Edgar Filing: FREEPORT MCMORAN COPPER & GOLD INC

fcx1q11_10q.htm

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q

(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2011
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from		To
Commission File Number: 001-11307-01



Freeport-McMoRan Copper & Gold Inc.
(Exact name of registrant as specified in its charter)

Delaware	74-2480931
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

333 North Central Avenue
Phoenix, AZ	85004-2189
(Address of principal executive offices)	(Zip Code)

(602) 366-8100
(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

R Yes o No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). R Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer R Accelerated filer o Non-accelerated filer o Smaller reporting company o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ÿo Yes R No

On April 29, 2011, there were issued and outstanding 947,315,321 shares of the registrant’s common stock, par value $0.10 per share.

FREEPORT-McMoRan COPPER & GOLD INC.

TABLE OF CONTENTS


	Page

Part I. Financial Information	3

Item 1. Financial Statements:

Condensed Consolidated Balance Sheets (Unaudited)	3

Consolidated Statements of Income (Unaudited)	4

Consolidated Statements of Cash Flows (Unaudited)	5

Consolidated Statement of Equity (Unaudited)	6

Notes to Consolidated Financial Statements (Unaudited)	7

Report of Independent Registered Public Accounting Firm	17

Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations	18

Item 3. Quantitative and Qualitative Disclosures About Market Risk	52

Item 4. Controls and Procedures	52

Part II. Other Information	53

Item 1. Legal Proceedings	53

Item 1A. Risk Factors	53

Item 4. Mine Safety Disclosure	53

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	53

Item 6. Exhibits	53

Signature	54

Exhibit Index	E-1

Table of Contents

FREEPORT-McMoRan COPPER & GOLD INC.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements.

FREEPORT-McMoRan COPPER & GOLD INC.

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

	March 31,			December 31,
	2011			2010
	(In millions)
ASSETS
Current assets:
Cash and cash equivalents	$	4,090		$	3,738
Restricted cash for early extinguishment of debt		1,168			-
Trade accounts receivable		1,588			2,132
Other accounts receivable		311			293
Inventories:
Product		1,450			1,409
Materials and supplies, net		1,199			1,169
Mill and leach stockpiles		1,060			856
Other current assets		280			254
Total current assets		11,146			9,851
Property, plant, equipment and development costs, net		17,076			16,785
Long-term mill and leach stockpiles		1,402			1,425
Intangible assets, net		325			328
Other assets		1,059			997
Total assets	$	31,008		$	29,386

LIABILITIES AND EQUITY
Current liabilities:
Accounts payable and accrued liabilities	$	2,318		$	2,441
Current portion of debt		1,170			95
Accrued income taxes		806			648
Dividends payable		239			240
Current portion of reclamation and environmental obligations		201			207
Rio Tinto share of joint venture cash flows		17			132
Total current liabilities		4,751			3,763
Long-term debt, less current portion		3,582			4,660
Deferred income taxes		3,056			2,873
Reclamation and environmental obligations, less current portion		2,065			2,071
Other liabilities		1,463			1,459
Total liabilities		14,917			14,826
Equity:
FCX stockholders’ equity:
Common stock		107			107
Capital in excess of par value		18,893			18,751
Accumulated deficit		(1,328	)		(2,590	)
Accumulated other comprehensive loss		(318	)		(323	)
Common stock held in treasury		(3,553	)		(3,441	)
Total FCX stockholders’ equity		13,801			12,504
Noncontrolling interests		2,290			2,056
Total equity		16,091			14,560
Total liabilities and equity	$	31,008		$	29,386

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

FREEPORT-McMoRan COPPER & GOLD INC.

CONSOLIDATED STATEMENTS OF INCOME (Unaudited)


	Three Months Ended
	March 31,
	2011			2010
	(In millions, except
	per share amounts)

Revenues	$	5,709		$	4,363
Cost of sales:
Production and delivery		2,377			1,918
Depreciation, depletion and amortization		232			271
Total cost of sales		2,609			2,189
Selling, general and administrative expenses		114			95
Exploration and research expenses		50			31
Total costs and expenses		2,773			2,315
Operating income		2,936			2,048
Interest expense, net		(98	)		(145	)
Losses on early extinguishment of debt		(7	)		(27	)
Other income, net		10			12
Income before income taxes and equity in
affiliated companies’ net earnings		2,841			1,888
Provision for income taxes		(984	)		(678	)
Equity in affiliated companies’ net earnings		4			5
Net income		1,861			1,215
Net income attributable to noncontrolling interests		(362	)		(270	)
Preferred dividends		-			(48	)
Net income attributable to FCX common
stockholders	$	1,499		$	897

Net income per share attributable to
FCX common stockholders:
Basic	$	1.58		$	1.04
Diluted	$	1.57		$	1.00

Weighted-average common shares outstanding:
Basic		946			861
Diluted		955			947

Dividends declared per share of common stock	$	0.25		$	0.075

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

FREEPORT-McMoRan COPPER & GOLD INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

	Three Months Ended
	March 31,
	2011			2010
	(In millions)

Cash flow from operating activities:
Net income	$	1,861		$	1,215
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation, depletion and amortization		232			271
Stock-based compensation		43			47
Charges for reclamation and environmental obligations, including accretion		38			39
Payments of reclamation and environmental obligations		(52	)		(68	)
Losses on early extinguishment of debt		7			27
Deferred income taxes		127			7
Other, net		(11	)		-
(Increases) decreases in working capital:
Accounts receivable		511			33
Inventories		(253	)		(113	)
Other current assets		(18	)		(2	)
Accounts payable and accrued liabilities		(264	)		(17	)
Accrued income and other taxes		138			379
Net cash provided by operating activities		2,359			1,818

Cash flow from investing activities:
Capital expenditures:
North America copper mines		(119	)		(19	)
South America		(140	)		(48	)
Indonesia		(125	)		(98	)
Africa		(11	)		(39	)
Molybdenum		(71	)		(7	)
Other		(39	)		(20	)
Other, net		-			2
Net cash used in investing activities		(505	)		(229	)

Cash flow from financing activities:
Proceeds from debt		9			21
Repayments of debt		(13	)		(326	)
Restricted cash for early extinguishment of debt		(1,124	)		-
Cash dividends and distributions paid:
Common stock		(238	)		(66	)
Preferred stock		-			(49	)
Noncontrolling interests		(133	)		(75	)
Contributions from noncontrolling interests		5			8
Net payments for stock-based awards		(20	)		(10	)
Excess tax benefit from stock-based awards		21			4
Other, net		(9	)		-
Net cash used in financing activities		(1,502	)		(493	)

Net increase in cash and cash equivalents		352			1,096
Cash and cash equivalents at beginning of year		3,738			2,656
Cash and cash equivalents at end of period	$	4,090		$	3,752

The accompanying notes are an integral part of these consolidated financial statements.

