MINERA ESCONDIDA
MERRILL LYNCH INVESTOR VISIT
NOVEMBER 18, 2002 Presentation Content • Geographical Location • Escondida Strengths • Operations Operview • Production (Including Apollo) • Financials • Business Strategy • Growth Opportunities • Current Activities
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 2 18 Nov 2002
World’s Premium Copper Region A
TOCOPILLA CHUQUICAMATA I IV
Northern Chile’s Atacama Desert, L
CALAMA O B 160 km south east of Antofagasta. MEJILLONES
ANTOFAGASTA CHILE COLOSO ZALDIVAR Cerro Colorado MONTURAQUI Quebrada Blanca Collahuasi ESCONDIDA El Abra Radomiro Tomic Chuquicamata Michilla Lince Spence TATAL Mantos Blancos Lomas Bayas Escondida El Tesoro Zaldivar EL SALVADOR CHAÑARAL ARGENTINA Manto Verde El Salvador POTRERILLOS
La Candelaria INCA DE ORO
Andacollo El Indio Los Pelambres
El Soldado Andina Los Bronces El Teniente
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 3 18 Nov 2002 Escondida Zaldivar Norte AerialLeach View Pads of MEL
Zaldivar Pit
Concentrator
Main Pit
Oxide Hamburgo Leach Pads Tails
N Phase IV 5 km BasePlant Metals CSGsite - Escondida - Merrill Lynch Analysts Andean Adventure Page 4 18 Nov 2002 Coloso Filter & Port
Base Metals CSG - Escondida - Merrill Lynch Analysts AndeanColoso Adventure Filter & Port Facilities Page 5 18 Nov 2002 Presentation Content • Geographical Location • Escondida Strengths • Operations Operview • Production (Including Apollo) • Financials • Business Strategy • Growth Opportunities • Current Activities
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 6 18 Nov 2002 Escondida’s Strategy Builds on its Strengths to Maximize Long Term Value
World’sWorld’s LargestLargest StrongStrong CopperCopper MineMine StrongStrong CashCash CreditCredit FlowFlow RatingsRatings
Low Cost StrongStrong LowLow CostCost Producer SpSpononssoorsrs ProducerProducer
DiversifiedDiversified StableStable SSaalesles BaseBase CountryCountry
AbilityAbility toto UnequalledUnequalled ManageManage ResourResourcece ExExpansionspansions HighHigh QualityQuality ConcentrateConcentrate
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 7 18 Nov 2002 World’s Largest Copper Mine
Leading Copper Mine Sites Leading Copper Producers
Escondida Ph IV Codelco Freeport Indonesia Escondida Ph IV Chuquicamata Collahuasi Phelps Dodge mpanies s e Morenci BHP Billiton El Teniente Grupo Mexico per Min
Los Pelambres ducing Co
Cop Bingham Canyon Rio Tinto
Andina per Pro F-McMoran Rudna Cop KGHM Dzhezkazgan Oktyabryski Anglo
0 400 800 1200 0 500 1000 1500 Copper Production ('000 tonnes) Copper Production ('000 tonnes) Source: Brook Hunt & Associates, Note: BHP and Rio Tinto production shares include Calendar year 2000, plus shares of Escondida production. Brook Hunt do not rate Escondida Ph IV 2004 projection. Escondida as a stand alone company.
