Freeport reports Q3 Indonesian production, exploration

The following is an excerpt on Papua project of US mining giant Freeport-McMoRan Copper & Gold Inc.'s third quarter 2008 report released on Tuesday.

Through its 90.64 percent owned 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.

Consolidated Indonesian Mining Operations	Third Quarter		Nine Months
	2008	2007	2008	2007
Copper (million of recoverable pounds):
Production	256	177	678	943
Sales	264	197	700	948
Average realized price per pound	$2.94	$3.63	$3.33	$3.48
Gold (thousands of recoverable ounces):
Production	264	182	731	2,051
Sales	271	234	757	2,061
Average realized price per ounce	$870	$695	$897	$668

Indonesia copper and gold sales in the third quarter of 2008 were higher than in the third quarter of 2007 as a result of the expected mining in a higher 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 varying quarterly and annual sales of copper and gold.

Third-quarter 2008 results were impacted by restricted access to high-grade material following the small scale failure at the Grasberg open pit in early September 2008. Remediation activities have been substantially completed and PT-FI regained access to the affected high-grade section in October 2008. Fourth-quarter 2008 sales are expected to approximate 400 million pounds of copper and 370 thousand ounces of gold.

FCX expects Indonesia sales of 1.1 billion pounds of copper and 1.1 million ounces of gold for the year 2008, compared with 1.1 billion pounds of copper and 2.2 million ounces of gold for the year 2007. Indonesia's production and sales volumes for copper and gold are expected to be higher in 2009 as PT-FI mines higher grade ore.

Unit Net Cash Costs (Credits)	Second Quarter		Six Months
	2008	2007	2008	2007
Per pound of copper:
Site production and delivery, after adjustments	$1.76	$1.76	$ 1.84	$1.10
Gold and silver credits	(0.93)	(0.90)	(1.04)	(1.50)
Treatment charges	0.24	0.34	0.28	0.35
Royalties	0.12	0.10	0.12	0.12
Unit net cash costs (credits)	$1.19	$1.30	$1.20	$0.07

PT-FI's unit net cash costs, including gold and silver credits, averaged $1.19 per pound for third-quarter 2008, compared with $1.30 per pound for third-quarter 2007. The lower unit net cash costs in 2008 reflected higher copper and gold volumes and higher gold prices, partly offset by higher input costs during third-quarter 2008. 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.

Assuming average copper prices of $2.15 per pound and average gold prices of $800 per ounce for the fourth quarter of 2008, achievement of current 2008 sales estimates and using recent prices for commodity-based input costs, PT-FI estimates that its 2008 unit net cash costs, including gold and silver credits, would approximate $0.76 per pound for the fourth quarter and average $1.04 per pound for the year. Unit net cash costs for 2008 would change by approximately $0.01 per pound for each $25 per ounce change in the average price of gold for the fourth quarter of 2008.

FCX expects PT-FI's 2009 unit net cash cost to be significantly lower than 2008 levels because of higher gold volumes and reduced commodity-based input costs.

DEVELOPMENT and EXPLORATION ACTIVITY
PT-FI has several projects in progress throughout the Grasberg district, including developing its large-scale underground ore bodies located beneath and adjacent to the Grasberg open pit. The expansion of the currently producing Deep Ore Zone (DOZ) mine to 50,000 metric tons of ore per day is complete with third-quarter rates averaging 60,800 metric tons per day. A further expansion of the DOZ mine to 80,000 metric tons per day is under way with completion targeted by 2010. Other projects include the development of the high-grade Big Gossan mine, currently designed to ramp up to full production of 7,000 metric tons per day in 2011, and the continued development of the Common Infrastructure project, which will provide access to the Grasberg underground ore body, the Kucing Liar ore body and future development of the mineralized areas below the DOZ mine. FCX will seek opportunities to defer capital spending in the Grasberg district where possible. (end of excerpt)