費利浦·麥克莫蘭銅金 (FCX) 2010 Q4 法說會逐字稿

Ladies and gentleman, thank you for standing by.

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

At this time all participants are in a listen-only mode.

Later we will conduct a question and answer session.

(Operator Instructions)

I would now like to turn the conference over Ms.

Kathleen Quirk, Executive Vice President and Chief Financial Officer.

Please go ahead ma'am.

Thank you and good morning.

Welcome to the Freeport-McMoRan Copper & Gold fourth quarter and 2010 earnings conference call.

Our release were released earlier this morning, and a copy of our press release is available on our website at FCX.com.

Our conference call today is being broadcast live on the Internet, and anyone may listen to the call by accessing our website home page and clicking on the webcast link for the conference call.

We also have several slides to supplement our comments this morning, which are also available on our website.

In addition to analysts and investors, the financial press has been invited to listen to today's call, and a replay of the webcast will be available on our website later today.

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

I would like to refer everyone to the cautionary language included in our press release and the presentation materials and to the risk factors described in our SEC filings.

On the call with me today our Richard Adkerson, President and Chief Executive of FCX; Jim Bob Moffett, Chairman of the Board.

We also have Red Conger with us today and Dave Thornton.

I will start by briefly summarizing our financial results and then turn the call over to Richard, who will be going through the slide materials to review our recent performance and outlook.

As usual, after our prepared comments we will open the call for questions.

We're very pleased to report today fourth-quarter 2010 net income attributable to common stock of $1.5 billion, or $3.25 per share.

That compared to net income of $971 million, or $2.15 per share for the fourth quarter of 2009.

For the year 2010 FCX net income attributable to common stock totaled $4.3 billion, or $9.14 per share, which compared to $2.5 billion, or $5.86 per share for the year 2009.

Our quarterly results for the fourth quarter and for the year 2010 were both new records for Freeport.

Our fourth-quarter 2010 consolidated copper sale of 941 million pounds were higher than our previous estimates of 895 million pounds, but as anticipated, lower than the fourth-quarter 2009 copper sales of 989 billion -- million pounds.

The variance to the October 2010 estimate primarily reflects favorable production performance in Indonesia, our South American operations, and our Tenke Fungurume operations in Africa.

The variance to 2009 primarily reflects anticipated lower sales in North America, partly offset by a higher contribution from Indonesia.

Our fourth-quarter 2010 consolidated gold sales of 590,000 ounces were slightly above our previous estimates of 585,000 ounces, and our gold sales in the year-ago period were 551,000 ounces.

Our consolidated molybdenum sales for the fourth quarter of 17 million pounds were slightly higher than our prior estimate of 15 million pounds, primarily because of stronger demand that we're seeing in the metallurgical sector.

The consolidating molybdenum sales for the fourth quarter of 2010 were similar to the year-ago sales.

Our results include positive pricing for all of our commodities -- copper, gold and molybdenum.

Our realized price for copper in the fourth quarter was $4.18 compared with $3.20 in the fourth quarter 2009.

Our realized price of gold approximated 1400 per ounce in the fourth quarter of 2010 compared with $1115 per ounce in the fourth quarter 2009.

And our realized molybdenum price of $[1660] was over 20% higher than the year-ago period.

As anticipated, our consolidated unit site production and delivery costs of $1.46 per pound in the fourth quarter were higher than the year-ago period.

Our net unit costs net of byproduct credits averaged $0.53 per pound in the fourth quarter of 2010, which compared to $0.62 per pound in the prior-year quarter.

The lower unit net cash costs in the 2010 period primarily reflect higher gold and the molybdenum byproduct credits.

Operating cash flow totaled $2.1 billion for the fourth quarter and $6.3 billion for the year 2010.

These amounts were net of working capital requirements totaling just over $300 million in the quarter and eight -- over $800 million for the year.

Operating cash flows at these levels were significantly above our capital expenditures, which totaled $535 million in the fourth quarter and $1.4 billion for the year.

We ended the year in a very strong financial position.

Our total debt was $4.8 billion and our consolidated cash approximated $3.7 billion.

During 2010 we repaid a total of $1.6 billion in debt.

We also were pleased to report today our preliminary estimated -- consolidated proven and probable reserves.

These reserves as of December 31, 2010, are estimated to total 120.5 billion pounds of copper, 35.5 million ounces of gold, and 3.39 billion pounds of molybdenum.

Net reserve additions totaled 20 billion pounds of copper and significant amounts of molybdenum.

Those totaled(Sic-see press release) 500% of our 2010 copper production and 1200% of our 2010 molybdenum production.

We used our long-term price to determine our reserve of $2.00 per pound of copper, $750 for gold, and $10.00 per pound of molybdenum.

It is a bit higher than our last year's numbers, which were based on $[1.60] per pound for copper, $550 per ounce of gold, and $8.00 for molybdenum.

As previously reported, our Board of Directors declared a supplemental dividend which was $1.00 per share that was paid on December 30.

That dividend is in addition to the regular quarterly common stock dividend of $0.50 per share.

And our Board also declared a two-for-one stock split to be effected on February 1st.

The additional shares will be issued on February 1st and will increase the number of shares outstanding to approximately 945 million, from the current level of 472 million.

I would now like to turn the call over to Richard, who will be providing additional comments about our results and discuss our outlook.

Good morning everyone.

It's a real pleasure to be reporting on a year in which we had such strong operating and financial performance.

We are making great progress in the restart optimization projects that we have previously talked with you about.

In aggregate these projects are moving towards adding 500 million pounds of annual copper production.

We're also aggressively working on identifying major growth projects.

We have a very significant opportunity to create value for our company through investing in our existing resources and reserves and create development projects and add future cash flows.

Our reserve base allows us to do this.

As Kathleen indicated, we had significant reserve additions this year, continuing the experience that we've had in past years, and with the strong commodity prices that had -- is significantly enhancing our financial and liquidity position and allowing our Board of continuing our long-standing tradition at Freeport of returning cash to shareholders.

If you turn to slide four, these are some of the numbers that Kathleen reviewed with you, and I'd just -- I would like to make just a couple of big-picture comments about these results.

First of all, with copper prices in excess of $4.00 -- and many expect them to go a higher, and the market is strong globally -- we are earning extraordinary margins.

Our unit costs in 2010 of $0.80 -- and that will increase to just over $1.00 next year because mine sequencing at Grasberg and some increased input costs.

