Seeking Alpha
We cover over 5K calls/quarter
Profile| Send Message|
( followers)  

Freeport-McMoran Copper & Gold Inc. (NYSE:FCX)

Q1 2009 Earnings Call

April 22, 2009 10:00 am ET

Executives

Kathleen L. Quirk – Executive Vice President, Chief Financial Officer & Treasurer

Richard C. Adkerson – President & Chief Executive Officer

James R. Moffett – Chairman

Analysts

Michael Gambardella – JPMorgan

David Gagliano – Credit Suisse

Anthony B. Rizzuto, Jr. – Dahlman Rose & Co.

Mark Liinamaa – Morgan Stanley

Brian MacArthur – UBS Security

Kuni Chen – Bank of America Securities

Jorge Beristain – Deutsche Bank Securities

Victor Flores – HSBC

Gary Lampard – Canaccord Adams

John Hill – Cambrian Fund

[Peter Walker with Sansar Capital]

John Tumazos – John Tumazos Very Independent Research

Justine Fisher – Goldman Sachs

David Katz – JPMorgan

Sunil Gathader – Sentinel Asset Management

[Ross Carton – Polygon]

Operator

Ladies and gentlemen, thank you for standing by. Welcome to the Freeport-McMoran Copper & Gold 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. (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.

Kathleen L. Quirk

Thank you and good morning everyone. Welcome to the Freeport-McMoRan Copper & Gold first quarter 2009 earnings conference call. Our earnings announcement was 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 we will have several slides to supplement our comments. The slides are accessible using the fcx.com website homepage link.

In addition to analysts and investors, the financial press has also been invited to listen to today’s call and a replay of the call will be available by accessing the webcast link on our Internet homepage later today.

Before we begin today’s comments, I’d like to remind everyone that today’s press release and certain of our comments on this call include forward-looking statements. Please refer to the cautionary language included in our press release and slide presentation and to our risk factors described in our SEC filings.

On the call today are, Jim-Bob Moffett, our Chairman; Richard Adkerson, President and Chief Executive Officer; Red Conger, who heads up our Americas operations and Mark Johnson, who heads up our Indonesian operations. We’ve got a number of our senior operating team traveling this week.

I’ll briefly summarize our financial results and then turn the call over to Richard, who will discuss our operations and outlook. We’ll then open up the call for questions.

FCX reported first quarter 2009 net income applicable to common stock of $43 billion, a $0.11 per share, compared with net income applicable to common stock of $1.1 billion, or $2.64 per share in the first quarter of 2008. Our first quarter 2009 net income applicable to common stock included net charges of $24 million, or $0.06 a share, which were detailed in our press release, but those included $31 million in charges or $0.08 a share associated with adjustments to our environmental reserves, $22 million, or $0.05 a share for restructuring and other costs associated with our revised operating plans, $19 million, or $0.05 a share associated with lower of cost or market molybdenum inventory adjustments related to the decline in molybdenum prices. These charges were partly offset by reductions to general and administrative costs associated with reduced compensation costs totaling $29 million, or $0.07 per share, and a $19 million gain for copper derivative contracts associated with our customer contracts for rod sales.

Our first quarter consolidated copper sales of 1 billion pounds was slightly above our previous guidance of 990 million pounds and higher than the first quarter 2008 sales of 911 million pounds reflecting the higher grades at Grasberg. Our gold sales of 545,000 ounces in the first quarter nearly two times the year ago level of 280,000 ounces because of the higher ore grades at Grasberg.

Our gold sales during the quarter exceeded our previous estimates of 500,000 ounces. Molybdenum sales during the quarter totaled 10 million pounds. Those were lower than the first quarter sales of 20 million pounds, and our January 2009 guidance of 13 million pounds, because of demand conditions in the molybdenum markets. Our copper prices recorded average $1.72 per pound in the first quarter of 2009 that was over 50% lower than the first quarter of 2008.

Our realized gold prices averaged $904 per ounce, as compared with $933 per ounce in the year ago period. We have realized $11.52 per pound of molybdenum during the first quarter and that was a reduction of 64%, compared with nearly $32 per pound in the first quarter of 2008. We’ve got a number of things that we will be talking about on the call particularly on our costs, where we achieved strong execution of our revised operating plans, our unit costs during the quarter, net cash costs, net of our byproduct credits on a consolidated basis averaged $0.66 per pound during the first quarter of 2009 that was significantly lower than the year ago period of $1.06 per pound.

Our operating cash flows totaled a use of $258 million during the first quarter that reflected a very large working capital use of $919 million and that was anticipated. It was primarily associated with the timing of settlements with customers on our 2008 provisionally priced sales.

Capital expenditures totaled $519 million for the first quarter about half of that related to the initial development of our Tenke project; Richard’s going to give an update on that, which is nearing completion. We also reported previously that we completed a public offering of $26.8 million shares of common stock during February at an average price of $28 per share that generated gross proceeds of $750 million and brought our shares, basic common shares outstanding to $412 million shares. Assuming conversion of our 51/2% convertible preferred stock and our mandatory convertible preferred stock, we would have roughly $469 million shares outstanding.

Total debt approximated $7.2 billion at the end of the quarter and our consolidated cash position was $644 million at the end of March. We had no amounts borrowed under our $1.5 billion credit facility.

Now I’d like to turn the call over to Richard, who will be referring to this presentation materials on the website.

Richard C. Adkerson

Good morning, everyone. In getting ready for this conference call today, I went back and glanced at the transcript for our last conference call for our year-end results and two things jumped out at me. At that point, I said the near-term copper price was going to be driven by events in China. And by the end of the first quarter, Chinese purchases of copper had come in very strongly as they continue to spend money in building infrastructure in their country and they face a scarcity of scrap and also have been building up copper stocks, but that has caused copper prices to be strong or even in the face of very weak market conditions in the U.S. and the rest of the developed world.

The second thing at the time of our last conference call, we were completing a process that we had literally started the first week in October of revising our operating plans to adjust to the lower copper molybdenum prices. And we had worked diligently right up until the time of that call to come up with new plans, and I said, we have plans that would allow us to be cash flow positive at our mines and be supportive of our business strategy, but that investor should watch how we execute on those plans. And I’m really pleased with the results of this first quarter. And Red Conger, Mark Johnson, Dave Thornton and their operating teams, aggressively went out of those plans and the results of their activities were shown in the financial results that you see today.

Page 4, Kathleen mentioned that the price of copper is half of what it was during the first quarter of '08. Price of goal is roughly, is actually averaged a bit lower than it did in '08, which is a bit surprising, I know it is surprising to a number of people, and molybdenum was down two-thirds.

Even with that, we had a good cash flow generation taking into account, the working capital uses that we talked about last quarterly call. And we ended up with a $0.11 a share of earnings and for those who model earnings, I will point out that is net of $0.06 of special charges that Kathleen outlined for you some of you may have picked those, some of those up, some of you may not have, but it is also reflected $0.15 for the deferral of profits that we’ve actually already generated through mining and sales of copper concentrate. That will be recognized in future periods under the accounting rules, because it sold intercompany to our Atlantic Copper smelter. And once that concentrate is process and copper is sold out of the smelter. Those profits, which have already been generated in the first quarter, will be recognized in our earnings. Most of that if prices stay roughly where they are today and operations continue as we expect most of that would turnaround in the second quarter. So all things be in equal and they may not be, but all things be in equal, we would have stronger earnings in the second quarter and in subsequent quarters in 2009.

Page 5, and I will talk about this more I've got a couple of more slides shows our, at the bottom the sales by our different regions, North America, South America and Indonesia point out the significant increase in both copper and gold sales in Indonesia. At Grasberg, we are operating now in the highest-grade section of that mine. That changes overtime depending on the sequencing of our operations, and as we work on this pit, which is now almost two kilometers across in the kilometer deep, as we maintain the integrity of this pit overtime, we manage high grade sections, we mine high grade sections and other terms we have to be in the upper regions where grades are lower, but we are now in high grade sections. And you can see just what kind of leverage that has on our volumes. They are supportive of our business now. We knew Grasberg would be the keystone asset and we combined our company with Phelps Dodge and particularly in times of low commodity prices and that’s exactly the role it’s serving.

Our gold revenues considering the gold volumes in the current gold price more than offset our total operating cost at Grasberg. So we were producing in the first quarter roughly 370 million pounds of copper at a net credit cash cost. But our cash cost have come down significantly in the rest of our operations as we've adjusted our operating plans to limit the marginal higher cost volumes and as we've taken advantage of the lower input costs that have gone along with the lower copper prices, and you can see there’s significant declines in these costs. Even though, we've lost byproduct credits because of the lower molybdenum sales.

On page 6, you can see on a consolidated basis. In terms of our site production delivery cost on a per pound basis, we’ve had a 36% reduction from the third quarter of '08, prior to us beginning to implement our new operating plans until the first quarter of '09. That reflects these revised plans, it also reflects the Grasberg ore grade situation and how we’ve been very aggressive in moving to achieve lower cost and take advantage of the available lower input cost. This was particularly important for our North American operations.

In the third quarter, by design because we have been pushing the production of marginal pounds, we had been aggressively increasing volumes knowing that our unit cost would go up, and in the third quarter at our largest mine in North America, the Morenci mine, our average unit cost and there are no byproduct credits at Morenci was approaching $2 a pound.

And you can see that $2 before byproduct credits at any of our mines has now been reduced significantly into the first quarter of ’09. Diesel prices are down, power prices are down, acid costs are down, but we have taken very strong steps to push out those marginal pound. So our employment at Morenci has gone from 3500 to 4000 down to below 2000 people. We've idled equipment, we are mining higher grade; we are doing what we need to do to make that operation and other operations cash flow positive.

