17 June 2014 Asia Pacific/Australia Equity Research Diversified Metals & Mining

BHP Billiton (BLT.L) Rating NEUTRAL* M&A PROPOSAL

Price (09 Jun 14, p) 1,904.00 Target price (p) 2,250.00¹ Market cap. (£mn) 105,152.92 Unscramble the DLC egg Yr avg. mthly trading (pmn) 264,765 Last month's trading (pmn) 218,797 Projected return: ■ Opportunity presents itself to truly simplify: The Ltd/Plc share price Capital gain (%) 18.2 differential at 5% (lowest since 2006), plus talk of simplification involving Dividend yield (net %) 4.0 structural change, is in our view, a once-in-a-decade opportunity to deal with Total return (%) 22.2 the lingering issues of the Dual Listed Company structure. By combining 52-week price range 1,995.0 - 1,666.5

* Stock ratings are relative to the relevant country benchmark. portfolio simplification (asset sales) with structural change (dismantle the ¹Target price is for 12 months. DLC), we believe BHP can kill two birds with one event stone, providing modest structural upside (10%+) while also enhancing long term strategic Research Analysts flexibility (Brambles and AMP/Henderson are examples of DLC unwinding). James Gurry 44 20 7883 7083 A unified share price would make it easier to use scrip as takeover currency [email protected] more adequately addressing long term opportunities… potash: build or buy? Paul McTaggart 61 2 8205 4698 ■ Catalysts: BHP has guided to portfolio simplification and shareholder [email protected] returns in the coming full year result period (production 23-July, financials Martin Kronborg 19-August). The $25bn net debt target for shareholder returns is within reach 61 2 8205 4369 [email protected] (CS FY14F $25.5bn) but we only see meaningful shareholder returns Michael Shillaker ($3bn+) closely linked to potential asset sales. 44 20 7888 1344 [email protected] ■ Key Question: is it better for shareholders? BHP already trades at a Liam Fitzpatrick premium (6.5x EBITDA FY14E) compared to traditional peers (mining 5x, 44 20 7883 8350 conventional oil 5x). In our view, only against shale peers (7x) does a [email protected] SpinCo make sense to capture re-rating potential (shale is 19% of EBITDA Justin Teo for simplified BHP), a modest 3%+. Our analysis suggests that selling the 61 2 8205 4426 [email protected] most attractive non-core assets could fund a $6bn / 4%+ buyback (Nickel Specialist Sales: James Brady West / Cannington CS value $6bn). Capital release potential from undoing 44 20 7888 4267 the DLC is difficult to estimate but at a maximum $10bn representing the net [email protected] assets of Billiton Plc, adding an additional blue-sky 7% upside potential.

Share price performance Financial and valuation metrics

Year 06/13A 06/14E 06/15E 06/16E Revenue (US$mn) 65,953.0 67,701.7 66,649.7 69,359.3 1899 EBITDA (US$mn) 28,363.0 32,302.3 31,225.0 33,080.0 EBIT (US$mn) 21,002.0 23,909.8 22,162.7 23,302.2 1399 Net income (US$mn) 11,223.0 14,549.0 12,926.3 13,677.0 Jun-12 Oct-12 Feb-13 Jun-13 Oct-13 Feb-14 EPS (CS adj.) (USc) 210.17 271.23 240.98 254.97 Price Price relative Change from previous EPS (%) n.a. — — — The price relative chart measures performance against the Consensus EPS (USc) n.a. 269.90 269.20 275.00 FTSE ALL SHARE INDEX which closed at 3662.18 on EPS growth (%) -40.9 29.1 -11.2 5.8 09/06/14 P/E (x) 15.2 11.8 13.3 12.6 On 09/06/14 the spot exchange rate was £.81/Eu 1. - Eu .74/US$1 Dividend (USc) 11,600.00 12,200.00 13,000.00 13,700.00 Dividend yield (%) 3.6 3.8 4.1 4.3 Performance Over 1M 3M 12M P/B (x) 2.4 2.1 2.0 1.8 Absolute (%) 0.4 6.2 5.4

Net debt/equity (%) 36.5 29.5 25.1 18.9

Relative (%) -3.5 1.7 -13.4 Source: Company data, ASX, Credit Suisse estimates, * Adj. for goodwill, notional interest and unusual items. Relative P/E against ASX/S&P200 based on pre GW in AUD. Company PE calculation is based on displayed EPS Currency. DISCLOSURE APPENDIX AT THE BACK OF THIS REPORT CONTAINS IMPORTANT DISCLOSURES, ANALYST CERTIFICATIONS, AND THE STATUS OF NON-US ANALYSTS. US Disclosure: Credit Suisse does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

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17 June 2014

BHP Billiton BLT.L Price (13 Jun 14): 1,850.00p, Rating: NEUTRAL, Target Price: 2,250.00p, Analyst: Paul McTaggart Per share data 06/13A 06/14E 06/15E 06/16E Key earnings drivers 06/13A 06/14E 06/15E 06/16E No. of shares (EOP) 5,340.00 5,364.12 5,364.12 5,364.12 — — — — EPS (Credit Suisse) (US$) 2.10 2.71 2.41 2.55 — — — — DPS (US$) 116.0 122.0 130.0 137.0 — — — — Dividend payout ratio 55.19 44.98 53.95 53.73 — — — — Operating cash flow per share 3.64 4.19 4.24 4.53 — — — —

(US$)

Income statement (US$mn) 06/13A 06/14E 06/15E 06/16E Growth(%) Total revenue 65,953.0 67,701.7 66,649.7 69,359.3 Sales (8.7) 2.7 (1.6) 4.1 Cost of goods sold 41,530.0 36,863.8 36,754.2 37,613.9 EBIT (23.2) 13.8 (7.3) 5.1 SG&A (excluding R&D) — — — — Net profit (40.9) 29.6 (11.2) 5.8 R&D costs 64.0 64.0 64.0 64.0 EPS (40.9) 29.1 (11.2) 5.8 Other operating inc/(exp.) (4,004.0) (1,528.4) (1,393.5) (1,398.6) Margins (%) EBITDA (US$mn) 28,363.0 32,302.3 31,225.0 33,080.0 EBITDA margin 43.0 47.7 46.8 47.7 Depr & amort (excl. goodwill) 7,361.0 8,392.5 9,062.3 9,777.8 EBIT margin 31.8 35.3 33.3 33.6 Goodwill impairment — — — — Pretax margin 27.5 32.3 30.1 30.7 EBIT (mn) 21,002.0 23,909.8 22,162.7 23,302.2 Net margin 17.0 21.5 19.4 19.7 Net interest income (exp) 1,276 1,118 1,210 1,097 Valuation metrics (%) Net non operating inc (exp) — — — — EV/sales 3.1 2.9 3.0 2.8 Share of associates/JVs' equity — — — — EV/EBITDA 6.1 5.4 5.6 5.3 Exceptionals (1,902.0) 551.0 — — EV/EBIT 9.6 8.3 8.9 8.3 Profit before tax (US$mn) 17,824.0 23,342.4 20,952.4 22,205.1 P/E 15.0 11.6 13.0 12.3 Taxes 5,926.0 7,072.6 6,809.5 7,216.7 P/B 2.4 2.1 1.9 1.8 Profit after tax 11,898.0 16,269.7 14,142.9 14,988.5 ROE analysis (%) Extraordinary gain/(loss) (922.0) 346.0 — — Return on equity stated — — — — Non-controlling interest (minority) 1,597.0 1,374.7 1,216.5 1,311.5 ROIC 15.4 15.9 13.9 14.1 Preferred dividends — — — — Asset turnover 47.4 43.7 41.2 41.5 Reported net income (US$mn) 10,301.0 14,895.0 12,926.3 13,677.0 Interest burden 0.94 0.95 0.95 0.95 Analyst after tax adjustment — — — — Tax burden 0.33 0.30 0.33 0.32 Adjusted net income (US$mn) 11,223.0 14,549.0 12,926.3 13,677.0 Financial leverage 184.9 179.1 173.0 165.2 Credit ratios Cash flow 06/13A 06/14E 06/15E 06/16E Net debt/equity (%) 36.5 29.5 25.1 18.9 EBITDA (US$mn) 28,363.0 32,302.3 31,225.0 33,080.0 Net debt / EBITDA (%) 0.97 0.79 0.75 — Cash taxes paid (7,618.0) (6,140.1) (5,883.1) (6,234.9) Interest coverage ratio 16.5 21.4 18.3 21.2 Change in working capital — — — — Other cash & non-cash items 6,060.0 4,696.8 6,461.5 7,215.0 Quarterly data 06/13A 06/14E 06/15E 06/16E Cash flow from operations 19,444.0 22,466.5 22,741.0 24,282.4 EPS for Q1 — — — — CAPEX (US$mn) (21,930.0) (15,653.3) (13,958.2) (12,637.2) EPS for Q2 — — — — Disposals of PPE 2,338.0 41.0 — — EPS for Q3 — — — — Free cash flow to the firm (US$) 15,915.0 18,202.2 18,477.5 19,954.2 EPS for Q4 — — — — Acquisitions (959.0) (472.0) — — Divestments 2,442.0 736.0 — — Other investment/(outflows) (617.0) (943.0) (1,108.8) (1,219.7) Source: Company data, ASX, Credit Suisse estimates, * Adj. for goodwill, Cash flow from investment (18,726.0) (16,291.3) (15,067.0) (13,856.9) notional interest and unusual items. Relative P/E against ASX/S&P200 Net share issue/(repurchase) 21.0 9.0 — — based on pre GW in AUD. Company PE calculation is based on displayed Dividends paid (7,004.0) (6,518.4) (6,806.7) (7,232.5) EPS Currency. Change in debt 7,143.0 3,661.0 — (2,300.0) Other financing inflows/outflows (358.0) 1,097.0 — — Cash flow from financing activities (198.0) (1,751.4) (6,806.7) (9,532.5) Effect of exchange rates (17.0) 44.0 — —

