* Stock Code: 3993 * 2016 Annual Report * 2016 Annual ReportAnnual 2016 * For identification purposes only CONTENTS Company Profile 2 Chairman’s Letter 3 Financial Highlights 5 Market Review and Prospects 12 Business Review and Prospects 20 Management’s Discussion and Analysis 23 Resources and Reserves 31 Material Events 37 Material Events 37 Honours 39 Domestic Industry Policies 39 Risks Warning 41 Corporate Governance Report 43 Report of the Directors 56 Summary of Environmental, Social and Governance Report 70 Report of the Supervisory Committee 71 Profiles of Directors, Supervisors and Senior Management 74 Corporate Information 78 Auditor’s Report 80 All statements, other than statements of historical facts, that address business activities, events or developments that the Company expects or anticipates may or will occur in the future (including but not limited to projections, targets, estimates and business plans) are forward-looking statements. The Company’s actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various variables and uncertainties. The Company makes the forward-looking statements in the annual report for the year referred to herein as at 30 March 2017 and undertakes no obligation or responsibility to update these statements, and do not constitute the Company’s substantive undertakings to investors. Investors are advised to pay attention to investment risks. China Molybdenum Co., Ltd. 1 COMPANY PROFILE China Molybdenum Co., Ltd. (“CMOC” or the “Company”, and together with its subsidiaries, the “Group”) is a joint stock company established in the People’s Republic of China (the “PRC” or “China”) on 25 August 2006. The Company was successfully listed on the Main Board of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) on 26 April 2007 and the Shanghai Stock Exchange (the “SSE”) on 9 October 2012. The Company is primarily engaged in the mining and selecting, smelting and deep processing of molybdenum, tungsten, copper, cobalt, niobium and phosphorus minerals. It possesses a relatively complete and integrated industry chain. The Company represents one of the leading molybdenum producers, one of the top five molybdenum producers, one of the largest tungsten producers and the second largest cobalt and niobium producer in the world. It is also the fourth largest existing copper ore producer in Australia and the second largest phosphate fertilizer producer in Brazil. The Company has the highest production capacity in ferromolybdenum and molybdenum oxides in the PRC. The Company operates its wholly-owned Sandaozhuang molybdenum/tungsten mine (三道莊鉬鎢礦), one of the largest proved reserves of molybdenum and the second largest proved reserves of tungsten in the world, with very competitive cost for both molybdenum and tungsten. The Shangfanggou molybdenum/iron mine (上房溝鉬鐵礦), which is owned by Luoyang Fuchuan Mining Co., Ltd. (洛 陽富川礦業有限公司) (“Luoyang Fuchuan”), a joint venture of the Company, is close to the Sandaozhuang molybdenum mine and has an abundant high-grade molybdenum reserve. The molybdenum mine located in East Gobi, Hami, Xinjiang owned by Xinjiang Luomu Mining Co., Ltd. (新疆洛鉬礦業有限公司) (“Xinjiang Luomu”), a subsidiary of the Company, was the first huge porphyry- type molybdenum mine discovered in Xinjiang, the PRC. The mine is large in scale, of high grade, shallow in terms of burial depth and easy for open-pit mining. The Copebras Indústria Ltda., a wholly-owned subsidiary of the Company, is a relatively established operator of phosphate fertilizer resources and the second largest fertilizer producer with its businesses covering the whole phosphorus industry chain in Brazil. It treats approximately 6 million tonnes of ores in aggregate every year with total ore production ranking second in Brazil, and the Chapadão mine under it boasts the highest-grade phosphorus resources in Brazil. The yet-to-be-developed Coqueiros deposit possesses a high-quality ore mine similar to Chapadão mine; while the Morro Petro deposit represents one of the most promising mining projects in Brazil in recent years relying on its immense potential resources and advantageous location. The Niobras Mineração Ltda., located in Brazil and wholly owned by the Company, is among the top two niobium ore producers world wide. Niobras Mineração Ltda. expanded its niobium mine and achieved the designed production capacity in 2016, which resulted in a growth in the annual output of the niobium ores. The Tenke Fungurume mining area in which the Company owns 56% equity interests is located in Katanga of the Congo (DRC), represents a copper and cobalt mining area with one of the largest reserve and highest grade in the world. Meanwhile, it is also the largest uni-cobalt-core producer in the world and the largest foreign-invested enterprise in the Congo (DRC). The Northparkes copper/gold mine in Australia (“NPM”), in which the Company owns 80% equity interests, adopts technologically advanced and highly automated