Page 8 talks about our provisional pricing. We always get a lot of questions on this, under longstanding commercial practices in the copper business, copper concentrates are provisionally priced when shipped and that’s the point where we record our sales. And then they are subject to a final price determination whether the price is higher or lower, which occurs depending on the contract from one to four months following shipment. And the accounting impact is the sales accrued initially at the provisional priced amounts and then adjusted in subsequent periods.

From a cash flow standpoint, customers pay us 90% of the provisional price at time of shipments and then there is a cash settlement at final prices. In the first quarter, we have final sales with customers that totaled a $600 million cash requirement that we had to return cash to our customers because of the receipt of prices at times when the price of copper was so much higher. And that was what result in our working capital requirements for the quarters. It’s a one-time type event. There will be adjustments going forward, but nothing of that magnitude absent some major subsequent swing in copper prices, but in the normal course of business these settlements are not material.

In early April, we made a decision and I want to be clear about this, because we’ve had a longstanding philosophy of not hedging copper production and that philosophy is not changed. We have not, have no plans of hedging any of our future copper production, but historically although we haven’t done it in sometime, we had taken steps to lock in open pounds and we did that at the end of the second quarter where we locked in, at the end of the first quarter, where we locked in $1.86 for roughly 350 million pounds of PT-FI’s provisionally priced open pounds at the end of the first quarter.

Substantially all of this will reverse in the second quarter. So there won't be any mark-to-market accounting implications of any consequence. And we did this to as part of our overall actions to preserve liquidity of the company to give us assurance of these prices in an uncertain marketplace. It also has the impact of limiting earnings volatility, and we have not made a decision to do this on an ongoing basis. We will look at it on a quarter-by-quarter basis and make those decisions. Again want to emphasize this does not change our basic approach to philosophy. We believe that we should offer investors an unhedged opportunity with respect to our commodities and that’s what we are doing.

Page 9 shows the copper markets, copper price and see the recent jump in prices from roughly the $1.40 level going into the quarter up to above $2 a pound. I've talked about China being the reason for this and as we go forward given the market conditions elsewhere around the world. The copper price in the short-term is going to be driven by China.

We continue to be very positive, extremely positive about being in the copper and molybdenum business. The inventories, as you can see by this chart are low by historical standards and we have a much larger copper market than we had prior to, in the historical periods prior to 2004. And even though the price has been weak, exchange stocks are low by historical standards and consumer stocks around the world are also low, the industry continues to face supply issues that are unrelated to price from grades at aging mines from equipment issues, the challenges of operating mines in today’s world continue unrelated to price, and then of course price has had an impact on our level of production and the level of certain other companies.

So, as the developing world sees its economies recovering and we are not in any position to predict when that will occur, and as the China and the rest of the undeveloped world continue to build infrastructure and invest in the standard of living of people in their countries. The world is going to have a strong demand for copper and the industry is going to be challenged to have the supplies to meet that demand.

As I look at this chart, I think back to the same time, six years ago in the spring of 2003. And although this scale of the copper prices on the right side is squeezed. There are some similarities for our industry based on where the industry was then. The world itself is quite different, but in the spring of 2003, the U.S. economy was in a recession, the developed world was in recession, the copper price was roughly $0.75, roughly 5% of the industry’s capacity was curtailed, inventories were very high and the people in the industry didn’t expect the price to reach $1 within a three or four-year timeframe. But in that year even with weak U.S. economy, China’s demand was so strong that inventories began to fall, and by 2004 when the U.S. economies recovered the price of copper jumped and it essentially doubled from the spring of 2003 to the end of 2004, and then continued upward because of the supply issues that the industry faced. So I think that’s a case study of thinking what we will be facing at some point, when as China continues to develop as the rest of the undeveloped world follow soon overtime and as the developed world’s economies recover.

Page 10, talks about what we have done with our company. I mentioned, we started this process of reviewing our operating plans at the start of the fourth quarter, and we continue to work on it, we are continuing to work on it. We are executing on the plans, but as we execute on the plans, we are looking at ways to optimize those and that involves changes and we'll continue to change overtime. But we are operating a Morenci and Safford, SX, EW operations in Eastern Arizona near each other at roughly half their design capacity rates that’s helping to drive their cost down.

We suspended operations at our Chino mine in New Mexico, although we continue to be use some copper and adjusted the mining rate at Tyrone significantly. We didn’t make a significant changes in South America, but we did adjust the mine rates at our Candelaria in Ojos district to help contain cost there. We continue to operate Grasberg aggressively because of its cost structure and the grades that we have available and essentially the same can be said about our Cerro Verde mine in Peru, which is a large low cost mine in the, cash flows from those mines are supporting our capital expenditure program, our debt servicing and our corporate G&A program and the other mines are being operated to be cash flow positive even with lower prices.

Molybdenum business is of course severely affected by the falloff in demand for our metallic molybdenum. In the steel industry, we sell a significant portion of our molybdenum as a chemical and that is somewhat weaker, but not as nearly as weak as in the steel industry and to adjust our operations in response to the lower demand for the product. We’ve taken stages of reduction at our molybdenum mine in Colorado, the Henderson mine. And now it is planned to be operated at roughly 40% of this capacity to reduce the amounts that we produced, we’ve also made some adjustments at our byproduct mines including suspending the molybdenum circuit at our Cerro Verde mine in Peru. At all of our operations, including Grasberg and Cerro Verde, we are deferring projects when we can, we are reducing cost wherever we have the opportunity to reduce costs. We’ve reduced our administrative costs, reduced our head count and our corporate headquarters by quarter. And as I have said, I am very, very pleased with the way the organization has responded to the necessities that the current market environment places before us.

Page 11 shows our outlook for sales this is similar to what we had at the end of the fourth quarter in our last earnings release. It shows that our production levels, sales levels for copper will continue at roughly the level we operated at in 2007, 2008, but what that doesn’t show as just a significant amount of reductions that we put in place from what we have planned to produce in sale.

We had a strategy up through the third quarter of adding the volumes, and we are successful in doing this. So we have cut back from what our plans are, we continue to have high volumes. You can see with the gold sales, the impact of the mining sequencing at Grasberg, where we will have roughly $1 million ounces in more gold sales this year, strong sales going into 2010, and then below that the moly chart shows the actions the effect of the actions that we’ve taken to adjust our moly sales in response to the low prices in the marketplace currently.

Page 12 shows the outlook now for our quarterly sales of copper, gold, and molybdenum for our company. You can see that our quarterly copper sales will be in the range of 950 million to a 1 billion pounds. Gold sales will be strong in the second and third quarters and almost 500,000 ounces in the fourth quarter. And then the current outlook for moly sales is shown on page 12. We will continue to review that again depending on what the market needs for that product is and determine how to what extent we operate Henderson.

Page 13 shows for the year 2009, previously the chart we’ve shown it for the first quarter, but this shows the outlook for the year, for our sales by region and also our outlook for unit cost both at site production and delivery before byproduct credits, the impact of byproduct credits and our outlook currently for where we expect to be for the year.

Now, this reflects the new outlook for molybdenum for example with lower molybdenum sales. It has golden year that priced to $900 an ounce, molybdenum at $8 a pound. That will have any impact on these net numbers depending on where the actual prices are. As we went into first quarter we were having to make some assumptions about where input costs were going. Now we are using the current outlook for those input costs and as that changes these numbers will change. So there is a lot of pluses and minuses that go into this, we are going to try to maximize our mine plans and be aggressive in finding ways of managing our costs and we are going to do our best try to beat these numbers as we go forward.

Exploration, we had doubled our exploration spending between 2007 and 2008. Our total expenditures were roughly $250 million mostly spent in drilling core holes associated with our existing ore bodies in terms of gaining a better understanding of the geology with the view towards adding to reserves and ultimately adding to expansion projects. And we were continued to be very positive about our ability to do that, lots of drilling also at our new project in Africa, Tenke Fungurume. You can see how the budget was spent, divided geographically.

We were successful we added significant reserves in '08; three times the amount of our copper production and six to seven times our moly production. And we expect to be able to continue to use the information from that core drilling to add reserves going forward and to continue to work to look to how to convert reserves in the cash flow producing assets. But we are going to spend less on core drilling in 2009 and reduce our budget from $250 million to $75 million, but not at all changing our emphasis on exploration.

Slide 15 shows our EBITDA numbers and our cash flow numbers, excluding working capital, but the operating cash flow is net of cash interest and cash taxes and shows that at the current level of copper and gold and molybdenum prices, we would expect don’t have average for 2009, 2010 to have roughly $4.5 billion of EBITDA and over $3 billion of operating cash flows. You can see the variance here to those numbers if copper and gold prices and molybdenum prices vary, and I guess this is the copper price variance here that’s shown on this slide. But on the next slide on page 16, we give you the sensitivities so that you can use our analysis and adjust prices to your own view of prices for both commodities, which we sell and also some important input cost to give those to you for financial analysis purposes.

In page 17 includes our capital expenditures and in light of our steps to protect liquidity, we made a significant reduction of roughly a $1 billion in our planned capital spending. For 2009, our current outlook for the year is $1.3 billion roughly equally divided between sustaining capital and the new projects that we are continuing. We suspended our projects except for the completion of the Tenke Fungurume project in Africa, the continued development of the underground ore bodies at Grasberg.

Then in 2010, our current outlook is for a $1 billion of capital. We will have completed our spending at Tenke roughly by the mid part of 2009. And the projects include Grasberg and we currently have the [Suffelox] project, the project to develop the sulfide ore reserves at El Abra included in 2010. Later this year, we will be making the decision about whether to go forward with that or defer it further, which we can do without loosing the resource if we see market conditions indicate, we should defer capital.

