費利浦·麥克莫蘭銅金 (FCX) 2003 Q4 法說會逐字稿

Ladies and gentlemen, thank you for standing by, and welcome to the Freeport-McMoRan Copper & Gold fourth-quarter conference call. (OPERATOR INSTRUCTIONS).

I would now like to turn the conference over to Mr. Richard Adkerson, President and Chief Executive Officer of Freeport-McMoRan.

Please go ahead sir.

Good morning, everyone.

I would like to begin the conference off today by introducing Kathleen Quirk as our new Chief Financial Officer.

She was named to that position last month.

Many of you know Kathleen.

She has been our Treasurer for a number of years, and a 15 year plus employee in our financial group here with Freeport-McMoRan copper & Gold.

So Kathleen will give our introduction to our conference call.

Thanks, Richard.

Good morning, everyone.

Welcome to the Freeport-McMoRan Copper & Gold fourth-quarter 2003 earnings conference call.

The FCX earnings announcement was released earlier this morning.

A copy of the release is available on our website at FCX.com.

Today's conference call is also being broadcast live on the Internet.

We have prepared several slides to supplement our comments this morning, and will refer to the slides during the call.

You can access the slides on our website link on our FCX.com website homepage.

In addition to analysts and investors, the financial press has been invited to listen to today's call.

A replay of the call is available by accessing the Webcast link on our Internet homepage later today.

Before we begin today's comments, we would like to remind everyone that today's press release and certain of our comments on this call include forward-looking statements.

Please refer to our cautionary statement included with this morning's press release and presentation material.

Also on the call with Richard and I is Jim Moffett, Chairman of the Board.

As usual, after our remarks, we will open up the call for questions.

Today, FCX reported fourth-quarter 2003 net income applicable to common stock of 0.2 million, breakeven on a cents per share basis, compared with fourth quarter 2002 net income of 64.1 million, 41 cents per share.

Net income for the fourth quarter of 2003 was reduced by 4.3 million or about 2 cents per share for equipment loss in the October 9th slippage at the Grasberg open pit, and 2.0 million, about a penny a share, for charges related to the early extinguishment of debt.

Fourth quarter results were also adversely affected by reduced mill throughput and lower ore grades following the slippage event.

For the twelve months ended December 31, 2003 FCX reported net income to common stock of 154.2 million, 97 cents per share, including losses on early extinguishment and conversion of debt totaling 31.9 million or 20 cents a share, and net charges for the cumulative effect of changes in accounting principle of 15.6 million or 10 cents per share compared with net income of 127 million, 87 cents per share, including a charge for the cumulative effect of a change in accounting principle of 3 million, 2 cents per share for the 12 months ended December 31, 2002.

Richard is going to talk more in detail about our strong financial performance in 2003, where we generated 572 million of operating cash flows and a number of financing transactions, which allowed us to reduce our consolidated net debt by a total of 643 million during the year, and 813 million, including the recent additional conversions in January of this year.

We would now like to turn the call over to Jim Bob Moffett, who is going to comment on the situation in the Grasberg open pit.

Thank you, very much.

Before I start, I would also like to congratulate Richard Adkerson on his becoming CEO, and add my congratulations to Kathleen Quirk becoming CFO, to provide a great management team.

And you are going to get great performance from these, people.

And once again, my congratulations to both of you.

Let me see if I can pick up where we were in December to try to continue to give you some information -- detailed as it may be.

Fortunately with the Web site, I hope all of you are going to access the diagrams that I am going to be referring to.

And I will try to move along here, but I will be specific on a couple in particular, because then the rest of the slides will have similar characteristics.

As you remember after we had our slip in October, what we do is to look at the stability of the wall and we tried to define for you the area that was affected.

If you will go to the first slide, which is Slide 4, called Grasberg open pit (indiscernible), you'll notice that once again, we've focused on the ore bodies and every body that you hear about in the waste areas that are most important to our currency to our current situation.

You have Six South and Five South, which is the Golden Horseshoe that we have been mining all the way from the top of this pit and will mine continuously until we get to the bottom of the pit in 2014.

Seven South and Six North are the high walls immediately above the pit with the Eight North wall being just to the north of Six North.

So that should give you, on the largest pit in the world, some notes that you can refer to for points of reference as to where the status of the pit and the ore are situated geographically.

If you will go to the next slide, let's update you on the issues that we are continuing to deal with.

In terms of the slip, the slip basically was an October 9th event.

We had another debris flow in December which we reported to you.

And if you'll notice, we are marking a blue area, which is called a safety corridor, that is around a dotted line, that we are showing as a slide area.

The importance of this is that what we want to emphasize as we have tried to do in our written communication to you, is all of the Golden Horseshoe is open for mining currently.

What our issue is is that after having stabilized the original flow that we saw some debris slide and we didn't want to be in a position, either rolling rock was an issue for our miners; and in December, we decided we would pull out of the middle of the pit, and in essence, put all of our equipment and energy on getting Seven South and parts of Six North completely stripped so that we wouldn't have to continue to have any kind of issue, so that we had a safety position, so that the safety of our miners was much more important than continuing to mine.

As it turns out, since we had our slip in December, we could have been mining and moving in the area, because there have been no more events.

But it became more difficult for us to mine through that.

So what we are going to show you is how we have spent the last month and we will spend the next month or so getting ourselves completely out of the influence of Seven South slide, so that our access areas can be open.

And of course, as we repeated the ore body, it was ready to be mined and we can start moving over the next day.

Now let's go to the next slide, which gives you the face of the pit wall that we have been talking about.

What I just showed you was a plant view looking down.

And here is Seven South and Six South and Five South.

And this is a view looking south in the pit.

And what you see if you see on the right, where it says Seven South and Six South, and you see some lines or some benches or cuts in the andocite growth (ph), which is basically like hard sandstones are all salacious.

And you'll notice an area where it comes to an abrupt end, just to the left of where it says Seven South or Seven S. And that's the area which we now have determined was a structural zone, a joint, a fault, if you will.

And that area is where the hard rock and the softer -- the fragmental volcanics, or poker chip, as we call it, were in juxtaposition or immediately adjacent.

And the water apparently moved along that plane, which we could not measure as well as we had hoped.

And it ended up -- became that contact, so that as you move away, you'll see sort of a grey area.

And I hope you can kind of see the little valley that has developed.

Then as you go to the left toward the word drill hole P2OS, you see we get back to the benches, which are 1000 percent limestone.

We knew these knots (ph) of fragmental volcanics existed.

