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CMOC Group Limited AGM Information 2016

May 12, 2016

50942_rns_2016-05-12_d39bd5d6-8b3a-41ee-80d4-9eb2ce4c7cc2.pdf

AGM Information

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THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other licensed securities dealer, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in China Molybdenum Co., Ltd.*, you should at once hand this circular and the accompanying reply slips and forms of proxy to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

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(Stock Code: 03993)

FINANCIAL REPORT AND BUDGET REPORT PROPOSED DISTRIBUTION OF FINAL DIVIDEND PROPOSED RENEWAL OF LIABILITY INSURANCE FOR DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT PROPOSED GENERAL MANDATE FOR REPURCHASE OF H SHARES PROPOSED GENERAL MANDATE FOR ISSUE OF SHARES AND

NOTICE OF ANNUAL GENERAL MEETING NOTICE OF THE 2016 FIRST CLASS MEETING OF H SHAREHOLDERS

A letter from the Board is set out on pages 1 to 9 of this circular.

Notices convening the AGM and the H Shareholders’ Class Meeting to be convened on Wednesday, 29 June 2016 are set out on pages 81 to 90 of this circular. The forms of proxy and reply slips for use in connection with such meetings are enclosed herewith.

Whether or not you are able to attend the AGM and the H Shareholders’ Class Meeting in person, you are requested to complete, sign and return the reply slips and forms of proxy applicable to the AGM and the H Shareholders’ Class Meeting in accordance with the instructions printed thereon. For H Shareholders, the forms of proxy applicable to the AGM and the H Shareholders’ Class Meeting should be returned to the Company’s H Share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible but in any event not less than 24 hours before the time appointed for holding the relevant meetings or any adjournments thereof (as the case may be). Completion and return of the forms of proxy applicable to the AGM and the H Shareholders’ Class Meeting will not preclude you from attending and voting in person at the AGM and the H Shareholders’ Class Meeting or any adjournments thereof should you so wish.

H Shareholders who intend to attend the AGM and the H Shareholders’ Class Meeting in person or by proxy should return the reply slips to the office of the Board at the Company’s principal place of business in the PRC, at North of Yihe, Huamei Shan Road, Chengdong New District, Luanchuan County, Luoyang City, Henan Province, the PRC, 20 days before the relevant meetings, i.e. before Thursday, 9 June 2016 by hand, by post or by facsimile.

13 May 2016

* For identification purposes only

CONTENTS

Page
DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
ii
LETTER FROM THE BOARD. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1
1. INTRODUCTION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
2. FINANCIAL REPORT AND BUDGET REPORT. . . . . . . . . . . . . . . . . . . . . 2
3. PROPOSED DISTRIBUTION OF FINAL DIVIDEND . . . . . . . . . . . . . . . . . 3
4. PROPOSED RENEWAL OF LIABILITY INSURANCE FOR
DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT . . . . . . . 4
5. PROPOSED GENERAL MANDATE FOR REPURCHASE OF
H SHARES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
6. PROPOSED GENERAL MANDATE FOR ISSUE OF SHARES. . . . . . . . . . 6
7. AGM, A SHAREHOLDERS’ CLASS MEETING AND
H SHAREHOLDERS’ CLASS MEETING . . . . . . . . . . . . . . . . . . . . . . . . 7
8. CLOSURES OF REGISTER OF MEMBERS . . . . . . . . . . . . . . . . . . . . . . . . 8
9. PROXY ARRANGEMENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
10. VOTING BY WAY OF POLL. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
11. RECOMMENDATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
APPENDIX I –
2015 FINANCIAL REPORT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .		 10
APPENDIX II –
2015 WORK REPORT OF INDEPENDENT DIRECTORS. . . . . . . . . . .		 64
APPENDIX III –
EXPLANATORY STATEMENT ON THE GENERAL MANDATE FOR
REPURCHASE OF H SHARES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
NOTICE OF ANNUAL GENERAL MEETING. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
81
NOTICE OF THE 2016 FIRST CLASS MEETING OF H SHAREHOLDERS. . . . . . . . . . . . . . 87

– i –

DEFINITIONS

In this circular, the following expressions have the following meanings unless the context requires otherwise:

“A Share(s)”

domestic share(s) with a nominal value of RMB0.20 each issued by the Company which are listed on the SSE and traded in Renminbi (stock code: 603993)

  • “A Shareholder(s)” holder(s) of A Shares

“A Shareholders’ Class Meeting” the 2016 first class meeting of A Shareholders (and any adjournment thereof) to be held on Wednesday, 29 June 2016 after the AGM at the International Conference Room of MuduLee Royal International Hotel at No. 239, Kaiyuan Street, Luolong District, Luoyang City, Henan Province, the PRC

  • “AGM” the annual general meeting of the Company (and any adjournment thereof) to be held at 1:00 p.m. on Wednesday, 29 June 2016 at the International Conference Room of Mudu-Lee Royal International Hotel at No. 239, Kaiyuan Street, Luolong District, Luoyang City, Henan Province, the PRC

  • “Articles of Association” the articles of association of the Company, as amended, modified or otherwise supplemented from time to time

  • “Board” the board of Directors of the Company

  • “Company” China Molybdenum Co., Ltd.* (洛陽欒川鉬業集團股份有限公 司), a joint stock company incorporated in the PRC with limited liability, the A Shares and H Shares of which are listed on the SSE and the Hong Kong Stock Exchange, respectively

“Company Law” the Company Law of the PRC

“Controlling Shareholder” has the meaning ascribed to it under the Hong Kong Listing Rules “CSRC” China Securities Regulatory Commission (中國證券監督管理委員中國證券監督管理委員 會)) “Director(s)” the director(s) of the Company

China Securities Regulatory Commission (中國證券監督管理委員中國證券監督管理委員 會))

