Ladies and gentlemen, thank you for standing by and welcome to the Freeport-McMoran fourth quarter conference call. At this time, all participants are in the listen-only mode. Later, we will conduct a question and answer session. If you wish to ask a question during the Q&A session, press star 1 on your touchstone phone. If you require assistance during the conference, please press star 0. I would now like to turn the conference over to Mr. David Joint Vice President, Investor Relations. Please go ahead, sir. Thank you, Regina, and good morning,

everyone. Welcome to the Freeport Conference Call. Earlier this morning, FCX reported its fourth quarter in full year 2025 operating and financial results. A copy of today's press release with supplemental schedules and slides are available on our website, fcx.com. Today's conference call as being broadcast live on the Internet. Anyone may listen to the conference call by accessing the webcast link on our homepage. In addition to analysts and investors, the financial press has been invited to listen to today's call. 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 non-GAAP measures and forward-looking statements, and actual results may differ materially. Please refer to the cautionary language included in our press release and slides and to the risk factors described in our SEC filings, all of which are available on our website. Also on the call with me today are Richard Acterson, Chairman of the Board, Kathleen Quirk, President and Chief Executive Officer, Marie Robertson, Executive Vice President and CFO, and other members of our management team. Richard will make some opening remarks. Kathleen will review our slide materials, and then we'll open up the call for questions. Richard?

Thanks, David. Thank each of you for joining our call today. We're pleased to report positive results for our fourth quarter 2025 was a truly eventful year recent copper prices have been strong in the face of uncertainties from global trade tariffs and geopolitical conflicts the future for copper remains bright kathleen will report on the notable progress we have achieved during the fourth quarter following the september mud flow event at ptfi it is impressive and It provides our organization confidence about our future. PTFI has a well-designed plan to recover. Now we must execute, and we will. Our long-term strategy commitment for Freeport to be foremost in copper remains intact. With our high quality assets, our strong financial position, and our highly motivated, confident global team, I'm personally enthusiastic and confident about Freeport's ability to create significant value for our shareholders and all of our stakeholders. Kathleen.

