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 annual report on Form 10-K for the year ended December 31, 2011, filed with the United States (U.S.) Securities and Exchange Commission (SEC). The results of operations reported and summarized below are not necessarily indicative of future operating results (refer to "Cautionary Statement" for further discussion). 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, significant mining operations in North and South America, and the Tenke Fungurume (Tenke) minerals district in the Democratic Republic of Congo (DRC). The Grasberg minerals district 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. We also operate Atlantic Copper, our wholly owned copper smelting and refining unit in Spain.

Our results for first-quarter 2012, compared with first-quarter 2011, primarily reflected lower copper and gold sales volumes and lower realized copper prices. First-quarter 2012 results also included losses on early extinguishment of debt of $168 million ($149 million to net income attributable to common stock or $0.16 per share). Refer to "Consolidated Results" for further discussion of our consolidated financial results for the first quarters of 2012 and 2011.

Our first-quarter 2012 results also reflected the impact of labor-related work interruptions and the related temporary suspension of operations at PT Freeport Indonesia. Operations and productivity at PT Freeport Indonesia have improved, and full operations, which are dependent on maintaining security and productivity in the workplace, are expected to be restored during second-quarter 2012. Refer to "Consolidated Results" and "Operations - Indonesia Mining" for further discussion of the impacts from the work interruptions and temporary suspension of operations in first-quarter 2012.

At March 31, 2012, we had $4.5 billion in consolidated cash and cash equivalents and $3.5 billion in total debt. During first-quarter 2012, we sold $3.0 billion of senior notes in three tranches with a weighted average interest rate of approximately three percent. We used the proceeds from this offering, plus cash on hand, to redeem the remaining $3.0 billion of our 8.375% Senior Notes. Refer to Note 5 "Capital Resources and Liquidity - Financing Activities" for further discussion.

In February 2012, our Board of Directors authorized an increase in the cash dividend on our common stock to an annual rate of $1.25 per share ($0.3125 per share quarterly). Refer to "Capital Resources and Liquidity - Financing Activities" for further discussion.

At current copper prices we expect to produce substantial operating cash flows in 2012, and plan to focus on using our cash to invest in our development projects and return cash to shareholders through common stock dividends and/or share repurchases.

We view the long-term outlook for our business positively, supported by limitations on supplies of copper and by the requirements for copper in the world's economy. We will continue to adjust our operating strategy as market conditions change. Our financial results vary with fluctuations in market prices for copper, gold and molybdenum and other factors. World market prices for these commodities have fluctuated historically and are affected by numerous factors beyond our control. Because we cannot control the price of our products, the key measures that management focuses on in operating our business are sales volumes, unit net cash costs and operating cash flow. Discussion of the outlook for each of these measures follows.

Sales Volumes. Consolidated sales from mines for the year 2012 are expected to approximate 3.7 billion pounds of copper, 1.1 million ounces of gold and 81 million pounds of molybdenum, including 895 million pounds of copper, 235 thousand ounces of gold and 20 million pounds of molybdenum for second-quarter 2012. Sales estimates for the year 2012 have been revised from the estimates provided in our annual report on Form 10-K for the year ended December 31, 2011, by approximately 100 million pounds of copper and 100 thousand ounces of gold because of reduced operations at PT Freeport Indonesia. The achievement of projected 2012 sales volumes is dependent on a number of factors, including returning to normal operations at Grasberg during second-quarter 2012, achievement of targeted mining rates, the successful operation of production facilities, the impact of weather conditions and other factors.

Unit Net Cash Costs. Assuming average prices of $1,600 per ounce of gold and $14 per pound of molybdenum for the remainder of 2012, and achievement of current sales volume and cost estimates, consolidated unit net cash costs (net of by-product credits) for our copper mining operations are expected to average approximately $1.43 per pound of copper for the year 2012. Quarterly unit net cash costs vary with fluctuations in sales volumes and average realized prices for gold and molybdenum. Second-quarter 2012 unit net cash costs are expected to be higher than first-quarter 2012 and the average for the year primarily reflecting lower gold volumes in Indonesia. The impact of price changes on consolidated unit net cash costs would approximate $0.01 per pound for each $50 per ounce change in the average price of gold during the remainder of 2012, and $0.015 per pound for each $2 per pound change in the average price of molybdenum during the remainder of 2012. Refer to "Consolidated Results - Production and Delivery Costs" for further discussion of consolidated production and delivery costs.

Operating Cash Flows. Our operating cash flows vary with prices realized from copper, gold and molybdenum sales, our sales volumes, production costs, income taxes and other working capital changes and other factors. Based on projected consolidated sales volumes and unit net cash costs for 2012, and assuming average prices of $3.50 per pound of copper, $1,600 per ounce of gold and $14 per pound of molybdenum for the remainder of 2012, consolidated operating cash flows are estimated to approximate $4.2 billion for the year 2012 (net of an estimated $1.1 billion in working capital uses). Projected operating cash flows for the year 2012 also reflect estimated taxes of $1.9 billion (refer to "Consolidated Results - Provision for Income Taxes" for further discussion of our projected consolidated effective annual tax rate for 2012). The impact of price changes for the remainder of 2012 on operating cash flows would approximate $110 million for each $0.05 per pound change in the average price of copper, $35 million for each $50 per ounce change in the average price of gold and $70 million for each $2 per pound change in the average price of molybdenum.