An important quarter for Tenke again I’m just really pleased with our construction team and our operations team there. They beat my own personal estimate about when they would be able to first produce copper. Today, we are looking at our first actual shipment of copper from that operations to the marketplace and that’s involves trucking the copper cathodes. This is an SX, EW operations from Katanga in the DRC to South Africa to marketplace. It’s sort of a test shipment, but we are producing copper there. We have an inventory of cathodes ready for shipment and as a project continues to be completed. We are completing the copper circuit, which is essentially completed now. We are focusing on the cobalt circuit and an acid plant that we are building there. We are on schedule to ramp-up to full capacity in the second half and that involves an annual rate of 250 million pounds of copper and 18 million pounds of cobalt.

Capital costs are significant and we are building this not just for this project, but to be able to expand because we are confident that the resource will allow us to do that. We will time subsequent expansions depending on market conditions, but the resources there and we are adding to our reserves still drilling there, expect to continue to add to our reserves.

Some great pictures on page 19, you can see an aerial shot in the lower left of the facility. This is a world-class facility. The first line tailings disposal facility in this region, and there is copper ready for shipments. So that’s a beautiful site for us, and it’s going well. As I have said, we are building this to world-class standards from an environmental management occupational safety and social responsibility. We are making investments in the community, which need investments to deal with a standard of living that the people have there, we’ve upgraded the road. We are investing in the power facilities to give us reliable power, doing social programs, which we will continue to expand as we earn revenues. This is a contractual arrangement that is fair to the DRC by international standards in terms of taxes, royalties and equity participation. We are continuing to work with the government on their contract review process, progress has been made we anticipate that this will be successfully concluded during the second quarter.

At Grasberg, we are looking forward to the time when the open-pit will be fully mined. Our current plan is that to complete the open-pit mining in roughly 2015. We are continuing to review that of the last several years. We've been building infrastructure to allow us to mine the underground reserves at law directly underneath the open-pit is really the same ore body, its just, it will be mined with the very large block cave mine. We’ve expanded our DOZ mine that had significant undeveloped resources there. And so once the open-pit is mined, this will continue to be a very high volume, low cost operation and are extending through the current life of our contract, which is 2041. But we are continuing to develop those reserves so that we can move to the underground hereof as planned.

Financially, our company is well situated in current market conditions and looking back to two years ago. We are very happy that we made the decisions that we made at that time to de-lever. And as a result of those de-levering actions that we took in 2007, we have a very attractive debt maturity schedules you can see on page 22. We have very small amounts of that principal payments for a number of years, we will continue to review our cash flows and debt marketplace to see whether we should take actions to retire some of this debt in advance to this maturity.

From a financial policy standpoint, we are committed to have a strong balance sheet and I think our track record of the actions that we've taken to de-lever, adjust our operations, raise capital, which we had a successful offering of common stock in using a procedure called an at-the-market offering, which allowed us to place $750 million of common stock in the marketplace in a way that was not disruptive to the marketplace and gave us additional liquidity. We are managing our cost, which I keep saying over and over limiting our capital in this environment. And we are going to continue to focus on protecting liquidity, because of one thing we want to do is for our company to continue to own these assets that we own today, because we believe those assets are going to be worse significant value in the future and we want our shareholders to be the ones to benefit from that.

So that is where we are at the end of the first quarter of 2009. That’s what our outlook is Jim-Bob's here on the line with me and we are pleased to open the line for your questions.

Question-and-Answer Session

Operator

(Operator Instructions) The first question comes from the line of Michael Gambardella with JPMorgan.

Michael Gambardella – JPMorgan

Hey Richard. Hi, Jim-Bob, and Kathleen.

Richard C. Adkerson

Hey Mike.

Michael Gambardella – JPMorgan

Congratulations on the good operational quarter. And on the progress, you are making at Tenke, I do have a question on Tenke, while you’ve had great progress on bringing this up ahead of schedule at least your schedule. What’s the progress or can you tell us any progress you’ve made on the contract with the government?

Richard C. Adkerson

Well. It’s been a process that has taken much longer than the government and indicated it was planning to devote to this. It’s been a difficult time for the country. At the end of ’08, they had to face the renewed problems in the eastern provinces, which is far away from us and did not affect us at all. Most of you know that the Congo is big as Europe, big as the U.S. east of the Mississippi and it doesn’t have roads or infrastructure. So, these eastern provinces are not things that affect us, but it did divert the government's attention. Recently they’ve had a change in their leadership of their assembly, their parliament and the company is facing economic challenges that where they already had challenges but with the drop-off in mining activities from the lower prices that’s made those even much more significant. So there have been a lot of things that have diverted the attention of the government officials. During the time, we were hoping to get this contract review. We have consistently worked cooperatively and discussions with the government and with the state-owned company Gécamines. We’ve worked hard to advise the government of the benefits that our projects will have for the country as a whole for the workforce and for the region. And we’ve been successful in getting those points across.

They’ve had a process of where they had the most recent process, they’ve had several but the most recent process was having a contract review commission that was headed by their Senior Minister for the economy and financial affairs a Vice Prime Minister. We successfully worked with that group. There was then a sub-group of the Council of Ministers they deal with the economy of financial affairs. And we’ve worked successfully through that group. And now we're waiting for the final action by the Council of Ministers. There is one point Mike that I want to make sure everybody understands. We have a contract we are not waiting for an approval of a contract. The contract we have was transparently renegotiated in the 2003, 2000 timeframe. It allows us to ship product, it allows us to operate our business, and we are proceeding on the basis of that contract that is enforceable under Congolese law and gives us the basis for doing what we are doing. But we are working with this review process, which is a review of all contracts, not just ours.

Michael Gambardella – JPMorgan

Richard, have you made the first shipment yet and how long does that actually take to get to the port?

Richard C. Adkerson

The first truck shipment is leaving today. And it takes 20 we are estimating an average of 20 days. This is a test shipment as we are going through different border crossings, and so forth. And it will be 20 days to 30 days, but we’ve been shipping significant amounts of construction materials on this same route. And so, it’s not like it something that we are just starting, just this time the trucks are going to be carrying copper cathode as opposed to bringing in construction equipment and mill equipment and sulfuric acid and all the things we’ve been shipping.

Michael Gambardella – JPMorgan

Is it 20 to 30 days round trip…

Richard C. Adkerson

No.

Michael Gambardella – JPMorgan

Or just one…

Richard C. Adkerson

One way.

Michael Gambardella – JPMorgan

One way. Okay, and then the last…

Richard C. Adkerson

That’s a good point Mike, because we can use this for this project for maybe the next expansion project in the long run to develop this property to its potential. We will need rail infracture and there is construction going on now in other countries to give us that access. But we’ve actually just got a note we’ve been averaging less than 15 days in bound. So hopefully, we were able to do that, but we’ve improved the roads, the biggest challenge we face initially was the quality of the roads inside the DRC, going from where we are on the road from the border to [Kwasy]. We're in between there and we were having go through Lubumbashi down to the border crossing. And we initially, it was with a consortium of companies, but those companies have now stopped operating. And so, it’s basically been on our shoulders to improve that road, but we made the improvements, we continued construction during the rainy period, and now we are confident about our ability to ship, but it will take a long time.

Michael Gambardella – JPMorgan

Okay. And last question, what was the biggest surprise you saw in the first quarter on the copper cash cost coming in so much lower and then I think you had expected at $0.66?

Richard C. Adkerson

I don’t want to characterize it as a surprise, but I was concerned about our ability to execute on these plans that we put together. As you recall, well Mike we announced one set of plans in the middle of December and the price continued to decline and we had developed new plans over the next three weeks or so, over the next month really before our earnings release. And we are working hard and looking alternatives making decisions and we’ve got our plans together that we announced to you with our fourth quarter earnings release. And those were dramatic changes, I mean, significant reductions in people, significant reallocation of equipment use and retirement of equipment. So, we had a plan in and I think, I cautioned everyone that having a plan is one thing executing on it is another. So the really a good surprise was our ability to achieve that plans. And I really tip my hat to all of our operating team and our leadership for ability to do that.

Michael Gambardella – JPMorgan

Okay. Thanks a lot Rich, and congratulations again on a good quarter.

Richard C. Adkerson

Thanks Mike.

Operator

Your next question comes from the line of David Gagliano with Credit Suisse.

David Gagliano – Credit Suisse

Hi, everybody. I just have a one quick clarification question. First of all, where does the $62 million hit on the deferrals between PT-FI and Atlanta Copper? Where does that flow through the income statement?

Kathleen L. Quirk

Well. What you see is, we produced, this is Kathleen. David, we produce the copper and copper concentrate at PT-FI. And so it really shows up when we sell it, we eliminate the sale and the costs. So, it’s in revenues, its in costs. So and then with the $62 million is the net effect, its primarily between PT-FI and Atlantic Copper, but we also have some intercompany associated with our Cerro Verde sales, but it shows up in revenues and in costs.

David Gagliano – Credit Suisse

And the net effect is (Inaudible) $62 million. So in terms of the unit cost per pound figure, does that include portion of that?

Kathleen L. Quirk

No.

David Gagliano – Credit Suisse

Okay.

Kathleen L. Quirk

What you would see for PT-FI is actually what our costs were.

David Gagliano – Credit Suisse

Okay, okay.

Kathleen L. Quirk

During this quarter.

Richard C. Adkerson

Yeah. It's a cash cost basis and it's the volumes that that we sell including the volumes we sell on an intercompany basis.

Kathleen L. Quirk

For that subsidiary.

