While BHP Billiton Limited does not anticipate any changes to these dates and times, it reserves the right to vary them without notification. BHP Billiton Limited may also decide not to proceed with the Buy-Back and may vary the size of the Buy-Back.

Eligibility to participate

Subject to the following, you are eligible to participate in the Buy-Back if Shares are registered in your name on the Buy-Back Record Date (Thursday, 3 March 2011) and, in accordance with the Settlement Rules, the Shares confer an entitlement to receive this Buy-Back Invitation.

The Buy-Back Invitation is not being made to Excluded Foreign Persons. In particular, any person who is in the United States or who is a US Person or a resident of Canada is not entitled to participate, directly or indirectly, in the Buy-Back. Copies of the Buy-Back Documents are not being mailed or otherwise distributed or sent into the United States or Canada.

Any person receiving any of the Buy-Back Documents must not distribute or send them into the United States or Canada, or make them available to any US Person or resident of Canada (including to any legal or beneficial owner of BHP Billiton Limited shares that is a US Person or a resident of Canada) or any person who is in the United States or Canada.

BHP Billiton Limited will not accept Tender Forms:

American Depositary Receipts (ADRs) representing BHP Billiton Limited shares and Restricted Employee Shares may not be tendered into the Buy-Back. This document does not provide financial product advice and has been prepared without taking into account your particular objectives, financial situation or needs. You should consider obtaining independent advice before making any financial decisions.

The date of this booklet is 24 February 2011 and all information contained in the booklet is current at that date (except where otherwise indicated).

BHP Billiton Limited is a member of the BHP Billiton Group which is headquartered in Australia.

Capital Allocation Priorities

The expanded US$10 billion capital management program continues BHP Billiton’s track record of returning excess capital to shareholders. On completion, BHP Billiton will have repurchased approximately US$23 billion of BHP Billiton Limited and BHP Billiton Plc shares since 2004, representing about 15 per cent of then issued capital.¹

The decision to buy back shares is consistent with BHP Billiton’s priorities for capital allocation which are our commitment to:

BHP Billiton’s particularly strong balance sheet affords us substantial flexibility as we continue with our significant organic growth program. We expect to invest in excess of US$80 billion over five years on capital projects. These include projects in iron ore and metallurgical coal, which are at an advanced stage of the approvals process.

On 22 February 2011, BHP Billiton also announced that it had agreed to acquire all of Chesapeake Energy Corporation’s interests in the Fayetteville Shale, USA, including the midstream pipeline system, for US$4.75 billion, which BHP Billiton expects to fund from the Group’s cash resources. The acquisition is consistent with BHP Billiton’s strategy of investing in large, long-life, low-cost assets with significant volume growth from future development. It also supports our goal of diversification by geography, customer and product.

Consistent with our capital allocation priorities, the Board considered various ways to return excess capital to shareholders. We have determined that an off-market buy-back is an efficient and effective action that delivers long-lasting benefits to all

shareholders. More detail on the rationale for undertaking the Buy-Back is outlined in Sections 1.3 and 1.4 of this booklet.

Participation

Eligible shareholders of BHP Billiton Limited may tender some or all of their shares into the Buy-Back:

BHP Billiton Limited will determine the Buy-Back Price according to the Tenders lodged and the Market Price, and may at its discretion, vary the size of the Buy-Back.

If you wish to submit a Tender, please ensure that your completed and signed Tender Form (a personalised Tender Form is enclosed with this booklet) is received by the Registry (if you are an Issuer Sponsored Holder), or your Tender is processed by your broker (if you are a CHESS Holder), by no later than 7.00pm (Melbourne time) on Friday, 8 April 2011. You do not need to take any action if you do not wish to participate in the Buy-Back.

Taxation Implications

The Buy-Back Price comprises a Capital Component and a fully franked Dividend Component for Australian tax purposes. It is anticipated that shareholders who elect to participate in the Buy-Back will receive a Capital Component of A$0.28 per Share,³ with the remainder of the Buy-Back Price deemed to be a fully franked dividend.

General Australian tax implications of the Buy-Back for shareholders are included in Section 2 of this booklet. You should obtain your own tax advice before making any decision to tender your Shares into the Buy-Back as it will have different tax consequences for different BHP Billiton Limited shareholders.

If you DO choose to participate

If you DO NOT choose to participate

Section 6 provides instructions on how to fill out a Tender Form in order to participate in the Buy-Back. Some words used in this booklet have defined meanings. Section 5 ‘Definitions and interpretation’ defines the capitalised words used throughout this booklet.

Contents

1.1 What is an off-market buy-back tender?

An off-market buy-back tender involves a company inviting eligible shareholders to offer to sell some or all of their shares to the company by way of a tender process. The shares bought back are subsequently cancelled, thereby reducing the total number of shares the company has on issue. Under the Buy-Back, Shares may be tendered by eligible BHP Billiton Limited shareholders at any of the specified discounts in the Tender Discount range of between 10 per cent and 14 per cent inclusive (at 1 per cent intervals) to the Market Price or as a Final Price Tender.

1.2 Why is BHP Billiton implementing the Buy-Back?

As part of its December 2010 Interim Results, BHP Billiton announced an expanded US$10 billion capital management program. The program will be executed in the form of both on-market buy-backs of BHP Billiton Plc shares and an off-market buy-back of BHP Billiton Limited shares.

The off-market buy-back of BHP Billiton Limited shares has a target size of A$5 billion. BHP Billiton Limited may, at its discretion, vary the size of the off-market buy-back. BHP Billiton Limited also retains the discretion to repurchase a lesser amount of shares than indicated or no shares at all.

The on-market buy-back of BHP Billiton Plc shares that was reactivated in November 2010 will continue, including largely over the period of the Buy-Back process. Subject to market conditions, it is BHP Billiton’s expectation that the US$10 billion capital management initiative will be largely completed by the end of the 2011 calendar year.

The announcement continues BHP Billiton’s strong track record of returning excess capital to shareholders. On completion of the US$10 billion capital management initiative, BHP Billiton will have repurchased approximately US$23 billion of BHP Billiton Limited and BHP Billiton Plc shares since 2004, representing 15 per cent of then issued capital.¹

Undertaking both an off-market and on-market buy-back, coupled with an increased interim dividend allows the entire BHP Billiton global shareholder base to participate, both directly and indirectly, in the expanded capital management initiative. An off-market buy-back provides an efficient means of generating economic value for all BHP Billiton shareholders. The target Buy-Back size of A$5 billion will enable BHP Billiton to continue to pay fully franked dividends under its progressive dividend policy. Further information about the effect of the Buy-Back on BHP Billiton is set out in Section 3.

