##### 



UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

F O R M 40-F

|      |  |                                                                                         
|----- |  | ----------------------------------------------------------------------------------------
|[   ] |  | Registration statement pursuant to Section 12 of the Securities Exchange Act of 1934, or
|      |  |                                                                                         
|      |  |                                                                                         
|[X]   |  | Annual Report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 

For the fiscal year ended June 30, 2002



---



Commission File Number 1-7953

RIO ALGOM LIMITED

(Exact name of registrant as specified in its Charter)


|                                                                                  |  |                                             
|--------------------------------------------------------------------------------- |  | --------------------------------------------
|Ontario, Canada
(Province or other jurisdiction of incorporation or organization) |  | None
(I.R.S. Employer Identification Number)

|                                                                                                |  |                   
|----------------------------------------------------------------------------------------------- |  | ------------------
|66
Wellington Street West, Suite 4200
Toronto, Ontario
(Address of Principal Executive Offices) |  | M5H 1N6
(Zip Code)

(416) 868-7544
(Registrants telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

|                                                   |  |                                          
|-------------------------------------------------- |  | -----------------------------------------
|Title of each Class                                |  | Name of each Exchange on which Registered
|                                                   |  |                                          
|9 3/8% Preferred Securities due September 30, 2047 |  | New York Stock Exchange                  

Securities registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

Title of each Class
7.05% Debentures due November 1, 2005

For annual reports, indicate by check mark the information filed with this
Form:

|                            |  |                                        
|--------------------------- |  | ---------------------------------------
|[X] Annual Information Form |  | [X] Audited annual financial statements

Indicate the number of outstanding shares of each of the issuers classes of
capital or common stock as of the close of the period covered by the annual
report:

Number of registrants common shares outstanding at June 30, 2002  65,505,788

Indicate by check mark whether the Registrant by filing the information
contained in this Form is also thereby furnishing the information to the
Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934
(the Exchange Act). If Yes is marked, indicate the file number assigned to
the Registrant in connection with such Rule.

|    |  |     
|--- |  | ----
|Yes |  | No X

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.

|      |  |   
|----- |  | --
|Yes X |  | No





---



##### 



Material included in this Form 40-F:



| |                                                                                                                        
| | -----------------------------------------------------------------------------------------------------------------------
| | Annual Information Form                                                                                                
|
| | Consolidated Financial Statements for the Twelve Months ended June 30, 2002
and the Eighteen Months ended June 30, 2001



The Registrant is not
required to make any disclosure in this Form 40-F by reason of
General Instruction B.(6)(b) or (c) to                 Form 40-F.



Exhibits



| | 23   |  | Consent of Independent Accountants                                                                                    
| | ---- |  | ----------------------------------------------------------------------------------------------------------------------
|
| | 99.1 |  | Certification of Bradford A. Mills, Chief Executive Officer,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
| | 99.2 |  | Certification of Philippe Monier, Chief Financial Officer,
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002  





---



##### 



RIO ALGOM LIMITED

2002 ANNUAL INFORMATION FORM

October 23, 2002





---



##### 



TABLE OF CONTENTS

|       |  |                                                     |  |  |                                               |                          |  |      |    | 
|------ |  | --------------------------------------------------- |  |  | --------------------------------------------- | ------------------------ |  | ---- | -- | 
|       |  |                                                     |  |  |                                               |                          |  | Page
|       |  |                                                     |  |  |                                               |                          |  |     
|Item 2 |  | Incorporation and Organization of Rio Algom Limited |  |  | 1                                             |                         
|       |  |                                                     |  |  | Subsidiaries and Investees                    |                          |  | 1    |   
|Item 3 |  | Business of Rio Algom Limited                       |  |  | 2                                             |                         
|       |  |                                                     |  |  | Introduction                                  |                          |  | 2    |   
|       |  |                                                     |  |  | Three-Year History                            |                          |  | 3    |   
|       |  |                                                     |  |  | Trends                                        |                          |  | 4    |   
|       |  |                                                     |  |  | Caution Regarding Forward-Looking Information |                          |  | 4    |   
|Item 4 |  | Narrative Description of the Business               |  |  | 5                                             |                         
|       |  |                                                     |  |  | Copper Mining                                 |                          |  | 5    |   
|       |  |                                                     |  |  |                                               | Markets and Competition  |  |      | 5  | 
|       |  |                                                     |  |  |                                               | Raw Materials and Inputs |  |      | 5  | 
|       |  |                                                     |  |  |                                               | Cerro Colorado           |  |      | 5  | 
|       |  |                                                     |  |  |                                               | Antamina                 |  |      | 7  | 
|       |  |                                                     |  |  |                                               | Highland Valley Copper   |  |      | 9  | 
|       |  |                                                     |  |  |                                               | Alumbrera                |  |      | 11 | 
|       |  |                                                     |  |  | Other Mining                                  |                          |  | 13   |   
|       |  |                                                     |  |  |                                               | Coal                     |  |      | 13 | 
|       |  |                                                     |  |  |                                               | Zinc                     |  |      | 14 | 
|       |  |                                                     |  |  | Development and Exploration                   |                          |  | 14   |   
|       |  |                                                     |  |  |                                               | Spence                   |  |      | 14 | 
|       |  |                                                     |  |  | Mineral Reserves and Resources                |                          |  | 16   |   
|       |  |                                                     |  |  | Environment, Health and Safety                |                          |  | 20   |   
|       |  |                                                     |  |  | Employees                                     |                          |  | 20   |   
|Item 5 |  | Selected Consolidated Financial Information         |  |  | 21                                            |                         
|Item 6 |  | Managements Discussion and Analysis                |  |  | 21                                            |                         
|Item 7 |  | Market for Securities                               |  |  | 21                                            |                         
|Item 8 |  | Directors and Officers                              |  |  | 22                                            |                         
|Item 9 |  | Additional Information                              |  |  | 23                                            |                         





---



##### 



Item 2
Incorporation and Organization of Rio Algom Limited

Rio Algom Limited (Rio Algom or the Corporation) was formed pursuant to the
laws of the Province of Ontario on June 30, 1960 as Rio Algom Mines Limited by
the issue of Letters Patent of Amalgamation of Algom Uranium Mines Limited,
Milliken Lake Uranium Mines Limited, Northspan Uranium Mines Limited and Pronto
Uranium Mines Limited. The name Rio Algom Mines Limited was changed to Rio
Algom Limited in April 1975. Effective January 30, 1980, pursuant to Articles
of Amalgamation issued by the Province of Ontario, Rio Algom Limited was
amalgamated with Preston Mines Limited and continued as Rio Algom Limited.
Effective October 2, 1984, Rio Algom filed Restated Articles of Incorporation
under the Ontario Business Corporations Act. Effective December 31, 1987,
pursuant to Articles of Amalgamation issued by the Province of Ontario, Rio
Algom Limited was amalgamated with Potash Company of America, Inc. and
continued as Rio Algom Limited. Effective January 1, 1990, pursuant to
Articles of Amalgamation issued by the Province of Ontario, Rio Algom Limited
was amalgamated with Rio Kemptville Tin Corporation and continued as Rio Algom
Limited. Effective January 1, 1998, pursuant to Articles of Amalgamation
issued by the Province of Ontario, Rio Algom Limited was amalgamated with Rio
Cornwallis Limited and continued as Rio Algom Limited. Effective January 1,
2000, pursuant to Articles of Amalgamation issued by the Province of Ontario,
Rio Algom Limited was amalgamated with Rio Algom Investments Inc. and continued
as Rio Algom Limited under the Ontario Business Corporations Act.

Subsidiaries and Investees

The principal direct and indirect subsidiaries and investees of Rio Algom are:

|                                        |  |                        |  | 
|--------------------------------------- |  | ---------------------- |  | 
|Entity                                  |  | Place of Incorporation
|                                        |  |                       
|Compañía Minera Riochilex S.A.          |  | Chile                 
|Compañía Minera Cerro Colorado Limitada |  | Chile                 
|Compañía Minera Antamina S.A.           |  | Peru (33.75%)         
|Rio Algom Exploration Inc.              |  | Canada                
|Minera Alumbrera Limited                |  | Antigua (25%)         

Rio Algoms voting interest in each entity listed is 100 per cent unless
otherwise noted. No non-voting shares are held in these entities.





---



##### 



Item 3
Business of Rio Algom Limited

Introduction

The business of Rio Algom and its subsidiaries and investees consists of
mining, exploration and development. In addition to the information set forth
below, reference is made to Managements Discussion and Analysis dated October
23, 2002 (Managements Discussion and Analysis) annexed as Schedule A hereto
and the Consolidated Financial Statements of the Corporation for the twelve
months ended June 30, 2002 (the Consolidated Financial Statements), both of
which are incorporated herein by reference.

Reference is made to Note 2 to the Consolidated Financial Statements with
respect to the change in the Corporations financial year end from December 31
to June 30 in fiscal 2001 and Note 3 to the Consolidated Financial Statements
with respect to the change in the Corporations reporting currency from
Canadian dollars to U.S. dollars in the third quarter of fiscal 2002.

All currency references herein are to U.S. dollars unless otherwise specified.
Reference to Canadian dollars is indicated by the symbol C$.

With respect to Rio Algoms mining, exploration and development activities:



| |  | cathode copper is produced at the Cerro Colorado open-pit mine in northern Chile by
wholly-owned Compañía Minera Cerro Colorado Limitada;                                                                                      
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | copper and zinc concentrates are produced at the Antimina open-pit mine in Northern Peru
owned by Compañía Minera Antamina S.A., in which the Corporation holds a 33.75%
interest;                                             
| |  | copper and molybdenum concentrates are produced by Highland Valley Copper, a
large-scale, open-pit mine in British Columbia, in which the Corporation has a 33.6%
partnership interest;                                        
| |  | copper-gold concentrate and gold doré are produced by the Alumbrera open-pit mine in
northwestern Argentina, in which Rio Algom has a 25% equity interest;                                                                     
| |  | metallurgical coal is produced by the Bullmoose mine in northeastern British Columbia,
in which Rio Algom has a 29.1% joint venture interest and which is expected to close in
2003;                                           
| |  | a 25% royalty interest is held by the Corporation in the net proceeds of production from
the Polaris zinc-lead mine in the Canadian Arctic. Polaris ceased operations in
September of 2002 following depletion of ore reserves;
| |  | feasibility work is underway at the wholly-owned Spence copper deposit in northern Chile.                                                                                                                                      

For operating and geographic segment data, see Note 23 to the Consolidated Financial Statements.

- 2 -



---



##### 



Three-Year History

1999 (January 1, 1999  December 31, 1999)



| |  | Highland Valley Copper suspended operations on May 15, 1999 for economic reasons                                                                                                                                                                                                                                                                                                            
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | the Corporation arranged a revolving securitization of accounts receivable from its metals distribution business for year-end
proceeds of C$157 million                                                                                                                                                                                                                                     
| |  | the Corporation reduced the carrying value of its interests in the Alumbrera copper-gold mine in Argentina, the Bullmoose coal
mine in British Columbia, its uranium operations in the U.S. and the Nicolet zinc-copper project by an aggregate amount of C$293
million before tax resulting in a one-time after tax non-cash charge to earnings of C$214 million or C$3.53 per common share
| |  | Highland Valley Copper resumed operations in August 1999, following the negotiation of new labour and power agreements                                                                                                                                                                                                                                                                      
| |  | the Antamina $1,320 million project financing and sale of a 10% interest in Compañía Minera Antamina S.A. to Mitsubishi
Corporation were concluded                                                                                                                                                                                                                                          
| |  | the Alumbrera project satisfied the production, efficiency, physical facilities, financial and legal performance tests to achieve
completion under its financing agreements resulting in the project loans being non-recourse to Rio Algom                                                                                                                                                  

2001 (January 1, 2000  June 30, 2001)



| |  | the Corporations shares were listed for trading on the New York Stock Exchange in June 2000                                                                                                                                                                                                                                                                                                                                                                                              
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Noranda Inc. made an unsolicited take-over bid to acquire all of the Corporations outstanding common shares for C$24.50 per share                                                                                                                                                                                                                                                                                                                                                        
| |  | the Corporation entered into an agreement with Billiton Plc on August 24, 2000, whereby Billiton agreed to offer C$27.00 per
share for all outstanding common shares                                                                                                                                                                                                                                                                                                                      
| |  | Billiton Plc indirectly acquired 95% of the outstanding common shares of the Corporation on October 6, 2000                                                                                                                                                                                                                                                                                                                                                                               
| |  | Billiton Plc indirectly acquired all of the common shares of the Corporation which were not tendered to its offer, pursuant to
the mandatory acquisition rights under section 188 of the Ontario Business Corporations Act in November 2000                                                                                                                                                                                                                                               
| |  | the common shares of the Corporation were delisted from the Toronto Stock Exchange and the New York Stock Exchange on November
29, 2000                                                                                                                                                                                                                                                                                                                                                   
| |  | the Corporation changed its financial year-end from December 31 to June 30 to coincide with the financial year-end of Billiton Plc                                                                                                                                                                                                                                                                                                                                                        
| |  | the Corporation transferred its interests in Atlas Ideal Metals Inc. and NAMD Inc. (formerly Rio Algom Inc.), which included its
metal distribution business, its U.S. uranium mining subsidiaries, Rio Algom Mining Corp. and Quivira Mining Company, and its
interest in the Nicolet zinc-copper project in Wisconsin, to wholly-owned subsidiaries of Billiton Plc for approximately $390
million (reported as $410 million prior to change in reporting currency) on December 15, 2000
| |  | approximately $333 million (reported as $350 million prior to change in reporting currency) of the proceeds of sale were loaned
to a wholly-owned Canadian subsidiary of Billiton Plc on commercial terms                                                                                                                                                                                                                                                                                 

- 3 -



---



##### 





| |  | the Antamina project achieved mechanical completion of the project facilities in May 2001                                                                                        
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | Billiton Plc and BHP Limited merged their businesses to form dual listed companies known as BHP Billiton Plc and BHP Billiton
Limited (collectively, BHP Billiton) in June 2001

2002 (July 1, 2001  June 30, 2002)



| |  | the pre-feasibility study on the Spence copper deposit in Chile was completed in September 2001 and feasibility study started in
January 2002                                                                 
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | in October 2001 the Antamina project commenced commercial production, four months ahead of schedule                                                                                                           
| |  | Cerro Colorados stretch program aimed at maintaining annual production at approximately 276 million pounds of copper during
the next five years was initiated at an estimated capital cost of $65.9 million
| |  | effective the third quarter ended March 31, 2002, the companys financial statements and notes are being reported in U.S. dollars                                                                             

See also Item 4 Narrative Description of the Business.

Trends

Except for commodity price trends and the uncertainties described at pages A-7
and A-8 of Managements Discussion and Analysis under Risks and
Uncertainties, management is not aware of any trends, commitments, events or
uncertainties that would reasonably be expected to have a material effect on
the Corporations business, financial condition or results of operations.

Caution Regarding Forward-Looking Information

Some of the disclosures included herein respecting production and production
capacity, mineral reserves, resources and grades, mine life expectations,
mining and treatment methods, metal prices, sales volumes, cash, operating,
development and total costs, development schedules and budgets, financing,
expenditures, returns and economic and market conditions represent
forward-looking statements (as defined in the U.S. Securities Exchange Act of
1934). Such statements are based on assumptions and estimates related to
future economic and market conditions.

While the reasonableness of such assumptions and estimates is reviewed by
management, unusual or unanticipated events may occur which render them
inaccurate. Factors that could cause actual results to differ materially
include, among others, the risks and uncertainties described in Managements
Discussion and Analysis and in the Consolidated Financial Statements,
international economic and political conditions, cyclical and volatile
commodity prices, availability of materials and equipment, failure to receive
necessary government permits, delays in anticipated start-up dates, unusual
weather or operating conditions, force majeure events, metallurgical and other
processing problems, lower than expected ore grades, unanticipated ground and water conditions, failure of
equipment or processes to operate in accordance with specifications or
expectations and litigation. Under such circumstances, future performance may
differ materially from expectations.

- 4 -



---



##### 



Item 4
Narrative Description of the Business

Copper Mining

Markets and Competition

For the twelve-month period ending June 30, 2002, the London Metal Exchange
(LME) copper cash settlement price averaged $0.69 per pound in comparison to
$0.81 per pound during the 18 months ended June 30, 2001. The LME copper cash
settlement price on June 28, 2002 was $0.75 per pound.

The current price weakness is mainly attributable to falling global industrial
production that has impacted negatively the demand for copper products. In
November 2001 prices hit historical lows while warehouse stocks continued to
rise, reaching a high of 1.52 million tonnes of copper in May 2002.

Rio Algoms copper production is sold as concentrate or as cathode to smelters,
refiners and metal traders. A substantial portion of Rio Algoms copper sales
are made under annual or long-term contracts based on LME prices. A producers
competitive advantage is based principally on production cost, price, quality
and dependability of supply, with production cost being the most important
consideration. Rio Algom competes directly or indirectly with other copper
mining companies as well as custom refiners and scrap dealers in the copper
market.

Copper competes with other materials used for similar purposes. The primary
uses of copper are in the building and construction industry, electrical and
electronic products and, to a lesser extent, industrial machinery and
equipment, consumer products and automotive and transportation industries.

Approximately half of Rio Algoms sales from mining activities are made to
Japan.

Raw Materials and Inputs

Other than mineral reserves, the primary raw materials and inputs required for
the Corporations mining activities are water and electricity. Each of the
operating mines of the Corporation or its investees have water rights or have
entered into third party supply contracts for water. None of the operations
expect water shortages because of environmental or meteorological conditions.
With respect to electricity, each operation has entered into contracts with
local independent power producers or local or national governmental utilities
and electricity is expected to be readily available for the requirements of
each operation.

Cerro Colorado

Cerro Colorado is a wholly-owned, open-pit copper mine located in the Atacama
Desert at an altitude of 2,600 metres, approximately 125 kilometres by road,
east of Iquique, Chile. Cerro Colorado holds mineral rights over 16,664
hectares. Surface rights are also held over approximately 1,305 hectares on
which the plant is located. The operator of the mine is Compania Minera Cerro
Colorado Limitada, a wholly-owned subsidiary of Rio Algom.

- 5 -



---



##### 



Finished cathode copper is produced by crushing, agglomeration and heap
leaching followed by a solvent extraction-electrowinning process. The mined
and crushed agglomerate is heaped on leach pads with an impervious bed. The
mixed oxide and sulphide ore is irrigated with an acid solution for up to 13
months depending on the characteristics of the particular ore and consequent
rate of copper dissolution. Leaching of the sulphide ores relies on bacterial
oxidation. The pregnant leach solution is then collected from the leach pads
and pumped to the solvent extraction phase, where the copper is selectively
transferred to a highly concentrated electrolyte. The electrowinning process
produces LME grade cathode.

Water requirements are sourced from an underground aquifer at Pampa Lagunillas,
the rights to which are held by Cerro Colorado by grant from the state. Power
for the mine is supplied through the Northern Chile Power grid from two
suppliers under long-term contracts. Cerro Colorado holds all permits which
are material to its operations and is in material compliance with these
permits.

The Cerro Colorado deposit lies within a series of Cretaceous, andesitic
volcanic rocks which have been intruded by two late Cretaceous to Tertiary,
chimney-like complexes of porphyritic tonalites and quartz monzonitic
microbreccias, referred to as the western and eastern intrusives. The entire
area centered on the intrusives has been affected by hydrothermal alteration
and mineralization typical of porphyry copper-molybdenum deposits. The deposit
is approximately 2 kilometres long east-west and 1.5 kilometres wide
north-south. Two main zones (West and East) are present. Mineralization is
from 50 to 250 metres thick and is covered by from 50 to 150 metres of leached
cap and post-mineral rocks. The East Zone contains multiple layers of oxide
and sulfide mineralization with complex shapes, indicating multiple stages of
supergene acid leaching and enrichment. Oxide mineralization can occur on top
of, or beneath, supergene sulfide mineralization. The West deposit generally
consists of one oxide layer overlying one sulfide layer, but locally exhibits
some of the complexities present in the East deposit. Oxide mineralization
consists primarily of chrysocolla with lesser tenorite, cuprite, brochantite
and malachite. Supergene sulfide is dominated by chalcocite (locally sooty),
with lesser covellite. Hypogene sulfides are pyrite, chalcopyrite, bornite and
molybdenite. Very strong clay alteration is present where pyrite was abundant
in the hypogene phyllic zone.

Construction was completed in 1994 at a final cost of $287 million and
commercial production commenced in June 1994. The original design capacity was
88 million pounds of refined cathode copper annually. An expansion of annual
production capacity to 132 million pounds was completed in 1995 at a cost of
$49 million. In 1998, Rio Algom completed the second expansion of Cerro
Colorado at a cost of $214 million and increased annual production capacity by
67% to a nominal 220 million pounds of refined copper. Copper production from
July 1, 2001 to June 30, 2002 was 288 million pounds compared to 279 million
pounds achieved during the 12 month period ended June 30, 2001 and 407 million
pounds during the 18 month period ended on such date.

Cerro Colorado has almost completed, at a total estimated cost of $65.9
million, a stretch program that covers plant modifications, increases in the
mines crushing capacity, leach pad area and mine fleet in order to maintain
annual production at approximately 276 million pounds during the next five
years. After that period, the annual production will decrease gradually due

- 6 -



---



##### 



to decreasing grade. With these modifications, which are expected to be
completed by June 2003, and based on current reserves, the remaining mine life
is estimated to be 13 years.

Under current sales contracts which expire December 31, 2008, Cerro Colorado is
committed to deliver a total of 133 million pounds of cathode copper annually
to two customers  one in Japan, the other in Germany. The remaining
production is sold under annual and spot contracts to various international
purchasers. Prices under all contracts are based on the monthly average LME
cash settlement price in or around the month of delivery.

In May 1999, the LME approved the registration of Cerro Colorado cathodes. LME
registration enables Cerro Colorado to obtain full premium on its sales price
and to deliver copper directly to LME warehouses.

Antamina

In 1996, Rio Algom and Inmet Mining Corporation (Inmet) were the successful
bidders to acquire the Antamina copper-zinc deposit located in the Peruvian
Andes at an elevation of 4,300 m, approximately 270 kilometres (by air) north
of Lima, Peru. The deposit is now owned by Compania Minera Antamina S.A.
(CMA) in which the Corporation owns a 33.75% interest together with Noranda
Inc. (33.75%), Teck Cominco Limited (22.5%) and Mitsubishi Corporation (10%).
The deposit was previously owned by Empresa Minera del Centro del Peru S.A.
(Centromin) and was auctioned by CEPRI-Centromin, an agency of the Peruvian
Government.

In March 1998, Rio Algom and Inmet completed a feasibility study on the
potential of the Antamina deposit to produce 600 million pounds of copper and
360 million pounds of zinc annually over a 20-year mine life. The feasibility
study was based on conventional open-pit mining, milling and flotation
technology, with a concentrator expected to process 70,000 tonnes of ore per
day in order to produce an average of 1.3 million tonnes of copper and zinc
concentrate annually. Although the feasibility study originally envisioned
transportation of the concentrate by truck, changes to the study were announced
in November 1998, the most significant being the provision for concentrates to
be transported approximately 300 kilometres via pipeline to a port facility at
Huarmey. Total development cost was estimated at $2,296 million (including
financing costs, working capital, payments to Centromin and sunk costs).

On July 13, 1998, the Corporation agreed to reduce its then 50% interest in the
project by 12.5% by way of an earn-in arrangement with Noranda Inc.
(Noranda). The transaction was related to the sale by Inmet of its 50%
interest in CMA to Noranda and Teck Corporation (Teck). On completion of
these transactions, each of the Corporation and Noranda owned a 37.5% interest
and Teck owned a 25% interest in CMA.

On September 16, 1998, the Corporation, Noranda and Teck elected to proceed
with development of the project. The agreement with Centromin required the
owners to invest $2.5 billion in the project by June 6, 2002 or pay 30% of the
shortfall to Centromin in lieu of further expenditures. As at June 6, 2002, total eligible investment for purposes of
determining the Centromin payment including working capital was $2,148 million.
Since the actual investment

- 7 -



---



##### 



was less than the investment commitment, $111.5 million or 30% of the shortfall
is payable to Centromin by CMA in lieu of further expenditures.

In June 1999, CMA signed definitive documentation with a group of lenders for
$1.32 billion of financing for the project. A definitive agreement was also
reached with Mitsubishi Corporation (Mitsubishi) whereby Mitsubishi would
acquire 10% of CMA, subject to satisfaction of certain conditions including the
closing of the project financing.

In October 1999, the closing and first draw down of funds from the project
financing and completion of the sale of 10% of CMA to Mitsubishi occurred.
Substantially all the assets of CMA have been pledged to the lenders as
security for the loans. The Corporation has guaranteed its 33.75% pro rata
share of the loans until such time as the project achieves completion, which
involves the project satisfying certain financial, legal and operating tests
prior to February 29, 2004 or, under certain circumstances, by February 28,
2005. Upon achievement of completion, the loans will be non-recourse to the
Corporation. At June 30, 2002, $1,255 million had been drawn on these loans,
33.75% of which ($424 million) has been guaranteed by the Corporation.

The property comprising the Antamina mine area consists of mining concessions,
mining claims and surface rights covering an area of approximately 14,000
hectares. CMA also owns sufficient surface rights for mining infrastructure,
the port facility at Huarmey and an electrical substation located at Huallanca.
In addition, CMA holds title to all easements and rights of way required for
the concentrate pipeline from the mine to CMAs port at Huarmey.

The Antamina deposit is a large copper skarn with zinc, silver, molybdenum and
bismuth mineralization formed by the intrusion of quartz monzonite into
limestone. It has a southwest to southeast strike length of more than 2,500
metres and a width of up to 1,000 metres. The skarn is well zoned around the
intrusion. The zoning is used as the basis for four major subdivisions of the
skarn which are a brown garnet skarn, a green garnet skarn, a
wollastonite/diopside/green garnet skarn and marbleized limestone with veins or
mantos of wollastonite. Other types of skarn, which include massive sulfides,
massive magnetite and chlorite skarn are randomly distributed throughout the
deposit.

The deposit sits at the bottom of a U shaped glacial valley surrounded by
limestone ridges. It is hosted in a sequence of limestones and sediments which
has been strongly deformed by thrusting and folding and has been intruded by
intermediate to felsic stocks. In the Antamina area, one of these stocks has
formed a complex, multiple intrusive around which the Antamina skarn has
developed over an area approximately 3 kilometres long by 1 kilometre wide and
to a depth of at least 1 kilometre.

