Q1 2024 Freeport-McMoRan Inc Earnings Call

Operator: Ladies and gentlemen, thank you for standing by, and welcome to the Freeport-McMoRan first 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 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 Mr. David Joint, Vice President, Investor Relations. Please go ahead, sir.

Ladies and gentlemen, thank you for standing by and welcome to the Freeport Mcmoran first 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.

Conference. Please press Star Zero I would now like to turn the conference over to Mr. David Joint Vice President Investor Relations. Please go ahead Sir.

David Joint: Thank you, Regina, and good morning, everyone. Welcome to the Freeport-McMoRan conference call. Earlier this morning, Freeport reported its first quarter 2024 operating and financial results. A copy of our press release, with supplemental schedules and slides, is available on our website, fcx.com. Today's conference call is being broadcast live on the internet. Anyone may listen to the conference call by accessing our homepage and clicking on the webcast link. In addition to analysts and investors, the financial press has been invited to listen to today's call.

David Joint: Thank you Regina and good morning, everyone.

David Joint: Welcome to the Freeport Mcmoran conference call.

David Joint: Earlier this morning, Freeport reported its first quarter 2024, operating and financial results.

David Joint: A copy of our press release with supplemental schedules and slides is available on our website at <unk> Dot com.

David Joint: Today's conference call is being broadcast live on the Internet.

David Joint: Anyone may listen to the conference call by accessing our website homepage and clicking on the webcast link.

David Joint: In addition to the <unk> to analysts and investors. The financial press has been invited to listen to todays to today's call. A replay of the webcast will be available on our website later today.

David Joint: A replay of the webcast will be available on our website later today. Before we begin today's comments, we'd like to remind everyone that our press release and certain of our comments on the call include non-GAAP measures and forward-looking statements, and actual results may differ materially. Please refer to the cautionary language included in our press release and slides and to the risk factors described in our SEC filings, all of which are available on our website.

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

David Joint: Please refer to our cautionary language included in our press release and slides and to the risk factors described in our SEC filings.

David Joint: All of which are available on our website.

David Joint: Also on the call with me today are Richard Adkerson, Chairman of the Board and Chief Executive Officer; Kathleen Quirk, President; Marie Robertson, Senior Vice President and CFO, and other senior members of our management team. Richard will make some opening comments, Kathleen will review our slide materials, and then we'll open up the call for questions. I would now like to turn the call over to Richard.

David Joint: Also on the call with me today are Richard Akerson, Chairman of the Board and Chief Executive Officer.

Kathleen Quirk, President Marie Robertson, Senior Vice President and CFO and other senior members of our management team.

Richard C. Adkerson: Richard will make some opening comments Kathleen will review, our slide materials and then we'll open up the call for questions.

Richard C. Adkerson: Now like the call turn the call over to Richard.

Richard C. Adkerson: Thank you, David. And thank you all for joining us. We're really pleased today to report our first quarter results. They reflect a continuation of Freeport's long-running success in executing our business plan. Kathleen will present our results, as David said, and then we'll answer your questions.

Richard C. Adkerson: Thank you David and thank you all for joining US we're really pleased today to report our first quarter results.

Kathleen: They reflect a continuation of freeport's long running success in executing our business plans.

Kathleen: Kathleen will present, our results as David said and then we will answer your questions.

Richard C. Adkerson: Kathleen will become Freeport's CEO effective with our annual shareholders meeting on June 11th. I will continue as chairman and support Kathleen and her management team on important strategic issues and external relations. This will be the most seamless management transition in history. It has been a 20-year transition, in fact.

Kathleen: Kathleen will become freeport's CEO effective with our annual shareholders meeting on June 11th.

Speaker Change: We will continue as chairman and support Kathleen and her management team.

Speaker Change: The important strategic issues and external relations.

David Joint: This will be the most seamless management transition in history. There is there's been a 20 year transition in fact.

Richard C. Adkerson: Coincidentally, Kathleen joined Freeport shortly after I did, 35 years ago, and I've been an advisor to the company for the previous two decades. She advanced through our finance group to become CFO when I became CEO 20 years ago. And since then, she's been integral to the management of the company. When I became chairman three years ago, I made a personal commitment to build a sustainable board and a sustainable management team. And since that time, we've added six high-quality, independent directors, New Directors, which together with our continuing directors comprise a very strong independent board to represent our shareholders.

David Joint: Coincidentally Kathleen joined Freeport shortly after I did 35 years ago.

David Joint: And I had been an adviser to the company for the previous two decades she.

David Joint: She advance through our finance group to come see <unk>, when I became CEO 20 years ago and since then she has been integral to the management of the company.

David Joint: When I became chairman three years ago, I made a personal commitment to build a sustainable board and a sustainable management team.

David Joint: And since that time, we've added six high quality.

David Joint: Independent directors, new directors, which together with our continuing directors comprise a very strong independent board to represent our shareholders, we bolstered our staff within internal promotions and external hires.

Richard C. Adkerson: We bolstered our staff with internal promotions and external hires. Freeport is strongly positioned for the future, and I'm personally proud to be able to say that at this point. Twenty years ago, we made a strategic commitment to copper based on the fundamentals of supply and demand for the commodity. The validity of that commitment has never been more evident, and the best is yet to come. My personal enthusiasm for Freeport's future has never been stronger. I cannot be more pleased with our board and with our management team under Kathleen's leadership. Kathleen, I'll turn the call over to you for your slides.

David Joint: Freeport is strongly positioned for the future and I'm personally proud to be able to say that at this point.

David Joint: Many years ago, we made a strategic commitment to copper based on the fundamentals of supply and demand for the commodity does.

The validity of that commitment has never been more evident and the best is yet to come.

David Joint: My personal enthusiasm for freeport's future has never been stronger I cannot be more pleased with our board and with our management team under Kathleen's leadership.

David Joint: Kathleen and I will turn the call over to you for your slides.

Kathleen Lynne Quirk: Great, and thank you, Richard, and a special thank you to you for your outstanding and visionary leadership during your long tenure as our CEO. As I prepare to become CEO in June, I'm focused on our copper leading strategy, centered on reliable execution of our plans, disciplined cost and capital management, and continuing our drive for profitable growth. Our seasoned team knows this business, has a proven ability to navigate challenges, and has a passion for finding value in our assets.

Kathleen: Great well, thank you Richard.

Speaker Change: A special thank you to you for your outstanding and visionary leadership during the year long tender his tenure as our CEO.

Kathleen: As I prepare to become CEO in June.

Kathleen: <unk> focused on our top our leading strategy centered on reliable execution of our plans disciplined cost and capital management and continuing our drive for profitable growth.

Our seasoned team knows this business hasnt.

Speaker Change: Our proven ability to navigate challenges and a passion for finding value in our assets I look forward to building on our past success and to leading our company to new highs in the future.

Kathleen Lynne Quirk: I look forward to building on our past success and to leading our company to new highs in the future. Starting on page 3, slide 3, we have a new annual report out with this year's theme being the value of copper. The report is available on our website.

Speaker Change: Starting on page three slide three we have a new annual report out with this year.

Speaker Change: The value of copper.

Speaker Change: <unk> is available on our website highlights our performance.

Kathleen Lynne Quirk: It highlights our performance, our copper-focused strategy, and our strength as a premier copper producer. We'll also be publishing our annual sustainability report, which will be available on our website later this week. This report, which we've been doing for some time now, details our environmental and social performance, which we take very seriously as part of our commitment to responsible production. On slide four, we present our key focus areas for 2024. These are the same items we discussed in our January call, and we thought it would be good to show these again for reference so you can track our progress against these areas as we go through the year. On slide five, turning to the first quarter highlights, we're off to a really good start so far in 2024.

Speaker Change: Copper focused strategy and our strength as a premier copper producer.

Speaker Change: Also be publishing our annual sustainability report, which will be available on our website. Later this week. This report, which we've been doing for some time now details, our environmental and social performance, which we take very seriously as part of our commitment to responsible production.

Speaker Change: On slide four we present, our key focus areas for 2024. These are the same items, we discussed on our January call and we thought it would be good to show. These again for reference. So you can track our progress against these areas as we go through the year.

Speaker Change: On slide five turning to the first quarter highlights we're off to a really good start so far in 2024.

Kathleen Lynne Quirk: As summarized, we exceeded our guidance for first quarter copper sales, gold sales were in line with our estimates, and consolidated unit net cash costs were better than forecast. We generated strong margins and cash flows during the quarter, with $2.5 billion in adjusted EBITDA and $1.9 billion in operating cash flows. And that was at an average copper price of $3.94 per pound. Unknown Attendee Capital Expenditures Excluding $1.5 billion for the Indonesian smelter project, totaled $800 million in the quarter, and we reduced our net debt.

Speaker Change: Summarized we exceeded our guidance for first quarter copper sales gold sales were in line with our estimates and consolidated unit net cash costs were better than forecast.

Speaker Change: We generated strong margins and cash flows during the quarter with $2 5 billion and adjusted EBITDA and $1 9 billion in operating cash flows and that was at an average copper price of 394 per pound.

Speaker Change: Capital expenditures excluding <unk>.

Speaker Change: <unk> 5 billion for the Indonesian smelter project totaled $800 million in the quarter and we reduced our net debt. We made great progress on several important initiatives, including on the Indonesian smelter, which is scheduled to start up in June building momentum and our innovative.

Kathleen Lynne Quirk: We made great progress on several important initiatives, including the Indonesian smelter, which is scheduled to start up in June, building momentum in our innovative copper leach initiative, and continuing to build optionality in our organic growth pipeline. Market conditions are increasingly positive, there is growing recognition of factors driving favorable fundamentals in copper, and we've also seen a rise in gold prices year to date. Recall that Grasberg is one of the world's largest mines in terms of both copper and gold production.

Speaker Change: Copper Leach initiative and continuing to build optionality in our organic growth pipeline.

Speaker Change: Market conditions are increasingly positive they're growing recognition of factors.

Driving favorable fundamentals in copper and we've also seen a rise in gold price this year to date.

Speaker Change: Call that Grasberg is one of the world's largest mines in town in terms of both copper and gold production.

Kathleen Lynne Quirk: Moving to copper markets, starting on slide 6. The growing intensity of use of copper in the global economy is supported by secular trends, particularly in electrification. Copper is a foundational, essential metal when it comes to electrification, and the world is becoming more and more focused on copper-intensive energy applications.

Speaker Change: Moving the copper markets starting on slide six.

