gld.031 major capital projects (minerals)

GLD.031 MAJOR CAPITAL PROJECTS (Minerals)

Version: 2.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled)

Brief description

Performance requirements for the initiation, development, execution, close out and transition to operations of minerals major capital projects.

The Gate references in the Major Capital Projects Group Level Document (GLD) are linked to the Investment Process GLD.

Key contact

Andy Higgins, Head of Group Project Management Services.


Version: 2.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 2 of 35

1. Project initiation

Major capital projects must be initiated and prioritised in accordance with the Corporate Objective, CSG strategy and CSG approved 5 Year Plan.

Ensure continuous single point accountability for ownership and delivery of the major capital project. Develop clear business objectives as specified in Appendix 2 Section 1.1. Register all major capital projects in the Investment Tracking System. Comply with authorities (Appendix 1).

2. Project development

Major capital projects must be developed, refined, and optimised by advancement through the identification phase, selection phase and definition phase.

Conduct the study activities in accordance with the requirements specified in Appendices 2 to 4. Study budgets, pre-commitments, execution phase budgets and approval to Gate between phases must

be authorised in accordance with the group investment process.

Comply with authorities (Appendix 1).

3. Project execution, close out and transition to operations

Major capital projects must be executed in accordance with the approved Project Execution Plan, budget and scope of work to meet the agreed project objectives and project key performance indicators (KPIs).

Execute the project in accordance with the requirements specified in Appendix 5 Sections 1.0 and 2.0. Transition to the operation phase in accordance with the requirements specified in Appendix 5 Section 3.0. Close out the project in accordance with the requirements specified in Appendix 5 Section 4.0. Comply with authorities (Appendix 1).



Appendix 1. Authorities

Endorse Approve Inform

5.12 MAJOR CAPITAL PROJECTS

5.12.1 Business objective(s) for the major capital project

Project leader

President

5.12.2 Phase requirements (study and execution phase objectives, study work plan, project execution plan, phase elements and phase deliverables)

Vice President Marketing (Appendices 2 to 4 Section 6.0)

Project leader

5.12.3 Recommendation to advance or not to next phase

Project leader

President

Group Management Committee (GMC) Owner

5.12.4 Assignment of major capital projects to a Project Hub, approval of project execution strategy and key project resources

Head of Group Project Management Services

President

5.12.5 Exemptions to investment phase mineral resource and ore reserve requirements

Head of Group Resource and Business Optimisation

President

5.12.6 Approval of operations strategy and key operations resources

Asset President

President



Appendix 2. Identification phase

1.0 Identification phase study overview Description What

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1.1 Business objective(s) and strategic fit

Develop and clearly document the business objective(s) for the investment opportunity, including identifying how this project fits into the resource development potential of the province. Ensure the investment is consistent with the corporate objective, CSG strategy and CSG approved 5 Year Plan. If it is not aligned, provide detailed reasoning. Provide a concise overview of the strategic rationale, strategic fit and any required exit strategy. Reference existing material from the CSG approved 5 Year Plan and CSG directional appraisal.

1.2 Study objectives The identification phase study objectives must be based on the group investment process investment phase objectives, investment phase activities and the individual needs of the investment opportunity. Investment phase objectives: Identify a value-creating investment, assess the material risk issues, identify the potential strategic investment alternatives to be assessed further during the selection phase and ensure alignment of the investment with the business strategy. Investment phase activities: identify a value-creating investment; identify major alternatives for evaluation in the selection phase; identify all potential material risk issues or major risks; ensure alignment with agreed CSG business strategy; define what work needs to be done to further assess the investment opportunity; plan for the next phase (see Appendix 2 Section 1.4).

1.3 Conduct study Conduct the identification phase study activities in accordance with the approved Study Work Plan (SWP) and budget to meet the agreed study objectives and deliverables. The SWP and budget must cover all activities in the identification phase up to the forecast approval date for the start of the selection phase. Appendix 2 Sections 2.0 to 15.0 detail the specific performance elements that must be considered during the study. Ensure that the study addresses these elements. Any elements considered not applicable, not relevant or where compliance cannot be achieved must be documented in the SWP. Direction on the application of the identification phase study requirements is available from Group Project Management Services (PMS).

1.4 Plan for next phase Complete all planning required for transition to the selection phase including: ensuring that the selection phase owners study manager and key study team resources are available; identification of the key selection phase study support contractor(s); development of the selection phase SWP and cost estimate; understanding of all business material risk issues; preparation of the zero harm HSEC Management Plan for the selection phase; identification of all key statutory or third party permits and approvals; planning for tenure and acquisition; development of the selection phase exploration and appraisal program.

1.5 Study deliverables The following deliverables are required from the identification phase: identification phase study report; investment evaluation model. If the recommendation from the study is to proceed to the selection phase then the following additional documentation is required: CSG funding approval document; CSG independent peer review (IPR) summary and functional reports, if required by approver; Investment Committee Notification (ICN).

1.6 Study report The study report must consist of an organised collection of documents that: contains an executive summary that includes confirmation of meeting the study objectives and a clear

recommendation to proceed, or not to proceed, to the next phase that is logically supported by the data, documentation and analysis;



1.0 Identification phase study overview Description What

addresses the minimum requirements for each applicable element as required by the SWP; is version controlled, stored in an approved document management system and accessible to the IPR

team; separates the materially sensitive sections or data such that joint venture partners or other third parties are

restricted from accessing confidential information; is, together with the investment evaluation, the source of information and data used to complete the

necessary approval documentation. The index of the study report must follow the same structure as Appendix 2 Sections 2.0 to 15.0 with the addition of the study report executive summary in Section 1.0.

1.7 Timing The business objectives are identified before and developed during the identification phase. The identification phase study objectives, SWP and budget are: developed prior to the start of the work; approved as part of the transition into the identification phase; implemented, managed and controlled during the identification phase. The identification phase deliverables are completed at the end of the study and approved as part of Gate 1 (the advancement from the identification phase to the selection phase).

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2.0 Geology and mineral resources

Description What

2.1 Data acquisition Collect sufficient data from exploration and drilling/sampling programs to support the determination of whether or not an investment opportunity exists. In the event that an investment opportunity is found to exist, prepare a selection phase work plan for geology and resources including an estimate of the requirements for the drilling and other field programs.

2.2 Geology and mineralisation description

Describe the major geological controls on the mineralisation and the geometry of the ore body. Describe the resource and the potential mineralisation in terms of parameter ranges and uncertainty resulting from Resource Range Analysis and other analysis.

2.3 Mineral inventory Develop a mineral inventory model that includes appropriate potential mineralisation and Mineral Resource. Describe the process undertaken to create the model. Delineate and characterise the resource with sufficient confidence in volume, geometry, continuity and grade and/or quality to clearly support a determination as to whether or not an investment opportunity exists.

2.4 Geometallurgy, hydrogeology and geotechnical

Describe the geometallurgical, hydro-geological and geotechnical environment and how it could affect future mine development, mining operations and processing.

2.5 Mineral Resource statement

A public Mineral Resource statement is not required in the identification phase. The mineral inventory used to determine whether or not an investment opportunity exists must be estimated by a Competent Person.