mining method of block caving, and is characterized by its high-quality products, low production cost and long term of mining. The vision of the Company is to become a respected international resources company. The focus of our developmental strategies will be: — To strengthen and maintain the existing highly competitive cost advantages and reduce costs continually, improve management, enhance efficiency and dig out the potential within the Company; — To continue to manage and optimize the balance sheet, properly arrange the financing structure and reduce cost of funds; — To ensure the stable operation of our overseas businesses and explore and give play to the synergistic effects of businesses by virtue of the comprehensive competitive advantages of the Company in terms of the scale, industry chain, technology, funds, market and management and its diversified financing platform; Focusing on adjustment of structure and shift of the way of growth, to actively promote resource acquisitions and prioritize mergers and acquisitions on investments in quality and mature resource projects located in politically stable areas and with good cash flows, so as to speed up the Company’s development through “combination of industry and financing”. 2 2016 Annual Report CHAIRMAN’S LETTER Dear shareholders: 2016 is a year of transformation for our company. If the acquisition of Northparkes copper/gold mine in Australia from Rio Tinto in 2013 marked the beginning of our overseas adventure, with the successful acquisitions in 2016 of the controlling interest in the world class Tenke Fungurume copper and cobalt facilities in the Democratic Republic of Congo (“DRC”) from Freeport-McMoran Inc. and the niobium and phosphates businesses in Brazil from Anglo American plc, we have become a truly international mining group. Boasting assets operated in four continents, we are now a global leading producer of specialty metals of molybdenum, tungsten, cobalt and niobium, one of the lowest cost large-scale copper miner in the world and the second largest phosphates producer in Brazil. REVIEW “It was the worst of times, it was the best of times; it was the age of foolishness, it was the age of wisdom; it was the epoch of incredulity, it was the epoch of belief; it was the season of darkness, it was the season of light; it was the winter of despair, it was the spring of hope; we had nothing before us, we had everything before us …”, this famous quote from Charles Dickens written almost 160 years ago still remains relevant, of which I only changed the order. That was the opening remarks I made at the Board meeting in April 2016, at which all directors of the Board voted unanimously to approve the two major acquisitions in Brazil and DRC. Since then we have experienced this extraordinary year of 2016. Faith is the foundation Our vision is to become a respected international resources company. This faith is guiding our development. “Respected” is a simple word, but it really means a lot – it is very hard to become and stay “respected”. Resources are the key to the success of a mining company. First-tier resources make a first-tier mining company; and world-class resources make a world-class mining company. Without world-class assets, how can a mining company earn respect? In our opinion, mining is a quasi-financial and quasi-investment industry. With the commodity market undergoing cycles every couple of years, investing in mining sector is cyclical and needs a long-term vision and unrelenting persistence. For many years, we agonized over this strategic question: how do we utilize and structure our capital so that we can acquire and control first-tier or even world-class mining assets during different cycles? Four years ago, we predicted that the winter was coming for the mining industry. While other companies were splurging money to invest or chasing the market’s popularity, we were busy shedding non-core assets and disposing of inefficient assets to withdraw cash, and using financial tools and capital market to accumulate funds. Investing in the mining sector also entails tolerance to loneliness and resistance to temptations. When opportunities come, one needs to act decisively. How can we win the respect of others without such a strategic vision and a speedy execution? It is our faith that underpins everything. Timing is everything It is still fresh in our memory that mining industry entered cold winter in the second half of 2015, and then hit its most freezing point in early 2016; all companies in the industry were struggling. Now it might be difficult for us to imagine that at the lowest point, the market cap of the fourth largest mining company in the world dropped to US$3.4 billion, and that of the largest listed copper producer was merely US$4.4 billion. However, it is only against this background that we can find opportunities and make a deal – having a buyer alone doesn’t make a deal, one also needs a willing seller.