Ladies and gentlemen, thank you for being with us. Welcome to the Freeport-McMoRan Third Quarter Conference Call. All participants are currently in a listen-only mode. A question-and-answer session will follow later. I would now like to turn the call over to Ms. Kathleen Quirk, Executive Vice President and Chief Financial Officer. Please proceed, ma'am.

Thank you, and good morning. Welcome to the Freeport-McMoRan third quarter conference call. Earlier this morning, we reported our third quarter 2020 operating and financial results, and a copy of today's press release and slides are available on our website at fcx.com. Our call today is being broadcast live on the Internet, and anyone may listen to the call by accessing our website homepage and clicking on the webcast link for the conference call. 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, we'd like to remind everyone that today's press release and certain of our comments on the call include forward-looking statements, and actual results may differ materially. I'd like to refer everyone to the cautionary language included in our press release and presentation materials and to the risk factors described in our Form 10-K and quarterly reports on Form 10-Q, each filed with the U.S. Securities and Exchange Commission. On the call today is Richard Adkerson; Mark Johnson is also on the call; Josh Olmsted; Mike Kendrick; Steve Higgins; and Rick Coleman. I'll start by briefly summarizing the quarter's financial results and then we'll turn the call over to Richard, who will review the slide materials. And we'll then open up the call for questions. Today, FCX reported net income attributable to common stock of $329 million, or $0.22 per share for the third quarter of 2020. After taking into account, debt extinguishment costs associated with our refinancings during the quarter and other non-recurring net charges totaling $101 million, or $0.07 per share, adjusted net income attributable to common stock totaled $430 million, or $0.29 per share. These special items can be reviewed on Page VII of our press release. Our adjusted earnings before interest taxes and depreciation and amortization, or EBITDA, totaled $1.4 billion for the third quarter of 2020, and a reconciliation of the EBITDA calculation is available on Page 32 of our slide deck. Our third quarter results benefited from improved pricing for both copper and gold, strong copper and gold sales volumes that were above the prior estimates and solid cost performance. The average realized price during the quarter for copper was $3.01 per pound, which was 15% above the year-ago average, and the third quarter realized gold price of just over $1,900 per ounce was 28% above the year-ago quarterly average. We generated strong cash flows in the quarter. Our operating cash flows totaled $1.2 billion and exceeded roughly $400 million of capital expenditures during the quarter. We ended the quarter with $10 billion of total debt and our consolidated cash position grew during the quarter from $1.5 billion at the start of the period to a total of $2.4 billion at the end of the quarter. I'd now like to turn the call over to Richard, who will be referring to our slide materials.