Within the skarn, copper has been relatively evenly distributed throughout,
while zinc and silver form an annulus around its periphery and molybdenum
mirrors late intrusive phases. Bismuth is a significant minor element in about
40% of the deposit, mainly in peripheral areas. Copper occurs mainly as
chalcopyrite except for one area, representing only 8% of the deposit, where it
occurs as bornite. Zinc occurs as low iron sphalerite. Other significant
sulphides include molybdenite and pyrite, and trace amounts of silver and
bismuth bearing minerals and local areas of galena are found. Sulphides occur as disseminations, veinlets,
pods and patches within the skarn. They exhibit significant short-range
variability, but are evenly distributed throughout the

- 8 -



---



##### 



skarn as a whole. Only the north and south margins of the deposit contain
skarn which is not substantially mineralized.

An Environmental Impact Study (EIA) addressing environmental, socio-economic
and community development aspects of the project was prepared and submitted to
the Government of Peru as part of the permitting process. The EIA was approved
on July 15, 1998. An addendum to the EIA covering the changes to the
feasibility study referred to above was approved on March 12, 1999.

Power to the mine site is being supplied under long-term contracts with
individual power producers through a 58 kilometre, 220 kv transmission line
constructed by CMA which is connected to the Peru national energy grid.

The Antamina project required more than 300 permits for its construction and
operation. CMA holds all permits material for construction and operation. CMA
utilizes a comprehensive environmental management system following the
International Standards Organization (ISO) 14001 model.

CMA has entered into nineteen long-term copper and zinc concentrate sales
contracts with sixteen smelting companies which, in aggregate, cover more than
70% of the expected annual production. Sixteen of the contracts are for terms
of twelve years following the start of production, one contract is for eleven
years following the start of production and one contract expires in 2013.

Mechanical completion of Antamina was achieved in May 2001, more than two
months ahead of schedule. The principal facilities include a 115-kilometre
access road, a truck-shovel pit operation, the concentrator, a 300-kilometre
(approximate) concentrate pipeline with a single stage pumping station to
transport concentrates in slurry form from the mine to the port at Huarmey, and
housing for operating employees and their families in the City of Huaraz,
located approximately 200 kilometres by road from the mine. The concentrator
has a nominal design capacity of 70,000 tonnes per day and is expected to
produce an average of 675 million pounds of copper and 625 million pounds of
zinc in concentrates per annum during the first ten years of operation.

Commercial production commenced on October 1, 2001. Rio Algoms share of
payable production for the year ended June 30, 2002 (from commencement of
commercial production) was 180 million pounds of copper and 106 million pounds
of zinc.

Based on current reserves, the expected mine life of Antamina is approximately
20 years.

Highland Valley Copper

Rio Algom owns a 33.6% interest in Highland Valley Copper (HVC), a
partnership with Teck Cominco Limited and its wholly-owned subsidiary, Teck
Cominco Metals Ltd. (collectively Teck Cominco) (61.4%) and Highmont Mining
Company (5%). Management of the operation is shared equally between Rio Algom
and Teck Cominco.

- 9 -



---



##### 



HVC holds and operates large scale, open-pit copper-molybdenum mining and
milling operations in the Highland Valley area near Logan Lake, British
Columbia, producing copper and molybdenum in concentrates. The operation is
accessible by highway and is located approximately 80 kilometres southwest of
Kamloops and 200 kilometres northeast of Vancouver. The mine operates
throughout the year. Power is supplied by B.C. Hydro through a 138kw line.
HVCs property interests consist of mineral claims and leases, Crown grants and
some properties in fee simple, of which 33,128 hectares are mineral rights and
2,698 hectares are surface rights.

Facilities include the Highland mill and the Lornex and Valley open-pit mines.
The mill uses semi-autogenous grinding and conventional flotation and has a
nominal milling capacity of 120,000 tonnes per day. Crushed ore from the
Valley mine, which comprises approximately 89% of the mill feed, is transported
via two 6,000 tonne per hour inclined conveyor belt systems. Two
60"x 89"
gyratory semi-mobile crushers, located in the pit, feed the inclined conveyors.
Ore from the Lornex mine is trucked to a third fixed gyratory crusher and
conveyor system. The three conveyor systems are integrated to allow blending
of ore to three mill stockpiles.

Slurried tailings from mill operations are collected and contained in a
tailings impoundment area. Mill process water is reclaimed from the tailings
pond. The operation is subject to water and air permits issued by the Province
of British Columbia and is in material compliance with these permits. HVC
holds all permits which are material to its operations.

The Lornex and Valley mines are located in the Guichon Batholith. The Lornex
orebody occurs in Skeena quartz diorite host rock which is intruded by quartz
porphyry and aplite dykes. The Valley deposit occurs mainly in quartz
monzonite and granodiorite host rocks which are also intruded by quartz
porphyry and aplite dykes. The sulphide ore is primarily fracture fillings of
chalcopyrite, bornite and molybdenite.

At current production rates, HVC is expected to remain in operation for
approximately seven years. Total estimated cost related to mine closure has
been reviewed and increased from C$35 million to C$104 million during the
financial year. As of June 30, 2002, HVC had accumulated a C$27.5 million in
provision for reclamation and site restoration following mine closure.

In August 1999, a labour agreement was negotiated linking labour costs to the
price of copper. This agreement and a similar agreement for power provide for
wage and power cost concessions to HVC at lower copper prices, which will be
reimbursed if prices rise above certain levels.

Rio Algoms share of HVCs payable copper production for the twelve months
ended June 30, 2002 was 135 million pounds, compared to 133 million pounds for
the 12 months ended June 30, 2001 and 201 million pounds for the 18 months
ended June 30, 2001.

More than 75% of HVCs production is sold under long-term contracts. The
remaining terms of these contracts range from approximately two to seven years.
The remaining production is sold on a spot basis. Contract prices are based
on the monthly average LME cash settlement price, generally three months after
delivery.

Based on current reserves, the expected mine life of HVC is approximately 7
years.

- 10 -



---



##### 



Alumbrera

In 1995, Rio Algom and North Limited of Australia jointly and equally acquired
all the shares of International Musto Explorations Limited at a combined cost
of C$514 million. Through this acquisition, Rio Algom and North Limited
jointly acquired a 50% interest in Minera Alumbrera Limited (Minera
Alumbrera) which holds the exploitation rights for the Bajo de la Alumbrera
copper-gold deposit. Alumbrera is located in the Argentina Andes at an
elevation of 2,600 metres, approximately 1,100 kilometres northwest of Buenos
Aires. The remaining 50% interest in Minera Alumbrera is indirectly owned by
M.I.M. Holdings Limited of Australia. Rio Algoms effective interest in the
Alumbrera mine is 25%. In August 2000, North Limited was acquired by Rio Tinto
Plc.

The mine-site is located in the Province of Catamarca approximately 60
kilometres northwest of Andalgalá and 100 kilometres northeast of Belén. It is
accessible by road or by propeller aircraft using a fair-weather, daylight
airstrip which was constructed for the project at Campo del Arenal,
approximately 35 kilometres from the mine.

Minera Alumbrera is responsible for developing and operating the Alumbrera
project pursuant to an agreement with Yacimientos Mineros de Agua de Dionisio
(YMAD), the owner of the 600-hectare property over which Minera Alumbrera
holds exploitation rights. YMAD is entitled to a 20% net profits interest,
after cost recovery, in the Alumbrera project. The Province of Catamarca is
entitled to a 3% royalty on the value of production after deducting all
processing costs (excluding mining costs) and transportation charges.

Construction of the project was substantially completed in 1997 and the first
concentrate shipment took place in October 1997. The operation attained
commercial production on February 1, 1998. Ore from the open pit is crushed
and ground, with copper-gold concentrate produced by the flotation process.
Some free gold is recovered by gravity methods to produce gold doré. The
design capacity of the mill is 80,000 tonnes per day. Copper-gold concentrate
produced in the mill is pumped through a 316-kilometre pipeline to a filter
plant and loadout facility at Cruz del Norte where water is removed and
filtered concentrate is shipped 830 kilometres by rail to Minera Alumbreras
port facility near the city of Rosario.

The mines tailings impoundment is located approximately 3 kilometres southeast
of the mine in the Campo del Carrizalito, an alluvial basin drained by the Vis
Vis River to the south. All mine site facilities are located within a single
catchment area and water from mill operations and other surface waters are
directed to a tailings dam which crosses the Vis Vis canyon. Seepage is
collected downstream of the tailings dam and is pumped back to the tailings
basin using several wells and two collection ponds.

The framework for Minera Alumbreras environmental management plan was
established in an environmental impact report based on 1988 World Bank
guidelines. The plan was approved by the Argentina regulatory authorities in
1999.

Minera Alumbrera holds all permits which are material to its operations and is
believed to be in material compliance with such permits. The project holds
sufficient surface rights for its

- 11 -



---



##### 



operations. Surface rights are held in fee simple and by legal easements,
private easements and usufructs.

Minera Alumbrera constructed a 200 kilometre, 220 kv, 250 MW capacity
transmission line, which is linked to the Argentine national electricity grid.
Most of the mines power needs are supplied under long-term contract with the
remainder purchased on the spot market.

The bulk of water needed for production is supernatant water drawn from
Alumbreras tailings reclaim system. Fresh water supply is from a well field
at Campo del Arenal basin. Fresh water is used as make-up for production
requirements and for camp consumption following treatment.

Alumbrera is located within the Farallón Negro  Capillita volcanic complex,
situated in the Sierra de Capillitas, with the volcanism being controlled by
sinistral pull-apart tectonics along a major northwest trending lineament. The
Farallón Negro volcanic and intrusive complex was a stratovolcano, formerly up
to 6 kilometres high and 16 kilometres in diameter, which evolved from early
mafic pyroxene andesites to later hornblende and biotite-bearing andesites and
dacites. These largely extrusive phases were followed by the emplacement of
mineralization-related dacite porphyries. The location of the dacite
porphyries coincided with the eruptive centers of the former andesite-dacite
stratovolcano.

The Alumbrera alkalic dacite porphyries were intruded approximately eight
million years ago into the roots of the Farallón Negro volcano. The ensuing
hydrothermal circulation resulted in alteration and mineralization of the
porphyry itself and its volcanic host rocks. Subsequent erosion has exposed
the upper part of the volcano and its porphyry system.

Topographically, the deposit is a bowl-shaped depression, approximately 1900
metres northeast to southwest and 1200 metres northwest to southeast,
surrounded by ridges of andesitic breccia. The flow of the bowl covers an area
of approximately 2.5 square kilometres. It is characterized by the products of
the pervasive hydrothermal alteration processes, which have subsequently been
oxidized, weathered and substantially eroded.

The primary mineralized rocks of Alumbrera consist of a series of porphyries
intruded into the Farallón Negro andesites. A total of seven such intrusions
have been identified, ranging from stocks (the oldest units) to dyke-like
bodies (youngest), with some of the latter forming a radial pattern around the
central rocks.

At least two distinct hydrothermal alteration events have been identified,
forming a concentric pattern around the deposit. The central core comprises
potassic alteration. Later phyllic/argillic alteration may overprint these two
zones and is most intense at the boundary between them.

The ore grades correlate with lithology, the highest copper-gold grades being
associated with intense potassic (plus quartz-magnetite) alteration of two of
the earliest mineralized porphyries. Younger porphyries are less mineralized
or barren. The majority of the copper is primary and occurs as chalcopyrite in disseminated grains and veinlets. Copper
and gold are positively correlated, with gold occurring in association with
early pyrite/chalcopyrite/magnetite as free grains and as inclusions within
chalcopyrite crystals.

- 12 -



---



##### 



Rio Algoms share of payable production for the twelve months ended June 30,
2002 was 106 million pounds of copper and 184,000 ounces of gold compared to 90
million pounds of copper and 139,000 ounces of gold for the 12 months ended
June 30, 2001 and 127 million pounds of copper and 205,000 ounces of gold for
the 18 months ended June 30, 2001.

In 1997, a $670 million financing provided by a consortium of international
lenders was arranged to partially finance the project with the balance being
provided by the project sponsors. At June 30, 2002, the outstanding balance
owed to the lenders was $358.4 million. Substantially all the assets of Minera
Alumbrera have been pledged to the lenders as security for the loans. The
Corporation had guaranteed its 25% pro rata share of the loans until such time
as the project achieved completion which required the project to satisfy
certain financial, legal and operating tests prior to December 31, 1999 or,
under certain circumstances, by June 2000. These tests were met in December
1999 and the loans are now, subject to certain limited exceptions, non-recourse
to the Corporation.

Minera Alumbrera is currently commissioning a third line mill and pebble
crushing circuit, which has been installed at a cost of approximately $36
million. These expansions have been funded from project cashflows and are
expected to expand processing capacity to 100,000 tonnes per day. Annual
average production would be increased to 195,000 tonnes of copper in
concentrate and 620,000 ounces of gold in concentrate and doré over 8 years,
before declining as low grade stockpiled ore is processed.

Minera Alumbrera has eight long-term sales contracts with purchasers located in
Europe and Asia and one in North America. Approximately 60% of expected annual
production is sold under contracts with remaining terms ranging from one to six
years. Remaining production is sold under short term contracts on a spot
basis. Contract prices are based on monthly average LME cash settlement
prices, generally two to three months after shipment.

The price for gold in concentrate is based on London bullion market prices,
generally one month after shipment or month of scheduled shipment. Gold from
doré is delivered against hedge positions or sold at London bullion market
prices immediately upon delivery.

Based on current reserves, the expected mine life of Alumbrera is approximately
10 years.

Other Mining

Coal

Bullmoose

The Bullmoose coal mine, which was developed in 1984, is a joint venture owned
by Rio Algom (29.1%), Teck Cominco Limited (60.9%) and Nissho Iwai Coal
Development (Canada) Ltd. (10%). Teck Cominco is the operator of the joint
venture. The mine is a conventional open-pit operation located in northeastern British Columbia, approximately 30
kilometres northwest of Tumbler Ridge. The coal plant has an annual capacity of
2.3 million tonnes of clean coal.

During 2000, a new contract was negotiated with Japanese steel mills to take
100% of the mines output at a rate of 1.7 million tonnes/year until the end of
the mine life in 2003. A new labour

- 13 -



---



##### 



agreement was also concluded with hourly-paid employees which will be in effect
until the mine closes.

Rio Algoms share of metallurgical coal production for the twelve months ended
June 30, 2002 was 579,000 tonnes, compared to 497,000 tonnes for the 12 months
period ended June 30, 2001 and 679,000 for the 18 month period ended June 30,
2001.

Zinc

Polaris

The Polaris underground zinc-lead mine is located on Little Cornwallis Island
in the Canadian Arctic. The mine is operated by Teck Cominco Metals Ltd. which
owns a majority equity interest (77.5%). Rio Algom owns a 25% royalty interest
in the annual net proceeds of production from Polaris. The royalty interest
entitles Rio Algom to representation on the mine advisory committee, which
oversees the operation of the mine.

As a result of ore reserves depletion, Polaris mine ceased its operations on
September 3, 2002.

Development and Exploration

Spence

In January 1997, the Corporation announced the discovery of the Spence copper
deposit in northern Chile. Compania Minera Riochilex S.A., a wholly-owned
subsidiary of the Corporation, holds 100% of the mineral rights in
approximately 26,000 hectares and surface rights in approximately 16,000
hectares.

The Spence deposit is located in Chiles Region II, approximately 65 kilometres
southwest of the city of Calama and 8 kilometres northwest of the town of
Sierra Gorda. The area has a moderate climate but is extremely dry with
average annual rainfall of 1 millimetre.

The project is well located with respect to infrastructure. The property is
adjacent to a rail line and is crossed by a main highway. Power is available
within 10 kilometres, with a number of utilities in the region using natural
gas, coal and oil-fired generators. Water can be purchased on a long-term basis
from a pipeline which crosses the property. Alternatively, water rights for
the use of 450 litres per second are owned at Baltinache in the Salar de
Atacama, 130 kilometres from the site. The latter would require the
installation of pumping, pipeline and treatment facilities. There are ports at
Antofagasta and Mejillones for delivery of equipment and supplies, and smelters
at Calama and Antofagasta, which produce sulfuric acid, which would be required
for leaching.

There are no significant environmental impacts predicted for the project and
the development plan is expected to meet Chilean regulatory and World Bank
requirements. For project development, the key authorization is approval of
the environmental impact assessment (EIA) under Chilean Law 19.300 for which
the application has been filed.

- 14 -



---



##### 



The Spence deposit is a copper porphyry hosted in and around three felsic
intrusive centers. The deposit shows a classical mineral zonation with leached
capping, an oxide zone, and a sulphide enrichment blanket downwards to a
hypogene core and base. Mineralization in the hypogene core consists mainly of
pyrite, chalcopyrite, bornite and covellite with minor molybdenite. The
supergene enrichment blanket is composed principally of chalcocite and digenite
replacing pyrite, chalcopyrite, and lesser bornite and covellite. The oxide
zone is composed primarily of atacamite, paratacamite, brochantite and lesser
amounts of chrysocolla and cuprite. The gravel and leach cap overlying the
deposit averages 60 metres in thickness. The oxide zone is approximately 30
metres thick, with a sharp contact to the supergene sulphide. The supergene
zone averages 60 metres in thickness, and the hypogene mineralization extends
to the limits of the drilling. The transitional area between the supergene and
hypogene zones is referred to as the mix zone, averaging 20 metres in
thickness.

Bedrock geology in the district is dominated by Upper Cretaceous andesites with
associated tuffaceous intervals, belonging to the Augusta Victoria Formation.
Upper Jurassic to Lower Cretaceous age granodiorites and diorites, as well as
Upper Cretaceous to Lower Tertiary porphyritic granodiorites, intrude the
volcanic units. The Augusta Victoria formation is in discordant contact with
Jurassic marine sediments of the Cerritos Bayos Formation in the eastern part
of the Sierra Gorda complex. Gravel cover is of Tertiary to Quaternary age.
The older gravels are the most dominant. Within this district, the Spence
property area is 95% overlain by unconsolidated older gravels of Pliocene age
and in the eastern sector by Pleistocene age gravels. The pampa areas are
bordered to the east and north by bedrock comprising fine-grained, variably
bedded, maroon and dark green Jurassic siltstones and claystones. These units
generally strike north-south and dip east. Dip angles vary between 45° and
90°. Minor open folds are present in outcrop as well as on a regional scale.
To the west of the pampa, low outcrop and subcrop ridges are dominated by
Cretaceous age, medium to dark green, aphanitic to occasionally porphyritic
andesite. These units are feldsparphyric and invariably magnetic. The
volcanics include some volcanoclastic units. The andesites have been subjected
to a regional metamorphic overprinting as evidenced by the presence of chlorite
and epidote and finely disseminated pyrite content. Due to the gravel cover,
no intrusions outcrop on the property. However, intrusive centres are located
to the southwest at Pampa Lina, at Santa Catalina, and minor intrusions of
mafic and felsic compositions within Jurassic sediments are located to the
north and to the northeast. All intrusions are interpreted to be of Upper
Cretaceous to lower tertiary age, consisting of granodiorite, granite,
monzodiorite and diorite.

The estimated mineral resources for Spence have been changed from 398 million
tonnes indicated as at June 30, 2001 to 252 million tonnes measured, 245
million tonnes indicated and 4 million tonnes inferred as a result of the 2001
drilling campaign which included reverse circulation drilling of 23,000 metres
and diamond drilling of 22,000 metres.

The sampling process for the project has been systematic and controlled to
produce an accurate resource estimate. For reverse circulation drilling, 2
metre continuous samples were taken. One half of the sample was retained for a
later split, resulting in 1/4 of the sample being sent for analysis, and
another 1/4 saved as a duplicate. For core drilling, continuous 3 metre
sample intervals were measured and all core was split. One half of the core
was sent for analysis and the other half was kept in a warehouse. All samples
were sent to the Cerro Colorado laboratory for assays. In addition, splits
were sent to independent laboratories.

- 15 -



---



##### 



Spence pre-feasibility study was completed in September 2001 and feasibility
study started in January 2002. It is contemplated that the mining rate would
feed 50,000 tonnes per day of ore to the crushing and conveying facilities and
allow for production of approximately 440 million pounds of cathode copper per
year through a heap-leach solvent extraction-electrowinning operation.

Mineral Reserves and Resources

Estimated mineral reserves and resources as at June 30, 2002, of mines and
mining properties of Rio Algom, its subsidiaries and investees, which were then
in production or which may be put into production in the future, are set out in
the following table and related notes.

- 16 -



---



##### 



MINERAL RESERVE AND RESOURCE SUMMARY JUNE 30, 2002

Rio Algom Share
        
        
        
        Resourcesof Production
        
        
        
        (Additional toJuly 1/01 to
        
        Reserves
        
        Reserves)Mines
        
        June 30/02
        
        (note 1)
        
        (note 1)CERRO COLORADO
Region 1
Northern Chile
100% owned
        
        288 million pounds of cathode copper
        
        Proven
19.9 million tonnes at 0.71% copper
Probable
201.7 million tonnes at 0.79% copper
Cutoff grade 0.30% copper
        
        Inferred
14.3 million tonnes
at 0.76% copper
Cutoff grade 0.30%
copperHIGHLAND VALLEY COPPER
Highland Valley
British Columbia, Canada
33.6% interest
        
        135 million pounds of payable copper in concentrate and 1 million pounds
of molybdenum (note 6)
        
        Proven
270.4 million tonnes at 0.407% copper and 0.0084%
molybdenum
Probable
52.6 million tonnes at 0.438% copper and 0.0057%
molybdenum
Cutoff grade 0.25% copper equivalent
        
        (note 6)ALUMBRERA
Catamarca Province
Argentina
25% interest
        
        110 million pounds of copper contained in concentrate and 189 thousand
ounces of gold contained in concentrate and dore
        
        Proven
328.7 million tonnes at 0.51% copper and 0.59 gpt gold
Probable
41.7 million tonnes at 0.55% copper and 0.64 gpt gold
Cutoff grade 0.28% copper equivalent
(note 4 )
  Reserve
Reconciliation (in millions)
July 1/01 to June 30/02 Proven
        
        ProbableTonnes
        
        % Cu
        
        Tonnes
        
        % CuReserves June 30 /01
        
        
        21.9
        
        
        
        0.84
        
        
        
        210.2
        
        
        
        0.80Tonnes processed during period
        
        
        (14.6
        )
        
        
        1.07
        
        
        
        0Adjustment
        
        
        12.6
        
        
        
        
        
        
        
        (8.4
        )Reserves June 30/02
(note 2)
        
        
        19.9
        
        
        
        0.71
        
        
        
        201.7
        
        
        
        0.79
 Proven
        
        ProbableTonnes
        
        % Cu
        
        % Mo
        
        Tonnes
        
        % Cu
        
        % MoReserves June 30/01
        
        
        316.0
        
        
        
        0.415
        
        
        
        0.0081
        
        
        
        52.5
        
        
        
        0.439
        
        
        
        0.0055Tonnes milled during period
        
        
        (44.5
        )
        
        
        0.442
        
        
        
        0.0083
        
        
        
        0Adjustment
        
        
        (1.1
        )
        
        
        
        
        
        
        
        
        
        
        0.1Reserves June 30/02
(note 3)
        
        
        270.4
        
        
        
        0.407
        
        
        
        0.0084
        
        
        
        52.6
        
        
        
        0.438
        
        
        
        0.0057
 Proven
        
        ProbableTonnes
        
        % Cu
        
        gpt Au
        
        Tonnes
        
        % Cu
        
        gpt AuReserves
June 30/01
        
        
        347.5
        
        
        
        0.53
        
        
        
        0.63
        
        
        
        37.3
        
        
        
        0.57
        
        
        
        0.67Tonnes milled during period
        
        
        (29.5
        )
        
        
        0.73
        
        
        
        1.03
        
        
        
        0Adjustment
        
        
        10.7
        
        
        
        
        
        
        
        
        
        
        
        4.4Reserves
June 30/02
        
        
        328.7
        
        
        
        0.51
        
        
        
        0.59
        
        
        
        41.7
        
        
        
        0.55
        
        
        
        0.64(note 4)
 Remaining
        QualifiedMine Life
        Person(Years)
        (note 1)13
        Tom John,
P. Eng., Consultant, Former General Manager, Technical, Rio Algom
Limited7
        R.P. Kintzi,
P. Eng.,
Superintendent, Mine Engineering,
Highland Valley Copper10 
(approx)
        David Keough, member AusIMM,
Chief Geologist,
Minera Alumbrera Limited




- 17 -



---



##### 



Rio Algom Share
        
        
        
        Resourcesof Production
        
        
        
        (Additional toJuly 1/01 to
        
        Reserves
        
        Reserves)Mines
        
        June 30/02
        
        (note 1)
        
        (note 1)ANTAMINA
Ancash Province
Central Peru
33.75% interest
        
        246 million pounds of copper contained in copper concentrate.
126 million pounds of zinc contained in zinc concentrate.
2.441 million ounces of silver contained in copper concentrate.
129 thousand pounds of molybdenum contained in concentrate
        
        Proven
297 million tonnes at 1.29% copper, 1.05% zinc, 0.03%
molybdenum and 14.2 gpt silver
Probable
246 million tonnes at 1.15% copper, 0.98% zinc,
0.028% molybdenum and 13.1 gpt silver
Cutoff grade 0.70% copper equivalent
        
        Measured
24 million tonnes
at 0.49% copper,
0.19% zinc, 4.3 gpt
silver and 0.032%
molybdenum
Indicated
37 million tonnes
at 0.46% copper,
0.31% zinc, 6.0 gpt
silver and 0.029%
molybdenum Inferred
37 million tonnes
at 0.77% copper,
1.01% zinc, 0.014%
molybdenum and 12.8
gpt silver
Cutoff grade 0.50%
copper equivalentPRE-DEVELOPMENT PROJECTS
        
        POTENTIAL ANNUAL PRODUCTIONSPENCE
Region 2
Northern Chile
100% owned
        
        440 million pounds of copper as copper cathode
        
        
        
        Measured
252 million tonnes
at 1.04% copper
Indicated
245 million tonnes
at 0.80% copper
Inferred
4 million tonnes at
0.69% copper
Cutoff grade 0.34%
copper
(note 5)
  Reserve
Reconciliation (in millions)
July 1/01 to June 30/02 Proven
        
        ProbableTonnes
        
        % Cu
        
        % Zn
        
        Tonnes
        
        % Cu
        
        % ZnReserves
June 30 / 01
        
        
        312.0
        
        
        
        1.30
        
        
        
        1.06
        
        
        
        246.0
        
        
        
        1.15
        
        
        
        0.98Tonnes milled during period
        
        
        (25
        )
        
        
        1.48
        
        
        
        1.03Adjustment
        
        
        10Reserves June 30/02
        
        
        297
        
        
        
        1.29
        
        
        
        1.05
        
        
        
        246.0
        
        
        
        1.15
        
        
        
        0.98
 Remaining
        QualifiedMine Life
        Person(Years)
        (note 1)20
        P. Gordon Stothart
P. Eng.,
Assistant Mine Manager,
Compania Minera Antamina S.A.Alberto Cerda
Civil Mine Engineer,
Mine Manager,
Spence Project




- 18 -



---



##### 



Notes to Reserve and Resource Summary:



|1. |  | The mineral reserve and resource estimates are consistent with the
classification system set out in National Instrument 43-101 entitled
Standards of Disclosure for Mineral Projects. The estimates have been
prepared by or under the supervision of the Qualified Persons identified
in the table and are based on 100% of the deposit. Mineral resources have
reasonable prospects for economic extraction but have not yet been fully
evaluated and do not have demonstrated economic viability.
|-- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | The ore reserve increase was due to the discovery of additional ore
outside the block model reserve. Probable reserves are converted to proven
reserves during ongoing definitive drilling.                                                                                                                                                                                                                                                                                                           
|  
|3. |  | At Highland Valley Copper small amounts of material were reclassified as
ore or waste because of the annual geological model update utilizing new
drillhole data.                                                                                                                                                                                                                                                                                                                                     
|  
|4. |  | At Alumbrera, proven reserves include 104.4 million tonnes, at 0.4%
copper and 0.4 gpt gold, of medium and low-grade material stockpiled for
future treatment. A new pit design and phase sequencing has added 15.6
million tonnes at 0.5% copper and 0.5 g/t gold to the ore reserves.                                                                                                                                                                                                               
|  
|5. |  | Spence Resource changes result from the results of the drilling campaign
in 2001, which included reverse circulation drilling of 23,000 metres and
diamond drilling of 22,000 metres. A new geological model has been built
and resource calculation completed.                                                                                                                                                                                                                                       
|  
|6. |  | Highland Valley production includes 9 million pounds of copper from a
non-reserve tonnage of 5.2 Mt at 0.286% copper. This is not currently
shown in the column for resources additional to reserves                                                                                                                                                                                                                                                                                                  
|  
|7. |  | Payable production represents
gross production less a  percentage deduction under the terms of
smelting and refining contracts. Unless otherwise noted, production numbers reported in this table represent gross production.                                                                                                                                                                                                                                                                         

- 19 -



---



##### 



Environment, Health and Safety

Rio Algoms facilities and operations are subject to extensive general and
industry-specific environmental, health and safety laws and regulations in
Canada, Chile, Argentina, Peru and elsewhere where the Corporation operates or
explores. Such laws and regulations include those relating to mine operation,
closure and restoration, waste and water management, the handling and disposal
of hazardous and non-hazardous materials and occupational health and safety.
The Corporation believes that it is in compliance, in all material respects,
with all material legal requirements of such nature. Rio Algom, like many of
its peers, has incurred, and will continue to incur, capital and operating
expenditures and other costs in complying with such laws and regulations at all
the locations where it operates or explores. Rio Algom has also adopted its
own policies seeking to ensure compliance with such laws and regulations.

