#1= ΞΙΙΙ IIIE SOUTH 32 16 May 2017 South32 Limited (Incorporated in Australia under the Corporations Act 2001 (Cth)) (ACN 093 732 597) ASX, LSE, JSE Share Code: S32 ADR: SOUHY ISIN: AU000000S320 south32.net BANK OF AMERICA MERRILL LYNCH GLOBAL METALS, MINING & STEEL CONFERENCE PRESENTATION 2017 South32 Limited Chief Executive Officer, Graham Kerr, will present at the Bank of America Merrill Lynch Global Metals, Mining & Steel Conference, in Barcelona, Spain today. The presentation is attached and will also be available on South32 Limited's website at: https://www.south32.net/investors-media/reports-and-presentations. About South32 South32 is a globally diversified mining and metals company with high quality operations in Australia, Southern Africa and South America. Our purpose is to make a difference by developing natural resources, improving people's lives now and for generations to come. We are trusted by our owners and partners to realise the potential of their resources. We have a simple strategy to maximise the potential of our assets and shareholder returns by optimising our existing operations, unlocking their potential and identifying new opportunities to compete for capital. Forward-looking statements This release contains forward-looking statements, including statements about production forecasts. These forward-looking statements reflect expectations at the date of this release; however, they are not guarantees or predictions of future performance. They involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this release. Readers are cautioned not to put undue reliance on forward-looking statements. Except as required by applicable laws or regulations, South32 Limited does not undertake to publicly update or review any forward looking statements, whether as a result of new information or future events. Past performance cannot be relied on as a guide to future performance. FURTHER INFORMATION INVESTOR RELATIONS Alex Volante T +61 8 9324 9029 M +61 403 328 408 E [email protected] Rob Ward T +61 8 9324 9340 M +61 431 596 831 E [email protected] Registered Office: Level 35, 108 St Georges Terrace, Perth Western Australia 6000, Australia ABN 84 093 732 597 Registered in Australia#2MEDIA RELATIONS Diana Wearing Smith T +61 8 9324 9198 M +61 436 482 290 E [email protected] Hayley Cardy T +61 8 9324 9008 M +61 409 448 288 E [email protected] Further information on South32 can be found at www.south32.net. JSE Sponsor: UBS South Africa (Pty) Ltd 16 May 2017#3ΞΙΙΙ IIIE SOUTH 32 BANK OF AMERICA MERRILL LYNCH GLOBAL METALS, MINING & STEEL CONFERENCE 16 MAY 2017 兴 PERPULAR LING#4IMPORTANT NOTICES THIS PRESENTATION SHOULD BE READ IN CONJUNCTION WITH THE "FINANCIAL RESULTS AND OUTLOOK - HALF YEAR ENDED 31 DECEMBER 2016" ANNOUNCEMENT RELEASED ON 16 FEBRUARY 2017, WHICH IS AVAILABLE ON SOUTH32'S WEBSITE (WWW.SOUTH32.NET). ΞΙΙΙ ΙΙΙΞ SOUTH 32 FORWARD LOOKING STATEMENTS This presentation contains forward-looking statements, including statements about trends in commodity prices and currency exchange rates; demand for commodities; production forecasts; plans, strategies and objectives of management; capital costs and scheduling; operating costs; anticipated productive lives of projects, mines and facilities; and provisions and contingent liabilities. These forward-looking statements reflect expectations at the date of this presentation, however they are not guarantees or predictions of future performance. They involve known and unknown risks, uncertainties and other factors, many of which are beyond our control, and which may cause actual results to differ materially from those expressed in the statements contained in this presentation. Readers are cautioned not to put undue reliance on forward-looking statements. Except as required by applicable laws or regulations, the South32 Group does not undertake to publicly update or review any forward-looking statements, whether as a result of new information or future events. Past performance cannot be relied on as a guide to future performance. The denotation (e) refers to an estimate or forecast year. NON-IFRS FINANCIAL INFORMATION This presentation includes certain non-IFRS financial measures, including Underlying earnings, Underlying EBIT and Underlying