Table of Contents

FREEPORT-McMoRan COPPER & GOLD INC.

CONSOLIDATED STATEMENT OF EQUITY (Unaudited)

	FCX Stockholders’ Equity
										Accumu-
										lated			Common Stock
	Common Stock									Other			Held in Treasury					Total FCX
	Number				Capital in		Accumu-			Compre-			Number					Stock-			Non-
	of		At Par		Excess of		lated			hensive			of		At			holders’			controlling			Total
	Shares		Value		Par Value		Deficit			Loss			Shares		Cost			Equity			Interests			Equity

	(In millions)
Balance at December 31, 2010		1,067	$	107	$	18,751	$	(2,590	)	$	(323	)		122	$	(3,441	)	$	12,504		$	2,056		$	14,560
Exercised and issued stock-based
awards		3		-		24		-			-			-		-			24			-			24
Stock-based compensation		-		-		45		-			-			-		-			45			-			45
Tax benefit for stock-based awards		-		-		6		-			-			-		-			6			-			6
Tender of shares for stock-based
awards		-		-		67		-			-			1		(112	)		(45	)		-			(45	)
Dividends on common stock		-		-		-		(237	)		-			-		-			(237	)		-			(237	)
Dividends and distributions to
noncontrolling interests		-		-		-		-			-			-		-			-			(133	)		(133	)
Contributions from noncontrolling
interests		-		-		-		-			-			-		-			-			5			5
Comprehensive income:
Net income		-		-		-		1,499			-			-		-			1,499			362			1,861
Other comprehensive income,
net of taxes:
Unrealized gains on securities		-		-		-		-			1			-		-			1			-			1
Translation adjustment		-		-		-		-			1			-		-			1			-			1
Defined benefit plans:
Amortization of unrecognized
amounts		-		-		-		-			3			-		-			3			-			3
Other comprehensive income		-		-		-		-			5			-		-			5			-			5
Total comprehensive income		-		-		-		-			-			-		-			1,504			362			1,866
Balance at March 31, 2011		1,070	$	107	$	18,893	$	(1,328	)	$	(318	)		123	$	(3,553	)	$	13,801		$	2,290		$	16,091

The accompanying notes are an integral part of these consolidated financial statements

Table of Contents

FREEPORT-McMoRan COPPER & GOLD INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1.	GENERAL INFORMATION

The accompanying unaudited consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and do not include all information and disclosures required by generally accepted accounting principles (GAAP) in the United States (U.S.). Therefore, this information should be read in conjunction with Freeport-McMoRan Copper & Gold Inc.’s (FCX) consolidated financial statements and notes contained in its 2010 Annual Report on Form 10-K. The information furnished herein reflects all adjustments that are, in the opinion of management, necessary for a fair statement of the results for the interim periods reported. All such adjustments are, in the opinion of management, of a normal recurring nature. Operating results for the three-month period ended March 31, 2011, are not necessarily indicative of the results that may be expected for the year ending December 31, 2011.

In December 2010, FCX’s Board of Directors declared a two-for-one split of its common stock in the form of a stock dividend on issued and outstanding shares, with the additional shares issued on February 1, 2011, to common shareholders of record at the close of business on January 15, 2011. All references to shares of common stock and per share amounts have been retroactively adjusted to reflect the two-for-one stock split.

2.	EARNINGS PER SHARE

FCX’s basic net income per share of common stock was calculated by dividing net income attributable to common stock by the weighted-average shares of common stock outstanding during the period. Following is a reconciliation of net income and weighted-average shares of common stock outstanding for purposes of calculating diluted net income per share (in millions, except per share amounts):

	Three Months Ended
	March 31,
	2011			2010
Net income	$	1,861		$	1,215
Net income attributable to noncontrolling interests		(362	)		(270	)
Preferred dividends		-			(48	)
Net income attributable to FCX common stockholders		1,499			897
Plus income impact of assumed conversion of
6¾% Mandatory Convertible Preferred Stocka		-			48
Diluted net income attributable to FCX common
stockholders	$	1,499		$	945

Weighted-average shares of common stock outstanding		946			861
Add stock issuable upon conversion, exercise or
vesting of:
6¾% Mandatory Convertible Preferred Stocka		-			78
Dilutive stock options		8	b		6	b
Restricted stock		1			2
Weighted-average shares of common stock outstanding
for purposes of calculating diluted net income per share		955			947

Diluted net income per share attributable to
FCX common stockholders	$	1.57		$	1.00

a.	All outstanding 6¾% Mandatory Convertible Preferred Stock automatically converted on May 1, 2010, into FCX common stock.

b.	Potential additional shares of common stock that were anti-dilutive totaled approximately two million for first-quarter 2011 and approximately five million for first-quarter 2010.

Outstanding stock options with exercise prices greater than the average market price of FCX’s common stock during the period are excluded from the computation of diluted net income per share of common stock. Excluded amounts were less than 1 million stock options with a weighted-average exercise price of $57.86 per option for first-quarter 2011 and approximately 3 million stock options with a weighted-average exercise price of $44.10 per option for first-quarter 2010.

