This report covers exploration and development activities for the quarter ended 31 December 2004 and projects commissioned to the date of this report. Unless otherwise stated, BHP Billiton's interest in the projects referred to in this report is 100 per cent, and references to quarters are based on calendar years.

Five projects have been commissioned since the September 2004 quarter.

Of the remaining ten projects that were under construction during the quarter, all are tracking on or ahead of schedule and eight are within original Board approved expenditure limits. The exceptions are Atlantis and Dendrobium.

In March 2003, BHP Billiton approved the first development phase of the Angostura oil and gas field off the northeast coast of Trinidad. First gas production from Angostura was achieved on 16 December 2004 and first oil was achieved on 9 January 2005. With a nameplate capacity of 100,000 barrels of oil equivalent per day, the development is expected to produce initially at a daily gross rate of 60,000 barrels of oil equivalent. Budgeted capital expenditure is US$327 million (BHP Billiton share). As the project has now been successfully commissioned, it will no longer be included in this report.

ROD Integrated Development, Algeria (BHP Billiton 36.04%, joint operating entity comprising BHP Billiton/SONATRACH)

The ROD Integrated Development consists of six satellite oil fields in the Berkine Basin in eastern Algeria. Production of oil from these fields commenced to schedule in October 2004 at an initial rate of 20,000 barrels of oil per day, with initial processing taking place in the adjacent BRN processing facility. The construction of the ROD stand-alone oil reception, processing, storage and export facilities were successfully completed on 31 December 2004, and oil is being processed and exported through the new Central Processing Facility (CPF). Water will shortly be re-injected into the reservoir to provide pressure support, and commissioning of the gas injection facilities is nearing completion. Following a ramp-up in production, the CPF will process approximately 80,000 barrels of Saharan Blend crude oil per day. Budgeted capital expenditure is US$192 million (BHP Billiton share). As the project has now been successfully commissioned, it will no longer be included in this report.

In May 2002, BHP Billiton approved the Minerva gas field project in the offshore Otway Basin in Victoria. Construction of the gas plant was completed in December 2004 and the facilities handed over for commissioning. First production from Minerva was achieved on 18 January 2005, approximately two weeks later than the revised schedule. In the March 2004 quarter, budgeted capital expenditure was increased to US$150 million (BHP Billiton share). As the project has now been successfully commissioned, it will no longer be included in this report.

BHP Billiton acquired respective 25 and 22 per cent interests in the Caesar oil and the Cleopatra gas pipelines. These pipelines will transport production from the Mad Dog and Atlantis fields to pipelines closer to shore. Commissioning of both Caesar and Cleopatra was to schedule in December 2004, with the commencement of oil and gas production from a third-party facility. Oil and gas production from the Mad Dog field has now commenced and is flowing through the Caesar and Cleopatra pipelines. Budgeted capital expenditure is US$132 million (BHP Billiton share). As the project has now been successfully commissioned, it will no longer be included in this report.

Atlantis Development, Gulf of Mexico, USA (BHP Billiton 44%, non-operated)

BHP Billiton approved US$1.1 billion for the development of the Atlantis oil and gas reserves in February 2003. During the quarter, the Board sanctioned an additional US$121 million (BHP Billiton share) to enhance capacity and allow for inflationary related cost pressures. The facility will now have a gross nameplate daily capacity of 200,000 barrels of oil (up from 150,000) and 180 million cubic feet of natural gas. The initial development drilling campaign has been completed and the project remains on schedule for first production in the third quarter of 2006.

The Worsley Alumina Development Capital Projects were approved in May 2004 with a budget of US$192 million (US$165 million BHP Billiton share). The projects will increase alumina capacity by 250,000 tonnes per annum (215,000 tonnes per annum BHP Billiton share) to 3.5 million tonnes per annum (3.01 million tonnes per annum BHP Billiton share). Overall the projects are greater than 30 per cent complete. Engineering and procurement activities are well advanced and construction work is progressing with the major civil works almost complete. Erection of the desilication, precipitation and deep cone washer tanks has commenced. Commissioning of the DCP is scheduled for the first quarter of 2006.

The Escondida Sulphide Leach project was approved in April 2004. The project will produce 180,000 tonnes (103,500 tonnes BHP Billiton share) of copper cathode per annum, utilising a bacterially assisted leaching process on low-grade run-of-mine ore from both the Escondida and Escondida Norte pits. The resulting solutions will then be treated in conventional solvent extraction and electrowinning plants. Detailed engineering and procurement activities are continuing. Construction underway includes erection of the rhyolite crushing facilities, leach pad base preparation, mine haulage road tunnels, and the solvent extraction and electrowinning base preparation. Development costs are estimated at US$870 million (US$500 million BHP Billiton share) and production is scheduled to begin during the second half of 2006.

The Dendrobium Mine will be a low cost underground longwall operation capable of producing 5.2 million tonnes per annum of raw coal (3.6 million tonnes per annum of clean coal). The mine surface facilities, ventilation shaft, washery upgrade and Kemira Valley Rail Coal Loading facilities have been successfully commissioned. Process commissioning of the first module of the thermal drier and mining development for Longwall 1 are progressing. Revised development costs are estimated at US$200 million and production is scheduled to commence in mid 2005.

Rapid Growth Project 2, Australia (BHP Billiton 85%)

The Rapid Growth Project 2 (RGP2) was approved in October 2004. The project comprises increases in mine, rail and port capacity through the development of Ore Body 18 (OB18), purchases of additional rolling stock and a new car dumper at Finucane Island. Initial engineering activities are underway, and the tendering and procurement processes are commencing. The project will increase installed capacity at Western Australian Iron Ore to 118 million tonnes per annum by the second half of 2006. Development costs are estimated at US$575 million (BHP Billiton share US$489 million).

The Panda Underground Project, approved in May 2004, will be a 2,600 tonnes per day sub-level retreat mine that will deliver approximately 4.6 million tonnes of ore and 4.7 million carats of high value Panda diamonds to the EKATI process plant over a 6 year production life. Underground mine development is progressing to schedule while construction activities associated with the mine surface facilities are well advanced. Three of four ventilation shafts have been completed. Development costs are estimated at US$182 million (BHP Billiton share US$146 million), with first ore production on schedule for early 2005 and full production in early 2006.

Exploration and appraisal wells drilled during the quarter or in the process of drilling as at 31 December 2004.

The Minerals Exploration group of BHP Billiton continued to pursue global exploration opportunities for key commodities of interest utilising both the Junior Alliance Programme and in-house capabilities.

Exploration drilling continued on diamond targets in Canada, Botswana and Namibia; on porphyry copper targets in Chile and Pakistan; and on nickel targets in Australia and Canada. Exploration for iron ore, coal and bauxite was undertaken in a number of regions including Australia, India, Brazil and West Africa.

During the quarter, BHP Billiton spent US$36 million on minerals exploration, of which US$35 million was expensed, and US$76 million on petroleum exploration, of which US$25 million was expensed.

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