FREEPORT-MCMORAN INC. In Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A), "we," "us" and "our" refer toFreeport-McMoRan Inc. (FCX) and its consolidated subsidiaries. You should read this discussion in conjunction with our consolidated financial statements, the related MD&A and the discussion of our Business and Properties in our annual report on Form 10-K for the year endedDecember 31, 2019 (2019 Form 10-K), filed with theUnited States (U.S.) Securities and Exchange Commission (SEC). The results of operations reported and summarized below are not necessarily indicative of future operating results (refer to "Cautionary Statement" for further discussion). References to "Notes" are Notes included in our Notes to Consolidated Financial Statements (Unaudited). Throughout MD&A, all references to losses or income per share are on a diluted basis. OVERVIEW We are a leading international mining company with headquarters inPhoenix, Arizona . We operate large, long-lived, geographically diverse assets with significant proven and probable reserves of copper, gold and molybdenum. We are one of the world's largest publicly traded copper producers. Our portfolio of assets includes the Grasberg minerals district inIndonesia , one of the world's largest copper and gold deposits; and significant mining operations inNorth America andSouth America , including the large-scaleMorenci minerals district inArizona and the Cerro Verde operation inPeru . In response to the global coronavirus (COVID-19) pandemic and resulting significant negative impact on the global economy, we have revised our operating plans. These revised operating plans are designed to protect the health and well-being of our employees, their families and communities where they live, ensure safe and reliable operations, to serve customers and protect our strong liquidity position through reductions in costs and capital spending while preserving the long-term value of our assets. We have proactively implemented operating protocols at each of our operating sites to contain and mitigate the risk of spread of COVID-19. A series of actions have been implemented, including, but not limited to, physical distancing, travel restrictions, sanitizing, and frequent health screening and monitoring. We are also incorporating testing procedures administered by medical providers at many of our facilities. InApril 2020 , we suspended operations at our Chino copper mine inNew Mexico because of the spread of COVID-19 among a limited number of employees. Our protocols have been effective in mitigating and preventing a major outbreak of COVID-19 at our operating sites. As the COVID-19 pandemic and related effects continue to evolve rapidly worldwide, we will continue to monitor, assess and update our COVID-19 related response, as needed. We have assessed our near-term operating plans with a focus on maximizing cash flow and protecting liquidity in a weak and uncertain economic environment to preserve asset values for anticipated improved copper prices as economic conditions recover. A series of actions are being implemented to significantly reduce costs and capital spending and adjust mine plans and corresponding mining and milling rates to maximize cash flow at lower prices. Our revised operating plans are highlighted by: (1) a$1.3 billion reduction in 2020 estimated operating costs; (2) an$800 million reduction in 2020 estimated capital expenditures; (3) a$100 million reduction in 2020 estimated exploration and administrative costs; and (4) an approximate 400 million pound reduction inNorth America andSouth America 2020 estimated copper sales volumes. These and other actions taken are discussed in more detail in "Operations." The plans also incorporate the impact of lower input costs, principally energy and foreign exchange rates, and higher gold prices. Our revised operating plans and estimates reflect current assumptions, and we will continue to closely monitor health and market conditions and make further adjustments to mine plans as required. We continue to achieve important progress to establish large-scale, low-cost production from our underground ore bodies at Grasberg and are nearing completion of the initial phase of theLone Star copper leach project (refer to "Operations" for further discussion). Net (loss) income attributable to common stock totaled$(491) million in first-quarter 2020 and$31 million in first-quarter 2019. First-quarter 2020 results, compared with the 2019 period, primarily reflect net realizable value metals inventory adjustments, lower copper prices, and lower copper and gold sales volumes. Refer to "Consolidated Results" for further discussion.
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March 31, 2020 . We have a strong liquidity position to manage volatility, and following theApril 2020 redemption of the remaining 4.00% Senior Notes, no senior notes maturing until 2022. Refer to Note 5 for discussion of debt and "Capital Resources and Liquidity" for discussion of our first-quarter 2020 debt transactions. OUTLOOK Despite a rapid change in market conditions and unfavorable changes to the global economy as a result of the COVID-19 pandemic, which is negatively impacting our short-term outlook, we continue to view the long-term outlook for our business positively, supported by limitations on supplies of copper and by the requirements for copper in the world's economy. Our financial results vary as a result of fluctuations in market prices primarily for copper, gold and, to a lesser extent, molybdenum, as well as other factors. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Refer to "Markets" below and "Risk Factors" in Part II, Item 1A. herein for further discussion. Because we cannot control the prices of our products, the key measures that management focuses on in operating our business are sales volumes, unit net cash costs, operating cash flows and capital expenditures.
Following are consolidated operating and financial data for the year 2020,
comparing current estimates to the estimates reported in
April 2020 January 2020
Estimates Estimates
(Based on $2.30
per pound of (Based on $2.85 per
copper) pound of copper)
First-quarter 2020 Total Total Total
(Actual) Remainder of 2020 2020 2020 Percent
Change
CONSOLIDATED OPERATING DATA
Sales, excluding purchases
Copper (billions of recoverable
pounds) 0.7 2.4 3.1 3.5 (11)%
Gold (thousands of recoverable
ounces) 144 636 780 775 1%
Molybdenum (millions of
recoverable pounds) 21 59 80 a 88 (9)%
Unit net cash costs per poundb $ 1.90 c $ 1.44 $ 1.55 d,e $ 1.75 d (12)%
CONSOLIDATED FINANCIAL DATA (in billions)
Operating cash flows $ - $ 1.8 $ 1.8 d,e $ 2.4 d (25)%
Capital expendituresf $ 0.6 $ 1.4 $ 2.0 $ 2.8 (29)%
Operating cash flows less
capital expenditures $ (0.6 ) $ 0.4 $ (0.2 ) $ (0.4 ) 50%
Cash and cash equivalents $ 1.6 N/A $ 1.7 $ 1.1 55%
Total debt, including current
portion $ 10.1 N/A $ 9.7 $ 9.9 g (2)%
a. Projected molybdenum sales include 25 million pounds produced by our
Molybdenum mines and 55 million pounds produced by our
b. Reflects per pound weighted-average unit net cash costs (net of by-product
credits) for all copper mines, before net noncash and other costs.
c. For reconciliations of per pound unit costs by operating division to
production and delivery costs applicable to sales reported in ourconsolidated financial statements, refer to "Product Revenues and Production
Costs."
d. Based on current sales volume and cost estimates, and assuming average prices
of
remainder of 2020. The
2020.
e. The impact of price changes for the remainder of 2020 on consolidated unit
net cash costs and operating cash flows follows:
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