3.0 Mining

Description What

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3.1 Mining strategy Develop a conceptual mining configuration that supports the investment opportunity. In the event that an investment opportunity is found to exist, prepare a selection phase work plan for mining including a list of plausible mining strategies for further evaluation and the actions required to investigate the major mine factors and key risks.

3.2 Mining plan Develop a conceptual mining plan that will support the investment opportunity. Demonstrate that the major mine factors and key risks that impact the potential investment have been identified including: definition of the key issues that impact mine design, including local and regional infrastructure,

environmental, cultural, processing and market considerations; identification of the key value drivers that impact or influence the mine plan and design.

3.3 Mine design Develop and describe a conceptual mine design to demonstrate technical viability including: an estimate of the mineable resource (tabulated by level, domain and classification); anticipated mine production rates; potential mining methods and for each potential mining method, the assumptions as to the type and size of



3.0 Mining

Description What mining equipment;

outline of conceptual mine excavations, waste dumps, ore stockpiles, mine site ore processing (for example, crushing), material handling and transport within the mine site, mining infrastructure and final mining limits.

Describe the major factors and assumptions used to convert the resource to mineable resources.

3.4 Mine operations Develop and describe a conceptual mining sequence and schedule including assumptions and risks for the investment opportunity. Summarise the assumed mining operations, mine equipment and manning levels. These can be based on benchmarking information.

3.5 Ore Reserves statement

Not required in identification phase.

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4.0 Processing

Description What

4.1 Processing strategy

Develop a conceptual process flow sheet and complete any test work required to support the investment opportunity. Highlight any key assumptions and risks. In the event that an investment opportunity is found to exist, identify the plausible metallurgical processing configurations that must be studied during the selection phase, including why they are appropriate to consider.

4.2 Feed characteristics

Describe the metallurgical characteristics of the different ore types including value minerals and impurities and discuss any variability.

4.3 Test work Describe the information and data used to support the processing configuration proposed and assumptions made.

4.4 Process selection Identify at least one metallurgical processing configuration that supports a value creating investment opportunity. Identify the major alternative processing configurations for evaluation in the selection phase. Identify processing and technology risks including potential issues and opportunities regarding the acquisition and implementation of new or alternative technology.

4.5 Metallurgical performance


4.6 Process facilities Outline the technically viable process facilities required for the conceptual processing configuration. Describe assumptions made regarding annual ore and product capabilities, plant availability, major operating and maintenance consumables and utilities, product handling, transportation and ramp-up strategies. These can be based on benchmarking information.

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5.0 Infrastructure, transport and logistics

Description What

5.1 Location Identify potential locations for the plant, infrastructure and residue disposal sites (for example, tailings dams). Describe the significant parameters and factors influencing the choice of locations (for example, environmental, site conditions and access to major utilities such as power and water). Use existing topographical and geotechnical information/data to provide a reasonable level of assurance as to the viability of the locations selected. Document conceptual site layouts for the materials handling between the mine and plant, the processing plant, materials handling and export, infrastructure and waste management facilities.

5.2 Infrastructure Outline requirements for all non production support facilities for the project including: power, water, utilities, waste disposal and drainage, buildings and facilities, transport Infrastructure, communications and temporary facilities. Include on site and off site infrastructure and define their battery limits. Outline existing infrastructure available to support the project, the new infrastructure required and the respective locations (on and off site). Identify potential locations proposed for the infrastructure using ground-level geotechnical survey (by surface observation and local pits), and topographical investigations via existing data to provide a reasonable level of support for the viability of the locations selected.

5.3 Transport and logistics

Outline the transport and logistics requirements for the conceptual configuration. Highlight any existing transport or logistics available to support the project and any new facilities and/or arrangements required.



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6.0 Market analysis

Description What

6.1 Marketing strategy Develop a preliminary marketing strategy in relation to the investment opportunity. Identify any competition (antitrust) and joint venture issues.

6.2 Pricing Use normal BHP Billiton reference prices to confirm that an investment opportunity exists. Identify any potential pricing strategies that are different from the norm.

6.3 Product specification

Identify the standard required for product(s). This must be a targeted quality or demonstrated by test work.

6.4 Supply and demand forecasts

Outline world demand or supply forecasts, utilising internal or external existing data or reports. Outline the key drivers for consumption.

6.5 Shipping, storage and distribution

Outline the likely product shipping, storage and distribution system post point of sale. Outline the probable cycle times from the project to customer.

6.6 Marketing contracts

Identify key contracts or agency agreements current or required for marketing the product.

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7.0 Scope

Description What

7.1 Statement of requirements

Outline key internal and external stakeholder requirements for the investment opportunity and document in a preliminary statement of requirements (SoR).

7.2 Scope of work Develop outline scopes for the major alternatives to be evaluated in the selection phase. Prepare a preliminary scope of work (SoW) for the identified investment opportunity. The identified investment opportunity is the value-creating alternative which is documented and described in the ICN.

7.3 Work breakdown structure


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8.0 Schedule

Description What

8.1 Project master schedule

Develop a preliminary project master schedule (overall timeline for all study phases and the execution phase). This can be based on benchmarking data. There may be different timelines associated with the different investment alternatives. Include the key milestones from the project master schedule for the identified investment opportunity in the ICN.

8.2 Study schedule Implement, manage and control the identification phase activities and durations in accordance with the approved study schedule. Prepare a detailed (Class 2) schedule for the selection phase and include in the forward work plan.

8.3 Execution phase schedule

Develop an outline duration for the execution phase of the identified investment opportunity. This can be based on benchmarking data.

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9.0 Cost

Description What

9.1 Overall investment amount

Develop a preliminary estimate of the total investment amount (expected expenditure for all study phases and the execution phase). This can be based on benchmarking data. There may be different capital estimates associated with the different investment alternatives. Include the total investment amount for the identified investment opportunity in the ICN.

9.2 Study phase cost estimate

Implement, manage and control the identification phase costs in accordance with the approved study budget. Prepare a detailed (Class 2) cost estimate for the selection phase and include in the forward work plan.

9.3 Execution phase cost estimate

Prepare outline (Class 4 or Class 5) cost estimates for the definition phase and execution phase of the identified investment opportunity. This can be based on benchmarking data.

9.4 Operations phase cost estimate

Prepare an outline (Class 4 or Class 5) operations cost estimate for the identified investment opportunity. This can be based on benchmarking data from similar Assets.



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10.0 Risk management

Description What

10.1 Risk register Identify and analyse the business material risk issues associated with the investment opportunity. Develop an initial Risk Register for the investment opportunity. Include as a minimum; strategy, market, resource or reservoir size, legal title, potential joint venture partners, fiscal regime, community or government relations, innovative technology, major health and safety events and the environment.

10.2 Risk control action plans

Identify and describe, in general terms, any risk control actions required to manage residual risk to a tolerable level. Assess the practicality of managing the business and project material risk issues. Document any areas of intolerable high residual risk (potential fatal flaws).

10.3 Risk management plan

Prepare a Risk Management Plan for the identification phase. Manage and control the risks in accordance with the plan. The plan must cover all material identification phase material risk issues (for example, new country entry, reputation, drilling and test work). Prepare a Risk Management Plan for the selection phase.

