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GLD.

031
MAJOR CAPITAL PROJECTS
(Minerals)

Brief description
Performance requirements for the initiation, development, execution, close out and transition to operations of
minerals major capital projects.

The Gate references in the Major Capital Projects Group Level Document (GLD) are linked to the Investment
Process GLD.

Key contact
Andy Higgins, Head of Group Project Management Services.

Version: 2.2 (29 August 2011)
Revalidation date: 31 December 2011
BHP Billiton Group Level Document (printed copies are uncontrolled)

GLD.031
MAJOR CAPITAL PROJECTS
(Minerals)

1. Project initiation
Major capital projects must be initiated and prioritised in accordance with the Corporate Objective, CSG strategy
and CSG approved 5 Year Plan.
 Ensure continuous single point accountability for ownership and delivery of the major capital project.
 Develop clear business objectives as specified in Appendix 2 Section 1.1.
 Register all major capital projects in the Investment Tracking System.
 Comply with authorities (Appendix 1).

2. Project development
Major capital projects must be developed, refined, and optimised by advancement through the identification phase,
selection phase and definition phase.
 Conduct the study activities in accordance with the requirements specified in Appendices 2 to 4.
 Study budgets, pre-commitments, execution phase budgets and approval to Gate between phases must
be authorised in accordance with the group investment process.
 Comply with authorities (Appendix 1).

3. Project execution, close out and transition to operations
Major capital projects must be executed in accordance with the approved Project Execution Plan, budget and
scope of work to meet the agreed project objectives and project key performance indicators (KPIs).
 Execute the project in accordance with the requirements specified in Appendix 5 Sections 1.0 and 2.0.
 Transition to the operation phase in accordance with the requirements specified in Appendix 5 Section 3.0.
 Close out the project in accordance with the requirements specified in Appendix 5 Section 4.0.
 Comply with authorities (Appendix 1).

Version: 2.2 (29 August 2011)
Revalidation date: 31 December 2011
BHP Billiton Group Level Document (printed copies are uncontrolled)

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GLD.031
MAJOR CAPITAL PROJECTS
(Minerals)
Appendix 1. Authorities
Endorse

Approve

Inform

5.12 MAJOR CAPITAL PROJECTS
5.12.1 Business objective(s) for the major capital project
Project leader


President <CSG>

5.12.2 Phase requirements (study and execution phase objectives, study work plan, project execution plan, phase
elements and phase deliverables)
Vice President Marketing (Appendices 2 to 4 Section 6.0)


Project leader
5.12.3 Recommendation to advance or not to next phase
Project leader


President <CSG>

Group Management Committee (GMC) Owner

5.12.4 Assignment of major capital projects to a Project Hub, approval of project execution strategy and key project
resources
Head of Group Project Management Services


President <CSG>
5.12.5 Exemptions to investment phase mineral resource and ore reserve requirements
Head of Group Resource and Business Optimisation


President <CSG>
5.12.6 Approval of operations strategy and key operations resources
Asset President <Asset>
President <CSG>


Version: 2.2 (29 August 2011)
Revalidation date: 31 December 2011
BHP Billiton Group Level Document (printed copies are uncontrolled)

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Direction on the application of the identification phase study requirements is available from Group Project Management Services (PMS).4 Plan for next phase Complete all planning required for transition to the selection phase including:  1. if required by approver.  identify all potential material risk issues or major risks.  identification of the key selection phase study support contractor(s).  preparation of the zero harm HSEC Management Plan for the selection phase.  CSG independent peer review (IPR) summary and functional reports. or not to proceed. provide detailed reasoning. 1. The SWP and budget must cover all activities in the identification phase up to the forecast approval date for the start of the selection phase.1 Business objective(s) and strategic fit What Develop and clearly document the business objective(s) for the investment opportunity. to the next phase that is logically supported by the data. Version: 2. Appendix 2 Sections 2. Ensure that the study addresses these elements. Identification phase 1. strategic fit and any required exit strategy.031 MAJOR CAPITAL PROJECTS (Minerals) Appendix 2.2 Study objectives The identification phase study objectives must be based on the group investment process investment phase objectives.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 4 of 35 .0 to 15.4).  development of the selection phase exploration and appraisal program.GLD.6 Study report  CSG funding approval document. Any elements considered not applicable.  ensure alignment with agreed CSG business strategy. The following deliverables are required from the identification phase:  identification phase study report. including identifying how this project fits into the resource development potential of the province. assess the material risk issues.  Investment Committee Notification (ICN).  identification of all key statutory or third party permits and approvals. If the recommendation from the study is to proceed to the selection phase then the following additional documentation is required: 1. Conduct the identification phase study activities in accordance with the approved Study Work Plan (SWP) and budget to meet the agreed study objectives and deliverables.  identify major alternatives for evaluation in the selection phase. Identification Phase Requirements Investment phase activities: 1. Ensure the investment is consistent with the corporate objective. identify the potential strategic investment alternatives to be assessed further during the selection phase and ensure alignment of the investment with the business strategy. Provide a concise overview of the strategic rationale. not relevant or where compliance cannot be achieved must be documented in the SWP. investment phase activities and the individual needs of the investment opportunity. Investment phase objectives: Identify a value-creating investment.  development of the selection phase SWP and cost estimate.  define what work needs to be done to further assess the investment opportunity.  understanding of all business material risk issues. documentation and analysis. The study report must consist of an organised collection of documents that:  contains an executive summary that includes confirmation of meeting the study objectives and a clear recommendation to proceed.0 Identification phase study overview Description 1. 1. CSG strategy and CSG approved 5 Year Plan.  investment evaluation model. Reference existing material from the CSG approved 5 Year Plan and CSG directional appraisal.0 detail the specific performance elements that must be considered during the study.3 Conduct study  identify a value-creating investment.  planning for tenure and acquisition. If it is not aligned.  plan for the next phase (see Appendix 2 Section 1.5 Study deliverables ensuring that the selection phase owner’s study manager and key study team resources are available.

SWP and budget are:  developed prior to the start of the work. prepare a selection phase work plan for mining including a list of plausible mining strategies for further evaluation and the actions required to investigate the major mine factors and key risks. continuity and grade and/or quality to clearly support a determination as to whether or not an investment opportunity exists.  anticipated mine production rates.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 5 of 35 . including local and regional infrastructure.0 Mining Description Identification Phase Requirements 3.031 MAJOR CAPITAL PROJECTS (Minerals) 1.1 Data acquisition What Collect sufficient data from exploration and drilling/sampling programs to support the determination of whether or not an investment opportunity exists. The index of the study report must follow the same structure as Appendix 2 Sections 2. The mineral inventory used to determine whether or not an investment opportunity exists must be estimated by a Competent Person. In the event that an investment opportunity is found to exist.1 Mining strategy What Develop a conceptual mining configuration that supports the investment opportunity.0 Geology and mineral resources Description Identification Phase Requirements 2. processing and market considerations.5 Mineral Resource statement A public Mineral Resource statement is not required in the identification phase. Describe the resource and the potential mineralisation in terms of parameter ranges and uncertainty resulting from Resource Range Analysis and other analysis. mining operations and processing. cultural.0 with the addition of the study report executive summary in Section 1.  is version controlled.  implemented.0 to 15. environmental.GLD.  is.3 Mine design  definition of the key issues that impact mine design. Delineate and characterise the resource with sufficient confidence in volume. In the event that an investment opportunity is found to exist. stored in an approved document management system and accessible to the IPR team. 2.  approved as part of the transition into the identification phase. together with the investment evaluation. 2. hydrogeology and geotechnical Describe the geometallurgical. 3.7 Timing The business objectives are identified before and developed during the identification phase.0. 2. prepare a selection phase work plan for geology and resources including an estimate of the requirements for the drilling and other field programs. 3.  identification of the key value drivers that impact or influence the mine plan and design. The identification phase deliverables are completed at the end of the study and approved as part of Gate 1 (the advancement from the identification phase to the selection phase). geometry. Develop and describe a conceptual mine design to demonstrate technical viability including:  an estimate of the mineable resource (tabulated by level. hydro-geological and geotechnical environment and how it could affect future mine development. 2. Demonstrate that the major mine factors and key risks that impact the potential investment have been identified including: 3.2 Mining plan Develop a conceptual mining plan that will support the investment opportunity.0 Identification phase study overview Description What  addresses the minimum requirements for each applicable element as required by the SWP.3 Mineral inventory Develop a mineral inventory model that includes appropriate potential mineralisation and Mineral Resource.4 Geometallurgy. 1. the source of information and data used to complete the necessary approval documentation. Describe the process undertaken to create the model. domain and classification).2 Geology and mineralisation description Describe the major geological controls on the mineralisation and the geometry of the ore body. The identification phase study objectives. managed and controlled during the identification phase.  potential mining methods and for each potential mining method. the assumptions as to the type and size of Version: 2.  separates the materially sensitive sections or data such that joint venture partners or other third parties are restricted from accessing confidential information. 2.

4. mine equipment and manning levels.3 Test work Describe the information and data used to support the processing configuration proposed and assumptions made. waste disposal and drainage. Describe the significant parameters and factors influencing the choice of locations (for example.6 Process facilities Outline the technically viable process facilities required for the conceptual processing configuration. transport and logistics Description Identification Phase Requirements 5. communications and temporary facilities.0 Mining Description What mining equipment. These can be based on benchmarking information. mine site ore processing (for example.0 Processing Description 4. the new infrastructure required and the respective locations (on and off site). 3. Identification Phase Requirements Highlight any key assumptions and risks. material handling and transport within the mine site.5 Ore Reserves statement Not required in identification phase. 5. 4.3 Transport and logistics Outline the transport and logistics requirements for the conceptual configuration. 4.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 6 of 35 . materials handling and export. major operating and maintenance consumables and utilities.2 Infrastructure Outline requirements for all non production support facilities for the project including: power. transport Infrastructure. crushing). Identify potential locations proposed for the infrastructure using ground-level geotechnical survey (by surface observation and local pits). Describe the major factors and assumptions used to convert the resource to mineable resources.0 Infrastructure. Describe assumptions made regarding annual ore and product capabilities. Document conceptual site layouts for the materials handling between the mine and plant. These can be based on benchmarking information.4 Process selection Identify at least one metallurgical processing configuration that supports a value creating investment opportunity. Outline existing infrastructure available to support the project.031 MAJOR CAPITAL PROJECTS (Minerals) 3. infrastructure and residue disposal sites (for example. Use existing topographical and geotechnical information/data to provide a reasonable level of assurance as to the viability of the locations selected. 5. infrastructure and waste management facilities. product handling.5 Metallurgical performance Not required in identification phase. 4. the processing plant. Version: 2. utilities. ore stockpiles. Identify processing and technology risks including potential issues and opportunities regarding the acquisition and implementation of new or alternative technology.  outline of conceptual mine excavations. and topographical investigations via existing data to provide a reasonable level of support for the viability of the locations selected.GLD. Identify the major alternative processing configurations for evaluation in the selection phase. 3. waste dumps. identify the plausible metallurgical processing configurations that must be studied during the selection phase. including why they are appropriate to consider. 4. plant availability. Highlight any existing transport or logistics available to support the project and any new facilities and/or arrangements required. mining infrastructure and final mining limits. site conditions and access to major utilities such as power and water). transportation and ramp-up strategies. environmental. In the event that an investment opportunity is found to exist.4 Mine operations Develop and describe a conceptual mining sequence and schedule including assumptions and risks for the investment opportunity.2 Feed characteristics Describe the metallurgical characteristics of the different ore types including value minerals and impurities and discuss any variability.1 Processing strategy What Develop a conceptual process flow sheet and complete any test work required to support the investment opportunity. water.1 Location What Identify potential locations for the plant. 4. 5. Summarise the assumed mining operations. Include on site and off site infrastructure and define their battery limits. tailings dams). buildings and facilities.

