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MINERA ESCONDIDA

ANALYSTS VISIT
April 24th, 2004

Presentation Content
Escondida Overview
Operations
Financial Overview
Business Strategy
Growth Opportunities
Marketing
Current Activities

Slide 2

TOCOPILLA

CALAM A

CHILE

MEJILLONES

ANTOFAGASTA
COLOSO

Cerro Colorado
Collahuasi
Radomiro Tomic
Michilla Lince
Mantos Blancos
Lomas Bayas
El Tesoro
Manto Verde

Quebrada Blanca

Chuquica mata
Spence

Los Bronces

Slide 3

TATAL

Escondida
Zaldivar
El Sa lvador

El Indio
Los Pela mbres

El Soldado

ESCONDIDA

El Abra

La Candelaria
Andacollo

ZALDIVAR
MONTURAQUI

Andina
El Teniente

EL SALVADOR
CHAARAL
POTRERILLOS
INCA DE ORO

ARGENTINA

Northern Chiles Atacama Desert,


160 km South East of Antofagasta

CHUQUICAMATA

BOLIVIA

Worlds Premium Copper Region

Zaldivar
Aerial
View
Leach
Padsof MEL

Escondida
Norte

Zaldivar
Pit
Concentrator
Main
Pit

Oxide
Leach Pads

Slide 4

Phase IV
Plant site

Hamburgo
Tails

5 km

Facilities Layout
CMZ
Property
Limit

E. Norte
Waste Dump
Limit

Northern
Waste
Dump Limit

E. Norte Pit
Ultimate
Limit

Main Pit
Ultimate
Limit
Phase
IV Plant
site

N
5 km

Slide 5

Hamburgo
Waste Dump
Limit

Coloso Filter & Port

Coloso Filter & Port Facilities


Slide 6

Escondidas Strategy Builds on its Strengths to Maximize Long


Term Value

Strong
Strong
Credit
Credit
Ratings
Ratings

World
World
s
Worlds
Largest
Largest
Copper
Copper Mine
Mine

Strong
Strong Cash
Cash
Flow
Flow
Low
Low Cost
Cost
Producer
Producer

Strong
Strong
Sponsors
Sponsors

Diversified
Diversified
Sales
Sales Base
Base
Ability
Ability to
to
Manage
Manage
Expansions
Expansions

Slide 7

Stable
Stable
Country
Country

High
High Quality
Quality
Concentrate
Concentrate

Unequalled
Unequalled
Resource
Resource

Worlds Largest Copper Mine


L ead ing C op per M ine Sit es

Lea ding Coppe r P ro ducers C ompa nies

L a gu n a S e ca

E sc on d id a

C ode lc o

P T Free p o rt
In d o n es ia

Lag un a S eca

E scond ida

BH P Billiton

C hu q u ica m a t a
KG HM P o lish
Cu

Ph elps D od ge
R io Tint o

E l T en ie n te
Grupo M exic o

M o re n ci

F-M cM Co ppe r &


Gold

L o s P e la m b re s

An glo Am erica n
plc

Co lla h ua s i

KGH M P olska
Mie dz

Ba t u Hija u

M IM H olding s

Ra d o m iro
To m ic

A nto fag asta plc

B ing h a m
Ca n yo n

S PC C

An d in a

0
-

2 00

40 0

6 00

80 0

1.00 0

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

Source:

Slide 8

1 .2 00

500

1.000

1.500

Coppe r P roduct ion ( Cu Pa ya ble '00 0 tonne s)

Brook Hunt & Associates, Estimated year 2003,


Escondida FY03 and Escondida Laguna Seca
Budget 2004

2.000

Sponsored By Worlds Premier Metals & Mining Houses


BHP Billiton Limited
100%

BHP Escondida Inc


57.5%

Rio Tinto Plc


100%

Rio Tinto
Escondida Limited
30%

Mitsubishi Corporation 60%


Mitsubishi Materials Corp 20%
Nippon Mining & Metals Co Ltd 20%

Japan Escon dida


Corporation
10%

Owners Council

Minera Escondida Limitada

Slide 9

International Finance
Corporation
2.5%

Unequalled Copper Resource


Ore Head Grade s Against Copper in Concentrate Production
2.100

E scon dida w ith


Ca thod es

Copper in Concentrate ( Payable in Mlbs)

1.900
PT Freep ort

1.700

E sco nd id a

1.500
1.300
1.100
900
Ba tu Hijau

700
500
300

Bingh am Ca nyon

L os P elam b re s
Ca nde laria
And in a
Ok Tedi

High la nd Valley
Alu m brera Cua jone s

Co lla hua si

Los Bronces

100
0,00

0,50

1,00
1,50
Head G rade (% )

2,00

Source: Brook Hunt Data for estimated year 2003.