David Gagliano – Credit Suisse

Okay. Got it. Just as a follow-up unrelated actually that there was some chatter out of Indonesia yesterday regarding a Presidential Decree to allow underground mining in protected forests. And obviously, you’ve got a large reserve and resource position there and I’m just wondering if you had some initial thoughts on what the potential long-term impact could be if there was an easing in the restrictions on the underground mining in the forest in Indonesia?

Richard C. Adkerson

First of all, our Grasberg operations including the large reserves that we have there were not affected by the previous government ruling about this issue. So we were, we've been free and cleared to operate there. It potentially could be beneficial to us, because of our large exploration acreage that we have outside of the Grasberg area, which we call Block A and certain of those areas were already exempt from that, because of the way the original ruling and their contract situation was there. But overall, it potentially could be beneficial with us, for us. But we always felt that had we discovered a significant ore resource in our exploration area. We could have worked with the government to develop it so. In terms of saying that this was a major issue for us, we didn’t see at that way, but potentially could be beneficial to us just in terms of administratively good and clearance to deal with what we might find there.

David Gagliano – Credit Suisse

Okay, fair enough. Thanks and congrats on a good quarter. Thanks.

Richard C. Adkerson

Thanks Dave.

Operator

Your next question comes from the line of Tony Rizzuto with Dahlman Rose.

Anthony B. Rizzuto, Jr. – Dahlman Rose & Co.

Thanks very much. Hi Richard, Jim-Bob, Kathleen and Red. Richard, I have got two questions here. And first, how should we think about Tenke in terms of modeling costs as you guys are in start up right now?

Richard C. Adkerson

Yeah. It’s cost structure will be an attractive one, once we get to full production capacity and we deal with the start-up type issues that are not really unique to Tenke, but just common start-up type issue. So the cost structure for 2009 will not be indicative of what our long-term cost structure will be, and to tell you the truth, right now we have some uncertainties ourselves, as to how it will workout. We have to demobilize a very large construction work crew there. And our real initial focus is to assure that we get this thing construct in the right way and started up. So we are going to be spending some money and some of that will go through our operating cost there, but as we go forward on a long-term basis, you will have an attractive cost structure. Some of the cost structure is going to driven by the price of cobalt. And on a long run if cobalt is at $10 a pound, we should have something that should be a unit cost or something less than $0.50. But there is some uncertainties on that Tony, and today cobalt is above $10 a pound. And that market is a very small market. We are going to producing a lot of cobalt, but what we are doing that a lot of other operations in the Congo and in Zambia are suspending production. So longer range if price of cobalt is higher, those cost are going to come down substantially.

Anthony B. Rizzuto, Jr. – Dahlman Rose & Co.

But the process itself Richard, is fairly efficient, because I believe you guys are going to combine both the copper and cobalt in the processing component of the facility, correct?

Richard C. Adkerson

Well, there will be a separate cobalt circuit that we are now constructing. It will go through the copper circuit initially and then the residue of the copper circuit will then be processed in the cobalt circuit. So, it’s an integrated facility, but the ore initially will go through the SAG mill and end up going through the SX, EW processing to extract copper and then go through a separate process to produce the cobalt product that we will be selling.

Anthony B. Rizzuto, Jr. – Dahlman Rose & Co.

And I understand you guys, in addition you are using sulfuric acid, you are using some bioleaching there as well?

Richard C. Adkerson

Yeah, it’s really sulfuric acid. It’s really one of these units of where that the – as opposed to leach stack is going to be a unit where the asset is in a facility that does an agitation type leach process.

Anthony B. Rizzuto, Jr. – Dahlman Rose & Co.

Okay. The other question I have is, what conditions or data points do you need to see before bringing back the North American operations?

Richard C. Adkerson

That’s really going to be an interesting decision point for us, but I think what we had really need to see is going to be a robust copper market. And that means recovery in the United States, Europe and Japan. Hopefully that stimulus packages and the actions to provide liquidity and financial strength to the banking system will lead to that, but we will need to see that occurring. China can be very, is very important, very supportive, quite frankly they are doing what we expected them to do, and that will be supportive of the marketplace, but we will need to see recovery in the developed world to have a robust market to give us the confidence of going forward.

Anthony B. Rizzuto, Jr. – Dahlman Rose & Co.

All right.

James R. Moffett

Tony, this is Jim-Bob. I would like to make one comment about the cost structure in Africa, which more doesn’t apply to '09, but I think the way we look at Africa much likely look at Indonesia with the high percentage of cobalt in the ore, as cobalt prices go up and down. We could actually see production cost of zero in using cobalt as a byproduct. One main difference in Africa, which strictly related to cobalt prices, whereas Indonesia as you know depending on our mining sequence, our goal goes up and goes down depending on where the Golden Horseshoe. So, in some respect as we get the substantial ore body up and running with expansions, you’re going to have a situation, where you’re going to have the cost structure, which is $0.50 to $10 cobalt, but if cobalt should strengthen and go into the 20, we could have a zero production costs. But once again, my main point is Indonesia it depends on the price of gold and where we are in the mining sequence, whereas in Africa, the cobalt and the copper will flow substantially in the same percentages because of the ore bodies being monolithic as opposed to the geometry of the ore body in Indonesia. I hope that’s clear.

Anthony B. Rizzuto, Jr. – Dahlman Rose & Co.

Very helpful Jim-Bob. I appreciate that for the color. Thank you. Thank you, guys.

Operator

Your next question comes from the line of Mark Liinamaa with Morgan Stanley.

Mark Liinamaa – Morgan Stanley

Hi, all.

James R. Moffett

Hi, Mark.

Mark Liinamaa – Morgan Stanley

Just quickly on scrap markets, tight scrap markets have been one of the contributors to the strengthen the copper price. Would you be able to share any insights on whether you think this is cyclical or are we seeing more of a secular tightness in scrap being that maybe we collected a little bit much relative to historic consumption at the peak of the cycle? Thanks.

Richard C. Adkerson

Well, our executive who runs our concentrate marketing activity was just in China and there is a clear scarcity of scrap there. And Mark, to a certain degree is going to be a function of price. I mean scrap comes as recovery from fabrication plants and as the fabrication plants have cut back their operating rates there is less scrap, but then there is also secondary scrap and with the copper price being below $2 a pound it just wasn’t economic to collect and ship that scrap. So, you could expect scrap to come back, once the price rises. But it is always been in the less visible part of the marketplace, a significant part of the marketplace, and the dynamics overtime will and continue to change.

Mark Liinamaa – Morgan Stanley

Thank you and good look with everything.

Richard C. Adkerson

Thanks Mark. Appreciate it.

Operator

Your next question comes from the line of Brian MacArthur with UBS Security.

Brian MacArthur – UBS Security

Good morning. Just three quick questions. Just on slide 13, where you talk about sales per region and there's a little footnote saying your sales from Africa of 100 million pounds are in there. Are they actually in one of those regions or they is it separate?

Kathleen L. Quirk

No, it's separate. If you add up the total there will be a 100 million pounds short of our 3.9 billion pounds of guidance. So we just haven’t separately put the Africa region on the schedule.

Brian MacArthur – UBS Security

Great. That's what I thought. Second question you talked about in North America and going down of another 200 million pounds next year. Yet, you talked about it, having fairly good flexibility to come back quickly. Why does it take so long, I mean if you're going to be 200 million pound that seems to be a long time to actually drop down to that new level and still if you see what I'm saying maintain flexibility coming up. Can you just explain what why that occur? Is it just the leach cycle or?

Richard C. Adkerson

Yes, exactly. I mean the places where we've curtailed production have been our SX, EW leaching operations. We have not curtailed production at Sierrita and Bagdad, which are concentrate operations because if you cut back there, you tend to drive unit cost up, because it has higher fixed costs.

Brian MacArthur – UBS Security

Right.

Richard C. Adkerson

So, we have reduced our mine rate, our stacking rate and when you do that, there is a long-term consequence for that, because that material is placed on the stacks and then recovered over a number of months. And so by cutting that back, we will have an impact on future production that you can't just turn around all together. In fact some of the things we’ve been doing in 2007 and 2008 were a recovery from the last time that these operations were curtailed. So, and I think I mentioned that before, when we were saying that if the price of copper dropped, and you remember we developed our plans and the scenario of roughly $1.25 of copper I have said if it they were to go below that we would have to make other decisions. And the further decisions you make the more long-term consequences we have. We tried to balance it, so that we can come back relatively quickly, but there will be a time lag between when we can recover and when we make the decision to recover and when we start really getting back to levels where we were.

Brian MacArthur – UBS Security

Okay, great. And my final question just relates, I know every quarter I ask this, but in the U.S. now you have very good cash cost and obviously South America and Indonesia make money. And just I would have thought you had a tax rate consolidated of 63% this quarter. And I would have thought in the U.S. even if you had $0.20 as part of the depreciation you would be making money everywhere. So, is it just there’s a lag in inventory coming through in the actual costs of production in North America are higher than that 122 or how did we get the 63, because I would have thought with Grasberg being the biggest contributor in the tax rate of 50, you would probably have a rate down a little lower?

Richard C. Adkerson

Well, it has to do with the fact that we really aren’t going paying taxes in the U.S. because of the interest cost allocation and some G&A cost allocation. So, while we will be cash flow positive. We still have depreciation charges, which are different and book depreciation charges.

Brian MacArthur – UBS Security

Right.

Richard C. Adkerson

Have interest cost because of the way of the U.S. tax laws relate to where you can, where you can't allocate interest cost. So, our cash taxes are going to be in Indonesia and in Peru and without any taxes paid in the U.S., even though those rates are higher on a consolidated basis, the effective book provision ends up being where it is.

Brian MacArthur – UBS Security

Okay. So say we get back to $2.50 or $3 or it sometime, we will start the tax rate go down though right?