Kathleen King- Thank you, Richard. And I'm going to be referring to our slide materials. We're very pleased to be here today to report on our fourth quarter results, review our 2025 performance, and update you on our initiatives, projects, and outlook for the future. Starting with slide three and looking back on our performance in 2025, our team demonstrated resilience in overcoming challenges and achieved meaningful progress on several initiatives to support a strong foundation and position the company for a positive long-term future centered on value creation. As we look ahead, we're strongly positioned as an experienced global leader with compelling opportunities to enhance values for our ongoing operational initiatives and future prospects for substantial cash flow generation which support investments in profitable growth and returns to shareholders we show our annual information on this slide on slide 3 on copper sales unit costs and financial metrics for the year 2025 we finished the year strong with copper sales and net unit cash costs slightly better than our adjusted guidance for the year. Despite the Grasberg incident, which impacted annual copper volumes by approximately 10% compared to our plan going into 2025, our consolidated unit net cash costs for the year of $1.65 per pound were within 3% of our guidance going into the year, and adjusted EBITDA of nearly $10 billion for 2025 was similar to 2024 levels. From a big-picture standpoint, the results demonstrate the benefits of our diversified portfolio of copper assets. It's clearly evident in our strong fourth-quarter financial results, the strength of our America's business in this environment. I'm going to turn to our focus areas for 2026 where we summarize on slide four our priorities. The first is execution. This is a hallmark of the Freeport culture. We're committed to maintaining Freeport's long track record for successful execution, carefully planning our work and bringing relentless focus and energy on achieving our plans. the grassberg incident was humbling but our team has risen to the challenge and is dedicated to safely and sustainably restoring our operations as we go through 2026 across the business we're sharply focused on delivering our plan volumes meeting our cost targets executing capital projects safely and efficiently and on maintaining discipline each day on the underlying metrics which drive our results, managing risk, overcoming unforeseen challenges, and staying on top of what matters, both for the short-term and the long-term. A second key focus area is crystallizing value in our leach opportunity. This is a meaningful value driver for our business, given the opportunity for near-term, low-cost growth. The work we have done in recent years position us to scale production in the coming years, and we're targeting a 40% increase in 2026 from this initiative on our path to achieving 800 million pounds per annum. Third, we're adopting innovation, automation, and new technologies to drive enhancements to reliability, efficiencies, and overall operational performance. These initiatives show promise for significant value as we work to reduce costs and enhance growth and profitability of our U.S. business. We have a robust profile of organic growth options and will continue to advance these initiatives during the year. We've got three projects, major projects in the Americas that provide optionality for future growth. And as we go forward, our team is focused on opportunities to increase margins and cash flows through greater efficiencies and disciplined investments in long-term growth. Turning to the markets on slide five, prices on the LME during 2025 traded in a broad range between $3.87 per pound and $5.68 per pound, averaging $4.51 per pound for the year. On the U.S. COMEX exchange, average prices for the year were slightly higher, although the differential is not significant year-to-date in 2026. Prices have risen significantly in recent months, with current LME prices approximately 30% higher than the 2025 average. During 2025, copper prices largely tracked macro sentiment, market weighed U.S. dollar weakness, expected U.S. rate cuts, accelerating AI and technology-driven demand, and Chinese stimulus against mixed economic data, uncertainty around tariff and trade policy, economic pressures in China an elevated geopolitical risk. At a micro level, demand benefited from secular demand trends associated with electrification and AI data centers and offset the impact of weakness in private construction and more cyclical sectors. Supply disruptions in copper and regional trade distortions, which drove significant material to the U.S., also impacted copper markets during 2025 in the u.s our customers are reporting that data center demand represent them represents the most significant source of growth for power cable and building wire this growing sector is offsetting weakness in traditional demand sectors in residential construction and autos demand from china continues to be supported by significant investments in the electrical grid and continued growth in china's production of electrical vehicles china's demand for copper continued to grow during 2025. as you'll see in this chart global inventories of copper on exchanges have risen in recent months during a period of sharp increases in copper prices most analysts are projecting that the market will be tightly balanced during 2026 with some projecting deficits and other small surpluses copper's superior conductivity make it the metal when it comes to electrification massive investment in the power grid renewable generation technology infrastructure and transportation are driving increased demand for copper and forecasts call for above trend growth and demand for the foreseeable future as we review the fundamentals we continue to expect the market will require additional copper supplies to meet growing demand. And at Freeport, we're well positioned to supply copper reliably and responsibly to a growing market. You've probably seen by now the recent report from S&P Global, which was released earlier this month. On slide 6 and 7, we published some highlights of the report. It was a new study which evaluated the role of copper in the age of artificial intelligence and which summarized key findings which indicate that massive growth in demand for electricity will translate into above-trend growth in copper demand, pointing to a doubling of copper demand through 2040. The study projects a long-term annual growth rate and demand of 2.9% over this period, including significant growth in new secular demand drivers. The report's available from S&P Global, and we encourage everyone to take a look at it. Moving to our fourth quarter results on slide eight, we've got a summary of the quarter. Our operating performance during the fourth quarter was favorable to our estimates going into the period. Production was in line with expectations, and sales were better than expected, principally because of timing of shipments in Indonesia. As indicated in our November update, we completed investigations on the Grasberg incident and restarted the Deep MLZ and Big Goss and Mines during the fourth quarter. since our november report we've continued to make steady progress to prepare the grassberg blockade to resume operations and we're on track for a second quarter 2026 startup with strength and copper prices during the quarter the performance of our u.s business was quite strong with operating income three-and-a-half times the level of the 2024 fourth quarter. This demonstrates the positive leverage of pricing at these operations with strong conversion to the bottom line. Moving to the operating statistics on slide nine, we've summarized the highlights by geographic region. Starting in the U.S., production was up 5% versus both the year-ago fourth quarter and for the year 2025 versus 2024. This is notable given the declines that we faced in the prior two years. And despite the low grades, we've been working to increase volumes in the U.S. through efficiency gains and through our leech recovery initiatives. We're targeting an 8% increase in volumes in the U.S. for 2026, in part related to adding scale and our innovative LEACH project. We're making excellent progress with our initiatives to improve efficiencies and cost performance. We're continuing to integrate new technologies to realize better performance in our basic mining functions, and we're successful in 2025 in converting our haul truck fleet at our Baghdad mine to autonomous. We're continuing to refine the autonomous process, but are optimistic that the value proposition of this technology can be applied on a broader scale. In South America, performance was in line with expectations. The Cerro Verde team will highlight finish strong to deliver another solid year. Our copper sales for South America for the year 2025 totaled 1.1 billion pounds. And the expectations is that we'll have a similar amount of sales from South America during 2026. Our unit net cash costs in South America for the fourth quarter averaged $257 per pound. And we expect a similar level in 2026. We're expecting stable production levels at Cerro Verde and some growth at El Abra, a project in Chile, in partnership with Codelco over the next couple of years. There's a lot of activity at El Abra currently with a leach pad extension and plans to conduct testing during 2026 of heated stockpile injections to enhance leach recoveries. We're also finalizing the preparation of an environmental impact statement for a major expansion at