Fourth-quarter 2008 net loss was $13.9 billion, $36.78 per share, compared with net income of $414 million, $1.05 per share, for fourth-quarter 2007. After adjusting for special items totaling $14.0 billion, $36.84 per share, fourth-quarter 2008 adjusted net income totaled $23 million, $0.06 per share (see page 3).
During fourth-quarter 2008, FCX completed a review of the carrying values of its inventories (including mill and leach stockpiles), long-lived assets and goodwill and recorded after-tax charges totaling $13.1 billion, $34.51 per share, primarily to reduce the carrying value of inventories (including mill and leach stockpiles), long-lived assets and goodwill related to the March 2007 acquisition of Phelps Dodge.
Consolidated 2008 sales from mines totaled 1.2 billion pounds of copper, 462 thousand ounces of gold and 12 million pounds of molybdenum for the fourth quarter and 4.1 billion pounds of copper, 1.3 million ounces of gold and 71 million pounds of molybdenum for the year.
In response to weak global economic conditions and a sharp decline in copper and molybdenum prices during fourth-quarter 2008, FCX announced a series of actions and revisions to operating plans in December 2008 to reduce costs and capital expenditures, and suspended its common dividend. FCX is announcing today further revisions to its operating plans principally affecting its North America operations to improve its operating cost profile.
The revised operating plans result in lower copper and molybdenum sales than previously reported estimates. Copper sales are expected to approximate 3.9 billion pounds in 2009 and 3.8 billion pounds in 2010 (9 percent and 17 percent lower than the October 2008 estimates). Molybdenum sales are expected to approximate 60 million pounds in 2009 and 60 million pounds in 2010 (25 percent and 40 percent lower than the October 2008 estimates). Gold sales are not impacted by the revised plans and are expected to approximate 2.2 million ounces in both 2009 and 2010.
Consolidated unit net cash costs (net of by-product credits) averaged $1.04 per pound for fourth-quarter 2008 and $1.16 per pound for the year ended December 31, 2008. Based on the revised operating plans and assuming average prices of $800 per ounce for gold and $9 per pound for molybdenum, consolidated unit net cash costs are estimated to average $0.71 per pound for the year 2009.
Operating cash flows totaled $201 million for fourth-quarter 2008 and $3.4 billion for the year 2008. The operating cash flows for the year 2008 are net of $1.2 billion in working capital uses. Using estimated sales volumes for 2009 and assuming 2009 average prices of $1.50 per pound for copper, $800 per ounce for gold and $9 per pound for molybdenum, operating cash flows in 2009 would approximate $1.0 billion, net of $0.6 billion in working capital requirements.
Capital expenditures totaled $779 million for fourth-quarter 2008 and $2.7 billion for the year 2008. FCX currently expects capital expenditures to approximate $1.3 billion for 2009. Projected 2009 capital expenditures include sustaining capital of $0.6 billion and $0.7 billion in investments in the Tenke Fungurume greenfield project in Africa and underground development projects in Indonesia. Capital spending plans will continue to be reviewed and revised as market conditions warrant.
Total debt approximated $7.4 billion and consolidated cash was $872 million at December 31, 2008.
FCX’s preliminary estimate of consolidated recoverable reserves as of December 31, 2008, totaled 102.0 billion pounds of copper, 40.0 million ounces of gold and 2.48 billion pounds of molybdenum. Estimated recoverable reserves include 3.9 billion pounds of copper in mill and leach stockpiles. Reserve additions of 12.8 billion pounds of copper and 0.51 billion pounds of molybdenum replaced over 300 percent of 2008 copper production and 700 percent of 2008 molybdenum production.
Prospectus Supplement Filing:
Freeport-McMoRan Copper & Gold Inc. announced today that it has filed with the Securities and Exchange Commission a prospectus supplement under which it may offer and sell shares of common stock having aggregate gross proceeds of up to $750 million from time to time through J.P.Morgan Securities Inc. as its sales agent. Sales of the common stock, if any, would be made by means of ordinary brokers’ transactions or block trades on the New York Stock Exchange at market prices or as otherwise agreed with its agent.
FCX intends to use the net proceeds from this offering for general corporate purposes, which may include, among other things, the repayment of amounts outstanding under its revolving credit facilities and the financing of working capital and capital expenditures.