Thanks, Kathleen, and good morning everyone. Thank you all for participating in today's call. I hope you and your families and your colleagues are all staying well and safe. This coronavirus situation has not ended. We at Freeport are not letting up our guard in any fashion. We remain focused on protecting the health and safety of our people and the communities where we work, and we're all looking forward to a medical solution, which will come in time. In the meantime, though, we are staying diligent with our health protocols and we're also being conservative in the way we continue to run our business. And this has proved, served us well over the last six months. I'm really proud of our Freeport team for the aggressive response we developed as an organization, how we've executed the plans that we announced just six months ago, it seems like a decade ago, but it was at the end of April when we announced plans that were well received by our company and the market to take steps to reduce cost, capital cost, operating cost and G&A cost, suspend some low margin production. And we put those plans in place and we really went after them in an aggressive way and it has served us well. Starting with Slide 3, we present the highlights for the quarter and it's notable just how much cash flow we're generating. We've been talking about this for a long time and finally arrived for Freeport. This is the quarter where all this work that we've been doing for years and years is beginning to show its presence. This free cash flow generation will actually accelerate as we go forward into the fourth quarter, into 2021. And by the end of 2021, we'll reach really a relatively steady state of volumes that extends for the 20 years beyond than our current contract rights extend to. But as you see clearly our sales volumes, our cost and capital performances were favorable to the estimates we provided to market three months ago. Our Grasberg team achieved its quarterly sales targets and continue to make excellent progress with the ramp up of our large underground mines, the Grasberg Block Cave, and the Deep MLZ mine. In Arizona, we completed The Lone Star project during the quarter. It was completed on time and below budget. In the bottom line, we generated substantial cash flows in the quarter, reduced our net debt in this quarter by $800 million. And this was all achieved operating safely in a challenging environment because of the pandemic. Our team maintained its focus on the health of our workers in our protocols and showed real drive and commitment in executing our plans while managing this health issue. As an organization, we're all stepping up to meet this challenge. We met challenges effectively in the past. Turning to Slide 4, this is LME Week and it's a strange deal and I being in London, last night would have been the night of our Freeport reception such a fun event and it's disappointing not to be there. We distributed a video to people. And if you didn't get it, contact David and we'll get it to you, but just a lot of fun looking at the video and thinking about all the good times I've had in London and looking forward to coming back next year. But you know thinking about LME Week and the times we're facing right now really makes us all very pleased to be a company that's the leading producer of copper and copper is critical to the economy of the world, has been, but even more so as we look to the future. Copper is absolutely essential and strategic to the technologies that the world is moving to transition to a global clean energy future. And more and more we're seeing the adoption of policies both in community and governments, but by companies to reduce carbon emissions. This initiative is no longer being debated as to whether it's needed or not, but there is a real commitment now to accelerate. As a result of the steps that will be required to reduce carbon, the intensity of the use of copper in those applications is really significant. Copper utilization in electric vehicles and the generation of renewable power requires four times more copper per unit than traditional internal combustion vehicles require and traditional power generation requires. The coming transition to 5G technology will be positive for copper with required data centers to supporting infrastructure with lots of new copper wiring required to support 5G. These major trends, which are in place and irreversible, will bring significant new sources of demand for copper. And that will supplement the already significant requirements for copper to fund global growth in the developing world. We are committed at Freeport to being a responsible producer of copper, which is a very favorable metal in terms of these positive ESG factors going forward. In addition to Freeport's commitment to the International Council on Mining and Metals, where I just returned as Chairman after serving 10 years ago, during the third quarter, we committed to the Copper Mark, which is a new assurance framework developed by The International Copper Association that's specific to the copper industry that demonstrates responsible production practices and how operations for copper can contribute to the UN sustainable development goals, and we're fully committed to these things. Currently in the market conditions, thinking back to six months ago, none of us would have anticipated that we would be today just six months later after facing the industrial downturn that was accelerating at that time. And all of the uncertainties from a health and economic standpoints to think that here we would be at the end of our third quarter in such a favorable market condition. And this has been led by the really dramatic recovery of the Chinese economy and demand that's generated for copper. Economic conditions in other parts of the world continue to face uncertainties. And we are certainly sensitive to those uncertainties. And as I said, we're not letting our guard down. But we're encouraged by these demand trends in China. And then we look at global stimulus measures and decarbonization initiatives, which are also supportive of copper demand. At a time when supplies of copper remain limited, and this supply effect has been really emphasized by what had gone on with the COVID situation. Prices have recovered from the lows earlier this year. You may recall that we were preparing for a scenario of $2 copper and year-to-date we have copper at $3.15 that's pretty remarkable. But the fundamentals of the copper market are increasingly attractive. We put together a slide on five to give a historical perspective on these copper markets. And thinking back, they're really strong similarities and parallels to what we've seen earlier. In the early 2000s, when the world was coming out of the global recession, there was policy-driven demand particularly in copper combined with limited new supplies, which was a new factor in the market at that time. And that drove a major repricing of copper to kick off the commodity super cycle. Then again in 2009 following the global financial crisis that emerged in 2008, China again led a significant and unexpected recovery in copper prices, which crisis – when crisis increased over three times from the lows with that 24-month period. In each of these times, FCX share price performed strongly. On the right side of the chart, which shows what's happened since March, copper – it's notable and this is something that I think is striking and it's different. The copper inventories have declined even with the major downturn in the global economy. You could have ever thought that the U.S. GNP would drop by a third in the second quarter and copper inventories would not have risen. The global pandemic resulted in disruption of supply as well as demand of course. And with low inventories and limited new supply, the market is positioned for additional gains. As we look forward to a medical solution to COVID-19 and for our economies to recover with major copper-intensive infrastructure spending on the horizon. Again, in the past, when the downturn occurred, inventories spills, the inventories had to be run off. We don't have that this time. We have low inventories. And so with recovery, we are better positioned to see copper perform strongly. Now turning to our company, the challenge for us in 2020, unlike these earlier times, when we faced downturns was a long list, the lower prices driven by COVID-19. We were at a time of trough production at Grasberg. We completed mining the Grasberg open pit at the end of 2019. We couldn't even begin to ramp up in any significant way of the Grasberg Block Cave ore body, which is our largest underground ore body until we were complete mining in the pit. So all of this started and production dropped from the pit, it was at low levels from the underground, and then we get hit with low copper prices from COVID and operational challenges in the Americas, because of their situation; so that makes what's happened for our company over the last six months really, really special. Our team in the Americas continues to do great work, executing our plans, and the plans were aggressive and challenging. You can see the results of the execution in our financial results. We made the decision to complete the initial Lone Star development project, which is located right in the heart of our operations in Eastern Arizona. This is a relatively small, but very positive returns initial project. And it opens the opportunity for a very large future significant project. The team at Cerro Verde in Peru has done exceptional work in restoring our large scale operations there. They were really challenged by COVID. Our people at Cerro Verde lived in the town of Arequipa, which was facing a challenging community situation with COVID where they work with the local community and with the government to restore operations. We've done that largely. We've had to keep a sharp focus on cost and capital management. We had one mine, an older mine in New Mexico that we shut down operations because of the COVID situation where now taking actions to restart that mine next year at a much reduced rate, a smaller