– ii –

DEFINITIONS

“Final Dividend”

  • the proposed distribution of a final dividend of RMB0.25 every 10 Shares (tax inclusive) for the year ended 31 December 2015 as described in the announcement of the Company dated 24 March 2016

  • “Financial Report” the 2015 financial report of the Company as set out in Appendix I to this circular

  • “Group”

the Company and its subsidiaries

  • “H Share(s)” overseas listed foreign share(s) with a nominal value of RMB0.20 each in the share capital of the Company which are listed on the main board of the Hong Kong Stock Exchange and are traded in Hong Kong dollars

  • “H Shareholder(s)” holder(s) of H Shares

  • “H Shareholders’ Class Meeting”

the 2016 first class meeting of H Shareholders (and any adjournment thereof) to be held on Wednesday, 29 June 2016 after the AGM and the A Shareholders’ Class Meeting at the International Conference Room of Mudu-Lee Royal International Hotel at No. 239, Kaiyuan Street, Luolong District, Luoyang City, Henan Province, the PRC

  • “Hong Kong”

the Hong Kong Special Administrative Region of the PRC

  • “Hong Kong dollars”

Hong Kong dollars, the lawful currency of Hong Kong

  • “Hong Kong Listing Rules”

the Rules Governing the Listing of Securities on the Hong Kong Stock Exchange

  • “Hong Kong Stock Exchange”

The Stock Exchange of Hong Kong Limited

  • “Issuance Mandate”

subject to the conditions set out in the proposed resolution approving the issuance mandate to be proposed at the AGM, the general mandate to authorise the Board to exercise its authority to issue additional A Shares not exceeding 20% of the number of the A Shares in issue and additional H Shares not exceeding 20% of the number of the H Shares in issue on the date of passing of the said resolution

– iii –

DEFINITIONS

“Latest Practicable Date” Friday, 6 May 2016, being the latest practicable date prior to the
printing of this circular for the purpose of ascertaining certain
information referred to in this circular
“PRC”, “Mainland” the People’s Republic of China, which for the purpose of this
circular only, excludes Hong Kong, Macau Special Administrative
Region of the PRC and Taiwan
“Repurchase Mandate” subject to the conditions set out in the proposed resolution
approving the repurchase mandate at the AGM, the A
Shareholders’ Class Meeting and the H Shareholders’ Class
Meeting, the general mandate to authorise the Board to exercise
its authority to repurchase H Shares of an aggregate number of not
exceeding 10% of the number of H Shares in issue as at the date of
passing of the said resolution
“RMB” Renminbi, the lawful currency of the PRC
“SAFE” State Administration of Foreign Exchange of the PRC and its local
representative offices
“SFO” the Securities and Futures Ordinance, Chapter 571 of the Laws of
Hong Kong
“Share(s)” A Share(s) and H Share(s)
“Shareholder(s)” holder(s) of the Shares
“SSE” the Shanghai Stock Exchange
“Supervisor(s)” supervisor(s) of the Company
“Takeovers Code” The Codes on Takeovers and Mergers and Share Buy-backs issued
by the Securities and Futures Commission in Hong Kong, as
amended from time to time
“USD” United States dollars, the lawful currency of the United States of
America
“%” per cent.

– iv –

LETTER FROM THE BOARD

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(Stock Code: 03993)

Executive Directors: Li Chaochun (Chairman) Li Faben

Non-executive Directors: Ma Hui (Vice Chairman) Yuan Honglin Cheng Yunlei

Registered office: North of Yihe Huamei Shan Road Chengdong New District Luanchuan County Luoyang City Henan Province The People’s Republic of China

Independent Non-executive Directors: Bai Yanchun Xu Shan Cheng Gordon

Principal place of business in Hong Kong: Level 54 Hopewell Centre 183 Queen’s Road East Hong Kong 13 May 2016

To the Shareholders

Dear Sir or Madam,

FINANCIAL REPORT AND BUDGET REPORT PROPOSED DISTRIBUTION OF FINAL DIVIDEND PROPOSED RENEWAL OF LIABILITY INSURANCE FOR DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT PROPOSED GENERAL MANDATE FOR REPURCHASE OF H SHARES PROPOSED GENERAL MANDATE FOR ISSUE OF SHARES AND NOTICE OF ANNUAL GENERAL MEETING NOTICE OF THE 2016 FIRST CLASS MEETING OF H SHAREHOLDERS

1. INTRODUCTION

References are made to the announcements of the Company dated 26 January 2016 and 24 March 2016, in relation to, among others, the budget report and proposed distribution of Final Dividend.

* For identification purposes only

– 1 –

LETTER FROM THE BOARD

The purpose of this circular is to provide you with, among others, the notice of AGM and the notice of H Shareholders’ Class Meeting, and to provide relevant details to you to make informed decisions on, among others, the below ordinary resolutions and special resolutions proposed for voting at the said meetings:

AGM

  • (i) Financial Report and budget report;

  • (ii) Proposed distribution of Final Dividend;

  • (iii) Proposed renewal of liability insurance for Directors, Supervisors, senior management;

  • (iv) Proposed general mandate for repurchase of H Shares; and

  • (v) Proposed general mandate for issue of Shares.

H Shareholders’ Class Meeting

  • (i) Proposed general mandate for repurchase of H Shares.