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 8 18 Nov 2002 Sponsored By World’s Premier Metals & Mining Houses
Mitsubishi Corporation 60% International Finance BHP Billiton Limited Rio Tinto Plc Mitsubishi Materials Corp 20% Corporation 100% 100% Nippon Mining & Metals Co Ltd 20% 2.5%
Rio Tinto JECO BHP Escondida Inc Escondida Limited 10% 57.5% 30%
Owners Council
Minera Escondida Limitada
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 9 18 Nov 2002 Total Ore Reserves and Mineral Resources: Official declaration at June 30, 2002, JORC Competent Person: Dr J M Gilligan
Ore Reserves Mineral Resources Ore Tonnes Grade Metal Tonnes Grade Metal Type (millions) (%Cu) (mlbs) (millions) (%Cu) (mlbs)
Sulphide 1,568 1.24 36,503 2,182 1.14 54,835 LG Float 582 0.60 6,157 1,409 0.59 18,421 Escondida LG Leach 658 0.43 6,209 Mixed 50 1.02 431 113 0.81 2,023 Oxide 208 0.69 2,706 280 0.64 3,935 Sulphide 649 1.33 19,014 Escondida Norte LG Float 642 0.58 8,190 Mixed 43 0.81 761 Oxide 142 0.79 2,476 Sub-Totals All Sulphide 2,149 1.07 42,660 5,540 0.87 106,669 Mixed 50 1.02 431 155 0.81 2,784 Oxide 208 0.69 2,706 422 0.69 6,411 TOTAL All Types 2,408 45,797 6,117 115,864
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 10 18 Nov 2002 Escondida Schematic Deposit Evolution Profile: Increasingly complex & variable geological conditions
⇐⇐⇐⇓variability ⇓⇒⇒⇒ “1991-1997” “1998-2010” Cu - Fe Oxides
cc
cc+cv+cp+py cp + py “>2010” py >> cp
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 11 18 Nov 2002 Copper Production & Head Grade: Incremental Expansion to offset Progressive Reduction in Head Grade with Time Graphic Represents Mine Capacity, Actual Production Depends on Market Conditions
Copper Production Production History & Forecast million lb Sulphide Ore Grade 3,000 3.0%
Ore Grade 2,500 2.5% 450 ktpa
Oxide 2,000 Ph. 3.5 Phase 4 at 110,000 tpd 2.0% P h a 3 1,500 s 1.5% e 300 ktpa
Ph. 2 1,000 1.0% Ph. 1
500 0.5% Phase 0 Original Production Forecast
0 0.0% 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
fine copper production fine copper production fine copper production sulphide ore grade 1988 Project Approval through Phase 3.5 Phase 4 Expansion Phase 4 Expansion
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 12 18 Nov 2002 Diverse Customer Base
CY 2001 Concentrate Sales, By Country CY 2001 Cathode Sales, By Country Chile Bulgaria Spain Mexico Indonesia Sweden Iran Traders 2% 2% 2% 2% 1% 2% 1% 5% Japan 3% Finland Spain France 2% Taiwan 3% 4% 24% India China Japan 3% 4% 34% Canada South Korea 4% 5%
South Korea USA 4% 5%
Philippines 5% England 10% Italy Brazil 16% 5%
China 6% Chile Holland 14% 10% Germany Brazil 10% 12%
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 13 18 Nov 2002 C1 Unit Costs in the 1st Quartile
CY01 Brook Hunt, Copper Industry C1 Cost Curve 160
140
120
100
80
(US c/lb) 60
40 Escondida Minesite C1 Cash Operating Cost C1 Cash Operating 20
0 0 5,000 10,000 15,000 20,000 25,000 Cumulative Production (Mlbs) Escondida Real Cost and Cooper Industry estimatt e
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 14 18 Nov 2002 Only 3 Producers with a Lower C3 Unit Cost
CY01 Brook Hunt, Copper Industry C3 Cost Curve 160
140
e t 120 i st o nes C n ) 100 o i /lb da Mi c
cct 80 S ndi u o U d ( c o s
r 60 E P 3
C 40
20
0 0 5,000 10,000 15,000 20,000 25,000 Cumulative Production (Mlbs) Escondida Real Cost and Cooper Industry estimated Cost
