Mmg Ltd. · HKEX:1208
Mmg — Minmetals Resources — Merger or Acquisition (December 2010)
62 slides from Mmg's merger presentation, Dec 7, 2010
Slide 1: Creating a Major International Upstream Base Metals Group
Creating a Major International Upstream Base Metals Group MINMETALS RESOURCES LIMITED MMR’s proposed acquisition of MMG December 2010
Slide 2: Disclaimer
Disclaimer This document has been prepared by Minmetals Resources Limited (“MMR” or the “Company”) solely for the purpose of information with respect to the proposed transaction by the Company and may not be downloaded, reproduced, redistributed or passed on, directly or indirectly, to any other per
Slide 3: Contents
Contents 01 CREATING CREATINGAAMAJOR MAJORINTERNATIONAL INTERNATIONALUPSTREAM UPSTREAMBASE BASEMETALS METALSGROUP GROUP 02 HIGHLIGHTS HIGHLIGHTSOF OFTHE THENEW NEWMMR MMR 03 CONCLUSION CONCLUSION 04 APPENDIX APPENDIX1: 1:FINANCIAL FINANCIALINFORMATION INFORMATION 05 APPENDIX APPENDIX2: 2:MMG MMGASSE
Slide 4: Creating a Major International Upstream Base Metals Group
01 CREATING A MAJOR INTERNATIONAL UPSTREAM BASE METALS GROUP
Slide 5: Game Changer: The New Minmetals Resources
Game Changer: The New Minmetals Resources Combination Combination of of MMR MMR and and MMG MMG to to create create aa leading leading diversified diversified upstream upstream 1 base base metals metals group group 2 Strong Strong operational operational and and financial financial performance perfo
Slide 6: Strong Financial Base
Strong Financial Base Creating a major international upstream base metals group (2)(3) (1H 2010 Financials) Products Alumina Trading, Aluminium New Minmetals Resources(1)(2)(3) (1H 2010 Pro-Forma) Fabrication, Others Geographies China, Jamaica Products Alumina Trading, Aluminium US$m Fabrication, Zi
Slide 7: Overview of MMR Aluminium Business Chain
Overview of MMR Aluminium Business Chain Upstream Downstream Alumina Aluminium Fabrication Bauxite / Alumina Aluminium Ingot/Primary Aluminium Copper Fabrication Guangxi Huayin (33.0%) Minmetals Aluminium (100%) North China Aluminium (72.8%) – Integrated alumina plants with – Trading of alumina and
Slide 8: MMG - An International Portfolio of Producing Base Metals Projects
MMG - An International Portfolio of Producing Base Metals Projects Century (Queensland, Australia) Sepon (Laos) One of the world’s largest zinc mines, Australia’s Copper cathode and gold dore largest open pit zinc mine Currently producing ~70ktpa of copper, expansion Producing 500ktpa of zinc progra
Slide 9: Significant Organic Growth Potential – Strong Exploration & Development Pipeline
Significant Organic Growth Potential – Strong Exploration & Development Pipeline Potential to expand and achieve sustainable growth through organic initiatives focusing on upstream mining operations New Mine discovery district programme exploration Commodity Copper-(gold) Zinc-lead Nickel-(copper) R
Slide 10: Transaction Summary
Transaction Summary Transaction Structure Key Conditions Approval by the Australian Government under the Foreign Acquisitions and Takeovers Act 1975 (“FATA”) CMC The Australian Government agreeing to release CMN from its existing undertakings in relation to MMG Approval from the independent sharehol
Slide 11: Specific Mandate
Specific Mandate CMN is committed to remaining as the controlling shareholder of MMR and holding no less than 51% of issued share capital of MMR Key terms Impact on shareholdings structure Maximum number of shares to be issued: 2.7 billion shares Immediately after completion (assuming no conversion
Slide 12: MMR Shareholding Structure
MMR Shareholding Structure Effects of the acquisition on the shareholding structure As at 18 November 2010, Immediately after Completion the latest practicable date Immediately after (assuming full conversion of the prior to issuance of the Completion (assuming no PSCS) and the issuance of all the n