Still at those levels, given the fact that we have such strong levels of consolidated production volumes, roughly 4 billion pounds a year, and we can see that continuing with minimal capital expenditures going forward, at today's copper prices that generates operating cash flows in the range of $8 billion a year.

We only had $1.4 billion of CapEx this past year.

Our estimate for next year is $2.5 billion.

We want to spend more capital as we advance our growth projects, and we do have a very attractive opportunity to grow internally, which we want to pursue aggressively.

So the big picture when you look at these numbers, our reserve base, our plans is we have a company that had the opportunity to grow in markets that are favorable and look to be favorable for the future, and at the same time earn excess cash, which gives our Board the opportunity of providing those kinds of returns to shareholders.

On page 5 we show the details of our unit production costs for the fourth quarter of 2010.

You can see that we do have impacts of higher input costs, which are rising -- but not to the levels of where they were prior to the financial downturn in 2008 -- and yet copper prices are stronger, so our margins are growing.

You can see just how strong this PTFI asset at Grasberg is in Indonesia.

With a quarter in which we had good gold production -- not our highest, not the strongest quarter that we have had, by any shot -- there we ended up with net unit costs of $0.91, so we sold almost 300 pounds of copper there at a price of $4.00 and the net credit of almost $1.00 a pound.

It's a great asset.

But we have a set of great assets.

It gives us a range of production in North America, South America, and you can see Africa is meeting its design capacity for copper, and altogether we end up with the consolidated unit cost of $0.53 for the fourth quarter.

In terms of markets, China continues to be strong.

The news out of China this morning is that their economy is growing at a stronger rate that it has been.

The market is concerned that that is going to lead to steps to control that growth.

China has had a great run now of being able to have very significant growth and to manage that growth in a way that it doesn't create the kinds of ups and downs that you see in a lot of other economic situations historically.

But China's internal economy is growing.

The world's economy overall is improving.

As we talk to our customers in North America -- and we supply almost half of the copper rod to the North American market -- we see sectors of the US economy responding favorably.

Of course anyone involved in either residential or commercial real estate continues to see weakness, but in the export economies, the manufacturing economies, the automobile business here we're seeing positive developments.

Northern Europe is strong.

And so we add to the fact of the continued strength in China and the emerging market, sectors in the USA and North America of improvement, and that has added up to a copper market that is very tight globally and a positive outlook for those marketplaces.

We benefit from the high gold prices.

Molybdenum prices have come off their lows, and they are at levels today that our world leading molybdenum business is a significant contributor to our company's profitability and growth opportunity.

At Freeport we have just a very straightforward operating strategy.

We focus on safety.

Our business is inherently dangerous, and whenever we talk about our operations to our people, we talk about safety first, and then we talk about maximizing production volumes and controlling costs.

It's that simple execution that is what drives it, and we've had a history of executing very well, and very proud of our operating teams for doing that.

Then in terms of building values for our shareholders, we start with this large mineral resource base that we have associated with our existing mines.

We do greenfield exploration, and success there would be incremental to this, but we don't depend on acquisitions or success in our greenfield projects to look for future growth.

We have that within our side of assets, and those resources are creating additions to our proved and probable reserves.

Significant additions this year.

But we've had a run of years in which we have had reserve additions.

And now we're working hard to convert those reserves into development projects so we can grow our production, create future incremental cash flows and provide returns to our shareholders.

Page 8 details the changes in our reserves.

You can see this year we added 20 billion pounds to our proved and probable recoverable reserves that we report to the SEC.

That reflects the higher copper price that we use this year, $2.00 -- still much lower than current prices of course.

But that increased our reserves 5 times over our production, to 120 billion pounds of proved and probable copper reserves, 6 times additions in the molybdenum reserves to -- over our production for the year.

As you can see if we go back a number of years, we've had increases in our reserves, and we see within our set of assets the ability to continue that going forward.

And then beyond our proved and probable reserves is this mineralized material which will be the source of future reserves, future production opportunities for us.

We're undertaking exploration to grow those resources.

To illustrate it we have this chart on page 9, which is a bit of apples/oranges when we add reserves to mineralized material, because the mineralized material is contained copper, not recoverable copper, but at $2.20 you can see over 1 billion pounds of contained copper within the zones.

(inaudible - microphone inaccessible)

It's over 100 billion pounds of contained copper within areas of where we've done drilling to identify this mineralized material.

To get that to reserves we often have to do further drilling, we have to develop mine plans, ensure we have power, water, resources to develop it.

But it is identified already.

It is not something that we have to go out and, as I said, do acquisitions or have success in greenfield projects.

It's there for us.

And it's interesting to look on page 10 to see where our reserve additions are coming from.

We have had significant reserve additions since 2010 in -- at our Cerro Verde project in Peru, which has a great development opportunity, but 80% of our reserves came from our properties in the US.

You'll have to go back many years for -- to hear people in the industry and in the investment community talk about the poor assets that were located in the southwest US.

Well, that is simply not the case in the context of the markets that we face today.

These assets contribute significant profits.

They have the opportunity for significant growth opportunities, and it's a real focus of our company as we go forward, is to identify how to expand them and take advantage of these very large reserves and resources that we have there.

Jim Bob did a presentation in New York in November, which is on our website, and I would encourage you to go review those slides in which he talked about our exploration from a big-picture standpoint.

But it's these really very significant sulfide resources that are below the oxide deposits that the company has been mining traditionally that give us this opportunity for growth.

So as we look forward for these expansions, we're looking at mill investments.

That's significant.

The mill investments allow you to have significant recoveries and be able to produce those reserves in an economic fashion.

So that's what we're doing.

The slide is a little simple.

It's not quite that bright line change between oxides and sulphides, but we have the technology and the capability to do it, and we're committed to going forward and growing our business.

We have some detailed reports on where we stand with some of the projects that we have been pursuing.

At Morenci we've restarted the mill.

It's operating over 40,000 tons per day and on its way to 50,000 tons per day.

That's allowing us to process material more efficiently than we otherwise could.

We had cut our mine rate at Morenci in half in the end of 2008 and going into 2009.

That was done in response to low prices at that point and driving down unit costs.

Now we're stepping it back up, and we're ramping it up to a current target of 635 metric tons.

Sometimes we talk about short tons at Morenci, but this is metric tons.

And where looking at further rate increases.

We're doing this in a way and with a view towards containing costs, but it does give us an opportunity to add volumes on an economic basis.

And we are looking at -- aggressively looking at potential investment in a major new mill to mine the sulfide ores that are -- have been identified and continue to be expanded.

