BHP BILLITON PLC - BHP approves South Flank project

BHP approves South Flank project

BHP Billiton Plc
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Registered in England and Wales
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NEWS RELEASE
Release Time       IMMEDIATE
Date               14 June 2018
Release Number     07/18



BHP approves South Flank project

The BHP Board has today approved US$2.9 billion (BHP share; US$3.4 billion 100 per
cent) (1) in capital expenditure for the South Flank project in the central Pilbara,
Western Australia.

BHP President Operations, Minerals Australia, Mike Henry, said the South Flank
project will fully replace production from the 80 Mtpa (100 per cent basis) Yandi mine
which is reaching the end of its economic life.

“South Flank is a capital efficient project which offers attractive returns, and which was
approved following a thorough evaluation under BHP’s Capital Allocation Framework,”
Mr Henry said. “The project will create around 2,500 construction jobs, more than 600
ongoing operational roles and generate many opportunities for Western Australian
suppliers. It will enhance the average quality of BHP’s Western Australia Iron Ore
(WAIO) production and will allow us to benefit from price premiums for higher-quality
lump and fines products.”

The South Flank project expands the existing infrastructure at Mining Area C, and
involves construction of an 80 Mtpa crushing and screening plant, an overland
conveyor system, stockyard and train loading facilities, procurement of new mining
fleet and substantial mine development and pre-strip work.

First ore from South Flank is targeted in the 2021 calendar year, with the project
expected to produce ore for more than 25 years.

South Flank iron ore will contribute to an increase in WAIO’s average iron grade from
61 per cent to 62 per cent, and the overall proportion of lump from 25 per cent to
approximately 35 per cent. It is expected to have a strip ratio in line with the WAIO
average.

In June 2017, BHP approved an initial funding commitment of US$184 million (BHP
share), primarily for the expansion of accommodation facilities to support current and
future workforce requirements.

The South Flank project will be the major contributor to a material increase in WAIO
Total Marra Mamba Ore Reserves, as outlined in Appendix 1 (2).

Further information on BHP can be found at: bhp.com


(1) BHP has an 85 per cent interest in Mining Area C and the South Flank project, with
ITOCHU Minerals and Energy of Australia Pty Ltd and Mitsui Iron Ore Corporation Pty
Ltd collectively owning the remaining 15 per cent interest. Overall capital intensity of
US$45 per tonne of annual capacity includes initial funding of US$216 million (US$184
million BHP share) announced on 26 June 2017. Overall South Flank project
expenditure fits within Western Australia Iron Ore’s previously indicated average
annual sustaining capital expenditure of approximately US$4 per tonne over the next
five years, with actual sustaining capital expenditure highly variable in any given year
during the development of South Flank.

(2) Appendix 1 has been submitted to the National Storage Mechanism and will shortly
be available for inspection at www.hemscott.com/nsm.do.


Sponsor: UBS South Africa (Pty) Limited


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