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

Freeport-McMoRan Freeport-McMoRan Copper & Gold Inc.Copper & Gold Inc.

An Overview of Financial An Overview of Financial PerformancePerformance

Buy Recommendation, November 2007Buy Recommendation, November 2007Analysis by Corrie Livesay and Analysis by Corrie Livesay and

Stephanie SnyderStephanie Snyder

Article Identified on Motley Article Identified on Motley FoolFool

Wednesday's 5 Large-Cap LeadersWednesday's 5 Large-Cap LeadersBy Tim Beyers November 1, 2007 By Tim Beyers November 1, 2007

Each day, Each day, The Wall Street JournalThe Wall Street Journal publishes a list of large-cap publishes a list of large-cap winners. Here are Wednesday's best:winners. Here are Wednesday's best:

COMPANYCOMPANY ClosingClosing CAPS Rating % CAPS Rating % ChangeChange 52-Week52-Week PricePrice (out of 5) (out of 5) RangeRange

BlackRock (NYSE: BLK) $206.95 *** 4.69% $139.20-$207.32BlackRock (NYSE: BLK) $206.95 *** 4.69% $139.20-$207.32GlobalSantaFe (NYSE: GSF) $81.03 ***** 4.46% $49.40-GlobalSantaFe (NYSE: GSF) $81.03 ***** 4.46% $49.40-

$81.27$81.27IAC/InterActive (Nasdaq: IACI) $29.46 *** 3.77% $25.08-$40.99IAC/InterActive (Nasdaq: IACI) $29.46 *** 3.77% $25.08-$40.99Paccar (Nasdaq: PCAR) $55.56 **** 3.23% $38.69-$65.75Paccar (Nasdaq: PCAR) $55.56 **** 3.23% $38.69-$65.75Freeport-McMoRan (NYSE: FCX) $117.68 ***** 3.22% $48.85-$120.20 Freeport-McMoRan (NYSE: FCX) $117.68 ***** 3.22% $48.85-$120.20

Sources: Sources: The Wall Street JournalThe Wall Street Journal, Yahoo! Finance, Motley Fool CAPS., Yahoo! Finance, Motley Fool CAPS.

Company OverviewCompany Overview( www.fcx.com )( www.fcx.com )

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

Source: Yahoo.Finance.comSource: Yahoo.Finance.com

Worldwide OperationsFCX has a dynamic portfolio of operating, expansion and growth projects in the copper industry and is the world’s largest producer

of molybdenum. Major projects include:

The recently completed $900 million expansion of the Cerro Verde mine in Peru;

The development of the new $580 million Safford mine in Arizona, which is expected to begin production in early 2008;

A project to extend the life of El Abra through sulfide leaching is expected to begin in 2010;

The exciting Tenke Fungurume copper/cobalt project in the Democratic Republic of Congo, which is expected to begin production in 2009;

The expansion of the DOZ underground mine in Indonesia to 80,000 metric tons per day; and

Other developments of large-scale, high-grade underground ore bodies in the Grasberg minerals district in Indonesia.

Key StatisticsKey Statistics

FCXFCX As of 11/06/07As of 11/06/07

PricePrice $ 112.80$ 112.80

52 Week High52 Week High $ 120.20 $ 120.20

52 Week Low52 Week Low $ 48.85$ 48.85

BetaBeta 1.181.18

Current P/ECurrent P/E 12.5012.50

Forward P/EForward P/E 11.0011.00

5 Year Est. Growth Rate5 Year Est. Growth Rate 37.5%37.5%

Earnings/ShareEarnings/Share 9.179.17

Market CapMarket Cap 43.06 B43.06 BSource: Moneycentral.com

FinancialsFinancials

Source: Finance.Google.com

NewsNewsFreeport Sells Wire and Cable BusinessFreeport Sells Wire and Cable Business

Thursday November 1, 6:17 pm ET Thursday November 1, 6:17 pm ET Freeport Sells Wire Freeport Sells Wire and Cable Business for $735 Millionand Cable Business for $735 Million

PHOENIX (AP) -- Freeport-McMoRan Copper & Gold Inc. said PHOENIX (AP) -- Freeport-McMoRan Copper & Gold Inc. said it has sold its international wire and cable business to it has sold its international wire and cable business to General Cable Corporation for $735 million. Phoenix-based General Cable Corporation for $735 million. Phoenix-based Freeport-McMoRan, one of the world's largest copper Freeport-McMoRan, one of the world's largest copper miners, said Wednesday it will use net proceeds of about miners, said Wednesday it will use net proceeds of about $620 million to help pay off debt following its acquisition of $620 million to help pay off debt following its acquisition of Phelps Dodge. Phelps Dodge.

The wire and cable business, known as Phelps Dodge The wire and cable business, known as Phelps Dodge International Corporation, operates factories and distribution International Corporation, operates factories and distribution centers in 19 countries throughout Latin America, Asia and centers in 19 countries throughout Latin America, Asia and Africa. Africa.