EBITDA, Underlying basic earnings per share, Underlying effective tax rate, Underlying EBIT margin, Underlying EBITDA margin, Underlying return on capital, Free cash flow, net debt, net operating assets and ROIC. These measures are used internally by management to assess the performance of our business, make decisions on the allocation of our resources and assess operational management. Non-IFRS measures have not been subject to audit or review and should not be considered as an indication of or alternative to an IFRS measure of profitability, financial performance or liquidity. NO OFFER OF SECURITIES Nothing in this presentation should be read or understood as an offer or recommendation to buy or sell South32 securities, or be treated or relied upon as a recommendation or advice by South32. RELIANCE ON THIRD PARTY INFORMATION Any information contained in this presentation that has been derived from publicly available sources (or views based on such information) has not been independently verified. The South32 Group does not make any representation or warranty about the accuracy, completeness or reliability of the information. This presentation should not be relied upon as a recommendation or forecast by South32. NO FINANCIAL OR INVESTMENT ADVICE - SOUTH AFRICA South32 does not provide any financial or investment 'advice' as that term is defined in the South African Financial Advisory and Intermediary Services Act, 37 of 2002, and we strongly recommend that you seek professional advice. MINERAL RESOURCES AND ORE RESERVES The information that relates to the Mineral Resource and Ore Reserve estimates of Worsley Alumina, Illawarra Metallurgical Coal, Cannington, South Africa Energy Coal, Australia Manganese, South Africa Manganese, Cerro Matoso and Brazil Alumina was declared as part of South32's Annual Resource and Reserve declaration in the FY16 Annual Report (www.south32.net). South32 confirms that it is not aware of any new information or data that materially affects the information included in the original announcement. All material assumptions and technical parameters underpinning the estimates and Reserve Life and Resource Life in the relevant market announcement continue to apply and have not materially changed. South32 confirms that the form and context in which the Competent Person's findings are presented have not been materially modified from the original market announcement. Reserve life is calculated based on the current stated Ore Reserves divided by the current approved nominated production rate as at the end of FY16. Reserve life information is based on the previously disclosed FY16 annual Resource and Reserve statement (pg. 73-84 of the South32 Annual Report 2016). Resource life is estimated from the FY16 Classified Mineral or Coal Resources (as applicable), and as provided in the FY16 annual Resource and Reserve statement, converted to a run-of-mine basis using historical Mineral or Coal Resources (as applicable) to Ore Reserves conversion factors, divided by the nominated run- of-mine production rate on a 100 per cent basis. Resource life calculations are indicative only and do not necessarily reflect future uncertainties such as economic conditions, technical or permitting issues. Historical Mineral or Coal Resources to Ore Reserves conversion factors may not be indicative of future conversion factors. Resource Life is based on the company's' current expectations of future results and should not be solely relied upon by investors when making investment decisions. There is a low level of geological confidence associated with Inferred Mineral resources and there is no certainty that further exploration will result in the determination of indicated resources. Weighted average individual operations Mineral or Coal Resources (as applicable) to Ore or Coal Reserves conversion factors and run-of-mine tonnages are as follows: Worsley Alumina: 0.85, 17.4Mt; Illawarra Metallurgical Coal: Bulli 0.38, 6.9Mt, Wongawilli 0.34, 4.8Mt; Cannington: 0.32, 3.3Mt; South Africa Energy Coal: Khutala 0.36, 5.26Mt, Klipspruit 0.89, 7.7Mt, Wolvekrans-Middelburg Complex (WMC) 0.86, 20Mt, Australia Manganese: 0.71, 8.8Mt; South Africa Manganese: Mamatwan: 0.72, 3.5Mt, Wessels: 0.6, 0.9Mt; Cerro Matoso: 0.35, 