Movements in cash/equivalents 503.0 4,467.8 867.3 892.9

Balance sheet 06/13A 06/14E 06/15E 06/16E Assets Cash and cash equivalents 5,677.0 12,154.2 14,103.4 16,158.6 Accounts receivable 6,310.0 6,698.0 6,698.0 6,698.0 Inventory 5,821.0 5,217.0 5,217.0 5,217.0 Other current assets 1,145.0 1,036.0 1,036.0 1,036.0 Total current assets 18,953.0 25,105.2 27,054.4 29,109.6 Total fixed assets 100,565.0 108,484.8 113,737.2 116,988.7 Intangible assets and goodwill 5,496.0 5,533.0 5,533.0 5,533.0 Investment securities — — — — Other assets 14,164.0 15,630.0 15,630.0 15,630.0 Total assets 139,178 154,753 161,955 167,261 Liabilities Accounts payable 10,860.0 9,734.0 9,734.0 9,734.0 Short-term debt — — — — Other short term liabilities 9,279.0 10,359.0 10,359.0 10,359.0 Total current liabilities 20,139.0 20,093.0 20,093.0 20,093.0 Long-term debt 28,099.0 31,302.0 31,302.0 29,002.0 Other liabilities 20,139.0 20,093.0 20,093.0 20,093.0 Total liabilities 63,887.0 68,336.0 68,336.0 66,036.0 Shareholders' equity 70,667.0 80,206.6 86,426.2 92,970.7 Minority interest 4,624 6,210 7,192 8,255 Total equity & liabilities 139,178.0 154,753.0 161,954.5 167,261.2

BHP Billiton (BLT.L) 2 17 June 2014 Two birds with one event stone Talk of SpinCo containing heritage Billiton assets highlights the fact an appropriate corporate entity already exists listed on the LSE, JSE and with an ADR – it's called (BHP) Billiton Plc. Only one of the assets so far suggested for disposal comes from BHP, and it (Cannington silver/zinc/lead mine) may be better sold separately given healthy buyer interest in base metals (CS value $5.2bn). The assets we have suggested for the SpinCo are: Aluminium/alumina, Manganese, Nickel (Nickel West and Cerro Matoso), Thermal coal: South Africa thermal coal business, Base metals: Cannington (silver/lead/zinc) mine. We value these assets at $19bn on our existing DCF or 11% of current market cap (refer our note: BHP Demerger would get our support, 2-April). The remaining Billiton assets have a questionable fit within the Group anyway:

■ Samarco is a JV in Brazil (uncertain taxes) and iron ore’s best days appear to be over,

■ NSW thermal coal has carbon (taxes),

■ Cerro Matoso is nickel in Colombia,

■ Antimina in Peru is a very good asset but not controlled and is zinc (not favoured) plus copper. None of these assets are in a resource basin with multi-mine synergies which is the BHP Billiton strategy, except NSW thermal coal. However with a combined value of $27bn any move to also divest these would be significant.

Figure 1: Sum of Parts DCF Asset Origin Description NPV (US$mn) US$/sh PETROLEUM BHP 55,861 10.5 ALUMINIUM Billiton Mozambique, South Africa and Western 5,209 1.0 Australia Alumina. Western Australia Iron Ore BHP 72,467 13.6 Samarco Billiton JV with VALE in Brazil. 5,858 1.1 IRON ORE 78,325 14.7 Escondida BHP 10,762 2.0 Pampa Norte (Spence & Cerro Billiton Chile. Copper basin. Core. 5,421 1.0 AntaminaColorado) Billiton Peru. Copper/Zinc. 5,500 1.0 Cannington BHP Australia. Silver, Zinc, Lead 5,174 1.0 Olympic Dam Acquired WMC 2005 4,490 0.8 COPPER 31,349 5.9 South Africa Coal Billiton Carbon (taxes). Higher geo-political risk 1,236 0.2 New Mexico BHP 95 0.0 NSW Energy Coal (prev. Hunter Billiton Carbon (taxes). 3,135 0.6 ColombiaValley) Billiton Carbon (taxes). Higher geo-political risk 4,276 0.8 ENERGY COAL 8,742 1.6 Potash Greenfield 2007/08 Better to acquire an existing asset? 2,448 0.5 MANGANESE Billiton South Africa / Australia 3,471 0.7 Queensland Coal BHP 8,378 1.6 Illawarra Coal BHP 3,226 0.6 METALLURGICAL COAL 11,604 2.2 Nickel West Acquired WMC 2005 431 0.1 Cerro Matoso Billiton Colombia. Nickel non-core commodity. 3,082 0.6 Nickel (prev STAINLESS STEEL 3,513 0.7 Exploration/DevelopmentMATERIALS) Projects 2,338 0.4 Other (incl. exploration/OEI) -334 -0.1 Total operations 202,524 38.0 Net debt 27,088 5.1 Provisions 799 0.2 Equity value 174,637 32.8 Source: Company data, Credit Suisse estimates It raises the question, should the DLC be unwound?

BHP Billiton (BLT.L) 3 17 June 2014

Billiton assets only make up 22% of Group value currently from 42% in the 2001 merger. The process of unwinding would not be simple with tax being the prime consideration but a single BHP company would remove all the complications of the DLC structure including the different share prices and make it easier to use BHP scrip in M&A. With the difference now at 5% it’s the lowest since 2006 so a potential ideal time to do it.

Figure 2: Summary of Asset Origin and Figure 3: Value split at time of 2001 merger current CS Value Asset NPV (US$mn) US$/sh Origin BHP 155,963 29.3 77% Origin Billiton 37,282 7.0 18% Other 9,543 1.8 5% Billiton Total operations 202,788 38.1 100% 42% Net debt 27,088 5.1 BHP Provisions 799 0.2 Ltd Equity value 174,901 32.9 58%

Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates By demerging the current complex Dual Listed Company structure with the main entity (BHP Ltd) listed primary in Australia and secondary on the LSE in a fungible form, can solve the confusion, franking and capital raising/return issues that DLC currently presents. We cite AMP-Henderson and Brambles as two historical examples later in this report. Two sets of shareholders: same call on the assets Plc shareholders need not be worried about being unfairly treated or being allocated the less attractive assets – Plc shareholders have just as much claim to WA Iron Ore and Escondida as those who hold Ltd shares. Any change would have to be voted on and all shareholders count equally. Although we note some significant differences in the characteristics of shareholders of Ltd and Plc:

■ Australian and NZ shareholders hold 98% of Ltd shares,

■ Plc shares are held by UK 79% and South African 20% based shareholders.

■ 30% of Ltd shares are held by private shareholders holders (i.e. not corporates) compared to less than 1% in UK. This is perhaps symbolic of the relevance of tax (franking credits) (also the self managed superannuation system in Australia). After distribution it may be more economically attractive for certain Australian taxpayers but this depends on the tax circumstances of the shareholder. With any change, all shareholders Ltd and Plc, would receive the same pre-tax economic distribution with any change to the group structure. These assets are a distraction and never likely to attract BHP capital In our view, management should divest the smaller assets that drag down overall returns and distract management from the core scale operations. These less attractive assets are never likely to win BHP's "competition for capital" within the group because of the less attractive returns on offer.

Figure 4: Value of assets suggested for SpinCo Asset Description NPV (US$m) Aluminium Mozambique, South Africa and Western Australia Alumina. 5,209 Manganese South Africa / Australia 3,471 Energy Coal (Sth Africa, New Mexico) Carbon. Higher geo-political risk 1,331 Nickel Columbia JV and Nickel West Australia 3,513 Cannington Australia. Silver, Zinc, Lead 5,174 Total Non core 18,698 Source: Credit Suisse: BHP Billiton – Demerger more things to think about 10-April

BHP Billiton (BLT.L) 4 17 June 2014

Figure 5: Lower production growth and EBIT margins at Figure 6: Dual Listed Company Structure non-core assets reflect capex allocation

Source: BHP Presentation May-2014 Source: Company data, Credit Suisse estimates Dual Listed (confusing) Company structure Long term structural issues with the Dual Listed Company Structure can be addressed:

■ Complex and confusing structure. The share price differentials between the UK and Australian listed shares creates confusion for current shareholders and prospective investors (price difference has ranged from 20% in April-2013 to 5% currently).

■ Capital return and raising: o On-market buybacks always on the cheaper set of shares: in recent years this means buying back the Plc line lowering the number of shares listed in UK and changing the balance of shares. o Off-market buy-backs ideally always on Ltd shares to effectively stream franking credits: Off-market buyback is the most efficient (size) and effective (stream to right set of shareholders) method to return capital and franking credits. However this should (read: can) only be done at a price below the Plc line and therefore difficult (not economic to the Group) in years when Plc trades at a 10%+ discount to Ltd (following ATO guidelines for buyback pricing). o Rights issue pricing: Rights issues must be done at the same equivalent price, therefore one set of shareholders gets an additional discount (Rio Tinto's $15.2bn June-2009 rights issue discount was 48.5% for Plc and 58% for Ltd for the same equivalent USD share price).

■ Lack of scrip as takeover currency: Valuation and jurisdiction difficulties have, in our view, made it difficult to offer BHP shares as scrip currency for a takeover offer. The only time BHP has proposed to use scrip was its takeover proposal for peer DLC listed company Rio Tinto. We find it difficult to imagine a US shareholder of a BHP target would easily accept non-fungible shares listed in either Australia or the UK with a historical up-to 20% price difference in an M&A deal.

■ Franking: Franking credits are restricted to Ltd shares. This means for normal dividends the DLC actually functions as an effective (and legal) streaming mechanism for franking credits so they are only distributed to Ltd shareholders.

BHP Billiton (BLT.L) 5 17 June 2014

■ Distortion in Total Shareholder Returns (Ltd v Plc): creates source of confusion for investment community. Total shareholder return distortions can occur when Plc and Ltd shares have different share price performance in a period and FX rates affect local currency dividend.

■ Maintain cash balance and retained profit reserves in Plc sufficient to cover annual dividend. This is difficult in the Plc companies of both BHP Billiton and Rio Tinto where the vast majority of earnings and cash are generated in Australia by businesses held by the Ltd companies. This may have been one reason for Rio Tinto's internal buyback in 2010 where Ltd re-purchased the 37% historical cross shareholding for $9.2bn. The opportunity has presented itself now because differences between the two DLC has narrowed to 5%, a level not seen since 2006. Such a small difference makes it easier to justify off-market buybacks in Australia to return franking credits to shareholders (at a <14% discount according to ATO rules).