Miami, which is the historical mining district here, east of Phoenix.

We have significant reclamation activities there.

Now we are doing stripping activities to allow us to mine copper as we reclaim this area.

We're ramping up to 100 million tons per year -- pounds per year.

We -- a relatively low-cost project.

We're using some of our existing equipment.

We've got reserves to allow us to operate for a number of years.

We're doing drilling there.

This is a place that had historical -- significant historical production.

It's also in the area where the resolution project is being pursued, and there are opportunities there that we're going to see if are available to us.

At Safford, which is a relatively new mine near Morenci, we have a sulfur burner project that is progressing, and that is going to allow our project to be more efficient and profitable and will be beneficial for the long-term development of that district, where we have an orebody called Lone Star that has a significant reach towards us, will be part of our future.

In New Mexico we're restarting the Chino Mine where we had stopped mining and ore crushing activities.

This is turning out to be a good project with the higher copper prices.

Our reserves that we identified last year of just over 1 billion pounds have grown to over 2.5 billion pounds.

We're investing money.

We're working towards reaching a -- production levels of 200 million pounds a year by 2014, and the economics of that are very attractive.

In South America the El Abra Sulfolix project is progressing.

Here's a picture where just within the last week to 10 days we initiated the stacking of ore on the new Sulfolix system.

That sulfide ore will replace the depleting oxide ore that we have been mining and give us a long-term life from that ore -- that mine.

The project is 80% complete and has gone on schedule within our capital budget.

And as we've gone forward with this, one of the things we've found since completion of the merger is that there is a significantly larger sulfide resource there than we had anticipated, and so we're looking at ways of accessing that through potentially a major mill development and working with our partner, Codelco, to do that on an economic basis.

Cerro Verde in Peru -- we completed a $50 million debottleneck project.

That increased our mill rate from 108,000 to 120,000 tons per day at a very low cash cost.

This is a mine that has the capacity to be expanded significantly, and we're working right now on plans to do that.

We expect to complete a feasibility study for a major expansion during the first half of this year and to move forward with permitting on it.

The expansion itself would be for either a doubling or a tripling of the current mill throughput rate, and we are very positive about the progress that has been made on the -- on both the feasibility study and on the important issue of identifying water resources to allow us to expand this in such a significant way.

In Indonesia we've continued to progress, the development of our underground reserves.

Very large, world-class, profitable orebody for the long range because of the very significant copper reserves, together with the significant gold resource in the same ore.

Our DOZ mine, which is currently operating at an 80,000 ton per day level is one of the world's -- if not the world's largest -- block-caving mine.

We've also begun mining the smaller Big Gossan Mine.

It has very high grades and is contributing to our profitability.

We'll be moving to the Grasberg block cave after the depletion of the Grasberg open pit, currently scheduled for 2016 and may be extended for a period of time, but that has very large reserves and would allow Grasberg to continue as a major, low-cost copper mine for the long-term future.

In Africa, Tenke Fungurume, we're benefiting from the fact that the mill that was designed for our initial development project is operating significantly above capacity.

It was designed for 8,000 tons per day and has operated in the fourth quarter at 11,000 tons per day, and 10,000 tons per day for the year.

Now, those tonnage, when you compare it to a Grasberg, sound small, but the grades at Tenke Fungurume are so large at roughly 4% copper equivalent that these increases in capacity for the mill translate into significant volumes.

The original project was designed at 115,000 tons of copper per year, roughly 250 million pounds.

You can see our numbers.

We're operating at that level in 2010.

Taking advantage of this higher mill capacity, we've bought some mining equipment we're putting in place, and that will allow copper production to increase to an estimated 290 million pounds in 2011.

We are moving forward with our expansion project.

We've had a goal to double the initial project through mining additional oxide ore.

We'll be doing that in steps, and we're progressing plans to do that.

We're looking to add 100 million to 200 million pounds to this roughly 300 million pounds over the next two to three years.

At the same time, we're drilling a lot of core holes, doing exploration analysis to see where the future of this goes.

We continue to believe this has the resource to allow this to be a world-class mine, and that is our goal for being there.

We completed the contract review process with the government of the Democratic Republic of Cong.

The appropriate government officials for the different agencies and our company have signed the amended contracts.

We're awaiting formal presidential decrees which would finalize the process, but we have a good working relationship with the government on the project at this point and anticipate working to keep that in that status.

At Climax -- Climax is we believe the world's most attractive development project in the molybdenum business.

It's a pure molybdenum mine located near Leadville, Colorado.

We are advancing construction to give us the ability to make the decision to start it up.

We're spending money to -- even in the winter we've advanced construction projects.

We will continue this mine development.

We will continue mine development in 2011.

We -- it's a $700 million project with remaining costs of $450 million.

Our plans include spending $350 million in 201.

So you can see that we're going to be nearing completion by the end of 2011.

The project has design capacity of 30 million pounds annually when it begins operation, and it has the resource to allow us to consider really significant expansion options beyond that.

We will continue to make the decision as to when to start hiring people to start this operation up.

We're going to be in a position to do that though because of the money we're spending.

Page 20 outlines the specific projects that we're working on that I mentioned earlier and shows how they aggregate to this 500 million pounds of additional incremental copper production, and this is just from debottlenecking, restarting deferred operations, tweaking the business, not making major capital expenditures.

But the major capital expenditures are things that we're really focused on.

Page 21 divides those projects into two basic types.

One is projects that replace depleting ore.

That includes Sulfolix at El Abra, the Grasberg underground to replace the pit there -- significant projects, very important to the future of our company.

But beyond that, we have the resource opportunities that would allow us to significantly add incremental production to our current base levels.

That includes the projects in South America and North America and in Africa with the Tenke oxide project.

In aggregate that is over 1.5 billion pounds of copper annually.

It involves spending capital, which we are prepared to spend and have the resources to spend over the coming years.

And then beyond that, there's other significant expansion opportunities that we're evaluating, studying.

With good copper markets we expect to go forward with those, and that's the Tenke sulfides, other North America mill projects, the Lone Star development.

And we continue to look at resources through spending money on exploration.

We are increasing our exploration budget significantly this year to $200 million.

You can see that is going to spent globally, really focused on our existing properties and brownfield expansions.

When we look at our 2011 outlook, we can report to you now the results of this annual process that we go through in finalizing our budgets, which our Board will be approving at its upcoming meeting.

