Ladies and gentlemen, thank you for standing by. Welcome to the Phelps Dodge Analysts' Conference Call. (Operator Instructions) I would now like to turn the conference over to Mr. Stan Rideout, Vice President and Treasurer at Phelps Dodge Corporation. Please go ahead.

Good morning to everyone on today's call. This event is being webcast and therefore the audio is available to both media and the general public. The webcast can be accessed at www.phelpsdodge.com. The webcast may contain forward-looking statements as defined in section 27-A of The Securities Act of 1933 and section 21-E of The Securities Act of 1934, including statements regarding among other things, the company's business strategy and growth strategy. All statements other than historical information are forward-looking statements. These forward-looking statements are based on management's current expectations, speak only as of today's date and are subject to a number of risks and uncertainties which cannot be predicted or quantified and are beyond our control. Future developments and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Please refer to the Risk Factors section and Management's Discussion and Analysis section of our recent 10-K and 10-Q reports, as well as our publicly available filings with the Securities and Exchange Commission for a discussion of factors that could cause such actual results to differ materially. In addition, this webcast may contain forward-looking statements concerning the proposed merger of Phelps Dodge with Freeport-McMoRan Copper & Gold Inc. Please refer to the risk factors and cautionary statements regarding forward-looking statements included in the preliminary joint proxy statement/prospectus filed by Freeport with the SEC for a discussion of factors that could cause actual results of the proposed merger to differ materially from such forward-looking statements. Phelps Dodge urges investors and stockholders to read the definitive joint proxy statement prospectus when it becomes available and any other relevant documents filed by either party with the SEC, because they will contain important information. Phelps Dodge and certain of its directors and executive officers may be deemed to…

Thank you, Stan and good morning and welcome to everyone on our call. With me today in Phoenix are Tim Snider, our President and Chief Operating Officer; Rami Peru, Executive Vice President and Chief Financial Officer; and Steve Higgins, the President of our sales company. Our format this morning will be as follows: I am going to briefly review our fourth quarter and full year 2006 results, and then I am going to ask Steve to comment on the copper and moly markets. I'll come back and provide a brief update in terms of the status of the Freeport transaction, and as a result of that transaction, I will provide the first quarter guidance that we are contemplating; and then, we will be pleased to take your questions. Turning to our fourth quarter results, we delivered record net income in the fourth quarter, despite a decline in copper prices compared with the two previous quarters. Now having said that, the average copper price for the quarter was still a very robust $3.20 per pound. We reported record GAAP earnings of $1.32 billion, or $6.50 per share, for the quarter. That exceeded the high end of our $4.75 to $5.50 per share of guidance. Included in that number were $0.77 per share for mark-to-market gains on the copper collars as a result of the copper price falling there at year end; also included was a $1.79 per share from special items, primarily the following: $1.32 per share associated with the remaining portion of the eco breakup fee, net of taxes and expenses; and $0.63 per share for the reversal of the U.S. deferred tax asset valuation allowance. For the year of 2006, we recorded record net income of a little over $3 billion -- actually $3.018 billion -- or $14.83 per…

Thank you, Steve and good morning. Quite simply 2006 was an extraordinary year to be in the copper business. The price averaged $3.09 a pound for the year, up nearly 85% from 2005 average of $1.68. Historically low refined copper inventories, significant production disruptions and increased fund activity contributed to the unprecedented price levels. Overall, we believe that the refined copper market was roughly in balance during 2006, however, developed quite differently than most observers had expected. Labor disputes, mechanical failures, and ore grade issues combined to reduce global mine output from expectations by some 600,000 to 700,000 metric tons. Refined production ended up around 5% from 2005 levels. The year was characterized by strong first half growth in global refined consumption followed by a more modest second half. We estimate copper consumption for the full year increase by 4%. At the regional level, however, there were some notable events. In the U.S., the first half of 2006 started well with refined consumption increasing from a year earlier. However, consumption in the second half and particularly in the fourth quarter, declined due to flagging demand from residential construction, a reduction in auto and light truck builds, and a significant downstream inventory liquidation across all consuming sectors. Our current estimate is that U.S. refined copper consumption decreased between 3% and 4% during 2006. In China, we believe refined copper consumption increased by 5% after taking into account the drawdown in SRB and consumer inventories. Europe experienced strong growth in copper consumption, increasing between 7% and 8% for the year, and Japan’s refined consumption also rebounded from 2005, ending the year up around 5%. As we look at 2007, we believe that the market fundamentals will continue to be favorable for copper. While they grew at year end, both exchange and off-exchange…