El Abra, which we plan to submit in the first half of this year. With our progress, you'll see we added reserves for the El Abra expansion of over 17 billion pounds of copper, and we're excited about this project as we progress through the regulatory process. In Indonesia, in line with our plans, we operated on a limited basis from the Deep MLZ and Big Gassen Mines during the fourth quarter and continued our preparation for the planned restart of the Grassberg Block Cave. Sales for the fourth quarter exceeded production by about 60 million pounds of copper, which was a timing variance. Operations at one of two smelters resumed late in the year, and the new smelter remains in standby status with an expected restart later this year. We've made great progress to restore operations at the Grassberg Block Cave, which we'll cover in more detail on the next two slides. On slide 10, we'll provide a refresher from our November call. the various work streams required to safely restart operations at the grassberg block cave as a reminder the grassberg block cave represents the most significant contributor in the district we provided us a schematic on the right showing the various production blocks within the grassberg block cave and as a reminder the incident occurred in plus production block 1c our plan incorporates a phased restart and ramp up of the glassberg block cave beginning in the second quarter initially in production blocks two and three followed by production block one s in mid middle of 2027 and finally production 1c at the end of 2027 with a successful ramp up of production Blocks 2 and 3 beginning in the second quarter, we expect to have 85 percent of production restored in the district in the second half of this year. The milestones for restarting Production Blocks 2 and 3 include cleanup of the mud in the tunnels, principally in the service area, the installation of cement plugs to isolate the panels in Production Block 1C and to ensure there's no connection to the surface and replacement of the electrical and communication systems damaged in the incident. For production block 1S, the repairs are expected to extend beyond the restart of PB2 and PB3, principally to install additional protective barriers and replace the number of damaged shoes used to transport ore to the haulage level. We continue to target of restart of PB1, both PB1S and PB1C during 2027, and we're going to continue to progress the reopening plan as we monitor progress with various mitigation initiatives for the production block one. We're incorporating recommendations from the investigation to enhance our risk management and mitigation. The incident highlighted the need for more dynamic cave management plans tailored for various conditions and for more robust controls and operational procedures to address areas subject to risk from an external mud rush. In addition, we're continuing to adopt new innovative approaches to mud drainage solutions for the pit bottom. We've got those described on slide 31, and to adopt emerging technology for imaging to improve cave shape monitoring, and those are all being advanced. We've got a scorecard on slide 11. We're very pleased with the progress that we've made to date. We're tracking the plan. Mud removals in the areas required to commence the startup of PB2 and PB3 is substantially complete and the barriers being installed to isolate production block one are advanced and expected to be completed in the first quarter. With the installation of the protective plugs, infrastructure repairs are expected to move to completion by quarter end, positioning the restart to commence in the second quarter. We remain confident in reestablishing large-scale production and in our ability to safely operate this great ore body over the long term the progress to date continues to de-risk the plan and executing the restart our team will be vigilant in prioritizing safety above all else we're pleased to report on our reserve at year-end 2025 those are reported on slide 12 as you know at Freeport we benefit from a significant reserve and resource position where we have established operations and successful track records a summary of the reserves are indicated here where we continue to maintain long reserve lives and substantial resources to support long term production and our growth opportunities the reserve additions that we're reporting in 2025 are substantially in excess of our production and those principally relate to the addition of over 17 billion pounds of copper for the alabra project which was previously considered a mineral resource. The reserves in Indonesia are included and they're reported through 2020-41. We note that an extension is in progress and that would enable a portion of the reported resource to be included in our longer-term reserve plans. In addition to the reserves, we have significant incremental mineral resources with over half located in the in the United States we'll point out the large resource in the Safford Lone Star District as we continue to advance studies to evaluate a major opportunity there slide 13 we wanted to update you on our growth plans it's clear additional copper supplies will be required to support energy infrastructure, new technologies, and more advanced societies. Our projects at Freeport would provide significant copper, which can be developed from our known resources in jurisdictions where we have an established history and experience. Our projects in Indonesia also benefit from the high gold content that goes along with the copper. Because these projects are brownfield in nature, we benefit from leveraging existing infrastructure and experienced workforce and relationships with key stakeholders to move more quickly with less risk than a greenfield project. We're now entering a period of growth in our America's business with near- and medium-term opportunities to scale our leach initiatives and double our production at our Baghdad mine. We have longer-term growth in the Safford Lone Star District and an exciting project as we mentioned at El Abra in Chile. In approaching these projects, we're using innovative approaches to improve efficiencies, reduce costs and capital intensity, and work to shorten lead times for our projects. Our high-potential, low-cost, innovative leach initiative is a great example of doing this. We've talked about what we've done to date. We've produced over 200 million pounds from this initiative in 2025. We're targeting 300 million pounds in 2026. Some of the progress and milestones that we reached in 2025 was the initiation of deployment in the field of our first internally generated additive at Morenci. We've got encouraging results there, and we're planning to adopt it on a broader scale during 2026. We're continuing to be very encouraged by lab testing of additional additives, and those show even greater promise. We have projects in 2026 in our pipeline for the LEACH project to test injection of heated solutions in our stockpiles, which together with the additives have potential for significant recovery gains. 2026 we're looking at as a pivotal year for us in this initiative as we work to scale to 400 million pounds in 2027 and to 800 million pounds by 2020-30. Our expansion opportunity at Baghdad is advancing toward an investment decision. During the first half of the year, we're planning to advance engineering, retest the economics, and work with our vendors to secure fixed pricing on major components. We're also continuing to advance our work on tailings infrastructure to further enhance the optionality on timing. We're continuing our studies on Safford Lone Star District, as we mentioned, to evaluate optimal development options. And at El Abro, we have a great opportunity with our partner at Codelco to develop a large-scale expansion Our total reserves at El Abra are getting close to the large position we have at Cerro Verde. This is a terrific opportunity for us, and we're looking forward to working with regulators as we commence the permitting process this year. Progress at Coochie-Liar is also continuing in Indonesia, and this will allow us to sustain a low-cost, long-term production profile in the Glassburg District. Before we get into our forecast for sales guidance and cost and cash flow, we want to highlight Freeport on slide 14 as America's copper champion. Freeport is an important American copper producer and is by far the largest contributor to the U.S. copper market with an established and successful franchise dating back to the late 1800s. Our operations in the U.S. are fully integrated with smelting and refining facilities and leach processing that efficiently produce refined cathode. Freeport supplies, 70% of the refined copper produced in the U.S., and as we pointed out, a large portion of our reserves, resources, and future growth are in the U.S. We're driving a series of initiatives to enhance our U.S. business through innovation, automation, and investment in expanded facilities. These initiatives are designed to add production at a low incremental cost and improve profitability and resiliency of our U.S. business. In an industry where development lead times can span more than a decade, our business in the U.S. is strongly positioned with the potential for an over 50% increase in copper production as we go through the next four to five years. We're very excited about these opportunities, and most of all, they represent a significant value driver for Freeport. Marie's going to cover our outlook, and then we'll circle back and open up the call for questions. Marie?

