Bhp Group Ltd · ASX:BHP
Bhp — BHP Billiton — Corporate Update (September 2005)
51 slides from Bhp's corporate update, Sep 19, 2005
Slide 1: EKATI Diamond Mine Investors & Analysts Tour
EKATI Diamond Mine Investors & Analysts Tour 22 March 2004 September 19th, 2005 Sean Brennan – President & COO EKATI
Slide 2: Disclaimer
Disclaimer The views expressed here contain information derived from publicly available sources that have not been independently verified. No representation or warranty is made as to the accuracy, completeness or reliability of the information. Any forward looking information in this presentation ha
Slide 3: EKATI - Introductions
EKATI - Introductions • Greg Spoonheim – Mgr Surface Mining • Paul Harvey – Project Director Underground Development • Richard Weishaupt – Business Improvement (former Mgr Processing) • David Scott – Mgr Environment & Technical Services • Bruce Royal – Mgr Health & Safety • Roy Lenardon – VP Human R
Slide 4: EKATI - Investors & Analysts Tour September 2005
EKATI - Investors & Analysts Tour September 2005 • Key Messages • BHP Billiton Context • The Diamond Business • EKATI Overview • EKATI Performance and Short Term Outlook • EKATI Development Potential • Summary and Questions 4
Slide 5: EKATI - Key Messages
EKATI - Key Messages • Diamond Business - highly attractive with excellent risk / return characteristics • Market Fundamentals - strong with positive outlook • Operational Complexity - successfully managing transition to multiple open pits & underground mining • Operating Performance - Safety, Produ
Slide 6: BHP Billiton Context
BHP Billiton Context
Slide 7: BHP Billiton is a Diversified Resources Company
BHP Billiton is a Diversified Resources Company Stainless Steel EBIT $758m Aluminium EBIT $977m Carbon Steel EBIT $2.8bn 2005 EBIT $9.33bn Petroleum EBIT $1.8bn Energy Coal EBIT $616m Base Metals EBIT $2.1bn Diamonds EBIT $498m 7
Slide 8: The Diamonds Business
The Diamonds Business
Slide 9: The Diamonds Market - a Positive Outlook
The Diamonds Market - a Positive Outlook Demand • Rough diamonds remain in demand with rough prices increasing more than polished prices in the last year • Diamond jewellery demand growth expected to be strong going forward • The US remains the largest market • On top of this, strong growth is being
Slide 10: The Diamonds Market - a Positive Outlook
The Diamonds Market - a Positive Outlook 10
Slide 11: Diamonds – An Attractive Business: Price trend comparison
Diamonds – An Attractive Business Price trend comparison 350 Price Index (Real-terms) 1970=100 300 250 200 Diamonds 150 100 Zinc 50 0 Copper 1982 1985 1979 1988 1991 1994 2003 1970 1973 1976 1997 2000 Copper and zinc are LME cash prices. Diamond price index is derived from De Beers’ price adjustment
Slide 12: Diamond Industry Structure
Diamond Industry Structure US$billion Production Rough Polished Jewellery Retail Marketing Manufacture Manufacturing Jewellery & Marketing & Marketing ANTI TRUST Marketing De Beers LV De Beers 4.0 5.7 support (DPS & DIC) (Not operationally linked with De Beers) (incl Debswana and SOC and NamDeb) Alm
Slide 13: EKATI Diamond Mine Overview
EKATI Diamond Mine Overview
Slide 14: EKATI Diamond Mine
EKATI Diamond Mine • The EKATI Diamond Mine - joint venture: – BHP Billiton Diamonds Inc. 80% – Chuck Fipke (10%) – Dr. Stewart Blusson (10%) • Location: – 310 km NE of Yellowknife – 200 km South of the Arctic Circle – 65 degrees N of the Equator 14
Slide 15: EKATI Diamond Mine - Overview