We didn't know it was as wet.

And as you heard the last time, if it did slip, it should have stopped on Six South.

But instead, it flowed like a mudflow static (ph) liquification because the water had so permeated the delong (ph) fragmented metal poker chip and immediate area of that contact between the two rocks.

There are two more connotations here -- one is the drill hole PS01, which is pit slow (ph) number one, and the drill hole pit slow number two.

I am going to give you a cross-section.

Those were drilled, because if I can -- and please understand that since we are humbled by the fact that this thing slipped at all and we lost eight of our brothers.

When I refer to these in some descriptive terms, I want you to understand this is a very important issue for us.

And I am trying to give you some lingo so you can identify with it.

If you look at the area that looks like the little valley that has developed right above the words drill hole PS01, that's -- I am going to compare that to a decay (ph) and a two.

The two, as I am going to show you behind that, in all three kinds of rocks, the andocite (ph), the poker chip, and the limestone the left, we are going to show you some drill holes to show you that the tooth is fine.

We had a decay, and we are cleaning out that decay.

And it was in that decay area, where the small debris slide of 100 to 150,000 tons flowed, that gave us the last signal, that in order to clean this decay up, we couldn't work under this until we were more convinced we would not subject any of our pit miners to any kind of a safety hazard.

And that's the phase that we are in.

But the drill holes, to get to them, I am going to show you, we're done .

And we started from the backside of Seven South and have drilled, basically, an oblique hole that's almost horizontal, to be able to look at the petrology of the rock characteristics of the whole wall.

And PS02 is a near vertical hole, which is drilled right under the surface of the limestone.

And I am going to show you what the result of that is, which should give you the comfort that the tooth is in good shape.

We are only talking about a small decay area in the front side of Seven South.

The next slide is section PS0101, the pit slope number one, number fan (ph) -- fan referring to a bunch of drill holes we will continue to drill to just give you the comfort and us the comfort of the stability of the pit.

And that's looking cross-section.

And I am going to spend a minute to be sure you know what you're looking at, because the rest of the slides are going to be identical.

What you have is a cartoon that shows where the top of the pit was before we started to mine.

The different covers that you see with the notations PG and DV, for instance, are the different kinds of formations that we have dealt with since we found this discovery in 1988.

And the ore body is basically the ore in the middle; it looks orange and lighter orange and brownish.

Remember, this is like the mineralization radiated from the center?

And your Golden Horseshoe is in the middle, which is the orange -- the two oranges.

And then the area to the -- in the brown -- the mineralization goes from 2 percent copper down to zero as you move outward.

So it's like a heat gradient that you can measure the amount of ore based on how close you are to the center of the ore body.

What else we have in here is we have two lines, which are important that I want to point out to you.

If you look to the left and you'll see the yellow dash line, and start the grey area above it, and then follow the grey area on up to the right, that is the present configuration of the pit.

In other words, we have excavated all of the area above that since 1988, in the last 15 years.

And we are going to call that our shifting period, where we stripped 2.7 billion tons of ore to create the current dip (ph) configuration -- 2.7 billion tons of ore and waste.

There was 650 million tons of that, which was the ore that we have produced for the next last 15 years, and 2.05 billion tons of that was waste, or a 3 to 1 stripping ratio.

From that activity, we produced in the last 15 years 18 billion pounds of payable in copper, and 30 million ounces of payable gold.

So in order to get to the current configuration and to have produced our last 15 years of ore, that's what we have done to excavate the pit to its current level.

I hope that's clear, because it will be on the rest of the slides.

Let's drop down to the area below that, and then there is an area that's defined as Final Pit 2014.

And you'll notice it is sort of a very grey looking area.

And that ore that you see between the current pit level and the bottom of the pit in 204 is the material that we will mine during the next 10 years to get the next phase of the pit down to the final pit shape.

And that's going to be in comparison to the stripping period.

We are going to call this the glory day period, where we have a glory day on cash flow, because as we explained to you last time, the beef (ph) that we get, we laid the walls back and the limestone and treuces (ph), almost all of our (ph) mechanics (ph) are gone by 2007.

And they are completely gone by 2010.

And of course, in the bottom of the pit, we are laid back in a treuces are limestone.

The importance of that is, those things, as you can see in the pictures we showed you last session, will support a 90 degree slope.

So we have a very stable situation on our pit walls.

The amount of material that we will extract in this glory day period for cash flow is 2.3 billion tons of ore and waste compared to 2.7 in the stripping period.

And of that, we would have 750 million tons of ore that is ore and 1.55 billion tons of waste.

So that comparison of 750 versus 650 in the (indiscernible) stripping period, and 1.55 billion tons in the waste compared to 2.05 billion is how we go down to a 2-to-1 strip versus a 3-to-1 strip.

So we are going to move 100 million tons of ore more; and we are going to move 400 million less tons of waste.

The whole thing is the real reason why it is (indiscernible) to cash flow, because you're going to produce 15 billion pounds of copper and 25 million ounces of gold in the next 10 years period.

And you're going to have less cost because you're moving ore not waste.

And then of course, we go underground, as we described, and once you go underground, you mine everything that's below the pit level.

And then your waste completely disappears because you only mine by blockade, the middle part is ore body, which is considered the ore that goes from 3 percent copper out to our cutoff rate of 0.4.

So I hope that gives you an idea of the amount of ore that we have already excavated and what we have to excavate.

Now let's get to why the drill holes that I am going to describe to you should give you the comfort about the stability of the pit behind this decaying part of Seven South.

On the very left side of this slide you just looked at, which is called PS01, there are some errors that point to several things.

The blue-looking connotations are core holes that were drilled before the pit was excavated while we were delineating the ore body and defining the picture that we are able to now draw with the many thousands of core holes that were drilled.

The green line is the core hole that we just finished drilling, and are in the process of finalizing.

We started from the back of the south side of the slope.

And we wanted to see what the petrography of the rock character -- of all that rock in the high wall was, especially where it intersected the original holes that were drilled during our delineation period.

And then we have taken petrographic microscopic analysis.

And we can see that there has been no erosion of the rock in the high wall behind the pit phase.

The reason we have done that is because as you excavate this pit, you obviously expose this rock to some new elements, oxidation, erosion.

And we have confirmed that this veneer that we have predicted, the cavity that flows in our original slope and in the debris side, is limited to just the very front side.

So once again, the tooth is very healthy.

We have to fix the one decay.

