Escondida Site Visit 240404

MINERA ESCONDIDA

ANALYSTS VISIT

April 24th, 2004

Slide 2

Presentation Content

• Escondida Overview• Operations• Financial Overview• Business Strategy• Growth Opportunities• Marketing• Current Activities

Slide 3

Northern Chile’s Atacama Desert,160 km South East of Antofagasta

TATAL

INCA DE ORO

EL SALVADORCHAÑARAL AR

GEN

TIN

A

COLOSO

ANTOFAGASTA

MEJILLONES

ZALDIVARMONTURAQUI

ESCONDIDA

CALAM A

CHUQUICAMATA

CH

ILE

TOCOPILLA

POTRERILLOS

BOLI

VIA

World’s Premium Copper Region

Cerro ColoradoQuebrada BlancaCollahuasi

El AbraChuquicamata

Radomiro Tomic

Michilla Lince

Mantos Blancos

El Tesoro

EscondidaZaldivar

El Sa lvadorManto VerdeLa Candelaria

El IndioAndacollo

Los Pelambres

El Soldado Andina

Los Bronces El Teniente

Lomas Bayas

Spence

Slide 4

Aerial View of MELEscondida

Norte

Oxide Leach Pads

Main Pit

Phase IV Plant site

ZaldivarPit

HamburgoTails

Concentrator

5 kmN

ZaldivarLeach Pads

Slide 5

Facilities Layout

HamburgoWaste Dump

Limit

E. Norte Waste Dump

Limit

Main Pit Ultimate

Limit

E. Norte Pit Ultimate

Limit

Northern Waste

Dump Limit

CMZ Property

Limit

Phase IV Plant

site

5 km

N

Slide 6

Coloso Filter & Port

Coloso Filter & Port Facilities

Slide 7

Escondida’s Strategy Builds on its Strengths to Maximize Long Term Value

Strong Cash Flow

Strong Cash Strong Cash FlowFlow

Low Cost ProducerLow Cost Low Cost ProducerProducer

Strong Credit Ratings

Strong Strong Credit Credit RatingsRatings

Stable CountryStable Stable

CountryCountry

Unequalled Resource

Unequalled Unequalled ResourceResource

High Quality ConcentrateHigh Quality High Quality ConcentrateConcentrate

Strong SponsorsStrong Strong

SponsorsSponsors

Ability to Manage

Expansions

Ability to Ability to Manage Manage

ExpansionsExpansions

Diversified Sales BaseDiversified Diversified Sales BaseSales Base

World’s Largest

Copper Mine

WorldWorld’’s s Largest Largest

Copper MineCopper Mine

Slide 8

World’s Largest Copper Mine

Source: Brook Hunt & Associates, Estimated year 2003, Escondida FY03 and Escondida Laguna SecaBudget 2004

L ead ing C op per M ine Sites

C o pp er Pro d uction ( Cu Payable '000 to n nes)

E sc ond ida

Los P e lambres

Morenci

E l T en ien te

C huqu icamata

Collahuas i

And ina

B ingham Canyon

Radomiro Tom ic

Batu Hijau

P T Freeport Indones ia

KG HM P o lish Cu

Laguna S eca

- 2 00 40 0 6 00 80 0 1.00 0 1 .2 00Copper Product ion ( Cu Payable '000 tonnes)

Leading Copper Pro ducers C ompanies

S PCC

A nto fag asta plc

M IM Holding s

KGHM P olska Mie dz

An glo Am erica n plc

F-M cM Co ppe r & Gold

Grupo M exic o

Rio Tint o

Ph elps Dod ge

BHP Billiton

E scond ida

Code lc o

0 500 1.000 1.500 2.000

Lag un a S eca

Slide 9

Sponsored By World’s Premier Metals & Mining Houses

BHP Billiton LimitedBHP Billiton Limited100% 100%

BHP BHP EscondidaEscondida Inc Inc 57.5%57.5%

Rio Rio TintoTinto Plc Plc 100%100%

Rio Rio TintoTintoEscondidaEscondida Limited Limited

30%30%

Mitsubishi Corporation 60%Mitsubishi Corporation 60%Mitsubishi Materials Corp 20%Mitsubishi Materials Corp 20%

