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October 31, 2008 Dear Friend, Attached are two very detailed reports on the world's largest resource company, BHP Billiton. First, we updated our consolidated models for $60 iron ore, $150 met coal, $6 nickel, $2 copper, $1.05 aluminum and related reduced revenues offset partly with the weaker A$, lower energy and other cutbacks. The company is very strong and robust, and we reaffirmed our Overweight or Buy rating but with a $60 down from $90 price target per ADS. We also analyzed BHP Billiton's iron ore business in depth. We consider BHP Billiton and Rio Tinto's Pilbara iron ore businesses are the best positioned world iron ore businesses in a downturn owing to freight advantages, low moisture contents, high ore grades and no other drawbacks. We expect the Pilbara to "run full" because steelmakers furnaces run best with richer inputs, dryer ores and clean ores. We continue to prepare for our November 12th investor conference, and please let us know if your preferences for one-on-one meetings change. Faithfully, John C. Tumazos |
Copyright © 2008 John Tumazos Very Independent Research,
LLC
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