Thanks, Kathleen. If you turn to slide 15, we show our three-year outlook for sales volumes of Copper, Gold and Molybdenum. The plans are very similar to our last update in November. Our 2026 copper sales have been adjusted slightly to address the timing of sales between 2025 and 2026. As indicated, we expect growing volumes in 2027 and 2028 as we reach full recovery at Grasberg. We provide quarterly estimates on page 27 of the reference materials. We expect to be at a quarterly run rate of approximately £1 billion per quarter in the second half of 2026. Unit net cash costs are expected to average $1.75 per pound for 2026, assuming by-product credits priced at $4,000 per ounce of gold and $20 per pound molybdening. With growing volumes, our first half costs are expected to be above the average for the year, with second half costs approximating $1.25 per pound, which is more reflective of a normalised run rate. Looking to slide 16, putting together our projected volumes and cost estimates, we show modelled results on slide 16 for EBITDA and cash flow at various copper prices, ranging from $4 to $6 per pound of copper. These are modelled results using the average of 2027 and 2028 with current volume and cost estimates and holding gold flat at $4,000 per ounce and molly flat at $20 per pound. Annual EBITDA would range from approximately $11 billion per annum at $4 per pound copper to over $19 billion per annum at $6 copper. With operating cash flows ranging from approximately $8 billion per year at $4 to over $14 billion per year at $6 copper. The dotted line shows the 2026 estimates, which reflect the phased ramp-up at Grasberg. These amounts exclude potential recovery under our property and business interruption insurance coverage. The policy provides coverage for up to $700 million for underground losses. We show sensitivities to various commodities on the rise. You will note we are highly leveraged to copper prices with each 10 cents per pound change equating to approximately $415 million in annual EBITDA in the 2027-2028 periods. We'll also benefit from improving gold prices with each $100 per ounce change in price approximating $120 million in annual EBITDA. With our long-lived reserves and large-scale production, we are well-positioned to generate substantial cash flow to fund future organic growth and cash returns under our performance-based payout framework. Slide 17 shows our current forecast for capital expenditures in 2026 and 2027. Capital expenditures for 2025 totaled $3.9 billion, half a billion dollars below our plan going into 2025, and are expected to approximate $4.3 to $4.5 billion in 2026 and 2027. We have added $150 million in capital in 2026 to advance engineering and early works at Baghdad to enhance optionality as we work towards an investment decision targeted in the second half of the year. The discretionary projects approximated $1.4 billion in 2025 and are expected to approximate $1.6 to $1.7 billion per year in 2026 and 2027, with roughly 50% related to the Kiching Liar development and the LNG project at Grasberg. The balance includes acceleration of tailings and other infrastructure to support the Baghdad expansion the atlantic copper circular project which is expected to be completed during 2026 and capitalized interest the discretionary category reflects the capital investments we are making in new projects that under our financial policy are funded with the 50 percent of available cash that is not distributed these projects are value enhancing initiatives detailed on slide 37 in our reference material. We continue to carefully manage capital expenditure and will continue to deploy capital strategically to projects with the best return and risk reward profiles. And finally, on slide 18, we reiterate the financial policy priorities centered on a strong balance sheet, cash returns to shareholders and investments in value-enhancing growth projects. Our balance sheet is solid with investment-grade ratings, solid credit metrics and flexibility within our debt targets to execute on our projects. We have no significant debt maturities during 2026 and have substantial flexibility for funding the 2027 maturities. We have distributed $5.7 billion to shareholders through dividends and share purchases and have an attractive future long-term portfolio that will enable us to continue to build long-term value for shareholders. Our global team is focused on driving value in our business, committed to strong execution of our plans, providing cash to invest in profitable growth and return cash to shareholders. Thank you for your attention. We'll now take your questions.