Speaker Change: The growing intensity of use of copper in the global economy is supported by secular trends, particularly in electrification.

Speaker Change: Copper is a foundational essential metal when it comes to electrification and the world is becoming more and more focused on copper intensive energy applications, new massive investment in the power grid renewable generation technology infrastructure and transportation are driving increased demand for copper.

Kathleen Lynne Quirk: New massive investment in the power grid, renewable generation, technology infrastructure, and transportation is driving increased demand for copper, and forecasts call for above-trend growth and demand for the foreseeable future. This is occurring at a time when there are constraints on existing supplies, an absence of major new copper development projects, and extended multi-year lead times for supply development, pointing to tight market conditions for an extended period of time. Copper producers, including us at Freeport, have been citing physical market tightness for some time, and in the last several weeks, the copper price has risen to reflect the reality of the market situation.

Speaker Change: And forecast call for above trend growth in demand for the foreseeable future.

Speaker Change: This is occurring at a time when there are constraints on existing supplies and absence of major new copper development projects and extended multiyear lead times for supply development wanting to tight market conditions for an extended period of time.

Speaker Change: Copper producers, including us at Freeport has been citing physical market tightness for some time and in the last several weeks the copper price has risen to reflect the reality of the market situation.

Kathleen Lynne Quirk: Based on historical periods of above-trend growth and demand, we may be in the early stages of a repricing for long-term copper prices. We illustrate this on slide 7, where we show how copper prices responded 20 years ago when China emerged as a major consumer of copper.

Speaker Change: Based on historical periods of above trend growth in demand we may be in the early stages of a repricing for long term copper prices.

Speaker Change: We illustrate this on slide seven.

Speaker Change: Where we show how copper prices responded 20 years ago, when China emerge as a major consumer of copper.

Kathleen Lynne Quirk: You can see on this chart that within 12 months, the copper price increased by 40% and was up nearly four times in a three-year period. During 2023, the secular drivers for copper demand provided growth in demand despite weakness in some of the more cyclical drivers of copper demand. In the fourth quarter of last year, industry announcements of sizable supply disruptions tightened the market significantly.

Speaker Change: You can see on this chart that within 12 months, the copper price increased by 40% and was up nearly four times within a three year period.

Speaker Change: During 2023, the secular drivers for copper demand provided growth in demand despite weakness in some of the more cyclical drivers of copper demand in the fourth quarter of last year industry announcements of sizeable supply disruptions tightened the market significantly.

Kathleen Lynne Quirk: This is clearly evident when you look at the physical concentrate markets, where smelters drop TC treatment charges sharply as a result of a shortage of concentrate supply. Notably, recent manufacturing data points also indicate that the global economy is recovering. The recently improved macroeconomic settlement combined with physical market conditions have driven copper prices higher year-to-date, and many analysts are now projecting significantly higher copper prices in the future. At Freeport, our financial performance is highly levered to copper prices, as you'll see from our sensitivities, which we'll review later in the presentation.

Speaker Change: This is clearly evident when you look at the physical concentrate markets, where smelters dropped Tc.

Speaker Change: <unk> charges sharply as a result of the shortage of concentrate supply.

Speaker Change: Notably recent manufacturing data points also indicate that the global economy is recovering.

Speaker Change: Our recently improved macroeconomic sentiment combined with physical market conditions have driven prices higher copper prices higher year to date and many analysts are now projecting significantly higher copper prices in the future.

Speaker Change: At Freeport, our financial performance is highly leveraged to copper prices as you'll see from our sensitivities will review later in the presentation, we're not predicting where prices will go from here and recognize there'll be volatility.

Kathleen Lynne Quirk: We're not predicting where prices will go from here and recognize there will be volatility, but clearly, the fundamentals point to an extended period of deficits and significantly higher copper prices over the long term. That's very positive for a company like ours with large-scale, long-life producing assets and organic development opportunities. Now we'll cover the operating highlights from the quarter. This is presented in slot 8.

Speaker Change: Clearly the fundamentals point to an extended period of deficits and significantly higher copper prices over the long term, that's very positive for a company like ours with large scale long life, producing assets and organic development opportunities.

Speaker Change: Now I'll cover the operating highlights from the quarter. This is presented on slide eight.

Kathleen Lynne Quirk: We're summarizing the key operating highlights by geographic region. In the U.S., we continue to work to mitigate the impact of lower ore grades by focusing on initiatives to improve the efficiency and reliability of our equipment, the productivity of our workforce, and sharpening our focus on cost reduction. We're making progress in these areas, but we still have work to do to regain our goal of being at the top of the industry in terms of efficiency and productivity. Our innovative leach initiative is providing incremental volumes and has helped us mitigate the impact of lower ore grades.

Speaker Change: We're summarizing the key operating highlights by geographic region in.

Speaker Change: In the U S. We continue to work to mitigate the impact of lower ore grades by focusing on initiatives to improve efficiency and reliability of our equipment the productivity of our workforce and sharpening our focus on cost reduction.

Speaker Change: We're making progress in these areas, but we still have work to do to regain our goal of being at the top of the industry in terms of efficiency and productivity.

Speaker Change: Innovative Leach initiative is providing incremental volumes and has helped us mitigate the impact of lower ore grades.

Kathleen Lynne Quirk: As we previously reported, we exceeded our 200 million pound per annum run rate. We've got several initiatives in progress to scale this to the 300 to 400 million pound per annum range over the next two years. We're also continuing to take advantage of new technologies and automation across the portfolio, which we believe have a lot of potential to move the needle as we go forward. In South America, our ore milled was slightly below 400,000 metric tons of ore per day at Cerro Verde.

Speaker Change: As we previously reported we reached over 200 million pound per annum run rate. We've got several initiatives in progress to scale. This to the 300 to 400 million pound per annum range over the next two years.

Speaker Change: We're also continuing to take advantage of new technologies and automation across the portfolio, which we believe have a lot of potential to move the needle as we go forward.

Speaker Change: In South America, we are at war milled was slightly below 400000 metric tonnes of ore per day at Cerro Verde.

Kathleen Lynne Quirk: Our team worked through several challenges during the quarter associated with material types which required optimizing mill throughput to address recoveries, and the team was successful in achieving copper volume targets by increasing mine rates and accessing higher than planned grades. Our molly byproduct volumes were impacted, however, by low recoveries associated with the material types, and progress is being made to address these. At our Labra Mon plant in Chile, we had a good quarter, and we met expectations. We're also pleased to report that Cera Verde recently finalized an agreement for a new four-year labor agreement with its workers.

Speaker Change: Team worked through several challenges during the quarter associated with material types, which required optimizing mill throughput to address recoveries.

Speaker Change: And the team was successful in achieving copper volume targets by increasing mine rates and accessing higher than planned grades.

Speaker Change: Our moly byproduct volumes were impacted however by lower recoveries associated with the material types and progress is being made to address this.

Speaker Change: At our La Romana in Chile, we had a good quarter and we met expectations. We're also pleased to report that Cerro Verde recently finalized an agreement for a new four year labor agreement with its workforce.

Kathleen Lynne Quirk: In Indonesia, we had another exceptional quarter of performance. Both copper and gold production exceeded our forecast with higher mill rates, higher ore grades, and recovery. Our net unit cash cost for the quarter in Indonesia was a net credit of $0.12 per pound.

Speaker Change: In Indonesia, we had another exceptional quarter of performance, both copper and gold production exceeded our forecast with higher mill rates higher ore grades and recoveries, our net unit cash costs for the quarter in Indonesia was a net credit of 12 cents per pound.

Kathleen Lynne Quirk: That means our gold by-product credits more than offset all of the cash production costs. Our underground ore mine, which is the largest block cave mine district in the world, averaged 220,000 tons per day. That was above the fourth quarter of 2023 and significantly above last year's first quarter. The Glassburg Block Cave Mine is our largest mine in the district, and it continues to achieve strong performance. We've also increased rates at the extra-high-grade, smaller mine at Big Gossan by nearly 30%. Our new SAG mill, which we installed at the end of last year, is performing very well.

Speaker Change: That means our gold byproduct credits more than offset all of the cash production costs.

Our underground ore mined which is the largest block cave mining district in the world averaged 220000 tonnes per day.

Speaker Change: That was above the fourth quarter of 2023, and and significantly above last year's first quarter.

Speaker Change: The Grasberg block Cave mine is our largest in the district and that continues to achieve strong performance. We've also increased our rates at the extra high grade smaller mine at big Gossan by nearly 30%.

Speaker Change: Our new Sag mill, which we installed at the end of last year is performing very well, we're nearing completion of a mill recovery project and that'll enable higher mill recoveries in the future.

Kathleen Lynne Quirk: We're nearing completion of a mill recovery project, and that will enable higher mill recoveries in the future. And our team there is just doing outstanding work in sustaining and optimizing value from this large resource position. To top it off, the PTFI team recently finalized a new two-year labor agreement with our workforce.

Speaker Change: And our team there is just doing outstanding work and sustaining and optimizing value from this large resource position topping it off the <unk> team recently finalized a new two year labor agreement with our workforce.

Speaker Change: Give a report on slide nine of where we stand with our smelter project and the completion of this new smelter in Indonesia is a very important catalyst for us as we work to secure an extension of our long term operating rights in Indonesia.

Kathleen Lynne Quirk: We'll give a report on slide 9 of where we stand with our smelter project, and completion of this new smelter in Indonesia is a very important catalyst for us, as we work to secure an extension of our long-term operating rights in Indonesia. We made substantial progress in the first quarter, and now we're focused on the remaining critical path and transitioning to commissioning and startup activity. We're on track to begin heating the furnaces during June, followed by concentrate processing in August, and first cathode in October.

Speaker Change: We've made substantial progress in the first quarter and now we're focused on the remaining critical path and transitioning to commissioning and startup activities.

Speaker Change: We're on track to begin heating furnaces. During June followed by concentrate processing August and first cathode in October.

Speaker Change: We're working closely with the Indonesian government to continue to export concentrates in anodes farms until the smelter in precious metals refinery are fully operational and we suspect that by year end when we will become a P. T F. I a fully integrated metals producer discussions with the government to date are paused.

Kathleen Lynne Quirk: We're working closely with the Indonesian government to continue to export concentrates and anode slimes until the smelter and precious metals refinery are fully operational, and we expect that by year-end, we will become a PTFI, a fully integrated metals producer. Discussions with the government to date are positive, and that's supported by the project status and the start-up plan. In terms of our startup, we have a very talented local team who will be supported by a large team of Freeporters from around the globe, including from our Spanish operations and our U.S. smelting operations to support an efficient startup.