Now I will try to move quicker to go to the next slide, because what this will do is show you that this is the whole -- if you look at plan view down in the right corner -- this is the PS02 you looked at a while ago, which is in the limestone just to the left looking south of the slide area.

What we did was, again, we have these three blue holes on the left margin, where you see the air pointing to PS02 or 01, and those were the original drill holes.

And we drilled this right below the current surface of the pit, almost parallel to the pit wall in order to get and intersect these three original core hole (indiscernible).

And once again, if you take the petrographic analysis under a petrographic microscope in thin section, that is 100 percent calcium carbonate or limestone, and there has been no alteration to that pit wall.

So that pit wall has the same rock character, i.e. hard limestone, what we call micritic limestone, and derives a very strong pit wall.

Of course, again, you can see -- once again, I won't go through all the details -- the current level of the pit, the final pit shape and the ore and waste that has been extracted above the current pit level, and that area is going to be stripped between 9 (ph) 2014, below it.

The next hole, if you look at it, the PS03, which is the next slide, just be sure that we, for completeness, gave you an idea of how you check the stability of the wall, which we have just described.

You see now on the northeast side of the pit, there is a plan view at the upper left margin.

What we did was set up and drilled back into the face of the northeast high wall.

And once again, the blue lines are the core holes that were originally drilled during delineation drilling.

And the green core hole is the one we just drilled to get the petrographic comparison of the -- of how these looked compared to the original holes.

We saw one meter of any oxidation or erosion as we went into that pit wall.

Everything behind that is as it was when we first drilled these core holes to delineate the pit before the pit was excavated.

I hope those three core holes, which, by the way on the next slide, we have a plan view of the whole pit.

It shows you the pit slope, number one core hole, the pit slope number two core hole, so that to the east of that, the northeast wall, where we have the pit slope 03.

Those are the core holes that we drilled.

And that's the way we continue to check the stability of the pit wall, and prove that the pit walls have not been altered by oxidation or erosion since the excavation of the pit.

So let's go to the next series of cross-sections.

These cross-sections are much more cartoons and not so detailed.

But let's just summarize what we just said.

When we had the slip on the high wall in Seven South, the veneer that it had formed, got in that notch, the decay of the tooth, got water wet to the point that it literally flowed like a mudflow, went across our protective edge and (indiscernible) stacking (ph) as we have said before, and flowed on into five South.

All of that material has been claimed.

The 150,000 tons of debris took place in the same place, and had a slight effect, almost a mud crust on Six South.

But because we saw the fragile nature of that status that was set up on the Seven South, we decided, for safety reasons, not to continue to try to work up there and put people on Six South and Five South, until we were completely comfortable that we had all of the loose debris pinned down and that we could monitor it.

What you're going to see in the next series of slides, we basically are taking the potential energy out of this thing by literally lowering it and laying it back to the yellow line, which would be the pit wall back in the hard rock, that PS01, that we just showed you, proves that we have hard, unruly rock to lay back into.

And so the next slide that you see, if you just kind of slip and look back and forth, you will see that Seven South is becoming a smaller slope.

And during that period is when we're taking the energy out of it, so that you remove potential energy.

If you have no wall to slide, it can't slide.

And so, I think you see what Richard is going to give you guidance on is sometime in this period, we have taken a conserve approach to say at the end of the second quarter, that we will have this thing neutered and can work.

In the interim period of time, we are looking at things that would let us go to work even quicker.

For instance, we believe after another week or so, we can start to literally dose down the grade material, that is, the remaining tailiffs (ph), and push it down and unload it off of Six South, so that there is no fragile rock left on the slope.

If we do that, then we go back to work.

The other possibility that we have is we are going to be using, starting next week, two remote-control dozers to clean up the Six South area, which means we will have dozers working without (indiscernible) demand.

And you literally operate them the way you would one of your kid's toys, when you use a joystick to turn left, turn right, raise the blade.

We have employed these before in the Ertsberg area.

We had some dozers over there early on.

This will be the first time we took the remote dozers in the pit.

We had no reason to use them in the last 15 years.

By the way, we are using remote-controlled loaders down in the underground, which you have seen pictures of, in some of our operational reports, where we had people with screens on these loaders, with joysticks underground, working in the wet muck (ph) areas for safety.

So we go to -- to this next phase, we are going to use all the technology available to us to make certain that we neuter and take away the potential energy of any more even rocks that are what we call falling rocks that might impact any of our miners in the area.

So it's safety first, and that's why we have taken this load.

And you can again say, we could have been mining since the minor debris flow, because there has been no other activity.

But we could not.

Until we could get reassurance that there would not be even a small debris flow, we decided not to take that chance.

If you look at the next slide, which is 13 on your charts, you can see the area which sort of summarizes this.

And basically, we are going to continue in the first quarter to do all the things I suggested to you.

Get this tailored (ph) slope, get the decay out of this tooth completely removed so we have got nothing but solid tooth that is in the pit wall.

And then our Six South, Five South, will be completely safe.

To maybe overstate the case, the next slide, Number 14, shows you Seven South, Six South, Five South; and it is basically a computer graphic of where the material was when this slope occurred.

You can see the decay up on the top of Seven South.

And then on the next slide, you can see the phases we're talking about, where we literally are taking the decay part of the tooth out, and it looks wider than the decay itself, because we sloped this and put the benches by it, we wanted to go far enough to the west and far enough to the east, and the limestone in the West and the hard andocite sandstone, because that gives us a very symmetric, smooth face.

And you can see that in Six South and Five South, as it has been for the last 15 years, will be open-access.

And by the time we get time we get to the end of the third quarter and sometime early in the fourth quarter, we will have continued to work on the slope.

So as you can see in Slide 16, the Seven South is basically all laid-back in the high wall.

And our Six South is our access and our catch (ph) bench for any kind of rolling rock.

And Five South is completely sound (ph).

So I hope you can see two things.

You can see that we are getting this decay out of the tooth.

We have proven with the drilling, matching it up with core holes that we have drilled, that we have a solid tooth to lay back into.

We also, I hope have shown you, the amount of rock we have moved during the so-called stripping period.

We have moved this 2.7 million tons of ore (ph) waste without any kind of incident in the pit.

This last incident, which we greatly regret, was halfway through the pit.

And now we are getting into the area where we will have much less of the material that is vulnerable to this kind of thing.

We will continue to monitor what rocks are left.

But we are into the glory days of moving more ore and less waste, as we get to the bottom of this pit.

I hope that gives you two good feelings, that we have a stable pit, and that we have mined out the stripping phase when we were outlining the (indiscernible) of the pit, and mining a lot of low-grade ore or waste.

