Broker Note, Rio Tinto, 17/01/2007 (Cannacord Adams)

8/15/2019 Broker Note, Rio Tinto, 17/01/2007 (Cannacord Adams)

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Daily Letter | 119 January 2007

Canaccord Adams is the global capital markets group of Canaccord Cap ital Inc. (CCI : TSX|AIM)The recommendations and opinions expressed in this Investment Research accurately reflect the Investment Analysts personal,independent and objective views about any and all the Designated Investments and Relevant Issuers discussed herein. For importantinformation, please see the Important Disclosures section in the appendix of this document or visit or visithttp://www.canaccordadams.com/research/Disclosure.htm.

Rio Tinto plc

RIO : LSE : 25.51 HOLD Target: 26.00

Damien Hackett [email protected]

Nicholas Pickens [email protected]

COMPANY STATISTICS:

Recommendation: Hold

12-month target price: 26.00

Price: 25.51

52-week Range: 23.52-33.22Market Capitalization (Million): 26,081

EARNINGS SUMMARY:

FYE Dec 2006E 2007E 2008ESales $USM 25,963 27,366 25,154

EBITDA $USM 13,556 14,005 11,707

Net profit adj. $USM 7,832 7,723 6,275

Free cash (1) $US/sh 5.27 6.68 5.92

EPS $US/sh 5.78 5.70 4.63

Dividend $US/sh 0.90 0.95 1.00

EV / EBITDA x 5.0 4.9 5.4

PER x 8.1 9.0 11.1

Free cash yield % 11.2 13.0 11.5

Yield after capex % 6.8 9.2 7.8

Dividend yield % 1.9 1.8 1.9

EBITDA margin % 52.2 51.2 46.5

EBIT margin % 45.4 44.3 39.0

Gearing (2) % 1.7 -22.3 -39.7

ROE (3) % 46.4 35.1 22.6

ROIC (4) % 33.8 29.9 23.5

Price to book x 3.4 2.8 2.3

1. Operating cash flow before investment and financing.

2. Net debt over total capital.3. Adjusted earnings pre exceptionals and goodwill over shareholder equity. 4. Adjusted net income over PP & E plus working capital.

SHARE PRICE PERFORMANCE:

2000

2200

2400

2600

2800

3000

3200

3400

Jan-06 Mar-06 May-06 Jul-06 Sep-06 Nov-06 Jan-07

Source: DatastreamAll amounts in unless otherwise noted.Share price data COB 18 January 2007.

Metals and Mining -- Senior Diversifieds

TARGET PRICE REDUCED

EventRio Tinto will announce preliminary financial results for the full year to

December 2006 on 1 February 2007. We expect attributable profit

excluding exceptional items of US$7,832 million (US$5.78/share), a

downward change of 3% following the release of a quarterly operations

review earlier this week. We have also revised our commodity price

forecast assumptions going forward resulting in a downgrade to our

profit estimates for 2007 from US$6.05/share to US$5.70/share.

Action

We have downgraded our rating to HOLD from Buy, with a target price

of 26.00/share (previously 36.00). We believe investors should hold

this stock over the near term to benefit from what we see as likelysubstantial capital returns.

Rationale

In our view, Rio Tinto may have reached a peak in earnings in 2006

against our revised commodity price assumptions, and we believe the

momentum in earnings growth seen in preceding years is unlikely to be

maintained. The stock is currently trading at 9 times earnings for

2007E while EV is priced at 4.9 times EBITDA, well below the historical

trading range for this company based on consensus estimates of 12-

month forward earnings, Figure 7. Consequently, we believe the current

share price is likely to be supported by PE expansion into a period of

weaker earnings - we note that the stock is priced at 15 times earningsin 2009E, indicating to us that there is room for PE expansion for the

next two years back to historical mid-cycle levels.

Investment risks

There are risks associated with metal prices not matching our forecasts

and with the share price achieving our target price.


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Full year results preview

Rio Tinto will be announcing preliminary financial results for the full year to December

2006 on Thursday 1 February 2007 and we have updated our earnings forecasts for the

period, following the companys recent operations results. We expect attributable profit

excluding exceptional items of US$7,832 million (US$5.78/share), or US$4,081million(US$3.01/share) for the half year and 2% lower than the consensus1 forecast. This

represents a 3% downward adjustment to our previous forecast and would be a year-on-

year increase of 58% over earnings for 12-months to December 2005.

