Q4 2023 Freeport-McMoRan Inc Earnings Call

Ladies and gentlemen, thank you for standing by. Welcome to the Freeport-McMoran 4th Quarter Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session.

Ladies and gentlemen, thank you for standing by welcome to the Freeport Mcmoran fourth quarter Conference call. At this time all participants are in a listen only mode. Later, we will conduct a question and answer session. If you wish to ask a question during the Q&A session Press Star one on your Touchtone phone if you require assistance during the call.

If you wish to ask a question during the Q&A session, press star 1 on your touchtone phone. If you require assistance during the conference, please press star 0. I would now like to turn the conference over to Ms. Kathleen Quirk, President. Please go ahead, ma'am.

Please press Star Zero I would now like to turn the conference over to MS. Kathleen Quirk President. Please go ahead ma'am.

Kathleen L. Quirk: Thank you and good morning. Welcome to the Freeport-McMoran conference call.

Kathleen L. Quirk: Thank you and good morning, welcome to the Freeport Mcmoran Conference call.

Kathleen L. Quirk: Earlier this morning, we reported our fourth quarter and full year 2023 operating and financial results, and a copy of today's press release with supplemental schedules and slides are available on our website at fcx.com.

Kathleen L. Quirk: Earlier. This morning, we reported our fourth quarter and full year 2023, operating and financial results and a copy of today's press release.

Kathleen L. Quirk: Mental schedules and the slides are available on our website at SPX dotcom.

Kathleen L. Quirk: Our conference call today is being broadcast live on the Internet, and anyone may listen to the call by accessing our website homepage and clicking on the webcast link for the conference call.

Kathleen L. Quirk: Conference call today is being broadcast live on the Internet and anyone may listen to the call by accessing our website homepage and clicking on the webcast link for the conference call.

Kathleen L. Quirk: In addition to analysts and investors, the financial press has been invited to listen to today's call and a replay of the webcast will be available on our website later today.

Kathleen L. Quirk: In addition to analysts and investors the financial press has been invited to listen to today's call and a replay of the webcast will be available on our website later today.

Kathleen L. Quirk: Before we begin our comments, we'd like to remind everyone today's press release and certain of our comments on the call include non-GAAP measures and forward-looking statements, and that actual results may differ materially. We'd like to refer everyone to the cautionary language included in our press release and presentation materials and to the risk factors described in our SEC filings.

Kathleen L. Quirk: Before we begin our comments, we'd like to remind everyone. Today's press release and certain of our comments on the call include non-GAAP measures and forward looking statements and that actual results may differ materially.

Kathleen L. Quirk: I'd like to refer everyone to the cautionary language included in our press release and presentation materials and to the risk factors described in our SEC filings.

Speaker Change: Also on the call with me today, Richard Adkerson, our chairman and CEO.

Speaker Change: Also on the call with me today are Richard Akerson, our chairman and CEO Marie Roberts, our Chief Financial Officer, Joshua Homestead are C. O all of the Americas, Mark Johnson operating officer for Indonesia, Mike Kendrick, who runs off.

Speaker Change: Marie Robertson, our Chief Financial Officer, Josh Olmstead, our COO of the Americas,

Speaker Change: Mark Johnson, Operating Officer for Indonesia, Mike Kendrick, who runs our molybdenum business, and Steve Higgins, who's our Chief Administrative Officer.

Speaker Change: Our molybdenum business and Steve Higgins, who is our chief administrative officer.

Speaker Change: We'll start the call with some opening comments from Richard, and then we'll go through the slide presentation materials and then open up the call for your questions.

Steve Higgins: I will start the call with some opening comments from Richard and then we'll go through the slide presentation materials, and then open up the call for your questions. So I'll turn it over to Richard.

Speaker Change: I'll turn it over to Richard.

Richard C. Adkerson: Richard, go ahead.

Richard C. Adkerson: Richard go ahead.

Richard C. Adkerson: Okay, good morning everyone. As you can see our

Richard C. Adkerson: Okay. Good morning, everyone.

Richard C. Adkerson: As you can see our.

Richard C. Adkerson: First quarter was really a sound quarter and outstanding in several respects in terms of our operations.

Richard C. Adkerson: First quarter was really good.

Richard C. Adkerson: Sound quarter.

Standing in several respects in terms of our operations.

Richard C. Adkerson: It was really led by PTFI during the whole year of 2023.

Speaker Change: It was really late Ed.

Speaker Change: During the whole year of 2023.

Richard C. Adkerson: Um,

Richard C. Adkerson: We began our ramp up in 2019 of the underground, and now we're fully operationally, and the team has been setting records consistently out there.

Speaker Change: We'll begin our ramp up in.

2019 of the underground and now.

Speaker Change: We are fully operationally.

Speaker Change: The team has been setting records consistently out there.

Richard C. Adkerson: Outperformed for the full year and faced some really

Speaker Change: For the full year in face of some really.

Richard C. Adkerson: challenges, which is just part of that business.

Speaker Change: Challenges, which is just part of that business.

Richard C. Adkerson: But I'm very proud of our PTFI team at Jobsite in Jakarta.

Speaker Change: But I'm very proud of our ETF team at job site in Jakarta.

Richard C. Adkerson: We are making great progress.

Ladies and gentlemen, thank you for standing by. Welcome to the Freeport-McMoran fourth quarter conference call. At this time, all participants are in a listen-only mode.

Speaker Change: We are making great progress.

Richard C. Adkerson: Thank you for fulfilling our 2018 commitment to the government to invest.

Speaker Change: Fulfilling our 2018 commitment to the government to invest in downstream, meaning in the copper concentrate business indeed.

Richard C. Adkerson: Downstreaming and the copper concentrate business.

Later, we will conduct a question and answer session. If you wish to ask a question during the Q&A session, press star 1 on your touchtone phone. If you require assistance during the conference, please press star 0. I would now like to turn the conference over to Ms. Kathleen Quirk, President. Please go ahead, Ms. Quirk.

Richard C. Adkerson: In December, uh,

Speaker Change: In December.

Speaker Change: I was there for the inauguration of the expansion of the older smelter PT smelting was president Yoko widow and that was it.

Richard C. Adkerson: Good event. And then with our new smelter at Man Yard in Eastern Java.

Speaker Change: Good event, and then with our new smelter menu are in eastern Java.

Richard C. Adkerson: We reached an important 90% milestone at the end of the year, and we're progressing for our 20th anniversary.

Kathleen L. Quirk: Thank you, and good morning. Welcome to the Freeport-McMoran conference call. Earlier this morning, we reported our fourth quarter and full year 2023 operating and financial results, and a copy of today's press release with supplemental schedules and slides is available on our website at fcx.com. Our conference call today is being broadcast live on the Internet, and anyone may listen to the call by accessing our website homepage and clicking on the webcast link for the conference call. In addition to analysts and investors, the financial press has been invited to listen to today's call, and a replay of the webcast will be available on our website later today.

Speaker Change: We reached an important 90% milestone at the end of the year and we're progressing for.

Richard C. Adkerson: Physical completion of the smelter and ramping it up on schedule in 2024.

Speaker Change: Physical completion of the smelter and ramping it up on schedule in 2024.

Richard C. Adkerson: Um...

Richard C. Adkerson: A couple of words about the markets. You know, it continues to be the micro versus macro story.

Speaker Change: Couple of words about the markets.

Speaker Change: Continues to be the micro versus macro story.

Richard C. Adkerson: Um

Richard C. Adkerson: Notably, in 2023, the macro factor...

Speaker Change: Notably in 2023 the macro.

Speaker Change: Factors drinks.

Richard C. Adkerson: Strength and Notably

Speaker Change: Drinks and notably.

Richard C. Adkerson: 2023 had long been forecasted to be a year of surplus because of new mines coming on stream.

Speaker Change: 2023 had long been forecasted to be a year of surplus because of new mines coming on stream.

Richard C. Adkerson: But it ended up being a small deficit. And at the same time, there was stronger than expected demand for copper in the United States and in China, despite all the issues with China's property business. Other sectors created

Speaker Change: But it ended up being a small deficit.

Speaker Change: And at the same time, there were stronger than expected demand for copper in the United States and in China. Despite all of the <unk>.

Richard: Before we begin our comments, we'd like to remind everyone that today's press release and certain of our comments on the call include non-GAAP measures and forward-looking statements, and that actual results may differ materially. We'd like to refer everyone to the cautionary language included in our press release and presentation materials, and to the risk factors described in our SEC filings. Also on the call with me today are Richard Adkerson, our Chairman and CEO; Marie Robertson, our Chief Financial Officer; and Josh Olmstead, our COO of the Americas. Mark Johnson, Operating Officer for Indonesia, Mike Kendrick, who runs our molybdenum business, and Steve Higgins, who's our Chief Administrative Officer. We'll start the call with some opening comments from Richard, and then we'll go through the slide presentation materials, and then we'll open up the call to your questions. I'll turn it over to Richard. Richard, go ahead.

Speaker Change: Issues with Chinas property business other sectors graded.

Richard C. Adkerson: The notable growth for copper in China.

Speaker Change: Notable growth for copper in China.

Richard C. Adkerson: Then there were the supply shortfalls throughout the industry.

Speaker Change: Then there was a supply shortfalls throughout the industry.

Richard C. Adkerson: for some significant minds and these

Speaker Change: Of course, some significantly mines in these firms.

Richard C. Adkerson: A range of factors that are kind of common to our business, you know, the copper business, mining business is a tough business.

Speaker Change: The range of factors that are kind of comment to our business.

Speaker Change: Copper business mining business is tough business.

Richard C. Adkerson: but it

Speaker Change: It was.

Richard C. Adkerson: political issues in some countries,

Political issues in some countries.

Richard C. Adkerson: Community Issues, and then operating. Radio.

Speaker Change: Community issues, and then operating issues.

Richard C. Adkerson: Uh...

Richard C. Adkerson: As a result of all that, inventories of copper around the world are at historically low levels.

Speaker Change: As a result of all that inventories of copper.

Speaker Change: Around the world are at historically low levels.

Richard C. Adkerson: and the inventory levels are really inconsistent with the current copper price the copper price

Speaker Change: And the inventory levels are really inconsistent with the current copper price copper price.

Richard C. Adkerson: Clearly being driven by macroeconomic factors.

Clearly being driven by macroeconomic factors.

Richard C. Adkerson: The Currency, The Strong US Dollar, Carryover Effects of Inflation, Government Fiscal Policy, The Currency, The Strong US Dollar, Carryover Effects of Inflation, Government Fiscal

Currency the strong U S dollar carryover effects of installations government fiscal policies and there are concerns about the economies in China and Europe.

Richard C. Adkerson: And there are concerns about economies in China and Europe.

Richard C. Adkerson: But it's the macro outlook, and I'll just say when the macro outlook.

Speaker Change: <unk>.

Speaker Change: If the macro outlook and I will just say when the macro outlook.

Richard C. Adkerson: Cruz, watch out for the copper price.

Speaker Change: Cruise watch out for the copper price.

Richard C. Adkerson: Okay, good morning, everyone. As you can see, our first quarter was really a sound quarter and outstanding in several respects in terms of our operation. It was really led by PTFI during the whole year of 2023. You know, we began our ramp up in 2019 of the underground, and now we're fully operational, and the team has been setting records consistently out there, out the forum for the full year in the face of some really challenging challenges, which is just part of that business. But I'm very proud of our PTFI team at Jobsite in Jakarta.

Richard C. Adkerson: Looking ahead, the world's going to need significantly more copper in the future for a variety of factors. The world's just becoming increasingly electrified, and that's what copper is used for.

Speaker Change: Looking ahead, the world's going to need significantly more copper in the future.

Speaker Change: A variety of factors the world is becoming increasingly electrified and Thats correct <unk>.

Richard C. Adkerson: and it's at a time when the industry is simply not investing to grow production

Speaker Change: And it's at a time when the industry is simply not investing to grow production.

Richard C. Adkerson: that the outlook indicates that will be required.

Speaker Change: Is that the outlook indicates that will be required.

Richard C. Adkerson: for economic, operational, and resource nationalism, a series of factors, but the facts are

Speaker Change: For our economic operational and resource nationalism, a series of factors, but the facts are.

Richard C. Adkerson: There's an outlook for strong demand and supply challenge.

Speaker Change: There is an outlook for strong demand.

Speaker Change: And supply challenges.

Richard C. Adkerson: That's why I am so personally confident about where Freeport,

Speaker Change: That's why I'm, so personally confident about where freeport is positioned and pleased with it we have high volume existing production.

Richard C. Adkerson: Musicians

Richard C. Adkerson: We are pleased with it. We have high volume existing production.

Richard C. Adkerson: We are making great progress on fulfilling our 2018 commitment to the government to invest in downstreaming the copper concentrate business. In December, I was there for the inauguration of the expansion of the older smelter, P.P. Smelting, with President Joko Widodo, a good event, and then with our new smelter at Manyar in eastern Java.

Richard C. Adkerson: We have large sustainable reserves and resources.

Speaker Change: Sustainable we have large sustainable reserves and resources, we have growth opportunities that we will pursue prudently from this.

Richard C. Adkerson: We have growth opportunities that we will pursue prudently.

Richard C. Adkerson: Really exciting leaching initiative that Kathleen will be talking about and from Boundfield Expansions of our existing ore box.

Speaker Change: Really exciting leaching initiatives that gasoline will be talking about <unk>.

Speaker Change: And from brownfield expansions of our existing ore bodies.

Richard C. Adkerson: Before turning over to Kathleen, I just want to

Speaker Change: Before turning over to Kathleen I just wanted to.

Richard C. Adkerson: Send a note of condolences to our friends at Rio Tinto.

Kathleen: And of note of condolences to our friends at Rio Tinto, you may have seen the news, but they had a claim.

Richard C. Adkerson: That they had.

Richard C. Adkerson: Plain to go down in Canada heading to their diamond operations there.

Richard C. Adkerson: We reached an important 90% milestone at the end of the year, and we're progressing for our physical completion of the smelter and ramping it up on schedule in 2024. A couple of words about the markets, you know; it continues to be the micro versus macro story. Notably, in 2023, the macro factor strengthened notably. 2023 had long been forecasted to be a year of surplus because of new mines coming on stream, but it ended up being a small deficit. And at the same time, there was stronger than expected demand for copper in the United States and in China. Despite all the issues with China's property business, other sectors created, You know, there is notable growth for copper in China. Then there were supply shortfalls throughout the industry for some significant mines, and these range of factors that are kind of common to our business. You know, the copper business is a tough business. Bye political issues in some countries, Community Issues, and then Operators. As a result of all that, inventories of copper around the world are at historically low levels.

Kathleen: Going to go down in Canada heading to their dominant operations there.

Richard C. Adkerson: Rio has been a special part of Freeport's history. Of course, they were our partners for many years at Grassburg.

Kathleen: Rio has been a special part of <unk>.

Kathleen: The report's history of course through our partners for many years at Grasberg.

Richard C. Adkerson: I've worked.

Kathleen: I've worked with.

Richard C. Adkerson: and seven, eight CEOs over my career, some of my closest colleagues.

Kathleen: 600, 700 Ceos of my career, so my closest colleagues.

Richard C. Adkerson: have been with that company and

Kathleen: I've been with that company.

Richard C. Adkerson: The toughest part of being a CEO is to lose people.

Kathleen: The toughest part of being a CEO is to lose people.

Kathleen: I'm just so sad to hear this news in the whole Freeport families heart goes out to our friends at Rio.

Richard C. Adkerson: Hard goes out to our friends at Rio.

Speaker Change: Thank you for that, Kathleen.

Kathleen: So that Kathleen I'll turn it over to you.

Kathleen L. Quirk: Okay, thank you, Richard, and I'll be covering the presentation materials.

Kathleen: Okay. Thank you Richard and I'll be covering.

Kathleen: The presentation materials.

Kathleen L. Quirk: Starting with slide three, our achievements for 2023 are summarized here.

Kathleen: Starting with slide three.

Kathleen: Achievements for 2023 was summarized here.

Kathleen L. Quirk: Our sharp focus on executing our plans in an effective, safe, and responsible manner.

Kathleen: Our sharp focus on executing our plans in an effective safe and responsible manner.

Kathleen L. Quirk: Managing the controllable drivers and navigating challenges successfully all translated into solid operating results over the year.

Kathleen: On a general controllable drivers in navigating challenges successfully all translated into solid operating results over the year a.

Kathleen L. Quirk: A big highlight for the year was the outstanding progress in Indonesia, where we grew production levels for the fourth year in a row, we posted several new operating records, and we continue to enhance values for this large-scale, low-cost, and long-lived resource.

Kathleen: A big highlight for the year was the outstanding progress in Indonesia, where we grew production levels for the fourth year in a row.

Kathleen: Several new operating records.

Kathleen: Continue to hoard enhance values for this large scale low cost and long life resource.

Kathleen L. Quirk: We were also successful in reaching several milestones during the year, including reaching our target run rate for incremental leach production in the Americas.

Kathleen: We were also successful in mutual several milestones during the year, including reaching our target run rate for incremental reach production in the Americas.

Kathleen L. Quirk: enhancing optionality in the Americas for our brownfield growth projects, and more.

Kathleen: Nancy and Optionality.

Kathleen: <unk> for our brownfield growth projects and reaching our targeted 90% completion milestone for the Indonesian smelter project by the end of.

Richard C. Adkerson: And the inventory levels are really inconsistent with the current copper price. The copper price is clearly being driven by macroeconomic factors. Thank you very much.

Kathleen L. Quirk: and reaching our targeted 90% completion milestone for the Indonesian smelter project by the end of 2023.

Kathleen: 2023.

Kathleen L. Quirk: As a leader in the industry, we were one of the first companies to have all of our operating sites certified under the copper and molybdenum mark.

As a leader in the industry. We wanted we were one of the first companies to have all of our operating sites certified under the copper and molybdenum marks.

Richard C. Adkerson: But if the macro outlook, and I'll just say when the macro outlook, Cruz, watch out for the copper price. Looking ahead, the world's going to need significantly more copper in the future for a variety of reasons. The world is just becoming increasingly electrified, and that's what copper is used for. And it's at a time when the industry is simply not investing to grow production that the outlook indicates that will be required, for economic, operational, resource nationalism, a series of factors, but the facts are, There's an outlook for strong demand and supply challenges. That's why I am so personally confident about where Freeport is going... 2, Pleased with it.

Kathleen L. Quirk: And this demonstrates our performance and commitment to responsible mining practice.

Kathleen: This demonstrates our performance and commitment to responsible mining practices.

Kathleen L. Quirk: We ended the year 2023 in a strong financial position, a positive outlook, and as we work together to enhance long-term value for shareholders.

We ended the year 2023, and a strong financial position a positive outlook and as we work together to enhance long term value for shareholders.

Kathleen L. Quirk: On slide four, we summarize the key results for 2023 compared with historical levels.

Kathleen: On slide four we summarize the key results for 2023 compared with historical levels.

Kathleen L. Quirk: After growing our volumes from 2020 to 2021 and 2022, we were able to sustain production of copper in 2023 despite a challenging environment for copper supply, as Richard discussed.

Kathleen: After growing our volumes from 2020 to 2021 and 2022, we were able to sale production of copper in 2023, despite a challenging environment for copper supply as Richard discussed.

Kathleen L. Quirk: And we reported another year of growth in gold production.

Kathleen: And we reported another year of growth in gold production.

Richard C. Adkerson: We have high-volume existing production. We have large sustainable reserves and resources. We have growth opportunities that we will pursue prudently. Before turning over to Kathleen, I just want to say...

Kathleen L. Quirk: Our unit net cash costs for 2023 were above the 2022 level as expected, but they came in very close to our original guidance for the year.

Kathleen: Our unit net cash cost for 2023.

Kathleen: Above the 2022 level as expected, but they came in very close to our original guidance for the year.

Kathleen L. Quirk: We're continuing to actively manage costs and productivity initiatives to address cost inflation and we'll be working on that as we go forward.

Kathleen: We're continuing to actively manage cost and productivity in our stores to address cost inflation and we'll be working on that as we go forward.

Kathleen L. Quirk: For the year 2023, we generated strong EBITDA of $8.8 billion and operating cash flows of over $5 billion.

Richard C. Adkerson: Send a note of condolences to our friends at Rio Tinto, you may have heard that they had a plane go down in Canada heading to their diamond operations there. Rio has been a special part of Freeport's history. Of course, they were our partners for many years at Grasberg. I've worked with 7, 8 CEOs in my career, some of my closest colleagues.