And now we are getting into our payday.

I am going to quit there.

I am sure you have some questions.

And Richard, would you like for me to take questions about this while it is on their minds?

Or would you like to do it at the end of your presentation?

Why don't I quickly walk through the presentation and then we can take questions because Jim Bob has given you a lot of information on what we're doing to ensure the stability of the wall and physically what we're doing.

Now what I would like to do is really outline what the financial expectations we are, given the physical work that we're doing.

First of all, Kathleen gave you the results for 2003.

But I think it's important to note that even with the weaker results in the fourth quarter than we had anticipated, we still had a very strong year.

At 82 cent average copper price and gold at an average of 3.67 for the year, FCX generated over $1 billion in EBITDA.

Our operating cash flow was $572 million.

And net of our capital expenditures, we had $433 million.

This cash flow generation and the financing steps that we took in the first quarter allowed us to greatly improve our balance sheet and improve our financial flexibility.

For the year, we reduced our debt by $643 million.

And then with the steps we took to tender a portion of our 8.25 converts in January, we increased that amount to $813 million.

This improved our liquidity, our debt maturity profile.

Over the past three years, our company has reduced its debt by $1.3 billion, three years, $1.3 billion.

We continue to be the industry leader in terms of our cash costs of producing copper at a credit of 2 cents a pound, net of our gold credits.

We have very long-lived reserves, 40 billion pounds of copper, 47 million ounces of gold.

And with this financial performance, our Board initiated a new dividend in February and increased it.

And we have an authorized share buyback program that we are looking to in the future.

On Page 19, you see a slide that many of you have seen in presentation this year, that shows our company for the past five years has generated more than $500 million of operating cash flow in the face of declining capital expenditures once we completed our fourth (ph) Constraitor (ph) project in 1987.

In fact, since our spinoff in 1996, we have had $500 million a year plus, except for 1998, when we were just below that.

So a remarkably consistent record of cash flow generation in the face of political change in Indonesia and turmoil in the commodities markets.

Page 20 illustrates the changes in our balance sheet, where we went from $2.5 billion of debt and redeemable preferred.

At the end of 2002, we had our two issues of notes in the first quarter, which we raised over $1 billion.

As you can see, we since used that money to retire debt and induce conversion of some of our 8.25 convertible notes, as a result, in the adjusted debt net of cash pro forma for the January 6 convertible transaction of $1.559 billion.

Page 21, we show the calculation of our 2 cent credit, looking at a product approach to our copper costs, which is the way base metal companies report their net costs.

If we were to arbitrarily allocate our costs to our copper and gold streams based on their relative sales value, you can see that we would be a copper company with 40 billion pounds of proved and probable reserves; average production rate for the next five years of 1.35 billion per year; and a cost of 37 cents a pound, which is very attractive.

In addition to that, we would have a gold stream with 46, 47 million ounces of proved and probable reserves; 2.2 million ounces of average annual production; at a cost of $160 an ounce, again, very attractive rates.

Our reserves are shown on Page 22.

And even though, since we completed our expansion, we have had very significant amounts of production, since 1997, we have had copper sales of 10 billion pounds and over 9 million ounces of gold.

We have actually had higher gold reserves -- copper reserves -- than we did at the beginning of the period, result of reserve additions.

And we've replaced 90 percent of our gold reserves.

But 47 million ounces of gold, many of you who follow gold companies, I am sure note that gold companies typically report contained reserves.

We, as other base metal companies, report payable reserves.

Our contained copper reserves -- or gold reserves -- would be about 62 million ounces, which is comparable with other gold companies this quarter.

Now looking forward, into 2004 and following the planned activities that Jim Bob just described to you, the changes in our mine sequences will affect our metal sales.

Previously, we had pointed toward having copper sales of 1.4 billion pounds and 2.2 million ounces of gold sales.

That plan, before the events in the fourth quarter of '03, was heavily weighted for the second half of the year because of our natural mine sequences.

As you remember, we went into higher-grade materials in mid 2002 and we had produced that higher-grade material through the end of the third quarter.

And then we were going to have, under our long-term plan, 3/4 of relatively low-grade.

As a result, 64 percent of our original copper plan and 70 percent of our original gold plan was in the second half of the year.

And as a result of this change in approach that Jim Bob described, some of our 2004 sales will now be realized in 2005.

And the change will largely offset.

Our current expectation is that we will move into the higher-grade mining areas of the Grasberg pit in the second quarter of 2004.

And again, in 2004, under our new plan, a significant portion would be incurred in the second half of the year.

Most of our costs are fixed.

We have set employee, complement equipment, infrastructure, mill structure, so many of our costs are fixed.

And that results in higher unit costs in the first half than in the second half.

As we have also been talking about throughout 2003, our wholly-owned Atlantic Copper subsidiary with its smelter in Huelva, Spain has a 45 day turnaround schedule in the spring.

This turnaround occurs every three or four years.

The turnaround itself will have a $40 million earnings and cash flow impact, including the effect of lower volumes.

This will be in the first half of the year, principally in the second quarter.

Atlantic Copper's results, as you see in our earnings results, are also being affected by the low TCs and RCs, which benefit PT-FI's operations in normal circumstances and the stronger Euro.

So the first half of the year, as we look forward, are going to be affected by both the timing of metal sales in PT-FI and the smelter maintenance activities.

Our five-year annual results for copper and gold are showing expectations -- current expectations are shown on Page 24.

The billion pounds of copper sales in '04 increases to 1.4, and averages -- in 2005, it averages 1.34 billion pounds over the five-year period, resulting in approximately the same as our previous five-year plan before the slip. 1.5 million ounces of gold expected in 2004 increases to 2.9 million ounces in '05, so obviously '05 is going to be an extraordinary year for us, and averaging 2.2 million ounces as we have been talking about for sometime.

So the changes in 2004 and 2005 are summarized for you on the Slide on Page 24 -- you can see -- on Page 25.

You can see that our previous estimate of 2.7 billion pounds pounds for the two years is now 2.5 billion pounds.

The remainder is essentially made up for over the five-year period.

And gold increases from 4.3 to 4.4.

So the effect of our change in sequences is essentially a switch from 2004 to 2005.

Our cost structure for the two years is shown on Page 26.

Obviously, with the lower volumes of both copper and gold in '04, our costs for the year will be higher -- much higher -- in the first half offset by improved performance in the second half.