Rio Algom implements programs at its operations to monitor compliance with
applicable laws, licences, permits and regulatory requirements, as well as with
the Corporations environmental and health and safety policies. The programs
address matters such as reclamation plans, incident response, health and safety
training, water discharges, solid waste disposal and air emissions. Management
reports to the Corporations Board of Directors on the Corporations compliance
with applicable law, permits, licences, regulatory requirements and policies.

Provisions for site restoration and related obligations set forth in Note 11 to
the Consolidated Financial Statements are based on the Corporations best
estimate of the costs of its currently planned closure and reclamation programs
at currently operating and closed mining facilities. It believes these
programs meet or exceed applicable requirements. Future changes, if any, in
requirements and operating assumptions with respect to any of Rio Algoms
reclamation programs, including any condition imposed by government authorities
with respect to mine reclamation plans for which the Corporation is in the
process of obtaining approvals, may be significant and would be recognized when
applicable. Under the terms of an agreement with Ontario Hydro, Ontario Hydro
is responsible for the costs of decommissioning and closing down the
Corporations Stanleigh uranium mine at Elliot Lake, Ontario. As a result, the
Corporation has not established a provision with respect to the decommissioning
costs for that mine.

During the fiscal year ended June 30, 2002, the Corporation spent $2 million
($5 million for the 12 month period ended June 30, 2001 and $8 million for the
18 month period ended June 30, 2001) and provided $4 million ($3 million for
the 12 month period ended June 30, 2001 and $4 million for the 18 month period
ended June 30, 2001) in respect of site restoration for continuing operations.

Employees

Rio Algom and its subsidiaries presently employ 662 people compared to 746 at
the end of fiscal 2001.

HVC has a five-year collective agreement, which expires on September 30, 2003
except for the provision linking wage costs to the price of copper, which
extends to 2004. Cerro Colorado employees have a collective agreement, which
expires on January 31, 2004.

- 20 -



---



##### 



Item 5
Selected Consolidated Financial Information

|                                                                        |  |           |       |           |  |              |       |   |  |  |       |  
|----------------------------------------------------------------------- |  | --------- | ----- | --------- |  | ------------ | ----- | - |  |  | ----- | -
|                                                                        |  | 12 Months |       | 18 Months |  | 12 Months to
|                                                                        |  | to June   |       | to June   |  | December 31,
|                                                                        |  | 30, 2002  |       | 30, 2001  |  | 1999        
|Total revenue from continuing operations ($ millions)                   |  |           | 431   |           |  |              | 445   |   |  |  | 217   |  
|Earnings (loss) from continuing operations ($ millions)                 |  |           | 29    |           |  |              | (6    | ) |  |  | (108  | )
|Earnings
(loss) per share from continuing operations 
basic(1)         |  |           | 0.02  |           |  |              | (0.47 | ) |  |  | (2.03 | )
|Earnings (loss) per share from continuing operations  fully
diluted(1) |  |           | 0.02  |           |  |              | (0.47 | ) |  |  | (2.03 | )
|Net earnings (loss) for the year ($ millions)                           |  |           | 29    |           |  |              | 17    |   |  |  | (115  | )
|Net earnings (loss) per share  basic(1)                                |  |           | 0.02  |           |  |              | (0.10 | ) |  |  | (2.15 | )
|Net earnings (loss) per share  fully diluted(1)                        |  |           | 0.02  |           |  |              | (0.10 | ) |  |  | (2.15 | )
|Total assets ($ millions)                                               |  |           | 2,075 |           |  |              | 1,954 |   |  |  | 1,559 |  
|Total long-term liabilities ($ millions)                                |  |           | 732   |           |  |              | 690   |   |  |  | 294   |  
|Dividends per share                                                     |  |           | 0     |           |  |              | 0.13  |   |  |  | 0.18  |  

See the Notes to the Consolidated Financial Statements which are incorporated
herein by reference and, in particular, see Note 2 with respect to the change
in the Corporations financial year end, Note 3 with respect to the change in
the Corporations reporting currency from Canadian dollars to U.S. dollars and
Note 4 with respect to discontinued operations.



|(1) |  | Per share data is calculated after deduction of the accretion of the
equity element of the Corporations convertible debentures and the
dividends on the Corporations preferred securities during the relevant
period. See Note 15(a) to the Consolidated Financial Statements.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Dividends

As the Corporation is an indirect wholly-owned subsidiary of BHP Billiton, it
does not have a dividend policy.

Item 6
Managements Discussion and Analysis

Managements Discussion and Analysis is annexed as Schedule A and forms part
hereof.

Item 7
Market for Securities

The common shares of the Corporation were de-listed from the Toronto Stock
Exchange and the New York Stock Exchange on November 29, 2000 following the
acquisition by Billiton Plc (now BHP Billiton Plc) of 100% of the outstanding
common shares of the Corporation. The

- 21 -



---



##### 



Corporations 5.5% convertible subordinated debentures (symbol ROM.DB) are
listed on the Toronto Stock Exchange. The Corporations
9 3/8% preferred
securities (symbol ROMPR) are listed on the New York Stock Exchange.

Item 8
Directors and Officers

Directors

The following persons are the directors of Rio Algom. Each directors term of
office will expire at the next annual meeting of the shareholder or when his
successor is elected or appointed.

Gordon C. Gray, Richmond Hill, Ontario
Director since 1976
Mr. Gray was Chairman of the Board of Rio Algom from 1991 to October 2000 and
was also interim Chief Executive Officer of the Corporation from July 1996 to
June 1997. Since 2000, Mr. Gray has been a director and Chairman of Integris
Inc., a metals distribution company in which BHP Billiton has a 50% joint
venture interest. Mr. Gray has been Honorary Chairman of Royal LePage Limited,
a diversified real estate services company, since 1994. He has also been a
director of McDonalds Corporation since 1980 and a director of
Abitibi-Consolidated Inc. since 1991.

David S. R. Leighton, Komoka, Ontario
Director since 1978
Dr. Leighton has been Chairman of the Board of the National Arts Centre,
Ottawa, since May, 1999 and has been Professor Emeritus, University of Western
Ontario, London, Ontario since July, 1987.

Bradford A. Mills, Houston, Texas
Director and Chairman since September 26, 2001 and President and Chief
Executive Officer since October 23, 2002
Mr. Mills has been President  Base Metals for BHP Billiton Limited since July
1, 2001, has assumed the duties and responsibilities of the Chief Executive
Officer of Rio Algom as of December 1, 2001. Prior thereto, he was
Vice-President and Chief Strategic Officer from September 1999 to June 30,
2001, Vice President, Strategy, Planning and Business Development, from October
1997 to August 1999, and Executive Vice-President and Group General Manager,
BHP Copper, from January 1996 to October 1997, all for BHP Limited.

Rio Algom does not have an executive committee of its board of directors but is
required to, and does have, an audit committee. The members of the Audit
Committee are Messrs. Gray, Mills and Dr. Leighton.

Officers

Set forth below for each of the officers of the Corporation, other than those
who are also directors, is the officers name, municipality of residence,
present position with the Corporation and principal occupations within the last
five years.

- 22 -



---



##### 



Philippe Monier, Houston, Texas, Chief Financial Officer since September 26,
2001 and Chief Financial Officer, BHP Billiton Base Metals  BHP Billiton since
September 1, 2001. Prior thereto, he was Director Corporate Finance, Billiton
Plc from June 2000 to August 2001 and was Director and later Executive
Director, Lehman Brothers from February 1994 to March 2000.

Maxine A. Wiber, Toronto, Ontario, Vice-President, Environment since 1994.

Willie Murray, The Hague, The Netherlands, Treasurer since 2001. Mr. Murray
has been Vice President Corporate Finance and Treasurer for BHP Billiton since
July 2001. Prior thereto, he was Group Treasurer, Billiton Plc from March 1999
to June 2001 and General Manager, Finance and Administration for Samancor
Limited from November 1996 to February 1999.

Corstiaan Bregman, Leiden, The Netherlands, Assistant Treasurer since October
1, 2001. Mr. Bregman has been Senior Treasury Accountant, BHP Billiton Finance
BV, Netherlands, since September 1, 2000. Prior thereto, he was an accountant
with Deloitte & Touche commencing in September 1997.

R.B. Bartlett, Voorberg, Netherlands, Assistant Treasurer since October 1,
2001. Mr. Bartlett has been front Office Manager  Treasury for BHP Billiton
Finance BV, Netherlands, since July 1, 2001. Prior thereto, he was he was Risk
Manager  Treasury for Billiton Plc, based in the Netherlands, from July 1,
1997.

Michael Neumann, Houston, Texas, Secretary since October 23, 2002. Mr. Neumann
has been general counsel at BHP Billiton and its predecessors since August
1992.

M. Ruth Rhodes Houston, Texas, Assistant Secretary since October 23, 2002. Ms.
Rhodes has been Manager Corporate Records, Houston for BHP Billiton since
January 2002. Prior thereto, she was a senior legal assistant for BHP Billiton
and its predecessors since May 1989.

Item 9
Additional Information

Additional information, including with respect to directors and officers
remuneration and indebtedness, principal holders of the Corporations
securities, options to purchase securities and interests of insiders in
material transactions, where applicable, is contained in the Corporations
annual filing for the fiscal year ended June 30, 2002. Additional financial
information is provided in the Consolidated Financial Statements.

The Corporation will provide to any person, upon request to the Secretary of
the Corporation and upon payment of a reasonable charge where permitted, a copy
of this Annual Information Form and any document, or portion thereof,
incorporated herein by reference, the Consolidated Financial Statements and the
accompanying auditors report thereon, any subsequent interim financial
statements, the annual filing referred to above and, if securities of the
Corporation are in the course of a distribution pursuant to a short form
prospectus or a preliminary short form prospectus, a copy of any other document
that is incorporated by reference into such a prospectus.

- 23 -



---



##### 



Schedule A

Rio Algom Limited

Managements Discussion and Analysis

October 23, 2002

66 Wellington Street West,
Suite 4200
Toronto Dominion Bank Tower
Toronto, Ontario
M5H 1N6





---



##### 



Managements Discussion & Analysis

Overview

Rio Algom Limited (Rio Algom) is an international mining company and is an
indirect wholly owned subsidiary of BHP Billiton Plc, a global natural
resources company. Rio Algom and its subsidiaries and investees produce
copper, zinc, molybdenum, gold and coal from mines in Canada, Chile, Peru and
Argentina.

Rio Algoms mining operations include the wholly owned Cerro Colorado copper
mine in Chile, a 33.6% partnership interest in Highland Valley Copper in
British Columbia, a 33.75% interest in the Antamina copper-zinc mine in Peru, a
25% equity investment in the Alumbrera copper-gold mine in Argentina, a 25%
royalty interest in the Polaris zinc-lead mine in the Canadian Arctic and a
29.1% joint venture interest in the Bullmoose Coal mine in British Columbia.
The company has also a wholly owned copper project at the feasibility stage in
Chile.

In October 2000, Billiton Plc, pursuant to a takeover bid, acquired in excess
of 90% of the issued and outstanding common shares of Rio Algom. In November
2000, Billiton Plc acquired all remaining outstanding common shares, and the
Rio Algom common shares were de-listed from the Toronto Stock Exchange and the
New York Stock Exchange.

On December 11, 2000 the company changed its financial year-end from December
31 to June 30 to match the financial year-end of its parent company, then
Billiton Plc. This change has resulted in the financial statements being issued
for the 18 months ended June 30, 2001 rather than the 12 months ended December
31, 2000. Financial statements for the 12 months ended June 30, 2002 are
compared to the corresponding prior period of 18 months ended June 30, 2001.
Additional information is provided in note 2 of the Consolidated Financial
Statements for the year ended June 30, 2002.

On December 15, 2000, the company sold its interests in wholly owned
subsidiaries, Atlas Ideal Metals Inc. (Atlas Ideal Metals) and NAMD Inc.
(NAMD) to wholly owned subsidiaries of Billiton Plc. Atlas Ideal Metals and
NAMD, directly and through subsidiaries, carried on Rio Algoms metals
distribution business. In addition, wholly owned subsidiaries of NAMD carried
on Rio Algoms uranium mining activities in the United States and also owned
the Nicolet zinc-copper project near Crandon, Wisconsin. Additional information
is provided in note 4 of the Consolidated Financial Statements for the year
ended June 30, 2002.

On June 29, 2001 Billiton Plc and BHP Limited of Australia merged, creating
dual-listed companies known as BHP Billiton Plc and BHP Billiton Limited
operating as BHP Billiton.

On October 1, 2001 the Antamina copper-zinc project commenced commercial
production, four months ahead of schedule.

Effective the third quarter ended March 31, 2002, the companys financial
statements and attached notes are being reported in US dollars. The US dollar
has been adopted as the companys functional currency. For Canadian reporting,
the comparative figures are presented using a translation of

A-2



---



##### 



convenience. The exchange rate used for the translation of convenience is the
one prevailing at December 31, 2001, the end of the last period for which the
Canadian currency was the currency of measurement and display.

See also notes 1, 3, 24 and 25 to the Consolidated Financial Statements for
the year ended June 30, 2002 for description of certain changes in the
Corporations accounting practices and financial reporting.

All currency references herein are to U.S. dollars unless otherwise specified.
Reference to Canadian dollars is indicated by the symbol C$.

Cash Profile and Liquidity

Cash and cash equivalents at June 30, 2002 were $206 million compared to $83
million at June 30, 2001. Cash flow components are detailed in the Consolidated
Statements of Cash Flow and in the Segmented Disclosures note 23.

Cash flow from continuing operating activities for the 12 months ended June 30,
2002 was $155 million compared to $23 million for the 18 months ended June 30,
2001. Last years cash flow included a $98 million payment for the repurchase
of receivables previously securitized starting in 1999.

Cash from operating activities increased mainly due to the start of commercial
production of the Antamina mine and lower operating costs, partly offset by
lower copper prices and working capital increase. Cash flow from operating
activities for the period ended June 30, 2001 was negatively impacted by the
transaction costs associated with the acquisition of Rio Algom by Billiton Plc
(now BHP Billiton Plc).

The sale of the companys metals distribution and mining businesses in the
United States in December 2000 resulted in a gain on sale of $19 million being
recorded in contributed surplus. The total consideration received by the
company for such interests was approximately $390 million (reported as $410
million prior to change in reporting currency). Of the $390 million in
consideration, Rio Algom loaned approximately $333 million (reported as $350
million prior to change in reporting currency) to another wholly owned Canadian
subsidiary of Billiton Plc at an interest rate of 6 month LIBOR plus 0.75% per
annum. In the year ended June 30, 2002, the company recorded interest income of
$10 million on this loan (December 15, 2000 to June 30, 2001  $11 million),
included in investment and other income. The maturity date of the loan is
February 1, 2003. BHP Billiton Plc has unconditionally and irrevocably
guaranteed the loan as to both principal and interest. On June 30, 2002, the
amount outstanding was $247 million compared to $293 million outstanding at
June 30, 2001. Additional information is provided in note 4 of the Consolidated
Financial Statements for the year ended June 30, 2002.

The main uses of cash for the 12-month period ended June 30, 2002 were capital
expenditures of $114 million compared to $374 million for the 18-month period
ended June 30, 2001. The majority of the capital expenditures were related to
development costs at the Antamina project and in the year 2002 part of the
expenditures also related to an expansion program at Cerro Colorado.

A-3



---



##### 



The estimated total cost of $14 million to complete approved capital projects,
as at June 30, 2002, will be financed through cash flow generated from
operating activities.

Results of Operations

Rio Algoms net earnings for the 12 months ended June 30, 2002, were $29
million compared to $17 million for the 18 months ended June 30, 2001.
Improved earnings resulted from higher sales and from lower average cash
production costs, offset by lower average realized prices for copper. Last
years results, including an additional six-months of operations, were
positively impacted by $23 million of results from discontinued operations and
negatively impacted by $38 million of transaction costs associated with the
acquisition of all of the outstanding common shares of Rio Algom by Billiton
Plc (now BHP Billiton Plc).

Continuing Operations
Earnings from continuing operations were $29 million for the year ended June
30, 2002 with revenue of $431 million and operating profit of $90 million
compared to a loss of $6 million for the 18 months ended June 30, 2001 with
revenue of $445 million and operating profit of $110 million.

All production references herein are to payable pounds or payable ounces.

Cerro Colorado
Cerro Colorado reported revenue of $208 million for the 12 months ended June
30, 2002, compared to $299 for the 18 months ended June 30, 2001. Copper sales
were 294 million pounds for the 12-month period ended June 30, 2002 compared to
401 million pounds in the previous financial year of 18 months. The average
realized copper price declined 11% from $0.82 in 2001 to $0.73 in 2002. Copper
production was 288 million pounds for the 12 months ended June 30, 2002
compared to 407 million pounds for the 18 months ended June 30, 2001 due in
part to the additional six-month period in the previous financial year. The
average cash operating costs decreased 3% from $0.40 per pound in 2001 to $0.39
per pound in 2002. Operating profit for the twelve months ended June 30, 2002
was $55 million, down 36% from the $86 million for the 18 months ended June 30,
2002 due to six months less of operation and to lower commodity prices,
partially offset by lower average cash operating costs. Operating profit for
the twelve-months ended June 30, 2001 was $64 million with 274 million pounds
of copper sold for the same period.

Antamina
The Antamina copper-zinc project commenced commercial production on October 1,
2001.
Rio Algoms share of the projects revenue for the year ended June 30, 2002 was
$119 million. Rio Algoms share of sales of copper and zinc amounted to 189
million pounds and 104 million pounds respectively and its share of production
at the Antamina mine was 180 million pounds of copper and 106 million pounds of
zinc. The average realized copper price was $0.72 per pound and the average
cash operating cost after by-product credits was $0.44 per pound of copper. Rio
Algoms share of Antaminas operating profit was $24 million for the year ended
June 30, 2002.

A-4



---



##### 



Project development expenditures are now complete and the project was completed
slightly under its original budget of $2,296 million.

Rio Algom has provided a several guarantee of its 33.75% share of Antaminas
senior debt during the pre-completion period, which amounts to $424 million as
of June 30, 2002. Antamina is now into its completion test period. Upon the
project meeting the completion tests as defined in the financing agreements,
Rio Algoms guarantee will terminate.

Highland Valley Copper (HVC)
Rio Algoms share of revenue was $75 million for the year ended June 30, 2002
compared to $110 million for the 18 months ended June 30, 2002. This reduction
was mainly due to six months less of operation and to the decrease in average
realized copper price from $0.77 to $0.67. Rio Algoms share of copper sales
was 138 million pounds for the 12 months ended June 30, 2002 compared to 187
million pounds the 18 months ended June 30, 2001. Rio Algoms share of copper
production at HVC was 135 million pounds for the twelve months ended June 30,
2002, compared to 201 million pounds for fiscal period 2001. Average cash
costs were down 10% from $0.58 per pound in 2001 to $0.52 per pound in 2002 due
to cost reductions. Rio Algoms share of operating profit for the twelve months
ended June 30, 2002 was $4 million compared to $19 million for the year before
due mainly to lower commodity prices and six months less of operation in the
reporting period. Rio Algoms share of HVCs operating profit for the
twelve-months ended June 30, 2001 was $14 million with 136 million pounds of
copper sold for the same period.

Copper hedges expiring at the end of July 2002 had a positive impact on the
average realized copper price in 2002 of $0.03 per pound. Currency hedges
reduced HVCs average realized copper price by $0.04 per pound in 2002 and by
$0.05 per pound in 2001. The currency hedges will expire at the end of December
2002.

Alumbrera
Rio Algoms investment in Minera Alumbrera is accounted for on an equity basis.
Rio Algoms share of net earnings was $13 million for the twelve months ended
June 30, 2002 compared to $7 million for the 18 months ended June 30, 2001. Rio
Algoms share of sales for the period ended June 30, 2002 included 106 million
pounds of copper and 185,000 ounces of gold, compared to 126 million pounds of
copper and 203,000 ounces of gold for the 18-month period ended June 30, 2001.
The average realized copper price decreased 14%, from $0.79 in 2001 to $0.68 in
2002. Rio Algoms share of copper production at Alumbrera for the year ended
June 30, 2002 included 106 million pounds of copper and 184,000 ounces of gold
compared to 127 million pounds of copper and 205,000 ounces of gold for the
18-month period ended June 30, 2001. Average cash costs after by-product
credits were $0.20 per pound for the twelve months ended June 30, 2002, down
from $0.35 per pound in 2001, mainly because Minera Alumbrera now benefits from
reduced operating costs in US dollar terms as a result of the Argentinean peso
devaluation which commenced in January 2002.

The financial impact for Minera Alumbrera of the devaluation of the Argentinean
peso against the US dollar includes the devaluation of peso denominated
operating costs, monetary assets and monetary liabilities. It also includes the
devaluation of future peso tax depreciation partly offset by

A-5



---



##### 



Argentine tax benefits arising from exchange losses on US dollar monetary
items, principally the project debt. The revaluation of all monetary balance
sheet items resulted in a loss of $24 million (of which Rio Algoms share was
$6 million) and is reflected in Rio Algoms equity in net earnings.
Additional information is provided in note 9 of the Consolidated Financial
Statements for the year ended June 30, 2002.

Other Mining
Other mining comprises a 25% royalty interest in the Polaris zinc-lead mine and
Rio Algoms 29.1% joint venture interest in the Bullmoose Coal mine. Revenue
of both operations for the twelve months ended June 30, 2002 was $29 million
compared to $36 million for the 18-month period ended June 30, 2001. Operating
profit from the Bullmoose Coal mine for the year ended June 30, 2002 was $7
million versus $2 million for 2001. No operating profit was reported in the
year 2002 for Polaris. The mine ceased its operations in September 2002 and the
royalty asset held by Rio Algom was amortized to the extent of the revenue
received. The asset currently left in the books is very minimal and is expected
to be fully amortized in the financial year ending June 30, 2003 as the zinc
shipments from the mine are collected and Rio Algom receives the royalty
revenue from those shipments.

Additional information is provided in note 5c of the Consolidated Financial
Statements for the year ended June 30, 2002.

Expenses
Corporate expenses for the 12-month period ended June 30, 2002 of $26 million,
were $4 million less than for the 18-month period ended June 30, 2001 due
mainly to a shorter reporting period and lower salary and other expenses
following the decision to close the corporate office in Toronto, partly offset
by an actuarially determined reduction of $10 million against Rio Algoms
pension assets following the partial wind up of the plan (see note 17 of the
Consolidated Financial Statements). During the 18 months ended June 30, 2001 a
charge of $38 million associated with the acquisition of all of the outstanding
common shares of Rio Algom by Billiton Plc, and other corporate reorganization
costs, affected the earnings. Exploration costs were $4 million during the
twelve months ended June 30, 2002 compared to $20 million for the 18-month
period ended June 30, 2001. Interest expense increased to $26 million from $18
million in the previous financial period due mainly to the interest from the
Antamina financing being expensed effective October 1, 2001 (being the date of
commencement of commercial production).

Future taxes
Rio Algom does not expect to fully utilize its tax losses. Therefore a
valuation allowance against the Canadian future tax assets of $19 million was
taken in 2002. A valuation allowance of $18 million had already been taken in
the financial year 2001.

Key operating statistics and additional quarterly information is contained at
the end of this report

A-6



---



##### 



Environmental Responsibility
Rio Algom believes it has made and is making adequate financial provisions for
its future restoration obligations. Each operating mine has a plan that
estimates the cost to rehabilitate the site. Plans include reclamation
objectives to ensure public safety and minimize risks to the local environment.
The cost of this plan is charged against the earnings during the expected life
of the operation.

For the twelve months ended June 30, 2002, the company recorded $4 million of
provisions for future restoration costs at operating mines compared to $4
million for the 18-month period ended June 30, 2001. Spending against previous
provisions for restoration work at closed mines was $2 million for 2002
compared to $8 million for the 18 months ended June 30, 2001. Ongoing care and
monitoring continues for these sites.

Additional information is provided in note 11 of the Consolidated Financial
Statements for the year ended June 30, 2002.

Development
Rio Algom is currently working on the feasibility of its Spence copper project
in Chile. Capital expenditures at Spence for the year ended June 30, 2002
amounted to $5 million compared to $9 million for the 18-month period ended
June 30, 2001.