Table of Contents

3.	PENSION AND POSTRETIREMENT BENEFITS

The components of net periodic benefit costs for pension and postretirement benefits follow (in millions):

	Three Months Ended
	March 31,
	2011			2010
Service cost	$	10		$	10
Interest cost		27			27
Expected return on plan assets		(24	)		(23	)
Amortization of net actuarial loss		6			5
Net periodic benefit costs	$	19		$	19

4.	INVENTORIES, INCLUDING LONG-TERM MILL AND LEACH STOCKPILES

The components of inventories follow (in millions):

	March 31,		December 31,
	2011		2010
Mining Operations:
Raw materials	$	1	$	1
Work-in-process		71		93
Finished goodsa		778		704
Atlantic Copper, S.A. (Atlantic Copper):
Raw materials (concentrates)		258		336
Work-in-process		324		266
Finished goods		18		9
Total product inventories		1,450		1,409
Total materials and supplies, netb		1,199		1,169
Total inventories, less current portion of mill and leach stockpiles	$	2,649	$	2,578

a.	Primarily includes molybdenum concentrates, and copper concentrates, anodes, cathodes and rod.

b.	Materials and supplies inventory is net of obsolescence reserves totaling $25 million at March 31, 2011, and $26 million at December 31, 2010.

A summary of mill and leach stockpiles follows (in millions):

	March 31,		December 31,
	2011		2010
Current:
Mill stockpiles	$	29	$	35
Leach stockpiles		1,031		821
Total current mill and leach stockpiles	$	1,060	$	856

Long-term:a
Mill stockpiles	$	482	$	470
Leach stockpiles		920		955
Total long-term mill and leach stockpiles	$	1,402	$	1,425

a.	Metals in stockpiles not expected to be recovered within the next 12 months.

Table of Contents

5.	INCOME TAXES

FCX’s first-quarter 2011 income tax provision resulted from taxes on international operations ($846 million) and U.S. operations ($138 million). FCX’s first-quarter 2010 income tax provision resulted from taxes on international operations ($597 million) and U.S. operations ($81 million). FCX’s consolidated effective income tax rate is a function of the combined effective tax rates for the jurisdictions in which it operates and totaled 35 percent for first-quarter 2011 and 36 percent for first-quarter 2010. Variations in the relative proportions of jurisdictional income result in fluctuations to FCX’s consolidated effective income tax rate.

6.	DEBT AND EQUITY TRANSACTIONS

FCX entered into a new senior unsecured revolving credit facility on March 30, 2011, which replaced the existing revolving credit facilities that were scheduled to mature on March 19, 2012. During the first quarter of 2011, FCX recognized a loss on early extinguishment of debt totaling $7 million ($6 million to net income attributable to FCX common shareholders or $0.01 per diluted share) associated with the revolving credit facilities that were replaced by the new senior unsecured revolving credit facility. This revolving credit facility is available until March 30, 2016, in an aggregate principal amount of $1.5 billion, with $500 million available to PT Freeport Indonesia. At March 31, 2011, FCX had no borrowings and $43 million of letters of credit issued under the revolving credit facility, resulting in availability of approximately $1.5 billion, of which $957 million could be used for additional letters of credit.

Interest on the revolving credit facility is generally based on the London Interbank Offered Rate (LIBOR) plus 2.00 percent, subject to an increase or decrease in the interest rate margin based on the credit ratings assigned by Standard & Poor’s Rating Services and Moody’s Investors Service to FCX’s senior unsecured debt.

The obligations of FCX and PT Freeport Indonesia under the revolving credit facility are not guaranteed by any subsidiaries and are unsecured; however, FCX may at any time designate any subsidiary (other than PT Freeport Indonesia) as a subsidiary guarantor. The revolving credit facility and FCX’s senior notes contain certain restrictive covenants that vary among the instruments, but include limitations on the incurrence of debt, liens and certain asset sales.

On February 24, 2011, FCX announced its intent to redeem the remaining $1.1 billion of its outstanding 8.25% Senior Notes due 2015. On March 30, 2011, FCX transferred funds totaling $1.2 billion to a restricted cash account to pay the holders of the 8.25% Senior Notes (principal and premium amounts together with accrued and unpaid interest). On April 1, 2011, holders of these senior notes received 104.125 percent of the principal amount together with accrued and unpaid interest. As a result of this redemption, FCX expects to record a loss on early extinguishment of debt totaling $56 million ($49 million to net income attributable to FCX common stockholders) in the second quarter of 2011.

Consolidated interest expense (before capitalization) totaled $123 million in first-quarter 2011 and $151 million in first-quarter 2010. Capitalized interest totaled $25 million in first-quarter 2011 and $6 million in first-quarter 2010.

On March 31, 2011, FCX declared a quarterly dividend of $0.25 per share, which was paid on May 1, 2011, to common shareholders of record at the close of business on April 15, 2011.

During the first quarter of 2010, FCX purchased in the open market $133 million of its 8.25% Senior Notes for $145 million and $136 million of its 8.375% Senior Notes for $148 million. These open-market purchases resulted in losses on early extinguishment of debt totaling $27 million ($23 million to net income attributable to FCX common shareholders or $0.02 per diluted share).

On May 1, 2010, the outstanding shares of FCX’s 6¾% Mandatory Convertible Preferred Stock were automatically converted into shares of FCX common stock (refer to Note 11 in FCX’s 2010 Annual Report on Form 10-K for further discussion).

Total comprehensive income attributable to FCX common stockholders totaled $1,504 million in first-quarter 2011 and $948 million in first-quarter 2010.

Table of Contents

7. FINANCIAL INSTRUMENTS

FCX does not purchase, hold or sell derivative financial instruments unless there are risks associated with an existing asset or obligation or if it anticipates a future activity that is likely to occur and will result in exposure to market risks and FCX intends to offset or mitigate such risks. FCX does not enter into any derivative financial instruments for speculative purposes, but has entered into derivative financial instruments in limited instances to achieve specific objectives. These objectives principally relate to managing risks associated with commodity price, foreign currency and interest rate risks. The fair values of FCX’s derivative financial instruments are based on widely published market prices.

Commodity Contracts. From time to time, FCX has entered into forward, futures and swap contracts to hedge the market risk associated with fluctuations in the prices of commodities it purchases and sells. Derivative financial instruments used by FCX to manage its risks do not contain credit risk-related contingent provisions. As of March 31, 2011, FCX had no price protection contracts relating to its mine production. A discussion of FCX’s derivative commodity contracts and programs follows.

