MMG Ltd. · HKEX:1208

MMG — Technical Presentation (April 2017)

50 slides from MMG's technical presentation, April 2017

1. Slide 1: Las Bambas Site Visit Presentation

   Las Bambas Site visit presentation April 2017

2. Slide 2: Disclaimer

   Disclaimer The information contained in this presentation is intended solely for your personal reference and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person (whether within or outside your organisation/firm) or published, in whole or in part, for any pu

3. Slide 3: Introduction to MMG

   Introduction to MMG Marcelo Bastos, Chief Operating Officer, MMG

4. Slide 4: Our first value: we think safety first

   Our first value: we think safety first  In 2016, MMG’s TRIF was in the top 5 Safety performance of all ICMM members globally. Member average TRIF was 4.19 4.1  Record low yearly Total Recordable Injury Frequency (TRIF)1 for MMG of 3.0 1.9 per million hours worked in 2016 2.4 2.3  Two fatal incide

5. Slide 5: MMG – global mid-tier miner

   MMG – global mid-tier miner MMG mines, explores and develops base metals  Headquarters in Melbourne (Australia); primary projects around the world listing on HKEx (HKEx:1208); secondary listing on ASX (ASX:MMG)  Founded in 2009, four operating mines and one development project across four continen

6. Slide 6: Las Bambas – a unique global opportunity

   Las Bambas – a unique global opportunity  MMG led consortium acquired Las Bambas in 2014 One of the largest  Rare opportunity to acquire at top tier global copper asset producers  Timing – during downturn in global markets  MMG / China Minmetals model able to finance the transaction at low point

7. Slide 7: MMG production profile has shifted towards copper

   MMG production profile has shifted towards copper Zinc production Copper production ‘000 tonnes ‘000 tonnes 560 - 615 2016 marked the transition with Century last ore and 503 Las Bambas ramp up 649 623 600 587 540 208 188 191 65 - 72 152 120 102 2011 2012 2013 2014 2015 2016 2017F 2011 2012 2013 201

8. Slide 8: We do what we say – delivering on commitments

   We do what we say – delivering on commitments  Las Bambas – industry leading ramp up, 2017 copper production guidance1 commercial production from July 16 Kt, Cu  Dugald River – project ~54% complete; high 1,600 1,400 quality zinc at time of shrinking supply 1,200 1,000  Operating efficiency and s

9. Slide 9: Peru Overview

   Peru Overview Domingo Drago – Vice President Corporate Affairs, Las Bambas

10. Slide 10: Peru has a strategic location, central to many markets

    Peru has a strategic location, central to many markets Located in the middle of South America, Peru has a strategic location that allows easy access to southeast Asian markets and the United States. Member of the Asia-Pacific Economic Cooperation (APEC) Germany Italy Belgium & Norway Luxembourg Port

11. Slide 11: Current political context

    Current political context Pedro Pablo Kuczynski, President of Peru Congress seat distribution  Peru’s government is led by Pedro Pablo Kuczynski (PPK), centre-right wing, pro investment Fuerza Popular (73)  Fuerza Popular, a populist right wing political party leads the Congress Frente Amplio (20)

12. Slide 12: Peru: a mining country

    Peru: a mining country  12% of GDP delivered by mining in 2016 US$ MILLION  59% of Peruvian exports  23% of tax and royalty revenue  174,126 direct jobs  More than 1 million indirect jobs  S/. 40 billion transferred as mining canon (2001-2016)  Project pipeline of US$47 billion Project pipeli

13. Slide 13: Social conflict management a critical focus for Peru

    Social conflict management a critical focus for Peru Conflict cases across Peru  Social conflict is common across the country and affects companies in the extractive industry operating in Peru  Government appointed Vice Minister to address social conflicts across Peru NUMBER OF CASES WITH CONFLICT

14. Slide 14: Delivery of Las Bambas

    Delivery of Las Bambas Marcelo Bastos – Chief Operating Officer, MMG

15. Slide 15: Las Bambas – a world class asset

    Las Bambas – a world class asset  MMG led consortium; 62.5% MMG, 22.5% Guoxin, 15% CITIC Metal  Total Project Development Cost US$9.7b, delivered ahead of time and within budget  Long life resource with significant future optionality  Experienced international management team  Highly skilled an

16. Slide 16: Las Bambas – size, scale and life

    Las Bambas – size, scale and life  Largest greenfield copper development in the 2017 forecast production capability1 past 10 years Escondida  Copper in copper concentrate production PT Freeport Indonesia  2016 actual: 330,227 tonnes Morenci Buenavista  2017 guidance: 420,000 – 460,000 tonnes (Ca