Figure 7: USD equivalent share price Figure 8:Ltd premium to Plc share price 52.0

30% 42.0

25% 32.0 20% 22.0 15%

12.0 10%

2.0 5% 15/07/2002 15/07/2004 15/07/2006 15/07/2008 15/07/2010 15/07/2012 -8.0 0% 07/01/2002 07/01/2004 07/01/2006 07/01/2008 07/01/2010 07/01/2012 07/01/2014 BLT.L BHP.AX -5% Source: Thomson Reuters Datastream Source: Thomson Reuters Datastream, Credit Suisse calculations How the current Dual Listed Company structure works… BHP Billiton Group and its assets are currently managed as a single unified economic entity run by a unified board and management team. Separate corporate entity and separate stock exchange listings exist but the economic interests of both companies are shared through a sharing agreement, cross guarantees and an equalisation ratio currently 1-1 (this ratio would only change if one of the companies paid its shareholders a different dividend or return of capital different to the other company paid its shareholders).

Figure 9: BHP Billiton Group DLC Structure

Source: Company presentations

BHP Billiton (BLT.L) 6 17 June 2014

What would be the advantage of scrip currency? Another tilt at PotashCorp? BHP's intentions in potash continued to be questioned by investors and the market, especially when it appears cheaper to buy its way into rather than build a position within the industry. BHP's previous target within the industry, PotashCorp, has a current mkt cap of ~$30bn, and with BHP Billiton's desire to maintain a Solid A credit rating it would clearly not in a position to make an all cash bid for the company, let alone pay for a takeover premium (30%?) should it wish to again try and enter the industry this way. Therefore unifying the DLC and creating one company with one share price would give BHP useful scrip currency it could more easily use were it to bid for PotashCorp again in the years ahead. Unifying BHPB's DLC may also put pressure on Rio Tinto which, similarly to BHP, currently finds it difficult to offer scrip in a transaction. If BHP were to unify, Rio Tinto may be left vulnerable should the situation ever arise that it wanted to use scrip as M&A currency. Precedent transactions: Brambles and AMP While each corporate Group has its own set of circumstances we find two precedent transactions: Brambles 2005/06 unification of its Dual Listed Structure and the AMP- Henderson demerger in 2003. The reasons cited for doing the transactions appear similar to some of the issues and themes surrounding BHP Billiton:

Figure 10: Reasons cited by Brambles and AMP for collapsing Dual Listed Companies ■ Focus on key assets and divestment non-core businesses ■ Enable shareholder returns from a capital release via buyback (or cash alternative to restructure group) ■ Eliminate share price differences between UK and Australia ■ Simplify a complex corporate structure and help shareholders, potential shareholders and broader community better evaluate and understand the financial performance and strategies. ■ Provide greater strategic flexibility. Source: Company data Brambles Logistics Group 2005 DLC unification In November 2006 Brambles unified its DLC structure into a new company listed only on the ASX but with a secondary listing in the UK (BHPB and Brambles shared history and legacy issues stem from Don Argus as Chairman of both). This was achieved via a scheme of arrangement where NewCo acquired all the shares of the Plc and Ltd companies. All shareholders had the option to take shares in NewCo or cash in their shareholdings. The reasons for Brambles unification:

■ Focus on the core businesses CHEP and Recall, while divestment of the other less core businesses.

■ Eliminated the share price differential between the two companies. At the date of announcement the difference in share prices was 8.9% and had ranged from 6.4% to 13.0% over the prior 12 months (Plc traded at a lower price).

■ The event freed up over £1.2bn in surplus capital, that was to be used for a share buyback or cash alternative to the unification.

■ The simplified corporate structure and reduce corporate costs.

■ Enhanced its position as leading ASX company. However of note, Brambles lost its FTSE index inclusion after moving to a secondary listing in the UK.

BHP Billiton (BLT.L) 7 17 June 2014

Figure 11: Brambles 2006: DLC unification

Source: Brambles December 2005 presentation AMP-HHG/Henderson demerger in 2003 In 2003 after a difficult period, AMP Group demerged to create AMP Limited listed in Australia and HHG (Henderson) listed on the LSE and ASX. Regulatory oversight in the insurance sector made this a more complex but relevant example. A key consideration was the adequate capitalization of the UK listed company and extensive regulatory negotiation was required. AMP Ltd remained a shareholder in the demerged UK company and a rights issue also occurred to ensure adequate funding of both companies. A key component was the takeover of Henderson Global Investors (an entity held in the Australian company up until that stage) by the demerged UK holding company HHG. The change was effected via a scheme of arrangement and all shareholders were offered shares in both AMP and HHG with the choice to sell into an underwritten book build if they did not want the shares. During the period when AMP announced the demerger the AMP was approached by parties interested in acquiring the UK assets. Similarly we would not rule out BHP being approached by parties for its more attractive assets up for sale (especially Nickel West which BHP announced is under strategic review).

BHP Billiton (BLT.L) 8 17 June 2014

Figure 12: AMP before the demerger Figure 13: AMP and Henderson after the demerger

Source: Company data Source: Company data Issues with the approach Potentially significant and complicated tax implications: Without being an insider to the tax consequences we can only assume that transferring real property (land and equipment) from one legal entity to another may trigger stamp duty taxes. At the company level, transferring interest in operating companies from one holding company to another would trigger potential capital gains tax consequences. The major gain would be by the Billiton Plc company which acquired an economic interest in BHP Ltd assets (Escondida copper, Western Australia Iron Ore, BMA Queensland Coking Coal) at relatively low prices in 2001 and would be selling this interest to another holding company as a much higher valuation. The tax treatment involving a vast amount of cross border tax implications (Australia / UK plus jurisdictions where the assets are based or holding companies registered) would be immensely complicated and often cited as a key impediment. Index inclusion: BHP is a significant part of the ASX and lesser extent FTSE 100 index (2.35%). A unification with re-listing as a secondary on the LSE may put index inclusion at a risk and decrease demand for the shares. Does it maximise the value for shareholders? BHP (says it) will only pursue the portfolio simplification option that maximises value for shareholders. Without an intimate knowledge of the significant tax liabilities and negotiations with tax authorities it is difficult for us to accurately assess the financial effect of dismantling the DLC. Needless to say there will not be a market value leakage now that both lines of shares trade near the same value. Ridding itself of the DLC would certainly simplify the portfolio and Group structure. The two companies may list at a higher multiple post-split.

BHP Billiton (BLT.L) 9 17 June 2014

Unnecessary value leakage through significant tax consequences from a mere paper shuffle of corporate legal entities amongst for the same ultimate shareholders is not an option. A 2 step scenario looks most feasible (1) Sell the 2 attractive assets (Nickel West / Cannington CS value $6bn); AND (2) Demerge SpinCo with remaining non-core assets ($10bn) offered to all shareholders (Ltd and Plc) with option to sell into book build. First: Sell the attractive assets at a higher than listed market value Therefore we see the most likely scenario as a piecemeal sale of the most attractive assets ($6bn) with a SpinCo ($10bn) to take the remaining non-core assets. A separate sale of Nickel West and Cannington could potentially yield more than a share market listing given the industry has repeatedly shown decent assets would likely attract a higher valuation when sold to industry participants such as Japanese trading houses, JV partners, peer companies, strategic investors. Recent examples include:

■ Las Bambas sold by Glencore for $5.85bn to Chinese entities,

■ AngloAmerican Sur share sold by Anglo American for implied price $22bn to Japanese entities,

■ Jimblebar Iron Ore share sold by BHP for implied value $10bn to Japanese entities. Second: demerger of SpinCo A demerger of SpinCo via scheme of arrangement (both shareholder and court approvals in Aust and UK) should be offered to all shareholders along with an option to sell allocated shares into an underwritten book build. SpinCo shares for Australian taxpayers can be in two components: 1) a deemed franked dividend and 2) a capital return making it even more attractive to those in certain tax brackets (similar to 2002 BlueScope Steel spin out in 2002 (refer our report: BHP – Demerger gets our approval 2-April-2014). Piecemeal sale of $6bn of decent assets:

■ Nickel West –Australia, acquired in 2005, $500m with upside given recent nickel price developments (refer our note: BHP: WA nickel at a crossroads 19-March-2014)

■ Cannington - Australia. Silver, Zinc, Lead. CS value $5.2bn. Disposal proceeds should be used in an on-market buyback in 2H 2014 and 2015 for up-to 3% of its shares outstanding and executed on Plc line (5% cheaper v Ltd). SpinCo is left with $10bn of other assets:

■ Aluminium: heritage Billiton assets in Mozambique, South Africa and Western Australia. CS value $5.2bn

■ Coal: South Africa thermal coal, Billiton heritage, CS value $1,2bn.

■ Manganese: heritage Billiton assets in South Africa / Australia: CS value $3.5bn.