ladies and gentlemen we will now begin the question and answer session if you wish to ask a question press star one on your touchstone phone if your question has been answered or you wish to remove yourself from the queue please press star one again if you are using a speaker phone please pick up your handset before pressing the numbers we ask that you limit your questions to one if you have additional questions please return to the queue our first question will come from the line of carlos dialba with morgan stanley please go ahead yeah thank you very much uh

everyone um great to see progress in indonesia i just wanted to understand maybe a little bit the guidance for for uh the outer years considering the opportunity in leaching that you have in north america does the numbers your guidance include the leaching reaching around 800 million pounds in 2028 or it is not included in that official guidance good morning Carlos

we we've included in our in our outlook between 250 and 300 million and in 2026 and have not included anything beyond that for expansion so it's around the long term we've got around 250 million pounds in these numbers and have the opportunity we expect to be at 300 this year with an opportunity to scale to 427 so there's some upside in our numbers obviously the slide where we're showing what the potential is getting to 2 billion pounds in the US is includes the Baghdad expansion and getting the incremental volumes out of the leech program. So we have the potential to get to roughly 2 billion pounds in the U.S., but those aren't included in the 27-28 guidance at this point.

All right.

Our next question comes from the line of Katya Yancic with BMO Capital Markets. Please go ahead. Hi, thank you for taking my question.

The unit cash costs in South America are moving higher. Can you maybe elaborate what's going on there and how we should think about costs there over the next few years?

Yes, Katja, in South America, we're forecasting net cash costs in the 258 range on average for 2026. Those are very similar to what we experienced during the fourth quarter of $2.57 per pound. When you look at the comparison to 2025, the increase relates mostly to labor and energy, power costs as well as labor. You know, you've got also a weaker dollar as well. So that's reflective, but it's very similar to what we experienced in the fourth quarter, and we'll carry that run rate forward.

Thank you. Our next question comes from the line of Alex Hacking with Citi. Please go ahead.

Yeah, thanks, Kathleen and team. The 2027 target to get cost in the U.S. down to $250 a pound, Could you maybe elaborate on how you plan to get there? Because, you know, cost last year was around $3.10. You're guiding to around three next year. Sorry, three this year, even with, you know, a nice increase in U.S. production. Like, how are you getting another 50 cents out by 2027?

It's really a target. and it assumes that we're successful with scaling our leach opportunity as well as continuing to drive efficiencies within the U.S. business. So it's really coming from adding volumes at a low incremental cost. We have a number of initiatives, not only in the leach initiative, but we have a number of initiatives really as we look at US operations focused on minimizing downtime improving and just improving all of the efficiencies and so we have really an opportunity to increase our volumes you know basically with the same operating rates that we have today that's it that's the target that we have and bringing in lower-cost volumes will bring down the average.

Thank you.

Our next question comes from the line of Bob Brackett with Bernstein Research. Please go ahead.

Good morning. I'd like to talk about slide 14 where you highlight America's copper champion. We think rough numbers, the U.S. consumes 4 billion pounds of copper, 2 billion of which is imported. in that context if you look at your targets you'd be adding you know rounding up 0.8 billion of that 2 billion of imports which is a significant amount of those imports and and I'll highlight that leach initiatives deliver refined copper not concentrate so I guess the question would be can you do more? But also the question is, how do you focus on this target in light of what copper tariffs could be going forward? Is that driving this production or is just the unit

economics in any world driving this production target? Thanks for those comments. And to highlight the LEACH initiatives, the exciting thing about these opportunities for us is that we're able to, with success, and we've got to have success on our additive work and with the heat injections that we're trialing this year, with success, the incremental cost of these pounds of copper that we're bringing on are very low cost, you know, relative to the cost of what you'd have to do to actually mine the material and take it all the way through a smelter. So these are very low incremental cost pounds. They do not require significant capital. We already have the material that's been mind and it's really the processing piece and spending some incremental dollars to improve recoveries is what we're targeting. So that is really a very exciting value creation opportunity for us when you're talking about adding these kinds of volumes in a relatively short period of time, when you think about copper projects taking 10 years or more, if we're successful here, we can be adding a new mine, you know, with very, very low operating costs and, you know, very, you know, insignificant capital expenditures. So that's a real opportunity for us. The Baghdad project is more of a conventional opportunity. As we've talked about, we've got a very significant reserve there, and what we have been talking about for a number of years now is the opportunity to build new processing facilities and bring that value forward. And we've been doing work on enhancing the optionality of that project. And as we look at that project today, it requires roughly a $4 average copper price to justify the investment. And, of course, copper prices are much higher than that today and support the project. You know, we look at a broad range of copper prices when we qualify a project. But this is one we want to put our infrastructure where we have big reserve positions, and this is one where we believe should be developed and can be developed within a short time frame. And so we're working to make sure that we have our arms around the Capitol and that we can execute the project efficiently. But that'll be a nice addition also to domestic production in the U.S. A quick follow-up, please. We're not really looking at tariffs to support this investment. It's hard to predict what those are. We're just really looking at a broad range of absolute prices and how we can deliver, you know, a low operating cost mine and improve resiliency in the U.S.