footprint that will allow us to achieve cost in capital benefits from as compared with prior operations. On the call today, Josh Olmsted and I want to recognize him and congratulate him on his expanded new role in managing our operations in the Americas. Josh was named Chief Operating Officer for the Americas in August, following Red Conger’s departure. Red was a great friend and long-time employee who decided to move for family reasons. And we congratulate him and wish him well. Josh was Red’s right-hand guy for – along with the rest of our team for recent years. He's an experienced operator; a really good, strong inspirational leader has been with our company 28 years. He has worked in leadership roles at a number of our operations across our Americas assets. Josh is really highly qualified and well prepared for success in this new role. He's off to a great start. He's been a key driver of our innovation initiatives, which all of our team is committed to and is committed to having a high performance culture. The really good thing is Josh has a terrific team around him. We have really significant technical depth, world-class in every respect. And we all look forward to working together with him and his team to accomplish both we have for us opportunities going forward. At Grasberg, our third core annual sales volumes on an annualized basis reached 58% of the targeted annual run rate post ramp-up. And I want you to focus on this. We generate all these cash flows by being at less than 60% of our targets of where we're going to, and we're making progress on reaching those targets. For so long, I've been talking at these calls about looking at this ramp-up. It's not like starting a new operation with a one point in time startup, but it was a process – a process of increasing volumes with 58% of the target, and you saw we generated this level of cash flows. So as we increase that ramp-up, volumes grow, cash flows will grow as well. It wasn't without its challenges this past quarter. We had a COVID-related labor disruption that we had to deal with. We were actually shut down for four or five days this week, worked with a group of indigenous workers in our workforce who wanted to be able to return to the Lowlands where many of their families lived. We had restricted travel. We had to negotiate a resolution with that. We also had some maintenance issues with the material handling. So it's notable, and we're going to have situations that are inherent part of mining as we go forward. But here's the quarter where we had to deal with temporary shutdowns and some unscheduled maintenance issues. And yet we were able to meet our metal targets. By the end of the quarter, the mining rates at the Grasberg Block Cave in the deep MLZ had reached targeted levels. We continue to target metal production that will approach 90% of the ramp-up targets by the middle of next year, the middle of 2021. Unit cost – note that the unit cost for Grasberg in the third quarter averaged $0.13 a pound. Grasberg, of course, has this really significant gold component in its ore which at full production rates makes it the largest gold mine in the world, even though it's byproduct production. Using current gold prices, looking forward, if prices stay at this level, global revenues will fund all of the costs of operations for Grasberg. And we'll be producing over 1.5 billion pounds of copper a year. With full ramp-up, we will reach that at the end of 2021 at a zero or negative unit cost. In Indonesia, I mentioned that the discussions about the new smelter are ongoing; they're being led by our partner, MIND ID interlude. PT-FI requested a 12-month delay in construction of the smelter that we had committed to because of COVID issues, which affects international contractors and local workers. The government is in the process of assessing alternatives to building a new smelter. No decision has been reached. The discussions being led by MIND ID and the Ministry of State-Owned Enterprises. The alternatives that are under consideration will be mutually beneficial to the government, first of all, and to PT-FI. We will keep you informed as developments occur going forward. I will note that our partnership that we established with the Government of Indonesia and the structure for governance in operating management that we established in December 2018 is really going well. The partnership is strong and mutually supportive. We and the government through the State-Owned Enterprise and the Ministry of State-Owned Enterprises, the Ministry of Mines, and the Ministry of Industry, the Ministry of Finance, we're all fully aligned now in our objectives of creating value for all stakeholders. We're working together and that's a huge positive development for Freeport and for the asset itself. Slide 7. We're focused on execution, that's what we've been saying for so long. And that's what the results show that we have been successful in doing, but we're focused on executing and continued success will drive strong and improving results. We're now on a path to double EBITDA from 2020 levels as we go forward. Execution of these plans all well underway; the biggest risks are behind us. There are always risks but the biggest risk behind us will allow us to grow our copper volumes by 20% in 2021; gold volumes by 70%, that would result in a reduction in net unit costs by 20% for the company and completely expand – significantly expand margins and cash flows. You see this in our third quarter results, our financial performance will improve throughout 2021. Our current operating rates, as I mentioned earlier, extend to 2041 with six fiscal terms. This will allow PT-FI to generate massive future cash flows from this set of remarkable copper and gold resources. Our company is going to stay focused on execution. As we complete this transition at Grasberg, we are deferring any decisions about major investments and as we go forward with the higher cash flows that we generated, we'll be able to reduce our debt and further improve our balance sheet to see what we've done this quarter? I'm confident that in 2021, we'll be in a position to recommend to our Board a resumption of our dividend for the Board to consider. And that as we go forward, we will be able to generate increasing returns to shareholders from higher cash flows. In addition, we'll have opportunities to consider significant growth from large scale low cost – low risk, high return, disciplined Brownfield investments in our large portfolio of undeveloped reserves and resources. Freeport can maintain its production, grow its production without having success and refill exploration, which we all do, or without having – without having to do any M&A deals. Slide 8 shows this, we have a long live portfolio of mineral reserves with recoverable reserves extending beyond 30 years with substantial options to expand these reserves in the future considering our large inventory of mineralized material with our resources beyond current proved and probable reserves. For now, however, I want to reemphasize again, we're focused on executing our plans efficiently, delivering on our targets. As we go forward we'll be accessing growth options in a measured and disciplined way. I'll close with Slide 9, with what we adopted internally as the Freeport Edge. Our management team has had extensive experience in managing this business responsibly. We've been together a long time now. Leadership teams across the company are seasoned, battle-hardened, value-oriented. We're all intentionally engaged in it. That's one thing I keep talking about our work during 2020. It has been really intense, but our people are energetic, highly motivated. We have an action-oriented management structure. We work together collaboratively. We're experienced decisive, never cut corners on important issues like worker safety, community responsibilities, environmental obligations. We keep a long-term focus on our licensed operators around the world. We work hard to earn this and to keep it. We know, and we've had a long history of operating on the premise that our shareholders cannot succeed, unless all stakeholders in our businesses succeed. Freeport is clearly on a global basis foremost in copper. A portfolio of assets are large high quality when established industry leader, great track record operating mines, developed mines among the largest in the world. Our assets are long-lived durable with embedded options for reserve and resource growth. Strong franchises in the U.S., South America, and Indonesia. Industry-leading technical capabilities with a strong track record of project execution around the world that we've had for many years. We've earned the trust and respect of our partners, our customers, our suppliers, financial markets; most importantly, our workers and communities in those countries. Notably our block caving experience is if not the most, one of the most extensive and longest standing in the history of the global mining industry. And that's so critically important for success, both in the ramp of Grasberg and being able to continue to execute our plans over the next 20 years. This is not for the faint of heart. We've been operating block cave mines in Indonesia since the early 1980s, and we have an important molybdenum block caving operation in our Henderson mine in Colorado. This is critically important as we transition Grasberg from the largest surface mine that we completed at the end of 2018 to the largest block caving operation in the history of the mining industry. Our team has demonstrated capabilities in good times and bad, and I want to close by thanking our people, recognizing their strength and resilience to your dedication. And now this is performance that's evidence in today's report. I'm personally proud to be part of this team. I look forward to the success we're going to have before us in the future. We're all motivated and committed to persevere and to achieve the success for the benefit of all of our stakeholders. So thank you for that. And now I will return – I will turn the presentation over to Kathleen to talk about some financial matters.