BHP Billiton (BLT.L) 10 17 June 2014

Figure 14: Pro-forma financials for all non-core assets P&L FY13A FY14e FY15e FY16e FY17e FY18e FY19e FY20e Aluminium 4,589 3,973 3,733 4,065 4,309 4,457 4,536 4,619 Manganese 2,113 2,140 2,235 2,235 2,235 2,235 2,235 2,235 SA + New mexico coal 2,045 1,896 2,070 2,137 1,992 2,020 1,735 1,747 Nickel (Stainless) 2,576 2,196 2,655 2,655 2,608 2,691 2,750 2,812 Cannington 1,365 1,131 1,096 1,092 1,155 1,190 1,162 1,132 Revenue 12,688 11,337 11,790 12,183 12,299 12,594 12,417 12,546 Aluminium 249 393 326 496 601 627 625 652 Manganese 580 564 542 542 542 542 542 542 SA + New mexico coal 272 260 340 407 442 470 455 467 Nickel (Stainless) 86 -80 528 528 481 564 623 685 Cannington 646 543 620 648 751 787 758 728 EBITDA 1,833 1,680 2,356 2,620 2,817 2,990 3,003 3,075 Aluminium 5% 10% 9% 12% 14% 14% 14% 14% Manganese 27% 26% 24% 24% 24% 24% 24% 24% SA + New mexico coal 13% 14% 16% 19% 22% 23% 26% 27% Nickel (Stainless) 3% -4% 20% 20% 18% 21% 23% 24% Cannington 47% 48% 57% 59% 65% 66% 65% 64% EBITDA MARGIN 14% 15% 20% 22% 23% 24% 24% 25% Aluminium 14% 23% 14% 19% 21% 21% 21% 21% Manganese 32% 34% 23% 21% 19% 18% 18% 18% SA + New mexico coal 15% 15% 14% 16% 16% 16% 15% 15% Nickel (Stainless) 5% -5% 22% 20% 17% 19% 21% 22% Cannington 35% 32% 26% 25% 27% 26% 25% 24% CONTRIBUTION 100% 100% 100% 100% 100% 100% 100% 100%

Income Tax -192 -178 -381 -483 -562 -636 -666 -710 Capex 0 -665 -688 -633 -594 -581 -565 -554 FCF before finance 1,641 837 1,287 1,504 1,661 1,773 1,772 1,811 Source: Company data, Credit Suisse estimates. NB: Commodity prices per CS forecasts except nickel (spot price: $8.54/lb) The SpinCo could be the old Billiton Plc or not. One option is for an internal transaction (approved by all shareholders) where Ltd buys all the shares of Plc (the takeover that never happened in 2001) in exchange for shares in Ltd at the same exchange ratio that currently exists (4 Ltd shares for each Plc share increasing Ltd share count by 40%). All assets would then be within the BHP Ltd company. Thereafter the less core assets above can be demerged (SpinCo) and listed in UK, South Africa and/or Australia. What are you left with in BHP Ltd? An oil, copper, iron ore and coal company with EBITDA of $30bn split as 40% petroleum (conventional 25%, shale 15%), 20% copper, 30% iron ore and 10% coal with potash a potential contributor in the long term.

Figure 15: BHP Billiton core asset EBITDA ($m) EBITDA FY13A FY14e FY15e FY16e FY17e FY18e FY19e FY20e Petroleum: conventional 7,726 7,804 8,085 7,466 7,216 7,141 6,921 6,579 Petroleum: Shale oil 1,508 2,304 3,572 4,761 5,458 6,036 6,076 6,148 Copper excl. Cannington 6,239 5,709 5,268 6,146 6,731 6,632 6,041 5,190 Iron ore 12,113 13,119 9,817 9,182 9,835 10,229 10,521 10,520 Met Coal 780 1,119 1,143 1,603 1,941 2,011 2,103 2,200 Core Energy coal 428 326 377 491 581 630 648 670 Potash (Prev. Diamonds & Speciality-210 prods.) -268 -300 -300 -300 -300 -300 228 Group and Unallocated 223 90 100 100 100 100 100 100 Total Core 28,807 30,203 28,062 29,450 31,562 32,480 32,109 31,634 Petroleum: conventional 27% 26% 29% 25% 23% 22% 22% 21% Petroleum: Shale oil 5% 8% 13% 16% 17% 19% 19% 19% Copper excl. Cannington 22% 19% 19% 21% 21% 20% 19% 16% Iron ore 42% 43% 35% 31% 31% 31% 33% 33% Met Coal 3% 4% 4% 5% 6% 6% 7% 7% Core Energy coal 1% 1% 1% 2% 2% 2% 2% 2% Potash (Prev. Diamonds & Speciality-1% prods.) -1% -1% -1% -1% -1% -1% 1% Group and Unallocated 1% 0% 0% 0% 0% 0% 0% 0% Contribution 100% 100% 100% 100% 100% 100% 100% 100% Source: Company data, Credit Suisse estimates BHP Billiton Plc – has $10bn of capital, can some of it be released in a demerger? The share capital of the Plc company is currently $10bn consisting of $1bn in paid in capital and $8.8bn in retained earnings. Without knowing the complexities involved, some of this amount may be able to be released by the Group if the DLC is collapsed.

BHP Billiton (BLT.L) 11 17 June 2014

Where is the upside in all this? From our extensive considerations above we see 4 possible sources of share price upside that sum to nearly 16% upside from the current market cap.

Figure 16: Total potential upside 16% Scenarios and upside Asset sale funded buyback 4% Re-rating on demerger from UK expoiting higher Australian price 3% EBITDA Re-rating from company split into core and non-core 3% Capital release from Billiton Plc (bluesky scenario) 7% Total potential upside 16% Source: Credit Suisse estimates

■ 4% - Share buyback from asset sales: $6bn of asset sale proceeds would allow BHP to re-purchase 3% of shares increasing theoretical TSR by that amount.

■ Upside from exploiting the DLC difference: An internal buyback of Plc, relisting the larger group in Australia and the UK may result in a modest increase in Group capitalization reflecting the higher value of the shares in Australia (all shares would be able to pay a franked dividend not just Ltd shares).

Figure 17: Exploiting the DLC difference yields 2.5% Figure 18: Buyback potential of 4% of capital Market data Group Ltd Plc Ticker $US BHP.AX BLT.L Share prices (local) (A$/GB£) 35.94 1,888 Group Ltd Plc Share price $US equivalent 32.87 33.69 31.62 Ticker $US BHP.AX BLT.L Plc / Ltd Premium/(discount) 7% -6% Share prices (local) (A$/GB£) 35.94 1,888 Market cap (US$'mn) 174,953 108,202 66,751 Market cap (%) 100% 62% 38% Share price $US equivalent 32.87 33.69 31.62 Shares on issue (mn) 5,323 3,212 2,111 Shares on issue (mn) 5,323 3,212 2,111 Market cap (US$'mn) 174,953 108,202 66,751 Shares (%) 100% 60% 40% Asset sale proceeds 6,000 3,582 Post demerger: Buyback cheaper Plc shares 1,888 Shares on issue (mn) 5,323 5,323 - Shares repurchased (mn) 190 Share price $US equivalent 33.7 33.7 - Shares repurchased (% of total) 3.6% Market cap (US$'mn) 179,325 179,325 - Increase 2.5% na Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

■ Post demerger re-rating 3.3%: As we highlighted in "BHP Demerger would get our support 2-April" our US colleagues noted a 12-month outperformance of 9.6% for the parent and 13.4% for the spin-off in the US but with large variances in the sample. Some of the performance comes from exploiting the different peer multiples for the separated companies. BHP already trades at a premium rating (6.5x EBITDA) compared to its traditional peers (mining 5x EBITDA, conventional oil 5x). Only against shale peers (7x) does a SpinCo make sense to capture the re-rating potential (shale is 19% of EBITDA for simplified BHP). When we assess the BHP Core and SpinCo on an EV basis we see modest upside.

Figure 19: BHP versus peers VALUATION (Calendar Year) PE EV:EBITDA Ticker 2014F 2015F 2014F 2015F x x x x Comment BLT.L 11.7 11.7 6.1 5.8 BHP.AX 12.5 12.4 6.0 5.7 Mining Peers 13.7 10.7 6.4 5.6 Similar Oil/gas Peers Conventional 12.2 11.6 5.2 5.0 Downside Oil/gas Peers Shale 20.0 18.0 8.1 7.1 Upside SpinCo Peers 18.5 13.5 7.2 6.2 Upside Source: Company data, Credit Suisse estimates

■ Our Blue-Sky valuation upside includes releasing capital from Billiton Plc. With current capital of $10bn this would be the absolute maximum potential to be released but is

BHP Billiton (BLT.L) 12 17 June 2014

unlikely to be realistic given available cash resources currently. This would result in our buyback scenario upside increasing from 3.5% to 9.5%.

Figure 20: Re-rating potential from core and non-core Figure 21: Blue-Sky release of Billiton Plc capital for 10% split of assets upside BHP Billiton Group Buyback potential Group Ltd Plc Current EV 202,840 Ticker $US BHP.AX BLT.L Debt 27,887 Share prices (local) (A$/GB£) 35.94 1,888 Equity 174,953 Share price $US equivalent 32.87 33.69 31.62 EBITDA FY1 30,418 Shares on issue (mn) 5,323 3,212 2,111 EBITDA FY2 32,070 Market cap (US$'mn) 174,953 108,202 66,751 EV:EBITDA 6.7 Asset sale proceeds 6,000 3,582 Buyback cheaper Plc shares 1,888 Shares repurchased (mn) 190 BHP Billiton Core Shares repurchased (% of total) 3.6% EBITDA 29,450 Max potential capital release $m 10,000 5,969 Peer multiple 6.4 Shares repurchased (mn) 316 Implied EV 189,687 Shares repurchased (% of total) 9.5% Peers EV:EBITDA Weight Mining Peers 6.4 59% Oil/gas Peers Conventional 5.2 22% Oil/gas Peers Shale 8.1 19%

SpinCo EBITDA 2,620 Peer multiple 7.2 Implied EV 18,922 Weight SpinCo EV:EBITDA 7.2 100%

SoTP Total implied EV 208,609 Less debt 27,887 Implied mkt cap 180,722 Upside from re-rate 3.3% Source: Company data, Credit Suisse estimates Source: Company data, Credit Suisse estimates