Figure 1: Financial summary table

FYE Dec US$ million Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06E Jun-07E Dec-07E Jun-08E Dec-08EGroup turnover US$M 6,805 7,725 9,439 11,303 12,111 13,852 13,799 13,567 12,875 12,279

EBITDA US$M 2,284 2,657 4,063 5,269 6,174 7,382 7,181 6,825 6,181 5,526

EBIT (1) US$M 1,600 1,379 3,280 4,428 5,348 6,448 6,248 5,872 5,229 4,574

Attributable profit (2) US$M 993 1,279 2,087 2,868 3,751 4,081 3,980 3,743 3,346 2,929Attributable EPS US cents 72.0 92.8 151.9 211.6 277.0 301.4 293.9 276.4 247.1 216.3

Dividend US cents 32.0 45.0 38.5 41.5 40.0 50.0 45.0 50.0 47.5 52.0

Reconciliation US$M

Attributable profit (2) US$M 993 1,279 2,087 2,868 3,751 4,081 3,980 3,743 3,346 2,929

Exceptional items US$M 618 407 78 182 45 0 0 0 0 0

Reported profit (3) US$M 1,611 1,686 2,165 3,050 3,796 4,081 3,980 3,743 3,346 2,929

1) Figure 2 below shows divisional contribution to EBIT and includes FX translation effect 2) excluding exceptional items. 3) including exceptionalcontributions and NML translationSource: Company data, Canaccord Adams estimates

Looking further forward, we have also adjusted our 2007 earnings estimates downward

based on our revised commodity price assumptions (Figure 3). We now estimate

attributable profit for 2007 at US$7,723 million (US$5.70/share). Contributions from thevarious product sector groups as shown in Figure 2.

Figure 2: EBIT by product sector group

US$ million Jun-04 Dec-04 Jun-05 Dec-05 Jun-06 Dec-06E Jun-07E Dec-07E Jun-08E Dec-08EIron ore 419 468 1,126 1,661 1,491 2,211 2,283 2,259 2,002 1,776

Energy 218 391 485 652 552 382 278 320 289 286

Industrial minerals 166 200 228 163 223 284 275 275 275 275

Aluminium 244 254 296 285 548 935 1,053 850 713 606

Copper 553 669 1,176 1,678 2,588 2,542 2,257 2,095 1,849 1,557

Diamonds 151 160 169 286 151 338 309 309 310 310

Other operations 24 12 14 -13 17 2 10 6 8 7

Product Group Earnings 1,775 2,154 3,494 4,712 5,570 6,694 6,463 6,115 5,446 4,816Other items -119 -687 -149 -156 -135 -146 -140 -143 -142 -142

Exploration and evaluation -56 -88 -65 -128 -87 -100 -75 -100 -75 -100

Rio Tinto Group EBIT 1,600 1,379 3,280 4,428 5,348 6,448 6,248 5,872 5,229 4,574Source: Company data, Canaccord Adams estimates

1 Mean IBES consensus forecasts of ten analysts provided by Bloomberg


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Figure 3: Key input variables

average for the period Dec-04E Jun-05 Dec-05 Jun-06 Dec-06 Jun-07E Dec-07E Jun-08E Dec-08ERand / US$ rate 0.73 0.77 0.75 0.74 0.76 0.80 0.80 0.78 0.78

A$ / US$ rate 134.5 151.0 182.6 277.4 335.0 253.8 246.3 232.5 205.0

Oil price WTI US$ / bbl 417.4 427.8 463.1 627.3 617.8 637.5 662.5 637.5 612.5

Copper price Usc / lb 80.0 83.7 88.7 115.2 118.1 122.5 112.5 105.0 100.0

Aluminium price Usc / lb 55.3 51.5 43.7 49.3 48.3 51.3 52.5 52.5 52.5

Thermal coal (1) US$ / t 57.2 91.1 125.0 119.5 114.0 105.0 96.0 86.6 86.6

Coking coal (2) US$ / t 45.9 62.3 78.8 86.3 93.7 98.2 102.6 92.4 92.4

Iron ore lump Usc / dltu 0.73 0.77 0.75 0.74 0.76 0.80 0.80 0.78 0.78

(1) Spot price from South Africa; 2) Contract price of Goonyella brand.Source: Company data, Canaccord Adams estimates

Production review

This week, Rio Tinto released a fourth quarter operations review for the period ending

December 2006.