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11.0 Investment evaluation

Description What

11.1 Method for estimating expected value

Apply a valuation methodology appropriate for the valuation of an identification phase investment opportunity.

11.2 Valuation model Complete the investment evaluation using a valuation model structure that is appropriate for an identification phase investment opportunity. Details on valuation modelling and investment evaluation are available from Group Investments & Value Management (I&VM). The valuation model must use key assumptions for valuation published by Group I&VM.


Complete sufficient initial investigation of the possible investment opportunity to: identify if a potentially value-creating investment opportunity exists; identify the major potential value-creating investment alternatives for more detailed evaluation in the

selection phase. Low, mid, and high cases must be sufficiently understood to reflect key uncertainties that affect value and impact the selection of the major alternatives to be carried over into the selection phase. Low case must be clearly understood and consideration must be given to a minimum screening criteria (for example, critical resource threshold) when deciding on the recommendation to proceed or not to the selection phase.

11.4 Value enhancement Not required in the identification phase.

11.5 Valuation summary Present a Valuation Summary Report for the identified investment opportunity.

12.0 Health, safety, environment and community Description What

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assessments Identify material HSEC issues associated with the investment opportunity. Prepare initial Health and Safety (H&S) and Environment and Community (E&C) risk assessments. Document these in an initial project HSEC Risk Register.

12.2 Environmental and Social Impact Assessment

Identify and document the scope and requirements of the project Environmental and Social Impact Assessment (E&SIA) or local equivalent. Including all significant baseline studies and investigations required together with their required timeline.

12.3 Study phase HSEC management

Develop, implement, manage and control the HSEC requirements for the identification phase with the objective of achieving zero harm during the study. Cover all material identification phase HSEC issues and risks (for example, travel, site visits and sampling). Prepare a HSEC Management Plan for the selection phase.

12.4 Execution phase HSEC management




12.0 Health, safety, environment and community Description What

12.5 Closure and rehabilitation

Identify and summarise any significant decommissioning, closure and rehabilitation issues associated with the investment opportunity.

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13.0 Stakeholder management

Description What


Identify the key stakeholders associated with the investment opportunity and prepare an Initial Stakeholder Register. Ensure that the stakeholder groupings include as a minimum: joint venture partners (if applicable); national, provincial and local government; non-government organisations (NGO); material media; shareholders. For investment opportunities where successful stakeholder management is critical to the investment outcome (for example, a greenfield project in a developing country with a local joint venture partner) develop an initial Stakeholder Management Plan and highlight the material risk issues and potential mitigation options available.

13.2 Communications Prepare an initial Project Communications Plan including an external relations assessment for the opportunity. Identify any key issues and special or unique requirements.

13.3 Ownership Identify key ownership issues associated with the investment opportunity, including ownership of the resource or reservoir and land needed for the investment opportunity and any rights and prior uses. Prepare an initial Ownership Register.

13.4 Legal and regulatory

Identify key legal and regulatory approval requirements associated with the investment opportunity. Prepare an initial Legal and Regulatory Approvals Register including: outline of applicable project permitting processes and likely time requirements; highlighting any legal and regulatory requirements that could present a material risk issue to the project

including consideration of sovereign risk, legal risk, ownership risk, project structure/entities and regulatory approvals;

provision of an indicative timeframe for meeting these requirements. Identify the potential legal structure(s) required for the development and execution of the project and the steps required to implement.

13.5 Contractual Identify any key contracts (for example, power, water, third party port access) required that materially impact on the investment opportunity and assess the practicality of achieving a successful outcome in these areas.

13.6 Joint ventures Identify the project operator if not BHP Billiton and provide an initial assessment of their capability and suitability (for example, funding capacity, HSEC performance, previous track record in projects and operations). Finalise any joint venture agreement(s) required for development of the investment opportunity. Prepare a Joint Venture Interface Plan for non BHP Billiton operated projects and BHP Billiton operated projects which have JV partner(s). The plan must ensure compliance with the requirements of the JV agreement(s) and detail how key interface areas (for example, JV approvals) will be successfully managed. When choosing JV partners, third parties or agents ensure all business conduct and governance considerations have been incorporated and that all counterparty risks (including reputation risks) have been fully assessed.

14.0 Study/Project delivery

Description What

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14.1 People and teams Develop and implement the identification phase resource requirements. Develop a detailed Project Resource Plan for the selection phase. Critical elements in the plan include: organisation, mobilisation, locations, local content, responsibilities, competencies, team integration and interfaces with key support contractors.

14.2 Study procedures

CSG responsibility to define requirements.

14.3 Study Information Management (IM) systems

CSG responsibility to define requirements.



14.0 Study/Project delivery

Description What

14.4 Value improvement

A Value Improvement Plan is not required in the identification phase. Review, document and implement all relevant learning's from post investment reviews, Project Close-Out Reports and other sources.

14.5 Innovation Demonstrate that opportunities to add material value to the investment opportunity through innovative technology (immature, emerging or novel) have been considered. Document the reasons for inclusion or exclusion of innovative technology and provide a preliminary description of the technology maturity, novelty, intellectual property aspects and high level risks. Ensure full disclosure of innovative technology risks and appropriate mitigation planning in the study report.

14.6 Project execution planning

Prepare an initial high level project execution strategy or strategies for the investment opportunity. A Project Execution Plan is not required in identification phase.

14.7 Program management


14.8 Study progress reporting

CSG responsibility to define identification phase study progress reporting requirements. Register the identified investment opportunity in the Investment Tracking System.

14.9 Forward work plan Develop the selection phase study objectives to meet requirements of Appendix 3 Section 1.2. Develop the selection phase SWP and cost estimate to meet requirements of Appendix 3 Sections 1.0 to 15.0.

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15.0 Transition to operations

Description What

15.1 People and teams Onboard (or access) the operations resource(s) required to complete the operations strategy. A detailed Project Operations Resource Plan is not required in the identification phase.

15.2 Operations strategy

Prepare an initial high level operations strategy for the investment opportunity. The operations strategy defines the operational value drivers, operational philosophy, operational requirements and key operational issues (for example, fly in fly out versus local workforce, contract versus owner operated), operations organisational structure and operations management systems.

15.3 Operations plan Not required in identification phase.

15.4 Operations input into design

Ensure that the requirements of the operations strategy are built into the identified investment opportunity and the major value-creating investment alternatives being carried into the selection phase for further evaluation.

15.5 Commissioning Not required in identification phase.

15.6 Operations readiness


15.7 Operations procedures


15.8 Operations Information Management (IM) systems




Appendix 3. Selection phase

1.0 Selection phase study overview

Description What

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1.1 Business objective(s) and strategic fit

Describe the main strategic options considered and reasons for selecting the preferred investment alternative. Show the preferred investment alternative in the context of the resource potential of the province. Ensure that the preferred investment alternative will meet the agreed business objective(s). Provide a concise description of the strategic fit and any required exit strategy for the preferred investment alternative. Reference existing material from the approved CSG 5 Year Plan and CSG directional appraisal.