Okay, great. Thanks, Richard. I'll just make some brief comments on financial matters so we can take your questions. As you'll see in the materials, our guidance is very similar to our prior guidance. We have incorporated the planned restart of Chino that Richard mentioned, and that's reflected in the guidance. But I just really wanted to make three points. The first one is, as Richard has said, we're continuing to focus on execution of his plan, which will generate growing cash flows and margins. Clearly, the Grasberg underground ramp-up is making great progress, and we're building on that momentum each quarter. I wanted to mention the cost benefits that we're seeing and the ongoing capital management programs. We now feel that we successfully implemented the plan that we laid out in April. I think when you look at the cash cost in the quarter of $1.32 per pound, and compare that to where we were in the first quarter of this year, you see a 30% reduction in that unit cash costs; also a 30% reduction in capital spending levels. With the increased volumes that we have coming in 2021 at very low incremental costs, we expect our unit net cash costs will decline below $1.20 per pound next year. So we're remaining focused on sustaining all of these costs and capital management programs. We've also implemented savings in a number of other areas, including in general administrative costs, which as you see in the third quarter were over 30% below the first quarter 2020 levels. The second point is, you know, and Richard made this point as well. So the third quarter really demonstrates the growing cash flow generating capacity of the business. We had $1.4 billion in EBITDA during the quarter, and $1.2 billion in operating cash flow, and our volumes are continuing to grow. We expect to continue building volumes during 2021 and using $3 to $3.50 copper, we would average between $7.4 billion to $9.4 billion per annum in EBITDA for 2021 and 2022. Generate nearly $5 billion to over $6 billion in operating cash flow with $2 billion of capital expenditures; so very focused on free cash flow generation as we look forward. And the third point is that our balance sheet and financial position are very strong. As you'll see in the slide materials, the net data is expected to decline rapidly and continued execution and performance will allow our board to consider a resumption of dividends in 2021 and increasing shareholder returns over time. As Richard mentioned, we're also continuing to assess the sequence of our future organic projects. We expect to be in a great position to maintain a strong balance sheet, provide returns to shareholders and invest in value-enhancing projects that are embedded in our portfolio as market conditions warrant. So that concludes our prepared remarks. And operator, we will now take questions.