3.2Mt and Brazil Alumina: 0.99, 17.75Mt. For Brazil Alumina, South32 is not aware of any new information or data that materially affects the information included in the announcements mentioned above and, in the case of estimates of Mineral Resources or Ore Reserves, all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. In addition, the form and context in which the Competent Persons' findings are presented have not been materially modified. Competent Persons for Worsley Alumina (G Burnham, AusIMM), Illawarra Metallurgical Coal (M Rose, AusIMM), Cannington (T Curypko, AusIMM and M Readford, AusIMM(CP)), South Africa Energy Coal (P Mulder, SAIMM), Australia Manganese (U Sandilands, AusIMM) and Cerro Matoso (I Espitia, AusIMM) have reviewed and revised the historical conversion rates and production rates for the operations and revised the information inline with this new information and consent to their publication in the form and context in which it appears. 16 MAY 2017 BANK OF AMERICA MERRILL LYNCH - GLOBAL METALS, MINING & STEEL CONFERENCE SLIDE 2#5OVERVIEW Operations focused on safety, volume, costs and capital Reset costs and sustaining capital Unlocked internal options for value Increased shareholder returns Creating future options 16 MAY 2017 BANK OF AMERICA MERRILL LYNCH - GLOBAL METALS, MINING & STEEL CONFERENCE Maintaining financial discipline ΞΙΙΙ ΙΙΙΞ SOUTH 32 SLIDE 3#6OUR OPERATIONS CY17 cost curve position by operation³ 3rd quartile 4th quartile 2nd quartile H1 FY17 Underlying EBITDA¹ by commodity Manganese US$294M Operating Margin² 1st quartile Australia Manganese 52% South Africa Manganese Base & Cerro Matoso Precious metals 39% US$234M Cannington Metallurgical coal 43% Illawarra Metallurgical Coal US$202M Aluminium US$166M South Africa Aluminium 23% Mozal Aluminium Energy coal 31% US$152M South Africa Energy Coal Alumina US$148M Worsley Alumina 25% Brazil Alumina 慢慢 慢慢 ΞΙΙΙ ΙΙΙΞ SOUTH 32 Manganese EBITDA includes manganese ore and manganese alloy from Australia Manganese and South Africa Manganese. Metallurgical coal EBITDA includes energy coal from Illawarra Metallurgical Coal. Base and Precious metals EBITDA includes nickel from Cerro Matoso and silver, lead and zinc from Cannington. Alumina EBIT includes Worsley Alumina and Brazil Alumina. Operating Margin shows Underlying EBITDA margin by commodity group for H1 FY17, excluding third party products. Manganese, aluminium and alumina sourced from CRU based on CY17 production and operating cash costs, overlaying with South32 asset unit cost for H1 FY17. Cost curve for Cannington based on CRU CY17 production and cash cost curves for lead and zinc. Cost curve for nickel, metallurgical coal and energy coal sourced from Wood Mackenzie using CY17 production and C1 cash costs. Notes: 1. 2. 3. 16 MAY 2017 BANK OF AMERICA MERRILL LYNCH - GLOBAL METALS, MINING AND STEEL CONFERENCE SLIDE 4#7OPTIMISING PERFORMANCE Operating unit costs, including Sustaining capital expenditure EIII IIIE SOUTH 32 H1 H1 Unit FY15 FY16 FY17 FY17e Unit FY15 FY16 FY17 FY17e AUSTRALIA MANGANESE (FOB) US$/dmtu 2.40 28% ILLAWARRA METALLURGICAL COAL US$/t 104 1.72 TBC2 SOUTH AFRICA MANGANESE (FOB) US$/dmtu 1% SOUTH AFRICA ALUMINIUM 2.23 2.20 CERRO MATOSO US$/lb 5.54 28% MOZAL ALUMINIUM 3.98 88 US$/t 1,812 23% 1,398 US$/t 1,813 19% 1,470 CANNINGTON1 US$/t 182 15% WORSLEY ALUMINA US$/t 266 155 SOUTH AFRICA ENERGY COAL US$/t 33 9% BRAZIL ALUMINA 30 Achieved to date Restructured and reset the cost base Next phase of opportunity Focused execution US$/t 222 215 18% 218 • Reduced controllable costs and capex by US$692M in FY16 • To deliver consistent production performance • Implemented regional model • . Right sized teams and functional support Enabled by our Care Strategy: develop an inclusive culture, where work is well designed and we continuously improve Notes: 1. 2. 