Name and Location
Zambeze coal project, near Tete, Mozambique.

Client
Rio Tinto has successfully acquired 100% of Riversdale Mining.

Project Description
The project proposes the development of Rio Tinto's second major coal project in the Moatize basin, adjacent to the company's Benga coal project. The tenement is characterised by relatively flat topography and is contiguous to excellent infrastructure, including the City of Tete, power, water, sealed roads, rail, the international airport and direct access to the Zambezi river. The project structure includes 22 coal seams outcropping over a strike length of 14 km.

The proposed 247.4 km² Zambeze project has an estimated coal resource of nine-billion tons. The total coal resource includes about 2.3-billion tons in the indicated category.

Based on washability analyses, of potential coal products that could be produced after beneficiation the project includes an export hard coking coal and a secondary thermal coal product, consisting of high-energy export thermal coal for the Indian and African markets.

Value
The total value of the project has not been disclosed.

Duration
The project is estimated to start production in 2014.

Latest Developments
September 2011
Rio Tinto Coal Mozambique (RTCM) has bought a modular coal handling plant for its Zambeze coal project, as a result of a test pit project used to provide data for coal processing, and to maximise the extraction of coking coal.

The Pilot Crushtec modular plant was bought by coal handling plant specialist Sedgman South Africa, on behalf of its client, RTCM, and includes a Pilot Modular GFH560 grizzly feed hopper, a Pilot Modular DD3615 double-deck screen, two Pilot Modular MC800 20 m conveyors, and three Pilot Modular MC800 12 m conveyors.

The plant was transported by six road trucks to Tete, Mozambique, and assembled and commissioned in 12 working days. The test plant was used over a six-week test period processing coal, and played an important role in the development of RTCM’s Zambeze coal project processing strategy.

At the end of the six-week period, the plant was disassembled and transported to a new site in Tete, to be re-erected for use as a training facility for artisans as part of a newly established training centre.

June 2011
India’s Tata Steel agreed to sell its 26% stake in Riversdale to Rio Tinto for $1.1-billion, giving Rio Tinto 99.76% of the coal miner. Rio is now mopping up the shares not yet acquired as part of its A$4-billion takeover.

Tata will keep its 35% stake in the Riversdale unit that owns coal assets in Mozambique and will discuss ways to enhance participation in the Benga joint venture.

Rio Tinto will seek to have Riversdale delisted from the Australian Securities Exchange after the offer has ended.

May 2011
In its quarterly activities report ended March 31, 2011, Riversdale Mining reports that a total of nine drilling rigs continue to be deployed across the central and northern portion of EL946L.

A total of 37 holes were completed during the quarter, comprising 10 547 m of partial and full core drilling. A further 6 699 m of open hole drilling (22 holes) were completed during the quarter.

Total exploration drilling completed on the project to date totals 28 094 m.

Meanwhile, a total of four large diameter bulk sample core holes were completed during the quarter, as part of a larger distribution of bulk sample core drilling across the proposed Zambeze openpit area. Additional 400 kg pilot scale coke oven tests are being planned throughout the year.

About 10 633 m of subcrop definition (Ioxline) drilling, covering some 205 holes, was completed during the quarter. Target seams have been seams B, C, D and E, across the 10 km strike length of the proposed opencut area.

The infill-drilling programme continues, with coverage over the full extent of the proposed opencut mine area to support an updated coal quality model by midyear.

The detailed planning towards the excavation of a 200 000 m3 bulk sample pit is well advanced. Overburden removal is expected to begin late this month, subject to all environmental and statutory approvals being in place by that time.

Meanwhile, a tender has been issued for test pit excavation and civil works and it is planned for around 20 000 run-of-mine (RoM) tons, which will be extracted from the bulk sample pit. Crushing and selective screening studies will be conducted, as well as subsamples dispatched to the pilot scale washing facilities in both Australia and South Africa.

An updated geological and structural model for the Zambeze deposit started during the quarter to lead into a more detailed mine design and life-of-mine scheduling, as part of the Zambeze coal project study.

A master schedule for the feasibility study is under development, and major equipment suppliers have been invited to tender for the mine design works, including the in pit crushing and conveying installations.