BHP Billiton (BLT.L) 13 17 June 2014

Figure 22: Peer Valuations COMPANY Price Change VALUATION (Calendar Year) Share MktCap Target EV PE EV:EBITDA Ticker Name price Local Price USD 2014F 2015F 2014F 2015F (local) mn (local) US$mn YTD 1m 3m 6m 12m x x x x BLT.L BHP Billiton 8.0 173,991 2,250.0 204,262 -1% -5% 4% 3% 2% CS 12.3 12.7 6.3 6.1 BLT.L 173,991 -1% -5% 4% 3% 2% IBES 11.7 11.7 6.1 5.8 BHP.AX BHP Billiton 35.9 176,752 38.0 204,262 -6% -6% 0% 0% 8% CS 13.2 13.6 6.3 6.1 BHP.AX 176,752 -6% -6% 0% 0% 8% IBES 12.5 12.4 6.0 5.7 Mining Peers RIO.L Rio Tinto 15.4 96,274 4,200 118,075 -11% -8% -4% -6% 8% CS 9.6 8.9 5.7 5.2 RIO.L 96,274 118,075 -11% -8% -4% -6% 8% IBES 9.6 8.8 5.5 4.8 RIO.AX Rio Tinto 59.4 99,740 80.0 118,075 -15% -6% -6% -11% 8% CS 10.1 9.4 5.7 5.2 RIO.AX 99,740 118,075 -15% -6% -6% -11% 8% IBES 10.4 9.6 5.8 5.1 GLEN.L Glencore 323.2 71,673 380.00 125,047 2% -2% 7% 4% 1% CS 15.3 12.7 8.7 7.3 GLEN.L 71,673 125,047 2% -2% 7% 4% 1% IBES 14.4 10.7 8.1 6.5 AAL.L Anglo American Plc 1,452 33,463 1,850.0 45,196 7% -10% -1% 9% -1% CS 14.8 11.5 5.9 5.3 AAL.L 33,463 45,196 7% -10% -1% 9% -1% IBES 13.4 10.5 5.7 5.3 FCX.N Freeport-McMoRan Copper34 & Gold38,283 42 56,928 -10% -3% 9% -2% 15% CS 19.2 15.2 7.2 5.9 FCX.N 38,283 56,928 -10% -3% 9% -2% 15% IBES 13.0 10.8 5.8 5.2 VALE.N Vale 13 67,035 17.0 91,159 -16% -7% 3% -13% -9% CS 7.7 7.9 5.0 5.2 VALE.N 67,035 91,159 -16% -7% 3% -13% -9% IBES 6.7 6.8 4.8 4.8 TCKb.TO Teck Resources Ltd 23 13,204 29 16,843 -16% -5% 2% -5% -3% CS 22.7 12.4 7.5 5.8 TCKb.TO 13,204 -16% -5% 2% -5% -3% IBES 24.2 14.4 7.7 6.4 Average - simple 13.7 10.7 6.4 5.6 Oil/gas Peers Conventional BP.L BP 508 158,879 495 184,084 4% 0% 6% 7% 12% CS 10.9 10.5 4.9 4.9 BP.L 158,879 184,084 4% 0% 6% 7% 12% IBES 10.7 10.1 4.9 4.7 CVX Chevron Corp. 127 242,260 140 246,078 2% 3% 12% 6% 6% CS 11.7 10.9 4.9 4.8 CVX 242,260 246,078 2% 3% 12% 6% 6% IBES 11.9 11.3 4.9 4.8 XOM ExxonMobil Corporation103 443,575 90 461,361 1% 2% 10% 6% 13% CS 13.3 12.4 5.9 5.5 XOM 443,575 461,361 1% 2% 10% 6% 13% IBES 13.2 13.3 6.1 6.1 COP ConocoPhillips 83 101,985 85 117,129 18% 6% 25% 19% 36% CS 12.6 11.3 4.9 4.3 COP 101,985 117,129 18% 6% 25% 19% 36% IBES 13.0 13.2 5.1 5.0 Average - simple 12.2 11.6 5.2 5.0 Oil/gas Peers Shale DVN Devon Energy Corp 78.0 32,699 90.0 38,655 26% 10% 24% 29% 44% Cs 14.3 13.8 11.6 10.4 DVN 32,699 38,655 26% 10% 24% 29% 44% IBES 13.5 12.2 6.1 5.5 MRO Marathon Oil Corp 39.1 45.0 32,925 11% 9% 18% 10% 14% Cs 12.0 13.0 4.1 3.9 MRO Object variable or With block variable not32,925 set 11% 9% 18% 10% 14% IBES 12.9 14.1 3.9 4.2 ECA Encana Corp. 24.4 18,093 27.0 22,651 35% 8% 21% 36% 40% Cs 14.6 14.5 6.2 5.8 ECA 18,093 22,651 35% 8% 21% 36% 40% IBES 14.2 13.8 6.0 5.1 AUT.AX Aurora Oil & Gas 4.2 1,876 38% 0% 1% 46% 44% Cs AUT.AX 1,876 38% 0% 1% 46% 44% IBES 10.9 8.9 5.7 4.6 PXD Pioneer Natural Resources227.0 32,465 215.0 34,725 23% 12% 22% 26% 55% Cs 46.3 38.7 15.3 13.2 PXD 32,465 34,725 23% 12% 22% 26% 55% IBES 40.8 33.3 14.0 11.4 Average - simple 20.0 18.0 8.1 7.1 SpinCo Peers AA Alcoa Inc. 15.4 17,022 37% 8% 23% 52% 79% IBES AA 17,022 37% 8% 23% 52% 79% Cs 31.4 21.7 8.5 7.3 AAL.L Anglo American Plc1,452.0 33,463 1,850.0 45,196 7% -10% -1% 9% -1% IBES 14.8 11.5 5.9 5.3 AAL.L 33,463 45,196 7% -10% -1% 9% -1% Cs 13.4 10.5 5.7 5.3 GLEN.L Glencore 323.2 71,673 380.00 125,047 2% -2% 7% 4% 1% IBES 15.3 12.7 8.7 7.3 GLEN.L 71,673 125,047 2% -2% 7% 4% 1% Cs 14.4 10.7 8.1 6.5 AAL.L Anglo American Plc 1,452 33,463 1,850.0 45,196 7% -10% -1% 9% -1% IBES 14.8 11.5 5.9 5.3 AAL.L 33,463 45,196 7% -10% -1% 9% -1% Cs 13.4 10.5 5.7 5.3 NHY.OL Norsk Hydro 33 68,173 24% 3% 17% 32% 31% IBES NHY.OL 68,173 24% 3% 17% 32% 31% Cs 30.8 18.6 9.2 7.2 Average - simple 18.5 13.5 7.2 6.2 Other POT Potash Corp - Saskatchewan15.4 30,463 29 33,772 9% -2% 6% 17% -11% Cs 22.6 19.0 12.9 11.3 POT Potash Corp - Saskatchewan15.4 30,463 29 33,772 9% -2% 6% 17% -11% IBES 21.5 17.6 12.3 10.7 Source: Company data, Credit Suisse estimates, IBES consensus data

BHP Billiton (BLT.L) 14 17 June 2014 Appendix:

BHP Billiton must call Australia home The Treasurer of Australia through the advice of the Australian Foreign Investment Review Board (FIRB) approved the 2001 DLC merger subject to a number of indefinite conditions including:

■ BHP Limited remains an Australian resident company, incorporated under the Australian Corporations Law, that is listed on the Australian Stock Exchange under the name “BHP Limited” and trades under that name;

■ the headquarters of BHP Limited and the global headquarters of the Group are to be in Australia;

■ that both the Chief Executive Officer of the Group and Chief Financial Officer of BHP Limited have their principal place of residence in Australia; If the company wants to change these conditions it must seek and obtain prior approval from the Australian Treasurer. Whenever BHP seeks to conduct a major M&A transaction it is subject to review by the Australian Foreign Investment Review Board (FIRB) and approval from the Australian Treasurer.

Proposed acquisition of Potash Corp of Saskatchewan 2010 In August 2010 BHP proposed to acquire 100% of the Canadian potash miner Potash Corp of Saskatchewan for US$130/share valuing Potash Corp at US$41bn. BHP was already operating in Saskatchewan with the development of its proposed Jansen Greenfield potash project (production expected 2014-2015). Potash Corp publically released correspondence from BHP prior to a formal offer being made. BHP then made a formal hostile on market takeover offer. After an extensive review period The Canadian Industry Minister indicated that he would not recommend the offer. BHP subsequently dropped its takeover offer for Potash Corp in November 2010 and reactivated its buyback that had been suspended since the initial proposed takeover of Rio Tinto. Costs of the Potash offer were US$350mn. BHP continues to invest in its greenfield postash project Jansen in Canada and has suggested it to be the 5th commodity basin pillar in its future strategy.

BHP Billiton (BLT.L) 15 17 June 2014

Figure 23: BHP Billiton Group timeline Date Event 2001 BHP Billiton merger approved. 2001 Antamina Copper-Zinc project in Northern Peru achieves commercial production 2001 Ekati Diamond Mine in Canada starts Misery Pipe production 2002 BHP Billiton completes withdrawal from the Ok Tedi copper mine in PNG 2002 Demerger of BHP Steel 2003 Chip Goodyear appointed BHP Billiton Chief Executive 2003 First oil and gas production from the Boris field in the deepwater Gulf of Mexico 2004 BHP Billiton approves US$870mn Escondida Sulphide Leach Copper Project in Chile 2004 BHP Billiton approves US$990million Spence copper project in northern Chile 2005 Oil and natural gas production begins from the Mad Dog in the deepwater Gulf of Mexico. 29-Aug-05 BHP extends on market buyback by 12 months to 30/Sept/06 and nearly doubles the number of shares to be bought back to 356mn from 186mn. 2005 BHP Billiton acquires Western Mining Corporation (WMC) for A$7.85 per share (A$9.2bn) adding key assets Olympic Dam (copper/gold in South Australia) and Nickel West (Western Australia). 2006 BHP Billiton agrees to sell its Australian coal bed methane (CBM) interests to The Australian Gas Light Company (AGL) for US$687mn. 03-Apr-06 BHP completes A$2.25bn (US$1.6bn) off market share buy-back 26-Mar-07 BHP completes US$3.5bn off market buy-back 31-May-07 Marius Kloppers succeeds Chip Goodyear as Chief Executive Officer Nov-07 BHP proposes to merger with Rio Tinto offering three BHP shares for one Rio share. Rio rejects approach. Dec-07 BHP suspends on market buyback. Feb-08 BHP increases Rio offer to 3.4 shares. 17-Jul-08 Acquires New Saraji Coal project in Queensland for US$1.2bn Nov-08 BHP withdraws offer for Rio Tinto. 2009 First oil and natural gas production from the Shenzi development in the deepwater Gulf of Mexico. 2009 BHP Billiton celebrates the opening of the ‘Newman Mining Hub' at its Western Australia Iron Ore operations. Jun-09 Rio Tinto and BHP Billiton sign a non-binding agreement to establish a production JV covering Western Australian iron ore assets. 2009 First production from the expansion of the Alumar alumina refinery in Brazil. 2010 BHP Billiton acquires Athabasca Potash in Canada. Aug-10 BHP makes cash offer for Potash Corp of Saskatchewan at US$130/share for US$40bn. Oct-10 BHP Billiton and Rio Tinto drop plans for Western Australia Iron Ore JV following concerns from regulators in Europe and Asia. Nov-10 BHP withdraws from Potash Corp takeover after Canadian Investment Review rejection. Nov-10 BHP reactivates buyback. 22-Feb-11 BHP acquires Chesapeake Energy Corp's interests in the Fayetteville Shale, USA for US$4.75bn. 22-Feb-11 BHP announces off-market buyback that will form part of its expanded US$10bn capital management initiative. 24-Mar-11 BHP approves US$7.4bn of CAPEX to fuel production growth in the WA iron ore operations 24-Mar-11 BHP approves US$2.5bn for three met coal projects in the Bowen Basin, Queensland 02-May-11 Samarco approves US$3.5bn (BHP share US$1.75bn) for iron ore operations in Fourth Pellet Plant Project, Samarco, Brazil 15-Jul-11 BHP acquires Petrohawk Energy Corp for US$12.1bn, which provides BHP with operated positions in the Permian Basin, Eagle Ford, and Haynesville shales. 12-Oct-11 BHP announces US$1.2bn in pre-commitment capital to fund the first phase of the Olympic Dam Project to develop an open pit mine in South Australia 01-Feb-12 BHP exits Titanium minerals industry after selling its 37% non-operated interest in Richards Bay Minerals (RBM) to Rio Tinto 14-Feb-12 BHP approves US$2.6bn investment for the Escondida mine for the Organic Growth Project 1 (OGP1) and the Oxide Leach Area Project (OLAP) 14-Nov-12 BHP sells diamonds business to Harry Winston Diamond Mines for US$500mn 7-June-13 Sells interest in Browse oil/gas JV for pre tax profit $1.5bn 2013 Work stops on Port Hedland Outer-Harbour Iron ore Expansion and Olympic Dam expansions 1H FY14 Share of Jimblebar iron ore WA and Pinto Valley Copper (USA) sold for $2.2bn

