Freeport-McMoRan Inc. (FCX) Q3 2012 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by. Welcome to the Freeport-McMoRan Copper & Gold Third Quarter Earnings Conference Call. At this time, all participants are in a listen-only-mode. Later, we will conduct an interactive question-and-answer session. (Operator instructions). I would now like to turn the conference over to Ms. Kathleen Quirk, Executive Vice President and Chief Financial Officer. Please go ahead, ma’am.

Thank you. Good morning. Welcome to the Freeport-McMoRan Copper & Gold third quarter 2012 earnings conference call. Our results were released earlier this morning and a copy of the press release is available on our website at fcx.com. Our conference call today is being broadcast live on the Internet, and anyone may listen to the call by accessing our website homepage and clicking on the webcast link for the conference call. We also have several slides to supplement our comments this morning, and we’ll be referring to the slides during the call. They are also available on our webcast link at fcx.com. In addition to analysts and investors, the financial press has been invited to listen to today’s call, and a replay of the webcast will be available on our website later today. Before we begin our comments today, we’d like to remind everyone that our press release and certain of our comments on this call will include forward-looking statements. We’d like to refer everyone to the cautionary language included in our press release and presentation materials, and to the risk factors described in our SEC filings. On the call today is our Chairman Jim Bob Moffett; our President and Chief Executive Officer, Richard Adkerson; Red Conger is here as well as Mark Johnson. I'll briefly summarize the financial results and then turn the call over to Richard who will be going through the slide materials that we've prepared. As usual, after our prepared remarks, we'll open the call up for questions. Today, FCX reported third quarter 2012 net income attributable to common stock of $824 million; that was $0.86 per share, compared with $1.1 billion or $1.10 per share for the third quarter of 2011. Our third quarter 2012 net income included credits for adjustments to Cerro Verde deferred…

Thanks Kathleen and good morning everyone. The third quarter of this year was a good quarter for our company when we look at our global operations. As Kathleen mentioned, we are achieving higher production growth in North America and Africa. We'll talk about that with our future growth opportunities. Our expansion at Tenke Fungurume in Africa is going very well, on time, on budget, and it was a quarter in which we set a number of operating records for our current operations. Our situation at Grasberg continues to progress and improve and I'll be talking about how to put this year in perspective for our longer term operations because it is an unusual year for Grasberg. We are advancing our Brownfield development projects. That's a focus of our company. As I mentioned, the project at Tenke Fungurume is going well and it's virtually complete, engineering construction with the mill expansion and mine rate expansion at Morenci is progressing and we are making positive permitting progress for our big project for the Cerro Verde project. So we have – we are on track for our strong outlook for growing production profile. The financial highlights that Kathleen mentioned to you, reviewed with you, I think when you look at it overall, we see this quarter as one basically where we achieved our outlook that we have planned to achieve during the quarter. We had a situation at Grasberg where we did have to change our mine plan for the pit and that resulted in this mining lower grade material out of the pit that had an impact on gold, and combined with the issue of ramping up DOZ resulted in us having 10% lower gold sales for the third quarter than we had anticipated. This is gold that we'll make up as…

Operator, we’ll take questions now.

Ladies and Gentlemen, we will now begin the question-and-answer session. (Operator instructions). Our first question comes from the line of Sal Tharani, with Goldman Sachs.

Hi guys. I just wanted to get some more color on the Indonesia. There are quite a bit of news from there and the latest one was the royalty question also. I was wondering – and obviously you are also spending quite a bit of money over there over the next few years before going underground. I was wondering if your conversation for expansion beyond 2021 incorporates all these issues and expansion and so forth or are these being talked separately and these are separate issues?

