Ladies and gentlemen, thank you for standing by, and welcome to the Freeport-McMoRan First Quarter Conference Call. At this time all participants are in a listen-only mode. Later we will conduct a question-and-answer session. [Operator Instructions] I would now like to turn the conference over to Mr. David Joint, Vice President, Investor Relations. Please go ahead, sir.

Thank you, Regina, and good morning, everyone. Welcome to the Freeport-McMoRan conference call. Earlier this morning, Freeport reported its first quarter 2024 operating and financial results. A copy of our press release with supplemental schedules and slides is available on our website, fcx.com. Today's conference call is being broadcast live on the Internet. Anyone may listen to the conference call by accessing our website home page and clicking on the webcast link. In addition to analysts and investors, the financial press has been invited to listen to today's call. A replay of the webcast will be available on our website later today. Before we begin today's – our comments, we'd like to remind everyone that our press release and certain of our comments on the call include non-GAAP measures and forward-looking statements, and actual results may differ materially. Please refer to our cautionary language included in our press release and slides and to the risk factors described in our SEC filings, all of which are available on our website. Also on the call with me today are Richard Adkerson, Chairman of the Board and Chief Executive Officer; Kathleen Quirk, President; Maree Robertson, Senior Vice President and CFO; and other senior members of our management team. Richard will make some opening comments, Kathleen will review our slide materials and then we'll open up the call for questions. I would now like to call – turn the call over to Richard.

Thank you, David, and thank you all for joining us. We're really pleased today to report our first quarter results. They reflect a continuation of Freeport's long-running success in executing our business plans. Kathleen will present our results, as David said, and then we'll answer your questions. Kathleen will become Freeport's CEO, effective with our Annual Shareholders Meeting on June 11. I will continue as Chairman and support Kathleen and our management team on important strategic issues and external relations. This will be the most seamless management transition in history. There's been a 20-year transition, in fact. Coincidentally, Kathleen joined Freeport shortly after I did 35 years ago and I've been an adviser to the company for the previous two decades. She advanced through our finance group to become CFO when I became CEO 20 years ago. And since then, she has been integral to the management of the company. When I became Chairman three years ago, I made a personal commitment to build a sustainable Board and a sustainable management team. And since that time, we've added six high-quality independent directors, new directors, which together with our continuing directors comprise a very strong independent board to represent our shareholders. We bolstered our staff with internal promotions and external hires. Freeport is strongly positioned for the future, and I'm personally proud to be able to say that at this point. 20 years ago, we made a strategic commitment to copper based on the fundamentals of supply and demand for the commodity. The validity of that commitment has never been more evident, and the best is yet to come. My personal enthusiasm for Freeport's future has never been stronger. I cannot be more pleased with our Board and with our management team under Kathleen's leadership. Kathleen, I'll turn the call over to you for your slides.

Great, and thank you, Richard. And a special thank you to you for your outstanding and visionary leadership during your long tender as our – tenure as our CEO. As I prepare to become CEO in June, I'm focused on our copper-leading strategy centered on reliable execution of our plans, disciplined cost and capital management and continuing our drive for profitable growth. Our seasoned team knows this business has a proven ability to navigate challenges and a passion for finding value in our assets. I look forward to building on our past success and to leading our company to new highs in the future. Starting on Page 3, Slide 3, we have a new annual report out with this year's theme being the value of copper. The report is available on our website. It highlights our performance, our copper-focused strategy and our strength as a premier copper producer. We'll also be publishing our annual sustainability report, which will be available on our website later this week. This report, which we've been doing for some time now, details our environmental and social performance, which we take very seriously as part of our commitment to responsible production. On Slide 4, we present our key focus areas of – for 2024. These are the same items we discussed in our January call and we thought it would be good to show these again for reference so you can track our progress against these areas as we go through the year. On Slide 5, turning to the first quarter highlights. We're off to a really good start so far in 2024. As summarized, we exceeded our guidance for first quarter copper sales. Gold sales were in line with our estimates and consolidated unit net cash costs were better than forecast. We generated strong margins…

[Operator Instructions] The first question comes from the line of Liam Fitzpatrick of Deutsche Bank. Please go ahead.

Good morning, Kathleen.

Good morning.