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 15 18 Nov 2002 Phase IV Expansion Components • An additional mine fleet – (1) 65 yd3 shovel, (6) 380 st haul trucks, (1) drill – Support equipment and maintenance shop expansion • In-pit ore crusher and conveyor to Phase IV concentrator – Relocation of existing crushers • 110,000 tpd Concentrator – 38-ft. SAG mill and (3) 25-ft. Ball mills – Conventional flotation using large cells, regrind, column cells • Concentrate handling – Slurry pipeline to existing concentrator, then on to the port – Added concentrate filtering and storage capacity – Modifications to port facility • Laguna Seca Tailings Facility – Tailings disposal for life of mine – both mills – Improved water reclaim to both mills Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 16 18 Nov 2002 Phase IV: Laguna Seca Concentrator: Detailed Site Layout
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 17 18 Nov 2002 Presentation Content • Geographical Location • Escondida Strengths • Operations Operview • Production (Including Apollo) • Financials • Business Strategy • Growth Opportunities • Current Activities
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 18 18 Nov 2002 Employment
Antofagasta Coloso Escondida Santiago Total
Expatriates 3024229
Operators 270162701699
Téchnical & Admin 15 1 89 1 106
Professional/Mgrs 51 17 426 9 503
Total 71 88 2166 12 2337 • Avg workforce age – 38 years Permanent Contractors 1770 • Avg length of service – 7 years • Employee turnover - 2% Projects & Construction 740 • Attendance rates - 97%+ • Female employees - 4% Total 4847 • Expatriate employees – 0.8%
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 19 18 Nov 2002 Safety – Potential or Actual Level 4 Incidents 20 18 18
16
14
12 nts 10 de i
c 10 n of I
# 8 7
6
4
2 1
0 2000 2001 2002 2003 Fiscal Years
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 20 18 Nov 2002 Dimensions Now Final E-W 2.2km 3.5km Escondida Mine Pit N-S Escondida Mine3.2km Pit 4.8km Depth 465m 750m
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 21 18 Nov 2002 Escondida Mining Fleet FY-02 • Electric Rope Shovels – Total 13 – P&H 4100 XPB (73 yd Dipper) 2 – BE 495 (55 yd Dipper) 10 – BE 395 (30 yd Dipper) 1 • Haul Trucks – Total 89 – Komatsu 830E (240 mt) 28 – CAT 793 B&C (240 mt) 47 – CAT 797 (380 mt) 14 • Front End Loaders – Total 3 – CAT 994 (23 yd Bucket) 3 • Drills – Total 12 – BE 49R & R2s (8), IR DMM2s (2) & P&H 250XPs (2) • Auxiliary Equipment – Total 44 – Dozers (9-D10s & 4-D11s), Tiger 690s (2), RTDs (13), Graders (5-16Gs & 2-24Hs), Water Trucks (6-CAT 777s) & Cable Reelers (3-CAT950Fs)
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 22 18 Nov 2002 Mine Production – ‘000s TPD Ex-Pit 1000
900
800
700 y a D r 600 pe s 500 901 928 930
Tonne 835 841 863 863
s 400 0
0 725
0 678 681 ' 300
200
100
0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Fiscal Years History Forecast Budget
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 23 18 Nov 2002 Mine Unit Cost – US$/t Mined 0.90
0.80
0.70
0.60 d e n
i 0.50 t M / $ 0.40 0.779
US 0.736 0.706 0.670 0.683 0.30 0.641
0.20
0.10
0.00 1998 1999 2000 2001 2002 2003
Fiscal Years History Forecast Budget
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 24 18 Nov 2002 Unit Cost & Productivity: Mine
Mines 1 Estimated Brook Hunt 200 2 3 1.30 4 UQ:91,0 5 8 1.20 9 11 1.10 11 12 Escondia FY98 13 1.00 Escondia FY99 14 1 Escondida FY00 15 0.90 Escondida FY01 16 22 Escondida YTD FY02 17 0.80 8 34 Escondida Budget FY02 18 13 27 25 20 Escondida Budget FY03 19 4 28 0.70 14 24 20 15 3 19 FY03 29 2 18 21 32 16 0.60 12 22 33 23 30 17 26 9 LQ:0.60 23 31 5 24 0.50 Unit Cost US$/ton Mined 25 21 26 0.40 27 28 0.30 29 30 0.20 31 20 30 40 50 60 70 80 90 100 110 120 130 32 33 Productivity (ton Mined/Hour) 34
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 25 18 Nov 2002 Los Colorados Concentrator
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 26 18 Nov 2002 Los Colorados Production – ‘000s TPD Milled 140
120
100 y a D r
pe 80 s
60 125 125 122 127 122 Tonne 116 118 115 118 s
0 103 0 0 ' 40
20