Prepare a preliminary scope of work (SoW) for the identified investment opportunity. Implement.1 Marketing strategy What Develop a preliminary marketing strategy in relation to the investment opportunity. Prepare a detailed (Class 2) schedule for the selection phase and include in the forward work plan. 7. 9.3 Product specification Identify the standard required for product(s). This can be based on benchmarking data. 6. storage and distribution Outline the likely product shipping.6 Marketing Identify key contracts or agency agreements current or required for marketing the product.3 Execution phase cost estimate Prepare outline (Class 4 or Class 5) cost estimates for the definition phase and execution phase of the identified investment opportunity.2 Scope of work Develop outline scopes for the major alternatives to be evaluated in the selection phase. This can be based on benchmarking data. The identified investment opportunity is the value-creating alternative which is documented and described in the ICN.0 Scope Identification Phase Description What 7.4 Supply and Outline world demand or supply forecasts.0 Schedule Identification Phase Description 8.2 Pricing Use normal BHP Billiton reference prices to confirm that an investment opportunity exists. Identification Phase Identify any competition (antitrust) and joint venture issues. This must be a targeted quality or demonstrated by test work. storage and distribution system post point of sale.3 Execution phase schedule Develop an outline duration for the execution phase of the identified investment opportunity. manage and control the identification phase activities and durations in accordance with the approved study schedule. 6. This can be based on benchmarking data.1 Overall investment amount What Develop a preliminary estimate of the total investment amount (expected expenditure for all study phases and the execution phase). 9.GLD. Identify any potential pricing strategies that are different from the norm. Version: 2.2 Study phase cost estimate Prepare a detailed (Class 2) cost estimate for the selection phase and include in the forward work plan.031 MAJOR CAPITAL PROJECTS (Minerals) 6. There may be different timelines associated with the different investment alternatives. This can be based on benchmarking data. contracts 7.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 7 of 35 . demand forecasts Outline the key drivers for consumption. 9. 8. This can be based on benchmarking data from similar Assets. There may be different capital estimates associated with the different investment alternatives.0 Market analysis Description 6. manage and control the identification phase costs in accordance with the approved study budget.4 Operations phase cost estimate Prepare an outline (Class 4 or Class 5) operations cost estimate for the identified investment opportunity. Include the total investment amount for the identified investment opportunity in the ICN. Include the key milestones from the project master schedule for the identified investment opportunity in the ICN.1 Statement of requirements Outline key internal and external stakeholder requirements for the investment opportunity and document in a preliminary statement of requirements (SoR).0 Cost Identification Phase Description 9. 8.3 Work breakdown structure Not required in identification phase. 6. utilising internal or external existing data or reports. 9.2 Study schedule Implement. Outline the probable cycle times from the project to customer. 7. 8.1 Project master schedule What Develop a preliminary project master schedule (overall timeline for all study phases and the execution phase). 6.5 Shipping. 6.

innovative technology. 11.  identify the major potential value-creating investment alternatives for more detailed evaluation in the selection phase.4 Execution phase HSEC management Not required in identification phase. Assess the practicality of managing the business and project material risk issues. Details on valuation modelling and investment evaluation are available from Group Investments & Value Management (I&VM).2 Environmental and Social Impact Assessment Identify and document the scope and requirements of the project Environmental and Social Impact Assessment (E&SIA) or local equivalent.2 Valuation model Complete the investment evaluation using a valuation model structure that is appropriate for an identification phase investment opportunity. manage and control the HSEC requirements for the identification phase with the objective of achieving zero harm during the study.5 Valuation summary Present a Valuation Summary Report for the identified investment opportunity. Manage and control the risks in accordance with the plan. Version: 2. Low case must be clearly understood and consideration must be given to a minimum screening criteria (for example. 10. Including all significant baseline studies and investigations required together with their required timeline.0 Risk management Description 10.3 Study phase HSEC management Develop. 11. resource or reservoir size.3 Investment evaluation Complete sufficient initial investigation of the possible investment opportunity to:  identify if a potentially value-creating investment opportunity exists.3 Risk management plan Prepare a Risk Management Plan for the identification phase. major health and safety events and the environment. critical resource threshold) when deciding on the recommendation to proceed or not to the selection phase.1 Method for estimating expected value Apply a valuation methodology appropriate for the valuation of an identification phase investment opportunity. The plan must cover all material identification phase material risk issues (for example. fiscal regime. drilling and test work). new country entry.GLD. The valuation model must use key assumptions for valuation published by Group I&VM. Document these in an initial project HSEC Risk Register. Prepare a Risk Management Plan for the selection phase.0 Health. and high cases must be sufficiently understood to reflect key uncertainties that affect value and impact the selection of the major alternatives to be carried over into the selection phase. travel. community or government relations. Cover all material identification phase HSEC issues and risks (for example.2 Risk control action plans Identify and describe. environment and community Identification Phase Reqauirements Description 12. reputation. 12. Document any areas of intolerable high residual risk (potential “fatal flaws”). 11. 12. 11. any risk control actions required to manage residual risk to a tolerable level. Low. site visits and sampling). 12.1 HSEC risk assessments What Identify material HSEC issues associated with the investment opportunity. Include as a minimum. mid. in general terms.1 Risk register What Identify and analyse the business material risk issues associated with the investment opportunity. 11. 10.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 8 of 35 . safety.031 MAJOR CAPITAL PROJECTS (Minerals) 10. legal title. implement. 12.4 Value enhancement Not required in the identification phase. potential joint venture partners.0 Investment evaluation Identification Phase Requirements Description What 11. strategy. Identification Phase Develop an initial Risk Register for the investment opportunity. Prepare initial Health and Safety (H&S) and Environment and Community (E&C) risk assessments. market. Prepare a HSEC Management Plan for the selection phase.

When choosing JV partners.2 Communications Prepare an initial Project Communications Plan including an external relations assessment for the opportunity. Identification Phase Requirements For investment opportunities where successful stakeholder management is critical to the investment outcome (for example.  material media.3 Ownership Identify key ownership issues associated with the investment opportunity. 13. water. 14. legal risk.4 Legal and regulatory Identify key legal and regulatory approval requirements associated with the investment opportunity.0 Stakeholder management Description What 13.5 Contractual Identify any key contracts (for example. Identify any key issues and special or unique requirements. project structure/entities and regulatory approvals.1 Stakeholder management Identify the key stakeholders associated with the investment opportunity and prepare an Initial Stakeholder Register. locations. safety. JV approvals) will be successfully managed. local content. third party port access) required that materially impact on the investment opportunity and assess the practicality of achieving a successful outcome in these areas. Finalise any joint venture agreement(s) required for development of the investment opportunity. Prepare an initial Ownership Register.GLD. 14. Prepare an initial Legal and Regulatory Approvals Register including:  outline of applicable project permitting processes and likely time requirements.3 Study Information Management (IM) systems CSG responsibility to define requirements. previous track record in projects and operations).  non-government organisations (NGO). 14.6 Joint ventures Identify the project operator if not BHP Billiton and provide an initial assessment of their capability and suitability (for example. Critical elements in the plan include: organisation. power. third parties or agents ensure all business conduct and governance considerations have been incorporated and that all counterparty risks (including reputation risks) have been fully assessed.5 Closure and rehabilitation Identify and summarise any significant decommissioning.031 MAJOR CAPITAL PROJECTS (Minerals) 12.2 Study procedures CSG responsibility to define requirements. including ownership of the resource or reservoir and land needed for the investment opportunity and any rights and prior uses. The plan must ensure compliance with the requirements of the JV agreement(s) and detail how key interface areas (for example. 13. Develop a detailed Project Resource Plan for the selection phase. 13. ownership risk.  shareholders.0 Study/Project delivery Description Identification Phase 14.1 People and teams What Develop and implement the identification phase resource requirements. closure and rehabilitation issues associated with the investment opportunity.  highlighting any legal and regulatory requirements that could present a material risk issue to the project including consideration of sovereign risk. 13.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 9 of 35 . 13. a greenfield project in a developing country with a local joint venture partner) develop an initial Stakeholder Management Plan and highlight the material risk issues and potential mitigation options available.  national. Ensure that the stakeholder groupings include as a minimum:  joint venture partners (if applicable). HSEC performance. responsibilities.0 Health. funding capacity.  provision of an indicative timeframe for meeting these requirements. Identify the potential legal structure(s) required for the development and execution of the project and the steps required to implement. 13. Version: 2. competencies. environment and community Description What 12. Prepare a Joint Venture Interface Plan for non BHP Billiton operated projects and BHP Billiton operated projects which have JV partner(s). mobilisation. team integration and interfaces with key support contractors. provincial and local government.

Not required in identification phase.031 MAJOR CAPITAL PROJECTS (Minerals) 14.8 Study progress reporting Register the identified investment opportunity in the Investment Tracking System.2 Operations strategy Prepare an initial high level operations strategy for the investment opportunity. emerging or novel) have been considered. fly in fly out versus local workforce.7 Program management Prepare an initial high level project execution strategy or strategies for the investment opportunity. 14.9 Forward work plan Develop the selection phase study objectives to meet requirements of Appendix 3 Section 1. Version: 2. intellectual property aspects and high level risks.7 Operations procedures Not required in identification phase. 15. 15.6 Operations readiness Not required in identification phase. operational requirements and key operational issues (for example. 15. Demonstrate that opportunities to add material value to the investment opportunity through innovative technology (immature. novelty. 15. 14. Project Close-Out Reports and other sources. Develop the selection phase SWP and cost estimate to meet requirements of Appendix 3 Sections 1. CSG responsibility to define identification phase study progress reporting requirements.5 Innovation What A Value Improvement Plan is not required in the identification phase.1 People and teams What Onboard (or access) the operations resource(s) required to complete the operations strategy.GLD. operations organisational structure and operations management systems. Identification Phase Requirements A detailed Project Operations Resource Plan is not required in the identification phase. 14.2.0.4 Value improvement 14. The operations strategy defines the operational value drivers. Ensure full disclosure of innovative technology risks and appropriate mitigation planning in the study report.8 Operations Information Management (IM) systems Not required in identification phase. 15. 15. contract versus owner operated). document and implement all relevant learning's from post investment reviews.0 Study/Project delivery Description 14.6 Project execution planning 14.4 Operations input into design Ensure that the requirements of the operations strategy are built into the identified investment opportunity and the major value-creating investment alternatives being carried into the selection phase for further evaluation. A Project Execution Plan is not required in identification phase.3 Operations plan Not required in identification phase. operational philosophy. Document the reasons for inclusion or exclusion of innovative technology and provide a preliminary description of the technology maturity.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 10 of 35 . 15. Review.0 Transition to operations Description 15.0 to 15. 15.5 Commissioning Not required in identification phase.

