RESOURCE SECTOR OVERVIEW

Australian Investors’ Association20 July, 2005

Presenter:Ron Cameron – Senior Analyst

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Research in this publication is sourced from JP Morgan Securities Australia Limited, Proview, Bloomberg and OML proprietary research.

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Resource Sector….Market Pariah to Market Darling

…….Driven bycommodity prices

Outpacing the All Ordsby 80+%

Inventories DOWN Prices UP….

Aluminium Copper

Nickel Zinc

…..Driven by Global Industrial Production

-10

-5

0

5

10

-50

0

50

100

% oy a

Global IP and commodity prices% oy a

92 94 96 98 00 02 04

IP Prices

….Resulting in Superior Earnings Growth in the Mining Sector

-5000

0

5000

10000

15000

20000

25000

2000 2001 2002 2003 2004f 2005f

BHP Billiton Limited Anglo AmericanRio Tinto CVRDNorilsk Nickel AlcoaPhelps Dodge Alcan Inc.

Source: Colonial First State Investments Limited

Crude Oil Markets

• Oil prices encircling record nominal highs

• Appears fundamentally overdone, BUT spare capacity is very low

• Some commodity risk premium is warranted

• Industry, and many analysts still using US$25-30/bbl assumption long term

‘Crude’ Facts

ENERGY: The Case For Moderating Prices

Source: Fidelity Management & Research Co. May 2005 reportentitled ‘The State of the Market

ENERGY: The Case for Higher Prices

Source: Fidelity Management & Research Co. May 2005 reportentitled ‘The State of the Market’

Coal Prices – Can They Get Much Better?

Thermal Coal

Hard Coking Coal

Source: Access Economics

Coal Stocks – Have they run too hard?12 April 2005

Outpacing the Market!

Outpacing their Peers!

What About The Others?

Uranium – Responding to the oil price shock?

Zircon – Mineral sands back in favour!

Even SUGAR!

Source: Fidelity Management & Research Co. May 2005 reportentitled ‘The State of the Market

Source: Fidelity Management & Research Co. May 2005 reportentitled ‘The State of the Market

CHINA IN PERSPECTIVE

Aluminium Copper

Nickel Zinc

CHINA IN PERSPECTIVE

Aluminium Copper

Nickel Zinc

CHINA IN PERSPECTIVE

Aluminium Copper

Nickel Zinc

The Global S-Curve

!Source: Fidelity Management & Research Co. May 2005 report

entitled ‘The State of the Market

Aluminium Copper

Nickel Zinc

MINING SECTOR –TURNING THE WORLD UPSIDE/DOWN!

When to Invest inResource Companies?????

BHP Billiton Limited (BHP)18 July 2005

Reasons to Invest• High quality assets, long operating lives and low on the global cost curve (profitable in the ‘bad’ times!)• Greater diversification than any other major resources company! • Deep inventory of organic growth projects (26 projects with >US$10b capital budget)• Strong earnings growth for several years ahead• Particular strengths in iron ore, coking coal, petroleum. Copper/uranium and nickel strengthened through WMR acquisition

18 July 2005BHP Billiton Limited (BHP)

(in US$) 2004(A) 2005(E) 2006(E)Net Profit ($m) 3,510 6,249 8,121Consensus N/P Range

(Average)2,212-6,497

(6,322)4,136 – 8,840

(8,363)

PER (x) 23.0 13.6 10.5Yield (%) 1.9 2.2 3.1AUD/USD* 5.0% 6.2%Copper* 2.8% 2.9%

Oil* 3.5% 4.0%

Recommendation: BUY (Low risk)Valuation: A$17.05 (target range A$18-20)

Share Price: A$18.67

* % change in EPS for a 10% change in…

18 July 2005Rio Tinto Limited (RIO)

Reasons to Invest

• Long-life, low cash operating cost, asset suite over a diversified range of commodities• Significant number of ‘organic’ growth options (28 projects – >US$6bn capex over next 2 years!)• Compelling fundamentals• Less volatile earnings, than perhaps its peers, through greater exposure to ‘bulk’ commodities• Well leveraged to the current buoyancy in the iron ore and coal markets

18 July 2005Rio Tinto Limited (RIO)

(in US$) 2004(A) 2005(E) 2006(E)Net Profit ($m) 2,221 4,396 4,984Consensus N/P Range

(Average)2,387 – 5,457

(4,331)3,826 – 5,594

(4,710)

PER (x) 19.9 10.7 9.4Yield (%) 2.3 4.3 5.3AUD/USD* 4.3% 4.0%Copper* 3.6% 2.7%Iron Ore - lump* 6.6% 7.6%

Recommendation: ACCUMULATE (Medium risk)Valuation: A$48.00 (target range A$55-60) Share Price: A$46.25

* % change in EPS for a 10% change in…

18 July 2005

Woodside Petroleum Limited (WPL)

Reasons to Invest

• The quality oil/gas company on the ASX• Strong organic growth until 2008 and probably beyond• Several significant growth options not included by market analysts in their valuations (e.g. Pluto-1)• Consensus oil price forecasts (circa US$30/bbl) remain well below spot and futures (circa US$50+/bbl!)• Substantial exploration effort continues ($250m+ per annum)