Kathleen L. Quirk

Well, that’s correct. The table on page 14, that shows what our tax rate, effective tax rate would be on an annual basis at these various price ranging from $1.50 to $2.50.

Brian MacArthur – UBS Security

Right.

Kathleen L. Quirk

63% in the first quarter, if you take the, if you look at the $2 case, on an annual basis would be 48% for 2009, which means that our tax rate in the second quarter, third quarter, fourth quarter would be lower than what we had in the first quarter.

Brian MacArthur – UBS Security

Right. Okay I just wanted to, but so that actually it’s just that mix, there is no lag and the fact, we would like, we would still have some inventory from the fourth quarter, which might be like $1.95 and Morenci that’s coming through in the first quarter that was none of that that was affecting everything this time too like there’s not a lag when you book it through inventory of you see what I am saying?

Kathleen L. Quirk

No. That’s right.

Richard C. Adkerson

No.

Brian MacArthur – UBS Security

Okay, great. Thank you very much.

Richard C. Adkerson

Okay, Brian.

Operator

Your next question comes from the line of Kuni Chen with Bank of America Securities.

Kuni Chen – Bank of America Securities

Hi, good day everybody. Just a couple of quick ones, I mean, as far as U.S. operations. Can you just give us a sense on how quickly you can bring back production once you make that decision? Is that kind of two, three months or something longer than that?

Richard C. Adkerson

Longer than that Kuni. Longer than that, I mean you’re talking about, if we were to make the decision let’s say in the second half of '09, then it’s a couple of years. The longer it goes the more that gets extended. Now at the same time, we have the opportunity to expand and those expansions may come in during that time frame. So we are not really just stuck with this price schedule. We have the opportunity to expand in several places in Africa is one where the second stage of expansion will be much quicker than the initial development, because we are building a lot of infrastructure. We were pursuing an incremental production enhancement at Cerro Verde. We are also continuing to study a large-scale project there and we have the opportunity to do some expansions at Sierrita. For example so, lag will be related to Morenci, Safford operations and other operations we could go back and to pushing volumes quickly both for copper and for molybdenum. By the way molybdenum recovery could be much quicker than that. So the lag thing is limited to Morenci, Safford and the longer this goes, the longer that lag time will be.

Kuni Chen – Bank of America Securities

Gotcha. And then just a final question on China. Obviously, we’ve seen the copper imports pick up here in February and March. What are your views on the sustainability of that?

Richard C. Adkerson

Well. We have a long-term view as positive about China’s continuing to invest in infrastructure. They are doing things to build facilities, housing, transportation, railroads, power facilities that consume copper. So, we believe the consumption activates to develop internally and the standard of living, the Chinese GDP growth was stronger than some had anticipated and number of people are upgrading their outlook for China's economic growth now, and copper is inherent to copper demands, inherent in the consumption of copper. Their export business, which is down, it is going to be affected by the world's economy. But we think a lot of the activity in China will be is clearly sustainable. Their buying practices could cause variability, we've seen that in the past, you might recall 2006, where in May copper went to $4 and China backed out of the marketplace, even though their economy and spending in consumption of copper continued to be place, but they just buy anything for a number of months and the price of copper dropped. So their buying practices will create volatility in the near term, but underlying that is economic growth infrastructure development that involves a real consumption of copper.

Kuni Chen – Bank of America Securities

Okay. Thanks, good luck.

Richard C. Adkerson

Thanks a lot.

Operator

Your next question comes from the line of Jorge Beristain with Deutsche.

Jorge Beristain – Deutsche Bank Securities

Hi, good morning Richard and everybody. Thanks for taking this call. My question was related to a unit costs and it would seen that with the unit cost sitting $0.66 in the first quarter and your full year guidance remaining at $0.70 that you are kind of saying that the best of the cost cutting is behind you. So I just wanted to understand if that’s the case. And secondly, just related to your updated guidance, I noticed that you are not using a $2 baseline copper price for 2009 versus a $1.50 previously. So $0.50 change, but you only increased your incremental operating cash flow forecast by around $1.5 billion instead of the $2 billion. One would assume given that $0.50 change. So, are you bracing for any kind of second half increase in cost or something what change in your thinking that you wouldn’t be raising your cash flow guidance by essentially $2 billion?

Richard C. Adkerson

Well, let me deal with the cost structure first. We it’s really such a combination of things. Let me say in response to your specific question, we aren't bracing ourselves for any cost increase. That’s not in our plans at all. It’s the combination of the by-product credits, the lower molybdenum credits have some, our production has some impact. Grasberg was stronger than planned in the first quarter. Historically for many years when, Grasberg is in this high-grade section of the pit, we have operationally been able to achieve better than planned results, because it doesn’t take a lot of material with grades of copper and gold at this level to improve. And as we go forward into 2009, we are going to continue to look for opportunities to do that safely, but and we will see if we are successful in doing that. But at the beginning of the year, we had to make some estimates on where we thought input costs would be. In terms of energy, and we have not only diesel, but purchase power in coal that we deal with and that’s a big part of our cost structure, work force reductions, our steel costs, a lot of those things were based on estimates at that time. Now we have experience of the first quarter and we have updated all those based on that experience. So, we will see how we do, but it’s a combination of things. There is nothing in our costs picture that shows some big increase and we are going to continue to work to achieve efficiencies. One thing Red is finding is particularly in North America as we've reduced our work force. We are bringing in much more efficiency. Our safety statistics are better for example, and that’s our real positive thing, because we had been adding to our work force so aggressively that we had less experienced workers and those were the ones that we have reduced our work force. And so, we are seeing more efficiencies, safer operations and all those things are good.

Kathleen L. Quirk

Jorge, in terms of the operating cash flows for 2009, beginning of the year, we assumed the $1.50 copper and we always show sensitivities, but at a $1.50 copper, we were talking about a $1 billion of cash flow, operating cash flow for 2009, net of $600 million in working capital requirements. If we assume the first quarter actual results and then just update the copper price for $2 for the balance of the year, our cash flows were approximately $2.5 billion, again net of $600 million of working capital. So, if you run the math, the numbers work for the balance of the three quarters, as you would expect, as Richard said it’s not any change in our cost structure that we are anticipating going forward, and everything is pretty much similar to what we had in January. We’ve updated some of the costs for actual diesel prices that we're experiencing. We also updated the costs for the effects of $2 copper, which you would see in increased royalties and treatment charges et cetera. So there is nothing unusual that you wouldn’t expect to $2 copper.

Richard C. Adkerson

And Jorge there is nothing magic about this number. We don’t go through any kind of extensive process. It's not our projection of prices, we don’t project prices. Literally last week Kathleen and I sat down and discussed whether we should use a $75 or $2 and I said the current price is above $2, let's just use $2. And so it is a frame of reference for people who follow us to use and we recognize that everyone is going to use their own prices. And I just want you to know, there's not any kind of great insight you should get about the fact that we use $75 versus $2, because we don’t we are not predicting a price.

Jorge Beristain – Deutsche Bank Securities

Okay, that’s fair. But just to clarify then again given that you reported $0.66 in the first quarter. You are still standing by your full year unit cost guidance of around $0.70 I think you've reduced it by about a $0.01 from $0.71 to $0.70. But do you think that there is actually downside risk to those costs in other words that they might come in better than budgeted as you said because you made surprise to the upside in Indonesia, or you still comfortable with your $0.70 guidance?

Richard C. Adkerson

Well, I want to say that, what we try to do is give you our best guidance, based on the analysis of all the elements of cost and production. And you should consider $0.70 from that standpoint. We're going to work real hard to beat that. And I do think we have the chance of coming in lower and one of the big things is the possibility of getting some higher grade ore at Grasberg through the last three quarters of the year like we did in the first quarter. And if we do that, then that’s going to really help our unit cost structure and all these other costs are going to be what they are going to be, but so, I can't say anything more than that, that’s our best guidance now. There is the opportunity to beat it. If oil prices go from $50 to $75 that’s going to be a negative, but that will be whatever it will be.

Jorge Beristain – Deutsche Bank Securities

Okay, great. Thank you.

Richard C. Adkerson

Thanks Jorge.

Operator

Your next question comes from the line of Victor Flores with HSBC.

Victor Flores – HSBC

Thank you, good morning. I have one question with respect to the South American assets and then, two with respect to Tenke. Just starting with South America, Richard you mentioned that you'd be rethinking the sulfide project that El Abra later this year. Is there a possibility that you will also rethink the expansion of Cerro Verde, or is there perhaps the possibility that you're comparing the two and might do one instead of the other?

Richard C. Adkerson

Let see, I don’t really see it is as a comparison of the two. We have the incentive to go forward with the project that El Abra, because the oxide ore is on a decline. And if we don’t go forward with that then we will have a gap between when the decline the oxide occurs and we ramp up for the sulfide. We have a 51% interest in that project and our partners Codelco and those decisions are going to made in consultation and working with Codelco. I would say the decision of Cerro Verde is going to be separate from that, and that’s going to be made on the basis of the overall market situation and where we stand with it. So, I don’t, we also have partners to work with there, of course as well. So, I don’t see it is an either or really that much of a competing situation with something that will be driven by the market. And I think the deferral of the sulfide would occur if markets would have to weaken significantly from where they are right now. And when we last talked with you on one of these conference calls, a large portion of the world was predicting that even though copper prices were in the $1.50 range that they are going to weaken substantially from that. And as always, we are running our business on the basis of scenarios. We are not predicting prices, we are just going to be prepared to act based on the different scenarios that we might be facing.

Victor Flores – HSBC

Great, thank you. Then two questions with respect to Tenke, I guess CRU has been saying that sulfuric acid price could head a pretty low this year. We've heard instances where people basically are paying to have their sulfuric acid taken away from them. I am just wondering whether that has any impact on the acid plant at Tenke, I realize that you are far from infrastructure and they are probably even that much cheap asset around, but I'm just wondering if there is any impact as a result of that?