But our current sales outlook is for 3.85 billion pounds of copper; 1.4 million ounces of gold, which reflects the sequencing at Grasberg, where we'll be mining in lower-grade areas this year, moving back to higher-grade areas in the future; 70 million pounds of molybdenum.

Net unit cash costs at those levels and at $15 moly and $1350 an ounce gold, of $1.10 a pound at current copper prices, our model would indicate $8 billion of operating cash flows with significant leverage to copper -- each $0.10 is $300 million -- and $2.5 billion of capital expenditures.

So very strong free cash flows.

Page 24 shows that we will be producing larger volumes as we go forward.

This shows the outlook for 2011 to 2013.

The gold sales reflect the mine sequencing at Grasberg, and the molybdenum sales at this point do not include Climax, and when we make the decision for Climax, that would be in addition to these volumes.

I had mentioned these projects under evaluation to add to those volumes, and that's what our plans are.

Our objectives are further increases in Morenci and Stafford; plans in the Sierrita district where we acquired the Twin Buttes orebody that is adjacent to Sierrita, looking for how to deal with that, either as separate orebodies or on some kind of combined basis; the Climax restart; the major mill project; the major expansion of Cerro Verde; the mill project for major expansion at El Abra; further development of the Tenke oxides and the long-term sulfide.

So these are the numbers that are approved, we're going forward with.

This is what we will be working on to add to those numbers in the future.

Looking at 2011, because of mine sequencing we'll produce higher volumes during the second half of the year than the first half, but this gives you the quarter-by-quarter outlook for copper, gold and molybdenum sales.

And when you add all of that together, you can see how our 2011 sales by region compare with this year.

You see higher volumes in North America, South America volumes being relatively consistent, and then lower volumes in Indonesia because of this mine sequencing issue.

That translates into unit cost by region, which we show on page 28.

You can see the swing is really basically at Grasberg, and that is shown on page 29, where we have a reconciliation.

It reflects 16% lower volumes of copper at Grasberg and 26% below -- lower volumes of gold.

And again, that is at a $1350 gold price.

So the unit cost is really more of a function of volumes.

It does have some impact from higher energy costs and other input costs, but it is driven principally by volumes.

Page 30 shows the analysis of operating cash flows and EBITDA numbers that we typically present and that I referred to earlier.

At current copper prices, $8 billion of operating cash flows and with EBITDA between $11.5 billion and $12.0 billion at current prices.

And you can see how that varies with changing prices.

Sensitivity data for your use and information is presented on slide 31.

Our current approved capital expenditures are shown on slide 32.

As we go forward we would expect these to be adjusted upward as we deal with these projects that we are studying and have plans to pursue.

We have financial resources to do this.

Our company is financially very strong at this point.

Our -- you can see how our debt has been reduced.

From the acquisition in 2007 to the end of 2010, our gross debt was $4.8 billion with no really near-term required maturities.

We may have the opportunity to deal with some debt because of call features in that debt, but net of cash our debt is $1 billion.

At December 31 the transaction that was previously announced to make the investment in McMoRan Exploration was closed.

FCX purchased $500 million of McMoRan's 5.75% perpetual preferred convertible stock as part of a $900 million financing by McMoRan.

It's convertible at $16 a share.

McMoRan is engaged in drilling high-potential wells in the shelf of the Gulf of Mexico that is redefining really geology on the shelf and has the potential of having very significant increases in the value of that company, and FCX now has a participation in that through this convertible preferred stock.

Financial policy continues to be one that is focused on maintaining the balance sheet, investing in our growth projects that we have, dealing with debt repayments when that is economic to do so.

And our Board in 2010 declared a supplemental dividend that was paid in December.

We will have a two-for-one stock split effective the 1st of February.

The current dividend is now $2.00 a share.

Of course that will be $1.00 per share past the split on February 1st.

And the Board will continue to have the opportunity to review ways to return cash to shareholders because of the financial performance of our company.

With that, we will be prepared to open the line for questions.

We appreciate your interest in our company and look forward to hearing your questions.

(Operator Instructions) Sal Tharani, Goldman Sachs.

Good morning.

If I'm looking at this slide on the growth project or the production project projection for [TD] -- for Grasberg, you have copper going down again in 2012.

Is it safe to assume that costs will actually even go up further because of that?

Well, it's -- there's cost, which is the cost that you incur in running that operation, and then there is unit cost.

And unit cost -- if all costs stay the same and your units are down, then your unit costs are rising -- but costs really haven't risen.

It is primarily a fixed-cost operation.

So, Sal, the unit costs are a reflection of the units that are produced, both units of copper and gold, and then the gold price.

And just one more question before I hand it over.

The latest merger between Lundin and Inmet, does it change anything for you at the Tenke, your plans?

And since you have now resolved issues with the government, would you be interested in buying that portion for yourself?

The transaction that Lundin is pursuing is a corporate transaction involving Lundin's and their -- and it's their own business.

It does not have any impact on the structure that we have at Tenke or has no impact on our plans at Tenke.

Great, thank you very much.

Brian Yu, Citigroup.

Thank you and good morning, Richard and Kathleen.

My question is on the reserve additions.

Could you parse out how much of that is attributable to drilling and exploration versus changes in your price assumptions?

It is really a combination of the two.

It is essentially -- the bulk of it is through drilling activity and it is that transfer, as we've talked about, of resources to reserves.

So we have the significant resources.

We're doing work every day, all the time, to qualify those resources' reserves.

And while there is some impact in going from $1.60 to $2.00, the bulk of the change has to do with the physical activities through drilling, mine planning, analysis, that gets those resources into reserves.

Essentially what we were able to do is to move -- a lot of this material was in our mineralized material previously, and so that was able to be moved into the reserve category, which is our goal going forward, to continue to find ways to move mineralized material into reserve, and it reflects, as Richard was talking about, the several years of drilling that was done.

The price impact and the economic assumptions did allow us to move it into reserves, but it was a result of the drilling over time.

Let me take a crack at it -- this is Jim Bob.

Let me reemphasize what both Rich and Kathleen have said.

The reason why it is a combination is, if you get a chance to review my presentation in New York earlier last year, we have this huge resource.

If you don't have core holes that are drilled into it, it doesn't matter what the prices are.

You can't sit back and say, well, we've got this big resource and now that prices have gone up, we'll use the $2.00 price.

If you haven't drilled the core holes and gotten the spacing that's necessary by -- to use a definition of a proved and probable resource going into reserves, then you can't add it to your reserves.

