MINMETALS RESOURCES LIMITED FOCUS PROGRESS POTENTIAL Becoming a world leader in base metals ANNUAL REPORT 2011 CORPORATE INFORMATION BOARD OF DIRECTORS Members AUDITOR Chairman WANG Lixin PricewaterhouseCoopers WANG Lixin (Non-executive Director) JIAO Jian Certified Public Accountants Anthony LARKIN Vice Chairman SHARE REGISTRAR LOONG Ping Kwan HAO Chuanfu (Executive Director)* Computershare Hong Kong Investor Executive Directors SAFETY, HEALTH, Services Limited Andrew MICHELMORE (CEO) ENVIRONMENT AND 17th Floor, Hopewell Centre David LAMONT (CFO) COMMUNITY COMMITTEE 183 Queen’s Road East LI Liangang* Chairman Wanchai, Hong Kong Non-executive Directors Peter CASSIDY PRINCIPAL BANKERS JIAO Jian Members Bank of China Limited XU Jiqing Andrew MICHELMORE China Development Bank Corporation GAO Xiaoyu GAO Xiaoyu Westpac Banking Corporation Independent Citibank NA DISCLOSURE COMMITTEE Non-executive Directors Members INVESTOR ENQUIRIES Peter CASSIDY Andrew MICHELMORE Colette CAMPBELL Anthony LARKIN Sally COX Group Manager Investor Relations LOONG Ping Kwan Troy HEY Telephone: +61 3 9288 9165 AUDIT COMMITTEE David LAMONT Email: [email protected] LEUNG Suet Kam, Lucia Chairman MEDIA ENQUIRIES Anthony LARKIN Nick MYERS Sally COX Members GENERAL COUNSEL Group Manager Communications XU Jiqing Nick MYERS Telephone: +61 3 9288 0888 Peter CASSIDY Email: [email protected] LOONG Ping Kwan COMPANY SECRETARY LEUNG Suet Kam, Lucia REGISTERED OFFICE REMUNERATION AND Units 8501-8503, Level 85 NOMINATION COMMITTEE LEGAL ADVISER International Commerce Centre Chairman Deacons, Hong Kong 1 Austin Road West, Kowloon Peter CASSIDY Linklaters, Hong Kong Hong Kong *Resigned on 29 March 2012 Corporate OFFICES AND PRINCIPAL WEBSITE PLACE OF BUSINESS www.minmetalsresources.com Hong Kong www.mmg.com Units 8501-8503, Level 85 International Commerce Centre SHARE LISTING 1 Austin Road West, Kowloon, Hong Kong The Stock Exchange of Hong Kong Limited Telephone: +852 2216 9688 Stock Code: 1208 Fax: +852 2840 0580 Additional shareholder information Australia The Chinese version of the Annual Report Level 23, 28 Freshwater Place is prepared based on the English version. Southbank, Victoria, Australia 3006 If there is any inconsistency between the Telephone: +61 3 9288 0888 English and Chinese version of this Annual Fax: +61 3 9288 0800 Report, the English text shall prevail to the Email: [email protected] extent of the inconsistency. Minmetals Resources Limited (MMR) is a mid-tier global resources company that mines, explores and develops base metal projects in Australia and around the world. The company is headquartered in Melbourne, Australia, and listed on the Hong Kong Stock Exchange under Stock Code: 1208. MMR owns the MMG group of companies and their operations after acquiring them on 31 December 2010. MMR is uniquely positioned with an experienced international management team, public ownership on the Hong Kong Stock Exchange and support of its ultimate controlling shareholder, China Minmetals Corporation (CMC). CONTENTS MAP OF operations i – 2 SUSTAINABILITY i – 35 HIGHLIGHTS i – 4 MANAGEMENT DISCUSSION AND ANALYSIS i – 38 CHAIRMAN’S REVIEW i – 6 DIRECTORS AND SENIOR MANAGEMENT i – 46 CHIEF EXECUTIVE OFFICER’S REVIEW i – 8 DIRECTORS’ REPORT i – 51 OUR PEOPLE i – 10 CORPORATE GOVERNANCE i – 62 OPERATIONAL REVIEW i – 12 INDEPENDENT AUDITOR’S REPORT i – 68 DEVELOPMENT PROjECTS i – 20 GLOSSARY i – 69 EXPLORATION i – 24 FINANCIAL STATEMENTS ii – 1 RESOURCES AND RESERVES i – 27 FIVE-YEAR FINANCIAL SUMMARY III – 1 I – 11 MAP OF OPERATIONS HIGH LAKE IZOK LAKE CANADA BELGIUM NORTH EUROPE VANCOUVER AMERICA ASIA DENVER SOUTH KOREA JAPAN CHINA HONG KONG LAOS VIENTIANE SEPON THAILAND AFRICA VIETNAM SOUTH-EAST ASIA JAKARTA SOUTH MUTOSHI KINSEVERE AMERICA LUSAKA CENTURY DUGALD RIVER TOWNSVILLE GOLDEN GROVE AUSTRALIA PERTH PORT PIRIE MELBOURNE TASMANIA AVEBURY ROSEBERY KINSEVERE GOLDEN GROVE ROSEBERY Acquired with the acquisition 2011 PRODUCTION 2011 PRODUCTION of Anvil Mining Limited Zinc concentrate (t) 70,687 Zinc concentrate (t) 80,670 Copper concentrate (t) 21,661 Lead concentrate (t) 25,353 HPM concentrate (t) 7,482 Gold doré (oz) 12,163 REVENUE US$388.5M REVENUE US$272.5M EBIT US$53.3M EBIT US$86.8M I – 2 OPERATIONS DEVELOPMENT PROJECTS SUSPENDED OPERATION ACTIVE EXPLORATION REGION CORPORATE OFFICES EXPLORATION OFFICES SALES HIGH LAKE IZOK LAKE IZOK CORRIDOR LOCATION CANADA Nunavut, Canada TARGET METALS BELGIUM NORTH Copper, zinc, lead, silver EUROPE VANCOUVER AMERICA ASIA DENVER SOUTH KOREA JAPAN SEPON CHINA 2011 PRODUCTION Copper cathode (t) 78,859 Gold poured (oz) 74,484 HONG KONG REVENUE US$816.9M LAOS VIENTIANE EBIT US$471.3M SEPON THAILAND AFRICA VIETNAM SOUTH-EAST ASIA JAKARTA SOUTH MUTOSHI KINSEVERE CENTURY AMERICA 2011 PRODUCTION LUSAKA CENTURY Zinc concentrate (t) 497,251 DUGALD RIVER Lead concentrate (t) 26,536 TOWNSVILLE REVENUE US$750.4M GOLDEN GROVE AUSTRALIA EBIT US$116.2M PERTH PORT PIRIE MELBOURNE TASMANIA AVEBURY ROSEBERY DUGALD RIVER LOCATION Queensland, Australia TARGET METALS Lead, zinc, silver I – 33 8,806 7,543 2,190 2,160 1,568 1,221 LME LME GOLD FINANcIAL ZINC COPPER (US$/OZ) hIghLIghTS 665.9 648.6 8,806 7,543 114.1 8,806 86.6 78.9 64.2 33.5 21.6 » Strong production results and base metal 7,543 2010 2,190 ZINC IN2,160 COPPER COPPER IN GOLD 2011 commodity prices resulted in full year net profit 1,568 1,221 ZINC CATHODE 8,806 COPPER (’000 OZ) 2,190 CONCEN-2,160 CONCEN- 1,568 1,221 after tax attributable to equity holders of the TRATE 7,543 TRATE LME LME GOLD Company of US$540.9 million. ZINC COPPER (US$/OZ) LME LME GOLD 2,190 2,160 ZINC COPPER (US$/OZ)1,568 8,806 1,221 » Effectively completed the US$726.8 million 7,543 AVERAGE divestment of the trading, fabrication and LME LME GOLD METAL PRICES ZINC 574.5 COPPER (US$/OZ) (US$/TONNES UNLESS 2,190 2,160 OTHERWISE SPECIFIED) 1,568 other operations to China Minmetals 483.6 1,221 Non-ferrous Metals Co. Ltd. 430.4 356.2 665.9 LME648.6 LME GOLD 665.9 ZINC COPPER (US$/OZ) 648.6 » Undertook a capital restructure issuing TOTAL CONTINUING 762,612,000 new shares to raise approximately OPERATIONS 114.1 86.6 78.9 665.9 64.2 648.6 33.5 21.6 US$500 million, increasing the free float 114.1 86.6 78.9 64.2 33.5 ZINC IN COPPER COPPER21.6 IN GOLD of shares