That all comes together, Sal. I mean the government is very positive about our investing now for volumes to produce beyond 2021. Consistently the discussions have been directed towards – are continuing to operate. We have reserves now to 2041, and so we were having a lot of support for what we were doing. It's meaningful to the country. We have a workforce of over 20,000 people there. We pay – taxes are the biggest component of our compensation we pay to the government, but we pay well over $2 billion a year on average for taxes, royalties and dividends and that's meaningful to the country. The issues have been built around this new mining law that was adopted that does not technically apply to us and the aspirations of the people of Indonesia regarding mineral resources. And so, we are engaged in productive discussions to find a way forward that is responsive to those aspirations and protects the interest of our shareholders, but built into this would be a positive response to your question, and that it would give us surety of our situation going forward beyond 2021 and the ability to take advantage of our current reserves and resources.

There were some rumors about floating Indonesia asset separately, so that to avoid any of the government regulations. Is that on the table also?

Well, it's not to avoid government regulations. I mean we are subject to our contract of work, which sets the basic parameters of how we operate and what our rights and obligations are, and that contract itself has a status of law. For some time now, we've seen benefits to having PT-FI listed on the Indonesian exchange. The government is very positive about that. We believe it would present the Company in a positive way within the country in terms of the way reports are dissimilated and so forth. And so we are pursuing discussions about that and believe that it would be a very positive step for us and the government will view it as positive as well.

Okay. Thank you very much.

Let me just add that that would be a small percentage of PT-FI. PT-FI is a large asset and so we’re talking about a small percentage listing of that which would be a large transaction for the Indonesian exchange.

Your next question will come from the line of Brian Yu with Citi. Brian Yu – Citigroup Inc.: Great. Thank you and good morning Richard, Kathleen. With regards to Grasberg, I know you’ve taken the copper shipment estimates down in the next few years and when I was looking at the reference slide, I couldn’t see any real appreciable difference in the mining plan at high level. I was wondering if you could go into that a little bit more detail and then similarly, with the DOZ and the delay in the ramp there. I think you mentioned you have some ongoing labor issues and then panels. Was there just more expensive damage with some of those panels and that’s what’s delaying the ramp? Thanks.

I’m going to let Mark answer the second part of the question first. And yeah, Mark, why don’t you answer that?

Yeah. On the panel repair, first of all typically in the DOZ, we’ve experienced over time about 5% to 10% of our drop points are down for some type of repair. During this period of time right now we’re up close to a third of our active drop points are in a repair process. These drop points, a lot of them are the older drop points to begin with. Some of them were built in the weaker area of the mine, the more friable ground. So that’s played a role. The impact of the labor disputes, the pipeline situation that we had last year, also added to our concerns there on the panels and these repairs and a lot of times the panel is in a state where it takes a very intensive repair, a lot of steel sets, a lot of concrete and really we don’t, until we get into those panels and start repairing them, sometimes we’re not completely aware of what might be done, needs to be done. So we’re the process. It takes very experienced miners. It takes a very methodical process to get them repaired. We feel good about our process in getting these open backed up. So we’re working through that. We have five panels right now that are undergoing repair. We get one of those panels back in the fourth quarter of this year and then over the course of 2013 we’ll be bringing these on sequentially.

Okay. And then with respect to the mine plan question, Brian, basically we’re looking at a period for open pit mining now they’ll go from now through 2016 and our total copper and gold during that period of time is essentially the same as our previous plans because of the factor that Mark mentioned and because of some of the delays that were caused with mining rates during the labor situation last year. There’s been some shifting of that from our previous plants back, but it’s really minor and now as we return to normal operations, we will be factoring back as to how we can advance volumes forward again. So it’s not in the bigger picture of things. It’s not major changes from what we were previously talking about. Brian Yu – Citigroup Inc.: Okay. Thank you.

Your next question will come from the line of Michael F. Gambardella with JP Morgan. Michael F. Gambardella - JP Morgan Chase & Co.: Good morning. I have a question going back to slide number 9 with the Brownfield projects. Now everyone in the world is taking on especially Greenfield but also Brownfield projects having cost increase. The Cerro Verde portion is obviously about two thirds of the component here for the total company going forward and it’s still three, four years out. How much confidence do you have in that number of $4.4 billion you recently upgraded? But just how much is locked in and how much variation possibly could we see in the CapEx program?

I’ll let Red Conger respond, Mike.