Escondida FY03.

Slide 10

Total Ore Reserves and Mineral Resources:

Official declaration at June 30, 2003, JORC Competent Person: Dr J M


Gilligan
Ore Reserves

Escondida

Escondida Norte

Mineral Resources

Ore

Tonnes

Grade

Metal

Tonnes

Grade

Metal

Type

(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

673

0.43

6,442

LG Leach
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

LG Float

95

0.61

998

642

0.58

8,190

43

0.81

761

Mixed
Oxide
Sub-Totals

TOTAL

Slide 11

105

0.77

1,478

142

0.79

2,476

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

59,431

6,025

All Sulphide

All Types

3,027

113,266

Copper Production & Head Grade


Material Milled, Headgrade and Copper Production

1,200

Tonnes milled (00 000)

Production (Cu Contained) (kt)

3.50%

Headgrade (%)
3.00%

1,000

2.50%
800
2.00%
600
1.50%
400
1.00%
200

0.50%

0.00%

0
FY91

Slide 12

FY92

FY93

FY94

FY95

FY96

FY97

FY98

FY99

FY00

FY01

FY02

FY03

FY04
YTD

Concentrate Grade Long Term:

Historic Annual Copper in Concentrate (All Production)


46%

Concentrate Grade (%Tcu)

44%
42%
40%
38%
36%
34%
32%
1992

1993

1994

1995

1996

1997

Fiscal Years

Slide 13

1998

1999

2000

2001

2002

2003

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
py >> cp

Slide 14

>2010

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 15

Phase IV Expansion Components


An additional mine fleet
(1) 65 yd 3 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 16

Phase IV: Laguna Seca Concentrator:


Detailed Site Layout

Slide 17

Presentation Content
Escondida Overview
Operations
Financial Overview
Business Strategy
Growth Opportunities
Marketing
Current Activities

Slide 18

Escondida Organisational Structure


President (A)
MEL
Kevin O'Kane
VP
External & Corporate Affairs
Mauro Valds

VP
Human Resources
Mark Stone

VP
Mine
Larry Hartley

VP
Finance
Alfredo Atucha

VP (A)
Process
Frank Cappelli

VP
Operations Services
Jorge Muoz

Manager
Health & Safety
Hans Sandoval

Slide 19

Employment
Expatriates
Operators

Antofagasta
2
0

Coloso
0
70

Escondida
11
1.698

Santiago Total Mel


0
13
0
1.768

Technical & Admin.


Professional/Mgrs

21
49

0
17

100
475

0
10

121
551

Total

72

87

2.284

10

2.453

Permanent Contractors

2.135

Capital Projects

1.167

Total Contractors

3.302

Avg workforce age 40 years


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

Note: As at 30 September 2003


Slide 20

Safety Lost Time Frequency Rate (LTIFR)


5.00

4.54

4.50

3.77

4.00

3.43

LTIFR per mmh

3.50

2.81

3.00
2.50
2.00
1.50

2.00
1.65

1.50
1.00

1.00
0.50
0.00
1998

1999

2000

2001
Fiscal Years

Slide 21

2002

2003

2004 YTDA

2004
YTDB

Dimensions

Now

Final

E-W

2.2km

3.5km

465m

750m

N-S

Minera Escondida
Ltda.
3.2km
4.8km

Depth

Slide 22

Escondida Mine Pit

Escondida Mining Fleet FY-04


Electric Rope Shovels Total
- P&H 4100 XPB (73 yd Dipper)
- BE 495HR (67 yd Dipper)
- BE 495 (55 yd Dipper)
- BE 395 (30 yd Dipper)

14
3
1
9
1

Haul Trucks - Total


- Komatsu 830E (240 mt)
- CAT 793 B&C (240 mt)
- CAT 797 (380 mt)