Risks and Uncertainties

Commodity Price Risk
The price of copper is the most significant factor influencing the
profitability of Rio Algom. For the twelve months ended June 30, 2002, the
companys average realized copper price, excluding Alumbrera, was $0.71 per
pound compared to $0.80 per pound the year before.

In previous years, the company hedged its exposure to changes in copper
prices at Cerro Colorado and HVC by purchasing put options and collars. The
company designated these hedging instruments as being in respect of specific
future production. Since October 2000, the hedging program for Cerro Colorado
and HVC has been discontinued and the last copper hedging instruments expired
in 2002.

A portion of gold production at Alumbrera is hedged. Approximately 23% of next
years sales and 17% of following years sales were hedged using forward sales
contracts with an average price per ounce of $350 and $354 respectively.

For additional information, see note 22 to the Consolidated Financial
Statements for the year ended June 30, 2002.

Currency Risk
In 1998, Rio Algom entered into foreign exchange contracts involving
approximately C$90 million

A-7



---



##### 



per year over five years. These positions were intended to hedge the companys
exposure to currency risk at HVC, which incurs operating expenses in Canadian
dollars, but receives sales revenue in US dollars. The average exchange rate
on the contracts when established was C$1.00 to US$0.70.

Contracts settling for the twelve months ended June 30, 2002 resulted in
realized losses of $6 million compared to $5 million in losses for the 18
months ended June 30, 2001. The remaining contracts expire in December 2002.

Mining Risk
The business of mining for metals is generally subject to a number of risks and
hazards, including environmental hazards, industrial accidents, labour
disputes, unusual or unexpected geological conditions, ground failures, changes
in the regulatory environment, delays in the permitting and licensing of new
projects and natural phenomena such as inclement weather conditions, floods and
earthquakes.

Such occurrences could result in damage to, or destruction of, mineral
properties or production facilities, personal injury or death, environmental
damage, delays in mining, monetary losses and possible legal liability.
Although the company maintains insurance against risks that are typical of the
mining industry, such insurance may not provide adequate coverage under all
circumstances.

Estimates involving metal recoveries and capital and operating costs are based
upon feasibility studies, which assess anticipated tonnage and grades of ore to
be mined and processed, the configuration of the orebody, facility and
equipment requirements, environmental and reclamation activities and other
factors. As a result, actual cash operating costs and economic returns of any
and all development projects may materially differ from the costs and returns
as estimated in feasibility studies.

Political and Financial Market Risks
Adverse political and economic developments can affect the performance of an
investment. While project-financing arrangements may contain exclusions for
certain political risks, including those covered by political risk insurance
taken out by the relevant bank syndicate, the companys equity investment in
these projects is not covered.

Outlook
The business environment remains uncertain in the short term and no significant
improvement in the demand for base metals commodities is expected soon. World
production of copper exceeded consumption in 2001 and continued to do so in
2002 albeit to a lesser extent due to production shut downs in the industry.
The resulting stock overhang contributed to ongoing weak copper prices.

Looking forward, we believe that the copper market outlook remains favourable.
Once world industrial production growth returns to more normal levels, we would
expect a rapid reduction in world inventories and the associated reversion of
base metals prices to their long-term trends.

Caution Regarding Forward-Looking Information
Some of the disclosures included herein respecting production and production
capacity, mineral

A-8



---



##### 



reserves, resources and grades, mine life expectations, mining and treatment
methods, metal prices, sales volumes, cash, operating, development and total
costs, development schedules and budgets, financing, expenditures, returns and
economic and market conditions, represent forward-looking statements (as
defined in the U.S. Securities Exchange Act of 1934). Such statements are
based on assumptions and estimates related to future economic and market
conditions.

While the reasonableness of such assumptions and estimates is reviewed by
management, unusual or unanticipated events may occur which render them
inaccurate. Factors that could cause actual results to differ materially
include, among others: the risks and uncertainties described earlier and in the
financial statements, international economic and political conditions, cyclical
and volatile commodity prices, availability of materials and equipment, failure
to receive necessary government permits, delays in anticipated start-up dates,
unusual weather or operating conditions, force majeure events, metallurgical
and other processing problems, lower-than-expected ore grades, unanticipated
ground and water conditions, failure of equipment or processes to operate in
accordance with specifications or expectations and litigation. Under such
circumstances, future performance may differ materially from expectations.

A-9



---



##### 



SUMMARY OF KEY OPERATING STATISTICS

|                                                                  |                                  |  |                 |       |                 |  |     |       | 
|----------------------------------------------------------------- | -------------------------------- |  | --------------- | ----- | --------------- |  | --- | ----- | 
|                                                                  |                                  |  | 12 Months Ended |       | 18 Months Ended
|                                                                  |                                  |  | June 30, 2002   |       | June 30, 2001  
|                                                                  |                                  |  |                 |       |                
|Copper Production(millions of
pounds payable) (a)                 |                                  |  |                 |       |                 |  |     |      
|                                                                  | Cerro Colorado                   |  |                 | 288   |                 |  |     | 407   | 
|                                                                  | Highland Valley Copper           |  |                 | 135   |                 |  |     | 201   | 
|                                                                  | Antamina                         |  |                 | 180   |                 |  |     |      | 
|                                                                  | Alumbrera (b)                    |  |                 | 106   |                 |  |     | 127   | 
|                                                                  |                                  |  |                 |       |                 |  |     |      
|                                                                  |                                  |  | 709             |       |                 |  | 735 |      
|                                                                  |                                  |  |                 |       |                 |  |     |      
|Average Copper Cash Cost (US$ per pound after by-product credits) |                                  |  |                 |       |                 |  |     |      
|                                                                  | Cerro Colorado                   |  |                 | 0.39  |                 |  |     | 0.40  | 
|                                                                  | Highland Valley Copper           |  |                 | 0.52  |                 |  |     | 0.58  | 
|                                                                  | Antamina                         |  |                 | 0.44  |                 |  |     |      | 
|                                                                  | Alumbrera                        |  |                 | 0.20  |                 |  |     | 0.35  | 
|Copper Sales(million of pounds
payable) (a)                       |                                  |  |                 |       |                 |  |     |      
|                                                                  | Cerro Colorado                   |  |                 | 294   |                 |  |     | 401   | 
|                                                                  | Highland Valley Copper           |  |                 | 138   |                 |  |     | 187   | 
|                                                                  | Antamina                         |  |                 | 189   |                 |  |     |      | 
|                                                                  | Alumbrera (b)                    |  |                 | 106   |                 |  |     | 126   | 
|                                                                  |                                  |  |                 |       |                 |  |     |      
|                                                                  |                                  |  | 727             |       |                 |  | 714 |      
|                                                                  |                                  |  |                 |       |                 |  |     |      
|Average Copper Price(US$ per pound)                               |                                  |  |                 |       |                 |  |     |      
|                                                                  | Cerro Colorado                   |  |                 | 0.73  |                 |  |     | 0.82  | 
|                                                                  | Highland Valley Copper           |  |                 | 0.67  |                 |  |     | 0.77  | 
|                                                                  | Antamina                         |  |                 | 0.72  |                 |  |     |      | 
|                                                                  | Alumbrera                        |  |                 | 0.68  |                 |  |     | 0.79  | 
|Other Production(payable) (a)                                     |                                  |  |                 |       |                 |  |     |      
|                                                                  | Gold (thousands of ounces) (b)   |  |                 | 184   |                 |  |     | 205   | 
|                                                                  | Molybdenum (thousands of pounds) |  |                 | 1,607 |                 |  |     | 2,010 | 
|                                                                  | Coal (thousands of tonnes)       |  |                 | 579   |                 |  |     | 679   | 
|                                                                  | Zinc (million of pounds)         |  |                 | 106   |                 |  |     |      | 



---

|(a) |  | Rio Algoms share                                                                                                                    
|--- |  | -------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Not included in mining revenue or operating profit as the companys
investment in Alumbrera is accounted for using the equity method.

A-10



---



##### 



Rio Algom Limited
Selected Consolidated Financial Information

|                                                             |  |           |       |           |  |           |       |           |  |           |       |           |  |           |       |           |  |           |      |           |  |  |       |   |  |  |      |  |  |  |      |  |  |  |      |  |  |  |       |  
|------------------------------------------------------------ |  | --------- | ----- | --------- |  | --------- | ----- | --------- |  | --------- | ----- | --------- |  | --------- | ----- | --------- |  | --------- | ---- | --------- |  |  | ----- | - |  |  | ---- |  |  |  | ---- |  |  |  | ---- |  |  |  | ----- | -
|For Quarter Ended                                            |  | 31-Mar-00 |       | 30-Jun-00 |  | 30-Sep-00 |       | 31-Dec-00 |  | 31-Mar-01 |       | 30-Jun-01 |  | 30-Sep-01 |       | 31-Dec-01 |  | 31-Mar-02 |      | 30-Jun-02
|                                                             |  |           |       |           |  |           |       |           |  |           |       |           |  |           |       |           |  |           |      |          
|Total revenue from continuing operations (US$ millions)      |  |           | 62    |           |  |           | 70    |           |  |           | 77    |           |  |           | 77    |           |  |           | 88   |           |  |  | 71    |   |  |  | 83   |  |  |  | 111  |  |  |  | 113  |  |  |  | 124   |  
|Earnings (loss) from continuing operations (US$ millions)    |  |           | 1     |           |  |           | 3     |           |  |           | (5    | )         |  |           | (12   | )         |  |           | 12   |           |  |  | (6    | ) |  |  | 8    |  |  |  | 8    |  |  |  | 17   |  |  |  | (4    | )
|Earnings
(loss) per share from continuing operations  basic |  |           | (0.03 | )         |  |           | (0.03 | )         |  |           | (0.15 | )         |  |           | (0.25 | )         |  |           | 0.12 |           |  |  | (0.13 | ) |  |  | 0.06 |  |  |  | 0.06 |  |  |  | 0.20 |  |  |  | (0.30 | )
|Net earnings (loss) for the period (US$ millions)            |  |           | 9     |           |  |           | 10    |           |  |           | (1    | )         |  |           | (8    | )         |  |           | 12   |           |  |  | (6    | ) |  |  | 8    |  |  |  | 8    |  |  |  | 17   |  |  |  | (4    | )
|Net earnings (loss) per share  basic                        |  |           | 0.10  |           |  |           | 0.09  |           |  |           | (0.08 | )         |  |           | (0.19 | )         |  |           | 0.12 |           |  |  | (0.13 | ) |  |  | 0.06 |  |  |  | 0.06 |  |  |  | 0.20 |  |  |  | (0.30 | )

     Fully diluted earnings per share calculations have not been disclosed on a
quarterly basis since on an annual basis the effect of the outstanding options
is antidilutive. Additional information is provided in note 15 of the
Consolidated Financial Statements for the year ended June 30, 2002.

In calculating basic earnings (loss) per share, the net earnings are
decreased or the loss is increased by the accretion of the equity element of
the convertible debentures and by the dividends on preferred securities. Basic
earnings (loss) per share are calculated using the weighted average number of
common shares outstanding during the year.

A-11



---



##### 



RIO ALGOM LIMITED



CONSOLIDATED FINANCIAL STATEMENTS



FOR THE TWELVE MONTHS ENDED JUNE 30, 2002



AND



THE EIGHTEEN MONTHS ENDED JUNE 30, 2001









66 Wellington Street West,
Suite 4200
Toronto, Ontario
M5H 1N6

1



---



##### 



MANAGEMENTS REPORT

Management is responsible for preparation of the consolidated financial
statements and the information contained throughout this report. The
accompanying consolidated financial statements have been prepared by management
in accordance with accounting principles generally accepted in Canada and
include amounts that are based on informed judgments and best estimates. Other
financial information appearing throughout this report is consistent with that
in the consolidated financial statements.

Rio Algom Limited maintains systems of internal controls over the financial
reporting process, designed to provide reasonable assurance that relevant and
reliable financial information is produced.

The Board of Directors, through an Audit Committee composed of three
non-management directors, oversees managements performance of its financial
reporting responsibilities. The Board reviews and approves the financial
statements.

The Audit Committee, appointed by the Board of Directors, meets periodically
with management, internal auditors and external auditors to discuss internal
controls over the financial reporting process, auditing matters and financial
reporting issues. The Committee reviews the financial statements and recommends
them to the Board for approval. The Committee also considers, for review by the
Board and approval by the shareholder, the appointment of the external
auditors.

PricewaterhouseCoopers LLP, the companys external auditors, have audited the
consolidated financial statements in accordance with generally accepted
auditing standards on behalf of the shareholder. They have full and free
access to the Audit Committee.

|                                                |  |                                                          
|----------------------------------------------- |  | ---------------------------------------------------------
|Bradford A. Mills"
Bradford A. Mills
President |  | Philippe Monier
Philippe Monier
Chief Financial Officer

October 23, 2002

2



---



##### 



AUDITORS REPORT TO THE SHAREHOLDER

We have audited the consolidated balance sheets of Rio Algom Limited as at June
30, 2002 and 2001 and the consolidated statements of earnings and retained
earnings and cash flow for the year ended June 30, 2002 and the 18-month period
ended June 30, 2001. These financial statements are the responsibility of the
companys management. Our responsibility is to express an opinion on these
financial statements based on our audits.

We conducted our audits in accordance with Canadian generally accepted auditing
standards. Those standards require that we plan and perform an audit to obtain
reasonable assurance whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements. An audit
also includes assessing the accounting principles used and significant
estimates made by management, as well as evaluating the overall financial
statement presentation.

In our opinion, these consolidated financial statements present fairly, in all
material respects, the financial position of the company as at June 30, 2002
and 2001 and the results of its operations and its cash flow for the year ended
June 30, 2002 and the 18-month period ended June 30, 2001 in accordance with
Canadian generally accepted accounting principles.

|                                                             |  |                      
|------------------------------------------------------------ |  | ---------------------
|PricewaterhouseCoopers LLPToronto, Canada
October 23, 2002 |  | CHARTERED ACCOUNTANTS

Comments by auditors for United States readers on Canada-United States reporting differences.

In the United States, reporting standards for auditors require the addition of
an explanatory paragraph (following the opinion paragraph) when there are
changes in accounting principles that have a material effect on the
comparability of the companys financial statements, such as the changes
described in Note 1 to the consolidated financial statements. Our report to the
shareholder dated October 23, 2002 is expressed in accordance with Canadian
reporting standards, which do not require a reference to such changes in
accounting principles in the auditors report when the changes are properly
accounted for and adequately disclosed in the financial statements.

|                                                             |  |                      
|------------------------------------------------------------ |  | ---------------------
|PricewaterhouseCoopers LLPToronto, Canada
October 23, 2002 |  | CHARTERED ACCOUNTANTS

3



---



##### 



CONSOLIDATED STATEMENTS OF EARNINGS AND RETAINED EARNINGS

EARNINGS

|                                                                                                |                                                                |               |                 |               |                 |   |      |       |  
|----------------------------------------------------------------------------------------------- | -------------------------------------------------------------- | ------------- | --------------- | ------------- | --------------- | - | ---- | ----- | -
|                                                                                                |                                                                |               | 12 Months Ended |               | 18 Months Ended
|(in millions of US dollars except per share data)                                               |                                                                | June 30, 2002 |                 | June 30, 2001
|                                                                                                |                                                                |               |                 |              
|Mining revenue                                                                                  |                                                                | $             | 431             |               |                 | $ | 445  |      
|                                                                                                |                                                                |               |                 |               |                 |   |      |      
|Expenses                                                                                        |                                                                |               |                 |               |                 |   |      |      
|                                                                                                | Cost of mine production                                        |               |                 | 243           |                 |   |      | 241   |  
|                                                                                                | Selling, general and administration                            |               |                 | 31            |                 |   |      | 33    |  
|                                                                                                | Depreciation and amortization (note 19)                        |               |                 | 93            |                 |   |      | 91    |  
|                                                                                                | Interest (note 20)                                             |               |                 | 26            |                 |   |      | 18    |  
|                                                                                                | Exploration                                                    |               |                 | 4             |                 |   |      | 20    |  
|                                                                                                |                                                                |               |                 |               |                 |   |      |      
|                                                                                                |                                                                |               | 397             |               |                 |   | 403  |      
|                                                                                                |                                                                |               |                 |               |                 |   |      |      
|                                                                                                |                                                                |               | 34              |               |                 |   | 42   |      
|                                                                                                |                                                                |               |                 |               |                 |   |      |      
|Transaction costs (note 2)                                                                      |                                                                |               |                |               |                 |   | (38  | )    
|Investment and other income                                                                     |                                                                |               | 21              |               |                 |   | 19   |      
|                                                                                                |                                                                |               |                 |               |                 |   |      |      
|Earnings before taxes, equity in net earnings of associated
company and discontinued operations |                                                                |               | 55              |               |                 |   | 23   |      
|Income and mining taxes (note 21)                                                               |                                                                |               | (39             | )             |                 |   | (36  | )    
|                                                                                                |                                                                |               |                 |               |                 |   |      |      
|Earnings (loss) from continuing operations, before equity in net
earnings of associated company |                                                                |               | 16              |               |                 |   | (13  | )    
|Equity in net earnings of associated company                                                    |                                                                |               | 13              |               |                 |   | 7    |      
|                                                                                                |                                                                |               |                 |               |                 |   |      |      
|Earnings (loss) from continuing operations                                                      |                                                                |               | 29              |               |                 |   | (6   | )    
|Discontinued operations, net of tax                                                             |                                                                |               |                |               |                 |   | 23   |      
|                                                                                                |                                                                |               |                 |               |                 |   |      |      
|Net earnings for the period                                                                     |                                                                | $             | 29              |               |                 |   | 17   |      
|                                                                                                |                                                                |               |                 |               |                 |   |      |      
|Accretion of equity element of convertible debentures                                           |                                                                |               | (13             | )             |                 |   | (11  | )    
|Dividends on preferred securities                                                               |                                                                |               | (14             | )             |                 |   | (12  | )    
|                                                                                                |                                                                |               |                 |               |                 |   |      |      
|Income (loss) attributable to the common shareholders                                           |                                                                | $             | 2               |               |                 | $ | (6   | )    
|                                                                                                |                                                                |               |                 |               |                 |   |      |      
|Per common share (note 15):                                                                     |                                                                |               |                 |               |                 |   |      |      
|                                                                                                | Earnings (loss) from continuing operations (basic and diluted) |               | $               | 0.02          |                 |   | $    | (0.47 | )
|                                                                                                | Net earnings (loss) for the period (basic and diluted)         |               | $               | 0.02          |                 |   | $    | (0.10 | )
|Weighted average shares outstanding (in millions)                                               |                                                                |               | 65.5            |               |                 |   | 63.0 |      
|                                                                                               
|RETAINED EARNINGS                                                                               |                                                                |               |                 |               |                 |   |      |      

|                                                                 |  |                 |     |                 |  |   |     |  
|---------------------------------------------------------------- |  | --------------- | --- | --------------- |  | - | --- | -
|                                                                 |  | 12 Months Ended |     | 18 Months Ended
|(in millions of US dollars)                                      |  | June 30, 2002   |     | June 30, 2001  
|                                                                 |  |                 |     |                
|Balance, beginning of period                                     |  | $               | 278 |                 |  | $ | 327 |  
|Adjustment from change in Canadian accounting standards (note 1) |  |                 |    |                 |  |   | (35 | )
|Net earnings for the period                                      |  |                 | 29  |                 |  |   | 17  |  
|                                                                 |  |                 |     |                 |  |   |     |  
|                                                                 |  |                 | 307 |                 |  |   | 309 |  
|Accretion of equity element of convertible debentures            |  |                 | (13 | )               |  |   | (11 | )
|Dividends on preferred securities                                |  |                 | (14 | )               |  |   | (12 | )
|Dividends on common shares                                       |  |                 |    |                 |  |   | (8  | )
|                                                                 |  |                 |     |                 |  |   |     |  
|Balance, end of period                                           |  | $               | 280 |                 |  |   | 278 |  
|                                                                 |  |                 |     |                 |  |   |     |  

The accompanying notes are an integral part of these consolidated financial statements

4



---



##### 



CONSOLIDATED BALANCE SHEETS

June 30, 2002 and 2001

|                                                   |                                                                          |      |       |      |  |   |       |     | 
|-------------------------------------------------- | ------------------------------------------------------------------------ | ---- | ----- | ---- |  | - | ----- | --- | 
|( in millions of US dollars)                       |                                                                          | 2002 |       | 2001
|                                                   |                                                                          |      |       |     
|Assets                                             |                                                                          |      |       |      |  |   |       |    
|Current                                            |                                                                          |      |       |      |  |   |       |    
|                                                   | Cash and cash equivalents                                                |      | $     | 206  |  |   | $     | 83  | 
|                                                   | Receivables and prepaid expenses                                         |      |       | 96   |  |   |       | 85  | 
|                                                   | Inventories (note 6)                                                     |      |       | 60   |  |   |       | 50  | 
|                                                   | Current future tax assets (note 21)                                      |      |       |     |  |   |       | 10  | 
|                                                   |                                                                          |      |       |      |  |   |       |    
|                                                   |                                                                          |      | 362   |      |  |   | 228   |    
|Property, plant and equipment (note 7)             |                                                                          |      | 1,043 |      |  |   | 353   |    
|Antamina project in process (note 5)               |                                                                          |      |      |      |  |   | 642   |    
|Mining properties (note 8)                         |                                                                          |      | 176   |      |  |   | 181   |    
|Investment (note 9)                                |                                                                          |      | 219   |      |  |   | 194   |    
|Loan receivable (note 4)                           |                                                                          |      | 247   |      |  |   | 293   |    
|Other assets (note 10)                             |                                                                          |      | 5     |      |  |   | 15    |    
|Non current future tax assets (note 21)            |                                                                          |      | 23    |      |  |   | 48    |    
|                                                   |                                                                          |      |       |      |  |   |       |    
|                                                   |                                                                          | $    | 2,075 |      |  | $ | 1,954 |    
|                                                   |                                                                          |      |       |      |  |   |       |    
|Liabilities                                        |                                                                          |      |       |      |  |   |       |    
|Current                                            |                                                                          |      |       |      |  |   |       |    
|                                                   | Bank loans and overdrafts                                                |      | $     |     |  |   | $     | 4   | 
|                                                   | Accounts payable and accrued liabilities                                 |      |       | 145  |  |   |       | 158 | 
|                                                   | Current portion of liability element of
convertible debentures (note 13) |      |       |     |  |   |       | 12  | 
|                                                   |                                                                          |      |       |      |  |   |       |    
|                                                   | Current portion of long term debt (note 12)                              |      |       | 45   |  |   |       |    | 
|                                                   |                                                                          |      |       |      |  |   |       |    
|                                                   |                                                                          |      | 190   |      |  |   | 174   |    
|Long term debt (note 12)                           |                                                                          |      | 529   |      |  |   | 498   |    
|Post-employment benefit obligations (note 17)      |                                                                          |      | 20    |      |  |   | 19    |    
|Site restoration and related obligations (note 11) |                                                                          |      | 47    |      |  |   | 43    |    
|Non current future tax liabilities (note 21)       |                                                                          |      | 136   |      |  |   | 130   |    
|                                                   |                                                                          |      |       |      |  |   |       |    
|                                                   |                                                                          |      | 922   |      |  |   | 864   |    
|                                                   |                                                                          |      |       |      |  |   |       |    
|Shareholders equity                               |                                                                          |      |       |      |  |   |       |    
|Equity portion of convertible debentures (note 13) |                                                                          |      | 222   |      |  |   | 214   |    
|Preferred securities (note 14)                     |                                                                          |      | 140   |      |  |   | 140   |    
|Common shares (note 15)                            |                                                                          |      | 368   |      |  |   | 368   |    
|Contributed surplus (note 4)                       |                                                                          |      | 43    |      |  |   | 43    |    
|Cumulative translation adjustment (note 16)        |                                                                          |      | 100   |      |  |   | 47    |    
|Retained earnings                                  |                                                                          |      | 280   |      |  |   | 278   |    
|                                                   |                                                                          |      |       |      |  |   |       |    
|                                                   |                                                                          |      | 1,153 |      |  |   | 1,090 |    
|                                                   |                                                                          |      |       |      |  |   |       |    
|                                                   |                                                                          | $    | 2,075 |      |  | $ | 1,954 |    
|                                                   |                                                                          |      |       |      |  |   |       |    

Commitments and contingencies (note 18).
The accompanying notes are an integral part of these consolidated financial statements.
Approved on behalf of the Board of Directors:

|                                         |  |                                               
|---------------------------------------- |  | ----------------------------------------------
|Gordon C. Gray
Gordon C. Gray
Director |  | Bradford A. Mills
Bradford A. Mills
Director

5



---



##### 



CONSOLIDATED STATEMENTS OF CASH FLOW

|                                                        |                                                                                   |               |                 |               |                 |  |      |    |  
|------------------------------------------------------- | --------------------------------------------------------------------------------- | ------------- | --------------- | ------------- | --------------- |  | ---- | -- | -
|                                                        |                                                                                   |               | 12 Months Ended |               | 18 Months Ended
|(in millions of US dollars)                             |                                                                                   | June 30, 2002 |                 | June 30, 2001
|                                                        |                                                                                   |               |                 |              
|CASH PROVIDED BY (USED IN) THE FOLLOWING:               |                                                                                   |               |                 |               |                 |  |      |   
|Operating Activities                                    |                                                                                   |               |                 |               |                 |  |      |   
|Earnings (loss) from continuing operations              |                                                                                   | $             | 29              |               |                 |  | (6   | ) 
|Non-cash items:                                         |                                                                                   |               |                 |               |                 |  |      |   
|                                                        | Depreciation and amortization                                                     |               |                 | 93            |                 |  |      | 91 |  
|                                                        | Future income taxes                                                               |               |                 | 36            |                 |  |      | 36 |  
|                                                        | Equity in net earnings of associated company                                      |               |                 | (13           | )               |  |      | (7 | )
|                                                        | Other non-cash items                                                              |               |                 | 17            |                 |  |      | (8 | )
|Site restoration and related obligations                |                                                                                   |               | 1               |               |                 |  | (3   | ) 
|Change in non-cash working capital:                     |                                                                                   |               |                 |               |                 |  |      |   
|                                                        | (Increase) decrease in receivables and prepaid
expenses and inventories           |               |                 | (13           | )               |  |      | 14 |  
|                                                        | Increase (decrease) in accounts payable and accrued
liabilities and taxes payable |               |                 | 5             |                 |  |      | 4  |  
|Repayment of securitization of receivables (note 4)     |                                                                                   |               |                |               |                 |  | (98  | ) 
|                                                        |                                                                                   |               |                 |               |                 |  |      |   
|                                                        |                                                                                   |               | 155             |               |                 |  | 23   |   
|Discontinued operations                                 |                                                                                   |               |                |               |                 |  | 31   |   
|                                                        |                                                                                   |               |                 |               |                 |  |      |   
|                                                        |                                                                                   |               | 155             |               |                 |  | 54   |   
|                                                        |                                                                                   |               |                 |               |                 |  |      |   
|Financing Activities                                    |                                                                                   |               |                 |               |                 |  |      |   
|Drawdown of senior project debt facilities (note 12)    |                                                                                   |               | 53              |               |                 |  | 296  |   
|Issue of common shares (note 15)                        |                                                                                   |               |                |               |                 |  | 60   |   
|Decrease in long term debt and other obligations        |                                                                                   |               | (5              | )             |                 |  | (8   | ) 
|(Decrease) increase in short term borrowings            |                                                                                   |               | (5              | )             |                 |  | 1    |   
|Interest on equity portion of convertible debentures    |                                                                                   |               | (13             | )             |                 |  | (11  | ) 
|Dividends on preferred securities                       |                                                                                   |               | (14             | )             |                 |  | (12  | ) 
|Dividends on common shares                              |                                                                                   |               |                |               |                 |  | (8   | ) 
|                                                        |                                                                                   |               |                 |               |                 |  |      |   
|                                                        |                                                                                   |               | 16              |               |                 |  | 318  |   
|Discontinued operations                                 |                                                                                   |               |                |               |                 |  | (17  | ) 
|                                                        |                                                                                   |               |                 |               |                 |  |      |   
|                                                        |                                                                                   |               | 16              |               |                 |  | 301  |   
|                                                        |                                                                                   |               |                 |               |                 |  |      |   
|Investing Activities                                    |                                                                                   |               |                 |               |                 |  |      |   
|Decrease (increase) in loan receivable                  |                                                                                   |               | 61              |               |                 |  | (293 | ) 
|Proceeds from sale of subsidiaries                      |                                                                                   |               |                |               |                 |  | 390  |   
|Proceeds from sale of investment                        |                                                                                   |               | 5               |               |                 |  |     |   
|Capital expenditures                                    |                                                                                   |               | (114            | )             |                 |  | (374 | ) 
|                                                        |                                                                                   |               |                 |               |                 |  |      |   
|                                                        |                                                                                   |               | (48             | )             |                 |  | (277 | ) 
|Discontinued operations                                 |                                                                                   |               |                |               |                 |  | (23  | ) 
|                                                        |                                                                                   |               |                 |               |                 |  |      |   
|                                                        |                                                                                   |               | (48             | )             |                 |  | (300 | ) 
|                                                        |                                                                                   |               |                 |               |                 |  |      |   
|Increase in cash and cash equivalents during the period |                                                                                   |               | 123             |               |                 |  | 55   |   
|Cash and cash equivalents, beginning of period          |                                                                                   |               | 83              |               |                 |  | 28   |   
|                                                        |                                                                                   |               |                 |               |                 |  |      |   
|Cash and cash equivalents, end of period                |                                                                                   |               | 206             |               |                 |  | 83   |   
|                                                        |                                                                                   |               |                 |               |                 |  |      |   

The accompanying notes are an integral part of these consolidated financial statements.