2. FINANCIAL REPORT AND BUDGET REPORT

As stated in the announcement of the Company dated 26 January 2016, the Board approved the financial budget report of the Company for the year ending 31 December 2016 (the “ Budget Report ”). For the year ending 31 December 2016, (1) the planned production volume and planned production cash costs of molybdenum concentrates (including 100% Mo) would be 16,058 tonnes and RMB56,298 per tonne (excluding resources tax, depreciation and amortisation, sales and general management costs), respectively; (2) the planned production volume and planned production cash costs of tungsten concentrates (including 100% WO3) would be 8,850 tonnes and RMB14,879 per tonne (excluding resources tax, depreciation and amortisation, sales and general management costs), respectively; and (3) the estimated production volume of metal produced from Northparkes copper and gold mine operations in Australia would be 39,368 tonnes (on the basis of the Company’s 80% equity interests in Northparkes) with C1 cash costs of USD0.77 per pound, and saleable gold would be 35,053 ounces (on the basis of the Company’s 80% equity interests in Northparkes). (C1 cash costs represent the cash operating costs (including mining, processing, onsite administrative expenses, logistic, smelting and refining expenses) net of income generated from by-products).

The Board approved the Financial Report on 24 March 2016, a copy of which is set out in Appendix I to this circular.

Ordinary resolutions regarding the consideration and approval of the Budget Report and Financial Report will be proposed at the AGM.

– 2 –

LETTER FROM THE BOARD

3. PROPOSED DISTRIBUTION OF FINAL DIVIDEND

As stated in the announcement of the Company dated 24 March 2016 relating to, among other things, annual results of the Company for the year ended 31 December 2015, the Board proposed to distribute the Final Dividend of RMB0.25 every 10 Shares (tax inclusive) subject to the approval of the Shareholders at the AGM and an ordinary resolution will be proposed to the Shareholders for voting at the AGM.

It is expected that the Final Dividend will be paid on Thursday, 4 August 2016, to H Shareholders whose names appear on the register of members of H Shares (the “ H Shares Register of Members ”) of the Company on Wednesday, 13 July 2016 (the “ Reference Date ”). The Company will make further announcement regarding the proposed distribution of Final Dividend to A Shareholders.

TAX

In accordance with the “Enterprise Income Tax Law of the People’s Republic of China” (《中 華人民共和國企業所得稅法》) and the “Rules for the Implementation of Enterprise Income Tax Law of the People’s Republic of China” (《中華人民共和國企業所得稅法實施條例》), both implemented on 1 January 2008 and the “Notice on Issues in Relation to the Withholding of Enterprise Income Tax on Dividends Paid by PRC Enterprises to Overseas Non-resident Enterprise Holders of H Shares” (Guo Shui Han [2008] No. 897) (《關於中國居民企業向境外H股非居民企 業股東派發股息代扣代繳企業所得稅有關問題的通知》(國稅函[2008]897號)) promulgated on 6 November 2008, the Company is obliged to withhold and pay PRC enterprise income tax on behalf of non-resident enterprise Shareholders at a tax rate of 10%, when the Company distributes annual dividend to non-resident enterprise Shareholders whose names appear on the H Shares Register of Members on the Reference Date. As such, any H Shares registered in the name of non-individual Shareholder, including shares registered in the name of HKSCC Nominees Limited, and other nominees, trustees, or other organizations and group, shall be deemed to be H Shares held by nonresident enterprise Shareholder(s), and the PRC enterprise income tax shall be withheld from any dividends payable thereon. Non-resident enterprise Shareholders may wish to apply for a tax refund (if any) in accordance with the relevant requirements, such as tax agreements (arrangements), upon receipt of any dividends.

In accordance with the “Notice on Certain Issues Concerning the Policies of Individual Income Tax” (Cai Shui Zi [1994] No. 020) (《關於個人所得稅若干政策問題的通知》(財稅字[1994]020 號)) promulgated by the PRC Ministry of Finance and the State Administration of Taxation on 13 May 1994, overseas individuals are, as an interim measure, exempted from the PRC individual income tax for dividends or bonuses received from foreign-invested enterprises. Furthermore, following consultations between the Company and the competent tax authority, it is confirmed that it is applicable to the Company for the relevant requirements under the “Notice on Certain Issues

– 3 –

LETTER FROM THE BOARD

Concerning the Policies of Individual Income Tax” (Cai Shui Zi [1994] No. 020) (《關於個人所得 稅若干政策問題的通知》(財稅字[1994]020號)), the Company will not be required to withhold and pay any individual income tax on behalf of individual Shareholders when the Company distributes the Final Dividend to individual Shareholders whose names appear on the H Shares Register of Members.

Pursuant to the “Notice on Relevant Taxation Policies Concerning the Pilot Inter-connected Mechanism for Trading on the Shanghai Stock Market and the Hong Kong Stock Market” (Cai Shui [2014] No. 81) (《關於滬港股票市場交易互聯互通機制試點有關稅收政策的通知》(財稅 [2014]81號)) promulgated on 17 November 2014:

  • For mainland individual investors who invest in the H Shares of the Company via the Shanghai-Hong Kong Stock Connect, the Company will withhold individual income tax at the rate of 20% in the distribution of the Final Dividend. Individual investors may, by producing valid tax payment proofs, apply to the competent tax authority of China Securities Depository and Clearing Corporation Limited for tax credit relating to the withholding tax already paid abroad. For mainland securities investment funds that invest in the H Shares of the Company via the Shanghai-Hong Kong Stock Connect, the Company will withhold individual income tax in the distribution of the Final Dividend pursuant to the foregoing provisions; and

  • For mainland corporate investors that invest in the H Shares of the Company via the Shanghai-Hong Kong Stock Connect, the Company will not withhold the income tax in the distribution of the Final Dividend and the mainland corporate investors shall file the tax returns on their own.

H Shareholders of the Company are recommended to consult their tax advisors regarding the relevant tax laws and regulations in the PRC, Hong Kong and other countries on the dividend payment by the Company and on the taxation implications of holding and dealing in the H Shares of the Company.