Kathleen: For the year 2023 would generate strong EBITDA of $8 8 billion in operating cash flows of over $5 billion.

Kathleen L. Quirk: We're continuing to carefully manage not only our operating costs, but also capital expenditures.

Kathleen: We're continuing to carefully manage not only our operating costs, but also capital expenditures.

Kathleen L. Quirk: With a priority on spending on projects to sustain production, improve efficiencies, and enhance optionality for future development options with attractive rates of return.

Kathleen: With a priority on spending on projects to sustain production improve efficiencies and enhance optionality for future development options with attractive rates of return.

Kathleen L. Quirk: During 2023, we returned $860 million to shareholders, bringing the total shareholder returns to $3.8 billion since we implemented our performance-based payout framework in 2021.

Kathleen: During 2023, we returned $860 million to shareholders, bringing the total shareholder returns to $3 8 billion since we implemented our performance based pay our framework in 2021.

Richard C. Adkerson: I've been with that company, and the toughest part of being a CEO is to lose people. It's so sad to hear this news and the whole Freeport family. My heart goes out to our friends at Rio. With that, Kathleen, I'll turn it over to you.

Kathleen L. Quirk: We ended the year with net debt of approximately $800 million, and that excludes the multi-related debt, which is $1.5 million.

Kathleen: We ended the year with net debt of.

Kathleen L. Quirk: Okay, thank you, Richard, and I'll be covering the presentation materials. Starting with slide three, our achievements for 2023 were summarized here. Our sharp focus on executing our plans in an effective, safe, and responsible manner, managing the controllable drivers, and navigating challenges successfully, all translated into solid operating results over the year. A big highlight for the year was the outstanding progress in Indonesia, where we grew production levels for the fourth year in a row, we posted several new operating records, and we continue to enhance values for this large-scale, low-cost, and long-life resource. We were also successful in reaching several milestones during the year, including reaching our target run rate for incremental leach production in the Americas. Enhancing Optionality in the Americas for our Brownfield Growth Project and reaching our targeted 90% completion milestone for the Indonesian smelter project by the end of 2023. As a leader in the industry, we were one of the first companies to have all of our operating sites certified under the copper and molybdenum mark.

Kathleen: Approximately $800 million and that excludes the <unk>.

Kathleen: And also related debt, which.

Kathleen L. Quirk: is being financed separately.

Kathleen: It is being financed separately.

Kathleen L. Quirk: I was going to move to slide five and talk about the fourth quarter.

Kathleen: I was a little just slide five and talk about the fourth quarter.

Kathleen L. Quirk: During the fourth quarter, our sales were 3% above our estimates going into the quarter. Our gold production was also very strong, but our shipments of gold in the fourth quarter were slightly below the previous estimates, and that reflected timing in these shipments we made in the first quarter.

Kathleen: During the fourth quarter, our sales were 3% above our estimates going into the quarter our.

Kathleen: Gold production was also very strong, but our shipments of coal and the.

Kathleen: Fourth quarter was slightly below the previous estimates and that reflected timing.

Kathleen: Yes.

Kathleen: Shipments were made in the first quarter.

Kathleen L. Quirk: Unit net cash cost averaged $1.52 per pound in the fourth quarter. That was better than our guidance of $1.58 per pound and slightly below the year-ago period.

Kathleen: Unit net cash cost averaged $1 52 per pound in the fourth quarter that was better than our guidance of $1 58 per pound.

Kathleen: Slightly below the year ago period.

Kathleen L. Quirk: Notably, unit net cash costs in Indonesia were zero in the fourth quarter, zero cents per pound, meaning our gold credits completely offset the production costs for copper.

Kathleen: Notably unit net cost cash cost in Indonesia.

Kathleen: Zero in the fourth quarter.

Kathleen: Per pound.

Kathleen: Golar credits completely offset the production cost for copper.

Kathleen L. Quirk: Average copper realizations in the fourth quarter were $3.81 per pound.

Kathleen: Average copper realizations in the fourth quarter were $3 81 per pound.

Kathleen L. Quirk: and we generated $2.3 billion in EBITDA.

Kathleen: And we generated $2 3 billion in EBITDA.

Kathleen L. Quirk: and operating cash flows of $1.3 billion.

Kathleen: And operating cash flows of $1 3 billion.

Kathleen L. Quirk: Go around the world and talk a little bit about our various operations in the fourth quarter. In the U.S., we made progress in increasing our mining rates. That's been a big focus during the quarter with a 9% increase over the year-ago quarter.

Kathleen: Well around the world and talk a little bit about our various operations in the fourth quarter.

Speaker Change: And this demonstrates our performance and commitment to responsible mining practice. We ended the year 2023 in a strong financial position, with a positive outlook, and as we work together to enhance long-term value for shareholders. On slide four, we summarize the key results for 2023 compared with the historical level. After growing our volumes from 2020 to 2021 and 2022, we were able to sustain production of copper in 2023 despite a challenging environment for copper supplies, Richard discussed. And we reported another year of growth in gold production.

Kathleen: In the U S. We made progress in increasing our mining rates that's been a big focus during the quarter with a 9% increase over the year ago quarter.

Kathleen L. Quirk: We have a continued focus on improving our asset efficiencies and workforce experience levels. These are important initiatives as we seek to increase productivity to combat lower ore grade.

Kathleen: We have a continued focus on improving our asset efficiencies and work workforce experience levels. These are important initiatives as we seek to increase product productivity to combat lower ore grades.

Kathleen L. Quirk: Our innovative leach initiatives met expectations and also helped to mitigate the impact of lower grades in the U.S.

Kathleen: Our innovative leach initiatives met expectations and also help to mitigate the impact of lower ore grades in the U S.

Kathleen L. Quirk: Labor market conditions in the U.S. continue to be tight. We're taking steps to expand housing options in our remote locations for recruiting and retention, and we're also continuing to pursue technology solutions to enhance productivity.

Kathleen: Labor market conditions in the U S continue to be tight we're taking steps to expand housing options in a remote locations for recruiting and retention.

Speaker Change: Our unit net cash costs for 2023 were above the 2022 level, as expected, but they came in very close to our original guidance for the year. We're continuing to actively manage costs and productivity initiatives to address cost inflation, and we'll be working on that as we go forward. For the year 2023, we generated strong EBITDA of $8.8 billion and operating cash flows of over $5 billion. We're continuing to carefully manage not only our operating costs but also capital expenditures, with a priority on spending on projects to sustain production, improve efficiencies, and enhance optionality for future development options with attractive rates of return. During 2023, we returned $860 million to shareholders, bringing the total shareholder returns to $3.8 billion since we implemented our performance-based payout framework in 2021. We ended the year with net debt of approximately $800 million, and that excludes the not related debt, which is being financed separately.

Kathleen: And we're also continuing to pursue technology solutions to enhance productivity.

Kathleen L. Quirk: Conversion of the Baghdad truck fleet to fully autonomous is advancing, and we're targeting to commence the transition in the second half of next year.

Kathleen: Conversion of Baghdad truck fleet to fully autonomous is advancing and we're targeting to commence the transition in the second half of next year.

Kathleen L. Quirk: In South America, our ore mill was sustained above 400,000 metric tons per day, and our ore stacking rates increased at a labra.

Kathleen: In South America, our ore milled was sustained about 400000 metric tons per day, and our ore stacking rates increased at a libra.

Kathleen L. Quirk: Mill recoveries at Cerro Verde in the fourth quarter of 2023 were below the year-ago level because of the material types that we're mining in the fourth quarter. This is continuing for mining phases in early 2024, and we're working to optimize performance.

Kathleen: Mill recoveries at Cerro Verde, and <unk> in the fourth quarter of 2023, well below the year ago level because of the material types that will moderate in the fourth quarter.

This is continuing for mining phases in early 2024 and were working to optimize performance.

Kathleen L. Quirk: As Richard discussed, the fourth quarter performance in Indonesia was exceptional.

Kathleen: As Richard discussed the fourth quarter performance in Indonesia was exceptional.

Kathleen L. Quirk: Underground ore mined averaged over 214,000 tons per day, and that was 8% higher than the year-ago period.

Kathleen: Underground ore mined averaged over 214000 tons per day, and that was 8% higher than a year ago period.

Kathleen L. Quirk: Combined with strong grades and recoveries, our copper and gold production in the fourth quarter was over 20% higher than last year's fourth quarter.

Kathleen: Combined with strong grades and recoveries, our copper and gold production in the fourth quarter was over 20% higher than last year's fourth quarter.

Kathleen L. Quirk: We completed the installation of a new sag mill at PTFI in December, and that will provide additional opportunities for us going forward. And the team is just doing outstanding work sustaining and optimizing value from this large resource position.

Kathleen: We completed the installation of our new SAB now at PT Fi in December and that will provide additional opportunities for us going forward and the team is just doing outstanding work sustainable and optimizing value from this large resource position.

Speaker Change: I was going to move to slide five and talk about the fourth quarter. During the fourth quarter, our sales were 3% above our estimates going into the quarter. Our gold production was also very strong, but our shipments of gold in the fourth quarter were slightly below the previous estimates, and that reflected timing in these shipments we made in the first quarter. Unit net cash cost averaged $1.52 per pound in the fourth quarter.

Kathleen L. Quirk: We thought it would be good to look back in history of how the underground transition has gone. Slide 6 covers this. We show the history of the progression of the transition.

Kathleen: Hum.

Kathleen: Probably good to look back in history of how the underground transition has gone.

Kathleen: Slide six covers loss ratio.

Kathleen: The history of the progression of the transition.

Speaker Change: That was better than our guidance of $1.58 per pound and slightly below the year-ago period. Notably, unit net cash costs in Indonesia were zero in the fourth quarter, zero cents per pound, meaning our gold credits completely offset the production costs for copper. Average copper realizations in the fourth quarter were $3.81 per pound, and we generated $2.3 billion in EBITDA and operating cash flows of $1.3 billion. I'll go around the world and talk a little bit about our various operations in the fourth quarter. In the U.S., we made progress in increasing our mining rates. That's been a big focus during the quarter, with a nine percent increase over the year-ago quarter. We have a continued focus on improving our asset efficiencies and workforce experience levels.

Kathleen L. Quirk: As Richard mentioned, we stopped mining from the surface in the Glassburg open pit at the end of 2019 and transitioned to fully underground operations beginning in 2020.

Kathleen: As Richard mentioned, we stopped mining from the surface.

Kathleen: The Grasberg open pit out at the end of 2019 and transition to a fully underground operations beginning in 2020.

Kathleen L. Quirk: We have a long history in Indonesia spanning over 56 years and a great track record for building value over many years for all stakeholders.

Kathleen: We have a long history in Indonesia spanning over 56 years and a great track record for building value over many years for all stakeholders.

Kathleen L. Quirk: We're extremely proud of the team's execution on this transition. We now have the world's largest underground mining complex, and it's been developed in a modern, efficient operation. The Grassberg is the world's second largest copper mine, and one of the largest gold mines, even though gold is a byproduct. High grades of both copper and gold make it one of the lowest cost operations in the world as well.

Kathleen: We're extremely proud of the team's execution on this transaction.

Kathleen: We now have the world's largest underground mining complex and it's been developed in a modern.

Kathleen: And efficient operation.

The Grasberg is the world's second largest copper mine.

One of the largest gold mines, even though gold as a byproduct high grades of both copper and gold make it one of the lowest cost operations in the world as well.

Kathleen L. Quirk: This took a lot of planning. We began planning for this underground era over 25 years ago and commenced development activities in 2004. And as you can see from the graph, the project is performing exceptionally well and generating strong margins and cash flow.

Kathleen: This took a lot of planning we began planning for this underground ore over 25 years ago and commence development activities in 2004, and as you can see from the graph the <unk>.

Speaker Change: These are important initiatives as we seek to increase productivity to combat lower oil grades. Our innovative leach initiatives met expectations and also helped to mitigate the impact of lower oil grades in the U.S. However, labor market conditions in the U.S. continue to be tight. We're taking steps to expand housing options in our remote locations for recruiting and retention, and we're also continuing to pursue technology solutions to enhance productivity. The conversion of the Baghdad truck fleet to fully autonomous is advancing, and we're targeting to commence the transition in the second half of next year. In South America, our ore mill was sustained above 400,000 metric tons per day, and our ore stacking rates increased at Alabra. However, mill recoveries at Cerro Verde in the fourth quarter of 2023 were below the year-ago level because of the material types that we're mining in the fourth quarter. This is continuing for the mining phases in early 2024, and we're working to optimize performance. As Richard discussed, the fourth quarter performance in Indonesia was exceptional.

Kathleen: Project is performing exceptionally well and generating strong margins and cash flows.

Kathleen L. Quirk: As we look forward, we're continuing to make investments in this resource.

Kathleen: As we look forward, we're continuing to make investments in this resource.

Kathleen L. Quirk: to enhance value and sustain long-term performance.

To enhance value and sustained long term performance.

Kathleen L. Quirk: We're working on the extension of our operating rights beyond 2041 and are increasingly confident about securing our long-term rights. And that would extend the lives of our resources and open a whole new set of opportunities for this district.

Kathleen: We're working on an extension of our operating life beyond 2041.

Kathleen: And our and increasingly confident about securing long term rights and that would extend the lives of our resources and open a whole new set of opportunities for this.

Kathleen: District.

Kathleen L. Quirk: Richard touched on the smelter progress, and this is really important for us in terms of securing long-term rights.

Kathleen: Richard touched on the smelter progress and this is really important for us.

Kathleen: In terms of securing long term rights.

Kathleen L. Quirk: We reached two important milestones on these initiatives in 2023.

Kathleen: We reached two important milestones on these initiatives.

Kathleen: In 2023.

Kathleen L. Quirk: The projects include a new greenfield smelter in East Java and the expansion of our nearby existing smelter, which was developed in the late 1990s.

Kathleen: The projects included in our new Greenfield smelter in East Java, and the expansion of our nearby existing smelter, which was developed in the late 19 nineties.

Speaker Change: Richard mentioned we celebrated in December the completion of the expansion project with the Indonesian government and our Japanese partner.

Speaker Change: Richard mentioned, we celebrated in December the completion of the expansion project with the Indonesian government and our Japanese partner.

Speaker Change: And we also reached a really important milestone on progress of the Greenfield project with completion progress.

Speaker Change: And we also reached a really important milestone on progress of the Greenfield project with completion progress achieving the target we set with the government of over 90% by the end of December.

Speaker Change: Underground ore mined averaged over 214,000 tons per day, and that was 8% higher than the year before. Combined with strong grades and recoveries, our copper and gold production in the fourth quarter was over 20% higher than last year's fourth quarter. We completed the installation of a new sugar mill at PTFI in December, and that will provide additional opportunities for us going forward. And the team is just doing outstanding work sustaining and optimizing value from this large resource position. We thought it would be good to look back in history on how the underground transition has gone. Slide 6 covers this.

Speaker Change: Achieving a target we set with the government of over 90% by the end of December.

Speaker Change: We posted a video this morning on our website that shows the Greenfield Smelter Project. You can see all the progress that's been made.

Speaker Change: We posted a video this morning on our website that shows the Greenfield smelter project you can see all the progress that's been made.

Speaker Change: And you can see the sheer size and scale of this impressive facility, and I hope you'll have a chance to look at it. Both projects have been executed very efficiently in the context of a challenging market for major project development.

Speaker Change: And you can see the sheer size and scale of this impressive facility and I hope you'll have a chance to go.

Speaker Change: So look at it.

Speaker Change: Both projects have been executed very efficiently in the context of a challenging market for major project development.

Speaker Change: The internal team that we have working on this project together with our contractor have done an outstanding job containing costs and maintaining schedules.

Speaker Change: The internal team that we have working on this project together with our contractor has done an outstanding job containing costs and maintaining schedules.

Speaker Change: We're working to complete the construction by the end of May of 2024 and to start commissioning.

Speaker Change: We show the history of the progression of the transition. As Richard mentioned, we stopped mining from the surface in the Grasberg open pit at the end of 2019 and transitioned to fully underground operations beginning in 2020. We have a long history in Indonesia, spanning over 56 years, and a great track record for building value over many years for all stakeholders. I'm extremely proud of the team's execution on this transition. We now have the world's largest underground mining complex, and it's been developed in a modern, efficient operation. Grasberg is the world's second largest copper mine and one of the largest gold mines, even though gold is a byproduct.

Speaker Change: Working to complete the well.

Speaker Change: The construction by the end of May of 2024, and the start commissioning.

Speaker Change: and to conduct the ramp-up period over the balance of 2024.

Speaker Change: And they conduct the ramp up period over the balance of 2024.

Speaker Change: This is a big deal for us. It's not very frequent that you see new smelters starting up and we've done a lot of planning going into this startup process. Our teams are well prepared and really highly motivated to achieve a safe, efficient, and timely startup in 2024.

Speaker Change: This is a big data for us its not very frequent that you've seen new smelter starting up and we've done a lot of planning.

Speaker Change: Going into the startup process, our teams are well prepared and really highly motivated to achieve a safe efficient and timely startup in 2024.

Speaker Change: Turning to the U.S. and the Americas where we've got an important REACH initiative ongoing, we achieved our targeted run rate where we were targeting approximately 200 million pounds of copper per year by the end of 2023.

Speaker Change: Turning to sales to the U S and in the Americas, where we've got an important leach initiatives ongoing.

Speaker Change: We achieved our targeted run rate, where we were targeting approximately 200 million pounds of copper per year by the end of 2023.

Speaker Change: High grades of both copper and gold make it one of the lowest cost operations in the world as well. This took a lot of planning. We began planning for this underground era over 25 years ago and commenced development activities in 2004. And as you can see from the graph, the project is performing exceptionally well and generating strong margins and cash flow. As we look forward, we're continuing to make investments in this resource to enhance value and sustain long-term performance. We're working on the extension of our operating rights beyond 2041 and are increasingly confident about securing our long-term rights, which would extend the lives of our resources and open a whole new set of opportunities for this district. Richard touched on the smelter progress, and this is really important for us in terms of securing long-term rights. We reached two important milestones on these initiatives in 2023. The projects include a new greenfield smelter in East Java and an expansion of our nearby existing smelter, which was developed in the late 1990s. Richard mentioned we celebrated the completion of the expansion project with the Indonesian government and our Japanese partner.

Speaker Change: This is an exciting and innovative initiative involving new operating practices being applied to our traditional leach operations and really working to get more out of our massive stockpiles that contain material that has been placed in prior years.

Speaker Change: This is an exciting and innovative initiative involved.

Speaker Change: New operating practices being applied to our traditional leach operations really working to get more out of a massive stockpiles that contain material that has been placed in prior years.

Speaker Change: Remember, as we talked about on prior calls, the cost of this, the incremental cost of production, is low from both an operating and capital perspective.

Speaker Change: But remember as we've talked about on prior calls the cost of the incremental cost of production is low from both an operating and capital perspective, because we're targeting material where the material has.

Speaker Change: because we're targeting material where the material has already been mined and we're largely using existing infrastructure to extract the new metal.

Speaker Change: Already been mined and we're largely using existing infrastructure to extract and new metal.

Speaker Change: The first phase of this initiative essentially involved four basic categories of actions.

Speaker Change: The first phase of this initiative essentially involved four basic categories of actions. One is we've talked about previously we commenced the process to install covers over the stockpiles. So when he increase heat retention and drive higher recoveries.

Speaker Change: One, as we've talked about previously, we commenced the process to install covers over the stockpiles to increase heat retention and drive higher recoveries.

Speaker Change: Two, we gained access to areas in the stockpiles that had not previously had the benefit of leach solution. This initiative we call Leach Everywhere.

Speaker Change: We gained access to areas in the stockpiles that had not previously had the benefit of Leach solution.

Speaker Change: This initiative, we call Leach everywhere.

Speaker Change: Three, we started using grilling techniques to specifically target areas within the stockpile where solution was lacking.

Speaker Change: Three we started using drilling techniques to specifically target areas within the stock power solution was lacking.

Speaker Change: And importantly, the fourth area is developing more sophisticated models using data analytics to optimize the application of solutions to improve performance.

Speaker Change: And importantly, the fourth area is developing more sophisticated models using data analytics to optimize the application of solutions for them.

