Business SummaryRio Tinto Limited (RIO) is engaged in minerals and metals exploration,development, production and processing. The Company's Portfolio of assetsis condensed into four product groups: Aluminium, Copper & Coal, Diamonds& Minerals and Iron Ore.

Aluminium: The group consists of three products. (i) Bauxite is the naturalore used to make aluminium. RIO's wholly and partly owned bauxite minesare located in Australia, Brazil and Guinea. (ii) Alumina is extracted frombauxite via a refining process. RIO's wholly-owned and JV alumina refineriesare located in Australia, Brazil and Canada. (iii) Aluminium is one of thewidely used metals in the world. RIO's smelters are mainly concentrated inCanada. RIO also has plants in France, Australia, New Zealand, Iceland, theUK and Oman.

Copper & Coal: The Company produces gold, silver and molybdenum asco-products of copper production. Rio Tinto Coal Australia is a wholly-ownedmember of the Rio Tinto Group. Rio Tinto Coal Australia produces boththermal and coking coal from five operations in the Hunter Valley in NSW andQueensland's Bowen Basin for international export. The product groupproduced 504 thousand tonnes of mined copper, 22.3million tonnes ofsemi-soft and thermal coal and 7.9 million tonnes of metallurgical coal.Copper & Coal also produced 376 thousand ounces of mined gold, 3,311thousand ounces of mined silver and 7.6 thousand tonnes of molybdenum asby-products.

Diamonds & Minerals: The group is engaged in mining, refining andmarketing. The group is made up of four operating assets, comprisingdiamonds, titanium dioxide, borates and salt. The group also includes theSimandou iron ore project in Guinea. RIO has operations in North American,Australia and South Africa.

Iron Ore: RIO is a supplier to the global seaborne iron ore trade andproduces saleable lump and fines ore, pellets, and concentrates. It alsooperates integrated mines, rail and port infrastructure. Operations are inAustralia and Canada.

Latest ResearchMixed MQ; Iron Ore Productivity Delivering Results

Buy Rated — Rio Tinto's 1Q18 production was mixed with iron oreshipments of 84.3mt coming 1% ahead of our estimates on productivityimprovements (85mt railed during the quarter) and less disruption fromweather. We maintain our Buy rating and increase target price toA$86/share (previously A$82/share) driven by commodity prices forecast(2Q18 Commodity Outlook) and partially offset by lower 2018 volumes foriron ore (IOC) and TiO2 slag (RMB).

For more information see research 19 Apr 2018.

GICS - Materials

Rio Tinto Limited

ASX Code: RIO Price: $82.50 12 Mth Target Price: $86.00 Rating: Buy

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Snapshot

DateMarket Cap.Shares on issue12 Month High12 Month Low

4 June 2018$34,024m412.4m$87.09$57.94

RatingRating12 Mth Target Price

Capital GainGross Yield

Implied Total Return

Buy$86.004.2%6.0%10.3%

Investment FundamentalsFYE 31 Dec 2017A 2018F 2019F 2020F

Profit $m 11,259.0 11,910.0 10,156.0 9,677.0Profit (norm)* $m 11,259.0 11,910.0 10,156.0 9,677.0

EPS* ¢ 646.0 680.0 580.0 553.0EPS Growth % 69.1 5.3 -14.7 -4.7P/E* x 12.8 12.1 14.2 14.9P/E Relative % 0.0 0.0 0.0 0.0

DPS ¢ 378.0 403.0 349.0 332.0Yield % 4.6 4.9 4.2 4.0Franking % 100.0 100.0 100.0 100.0* Adjusted for goodwill and unusual itemsSource: Based on Citi estimates

Share Price Chart

Total Return on $10,000 Investment

Profit & Loss ($M)2013A 2014A 2015A 2016A 2017A

Sales Revenue 57,187 58,113 47,672 46,685 51,321Total Revenue ex. Int. 58,133 60,905 49,225 49,273 56,381EBITDA 23,279 22,347 15,846 17,257 22,250Depreciation & Amort. -5,767 -5,925 -6,358 -6,625 -5,609Goodwill Amortisation -- -- -- -- --EBIT 17,512 16,422 9,488 10,632 16,641Net Interest -475 -713 -955 -1,412 -906Profit Before Tax 17,037 15,708 8,533 9,219 15,735Income Tax -5,664 -4,238 -2,135 -1,951 -4,319Outside Equity Int. 2,890 34 1,168 -220 -114Profit after Tax 14,264 11,505 7,565 7,048 11,301Significant Items after Tax -10,168 -3,547 -8,750 -667 -68Reported Profit after Tax 4,096 7,958 -1,185 6,381 11,233Preferred Dividends -- -- -- -- --

