150<strong>Minmetals</strong> <strong>Resources</strong> <strong>Limited</strong>’s (MMR) share priceperformanceWith a current free float of 28%, and the rest of ourstock held, ultimately, by majority shareholder China<strong>Minmetals</strong> Corporation, it is challenging to realise a fullvaluation from the market of our company in our shareprice and market capitalisation. This has the potential to50limit our ability to attract high-potential candidates to thebusiness and to meet our growth targets.Over the course of <strong>2011</strong>, MMR’s share price (HKSE 1208)performance0largely mirrored the performance of theHSBC Global Base Metals Index. MMR’s share price alsofollows the movements of global commodity prices,namely copper and zinc, our major products. The indexended the year down 28%, but MMR’s share price endedthe year down 44%, so MMR underperformed againstthe index.Three research analysts initiated coverage on thecompany this year. MMR intends to continuecommunications with the investment market, includingthe development of an Investor Relations Strategy in2012, to ensure balanced valuation of our stock.Volatility in commodity pricesThe price of metals, such as copper, gold, lead and zinc,fluctuates on the market as a result of changes in demandand currency exchange rates. This directly affects theprofit attainable from our products, our intent to invest inorganic growth and our ability to retain key employees.The price of our products in the market is directly relatedto the economic sustainability of our business, determiningthe level of 140 profit attainable from our operations and thefinancial viability 120 of operating our mines. Prices for ourkey commodities of copper and zinc declined in the latter100part of <strong>2011</strong> with concerns around European debt issuesreducing general 80 commodity demand.Rapid urbanisation 60 in China continues to drive backgrounddemand for 40natural resources. While China’s gross domesticproduct (GDP) growth is expected to slow to around 7–8%20in 2012, this is still impressive growth off such a large base.1000HSBC GLOBAL BASE METALS TR INDEXDemand is now being driven more by domesticconsumption within China, with a focus on publichousing development. We believe base metal demandwill continue to be strong but may face some short-termfluctuations, with recent economic difficulties in someparts of Europe and the United States.In order to manage this risk, we closely monitor and analysecommodity price movements and update our internalfinancial models and forecasts. Our growth strategyincludes the long-term analysis and demand for a varietyof base metal commodities.In addition to this, we work with industry partners topromote our products, increase demand through newuses and markets, and maintain the quality140of ourproducts to market to attain the best possible prices.120In <strong>2011</strong>, Chief Executive Officer Andrew Michelmore wasmade the Chairman of the International 100 Zinc Association(IZA), the peak industry body for the zinc 80 industry. TheIZA aims to sustain the long-term global demand for zinc60and promote its importance to human health andagriculture.40Acquisition and project investment 20We are investing in new assets through mergers 0 andacquisitions to create shareholder value. We are workingto ensure the smooth integration of acquisitions intobusiness activities to achieve synergies and maximiseopportunities.When MMG was formed in 2009, we established a clearvision for the business – to build the next generation’sMMR SHARE PRICE (HK$)leading global diversified minerals and metals group.While we currently have a market capitalisation of aroundUS$2 billion, our objective is to be recognised as one ofthe top three mid-tier base metal mining companies inthe world. This would require growth of around three tofive times our current size through discovering, acquiring,developing and sustainably operating base metalsprojects around the world. New and difficult jurisdictionsand environments of available economic deposits willchallenge growth of this scale.JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC<strong>2011</strong> <strong>Minmetals</strong> <strong>Resources</strong> <strong>Limited</strong>’s share prices performance against the HSBC Mining Index150HSBC GLOBAL BASE METALS TR INDEXMMR SHARE PRICE (HK$)100500JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC68
In <strong>2011</strong>, MMR announced an intention to make an offerfor Equinox Minerals <strong>Limited</strong> (ASX, TSX: EQN) (“Equinox”),a mining company with copper assets in Zambia. Thiswas our first step into the global merger and acquisitionsmarket and signalled our interest in expanding into thehighly prospective southern African copper belt. Whilewe chose not to pursue this acquisition, the high priceultimately paid for Equinox enabled us to realise anattractive gain on our investment of US$152.1 million(pre-tax) from the sale of our 4.2% stake in that company.In September <strong>2011</strong>, we announced an offer to acquireAnvil Mining <strong>Limited</strong> (ASX, TSX: AVM) (“Anvil”). We werepleased to complete the C$1,330 million acquisition,which brings the Kinsevere copper cathode operation inCASE STUDY: Zinc Saves KidsMMG supports UNICEF micronutrient powder gifts.Zinc is an essential micronutrient for healthy humandevelopment as it helps generate cells and is importantfor growth and brain development. Zinc Saves Kids is anIZA program that improves the survival, growth anddevelopment of undernourished children by fundingUNICEF-supported zinc micronutrient programs aroundthe world.UNICEF’s charity gifts program gives people theopportunity to purchase a gift that will make adifference to children in need. We are supportingpurchases of micronutrient powder valued at $16 for480 sachets, which we are matching dollar for dollarup to $25,000. The powder contains micronutrientsthat are lacking in many infants’ diets in developingcountries. The little sachets also help to give children’semergency food rations a powerful boost.MMG is now a key supporter of the IZA’s Zinc SavesKids program. The IZA, meanwhile, has a crucial roleto play in sustaining long-term global demand for zincand promoting its criticality to human health, cropnutrition and sustainable development.Anyone can support Zinc Saves Kids by purchasingmicronutrient powder gifts through the UNICEFInspired Gifts website: http://www.unicef.org.au/Charity-Gifts/Products/micronutrient-powder.aspxthe Democratic Republic of Congo into MMR’s portfolio.Our first priority is to smoothly integrate the Anviloperations into our business in 2012.Supporting our growth aspirations will be the deliveryof two important projects, Dugald River and Izok Corridor,which are targeted to replace Century mine productionpost closure, in zinc equivalent. The Dugald Riverdevelopment project in Queensland, Australia, advancedwith the Board approving further expenditure ofA$157 million toward the next stage of the project.A pre-feasibility study of the Izok Corridor Project inNunavut, Canada, was completed in <strong>2011</strong> and workhas now commenced on a feasibility study.Micronutrient sachets are sprinkled on meals.ZincSavesKidsTMAn International Zinc Association initiative in support of UNICEFSUSTAINING OUR ECONOMIC PERFORMANCE RESPECTING OUR ENVIRONMENT WORKING WITH OUR STAKEHOLDERS HEALTH AND SAFETY OUR PEOPLE69
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