Speaker Change: And that's supported by the project status and the startup plans.

Speaker Change: In terms of our start up we have a very talented local team who will be supported by a large team of Freeport <unk> from around the globe, including from our Spanish operations in our U S smelting operations to support an efficient startup.

Speaker Change: We're very focused on our growth.

Speaker Change: And optionality in our growth pipeline and we've got a summary on slide 10, where we go through where we stand on the various projects we have.

Speaker Change: <unk> teams working on advancing opportunities to grow production in the future.

Speaker Change: You'll see the the update for each of the major initiatives underway, starting with the innovated Leach innovative Leach initiative.

Kathleen Lynne Quirk: We're very focused on our growth and optionality in our growth pipeline, and we've got a summary on slide 10 where we go through where we stand on the various projects. We have dedicated teams working on advancing opportunities to grow production in the future. And here you'll see an update on each of the major initiatives underway, starting with the Innovative Leach Initiative, where our team has several work streams in progress to take our initial success and build substantial scale.

Speaker Change: Where our team has several work streams in progress to take our initial success and build substantial scale.

Speaker Change: This project has the highest net present value potential of any project, we have seen historically because of low capital intensity low incremental operating costs.

Speaker Change: And a freeport would uniquely positioned to capture this value with our sizable existing footprint technical knowhow and new technologies available to us.

Kathleen Lynne Quirk: This project has the highest net present value potential of any project we have seen historically because of low capital intensity and low incremental operating costs. And at Freeport, we're uniquely positioned to capture this value with our sizable existing footprint, technical know-how, and new technologies available to us. At our Baghdad operation in northwest Arizona, we talked about it on our last call, and now we're continuing to take steps to de-risk the brownfield expansion project by converting the existing haul truck fleet to be fully autonomous, expanding housing infrastructure at the site, and expanding our tailings facility.

Speaker Change: At our Bagdad operation in northwest, Arizona, We talked about it on our last call and now we're continuing to take steps to Derisk. The brownfield expansion project by converting the existing haul truck fleet to fully autonomous.

Speaker Change: Expanding housing infrastructure at the site and expanding our tailings facilities.

Speaker Change: We're also continuing to monitor labor market conditions in Arizona and hope to be in a position to make an investment decision by the end of next year from there. The project would take about three to four years to construct.

Speaker Change: At our Lone Star Safford Brownfield project in Eastern Arizona, We're commencing a pre feasibility study this year to define and frame a major expansion as we've been talking about over many quarters, we have a sizable resource here and expect this district will become a major cornerstone asked.

Kathleen Lynne Quirk: We're also continuing to monitor labor market conditions in Arizona and hope to be in a position to make an investment decision by the end of next year. From there, the project would take about three to four years to construct.

Kathleen Lynne Quirk: At our Lone Star-Safford-Brownfield project in eastern Arizona, we're commencing a pre-feasibility study this year to define and frame a major expansion. As we've been talking about for many quarters, we have a sizable resource here and expect this district will become a major cornerstone asset for us in Arizona during the next decade. At Alhambra in Chile, we have a large resource that can support a new concentrator of scale.

Speaker Change: That for us in Arizona during the next decade.

Speaker Change: At El Abra in Chile, we have a large resource that can support our newest concentrate or scale.

Speaker Change: And we're looking at a concentrate or similar to the size of the Cerro Verde concentrator expansion, we installed nearly 10 years ago, we've done substantial work to define the project and we're currently in the process of re testing the economics.

Kathleen Lynne Quirk: And we're looking at a concentrator similar to the size of the Cerro Verde concentrator expansion we installed nearly 10 years ago. We've done substantial work to define the project, and we're currently in the process of retesting the economics and taking a hard look at capital costs in light of the recent industry experience in Chile. We're working to be in a position to file an environmental impact statement by the end of next year. And this project would require seven to eight years of lead time because of environmental requirements.

Speaker Change: And taken a hard look at capital costs in light of the recent industry experience in Chile.

Speaker Change: We're working to be in a position to file an environmental impact statement by the end of next year and this required. This project would require of seven to eight years of lead time because of permitting requirements.

Speaker Change: In Indonesia, we're continuing to advance our large scale cuccinelli our development to commence production by 2030. We also have several additional exploration targets in the district and.

Speaker Change: And expect to have additional long term development options that would be become available with an extension of our operating rights beyond 2041.

Kathleen Lynne Quirk: In Indonesia, we're continuing to advance our large-scale Coutin-Lyar development to commence production by 2030. We also have several additional exploration targets in the district and expect to have additional long-term development options that would become available with an extension of our operating rights beyond 2041. We're going to continue to be disciplined in our approach, targeting opportunities that can be executed efficiently and profitably and where we think we can create value for shareholders. We wanted to take you through a little bit of our learning history on slide 11, which provides a history of what we've achieved to date on this innovative project.

Speaker Change: We're going to continue to be disciplined in our approach targeting opportunities that can be executed efficiently and profitably and where we think we can create value for shareholders.

Speaker Change: We wanted to take you through a little bit of our Leach history on slide 11 that provides history of what we've achieved to date on this innovative project.

Speaker Change: We started on this journey two years ago with data analytics, and new operating practices to tap into our large stockpiles to recover copper from material that was previously mined.

Speaker Change: Through a combination of actions to achieve greater heat retention and the stockpiles gaining.

Speaker Change: Gaining access to areas of the stockpiles that had not been optimally leach historically.

Speaker Change: And through the use of better identification of trapped potential we've been successful.

Kathleen Lynne Quirk: We started on this journey two years ago with data analytics and new operating practices to tap into our large stockpiles to recover copper from material that was previously mined. Through a combination of actions to achieve greater heat retention in the stockpiles, gaining access to areas of the stockpiles that had not been optimally leached historically, and through the use of better identification of trapped potential, we've been successful in adding incremental copper previously thought to be un This initiative has grown now to be a major value driver for America's business, particularly for our largest U.S. mine in Marantz.

Speaker Change: And adding incremental copper previously thought to be unrecoverable.

Speaker Change: This initiative has grown now to be a major value driver for our Americas business, particularly for our largest U S mine in an emergency.

Speaker Change: We as we mentioned we achieved our initial target for an annual run rate of 200 million pounds per annum now focused on doubling this through scaling what we've learned to date.

Speaker Change: To date with the success has largely been operationally driven complemented by new data and technology.

Speaker Change: At the same time in parallel we're advancing studies on new additives that could boost recoveries and we're exploring options for adding heat to existing stockpiles to generate incremental copper.

Kathleen Lynne Quirk: As we mentioned, we achieved our initial target for an annual run rate of 200 million pounds per annum, now focused on doubling this or scaling what we've learned to date. To date, the success has largely been operationally-driven, complemented by new data and technology.

Speaker Change: In the aggregate these initiatives have the potential to reach 800 million pounds per annum and that's the equivalent of a large scale copper mine with low capital intensity low costs in a low carbon footprint.

Speaker Change: About half of this can be achieved through further scaling as we mentioned and the other half relates to technology under development.

Kathleen Lynne Quirk: At the same time, in parallel, we're advancing studies on new additives that could boost recoveries, and we're exploring options for adding heat to existing stockpiles to generate incremental copper. In the aggregate, these initiatives have the potential to reach 800 million pounds per annum, and that's the equivalent of a large-scale copper mine with low capital intensity, low costs, and a low carbon footprint. About half of this can be achieved through further scaling, as we mentioned, and the other half relates to technology under development. The value potential is very attractive, particularly for Freeport, given our large quantities of suitable material that we have previously mined. In terms of our...

Speaker Change: Value potential is very attractive, particularly for freeport, given our large quantities of suitable materially materially material that we'd previously mined.

Speaker Change: In terms of our.

Speaker Change: Timing of all of this on slide 12, we summarize potential growth in that we frame it in near term medium term and longer term horizons.

Speaker Change: We've outlined identified projects in the Americas totaling $1 7 billion pounds and the coaching Liard project currently in development in Indonesia, and that that's expected to continue to support long term production profiles in the Grasberg district.

Speaker Change: In the two to three year category, where we center our focus on incremental production on scaling our leach initiatives and operational improvement projects together the potential from these opportunities total 400 million pounds and do not require a significant investment.

Kathleen Lynne Quirk: Timing of all this on slide 12, we summarize potential growth and frame it in near-term, medium-term, and longer-term horizons. We've outlined identified projects in the Americas, totaling 1.7 billion pounds, and the Kuchin-Liar project currently in development in Indonesia. And that is expected to continue to support long-term production profiles in the Grasberg district. In the two- to three-year category, we center our focus on incremental production, on scaling our leach initiatives, and operational improvement projects.

Our long wait times and.

Speaker Change: In three to five year category, we've got the Baghdad expansion opportunity and the additional potential from our leach initiatives.

Speaker Change: El Abra is reflected in the seven to eight year category.

Speaker Change: And one star is not on here, but it's also a major opportunity, which we are currently defining it's likely a bit further out but we feel it will be a major major new opportunity for us as we go forward.

Speaker Change: The KL development in Indonesia is proceeding on schedule and we expect to.

Speaker Change: Commence production before 2030 and ramp up to over 500 million pounds of copper and 500000 ounces of gold which is meaningful.

Kathleen Lynne Quirk: Together, the potential from these opportunities totals £400 million and does not require significant investment or a long lead time. In the three to five year category, we've got the Baghdad expansion opportunity and the additional potential from our leach initiative. El Arbor is reflected in the 7- to 8-year category.

Speaker Change: Meaningful operation.

Speaker Change: And Indonesia and extension of our rights beyond 2041 would open substantial opportunity for reserve and resource expansion and continuation of large scale mining and one of the world's largest and highest grade copper and gold mining districts were in a strong position as you see here to continue our leadership role in supply.

Kathleen Lynne Quirk: And Lone Star is not on here, but it's also a major opportunity, which we're currently defining. It's likely a bit further out, but we feel it will be a major new opportunity for us as we go forward. The KL development in Indonesia is proceeding on schedule.

Speaker Change: Copper to a world with growing requirements.

Speaker Change: On slide 13, as we usually do we show our three year outlook for sales volume of copper gold and molybdenum, we've increased our 2020 for copper sales by about one 5%.

Speaker Change: Reflecting the first quarter outperformance the rest of the guidance is similar to our outlook at the start of the year.