17. Slide 17: Industry leading ramp up

    Industry leading ramp up Ramp up profiles of similar1 greenfield copper concentrators 100%  Key to successful ramp up was getting the right leadership in place 80%  MMG assembled experienced local team % of installed Capacity  Backed up by MMG’s world class 60% technical expertise Las Bambas  Su

18. Slide 18: Las Bambas – a world class asset

    Las Bambas – a world class asset Las Bambas expected to be a first quartile cost producer, with a steady state C1 cost of US$0.85-0.95/lb 18

19. Slide 19: High quality concentrate flowing to market

    High quality concentrate flowing to market Extremely fast and efficient loading  Production sold to MMG (73.75%) and CITIC  MMG manages logistics (including ocean (26.25%) who then market (MMG working with freight) for 100% of production from Melbourne China Minmetals)  Shipments are basis Incote

20. Slide 20: Las Bambas overview

    Las Bambas overview Suresh Vadnagra – President, Minera Las Bambas SA – Group General Manager, MMG South America

21. Slide 21: Las Bambas overview

    Las Bambas overview  Located in Cotabambas, Apurimac Region, Peru  35.5 ha tenement with only 10% explored  12.9 mt resources and 7.7 mt reserves  Three main ore bodies – Ferrobamba, Chalcobamba, and Sulphobamba  Conventional open pit mine with conventional flotation circuit  Produces clean co

22. Slide 22: Our first value – we think safety first

    Our first value – we think safety first 160 2.50  Visible, tangible, safety leadership 2.50 140  Building the capability and competency 1.94 2.00 of our people 2.00 120  Embedding the discipline of safe task 100 1.50 management 1.50 80 1.01  Fatal risk control and control verification 1.00 1.00

23. Slide 23: Delivering exceptional results through our people

    Delivering exceptional results through our people  ~2,000 direct employees  21% of employees from Apurimac region  Extensive employment commitments with local community  Supported by highly experienced mining professionals and operators  First union formed in Las Bambas in December 2016  Las B

24. Slide 24: Mine fleet utilisation

    Mine fleet utilisation “Las Bambas equipment show top quartile Total Material Moved performance however there is significant improvement potential in availability of the loading 200 Mtpa machines and utilization of the drills.” 150 Mtpa Source: Management consultant Benchmarking Report 2017 100 Mtpa

25. Slide 25: Maximising asset utilisation driving performance

    Maximising asset utilisation driving performance 1,449 tpd 1,368 tpd 1,130 tpd 1,130 tpd Q1 16 Q2 16 Q3 16 Q4 16 Actual Production Opportunity Nameplate Improving Maximum Sustainable Production Rate to drive performance beyond nameplate capacity 25

26. Slide 26: Copper concentrate logistics corridor

    Copper concentrate logistics corridor  280km transport road constructed by Las Bambas (US$300m investment)  Community use of the road has increased substantially improving access to health, education, employment and creating business opportunities  Extensive ongoing program for road improvement,

27. Slide 27: Concentrate pushed to port and to market despite complexities

    Concentrate pushed to port and to market despite complexities and challenges  Transport chain ramped-up to 100% WMT of design capacity (3000t/day) in 5 months 500,000  Average of 139 trucks/day 450,000 400,000  Award winning container unloading system 350,000 300,000  1.3 million WMT shipped by

28. Slide 28: Financial performance 2016

    Financial performance 2016  6-month financials from 1 July 2016 Financials (start of commercial production) US$ million FY16 FY15  Revenue US$1,224m from 223k tonnes sold in last 6 months Revenue1 1,224.2 -  Strong EBITDA margin of 54% EBITDA1 655.0 (72.1)  Total production for 2016 330k tonnes

29. Slide 29: Las Bambas – low cost position

    Las Bambas – low cost position  Bottom quartile costs achieved within C1 cost - Quarterly evolution 6 months 2.47  Progressing towards steady state C1 cost target of US$0.85 – 0.95/lb in 2017 1.25  Commenced a transformational project to drive 1.03 1.00 $0.85 – 0.95/lb operational and cost effici

30. Slide 30: Resource development – stronger for longer

    Resource development – stronger for longer  2mt production expected over first 5 years, predominantly from the current Ferrobamba pit  Beyond the first 5 years, we are focused on development opportunities that will offset the impact of declining grades and maintain or increase production:  asset

31. Slide 31: Social development and community

    Social development and community Suresh Vadnagra – President, Minera Las Bambas SA – Group General Manager, MMG South America

32. Slide 32: Diversity of communities surrounding Las Bambas

    Diversity of communities surrounding Las Bambas Social Environment  Apurimac, previously recognized as one of the least developed provinces in Peru  Apurimac population approximately 450,000  ~16 communities around the site; 38 along the road to Pillones  Further 32 communities along the transpo