Nippon Mining & Metals Co Ltd 20%Nippon Mining & Metals Co Ltd 20%

Japan Japan EscondidaEscondidaCorporation Corporation

10%10%

International FinanceInternational FinanceCorporationCorporation

2.5%2.5%

MineraMinera EscondidaEscondida LimitadaLimitada

Owners CouncilOwners Council

Slide 10

Unequalled Copper Resource

Source: Brook Hunt Data for estimated year 2003.Escondida FY03.

Ore Head Grades Against Copper in Concentrate Production

Ok TediCandelaria

PT Freeport

Escondida w ith Cathodes

Escondida

Bingham Canyon

Batu Hijau

High land Valley

Los PelambresCollahuasi

Andina

Los BroncesCuajonesAlumbrera

100

300

500

700

900

1.100

1.300

1.500

1.700

1.900

2.100

0,00 0,50 1,00 1,50 2,00Head Grade (% )

Copp

er in

Con

cent

rate

( Pa

yabl

e in

Mlb

s)

Slide 11

Total Ore Reserves and Mineral Resources:Official declaration at June 30, 2003, JORC Competent Person: Dr J M Gilligan

Ore Tonnes Grade Metal Tonnes Grade MetalType (millions) (%Cu) (mlbs) (millions) (%Cu) (mlbs)

Sulphide 1,514 1.21 34,293 2,121 1.12 52,550 LG Float 570 0.60 6,026 1,396 0.59 18,254

Escondida LG Leach 673 0.43 6,442 Mixed 51 1.04 478 111 0.82 2,013 Oxide 191 0.71 2,617 248 0.65 3,567 Sulphide 502 1.44 13,541 649 1.33 19,014

Escondida Norte LG Float 95 0.61 998 642 0.58 8,190 Mixed 43 0.81 761 Oxide 105 0.77 1,478 142 0.79 2,476

Sub-Totals All Sulphide 2,680 1.10 54,859 5,481 0.86 104,449 Mixed 51 1.04 478 154 0.82 2,775 Oxide 296 0.73 4,094 390 0.70 6,043

TOTAL All Types 3,027 59,431 6,025 113,266

Ore Reserves Mineral Resources

Slide 12

Copper Production & Head Grade

Material Milled, Headgrade and Copper Production

0

200

400

600

800

1,000

1,200

FY91 FY92 FY93 FY94 FY95 FY96 FY97 FY98 FY99 FY00 FY01 FY02 FY03 FY040.00%

0.50%

1.00%

1.50%

2.00%

2.50%

3.00%

3.50%

Tonnes milled (00 000) Production (Cu Contained) (kt) Headgrade (%)

YTD

Slide 13

Concentrate Grade Long Term:Historic Annual Copper in Concentrate (All Production)

32%

34%

36%

38%

40%

42%

44%

46%

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003Fiscal Years

Conc

entra

te G

rade

(%Tc

u)

Slide 14

Escondida Schematic Deposit Evolution Profile:Increasingly complex & variable geological conditions

⇐ ⇐ ⇐ ⇓ variability ⇓ ⇒ ⇒ ⇒

py >> cp

cc

cp + py

Cu - Fe Oxides

cc+cv+cp+py

“1991-1997” “1998-2010”

“>2010”

Slide 15

Ore-Related Concentrate Grade & Quality Drivers• Copper Mineralogy

– Chalcocite to chalcopyrite ratios decrease with depth• Pyrite Content

– Increasing pyrite content over last several years• Sulfide-Sulfide and Sulfide-Gangue Intergrowths

– Dependent on alteration, lithology, and degree of enrichment• Trace Element Geochemistry

