MMG : ANNOUNCEMENT ON ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020

About this update from Mmg Ltd.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement. MMG LIMITED 五礦資源有限公司 (Incorporated in Hong Kong with limited liability ) (STOCK CODE: 1208) ANNOUNCEMENT ON ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020 The board of directors (Board) of MMG Limited (Company) is pleased to announce the consolidated results of the Company and its subsidiaries (Group) for the year ended 31 December 2020. The financial information set out in this announcement does not constitute the Group's complete set of the consolidated financial statements for the year ended 31 December 2020 but represents an extract from those consolidated financial statements. The financial information has been reviewed by the Company's Audit and Risk Management Committee and the Company's auditor. The consolidated results of the Group are annexed to this announcement. DECEMBER 2020 KEY POINTS • Total recordable injury frequency (TRIF) of 1.38 per million hours worked for 2020, representing a 13% decrease on the 2019 TRIF of 1.58. • Net Cash Flow from Operating Activities increased by 19%, to US$1,358.2 million, supporting a reduction in borrowings of US$453.3 million. • Effective management of COVID-19 risks and improved operational and financial performance in the second half, resulting in a US$93.3 million profit attributable to equity holders in the six months to 31 December 2020 and a full year loss attributable to equity holders of US$64.7 million, a 72% improvement on 2019. • Full year financial performance was impacted by lower zinc prices and the effects of COVID-19 and community disruptions on sales volumes at Las Bambas. This was offset by improved output at Kinsevere, strong operational performance at Dugald River, higher copper and precious metal prices and lower financing costs. • Las Bambas produced 311,020 tonnes of copper in concentrate in 2020. COVID-19 related impacts on workforce availability and unplanned site maintenance were the largest drivers of an estimated 70,000 tonnes production shortfall. COVID-19 and community road blocks also impacted sales throughout 2020, with a significant year-end balance of finished goods remaining stockpiled at site. Despite the challenges of 2020, higher copper prices, increased molybdenum sales and lower cash production expenses assisted in achieving an EBITDA of US$1,196.3 million, 2% below 2019 Las Bambas EBITDA. • A 6% increase in copper production at Kinsevere and higher copper prices supported an EBITDA of US$68.3 million, 143% higher than 2019. Improved ore quality and lower waste movement following a shift to the Central pit contributed to higher volumes while at the same time lowering production costs. • Records were set at Dugald River in 2020 for both zinc and lead production which increased by 4% and 3% respectively. Work to improve mine production and optimise mill performance leaves the site well positioned to deliver further production growth in 2021 and beyond. Higher volumes in 2020 assisted in offsetting the impact of lower zinc prices. Full year EBITDA of US$100.0 million was also impacted by high zinc treatment charges, which are expected to reduce significantly in 2021. • Significant precious metal by-products and higher gold and silver prices supported a 3% increase in EBITDA for Rosebery. This was achieved despite declining zinc ore grades at depth and lower zinc and lead prices and constraints on mine access for much of the year, demonstrating the Company's ability to effectively operate and maximise output from Rosebery in its 85 th year of continuous operation. • Total capital expenditure for 2020 was US$516.6 million. This was below initial guidance, reflecting the impact of COVID-19 on the progress of key capital projects at Las Bambas. Much of this expenditure will now fall into 2021. Total capital expenditure for 2021 is expected to be between US$750.0 and US$800.0 million, inclusive of capitalised mining. This includes the development of the Chalcobamba pit, third ball mill construction and tailings dam works. • The Board does not recommend the payment of a dividend for the year. DECEMBER 2020 • MMG expects to produce between 360,000 and 390,000 tonnes of copper and 240,000 and 260,000 tonnes of zinc in 2021, with Las Bambas ' annual copper production anticipated to increase to an average of 400,000 tonnes over the period 2022 to 2025. • Anticipated approval of the next phase of development at Kinsevere, the potential for mine life extension at Rosebery, expected strong medium-term performance for Las Bambas and Dugald River and favourable commodity price trends present a positive outlook for the Company. MMG RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020 CONTINUED YEAR ENDED 31 DECEMBER 2020 2019 CHANGE % US$ MILLION US$ MILLION FAV/(UNFAV) Revenue 3,033.7 3,011.6 1% EBITDA 1,379.7 1,461.5 (6%) EBIT (underlying) 451.9 491.9 (8%) Profit/(loss) for the year (underlying) 5.6 (90.3) 106% Impairment expense - net of income tax benefit - (105.0) - Profit/(loss) for the year after income tax 5.6 (195.3) 103% EBITDA margin 45% Net cash generated from operating activities 1,358.2 Dividend per share - Basic loss per share US (0.80) cents Diluted loss per share US (0.80) cents 4 48% 1,145.1 19% - US (2.86) cents US (2.86) cents CHAIRMAN'S REVI EW Dear Shareholders, I would like to thank you for your long term trust and support of MMG. On behalf of the MMG Board, I am pleased to present our results for the year ended 31 December 2020. 2020 was an extraordinary year. The unprecedented outbreak of the COVID-19 pandemic severely harmed the global economy and society and presented serious challenges for the metals and mining industry. MMG strove to overcome these difficulties and achieve a balance between effective control measures and the continuity of our operations. We strictly followed government regulations where we operate and took every effort to protect the safety and health of our employees. At the same time, we operated with optimized protection measures according to the specific needs at our sites. In 2020, we managed to maintain continuous production at all of our mines during the year. MMG adhered to our value of "safety first". The total recordable injury frequency (TRIF) was 1.38 per million hours worked for the year, a 13% decrease compared to 2019. We were proud to deliver such a result under extremely difficult circumstances. In 2020, the MMG Board approved an updated corporate development strategy, which sets the goal to double and double again MMG's mineral resources, production of our core commodities and enterprise value by 2030. To achieve this, MMG has implemented a business transformation program, streamlining its business management structures and processes. We have defined four strategic drivers including China Champion, Business Miner, Delivering Progress and Federation of MMG. MMG aims to improve productivity and maximize asset value in the short term and accelerate growth through focusing on core commodities and increased synergies in medium to long term. Looking ahead, while the impact of COVID-19 persists, the global economic landscape will remain complicated and challenging, with recovery of the mining industry also facing uncertainties. However, we are confident in our outlook for growth. This confidence comes from our understanding of the industry cycle and our trust in the future development of China and our major shareholder China Minmetals Corporation ("CMC"). China was the only major economy that achieved growth in 2020. China will continue to realise its potential for economic growth. In particular, the fast growth in demand for copper, zinc, nickel and other metals will be supported by the increasing demand for new energy vehicles, investment into new infrastructure, innovative urbanisation initiatives and other projects that are key for national development. In 2020, CMC, our major shareholder, delivered all its targets under its 13th Five-Year Plan and successfully completed its goal of "Three Steps and Two Doubles". CMC achieved a record performance result, includin g operating revenue of RMB701.6 billion which represents 15% year-on-year growth. Under the 14th Five-Year Plan, CMC has committed to a set of goals including operating revenue of over RMB1 trillion, doubling its profit again, optimizing and strengthening its metals and mineral businesses, leveraging its integrated industrial chain, and increasing investments in the industry. This will enable CMC to become a world-class metals and mining company. MMG forms a key part of this plan and will be provided with strong and reliable support from CMC with more room to grow. As we continue to work to overcome the COVID-19 pandemic, life will continue to return to normal. We will continue to strive to achieve and move forward on the path to success. We will continue to deliver improvements in our operating results and make valuable contributions to society. This will be supported by CHAIRMAN'S REVIEW CONTINUED economic development, both in China and globally, and we will be guided by our values as we execute on our strategic plans. I would like to express my gratitude to all shareholders, communities and business partners for their ongoing support and to all our employees for their contribution. GUO Wenqing CHAIRMAN CHIEF EXECUTIVE OFFI CER'S REPORT Dear Shareholders I am pleased to present our 2020 Annual Results. Thank you for your ongoing support throughout this unprecedented year. In 2020, we demonstrated our ability to maintain continuous production across our operations while working hard to manage the impact of COVID-19 on our people and communities. We ended the year in a strong position with increasing metals prices and improving production, including at Las Bambas, where we have been able to return workforce levels close to full capacity. In 2021 we will continue to advance our objective of generating further value from our existing operations as we look to grow our business. SAFETY The COVID-19 pandemic has had a significant impact on our people, communities and the broader global community as we have all worked to adjust to the disruptions to our daily lives. I am proud of the efforts made by our people to keep themselves and their families safe. As a Company we have demonstrated our ability to actively and effectively manage the risks presented by this virus. Implementation of strict health and hygiene protocols, backed by a vigorous testing regime, has enabled us to maintain production even in the regions such as Peru where the impact of COVOD-19 was particularly significant. While we are encouraged by the progress made in the development and distribution of vaccines globally, the impacts of COVID-19 are likely to present continued challenges in the near team. We remain committed to maintaining a strong focus on managing the risks posed to our people and communities. In 2020, our total recordable injury frequency (TRIF) was 1.38 per million hours worked which represents a decline of 13% from the 2019 result of 1.58. It is pleasing to see a decline in the overall injury rate and we will continue to direct significant effort towards our goal of eliminating injuries from our workplaces. We continue to prioritise our investigation and learning from events process and ensuring that procedures are optimised to ensure the safety of our people. OPERATING PERFORMANCE In 2020, MMG operations produced 384,564 tonnes of copper and 245,097 tonnes of zinc. Las Bambas produced 311,020 tonnes of copper in 2020, 19% below the 2019 result. This was as a result of the COVID-19 restrictions on workforce availability, unplanned maintenance requirements and community blockades, some of which impacted inbound logistics. Delays in the permitting and development of the Chalcobamba pit, and the further impacts of COVID-19 on development projects will impact production of copper concentrate in 2021 with an expected range of 310,000 and 330,00 tonnes. The development of Chalcobamba, further investment in mining fleet and the third ball mill is however anticipated to see average annual copper production increase to approximately 400,000 tonnes over the subsequent four years (2022 to 2025, inclusive). Kinsevere produced 72,007 tonnes of copper cathode in 2020 which represents an