Our first question comes from Alex Hacking with Citi. Please go ahead.

Yes. Good morning, Richard and Kathleen, and thanks for the presentations. I'll ask two questions if it's okay. The first question on the dividend, Richard, you mentioned restarting the dividend next year. Any thoughts on how that would be structured, percentage payout in that debt target something like that? And the second quick one if I may, just the copper grade at Grasberg is very, very strong during the quarter. Should we read anything into this? Are grades coming in ahead of your geological models or this was just some variance that we shouldn't read much into? Thank you.

So, you know, on the dividend, it's really going to be something that we haven't teed up for the board yet. We're really focused on getting through this year and going forward. But we are giving thought to this idea as we make further progress on getting to our targets is to how to establish a policy for the dividend. We won't, as I mentioned, we want to take steps to reduce debt. We're on track to doing that. We will likely take a first step of restoring the dividend, but then we will have the opportunity of doing, as you said, of establishing a financial policy and looking for further shareholder returns, growing shareholder returns in the future, that could be in the form of dividends and depending on how the equity market reacts, we would have the option of looking at stock buybacks. But at this point, we have not really engaged with the Board to establish a specific policy. Mark, do you want to comment on the grade situation?

Sure. Yes. Alex, where we're at right now in the Deep MLZ, we're mining some of the highest grade sections of the ore body. Estimation of these very high grade zones is always a challenge for our modelers. The concern is always that we take high grade intercepts and smear them over too broad of an area and cause overestimation. So we've taken a conservative but appropriate modeling approach. So the grades that you've seen are a bit of a positive variance that we've had really for the last six months. We believe our overall global estimate is appropriate. We didn't do anything with our sequencing of the cave. We followed our cave management plan and really the grades just came to us more or less as a bit of a positive surprise. But if you look at the grades individually, Deep MLZ is very high grade; it's close to 1.9% and gold grades are about 1.8%. And what we saw was a bit higher than expected grades in that very high grade portion of the mine.

And one of the things that Mark is doing, and the team out there is doing is really focused on the long-term plan. And so, as Mark said, we're following the sequencing to maximize the long-term values and not try to look for short-term wins, and they're really doing a good job of staying disciplined on that program.

Great. Thank you so much. And I should say congratulations on the very strong cash flow in the quarter. Thanks.

Thanks, Alex.

Your next question comes from the line of Timna Tanners with Bank of America.

Yes. Hey, good morning everyone. And thanks for the update.

Okay. Hey, Timna.

Good morning.

I wanted to ask two questions, also I suppose, I'm really curious about the Gresik smelter alternatives and the update there. I know you alluded to some ongoing negotiations. I'm just wondering if you could, if it's more than just a delay, if you could give us any color on what that might look like. And then I'll follow up with the second question.

So an alternative would be rather than building a new smelter as to expanding the existing Gresik smelter and adding a precious metals refinery to it. That could not be expanded to a size to take all of our future concentrate production, so there it would have to be an agreement allowing us to export the excess. We proposed if that's allowed, I'm going to say if we as PT-FI and this is being led by the state-owned ministries in the internal discussions within the government that would involve paying an export fee on that. The benefits would be, we would avoid having to undertake this major new construction project and the financial benefits are really positive for the government. And so with the government, like all other countries around the world, seeing its financial situation being challenged by COVID, this is – this has some fundamental attractions to the government. As you know, when we reached our agreement in 2018, a feature of that agreement was a commitment by PT-FI to build a new smelter that we had years of discussions about that because it is uneconomic to everyone. But to get the deal accomplished in 2018, we had to commit to do that, and that commitment is in place. So it's really in the government's hands about what they decide to do, but this issue of the financial benefits to the government is a significant one.

Okay. That's super helpful. Thank you. And I don't want to take away from all the Grasberg progress and success, but starting to think actually about the next generation of projects and initiatives for the company. I know you've alluded to other projects. Can you kind of run through with us where you prioritize the different options and alternatives out there? So we can start thinking about what's around the corner?

I can point to them. We haven't prioritized them yet. We've done some initial pre-feasibility, feasibility type work. We actually suspended some of that as part of our cost reduction efforts in April. But we have a significant opportunity in Chile with our El Abra project where we're essentially 50/50 partners with CODELCO. It has a significant sulfide deposit. It would be a major development project involving a water desalinization plant, but a project from the order of our Cerro Verde expansion, but it has an attractive ore body to consider. And then in the U.S. we have a series of Brownfield expansions at mines ranging from our Bagdad mine in Northwest Arizona. There's in the future a very large sulfide opportunity at Morenci, this Lone Star property as we've mined the oxide cap, we're exposing what looks to be a very significant sulfide resource, which I believe will be developed. The U.S. opportunities have some economic advantages. We own all of our lands in the U.S. essentially all of our lands and sea; so there's no royalties. The tax situation is very favorable and we have a big NOL carry forward. So when we have the ability to develop resources with no taxes, no royalties, that's a big, big fundamental economic advantage. So as we go forward, we'll be doing trade-off studies and making decisions about where and when to invest; that's in the future. We have a long line of potential partners who are interested in working with us. That would be something we could consider. But right now, we're going to continue to focus and achieve the kind of success for the next few quarters like you saw in this third quarter.

Okay. Super. Thanks for all the detail.

Thank you, Timna.

Okay.

Your next question comes from the line of Chris Terry with Deutsche Bank.