Iron ore production during the fourth quarter was 35 million tonnes, 2% lower compared

with the previous quarter, primarily due to the impact of maintenance activities. Year-

on-year production increased 7% to 132.8 million tonnes, reflecting expansions in

response to strong global demand. We estimate the draw on inventories at Hamersley,

Robe River and IOC in the final quarter were 2.1, 0.4 and 1.4 million tonnes respectively.

Mined copper production increased to 209,800 tonnes during the period, 15% higher

than the third quarter as a result of industrial action at Escondida. Grasberg also

benefited from access to higher grades than the preceding three quarters. Year-on-year,

total copper mined in 2006 increased by 2%, over a period that saw the average copper

price increase by 84%.

Refined copper production for the quarter was 29% lower than the third quarter mainly

due to the effects of scheduled maintenance shutdown at the Kennecott Utah Copper

smelter. Kennecott Utah also produces molybdenum and production declined by 11%

compared with the third quarter due to lower grades and recoveries.

Bauxite production in the fourth quarter was 10% higher than the previous quarter due

to a high level of equipment availability and minimal plant downtime. Furthermore,

production for the full year to December 2006 increased to record levels of 16.1 million

tonnes. Yarwun (the renamed Comalco Alumina Refinery) reached design capacity

during the final quarter and achieved a production record for the quarter and the year.

Total alumina production for 2006 increased 10% to 3.2 million tonnes, while aluminium

production declined 1% to 844,700 tonnes.

US coal production set quarterly and annual production records as the capacity

expansions at several mines ramped up. Production of hard coking coal declined by 12%

compared with the third quarter, attributable to lower volumes at Kestrel from operating

in the zone of a known fault line.

In other business groups, titanium dioxide feedstock production increased by 12%

compared with the previous quarter, reflecting strong demand and the successful

completion of the expansion of the UGS plant. Uranium production declined 13% year-

Figure 4: Group EBIT 2007E

Fe ore

31%

Energy

14%

Ind min

10% Diam.

4%

Copper

24%

Alum

17%

Source: Canaccord estimates


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on-year, largely as a result of production disruptions in the second quarter brought about

by heavy rains.

In our view, this production report highlights industry supply difficulties. Generally

production increases year-on-year were modest compared to the surge in demand seen

through 2006. This relatively weak increase in production from one of the biggest and

most efficient producers underscores our belief in the sustainability of some commodity

markets. We note that in 2006, Rio Tinto delivered 11% less copper than it did five years

ago into a global market that is now demanding around 16% more2.

Rio Tinto also asserted that input shortages are maintaining cost pressures, especially in

the iron ore business. We estimate full cash costs of iron ore production have risen

steadily from US$8.70/t in the December quarter of 2003 to US$19.3/t for the December

quarter of 2006. Currently these costs have been masked by higher prices, but we

expect all producers will have a major task in front of them when, as we believe,

commodity prices weaken.

Figure 5: Key operations production report

'000 tonnes unless specified (attributable) Dec-04 Jun-05 Dec-05 Jun-06 Dec-06 Jun-07E Dec-07E Jun-08E Dec-08EAlumina 1,201 1,489 1,474 1,633 1,616 1,737 1,737 1,737 1,737

Aluminium 419 412 447 408 442 389 389 389 389

Copper in concentrate 380 378 414 389 416 398 395 394 394

Copper cathode 795 880 895 429 563 751 768 772 772

Nickel 7,374 7,466 6,720 6,058 7,142 7,250 7,115 7,093 7,093

Zinc in concentrate 16,635 20,689 14,947 15,531 19,632 19,363 19,381 19,386 19,387

Iron ore (including pellets) 81,985 77,303 76,338 79,627 82,796 84,497 85,698 85,645 85,694

Metallurgical coal 3,186 3,051 3,533 2,507 2,918 3,150 3,150 3,150 3,150

Energy coal 290 268 292 272 282 300 300 300 300

Crude oil and condensate. '000 bbl 2,401 2,774 2,730 2,649 2,753 2,596 2,596 2,596 2,596

Total hydrocarbons '000 boe 725 689 673 726 664 699 699 699 699

Diamonds '000 cts 615 649 662 697 718 640 640 640 640

Source: Company reports, Canaccord Adams estimates

Valuation

In our view, Rio Tinto may have reached a peak in earnings in 2006 we are estimating

US$7.8 billion (US$5.70/share) against our revised commodity price assumptions and

believe the momentum in earnings growth seen in the preceding years is unlikely to be

maintained. In our opinion, risks to the downside on our estimates are limited; only a

period of global economic slowdown substantially greater than our forecast would result

in a significant reduction in volumes and prices across the commodities. Conversely, we

believe the possibility of unexpected supply disruptions in the industry may continue tooffer upside to commodity prices and earnings forecasts.