Kathleen Lynne Quirk: We expect to commence production before 2030 and ramp up to over 500 million pounds of copper and 500,000 ounces of gold, which is a meaningful operation. In Indonesia, an extension of our rights beyond 2041 would open a substantial opportunity for reserve and resource expansion and continuation of large-scale mining in one of the world's largest and highest-grade copper and gold mining districts. We are in a strong position, as you can see here, to continue our leadership role in supplying copper to a world with growing requirements.

Speaker Change: We're also estimating consolidated net unit cash costs to approximate $1.57 per pound on a consolidated basis, that's slightly below our previous guidance of $1 60 per pound. We've got some details of the of the make up of this this average presented on slide 20.

Speaker Change: Five in the restaurants materials.

Speaker Change: With a strong cash flow generator as you can see on slide 14, where we show modeled results for our EBITDA and cash flows at various copper prices ranging from $4 per pound to $5 per pound.

Speaker Change: For the for the average of 25 and 26.

Kathleen Lynne Quirk: On slide 13, as we usually do, we show our three-year outlook for sales volumes of copper, gold, and molybdenum. We've increased our 2024 copper sales by about 1.5 percent, reflecting the first quarter outperformance. The rest of the guidance is similar to our outlook at the start of the year. We're also estimating consolidated net unit cash costs to approximate $1.57 per pound on a consolidated basis. That's slightly below our previous guidance of $1.60 per pound. We've got some details of the makeup of this average presented on slide 25 in the reference materials.

Speaker Change: We're using our current volume estimates for 25 and 26, our cost estimates and we're holding go flat here at $2300 per ounce and molybdenum at $20 an ounce for for illustration under this scenario annual EBITDA.

Speaker Change: Range from almost $11 billion per annum at $4 copper to in excess of $15 billion per annum at $5 copper and our operating cash flows would range from over seven 5 billion per year.

Speaker Change: At $4 copper and over $11 billion per year at $5 per pound copper, we've got sensitivities to the various commodities on the right with long life reserves large scale production.

Kathleen Lynne Quirk: We're a strong cash flow generator, as you can see on slide 14, where we show modeled results for EBITDA and cash flows at various copper prices ranging from $4 per pound to $5 per pound for the average of $25 and $26. We're using our current volume estimates for 25 and 26, our cost estimates, and we're holding gold flat here at $2,300 per ounce and molybdenum at $20 an ounce for illustration. On to this scenario, and you'll leave a dial. Our revenues would range from almost $11 billion per annum at $4 copper to in excess of $15 billion per annum at $5 copper, and our operating cash flows would range from over $7.5 billion per year at $4 copper and over $11 billion per year at $5 per pound copper.

Speaker Change: <unk> well positioned to benefit from improved pricing provided substantial cash flow for investments in our organic growth and cash returns to shareholders on our performance base pay out framework.

Speaker Change: On Slide 15, we show our current estimates for capital expenditures for 'twenty, four and 'twenty five.

Speaker Change: Not much has changed since our last update.

Speaker Change: $3 6 billion is projected for 'twenty 'twenty four.

Which is consistent with our prior guidance and in 2025, we estimate Capex will total about $3 9 billion.

Speaker Change: It's about $100 million higher than the January estimate.

Speaker Change: And reflects timing changes for us.

Speaker Change: Our Gucci and Liard project spend for 2025.

During this period don't during this two year period discretionary projects totaled $2 5 billion.

Speaker Change: This is this category reflects the capital investments, we're making in new projects that under our financial policy.

Speaker Change: Wanted with the half of available cash that is not distributed.

Speaker Change: And these projects are all value enhancing initiatives and we've got some details in the back on in a reference materials.

Kathleen Lynne Quirk: We've got sensitivities to the various commodities on the right, with long-life reserves, large-scale production, and are extremely well-positioned to benefit from improved pricing, providing substantial cash flow for investments in our organic growth and cash returns to shareholders on our performance-based payout framework. On slide 15, we show our current estimates for capital expenditures for 2024 and 2025. Not much has changed since our last update.

Speaker Change: Finally, getting to financial policy, we see on slide 16, we reiterate the policy priorities centered on our strong balance sheet cash returns to shareholders and investments in value enhancing growth projects balance sheet continues to be very strong we've got great metrics for <unk>.

Speaker Change: Credit metrics and significant flexibility within our debt targets to execute on our projects.

Speaker Change: As indicated here, we've distributed about a $4 billion to shareholders through dividends and share purchases since starting this new financial policy.

Kathleen Lynne Quirk: $3.6 billion is projected for 2024, which is consistent with our prior guidance. And in 2025, we estimate CapEx will total about $3.9 billion. That's about $100 million higher than the January estimate and reflects timing changes for our Kuching-Lear project spend for 2025. During this two-year period, discretionary projects totaled $2.5 billion.

Speaker Change: And we've got a.

Speaker Change: Very attractive future long term portfolio that'll enable us to continue to build long term value for shareholders.

Speaker Change: A sustained higher price for copper will drive higher cash returns to shareholders, while allowing us to invest in in future value oriented growth.

Speaker Change: We're going to continue to actively monitor the market conditions will carefully manage the timing of our projects and make sure that our financial flexibility remains strong.

Speaker Change: In closing our global team is driven by value and we continue to focus on what matters in our business by executing our plans responsibly safely and efficiently and maximizing the value of our vast resources.

Kathleen Lynne Quirk: This category reflects the capital investments we're making in new projects that, under our financial policy, are funded with half of available cash that is not distributed. And these projects are all value-enhancing initiatives. And we've got some details in the back in the reference material.

Speaker Change: You all for your attention and we'll now open up the call for questions.

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 Touchtone phone. If your question has been answered or you wish to remove yourself from the queue. Please press star one again, if youre using a speakerphone. Please pick up your handset before pressing the numbers, we ask that you limit your question.

Kathleen Lynne Quirk: Finally, getting to financial policy on slide 16, we reiterate the policy priorities centered on a strong balance sheet, cash returns to shareholders, and investments in value-enhancing growth projects. Our balance sheet continues to be very strong, we've got great metrics, credit metrics, and significant flexibility within our deck targets to execute on our projects. As indicated here, we've distributed about $4 billion to shareholders through dividends and share purchases since starting this new financial policy, and we've got a very attractive future long-term portfolio that will enable us to continue to build long-term value for shareholders.

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

Speaker Change: The first question comes from the line of Liam Fitzpatrick with Deutsche Bank. Please go ahead.

Liam Fitzpatrick: Hi, good morning Kathleen.

Maybe fitzpatrick from Deutsche Bank first question is just on your U S assets.

Liam Fitzpatrick: You've been talking about for some time the productivity improvements that you're targeting.

Liam Fitzpatrick: Could you give us a bit more color on when we should expect some of this to be to be visible in the numbers.

Kathleen Lynne Quirk: A sustained higher price for copper will drive higher cash returns to shareholders while allowing us to invest in future value-oriented growth. We're going to continue to actively monitor market conditions. We'll carefully manage the timing of our projects and make sure that our financial flexibility remains strong. In closing, our global team is driven by value, and we continue to focus on what matters in our business by executing our plans responsibly, safely, and efficiently and maximizing the value of our vast resources. Thank you all for your attention, and we will now open up the call for questions.

Liam Fitzpatrick: Sort of change are you, hoping for is just to do better than inflation or could there be more of a step change at some stage.

Speaker Change: And then the second question.

Speaker Change: So it really is just on your projects.

Speaker Change: We don't think that I think the timing given the presentation suggests you could make an investment decision next year.

Speaker Change: Wanted to check that's the right timing to think about and then.

Speaker Change: Sure.

Speaker Change: If you do nothing at that mine when will it be facing a more material dropoff in grades.

Speaker Change: Okay.

Operator: 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 numbers.

Speaker Change: Thanks Liam.

Speaker Change: In terms of the U S operations.

What we're what we're faced with right now is very low or grades.

Speaker Change: They have the lowest ore grades we've had in since 2010.

Speaker Change: So that is a that is structurally it's a challenge for us.

Operator: We ask that you limit your questions to one. If you have additional questions, please return to the queue. One moment, please, for our first question. The first question comes from the line of Liam Fitzpatrick with Deutsche Bank. Please go ahead.

Speaker Change: Over the last couple of years, we've also been dealing with.

Speaker Change: Labor labor shortages in the U S and needing to make sure that our people are trained and can gain the efficiencies that we've had in 2019 before before COVID-19.

Liam Fitzpatrick: Good morning Kathleen. Good morning. Liam Fitzpatrick from Deutsche Bank.

Liam Fitzpatrick: The first question is just on your US assets. You've been talking about for some time the productivity improvements that you're targeting. Could you give us a bit more color on when we should expect some of this to be visible in the numbers and what sort of change you are hoping for? Is this just to do better than inflation, or could there be more of a step change at some stage? And then the second question, two parts to it, really, is just about your projects.

Speaker Change: We're making really good progress with the work that we're doing it's not easy work. Its hard work every single day, but we know what the work is and we've got to make sure that our equipment is operating that we're getting the asset efficiencies in our equipment that we should.

Speaker Change: Be getting if we look back over the last couple of years.

Speaker Change: We haven't gotten the asset efficiencies that that we've had historically and so we've been working on that we've been working on on maintenance to make sure that or equipment health is strong.

Liam Fitzpatrick: Firstly, on Baghdad, I think the timing you give in the presentation suggests you could make an investment decision next year. I just wanted to check that's the right timing to think about it. And then, at El Abra, if you do nothing at that mine, when will it face a more material drop-off in grades? Thank you.

Speaker Change: We're working on training of our.

Speaker Change: A workforce, that's that's less experienced and it's just basic blocking and tackling them, but the headwind as is or the ore grades and we're really happy with the with the the results of the Leach initiative and that's provided us with some some some benefits.

Kathleen Lynne Quirk: Thanks, Liam. In terms of the U.S. operations... What we're, what we're faced with right now is a very low horror grade. They're the lowest ore grades we've had since 2010. So that is a structural challenge for us. Over the last couple of years, we've also been dealing with labor shortages in the U.S. and needing to make sure that our people are trained and can gain the efficiencies that we had in 2019 before COVID. We're making really good progress with the work that we're doing. It's not easy work.

Speaker Change: We've gone through these lower ore grades, but we still think we have a lot of potential and we're making we're making the progress. We've got detailed scorecards of what we're doing every day and all of the drivers of what makes a sufficient everybody's focused on it. We're also focused on technology advancements.

You read about the the advancements we have it at Bagdad, where we're looking to convert the the haul truck fleet there to fully autonomous.

