Management’s Discussion and Analysis measures may not be comparable to similarly titled measures  reported by other companies. For a reconciliation of cash  production costs per pound to production and delivery costs  applicable to sales reported in our consolidated financial  statements, see “PT Freeport Indonesia Product Revenues  and Net Cash Production Costs” under “Product Revenues  and Production Costs.” 2004 and is expected to average approximately 235,000 metric  tons per day in 2005. Approximate average daily throughput  processed at our mill facilities from each of our producing mines  follows (metric tons of ore per day): PT Freeport Indonesia Operating Results – 2004 Compared with 2003 Production from the Deep Ore Zone (DOZ) underground  mine averaged 43,600 metric tons of ore per day, representing  24 percent of total 2004 mill throughput. DOZ operations  continue to perform above design capacity of 35,000 metric  tons of ore per day. PT Freeport Indonesia is expanding the  capacity of the DOZ underground operation to 50,000 metric  tons per day with the installation of a second crusher and  additional ventilation. PT Freeport Indonesia’s share of capital  expenditures for the DOZ expansion in the period 2004  through the projected 2007 ramp-up are expected to approxi- mate $37 million, with $19 million estimated for 2005. The  DOZ mine, a block cave operation, is one of the world’s largest  underground operations. The Intermediate Ore Zone under- ground mine was depleted during the third quarter of 2003,  producing almost 30 percent more copper and gold throughout  its 10-year life than the initial reserve estimates. Copper ore grades averaged 0.87 percent in 2004,  compared with 1.09 percent in 2003. Copper recovery rates  were 88.6 percent for 2004, compared with 89.0 percent  for 2003. In 2004, gold ore grades averaged 0.88 grams per  metric ton (g/t), compared with 1.54 g/t in 2003. Gold  recovery rates were 81.8 percent for 2004, compared with  87.3 percent for 2003. The mining of lower grade material  resulted in lower 2004 recovery rates. Compared to 2004,  ore grades are expected to be higher for 2005 resulting in  increased metal production in 2005. Gold recovery rates are  expected to improve with the higher ore grades. Unit net cash production costs, including gold and silver  credits, averaged $0.40 per pound of copper during 2004,  compared with a net credit of $(0.02) per pound for 2003.  Higher unit site production and delivery costs in 2004  reflected significantly lower sales volumes resulting from lower  ore grades and the primarily fixed nature of a large portion  of PT Freeport Indonesia’s cost structure. In addition, the  lower sales volumes resulted in PT Freeport Indonesia being  allocated a larger percentage of those fixed costs in 2004  under our joint venture arrangements with Rio Tinto. To a  lesser extent, 2004 unit costs were impacted by higher energy  costs, increased maintenance costs, the impact of a stronger  Australian dollar and increased treatment and refining charge  rates caused by higher copper prices and our customer mix. PT Freeport Indonesia’s 2004 revenues were slightly higher  than 2003 revenues, with higher price realizations offset by  lower sales volumes. PT Freeport Indonesia reported lower  production and sales in 2004, reflecting the mining of lower- grade material and accelerated overburden removal activities  following the fourth-quarter 2003 slippage and debris flow  events. Copper sales volumes totaled 1.0 billion pounds in  2004, 23 percent lower than the 1.3 billion pounds reported  in 2003. Copper price realizations of $1.37 per pound in  2004 were $0.55 per pound higher than the 2003 realizations  of $0.82 per pound. Gold sales volumes totaled 1,443,000  ounces in 2004, 42 percent lower than the 2,469,800 ounces  reported in 2003. Gold price realizations of $412.32 per  ounce in 2004 were $54.71 an ounce higher than the 2003  realizations of $357.61 per ounce, before realized gains  related to the redemption of our Gold-Denominated Preferred  Stock. Gold realizations were $366.60 per ounce in 2003 after  hedging gains from redemption of our Gold-Denominated  Preferred Stock. Treatment charges vary with the volume of metals sold  and the price of copper, and royalties vary with the volume  of metals sold and the prices of copper and gold. In addition,  treatment charges vary based on PT Freeport Indonesia’s  customer mix. Market rates for treatment and refining  charges increased significantly toward the end of 2004 and  are expected to be higher in 2005; however, PT Freeport  Indonesia expects its 2005 rates to approximate its 2004  rates because of its customer mix. Total treatment charges  for PT Freeport Indonesia in 2004 were lower because of  the lower volume of metal sales. Royalty costs totaled  $43.5 million in 2004 compared with $26.5 million in 2003,  reflecting higher metal prices partly offset by lower sales  volumes. Following the fourth-quarter 2003 Grasberg open-pit  slippage and debris flow events, we accelerated the removal  of overburden and mined low-grade ore prior to restoring  safe access to higher-grade ore areas in the second quarter  of 2004 and resuming normal milling rates in June 2004. Mill  throughput averaged 185,100 metric tons of ore per day in  2004 and 203,000 metric tons of ore in 2003. Mill throughput,  which varies depending on ore types being processed,  averaged 229,800 metric tons per day in the fourth quarter of  2004 ANNUAL REPORT  | 29 Years Ended December 31,  2004  2003  2002 Grasberg open pit  141,500  155,700   194,500 Deep Ore Zone  43,600  40,500  21,800 Intermediate Ore Zone —  6,800  19,300 Total mill throughput  185,100  203,000  235,600