Hi, Richard and Kathleen. A couple of questions from me. First on Grasberg, just on the development rights for the quarter; I think you said you try to be at 90% by the middle of next year. Just wondering if the third quarter exit rate, that was just looking at the chart from last quarter and slide pack, I think that 94,000 tons is back on track. I just wondered if you could give some details, a bit more specifically on during the quarter, some of those hiccups if so, you said COVID 4 to 5 days. Was there anything else in there? And basically what the messages sending, I think is at the end of the quarter you're back onto the chart? The progress chart, that's my first question, I'll start with that.

That's right, Chris. We did have the five-day outage for the work stoppage, and then we had some overflow maintenance that was unplanned during the period. And by the end of the quarter, we had gotten back to the rates and Mark and his team do an update every quarter and went through the five-year forecast. And essentially there was very little change in our ramp-up. So we're still on track with getting to 90% of the run rate by mid-next year.

Okay. I think on every one of these calls, we noted that there will be things we'll have to deal with from time to time just to inherit the nature of mining. And what I say is the fact that we had these and we're still able to have this kind of quarter. So as we go forward and as we open up more access to these ore bodies, that gives us more flexibility. If we do have some issues to deal with offsetting those by adjusting our operations because of this greater access that continues to emerge.

Okay. Thanks. Thanks, Richard. The follow-up question I had is just around the dividend. I know you commented before that it's early days, but just wanted to get an update on the target net debt level. I think you previously talked about $5 billion. It's been around that level that you would think about the dividend. Is that still the thinking on $5 billion more correctly is about the level of net debt that you're targeting, so then you can explore other options? You're obviously at $7.6 billion now. So that's still how we should think about the timing of the dividend when you break it up to that level?

We said that back five years ago, we set a target of reducing what was then $20 billion of debt to $5 billion. By reducing $20 billion by $5 billion to $10 billion. So that's the $5 billion; nothing magic about it. In fact, in those earlier years that I referred to when we started generating so much cash in both of those cases, we totally paid off our debt. We were debt-free, 2005 I believe we were debt-free in 2010, 2011. That's just because these cash flows when the market is really good, really come at you really strong. And so in both of those cases, we were able to pay big dividends. And so we were certain, we're comfortable with the debt level we have now. Kathleen and her team have done a great job of structuring our maturity schedules. So we got really strong liquidity, and certainly $5 billion would be a level of debt that we'd be comfortable living within the long run. So we'll manage our business on the basis of the cash that comes to us in our expectations by cash flows. But I think you could be comfortable in saying that, that $5 billion target is something that would be acceptable to us. Cash may come to us that we've paid down more than that, but as we did that would clearly be returning cash to shareholders and looking at these opportunities for future investments.

Thanks, Richard. Thanks, Kathleen and well-done on a great quarter. Thanks.

Thanks, Chris. Appreciate it.

Your next question comes from the line of David Gagliano with BMO Capital Markets.

Great. Thanks for taking my questions, and as always thank you for the detailed update. You covered a lot of the things that I was hoping to ask about already. But, I do have a bit of a follow-up on the capital allocation question. On the Brownfield opportunities, I was wondering if you can just talk about the timing of investing in those opportunities relative to the 2021 dividend recommendations for the board.

Well, and this is a feature of the industry, David. Even with all of these projects and the Brownfield expansions, execution of those will take a long period of time. Even if we were to start today and we're not starting today. So each of these projects that would be significant projects. Now we're going to do things to make incremental improvements through the efficiency programs and so forth, and we have an initiative to actually increase volumes without making a capital investment that we call the America's concentrator project. But for a major Brownfield investment project from the time we make the decision to start, and that's not likely to occur until 2022, 2023, you're still looking at six or seven years at a minimum, for the execution on it. So with positive cash flows, those won't stand in the way of really having significant increases in returns to shareholders.

And Dave, we'll have some incremental projects that we can look at that would be quicker than that, but Richard's talking about a major investment, but we'll have some incremental opportunities that we can evaluate as well during that period.

Okay, great. That's helpful. Thank you.

By the way, Dave, we thought about you on Monday at lunch. So we miss being in London.

Your next question comes from the line of Chris LaFemina with Jefferies.

Hi, good morning, Richard, Kathleen. Thanks for taking my question. It's really a strategic question about Grasberg. And Richard as something I know you've addressed at times in the past, but obviously the world is changing and things like Grasberg are changing pretty quickly. So the question relates to the potential rationale of selling a portion of the gold production from Grasberg as a gold stream; presumably you would get a premium multiple. The ability to do so, I would think, has increased. Now that Grasberg is ramping up and being de-risked. This would accelerate your ability to return capital potentially even via buyback, which would be pretty compelling. I think right now, would probably be very significant and positive for your shares would really – would not really reduce the competitors in the mine and would probably reduce the perceived risk around Freeport as it would reduce your exposure to Indonesia a little bit in the market. So obviously in the past, Grasberg was such a critically important asset to Freeport. You obviously owned more than 90% of the mine for a long time, but now that you've done this transition, ownership is transitioning as well, but the operational transition to the underground. And again, the fact that arguably the value of the gold from the asset has been not reflected in your shares. What is your argument to not sell a portion of that gold as a stream? Thank you.