So if you'd just imagine a deposit that has got an open pit and it's sitting there and then the deepest wells that have been drilled are right below the pit level and maybe there's one or two or three core holes that have been drilled deeper, you might put that into mineralized material, but you can't discuss it even as a possible resource because with just one or two or three drill holes, the spacing is just too wide.

What we have done is at all of our major projects, gone in and spent probably -- and actually as of -- $400 million or $500 million since the acquisition of the Phelps Dodge company, and by getting the core holes and having the data spacing that's necessary to be able to do define by assays and then of course by taking the [early] extent of those assays, we could add these major volumes.

I hope that gives you some idea of why we say it's a combination of the drilling, and of course once you get the drilling, if it [fractures] and if you're using a cutoff of $1.00, $1.60 or $2.00, that's going to have an impact on how deep you can take some of these pits and add these reserves that you've drilled up.

Okay, that is helpful.

And Brian, just one more comment along those lines.

It's not something you can really divide easily because at higher prices your entire mine development approach may change -- than it would at lower prices.

So you may have a bigger footprint, a bigger processing facility, and these are -- this is an exercise that we do for purposes of public reporting with the SEC.

When we get into planning actual development activities, it's not targeted to a specific price.

We look at an array of prices and think about how that would fit into our portfolio, what would be an opportunity to us, and how would we manage it within our portfolio.

And so it is not a simplistic thing of looking at a price and saying that is going to drive how we decide to spend our money.

Okay, that's helpful.

Can I get one more question in?

With your 2011 exploration budget, it looks like most of it is for North America and South America in terms of the incremental increases.

Along those same lines, can you give us a sense of how much of that is attributable to more infield drilling versus stepping out of your existing resource base?

(multiple speakers) The majority of our exploration budget is still targeted at brownfield projects and getting them defined as I just described.

We obviously have some greenfield stuff that we always (inaudible) out in front of the exploration program, and we have got some very interesting greenfield projects that will be pursued.

But the majority of the money you see for our budget will be a continuation of this effort to convert mineralized material around our substantial holding and continue to add to the reserve base vis-a-vis the techniques we've just described to you.

Thank you.

David Gagliano, Credit Suisse.

Hi.

Thanks for taking the question.

My questions relate to your project pipeline, or slides 25 and -- 25 and slide 21 on the slide deck.

First on slide 25, of the eight or so projects that are still under evaluation, I was wondering if you could prioritize that list and also give us a sense as to when we should get definitive go/no-go decisions for those projects?

Okay.

The -- you know, it is a question, David -- we're working on all of these projects, so it's -- and it's in some cases different teams within our company working on them.

So it's not like we just go from one to another.

But the one really to watch near-term is this Cerro Verde project.

We expect to have a feasibility study during the early part of 2011, and that will lead to a permitting process.

And the major decision we're evaluating there, a lot of it driven by water resources, is whether double or triple.

So that is one to watch.

At Tenke we're doing this in steps.

We have permits that allow us to expand there, so it is a different process than at Cerro Verde.

And we will be making progress on that and reporting that to you as we go along.

I would say the next major project that will require -- that we're working on, we're very encouraged by the progress we're making and what we're seeing with it, is this idea of a concentrator mill at Morenci.

And that would be a significant capital project but a significant incremental value driver for Morenci in our North American operation.

With the Climax startup you can see how much money we're spending.

We have our plan.

We're just doing it.

And it's just going to be a question of saying, when do we start hiring the operators and going to work there?

And that's going to be based on our assessment of the marketplace.

But we're spending money on a much more accelerated rate than we had previously planned to spend money.

Okay, that's helpful.

And just to clarify, none of these are in the current mine plan through 2013; correct?

That's correct.

Nothing is in our volumes or the CapEx for these projects.

And then my (multiple speakers) sorry.

Go ahead.

Except the Climax CapEx is there, but not be volumes.

Okay.

And then my last question, on slide 21 I was wondering if you could just divide the bucket, in terms of the $8 billion to $10 billion of CapEx, between the left side of replacement and the right side of growth projects?

Well, at El Abra we're just about finished with the sulfide spending there.

On the replacement, we're going to be spending roughly $450 million to $500 million on Grasberg development over the next several years.

So the balance of what we're talking about in $8 billion to $10 billion, aside from the Grasberg development of roughly $450 million to $500 million a year, is coming from the projects that Richard just talked about.

Okay.

And $450 million, $500 million over the -- per year over the next --

Per year.

Per year.

Right.

Over the next four or five years sort of thing?

Is that --

Right.

That's correct.

Thanks very much.

Brian MacArthur, UBS Securities.

Good morning.

I just want to follow up a little bit on Dave's question.

On 21 you talked about 850 million pounds out of South America, potential new copper production annually.

Is that a consolidated number?

I mean, where I'm going with this is Cerro Verde could be doubled or tripled to make up a good portion of that, but do we have anything in five years for potentially Candelaria or El Abra at deeper?

Are you thinking about that, or is that just really Cerro Verde?

It is Cerro Verde and El Abra.

It's the Cerro Verde mill project that we've been talking about, and it's a potential project at El Abra for a mill.

Second question, just on 32, and we're talking about capital going forward to give us the $1.3 billion in 2011, which -- I know it is for major projects, but you assume it's $470 million for Grasberg, $350 million for Climax, $200 million for the rest of El Abra, and odds and sods.

Does that mean the other $1.2 billion for all other, is that kind of a sustaining CapEx number going forward?

I mean up from sort of $700 million to $800 million?

Yes.

Some of the timing, Brian, of what we -- we were budgeting around $900 million or $1 billion a year in CapEx, sustaining CapEx.

Some of what you're seeing in 2011 and 2012 is really from prior years, but a good number is around the $900 million or $1 billion for sustaining capital.

Yes.

And part of it is just this catch-up.

The last half of 2008 and through at least half of 2009 we really cut back capital.

We were cannibalizing equipment, not buying spare parts.

And now those 100 trucks we had parked are either cannibalized or going back to work, and now we're having to -- it's some restocking coming in on that.

Right -- which is why you've carried it forward for another year after that; right?

Right.

Next question just very quickly -- Grasberg taxes in the fourth quarter were down to 40%, which is lower than the year.

Is that just cleanup of truing up?

And I know it varies a lot, but nothing has changed going forward as far as the tax rate, it is just the way it worked out this quarter?

Because that is lower than --

No.

That is strictly just the way that -- we make calculations on a quarterly basis, and it's trued up every quarter, and that reflects that.