Freeport-McMoRan said it expects to record charges of Freeport-McMoRan said it expects to record charges of about $20 million, including $12 million to net income, for about $20 million, including $12 million to net income, for transaction and related costs.transaction and related costs.

Some Positive NewsSome Positive News

If above-ground copper stockpiles stay If above-ground copper stockpiles stay low, speculators will continue to add a low, speculators will continue to add a risk premium to copper’s price.risk premium to copper’s price.

Freeport-McMoRan has only one Freeport-McMoRan has only one earnings miss in the past 11 quarters.earnings miss in the past 11 quarters.

FCX is very close to opening the Safford copper mine in SE Arizona with expected copper volumes here in the fourth quarter.

Possible Negative News

FCX’s stock price is ultimately affected by the prices of gold, copper, and molybdenum.

Investors often turn to gold as a hedge against inflation and pull back when the dollar gains strength and oil prices retreat.

Copper is used primarily in the building industry (48%). If the economy slows this could decrease the demand for copper.

Gold and Copper Correlation

Since the beginning of the commodities bull market in 2001 copper and gold have had a correlation of .921 which yields an r-square of

85%. SOURCE: Zeal Speculation and Investment; March 31, 2006

10 Year Stock Performance10 Year Stock Performance

Source: Moneycentral.com

Freeport McMoRan’s Year-to-Date Freeport McMoRan’s Year-to-Date Performance Compared to Performance Compared to

CompetitorsCompetitors

Source: Moneycentral.com

Comparison of Comparison of Price/Earning RatiosPrice/Earning Ratios

Source: Smartmoney.com

Comparison of Comparison of Financial Strength & Financial Strength &

VolatilityVolatility

Source: Smartmoney.com

Comparison of Key StatisticsComparison of Key Statistics

Source: Smartmoney.com (Millions)

Comparison of Comparison of Growth EstimatesGrowth Estimates

Source: Smartmoney.com

Comparison of Comparison of Profitability & EfficiencyProfitability & Efficiency

Source: Smartmoney.com

What the Analysts SayWhat the Analysts Say

Source: Moneycentral.com & Finance.Yahoo.com

Insider TradingInsider Trading

Source: Smartmoney.com, Moneycentral.com, & Yahoo.Finance.com

What Others ThinkWhat Others Think

What the Community Thinks What the Community Thinks Total PlayersTotal Players

1713 Outperforms1713 Outperforms34 Underperforms34 Underperforms

  All-StarsAll-Stars

823 Outperforms823 Outperforms8 Underperforms8 Underperforms

  Wall StreetWall Street

13 Outperforms13 Outperforms1 Underperforms1 Underperforms

http://www.thestreet.com/video/index.html?clipId=1373_10387635&channe... Interview posted on Wednesday. October 31, 2007

2-Stage Growth Model: FCX2-Stage Growth Model: FCX

Source: Smartmoney.com

Intrinsic Growth RateIntrinsic Growth Rate

Intrinsic Growth Rate= ROE (1 – payout Intrinsic Growth Rate= ROE (1 – payout ratio)ratio)

= 25.98%(1 – 32.2%)= 25.98%(1 – 32.2%) = 17.61%= 17.61%

Analysts recommended a 43.8% 5-year Analysts recommended a 43.8% 5-year growth rate so we took the average to find growth rate so we took the average to find a growth rate of 30.71%. a growth rate of 30.71%.

3-Stage Growth Model3-Stage Growth Model

3-Stage Growth Model with 3-Stage Growth Model with Intrinsic Growth Rate OnlyIntrinsic Growth Rate Only

Relative ValuationRelative ValuationP/E EPS 2007 2008

Current P/E 12.5 Low Estimate 9.83 7.59

Forward P/E 11.0 Avg. Estimate 10.27 10.76

Industry P/E 12.3 High Estimate 11.03 13.41

2007 EPS($9.83)

2007 EPS($10.27)

2007 EPS($11.03)

2008 EPS($7.59)

2008 EPS($10.76)

2008 EPS($13.41)

P/E 11.0

$108.13 $112.97 $121.33 $83.49 $118.36 $147.51

P/E 12.3

$120.91 $126.32 $135.66 $93.35 $132.35 $164.94

P/E 12.5

$122.88 $128.38 $137.87 $94.88 $134.50 $167.63

Scenario Est. Return 2007

Worst -1.70%

Expected 14.84%

High 25.34%

Scenario Est. Return 2008

Worst -24.10%

Expected 20.32%

High 53.39%

RecommendationRecommendation

FCX is witnessing strong growth backed by FCX is witnessing strong growth backed by improved productivity and a strong cash improved productivity and a strong cash flow position. flow position.

At the current price of $110.00, we believe At the current price of $110.00, we believe FCX to be undervalued.FCX to be undervalued.

We believe that $125.00 is very obtainable We believe that $125.00 is very obtainable with the potential of reaching $165.00.with the potential of reaching $165.00.

We suggest purchasing FCX around We suggest purchasing FCX around $110.00.$110.00.

Questions?