Spm Exhibit

EXHIBIT 1 Financial Data for Freeport Sulfur Company, 1959-1969 (millions of dollars except per share data) Profitability and Financial Position (1) (2) (3) (4) (5) (6) (7) Profit after Tax

PAT/ Equity

Cash and Marketable Securities

Other Assets

Total Assets

Borrowed Money

Other Liabilities

(8)

(9)

Net Worth

Total Liab., Net Worth

1959 . .

14.5

9.4

67

100

167

0

13

154

167

1960 1961 1962 1963 1964 1965 1966 1967 1968 1969

13.2c 12.9 12.7 12.8 15.3 21.7 32.2 32.4 40.4 28.5

9.4 8.9 8.6 8.2 9.2 12.1 16.4 15.5 17.8 12.3

64 58 59 51 54 51 63 47 43 51

140 153 123 124 173 156 176 228 247 243

204 211 182 175 227 207 239 275 290 294

0 0 0 0 0 0 8 7 7 6

63 66 33 18 61 30 35 60 56 57

141c 145 149 157 166 179 196 208 227 231

204 211 182 175 227 209 239 275 290 294

. . . . . . . . . .

. . . . . . . . . .

(10) Earnings/ Share

1959 1960 1961 1962 1963 1964 1965 1966 1967 1968 1969

. . . . . . . . . . .

. . . . . . . . . . .

0.96 0.88 0.85 0.84 0.84 1.00 1.41 2.08 2.09 2.61 1.84

Market Valuation Data (11) (12) Dividends/ Share

0.60 0.60 0.60 0.60 0.60 0.60 0.80 1.06 1.25 1.40 1.60

Dividend Payout Ratio

63 68 71 71 71 60 57 51 60 54 87

(13)

(14)

(15)

Market Value Market Value Book Value of Equity of Equity

199 235 210 172 266 341 478 593 1122 683 320

Sources : Freeport Sulfur Company, annual reports, Bank and Quotation Record. a. Excludes extraordinary profit of $67 million from the sale of oil and gas interests. b. In 1958, Freeport's cash and net worth grew dramatically as a result of the cash sale of the company's oil and gas interests for nearly $100 million. c. In 1960, Freeport wrote off its equity investment in subsidiaries located in Cuba. Profit data exclude the effect of this extraordinary charge.

1.3 1.7 1.4 1.2 1.7 2.1 2.7 3 5.4 2.0 1.4

Price/ Earnings Ratio

14 18 16 14 21 22 22 18 35 17 11

EXHIBIT 2 World Copper Consumption and Production by Smelter Location and Origin or Ore, 1963-1969 (thousands of tons) 1963

1964

1965

1966

1967

1968

1969

World Copper Consumption 1. United States 2. Japan 3. German 4. United Kingdom 5. All other free world 6. Total free world 7. Soviet sphere 8. Total world

1,855 471 610 717 1,593 5,246 995 6,241

2,240 532 541 653 1,639 5,605 1,010 6,615

1,595 679 548 567 1,481 4,870 1,070 5,940

1,707a 766 681 594 1,594 3,635 1,122 4,757

1,914 888 728 603 1,749 5,882 1,211 7,093

1,521 767 615 403 394 422 318 730 5,170 903 6,073

1,580 656 667 446 414 410 349 846 5,368 968 6,336

930a 698 695 518 422 478 352 851 4,014 1,050 5,064

1,352a 732 687 605 477 499 359 928 4,287 1,108 5,395

1,678 775 713 694 441 431 401 947 6,080 1,185 7,265

1,356

1,408

950a

1,203a

1,535

710

767

c

731

755

793

662

685

645

c

701

728

726

758

462 298 967 4,245 723 4,968

487 305 961 4,399 818 5,217

510 318 969 3,920 867 4,787

508 349 1,098 4,064 927 4,991

603 353 1,084 3,499 1,009 4,508

633 358 1,168 3,640 1,077 4,717

573c 399 1,242 4,727 1,160 5,887

1,580 339 535 615 1,408 4,477 850 5,327

1,683 504 628 698 1,565 5,078 955 6,033

World Copper Production by Smelter Location 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19.

United States Zambia Chile Japan West Germany Canada Congo All other free world Total free world Soviet sphere Total world

1,393 637 615 325 334 361 298 710 4,673 752 5,425

1,418 704 647 377 371 398 305 712 4,932 858 5,790

World Copper Production by Origin of Ore b 20. United States 21. Zambia 22. Chile 23. 24. 25. 26. 27. 28.

