Number 21/03

BHP Billiton and its partners have approved the development of the Escondida Norte copper project in northern Chile, as part of Escondida’s operating strategy to maintain copper production capacity in future years.  

Brad Mills, President and CEO of BHP Billiton Base Metals said that the Escondida Norte open pit would be located 5 km from the existing Escondida mining operations. Escondida Norte will mine a satellite ore body that will be able to provide higher-grade copper ore to the two existing Escondida concentrators, which will also continue to receive ore from the Escondida mine.

“Due to the proximity of the Norte open pit to the Escondida operations, we can develop this property in a manner that maximizes the synergies with the existing Escondida infrastructure.  Norte will provide the necessary feed to maintain capacity at Escondida above 1.2 million tonnes per annum of copper in concentrate and cathode through the end of 2008,” Mr Mills said.

Ore grades at the existing Escondida mine are forecast to continue to decline over the next several years.  Norte will enable Escondida to maintain existing capacity.  The development of the Norte open pit will increase production flexibility and reduce operational risks associated with a single mine source, as well as further reduce the cost of production from an already low base.  First copper production from the Norte open pit is scheduled for the fourth quarter of CY2005.

Development costs are estimated at US$400 million (BHP Billiton share US$230 million). These costs include installation of a primary crusher, construction of an overland conveyor, maintenance and operating support facilities, some new mining equipment, the transition of a portion of the current Escondida mobile equipment fleet to the Norte open pit and waste pre-stripping of the new pit.  Escondida Norte's combined proved and probable ore reserves are estimated at 526 million tonnes of sulphide ore at an average copper grade of 1.42% and a cut-off grade of 0.7%, giving an ore reserve life of approximately 17 years.  

The information in this report that relates to Ore Reserves is based on information compiled by Dr Jonathan M. Gilligan Ph.D., B.Sc. (Hons), FGS, MAusIMM, who is a Member of the Australian Institute of Mining and Metallurgy and is a full time employee of Minera Escondida Ltda.  Dr Gilligan has sufficient experience, which is relevant to the style and type of deposit and to the activity that he is undertaking to qualify as a Competent Person as defined in the 1999 edition of the "Australasian Code for Reporting of Minerals Resources and Ore Reserve”. The Competent Person consents to the inclusion in this report of the matters based on their information in the form and context in which they appear.

Australia
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