Source: Company data, Credit Suisse estimates

BHP Billiton (BLT.L) 16 17 June 2014

Figure 24: Financial Summary Market data Ltd Plc Valuation summary NPV (US$m) US$/share A$/share GB£/share Ticker BHP.AX BLT.L Petroleum 55,861 10.5 12.4 6.3 28% Share prices (local) (A$/GB£) 35.94 1,888 Aluminium / alumina 5,209 1.0 1.1 0.6 3% Share price $US equivalent 33.69 31.62 Base Metals 31,349 5.9 7.0 3.5 15% Plc / Ltd Premium/(discount) 7% -6% Iron ore 78,325 14.7 17.4 8.8 39% Market cap (US$'mn) 108,202 66,751 Manganese 3,471 0.7 0.8 0.4 2% Market cap (%) 62% 38% Metallurgical Coal 11,604 2.2 2.6 1.3 6% Market cap (local) (GB£ / A$) (million) 115,428 39,847 Diamonds & Specialty 2,448 0.5 0.5 0.3 1% Shares on issue (mn) 3,212 2,111 Energy Coal 8,742 1.6 1.9 1.0 4% Shares (%) 60% 40% Stainless Steel Materials 3,513 0.7 0.8 0.4 2% Net debt (cash) (US$mn) Group & unallocated items 2,004 0.4 #VALUE! 0.2 1% Enterprise value (EV) ($US'mn) Total 202,524 38.0 #VALUE! 22.7 100% FX rate (AUD:USD) & (GBP:USD) 0.94 1.68 Net debt & Provisions 27,887 5.2 6.2 3.1 BHP DCF valuation 174,637 32.8 #VALUE! 19.6 Price / NPV 1.00x #VALUE! 0.96x Note: the A$/share valuation is calculated using our forecast AUD/USD assumptions Key assumptions FY11 FY12 FY13 FY14F FY15F FY16F FY17F FY18F FY19F FY20F Exchange rate (AUD / USD) 0.99 1.03 1.02 0.92 0.88 0.85 0.85 0.85 0.85 0.85 Exchange rate (USD / GBP) 1.55 1.55 1.56 1.55 1.55 1.55 1.55 1.55 1.55 1.55 Aluminium (US$/lb) 1.09 0.99 0.89 0.81 0.83 0.92 0.98 1.00 1.02 1.03 Alumina (US$/t) 368 337 328 326 340 350 368 382 390 399 Copper (US$/lb) 3.93 3.74 3.50 3.15 2.95 3.20 3.40 3.50 3.44 3.37 Iron ore, fines (US$/t) 159 150 126 125 100 94 95 95 95 95 Iron ore, lump (US$/t) 177 211 133 139 115 108 109 110 111 110 Coking coal (US$/t) 247 261 183 140 139 150 159 161 163 166 Coking coal semi (US$/t) 235 177 125 101 99 105 111 112 114 116 Thermal coal (US$/t) 104 111 87 78 81 88 93 95 96 97 Manganese (US$/t) 338 284 300 300 297 284 283 281 267 253 Gold (US$/oz) 1,371 1,673 1,605 1,304 1,300 1,300 1,300 1,303 1,318 1,334 Zinc (US$/lb) 1.03 0.92 0.88 0.89 1.02 1.12 1.19 1.23 1.17 1.11 Oil, Brent 100.9 106.2 107.6 108.0 103.8 95.0 95.0 95.0 95.1 95.2 Gas - Henry Hub ($/Mmbtu) 4.89 3.17 3.43 4.26 4.33 4.38 4.45 4.51 4.56 4.62 Production schedule (attributable) FY11 FY12 FY13 FY14F FY15F FY16F FY17F FY18F FY19F FY20F Total Petroleum products, Mmboe 159 222 236 246 272 302 317 330 335 340 Crude oil & condensate, Mmboe 81 71 73 83 94 103 108 112 107 102 Alumina ('000 tonnes) 4,010 4,152 4,880 5,200 5,193 5,193 5,193 5,193 5,193 5,193 Aluminium ('000 tonnes) 1,246 1,153 1,181 1,177 1,035 1,035 1,035 1,035 1,035 1,035 Copper ('000 tonnes) 1,134 1,089 1,689 1,224 1,330 1,339 1,339 1,297 1,265 1,213 Zinc ('000 tonnes) 152 112 128 131 138 133 133 133 133 133 Uranium oxide concentrate (tonnes) 4,045 3,885 4,102 4,041 4,125 4,125 4,125 4,125 4,125 4,125 Nickel ('000 tonnes) 153 158 154 152 141 141 141 141 141 141 Iron Ore (kt) (global) (attributable) 134,406 159,478 169,856 196,781 206,175 212,200 221,125 229,625 236,000 236,000 Iron Ore (kt) (global) (100%) 167,767 197,028 208,875 241,035 254,500 262,000 272,500 282,500 290,000 290,000 Iron Ore (kt) (WA) (attributable) 122,697 148,055 158,874 185,211 191,675 197,200 206,125 214,625 221,000 221,000 Iron Ore (kt) (WA) (100%) 144,349 174,182 186,911 217,895 225,500 232,000 242,500 252,500 260,000 260,000 Manganese ore ('000 tonnes) 7,093 7,931 8,517 8,446 8,400 8,400 8,400 8,400 8,400 8,400 Manganese alloy ('000 tonnes) 753 602 608 653 750 750 750 750 750 750 Metallurgical Coal (Mt, attributable) 32,678 33,230 39,826 43,525 46,100 46,800 46,800 46,800 46,800 46,800 Energy Coal (Mt) 69,500 71,111 72,892 73,456 72,500 73,300 69,300 69,300 63,300 63,300 Revenue, mt Fe - IO equivalent terms 617 652 725 782 819 863 891 908 920 917 Growth - IO equivalent terms 4% 6% 11% 8% 5% 5% 3% 2% 1% 0% Expenses, mt Fe - IO equivalent terms 57 60 57 46 44 43 43 43 42 42 P&L ($US'mn) FY11 FY12 FY13 FY14F FY15F FY16F FY17F FY18F FY19F FY20F Petroleum 10,737 12,937 13,213 14,795 16,515 17,409 18,259 18,962 18,780 18,528 Aluminium 5,221 4,766 4,589 3,973 3,733 4,065 4,309 4,457 4,536 4,619 Base Metals 14,152 11,596 14,537 13,764 13,785 14,988 15,865 15,770 15,128 14,209 Diamonds and Specialty Products (Potash) 1,517 1,326 11 6 - - - - - 338 Stainless Steel Materials 3,861 2,993 2,576 2,196 2,379 2,503 2,608 2,691 2,750 2,812 Iron Ore 20,412 22,601 18,593 21,086 17,750 17,096 18,105 18,835 19,377 19,377 Manganese 2,423 2,152 2,113 2,140 2,235 2,235 2,235 2,235 2,235 2,235 Metallurgical Coal 7,573 7,576 5,739 5,758 5,955 6,553 6,948 7,030 7,139 7,255 Energy Coal 5,507 6,022 4,156 3,968 4,047 4,261 4,196 4,285 3,978 4,016 Group and inter segment adjustment 336 257 426 15 250 250 250 250 300 300 BHP Billiton Group revenue 71,739 72,226 65,953 67,702 66,650 69,359 72,777 74,515 74,173 73,639 Other Income 531 906 3,947 922 1,000 1,000 1,000 1,000 1,000 1,000 Net BHP Billiton revenue 72,270 73,132 69,900 68,624 67,650 70,359 73,777 75,515 75,173 74,639 Total operating expenses 35,177 39,386 41,537 36,321 36,425 37,279 38,134 38,742 38,773 38,648 EBITDA - Underlying 37,093 33,746 28,363 32,302 31,225 33,080 35,643 36,774 36,400 35,990 Depreciation & amortisation -5,113 -6,408 -7,361 -8,393 -9,062 -9,778 -10,232 -10,472 -10,559 -10,577 Underlying EBIT 31,980 27,338 21,002 23,910 22,163 23,302 25,411 26,301 25,840 25,414 Net interest + other -561 -730 -1,276 -1,118 -1,210 -1,097 -908 -653 -315 81 Profit before tax 31,419 26,608 19,726 22,791 20,952 22,205 24,503 25,648 25,525 25,494 Income tax and other royalties -7,309 -7,490 -6,906 -6,868 -6,810 -7,217 -7,964 -8,336 -8,296 -8,286 OEI -298 -115 -1,597 -1,375 -1,217 -1,311 -1,391 -1,314 -1,146 -902 Underlying NPAT 23,812 19,003 11,223 14,549 12,926 13,677 15,149 15,999 16,083 16,307 Net significant items (post tax) -164 -3,586 - 346 ------Reported NPAT 23,648 15,417 11,223 14,895 12,926 13,677 15,149 15,999 16,083 16,307 Normalised cash earnings 26,797 23,525 19,506 22,942 21,989 23,455 25,381 26,471 26,643 26,884 EPS - basic underlying (US cents) 393 322 222 274 243 258 285 301 303 307 Dividends Per Share - (US cents) 101 112 116 122 130 137 143 147 148 148 Business unit EBIT FY11 FY12 FY13 FY14F FY15F FY16F FY17F FY18F FY19F FY20F Petroleum 6,330 6,348 5,985 6,154 7,386 7,458 7,560 7,824 7,506 7,164 Aluminium 266 -291 -117 83 28 207 322 358 364 400 Copper (prev. Base Metals) 6,790 3,965 5,639 4,916 4,379 5,135 5,747 5,700 5,113 4,264 Potash (prev. Diamonds and Specialty Products) 587 199 -334 -291 -340 -340 -340 -340 -340 141 Stainless Steel Materials 588 32 -203 -301 11 134 240 322 381 444 Iron Ore 13,328 14,201 11,109 11,857 8,424 7,760 8,377 8,714 8,970 9,003 Manganese 697 235 478 411 367 367 371 376 381 386 Metallurgical Coal 2,670 1,570 254 464 422 838 1,154 1,240 1,347 1,459 Energy Coal 1,129 1,227 341 246 404 580 716 805 831 872 Group and unallocated items -405 -148 -2,150 370 1,082 1,162 1,264 1,303 1,288 1,282 Total BHP Billiton Group 31,980 27,338 21,002 23,910 22,163 23,302 25,411 26,301 25,840 25,414 Source: Company data, Credit Suisse estimates

