Ladies and gentlemen, thank you for standing by. Welcome to the Freeport-McMoRan First Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. 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, everyone, and welcome to the Freeport-McMoRan first quarter 2017 earnings conference call. Our results were released earlier this morning and a copy of the press release and slides for today's call are available on our website at fcx.com. Our 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. 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, we'd like to remind everyone that today's press release and certain of our comments on the call include forward-looking statements and actual results may differ materially. 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 2016 Form 10-K and subsequent SEC filings. On the call today are Richard Adkerson, Chief Executive Officer; we also have Red Conger who heads our Americas business and Mark Johnson, who heads our Indonesian business with us today in the room. I'll start by briefly summarizing the financial results and then will turn the call over to Richard, who'll go through our slide presentation. As usual, after our remarks, we'll open up the call for questions. Today, FCX reported net income attributable to common stock of $228 million, or $0.16 per share for the first quarter of 2017. We had a number of special items that are detailed on VI of the press release. They net to an $8 million gain. After adjusting for these net gains, the first quarter 2017 adjusted net income attributable to common stock totaled…

Good morning, everyone. I'll refer you first to slide 3, where we have a picture of the cover of this year's annual report, the title is Driven by Value, which highlights our resolve to deliver value to shareholders. Last year, our annual report was entitled Prove Our Mettle, and in 2016 we did successfully address our excessive debt level going into the year and we're in the homestretch of reaching a target that we set at the beginning of 2016, that was a two year target to cut our debt in half. We have a clear path to doing that now, and our focus is now generating long-term shareholder value. We strengthened our balance sheet and our liquidity. We executed our operating plans. We successfully completed the major development project at Cerro Verde, which was a significant accomplishment for our company and part of this long-term value proposition that we have before us. We refocused our business to be a leader in the global copper industry. We set out with the intent of reducing our debt but leaving ourselves a set of assets that would provide the basis for future profitability and profitable growth. The asset valuations that we were able to achieve in our property sales in a very tough market were attractive. And recent market developments reinforce our optimism about the long-term fundamentals for the copper markets and reinforce our focus on what we're doing. So we are – going into this year, we're focused on Indonesia. I'll be talking about that. That's clearly a challenge for us, has been for some time, and I want to make sure I address all of your questions about it and let you know what we're doing about facing that challenge. With respect to copper markets, page 5, beginning in second…

Ladies and gentlemen, we will now begin the question-and-answer session. One moment please for our first question. The first question comes from the line of Chris Terry with Deutsche Bank. Please go ahead.

Hi, Richard and Kathleen. A couple of questions from my side. Just in terms of the guidance for this year, is it right to assume that in 2Q you basically would sell most of the concentrate that was sitting at port plus what you produced in the quarter? Is that fair for 2Q?

Well, there is a – in general, that's true. There is a ramp-up that we have to go through. And we also have to coordinate shipments with our customers who had to make other arrangements for supply when we were shut down from exports. But we do have a series of ships, ones having loading completed as we speak, to – we had close to 100,000 tons of copper concentrate at our port site and storage facilities. These ships are 20,000 tons, 25,000 tons. And so we'll have a series of ships to reduce that inventory. We're beginning to ramp up. We have plans to ramp up our mine rate and to return our mill to full production. Now, there is labor issues that we are facing in Indonesia at job site. The leader of the union that represents PT-FI's employees, which is about 12,000 of our 30-plus thousand workforce, our employees, is undergoing a trial for corruption allegations in Timika and there have been demonstrations by workers in support of their leaders. There was an incident with the police in which some rubber bullets were fired and some people were injured in the last three days. That has resulted in absenteeism at our workplace. And then overlying that are concerns by the union of our plans to – that we put in place to reduce employment, and they're concerned as we are about the long-term impact of that. And so we are engaged with the union in an effort to get them to return to work and we're getting support from the government and from the local police. During all this quarter, the social situation and security situation at job site, which was a concern when we suspend operations, has been relatively peaceful, but we do have this current unusual situation with the demonstrations and the absenteeism. All of our projections are predicated on getting that resolved and getting people back to work.