Derivatives Designated as Hedging Instruments – Fair Value Hedges

Copper Futures and Swap Contracts. Some of FCX’s U.S. copper rod customers request a fixed market price instead of the New York Mercantile Exchange (COMEX) average copper price in the month of shipment. FCX hedges this price exposure in a manner that allows it to receive the COMEX average price in the month of shipment while the customers pay the fixed price they requested. FCX accomplishes this by entering into copper futures and swap contracts and then liquidating the copper futures contracts and settling the copper swap contracts during the month of shipment, which generally results in FCX receiving the COMEX average copper price in the month of shipment. Hedge gains or losses from these copper futures and swap contracts are recorded in revenues. FCX did not have any significant gains or losses during the three-month periods ended March 31, 2011 and 2010, resulting from hedge ineffectiveness. At March 31, 2011, FCX held copper futures and swap contracts that qualified for hedge accounting for 55 million pounds at an average price of $4.26 per pound, with maturities through December 2012.

A summary of gains (losses) recognized in revenues for derivative financial instruments related to commodity contracts that are designated and qualify as fair value hedge transactions, along with the unrealized gains (losses) on the related hedged item (firm sales commitments) follows (in millions):

	Three Months Ended March 31,
	2011			2010
Copper futures and swap contracts:
Unrealized gains (losses):
Derivative financial instruments	$	(15	)	$	2
Hedged Item		15			(2	)

Realized gains:
Matured derivative financial instruments		12			10

Derivatives Not Designated as Hedging Instruments

Embedded Derivatives. As described in Note 1 to FCX’s 2010 Annual Report on Form 10-K under “Revenue Recognition,” certain FCX copper concentrate, copper cathode and gold sales contracts provide for provisional pricing primarily based on London Metal Exchange (LME) or COMEX prices at the time of shipment as specified in the contract. Similarly, FCX purchases copper and molybdenum under contracts that provide for provisional pricing (molybdenum purchases are based on an average Metals Week Molybdenum Dealer Oxide price). FCX applies the normal purchases and normal sales scope exception in accordance with derivatives and hedge accounting guidance to the host sales agreements since the contracts do not allow for net settlement and always result in physical delivery. Sales and purchases with a provisional sales price contain an embedded derivative (i.e., the price settlement mechanism that is settled after the time of delivery) that is required to be bifurcated from the host contract. The host contract is the sale or purchase of the metals contained in the concentrates or cathodes at the then-current LME or COMEX price (copper), London Bullion Market Association price (gold) or the average Metals Week Molybdenum Dealer Oxide price (molybdenum) as defined in the contract. Mark-to-market price fluctuations recorded through the settlement date are reflected in revenues for sales contracts and in cost of sales as production and delivery costs for purchase contracts.

Table of Contents

A summary of FCX’s embedded derivatives at March 31, 2011, follows:

		Average Price
	Open	Per Unit				Maturities
	Positions	Contract		Market		Through
Embedded derivatives in provisional
sales contracts:
Copper (millions of pounds)	653	$	4.28	$	4.27	September 2011
Gold (thousands of ounces)	194		1,402		1,436	June 2011
Embedded derivatives in provisional
purchase contracts:
Copper (millions of pounds)	115		4.33		4.27	May 2011
Molybdenum (thousands of pounds)	24		15.04		14.69	April 2011

Copper Forward Contracts. Atlantic Copper, FCX’s wholly owned smelting and refining unit in Spain, enters into forward copper contracts designed to hedge its copper price risk whenever its physical purchases and sales pricing periods do not match. These economic hedge transactions are intended to hedge against changes in copper prices, with the mark-to-market hedging gains or losses recorded in cost of sales. At March 31, 2011, Atlantic Copper held net forward copper sales contracts for 7 million pounds at an average price of $4.35 per pound, with maturities through May 2011.

A summary of the realized and unrealized gains (losses) recognized in income before income taxes and equity in affiliated companies’ net earnings for commodity contracts that do not qualify as hedge transactions, including embedded derivatives, follows (in millions):

	Three Months Ended March 31,
	2011			2010
Embedded derivatives in provisional sales contractsa	$	(44	)	$	131
Embedded derivatives in provisional purchase contractsb		-			(2	)
Copper forward contractsb		-			1

a.	Amounts recorded in revenues.

b.	Amounts recorded in cost of sales as production and delivery costs.

Foreign Currency Exchange Contracts. As a global company, FCX transacts business in many countries and in many currencies. Foreign currency transactions at FCX’s international subsidiaries increase its risks because exchange rates can change between the time agreements are made and the time foreign currency transactions are settled. FCX may hedge or protect its international subsidiaries’ foreign currency transactions from time to time by entering into forward exchange contracts to lock in or minimize the effects of fluctuations in exchange rates. FCX had no outstanding foreign currency exchange contracts at March 31, 2011.

Interest Rate Swap Contracts. From time to time, FCX or its subsidiaries may enter into interest rate swaps to manage its exposure to interest rate changes and to achieve a desired proportion of fixed-rate versus floating-rate debt based on current and projected market conditions. FCX may enter into interest rate swap contracts to lock in an interest rate considered to be favorable in order to protect against its exposure to variability in future interest payments attributable to increases in interest rates of the designated floating-rate debt. In some situations, FCX may enter into fixed-to-floating interest rate swap contracts to protect against changes in the fair value of the underlying fixed-rate debt that result from market interest rate changes and to take advantage of lower interest rates. FCX had no outstanding interest rate swap contracts at March 31, 2011.