4. PROPOSED RENEWAL OF LIABILITY INSURANCE FOR DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

Considering the risks of domestic and overseas litigations or regulatory investigations that the Directors, Supervisors and senior management may be exposed to when carrying out their duties in executing the business decisions and information disclosure; to allow the Directors, Supervisors and senior management to work without such concerns; to stimulate them to perform their duties in a diligent and responsible manner; and to better protect the Shareholders’ interests, the Board approved the renewal of liability insurance for the Company and the Directors, Supervisors, senior management of the Company. The insurance will cover management liabilities

– 4 –

LETTER FROM THE BOARD

of the Directors, Supervisors and senior management, the Company’s securities claims and the Company’s inappropriate employment practices claims. The amount of insurance coverage will be USD15,000,000 per annum; at the total costs of not more than USD20,400 per annum; and with the term ending on 30 June 2017.

According to the requirements under the Company Law of the PRC, rules governing the listing of securities and the Articles of Association, an ordinary resolution to consider and approve the proposed renewal of liability insurance for Directors, Supervisors and senior management will be proposed at the AGM.

5. PROPOSED GENERAL MANDATE FOR REPURCHASE OF H SHARES

In view of the development requirements of the Company and in order to give the Company the flexibility to repurchase H Shares if and when appropriate, the Board will propose a special resolution at the AGM, the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting to grant the Repurchase Mandate to the Board to repurchase H Shares of an aggregate number not exceeding 10% of the number of H Shares in issue as at the date of the passing of the resolutions proposed for approval of the Repurchase Mandate.

The Company Law of the PRC (to which the Company is subject) provides that a joint stock limited company incorporated in the PRC shall not repurchase its shares unless such repurchase is effected for the purpose of: (a) reducing its registered share capital; (b) merger with another entity holding its shares; (c) granting shares as reward to the staff of the company; or (d) the repurchase is made at the request of its shareholders who disagree with the resolution regarding a merger or division made at the general meeting. The Articles of Association provides that subject to the approval of relevant regulatory authorities and in compliance with the Articles of Association, the Company shall repurchase its Shares for the purposes of reducing its registered capital, merger with another entity holding its Shares, granting Shares as reward to the staff of the Company, in such circumstances permitted by laws or administrative regulations. H Shares repurchased under this general mandate can only be cancelled and the registered capital of the Company shall be reduced accordingly.

The Hong Kong Listing Rules permit shareholders of a PRC joint stock limited company to grant a general mandate to the directors to repurchase H shares of such company that are listed on the Hong Kong Stock Exchange.

Such mandate is required to be given by way of special resolutions passed by Shareholders in general meeting and by holders of A Shares and H Shares respectively at the class meetings.

As H Shares are traded on the Hong Kong Stock Exchange in Hong Kong dollars and the price payable by the Company upon any repurchase of H Shares will, therefore, be paid in Hong Kong dollars, the approval of SAFE and other relevant competent authorities is required.

– 5 –

LETTER FROM THE BOARD

In accordance with the requirements of Article 27 of the Articles of Association applicable to registered capital reduction, the Company shall notify its creditors within 10 days after the passing of such resolutions by the Board and shall publish a press announcement within 30 days after the passing of such resolutions by the Board. Creditors then have the right within 30 days of receiving the written notification from the Company or, if no such notification has been received, up to 45 days after the publication of the press announcement to require the Company to repay amounts due to them or to provide guarantees in respect of such amounts.

The Repurchase Mandate will be conditional upon: (a) the special resolutions approving the grant of the Repurchase Mandate being approved at each of the AGM, the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting; (b) the approval of the regulatory authorities (if applicable) as required by the laws, rules and regulations of the PRC being obtained; and (c) the Company not being required by any of its creditors to repay or to provide guarantee in respect of any amount due to any of them (or if the Company is so required by any of its creditors, the Company having, in its absolute discretion, repaid or provided guarantee in respect of such amount) pursuant to the notification procedure under Article 27 of the Articles of Association as described above. In the event that the Company determines to repay any amount to its creditors in the circumstances described in item (c) above, the Company is expected to repurchase Shares with its internal resources. No Repurchase Mandate shall be exercised by the Board without satisfying conditions set out above. The Directors hereby state that as at the Latest Practicable Date, they have no intention to repurchase any H Shares pursuant to the Repurchase Mandate.

Details of special resolutions to be proposed at the AGM, the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting respectively to grant the Repurchase Mandate to the Board are set out in the Special Resolution No. 11 of the notice of AGM, the special resolution of the notice of A Shareholders’ Class Meeting and the special resolution of the notice of H Shareholders’ Class Meeting. The number of H Shares which may be repurchased under the Repurchase Mandate shall not exceed 10% of the number of H Shares in issue as at the date of the passing of the proposed resolutions approving the Repurchase Mandate.

Pursuant to the Hong Kong Listing Rules, the Company shall give an explanatory statement to Shareholders, which contains information reasonably necessary to enable Shareholders to make an informed decision on voting for or against the granting of Repurchase Mandate. The explanatory statement is set out in the Appendix III to this circular.

6. PROPOSED GENERAL MANDATE FOR ISSUE OF SHARES

In order to increase the flexibility and efficiency in the Company’s operation, and to give discretion to the Board in the event that it becomes desirable to issue any Shares, the Board will propose a special resolution to grant to the Board the Issuance Mandate to issue, allot and deal with additional A Shares not exceeding 20% of the number of the A Shares in issue and additional H Shares not exceeding 20% of the number of the H Shares in issue on the date of passing of the resolution as set out in Resolution No. 12 of the notice of AGM.

– 6 –

LETTER FROM THE BOARD

As at the Latest Practicable Date, the Company had an aggregate of 16,887,198,699 Shares in issue, comprising 3,933,468,000 H Shares and 12,953,730,699 A Shares. Subject to the passing of the proposed resolution for the approval of the Issuance Mandate, the Company will be allowed to issue, allot and deal with up to a maximum of 3,377,439,739 Shares (comprising 786,693,600 H Shares and 2,590,746,139 A Shares), representing 20% of the Shares in issue on the date of the passing of such resolution, on the basis that no further Shares will be issued by the Company prior to the AGM.

