Palabora Mining Final Results

Rio Tinto PLC
29 January 2001


                               Palabora Mining                                
            Preliminary report for the year ended 31 December 2000            
                            Audited Group Results                             
                                                                              
                                                                           
    INCOME STATEMENT                                      2000        1999 
                                                     R'000           R'000 

    REVENUE                                           1 747 685   1 581 960
    Operating costs                                   1 305 600   1 120 822
    DEPRECIATION                                        124 302     118 198
    OPERATING PROFIT                                    317 783     342 940
    Interest received                                    12 723      11 240
    Interest payable                                   (11 545)     (6 034)
    Foreign exchange gains                               28 081       7 707
    Amortisation of discount related to provisions     (19 642)    (12 400)
    PROFIT BEFORE TAXATION                              327 400     343 453
    Taxation                                             90 658     (6 029)
    Current                                               7 738      25 809
    DEFERRED TAX                                         82 920    (31 838)
    PROFIT AFTER TAXATION                               236 742     349 482
 
                                                                             
    BALANCE SHEET                                          2000         1999 
                                                     R'000             R'000 
    EMPLOYMENT OF CAPITAL                                                    
    Current assets                                       945 748      778 716
    Mining assets                                      2 935 660    2 323 921
    Deferred expenditure                                  26 126       44 619
    Investment - (Unlisted)                               41 967       38 218
    TOTAL ASSETS                                       3 949 501    3 185 474 
    LIABILITIES AND SHAREHOLDERS' EQUITY                                     
    Current liabilities                                1 250 497      549 067
    Provision for restoration                            142 092      122 580
    Borrowings                                           189 250      461 625
    Provision for Post Retirement Medical Benefits       141 490      128 773
    Deferred taxation                                    701 506      618 586
    Secondary taxation                                         -       12 711
    Total liabilities                                  2 424 835    1 893 342
    Total shareholders' equity                         1 524 666    1 292 132
    Total equity and liabilities                       3 949 501    3 185 474 
 
 
NOTES: 
 
 
1.     ACCOUNTING POLICIES

The preliminary consolidated financial statements are prepared on the
historical cost basis. Accounting principles and policies used in preparing
this report comply with South African Statements of Generally Accepted
Accounting Practice and are consistent with the accounting policies applied
in the previous year except for the following:-
 
1.1     PROVISIONS 
During the current year the Group changed its accounting policy whereby
provisions are made for a probable outflow of resources as a result of past
events. In such a case, the outflow embodies economic benefits required to
settle an obligation which, in turn, required a reliable estimate to be made.
 
As a result of this change the long term provision for secondary tax on
companies which was previously provided based on the estimated liability of
the distributable reserves that the Group estimated would be distributed, was
reversed. The full effect of the reversal has been accounted for in the
current year's income statement due to the immateriality of the amount
involved.
 
1.2     DIVIDENDS PAID 
Dividends paid were previously recognised when proposed but subject to Board
approval. With the adoption of AC107 'Events after the Balance Sheet Date',
dividends paid are recognised only when declared by the Board of Directors.
This change in accounting policy has been retrospectively applied.
 
2.     LONG-TERM LOAN 
The company has a long-term loan with Chase Manhattan Bank, which acts as an
agent for a consortium of overseas banks for an unsecured facility agreement
of US$100 million. The facility, which is being used exclusively for the
underground mine development, is repayable in four half-yearly installments
of US$25 million which started on 12 November 2000 and the interest rate is
based on Libor +0,6%.
 
3.     HOLDING COMPANY 
The immediate holding company is Palabora Holdings Limited and the ultimate
holding company is Rio Tinto Plc, which is incorporated in the United
Kingdom. Rio Tinto increased its beneficial holding in Palabora Mining
Company Limited by 2% to 48,5% in November 2000.
 
                                                                             
                                                            2000        1999 
                                                           R'000       R'000 
    CASH FLOW                                                                
    Cash flow from operating activities                   317 239     399 443
    Cash flow from investing activities                 (599 423)   (539 198)
    Replacement of mining assets                        (132 447)   (114 839)
    Development expenditure                             (476 673)   (449 445)
    Other investing activities                              9 697      25 086
    Cash flow from financing activities                 (225 192)    (65 126)
    Long-term loans paid                                (191 213)           -
    Other financing activities                           (33 979)    (65 126)
    Net decrease in cash and cash equivalents           (507 376)   (204 881)
    Cash and cash equivalents at beginning of period     (79 792)     125 089
    Cash and cash equivalents at end of period          (587 168)    (79 792)
 