Okay. Thanks. Thanks, Richard. And just in terms of the longer-term profile, it looks like roughly you've delayed some of 2017 into 2018. But then looking at further out, the 2021, 2022 numbers look a little different, particularly 2021. Is that just assumptions around where the underground is at or what's moved those sort of medium to longer-term numbers?

It's really a slowdown of the Grasberg Block Cave compared to our prior assumption. And these are, at this point, assumptions and assume that we continue to slow Grasberg Block Cave throughout 2017. As Richard talked about earlier, the timing of that will depend on the progress we make with the government with respect to our long-term agreement. So what we've assumed here is a slight delay in the development of the Grasberg Block Cave.

So Chris, our long-term plan for several years had been to complete mining the pit in 2016, in early 2016. And now with the issues we faced over the last five years, in terms of the issues with the government and the strikes and so forth, that has been pushed out to 2018. The ramp-up of the Grasberg Block Cave is a six-year plus event. So the more this thing is delayed, the longer that ramp-up occurs, and that's what I was saying, it's so important that we reach an agreement with the government so that we can move forward, complete mining the resources and the pit. We haven't lost any resources throughout all of these deferrals. But it's an – economically, the sooner we can begin completing the Grasberg Block Cave development, begin ramping it up, the better off we all are.

Okay. That makes sense. And just a last one on the CapEx, just to be clear. The latest number that I had seen for the smelter if you were to go down that route is $2.5 billion. Is that correct? And also in your guidance, there is no CapEx included in future years for that at this stage until you get resolution on the ownership agreement, is that right?

That's correct. No CapEx are included. Our plans are to finance this on a project basis. There would be other partners involved in our plans, and we would get project type financing for it, which requires that we have a contract for PT-FI's operations, because that's the source of the plot for the smelter. $2.5 billion, there is working capital requirements and so forth, so it would be somewhere between $2.5 billion and $3 billion, depending on that. We've done a lot of preliminary engineering work with the Japanese construction firm that designed our initial smelter. We've done site studies and site analysis, but we have not entered into contracts on the timing of spending new capital and that's dependent on reaching this long-term agreement with the government. And the government has agreed on the MoU that we signed in 2014, has recognized that there would have to be certain financial incentives provided by the government because of the poor economics of this investment.

Okay. Thanks, Richard and Kathleen. I'll leave it there. Thanks.

Thanks, Chris.

Your next question comes from the line of Orest Wowkodaw with Scotiabank. Please go ahead.

Hi. Good morning. Richard, just curious on your statement earlier. What gives you any confidence that the Indonesians are, I guess, willing to negotiate beyond the initial terms that were set out under the new mining laws around Grasberg?

My direct discussions with senior government officials. I mean, I have been in continual conversation with people and they've made public decision out. The Indonesia is a country that has a democracy, it has freedom of press, and for those of you who read the media in Indonesia, you know that there are a lot of comments made by many different people. Some informed, some less so, but in terms of my direct discussions with the government officials, we have committed with them to approach this in a good fair basis to reach a resolution. And in fact, we are beginning those discussions immediately and I'll be spending a good bit of time in Jakarta in those engagements. There was a visit to Jakarta last week by Vice President, Michael Pence on his tour of countries in Asia. He met with the President and spoke with him about our situation and it was a positive conversation according to the reports that I've received. We have had tremendous support from others in the U.S. government in the State Department, the Commerce Department and in business groups that deal with Indonesia, U.S. bilateral relationships. So, it's in everyone's interest at the end of the day. It's been a complicated situation politically in Indonesia, but that's the basis for my comments.

And does that mean you are holding off pursuing the international arbitration to protect the COW?