Slide 13: Strategies of the Enlarged Group
Strategies of the Enlarged Group Maintain and expand our position as a leading internationally diversified base metals group 1 Commit to best practices in corporate governance, production standards, safety, operational excellence and environmental protection MMG is the only PRC-affiliated mining com
Slide 14: Highlights of the New MMR
02 HIGHLIGHTS OF THE NEW MMR
Slide 15: Combination of MMR and MMG to Create a Leading Diversified Upstream Base Metals Group
Combination of MMR and MMG to Create a Leading Diversified Upstream Base Metals Group Enlarged group’s asset overview MMR assets MMG assets – development / exploration Alumina trading Global Avebury (Australia) Nickel (development**) Aluminium fabrication China Dugald River (Australia) Zinc/lead/sil
Slide 16: Strong Operational and Financial Performance
Strong Operational and Financial Performance MMR and MMG’s track record in delivering growth and sustainable operating results MMR operational and financial highlights MMG operational and financial highlights 1,000 1,000 2H 2009 1H 2009 845 1H 2010 748 1H 2010 Financials (US$m) Financials (US$m) 800
Slide 17: Internationally Diversified Upstream Base Metals Group Listed in Hong Kong
Internationally Diversified Upstream Base Metals Group Listed in Hong Kong Given the scarcity of internationally diversified base metals groups listed in Hong Kong, the Enlarged Group will be uniquely positioned within the SEHK resources sector HK listed base metals companies Mid-tier international
Slide 18: Strong Industry Fundamentals Underpinned by China's Growth Engine
Strong Industry Fundamentals Underpinned by China’s Growth Engine Rapid urbanization will drive China’s appetite for commodities to expand further GDP growth Income versus Urbanization rate % 90 12% Urbanisation Rate % 10% South Korea 8% 60 6% Average of Middle Income Economies 4% 30 China 2% India
Slide 19: New MMR Will Serve as CMC's Platform for International Growth
New MMR Will Serve as CMC’s Platform for International Growth and Diversification in Upstream Base Metals Ability to leverage on the expertise, experience and relationships of the ultimate shareholder, CMC Backed by a strong ultimate controlling shareholder with track record of international mining
Slide 20: World Class Chinese & Western Board and Management
World Class Chinese & Western Board and Management Current board has in depth managerial capability and experience Li Fuli Shen Ling Vice President of China Minmetals CFO of China Minmetals Corporation Corporation Non-Executive Director of MMR Chairman and Non-Executive Director of Over 25 years exp
Slide 21: World Class Chinese & Western Board and Management
World Class Chinese & Western Board and Management New board members to add further international experience to the board New MMR board members Andrew Michelmore Jiao Jian CEO and Executive Director of the New Non-Executive Director of the New MMR MMR President of China Minmetals Non-ferrous Ex-CEO
Slide 22: Conclusion
03 CONCLUSION
Slide 23: Game Changer: The New Minmetals Resources
Game Changer: The New Minmetals Resources Combination Combination of of MMR MMR and and MMG MMG to to create create aa leading leading diversified diversified upstream upstream 1 base base metals metals group group 2 Strong Strong operational operational and and financial financial performance perfo
Slide 24: Appendix 1: Financial Information
04 APPENDIX 1 FINANCIAL INFORMATION
Slide 25: MMR Financial Information
MMR Financial Information Income statement (in US$m, except per share data) For the 6 months period ended 30 June For the year ended 31 December 2009 2009 2008 2010 (restated) % Change (restated) (restated) % Change Revenue 693 274 +153% 797 1,083 -26% Profit attributable to equity holders 54 40 +35
