Acquisition of Las Bambas. April 2014

Transcription

1 Acquisition of Las Bambas April 2014

2 Important information This presentation and the information contained herein are given for general reference only. It is not intended and does not constitute or form part of any information furnished by MMG for the purpose of any shareholders meeting or any voting by its shareholders at any such meeting, or any offer for sale or subscription of or solicitation or invitation of any offer to buy or subscribe for any securities of MMG. No part of this presentation or the information contained herein shall form the basis of or be relied upon in connection with any voting, contract, commitment or investment decision in relation thereto. Shareholders of MMG and potential investors should refer to, and should only rely on, the information contained in the announcements and circulars published or to be published by MMG on the Hong Kong Stock Exchange s website in making any decision on voting or investment. No representation, warranty or undertaking, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information or the opinions contained herein. None of MMG or any of its affiliates, directors, employees, agents, advisers or representatives shall have any liability whatsoever for any loss however arising, whether directly or indirectly, from any use, reliance or distribution of this presentation or its contents or otherwise arising in connection with this presentation. The information presented or contained in this presentation is subject to change without notice and its accuracy is not guaranteed. Certain information contained in this presentation constitutes forward-looking statements. These statements are inherently uncertain and involve risks and uncertainties that could cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements include, without limitation, statements relating to the business strategies, future business development, financial conditions and results of operations. No assurance can be given that such forward-looking statements will prove to have been correct. No undue reliance should be placed on these forward-looking statements, which are based on the current view of management on future events. MMG has no obligation and does not undertake to revise or update any forward-looking statements as a result of new information or to reflect future events or circumstances. It should be noted, in particular, that as completion of the Acquisition mentioned in this presentation is subject to a number of conditions (as described in the announcement published by MMG on 14 April 2014), which may or may not be fulfilled, the Acquisition may or may not proceed. This presentation and the information contained herein are being furnished to you solely for your information and may not be reproduced or redistributed to any other person, in whole or in part. In particular, neither the information contained in this presentation nor any copy hereof may be, directly or indirectly, taken or transmitted into or distributed in the U.S., Canada, Japan or any other jurisdiction which prohibits the same except in compliance with applicable securities laws. No money, securities or other consideration is being solicited, and, if sent in response to this presentation or the information contained herein, will be accepted. 2

3 Key points MMG led consortium (JV) has entered into an agreement with GlencoreXstrata to acquire the Las Bambas copper project in Peru for US$5.85 billion (100%). Unique opportunity to acquire a world-class, high quality copper asset with prospective, near mine exploration opportunities. Fully funded JV with MMG 62.5% owner and operator of Las Bambas. Establishes a strong platform in the highly prospective South American mining region. Leverages MMG s operational strength and commitment to world-class standards in safety, health and environment. Transformational to MMG consistent with MMG s growth strategy and vision. 3

4 Transaction overview Transaction Governance Consideration Financing Approvals Key dates JV has entered a Share Purchase Agreement to acquire 100% of Xstrata Peru S.A. (Las Bambas). JV structure: MMG (62.5%), and GXIIC (22.5%), CITIC (15.0%). JV will operate Las Bambas adopting MMG standards, processes and systems. JV Board Maximum six Directors with MMG appointing the Chairman. Consideration of US$5.85 billion (100%). JV assumes responsibility for project capital spend from 1 January Acquisition capital and project capital expenditure fully funded. Banking syndicate arranged through China Development Bank (CDB). JV debt to be supported by a guarantee from China Minmetals Non-ferrous. MMG equity funding to be provided by a shareholder loan from China Minmetals Non-ferrous. Approvals required from regulators in China and Peru. MMG shareholder approval; major shareholder China Minmetals will vote in favor of transaction. June 2014: Dispatch of Shareholder Circular. July 2014: MMG Extraordinary General Meeting. Third quarter 2014: Target transaction completion. 4

5 Las Bambas is a world-class, high-quality asset Located in Cotabambas, Apurimac Region, Peru. Advanced stage construction - US$3.5 billion spent as at 31 December Open pit mining methods, conventional copper concentrator Forecast annual production tonnes, contained copper Escondida Cerro Verde Las Bambas Collahuasi First quartile cost position. Antamina Mine life in excess of 20 years. 6.9Mt copper Ore Reserve, 10.5Mt copper Mineral Resource. Update to project schedule and future capital expenditure upon transaction completion. Grasberg El Teniente Los Pelambres Chuquicamata Los Bronces (1) Source: Wood Mackenzie, Global copper long-term outlook Q4 2013, January 2014, Company Reports

6 with prospective, near mine exploration opportunities Substantial geological potential. Significant proportion of licence area currently unexplored with limited exploration drilling since Focus on extensions to current forecast mine life. Exploration program planned upon transaction completion. (1) Source: GlencoreXstrata. 6

7 Establishes a strong platform in a highly prospective mining region Establishing a major and permanent presence in Peru Apurimac region supportive of mining investment. MMG will seek to retain and attract a permanent local workforce to operate Las Bambas. MMG will seek to build long-term partnerships. Prospective country for mining investment Ranked #3 global copper producer in Estimated to contain over one eighth of global copper reserves. Copper accounts for over 50% of Peru s total exports. Projected US$57 1 billion pipeline of new mining investment. Significant presence of major global mining companies. (1) Source: Peru Ministry of Mines and Energy. 7

8 MMG has demonstrated operational strength Track record of delivering to production and cost guidance. MMG attributable production 000 tonnes, Cu Equivalent 1 Commitment to continuously improving processes, quality and costs. 600 CAGR 12% Experienced and responsible operator of large open pit mines. Focus on building partnerships with our people, communities and host countries. Diverse international leadership team. Supported by majority shareholder China Minmetals CAGR 13% F (1) Copper equivalent is calculated using Average LME prices in 2011 and 2013 and MMG forecasts (real) for