Well, having said all that, we're not underestimating the challenges, because these are issues where we have significant disagreements on. Now, we have triggered the 120-day notice required by the contract and that notice period continues to run. And so after mid-June, we and the government would each have the ability to commence arbitration proceedings. We hope not to do that. And – but we have that, as a right of ours under the contract, that process requires a significant amount of time, procedurally to put in place. So that is, let me see, some of this running in parallel, it's a fallback that each of us will assess after mid-June to see where we are in the discussions, and whether or not to proceed with arbitration is my hope that we do not have to take that step, but if we have to, we'll be prepared to do it.

I see. And in your disclosure, you talked about potential significant reduction in capital spending development at Grasberg if there's no resolution. Would we see that impact as early as 2018 or is that something that, really that...

You potentially could see in 2017.

Okay.

I mean, it's a step, the next major step we would have would be to suspend the Grasberg Block Cave spending, which we're spending roughly $40 million a month on, and that involves a set of workers, principally contractors of about 5,000 people. So, we are continuing that. We had plans to suspend it. Those plans were averted by this recent agreement that we reached with the government for this temporary IUPK and so all of that is – we still have those plans ready to execute if we have to.

Orest, we've taken the number down by about 25% for the Grasberg Block Cave and the number Richard is talking about, $40 million, is the reduced number. We have the ability to take that down to zero. Economically, we prefer not to because of what it does to our production schedule and NPVs, but in terms of how we are progressing with the government, we are assessing that on a week by week, month by month basis and have plans, as Richard said, contingency plans if we need to take that number all the way to zero.

I see. Just final question if I may. What percent of the 2018, 2019 copper production can be attributed to the Block Cave here?

Very little in that timeframe.

So it's really later in 2021, 2022?

That's right. And as I said, let's say, roughly six-year plus ramp-up. So, we are about just over half way through the initial development. We'd be mining the open pit into 2018. We can't start that ramp-up until mining in the pit is completed because it's directly underneath the pit and you have subsidence, so we have to complete the pit and then begin the ramp-up of production and that goes out for six-plus years from whenever we start. So it's not much impact on production during that timeframe you referenced. There is the capital that would be spent, which we'll have to adjust that capital if we have to live within lower cash flows, but not being able to export.

Thank you very much.

All right. Thank you.

Your next question comes from the line of David Gagliano with BMO Capital Markets. Please go ahead.

Hi. Thanks. I just have a question that actually continue along the same lines in terms of the longer-term mine plan at PT-FI. I'm looking at the slide on page, I think, it's 26. 2022, it shows no change versus 2021, obviously, down a little bit – well, anyway 2020, 2021 down versus previous. But my question is 2022, does that include, I don't think it does, Rio Tinto's interest?

No.

This is all net to PT-FI.

No, this is all net to PT-FI, and let me just – I think everybody understands this. While we operate broadly with Indonesia under the name PT-FI, the operation is a joint venture between Freeport subsidiary PT-FI and a Rio Tinto subsidiary in Indonesia, and all the numbers that we show financially in our presentation are Freeport's subsidiary numbers, and currently that subsidiary is owned 9.36% by the government with the remainder owned by FCX. So all of that just reflects PT-FI's net interest. Last year in January, when we filed the valuation of PT-FI with the government that showed a $16 billion valuation at that time. That was strictly PT-FI Freeport's net interest and excluded any values for the Rio Tinto or the values for Rio Tinto's interest in the joint venture.

Okay. So, but – I guess, I don't know why I'm still confused on this. But, if you go to 2023, 2024 et cetera, the PT-FI mine plan doesn't change, but Freeport's ownership of PT-FI changes, correct?

That's correct. Right now that was originally and this was an agreement that was signed in 1995. And it was structured around that all reserves at 12/31/94 will be retained by Freeport PT-FI and they were scheduled to be produced by 2021, and Rio Tinto was scheduled to come in for 40% beyond 2021. Well, because of the delays and strikes and export suspensions, that 2021 date now goes out to roughly 2023.