1.3 What are the advantages of an off-market tender process?

BHP Billiton Limited is conducting the Buy-Back by way of a tender process. The advantages of the tender process include the following:

1.4 Did BHP Billiton consider other ways of returning capital?

The Board has considered various ways to return surplus capital to shareholders, including off-market buy-backs, on-market buy-backs, special dividends and a combination of these options. The Board considers that, at this time, it is in the best interests of BHP Billiton and its shareholders as a whole to pursue an off-market buy-back of BHP Billiton Limited shares as part of BHP Billiton’s expanded capital management program. The benefits of the Buy-Back are discussed in Section 1.3 above.

The Board believes that returning surplus capital to shareholders through an off-market share buy-back is an important component of its strategy that aims to maximise economic value across BHP Billiton’s entire shareholder base.

The Buy-Back is expected to enhance earnings per share and cash flow per share to a greater extent than a special dividend. In contrast, a special dividend only provides a discrete, one-off cash benefit to shareholders and offers no choice of participation. In addition, a special dividend would need to be paid to all shareholders of BHP Billiton Limited and BHP Billiton Plc, and this mechanism is not considered to be the most efficient way to return capital to shareholders.

While the precise impact of the Buy-Back cannot be determined, it is expected to have a lasting and positive impact on BHP Billiton’s earnings per share, cash flow per share and return on equity. As a result, all BHP Billiton shareholders will benefit. The Buy-Back will enable the purchase of BHP Billiton Limited Shares at a material discount to the prevailing market price of BHP Billiton Limited and can be completed in a shorter period of time than on-market buy-backs of a comparable size.

1.5 Am I entitled to tender Shares into the Buy-Back?

If you are eligible to participate, you are entitled to tender up to 100 per cent of the Shares which are registered in your name on the Buy-Back Record Date (Thursday, 3 March 2011). Shares acquired on the ASX on or after the ex-entitlement date (Friday, 25 February 2011) generally will not be registered in your name by the Buy-Back Record Date and therefore will not carry an entitlement to participate in the Buy-Back.

The maximum number of Shares you are entitled to tender into the Buy-Back is set out in Box A on your personalised Tender Form enclosed with this booklet.

If you hold 125 Shares or less, and you wish to tender Shares in the Buy-Back, you must tender all of your Shares at the same Tender Discount or as a Final Price Tender.

If you hold more than 125 Shares, you may tender different parcels of your Shares set out in Box A on your personalised Tender Form at one or more Tender Discounts or as a Final Price Tender. However, you must tender a minimum of 125 Shares in aggregate.

The Buy-Back Invitation is not being made to any Excluded Foreign Person. In particular, the Buy-Back Invitation is not being made to any person in the United States or any US Person or resident of Canada. ADRs and Restricted Employee Shares may not be tendered into the Buy-Back.

1.6 How does the Buy-Back compare to selling my Shares on the stock market?

Depending on your individual circumstances, if you sell your Shares on the ASX, the Australian tax consequences of doing so may be different from selling your Shares into the Buy-Back (see Section 2 for general details in relation to Australian tax implications, but note that BHP Billiton Limited shareholders should consider their own particular tax circumstances).

In addition, to execute a share sale on the ASX, you will need to appoint a broker and may have to pay brokerage whereas you should not need to appoint a broker or pay brokerage to sell your Shares into the Buy-Back.

However, it is likely that you will be able to sell your Shares on the ASX for a price that is higher than the Buy-Back Price. This is because the prices at which eligible BHP Billiton Limited shareholders can tender Shares into the Buy-Back are at discounts of between 10 per cent and 14 per cent inclusive to the Market Price. Therefore, it is likely that the BHP Billiton Limited share price on the ASX will be higher than the Buy-Back Price during and possibly immediately after the Tender Period.

To provide eligible BHP Billiton Limited shareholders with an indication of the possible after-tax proceeds from selling their Shares into the Buy-Back compared to selling their Shares on the ASX, BHP Billiton Limited intends to provide access to a tax calculator through its website (www.bhpbilliton.com) from approximately 7 March 2011 to 18 April 2011.

By making the Buy-Back Invitation and setting the range of Tender Discounts, BHP Billiton Limited is not making any recommendation or giving any advice on the value of your Shares or whether (or how) you should sell your Shares.

Before you decide whether to participate in the Buy-Back, BHP Billiton Limited strongly recommends that you seek your own professional advice.

1.7 Will I receive the 2011 interim dividend if my Shares are bought back?

Yes. All shareholders with an entitled registered holding of shares in BHP Billiton Limited on Friday, 11 March 2011 will be paid the US 46 cents per share fully franked dividend in respect of that holding, whether or not they participate in the Buy-Back.

1.8 Do I have to tender my Shares?

Participation in the Buy-Back is entirely at your discretion. You do not have to tender your Shares if you do not want to. If you do not wish to participate, you do not have to take any action.

1.9 What does the Buy-Back mean for me if I do not participate?

If you choose not to participate, you are an Excluded Foreign Person or your Tender is unsuccessful, the number of Shares you hold will not change as a result of the Buy-Back. After the Buy-Back is completed, you will hold a slightly larger percentage of the total shares in BHP Billiton (as there will be fewer shares on issue).

1.10 What price will BHP Billiton Limited pay to buy back my Shares?

BHP Billiton Limited will pay you the Buy-Back Price for each of your Shares accepted under the Buy-Back even if your Tender Discount is equal to or larger than the Buy-Back Discount.

The Buy-Back Price will be the price that equates to the largest Tender Discount in the range of between 10 per cent and 14 per cent inclusive (at 1 per cent intervals) to the Market Price that will enable BHP Billiton Limited to purchase the amount of capital it determines to buy back.

