Gloom, Doom, and more Gloom

It is the best of days, it is the worst.......................

Consensus is that resource stocks are doomed and that there is Darkness all round.............

But wait I see a flicker of light.................Macquare has just lit a candle.............

1

BHP is on target to reduce C1 cash costs for its iron-ore business to US$17/t
as its cost out program combined with a weaker A$ delivers a material
improvement in reported US$ cash costs

2


Currency gains should see cash costs fall to around US$17/t: BHP’s sub
US$20/t cash cost target assumes an A$/US$ exchange rate of 0.91. Our
forecasts assume the A$/US$ exchange rate remains around 0.77 for FY16,
which should enable BHP to report cash costs of around US$17/t with a
number below this level possible if it exceeds its cost out targets.
3

Price catalyst
… 12-month price target: A$36.00 based on a DCF methodology.
Catalyst: The release of the South32 demerger documents later this month
presents a material positive catalyst for BHP in the short term. The
shareholder vote for the demerger is schedule for May.