3. • Use technology and innovation as a key enabler to enhance safety and productivity Shows US dollar per tonne of ore processed. Periodic movements in finished inventory may impact operating unit cost as related marketing costs and treatment and refining charges may change. Illawarra Metallurgical Coal FY17 unit cost guidance to be updated following the 10 May 2017 ASX, JSE & LSE announcement. FY17e Operating unit cost guidance, including Sustaining capital expenditure, and Sustaining capital expenditure guidance, include royalties (where appropriate) and the influence of exchange rates, and are predicated on various assumptions for H2 FY17, including: an alumina price of US$316/t; an average blended coal price of US$146/t for Illawarra Metallurgical Coal; a manganese ore price of US$6.79/dmtu for 44% manganese product; a nickel price of US$4.65/lb; a thermal coal price of US$84/t (AP14) for South Africa Energy Coal; a silver price of US$17.04/troy oz; a lead price of US$2,267/t; a zinc price of US$2,746/t; an AUD:USD exchange rate of 0.75; a USD:ZAR exchange rate of 14.20; and a USD:COP exchange rate of 2,943; all of which reflected forward markets as at January 2017 or our internal expectations. 16 MAY 2017 BANK OF AMERICA MERRILL LYNCH - GLOBAL METALS, MINING & STEEL CONFERENCE SLIDE 5 3%#8FY17 PRODUCTION PERFORMANCE Production by upstream operation¹ WORSLEY ALUMINA BRAZIL ALUMINA SOUTH AFRICA ENERGY COAL - DOMESTIC COAL SOUTH AFRICA ENERGY COAL - EXPORT COAL ILLAWARRA METALLURGICAL COAL² - METALLURGICAL COAL ILLAWARRA METALLURGICAL COAL² - ENERGY COAL AUSTRALIA MANGANESE- ORE CERRO MATOSO CANNINGTON - SILVER CANNINGTON - LEAD CANNINGTON - ZINC 9M YTD17 Q4 FY17 guidance 0% 25% 50% 75% 100% South32 share. Production guidance not provided for our Aluminium Smelters and South Africa Manganese ore, which remains subject to market demand. Illawarra Metallurgical Coal FY17 production guidance to be updated following the 10 May 2017 ASX, JSE & LSE announcement. Based on prior guidance of 7.9Mtpa. Annualised rate of 3.8Mwmt achieved during the March 2017 Quarter Notes: 1. 2. 3. 16 MAY 2017 BANK OF AMERICA MERRILL LYNCH - GLOBAL METALS, MINING & STEEL CONFERENCE Investing in our operations EIII IIIE SOUTH 32 Nearing completion of the first panel at Illawarra Metallurgical Coal's Appin Area 9 Delivered first ore from the higher grade La Esmeralda deposit at Cerro Matoso Completed Premium Concentrate Ore project ramp-up at Australia Manganese Commissioned Wessels Central Block and increased ore production³ at South Africa Manganese in response to market conditions Developing new mining areas at South Africa Energy Coal Maintained benchmark levels of operating efficiency at our Aluminium smelters SLIDE 6#9RESERVE AND RESOURCE LIFE ■Reserve Life ☐ Project in study phase Resource Life Exploration potential Southern Areas exploration potential 67 98 Planeta Rica exploration potential 30 Cannington open pit life extension 22 19 project 17 13 13 12 9 6 Wessels Australia Manganese South Africa Manganese Cerro Matoso Cannington² Notes: 43 Dendrobium next domain Illawarra Metallurgical Coal³ 34 Khutala life extension project West Marradong mining area exploration 9 91 Klipspruit life extension 24 project 13 South Africa Energy Coal4 34 15 ΞΙΙΙ ΙΙΙΞ SOUTH 32 53 Bauxite extension project + 29 Worsley Alumina Brazil Alumina 1. Resource and Reserve Life calculations are based on the previously disclosed FY16 Annual Resource and Reserve Statement (pg. 73-84 of the South32 Annual Report 2016) which has been prepared by Competent Persons in accordance with the requirements of the JORC Code (2012). Resource conversion factors and run-of-mine production assumptions are shown in slide 2 - Important Notices. 2. 3. Cannington underground Reserve life is 6.5 years based on the nominal production rate. Open cut Resource life of 5 years is estimated at a resource to reserve conversion rate of 0.8. Dendrobium next domain project is based on exploration target. The potential quantity and grade is conceptual in nature, there has been insufficient exploration to determine a mineral resource and there is no certainty that further exploration work will result in the determination of mineral resources. Appin colliery Reserve and Resource refers to Bulli coal seam, Dendrobium colliery Reserve and Resource refers to Wongawilli coal seam. Khutala Coal Resource life is inclusive of undeveloped domains; Klipspruit Coal Resource life do not include Weltevreden Resources. 4. 