All right, well, Chris, one bit of correction there about the ownership. Since the mid-1990s, Rio Tinto had a joint venture ownership in this interest. And so, while the government's interest was roughly 10%, FCX's interest was net of the Rio Tinto joint venture interest. So what we own in Grasberg today is essentially the same that we've owned since the mid-1990s. It's just that the Rio Tinto interest was transferred from a joint venture interest of Rio Tinto to shares owned by the government. So our fundamental interest has not changed. Did you follow that, Chris?

Yes, that's right. So, basically, my point is that Indonesia will be the majority owner of the mine, whereas historically they owned less than 10%. So the...

They own 51% of the shares. And in the past that ownership interest there 10%. They acquired about five from us, but they acquired the Rio Tinto interest. But when you look at FCX's ownership interest, it really hasn't changed from what we've had for over the years. And that was one of the really good things about the deal that we got in 2018 is we were able to hold on to the interest that we had, even though the government had these ownership objectives, which they reached by acquiring the Rio Tinto interest. So that's just...

The cost will change but our economic interest did not.

That's right. Our economic interest has not changed. That's just a clarification. But, yes, we're fully aware of the opportunity that we have to look at a gold streaming opportunity. As you know, we've assessed those over the years in various forms. And with the spike in gold prices currently, it makes that a new opportunity for us. We need to get ramped up. You don't want to sell a stream before you have the stream in place, but we're studying various alternatives for doing that. And we recognized the opportunity to generate cash and restructure our balance sheet and our ability to deal with returns to shareholders and so forth. So that's on our plate. You can rest assured that bankers are visiting us regularly and talking about that opportunity and it's something we'll be considering. Our first order of business though is to get it ramped up.

And sorry. Second question along those lines, in terms of the operational performance at Grasberg, can you just give us an update and I'm sorry if you mentioned this earlier, I might have missed it on the call before, but can you give us an update in terms of number of COVID cases at Grasberg between your employees and between contractors, if things are getting better or worse, we run in COVID at the mine, just an update there. Thank you.

Yes. I mean, I'm just – when COVID broke out, Grasberg was the huge concern. I think most of you know, we have an enormous workforce there. It was on the order of approaching 30,000 people, roughly 20,000 at any point in time were living in close proximity to each other in the highlands area of New Guinea where it's damp and cool and people live and work together. So we really recognize that as a problem and made major investments in medical facilities, in protocols for managing it, testing equipment, PCR labs both in the highlands and the lowlands. We did all the things at the health standards say that you should do in terms of finding infected people, tracing, isolating and treating. And so, over time, we've had – and Indonesia as a country is – is a country that's challenged with COVID. So we've had a number of cases, fortunately the huge majority of those who have recovered or non-symptomatic, our process of isolation and restricting travel and testing has worked. The serious cases we have had have been few, and the most serious ones were ones where people had previous health conditions. So it's consistent with what people are faced with around the world. We've really done well in the highlands. We had an outbreak of cases in the lowlands where our ship terminal is and where people there have more of an interaction with the community to make a – which is less of a controlled situation. But we've instituted new protocols there and it made great progress. So we've had to deal with it. We've had a number of cases, almost all have now recovered. And we continue to have very strict protocols on travel interactions and people there. So the government, and in large part, the local community support us. We're supporting local communities with helping them health issues and testing procedures. So it's been an issue, but has been managed.

Thank you.

Your next question comes from the line of Orest Wowkodaw with Scotiabank.

Hi, good morning.

Good morning.

Just turning our – good morning, turning our attention back to Grasberg. Obviously, there was, I guess, a bit of a setback there in the third quarter, but you recovered really well with that exit rate of 90,000 tons a day. Can you give us a sense of how that's continued through October? And if I'm not mistaken looking at your slides, it wasn't your planned exit rate for the year at 95,000? So, I mean, doesn't that mean you're essentially already there at the end of September?

Yes, you're right. I mean, it's going well and I would not – you got to look at where I am. I'm really sensitive. I wouldn't call what we faced was a setback. It was just a situation we had to face and we managed it. I mean, man, you look back over the years, that's always the case. It's always the case with complicated mines. So it certainly wouldn't be – I wouldn't characterize it as a setback, but yes, we're on track. We're on track in October. If we had any significant issues to report today, we would have reported them. So, we just feel great about what's going on. This was a critically important time for us at Grasberg in 2020 completing mining the pit and really taking the ramp up over the hump to the point where it was ramping up in generating cash flows. This was a quarter that we always knew was going to be the quarter where cash flows were going to start coming in. They did. We had to do that in managing the COVID situation, and we just talked about. So it's a remarkable accomplishment that we've been able to do that and we feel very good. We feel like we've avoided the major risk of COVID. We've now avoided the major risk of the ramp-up. Mark and his team will face issues every day. We're communicating about how things are going with the various aspects of our operations, how we're doing with our maintenance programs, how we're doing in. We've had lots of excess capacity in the mill, but that's we're going to start filling the mill up. So, we've got to be prepared for that, but we're on track to 200,000 tons a day plus of ore from these underground ore bodies to the mill, and everything is on track and it's really gratifying to see.