increase of 6% on the 2019 result. This result is attributable to the return to mining in the higher-grade Central pit, along with stability in the plant and increased throughput, recovery and ore grades. Following the decision to temporarily suspend mining late in the third quarter ahead of the wet season, ore mining volumes were impacted. However, with significant stockpiles available on site, processing of ore continues. We now expect to resume mining in the second quarter of 2021. Dugald River delivered record annual production of 177,074 tonnes of zinc in zinc concentrate in 2020. The operation further set annual records for mining volumes, recovery and production of lead and silver by-products. These outstanding results follow a significant effort by the Dugald River team throughout the year to ramp up and optimise the mine and processing plant. The operation is well positioned to deliver on targeted zinc production approaching 200,000 tonnes per year by 2022. Our Rosebery operation produced 67,393 tonnes of zinc, a result that exceeded our expectations despite being 19% below 2019 levels. The result was largely due to the declining zinc ore grades at depth and lower mining and milling volumes, with access to certain mining areas constrained for much of the year following the seismic events in 2019. While lead production was also 5% lower than the 2019 volumes, production of both gold and silver was higher. We expect to produce between 360,000 and 390,000 tonnes of copper and 240,000 and 260,000 tonnes of zinc in 2021. FINANCIAL PERFORMANCE The Company delivered an EBITDA result of US$1,379.7 million. Financial performance was impacted by lower zinc prices, the ongoing impact of COVID-19 and community blockades at Las Bambas which impacted sales volumes. While the first half of 2020 was challenging, our strong management of COVID-19 risks, improved operational and financial performance and a recovery in commodity prices enabled us to deliver a US$93.3 million profit attributable to equity holders in the six months to 31 December 2020. Full year net cashflow from operating activities increased by 19% to US$1,358.2 million, further supporting a reduction in borrowings of US$453.3 million. TRANSFORMING OUR BUSINESS In 2020, we continued to transform our business by placing significant focus on improving operational performance, increasing efficiency and generating greater value from our activities to improve shareholder returns. This business-wide transformation program touched on every area of our operations from our culture through to our daily operating processes. The results of this program have been pleasing with significant strides made in simplifying our business and providing clear accountabilities for performance improvement. OUTLOOK Looking ahead to 2021, we expect that the challenges brought on by the global pandemic will remain in the near term and that the global economic recovery will remain volatile. Nevertheless, our confidence in the outlook for our core commodities is supported by the broader global trends of clean energy, a shift to greater vehicle electrification and increased global economic stimulus which will sustain recent commodity price rises. MMG is well positioned for growth as we look to the next phase of development at Kinsevere, the potential mine extension at Rosebery and encouraging drilling results from exploration programs around our existing operating hubs. Finally, thank you to our shareholders, communities, contractors and our people for your continued support. Geoffrey (Xiaoyu) GAO CHIEF EXECUTIVE OFFICER MANAGEMENT DISCUSSION AND ANALYSIS RESULTS FOR THE YEAR ENDED 31 DECEMBER 2020 For the purpose of management discussion and analysis, the Group's results for the year ended 31 December 2020 are compared with results for the year ended 31 December 2019. YEAR ENDED 31 DECEMBER 2020 2019 CHANGE % US$ MILLION US$ MILLION FAV/(UNFAV) Revenue 3,033.7 3,011.6 1% Operating expenses (1,590.6) (1,538.1) (3%) Exploration expenses (19.1) (37.7) 49% Administration expenses (20.5) (23.3) 12% Other (expenses)/income (23.8) 49.0 (149%) EBITDA 1,379.7 1,461.5 (6%) Depreciation and amortisation expenses (927.8) (969.6) 4% Impairment expense - (150.0) - EBIT 451.9 341.9 (32%) Net finance costs (399.5) (511.9) 22% Profit/(loss) before income tax 52.4 (170.0) 131% Income tax expense (46.8) (25.3) (85%) Profit/(loss) for the year after income tax 5.6 (195.3) 103% Other comprehensive loss for the year after income tax (i) (14.5) - (100%) Total comprehensive loss for the year (8.9) (195.3) 95% Profit/(loss) attributable to: Equity holders of the Company (64.7) (230.4) 72% Non-controlling interests 70.3 35.1 100% Comprehensive profit/(loss) attributable to: Equity holders of the Company (76.5) (230.4) 67% Non-controlling interests 67.6 35.1 93% (i) Other comprehensive loss for the year represents items that may be reclassified to profit or loss. It is primarily made up of the fair value loss on hedging instruments designated as cash flow hedges, which as at 31 December 2020 were recorded in the cash flow hedge reserve. Profit/(loss) attributable to equity holders of the company MMG's profit of US$5.6 million for the year ended 31 December 2020 includes losses attributable to equity holders of US$64.7 million and profits attributable to non-controlling interests of US$70.3 million. This compares to losses attributable to equity holders of US$230.4 million and profits attributable to non-controlling interests of US$35.1 million in 2019. Profits attributable to non-controlling interests relates to the 37.5% interest in Las Bambas not owned by the Company. The following table provides a reconciliation of reported profit after tax attributable to equity holders. YEAR ENDED 31 DECEMBER 2020 2019 CHANGE % US$ MILLION US$ MILLION FAV/(UNFAV) Profit after tax - Las Bambas 62.5% interest 117.1 58.5 100% Profit/(loss) after tax - Other operations 15.3 (38.5) 140% Impairment expense - net of income tax benefit - (105.0) - Exploration expenses (19.1) (37.7) 49% Administration expenses (20.5) (23.3) 12% Net finance costs (excluding Las Bambas) (99.5) (106.3) 6% Other (58.0) 21.9 (365%) Loss for the year attributable to equity holders (64.7) (230.4) 72% Overview of results from continuing operations The Group's continuing operations comprise Las Bambas, Kinsevere, Dugald River and Rosebery . Exploration, corporate activities and other subsidiaries are classified as 'Other'. YEAR ENDED REVENUE EBITDA 31 DECEMBER 2020 2019 CHANGE % 2020 2019 CHANGE % US$ MILLION US$ MILLION FAV/(UNFAV) US$ MILLION US$ MILLION FAV/(UNFAV) Las Bambas 2,078.6 2,013.0 3% 1,196.3 1,221.3 (2%) Kinsevere 418.9 386.0 9% 68.3 28.1 143% Dugald River 331.3 336.0 (1%) 100.0 108.7 (8%) Rosebery 280.7 272.8 3% 130.3 125.9 3% Other (75.8) 3.8 (2,095%) (115.2) (22.5) (412%) Total 3,033.7 3,011.6 1% 1,379.7 1,461.5 (6%) The following discussion and analysis of the financial information and results should be read in conjunction with the financial information. Revenue from operations increased by US$22.1 million (1%) compared to 2019, driven by favourable realised net commodity price movements (US$22.4 million), offset to a small degree by lower sales volumes (US$0.3 million). A favourable commodity price variance of US$22.4 million was the result of higher realised prices for copper (US$115.0 million), silver (US$44.0 million) and gold (US$33.4 million). This was offset by lower realised prices for zinc (US$59.7 million), lead (US$14.2 million) and molybdenum (US$10.5 million), together with losses recognised in the profit and loss statement on copper (US$78.8 million) and zinc (US$6.8 million) commodity hedges. Copper hedges were transacted at a corporate level and are not reflected against individual site revenue. Zinc hedges were transacted at an operational level and have been recorded against Dugald River revenue. Lower sales volumes of US$0.3 million were primarily due to lower payable metal content in copper concentrate sold from Las Bambas (US$82.7 million). This was partly offset by higher molybdenum sales volumes (US$15.7 million), following the completion of de-bottlenecking work at the molybdenum plant which increased production. Further offsetting was an increase in payable metal sales volumes at Kinsevere (US$23.3 million) and Dugald River (US$40.5 million), a result of increased production at both sites. At Rosebery, lower zinc and lead sales volumes (US$15.5 million) resulted from lower production of these metals, however this was more than offset by increased production and sale of precious metal by-products (US$18.4 million). Further detail for each site is set out below in the mine analysis section. REVENUE BY COMMODITY 2020 2019 CHANGE % YEAR ENDED 31 DECEMBER US$ MILLION US$ MILLION FAV/(UNFAV) Copper (US$ million) 2,178.6 2,167.1 1% Zinc (US$ million) 369.9 420.7 (12%) Lead (US$ million) 70.1 81.8 (14%) Gold (US$ million) 190.9 172.6 11% Silver (US$ million) 181.4 131.7 38% Molybdenum (US$ million) 42.8 37.7 14% Total 3,033.7 3,011.6 1% Price Average LME metals prices for copper, gold and silver were higher in 2020 compared to 2019. The averages for zinc, lead and molybdenum were lower. AVERAGE LME CASH PRICE 2020 2019 CHANGE % YEAR ENDED 31 DECEMBER FAV/(UNFAV) Copper (US$/tonne) 6,169 6,005 3% Zinc (US$/tonne) 2,265 2,549 (11%) Lead (US$/tonne) 1,824 1,998 (9%) Gold (US$/ounce) 1,770 1,393 27% Silver (US$/ounce) 20.51 16.20 27% Molybdenum (US$/tonne) 19,163 25,032 (23%) Sales volumes PAYABLE METAL IN PRODUCT SOLD YEAR ENDED 31 DECEMBER 2020 2019 CHANGE % FAV/(UNFAV) Copper (tonnes) 377,852 382,214 (1%) Zinc (tonnes) 216,535 208,538 4% Lead (tonnes) 45,088 43,981 3% Gold (ounces) 109,336 120,061 (9%) Silver (ounces) 8,418,940 8,061,622 4% Molybdenum (tonnes) 2,609 1,866 40% PAYABLE METAL IN PRODUCT SOLD COPPER ZINC LEAD GOLD SILVER MOLYBDENUM YEAR ENDED 31 DECEMBER 2020 TONNES TONNES TONNES OUNCES OUNCES TONNES Las Bambas 304,266 - - 72,860 4,092,872 2,609 Kinsevere 72,024 - - - - - Dugald River - 152,573 23,301 - 1,583,186 - Rosebery 1,562 63,962 21,787 36,476 2,742,882 - Total 377,852 216,535 45,088 109,336 8,418,940 2,609 PAYABLE METAL IN PRODUCT SOLD COPPER ZINC LEAD GOLD SILVER MOLYBDENUM YEAR ENDED 31 DECEMBER 2019 TONNES TONNES TONNES OUNCES OUNCES TONNES Las Bambas 312,918 - - 91,439 4,581,714 1,866 Kinsevere 67,881 - - - - - Dugald River - 138,409 20,291 - 1,193,303 - Rosebery 1,415 70,129 23,690 28,622 2,286,605 - Total 382,214 208,538 43,981 120,061 8,061,622 1,866 Operating expenses include expenses of operating sites, excluding depreciation and amortisation. Site expenses include mining and processing expenses, changes in inventories, royalty expenses, selling expenses and other operating expenses. Total operating expenses increased by US$52.5 million (3%) in 2020. This was largely attributable to Las Bambas (US$46.5 million), with total operating expenses at other sites broadly in line with 2019 levels. Further detail for each site is set out below in the mine analysis section. Exploration expenses decreased by US$18.6 million (49%) to US$19.1 million in 2020, largely due to exploration work in around existing hubs being disrupted by COVID-19. In particular, this resulted in lower exploration spend in relation to tenements in the DRC (US$11.1 million) and at Las Bambas (US$8.0 million). Administrative expenses represent head office expenditure not re-charged to operating sites. Administrative expenses decreased by US$2.8 million (12%) in 2020, predominantly driven by cost and efficiency improvement initiatives across group and support functions, resulting in lower people costs, consultant spend and travel expenses compared to 2019 (US$11.6 million). The majority of this benefit was realised at a site level through lower re-charges. Other income and expenses had an aggregate unfavourable impact on EBIT of US$23.8 million in 2020, compared to a favourable impact in 2019 (US$49.0 million). In 2020, other income and expenses were largely represented by net foreign exchange losses of US$33.6 million (2019: US$3.0 million gain). These losses include revaluation of the Century guarantee liability (US$12.4 million), Peru VAT and income tax receivable balances (US$11.5 million) and other realised and unrealised foreign exchange positions primarily related to further AUD and PEN exposures arising in the ordinary course of