BHP Group Limited — Capital/Financing Update 2008

Nov 25, 2008

ABN 25 001 150 849

Level 3, 2 Elizabeth Plaza North Sydney NSW PO Box 1507 North Sydney NSW 2059 Australia

Phone: 02-9925-8170 Fax: 02-9925-8110 Email: mail@intec.com.au Website: www.intec.com.au ASX code: INL

Companies Announcements Office Australian Securities Exchange

26 November 2008

Intec Acquires Right to Purchase Major Hydrometallurgical Plant

Transaction Structure

Intec Ltd (ASX code: INL) is very pleased to announce that it has entered into a conditional agreement with Delta EMD Australia Pty Ltd (part of the international Delta Group, see www.deltaplc.com) for the intended purchase of Delta’s integrated minerals processing plant at Newcastle (including land, buildings, plant and equipment - see Figure 1) at a proposed total cost of A$20 million.

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Figure 1: Aerial view of the Delta EMD plant on the banks of the Hunter River at Newcastle, Australia. This photo was taken in 1992 shortly after commissioning and shows clearly the various process units.

The plant was originally constructed by BHP in 1989 (at a capital cost of over A$160 million) and operated until being transferred to Delta in 1998. It is estimated to have a replacement cost of up to A$500 million in today’s terms. It produced electrolytic manganese dioxide (EMD) used in the production of alkaline batteries until March 2008, when it was decommissioned due to low EMD prices worldwide.

Under the terms of the agreement, Intec has paid a non-refundable holding fee of A$300,000 (plus GST). The Contract for Sale of the site is due to be executed, and the 10% deposit (A$2.0 million, less the option premium) paid, by 28 February 2009, subject to (South African) regulatory and (Delta) shareholder approval. Completion of the sale and associated (pre-approved) transfer of BHP Billiton’s existing site environmental indemnity are due by 15 April 2009. The sale does not include certain equipment, software and information essential to the production of EMD, in accordance with the mutual legal agreement between the parties that the site cannot be returned to EMD production at any time in the future.

Overview

The purchase of the processing plant will represent a significant acceleration and expansion of the Intec Metals Recycling Project, enabling the short-term implementation of individual business units at a very competitive capital cost for the generation of early cash flows and profitability. With manifest advantages in location, lowest-possible technology and engineering risk, and shortest-possible implementation times, this deal secures the optimum platform for implementing the overall Intec Metals Recycling Project.

The site is very well situated alongside the Hunter River across from Kooragang Island (see Figures 2 and 3), in immediate proximity to Newcastle’s port loading and unloading facilities, and with excellent rail and road access. The coastal mainland location also improves accessibility for delivery of copper, lead, zinc, silver and other metal feedstocks, which will be treated on either a project-participant or toll-treatment basis.

Figure 2: Plant location (marked with a red circle)

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Figure 3: Aerial view of the plant location, showing the Hunter River and Kooragang Island to the north

Intec is better placed than any other Australian company

to unlock the value of, and to utilise this extensive plant infrastructure, due to compatibility of materials of construction and business plans. Importantly, the existing Newcastle facility offers significant additional capacity to that previously envisaged for the Intec Metals Recycling Project. It comprises a number of equipment units yielding both short-term and long-term opportunities for integrated but individually-operated profit centres as follows:

• the ‘Refractory Unit’, consisting of a ball mill, rotary kiln, cyclone and off-gas control equipment and baghouse;

• the ‘Hydrometallurgical Unit’, consisting of the leaching, filtration, purification and electrowinning operations – the basis for Intec’s original interest in the Newcastle site – which is readily suitable (including its materials of construction) for commercial-scale implementation of the Intec Process;

• the ‘Pilot Plant’, which is very well-equipped and will be very useful for Intec Process projects progressing through the development pipeline;

• the ‘Wastewater Unit’, including tanks, pumps, and trace metals removal units, which is intended for early re-use as a separate business centre;

• the ‘Ancillary Units’, such as a concentrate/feedstock storage shed, ring roller mill, office buildings, substantial staff amenities (including first aid station), high-quality laboratory space, spare parts/stores and a maintenance workshop.

“We have persevered over many months to secure this unique opportunity for Intec,” says Philip Wood, its Managing Director and CEO. “There is more quality equipment on this site than we would have considered putting into our first commercial project, and it is contractually available to us at a fraction of the cost. So now we have every opportunity to really prove what Intec can do.”

