Acquisition of Las Bambas April 2014
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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
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 2014. 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
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 2013. Open pit mining methods, conventional copper concentrator. 2017 Forecast annual production 1 000 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. 0 200 400 600 800 5
with prospective, near mine exploration opportunities Substantial geological potential. Significant proportion of licence area currently unexplored with limited exploration drilling since 2010 1. Focus on extensions to current forecast mine life. Exploration program planned upon transaction completion. (1) Source: GlencoreXstrata. 6
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 2012 1. 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
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. 450 300 150 0 CAGR 13% 2011 2013 2017F (1) Copper equivalent is calculated using Average LME prices in 2011 and 2013 and MMG forecasts (real) for 2017. 8
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. 2013 Total recordable injury frequency rate (TRIFR) Per million hours worked Sepon Kinsevere Century Rosebery 0.9 0.5 1.7 3.5 4.2 4.0 3.4 5.2 2012 2013 Golden Grove 4.5 10.0 9
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
Las Bambas is transformational to MMG 2017 Forecast annual production select projects 000 tonnes, copper contained metal 1 600 500 Las Bambas 400 300 200 100 0 Sepon Nchanga Kinsevere Sentinel Sierra Gorda Pumpkin Hollow Antapaccay Frontier Antucoya Konkola Rosemont Caserones Lubambe Salobo Toromocho Oyu Tolgoi 5 10 15 20 25 30 35 40 45 50 (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
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. 3.9 2.7 x Strategic entry into South America. Significant exploration potential. MMG MMG + 62.5% Las Bambas Revenue by commodity - 2013 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 2017. Excludes Las Bambas by-products. 12
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
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
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 2014. Greg Travers has been appointed as the new EGM Business Support and will commence in May 2014.
Key milestones and performance Key Milestones MMG copper production ( 000 tonnes) 2010 2011 2012 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 99 102 152 188 173-186 2010 2011 2012 2013 2014F MMG zinc production ( 000 tonnes) 2013 MMG delivered US$2,469.8m revenue and US$122.5m profit in 2013. 666 649 623 600 600-625 2010 2011 2012 2013 2014F 17