Richard C. Adkerson

Well, the thing you say about sulfuric acid is also true for elemental sulfur. I mean it's prices has varied in a similar way to acid prices. And there are sources for high quality sulfur in that region. And over the long run, as we are developed again we are developing this projects for the long run. We think it will make sense for us to build this plant and have that ready to go for further expansions, and take advantage of the favorable market for our high quality elemental sulfur to burn in that plant. On a day-to-day basis, some of these impacts could indicate it would make sense to buy acid rather than build the plant, but longer run is, that decision is pretty clear, is very clear cut.

Kathleen L. Quirk

It's a lot more efficient to bring in such a truck in sulfur than have to truck in the larger volumes of acid.

Richard C. Adkerson

Right.

Victor Flores – HSBC

Right. And then just finally one question now, now that you are actually producing cathode and getting ready to ship it. Is there any requirement or mechanism that you have to hold back certain parts of the cash flow or the cash you receive for the sale of cathode until the contract negotiation is bedded down?

Richard C. Adkerson

Absolutely not. No, we have a contract that gives us the access to the cash and the management of it, and there is no uncertainties about operations or spending or anything else related to the business there.

Victor Flores – HSBC

Right, thank you so much.

Richard C. Adkerson

Okay, thanks a lot Victor.

Operator

Your next question comes from the line of Gary Lampard with Canaccord.

Gary Lampard – Canaccord Adams

Good morning.

Kathleen L. Quirk

Good morning.

Gary Lampard – Canaccord Adams

My question relates to Tenke Fungurume as well. How do you think conceptually in terms of the expansion, I mean obviously the resource base can support many levels of expansion? The first step probably doubling to about 200,000 tons per annum, what constraints are there against that sort of expansion, I guess power is the primary potential one, do you have the power to double up to 200,000 pounds per annum?

Richard C. Adkerson

Yeah, power is not a constraint. We currently have the power available to us that would allow us to double it, we are making investments in restoring some generating facilities, hydro generating faculties that are going to add reliability to that power. So there are really no constraints Gary to the next step of the expansion other than the issue of whether the market needs that.

Gary Lampard – Canaccord Adams

Got it. Okay. I guess the other general question. How would you look at brownfield costs compared to your startup costs?

Richard C. Adkerson

Brownfield costs related to the startup cost?

Gary Lampard – Canaccord Adams

No, no compared to startup? If you were to double production, do you think the cost would be half of your greenfield cost?

Richard C. Adkerson

Of the expansion project?

Gary Lampard – Canaccord Adams

Correct. Yeah.

Richard C. Adkerson

The capital cost to expand?

Gary Lampard – Canaccord Adams

Yeah.

Richard C. Adkerson

It would be substantially less, we are going through a study now of dealing with that, we are continuing to drill in different areas to understand exactly. This is a huge concession for those of you who haven’t follow it 600 square miles. There is mineralization throughout that and part of the decision will be made was what would be the next development location to find the ore for the expansion that Gary is talking about. So Gary all I can say is it would be substantially less, it would be a very attractive project with a great operating cost and capital cost project. We won’t have to do things like building a new town side or we’ve already included the power cost in this project and a lot of the other types of basic infrastructure. But let’s wait until; we get a little clear view on exactly which we will be using and what project we will do before we talk about capital cost.

James R. Moffett

Richard, this is Jim. Let me just, you mentioned the size of the concession and the extensive ore. This is basically a flat terrain without any impairment going in any direction, we want to go, and as you know the ore that we have out there that the surface we are basically using graders to scrap the ore. We don’t have a big situation where you got some terrain features like we had in Indonesia, when you go from one level to the other, you don’t have an underground versus an open-pit. For many, many years you are going to have basically surface, the [excurvation of] ore, which can easily be trucked to the existing facility. So that’s a big difference just because of the fact that the terrain here is very friendly to literally moving from one end of the concession to the other.

Gary Lampard – Canaccord Adams

Okay. And in terms of timing, would something like two years from the time you make a decision. Do you have reasonable assumption?

Richard C. Adkerson

Yes, I mean, if you really look at it, there is very little construction done in 2007 on this project. So we basically build this project during 2008 and the first quarter of 2009.

Gary Lampard – Canaccord Adams

Yep. Okay, all right. Thanks very much for that.

Richard C. Adkerson

Okay, Gary. Thank you.

Operator

Your next question comes from the line of John Hill with Cambrian.

John Hill – Cambrian Fund

Good morning everyone. Thanks for a great presentation and really showing some stamina here on the call everyone. Just a quickest question and feel free to answer very briefly. I know you've at it for a quite a while. First of all, just on moly, taking Henderson down, there seems to be some differences of opinions out there. China reverted to net import status. There’s observers that are see, claim to be seeing new orders out of North America from moly going to China, have you received those calls and are you suspicious of this kind of commentary and how genuine do you regard it?

Richard C. Adkerson

I'm not going to, John I'm not in a position to comment on some of the comments, but we have our downstream processing and marketing facilities to deal with customers, basically here in the U.S. and in Europe. And that’s what we are dealing with. We’ve historically not shipped to China. We do have relationships there that may give us some opportunities to do that and there have been some recent inquiries about it, but we really not in a position to comment on it any more than that. We are basically working our plans off what we see from our traditional customers. And if this gives us some new opportunities, we can very quickly react to take advantage of them.

John Hill – Cambrian Fund

Very good, very good. And then just a follow-up on something we've discussed on the call last quarter, just the thought about, any thoughts, renewed thoughts about trying to lock in so some of these low input costs. It looks like there’s a pretty historic disconnect between attractive copper prices and relatively low, very low quotes for diesel fuel, natural gas in the United States and coal globally. It looks like kind of situation that does not come around very often and particularly when we look forward to 2011 with the Grasberg grades in the 80 push back in some parts at a third degrade of what we are mining today, and then potentially, hopefully and that environment some of the U.S. operations coming back as greater $0.60 to $0.70 costs are today, they could be much, much, much higher with those ore grades, those mines and higher input costs. And any further thoughts about trying to lock in long-term diesel, natural gas or coal?

Richard C. Adkerson

Well, let me say first of all, yeah. We have included this on our website, our longer-term mining plans for Grasberg. This is something that Freeport’s had a tradition of doing and we’ve continued that now as Grasberg does get into those future years, Mark is working hard with our team to take actions to move copper ore and old ore forward. And historically, we've been able to find ways of doing that. And as those plants keep getting developed, we will advise you of those. But that's a long-term plan, we always see plans as calls for action as opposed to the ends of action. So, we are going to continue to work to do that. And at the same time, we have the opportunity at our operations to increase production, Tenke will be at full stream and other things will be coming up. I know that’s not the basic question you ask, but just since you commented on that longer-term outlook. I'm want to make sure, it’s put in the right context for where we are. John we continue to see this correlation between our input cost and commodity prices. And we then use that correlation as a way to adjust our operations. So that, we can be flexible to meet market conditions and our hedging philosophy of giving investors the exposure to an unhedge marketplace is really one that carries forward to input costs as well as it does to commodity prices. I understand your logic. I'm not necessarily taking issue with it, but just philosophically, we adjust our operations to be responsive to overall market conditions, and that includes both the commodity prices or products we sell, as well as our input costs.

John Hill – Cambrian Fund

Great, thank you. And good luck as Tenke continues to come up.

Richard C. Adkerson

Thanks John. Good to hear from you.

Operator

Your next question comes from the line of [Peter Walker] with [Sansar Capital].

Peter Walker – Sansar Capital

Hi guys, undeniably a solid quarter given the circumstances. I've got three quick questions. First is just a clarification, prior comment on Tenke, you're going to be exiting the calendar year at a 750 million pound capacity, if not run rate, correct?

Kathleen L. Quirk

It’s $250 million.

Peter Walker – Sansar Capital

I'm sorry, that’s what I mean 250. That’s what I mean. Okay so okay. And you're going to be producing 100 million pounds this year?

Richard C. Adkerson

Well, there is uncertainty about that, because that’s based on an assumption of when we get up. We could produce more or less in that but…

Peter Walker – Sansar Capital

Okay, okay.

Richard C. Adkerson

That’s what’s in our plan.

Peter Walker – Sansar Capital

Understood. The next question is about a little bit about China. I'm hearing that Chinese buyers are expressing some interest in contracting for longer terms, greater than six months for copper, cathode, and I'm not positive but possibly concentrate as well. They've done so with for cathode was some Chilean producers. Have you heard anything about that, have they contacted you about that? Is there any reason, you would pursue some of those relationships?

Richard C. Adkerson

Well, you’ve got, we are in Asia we're essentially a concentrate supplier. Our copper cathode is in large part produced in the U.S. where we then marketed through our rod operations and supply about half the copper rod in the U.S. And then in Asia, and in Europe through Atlantic Copper, where we produce that the Mitsubishi manages the cathode output at the Gresik plant in Indonesia. So, we are not really in that marketplace of supplying cathode to Asia. Our copper concentrate contracts are long-term contracts, they are multi-year contracts, and we sell some concentrate not a large percentage of our concentrate into China. We are talking to them about longer-term contracts, but that is marketed and if where we get the current market price for the copper and gold that's in the concentrate at the time of the shipment, and then we have annual negotiations of the processing fees, and that would be structure of any contract we would do in China.