Speaker Change: And we also reached a really important milestone in the progress of the Greenfield Project with completion progress, achieving a target we set with the government of over 90% by the end of December. We posted a video this morning on our website that shows the Greenfield smelter project. You can see all the progress that's been made. And you can see the sheer size and scale of this impressive facility, and I hope you'll have a chance to look at it.

Speaker Change: For performance and using these this data as a valuable tool and got them working in all the areas of initiatives.

Speaker Change: and using this data as a valuable tool in guiding work in all the areas of initiative in this important program.

Speaker Change: And it's in this important program.

Speaker Change: and more.

Speaker Change:

Speaker Change: As we look at where the impacts came from, you can see most of the incremental production was from our Malensee mine. That mine has a very long history of leaching operations. We have a massive set of stockpiles there and a very large opportunity set at Malensee.

Speaker Change: As we look at where the where the impacts came from you can see most of the incremental production was from our morency mine at.

Speaker Change: Mine has a very long history of leaching operations, we have a massive set of stockpiles there in a very large opportunity set at morency.

Speaker Change: As we go to phase two of the project where we are working to essentially double the initial target from 200 million pounds to 400.

Speaker Change: As we go to phase two of the project, where we are working to essentially double the initial target from 200 million pounds to 400.

Speaker Change: The internal team that we have working on this project, together with our contractor, have done an outstanding job containing costs and maintaining schedules. We're working to complete the construction by the end of May 2024 and start commissioning, and to conduct the ramp-up period over the balance of 2024. This is a big deal for us.

Speaker Change: We really are looking at just scaling these practices further.

Speaker Change: We really are looking at just scaling these practices further.

Speaker Change: And by continuing to scale the operating practices, we think we can double the initial target over the next two to three years.

Speaker Change: By continuing to scale the operating practices. We think we can double the next initial target over the next two to three years and as we continue to work to sustain the production.

Speaker Change: and as we continue to work to sustain the production, we will continue to work to sustain the production.

Speaker Change: We can add to our reserve position, and that's a real focus of ours, to capitalize the progress into long-term reservatives.

Speaker Change: We can add two hours our position in that that's a real focus of ours since to capitalize that.

Speaker Change: It's not very common that you see new smelters starting up, and we've done a lot of planning going into this startup process. Our teams are well prepared and really highly motivated to achieve a safe, efficient, and timely startup in 2024. Turning to the U.S. and the Americas, where we've got an important REACH initiative ongoing, we achieved our targeted run rate where we were targeting approximately 200 million pounds of copper per year by the end of 2023. This is an exciting and innovative initiative involving new operating practices being applied to our traditional leach operations and really working to get more out of our massive stockpiles that contain material that has been placed in prior years. Remember, as we talked about on prior calls, the cost of this, the incremental cost of production, is low from both an operating and capital perspective because we're targeting material where the material has already been mined and we're largely using existing infrastructure to extract the new metal. The first phase of this initiative essentially involved four basic categories of action.

Speaker Change: Progress into long term reserve additions.

Speaker Change: The first and second phase of this initiative is really operationally driven using existing technology.

Speaker Change:

Speaker Change: The first and second phase of this initiative is really operationally driven using existing technologies.

Speaker Change: The third phase, which is also very exciting, is really the work that we and others are doing to advance the leaching process using different additives and different techniques. And this is more of an R&D effort, but it's being advanced.

Speaker Change: Phase, which is also very exciting.

Speaker Change: Is is really the work that we and others are doing to advance.

Speaker Change: The leaching process using different additives and different techniques and this is more of an R&D effort, but it's been advanced.

Speaker Change: We're commencing a large-scale testing activity to evaluate the response to new additives.

Speaker Change: Where we're commencing a large scale testing.

Speaker Change: Activity to evaluate the response to new attitudes.

Speaker Change: And we're also evaluating opportunities to get more heat retention in our stockpiles, and heat really is an enabler of more copper production.

Speaker Change: And we're also evaluating opportunities to get more heat retention and our stockpiles and he really is an enabler of more copper production and higher recoveries.

Speaker Change: and higher recovery.

Speaker Change: In aggregate, these initiatives have the potential to reach 800 million pounds per annum, and that's equivalent to a large-scale copper mine. And notably, it's got very low capital intensity, and you've seen how much new copper...

Speaker Change: In aggregate these initiatives have the potential to reach 800 million pounds per annum.

Speaker Change: And that's equivalent to a large scale copper mine and inevitably it's got very low capital intensity and you've seen how much new topic.

Speaker Change: This is a very low capital intensity, low incremental operating cost.

Speaker Change: How much new compromised class. This is a very low capital intensity low incremental operating costs.

Speaker Change: and a low carbon footprint. The value potential here is very attractive.

Speaker Change: And our low carbon footprint and the value potential here is very attractive.

Speaker Change: Particularly for a company like Freeport to take advantage of given our large quantities of suitable materials that we previously mined.

Speaker Change: Particularly for a company like Freeport to take advantage of given our large quantities of suitable material that we previously mined.

Speaker Change: One, as we've talked about previously, we commenced the process to install covers over the stockpiles to increase heat retention and drive higher recoveries. Two, we gained access to areas in the stockpiles that had not previously had the benefit of Leach Solutions, an initiative we call Leach Everywhere.

Speaker Change: Richard touched on copper markets earlier, and we have some information on slide nine. Physical markets have continued to tighten, inventories have declined, and demand is growing.

Speaker Change: Richard touched on on copper markets earlier, and we have some information on on slide nine.

Speaker Change: Physical markets have continued to tighten inventories have declined and demand is growing.

Speaker Change: Despite the weak sentiment over the last several quarters on the Chinese economy and property sector, the reality is that China's copper consumption was strong throughout 2023.

Speaker Change: Right the weak sentiment over the last several quarters on the Chinese economy and property sector. The reality is the top China's copper consumption was strong throughout 2023.

Speaker Change: Three, we started using drilling techniques to specifically target areas within the stockpile where solutions were lacking. And importantly, the fourth area is developing more sophisticated models using data analytics to optimize the application of solutions to improve performance and using this data as a valuable tool in guiding work in all the areas of initiative in this important program. As we look at where the impacts came from, you can see most of the incremental production was from our Morenci mine, which has a very long history of leaching operations.

Speaker Change: And this reflected the intensity of copper use in energy infrastructure, renewables, and electric vehicles.

Speaker Change: And this reflected the intensity of copper used in energy infrastructure renewables and electric vehicles.

Speaker Change: In the U.S., our customers continue to report solid demand for copper with growth in several sectors.

Speaker Change: In the U S. Our customers continue to report solid demand for copper with growth in several sectors.

Speaker Change: At the same time, supply disruption increased meaningfully in recent months.

Speaker Change: At the same time supply disruption increased meaningfully in recent months.

Speaker Change: In total, near-term supplies of copper have been reduced by over 700,000 tons in a very short period of time.

Speaker Change: Total near term supplies of copper had been reduced by over seven.

700000 tons in a very short period of time.

Speaker Change: The market was previously expecting that

Speaker Change: Market was previously expecting that.

Speaker Change: 2024 would be a small surplus market.

Speaker Change: 2024 would be a small surplus market.

Speaker Change: and turning to deficit beginning in 2025 timeframe 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.

Speaker Change: And turning to deficit beginning in 2025 time frame and continuing for some time with the recent supply disruptions and continued demand growth.

Speaker Change: We have a massive set of stockpiles there and a very large opportunity set at Morenci. As we go to phase two of the project, where we are working to essentially double the initial target from 200 million pounds to 400. We really are looking at just scaling these practices further. And by continuing to scale the operating practices, we think we can double the initial target over the next two to three years. And as we continue to work to sustain production, we can add to our reserve position, and that's a real focus of ours, to capitalize on the progress into long-term reserves it is. The first and second phase of this initiative are really operationally driven using existing technology. The third phase, which is also very exciting, is really the work that we and others are doing to advance the leaching process using different additives and different techniques, and this is more of an R&D effort, but it's being advanced. We're commencing a large-scale testing activity to evaluate the response to new additives.

Speaker Change: Deficit market has been advanced into 2020 for setting up the tight market conditions in the near term.

Speaker Change: While the fundamentals have become significantly more positive, macro conditions tied to U.S. dollar strength and sentiment about China have influenced copper price movements.

Speaker Change: While the fundamentals have become significantly more positive macro conditions tied to U S dollar strength and sentiment about China have influenced copper price movements.

Speaker Change: Richard mentioned we believe the fundamentals of the market will lead to significantly higher copper prices in the future, and that's supported by anticipated strong growth in demand associated with secular trends.

Speaker Change: Richard mentioned, we believe the fundamentals of the market will lead to significantly higher copper prices in the future and that's supported by anticipated strong growth in demand associated with secular trends.

Speaker Change: and the Global Economy's Requirements for Copper.

Speaker Change: And the global economies requirements for copper.

Speaker Change: Also, the realities of the cost and timeframes required for new supply development is an important factor when we look at the fundamental outlook for copper.

Speaker Change: Also the realities of the cost and timeframe required for new supply development is an important factor when we look at the fundamental outlook for copper.

Speaker Change: Turning to how Freeport is positioning to try to grow production in response to this market demand, really look at the sizable, on slide 10, we really look at the sizable reserve position of copper and even larger resource position that Freeport has that supports a pipeline for future growth options.

I'm trying to just how Freeport is is positioning to try to grow production in response to this market demand.

Speaker Change: Look at the sizable.

Speaker Change: On slide 10, we really look at the sizable reserve position of copper and even larger resource position that Freeport has that supports a pipeline for future growth options.

Speaker Change: And we're also evaluating opportunities to get more heat retention in our stockpiles, and heat really is an enabler of more copper production and higher recovery. In aggregate, these initiatives have the potential to reach 800 million pounds per annum, and that's equivalent to a large-scale copper mine. And notably, it's got very low capital intensity, and you've seen how much new copper, and how much new copper mines cost. This has a very low capital intensity, low incremental operating costs, and a low carbon footprint.

Speaker Change: Within the portfolio, we look for opportunities to get more out of what we have through innovation and operating efficiencies. We look for investments in projects where we have large resource positions and where we have established track records and opportunities to leverage the existing infrastructure, our people, and capabilities, all with the drive focused on increasing value.

Speaker Change: Within the portfolio, we look for opportunities to get more out of what we have.

Innovation and operating efficiencies.

Speaker Change: Look for investments in projects, where we have large resource positions and where we have established track records and.

Opportunities to leverage the existing infrastructure people and capabilities all with the dry focused on increasing value.

Speaker Change: We categorized on slide 10 our near-term, medium-term, and longer-term development options.

We categorized on slide 10, our near term medium term and longer term development options.

Speaker Change: And we've outlined identified projects totaling about 1.7 billion pounds of copper in the Americas.

Speaker Change: And we've outlined identify projects totaling about $1 7 billion pounds of copper in the Americas.

Speaker Change: The value potential here is very attractive, particularly for a company like Freeport to take advantage of given our large quantities of suitable material that we previously mined. Richard touched on copper markets earlier, and we have some information on slide 9. Physical markets have continued to tighten, inventories have declined, and demand is growing. Despite the weak sentiment over the last several quarters on the Chinese economy and property sector, the reality is that China's copper consumption was strong throughout 2023. And this reflected the intensity of copper use in energy infrastructure, renewables, and electric vehicles. In the U.S., our customers continue to report solid demand for copper with growth in several sectors. At the same time, supply disruption has 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.

Speaker Change: And we've also highlighted on the slide the ongoing development of the Kuching Liar project in Indonesia, which is expected to support long-term production profiles in the Glassburg district.

Speaker Change: And we've also highlighted on the slide the ongoing development of the Cuccinelli Our project in Indonesia, which is expected to support long term production profiles and our glass for district.

Speaker Change: The opportunities that are shown on the slide in the two- to three-year category, they center around scaling our leach initiatives and achieving incremental production from our operational improvement projects.

Speaker Change: The opportunities that are that are shown on the slide in the two to three year category.

Speaker Change: They center around scaling our reach initiatives.

Speaker Change: And achieving incremental production from our operational improvement projects together the potential from these opportunities total of 400 million pounds of incremental copper per annum and did not require a significant investment or long lead times.

Speaker Change: Together, the potential from these opportunities total 400 million pounds of incremental copper per annum and do not require significant investment or long lead time.

Speaker Change: We discussed earlier 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.

Speaker Change: We discussed earlier that the leach projects, but we're also dedicating significant resources to enhancing productivity and asset efficiencies.

Speaker Change: We are building an experienced about workforce given a lot of large number of new hires in recent years.

Speaker Change: and utilizing new technologies and automation to restore and improve on productivity metrics that weakened somewhat during the pandemic.

Speaker Change: And utilizing new technologies and automation to restore and improve on productivity metrics that that weakened somewhat during the pandemic.

Speaker Change: As we indicated, we completed a feasibility study late in the year 2023 to evaluate a project to more than double the size of our Baghdad operation in northwest Arizona. The reserves at Baghdad span for decades, and they support expansion of infrastructure at the site to bring value forward.

And as we indicated we completed a feasibility study late in the year 2023.

Speaker Change: Valuate, a project to more than double the size of our Bagdad operation in northwest Arizona.

Speaker Change: The market was previously expecting that 2024 would be a small surplus market and turning to deficit beginning in the 2025 time frame and continuing for some time. However, 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. While the fundamentals have become significantly more positive, macro conditions tied to U.S. dollar strength and sentiment about China have influenced copper price movements.

Speaker Change: Reserves at Bagdad, our span for decades, and they support expansion of infrastructure at the site to bring value forward.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: An expanded operation would not only substantially increase copper production, but would produce economies of scale and reduce unit costs.

Speaker Change: An expanded operation would would not only substantially increased copper production that would produce economies of scale and reduced unit costs.

Speaker Change: The project does not require major permitting and is 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.

Speaker Change: I would the project does not require a major permitting and is relatively straightforward.

Speaker Change: Given the tight labor market conditions in general market factors, we're not making a decision right now on the timing of the project.

Speaker Change: 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.

Speaker Change: Richard mentioned we believe the fundamentals of the market will lead to significantly higher copper prices in the future, and that's supported by anticipated strong growth and demand associated with secular trends and The Global Economy's Requirements for Copper. Also, the realities of the cost and timeframes required for new supply development are an important factor when we look at the fundamental outlook for copper. Turning to how Freeport is positioning to try to grow production in response to this market demand, we really look at the sizable, on slide 10, we really look at the sizable reserve position of copper and even larger resource position that Freeport has that supports a pipeline for future growth options. Within the portfolio, we look for opportunities to get more out of what we have through innovation and operating efficiencies. We look for investments and projects where we have large resource positions, and where we have established track records and opportunities to leverage the existing infrastructure, our people, and capabilities, all with a drive focused on increasing value. We categorized on slide 10 our near-term, medium-term, and longer-term development options.

Speaker Change: Well, 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.

Speaker Change: Making some investments and the autonomous haulage for our mining operations.

Speaker Change: Making some investments in housing and also advancing investments in the tailings infrastructure that will put us in a position that we make the decision we could get the project online within a few years.

Speaker Change: I'm, making some investments in housing and also advancing investments in the tailing tailings infrastructure that that will put us in a position.

Speaker Change: We make the decision we could get the project online within or within a few years.

Speaker Change: In Chile, at Alhabra, we've talked about this. Our resource is very large. We have a major opportunity to install a new concentrator on the order of magnitude size of the concentrator we added at Cerro Verde in 2015.

Speaker Change: In Chile at our Libra, we've talked about this a resource is very large we have a major opportunity to install a new concentrator or on the size of the kind of on the order of magnitude size of the concentrator, we added at Cerro Verde in 2015.

Speaker Change: We'll continue to work to retest the economics and updating our project capital costs in light of recent capital cost experience of other large projects. And in parallel, we're starting work in preparation for an environmental impact statement.

Speaker Change: We'll continue to work to re task the economics and updating our project capital costs in light of recent capital cost experience of other large projects and in parallel we're starting work and preparation.

Speaker Change: Ration for the environmental impact statement.

Speaker Change: That would give us the ability to advance the project and provide optionality for future development.

Speaker Change: That would give us something.

Speaker Change: Ready to advance the project and provide optionality for future development.

Speaker Change: We mentioned the Cuchumliar development project in the Glassburg District, which we've initiated development on. This is a multi-year development project, and it's proceeding on schedule, and we expect to commence production by 2030, ramping up to over 500 million pounds of copper and over 500,000 ounces of gold.

Speaker Change: You mentioned the coaching Lee our development project in the Grasberg District, which was initiated development on this as a multiyear development project and it's proceeding on schedule and we expect to commence production by 2030 are ramping up to over 500 million pounds of copper.

Speaker Change: Copper and over 500000 ounces of gold were also conducting additional exploration in the Grasberg district, where we have identified potential we've got a big potential below I do that MLG ore body and we expect to have additional opportunities in the future at Grasberg.

Speaker Change: We're also conducting additional exploration in the Grassford District where we have identified potential. We've got a big potential below our deep MLZ ore body, and we expect to have additional opportunities in the future at Grassford.

Speaker Change: And we've outlined and identified projects totaling about 1.7 billion pounds of copper in the Americas. And we've also highlighted on this slide the ongoing development of the Kuching-Liar project in Indonesia, which is expected to support long-term production profiles in the Glassburg District. The opportunities that are shown on the slide in the 2-3 year category center around scaling out leach initiatives and achieving incremental production from our operational improvement projects. Together, the potential from these opportunities totals 400 million pounds of incremental copper per annum and do not require significant investment or a long lead time.

Speaker Change: We have a major opportunity in the U.S. at the Safford-Monstar District. We've identified a significant resource there.

Speaker Change: We have a major opportunity in the U S. At the Safford Lone Star District, we've identified a significant resource there.

Speaker Change: This year we're going to work to complete metallurgical testing and mine planning and start a pre-feasibility study to assess future development options there. We continue to see this district as one that has big potential and potentially being a cornerstone asset in the U.S. adjacent to the Marinci operation.

Speaker Change: This year, we're going to work to complete metallurgical testing and mine planning and start a previous feasibility study to assess future development options. There. We continue to see this district as is one that has big potential and potentially being a cornerstone asset in the U.

Speaker Change: On an adjacent to the to the North Sea operations.

Speaker Change: In Indonesia, we're focused on this extension of our rights beyond 2041 because that would open up substantial opportunity for reserve and resource expansion and a continuation of the large-scale mining in one of the world's largest and highest-grade copper and gold mining.

Speaker Change: And Indonesia, where we're.

Speaker Change: Focused on this extension of our rights beyond 2041, because that would open up a substantial opportunity for reserve and resource expansion and a continuation of the large scale mining and one of the world's largest and highest grade copper and gold mine districts.

Speaker Change: We're in a really strong position to continue our leadership role in supplying copper to a world with growing requirements, but we're going to continue to be disciplined in our approach.

We're in a really strong position to continue our leadership role in supplying copper to a world with growing requirements, but we're going to continue to be disciplined in our approach and focused on executing projects, where we can create value for shareholders.

Speaker Change: We discussed earlier 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 a feasibility study late in the year 2023 to evaluate a project to more than double the size of our Baghdad operation in northwest Arizona. The reserves at Baghdad span decades, and they support the expansion of infrastructure at the site to bring value forward.

Speaker Change: We're focused on executing projects where we can create value for shareholders.

Speaker Change: With a lot of history in developing big projects, we included a slide on page 11 that you can take a look at. A key strength of our company is the ability to execute projects successfully.

With a lot of history in developing the projects. We included a slide on on on page 11 that that you can take a look at our key strengths of our company is the ability to execute projects successfully.

Speaker Change: This does not come easy. It requires a focused, hands-on approach, and we've got a business model of pairing internal resources with trusted contractors, and that has served us well.

Speaker Change: This does not come easy it requires a focused hands on approach and we've got a business model of pairing internal resources with trusted contractors and that has served us well.

Speaker Change: We've listed several projects that we've led over the years, and we've developed very complex projects around the world. We're going to continue to approach future projects with the same level of preparedness, rigor, and a focus on execution.

Speaker Change: And several projects that we've laid over this over the years and will develop very complex projects around the world.

Speaker Change: 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. 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 is relatively straightforward.

Speaker Change: We're going to continue to approach future projects with the same level of preparedness rigor and our focus on execution.

Speaker Change: As we look at 2024, turning to slide 12, we've got our focus areas listed here. And first and foremost, we remain committed to safe and reliable execution of our operating plans across the global business.