business. Foreign exchange losses were partly offset by US$5.1 million of additional insurance proceeds received in relation to a conveyor belt failure at Las Bambas in 2017 (2019: US$12.0 million) and a reduction in the Century bank guarantee liability (US$3.7 million). Depreciation and amortisation expenses decreased by US$41.8 million (4%) to US$927.8 million in 2020. This was largely driven by Kinsevere (US$22.8 million), as a result of lower mining volumes following the temporary suspension of mining activities from late in the third quarter. At Rosebery, lower mining and production when compared to 2019 also resulted in reduced depreciation (US$19.9 million). Net finance costs of US$399.5 million were lower by US$112.4 million (22%) compared to 2019. Lower average LIBOR rates applicable to floating rate borrowings (US$71.8 million) and interest savings associated with lower overall debt balances (US$35.5 million) were the largest drivers of this reduction. A favourable movement in other finance costs and lower discount unwind in realtion to lease liabilities, was partly offset by decreased interest income (US$9.3 million), a result of lower average cash balances and interest rates available on bank deposits. Income tax expense increased by US$21.5 million, reflecting the increase in the Group's underlying profit before income tax from the prior year. Underlying income tax expense for 2020 of US$46.8 million reflects the impacts of non-creditable withholding tax in Peru of US$37.6 million (2019: US$38.8 million), and other non-deductible items. MINES ANALYSIS Las Bambas YEAR ENDED 31 DECEMBER 2020 2019 CHANGE % FAV/(UNFAV) Production Ore mined (tonnes) 57,999,845 51,653,616 12% Ore milled (tonnes) 45,184,395 51,283,371 (12%) Waste movement (tonnes) 137,484,467 128,286,976 7% Copper in copper concentrate (tonnes) 311,020 382,518 (19%) Payable metal in product sold Copper (tonnes) 304,266 312,918 (3%) Gold (ounces) 72,860 91,439 (20%) Silver (ounces) 4,092,872 4,581,714 (11%) Molybdenum (tonnes) 2,609 1,866 40% YEAR ENDED 31 DECEMBER 2020 2019 CHANGE% US$ MILLION US$ MILLION FAV/(UNFAV) Revenue 2,078.6 2,013.0 3% Operating expenses Production expenses Mining (211.8) (296.1) 28% Processing (216.1) (243.5) 11% Other (323.5) (335.2) 3% Total production expenses (751.4) (874.8) 14% Freight (transportation) (69.0) (63.0) (10%) Royalties (62.6) (58.1) (8%) Other (i) 10.7 170.1 (94%) Total operating expenses (872.3) (825.8) (6%) Other (expenses)/income (ii) (10.0) 34.1 (129%) EBITDA 1,196.3 1,221.3 (2%) Depreciation and amortisation expenses (695.5) (697.2) 0% EBIT 500.8 524.1 (4%) EBITDA margin 58% 61% (i) Other operating expenses include changes in inventories, corporate recharges and other costs of operations. (ii) Effective from 2020, Other (expenses)/income includes Las Bambas related exploration expenditure, which was previously recognised at a corporate level. Prior year comparatives have been reclassified to reflect this change. Las Bambas produced 311,020 tonnes of copper in 2020, 71,498 tonnes (19%) below 2019 volumes. COVID-19 associated restrictions on people movement, unplanned site maintenance requirements and community road blockages, some of which extended to inbound logistics, had a combined adverse impact on annual copper production of approximately 70,000 tonnes. Completion of de-bottlenecking works at the molybdenum plant in the third quarter did however result in a significant increase in molybdenum output, with production of 3,167 tonnes representing a 78% increase on the prior year. In 2019, concentrate transport logistics at Las Bambas were disrupted for over 100 days as a result of community disruption. In 2020, community disruption accounted for 64 days of lost concentrate transportation, however when combined with a further 43 days of disruption due to COVID-19 the total figure was comparable to 2019. Despite this, total tonnages of concentrate sold in 2020 did increase slightly (6%) compared to prior year levels. Although the balance fluctuated throughout the year, this resulted in approximately 65,000 tonnes of copper metal remaining stockpiled at site as at 31 December 2020 (2019: 50,000 tonnes), with a build up toward year end the result of community disruptions in the fourth quarter. Of this balance, approximately 18,000 tonnes had been sold prior to balance date and although stored at site, it no longer forms part of Las Bambas' inventory. This, together with other unsold concentrate held at site will be progressively shipped over the first half of 2021. Las Bambas' r evenue of US$2,078.6 million was 3% higher than 2019. The impact of higher realised commodity prices (US$132.6 million) and higher molybdenum sales volumes (US$15.7 million), was partly offset by lower payable metal content in copper concentrate sold compared to the prior year (US$82.7 million). Total production expenses of US$751.4 million were 14% below 2019 levels. Lower mining costs of US$84.3 million were largely the result of higher mining capitalisation (US$49.0 million), with increased waste material movement compared to the prior year. In addition, lower mining costs also reflect the deferral of some maintenance activities (US$30.4 million) into 2021, as a result of operational disruptions caused by COVID-19. Processing costs reduced by US$27.4 million, driven by lower milling volumes, reduced maintenance costs and lower reagent unit prices. Lower production expenses were offset by year-on-year stock movements, with a favourable net impact in 2019 resulting from a build-up in stockpiled concentrate following community disruptions (US$183.7 million). As noted above, the balance of unsold copper stockpiled at site as at 31 December 2020 remains roughly in line with 2019 year end levels, however ore stockpiles did increase in line with the mine plan (US$69.7 million). Total operating expenses were also impacted by the higher health and safety initiatives in response to COVID-19 (US$27.5 million) and increased royalty and transport costs (US$10.5 million), reflecting higher concentrate sales volumes and revenue. A US$44.1 million movement in other income and expenses largely resulted from the year-on-year impact of US$33.6 million in one-off other income items during 2019. This related to the reversal of tax overprovisions and the impact of lease accounting adjustments. C1 costs for 2020 were US$1.00/lb, which is largely consistent with 2019 C1 costs of US$0.99/lb. The impact of lower copper production was largely offset by reduced cash production expenses and higher by-product credits. As a result of ongoing delays to the permitting and development of Chalcobamba (refer Development Projects section) and the impact of COVID-19 on the progress of other site development projects, Las Bambas copper concentrate production for 2021 is expected to be between 310,000 and 330,000 tonnes. Benefiting from the development of Chalcobamba, investment in mine fleet and the third ball mill, it is expected that annual production will increase to an average of 400,000 tonnes over the subsequent four-year period (2022-2025, inclusive). C1 unit cost guidance of US$1.10-1.20/lb for 2021 represents an increase on 2020. In large part this is attributable to increased pre-stripping, maintenance, community costs and project study expenditure, much of which has been held over from 2020 due to COVID-19 impacts. Cost pressures associated with increased mining and milling volumes and longer haul distances as the depth of the Ferrobamba pit increases and Chalcobamba comes into production, will continue to be partially offset by ongoing cost and efficiency programs. This will ensure Las Bambas remains one of the lowest cost mines of this scale in the world. Kinsevere YEAR ENDED 31 DECEMBER 2020 2019 CHANGE % FAV/(UNFAV) Production Ore mined (tonnes) 1,925,609 2,462,037 (22%) Ore milled (tonnes) 2,448,852 2,355,275 4% Waste movement (tonnes) 8,773,208 17,024,362 (48%) Copper cathode (tonnes) 72,007 67,935 6% Payable metal in product sold Copper (tonnes) 72,024 67,881 6% YEAR ENDED 31 DECEMBER 2020 2019 CHANGE % US$ MILLION US$ MILLION FAV/(UNFAV) Revenue 418.9 386.0 9% Operating expenses Production expenses Mining (63.4) (88.2) 28% Processing (85.0) (103.3) 18% Other (104.1) (111.7) 7% Total production expenses (252.5) (303.2) 17% Freight (export clearing costs) (12.1) (11.0) (10%) Royalties (24.9) (22.5) (11%) Other (i) (45.5) (0.9) (4,956%) Total operating expenses (335.0) (337.6) 1% Other expenses (ii) (15.6) (20.3) 23% EBITDA 68.3 28.1 143% Depreciation and amortisation expenses (117.2) (140.1) 16% EBIT (underlying) (48.9) (112.0) 56% Impairment expense - (150.0) - EBIT (statutory) (48.9) (262.0) 81% EBITDA margin 16% 7% (i) Other operating expenses include changes in inventories, corporate recharges and other costs of operations. (ii) Effective from 2020, Other expenses includes Kinsevere related exploration expenditure, which was previously recognised at a corporate level. Prior year comparatives have been reclassified to reflect this change Kinsevere produced 72,007 tonnes of copper cathode in 2020, a 6% increase on the prior year. This was a result of a return to mining at the higher-grade Central pit together with sustained plant stability, with increased throughput, recovery and ore grades all contributing. Mined ore volumes decreased by 22% compared to 2019 levels. This followed a decision to temporarily suspend mining activity from late in the third quarter. It is expected that mining will resume in the second quarter of 2021, with ore stockpiles being consumed in the interim. Revenue increased by $32.9 million (9%) compared to 2019, driven by higher sales on the back of increased production (US$23.6 million) and higher average realised copper prices (US$9.3 million). Total operating costs of US$335.0 million were in line with 2019 (US$337.6 million). A US$50.7 million reduction in production expenses, as discussed below, was largely offset by unfavourable inventory movements, with a net drawdown of ore stockpiles in 2020 following the temporary suspension of mining (US$25.4 million). This compares to a US$25.8 million ore build-up in 2019, resulting in a year-on-year movement of US$51.2 million. Increased freight and royalty costs were consistent with higher sales volumes, with a 16% reduction in depreciation reflecting lower mine output. Mining costs were lower by US$24.8 million, consistent with lower waste movement and mining volumes, in particular following the temporary suspension of mining at the end of September. Processing costs were lower by US$18.3 million, with more favourable ore characteristics requiring less reagent and power consumption. This includes savings attributable to lower sulphuric acid consumption (US$8.4 million) and reduced maintenance costs. Other production expenses were lower by US$7.6 million mainly due to lower consumption of third-party ore (US$13.8 million), however this was partially offset by increased health and safety costs in response to COVID-19 (US$7.0 million). C1 unit costs for 2020 of $US1.81/lb reflected higher production volumes, together with benefits associated with a return to mining at the higher-grade Central pit. The temporary suspension of mining from late in the third quarter also contributed. Copper cathode production for 2021 is expected to be in the range of 50,000 to 60,000 tonnes. This reflects expected ore grade declines, depleting oxide reserves, and a mine plan that assumes the Company will proceed with a transition to the mining and processing of sulphide ores in future years. As noted elsewhere in this report, the decision to proceed with this phase of development remains subject to Board approval. Reflecting a lower production guidance range and an anticipated increase in mining volumes once mining activity resumes, 2021 full year C1 costs are expected to be between US$2.15 and US$2.25/lb. Dugald River YEAR ENDED 31 DECEMBER 2020 2019 CHANGE % FAV/(UNFAV) Production Ore mined (tonnes) 1,982,988 1,853,876 7% Ore milled (tonnes) 1,958,672 1,975,569 (1%) Zinc in zinc concentrate (tonnes) 177,704 170,057 4% Lead in lead concentrate (tonnes) 23,847 23,154 3% Payable metal in product sold Zinc (tonnes) 152,573 138,409 10% Lead (tonnes) 23,301 20,291 15% Silver (ounces) 1,583,186 1,193,303 33% YEAR ENDED 31 DECEMBER 2020 2019 CHANGE % US$ MILLION US$ MILLION FAV/(UNFAV) Revenue 331.3 336.0 (1%) Operating expenses Production expenses Mining (81.0) (73.4) (10%) Processing (60.8) (67.0) 9% Other (57.4) (59.1) 3% Total production expenses (199.2) (199.5) 0% Freight (transportation) (12.6) (13.2) 5% Royalties (11.3) (12.3) 8% Other (4.0) (2.8) (43%) Total operating expenses (227.1) (227.8) 0% Other income (4.2) 0.5 (940%) EBITDA 100.0 108.7 (8%) Depreciation and amortisation expenses (59.9) (55.9) (7%) EBIT 40.1 52.8 (24%) EBITDA margin 30% (i) 32% Other operating expenses include changes in inventories, corporate recharges and other costs of operations. Dugald River delivered record annual production of 177,704 tonnes of zinc in zinc concentrate during 2020, 4% above 2019 volumes. Annual records were also set for mining volumes, recovery and the production of lead and silver by-products. These significant achievements were a result of continued success in work to ramp up and optimise of both the mine and processing plant. Revenue decreased by US$4.7 million (1%) compared to 2019, a result of lower average realised zinc and lead prices and losses realised on zinc commodity hedges. This was partly offset by higher zinc, lead and silver sales volumes and higher average realised silver prices. Total operating expenses of US$227.1 million were in line with 2019, despite increased production. Higher mining costs (US$7.6 million) were driven by increased volumes and contractor costs. This was however largely offset by lower processing costs (US$6.2 million), mainly attributable reduced energy expenditure. Full year C1 unit costs were US$0.70/lb in 2020, consistent with the prior year. The favourable impact of higher volumes and increased by-product credits was offset by higher zinc treatment charges. Dugald River is expected to produce between 180,000 and 190,000 tonnes of zinc during 2021, an increase on 2020 volumes. Anticipated 2021 C1 costs of US$0.70/lb - US$0.75/lb are in line with 2020. Higher production volumes, together with an expected fall in treatment charges and higher by-product credits will offset the impacts of what is anticipated to be a less favourable exchange rate environment. Rosebery YEAR ENDED 31 DECEMBER 2020 2019 CHANGE % FAV/(UNFAV) Production Ore mined (tonnes) 991,124 1,032,508 (4%) Ore milled (tonnes) 979,718 1,030,016 (5%) Copper in copper concentrate (tonnes) 1,537 1,510 2% Zinc in zinc concentrate (tonnes) 67,393 83,463 (19%) Lead in lead concentrate (tonnes) 23,272 24,549 (5%) Gold contained in gold doré (ounces) 10,636 10,567 1% Silver contained in gold doré (ounces) 6,137 6,051 1% Payable metal in product sold Copper (tonnes) 1,562 1,415 10% Zinc (tonnes) 63,962 70,129 (9%) Lead (tonnes) 21,787 23,690 (8%) Gold (ounces) 36,476 28,621 27% Silver (ounces) 2,742,882 2,286,605 20% YEAR ENDED 31 DECEMBER 2020 2019 CHANGE % US$ MILLION US$ MILLION FAV/(UNFAV) Revenue 280.7 272.8 3% Operating expenses Production expenses Mining (69.2) (74.3) 7% Processing (29.7) (29.3) (1%) Other (23.1) (24.9) 7% Total production expenses (122.0) (128.5) 5% Freight (transportation) (6.5) (7.0) 7% Royalties (15.0) (12.3) (22%) Other (6.4) 0.9 (811%) Total operating expenses (149.9) (146.9) (2%) Other income (0.5) - (100%) EBITDA 130.3 125.9 3% Depreciation and amortisation expenses (50.8) (70.7) 28% EBIT 79.5 55.2 44% EBITDA margin 46% (i) 46% Other operating expenses include changes in inventories, corporate recharges and other costs of operations. Rosebery produced 67,393 tonnes of zinc in 2020, 19% below the prior year however slightly above expectations. Declining zinc ore grades at depth was the key driver for the anticipated decline from prior year, in addition to lower mining and milling volumes - a result of constrained mine access for much of the year following seismic events in 2019. Lead production was also lower than prior year volumes (5%), however both gold and silver production increased. Revenue increased by US$7.9 million (3%) to US$280.7 million in 2020, a result of higher sales volumes and realised prices for gold and silver. This was however offset by the impact of lower sales and average realised prices for zinc and lead. Total production expenses were US$6.5 million (5%) lower than 2019. Savings were largely attributable to reduced mining and milling volumes and an increase in capitalised mine development. This was however partly offset by higher backfill and additional tailings dam management expenditure. A slight increase in royalty payments was a result of increased revenue from precious metals. Reflecting the strong contribution of precious metal by-products throughout the year, R osebery's zinc C1 costs for 2020 were US$0.01/lb. Also contributing to this result were lower production expenses, which offset the adverse impacts of reduced volumes and higher zinc treatment charges compared to the prior year. MMG expects to produce between 60,000 and 70,000 tonnes of zinc in zinc concentrate in 2021. C1 costs are estimated at US$0.00-0.10/lb, with this range remaining sensitive to by-product metal production and price and exchange rate fluctuations. These guidance ranges are broadly in line with 2020 results, reflecting the ability of the Company to continue efficiently operating the mine and maximizing output. This is despite longer term grade declines and higher costs associated with operating at depth CASH FLOW ANALYSIS Net cash flow YEAR ENDED 31 DECEMBER 2020 2019 US$ MILLION US$ MILLION Net operating cash flows 1,358.2 1,145.1 Net investing cash flows (515.8) (480.8) Net financing cash flows (867.2) (1,048.7) Net cash outflows (24.8) (384.4) Net operating cash inflows increased by US$213.1 million (19%) to US$1,358.2 million. This largely reflects a US$230.0 million year-on-year movement in cash flows associated with income tax (2020: US$32.4 million refund / 2019: US$197.6 million payment). Operating cashflow benefits associated with reduced exploration expenditure and lower cash production costs were largely offset by a decrease in cash receipts from customers and other timing differences. Net investing cash outflows increased by US$35.0 million (7%) to US$515.8 million. This was primarily due to higher capital spend at Las Bambas (US$40.5 million) in major projects such as the third-ball mill, tailings dam works, new mine fleet, de-bottlenecking of the Molybdenum plant and increased capitalised mining expenditure. Net financing cash outflows decreased by US$181.5 million (17%) in 2020 and included a US$453.3 million net repayment of borrowings (2019: US$511.4 million), together with payment of interest and financing costs of US$380.7 million (2019: $509.1 million). FINANCIAL RESOURCES AND LIQUIDITY 2020 2019 CHANGE AT 31 DECEMBER US$ MILLION US$ MILLION US$ MILLION Total assets 12,298.0 12,665.1 (367.1) Total liabilities (9,628.3) (9,987.2) 358.9 Total equity 2,669.7 2,677.9 (8.2) Total equity decreased by US$8.2 million to US$2,669.7 million at 31 December 2020. This was mainly due to the net profit for the year (US$5.6 million), offset by the impact of an unfavourable change in fair value of derivative instruments that was recognised in the cashflow hedge reserve (US$12.8 million). The Group's objectives in managing capital are to safeguard its ability to continue as a going concern, support sustainable growth, enhance shareholder value and provide capital for potential acquisitions and investment. The gearing ratio for the Group is set out below, with gearing defined as net debt (total borrowings excluding finance charge prepayments, less cash and cash equivalents) divided by the aggregate of net debt and total equity. MMG GROUP Total borrowings (excluding prepaid finance charges) (i) Less: cash and cash equivalents Net debt Total equity Net debt +Total equity Gearing ratio 2020 US$ MILLION 2019 US$ MILLION 7,238.5 7,691.9 (192.7) (217.5) 7,045.8 7,474.4 2,669.7 2,677.9 9,715.5 10,152.3 0.73 0.74 (i) Borrowings at an MMG Group level reflect 100% of the borrowings of the Las Bambas Joint Venture Group. Las Bambas Joint Venture Group borrowings at 31 December 2020 were US$4,400.2 million (2019: US$4,852.1 million) and Las Bambas Joint Venture Group cash and cash equivalents at 31 December 2020 were US$102.2 million (2019: US$90.9 million). For the purpose of calculating the gearing ratio, Las Bambas Joint Venture Group borrowings and cash and cash equivalent balances have not been reduced to reflect the MMG Group's 62.5% equity interest. This is consistent with the basis of preparation of MMG's financia l statements. Under the terms of relevant debt facilities held by the Group, the gearing ratio for covenant compliance purposes is calculated exclusive of US$2,261.3 million (2019: US$2,261.3 million) of shareholder debt that was used to fund the MMG Group's equity contribution to the Las Bambas Joint Venture Group. For the purpose of the above, it has however been included as borrowings. Available debt facilities At 31 December 2020, the Group (excluding the Las Bambas Joint Venture Group) had available to it undrawn debt facilities of US$650.0 million (31 December 2019: US$220.0 million). This was represented by: (i) US$70.0 million (2019: nil) that was undrawn and available under a US$300.0 million revolving credit facility provided by Top Create, for general corporate purposes. The facility, which matures in June 2021, was established in June 2020, to replace a US$300.0 million revolving credit facility provided by ICBC, Melbourne Branch that was due to mature in December of 2020; (ii) US$200.0 million (2019: US$100.0 million) that was undrawn and available under a US$200.0 million revolving credit facility provided by Top Create, for general corporate purposes. In May of 2020, the limit of this facility was increased from US$100.0 million to US$200.0 million and the maturity date extended from April to October 2021; (iii) US$80.0 million that was an additional US$85.0 million facility with China Development Bank maturing in September 2023; and (iv) US$300.0 million that was a new US$300.0 million revolving credit facility with ICBC maturing in December 2023. At 31 December 2020, the Las Bambas Joint Venture Group had available to it undrawn debt facilities of US$1,150.0 million (31 December 2019: US$350.0 million). This was represented by: (i) US$175.0 million (2019: US$175.0 million) that was undrawn and available under a US$175.0 million revolving credit facility provided by BOC Sydney, for general corporate purposes; (ii) US$175.0 million (2019: US$175.0 million) that was undrawn and available under a US$175.0 million revolving credit facility provided by ICBC Luxembourg, for general corporate purposes; and (iii) US$800.0 million (2019: nil) that was an additional US$800.0 million three years revolving credit facility to support the operation through the COVID-19 pandemic with China Development Bank, Bank of China, Industrial and Commercial Bank of China Limited and The Export-Import Bank of China. In addition, at 31 December 2020, the Las Bambas Joint Venture Group had an agreement with CMC and CITIC, each as direct or indirect off-takers of Las Bambas production, for early payment on cargoes already shipped and invoiced as well as pre-payments for inventory held at both port and site. Early payment and pre-payments are permitted up to an aggregate amount of US$200.0 million, allocated to each party in their respective off-take proportions. The Group's available external debt facilities are subject to covenant compliance requirements. The Group was not in breach of covenant requirements in respect of the Group's borrowings at 31 December 2020. Certain financial covenants are measured with reference to the financial performance of the Group or its subsidiaries and may be influenced by future operational performance and community related disruptions. DEVELOPMENT PROJECTS Drilling, permitting and engineering works continue at the Las Bambas Chalcobamba project, however progress in 2020 was delayed as a result of the COVID-19 pandemic. General political instability across Peru, in particular over the second half of 2020, also contributed to delays. Formal government permitting is now anticipated to be received during the first quarter of 2021. The Company is also continuing to take steps to progress community engagement in the area. This is with an expectation of commencing significant development of the pit and accessing first ore during the first half of 2021. There