And we haven't had geologic or geotechnical type things, the kind of things that we're aiming to in the third quarter, other than the labor issue was just more mechanical type things, maintenance type items and ore getting hung up in passes and that sort of thing. And that's going to happen from time to time, but those things are more easily dealt with than geologic or geotechnical issues and we're pleased to report we just feel it's been going very well on the geologic and geotechnical front.

Yes. This fracking approach then Mark and his team came up with, the Deep MLZ mine was delayed on the order of two years as we dealt with the seismicity issues, but – which is not a factor in the Grasberg Block Cave because of the geological setting that it's in, physical setting, I should say, but that was an issue in the Deep MLZ, they came up with the solution and it's working. We still have seismic events from time to time, but the fracking is helping us to manage those. And we're being able to achieve the results that you see. And it's straightforward fracking. It's not as complicated as what's going on in the oil and gas industry in the Permian basin. This is a really straightforward type of operation.

Is it possible that you may actually exit this year ahead of plan, I think you've been – you're already at 94,000 tons a day?

Certainly possible, and our guys are going to do the best they can do. We set our plans as being aspirational plans, but achievable. And the guys work every day to try to do better than planned. And they take – it's a great – I mean the smiles on our faces when we have these days, when we go over plans, its felt all the way from where we are here in the United States. So everybody is oriented to try to beat the plans. And in the Americas too, I mean, Josh – Josh's guys have done a great job. Our safety statistics are great. We did have an unfortunate fatality at Grasberg, where a worker took a really unfavorable action, but we work hard, but our safety statistics are good. Our people are focused. I think one thing about – one thing I think of this COVID thing has done for all of us is really made us focus on our work even more intently than we ever had. And I keep talking about work is intense. And so now with having restricted travel, making sacrifices in your personal life, everybody is really focused on work, and we can see the results of that globally.

And to your second question, the volumes we expect will increase quarter-by-quarter through 2021. And that's mainly because of the Grasberg ramp-up. And as we said, we expect to get to about 90% of the run rate by the middle of next year. So but the back half will be bigger than the front half, but the front half will still be significant and growing from where we were in the third quarter.

That's very clear. Thank you very much for answering my questions.

Thank you for your question.

Your next question comes from the line of John Tumazos with John Tumazos Very Independent Research.

Thank you very much and congratulations on so much progress.

Thanks, John.

Just sulfides concentrators that you've talked about for a couple of years. Are any of them even 10% engineered and what's the six to seven year time horizon you're talking about? You're saying that none of them would arrive earlier than 2027.

Yes, that's right, Richard. With permitting and with downstream engineering, it is definitely not more than 10% on the larger concentrator designs.

Okay.

And again, John, that's where he's referring to is major new projects like there are a lot of project would be like another Cerro Verde. As we said, we also have incremental type expansions within the portfolio that don't require permitting or don't require major multi-year planning. So we've got a combination of both, but the major projects, like the one that operates is multi years because of the permitting that has to be done and all the infrastructure. But we do have other options within the portfolio that wouldn't be as lonely.

Lone Star or the oxide is so vast that the sulfides wouldn't be exposed or you wouldn't need the sulfides until 2027?

Right. And so Lone Star, which made it so attractive initially, is it dovetails in with the depletion of the Safford reserves, which was part of the mine plan there. So we had existing processing facilities and Lone Star is so close to Safford that we're able to truck the ore to Safford facilities and also build new facilities, the oxide resource is growing. And we may have an opportunity to invest in incremental processing facilities, take advantage of that. So but this Lone Star sulfide is longer-term, even then the opportunities that we have at the other projects, because we can make so much money off of oxides before we develop it.

And we've done a lot of work on drilling over the past several years on Lone Star. And we'll be incorporating that drilling. This joint was also into our longer-range plans. And a lot of our exploration budget over the last few years has been on Lone Star. So we were really prioritizing that opportunity.

If I could ask one more, if we just take, for example, an El Abra sulfide now, if you're largely copying the 240,000 metric ton a day most recent module at Cerro Verde and the diesel plant pumping pipeline is sort of an off-the-shelf third-party design. Why would the – pits pre-stripped, why would the engineering and planning take a long time in El Abra?

It's not just the engineering and planning. It's the permitting, as Rick was saying, we've got to, we'd have to do an EIS, and you've got a baseline that you have to provide in terms of data going back on it. And so it's a new mill, new diesel; we don't have a mill there now. But it's an attractive project. It's a very attractive project, but we may have more attractive projects that are less capital intensive.

Thank you.

Now, we'll turn the call over to management for any closing remarks.

Well, thanks everyone. Appreciate your interest. Obviously a great quarter for us, and we look forward to reporting continued progress. So it's been a tough world. We live in lots and lots of personal sacrifices. It's gratifying though to see within our company to see the success that we're all sharing together. And I think we've made clear today, our commitment to continue to move forward with progress and success in the future. But thanks for being on our call today.

Ladies and gentlemen, that concludes our call for today. Thank you for your participation. You may now disconnect.