In Management's Discussion and Analysis of Financial Condition and Results of Operations, "we," "us" and "our" refer to Freeport-McMoRan Copper & Gold Inc. (FCX) and its consolidated subsidiaries. You should read this discussion in conjunction with our financial statements, the related "Management's Discussion and Analysis of Financial Condition and Results of Operations" and the discussion of our "Business and Properties" in our Form 10-K for the year ended December 31, 2008, filed with the U.S. Securities and Exchange Commission (SEC). The results of operations reported and summarized below are not necessarily indicative of future operating results. References to "Notes" are Notes included in our "Notes to Consolidated Financial Statements." Throughout Management's Discussion and Analysis of Financial Condition and Results of Operations, all references to earnings or losses per share are on a diluted basis, unless otherwise noted.

We are one of the world's largest copper, gold and molybdenum mining companies in terms of reserves and production. Our portfolio of assets includes the Grasberg minerals district in Indonesia, which contains the largest single recoverable copper reserve and the largest single gold reserve of any mine in the world based on the latest available reserve data provided by third-party industry consultants; significant mining operations in North and South America; and the Tenke Fungurume minerals district in the Democratic Republic of Congo (DRC). We also operate Atlantic Copper, our wholly owned copper smelting and refining operation in Spain. Refer to "Operations" for further discussion.

The dramatic declines in copper and molybdenum prices in fourth-quarter 2008 and the deterioration of the economic and credit environment limited our ability to invest in growth projects and required us to make adjustments to our near-term plans in late 2008 and early 2009 (refer to Note 2 for further discussion).

Our third-quarter 2009 results reflect strong operating performance and rising copper prices. While copper prices were lower than in third-quarter 2008, our improved results reflect higher volumes from the Grasberg mine and a lower cost structure at the North America mines. These strong results have enabled us to enhance our financial and liquidity position, allowing us to manage volatile conditions effectively, reduce debt and reinstate cash dividends to shareholders, while maintaining our future growth opportunities. In addition, we have announced initiatives to resume certain project development activities that were deferred in late 2008.

Refer to "Consolidated Results" for further discussion of our consolidated financial results for the three- and nine-month periods ended September 30, 2009 and 2008.

Outlook
Consolidated sales from mines for the year 2009 are expected to approximate 4.0 billion pounds of copper, 2.5 million ounces of gold and 56 million pounds of molybdenum, including 915 million pounds of copper, 425 thousand ounces of gold and 14 million pounds of molybdenum in fourth-quarter 2009. These sales volume estimates are dependent on the achievement of targeted mining rates, the successful operation of production facilities, the impact of weather conditions and other factors.

Assuming average prices of $2.75 per pound of copper, $1,000 per ounce of gold and $10 per pound of molybdenum for fourth-quarter 2009, we estimate consolidated unit net cash costs (net of by-product credits) for our copper mining operations, excluding Africa mining, would average approximately $0.60 per pound of copper for the year 2009, compared with $1.16 per pound of copper in 2008. Estimated consolidated unit net cash costs for 2009 have improved compared to 2008 primarily because of mining in a higher grade section of the Grasberg open pit, reduced operating rates at our North America copper mines to lower production of high-cost incremental volumes, achievement of cost savings initiatives and operating efficiencies, and lower energy and other commodity-based input costs. We will incorporate Africa mining in our consolidated unit net cash cost disclosures upon completion of ramp-up activities, expected in 2010.

Consolidated revenues, operating cash flows and net income vary significantly with fluctuations in the market prices of copper, gold and molybdenum, sales volumes and other factors. Based on the above projected consolidated sales volumes for 2009 and assuming average prices of $2.75 per pound of copper, $1,000 per ounce of gold and $10 per pound of molybdenum for fourth-quarter 2009, our consolidated operating cash flows are estimated to exceed $4.0 billion for the year 2009, net of an estimated $0.3 billion for working capital requirements. Operating cash flows for fourth-quarter 2009 would be impacted by approximately $80 million for

each $0.10 per pound change in copper prices, $30 million for each $50 per ounce change in gold prices and $5 million for each $1 per pound change in molybdenum prices.

Capital expenditures for the year 2009 are expected to approximate $1.4 billion, including $0.6 billion for sustaining capital and $0.8 billion for major projects, which primarily include Tenke Fungurume and the Grasberg underground development projects. For 2008, capital expenditures totaled $2.7 billion, which included approximately $1.6 billion for major projects. Lower projected capital expenditures for the year 2009 results from the deferral of capital spending for most of our project development activities, lower spending on the Tenke Fungurume development project (for which construction activities are substantially complete) and reduced spending for sustaining capital. We have announced initiatives to resume certain project development activities that were deferred in late 2008 (refer to "Development Projects" for further discussion). Capital spending plans will continue to be reviewed and adjusted in response to changes in market conditions and other factors.