The tax rate is set by our contract award.

The income tax is 35% and withholding tax 10%, so that has not changed.

And just one final question.

Just with gold price over there, is there anything going on at Wabu or anything, any at all, any change there?

No, there is no change at Wabu.

Our work to date does not indicate that there is a resource that warrants development from our standpoint.

Great.

Thank you very much.

I will say though we do have continued exploration drilling outside of block A, and that work continues, as well as significant exploration within block A.

Great.

Thank you very much.

Tony Rizzuto, Dahlman Rose.

Hi all.

Thank you very much for taking my questions.

I have got two of them actually.

One is -- and thanks for all the detail on Cerro Verde.

I noticed that around the holidays there was a threat of a potential labor action there, which is not unusual.

But I was wondering if you could provide us a little bit of color behind maybe what you guys agreed to with the labor there.

And it seems to me that was a very important component of allowing the increased and further development there along the lines of expanding the operations.

And the second question I have is on Tenke, and that's in regards to (multiple speakers)

Tony, let's go ahead and --

Tackle that one first?

Yes.

Let's go ahead and let Red talk about Cerro Verde.

Good morning Tony.

The team there did a great job of understanding what the union's concerns were, primarily around how we do shift change and hot changes to maximize the utilization of the equipment.

We got that resolved satisfactorily.

And we are also looking into some of the details around how medical benefits are done, and we're going to jointly look at that going forward.

So good resolution there, and we continue to be pleased with the workforce at Cerro Verde.

Excellent.

(multiple speakers) the second question (multiple speakers)

We do have our contract up for renegotiation this year.

I recall back in 2007 and prior it was not uncommon to have strikes that Cerro Verde for any number of reasons, some totally unrelated to our employees.

And we have had plans -- and still have plans -- that allow us to operate.

When those strikes occur, not all of our workers are -- would be subject to a union strike there.

But one of the things that has really improved is Cerro Verde's relationships with the community in Arequipa.

We're building a major water plant for them now.

The community relationships are much improved, and we just don't have the kind of issues related to work stoppages that we had going back three years ago.

Excellent.

The other question I have, gentlemen, is -- and lady -- is on Tenke, and obviously with the contract review process completed, I understand there's another political or another election this year, if I'm not mistaken.

I'm wondering, how comfortable are you that this whole thing may not be -- may be reopened -- may not be reopened again?

Well, there is a presidential election scheduled for the end of 2011.

That's a normal-cycle presidential election.

There has been some changes in the constitution there about how that election will be conducted, but we're confident that our contract now has completed this 2.5 year plus review process.

I don't think anybody will have an appetite for opening it up.

We will be a significant taxpayer.

The government will be getting -- after recruitment of the capital that we invested on their behalf, in the future there's dividends coming to them.

We have a workforce that approaches 5,000 people.

80% of those are Congolese.

And the operation is going relatively smoothly, and everybody is focused on expansion.

So we think all that adds up to giving us a lot more comfort about our relationships with the government than we have had during the course of this contract review.

Excellent.

Thank you, Richard.

I appreciate and look forward to seeing the continued success there.

Thank you.

Mark Liinamaa, Morgan Stanley.

Good morning.

I would like to just ask about the new royalty structure that was discussed in some articles yesterday in Chile.

Is that included in your guidance?

And is -- how much of a change is it?

And do you expect that sort of thing to maybe happen in Peru or elsewhere?

Thanks.

Let me just say -- and then I will let Kathleen talk about the details -- this is a special situation in Chile that is related to the country's recovery from the earthquake.

And it has been a matter of discussion for some time now, and there was a give-and-take between the government, the administration, the parliament, and the industry to come up with a structure that would provide some near-term cash to the government to deal with the significant investment they're having to make from earthquake recovery and to do it in a way that would be acceptable to the miners there, and we're supportive of it and believe that they have come up with that.

Now Kathleen will talk about how it affects us.

It is reflected in our results for the year 2010.

The impact, pre minority interest, was about $[16] million, and it is reflected in our results going forward, and it depends on prices and margins at each operation.

But as Richard said, it is a contribution to the recovery of Chile, and we were pleased to be a part of contributing to that effort.

And you asked also about Peru.

Peru -- we have a stabilization -- current stabilization agreement at Cerro Verde in connection with our expansion, which the government is very supportive and encouraging of us expanding there.

We will be talking about the possibility of a new stabilization agreement with the government at that point.

Thanks for that.

And then just quickly, is there any comment you can make associated with maybe non-Freeport investments in infrastructure in the Congo that would allow you to develop Tenke up to its full potential?

Thanks, and that is it from me.

Thanks a lot, Mark.

The infrastructure development in that country is a major priority and a great need for the country.

There is work being done with the Chinese, and they are discussing issues with the Koreans and others about it.

We're having discussion with other miners there about the ultimate development of a rail connection, most logically through Angola.

That would be done on a cooperative basis with companies and the government.

And so that is something we're working on.

Power development is another factor that we're investing in significantly now, will require further investments in roads.

So this whole infrastructure development issue is an important one, and we will be a player in that, and there will be other players involved.

Thanks.

Good luck with everything.

I will say, though, we've talked a lot about this trucking issue, and it's not without its adventures, but overall it is working very well.

We're able to move product, going all the way down to [Durbin].

And costs are up because some diesel costs are up, but overall that system is working well.

And that will be the source of transport for the next expansion that we work on.

John Redstone, Desjardins.

I have two quick questions.

Firstly, off the top of the bat if you could clarify the situation regarding Climax.

In other words, given where we are today, how -- what would be the earliest date that that operation could be into production?

2012.

All right, okay.

Early 2012 or late 2012?

(laughter)

Well, the earliest would be early 2012.

(laughter)

All right, okay.

The other thing is, on slide 31 you outline in great detail actually the impact that diesel purchase power and currencies have on your EBITDA.

I was wondering if you had or if you were considering taking any steps to mitigate the risk of these inputs and maybe lock in prices and so forth going forward?

No.

I tell you, we look at this and we see correlations between many of these costs and the copper prices, and philosophically we're not -- we have not hedged copper prices, and as a result we -- with a couple of minor exceptions -- and historically we have not hedged any other costs as well.

Thank you.

Jorge Beristain, Deutsche Bank.

Good morning, Jim Bob, Richard, Kathleen.

Most of my questions have been answered, but one was really related to the use of cash flow.