And then 2005, because of the high copper volumes and the very high gold volumes, again, has the expectation of being an extraordinary year for us.

Page 27 shows our variances, our scenarios for copper and gold prices and their impacts on our operating cash flow.

Our annual operating cash flow for the three-year period is just under $600 million.

We are looking at lower cash flows next year, at the $1 in copper and $400 gold, were approximately $230 million for 2004; and then very strong 2005, resulting in the averages over the three-year period of just under $600 million.

The variances to changes in prices to those estimates are shown on Page 28.

A dollar change in the price of gold is just over $1 million impact on our earnings and cash flows.

Ten cents of copper is $70 million impact on earnings and cash flow, so you can make the adjustments.

On Page 29, we nine, we show our capital expenditures.

Again, in this period, of where we have a fully developed asset.

Jim Bob talked about the impact on our stripping.

But we also have essentially the equipment and infrastructure in place to operate the Grasberg pit during its remaining life.

Our capital expenditures in '04 were slightly less than we had previously estimated.

And we are showing very low levels of capital expenditures for '05 and '08.

And that includes our initial expenditures, which are beginning this year, for the common infrastructure development, that will lead to our underground mine development that will occur as we approach 2014, the termination of the pit.

All of this adds up to a very strong cash flow situation.

And Page 30 shows our debt liquidity situation, excluding the remaining $113 million of our 8.25 convertible notes, which are callable at the end of July -- beginning and end of July in 2004.

You can see our maturities are very manageable.

They include the two issues in 010 and 011 that we have issued in the first quarter of this year.

We are looking at financing steps to perhaps take advantage of this favorable market right now to refinance some of this on more attractive terms.

But we have a great deal of financial flexibility, given our Company's asset and cash flow generating capacity and the steps that we have taken to-date to improve our balance sheet.

In summary, Page 31, our company is characterized by long lived reserves, proved and probable reserves.

We will have these cash flows.

We don't need to enter into new exploration activities or make acquisitions.

These are reserves that have previously been established and proved, and established as being proved and probable.

We're fully developed now for the remaining life of the open pit, and we have twice the undeveloped reserves underground, very strong cash position, cash flow generations.

We're not hedged to either copper and gold.

Declining debt.

Cash flow gives us a potential for enhance shareholder returns.

And our company still trades at an attractive relative valuation to other companies.

We have -- we thought this was an appropriate time to spend more time explaining our situation today than we normally do.

For those of you -- we will be on the phone to answer any of your questions.

For those of you who have a schedule program, I will remind you that this call will be available on the Internet.

And if you have to drop off and still have questions, we are available by telephone to answer those.

So with that, Frank, we would like to close the presentation and open the call up for questions.

(OPERATOR INSTRUCTIONS).

John Hill, Smith Barney.

Good morning, everyone, and thank you for some very detailed discourse on the circumstance and outlook.

I have to also say, it's been awhile since we've have a call that featured petrographic thin section work, so that's quite notable.

I was wondering if you could give us a little bit more clarity on the mill throughput progression in '04 that's taking us from the fourth quarter level of 142,000 tons a day back up to something in the 230 range.

And then perhaps similarly to the way that '04 guidance was originally portrayed, the percentage of metals, first half and second half of the year?

We will be looking at operating the mill at roughly 100,000 tons a day in the first quarter.

And then we will be ramping up in the second quarter and the second half of the year to our normal rates of 230 to 240, depending on the levels of ore that we have.

We have taken advantage of this time in the fourth quarter.

And we will in the first quarter, of doing some maintenance in advance of its normal schedule.

So we have been rotating which of our mills have been operating and which have been down.

And we think that will give us a benefit, as we go forward.

As I mentioned, the original sequencing involved us mining relatively more waste than we had been in previous quarters during the fourth quarter of '03 and the first two quarters of '04.

So that resulted in the percentages, before we were scheduled for example, to the eight (indiscernible), to produce one million ounces of gold.

When I say the eight that's our interests plus (indiscernible) joint ventures interests -- one million ounces of gold under our original plan in the fourth quarter.

So our original plan that we have been talking about was heavily back-end weighted.

And now to the extent that we are doing this additional work -- revised work in the first quarter, that results in the deferral of metal volumes from '04 to '05.

Very good.

Also, Richard, could you give us just a comment or two on the Atlantic Copper hedges and the 4 cent hit to earnings, the complexion and disposition of those?

Yes, that hedging activity for their copper concentrates is just a normal process, normal price management hedges that they have that tends to offset over time.

Considering the unusual movements during the fourth quarter, that resulted in this charge.

But if you look back over history and our expectation would be over time is that that would offset.

It's designed to be a cost-neutral program.

And we don't seek to make any profits through those hedging activities.

Can you just give us a feel for the tenor of those hedges -- the time frame on them, on the amounts of volumes that are presently committed?

It is very short.

It's a matter of days, or certainly not more than a month or two designed to match up the purchases.

And that varies by term under their concentrate purchase contracts with the amount of time that it takes to go through the smelter and for the final products to be sold.

So they're very short term, generally, over a month or two to deal with it.

And it involves about 10,000 tons of concentrates in a normal average.

Alberto Arias (ph) Goldman Sachs.

Thank you for the explanation.

A few quick jumps with regards to your numbers.

Part of the smelter results reflected a 13-cent per share gain from changes in the recognition of deferred profits.

That's significantly higher than what you had last year.

And if you could elaborate a bit more, if this is just an impact of the corporate price?

Or is there something else that we should consider for predicting subsequent quarters?

It's not a copper price phenomenon.

That has some effect.

But the effect occurred because we had significantly less volumes in the fourth quarter; and that means at the end of the quarter, there was less volumes going to Atlantic Copper than there were at the end of the third quarter.

So when there is less volumes going, you have a reversal of the deferred profits that were in existence at the beginning of the quarter.

Now looking forward, you can expect other reversals in the first quarter, and then more of a leveling out in the second quarter.

And then as we go into the third and fourth quarters of next year, as our production ramps up, you can expect to have significantly higher levels of deferred profits as we go at the end of the third quarter and end of the fourth quarter of 2004.

As we move forward in the year, we will give you guidance on those numbers.

But it is a function of how much concentrate we are producing at PT-FI, how much of that is going to Atlantic Copper and then the timing of the shipments to Atlantic Copper versus to Gresik and our other customers.

Another question is with regard to your cost guidance of 25 cents for 2004 is significantly higher than what you had in 2003.

If you could tell us how much is attributable to the lost economies of scale that you're having because of these disruptions, and how much is because of energy costs or currencies?