Kathleen Lynne Quirk: It's hard work every single day, but we know what the work is, and we've got to make sure that our equipment is operating, that we're getting the asset efficiencies in our equipment that we should be getting. If we look back over the last couple of years, we haven't gotten the asset efficiencies that we have had historically, and so we've been working on that. We've been working on maintenance to make sure that our equipment health is strong.

Speaker Change: We've got all kinds of technology initiatives available to us that we haven't had historically and I think that is a key driver for US also as we look at improving our North American operations, but we think you know.

Speaker Change: We think we do have opportunities within the within the portfolio within the North American portfolio to increase production as we gain productivity.

Kathleen Lynne Quirk: We're working on training a workforce that's less experienced, and it's just basic blocking and tackling, but the headwind is the ore grades, and we're really happy with the results of the leach initiative, and that's provided us with some benefits as we've gone through these lower ore grades, but we still think we have a lot of potential, and we're making progress. We've got detailed scorecards of what we do every day and all the drivers of what makes us efficient. Everybody's focused on it.

Speaker Change: And and that's you know that's a 200 million pound a year range and that's that's a focus of ours and I think we're on the path. It doesn't it doesn't happen overnight, but it takes working every day and discipline around it but we know what to focus on.

Speaker Change: Regarding your question at Baghdad.

Speaker Change: We've got the study done.

Speaker Change: What we're focused on there is really this work for situations, where we want to make sure that when we go forward with the project that we can do it efficiently and that we can deliver the project within the within the capital cost estimates and within the Timeframes and so we want to take our time.

Kathleen Lynne Quirk: We're also focused on technological advancements. You read about the advancements we have in Baghdad, where we're looking to convert the haul truck fleet there to fully autonomous. We've got all kinds of technology initiatives available to us that we haven't had historically, and I think that is a key driver for us also as we look at improving our North America operations. But we think we do have opportunities within the portfolio, within the North American portfolio, to increase production as we gain productivity, and that's this 200 million pound range, and that's the focus of ours, and I think we're on the path. It doesn't happen overnight, but it takes working every day and discipline around it.

Speaker Change: <unk> and doing additional work Derisking the plan as we as we go forward over the next 18 months and then once we get this autonomous fleet converted will be in a position to reassess as it situation and and be in a position to us to move forward, it's not a.

Speaker Change: And in an ordinary environment, it's not a complex project, it's a brownfield project, where we have a substantial history in the district.

Speaker Change: The issue really gets to the the labor market conditions and also we want to continue to monitor the.

Kathleen Lynne Quirk: But we know what to focus on. Regarding your question about Baghdad, we've got the study done. What we're focused on there is really this workforce situation, where we want to make sure that when we go forward with the project, we can do it efficiently, and that we can deliver the project within the capital cost estimates and within the time frame. And so we want to take our time doing additional work, de-risking the plan as we go forward over the next 18 months.

Speaker Change: The copper markets et cetera, as we as we always do but this is a very executable plan. If we can we can deal with the workforce challenges that we have in Arizona, which is a very competitive place right now given all the activity in the state with respect to El Abra.

Speaker Change: We're looking at them.

Speaker Change: The current operation, which is very small relative to the size of Freeport is is is got life to it.

Kathleen Lynne Quirk: And then once we get this autonomous fleet converted, we'll be in a position to reassess the situation and be in a position to move forward. It's not, in an ordinary environment, it's not a complex project.

Speaker Change: Over the next several years and will start to decline.

Speaker Change: Probably get you know give us another 10 years.

Speaker Change: But we have some some water we've gotta get some water extensions and things that we're working on there, but they'll Abra project is.

Kathleen Lynne Quirk: It's a brownfield project where we have a substantial history in the district. The issue really gets to the labor market conditions, and also we want to continue to monitor Copper Markets, et cetera, as we always do. But this is a very executable plan if we can deal with the workforce challenges that we have in Arizona, which is a very competitive place right now, given all the activity in the state. With respect to Alabra, we're looking at: the current operation, which is very small relative to the size of Freeport, has got life in it for the next several years and will start to decline.

Speaker Change: Very exciting from the standpoint of the resource.

It's very large it's not in our current reserves.

Speaker Change: And so we have the ability to add reserves of of scale in terms of the overall project like I mentioned, we've done a lot of work on it.

Speaker Change: We feel very good about being able to execute it.

Speaker Change: But the things that we're working on there are really going back and looking at our capital cost estimates really stress testing hose understanding what happened at other projects in Chile, and figuring out make sure we're comfortable that the economics of the project are as good as they look initially and that's.

Kathleen Lynne Quirk: I'll probably get you know, give us another 10 years, but we have some water. We've got to get some water extensions and things that we're working on there, but the Alaba project is very exciting from the standpoint of the resource. It's very large, it's not in our current reserves.

Speaker Change: That's what we're that's what where we're testing now the long lead time in Chile is because of the permitting requirements. It takes an extended period of time to get the data necessary to file the application and then as you know there's a there's a review period that can span two to three.

Kathleen Lynne Quirk: And so we have the ability to add reserves of scale. In terms of the overall project, like I mentioned, we've done a lot of work on it. We feel very good about being able to execute it.

Kathleen Lynne Quirk: But the things that we're working on there are really going back and looking at our capital cost estimates, really stress testing those, understanding what happened with other projects in Chile, and figuring out how to make sure we're comfortable that the economics of the project are as good as they look initially. And that's what we're testing now. The long lead time in Chile is because of the permitting requirements. It takes an extended period of time to get the data necessary to file the application.

Speaker Change: Years, and I know, Chile is working to streamline its permitting that would be helpful for us as well, but really what we're focused on there is getting to a point, where we can file that the environmental impact statement and then that'll give us additional optionality, but theres good value in that in that project.

Speaker Change: For us.

Speaker Change: Okay, that's great color. Thank you.

Speaker Change: Yeah.

Speaker Change: Your next question will come from the line of Chris <unk> with Jefferies. Please go ahead.

Kathleen Lynne Quirk: And then, as you know, there's a review period that can span two to three years. And I know Chile is working to streamline its permitting process, and that would be helpful for us as well. But really, what we're focused on there is getting to a point where we can file the environmental impact statement. And then that'll give us additional optionality. But there's good value in that project for us.

Chris: Hi, Richard and Kathleen Thanks for taking my question first I just wanted to say congratulations on the operating performance in Indonesia that has been very impressive and once again this past quarter.

Chris: Pretty incredible what you've done there so congrats on that and then secondly, just wanted to ask a follow up on the trends in costs in the U S.

Chris: If you you did about 51 million pounds of Leach production from that new leaching initiatives in the U S. In the first quarter and if we assume that's around a dollar a pound that would imply that the rest of the production in the U S is around $3 and 35 340, a pound for net cash cost and then we add to that sustaining capex, it's probably.

Kathleen Lynne Quirk: Okay, that's great Kala, thank you.

Operator: Your next question will come from the line of Chris LaFemina with Jeffreys. Please go ahead.

Christopher LaFemina: Hi Richard and Kathleen. Thanks for taking my question. First, I just wanted to say congratulations on the operating performance in Indonesia. That has been very impressive.

Chris: Something close to $4 a pound free cash flow breakeven. So my first question is is that right or you at around $4, a pound free cash flow breakeven in the U S. If you exclude the benefit of the new leasing initiatives.

Chris: In terms of the leaching initiatives when you look at our reported cash costs.

Christopher LaFemina: And once again, this past quarter, pretty incredible what you've done there, so congrats on that. And then, secondly, I just wanted to ask you a follow-up on the trends in costs in the U.S. So, if you did, what, 51 million pounds of production from the new leaching initiatives in the U.S. in the first quarter, and if we assume that's around $1 a pound, that would imply that the rest of your production in the U.S. is around $3.35, $3.40 a pound for net cash costs.

Chris:

Chris: You have to consider that until we add additional pounds to the stockpiles.

Chris: The what we're recording as our average cost is.

Chris: Reflective of our average cost per unit in the stockpile, so as we gain more confidence.

Chris: The denominator will drop so we're pulling those pounds out now out of the stockpiles.

Chris: Reflecting like a $3 average cost when in reality the incremental cost is closer to closer to a dollar.

Christopher LaFemina: And then if we add to that sustaining capex, it's probably something close to $4 a pound free cash flow breakeven. So, my first question is, is that right? Are you at around $4 a pound free cash flow breakeven in the U.S. if you exclude the benefit of the new leaching initiatives?

Chris: So as we get more confidence and we're able to add more pounds multiyear amounts of of this leach reserve.

Chris: Well, you'll see that that unit costs come down but in terms of your your analysis. It maybe shy of the $4 you're talking about but we are in a lower grade.

Kathleen Lynne Quirk: In terms of the leaching initiatives, when you look at our reported cash costs, you have to consider that until we add additional pounds to the stockpile, what we're recording as our average cost is reflective of our average cost per unit in the stockpile. So, as we gain more confidence, the denominator will drop. So what we're pulling those pounds out now from the stockpiles is reflecting a $3 average cost when, in reality, the incremental cost is closer to a dollar.

Chris: Great area of of the North America right now and so are our unit costs are relatively high compared to historical levels.

Chris: We've had you know cost inflation as everybody has seen but the other the other area, where we're focused on is more on the things that we can control and we've seen some of the inflationary pressures moderate.

Chris: But the things that we want to continue to work on.

Kathleen Lynne Quirk: So as we get more confidence and we're able to add more pounds, multi-year amounts of this leach reserve, we'll you'll see that that unit cost come down, but in terms of your analysis, It may be shy of the $4 you're talking about, but we are in a lower-grade area of North America right now, and so our unit costs are relatively high compared to historical levels. We've had, you know, cost inflation, as everybody has seen, but the other area where we're focused on is more on the things that we can control, and we've seen some of the inflationary pressures moderate.

Chris: Is to avoid unplanned maintenance to avoid a two to two.

Chris: To reduce our maintenance costs and also as we get more workers within the within our own team and we get those workers trained up.

Chris: Will reduce our reliance on contractors, which is it has been a big cost for us and that's what we've had to do during this period of of of of labor challenges as rely more on contractors and so right now, we're really rationalizing contractors and training up our people to be able to do this this work so.