The Board will only exercise its authority under the Issuance Mandate in accordance with the Company Law of the PRC, other applicable laws and regulations (as amended from time to time) and the relevant provisions of the securities regulatory institutions at the place of listing of the Shares and only with the necessary approvals from the CSRC and other relevant PRC government departments. The Directors hereby state that as at the Latest Practicable Date, they have no intention to issue any new Shares pursuant to the Issuance Mandate.

The Board believes that it is in the best interests of the Company and the Shareholders to grant the Issuance Mandate to the Board to issue new Shares. Whilst it is not possible to anticipate in advance any specific circumstances in which the Board might think appropriate to issue Shares, the ability to do so would give them the flexibility to capture the opportunity if it so arises.

7. AGM, A SHAREHOLDERS’ CLASS MEETING AND H SHAREHOLDERS’ CLASS MEETING

The Board proposed to seek the Shareholders’ approval at the AGM to approve, among others: (i) the Financial Report and the Budget Report; (ii) the proposed distribution of Final Dividend; (iii) the proposed renewal of liability insurance for Directors, Supervisors and senior management; (iv) the proposed general mandate for repurchase of H Shares; and (v) the proposed general mandate for issue of Shares. The Board also proposed to seek the approval from A Shareholders and H Shareholders at the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting respectively to grant a general mandate to the Board to repurchase H Shares.

Notices of the AGM and the H Shareholders’ Class Meeting to be held at the International Conference Room of Mudu-Lee Royal International Hotel at No. 239, Kaiyuan Street, Luolong District, Luoyang City, Henan Province, the PRC, on Wednesday, 29 June 2016 are set out on pages 81 to 90 of this circular.

According to the requirements under the “Rules of Shareholders’ Meeting of Listed Companies” of the CSRC, independent Directors shall issue a work report at the annual general meeting. Such report will be submitted to the shareholders’ general meeting for consideration but not for shareholders’ approval. The 2015 Work Report of Independent Directors of the Company is set out in Appendix II to this circular for Shareholders’ information.

– 7 –

LETTER FROM THE BOARD

8. CLOSURES OF REGISTER OF MEMBERS

In order to determine the list of H Shareholders who will be entitled to attend and vote at the AGM and the H Shareholders’ Class Meeting, the Company’s H Shares Register of Members will be closed from Monday, 30 May 2016 to Wednesday, 29 June 2016 (both days inclusive), during which period no transfer of H Shares will be effected. H Shareholders whose names appear on the H Shares Register of Members of the Company at 4:30 p.m. on Friday, 27 May 2016 shall be entitled to attend and vote at the AGM and the H Shareholders’ Class Meeting. In order for the H Shareholders to qualify for attending and voting at the AGM and the H Shareholders’ Class Meeting, Shareholders whose H Shares are not registered in their names should complete and lodge their respective instruments of transfer with the relevant H Share certificates with Computershare Hong Kong Investor Services Limited, the Company’s H Share registrar in Hong Kong, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, and in any case no later than 4:30 p.m. on Friday, 27 May 2016.

In order to determine the list of H Shareholders who are entitled to receive the Final Dividend, the H Shares Register of Members will be closed from Friday, 8 July 2016 to Wednesday, 13 July 2016 (both days inclusive), during which period no transfer of H Shares will be effected. H Shareholders whose names appear on the H Shares Register of Members as at the Reference Date (i.e. Wednesday, 13 July 2016) will be entitled to receive the Final Dividend. In order to determine the entitlement for receiving the proposed Final Dividend, H Shareholders whose H Shares are not registered in their names should complete and lodge their respective instruments of transfer with the relevant H Share certificates with Computershare Hong Kong Investor Services Limited, the Company’s H Share registrar in Hong Kong, at Shops 1712–1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, and in any case no later than 4:30 p.m. on Thursday, 7 July 2016.

9. PROXY ARRANGEMENT

Forms of proxy applicable to the AGM and the H Shareholders’ Class Meeting are enclosed with this circular and such forms of proxy are also published on the websites of the Hong Kong Stock Exchange (www.hkexnews.hk) and the Company (www.chinamoly.com). For H Shareholders, whether or not you are able to attend the AGM and the H Shareholders’ Class Meeting in person, you are requested to complete the forms of proxy applicable to the AGM and the H Shareholders’ Class Meeting in accordance with the instructions printed thereon, and return the same to the Company’s H Share registrar in Hong Kong, Computershare Hong Kong Investor Services Limited, at 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, as soon as possible but in any event not less than 24 hours before the time appointed for holding the relevant meetings or any adjournments thereof. Completion and return of the forms of proxy as applicable to the AGM and the H Shareholders’ Class Meeting will not preclude you from attending and voting in person at the AGM and the H Shareholders’ Class Meeting or any adjournments thereof should you so wish.

– 8 –

LETTER FROM THE BOARD

10. VOTING BY WAY OF POLL

Pursuant to Rule 13.39 of the Hong Kong Listing Rules, any votes of the Shareholders at the AGM and the H Shareholders’ Class Meeting must be taken by poll except where the chairman, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands. The poll results announcement will be announced by the Company after the AGM and the H Shareholders’ Class Meeting in the manner prescribed under Rule 13.39(5) of the Hong Kong Listing Rules.

As at the Latest Practicable Date, no Shareholder is required to abstain from voting on any resolution.

In addition, the Company will offer a platform to A Shareholders including investors of ShanghaiHong Kong Stock Connect to vote online through the general meeting online voting system of the SSE. Please refer to the relevant announcement published by the Company on the SSE for details.