If you could rank in terms of your preference for use of cash in 2011, CapEx, dividends -- including extraordinaries -- the potential for buybacks, and lastly M&A, because it would seem that given the consolidation happening in the copper industry, just wondering what Freeport's thoughts are in terms of the potential for M&A, and would you remain copper focused?

Well, in terms of priority it's CapEx, CapEx, CapEx, CapEx.

That's our number-one priority.

To the extent we can identify projects that have attractive rates of return and contribute to our growth, that's what's going to be our number-one priority.

And beyond that, because we have -- we're now an investment grade rated company with all the credit rating agencies, the banks are -- can I say very amenable to talking to us about financings if we need it.

We won't have any need of keeping significant cash in the company, so that allows the Board to think about dividends and stock buyback.

That is a subject of ongoing discussions.

With M&A activity, it is difficult, and we are in the deal flow information.

We have -- you can rest assured that bankers present every opportunity that is available globally to us, and we have discussions, and we have groups that follow projects and so forth.

It's not something I think -- and my experience has been you can't plan these unless you have a strategy of going through acquisitions, which we do not.

We're -- have a strategy of growing through internal investments.

And so potential M&A opportunities are opportunistic.

And we're certainly listening to opportunities.

It would have to be something that would be attractive to us incrementally to what we're doing with our basic strategy.

We would not necessarily be limited to copper and molybdenum, and so we would be open to ideas.

It is -- our experience has been that it is difficult to see how those work for us given our company's situation and our internal investment opportunities.

Okay.

And then just lastly maybe you could touch upon your outlook for the copper price.

Typically in a quarter you talk about how you're seeing better demand from industry.

Could you comment what you're seeing right now in terms of the end pull for copper and if you think the current copper price is fair in the context of what you're aware of in the world?

Well you know, the copper price -- I'm asked this all the time in the media and others.

The current copper price is what it is.

It's just the results of the marketplace at any point in time.

It's affected by investment fund flows.

That can affect the absolute price at any point in time, and it treats -- it affects the volatility in prices.

All of you know that, and that is just what it is.

So I don't even allow myself to think about whether the price is fair or not.

It's what it is.

We don't really have a view about predicting short-term price movements.

We're not traders or hedgers.

So we're optimistic about the economics of this business longer run, and that is driven by the supply challenges that you can see.

We would like to turn the spigot on and produce more copper today, but we can't do that because of the time it takes to drill resources, to get permits, to get water and power and so forth.

That is the double-edged sword.

We can't turn it on quickly, but because we can't, others can't either, and that leads to strong prices.

So we're optimistic about the future.

Don't know what short-term prices are going to be.

Now, in advance of each of these meetings I have our marketing guys around the world give me comments that they're hearing from customers.

And when I get those -- when I got those for this meeting, I looked at them and I was very encouraged by what I saw, encouraged by what we're seeing in Asia and in the US.

In general, you know, it is a continuing improvement situation.

The same way for Northern Europe.

But still those customers that are linked in to residential and commercial real estate have weak businesses.

But others are seeing their business is strong, they've adjusted to us.

They are concerned about how copper prices are because of the working capital implications, the potential substitution.

But offsetting that substitution is new markets that are increasingly becoming important because of the investment in energy-saving devices, the potential future of hybrid and electric cars, the mechanization and electronics that's being put in all processes today.

So fundamentally we feel very good about the marketplace.

We feel good about 2011, and we're very positive over a longer period.

Great, thank you.

Richard, let me make a comment about our investment strategy.

With the kind of cash flow you heard that we're going to be generating, assuming copper prices stay buoyant, it gives us a great opportunity to be on the lookout for big deals.

And an answer is, one of the things that controls our investment strategy is we're not going to get into a situation where we take on a small deal because we've learned quickly over the last 35 years of running these natural resource businesses that small projects get smaller, and big projects get bigger.

So we're focused on taking the opportunities, and unfortunately when you define that investment strategy, it means that there's many projects that you look at that may have some interesting core holes on the initial drilling or additional exploration, but unless you're convinced that it is a big opportunity, especially with the fact that we have our mineralized material and our resources still are vast that we have not exploited.

As you've heard us say, we've added significant reserves, especially since the inception of our exploration -- exploitation of these brownfield projects after the Phelps deal.

We've added over 40 billion pounds of copper -- 42 billion, to be exact.

That is the equivalent of a Collahusi.

It's the equivalent of a [Oyu Tonga].

So you can see why we have a great propensity to continue what has been successful (technical difficulty) great resource that we have and make sure we define it.

But big projects are our target because that is the only thing that is going to add value to the size of the resources that we have, and that is what you are looking for.

Great.

Thanks for the additional color.

John Tumazos, John Tumazos Very Independent Research.

Congratulations on the $1.46 site costs.

That is a big accomplishment.

How much engineering, metallurgy, geology staff do you have?

The brownfield projects are superb economically but also from a personnel standpoint, because you have the whole suite of specialists at each producing mine.

Do you have the personnel to undertake even one project away from your core operations if there was a new discovery or new project?

How much human capacity do you have?

I'm sure your guys are working very hard.

With the combination of the Freeport and Phelps Dodge human resources when we made our deal, we have the finest and deepest bench that you can imagine, and of course, in order to do all of the things you've heard us say we're doing, where we react to changes in the market conditions, we've been engaged in trying to define these assets and make sure that everybody understands where our best opportunities are, but there's one thing you can be assured, we've suited up the finest human resource group of -- all the way from our mines to our research to our financial people.

This company is blessed with the best people we could possibly have.

And we have enough people, with the amount of experience we have -- hundreds of years of experience, most of which are experienced right here on either the Freeport or the Phelps Dodge properties.

So that's not an issue that we even think about.

We just are blessed to have the human resources group that we have.

And one thing, John, too that we're benefiting from is these years of experience that we have are developing new people, and they're not new now.

But in Africa at Tenke Fungurume you see a lot of Indonesian faces.

We're using people from South America for the underground development at Grasberg.

People that work with us, because of the broad scope of our open pit mining, our underground mining, our concentrator mill processing, and our SX/EW operations have gotten tremendous amounts of experience.

We're always looking for good people, and we're filling in, but for example, as we undertook the re-manning of the Chino Project with adding 500 or so people, we realigned some responsibilities, and all of that is going very well.

Thank you.

Charles Bradford, Bradford Research.

Good morning.

There's been a lot of talk obviously about cash needs in Chile and Peru, but what about the US?

