Operations & financial report

Financial performance

2007 compared with 2006

"Exploration" expenditures reported by Rio Tinto include exploration and evaluation spends in both the greenfield and brownfield environments. Expenditure on brownfield projects reported separately in this Annual report by each of the Rio Tinto product groups is included in this summary.

Net cash expenditure on exploration in 2007 was US$576 million, an increase of US$231 million over 2006. This primarily reflects the large number of high quality projects in the exploration and evaluation pipeline, net of US$197 million cash proceeds from the sale of the Peñasquito royalty, shares in Anatolia Minerals, the Southdown iron ore deposit and various other interests during 2007. The pre-tax charge to underlying earnings of US$321 million is net of US$253 million of total proceeds from the divestments mentioned above.

2006 compared with 2005

Net cash expenditure on exploration in 2006 was US$345 million, a US$81 million increase over 2005, reflecting an increase in the number of high quality projects in the exploration and evaluation pipeline, net of US$23 million cash proceeds from the sale of various interests, including Ashton Canada shares. The pre tax charge to underlying earnings in 2006 was US$237 million net of US$46 million of total proceeds from divestments.

Discoveries

(Projects transferred to product group evaluation teams)

Definitions
Tier 1 Large, high quality deposits - the 20 per cent of deposits contributing 80 per cent of global production.
Tier 2 Smaller or lower quality deposits - the 80 per cent of deposits contributing 20 per cent of global production.

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