Base Metals Exploration

Ken Pickering

CDO Base Metals

Houston, May 2003

Longer Term Value Creation•BHP Billiton Base Metals has the most attractive suite of brownfield and greenfield development projects in the industry.

•Longer term, exploration success and break throughsin New Technology development is key to creating value.

– Technology development, focused on copper ore leaching, is proprietary and commercially sensitive

– Focus on exploration– Advanced Project – Resolution– Grass roots projects – Application of Falcon airborne gravity to

the discovery of base metals– 80 regional targets with 30 ready to drill

•There is no certainty that exploration targets will lead to the discovery of economic mineralisation

Superior – Resolution Project

• Mineralisation

– 1400 - 2300 meters depth

– Temperatures - 75-80o C

– Block cave

• Potential synergy - Pinto Valley processing facilities

• Kennecott (RioTinto) Earn-In Agreement.

– $25 million to earn a 55% interest

• Conceptual study

Mantos Blancos180Mt @ 1.5% Cu

Manto Verde85Mt @ 0.82% Cu

Candelaria400Mt @ 1% Cu(0.2 g/t Au, 4.5 g/t A

El Soldado130Mt @ 1.5% Cu

Marcona Discovery1,400Mt @ >50% Fe+ (Cu, Ag, Au)

Raul y Condestable

Known FeOx-Cu-Au Mines(IOCG)

Lima

FALCON™ICA Project

FALCON™Candelaria Project

5.

g)

20 kms

Toq

uepa

laM

ine

Act

ive

volc

anoe

s

Target AreaUnder cover

Pacific Ocean

Note: Vertical scale exaggerated

Generalized Cross SectionSouthern Peru Porphyry Belt

Porphyry copper search – utilizing New Technology

100 km

Arirahua (Au)

Cerro Verde

Cuajone

Toquepala

Cerro Colorado

Mollendo

Arequipa

Ilo

Tacna

Arica

Iquique

Tarapacá

CC Ext.

Jewel Sur

Jewel Alto

Jewel Norte

Falcon Fly BlocksPerú and Chile Falcon Tarapacá

Preliminary Gd Resultsand Retained Property

-6.0-5.0-4.0-3.0-2.5-2.0-1.5-1.0-0.50.00.51.01.52.02.53.03.54.04.55.06.0

mGals

Cerro Colorado

Mocha

25 km

Geochemistryanomaly

Property boundary(blue retained)

FALCON™ Chile/PeruPorphyry Project

1

2

3

4

56

7

8

9

3.

SogaIP anomalies

ChintuyaIP anomalies

100 km

Arirahua (Au)

Cerro Verde

Cuajone

Toquepala

Cerro Colorado

Mollendo

Arequipa

Ilo

Tacna

Arica

Iquique

Tarapacá

CC Ext.

Jewel Sur

Jewel Alto

Jewel Norte

Falcon Fly BlocksPerú and Chile Falcon Tarapacá

Preliminary Gd Resultsand Retained Property

-6.0-5.0-4.0-3.0-2.5-2.0-1.5-1.0-0.50.00.51.01.52.02.53.03.54.04.55.06.0

mGals

Cerro Colorado

Mocha

25 km

Geochemistryanomaly

Property boundary (blue retained)

Piedemont IP anomalySouthern Peru

Regional Geology and Mineral Deposits

Copperbeltlineament

KalahariCover

Secondlineament

8.

Proposed Falcon Survey BlocksLuamata Mwinilunga, Zambia*

km20Luamata PL146

Airborne magnetics RTP

20km

MusangilaBlock2200km2400m line spacing

Kakoma Block3070km2, 800m line spacing

Musangila Mwinilunga PL66

Luamata PL146

K2

Airfield

*Note: Entire area covered by Kalahari sands

Drill Targets•Musangila (2)•K2 (1)•Airfield (1)

9.

Page 2Minerals Exploration

Drill Holes

Mineral Occurrences

Alvsbyn GEOTEMSurvey

Jokkmokk Project – Alvsbyn Area, VD1 Magnetics and Historical EM

(yellow/orange is typical ore/culture response, blue is typical river/lake response

(smelter)

BHPB Tenements

Jokkmokk GEOTEM

SnarkolonTarget

SvartlaTarget

12

3

45

6

11.