1.2 Study objectives The selection phase study objectives must be based on the group investment process investment phase objectives, investment phase activities and the individual needs of the investment opportunity. Investment phase objectives: Assess all reasonable value-creating alternatives and select the optimal investment alternative taking into account net present value, risk, uncertainty and embedded option value. Ensure the technical and commercial viability of the selected investment prior to further study and optimisation in the definition phase. Investment phase activities: Step 1: Identify and assess all reasonable value-creating alternatives (opportunity framing). Step 2: Select the optimal investment alternative, taking into account net present value (NPV), risk, uncertainty and embedded option value (opportunity selection). Step 3: Produce a summary of the investment alternatives considered, the criteria used and the reasoning behind the decision to select the preferred investment alternative for formal internal CSG approval (Gate 2A). Step 4: Complete sufficient work (opportunity realisation) on the preferred investment alternative to: have the main areas of the project scope clearly understood and frozen; ensure technical and commercial viability of the investment; assess all material risk issues; plan for the next phase (see Appendix 3 Section 1.4).

1.3 Conduct study Conduct the selection phase study activities in accordance with the approved SWP and budget to meet the required study objectives and study deliverables. The SWP and budget must cover all activities in the selection phase up to the forecast approval date for the start of the definition phase. Appendix 3 Sections 2.0 to 15.0 detail specific performance elements that must be considered during the study. Ensure that the study addresses these elements. Any elements considered not applicable, not relevant or where compliance cannot be achieved must be documented in the SWP. Direction on the application of the selection phase study requirements is available from Group PMS.

1.4 Plan for next phase Complete all planning required for transition to the definition phase including: ensuring that the definition phase owners project manager and key project team resources are available; Identification of key definition phase support contractor(s) and contracts developed to stage of

conditional agreements; development of the definition phase SWP and cost estimate including details of any outstanding

optimisation studies required on the preferred investment alternative; understanding of all business and project material risk issues; planning for tenure and acquisition; preparation of the zero harm HSEC Management Plan for the definition phase; development of the action plan to progress all required statutory and third party approvals; planning for the location and geotechnical studies; development of the definition phase exploration and appraisal program.

1.5 Study deliverables The following deliverables are required from the selection phase: selection phase Study Report; investment evaluation model(s) that support the selection of the preferred investment alternative. If the recommendation from the study is to proceed to the definition phase then the following additional deliverables are required as part of the group investment process: Investment Approval Request (IAR);



1.0 Selection phase study overview

Description What Group IPR summary and functional reports.

1.6 Study report The study report must consist of an organised collection of documents that: contains an executive summary that includes both confirmation of meeting the study objectives and a clear



team; separates the BHP Billiton confidential sections or data such that joint venture partners or other third parties

are restricted from accessing confidential information; is, together with the investment evaluation, the source of information and data used to complete the

necessary approval documentation. The index of the study report must follow the same structure as Appendix 3 Sections 2.0 to 15.0 with the addition of the executive summary as per Section 1.0.

1.7 Timing The selection phase study objectives, SWP and budget, project hub strategy and key project resources are: developed at the end of the identification phase; approved as part of Gate 1 (the advancement from the identification phase to the selection phase); implemented, managed and controlled during the selection phase. The selection phase deliverables are completed at the end of the study and approved as part of Gate 2 (the advancement from the selection phase to the definition phase).

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Description What

2.1 Data acquisition Collect sufficient data to define the ore-body limits, the tonnage, density, shape, physical and metallurgical characteristics, grade and mineral content to enable selection of the preferred investment alternative from the range of investment options under consideration. Provide a description of the data acquisition work plan for the definition phase.


Describe the geology and the extent of the ore body to a sufficient standard to enable evaluation of the full range of investment alternatives, including a full range of mining and processing alternatives.

2.3 Mineral inventory Update the mineral inventory model to sufficient detail and spatial coverage to facilitate a confident, unbiased and objective comparison of the various investment alternatives. There must be a low residual risk of the preferred investment alternative changing as a result of further refinement of the geology and mineral inventory. Provide evidence that the materially significant aspects of the ore body have been modelled with sufficient accuracy to allow selection of an investment alternative. Provide a description of the mineral inventory that will underpin the future projects/options in the pipeline. Present estimates of volume and quality versus cut-off (tabulated and/or graphically) and compare with previous estimates. Tabulate the Mineral Resource by classification and domain. For representative sections of the ore body, demonstrate that the drill spacing is sufficiently close to provide confidence as to resource classification. An independent audit of the database, resource model and resource statement must be undertaken prior to a public declaration of the resource.


Describe the geometallurgical, geotechnical rock mass and the ground water regimes, including aspects that have the potential to impact on mining method and process selection, rates, scale and operability, in sufficient detail to ensure valid mine plans and processing route are used for the basis of selection of the preferred investment alternative.


Develop the public JORC compliant Mineral Resource statement complete with sign off by a Competent Person. This is required prior to approval to advance into the definition phase. For the preferred investment alternative, at least 80% of the ore scheduled for mining in the first five years of operation must be in the Indicated Mineral Resource classification.



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3.0 Mining

Description What

3.1 Mining strategy Commencing with the list of plausible mining strategies developed during the identification phase, develop a range of mining strategy alternatives and analyse the alternatives in sufficient detail to enable selection of a short list of alternatives. For each alternative in the short list develop and analyse a number of mine plans, mine designs and mine operations alternatives. Describe the range of mining strategies analysed and the analysis outcomes. Describe the selected mining strategy in detail and describe the rationale for the choice of associated mine plan, mine design and mine operations.

3.2 Mining plan For each short-listed mining strategy, develop a range of mine plans. Analyse the range of mine plans including consideration of these key issues: local and regional setting, including: climatic, surface and seismic conditions; tenure conditions, including ownership, mineral titles, water rights, operating licenses and surface access

rights; site access, plus existing and proposed local and regional infrastructure facilities relevant to the project; contribution to the creation of long-term value, value drivers and risks, relevant processing, market and

sustainability.

3.3 Mine design Develop a range of mine designs as supported by resource range analysis. For each mine design alternative demonstrate a viable approach to resource recovery, dilution, scale and rate, mining method, layout, final limits, equipment selection, sequence and schedule. Complete each mine design to a sufficient level of detail to demonstrate its technical viability and effectiveness for the purposes of selecting the preferred alternative. Evaluate and incorporate uncertainties and mining risks in the selection process. Key assumptions must be underpinned by engineering and historical and/or benchmark rates from similar mines. Describe and document the preferred mine design including mine excavations, waste dumps, ore stockpiles, mine site ore processing (for example, crushing), material handling and transport within the mine site, mining infrastructure and final mining limits for the selected mine design. At the end of the selection phase the major areas of the mining scope must be clearly understood, have key uncertainties resolved and meet the level of definition required of a preliminary (Class 3) cost estimate.

3.4 Mine operations For each short-listed mining alternative, develop a range of production schedules for analysis. Analyse and describe the risks and uncertainties for each alternative and how these could impact on the outcome and value. Select a preferred production schedule and detail the rationale for the selection. For the selected go forward alternative provide an annualised mining schedule over the payback period from start of operations. Include: ore and waste production and ore feed to process; ore feed by resource classification; equipment, manning and infrastructure required for mining operations; mine sustaining capital requirements and operating costs. Describe key mining equipment alternatives considered.