Version: 2. Appendix 3 Sections 2. Provide a concise description of the strategic fit and any required exit strategy for the preferred investment alternative.  development of the definition phase exploration and appraisal program. Step 2: Select the optimal investment alternative.5 Study deliverables Complete all planning required for transition to the definition phase including:  ensuring that the definition phase owner’s project manager and key project team resources are available. uncertainty and embedded option value.  planning for the location and geotechnical studies. 1. If the recommendation from the study is to proceed to the definition phase then the following additional deliverables are required as part of the group investment process:  Investment Approval Request (IAR).2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 11 of 35 . Ensure that the preferred investment alternative will meet the agreed business objective(s). Selection Phase Requirements Step 4: Complete sufficient work (opportunity realisation) on the preferred investment alternative to: 1. Selection phase 1. the criteria used and the reasoning behind the decision to select the preferred investment alternative for formal internal CSG approval (Gate 2A).  preparation of the zero harm HSEC Management Plan for the definition phase. risk.  development of the action plan to progress all required statutory and third party approvals.  Identification of key definition phase support contractor(s) and contracts developed to stage of conditional agreements.  development of the definition phase SWP and cost estimate including details of any outstanding optimisation studies required on the preferred investment alternative.4 Plan for next phase 1.  understanding of all business and project material risk issues.0 to 15. Ensure that the study addresses these elements. investment phase activities and the individual needs of the investment opportunity. The following deliverables are required from the selection phase:  selection phase Study Report.0 Selection phase study overview Description 1. taking into account net present value (NPV). not relevant or where compliance cannot be achieved must be documented in the SWP.1 Business objective(s) and strategic fit What Describe the main strategic options considered and reasons for selecting the preferred investment alternative.  assess all material risk issues. risk. 1. Ensure the technical and commercial viability of the selected investment prior to further study and optimisation in the definition phase. Direction on the application of the selection phase study requirements is available from Group PMS.3 Conduct study  have the main areas of the project scope clearly understood and frozen. uncertainty and embedded option value (opportunity selection).  ensure technical and commercial viability of the investment. The SWP and budget must cover all activities in the selection phase up to the forecast approval date for the start of the definition phase. Reference existing material from the approved CSG 5 Year Plan and CSG directional appraisal.  plan for the next phase (see Appendix 3 Section 1. Any elements considered not applicable.  investment evaluation model(s) that support the selection of the preferred investment alternative.  planning for tenure and acquisition. Conduct the selection phase study activities in accordance with the approved SWP and budget to meet the required study objectives and study deliverables.4).0 detail specific performance elements that must be considered during the study.GLD. Show the preferred investment alternative in the context of the resource potential of the province.2 Study objectives The selection phase study objectives must be based on the group investment process investment phase objectives.031 MAJOR CAPITAL PROJECTS (Minerals) Appendix 3. Step 3: Produce a summary of the investment alternatives considered. Investment phase objectives: Assess all reasonable value-creating alternatives and select the optimal investment alternative taking into account net present value. Investment phase activities: Step 1: Identify and assess all reasonable value-creating alternatives (opportunity framing).

Version: 2. 2.0 with the addition of the executive summary as per Section 1.031 MAJOR CAPITAL PROJECTS (Minerals) 1.5 Mineral Resource statement Develop the public JORC compliant Mineral Resource statement complete with sign off by a Competent Person. Present estimates of volume and quality versus cut-off (tabulated and/or graphically) and compare with previous estimates. 2. resource model and resource statement must be undertaken prior to a public declaration of the resource.0 Geology and mineral resources Description 2. managed and controlled during the selection phase. the source of information and data used to complete the necessary approval documentation. or not to proceed. There must be a low residual risk of the preferred investment alternative changing as a result of further refinement of the geology and mineral inventory. to the next phase that is logically supported by the data.GLD. Provide a description of the mineral inventory that will underpin the future projects/options in the pipeline.  is. demonstrate that the drill spacing is sufficiently close to provide confidence as to resource classification. Tabulate the Mineral Resource by classification and domain. The selection phase deliverables are completed at the end of the study and approved as part of Gate 2 (the advancement from the selection phase to the definition phase). geotechnical rock mass and the ground water regimes. For representative sections of the ore body.0. Provide evidence that the materially significant aspects of the ore body have been modelled with sufficient accuracy to allow selection of an investment alternative.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 12 of 35 . 2.  separates the BHP Billiton confidential sections or data such that joint venture partners or other third parties are restricted from accessing confidential information. shape. The index of the study report must follow the same structure as Appendix 3 Sections 2. 2. including aspects that have the potential to impact on mining method and process selection. together with the investment evaluation. project hub strategy and key project resources are:  developed at the end of the identification phase. at least 80% of the ore scheduled for mining in the first five years of operation must be in the Indicated Mineral Resource classification.2 Geology and mineralisation description Describe the geology and the extent of the ore body to a sufficient standard to enable evaluation of the full range of investment alternatives.4 Geometallurgy. Selection Phase Requirements Provide a description of the data acquisition work plan for the definition phase. 1. rates.0 to 15. grade and mineral content to enable selection of the preferred investment alternative from the range of investment options under consideration.  is version controlled. unbiased and objective comparison of the various investment alternatives. stored in an approved document management system and accessible to the IPR team. documentation and analysis.  addresses the minimum requirements for each applicable element as required by the SWP. SWP and budget. including a full range of mining and processing alternatives.3 Mineral inventory Update the mineral inventory model to sufficient detail and spatial coverage to facilitate a confident.0 Selection phase study overview Description What  1. 2. physical and metallurgical characteristics.7 Timing The selection phase study objectives. hydrogeology and geotechnical Describe the geometallurgical. This is required prior to approval to advance into the definition phase. density. in sufficient detail to ensure valid mine plans and processing route are used for the basis of selection of the preferred investment alternative.  approved as part of Gate 1 (the advancement from the identification phase to the selection phase).  implemented.6 Study report Group IPR summary and functional reports. An independent audit of the database. The study report must consist of an organised collection of documents that:  contains an executive summary that includes both confirmation of meeting the study objectives and a clear recommendation to proceed. For the preferred investment alternative. the tonnage.1 Data acquisition What Collect sufficient data to define the ore-body limits. scale and operability.

 site access. mine design and mine operations. mining method. Select a preferred production schedule and detail the rationale for the selection.  ore feed by resource classification. For the preferred mine design at least 80% of the ore scheduled for mining in the first five years operation must be in the Probable Ore Reserve classification as supported by mine planning and geometallurgy. material handling and transport within the mine site. scale and rate. relevant processing.5 Ore Reserves statement Prepare a JORC compliant Ore Reserve statement for internal purposes. At the end of the selection phase the major areas of the mining scope must be clearly understood. develop a range of production schedules for analysis. For the selected go forward alternative provide an annualised mining schedule over the payback period from start of operations. Describe key mining equipment alternatives considered. Describe and document the preferred mine design including mine excavations. sequence and schedule. For each alternative in the short list develop and analyse a number of mine plans.031 MAJOR CAPITAL PROJECTS (Minerals) 3. Complete each mine design to a sufficient level of detail to demonstrate its technical viability and effectiveness for the purposes of selecting the preferred alternative.  tenure conditions. manning and infrastructure required for mining operations. mine site ore processing (for example. market and sustainability.GLD. Describe the selected mining strategy in detail and describe the rationale for the choice of associated mine plan. including ownership. waste dumps.  mine sustaining capital requirements and operating costs.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 13 of 35 . Include:  ore and waste production and ore feed to process. Characterisation must include (where possible) value minerals. develop a range of mining strategy alternatives and analyse the alternatives in sufficient detail to enable selection of a short list of alternatives. mine designs and mine operations alternatives. Describe the range of mining strategies analysed and the analysis outcomes. operating licenses and surface access rights. Analyse and describe the risks and uncertainties for each alternative and how these could impact on the outcome and value. develop a range of mine plans. 4.2 Feed characteristics Describe the metallurgical characterisation of the ore types and blends in sufficient detail to facilitate objective comparison of the alternative processing configurations being considered.0 Processing Selection Phase Description 4. crushing). have key uncertainties resolved and meet the level of definition required of a preliminary (Class 3) cost estimate. mineral titles.0 Mining Description 3. including: climatic. Sufficient test work and analysis must be undertaken to select the configuration with the maximum value and an acceptable risk profile. 3. An external Ore Reserve statement is not required at the conclusion of the selection phase.  contribution to the creation of long-term value. dilution. mining infrastructure and final mining limits for the selected mine design.3 Mine design  local and regional setting.4 Mine operations For each short-listed mining alternative. plus existing and proposed local and regional infrastructure facilities relevant to the project. 4. Selection Phase Requirements Analyse the range of mine plans including consideration of these key issues: 3. 3. ore stockpiles. 3. water rights. Key assumptions must be underpinned by engineering and historical and/or benchmark rates from similar mines. Develop a range of mine designs as supported by resource range analysis. Evaluate and incorporate uncertainties and mining risks in the selection process. Version: 2.1 Mining strategy What Commencing with the list of plausible mining strategies developed during the identification phase.2 Mining plan For each short-listed mining strategy.  equipment. impurity behaviour and materials handling characteristics. Demonstrate that the methodology applied for taking representative samples is aligned to the understanding of ore and geometallurgy variability and addresses associated processing risks and required controls. final limits.1 Processing strategy What Develop a range of processing strategy alternatives and analyse the alternatives in sufficient detail to enable selection of the preferred configuration. For each mine design alternative demonstrate a viable approach to resource recovery. surface and seismic conditions. equipment selection. value drivers and risks. layout.

have key uncertainties resolved and meet the level of definition required of a preliminary (Class 3) cost estimate. supply and transport considerations and access to all major utilities like power and water). topographical. 4. materials handling and export. seismological and climatic site conditions. Selection Phase Requirements Detail the significant parameters and factors influencing the choice of locations (for example.GLD. 4. have key uncertainties resolved and meet the level of definition required of a preliminary (Class 3) cost estimate. Include:  identification of key metallurgical performance (success) factors and economic drivers. Demonstrate that the test work is sufficient for defining and managing the risk for the preferred alternative to an acceptable level. environmental constraints. demonstration plants or variability testing are required and if so why. 5. Describe and document the facilities scope for the preferred investment alternative. their processing and economic significance and their potential impacts on production targets and product qualities. 5. Identify if pilot plants. Prepare an Engineering Management Plan for the engineering work required during the definition phase. energy and water balances for the process alternatives. This does not require all options to be fully engineered in order to separate and prioritise them. Select the preferred transport and logistics for the investment and detail the rationale for the selection. The level of definition and investigation must be sufficient to support selection of the preferred investment alternative. highlighting assumptions and areas of uncertainty.031 MAJOR CAPITAL PROJECTS (Minerals) 4. modelling and simulation work performed to validate the alternative flow sheets and address risks associated with any innovative technology.1 Location What Evaluate the major location alternatives for the investment opportunity and identify the preferred locations for the plant.0 Processing Description 4.5 Metallurgical performance For the selected processing alternative discuss geometallurgical modelling and testing and the basis for metallurgical prediction. Test work must be shown to be aligned with the preferred mine design and be able to validate Probable Ore Reserve ore classification for at least 80% of feed for the first five years operation.6 Process facilities Prepare mass. Identify any key risks or uncertainties to assist the selection of the preferred investment alternative. Select the preferred supporting infrastructure for the investment and detail the rationale for the selection. Define to a sufficient level of detail to enable selection of the preferred configuration with maximum value and acceptable risk profile.3 Transport and logistics Define the transport and logistics requirements for the different investment alternatives. infrastructure and residue disposal sites (for example.4 Process selection Present the process alternatives considered and discuss the process and methodology for selecting the preferred flow sheet. 5. At the end of the selection phase the major areas of the processing scope must be clearly understood. At the end of the selection phase the major areas of infrastructure scope must be clearly understood. Document preliminary site layouts and general arrangements for the materials handling between the mine and plant. Carry out sufficient geotechnical and topographical surveys to ensure that the preferred locations are valid and that there is a low probability of a material change after the end of the selection phase.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 14 of 35 . transport and logistics Description 5. Describe and document the infrastructure scope for the preferred investment alternative. Use range analysis to quantify the uncertainty around key processing value drivers and show the impact on project value. Describe and discuss the preferred flow sheet including the range of metallurgically different ore types. infrastructure and waste management facilities.3 Test work What Describe the metallurgical test work conducted to verify key unit operation for the processing alternatives considered. Version: 2. plus any trade-off studies conducted. Compare the process facilities and physical plant required for the different process alternatives. The level of definition and investigation must be sufficient to enable selection of the preferred investment alternative.2 Infrastructure Define the requirements for the supporting infrastructure for the different investment alternatives studied. the processing plant. 4. Identify potential locations for the infrastructure required for the different investment alternatives under consideration. Identify any key risks or uncertainties to assist the selection of the preferred investment alternative. including consideration of all risk issues. Discuss areas of risk and uncertainty for more detailed evaluation in the definition phase.  test work. tailings dams).0 Infrastructure.

