Why is FCX reclassifying TFHL as discontinued operations?

FCX is reclassifying TFHL as discontinued operations because it has entered into an agreement to sell its 70 percent interest in TFHL to CMOC. According to accounting principles, assets held for sale and their related operations are presented separately as discontinued operations.

What is the financial impact of this reclassification on FCX's reported results?

The reclassification will present the historical operating results of TFHL as discontinued operations in the consolidated statements of operations and its assets and liabilities as held for sale on the consolidated balance sheets for all periods presented. This means TFHL's revenues, expenses, gains, and losses will be separated from the company's ongoing operations. The company notes that comprehensive income was not impacted as TFHL had no other comprehensive income, and cash flows are reported on a combined basis.

What are the key terms of the sale of TFHL to CMOC?

FCX agreed to sell its 70 percent interest in TFHL to CMOC for $2.65 billion in cash, with the potential for up to an additional $120 million in contingent consideration. This transaction involves FCX's stake in Tenke Fungurume Mining S.A.

FCX 8-K SEC Disclosure

Q: Are there any remaining conditions for the sale of TFHL to close?

Yes, the closing of the transaction is subject to customary closing conditions. A significant condition mentioned is the resolution of Lundin Mining Corporation's right of first offer, which is set to expire on November 15, 2016. Both parties are actively working towards a satisfactory resolution.

Summary

Freeport-McMoRan Inc. (FCX) is filing an 8-K to update its financial reporting for the quarter ended March 31, 2016, specifically to reclassify its investment in TF Holdings Limited (TFHL) as discontinued operations. This aligns with previous reporting for the quarter ended June 30, 2016, and a concurrent 8-K filing that updates its 2015 Form 10-K. The company is also separately updating its 2015 Form 10-K to reflect this reclassification. This reclassification stems from the definitive agreement signed on May 9, 2016, to sell FCX's 70 percent interest in TFHL to China Molybdenum Co., Ltd. (CMOC) for $2.65 billion cash plus up to $120 million in contingent consideration. TFHL holds a significant interest in Tenke Fungurume Mining S.A. in the Democratic Republic of Congo. Investors should note that the closing of this transaction is still subject to certain conditions, including the resolution of Lundin Mining Corporation's right of first offer, which is expected by November 15, 2016. The recast financial statements will present TFHL's results as discontinued operations and its assets/liabilities as held for sale, without impacting comprehensive income or cash flow reporting.

Key Highlights

1FCX is reclassifying its investment in TF Holdings Limited (TFHL) as discontinued operations in its first-quarter 2016 financial reporting.
2This reclassification is in preparation for the sale of FCX's 70% interest in TFHL to China Molybdenum Co., Ltd. (CMOC).
3The sale agreement includes $2.65 billion in cash and up to $120 million in contingent consideration.
4TFHL's primary asset is an effective 56% interest in Tenke Fungurume Mining S.A. located in the Democratic Republic of Congo.
5The transaction closing is contingent on customary conditions, including the resolution of Lundin Mining Corporation's right of first offer by November 15, 2016.
6The recast financial statements will show TFHL as discontinued operations and its assets/liabilities as held for sale.
7The Atlantic Copper Smelting & Refining operation is now recognized as a reportable segment.

FREEPORT-MCMORAN INC 8-K Report, Corporate Update (Nov 9, 2016)

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