Slide 26: MMG Financial Information
MMG Financial Information Income statement (in US$m) (3) For the 6 months period ended 30 June 2010 31 December 2009 % Change Revenue 845 748 +13% Cost of goods sold 334 303 +10% Operating income (2) 511 445 +15% Depreciation and Amortization 124 134 -8% Profit before tax 257 159 +62% Net profit aft
Slide 27: Proforma Consolidated Financial Information of MMR + MMG
Proforma Consolidated Financial Information of MMR + MMG (3)(4) (3)(4) Income statement (in US$m) Cash flows statement (in US$m) For the 6 months period ended For the 6 months period ended 30 June 2010 30 June 2010 Revenue 1,537 Operating cash flows 267 Cost of goods sold (1,112) Investing cash flow
Slide 28: Business Combination
Business Combination Key features of merger accounting Consolidate Consolidate financial financial information information as as ifif MMR MMR and and MMG MMG had had been been combined combined from from the the Merger accounting date date when when both both entities entities first first came came
Slide 29: Appendix 2: MMG Assets Profile
05 APPENDIX 2 MMG ASSETS PROFILE
Slide 30: Sepon
Sepon Overview Location Location Laos MMG ownership 90% Commodity Copper, gold, silver Stage Production Mining method Open-pit Final year of operation 2022 (Sepon Copper) 1H 2010A Cu milled grade 5.28% 1H 2010A Cu cathode production 34.3kt (contained metal) Reserves and resources (as at June 2009) C
Slide 31: Sepon (cont'd)
Sepon (cont’d) Recent developments Mining operations Copper expansion currently commissioning to increase nameplate capacity to >80ktpa Gold production extended Thengkham expansion underway Major exploration initiatives being pursued Processing facility Copper cathode products 31
Slide 32: Sepon Copper – AMC Planning Case 1
Sepon Copper – AMC Planning Case 1 Total ore processing inventory of 22.7Mt @ 3.91% Cu – based on June 2009 ore reserves with additional 5.8Mt of inferred material Item Unit Total 2010 2011 2012 2013 2014 2015 - 2017 2018 - 2020 2021 - 2022 Production Total Material Movement kt 123,646 3,327 5,819 1
Slide 33: Sepon Copper – AMC Planning Case 2
Sepon Copper – AMC Planning Case 2 Total ore processing inventory of 25.5Mt @ 3.82% Cu – based on Planning Case 1 with additional 2.8Mt of inferred material and exploration upside Item Unit Total 2010 2011 2012 2013 2014 2015 - 2017 2018 - 2020 2021 - 2023 Production Total Material Movement kt 160,4
Slide 34: Sepon Gold – AMC Planning Case 1 & 2
Sepon Gold – AMC Planning Case 1 & 2 AMC Planning Case 1 AMC Planning Case 2 Total ore processing inventory of 3.86Mt @ 1.35g/t Au Total ore processing inventory of 5.86Mt @ 1.3g/t Au Item Unit Total 2010 2011 2012 Item Unit Total 2010 2011 2012 Production Production Total Material Movement kt 14,65
Slide 35: Century
Century Overview Location Location Queensland, Australia MMG ownership 100% Commodity Zinc, lead, silver Stage Production Mining method Open-pit Final year of operation 2015 1H 2010A Zn milled grade 11.8% 1H 2010A Zn production 238.5kt (contained metal) Reserves and resources (as at June 2009) Zn Pb
Slide 36: Century (cont'd)
Century (cont’d) Recent developments Mining operations Large, reliable, low-risk zinc producer Overburden removal substantially completed; volume down by over 50% since 2007 peak, with further reductions scheduled Mine life estimated to extend until 2015 Regional exploration programs ongoing Open-pi
Slide 37: Century – AMC Planning Case 1
Century – AMC Planning Case 1 The mining inventory is 29.9Mt @ 10.5% Zn, 1.1% Pb and 18g/t Ag – based on a 3.9 cut-off grade mining schedule prepared by MMG in August 2010 Item Unit Total/Avg 2010 2011 2012 2013 2014 2015 Production Parameters Total Movement Mt 129.9 18.4 55.4 33.3 11.6 8.7 2.6 Ore
Slide 38: Golden Grove
