This report covers exploration and development activities for the quarter ended 30 June 2004. Unless otherwise stated, BHP Billiton's interest in the projects referred to in this report is 100 per cent, and references to quarters are based on calendar years.

Of the 14 projects that were under construction during the quarter, 12 are within Board approved expenditure limits and are tracking on or ahead of schedule. (Refer to comments on Dendrobium Coal Project on page 3.) The exceptions are Minerva and the ROD Integrated development. The Panda Underground, the Worsley Development Capital and the Escondida Sulphide Leach projects have received Board approval during the quarter.

Overall progress on the fourth liquefaction processing train is 96 per cent complete. At the end of June the construction phase was nearly complete, with pipe and vessels insulation still to be finished. Commissioning is 90 per cent complete. The second trunkline was commissioned in mid February 2004. The project remains on budget (BHP Billiton's share of capital expenditure is US$247 million).

BHP Billiton announced its sanction of the Mad Dog field in February 2002, approving up to US$335 million for the development of this Gulf of Mexico oil and gas field. The sanctioned facility has been designed to produce at a daily rate of 80,000 barrels of crude oil and 40 million cubic feet of natural gas. At the end of June, work on the topsides continued on track with its offshore lift onto the hull, which was successfully installed at its offshore location in February. The project remains on budget and on schedule for targeted first production by the end of 2004.

In March 2003, BHP Billiton approved US$327 million for the first development phase of the Greater Angostura oil and gas field off the northeast coast of Trinidad. During the quarter, fabrication of onshore facilities continued, including oil storage tanks, pipelines and associated infrastructure. Fabrication/manufacture is complete on the loading buoy, pipeline end manifold and associated anchors, chains and hoses, which have all been received in Trinidad. All four wellhead protector platforms and the jacket for the central processing platform have also been completed and installed offshore. The remaining offshore facilities are being completed and offshore pipeline installation is in progress. The project remains on budget and on schedule for first oil production by the end of 2004.

The ROD Integrated Development consists of the development of six satellite oilfields in the Berkine Basin in eastern Algeria. The project will produce 80,000 barrels of Sahara Blend crude oil per day, with associated gas being reinjected into the reservoir together with water to provide pressure support to the reservoir. The development drilling has been concluded and a total of 34 development wells are currently available for production operations. As at the end of June over 6.75 million workhours have been completed at the construction site without a Lost Time Incident. Overall project progress is 93 per cent complete. Lower than planned productivity at the construction site has impacted progress and first oil is now scheduled for fourth quarter 2004. The project is expected to be delivered within the original budget. BHP Billiton's share is US$192 million.

Caesar/Cleopatra Transportation Systems, Gulf of Mexico, USA (BHP Billiton interest in Caesar pipeline, 25%; interest in Cleopatra pipeline, 22%. Non-operated)

BHP Billiton acquired a 25 per cent interest in the Caesar oil pipeline and a 22 per cent interest in the Cleopatra gas pipeline, which will transport product from the Mad Dog and Atlantis fields to pipelines closer to shore. Construction of the system to the Mad Dog field is complete. During the quarter, risers connecting the hull of the Mad Dog production facility to the Caesar and Cleopatra pipelines were installed. Expenditure of up to US$132 million has been approved by the Board for this project. The project is on budget and on schedule to begin operation with first production at third-party facilities, in advance of first hydrocarbon production from Mad Dog and Atlantis.

BHP Billiton completed full capital allocation for the Atlantis project in February 2003. Our share of total project expenditure is US$1.1 billion. The sanctioned facility is designed to produce at a daily rate of up to 150,000 barrels of crude oil and 180 million cubic feet of natural gas. During the quarter, batch setting operations were completed for the initial 15 wells of the development. The hull entered the dry-dock, and the topsides' lower and upper sections for each module were moved to the outdoor erection site for the completion of further work on these facilities. The project remains on budget and on schedule for first production in the third quarter of 2006.

The development of the Escondida Norte pit, located approximately 5 kilometres north of the existing Escondida mining operations, was approved in June 2003. Pre-mine waste stripping continued during the quarter, using both contractor and Escondida equipment, with a third truck-shovel fleet commencing during June 2004. Total material movement in the pre-mine to the end of June 2004 was 47.9 million tonnes. Construction development during the period involved the partial erection of the mine fleet maintenance work shop, commencement of the crusher foundation area and its associated retaining wall, partial construction of the overland conveyor alignment and near completion of the light vehicle access road. Pre-mine development, design and construction activities are currently on track to meet first ore delivery to the crusher in the fourth quarter of 2005. Development costs are estimated at US$400 million (BHP Billiton share US$230 million).

The Escondida Sulphide Leach project was approved in April 2004. The project will produce 180,000 tonnes (103,500 tonnes BHP Billiton share) of copper cathode per annum, utilising a bacterially assisted leaching process on low-grade run-of-mine ore from both the Escondida and Escondida Norte pits. The resulting solutions will then be treated in conventional solvent extraction and electrowinning plants. Detailed engineering is underway and preliminary site work has started to develop the temporary construction facilities. Development costs are estimated at US$870 million (US$500 million BHP Billiton share) and production is scheduled to begin during the second half of 2006.

The Ravensthorpe Nickel Project was approved in March 2004. The project includes the development of a mine, treatment plant and associated infrastructure near Ravensthorpe in Western Australia. The Ravensthorpe processing plant will produce a mixed nickel-cobalt hydroxide intermediate product (MHP). Engineering and procurement are proceeding on schedule including the construction management, autoclaves, acid plant and construction camp contracts. Site activities have commenced at Ravensthorpe. The capital cost for the project is expected to be US$1.05 billion, with the first shipment of MHP from Ravensthorpe expected by the second quarter of 2007.

The Yabulu Extension Project was approved in March 2004. The metal refining section of the QNI Yabulu refinery near Townsville in Queensland is being expanded to process up to 220,000 tonnes of mixed nickel-cobalt hydroxide intermediate product (MHP). This additional processing capacity will increase refinery production to 76 000 tonnes of nickel and 3 500 tonnes of cobalt. Engineering and procurement activities are proceeding on schedule. The capital cost for the project is expected to be US$350 million, with first nickel metal production from the expanded Yabulu refinery expected by late 2007.

Exploration and appraisal wells drilled during the quarter or in the process of drilling as at 30 June 2004.

The minerals exploration group of BHP Billiton continued to pursue global exploration opportunities for key commodities of interest to the group utilising both the Junior Alliance Program and in-house capabilities.

The bulk sampling programme on the BHP Billiton Qilalugaq property near Repulse Bay, Nunavut, Canada (BHP Billiton 100%), has been completed. Processing of the sample is underway. Diamond drill testing of previously defined targets commenced on time and is on-going. Till sampling, Falcon and Dighem airborne surveys are underway on the remainder of the property to define additional targets.

During the quarter, BHP Billiton spent US$49 million on minerals exploration, of which US$46 million was expensed, and US$128 million on petroleum exploration, of which US$78 million was expensed.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.