HENDERSON MINE

Announced response to the recent sharp decline in molybdenum prices plans to reduce production from its Henderson primary molybdenum mine.

The company reported the investment on an incresed capacity to maintain production levels of 32 million pounds a year beyond 2007. In 2004, based on rapidly increasing molybdenum prices and market fundamentals for molybdenum, the company increased annual production at Henderson to approximately 28 million pounds, and in 2005, annual production at Henderson was approximately 32 million pounds. Henderson is expected to be capable of producing up to 40 million pounds annually by mid-2006. In May 2000, Phelps Dodge announced a plan to curtail molybdenum production by approximately 20 % and reduce its Henderson workforce by approximately 130 workers. This production curtailment essentially remained in place through 2003. In 1998-99, the rail haulage system was replaced with a conveyor system and a new producton level using more efficient high-lift caving methods was begun and completed in early 2000. Production was scaled back by 40% in early 1993. A program of further development and modernization commenced in 1991. This first stage included development of a new mining level and upgrading of equipment.

Phelps Dodge's recent announcement that it would pay a special dividend of US$5 per common share on December 2, 2005, apparently did not wow all its major shareholders reports Mineweb. During a breakfast meeting Thursday to discuss the company's third-quarter results, PD Chairman and CEO Steve Whisler declared: "We will not overextend ourselves financially in anticipation of continued strength at the expense of needlessly disadvantaging this company in an unforeseen downturn."