FREEPORT-McMoRan COPPER & GOLD INC. REPORTS FOURTH-QUARTER AND YEAR-END 1994 RESULTS

Business Wire, Jan 24, 1995

NEW ORLEANS--(BUSINESS WIRE)--Jan. 24, 1995--Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX), an affiliate of Freeport-McMoRan Inc. (NYSE: FTX), reported fourth-quarter 1994 net income applicable to common stock of $41,663,000, $0.20 per share, which included a $17.4 million gain, $0.08 per share, from an insurance settlement on the June 1993 ore pass cave. For the fourth quarter of 1993, net income was $29,358,000, $0.15 per share. For the twelve months ended December 31, 1994, FCX reported net income applicable to common stock of $78,403,000, $0.38 per share, after the insurance gain discussed above, compared with net income of $21,862,000, $0.11 per share, a year ago, after charges. The following factors contributed to the difference between the quarterly periods:

-- Higher Copper Sales Volumes. PT-FI's sales of copper for the fourth quarter of 1994 were higher than the year-ago period primarily because of higher ore grades and mill throughput, which averaged 75,200 metric tons of ore per day (MTPD) during the 1994 quarter compared with 71,700 MTPD during the fourth quarter of 1993. Gold sales were lower than in the 1993 quarter when significantly higher gold grades were mined. PT-FI's fourth-quarter 1994 sales of 206.9 million pounds of copper and 213,800 ounces of gold were somewhat lower than anticipated primarily because weather conditions delayed one concentrate shipment until January 1995. Both copper and gold production and sales will improve significantly in 1995 once the mine/mill expansion is complete.

The company has obtained commitments for essentially all of its expected 1995 concentrate sales which are estimated to yield, depending on the timing of the completion of the expansion to 115,000 MTPD, approximately 850 million pounds of copper and 1,100,000 ounces of gold. First-quarter 1995 sales of copper and gold are estimated at 180 million pounds and 235,000 ounces, respectively.

FCX expects to attain throughput rates of 115,000 MTPD during the second half of 1995, with expansion-related construction approximately 80% completed and engineering and procurement concluded as of year-end 1994. For at least the twelve months following attainment of 115,000 MTPD, FCX intends to fine tune its operations in order to maximize cost efficiencies and achieve maximum cash flows. During this optimization period, FCX will continue to review the feasibility of further expansions as well as the results of exploration activities in order to determine where best to make future investments in order to maximize shareholder returns.

-- Cost Analysis. Total unit cash production costs of 41.4 cents in the fourth quarter of 1994 were higher than the year-ago period when record gold ore grades, sales, and resulting credits to cost were achieved. Unit site costs were higher in the fourth quarter of 1994 compared with 1993 because of expansion-related activities and higher jobsite administrative expenses while copper royalties were lower on a per pound basis in the year-ago period due to lower copper prices which affect royalty payments. (Cash production costs include site production and delivery costs, treatment charges, and royalties net of gold and silver credits.)

Unit cash production costs in the first quarter of 1995 should approximate fourth quarter results as higher unit site costs are expected to be essentially offset by increasing gold credits. The higher unit site costs in the first quarter will result from construction-related activities to our conveyor/transport system which must be completed prior to ramping up to 115,000 MTPD and the planned mining during this construction tie-in period of lower grade ore that experiences lower recoveries, both leading to lower copper sales volumes and higher unit costs. Unit cash production costs for the remainder of 1995 are expected to be significantly lower, particularly in the second half of the year, as increasing gold credits associated with the expansion more than offset higher unit site costs which are expected to gradually decline throughout the year as the operations begin to maximize the economies of scale associated with the expansion.

-- Rio Tinto Minera (RTM). During the quarter, RTM contributed earnings of $0.6 million from its smelting/refining and mining operations mainly because of high operating rates, cost reduction efforts and greater price participation resulting from higher copper prices. Smelting operations produced 85.6 million pounds of copper anodes and refining operations produced 78.8 million pounds of copper cathodes. Construction work related to the expansion from 150,000 metric tons of annual metal production to 270,000 metric tons continues on schedule. RTM's 1995 results are expected to be negatively impacted by rate reductions in smelting charges resulting from the current concentrate market and expansion-related activities.

OTHER ACTIVITIES

In December, PT-FI settled a property and business interruption insurance claim for the June 1993 ore pass cave for $39.6 million.