the future of mineral exploration in a changing world - stephen mcintosh from rio tinto at mines and...

Stephen McIntoshHead of Exploration, Rio Tinto1st December 2015

Mines and Money LondonThe future of mineral exploration in a changing world

© 2015, Rio Tinto, All Rights Reserved

Cautionary statement

This presentation has been prepared by Rio Tinto plc and Rio Tinto Limited (“Rio Tinto”). By accessing/attending this presentation you acknowledge that you have read and understood the following statement.

Forward-looking statements

This document contains certain forward-looking statements with respect to the financial condition, results of operations and business of the Rio Tinto Group. These statements are forward-looking statements within the meaning of Section 27A of the US Securities Act of 1933, and Section 21E of the US Securities Exchange Act of 1934. The words “intend”, “aim”, “project”, “anticipate”, “estimate”, “plan”, “believes”, “expects”, “may”, “should”, “will”, “target”, “set to” or similar expressions, commonly identify such forward-looking statements.

Examples of forward-looking statements include those regarding estimated ore reserves, anticipated production or construction dates, costs, outputs and productive lives of assets or similar factors. Forward-looking statements involve known and unknown risks, uncertainties, assumptions and other factors set forth in this presentation.

For example, future ore reserves will be based in part on market prices that may vary significantly from current levels. These may materially affect the timing and feasibility of particular developments. Other factors include the ability to produce and transport products profitably, demand for our products, changes to the assumptions regarding the recoverable value of our tangible and intangible assets, the effect of foreign currency exchange rates on market prices and operating costs, and activities by governmental authorities, such as changes in taxation or regulation, and political uncertainty.

In light of these risks, uncertainties and assumptions, actual results could be materially different from projected future results expressed or implied by these

forward-looking statements which speak only as to the date of this presentation. Except as required by applicable regulations or by law, the Rio Tinto Group does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information or future events. The Group cannot guarantee that its forward-looking statements will not differ materially from actual results. In this presentation all figures are US dollars unless stated otherwise.

Disclaimer

Neither this presentation, nor the question and answer session, nor any part thereof, may be recorded, transcribed, distributed, published or reproduced in any form, except as permitted by Rio Tinto. By accessing/ attending this presentation, you agree with the foregoing and, upon request, you will promptly return any records or transcripts at the presentation without retaining any copies.

This presentation contains a number of non-IFRS financial measures. Rio Tinto management considers these to be key financial performance indicators of the business and they are defined and/or reconciled in Rio Tinto’s annual results press release and/or Annual report.

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Rio Tinto – a world leader in mining

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Aluminium• Industry-leading bauxite position

• Alumina refineries providecompetitive security ofsupply for our smelters

• Sector-leading primaryaluminium metalEBITDA margins Al

Copper & Coal• Significant producer of copper from

our assets in the USA, Mongolia, Chile and Indonesia

• Australian producer ofthermal, semi-soft andhard coking coal

Cu

Diamonds & Minerals• Demand led operating philosophy

• Flexible product portfolio in titaniumdioxide and zircon

• Leading supplier of borates

• Diverse diamonds business

• Supplier of salt and uranium

Iron Ore• Leading producer of iron ore

• Australian Pilbara business supplies our premium Pilbara Blend lump and fines products

• IOC in Canada producesboth concentratesand pellets

Fe


World Population and global production trendsPrimary Copper Supply (Mt/a)

Primary copper, not refined copper demand, which is above 20Mt this year, but includes scrap

0

5

10

15

20

1900 1920 1940 1960 1980 2000

18.83Mt

Aluminum Supply (Mt/a)

Source: US Geological Survey / Wood Mackenzie 2014

0

15

30

45

60

1900 1920 1940 1960 1980 2000

53.72Mt

World Population GrowthEstimated Population (Billions)

0

2

4

6

8

1900 1920 1940 1960 1980 2000

7.35B

Source: UN Department of Economic & Social Affairs 2015

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We are not running out of resources globally

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BKM – Brockman iron formationMM – Marra Mamba iron formationDID – Detrital iron deposit

Data sourced from 2013 global public domain 3rd party and Rio Tinto reports of Ore Reserves, Resources and Exploration Targets. Due to multiple reporting codes and various report timeframes these charts are for comparative purposes only and do not represent current Resources and Reserves for Rio Tinto or other competitors.