11. RECOMMENDATIONS

The Board considers that, (i) the Financial Report and the Budget Report; (ii) the proposed distribution of Final Dividend; (iii) the proposed renewal of liability insurance for Directors, Supervisors and senior management; (iv) the proposed general mandate for repurchase of H Shares; and (v) the proposed general mandate for issue of Shares are in the best interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the relevant resolutions to be proposed at the AGM, the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting (as the case may be) as set out in the notices of AGM, A Shareholders’ Class Meeting and H Shareholders’ Class Meeting.

By Order of the Board

China Molybdenum Co., Ltd. * Li Chaochun

Chairman

– 9 –

2015 FINANCIAL REPORT

APPENDIX I

China Molybdenum Co., Ltd. 2015 Financial Report

CHAPTER 1 OVERVIEW

In 2015, the Group witnessed too many challenges. Throughout the year, under the disadvantageous condition that the nonferrous metal market kept sluggish and the tungsten copper price went down substantially due to the influences of international and domestic economy, the Group, in accordance with the overall arrangements of Board of Directors and on the basis of such measures as stripping low-efficiency assets, decreasing costs and increasing benefits, comprehensively recycling resources and constantly enhancing internal management, made a positive response to the challenges resulting from the fluctuation of market price, well fulfilled all annual targets and tasks, and realized significant achievements. Meanwhile, in terms of financial management task, the Group performed better than expected in budget and achieved an annual financial management income of RMB175,000,000 (net income before tax), which offset the losses caused by income decreases of some entities.

Relevant data in this Financial Report has been audited by Deloitte Touche Tohmatsu Certified Public Accountants LLP (Special General Partnership).

The general financial condition of the year is:

As of 31 December 2015, the Group’s total consolidated assets summed up to RMB30,880,530,000, total reliabilities were RMB13,063,840,000 and net assets were RMB17,816,690,000, among which RMB17,353,480,000 was attributable to parent company shareholders’ equity and RMB463,210,000 attributable to minority shareholders’ equity.

The Group’s consolidated sales revenue in 2015 was RMB4,196,840,000, accounting for 77% of the annual budgetary revenue (RMB5,425,980,000) and representing a year-on-year decrease of RMB2,465,540,000 or 37%. The net profit was RMB703,110,000, representing a decrease of RMB634,850,000 or 47% compared with the annual budget and a year-on-year decrease of RMB1,097,090,000 or 61%. The net profit attributable to the owners of the parent company was RMB761,160,000, showing a decrease of RMB614,910,000 or 45% compared with the annual budget and a year-on-year decrease of RMB1,063,100,000 or 58%.

– 10 –

2015 FINANCIAL REPORT

APPENDIX I

CHAPTER 2 PROFIT PERFORMANCE

Profit Contrastive Analysis Sheet

Unit: RMB0’000 yuan

Compared with the Compared with Compared with
same period of last year the Budget
Percentage Percentage
2015 2014 2015 Increase/ of Increase/ Increase/ of Increase/
Item Actual Actual Budget decrease decrease decrease decrease
I. Total operating revenue 419,684 666,238 542,598 -246,554 -37% -122,914 -23%
Including: Operating revenue 419,684 666,238 542,598 -246,554 -37% -122,914 -23%
Less: Operating costs 262,245 387,143 313,380 -124,898 -32% -51,135 -16%
II. Gross operating profits 157,439 279,095 229,218 -121,656 -44% -71,779 -31%
Business taxes and surcharges 24,247 34,998 29,020 -10,751 -31% -4,773 -16%
Selling expenses 8,467 9,982 10,212 -1,514 -15% -1,745 -17%
Administrative expenses 35,717 44,835 32,668 -9,118 -20% 3,050 9%
Financial expenses 4,618 18,170 18,857 -13,552 -75% -14,239 -76%
Impairment losses of assets 23,044 10,556 – 12,488 118% 23,044
Add: Gains (losses) from
changes in fair
values -277 89 – -366 -412% -277
Investment income 11,659 53,176 38,132 -41,516 -78% -26,473 -69%
Including: Income from
investments in
associates and joint
ventures -986 8,647 10,870 -9,633 -111% -11,856 -109%
III. Operating profit 72,727 213,819 176,593 -141,092 -66% -103,866 -59%
Add: Non-operating income 5,015 6,666 2,505 -1,650 -25% 2,511 100%
Less: Non-operating expenses 9,460 5,679 10,066 3,781 67% -606 -6%
IV. Total profit 68,282 214,806 169,031 -146,524 -68% -100,749 -60%
Less: Income tax expenses -2,029 34,786 35,236 -36,815 -106% -37,265 -106%
V. Net profit 70,311 180,020 133,796 -109,709 -61% -63,485 -47%
VI. Net profit attributable to owners
of the parent company 76,116 182,426 137,607 -106,310 -58% -61,491 -45%
VII. Profit or loss attributable to
minority interests -5,805 -2,405 -3,811 -3,400 141% -1,994 52%