EKATI Diamond Mine - Overview • BHPBilliton’s & Canada’s First Diamond Mine • JV Claim Block - 860,000 acres • Kimberlite Pipes discovered to date - 154 • Resource Development Plan - 8 Pipes • Open pit & Underground mining methods • Site Access by Air (year round) & Winter Road (February - March) •
Slide 16: EKATI - Discovery & Resource Development
EKATI - Discovery & Resource Development • Charles Fipke & Dr. Stewart Blusson search commenced early 1980s • Indicator minerals found in Lac de Gras area in ~1985 • BHP joins JV in August 1990 • Diamond discovery at Point Lake in September 1991 • Resulted in the largest mineral staking Needs New Ph
Slide 17: EKATI – A Successful Construction & Startup
EKATI – A Successful Construction & Startup • Canada’s first diamond mine in challenging artic conditions • Rigorous environmental review process • Final regulatory approval of the mine received in January 1997 • Initiate construction 1997. • The EKATI Diamond Mine was completed - on time, under bud
Slide 18: EKATI - A Remote Site with Challenging Logistics
EKATI - A Remote Site with Challenging Logistics Winter Road • Ice Road JV includes BHP Billiton & Diavik. • Ice Road 475km, constructed largely across lakes (86%), open 8-10 weeks / year (mid-Jan to late Mar) • EKATI Freight ~5,000 truckloads (diesel, ammonium nitrate prill, tires, construction mat
Slide 19: EKATI - A Complex Regulatory Framework
EKATI - A Complex Regulatory Framework • Mineral Leases • Water Licenses – to use water and dispose of waste water • Surface Land Leases – to accommodate infrastructure for mining • Land Use Permits – for activities on the Mineral Claim Block outside the land leases • Fisheries Authorizations – allo
Slide 20: EKATI – An Overriding Commitment to Health & Safety
EKATI – An Overriding Commitment to Health & Safety 14.0 EKATI Classified Injury Frequency Rate • Visible Management Commitment 12.0 • Active Team Participation - PASS & 10.0 Operation Zero Harm 8.0 • Reporting Culture - Near Miss, Job Safe C IF R 13.0 6.0 10.8 Observations 4.0 7.4 2.0 6.4 3.4 • Beh
Slide 21: EKATI – A Pristine Artic Wilderness Environment
EKATI – A Pristine Artic Wilderness Environment • Environmental Management based on adaptive management strategy - which allows for uncertainty & changes • Voluntary Environmental Agreement - providing for mine-related matters that go beyond legislation and regulations • Monitoring Programs include
Slide 22: EKATI - Valued by the Communities in which we Operate
EKATI - Valued by the Communities in which we Operate • Socio-Economic Agreement (SEA) – voluntary agreement to ensure the mine be constructed for the mutual benefit of BHP Billiton and the people of the NWT • Impact and Benefit Agreements (IBA) – voluntary agreements (4) which allow benefits to flo
Slide 23: EKATI – Building Capability through People Development
EKATI – Building Capability through People Development • Workplace Literacy Program • Pre-trades Entrance & Apprenticeships • Aboriginal Underground Miners Training Program • Workplace Training & Progression • Aboriginal Scholarship Program • Traccess self paced visual learning • EKATI Leadership De
Slide 24: EKATI – Business Improvement a Significant Contribution
EKATI – Business Improvement a Significant Contribution Improved Utilization -Crushed Feed -HPGR roll speed 16,000 Tonnes Per Day Processed Loader Constraints HMS Recrush -High utilization -5 Whys -Pushing bottlenecks Favorable Ore Exceptional overall utilization • Integrated Business Improvement Pr
Slide 25: EKATI Performance & Short Term Outlook
EKATI Performance & Short Term Outlook
Slide 26: EKATI - Diamond Mine Process Flow