The stock is currently trading at 9 times earnings for 2007 while EV is priced at 4.9

times EBITDA, on our estimates. These multiples are below the low end of the historical

trading range for this company based on our analysis of the share price against

2 Brook Hunt figures for global copper consumption in 2001 was 14.8Mt versus 2006E of 17.8Mt.

Production report highlights

industry supply difficulties


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consensus estimates of 12-month forward earnings, Figure 7. Consequently, we believe

the current share price is likely to be supported by PE expansion into a period of weaker

earnings we note that the stock is priced at 15 times earnings in 2009E, indicating to

us that there is room for PE expansion for at least the next two years back to historical

mid-cycle levels.

To reflect the transition from mid-cycle to peak cycle, we have reduced our 12-month

forward earnings multiple from 14 times to 10 times and 12-month forward EBITDA

from 7.5 times to 6 times. This suggests a 12-month forward market price for the stock

of 25.70/share.

Consequently, we have reduced our target price for the stock from 36.00/share to26.00/share and downgraded our recommendation from Buy to HOLD.

With a free cash yield of 13% in 2007E, we expect the company to be cash rich as it was

last year. We therefore recommend that investors hold this stock in anticipation of

further returns.

Figure 7: Pricing history for Rio Tinto

5

10

15

20

25

30

35

Jan-90 Jan-91 Jan-92 Jan-93 Jan-94 Jan-95 Jan-96 Jan-97 Jan-98 Jan-99 Jan-00 Jan-01 Jan-02 Jan-03 Jan-04 Jan-05 Jan-06

500

1000

1500

2000

2500

3000

3500

Rio Tinto plc 12-month forward PE (LHS) Mean PE Rio Tinto plc share price in pence (RHS)

15 year average price is 14.2x 12-month forward earnings

Range shows + / - one standard deviation from mean PE

14.2

17.4

11.1

Source: Company reports, Datastream

Our NPV for the stock now stands at 27.17/share based on the 1,354 million shares onissue, with cash flow discounted at 9% per annum (RFR at 4% per annum, MRP at 5%

per annum and beta of 1.0) and with terminal growth rates across all the business of

3.5% per annum.


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Investment risks

There are risks associated with the share price achieving our target price and our

financial forecasts.

In our opinion, risks to the downside on our estimates are limited; only a period of global

economic slowdown substantially greater than our forecast would result in a significantreduction in volumes and prices across the commodities. Conversely, we believe the

possibility of unexpected supply disruptions in the industry may continue to offer upside

to commodity prices and earnings forecasts.

In addition, metal prices may not match our forecasts; as with any mining company,

there are operating risks involved in both underground and open pit mining operations;

foreign currency exchange rate fluctuations will impact both the companys operating

costs and its revenues. There are also numerous technical and environmental risks

associated with the operation of a mining company that could have an impact both upon

the companys valuation and our financial estimates.


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APPENDIX: IMPORTANT DISCLOSURES

Analyst Certification: Each authoring analyst of Canaccord Adams whose name appears on the front page of this investmentresearch hereby certifies that (i) the recommendations and opinions expressed in this investment researchaccurately reflect the authoring analysts personal, independent and objective views about any and all of thedesignated investments or relevant issuers discussed herein that are within such authoring analysts coverage

universe and (ii) no part of the authoring analysts compensation was, is, or will be, directly or indirectly,related to the specific recommendations or views expressed by the authoring analyst in the investmentresearch.

Site Visit: An analyst has not visited the issuer's operations in the last 12 months.

Price Chart:*

* Price charts assume event 1 indicates initiation of coverage or the beginning of the measurement period.

Distribution of Ratings:

Global Stock Ratings(as of 1 January 2007)

Coverage Universe IB ClientsRating # % %Buy 292 55.6% 43.2%Speculative Buy 64 12.2% 65.6%Hold 147 28.0% 30.6%Sell 22 4.2% 9.1%

525 100.0%

Canaccord Ratings

System:

BUY: The stock is expected to generate risk-adjusted returns of over 10% during the next 12 months.HOLD: The stock is expected to generate risk-adjusted returns of 0-10% during the next 12 months.SELL: The stock is expected to generate negative risk-adjusted returns during the next 12 months.Risk-adjusted return refers to the expected return in relation to the amount of risk associated with thedesignated investment or the relevant issuer.