Speaker Change: As we look at 2024, turning to slide 12, we've got our focus areas listed here and first and foremost we remain committed to safe and reliable execution of our operating plans across the global business.

Speaker Change: 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 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 that when we make the decision, we could get the project online within a few years. In Chile, at Alhambra, we've talked about this; our resource is very large.

Speaker Change: Seems like a simple thing, but this involves discipline and hard work day in and day out.

Speaker Change: Like a simple thing, but this involves discipline and hard work day in and day out.

Speaker Change: We discussed our focus on enhancing performance in the U.S. through our leach initiatives and productivity.

Speaker Change: We discussed our focus on enhancing performance in the U S through our lean initiatives and productivity.

Speaker Change: This is particularly important to mitigate low grades.

Speaker Change: This is particularly important to mitigate low grades.

Speaker Change: and to manage costs which experience higher inflation in recent years.

Speaker Change: And to and to manage Pos which experienced higher inflation in recent years.

Speaker Change: We're going to have another big year in Indonesia. A key priority for us is to complete the smelter and ramp up safely and efficiently and to finalize an agreement for extension of our long-term operating rights.

Speaker Change: We're going to have another big year in Indonesia, a key priority for us is to complete the smelter and ramp up safely and efficiently.

Speaker Change: Finally, as an agreement for extension of our long term operating rights.

Speaker Change: We're also very focused on enhancing optionality, definition, and the value of our embedded growth options.

Also very focused on enhancing optionality definition in Nevada, and the value of our embedded growth options.

Speaker Change: On slide 13, as usual, we show a three-year outlook for sales volumes of copper, gold, and molybdenum.

Speaker Change: We have a major opportunity to install a new concentrator the size of the, on the order of magnitude, size of the concentrator we added at Cerro Verde in 2015. We'll continue to work to retest the economics and update our project capital costs in light of recent capital cost experience with other large projects. And in parallel, we're starting work in preparation for an environmental impact statement. That would give us the ability to advance the project and provide optionality for future development. We mentioned the Kuching-Lear development project in the Glassburg District, which we've initiated development on. This is a multi-year development project, and it's proceeding on schedule, and we expect to commence production by 2030, ramping up to over 500 million pounds of copper and over 500,000 ounces of gold. We're also conducting additional exploration in the Grassford District, where we have identified potential.

Speaker Change: On Slide 13, we show we as usual we show a three year outlook for sales volumes of copper gold and molybdenum.

Speaker Change: For 2024, the copper sales volumes are slightly reduced, less than 2%, below our prior estimate, and are now expected to be similar to 2023 levels.

Speaker Change: For 2020 for the copper sales volumes are slightly reduced less than 2% below our prior estimate.

And are now expected to be similar to 2023 levels. The gold sales are 10% higher than our prior estimate.

Speaker Change: The gold sales are 10% higher than our prior estimate.

Speaker Change: and higher than they were in 2023.

Speaker Change: And higher than they were in 2023.

Speaker Change: Our sales in Indonesia for the year 2024 offset by slightly lower sales from the Americas.

Speaker Change: Sales in Indonesia for the year of 2024 offset by slightly lower sales from the Americas.

Speaker Change: In 2025, our sales estimates are similar to the prior estimates, and we've added 2026 estimates, which you can see are slightly above the 2025 level.

Speaker Change: In 2025, our sales estimates are similar to the prior estimates and we've added 2026 estimates, which you can see or slightly above the 2025 levels.

Speaker Change: For 2024, we currently estimate our consolidated unit costs to approximate $1.60 per pound. We've got some details in the reference materials, I believe on page 30, that you can look at the composition of those costs. But $1.60, very similar to what we had in 2023.

Speaker Change: For 2020 for our we currently estimate our consolidated unit costs.

Speaker Change: <unk> $1 60 per pound, we've got some details in the reference materials I believe on page 30 that you can look at the composition of those costs, but our 60 very similar to what we had them in 2023.

Speaker Change: On slide 14, we put together our projected volumes and cost projections.

Speaker Change: On slide 14, we put together our projected volumes and cost projections and we model the results for our EBITDA and cash flow at various copper prices ranging from $4 to $5 copper.

Speaker Change: And we model the results for our EBITDA and cash flow at various copper prices ranging from $4 to $5 copper.

Speaker Change: We've got big potential below our deep MLZ ore body, and we expect to have additional opportunities in the future at Grassford. We also have a major opportunity in the U.S. at the Saffron Lone Star District. We've identified a significant resource there, and this year we're going to work to complete metallurgical testing and mine planning and start a pre-feasibility study to assess future development options. We continue to see this district as one that has big potential and potentially could be a cornerstone asset in the U.S., adjacent to the Marinci operation.

Speaker Change: These models use the average of 2025 and 2026.

Speaker Change: Models are is the average of 2025 and 2026.

Speaker Change: and our current volume estimates and our cost estimates in holding gold flat at roughly current levels of $2,000 per ounce and the Libdenum flat at $19 per pound. 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 would range from $7 billion to over $10 billion. And we've got sensitivities to the various commodities on the right-hand side of the chart.

Speaker Change: And our current volume estimates on our cost estimates and holding goes flat at roughly current levels of $2000 per ounce and molybdenum flat at $19 per pound and you can see here on the chart that annual EBITDA in these periods would range from 10 billion.

Speaker Change: Per annum at $4 copper to over $14 billion per year at $5 copper and operating cash flows under these price scenarios a range from seven to over $10 billion.

Speaker Change: In Indonesia, we're focused on this extension of our rights beyond 2041 because that would open up substantial opportunities for reserve and resource expansion and a continuation of the large-scale mining in one of the world's largest and highest-grade copper and gold mining areas. We're in a really strong position to continue our leadership role in supplying copper to a world with growing requirements, but we're going to continue to be disciplined in our approach.

Speaker Change: Got sensitivities to various commodities on the right hand side of the chart.

Speaker Change: We're really well-positioned with long-alive reserves, large-scale production. We not only have current exposure to copper, but all of our future projects and growth opportunities are well-positioned to benefit from future metals-intensive growth, and this will give us the ability to generate returns on projects and enhance cash returns under our performance-based payout framework.

Speaker Change: We're really well positioned with long life reserves large scale production.

Speaker Change: We not only have parent current exposure to copper, but all of our future projects and growth opportunities are well positioned to benefit from future metals intensive growth.

Speaker Change: And and and this will give us the ability to generate returns on projects and enhanced cash returns under our performance based pay out framework.

Speaker Change: Turning to the capital expenditures on slide 15, we show our current forecast for 24 and 25. We should also show where we ended up for 23, which totaled $3.1 billion, and that was slightly lower than what we had got in October of $3.2 billion. And capital for 2024 is currently forecast to approximate $3.6 billion compared with the $3.9 billion previously.

Speaker Change: Turning to the capital expenditures on Slide 15, we show our our current forecast.

Speaker Change: We're focused on executing projects where we can create value for shareholders. We've got a lot of history in developing big projects. We included a slide on page 11 that you can take a look at. A key strength of our company is the ability to execute projects successfully. This does not come easy.

For 'twenty, four and 'twenty five.

Speaker Change: We should also show where we ended up for 'twenty, three which totaled $3 to $3 1 billion and that was slightly lower than what we had guided to in October of $3 2 billion.

Speaker Change: And in capital for 2024 is currently forecast to approximate.

Speaker Change: It requires a focused, hands-on approach, and we've got a business model of pairing internal resources with trusted contractors, and that has served us well. We've listed several projects that we've led over the years, and we've developed very complex projects around the world. We're going to continue to approach future projects with the same level of preparedness, rigor, and focus on execution. As we look at 2024, turning to slide 12, we've got our focus areas listed here, and first and foremost, we remain committed to safe and reliable execution of our operating plans across the global business. Seems like a simple thing, but it involves discipline and hard work, day in and day out.

Speaker Change: $3 6 billion compared with $3 9 billion previously.

Speaker Change: The 2025 estimates that are new here are currently estimated to total $3.8 billion. That includes $1.2 billion in discretionary growth projects.

Speaker Change: With the 2025 estimates that are new here are currently estimated to total $3 8 billion that includes $1 2 billion in discretionary growth projects.

Speaker Change: which totaled $2.4 billion over the 2024 and 2025 years.

Which totaled $2 4 billion over the 2024 and 2025 years. This category reflects the capital investments, we're making in new projects.

Speaker Change: This category reflects the capital investments we're making in new projects.

Speaker Change: to generate returns that under our financial policy are funded with the 50% of available cash that's not distributed.

Speaker Change: To generate returns that under our financial policy are funded with 50% of available cash that's not distributed.

Speaker Change: Their value-enhancing projects.

Speaker Change: Their value enhancing projects.

Speaker Change: that are detailed in the reference materials on slide 33.

Speaker Change: That are detailed in the reference materials on slide 33.

Speaker Change: We're going to continue to be very disciplined around capital expenditures, carefully managing those. You saw we adjusted the capital expenditures down for 2024, and as we go forward, we'll continue to look at opportunities to do things to sustain our business and to do things on a low capital intensity basis.

Speaker Change: We're going to continue to be very disciplined around capital expenditures carefully managing known as you saw we.

Speaker Change:

Speaker Change: Justin the capital expenditures down for 2024 and as we go forward, we'll continue to look at opportunities.

Speaker Change: We discussed our focus on enhancing performance in the U.S. through our leach initiatives and productivity. This is particularly important to mitigate low-grade and to manage costs, which have experienced higher inflation in recent years. We're going to have another big year in Indonesia.

Speaker Change: To do things to sustain our business and to do things on a on a low capital intensity basis.

Speaker Change: And finally, before we take your questions, just on slide 16, we reiterate our financial policies, and those are prioritized, centered on a strong balance sheet, cash returns to shareholders, and investments in value-enhancing growth projects.

Speaker Change: And finally before we take your questions. We just on slide 16, we reiterate our financial policies and.

Speaker Change: A key priority for us is to complete the smelter and ramp up safely and efficiently and to finalize an agreement for the extension of our long-term operations. We're also very focused on enhancing optionality, definition, and the value of our embedded growth options. On slide 13, we show, as usual, a three-year outlook for sales volumes of copper, gold, and molybdenum. For 2024, copper sales volumes are slightly reduced, less than 2% below our prior estimate, and are now expected to be similar to 2023 levels.

Speaker Change: And those are prioritized centered on our strong balance sheet cash returns to shareholders and investments and value enhancing growth projects.

Speaker Change: The balance sheet is solid, we've got strong credit metrics, a lot of flexibility within our debt targets to execute on our project.

Speaker Change: Balance sheet is solid we've got strong credit metrics and a lot of flexibility within our debt targets to execute on our on our projects.

Speaker Change: You may have seen that Moody's upgraded our credit rating in December, and that just demonstrates our strong financial profile.

Speaker Change: You may have seen that Moody's upgraded our credit rating in in December and that just.

Speaker Change: Demonstrates our strong financial profile.

Speaker Change: Indicated on the slide, we've distributed almost $4 billion to shareholders through dividends and share purchases since the payout framework was implemented in the second half of 2021.

Speaker Change: <unk> indicated on the slide with distributed almost $4 billion to shareholders through dividends and share purchases since the.

Speaker Change: Payout framework was implemented in the second half of 2021.

Speaker Change: The growth sales are 10% higher than our prior estimate and higher than they were in 2023. Our sales in Indonesia for the year 2024 are offset by slightly lower sales from the Americas. In 2025, our sales estimates are similar to the prior estimates, and we've added 2026 estimates, which you can see are slightly above the 2025 level. For 2024, we currently estimate our consolidated unit costs to approximate $1.60 per pound.

Speaker Change: And we have an attractive future long-term portfolio that will enable us to continue to build value, long-term value for shareholders.

Speaker Change: And we have an attractive feature long term portfolio that will enable us to continue to build value long term value for shareholders.

Speaker Change: The global team as we go forward is really highly focused on our strategy of being foremost in copper.

Speaker Change: Our global team as we go forward is really highly focused on our strategy of being foremost in copper.

Speaker Change: And we're driven to continue pursuing long-term value in the business and executing our plans responsibly, safely, and efficiently.

Speaker Change: And we are driven to continue pursuing long term value in the business and executing our plans responsibly safely and efficiently.

Speaker Change: And I want to thank everybody for their attention and we'll now take the questions.

Speaker Change: And then I want to thank everybody for their attention and we'll now take your questions.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, press star 1 on your touchtone phone. If your question has been answered or you wish to remove yourself from the queue, please press star 1 again. If you're using a speakerphone, please pick up your handset before pressing the number

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question press star one on your attach telephone. If your question has been answered or you wish to remove yourself from the queue. Please press star one again, if you're using a speakerphone. Please pick up your handset before pressing the numbers we ask that you please limit.

Speaker Change: We've got some details in the reference materials, I believe on page 30, that you can look at the composition of those costs. But $1.60, very similar to what we had in 2023. On slide 14, we put together our projected volumes and cost projections, and we model the results for our Ibadan cash flow at various copper prices ranging from $4 to $5 per ounce. These models use the average of 2025 and 2026, and our current volume estimates and our cost estimates, holding gold flat at roughly current levels of $2,000 per ounce and libidinum flat at $19 per pound.

Speaker Change: We ask that you please limit your questions to one. If you have additional questions, please return to the queue. One moment, please, for our first question.

Speaker Change: Your questions to one if you have additional questions. Please return to the Q1 moment. Please for our first question.

Speaker Change: Our first question comes from the line of Alex Hacking with Citi. Please go ahead.

Our first question comes from the line of Alex Hacking with Citi. Please go ahead.

Speaker Change: Okay.

Alex Hacking: and Richard.

Alex Hacking: And Richard.

Alex Hacking: I guess my question is around Baghdad and the technical study. I was a little surprised.

Richard C. Adkerson: I guess my question is around.

And the technical study.

I was a little surprised.

Alex Hacking: by how high the CapEx was, $3.5 billion,

Richard C. Adkerson: By how high the Capex was $3 5 billion.

Alex Hacking: For an incremental 100,000 tons, that's about $35,000 a ton.

For an incremental 100000 tons, that's about $35000 a ton.

Alex Hacking: I mean, in your view, is that the new normal for...

Richard C. Adkerson: I mean in your view is that the new normal for.

Alex Hacking: You know, a concentrate project or are there particular factors with Baghdad that are raising, you know, the capex above historical levels? Thank you.

Richard C. Adkerson: But ah concentrate project or are there particular factors at Baghdad.

Richard C. Adkerson: Raising the capex above historical levels. Thank you.

Speaker Change: And you can see 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 would range from $7 to over $10 billion. We've got sensitivities to the various commodities on the right-hand side of the chart. We're really well-positioned with a lot of live reserves and large-scale production. We not only have current exposure to copper, but all of our future projects and growth opportunities are well-positioned to benefit from future metals-intensive growth. And this will give us the ability to generate returns on projects and enhance cash returns under our performance-based payout framework. Turning to capital expenditures, on slide 15, we show our current forecast for 2024 and 2025. We also show where we ended up for 2023, which totaled $3.1 billion, and that was slightly lower than what we got in October of $3.2 billion. And capital for 2024 is currently forecast to approximate $3.6 billion, compared with $3.9 billion previously. The 2025 estimates that are new here are currently estimated to total $3.8 billion.

Speaker Change: Thank you, Alex. I think it is somewhat of a new normal for the cost of a concentrator and related mining infrastructure. When you do, you're dividing on the cost per ton.

Richard C. Adkerson: Thank you Alex and I think it is somewhat of a new normal for the cost of a concentrate or in related mining infrastructure.

Richard C. Adkerson: The when you do it you're dividing on on a cost per ton.

Speaker Change: You know, you're looking at how many pounds of copper are going to come out of that concentrator, and, you know, our U.S. mines are characterized by relatively low ore grades, and Baghdad has relatively low copper ore grades but also has molybdenum kicker, so the molybdenum would add something like 10 million pounds of molybdenum with an expansion, so that'll be another benefit. But really what we, you know, need to do is focus on, it does bring down our overall cost per pound, so that's a big plus for us. When you look at an investment in the U.S., it may be to develop a relatively lower grade mine, but something important to point out is...

Richard C. Adkerson: You're looking at them, how many pounds of copper are going to come out of that that that concentrate or and you know our our U S. Mines are characterized by relatively low ore grades and bagdad has relatively low copper ore grades, but also has molybdenum.

Richard C. Adkerson: Kicker so the molybdenum would add.

Richard C. Adkerson: Something like 10 million pounds of the Libyan them with an expansion so that'll that'll be in another benefit but.

Richard C. Adkerson: Really what we need to do is focus on it it does bring down our overall cost per pounds. So that's a big a big plus for us.

Richard C. Adkerson: When you look at an investment in the U S. It may be to develop a relatively lower grade mine, but something important to too to point out is.

Speaker Change: That we don't have the tax burden.

Richard C. Adkerson: That we don't have the the tax burden in.

Speaker Change: In the U.S. that you have in the international location. So I think our projects in the U.S., while they're low grade, when you cut through all the economics,

Richard C. Adkerson: In the U S that that you have in the international location. So I think our projects in the U S father, they're low grade when you when you cut through all the economics.

Speaker Change: And you look at the ability for us to, you know, to execute the projects and look at the risks associated with them and different than looking at a project in a different location. So, there's some pluses or minuses that go into the bottom line, but we, you know, started this work on Baghdad some time ago and we've updated all of the capital costs in line with where current capital costs are. And so, I think a reality of the market is that, you know, the incentive price to develop new copper. Even if it's brownfield is much higher than it has been in the past and that's, you know, another reason why we believe that, you know, the markets if they need these copper units are going to have to adjust to the incentive prices required to get these projects.

Richard C. Adkerson: And you look at the ability for us to you know.

Richard C. Adkerson: So just to execute the projects and in and look at the risks associated with them the different than looking at a project in a in a different location. So there's some pluses or minuses that go into the bottom line, but.

Richard C. Adkerson: We started this work on bad debt sometime ago, and we've updated all of the all of the capital cost in line with where we're where current capital costs are and so I think a reality of the market is that.

Speaker Change: That includes $1.2 billion in discretionary growth projects, which totaled $2.4 billion over the 2024 and 2025 years. This category reflects the capital investments we're making in new projects to generate returns that, under our financial policy, are funded with 50% of available cash that's not distributed. There are value-enhancing projects that are detailed in the reference materials on slide 33. We're going to continue to be very disciplined around capital expenditures, carefully managing those. You saw we adjusted the capital expenditures down for 2024, and as we go forward, we'll continue to look at opportunities to do things to sustain our business and to do things on a low capital intensity basis. And finally, before we take your questions, on slide 16, we reiterate our financial policies, which are prioritized, centered on a strong balance sheet, cash returns to shareholders, and investments in value-enhancing growth projects.

Richard C. Adkerson: You know the incentive price to develop new copper, even if its brownfield.

Richard C. Adkerson: Is is much higher than it has been in the past and and that's another reason why we believe that in the markets that they need. These copper units are gonna have to do to adjust to the incentive prices required to get these projects.

Speaker Change: Because we don't want to front run the market. We want to be prepared. We want to have options to go forward as soon as we can, but we don't want to be in a position where we're investing and making major capital commitments before the market prices are telling us they're ready.

Richard C. Adkerson: Going because we don't want to front run the market.

Richard C. Adkerson: We want to be prepared we want to be.

Richard C. Adkerson: Have have options to go forward and as soon as soon as we can but we don't want to be in a position, where we're investing and making major capital commitments before the market prices were telling us already.

Speaker Change: Thanks Kathleen, appreciate the call.

Speaker Change: Thanks, Kathleen I appreciate the color.

Speaker Change: Yeah, Alex, let me just add very briefly that Kathleen makes a really good point about these relative economics.

Kathleen: Yeah, Alex let me just add very brief.

Speaker Change: The balance sheet is solid, we've got strong credit metrics, and a lot of flexibility within our debt targets to execute on our project. You may have seen that Moody's upgraded our credit rating in December, and that just demonstrates our strong financial profile. As indicated on the slide, we've distributed almost $4 billion to shareholders through dividends and share purchases since the payout framework was implemented in the second half of 2021.

Alex Hacking: Very briefly that kathleen's makes a really good point about these relative economics.

Speaker Change: No royalties in the U.S.

Alex Hacking: No royalties in the U S.

Speaker Change: U.S. tax rate.

Alex Hacking: U S tax rate.

Speaker Change: is

Alex Hacking: Yes.

Speaker Change: Much lower, federal tax rates much lower than outside the U.S.