Thank you, Steve. Let me just provide a quick update on the transaction that we announced during the fourth quarter with Freeport Copper & Gold. The reasons and rationale for that transaction are set forth in a great amount of detail in the preliminary proxy materials that Stan referenced in his opening comments, so I don’t intend to repeat any of that here. I am just going to simply try to provide an update in terms of where we stand. I think from our perspective, we remain on track to complete that transaction by the end of the current quarter. Freeport is working with the SEC on those preliminary proxy materials, and hopefully we will be in a position to have that move forward here shortly. The transaction is subject to shareholder and regulatory approvals, which are progressing. The U.S. antitrust authorities did grant early termination of the waiting period under the HartScottRodino Act in late September of last year. We are working to obtain EU and other regulatory approvals, and I am not aware of any issues in that regard. The shareholder meetings will be scheduled once the SEC declares the proxy effective and we expect those meetings to be held, as I said, in March with closing thereafter. Given the fact that we expect that transaction with Freeport to close by the end of this quarter, we are going to limit our guidance for the first quarter to the following Phelps Dodge metrics: these numbers should enable you to do the necessary modeling as you combine the two companies and look forward on a prospective basis. Obviously, going forward you can make adjustments as you see fit. For Phelps Dodge, copper production for the first quarter of this year should be in the range of 600 million to 655 million pounds, and it should approximate 2.9 million pounds for the year. Copper sales in the same period – that is, the first quarter – should be in the range of 615 million to 645 million pounds, and again, for the year, should also approximate 2.9 million pounds. Finally, cash on hand at the end of the first quarter will likely approximate $4.6 billion, of which approximately $2 billion will be held outside of the U.S. and that amount will include approximately $700 million held for the account of our minority partners. With that, that concludes our formal remarks and overview of the quarter. As I said, all in all, a fairly uneventful quarter and one which our guys did a great job of delivering from an operational standpoint. With that, operator, we will open up the lines for questions.

(Operator Instructions) Our first question comes from John Hill – Citigroup.

Thank you and good morning, everyone. I was just wondering if we could have a comment or two on anything new we are seeing on the subject of copper substitution?

Thank you, John. I don’t think that we have seen anything new on substitution as compared to what we have commented in the past. The early substitution that we saw in those product areas that can move easily between copper and aluminum or other products took place pretty early on in the cycle. The concern, of course, is the longer the price stayed high the more we would see the potential for re-engineering products into other materials. In fact, we have seen very limited amounts of that, and I think primarily as a function of the fact that it is very difficult for other materials to duplicate copper’s characteristics. Manufacturers are going to do that very carefully, and only, I think, if they think that the price differential is going to remain high for the long term. So while there has been bits and pieces here and there, and certainly the plumbing tube market is probably the most notable, we’ve seen fairly limited further substitution since our last call.

Very good. And then just a quick follow-up if I could on concentrate leach. Anything new to report from Morenci and then any further thoughts how that might translate into opportunities elsewhere in the industry?

John, this is Tim Snider. Morenci straight leach project is going along well. We expect it to start up sometime in the middle of the year, and we are pretty confident about how that is going to go. We are continually studying where that might go in the future, but we are pretty optimistic.

Great, thank you.

Okay, I guess that is the only question that we had, so – are we getting one more?

(Operator Instructions)

All right, well we have no questions so I guess we are getting a free pass, a little bit. Let me close with the following comments, if I may. I recognize that this could be Phelps Dodge’s final earnings conference call, and if everything goes according to plan our agreement to be acquired by Freeport-McMoRan will be completed before the end of March. For that reason and on behalf of the board of management, I would like to take this opportunity to thank a number of people who have supported Phelps Dodge over the years. Our customers have continued to support us with their business; our suppliers have provided us with excellent products and services; and our engineering and construction contractors have helped us develop efficient, effective projects. But above all, I want to thank our employees whose dedication and hard work have helped us achieve record results for three consecutive years. I especially appreciate their unrelenting focus on safety, as they constantly strive to achieve the goal of zero injuries and occupational illnesses. Employees have been instrumental in achieving our advanced growth projects, such as the new Safford mine and the Tenke Fungurume project in the Democratic Republic of the Congo. They have also played a key role in ensuring that we protect the environment and address our legacy environmental issues to address reclamation and remediation. For nearly 173 years, the Phelps Dodge name has been a part of the American and global landscape, and I am pleased Freeport-McMoRan will keep it alive in the marketplace. We all look forward to making significant contributions to the exciting new company we will become in combination with Freeport-McMoRan. So again, on behalf of the board and management, I thank all of you. Operator, thank you very much.

Ladies and gentlemen, that concludes our conference for today.