Coal processing and infrastructure design has also been progressing in line with the master schedule. The evaluation of the infrastructure design capabilities to determine a short list of suppliers for delivery into Mozambique has been completed. The refining of the coal processing design will be carried out once the test pit programme has been finalised.

Drilling and coal quality assessment has also advanced, with additional samples being prepared for pilot scale coke testing.

The March quarter also saw the start of exploration drilling activities in a number of tenements in the eastern Tete area, starting with EL’s 1242, 945 and 937. Drilling activities were concentrated mostly on fully cored HQ drilling, with intention to define the indicated resources consistent with the Joint Ore Resources Committee guidelines.

Additional open hole graben fault delineation drilling was undertaken on EL’s 1242 and 937 to assist local structure before the start of the fully cored drilling.

Meanwhile, the RoM production for the quarter was 191 083 t, a decrease of 20 455 t compared with the December 2010 quarter and 11 383 t more than the same quarter last year. The production was affected by the temporary closure of the Western Extension shaft, owing to a geological disturbance created by adverse weather conditions. The shaft will be operational during the latter part of the June quarter.

The production split during the quarter amounted to 58% of the RoM being from the low seam areas, with the high seam area contributing the balance.

Saleable production was 168 904 t, a decrease of 17 008 t compared with the December 2010 quarter and 5 570 t more than the same quarter last year. The reduced RoM production resulted in a reduction in plant feed, which impacted the plant’s production for the quarter.

Total product sales were 165 893 t, which is 255 t less on the previous quarter and 107 324 t down on the same quarter last year.

January 2011
Riversdale Mining reports in its quarterly activities report that activities for the Zambeze project have been focused on mine development drilling and completion of the draft prefeasibility study.

Meanwhile, a total of nine drilling rigs were deployed across the central and northern portion of EL946L in the quarter, concentrating on slimcore coal sample drilling, subcrop and fault delineation drilling. A second drilling contractor started at the beginning of November, adding an incremental four rigs to the previous fleet of five.

A total of 81 holes were completed during the quarter, comprising 5 582 m of partial and full core drilling. A further 10 912 m of open hole drilling (58 holes) were completed during the quarter.

The infill-drilling programme has been expanded to cover the full extent of the proposed opencut mine area in accordance with the next phase of the project schedule. Drilling was initially concentrated within the area designated for the initial five years of mining.

Drilling will continue in EPL946L into 2011, with priority on completing the infill core drilling within the mine plan footprint and the definition fault structures and mining limits along seam subcrop zones.

Due to extensive outcrops of the coal-bearing Karoo group of sedimentary rocks throughout the target resource area, plans are under way to undertake further surface geology field mapping to assist with delineation of faults, as well as confirming coal seam outcrops.

In June 2010, Riversdale announced that it had signed a nonbinding memorandum of understanding (MoU) with Wisco and a logistics partnership agreement with the China Communications Construction Company (CCCC) for the development of the Zambeze coal project. The definitive agreements were not concluded nor were regulatory approvals in China and Australia obtained by the due date set out in the MoU, which has consequently expired. Discussions with Wisco have been suspended while the Rio Tinto offer is open.

On December 23, 2010, Riversdale Mining announced a recommended takeover offer by Rio Tinto for $16 a share. The offer price values the fully diluted equity of the company at about A$3,9-billion.

The offer is subject to a number of conditions, including a minimum acceptance condition of greater than 50%.

The offer is scheduled to close on February 18, 2011.

October 2010
In the quarter ended September 2010 the Zambeze project study team reviewed a number of conceptual mine plans. These options have been fine-tuned and compared with a single go-forward option developed into a prefeasibility study. This study will be presented to the board in the forthcoming quarter for approval to progress to a definitive feasibility study.

September 2010
Riversdale Mining has reported that its Zambeze coal project is poised to become a hard coking coal project, following results of its first coke test.

The project produced coke coal strength after reaction (CSR) results ranging between 67 and 73, which was "extremely encouraging".

The initial CSR results came from two coal seams, which would make up more than half of the project's production for the first 30-years life-of-mine.

Further test work is necessary to consolidate the findings.