Mike, we now have an estimate based on 30% of the engineering being completed so that gives us a good solid basis for that new forecast. As Richard motioned, a lot of the change has been on things outside of what I would call the outer limits of a normal project – power, water, those kinds of things that are unique. In this case the mill and processing facility itself, we understand well and have the tailing down. We have good estimates on all of that and as Richard said, we’re all focused on doing it well, doing it right and we’ll keep you posted on that. But right now it’s a very good estimate. And Mike, I just want to make the point again that this is different than even a lot of other Brownfield projects. This is the footprint of where we’ve been operating there. As you may remember the last major expansion was completed in 2006 right before our transaction. A lot of this is not exactly replicating but very similar in nature to what we’ve done before. The big issues as is the case in Northern Chile and Southern Peru is water and power and those are the things where we have seen some escalation on. But some of our investment has done is to give a surety on these things so that in a world of where both water and power are going to be increasingly problematic, we're investing to see that we've got safety in our project. But in terms of the mill processing facilities and so forth, these are essentially things that we've done before. Michael F. Gambardella - JP Morgan Chase & Co.: Okay. Thanks Richard and Red.

Your next question will come from the line of Anthony Rizzuto with Dahlman. Anthony Rizzuto - Dahlman Rose & Co.: Thank you very much. Hi everyone. Hey, I just want to follow-up a little bit just to make sure I understand correctly. When you guys talk about the panels, am I correctly thinking about mine roof bolt systems? Are they similar?

The panels are essentially our access to the – it’s the drift where we access the draw points. We have various levels of ground support. Some areas in the very good ground we just put shotcrete, very light roof bolt support. In these areas, as we repair them, it's very extensive. It’s steel sets, essentially re-concreted in. We re-support the ground essentially in a very engineered and structured way. So it does involve roof bolts. There’s a variety of roof support, ground support throughout these deals relative to the ground conditions in the specific area. Anthony Rizzuto - Dahlman Rose & Co.: Okay, Mark. And so I guess the situation I think that Richard alluded to, could you elaborate a little bit more about the specific situation? Was it something that was labor related that did occur during the quarter?

One of the – with block caving, one of things is is that once you start mining the area, it’s not a mining method that’s easily shot off and restarted. As I had mentioned, some of these draw points that we’re repairing may have needed repair regardless of the labor situation and the pipeline situation that we dealt with last year, but both of those issues exacerbated the potential for damage. And like I said, it’s difficult in a block cave once you start pulling an area, to keep the stresses off of the panels, to keep the ground support intact, you want to keep pulling each area in a very engineered and controlled fashion. We had disruptions last year during all of the issues that we dealt with and it certainly played a role in the situation we’re dealing with today.

Yeah. Tony, this wasn’t something that occurred this quarter. During the labor issues which began mid-September really last year, we were taking steps to try to mitigate this problem which we knew was there. Then some of those disruptions continued as you recall into early 2012. So this was developing and we had plans as to how we would deal with it, and as we physically get into dealing with it, it's taking us a bit longer than we thought it would when we gave our earlier guidance. So it's more of that situation than some new problem that developed this quarter. Anthony Rizzuto - Dahlman Rose & Co.: Understand. Thank you very much. It’s very helpful.

Your next question will come from the line of Paretosh Misra with Morgan Stanley.

Hi. Good morning. The first question was about your Africa operations, and I see that a second sulfuric acid plant that you mentioned that is expected to be completed in 2015. Could you give us any sense as to what capacity this can support?

I should know that right off the top of my head. I don't, and we'll back to you on that. But it's a similar size plant to what we built at our Safford operation when we expanded that. So we'll have an answer to you before the call is over.

It's like 600,000 tons a year.

But as we – the reason why we have the plant is as we go forward we've got – and as part of our long-term plans, we've got ore that has higher acid consumption. And so as part of the long range planning. We have timed in the addition of an acid plant. We also supplement from time to time purchases of acid. But it's more cost effective for us to actually buy the sulfur and logistically better for us to buy the sulfur and convert it to acid.