For each Share purchased from you under the Buy-Back, you will receive a cash amount determined in accordance with the following formula:

A = B × (1 – C)

So, for example, if the relevant Market Price is A$45.00 and the Buy-Back Discount is 14 per cent, the Buy-Back Price would be A$38.70 (i.e. A$45.00 x (1–0.14)).¹

The Buy-Back Price will not exceed the Tax Value. The Tax Value is the price used by the ATO to determine for Australian tax purposes the market value of the relevant Shares when the Buy-Back occurs. The Tax Value will be A$46.55, adjusted for the movement in the BHP Billiton Plc share price from the close of trading on the London Stock Exchange on Monday, 21 February 2011 to the opening of trading on the London Stock Exchange on the Closing Date (expected to be Friday, 8 April 2011). If the movement in the BHP Billiton Plc share price is significantly different from the movement in the BHP Billiton Limited share price over the relevant period, BHP Billiton Limited may approach the ATO to seek to vary the methodology used to determine the Tax Value. The method for determining the Tax Value is explained in more detail in Section 2.3.

1.11 How will I know what the Market Price is?

The Market Price is calculated as the volume weighted average price (VWAP) of BHP Billiton Limited shares over the five trading days up to and including the Closing Date (excluding certain trades – see definitions of VWAP and Market Price in Section 5.1 for further details).

To provide an indication of the Market Price, BHP Billiton Limited will calculate and make available to eligible shareholders the running VWAP during this five-day period. The running VWAP will be made available to eligible shareholders on BHP Billiton’s website from approximately 6.00pm (Melbourne time) on Monday, 4 April 2011 (www.bhpbilliton.com) and will be available through the Buy-Back enquiry line from Tuesday, 5 April 2011 and will be updated cumulatively each day. Please note that the Market Price information provided by BHP Billiton on its website and through the Buy-Back enquiry line will only be an estimate given that it is a cumulative daily update from the opening of trading on Monday, 4 April 2011.

The actual Market Price, representing the VWAP for the full five-day period up to and including the Closing Date, will be available from approximately 6.00pm (Melbourne time) on Friday, 8 April 2011, and can be obtained by accessing the BHP Billiton website or by calling the Buy-Back enquiry line on 1300 612 584 within Australia, 0800 451 521 within New Zealand or +61 3 9415 4868 if you are calling from outside Australia or New Zealand. BHP Billiton Limited also intends to announce the Market Price to the ASX (and other relevant exchanges) as soon as practicable on Friday, 8 April 2011.

1.12 What is a Final Price Tender?

A Final Price Tender is an offer to sell your Shares to BHP Billiton Limited at whatever price is ultimately determined to be the Buy-Back Price under the tender process. The Buy-Back Price could be as low as a 14 per cent discount to the Market Price or as high as a 10 per cent discount to the Market Price. If a large number of Final Price Tenders are submitted, it is more likely that the Buy-Back Price will be at a larger discount to the Market Price subject to the 14 per cent maximum. Final Price Tenders are designed to make it easier for eligible BHP Billiton Limited retail shareholders to participate successfully in the Buy-Back. Final Price Tenders will only be scaled back (see Section 1.17) if the Buy-Back Price is set at a 14 per cent discount to the Market Price and the total number of Shares tendered at that discount and as Final Price Tenders is more than BHP Billiton Limited determines to buy back. Therefore, if you wish to increase the likelihood that your Shares will be bought back, you may consider submitting a Final Price Tender.

1.13 How will I know what the Buy-Back Price is?

BHP Billiton Limited intends to announce the Buy-Back Price to the ASX (and other relevant exchanges) as soon as practicable after the Tender Period closes. BHP Billiton Limited expects this announcement to be on Monday, 11 April 2011. The announcement will also be posted on BHP Billiton’s website (www.bhpbilliton.com).

1.14 Will all the Shares I tender be bought back?

The success of your Tender will depend on your Tender Discount, the size and price of Tenders lodged by other BHP Billiton Limited shareholders and the total number of Tenders that BHP Billiton Limited accepts. There is no guarantee that all or even some of your Tender will be accepted. The final size of the Buy-Back will depend on tenders lodged by BHP Billiton Limited shareholders and market conditions. In particular, BHP Billiton Limited may buy back significantly less than the announced target of A$5 billion, or no Shares at all.

1.15 How will I know how many of my Shares have been bought back?

No later than Monday, 18 April 2011, BHP Billiton Limited will send all eligible BHP Billiton Limited shareholders who have tendered their Shares into the Buy-Back a statement notifying them of the number of their Shares (if any) that have been bought back and the price paid. Eligible BHP Billiton Limited shareholders can also access this information on or after Monday, 11 April 2011 by calling the Buy-Back enquiry line on 1300 612 584 within Australia, 0800 451 521 within New Zealand or +61 3 9415 4868 if you are calling from outside Australia or New Zealand. If you are a CHESS Holder, you will receive written confirmation from CHESS of your Tenders that were successful made on your holding or Tenders withdrawn by your controlling participant. Shareholders may also enquire through the Registry website (www.investorcentre.com) on or after Monday, 11 April 2011. To access your account in Investor Centre you will need your Holder Identification Number (HIN) or Securityholder Reference Number (SRN).

1.16 How will BHP Billiton Limited determine successful Tenders and any scale back?

If BHP Billiton Limited proceeds with the Buy-Back and your Tender Discount is equal to or larger than the Buy-Back Discount, or you lodged a Final Price Tender, your Tender will be successful and your Shares will be bought back, subject to any scale back and, if applicable, any Minimum Price condition.

If your Tender Discount is smaller than the Buy-Back Discount, your Tender will be rejected and your Shares will not be bought back.

If you have chosen a Minimum Price and the Buy-Back Price is below that price, your Tender will be rejected and your Shares will not be bought back.

1.17 When may a scale back apply?

A scale back may apply if the total amount of Shares tendered at a Tender Discount, which is equal to or greater than the Buy-Back Discount, and as Final Price Tenders, is more than the total amount of Shares that BHP Billiton Limited determines to buy back. In such circumstances, a scale back would apply as follows:

If the Buy-Back Discount is between 10 per cent and 13 per cent (inclusive)

Where the Buy-Back Discount is between 10 per cent and 13 per cent (inclusive):

If the Buy-Back Discount is 14 per cent

Where the Buy-Back Discount is 14 per cent:

When the scale back is calculated, all fractions will be rounded down to the nearest Share.

If you want to reduce the likelihood of any scale back applying to your Tender, you may consider submitting a Final Price Tender (see Section 1.12 for further details). This is because in the event that a scale back applies, Shares tendered as a Final Price Tender will only be scaled back if the Buy-Back Price is based on a 14 per cent Tender Discount.