In addition to the Hydrometallurgical Unit operating the Intec Process at the expanded commercial scale, it is expected that the distinct Refractory Unit can be quickly brought into profitable operation for Intec’s stockpile of EAF dust to generate early revenues for the Intec Metals Recycling Project.

The Wastewater Unit and Pilot Plant both offer exciting profit opportunities; and the site is wellsupported by a comprehensive range of Ancillary Units, some of which will be transferrable to the other profit centres. Any surplus remainder can be sold in an orderly and targeted manner for near-term cash receipts to offset in part the site capital cost.

The Company now enters into a near five-month due diligence period (ending 15 April 2009), which will also be used by the Company to secure the total initial capital costs of A$25-30 million for all of the site purchase, Refractory and Wastewater Units startups and working capital.

Site, Plant and Equipment Detail

The underlying land value of the 8.9 hectare site has been independently estimated by one of Australia’s leading commercial real estate agencies at A$10.7-12.5 million - over half of the A$20 million proposed purchase price. Additionally, the site includes major plant and equipment items (Figure 4), such as:

• a complete hydrometallurgical leach train, consisting of sixteen fibreglass tanks, piping, instrumentation, pumps, etc. The fibreglass tanks include six 600 m[3] and six 300 m[3] reactors/storage tanks, two smaller sulphidising tanks and two electrolyte collection tanks.

• a complete refractory unit, including a 90 kW ball mill, 27 metre rotary kiln, two baghouses (to be relocated from elsewhere on the site for this purpose), instrumentation and handling equipment, which alone have an estimated replacement value of A$60 million;

• a sulphidisation train, including precipitation reactors, storage tanks, scrubbers, filters, etc;

• a major electrowinning tankhouse, piping, instrumentation, rectifiers, transformers, and over A$2 million worth of contained copper in electricity-conducting busbars. This facility is larger than required for the Intec Metals Recycling Project, allowing for future expansion of the Hydrometallurgical Unit;

• two 15 MW boilers, each capable of generating 24 tph of steam– significantly in excess of Intec’s requirements;

• two 14 metre plate-and-frame filter presses each with over one hundred 1.2 m x 1.6 m plates, rated to 700 kPa – an otherwise long lead-time item required by the Intec Process;

• a 5,000 t storage shed, with room to expand this to more than 10,000 t;

• a host of ancillary equipment: air compressors, pumps, fans, bins, filters, cranes, tanks, screw feeders, conveyors, control valves; and

• a high-quality maintenance unit, complete with a full set of critical spares required for the ongoing maintenance of the Newcastle facility.

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Figure 4: Panoramic view of the Newcastle site, viewed from the east (left to right): A – Ancillary Units, including milling equipment, B – Hydrometallurgical Unit, electrowinning tankhouse, C – Pilot Plant, D – (foreground) feedstock storage shed, E – Refractory Unit (Photo courtesy of Exile Creative – www.exilecreative.com.au)

The distinct items of the land, plant and equipment each represent valuable stand-alone assets. As such, the proposed $20 million purchase price for the acquisition of the entire site for profitable operation, represents a major value proposition for Intec’s shareholders.

Refractory Unit

The stand-alone plant and equipment of the Refractory Unit were originally required by Delta for the pre-treatment of the manganese ore feedstock. Since the hydrometallurgical Intec Process technology does not typically require special measures for its feedstocks, this high-quality set of equipment is freed up for other business opportunities.

Although Intec has already identified a number of such opportunities, it has decided to proceed with early implementation of zinc recovery from EAF dust. At current prices, Intec’s stockpile of this feedstock contains approximately A$20 million of zinc; and the early recycling of this material would also obviate the need for the current environmental storage bonds, thereby returning approximately A$4.5 million to the Company.

Importantly, economic modelling shows that long term operation of the Refractory Unit for EAF dust recycling alone (just by itself and excluding the additional value of the other business units on the Newcastle site) fully justifies the capital costs for the acquisition of the entire site, while providing an attractive return on investment for Intec’s shareholders. As such, the early operation of the Refractory Unit represents a clear, low-hurdle value proposition for the Intec Metals Recycling Project even in the current challenging financial and metals prices climate.

As noted by John Moyes, Technical Director for Intec: “BHP built this facility to the very highest engineering standards, and Delta has looked after the site with the intention of running it indefinitely. Almost A$10 million has been spent on preventive maintenance for the site in the last five years alone. Even the 2008 shutdown was handled by Delta with admirable care and attention. You could actually walk back in tomorrow and restart some of the units immediately – in fact, Delta staff turned the Refractory Unit over for us the other day, proving just how well it has all been managed.”