Canada Congo All other free world Total free world Soviet sphere Total world

1,208 648

1,251

687

Source: Yearbook of the American Bureau of Metal Statistics, 1970. a. Between July 15, 1967, and March 30, 1968, the U.S. copper producers were on strike. Copper mining, smelting, and consumption were cut significantly during this period. b. Some countries with copper mines exported the ore to be smelted and refined elsewhere. c. Production was interrupted in Chile in 1965, Zambia in 1966, and Canada in 1969.

EXHIBIT 3 Calculations of Cash Flows Associated with the Ertsberg Investment Opportunity, 1973-1985 (millions of dollars) 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16.

Sales: 130 mil. lbs copper @ 40 cents 68,000 oz gold @ $35 .75 mil oz. silver @ $1.65 Total Sales Mining and milling costsa Smelting, refining, freight, and other Operating Profits Depreciation and amortization Earnings before interest and taxes Taxes @ 40%b Profit after taxes Depreciation and amortization Cash flow from operations c Return of working capital Total cash return Total cash investmentd

1973 $52.0 2.4 1.2 55.6

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

Total

$55.6

$55.6

$55.6

$55.6

$55.6

$55.6

$55.6

$55.6

$55.6

$55.6

$55.6

$55.6

$722.8

6.2 13.0 36.4 8.9 27.5

6.2 13.0 36.4 8.9 27.5

6.2 13.0 36.4 8.9 27.5

7.5 13.0 35.1 8.9 26.2

7.5 13.0 35.1 8.9 26.2

7.5 13.0 35.1 8.9 26.2

7.5 13.0 35.1 8.9 26.2

7.5 13.0 35.1 8.9 26.2

8.8 13.0 33.8 8.9 24.9

8.8 13.0 33.8 8.9 24.9

8.8 13.0 33.8 8.9 24.9

8.8 13.0 33.8 8.9 24.9

8.8 13.0 33.8 8.7 25.1

100.1 169.0 453.7 115.5 338.2

11.0 16.5 8.9 25.4

11.0 16.5 8.9 25.4

11.0 16.5 8.9 25.4

10.5 15.7 8.9 24.6

10.5 15.7 8.9 24.6

10.5 15.7 8.9 24.6

10.5 15.7 8.9 24.6

10.5 15.7 8.9 24.6

10.0 14.9 8.9 23.8

10.0 14.9 8.9 23.8

10.0 14.9 8.9 23.8

10.0 14.9 8.9 23.8

10.0 15.1 8.7 23.8

135.5 202.7 115.5 318.2

$25.4

$25.4

$25.4

$24.6

$24.6

$24.6

$24.6

$24.6

$23.8

$23.8

$23.8

$23.8

4.5 $28.3

4.5 $322.7

Source: Wall Street Institutional research reports; Freeport Sulfur Company., 10-K report to the SEC, 1969; casewriter's estimates. Note: Based on the assumption that future world copper prices equal 40 center per pound. a. During the first 3 years of mining operations, costs were expected to be relatively low, as a significant portion of the cooper ore at Ertsburg was covered with very little overburden (non-ore-bearing material). Convention open pit mining at slightly higher cost would be undertaken in the middle years of the mine's life. More expensive underground mining would not be necessary until the latter years of mine operation. b. For simplicity, a 40% tax rate was assumed. Indonesia granted tax concessions making the Indonesian tax rate substantially lower than 40%. Additional taxes would be incurred by Freeport Sulfur in the U.S., however, on any of Freeport Indonesia's earnings which were repatriated through the payment of dividends. c. Of the $120 million in capital originally budgeted for the project, $4.5 million was for working capital. d. Total cash investment equaled $120 million over a 4-year period: 1969, $7.5 mil.; 1971, $42.5 mil.; and 1972, $51.1 mil.

$120.0

Chart2

Exhibit 4 Net Present Value of Free Cash Flows from Exhibit 3 $250

$200

$150 NPV (millions) $100 Copper @ 40 cents/lb Copper @ 60 cents/lb

$50

$0 5%

10%

15%

20%

($50) Discount Rate

Page 4

25%

30%

EXHIBIT 4 Net Present Value of the Net Cash Flows Associated with the Total Investment in the Ertsberg Project Calculated at Various Discount Rates