1.18 What is the Priority Allocation?

In the event of a scale back, BHP Billiton Limited will buy back the first 125 Shares successfully tendered by each shareholder or such lesser number of Shares determined to be the Priority Allocation as is required to ensure that BHP Billiton Limited buys back only the number of Shares it determines to buy back. If you successfully tender less than the Priority Allocation, then all of your tendered Shares would be bought back as your Priority Allocation in the circumstances described above. BHP Billiton Limited is offering the Priority Allocation to ensure that small eligible BHP Billiton Limited shareholders are not disadvantaged by any scale back.

1.19 What is a Small Holding Tender?

A Small Holding Tender is a Tender submitted by a BHP Billiton Limited shareholder who tenders all of their Shares at one or more Tender Discounts equal to or greater than the Buy-Back Discount and/or as a Final Price Tender and who would have a Small Holding (50 Shares or less) created as a result of BHP Billiton Limited’s acquisition of a Priority Allocation and any scale back.

However, if you become the registered holder of additional ordinary shares in BHP Billiton Limited after the Buy-Back Record Date and, as a result, you are the registered holder of more BHP Billiton Limited ordinary shares at the Closing Date than you held on the Buy-Back Record Date, then your Tender will not be a Small Holding Tender and the scale back will apply to your Tender as it would to any other Tender.

1.20 How would a scale back affect my Tender?

The details of any scale back will be announced as soon as possible after the Closing Date. BHP Billiton Limited expects to make this announcement on Monday, 11 April 2011. To assist you in understanding how a scale back may affect your Tender, the following two illustrative examples have been provided.

Examples

As an illustration, it is assumed that five eligible BHP Billiton Limited shareholders with various sized holdings each tender Shares into the Buy-Back. In each of the two different examples:

1.21 Can I elect a Minimum Price for the purchase of my Shares?

If you choose to tender Shares into the Buy-Back, you will need to nominate a Tender Discount or lodge a Final Price Tender.

If you are concerned that movements in the Market Price after you lodge your Tender may result in your Tender corresponding to a lower Buy-Back Price than you are willing to sell your Shares for, then you have the option of making your Tender conditional on the Buy-Back Price being no less than a specified Minimum Price. Note that this may affect the success of your Tender because if the Buy-Back Price is below your Minimum Price, then your Tender will be rejected and your Shares will not be bought back. If you choose to make your Tender conditional on the Buy-Back Price being no less than one of the specified Minimum Prices, you must do this in addition to nominating a Tender Discount or a Final Price Tender. If you fail to nominate a Tender Discount or a Final Price Tender, and only make your Tender conditional on a specified Minimum Price, your Tender will be invalid and will not be accepted by BHP Billiton Limited.

1.22 How have BHP Billiton Limited shares performed over recent times?

The closing price of BHP Billiton Limited shares on the ASX on Monday, 21 February 2011, being the last trading day before BHP Billiton Limited announced details of the Buy-Back, was A$45.85.

BHP Billiton Limited’s highest and lowest market sale prices during each of the preceding six months were as follows:

Source: IRESS

Notes:

1.23 How do I participate in the Buy-Back? Step 1 – Decide how many Shares you wish to sell

To participate in the Buy-Back, you first need to decide how many Shares you wish to sell.

The personalised Tender Form enclosed with this booklet sets out the maximum number of Shares you may tender into the Buy-Back. However, if you hold 125 Shares or less, to participate you must tender all of your Shares and if you hold more than 125 Shares, you must tender a minimum of 125 Shares in aggregate.

You should not, before the Buy-Back Date, sell or offer to sell to others the Shares you have tendered into the Buy-Back unless you first withdraw or amend your Tender (see Section 1.24).

Step 2 – Choose your Tender Discount(s) and/or a Final Price Tender

Once you have determined the number of Shares you wish to tender into the Buy-Back, you need to specify the discount(s) to the Market Price at which you are willing to tender these Shares (your Tender Discount(s)).

You may tender your Shares at discounts of between 10 per cent and 14 per cent inclusive (at 1 per cent intervals) to the Market Price as set out on the Tender Form or as a Final Price Tender. If you hold 125 Shares or less, to participate you must tender all of your Shares at the same Tender Discount or as a Final Price Tender (which is an election to receive the

Buy-Back Price, whatever BHP Billiton Limited determines it to be). But if you hold more than 125 Shares, you may tender different parcels of the Shares you wish to sell at different Tender Discounts. For example, you may tender one third of the Shares you wish to sell at a 14 per cent Tender Discount, one third at a 10 per cent Tender Discount and one third as a Final Price Tender. However, you may not tender the same Shares at different Tender Discounts (or at both a specified Tender Discount and as a Final Price Tender). Each parcel of Shares tendered at a different Tender Discount or as a Final Price Tender is a separate Tender (but entered on the one form). The total number of Shares that you tender into the Buy-Back must not exceed the number set out in Box A on your Tender Form.

To provide an indication of the Market Price, BHP Billiton will calculate and make available to eligible shareholders the running VWAP during the five-day period as referred to in Section 1.11. The running VWAP will be published on BHP Billiton’s website (www.bhpbilliton.com) from approximately 6.00pm (Melbourne time) on Monday, 4 April 2011 and will be available through the Buy-Back enquiry line from Tuesday, 5 April 2011 and will be updated cumulatively each day. Please note that the Market Price information provided by BHP Billiton on its website and through the Buy-Back enquiry line will only be an estimate given that it is a cumulative daily update from opening of trading on Monday, 4 April 2011.

The actual Market Price, representing the VWAP for the full five-day period up to and including the Closing Date, will be available from approximately 6.00pm (Melbourne time) on Friday, 8 April 2011, and can be obtained by accessing the BHP Billiton website or by calling the Buy-Back enquiry line on 1300 612 584 within Australia, 0800 451 521 within New Zealand or +61 3 9415 4868 if you are calling from outside Australia or New Zealand. BHP Billiton Limited also intends to announce the Market Price to the ASX (and other relevant exchanges) as soon as practicable on Friday, 8 April 2011.

BHP Billiton Limited shareholders may wish to delay submitting their Tender until towards the end of the Tender Period so that they can consider the approximate Market Price before submitting their Tender Form.