to 28.4% and enhancing the ZINC CATHODE COPPER (’000 OZ) ZINCCONCEN- IN COPPER COPPERCONCEN- IN GOLD institutional presence on the register. ZINC CATHODE COPPER (’000114.1 OZ) TRATE665.9 TRATE METAL 86.6 648.6 78.9 CONCEN- 64.2 CONCEN- 33.5 PRODUCTION TRATE TRATE 21.6 (‘000 TONNES UNLESS » The Board approved a further A$157 million ZINC IN COPPER COPPER IN GOLD OTHERWISE SPECIFIED) 816.2 800.5 ZINC CATHODE COPPER764.6 (’000 OZ) CONCEN- CONCEN-699.7 expenditure on the next phase of the Dugald 114.1 86.6 TRATE 78.9 TRATE 64.2 33.5 21.6 River zinc project in Queensland, Australia, 574.5 ZINC IN COPPER COPPER IN GOLD 483.6 for spend up until the third quarter 2012. ZINC CATHODE574.5 COPPER (’000 OZ) CONCEN- 430.4 CONCEN- 483.6 TRATE TRATE356.2 TOTAL430.4 CONTINUING » Executed C$1,330 million acquisition of Anvil OPERATIONS 356.2 574.5 Mining Limited (Anvil) and achieved expansion 483.6 TOTAL430.4 CONTINUING into the southern African copper belt. OPERATIONS PROFIT TOTAL CONTINUING356.2 (US$ MILLION) 574.5 OPERATIONS » Increase in Mineral Resources and Ore Reserves 483.6 TOTAL430.4 CONTINUING including 103.9% increase in zinc Ore Reserves 10.71 OPERATIONS356.2 9.04 8.99 due to the inclusion of Dugald River. .41 7 816.2 800.5 TOTAL CONTINUING764.6 » Increase in the Group’s total diluted earnings 699.7 816.2 EARNINGS PER 800.5 OPERATIONS 764.6 SHARE FOR PROFIT per share of 18.5% to US10.71 cents in 2011. 699.7 attributABLE TO DILUTED – DILUTED – EQUITY HOLDERS TOTAL CONTINUING 816.2 OF THE COMPANY 800.5 OPERATIONS Segmental PERFORMANCE 764.6 (US CENTS) TOTAL CONTINUING699.7 US$ MILLION REVENUE EBITDA EBIT OPERATIONS CONTINUING OPERATIONS TOTAL CONTINUING OPERATIONS 816.2 CENTURY 750.4 293.0 116.2 800.5 764.6 SEPON 699.7 816.9 529.4 471.3 TOTAL CONTINUING GOLDEN GROVE 388.5 101.6 53.3 OPERATIONS Rosebery 272.5 108.6 86.8 NET CASH 10.71 generated OTHER – 31.2 27.7 FROM OPERATING TOTAL9.04 CONTINUING 8.99 10.71 Total OPERATIONS.41 ACTIVITIES 2,228.3 1,063.8 755.3 7 9.04 8.99 (US$ MILLION) .41 7 10.71 9.04 8.99 I – 4 .41 DILUTED – DILUTED7 – TOTAL CONTINUING DILUTED – OPERATIONSDILUTED – TOTAL CONTINUING 10.71 OPERATIONS 9.04 8.99 .41 DILUTED – DILUTED7 – TOTAL CONTINUING OPERATIONS DILUTED – DILUTED – TOTAL CONTINUING OPERATIONS SITE % INCIDENTS GOLDEN GROVE 25% ROSEBERY 7% EXPLORATION 0% CENTURY 25% SEPON 36% DUGALD RIVER 6% MELBOURNE HEAD OFFICE 0% SLustainabI ITY hIghLIghTS Total Recordable Injury Frequency Rate 2011 Month TRIFR Jan-11 4.50 4.50 Feb-11 4.30 4.30 4.50 4.6 Mar-11» Alignment with the International4.50 Council on 5 5 SIGNIFICANT/HIGH POTENTIAL FatalitY INCIDENTS 4.5 Mining and Metals 10 Sustainable Development 4.50BY SITE 2011 Apr-11 4.50 4.4 Principles identified as a key work program for 4.30 May-11 4.30 4.3 the next three years with work already well 4.20 GOLDEN Jun-11 4.20 DUGALD GROVE 4.2 underway. 4.10RIVER 25% Jul-11 4.10 6% 4.1 4.20 Aug-11 4.20 4.0 » Health and safety: Safety adopted as a 4.30 Sep-11 4.30 4 ROSEBERY core company value in response to feedback 7% 3.9 Oct-11 4.50 4.50 4 that while safety is a priority, it should be Nov-11 4.40 4.40 considered a core value.