CID – Channel iron depositET – Exploration target


Mineral exploration spend and discovery rateSignificant* mineral discoveries and expenditures (excluding bulk commodities)Western world: 1996 - 2014

Caution: Incomplete discovery data in recent years*Signif icant defined as >100Koz Au, >10Kt Ni, >100Kt Cu equiv, 250Kt Zn+Pb, >5Moz Ag, >5kt U3O8

Source: Discoveries - MinEx Consulting June 2015 ; Expenditures - SNL Metals & Mining December 2014

0

50

100

150

200

0

5

10

15

20

25

1996 2000 2004 2008 2012

Number of discoveries

Estimated worldwide exploration expenditure (US$B)

Exp

lora

tio

n

exp

end

itu

re(r

eal 2

014

US

$B)

Discoveries

Expenditures

Nu

mb

er o

f D

isco

veri

es

Estimated spend (1996 – 2014): $155BTotal number of discoveries (1996 – 2014): 1031

Incompletediscovery data in recent years

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2002Resolution

Copper

65 year track record discovery success1947Lac AllardIlmenite

1953Elliot Lake

Uranium

1955Weipa

Bauxite

1956PalaboraCopper

1960Kirka

Borates

1962Tom PriceIron Ore

1968RössingUranium

1970Tarong (QLD)Coal

1972ParagominasBauxite

1979Argyle

Diamonds

1982Moro de Ouro

Gold

1983LihirGold

1986Kintyre

Uranium

1996Diavik

Diamonds

2004SimandouIron Ore

2008BunderDiamonds

2008SulawesiNickel

2008MutambaIlmenite

1960SeirritaCopper

1955Mary KathleenUranium

1964PangunaCopper

1968OK TediCopper

1972Richards BayIlmenite

1977Kelian

Gold

1984Kaltim Prima

Coal

1990CenturyLead-Zinc

1996Las Cruces

Copper

2000PRC

Potash

2009JadarLithium

2005Caliwingina

Iron Ore

2005La Granja

Copper

2007Chapudi

Coal

1991Corumba

Iron ore

2011AmargosaBauxite

1996Sepon

Copper

2013SaskatchewanPotash

1956SangarediBauxite

2004EagleNickel

2004ConstanciaCopper

1999Murowa

Diamonds

2014Yandi BraidIron Ore

1947

1950

1953

1956

1959

1962

1965

1968

1971

1974

1977

1980

1983

1986

1989

1992

1995

1998

2001

2004

2007

2010

2013

2016

Founding discoveries for key product groups

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Saskatchewan2012, potash

Eagle2004, nickel**

Resolution2002, copper

La Granja2005, copper Amargosa

2011, bauxite

Potasio Rio Colorado2000, potash*

Simandou2004, iron ore

Bunder,2008, diamonds

Mutamba2008, mineral sands****

Jadar2009, borate/lithium

Sulawesi2008, nickel laterite***

Caliwingina2005, iron ore

Yandi Braid2014, iron ore

Aluminium

Copper & Coal

Diamonds & Minerals

Iron Ore

Greenfield projects

Brownfield projects

Rio Tinto significant discoveries – 2000 to 2014A truly global exploration effort not solely focussed on the OECD

*sold to Vale in 2009 **sold to Lundin in 2013 ***sold in 2014 ****JV with Savannah in 2015

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Leading exploration capability delivering future growth options for <$40 million* each

Mine & Process

*net Average USD cost 2004 - 2013 after divestment income

• Continue generating options to invest in Tier 1 brownfield and greenfield projects aligned with portfolio strategy

• Maintain disciplined process to ensure that only highest quality projects advance through the pipeline

• Focus on partnering with juniors and using new technology coupled with legacy data to generate new projects