Good morning. Liam Fitzpatrick from Deutsche Bank. The first question is just on your U.S. assets. You've been talking about for some time, the productivity improvements that you're targeting. Could you give us a bit more color on when we should expect some of this to be visible in the numbers? And what sort of change are you hoping for? Is this just to do better than inflation? Or could there be more of a step change at some stage? And then the second question, two parts to it really is just on your projects. Firstly, on Bagdad, I think the timing you give in the presentation suggests you could make an investment decision next year. I just wanted to check that's the right timing to think about. And then at El Abra, if you do nothing at that mine, when will it be facing a more material drop off in grades? Thank you.

Thanks, Liam. In terms of the U.S. operations, what we're faced with right now is very low ore grades, the lowest ore grades we've had in – since 2010. So that is structurally a challenge for us. Over the last couple of years, we've also been dealing with labor shortages in the U.S. and needing to make sure that our people are trained and can gain the efficiencies that we've had in 2019 before COVID. We're making really good progress with the work that we're doing. It's not easy work. It's hard work every single day, but we know what the work is. And we've got to make sure that our equipment is operating that we're getting the asset efficiencies in our equipment that we should be getting. If we look back over the last couple of years, we haven't gotten the asset efficiencies that we've had historically. And so we've been working on that. We've been working on maintenance to make sure that our equipment health is strong; we're working on training of a workforce that's less experienced. And it's just basic blocking and tackling, but the headwind is the ore grades. And we're really happy with the results of the leach initiative, and that's provided us with some benefits as we've gone through these lower ore grades. But we still think we have a lot of potential. And we're making the progress. We've got detailed scorecards of what we're doing every day in all the drivers of what makes us efficient. Everybody is focused on it. We're also focused on technology advancements. You read about the advancements we have at Bagdad, where we're looking to convert the haul truck fleet there to fully autonomous. We've got all kinds of technology initiatives available to us that we haven't had…

Okay. That’s great color. Thank you.

Your next question will come from the line of Chris LaFemina with Jefferies. Please go ahead.

Hi, Richard and Kathleen. Thanks for taking my question. First, I just wanted to say congratulations on the operating performance in Indonesia. That has been very impressive. And once again, this past quarter, pretty incredible what you’ve done there, so congrats on that. And then secondly, I just wanted to ask a follow-up on the trends in cost in the U.S. So if you did, what, 51 million pounds of leach – production from that new leaching initiatives in the U.S. in the first quarter. And if we assume that’s around $1 a pound, that would imply that the rest of your production in the U.S. is around $3.35, $3.40 a pound for net cash cost. And then if we add to that sustaining CapEx, it’s probably something close to $4 a pound free cash flow breakeven. So my first question is, is that right? Are you at around $4 a pound free cash flow breakeven in the U.S. if you exclude the benefit of the new leaching initiatives?

In terms of the leaching initiatives, when you look at our reported cash costs, you have to consider that until we add additional pounds to the stockpiles. What we’re recording as our average cost is reflective of our average cost of per unit and stockpiles. So as we gain more confidence, the denominator will drop, so we’re pulling those pounds out now out of the stockpiles are reflecting like a $3 average cost. When in reality, the incremental cost is closer to $1. So as we get more confidence and we’re able to add more pounds, multiyear amounts of this leach reserve, you'll see that unit costs come down. But in terms of your analysis, it may be shy of the $4 you're talking about, but we are in a lower grade area of the North America right now. And so our unit costs are relatively high compared to historical levels. We've had cost inflation as everybody has seen, but the other area where we're focused on is more on the things that we can control. And we've seen some of the inflationary pressures moderate, but the things that we want to continue to work on is to avoid unplanned maintenance, to avoid – to reduce our maintenance costs. And also as we get more workers within our own team, and we get those workers trained up, it will reduce our reliance on contractors, which has been a big cost for us. And that's what we've had to do during this period of the labor challenges is rely more on contractors, and so right now, we're really rationalizing contractors and training up our people to be able to do this work. So the leach opportunity, big picture, is really going to be a step change, though, as we go forward in the U.S. And if we're able to be successful in adding another 200 million pounds from the leach initiative at a very low incremental cost and improving our technology – I mean, our productivity gains, you'll see our costs start to trend a lot lower in the U.S., and that's what we're focused on. That's what Josh and his team are focused on. Maree is very focused on it as well and her team. So we're all over this, Chris.

