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NEWS-LEADING DEVELOPMENTS BHP and Rio Tinto Producing Iron Ore at Record Pace BHP Billiton's Jimblebar mine and plant expansion, shown here under construction, is expected to begin production in December, ahead of schedule. (Photo courtesy of BHP Billiton) BHP Billiton and Rio Tinto continued to report record levels of iron ore production in Western Australia for their reporting periods ending June 30 (the end of BHP's fiscal year and the end of Rio Tinto's fiscal first half.) BHP's Western Australia Iron Ore unit delivered its 13th consecutive annual production record of 187 million metric tons (mt) (100% basis, including production attributable to minority partners). During the June quarter, shipments were running at an annualized rate of 217 million mt, reflecting the successful commissioning of all major infrastructure associated with Western Australia Iron Ore's Inner Harbour expansion project at Port Hedland and the destocking of mine and port inventory built in anticipation of the increase in port capacity. Western Australia Iron Ore's production is expected to increase to approximately 207 million mt (100% basis) in BHP Billiton's 2014 financial year. First production from the Jimblebar mine expansion is now anticipated in the December quarter, ahead of schedule. Longer term, the progressive debottlenecking of the supply chain is expected to underpin substantial low-cost growth in Western Australia Iron Ore's business. Rio Tinto's Pilbara operations in Western Australia produced 120 million mt of iron ore during the first half of 2013 (Rio Tinto share 100 million mt), setting a first-half record. Expansion projects remain on track, 4 E&MJ; • AUGUST 2013 despite challenging weather conditions. Completion of the Rail Capacity Expansion infrastructure project in the second quarter marked the latest major milestone. Rio Tinto's phase-two expansion of port, rail, and power infrastructure to 360 million mt/y is currently under way. A number of options for mine capacity growth are under evaluation, including the potential development of new mines and incremental tons from further productivity improvement at existing mines. Barrick Extends Pascua-Lama Development Schedule Barrick Gold has submitted a plan, subject to review by Chilean regulatory authorities, to construct the water management system on the Chilean side of its huge PascuaLama gold-silver project to bring it into compliance with permit requirements by the end of 2014. Under this scenario, ore from Chile is expected to be available for processing by mid-2016, and Barrick is extending the construction timelines for the project's process plant and other facilities in Argentina, targeting first production by mid-2016, compared to its previous schedule of the second half of 2014. Barrick suspended construction work on the Chilean side of the Pascua-Lama project in April to address environmental and other regulatory requirements to the satisfaction of Chilean authorities. Activities deemed necessary for environmental protection remained ongoing (E&MJ;, May 2013, p. 14 and June 2013, p. 24). A Chilean appeals court formally suspended construction of the project on July 15 until Barrick builds infrastructure that will prevent water pollution. Re-sequencing the Pascua-Lama project will include a reduction in project staffing levels and deferral of substantial capital spending previously planned for 2013 and 2014. Barrick now expects to reduce capital expenditures across the two years by a total of $1.5 billion to $1.8 billion. For 2013, Pascua-Lama expenditures will be reduced by $700 million to $800 million to $1.8 billion to $2 billion. For 2014, they are expected to be reduced by $800 million to $1 billion to approximately $1 billion to $1.2 billion. Barrick expects to provide an updated total capital cost estimate for the project in the third quarter of 2013, when the resequenced construction schedule is finalized. Barrick also reported that it was conducting impairment testing for PascuaLama as a result of both the delay in first gold production and of recent significant declines in gold and silver prices. Preliminary analysis indicated an after-tax asset impairment charge in the range of $4.5 billion to $5.5 billion, the company said. A final impairment assessment was expected to be included in the company's second quarter 2013 results release in early August. Barrick President and CEO Jamie Sokalsky said, "When complete, PascuaLama will be one of the world's great, lowcost gold mines, producing an average of 800,000 to 850,000 oz of gold per year in its first full five years of production. In light of the challenging business environment we are facing today, and taking into consideration existing construction delays, the company is advancing the project in a prudent manner by extending the construction schedule over a longer period. "This mine has significant and strategic value for Barrick shareholders and the project's host jurisdictions of San Juan province, Argentina and the Atacama region of Chile. We continue to work closewww.e-mj.com