92
28
48
16

Front End Loaders Total


- CAT 994 (23 yd Bucket)

3
3

Drills Total

15

- BE 49R R2s (8), IR D MM2s (2), DM45 (2), C M780 (1) & P&H 250XPs (2)
Auxiliary

Slide 23

Equipment Total

52

Mine Production 000s TPD Ex-Pit


1000
900

835

'000s Tonnes per Day

800
700

678

681

901

858

814

725

600
500
400
300
200
100
0
1998

1999

2000

2001
Fiscal Years

Slide 24

2002
Histor y

2003

2004
YTD

Los Colorados Concentrator

Slide 25

Laguna Seca Production 000s TPD Milled


100
90

'000s Tonnes per Day

80
70
60
50

95

40
30

51.5

20
10
0
2002

2003
Fiscal Years

Slide 26

2004
Histor y

YTD

Concentrate Grade Ex-Coloso - % Cu Contained


45.0%
40.0%

Concentrate Grade % Cu

35.0%
30.0%
25.0%
20.0%

41.4%

39.8%

39.9%

39.8%

1999

2000

2001

35.6%

37.3%

2002

2003

15.0%

34.7%

10.0%
5.0%
0.0%
1998

Fiscal Years

Slide 27

Histor y

2004
YTD

Coloso Port 000ts Concentrate Shipped


2500

'000s Tonnes Shipped

2000

1500

1000

2,073

2,145

2,105

1,813

2,056
1,682

1,853

500

0
1998

1999

2000

2001
Fiscal Years

Slide 28

2002
Histor y

2003

2004
YTD

Copper Production 000ts Cu Contained in Concentrate


1000
900
'000s Tonnes of Cu Contained

800
700
600
500
400

860

838

845

726

300

755
611

641

200
100
0
1998

1999

2000

2001
Fiscal Years

Slide 29

2002
Histor y

2003

2004
YTD

Oxide Production 000s Tonnes of Cathodes


160
140

'000s Tonnes

120
100
80

150.7

145.1

150.5

60

136.7
113

40

56.4

20
0
1998

1999

2000

2001
Fiscal Years

Slide 30

2002
Histor y

2003

2004
YTD

Copper Production 000ts Cu Contained


1200

996
'000s Tonnes of Cu Contained

1000

860

894
56

800

151

892

871
145

766

137

754
113

151
600
400

860

838

845

726

611

755

641

200
0
1998

1999

2000

2001
Fiscal Years

Slide 31

2002
Concentr ate

2003
Cathodes

2004
Total

Presentation Content
Escondida Overview
Operations
Financial Overview
Business Strategy
Growth Opportunities
Marketing
Current Activities

Slide 32

C1 Unit Costs in the 1st Quartile


125
100
75

Esc ondida

C1 Cash Operating Cost (US c/lb)

Estimated 2003 Brook Hunt, Copper Industry C1 Cost Curve

50
25
0
0

5000

10000

15000

20000

Cumulative Production (Payable in Mlbs)

Brook Hunt Estimated 2003,


Escondida FY03

Slide 33

25000

C2 Unit Costs
Estimated 2003 Brook Hunt, Copper Industry C2 Cost Curve

125
100
Es condida

C2 Production Cost (US c/lb)

150

75
50
25
0
0

5000

10000

15000

20000

Cumulative Production (Payable in Mlbs)

Brook Hunt Estimated 2003, Escondida FY03

Slide 34

25000

Only 3 Producers with a Lower C3 Unit Cost


Estimated 2003 Brook Hunt, Copper Industry C3 Cost Curve

150
125
100

Escondida

C3 Production Cost (US c/lb)

175

75
50
25
0
0

5000

10000

15000

Cumulative Production (Payable in Mlbs)

Brook Hunt Estimated 2003, Escondida FY03

Slide 35

20000

25000

STRATEGIC KEY ELEMENT NPV

Optimize Escondidas 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 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

Slide 36

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

Slide 37

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
Utilizing the BHP Billiton Base Metals Marketing structure
Reducing the impact of variable concentrate grades
Emphazising continuous and proactive interaction between the
Operational and Marketing areas
Maintain status as a quality supplier through producing improved and
predictable levels of Grade A quality cathode