-7.5 -7.5

-18.9 -18.9

Discount Rate 40 cents 60 cents 0.050 $93.34 $219.93 0.060 $78.58 $194.53 0.070 $65.51 $171.94 0.080 $53.93 $151.80 0.090 $43.64 $133.83 0.100 $34.50 $117.75 0.110 $26.37 $103.36 0.120 $19.12 $90.45 0.130 $12.66 $78.85 0.140 $6.89 $68.41 0.150 $1.74 $59.01 0.160 ($2.86) $50.53 0.170 ($6.98) $42.87 0.180 ($10.66) $35.95 0.190 ($13.96) $29.69 0.200 ($16.91) $24.01 0.210 ($19.55) $18.86 0.220 ($21.92) $14.19 0.230 ($24.04) $9.94 0.240 ($25.94) $6.08 0.250 ($27.63) $2.56 0.260 ($29.15) ($0.64) 0.270 ($30.50) ($3.55) 0.280 ($31.71) ($6.21)

-42.5 -42.5

-51.1 -51.1

$57.26

$25.4

$25.4

$25.4

$24.6

$41.0

$41.0

$41.0

$40.2

$24.6

$24.6

$24.6

$24.6

$23.8

$23.8

$23.8

$23.8

$28.3

$40.2

$40.2

$40.2

$40.2

$39.4

$39.4

$39.4

$39.4

$43.9

$322.7

EXHIBIT 5 Proposed Capital Takedown Plan and Contractual Loan Principal Repayment Schedule, 1969-1982 (millions of dollars) 1969 Capital Takedown Schedule 1. Senior debt-Insurance companies 2. Senior debt-U.S. banks 3. Senior debt-German bank 4. Junior debt-Japanese ore buyers 5. Equity-Southport Minerals, Inc. 6. Total Capital

$7.5 $7.5

Loan Principal Repayment Schedule 7. Senior debt-Insurance companies 8. Senior debt-U.S. banks 9. Senior debt-German bank 10. Junior debt-Japanese ore buyers 11. Total Repayments Source: Freeport Sulfur Company, 10-K report to the SEC, 1969.

1970 $6.7 3.1 $2.4 6.3 0.4 $18.9

1971 $17.1 7.6 $8.2 5.6 1.0 $42.5

1972

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

$16.2 7.3 $11.4 8.1 8.1 $51.1

Total $40.0 18.0 22.0 20.0 17.0 $120.0

7.2 0.7 -

$7.9

$0.9 6.4 1.4 3.3 $12.0

$2.2 4.4 2.1 3.3 $12.0

$7.1 2.1 3.3 $12.5

$6.3 2.8 3.4 $12.5

$5.9 3.2 3.4 $12.5

$5.9 3.3 3.3 $12.5

$5.9 3.2

$5.8 3.2

$9.1

$9.0

$40.0 18.0 22.0 20.0 $100.0

Exhibit 6 Loan Guarantors, Capital Providers, and Ore Buyers Involved in the Proposed Investment Project Guarantors Funds Providers Mine Owners U.S. Government (Overseas Private Investment Corp.)

$18M unconditional guarantee

5 U.S. Insurance Companies

$40M senior loan

U.S. Government (Export-Import Bank of the United States)

$40M unconditional guarantee

7 U.S. Banks

$40M senior loan

German Government (Federal Republic of Germany)

$22M unconditional guarantee

West German Development Bank

$22M senior loan

Japanese Government (Export-Import Bank

$20 unconditional guarantee

13 Japanese Smelting and Trading Cos.

$20M junior loan

U.S. Government (Overseas Private Investment Corp.)

$20M guarantee

Ore Buyers

1 German Smelting Company

13 Japanese Smelting and Trading Cos.

1/3 of copper ore against war, expropriation & currency incovertibility

Freeport Sulfur (Parent Co.)

$20M equity

Freeport Indonesia (Subsidary of Freeport Sulfur Co.)

2/3 of copper ore

EXHIBIT 7 Calculation of Cash Flows (Dividends) to Freeport Sulfur Company from Its Freeport Indonesia Subsidiary, 1969-1985 (millions of dollars) 1969

1970

1971

1972

1. Sales: 130 mil. lbs copper @ 40 cents

1973

1974

1975

1976

1977

1978

1979

1980

1981

1982

1983

1984

1985

Total

$52.0

2. 68,000 oz gold @ $35

2.4

3. .75 mil oz. silver @ $1.65

1.2

4. Total Sales

55.6 $55.6 $55.6 $55.6 $55.6 $55.6 $55.6 $55.6 $55.6 $55.6 $55.6 $55.6 $55.6 $722.8