Got it. Fair enough. And then maybe if I could ask a second probably question for Mark, any specific reason why gold recovery was down in third quarter at Grasberg?

Yes. As we work through this lower grade material in the pit, we also experienced lower gold recovery. It's expected. It wasn't a surprise to us actually. We were about 2% better than what we had modeled as far as mill recovery for gold. One of the characteristics of the Grasberg that works out mostly in our favor is that when we're in the very high grade areas, we get the highest grade copper recovery, the highest gold recovery and the best con grades and it was just part of the process to working through this lower grade phase that Richard described earlier.

Understood. Thanks guys.

Higher grades make better miners.

Your next question will come from the line of Oscar Cabrera with Bank of America.

Good morning everyone. So you are saying better lucky than good, Richard?

I don't think so. But it's great to be lucky and good. Jim Bob's on the line, but one of the first things he told me was luck is when preparation meets opportunity. So it's good we're lucky.

Absolutely. Exactly. I just was wondering about your tripling agreement with Rio Tinto. As one of the previous callers mentioned the production specific before gold is very backend loaded in the years that you show here, '15, '16. So can you remind me what this tripling agreement for levels for copper and gold for Grasberg are please?

It varies year-by-year, Oscar. So it's not something you can just say simply. It's disclosed in our 10-Ks, but that metal strip is the schedule that – the way we call it, was established back in 1994 when we negotiated the deal with Rio Tinto. And what we did then was we took the reserves that were in place at that point and the productive capacity that was in place at that point and agreed with them on how that would be produced year by year and then to the extent that actual production in any given year exceeds the metal strip, then that’s shared 60-40. So Freeport gets all of the metals stripped plus 60% of the excess. And so it varies year by year extending to 2021. We’ve made a couple of adjustments for force majeure type items and so forth, but we have those details in our documents and Kathleen’s got…

But just on average, Oscar, if you look at the 2013 to 2016 aggregate Grasberg production of 1.4, our share of that would be roughly 1.3, and at gold of 2.1 our share would be roughly 1.9. And as Richard said, it varies year to year, but they get 40% of the increment above what the strip is. And in year when we’re below the strip like this year, we make that up first. But on average we will be getting 1.3 out of the 1.4 and 1.9 out of the 2.1 during this period of time.

Thanks Kathleen. That’s very helpful. That was the next question. So then maybe I get to ask another one. On 2012, your overall CapEx went down from $4 billion to $3.6 billion. Can you talk about the difference? Where was that change, because 2013 the CapEx stayed more or less the same, $4.6 billion now versus $4.5 billion in the previous outlook?

It’s mainly a timing thing, Oscar, as we looked at where we were and look at the outlook for the year, mostly on projects moved into 2013 and some of the 2013 moved into 2014. So it's not a kind of across the board timing. We put together these forecast based on the best estimates, but sometimes these actual spends lie in the quarter or two and that ends up deferring money into next year and then we've got some that’s deferred into 2014. So we are spending about $1.5 billion in sustaining capital and then the balance is in our projects.

Okay, great. Thank you very much.

And Oscar, going into the fourth quarter, we'll be doing our companywide planning for our business. And so we'll be able to give you at our next update the results of our detailed planning exercise.

Appreciate it, Richard. Thanks very much.

Your next question will come from the line of Jorge Beristain with Deutsche Bank.

Good morning everybody. Richard, I guess, my question is just on Indonesia. I guess you've deferred if I understood that correctly going underground by one year just because of the delays partly on the labor issues. But could you talk a little bit about from 2017, what the unit cost would look like out at Grasberg compared to sort of your I guess 2015 guidance which is your last data point there? And also talk about production that would be both in total and attributable to you guys?

