Freeport-McMoRan Inc. (FCX) Earnings

Management highlights

### Core Strategic Positioning & Priorities - Freeport is positioned as a leading global copper producer, with high exposure to growing demand driven by global electrification, AI data centers, energy infrastructure, and automotive electrification. - Management's core priorities are: disciplined execution of the Grasberg ramp-up, unlocking value from U.S. leach initiatives, adopting new technologies to improve operational performance, and investing in profitable growth to drive long-term shareholder value. - Financial policy priorities maintain a strong investment-grade balance sheet, balanced allocation between cash returns to shareholders and value-enhancing growth investments. Since 2021, Freeport has returned $6.3 billion to shareholders via dividends and share repurchases, and returned $600 million to shareholders in H1 2026, including ~$200 million in share repurchases. ### Operational Progress - **Grasberg (Indonesia)**: The Grasberg Block Cave ramp-up is on schedule; upgrades to the automated rail material handling system are progressing as planned, with a targeted ramp to ~65% of full capacity in H2 2026, 80% by mid-2027, and full capacity by end-2027. The formal operating rights extension application was submitted to the Indonesian government in June 2026, consistent with the previously agreed MOU terms. - **U.S. Operations**: Morenci achieved Q2 2026 mining rates 30% higher than the 5-year average, driven by improved equipment reliability, better workforce coordination, and new technology adoption; the company is targeting sustained higher rates to grow copper production in coming quarters. Innovative leach initiatives are advancing: the first internally-developed leaching additive is delivering positive results, with two additional high-potential additives scheduled for field testing in coming quarters; pilot testing of heated leaching at Morenci is underway, with a long-term target of 800 million pounds per annum of leach production, and a near-term target of 300 million pounds run rate by end-2026. The Baghdad mine expansion investment decision is targeted for H2 2026, with preliminary capital estimates of ~$4.5 billion. Environmental permitting for the Elabra expansion in Chile is advancing, with positive engagement from the Chilean government. ### Growth Pipeline - All major growth projects are low-risk brownfield developments that leverage existing infrastructure, experienced workforces, and established stakeholder relationships, with shorter lead times than greenfield projects. U.S. copper production has potential to grow 60% over the coming years from current levels, establishing Freeport as the largest copper producer in the U.S.

Guidance

- 2026 average unit net cash cost is guided to ~$1.90 per pound of copper, a slight downward revision from the prior April estimate of $1.95 per pound, as higher by-product credits more than offset other cost increases. - Full year 2026 capital expenditure guidance remains consistent with prior estimates; 2027 capital expenditure is guided to $4.8 billion, a $300 million upward revision from the prior estimate, reflecting investments in upgraded mining equipment and revised project cost estimates. - H2 2026 copper sales are projected to be more than 20% higher than H1 2026, and gold sales are projected to be more than 65% higher than H1 2026, driven by higher output at Grasberg and U.S. operations. Sequential sales timing adjustments between Q3 and Q4 2026 reflect inventory build for the new Indonesian smelter, with no change to full-year production guidance. - For 2027, annual copper sales are projected to increase more than 20% compared to 2026, and gold volumes are projected to increase more than 50% year-over-year, with additional growth expected for both metals in 2028. - Modelled 2027-2028 annual EBITDA ranges from ~$13 billion at $5 per pound copper to ~$20 billion at $7 per pound copper, with operating cash flow ranging from ~$9.5 billion at $5 copper to ~$15.5 billion at $7 copper (holding gold at $4,000 per ounce and molybdenum at $30 per pound). Each 10 cent per pound copper price change impacts annual EBITDA by ~$390 million.

Segment performance

Freeport-McMoRan reports consolidated net income for H1 2026 increased 65% compared to H1 2025. U.S. mining operations contributed 2.4 times more operating income in H1 2026 versus the prior year period, making the U.S. segment the highest earnings contributor year-to-date. At the Grasberg Block Cave mine in Indonesia, production rates doubled during Q2 2026, rising from an average of 34,000 tons per day in April to 69,000 tons per day in June, in line with ramp-up targets. In South America, Cerro Verde's Q2 2026 mining and milling rates exceeded analyst expectations, with sales and cost performance slightly better than prior estimates, and Elabra continued operational advancement ahead of its planned expansion. Freeport increased its ownership stake in Cerro Verde by 2% to over 55% via $300 million in opportunistic open market purchases over the past two years.