It is planned that the remaining productive seams at Zambeze will undergo coke tests during the early stages of the Zambeze definitive feasibility study, in the first quarter of 2011.

An assessment of the coal quality of the remaining seams indicates that, on average, the seams will produce coke of comparable strength to the two seams already tested.

Meanwhile, Riversdale is progressing the prefeasibility study for the Zambeze coal project, which is due for completion by the fourth quarter of 2010.

July 2010
Riversdale Mining has reported that the Zambeze project study team has reviewed a number of conceptual mine plans, covering the revised indicated and inferred coal resource of nine-billion tons. These options are being fine tuned to determine the optimal approach to develop the mine, including processing and logistics. The deposit will be able to support a high-volume mining operation in which significant economies of scale can be realised and the use of cost efficient mining techniques, including electric shovels and in-pit crushing and conveying systems will be possible.

Detailed mine planning has progressed, including a range of technical workshops held to determine the best approach for the most effective development of the deposit. The workshops have addressed issues in large-scale mining in the Moatize basin, raw coal handling and liberation, and the appropriate coal beneficiation technology, coupled with achievable ramp up and market acceptance scenarios. As part of the continued prefeasibility study, the detailed evaluation of the project options will progress in the third quarter of 2010.

June 2010
Riversdale Mining has upgraded the coal resource estimate of the project from 1,7-billion tons to nine-billion tons. The total coal resource includes about 2,3-billion tons in the indicated category.

The company is in discussion with steel makers in Asia, Europe and South America regarding coal sampling and the future marketing of potential coal products, which are expected to comprise quality hard coking coal and secondary thermal coal product.

Further, Riversdale Mining has agreed to jointly develop its coal project with China's Wisco, in a transaction that values the mine at $2-billion. Wisco may acquire a 40% interest in the project for $800-million and will have the right to buy 40% of the coking coal produced.

The Australian company has also agreed a logistics deal with CCCC. The memorandum of understanding covers the facilitation by Wisco, CCCC and other Chinese companies; of a comprehensive study of mine-to-ship logistics to enable the export of large tons of coal products from the project to ports for export markets.

Under the agreement, Wisco will pay the $800-million in three tranches. The first $200-million will be paid on the completion and signing of a definitive agreement covering the joint venture. The next $150-million will be payable on the successful completion of a feasibility study for Zambeze, subject to meeting certain milestones, including establishing the commercial viability of developing and operating the project to produce no less than 30-million run-of-mine tons of coal a year. A further $450-million would be payable on the granting of the mining contract, mining licence, final environmental approval and other necessary regulatory approvals required to proceed with the development of the project.

November 2009
Riversdale Mining has committed to an extensive programme of drilling, and to coal quality and market studies to determine the feasibility of large-scale openpit development of the deposit.

Meanwhile, the company has completed a series of studies on the Zambezi river to confirm the viability of large-scale barging of coal to an offshore floating transloading vessel.

To date, high-definition bathymetric surveying, wave analysis, hydrology, water quality, water depth and flow modelling and sediment sampling studies have been undertaken, as well as design engineering for loading, barge and push tugs.

An environmental-impact study (EIS) was started in August 2009 and a series of stakeholder consultations were conducted throughout September 2009, with the community and government in Tete, Chimoio, Beira and Maputo.

Specialist studies will continue in the current quarter.

It is expected that a barging feasibility study will be submitted to the government of Mozambique along with the EIS during the second half of 2010.

Riversdale Mining has found no physical impediments to coal barging on the Zambezi river, although some dredging may be required on certain sections of the river. Implementation of large-scale barging will depend upon, besides other issues, completion and approval of an EIS and environmental management plan; licensing by Mozambique statutory authorities for barging and transloading operations over the 560 km from Tete to Chinde at the river mouth; and stakeholder and community consultation in the Zambezi River Valley.

Key Contracts and Suppliers
Sedgman South Africa and Pilot Crushtec (modular coal handling plant).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Rio Tinto investor relations Australia, Dave Skinner tel +61 3 9283 3628 or email media.enquiries@riotinto.com,
Sedgman South Africa, tel+ 27 12 648 2000 or fax +27 12 648 2299.
Pilot Crushtec, tel +27 11 842 5600 or fax +27 11 842 5610.