Jorge, we really haven't deferred the transition to underground. We've been talking about 2016 for a number of years now, so there has been no deferral for it. As a practical matter, as we get closer to that period of time, there will be some decisions made about what we actually do. So that's still before us, but our guidance right now is the same that it's been for years. Now, there is a lot of moving parts to this second question. As we finish mining in the pit and transition to the Grasberg Block Cave, which is directly under the pit, that will have a ramp up period. And one of our strategic challenges that we had for years was how to deal with the drop off production in the pit and then the ramp up of the underground. We've had some success in dealing with that and one of the big successes has been the additional reserves we've discovered in the DOZ, MOZ complex which we've advanced the development of so that that's going to come on stream before 2016 and offset the ramp up to a degree of the Grasberg underground. We've got stock piling plans. We developed the big Garson mine and so there will still be some ramp up effects, but it is not nearly as severe as our long-term plans once indicated. Now looking beyond the open pit area to the underground, Kathleen, you have some information on the unit cost?

Okay. Just in terms of the volumes that Richard was talking about, as we look at the ramp up period going from 2016 into 2025, we're expecting on average aggregate copper price – I mean copper volumes to be around the lower 1.4 and gold to be 1.8, which would – our share of that would be roughly 1.1 and 1.4 for copper and gold and then longer term we’re expecting average in the whole underground era have an aggregate production of 1.6 and 1.4. As we look at costs underground, as we’ve talked about on previous calls, we don’t have the stripping to do. It’s essentially all coming out as ore. And so we’re able to – and these are large scale operations, and so we’re able to have a very efficient cost structure. We’re actually projecting costs in the underground era that will look very much like the type of costs on a net unit cost basis of what we’ve enjoyed during the open pit era and would be significantly less than $0.40 per pound at current gold prices. So we’re going to have a period of time in ‘16, ’17 and ’18 as we’re ramping up where as the open pit depletes and we’re not quite up to the 240 rates in undergrounds, we’ll have some lower throughput, but as Richard said, we’ve got high-grade material coming from Deep MLZ and so that transition in terms of metal production is better than what you’ll see through the mill. But as we look forward, these underground projects are very, very attractive. The economics are compelling, some of the best in the company and we had a record during the third quarter in terms of development progress and we’re very optimistic about being able to establish a very large scale low-cost underground operation.

The other side of that timeframe is we should have some excellent years leading up to the depletion of the pit, because we'll have very high grades of both copper and particularly gold, we'll have low stripping, we'll be retiring equipment and so forth. So we'll have some – it should be some, very, very attractive times before the pit is depleted.

As Kathleen said, as we start up the Deep MLZ and the Grasberg Block Cave, we start those off in the highest grade portion of the ore bodies. So as we are ramping tons up, we are experiencing some of the better grades available to us in both those deposits.

Got it. Thank you. And sorry, if I could follow up as well maybe with Richard. Just on your balance sheet, you are again positing a net cash positive result. Historically you've tended to do a little bit of top-up extraordinary dividend in the fourth quarter. Could you just talk about what your relative preference would be for returning cash to shareholders given that you did not pay an extraordinary last December or declare one? Would you favor now just increasing your base dividend as a way to return cash to shareholders? Or would you see still falling back on that kind of fourth quarter top-up as a way to kind of flare excess cash off?

Well, that's issues that our Board talks about and they’ll be looking at those things. In the very near term our CapEx are going to basically be absorbing all of our cash flow generation at these prices, because of our CapEx situation. But as I said, financial policy is something that Board looks at, and they will be viewing investment opportunities in relation to available cash and deciding how to manage it. We have a long tradition of returning cash to shareholders as you noted.

Great. Thank you.

Your next question will come from the line of Richard Garchitorena with Credit Suisse.

Good morning everybody. Just a follow-up on that question. Given the sensitivity that your cash flows and EBITDA have to the expansions, the 50% increase that you highlighted as of 2015, 2016, how should we think about that and how would you think the Board would view that going forward just given the strong generation of cash flows at higher volumes over the next three, four years?

Well, we smile when we think about it. So it's going to give the Board a lot of opportunities in deciding this balancing of investment opportunities, returns of cash to shareholders. So it's – as a practical world these are based on models. We live in a complicated world today and so we're going to be focused on achieving these projects, which give us the opportunity to generate these volumes and then the market price of copper and gold, molybdenum and cobalt will determine exactly what those cash flows are. So we've got time now as we work through this and executing our plan and then the Board is going to have a lot of options to it in deciding what to do going forward.