Exploration - Summary•Exploration success is a clear path to long term value creation

•Identification of prospective drill targets does not guarantee success, it is simply a pre-requisite for success

– Exploration is potentially a high risk and high reward activity

•Falcon is another tool that has the potential to improve the probability of locating mineral resources – and thus may offer BHPB a competitive advantage in base metal exploration

•Base Metals works closely with BHPB Exploration to identify areas of high prospectivity, in regions where BHPB can work in accordance with its Charter, to apply our expertise to create shareholder value

Capital Approvals Process

Glenn Kellow

CFO Base Metals

May 2003

Deep inventory of projects - Base Metals is Significant

2004 2005CY2003 2006 2007

SpenceSpence

Esc’daSulphideEsc’da

SulphideEsc P4Esc P4

CnntonCnnton

B R O W N F I E L DEsc’daNorte

Esc’daNorte

Size of bubble indicatesproposed capital expenditure; bold outer border signifies sanctioned project

$US200m$US200m

As at April 2003G R E E N F I E L D

BHP Billiton has put in place a rigorous review and tollgating process for its investments

The purpose of the Investment System is to ensure;

• Investments are aligned with Company priorities, strategies and values

• Investments are optimised to maximise shareholder value (returns are above cost of capital) with acceptable risk profiles

• Investments have the best probability of success

• Decisions are made on a consistent basis

• Risks are identified and evaluated and appropriate mitigation strategies are in place

Key Features of the Process

• Clear guidelines• Tollgating• Multi-tiered authority structure• Standard price protocols & other economic assumptions• Independent Review & Challenge• Assessment of Key Risks (EWRM)• Valuation Analysis• PIRs and Learning/Feedback Loops

InvestmentProcess Map

GROUPDevelop Agreed

Strategy Develop Corporate Strategy

Conduct Feasibility Study & Prepare

Board Submissions

Execute

Operate

Spec

ialis

t Sup

port

Gov

erna

nce

Base Metals Exco & Board Approval

IRC Pre-feasibility tollgate forInvestments > US$100m

IRC Feasibility endorsement & Reviewof Board Submission for Investments

> US$100m

Project Close Out Review, IRC informed & approve review team for investments > US$100m

Post Investment Review, IRC informed & approve review team for

investments > US$100m

Monitor against performance targets

Iterative Support and Governance as required

Iterative Support and Governance as required

IND

EPEN

DEN

T PE

ER R

EVIE

W

P

Base Metals Exco & Board Approval

BHPB Executive Committee

Approvals Reviews/EndorsementsDevelop Concept

IRC Informed & briefing note issued for investments >

US$100m, IPR Leader appointedConduct Pre-

feasibility Study

Base Metals Exco & Board Approval

BHPB Board Approval

Risk Management An Integral Part of Investment

• EWRM methodology used to assess key project risks in the IPR process

• Gross exposure, severity rating and risk control effectiveness are evaluated for major risks and mitigation strategies developed

0102030405060708090

100

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0%

5%

10%

15%

20%

25%

30%

35%

Co

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Rating

Risk Control Gap

Example Only

Value is the key driver and understanding / mitigating risks a key focus

• Impact of major sensitivities on investment value is established

• The top 5 sensitivities are used as a basis of a probabilistic distribution of expected value

Frequency Chart

Certainty is 90.19% from 0 to +Infinity US$ MM

Mean = 243.000

.004

.008

.012

.016

0

40

80

120

160

-250 125 500 875 1,250

10,000 Trials 0 OutliersForecast: NPV

LOW

MID

HIGH

0

NPV IRR

P90 5 8.2%

P50 234 18.3%

P10 504 23.4%

Mean 243 18.7%

(US$ MM)-400 -200 0 200 400 600 800

Uptime

Opex

Tax Rate

Delay

Capex

Forex

Volume

Price

Project NPV (US$ MM)

-425

LH

L

L

-305

-250

-200

-195

-155

-95

-65

+315

+225

+170

+150

+80

+450

+140

+70

H

H

Mid NPV $ 230 MM

Example Only

Examples of Base Metals Projects at Various Stages of Tollgating

•Escondida Norte Feasibility

•Escondida Sulphide Leach Feasibility

•Spence Feasibility

•Cannington North Block Execution

•Escondida Phase IV Operation

Capital Approval Process – Conclusions

•Strong portfolio of projects currently in Tollgating

•Key considerations in project timing will be market conditions and internal hurdles

•Rigorous and disciplined review process – focus on value & risks

Conclusion

BHP Base Metals•The CSG has delivered improving performance since its formation in 2001

•Base Metals has developed major projects on time and on budget

•As market conditions improve, Base Metals will increase capacity utilisation to significantly increase copper production, increasing revenues and lowering unit costs

•Over the medium term, Base Metals will develop its suite of major projects that pass through the rigorous tollgating processes

•Over the longer term Base Metals aims to create shareholder value through improving leaching technology and exploration success