Okay.

So Rio Tinto's 40% kicks in...

2023.

In 2023, sometime during the year 2023 and, of course, that's going to be dependent on our resolving all these issues.

Right. Okay. And I guess the reason I'm asking is, because, I guess, I'm still trying to figure out, the economics, can you give us a little more color on the economics associated with continuing the spend, to go underground, continuing to spend and develop obviously the Grasberg Block Cave when – by the time it actually really ramps up, the ownership really switches over to Rio Tinto. Is there any – like what's the economics associated with the upfront CapEx?

I mean, they are very attractive.

Even with the reduced...

The rate of return, and when you say it shifts over, I mean we still own 60% of this business and I mentioned just how large the resource is. So I haven't seen every economic analysis for future development in our industry, but my sense is this is perhaps – this is probably the most attractive rate of return investment in the mining industry today.

Okay. Understood, I appreciate it. Thanks.

And, Dave, I understand all this has been a moving target and change and what we would plan to do as we – when we complete our long-term agreement with the government is have a face-to-face session with analysts and investors and walk through this in some detail so that we make sure that there is a clear understanding of the value of this business. And we haven't done that to date, because we've been so focused on trying to resolve the issue with the government and all of these values are dependent on getting that resolved.

Okay. I appreciate it. Thanks.

Thanks for your questions, Dave.

Your next question comes from the line of Chris Mancini with Gabelli. Please go ahead. Christopher Domenic Mancini - Gabelli & Company: Hi. Just a quick question along those lines of the premium with Rio Tinto. Under the current contract, how much would they have to spend on this underground capital development in Grasberg in order to maintain their 40% stake, and have they committed to that, because I've read in the press that they were questioning their commitment to Grasberg at this point?

So, Chris, the way this works is, capital expenditures are divided on the basis of whether they're replacement capital or expansion capital. The Grasberg Block Cave is deemed to be replacement capital. And so Rio Tinto share of those costs are relatively small. They pay the same percentage of that, that they would pay as determined by their share of revenues and how much operating costs they pay, and that has been relatively small to date. The Deep MLZ project is a growth project, and they pay 40% of that. And we years ago entered into an agreement that the common infrastructure that's used to develop both of those resources, and ultimately the Kucing Liar resource is shared 50:50. So they are making some capital commitments, and they've made those consistently all along. The bulk of the capital is funded by Freeport under the current situation. And I will say, we have an excellent working relationship with Rio Tinto, and have had from the start. They're engaged in what we do. We're transparent about everything, they have the input. There is one contract that's shared by Freeport and Rio Tinto and they have the right to approve any changes to that contract that has an adverse impact on their company, so it's important that we are aligned and to date we are aligned. We're all concerned – we are both concerned about the future and recognize the importance, particularly important for Rio Tinto because without getting this extension, they actually have no value to speak of in the business. Christopher Domenic Mancini - Gabelli & Company: Okay. So, over the next – sorry.

Chris, I was just going to add that we manage the development of these ore bodies based on the aggregate 100% economics. We do what's best for the overall operation and don't get into trying to say, you're only funding a small part of this and getting 40% or you are funding 40% and only getting a small part. We manage for the overall NPV the aggregate resource and that's worked out over time. It's been pluses and minuses on each side, but it's worked out to be a good long-term partnership.

And the agreement has a kind of do-right provision and over the years each of us have approached it in that standpoint. It's a complicated agreement. Doesn't spend any time, and wish you've done it different way back in the mid-1990s, but we are where we are and they are very good partners. And we feel a very strong responsibility to represent their interest in the right way and we'll do that. Christopher Domenic Mancini - Gabelli & Company: Okay. Great. Of the $1 billion that you expect to spend on underground development over the next few years, how much of that per year do you think would be Rio Tinto? I understand it depends on if you are in, I guess, the DMLZ, but do you have a sense as to how much they have to spend?