World prices for copper, gold and molybdenum can fluctuate significantly. During the period from January 2002 through April 2012, the London Metal Exchange (LME) spot copper price varied from a low of $0.64 per pound in 2002 to a record high of $4.60 per pound in February 2011, the London Bullion Market Association (London) gold price fluctuated from a low of $278 per ounce in 2002 to a record high of $1,895 per ounce in September 2011, and the Metals Week Molybdenum Dealer Oxide weekly average price ranged from a low of $2.43 per pound in 2002 to a record high of $39.25 per pound in 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 annual report on Form 10-K for the year ended December 31, 2011.
[[Image Removed]]* Excludes Shanghai stocks, producer, consumer and merchant stocks.

This graph presents LME spot copper prices and the combined reported stocks of copper at the LME and the New York Mercantile Exchange (COMEX) from January 2002 through April 2012. From 2006 through most of 2008, limited supplies, combined with growing demand from China and other emerging economies, resulted in high copper prices and low levels of inventories. In late 2008, slowing consumption, turmoil in the U.S. financial markets and concerns about the global economy led to a sharp decline in copper prices, which reached a low of $1.26 per pound in December 2008. Copper prices have since improved from 2008 lows, attributable to a combination of strong demand from emerging markets and limitations on available supply. During first-quarter 2012, LME spot copper prices ranged from $3.39 per pound to $3.93 per pound, averaged $3.77 per pound and closed at $3.85 per pound on March 30, 2012. Combined LME and COMEX inventories have fallen somewhat in 2012, compared to year-end 2011 levels, primarily as a result of increased Chinese imports.

We believe the underlying fundamentals of the copper business remain positive, supported by the significant role of copper in the global economy and limited supplies. Future copper prices are expected to be volatile and are likely to be influenced by demand from China and emerging markets, 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 $3.87 per pound on April 30, 2012.

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This graph presents London p.m. gold prices from January 2002 through April 2012. During first-quarter 2012, gold prices ranged from $1,598 per ounce to $1,781 per ounce, averaged $1,691 per ounce and closed at $1,663 per ounce on March 30, 2012. We believe the outlook for gold remains positive, supported by continued macroeconomic uncertainty and elevated sovereign debt levels. Gold prices closed at $1,651 per ounce on April 30, 2012.

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This graph presents the Metals Week Molybdenum Dealer Oxide weekly average prices from January 2002 through April 2012. In late 2008, molybdenum prices declined significantly as a result of the financial market turmoil and a decline in demand; however, molybdenum prices have increased from the 2008 lows, and we believe prices are being supported by improved economic conditions and resulting demand increases. During first-quarter 2012, the weekly average price of molybdenum ranged from $13.45 per pound to $14.80 per pound, averaged $14.17 per pound and closed at $14.00 per pound on March 30, 2012. The Metals Week Molybdenum Dealer Oxide weekly average price was $14.18 per pound on April 30, 2012.

                              CONSOLIDATED RESULTS
                                                             Three Months Ended
                                                                 March 31,
                                                           2012                2011
Financial Data (in millions, except per share
amounts)
Revenuesa,b                                         $       4,605         $      5,709
Operating incomeb,c                                 $       1,734         $      2,936
Net income attributable to FCX common stockholders  $         764      d  $      1,499   d
Diluted net income per share attributable to FCX                       d                 d
common stockholders                                 $        0.80         $       1.57
Diluted weighted-average common shares outstanding            955                  955

Mining Operating Data
Copper (millions of recoverable pounds)
Production                                                    833                  950
Sales, excluding purchases                                    827                  926
Average realized price per pound                    $        3.82         $       4.31
Site production and delivery costs per pounde       $        1.96         $       1.61
Unit net cash costs per pounde                      $        1.26         $       0.79
Gold (thousands of recoverable ounces)
Production                                                    252                  466
Sales, excluding purchases                                    288                  480
Average realized price per ounce                    $       1,694         $      1,399
Molybdenum (millions of recoverable pounds)
Production                                                     21                   20
Sales, excluding purchases                                     21                   20
Average realized price per pound                    $       15.34         $      18.10

a. Includes the impact of adjustments to provisionally priced concentrate and cathode sales recognized in prior years (refer to "Revenues" below for further discussion).

b. Refer to Note 11 for a summary of revenues and operating income by business segment.

c. We defer recognizing profits on intercompany sales until final sales to third parties occur. Refer to "Operations - Atlantic Copper Smelting & Refining" for a summary of net impacts from changes in these deferrals.

d. Includes losses on early extinguishment of debt totaling $149 million ($0.16 per share) for first-quarter 2012 associated with the redemption of our 8.375% Senior Notes and $6 million ($0.01 per share) for first-quarter 2011 associated with the revolving credit facilities that were replaced in March 2011 (Refer to Note 5 for further discussion).

e. Reflects per pound weighted-average production and delivery costs and unit net cash costs (net of by-product credits) for all copper mines, excluding net noncash and other costs. 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 totaled $4.6 billion in first-quarter 2012, compared with $5.7 billion in first-quarter 2011. Consolidated revenues include the sale of copper concentrates, copper cathodes, copper rod, gold, molybdenum and other metals by our North and South America mines, the sale of copper concentrates (which also contain significant quantities of gold and also silver) by our Indonesia mining operations, the sale of copper cathodes and cobalt hydroxide by our Africa mining operations, 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.

Following is a summary of changes in our consolidated revenues between periods (in millions):