Freeport reports Q4 Indonesian production

The following is an excerpt on Papua project of US mining giant Freeport-McMoRan Copper & Gold Inc.'s fourth quarter 2009 report released on Thursday.

Indonesia Mining. 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	Third Quarter		Nine Months
	2009	2008	2009	2008
Copper (million of recoverable pounds):
Production	274	416	1,412	1,094
Sales	269	411	1,400	1,111
Average realized price per pound	$ 3.31	$ 1.39	$ 2.65	$ 2.36
Gold (thousands of recoverable ounces):
Production	535	432	2,568	1,163
Sales	528	425	2,543	1,182
Average realized price per ounce	$ 1,116	$ 819	$ 994	$ 861
Unit net cash (credits) costs per pound of copper:
Site production and delivery, after adjustments	$ 1.36	$ 1.16	$ 1.05	$ 1.59
Gold and silver credits	(2.39)	(0.85)	(1.86)	(0.97)
Treatment charges	0.24	0.18	0.22	0.24
Royalties	0.12	0.06	0.10	0.10
Unit net cash (credits) costs (*)	$ (0.67)	$ 0.55	$ (0.49)	$ 0.96
*. 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 lower copper sales and higher gold sales in the fourth quarter of 2009, compared to the fourth quarter of 2008 as a result of mining of a section with anticipated lower copper ore grades and higher gold ore grades in the Grasberg open pit.

Fourth-quarter 2009 gold sales were also higher, compared to the October 2009 estimate because of the accelerated mining of a section with high gold ore grades previously scheduled to be mined in future periods. 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 1.7 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 as PT-FI is transitioning to a lower grade section of the Grasberg open pit in 2010.

Anticipated changes in ore grades throughout the year are expected to result in variability in quarterly volumes. Approximately 60 percent of PT-FI?s copper and gold production is expected in the second half of 2010.

PT-FI?s unit net cash (credits) costs, including gold and silver credits, averaged a net credit of $0.67 per pound of copper for the fourth quarter of 2009, compared with a net cost of $0.55 per pound for the fourth quarter of 2008, and averaged a net credit of $0.49 per pound of copper for the year 2009, compared with a net cost of $0.96 per pound for the year 2008. The lower unit net cash costs in the 2009 periods primarily reflected higher gold volumes and prices. Fourth-quarter 2009 unit site production and delivery costs of $1.36 per pound of copper were higher, compared to $1.16 per pound for the fourth quarter of 2008 primarily because of lower copper volumes for the fourth quarter of 2009.

The lower unit site production and delivery costs for the year 2009 compared to the year 2008 reflected significantly higher copper volumes and lower commodity-based input costs for the year 2009. 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 achievement of current 2010 sales estimates, average gold prices of $1,100 per ounce for the year 2010 and current estimates for energy costs, currency exchange rates and other cost factors, FCX expects PT-FI?s average unit net cash costs per pound to approximate a net cost of $0.21 per pound for the year 2010. Unit net cash costs for the year 2010 are expected to be higher than unit net cash costs for the year 2009 primarily because of lower projected sales volumes and higher commodity-based input costs. Unit net cash costs for 2010 would change by approximately $0.07 per pound for each $50 per ounce change in the average price of gold for 2010.

Quarterly unit net cash costs will vary significantly with variations in quarterly metal sales volumes. (end of excerpt)