5. Mining and milling costs

a

6.2

6.2

6.2

7.5

7.5

7.5

7.5

7.5

8.8

8.8

8.8

8.8

8.8

100.1

6. Smelting, refining, freight, and other

13.0

13.0

13.0

13.0

13.0

13.0

13.0

13.0

13.0

13.0

13.0

13.0

13.0

169.0

7. Operating Profits

36.4

36.4

36.4

35.1

35.1

35.1

35.1

35.1

33.8

33.8

33.8

33.8

33.8

453.7

8. Depreciation and amortization 9. Earnings before interest and taxes 10. Interest 11. Pre-tax profits 12. 13. 14. 15.

8.9 $ 27.5

Taxes @ 40%b Profit after taxes Depreciation and amortization Cash flow from operations c

16. Working capital changes 17. Cash flow for debt repayment and dividends 18. Contractually required debt repayment 19. Debt prepayments requiredd 20. Cash available for dividend payments 21. Debt investmente 22. Equity investment

$18.5 $ 7.5

$ 0.4

$38.5 $ 4.0

8.9 $ 27.5

8.9 $ 26.2

8.9 $ 26.2

8.9 $ 26.2

8.9 $ 26.2

8.9 $ 26.2

8.9 $ 24.9

8.9 $ 24.9

8.9 $ 24.9

8.9 $ 24.9

8.7 $ 25.1

8.6

7.2

6.4

5.3

4.0

2.3

0.6

-

-

-

-

-

-

34.4

20.3

21.1

20.9

22.2

23.9

25.6

26.2

24.9

24.9

24.9

24.9

25.1

303.8

7.6

8.1

8.4

8.4

8.8

9.5

10.2

10.5

9.9

9.9

9.9

9.9

9.9

121.0

11.3

12.2

12.7

12.5

13.4

14.4

15.4

15.7

15.0

15.0

15.0

15.0

15.2

182.8

8.9

8.9

8.9

8.9

8.9

8.9

8.9

8.9

8.9

8.9

8.9

8.9

8.7

115.5

20.2

21.1

21.6

21.4

22.3

23.3

24.3

24.6

23.9

23.9

23.9

23.9

23.9

298.3

-

(5.5)

-

-

-

-

-

5.5

-

-

-

-

4.5

4.5

20.2

15.6

21.6

21.4

22.3

23.3

24.3

30.1

23.9

23.9

23.9

23.9

28.4

302.8

-

7.9

5.6

5.5

10.4

9.7

5.0

-

-

-

-

-

-

44.1

-

3.8

8.0

7.9

5.9

6.8

3.3

$ 3.9

$ 8.0

$ 8.0

$ 6.0

$ 6.8

$ 16.0

$ 30.1

$ 23.9

$ 23.9

$ 23.9

$ 23.9

$ 28.4

$43.0 $ 8.1

115.5 $ 338.2

18.9

20.2 $

8.9 $ 27.5

55.9 $ 202.8 $100.0

-

-

-

-

-

-

-

-

-

-

-

Source: Wall Street institutional reports; Freeport Sulfur's 10-K report to the SEC, 1969; casewriter's estimates. Note: Based on the assumption that future world copper prices equal 40 cents per pound. a. During the first 3 years of mining operations, costs were expected to be relatively low, as a significant portion of the cooper ore at Ertsburg was covered with very little overburden (non-ore-bearing material). Convention open pit mining at slightly higher cost would be undertaken in the middle years of the mine's life. More expensive underground mining would not be necessary until the latter years of mine operation. b. For simplicity, a 40% tax rate was assumed. Indonesia granted tax concessions making the Indonesian tax rate substantially lower than 40%. Additional taxes would be incurred by Freeport Sulfur in the U.S., however, on any of Freeport Indonesia's earnings which were repatriated through the payment of dividends.

c. $4.5 million of the $120 million capital investment in Freeport Indonesia was to be used as working capital. Since under the various loan convenants dividends could not be paid unless net working capital was at least $10 million, $5.5 million of cash flow was retained and committed to net working capital as of December 31, 1974. Since the loans were entirely repaid by December 31, 1980, these convenants became inoperative and the $5.5 million of working capital not needed to support normal operations could be paid out in dividends. d. Under various loan convenants, no dividends could be paid until December 31, 1974, and debt prepayments in an amount equal to the proposed dividend had to be made before dividend could be paid. e. Debt investment includes accrued interest to date.