Step 3 – Optional – choose your Minimum Price

In addition to choosing to tender your Shares at the specified Tender Discounts and/or as a Final Price Tender, you may also elect to impose a Minimum Price condition on your Tender (see Section 1.21).

Step 4 – Submit your Tender(s)

How you submit your Tender(s) will depend on the type of holding you have. The method for submitting your Tenders will be specified on your Tender Form.

(a) Issuer Sponsored Holdings

Once you have determined the number of Shares you wish to tender into the Buy-Back and your Tender Discount(s) and/or Final Price Tender, and, if you choose, your Minimum Price, you need to complete and sign your personalised Tender Form and return it to the Registry by 7.00pm (Melbourne time) on Friday, 8 April 2011:

If sending by mail

BHP Billiton Limited Buy-Back

C/- Computershare Investor Services Pty Limited

GPO Box 52

Melbourne VIC 8060

AUSTRALIA

If sending by facsimile

BHP Billiton Limited Buy-Back

Fax no: +61 3 9473 2092

You can use the enclosed reply-paid envelope if you are posting your Tender Form from within Australia. If you are sending your Tender Form by facsimile, do NOT send your original Tender Form to the Registry.

BHP Billiton Limited will not accept your Tender Form unless it is actually received at the specified address before the Tender Period closes. You should allow sufficient time for your Tender Form to be received if you are sending your Tender Form by mail.

(b) CHESS Holdings

Once you have determined the number of Shares you wish to sell, your Tender Discount(s) and/or Final Price Tenders, and, if you choose, your Minimum Price, you need to instruct your controlling participant (normally your broker) in sufficient time for them to process your Tender so that it is received by the Registry by 7.00pm (Melbourne time) on Friday, 8 April 2011. The name of the controlling participant who manages your CHESS Holding as at the Buy-Back Record Date is printed on your Tender Form.

You should NOT send your Tender Form to the Registry.

If you are a CHESS Holder, you will be sent written confirmation from CHESS of the Tenders made on your holding or Tenders withdrawn by your controlling participant. Irrespective of its wording, this confirmation is not an acceptance by BHP Billiton Limited of any Tender.

1.24 Can I withdraw or amend my Tender?

Once you have submitted a Tender, it can only be withdrawn or amended by following the procedures set out below.

(a) Issuer Sponsored Holdings

To withdraw or amend a Tender that has been received by the Registry, you will need to submit a Withdrawal/ Amendment Form, a copy of which is included at the back of this booklet. If you wish to withdraw all of your Tenders (‘Withdrawal’), or change the terms of all or some of your Tenders, or withdraw some (not all) of your Tenders (‘Amendment’), you must follow the following procedure:

The effect of amending your Tenders by submitting a Withdrawal/Amendment Form will be to withdraw all of your previous Tenders and (where applicable) replace them with the Tenders detailed on that Withdrawal/ Amendment Form.

(b) CHESS Holdings

If you have a CHESS Holding, you will need to instruct your controlling participant in sufficient time for them to process your withdrawal or amendment by 7.00pm (Melbourne time) on Friday, 8 April 2011.

If you have a CHESS Holding, you should NOT send a Withdrawal/Amendment Form to the Registry.

The effect of your controlling participant withdrawing or amending one or more of your Tenders will be to withdraw those Tenders, and in the case of an amendment to replace the amended Tenders with new Tenders.

If you are a CHESS Holder, you will be sent written confirmation from CHESS of the withdrawals/amendments made in relation to your holding by your controlling participant. Irrespective of its wording, this confirmation is not an acceptance by BHP Billiton Limited of your withdrawal or amendment of any Tender.

1.25 How can I obtain additional Tender or Withdrawal/Amendment Forms?

If you require replacement Tender Forms or additional Withdrawal/Amendment Forms, please call the Buy-Back enquiry line on 1300 612 584 within Australia, 0800 451 521 within New Zealand or +61 3 9415 4868 if you are calling from outside Australia or New Zealand. Withdrawal/ Amendment Forms can also be downloaded from BHP Billiton’s website (www.bhpbilliton.com).

You should keep in mind that, in order to withdraw or amend your Tender at or near the end of the Tender Period, you will need to have sent your form so that it is received by the Registry (or, for CHESS Holders, processed by your controlling participant) by 7.00pm (Melbourne time) on Friday, 8 April 2011.

1.26 Can ordinary shares held by BHP Billiton employees be tendered?

Restricted Employee Shares are not eligible to be tendered into the Buy-Back and these shares have not been included on your Tender Form. This includes ESP Loan Shares.

However, any EEP Shares which are registered in your name at the Buy-Back Record Date, and which are not Restricted Employee Shares, may be tendered into the Buy-Back and are included on the Tender Form you received.

Shareplus Shares that have been transferred to you and registered in your name on the Buy-Back Record Date are eligible to participate.

Any form of rights or options to acquire Shares granted under an EEP are not Shares, and therefore are not eligible to be tendered into the Buy-Back. This includes ESP Options, PSP Performance Rights, LTIP Performance Shares, MAP Restricted Shares, GIS Deferred Shares, GIS Options, GSTIP Deferred Shares and GSTIP Options granted under BHP Billiton’s EEP. However, EEP Shares you acquire on the exercise or vesting of such options or rights (as applicable), and which are registered in your name on the Buy-Back Record Date, are eligible to be tendered into the Buy-Back.

BHP Billiton employees who are Excluded Foreign Persons (including employees who are located in the United States, are US Persons or are residents of Canada) are not eligible to participate in the Buy-Back.

If you hold EEP Shares and have any questions about tendering your EEP Shares, please call the Buy-Back enquiry line on 1300 612 584 within Australia, 0800 451 521 within New Zealand or +61 3 9415 4868 if you are calling from outside Australia or New Zealand.

1.27 How will I receive payment for Shares bought back?

If you have an existing direct credit instruction to an Australian bank account for the payment of dividends on your Shares recorded on the BHP Billiton Limited Share Register at 7.00pm (Melbourne time) on Friday, 8 April 2011, all proceeds due to you under the Buy-Back will be credited to your nominated bank account. If your nominated bank account is domiciled in the United States or Canada or you do not have a direct credit authority, you will be sent a cheque in Australian dollars. Where dividends are normally paid in a currency other than Australian dollars, the Buy-Back proceeds will be paid in that other currency by direct credit. However, BHP Billiton Limited will only make payments in New Zealand dollars and pounds sterling. To determine the amounts payable in currencies other than Australian dollars, the Buy-Back proceeds will be converted into the relevant currency at the applicable exchange rate on the Buy-Back Date as determined by BHP Billiton Limited.