6 Marketing contracts 7. place and price. Describe and document the scope of work (SoW) for the preferred investment alternative. Include an analysis of the major risks.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 15 of 35 .1 Marketing strategy What Prepare the preferred marketing strategy in relation to the product.1 Statement of requirements Selection Phase Requirements Document any new contracts or agency agreements required for marketing the product together with any existing contracts or agency agreements that must be used. volume. storage and distribution Prepare product shipping. medium and long term trends. manage stakeholder expectation(s) and minimise project impact.0 Schedule Selection Phase 8.5 Shipping.2 Pricing Develop the pricing strategy required for each of the investment alternatives under consideration. Any requirements where compliance cannot be achieved must be documented in the SoR together with the measures required to address the outstanding requirement(s). market share. 100% basis) in the definition phase requires development of the project master schedule in more detail at the end of the selection phase in order to confirm the impact of early funding on the overall schedule. Selection Phase Requirements 6. opportunities or uncertainties that impact these forecasts. storage and distribution summaries for each investment alternative (where these are different). 8. Any areas where this cannot be achieved must be clearly identified in the SoW document together with an assessment of the resultant exposure.0 Scope Description 7. 8. Confirm that the preferred investment alternative satisfies key stakeholder requirements identified in the SoR.2 Scope of work Develop the scope for each major investment alternative in sufficient detail to be able to select the preferred investment alternative. selection phase. 7. A request for approval of significant pre-commitments (>US$50M. The decision criteria and authorities associated with any outstanding choices must be fully documented and timed to be unequivocally resolved before the end of the definition phase. Detail any competition (antitrust) and joint venture issues.GLD. Document the pricing strategy for the selected investment alternative.3 Product specification Document the product specification (quality standard) required for the selected investment alternative.3 Work breakdown structure Configure the preferred investment alternative into the agreed project work breakdown structure (WBS). manage and control the selection phase activities and durations in accordance with the approved study schedule. Identify and document the optimum product shipping. 6. 7. Specify the product specification required for each of the investment alternatives under consideration. storage and distribution system for the preferred investment alternative.4 Supply and demand forecasts Prepare or reference current BHP Billiton world supply and demand forecasts and incorporate an analysis of short. What Update and finalise the statement of requirements (SoR) for the investment opportunity.2 Study schedule Implement. 6. Version: 2. 6. growth potential. Include the key drivers of the demand and supply cycles. market impact and a comparison with industry cost curves. Confirm or otherwise that the normal BHP Billiton reference prices are relevant for this investment opportunity.0 Market analysis Description 6. 6. The WBS must be capable of further development to ensure an integrated control and reporting standard for the execution of the project. have key uncertainties resolved (minimal carry over of selection phase work into definition phase) and meet the level of maturity and definition requirements of a preliminary (Class 3) cost estimate. At the end of the selection phase all major areas of scope must be clearly understood. definition phase and execution phase and ramp up period for the preferred investment alternative.1 Description What Project master schedule Update and maintain the overall project master schedule including the forecast or actual start and finish dates for the identification phase.031 MAJOR CAPITAL PROJECTS (Minerals) 6. with the basis stated for concluding the forecasts. Include an assessment of BHP Billiton’s expected market share.

3 Execution phase schedule Develop outline (Class 4 or Class 5) execution phase schedules for each major investment alternative under consideration.2 Risk control action plans If risk is a critical factor in deciding on the preferred investment alternative. 9. Confirm the practicality of managing the business and project material risk issues. Develop a preliminary (Class 3) operations cost estimate and associated BoE for the preferred investment alternative. manage and control the selection phase costs in accordance with the approved study budget.0 Investment evaluation Selection Phase Description 11.  completing the investment evaluation requirements of an IAR. in order to be able to select the preferred investment alternative. develop outline risk control action plans for each of the major investment alternatives under consideration so that the residual risk rating (RRR) and maximum foreseeable loss (MFL) can be quantified for each alternative. with a focus on the key schedule drivers. 11.1 Method for estimating expected value What Apply one or more valuation methodologies that are appropriate for:  selecting the preferred investment alternative.GLD.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 16 of 35 . in order to be able to select the preferred investment alternative. test work and pilot plants). 10.2 Study phase cost estimate Prepare a detailed (Class 2) cost estimate for the definition phase and include in the forward work plan. The estimate must cover all activities from the start of the execution phase up to project completion.1 Risk register What Develop the Risk Register for each major investment alternative in sufficient detail to be able to select the preferred investment alternative. The plan must cover all selection phase material risk issues (for example. Prepare a Risk Management Plan for the definition phase. Carry out a deterministic range analysis on this estimate. to be able to select the preferred investment alternative. sampling. Carry out a deterministic range analysis of this estimate.031 MAJOR CAPITAL PROJECTS (Minerals) 8.1 Overall investment amount Update and maintain the overall investment cost estimate (including the forecast or actual cost for identification phase.3 Risk management plan Implement. 8. Document any concerns with the application of the valuation methodology that impact the selection of the preferred investment alternative.0 Cost Description What 9.0 Risk management Selection Phase Requirements Description 10. Selection Phase Requirements Carry out a deterministic range analysis on this schedule. definition phase and execution phase) for the preferred investment alternative. manage and control the Risk Management Plan for the selection phase. 10. Develop outline (Class 4 / Class 5) execution phase cost estimates for each of the major investment alternatives under consideration. Develop a preliminary project Risk Register for the selected investment alternative. 9. 11. 9.0 Schedule Description What Prepare a detailed (Class 2) schedule for the definition phase and include in the forward work plan.4 Operations phase cost estimate Develop outline (Class 4 or Class 5) operations cost estimate for each of the major investment alternatives under consideration. All material risk issues identified in other parts of the study must be “rolled up” and included in the Risk Register (for example. 10. selection phase. Develop a preliminary (Class 3) cost estimate and associated basis of estimate for the execution phase of the preferred investment alternative. Develop a preliminary risk control action plan for the preferred investment alternative.2 Valuation model Complete the investment evaluation using a valuation model structure that is appropriate for: Version: 2. HSEC). Develop a preliminary (Class 3) schedule and associated basis of schedule (BoS) for the execution phase of the preferred investment alternative. with a focus on the key operations cost drivers.3 Execution phase cost estimate Implement. 9. with a focus on key capital cost drivers.

precommitments). Step 3: Produce a summary of the investment alternatives considered.GLD. For the preferred investment alternative detail and quantify any key opportunities to enhance value through the existence of options in the investment that require funding during the definition phase (for example. Include socio-economic considerations. Details on valuation modelling and investment evaluation are available from Group I&VM. Safety. Prepare a HSEC Management Plan for the definition phase.031 MAJOR CAPITAL PROJECTS (Minerals) 11.5 Closure and rehabilitation Update the summary of significant decommissioning.5 Valuation summary Document a summary of the investment alternatives considered.  assess all material risk issues. manage and control the HSEC Management Plan for the selection phase with the objective of achieving zero harm during the study. sampling and test work). uncertainty and embedded option value (opportunity selection). Environment and Community Description Selection Phase Requirements 12. the criteria used and the reasoning behind the decision to select the preferred investment alternative for formal internal CSG approval (Gate 2A). 11. drilling.3 Study phase HSEC management Implement. future expansion.  ensure technical and commercial viability of the investment. and recruitment.0 Health. local service industry. air transport or site surveys) must be “rolled up” and included in the register. This is carried out in a series of steps as follows: Step 1: Identify and assess all reasonable value-creating alternatives (opportunity framing). on and off site accommodation. The E&SIA must reflect the level of accuracy of the project scope at the time of preparation and contain sufficient flexibility to accommodate future optimisation of the project as it moves through subsequent investment phases.2 Environmental and Social Impact Assessment What Develop a preliminary project HSEC Risk Register for the preferred investment alternative. 12. drilling.3 Investment evaluation Assess all reasonable value-creating alternatives and select the optimal investment alternative taking into account net present value.  plan for the next phase (Appendix 3 Section 1.0 Investment evaluation Description What  selecting the preferred investment alternative from the studied investment alternatives. Ensure the technical and commercial viability of the selected investment prior to further study and optimisation in the definition phase. risk. closure and rehabilitation issues associated with the preferred investment alternative. uncertainty and embedded option value.  completing the investment evaluation requirements of an IAR. 11. work force planning. Commence baseline studies and any necessary investigations and prepare the detailed E&SIA or local equivalent for the preferred investment alternative.4). Version: 2. community services.4 Value enhancement  have the main areas of the project scope clearly understood and frozen. taking into account net present value (NPV). 12. The valuation model must use key assumptions for valuation published by Group I&VM. Step 2: Select the optimal investment alternative. Step 4: Complete sufficient work (opportunity realisation) on the preferred investment alternative to: 11. site surveys. All material HSEC risks identified in other parts of the study (for example. Describe any key valuation risks.1 HSEC risk assessments 12. Document the investment evaluation model(s) and lodge in the Investment Tracking System. Document and take into consideration the relative impact each investment alternative’s future options have on the selection of the preferred investment alternative (for example. Describe the optimised without and optimised with alternatives that demonstrate the incremental value of the selected investment alternative.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 17 of 35 . the criteria used and the reasoning behind the decision to select the preferred investment alternative. future development). Timing of submission of the E&SIA for approval must take into account the critical path for the project. risk. The plan must cover all material selection phase HSEC risks (for example. issues or constraints associated with the preferred investment alternative. 12. Describe any unique characteristics and the physical scope of the proposed investment. 12.4 Execution phase HSEC management Not required in selection phase.

provincial and local government: include an authoritative opinion and appraisal of views of governments and their authorities to the investment. be company employees rolled over from a previous project or study as part of a deliberate program to grow internal project capability.  national. Develop the preliminary Project Communications Plan including an external relations assessment for the preferred investment alternative. Where possible current title and a right to purchase or lease must be agreed in principle and recorded in writing. As a minimum include details on: sovereign risk.2 Communications  JV partners (if applicable). Key project resources in the selection phase must meet minimum competency and experience standards. involving the legislative and regulatory environment. water.GLD. funding capacity. Review and update the Legal and Regulatory Approvals Plan for the preferred investment alternative.2 Study procedures Develop. Include as a minimum consideration of: power. Q&As.5 Contractual Define all material contractual arrangements for the preferred investment alternative.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 18 of 35 . Cover all key functional processes required to safely and successfully deliver the selection phase objectives and include the review and endorsement of support contractor(s) key procedures. Describe the status of any negotiations or agreements for ownership alternatives or rights. These must. HSEC performance.1 People and teams What Implement the selection phase Project Resource Plan. facilities construction. Critical elements in the plan include: organisation. 14. When choosing JV partners. Implement the Joint Venture Interface Plan for non BHP Billiton operated projects and BHP Billiton operated projects which have JV partner(s).4 Legal and regulatory Review and update the Ownership Register and key issues for the preferred investment alternative.  media: include an authoritative assessment on likely impact of local media on the proposed investment. JV approvals) will be successfully managed.  ownership of lands or other surface rights required for the preferred investment alternative. Key definition phase support contractor(s) (for example.0 Study/Project delivery Description 14.6 Joint Ventures Confirm project operator if not BHP Billiton and their capability and suitability (for example. See Appendix 1. locations. project structure/entities and all material regulatory approvals or other legal actions required for the investment together with the status of any negotiations or applications. previous track record in projects and operations).3 Ownership 13. 13. third parties or agents ensure all business conduct and governance considerations have been incorporated and all counterparty risks (including reputation risks) have been fully assessed. Provide an assessment of the international trade considerations for the investment. The plan must ensure compliance with the requirements of the JV agreement(s) and detail how key interface areas (for example. Selection Phase Develop a detailed Project Resource Plan for the definition phase and an outline Project Resource Plan for the execution phase for the preferred investment alternative. responsibilities.031 MAJOR CAPITAL PROJECTS (Minerals) 13. any rights or royalties and make reference to the sources of information. Where possible ownership alternatives or rights must be negotiated and an agreement reached in principle. legal risk. Ensure that the stakeholder groupings include as a minimum: Selection Phase Requirements 13. Implement (as necessary and appropriate) any new or modified legal structure required for the development and execution of the project. plant and equipment supply and operations. additional resource mobilisation. implement and maintain the procedures required for the selection phase study. Provide a plan and schedule for obtaining the necessary approvals.1 Stakeholder management What Prepare a preliminary Stakeholder Management Plan for the preferred investment alternative. 14. local content. team integration and interfaces with key support contractors. Document and discuss any key issues and special or unique requirements. where possible. FEED or ESC/EPCM) must be identified and developed to the stage of conditional agreements.  non-government organisations (NGO): include an authoritative assessment on the views and potential actions of NGOs to the project. Version: 2. competencies. including:  ownership of the resource or reservoir. briefings and any special requirements).  shareholders: include details of stock exchange/media engagement and communications (releases.0 Stakeholder management Description 13. update. asset transfers. 13. any rights and uses. ownership risk. 13.