were no other major development projects noted during the year ended 31 December 2020. CONTRACTS AND COMMITMENTS 635 contracts have been reviewed during 2020 through either market engagements or in-contract renegotiations. The approximate annual operational or capital values addressed by these activities totals US$1,094.0 million. Significant additional contracting activity was undertaken with respect to all of the Company's operations throughout 2020 to ensure security of supply for critical inputs and other requirements as necessary to enable continued operations and the management of risks throughout the COVID-19 pandemic. Las Bambas New and revised agreements were finalised in the period to ensure a sustainable cost base and in support of optimising production and expansion options for Las Bambas including; contracts for the supply of blasting services and explosives, additional mobile equipment, temporary camp facilities, fixed plant components (and associated maintenance services), spares, earthmoving services and engineering services. Multiple IT contracts, site services contracts, contracts related to tailings storage facilities and other site infrastructure capital works, multiple contracts covering operations, studies and exploration drilling services, and various goods and services contracts were also finalised in support of the operations. These processes involved engagement with various local communities. Kinsevere New and revised agreements were finalised with regard to various goods and services focussed on supporting production levels while improving operational cost performance. This included revision of mining and civil services contracts, operations and exploration drilling services contracts, multiple contracts covering material and service requirements for site infrastructure projects and various contracts for the supply of reagents and commodities. In addition, various engineering services and consultancy agreements were finalised in support of Kinsevere expansion and development studies. Dugald River New and revised agreements were finalised with regards to operations, including; revised concentrate logistics and drilling services contracts, multiple contracts for the supply of reagents and grinding media, multiple contracts covering goods and services requirements for infrastructure projects, and other site support services. Rosebery New and revised agreements were finalised with regards to various goods and services with a focus on supporting mine development activities and maintaining production performance. These included; drilling and site support services, multiple contracts for the supply of reagents and grinding media and various engineering, laboratory services and consultancy agreements. Group New and revised agreements were finalised with regards to various goods and services including; group-wide travel management contracts, IT related services and licence agreements, and multiple professional services and consultancy agreements. PEOPLE As at 31 December 2020, the Group employed a total of 3,958 full-time equivalent employees (2019: 3,852) in its operations (excluding contractors) with the majority of employees based in Australia, Peru, the Democratic Republic of Congo, the Laos P eople's Democratic Republic and China. Total employee benefits expenses for the Group's continuing operations for the year ended 31 December 2020, including Directors' emoluments, totalled US$247.4 million - a reduction of 18.3% (2019: US$302.9 million). This was primarily due to organisational transformation, an increase in capitalised mining at Las Bambas, operational efficiencies and the one-off impact of prior year collective agreements. The Group has remuneration policies that align with market practice and remunerates its employees based on the responsibilities of their roles, their performance, market requirements and the performance of the Group. Employee benefits include market-competitive fixed remuneration, performance-related incentives, a limited long-term incentive scheme and, in specific cases, insurance and medical coverage. A range of targeted training and development programs are provided to employees across the Group that are designed to improve individual capability and enhance employee and Group performance. EXPLORATION ACTIVITIES Exploration expenditure for 2020 was US$19.1 million (2019: US$37.7 million). This reduction in expenditure was largely a result of exploration work in and around existing hubs being disrupted by COVID-19. The 2020 exploration program at Las Bambas focused on further resource definition drilling at Chalcobamba as well as ongoing development drilling within the southwest extension of the Chalcobamba deposit (Chalcobamba Southwest Zone). Drilling the Chalcobamba Southwest Zone continues to extend and confirm the near surface skarn and porphyry copper mineralization that is expected to drive expansion of the Chalcobamba pit design and contributed to a 13% increase in copper resource at the Chalcobamba deposit. To the extent possible given COVID-19 restraints, surface exploration continued within the mining leases surrounding the currently identified mineral resources. Surface exploration programs include electrical and magnetic geophysical methods as well as surface geochemical surveys and are evaluating potential extensions to known mineral resources as well as recently identified exploration targets. In the DRC, exploration activity has continued to focus on the discovery and delineation of satellite copper oxide deposits within a roughly 50km radius of the Kinsevere mine. This activity continues to confirm and define several compelling copper-cobalt targets at the Nambulwa, Mwepu, Sokaroshe II and Shandwe Projects. At Dugald River, underground drilling in 2020 focussed on infilling in the South Mine. Orebody thicknesses intersected in the 2020 program exceeded 2019 interpretation, leading to an increase in the size of the zinc orebody. As reported in the Company's 2020 Mineral Resource a nd Ore Reserve statement, the tonnage of the primary zinc mineral resource at Dugald River increased by approximately 14% from the previous annual report. High grade lead and silver are also present in these areas of structural thickening. Further interpretation work has indicated that these thicknesses in the zinc orebody could be repeated within the current in-mine footprint requiring prioritised infill drilling. At Rosebery, r esource extension and near mine exploration drilling during 2020 continued to indicate further extensions to the resource. Further work will be undertaken in 2021. Additional information is available in the Company's 2020 Mineral and Ore Reserves Statement, which is available at www.mmg.com . AVERAGE METERAGE NUMBER OF LENGTH PROJECT HOLE TYPE (METRES) HOLES (METRES) Africa Kinsevere RAD50 Diamond 3,617 27 134 Reverse Circulation 6,704 57 118 Americas Las Bambas Diamond 24,145 119 203 Reverse Circulation 5,407 38 142 Australia Dugald River Diamond 57,384 388 148 Rosebery Diamond 75,248 295 255 Total 172,505 924 187 MATERIAL ACQUISITIONS AND DISPOSALS The Group made no material acquisition or disposal in the year ended 31 December 2020. EVENTS AFTER THE REPORTING DATE Other than the matters outlined below and in other sections of the management discussion and analysis, there have been no matters that have occurred subsequent to the reporting date which have significantly affected, or may significantly affect the Group's operations, results or state of affairs in future years. 1. As noted under contingent liabilities for tax, MLB received SUNAT's assessment notice for Peru - Withholding Taxes (2014/15) in connection with audits undertaken in respect of the 2015 tax year. MLB intends to appeal the assessments and not to pay the assessed amount to SUNAT pending resolution of the appeal. 2. Subsequent to the reporting date, New Century Resources Limited ("New Century") announced an agreement for a reduction in the Estimated Rehabilitation Cost ("ERC") with the Queensland Government's Department of Environment and Science (DES) for A$14.1 million. The Group currently holds a provision in respect of bank guarantee for the benefit of New Century, associated with the disposal of the Century Mine in 2017. In line with the reduction in the ERC, the bank guarantee liability is expected to reduce by approximately US$11.0 million during 2021. FINANCIAL AND OTHER RISK MANAGEMENT The Group's activities expose it to a variety of financial risks, including commodity price risk, interest rate risk, foreign exchange risk, credit risk and liquidity risk. The Group's overall risk management program focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Group's financial performance. The Group can use derivative financial instruments such as foreign exchange contracts, interest rate swaps and commodity swaps to manage certain exposures. The Group does not and is prohibited from entering into derivative contracts for speculative purposes. Financial risk management is carried out by the Group Treasury function under proposals approved by the Board. Group Treasury identifies, evaluates and manages financial risks in close cooperation with the Group's operating units. The Board approves written principles for overall risk management, as well as policies covering specific areas, such as those identified below. (a) Commodity price risk The prices of copper, zinc, lead, gold, silver and molybdenum are affected by numerous factors and events that are beyond the control of the Group. These metal prices change on a daily basis and can vary significantly up and down over time. The factors impacting metal prices include both broader macro-economic developments and micro-economic considerations relating more specifically to the particular metal concerned. During the year ended 31 December 2020, the Group entered into various commodity trades to hedge the sales prices for copper and zinc. This included hedging 110,300 tonnes of copper and 54,500 tonnes of zinc at prices ranging from US$6,392/tonne to US$6,750/tonne (copper) and US$2,381/tonne to US$2,395/tonne (zinc). Certain hedges will be settled in 2021 and the fair value of such derivatives is disclosed in the Financial Statements. The effective portion of such fair value movement, from hedge inception to date, has been recognised in other comprehensive loss amounting to US$5.5 million. A change in commodity prices during 2021 can result in a favourable or unfavourable financial impact for the Group during 2021. The following table contains details of the hedging instrument used in the Group's hedging strategy: At 31 December 2020 Cash flow hedges: Derivative financial liabilities Term Carrying amount of hedging instrument US$ million Favourable/(Unfavourable) changes in fair value used for measuring ineffectiveness Settled portion of hedging instrument realized losses US$ million Hedging loss recognised in cash flow hedge reserve US$ million Hedge ineffectiveness recognised in profit or loss US$ million Hedging instrument US$ million Hedged item US$ million January 2021 to March 2021 (7.9) (7.9) 7.9 (6.8) (5.5) - The following table details the sensitivity of the Group's financial assets balance to movements in commodity prices. Financial assets arising from revenue on provisionally priced sales are recognised at the estimated fair value of the total consideration of the receivable and subsequently remeasured at each reporting date. As at the reporting date, if the commodity prices increased/(decreased) by 10% and taking into account the commodity hedges, with all other variables held constant, the Group's post -tax loss/profit would have changed as set out below: 2020 2019 Commodity Copper Zinc Total Commodity price movement (Decrease)/Increase in profit US$ million Increase in OCI US$ million Commodity price movement Decrease in loss US$ million +10% (11.0) - +10% 44.0 +10% 2.0 (6.3) +10% 4.0 (9.0) (6.3) 48.0 Commodity Copper Zinc Total Commodity price movement Decrease in profit US$ million Decrease in OCI US$ million Commodity price movement Increase in loss US$ million -10% (18.9) - -10% (44.0) -10% (2.0) 6.3 -10% (4.0) (20.9) 6.3 (48.0) (b) Interest rate risk The Group is exposed to interest rate risk primarily through interest bearing borrowings and investment of surplus cash holdings. Deposits and borrowings at variable rates