Alex Hacking: Much lower federal tax rate is much lower than outside the U S.

Speaker Change: We have a net operating loss carry forward.

Alex Hacking: We have a net operating loss carryforward.

Speaker Change: Uh...

Speaker Change: Uh huh.

Speaker Change: Community support is strong.

Speaker Change: Community support is strong.

Speaker Change: in the U.S.

Speaker Change: In the U S.

Speaker Change: and we have no minority interest there.

Speaker Change: And we have no minority interest there.

Speaker Change: So looking at global benchmarks,

Speaker Change: So looking globally.

Speaker Change: Benchmarks.

Speaker Change: needs to be adjusted for the site-specific factors that we have in the U.S. and they're very positive.

Speaker Change: Needs to be adjusted for the site specific factors that we have in the U S and they're very positive.

Speaker Change: And we have an attractive future long-term portfolio that will enable us to continue to build value, long-term value for shareholders. The global team, as we go forward, is really highly focused on our strategy of being foremost in copper. And we're driven to continue pursuing long-term value in the business and executing our plans responsibly, safely, and efficiently. And I want to thank everybody for their attention, and we'll now take questions. Ladies and gentlemen, we will now begin the question and answer session. If you wish to ask a question, press star 1 on your touchtone phone. If your question has been answered, or you wish to remove yourself from the queue, please press star 1 again. If you're using a speakerphone, please pick up your handset before pressing the number.

Speaker Change: Your next question comes from the line of Carlos De Aldo with Morgan Stanley. Please go ahead.

Speaker Change: Your next question comes from the line of Carlos de Alba with Morgan Stanley. Please go ahead.

Speaker Change: Yeah, good morning Richard and Kathleen. Question is on cost. I just want to see if you can provide a little bit more color. The guidance for the first quarter of net unit cash cost of $155 per pound looked very good relative to consensus expectations on our own estimate. However, for the full year, the guidance came at $160 and that is a little bit higher than the market. Again, consensus on our model suggests. So, what are you expecting? What the viability in this where you're surprised at the beginning of the year but then maybe throughout the rest of the quarters is increasing? What is driving that and to what extent this number for the year is conservative?

Speaker Change: Yes, good morning, Richard and Kathleen.

Speaker Change: Question is on cost.

Speaker Change: Just wanted to see if you can provide a little bit more color the guidance for the first quarter of net unit cash cost of $1 $55 per pound.

Speaker Change: Luke Luke.

Speaker Change: Very good Dragon two consensus expectations on our own estimate however for the full year the guidance.

Speaker Change: Jim at 160, <unk>, and then you said it'll be higher than the market consensus.

Speaker Change: Our model suggests.

Speaker Change: What are you expecting what the viability and these were you surprised in the in the beginning of the year, but then maybe throughout the rest of the quarters.

Speaker Change: Greasing, and what is driving that and to what extent. These number for the U S is concerned with you.

Speaker Change: The.

Speaker Change: In terms of the first quarter, we do have some goals that that was there was not shipped in the fourth quarter that'll be shipped in the first quarter and so the relative you know gold to copper ratio impacts the first quarter and makes that less than what we expect the average should be for the for the full year.

Speaker Change: We ask that you please limit your questions to one. If you have additional questions, please return to the queue. One moment, please, for our first question. Our first question comes from the line of Alex Hacking with Citi. Please go ahead, and Richard.

Alex Hacking: I guess my question is around Baghdad and the technical study. I was a little surprised by how high the capex was 3.5 billion. For an incremental 100,000 tons, that's about $35,000 a ton. I mean, in your view, is that the new normal for... Thank you. Thank you, Alex.

Speaker Change: Year, I don't know what colors, what you had and therefore for export duties, but where.

Speaker Change: We're assuming in Indonesia that those are continuing. We are continuing to discuss with the government of Indonesia the applicability of those duties. And I think the more that we make progress on the smelter, the better our case there is. But that's something we've factored into the estimate. But...

Speaker Change: We're assuming in Indonesia that those are continuing.

Speaker Change: We are continuing to discuss with the with the government of of Indonesia, The the applicability of those duties and and and I think the more that we make progress on the smelter did better our case there is a but that's something we've factored into the estimate but.

Speaker Change: I think it is somewhat of a new normal for the cost of a concentrator and related mining infrastructure. When you do, you're dividing it by the cost per ton. You know, you're looking at how many pounds of copper are going to come out of that concentrator. And, you know, our U.S. mines are characterized by relatively low ore grades. And Baghdad has relatively low copper ore grades but also has molybdenum, so the molybdenum would add something like 10 million pounds of molybdenum with an expansion.

Speaker Change: But we.

Speaker Change: We are continuing to have that discussion, so if we are successful in reducing those duties, that would be a benefit.

Speaker Change: We are continuing to have that discussion. So if we are successful in reducing those duties.

Speaker Change: That would be that would be a benefit.

Speaker Change: And just to clarify then, Kathleen, the cash cost guidance for the year of 160 includes that the duties in Indonesia concentrate exports remain throughout the entire of the year, right, the full year? Yes, it only applies to export volumes, and so as we go through the year, the exports will decline because we'll be ramping up the smelter. So, you know, our goal for 2024 is to get the full ramp up completed, and so that's not something that'll continue long-term, the duties, once we get the smelter fully up and running.

Speaker Change: Alright, and then just to clarify then.

Speaker Change: These are the cash cost guidance for the year of 160 includes the duties in Indonesia concentrate exports remained throughout the entire of the year the full year.

Speaker Change: Yes, our export it only applies to export volumes and so as we go through the year the exports will decline.

Speaker Change: Because we'll be ramping up the smelter so.

Speaker Change: You know our goal for 2020 for us to.

Speaker Change: So that'll be another benefit. But really, what we, you know, need to focus on is that it does bring down our overall cost per pound. So that's a big plus for us. When you look at an investment in the U.S., it may be to develop a relatively low-grade mine. But something important to point out is that we don't have the tax burden in the U.S. that you have in international locations.

Speaker Change: To get the full ramp up completed and so that's not something that'll that'll continue long term the duties once we get the smelter fully up and running.

Kathleen L. Quirk: But, you know, it'll start to decline over the course of the second half as we ramp up and we produce more domestic.

Speaker Change: But you know it'll start to decline over the course of the second half as we ramp up and we produce more domestically.

Speaker Change: Thank you very much.

Speaker Change: Thank you very much.

Speaker Change: Your next question comes from the line of Christopher LaFemina with Jefferies. Please go ahead. Hi, thanks, operator. Hi, Richard and Kathleen. Thanks for taking my question.

Speaker Change: Your next question comes from the line of Christopher lithium in that with Jefferies. Please go ahead, hi, Thanks, Operator, Hi, Richard and Kathleen Thanks for taking my question.

Speaker Change: So, I think our projects in the U.S., while they're low-grade, when you cut through all the economics, and you look at the ability for us to, you know, execute the projects and look at the risks associated with them, and it's different than looking at a project in a different location. So there are some pluses or minuses that go into the bottom line, but we, you know, started this work on Baghdad some time ago, and we've updated all of the capital costs in line with where the current capital costs are. And so I think a reality of the market is that, you know, the incentive price to develop new copper, even if it's brownfield, is much higher than it has been in the past, and that's, you know, another reason why we believe that, you know, the markets, if they need these copper units, are going to have to adjust to the incentive prices required to get these projects. We don't want to front run the market.

Christopher LaFemina: I wanted to ask about the kind of cost trends in North America, in particular at Marenci. So I know that you're guiding to a slight increase in your site production delivery costs in 2024, and I assume that is a function of volumes being lower. But if we think about kind of where this business could be headed, assuming that Marenci can kind of get back to where it was 12 or 18 months ago, and I'm not sure if that's a good assumption, but let's assume that to be the case. With the leaching ramp up, with the staffing and productivity improvements, with the new technologies, and potentially even longer term with the Baghdad expansion, where could that kind of site production delivery cost number trend down to? Could it get back to 250 or lower, or is $3 a pound sort of the new normal for that business? Thank you.

Christopher LaFemina: I wanted to ask about the kind of cost trends in the in North America in particular at Morency.

Christopher LaFemina: I know that you're guiding to a slight increase in your site production delivery costs in 2024.

Christopher LaFemina: Assuming that is a function of volumes being lower.

Christopher LaFemina: But if we think about kind of where this business could be headed assuming that rents. So you can kind of get back to where it was 12 or 18 months ago and I'm not sure. If that's a good assumption, but let's assume that to be the case with the leaching ramp up with the staffing and productivity improvements with the new technologies and potentially even longer term with Baghdad expansion, where could that kind of site production delivery costs.

Christopher LaFemina: Number trend down to can it get back to $2 50, or lower or is $3 a pound sort of the new normal for that business. Thank you.

Christopher LaFemina: Okay.

Speaker Change: Well, we hope it's not the new normal, Chris. We're working hard. I mean, one of the things that's...

Speaker Change: Well, we hope it's not there Chris.

Speaker Change: Chris We're working hard I mean, one of the things that's this.

Speaker Change: You've got to take into account here is we are in a low grade period.

Speaker Change: You've got to take into account here is we are in a low-grade period in the U.S. I think the grades that we had in 2023 were the lowest that they had been in probably 10 years or so or more. So we are in a period, and that's continuing in 2024, where we do have some low grades that we're going through. All right.

Speaker Change: We want to be prepared. We want to have options to go forward as soon as we can, but we don't want to be in a position where we're investing and making major capital commitments before the market prices are telling us they're ready. Thanks Kathleen, appreciate the call. Yeah, Alex, let me just add very briefly that Kathleen makes a really good point about these relative economies. No royalties in the U.S. The U.S. tax rate is much lower federal tax rates, much lower than outside the U.S. We have a net operating loss carried forward.

Speaker Change: In the U S. You know I think the grades that we had in <unk> and 2023 where the the lowest that they had been in probably 10 years or so or more so we are in a in a period. That's continued in 'twenty four and.

Speaker Change: Where we do have some some some low grade that we're going through but.

Speaker Change: That is why it's so important for us to bring on new units with a lower incremental cost.

Speaker Change: That is why it's so important for us to to bring on new units with a with a lower incremental cost.

Speaker Change: and the Leach Opportunity.

Speaker Change: And the Leach and the Leach opportunity.

Speaker Change: will help us there and as we

Speaker Change: He will help us there and as we.

Alex Hacking: Community support is strong in the U.S., and we have no minority interest there. So looking at global benchmarks, it needs to be adjusted for the site-specific factors that we have in the U.S., and they're very positive. Your next question comes from the line of Carlos De Alba with Morgan Stanley. Please go ahead.

Speaker Change: are able to get those pounds.

Speaker Change: Are able to get those pounds.

Speaker Change: Put into reserves longer term, not just what you're mining that year or getting that year, but multi-year reserve additions for the leach.

Speaker Change: Put into reserves longer term not just what your money in that year or getting that year, but multi year reserve additions for the leach.

Speaker Change: That spreads all the costs over more reserves, and so it does help us with driving the economies of scale and why it's so important. We're not in a position now to say where costs could go. There's been a number of other factors that have, you know, inflation factors and things like the cost of, you know, basic parts and materials and supplies has gone up from where it was. Just, you know, two or three years ago, but we are very focused on it.

Speaker Change: That spreads the cost all the costs over more more reserves and so it does help us with driving economies of scale and why it's so important where we're not in a position now to just say where costs could go it's been a number of other factors that have you know inflation factors in.

Speaker Change: Yeah, good morning, Richard and Kathleen. The question is on cost. I just want to see if you can provide a little bit more color. The guidance for the first quarter of net unit cash costs of $155 per pound looked very, very good relative to consensus expectations and our own estimate. However, for the full year, the guidance came in at $160, and that is a little bit higher than the market than, again, consensus on our model suggests. So what are you expecting? What is the viability in these where you're surprised in the beginning of the year but then maybe throughout the rest of the quarters is increasing? What is driving that, and to what extent is this number for the year conservative?

Speaker Change: And things like the cost of.

Speaker Change: You know basic parts and materials and supplies has has gone up from from where it was.

Speaker Change: I'm, just you know two or three years ago, but we are very focused on it.

Speaker Change: And.

Speaker Change: All of these self-help things for us have very high rates of return. You know, there's not a lot of capital involved. It's focused resources. It's not an easy thing because it would have been done already, but it is an area we think we can make improvements.

Speaker Change: All of these self help things yeah for us have very high rates of return you know there's not a lot of capital involved it's focused resources, it's not it's not I'm not an easy thing because it would have been done already but but it is an area. We think we.

Speaker Change: We can make improvements.

Speaker Change: We can also focus, which we're doing now, on, you know, the last couple of years, we've had to rely more on contractors because of the staffing issues, but as we get, you know, staffing set up and get more experience in the workforce, we can reduce our reliance on contractors, as you probably know, have gotten expensive, and Arizona's a very competitive market. So we're working on all those things within, the things that we have within our control, and are really going to be focused on trying to drive the cost down.

Speaker Change: In terms of the first quarter, we do have some gold that was not shipped in the fourth quarter that will be shipped in the first quarter. And so the relative gold to copper ratio impacts the first quarter and makes that less than what we expect the average to be for the full year. I don't know what you had in there for export duties, but we're, We're assuming in Indonesia that those are continuing. We are continuing to discuss with the government of Indonesia the applicability of those duties, and I think the more that we make progress on the smelter, the better our case there is, but that's something we've factored into the estimate, but we are continuing to have that discussion.

Speaker Change: We can also focus which we're doing now on you know the last couple of years, we've had to rely more on contractors.

Speaker Change: Because of the staffing issues, but as we get you know staffing set up and get more experience in the work force.

Speaker Change: We can reduce our reliance on contractors as you probably know we've gotten not inexpensive in Arizona is a very competitive market. So we're working on all those things.

Speaker Change: Within that the things that we have within our control and are really going to be focused on trying to drive to.

Speaker Change: The costs down we're also looking at morency specifically.

Speaker Change: We're also looking at Marenzi specifically at different configurations.

Speaker Change: At different configurations.

Speaker Change: We're looking at whether it makes sense for us to be operating all of our equipment like we are today and looking at if we cut back some things, would that be, is there cost and benefits to that because that could have volume impacts as well, but is that a better setup, a more efficient setup that will allow us to drive costs lower? So we've got some of those initiatives that are being reviewed right now on what the right setup is given how costs have risen.

Speaker Change: So if we are successful in reducing those duties, that would be a benefit. All right, and just to clarify, Kathleen, the cash cost guidance for the year of 160 includes that the duties on Indonesian concentrate exports remain throughout the entire year, right, the full year? Yes, our exports, it only applies to export volumes, and so as we go through the year, the exports will decline because we'll be ramping up the smelter.

Speaker Change: We're looking at whether it makes sense for us to be operating all of our equipment like we are today.

Speaker Change: And looking at if we cut back some things would that be is this cost and benefits of that because that could have volume impacts as well, but is that a better set up a more efficient set up that'll allow us to drive costs lower so we've got some some of those initiatives that are there are being reviewed right now.

Speaker Change: And what the right set up is given the given how costs have risen.

Speaker Change: So, you know, our goal for 2024 is to get the full ramp-up completed, and so that's not something that'll continue long-term, the duties, once we get the smelter fully up and running. But, you know, it'll start to decline over the course of the second half as we ramp up and we produce more domestically. Thank you very much.

Speaker Change: That's very helpful.

Speaker Change: That's very helpful. Thank you.

Speaker Change: Your next question comes from the line of Orest Wowkodaw with Scotiabank. Please go ahead.

Speaker Change: Your next question comes from the line or small Codell with Scotiabank. Please go ahead.

Orest Wowkodaw: Hi, good morning. Given the costs, the capital costs involved in the timing of building new projects and the strength of your balance sheet, I'm just wondering whether M&A of producing assets.

Codell: Hi, good morning, given the cost the capital cost involved and the timing of building new projects.

Codell: And the strength of your balance sheet, I'm, just wondering whether M&A or producing assets.

Speaker Change: Thank you very much.

That's on the radar because it certainly seems like there could be some assets available out there.

Codell: Especially and that jurisdictions are not currently in.

Codell: Okay.

Speaker Change: Well, you know, we are...

Codell: Well you know we.

Speaker Change: Your next question comes from the line of Christopher LaFemina with Jefferies. Please go ahead. Hi. Thanks, operator. Hi, Richard and Kathleen.

Speaker Change: We're constantly monitoring the market.

Codell: We're constantly.

Codell: Currently monitoring the market.

Speaker Change: and you can be confident that opportunities are available or presented to us.

Codell:

Codell: Can be confident that opportunities are available are presented to us.

Speaker Change: and we consider them

Codell: And we consider them.

Speaker Change: The facts are we haven't found those attractive to date.

Codell: The facts are we haven't found those attractive today.

Christopher LaFemina: Thanks for taking my question. I wanted to ask about the kind of cost trends in North America, in particular in Morenci. So I know that you're guiding to a slight increase in your site production delivery costs in 2024, and I assume that is a function of volumes being lower. But if we think about kind of where this business could be headed, assuming that Morenci can kind of get back to where it was 12 or 18 months ago, and I'm not sure if that's a good assumption, but let's assume that to be the case With the leaching ramp up, with the staffing and productivity improvements, with the new technologies, and potentially even longer term with the Baghdad expansion, where could that kind of site production delivery cost number trend down to? Could it get back to 250 or lower, or is $3 a pound sort of the new normal for that business? Thank you. Well, we hope it's not the new normal, Chris.

Speaker Change: Um

Codell:

Speaker Change: We have such great opportunities to create value

Codell: We have such great opportunities to create value.

Speaker Change: Totally for our shareholders by focusing on internal growth through the LEACH project through

Codell: For our shareholders by focusing on internal.

Internal growth.

Jack.

Speaker Change: The Brownfield Developments in the Americas.

Codell:

Codell: Brownfield developments in the Americas.

Speaker Change: through the Kuching Leir Project in Indonesia and now with the

Codell: The <unk> project in Indonesia.

Codell:

Speaker Change: With the expectation that we'll go beyond 2041, we're going to do additional.

What's the expectation that we will go beyond 2041 were going to do additional.

Speaker Change: Exploration there to understand what the opportunities are.

Codell: Exploration there to understand what the opportunities are.

Speaker Change: and

Speaker Change: Success in any of those opportunities creates value where there's no value in ours.

Codell: Success in either of those opportunities creates value, where there's no value in it.

Speaker Change: Our current share price, so it's all for the benefit of our shareholders.

Codell: Our current share price so it's all good.

Codell: Some of our shareholders.

Speaker Change: And that makes it much, much more difficult for

It makes it much much more difficult for us.

Speaker Change: External opportunities to compete with.

Codell: External opportunities to compete with them.

Speaker Change: And my experience has shown that small mines get smaller and big mines get bigger.

Codell: And my experience has shown a small minds gets smaller.

Codell: Bigger.

Speaker Change: So we really...

Codell: So we really.

Speaker Change: We really are, as I said in my opening comments, pleased about where Freeport is positioned.

Codell: We really are.

Codell: As I said in opening comments pleased about where free board is positioned well.

Speaker Change: are what we believe is going to be a great future for our country.

Codell: But what we believe is going to be.

Codell: <unk> future for our company.

Speaker Change: Thanks, Richard.

Speaker Change: Thanks Richard.

Speaker Change: Your next question comes from the line of Edward Goldsmith with Deutsche Bank. Please go ahead.

Speaker Change: We're working hard. One of the things that you've got to take into account here is that we are in a low-grade period in the U.S. I think the grades that we had in 2023 were the lowest that they had been in probably 10 years or so or more.

Speaker Change: Your next question comes from the line of Edward Goldsmith with Deutsche Bank. Please go ahead.

Speaker Change: Okay.

Edward Goldsmith: Hi Richard and Kathleen, thanks for the presentation. Two questions from my side. So firstly, can you give an update on the status of the negotiations over concentrate export extension post May? And secondly, can you outline the reductions to the 2024 capex? I think they were at the discretionary and the other capex bucket level. Thank you.

Edward Goldsmith: Hi, Richard and Kathleen Thanks for the presentation two questions from my side. Firstly can you give an update on the status of the negotiations concentrate exports extension pacemaker and secondly can you outline the reductions JV so interesting topics.