Risk Qualifier: SPECULATIVE: Stocks bear significantly higher risk that typically cannot be valued by normal fundamentalcriteria. Investments in the stock may result in material loss.

Canaccord Adams Research Disclosures as of 19 January 2007Company DisclosureRio Tinto plc None


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1 The relevant issuer currently is, or in the past 12 months was, a client of Canaccord Adams or its affiliatedcompanies. During this period, Canaccord Adams or its affiliated companies provided the following servicesto the relevant issuer:

A. investment banking services.

B. non-investment banking securities-related services.

C. non-securities related services.

2 In the past 12 months, Canaccord Adams or its affiliated companies have received compensation forCorporate Finance/Investment Banking services from the relevant issuer.

3 In the past 12 months, Canaccord Adams or any of its affiliated companies have been lead manager, co-leadmanager or co-manager of a public offering of securities of the relevant issuer or any publicly disclosed offerof securities of the relevant issuer or in any related derivatives.

4 Canaccord Adams acts as corporate broker for the relevant issuer and/or Canaccord Adams or any of itsaffiliated companies may have an agreement with the relevant issuer relating to the provision of CorporateFinance/Investment Banking services.

5 Canaccord Adams or any of its affiliated companies is a market maker or liquidity provider in the securities ofthe relevant issuer or in any related derivatives.

6 In the past 12 months, Canaccord Adams, its partners, affiliated companies, officers or directors, or anyauthoring analyst involved in the preparation of this investment research has provided services to therelevant issuer for remuneration, other than normal course investment advisory or trade execution services.

7 Canaccord Adams intends to seek or expects to receive compensation for Corporate Finance/Investment

Banking services from the relevant issuer in the next six months.8 The authoring analyst, a member of the authoring analysts household, or any individual directly involved in

the preparation of this investment research, has a long position in the shares or derivatives, or has any otherfinancial interest in the relevant issuer, the value of which increases as the value of the underlying equityincreases.

9 The authoring analyst, a member of the authoring analysts household, or any individual directly involved inthe preparation of this investment research, has a short position in the shares or derivatives, or has anyother financial interest in the relevant issuer, the value of which increases as the value of the underlyingequity decreases.

10 Those persons identified as the author(s) of this investment research, or any individual involved in thepreparation of this investment research, have purchased/received shares in the relevant issuer prior to apublic offering of those shares, and such persons name and details are disclosed above.

11 A partner, director, officer, employee or agent of Canaccord Adams and its affiliated companies, or a memberof his/her household, is an officer, or director, or serves as an advisor or board member of the relevant issuerand/or one of its subsidiaries, and such persons name is disclosed above.

12 As of the month end immediately preceding the date of publication of this investment research, or the priormonth end if publication is within 10 days following a month end, Canaccord Adams or its affiliatecompanies, in the aggregate, beneficially owned 1% or more of any class of the total issued share capital orother common equity securities of the relevant issuer or held any other financial interests in the relevantissuer which are significant in relation to the investment research (as disclosed above).

13 As of the month end immediately preceding the date of publication of this investment research, or the priormonth end if publication is within 10 days following a month end, the relevant issuer owned 1% or more ofany class of the total issued share capital in Canaccord Adams or any of its affiliated companies.

14 Other specific disclosures as described above.

Canaccord Adams is the business name used by certain subsidiaries of Canaccord Capital Inc., includingCanaccord Adams Inc., Canaccord Adams Limited, and Canaccord Adams, a division of Canaccord CapitalCorporation. Clients of Canaccord Adams, in the past 12 months, may have been clients of Canaccord CapitalCorporation, Canaccord Capital (Europe) Limited, Canaccord Capital Corporation USA Inc., and/or AdamsHarkness Financial Group Ltd.

The authoring analysts who are responsible for the preparation of this investment research are employed byCanaccord Adams, a securities broker-dealer with principal offices located in Vancouver, Calgary, Toronto,Montreal (all Canada), Boston, New York, San Francisco (all US) and London (UK).