Table of Contents

Unsettled Derivative Financial Instruments

A summary of the fair values of unsettled derivative financial instruments recorded on the consolidated balance sheets follows (in millions):

	March 31,			December 31,
	2011			2010
Derivatives designated as hedging instruments
Commodity contracts:
Copper futures and swap contracts:a
Asset positionb	$	6		$	18
Liability positionc		(3	)		-

Derivatives not designated as hedging instruments
Commodity contracts:
Embedded derivatives in provisional sales/purchases contracts:d
Asset position	$	58		$	357
Liability position		(52	)		(115	)
Copper forward contracts:
Asset positionb		1			-
Liability positionc		-			(10	)

FCX had paid $7 million at March 31, 2011, and $3 million at December 31, 2010, for margin requirements (recorded in other current assets). In addition, FCX had received $8 million from a broker associated with margin requirements (recorded in accounts payable and accrued liabilities) at December 31, 2010.

b.	Amounts recorded in other current assets.

c.	Amounts recorded in accounts payable and accrued liabilities.

d.	Amounts recorded either as a net accounts receivable or a net accounts payable.

Credit Risk. FCX is exposed to credit loss when financial institutions with which FCX has entered into derivative transactions (commodity, foreign exchange and interest rate swaps) are unable to pay. To minimize the risk of such losses, FCX uses highly rated financial institutions that meet certain requirements. FCX also periodically reviews the creditworthiness of these institutions to ensure that they are maintaining their credit ratings. FCX does not anticipate that any of the financial institutions it deals with will default on their obligations. As of March 31, 2011, FCX did not have any significant credit exposure associated with derivative transactions.

Other Financial Instruments. Other financial instruments include cash and cash equivalents, restricted cash for early extinguishment of debt, accounts receivable, trust assets, available-for-sale securities, accounts payable and accrued liabilities, dividends payable, Rio Tinto share of joint venture cash flows and long-term debt. Refer to Note 8 for the fair values of these financial instruments.

Cash and Cash Equivalents, Restricted Cash for Early Extinguishment of Debt, Accounts Receivable, Accounts Payable and Accrued Liabilities, Dividends Payable and Rio Tinto Share of Joint Venture Cash Flows. The financial statement amount is a reasonable estimate of the fair value because of the short maturity of these instruments and generally negligible credit losses.

Trust Assets and Available-for-Sale Securities. The financial statement amount represents the fair value of trust assets and available-for-sale securities.

Long-Term Debt. The financial statement amount represents cost except for long-term debt acquired in the Phelps Dodge Corporation (Phelps Dodge) acquisition, which was recorded at fair value at the acquisition date.

8.	FAIR VALUE MEASUREMENT

Fair value accounting guidance includes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 inputs) and the lowest priority to unobservable inputs (Level 3 inputs). FCX did not have any significant transfers in or out of Levels 1, 2, or 3 for first-quarter 2011.

Table of Contents

A summary of FCX’s financial assets and liabilities measured at fair value on a recurring basis follows (in millions):

	Fair Value at March 31, 2011
	Total			Level 1			Level 2		Level 3
Assets
Cash equivalents:
Money market funds	$	3,793		$	3,793		$	-	$	-
Time deposits		208			208			-		-
Total cash equivalents		4,001			4,001			-		-

Restricted cash for early extinguishment of debt:
U.S. government treasury funds		1,168			1,168			-		-

Trust assets (current and long-term):
U.S. core fixed income funds		43			-			43		-
Government mortgage-backed securities		40			-			40		-
Corporate bonds		22			-			22		-
Asset-backed securities		19			-			19		-
Money market funds		12			12			-		-
Government bonds and notes		11			-			11		-
Municipal bonds		1			-			1		-
Total trust assets		148			12			136		-

Available-for-sale securities:
Time deposits		23			23			-		-
Equity securities		10			10			-		-
Money market funds		4			4			-		-
Total available-for-sale securities		37			37			-		-

Derivatives:
Embedded derivatives in provisional sales/purchases		58			58			-		-
Copper futures and swap contracts		6			6			-		-
Copper forward contracts		1			1			-		-
Total derivatives		65			65			-		-

Total assets	$	5,419		$	5,283		$	136	$	-

Liabilities
Derivatives:
Embedded derivatives in provisional sales/purchases	$	(52	)	$	(52	)	$	-	$	-
Copper futures and swap contracts		(3	)		(3	)		-		-
Total derivative liabilities	$	(55	)	$	(55	)	$	-	$	-

Valuation Techniques

Money market funds, time deposits and U.S. government treasury funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets.

Fixed income securities (government and agency securities, corporate bonds, asset-backed securities and U.S. core fixed income funds) are valued using a bid evaluation or a mid evaluation. A bid evaluation is an estimated price at which a dealer would pay for a security. A mid evaluation is the average of the estimated price at which a dealer would sell a security and the estimated price at which a dealer would pay for a security. These evaluations are based on quoted prices, if available, or models that use observable inputs and, as such, are classified within Level 2 of the fair value hierarchy.

Equity securities are valued at the closing price reported on the active market on which the individual securities are traded and as such are classified within Level 1 of the fair value hierarchy.

FCX’s embedded derivatives on provisional copper concentrate, copper cathode and gold purchases and sales are valued using quoted market prices based on the forward LME or COMEX prices (copper) and the London Bullion Market Association price (gold) and, as such, are classified within Level 1 of the fair value hierarchy. FCX’s embedded derivatives on provisional molybdenum purchases are valued based on the latest average weekly

Table of Contents

Metals Week Molybdenum Dealer Oxide prices and, as such, are classified within Level 1 of the fair value hierarchy.

FCX’s derivative financial instruments for copper futures and swap contracts and forward contracts are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices in active markets (refer to Note 7 for further discussion).

The techniques described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while FCX believes its valuation techniques are appropriate and consistent with other market participants, the use of different techniques or assumptions to determine fair value of certain financial instruments could result in a different fair value measured at the reporting date. There have been no changes in the techniques used at March 31, 2011.