Speaker Change: So we are in a period, and that's continuing in 2024, where we do have some low grades that we're going through. That is why it's so important for us to bring on new units with a lower incremental cost, and The Leach Opportunity will help us there. And as we are able to get those pounds, put them into reserves for the longer term, not just what you're mining that year or getting that year, but multi-year reserve additions will lead to That spreads all the costs over more reserves, and so it does help us with driving the economies of scale and why it's so important. We're not in a position now to say where costs could go. There's been a number of other factors that have, you know, inflationary factors and things like the cost of, you know, basic parts and materials and supplies has gone up from where it was just, you know, two or three years ago, but we are very focused on it. And all these self-help things, for us, have very high rates of return. There's not a lot of capital involved.

Edward Goldsmith: The discretionary.

Speaker Change: Catholics bucket level. Thank you.

Edward Goldsmith: On the first part of the question, our current export license in Indonesia goes to May of 2024, and we are continually having discussions with the government of Indonesia about the fact that while we will be substantially complete on construction activities by the end of May, which was a real important target for us and for them, that just the ordinary course of a smelter startup can take five or six months to get through. And so we're having those discussions. They understand the situation, and they're encouraging us to continue to meet our targets, and those discussions will continue.

Speaker Change: Yeah on the on the first part of the question or current export license in Indonesia.

Speaker Change: It goes to our May of 2024.

Speaker Change: And we are continually having discussions with the government of Indonesia.

Speaker Change: About the fact that.

Speaker Change: While we will be substantially complete on construction activities by the end of May which is was real important target for us and for them.

Speaker Change: It just the ordinary course of our smelter start up and take five or six months to get through and so we're having those discussions they understand the situation.

Speaker Change: And they are encouraging us to continue to continue to meet our targets and that those discussions.

Speaker Change: It will continue.

Edward Goldsmith: I want to point out that the alignment that we have with the 51% ownership of the state-owned company, MindID, in PTFI's operations is really important here. That combined with tax revenues, et cetera, that the government gets from having consistent operations at PTFI, we're both aligned. In that, to get, to have exports continue, so the conversations have been constructed to date, but we've just got to, we've got to continue to progress it and have those, you know, continue to have the discussions with the government, and we're doing that on a regular basis.

Speaker Change: Now that the.

Speaker Change: Alignment that we have with them with a 51% ownership.

Speaker Change: Of of this state owned company mind, I D N P T F EIS operations.

Speaker Change: Is is really important here that combined with tax revenues et cetera that the government gets from from having them having consistent operations at PT Fi is.

Speaker Change: It's focused resources. It's not an easy thing, because it would have been done already, but it is an area we think we can make improvements. We can also focus, which we're doing now, on, you know, the last couple of years, we've had to rely more on contractors because of the staffing issues, but as we get, you know, staffing set up and get more experience in the workforce, we can reduce our reliance on contractors. As you probably know, contractors have gotten expensive, and Arizona's a very competitive market. So we're working on all those things within We're also looking at Morenci specifically in different configurations. We're looking at whether it makes sense for us to be operating all of our equipment like we are today. And looking at if we cut back some things, would that be...

Speaker Change: Both aligned in that to get have exports continue so they can have the conversations have been constructive to date, but we've just got we've got to continue to progress it in.

Speaker Change: And and have those Canadian have the discussions with the government and.

Speaker Change: Well, we're doing them on a regular basis.

Speaker Change: Well, Kathleen, just let me add, they're not negotiations.

Speaker Change: Well you definitely just let me add there not negotiations.

Speaker Change: The mind, I mean, I've spoken in recent months on

The demand.

Spoken.

Speaker Change: In recent months.

Speaker Change: At least three occasions directly with the president about it, he understands.

Speaker Change: At least three occasions directly with the president about it he understands it.

Speaker Change: The Mines Minister, who has a business background, clearly understands the world.

Speaker Change: Uh huh.

Speaker Change: As Minister who has a business background clearly understands it.

Speaker Change: it's just administrative procedurally they concluded not to grant that export right

Speaker Change: Just administrative procedurally.

Speaker Change: He concluded.

Speaker Change: There are costs and benefits to that because that could have volume impacts as well. But is that a better setup, a more efficient setup that will allow us to drive costs lower? So we've got some of those initiatives that are being reviewed right now on what the right setup is given how costs have risen. That's very helpful. Your next question comes from the line of Orest Wowkodaw with Scotiabank. Please go ahead. Hi, good morning.

Speaker Change: Not to grant that.

Speaker Change: Export rights.

Speaker Change: Beyond this date to see if we complete the smelter as we've committed to do it. But beyond that, it'll just be an administrative action to get it.

Speaker Change: This data to see if we complete the smelter as we committed to do it but beyond that it will be just be an administrative action to get it approved.

Speaker Change: Yeah.

Speaker Change: On the second question with respect to capital expenditures,

Speaker Change: On the second question with respect to capital expenditures.

Speaker Change: We always go through a process of

Speaker Change: We always go through a process of Av.

Speaker Change: Looking for opportunities.

Speaker Change: Looking for opportunities.

Speaker Change: to push out capital if it's not required in the current year. And we went through a process between the last update and this one to really look hard at what we could efficiently spend this year and cut back on some things. Some of that's showing up in 2025. We'll do the same thing again, you know, because really what we want to do is deploy the capital as efficiently as we can and make sure we're sustaining the reliability of our operations, but also looking at, you know, we don't want to be doing too many things at one time, and so we always take a hard look at it. So we'll continue to do that as we go forward and manage the capital very carefully. But there wasn't really one big thing. There was a number of things that we did in looking at the prior estimate for 2024.

Orest Wowkodaw: Given the costs, the capital costs involved in the timing of building new projects, and the strength of your balance sheet, I'm just wondering whether M&A of producing assets is something that's on the radar because it certainly seems like there could be some assets available out there, especially in jurisdictions you're not currently in. Well, you know, we are. We're constantly monitoring the market, and you can be confident that opportunities that are available will be presented to us, and we will consider them. The facts are we we haven't found those attractive today.

Speaker Change: To push out capital if its you know if it's if it's not required in the current year.

Speaker Change: And we went through a process between the last update in this one to really look hard at.

Speaker Change: What we could efficiently spend this year and and cut back on some things and some.

Speaker Change: Some of that showing up in 2025, we'll do the same thing again, you know because really what we want to do is deploy the capital as efficiently as we can and make sure. We're sustaining the reliability of our operations, but also looking at them. You know, we don't want to be doing too many things at once.

Orest Wowkodaw: We have such great opportunities to create value for our shareholders by focusing on internal growth. This is a leech project through the Brownfield Developments in the Americas, through the Kuching Lair Project in Indonesia now, and with the expectation that we'll go beyond 2041, we're going to do additional. There's a lot of exploration there to understand what the opportunities are. Success in any of those opportunities creates value where there's no value in our current share price, so it's all for the benefit of our shareholders. And that makes it much, much more difficult for them.

Speaker Change: <unk> and and so we always take a hard look at it. So we will continue to do that as we go forward and manage the capital.

Speaker Change: Very carefully but there wasn't really one big thing there was a number of things that we did and looking at at the prior estimate for 2024.

Speaker Change: Thank you.

Speaker Change: Thank you.

Speaker Change: Your next question comes from the line of Michael Dudas with Vertical Research. Please go ahead.

Speaker Change: Your next question comes from the line of Michael Dudas with vertical research. Please go ahead.

Michael S. Dudas: Good morning, Kathleen and Richard.

Michael S. Dudas: Good morning, Kathleen and Richard.

Michael S. Dudas: Hey, Michael. Hey, Michael.

Michael S. Dudas: Hey, Michael Hey, Michael.

Michael S. Dudas: Thank you.

Michael S. Dudas:

Michael S. Dudas: With regard to your proposed investments in the U.S., maybe even looking in Latin America, maybe, Kurt, remind us on an internal rate of return, risk-adjusted rate of return basis, what Freeport is looking for. Certainly, you mentioned on the U.S. investments, you get benefits from royalty and tax issues. But just on a general basis, even when you're thinking about your assets in Indonesia. And then to follow up on that,

Michael S. Dudas: With regard to your proposed investments in the U S and maybe even looking in Latin America, maybe Kurt remind us.

Kurt: Internal rate of return risk adjusted rate of return basis, what Freeport is looking for.

Orest Wowkodaw: External opportunities to compete with. And my experience has shown that small minds get smaller, and big minds get bigger. So, uh, we really are, as I said in my opening comments, pleased about where Freeport is positioned, or what we believe is going to be a great future for our company. Thanks, Richard. Your next question comes from the line of Edward Goldsmith with Deutsche Bank. Please go ahead.

Kurt: Certainly you mentioned U S investments you get benefits from royalty and tax issues, but just on a general basis, even when you're thinking about your assets in Asia and then.

Speaker Change: The follow up on that.

Michael S. Dudas: Is the industry relative to a year ago today? Is the industry ahead of the curve or behind the curve on meeting what the expected demand opportunities are in the market? Thank you.

Speaker Change: Is the industry relative to year ago today as the industry ahead of the curve or behind the curve on meeting what the expected demand opportunities are in the market. Thank you.

Michael S. Dudas: On the first part of the question, with respect to how we evaluate projects and returns, we don't target...

Speaker Change: On the first part of the question with respect to how we evaluate projects and in returns.

Speaker Change: We don't target.

Michael S. Dudas: We look at what the specific project is, what the execution risk is, where it's located, and how it's going to be executed.

Speaker Change: One number.

Speaker Change: Look at what the specific project is what the execution risk is where it's located and.

Edward Goldsmith: Hi Richard and Kathleen, thanks for the presentation. Two questions from me. First, can you give an update on the status of the negotiations over concentrate export extension post-May? And secondly, can you outline the reductions to the 2024 CAPEX? I think they were at the discretionary and the other CAPEX bucket levels. Thank you.

Michael S. Dudas: And we run a range of commodity price assumptions around it to look at what we're really focused on in deploying capital is and we're really focused on in deploying capital is

Speaker Change: And we run a range of commodity price assumptions around it to look at what we're really focused on and in deploying capital is.

Michael S. Dudas: Investing in putting our infrastructure and investments in places where we can execute the plan.

Speaker Change: Investing in putting our infrastructure and investments in places, where we can execute the plan.

Michael S. Dudas: and in places where we've got long-term reserves.

And in places, where we've got long term reserves.

Speaker Change: Yeah, on the first part of the question, our current export license in Indonesia expires in May of 2024. And we are continually having discussions with the government of Indonesia about the fact that while we will be substantially complete in construction activities by the end of May, which is a real important target for us and for them, that just the ordinary course of a smelter startup can take five or six months to get through. And so we're having those discussions. They understand the situation, and they're encouraging us to continue to meet our targets and that those discussions will continue. I want to point out that the alignment that we have with the 51% ownership of the state-owned company, MindID, in PTFI's operations is really important here.

Michael S. Dudas: Because anybody that tells you they can get the copper price right is wrong because it's going to move up and down. And so what we want to have is a situation where we've got a very long life reserve where you can make that capital investment up front and realize cash flows over a long period of time and not have to get the price forecast for copper perfect in the first year or two. And so when we look at returns, we're looking at those projects that have leverage.

Speaker Change: Because anybody that tells you they can get the copper price right is is is wrong, because it's going to move up and down.

Speaker Change: And so what we want to have is a situation where we've got a very long life reserve.

Where they where you can make that capital investment upfront and realized cash flows over a long period of time and not have to get the price forecast for copper perfect in the in.

Speaker Change: In the first year or two and so when.

Speaker Change: When we look at returns we're looking at those projects that have leverage.

Michael S. Dudas: To Future Copper. And we may, you know, we look at something outside of the U.S., we may apply higher risk factors.

Speaker Change: So future copper and we may.

We look at.

Speaker Change: Something than it is outside of the U S. We may apply higher risk factors.

Michael S. Dudas: and we look to get higher rates of return than what we would want to have in something like the U.S., where for reasons that Richard talked about, you know, have somewhat of a lower risk profile for us.

Speaker Change: And and and really look to get higher rates of return than than what we would want to have an in something like the U S where for reasons that Richard talked about.

Speaker Change: And somewhat of a lower risk profile for us.

Michael S. Dudas: But it's not one scientific number, it's a range of scenarios that we run around a project.

But it's not one scientific number it's a range of scenarios that we run around a project.

Michael S. Dudas: and again, looking at the resources,

And again looking at the resource.

Michael S. Dudas: and the size of the investment and our ability to generate returns over a long period of time that would be consistent, not that it would go away, it would fall off, you know, something that could be earned over a long period of time, has a long tail, which a lot of our projects do. And Richard may have some perspectives on the second question. I think it's obvious that... I think it's obvious that...

Speaker Change: And the size of the investment and our ability to generate returns over a long period of time that would be consistent not that it would it would go away. It would fall off you know something that could be.

Speaker Change: That combined with tax revenues, et cetera, that the government gets from having consistent operations at PTFI, we're both aligned in that to have exports continue. The conversations have been constructed to date, but we've got to continue to progress it and continue to have the discussions with the government. We do that on a regular basis. Well, Kathleen, just let me add, they're not negotiating.

Speaker Change: It could be earned over a long period of time, there's a long tail, which a lot of our projects too.

Speaker Change: And Richard might have some perspective on the second question I think it's obvious that.

There haven't been new projects sanctioned in our industry.

Richard C. Adkerson: For some time and what's happened recently in recent years with the copper prices rallying and then falling off you know has just cause.

Speaker Change: The mind, I mean, I've spoken directly with the president on at least three occasions in recent months about it. He understands. The Mines Minister, who has a business background, clearly understands that it's just administrative procedurally; they concluded not to grant that export right beyond this date to see if we complete the smelter as we've committed to do it. But beyond that, it'll just be an administrative action to get it. On the second question, with respect to capital expenditures... We always go through a process of looking for opportunities to push out capital if it's, you know, if it's not required in the current year. And we went through a process between the last update and this one to really look hard at what we could efficiently spend this year and cut back on some things.

Richard C. Adkerson: More delays more cautiousness by by developers in developing the project.

You know I would say in my opinion the situation has become you know.

Richard C. Adkerson: More significant because the projects are taking longer not shorter and you know we talked about when we started on Grasberg underground.

Richard C. Adkerson: We started planning, started investing 20 years ago in it. I mean, you really have, these are long lead time projects, and we really need to have started investments. And that's why we're really focused on what can we do.

Richard C. Adkerson: We started planning starting investing 20 years ago and it I mean, you read.

Richard C. Adkerson: These are long lead time projects and we really need to have started investments and that's why we're really focused on what can we do.

Speaker Change: Continue to plan for these long-term projects, but what else can we do, and what can we do to take advantage of technology that's available to us, and what can we do to get more out of the resources we already have? But not everybody has that ability, and Richard, I don't know if you want to add any comments to that second part.

Speaker Change: We continue to plan for these long term projects, but what else can we do and what can we do take advantage of technology, that's available to us and what can we do to get more out of the resources, we already have but not everybody has that that that ability and Richard I don't know if you want to add any comments to that second part.

Speaker Change: Some of that's showing up in 2025. We'll do the same thing again, you know, because really what we want to do is deploy capital as efficiently as we can and make sure we're sustaining the reliability of our operations, but also looking at, you know, we don't want to be doing too many things at one time. And so we always take a, you know, hard look at it. And we'll continue to do that as we go forward and manage the capital very carefully. But there wasn't really one big thing.

Richard C. Adkerson: Well, and I'll add a brief comment to the first part too, Kathleen.

Richard C. Adkerson: Well and I'll add a brief comment on the first part to Kathleen.

Richard C. Adkerson: Um,

Richard C. Adkerson:

Richard C. Adkerson: [laughter].

Richard C. Adkerson: My early experience in my career was in the oil and gas industry.

Richard C. Adkerson: Our early experience of my career was in oil and gas industry.

Richard C. Adkerson: And early on, Dan Yergin and I wrote up.

Richard C. Adkerson: And early on Dan Yergin, and I wrote it.

Richard C. Adkerson: wrote a paper on oil price forecasts.

Richard C. Adkerson: Wrote a paper on oil price forecasting.

Richard C. Adkerson: which basically evidenced how wrong forecasts

Richard C. Adkerson: Which basically evidenced how wrong forecast can be.

Richard C. Adkerson: And so we approach, as Kathleen described,

Richard C. Adkerson: And so we approach as Kathleen described.

Richard C. Adkerson: All of our investment in business planning on a scenario basis.

Richard C. Adkerson: All of our investment and business planning on scenario basis not.

Richard C. Adkerson: Trying to predict a particular price or range of price.

Speaker Change: There were a number of things that we did in looking at the prior estimate for 2024. Thank you. Your next question comes from the line of Michael Dudas with Vertical Research. Please go ahead. Good morning Kathleen and Richard. Hey, Michael.

Richard C. Adkerson: Trying to predict a particular price or range of pricing.

Richard C. Adkerson: But to look at what impact

Richard C. Adkerson: But to look at what impact.

Speaker Change: Thank you.

Richard C. Adkerson: Investment decisions and operating decisions have owner.

Richard C. Adkerson: Our overall portfolio.

Speaker Change: and we look to protect ourselves on a portfolio basis from downside risk

Richard C. Adkerson: And we look to protect ourselves on a portfolio basis from downside risk.

Michael S. Dudas: With regard to your proposed investments in the U.S., maybe even looking in Latin America, maybe you can remind us on an internal rate of return, risk-adjusted rate of return basis, what Freeport is looking for. Certainly, you mentioned on the U.S. investments, you get benefits from royalty and tax issues. But just on a general basis, even when you're thinking about your assets in Indonesia. And then to follow up on that, is the industry, relative to a year ago today, ahead of the curve or behind the curve on meeting what the expected demand opportunities are in the market? Thank you.

Speaker Change: and then Structure Invest

Richard C. Adkerson: And then structure investments.

Speaker Change: to take.

Speaker Change: The advantage of what we have is confidence in a long-term price.

Richard C. Adkerson: <unk>.

Advantage of what we have this confidence in our long term price.

Speaker Change: So it's not any kind of formal rate of return kind of criteria that you see in a lot of industries which work elsewhere.

Richard C. Adkerson: It's not any kind of.

Richard C. Adkerson: Kind of formal rate of return kind of criteria that you see in a lot of industries would work.

Richard C. Adkerson: Yeah.

Speaker Change: You know, have this saying that figures don't lie, but liars figure. And so, you know, we just really.

Richard C. Adkerson: You know they have the same figures don't lie, but liars figure.

Richard C. Adkerson:

Richard C. Adkerson: You know, we just really basic things as I said on scenario planning and portfolio impacts.

Speaker Change: We base these things, as I said, on scenario planning and portfolio impact.

Speaker Change: Thank you for watching!

Richard C. Adkerson: Yeah.

Speaker Change: The basic thesis, I believe, for the demand for copper is

Richard C. Adkerson: The basic thesis I believe for the demand for copper is.

Speaker Change: Unchanged and continues to be supported.

Richard C. Adkerson: Unchanged and continues to be supported.

Speaker Change: From the very start, my work with ICMM,

Richard C. Adkerson: The very start in my work with us.

Richard C. Adkerson: The very start in my work with us.

Speaker Change: Chairman.

Speaker Change: Mr Chairman.

Speaker Change: Mr Chairman.

Speaker Change: Thank you very much for joining us and we look forward to seeing you again next week.

Speaker Change: Two occasions with most recently with all the issues about.

Speaker Change: The aspirational goals for carbon reductions were.

Speaker Change: On the first part of the question, with respect to how we evaluate projects and returns, we don't target... one number. You know, we look at what the specific project is, what the execution risk is, where it's located. And we run a range of commodity price assumptions around it to look at what we're really focused on in deploying capital. Investing in putting our infrastructure and investments in places where we can execute the plan, and in places where we've got long-term reserves, because anybody that tells you they can get the copper price right is wrong because it's going to move up and down. And so what we want to have is a situation where we've got a very long-life reserve where you can make that capital investment up front and realize cash flows over a long period of time and not have to get the price forecast for copper perfect in the first year or two.

Speaker Change: and considered in such promise.

Speaker Change: Considering such promise.

Speaker Change: I've always said

Speaker Change: I have always said.

Speaker Change: That there are a lot of unanswered questions.

Speaker Change: There are a lot of unanswered questions.

Speaker Change: The movement towards these aspirational goals will not be

Speaker Change: Towards.

Speaker Change: Aspirational goals will not be.

Speaker Change: consistent, but they'll have

Speaker Change: Consistent with the Ohio.