Prepare a JORC compliant Ore Reserve statement for internal purposes. An external Ore Reserve statement is not required at the conclusion of the selection phase. For the preferred mine design at least 80% of the ore scheduled for mining in the first five years operation must be in the Probable Ore Reserve classification as supported by mine planning and geometallurgy.

4.0 Processing

Description What

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Develop a range of processing strategy alternatives and analyse the alternatives in sufficient detail to enable selection of the preferred configuration. Sufficient test work and analysis must be undertaken to select the configuration with the maximum value and an acceptable risk profile.


Describe the metallurgical characterisation of the ore types and blends in sufficient detail to facilitate objective comparison of the alternative processing configurations being considered. Characterisation must include (where possible) value minerals, impurity behaviour and materials handling characteristics. Demonstrate that the methodology applied for taking representative samples is aligned to the understanding of ore and geometallurgy variability and addresses associated processing risks and required controls.



4.0 Processing

Description What

4.3 Test work Describe the metallurgical test work conducted to verify key unit operation for the processing alternatives considered. Demonstrate that the test work is sufficient for defining and managing the risk for the preferred alternative to an acceptable level.

4.4 Process selection Present the process alternatives considered and discuss the process and methodology for selecting the preferred flow sheet, including consideration of all risk issues. Include: identification of key metallurgical performance (success) factors and economic drivers; test work, modelling and simulation work performed to validate the alternative flow sheets and address risks

associated with any innovative technology; plus any trade-off studies conducted. Describe and discuss the preferred flow sheet including the range of metallurgically different ore types, their processing and economic significance and their potential impacts on production targets and product qualities. Identify if pilot plants, demonstration plants or variability testing are required and if so why.


For the selected processing alternative discuss geometallurgical modelling and testing and the basis for metallurgical prediction. Test work must be shown to be aligned with the preferred mine design and be able to validate Probable Ore Reserve ore classification for at least 80% of feed for the first five years operation. Use range analysis to quantify the uncertainty around key processing value drivers and show the impact on project value.

4.6 Process facilities Prepare mass, energy and water balances for the process alternatives, highlighting assumptions and areas of uncertainty. Compare the process facilities and physical plant required for the different process alternatives. Define to a sufficient level of detail to enable selection of the preferred configuration with maximum value and acceptable risk profile. This does not require all options to be fully engineered in order to separate and prioritise them. Discuss areas of risk and uncertainty for more detailed evaluation in the definition phase. Describe and document the facilities scope for the preferred investment alternative. At the end of the selection phase the major areas of the processing scope must be clearly understood, have key uncertainties resolved and meet the level of definition required of a preliminary (Class 3) cost estimate. Prepare an Engineering Management Plan for the engineering work required during the definition phase.

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5.0 Infrastructure, transport and logistics

Description What

5.1 Location Evaluate the major location alternatives for the investment opportunity and identify the preferred locations for the plant, infrastructure and residue disposal sites (for example, tailings dams). Detail the significant parameters and factors influencing the choice of locations (for example, environmental constraints, topographical, seismological and climatic site conditions, supply and transport considerations and access to all major utilities like power and water). Carry out sufficient geotechnical and topographical surveys to ensure that the preferred locations are valid and that there is a low probability of a material change after the end of the selection phase. Document preliminary site layouts and general arrangements for the materials handling between the mine and plant, the processing plant, materials handling and export, infrastructure and waste management facilities.

5.2 Infrastructure Define the requirements for the supporting infrastructure for the different investment alternatives studied. The level of definition and investigation must be sufficient to support selection of the preferred investment alternative. Identify potential locations for the infrastructure required for the different investment alternatives under consideration. Identify any key risks or uncertainties to assist the selection of the preferred investment alternative. Select the preferred supporting infrastructure for the investment and detail the rationale for the selection. Describe and document the infrastructure scope for the preferred investment alternative. At the end of the selection phase the major areas of infrastructure scope must be clearly understood, have key uncertainties resolved and meet the level of definition required of a preliminary (Class 3) cost estimate.

5.3 Transport and logistics

Define the transport and logistics requirements for the different investment alternatives. The level of definition and investigation must be sufficient to enable selection of the preferred investment alternative. Identify any key risks or uncertainties to assist the selection of the preferred investment alternative. Select the preferred transport and logistics for the investment and detail the rationale for the selection.



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6.0 Market analysis

Description What

6.1 Marketing strategy Prepare the preferred marketing strategy in relation to the product, volume, market share, growth potential, place and price. Detail any competition (antitrust) and joint venture issues.

6.2 Pricing Develop the pricing strategy required for each of the investment alternatives under consideration. Document the pricing strategy for the selected investment alternative. Confirm or otherwise that the normal BHP Billiton reference prices are relevant for this investment opportunity.

6.3 Product specification

Specify the product specification required for each of the investment alternatives under consideration. Document the product specification (quality standard) required for the selected investment alternative.

6.4 Supply and demand forecasts

Prepare or reference current BHP Billiton world supply and demand forecasts and incorporate an analysis of short, medium and long term trends, with the basis stated for concluding the forecasts. Include the key drivers of the demand and supply cycles. Include an assessment of BHP Billitons expected market share, market impact and a comparison with industry cost curves. Include an analysis of the major risks, opportunities or uncertainties that impact these forecasts.

6.5 Shipping, storage and distribution

Prepare product shipping, storage and distribution summaries for each investment alternative (where these are different). Identify and document the optimum product shipping, storage and distribution system for the preferred investment alternative.

6.6 Marketing contracts

Document any new contracts or agency agreements required for marketing the product together with any existing contracts or agency agreements that must be used.

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7.0 Scope

Description What

7.1 Statement of requirements

Update and finalise the statement of requirements (SoR) for the investment opportunity. Confirm that the preferred investment alternative satisfies key stakeholder requirements identified in the SoR. Any requirements where compliance cannot be achieved must be documented in the SoR together with the measures required to address the outstanding requirement(s), manage stakeholder expectation(s) and minimise project impact.

7.2 Scope of work Develop the scope for each major investment alternative in sufficient detail to be able to select the preferred investment alternative. Describe and document the scope of work (SoW) for the preferred investment alternative. At the end of the selection phase all major areas of scope must be clearly understood, have key uncertainties resolved (minimal carry over of selection phase work into definition phase) and meet the level of maturity and definition requirements of a preliminary (Class 3) cost estimate. Any areas where this cannot be achieved must be clearly identified in the SoW document together with an assessment of the resultant exposure. The decision criteria and authorities associated with any outstanding choices must be fully documented and timed to be unequivocally resolved before the end of the definition phase.

7.3 Work breakdown structure

Configure the preferred investment alternative into the agreed project work breakdown structure (WBS). The WBS must be capable of further development to ensure an integrated control and reporting standard for the execution of the project.

8.0 Schedule Description What

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8.1 Project master schedule

Update and maintain the overall project master schedule including the forecast or actual start and finish dates for the identification phase, selection phase, definition phase and execution phase and ramp up period for the preferred investment alternative. A request for approval of significant pre-commitments (>US$50M, 100% basis) in the definition phase requires development of the project master schedule in more detail at the end of the selection phase in order to confirm the impact of early funding on the overall schedule.