BHP Billiton (BLT.L) 17 17 June 2014

Figure 25: Financial Summary Cashflows ($US'mn) FY11 FY12 FY13 FY14F FY15F FY16F FY17F FY18F FY19F FY20F Operating cashflows 31,061 24,384 19,444 22,467 22,741 24,282 26,292 27,473 27,744 28,095 Capex - sustaining -2,244 -2,588 -3,529 -4,264 -4,264 -4,328 -4,354 -4,330 -4,281 -4,183 Free cash flow (sustaining) 28,817 21,796 15,915 18,202 18,477 19,954 21,938 23,143 23,463 23,912 FCF per share 5.23 4.09 2.99 3.40 3.45 3.73 4.10 4.33 4.39 4.47 Capex - exploration -1,240 -2,452 -1,351 -1,008 -1,109 -1,220 -1,342 -1,476 -1,623 -1,786 Capex - growth projects -9,366 -17,735 -18,401 -11,389 -9,695 -8,309 -7,390 -7,170 -5,444 -5,431 Free cash flow (all capex) 18,216 1,613 -3,834 5,809 7,677 10,429 13,210 14,502 16,400 16,700 FCF per share 3.31 0.30 -0.72 1.09 1.44 1.95 2.47 2.71 3.07 3.12 Other investing cashflows -4,595 -9,261 4,555 370 ------Dividend payments -5,054 -5,877 -6,167 -6,367 -6,707 -7,133 -7,452 -7,750 -7,911 -7,832 Other financing cashflows -10,973 8,382 6,677 6,631 977 -1,243 157 1,196 -619 424 Net increase in cash -2,402 -5,143 1,230 6,443 1,949 2,055 5,918 7,951 7,873 9,296 Cash at end of the year 10,080 4,881 5,667 12,154 14,103 16,159 22,077 30,027 37,900 47,196 Total capex spend -12,850 -22,775 -23,281 -16,661 -15,067 -13,857 -13,086 -12,975 -11,349 -11,400 Balance Sheet ($US'm) FY11 FY12 FY13 FY14F FY15F FY16F FY17F FY18F FY19F FY20F Cash 10,084 4,781 5,677 12,154 14,103 16,159 22,077 30,027 37,900 47,196 Receivables 8,197 7,704 6,310 6,698 6,698 6,698 6,698 6,698 6,698 6,698 Inventories 6,154 6,233 5,821 5,217 5,217 5,217 5,217 5,217 5,217 5,217 Plant & equipment 68,468 95,247 100,565 108,485 113,737 116,989 118,932 120,433 120,121 119,732 Deferred tax assets 3,993 4,525 6,069 6,801 6,801 6,801 6,801 6,801 6,801 6,801 Intangibles 534 4,742 5,496 5,533 5,533 5,533 5,533 5,533 5,533 5,533 Other assets 5,461 6,041 9,240 9,865 9,865 9,865 9,865 9,865 9,865 9,865 Assets 102,891 129,273 139,178 154,753 161,955 167,261 175,122 184,574 192,135 201,042 Payables 9,718 12,024 10,860 9,734 9,734 9,734 9,734 9,734 9,734 9,734 Provisions 2,256 2,784 2,372 2,135 2,135 2,135 2,135 2,135 2,135 2,135 Tax liabilities 3,693 2,811 1,158 1,596 1,596 1,596 1,596 1,596 1,596 1,596 LT Borrowings 12,388 24,799 28,099 31,302 31,302 29,002 28,002 28,002 26,202 25,452 Other liabilities 17,081 19,770 21,398 23,569 23,569 23,569 23,569 23,569 23,569 23,569 Liabilities 45,136 62,188 63,887 68,336 68,336 66,036 65,036 65,036 63,236 62,486 Net Assets 57,755 67,085 75,291 86,417 93,619 101,225 110,086 119,538 128,899 138,556 OEI 993 1,215 4,624 6,210 7,192 8,255 9,418 10,622 11,810 12,991

Valuation metrics FY11 FY12 FY13 FY14F FY15F FY16F FY17F FY18F FY19F FY20F Underlying earnings (US$bn) 23,812 19,003 11,223 14,549 12,926 13,677 15,149 15,999 16,083 16,307 Average shares on issue (basic, millions) 5,511 5,323 5,322 5,348 5,348 5,348 5,348 5,348 5,348 5,348 Reported EPS - diluted (US cents) 427 288 210 278 241 255 282 298 300 304 Underlying EPS (diluted) (US cents) 391 320 227 271 241 255 282 298 300 304 EPS growth 76% -18% -29% 19% -11% 6% 11% 6% 1% 1% Cash EPS (diluted) 484 440 365 428 410 437 473 493 497 501 PE Ltd 8.6x 10.5x 14.8x 12.4x 14.0x 13.2x 11.9x 11.3x 11.2x 11.1x PE Plc 8.1x 9.9x 13.9x 11.7x 13.1x 12.4x 11.2x 10.6x 10.5x 10.4x PE Ltd (CS FX forward curve) 9.1x 11.6x 16.2x 12.2x 13.0x 12.0x 10.8x 10.2x 10.2x 10.0x PE Plc (CS FX forward curve) 7.5x 9.1x 12.9x 10.8x 12.1x 11.5x 10.4x 9.8x 9.8x 9.6x Price/cash earnings - Ltd 7.0x 7.7x 9.2x 7.9x 8.2x 7.7x 7.1x 6.8x 6.8x 6.7x Price/cash earnings - Plc 6.5x 7.2x 9.2x 7.4x 7.7x 7.2x 6.7x 6.4x 6.4x 6.3x Book value (US$/share) 10.3 12.4 13.3 15.0 16.2 17.4 18.8 20.4 21.9 23.5 P / NAV (P/B) - Ltd 3.3x 2.7x 2.5x 2.2x 2.1x 1.9x 1.8x 1.7x 1.5x 1.4x P / NAV (P/B) - Plc 3.1x 2.6x 2.4x 2.1x 2.0x 1.8x 1.7x 1.6x 1.4x 1.3x DPS, ordinary (USD) 101.0 112.0 116.0 122.0 130.0 137.0 142.8 147.1 147.9 147.7 DPS, ordinary (AUD spot) 107.7 119.5 123.7 130.1 138.7 146.1 152.3 156.9 157.8 157.5 Payout ratio, ordinary 26% 35% 51% 45% 54% 54% 51% 49% 49% 49% Div Yield Ltd 3.0% 3.3% 3.4% 3.6% 3.9% 4.1% 4.2% 4.4% 4.4% 4.4% Franking 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% Dividend yield (gross) (Ltd) 4.3% 4.7% 4.9% 5.2% 5.5% 5.8% 6.1% 6.2% 6.3% 6.3% EV (fixed) / EBITDA 5.5x 6.0x 8.0x 6.8x 7.0x 6.7x 6.2x 5.9x 5.9x 5.9x EV/EBITDA 4.9x 5.9x 8.0x 6.7x 6.9x 6.4x 5.7x 5.3x 5.0x 4.7x EBIT/Total Assets 33.4% 23.6% 15.6% 16.3% 14.0% 14.2% 14.8% 14.6% 13.7% 12.9% FCF/sh -sustaining CAPEX (US$) 5.41 4.09 2.99 3.42 3.47 3.75 4.12 4.35 4.41 4.49 FCF/sh - total CAPEX 3.42 0.30 -0.72 1.09 1.44 1.96 2.48 2.72 3.08 3.14 FCF Yield (sustaining CAPEX) (%) 16.5% 12.5% 9.1% 10.4% 10.6% 11.4% 12.5% 13.2% 13.4% 13.7% FCF Yield (total CAPEX) (%) 10.4% 0.9% -2.2% 3.3% 4.4% 6.0% 7.6% 8.3% 9.4% 9.5% Price / cash earnings Ltd 7.0x 7.7x 9.2x 7.9x 8.2x 7.7x 7.1x 6.8x 6.8x 6.7x Price / Book Ltd 3.3x 2.7x 2.5x 2.2x 2.1x 1.9x 1.8x 1.7x 1.5x 1.4x ROIC (%) 38% 19% 12% 13% 11% 12% 13% 15% 15% 15% ROE - underlying NPAT (%) 46% 31% 19% 21% 17% 17% 17% 17% 15% 14% Gearing FY11 FY12 FY13 FY14F FY15F FY16F FY17F FY18F FY19F FY20F Net Debt (net cash) 5,823 23,549 27,510 25,481 23,532 19,176 12,258 4,308 -5,365 -15,411 Net Debt / (Net Debt + Equity) (%) 9% 26% 27% 23% 20% 16% 10% 3% -4% -13% Net Debt / Equity (%) 10% 35% 37% 29% 25% 19% 11% 4% -4% -11% Interest cover (x) (EBITDA) 66.12 46 22.23 29 26 30 39 56 116 -446 Margins FY11 FY12 FY13 FY14F FY15F FY16F FY17F FY18F FY19F FY20F EBITDA margin 51% 46% 41% 47% 46% 47% 48% 49% 48% 48% EBIT margin 44% 37% 30% 35% 33% 33% 34% 35% 34% 34% NPAT margin 33% 26% 16% 21% 19% 19% 21% 21% 21% 22% Tax rate 21% 31% 35% 30% 33% 33% 33% 33% 33% 33%

