Rio Tinto Copper CEO Bret Clayton said, “Sulawesi Nickel has been confirmed as a tier one opportunity for our group. This announcement shows a substantial resource and we believe that there is significant potential to find further resources through our exploration efforts. This project will provide an attractive entry for Rio Tinto into a new metal and in 10 years’ time, Rio Tinto could rank among the top 10 nickel producers globally.”

The laterite deposits are located approximately 40 km from the east coast of the island of Sulawesi, straddling the border of Central and South East Sulawesi provinces. The deposit was discovered in 2000, as part of a regional reconnaissance program following the issuing of an Approval in Principle by the Indonesian government in 1999 to negotiate the Contract of Work. Rio Tinto Indonesia is pursuing full mining tenure and Contract of Work mineral title and is in the final rounds of government negotiations. Once negotiations are completed the Contract of Work will be submitted to the Indonesian parliament for review.

The geology is a typical tropical lateritic nickel deposit containing both limonite and saprolite material types, developed over ultramafic rock units. The area is part of a larger mineralized province containing other lateritic nickel resources such as Soroako (Vale) and Bahodopi (Vale). The area of mapped lateritic nickel profiles within Rio Tinto’s leases is about 84 km2 within two main clusters, approximately 30 km apart.

Approximately two-thirds of the Southern target area has been drill tested to Inferred Resource level, using diamond core drilling on a 1-km grid, with targeted 100-m space drilling to confirm continuity. The diamond core drill rig penetrated both the limonite and saprolite horizons through to bedrock. A total of 46 diamond core holes have been used to support the Inferred Resource estimate.

Rio Tinto said order of magnitude studies have been progressed to determine the most appropriate mining, processing and engineering approaches; shallow open-cut mining is the typical mining method for similar deposits, and studies have indicated a typical excavator and truck mining method would be suitable for the Sulawesi deposits. The tropical lateritic nickel deposits in this region tend to have better grades and better metallurgy than the typical arid style deposits found in Australia.

Laboratory metallurgical testwork conducted by Rio Tinto suggests that the Sulawesi deposit can be economically extracted using conventional and commercial high pressure acid leaching techniques. Initial batch test work and process engineering design indicates process nickel recoveries could be around 90% and 88% for cobalt.

Rio Tinto also announced that it has lodged mining lease applications for its Bunder diamond project in the Bundelkhand region of Madhya Pradesh, India, a step in the development of what could be the first significant world class diamond mine in India. Rio Tinto also announced the exploration target for diamond mineralization at the Bunder project of 40 to 70 million mt at a grade of between 0.3 and 0.7 carats per mt. The company said the targeted diamond grades are at least three times greater than the grade of the Panna mine, India’s only other hard rock diamond mine.

The original discovery was made as part of a regional exploration reconnaissance in 2002. A prospecting license was executed in September 2006, which allowed exploration activities to continue, and an order of magnitude study was commenced to evaluate the economic viability of the eight diamondiferous lamproites. The results of this are expected by the end of the third quarter of 2008.

Nik Senapati, managing director of Rio Tinto in India, said, “Diamonds are a significant part of the history of India and an important product for Rio Tinto. We have spent more than 100 Crore rupees ($25 million) over the last six years on diamond exploration and evaluation in India, and remain excited about the prospects for the Bunder project. The application for mining leases is confirmation of our commitment to both mining in India and the global diamond industry.”

Currently, Rio Tinto processes the majority of its diamonds in India and independently markets the diamond productions from its Australian, Canadian and African mines.

Work on the Bunder diamond project to date includes mapping, 48 drill holes and five surface bulk samples. Drilling is continuing and further surface bulk sampling to support diamond valuation is under way. Environmental approval for a 10-mt/h dense media separation plant is expected soon from the Madhya Pradesh government, which allows processing of bulk samples at the project site.

Following the completion of the order of magnitude study in the second half of 2008, a pre-feasibility study would involve further social and environmental studies including further drilling and below the surface bulk sampling. In total, Rio Tinto said it has spent more than 75 Crore rupees ($19 million) to date on evaluation of the deposit. Plans are in place to spend around a further 135 Crore rupees ($30 million) to support continued evaluation of the deposit.