33. Slide 33: Social development is built on six pillars

    Social development is built on six pillars Education, Culture Health & & Capacity-building Sanitation Vulnerable Economic Groups Development Agriculture Local Employment & Livestock

34. Slide 34: Nueva Fuerabamba – delivering progress

    Nueva Fuerabamba – delivering progress 2012 2017 34

35. Slide 35: Nueva Fuerabamba – health and education

    Nueva Fuerabamba – health and education 35

36. Slide 36: Las Bambas, transformational for local communities

    Las Bambas, transformational for local communities  Large program since 2007  Indirect investment includes:  US$46m Royalties to Apurimac in 2016 (266% growth)  US$14.4m spend in local procurement in 2016  US$300m social investment to date  US$25.3m investment in social development programs in

37. Slide 37: Exploration

    Exploration Suresh Vadnagra – President, Minera Las Bambas SA – Group General Manager, MMG South America

38. Slide 38: Exploration overview

    Exploration overview  Significant upside from exploration potential at  Las Bambas exploration activity accelerated Las Bambas during 2016  No significant exploration since 2004,  Detailed reinterpretation of the geology of Xstrata focus was on resource drilling Ferrobamba has produced targets w

39. Slide 39: Regional geology

    Regional geology CHILE 39

40. Slide 40: MMG's exploration approach

    MMG’s exploration approach  Strong exploration team assembled with Main Objectives: extensive porphyry copper exploration experience  Support operations and mine planning team with interpretive geology  Comprehensive datasets already acquired and under analysis  Enhance latter stages of mine pla

41. Slide 41: Exploration priorities

    Exploration priorities Our exploration target priorities are: Our near term target priorities are:  Priority #1: Skarn extensions of existing  Priority #4: High grade deep porphyries resources which could be included in current amenable to block-caving, augmenting later mine design mine life, lowe

42. Slide 42: Appendix

    Appendix

43. Slide 43: Las Bambas – Joint Venture Structure

    Las Bambas – Joint Venture Structure MMG South America Elion Holdings Corp.  MMG South America Co. Limited (Guoxin Int’l CITIC Metal Co. Ltd. Co. Ltd. Investments Co.) Ltd is 100% owned by MMG Limited 62.5% 22.5% 15%  MMG is the operator of MMG South America Las Bambas and the Joint Management Co.

44. Slide 44: Debt facilities – long tenor, low cost

    Debt facilities – long tenor, low cost Facility Size Tenor Lenders Project Facility US$5,988m 18 years – matures (fully drawn) July 2032 First amortisation July 2017 Acquisition Facility US$969m 7 years – matures (fully drawn) July 2021 First amortisation July 2017 Working Capital US$350m 3 years –

45. Slide 45: Las Bambas external debt maturity profile

    Las Bambas external debt maturity profile $US million 800.0 700.0 600.0 500.0 400.0 300.0 200.0 100.0 0.0 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 7 Yr Acquisition Facility 18 Yr Project Facility 45

46. Slide 46: Peruvian mining tax system

    Peruvian mining tax system Key taxes applicable to mining in Peru Tax Stabilisation agreement signed by Las Bambas applies from 2016 until 2030 Income Tax Stabilised Taxes 32% Depreciation VAT  Income Tax regimes 18%  Special Mining Burden  Accelerated depreciation regime Dividends OSINERGMIN 5%

47. Slide 47: Mineral Resources and Ore Reserves

    Mineral Resources and Ore Reserves  Las Bambas has three main deposits: Ferrobamba, Chalcobamba and Sulfobamba  Across the three deposits Las Bambas has 7.7 Mt of Copper ore reserves and 12.9 Mt of Copper mineral resources Source: Mineral Resources and Ore Reserves Statement as at 30 June 2016 47

48. Slide 48: Las Bambas has a long history…

    Las Bambas has a long history… A historically resource rich region… 1874 Raymondi writes a description of the Cotabambas mines 1911 Ferrobamba Ltd. carries out several exploration works 1941 William Jenks conducts exploration on Ferrobamba and Chalcobamba 1942-1969 Cerro de Pasco Co. carries out dri

49. Slide 49: …with significant progress delivered in recent years

    …with significant progress delivered in recent years 2004 2012  Xstrata Copper obtains exploration rights with option to acquire  Mine construction begins and operate Las Bambas project  Extension time to deliver NFB granted by the community 2005 2013  Exploration and drill holes commence  Mini

50. Slide 50: Mprocress IWEIVIG

    MA Mprocress IWEIVIG

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