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Production from PT Freeport Indonesia’s Deep Ore Zone (DOZ) underground mine averaged 43,600 metric tons of ore per day in 2004. DOZ operations continued for a second straight year to perform above design capacity, which is being increased to a sustainable level of 50,000 metric tons per day through a high-return capital project to install a second underground crusher and additional ventilation. The DOZ block cave mine is one of the world’s largest underground operations. 

Mill throughput increased throughout 2004 as we made progress on our waste removal efforts, averaging 185,100 metric tons of ore per day during 2004, including a fourth-quarter average of approximately 230,000 metric tons of ore per day. Mill throughput, which varies depending on ore types processed, is expected to average approximately 235,000 metric tons per day in 2005. 

Copper ore grades from the PT Freeport Indonesia operations averaged 0.87 percent for the full year 2004, compared with 1.09 percent for 2003. Gold ore averaged 0.88 grams per metric ton, compared with 1.54 grams per metric ton in the previous year. Grades were higher in the fourth quarter (1.17 percent for copper and 1.20 grams per metric ton for gold) and are expected to be significantly higher in 2005 than 2004 levels. 

## Quarterly Mill Throughput 

in thousands of metric tons per day 

<img src='content_image/43551.jpg'>

PT Freeport Indonesia’s unit net cash production costs, including gold and silver credits, averaged $0.40 per pound for 2004, compared to a net credit of ($0.02) in 2003. This increase was primarily the result of lower sales volumes, and to a lesser extent higher energy costs, increased maintenance costs, the impact of a stronger Australian dollar and increased treatment and refining costs resulting from higher copper prices. Cash production costs for the fourth quarter of 2004 averaged $0.17 per pound of copper. Because of the fixed nature of most of PT Freeport Indonesia’s costs and the effect of higher sales volumes in 2005, PT Freeport Indonesia estimates that in 2005 unit net cash production costs will be significantly lower than in 2004. Assuming an average price of $420 per ounce for gold, gold credits are expected to essentially offset cash production costs for the year, resulting in a net cash production cost of zero cents per pound of copper. 

Our operations team continues its efforts to improve productivity of our mining, milling and maintenance activities. Programs are under way, in coordination with our partners and contractors, to improve performance involving safety, equipment availability, drilling efficiency, pit road maintenance, logistics and other areas that are part of our continual improvement and operations excellence programs. In addition, work commenced in 2004 on new portals and tunnel systems as part of common infrastructure which will provide for future development of underground operations and enable us to expand exploratory drilling activities. 

## DOZ Block Cave Production: Original Feasibility v. Actual/Projected 

in thousands of metric tons per day 

<img src='content_image/43550.jpg'>