Peter Walker – Sansar Capital

Okay. Thank you. And the last question this announcement was made on April 1. So I'm not exactly sure what to make of that, but Bob Friedland over at Ivanhoe made an announcement on in Santiago about, what could be a fairly significant find in Katanga, he calls it [Komova]. It's going to produce sulfur potentially sulfuric acid it's probably several years out at the earliest, but it's only a 100 kilometers from Tenke. And he was talking about ore grades above 3, even 4%. He was talking about 10 meter plus deep seems and a 100 or 1000 square kilometers of potentially developable resources. So I mean, can you comment on that are there any synergies there (Inaudible) also talking about looking for partners to develop the resources. Does this have any impact on Tenke, and the last issue there he also mentioned that the rail line through Angola was upgraded and was running to the DRC border. Now that's I've heard stories directly to the contrary of that. But I guess my broader question is similar to a question asked earlier, what are the gating factors to increasing the production run rate above 250 million pounds at Tenke? Is it the rail line, what's the progress there and then is there anything synergistic in terms of sharing infrastructure resources, it was something like [Komova], maybe sulfur is that one of the potential sources of sulfur that you are talking about earlier?

Richard C. Adkerson

Well, let me say that. Let's see Peter, let me see I want to organize my thoughts about this. First of all I said earlier that to develop Tenke, standalone basis to its full potential will need rail, shipping capabilities and the Angola railway is an important part of that. Maybe Robert has information that I don’t have, but my understanding is that, that railroad is not yet complete and there is some significant bridgework and other work to be done for that, but we are engaged in some long-term planning about upgrading the rail facilities in the Congo to connect with that. And so that, it does look like the long-term alternative that's most efficient, because certainly the closest port for us to get to, so that's important.

We will always work to achieve synergies that are available from other operations that may work for us to deal with, and we would certainly work with Ivanhoe or whoever in the area might have some synergies to work with and if something comes out that make sense then we will work for it. That is not the source of sulfur that I was talking about. I was talking about sulfur in the Mid East that comes from very large markets there that have the opportunity for us to access in our high-quality sulfur. So that was there, but we'll continue to see what happens the development of an operation that would generate sulfur requires a construction of a concentrator mill or some start and that’s a big project. So that is somewhere down the road before that would be available.

Peter Walker – Sansar Capital

And just in terms of the resource quality that was being mentioned. I mean does that have any bearing on the potential for Tenke?

Richard C. Adkerson

No, (Inaudible) far away.

James R. Moffett

Richard, let me handle this one. Why don’t we just put it this way? We don’t comment on things that Ivanhoe or any other producer announces, especially until we have a chance to go in and look at the resource, which we'll probably have a chance to do, but I think it would be best if we just don’t comment on the quality of the ore et cetera, because Ivanhoe, the only one that's really done the work and got the information available to us.

Peter Walker – Sansar Capital

Okay understood. Thank you very much.

Operator

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

John Tumazos – John Tumazos Very Independent Research

Probably there's almost 2000 people in Morenci, or other locations that's you had to let go were pretty good people because you hired them in the first place. What would be the timetable in terms of the copper price or economic conditions in terms of bringing some people back, the first? And second, could you describe or review your tax return by operating country? It looked like from the cash costs and volume that copper and moly might have had $175 million contribution in terms of output times price minus cash cost in the U.S. that you obviously have depreciation. Many overhead items in the U.S., did you have a profit for taxes in the U.S., could you just walk us through the tax return by country?

Richard C. Adkerson

Okay. Let me say first of all that the workforce that reduction that we did was done in stages, and we took steps and it’s gone very well. We try to be as fair to people as they’re leaving as when we hired them. And we had an early retirement program. We had an incentivized retirement program and incentivized severance program and then a lot of the reductions were in the less experienced workers and one of the – this time a year ago, the biggest challenge we had was finding workers, and we were hiring a lot of in experience workers employment for these operations in Arizona over the past five years had doubled up to almost 10,000 people. With these cutbacks we are now down to roughly the level of where the operations were in 2006 at the time we announce the Phelps Dodge transaction. So, we had the ability and we taken steps to retain the more experienced workers, we’ve done some reassignments of people to different areas. So that we could keep the people that were experienced in their operations and we have, so we have curtailed the less experienced people and then the people that were nearing retirement. If in the event of economic recovery, there will be a challenge to recruit workers to work in the small towns in Eastern Arizona, I mean as just that’s just a fact of life right now in Phoenix there is significant unemployment, significant opportunities, but if the copper market recover Phoenix is going to recover, and so we'll be back in the position of having to take steps to recruit workers. We use some workers globally now one of the good things that we are able to do is lever off of our operations in Indonesia and elsewhere to bring people in to work here, training people in the Congo here and so it’s going to be, but that will be a future business probably John.

Kathleen L. Quirk

John, this is Kathleen. On the taxes, there is a schedule on page 14 of the press release that goes through has a table that shows the income by region in the applicable tax rates. In the U.S. we did have a loss in the first quarter for income purposes, which includes the as Richard was talking about earlier not only the cash cost, but the depreciation also interest costs to the parent company and administrative costs so for book in some purposes it’s a loss and we don’t record a benefit on that. So, you see how that raises the effective tax rate to 63% during the quarter, but Indonesia we're continuing to pay at our contract rate of 35% plus we’ve got withholding taxes. In Peru, the tax rate 30% plus withholding taxes. And in Chile, we've got a 17% income tax rate and 22% withholding tax rate. So, if you have questions after looking at the disclosure, you feel free to give us a call, but it's all outlined on page 14.

John Tumazos – John Tumazos Very Independent Research

Thank you for calling that to my attention.

Richard C. Adkerson

Thanks John.

Operator

Your next question comes from the line of Justine Fisher with Goldman Sachs.

Justine Fisher – Goldman Sachs

Good morning.

Kathleen L. Quirk

Good morning.

Richard C. Adkerson

Good morning.

Justine Fisher – Goldman Sachs

Just one question about a minimum cash balance that you guys would look to keep on hand. I guess 644, to me it doesn't seem low but it is the lowest that I think we've had since you bought Phelps Dodge and obviously you've got the entire revolver availability left, but I just wanted to know how you guys plan to look at the cash you keep on the balance sheet versus the total liquidity you keep under the revolver going forward?

Kathleen L. Quirk

Well, the cash on the balance sheet really reflects we've been doing since the Phelps Dodge transaction is moving as much cash flow as available from the subsidiaries as is generated up to the parent. So that we could service debt, repay debt, repay dividends et cetera, so that's really been the focus, and why you've seen the cash balance decline since the time of the combination is just so that we could be more efficient with our use of cash. So what you see on the balance sheet now is what we have and we've got some cash in South America that's not able to be distributed because of some of the statutory rules there, but as we generate additional cash flows that'll be available to the parent. So, we really look at our overall liquidity as you mentioned we have a fully unfunded revolver plus the cash, so we really try to look at both the cash and the revolver combined and we don’t have a minimum level of cash. We try to work down our cash as much as possible to be efficient with our capital, but there is not a minimum level of cash that we are looking for.

Justine Fisher – Goldman Sachs

And I know you guys had spoken early, like in the fourth quarter you said, oh, we expect to draw down X amount of the revolver. In the first quarter, but I mean it seems obviously the copper price is the biggest deciding factor here, but it seems as though if copper prices remain reasonably, you wouldn’t need to draw down the revolver to fund any other major cash outflows through the year?

Richard C. Adkerson

That’s correct. And that was really the basic reason Justine that we did our equity offering. In other words that in effect funded this working capital requirement and at the time we said we did it. So that we would not have to use our, make a big draw under our revolver, because we won’t have that revolver available for what I think revolver should be for that’s unexpected events.

Justine Fisher – Goldman Sachs

Excellent. Thank you so much. I appreciate it.

Richard C. Adkerson

Okay.

Operator

Your next question comes from the line of Dave Katz with JPMorgan.

David Katz – JPMorgan

Could you talk a bit about your working capital expectations? Specifically you guys have indicated that you add $2 copper, you envision a $600 million working capital of use. By my calculations you had a $900 million use in the first quarter. So does that imply a $300 million source for the rest of the year and then I was hoping you could also talk about the growth in accounts receivable balances?

Richard C. Adkerson

Hey, Dave, you got it. I mean, you exactly right. We're expecting source of working capital to offset the use, part of the use in the first half of the year and just think about it at a time when we're producing additional volumes at Grasberg and so fourth. Your accounts receivable are going to grow, and that’s part of that, that’s consistent with this deferral we have for intercompany profit sales. So that’s just a function of what happens to you, when you’re producing additional volumes at an operations like Grasberg.

Kathleen L. Quirk

Both volumes and prices higher prices, during the quarter.

David Katz – JPMorgan

Okay. Thank you.

Operator

Your next question comes from the line of Sunil Gathader with Sentinel Asset Management.

Sunil Gathader – Sentinel Asset Management

Yeah, thanks. Richard you spoke about if the American continent, European and Japanese recover property then there might be a better copper price. But if that occurs probably do you need to raise your CapEx that you outlined for 2010, if the recovery happens sooner than expected with your CapEx around $1 billion. Do you need to raise that?

Richard C. Adkerson

[Sentinel], we don’t need to raise it. I mean, because we are doing certain things with our capital expenditures right now, we are maintaining our business, we are not letting our business deteriorate because we’re not having to defer necessary maintenance capital, and we are working to complete Tenke, we are working to continue the underground development at Grasberg and we have in our plans that I've talked about earlier the [Suffelox] project at El Abra. So there is no requirements that if that happen to do it. But we will be evaluating the marketplace to see if, if investing additional capital gives us a really strong returns. And that will be the analysis that will go through, but there is no, there is nothing out there of some kind of hidden capital requirement that pops up if prices rise.