Right. So that $1 per pound cash cost for leaching is not what's reflected in the production cost in the first quarter and that was reflected in the 2024 full year guidance, right? You're using something like $3 a pound in the guidance as well?

Yes. It's just coming out at the average when we report it. And the way it will come down on our financial books is with an increase in estimates and future estimates, because the costs are spread over what's remaining in the stockpiles. And as we add more volumes to the stockpiles, that will reduce the incremental cost and be reflective really truly of what's really occurring.

Got it. Thank you.

From a cash flow standpoint, it doesn't affect cash flow. So the cash flow, we really are getting the benefit of the incremental cost below $1.

So if we think about the cash flow, you have the smelter construction is nearly complete. You're going to one way or another, not be paying royalties at the smelters ramped up. Copper price is obviously higher…

Duty.

Duty, sorry, the copper price is obviously higher, gold price is higher, balance sheet is clean. You have your performance-based capital return policy, which you haven't really executed on in the last year. You've had a lot going on, but I'm just wondering in terms of timing of when we could see those supplemental capital returns. Is that something the Board will consider imminently? Or is it kind of – do we have to get through certain events before you consider delivering those capital returns? Thanks.

Yes. Well, we have been executing under the policy. We've distributed since we started the policy, 50% of our available cash flow. And so all the items that you cite and that excludes the smelter, but all the items that you cite are building to give us more cash that will be available for distribution. And we'll continue to file that policy of higher prices is going to be more cash flows and more cash returns to shareholders. And that is the policy.

Great. Thank you very much. Good luck.

Thanks, Chris.

Our next question will come from the line of Michael Dudas with Vertical Research Partners. Please go ahead.

Hi, Mike.

Good morning, David, Richard and Kathleen.

Hey, Mike.

Hi, I think you mentioned in response to the question about operating costs and cost moderation. So maybe you can touch a little bit more on what you're seeing on the ground more specifically in your North America and South American mines on cost improvement, what your expectations are versus what it might have been a few months ago? And how are you seeing that in some of the feasibility studies that you're working on and completed? And what kind of – have we seen double-digit inflation continuing on the capital cost side that's going to continue to make it a little bit more challenging for Freeport and others to really follow through and provide the material of our market needs?

Yes. I think those issues have moderated a bunch, and we're getting more into a stable situation, while it's higher than it has been. It is more stable. For instance, when we were going out for bids for things a year or two ago, you might get one bidder on a project. And now things are opening up some more for us. So on that part, I think it's stabilized now. We’ll continue to test it. And whenever we run our projects and run our economics, we always look at a range of what the capital costs are and what the sensitivities are to higher or lower capital spend. But in terms of the extremes that we have seen in the recent years, we’re not encountering that right now. And in terms of commodity input costs and things, they’ve been more moderate and more stable than we’ve seen in some time. We all know that that can change, but it has been more stable. The things that we need to work on are particularly in the U.S. of this issue I mentioned with respect to the labor force and the experience levels and with contractors. And the third thing, and one of the most important is reliable asset efficiency. And so those are the challenges that we have and we’re working on them. I feel very confident that we’re turning the corner on that. We’re continuing to make good progress on really driving efficiency within the U.S. operations. We haven’t had the issue in South America and in Indonesia. We’ve got a much more stable workforce, much more experienced workforce. We’ve also benefited there from a stronger dollar. So many of our – much of our labor cost is in foreign currency. So we have benefited there from a stronger dollar and have not seen, obviously haven’t seen that benefit in the U.S. But we do believe there are some things within our control that we’re focused on now. And now that things have moderated some with inflation. We’ve got a clear focus on being as efficient as we can, recognizing that low grades becomes a challenge. But we want to do better than inflation. I mean, that’s what we want to make sure that we can overcome inflation in our costs with productivity gains and efficiency gains. And we’ve got technologies available to us that we haven’t had in the past. And I think as a company, we’re going to be leaning a lot more into innovation as a tool to help us with productivity.

Excellent, Kathleen. Thank you.