Woodside Petroleum Limited (WPL)18 July 2005

Recommendation: ACCUMULATE (Medium risk)Valuation: $21.03 (base case), $27.69 (blue-sky)

2004(A) 2005(E) 2006(E)

Net Profit ($m) 651 831 1,324

Consensus N/P Range(Average)

366 – 942(832)

617 – 1,484 (1112)

PER (x) 26.4 23.0 14.5

Yield (%) 2.3 2.6 4.1

AUD/USD (+/-1cent) 2.8% ($19m) 3.5% ($35m)

Oil (+/- US$1/bbl) 3.0% ($20m) 4.3% ($44m)

Share Price: $28.71

18 July 2005

Newcrest Mining Limited (NCM)

Reasons to Invest

• Recent interim profit a clear indication the company is ‘back-on-track’• Successful Telfer commissioning (albeit later than expected) removes project and growth risks• Copper exposure (Cadia/Ridgeway) a clear benefit in the current climate• Open share register exposes corporate appeal• Quality management team

Newcrest Mining Limited (NCM)18 July 2005

2004(A) 2005(E) 2006(E)

Net Profit ($m) 119 144 205

Consensus N/P Range(Average)

81 – 172(140)

198 – 282(215)

PER (x) 47.5 36.2 25.3

Yield (%) 0.3 0.4 2.9

AUD/USD (+/- 1c) n/c n/c

Gold (+/- US$10/oz) n/c n/c

Recommendation: ACCUMULATE (Medium risk)Valuation: $10.19 (NPV) Share Price: $15.65

This satirical piece is based on the experiences

of the English who invested in California

and Australian mines.The featured subject is;"The Great Doo &

Diddle, Gold, Silver, Copper, and Brass,

Smash, Dash, & Crash Company"

We’ve Come a Long Way!

Aluminium Copper

ZincNickel

18 July 2005

• The quality company in the mid-cap oil/gas stocks• Strong management and Board• Strong balance sheet, and good institutional support• AWE will be transformed through four new projects coming on stream over 2005-2006, all in Australia/NZ• Solid earnings base from two gas projects over 10-15 years, upside from two oil projects

Australian Worldwide Exploration Limited (AWE)

Reasons to Invest

Australian Worldwide Exploration Limited (AWE) 18 July 2005

2005(E) 2006(E) 2007(E)

Net Profit ($m) (7.4) 18.3 82.6

Consensus N/P Range(Average)

(7.4) – 0.8(-1.6)

10.0 – 51.0(25.1)

50.6 – 124.0(25.1)

PER (x) n/a 33.3 7.4

Yield (%) 0 1.0 1.6

AUD/USD (+/- 1c) 1.6% ($0.4m) 2.4% ($2.0m)

Oil (+/- US$1/bbl) 2.4% ($0.6m) 4.2% ($3.5m)

Recommendation: BUY (Medium risk)Valuation: $2.15 (base case) $3.00+ (spot oil)

Share Price: $2.05

18 July 2005

Jubilee Mines N.L. (JBM)

Reasons to Invest

• Expanding portfolio of quality growth options• Recent exploration success will lead to further resource/reserve upgrades and ongoing market re-rating• Leveraged to movements in the nickel price (unhedged)• Extensive wholly-owned land-bank covering known Ni-bearing province (Cosmos region et. al.)• Total returns enhanced by solid yield

18 July 2005

Jubilee Mines N.L. (JBM)

2004(A) 2005(E) 2006(E)

Net Profit ($m) 95 79 68

Consensus N/P Range(Average)

38 – 79(77)

46 – 87(82)

PER (x) 9.1 11.3 13.1

Yield (%) 6.4 5.0 4.1

AUD/USD* 18.0% 21.3%

Nickel* 11.1% 19.4%

Recommendation: BUY (Medium risk)Valuation: $5.24 (‘most-likely’ case)

Share Price: $7.20

* % change in EPS for a 10% change in…

18 July 2005Bemax Resources N.L. (BMX)Recommendation: BUY (High risk) $0.195

Reasons to Invest

• Developing a world-class resource at Pooncarrie (20-25 year mine life)• Existing mineral sands operations provide experienced management team in marketing, processing and extraction• Guaranteed off-take agreement with Dupont & Cristal• Delivering Pooncarrie on time & budget• Clearly undervalued on a 1-2 year time frame• Rationalisation of tenements with ILU provides another phase of growth

18 July 2005Bendigo Mining (BDG)

Recommendation: BUY (High risk) $1.10

Reasons to Invest

• Emerging gold producer with circa 11 million ounces of inferred resources (post-BFS)• Tenure over the entire Bendigo goldfiled (historical production of 22 million ounces of gold!)• Substantial discount to our current valuation of $1.86 (upside to $2.25)• Stage 1 - 140,000oz per annum (@$400/oz cash cost)• Stage 2 - 600,000oz per anum (@under $200/oz)

18 July 2005Paladin Resources (PDN)Recommendation: ACCUMULATE (High risk) $1.38

Reasons to Invest

• Emerging uranium producer• Langer Heinrich (LH) project in Namibia is the most advanced uranium project globally outside the majors• Total resource base of 135 million pounds (LH resources of 72 million pounds)• Staged growth through 4 advanced projects• Positive outlook for uranium prices

ANY QUESTIONS?