Sunil Gathader – Sentinel Asset Management

Okay. So that raises another question basically. If that’s the case the focus that you have shown free cash flow or cash flow thing, even if the copper goes back to $1.50 you still will be free cash flow positive in 2009. And if copper goes up to $2 bucks you would be strongly free cash flow positive in 2010, with the CapEx that you outlined. So does that mean that if your [project] remains debt payment, you can start resuming your, or you can resume your dividend payments to common stock holders?

Richard C. Adkerson

Well, that will be something that our Board will review ongoing on a basis as we go forward, and that will depend on the market outlook. I would tell you, we are going to be committed to protecting liquidity in this time of economic uncertainty, and our industry is benefiting by Chinese activity, but there is still a great deal of economic uncertainty in the world, and we're going to be prudent about maintaining liquidity in light of that. So we couldn’t be more positive about what we're going to see in the future.

Sunil Gathader – Sentinel Asset Management

Okay.

Richard C. Adkerson

The inventories are low, the industry's having a tough time producing copper and you can read current news were accounts about that, and the world's going to need copper, and we’ve got the assets and the resources to produce it, but we're going to be, continue to be prudent about managing our operations in this time of uncertainty, because we feel so good about where we going to be at some point in the future.

Sunil Gathader – Sentinel Asset Management

Okay. Just a last question on the debt levels, you currently have about $7.2 billion, where do you want to reduce to by the year-end?

Richard C. Adkerson

Well, we are comfortable where our debt level is right now. So any decisions we make to retire debt before, its scheduled maturity will depend on the cash flow that we have available and the decisions about how we use that cash flow. But we are very comfortable with our current level of debt.

Sunil Gathader – Sentinel Asset Management

Okay, great. Thank you.

Richard C. Adkerson

Thank you.

Operator

Your final question comes from the line of [Ross Carton] with [Polygon].

Ross Carton – Polygon

Hi guys. Just on Tenke. Do you get the 100% writing down allowances for tax?

Richard C. Adkerson

So, we get what now? I couldn’t hear you.

Ross Carton – Polygon

Sorry. Are you able to write-off CapEx, 100% against taxable profit?

Richard C. Adkerson

No, no…

Ross Carton – Polygon

In other words do you?

Richard C. Adkerson

Not there…

Ross Carton – Polygon

Okay.

Richard C. Adkerson

There is…

Ross Carton – Polygon

How do that work?

Richard C. Adkerson

There is depreciation, within the tax code for the DRC like with other countries. There is depreciation schedules that are defined by the tax code, which is reflected in our contract. So, it's not a 100% write-off, but it is an accelerated depreciation method that's an accounting base determination of income, which is not unlike that of situation in the U.S. or other countries.

Ross Carton – Polygon

Okay, is any guidance you can give me for example, this is over four-year period or how accelerate is it?

Richard C. Adkerson

I will tell you, lets followup with that. Its kind of a typical deal and I've seen analysis on it, but I don’t want to just comment off the top of my head is to how it works, but its for the group as a whole, this is kind of a standard tax depreciation methodology that’s typical for what we see in the U.S. and Indonesia and South America.

Ross Carton – Polygon

Okay.

Richard C. Adkerson

And Ross, give us call and we'll followup with you.

Ross Carton – Polygon

Okay, will do. Second question, again relating to Tenke on the power, early you said that it’s that you have it available, it's not a constrained. I just wanted to ask you, lets say tomorrow you decided that you're going to do 20,000 tons of copper. Would the power be available or is there more work to be done both by yourself and other parties. And then so, who would be the other party there involved in the power project?

Richard C. Adkerson

Well, the power is available. The question is the extended reliability and that’s why we've entered into this arrangement with the government entity called SNELL, which is the Congolese power authority, and under that arrangement we are investing in the restoration of hydropower facilities that will improve the availability and reliability of power over the long run and that’s in progress now. We are doing this in the form of a loan that will get repaid based on our uses of power overtime. But there is a great source of hydropower in the country and that will be an advantage because of that in terms of its availability and its costs, it will be low cost power for us.

Ross Carton – Polygon

Okay and then are there other parties other than SNELL and yourselves involved in that project? Are you relying on other people to put up the cash as well?

Richard C. Adkerson

Not, not, no, not for this project.

Ross Carton – Polygon

Okay.

Richard C. Adkerson

There other two were also have, had plans to make investments in other facilities and some of those have been deferred and so fourth, but our project is a Tenke Fungurume mining project and its going forward.

Ross Carton – Polygon

Okay. Just third question again on Tenke. If Lundin Mining do not have the cash versus financing available to fund, let's say second stage expansion. Would you provide them with a free carry and then once that's paid off then they would start receiving the dividend, is that how it work?

Richard C. Adkerson

No, we have, there is no obligation for us to provide any free carry to our partner there. Dave indicated an ability to fund their cost going forward, and if they were unable to do that our joint venture arrangement covers, how we would handle that. But we have no obligation to provide a free carry for our partner, Lundin, who I will say has been a good partner for us in our project.

Ross Carton – Polygon

Right. Okay. And then just one last question on, again on Tenke, I was looking at the feasibility that you put out in March. And it looks like when you look at the ton that you’re mining, so the tons of ore versus what you're sending to the mill, there's a big difference there. And it looks like when you look at the grade that you’re sending to the mill, the head grade that you’re mining. Obviously, you’re screening what you send to the mill, but would it not be more cost effective to be more selective in the mining, rather than [the feed] that you send to the mill, because there is a huge amount of material that you’re stockpiling?

Richard C. Adkerson

No, Ross, we didn’t put out any feasibility study in March.

Ross Carton – Polygon

I am sorry. It was the lending…

Richard C. Adkerson

Yeah.

Ross Carton – Polygon

The one on the lending side.

Richard C. Adkerson

Right. So we didn’t put it out. We are managing the project to give us the grade of ore to make this initial project feasible and attractive as in mining operations it’s typical we also have to mine some ore that we then our stockpiling that’s lower grade and then we'll be developing longer-term plans about how to deal with that ore in the processing, but it’s this is all in accordance with our long-term life of mine plant.

Ross Carton – Polygon

Right. Okay, all right. Thanks guys.

Richard C. Adkerson

Yeah, thanks a lot. Everyone we really appreciate your participation on the call I know we had a lot of questions, but if you have others, we are available to respond to them.

James R. Moffett

Richard let me just make on final comment. We didn’t talk a lot about, but if questions had come up. We had a slide that showed that we've reduced our exploration expenditures significantly to $75 million. I want to remind everybody that we made a policy decision after the acquisition of Phelps Dodge that we go in and spend almost $300 million of drilling drill holes that went outside the traditional areas that had been drilled by Phelps Dodge. I just wanted to report to you that we continue to even with the expenditures for actual drilling operations cut substantially to get to the $75 million level all the data that we picked up during the $300 million expenditure to try to better understanding what kind of ore we have that it was outside the existing ore body that (Inaudible) by Phelps Dodge. On a daily basis, our whole group is focusing on analyzing the information that we acquired over that 18 month period when we were drilling unprecedented amounts of wells. And we continue to see ore grades continue below the bottom of the pits that were existing in an areas adjacent to it, even the bridges between the existing pits and so you can, you will be happy to know that there is a substantial amount of ore its going to be brought into proven categories over the years as a result of the intense drilling program that we did. So, exploration is alive and breathing, the amount of money we’re spending has no impact on the potential of adding new ore in 2009, 2010, and 2011. We continue that in a very energetic way.

Richard C. Adkerson

All right. Thanks Jim-Bob and that’s the future of our company and one that we’re all just tremendously excited about. We saw when we were doing initial due diligence on Phelps Dodge and then after we got into this that it was a great opportunity to make an attractive purchase based on what was known at the time, but this ability to add values that are not reflected today in our stock price and for our shareholders to have the opportunity to capture all these values in the future is what we are really focused on and it's a lot more accretive than going out and trying to acquire any kind of existing operations. So, it's really exciting for our future.

Once again, thanks, thanks to everybody and we will look forward to speaking with you about our year as it progresses.

Operator

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

Copyright policy: All transcripts on this site are the copyright of Seeking Alpha. However, we view them as an important resource for bloggers and journalists, and are excited to contribute to the democratization of financial information on the Internet. (Until now investors have had to pay thousands of dollars in subscription fees for transcripts.) So our reproduction policy is as follows: You may quote up to 400 words of any transcript on the condition that you attribute the transcript to Seeking Alpha and either link to the original transcript or to www.SeekingAlpha.com. All other use is prohibited.

THE INFORMATION CONTAINED HERE IS A TEXTUAL REPRESENTATION OF THE APPLICABLE COMPANY'S CONFERENCE CALL, CONFERENCE PRESENTATION OR OTHER AUDIO PRESENTATION, AND WHILE EFFORTS ARE MADE TO PROVIDE AN ACCURATE TRANSCRIPTION, THERE MAY BE MATERIAL ERRORS, OMISSIONS, OR INACCURACIES IN THE REPORTING OF THE SUBSTANCE OF THE AUDIO PRESENTATIONS. IN NO WAY DOES SEEKING ALPHA ASSUME ANY RESPONSIBILITY FOR ANY INVESTMENT OR OTHER DECISIONS MADE BASED UPON THE INFORMATION PROVIDED ON THIS WEB SITE OR IN ANY TRANSCRIPT. USERS ARE ADVISED TO REVIEW THE APPLICABLE COMPANY'S AUDIO PRESENTATION ITSELF AND THE APPLICABLE COMPANY'S SEC FILINGS BEFORE MAKING ANY INVESTMENT OR OTHER DECISIONS.

If you have any additional questions about our online transcripts, please contact us at: transcripts@seekingalpha.com. Thank you!

Source: Freeport-McMoran Copper & Gold Inc. Q1 2009 Earnings Call Transcript
This Transcript
All Transcripts