8 Study reporting Major capital projects.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 19 of 35 . Project Close-Out Reports and other sources.1 People and teams What Onboard (or access) the operations resources required to develop the operations strategy. must be developed via a project hub in the selection phase.5 Innovation Revise the details of any innovative technology required for the preferred investment alternative. 14. Prepare the IM Management Plan for the definition phase and execution phase. Document the project execution strategy for the preferred investment alternative. Include in the definition phase work plan. fly in fly out versus local workforce. 14.0. relevant sections of the Quality Management Plan.0 to 15. The operations strategy defines the operational value drivers. human factor considerations. hazard identification and mitigation. Implement the relevant value improvement practices (VIPs) required during the selection phase.3 Study Information Management (IM) systems What Develop and implement the required suite of IM systems for the selection phase. operational requirements and key operational issues (for example. 15. Update the Investment Tracking System in accordance with the group investment process. document and implement all relevant learning's from post investment reviews. 15.3 Operations plan Prepare an outline Operations Plan for the preferred investment alternative. project authorities framework). See Appendix 1. procedures and controls. Version: 2. Cover all key functional IM support required to safely and successfully deliver the selection phase study objectives and include the review and endorse of support contractor(s) key project IM systems and procedures.7 Program management 14.4 Value improvement Prepare the project Value Improvement Plan. Key operations resources in the selection phase must meet minimum competency and experience standards. The Operations Plan describes how the Asset is safely and efficiently operated and maintained throughout its life.GLD. Develop and issue a monthly study progress report to key stakeholders.0 Transition to operations Description 15. 14. where BHP Billiton is the project manager. reliability. 14.9 Forward work plan Develop the definition phase study objectives to meet the requirements of Appendix 4 Section 1. including an update of the status of the technology maturity and novelty. Develop the definition phase Study Work Plan (SWP) and cost estimate to meet the requirements of Appendix 4 Sections 1.4 Operations input into design Ensure the requirements of the operations strategy and plan are built into the SoW for the preferred investment alternative. manage and control the pre-commitments (for example. operations risk management. Selection Phase Requirements A detailed Project Operations Resource Plan is not required in the selection phase. Ensure full disclosure of all residual technology risks and detail how they will be reduced to an acceptable level during the definition phase. 14.6 Project execution planning Develop the project execution strategy for each major investment alternative in sufficient detail to be able to select the preferred investment alternative.2. 100% basis) in the definition phase requires bringing forward into the definition phase the development of appropriate activities required to successfully implement. Use this as a key input into the Operations Plan. Include an analysis of prior experience with the technology against the intended duty and take into consideration the intended location. Develop the operations strategy for the preferred investment alternative. 15. maintainability. operations organisational structure and operations management systems. The plan must include the lessons learned VIP which involves the review. 15. operational philosophy. Prior to selection of an innovative technology establish a definitive view of any intellectual property implications and ensure that material technology risks are resolved. See Appendix 1. Contracts and Procurement Plan.0 Study/Project delivery Description 14. Operations Plan and implement the operations input into design.031 MAJOR CAPITAL PROJECTS (Minerals) 14. contract versus owner operated). A request for approval of significant pre-commitments (>US$50M.2 Operations strategy Develop the operations strategy for each major investment alternative in sufficient detail to be able to select the preferred investment alternative. Include: operations participation in design reviews for operability.

GLD. 15. 15.6 Operations readiness Not required in selection phase.7 Operations procedures Not required in selection phase. Version: 2.5 Commissioning Not required in selection phase.0 Transition to operations Description What 15.031 MAJOR CAPITAL PROJECTS (Minerals) 15.8 Operations IM systems Identify and document the key operations and maintenance Information Management (IM) systems associated with the preferred investment alternative. 15.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 20 of 35 .

1.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 21 of 35 . Version: 2.0 to 15.3 Conduct study  optimise LCC and NPV for the investment. schedule.  include any upside alternatives that may accrue outside the project scope. cost.  Board papers. The following deliverables are required from the definition phase:  definition phase study report. Definition phase 1. cost. contractor leader(s) and key team members are available.  ensuring that all required tenure and land is secure.  development of key contracts or purchases that are on the early critical path to the stage of firm and actionable bids (conditional agreements). Confirm that there has been no material change to the external or internal business drivers for the investment. Definition Phase Requirements Investment phase activities: 1. If there has been a change. Reference existing material from the approved CSG 5 Year Plan and CSG directional appraisal.4 Plan for next phase 1. project KPIs. Show the selected investment alternative in the context of the resource potential of the province. Direction on the application of the definition phase study requirements is available from Group PMS.  investment evaluation model.  complete any outstanding optimisation work.  development of specific project objectives.  plan for the next phase (Appendix 4 Section 1.2 Study objectives The definition phase study objectives must be based on the group investment process investment phase objectives.  ensuring that key implementation support contract(s). schedule and operability) and will demonstrably meet the business objective(s). Ensure that the project objectives are clearly measurable.  ensuring all statutory and third party approvals are in place or available. strategic fit and any required exit strategy for the preferred investment alternative. commercial terms and statutory approvals.  Group IPR summary and functional reports. Appendix 4 Sections 2.  finalise scope.GLD. commercial terms and statutory and regulatory approvals/agreements prior to project execution. Board presentation. investment phase activities and the individual needs of the selected investment alternative.  understanding of all material risk issues and have appropriate controls in place.031 MAJOR CAPITAL PROJECTS (Minerals) Appendix 4.4). cost. cover all required areas (for example. If the recommendation from the study is to proceed to the execution phase then the following additional deliverables are required as part of the group investment process:  Investment Approval Request (IAR). document the reason(s) and the impact on the expected investment outcomes. The SWP and budget must cover all activities in the definition phase up to the forecast approval date for the start of the execution phase. Ensure that the study addresses these elements. 1.0 Definition phase study overview Description 1.1 Business objective and strategic fit What Prepare a detailed set of project objectives based on the agreed business objective(s).  complete a full evaluation of the investment including the risk profile. draft media release and media Q&As. Any elements considered not applicable. schedule. not relevant or where compliance cannot be achieved must be documented in the SWP. Provide a concise description of the strategic rationale.  preparation of the zero harm HSEC Management Plan for the execution phase. Conduct the definition phase study activities in accordance with the approved SWP and budget to meet the required study objectives and study deliverables. Project Execution Plan and cost estimate. Investment phase objectives: Define the investment by optimising the selected configuration for life cycle costs (LCC) and net present value (NPV) and finalising the scope.0 detail the specific performance elements that must be considered during the study.5 Study deliverables Complete all planning required for transition to the execution phase including:  ensuring that the execution phase owner’s project manager and key project team resources are available. HSEC.

together with the investment evaluation.2 Geology and mineralisation description 2.  addresses the minimum requirements for each applicable element as required by the SWP.  it supports the definition phase case and in particular the mining and processing methods. summarising all key mine aspects. If an independent audit of the database and Mineral Resource was not completed during the selection phase it must be undertaken in the definition phase unless agreed otherwise with the IPR Leader. The index of the study report must follow the same structure as Appendix 4 Sections 2. The resource model must be to a high level of confidence and have been verified such that:  sufficient resource is in the measured and indicated category to provide local estimation of the ore body characteristics for final Life of Asset planning. infrastructure and site logistics. the source of information and data used to complete the necessary approval documentation.0 Geology and mineral resources Description 2.2 Mining plan Provide a comprehensive and detailed description of the selected mine plan including mine configuration. Definition Phase Requirements The spatial variability of the key resource parameters must be well understood and defined in sufficient detail to support the mine design and schedule requirements. hydrogeology and geotechnical Detail the geometallurgical.3 Mineral inventory Complete the geology and mineral inventory description.0 Update the JORC compliant Mineral Resource statement. 2.  implemented. 2. At least 80% of the ore scheduled for mining in the first five years of operation must be in the Measured Mineral Resource classification.031 MAJOR CAPITAL PROJECTS (Minerals) 1. SWP and budget.6 Study report Prospective Evaluation Report by Independent Project Analysis Inc (IPA). 2.0 Definition phase study overview Description What  1. 1. Version: 2. hydro-geological and geotechnical environment for the selected investment alternative.0 to 15. to the next phase that is logically supported by the data. the ground support and the stability assumptions used.  separate the BHP Billiton confidential sections or data such that JV partners or other third parties are restricted from accessing confidential information. Detail the in situ recoverable resources and update the tabulation of the Mineral Resource.1 Data acquisition What Collect sufficient data to optimise the recoverable resource for the selected option as input to Life of Asset planning. Define and document the risks to the key mineral inventory parameters.4 Geometallurgy. Demonstrate the adequacy of the proposed dewatering and de-pressurisation programs. managed and controlled during the definition phase.  is. documentation and analysis. Identify and discuss all key issues and risks.0. Provide a detailed site description. Mining Description What 3.7 Timing The definition phase study objectives.GLD.5 Mineral Resource statement 3.1 Mining strategy Optimise the selected mining strategy and demonstrate how it delivers the maximum value with acceptable risk. 3.  approved as part of Gate 2 (the advancement from the selection phase to the definition phase). project execution strategy and key project resources are:  developed at the end of the selection phase. stored in an approved document management system and accessible to the IPR team. The definition phase deliverables are completed at the end of the study and approved as part of Gate 3 (the advancement from the definition phase to the execution phase). The study report must consist of an organised collection of documents that:  contains an executive summary that includes both confirmation of meeting the study objectives and a clear recommendation to proceed.  is version controlled. or not to proceed. 2. Describe the key resource estimation methods used and the decisions taken.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 22 of 35 .0 with the addition of the executive summary as per Section 1.

4. Characterise any wastes and tailings during test work. Describe the methodology used to optimise final mining limits. 4. An independent audit of the reserve model and reserve statement must be undertaken prior to a public declaration of the reserve.0 Processing Description 4.031 MAJOR CAPITAL PROJECTS (Minerals) 3. Discuss the sensitivity of the investment and mine plans to any processing or market issues. infrastructure and site logistics. Present a range analysis for metallurgical performance including product quality variability.5 Metallurgical performance Describe the geomet model for the selected flow sheet and relevant ranges and uncertainties. the optimisation of the plant design and the selection of major equipment and infrastructure items.2 Feed characteristics What Define the optimised process design and plant configuration for the selected investment alternative. including the preferred contracting strategy.  predicted consumable usage rates and Opex. Describe any blending strategy and the link to the selected mine design.GLD. Describe the waste characteristics. Describe the impact of ore variability on the selected flow sheet and plant performance. 3. Version: 2. material handling and transport within the mine site. Show how the risks have been addressed can be managed. 3. Provide sections and plans illustrating the locations and position of mine excavations.4 Process selection Provide details of the selected flow sheet.3 Test work Undertake sufficient test work to understand. Provide a full characterisation of the predicted ore and ore blends.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 23 of 35 . crushing). Report the sample selection and test work carried out for the optimisation and verification of the selected metallurgical processing flow sheet. Describe the designed mine production phases and the selected mining sequence including ore blending and ore and waste stockpiling strategies as appropriate. Provide the mining schedule in monthly increments for the first two years of production.4 Mine operations Provide a comprehensive description of the selected mining operation.3 Mine design Provide a comprehensive and detailed description of the selected mine design. Mining operation and mining equipment must be optimised and rationalised.0 Mining Description What Define any aspects on which the selected optimum mine plans place high reliance. and the impact of these on mining rates. 4. The ore scheduled for the first two years must all be in the Proved Ore Reserve classification. mining infrastructure and final mining limits. ore stockpiles. The mining scope at the end of the definition phase must meet the level of definition required of a detailed (Class 2) cost estimate. mine site ore processing (for example.5 Ore Reserves statement Develop the JORC compliant Ore Reserve statement from the final mine layout and the mineable resource model. Demonstrate optimisation of the selected mine configuration. 4. optimise and manage operational risks and variability. the costs of any technology acquisition and the potential for competitive advantage. Discuss key technology issues and risks relating to the process including scale-up factors required. Highlight any residual tenure issues or constraints. quarterly for the subsequent three years and then annually. 3. Focus test work on performance and product predictions and variability. Provide details of:  optimisation studies conducted in arriving at the final configuration. mining rate and mining Capex and Opex. and on design criteria determination. waste dumps. Definition Phase Requirements Show how the plant has been optimised taking into consideration feed characteristics and variability. Key drivers must be supported by benchmark data from similar mines. metallurgical production schedule and project ramp up. At least 80% of the ore scheduled for mining for the first five years of operation must be in the Proved Ore Reserve classification. Test work must be shown to be aligned with detailed mine design and validate Proved Ore Reserve ore classification for the first two years of operation and at least 80% of feed for the first five years.1 Processing strategy 4.