The carrying value for certain FCX financial instruments (i.e., accounts receivable, accounts payable and accrued liabilities, dividends payable, and Rio Tinto’s share of joint venture cash flows) approximate fair value and, therefore, have been excluded from the table below. A summary of the carrying amount and fair value of FCX’s other financial instruments follows (in millions):

	At March 31, 2011						At December 31, 2010
	Carrying			Fair			Carrying			Fair
	Amount			Value			Amount			Value
Cash and cash equivalentsa	$	4,090		$	4,090		$	3,738		$	3,738
Restricted cash for early extinguishment of debta		1,168			1,168			-			-
McMoRan Exploration Co. investmentb		496			658			500			623
Net embedded derivatives included in accounts
receivable or payablea		6			6			242			242
Trust assets (current and long-term)a, c		148			148			148			148
Available-for-sale securities (current and
long-term)a, c		37			37			34			34
Derivative assetsa, d		7			7			18			18
Derivatives included in accounts payable and
accrued liabilitiesa		(3	)		(3	)		(10	)		(10	)
Long-term debt (including amounts due
within one year)e		(4,752	)		(5,114	)		(4,755	)		(5,146	)

a.	Recorded at fair value.

b.	Recorded at cost and included in other assets. Fair value is based on a bid evaluation, which is an estimated price at which a dealer would pay for a security.

c.	Current portion included in other current assets and long-term portion included in other assets.

d.	Included in other current assets.

e.	Recorded at cost except for long-term debt acquired in the Phelps Dodge acquisition, which was recorded at fair value at the acquisition date. Fair value of substantially all of FCX’s long-term debt is estimated based on quoted market prices.

9.	NEW ACCOUNTING STANDARD

Fair Value Measurements and Disclosures (Topic 820), Improving Disclosures about Fair Value Measurements. In January 2010, the Financial Accounting Standards Board issued accounting guidance intended to improve disclosures related to fair value measurements. This guidance requires significant transfers in and out of Level 1 and Level 2 fair value measurements to be disclosed separately along with the reasons for the transfers. Additionally, in the reconciliation for the fair value measurements using significant unobservable inputs (Level 3), separate information about purchases, sales, issuances and settlements must be presented (cannot net as one number). This guidance also provides clarification for existing disclosures on (i) level of disaggregation and (ii) inputs and valuation techniques. In addition, this guidance includes conforming amendments for employers’ disclosure of postretirement benefit plan assets. This guidance is effective for interim and annual reporting periods beginning after December 15, 2009, except for the disclosures about purchases, sales, issuances and settlements in the rollforward of activity in Level 3 fair value measurements. Those disclosures are required for fiscal years beginning after December 15, 2010, and for interim periods within those fiscal years.

Table of Contents

10.	SUBSEQUENT EVENTS

In October 2010, the government of the DRC announced the conclusion of the review of Tenke Fungurume Mining S.A.R.L.’s (TFM) contracts, and confirmed that TFM’s existing mining contracts are in good standing and acknowledged the rights and benefits granted under those contracts. In connection with the review, TFM made several commitments that have been reflected in amendments to its mining contracts, which were signed by the parties in December 2010. In March 2011, the amendments were approved by a ministerial council, and a Presidential Decree signed by the President and Prime Minister of the DRC was issued in April 2011. After giving effect to the modifications that will be made to TFM’s bylaws to reflect the agreement of the parties, FCX’s effective ownership percentage in the project will be 56.0 percent prospectively, compared to its current ownership interest of 57.75 percent.

On April 20, 2011, FCX’s Board of Directors declared a supplemental common stock dividend of $0.50 per share to be paid on June 1, 2011, to common shareholders of record at the close of business on May 15, 2011.

FCX evaluated events after March 31, 2011, and through the date the consolidated financial statements were issued, and determined any events or transactions occurring during this period that would require recognition or disclosure are appropriately addressed in these consolidated financial statements.

11.	BUSINESS SEGMENTS

FCX has organized its operations into five primary divisions – North America copper mines, South America mining, Indonesia mining, Africa mining and Molybdenum operations. Notwithstanding this structure, FCX internally reports information on a mine-by-mine basis. Therefore, FCX concluded that its operating segments include individual mines. Operating segments that meet certain thresholds are reportable segments.

Intersegment Sales. Intersegment sales between FCX’s operations are based on similar arms-length transactions with third parties at the time of the sale. Intersegment sales may not be reflective of the actual prices ultimately realized because of a variety of factors, including additional processing, timing of sales to unaffiliated customers and transportation premiums.

Allocations. FCX allocates certain operating costs, expenses and capital expenditures to the operating divisions and individual segments. However, not all costs and expenses applicable to a mine or operation are allocated. All U.S. federal and state income taxes are recorded and managed at the corporate level, whereas foreign income taxes are recorded and managed at the applicable country. In addition, most exploration and research activities are managed at the corporate level, and those costs along with some selling, general and administrative costs are not allocated to the operating divisions or segments. Accordingly, the following segment information reflects management determinations that may not be indicative of what the actual financial performance of each operating division or segment would be if it was an independent entity.

Table of Contents

Business Segments

(In Millions)		North America Copper Mines						South America						Indonesia			Africa
																							Atlantic			Corporate,
																							Copper			Other &
				Other				Cerro		Other									Molyb-		Rod &		Smelting			Elimi-			FCX
		Morenci		Mines		Total		Verde		Mines		Total		Grasberg			Tenke		denum		Refining		& Refining			nations			Total
Three Months Ended March 31, 2011
Revenues:
Unaffiliated customers		$	136	$	16	$	152	$	668	$	595	$	1,263	$	1,372	a	$	309	$	374	$	1,481	$	756		$	2		$	5,709
Intersegment			386		810		1,196		60		79		139		358			-		-		6		6			(1,705	)		-
Production and delivery			210		365		575		175		236		411		526			124		240		1,481		763			(1,743	)		2,377
Depreciation, depletion and amortization			28		30		58		34		23		57		57			28		14		2		10			6			232
Selling, general and administrative expenses			-		1		1		1		1		2		43			2		4		-		8			54			114
Exploration and research expenses			-		-		-		-		-		-		-			-		1		-		-			49			50
Operating income (loss)			284		430		714		518		414		932		1,104			155		115		4		(19	)		(69	)		2,936

Interest expense, net			1		1		2		-		-		-		1			2		-		-		4			89			98
Provision for income taxes			-		-		-		163		143		306		507			40		-		-		-			131			984
Total assets at March 31, 2011			1,991		4,623		6,614		4,573		3,427		8,000		5,440			3,630		2,068		384		1,437			3,435			31,008
Capital expenditures			29		90		119		24		116		140		125			11		71		3		8			28			505


