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here we show modeled results for our EBITDA and cash flows at various copper prices ranging from $4 per pound to $5 per pound for the average of '25 and '26. We're using our current volume estimates for '25 and '26, our cost estimates and we're holding gold flat here at $2,300 per ounce and molybdenum at $20 an ounce for illustration.
Under this scenario, annual EBITDA would range from almost $11 billion per annum at $4 copper to in excess of $15 billion per annum at $5 copper and our operating cash flows would range from over $7.5 billion per year at $4 copper and over $11 billion per year at $5 per pound copper. We've got sensitivities to the various commodities on the right with long life reserves, large-scale production, we're extremely well positioned to benefit from improved pricing, providing substantial cash flow for investments in our organic growth and cash returns to shareholders on our performance-based payout framework.
ebitda/cash flow senstivity
Transcript
2024 Q1
24 Apr 24
As we mentioned, we achieved our initial target for an annual run rate of 200 million pounds per annum, now focused on doubling this or scaling what we've learned to date. To date, the success has largely been operationally driven, complemented by new data and technology. At the same time, in parallel, we're advancing studies on new additives that could boost recoveries and we're exploring options for adding heat to existing stockpiles to generate incremental copper.
In the aggregate, these initiatives have the potential to reach 800 million pounds per annum and that's the equivalent of a large-scale copper mine with low capital intensity, low cost and a low carbon footprint. About half of this can be achieved through further scaling, as we mentioned, and the other half relates to technology under development.
The value potential is very attractive, particularly for Freeport given our large quantities of suitable materially -- material that we previously mined.
leaching initstive
Transcript
2024 Q1
24 Apr 24
his project has the highest net present value potential of any project we have seen historically because of low capital intensity, low incremental operating costs. And at Freeport, we're uniquely positioned to capture this value with our sizable existing footprint, technical know-how and new technologies available to us.
At our Bagdad operation in Northwest Arizona, we talked about it on our last call. And now we're continuing to take steps to derisk the brownfield expansion project by converting the existing haul truck fleet to fully autonomous, expanding housing infrastructure at the site and expanding our tailings facilities. We're also continuing to monitor labor market conditions in Arizona and hope to be in a position to make an investment decision by the end of next year. From there, the project would take about 3 to 4 years to construct.
At our Lone Star, Safford brownfield project in Eastern Arizona, we're commencing a pre-feasibility study this year to define and frame a major expansion.
As we've been talking about over many quarters, we have a sizable resource here and expect this district will become a major cornerstone asset for us in Arizona during the next decade. At El Abra, in Chile, we have a large resource that can support a new concentrator of scale and we're looking at a concentrator similar to the size of the Cerro Verde concentrator expansion we installed nearly 10 years ago.
We've done substantial work to define the project, and we're currently in the process of retesting the economics and taking a hard look at capital costs in light of the recent industry experience in Chile. We're working to be in a position to file an environmental impact statement by the end of next year, and this project would require 7 to 8 years of lead time because of permitting requirements.
In Indonesia, we're continuing to advance our large-scale Kucing Liar development to commence production by 2030.
We also have several additional exploration targets in the district and expect to have additional long-term development options that would become available with an extension of our operating rights beyond 2041.
expansion opportunititsx
Transcript
2024 Q1
24 Apr 24
As we previously reported, we reached over our 200 million per annum run rate, we've got several initiatives in progress to scale this to the 300 million to 400 million-pound per annum range over the next 2 years. We're also continuing to take advantage of new technologies and automation across the portfolio, which we believe have a lot of potential to move the needle as we go forward.
leaching at 200m run rate now
Transcript
2024 Q1
24 Apr 24
And we've outlined identified projects totaling about 1.7 billion pounds of copper in the Americas. And we've also highlighted on the slide the ongoing development of the [indiscernible] project in Indonesia which is expected to support long-term production profiles in the Grasberg District.
The opportunities that are shown on the slide in the 2- to 3-year category, they center around scaling our rich initiatives and achieving incremental production from our operational improvement projects. Together, the potential from these opportunities total 400 million pounds of incremental copper per annum and do not require significant investment or long lead times. We discussed earlier that the leach projects, but we're also dedicating significant resources to enhancing productivity and asset efficiencies, rebuilding the experience of our workforce given the large number of new hires in recent years and utilizing new technologies and automation to restore and improve on productivity metrics that weakened somewhat during the pandemic.
As we indicated, we completed the feasibility study late in the year 2023, to evaluate a project to more than double the size of our bad debt operation in Northwest Arizona. The reserves at Bagdad are span for decades, and they support expansion of infrastructure at the site to bring value forward. The incremental capital cost to build a new concentrator and support infrastructure for significantly higher mining and milling rates is on the order of $3.5 billion and an expanded operation would not only substantially increase copper production but would produce economies of scale and reduce unit costs.