0 Infrastructure. Include:  any optimisation studies undertaken. reagents) for the selected investment alternative. Consideration must be given to doing this in two stages:  Preparation of a basis of design (BoD) for the facilities.  temporary facilities. specifications and/or codes that the plant will be engineered and designed to meet). The infrastructure scope at the end of the definition phase must meet the level of definition required of a detailed (Class 2) cost estimate.3 Transport and logistics Define and describe the optimised transport and logistics including the product and other key commodity transport requirements (for example. pipelines. Coverage to include mine to plant.  communications. design life and quality criteria. 4. During definition phase the engineering focus must be on developing the functional requirements for the selected investment configuration into functional specifications which can then be used as the basis for the subsequent detailed design in the execution phase.0 Processing Description What Show the impact of these on project value.2 Infrastructure Define and describe the optimised infrastructure requirements for the selected investment alternative. Version: 2.  describe the plant operations strategies.  estimated plant availability (benchmarked where possible).GLD. All other project infrastructure must be covered here. 5. design criteria and engineering standards. general arrangements and sections for the materials handling between the mine and plant. with variability estimates. 5. including ore blending and stockpiling.  start up and shut down criteria.  expandability and expansion options. together with the projects technical requirements. storage and distribution required up to the point of sale. the processing plant. shipping. orientation and levels will not materially change during the execution phase. Implement and control engineering resources and activities in accordance with the Engineering Management Plan.  Preparation of project technical specifications which provide a detailed description of the necessary project hardware. infrastructure and waste management facilities. transport and logistics Description 5. 5.  buildings and facilities. materials handling and export.  description of site layout.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 24 of 35 . product handling and transportation and plant residues/effluent disposal/water management. capacity and availability) and form the starting point for the detailed design and form the basis for the technical sections of tender documentation (for example. Complete all outstanding geotechnical and topographical surveys to provide a high level of assurance as to the selected locations. tailings dams) are fully optimised and that the position.6 Process facilities Describe the optimised physical plant and plant operation including:  facility capacity.  detail the interface with the point of delivery to the customer. acid plant or power station). conveyors. The BoD details the design intent. utilities. plant.  operating and maintenance consumables and utilities usage rates. drainage and waste disposal.  major plant mass and energy flows and capacities. limit any material changes in the execution phase and meet the requirements of a detailed (Class 2) cost estimate. These normally include performance targets for the facilities in the operation phase (for example.  process design criteria. Include mining infrastructure in mining design.  sewerage. infrastructure and all transport. Definition Phase Requirements Document final site layouts.  haul roads. The level of engineering detail at the end of the definition phase must be sufficient to enable design of key equipment.  utilities provision.1 Location What Ensure that locations proposed for the plant. Include:  any optimisation studies undertaken.031 MAJOR CAPITAL PROJECTS (Minerals) 4. infrastructure and residue disposal sites (for example.

6. storage and distribution system post point of sale.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 25 of 35 . transport and logistics Description What  stockpiles. growth potential.  the selected optimum product shipping. 7.5 Shipping. including export surcharges. place.2 Scope of work Define and describe the optimised SoW for the project in the execution phase. Include transport requirements post point of sale in market analysis.  basis of any proposed contracts for shipping and distribution. Present realistic low and high cases around the deterministic Mid case supply and demand profiles over time. Conclusions concerning importation and other duties. Confirm that the normal BHP Billiton reference prices are relevant for this opportunity. modularisation). 6.0 Infrastructure. Forecast low.3 Product specification Detail the required product specification (quality standard).2 Pricing Detail the pricing strategy.1 Statement of requirements What Update and maintain the SoR.GLD. Define off-specification products within metallurgical or other data limits. 7. manage stakeholder expectation(s) and minimise project impact.  cost and freight (Incoterms CFR) competitiveness. into target markets together with any potential vulnerability to countervailing or shipping duties.0 Market analysis Description 6.  transport infrastructure. Confirm that the project at the end of the definition phase meets all key stakeholder requirements.  temporary transport requirement (for example. opportunities or uncertainties that impact these forecasts. substantiated by demand or supply forecast and competitor analysis. Include an assessment of BHP Billiton’s expected market share. 6. Assess any competition (antitrust) and joint venture issues and ensure compliance with the relevant Group Level Documents. 6. This scope must be well-understood. volume. All requirements where compliance cannot be achieved must be documented in the SoR together with the measures required to address the outstanding requirement(s). 6. medium and long term trends.  cost and freight (incoterms CFR) competitiveness.  basis of any proposed contracts for shipping and distribution. with the basis stated for concluding the forecasts. including export surcharges.  cycle times from the project to customer. price and promotion to customers. Include an analysis of the major risks.0 Scope Description Definition Phase Progress all contracts or agency agreements required for marketing the product up to the stage of in-principle agreements. storage and distribution system up to the point of sale.4 Supply and demand forecasts Prepare or reference current BHP Billiton world supply and demand forecasts and incorporate an analysis of short. market share.1 Marketing strategy What Detail the marketing strategy in relation to product. have all material uncertainties resolved (minimal carry over of definition phase work into execution phase) and meet the level of maturity and definition requirements of a detailed (Class Version: 2. into target markets together with any potential vulnerability to countervailing or shipping duties. Document conclusions concerning importation and other duties. mid and high sales.  cycle times from the project to customer (for the calculation of working capital). Definition Phase Requirements Explain the derivation of any specific price premiums or discounts from the normal reference prices. Identify entry and competitive strategies. 6. storage and distribution Detail:  the selected optimum product shipping. Detail the impact on existing pricing in the case where market share increases significantly or there is a significant change in the competitive environment. Include the key drivers of the demand and supply cycles and make an assessment of the factors resulting in historic highs and lows.031 MAJOR CAPITAL PROJECTS (Minerals) 5.6 Marketing contracts 7.

manage and control the definition phase activities and durations in accordance with the approved study schedule. 9. update and maintain the detailed project Risk Register. 8. definition phase.0 Scope Description What 2) cost estimate.3 Work breakdown structure Update the SoW into the agreed project work breakdown structure (WBS). site surveys.1 Risk register What Develop. Version: 2.0 Schedule Description What 8.4 Operations phase cost estimate Carry out a probabilistic range analysis of this estimate. manage and control the Risk Management Plan for the definition phase. 8. 9. Definition Phase 8. The WBS must be capable of being mapped to the relevant work packages.2 Study phase cost estimate Manage and control the definition phase study costs in accordance with the approved study budget. Prepare a detailed (Class 2) operations cost estimate and associated BoE for the selected investment alternative.GLD.1 Overall investment amount Update and maintain the overall investment cost estimate (including the forecast or actual cost for identification phase. 7. selection phase.3 Risk management plan Implement. selection phase.1 Project master schedule Update and maintain the overall project master schedule including the forecast or actual start and finish dates for the identification phase.2 Risk control action plans Review.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 26 of 35 . 10.2 Study schedule Implement. The plan must cover both business level risks associated with the selected investment alternative and project specific risks associated with both the definition phase and execution phase.0 Risk management Description 10.031 MAJOR CAPITAL PROJECTS (Minerals) 7. 10. The mapping must enable the project to have an appropriate integrated monitoring and control mechanism in place for the execution phase. The register must cover both business level risks associated with the selected investment alternative and project specific risks associated with both the definition phase and execution phase. definition phase and execution phase) for the selected investment alternative. early site works.0 Cost Definition Phase Description What 9.3 Execution phase cost estimate Develop a detailed (Class 2) cost estimate and associated BoE for the execution phase. 9. Carry out a probabilistic range analysis of this estimate. implement and maintain the detailed project risk control action plan consistent with the Risk Register. Any areas where this cannot be achieved must be clearly identified in the SoW document together with an assessment of the resultant exposure. Definition Phase Requirements 10. Carry out a probabilistic range analysis of this schedule. update. The plan must cover all definition phase material risk issues (for example.3 Execution phase schedule Develop a detailed (Class 2) schedule and associated BoS for the execution phase. equipment packages and contracts in line with the final understanding of the Project Execution Plan and implementation strategy. and execution phase and ramp up period. and sampling). Prepare a detailed Risk Management Plan for the execution phase and the transition to the operation phase. drilling. 9.

site surveys. Detail any unique characteristics and physical scope of the selected investment alternative.4 Execution phase HSEC management Prepare a detailed execution phase HSEC Management Plan for the selected investment alternative. manage and control the HSEC Management Plan for the definition phase with the objective of achieving zero harm during the study.2 Valuation model Complete the investment evaluation using a valuation model structure that is:  appropriate for fully characterising the incremental value of the investment opportunity. Details on valuation modelling and investment evaluation are available from Group I&VM.  an implementation plan for the execution phase HSEC program.3 Study phase HSEC management Implement. All material HSEC risks identified in other parts of the study (for example.1 HSEC risk assessments Review and update both the H&S and the E&C risk assessments.5 Valuation summary Describe the optimised without and optimised with alternatives that demonstrate the incremental value of the selected investment alternative. Describe any variance between the selection phase NPV with the definition phase NPV with a NPV waterfall diagram that presents the variance by key value driver.4 Value enhancement Detail and quantify the key opportunities to enhance value through the existence of options (for example.5 Closure and rehabilitation The plan must cover all material definition phase risks (including early site works. Prepare a preliminary Closure and Rehabilitation Plan for the selected investment alternative. safety.2 Environmental and Social Impact Assessment Finalise the detailed project E&SIA or local equivalent and obtain relevant government approval if this has not already been completed in the selection phase. drilling.  requirements for resource and biodiversity conservation.  compliance with BHP Billiton sustainable development policy. issues or constraints associated with the selected investment.0 Investment evaluation Description 11.  control of environmental emissions and wastes. risk and uncertainties in order to fully characterise the incremental value of the investment opportunity.3 Investment evaluation Complete sufficient identification and evaluation of key value drivers. and sampling). 12.  completing the investment evaluation requirements of an IAR. 11. The valuation model must use key assumptions for valuation published by Group I&VM. future expansion. 12. Definition Phase Requirements Document the investment evaluation model(s) and lodge in the Investment Tracking System. 12. This must be based on the H&S and E&C risk assessments and include: 12. 11. Detail all key valuation risks. 11.031 MAJOR CAPITAL PROJECTS (Minerals) 11.  completing the investment evaluation requirements of an IAR. Version: 2. 12. environment and community Definition Phase Requirements Description What 12. Discuss any other potential upside that exists for the selected investment that "unlock" future value if conditions change and articulate the circumstances for such upside to become reality. future development.GLD.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 27 of 35 .  strategies for management of environmental and community aspects.0 Health.1 Method for estimating expected value What Apply a valuation methodology that is appropriate for:  fully characterising the incremental value of the selected investment alternative. air transport or site surveys) must be “rolled up” and included in the project HSEC Risk Register. The E&SIA must reflect the level of accuracy of the project scope at the time of preparation and contain sufficient flexibility to accommodate future optimisation of the project as it moves through the subsequent investment phases. drilling.  management of HSEC risks. 11. Timing of the submission of the E&SIA for approval must take into account the critical path for the project. Document any concerns with the application of the valuation methodology that impact on the decision to proceed to execution phase. pre-commitments) in the investment.