Cash Flow ($M)2013A 2014A 2015A 2016A 2017A

Receipts from Customers -- -- -- -- --Funds from Operations -- -- -- -- --Net Operating Cashflow 16,851 17,418 12,843 11,698 17,800Capex -14,530 -9,951 -6,413 -4,163 -5,746Acquisitions & Investments -79 -29 -71 -1,090 -931Sale of Invest. & Subsid. 2,369 1,291 37 1,856 3,481Net Investing Cashflow -12,233 -7,929 -6,296 -2,908 -3,042Proceeds from Issues 178 1,574 141 140 218Dividends Paid -3,713 -4,523 -5,579 -3,766 -5,449Net Financing Cashflow -1,044 -6,628 -10,498 -10,352 -11,719Net Increase Cash 3,574 2,861 -3,952 -1,562 3,038Cash at Beginning 8,127 12,447 16,972 12,927 10,499Exchange Rate Adjust. -292 -190 -218 -48 -15Cash at End 11,409 15,118 12,803 11,317 13,522

Ratios and Substantial Shareholders2013A 2014A 2015A 2016A 2017A

Profitability RatiosEBITDA Margin % 40.71 38.45 33.24 36.96 43.35EBIT Margin % 30.62 28.26 19.90 22.77 32.43Net Profit Margin % 24.94 19.80 15.87 15.10 22.02Return on Equity % 27.81 20.39 14.80 12.98 19.72Return on Assets % 12.69 9.94 7.14 7.10 10.53

Debt/Safety RatiosNet Debt/Equity % 34.19 23.29 31.58 21.14 9.73Interest Cover x 36.87 23.02 9.93 7.53 18.36

Top 5 Substantial ShareholdersShining Prospect Pte Ltd 13.1%BlackRock, Inc 6.3%

Balance Sheet ($M)2013A 2014A 2015A 2016A 2017A

Cash & Equivalent 11,417 15,146 12,820 11,334 13,526Receivables 4,949 4,236 2,992 4,414 4,056Inventories 6,411 5,304 4,336 4,059 4,451Other Current Assets 1,061 690 740 999 1,913Current Assets 24,902 25,756 21,289 20,849 24,579Prop. Plant & Equipment 79,154 83,752 83,571 81,336 79,606Intangibles 5,494 5,501 5,787 5,846 5,328Other Non-Current Assets 3,453 2,280 2,596 2,854 4,173Non-Current Assets 99,176 105,708 104,038 102,511 98,146Total Assets 124,078 131,464 125,327 123,360 122,726Interest Bearing Debt 31,862 30,649 31,892 24,695 19,899Other Liabilities 32,424 34,254 33,036 35,467 37,295Total Liabilities 64,286 64,902 64,927 60,162 57,194Net Assets 59,792 66,562 60,400 63,198 65,532Share Capital 5,745 5,810 5,713 5,720 5,590Reserves 19,155 18,788 18,394 18,684 21,269Retained Earnings 26,380 31,834 27,013 29,894 30,463Outside Equity Int. 8,511 10,130 9,279 8,900 8,210Total Shareholders Equity 59,792 66,562 60,400 63,198 65,532

Current Analyst Recommendations *

* Source: Morningstar. This chart shows the spread of recommendations from thosebroker analyst's in Australia with research coverage of this stock.

Principals & DirectorsPrincipals

Company Secretary Mr Stephen (Steve) AllenMr Timothy (Tim) Paine

Directors

Mr Christopher James Lynch(Executive Director,Chief FinancialOfficer)Mr Sam Laidlaw(Non-Executive Director)Mr Simon Robert Thompson(Non-Executive Director,Non-ExecutiveChairman)Ms Ann Frances Godbehere(Non-Executive Director,SeniorIndependent Director)Mr Simon Henry(Non-Executive Director)Mr Jean-Sebastien Jacques(Executive Director,Chief ExecutiveOfficer)Mr Michael Gerard L'Estrange(Non-Executive Director)Dr Megan Elizabeth Clark(Non-Executive Director)Mr David Constable(Non-Executive Director)

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Rio Tinto Limited

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