-

-

$ 20.0

EXHIBIT 8 Schedule of Debt Amortization Required under Various Loan Agreements, 1973-1979 (millions of dollars) Loan Principal Repayment Schedule Senior Debt - Insurance Companies 1. Contractural repayment 2. Prepayment 3. Total amortization

1973

1974

-

-

Senior Debt-U.S. Banks 4. Contractual repayment 5. Prepayment 6. Total amortization

$ 9.1 $ 9.1

$ 7.2 1.7 $ 8.9

Senior Debt - German Bank 7. Contractual repayment 8. Prepayment 9. Total amortization

$ 11.1 $ 11.1

$ 0.7 2.1 $ 2.8

Junior Debt-Japanese Ore Buyers 10. Contractual repayment 11. Prepayment 12. Total amortization 13. Total contractual repayments 14. Total prepayments 15. Total debt amortization

20.2 $ 20.2

7.9 3.8 $ 11.7

1975

1976

1977

1978

1979

Total

$ 0.9 1.3 $ 2.2

$ 2.2 7.9 $ 10.1

$ 7.1 5.9 $ 13.0

$ 6.3 6.8 $ 13.1

$ 1.6 $ 1.6

$ 18.1 21.9 $ 40.0

$ 1.4 6.7 $ 8.1

-

-

-

-

$

-

-

-

-

$

$ 3.3 $ 3.3

$ 3.3 $ 3.3

$ 3.3 $ 3.3

$ 3.4 $ 3.4

$ 3.4 3.3 $ 6.7

5.6 8.0 $ 13.6

5.5 7.9 $ 13.4

10.4 5.9 $ 16.3

9.7 6.8 $ 16.5

5.0 3.3 $ 8.3

Sources: Freeport Sulfur Company, 10-K report to the SEC, 1969; casewriter's estimates. Note: Based on the assumption of Freeport Indonesia, Inc. paying the maximum permitted dividends at the earliest possible dates.

7.2 10.8 $ 18.0 2.1 19.9 $ 22.0 $ 16.7 3.3 $ 20.0 44.1 55.9 $ 100.0

Chart3

Exhibit 9 Net Present Value of Cash Flow to Equity from Exhibit 7 $140

$120

$100 NPV (millions) $80

$60

Copper @ 40 cents/lb

$40

Copper @ 60 cents/lb

$20

$0 10%

15%

20%

25%

30%

($20) Discount Rate

Page 12

35%

40%

45%

50%

EXHIBIT 9 Net Present Value of the Net Cash Flows Associated with the Equity Investment in the Ertsberg Project Calculated at Various Discount Rates $

(7.5) $

(0.4) $

(4.0) $

(8.1) $

-

$

3.9

$

8.0

$

8.0

$

(7.5) $

(0.4) $

(4.0) $

(8.1) $

-

$

11.6

$

16.0

$

16.5

Discount Rate 40 cents 60 cents 0.050 $94.63 $221.07 0.060 $83.02 $197.88 0.070 $72.82 $177.32 0.080 $63.84 $159.07 0.090 $55.92 $142.85 0.100 $48.92 $128.39 0.110 $42.74 $115.49 0.120 $37.25 $103.96 0.130 $32.39 $93.64 0.140 $28.07 $84.38 0.150 $24.23 $76.07 0.160 $20.80 $68.59 0.170 $17.75 $61.86 0.180 $15.02 $55.78 0.190 $12.58 $50.29 0.200 $10.39 $45.33 0.210 $8.43 $40.83 0.220 $6.67 $36.75 0.230 $5.10 $33.05 0.240 $3.67 $29.68 0.250 $2.40 $26.61 0.260 $1.24 $23.82 0.270 $0.20 $21.27 0.280 ($0.73) $18.94 0.290 ($1.58) $16.81 0.300 ($2.35) $14.86 0.310 ($3.04) $13.08 0.320 ($3.67) $11.44 0.330 ($4.23) $9.94 0.340 ($4.75) $8.56 0.350 ($5.22) $7.28 0.360 ($5.64) $6.12 0.370 ($6.02) $5.04 0.380 ($6.37) $4.04 0.390 ($6.69) $3.13 0.400 ($6.98) $2.28 0.410 ($7.24) $1.50 0.420 ($7.48) $0.77 0.430 ($7.69) $0.11 0.440 ($7.89) ($0.51) 0.450 ($8.07) ($1.09)

$

6.0

$

6.8

$

16.0

$

30.1

$

23.9

$

23.9

$

23.9

$

23.9

$

28.4

$

40.3

$

40.3

$

40.4

$

45.7

$

39.5

$

39.5

$

39.5

$

39.5

$

44.0