The project does not require major permitting and it's relatively straightforward. But given the tight labor market conditions and general market factors, we're not making a decision right now on the timing of the project. We'll continue to evaluate the timing of when we would go forward. But we are taking steps now to enhance optionality for the future by making some investments in the autonomous haulage for our mining operations, making some investments in housing, and also advancing investments in the tailings infrastructure that will put us in a position when we make the decision, we could get the project online within a few years.
expansion projects
Transcript
2023 Q4
17 Apr 24
And you can see here on the charts that annual EBITDA in these periods would range from $10 billion per annum at $4 copper to over $14 billion per year at $5 copper and operating cash flows under these price scenarios to range from $7 billion to over $10 billion. A
sensitivities
Transcript
2023 Q4
17 Apr 24
At the same time, supply disruption increased meaningfully in recent months. In total, near-term supplies of copper have been reduced by over 700,000 tons in a very short period of time. The market was previously expecting that 2024 would be a small surplus market and turning to deficit beginning in 2025 time frame and continuing for some time.
With the recent supply disruptions and continued demand growth, the deficit market has been advanced into 2024, setting up for tight market conditions in the near term.
supply disiripteribs
Transcript
2023 Q4
17 Apr 24
nventories of copper around the world are at historically low levels and the inventory levels are really inconsistent with the current copper price. The copper price clearly been driven by macroeconomic factors.
low inventory levels
Transcript
2023 Q4
17 Apr 24
Then there were the supply shortfalls throughout the industry for some significant mines and these for range of factors that are kind of coming to our business.
supply shortfalls
Transcript
2023 Q4
17 Apr 24
Excluding the net debt associated with the smelter projects in Indonesia, we ended the quarter with $800 million in net debt.
net debt excluding smekter is ony 800m
Transcript
2023 Q3
26 Oct 23
Our Kucing Liar development in Grasberg is proceeding on schedule.
We expect to commence production by 2030. A huge, huge ore body ramping up to 550 million pounds of copper and 560,000 ounces of gold in next decade. We're also conducting some additional exploration in the Grasberg district, where we have identified some potential below our Deep MLZ ore body. We're continuing to advance discussions in Indonesia for extension beyond 2041.
Kucing Liar
Transcript
2023 Q3
23 Oct 23
We also have a major opportunity for expansion at our El Abra mine in Chile. This is a very large resource that could support a concentrator on the size of the concentrator we added at Cerro Verde several years ago. We're retesting the economics to update project capital costs in light of the recent capital cost experience and other large projects. And in parallel, we are planning investments in water infrastructure to support the current operation and provide optionality for the future. Again, this is about options for expansion at the right time, and we've got the portfolio with a lot of option value within the Freeport portfolio
El Abra
Transcript
2023 Q3
23 Oct 23
We're also continuing our work on potential expansion of the Bagdad mine in Northwest Arizona. We're completing a feasibility study, and we're taking some steps now to enhance optionality for the future, including making some investments in autonomous haulage in our mining operations at Bagdad and we're advancing investments in our tailings infrastructure for the future.
We are setting up Bagdad expansion project as an option for the future. The timing of it will depend on market conditions.
Bagdad
Transcript
2023 Q3
23 Oct 23
our strategy is really focused on development of extensions of our existing operations and our portfolio of brownfield opportunity.
growth opportunity on brownfield
Transcript
2023 Q3
23 Oct 23
The recent weakness in price, combined with higher capital costs to develop new mines, are making it more difficult to justify new project development, which is essential to the future. With this backdrop, we believe the current price is not sustainable and prices will need to rise to incentivize new supplies.
At Freeport, we benefit from a large reserve position and an even larger resource position to grow our business in the future. We're going to take a long-term view and also be mindful of the short-term pressures on the market.
near term price weakness
Transcript
2023 Q3
23 Oct 23
China's consumption continues to grow despite the country's weak property sector, supported by massive investments in wind and solar and growth in electric vehicle production. And the recent signs we're seeing that economic activity is picking up in China.
We're also seeing growth in copper consumption in India, which has historically used less copper per catheter than other countries. We can't predict short-term macro forces that have heavily influenced the market, but our conviction for the long-term fundamental outlook remains strong. Copper is the metal when it comes to electrification and Freeport is well positioned as a leader in the global copper industry.
china and india
Transcript
2023 Q3
23 Oct 23
n the U.S., several of our customers are reporting growth in power cable and building wire for utilities and data centers and rising demand from the automotive sector.
power cable demand good
Transcript
2023 Q3
23 Oct 23
Macroeconomic factors with higher interest rates are negative for the price of copper and Freeport's equity. It goes without saying, our business by design, by strategy is correlated to the price of copper. In response to the recent lower copper prices, we are supported by having a strong balance sheet, which we're committed to maintaining and by having the ability to manage our capital cost and operations to be responsive to the price environment.
lower prices
Transcript
2023 Q3
23 Oct 23
And Brian just let me say because of the IUPK term, we only report reserves through 2041. But with our work to develop our mine plans to 2041, we've already identified production that would extend production of significance that would extend beyond that. And Mark Johnson our PT-FI team are already started the process of looking at delineating these ore bodies to see what opportunities are there.
reserves on ly reported to 2041
Transcript
2023 Q2
28 Jul 23
Under the policy, we're distributing 50%. And if you go back cumulatively to where – when we started it in the second half of 2021, we've distributed over 50% between the dividends and the share buybacks.
50% distribution
Transcript
2023 Q2
28 Jul 23