8.2 Study schedule Implement, manage and control the selection phase activities and durations in accordance with the approved study schedule.



8.0 Schedule Description What

Prepare a detailed (Class 2) schedule for the definition phase and include in the forward work plan.

8.3 Execution phase schedule

Develop outline (Class 4 or Class 5) execution phase schedules for each major investment alternative under consideration, with a focus on the key schedule drivers, to be able to select the preferred investment alternative. Develop a preliminary (Class 3) schedule and associated basis of schedule (BoS) for the execution phase of the preferred investment alternative. Carry out a deterministic range analysis on this schedule.

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9.0 Cost

Description What

9.1 Overall investment amount

Update and maintain the overall investment cost estimate (including the forecast or actual cost for identification phase, selection phase, definition phase and execution phase) for the preferred investment alternative.

9.2 Study phase cost estimate

Implement, manage and control the selection phase costs in accordance with the approved study budget. Prepare a detailed (Class 2) cost estimate for the definition phase and include in the forward work plan.

9.3 Execution phase cost estimate

Develop outline (Class 4 / Class 5) execution phase cost estimates for each of the major investment alternatives under consideration, with a focus on key capital cost drivers, in order to be able to select the preferred investment alternative. Develop a preliminary (Class 3) cost estimate and associated basis of estimate for the execution phase of the preferred investment alternative. The estimate must cover all activities from the start of the execution phase up to project completion. Carry out a deterministic range analysis of this estimate.

9.4 Operations phase cost estimate

Develop outline (Class 4 or Class 5) operations cost estimate for each of the major investment alternatives under consideration, with a focus on the key operations cost drivers, in order to be able to select the preferred investment alternative. Develop a preliminary (Class 3) operations cost estimate and associated BoE for the preferred investment alternative. Carry out a deterministic range analysis on this estimate.

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10.0 Risk management

Description What

10.1 Risk register Develop the Risk Register for each major investment alternative in sufficient detail to be able to select the preferred investment alternative. Develop a preliminary project Risk Register for the selected investment alternative. All material risk issues identified in other parts of the study must be rolled up and included in the Risk Register (for example, HSEC).

10.2 Risk control action plans

If risk is a critical factor in deciding on the preferred investment alternative, develop outline risk control action plans for each of the major investment alternatives under consideration so that the residual risk rating (RRR) and maximum foreseeable loss (MFL) can be quantified for each alternative. Develop a preliminary risk control action plan for the preferred investment alternative. Confirm the practicality of managing the business and project material risk issues.

10.3 Risk management plan

Implement, manage and control the Risk Management Plan for the selection phase. The plan must cover all selection phase material risk issues (for example, sampling, test work and pilot plants). Prepare a Risk Management Plan for the definition phase.

11.0 Investment evaluation Description What

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estimating expected value

Apply one or more valuation methodologies that are appropriate for: selecting the preferred investment alternative; completing the investment evaluation requirements of an IAR. Document any concerns with the application of the valuation methodology that impact the selection of the preferred investment alternative.

11.2 Valuation model Complete the investment evaluation using a valuation model structure that is appropriate for:



11.0 Investment evaluation Description What

selecting the preferred investment alternative from the studied investment alternatives; completing the investment evaluation requirements of an IAR. Document the investment evaluation model(s) and lodge in the Investment Tracking System. Details on valuation modelling and investment evaluation are available from Group I&VM. The valuation model must use key assumptions for valuation published by Group I&VM.


Assess all reasonable value-creating alternatives and select the optimal investment alternative taking into account net present value, risk, uncertainty and embedded option value. Ensure the technical and commercial viability of the selected investment prior to further study and optimisation in the definition phase. This is carried out in a series of steps as follows: Step 1: Identify and assess all reasonable value-creating alternatives (opportunity framing). Step 2: Select the optimal investment alternative, taking into account net present value (NPV), risk, uncertainty and embedded option value (opportunity selection). Step 3: Produce a summary of the investment alternatives considered, the criteria used and the reasoning behind the decision to select the preferred investment alternative for formal internal CSG approval (Gate 2A). Step 4: Complete sufficient work (opportunity realisation) on the preferred investment alternative to: have the main areas of the project scope clearly understood and frozen; ensure technical and commercial viability of the investment; assess all material risk issues; plan for the next phase (Appendix 3 Section 1.4).

11.4 Value enhancement

Document and take into consideration the relative impact each investment alternatives future options have on the selection of the preferred investment alternative (for example, future expansion, future development). For the preferred investment alternative detail and quantify any key opportunities to enhance value through the existence of options in the investment that require funding during the definition phase (for example, pre-commitments).

11.5 Valuation summary Document a summary of the investment alternatives considered, the criteria used and the reasoning behind the decision to select the preferred investment alternative. Describe the optimised without and optimised with alternatives that demonstrate the incremental value of the selected investment alternative. Describe any unique characteristics and the physical scope of the proposed investment. Describe any key valuation risks, issues or constraints associated with the preferred investment alternative.

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12.0 Health, Safety, Environment and Community Description What

12.1 HSEC risk assessments

Develop a preliminary project HSEC Risk Register for the preferred investment alternative. All material HSEC risks identified in other parts of the study (for example, drilling, air transport or site surveys) must be rolled up and included in the register.

12.2 Environmental and Social Impact Assessment

Commence baseline studies and any necessary investigations and prepare the detailed E&SIA or local equivalent for the preferred investment alternative. Include socio-economic considerations, local service industry, community services, work force planning, on and off site accommodation, and recruitment. The E&SIA must reflect the level of accuracy of the project scope at the time of preparation and contain sufficient flexibility to accommodate future optimisation of the project as it moves through subsequent investment phases. Timing of submission of the E&SIA for approval must take into account the critical path for the project.

12.3 Study phase HSEC management

Implement, manage and control the HSEC Management Plan for the selection phase with the objective of achieving zero harm during the study. The plan must cover all material selection phase HSEC risks (for example, site surveys, drilling, sampling and test work). Prepare a HSEC Management Plan for the definition phase.

12.4 Execution phase HSEC management

Not required in selection phase.

12.5 Closure and rehabilitation

Update the summary of significant decommissioning, closure and rehabilitation issues associated with the preferred investment alternative.



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13.0 Stakeholder management Description What


Prepare a preliminary Stakeholder Management Plan for the preferred investment alternative. Provide an assessment of the international trade considerations for the investment. Ensure that the stakeholder groupings include as a minimum: JV partners (if applicable); national, provincial and local government: include an authoritative opinion and appraisal of views of

governments and their authorities to the investment, involving the legislative and regulatory environment; non-government organisations (NGO): include an authoritative assessment on the views and potential

actions of NGOs to the project; media: include an authoritative assessment on likely impact of local media on the proposed investment; shareholders: include details of stock exchange/media engagement and communications (releases, Q&As,

briefings and any special requirements).

13.2 Communications Develop the preliminary Project Communications Plan including an external relations assessment for the preferred investment alternative. Document and discuss any key issues and special or unique requirements.