expose the Group to cash flow interest rate risk. Deposits and borrowings at fixed rates expose the Group to fair value interest rate risk. Details of the Group's cash and cash equivalents and the Group's borrowings are set out in the Financial Statements. The Group regularly monitors its interest rate risk to ensure there are no undue exposures to significant interest rate movements. Any decision to hedge interest rate risk is assessed periodically in light of the overall Group's exposure, the prevailing interest rate market and any funding counterparty requirements. Regular reporting of the Group's debt and interest rates is provided to the Executive Committee. During the year ended 31 December 2020, MLB entered into a notional US$2,100 million 5-year amortising interest rate swap with respect to the floating 6-month LIBOR base rate applicable under its existing project facility, converting the floating rate to a fixed base rate. The main sources of hedge ineffectiveness are considered to be the effects of counterparty credit risks on the hedging instrument and uncertainty associated with benchmark interest rate reform. Further, if LIBOR rates become negative for a period of time, then this corresponding component of the hedging instrument will be ineffective from year two to year five. A floor is purchased on LIBOR at zero for the first year of the hedge instrument. The following table contains details of the hedging instrument used in the Group's hedging strategy: At 31 December 2020 Cash flow hedges: Derivative financial liabilities 1 Term Notional amortising amount US$ million Carrying amount of hedging instrument US$ million Favourable/(Unfavourable) changes in fair value used for measuring ineffectiveness Settled portion of hedging instrument realized losses US$ million Hedging loss recognised in cash flow hedge reserve US$ million Hedge ineffectiveness recognised in profit or loss US$ million Hedging instrument US$ million Hedged item US$ million June 2020 - June 2025 2,020.0 (10.7) (10.7) 10.7 (1.4) (7.3) - 1. During the year ended 31 December 2020, the Group has entered into a notional US$2,100 million 5-year amortising interest rate swap with BOC Sydney . The purpose of the arrangement is to fix approximately half of the remaining interest rate exposure accompanying the floating interest rate MLB project facility (borrowings of US$4,068.6 million outstanding at 31 December 2020, maturing in June 2032) from CDB, ICBC, BOC Sydney and The Export-Import Bank of China for a period of 5 years. The interest rate swap hedge will amortise in line with the MLB project facility and swap the 6-month LIBOR exposure for a fixed rate (0.5568% in the first year and 0.5425% from the year two to year five). At 31 December 2020 and 31 December 2019, if the interest rate had increased/(decreased) by 100 basis points, taking into account the interest rate swap, with all other variables held constant, post-tax profit/(loss) and other comprehensive income (OCI) would have changed as follows: 2020 2019 +100 basis points -100 basis points +100 basis points -100 basis points Increase/ Increase/ (Increase) (Increase) (decrease) US$ MILLION Financial assets Cash and cash equivalents Financial liabilities Borrowings (taking into account the impact of the interest rate swap) in profit after tax Increase/ (decrease) (decrease) in OCI in profit after tax Increase/ (decrease) in OCI /decrease in loss after tax (Increase) / decrease in OCI /decrease in loss after tax (Increase)/ decrease in OCI - (1.5) - Total - - 36.9 35.4 - - Effect of benchmark interest rates reform Following the global financial crisis, the reform and replacement of benchmark interest rates such as US$ LIBOR became a priority for global regulators. It is expected that LIBOR will no longer be published after December 2021. There is currently uncertainty around the timing and precise nature of these changes. The Group's risk exposure that is directly affected by the interest rate benchmark reform is its borrowings at variable rates. The Group has hedged US$2,100.0 million of these borrowings with an amortising interest rate swap, and it has designated the swap as a cash flow hedge of the variability in cash flows of the debt. Under the amendments, hedge accounting is not discontinued solely because of the interest rate benchmark reform. Hedging relationships (and related documentation) are required to be amended to reflect modifications to the hedged item, hedging instrument and hedged risk. Amended hedging relationships should meet all qualifying criteria to apply hedge accounting, including effectiveness requirements. If, and when, LIBOR is replaced as the underlying variable rate applicable to the Group's borrowings, with an alternate benchmark rate, this may potentially impact the future interest payable on the Group's borrowings. The Group is closely monitoring the transition to new benchmark interest rates. The Group's management has opted to early adopted Phase I and opted to early adopt Phase II of the Amendments to HKFRS 9, HKAS 39 and HKFRS 7 Interest Rate Benchmark Reform. In respect of the interest rate swap entered into by the Group, the amendments provide temporary relief from applying specific hedge accounting requirements to the hedging relationships if it directly gets affected by benchmark interest rates reform. This will prevent hedge accounting from terminating but may result in hedge ineffectiveness. Any hedge ineffectiveness continues to be recorded in the consolidated statement of profit or loss. (c) Foreign exchange risk The Group operates internationally and is exposed to foreign currency exchange risk. The Group's reporting currency and functional currency of the majority of subsidiaries within the Group is US dollars. The majority of revenue received by the Group is in US dollars. The Group's foreign currency exchange risk arises predominantly from the currency of the countries in which t he Group's operations are located. Any decision to hedge foreign currency risk is assessed periodically in light of the Group's exposure, the prevailing foreign currency market and any funding counterparty requirements. Based on the Group's net monetary as sets and financial liabilities at 31 December and 2019, a movement of the US dollar against the principal non-functional currencies illustrated below, with all other variables held constant, would cause changes in post-tax profit/(loss) as follows: 20 2 0 2019 Weakening of US Strengthening of Weakening of US Strengthening of dollar US dollar dollar US dollar (Decrease)/ (Decrease)/ (Increase)/ (Increase)/ increase in profit increase in profit decrease in loss decrease in loss US$ MILLION after tax after tax after tax after tax 10% movement in Australian dollar (2019: 10%) (16.2) 16.2 (13.4) 13.4 10% movement in Peruvian sol (2019: 10%) (10.0) 10.0 1.1 (1.1) Total (26.2) 26.2 (12.3) 12.3 (d) Credit risk Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group. The Group is exposed to counterparty credit risk through sales of metal products on normal terms of trade, through deposits of cash and settlement risk on foreign exchange transactions. While the most significant exposure to credit risk is through sales of metal products on normal terms of trade, the majority of sales for mining operations were made under contractual arrangements whereby provisional payment is received promptly after delivery and the balance within 30 to 120 days from delivery. The aging analysis of the trade receivables is provided in the Financial Statements, and 100% of the balance is aged less than six months based on invoice date. The carrying amount of the Group's trade receivables at fair value through profit or loss is also disclosed in the Financial Statements, representing their respective maximum exposure to credit risk. The Group holds no collateral over any of these balances. Investments in cash, short-term deposits and similar assets are with approved counterparty banks. Counterparties are assessed prior to, during and after the conclusion of transactions to ensure exposure to credit risk is limited to acceptable levels. There has been no change in the estimation techniques or significant assumptions made during the year ended 31 December 2020 in assessing the expected credit loss for these financial assets. The limits are set to minimise the concentration of risks and therefore mitigate the potential for financial loss through counterparty failure. Impairment is provided for where the credit risk is perceived to exceed the acceptable levels and there are concerns on recoverability of the relevant assets. Management considers cash and cash equivalents that are placed on deposit with financial institutions that hold a high-grade credit rating to be low credit risk financial assets. The Group's most significant customers are CMN, Citic Metal Peru Investment Limited (CITIC Metal), and Trafigura Pte Ltd (Trafigura). Revenue earned from these customers as a percentage of total revenue was: CMN CITIC Metal Trafigura 2020 2019 37.9% 36.4% 18.3% 16.9% 14.6% 14.0% The Group's largest debtor at 31 December 2020 was CMN, with a balance of US$121.1 million (2019: CMN with US$60.4 million) and the five largest debtors accounted for 85.0% (2019: 77.6 %) of the Group's trade receivables. Credit risk arising from sales to large concentrate customers is managed by contracts that stipulate a provisional payment of at least 90% of the estimated value of each sale. For most sales a second provisional payment is received within 60 days of the vessel arriving at the port of discharge. Final payment is recorded after completion of the quotation period and assaying. Credit risk by geographic region was: AT 31 DE CEMBER US$ MILLION Asia Europe Australia Other 2020 2019 297.5 157.7 67.9 65.7 0.6 5.6 3.2 11.6 369.2 240.6 (e) Liquidity risk Liquidity risk is the risk that the Group will encounter difficulty in meeting obligations associated with financial liabilities. Management utilises short and long-term cash flow forecasts and other consolidated financial information to ensure that appro priate liquidity buffers are maintained to support the Group's activities. The table below analyses the Group's non -derivative financial assets and liabilities by relevant maturity groupings based on the remaining period to contractual maturity as at the reporting date. The amounts disclosed in each maturity grouping are the contractual undiscounted cash flows for non-derivative financial instruments. US$ MILLION At 31 December 2020 Financial assets Cash and cash equivalents Trade receivables Other receivables Other financial assets Financial liabilities Trade and other payables Other financial liabilities Borrowings (including interest) Lease liabilities (including interest) Derivative financial liabilities Within 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years Total Total carrying value 192.7 - - - 192.7 192.7 369.2 - - - 369.2 369.2 139.4 23.4 16.7 5.8 185.3 185.3 1.7 - - - 1.7 1.7 (470.2) (112.2) - - (582.4) (582.4) - - - (145.4 ) (145.4) (145.4) (1,152.6) (969.2) (4,418.1) (1,999.6) (8,539.5) (7,179.5) (33.0) (29.7) (57.0) (113.4) (233.1) (148.7) (35.8) (6.0) 1.7 - (40.1) (40.0) (988.6) (1,093.7) (4,456.7) (2,252.6) (8,791.6) (7,347.1) US$ MILLION At 31 December 2019 Financial assets Cash and cash equivalents Trade receivables Other receivables Other financial assets Financial liabilities Trade and other payables Within 1 year Between 1 and 2 years Between 2 and 5 years Over 5 years Total Total carrying value 217.5 - - - 217.5 217.5 240.6 - - - 240.6 240.6 83.6 92.9 - - 176.5 176.5 3.1 - - - 3.1 3.1 (591.3) - - - (591.3) (591.3) Other financial liabilities Borrowings (including interest) Lease liabilities (including interest) - - - (135.7) (135.7) (135.7) (1,157.0) (1,650.5) (3,388.5) (3,392.9) (9,588.9) (7,628.3) (36.5) (28.5) (64.0) (128.6) (257.6) (160.8) (1,240.0) (1,586.1) (3,452.5) (3,657.2) (9,935.8) (7,878.4) (f) Sovereign risk The Group conducts all of its operations outside of Hong Kong and, as such, it is exposed to various levels of political, economic and other risks and uncertainties. These risks and uncertainties vary from country to country. Material risks include, but are not limited to, regime or policy change, fluctuation in currency exchange rates, changes to licensing regimes and amendments to concessions, licences, permits and