The graphs below illustrate the movements in metals prices from January 1999 through October 2009. World prices for copper, gold and molybdenum have fluctuated significantly during this period. The London Metal Exchange (LME) spot copper price varied from a low of $0.60 per pound in 2001 to a high of $4.08 per pound in July 2008, the London gold price fluctuated from a low of approximately $250 per ounce in 1999 to a high of $1,062 per ounce in October 2009, and the Metals Week Molybdenum Dealer Oxide weekly average price ranged from $2.19 per pound in December 2000 to a high of $39.25 per pound in June 2005. Copper, gold and molybdenum prices are affected by numerous factors beyond our control as described further in our "Risk Factors" contained in Part I, Item 1A of our Form 10-K for the year ended December 31, 2008.

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* Excludes Shanghai stocks, producer, consumer and merchant stocks.

The graph above presents LME spot copper prices and reported stocks of copper at the LME and the New York Mercantile Exchange (COMEX) from January 1999 through October 2009. From 2006 through most of 2008, disruptions associated with strikes and other operational issues, combined with growing demand from China and other emerging economies resulted in low levels of inventory. Beginning in late 2008, slowing consumption led to increased levels; however, China's increased buying activity contributed to a decline in exchange inventories

during the first half of 2009. Combined LME and COMEX stocks totaled approximately 394 thousand metric tons at September 30, 2009, which represents approximately one week of global consumption.

Turmoil in the United States (U.S.) financial markets and concerns about the global economy negatively impacted copper prices in late 2008 and early 2009; however, copper prices have improved during the first nine months of 2009 as a result of strong Chinese import activity and limited supply. During third-quarter 2009, LME spot copper prices ranged from $2.19 per pound to $2.94 per pound and averaged $2.65 per pound. While the near-term outlook is uncertain, we believe the underlying fundamentals of the copper business remain positive, supported by limited supplies from existing mines and the absence of significant new development projects. Future copper prices are expected to be volatile and are likely to be influenced by demand from China, economic activity in the U.S. and other industrialized countries, the timing of the development of new supplies of copper and production levels of mines and copper smelters. The LME spot copper price closed at $2.98 per pound on October 30, 2009.

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The graph above presents London gold prices from January 1999 through October 2009. During third-quarter 2009, the environment for gold was positive, but volatile, with gold prices ranging from approximately $909 per ounce to $1,019 per ounce and averaging approximately $960 per ounce. Growing investment demand and a weak U.S. dollar are continuing to support gold prices. London gold prices reached a new record high of $1,062 per ounce during October 2009 and closed at approximately $1,040 per ounce on October 30, 2009.

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The graph above presents Metals Week Molybdenum Dealer Oxide weekly average prices from January 1999 through October 2009. Molybdenum prices have declined significantly from 2008 levels as a result of the financial market turmoil and a decline in demand; however, prices improved during third-quarter 2009, compared to the first half of 2009, with the weekly average price of molybdenum ranging from approximately $10.80 per pound to approximately $18.00 per pound and averaging $14.68 per pound. This increase was driven by Chinese imports and modest recovery in western demand associated with restocking and improved automotive markets. However, molybdenum prices have begun to decline again on weaker demand; the Metals Week Molybdenum Dealer Oxide weekly average price was $11.35 per pound on October 30, 2009.

                              CONSOLIDATED RESULTS
                                                          Nine Months Ended
                                   Third-Quarter            September 30,
                                  2009       2008          2009         2008
Financial Data (in millions,
except per share amounts)
Revenuesa                        $ 4,144 b  $ 4,616 b   $   10,430 b  $ 15,729 b
Operating income                 $ 2,084 b  $ 1,133 b   $    4,264 b  $  5,582 b
Net income                       $ 1,203    $   742     $    2,222    $  3,531
Net income attributable to       $   925 d  $           $    1,556 d  $  2,592 d
common stockc                                   523
Diluted net income per share of  $  2.07 d  $           $     3.70 d  $   6.20 d
common stock                                   1.31
Diluted weighted-average common      472                       428         449
shares outstandinge                             447