0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Fiscal Years History Forecast Budget
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 27 18 Nov 2002 Los Colorados Unit Cost – US$/t Milled 4.50
4.00
3.50
3.00 d lle
i 2.50 M / t
$ 2.00 4.07 S 3.91 U 3.58 3.43 3.42 3.42 1.50
1.00
0.50
0.00 1998 1999 2000 2001 2002 2003
Fiscal Years History Forecast Budget
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 28 18 Nov 2002 Unit Cost & Productivity: Concentrators
Mills 1 Estimated Brook Hunt 200 2 3 4.80 4 UQ:55,0 5 4.40 10 6 11 7 4.00 8 ) 12 13 3.60 26 9 6 14 16 FY03 28 Laguna Seca FY03 Escondida FY98 10 3.20 9 15 2 Escondida FY99 11 Milled 20 5 n 24 Escondida FY00 12 2.80 27 21 8 Escondida FY01 13 2.40 7 22 25 Escondida YTD FY02 14 418 Escondida Budget FY02 15 2.00 23 3 LQ:1,96 19 1 Escondida Budget FY03 16 17 st (US$/to 17 1.60 18 1.20 19
20 Unit Co 0.80 21 22 0.40 23 0.00 24 0 5 10 15 20 25 30 35 40 45 50 55 60 65 70 75 80 85 90 95 100 105 110 25 26 Productivity (ton Milled/Hour) 27 Escondida Laguna Seca 28 Laguna Seca including Filter and excluding Overland Conveyors and Camp Cost Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 29 18 Nov 2002 Escondida SX-EW Oxide Plant Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 30 18 Nov 2002 Oxide Production – ‘000s Tonnes of Cathodes 160 1.6% 1.4% 140 1.4% 1.2% 120 1.1% 1.2% ) u
1.0% 1.0% 1.0% C %
s 100 1.0% 0.8% 0.8% acked ( t
Tonne 80 0.7% 0.8% s 0 e S 0 0 ad ' 60 0.6% r e G r 40 0.4% O
20 0.2%
0 0.0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Fiscal Years History Forecast Budget Ore Grade (%)
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 31 18 Nov 2002 Oxide Unit Cost – US$/lb Cathode 0.30
0.25
0.20 e d o h t a
C 0.15
/ lb 0.262 $ 0.250 0.249 0.256
S 0.244 U 0.10
0.05
0.00 1998 1999 2000 2001 2002 2003
Fiscal Years History Forecast Budget
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 32 18 Nov 2002 Unit Cost & Productivity: Oxide
Oxide Estimated CRU 1 2 60.0 3 21 UQ:135.8 4 55.0 5 50.0 6 Escondida FY00 7 45.0 Escondida FY01 8 13 22 17 40.0 Escondida YTD FY02 9 18 35.0 Budget FY02 10 6 19 US$/Lb) 5 4 Budget FY03 11 c 30.0 3 14 12 12 1 11 FY03 LQ:25.2 13 25.0 Cost ( 16 2 7 8 14 15 10 9 Unit 20.0 20 23 15 16 15.0 17 10.0 18 19 5.0
20 - 21 0 20 40 60 80 100 120 140 160 180 200 220 240 22 Productivity (Kg-Cu/Hours) 23
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 33 18 Nov 2002 Presentation Content • Geographical Location • Escondida Strengths • Operations Operview • Production (Including Apollo) • Financials • Business Strategy • Growth Opportunities • Current Activities
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 34 18 Nov 2002 Head Grade - % Contained Copper 3.0%
2.5%
2.0% u C e %
ad 1.5% r
G 2.75% ad e
H 2.22% 1.0% 1.95% 1.89% 1.69% 1.57% 1.65% 1.56% 1.61% 1.53% 0.5%
0.0% 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Fiscal Years History Forecast Budget
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 35 18 Nov 2002 Escondida – Substantial Production Flexibility
Copper Production
Escondida Escondida + Development Projects
1,800
1,600
1,400
1,200
1,000
800
Copper - 000's t 600
400
200
- 2013 2014 2015 2016 2017 2018 2019 2020 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Fiscal Period
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 36 18 Nov 2002 Escondida – Substantial Production Flexibility
No Limits Limited at 1,400 ktpa Escondida Base Development Projects Escondida Base Development Projects 1,600 1,600
1,400 1,400
1,200 1,200
t 1,000 1,000 t k k - - r r
800 e 800 p p ppe o Co C 600 600
400 400
200 200
- - 5 7 9 1 3 5 7 9 1 3 5 7 9 1 3 5 3 200 200 200 201 201 201 201 201 202 202 202 202 202 203 203 203 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 200 Fiscal Period Fiscal Period