13.3 Ownership Review and update the Ownership Register and key issues for the preferred investment alternative, including: ownership of the resource or reservoir, any rights or royalties and make reference to the sources of

information. Describe the status of any negotiations or agreements for ownership alternatives or rights. Where possible ownership alternatives or rights must be negotiated and an agreement reached in principle;

ownership of lands or other surface rights required for the preferred investment alternative, any rights and uses. Where possible current title and a right to purchase or lease must be agreed in principle and recorded in writing.

13.4 Legal and regulatory

Review and update the Legal and Regulatory Approvals Plan for the preferred investment alternative. As a minimum include details on: sovereign risk, legal risk, ownership risk, project structure/entities and all material regulatory approvals or other legal actions required for the investment together with the status of any negotiations or applications. Provide a plan and schedule for obtaining the necessary approvals. Implement (as necessary and appropriate) any new or modified legal structure required for the development and execution of the project.

13.5 Contractual Define all material contractual arrangements for the preferred investment alternative. Include as a minimum consideration of: power, water, facilities construction, asset transfers, plant and equipment supply and operations. Key definition phase support contractor(s) (for example, FEED or ESC/EPCM) must be identified and developed to the stage of conditional agreements.

13.6 Joint Ventures Confirm project operator if not BHP Billiton and their capability and suitability (for example, funding capacity, HSEC performance, previous track record in projects and operations). Implement the Joint Venture Interface Plan for non BHP Billiton operated projects and BHP Billiton operated projects which have JV partner(s). The plan must ensure compliance with the requirements of the JV agreement(s) and detail how key interface areas (for example, JV approvals) will be successfully managed. When choosing JV partners, third parties or agents ensure all business conduct and governance considerations have been incorporated and all counterparty risks (including reputation risks) have been fully assessed.

14.0 Study/Project delivery Description What

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14.1 People and teams Implement the selection phase Project Resource Plan. Develop a detailed Project Resource Plan for the definition phase and an outline Project Resource Plan for the execution phase for the preferred investment alternative. Critical elements in the plan include: organisation, additional resource mobilisation, locations, local content, responsibilities, competencies, team integration and interfaces with key support contractors. Key project resources in the selection phase must meet minimum competency and experience standards. See Appendix 1. These must, where possible, be company employees rolled over from a previous project or study as part of a deliberate program to grow internal project capability.

14.2 Study procedures

Develop, update, implement and maintain the procedures required for the selection phase study. Cover all key functional processes required to safely and successfully deliver the selection phase objectives and include the review and endorsement of support contractor(s) key procedures.



14.0 Study/Project delivery Description What

14.3 Study Information Management (IM) systems

Develop and implement the required suite of IM systems for the selection phase. Cover all key functional IM support required to safely and successfully deliver the selection phase study objectives and include the review and endorse of support contractor(s) key project IM systems and procedures. Prepare the IM Management Plan for the definition phase and execution phase.

14.4 Value improvement Prepare the project Value Improvement Plan. Implement the relevant value improvement practices (VIPs) required during the selection phase. The plan must include the lessons learned VIP which involves the review, document and implement all relevant learning's from post investment reviews, Project Close-Out Reports and other sources.

14.5 Innovation Revise the details of any innovative technology required for the preferred investment alternative, including an update of the status of the technology maturity and novelty. Include an analysis of prior experience with the technology against the intended duty and take into consideration the intended location. Prior to selection of an innovative technology establish a definitive view of any intellectual property implications and ensure that material technology risks are resolved. Ensure full disclosure of all residual technology risks and detail how they will be reduced to an acceptable level during the definition phase.

14.6 Project execution planning

Develop the project execution strategy for each major investment alternative in sufficient detail to be able to select the preferred investment alternative. Document the project execution strategy for the preferred investment alternative.

14.7 Program management

Major capital projects, where BHP Billiton is the project manager, must be developed via a project hub in the selection phase. See Appendix 1.

14.8 Study reporting Develop and issue a monthly study progress report to key stakeholders. Update the Investment Tracking System in accordance with the group investment process.

14.9 Forward work plan Develop the definition phase study objectives to meet the requirements of Appendix 4 Section 1.2. Develop the definition phase Study Work Plan (SWP) and cost estimate to meet the requirements of Appendix 4 Sections 1.0 to 15.0. A request for approval of significant pre-commitments (>US$50M, 100% basis) in the definition phase requires bringing forward into the definition phase the development of appropriate activities required to successfully implement, manage and control the pre-commitments (for example, Contracts and Procurement Plan, procedures and controls, relevant sections of the Quality Management Plan, project authorities framework). Include in the definition phase work plan.

15.0 Transition to operations Description What

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15.1 People and teams Onboard (or access) the operations resources required to develop the operations strategy, Operations Plan and implement the operations input into design. A detailed Project Operations Resource Plan is not required in the selection phase. Key operations resources in the selection phase must meet minimum competency and experience standards. See Appendix 1.

15.2 Operations strategy

Develop the operations strategy for each major investment alternative in sufficient detail to be able to select the preferred investment alternative. Develop the operations strategy for the preferred investment alternative. The operations strategy defines the operational value drivers, operational philosophy, operational requirements and key operational issues (for example, fly in fly out versus local workforce, contract versus owner operated), operations organisational structure and operations management systems. Use this as a key input into the Operations Plan.

15.3 Operations plan Prepare an outline Operations Plan for the preferred investment alternative. The Operations Plan describes how the Asset is safely and efficiently operated and maintained throughout its life.

15.4 Operations input into design

Ensure the requirements of the operations strategy and plan are built into the SoW for the preferred investment alternative. Include: operations participation in design reviews for operability, maintainability, reliability, human factor considerations, hazard identification and mitigation, operations risk management.



15.0 Transition to operations Description What

15.5 Commissioning Not required in selection phase.

15.6 Operations readiness


15.7 Operations procedures


15.8 Operations IM systems

Identify and document the key operations and maintenance Information Management (IM) systems associated with the preferred investment alternative.



Appendix 4. Definition phase

1.0 Definition phase study overview Description What

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1.1 Business objective and strategic fit

Prepare a detailed set of project objectives based on the agreed business objective(s). Show the selected investment alternative in the context of the resource potential of the province. Ensure that the project objectives are clearly measurable, cover all required areas (for example, HSEC, cost, schedule and operability) and will demonstrably meet the business objective(s). Confirm that there has been no material change to the external or internal business drivers for the investment. If there has been a change, document the reason(s) and the impact on the expected investment outcomes. Provide a concise description of the strategic rationale, strategic fit and any required exit strategy for the preferred investment alternative. Reference existing material from the approved CSG 5 Year Plan and CSG directional appraisal.

1.2 Study objectives The definition phase study objectives must be based on the group investment process investment phase objectives, investment phase activities and the individual needs of the selected investment alternative. Investment phase objectives: Define the investment by optimising the selected configuration for life cycle costs (LCC) and net present value (NPV) and finalising the scope, cost, schedule, commercial terms and statutory and regulatory approvals/agreements prior to project execution. Investment phase activities: optimise LCC and NPV for the investment; complete any outstanding optimisation work; complete a full evaluation of the investment including the risk profile; finalise scope, cost, schedule, commercial terms and statutory approvals; include any upside alternatives that may accrue outside the project scope; plan for the next phase (Appendix 4 Section 1.4).