Kathleen Lynne Quirk: But the things that we want to continue to work on is to avoid unplanned maintenance, to avoid, to reduce our maintenance costs, and also as we get more workers within our own team and we get those workers trained up, it'll reduce our reliance on contractors, which has been a big cost for us, and that's what we've had to do during this period of labor challenges, is rely more on contractors, and so right now, we're really rationalizing contractors and training up our people to be able to do this work, so the leach opportunity, big picture, is really going to be a step change, though, as we go forward in the U.S., and if we're able to be successful in adding another 200 million pounds from from the Leach Initiative at a very low incremental cost and improving our technology, I mean, our productivity gains, you'll see our costs start to trend a lot lower in the US and that's what we're focused on. That's what Josh and his team are focused on. Marie is very focused on it as well and her team. So we're all over this, Chris.

Chris: The the Leach opportunity Big picture is.

Chris: He is really going to be a step change, though as we go forward in the U S and if we're able to to be successful in adding another 200 million pounds from.

Chris: From the from the Leach initiative at a very low incremental cost and improving our our technology productivity gains you'll see our costs start to trend a lot lower in the U S and that's that's what we're focused on and that's what we're Josh and his team are focused on marine is very focused on as well.

Chris: Our team. So we're we're all over this Chris right.

That dollar per pound cash cost for leaching is not what's reflected in the production costs in the first quarter and that was reflected in the 2020 for full year guidance rate, you're using something like $3 a pound in the guidance as well yeah. It's it's just coming out at the average when we will report it and the way it'll come down R&R.

Chris: Actual books is with an increase in estimates in future estimates because of the cost.

Chris: Our spread over what's remaining in the stockpiles and as we add more volumes to the to the stockpiles that will reduce the incremental cost would be reflective really truly of what's what's really occurring.

Chris: Got it from a cash flow standpoint is that it doesn't affect cash flow.

Chris: The cash flow, we really are getting the benefit of the incremental cost below a dollar.

Kathleen Lynne Quirk: Right, so that dollar per pound cash cost for leaching is not what's reflected in the production costs in the first quarter and not what's reflected in the 2024 full year guidance, right? You're using something like $3 a pound in the guidance as well?

Chris: So if we think about the cash flow you have the smelter construction is nearly complete youre going to one way or another not be paying royalties. After the smelter is ramped up comparably, because obviously duties duties sorry, yes, the copper prices, obviously higher gold prices higher balance sheet is clean.

Kathleen Lynne Quirk: Yeah, it's just coming out on the average when we report it, and the way it'll come down on our financial books is with an increase in estimates, in future estimates, because the costs, you know, are spread over what's remaining in the stockpiles, and as we add more volumes to the stockpiles, that'll reduce the incremental costs and be reflective really truly of what's really occurring. From a cash flow standpoint, it doesn't affect cash flow. And so in cash flow, we really are getting the benefit of the incremental cost below a dollar.

Chris: Do you have your performance space capital return policy.

Chris: What you haven't really executed on in the last year, you've had a lot going on but I'm. Just wondering in terms of timing of when we could see those supplemental capital returns is that something the board would be.

Chris: We consider them, an OE or is it kind of.

Speaker Change: Do we have to get through certain events before you consider delivering those capital returns. Thanks, Yeah, well, we have been executing under the policy. We've we've distributed since we started the policy 50% of our.

Speaker Change: Of our available cash flow and so all of the items that you cite and that excludes the smelter, but all all the items that you cite are building to give us more cash that'll be available for distribution and we will continue to follow that policy of.

Kathleen Lynne Quirk: So, if we think about the cash flow, you have the smelter construction is nearly complete, you're going to, one way or another, not be paying royalties after the smelter is ramped up. Copper price is obviously higher. Duties. Duties, sorry. Duties. Yeah.

Higher prices is going to mean more cash flows and more cash returns to shareholders and that's the cause of.

Speaker Change: That is the policy.

Speaker Change: Great. Thank you very much good luck.

Kathleen Lynne Quirk: The copper price is obviously higher, while the gold price is higher. The balance sheet is clean. You have your performance-based capital return policy, which you haven't really executed on in the last year. You've had a lot going on, but I'm just wondering in terms of timing of when we could see those supplemental capital returns. Is that something the board would consider imminently, or is it kind of, you know, do we have to get through certain events before you consider delivering those capital returns?

Speaker Change: Thanks, Chris.

Speaker Change: Our next question will come from the line of Michael Dudas with vertical Research partners. Please go ahead.

Michael Stephan Dudas: Hey, Mike.

Michael Stephan Dudas: Good morning, David.

Speaker Change: I mean.

Michael Stephan Dudas: Okay Mike.

Michael Stephan Dudas: I think you mentioned.

Michael Stephan Dudas: Operating cost.

Michael Stephan Dudas: Cost moderation.

Michael Stephan Dudas: That's a little bit more on what you're seeing on the ground.

Michael Stephan Dudas: Yeah.

Michael Stephan Dudas: Cost improvement.

Michael Stephan Dudas: <unk>.

Kathleen Lynne Quirk: Yeah, well, we have been executing under the policy. We've distributed 50% of our available cash flow since we started the policy. And so all the items that you cite, and that excludes the smelter, but all the items that you cite are building to give us more cash that'll be available for distribution. And we'll continue to follow that policy of, you know, higher prices are gonna mean more cash flows and more cash returns to shareholders. And that is the policy. Thank you very much.

Michael Stephan Dudas: Two months ago, and how you see that in some of these movies when you said you're working on.

Michael Stephan Dudas: We see double digit inflation continue on the capital cost side.

So you can make it a little bit more challenging.

Michael Stephan Dudas: And others to really fall through.

Michael Stephan Dudas: Material.

Michael Stephan Dudas: Yeah, I think those issues have moderated a bunch and we're getting more into of a stable situation, while it's higher than it has been.

Michael Stephan Dudas: It is it is it is more stable.

Operator: Our next question will come from the line of Michael Dudas with Vertical Research Partners. Please go ahead.

Michael Stephan Dudas: For instance, when we were going out for bids for things you know a year or two ago. You know you might get you know one bidder on on on a on a on a project and and now things are opening up some more for us. So on that part I think it's it's it's stabilized.

Michael Stephan Dudas: Good morning David, Richard, and Kathleen. Hey Mike.

Kathleen Lynne Quirk: Yeah, Kathleen, you mentioned in response to Chris's question about operating costs and cost moderation that some of you could touch a little bit more on what you're seeing on the ground, more specifically in your North American and South American minds about, you know, cost improvement, and what your expectations are versus what they might have been a few months ago. And how are you seeing that in some of the feasibility studies that you're working on and have completed?

Michael Stephan Dudas: Now.

Michael Stephan Dudas: We will continue to test it and we'll get when whenever we run our.

Michael Stephan Dudas: Our projects and run our economics, we always look at a range of what the capital costs are and what the sensitivities are at a higher or lower capital spend but in terms of the extremes that we have seen as you know in the recent years, we're not encountering that right now.

Kathleen Lynne Quirk: And what kind of a – have we seen double-digit inflation continuing on the capital cost side that's going to continue to make it a little bit more challenging for Freeport and others to really follow through and provide the material that the market needs?

Michael Stephan Dudas:

Michael Stephan Dudas: And in terms of commodity input costs and things there.

Michael Stephan Dudas: There there have been more moderate and more stable than we've seen in some time, we all know that that can change, but but it's but it has been more stable the things that we need to work on our you know and in particularly in the U S of this issue I mentioned with respect to the Labor force and the experience.

Kathleen Lynne Quirk: Yeah, I think those issues have moderated a bunch, and we're getting more into a stable situation while it's higher than it has been. It is more stable. For instance, when we were going out for bids for things a year or two ago, you know, you might get, you know, one bidder on a project.

Michael Stephan Dudas: Its levels and with with contractors.

Michael Stephan Dudas: And the third thing and in one of the most important is reliable asset efficiency.

Kathleen Lynne Quirk: And now, things are opening up some more for us. So, on that part, I think it's stabilized. Now, we'll continue to test it whenever we run our.

Michael Stephan Dudas: And and so that those are the those are the challenges that we have.

Michael Stephan Dudas: And and we were working on and I feel very confident that we're turning the corner on that we're continuing to make make good progress on on on really driving efficiency within the U S operations. We haven't had the issue in South America, and Indonesia are we've got a much.

Kathleen Lynne Quirk: In our projects and run our economics, we always look at a range of what the capital costs are and what the sensitivities are to higher or lower capital spend. But in terms of the extremes that we have seen in recent years, we're not encountering that right now. And in terms of commodity input costs and things, they've been more moderate and more stable than we've seen in some time. We all know that that can change, but it has been more stable.

Michael Stephan Dudas: More stable workforce much more experienced.

Michael Stephan Dudas: Workforce, we will also benefited there from a stronger dollar.

Michael Stephan Dudas: So many of our much of our labor cost is and in foreign currency. So we have benefited there from the from a stronger dollar and have not seen you know obviously haven't seen that benefit in the U S. But we do believe there are some things within our control that we're focused on now.

Kathleen Lynne Quirk: The things that we need to work on are, you know, and particularly in the U.S., this issue I mentioned with respect to the labor force and the experience levels, and with contractors. And the third thing, and one of the most important, is reliable asset efficiency. And so those are the challenges that we have, and we're working on them. I feel very confident that we're turning the corner on that, and we're continuing to make good progress on really driving efficiency within the U.S. operations. We haven't had this issue in South America and in Indonesia.

Michael Stephan Dudas: And now that things have moderated.

Michael Stephan Dudas: Moderated some with inflation, we've got a clear a clear focus on.

Michael Stephan Dudas: On on being as efficient as we can recognizing that.

Michael Stephan Dudas: Low grades you know becomes becomes a challenge, but we want to we want to do better than inflation I mean, that's what we want to make sure that we can we can overcome inflation in our costs with productivity gains and efficiency gains and we've got technologies available to us that we haven't had in the past.

Michael Stephan Dudas: I think.

Michael Stephan Dudas: You know as a company, we're gonna be leaning a lot more into innovation as a tool to help us with productivity.

Kathleen Lynne Quirk: We've got a much more stable workforce, and a much more experienced workforce. We've also benefited there from a stronger dollar. Much of our labor cost is in foreign currency, so we have benefited there from a stronger dollar. I obviously haven't seen that benefit in the U.S., but we do believe there are some things within our control that we're focused on now, and now that things have moderated some with inflation, we've got a clear focus on being as efficient as we can, recognizing that low grades become a challenge, but we want to do better

Speaker Change: Excellent. Thank you.

Speaker Change: But let me just add one point on the broader copper market implications of that question.

Speaker Change: Kathleen describe very well.