Let me just add one point on the broader copper market implications of that question. Kathleen described very well the things we’re doing within our company. And when you look back at our cost history in relation to general inflation, we’ve done a good job with our supply chain team. But the shocking amount of overruns on the major project in Chile, but elsewhere and also the political situation in Panama, as I talk with CEOs around the industry, makes us all step back and say we have to be careful. We have to be careful because the overruns are more than just simply inflation. And we’re still trying to get our arms around what’s going on with these projects to cause them to be delayed and to have the kind of cost situations they have. At the end of the day, this is just another major element for the positive outlook for copper prices. I mean, if these problems were easily solved and this is a tough business, you wouldn’t have the supply shortfalls that we’re having. And that’s been a major factor from seeing the recent run up in copper prices. And it’s also something that’s very supportive for the longer-term outlook for copper prices.

Well said, Richard.

Our next question will come from the line of Bill Peterson with JPMorgan. Please go ahead.

Hey, Bill.

Good morning, Kathleen, Richard, it’s actually Bennett on for Bill this morning.

Hey, Bennett.

If I could, I wanted to ask what, if any, is the company’s current dialogue with the new leadership in Indonesia and how you see that relationship developing over time.

Well, the transition doesn’t take place until October, and we’re continuing to work with the existing administration. We’ve got some matters that we’re working together on with respect to the concentrate license that we talked about earlier as well as the IUPK extension. And so we’re continuing to work with the current administration on these matters. We have a long history in Indonesia. We just celebrated 57 years of operation there. And we’ve worked with many governments over the years and many administrations. And we feel very confident that we’ll continue to have good relations with the new administration. And what we focus on, we’re not – we don’t get involved in politics. So we focus on what we do there to be a good citizen of Indonesia, to provide benefits to the national government, the local government, all of our workforce, the community and stakeholder work that we do there is very important and that’s – that lasts that survives administrations. And so we really focus on the things that make the asset good for Indonesia and good for all the stakeholders. And that’s what we’ll continue. Richard, I don’t know if you want to add anything to those comments?

Sure. I’ve been going to Indonesia now for all my career with Freeport over 35 years, and our relationships have never been better. I was just in Washington Friday evening for a reception to celebrate 75 years of positive relationships between the U.S. government and the Republic of Indonesia and the Finance Minister, Sri Mulyani and the Central Bank Governor Perry were there. And I wish you all could just hear the positive things that were set around this table of a number of companies and a number of Indonesian government officials about the current way that Freeport is viewed and how positive they see our partnership is in building PT-FI, which is an Indonesian company and to be in such a success for all the stakeholders.

Thanks. That's helpful. And if I could just squeeze in one more on the topic regarding the future mining rates in Indonesia, we saw a headline last week that these could potentially be granted as soon as this upcoming June. So I'm wondering if there's any updates you can provide there? And what additional ask maybe on the table from the government there?

Let me just say that we have gotten – we have an agreement with the government on the structure beyond 2041. There's no controversy over that, and there's general support for it. The – I believe the fact that the election occurred and we just went through Ramadan is having an effect on the timing, but we're very pleased. I mean it's important to know that we currently under our existing permit have no rights to anything beyond 2041. And it makes no sense for any stakeholder to have this operation run without having a long-term plan for it in terms of doing more drilling to understand what resources are there, doing long-term planning or how those resources will be developed. The Indonesian – our Indonesian shareholder mines ID understands that. The Ministry of Mines understands that the President's Office does as well. So I'm confident we're going to be able to get that. As always, there's uncertainties as to when the actual formalities will be concluded to grant the regulations to allow us to continue. But there's no real controversy about the structure going forward.

And delivery of the smelter is an important part of that. And the government is very pleased with the progress we've made in getting the smelter to a point where it can be commissioned next quarter – this quarter.

All right. Understood. Thank you very much and best of luck going forward.

Thank you, Bennett.

Thanks, Bannett.

Your next question will come from the line of Lawson Winder with Bank of America Securities. Please go ahead.

Hi. Good morning.

Good morning, Lawson.

Good morning, operator. Yes. Good morning Richard and Kathleen. Thank you for today's update. Maybe just on Cerro Verde, if I could, is there still a pathway to consistently exceeding well over 400,000 tons per day at that asset?

Absolutely.