Aluminium

Copper & Coal

Diamonds & Minerals

Iron Ore

Greenfield projects

Brownfield projects

…and a strong pipeline of future prospects

ExplorationAccountability

Target Generation

TargetTesting

Projectof Merit

Order ofMagnitude

AreaSelection

Discovery PreFeasibility

Feasibility

Product GroupAccountability

100% of targets <0.1% of targets

Global portfolio prioritisation

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Mineral exploration and the role of cover

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Caliwingina

Tom Price

Kintyre

Argyle

Mary Kathleen

Century

Tarong

Weipa

ValeriaBlair Athol

Hail Creek

Kestrel

Gove

Salt

Hunter Valley

Rio Tinto Exploration 2015 projects

Rio Tinto discoveries

Rio Tinto mines

Outcrop & shallow basement (the highlighted areas serve as an indication only)Cover

Year Discovery Commodity

1955 Weipa Bauxite

1955 Mary Kathleen Uranium

1962 Tom Price Iron Ore

1963 Paraburdoo Iron Ore

1968 Hail Creek Coking Coal

1969 Valeria Thermal Coal

1970 Tarong Coal

1979 Argyle Diamonds

1986 Kintyre Uranium

1990 Century Lead-Zinc

2005 Caliwingina Iron ore

2014 Yandi Braid Iron Ore


Non-technical barriers to exploration

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Source: Australian Government Productivity Commission Inquiry Report September 2013

a A work program must be submitted with the application, but may not be part of the decision-making process.

b Jurisdictions require different environmental, heritage and land access agreements to be completed at different stages of the exploration licence approval process.

Application for exploration licencea

Public notification

Scope for public comment (some jurisdictions)

Environmental assessment (some cases)

Exploration licence granted

Works and access approvals and agreements

Exploration commences

Land access agreements and compensation for landholders

Native title agreement

Heritage surveys

Other land access agreements

Works approval

Environmental approvals

Other approvals as required

b

Australian Government Productivity Commission Inquiry – 2013

ExplorationProcess

Australiaaverage

timeframe(months)

Canadaaverage

timeframe(months)

Concept 6 - 12 6 – 12

Pre grantApplication to governments for claims

6 – 13improving

0.25

Post grantPermits or work access agreements, stakeholder engagement for ground work*

8 – 30(exceptional +60

months)

2

Total (months)

(years)

~ 20 – 55

~ 1.6 – 4.5

~ 8 – 14

~ 0.6 – 1.2

Trend in timePost grant processesincreasing

Increase

Rio Tinto Exploration experienceTimeframes for license access for exploration

Source: Australia - Rio Tinto Exploration Pty Ltd experience post 2000; WA government – July 2015; Not all States have the same trend

*Includes negotiations with all stakeholders, some aspects may be done in parallel with government claim application


Improving discovery rates

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Combination of old and new technologies and effective data integration yielding knowledge

New technologiesand concepts

DataIntegration

Traditionalmethods

Bundoora Micro-Analytical FacilityGreenrocks & RIMS

VK1 gravity gradiometer

Discovery Success

Resistate Indicator Minerals & Greenrocks

• Detection of sulphides and other minerals associated with mineralisation in exploration samples• Vectoring towards concealed mineralisation from distal alteration halos• Assessment of fertility potential of prospects and exploration targets

Resistate Indicator Minerals & Greenrocks

• Detection of sulphides and other minerals associated with mineralisation in exploration samples• Vectoring towards concealed mineralisation from distal alteration halos• Assessment of fertility potential of prospects and exploration targets

Epidote ChloriteSulphides


Vast quantities of geochemical data –but lacking in many developing countries

Australia surfacesamples: >6.3 million

Total public geochemistry surface samples: 14.4 millionTotal public geochemistry surface samples: 14.4 million

RTX Global Public Geochemical Database (GPG)Africa surface

samples: 1.3 million

Updated Nov 2015

Total in-house geochemistry surface samples: 3.2 millionTotal in-house geochemistry surface samples: 3.2 million

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Future eco-system for discovery

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Best People Best Ideas

Efficient Access Innovative Technology

Leadingcollaboration within a neweco-system

the future of mineral exploration in a changing world - stephen mcintosh from rio tinto at mines and...

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