It'll vary somewhat, but it's roughly $200 million a year. Christopher Domenic Mancini - Gabelli & Company: Okay. Got it. Okay, okay. And, okay. And then going to Safford, so it looks like you have around a year left in your reserve life at Safford now under the current reserves and so this Lone Star would essentially extend the life of the Safford mine you said. So would it be able to produce at similar rates around 200 million pounds of copper a year? And I mean, I guess, the question is, what kind of IRR are you expecting from the project, and kind of what can we infer then in terms of what your required IRR would be for future expansion projects or things like that you described earlier?

Red can add to this, but the Safford production goes out to 2021. It declines from here to there, but what we're doing really is essentially bringing in ore from the adjacent Lone Star mine and using the same infrastructure, tank house that we have at Safford. Most of the cost is stripping and so it's an attractive project from the perspective of low capital intensity, but we do have a several-year stripping program that's several hundred million dollars. I don't know, Red, if you want to add anything..

Red Conger runs our operations in the Americas. Red? Harry M. “Red” Conger IV - Freeport-McMoRan, Inc.: Yeah, Chris, so we're producing about 60 million pounds a year there right now, and as Kathleen said, that will go out for another eight years. And that gives us plenty of time to get the stripping done and maintain the continuity of the operation. So it's attractive and we're just – we should have permits here mid-year that would allow us to start developing and getting some of the early mining done. So we're on it. Christopher Domenic Mancini - Gabelli & Company: Okay.

And that project, to your question about IRR, that project in and of itself is a good project from an IRR standpoint, but what we're really doing here is exposing the longer-term resource at Lone Star which is an enormous resource. And so this – while this will produce cash flows and a return on investment, it opens up a very long-term 50 billion pound sulfide resource that we can consider for future investment. So it's part of a long-term district play. Christopher Domenic Mancini - Gabelli & Company: Okay. I mean, would we expect – or could we expect to see feasibility studies on any of the development project that you mentioned, Bagdad, Chino, El Abra, so that we could get some parameters around what the economics would be depending on the metals prices and things like that as you do complete these studies?

Yes. I mean, what we're doing now is going through the portfolio. We've got a preliminary feasibility study on El Abra, and that's going to be updated, but the rest of the portfolio in the Americas, we're going through it to identify what the project – defining the project. And what we're challenging our team to do is to find ways to cut capital. We've been focused on keeping operating costs low in the Americas, but what we're challenging the team to do now is how do we develop cheaper mills and how can we get these projects to be more economic because many of the projects require, just like the rest of the industry, $3 copper for them to make sense. That's not the case with Lone Star oxides, but some of the larger projects, because of the high capital costs of a mill, require higher copper prices. And so what we're doing first before we go prepare feasibility is to challenge our team to find ways to be more creative about how we can develop projects on a lower capital cost basis. And so, these are long-term, Chris, in our portfolio. We're not spending much money now, but we're preparing for the future long term. Christopher Domenic Mancini - Gabelli & Company: Okay. Okay. Great. Thanks a lot.

And I don't want to drag this out too long, but that's been a strength of our business. I mean, we go back years – through the years as Phelps Dodge was the leader in SX/EW, but it was also active in developing mills over time, at Candelaria for example. And PT-FI was a real leader in developing large-scale SAG mills and then high-pressure grinding rolls. And we've taken that experience and brought it forward to the expansion project that we had in Morenci where we had a new mill design, the recent expansion at Cerro Verde with new mill technology. And now we want to keep building on that and working with our suppliers and contractors, as Kathleen said, to have these opportunities with much improved economics and energy efficiency and so forth. Christopher Domenic Mancini - Gabelli & Company: Okay. Great. Thanks.

Okay. Christopher Domenic Mancini - Gabelli & Company: Thanks.

Your next question comes from the line of Alex Hacking with Citi. Please go ahead.

