Freeport reports Q3 Indonesian production

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

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 Sept. 30		Nine Months Ended Sept. 30
	2010	2009	2010	2009
Copper (million of recoverable pounds):
Production	358	331	913	1,138
Sales	364	330	919	1,131
Average realized price per pound	$ 3.60	$ 2.77	$ 3.36	$ 2.41
Gold (thousands of recoverable ounces):
Production	462	685	1,185	2,033
Sales	466	683	1,200	2,015
Average realized price per ounce	$ 1,266	$ 988	$ 1,204	$ 944
Unit net cash (credits) costs per pound of copper:
Site production and delivery, including adjustments	$ 1.43	$ 1.10	$ 1.52	$ 0.98
Gold and silver credits	(1.67)	(2.10)	(1.63 )	(1.74 )
Treatment charges	0.22	0.24	0.23	0.22
Royalties	0.12	0.12	0.12	0.10
Unit net cash (credits) costs (*)	$ 0.10	$ (0.64)	$ 0.24	$ (0.44 )
*. 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.?

Indonesia reported higher copper sales in the third quarter of 2010, compared to the third quarter of 2009, primarily because of higher sharing under joint venture arrangements. Indonesia gold sales for the third quarter of 2010 were lower than third-quarter 2009 sales, primarily as a result of sequencing of mining in 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.

FCX expects Indonesia sales of 1.2 billion pounds of copper and 1.8 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. The lower copper and gold sales from Indonesia in 2010, compared to 2009, reflect the mining of lower grade material in 2010.

Indonesia unit site production and delivery costs were higher in the third quarter of 2010, compared with the third quarter of 2009, primarily because of higher input costs (including materials, labor and energy), higher maintenance and support costs and higher cost sharing under joint venture cost sharing arrangements, partly offset by the impact of higher volumes. Unit net cash costs of $0.10 per pound in the third quarter of 2010 were higher than the year-ago quarter of a net credit of $0.64 per pound because of higher site costs and lower gold volumes.

Assuming an average gold price of $1,300 per ounce for the fourth quarter 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 $0.05 per pound for the year 2010. Unit net cash costs for 2010 would change by approximately $0.02 per pound for each $50 per ounce change in the average price of gold for the fourth quarter of 2010. Quarterly unit net cash costs will vary significantly with variations in quarterly metal sales volumes.

Development Activities
FCX has several attractive development projects in the Grasberg minerals district, primarily related to the development of the large-scale, high-grade underground ore bodies located beneath and adjacent to the Grasberg open pit. In aggregate, these ore bodies are expected to ramp up to approximately 240,000 metric tons of ore per day following depletion of the Grasberg open pit. The world-scale Deep Ore Zone underground mine has been expanded to 80,000 metric tons of ore per day and the development of the high-grade Big Gossan mine is expected to begin production in 2011 and reach full rates of 7,000 metric tons of ore per day by the end of 2012.

Substantial progress has been made in developing infrastructure and underground workings that will enable access to the underground ore bodies. Development of the terminal infrastructure and mine access for the massive Grasberg Block Cave and Deep Mill Level Zone ore bodies has commenced.

Estimated aggregate capital spending on these projects in 2010 approximates $350 million ($275 million net to PT-FI). Over the next several years, estimated aggregate capital spending will average approximately $500 million ($400 million net to PT-FI) per year on underground development activities.

PT-FI continues to evaluate economic studies and mine plans to determine the optimal transition from the Grasberg open pit to the Grasberg Block Cave, which is currently planned for 2016. (end of excerpt)