6



---



##### 



RIO ALGOM LIMITED

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

ACCOUNTING POLICIES

The consolidated financial statements of Rio Algom Limited (the company)
are prepared in accordance with accounting principles generally accepted
in Canada applied on a consistent basis. As described in note 24, these
principles differ in certain material respects from principles and
practices generally accepted in the United States.

The significant accounting policies followed by the company and its
subsidiaries are summarized below.

Nature of Operations

The company is primarily engaged in copper mining and processing, and
other related mining activities including exploration and development, in
Canada and South America.

Basis of Consolidation

The consolidated financial statements include the accounts of the company
and all significant subsidiary companies, where more than 50% of the
voting shares are owned. All material inter-company balances and
transactions are eliminated.

Investments in partnerships and joint ventures are accounted for by the
proportionate consolidation method. Under this method, the company
includes in its accounts its proportionate share of the assets,
liabilities, revenues and expenses. All material inter-company balances
and transactions are eliminated.

Investments which are not partnerships and joint ventures but in which the
company owns 50% or less of the shares and over which it exercises
significant influence are accounted for by the equity method. Under this
method, the company includes in its net earnings its share of the net
earnings or losses of these associated companies.

Use of Estimates

The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the
financial statements and the reported amounts of revenues and expenses
during the reporting period. The most significant estimates are related
to the physical and economic lives and the recoverability of mining
assets, mineral reserves, site restoration and related obligations,
financial instruments and income taxes. Actual results could differ from
those estimates.

Foreign Currency Translation

All of the companys integrated foreign operations are translated using
the current rate method. Under this method, all assets and liabilities
are translated at the year-end exchange rate and all revenue and expense
items are translated at the average rate of exchange in effect during the
period. Exchange gains and losses arising from the translation of
Canadian operations balance sheets are included in the cumulative
translation adjustment component of shareholders equity as these
operations are considered to be self-sustaining.

7



---



##### 



These adjustments are not included in earnings until realized through a
reduction in the companys net investment in such operations.

Effective the third quarter ended March 31, 2002, the companys financial
statements and attached notes are being reported in US dollars. The US
dollar has been adopted as the companys functional currency. For Canadian
reporting, the comparative figures are presented using a translation of
convenience. The exchange rate used is the one prevailing at December 31,
2001, the end of the last period for which the Canadian currency was the
currency of measurement and display.

Cash Equivalents

Cash equivalents comprise commercial paper, bankers acceptances, treasury
bills and bank deposits with original maturity dates of less than 90 days.

Revenue Recognition and Product Inventories

Mining revenue is recognized when title passes to the customer. The
passing of title is based on the terms of the contract and is generally
upon shipment.

Mining inventories are recorded at the lower of net realizable value and
average cost.

Royalty revenue is recognized when earned under the respective agreements.

Hedging Transactions

In order to protect against the impact of declining metal prices, the
company has periodically entered into option contracts. The company has
also entered into US dollar forward contracts to hedge the effect of
exchange rate changes on future Canadian dollar requirements.

The commodity contracts were matched to anticipated future production
while the currency contracts are matched to anticipated future cash
requirements. As such, these contracts are accounted for as hedges.

Premiums paid, gains and losses and cash flows on these contracts are
recognized as a component of the related transaction when the contracts
mature.

Since October 2000, the company has ceased new hedging activities.
Contracts existing at that time have been allowed to mature.

Depreciation and Amortization

The company charges depreciation and amortization on the following basis:

Mining fixed assets are depreciated on the basis of the shorter of
physical life (straight-line method) or economic life as estimated for
each mining unit (unit of production method). Economic life is adjusted
from time to time as conditions warrant.

Mining properties are amortized over the estimated economic life of the
mine on a unit of production method.

Other fixed assets are depreciated using the straight-line method over the
estimated useful life.

8



---



##### 



Capitalization of Interest

Net interest costs are capitalized during construction or development
phases on those projects for which funds have been borrowed. This would
normally apply only to major new projects from the beginning of
construction or development up to the commencement of commercial
operations. In these cases, interest earned on project funds during the
development and construction period is applied against the interest
expense to reduce the amount of interest costs capitalized.

Mining, Exploration and Development Properties

Exploration expenditures are charged to earnings in the year they are
incurred except for expenditures on specified properties for which a
pre-feasibility assessment has been completed, confirming measured and
indicated resources with the potential of being developed into a mine, in
which case the expenditures are capitalized.

Mine development costs incurred to maintain current production are
included in operating costs. Mine development costs incurred to expand the
capacity of operating mines, to develop new orebodies or to develop mine
areas substantially in advance of current production are capitalized and
charged to operations on a unit of production method related to the
mineral reserves position. If it is determined that an investment in
capitalized mine development or exploration is not recoverable over the
productive life of the property, the unrecoverable portion is charged to
earnings in the year such determination is made.

The company reviews and evaluates the recoverability of mining properties
on a periodic basis. Estimated future net cash flows, on an undiscounted
basis, from each property are calculated using estimated recoverable
quantities; estimated future price realizations (considering contracts in
place, historical and current prices, price trends and related factors);
and operating, capital and reclamation costs. Reductions in the carrying
value of mining properties with a corresponding charge to earnings are
recorded to the extent that the estimated future net cash flows are less
than the carrying value.

Estimates of future cash flows are subject to risks and uncertainties. It
is possible that changes could occur which may affect the recoverability
of the carrying value of mining properties.

Capitalized costs associated with projects held for development and under
development are not depreciated until commercial production is attained.

Pre-production Costs

Pre-production costs related to major projects are deferred until the
facilities achieve commercial operation or are deemed to be uneconomic.
These deferred costs are included in mining properties and amortized on a
unit of production method over the estimated economic life of the mine or
are written off when the project is determined to be uneconomic.

Income and Mining Taxes

Future income tax assets and liabilities are recognized for temporary
differences between the tax and accounting bases of assets and liabilities
as well as for the benefit of losses available to be carried forward to
future years for tax purposes that are more likely than not to be
realized, and are measured using the tax rates and laws that will be in
effect when the differences are expected to reverse or the losses to be
realized.

9



---



##### 



Post-employment Costs

Costs of retirement benefits and certain post-employment benefits are
recognized over the period in which employees render services in return
for the benefits.

The company maintains defined benefit and defined contribution pension
plans. Pension costs and obligations for the defined benefit plans are
determined using the projected benefit method of actuarial valuation
prorated on the projected length of employee service. Pension surpluses
and deficiencies, experience gains and losses and the effects of changes
in plan assumptions are amortized on a straight-line basis over the
expected average remaining service life of the relevant employee group.
The cumulative difference between amounts expensed or credited to income
and funding contributions is recorded on the balance sheet.

Pension costs and obligations under the defined contribution plan
represent both the companys core contributions based on a percentage of
each participants pensionable earnings and the companys matching
contributions based on a percentage of each participants elective
contributions.

Site Restoration and Related Obligations

Estimated site restoration and related obligations for each producing mine
are charged to earnings over the expected economic life of each mine using
the unit of production method. Provisions with respect to site
restoration and related obligations of a longer-term nature are prepared
on a discounted basis.

In determining expected costs, recoveries to be made at the time of
shutdown are estimated and taken into account. The process of cost
estimation is a continuous one, subject to changing laws and regulations,
regulatory approvals, technology and other external factors, which will be
recognized when applicable.

Current expenditures relating to site restoration and related obligations
at operating mines are charged to earnings as incurred. Expenditures
pertaining to closed mines are charged to the applicable site restoration
and related obligations provision.

Net earnings (loss) per common share

Basic earnings (loss) per common share is computed by dividing net
earnings (loss) applicable to common shares by the weighted-average number
of common shares issued and outstanding for the relevant period. Diluted
earnings (loss) per common share is computed by dividing net earnings
applicable to common shares, as adjusted for the effects of dilutive
securities, by the sum of the weighted-average number of common shares
issued and outstanding and all additional common shares that would have
been outstanding if potentially dilutive common shares had been issued.

Stock-based compensation plan

No compensation expense is recognized when stock or stock options are
issued to employees. Any consideration paid by employees on exercise of
stock options or purchase of stock is credited to share capital. If stock
or stock options are repurchased from employees, the excess of the
consideration paid over the carrying amount of the stock or stock option
cancelled is charged to retained earnings.

10



---



##### 



1. ACCOUNTING POLICY CHANGES

To comply with a new Canadian accounting standard regarding income taxes,
effective January 1, 2000, the company began to calculate income taxes
using the liability method as opposed to the deferral method used prior to
such date. The standard was adopted retroactively and as a result,
opening retained earnings were reduced by US$11 million. The effect of
this change in the 18 months ended June 30, 2001 was not material.

To comply with a new Canadian accounting standard regarding employee
future retirement benefits, the company, effective January 1, 2000, began
accruing the cost of all future employee retirement benefits over the
working lives of the employees. This standard was adopted retroactively
and as a result, retained earnings effective January 1, 2000 were reduced
by US$9 million for continuing operations and US$15 million for
discontinued operations. The effect of this change in the 18 months ended
June 30, 2001 was not material.

2. FINANCIAL YEAR

On December 11, 2000 the company changed its financial year-end from
December 31 to June 30. This change made the financial year-end of the
company the same as that of Billiton Plc, which, through a Canadian
subsidiary, acquired the majority of the common shares of the company
effective October 6, 2000. Billiton Plc acquired the remainder of the
common shares effective November 29, 2000. On June 29, 2001, Billiton Plc
merged with BHP Limited to form dual-listed companies known as both BHP
Billiton Plc and BHP Billiton Limited (collectively, BHP Billiton).

Also as part of the Billiton Plc acquisition, transaction costs (primarily
investment, legal and other fees, and severance), were expensed by the
company.

3. CHANGE IN REPORTING CURRENCY

Effective the third quarter ended March 31, 2002, the companys financial
statements and attached notes are being reported in US dollars. US dollar
has been adopted as the companys functional currency. For Canadian
reporting, the comparative figures have been presented using a translation
of convenience. The exchange rate used is the one prevailing at December
31, 2001, the end of the last period for which the Canadian currency was
the currency of measurement and display.

4. DISCONTINUED OPERATIONS AND RELATED PARTY TRANSACTIONS

On December 15, 2000, the company sold its interests in its wholly-owned
subsidiaries, Atlas Ideal Metals Inc. (Atlas Ideal) and NAMD Inc.
(NAMD) to related parties, being wholly-owned subsidiaries of Billiton
Plc. Atlas Ideal and NAMD, directly and through subsidiaries, carried on
Rio Algoms metals distribution business. In addition, wholly owned
subsidiaries of NAMD carried on Rio Algoms uranium mining activities in
the United States.

The total consideration received by the company for such interests (which
consist of all of the common shares of Atlas Ideal and NAMD and the
indebtedness of such companies and their subsidiaries to Rio Algom) was
approximately US$390 million (reported as US$410 million prior to change
in reporting currency) and resulted in a gain on sale of US$19 million,
which as the companies are under common control, has been recorded in
contributed surplus. Of the US$390 million in consideration,
approximately US$333 million (reported as US$350 million prior to change
in reporting currency) was loaned by Rio Algom to another wholly-owned
Canadian subsidiary of Billiton Plc at 6 month LIBOR plus 0.75% per annum.
In the year ended June 30, 2002, the company recorded US$10 million of
interest income (2001: US$11 million) on this loan. The maturity date of
the loan is February 1, 2003. BHP Billiton Plc has

11



---



##### 



unconditionally and irrevocably guaranteed the loan as to both principal
and interest. On June 30, 2002, the amount outstanding was US$247 million
(June 30, 2001: US$293 million). The accrued interest receivable at June
30, 2002 was US$12 million, included in Receivables and prepaid expenses.

The company entered into a securitization facility pursuant to a
receivable purchase agreement (the Agreement) made as of November 30,
1999 with a trust managed by a commercial bank (the Purchaser). The
Agreement provided for the sale, on a daily revolving basis, of the trade
account receivables of the companys metals distribution business. The
securitization facility had a limit of $180 million or US$150 million,
whichever was less. Under the facility, receivables were sold on a fully
serviced basis, so that the companys subsidiaries continued to administer
the collection of such receivables. Payment for purchased receivables was
made by the Purchaser by way of an initial cash payment and a deferred
amount following collection. The facility was terminated and receivables
repurchased by the metals distribution business on December 15, 2000.

As a result of the sale of the subsidiaries referred to above, the
companys metals distribution and U.S. uranium mining businesses have been
accounted for as discontinued operations effective October 7, 2000.

The results of discontinued operations were as follows:

|                                                                  |  |                              |     |  
|----------------------------------------------------------------- |  | ---------------------------- | --- | -
|(in millions of US dollars)                                       |  | Period
ended
October 7, 2000
|                                                                 
|Revenue                                                           |  | $                            | 845 |  
|                                                                  |  |                              |     |  
|Cost of sales                                                     |  |                              | 700 |  
|Selling, general and administration                               |  |                              | 104 |  
|Depreciation and amortization                                     |  |                              | 8   |  
|                                                                  |  |                              |     |  
|Earnings (loss) before income taxes                               |  |                              | 33  |  
|Provision for taxes                                               |  |                              | (13 | )
|                                                                  |  |                              |     |  
|Net earnings (loss) for the period                                |  |                              | 20  |  
|Net earnings for the period  October 7, 2000 to disposition date |  |                              | 3   |  
|                                                                  |  |                              |     |  
|Discontinued operations, net earnings                             |  | $                            | 23  |  
|                                                                  |  |                              |     |  

5. PARTNERSHIP AND JOINT VENTURES

(a)  The company holds a 33.75% interest in Compania Minera Antamina S.A.
(CMA), a joint venture with Noranda Inc. (Noranda) (33.75%), Teck
Cominco Limited (Teck Cominco) (22.5%) and Mitsubishi Corporation
(Mitsubishi) (10%). CMA has developed and now operates a copper-zinc
project in Peru. Each shareholder is responsible for its proportional
share of the projects total cost, which is currently estimated at
US$2,296 million. Rio Algoms 33.75% share of the total cost of the
Antamina project is estimated at US$775 million.

The company has provided a several guarantee of its 33.75% share of
Antaminas senior debt, which 33.75% share amounts to US$424 million at
June 30, 2002 (June 30, 2001  US$370 million). The guarantee will
increase to a maximum of US$445 million as Antamina draws fully on its
senior debt facilities. Following satisfaction of a number of pre-agreed
completion tests expected to occur between 2002 and February 2004, the
guarantee will terminate.

On October 1, 2001, the CMA copper-zinc project commenced commercial
production.

(b) The company holds a 33.6% partnership interest in Highland Valley
Copper (HVC), a partnership with Teck Cominco Limited and its
wholly-owned subsidiary, Teck Cominco Metals Ltd., (collectively Teck
Cominco) (61.4%) and Highmont Mining Company (5%). The company and Teck
Cominco have equal control and management.

12



---



##### 



HVC holds and operates large-scale copper/molybdenum mining and milling
operations in the Highland Valley area of British Columbia to produce
copper and molybdenum in concentrates with gold and silver as by-products.

(c)  The company holds a 29.1% joint venture interest in Bullmoose Coal,
with Teck Cominco Limited (60.9%) and Nissho Iwai Coal Development
(Canada) Ltd. (10%). The open-pit metallurgical coal mine and processing
facility is located in northeastern British Columbia.

All of the above operations are accounted for using the proportionate
consolidation method. The companys share in the assets, liabilities,
revenue, expenses and cash flow of the partnership and joint ventures are
as follows:

|                            |             |               |                 |               |                 |   |     |      |  
|--------------------------- | ----------- | ------------- | --------------- | ------------- | --------------- | - | --- | ---- | -
|                            |             |               | 12 Months Ended |               | 18 Months ended
|(in millions of US dollars) |             | June 30, 2002 |                 | June 30, 2001
|                            |             |               |                 |              
|Revenue                     |             | $             | 218             |               |                 | $ | 136 |     
|Cost of sales               |             |               | 208             |               |                 |   | 114 |     
|                            |             |               |                 |               |                 |   |     |     
|Operating profit (loss)     |             |               | 10              |               |                 |   | 22  |     
|Income taxes                |             |               | (5              | )             |                 |   | (10 | )   
|                            |             |               |                 |               |                 |   |     |     
|Net earnings (loss)         |             | $             | 5               |               |                 | $ | 12  |     
|                            |             |               |                 |               |                 |   |     |     
|Assets                      |             |               |                 |               |                 |   |     |     
|                            | Current     |               | $               | 136           |                 |   | $   | 68   |  
|                            | Non-current |               |                 | 741           |                 |   |     | 728  |  
|Liabilities                 |             |               |                 |               |                 |   |     |     
|                            | Current     |               |                 | (128          | )               |   |     | (109 | )
|                            | Non-current |               |                 | (534          | )               |   |     | (473 | )
|                            |             |               |                 |               |                 |   |     |     
|Net investment              |             | $             | 215             |               |                 | $ | 214 |     
|                            |             |               |                 |               |                 |   |     |     

|                            |                      |               |                 |               |                 |   |     |      |  
|--------------------------- | -------------------- | ------------- | --------------- | ------------- | --------------- | - | --- | ---- | -
|                            |                      |               | 12 Months Ended |               | 18 Months ended
|(in millions of US dollars) |                      | June 30, 2002 |                 | June 30, 2001
|                            |                      |               |                 |              
|Cash inflow (outflow) from: |                      |               |                 |               |                 |   |     |     
|                            | Operating activities |               | $               | 50            |                 |   | $   | 47   |  
|                            | Financing activities |               |                 | 46            |                 |   |     | 297  |  
|                            | Investing activities |               |                 | (84           | )               |   |     | (360 | )
|                            |                      |               |                 |               |                 |   |     |     
|Increase (decrease) in cash |                      | $             | 12              |               |                 | $ | (16 | )   
|                            |                      |               |                 |               |                 |   |     |     

6. INVENTORIES

|                            |                                 |               |    |               |  |   |    |    | 
|--------------------------- | ------------------------------- | ------------- | -- | ------------- |  | - | -- | -- | 
|(in millions of US dollars) |                                 | June 30, 2002 |    | June 30, 2001
|                            |                                 |               |    |              
|Mining operations           |                                 |               |    |               |  |   |    |   
|                            | Copper-concentrates and cathode |               | $  | 24            |  |   | $  | 26 | 
|                            | Mine supplies and other         |               |    | 36            |  |   |    | 24 | 
|                            |                                 |               |    |               |  |   |    |   
|                            |                                 | $             | 60 |               |  | $ | 50 |   
|                            |                                 |               |    |               |  |   |    |   

13



---



##### 



7.  PROPERTY, PLANT AND EQUIPMENT

|                                       |  |               |       |               |  |   |      |  
|-------------------------------------- |  | ------------- | ----- | ------------- |  | - | ---- | -
|(in millions of US dollars)            |  | June 30, 2002 |       | June 30, 2001
|                                       |  |               |       |              
|Buildings, at cost                     |  | $             | 52    |               |  | $ | 49   |  
|Accumulated depreciation               |  |               | (32   | )             |  |   | (27  | )
|                                       |  |               |       |               |  |   |      |  
|                                       |  |               | 20    |               |  |   | 22   |  
|                                       |  |               |       |               |  |   |      |  
|Plant machinery and equipment, at cost |  |               | 1,282 |               |  |   | 519  |  
|Accumulated depreciation               |  |               | (259  | )             |  |   | (188 | )
|                                       |  |               |       |               |  |   |      |  
|                                       |  |               | 1,023 |               |  |   | 331  |  
|                                       |  |               |       |               |  |   |      |  
|                                       |  | $             | 1,043 |               |  | $ | 353  |  
|                                       |  |               |       |               |  |   |      |  

8.  MINING PROPERTIES

|                                                |  |               |      |               |  |   |      |  
|----------------------------------------------- |  | ------------- | ---- | ------------- |  | - | ---- | -
|(in millions of US dollars)                     |  | June 30, 2002 |      | June 30, 2001
|                                                |  |               |      |              
|Mining properties, at cost                      |  | $             | 283  |               |  | $ | 269  |  
|Accumulated amortization                        |  |               | (153 | )             |  |   | (126 | )
|Properties held for development: Spence Project |  |               | 46   |               |  |   | 38   |  
|                                                |  |               |      |               |  |   |      |  
|                                                |  | $             | 176  |               |  | $ | 181  |  
|                                                |  |               |      |               |  |   |      |  

9.  INVESTMENT

Investment is carried on an equity basis.

|                                           |  |           |    |               |  |               |     |  |  |  |     | 
|------------------------------------------ |  | --------- | -- | ------------- |  | ------------- | --- |  |  |  | --- | 
|(in millions of US dollars)                |  | Ownership |    | June 30, 2002 |  | June 30, 2001
|                                           |  |           |    |               |  |              
|Minera Alumbrera Limited                   |  |           | 25 | %             |  |               |     |  |  |  |     | 
|-Equity (a)                                |  |           |    |               |  |               | 118 |  |  |  | 112 | 
|-Long term shareholder loans (b)           |  |           |    |               |  |               | 75  |  |  |  | 69  | 
|-Accumulated equity in net earnings (loss) |  |           |    |               |  |               | 26  |  |  |  | 13  | 
|                                           |  |           |    |               |  |               |     |  |  |  |     | 
|                                           |  |           |    |               |  |               | 219 |  |  |  | 194 | 
|                                           |  |           |    |               |  |               |     |  |  |  |     | 



---

|(a) |  | In May 1995, the company acquired a 25% effective interest in
Minera Alumbrera Limited, which commenced commercial production of
the Alumbrera copper-gold deposit in northwest Argentina on February
1, 1998.
|--- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | The US dollar denominated long term shareholder loans (US$70
million) bear interest at a rate of LIBOR plus 2% and will be repaid
from project cash flows when permitted under senior debt agreements.        
|   
|(c) |  | The companys 25% share in the assets, liabilities, revenues
and expenses of Minera Alumbrera Limited are as follows:                                                                                         

|                            |  |               |                 |               |                 |   |     |   | 
|--------------------------- |  | ------------- | --------------- | ------------- | --------------- | - | --- | - | 
|                            |  |               | 12 Months Ended |               | 18 Months ended
|(in millions of US dollars) |  | June 30, 2002 |                 | June 30, 2001
|                            |  |               |                 |              
|Revenue                     |  | $             | 117             |               |                 | $ | 131 |  
|Cost of sales               |  |               | 91              |               |                 |   | 105 |  
|                            |  |               |                 |               |                 |   |     |  
|Operating profit            |  |               | 26              |               |                 |   | 26  |  
|Expenses                    |  |               | (6              | )             |                 |   | (13 | )
|Income taxes                |  |               | (7              | )             |                 |   | (6  | )
|                            |  |               |                 |               |                 |   |     |  
|Net earnings (loss)         |  | $             | 13              |               |                 | $ | 7   |  
|                            |  |               |                 |               |                 |   |     |  

14



---



##### 



|                                    |             |               |                 |               |                 |   |     |      |  
|----------------------------------- | ----------- | ------------- | --------------- | ------------- | --------------- | - | --- | ---- | -
|                                    |             |               | 12 Months Ended |               | 18 Months ended
|(in millions of US dollars)         |             | June 30, 2002 |                 | June 30, 2001
|                                    |             |               |                 |              
|Assets                              |             |               |                 |               |                 |   |     |     
|                                    | Current     |               | $               | 55            |                 |   | $   | 45   |  
|                                    | Non-current |               |                 | 277           |                 |   |     | 346  |  
|Liabilities                         |             |               |                 |               |                 |   |     |     
|                                    | Current     |               |                 | (48           | )               |   |     | (53  | )
|                                    | Non-current |               |                 | (65           | )               |   |     | (144 | )
|                                    |             |               |                 |               |                 |   |     |     
|Net investment (inclusive of loans) |             | $             | 219             |               |                 | $ | 194 |     
|                                    |             |               |                 |               |                 |   |     |     

10. OTHER ASSETS

|                            |  |               |   |               |  |   |    | 
|--------------------------- |  | ------------- | - | ------------- |  | - | -- | 
|(in millions of US dollars) |  | June 30, 2002 |   | June 30, 2001
|                            |  |               |   |              
|Other investments           |  | $             |  |               |  | $ | 4  | 
|Pension (note 17)           |  |               | 5 |               |  |   | 11 | 
|                            |  |               |   |               |  |   |    | 
|                            |  | $             | 5 |               |  | $ | 15 | 
|                            |  |               |   |               |  |   |    | 

11. SITE RESTORATION AND RELATED OBLIGATIONS

|                                                                                   |  |               |    |               |  |   |    | 
|---------------------------------------------------------------------------------- |  | ------------- | -- | ------------- |  | - | -- | 
|(in millions of US dollars)                                                        |  | June 30, 2002 |    | June 30, 2001
|                                                                                   |  |               |    |              
|Site restoration and related obligations                                           |  | $             | 47 |               |  | $ | 43 | 
|Current portion included in accounts payable
and accrued liabilities               |  |               | 4  |               |  |   | 4  | 
|Exchange variance due to change in
reporting currency (translation of
convenience) |  |               |    |               |  |   | 2  | 
|                                                                                   |  |               |    |               |  |   |    | 
|                                                                                   |  | $             | 51 |               |  | $ | 49 | 
|                                                                                   |  |               |    |               |  |   |    | 

During the year the company spent US$2 million (18 months ended June 30,
2001  US$8 million) and provided US$4 million (18 months ended June 30,
2001  US$4 million) for site restoration and related obligations for
continuing operations.