Three Months Ended March 31, 2010
Revenues:
Unaffiliated customers		$	9	$	15	$	24	$	458	$	497	$	955	$	1,161	a	$	249	$	275	$	1,066	$	633		$	-		$	4,363
Intersegment			356		674		1,030		83		31		114		298			-		-		7		-			(1,449	)		-
Production and delivery			146		318		464		171		205		376		475			110		185		1,067		628			(1,387	)		1,918
Depreciation, depletion and amortization			42		40		82		34		27		61		63			30		13		2		10			10			271
Selling, general and administrative expenses			-		-		-		-		-		-		29			-		3		-		6			57			95
Exploration and research expenses			-		-		-		-		-		-		-			-		1		-		-			30			31
Operating income (loss)			177		331		508		336		296		632		892			109		73		4		(11	)		(159	)		2,048

Interest expense, net			2		3		5		-		-		-		-			2		-		-		2			136			145
Provision for income taxes			-		-		-		105		92		197		393			25		-		-		-			63			678
Total assets at March 31, 2010			1,897		4,194		6,091		4,294		2,803		7,097		4,896			3,431		1,745		347		1,207			2,299			27,113
Capital expenditures			3		16		19		12		36		48		98			39		7		1		9			10			231


a.	Includes PT Freeport Indonesia’s sales to PT Smelting totaling $680 million in the first three months of 2011 and $486 million in the first three months of 2010.

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

TO THE BOARD OF DIRECTORS AND STOCKHOLDERS OF

FREEPORT-McMoRan COPPER & GOLD INC.

We have reviewed the condensed consolidated balance sheet of Freeport-McMoRan Copper & Gold Inc. as of March 31, 2011, and the related consolidated statements of income and cash flows for the three-month periods ended March 31, 2011 and 2010, and the consolidated statement of equity for the three-month period ended March 31, 2011. These financial statements are the responsibility of the Company’s management.

We conducted our review in accordance with the standards of the Public Company Accounting Oversight Board (United States). A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the Public Company Accounting Oversight Board, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

Based on our review, we are not aware of any material modifications that should be made to the condensed consolidated financial statements referred to above for them to be in conformity with U.S. generally accepted accounting principles.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Freeport-McMoRan Copper & Gold Inc. as of December 31, 2010, and the related consolidated statements of operations, cash flows, and equity for the year then ended (not presented herein), and in our report dated February 25, 2011, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of December 31, 2010, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

ERNST & YOUNG LLP

Phoenix, Arizona

May 6, 2011

Table of Contents

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations.

OVERVIEW

In Management’s Discussion and Analysis of Financial Condition and Results of Operations, “we,” “us” and “our” refer to Freeport-McMoRan Copper & Gold Inc. (FCX) and its consolidated subsidiaries. You should read this discussion in conjunction with our financial statements, the related Management’s Discussion and Analysis of Financial Condition and Results of Operations and the discussion of our Business and Properties in our Annual Report on Form 10-K for the year ended December 31, 2010, filed with the United States (U.S.) Securities and Exchange Commission (SEC). The results of operations reported and summarized below are not necessarily indicative of future operating results. References to “Notes” are Notes included in our Notes to Consolidated Financial Statements. Throughout Management's Discussion and Analysis of Financial Condition and Results of Operations all references to earnings or losses per share are on a diluted basis, unless otherwise noted, and have been retroactively adjusted to reflect the February 1, 2011, two-for-one stock split.

We are one of the world’s largest copper, gold and molybdenum mining companies in terms of reserves and production. Our portfolio of assets includes the Grasberg minerals district in Indonesia, significant mining operations in North and South America, and the Tenke Fungurume (Tenke) minerals district in the Democratic Republic of Congo (DRC). The Grasberg minerals district contains the largest single recoverable copper reserve and the largest single gold reserve of any mine in the world based on the latest available reserve data provided by third-party industry consultants. We also operate Atlantic Copper, our wholly owned copper smelting and refining unit in Spain.

Our results for first-quarter 2011, compared with first-quarter 2010, primarily reflected higher realized copper and gold prices, partly offset by lower copper sales volumes. Refer to “Consolidated Results” for further discussion of our consolidated financial results for the first quarters of 2011 and 2010.

At March 31, 2011, we had $4.1 billion in consolidated cash and cash equivalents and $4.8 billion in total debt. On April 1, 2011, we redeemed the remaining $1.1 billion of the outstanding 8.25% Senior Notes (refer to Note 6 for further discussion). After taking into account the April 1, 2011, redemption, which was funded with restricted cash, total debt approximated $3.7 billion. We have no significant debt maturities in the near term; however, we may consider additional opportunities to prepay debt in advance of scheduled maturities. Refer to “Capital Resources and Liquidity – Financing Activities” for further discussion.

In December 2010, our Board of Directors (the Board) authorized a two-for-one common stock split effected on February 1, 2011 (refer to Note 1 for further discussion). All references to our common stock, per share amounts and dividends on common stock herein have been retroactively adjusted to reflect the two-for-one stock split. Refer to “Capital Resources and Liquidity – Financing Activities” for further discussion of common stock dividends.

In December 2010, the Board declared a $0.50 per share supplemental common stock dividend that was paid on December 30, 2010. In April 2011, the Board declared an additional $0.50 per share supplemental common stock dividend to be paid on June 1, 2011, to shareholders of record on May 15, 2011.

In October 2010, the government of the DRC announced the conclusion of the review of Tenke Fungurume Mining S.A.R.L.’s (TFM) contracts, and confirmed that TFM’s existing mining contracts are in good standing and acknowledged the rights and benefits granted under those contracts. In connection with the review, TFM made several commitments that have been reflected in amendments to its mining contracts, which were signed by the parties in December 2010 (refer to Note 14 in our Annual Report on Form 10-K for the year ended December 31, 2010, for further discussion). In March 2011, the amendments were approved by a ministerial council, and a Presidential Decree signed by the President and Prime Minister of the DRC was issued in April 2011. After giving effect to the modifications that will be made to TFM’s bylaws to reflect the agreement of the parties, our effective ownership interest in the project will be 56.0 percent prospectively, compared to our current ownership interest of 57.75 percent.