Hi. Good morning, Richard and Kathleen. My first question is just coming back to Indonesia. Is your sense at the moment that you're negotiating against a single party there or there's still a lot of divergent viewpoints on the table on the Indonesia side? Thanks.

Well, I'd say yes to both questions. The Minister of Energy and Mines is taking the lead and has been authorized by the President to represent the government. So, he is the point person in these negotiations, and he's a guy with a good business background and we can talk with each other in a very straightforward, candid way. The Minister of Finance is also involved in a significant way. But there's – in a country like Indonesia, there are divergent views and so our challenge will be to find a way to reach an agreement that is acceptable to the Minister and to the President and works for us.

Okay. Great. Thanks. And then just a follow-up question. You mentioned that you've entered into an MoU recently in Indonesia. Does that MoU last for – I guess, is there a tenure on that MoU...

Yes.

...or is it indefinite?

No, it's six months. I mean, this temporary IUPK lasts until October and so we need to get a long-term resolution during that timeframe.

Okay. And then at the end of that period, would your contract award still be valid?

Yes.

Okay. That's clear. Thank you.

Yes, and the MoU makes that clear. The issue is, we would then fall back with their regulations, which would restrict our rights to export, but the timeframe – and this was a – we had suggested this back in January – was to give us a period of time to negotiate a long-term solution and during that period allow us to export and allow our contract – recognize that our contract stays in place, and that's what the MoU does, and this MoU will be filed publicly.

Sorry, just one final question, if I may. Are you – I think you answered this earlier, but just to clarify, are you still allowed to move to arbitration according to the terms of the MoU, does it restrict your (01:05:47) rights (01:05:48)?

The MoU doesn't address arbitration, but the notice period has been initiated and that will run through the end of June. And under the terms of the contract which remains in place, either party has the right to move to arbitration after mid-June.

Okay. Thank you for the clarification.

Your next question comes from the line of Andrew Quail with Goldman Sachs. Please go ahead. Andrew Quail - Goldman Sachs & Co.: Hi, Richard, Kathleen. Thanks for the update. More short-term questions on Indonesia on our models. What do you foresee going back to on a 1,000 tons per day basis the operation in the next sort of – in 2Q and maybe 3Q given the dip this quarter?

Are you talking about mill rate?

Mill rate or... Andrew Quail - Goldman Sachs & Co.: Yeah, yeah, mill rate, mill rate.

Mill rate.

Hi, Mark.

Yeah. This is Mark Johnson. Our forecast right now, pending the issues with our workforce, is that we'd be up near 200,000 tons a day again. We'd be producing upwards to 10,000 tons a day of copper (01:07:05) but averaging somewhere around 7,500 tons for the quarter. Andrew Quail - Goldman Sachs & Co.: And then – and 200,00 in 2Q or is that more throughout 3Q, 4Q?

It's really the 2Q and then for the reminder of the year, we'll be at that sort of rate. Just really depending on the hardness of the material, coming out of the mines, but it'd be more or less normal operations as we've seen in the past. The mill has performed over 300,000 tons a day at a peak and it's typically kind of that 200,000 to 220,000 based on material types.

Yeah. And we manage our business on the basis of metal output as opposed to mill rates. I mean, and the mill rates will vary, as Mark says, depending on the nature of the rock and we are in really high-grade material now, so we need to.

But we'll average less than 200,000 in the second quarter. Andrew Quail - Goldman Sachs & Co.: Yeah.

Because we're just ramping up now, but with Mark's – we get to by the end of the second quarter, the 200,000. Andrew Quail - Goldman Sachs & Co.: You get to that rate, Kathleen, yeah. Okay.

Right. Andrew Quail - Goldman Sachs & Co.: So, yeah, you would be – because you start on the 21st of April. Okay. And then, well, you had pretty good recoveries last quarter in both copper and gold. Do you expect that still to continue going forward?