Slide 38

Presentation Content
Escondida Overview
Operations
Financial Overview
Business Strategy
Growth Opportunities
Marketing
Current Activities

Slide 39

Sulphide Leach Project Summary


60-100 Mtpa @ 0.6% TCu

1.6 billion t sulphide ore at 0.6%tcu


Current stockpile 100mt
Copper recovery by:
ROM leaching
Solvent extraction
Electrowinning
Expected recovery 36%

raffinate

Air

Solvent Extraction
180-245 ktpa cathode
Electrowinning

Approx 50% of Cu is chalcopyrite

Crush & Leach + Sulphide/ROM Leach Operations


EW Copper Production

Initial copper production 180 ktpa


Increasing to 245 ktpa as ore supply
increases and oxide T/H capacity
becomes available
Initial capital $ 870M (incl. water supply)
Operating costs < $0.35/lb Cu

350

300

250

Sulph id e/ROM Leach


Crus h Leach

200

Crush Leach E W Cap acity

150

100

Fiscal Perio d

Slide 40

2030

2029

2028

2027

2026

2025

2024

2023

2022

2021

2020

2019

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

50

2004

EW Copper Production - kt

EW Capacit y with ROM Le ach

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 41

Presentation Content
Escondida Overview
Operations
Financial Overview
Business Strategy
Growth Opportunities
Marketing
Current Activities

Slide 42

Diverse Customer Base


COPPER CONCENTRATE SALES BY DESTINATION - 2003

Germ any
8.0%
South Korea
8.9%

Merchants China
7.3%
6.1% India
4.1%
Sw eden
3.4%

Other
14.3%
Chile
22.1%

Brazil
3.3%
Philippines
3.0%
Spain
2.8%
Bulgaria
2.7%
South Africa
1.6%
Iran
0.4%

Japan
25.8%

Slide 43

Finland
0.4%

Diverse Customer Base


CATHODE SALES BY DESTINATION - 2003

Chile
4.2%

Canada
3.6%

Spain UK
3.0% 2.0%

Italy
5.9%

Turkey
0.8%
Intermediaries / BMAG
21.9%

Brazil
6.7%
Germany
12.5%

Japan
8.2%

Taiwan
8.5% South Korea
10.8%

Slide 44

France
11.8%

Presentation Content
Escondida Overview
Operations
Financial Overview
Business Strategy
Growth Opportunities
Marketing
Current Activities

Slide 45

Water Issue
What caused the water problem between Novembre 2003 and
January 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 allow
all tailings to report to the impoundment

Slide 46

Water Issue - How MEL is solving the water problem


1. Secured fresh water to the Laguna Seca Concentrator through an additional
water line
2. Implemented an aggressive maintenance program to restore wells in various
well 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 density
at lower yield stress and viscosity
5. Will construct a protective wall around the pump barges in the tailings
impoundment
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 limits
8. Established a water strategy that will secure future water supply to the
operation
Slide 47

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 Escondidas employees,
Adoption of DuPont Job Observation methodology

Slide 48

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 49

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)

Slide 50

Action Plans CUSTOMERS


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 and
China
Initiate spot sales
Continue to push transition to global market terms for concentrates
Close cooperation with Escondida Operations to address concentrate
grade reduction and variability issues
Slide 51

Head Grade - % Contained Copper


3.0%

Head Grade % Cu

2.5%
2.0%
1.5%

2.75%
2.22%

1.0%

1.95%

1.89%

1.69%

1.54%

1.37%

0.5%
0.0%
1998

1999

2000

2001
Fiscal Years

Slide 52

2002
History

2003

2004
YT D

Oxide Flowsheet

PRIMARY
CRUSHER

ORE

STOCKPILE

RAFFINATE

CRUSHING &
SCREENING

CONVEYING SYSTEM

PLS
LEACH PAD

EXTRACTION

AGLOMERATION
ORGNIC

SOLVENT
EXTRACTION

SULFRIC ACID

ORGNIC
RECOVERY
WASHING
WATER

COPPER CATHODES
150.000 TPA

STRIPPING

RICH ELECTROLYTE
LEAN ELECTROLYTE

Slide 53

ELECTRO-WINNING