13. Ensure that the stakeholder groupings include as a minimum: 13. Provide an assessment of the international trade considerations for the project. Key contracts or purchases on the early critical path of the execution phase must be developed to the stage of firm and actionable bids or contracts (conditional agreements). 14. implement. Update and finalise the execution phase Project Resource Plan.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 28 of 35 . provincial and local government: include an authoritative opinion and appraisal of the views of governments and their authorities to the proposed project. update. local content. legal risk. implement and maintain the procedures required for the definition phase. Critical elements in the plan include: organisation. rights to market the products.GLD. briefings and any special requirements).0 Study/Project delivery Description Definition Phase R i t 14. ownership or other rights to use intellectual property and technology necessary for the project. Key project resources must meet minimum competency and experience standards (see Appendix 1).  national.1 Stakeholder management What Review.  NGO: include an authoritative assessment on the views and potential actions of NGOs to the project. ownership of lands for the project.  shareholders: include details of stock exchange/media engagement and communications (releases. transfer points for products. Develop. The plan must ensure compliance with the requirements of the JV agreement(s) and detail how key interface areas (for example. 13. Definition Phase Requirements The plan must be reviewed by the relevant CSG communications/external affairs focal point prior to advancement into the execution phase. All material arrangements required for the project must be developed to the stage of in-principle agreements. mobilisation.1 People and teams 14. Report key issues and special or unique requirements in detail. construction.3 Ownership Finalise and document all key ownership issues associated with the project in the Ownership Register. asset transfers. As a minimum include details on: sovereign risk. As a minimum include details on: ownership of the resource or reservoir. third parties or agents ensure all business conduct and governance considerations have been incorporated and all counterparty risks (including reputation risks) have been fully assessed. team integration and interfaces with key support contractors.4 Legal and regulatory 13. JV approvals) will be successfully managed. be company employees rolled over from a previous project or study as part of a deliberate program to grow internal project capability.6 Joint Ventures Continue to implement the joint venture interface plan for non BHP Billiton operated projects and BHP Billiton operated projects which have JV partner(s).2 Study and Project procedures What Implement the definition phase Project Resource Plan. implement and maintain the Project Communications Plan including an external relations assessment. 13. ownership risk. competencies.5 Contractual Review. engineering. These must. update. Cover all key functional processes required to safely and successfully deliver the definition phase objectives and Version: 2.0 Stakeholder management Description 13. responsibilities.031 MAJOR CAPITAL PROJECTS (Minerals) 13. where possible. When choosing JV partners. update and maintain the project Legal and Regulatory Approvals Plan. Where possible ensure continuity of key project owner’s team and implementation contractors resources between the definition phase and execution phase. project structure/entities and all material regulatory approvals or other legal actions required for the project together with the status of any negotiations or applications. involving the legislative and regulatory environment. plant and equipment supply and operations. implement and maintain the project Stakeholder Management Plan.  media: include an authoritative assessment on the likely impact of local media on the proposed project. Q&As.2 Communications  JV partners (if applicable). Review. tenure. Include consideration of: power. update. Establish a framework for the development and approval of the contract documentation required for the project. water. rights to import goods and services and to export the product to the point of sale. locations.

The plan must include the lessons learned VIP which involves the review.0. ensure that this is clearly highlighted and described.1 People and teams What Continue to onboard (or access) the operations resources required to develop the operations strategy.9. must be developed via a project hub in the definition phase. Develop a detailed Project Operations Resource Plan for the execution phase.8 Study progress reporting Develop and issue a monthly study progress report to key stakeholders. activities. The operations strategy defines the operational value drivers.0. This section also contains details on the minimum content requirements for the Project Execution Plan. 14. See Appendix 1. mobilisation.6 Project execution planning See Appendix 4 Section 14. Use this as a key input into the Operations Plan.2. competencies. Implement the relevant project value improvement practices (VIPs) required during the definition phase.0 to 4.5 Innovation If an innovative technology has been selected for the preferred investment alternative.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 29 of 35 . operational philosophy. operations organisational structure and operations management systems. Each section of the Project Execution Plan details how the project will implement. systems and tools to deliver the required SoW and deliverables. team integration. Review and update the project Value Improvement Plan.4 Value improvement Develop and implement the required suite of project IM systems for the definition phase study. 14. Prepare an index of critical project procedures required for the execution phase and a plan for their development. locations. Prepare the IM Management Plan for the execution phase. document and implement all relevant learning's from post investment reviews. 14. 14.0 Study/Project delivery Description What include the review and endorsement of support contractor(s) key procedures. details of which are included in the main Operations Plan. operational requirements and key operational issues (for example.2 Operations strategy Update and optimise the operations strategy. Include: organisation. Show how any test work supports the view of residual technology risk. 15. processes. contract versus owner operated). where BHP Billiton is the project manager. See Appendix 1. The Project Operations Resource Plan normally transitions directly into the actual operation phase resourcing.7 Program management Major capital projects. 14. local content. The Project Execution Plan describes how the full SoW of the project must be safely executed to meet the agreed project objectives and project KPIs and includes details of the proposed contracting strategy. See Appendix 1. this information can be included directly in the Project Execution Plan or in separate management plans that are then referenced and summarised in the Project Execution Plan. Ensure full disclosure of all residual technology risks and their potential impact on the execution phase.0 Transition to operations Description Definition Phase Requirements 15. Operations Plan and implement the operations input into design. manage and control the respective resources. 15. Develop optimise and finalise the execution phase Project Execution Plan and cost estimate to meet the requirements of Appendix 5 Sections 1.031 MAJOR CAPITAL PROJECTS (Minerals) 14. Update the Investment Tracking System in accordance with the group investment process. Key operations resources in the definition phase must meet minimum competency and experience standards. interfaces and reporting relationship with the project and interfaces with key operation phase support contractors. fly in fly out versus local workforce. Cover all key functional IM support required to safely and successfully deliver the definition study objectives and include review and endorsement of support contractor(s) key project IM systems and procedures.GLD. Project Close-Out Reports and other sources. Depending on size and complexity of the project. Version: 2.9 Forward work plan Finalise the project objectives and associated project KPIs for the execution phase in accordance with the requirements of Appendix 5 Section 1. Include all key functional processes required to safely and successfully deliver the execution phase objectives. The plan must cover all operations resourcing from the start of the execution phase through to project completion and handover to operations. responsibilities. The structure of the Project Execution Plan must follow the headings and sequence as Appendix 5 Section 2. 14.3 Project Information Management (IM) systems 14.

reliability. operations risk management. Cover all key functional processes required to safely and successfully operate the Asset. 15. start up and steady state operations. The Operations Plan describes how the Asset is operated and maintained throughout its life.4 Operations input into design Ensure that the requirements of the detailed operations strategy and plan are built into the SoW for the selected investment alternative.GLD.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 30 of 35 .0 Transition to operations Description 15.5 Commissioning Develop the preliminary Commissioning Plan. Include this in the Operational Readiness and Handover Plan.6 Operations readiness Develop the preliminary Operational Readiness and Handover Plan. hazard identification and mitigation. 15. 15.031 MAJOR CAPITAL PROJECTS (Minerals) 15. Version: 2. maintainability. 15. commissioning and start up philosophy.3 Operations plan What Develop the Operations Plan required for start-up and subsequent safe and reliable commercial operation. 15.8 Operations IM systems Detail the key operations and maintenance IM systems required during commissioning. Include: operations participation in design for operability.7 Operations procedures Identify and list the key operations and maintenance procedures required during commissioning. human factor considerations. start up phase and steady state operations and include this in the Operational Readiness and Handover Plan. pre-commissioning.

scope of work (SoW) and approved execution key performance indicators (KPIs). investment phase activities and the individual needs of the selected investment alternative.  complete all project close out activities and deliverables.  transition the project to the operation phase.2 Project objectives and KPIs The project objectives and associated project KPIs for the execution phase must be based on the group investment process investment phase objectives.1 Business objective(s) and strategic fit Deliver on the business objective(s) for the investment. manage and control the scope using the agreed project WBS. approved SoW and project KPIs. Investment phase objectives: Deliver the investment to meet the agreed project objectives. Project Execution Plan. The Commissioning Plan must be finalised at least three months before construction completion/energisation of the first system. Execution phase 1.0 and 4. KPIs. managed and controlled during the execution phase. SoR. agreed project scope and project KPIs. The Project Execution Plan and budget must cover all activities in the execution phase up to the forecast date for project completion.2 Project scope of work Implement and deliver the approved project SoW.0 Project delivery (Project Execution Plan) Description What 2. Direction on the application of the execution phase requirements is available from Group PMS. exclusions and battery limits). The Post Investment Review (PIR) report is required within eighteen months of advancement into the operation phase in accordance with the group investment process.  implemented. 1. Ensure that the project addresses these elements. project objectives and project KPIs in the Project Execution Plan.3 Execute project  execute the project in accordance with the approved Project Execution Plan and budget to meet the specific project objectives. Version: 2.0. The Operations Readiness and Handover Plan must be finalised at least one month prior to start of the handover activities. The Project Close-Out Report (PCOR) and the close-out evaluation report by IPA are required within three months of project completion. Monitor. Any elements considered not applicable. Execution Phase Requirements Investment phase activities: 1. not relevant or where compliance cannot be achieved must be documented in the Project Execution Plan. 1.031 MAJOR CAPITAL PROJECTS (Minerals) Appendix 5. 2.0 Execution phase overview Description What 1. Include all major components of work and who is executing them. Include in the Project Execution Plan an outline of the overall project scope (inclusions. 3.4 Transition to operations See Appendix 5 Section 3.1 Objectives Document the business objectives. budget and key project resources are:  finalised at the end of the definition phase.  approved as part of Gate 3 (the advancement from the definition phase to the execution phase).GLD. 1.0.6 Timing The execution phase project objectives.0.0 detail the specific performance elements that must be considered during the execution phase. Reference the detailed SoW and WBS documents. Appendix 5 Sections 2. 2.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 31 of 35 .5 Close out project See Appendix 5 Section 4. 1. Execute the project in accordance with the approved Project Execution Plan and budget to meet the specific project objectives.