EKATI - Diamond Mine Process Flow Mining Open Pit Processing • Waste rock to dumps • Primary Crushing 12,500 tpd • Ore hauled to Process Plant • Stockpile • Low grade ore to Stockpile • Secondary Crushing Mining Underground • Washing • Development Waste rock to dumps • Ore trucked & conveyed to Proc
Slide 27: EKATI - Current Status of Operations
EKATI - Current Status of Operations Transition from single Open Pit to multiple Open Pit & Underground Operations Current status of operations: • Panda OP - Completed • Koala OP - Completed (stockpile feed) • Misery OP - Completed (stockpile feed) • Beartooth OP - Active (ore FY-06) • Fox OP - Acti
Slide 28: EKATI Outlook - Ore Feed Sources
EKATI Outlook - Ore Feed Sources Process Plant Ore Feed Sources (% of total throughput) 100% 75% 50% 25% 0% FY-99 FY-00 FY-01 FY-02 FY-03 FY-04 FY-05 FY-06 FY-07 FY-08 FY-09 FY-10 Panda Pit Koala Pit Misery Pit Koala North Beartooth Pit Panda UG Fox Pit Koala Nrth UG Koala UG 28
Slide 29: EKATI Outlook - Operations KPIs
EKATI Outlook - Operations KPIs Open Pit Tonnes Mined (ex-pit million tonnes / year) Underground Development (linear meters / year) 70 12,000 60 10,000 50 8,000 40 6,000 30 4,000 20 10 2,000 0 0 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07
Slide 30: EKATI Outlook – Production KPIs
EKATI Outlook – Production KPIs Average Feed Grade (recoverable carats / tonne) Carats Recovered (million carats / year) 1.8 8.00 1.6 7.00 1.4 6.00 1.2 5.00 1.0 4.00 0.8 3.00 0.6 0.4 2.00 0.2 1.00 0.0 0.00 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 FY99 FY00 FY01 FY02 FY03 FY04 FY05
Slide 31: EKATI Outlook - Financial KPIs
EKATI Outlook - Financial KPIs EBIT (US% million BHBBilliton Share) Cash Flow (US$ million before tax) $400 $400 $350 $300 $300 $200 $250 $100 $200 $150 $0 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10 $100 -$100 $50 -$200 $0 FY99 FY00 FY01 FY02 FY03 FY04 FY05 FY06 FY07 FY08 FY09 FY10
Slide 32: EKATI Development Potential
EKATI Development Potential
Slide 33: Rich Portfolio of Development Options
EKATI - Rich Portfolio of Development Options 2010 2015 2017 2025 Plant Expansion Cases 17.5 ktpd (brings forward tons & shorten mine life -accelerating need to “upgrade” resource definition Plant Throughput 12.5 ktpd Base Plan Case 1 Case 2 Development Potential Exploration Fox OP (135), Panda UG,
Slide 34: EKATI - Underground Complex Development
EKATI - Underground Complex Development Koala Koala North Panda 34
Slide 35: EKATI Development - Panda Underground Project
EKATI Development - Panda Underground Project • Panda U/G Project, Capital $236m CDN, Planned Mining to 500m Completed open pit • Current design is a Sub Level Retreat operation WASTE • Full production ramp-up underway (End FY06). Original pit bottom Original orebody outline • Development to full pr
Slide 36: EKATI Development - Koala Underground Project
EKATI Development - Koala Underground Project • In Feasibility. Current design is a Sub Level Cave operation. Completed open pit • U/G diamond drilling, hydrology and bulk sample program underway • Scheduled for approval first half 2006 => Original orebody outline first production early 2008 • Share
Slide 37: EKATI Development Potential - Fox Deep
EKATI Development Potential - Fox Deep 515290E Looking West 135m pit bottom Open pit design Red – upper diatreme Brown – internal granite ZONE 1 Blue – lower diatreme 37
Slide 38: EKATI Development Potential - Kimberlite Discoveries
EKATI Development Potential - Kimberlite Discoveries Core Zone •BBDI 80% Sable •Chuck Fipke 10% •Stewart Blusson 10% Buffer Zone Pigeon •BBDI 58.8% •Chuck Fipke 10% Rat East •Stewart Blusson 31.2% Fox Jay Point Lake Misery Eagle 38