– Zonation of trace and minor elements within ore deposit– Elements such as Ag, As, and Cd contained within copper sulfides,

with high recovery

Slide 16

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

Slide 17

Phase IV: Laguna Seca Concentrator:Detailed Site Layout

Slide 18



Slide 19

Escondida Organisational Structure

VPExternal & Corporate Affairs

Mauro Valdés

VPHuman Resources

Mark Stone

VPMine

Larry Hartley

VPFinance

Alfredo Atucha

VP (A)Process

Frank Cappelli

VPOperations Services

Jorge Muñoz

ManagerHealth & SafetyHans Sandoval

President (A)MEL

Kevin O'Kane

Slide 20

Employment

•Avg workforce age – 40 years

•Avg length of service – 8 years•Employee turnover – 0.38%•Attendance rates – 96,6%+ •Female employees – 3.9%•Expatr iate employees – 0.53%

Antofagasta Coloso Escondida Santiago Total MelExpatriates 2 0 11 0 13Operators 0 70 1.698 0 1.768Technical & Admin. 21 0 100 0 121Professional/Mgrs 49 17 475 10 551Total 72 87 2.284 10 2.453

Permanent Contractors 2.135

Capital Projects 1.167

Total Contractors 3.302

Note: As at 30 September 2003

Slide 21

Safety – Lost Time Frequency Rate (LTIFR)

1.501.00

2.001.65

3.77

4.54

2.81

3.43

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

1998 1999 2000 2001 2002 2003 2004 YTDA 2004YTDB

Fiscal Years

LTIF

R pe

r mm

h

Slide 22

Minera Escondida Ltda.

Dimensions Now Final

E-W 2.2km 3.5km

N-S 3.2km 4.8kmDepth 465m 750m

Escondida Mine Pit

Slide 23

Escondida Mining Fleet FY-04

• Electric Rope Shovels – Total 14- P&H 4100 XPB (73 yd Dipper) 3- BE 495HR (67 yd Dipper) 1- BE 495 (55 yd Dipper) 9- BE 395 (30 yd Dipper) 1

• Haul Trucks - Total 92- Komatsu 830E (240 mt) 28- CAT 793 B&C (240 mt) 48- CAT 797 (380 mt) 16

• Front End Loaders – Total 3- CAT 994 (23 yd Bucket) 3

• Drills – Total 15- BE 49R R2s (8), IR DMM2s (2), DM45 (2), CM780 (1) & P&H 250XPs (2)

• Auxiliary Equipment – Total 52

Slide 24

Mine Production – ‘000s TPD Ex-Pit

681725

835901

814858

678

0

100

200

300

400

500

600

700

800

900

1000

1998 1999 2000 2001 2002 2003 2004Fiscal Years

'000s

Ton

nes

per D

ay

Histor y YTD

Slide 25

Los Colorados Concentrator

Slide 26

Laguna Seca Production – ‘000s TPD Milled

51.5

95

0

10

20

30

40

50

60

70

80

90

100

2002 2003 2004Fiscal Years

'000s

Ton

nes p

er D

ay

Histor y YTD

Slide 27

Concentrate Grade Ex-Coloso - % Cu Contained

41.4% 39.8% 39.9% 39.8%35.6% 37.3% 34.7%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