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Figure 5: Panoramic ‘fish-eye lens’ view of the electrowinning tankhouse (Photo courtesy of Exile Creative – www.exilecreative.com.au)

Hydrometallurgical Unit

The existing Hydrometallurgical Unit offers numerous important advantages for application of the internationally patented Intec Process technology. Delta’s individual unit operations of leaching, purification and electrowinning, closely match those of the Intec Process. The installed electrowinning capacity and the significant infrastructure to support its operation represent a major enhancement of the original Intec Metals Recycling Project in Tasmania. It is now Intec’s intention to produce up to 15,000 tpa high-grade copper metal and up to 10,000 tpa high-grade lead metal directly from the chloride electrolyte, at a fraction of the estimated capital cost of a new electrowinning tankhouse.

Furthermore, due to differences in energy consumption, the total capacity of the tankhouse (Figure 5) to produce copper and lead is much greater than the amount of former production of EMD. Hence, the limiting factors for future expansion of the initial project are the leach and purification sections, which are nonetheless already very sizeable and can be readily expanded at modest cost when required.

The leaching section of Delta’s Newcastle plant includes six 300 m[3] fibreglass tanks. They have been constructed and maintained to suitable standards for the Intec Process and require only relatively minor modification and some repair. It is envisaged that the multiple feedstocks to the plant would be collectively leached in a single process train, taking advantage of the synergies in acid-consuming and acid-generating feed-types to offset the demands of each other. Sulphides will be substantially leached by the recycling of oxidant from the electrowinning operations, thus forming a closed-loop process for the hydrometallurgical plant.

The simultaneous leaching of multiple feedstocks in a single train of large leach vessels will be aided by the robust flexibility of the Intec Process to changing inputs. In this manner, the plant will have the capacity to be responsive to new opportunities over time (and, to a limited extent, relative changes in global prices for different metals), as well as having the flexibility to accommodate the inconsistent nature of industrial residue feedstocks, yielding the best-practice environmental recycling of materials that would otherwise have found their way to landfill disposal.

The existing filter presses (typically expensive, long lead-time items) are well-suited to Intec’s needs, and the downstream sulphidisation circuit could be directly applicable to the recovery of high-grade zinc sulphide product from zinc-bearing feedstocks. Valuable trace metals such as silver (which is common in many mineral concentrates) and indium (which is present at economic levels in a copper concentrate envisioned for the plant) will also be recovered.

Collectively, the plant and equipment forming the Hydrometallurgical Unit (Figure 6) are ideal for the Intec Process and readily amenable to retrofitting for early commercial-scale operation of the Intec Process, at less than half the capital cost previously expected for the smaller Tasmanian-located Intec Metals Recycling Project. With the bulk of the plant and equipment already installed, the engineering task required for Project implementation is significantly reduced, as is the construction cost and time.

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Figure 6: Panoramic view of the Hydrometallurgical Unit, viewed from the south (left to right): A – (foreground) Wastewater Unit, (rear) 2 x 15MW boilers, B - fibreglass leach train, C - 2 x plate & frame filters, D - Pilot Plant, E – Maintenance and Stores (Photo courtesy of Exile Creative – www.exilecreative.com.au)

Further, the project risk of cost overruns common to many recent Australian projects is considerably lowered, yielding a more tightly-defined, quantifiable Project.

The larger size of the Hydrometallurgical Unit relative to that originally envisaged for the Intec Metals Recycling Project (Stages 1 and 2 combined), affords an excellent opportunity to expand the treatment of polymetallic or ‘intermediate’ mineral concentrates and to include those concentrates that suffer high penalties due to the presence of unwanted base metals or contaminants such as arsenic, mercury, bismuth and/or cadmium, which pose significant environmental and safety concerns at smelters but are readily and safely dealt with in an environmentally advantageous way via the Intec Process.

This is particularly the case for the business model originally envisaged for Intec’s Hellyer operations, and now shown to have much wider application: ie to include miners who can additionally produce low grade or ‘intermediate’ concentrates at minimal incremental cost. The Intec Process can unlock incremental value from mineral resources, in addition to the revenues already generated by operating miners through their standard concentrate sales. By producing the ‘intermediate’ concentrates from the material that the Australian miners would otherwise be disposing to tailings, these ‘orphan’ or ‘stranded’ concentrates offer a win-win for both Intec and the mining companies.