 
SELECTED STATISTICS

                                                                            
                                                              2000      1999 
    PRODUCTION AND SALES                                                    
    Materials mined (millions of tons)                         21,8     25,4
    Copper in concentrate (thousands of tons)                   117    131,5
    Cathode produced (thousands of tons)                       87,7    100,0
    Cathode sold (thousands of tons)                           84,2    101,4
    Contained copper sold (thousands of tons)                  89,7    108,3
    Average rand/dollar exchange rate                          6,93     6,11
    Average copper price realised per ton (SAR)              12 949   10 102
    Cash Cost - delivered (SAR)                               7 682    6 029
    Average copper price realised (USc/lb)                     84,8     75,0
         All tons are metric tons                                           
    Capital Expenditure (R millions)                            505      510
    Capital commitments (R millions)                                        
    Approved expenditure at end of each period                  999    1 018
    Contracts placed at end of each period                      621      665
    Share capital                                                           
    Ordinary shares of R1 each (thousands) - Authorised      28 500   28 500
    Ordinary shares of R1 each (thousands) - Issued          28 316   28 316
    The directors are authorised to issue unissued                          
    Shares until the next annual general meeting                            
    Investments - (unlisted) (r millions)                                   
    Fair value of unlisted investments                       70 078   56 100
    Dividends paid (r thousands)                                            
    1999 total dividend 160 cents per share                           45 304
    2000 total dividend 120 cents per share                  33 980         
    Earnings per share, based on the net profit after tax     R8,36   R12,34
    Headline earnings per share, based on the net profit                    
    After tax adjusted for non-operational gains/losses       R7,91   R11,31
    Net asset value per share                                R53,85   R45,63
 
 
COMMENTARY 
 
Group profit after tax for the year was R 237 million, down 32% on the R 349
million achieved in 1999. The decrease can largely be attributed to a
decrease in product output, an increase in operating costs and an increase in
taxation. In 1999 there was a saving in taxation as a result of the reduction
in the corporate income tax rate from 35% to 30% which contributed R 80
million to earnings for that year.
 
Group operating expenditure increased by R 185 million. South African
operating expenditure rose by R 98 million or 10,4% mainly due to an increase
in maintenance and fuel costs, operational difficulties experienced in the
smelter in the first half of the year, and damages resulting from the
flooding that occurred in early 2000.
 
Contained copper in concentrate production was 116 959 tons, down 11% on the
131 542 tons achieved in 1999. The decrease was mainly the result of the
planned decrease in ex-pit production and an associated increase in lower
grade surface stockpile mining. Cathode production was 13% down on the
previous year due to lower anode supply from the smelter.
 
Contained copper sales of 89 685 tons was 18 590 tons, down on the 108 275
tons achieved in 1999. The decrease in sales was attributable to lower
production volumes. The smelter was shut down for four weeks for planned
refurbishment. Smelter performance, which was poor ahead of the shutdown, has
returned to normal levels.
 
The weighted average unit cost of copper cathode delivered to customers
excluding by-product contributions was R7 682 per ton. This was 27% higher
than the R6 029 per ton achieved in the previous year as a result of both
lower production volumes and high operating costs, as mentioned above.
 
For 2000, Palabora declared total dividends of R1,20 per share. The dividends
reflect the intention to finance the R2,5 billion (in escalated terms)
capital expenditure for the underground project partly from retained earnings
and partly from borrowings. The company repaid the first of four half-yearly
installments of US$ 25 million of the unsecured US$ dominated facility of US$
100 million on 12 November 2000.

Safety and environment

There was a very significant decrease of 50% in lost time injuries for 2000
when compared with the previous year. The lost time injury frequency rate
(LTIFR) was 0,42, which represented a 53% improvement compared with 0,89
achieved in 1999. We regret to report that there were two fatalities during
the year.
 
On the environmental front there was a decrease in the annual average raw
water consumption with an average consumption of 43 Ml/day for 2000, compared
with 49 Ml/day for 1999. The decrease can partially be attributed to the
heavy rainfall earlier in the year as well as continued effort to manage raw
water consumption effectively. While the ground level sulphur dioxide
concentrations decreased by 9%, there was a 3% increase in sulphur dioxide
emissions when compared with 1999.
 
Social commitment

The Palabora Foundation continued to provide substantial assistance to local
communities in training, education and socio-economic development, with
financial support from the company amounting to R 10 million in 2000.

Underground development

The project to develop an underground mine had been in progress for 56 months
at the end of 2000. Approximately 65% of the work had been completed against
the schedule of 66%. No delays experienced to date are expected to pose a
threat to the overall completion timetable. The underground mine is projected
to reach full production in November 2002. Cumulative expenditure on the
project to the end of 2000 was R 1 675 million.
 
 
DECLARATION OF DIVIDEND 
 
Notice is hereby given that Dividend No. 135 of 30 cents per R1 share, being
final dividend for the year ended 31 December 2000, has been declared payable
to shareholders registered in the books of the company on 9 February 2001.
 
The dividend is declared payable in the currency of the Republic of South
Africa. Dividend warrants will be posted on or about 8 March 2001.
 
The Transfer Books and Register of Members will be closed from 10 February
2001 to 23 February 2001, both days inclusive.
 
 
 
For further information, please contact:
 
LONDON 
 
Media Relations                     Investor Relations 
Lisa Cullimore                      Peter Jarvis
+ 44 (0) 20 7753 2305               + 44 (0) 20 7753 2401
 
AUSTRALIA 
 
Media Relations                     Investor Relations 
Ian Head                            Dave Skinner
[phone]                 [phone]
                              
                                    Daphne Morros
                                    [phone]
 
Website: www.riotinto.com