16 MAY 2017 BANK OF AMERICA MERRILL LYNCH - GLOBAL METALS, MINING & STEEL CONFERENCE SLIDE 7#10IDENTIFYING NEW OPPORTUNITIES Focused opportunity set that is continually assessed Greenfield exploration offers attractive risk/reward potential Multi-year field programs to test upside resource potential Partnerships with juniors provides access to attractive opportunities and reduces technical and operating exploration risk Advance suitable projects to development and seek partners where required Exploration spend of ~US$30M1 expected in FY17 across our portfolio Ni, Cu AusQuest Jimberlana Zn (±Cu, Pb) AusQuest Bluebilly JV Cu, Pb, Zn, Au, Ag Trilogy Bornite & Arctic Cu, Ni Northern Shield Resources Huckleberry Zn, Pb, Ag Arizona Mining Hermosa Project Cu, Au AusQuest AusQuest Chololo & Los Otros Ni, Cu Gibson Soak & Balladonia Notes: 1. Excludes C$110.3M purchase of Arizona Mining shares. 16 MAY 2017 BANK OF AMERICA MERRILL LYNCH - GLOBAL METALS, MINING & STEEL CONFERENCE ΞΙΙΙ ΙΙΙΞ SOUTH 32 SLIDE 8#11IDENTIFYING NEW OPPORTUNITIES Concept AusQuest Strategic Alliance¹ Resource Drilling Trilogy Metals Option Agreement I I Zn (±Cu, Pb) I I I I Ni, Cu Bluebilly JV Cu, Pb, Zn Au, Ag Jimberlana I I I Ni, Cu Gibson Soak & Balladonia • I I I I Cu, Au Chololo & Los Otros T I Northern Shield Option Agreement¹ T Cu, Ni, PGE I T Huckleberry Bornite & Arctic Polymetallic district in Alaska at relatively early stage of exploration 3.8Mt contained Cu in Mineral Resource² (Arctic 40Mt @ 2.95% Cu, Bornite Open Pit 125Mt @ 0.97% Cu, Bornite below pit 58Mt @ 2.9% Cu) South32 will fund US$30M over 3 years, subject to exploration results Drilling this season to test extension of known mineralisation Option to form 50-50 Joint Venture Indicated & Inferred Open Pit Resource I ΞΙΙΙ ΙΙΙΞ SOUTH 32 Feasibility Arizona Mining Strategic Investment Zn, Pb, Ag Hermosa Project I • Binding agreement³ to invest C$110M for 15% ownership in Arizona Mining Hermosa Project in Arizona with underground Taylor sulphide deposit I . Current Mineral Resource of 72.5Mt (M&I)4 @ 10.5% ZnEq. Funds to advance feasibility study, advance permitting and further exploration î Looking Northeast +4000-Pt Thrust Fault Proposed Pit Exploration Upside Drill Holes Inferred Below Pit Resource Drill Target Meadow Valley Andesite +2000-Ft Older Volcanics +0-Ft +AMSL (Sea Level Hardshell Volcanics) Central Manto Oxide Deposit Hardshell Volcanics (Scherre Concha Scherrer) Notes: 1. 2. 3. The opportunities are conceptual in nature, there has been insufficient exploration to estimate a Mineral Resource and it is uncertain if exploration will result in the estimation of a Mineral Resource Trilogy Metals Mineral Resource estimate, published 22.04.2017 on their website (www.trilogymetals.com), prepared in accordance with NI43-101 and the CIM definition standard and available at www.sedar.com Investment subject to certain customary conditions 4. Thrust Fault Normal Fault Epitaph I I Concha Meadow Valley Cetaceous Andeste Taylor Sulphide Deposit I Handhal Juric Van I Oder Triassic Wanks Piece Concha Limestone Plecacie Scheiner Quarte Taylor Deeps Sulphide Central Ovide Deposit Epitaph Taylor Sulphide Depot Tor Deus Shale ARIZONA MINING Pluri 00 Aasim 045 1500 000 Arizona Mining Resource estimate, published 13.04.2017 on their website (www.arizonamining.com), prepared in accordance with N143-101 and the CIM definition standard stated at a cut-off grade 4% ZnEq, reported using units of short tons and available at www.sedar.com 16 MAY 2017 BANK OF AMERICA MERRILL LYNCH - GLOBAL METALS, MINING & STEEL CONFERENCE SLIDE 9 I I#12BALANCE SHEET AND CAPITAL MANAGEMENT Quarterly net cash movements and shareholder returns (US$M) 700 US$1.5B Net Cash as at 31 March 2017 600 500 400 300 206 200 100 0 Sep-15 16 MAY 2017 134 80 53 294 308 239 192 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 645 Mar-17 500 Ordinary dividends -Quarterly net cash movement Additional Capital Management US$500M Capital Management Program commenced in April | 2017. Expected to be completed over a 12 month period BANK OF AMERICA MERRILL LYNCH - GLOBAL METALS, MINING & STEEL CONFERENCE Maximise cash flow ROIC Competition for excess capital Distribute a minimum 40% of Underlying earnings as ordinary dividends Maintain safe and reliable operations and an investment grade credit rating through the cycle Cash flow priorities SLIDE 10 ΞΙΙΙ ΙΙΙΞ SOUTH 32#13EIII IIIE SOUTH 32