Alternatively, if you wish to receive payment for Shares bought back in a form that is different from your current direct credit instructions for payment of dividends on your Shares, you may change your current direct credit instructions by providing written instructions to the Registry before 7.00pm (Melbourne time) on Friday, 8 April 2011 or update your details by logging onto the Investor Centre (www.investorcentre.com). Please note that if you do alter your nominated bank account details, this will be taken to be your nominated bank account for future dividend payments.

Cheques and direct credit advices will be mailed to you at your risk to your address, as shown on the BHP Billiton Limited Share Register at 7.00pm (Melbourne time) on Friday, 8 April 2011. It is your responsibility to inform the Registry of any changes to your contact details. Payments to bank accounts and dispatch of cheques are expected to be completed by Monday, 18 April 2011. Payments to the accounts and the dispatch of cheques to the addresses on the BHP Billiton Limited Share Register will satisfy BHP Billiton Limited’s obligation to pay you for any Shares bought back.

1.28 Can I trade my Shares after submitting a Tender?

Once you have tendered Shares into the Buy-Back, you should not:

However, any Shares which you have not tendered into the Buy-Back may be sold or otherwise dealt with in the ordinary manner.

Once you have submitted a Tender, you will not be able to deal with those Shares before the end of the Tender Period unless you first withdraw or amend your Tender, in accordance with the procedures set out in Section 1.24 of this booklet.

1.29 If I purchase other Shares during the Tender Period, will my tendered Shares be affected?

Eligible BHP Billiton Limited shareholders who tender their Shares to BHP Billiton Limited under the Buy-Back will be able to purchase additional Shares in BHP Billiton Limited on or after Friday, 25 February 2011 without compromising their Australian tax position, specifically their entitlement for claiming related franking credits, on Shares sold into the Buy-Back. This is because:

General information on the Australian tax implications for eligible BHP Billiton Limited shareholders participating in the Buy-Back is included in Section 2 of this booklet.

If you decide to participate in the Buy-Back, your particular tax treatment will depend on your own circumstances. It is therefore important that you seek professional tax advice to take into account your particular circumstances.

2.1 Introduction

Unless otherwise specified, this discussion is based on Australian income tax legislation and administrative practice as at 24 February 2011. These laws, the interpretation of them by the courts, and administrative practice may change at any time, and sometimes with retrospective effect.

In May 2009, the Assistant Treasurer announced a number of proposed changes to the tax laws affecting off-market share buy-backs. These changes, if enacted, may affect the terms on which companies offer to buy back their shares and the taxation consequences for BHP Billiton Limited shareholders of participating in a buy-back.

It has been announced that any changes to the taxation laws affecting off-market share buy-backs would apply from the date of enactment of the relevant legislation. Since that legislation has yet to be introduced into Parliament, BHP Billiton Limited does not anticipate that the Buy-Back will be affected by the proposed changes, but this cannot be known with certainty.

BHP Billiton Limited has received a draft Class Ruling from the ATO for BHP Billiton Limited shareholders who participate in the Buy-Back, which provides preliminary confirmation of a number of the statements contained in this summary. The ATO will not issue the Class Ruling in a form that is binding until after completion of the Buy-Back. Although it is not anticipated to be the case, when the binding Class Ruling is issued by the ATO, it is possible that it may express a view contrary to that set out below.

This general summary of the Australian income tax implications of participating in the Buy-Back is limited to BHP Billiton Limited shareholders who hold their Shares on capital account and therefore may be assessed for tax under the capital gains tax (‘CGT’) provisions on Shares bought back by BHP Billiton Limited. BHP Billiton Limited shareholders who:

may be assessed on their dealings in Shares other than under the CGT provisions. The tax consequences for those BHP Billiton Limited shareholders may differ significantly from those discussed below.

The general summary below does not address any specific issues that may arise where a shareholder receives the Buy-Back proceeds in a currency other than Australian dollars.

2.2 Income tax – Treatment of Dividend Component of Buy-Back Price

Australian Resident Shareholders

What proportion of the Buy-Back Price is a deemed dividend that I must include in my assessable income?

The Buy-Back will constitute an ‘off-market’ buy-back for the purposes of Division 16K of Part III of the Income Tax Assessment Act 1936. It is anticipated that the Capital Component of the Buy-Back Price will be A$0.28 and that all of the Buy-Back Price in excess of A$0.28 (Dividend Component) will be treated as a frankable distribution.

The Dividend Component will be fully franked. You will need to include this amount in your assessable income.

Will I be entitled to a tax offset?

If you are entitled to the benefit of franking credits on the Dividend Component (see section entitled ‘Franking Credit Entitlements’ below) you will also:

The tax offset may reduce the total tax payable on your taxable income. If you are an individual or a complying superannuation entity and your total tax offsets exceed the total tax payable on your taxable income, you may be entitled to a cash refund of that excess.

Generally no refunds will be available to companies if the tax offset exceeds the tax payable, however, they may be able to carry forward any excess tax offsets to reduce tax payable in future income years.

Will an Australian resident company be entitled to a credit in its own franking account?

Yes. If the company satisfies the holding period rules (see section entitled ‘Franking Credit Entitlements’ below), the company should enter the franking credit in its franking account and it can be used to frank dividends that the company pays.

Non-Resident Shareholders

What is the tax treatment if I am not a resident of Australia?

If you are a non-resident shareholder that does not carry on business through a permanent establishment in Australia, the Dividend Component is not subject to either Australian income tax or Australian withholding tax as it will be fully franked. The franking credits which are attached to the Dividend Component will generally have no further relevance for you and no part of those franking credits is refundable by the ATO to you.

Different consequences may arise if you hold Shares as part of a business conducted through a permanent establishment in Australia. In that case, you should obtain your own Australian tax advice before making a decision to participate in the Buy-Back.

The treatment of the Dividend Component as a deemed dividend is a function of Australian tax law (Division 16K of Part III of the Income Tax Assessment Act 1936) and does not alter the fact that, for all other purposes, the Buy-Back Price is the proceeds from selling the shares back to BHP Billiton Limited. It cannot therefore be assumed that the tax laws of the jurisdiction in which you reside will treat any part of the Buy-Back Price as a dividend.