– 11 –

2015 FINANCIAL REPORT

APPENDIX I

2.1. ANALYSIS ON THE OPERATING REVENUE PERFORMANCE

2.1.1 Total Revenue Performance

  1. Year-on-year contrastive analysis of operating revenue:

Unit: RMB0’000 yuan

Product name
Grade
– Domestic:
Molybdenum raw ore
Molybdenum concentrate
47%
Molybdenum oxide
53%
Molybdenum oxide granule
60%
Ferromolybdenum
60%
Ammonium molybdate
Molybdenum powder
High-purity molybdenum
trioxide
Molybdenum disulfide
Tungsten concentrate
100%
Tungstic acid
100%
APT
100%
Gold_(kg)
Silver(kg)_
Electrolytic lead
Vitriol
Iron powder
Nickel plate
Processing charges of
molybdenum oxide
Processing charges of
ferromolybdenum
Others
Hotel revenue
Other revenues
Sub-total
– Australia:
Copper concentrate
Other revenue
Sub-total
Total operation revenue		 Actual in 2014
Sales
volume
Unit cost
Sales
revenue
(ton)
2,025,012
78
15,705
696
53,640
3,733
1,780
71,337
12,696
1,566
74,823
11,715
28,378
79,566
225,792
1,075
84,374
9,070
49
167,833
817
20
110,135
223
10
109,865
113
2,281
130,068
29,663
4,647
139,244
64,712
0
94,645
0
643
231,719
14,903
40,868
3,062
12,515
18,259
11,812
21,568
59,201
69
407
0
209
0
100
117,928
1,182
3,648
1,790
653
356
7,264
258
–
17,763
–
7,516
–
6,968
457,971
204,942
3,325
208,267
656,238		 Actual in 2015
Sales
volume
Unit cost
Sales
revenue
(ton)
2,033,000
66
13,480
40
51,471
32,360
6.870
47,107
32,360
258
50,374
1,300
22,653
56,587
128,187
797
67,792
5,401
169
133,204
2,256
68
74,565
507
7
114,621
84
4,706
85,496
40,230
3,374
91,003
30,704
53
94,645
503
–
231,719
–
–
3,062
–
–
11,812
–
32,075
150
480
3,475
209
73
–
117,928
–
2,155
1,748
37,678
–
7,264
–
–
–
3,987
–
–
6,400
–
–
5,247
271,780
144,280
3,624
147,904
419,684		 Year-on-Year Increase or Decrease of
Actual Revenue
Change
of sales
volume
Impact
of sales
volume
Change
of sales
price
Impact
of sales
price
7,988
62
-11
-2,288
-656
-3,517
-2,169
-9
5,090
36,309
-24,229
-16,645
-1,308
-9,784
-24,449
-631
-5,725
-45,549
-22,979
-52,058
-278
-2,349
-16,581
-1,321
121
2,025
-34,629
-586
48
525
-35,569
-242
-3
-32
4,756
3
2,425
31,540
-44,572
-20,973
-1,273
-17,732
-48,242
-16,276
53
503
–
–
-643
-14,903
–
–
-40,868
-12,515
–
–
-18,259
-21,568
–
–
-27,126
-186
81
260
3,475
73
–
–
-100
-1,182
–
–
-1,493
-267
-42
-9
-356
-258
–
–
-13,776
–
-1,116
–
-1,721
–
-75,419
-110,772
-60,662
–
–
299
-60,363
0
-135,783
-110,772		 Total
-2,226
-3,526
19,665
-10,415
-97,605
-3,670
1,439
284
-29
10,567
-34,009
503
-14,903
-12,515
-21,568
73
73
-1,182
-276
-258
-13,776
-1,116
-1,721
-186,191
-60,662
299
-60,363
-246,554

– 12 –

2015 FINANCIAL REPORT

APPENDIX I

The actual sales revenue for the year reached RMB4,196,840,000, representing a decrease of RMB2,465,540,000 as compared with the same period of last year, including:

  • (1) Changes of product sales volume affected that the sales revenue for the year decreased by RMB1,191,690,000 as compared with the same period of last year, including:

  • a. The sales volume of ferromolybdenum for the year decreased by 5,725 tons as compared with the same period last year, affecting that the sales revenue decreased by RMB455,490,000.

  • b. The sales volume of molybdenum oxide for the year increased by 5,090 tons as compared with the same period last year, affecting that the sales revenue increased by RMB363,090,000.

  • c. The sales volume of molybdenum oxide granule for the year decreased by 1,308 tons as compared with the same period last year, affecting that the sales revenue decreased by RMB97,840,000.

  • d. The sales volume of tungsten concentrate for the year increased by 2,425 tons as compared with the same period last year, affecting that the sales revenue increased by RMB315,400,000.

  • e. The sales volume of tungstic acid for the year decreased by 1,273 tons as compared with the same period last year, affecting that the sales revenue decreased by RMB177,320,000.

  • f. The APT product for the year newly increased by 53 tons for selling affected that the income increased by RMB5,030,000.

  • g. Due to the respective selling of the gold business and silver business in 2014 and 2015, a decrease of RMB274,180,000 of relevant products was caused.

  • h. Due to the selling of Yongning Gold & Lead Company, a decrease of RMB215,680,000 in electrolytic lead income was caused.

  • i. The sales volume of trade product (nickel plate) for the year decreased by 100 tons as compared with the budget, affecting that the sales revenue decreased by RMB11,820,000.

– 13 –

2015 FINANCIAL REPORT

APPENDIX I

  • j. The change of other product sales volume affected that the sales revenue decreased by RMB39,250,000.

  • k. Affected by businesses in Australia, the revenue decreased by RMB603,630,000 as compared with the budget.

  • (2) The sales price of products for the year was lower than that in the same period of last year, affecting that the sales for the year decreased by RMB1,107,720,000, including:

  • a. The sales price (tax inclusive) of ferromolybdenum for the year decreased by RMB26,886/ton as compared with the same period last year, affecting that operating revenue for the year decreased by RMB520,560,000.

  • b. The sales price (tax inclusive) of molybdenum oxide for the year decreased by RMB28,348/ton as compared with the same period last year, affecting that operating revenue for the year decreased by RMB166,450,000.

  • c. The sales price (tax inclusive) of molybdenum oxide granule for the year decreased by RMB28,605/ton as compared with the same period last year, affecting that operating revenue for the year decreased by RMB6,310,000.

  • d. The sales price (tax inclusive) of tungsten concentrate for the year decreased by RMB52,149/ton as compared with the same period last year, affecting that operating revenue for the year decreased by RMB209,730,000.

  • e. The sales price (tax inclusive) of tungstic acid for the year decreased by RMB56,442/ton as compared with the same period last year, affecting that operating revenue for the year decreased by RMB162,760,000.

  • f. The change of other product prices affected that the revenue decreased by RMB41,910,000.