1998 1999 2000 2001 2002 2003 2004Fiscal Years

Conc

entra

te G

rade

% C

u

Histor y YTD

Slide 28

Coloso Port – ‘000ts Concentrate Shipped

2,145 2,1051,813 1,682

2,056 1,8532,073

0

500

1000

1500

2000

2500

1998 1999 2000 2001 2002 2003 2004Fiscal Years

'000s

Ton

nes S

hipp

ed

Histor y YTD

Slide 29

Copper Production – ‘000ts Cu Contained in Concentrate

838 845726

611755

641

860

0

100

200

300

400

500

600

700

800

900

1000

1998 1999 2000 2001 2002 2003 2004Fiscal Years

'000s

Ton

nes o

f Cu

Cont

ained

Histor y YTD

Slide 30

Oxide Production – ‘000s Tonnes of Cathodes

56.4

150.7 145.1 150.5136.7

113

0

20

40

60

80

100

120

140

160

1998 1999 2000 2001 2002 2003 2004Fiscal Years

'000s

Ton

nes

Histor y YTD

Slide 31

Copper Production – ‘000ts Cu Contained

838 845726

611755

641

56151

145151

137

113

860

860 894996

871766

892

754

0

200

400

600

800

1000

1200

1998 1999 2000 2001 2002 2003 2004Fiscal Years

'000s

Ton

nes

of C

u Co

ntain

ed

Concentr ate Cathodes Total

Slide 32



Slide 33

C1 Unit Costs in the 1st QuartileEstimated 2003 Brook Hunt, Copper Industry C1 Cost Curve

Esco

ndid

a

0

25

50

75

100

125

0 5000 10000 15000 20000 25000

Cumulative Production (Payable in Mlbs)

C1

Cash

Ope

ratin

g Co

st (U

S c/

lb)

Brook Hunt Estimated 2003, Escondida FY03

Slide 34

C2 Unit CostsEstimated 2003 Brook Hunt, Copper Industry C2 Cost Curve

Esco

ndid

a

0

25

50

75

100

125

150

0 5000 10000 15000 20000 25000


C2 P

rodu

ctio

n C

ost (

US c

/lb)


Slide 35

Only 3 Producers with a Lower C3 Unit Cost


Estimated 2003 Brook Hunt, Copper Industry C3 Cost Curve

Esco

ndid

a

0

25

50

75

100

125

150

175

0 5000 10000 15000 20000 25000


C3

Prod

uctio

n C

ost (

US

c/lb

)

Slide 36

Optimize Escondida’s Net Present ValueWe will optimize NPV by:

– Taking a leadership role within the industry and adopting a flexible production profile

– Continually focusing on cost reduction– Leveraging Six Sigma 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

STRATEGIC KEY ELEMENT NPV

Slide 37

Achieve Maximum Potential with EmployeesWe 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

STRATEGIC KEY ELEMENT PEOPLE

Slide 38

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

– Utilizing the BHP Billiton Base Metals Marketing structure

– Reducing the impact of variable concentrate grades

– Emphazising continuous and proactive interaction between theOperational and Marketing areas

– Maintain status as a quality supplier through producing improved andpredictable levels of Grade A quality cathode

STRATEGIC KEY ELEMENT CUSTOMERS

Slide 39



Slide 40

Sulphide Leach – Project Summary• 1.6 billion t sulphide ore at 0.6%tcu• Current stockpile 100mt• Copper recovery by:

– ROM leaching– Solvent extraction– Electrowinning

• Expected recovery 36%• Approx 50% of Cu is chalcopyrite• Initial copper production 180 ktpa• Increasing to 245 ktpa as ore supply

increases and oxide T/H capacitybecomes available

• Initial capital $ 870M (incl. water supply)• Operating costs < $0.35/lb Cu

Crush & Leach + Sulphide/ROM Leach OperationsEW Copper Production

-

50

100

150

200

250

300

350

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

Fiscal Period

EW C

oppe

r Pr

oduc

tion

- k

t Sulph ide/ROM Leach

Crush Leach

Crush Leach EW Capacity

EW Capacity with ROM Leach

60-100 Mtpa @ 0.6% TCu

Solvent Extraction

Electrowinning

180-245 ktpa cathode

raffinate

Air

Slide 41

Bioleaching Technology• Sulphide leaching requires ferric iron as oxidant• Conversion of ferrous iron to ferric is catalyzed by bacteria