Golden Grove Overview Location Location Western Australia MMG ownership 100% Commodity Zinc, copper, lead, gold, silver Stage Production Mining method Underground Final year of operation 2016 1H 2010A Zn production 43.8kt (contained metal) 1H 2010A Cu production 14.2kt (contained metal) Reserves and
Slide 39: Golden Grove (cont'd)
Golden Grove (cont’d) Recent developments Mining operations Copper oxide open pit and Scuddles underground scheduled for 2011 Significant exploration program – Material high-grade Zn and Cu discovery at Gossan Valley A$25m (~US$24m) tailings management facility upgrades completed – 15 years capacity
Slide 40: Golden Grove – AMC Planning Case 1
Golden Grove – AMC Planning Case 1 Mining inventory comprised reported ore reserves plus ~1.6Mt of additional zinc / copper mineralization, and 1.8Mt of copper oxide open pit mining inventory Item Unit Total 2010 2011 2012 2013 2014 Production Total Material Movement kt 22,382 895 7,657 8,844 4,250
Slide 41: Golden Grove – AMC Planning Case 2
Golden Grove – AMC Planning Case 2 Relative on Planning Case 1, includes additional 2.9Mt of gold oxide, zinc sulphide and copper sulphide mining inventories Item Unit Total 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Production Total Material Movement kt 115,407 895 7,657 8,844 2,070 31,
Slide 42: Rosebery
Rosebery Overview Location Location Tasmania, Australia MMG ownership 100% Commodity Zinc, lead, copper, gold, silver Stage Production Mining method Underground Final year of operation 2020 1H 2010A Zn milled grade 12.1% 1H 2010A Zn production 35.9kt (contained metal) Reserves and resources (as at J
Slide 43: Rosebery (cont'd)
Rosebery (cont’d) Recent developments Mining operations Reliable high-grade polymetallic mine: operating since 1934 Large high-grade resource base Orebodies open in most directions and exploration programs underway New 1.4km deep ventilation shaft recently completed Processing plant Concentrate prod
Slide 44: Rosebery – AMC Planning Case 1
Rosebery – AMC Planning Case 1 Based on ore reserve plus part of other mineral resources / exploration potential that AMC judges there is a high confidence of future conversion to ore reserves Item Unit Total/Avg 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total Ore Mined kt 6,120.0 360.0
Slide 45: Rosebery – AMC Planning Case 2
Rosebery – AMC Planning Case 2 Additional tonnages from existing mineral resources / readily demonstrable exploration potential that AMC has reasonable confidence of future conversion Item Unit Total/Avg 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total Ore Mined kt 7,050.0 360.0 720.0 72
Slide 46: Development Projects – Dugald River
Development Projects – Dugald River Overview Location Location Queensland, Australia MMG ownership 100% Commodity Zinc, lead, silver Stage Final stages of feasibility and permitting Investment decision expected Q1 2011 Mining method Underground First year of operation 2014 Planned mine life 23 years
Slide 47: Dugald River – AMC Planning Case 1
Dugald River – AMC Planning Case 1 Item Unit Total 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total mining ore of Production Parameters 39Mt @ 12.3% Zn, Ore Mined Mt 39.0 0.0 0.0 0.0 0.0 1.6 2.0 2.0 2.0 2.0 2.0 2.0 1.9% Pb and 42 g/t Ore Processed Mt 39.0 0.0 0.0 0.0 0.0 1.6 2.0 2.0 2.0
Slide 48: Dugald River – AMC Planning Case 2
Dugald River – AMC Planning Case 2 Item Unit Total 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total mining ore of Production Parameters 43.5Mt @ 12.2% Ore Mined Mt 43.5 0.0 0.0 0.0 0.0 1.6 2.0 2.2 2.2 2.2 2.2 2.2 Zn, 2% Pb and 40 Ore Processed Mt 43.5 0.0 0.0 0.0 0.0 1.6 2.0 2.2 2.2 2.2
Slide 49: Development Projects – Avebury
Development Projects – Avebury Overview Location Location Tasmania, Australia MMG ownership 100% Commodity Nickel status Care and maintenance Mining method Underground Resources (as at June 2009) Ni Ni Ore grade cont. Mineral Resources (Mt) (%) (Mt) Measured 3.4 1.1 0.0 Indicated 4.7 1.0 0.0 Inferre