Speaker Change: Things, we're doing within our company and when you look back at our.

Speaker Change: Cost history in relation to general inflation.

Speaker Change: Good job.

Speaker Change: With our supply chain team.

Speaker Change: But.

Speaker Change: The shocking.

Amount of overruns.

Speaker Change: Your project in Chile, but elsewhere and also.

Speaker Change: Political situation in Panama.

Kathleen Lynne Quirk: That's why we want to make sure that we can overcome inflation and our costs with productivity gains and efficiency gains. We've got technologies available to us that we haven't had in the past. You know, as a company, we're going to be leaning a lot more into innovation as a tool to help us with product.

Speaker Change: As I talk with Ceos around the industry. It makes it so I'll step back and say we have to be careful we have to be careful because the the overruns are more than just simply inflation and we're still trying to get our arms around what's going on with these projects because of them to be delayed and that have the kind of cost.

Speaker Change: Tuition at.

Kathleen Lynne Quirk: Excellent Kathleen, thank you. But let me just add one.

Speaker Change: At the end of the day. This is just another major element for the positive outlook for copper prices I mean, if these problems were easily solved and this is a tough business you wouldn't have the supply shortfalls that were having and thats been a major factor from the recent run up in copper prices.

Richard C. Adkerson: But let me just add one point on the broader copper market implications of that question. You know, Kathleen described very well the things we're doing within our company. And when you look back at our cost history in relation to general inflation, we've done a good job with our supply chain team. But the shocking amount of overruns on the major project in Chile, but elsewhere, and also the political situation in Panama. As I talk with CEOs around the industry, it makes us all step back and say, we have to be careful.

Speaker Change: And it's also something thats very supportive for the longer term outlook for copper prices.

Speaker Change: Richard.

Speaker Change: Our next question will come from the line of Bill Peterson with Jpmorgan. Please go ahead.

Speaker Change: Yeah.

William Chapman Peterson: Hey, Bill Good morning, Kathleen Good morning, Catherine Richard essentially done it on for Bill. This morning, Hey, Ben if I can.

Richard C. Adkerson: We have to be careful because the overruns are more than just inflation, and we're still trying to get our arms around what's going on with these projects to cause them to be delayed and to have the kind of cost situations they have. At the end of the day, this is just another major element in the positive outlook for copper prices. I mean, if these problems were easily solved, and this is a tough business, you wouldn't have the supply shortfalls that we're having, and that's been a major factor in seeing the recent run-up in copper prices, and it's also something that's very supportive of the longer-term outlook for copper.

William Chapman Peterson: Yeah. Thanks, David I wanted to ask what if any is the company's current dialogue with the new leadership in Indonesia, and how you see that relationship developing over time.

William Chapman Peterson: Okay.

Speaker Change: Well the transition doesn't take place until October.

Speaker Change: And we're continuing to work with the existing administration.

Speaker Change: Got some matters that that we're working together on a with respect to the.

To the concentrate license that we talked about earlier as well as the IU PK extension and so we're continuing to work with the with our with the current administration on these matters.

Operator: Our next question will come from the line of Bill Peterson with J.P. Morgan. Please go ahead.

Bennett: Good morning, Kathleen and Richard. It's actually Bennett on for Bill this morning. If I could, I wanted to ask what, if any, is the company's current dialogue with the new leadership in Indonesia and how you see that relationship developing over time.

Speaker Change: We have a long history in Indonesia, we just celebrated.

Speaker Change: 57 years of of.

Speaker Change: Of of operation there and we've worked with many governments over the years and many administrations and we will see we feel very confident that that will continue to to have good relations with the new administration.

Kathleen Lynne Quirk: Well, the transition doesn't take place until October, and we're continuing to work with the existing administration. We've got some matters that we're working together on with respect to the concentrate license that we talked about earlier, as well as the IUPK extension. And so we're continuing to work with the current administration on these matters. We have a long history in Indonesia. We just celebrated 57 years of operation there. And we've worked with many governments over the years and many administrations.

Speaker Change: And you know what what we focus on we're not we don't get involved in politics, but we focus on what we do there too.

Speaker Change: To be a good citizen of Indonesia to to provide benefits to the national government. The local government all of our work force the community and stakeholder work that we do there is very important and that's that lasts that survives administrations and so we really focus on the things that.

Kathleen Lynne Quirk: And we feel very confident that we'll continue to have good relations with the new administration. And what we focus on, we don't get involved in politics, but we focus on what we do there to be a good citizen of Indonesia, to provide benefits to the national government, the local government, all of our workforce, the community, and stakeholder work that we do there is very important, and that lasts, that survives administrations.

Speaker Change: That make the asset good for Indonesia, and good for all the stakeholders and that's what we'll continue Richard I don't know if you want to add anything to those comments.

Speaker Change: Right.

Richard C. Adkerson: I've been going Indonesia now for.

Richard C. Adkerson: You know all my career with Freeport over 35 years, and our relationships have never been better I was just in Washington.

Kathleen Lynne Quirk: And so we really focus on the things that make the asset good for Indonesia and good for all the stakeholders, and that's what we'll continue. Richard, I don't know if you want to add anything to those comments.

Richard C. Adkerson: Friday evening for reception to celebrate 75 years.

Richard C. Adkerson: Positive relationships between the U S government and the Republic of Indonesia.

Richard C. Adkerson: The finance Minister Sri Mulyani in.

Richard C. Adkerson: You know, I've been going to Indonesia now for... You know, all my career with Freeport, it was 35 years, and our relationships have never been better. I was just in Washington.

Richard C. Adkerson: Central Bank Governor Perry, where there and.

Richard C. Adkerson: I wish you all could just hear the positive things that were said around this.

Richard C. Adkerson:

Richard C. Adkerson: Stable.

Richard C. Adkerson: Friday evening for a reception to celebrate 75 years of, positive relationships between the U.S. government and the Republic of Indonesia, and the finance minister, Sri Mulyani, and the central bank governor, Piri, were there. I wish you all could just hear the positive things that were said around this, table of a number of companies and a number of Indonesian government officials about the current way that Freeport is viewed and how positive they see our partnership is. Building PTFI, which is an Indonesian company, and to be in such a success for all the stakeholders.

Richard C. Adkerson: A number of companies in a number of Indonesian government officials about the current way that Freeport is viewed in a positive.

Richard C. Adkerson: They see our partnership is.

Building <unk>, which is an Indonesian company.

Richard C. Adkerson: Such a success for all stakeholders.

Richard C. Adkerson: Okay.

Richard C. Adkerson: Okay.

Speaker Change: Thanks, that's helpful and if I could just squeeze in one more on the topic regarding the future mining rates in Indonesia, we saw a headline last week that these potentially be granted I assume that this upcoming James I'm wondering if there's any update you can provide there and what additional has may be on the table from the government there.

Kathleen Lynne Quirk: Thanks, that's helpful. And if I could just squeeze in one more on the topic regarding the future mining raids in Indonesia, we saw a headline last week that these could potentially, you know, be granted as soon as this upcoming June. So I'm wondering if there's any updates you can provide there and what additional demands may be on the table from the government there.

Speaker Change: Let me just say that we've gotten.

Speaker Change: We have.

Speaker Change: In agreement with the government on the structure beyond 2041.

Speaker Change: There's no controversy over there.

Richard C. Adkerson: Let me just say that we've gotten in agreement with the government on the structure beyond 2041. There's no controversy over that, and there's general support for it. I believe the fact that the election occurred and we just went through Ramadan is having an effect on the timing, but we're very pleased.

Speaker Change: And there is general support for it.

Speaker Change: I believe.

Speaker Change: The fact that the election occurred and we just went through Ramadan.

Speaker Change: <unk> is having an effect on the timing, but we.

Speaker Change: We were very pleased I mean, it's important to know that we currently under our existing permit have no rights to think beyond 2041.

Richard C. Adkerson: I mean, it's important to know that currently, under our existing permit, we have no rights to anything beyond 2041. And it makes no sense for any stakeholder to have this operation run without having a long-term plan for it in terms of doing more drilling to understand what resources are there and doing long-term planning on how those resources will be developed. The Indonesian, our Indonesian shareholder Mind.id understands that, the Ministry of Mines understands that, and the President's Office does as well.

Speaker Change: And it makes no sense for any stakeholder to have this operation one.

Speaker Change: Without having a long term plan for it in terms of.

Doing more drilling to understand resources as Theyre doing long term planning to have those resources can be developed.

Speaker Change: The Indonesian or Indonesia shareholder mind that D understands that the ministry of mines understands that the President's office does as well so I'm confident we're going to be able to get that as always there are uncertainties as to when the actual.

Richard C. Adkerson: So I'm confident we're going to be able to get that. As always, there's uncertainties as to when the actual... formalities will be concluded to grant the regulations to allow us to continue. But there's no real controversy about the structure going forward or delivery of the smelter.

Speaker Change: Formalities will be concluded to grant.

Speaker Change: Regulations to allow us to continue but there is no real controversy about the structure going forward.

Speaker Change: And delivery of the smelter is an important part of that and and the government is very pleased with the progress we've made and in and getting the smelter to a point where it can be commissioned.

Kathleen Lynne Quirk: The delivery of the smelter is an important part of that, and the government is very pleased with the progress we've made in getting the smelter to a point where it can be commissioned next quarter.

Speaker Change: Next quarter.

Speaker Change: Well this quarter.

Speaker Change: Okay.

Speaker Change: Alright understood. Thank you very much and best of luck. Thank you Ben.

Speaker Change: The next question will come from the line of Lawson Winder with Bank of America Securities. Please go ahead.

Bennett: All right, understood. Thank you very much and best of luck. Thank you, Bennett. Our next question will come from the line of Lawson Winder with Bank of America Securities. Please go ahead. Hi, good morning. Thank you, operator.

Lawson Winder: Hi, good morning, good morning, operator, yes.

Lawson Winder: Yes, good morning, Richard and Kathleen Thank you for today's update.

Lawson Winder: Maybe just.

Lawson Winder: On Cerro Verde, if I could.

Operator: Our next question will come from the line of Lawson Winder with Bank of America Securities.

Lawson Winder: Theres still a pathway to consistently exceeding well over.

Lawson Winder: Per day at that asset.

Lawson Winder: Absolutely.

Lawson Winder: Yeah.