And that again is the quality of the ore... Andrew Quail - Goldman Sachs & Co.: The grade.

...we had over 92% on copper. Andrew Quail - Goldman Sachs & Co.: Yeah.

And that's very much driven by the high-grade portion of the Grasberg, which we'll be mining consistently to the end of the pit. Andrew Quail - Goldman Sachs & Co.: Okay. So, it's through to 2018. Okay. It's a positive, good. Okay. And then, I mean, it's a bit of a weird one, Richard, but you might laugh at this one, but just for modeling. Your price realized for molybdenum of $8.70 was much higher than we expected. Is there something we're missing there when you look at spot prices on screen (01:09:02)?

What you have to take into account is that we sell a significant portion of our molybdenum output in a chemical form as opposed to looking the quoted price is for molybdenum metal and the chemical product is a much higher valued product. This is – we're able to do this as a result of investments that were made over many years. And then we enter into supply contracts to refiners and others who use this chemical-grade molybdenum and its realizations are significantly higher than metallic molybdenum. Andrew Quail - Goldman Sachs & Co.: All right. Thanks very much guys for taking my question. Bye.

Your next question comes from the line of Michael Dudas with Vertical Research. Please go ahead. Michael, you may be on mute.

Thank you very much. Thank you, Kathleen and Richard. I'll try to keep it brief. Regarding – if you decide to suspend block-cave investment, can you reverse that in two weeks, or it's like once you get going with that, is that going to be a multi-week, multi-month process? I mean could you just get a sense of when you talk about that, I know it's a very serious decision, but how that would play out? And if you had to change it, how quickly you could get it back into gear?

Yeah. It's a really good point and that's what has led us to be reluctant to turn it off, because this is a highly skilled group of workers that are involved in this block-cave development. And if we demobilize that group, then we would be faced with a period of time to remobilize them and get them back to work. And it's not a matter of weeks, but it's a significant operational issue for us to disperse that team and there are other major block-cave operations going on around the world. And then to bring them back together would be a period of time measured in months rather than weeks.

Understood, I appreciate that thought. And just a follow-up, Richard, as you look out through 2017 in the marketplace and, of course, you've had some labor issues yourselves, do you anticipate we're going to see more difficult negotiations among some of your peers and competitors around the world, as labor starts to feel a little bit better about their positioning?

Well, I was just down in Chile at the Cesco Group and saw a number of my associates in the industry. And we were all talking about that versus a correlation between copper prices and labor problems. And so, as the copper prices increase, that's heightened the aspirations of labor for better deals, and then I always say that labor problems are contagious disease that once someone experienced one, they tend to happen in other places and we've certainly seen that with Escondida, ours, the Southern Copper situation and unions are talking everywhere about the situation.

Understood. Thank you for your thoughts, Richard.

Yeah.

Your next question comes from the line of John Tumazos with John Tumazos Very Independent Research. Please go ahead.

Thank you very much for taking my question. The mine output appeared to fall at each of the copper mines and I tried to adjust for this sale of 13% at Morenci and 56% of Tenke and estimated that the continuing copper output fell about 11% or 89 million pounds. Could you talk about the rebounds to tons and grade at the mines other than Grasberg to meet your 3.9 billion pound forecast for the year?

Yeah. There was some impact in Cerro Verde from the weather and the strike situation. The principal impact of that's going to be longer term than I mentioned because we kept our mill basically running during the quarter, but our mine rate was – in the month of March, we have about half of what it has been in the first two months. Now, we returned that to that level, but that's going to have some ongoing impact. The rest of it, John, is just normal issues you face in running a business like ours.

But we're not showing – John, we're showing the first quarter looking pretty similar to the rest of the year on a quarterly basis in the Americas. So, really, it's – Indonesia is the change, so there's really not a big change in the overall output in the Americas compared to the first quarter.

Thank you.

