Freeport-McMoRan Guides 2H26 Grasberg Output Lower as Upgrades Downtime Dampens Run-Rate

What drives the 60k–65k tpd Grasberg 2H26 guidance (vs. June ~69k tpd), and is there upside from CG44 upgrades?

1) Why 2H26 average is guided to 60k–65k tpd despite June running ~69k tpd

A. The guidance explicitly reflects planned “downtime/transition” to complete shoot-gallery and material-handling upgrades in 2H26

Management stated that 2H26 guidance (60k–65k plus/minus) is driven by the need to complete work in a shoot gallery associated with “spilminator work” and related equipment (including a “chute regulator”), then transition to another area to complete maintenance/upgrades in the second half. This scheduling implies that some production will come on as work completes, but other periods will have production going down to complete the upgrades—resulting in a lower average than the June exit rate. ¹

B. June’s ~69k tpd represents an end-of-period “exit” level, not the full-second-half average

Freeport noted it “exited June at an average of 69 thousand tons per day” while guidance is “60 thousand to 65 thousand…in the second half,” and that conditions are improving (wet draw points converting to dry) with increased cave activity. This means June is best viewed as a high point during the ramp/execution curve, while 2H26 includes both ramp-up and planned maintenance windows, pulling the average down. ¹

C. Wet-to-dry draw point improvement helps, but doesn’t remove the upgrade-related throughput interruptions

Management said draw-point conditions improved during the quarter as the wet-to-dry ratio improved (with “draw points that were wet in April convert to dry”). They also emphasized that their upgrades are intended to create a “more robust plan longer term…to deal with any type of material,” but those upgrades come with “some downtime…In the second half,” which is already reflected in guidance. ²¹

D. The company also frames material-handling system upgrades as in-progress (scheduled on-track) but still part of execution volatility

They cited progress “on schedule” for “upgrades to the material handling system for our automated rail system,” and linked the overall ramp to a derisking process and phase progression toward longer-term capacity targets. However, progress-by-definition across multiple work fronts can still create temporary production variability even if execution is on-track. ³¹

2) Is there upside from ongoing CG44 upgrades?

A. Yes—CG44 is described as a “step change” source of production once completed, and it is expected to be done by end of 2026

Freeport’s CG44 shoot-gallery work was described as being in a major production area for the “next 3 years,” with completion expected “by the end of the year.” Management stated that when CG44 comes up, there will be “an increase in production associated with that,” and they quantified CG44 output as “about 25 thousand to 30 thousand tons a day” that comes out of CG44 area—explicitly calling it a “step change once that is complete.” ⁴

B. CG44 upside appears to be more relevant to post-2H26 ramp dynamics than to explain a lower 2H26 average

The combination of:

• 2H26 guidance being constrained by near-term shoot-gallery/chute regulator maintenance transitions and downtime, ¹
• and CG44 being a “step change” expected to be completed by end of the year, ⁴ suggests that CG44’s largest throughput benefit is more likely to be felt toward late-2026 and/or mainly into 2027 rather than lifting the average 2H26 number above the 60k–65k band (which already incorporates planned downtime). ⁴¹

C. Management also flags additional future shoot work beyond CG44, which could create further upside after CG44

They noted that in 2027 there is “some ongoing construction on implementing these shoots… taking place in the future,” and referenced other quantities for additional future shoot implementation. While the excerpt is partially truncated in wording, management clearly implies that CG44 is not the only incremental production step, and that additional ramp items continue into 2027. ⁴

Bottom line (answering the question directly)

• What drives 60k–65k tpd 2H26 despite June ~69k tpd? The lower 2H26 average is primarily explained by planned maintenance/upgrade execution during the second half—work on spilminator-related shoot galleries/chute regulator and then transitions to another shoot-gallery area, including periods where production is reduced to complete upgrades, even though draw-point conditions and execution are progressing. ¹²
• Is there upside from ongoing CG44 upgrades? Yes. CG44 is described as a major production area with ~25k–30k tpd expected to come out of CG44 once its shoot-gallery technology is completed, expected by end of the year, and characterized as a step change. ⁴ That upside is more likely to influence late-2026/early-2027 ramp-up rather than eliminating the 2H26-average headwinds from planned upgrade downtime already embedded in guidance. ⁴¹