Slide 39: EKATI Development Potential - Jay Pipe
EKATI Development Potential - Jay Pipe Pre-2005 interpretation = 8 ha 2005 interpretation = 12 ha 39
Slide 40: EKATI Development Potential - Eagle Pipe Discovery
EKATI Development Potential - Eagle Pipe Discovery 40
Slide 41: EKATI Development Potential - Eagle Pipe Discovery
EKATI Development Potential - Eagle Pipe Discovery 41
Slide 42: BHP Billiton - Canadian Diamond Exploration Activity
BHP Billiton - Canadian Diamond Exploration Activity Somerset Is. & Brodeur Peninsula Victoria Is. Darnley Bay Aviat Wales Is. Coronation Gulf Lac de Gras Pelly Area 8 Bay Torngat Buffalo Head Hills Churchill Fort a la Corne Attawapiskat Otish Le Tac Kimberlites BHPB South Ontario Wawa Licenses 1,00
Slide 43: EKATI - Key Messages
EKATI - Key Messages • Diamond Business - highly attractive with excellent risk / return characteristics • Market Fundamentals - strong with positive outlook • Operational Complexity - successfully managing transition to multiple open pits & underground mining • Operating Performance - Safety, Produ
Slide 44: Appendices
BHP BILLITON Appendices
Slide 45: EKATI - FY05 Highlights
EKATI - FY05 Highlights HSEC • Safety Injury Reduction - 33% Reduction in CIFR, ZIP & Job Safe Observation Rollout • Water License Renewal - Draft License similar to current terms PEOPLE • Collective Bargaining - negotiating enterprise agreement • Aboriginal & Northern Hire - Aboriginal up 2% & Nort
Slide 46: EKATI - FY-06 Priorities
EKATI - FY-06 Priorities HSEC • Safety Injury Reduction - ZIP & Job Safe Observation Rollout • Water License Renewal - Under Acceptable Terms • Long Lake Management - Fox Ore Quality Challenges PEOPLE • EKATI Transition - Open Pit to Underground & Decline in Ore Value • Labor Relations - Collective
Slide 47: EKATI – Open Pit Mining Operations
EKATI – Open Pit Mining Operations • Production rate – nominal 150,000tpd • Surface Mining Fleet – 2 Demag 655 shovels (35m3) – 3 PC1800 excavators (12m3) – 1 CAT 994 FEL (14m3) – 15 CAT 793 / 789 haul trucks (218t) – 12 CAT 777 haul trucks (100t) • Open Pit Mining Areas – Fox – pre-strip developmen
Slide 48: EKATI - Underground Mining Operations
EKATI - Underground Mining Operations • Underground Mining Infrastructure – Surface workshops, office & dry – Fully mechanised mining; jumbos, LHDs (8m3), Haul trucks (45t), McLean Rockbolters, UG workshop – UG sizing & conveyor ore haulage – Contract mine development (Procon) – Permafrost / Mine ai
Slide 49: EKATI - Processing Plant Operations
EKATI - Processing Plant Operations • Throughput rate – nominal 12,500tpd (9,000tpd nameplate) • Main Processing Stages – Crushing, scrubbing & screening – Grinding & screening (HPGR) – Heavy Medium Separation (FiSi) – Diamond Recovery (WHIMS, X-Ray & Grease Table) • Processed kimberlite – Fines pum
Slide 50: EKATI - Sorting, Valuation & Multi Channel Marketing
EKATI - Sorting, Valuation & Multi Channel Marketing • Initial sorting & Government valuation occurs in Yellowknife - ten parcels per year • After Valuation diamonds are shipped to Antwerp for sorting, valuation & sale to: – Core Customers (majority) – Window sales (test market) – NWT Cutting & Poli
Slide 51: Rough Diamonds: Multi-Channel Marketing Strategy
Multi-Channel Marketing Strategy provides flexibility CanadaMark Licensing Sales Sales to retailers Rough Trading / Speculation Premium Sales Fixed contracts Set in Jewellery / Sales to Retailers Antwerp Ekati Polishing agreements Distribution by partners office CanadaMark Licensing Sales Rough Diam