Key project resources must meet minimum competency and experience standards. approved for construction packages) in accordance with the approved scope of work. manage and control the contracts and procurement resources and activities in accordance with the Contracts and Procurement Plan. update and maintain the execution phase Project Resource Plan. 2. Provide a high level summary of the HSEC Management Plan in the Project Execution Plan and reference the detailed plan. Implement all material arrangements and execute all required contract documentation for the project in accordance with the agreed project authorities. manage and control the Risk Management Plan for the execution phase including the associated Risk Register and risk control action plans. manage and control the contracts and procurement activities needed to deliver the required services and materials in accordance with the approved SoW.GLD. activities. The plan must include the lessons learned VIP which involves the review. environmental and community activities on the project are compliant with the requirements of the HSEC Group Level Documents and how the project intends to achieve zero harm in these respective areas. document and implement all relevant learning's from post investment reviews. Provide a high-level summary of the projects material risk issues and the project execution phase Risk Management Plan in the Project Execution Plan and reference the detailed plan.0 Project Integration Management. budget and schedule. BoD and project technical specifications. Major capital projects. systems and tools to produce required engineering deliverables (for example.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 32 of 35 .031 MAJOR CAPITAL PROJECTS (Minerals) 2. In the Project Execution Plan include as a minimum the organisation chart for the project (owner’s team and implementation contractors team). responsibility matrix or similar showing interrelationship between functions for the key project activities. 2. where possible.9 Contracts and procurement Implement. budget or plan must be managed via a formal project change control process.3 Project execution What Implement the project in accordance with the approved Project Execution Plan and contracting strategy. commissioning and the transition between project and operations. It must also identify the main activities necessary to prepare for the management of risk in the operation phase. including construction and commissioning.4 Project HR management Implement. 2. implement. See Appendix 1. 2. Provide a high-level summary of the Engineering Management Plan in the Project Execution Plan and reference the detailed plan. safety.5 HSEC management Update and maintain the execution phase HSEC Risk Register and risk control action plans as key inputs into the HSEC Management Plan.7 Value improvement Review and update the project Value Improvement Plan. Implement the requirements of the project E&SIA. Execution Phase Requirements Implement the project execution phase HSEC Management Plan including detailed safety plans for construction. The plan must define how the project intends to manage to an acceptable level (ALARP) all execution phase material risk issues. The plan must define how the project will ensure that the health. 2. The plan must ensure that the right people in the right numbers at the right time with the appropriate responsibility are in place to successfully deliver the required project outcomes. The Engineering Management Plan must define how the project will manage and control the engineering resources. Changes to the scope. The plan must define how the project intends to develop. The plan must also include provision for follow on engineering support to the construction and commissioning teams and completion of as-built drawings for handover to operations. where BHP Billiton is project manager must be executed via a project hub (see Appendix 1). Version: 2. These must.0 Project delivery (Project Execution Plan) Description 2.8 Engineering management Implement. The Project Execution Plan must include details of how the project will ensure the progressive integration of critical activities in line with the requirements of ANSI-99-001-2008 (PMBOK) chapter 4. locations of work for respective teams.6 Risk management Implement. be company employees rolled over from a previous project as part of a deliberate program to grow internal project capability. Update and maintain the Project Execution Plan as a live document during the execution phase. manage and control engineering resources and activities in accordance with the Engineering Management Plan. Implement the relevant project value improvement practices (VIPs) required during the execution phase. 2. Project Close-Out Reports and other sources. processes. the requirement for early mobilisation for owner’s team and implementation contractors’ teams and details of how the project will ensure that the resources will work effectively as a high performance team.

manage and control the execution phase costs in accordance with the approved budget. ensure interface compatibility with owner management systems (for example. correspondence protocols. 2. Include the as-built execution phase schedule in the PCOR. 1SAP). These must be proven and capable of providing baseline information. record keeping. vendor drawings and spares lists). Include in the Project Execution Plan a high-level summary of the project services processes and refer to any specific plans for project control and reporting. manage and control the construction resources and activities in accordance with the Construction Management Plan. The execution schedule must cover all activities from the start of the execution phase up to project completion. cost and schedule. They can be owner or implementation contractor systems. implement and maintain the project procedures required for the execution phase. Provide in the Project Execution Plan a high-level summary of the project quality management activities required in accordance with the scope of work and reference the detailed Quality Management Plan.13 Project services Project control systems: Implement the project control systems required to manage and control the scope. Provide in the Project Execution Plan an overview of the project schedule including key target dates and interim milestones. manage and control the in-house and third party quality resources and activities in accordance with the Quality Management Plan.GLD. Provide a high-level summary of the Contracts and Procurement Plan in the Project Execution Plan. known risks and contingency.10 Construction management Implement. Execution Phase Requirements Include as-built execution phase costs in the PCOR. Consideration must be given to the benefits of developing a definitive (Class 1) execution phase cost estimate to improve the accuracy of the forecast final cost. GSAP. Project reporting: Issue a monthly project progress report to key stakeholders. manage and control the execution phase activities and durations in accordance with the approved baseline schedule. 3D model. 2D schematics. 2. financial control and reporting. 2.11 Budget management and control Implement. forecast to complete and variance analysis. These must cover all key functional processes required to safely and successfully deliver the project objectives and include the review and endorsement of implementation contractor(s) key procedures. Project procedures: Finalise. Include details of how the plan has been integrated with other key project activities (engineering and construction) and how critical path activities (for example.031 MAJOR CAPITAL PROJECTS (Minerals) 2. key contract awards and vendor data) meet the required project timeline. travel. accounting. 2. Reference the detailed execution phase cost estimate and associated BoE. and a clear statement of any exclusions. administration policies. Lodge the native format file(s) with Project Management Services for inclusion in the company project cost benchmarking database. Project administration: Implement and manage the required project administration including office locations. The budget must cover all costs required by the project from the start of the execution phase up to project completion. construction drawings. detailed equipment specifications.0 Project delivery (Project Execution Plan) Description What Interface with the Marketing group to arrange execution of all new/revised contracts/agency agreements required for marketing the product.14 Quality management Implement. facilities and support. The plan must define how the project will assure quality (conformance to specification) for all items of material and relevant services (for example. The plan must define how the project will build the required plant and facilities in accordance with the project approved for construction (AFC) package(s) and approved SoW. Project authorities: Implement and maintain project specific authorities in compliance with company authorities.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 33 of 35 . If the latter. 2. current status.12 Schedule management and control Implement. payments. welding). Update the Investment Tracking System in accordance with the group investment process. the critical path(s). Lodge the native format file(s) with Project Management Services for inclusion in the company project schedule benchmarking database. Include in the Project Execution Plan a summary of the approved budget including the provisions for identified risks. treasury functions and asset management. P&IDs. escalation and contingency. Provide in the Project Execution Plan a high-level summary how the project plans to safely manage the construction activities across all project sites in accordance with the approved SoW and reference the detailed Construction Management Plan. Reference the detailed execution phase schedule and BoS. Version: 2. procedures for equipment installation. The AFC package(s) must contain all the information required for construction (for example.

including review/endorsement of implementation contractor(s) project IM systems/procedures and the handover to operations.0 Project delivery (Project Execution Plan) Description 2. Provide an overview in the Project Execution Plan of the required suite of project IM systems for the execution phase. permit to work).0 See Appendix 5 Section 4. central government.  meet the requirements of the Market Disclosure and Public Affairs. Execute the operational activities required during pre-commissioning. These plans must define how the project will ensure that the project activities are compliant with all statutory and regulatory requirements and how the project will:  effectively manage key stakeholders. Update and maintain the project Ownership Register and associated documentation. reviews. Continue to implement the Joint Venture Interface Plan and manage the joint venture partners. 2. 2. local government. Transition to operations Description 3. The plan must define how the project will ensure that all plant and facilities function as per their design specification before handover to operations. Provide in the Project Execution Plan a high-level summary of how the project plans to manage and execute the commissioning of all project facilities in accordance with the scope of work and reference the detailed Commissioning Management Plan.18 Commissioning management Implement. Investor Relations and Brand Group Level Documents. operations organisational structure and operations management systems.0.  manage these activities in order to meet the required project outcomes. 3. operational requirements and key operational issues (for example.17 Operational readiness and handover See Appendix 5 Section 3. 2.20 Project close out 3. Ensure that any use of third parties or agents complies with all business conduct and governance considerations and that all counterparty risks (including reputation risks) are carefully managed. The operations strategy defines the operational value drivers. the media and visitors). manage and control the execution phase IM program in accordance with the IM Management Plan. the procedure for internal stakeholder communication including corporate reporting. Use this as a key input into the Operations Plan. fly in fly out versus local workforce.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 34 of 35 . regulatory authorities.19 Project reviews and audits Develop and implement the plan for regular reviews and audits of the project during the execution phase. Any material changes to the plan(s) must be reviewed by the relevant CSG communications/external affairs focal point. The Operations Plan describes how the Asset is operated and maintained throughout its life. the procedure for external stakeholder communications (such as the contractors.16 Project IM systems Implement. actions and closes out corrective actions identified from the reviews and audits.1 Operations strategy What Finalise and handover to operations the agreed operations strategy. Update and maintain the project Legal and Regulatory Approvals Register and plan. 2. Provide in the Project Execution Plan a copy of the project review and audit plan and detail how the project will ensure it captures. The plan must demonstrate how the project intends to ensure compliance with company Group Level Documents and provide an independent view of project progress against approved targets through the use of execution phase reviews (EPRs). This can be a separate document or form part of the main Stakeholder Management Plan. commissioning and start-up in accordance with the agreed Operations Plan (for example. The plan must define how the project will manage all key functional IM requirements (hardware.15 Stakeholder management What Implement the project Stakeholder Management and Communications Plan(s). software and support) required to safely and successfully deliver the project objectives. non-government organisations. local community. 2.0. Reference the relevant detailed plans. project team members and other employees. contract versus owner operated). operations. operational philosophy.GLD. manage and control the commissioning resources and activities in accordance with the Commissioning Management Plan. Include an overview in the Project Execution Plan of the interfaces and relationships with: third-parties. Reference the detailed project IM Management Plan. Version: 2.2 Operations plan Finalise and handover to operations the agreed Operations Plan.031 MAJOR CAPITAL PROJECTS (Minerals) 2.

start up phase and steady state operations.0 Project close out Description Execution Phase Requirements Update the preliminary Closure and Rehabilitation Plan with as-built information and handover to operations.5 Operations procedures Develop.7 Operations phase cost estimate Update and then handover to operations the detailed (Class 2) operations cost estimate and associated BoE. It includes the relevant requirements from the operations strategy and Operations Plan. 3. software and data. 3.  clear process is in place and milestones agreed for project handover by package. Execution Phase Requirements Prepare for.4 Operations resources  owner’s Asset leader and key operations and maintenance resources in place. implement and handover to operations the complete suite of operations and maintenance procedures and manuals required during commissioning. Typically key operations supervision must meet minimum experience and performance standards and the core operations and maintenance workforce must meet minimum experience and appropriate trade competency standards.  clean-up of site including removal of temporary facilities and the disposal of surplus material. site statutory safety manager). details of which are included in the main Operations Plan. What 4. transition from capital to operating expenditure). system and asset(s).  documentation and close out of all project activities including all key purchase orders. systems. Implement.2 (29 August 2011) Revalidation date: 31 December 2011 BHP Billiton Group Level Document (printed copies are uncontrolled) Page 35 of 35 .GLD. key contracts. maintenance and support resources in the right numbers at the right time with the appropriate responsibility are in place to meet the operational readiness and handover requirements. including confirmation of completion of the approved SoW and compliance with finance reporting requirements (for example. contracts and commitments. implement and handover to operations the key operations and maintenance IM systems required during commissioning. 4.  all required operations statutory permits and approvals in place. equipment and asset(s).0 Transition to operations Description 3. Key operations resources in the execution phase must meet minimum competency and experience standards. insurance. Include in the Project Execution Plan as a minimum the operations team organisation.3 Operational readiness What Develop the detailed Operational Readiness and Handover Plan.  a clear definition of (and milestone for) project completion. See Appendix 1. manage and control the project close out activities in accordance with the plan.  Operations Management Plan in place. key project resources and project team members.031 MAJOR CAPITAL PROJECTS (Minerals) 3.  handover of all legal and statutory requirements.  clear responsibilities and accountabilities during handover period (for example. Version: 2. implement and complete the transition to operations in accordance with the agreed Operations Readiness and Handover Plan including: 3. zero harm HSEC and Risk Management Plans. documentation and as build drawings. The Operational Readiness and Handover Plan details how the project plans to safely and successfully transition to the operation phase and includes both the preparation work required and the actual handover of all project facilities and asset(s). including agreement on handover of any outstanding work (punch list items) and associated budget. a mobilisation chart demonstrating that the operations resources will be available in line with the operational readiness and commissioning activities in the project schedule and an overview of the required operations and maintenance training and competency programmes. including permit to work.2 Close out activities and deliverables The following activities and deliverables must be completed at the end of the project: Implement. The overall training and competency objective for the operations staff and support contractors is to be able to safely and efficiently operate and maintain the new facilities. The plan must ensure that the right operations.6 Operations IM systems Develop.  succession planning for project leader. spares and consumables.  completion of a PCOR.  demobilisation of implementation contractor and all other project consultants and contractors. start up and steady state operations. 4. asset(s). update and maintain the execution phase Project Operations Resource Plan. 3.  completion of a close-out evaluation report by IPA.1 Project Close Out Plan Develop the Project Close Out Plan. It normally transitions directly into the actual operation phase resourcing.