Great. Thanks for that, caller. A quick follow-up would be, in the past, you've talked about the next phase of leaching as being a Phase 3. In today's presentation, you're starting to take that Phase 3 and tell us specifically how you're going to achieve it. Should I interpret that to mean that your level of conviction in the 600 million pound target has increased over the last year or so?

Certainly, with the additive work that we've done, prior to this past year, we were doing mostly lab testing. Now we're doing more work in the field where we're actually deploying additives on stockpiles in the field. We're going to be doing that on a broader basis during 2026. And we've advanced these heat projects where essentially we're taking the solutions that we apply on the stockpiles and heating those solutions as injecting heat into the stockpiles. And so what I say is 2026 is a pivotal year for us because we should have results on how heat and additives combine, and that really will set us up for scaling the opportunity. But you're right, we've made really good progress, particularly on the additives. We're excited to test this heat opportunity both at Morenci and El Abra this year, and that's going to be very informative to us on our path, but we've made a lot of progress in converting some of the R&D work to early positive results. So, the additive we end up with will likely be a little different than the additive we're using today. The additive we're using today is performing well, it is giving us incremental production, but we do believe based on what we've been seeing in the lab that we'll use a variety of additives depending on the stockpiles to drive the best recoveries that we can get. And we really think we're on to something, we've got more work to do. But this is a huge value creator for Freeport, particularly in our U.S. business.

Thanks for that, Keller.

Our next question comes from the line of Lawson Winder with B of A Securities. Please go ahead.

Thank you very much, Operator. And Kathleen, thank you for today's update. If I could just pick up on some of the comments you made on Baghdad 2X, Can you maybe give us a sense of a more precise timing this year for the update? That would be one. And then thinking about the CapEx, I mean, the slides highlight that the CapEx is still under review. What we've been seeing in the industry over the past several years is typical CapEx inflates at about 5% per year versus the 2023 3.5 billion. is is that like a reasonable way to think about what's the level of capex inflation um and then are there any changes to the plan being contemplated with this latest updated study that could potentially change the approach or the overall mine plan or the or the capex and then just finally i mean you you highlight the attractiveness of this project at the current copper price uh given that it works at four dollars i mean outside of the copper price what other factors will you consider when thinking about approving this project potentially later this year so i know that's sort of four questions but really it's just about bag dead 2x and a few

few more details on that project okay um so as you pointed out we the three and a half billion for the project was based on work that we had done at the end of 2023. And what we're doing in the first half of this year is continuing our engineering work and actually getting to a point where we can have enough of the engineering done to go out to our to our vendors to actually get fixed pricing that that's really where we want to put ourselves as we go through the next six months so that we have more concrete bids on what the project will cost and so we're looking to make a decision on the project in you know when we have this information at mid-year and so we don't know the answer to your question yet about this about this 5% per annum we know there is cost inflation we've been trying to assess whether the tariffs will have any impact on on on some of the components that are involved here and we'll continue to do value engineering to try to keep the capital intensity of the project as low as possible. But we want to do enough front-end work so that when we qualify the project for investment, we can deliver and execute on that plan. And that's what we're working on in the first part of this year. We're also doing some work on the power infrastructure and making some deposits there. So we've added $150 million in capital associated with this project that will put us in a position to make a decision. In terms of the factors that we are looking at, in addition to the copper price, And we want to look at, you know, the long term and the range of prices and how this project would perform. We also want to make sure that we have the right workforce set up and we've been investing in infrastructure. Labor has been a challenge in the U.S. And that's what partially what drove us to going to autonomous during 2025 to set up better optionality for Baghdad for expansion in the future. We want to optimize the performance of the autonomous fleet. We're not getting exactly what we expected to get from the performance of the autonomous fleet, but we've got progress and ongoing to get us to the point where we're comfortable that the autonomous fleet is capable of running at these higher rates. So we've got some other things going on to de-risk the plan as we go through the first half, but those are the major factors, is confidence in our ability to execute the capital plan, confidence in our ability to to operate efficiently you know part of the goal here in addition to bringing on additional volumes is to bring on those volumes at a low lower incremental cost than our current costs and take advantage of efficiency so that work we're going to be doing as well over the next several months as we get to an investment decision but this is a project that is pretty straightforward. It's a relatively short lead time, and we just want to make sure that we can deliver on the economics that we set up at the start. Corey Stevens is on the call, and Corey, anything that you want to add there, either on the Baghdad expansion, the LEACH initiative, or our focus on bringing down our unit costs in the U.S., I'd be happy to see if you have any insights that you want to add to that.