Okay, great. And just one follow-up. On Tenke, obviously the sulfuric acid plant will be completed in 2015. When should we expect to hear an announcement on the next phase? Would it be when this current phase is complete and you're going through the plans for next year and the year after?

We will give you a quarterly update of where we stand with our thinking on Tenke. It's not – we're going to be – the first thing now that we virtually completed this project is what it’s actually going to do. Are we going to be able to optimize it as we did the initial project? I think our original design capacity for our mill there was 8,000 tons per day. It operated at 12,000 tons, which was a huge upside for us. So we were able to buy some additional mining equipment. That allowed us to expand processing equipment. So now I’ve just got to tell you how proud I am of our team over there and operating in a challenging environment, as I am with the Americas which we’ve done great and Indonesia, our team has met the challenges there in effective way. But the first step will be to see exactly how this system operates in the way you design systems. Your hope is, our experience has been is that you better than design and that’s what we’re going to see where that happens and then we’ll go from there. In the meantime, we’re going to be continuing to do a lot of drilling and to do a lot of metallurgical work on how long run to deal with this big sulfide next-door opportunity that we had and I would say our work over the past, year, 18 months has been very encouraging about that.

To just to come back to Tenke and the asset plans that Paretosh asked about, the plant that we are planning to come in in the 2015 timeframe would have a capacity of about 1,400 tons per day. The existing plant there has 800 tons per day, but the new plant will be similar size to our Safford acid plant that we put in recent years which has a similar capacity.

Great. Thank you.

The next question will come from the line of John Tumazos with John Tumazos Very Independent Research, LLC

Congratulations on all the good, hard work. I know all these projects can take a little time. I want to direct a question to Red about the Cerro Verde economics and I understand that 360,000 tons a day would be the biggest one in the world. But the grades at Cerro Verde aren't as good as the grades at Grasberg or Escondido or Chuqui when the big mill was built there or even Northern Dynasty, Pebble in Alaska that proposes a big mill. Why does Cerro Verde justify all your hard work and shareholders' precious capital? If you could explain it a little more fully. On the surface from a distance a cynic might say it's a marginal mine where the costs are going rise, and if don't triple it, you’ll shut it down. You need the economies of scale to justify keeping it open because of the low grades and mining inflation.

I will let Red respond to it and Red, just let me make an introductory comment. When we look at our reserves and resources and what we believe is a very positive long range view for copper markets, we want to position our company to take advantage of that and to do that, we need to make long term investment decisions that allows you to have the ability to deliver copper into the marketplace. And the two-edge sword for the industry is that you just can't increase capacity in a short period of time as you mentioned, John, and thank you for your comment. And so you want to position ourselves and that's what we're looking for with our capacity expansions is to position ourselves to deliver large volumes of copper into what we will do with long-term positive marketplace and to manage that we look at our assets on a portfolio basis. We wish every mine could be a Grasberg, but it can't. And the world is increasingly having to look to Cerro Verde type deposits for supplies of copper, and with Greenfield projects with a Cerro Verde type grade you had a big challenge in trying to do it. So we are seeing the investment of this as giving us the opportunity to have the chance to move forward this significant resource, have it available to the marketplace. If we have times as we faced in 2008 and 2009 of where the world turns against us, we have our business organized that we can adjust to that. So it's that balance of positioning yourself to take advantage what we believes the long-term positive market for copper and then manage yourself to deal with the short-term risks that are clearly evident in the world today. So Red I’ll let you – but the decisions are made on a portfolio basis and not just on a mine-by-mine basis. Red?

John, just on a technical basis, you're absolutely right about the comparative ore grade. What we have going for us at Cerro Verde is a low string ratio compared to lot of other high grade mines we see around the world. And we have hydropower available to us in that part of the world which we – as part of our new plant we’ve got additional hydropower contracted for the mine going forward. So those are the two big offsetting items that are favorable for us.