There'd been talk a few years ago about redoing the old Mining Act.

Some of the states where you operator are in pretty bad shape.

Are you seeing any pushes locally or within the US to increase taxes or royalties or anything else?

Well, you know, the Mining Act changes are still being debated, and we're engaged in that through the American Mining Congress.

Most of our properties in the US are owned and fee'd.

So the discussions about government royalties don't apply to many of our operations.

Here in Arizona where the most significant of our operations are, there is a significant budget deficit, but there is a real focus on job creation.

And we meet frequently -- I'm meeting with the governor this afternoon, as a matter of fact, and talking about this notion of our ability to invest and add significant numbers of jobs in Arizona.

So the politics are what the politics are globally, and we and the industry have to live with them.

As prices go up, governments, employees are going to push for more.

That has had an impact, as you know, in a number of operations in seeing projects deferred, as has environmental and community acceptance.

So all of this adds to this issue of the supply, supportive nature of the supply situation.

Thank you very much.

[Stephanie Chicaro], Barclays.

I just have noticed that you guys have done a very good job reducing debt, and I know the 2015's are callable in April, and I was wondering if you had any color on possibly refinancing those or how you view your capital structure.

We haven't made a decision.

We have the ability to call those, as you mentioned, and so we will be looking at whether to call them, refinance, repay with the cash on balance sheet.

We haven't made decisions as to where we go, but we have opportunities that look economically attractive.

Okay, thank you.

The face interest rates on our existing debt is substantially higher than what we could obtain with new financing in the marketplace.

Andrew [O'Connor], Harris Investments.

Hello, Richard, Kathleen and Jim Bob.

Congratulations on your progress.

Thanks Andy.

Simply wanted to gauge your sense of risk regarding your metal end markets today relative to say 12 to 18 months ago.

And you have already spoken to this a little bit.

But are you more inclined to use debt today?

And at what -- or pardon me -- at what are still low interest rates, to finance the company's organic growth versus say 12 to 18 months ago?

So thanks for any additional comments you have.

Well, clearly I think the world is stronger today than it was 12 or 18 months ago, I think most clearly evidenced by the improvement in the financial sector.

The banks are stronger.

Pockets of growth are there, and there are still risks that you read about every day, and those risks are still there.

But I think everyone would agree the world is stronger today than it was 12 or 18 months ago, and we certainly see that for our business in terms of the fundamentals of selling copper.

So it is there.

Now, our situation is, we're making so much cash at these levels, the need for financing is very low.

The financing is there, as Jim Bob referred to the -- if an opportunistic big deal came along, we [could] finance that.

But in terms of seeing our capital requirements as we go forward now, we have sufficient cash to pay for those.

[Fred Levy], Jefferies & Company.

Hey guys.

Thanks for taking my question.

I know that on the Alcoa call they guided to a 2011 demand growth of about 12%.

There's also been a couple of articles out there talking about certain applications where aluminum is a substitute for copper.

Can you -- whether it is your own sources or an external source, can you talk about what you see as an absolute percentage of demand growth for copper globally from 2010 to '11, and then maybe '11 to 12?

And then also talk about whether or not you think there is any significant risk of copper to aluminum substitution?

Well, you know copper in the developed world is historically -- been the commodity that is most closely correlated to industrial production changes.

So if you look in the developed world and take your own view of GNP/IP growth, in large part you're going to see what copper demand is going to be.

Then China, which today is between 35% and 40% of world consumption, is its own special case.

As I said, the story is today is about China's GNP growth, and they are spending tremendous amounts of money on projects that require copper.

And when you look out over the future years and think about what is ahead for China in terms of its own internal development, its demand for copper is very significant.

And then the rest of the developing world, in Asia and South America adds to that.

So I would refer you to the analysts that follow the supply/demand balance.

They've been right.

They've been wrong.

We sell all of our product to end users.

We don't sell to exchanges.

We sell a very little amount to traders.

And we see demand being very strong.

Double-digit strong?

No, not double-digit strong, but going from the 2% to 3% maybe to the 4% or 5% kind of levels, which is really significant for copper considering the challenges that the market has for supplying in place.

Most people are expecting a deficit.

But I got to tell you, we're focused on dealing with our customers and our operations.

We don't see ourselves as market gurus.

There are lots of those out there, and we read them all and think about how we plan our businesses, and that is the way we respond.

Richard, let me add a little color to that.

I'm not a market guru either, I'm an exploration geologist.

But I will tell you that back in 1980 when we put McMoRan and Freeport together, the conversation about the replacement of copper with aluminum kind of reminds me of our energy policy in the United States, where people in the 1950s said we were going to become independent of OPEC oil.

In 1960, 1970 1990, 2010 we're still trying to figure out how to become non-dependent on OPEC oil.

And back in 1980/'81 when we considered the combination of the McMoRan and Freeport companies, the big consideration was, is fiber optics going to replace copper?

And all of the same conversations that you're talking about right now were going on then, and yet the rest is history as to whether aluminum ever became -- or fiber optics became an option to using copper.

Copper uses are so varied today with the third world countries becoming as economically improved as they are, so as I say, this conversation has been going on for 40-some years that I know of, and it will be going on 40 years from now.

Yes.

And with respect to aluminum, there have been uses for aluminum that traditionally were copper uses.

But at the same time, copper can't compete with -- I mean aluminum cannot compete with copper because of its fundamental qualities in conducting electricity.

There's a lot of barriers to substitution because of the investments that required, and there are new uses being developed for copper because of the way the world is changing, that copper is really moving -- when it is replaced, it is really moving to higher uses in the economic cycle.

So it is a great commodity because it is so difficult to replace as far as fundamental uses.

One last issue from my side.

When you look at the copper and project the amount of copper that is going to be available to the market, to the extent that has an impact on prices, what you have to remember is since 1980/1981 when I started doing my research on putting the two companies together, the other issue that people continue to misunderstand, if you go back and plot from 1980 to today, there's been a hell of a lot more copper used then we have found, so we haven't been replacing our reserves -- we have been lucky and replaced our reserves, as we talked earlier today.

But if you look at the amount of copper that's been used versus the amount of copper that's been found since 1980, it would overwhelm you.

Thanks very much guys.

Okay, thanks Brad.

I will now turn the call back to management for any concluding remarks.

Thanks everyone.

We will look forward to reporting on our progress in 2011 and appreciate your interest in our company.

Ladies and gentlemen, that concludes our call for today.

Thank you for your participation.

And you may now disconnect.