It's overwhelmingly because of the volume factor.

As the margin, energy cost has an impact.

We're using about the same amount of diesel we have always used.

And diesel prices have gone from 85 cents to $1.

So that has some impact.

About one-third of our costs are in Rupiah and Australian dollars.

The Rupiah has roughly 10 percent, and the Australian dollar is much stronger.

So that has an impact.

But those are only, at the margins, our costs are essentially fixed.

And the major, major part of the impact that you mentioned is strictly the volumes.

And you can see that reversing in the chart I had for 2005.

A final question with regard to the open pit, have there been any monitors of seismic activity around the area where to accident happened?

Are you confident that there is not going to be underground movement, even prior to lowering the slope of the Seven South area?

This is Jim Bob, Alberto.

Yes, we were monitoring the pit and still continue to monitor it.

And we have always monitored the pit.

There is no activity left to move.

I would say the rest of the high wall is in the the solid rock that we have indicated to you that we have cored with this PS01.

Once the rubble is down and we have it gone, we will continue to monitor.

All of the high wall is monitored, and continuously has been ever since we have started the excavation of the pit, and will continue to do so.

But the decay that moved is gone.

What is left up there, which is what (indiscernible) safety, once it's dosed down and the slope is lowered, there's nothing -- there is no energy left to create a slide.

Alex Lazzer (ph) Merrill Lynch.

I have a follow-up question on the work that you guys have been doing.

And it's a great explanation, Jim Bob.

On the stripping area, the faults, obviously was instrumental in causing the slide in addition to the water and the liquefaction of the clay within the fault.

So the focus moves to other fault areas in the pit, obviously, like you said, removing the slope area above success, you've reduced all -- most of the potential energy for any future slides.

What about other fault areas, and other water flow areas in fault areas, say on the other side of where we're talking about, where the Six North area overlies?

Obviously, any of those areas that have that kind of fracture system, we have been monitoring.

As I just said, Alex, the monitoring of those slips -- of the slide -- to be sure and predict slips, has been ongoing.

Obviously, with this liquefaction, which is the first time we have had a liquefaction in our 15 years, and there have only been three in the history of mining.

We are dewatering and looking at any other possible area that would be a notch.

So we have neutered that situation, and that's why we went over on the high wall and drilled that northeast core hole to confirm that there has been no pervasive erosion on the north wall.

But to answer your question, we have been monitoring and maintained the slope.

That's why for 15 years, we have got this 2.7 million of ore stripped out of the first phase.

And fortunately, we had this one get away from us.

But it will heighten our ability to avoid any other notches failing.

I hope that covers that.

That does.

Thanks, Jim Bob.

I have a more mundane question on the shares outstanding.

What were the actual shares outstanding at the end of the year, if that's possible?

196 million, including the shares that we just converted.

So that is including the shares that were converted from the 8.25's in January.

Okay, so at the end of the -- all right.

They were obviously all in our fully diluted shares.

But if those were the actual shares, it was 184 million at the end of the year, plus the additional 12 million shares, roughly, that came in with the 8.25.

Brad Levy (ph), Royal Bank of Canada.

First off, Richard and Kathleen, congratulations.

Secondly, I know what your historic perspectives have been on forward sales or hedges, but obviously prices are in a different place right now.

Any revised thoughts on either of those issues?

And then also, is there any kind of insurance related to this sort of disruption?

Thanks, Brad.

We appreciate your comments, and thanks for reminding me above the insurance.

I actually meant to mention that.

There is no insurance proceeds included in the cash flow numbers that I mentioned.

We are working with our insurers.

We do have coverage for the equipment and for certain aspects of our operations.

It is subject to a $40 million deductible that we have.

And we will be working to file claims and go through the negotiations with the insurance companies for that.

And as that proceeds during the first quarter, we will be reporting to you.

But I want to emphasize that the cash flow number estimates that we gave you included no proceeds for insurance, and we expect to have some.

The question you asked about hedging, philosophically, we're not a trading-type company.

We focus on our operations and our low cost.

We do monitor the markets.

In the past, when copper prices have been high, we have looked at the opportunities to buy puts, and that is certainly something that we will examine.

But I think the most exotic hedging activity you could expect from us would be something along those lines.

But obviously, we monitor markets and talk with our board about it, and will react according to the opportunities and circumstances there.

But in the past, when copper prices have gone over $1, we have bought copper puts at 90 cents, when we felt like it was appropriate to put a full (ph) on the price.

Victor Flores, HSBC

Simple question, with regard to the CAPEX for this year and next year, how is that going to be spread out, either by quarter or by half, given the ramp up in production?

Well, the timing of CAPEX is always dependent, just, Victor, on when the equipment gets purchased.

Let us take a quick look at that and then we will give you an answer back on that as we answer other questions.

Okay, great.

Thank you.

John Tumazos, Prudential Equity.

Between, I guess October 9 and the second quarter, there will have been six or eight months where you will be doing more stripping and less ore, maybe 150 150 to 200 million tons of stripping.

Is this all being expense that is incurred?

And are there any costs being capitalized, in terms of extra measures you're taking, monitoring wells etc.?

Can you explain the accounting treatment?

Basically, we are following our established accounting policies.

We are expensing normal costs.

We wrote off, in the fourth quarter, the equipment that was lost in the October event.

New equipment that would be replaced would be capitalized.

In terms of our mining activity, we are following our normal mine-stripping accounting policies.

And we are capitalizing based on the amount of ore that we are mining, the stripping costs in excess of that.

At the end of 2003, we had $142 million of deferred stripping costs.

And that number will increase during 2004, as we focus more on waste mining rather than the mining of ore.

To the extent our stripping exceeds about 2.25 waste to ore, we capitalize a portion of our costs.

And then in future years, as Jim Bob was talking about, as that waste declines, then that would be amortized back against income.

So the 25-cent mining costs you are forecasting for the year '04 relates to having less than than 230,000 tons a day through the mill in unabsorbed fixed overheads.

But you are not expensing an extra 150 million through this extra stripping.

That is being capitalized and will be amortized over future production?

That's correct.

(OPERATOR INSTRUCTIONS).

Victor Lazarovici, BMO Nesbitt Burns.

Quick question on the material flow and the logistics.

In the past, you have had issues with concentrate storage and shipment schedules.

As you look into the ramp up in 205, is there anything you're going to have to do differently at the port or at the smelter to handle the extra material?

And secondly, in the first part of '04 will you still be able to meet your commitments to Gresik?