Limited at 1,000 ktpa Limited at 1,200 ktpa Escondida Base Development Projects Escondida Base Development Projects 1,600 1,600
1,400 1,400
1,200 1,200
1,000 t 1,000 t k - k - r r 800 e 800 p ppe p o Co 600 C 600
400 400
200 200
- - 05 07 09 11 13 15 17 19 21 23 25 27 29 31 33 35 03 2003 2005 2007 2009 2011 2013 2015 2017 2019 2021 2023 2025 2027 2029 2031 2033 2035 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Fiscal Period Fiscal Period
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 37 18 Nov 2002 Historical Global Copper Market Situation
The strong temporary price increase reflects Market Strong increase in price the influence of Conditions: when stock levels fell speculative agents Today worse below 5 weeks of than 1998
) 18 demand 160 but not so e r bad as the 16 est 140
e start of the m i 14 ’80s 120 obr anas de Tr 12 C em Copper Price 100 S ) del o del 10 l a n /lb o ( i 80 r c m
8 S est (U
60 m nsum i Tér 6 o
C 40 4 o Tr Stocks nda al
eci pass over ock/ a r t 20 2 Stock Demand P S
m critical e 0 0 levels and D rising 2000 1980 1985 1990 1995
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 38 18 Nov 2002 Resistance to Closure and Consolidation • Persistent optimism of imminent return of higher prices • Most operations making cash at $0.65/lb – Higher cost assets have already closed or improved cost competitiveness • Cross subsidization of asset portfolio • Re-financing opportunities at historically low rates • Country priorities: foreign exchange, employment, basic services, etc • Lack of feed for integrated smelters • Excessive environmental liabilities associated with many take-over targets
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 39 18 Nov 2002 The Way Forward • The Project Apollo has been very successful for FY02 – Led to a supply-demand balance in the copper market – Prompted a 7 cent / lb rise in price
• No market commitment beyond Calendar 2002
• Major decision pending in December 2002 with regard to production levels for Calendar 2003
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 40 18 Nov 2002 Presentation Content • Geographical Location • Escondida Strengths • Operations Operview • Production (Including Apollo) • Financials • Business Strategy • Growth Opportunities • Current Activities
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 41 18 Nov 2002 Key Business Drivers (Effect of Incremental Movements on EBIT) • Copper Price 1c/lb = US$21m • C1 Costs 1c/lb = US$21m • Mill Recovery 1% = US$16m • Headgrade 0.01% = US$8.5m • Mill Throughput 1k TPD = US$7.5m • Concentrate Grade 1% = US$7m • TCRC’s 5% change = US$5.5m • Peso FX Rate 10 peso = US$4m • Power 0.1c/kwh = US$2m •Fuel 1c/l = US$1m
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 42 18 Nov 2002 Financial Performance: Strong Cash Despite Poor Global Economic Conditions
Metric FY00 FY01 FY02 Net Profit 481 375 143 (US$m) FCF 456 134 (383) (US$m)
EBIT SVA (US$m) 341 111 (131) ROC 18.5 14.6 6.0 (%) ROE 35.8 35.1 16.1 (%) Dividends 764 480 - (US$m)
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 43 18 Nov 2002 Controlling Cost (C1) Against a Declining Grade Mines 1 Estimed Brook Hunt 2001 2 3 4 105 5 8 95 9 11 85 12 Escondia FY98 13 27 23 Escondia FY99 14 75
Escondida FY00 15 )
b 5 33 Escondida FY01 16 L 3 65 19 26 y 28
Escondida FY02 17 a 9 Escondida Budget FY03 18 /P $ 55 1 12 19 S 20 24 20 U 21 ( 8 31 14 FY99 13 FY98 21 1 45 15 FY00 C 2 22 22 30 25 11 29 23 35 17 FY02 16 FY01 24 25 18 BFY03 26 25 4 27 28 15 29 32 30 5 31 0.20.40.60.81.01.21.41.61.82.02.22.42.62.8 32 Grade Ore (%) 33
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 44 18 Nov 2002 Maintaining C3 Units Costs Below US$0.60/lb Mines 1 2 Estimed Brook Hunt 2001 3 110 4 5 8 100 9 24 11 28 12 12 90 5 Escondia FY98 13 3 Escondia FY99 14 34 80 Escondida FY00 15 29 ) 20 27 23
