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Freeport-McMoRan Copper & Gold Inc.

Freeport-McMoRan Copper & Gold Inc. An Overview of Financial Performance Buy Recommendation, November 2007 Analysis by Corrie Livesay and Stephanie Snyder. Article Identified on Motley Fool. Wednesday's 5 Large-Cap Leaders By Tim Beyers November 1, 2007

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Freeport-McMoRan Copper & Gold Inc.

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  1. Freeport-McMoRan Copper & Gold Inc. An Overview of Financial Performance Buy Recommendation, November 2007 Analysis by Corrie Livesay and Stephanie Snyder

  2. Article Identified on Motley Fool Wednesday's 5 Large-Cap Leaders By Tim Beyers November 1, 2007 Each day, The Wall Street Journal publishes a list of large-cap winners. Here are Wednesday's best: COMPANYClosingCAPS Rating % Change52-Week Price (out of 5) Range BlackRock (NYSE: BLK) $206.95 *** 4.69% $139.20-$207.32 GlobalSantaFe (NYSE: GSF) $81.03 ***** 4.46% $49.40-$81.27 IAC/InterActive (Nasdaq: IACI) $29.46 *** 3.77% $25.08-$40.99 Paccar (Nasdaq: PCAR) $55.56 **** 3.23% $38.69-$65.75 Freeport-McMoRan (NYSE: FCX) $117.68 ***** 3.22% $48.85-$120.20 Sources: The Wall Street Journal, Yahoo! Finance, Motley Fool CAPS.

  3. Company Overview( www.fcx.com ) Freeport-McMoRan Copper & Gold, Inc., through its subsidiaries, engages in the exploration, mining, and production of copper, gold, and silver. It holds interests primarily in the Grasberg open pit and the Deep Ore Zone mines in Indonesia. The company also owns interests in the Grasberg block cave, Kucing Liar, Deep Mill Level Zone, ErtsbergStockwork Zone, Mill Level Zone, Big Gossan, Dom open pit, and Dom block cave. In addition, it smelts and refines copper concentrates, and markets the refined copper products. As of December 31, 2006, it had 2,813,089 metric tons of proven and probable recoverable ore reserves. Freeport-McMoRan Copper & Gold, Inc. sells its concentrates containing copper, gold and silver primarily to companies in Asia and Europe, and to international trading companies. The company was founded in 1987 and is based in Phoenix, Arizona. Source: Yahoo.Finance.com

  4. Worldwide Operations FCX has a dynamic portfolio of operating, expansion and growth projects in the copper industry and is the world’s largest producer of molybdenum. Major projects include: • The recently completed $900 million expansion of the Cerro Verde mine in Peru; • The development of the new $580 million Safford mine in Arizona, which is expected to begin production in early 2008; • A project to extend the life of El Abra through sulfide leaching is expected to begin in 2010; • The exciting Tenke Fungurume copper/cobalt project in the Democratic Republic of Congo, which is expected to begin production in 2009; • The expansion of the DOZ underground mine in Indonesia to 80,000 metric tons per day; and • Other developments of large-scale, high-grade underground ore bodies in the Grasberg minerals district in Indonesia.

  5. Key Statistics Source: Moneycentral.com

  6. Financials Source: Finance.Google.com

  7. News Freeport Sells Wire and Cable BusinessThursday November 1, 6:17 pm ET Freeport Sells Wire and Cable Business for $735 Million • PHOENIX (AP) -- Freeport-McMoRan Copper & Gold Inc. said it has sold its international wire and cable business to General Cable Corporation for $735 million. Phoenix-based Freeport-McMoRan, one of the world's largest copper miners, said Wednesday it will use net proceeds of about $620 million to help pay off debt following its acquisition of Phelps Dodge. • The wire and cable business, known as Phelps Dodge International Corporation, operates factories and distribution centers in 19 countries throughout Latin America, Asia and Africa. • Freeport-McMoRan said it expects to record charges of about $20 million, including $12 million to net income, for transaction and related costs.

  8. If above-ground copper stockpiles stay low, speculators will continue to add a risk premium to copper’s price. Freeport-McMoRan has only one earnings miss in the past 11 quarters. FCX is very close to opening the Safford copper mine in SE Arizona with expected copper volumes here in the fourth quarter. Some Positive News

  9. Possible Negative News • FCX’s stock price is ultimately affected by the prices of gold, copper, and molybdenum. • Investors often turn to gold as a hedge against inflation and pull back when the dollar gains strength and oil prices retreat. • Copper is used primarily in the building industry (48%). If the economy slows this could decrease the demand for copper.

  10. Gold and Copper Correlation Since the beginning of the commodities bull market in 2001 copper and gold have had a correlation of .921 which yields an r-square of 85%. SOURCE: Zeal Speculation and Investment; March 31, 2006

  11. 10 Year Stock Performance Source: Moneycentral.com

  12. Freeport McMoRan’s Year-to-Date Performance Compared to Competitors Source: Moneycentral.com

  13. Comparison of Price/Earning Ratios Source: Smartmoney.com

  14. Comparison of Financial Strength & Volatility Source: Smartmoney.com

  15. Comparison of Key Statistics Source: Smartmoney.com (Millions)

  16. Comparison of Growth Estimates Source: Smartmoney.com

  17. Comparison of Profitability & Efficiency Source: Smartmoney.com

  18. What the Analysts Say Source: Moneycentral.com & Finance.Yahoo.com

  19. Insider Trading Source: Smartmoney.com, Moneycentral.com, & Yahoo.Finance.com

  20. What Others Think What the Community Thinks Total Players 1713 Outperforms 34 Underperforms All-Stars 823 Outperforms 8 Underperforms Wall Street 13 Outperforms 1 Underperforms http://www.thestreet.com/video/index.html?clipId=1373_10387635&channe... Interview posted on Wednesday. October 31, 2007

  21. 2-Stage Growth Model: FCX Source: Smartmoney.com

  22. Intrinsic Growth Rate • Intrinsic Growth Rate= ROE (1 – payout ratio) • = 25.98%(1 – 32.2%) • = 17.61% • Analysts recommended a 43.8% 5-year growth rate so we took the average to find a growth rate of 30.71%.

  23. 3-Stage Growth Model

  24. 3-Stage Growth Model with Intrinsic Growth Rate Only

  25. Relative Valuation

  26. Recommendation • FCX is witnessing strong growth backed by improved productivity and a strong cash flow position. • At the current price of $110.00, we believe FCX to be undervalued. • We believe that $125.00 is very obtainable with the potential of reaching $165.00. • We suggest purchasing FCX around $110.00.

  27. Questions?

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