contracts, and changing political conditions and governmental regulations. Changes in any mining or investment policies or shifts in political attitudes in the jurisdictions in which t he Group operates may adversely affect the Group's operations and profitability. The decline in growth and macroeconomic activity in many developing nations has resulted in governments seeking alternative means of increasing their income, including increases to corporate tax, VAT and royalty rates, coupled with increased audit and compliance activity. The DRC Government during 2018 made changes to the 2002 Mining Code and Mining Regulations. These changes were enacted (2018 Mining Code) and continue to result in an increased tax burden on mining companies. Some of the countries in which the Group operates carry higher levels of sovereign risk. Political and administrative changes and reforms in law, regulations or taxation may impact sovereign risk. Political and administrative systems can be slow or uncertain and may result in risks to the Group including the ability to obtain tax refunds in a timely manner. The Group has processes in place to monitor any impact on the Group and implement responses to such changes. CONTINGENT LIABILITIES Bank guarantees Certain bank guarantees have been provided in connection with the operations of certain subsidiaries of the Company primarily associated with the terms of mining leases, mining concessions, exploration licences or key contracting arrangements. At the end of the reporting period, no material claims have been made under these guarantees. The amount of these guarantees may vary from time to time depending upon the requirements of the relevant regulatory authorities. At 31 December 2020, these guarantees amounted to US$417.7 million (2019: US$373.4 million). The Group has a A$230.0 million (2019: A$200.0 million), revolving bank guarantee facility with Bank of China Sydney, which is guaranteed by CMN. MMG has entered into a counter-indemnity agreement in favour of CMN for the maximum principal amount outstanding under the BG Facility. Following the sale of Century mine in 2017, the Group has procured certain bank guarantees amounting to US$145.4 million (2019: US$135.7 million) for the benefit of New Century until 31 December 2023. New Century is legally required to punctually meet all obligations and must use best endeavours to ensure that no demand is made under the bank guarantees. New Century must ensure that, within 90 days of the end of each financial year, the bank guarantee is reduced by not less than 40% of the Century mine's EBITDA in respect of a financial year. In 2020, New Century sold it's 49% interest in Lawn Hill and Riversleigh Pastoral Holding Company. In line with the Bank Guarantee Support Agreement in place with New Century, the bank guarantee has been reduced by US$3.7 million (A$4.8 million), representing 50% of the proceeds from such sale. Tax related contingencies The Group has op erations in multiple countries, each with its own taxation regime. The nature of the Group's activities requires it to comply with various taxation obligations including corporation tax, royalties, withholding taxes, transfer pricing arrangements with related parties, resource and production-based taxes, environmental taxes and employment related taxes. Application of tax laws and interpretation of tax laws may require judgement to assess risk and estimate outcomes, particularly in relation to the application of income taxes and withholding tax to the Group's cross -border operations and transactions. The evaluation of tax risks considers both assessments received and potential sources of challenge from tax authorities. Additionally, the Group is currently subject to a range of audits and reviews by taxation authorities in Australia, Peru, Zambia and the DRC. No disclosure of an estimate of financial effect of the subject matter has been made in the consolidated financial statements as, in the opinion of the management, such disclosure may seriously prejudice the position of the Group in dealing with these matters. Tax matters with uncertain outcomes arise in the normal course of business and occur due to changes in tax law, changes in interpretation of tax law, periodic challenges and disagreements with tax authorities, and legal proceedings. The status of proceedings for such uncertain tax matters will impact the ability to determine the potential exposure and, in some cases, it may not be possible to determine a range of possible outcomes, including timing of resolution or determining a reliable estimate of the potential exposure. Peru - Withholding Taxes (2014/15) Included within such uncertain tax matters is an audit of the 2014 tax year for MLB in relation to withholding taxes on fees paid under certain loans, which were provided to MLB pursuant to facility agreements entered into among MLB and a consortium of Chinese banks in connection with the acquisition of the Las Bambas mine in 2014. MLB received an assessment notice (the " 2014 Initial Assessment") in July 2020 from the Peruvian tax authority (National Superintendence of Tax Administration of Peru or "SUNAT"), which advised that, in its opinion, MLB and the Chinese banks are related parties and thus a 30% withholding tax rate ought to be imposed rather than the 4.99% applied. The 2014 Initial Assessment of omitted tax is PEN 60,687,851 (approximately US$17.3 million). The total 2014 Initial Assessment of omitted tax plus penalties and interest imposed by SUNAT is PEN 154,193,808 (approximately US$44.0 million). On 10 December 2020, SUNAT issued assessments to MLB for December 2014 tax year (the "2014 Supplementary Assessment") in the amount of PEN 44,836,952 (approximately US$13.0 million). This amount included interest until the estimated date of Peru Tax Court resolution, which is expected by June 2025. On 18 February 2021, MLB received assessment notices from SUNAT in connection with audits undertaken in respect of the 2015 tax y ear (the "2015 Assessment") in the amount of PEN 521,152,714 (approximately US$149.0 million). The 2015 Assessment and 2014 Supplementary Assessment are based upon the same interpretation of Peruvian tax law by SUNAT as the 2014 Initial Assessment. In relation to these assessments, having received external legal and tax advice, the Group has formed the view that the Company and its controlled entities are not related parties to Chinese banks under Peruvian tax law. MLB notes that the Peruvian tax law was amended to apply from October 2017 onwards to provide expressly that parties are not related by being under state ownership for the purposes of withholding taxes. MLB intends to appeal the assessment and not to pay the assessed amounts to SUNAT pending resolution of the appeal. SUNAT could potentially bring a similar challenge regarding the rate of withholding tax applied by MLB in the 2016 tax years and the part of the 2017 tax year before the amendment to the Peruvian tax law. Where MLB is not successful in rebutting or appealing such challenge(s), this could result in significant additional tax liabilities. Peru - VAT refund claims (2011/12) I ncluded as an uncertain tax matter is the decision from the Peru Tax Court in relation to SUNAT's audit of MLB's VAT refund claims in the 2011 and 2012 years. SUNAT conducted an audit of MLB's tax affairs of the 2011 and 2012 financial years and challenged certain VAT matters. SUNAT disallowed MLB's claim, despite MLB providing a substantial amount of documentary evidence to support its position during and after the audit, which MLB is of the opinion it is entitled to do, pursuant to Peruvian law. These matters were subsequently referred to the Peru Tax Court for further determination. The Peru Tax Court heard these matters on 15 August 2018, and informed MLB of its decision on 14 October 2020. The Peru Tax Court upheld a majority of the assessment by SUNAT that US$187 million of VAT, penalties and interest has been correctly assessed in respect of the 2011 and 2012 financial years when the Las Bambas mine was under the ownership of Glencore plc. On 26 October 2020, SUNAT issued a new assessment. The Group is contesting the calculation of the new assessment. Following the tax court ruling on the amount, payment will be required. MLB has appealed the judgment. Appeals in the Peruvian Judiciary System may take several years to resolve. The assessed amount relates to the pre-closing period under the agreement signed with Glencore in 2014 which clarified MMG can pursue indemnity and warranty claims against Glencore due to the matters before 2014 ("Share Purchase Agreement") entered into with Glencore plc in respect of the acquisition of the Las Bambas mine, transacted by MMG with Glencore in 2014 ("Las Bambas Project") in July 2014 and, if any assessed amount were to become payable, MLB may seek reimbursement of some or all of the amount from Glencore plc by way of indemnity or warranty claims under that agreement. The Group continues to proactively cooperate with the relevant taxation authorities and to actively manage these audits and reviews. Where appropriate, the Group has filed appeals with either the relevant tax authority or the tax court. For all such open tax matters that the Group presently has, any ultimate obligation would depend on future resolution of the matters and currently, a payment is either not probable or cannot be measured reliably. As such, no provision has been reflected in the consolidated financial statements for such tax matters. Other contingencies Mining Company Katanga SARL ("MCK") filed a claim against MMG Kinsevere SARL ("MMG Kinsevere"), a subsidiary of the Group, to compensate MCK for losses suffered as a result of Kinsevere's decision to not renew or extend the mining services contract with its associate entity MCK Trucks (then known as NB Mining SA) in 2018 on the basis that MCK was entitled to a "life of mine" agreement with Kinsevere. MCK is seeking an award of losses suffered and punitive damages. MMG Kinsevere and the Company regard the claim as unfounded and opportunistic, and the amount claimed as completely disproportionate to the losses that could reasonably have been suffered. The Group is vigorously contesting the claim. Court proceedings between MMG Kinsevere and MCK in the DRC are continuing. MCK obtained freezing orders in February 2020 over certain assets of Kinsevere, which have been partly enforced over US$15.0 million cash held in bank accounts in the DRC. Considering the uncertainty around this matter and the fact that there is no present obligation for Kinsevere to make any payments, nor such payment being reliably estimated at this time, no provision has been recognised for this matter. RE-CLASSIFICATION Certain amounts in the prior period consolidated financial statements have been reclassified to conform to the presentation of the current period consolidated financial statements. These reclassifications had no effect on the previously reported total comprehensive loss for the year. CHARGES ON ASSETS At 31 December 2020, certain borrowings of the Group were secured as follows: 1. Approximately US$4,307.6 million (2019: US$4,852.1 million) from China Development Bank, ICBC, BOC Sydney and The Export-Import Bank of China was secured by share security over the entire share capital of MMG South America Management Co Ltd and each of its subsidiaries including MLB, a debenture over the assets of MMG South America Management Co Ltd, an assets pledge agreement and production unit mortgage in respect of all of the assets of MLB, assignments of shareholder loans between MMG South America Management Co Ltd and its subsidiaries and security agreements over bank accounts of MLB. Approximately US$239.0 million (2019: US$469.0 million) of these borrowings are guaranteed on a several basis by China Minmetals Non-ferrous Metals Holding Company Limited, Guoxin International Investment Corporation Limited and CITIC Corporation Limited in proportion to the respective shareholdings of MMG SA, Elion Holdings Corporation Limited and Citic Metal Peru Investment Limited in the Las Bambas Joint Venture Group. 