Red, what do you project the rates of return to be at $3, $3.50 copper for this $4.4 billion?

I'll let our Chief Financial Officer answer that question.

If we look at the breakeven of the project in terms of getting a 10% after-tax return, the price of copper is about $2.80,$2.85, and then of course as you move up to higher copper prices, at $4 copper, you are approaching 20% returns – after tax returns. So as we look the projects that we have currently, our Tenke project which is nearly complete is the most attractive on just a breakeven copper price. And then Morenci would be in between Tenke and Cerro Verde.

Thank you. I just want to say that sometimes we might listen to these conference calls and I appreciate the hard work you do. I have an investment in another company where the other shareholders got impatient and changed the Board and one of the guys went ahead and shut the headquarters and fired up most of the people and now the Directors are running it free, trying to do all the detailed work and they made me Chairman and I'm suffering for all my years of wise-ass remarks. So Red, I just want you to you know, I appreciate it, but I'm involved in a company where the shareholders went ahead and fired everybody because the CapEx was too high. Now I’m suffering.

All right John. Good luck to all of us. Thanks.

Your next question will come from the line of Carly Mattson with Goldman Sachs.

Good morning. Could you talk to just more broadly the M&A environment and has recent commodity price volatility changed the landscape at all? And then, just kind of a following question to that, if valuations do become more attractive, how would Freeport weigh closely acquisitions over the organic growth opportunities the company is currently pursuing?

Carly, I missed the first part of your question. Could you repeat that?

Sure. So as far as the M&A environment and valuations, has recent commodity price volatility changed the landscape at all regarding valuations?

Well, the answer is yes. You can just look at share price performance over recent years. It's not just changing valuations, but also the uncertainties in today's world and I think has an impact on company's willingness to invest in projects pursue opportunities for M&A. As a company, we are constantly looking for opportunities. We have internal discussions. We have others proposing ideas. We talk about it with our Board. So, we always have our eyes open for opportunities. The base case for our company is one that's focused on organic growth and that opportunity became much more significant for us than we anticipated after we completed the Phelps Dodge deal. We looked at the economics of that deal on the basis of our positive view of our copper markets and their production profile. We've done a lot of work since then and have added 45 billion, 50 billion pounds of copper reserves that's given us a lot of internal growth opportunities. Lots of times in the M&A world, you can't predict opportunities that are going to come to you. We certainly didn't predict the timing or the opportunity for us to acquire Phelps Dodge. But the stars and moon – the stars aligned for us, financing market is aligned for us and we were able to do it. So we are always alert to opportunities. We have our base case for our Company that's very attractive and it's one that we are aggressively pursuing.

Great. Thank you.

Your final question will come from the line of Wayne Atwell with Global Hunter Securities.

Good morning. Thank you for taking my question. There's been some labor issues in Africa. Can you talk to us about the tone of the labor relationship between you and the union where you currently operate?

Yeah, it's a very difficult situation in South Africa. Other countries have had things. Our situation in the DRC with our labor group has been very positive. We just signed an agreement there. That country is one in which has very difficult financial situation. 65 million people with $12 billion to $14 billion of G&P. It's $200 a person. In the United States it's almost $50,000 a person. So in the community and with workers, people are very appreciative of what we’re doing there. We made the largest investment so far in the history of the country. We’re giving employment right now with construction workers. We have about 9,000 people working there. The vast majority of those are Congolese. We’re doing community development. Government officials from the President to the Mines Minister to the Governor of Katanga are all very positive about what we’re doing. We’re being sensitive to workers there, paying them well, providing benefits, and so far we’ve had very good relations with them. This whole issue globally though with workforces is a challenge for the industry and one that’s caused production disruptions, which has led to copper market implications and that’s not likely to go away.

Great. Thank you very much.

I will now turn the conference back over to management for any closing remarks.

Well, thanks everyone for their attention. We’re pleased to have this chance to review our business with you and look forward to other progress as we execute our plans. Thanks.

Ladies and gentlemen, that concludes our call for today. Thank you for your participation. You may now disconnect.