Or will they go out or will you have to go out into the market to secure concentrates?

The plans that we have described to you today sit within our normal operating limits for ore delivery to the mill, mill operations and concentrate delivery to the port and port operations.

So other been doing, as I mentioned, some accelerated maintenance activity to ensure that all of our systems are ready to work, we are not having to take any special steps to meet the plans that we talked about.

That's within the normal capabilities of our existing operating systems.

We are delivering concentrates to Gresik, and Gresik is adjusting its operations based on the availability of the concentrate markets.

To deal with that, they are using some other concentrates.

But essentially, they are adjusting their level of operations and doing maintenance activities, as well, to adjust for that.

John Hill, Smith Barney.

Just a quick couple follow-ups, further to the accounting questions.

Could you give us a view, on '04, on some of the elements of DD&A, tax rates, fully diluted shares, and the outlook or pace for the buyback programs?

Yes.

Our DD&A rate will be slightly higher.

It's about 15 cents this year.

It could be up a penny or so next year because of the volume impacts that we will have, John.

But it would be up maybe a penny, no more than 2 pennies, per pound, going forward.

Tax rates are going to be varying quite a bit during the quarter-by-quarter.

We included, as -- I can't remember who -- but someone suggested that we include, in past calls, the calculation of our effective tax rate an,d that's included as an attachment to our earnings release.

And you can see that because again -- because I say this at every call -- a reminder that PT-FI is a taxable entity with a set income tax rate of 35 percent on its income.

Then there is an additional 10 percent taxes, dividends, or interest are paid by PT-FI to FCX.

FCX itself is subject only to a 2 percent alternative minimum tax.

And Atlantic Copper has no tax.

So based on the relative proportion of earnings and losses, the tax rate moves, and that is illustrated in the fourth quarter by the fact that we had an effective tax rate of greater than 80 percent, because of the low levels of activity at PT-FI and the losses at the parent company, Atlantic Copper.

That will be the case in the first quarter.

And then, it will be reversed again as we move in the second quarter and the second half of next year.

But the tax rates will vary a great deal, from an effective tax rate standpoint during those quarters.

Stock buybacks, dividend policies are something that our board reviews at each of its meetings.

Obviously, our cash flows are going to be lower during the first part of 2004.

But the Board will be reviewing those matters as we go forward into future periods with higher cash flows available to the Company.

Jim Copeland, Goldman Sachs.

Jim Bob, from your presentation before -- which thank you very much for that -- it seems the focus of your investigation has been very deliberate in terms of looking at the weathering profile around the Grasberg pit, as opposed to purely an investigation of geology and geological structures.

My present understanding is that the poker chip material was the most unstable material, and that you simply wanted to delineate exactly where that was.

But is there any -- is it the weathering profile, is that the issue?

Or if you have comments on that, I would be really grateful?

Thank you.

As far as where the various types of rock types are, the sections that we provided you happen to be in the planned view that you have seen.

We could have cut these on a 360 degree circle, because as you know, we have thousands of core holes like the blue core holes that you have seen.

And before we ever extracted the first bit of this ore, we began to build a profile.

So we know, in a geologic model, where all of the various kind of rock types are.

And not to be evasive, but since all of these core holes are logged and reported by every foot, every inch, it's not an issue as to where the various rock types are in the pit, Jim.

And what we would do is, as we just answered in the question about the structure, the faults of the joints, we have always been aware of the juxtaposition of various rock types that would be abnormal contacts.

In other words, if you have a contact between a andocite, a lava flow that's hard and not very permeable versus a poker chip, we know where that is.

And normally, it is a gradation that has been moved into close contact by this fault or structure, which was the case in this one notch.

There are only two areas in the pit where that happens.

And those, of course, we monitor that, plus all of our slopes.

As you know, we have extensometers.

And for those that don't know what an extensometer is, it literally measures every inch of movement, every millimeter of movement.

And then we have prisms around the pit.

The prisms are there, and they literally are a high-tech way of being able to tell any slight movement, much like they track earthquakes and fault movements in the San Andreas fault and those kind of things.

So there are all kinds of equipment, ladies and gentlemen, that are available to do this monitoring.

That's why we said we were humbled.

And we let this one surprise liquification get away from us.

But to answer your question, our focus has been on re-confirming some of the things that we know, Jim.

And the best we could do that, and I don't want to repeat myself, was to go back in and just twin these old core holes, which have described the rock type and rock quality, and that's why by drilling these and confirming that the rock quality hasn't changed as the excavation of the pit gave us the assurance that the the observation of the pit walls was a veneer, not something that was pervasive.

Wayne Atwell, Morgan Stanley.

That's correct.

All the reading we do indicates that cost of freight is extremely tight, availability and cost.

What kind of impact is that having on you?

Do you pay for your freight to move your concentrate, or is that paid by others?

And is your freight done by spot or long-term contract?

Can you sort of clarify that a little bit?

Yes, we do pay for the freight.

That's part of our negotiations with the contractors.

Our freight contracts are on a long-term basis.

We have -- roughly one-third came up from negotiations this past year, or 25 percent of one-third.

And we were able, because of our long-term relationships with the shipping company and established rates, able to extend that portion of our contract without a significant increase.

So far, we have not seen a significant impact on our operations from the freight rates.

We just negotiated a new rate right at the end of 2003 for about a quarter.

And the remaining three quarters are still running under long-term contracts.

So your rates would be three or four years generally?

Yes, it's three, four, some five years.

Victor Flores, I will answer your question.

While there will be some variation for modeling purposes on our CAPEX, we suggest using equal amounts of that in each quarter.

Charles Bradford, Bradford Research.

My questions have been asked.

It was on taxes.

I think the best way to deal with that is to use that schedule that we showed, make your own estimates, and then estimate that, recognizing that will move around.

John Tumazos, Prudential Equity Group.

In terms of imprecise acts of mother nature, such us when it rains, three inches in a day, rather than three quarters of an inch or an inch, are you attempting to install dewatering capacity for surge rainfall?

Or is your principle safety valve or extra margin of safety these six months plus of extra stripping you are doing right now?

Let me kind of go back and refer to my model.

We have been managing the water in this pit since the inception of our excavation.

And to answer your question, it's been raining for 15 years while we excavated the top part of the pit.

As you know, since you are familiar with the mining techniques, our dewatering system is an extravagant and part of our pit management.

Like I said, this is our first slip in the pit in 15 years.

And with all of the waste and ore that we have moved, we have managed to keep this pit dewatered.

