Freeport reports Q4 Indonesian production, exploration

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

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.

Indonesian Mining Operations	Fourth Quarter		Years Ended Dec. 31
	2008	2007	2008	2007
Copper (million of recoverable pounds):
Production	416	208	1,094	1,151
Sales	411	183	1,111	1,131
Average realized price per pound	$1.39	$3.03	$2.36	$3.32
Gold (thousands of recoverable ounces):
Production	432	147	1,163	2,198
Sales	425	124	1,182	2,185
Average realized price per ounce	$819	$807	$861	$681

Indonesia copper and gold sales in the fourth quarter of 2008 were higher than in the fourth quarter of 2007 as a result of mining in a higher ore grade section of the Grasberg open pit, as planned. 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. After mining in a relatively low-grade section of the open pit in the last half of 2007 and first half of 2008, FCX is currently mining in a high-grade section which is expected to continue throughout 2009.

FCX expects Indonesia sales of 1.3 billion pounds of copper and 2.1 million ounces of gold for the year 2009, compared with 1.1 billion pounds of copper and 1.2 million ounces of gold for 2008.

Unit Net Cash Costs	Fourth Quarter		Years Ended Dec. 31
	2008	2007	2008	2007
Per pound of copper:
Site production and delivery, after adjustments	$1.16	$1.66	$ 1.59	$1.19
Gold and silver credits	(0.85)	(0.64)	(0.97)	(1.36)
Treatment charges	0.18	0.29	0.24	0.34
Royalties	0.06	0.08	0.10	0.12
Unit net cash costs	$0.05	$1.39	$0.96	$0.29

PT-FI?s unit net cash costs, including gold and silver credits, averaged $0.55 per pound for the fourth quarter of 2008, compared with $1.39 per pound for the fourth quarter of 2007. The lower unit net cash costs in 2008 primarily reflected higher copper and gold volumes and higher gold prices. 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.

FCX expects PT-FI?s 2009 unit net cash costs to be significantly lower than 2008 levels because of higher gold volumes and reduced commodity-based input costs. Assuming achievement of current 2009 sales estimates, average gold prices of $800 per ounce for 2009 and revised estimates for energy, currency exchange rates and other cost factors, FCX expects PT-FI?s average unit net cash costs per pound to approximate zero for 2009. Unit net cash costs for 2009 would change by approximately $0.08 per pound for each $50 per ounce change in the average price of gold for 2009.

DEVELOPMENT AND EXPLORATION ACTIVITY
PT-FI has several projects throughout the Grasberg district, including developing its large-scale underground ore bodies located beneath and adjacent to the Grasberg open pit. Other projects include the development of the high-grade Big Gossan mine, designed to rump up to full production of 7,000 metric ton per day and the continued development of the common infrastructure project, which will provide to the Grasberg underground ore body, the Kucing Liar ore body and future development of the mineralized areas below to deep ore zone (DOZ) mine. FCX is deferring capital spending in the Grasberg district where practicable. (end of excerpt)