2. Approximately US$342.2 million (2019: US$398.6 million) from China Development Bank and BOC Sydney was substantively secured by the shares and assets of MMG Dugald River Pty Ltd. This consists of a charge over the shares in MMG Dugald River, a real property mortgage over all of the interests in land of MMG Dugald River, a general security agreement in respect of all of the assets of MMG Dugald River, and specific security over certain assets owned by MMG Australia Limited relating to the Dugald River project, and a featherweight charge over all of MMG Aust ralia Limited's other assets. This borrowing is guaranteed by CMC. 3. Approximately US$92.5 million (2019: nil) from ICBC Peru Bank, Banco de Crédito del Peru and Scotiabank Peru secured by mine fleet equipment procured under asset finance arrangements. FUTURE PROSPECTS MMG's vision is to build the world's most respected mining company. We mine to create wealth for our people, host communities and shareholders with an ambition to double the size and value of MMG, and then double again by 2030. MMG has established strong foundations that support future growth and development. The Board is committed to sustaining the successful model that brings together the best fit management team and a strong relationship with China that draws upon the strength of the world's largest commodities consumer, provides deep understanding of markets and access to its sources of funding. The Company is focused on containing costs, continually improving productivity, growing its resource base and strengthening the balance sheet. This will enable the Company to step into its next phase of disciplined growth. In 2021, MMG expects to produce between 360,000 and 390,000 tonnes of copper and between 240,000 and 260,000 tonnes of zinc. Las Bambas copper production in 2021 will continue to be impacted by COVID-19 and delays incurred during 2020 with respect to key development projects and commencement of mining at Chalcobamba. Las Bambas copper volumes are expected to recover from 2022 onwards, with average annual production of approximately 400,000 tonnes anticipated over the period 2022 to 2025. The Las Bambas tenements are highly prospective in nature, as demonstrated by positive early drilling results at the Chalcobamba Southwest Zone which are expected to drive expansion of the Chalcobamba pit design. Other greenfield exploration targets in the area will continue to be pursued in 2021. In the DRC, the Company has built a valuable skill base in a world-leading copper province, established practices for the development and processing of third-party and satellite deposits and derived valuable in-country operating knowledge as part of the Kinsevere project. The Company continues to investigate options to extend the life of Kinsevere with a final investment decision anticipated in the first half of 2021 regarding the next phase of development of the Kinsevere project. This potential development includes the addition of a sulphide ore and cobalt processing circuit alongside the existing oxide circuit. Should it proceed, this project will enhance the value of MMG's operations in the DRC, provide an entry for the Company into the cobalt market, and enhance optionality for future potential investments in country. It is anticipated that the project would result in a return to annual copper cathode production of around 80,000 tonnes per year and annual cobalt production of between 3,000 and 5,000 tonnes per year. The project will also add approximately ten years to the life of the Kinsevere mine. This work is in addition to the continuation of regional exploration programs focused on proving up discoveries within a 50-kilometre radius of the Kinsevere mine. In 2021, the Company will continue to progress its successful ramp-up of Dugald River, taking advantage of works carried out in 2020 to achieve increased mine output, enhanced processing performance and ultimately higher production. This work, together with a 14% increase in Dugald River's primary zinc resource following successful early drilling, positions Dugald River to achieve its stated target of sustained mine capacity in excess of two million tonnes per annum by 2022 and zinc production approaching 200,000 tonnes annually. It also supports the possibility of either mine life extension or expansion of the Dugald River operation. At Rosebery, work directed at extending the current mine life will continue to be pursued, including resource extension drilling and analysis of tailings disposal strategies. Total capital expenditure in 2021 is expected to be between US$750.0 million and US$800.0 million. Of this, approximately US$650.0 million is attributable to Las Bambas, including approximately US$250.0 million related to capitalised deferred stripping activity. Costs related to the development of Chalcobamba, completion of the third ball mill project and expansion of the Las Bambas tailings dam facility, much of which was originally expected to fall in 2020 but was deferred as a result of COVID-19, all contribute to this higher level of capital expenditure. Capital expenditure for the Group is expected to reduce over subsequent years, to approximately US$450.0 million (US$650.0 million inclusive of capitalised mining) per annum. These figures do not include costs associated with the next phase of development at Kinsevere, details of which will be announced if and when the project receives formal approval. MMG currently has no future plans for material investments or capital assets sanctioned by the Board other than those detailed in this report or announced to the market. OTHER INFORMATION ANNUAL GENERAL MEETING The annual general meeting of the Company will be held on Thursday, 20 May 2021 (AGM). The notice of the AGM will be published and despatched to shareholders of the Company in due course. CLOSURE OF REGISTER OF MEMBERS The register of members of the Company will be closed from Monday, 17 May 2021 to Thursday, 20 May 2021, inclusive, during which period no transfer of shares will be registered. In order to qualify for attending and voting at the AGM, all completed transfer forms accompanied by the relevant share certificates must be lodged with Computershare Hong Kong Investor Services Limited at Shops 1712- 1716, 17/F, Hopewell Centre, 183 Queen's Road East, Wanchai, Hong Kong not later than 4:30 pm on Friday, 14 May 2021. The record date for determining Shareholders' eligibility to attend and vote at the AGM will be on Friday, 1 4 May 2021. CORPORATE GOVERNANCE The Company is committed to maintaining a high standard of corporate governance practices by emphasising a quality Board, sound internal controls, and transparency and accountability to all Shareholders. The Company has complied with all the code provisions of the Corporate Governance Code as set out in Appendix 14 of the Listing Rules throughout the year ended 31 December 2020, except for the following deviations: 1. Code provision A.4.1 requires that Non-executive Directors should be appointed for a specific term and subject to re-election. Each of the Non-executive Directors entered into an appointment agreement with the Company for a specific term of three years, except for Dr Peter Cassidy. Dr Cassid y's appointment agreement commenced on 31 December 2010 and continues until either the Company or he terminates such agreement by serving on the other not less than one month's prior written notice. In accordance with the Company's articles of associatio n, each Director appointed by the Board shall be subject to re-election by Shareholders at the next general meeting (in the case of filling a casual vacancy) or at the next annual general meeting (in the case of an addition to the Board), and thereafter be subject to retirement by rotation at least once every three years at the annual general meeting. Dr Cassidy, who was appointed by the Board on 31 December 2010 to fill a casual vacancy, is also subject to retirement from the Board by rotation at least once every three years at the annual general meeting. Since Dr Cassidy has been appointed, he has been re-elected by the Shareholders at the annual general meetings held in 2011, 2013, 2016 and 2019. 2. Code provision E.1.2 requires the Chairman of the Board to attend and answer questions at the annual general meeting. Mr Guo Wenqing, the Chairman of the Board, was not available for the Company's annual general meeting held on 21 May 2020 due to unplanned business commitments. Accordingly, Mr Leung Cheuk Yan, an Independent Non-executive Director, a member of the Audit and Risk Management Committee and the Governance, Remuneration and Nomination Committee of the Company, was nominated by the Board to take the chair of the said meeting. The Company adopted a Board Charter to outline the manner in which its constitutional powers and responsibilities will be exercised, delegated and discharged, having regard to principles of good corporate governance, international best practice and applicable laws. The Board Charter is adopted on the basis that strong corporate governance can add to the performance of the Company, create Shareholder value and engender the confidence of the investment market. DIRECTORS' SECURITIES TRANSACTIONS The Company has adopted a model code for securities trading by Directors (Securities Trading Model Code) on terms no less exacting than the required standard of the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules (Model Code). Specific enquiry was made with all the Directors and all confirmed that they have complied with the requirements set out in the Model Code and the Securities Trading Model Code during the year ended 31 December 2020. AUDIT AND RISK MANAGEMENT COMMITTEE The Audit and Risk Management Committee comprised five members including three Independent Non-executive Directors, namely Mr Chan Ka Keung, Peter as Chair, Dr Peter Cassidy and Mr Leung Cheuk Yan, and two Non-executive Directors, namely Mr Zhang Shuqiang and Mr Xu Jiqing. The Audit and Risk Management Committee is principally responsible for (i) the financial reporting related matters, such as reviewing financial information and overseeing financial reporting related systems and controls; and (ii) advising the Board on high-level risk related matters, risk management and internal control, including advising on risk assessment and oversight of the internal audit function. The Audit and Risk Management Committee has reviewed the consolidated financial statements of the Group for the year ended 31 December 2020. PURCHASE, SALE OR REDEMPTION OF THE COMP ANY'S LISTED SECURIT IES During the year ended 31 December 2020, neither the Company nor any of its subsidiaries purchased, sold or redeemed any of the Company's listed securities. PUBLICATION OF ANNUAL RESULTS AND ANNUAL REPORT This annual results announcement is also published on the website of the Company ( www.mmg.com ). The Company's 20 20 Annual Report will be despatched to Shareholders and made available on the websites of the Hong Kong Exchange and Clearing Limited ( www.hkexnews.hk ) and the Company in due course. Scope of work of Messrs. Deloitte Touche Tohmatsu The figures in respect of the Group's consolidated statement of financial position, consolidated statement of profit or loss, consolidated statement of comprehensive income, consolidated statement of changes in equity, consolidated statement of cash flows and the related notes thereto for the year ended 31 December 2020 as set out in the announcement on annual results for year ended 31 December 2020 have been agreed by the Group's auditor, Messrs. Deloitte Touche Tohmatsu, to the amounts set out in the Group's audited consolidated financial statements for the year. The work performed by Messrs. Deloitte Touche Tohmatsu in this respect did not constitute an assurance engagement in accordance with Hong Kong Standards on Auditing, Hong Kong Standards on Review Engagements or Hong Kong Standards on Assurance Engagements issued by the Hong Kong Institute of Certified Public Accountants and consequently no assurance has been expressed by Messrs. Deloitte Touche Tohmatsu on the announcement on annual results for year ended 31 December 2020. FINANCIAL INFORMATION OF THE GROUP The financial information relating to the year ended 31 December 2020 and 2019 included in this preliminary announcement of annual results for 2020 does not constitute the Company's statutory consolidated financial statements for those years but is derived from those financial statements. Further information relating to...

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