Risks & headwinds

- Construction labor market tightness in the U.S. Southwest, driven by high demand from semiconductor, data center, and power generation projects, has pushed up labor costs for the Baghdad expansion, contributing to a 30% increase in capital estimates from 2023. - Ongoing volatility in global energy and commodity markets creates uncertainty for diesel, sulfur, and sulfuric acid costs, though Freeport's integrated smelting operations provide a partial natural hedge for sulfuric acid exposure. - The Indonesian operating rights extension approval process has no mandatory fixed timeline, and while all stakeholders are aligned on approval, regulatory progress could take longer than the current target of completion in 2026. - Wet ore conditions at Grasberg create ongoing operational risk, though the company is executing multiple risk mitigation initiatives, including new drainage infrastructure, upgraded material handling chutes, and advanced drilling to manage water accumulation at the pit bottom. - Permitting timelines for international projects such as Elabra in Chile are subject to regulatory uncertainty that could delay project development.

Analyst Q&A

• Q: What work remains to finalize the Baghdad expansion investment decision, and how do project economics hold up despite higher capital costs? /

  A: Management is currently securing firm construction bids, confirming labor cost estimates in the competitive U.S. Southwest construction market, and optimizing the project's operating model. The mine will be fully autonomous, with new technologies incorporated to drive operating efficiencies. Even with a $4.5 billion capital estimate (30% above 2023 levels), the project still covers its cost of capital at a $4 per pound copper price, well below current market prices, and will expand recoverable resources long-term. Operating efficiencies are offsetting a portion of the higher capital costs.

• Q: What is the timeline and outlook for the Grasberg operating rights extension approval in Indonesia? /

  A: The formal extension application, consistent with the terms agreed in the February 2026 MOU, was submitted in June 2026 to Indonesia's Energy and Mines Ministry, and meets all regulatory requirements for a life-of-resource extension for integrated producers. The Indonesian president and senior leadership have expressed strong support for timely approval, as the project delivers major economic benefits to the government and local communities. Management targets approval in 2026, though there is no fixed regulatory timeline for the process.

• Q: Could there be upside to the H2 2026 Grasberg production guidance, given that June output hit 69,000 tons per day, above the prior 60,000 ton per day H2 average target? /

  A: Production rates are broadly in line with prior guidance. The higher June output reflects current progress, but planned upgrades to key chute galleries in H2 2026 will require temporary downtime in some production areas, resulting in an average H2 rate of 60,000-65,000 tons per day, consistent with April guidance. Upon completion of upgrades by end-2026, the CG44 production area will add 25,000-30,000 tons per day of output, driving higher production in 2027 when PB1 South comes online. Multiple risk mitigation initiatives for water management are progressing well, with new high-speed drilling and additional drainage infrastructure underway.

• Q: What is the outlook for incremental Cerro Verde share purchases, and how do they balance against shareholder returns? /

  A: Cerro Verde has a small public float, so Freeport opportunistically purchases shares when opportunities become available. The company views Cerro Verde as a high-quality core asset and would purchase additional shares if opportunities arise. These purchases have not impacted FCX's ongoing share repurchase program, which follows the policy of returning 50% of available cash to shareholders via dividends and repurchases.

• Q: What progress has been made toward the 300 million pound per annum leach production target by end-2026, and what upside exists from new technologies? /

  A: Current leach production is ~200 million pounds per annum, driven by base tactical improvements including new irrigation lines and targeted solution injection. The first-generation leaching additive is already delivering better-than-expected results, and second-generation additives (expected to deliver multiple times the effectiveness of Gen 1) are scheduled for field testing across four demonstration piles in H2 2026. Heated leach pilot testing at Morenci is underway, with a commercial demonstration unit starting up at Elabra in H2 2026, which could unlock substantial additional recoveries and scale to 800 million pounds per annum long-term.