In anticipation of this expansion, Intec has been actively discussing project participation and/or mineral feedstock supply with a range of established Australian mining and processing companies that have understandably shown strong levels of interest.

As a further enhancement, the additional capacity and central eastern seaboard location improves the opportunities for recycling metal-bearing waste materials. Thus, the plant should be able to play an enhanced role relative to that previously envisaged under the collaboration agreement established with Veolia Environmental Services in December 2007.

In total, the Hydrometallurgical Unit will have the capacity to produce 15,000 tpa of high-grade copper metal, 10,000 tpa lead metal, zinc intermediates and by-products of silver and indium on a flexible basis depending on the fluctuations in the feedstocks over time.

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Figure 7: Sunset panoramic view of the Hydrometallurgical Unit, viewed from the east

Project Implementation

Intec has formed a special-purpose wholly-owned vehicle – Intec Metals Recycling Pty Ltd – for the Project and the overall site acquisition.

The numerous valuable feedstock opportunities generated by the size and capabilities of the Hydrometallurgical Unit (Figure 7) will continue to be progressed commercially by the Company during the due diligence period.

Intec will complete the significantly-reduced project engineering task with GHD Australia, which has already conducted a detailed site review and appraisal. This will build on the work already completed during recent Stage 1 and 2 engineering studies, and will result in a ±15% bankable feasibility study to contribute to the overall Intec Metals Recycling Project financing.

In parallel with the due diligence studies, Intec will also commence the regulatory processes associated with amending the existing site licences and, where necessary, acquiring new approvals for the upgraded Intec Metals Recycling Project. This will include surveys of the existing site conditions, air and water quality, and the early engagement with community representatives for the co-operative implementation of the environmentally advantageous Intec Process technology (which gives rise to no liquid effluents or gaseous emissions). In addition, this regulatory approval will incorporate all aspects of the upgraded project, including the operation of the multiple business units such as the kiln and wastewater treatment unit.

To date, Intec has received letters of support from seven potential project participants and feedstock suppliers, as well as expressions of interest from multiple Australian mining companies in the potential of the Intec Metals Recycling Project’s ability to unlock additional value from their intermediate product streams.

Current World Economic Climate Warrants Caution

The Board of Intec is optimistic that, following due diligence and commercial negotiations, it will be in a position to exchange contracts and then complete the purchase by 15 April 2009. However, in the current climate of world-wide economic uncertainty there can, of course, be no guarantee that funding will be available and accordingly this acquisition cannot yet be regarded by shareholders as certain to proceed. Having said that, the directors are confident that there is a compelling case for the Project and every prospect of a successful outcome.

Summary

The acquisition of the high-grade hydrometallurgical and integrated multiple business unit facility at Newcastle represents a significant new forward step in the commercial-scale application of the Intec Process, and of Intec’s overall strategy of profitable and environmentally advantageous production of high-grade metals and metal products from mineral concentrates and industrial residue feedstocks.

Following extensive preliminary legal and technical work to date, Intec will now, over the five months to 15 April 2009, vigorously pursue this opportunity to completion. This will involve finalising the (considerably reduced) engineering, updating and upgrading the regulatory approvals for the site, and arranging the financing of the site acquisition.

“I commend all of Intec’s team - staff and key consultants - for identifying this opportunity, and the Delta Group for assisting us in finally arriving at this productive outcome for all stakeholders” said Trevor Jones, Chairman of Intec Ltd. “Working on this established Newcastle site, with most of the necessary equipment already in place, the Intec Metals Recycling Project should quickly move to being the flagship for innovative application of our economic and environmentally advantageous metals processing technology.”

Yours faithfully Intec Ltd

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Philip R Wood Managing Director and Chief Executive Officer

For more information about this announcement, please view the Intec Investor Q&A Forum on Intec’s web site: www.intec.com.au, or contact:

Dave Sammut Corporate Development Manager Intec Ltd +61 (0)2 9925 8170 dave@intec.com.au

About Intec Ltd

Intec Ltd is an Australian company which owns the Intec Process for superior and sustainable metals production. The Intec Process comprises a set of patented chloride-based hydrometallurgical processes that have been demonstrated to produce high purity base and precious metals from concentrates of sulphide and oxide ores, tailings and industrial wastes. The Intec Process has substantial environmental and cost advantages over both the widely used conventional smelting and refining processes and other known hydrometallurgical processes.