The above provisions represent the amount accrued to date based on the
companys best estimate of the cost of its planned shutdown and
restoration programs, which it believes meet or exceed existing
requirements at producing, closed and discontinued mining operations.
Future changes, if any, in requirements, laws and regulations and
operating assumptions may be significant and will be recognized if and
when applicable.

12. LONG TERM DEBT

|                                                                                            |  |               |     |               |  |   |     |  
|------------------------------------------------------------------------------------------- |  | ------------- | --- | ------------- |  | - | --- | -
|(in millions of US dollars)                                                                 |  | June 30, 2002 |     | June 30, 2001
|                                                                                            |  |               |     |              
|7.05% US dollar debentures due Nov. 1, 2005 (a)                                             |  | $             | 150 |               |  | $ | 150 |  
|Senior project debt facilities (b)                                                          |  |               | 424 |               |  |   | 370 |  
|                                                                                            |  |               |     |               |  |   |     |  
|                                                                                            |  |               | 574 |               |  |   | 520 |  
|Exchange variance due to change in reporting
currency (translation of convenience) (note 3) |  |               |    |               |  |   | (22 | )
|Less: current portion                                                                       |  |               | (45 | )             |  |   |    |  
|                                                                                            |  |               |     |               |  |   |     |  
|                                                                                            |  | $             | 529 |               |  | $ | 498 |  
|                                                                                            |  |               |     |               |  |   |     |  

15



---



##### 



(a)  In November 1995, the company issued US$150 million of unsecured 7.05%
debentures due November 1, 2005. Costs associated with the issue of the
debentures are being amortized over the term of the debt.

(b)  During 1999, CMA arranged a US$1,320 million project financing for
the Antamina copper-zinc project in Peru. As at June 30, 2002 US$1,255
million has been drawn down (2001: US$1,097 million) (the companys share
is US$424 million; 2001: US$370 million). The average interest margin over
LIBOR or Eurodollar loans, inclusive of political risk insurance premiums
and guarantee fees payable by CMA on the commercial bank portion, is 2.4%
prior to completion, 3.4% from completion to December 31, 2004, 3.7% from
January 1, 2005 to December 31, 2008, and 4.1% from January 1, 2009
onwards. During the drawdown period, CMA will pay commitment fees on the
undisbursed principal amount averaging 0.6% per annum.

Security for the senior debt facilities is governed by a common security
agreement. The agreement provides the senior lenders a security interest
in shares and other securities issued by CMA, substantially all the assets
of CMA, material project agreements, permits and approvals, and
receivables under concentrate sales agreements. The agreement contains
normal covenants and events of default including completion tests, which
must be met by the final completion date of February 29, 2004 (subject to
extension for up to one year for force majeure). In addition, the
company, Noranda, Teck and Mitsubishi have provided the lenders with pro
rata several guarantees during the pre-completion period. Upon meeting
the completion tests, such guarantees will terminate.

The repayment terms of the various tranches of loans vary from 6 1/2 to
10 1/2 years from the commitment termination date, which started in
September 2002. Repayments of loans are due semi-annually, in March and
in September. Certain conditions must be met prior to distributions to
shareholders, including the requirement to make prepayments.

13.   CONVERTIBLE DEBENTURES & EQUITY OFFERING

(a)  On February 4, 1997 the Company arranged a C$500 million financing.
The financing comprised US$222 million (C$353.4 million) of 5.5%
convertible redeemable subordinated debentures due February 1, 2007
evidenced by installment receipts, and 4,417,500 common shares. On or
after February 1, 2002 the company may redeem the debentures at par for
cash or common shares. Each debenture is convertible at the option of the
holder into common shares at a price of C$40 per common share.

(b)  In view of the companys right to redeem the 5.5% debentures through
the issuance of common shares, they are being accounted for as having both
a debt and equity component in accordance with accounting standards of the
Canadian Institute of Chartered Accountants. The liability element of
US$12 million (C$19 million) as at June 30, 2001 represents the present
value of interest payments discounted at the companys normal borrowing
rate until February 1, 2002. Interest expense is determined on the debt
component. Each year a portion of the required semi-annual interest
payment is applied as a reduction of the debt component. Interest expense
for the eighteen months period ended June 30, 2001 amounted to US$2
million.

(c)  The difference between the amount calculated as debt and the US$222
million (C$353.4 million) value of the 5.5% debentures is classified as
equity, net of issue costs and taxes. The equity component of the
debentures was increased over a five-year term to the full face value by
charges to retained earnings. The increase in the carrying value of the
equity component, referred to as the equity accretion, is computed on an
after-tax basis for the purpose of calculating earnings per share.

16



---



##### 



14.   PREFERRED SECURITIES

|                                                                                   |  |               |     |               |  |   |     |  
|---------------------------------------------------------------------------------- |  | ------------- | --- | ------------- |  | - | --- | -
|(in millions of US dollars)                                                        |  | June 30, 2002 |     | June 30, 2001
|                                                                                   |  |               |     |              
|Preferred securities issued                                                        |  | $             | 150 |               |  | $ | 150 |  
|After-tax issue costs                                                              |  |               | (4  | )             |  |   | (4  | )
|Exchange variance due to
change in reporting
currency (translation of
convenience) |  |               | (6  | )             |  |   | (6  | )
|                                                                                   |  |               |     |               |  |   |     |  
|                                                                                   |  | $             | 140 |               |  | $ | 140 |  
|                                                                                   |  |               |     |               |  |   |     |  

On August 7, 1998, the company issued US$150 million of preferred
securities at 93/8%. The preferred securities are due September 30, 2047.
Interest is payable quarterly.

The company, through a trustee, can at its option redeem such securities
on or after August 7, 2003 and has the right to deliver common shares in
lieu of cash as payment for both principal and interest.

The principal amount of the preferred securities, net of after-tax issue
costs of US$4 million (US$6 million pre-tax), has been classified as
equity and the interest payments, on an after-tax basis, are classified as
dividends.

15.   CAPITAL STOCK

|            |  |                      |  |                                                    
|----------- |  | -------------------- |  | ---------------------------------------------------
|Authorized: |  | 16,000,000
Unlimited |  | Preference Shares, issuable in series
Common Shares

|                                     |  |        |            |                 |  |        |     | 
|------------------------------------ |  | ------ | ---------- | --------------- |  | ------ | --- | 
|                                     |  |        |            |                 |  | Amount
|Common Shares issued:                |  | Number |            | (millions $ US)
|                                     |  |        |            |                
|Balance December 31, 1999            |  |        | 60,625,924 |                 |  |        | 308 | 
|Issued under share option plans      |  |        | 4,879,314  |                 |  |        | 60  | 
|Conversion of convertible debentures |  |        | 550        |                 |  |        |    | 
|                                     |  |        |            |                 |  |        |     | 
|Balance June 30, 2002 and 2001       |  |        | 65,505,788 |                 |  |        | 368 | 
|                                     |  |        |            |                 |  |        |     | 

(a)  In calculating basic earnings per share, the net earnings of US$29
million (18 months to June 30, 2001  net earnings of US$17 million) is
decreased by the accretion of the equity element of the convertible
debentures of US$13 million (18 months to June 30, 2001  US$11 million
(net of tax)) and by the dividends on preferred securities of US$14
million, (18 months to June 30, 2001  US$12 million (net of tax)). Basic
earnings per share are calculated using the weighted average number of
common shares outstanding during the year ended June 30, 2002 of 65.5
million (18 months to June 30, 2001  63.0 million).

Fully diluted earnings per share are not being presented as the effect of
the outstanding options is antidilutive.

(b)  Dividends paid per common share were nil in the twelve months period
ended June 30, 2002 and US$0.13 (C$0.21) in the eighteen months ended June
30, 2001.

(c)  Financial covenants could restrict the payment of common share
dividends in certain circumstances.

17



---



##### 



Share Option Plans

Outstanding options on common shares at June 30, 2002 and 2001 under the

various share option plans are as follows:



| | 
| | 
|

|                         |                 |  |           |   |                  |  |          |   |                     |  |          |   |                     |   |          |   |                     |  |         |   |  |   |       |   |  |  |            |         |   |   |       |       | 
|------------------------ | --------------- |  | --------- | - | ---------------- |  | -------- | - | ------------------- |  | -------- | - | ------------------- | - | -------- | - | ------------------- |  | ------- | - |  | - | ----- | - |  |  | ---------- | ------- | - | - | ----- | ----- | 
|                         |                 |  | 1987 Plan |   | 1993 Plan       
|                         |                 |  |           |   |                 
|                         |                 |  | June 30,  |   | Weighted Average |  | June 30, |   | Weighted Average    |  | June 30, |   | Weighted Average    |   | June 30, |   | Weighted Average   
|                         |                 |  | 2002      |   | Exercise Price   |  | 2001     |   | Exercise Price Cdn$ |  | 2002     |   | Exercise Price Cdn$ |   | 2001     |   | Exercise Price Cdn$
|                         |                 |  |           |   |                  |  |          |   |                     |  |          |   |                     |   |          |   |                    
|Outstanding at
beginning |                 |  |          |   |                  |  |         |   |                     |  | 117,700  |   |                     | $ | 16.62    |   |                     |  | 552,400 |   |  | $ | 33.56 |   |  |  | 4,051,186  |         |   | $ | 22.20 |      
|Changes during
period    |                 |  |           |   |                  |  |          |   |                     |  |          |   |                     |   |          |   |                     |  |         |   |  |   |       |   |  |  |            |         |   |   |       |      
|                         | Granted         |  |           |  |                  |  |          |  |                     |  |          |  |                     |   |          |  |                     |  |         |  |  |   |       |  |  |  |            | 931,600 |   |   | $     | 17.82 | 
|                         | Exercised       |  |          |   |                  |  |         |   |                     |  | (117,700 | ) |                     | $ | 16.62    |   |                     |  |        |   |  |   |      |   |  |  | (4,331,086 | )       |   | $ | 19.79 |      
|                         | Expired         |  |           |  |                  |  |          |  |                     |  |          |  |                     |   |          |  |                     |  |         |  |  |   |       |  |  |  |            | (99,300 | ) |   | $     | 24.58 | 
|                         |                 |  |           |   |                  |  |          |   |                     |  |          |   |                     |   |          |   |                     |  |         |   |  |   |       |   |  |  |            |         |   |   |       |      
|Outstanding at end       |                 |  |          |   |                  |  |         |   |                     |  |         |   |                     |   |         |   |                     |  | 552,400 |   |  | $ | 33.56 |   |  |  | 552,400    |         |   | $ | 33.56 |      
|                         |                 |  |           |   |                  |  |          |   |                     |  |          |   |                     |   |          |   |                     |  |         |   |  |   |       |   |  |  |            |         |   |   |       |      
|Exercisable at end       |                 |  |          |   |                  |  |         |   |                     |  |         |   |                     |   |         |   |                     |  | 552,400 |   |  | $ | 33.56 |   |  |  | 552,400    |         |   | $ | 33.56 |      
|                         |                 |  |           |   |                  |  |          |   |                     |  |          |   |                     |   |          |   |                     |  |         |   |  |   |       |   |  |  |            |         |   |   |       |      
|                         | Shares reserved |  |          |   |                  |  |         |   |                     |  |         |   |                     |   |         |   |                     |  | 552,400 |   |  |   |      |   |  |  | 552,400    |         |   |   |      |      
|                         |                 |  |           |   |                  |  |          |   |                     |  |          |   |                     |   |          |   |                     |  |         |   |  |   |       |   |  |  |            |         |   |   |       |      

|                         |                 |  |                      |   |                      |  |          |   |                     |  |          |          |                     |   |          |       |                     |  |         |   |  |   |       |   |  |  |         |          |   |   |       |       | 
|------------------------ | --------------- |  | -------------------- | - | -------------------- |  | -------- | - | ------------------- |  | -------- | -------- | ------------------- | - | -------- | ----- | ------------------- |  | ------- | - |  | - | ----- | - |  |  | ------- | -------- | - | - | ----- | ----- | 
|                         |                 |  | 1993 Directors' Plan |   | 1996 Directors' Plan
|                         |                 |  |                      |   |                     
|                         |                 |  | June 30,             |   | Weighted Average     |  | June 30, |   | Weighted Average    |  | June 30, |          | Weighted Average    |   | June 30, |       | Weighted Average   
|                         |                 |  | 2002                 |   | Exercise Price Cdn$  |  | 2001     |   | Exercise Price Cdn$ |  | 2002     |          | Exercise Price Cdn$ |   | 2001     |       | Exercise Price Cdn$
|                         |                 |  |                      |   |                      |  |          |   |                     |  |          |          |                     |   |          |       |                    
|Outstanding at
beginning |                 |  |                     |   |                      |  |         |   |                     |  | 193,000  |          |                     | $ | 21.17    |       |                     |  | 297,000 |   |  | $ | 30.34 |   |  |  | 417,528 |          |   | $ | 27.52 |      
|Changes during
period    |                 |  |                      |   |                      |  |          |   |                     |  |          |          |                     |   |          |       |                     |  |         |   |  |   |       |   |  |  |         |          |   |   |       |      
|                         | Granted         |  |                      |  |                      |  |          |  |                     |  |          |         |                     |   |          |      |                     |  |         |  |  |   |       |  |  |  |         | 117,000  |   |   | $     | 17.50 | 
|                         | Exercised       |  |                      |  |                      |  |          |  |                     |  |          | (193,000 | )                   |   | $        | 21.17 |                     |  |         |  |  |   |       |  |  |  |         | (237,528 | ) |   | $     | 19.05 | 
|                         | Expired         |  |                      |  |                      |  |          |  |                     |  |          |         |                     |   |          |      |                     |  |         |  |  |   |       |  |  |  |         |         |   |   |       |      | 
|                         |                 |  |                      |   |                      |  |          |   |                     |  |          |          |                     |   |          |       |                     |  |         |   |  |   |       |   |  |  |         |          |   |   |       |      
|Outstanding at end       |                 |  |                     |   |                      |  |         |   |                     |  |         |          |                     |   |         |       |                     |  | 297,000 |   |  | $ | 30.34 |   |  |  | 297,000 |          |   | $ | 30.34 |      
|                         |                 |  |                      |   |                      |  |          |   |                     |  |          |          |                     |   |          |       |                     |  |         |   |  |   |       |   |  |  |         |          |   |   |       |      
|Exercisable at end       |                 |  |                     |   |                      |  |         |   |                     |  |         |          |                     |   |         |       |                     |  | 297,000 |   |  | $ | 30.34 |   |  |  | 297,000 |          |   | $ | 30.34 |      
|                         |                 |  |                      |   |                      |  |          |   |                     |  |          |          |                     |   |          |       |                     |  |         |   |  |   |       |   |  |  |         |          |   |   |       |      
|                         | Shares reserved |  |                     |   |                      |  |         |   |                     |  |         |          |                     |   |         |       |                     |  | 297,000 |   |  |   |      |   |  |  | 297,000 |          |   |   |      |      
|                         |                 |  |                      |   |                      |  |          |   |                     |  |          |          |                     |   |          |       |                     |  |         |   |  |   |       |   |  |  |         |          |   |   |       |      

18



---



##### 



16. CUMULATIVE TRANSLATION ADJUSTMENT

|                                    |  |               |     |               |  |   |    | 
|----------------------------------- |  | ------------- | --- | ------------- |  | - | -- | 
|(in millions of US dollars)         |  | June 30, 2002 |     | June 30, 2001
|                                    |  |               |     |              
|Balance, beginning of year          |  | $             | 47  |               |  | $ | 47 | 
|Increase (decrease) during the year |  |               | 53  |               |  |   |   | 
|                                    |  |               |     |               |  |   |    | 
|Balance, end of year                |  | $             | 100 |               |  | $ | 47 | 
|                                    |  |               |     |               |  |   |    | 

The cumulative translation adjustment represents the net unrealized
foreign currency translation gain on the companys net investment in
self-sustaining Canadian operations. The increase during the year was
primarily a result of the increase in the Canadian dollar exchange rate
from $0.6273 to $0.6658 at June 30, 2002. The comparative figures for
June 2001 were translated from reported Canadian dollars using a rate of
convenience of $0.6273. The rate used was as at December 31, 2001, the end
of the last period for which the Canadian currency was the currency of
measurement and display.

17. POST EMPLOYMENT COSTS

The company has a number of defined benefit plans providing pension,
health, dental and life insurance retirement benefits to substantially all
retired employees who qualify.

Substantially all employees of the company are participants in either a
defined contribution or non-contributory defined benefit pension plan.
Benefits under the defined benefit plans are generally determined by years
of service and employees compensation, the latter being based on the
three highest of the last ten years of employment, or a flat dollar
benefit.

An actuarial valuation is performed at least triennially with intervening
annual reassessments for substantially all defined benefit plans to
determine the present value of the accrued pension benefits. Pension fund
assets are carried at values determined by using a three-year average
between book and market values.

Due to the closure of the Toronto office of Rio Algom Limited, the company
partially wound up the Rio Algom Limited Salaried Employees Pension Plan
effective June 30, 2002. Rio Algom s pension plan, currently in a surplus
position, is presented in the financial statements as a pension asset to a
maximum of the present value of savings in future contributions. As a
result of the reduction in active members, the plan was partially wound up
resulting in an actuarially determined reduction of US$10 million to the
pension asset. A partial wind up report and other supporting documentation
will be filed with the Superintendent of Financial Services in Ontario.
The partial wind up report sets out the financial position of the Plan at
the partial wind up date and the benefit entitlements of members of the
Plan affected by the wind up including any additional benefits or rights
attributable to the partial wind up. The approval of the Superintendent is
required for the payment of benefits to members affected by the partial
wind up.

The obligation for benefits under these plans is determined through
actuarial reports that are based on the following weighted-average
assumptions, which were applicable for the periods shown below:

|                                                         |  |               |     |                               |  |              |     |                               |     |   |     |              |  |  |     |  
|-------------------------------------------------------- |  | ------------- | --- | ----------------------------- |  | ------------ | --- | ----------------------------- | --- | - | --- | ------------ |  |  | --- | -
|                                                         |  | June 30, 2002 |     | June 30, 2001                
|                                                         |  |               |     |                              
|                                                         |  | Corporate     |     | Partially-owned               |  | Corporate    |     | Partially-owned              
|                                                         |  |               |     | partnership
and jointventures |  |              |     | partnership
and jointventures
|                                                         |  |               |     |                               |  |              |     |                              
|Discount rate                                            |  |               | 6.5 | %                             |  |              | 7.0 | %                             |     |   | 6.5 | %            |  |  | 7.3 | %
|Expected long-term
rate of return on
pension plan assets |  |               | 8.0 | %                             |  |              | 7.0 | %                             |     |   | 8.0 | %            |  |  | 7.0 | %
|Rate of compensation
increase                            |  |               | 3.5 | %                             |  | 1.0% to 4.5% |     |                               | 3.5 | % |     | 1.0% to 4.5%

19



---



##### 



|                                                         |  |                     |    |                     |  |     |    |                    |  |                     |     |               |  |  |    |  |  |  |    |   |  |  |    | 
|-------------------------------------------------------- |  | ------------------- | -- | ------------------- |  | --- | -- | ------------------ |  | ------------------- | --- | ------------- |  |  | -- |  |  |  | -- | - |  |  | -- | 
|(in millions of US dollars)                              |  | As at June 30, 2002 |    | As at June 30, 2001
|                                                         |  |                     |    |                    
|                                                         |  | Plans where assets  |    | Plans where benefit |  | Net |    | Plans where assets |  | Plans where benefit |     | Net          
|                                                         |  | exceed benefit      |    | obligations         |  |     |    |                    |  | exceed benefit      |     | obligations   |  |  |    | 
|                                                         |  | obligations         |    | exceed assets       |  |     |    |                    |  | obligations         |     | exceed assets |  |  |    | 
|                                                         |  |                     |    |                     |  |     |    |                    |  |                     |     |               |  |  |    |  | 
|Plan assets                                              |  |                     | 98 |                     |  |     | 7  |                    |  |                     | 105 |               |  |  | 92 |  |  |  | 7  |   |  |  | 99 | 
|Benefit obligations                                      |  |                     | 77 |                     |  |     | 8  |                    |  |                     | 85  |               |  |  | 67 |  |  |  | 9  |   |  |  | 76 | 
|                                                         |  |                     |    |                     |  |     |    |                    |  |                     |     |               |  |  |    |  |  |  |    |   |  |  |    | 
|Excess (deficit) of
plan assets over
benefit obligations |  |                     | 21 |                     |  |     | (1 | )                  |  |                     | 20  |               |  |  | 25 |  |  |  | (2 | ) |  |  | 23 | 
|Net accrued benefit
(liability) asset                    |  |                     | 5  |                     |  |     |   |                    |  |                     | 5   |               |  |  | 12 |  |  |  | (1 | ) |  |  | 11 | 
|                                                         |  |                     |    |                     |  |     |    |                    |  |                     |     |               |  |  |    |  |  |  |    |   |  |  |    | 
|                                                         |  |                     | 16 |                     |  |     | (1 | )                  |  |                     | 15  |               |  |  | 13 |  |  |  | (1 | ) |  |  | 12 | 

|                                          |  |                                  |     |                     |  |                 |    |           |  |                 |     |       |  |                 |     |                |  |  |    |   |  |  |     |  
|----------------------------------------- |  | -------------------------------- | --- | ------------------- |  | --------------- | -- | --------- |  | --------------- | --- | ----- |  | --------------- | --- | -------------- |  |  | -- | - |  |  | --- | -
|                                          |  | For the year ended June 30, 2002
|                                          |  |                                 
|                                          |  | Pension Benefits                 |     | Other Benefit Plans
|                                          |  |                                  |     |                    
|                                          |  | Corporate                        |     | Partially-owned     |  | Total           |    | Corporate |  | Partially-owned |     | Total
|                                          |  |                                  |     |                     |  | partnership and |    |           |  |                 |     |       |  | partnership and |     |                |  | 
|                                          |  |                                  |     |                     |  | joint ventures  |    |           |  |                 |     |       |  |                 |     | joint ventures |  |  |    |  
|                                          |  |                                  |     |                     |  |                 |    |           |  |                 |     |       |  |                 |     |                | 
|Change in benefit
obligations             |  |                                  |     |                     |  |                 |    |           |  |                 |     |       |  |                 |     |                |  |  |    |   |  |  |     |  
|Beginning obligations                     |  |                                  | 55  |                     |  |                 | 21 |           |  |                 | 76  |       |  |                 | 17  |                |  |  | 2  |   |  |  | 19  |  
|Impact of changes in
year end assumptions |  |                                  |    |                     |  |                 | 5  |           |  |                 | 5   |       |  |                 |    |                |  |  |   |   |  |  |    |  
|Current service                           |  |                                  |    |                     |  |                 | 1  |           |  |                 | 1   |       |  |                 |    |                |  |  |   |   |  |  |    |  
|Benefits paid                             |  |                                  | (6  | )                   |  |                 | (1 | )         |  |                 | (7  | )     |  |                 | (2  | )              |  |  |   |   |  |  | (2  | )
|Interest cost on
benefit obligations      |  |                                  | 4   |                     |  |                 | 1  |           |  |                 | 5   |       |  |                 | 1   |                |  |  | 1  |   |  |  | 2   |  
|Other                                     |  |                                  | 3   |                     |  |                 | 2  |           |  |                 | 5   |       |  |                 | 1   |                |  |  |   |   |  |  | 1   |  
|                                          |  |                                  |     |                     |  |                 |    |           |  |                 |     |       |  |                 |     |                |  |  |    |   |  |  |     |  
|Ending obligations                        |  |                                  | 56  |                     |  |                 | 29 |           |  |                 | 85  |       |  |                 | 17  |                |  |  | 3  |   |  |  | 20  |  
|                                          |  |                                  |     |                     |  |                 |    |           |  |                 |     |       |  |                 |     |                |  |  |    |   |  |  |     |  
|Change in plan assets                     |  |                                  |     |                     |  |                 |    |           |  |                 |     |       |  |                 |     |                |  |  |    |   |  |  |     |  
|Beginning fair value
of assets            |  |                                  | 74  |                     |  |                 | 25 |           |  |                 | 99  |       |  |                 |     |                |  |  |    |   |  |  |     |  
|Recognition of fund
assets                |  |                                  | (1  | )                   |  |                 |   |           |  |                 | (1  | )     |  |                 |     |                |  |  |    |   |  |  |     |  
|Employer contributions                    |  |                                  | 1   |                     |  |                 | 2  |           |  |                 | 3   |       |  |                 |     |                |  |  |    |   |  |  |     |  
|Benefits paid                             |  |                                  | (6  | )                   |  |                 | (1 | )         |  |                 | (7  | )     |  |                 |     |                |  |  |    |   |  |  |     |  
|Return on plan assets                     |  |                                  | 5   |                     |  |                 |   |           |  |                 | 5   |       |  |                 |     |                |  |  |    |   |  |  |     |  
|Other                                     |  |                                  | 4   |                     |  |                 | 2  |           |  |                 | 6   |       |  |                 |     |                |  |  |    |   |  |  |     |  
|                                          |  |                                  |     |                     |  |                 |    |           |  |                 |     |      
|Ending fair value of
assets               |  |                                  | 77  |                     |  |                 | 28 |           |  |                 | 105 |       |  |                 |     |                |  |  |    |   |  |  |     |  
|                                          |  |                                  |     |                     |  |                 |    |           |  |                 |     |       |  |                 |     |                |  |  |    |   |  |  |     |  
|Ending Surplus
(deficit)                  |  |                                  | 21  |                     |  |                 | (1 | )         |  |                 | 20  |       |  |                 | (17 | )              |  |  | (3 | ) |  |  | (20 | )
|Valuation allowance                       |  |                                  | (19 | )                   |  |                 |   |           |  |                 | (19 | )     |  |                 |    |                |  |  |   |   |  |  |    |  
|                                          |  |                                  |     |                     |  |                 |    |           |  |                 |     |       |  |                 |     |                |  |  |    |   |  |  |     |  
|Accrued benefit
(liability) asset         |  |                                  | 2   |                     |  |                 | (1 | )         |  |                 | 1   |       |  |                 | (17 | )              |  |  | (3 | ) |  |  | (20 | )
|Unamortized actuarial
(gains) losses      |  |                                  |    |                     |  |                 | 4  |           |  |                 | 4   |       |  |                 |    |                |  |  |   |   |  |  |    |  
|                                          |  |                                  |     |                     |  |                 |    |           |  |                 |     |       |  |                 |     |                |  |  |    |   |  |  |     |  
|Net accrued benefit
(liability) asset     |  |                                  | 2   |                     |  |                 | 3  |           |  |                 | 5   |       |  |                 | (17 | )              |  |  | (3 | ) |  |  | (20 | )
|                                          |  |                                  |     |                     |  |                 |    |           |  |                 |     |       |  |                 |     |                |  |  |    |   |  |  |     |  