Table of Contents

OUTLOOK

We view the long-term outlook for our business positively, supported by limitations on supplies of copper and by the requirements for copper in the world’s economy.

Our financial results can vary significantly as a result of fluctuations in the market prices of copper and, to a lesser extent, gold and molybdenum. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Because we cannot control the price of our products, the key measures that management focuses on in operating our business are sales volumes, unit net cash costs and operating cash flow. Discussion of the outlook for each of these measures follows.

Sales Volumes. Our projected sales volumes depend on the achievement of targeted mining rates, the successful operation of production facilities, the impact of weather conditions and other factors. Consolidated sales from mines for the year 2011 are expected to approximate 3.9 billion pounds of copper, 1.6 million ounces of gold and 73 million pounds of molybdenum, including 965 million pounds of copper, 365 thousand ounces of gold and 17 million pounds of molybdenum for second-quarter 2011.

Unit Net Cash Costs. Quarterly unit net cash costs vary with fluctuations in sales volumes. Quarterly unit net cash costs for the remainder of 2011 are expected to be higher than first-quarter 2011 consolidated unit net cash costs of $0.79 per pound. Assuming average prices of $1,400 per ounce of gold and $15 per pound of molybdenum for the remainder of 2011, and achievement of current 2011 sales volumes and cost estimates, we estimate our consolidated unit net cash costs (net of by-product credits) for our copper mining operations would average approximately $1.04 per pound of copper for the year 2011. The impact of price changes on consolidated unit net cash costs would approximate $0.02 per pound for each $50 per ounce change in the average price of gold for the remainder of 2011, and $0.02 per pound for each $2 per pound change in the average price of molybdenum for the remainder of 2011. Refer to “Consolidated Results – Production and Delivery Costs” for further discussion of consolidated production and delivery costs.

Operating Cash Flows. Our operating cash flows vary with prices realized from copper, gold and molybdenum sales, our sales volumes, production costs, income taxes and other working capital changes and other factors. Based on projected consolidated sales volumes and unit net cash costs for 2011, and assuming average prices of $4.25 per pound of copper, $1,400 per ounce of gold and $15 per pound of molybdenum for the remainder of 2011, we estimate consolidated operating cash flows will approximate $8.3 billion for the year 2011, net of an estimated $60 million for working capital requirements. Our estimate of operating cash flows for the year 2011 also reflect estimated taxes of $3.9 billion (refer to “Consolidated Results – Provision for Income Taxes” for further discussion of our projected annual consolidated effective annual tax rate for 2011). The impact of price changes for the remainder of 2011 on operating cash flows would approximate $125 million for each $0.05 per pound change in the average price of copper, $50 million for each $50 per ounce change in the average price of gold and $60 million for each $2 per pound change in the average price of molybdenum.

Table of Contents

COPPER, GOLD AND MOLYBDENUM MARKETS

World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January 2001 through April 2011, the London Metal Exchange (LME) spot copper price varied from a low of $0.60 per pound in 2001 to a record high of $4.60 per pound in February 2011, the London gold price fluctuated from a low of $256 per ounce in 2001 to a record high of $1,536 per ounce in April 2011, and the Metals Week Molybdenum Dealer Oxide weekly average price ranged from a low of $2.19 per pound in 2001 to a high of $39.25 per pound in 2005. Copper, gold and molybdenum prices are affected by numerous factors beyond our control as described further in our “Risk Factors” contained in Part I, Item 1A of our Annual Report on Form 10-K for the year ended December 31, 2010.

* Excludes Shanghai stocks, producer, consumer and merchant stocks.

This graph presents LME spot copper prices and reported stocks of copper at the LME and the New York Mercantile Exchange (COMEX) from January 2001 through April 2011. From 2006 through most of 2008, limited supplies, combined with growing demand from China and other emerging economies resulted in high copper prices and low levels of inventories. In late 2008, slowing consumption, turmoil in the U.S. financial markets and concerns about the global economy led to a sharp decline in copper prices, which reached a four-year low of $1.26 per pound in December 2008. Copper prices have since improved significantly, attributable to a combination of an improved global economic outlook, strong demand from emerging markets, recovering demand in the western world and limitations of available supply. During first-quarter 2011, LME spot copper prices ranged from $4.07 per pound to a record high of $4.60 per pound and averaged $4.38 per pound. Combined LME and COMEX inventories have risen somewhat in 2011, compared to year-end 2010 levels, as a result of reduced Chinese imports.

We believe the underlying fundamentals of the copper business remain positive, supported by limited supplies from existing mines and the absence of significant new development projects. Future copper prices are expected to be volatile and are likely to be influenced by demand from China, economic activity in the U.S. and other industrialized countries, the timing of the development of new supplies of copper and production levels of mines and copper smelters. The LME spot copper price closed at $4.25 per pound on April 28, 2011.

Table of Contents

This graph presents London gold prices from January 2001 through April 2011. Gold prices reached a record high of $1,536 per ounce in April 2011, supported by investment demand and weakness in the U.S. dollar. During first-quarter 2011, gold prices ranged from approximately $1,319 per ounce to $1,447 per ounce and averaged $1,386 per ounce. London gold prices closed at approximately $1,536 per ounce on April 28, 2011.

Table of Contents

This graph presents the Metals Week Molybdenum Dealer Oxide weekly average prices from January 2001 through April 2011. In late 2008, molybdenum prices declined significantly as a result of the financial market turmoil and a decline in demand; however, molybdenum prices have since increased, which we believe is supported by improved economic conditions and increased demand in the chemical and metallurgical sectors. During first-quarter 2011, the weekly average price of molybdenum ranged from $16.40 per pound to $17.88 per pound and averaged $17.24 per pound. The weekly average Metals Week Molybdenum Dealer Oxide weekly average price was $17.03 per pound on April 28, 2011.

Table of Contents

CONSOLIDATED RESULTS

	Three Months Ended March 31,
	2011		2010
Financial Data (in millions, except per share amounts)
Revenuesa,b	$	5,709	$	4,363
Operating incomeb	$	2,936	$	2,048
Net income attributable to FCX common stockholders