Escondida FY01 16 b
L 1 Escondida FY02 17 25 y 70 21 2 Escondida Budget FY02 18 a 9 8 11 Escondida Budget FY03 19 /P 14 FY99 $ 32 31 22 20 S 60 26 18 BFY02
U 30
21 ( 22 4 C3 17 FY02 15 FY00 23 50 16 FY01 13 FY98 24 19 BFY03 25 33 40 26 27 28 30 29 30 31 20 32 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1.6 1.8 2.0 2.2 2.4 2.6 2.8 33 Grade Ore (%) 34
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 45 18 Nov 2002 Presentation Content • Geographical Location • Escondida Strengths • Operations Operview • Production (Including Apollo) • Financials • Business Strategy • Growth Opportunities • Current Activities
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 46 18 Nov 2002 STRATEGIC KEY ELEMENT HSEC Achieve a “Zero Harm” Culture We will achieve our HSEC Zero Harm goals through: – Managing by walking around with a focus on safe behaviours – Simplifying and rationalizating our systems and procedures under the BHP Billiton Standards – Entrenching Cardinal Rules into our culture – Requiring demonstrated safety performance when considering promotions – Engaging our contractors and subcontractors in the same way that we engage Escondida’s workforce in our safety program – Being proactive and transparent on environment issues and maintaining our ISO 14001 accreditation – Directing 1% of our pre-tax profit to activities that will benefit the community – Promoting a culture that actively encourages the social and environmental responsability of each of our employees
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 47 18 Nov 2002 STRATEGIC KEY ELEMENT NPV Optimize Escondida’s Net Present Value We will optimize NPV by: – Taking a leadership role within the industry and adopting a flexible production profile – Continually focusing on cost reduction – Leveraging Operational Excellence and the Maintenance Improvent Programs – Using tollgating to improve our Capital Productivity – Capturing the synergies of both concentrators – Leveraging leach technologies – Taking a leadership position in the responsible management of the use of fossil water; 10% reduction in water requirements
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 48 18 Nov 2002 STRATEGIC KEY ELEMENT PEOPLE Achieve Maximum Potential with Employees We willl ensure Maximum Alignment Among Employees, Organizational Structure & Performance Management Systems by: – Attracting and retaining high quality employees – Creating a high performance environment – Focusing on the development of technical and people leaders – Ensuring that learning and skills development are applied to everyone in the organization – Creating a work environment where we have positive, mature, and direct working relationships
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 49 18 Nov 2002 STRATEGIC KEY ELEMENT CUSTOMERS To Be The Preferred Supplier of Copper in Concentrate & Cathodes We will achieve our value proposition to customers through: – Achieving appropriate geographical and market diversification – Leveraging the BHP Billiton Base Metals Marketing hub – Minimizing the impact of variability and low concentrate grades – Emphazising continuous and proactive interaction between the Operational and Marketing areas – Maintain status as a quality supplier through producing improved levels of Grade A quality cathode
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 50 18 Nov 2002 Presentation Content • Geographical Location • Escondida Strengths • Operations Operview • Production (Including Apollo) • Financials • Business Strategy • Growth Opportunities • Current Activities
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 51 18 Nov 2002 ROM Leach Pads Escondida Norte
Waste Dump – Open Pit
