Mining

3. Growth beyond the Core Business

Reko Diq

The Group holds a 50% interest in Tethyan Copper Company Limited (“Tethyan”), its joint venture with Barrick Gold Corporation (“Barrick”) established in 2006. Tethyan’s principal assets are a 75% interest in the exploration licence encompassing the Reko Diq prospects in the Chagai Hills region of South-West Pakistan (in which the Government of Baluchistan holds the remaining 25%) including the Western Porphyries,and a 100% interest in certain other licences in the region.

The mineral resource at Reko Diq is estimated at 5.9 billion tonnes with an average copper grade of 0.41% and an average gold grade of 0.22 g/tonne at a cut-off grade of 0.20% copper equivalent (2008 – 4.1 billion tonnes with an average copper grade of 0.50% and an average gold grade of 0.298 g/ tonne), and the Group’s attributable share of this joint venture interest amounts to 2.2 billion tonnes (2008 – 1.5 billion tonnes). The increase compared with 2008 is primarily due to the inclusion of three neighbouring deposits H13, Tanjeel (also referred to as H4) and H8 into the resource estimate, along with the existing H14 and H15 deposits.

The Group’s 50% share of expenditure relating to Tethyan during 2009 amounted to US$36.6 million. This includes US$32.5 million relating to exploration and pre-feasibility costs which have been expensed and US$4.1 million relating to the costs of the feasibility study which have been capitalised.

Work on the feasibility study and the related environmental and social impact assessment study is in its final stages. Discussions for agreements with the relevant authorities in Pakistan are continuing, as agreement has not yet been reached concerning a mineral agreement and the conversion of the exploration licence encompassing Reko Diq (which currently expires in February 2011) into a mining lease.