The liquification event that occurred with the contact of the poker chip, we will step up on monitoring and step up our ability to drill, literally drill, fresh drain-type holes into some of these areas where we have the unusual contacts just to be sure there's nothing building up in those few areas that would have that characteristic.

But basically say that stripping water maintenance on a continuous basis every hour, every day, when you are moving this much ore, 2.7 billion tons of ore and waste in the last 15 years, and you're moving somewhere between 4 and 750,000 tons a day rain or shine, all of the above have to be closely looked at.

And I think our 15-year record would show that we have had the ability to manage it, and the ability to increase our awareness as a result of this static liquification, which was obviously an unusual anomaly for the industry as well as this pit, will heighten our efforts to make sure that we maintain the liquefaction factor, i.e. dewatering.

Phil Gumez (ph), GL Capital.

Obviously, you guys have initiated a nice dividend here in '03, and raised it in '04.

It seems as though the cash flow situational lends itself possibly to further increase, albeit not extremely large.

What sort of is your thought process there and your comfort level on a cash flow basis annually for dividend payouts?

There is not any precise formula that we can give you.

As I mentioned, this is a matter that our board reviews at each of its meetings, in terms of looking at the cash flow that's available to us, the requirements that we have for capital expenditures, debt repayments.

And obviously, when you look out beyond the first half of '04, that's a very attractive situation for our company but that will be a matter that the Board will review and reach its conclusions on.

Let me just at me just add, this is Jim Bob, I think the geologists always come down and the past is always the best key to the present.

When we had our cash flows in high copper prices back in the 90s, we paid out one billion in dividends and bought back one billion in stock and of course, kept our debt payment -- when we got into a situation where all of a sudden, because of the Asia crisis after 97, we had to be focused on paying our debt down, just because people were more concerned about the political risk aspects.

We focused ourselves on paying down debt.

The only reason I bring up what we did back in dollar copper days in the 90s, you tell us what the price of copper is going to be, we will tell you how much cash we're going to have.

Let's just talk about 2005, for instance.

Richard mentioned we will be rolling the deal forward, if in fact we don't get back to work before the second quarter in our pit.

But using reasonable numbers now, our cash flow could reach $850 million in 2005 and yet our CAPEX don't go up.

You look at those kind of numbers and this Board has a history of making sure the shareholders get the benefit and if the benefit is to pay dividends, we pay dividends.

If the benefit is to pay dividends and buy stock back, we do that.

If the benefit is to pay debt down, because we paid off $1.5 billion worth of debt in the last several years, our debt issue has become less of an issue because we don't have any maturities.

And we can always look at whether we can buy bonds back and reduce our costs.

Those are the three uses of money that we would have and our history says that we share it with the shareholders and that's where we think the cash flow ought to go.

Brian Macarthur, UBS.

The DOZ underground continues to perform very very well, despite what the open pit does.

Can you tell me two things, one what assumptions you have made for the underground going forward, the numbers for the next three or four years?

And two, when you'll make a decision on the expansion, potentially the 50,000 tons underground?

The current DOZ plan that we have was originally scheduled for a maximum of 35,000 tons.

The overproduction as you have seen after some peak days of 50,000 tons, is just because of the fact this ore body blockades so well and as usual, if you go back in our mining plans, we generally exceed our mining plans but the expansion of the underground DOZ, we are already into that philosophically.

I think you remember that we just bolted on below the DOZ, this MLZ or mine level ore body which is another huge ore body below the DOZ.

So I think you can look for continued opportunities by us to ramp this up to above 50,000 houses tons, just because of the efficiency of the blockade.

Right.

Are those in your numbers already for the forecast you get when you are calculating the next three or four years production that you're giving us, the CAPEX and the impact of that or is that still -- what I am trying to get at, is there another additional increase on top of what you're showing?

Our plan is based on 35,000 tons a day which is the nameplate capacity.

It was 42,000 for the fourth quarter and as Jim Bob said, for days we have done over 50,000.

During the first quarter, certainly in the first half, we are going to reach decisions about whether to go forward what the AFE for the necessary approval to get the nameplate up to over 50,000 and that looks very attractive.

It's not a large amount of capital.

It's not currently in our numbers but assuming we go forward, and I think that's really a strong probability at this point, it would be a very high rate of return project.

I might mention that again, the indications of the ability to blockade both the IOZ, which is right above the DOZ and the ore zone, deep ore zone, now mill level below it, what that is also doing is give us a high level of confidence on what the ore under the current pit will do and what would happen at Kucing Liar.

So it's important to emphasize that the fact that we're up to 50,000 tons makes us one of the biggest underground ore movers.

And by the time we get to the bottom of the pit in 2014, we estimate we could be up as high as 200,000 tons a day of moving the ore because of the efficiency of this ore.

In other words, a fracture of the ore is pervasive across our endar (ph) deposit.

As you know, the DOZ is about 2 kilometers to the southeast of this ore body.

But from the drilling we have done of the ore body, the underground ore that we have under the Grasberg pit and the Kucing Liar will be similar in nature.

And so our expectation is to be able to get from 50,000 tons, like the DOZ, up to 200,000.

Our confidence level in that increases as we have these successes in DOZ.

I think that is relevant to your question.

Great.

Thank you, very much.

And maybe another one, just one quick question following on Vic's earlier.

We talked about Gresik and the impact of the mine on that.

I assume with Atlantic's 45-day shutdown, there is no real impact on the float (ph) as to Atlantic as a result of the Grasberg being done, i.e., it's got all its fees for what it's being contract, what it needs from third parties?

Right.

And, you know, it's at a time that Gresik -- that Atlantic will have less need for concentrate and we will be producing less concentrate.

So when Atlantic is producing less, when PT-FI is producing less, so that matches up.

And we are working with our customers to advise them of our production plans, and working cooperatively with them, as they develop other sources for their concentrate fee.

So the Atlantic shutdown gives you a little more flexibility in dealing with other third-party players?

Exactly.

Mr. Adkerson, there are no further questions at this time.

I will now turn the call back to you.

Please continue with your presentation or closing remarks.

We want to thank everybody for their interest.

And we will look forward to reporting to you at the end of the second quarter.

If you have any questions following the call today, or as you listen to replays or review the information that's available on our Web site, please feel free to call us if you have follow-up comments or questions.

Thanks for your participation.

Ladies and gentlemen, that does conclude the conference call for today.

We thank you for your participation and ask that you please disconnect your line.

Thank you.