Speaker Change: issues, complications, and so forth. And that's certainly what we're seeing. The future of copper is

Speaker Change: Issues complications and so forth and that's certainly what we're seeing.

Speaker Change: The future of Koppers.

Speaker Change: Thank you very much.

Speaker Change: Lee.

Speaker Change: Influenced significantly by investments in carbon reduction I think in some of the world.

Speaker Change: Absolutely has to do. There are other factors related to global growth, connectivity.

Speaker Change: Absolutely has to do.

Speaker Change: Are there other factors related to global growth connectivity.

Speaker Change: Data Centers, and some of that's being driven by artificial intelligence. Intelligence.

Speaker Change: Data centers and some of Thats being driven by artificial intelligence just everywhere you turn the world is getting more electrified and that's why I think the fundamental long term demand for copper is just getting stronger and stronger.

Speaker Change: Everywhere you turn, the world is getting more electrified, and that's why I think the fundamental long-term demand thesis for copper.

Speaker Change: Getting stronger and stronger.

Speaker Change: Very helpful. Thank you.

Speaker Change: Very helpful. Thank you.

Speaker Change: Thanks, Mike.

Speaker Change: Thanks, Mike.

Speaker Change: Your next question comes from the line of Brian MacArthur with Raymond James. Please go ahead.

Speaker Change: Your next question comes from the line of Brian Macarthur with Raymond James. Please go ahead.

Brian Macarthur: Good morning Richard and Kathleen and thank you for taking my question. It goes back to what Alex was asking and bag dog. So I just want to make sure as I look at these numbers. So the project capital is 3.5 billion and I

Brian Macarthur: Good morning, Richard and Kathleen and thank you for taking my question.

Brian Macarthur: It goes back to what Alex was asking and bag, Doug. So I just wanted to make sure as I look at these numbers.

Brian Macarthur: So the project capital of $3 5 billion.

Speaker Change: Uh huh.

Brian Macarthur: I would have to think you get some infrastructure benefit there, so it's not a true greenfield. And then you talk about a $3.50 to $4 incentive copper prices, and I understand the benefits of no royalties and taxes.

Speaker Change: I would have to think you can get some infrastructure benefit there. So it's not a true Greenfield and then you talked about a $3 50 to $4 <unk>.

Speaker Change: <unk> of copper prices and I understand the benefits of no royalties and taxes.

Brian Macarthur: Does that sort of say that if you didn't have infrastructure, the capital cost would have been higher, and if you didn't have all these tax benefits, the incentive price would be an awful lot higher, i.e. if anybody else had to do a greenfield there, you'd probably need an incentive price.

Speaker Change: That sort of say that if you didn't have infrastructure the capital costs would have been higher if you didn't have all these tax benefits the incentive price would be an awful lot higher ie, if anybody else had to do a greenfield there.

Speaker Change: And so when we look at returns, we're looking at those projects that have leverage on future copper. And we may, you know, look at something outside of the U.S., we may apply higher risk factors, and really look to get higher rates of return than what we would want to have in something like the U.S., where, for reasons that Richard talked about, have somewhat of a lower risk profile for us.

Speaker Change: You know you'd probably need a incentive price.

Speaker Change: Well over $4 to make it work, i.e. those numbers include all the tax benefits and everything that you were talking about before? If I can ask the question that way?

Speaker Change: Well over $4 to make it work I E. Those numbers include all the tax benefits and everything as you were talking about before if I can ask.

Speaker Change: Okay.

Speaker Change: [laughter], Brian the if if somebody else had the same situation greenfield in the grades we have it would be a lot more.

Speaker Change: Brian, if somebody else had the same situation, Greenfield and the grades we have, it would be a lot more.

Speaker Change: But it's not one scientific number; it's a range of scenarios that we run around a project. And again, looking at the resource and the size of the investment and our ability to generate returns over a long period of time, that would be consistent. Not that it would fall off.

Speaker Change: A lot more.

A lot more expensive a lot worse.

Speaker Change: a lot more yeah right and and you know you're you're four dollars

Speaker Change: Yeah right.

Speaker Change: Your $4.

Speaker Change: You know, your $4 is absolutely right. I mean, you just look at recent projects.

Speaker Change: Your $4 is absolutely right I mean, you just look at recent projects.

Speaker Change: And look at you know how costs escalate and then what would have taken.

Speaker Change: Look.

Speaker Change: Something that can be earned over a long period of time has a long tail, which a lot of our projects do. And Richard might have some thoughts on the second question. I think it's obvious that there haven't been new projects sanctioned in our industry for some time, and what's happened recently in recent years with the copper prices rallying and then falling off, you know, has just caused more delays, more cautiousness by developers in developing the projects. So, you know, I would say, in my opinion, the situation has become more significant because the projects are taking longer, not shorter. And, you know, we talked about when we started on Grasberg Underground.

Speaker Change: You know how costs escalate, and then what would it have taken to make it this far?

Speaker Change: from an incentive price to justify that project from the outset if the cost numbers had been known.

Speaker Change: From an incentive price to justify that project from the outset, if the cost numbers had been known.

Speaker Change: So this is not that complicated. This is not a greenfield project. We've operated there for

Speaker Change: So this is not that complicated.

Speaker Change: Is it not a greenfield project we've operated there for.

Speaker Change: For 80 years or so, and it's about as straightforward a project as you could have, but it's telling for the industry, even with this kind of straightforward project, the challenge you face. You know?

Speaker Change: For 80 years, or so and it's.

Speaker Change: About a straightforward project because you could have but it's telling for the industry, even with this kind of straightforward project. The challenge you face.

Speaker Change: Thanks for joining us.

Speaker Change: It's cost it's tailings and we do benefit from infrastructure. This is just the mill expansion is not building a new mine, but then there was a challenge of getting workers in housing for workers. So.

Speaker Change: All of this is real telling.

Speaker Change: On the supply side, I just talked about the demand side support for copper.

Speaker Change: On the supply side I, just talked about the demand side support for copper. This is a great example of a simple project.

Speaker Change: This is a great example of a simple project.

Speaker Change: In terms of the relative.

Speaker Change: in terms of the relatives.

Speaker Change: We started planning, and started investing 20 years ago in it. I mean, you really have to, these are long-lead time projects, and we really need to have started investments. And that's why we're really focused on what we can do. We continue to plan for these long-term projects, but what else can we do, and what can we do to take advantage of the technology that's available to us, and what can we do to get more out of the resources we already have? But not everybody has that ability.

Speaker Change: Thank you for watching.

Speaker Change: Complexities.

Speaker Change: projects in our industry. This is relatively simple. And yet, you know, it faces these challenges of being economically justified in today's price. You know, at the outset, I said,

Speaker Change: Projects in our industry is relatively simple and yet.

Speaker Change: These challenges are being economically justified.

Day's price.

Speaker Change: Ed.

Speaker Change: Today's copper price is not a price that's adequate to simulate the kind

Speaker Change: Today's copper price.

Speaker Change: On prices is adequate to stimulate the economy.

Speaker Change: and more.

Speaker Change: Investments are going to be needed for this industry.

Speaker Change: That's why we're optimistic about Future Pride.

Speaker Change: And that's why we're optimistic about future prices.

Speaker Change: Right, and maybe if I could just ask, just on the capital allocation, I mean, you've got lots of options, as you said, but if you're successful for phase three, I mean, you get as much production there as you would here at, I assume, a fraction of the capital cost. Does Baghdad get...

Speaker Change: Right and maybe if I could just ask just on the capital allocation I mean, you've got lots of options as you said, but if youre successful for phase three.

Speaker Change: And Richard, I don't know if you want to add any comments to that second part. Well, and I'll add a brief comment to the first part, too, Kathleen. My early experience in my career was in the oil and gas industry, and early on, Dan Yergin and I wrote a paper on oil price forecasts, which basically demonstrated how wrong they were. And so we approach, as Kathleen described... All of our investment and business planning on a scenario basis, not trying to predict a particular price or range of prices but to look at what impact investment decisions and operating decisions have on our overall portfolio. And we look to protect ourselves on a portfolio basis from downside risk and then structure investment to take advantage of what we have is confidence in a long-term price. So it's not any kind of formal rate of return kind of criteria that you see in a lot of industries which work elsewhere. You know, we have this saying that figures don't lie but liars do, and so you know we just really base these things, as I said, on Umm...

Speaker Change: You get as much production there as you would hear at ice, but assume a fraction of the capital cost of Baghdad.

Speaker Change: Thank you for your time, and we'll see you next time.

Speaker Change: Pushed in that situation I mean, I get it the world needs, probably all of it but would they get sequenced or are they complementary I mean, I know they don't depend on each other but are they complementary and you would do both at once if both work.

Speaker Change: We're prioritizing the leach initiatives mean that that is one it's a no brainer for us.

Speaker Change: It's got very, very little capital that we're investing in it, and it's our lowest incremental operating cost of anything in the U.S., and so that's a no-brainer. We're pursuing that regardless. That makes a ton of sense.

Speaker Change: It's a very very little capital that we're investing in it and very low increment, it's our lowest incremental operating costs of anything and in the U S and and so that's a no brainer, we're pursuing that regardless that makes a ton of sense.

Speaker Change: and we're pursuing that regardless. We think...

Speaker Change: And we're pursuing that regardless, we think.

Speaker Change: The world's going to need something beyond that, you know, obviously. And so on the Baghdad thing, we just want to get it.

Speaker Change: The world is going to need something beyond that you know obviously and so.

Speaker Change: On the back of that thing, we just want to get it here.

Speaker Change: Get it to where...

Speaker Change: Get it to where you know continue to enhance the optionality in it.

Speaker Change: You know, continue to enhance the optionality in it.

Speaker Change: We need to do some things anyway. We're doing some infrastructure on tailings that we would need to do anyway in the future, maybe not as quickly as what we would need with a new project, but we need to do those anyway, so we're going to do those to the extent we can do that efficiently. We want this autonomous thing that we're pursuing. Years ago, people thought you didn't really need autonomous in the U.S., but now, particularly in these remote locations, we really do when you consider the cost of the workforce and the housing limitations and that sort of thing.

Richard C. Adkerson: The basic thesis, I believe, for the demand for copper is unchanged and continues to be supported. From the very start, my work with ICMM... Chairman, on two occasions but most recently when all the issues about aspirational goals for carbon reduction were being considered with such promise. I've always said that there are a lot of unanswered questions, and movement towards these aspirational goals will not be consistent, but they'll have issues, complications, and so forth. And that's certainly what we're seeing. The future of copper is really influenced significantly by investments in carbon reduction, and I think it's some of the world absolutely has to do. There are other factors related to global growth and connectivity.

Speaker Change: And we need to do some things anyway, what we were doing some infrastructure on on tailings that that we would need to do any way in the future maybe not as quickly as what would what it would need with the new project, but we need to do those anyway. So we're gonna do those to the extent, we can do that efficiently we want this autonomous.

Speaker Change: MS thing that we're pursuing them you know years ago people thought you didn't really need autonomous in the U S. But now we particularly in these remote locations. It really really do you know when you consider the cost of a workforce and the housing.

Speaker Change: <unk> limitations in that sort of thing.

Speaker Change: and the opportunities to upskill our employees, we think it checks all of those boxes. So autonomous.

Speaker Change: And and the opportunity to upscale our employees, we think it checks all of those boxes. So autonomous.

Richard C. Adkerson: Data Centers, and some of that's being driven by artificial intelligence. Everywhere you turn, the world is getting more electrified, and that's why I think the fundamental long-term demand thesis for copper is getting stronger and stronger. Very helpful.

Speaker Change: We want that to see how that unfolds. So we don't have to pull the trigger on Baghdad now, but we want to put it in a position where it can go forward. It makes sense if the world needs more copper to get copper from where we already have it. And so it's a good project. It's not a barn burner from an economic standpoint right now, but it will have its day, and I think it will get done at some point. We aren't predicting exactly when.

Speaker Change: We want that to see how that unfolds.

Speaker Change: So we we we don't have to pull the trigger on an on Baghdad now, but we want to put it in a position where it can go forward. It. It it makes sense if the world needs more copper than to get copper from where we already have it.

Richard C. Adkerson: Thank you. Thanks, Mike. Your next question comes from the line of Brian MacArthur with Raymond James. Please go ahead. Good morning, Richard and Kathleen, and thank you for taking my question. It goes back to what Alex was asking about bag dogs.

Speaker Change: And so what it does it's a good project, it's not a barnburner from an economic standpoint.

Speaker Change: Right now, but it will have its day and I think it will get done at some point it just we aren't predicting exactly when.

Brian Macarthur: So I just want to make sure as I look at these numbers, so the project capital is 3.5 billion, and I would have to think you get some infrastructure benefit there, so it's not a true greenfield. And then you talk about a $3.50 to $4.00 incentive copper price, and I understand the benefits of no royalties and taxes. Does that sort of say that if you didn't have infrastructure, the capital costs would have been higher? And if you didn't have all these tax benefits, the incentive price would be an awful lot higher, i.e.

Speaker Change: Great, thanks very much for all the color.

Speaker Change: Great. Thanks, very much for all the color.

Speaker Change: And Brian, we've got a strong enough financial position that we...

Speaker Change: And Brian we've got a strong enough financial position that we.

Speaker Change: He can.

Speaker Change: You know... You know...

Speaker Change:

Speaker Change: Capital is not a barrier for us doing projects.

Speaker Change: Capital is not.

A barrier for us doing projects that makes sense.

Speaker Change: Thank you.

Yeah.

Speaker Change: Your next question comes from the line of Alan Spence with BNP Paribas. Please go ahead.

Speaker Change: Your next question comes from the line of Alan Spence with BNP Paribas. Please go ahead.

Speaker Change: Yeah.

Alan Spence: It's pretty good.

Alan Spence: Okay.

Alan Spence: Yeah.

Alan Spence: Okay.

Brian Macarthur: If anybody else had to do a greenfield there, you know, you'd probably need an incentive price of well over four dollars to make it work i.e., those numbers include all the tax benefits and everything that you were talking about before. If I can ask the question that way, Brian, if somebody else had the same situation Greenfield and the grades we have, it would be a lot more. A lot of books, a lot more. Yeah, right. And you know, you're $4.

Alan Spence: John, you're breaking up on us.

Alan Spence: Alan you, you're breaking up on us.

Alan Spence: Sorry, I'll try again, hopefully this is Jeremy yeah, that's better.

John: Yeah, that's better.

Alan Spence: Strong performance for Grasberg in December. Is that a level you think...

Jeremy: Strong performance Grasberg in Denver is that a level you think could potentially be.

Speaker Change: Thank you for your time, and I look forward to seeing you again next week.

Jeremy: 24 or was there something.

Jeremy: What happened last month.

Sure Mike.

Speaker Change: Timeline

Speaker Change: Timeline to get to.

Speaker Change: 240,000 funds per day.

Speaker Change: 240000 ton per day run rate.

Brian Macarthur: You know, your $4 is absolutely right. I mean, you just look at recent projects, you know how costs escalate, and then what would it take from an incentive price to justify that project from the outset if the cost numbers had been known? So, this is not that complicated. This is not a Greenfield project. We've operated there for This is just a mill expansion. It's not building a new mine. But then there's the challenge of getting workers and housing for workers.

Speaker Change: With respect to grass, we've got a great

Speaker Change: With respect to exactly you got it great.

Speaker Change: Go ahead.

Speaker Change: Go ahead, Kathleen Okay, I was going to say Mark Johnson is on the line he can add to it if he wants but.

Speaker Change: Okay. I was going to say Mark Johnson's on the line. He can add to it if he wants, but with respect to December.

Mark J. Johnson: With respect to December.

Mark J. Johnson: You know, it highlights, we got that sag mill completed, that new sag mill completed in December. So really, that gave us the ability to put more ore throughput through the concentrators and with the combination of higher grades.

Mark J. Johnson: You know it highlights we we we got that Sag mill completed new Sag mill completed in in December So really that gave us the ability to put more ore throughput.

Mark J. Johnson: Through the through the concentrator.

Mark J. Johnson: And with the combination of higher grades.

Mark J. Johnson: and strong recoveries we had you know a great month. Now we have the ability to to to continue to have strong performance. We achieved a lot of records in in December but we do have we do have the ability and some upside to continue that. That that sag mill was was originally put in the plan because that that sag mill was was originally put in the plan because

Mark J. Johnson: And strong recoveries, we had you know a great month now we have the ability to do to continue to have strong performance and we achieved a lot of records in in December but we do have we do have the ability in some upside to continue that.

Brian Macarthur: So all of this is really telling. On the supply side, I just talked about the demand side support for copper. This is a great example of a simple project, complex projects in our industry. This is relatively simple.

Speaker Change: And yet, you know, it faces these challenges of being economically justified at today's price. You know, at the outset, I said, Today's top price is not a price that's adequate to stimulate the counter. And that's mostly going to be needed. And that's why we're optimistic about future projects. Right, and maybe if I could just ask just on the capital allocation, I mean, you've got lots of options, as you said, but if you're successful for phase three, I mean, you get as much production there as you would here at, I assume, a fraction of the capital cost. Does Baghdad get pushed in that situation? I mean, I get it, the world needs all of it, but would they get sequenced, I mean, I know they don't depend on each other, but are they complementary, and you would do both at once if both work?

Mark J. Johnson: That Sag mill was was.

Mark J. Johnson: Originally put in the plan because.

Mark J. Johnson: Over time, we'll need the additional grinding capacity, et cetera, to take the ore that will be coming. But right now, while we're in these higher grade sections, the more we can put through the mills, the better the copper production will be. In terms of the 240, right now, we don't have...

Mark J. Johnson: Overtime will need the additional grinding capacity et cetera to take the <unk>.

Mark J. Johnson: Or that will be coming but right now while we're in these higher grade sections. The more we can put through the mill the better of the copper production will be.

Mark J. Johnson: In terms of the the 240 right now we don't have.

Mark J. Johnson: Um, 240 in our plans, but over time,

Mark J. Johnson: To 40 in our plans, but over time.

Mark J. Johnson: With the addition of Coochie Maillard, we'll have that capacity to do it. But having SAG-3 does give us some more opportunities in the near term to, if we continue to have high rates of ore produced from the underground, it'll give us some upside. A mine we don't talk a lot about, but one that we're going to try to keep improving on is the Big Gossan mine. It's a relatively small mine, but very, very high grade. And we've got some plans to bring in some additional, and that's reflected in the five-year guidance, but some additional throughput from Big Gossan that'll add copper production and gold production.

With the addition of coaching they are.

Mark J. Johnson: That will have that capacity to do it.

Mark J. Johnson: But but having said three does give us some more opportunities in the near term to its a if we continue to have high rates of of of or produced from the underground.

Mark J. Johnson: It'll give us some some upside in our mind, we don't talk a lot about them, but one that we're going to try to keep improving on is a big gossan mine. It's a relatively small line, but very very high grade and and we've got some plans to to bring in some additional.

Speaker Change: We're prioritizing the leach initiative. I mean, that is one. It's a no-brainer for us. It's very, very little capital that we're investing in it, and very low. It's our lowest incremental operating cost of anything in the U.S., and so that's a no-brainer. We're pursuing that regardless. That makes a ton of sense, and we're pursuing that regardless, we think. The world's going to need something beyond that, you know, obviously. And so on the Baghdad thing, we just want to get it.

Mark J. Johnson: And that's reflected in the five year guidance, but some additional and throughput from from Big Gossan that'll that'll add add copper production in gold production and Mark I don't know if you want to add into any of those comments.

Speaker Change: And Mark, I don't know if you want to add to any of those comments.

Mark J. Johnson: Yeah, Kathleen, the only thing I would add is as part of the KL.

Mark J. Johnson: Yes, Kathryn and the only thing I would add is as part of the Kale.

Kathleen L. Quirk: Project. We also add some, over the shorter term, we add some ore flow capacity and

Project, we also add some over the shorter term, we add some more full capacity and.

Kathleen L. Quirk: and optionality at GBC.

And optionality of GBC.

Kathleen L. Quirk: That allows us to get GBC up from like 120 up to 140,000 tons a day in 2026.

Mark J. Johnson: That allows us to get GBC up from like 120 up to 140000 tonnes a day in 2026.

Kathleen L. Quirk: And at that point, we'll be able to run close to 240,000 tons through the mill. The mine and mill will be matched.

Mark J. Johnson: And at that point, we'll be able to run close to 240000 tonnes through the mill.