No, I appreciate that, Kathleen. And just the comment on the Baghdad work, you know, the team is super energized. You know, we're working through a lot of the incoming infrastructure requirements and designs and long lead items from, like, power upgrades and so forth. So, and then in parallel, like we talked about, the autonomous work, very inspiring. You know, it's still early days there. You know, we really only went full autonomous late in the summer, so there's a bit of a learning curve there, but we're on a good track, and the team's going to figure that out as we go forward. On the leach side, the ramp-up is really based on a lot of the initiatives that are coming to pass this year. So heat, we talked about at Marinci, at El Abra, those are big demonstration activities going on there. And then yesterday, as a matter of fact, we started another leach stockpile at our New Mexico operation at Chino. And there we were using chemical heat. So we termed that one the perfect pile. It's an engineered heap that we build confidence around our lab work there that's really giving us a lot of excitement there that really can facilitate not only a benefit to Chino, but could change the way that we design future stockpiles going forward to enhance the ultimate activity that's coming out of those. So, lots of moving parks, lots of activities, more to come this year.

Excellent. Thank you both.

Our next question will come from the line of Bill Peterson with J.P. Morgan. Please go ahead.

Yeah, hi. Good morning, team, and thanks for taking the questions. It sounds like Indonesia is on track with the timing, with guidance from last year. I was wondering if you can add any incremental lessons learned at Grasberg since the November update. You know, you called PB2 and 3 on schedule for 2Q for 26. Any further granularity you could provide on timing, where it could land on the quarter? Where, you know, what would make it come in faster versus extended?

Thank you. And Mark Johnson's on the line, and he can add to these comments. But, you know, we did a update in mid-November on the investigation, and we have learned, as I mentioned, we are adopting the recommendations from the investigation. The plan in terms of what we laid out in that timeframe in November is very much the same. We've been executing on that plan. And we've been achieving the results. As we mentioned, the mud removal within the mine workings has gone well, and we're 97% of what we need to be to start up production blocks two and three. We've just completed a cement pour at one of these protective barriers that we talked about that's needed to restart production block two and three. And so the work that we're doing between now and startup really is related mostly to infrastructure. Now that we have these plugs in, we'll be able to advance that more. But we haven't given a specific date within the second quarter, but we would expect it would be in the first half of the second quarter at this point, and we're on track to do that. Mark, I don't know if you want to add anything about that and also add maybe any comments about the overall risk management we're doing on mud removal from the surface.

Yeah, the plan, as you stated, that we came up in November, the team's done a great job of executing that. you know is primarily driven at first with the cleanup of the mud uh that is essentially complete for the pv2 pv3 startup obviously there were some challenges there that a lot of uh you know it's not it's kind of a unique work environment uh we dealt with some localized drainage issues you know required pumping and the team was quick to respond i'm very happy also with the response from some of our key suppliers a lot of this infrastructure that we're building is is the communication systems that allow us to do the remote mining so our suppliers on that end have risen to the challenge so we don't see any problem with the supply chain side of things we've continued to work with our consultants and verify our plan make it more robust we're looking at some new tools for our cave management that will also play into how we look and mitigate risks, and all of that's progressing quite well. Really I don't see any real hurdles at this point to be able to start up as we've planned. Any variation I think will be relatively minor, plus and minuses. I think it's a very solid plan to start up. The ramp up is something that we've spent time looking at as well. We have good history on that as to how we'll reopen some of these draw points, do it in a very cautious and safe manner, step by step, and observe and adjust as we go. um so anyway i'm very happy with with the overall progress and where we are today um so pb2 and pb3 you know is it is the lion's share of our production and then obviously we're also working towards the pb1 area restart thank you mark thank you thanks for all the color

our next question will come from the line of liam fitzpatrick with deutsche bank

please go ahead. Good morning, Kathleen and team. Just a couple of follow-up questions on the GBC profile. It sounds like the initial startups for 2026 are going to plan, but in terms of 2027, is it possible that PB1S could be brought forward ahead of the mid-2027 startup that you have? And then for PB1C, if you conclude that you can't restart production from that block, Do you have the flexibility to open up other areas and bring those into production also by late 2027?

We haven't, with respect to our plans for PB1, the work that we've done to lay out this plan, we're continuing to expect that Production Block 1 South will be a mid-27 and start up, and then we're going to continue to evaluate the PB1C. Our focus really is getting the 85% up and running that we're talking about during 2026. And as we go through and in parallel, we're working on PB1. But our focus for the current period is to get the substantial amount of production restored and then we'll look to see how to optimize and enhance it. But we're not, at this point, not looking at advancing PB1S. But we'll be in a position to continue to evaluate that as we go.

Okay, thank you.

With the question about the PB1C, do you want to comment on that if we decide not to go back into PB1C?