Slide 50: Avebury – AMC Planning Case 1
Avebury – AMC Planning Case 1 Based on the MMG feasibility study Item Unit Total/Avg 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total Ore Mined kt 5,400.0 - - - 900.0 900.0 900.0 900.0 900.0 900.0 - - Ore mined grade Ni Head grade % 1.13 - - - 1.19 1.09 1.04 1.18 1.18 1.08 - - Co Head gr
Slide 51: Avebury – AMC Planning Case 2
Avebury – AMC Planning Case 2 Based on the MMG feasibility study, and the mining plan is extended by one full year at the average grade Item Unit Total/Avg 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Total Ore Mined kt 6,300.0 - - - 900.0 900.0 900.0 900.0 900.0 900.0 900.0 - Ore mined gr
Slide 52: Development Projects – Nunavut Territories
Development Projects – Nunavut Territories Overview Location A suite of polymetallic base metals and gold assets in the Nunavut Territories of northern Canada Izok Lake – Cu / Zn / Pb / Ag – High grade deposit (14.8Mt mineral resources at 12.8% Zn, 2.5% Cu, 1.3% Pb, 71.0g/t Ag) – High geological pro
Slide 53: Appendix 3: Overview of Standalone MMR
06 APPENDIX 3 OVERVIEW OF STANDALONE MMR
Slide 54: Overview of MMR
Overview of MMR Overview of MMR MMR together with its subsidiaries and jointly controlled companies are engaged in alumina production, aluminum fabrication, copper fabrication and plica tubes production In addition, the Group is also engaged in port logistics services and other industrial operation
Slide 55: Appendix 4: Other Senior Management in MMR & MMG
07 APPENDIX 4 OTHER SENIOR MANAGEMENT IN MMR & MMG
Slide 56: MMR & MMG Senior Management
MMR & MMG Senior Management Other key MMG & MMR senior management adds to the credentials of the team MMG MMR Brett Fletcher Tang Xiaojin Chief Operating Officer Vice President Previously appointed Chief Operating Officer of Zinifex in April 2007 General manager of Orienmet Industry Company Limited
Slide 57: Appendix 5: Overview of CMC and CMN
08 APPENDIX 5 OVERVIEW OF CMC AND CMN
Slide 58: Overview of China Minmetals Corporation
Overview of China Minmetals Corporation China Minmetals Profile China Minmetals’ Strength in Ferrous Metals and Non-ferrous Metals China Minmetals Corporation was founded in 1950, and it is a large Leader in the area of ferrous metals conglomerate focused on the development, production, trading and
Slide 59: CMC Business Scope and Segments
CMC Business Scope and Segments Integrated upstream and downstream metal industry with full value chain coverage Resources Metal Smelting and Core Business Resource Trade Metal Trade Deep Processing Exploration and Mining Processing Ferrous Business Hanxing Bureau Raw Materials Yingkou Medium Plate
Slide 60: CMC's Rich Experience in Managing Public Companies
CMC’s Rich Experience in Managing Public Companies Listed companies under CMC As of June 2010, CMC had a holding stake in nine listed companies, many of which have a diversified shareholding structure and highly market- oriented operations China Minmetals Corporation Changsha Research China Minmetal
Slide 61: China Minmetals's Remarkable and Successful Performance in M&A
China Minmetals’s Remarkable and Successful Performance in M&A China Minmetals’s Key M&A Cases since 2003 2009 2008 • Acquisition of OZ assets 2007 • Acquisition of • Restructuring of Deutsche HPTech HNG • Joint acquisition of • Restructuring of 2006 • Restructuring of Northern Peru CINF Yingkou Med
Slide 62: Overview of CMN
Overview of CMN Overview of CMN CMN is the non-ferrous metals business division of CMC – ~RMB 42.2 bn of revenue in year 2009 with ~RMB 2.1 bn of net income CMN has 28 affiliates and 3 associated companies, covering copper, aluminum, lead and zinc, tungsten, rare earth, antimony, tin, tantalum and n
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