I can't tell you what a great job our team down there has done. I visited recently and I mean, just the spirit, the relationships with the local community. And as you all know, Peru is a very complicated country and has a lot of issues politically and economically to deal with, but it is just an uplifting experience to see what our team has done down there. I had some friends with me and to see an operation where we're moving 400,000 – over 400,000 metric tons of material a day, that's the equivalent of 80,000 street dump trucks moving material in a single day. And so it's an inspiration quite frank, for me to see it. The community supports us. We've got a great workforce. We're actually bringing some of our Peruvian operating people to work in Arizona and New Mexico to support our operations there, but it's an uplifting place to go for me.

Lawson, it's not without challenges this team has demonstrated, as Richard said, that they can – they're very resilient team and can deal with a lot of different challenges. But water is something that is always a concern. We did with our expansion almost 10 years ago to put in a water treatment facility, and we provide clean water to the community, and it also supports our own operations. But particularly during this time where we've been through El Nino and droughts and there's always a focus on water, but the ore is there, the resource is there, and the team has got – we've got the assets there and the team has got really good work practices. And as Richard said, the relationship with the community is top-notch.

Okay. That addresses my question. Thank you very much.

Thank you.

Our next question will come from the line of John Tumazos from John Tumazos Very Independent Research. Please go ahead.

Thank you very much. In the first quarter, the minority interest was $689, and the income to shareholders was $473. Could we interpret from that that the U.S. mines made about $200 million less profits than the overhead or the U.S. operations are losing money? And what are the short term remedies? For example, how quickly can you convert to autonomous drugs and mitigate wage inflation, et cetera?

But one thing, John. Kathleen, let me say one thing to John before you answer the question, Kathleen. And I've seen some of your writings, John, and the minority ownership in PT-FI came about from the Rio Tinto deal in the mid-1990s, and that really hasn't changed. That just was transferred to the government of Indonesia and that joint venture interest was converted to shares. But in 2018, Freeport, through the agreement that we reached, maintained virtually the same economic interest in the mine that we've had all along. So this wasn't something that happened because of the government, but because of a deal that was cut back in the mid-1990s. And you know, the, when you look through it, and I talk with our Americas people and our people in the U.S. about it, because even though our mines in the U.S. are low grade, because of the fact we have a very favorable income tax situation in the U.S., bolstered by net operating loss carryforwards, we own our lands in fees, so there's no royalties. We get community support for schools and hospitals and our workers. We don't have to provide for the same things we do overseas that we do overseas. And so the profitability of those mines is really very attractive. And that's what makes these growth opportunities in the U.S. so attractive for Freeport. You and I both remember a time when people thought the Southwest copper district was dead. And right now it's a big part of the future for our country in terms of providing the copper resource needed for the energy transition and electrification broadly. But also it's a great opportunity for our shareholders to create value for Freeport, to create value for our shareholders.

John, I was just going to point you to the press release. There's some, in the back of the press release, there's some segment analysis, and you can look at the segments we show, how much the U.S. mines contributed, etcetera. And if that doesn't answer your question, just follow up with us afterward.

Thank you.

Our last question will come from the line of Martin Malloy with Johnson Rice and Company. Please go ahead.

Hi, Marty.

Good morning. I wanted to ask, with your leaching technology, does that give you a competitive advantage and maybe looking at acquisition opportunities?

Well, we're focused on – I mean, we've got almost 40 billion pounds in our own in our inventory. And that doesn't include some really old areas where we're not active. But yes, I mean, to answer your question, it does give us some interest in some things that may have this opportunity to be able to apply our know-how to it. But we're really focused on our own organic situation. If an opportunity came available that had this, we would be interested in seeing what we could make out of it. But we've got a lot within our portfolio to be able to get substantial value for our shareholders from.

Yes. And a lot is understating it. It is massive, what we have the opportunity to develop from what's already owned by Freeport from our existing stockpiles and Kathleen mentioned our historical stockpiles. So yes, an opportunity came along, but I'm not expecting it. I think that we're going to be able to grow tremendous amounts of value doing with what we have, which now the company really has, others have opportunities. No one else has it in this kind of scale that we do.

Thank you.

With that, we'll turn the call over to management for any closing remarks.

Thanks, everyone, for all your good questions today and your interest in Freeport, and we look forward to reporting in the future on our progress.

Thank you, all.

That concludes our call for today. Thank you all for joining, and you may now disconnect.