Franking Credit Entitlements

Are there any rules which might deny me the benefit of the franking credits?

The Australian tax legislation includes a number of rules which may prevent you from claiming the benefit of franking credits on the Dividend Component. These rules are designed to, amongst other things, discourage trading in franking credits. These rules may deny the benefit of franking credits to you generally, or because of your particular circumstances.

Will the anti-streaming rules deny me the benefit of franking credits?

BHP Billiton Limited has received preliminary advice from the ATO that it will not make a determination to deny participating BHP Billiton Limited shareholders the benefit of franking credits on the Dividend Component.

However, the particular circumstances of each participating shareholder will also be relevant in determining whether the rules deny the benefit of the tax offset or franking credit. For example, the period during which you hold the Shares and any arrangements you have in relation to the Shares will be important.

How long do I have to hold the Shares to be entitled to the franking credits?

To qualify for the franking credit on the Dividend Component you must be a ‘qualified person’. You will be a qualified person if:

The 45-day rule requires that if you are an Australian resident shareholder you have to have held your Shares ‘at risk’ for a period of at least 45 days excluding the days of acquisition and disposal.

The 45-day rule is complex. Generally, if you are subject to the rule and you acquired all of your Shares on or before Thursday, 24 February 2011 you will have held your shares for 45 clear days in respect of the Dividend Component. This is on the assumption that the determination of the Buy-Back allocations occurs on Monday, 11 April 2011.

Will I have held my shares at risk over this 45-day period?

You can still not satisfy the 45-day rule even if you acquired your Shares on or before Thursday, 24 February 2011. This may arise where you have entered into other arrangements regarding the Shares, which reduce the risk of loss or opportunity for gain on the Shares. For example, granting an option to another person to acquire the Shares would reduce that risk or opportunity.

In addition, if you are under an obligation to make a payment that passes the benefit of the Dividend Component to another person, you may also not qualify for the franking credit unless other ‘at risk’ holding requirements are satisfied.

If I acquire shares after the ex-entitlement date will this impact Shares tendered into the Buy-Back?

The 45-day rule operates on the last-in-first-out principle so you will be deemed, for the purpose of applying the 45-day rule, to have disposed of your most recently acquired Shares under the Buy-Back.

The ATO generally accepts that shares purchased on or after the ex-entitlement date for an off-market buy-back (in this case, Shares purchased on or after Friday, 25 February 2011) will be excluded from the ‘last-in-first-out’ rule. The acquisition of Shares on an ex-entitlement basis will therefore not affect your ability to receive franking credits on Shares acquired on or before Thursday, 24 February 2011 which are tendered into the Buy-Back. If the determination of the Buy-Back allocations occurs on a day other than Monday, 11 April 2011, these dates may alter.

2.3 Capital Gains Tax (‘CGT’) – Disposal of Shares (acquired after 19 September 1985¹)

Australian Resident Shareholders

BHP Billiton Limited shareholders participating in the Buy-Back will be deemed for CGT purposes to have disposed of each Share for the Capital Component of A$0.28 plus the amount (if any) by which the Tax Value exceeds the Buy-Back Price (Capital Proceeds). The date of disposal will be taken, for CGT purposes, to be the date on which BHP Billiton Limited accepts the Tender. This is anticipated to be on Monday, 11 April 2011.

What is the Tax Value of the Shares?

In 2004, the ATO released Taxation Determination TD2004/22, which sets out the ATO’s view in relation to determining the Tax Value of shares bought back off-market. TD2004/22 provides that the Tax Value should be determined as the volume weighted average price of the shares over the last five trading days before the first announcement of the buy-back, adjusted for the movement in the S&P/ASX 200 Index from the opening of trading on the announcement date to the close of trading on the day the buy-back closes.

TD2004/22 also provides that if companies undertaking an off-market share buy-back wish to vary this methodology, representations should be made to the ATO explaining the rationale for this variation.

BHP Billiton Limited has made representations to the ATO that the market value setting methodology adopted in TD2004/22 should be varied in determining the Tax Value of Shares. As a result of these representations, the ATO has indicated that for the purposes of the Buy-Back, the Tax Value may be determined in accordance with the following formula:

If the movement in the BHP Billiton Plc share price is significantly different from the movement in the BHP Billiton Limited share price over the relevant period, BHP Billiton Limited may approach the ATO to seek to vary the methodology used to determine the Tax Value.

If the Buy-Back Price was higher than the Tax Value, a portion of the Dividend Component equal to the difference between the Buy-Back Price and the Tax Value would be deemed to be unfrankable. BHP Billiton does not intend to buy back any Shares for an amount in excess of the Tax Value.

Will I make a capital gain or a capital loss on sale of Shares into the Buy-Back?

You will make a capital gain on a Share disposed of under the Buy-Back to the extent that your Capital Proceeds exceed the CGT cost base of the Share. However, in light of the size of the Capital Component, this will not typically occur.

Under current law, you will make a capital loss for a Share disposed of under the Buy-Back if the CGT cost base of the Share exceeds the Capital Proceeds. No allowance for indexation or non-capital costs is made in determining the CGT cost base of the Share in calculating a capital loss.

The capital loss which arises under the Buy-Back may be greater than the capital loss which may have arisen under an equivalent sale of the Shares on-market. This is because the Capital Proceeds under the Buy-Back are limited to A$0.28 plus the amount (if any) by which the Tax Value exceeds the Buy-Back Price, rather than the price at which the shareholder would have sold their Shares on-market. The lower Capital Proceeds also mean that any capital gain which may otherwise have arisen on disposal of the Shares under the Buy-Back is reduced or eliminated.

If you are a company, or normally taxed as a company, it does not necessarily follow that you will have a capital loss if the Capital Proceeds are less than the CGT cost base of the share (excluding indexation and non-capital costs). Where a shareholder is a company, or is normally taxed as a company, the amount of any capital loss is reduced by the lesser of:

If a capital loss does arise from the Buy-Back, you cannot offset that capital loss or any part of it against the Dividend Component or any franking credit included in your assessable income, as it can only be used to offset capital gains. Capital losses that are not used in the income year in which they arise may usually be carried forward and used to offset capital gains made in later income years.

