86.8 Billion Pounds Of Copper In Proven And Probable Reserves
PHOENIX, AZ - Freeport-McMoRan Inc. President and Chief Executive Officer Richard C. Adkerson, said, “During 2016, we took aggressive actions. I am pleased to report that we were successful in reducing our net debt by over $8 billion during the year while completing a major expansion at our world class Cerro Verde mine. I am proud of our global team for their accomplishments in ‘Proving our Mettle.’ As we enter 2017, we are enthusiastic about opportunities to generate future values through our portfolio of high-quality, long-lived copper resources.” FCX has significant undeveloped reserves and resources in North America and a portfolio of potential long-term development projects. The company operates seven open-pit copper mines in North America - Morenci, Bagdad, Safford, Sierrita and Miami in Arizona, and Chino and Tyrone in New Mexico. In addition to copper, molybdenum concentrate, gold and silver are also produced by certain of FCX’s North America copper mines. All of the North America mining operations are wholly owned, except for Morenci. FCX records its 72 percent undivided joint venture interest in Morenci using the proportionate consolidation method.
Fourth-quarter 2016 copper sales were 1.2 billion pounds. The fourth-quarter 2016 copper sales were higher than fourth-quarter 2015 sales of 1.1 billion pounds, primarily reflecting higher volumes from Cerro Verde and PT-FI, partly offset by lower sales from North America primarily associated with reduced mining rates and lower ore grades, and the impact of the November 2016 Tenke sale. FCX completed the sale of its interest in TFHL, through which FCX held an effective 56 percent interest in the Tenke copper and cobalt mining concessions in Africa, the Southeast region of the DRC. Gold sales in the fourth-quarter were 405 thousand ounces, higher than fourth-quarter 2015 sales of 338 thousand ounces primarily reflecting higher mining and milling rates and higher ore grades at PT-FI. The fourth-quarter 2016 molybdenum sales were 22 million pounds, which were slightly higher than the October 2016 estimate of 21 million pounds and fourth-quarter 2015 sales of 20 million pounds. During 2016, FCX agreed to negotiate exclusively with China Molybdenum Co., Ltd. (CMOC) until February 28, 2017, to enter into a definitive agreement to sell its interests in Freeport Cobalt for $100 million and the Kisanfu exploration project in the Democratic Republic of Congo (DRC) for $50 million in separate transactions.
Adkerson said, “Sales volumes for the year 2017 are expected to approximate 4.1 billion pounds of copper, 2.2 million ounces of gold and 92 million pounds of molybdenum, including 1.0 billion pounds of copper, 460 thousand ounces of gold and 23 million pounds of molybdenum in first-quarter 2017. Estimated sales volumes assume the resumption of concentrate exports by PT-FI this month and the renewal of PT Smelting’s export license.”
The company has two copper mines in South America - Cerro Verde in Peru (in which FCX owns a 53.56 percent interest) and El Abra in Chile (in which FCX owns a 51 percent interest). The Cerro Verde expansion project commenced operations in September 2015 and achieved capacity operating rates during first-quarter 2016. Cerro Verde’s expanded operations benefit from its large-scale, long-lived reserves and cost efficiencies. The project expanded the concentrator facilities from 120,000 metric tons of ore per day to 360,000 metric tons of ore per day and is on track to provide incremental annual production of approximately 600 million pounds of copper and 15 million pounds of molybdenum. Cerro Verde’s copper production totaled 1.1 billion pounds for the year 2016, compared with 545 million pounds for the year 2015.
In response to market conditions, in the second half of 2015 FCX adjusted operations at its El Abra mine to reduce mining and stacking rates by approximately 50 percent to achieve lower operating and labor costs, defer capital expenditures and extend the life of the existing operations. FCX continues to evaluate a potential large-scale milling operation at El Abra to process additional sulfide material and to achieve higher recoveries. Exploration results in recent years at El Abra indicate a significant sulfide resource, which could potentially support a major mill project. “South America’s consolidated copper sales volumes of 359 million pounds in fourth-quarter 2016 were higher than fourth-quarter 2015 sales of 286 million pounds, reflecting Cerro Verde’s expanded operations. Sales from South America mining are expected to approximate 1.3 billion pounds of copper for the year 2017, compared with 1.3 billion pounds of copper in 2016,” said Adkerson.
The company also has two wholly owned molybdenum mines in North America; the Henderson underground mine and the Climax open-pit mine, both in Colorado. The Henderson and Climax mines produce high-purity, chemical-grade molybdenum concentrate, which is typically further processed into value-added molybdenum chemical products. The majority of molybdenum concentrate produced at the Henderson and Climax mines, as well as from FCX’s North and South America copper mines, is processed at FCX’s conversion facilities. The Henderson molybdenum mine operated at reduced rates during 2016. The company incorporated changes in the commercial pricing structure for its chemical products to enable continuation of chemical-grade production. Production from the Molybdenum mines totaled 7 million pounds of molybdenum in fourth-quarter 2016 with a total 26 million pounds in the year 2016.
FCX has significant reserves, resources and future development opportunities within its portfolio of mining assets. FCX’s preliminary estimated consolidated recoverable proven and probable reserves from its mines at December 31, 2016, include 86.8 billion pounds of copper, 26.1 million ounces of gold and 2.95 billion pounds of molybdenum.