Source: Company data, Credit Suisse estimates

BHP Billiton (BLT.L) 18 17 June 2014

Companies Mentioned (Price as of 09-Jun-2014) Anglo American Plc (AAL.L, 1471.5p) BHP Billiton (BLT.L, 1904.0p, NEUTRAL, TP 2250.0p) BHP Billiton (BHP.AX, A$36.24, NEUTRAL, TP A$38.0) BP (BP.L, 505.6p) Chevron Corp. (CVX.N, $124.37) ConocoPhillips (COP.N, $80.85) Devon Energy Corp (DVN.N, $74.45) Encana Corp. (ECA.N, $23.35) ExxonMobil Corporation (XOM.N, $101.52) Freeport-McMoRan Copper & Gold (FCX.N, $34.66) Glencore (GLEN.L, 326.3p) Marathon Oil Corp (MRO.N, $37.84) Norsk Hydro (NHY.OL, Nkr32.95) Pioneer Natural Resources (PXD.N, $220.47) Potash Corp - Saskatchewan (POT.N, $35.55) Rio Tinto (RIO.AX, A$59.4) Rio Tinto (RIO.L, 3172.5p) Teck Resources Ltd (TCKb.TO, C$23.61) Vale (VALE.N, $13.29)

Disclosure Appendix Important Global Disclosures The analysts identified in this report each certify, with respect to the companies or securities that the individual analyzes, that (1) the views expressed in this report accurately reflect his or her personal views about all of the subject companies and securities and (2) no part of his or her compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

3-Year Price and Rating History for BHP Billiton (BLT.L)

BLT.L Closing Price Target Price Date (p) (p) Rating 02-Aug-11 2214.50 3160.00 N 04-Oct-11 1667.00 2800.00 O 13-Apr-12 1889.00 2460.00 11-Jul-12 1811.00 2100.00 N 07-Jan-13 2169.00 2400.00 03-Apr-13 1900.00 2250.00 25-Jun-13 1689.50 2100.00 17-Jul-13 1868.00 2250.00 18-Jul-13 1881.00 2100.00 30-Jul-13 1880.00 2250.00 NEUTRAL OUTPERFORM * Asterisk signifies initiation or assumption of coverage.

3-Year Price and Rating History for BHP Billiton (BHP.AX)

BHP.AX Closing Price Target Price Date (A$) (A$) Rating 03-Aug-11 40.15 47.00 N 04-Oct-11 33.86 45.00 O 11-Jul-12 31.05 35.00 N 01-Nov-12 33.82 36.00 07-Jan-13 37.81 40.00 03-Apr-13 32.23 35.00 25-Jun-13 30.81 34.00 26-Aug-13 35.58 38.00 * Asterisk signifies initiation or assumption of coverage. NEUTRAL OUTPERFORM

The analyst(s) responsible for preparing this research report received Compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities

BHP Billiton (BLT.L) 19 17 June 2014

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Price Target: (12 months) for BHP Billiton (BLT.L) Method: We set our target price of A$38/GBp2,250 in line with our discounted cash flow (DCF) sum-of-parts (SOP) valuation. Weighted average cost of capital (WACC) of 9%. We model (principally) in USD and over life-of-mine for BHP's long life operations. Valuation includes our assessment of the Australian Government's proposed new mining taxes.

Risk: Risks to our BHP price targets of A$38 / GBp2250 include commodity price risk (especially Chinese growth expectations), mining operational risk and regulatory risk (taxes and royalty rates, and possible future carbon taxes).

BHP Billiton (BLT.L) 20 17 June 2014

Price Target: (12 months) for BHP Billiton (BHP.AX) Method: We set our target price of A$38 / GBp2250 in line with our discounted cash flow (DCF) sum-of-parts (SOP) valuation. Weighted average cost of capital (WACC) of 9%. We model (principally) in USD and over life-of-mine for BHP's long life operations. Valuation includes our assessment of the Australian Government's proposed new mining taxes.

Risk: Risks to our BHP price targets of A$38 / GBp2250 include commodity price risk (especially Chinese growth expectations), mining operational risk and regulatory risk (taxes and royalty rates, and possible future carbon taxes).

Please refer to the firm's disclosure website at https://rave.credit-suisse.com/disclosures for the definitions of abbreviations typically used in the target price method and risk sections.

See the Companies Mentioned section for full company names The subject company (BLT.L, BHP.AX, FCX.N, BP.L, AAL.L, GLEN.L, PXD.N, RIO.AX, CVX.N, POT.N, COP.N, DVN.N, ECA.N, MRO.N, RIO.L, VALE.N, XOM.N) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (BP.L, AAL.L, GLEN.L, PXD.N, RIO.AX, COP.N, DVN.N, ECA.N, RIO.L, XOM.N) within the past 12 months. Credit Suisse provided non-investment banking services to the subject company (BLT.L, BHP.AX, BP.L, AAL.L, GLEN.L, PXD.N, RIO.AX, POT.N, COP.N, DVN.N, ECA.N, MRO.N, RIO.L, VALE.N, XOM.N) within the past 12 months Credit Suisse has managed or co-managed a public offering of securities for the subject company (BP.L, AAL.L, GLEN.L, RIO.AX, DVN.N, ECA.N, RIO.L, XOM.N) within the past 12 months. Credit Suisse has received investment banking related compensation from the subject company (BP.L, AAL.L, GLEN.L, PXD.N, RIO.AX, COP.N, DVN.N, ECA.N, RIO.L, XOM.N) within the past 12 months Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (BLT.L, BHP.AX, FCX.N, BP.L, AAL.L, GLEN.L, PXD.N, RIO.AX, CVX.N, POT.N, COP.N, DVN.N, ECA.N, MRO.N, RIO.L, VALE.N, XOM.N) within the next 3 months. Credit Suisse has received compensation for products and services other than investment banking services from the subject company (BLT.L, BHP.AX, BP.L, AAL.L, GLEN.L, PXD.N, RIO.AX, POT.N, COP.N, DVN.N, ECA.N, MRO.N, RIO.L, VALE.N, XOM.N) within the past 12 months As of the date of this report, Credit Suisse makes a market in the following subject companies (FCX.N, PXD.N, CVX.N, POT.N, COP.N, DVN.N, ECA.N, MRO.N, VALE.N, XOM.N). As of the end of the preceding month, Credit Suisse beneficially own 1% or more of a class of common equity securities of (RIO.AX). Credit Suisse has a material conflict of interest with the subject company (GLEN.L) . Credit Suisse Securities (Europe) Limited is acting as financial advisor in connection with the GlencoreXstrata sale of its interest in the Las Bambas copper mine project in Peru to a consortium owned 62.5% by MMG Limited, 22.5% by GUOXIN International Investment Corporation Limited and 15.0% by CITIC Metal Co. Limited. Credit Suisse has a material conflict of interest with the subject company (RIO.AX) . Credit Suisse is acting as advisor to Imerys on the proposed acquisition of the Luzenac Talc Group from Rio Tinto.

For other important disclosures concerning companies featured in this report, including price charts, please visit the website at https://rave.credit- suisse.com/disclosures or call +1 (877) 291-2683. Important Regional Disclosures Singapore recipients should contact Credit Suisse AG, Singapore Branch for any matters arising from this research report. The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (BLT.L, BHP.AX, FCX.N, TCKb.TO, BP.L, NHY.OL, AAL.L, GLEN.L, PXD.N, RIO.AX, CVX.N, POT.N, COP.N, DVN.N, ECA.N, MRO.N, RIO.L, VALE.N, XOM.N) within the past 12 months Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares. Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml. Credit Suisse Securities (Europe) Limited (Credit Suisse) acts as broker to (RIO.L). The following disclosed European company/ies have estimates that comply with IFRS: (BLT.L, BP.L, AAL.L, RIO.AX, RIO.L, XOM.N). Credit Suisse has acted as lead manager or syndicate member in a public offering of securities for the subject company (BP.L, AAL.L, GLEN.L, PXD.N, RIO.AX, COP.N, DVN.N, ECA.N, RIO.L, XOM.N) within the past 3 years. As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.

BHP Billiton (BLT.L) 21 17 June 2014

Principal is not guaranteed in the case of equities because equity prices are variable. Commission is the commission rate or the amount agreed with a customer when setting up an account or at any time after that. To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. Credit Suisse Equities (Australia) Limited ...... Paul McTaggart ; Martin Kronborg ; Justin Teo Credit Suisse Securities (Europe) Limited...... Michael Shillaker ; James Gurry ; Liam Fitzpatrick

For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at https://rave.credit- suisse.com/disclosures or call +1 (877) 291-2683.

BHP Billiton (BLT.L) 22 17 June 2014

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