In the event that this is compendium investment research (covering six or more relevant issuers), CanaccordAdams and its affiliated companies may choose to provide specific disclosures of the subject companies byreference, as well as its policies and procedures regarding the dissemination of investment research. Toaccess this material or for more information, please send a request to Canaccord Adams Research, Attn:Disclosures, P.O. Box 10337 Pacific Centre, 2200-609 Granville Street, Vancouver, BC, Canada V7Y 1H2 [email protected].

The authoring analysts who are responsible for the preparation of this investment research have received (orwill receive) compensation based upon (among other factors) the Corporate Finance/Investment Banking


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revenues and general profits of Canaccord Adams. However, such authoring analysts have not received, andwill not receive, compensation that is directly based upon or linked to one or more specific CorporateFinance/Investment Banking activities, or to recommendations contained in the investment research.

Canaccord Adams and its affiliated companies may have a Corporate Finance/Investment Banking or otherrelationship with the company that is the subject of this investment research and may trade in any of thedesignated investments mentioned herein either for their own account or the accounts of their customers, in

good faith and in the normal course of market making. Accordingly, Canaccord Adams or their affiliatedcompanies, principals or employees (other than the authoring analyst(s) who prepared this investmentresearch) may at any time have a long or short position in any such designated investments, Relateddesignated investments or in options, futures or other derivative instruments based thereon.

Some regulators require that a firm must establish, implement and make available a policy for managingconflicts of interest arising as a result of publication or distribution of investment research. This investmentresearch has been prepared in accordance with Canaccord Adams policy on managing conflicts of interest,and information barriers or firewalls have been used where appropriate. Canaccord Adams policy isavailable upon request.

The information contained in this investment research has been compiled by Canaccord Adams from sourcesbelieved to be reliable, but (with the exception of the information about Canaccord Adams) no representationor warranty, express or implied, is made by Canaccord Adams, its affiliated companies or any other personas to its fairness, accuracy, completeness or correctness. Canaccord Adams has not independently verifiedthe facts, assumptions, and estimates contained herein. All estimates, opinions and other informationcontained in this investment research constitute Canaccord Adams judgement as of the date of thisinvestment research, are subject to change without notice and are provided in good faith but without legal

responsibility or liability.Canaccord Adams salespeople, traders, and other professionals may provide oral or written marketcommentary or trading strategies to our clients and our proprietary trading desk that reflect opinions that arecontrary to the opinions expressed in this investment research. Canaccord Adams affiliates, proprietarytrading desk, and investing businesses may make investment decisions that are inconsistent with therecommendations or views expressed in this investment research.

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For Canadian Residents: This Investment Research has been approved by Canaccord Adams, a division of Canaccord CapitalCorporation, which accepts responsibility for this Investment Research and its dissemination in Canada.Canadian clients wishing to effect transactions in any Designated Investment discussed should do so througha qualified salesperson of Canaccord Adams, a division of Canaccord Capital Corporation in their particular

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Residents:

This Investment Research complies with of the Financial Services Authority's Handbook's chapter on Conductof Business and is approved by Canaccord Adams Limited, which is regulated and authorized by theFinancial Services Authority, in connection with its distribution in the United Kingdom. This material is notfor distribution in the United Kingdom to private customers, as defined under the rules of the FinancialServices Authority. Canaccord Adams Limited accepts responsibility for this Investment Research and itsdissemination in the United Kingdom. The information contained in this Investment Research is only

intended for distribution in the UK to persons who qualify as intermediate customers or marketcounterparties, as defined under the rules of the Financial Services Authority.For United States

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Canaccord Adams Inc., a US registered broker-dealer, accepts responsibility for this Investment Research andits dissemination in the United States. This Investment Research is intended for distribution in the UnitedStates only to certain US institutional investors. US clients wishing to effect transactions in any DesignatedInvestment discussed should do so through a qualified salesperson of Canaccord Adams Inc..

For European Residents: If this Investment Research is intended for disclosure in any jurisdiction other than the United Kingdom, theUS or Canada, then the relevant rules and regulatory requirements of that jurisdiction will apply.


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Additional information is available on request.Copyright Canaccord Adams, a division of Canaccord Capital Corporation 2007. Member IDA/CIPFCopyright Canaccord Adams Limited 2007. Member LSE, regulated and authorized by the FinancialServices Authority.Copyright Canaccord Adams Inc. 2007. Member NASD/SIPC

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Broker Note, Rio Tinto, 17/01/2007 (Cannacord Adams)

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