Mining Operating Data
Copper (millions of recoverable
pounds)
Production                         1,015      1,024          3,125       2,845
Sales, excluding purchases         1,000      1,016          3,122       2,869
Average realized price per pound $  2.75    $  3.14     $     2.35    $   3.43
Site production and delivery     $  1.15    $           $     1.08    $   1.58
costs per poundf                               1.66
Unit net cash costs per poundf   $  0.50    $  1.29     $     0.53    $   1.21
Gold (thousands of recoverable
ounces)
Production                           708        300          2,105         825
Sales, excluding purchases           706        307          2,088         852
Average realized price per ounce $   987    $   869     $      944    $    897
Molybdenum (millions of
recoverable pounds)
Production                            15         21             42          57
Sales, excluding purchases            16         19             42          59
Average realized price per pound $ 13.95    $ 32.11     $    11.93    $  31.78

a. Includes the impact of adjustments to provisionally priced concentrate and cathode sales recognized in prior periods. Refer to "Revenues" for further discussion.

b. As discussed in Note 12, Africa mining became a reportable segment during 2008. Accordingly, we have revised our segment disclosures for the third quarter and first nine months of 2008 to conform to the current period presentation. Following is a summary of revenues and operating income (loss) by operating division (in millions):

                                       Third-Quarter 2009         Third-Quarter 2008
                                                   Operating                  Operating
                                                    Income                     Income
                                      Revenues      (Loss)       Revenues      (Loss)
North America copper mines          $      920   $       399   $    1,402   $       361
South America copper mines               1,018           572        1,008           388
Indonesia mining                         1,656         1,199          802           260
Africa mining                              113             4            -            (1 )
Molybdenum                                 258            65          683           211
Rod & Refining                             963             4        1,485             5
Atlantic Copper Smelting & Refining        495           (11 )        625             1
Corporate, other & eliminations         (1,279 )        (148 )     (1,389 )         (92 )
Total                               $    4,144   $     2,084   $    4,616   $     1,133



                                       Nine Months Ended          Nine Months Ended
                                       September 30, 2009         September 30, 2008
                                                   Operating                  Operating
                                                    Income                     Income
                                      Revenues      (Loss)       Revenues      (Loss)
North America copper mines          $    2,241   $       543   $    4,469   $     1,688
South America copper mines               2,604         1,291        4,043         2,272
Indonesia mining                         4,388         2,983        2,870         1,313
Africa mining                              170           (64 )          -           (15 )
Molybdenum                                 590            69        2,117           644
Rod & Refining                           2,329            11        4,856            20
Atlantic Copper Smelting & Refining      1,202           (40 )      2,014             9
Corporate, other & eliminations         (3,094 )        (529 )     (4,640 )        (349 )
Total                               $   10,430   $     4,264   $   15,729   $     5,582

c. After noncontrolling interests and preferred dividends.

d. Includes net losses on early extinguishment of debt totaling $31 million ($28 million to net income attributable to common stock or $0.06 per share for third-quarter 2009 and $0.07 per share for the first nine months of 2009). Refer to Note 7 for further discussion.

The first nine months of 2008 includes net losses on early extinguishment of debt totaling $6 million ($5 million to net income attributable to common stock or $0.01 per share).

e. As applicable, reflects assumed conversion of our 5½% Convertible Perpetual Preferred Stock (which converted into 17.9 million shares of FCX common stock in September 2009) and 6¾% Mandatory Convertible Preferred Stock (refer to Note 3). In addition, the 2009 periods include the effects of the 26.8 million shares of common stock sold in February 2009.

f. Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for our copper mining operations, excluding net noncash and nonrecurring costs and Africa mining. For reconciliations of the per pound costs by operating division to production and delivery costs applicable to sales reported in our consolidated financial statements, refer to "Operations - Unit Net Cash Costs" and to "Product Revenues and Production Costs."

Revenues
Consolidated revenues include the sale of copper concentrates, copper cathodes, copper rod, molybdenum, gold and other metals by our North and South America copper mines, the sale of copper concentrates (which also contain significant quantities of gold and silver) by our Indonesia mining operation, the sale of copper cathodes by our Africa mining operation, the sale of molybdenum in various forms by our Molybdenum operations, and the sale of copper cathodes, copper anodes, and gold in anodes and slimes by Atlantic Copper. Consolidated revenues totaled $4.1 billion in third-quarter 2009 and $10.4 billion for the first nine months of 2009, compared with $4.6 billion in third-quarter 2008 and $15.7 billion for the first nine months of 2008. Following is a summary of changes in our consolidated revenues between periods (in millions):