831259--2/28/2007--FREEPORT_MCMORAN_COPPER_&_GOLD

related topics

{operation, international, foreign}

{gas, price, oil}

{debt, indebtedness, cash}

{stock, price, share}

{loss, insurance, financial}

{cost, regulation, environmental}

{operation, natural, condition}

{regulation, change, law}

{acquisition, growth, future}

{cost, contract, operation}

{provision, law, control}

{financial, litigation, operation}

{personnel, key, retain}

Because our primary operating assets are located in the Republic of Indonesia, our business may be adversely affected by Indonesian political, economic and social uncertainties, in addition to the usual risks associated with conducting business in a foreign country. In addition to the usual risks encountered in the mining industry, we face additional risks because our operations are located on difficult terrain in a very remote area. The terrorist attacks in the United States on September 11, 2001, subsequent attacks in Indonesia and the potential for additional future terrorist acts and other recent events have created economic and political uncertainties that could materially and adversely affect our business and the prices of our securities. Our profitability can vary significantly with fluctuations in the market prices of copper and gold. Our Contracts of Work are subject to termination if we do not comply with our contractual obligations, and if a dispute arises, we may have to submit to the jurisdiction of a foreign court or arbitration panel. Any suspension of required activities under our Contracts of Work requires the consent of the Indonesian government. Our mining operations create difficult and costly environmental challenges, and future changes in environmental laws, or unanticipated environmental impacts from our operations, could require us to incur increased costs. The volume and grade of the reserves we recover and our rates of production may be more or less than we anticipate. We do not expect to mine all of our reserves before the initial term of our Contract of Work expires. Increased energy and other production costs could reduce our profitability and cash flow. Our business is subject to operational risks. Movements in foreign currency exchange rates or interest rates could negatively affect our operating results. Because we are a holding company, our ability to pay our debts depends upon the ability of our subsidiaries to pay us dividends and to advance us funds. In addition, our ability to participate in any distribution of our subsidiaries assets is generally subject to the prior claims of the subsidiaries creditors. Risk Factors Associated with the Proposed Acquisition of Phelps Dodge. Shareholders cannot be sure of the market value of our shares that will be issued in the transaction. We may not be able to obtain the financing needed for the transaction on favorable terms. The combined company will be highly leveraged, and its high level of debt may limit its financial and operating flexibility. Declines in the market prices of copper, gold and molybdenum could adversely affect the combined company s earnings and cash flows, and therefore its ability to repay its debt. The combined company will operate on a broader geographical scope than either we or Phelps Dodge has operated individually, and will be exposed to a broader range of political, social and geographic risks than either company has been exposed to on an individual basis. The impact of purchase accounting could adversely affect the combined company s earnings. The combined company will depend on its senior management team and other key employees, and the loss of any of these employees could adversely affect the combined company s business. Resales of shares of our common stock following the transaction and future issuances of equity or equity-linked securities by us may cause the market price of shares of our common stock to fall. The trading price of shares of our common stock following the transaction may be affected by factors different from those affecting the trading price of Phelps Dodge common shares and shares of our common stock prior to the transaction.

Full 10-K form ▸

831259--2/28/2007--FREEPORT_MCMORAN_COPPER_&_GOLD_INC