Yeah, we have some other, you know, we haven't had to face this yet, but some of the other opportunities there would be to change our sequence and go to PB1 North. forth. We also have some options to incrementally add production from deep MLZ. It would be at a lower grade if we did that. And, you know, the potential would be to continue to develop and ramp up PB2, PB3 beyond what we have in our plans. But all of those are forward looking we don't have any our plan is still to to to proceed as we as we've shown on slide 31 a lot of that a lot of those initiatives there on the mud removal are focused on pb1 so the execution of those and the results of those will very much drive how we look at what our options or what our

future plans may look like. Just a quick follow-up. If you wanted to do PB1N, you could bring that in around a similar time, late 27, early 2028? Yeah, we'd have to do some different

development. You know, it's a change in the sequence. It would be something that we'd have to work through. We've talked about it at a high level, but we don't have anything firm. And, you know, until I have that, I'd hate to respond on the timing, but we've got a lot of development capability it's not you know it's adjacent to what we're already doing we were in the process of developing all of the infrastructure around that so that would be an option but we don't have any firm plans okay

thank you our next question comes from the line of Tim the tanners with Wells

Fargo please go ahead hey good morning I wanted to ask in light of the sharp move in copper lately if you have any fresh thoughts about uh the recycling opportunity i know that you have an offer you have a plan and program at ellen copper are there other potential initiatives that could you know leverage secondary material and then along those same lines any um any thoughts on substitution no copper for silver and solar but also aluminum for copper and other applications would be great to get your thoughts thanks

You pointed out the circular project that we're doing in Spain at our facility at Atlanta Copper, where we're completing a project to process scrap from electronics. So it's got a lot of precious metals associated with it. And so that project, we're completing the middle of this year. We do some scrap processing in the U.S. at our existing facilities. It's not, you know, we follow that business, but it's not the core of what we do. You know, our core really is around, you know, producing, mining, and processing what we mine. But we'll look on the margin if there's an opportunity, but it's obviously not our business. In terms of substitution, that is a topic that people long talked about. You know, we believe that the properties of copper, because of its superior conductivity, are compelling. You know, when you talk about data centers and that sort of thing, you know, copper still is, you know, a very, very important component of data centers. There will be substitution and thrifting as prices rise, but when you look at the big picture, you still need a lot more copper to be able to support the demand, the secular demand trends that are ongoing. So we're very, you know, we're very confident that copper will still be viewed as a superior metal really from its conductivity, recognizing that there will be, you know, will be thrifting, there will be substitution that takes place as that relative value changes.

I appreciate it. But that's, this is Richard, that's inevitable, but it will be in the context of a higher copper price. Sure.

Our next question will come from the line of Brian MacArthur with Raymond James. Please go ahead.

Good morning. Thank you for taking my questions. Two questions on Indonesia. First, in the fourth quarter, I see there's no export duties, but when I look at your guidance going forward, tcs are up to 43 cents versus um historical levels can you just tell me how you're accounting for that whether there are export duties in that guidance going forward or what's going on or whether that's just inter transfer of costs as you go to the new smelt or as things ramp up and my second question has to do with kl obviously it's getting bigger um is that all additive post 2030, i.e. the higher production at KL, you still have the mill capacity, you don't have to do anything, and I see capital's gone up. Is that just inflation, or is that given the KL or is a little more complicated, and you have to do something else? Thank you. In terms of the

question around export duties, we're no longer exporting concentrates, and so we don't have any export duties in our numbers. The TC number is really just the internal smelter cost, the operation of the existing smelter, as well as the towing fees that we pay, or the operating costs of the new smelter and the towing fees we pay at PT smelting. So they're really kind of internal costs. Of course, it doesn't include, you know, when you're comparing selling concentrate to a third party, that rate reflects all of the byproducts and the free metal. So going forward at PTFI, you're going to have the cost of the smelter in that processing line, that TCRC line, but all the benefits that you get from the free metal, the byproducts, et cetera, will be in the revenue line. So it's a little different than historically when we've been just, you know, selling most of our concentrates. And Brian, we can follow up more with you on that if I didn't fully answer it. But on the Kuchinliar, this is actually a positive here. We've been looking for some time at what's optimal between Grassberg Block Cave and Kuchinliar operating rates to look at what is optimal from an NPV standpoint. And, as you know, the footprint of KL is very big, and a lot of it was just carrying forward after 2041. But in looking at the Glassberg Block Cave and Kuching Riyar and the need potentially to invest in pyrite handling and processing facilities for certain types of ore, we developed a plan that allowed us to do a significant amount of pyrite processing that would have been associated with with grassberg block cave and actually defer that out and and and so you see KL rates going from where we were projecting 90,000 tons a day to one hundred and thirty so we've added production from KL grassberg block cave is is slightly smaller all of this is just timing because with an extension we'll get we'll get those reserves over time but

this this plan allows us to defer you have to make them in whatever it is max like it used to be before you're just substituting a for B in this process

right exactly and what it allows us to do is defer the timeframe when we need to spend capital on the pyrite handling.

And just back, we can take the rest of this offline, but just that 43 cents for Indonesia this year for treatment charges, is that inflated this year because we have a lower production rate and it's a ramp up, i.e., on an ongoing basis, would it be better than that?

Yes.

Thank you very much.

And I will now turn the call back over to management for any closing comments.

Thanks, everyone, for participating, for your questions. And if you have any follow-ups, David's join is available and our management team is available. And we look forward to reporting our progress as we go through the year.

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