Section 2.4 provides illustrative examples of the potential tax consequences for an Australian resident individual disposing of their Shares under the Buy-Back. The actual tax consequences will depend on the Buy-Back Price, the Tax Value, the individual’s applicable marginal tax rate and their CGT cost base for the Shares.

Will I receive a CGT discount?

If you have held your Shares for more than 12 months prior to the date of disposal (anticipated to be Monday, 11 April 2011), you are eligible for the discount and need only include in your assessable income one-half (for individuals) and two-thirds (for complying superannuation funds) of any net capital gain. If you are a company you are not entitled to any CGT discount.

What will be my CGT cost base?

Generally, the CGT cost base for a Share will be the amount that you paid to acquire the Share together with certain incidental costs of acquisition, for example stamp duty and brokerage, and certain incidental costs of disposal. If you are the trustee of a superannuation fund, you should note that the cost base of shares acquired before 1 July 1988 may be adjusted to the market value of the shares on 30 June 1988.

If you acquired your Shares pursuant to an employee equity scheme, your cost base will be determined under the specific provisions dealing with such schemes.

The cost base must also be adjusted for any capital reductions or bonus issues of shares. For example, on the formation of the DLC in 2001 a bonus issue of 1.0651 shares for each share held was made. Further, capital reductions were undertaken to facilitate the demerger of each of OneSteel Ltd in October 2000 (A$0.66 per share reduction in the cost base per share before adjustment for DLC bonus shares) and BlueScope Steel Ltd in July 2002 (5.063 per cent reduction in cost base per share).

In determining the impact of the BlueScope Steel Ltd demerger, the ATO accepts that there may be more than one method of allocating the cost base that results in a reasonable apportionment. In all cases, the ATO considers that the apportionment will be reasonable if a taxpayer calculates the new cost base of each post-demerger interest in accordance with the market value of that interest relative to the total market value of all of their post-demerger interests. This method is referred to as the relative market value method. However, it may also be acceptable to use the parcel by parcel method.

This information is contained in:

http://law.ato.gov.au/atolaw/view.htm?Docid=

TXD/TD200673/NAT/ATO/00001&PiT=

99991231235958

http://www.ato.gov.au/print.asp?doc=/content/75646.htm

Can the CGT cost base be indexed?

If you are not a company and you acquired your Shares at or before 11.45am (ACT time) on 21 September 1999, you may choose whether to index the cost base to 30 September 1999 or to apply the CGT discount. A company is permitted to index the cost base of Shares acquired before 11.45am (ACT time) on 21 September 1999, but is not permitted to apply the CGT discount.

If you acquired your Shares after 11.45am (ACT time) on 21 September 1999, you cannot index your cost base. However, you may apply the CGT discount (unless you are a company) in calculating any capital gain on disposal if you have held your Shares for at least 12 months.

Indexation does not apply to the calculation of a capital loss.

Non-Resident Shareholders

Under Australian CGT rules, a taxable capital gain or capital loss generally will not arise for a non-resident participating in the Buy-Back unless the non-resident together with its ‘associates’ holds a ‘non-portfolio interest’ in BHP Billiton Limited on Monday, 11 April 2011 or throughout a 12-month period during the 2 years ending Monday, 11 April 2011. This assumes that the determination of the Buy-Back allocation occurs on Monday, 11 April 2011.

A ‘non-portfolio interest’ is a 10 per cent holding of the issued shares of BHP Billiton Limited (including options to acquire such shares). If you and your associates together hold, or have held, a non-portfolio interest in BHP Billiton Limited, you should obtain specific Australian taxation advice before making any decision to tender your Shares into the Buy-Back.

However, different consequences may arise if a nonresident shareholder holds Shares as part of a business conducted through a permanent establishment in Australia or if a non-resident has previously resided in Australia and held the relevant Shares at the time when they left Australia. If these circumstances apply to you, you should obtain specific Australian taxation advice before making any decision to tender your Shares into the Buy-Back.

2.4 Worked tax example of potential tax consequences for Australian resident individuals and Australian complying superannuation funds

The following worked examples set out the potential tax consequences per Share acquired after 19 September 1985 for Australian resident individuals and Australian complying superannuation funds participating in the Buy-Back. The examples assume a Buy-Back Price of A$38.70 (an assumed 14 per cent Buy-Back Discount to an assumed Market Value of A$45.00) and two illustrative cost bases for CGT purposes of A$20.00 and A$30.00 per Share. You should not rely on A$38.70 as being the actual Buy-Back Price; see Section 1.10 for an explanation of how the Buy-Back Price will be determined.

The ‘Jonathan example’ following the table assumes a Buy-Back Price of A$38.70 (an assumed 14 per cent Buy-Back Discount to an assumed Market Value of A$45.00) and a A$30.00 cost base for CGT purposes and provides more detailed commentary on the relevant calculations in notes A to I following the table. The column on the right of the table marked ‘Your workings’ is there to assist you should you choose to participate in the Buy-Back. It is intended to help you calculate your anticipated income tax and CGT consequences if you choose to participate in the Buy-Back.

It is important to understand that the table is an illustrative example only and is based on a number of assumptions including:

the discount capital gain method is used, which may or may not be applicable depending on a participating shareholder’s circumstances; and

In any event, the tax consequences for an Australian resident individual or an Australian complying superannuation fund may be different from the illustrative example because of their particular circumstances. The amounts calculated under the illustrative example will not necessarily reflect the actual tax consequences for you if you choose to participate in the Buy-Back.

Tax calculator

To assist you to calculate the tax consequences for you if you choose to participate in the Buy-Back, BHP Billiton Limited intends to provide access to a tax calculator through its website (www.bhpbilliton.com) from approximately Monday, 7 March 2011 to Monday, 18 April 2011.

Notes:

‘Jonathan example’

Jonathan earns A$48,000 per annum and he is in a tax bracket that gives him a marginal tax rate of 31.5 per cent. Jonathan purchased 500 BHP Billiton Limited Shares post July 2002 (that is, Jonathan did not participate in any of the demergers) at A$30.00 per Share and as a consequence his cost base for CGT purposes is A$30.00 per Share. Jonathan is able to tender at any of the five specified Tender Discounts in the range of 10 per cent to 14 per cent inclusive (at 1 per cent intervals) to the Market Price or as a Final Price Tender, and wants to calculate the income tax and CGT consequences for a given Buy-Back Price within the range on a per Share basis.

Income tax consequences (See ‘Jonathan example’ above)