– Without bacteria, leaching is slow due to lack of ferric iron• Main bacteria are mesophiles such as thiobacillus ferrooxidans• Mesophiles occur naturally in ore and thrive in acidic conditions at

temperatures from 20-40C• Bacteria require oxygen as does the oxidation reactions

– Forced aeration is key for high bacterial activity and fast leaching• The process is simple and robust

Slide 42



Slide 43

Diverse Customer BaseCOPPER CONCENTRATE SALES BY DESTINATION - 2003

Japan25.8%

Chile22.1%

South Korea8.9%

Germany8.0%

Other14.3%

Merchants7.3%

China6.1%

Finland0.4%

Iran0.4%

India4.1%

Sweden3.4%

Brazil3.3%

Philippines3.0%

Bulgaria2.7%

South Africa1.6%

Spain2.8%

Slide 44

Diverse Customer BaseCATHODE SALES BY DESTINATION - 2003

France11.8%South Korea

10.8%

Brazil6.7%

Italy5.9%

Canada3.6%

Spain3.0%

UK2.0% Turkey

0.8%

Intermediaries / BMAG21.9%

Japan8.2%

Taiwan8.5%

Germany12.5%

Chile4.2%

Slide 45



Slide 46

What caused the water problem between Novembre 2003 andJanuary 2004:

•Deteriorated water-pulp separation from tailings•Inability to increase fresh water supply to Laguna Seca Concentrator to compensate reduced reclaim water return•Hydraulic restrictions in the tailings transport system did not allowall tailings to report to the impoundment

Water Issue

Slide 47

1. Secured fresh water to the Laguna Seca Concentrator through an additionalwater line

2. Implemented an aggressive maintenance program to restore wells in variouswell fields

3. Identified mineral ore types that cause water-pulp separation problems, allowing the mine to better blend plant feed

4. Identified a flocculant that allows the production of higher underflow densityat lower yield stress and viscosity

5. Will construct a protective wall around the pump barges in the tailingsimpoundment

6. Will embark on an engineering program to eliminate hydraulic problems in the tailings transport system

7. Drilled new wells, allowing MEL to pump up to legal and environmental limits8. Established a water strategy that will secure future water supply to the

operation

Water Issue - How MEL is solving the water problem

Slide 48

Action Plans – HSEC

• Simplification and streamlining proposal of the HSEC systems underthe BHP Billiton Standards

• Employ the Landmark process to engage the workforce and ensuretheir 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

Slide 49

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

Slide 50

• Implementation of an employee climate survey

• Continuous development of a team based work structure

• To build an integrated Performance Management system whichlinks competency development, individual performance on the joband remuneration

• To perform the second teams check-up (HISI)

Action Plans – PEOPLE

Slide 51

• Eliminate backlog of concentrate deliveries arising from Apollo cuts

• Complete Sales Book restructuring

– Reduced sales to Merchants

– Increase sales to emerging smelter markets, eg., India andChina

– Initiate spot sales

• Continue to push transition to global market terms for concentrates

• Close cooperation with Escondida Operations to address concentrategrade reduction and variability issues

Action Plans – CUSTOMERS

Slide 52

Head Grade - % Contained Copper

2.75%2.22%

1.95% 1.89% 1.69% 1.54% 1.37%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

1998 1999 2000 2001 2002 2003 2004Fiscal Years

Head

Gra

de %

Cu

History YT D

Slide 53

ORE PRIMARYCRUSHER

STOCKPILE

AGLOMERATION

CRUSHING &SCREENING

SOLVENTEXTRACTION

ELECTRO-WINNINGRICH ELECTROLYTE

LEAN ELECTROLYTE

RAFFINATE

LEACH PAD

CONVEYING SYSTEM

COPPER CATHODES150.000 TPA

PLS

WASHING

STRIPPING

EXTRACTION

ORGÁNIC

SULFÚRIC ACID

WATER

ORGÁNICRECOVERY

Oxide Flowsheet

Documents

Escondida Site Visit 240404