Freeport reports Q2 Indonesian production

The following is an excerpt on Papua project of US mining giant Freeport-McMoRan Copper & Gold Inc.'s second quarter 2010 report released on Wednesday.

Through its 90.64 percent owned and wholly consolidated subsidiary PT Freeport Indonesia (PT-FI), FCX operates the world?s largest copper and gold mine in terms of reserves at its Grasberg operations in Papua, Indonesia.

Indonesian Mining Operations	Three Months Ended June 30		Six Months Ended June 30,
	2010	2009	2010	2009
Copper (million of recoverable pounds):
Production	276	403	555	807
Sales	259	432	555	801
Average realized price per pound	$ 2.95	$ 2.24	$ 3.05	$ 2.06
Gold (thousands of recoverable ounces):
Production	294	778	723	1,348
Sales	276	811	734	1,332
Average realized price per ounce	$ 1,235	$ 932	$ 1,171	$ 919
Unit net cash (credits) costs per pound of copper:
Site production and delivery, including adjustments	$ 1.62	$ 0.93	$ 1.58	$ 0.92
Gold and silver credits	(1.41)	(1.80)	(1.61 )	(1.58)
Treatment charges	0.26	0.22	0.24	0.21
Royalties	0.11	0.12	0.11	0.09
Unit net cash (credits) costs (*)	$ 0.58	$ (0.53)	$ 0.32	$ (0.36)
*. For a reconciliation of unit net cash (credits) costs per pound to production and delivery costs applicable to sales reported in FCX?s consolidated financial statements, refer to the supplemental schedule, ?Product Revenues and Production Costs,? beginning on page VII, which is available on FCX?s web site, ?www.fcx.com.?

As expected, Indonesia reported lower copper and gold sales in the second quarter of 2010, compared to the second quarter of 2009, as a result of sequencing of mining in a lower ore-grade section of the Grasberg open pit. At the Grasberg mine, the sequencing in mining areas with varying ore grades causes fluctuations in the timing of ore production resulting in fluctuations in quarterly and annual sales of copper and gold.

PT-FI has revised its mine plans to incorporate precautionary remedial activities and geotechnical considerations affecting a relatively high-grade section of the Grasberg open pit previously scheduled to be mined in 2010 and 2011. The impact of these mine plan changes results in the deferral of approximately 130 million pounds of copper and 270,000 ounces of gold, net to PT-FI's interest, from the 2010 to 2014 period to the 2015 to 2016 period.

The revised plans, which are subject to ongoing review and optimization, reflect timing differences and do not result in significant changes to reserves or ultimate production from the open pit.

FCX expects Indonesia sales of 1.2 billion pounds of copper and 1.7 million ounces of gold for the year 2010, compared with 1.4 billion pounds of copper and 2.5 million ounces of gold for 2009. Anticipated changes in ore grades throughout the year are expected to result in significant variability in quarterly volumes. Mine sequencing at Grasberg is expected to result in higher copper and gold grades beginning in the fourth quarter of 2010.

Indonesia unit site production and delivery costs were higher in the second quarter of 2010, compared with the second quarter of 2009, primarily because of anticipated lower copper volumes for the 2010 period. Unit site production and delivery costs will vary with fluctuations in production volumes because of the primarily fixed nature of PT-FI?s cost structure.

Gold credits were lower in the second quarter of 2010 because of lower gold volumes, which also resulted in higher unit net cash costs in the second quarter of 2010.

Assuming an average gold price of $1,200 per ounce for the second half of 2010 and using current 2010 sales and costs estimates, FCX expects PT-FI?s average unit net cash costs, including gold and silver credits, to approximate $0.14 per pound for the year 2010.

Unit net cash costs for 2010 would change by approximately $0.04 per pound for each $50 per ounce change in the average price of gold for the second half of 2010. Quarterly unit net cash costs will vary significantly with variations in quarterly metal sales volumes. (end of excerpt)