The companys post-employment benefit expense for the year ended June 30,
2002 included the following components:

20



---



##### 



|                                                  |  |                  |    |                     |  |                 |    |           |  |                 |    |       |  |  |   |                 |  |  |   |  |  |  |   | 
|------------------------------------------------- |  | ---------------- | -- | ------------------- |  | --------------- | -- | --------- |  | --------------- | -- | ----- |  |  | - | --------------- |  |  | - |  |  |  | - | 
|                                                  |  | Pension Benefits |    | Other Benefit Plans
|                                                  |  |                  |    |                    
|                                                  |  | Corporate        |    | Partially-owned     |  | Total           |    | Corporate |  | Partially-owned |    | Total
|                                                  |  |                  |    |                     |  | partnership and |    |           |  |                 |    |       |  |  |   | partnership and |  |  |   | 
|                                                  |  |                  |    |                     |  | joint ventures  |    |           |  |                 |    |       |  |  |   | joint ventures  |  |  |   | 
|                                                  |  |                  |    |                     |  |                 |    |           |  |                 |    |      
|Current service                                   |  |                  |   |                     |  |                 | 1  |           |  |                 | 1  |       |  |  |  |                 |  |  |  |  |  |  |  | 
|Interest cost on
benefit obligations              |  |                  | 4  |                     |  |                 | 1  |           |  |                 | 5  |       |  |  | 1 |                 |  |  |  |  |  |  | 1 | 
|Expected return on
plan assets                    |  |                  | (5 | )                   |  |                 |   |           |  |                 | (5 | )     |  |  |  |                 |  |  |  |  |  |  |  | 
|Actuarially
determined
reduction in
pension asset |  |                  | 10 |                     |  |                 |   |           |  |                 | 10 |       |  |  |   |                 |  |  |   |  |  |  |   | 
|Other                                             |  |                  | 1  |                     |  |                 | (1 | )         |  |                 |   |       |  |  |  |                 |  |  |  |  |  |  |  | 
|                                                  |  |                  |    |                     |  |                 |    |           |  |                 |    |       |  |  |   |                 |  |  |   |  |  |  |   | 
|Total expense                                     |  |                  | 10 |                     |  |                 | 1  |           |  |                 | 11 |       |  |  | 1 |                 |  |  |  |  |  |  | 1 | 
|                                                  |  |                  |    |                     |  |                 |    |           |  |                 |    |       |  |  |   |                 |  |  |   |  |  |  |   | 

18. COMMITMENTS AND CONTINGENCIES

(a)  In September 1998, the company, along with partners Noranda and Teck,
elected to proceed with the development of the Antamina property. In
connection with this election, they have made an investment commitment of
US$2.52 billion. Since at June 6, 2002 the actual investment was less
than the investment commitment, US$111.5 million or 30% of the shortfall
is payable by CMA to Centromin (a mining company owned by the Peruvian
government) in lieu of further expenditures. Rios share of the shortfall
payable is included on the balance sheet under accounts payable and
accrued liabilities.

The company has provided a several guarantee of its 33.75% share of
Antaminas senior debt, which amounts to US$424 million at June 30, 2002
(June 30, 2001  US$370). The guarantee will increase to a maximum of
US$445 as Antamina draws fully on its senior debt facilities. Following
satisfaction of a number of pre-agreed completion tests expected to occur
between 2002 and February 2004, the guarantee will terminate.

The Antamina copper-zinc project commenced commercial production on
October 1, 2001. CMA has entered into concentrate sales agreements for a
significant portion of its future production with various counterparties
including an affiliate.

(b)  The estimated total cost to complete approved capital projects as at
June 30, 2002 was US$14 million (committed US$3 million).

(c)  In 1997, Minera Alumbrera Limited obtained a US$670 million project
financing facility of which US$660 million was ultimately drawn down. As
at June 30, 2002 US$358 million was outstanding
(June 30, 2001  US$434
million). During 1999, Minera Alumbrera Limited satisfied the completion
tests under the project financing and as a result, the companys several
guarantee of 25% of the project debt has terminated. Minera Alumbrera
Limited has a non-revolving VAT letter of credit for up to US$213 million,
which the company has unconditionally severally guaranteed to the extent
of 25%. Guaranties of ARS 38 million (Argentine Pesos) were not yet
renewed at June 30, 2002. Furthermore, Minera Alumbrera Limited has a
US$20 million working capital facility, which the company has
unconditionally severally guaranteed to the extent of 25%. At June 30,
2002, no amount was outstanding under the working capital facility.

(d)  Rio Algom Limited has been named in an application brought in the
Ontario Superior Court of Justice by certain holders of its 5.5%
Convertible Debentures against Rio Algom, certain of its directors and
officers, Billiton Plc, its directors and Billiton Copper Holding Inc. The
application relates to the successful takeover of Rio Algom by Billiton
Plc in October 2000 and involves, among other things, the assertion by the
applicants that they were oppressed or their interests unfairly
disregarded in that takeover. The applicants, who hold C$30,265,000 or
approximately 8.5% of the outstanding Debentures, seek, among other
things, a court order requiring Rio Algom to repurchase or redeem the
Debentures held by the

21



---



##### 



applicants at a premium over par value. The Debentures, which are listed
on the Toronto Stock Exchange, were issued in February 1997 for a 10-year
term maturing on February 1, 2007 and are redeemable at par by Rio Algom
on or after February 1, 2002. On August 22, 2002 the claim against Rio and
its current and former directors was dismissed. The applicants have filed
a Notice of Appeal with respect to that dismissal.

19. DEPRECIATION AND AMORTIZATION

|                              |  |                 |    |                 |  |   |    | 
|----------------------------- |  | --------------- | -- | --------------- |  | - | -- | 
|                              |  | 12 Months Ended |    | 18 Months Ended
|(in millions of US dollars)   |  | June 30, 2002   |    | June 30, 2001  
|                              |  |                 |    |                
|Plant machinery and equipment |  | $               | 74 |                 |  | $ | 61 | 
|Mining properties             |  |                 | 19 |                 |  |   | 29 | 
|Other                         |  |                 |   |                 |  |   | 1  | 
|                              |  |                 |    |                 |  |   |    | 
|                              |  | $               | 93 |                 |  | $ | 91 | 
|                              |  |                 |    |                 |  |   |    | 

20. INTEREST EXPENSE

|                                   |  |                 |    |                 |  |   |    | 
|---------------------------------- |  | --------------- | -- | --------------- |  | - | -- | 
|                                   |  | 12 Months Ended |    | 18 Months Ended
|(in millions of US dollars)        |  | June 30, 2002   |    | June 30, 2001  
|                                   |  |                 |    |                
|Interest on demand loans and other |  | $               | 1  |                 |  | $ | 1  | 
|Interest on long term debt         |  |                 | 25 |                 |  |   | 15 | 
|Interest on convertible debentures |  |                 |   |                 |  |   | 2  | 
|                                   |  |                 |    |                 |  |   |    | 
|                                   |  | $               | 26 |                 |  | $ | 18 | 
|                                   |  |                 |    |                 |  |   |    | 

|              |  |               |    |               |  |   |    | 
|------------- |  | ------------- | -- | ------------- |  | - | -- | 
|              |  | June 30, 2002 |    | June 30, 2001
|              |  |               |    |              
|Interest paid |  | $             | 27 |               |  | $ | 18 | 
|              |  |               |    |               |  |   |    | 

21. INCOME AND MINING TAXES

a) Earnings (loss) before taxes:
Earnings (loss) before taxes, equity in net earnings (loss) of associated
company and discontinued operations consist of:

|                            |  |                 |    |                 |  |   |     |  
|--------------------------- |  | --------------- | -- | --------------- |  | - | --- | -
|                            |  | 12 Months Ended |    | 18 Months Ended
|(in millions of US dollars) |  | June 30, 2002   |    | June 30, 2001  
|                            |  |                 |    |                
|Canada                      |  | $               | (9 | )               |  | $ | (56 | )
|United States               |  |                 |   |                 |  |   | (7  | )
|Chile                       |  |                 | 54 |                 |  |   | 89  |  
|Other                       |  |                 | 10 |                 |  |   | (3  | )
|                            |  |                 |    |                 |  |   |     |  
|                            |  | $               | 55 |                 |  | $ | 23  |  
|                            |  |                 |    |                 |  |   |     |  

b) Provision for income and mining taxes
Income and mining taxes recovery (provision) of continuing operations
consist of:

|                            |               |               |                 |               |                 |  |   |    |  
|--------------------------- | ------------- | ------------- | --------------- | ------------- | --------------- |  | - | -- | -
|                            |               |               | 12 Months Ended |               | 18 Months Ended
|(in millions of US dollars) |               | June 30, 2002 |                 | June 30, 2001
|                            |               |               |                 |              
|Current                     |               |               |                 |               |                 |  |   |   
|                            | Canadian      |               | $               | (3            | )               |  | $ | (2 | )
|                            | United States |               |                 |              |                 |  |   | 3  |  
|                            |               |               |                 |               |                 |  |   |    |  
|                            |               |               | (3              | )             |                 |  | 1 |   
|                            |               |               |                 |               |                 |  |   |   

22



---



##### 



|                                                   |               |               |                 |               |                 |   |     |     |  
|-------------------------------------------------- | ------------- | ------------- | --------------- | ------------- | --------------- | - | --- | --- | -
|                                                   |               |               | 12 Months Ended |               | 18 Months Ended
|(in millions of US dollars)                        |               | June 30, 2002 |                 | June 30, 2001
|                                                   |               |               |                 |              
|Future                                             |               |               |                 |               |                 |   |     |    
|                                                   | Canadian      |               |                 | (16           | )               |   |     | (7  | )
|                                                   | United States |               |                 |              |                 |   |     | 1   |  
|                                                   | Chile         |               |                 | (20           | )               |   |     | (31 | )
|                                                   |               |               |                 |               |                 |   |     |    
|                                                   |               |               | (36             | )             |                 |   | (37 | )  
|                                                   |               |               |                 |               |                 |   |     |    
|Total income and mining taxes (provision) recovery |               | $             | (39             | )             |                 | $ | (36 | )  
|                                                   |               |               |                 |               |                 |   |     |    

|                                                                       |  |               |     |               |  |   |    | 
|---------------------------------------------------------------------- |  | ------------- | --- | ------------- |  | - | -- | 
|(in millions of US dollars)                                            |  | June 30, 2002 |     | June 30, 2001
|                                                                       |  |               |     |              
|Income and mining taxes (recovered) paid by
continuing operations, net |  | $             | (15 | )             |  | $ | 16 | 
|                                                                       |  |               |     |               |  |   |    | 

The recovery of (provision for) income taxes differs from the amount that
would have resulted by applying Canadian federal and weighted average
provincial statutory tax rates of 43.4% for the year ended June 30, 2002
(June 30, 2001  44.9%) as follows:

|                                                                                        |                                   |               |                 |               |                 |   |     |     |  
|--------------------------------------------------------------------------------------- | --------------------------------- | ------------- | --------------- | ------------- | --------------- | - | --- | --- | -
|                                                                                        |                                   |               | 12 Months Ended |               | 18 Months Ended
|(in millions of US dollars)                                                             |                                   | June 30, 2002 |                 | June 30, 2001
|                                                                                        |                                   |               |                 |              
|Income and mining taxes (provision)
recovery at the Statutory rate                      |                                   | $             | (24             | )             |                 | $ | (10 | )  
|Tax effect of:                                                                          |                                   |               |                 |               |                 |   |     |    
|                                                                                        | Unrecognized operating losses     |               |                 |              |                 |   |     | (12 | )
|                                                                                        | Valuation allowance               |               |                 | (19           | )               |   |     | (18 | )
|                                                                                        | Lower effective foreign tax rates |               |                 | 3             |                 |   |     | 4   |  
|                                                                                        | Other                             |               |                 | 1             |                 |   |     |    |  
|                                                                                        |                                   |               |                 |               |                 |   |     |    
|Income and mining taxes (provision)
recovery in the consolidated
statements of earnings |                                   | $             | (39             | )             |                 | $ | (36 | )  
|                                                                                        |                                   |               |                 |               |                 |   |     |    

c) Future income and mining taxes:
The components of future taxes are as follows:

|                                    |                                                  |               |     |               |   |   |     |     |  
|----------------------------------- | ------------------------------------------------ | ------------- | --- | ------------- | - | - | --- | --- | -
|(in millions of US dollars)         |                                                  | June 30, 2002 |     | June 30, 2001
|                                    |                                                  |               |     |              
|Current future tax assets:          |                                                  |               |     |               |   |   |     |    
|                                    | Site restoration and related obligations         |               | $   | 1             |   |   | $   | 2   |  
|                                    | Other                                            |               |     | 5             |   |   |     | 8   |  
|                                    | Valuation allowance                              |               |     | (6            | ) |   |     |    |  
|                                    |                                                  |               |     |               |   |   |     |    
|                                    |                                                  |               |    |               |   |   | 10  |    
|                                    |                                                  |               |     |               |   |   |     |    
|Non current future tax assets:      |                                                  |               |     |               |   |   |     |    
|                                    | Post-employment benefit obligations              |               |     | 5             |   |   |     | 3   |  
|                                    | Property, plant and equipment                    |               |     | (11           | ) |   |     | (13 | )
|                                    | Mining properties                                |               |     | (5            | ) |   |     | (8  | )
|                                    | Site restoration and related obligations         |               |     | 16            |   |   |     | 15  |  
|                                    | Non-capital losses                               |               |     | 46            |   |   |     | 61  |  
|                                    | Foreign exploration and development expense pool |               |     | 10            |   |   |     | 10  |  
|                                    | Other                                            |               |     |              |   |   |     | (2  | )
|                                    | Valuation allowance                              |               |     | (38           | ) |   |     | (18 | )
|                                    |                                                  |               |     |               |   |   |     |    
|                                    |                                                  |               | 23  |               |   |   | 48  |    
|                                    |                                                  |               |     |               |   |   |     |    
|Non current future tax liabilities: |                                                  |               |     |               |   |   |     |    
|                                    | Property, plant and equipment                    |               |     | 99            |   |   |     | 89  |  
|                                    | Mining properties                                |               |     | 39            |   |   |     | 41  |  
|                                    | Site restoration and related obligations         |               |     | (2            | ) |   |     | (1  | )
|                                    | Other                                            |               |     |              |   |   |     | 1   |  
|                                    |                                                  |               |     |               |   |   |     |    
|                                    |                                                  | $             | 136 |               |   | $ | 130 |    
|                                    |                                                  |               |     |               |   |   |     |    

23



---



##### 



d) Tax loss carry-forwards:

The company has realized non-capital losses of approximately US$60 million
for Canadian income tax purposes of which only approximately US$29.5
million are available to offset future taxable income, however, no tax
benefit has been recognized for financial statement purposes. Such portion
of the losses expire as follows:

|       |  |                |  | 
|------ |  | -------------- |  | 
|2007 : |  | US$8.5 million
|2009 : |  | US$21 million 

In addition, subsidiaries of the company have loss carry-forwards of US$60
million available to reduce future Chilean taxable income. These losses
could be carried forward indefinitely and the benefit has been recognized
in the accounts.

22. FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying values for all financial instruments approximate fair values
except for the following:

|                                                   |  |                            |     |      |                |      |            |      |    |   |     |   |    |   |     |   |    |   | 
|-------------------------------------------------- |  | -------------------------- | --- | ---- | -------------- | ---- | ---------- | ---- | -- | - | --- | - | -- | - | --- | - | -- | - | 
|                                                   |  |                            |     |      | Carrying Value |      | Fair Value
|                                                   |  |                            |     |      |                |      |           
|(in millions of US dollars)                        |  | 2002                       |     | 2001 |                | 2002 |            | 2001
|                                                   |  |                            |     |      |                |      |            |     
|Derivatives                                        |  |                            |     |      |                |      |            |      |    |   |     |   |    |   |     |  
|                                                   |  | Copper put options         |     | $    |               |      |            | $    | 5  |   |     | $ |   |   |     | $ | 9  |  
|                                                   |  | Copper call options        |     | $    |               |      |            | $    | (2 | ) |     | $ |   |   |     | $ |   |  
|                                                   |  | Forward currency contracts |     | $    |               |      |            | $    |   |   |     | $ | (2 | ) |     | $ | (6 | )
|                                                   |  | Other investments          |     | $    |               |      |            | $    | 4  |   |     | $ |   |   |     | $ | 4  |  
|Financial liabilities                              |  |                            |     |      |                |      |            |      |    |   |     |   |    |   |     |  
|7.05% Debentures due November 1, 2005              |  | $                          | 150 |      |                | $    | 150        |      |    | $ | 154 |   |    | $ | 146 |  
|5.5% Convertible Debentures                        |  | $                          | 222 |      |                | $    | 226        |      |    | $ | 240 |   |    | $ | 234 |  
|9.3/8% Preferred Securities due
September 30, 2047 |  | $                          | 150 |      |                | $    | 150        |      |    | $ | 148 |   |    | $ | 146 |  

The fair value of the derivatives and financial liabilities is based on
market prices at June 30, 2002 and 2001.

The carrying amounts of cash, short term investments, receivables, bank
loans and overdrafts and accounts payable and accrued liabilities in the
consolidated balance sheets approximate fair value due to the short term
maturities of these instruments.

Fair value estimates are made at a specific point in time, based on
relevant market information and information about the financial
instrument. These estimates are subjective in nature and involve
uncertainties and matters of significant judgement and therefore cannot be
determined with precision. Changes in assumptions could significantly
affect the estimates.

The company hedged its exposure to changes in copper prices using put
options and collars. The collars represent a purchased put and written
call for the same quantity of copper and maturing on the same date. The
purpose of the written call is to subsidize the cost of the put. The
company designates these hedging instruments as being in respect of
specific future production. The copper options expired in July 2002 and
were not renewed.

At June 30, 2002, the company had outstanding forward currency contracts
to sell US$30 million at an average exchange rate to Canadian dollars of
$1.42. The purpose of the companys hedging activities was to reduce the
risk that the eventual US dollar cash flows used to fund Canadian
production costs would be

24



---



##### 



adversely affected by an appreciation of the Canadian dollar. For example,
Highland Valley Copper produces commodities that are sold in US dollars;
however, the costs of production are predominantly in Canadian dollars.
The company has not engaged in any significant foreign currency derivative
activities that have not been specifically identified as hedges.

Realization under these hedge contracts is dependent upon the ability of
the counterparties to perform in accordance with the terms of the
contracts; however, the companys credit risk is limited to unrealized
gains existing at any time. The company manages credit risk by only
dealing with major financial institutions that meet its credit rating
standards; by limiting arrangements outstanding with individual
counterparties; and by entering into master netting agreements which
incorporate the right of setoff and provide for the net settlement of
contracts with the same counterparty in the event of default or other
cancellation under the agreement.

23.  SEGMENT DISCLOSURES

The operations of the company are grouped into operating and geographic
segments according to the basis upon which senior management evaluates the
operations.

Operating Segments

Cerro Colorado (Cerro)

| |  | Mining and processing of copper ore into cathode copper in Chile
|- |  | ----------------------------------------------------------------

Highland Valley Copper (HVC)

| |  | Partnership interest in mining and milling of copper-molybdenum ore in Canada
|- |  | -----------------------------------------------------------------------------

Compania Minera Antamia (CMA)

| |  | Joint venture interest in mining and milling of copper-zinc ore in Peru
|- |  | -----------------------------------------------------------------------

Other Mining
Bullmoose joint venture interest in mining and treatment of metallurgical
coal in Canada and a royalty interest in the Polaris zinc-lead mine in
Canada

Corporate, Development and Exploration
Corporate expenses, exploration through offices in North and South
America, development projects in Chile (Spence) and an investment in
Minera Alumbrera Limited, a copper-gold mine in northwest Argentina.

25



---



##### 



SEGMENTED DISCLOSURE(in millions of US dollars)

|                                                                                      |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  |     |   |  |  |      |   |  |  |     |   |  |  |     |  
|------------------------------------------------------------------------------------- |  | ------------ | --- | --------------- |  | -------- | --- | ------------ |  | ----------- | -- | -------- |  | ---- | --- | --------------- |  | ---- | --- | ---- |  | ---------- | --- | ---- |  |  | -- |  |  |  | -- |  |  |  | --- | - |  |  | ---- | - |  |  | --- | - |  |  | --- | -
|                                                                                      |  | Compania     |     |                 |  |          |     |              |  |             |    | Compania |  |      |     |                 |  |      |     |      |  | Corporate, |     |      |  |  |    |  |  | 
|                                                                                      |  | Minera Cerro |     | Highland Valley |  | Minera   |     |              |  |             |    |          |  |      |     | Development and |  |      |     |      |  |            |     |     
|                                                                                      |  | Colorado     |     | Copper          |  | Antamina |     | Other Mining |  | Exploration |    | Total   
|                                                                                      |  |              |     |                 |  |          |     |              |  |             |    |         
|                                                                                      |  | 2002         |     | 2001            |  | 2002     |     | 2001         |  | 2002        |    | 2001     |  | 2002 |     | 2001            |  | 2002 |     | 2001 |  | 2002       |     | 2001
|                                                                                      |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |     
|Segmented Earnings                                                                    |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  |     |   |  |  |      |   |  |  |     |   |  |  |     |  
|For the twelve Months Ended June 30, 2002 and the eighteen Months Ended June 30, 2001
|Revenue                                                                               |  |              | 208 |                 |  |          | 299 |              |  |             | 75 |          |  |      | 110 |                 |  |      | 119 |      |  |            |    |      |  |  | 29 |  |  |  | 36 |  |  |  |    |   |  |  |     |   |  |  | 431 |   |  |  | 445 |  
|Cost of operations                                                                    |  |              | 107 |                 |  |          | 151 |              |  |             | 58 |          |  |      | 73  |                 |  |      | 66  |      |  |            |    |      |  |  | 18 |  |  |  | 23 |  |  |  |    |   |  |  |     |   |  |  | 249 |   |  |  | 247 |  
|Depreciation and amortization                                                         |  |              | 46  |                 |  |          | 62  |              |  |             | 13 |          |  |      | 18  |                 |  |      | 29  |      |  |            |    |      |  |  | 4  |  |  |  | 8  |  |  |  |    |   |  |  |     |   |  |  | 92  |   |  |  | 88  |  
|                                                                                      |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  |     |   |  |  |      |   |  |  |     |   |  |  |     |  
|Segment profit                                                                        |  |              | 55  |                 |  |          | 86  |              |  |             | 4  |          |  |      | 19  |                 |  |      | 24  |      |  |            |    |      |  |  | 7  |  |  |  | 5  |  |  |  |    |   |  |  |     |   |  |  | 90  |   |  |  | 110 |  
|                                                                                      |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  |     |   |  |  |      |   |  |  |     |   |  |  |     |  
|Corporate expenses                                                                    |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  | (26 | ) |  |  | (30  | ) |  |  | (26 | ) |  |  | (30 | )
|Interest expense                                                                      |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  | (26 | ) |  |  | (18  | ) |  |  | (26 | ) |  |  | (18 | )
|Exploration                                                                           |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  | (4  | ) |  |  | (20  | ) |  |  | (4  | ) |  |  | (20 | )
|Transaction costs                                                                     |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  |    |   |  |  | (38  | ) |  |  |    |   |  |  | (38 | )
|Investment and other income                                                           |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  | 21  |   |  |  | 19   |   |  |  | 21  |   |  |  | 19  |  
|Income and mining taxes                                                               |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  | (39 | ) |  |  | (36  | ) |  |  | (39 | ) |  |  | (36 | )
|                                                                                      |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  |     |   |  |  |      |   |  |  |     |   |  |  |     |  
|                                                                                      |  |              | 55  |                 |  |          | 86  |              |  |             | 4  |          |  |      | 19  |                 |  |      | 24  |      |  |            |    |      |  |  | 7  |  |  |  | 5  |  |  |  | (74 | ) |  |  | (123 | ) |  |  | 16  |   |  |  | (13 | )
|Associated company:                                                                   |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  |     |   |  |  |      |   |  |  |     |   |  |  |     |  
|Equity in net earnings                                                                |  |              |    |                 |  |          |    |              |  |             |   |          |  |      |    |                 |  |      |    |      |  |            |    |      |  |  |   |  |  |  |   |  |  |  | 13  |   |  |  | 7    |   |  |  | 13  |   |  |  | 7   |  
|                                                                                      |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  |     |   |  |  |      |   |  |  |     |   |  |  |     |  
|Earnings (loss) from continuing
operations                                            |  |              | 55  |                 |  |          | 86  |              |  |             | 4  |          |  |      | 19  |                 |  |      | 24  |      |  |            |    |      |  |  | 7  |  |  |  | 5  |  |  |  | (61 | ) |  |  | (116 | ) |  |  | 29  |   |  |  | (6  | )
|                                                                                      |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  |     |   |  |  |      |   |  |  |     |   |  |  |     |  
|Segmented Cash Flow                                                                   |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  |     |   |  |  |      |   |  |  |     |   |  |  |     |  
|For the twelve Months Ended June 30, 2002 and the eighteen Months Ended June 30, 2001
|Operating activities                                                                  |  |              | 103 |                 |  |          | 165 |              |  |             | 17 |          |  |      | 46  |                 |  |      | 35  |      |  |            |    |      |  |  | 4  |  |  |  | 19 |  |  |  | (4  | ) |  |  | (207 | ) |  |  | 155 |   |  |  | 23  |  
|                                                                                      |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  |     |   |  |  |      |   |  |  |     |   |  |  |     |  
|Capital expenditures                                                                  |  |              | 44  |                 |  |          | 7   |              |  |             | 3  |          |  |      | 9   |                 |  |      | 78  |      |  |            | 352 |      |  |  |   |  |  |  |   |  |  |  | (11 | ) |  |  | 6    |   |  |  | 114 |   |  |  | 374 |  
|                                                                                      |  |              |     |                 |  |          |     |              |  |             |    |          |  |      |     |                 |  |      |     |      |  |            |     |      |  |  |    |  |  |  |    |  |  |  |     |   |  |  |      |   |  |  |     |   |  |  |     |  