Richard C. Adkerson: I can't tell you what it is. I can't tell you what a great job our team down there has done. I visited recently and, I mean, just the spirit, the relationships with the local community, and, as you all know, Peru is a very complicated country. A lot of issues politically and economically to deal with, but it is just an uplifting experience to see what our team has done down there. I had some friends with me and to see an operation where we're moving over 400,000 metric tons of material a day, that's the equivalent of 80,000 street dump trucks moving material in a single day.

Okay.

Speaker Change: Got it.

Speaker Change: I can't tell you what a great job our team down there has done a visit recently and.

Speaker Change: I mean, just the spirit.

Speaker Change: The relationships with the local community and as you all know Peru is a very complicated.

Speaker Change: Country.

Speaker Change: It has.

Speaker Change: You know a lot of issues politically and economically to deal with but it is just an uplifting experience to see what our team has done down there.

Speaker Change: Yeah.

Speaker Change: I had some friends with me.

Speaker Change: And operation, who are moving 400000 over 400000 metric tonnes of material that day.

Speaker Change: The equivalent of 80000 street dump trucks moving material.

Richard C. Adkerson: And so it's an inspiration, quite frankly, for me to see that the community supports us. We've got a great workforce. We're actually bringing some of our Peruvian operating people to work in... in Arizona and New Mexico to support our operations there, but it's an uplifting place to go for me. Lawson, you know, it's not without challenge.

Speaker Change: In a single day and so it's.

Speaker Change: It's an inspiration quite right for me to see it.

Speaker Change: Community support since we got a great workforce, we're actually bringing some of our Peruvian operating people to work.

Speaker Change: In Arizona, and new Mexico to support our operations there.

Speaker Change: It's an uplifting place to go for me.

Speaker Change: Lawson.

Speaker Change: It's not without challenges.

Kathleen Lynne Quirk: Lawson, you know, it's not without challenges. This team has demonstrated, as Richard said, that they're a very resilient team and can deal with a lot of different challenges, but water is something that is always a concern. We did, with our expansion almost 10 years ago, put in a water treatment facility, and we provide clean water to the community, and it also supports our own operations. But particularly during this time when we've been through El Nino and droughts, there's always a focus on water, but the ore is there, the resource is there, the team has got the assets there, and the team has got really good work practices, and as Richard said, the relationship with the community is top-notch.

Speaker Change: Team has just demonstrated as rich said.

Speaker Change: They can they're very resilient team and can can deal with a lot of different challenges, but water is something that that that is is always a concern.

We did with our expansion almost 10 years ago put put in a water treatment facility and we provide a clean water to the to the community and it also supports our own operations, but.

Speaker Change: During this time, where we've been through a.

Speaker Change: El Nino and droughts and you know there's always a focus on water, but the the or is there the resources there and the team has got we've got the assets there and the team has got really good really good work practices and as Richard said that the relationship with the community is.

Is top notch.

Operator: Our next question will come from the line of John Tumazos, with John Tumazos Ferry Independent Research. Please go ahead.

Speaker Change: Okay.

Speaker Change: Okay that addresses my question. Thank you very much.

Speaker Change: Thank you.

Speaker Change: Our next question will come from the line of John Tumazos with John Tumazos very independent research. Please go ahead.

John Charles Tumazos: Thank you very much. In the first quarter, the minority interest was $689, and the income to shareholders was $473. Can we conclude from that that the... U.S. Vines made about $200 million less profits than overhead, or are the U.S. operations losing money? And what are the... Short-term remedies, for example, how quickly can you convert to autonomous trucks and Mitigate Wage Inflation

Speaker Change: Yeah.

Thank you very much.

John Tumazos: In the first quarter.

John Tumazos: Yeah.

John Tumazos: Yes.

John Tumazos: Thanks.

John Tumazos: Sure.

John Tumazos: Great.

John Tumazos: Sure.

John Tumazos: Mhm.

John Tumazos: Yes.

John Tumazos: Okay.

John Tumazos: You may need about 200 million.

John Tumazos: Yes.

John Tumazos: No.

John Tumazos: Okay.

John Tumazos: Our.

John Tumazos: The U S operations.

John Tumazos: Yes.

John Tumazos: Uh huh.

John Tumazos: Okay.

John Tumazos: Sure.

John Tumazos: For example, how quickly.

John Tumazos: So that's one of the structure.

Mitigate wage.

Kathleen Lynne Quirk: Well, one thing, John. Kathleen, let me say one thing to John before you answer the question, Kathleen.

John Tumazos: Sure.

John Tumazos: Okay.

John Tumazos: Yeah.

Speaker Change: Well, thanks, John definitely.

Speaker Change: Let me say one thing to John before you ask your question Kathleen.

Richard C. Adkerson: I've seen some of your writings, John, and the minority ownership in PTFI came about from the Rio Tinto deal in the mid-1990s. And that really hasn't changed; that just was transferred to the government of Indonesia, and that joint venture interest was converted to shares. But in 2018,... Freeport, through the agreement that we reached, maintained virtually the same economic interest in the mine that we've had all along. So this wasn't something that happened because of the government, but because of a deal that was cut back in the mid-1990s.

I've seen some of your writing as John.

Speaker Change: Uh huh.

Speaker Change: The minority ownership in <unk> came about from the Rio Tinto deal in the mid 19 nineties.

Speaker Change: And that really Hasnt changed.

He was transferred to the government of Indonesia.

Speaker Change: And the joint venture interest was converted to shares.

Speaker Change: But in 2018 report through the agreement that we reached.

<unk> virtually the same economic interest in the mine that we've had all along so this wasn't something that happened because of the government.

But because of a deal that was cut back in the mid 19 nineties.

Richard C. Adkerson: And, you know, when you look through it, and I talk with our Americans people and our people in the U.S. about it, because even though our mines in the U.S. are low-grade, because of the fact we have a very favorable income tax situation in the U.S., backed by Net Operating Loss Care Forge, we own our lands in fees, so there's no royalties. We get community support for schools and hospitals and for our workers. We don't have to provide for the same things that we do overseas.

Speaker Change: You know the.

Speaker Change: When you look through it and talk with our Americas people not people you asked about it.

Speaker Change: Because even though our mines in the U S are low grade.

Speaker Change: Because of the fact, we have a very favorable income tax situation in the U S.

Speaker Change: Bolstered by our net operating loss carryforwards, we own our lands and fee. So theres no royalties, we get community support for schools and hospitals.

Speaker Change: Our workers.

Speaker Change: We don't have to provide for the same things we do overseas that we do overseas and so the profitability of those mines is really very attractive and that's what makes these growth opportunities in the U S. So attractive for Freeport.

Kathleen Lynne Quirk: And so the profitability of those mines is really very attractive, and that's what makes these growth opportunities in the U.S. so attractive for Freeport. You and I both remember a time when people thought the Southwest Copper District was dead. And right now, it's a big part of the future for our country in terms of providing the copper resource needed for the energy transition and electrification broadly. But also, it's a great opportunity for our shareholders to create value and for Freeport to create value for our shareholders.

Speaker Change: Both remember a time when people thought the south, Wisconsin copper district.

Speaker Change: And right now, it's a big part of the future for our country in terms of providing.

Speaker Change: Copper resource needed for the energy transition in electrification broadly, but also it's a great opportunity for our shareholders to create value.

Speaker Change: Well for Freeport to create value for our shareholders.

Kathleen Lynne Quirk: John, I was just going to point you to the press release. There's some segment analysis in the back of the press release, and you can look at the segments where we show how much the U.S. mines contributed, et cetera. And if that doesn't answer your question, just follow up with us afterward. Our last question will come from the...

Speaker Change: John I was just going to point you to the press release Theres. Some theres in the back of the press release, there's a segment analysis and you can look at the.

Speaker Change: The segments that we show how much the U S mines contributed et cetera, and if that doesn't answer your question.

Speaker Change: Just follow up with us afterwards.

Speaker Change: Thank you.

Operator: Our last question will come from the line of Martin Malloy with Johnson Rice & Company. Please go ahead.

Speaker Change: Our last question will come from the line of Martin Malloy with Johnson Rice <unk> Company. Please go ahead.

Martin Whittier Malloy: Well, we're focused on, I mean, we've got almost 40 billion pounds in our own inventory, and that doesn't include, you know, some really old areas where we're not active, but yes, I mean, to answer your question, it does give us an interest in some things that may have this opportunity to be able to apply our know-how to them, but we're really focused on our own organic situation. If an opportunity came available that had this, we would be interested in seeing what we could make out of it, but we've got a lot within our own portfolio to be able to get substantial value for our shareholders. Yeah, and a lot...

Martin Malloy: Hi, good morning, good morning.

Martin Malloy: Morning.

Martin Malloy: Hum.

Martin Malloy: With your leaching technology does that give you a competitive advantage and maybe looking at acquisition opportunities.

Speaker Change: Well we're focused on.

Speaker Change: We've got almost 40 billion pounds in our own in our own inventory and that doesn't include some of some really old areas, where we're not active.

Speaker Change: But yes, I mean, the answer to your question. It does give us it does give us interests and some things that that may have this opportunity to be able to apply our apply our knowhow to it but we're really focused on our own organic situation, if an opportunity came up.

Speaker Change: Available that had this you know we would be interested in seeing what we could make out of it but we've got a lot within our own portfolio to be able to get get substantial value for our shareholders from.

Kathleen Lynne Quirk: Yeah, and a lot is understating it. It is massive what we have the opportunity to... (inaudible) Others have opportunities. No one else has it on this kind of scale that we do.

Speaker Change: And a lot is understating it is masking what we have the opportunity.

Speaker Change: Develop from what's already owned by Freeport from our existing stockpiles as Kathleen mentioned, our historical stockpiles. So yes, if an opportunity came along but I'm not expecting it.

Operator: With that, we'll turn the call over to management for any closing remarks.

Speaker Change: You're going to be able to grow tremendous amounts of value.

Kathleen Lynne Quirk: Thank you everyone for all your good questions today and your interest in Freeport, and we look forward to reporting in the future on our progress.

Speaker Change: With.

Speaker Change: With what we have with the company really has.

Speaker Change: Others have opportunity no one else has and this kind of scale that we do.

Speaker Change: Thank you.

Speaker Change: Okay.

Speaker Change: With that I will turn the call over to management for any closing remarks.

Thanks, everyone for all your your good questions today and your interest in Freeport, and we look forward to reporting in the future on our progress.

Operator: Ladies and gentlemen, that concludes our call for today. Thank you all for joining us, and you may now disconnect.

Speaker Change: Thank you all and that concludes our call for today. Thank you all for joining and you may now disconnect.