1.3 Conduct study Conduct the definition phase study activities in accordance with the approved SWP and budget to meet the required study objectives and study deliverables. The SWP and budget must cover all activities in the definition phase up to the forecast approval date for the start of the execution phase. Appendix 4 Sections 2.0 to 15.0 detail the specific performance elements that must be considered during the study. Ensure that the study addresses these elements. Any elements considered not applicable, not relevant or where compliance cannot be achieved must be documented in the SWP. Direction on the application of the definition phase study requirements is available from Group PMS.

1.4 Plan for next phase

Complete all planning required for transition to the execution phase including: ensuring that the execution phase owners project manager and key project team resources are available; ensuring that key implementation support contract(s), contractor leader(s) and key team members are

available; development of specific project objectives, project KPIs, Project Execution Plan and cost estimate; development of key contracts or purchases that are on the early critical path to the stage of firm and

actionable bids (conditional agreements); understanding of all material risk issues and have appropriate controls in place; preparation of the zero harm HSEC Management Plan for the execution phase; ensuring all statutory and third party approvals are in place or available; ensuring that all required tenure and land is secure.

1.5 Study deliverables

The following deliverables are required from the definition phase: definition phase study report; investment evaluation model. If the recommendation from the study is to proceed to the execution phase then the following additional deliverables are required as part of the group investment process: Investment Approval Request (IAR); Group IPR summary and functional reports; Board papers, Board presentation, draft media release and media Q&As;



1.0 Definition phase study overview Description What

Prospective Evaluation Report by Independent Project Analysis Inc (IPA).

1.6 Study report The study report must consist of an organised collection of documents that: contains an executive summary that includes both confirmation of meeting the study objectives and a clear



team; separate the BHP Billiton confidential sections or data such that JV partners or other third parties are

restricted from accessing confidential information; is, together with the investment evaluation, the source of information and data used to complete the

necessary approval documentation. The index of the study report must follow the same structure as Appendix 4 Sections 2.0 to 15.0 with the addition of the executive summary as per Section 1.0.

1.7 Timing The definition phase study objectives, SWP and budget, project execution strategy and key project resources are: developed at the end of the selection phase; approved as part of Gate 2 (the advancement from the selection phase to the definition phase); implemented, managed and controlled during the definition phase. The definition phase deliverables are completed at the end of the study and approved as part of Gate 3 (the advancement from the definition phase to the execution phase).

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Description What 2.1 Data acquisition Collect sufficient data to optimise the recoverable resource for the selected option as input to Life of Asset

planning. The spatial variability of the key resource parameters must be well understood and defined in sufficient detail to support the mine design and schedule requirements.


Complete the geology and mineral inventory description. Detail the in situ recoverable resources and update the tabulation of the Mineral Resource. Describe the key resource estimation methods used and the decisions taken.

2.3 Mineral inventory The resource model must be to a high level of confidence and have been verified such that: sufficient resource is in the measured and indicated category to provide local estimation of the ore body

characteristics for final Life of Asset planning; it supports the definition phase case and in particular the mining and processing methods. If an independent audit of the database and Mineral Resource was not completed during the selection phase it must be undertaken in the definition phase unless agreed otherwise with the IPR Leader. Define and document the risks to the key mineral inventory parameters.


Detail the geometallurgical, hydro-geological and geotechnical environment for the selected investment alternative. Identify and discuss all key issues and risks. Demonstrate the adequacy of the proposed dewatering and de-pressurisation programs, the ground support and the stability assumptions used.


Update the JORC compliant Mineral Resource statement. At least 80% of the ore scheduled for mining in the first five years of operation must be in the Measured Mineral Resource classification.

3.0 Mining

Description What

3.1 Mining strategy Optimise the selected mining strategy and demonstrate how it delivers the maximum value with acceptable risk.

3.2 Mining plan Provide a comprehensive and detailed description of the selected mine plan including mine configuration, infrastructure and site logistics. Provide a detailed site description, summarising all key mine aspects.



3.0 Mining

Description What Define any aspects on which the selected optimum mine plans place high reliance. Show how the risks have been addressed can be managed. Highlight any residual tenure issues or constraints. Demonstrate optimisation of the selected mine configuration, infrastructure and site logistics. Discuss the sensitivity of the investment and mine plans to any processing or market issues.

3.3 Mine design Provide a comprehensive and detailed description of the selected mine design. Provide sections and plans illustrating the locations and position of mine excavations, waste dumps, ore stockpiles, mine site ore processing (for example, crushing), material handling and transport within the mine site, mining infrastructure and final mining limits. The mining scope at the end of the definition phase must meet the level of definition required of a detailed (Class 2) cost estimate. Describe the methodology used to optimise final mining limits, mining rate and mining Capex and Opex. Key drivers must be supported by benchmark data from similar mines.

3.4 Mine operations Provide a comprehensive description of the selected mining operation, including the preferred contracting strategy. Mining operation and mining equipment must be optimised and rationalised. Describe the designed mine production phases and the selected mining sequence including ore blending and ore and waste stockpiling strategies as appropriate. Describe the waste characteristics, and the impact of these on mining rates. Provide the mining schedule in monthly increments for the first two years of production, quarterly for the subsequent three years and then annually. The ore scheduled for the first two years must all be in the Proved Ore Reserve classification.


Develop the JORC compliant Ore Reserve statement from the final mine layout and the mineable resource model. An independent audit of the reserve model and reserve statement must be undertaken prior to a public declaration of the reserve. At least 80% of the ore scheduled for mining for the first five years of operation must be in the Proved Ore Reserve classification.

4.0 Processing

Description What

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Define the optimised process design and plant configuration for the selected investment alternative.


Provide a full characterisation of the predicted ore and ore blends. Describe the impact of ore variability on the selected flow sheet and plant performance. Describe any blending strategy and the link to the selected mine design. Show how the plant has been optimised taking into consideration feed characteristics and variability.

4.3 Test work Undertake sufficient test work to understand, optimise and manage operational risks and variability. Report the sample selection and test work carried out for the optimisation and verification of the selected metallurgical processing flow sheet. Characterise any wastes and tailings during test work. Focus test work on performance and product predictions and variability, and on design criteria determination.

4.4 Process selection Provide details of the selected flow sheet, the optimisation of the plant design and the selection of major equipment and infrastructure items. Provide details of: optimisation studies conducted in arriving at the final configuration; predicted consumable usage rates and Opex. Discuss key technology issues and risks relating to the process including scale-up factors required, the costs of any technology acquisition and the potential for competitive advantage.


Describe the geomet model for the selected flow sheet and relevant ranges and uncertainties. Test work must be shown to be aligned with detailed mine design and validate Proved Ore Reserve ore classification for the first two years of operation and at least 80% of feed for the first five years. Present a range analysis for metallurgical performance including product quality variability; metallurgical production schedule and project ramp up.



4.0 Processing

Description What Show the impact of these on project value.

4.6 Process

gld.031 major capital projects (minerals)

Documents