[Management View]
Freeport-McMoRan (FCX) management highlighted the early commissioning of its Indonesian copper smelter and ongoing ramp-up, positioning the company as a fully integrated global producer. The tripling of the U.S. copper price premium due to new tariffs could substantially increase future earnings and cash flow if current differentials persist. Despite revising 2025 gold and copper guidance downward following a recalibration of the Grasberg ore model, long-term production and cost guidance for 2026 and 2027 remain unchanged.

[Outlook]
Management reiterated its long-term production and cost guidance for 2026 and 2027, citing unchanged multi-year forecasts. The company plans to continue focusing on organic growth initiatives, including the leach initiative at the Morenci mine and potential brownfield expansions in North and South America.

[Financial Performance]
- EBITDA: $3.2 billion for the quarter.
- Operating Cash Flow: $2.2 billion reported for the quarter.
- Copper Sales Volume: Second-half 2025 copper sales projected to be nearly 10% higher than the first half.
- Gold Sales Volume: 2025 gold sales guidance reduced by approximately 17%.
- Net Unit Cash Cost: Q2 2025 was $1.13 per pound; full-year 2025 estimated at $1.55 per pound.

[Q&A Highlights]
Question 1: Did the mine plan change at Grasberg due to new data, and what went into the modeling update?
Answer: The quarterly forecast update detected differentials between actual ore grades and model estimates. The model was recalibrated to better reflect the timing of ore grades flowing through draw points. The changes are timing-related and not expected to impact ultimate recoveries over the life of the deposit.

Question 2: How could tariffs impact the cost outlook in North America?
Answer: The impact of tariffs is being closely monitored, with an estimated potential 5% impact on costs. Efforts are underway to modify the supply chain and work with vendors to source tariff-free materials. The focus remains on driving efficiencies and reducing costs through innovation and automation.

Question 3: Has there been any discussion with the US administration regarding financing or incentives for US-based growth?
Answer: Discussions have been held with various government authorities about Freeport's role as a dominant US producer. Efforts are focused on educating the government about the company's potential to boost refined copper production through the leach initiative and other projects.

Question 4: What is the internal cost to operate the new Indonesian smelter, and how will it impact margins?
Answer: The operating cost of the new smelter is approximately 27¢ per pound. The net cost impact, considering additional revenues and the elimination of export duties, is expected to benefit margins.

Question 5: Is there potential to ship refined copper from Indonesia to the US to take advantage of tariff differentials?
Answer: Historically, Indonesia has not shipped significant copper to the US. The near-term plan is to sell copper cathode in Asia, but the company will evaluate the best market for future sales.

Question 6: What is holding back the pace of share repurchases despite being below the net debt target?
Answer: The financial policy of distributing 50% of available cash flows through dividends and buybacks is being applied. The recent increase in the US copper premium could provide more cash flow for shareholder returns.

Question 7: How confident is management in the medium-term gold guidance given the variability experienced?
Answer: Management is confident in the modeling and data used for the gold grades. The completion of major maintenance projects and the ramp-up of the new smelter are expected to support future production levels.

[Sentiment Analysis]
Analysts' tone was inquisitive and focused on understanding the implications of the revised guidance and the impact of tariffs. Management's tone was confident and focused on long-term strategic initiatives and operational efficiencies.

[Quarterly Comparison]
| Metric | Q2 2025 | Q1 2025 | YoY Change |
|-------------------------|---------|---------|------------|
| EBITDA | $3.2B | $3.0B | +6.7% |
| Operating Cash Flow | $2.2B | $2.0B | +10% |
| Copper Sales Volume | +10% (H2) | - | - |
| Gold Sales Volume | -17% (2025) | - | - |
| Net Unit Cash Cost | $1.13/lb | $1.10/lb | +2.7% |

[Risks and Concerns]
- Revised gold production guidance due to recalibration of the Grasberg ore model.
- Potential 5% cost impact from tariffs.
- Uncertainty regarding the implementation of US copper import tariffs.

[Final Takeaway]
Freeport-McMoRan's early commissioning of its Indonesian copper smelter and the tripling of the US copper price premium due to new tariffs are significant milestones. Despite revising 2025 gold and copper guidance downward, the company remains confident in its long-term production and cost outlook for 2026 and 2027. Management continues to focus on organic growth initiatives and operational efficiencies to drive future earnings and cash flow.