9 committed to world-class operating standards An International Council on Mining and Metals member committed to the ICMM Sustainable Development Framework. Safety focus and performance core to company values. We value our integrity ensuring our workforce behaves with respect to land, people and cultures. We embrace diversity and see the benefits of working closely with our host communities Total recordable injury frequency rate (TRIFR) Per million hours worked Sepon Kinsevere Century Rosebery Golden Grove

10 Excellent fit with MMG s growth strategy Commodity Attractive long-term copper market fundamentals. Scale Globally significant by production and resource size. Stage Advanced stage construction project, close to production. Upside Significant proportion of licence area currently unexplored. Geography Peru is a stable jurisdiction, supportive of mining investment. 10

11 Las Bambas is transformational to MMG 2017 Forecast annual production select projects 000 tonnes, copper contained metal Las Bambas Sepon Nchanga Kinsevere Sentinel Sierra Gorda Pumpkin Hollow Antapaccay Frontier Antucoya Konkola Rosemont Caserones Lubambe Salobo Toromocho Oyu Tolgoi (1) Source: Wood Mackenzie, Global copper long-term outlook Q4 2013, January 2014, Company Reports. Circle size represents current Mineral Resource. Mine life years 11

12 Transforms MMG creates future opportunities Transaction creates value for MMG shareholders over the long-term. MMG Mineral Resource 000,000 tonnes, contained copper metal 10.5 Significantly increases MMG copper production and Mineral Resources and Ore Reserves x Strategic entry into South America. Significant exploration potential. MMG MMG % Las Bambas Revenue by commodity Revenue by commodity 2017 (forecast) 1 30% Zinc 19% 16% 54% Copper Other 3% 78% (1) 2017 revenue is estimated using MMG forecasts (real) for Excludes Las Bambas by-products. 12

13 Summary MMG led consortium (JV) has entered into an agreement with GlencoreXstrata to acquire the Las Bambas copper project in Peru for US$5.85 billion (100%). Unique opportunity to acquire a world-class, high quality copper asset with prospective, near mine exploration opportunities. Fully funded JV with MMG 62.5% owner and operator of Las Bambas. Establishes a strong platform in the highly prospective South American mining region. Leverages MMG s operational strength and commitment to world-class standards in safety, health and environment. Transformational to MMG consistent with MMG s growth strategy and vision. 13

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15 Overview of MMG Headquartered in Australia, listed on The Stock Exchange of Hong Kong. Five major operating mines. Major producer of zinc and copper. Legend: Operating assets Development projects Izok Corridor Sepon Kinsevere Century Golden Grove Dugald River Rosebery 15

16 MMG s experienced leadership team CEO & Executive Director Andrew Michelmore CFO & Executive Director David Lamont EGM Strategic Planning & Executive Director Xu Jiqing EGM Business Development Michael Nossal Age 61, appointed 2009 Bachelor of Chemical Engineering Former CEO of Zinifex, OZ Minerals, En+ and WMC Resources Director, Century Aluminium Chairman, Minerals Council of Australia, International Zinc Association Deputy Chair, ICMM 30+ years global experience in metals & mining Age 48, Appointed 2009 Bachelor of Commerce and chartered accountant Former CFO OZ Minerals Former CFO PaperlinX, Incitec Held senior roles at BHP Energy Coal & Carbon Steel Materials Age 46, appointed 2013 Holds Bachelor s degree in Accounting, MBA Director CMN, Album Enterprises, Hunan Non-Ferrous 20+ years experience with CMC holding Finance leadership roles Age 55, Appointed 2010 Holds Bachelor of Science, MBA Non-exec director of Nord Gold Former Deputy CEO En+ Former EGM WMC Resources Senior roles at Normandy Mining and Kenmare Resources Chief Operating Officer Marcelo Bastos EGM Exploration Steve Ryan EGM Business Support 1 Tim Scully EGM Stakeholder Relations Troy Hey Age 51, appointed 2011 Mechanical engineer, MBA Former director of Vale s Non-Ferrous operations Former CEO BHP Mitsubishi Alliance, President BHP Billiton Nickel West, President of BHPB Cerro Matoso 26 years mining experience Age 50, appointed 2009 Holds Bachelor degree in Geology and MBA International business Former roles include senior international positions for Rio Tinto Director, Sama Resources 25 years experience in mineral exploration Age 66, appointed 2009 Held senior HR roles with OZ Minerals, Intrepid Mines, Atlas and WMC Resources. Experience in shared HR systems and processes Aged 43, appointed August 2013 Bachelor of Law and Bachelor of Commerce Former Director Corporate Affairs Foster s Group, Group Manager Public Affairs WMC Resources 20+ years of experience in stakeholder relations MMG s liaison for the ICMM 16 (1) Tim Scully advised his intention to retire in March Greg Travers has been appointed as the new EGM Business Support and will commence in May 2014.

17 Key milestones and performance Key Milestones MMG copper production ( 000 tonnes) Minmetals Resources acquires Minerals and Metals Group (MMG) Minmetals Resources bid for Equinox Minerals, but subsequently chose not to pursue the transaction given a higher offer Minmetals Resources successfully acquires Anvil Mining Limited including the the Kinsevere mine in the DRC Minmetals Resources changes its company name to MMG Ltd F MMG zinc production ( 000 tonnes) 2013 MMG delivered US$2,469.8m revenue and US$122.5m profit in F 17