South32 Regulatory News (S32)

23rd August 2018

South32 Limited

(Incorporated in Australia under the Corporations Act 2001)

(ACN 093 732 597)

ASX / LSE / JSE Share Code: S32ISIN: AU000000S320

south32.net

South32 Limited

WORSLEY ALUMINA ORE RESERVES UPDATE

South32 Limited (ASX, LSE, JSE: S32; ADR: SOUHY) (South32) is pleased to announce changes to its estimates of Ore Reserves for Worsley Alumina.

· 43 Mt[1] of Ore Reserves added from the Marradong West Area

Worsley Alumina is an integrated bauxite mine and alumina refinery which is 86% owned by South32. It is located 130 kilometres (kms) south east of Perth, in Western Australia.

Full details of this update are contained in the attached report.

The estimates of Mineral Resources and Ore Reserves have been reported in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2012 (JORC Code) and the Australian Securities Exchange Listing Rules. This report summarises the information contained in the JORC Code Table 1. Appendices prepared in connection with this report have been submitted to UK Listing Authority (UKLA) national storage mechanism and are available for inspection at http://www.morningstar.co.uk/uk/NSM or are otherwise available on South32's website at http://www.south32.net.

About South32

South32 is a globally diversified mining and metals company. We produce bauxite, alumina, aluminium, energy and metallurgical coal, manganese, nickel, silver, lead and zinc at our operations in Australia, Southern Africa and South America. We are also the owner of a high grade zinc, lead and silver development option in North America and have several partnerships with junior explorers with a focus on base metals. Our purpose is to make a difference by developing natural resources, improving people's lives now and for generations to come, and to be trusted by our owners and partners to realise the potential of their resources.

Further information on South32 can be found at www.south32.net.

JSE Sponsor: UBS South Africa (Pty) Ltd23 August 2018

Update on estimates of Ore Reserves for Worsley Alumina

South32 confirms an addition of 43 Mt to its Ore Reserves estimate as at 30 June 2018 for Worsley Alumina. The increase relates to the first time reporting of Ore Reserves from the Marradong West area of the Worsley Alumina project.

The Mineral Resources and Ore Reserves estimates as at 30 June 2018, are presented in Appendix 1, Table 1 and Table 3. A comparison to previously published Mineral Resources and Ore Reserves estimates (as at 30 June 2017) are presented in Appendix 1, Table 2 and Table 4.

The estimates of Mineral Resources and Ore Reserves have been reported in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves, 2012 (JORC Code) and the Australian Securities Exchange Listing Rules.

The breakdown of the total estimates of Mineral Resources and Ore Reserves into the specific JORC Code categories is contained in the Appendix 1 Tables. This report also summarises the information contained in the JORC Code Table 1, which is included in Appendix 2 of this report.

Estimate of Ore Reserves

The declared Ore Reserves estimates are based on the Worsley Alumina Mineral Resource estimates as at 30 June 2018.

Material and economic assumptions

Worsley Alumina's Boddington Bauxite Mine (BBM) has been operating since 1984. The run-of-mine (ROM) ore is crushed onsite before being transported by conveyor to the Worsley Alumina Refinery near Collie, in Western Australia.

Sufficient studies have been undertaken to enable the Mineral Resource to be converted to Ore Reserve on the basis of current operating methods and practices.

The capital costs are based on the expected future development of the mine, refinery, tailings facilities and sustaining capital requirements. The costs have been accounted for in the operation's valuation models.

· Operating costs are estimated as part of the South32 internal budgeting process, which also considers transport costs including current truck, conveyor and contractor rates.

· Other economic assumptions used for the valuation reflect South32's internal views of demand, supply, volume forecasts and competitor analysis, and are commercially sensitive.

Ore Reserve classification

Proved and Probable Ore Reserve are derived from the respective Mineral Resource classification in accordance with the JORC Code other than as noted below.

Approximately 4 Mt of Measured Mineral Resource was converted to a Probable Ore Reserve. This ore is subject to contractual co-operation arrangements with Newmont's Boddington Gold Mine and is under or in close proximity to existing key infrastructure. Internal and planned dilution within ore reserve pit shells represents

The Reserve Life reported as of 30 June 2018 reflects the scheduled extraction period in years for the total Ore Reserves in the current approved life of operation plan.

Mining method and assumptions

The BBM mining operations are centred on existing crushing and conveying hubs in the Saddleback and Marradong mining areas.

Shallow, multi-pit, open-cut mining techniques (drill, blast, load and haul) are used by BBM and have been developed over the last thirty-four years to efficiently extract bauxite from the discrete pods. This mining method is used to model and report the 30 June 2018 Ore Reserve estimate.

The Ore Reserve is reported within mine design shells, generated using mine design assumptions, including limiting factors (i.e. heritage sites, protected areas, thickness and mining constraints etc.), which are applied to the resource model.

Processing method and assumptions

The Worsley Alumina Refinery produces alumina from bauxite exclusively sourced from BBM utilising the Bayer refining process. This refining process is the industry standard used to produce alumina from gibbsitic bauxite ores.

· Predicted recoveries at the refinery are derived using a historic recovery model over the life of the operation.

· Metallurgical recovery is assumed at 94.1%.

· Allowances have been made for deleterious elements in the life of operation plan valuation.

Cut-off grade

A variable cut-off grade ranging from 22.5-25% for A.Al2O3 and 2 is considered in the pit design shells used for reporting the Ore Reserves. The Marradong West area is mined under a third-party access agreement, which specifies a cut-off grade for individual pits. This pit scale cut-off grade is applied directly when reporting the Marradong West Ore Reserve.

Estimation methodology

The Ore Reserve as at 30 June 2018 was estimated using updated mine design shells for ore and waste, applying the current mining parameters, constraints, and exclusions, which were then confirmed in an economic mine schedule.

Material modifying factors

The reported Ore Reserve is within the mine design shells, using current mining methods and practices. These are fully contained within South32 mining tenements. The Ore Reserve is scheduled to be extracted within the expected expiration date of all mining leases.

Worsley Alumina is an operating asset which has all the required infrastructure and environmental approvals required to operate its existing mine sites. The requirement for future infrastructure and its expected approvals have been considered in the mine schedule which assumes no outstanding or foreseeable issues with material legal agreements or regulatory approvals. Long-term marketing arrangements are in place.

Competent Person Statement

The information in this report that relates to estimates of Mineral Resources for Worsley Alumina is presented on a 100% basis and represents an estimate as at 30th June 2018. It is based on information compiled by Jessica Binoir and Rodney Brown.

The information in this report that relates to estimates of Ore Reserve for Worsley Alumina is presented on a 100% basis and represents an estimate as at 30th June 2018. It is based on information compiled by Glen Burnham.

Ms. Binoir and Mr. Burnham are full time employees of South32. Mr. Brown is employed by SRK Consulting. All three individuals are members of the Australasian Institute of Mining and Metallurgy. Each Competent Person has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activities being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Each Competent Person consents to the inclusion in this report of the matters based on their information in the form and context in which it appears.