Speaker Change: Get it to where... You know, continue to enhance the optionality in it. And we need to do some things anyway. We're doing some infrastructure on tailings that we would need to do anyway in the future, maybe not as quickly as what we would need with a new project, but we need to do those anyway. So we're gonna do those to the extent we can do that efficiently. We want this autonomous thing that we're pursuing. You know, years ago, people thought you didn't really need autonomous vehicles in the U.S., but now, particularly in these remote locations, you really, really do, you know, when you consider the cost of a workforce and the housing limitations and that sort of thing, and the opportunities to upskill our employees. We think it checks all of those boxes. It's so autonomous.

Mark J. Johnson: The mine and mill will be matched and then as you said the K I'll come up and then GBC U K I'll share.

Kathleen L. Quirk: And then, as you said, the KAL come up and then GBC and KAL share portions of the ore flow system, but over the short term,

Mark J. Johnson: <unk> of that.

Mark J. Johnson: Of the orphan system, but over the short term.

Kathleen L. Quirk: We sequenced that part of the KL ore flow that gives us the opportunity at GBC in the much shorter term.

We sequence that part of the Kale or Florida gives us.

The opportunity at GBC and the much shorter term.

Speaker Change: Your next question comes from the line of Bill Peterson with JP Morgan. Please go ahead.

Speaker Change: Your next question comes from the line of Bill Peterson with Jpmorgan. Please go ahead.

Bill Peterson: Richard, Kathleen, and team, nice job on the quarterly exit.

Bill Peterson: Hi, Richard Kathleen and her team are nice Kevin Accordingly execution, thanks for sneaking in my.

Speaker Change: Thanks for watching.

Speaker Change: So I want to come back to the reaching efforts to incremental $200 million.

Bill Peterson: Question here, so wanted to come back to the reaching efforts to an incremental 200 million pounds.

Speaker Change: I think you mentioned two to three year period. Is that a 30 minute year ramp or is that more back end weighted? And you've consistently talked about low capital intensity. Can you remind us what the capital associated with this is, I guess, quantified and has there been any capex creep in interim similar to just other broader projects?

Bill Peterson: I think you mentioned two to three year period is that a fairly linear ramp or is that more backend weighted.

Speaker Change: We want to see how that unfolds. So we don't have to pull the trigger on Baghdad now, but we want to put it in a position where it can go forward. It makes sense if the world needs more copper to get copper from where we already have it, and so it's a good project. It's not a barn burner from an economic standpoint right now, but it will have its day, and I think it will get done at some point. We aren't predicting exactly when. Great, thanks very much for all the color.

Bill Peterson: You've consistently talked about low capital intensity can you remind us what the capital associated with this.

I guess quantified and has there been any capex creep in interim similar to other broader projects.

Bill Peterson: Yes.

Bill Peterson: Okay.

Speaker Change: On the time frame for the incremental 200, we have not given a specific timeline.

Bill Peterson: On the timeframe for the for the incremental 200.

Bill Peterson: We have not given a specific.

Speaker Change: A specific time frame, we do feel we can get it done within a couple of years, and we'll add whatever we can in the interim. This Leach Everywhere initiative that we have where we're accessing parts of stockpiles that hadn't been accessed before, getting access to some of the side slopes and some of the areas around the stockpile that we just didn't leach before, we're...

Bill Peterson: A specific timeframe.

Bill Peterson: We do feel we can get it done within a couple of years and we'll add whatever we can be in the interim we're where this this leach everywhere initiative that we have where.

Speaker Change: And Brian, we've got a strong enough financial position that we, you know, capital is not a barrier for us doing projects that make money. Your next question comes from the line of Alan Spence with BNP Paribas. Please go ahead. Alan, you're breaking up with us.

Bill Peterson: We are or accessing parts of stockpiles that hadn't been accessed before I'm getting access to some other side slopes and some of the areas around the stockpile that.

Bill Peterson: We just didn't leash before where we're.

Speaker Change: That's been a big driver of success and will continue to be. The other one that we're excited about is the targeted drilling. And through our data, we can see where you have situations where the solution that needs to get to the ore has been blocked for some reason over history. And this targeted drilling allows us to get access to it. We are testing this year some abilities to do that more at scale. And that is something that we're real interested to see how that develops and whether that will give us some success. Additional incremental production, we haven't factored that into our plans at this point. But we're going to continue to use these covers. We still don't have everything. The stockpiles are so massive.

Alan Spence: Yeah, that's better. Strong performances from Grassberg and Stemper. Is that a level you think could be improved? 24, or was there something unique about what happened last month?

Bill Peterson: That's that's been a big big driver of success and will continue to be the other one that that where we're excited about is they're targeted targeted drilling.

Bill Peterson: And through our data, we can see where you have situations where.

Alan Spence: And also, if you could just remind me... Pipeline, 240,000 tons per day run. With respect to Grassley, we've got a great, Go ahead. Okay, I was going to say Mark Johnson's on the line, he can add to it if he wants, but with respect to December... You know, it highlights that we got that sag mill completed, that new sag mill completed in December. So really, that gave us the ability to put more ore throughput through the concentrators, and with the combination of higher grades, we have the ability to continue to have strong performance. We achieved a lot of records in December, but we do have the ability and some upside to continue that.

Bill Peterson: The solution that needs to get to the ore.

Bill Peterson: Has been blocked for some reason over history and its targeted drilling allows us to get access to it we are.

Bill Peterson: Testing this year some.

Bill Peterson: Some abilities to do that more at scale.

Bill Peterson: And.

That is something that we're really interested to see how that that develops and whether that will give us some like some of the additional incremental production, we haven't factored that factor that into our plans at this point, but we're going to continue to use these.

Bill Peterson: These covers we still don't have everything of the stockpiles are so massive covering standing, particularly morency just miles of of of area and so we were still doing the doing the recovers we're still looking for other opportunities to get heat into the.

Speaker Change: Covering, you know, spanning, particularly Morenci, just miles of area. And so we're still doing the covers. We're still looking for other opportunities to get heat into the stockpiles. We're targeting some...

Speaker Change: That sag mill was originally put in the plan because... Over time, we'll need the additional grinding capacity, et cetera, to take the ore that will be coming. But right now, while we're in these higher-grade sections, the more we can put through the mills, the better the copper production will be. In terms of the 240, right now, we don't have 240 in our plans, but over time..., with the addition of Kouchi Maillard, we will have that capacity to do it.

Bill Peterson: Into the into the stockpiles were targeting some.

Speaker Change: Some pyrite ores in some of our operations that have pyrite in the ores, that is a source of heat as well. But there are a number of things that we're working on that are not the big R&D effort, but things that we can do from an operational standpoint. But we'll stay tuned. This is a big, big initiative, and stay tuned as we go forward, look to give you a little bit more as we go through 2024 in terms of the time frame. We haven't spent much capital on this initiative.

Bill Peterson: Pyrite ores and some of our operations that have pyrite and yours that is a source of heat as well, but there are a number of things that we're working on them that are or are not the big R&D effort, but but things that we can do from an operational standpoint.

Bill Peterson: But we'll stay tuned and we will this is a big Big initiative and stay tuned we will.

Speaker Change: But having SAC-3 does give us some more opportunities in the near term to, if we continue to have high rates of ore produced from the underground, it will give us some upside. A mine we don't talk a lot about, but one that we're going to try to keep improving on is the Big Gossan Mine. It's a relatively small mine, but very, very high grade. And we've got some plans to bring in some additional, and that's reflected in the five-year guidance, but some additional throughput from Big Gossan that will add copper production and gold production. And Mark, I don't know if you want to add to any of those comments.

Bill Peterson: As we go forward and look to give you a little bit more as we as we go through 2024 in terms of in terms of the timeframe. We havent spent much capital on on this initiative, we've already got the infrastructure basic infrastructure of the bank.

Speaker Change: We've already got, you know, the infrastructure, basic infrastructure, the tank house capacity, you know, this is...

Bill Peterson: Tank House capacity you know this is this is.

Speaker Change: Thank you very much for joining us, and we'll be right back.

Bill Peterson: Or that's it goes to a to a to a tank house not a smelter and we are we have already excess latent tank house capacity.

Some money, but it doesn't it doesn't round to anything really big and the operating costs the incremental operating costs of this have been very low on the order.

Speaker Change: A dollar per pound, and so it's just a really, really exciting opportunity for us to generate value. And so as we go forward, we don't see huge amounts of capital either that'll come into play. When you get to this piece that's R&D, that's where we need to make sure that all these things can be applied and deployed at scale and can be economic. But that testing's ongoing, but the first 400 million pounds, we think that we can do that without spending a lot of capital.

A dollar per pound.

Bill Peterson: And so it's it's just a it's just a really really exciting opportunity for us to generate value and and and so we as we go forward. We don't see huge amounts of capital either that'll that'll come into play when you get to this piece, that's R&D and that's where we need to make.

Mark J. Johnson: Yeah, Kathleen, the only thing I would add is, as part of the KL project, we also add some, over the shorter term, we add some workflow capacity and and optionality at GBC. That allows us to get GBC up from like 120 to 140,000 tons a day in 2026. And at that point, we'll be able to run close to 240,000 tons through the mill. The mine and mill will be matched. And then, as you said, KL comes up, and then GBC and KL share portions of the overflow system, but only in the short term.

Bill Peterson: Sure that all of these things can be applied and deployed at scale and can be economic but that testing is ongoing but the first 400 million pounds.

Bill Peterson: We think that we can we can do that without without spending a lot of capital.

Speaker Change: and you may have noticed this Kathleen but importantly there's no permitting.

Speaker Change: Thanks. Good afternoon, you may have noted this gasoline, but importantly, no permitting issues.

Speaker Change: and that is a real challenge for any kind of project you do in terms of making a film.

And that is a real challenge for any kind of project you do in terms of good.

Speaker Change: Brownfield expansions and really tough for Greenfield expansion. So here, no capital, low operating costs, no permitting.

Speaker Change: Brownfield expansions and really tough.

Speaker Change: So here no capital and low operating cost no permitting delays.

Mark J. Johnson: We sequenced that part of the KL overflow that gives us the opportunity at GBC in the much shorter term. Your next question comes from the line of Bill Peterson with J.P. Morgan. Please go ahead. Hi, Richard, Kathleen, and team. Nice job in the Coral Reacts.

Speaker Change: Our final question will come from the line of Lawson Winder with Bank of America Securities. Please go ahead.

Speaker Change: Our final question will come from the line of Boston Winter with Banc of America Securities. Please go ahead.

Lawson Winder: Thank you very much, Operator, and good morning, good day, Kathleen.

Boston Winter: Okay, well, thank you very much operator.

Boston Winter: Good morning, Good day, Kathleen and Richard Thank you very much for the update.

Bill Peterson: Thanks. So we're going to come back to the reaching efforts to incremental 200 million. I think you mentioned a two- to three-year period. Is that a 30-minute ramp, or is that more back-end-weighted?

Kathleen L. Quirk: Thank you very much for the update. If I could just sneak in one and a half questions. One would just be, on the current level of the dividend, I mean, is your view that, you know, given the cash flow outlook, your view of the copper price, I mean, is this a comfortable level for the dividend?

Boston Winter: Just.

Boston Winter: If I could just sneak in one and a half question.

Boston Winter: I would just be.

Boston Winter: And the current level of the dividend.

Boston Winter: We view that.

Boston Winter: Given the cash flow outlook your view of the copper price I mean, this is a comfortable level for the dividend for 2024, and then just might have question would be is there any movement within your existing TCR see contracts to potentially renegotiate those or get the benefit of some of the really really low spot pricing. We're seeing today. Thank you.

Bill Peterson: And you've consistently talked about low capital intensity. Can you remind us what the capital associated with this is, I guess, quantified, and has there been any capex creep in the interim similar to just other broader projects? On the time frame for the incremental 200, we have not given a specific... a specific time frame, but we do feel we can get it done within a couple of years and we'll add whatever we can in the interim. This Leach Everywhere initiative that we have, where we are accessing parts of stockpiles that hadn't been accessed before, getting access to some of the side slopes and some of the areas around the stockpile that The other one that we're excited about is targeted drilling. And through our data, we can see where you have situations where the solution that needs to get to the ore has been blocked for some reason in history. And this targeted drilling allows us to get access to it.

Kathleen L. Quirk: for 2024.

Kathleen L. Quirk: My half question would be, is there any movement within your existing TCRC contracts to potentially renegotiate those or get the benefit of some of the really, really low spot pricing we're seeing today?

Boston Winter: Okay.

Kathleen L. Quirk: On the dividend question, our board reviews the financial policy on a regular basis.

Speaker Change: On the dividend question, our board reviews, our financial policy on a on a regular basis.

Kathleen L. Quirk: We put in place the base dividend, the variable dividend, and we've been paying at that level for some time now. We'll continue to review that with the board. You can see from our results, the financial results that we're projecting for 2024 look very good. But we always, you know, are going to look at what's going on in the market and don't want to put ourselves in a position of,

Speaker Change: Put in place the.

Speaker Change: The base dividend the variable dividend and we've been paying at that level for some time now and will continue to review that with the board you can see from our our results.

Speaker Change: The financial results that were projecting for 2024.

Speaker Change: Look very good but we always you know I'm going to look at what's going on in the market and and and don't want to put ourselves in a position of.

Kathleen L. Quirk: of, um, of,

Speaker Change: Hum.

Speaker Change: Yeah.

Kathleen L. Quirk: Running up debt, but we have a good balance sheet, so I don't want to front run anything. The board will look at this on a regular basis, but our financial position.

Speaker Change: Running up debt, but and but we have a good balance sheet. So I I don't want to front run anything the board will look at this on a on a regular basis, but our financial position is.

Bill Peterson: We are testing this year some abilities to do that more at scale, and that is something that we're really interested to see how that develops and whether that will give us some additional incremental production. We haven't factored that into our plans at this point, but we're going to continue to use these covers. We still don't have everything, the stockpiles are so massive, covering, you know, spanning, particularly Maranci, just miles of area. And so we're still doing the covers, we're still looking for other opportunities to get heat into the into the stockpiles. We're targeting some pyrite ores in some of our operations that have pyrite in the ores, that is a source of heat as well.

Kathleen L. Quirk: is in really excellent shape.

Speaker Change: Isn't really you know really excellent shape.

Kathleen L. Quirk: Um...

Speaker Change:

Kathleen L. Quirk: The second question on TCRC...

Speaker Change: The second question on TCR fees.

Kathleen L. Quirk: You know, we reach agreement, you know, as you know, on long-term TCRCs that are done, you know, on fixed contracts.

Speaker Change: You know we we reach agreement you know as you know with them on on long term TCR sees that are done you know on fixed contracts.

Kathleen L. Quirk: Once a year, and since then, you know, spot rates have come a lot, lot lower, you know, given the tightness in supply. We do sell some things on a spot basis, but most of it is sold under these fixed contracts where we have the TCRCs fixed. The other, you know, the other thing is once, you know, once we get the smelter in Indonesia up and running, we don't have, you know, we still do with, still have with Cerro Verde concentrate that we sell, but, you know, everything from Indonesia will be really just.

Speaker Change: Once a year and since then you know spot rates of <unk> have come from a lot lot lower you know given the tightness in supply.

Speaker Change: We do sell some things on a spot basis, but most of it is sold under these these fixed contracts, where we have the TCR cease fixed the other you know the other thing is once you know once we get the smelter in Indonesia up and running we don't have you know, we still do with Cerro still have with Cerro Verde.

Bill Peterson: But there are a number of things that we're working on that are not the big R&D effort but things that we can do from an operational standpoint. We'll stay tuned.

Speaker Change: Concentrate that we that we sell but everything from Indonesia will be really just.

Bill Peterson: This is a big, big initiative. And stay tuned as we go forward to give you a little bit more as we go through 2024 in terms of the timeframe. We haven't spent much capital on this initiative. We've already got, you know, the infrastructure, basic infrastructure, the tank house capacity. You know, this is, this is.

Kathleen L. Quirk: You know, process through our own smell.

Speaker Change: As you know process through our own smelters.

Kathleen L. Quirk: And our contracts are long-term.

Speaker Change: Okay.

Speaker Change: Contracts are long term in terms of volumes, but.

Kathleen L. Quirk: In terms of volumes, but...

Kathleen L. Quirk: PCRC

Speaker Change: E R seizure renegotiated each year.

Kathleen L. Quirk: and you raised a great point for those of you who haven't followed

Speaker Change: And you raised a great point.

Speaker Change: You haven't solved it.

Bill Peterson: We've spent some money, but it doesn't, it doesn't round to anything really big. Operating costs, the incremental operating costs of this have been very low, on the order of a dollar per pound. And so it's just a really, really exciting opportunity for us to generate value. And so as we go forward, we don't see huge amounts of capital either that'll come into play. When you get to this piece that's R&D, that's where we need to make sure that all these things can be applied and deployed at scale and can be economical. But that testing's ongoing. But the first 400 million pounds, we think that we can do that without spending a lot of capital. You may have noticed this, Kathleen, but importantly, there's no permit. And that is a real challenge for any kind of project you do in terms of... brownfield expansions and really tough for greenfield expansions.

Speaker Change: Thank you.

Speaker Change: Hey.

The situation right now with smelters, where they can't.

Speaker Change: Situation right now with smelters where they can't.

Speaker Change: Yes.

Speaker Change: Concentrate to process is a real strong indicator of where this market is and where it's going.

Speaker Change: Yes concentrate to process is real strong.

Speaker Change: Indicator of where this market is and where it's going.

Speaker Change: Yeah.

Speaker Change: I'll turn the call back to management for any closing remarks.

Speaker Change: I'll turn the call back to management.

Speaker Change: Next.

Speaker Change: We appreciate it everyone. If there are any follow-ups, feel free to call David and we're available to continue to discuss and report to you our progress throughout the year.

Speaker Change: We appreciate it everyone.

Speaker Change: You feel free to call, David and we are available to them continuing to discuss.

Speaker Change: To you our progress throughout the year.

Speaker Change: Thank you for joining us today, and everyone have a great day.

Yes, thank you for joining us today and everyone everyone have a great day.

Speaker Change: Ladies and gentlemen, that concludes our call for today. Thank you for your participation and you may now disconnect.

Speaker Change: Ladies and gentlemen that concludes our call for today. Thank you for your participation and you may now disconnect.

Speaker Change:

Bill Peterson: So here, no capital, low operating costs, no permitting. Our final question will come from the line of Lawson Winder with Bank of America Securities. Please go ahead.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: Hum.

Lawson Winder: Thank you very much, Operator, and good morning, good day, Kathleen. Thank you very much for the update. I just, if I could just sneak in one and a half questions, one would just be on the current level of the dividend. I mean, is your view that, you know, given the cash flow outlook, your view of the copper price, is this a comfortable level for the dividend? 2024.

Lawson Winder: And my half question would be, is there any movement within your existing TCRC contracts to potentially, you know, renegotiate those or get the benefit of some of the really, really low spot prices we're seeing today? On the dividend question, our board reviews the financial policy on a regular basis. We put in place the base dividend, the variable dividend, and we've been paying at that level for some time now.

Speaker Change: We'll continue to review that with the board. You can see from our results, the financial results that we're projecting for 2024 look very good. But we're always going to look at what's going on in the market and don't want to put ourselves in a position of— of running up debt, but we have a good balance sheet, so I don't want to front run anything.

Speaker Change: The board will look at this on a regular basis, but our financial position is... is in really, you know, really excellent shape. The second question about TCRCs: we reached agreement, as you know, on long-term TCRCs that are done on fixed contracts. Once a year, and since then, you know, spot rates have come a lot, a lot lower, you know, given the tightness in supply. We do sell some things on a spot basis, but most of it is sold under these fixed contracts where we have the TCRCs fixed. The other thing is once, you know, once we get the smelter in Indonesia up and running, we won't have, you know, we still have Sara Verde concentrate that we, that we sell, but, you know, everything from Indonesia will be really just processed through our own snow, And our contracts are long term, in terms of volumes, but E.C.E.R. And you raised a great point, for those of you who haven't followed it, the situation right now with smelters where they can't yet concentrate to process is a really strong indicator of where this market is and where it's going.

Speaker Change: I'll turn the call back to management for any closing remarks. We appreciate it, everyone. If there are any follow-ups, feel free to call David, and we're available to continue to discuss and report to you our progress throughout the year. Thank you for joining us today, and everyone have a great day. Ladies and gentlemen, that concludes our call for today. Thank you for your participation, and you may now disconnect.