Facilities – Premine 250 MT – Sulphide Ore Laguna – 584 MT @ 1.3 % TCu Seca Conc – Oxide Ore Crusher – 97 MT @ 0.82 % SCu – Sulphide Low grade Norte Pit Los Colorados – 442 MT @ 0.6 % TCu Concentrator – 5 Electric Shovel
Escondida Pit – 39 Haul Trucks – 1 Semi Mobil Crusher CMZ – 6 Km Land Conveyors – Maintenance Shop – Capital – Order of magnitude US$400m (100%) including US$170 pre- strip Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 52 18 Nov 2002 Escondida Sulphide Leach Outline
Sulphide Leach Circuit • 2.3 Billion tonnes sulphide ore at 0.55%TCu Approx 50 Mtpa @0.5% TCu Acid solution • Current stockpile 86Mt • Copper recovery by: Run of Mine Dump Pregnant – ROM leaching Solution – Solvent extraction Solvent Extraction
Rich Electrolyte – Electrowinning Lean Electrolyte • Expected recovery 30-35% Electrowinning 8484,000,000 tpa tpaC Catathodeshode • Approx 50% of Cu is chalcopyrite • Tonnage & mineralogy highly variable
• Initial copper production 84 ktpa • Increasing to 234 ktpa as ore supply increases and oxide T/H capacity becomes available • Estimated operating cost of <40 cents/lb • Capital – Order of magnitude US$500m
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 53 18 Nov 2002 Presentation Content • Geographical Location • Escondida Strengths • Operations Operview • Production (Including Apollo) • Financials • Business Strategy & Risk Management • Growth Opportunities • Current Activities
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 54 18 Nov 2002 Action Plans – HSEC • Simplification and streamlining proposal of the HSEC systems under the BHP Billiton Standards • Employ the Landmark process to engage the workforce and ensure their commitment to a zero harm workplace • Implemention of Cardinal Rules Program • Development of Drug/Alcohol Policy • Alignment of HSEC & RDO • Encourage employee participation in Company sponsored assistance projects for the community to instill a sense of social responsibility in Escondida’s employees, • Adoption of Dupont Job Observation methodology
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 55 18 Nov 2002 Action Plans – NPV • Los Colorados Mill improvement program • Mine to mill improvement project • Light dump bodies project • Develop long term water sourcing plan • Inventory reduction program • Flexible production plans • Develop a program for coordinating plants, crushers, shovels, pipelines, filters shutdowns • Development of an integrated production system
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 56 18 Nov 2002 Action Plans – PEOPLE • Implementation of an employee climate survey • Continuous development of a team based work structure • To build an integrated Performance Management system which links competency development, individual performance on the job and remuneration • To perform the second teams check-up (HISI)
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 57 18 Nov 2002 Action Plans – CUSTOMERS
• Realignment of specifications of concentrate grades in sale contracts • Develop plan to address concentrate grade reduction and variability issues • Develop LME average price achievement strategy • Develop standards for exchange of commercial documentation
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 58 18 Nov 2002 Escondida’s Strengths to Maximize Long Term Value
World’sWorld’s LargestLargest StrongStrong CopperCopper MineMine StrongStrong CashCash CreditCredit FlowFlow RatingsRatings
Low Cost StrongStrong LowLow CostCost Producer SpSpononssoorsrs ProducerProducer
DiversifiedDiversified StableStable SSaalesles BaseBase CountryCountry
AbilityAbility toto UnequalledUnequalled ManageManage ResourResourcece ExExpansionspansions HighHigh QualityQuality ConcentrateConcentrate
Base Metals CSG - Escondida - Merrill Lynch Analysts Andean Adventure Page 59 18 Nov 2002