Your next question comes from the line of Novid Rassouli with Cowen and Company. Please go ahead. Novid Rassouli - Cowen & Co. LLC: Hi, Richard and Kathleen. Thanks for taking my questions. I was curious if the Indonesian government has backed off the divestment requirement at replacement costs or if there have been any developments there?

Well, that was in the – that was the subject to one of the new regulations that was adopted in January, and that regulation is still in place. And that's going to be one of the issues under discussion as we enter into these negotiations. Novid Rassouli - Cowen & Co. LLC: Got it. Two other quick ones. Can you just comment on Cerro Verde's production profile over the next three years, and maybe the stability that you see there?

Yeah, we're expected to be just shy of 1.1 billion pounds at Cerro Verde this year, and it's pretty consistent over the next few years. Novid Rassouli - Cowen & Co. LLC: Great. And then lastly, I know it's a small piece at this point, but any guidance that you can provide on the oil and gas production with respect to either revenue or costs? Thank you.

In terms of oil and gas, it's down to a very small number, we're producing in the shale for the Gulf of Mexico. We've got something onshore in the Gulf Coast region and now in offshore California. But just from an overall EBITDA standpoint, it's a very small contribution, it was slightly negative in the first quarter. Novid Rassouli - Cowen & Co. LLC: Great. Thank you.

And the more significant issue we're working on to manage is the abandonment costs that we faced as a result of this business. So, that's something that's getting a lot of attention, and we're continuing to unwind some commitments on cost that is a carry-over for certain facilities and office space and so forth, but we've made a lot of progress with that.

Our final question comes from the line of Evan Kurtz with Morgan Stanley. Please go ahead. Evan L. Kurtz - Morgan Stanley & Co. LLC: Hey. Good morning, Richard and Kathleen.

Good morning. Evan L. Kurtz - Morgan Stanley & Co. LLC: So, just one more on Grasberg. One of the issues, I guess, key sticking point here is this 51% number that's out there. And I know in the past you seemed fairly reluctant to give up majority ownership of PT-FI. And I just kind of wanted to take your temperature, is that something that you'd be a little bit more open to than you have been in the past and is that really on the table, or is that something that you're going to really push back on hard?

Evan, the worst thing I could do is, get out in front of the negotiations and discussions in answering a question like that. As I mentioned, the issue of divestment is on the table. And that's going to cover the range of issues, including the percentage of the investment, the process for divesting, the valuation for divesting and the carry-on issues related to operatorship and governance of PT-FI. So, I think, at this point, the only thing I can say is that those are on the table. Our broad objectives, as we go into the negotiations, are going to be to protect the value of this asset for our shareholders and to find a way to reduce the risk that's overhanging the situation now and provide a stability for the long term. And we need to have that stability to warrant these investments. I mean we've been running this business for years and the government has been cooperating with us on it by making investment for production that's to be received beyond 2021. So, we have to get that situation clarified and de-risked. The one thing that we will insist on that any divestment to be made on the basis of the fair value of the assets. Evan L. Kurtz - Morgan Stanley & Co. LLC: Great. Thanks. And maybe an easier question to answer, but I know that part of the deal with China Moly included a later negotiation on selling Freeport Cobalt, the Kokkola operation. Is that something that happened and maybe it's just too small to report or is that still underway?

That has not happened and with the dramatic change in the cobalt market, that's occurred since we closed our deal with China Moly. That matter is under discussion, so it is – let me just leave it at that. It hasn't happened, it's under discussion. Evan L. Kurtz - Morgan Stanley & Co. LLC: Great. Does that mean that you might be able to keep that or have you committed to sell it at this point?

No, we didn't commit to sell it, we committed to give them an opportunity to negotiate with us for it. But we didn't agree – it wasn't a price that was agreed to, and there was no firm commitment on either party to close the transaction. Evan L. Kurtz - Morgan Stanley & Co. LLC: Got it. Thanks for that. Thank you guys.

Okay. Thanks, everyone. We look forward to reporting further progress.

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