Segmented Balance SheetsAs at June 30, 2002 and 2001

|                                   |  |              |     |                 |  |          |     |              |  |             |    |          |  |  |     |                 |  |  |     |  |  |            |     |  |  |  |    |  |  |  |    |  |  |  |     |  |  |  |     |  |  |  |       |  |  |  |       | 
|---------------------------------- |  | ------------ | --- | --------------- |  | -------- | --- | ------------ |  | ----------- | -- | -------- |  |  | --- | --------------- |  |  | --- |  |  | ---------- | --- |  |  |  | -- |  |  |  | -- |  |  |  | --- |  |  |  | --- |  |  |  | ----- |  |  |  | ----- | 
|                                   |  | Compania     |     |                 |  |          |     |              |  |             |    | Compania |  |  |     |                 |  |  |     |  |  | Corporate, |     |  |  |  |    |  |  | 
|                                   |  | Minera Cerro |     | Highland Valley |  | Minera   |     |              |  |             |    |          |  |  |     | Development and |  |  |     |  |  |            |     | 
|                                   |  | Colorado     |     | Copper          |  | Antamina |     | Other Mining |  | Exploration |    | Total   
|                                   |  |              |     |                 |  |          |     |              |  |             |    |         
|Assets                             |  |              |     |                 |  |          |     |              |  |             |    |          |  |  |     |                 |  |  |     |  |  |            |     |  |  |  |    |  |  |  |    |  |  |  |     |  |  |  |     |  |  |  |       |  |  |  |       | 
|Current assets                     |  |              | 174 |                 |  |          | 110 |              |  |             | 29 |          |  |  | 26  |                 |  |  | 100 |  |  |            | 38  |  |  |  | 13 |  |  |  | 6  |  |  |  | 46  |  |  |  | 48  |  |  |  | 362   |  |  |  | 228   | 
|Fixed assets and mining properties |  |              | 415 |                 |  |          | 400 |              |  |             | 66 |          |  |  | 74  |                 |  |  | 689 |  |  |            | 642 |  |  |  | 1  |  |  |  | 5  |  |  |  | 48  |  |  |  | 55  |  |  |  | 1,219 |  |  |  | 1,176 | 
|Investment                         |  |              |    |                 |  |          |    |              |  |             |   |          |  |  |    |                 |  |  |    |  |  |            |    |  |  |  |   |  |  |  |   |  |  |  | 219 |  |  |  | 194 |  |  |  | 219   |  |  |  | 194   | 
|Other assets                       |  |              | 14  |                 |  |          | 31  |              |  |             | 3  |          |  |  |    |                 |  |  |    |  |  |            |    |  |  |  |   |  |  |  |   |  |  |  | 258 |  |  |  | 325 |  |  |  | 275   |  |  |  | 356   | 
|                                   |  |              |     |                 |  |          |     |              |  |             |    |          |  |  |     |                 |  |  |     |  |  |            |     |  |  |  |    |  |  |  |    |  |  |  |     |  |  |  |     |  |  |  |       |  |  |  |       | 
|Total assets                       |  |              | 603 |                 |  |          | 541 |              |  |             | 98 |          |  |  | 100 |                 |  |  | 789 |  |  |            | 680 |  |  |  | 14 |  |  |  | 11 |  |  |  | 571 |  |  |  | 622 |  |  |  | 2,075 |  |  |  | 1,954 | 
|                                   |  |              |     |                 |  |          |     |              |  |             |    |          |  |  |     |                 |  |  |     |  |  |            |     |  |  |  |    |  |  |  |    |  |  |  |     |  |  |  |     |  |  |  |       |  |  |  |       | 
|Liabilities                        |  |              |     |                 |  |          |     |              |  |             |    |          |  |  |     |                 |  |  |     |  |  |            |     |  |  |  |    |  |  |  |    |  |  |  |     |  |  |  |     |  |  |  |       |  |  |  |       | 
|Current liabilities                |  |              | 15  |                 |  |          | 17  |              |  |             | 17 |          |  |  | 18  |                 |  |  | 109 |  |  |            | 80  |  |  |  | 2  |  |  |  | 2  |  |  |  | 47  |  |  |  | 57  |  |  |  | 190   |  |  |  | 174   | 
|Long term liabilities              |  |              | 134 |                 |  |          | 126 |              |  |             | 8  |          |  |  | 6   |                 |  |  | 379 |  |  |            | 354 |  |  |  | 8  |  |  |  | 7  |  |  |  | 203 |  |  |  | 197 |  |  |  | 732   |  |  |  | 690   | 
|                                   |  |              |     |                 |  |          |     |              |  |             |    |          |  |  |     |                 |  |  |     |  |  |            |     |  |  |  |    |  |  |  |    |  |  |  |     |  |  |  |     |  |  |  |       |  |  |  |       | 
|Total liabilities                  |  |              | 149 |                 |  |          | 143 |              |  |             | 25 |          |  |  | 24  |                 |  |  | 488 |  |  |            | 434 |  |  |  | 10 |  |  |  | 9  |  |  |  | 250 |  |  |  | 254 |  |  |  | 922   |  |  |  | 864   | 
|                                   |  |              |     |                 |  |          |     |              |  |             |    |          |  |  |     |                 |  |  |     |  |  |            |     |  |  |  |    |  |  |  |    |  |  |  |     |  |  |  |     |  |  |  |       |  |  |  |       | 
|Net assets                         |  |              | 454 |                 |  |          | 398 |              |  |             | 73 |          |  |  | 76  |                 |  |  | 301 |  |  |            | 246 |  |  |  | 4  |  |  |  | 2  |  |  |  | 321 |  |  |  | 368 |  |  |  | 1,153 |  |  |  | 1,090 | 
|                                   |  |              |     |                 |  |          |     |              |  |             |    |          |  |  |     |                 |  |  |     |  |  |            |     |  |  |  |    |  |  |  |    |  |  |  |     |  |  |  |     |  |  |  |       |  |  |  |       | 

Geographic Data

|                                                                                      |  |        |     |       |  |           |     |      |  |       |     |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  |       |  |  |  |       | 
|------------------------------------------------------------------------------------- |  | ------ | --- | ----- |  | --------- | --- | ---- |  | ----- | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | --- |  |  |  | ----- |  |  |  | ----- | 
|                                                                                      |  | Canada |     | Chile |  | Argentina |     | Peru |  | Total
|                                                                                      |  |        |     |       |  |           |     |      |  |      
|For the twelve Months Ended June 30, 2002 and the eighteen Months Ended June 30, 2001
|Revenue from continuing
operations                                                    |  |        | 104 |       |  |           | 146 |      |  |       | 208 |  |  |  | 299 |  |  |  |    |  |  |  |    |  |  |  | 119 |  |  |  |    |  |  |  | 431   |  |  |  | 445   | 
|                                                                                      |  |        |     |       |  |           |     |      |  |       |     |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  |       |  |  |  |       | 
|As at June 30, 2002 and 2001                                                          |  |        |     |       |  |           |     |      |  |       |     |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  |       |  |  |  |       | 
|Capital assets                                                                        |  |        | 319 |       |  |           | 411 |      |  |       | 486 |  |  |  | 479 |  |  |  | 219 |  |  |  | 194 |  |  |  | 689 |  |  |  | 642 |  |  |  | 1,713 |  |  |  | 1,726 | 
|                                                                                      |  |        |     |       |  |           |     |      |  |       |     |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  |     |  |  |  |       |  |  |  |       | 





---



##### 



24. DIFFERENCES FROM UNITED STATES ACCOUNTING PRINCIPLES

Canadian GAAP varies in certain significant respects from the principles and
practices generally accepted in the United States (US GAAP). The effect of
these principal differences on the companys consolidated financial statements
are quantified below and described in the accompanying notes:

Statements of Earnings

|                                                                |  |                 |       |                 |  |   |      |  
|--------------------------------------------------------------- |  | --------------- | ----- | --------------- |  | - | ---- | -
|                                                                |  | 12 Months Ended |       | 18 Months Ended
|(in millions of US dollars except per share data)               |  | June 30, 2002   |       | June 30, 2001  
|                                                                |  |                 |       |                
|Net earnings (loss) for the period reported under Canadian GAAP |  | $               | 29    |                 |  | $ | 17   |  
|Capitalized interest on deferred mine development costs (a)     |  |                 | 2     |                 |  |   | 29   |  
|Write off of fees on convertible debentures (b)                 |  |                 | (8    | )               |  |   |     |  
|Amortization of capitalized interest                            |  |                 | (2    | )               |  |   | (1   | )
|Increase in interest expense (c)                                |  |                 | (26   | )               |  |   | (38  | )
|Start-up costs (e)                                              |  |                 | (16   | )               |  |   | (4   | )
|Adjustments of certain financial instruments to market (d)      |  |                 | (3    | )               |  |   | 2    |  
|Revenue recognition adjustment (f)                              |  |                 | 3     |                 |  |   | (3   | )
|Income tax effect of the above adjustments                      |  |                 | 6     |                 |  |   | 13   |  
|                                                                |  |                 |       |                 |  |   |      |  
|(Loss) net earnings for the period reported under US GAAP       |  | $               | (15)  |                 |  | $ | 15   |  
|                                                                |  |                 |       |                 |  |   |      |  
|Basic (loss) net earnings per common share for the period       |  | $               | (0.23 | )               |  | $ | 0.24 |  
|                                                                |  |                 |       |                 |  |   |      |  
|Diluted (loss) net earnings per common share                    |  | $               | (0.23 | )               |  | $ | 0.24 |  
|                                                                |  |                 |       |                 |  |   |      |  



|(a) |  | The company capitalizes interest on a mine development project only if
the interest arises on indebtedness incurred specifically to finance the
project. Under US GAAP, a portion of all interest costs incurred must be
capitalized as part of the project under development.                                                                                                                                                                                                                            
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(b) |  | Under Canadian GAAP the initial carrying amount of the equity element of
the convertible debentures is presented net of the after tax underwriters
and other fees and net of the interest receivable on the installment
receivable. These amounts, amortized under Canadian GAAP through the
accretion of the liability over a 5-year period are now written off.                                                                                                                                         
|   
|(c) |  | The company accounts for the convertible debentures in accordance with
their substance and as such they are presented in the financial statements
in their liability and equity component parts as described in note 13.
Under US GAAP, the entire face value of the convertible debentures is
treated as debt with interest expense based on the coupon rate of 5.5%.
The increase in interest expense was US$12 million in the year ended June
30, 2002 (18 months ended June 30, 2001  US$17 million).
|   
|    |  | Furthermore, the company accounts for the preferred securities in
accordance with their substance and as such they are included in
shareholders equity. Under US GAAP such preferred securities are treated
as debt with interest expense based on the coupon rate of 9 3/8 %. The
increase in interest expense was US$14 million in the year ended June 30,
2002 (18 months ended June 30, 2001  US$21 million).                                                                                       
|   
|(d) |  | Under Canadian GAAP, certain financial instruments qualify as a hedge for
accounting purposes and therefore gains and losses on these contracts are
recognized in revenue at the time the anticipated cash flows are incurred.
However, under US GAAP these contracts must be marked to market at the
end of each reporting period with any resulting gain or loss recognized in
income.                                                                                                                  
|   
|(e) |  | In 1999 the company adopted a US accounting standard (Statement of
Principles 98-5) which requires start-up costs to be expensed as incurred.
Under Canadian GAAP, start-up costs are deferred and amortized over the
mine life.                                                                                                                                                                                                                                                                          

27



---



##### 





|(f) |  | Under Canadian GAAP, revenue has been recognized under certain contracts
at Highland Valley Copper for which delivery has not occurred, using the
following criteria:
|--- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | Concentrate is in a form suitable for delivery                                    
| | - | ----------------------------------------------------------------------------------
|
| |  | Quantity and quality of the concentrate can be determined with reasonable accuracy
|
| |  | Title of the concentrate has passed to the purchaser                              
|
| |  | The actual selling price has been determined                                      

US GAAP requires certain criteria to be met in order to recognize revenue
when delivery has not occurred. These criteria include the fact that the
risks of ownership must have passed to the buyer, which occurs when the
concentrate is loaded on to the ship. In addition, there must be a fixed
schedule for delivery of the goods.

Statements of Comprehensive Earnings

The statements of comprehensive earnings provide a measure of all changes in
equity of the company that result from transactions and other economic events
that occur during the period.

|                                                          |                                          |               |                 |          |                      |   |    |    | 
|--------------------------------------------------------- | ---------------------------------------- | ------------- | --------------- | -------- | -------------------- | - | -- | -- | 
|                                                          |                                          |               | 12 Months Ended |          | 18 Months Ended June
|(in millions of US dollars)                               |                                          | June 30, 2002 |                 | 30, 2001
|                                                          |                                          |               |                 |         
|Net earnings (loss) for the period reported under US GAAP |                                          | $             | (15             | )        |                      | $ | 15 |   
|Other comprehensive earnings:                             |                                          |               |                 |          |                      |   |    |   
|                                                          | Foreign currency translation adjustments |               |                 | (6       | )                    |   |    | 34 | 
|                                                          |                                          |               |                 |          |                      |   |    |   
|Comprehensive earnings                                    |                                          | $             | (21             | )        |                      | $ | 49 |   
|                                                          |                                          |               |                 |          |                      |   |    |   

Statements of Cash Flow

|                                                    |                                                       |               |                 |          |                      |   |      |     |  
|--------------------------------------------------- | ----------------------------------------------------- | ------------- | --------------- | -------- | -------------------- | - | ---- | --- | -
|                                                    |                                                       |               | 12 Months Ended |          | 18 Months Ended June
|(in millions of US dollars)                         |                                                       | June 30, 2002 |                 | 30, 2001
|                                                    |                                                       |               |                 |         
|Cash and cash equivalents beginning of period       |                                                       | $             | 86              |          |                      | $ | 31   |    
|                                                    |                                                       |               |                 |          |                      |   |      |    
|Operating activities cash flow on a Canadian basis |                                                       |               | 155             |          |                      |   | 58   |    
|                                                    | Capitalized interest on deferred mine development     |               |                 | 2        |                      |   |      | 29  |  
|                                                    | Increase in interest expense net of current tax       |               |                 | (26      | )                    |   |      | (25 | )
|                                                    | Start-up costs                                        |               |                 | (16      | )                    |   |      |    |  
|                                                    | Valuation of opening cash a historical rate           |               |                 | (4       | )                    |   |      | (4  | )
|                                                    |                                                       |               |                 |          |                      |   |      |    
|Operating activities cash flow on a US basis       |                                                       |               | 111             |          |                      |   | 58   |    
|                                                    |                                                       |               |                 |          |                      |   |      |    
|Financing activities cash flow on a Canadian basis |                                                       |               | 16              |          |                      |   | 319  |    
|                                                    | Accretion of equity element of convertible debentures |               |                 | 13       |                      |   |      | 12  |  
|                                                    | Preferred securities dividends                        |               |                 | 14       |                      |   |      | 13  |  
|                                                    |                                                       |               |                 |          |                      |   |      |    
|                                                    |                                                       |               |                 |          |                      |   |      |    
|Financing activities cash flow on a US basis       |                                                       |               | 43              |          |                      |   | 344  |    
|                                                    |                                                       |               |                 |          |                      |   |      |    
|Investing activities cash flow on a Canadian basis |                                                       |               | (48             | )        |                      |   | (318 | )  
|                                                    | Capitalized interest on deferred mine development     |               |                 | (2       | )                    |   |      | (29 | )
|                                                    | Start-up costs                                        |               |                 | 16       |                      |   |      |    |  
|                                                    |                                                       |               |                 |          |                      |   |      |    
|Investing activities cash flow on a US basis       |                                                       |               | (34             | )        |                      |   | (347 | )  
|                                                    |                                                       |               |                 |          |                      |   |      |    
|Cash and cash equivalents end of period             |                                                       | $             | 206             |          |                      | $ | 86   |    
|                                                    |                                                       |               |                 |          |                      |   |      |    

28



---



##### 



Net change in non-cash working capital items related to operations:

|                                         |  |                 |     |                 |  |   |     |  
|---------------------------------------- |  | --------------- | --- | --------------- |  | - | --- | -
|                                         |  | 12 Months Ended |     | 18 Months Ended
|(in millions of US dollars)              |  | June 30, 2002   |     | June 30, 2001  
|                                         |  |                 |     |                
|Receivables and prepaid expenses         |  | $               | (12 | )               |  | $ | 19  |  
|Inventories                              |  |                 | (1  | )               |  |   | (16 | )
|Accounts payable and accrued liabilities |  |                 | (12 | )               |  |   | 29  |  
|Income and mining taxes payable          |  |                 | 20  |                 |  |   | (11 | )
|                                         |  |                 |     |                 |  |   |     |  
|                                         |  | $               | (5  | )               |  | $ | 21  |  
|                                         |  |                 |     |                 |  |   |     |  

Balance Sheets

The following summarizes the balance sheet amounts in accordance with US GAAP
where different from the amounts reported under Canadian GAAP.

|                                                              |  |                  |        |                  |  |          |       |      |  |   |        |   |  |   |      |  
|------------------------------------------------------------- |  | ---------------- | ------ | ---------------- |  | -------- | ----- | ---- |  | - | ------ | - |  | - | ---- | -
|(in millions of US dollars)                                   |  | At June 30, 2002 |        | At June 30, 2001
|                                                              |  |                  |        |                 
|                                                              |  | Canadian         |        | US               |  | Canadian |       | US  
|                                                              |  | GAAP             |        | GAAP             |  | GAAP     |       | GAAP
|                                                              |  |                  |        |                  |  |          |       |     
|Cash and cash equivalents                                     |  | $                | 206    |                  |  | $        | 206   |      |  | $ | 83     |   |  | $ | 86   |  
|Receivables and prepaid expenses                              |  |                  | 96     |                  |  |          | 99    |      |  |   | 85     |   |  |   | 96   |  
|Inventory                                                     |  |                  | 60     |                  |  |          | 60    |      |  |   | 50     |   |  |   | 52   |  
|Property, plant and equipment                                 |  |                  | 1,043  |                  |  |          | 1,059 |      |  |   | 353    |   |  |   | 369  |  
|Antamina project in process                                   |  |                  |       |                  |  |          |      |      |  |   | 642    |   |  |   | 706  |  
|Mining properties                                             |  |                  | 176    |                  |  |          | 179   |      |  |   | 181    |   |  |   | 191  |  
|Investment                                                    |  |                  | 219    |                  |  |          | 222   |      |  |   | 194    |   |  |   | 209  |  
|Loan receivable                                               |  |                  | 247    |                  |  |          | 247   |      |  |   | 293    |   |  |   | 307  |  
|Non current future tax assets                                 |  |                  | 23     |                  |  |          | 23    |      |  |   | 48     |   |  |   | 51   |  
|Accounts payable                                              |  |                  | (145   | )                |  |          | (148  | )    |  |   | (158   | ) |  |   | (171 | )
|Current portion of liability
element of convertible debenture |  |                  |       |                  |  |          |      |      |  |   | (12    | ) |  |   |     |  
|Long term debt                                                |  |                  | (529   | )                |  |          | (914  | )    |  |   | (498   | ) |  |   | (897 | )
|Non current future tax liabilities                            |  |                  | (136   | )                |  |          | (136  | )    |  |   | (130   | ) |  |   | (141 | )
|Shareholders equity                                          |  | $                | (1,153 | )                |  | $        | (792  | )    |  | $ | (1,090 | ) |  | $ | (815 | )

Shareholders Equity

|                                                      |  |                  |       |                  |  |   |       |  
|----------------------------------------------------- |  | ---------------- | ----- | ---------------- |  | - | ----- | -
|(in millions of US dollars)                           |  | At June 30, 2002 |       | At June 30, 2001
|                                                      |  |                  |       |                 
|Shareholders equity based on Canadian GAAP           |  | $                | 1,153 |                  |  | $ | 1,090 |  
|Equity component of convertible debentures            |  |                  | (222  | )                |  |   | (214  | )
|Preferred securities                                  |  |                  | (140  | )                |  |   | (140  | )
|Capitalized interest                                  |  |                  | 92    |                  |  |   | 92    |  
|Interest expense                                      |  |                  | 8     |                  |  |   | 8     |  
|Pensions and post-employment benefits                 |  |                  |      |                  |  |   |      |  
|Adjustment of certain financial instruments to market |  |                  | (2    | )                |  |   |      |  
|Foreign currency translation adjustments              |  |                  | (43   | )                |  |   | 12    |  
|Start-up costs                                        |  |                  | (29   | )                |  |   | (11   | )
|Asset valuation writedowns adjustments                |  |                  | (52   | )                |  |   | (52   | )
|Write off of fees on convertible debentures           |  |                  | (8    | )                |  |   |      |  
|Variation due to conversion exchange rate             |  |                  | 34    |                  |  |   | 40    |  
|Income tax adjustments on the above-noted items       |  |                  | 1     |                  |  |   | (10   | )
|                                                      |  |                  |       |                  |  |   |       |  
|Shareholders equity based on US GAAP                 |  | $                | 792   |                  |  | $ | 815   |  
|                                                      |  |                  |       |                  |  |   |       |  

29



---



##### 



New Standards for US GAAP

In June 2001, the Financial Accounting Standards Board (FASB) issued SFAS
No. 141, Business Combinations, and SFAS No. 142, Goodwill and Other Intangible
Assets.These new standards eliminate pooling as a method of accounting for
business combinations, and feature new accounting rules for goodwill and
intangible assets. The company does not foresee any impact on a cumulative
effect of an accounting change or on the carrying values of assets and
liabilities recorded in the Consolidated Balance Sheet upon adoption. SFAS No.
141 is effective for business combinations initiated from July 1, 2001. SFAS
No.142 will be adopted on July 1, 2002.

Also issued June 2001, was SFAS No. 143, Accounting for Asset Retirement
Obligations.This Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and
the associated asset retirement costs. It requires that the fair value of a
liability for an asset retirement obligation be recognized in the period in
which it is incurred if a reasonable estimate of fair value can be made. The
associated asset retirement costs are capitalized as part of the carrying
amount of the long-lived asset. The company is analyzing the impact of SFAS No.
143 and will adopt this standard on July 1, 2002.

In August 2001, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 144, Accounting for the
Impairment or Disposal of Long-Lived Assets.This Statement supersedes SFAS
No. 121 and the accounting and reporting provisions of APB Opinion No. 30, and
also amends ARB No. 51. This Statement will require one accounting model be
used for long-lived assets to be disposed of by sale, whether previously held
and used or newly acquired, and will broaden the presentation of discontinued
operations to include more disposal transactions. The company is analyzing the
impact of SFAS No. 144 and will adopt this standard on July 1, 2002.

In July 2002, the FASB issued Statement of Financial Accounting Standards
No.146, Accounting for Costs Associated with Exit and Disposal Activities.This
statement, effective for exit or disposal activities initiated after 31
December 2003, requires that costs associated with exit or disposal activities
be recognized when they are incurred rather than at the date of a commitment to
an exit or disposal plan. The company has not adopted this standard early for
the purpose of the June 2002 financial statements.

25. NEW STANDARDS FOR CANADIAN GAAP

In July 2001, the CICA approved the new Handbook Section 1581, Business
Combinations, replacing Section 1580, that will require all business
combinations to use the purchase method of accounting. They have also approved
a new Section 3062, Goodwill And Other Intangible Assets, which will require
intangible assets with an indefinite life and goodwill to be tested for
impairment on an annual basis. Goodwill and indefinite life intangibles will no
longer be amortized. Intangible assets with a definite life will continue to
be amortized over their useful life. The new Sections are consistent with those
recently approved by the FASB (SFAS No. 141 and SFAS No.142). The adoption of
these new standards is not expected to have any material effect on the
companys financial position, results of operations or cash flows. Section 1581
is effective for business combinations initiated from July 1, 2001. Section
3062 will be adopted on July 1, 2002.

30



---



##### 



UNDERTAKING

Registrant undertakes to make available, in person or by telephone,
representatives to respond to inquiries made by the Commission staff, and to
furnish promptly, when requested to do so by the Commission staff, information
relating to: the securities registered pursuant to Form 40-F; the securities in
relation to which the obligation to file an annual report on Form 40-F arises;
or transactions in said securities.

SIGNATURES

Pursuant to the requirements of the Exchange Act, the Registrant certifies
that it meets all of the requirements for filing on Form 40-F and has duly
caused this annual report to be signed on its behalf by the undersigned,
thereto duly authorized.

|                        |  |  |     |                                        
|----------------------- |  |  | --- | ---------------------------------------
|Date: November 15, 2002 |  |  |     | RIO ALGOM LIMITED
(Registrant)         
|                        |  |  |     |                                        
|                        |  |  |     |                                        
|                        |  |  |     |                                        
|                        |  |  | By: | Philippe Monier                      
|                        |  |  |     |                                        
|                        |  |  |     | Philippe Monier
Chief Financial Officer





---



##### 



Certifications

I, Bradford A. Mills, certify that:



|1. |  | I have reviewed this annual report on Form 40-F of Rio Algom
Limited;                                                                                                                                                                                                                                                       
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report; and
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present in
all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this annual report.                       

Date: October 30, 2002



| | Bradford A. Mills
Bradford A. Mills
Chief Executive Officer
| | -------------------------------------------------------------





---



##### 



I, Philippe Monier, certify that:



|1. |  | I have reviewed this annual report on Form 40-F of Rio Algom
Limited;                                                                                                                                                                                                                                                       
|-- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  
|2. |  | Based on my knowledge, this annual report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this annual report; and
|  
|3. |  | Based on my knowledge, the financial statements, and other
financial information included in this annual report, fairly present
in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented
in this annual report.                       

Date: October 30, 2002



| | Philippe Monier
Philippe Monier
Chief Financial Officer
| | ---------------------------------------------------------





---



##### 



Exhibit Index



|23   |  | Consent of Independent Accountants                                                                                    
|---- |  | ----------------------------------------------------------------------------------------------------------------------
|    
|99.1 |  | Certification of Bradford A. Mills, Chief Executive Officer, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
|    
|99.2 |  | Certification of Philippe Monier, Chief Financial Officer, pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002