  • (3) Other incomes for the year decreased by RMB166,130,000 as compared with the same period of last year.

– 14 –

2015 FINANCIAL REPORT

APPENDIX I

  1. Contrastive analysis of operating revenue and the budget:

Contrastive Analysis Sheet of Operating Revenue and the Budget in 2015

Unit: RMB0’000 yuan

Budget in 2015
Product name
Grade
Sales
volume
(ton)
– Domestic:
Molybdenum raw ore
2,078,806
Molybdenum concentrate
47%
–
Molybdenum oxide
53%
2,717
Molybdenum oxide granule
60%
1,200
Ferromolybdenum
60%
26,370
Ammonium molybdate
870
Molybdenum powder
60
High-purity molybdenum trioxide
66
Molybdenum disulfide
–
Tungsten concentrate
100%
3,320
Tungstic acid
100%
5,400
APT
100%
–
Gold_(kg)
–
Silver(kg)_
–
Electrolytic lead
–
Vitriol
37,420
Iron powder
–
Nickel plate
360
Processing charges of
molybdenum oxide
3,085
Processing charges of
ferromolybdenum
–
Others
–
Hotel revenue
–
Other revenues
–
Sub-total
– Australia:
Copper concentrate
Other revenue
Sub-total
Total operation revenue		 Unit cost
78
51,471
58,348
72,650
76,867
80,693
163,248
102,906
114,621
106,838
116,344
94,645
231,719
3,062
11,812
65
209
91,026
1,534
7,264		 Actual in 2015
Sales
revenue
Sales
volume
(ton)
16,140
2,033,000
–
40
15,853
6,870
8,718
258
202,698
22,653
7,020
797
979
169
679
68
–
7
35,470
4,706
62,826
3,374
–
53
–
–
–
–
–
–
244
32,075
–
3,475
3,277
–
473
2,155
–
–
4,822
–
6,787
–
4,413
–
370,400
172,198
–
172,198
542,598		 Unit cost
66
51,471
47,107
50,374
56,587
67,792
133,204
74,565
114,621
85,496
91,003
94,645
231,719
3,062
11,812
150
209
117,928
1,748
7,264
–
–
–		 Year-on-Year Increase or Decrease
Sales
revenue
Change
of sales
volume
Impact
of sales
volume
13,480
-45,806
-356
207
40
207
32,360
4,153
24,229
1,300
-942
-6,843
128,187
-3,717
-28,570
5,401
-73
-592
2,256
109
1,785
507
2
20
84
7
84
40,230
1,386
14,803
30,704
-2,026
-23,572
503
53
503
–
–
–
–
–
–
–
–
–
480
-5,345
-35
73
3,475
73
–
-360
-3,277
377
-930
-143
–
–
–
3,987
-834
6,400
-387
5,247
833
271,780
-22,073
144,280
-27,918
3,624
3,624
147,904
-24,295
419,684
-46,368		 of Actual Revenue
Change of
sales price
Impact of
sales price
-11
-2,304
–
–
-11,240
-7,722
-22,275
-575
-20,280
-45,941
-12,901
-1,028
-30,044
-509
-28,341
-193
–
–
-21,342
-10,042
-25,341
-8,550
–
–
–
–
–
–
–
–
84
271
–
–
26,902
–
215
46
–
–
–
–
–
-76,546
–
–
–
-76,546		 Total
-2,660
207
16,508
-7,418
-74,511
-1,620
1,276
-173
84
4,760
-32,122
503
–
–
–
236
73
-3,277
-96
–
-834
-387
833
-98,619
-27,918
3,624
-24,295
-122,914

– 15 –

2015 FINANCIAL REPORT

APPENDIX I

The actual sales revenue for the year reached RMB4,196,840,000, representing a decrease of RMB1,229,140,000 as compared with the budget of the year.

Including:

  • (1) Changes of product sales volume affected that the sales revenue for the year decreased by RMB459,800,000 as compared with the budget, including:

  • a. The sales volume of ferromolybdenum for the year decreased by 3,717 tons as compared with the budget, affecting that the sales revenue decreased by RMB285,700,000.

  • b. The sales volume of molybdenum oxide for the year increased by 4,153 tons as compared with the budget, affecting that the sales revenue increased by RMB242,290,000.

  • c. The sales volume of molybdenum oxide granule for the year decreased by 942 tons as compared with the budget, affecting that the sales revenue decreased by RMB68,430,000.

  • d. The sales volume of tungsten concentrates for the year increased by 1,386 tons as compared with the budget, affecting that the sales revenue increased by RMB148,030,000.

  • e. The sales volume of tungstic acid for the year decreased by 2,026 tons as compared with the budget, affecting that the sales revenue decreased by RMB235,720,000.

  • f. The APT product for the year newly increased by 53 tons for selling affected that the income increased by RMB5,030,000.

  • g. The sales volume of trade product (nickel plate) for the year decreased by 360 tons as compared with the budget, affecting that the sales revenue decreased by RMB32,770,000.

  • h. The change of other product sales volumes affected that the revenue increased by RMB10,430,000.

  • i. Affected by Australia businesses, the revenue decreased by RMB242,950,000 as compared with the budget.

– 16 –

2015 FINANCIAL REPORT

APPENDIX I

  • (2) The sale prices of products for the year were lower than the budget ones, affecting that the sales decreased by RMB765.46 million, including:

  • a. Sales price (tax inclusive) of ferromolybdenum for the year decreased by RMB23,728/ton as compared with the budget, affecting that operating revenue for the year decreased by RMB459,410,000.

  • b. Sales price (tax inclusive) of molybdenum oxide for the year decreased by RMB13,151/ton as compared with the budget, affecting that operating revenue for the year decreased by RMB77,220,000.

  • c. Sales price (tax inclusive) of molybdenum oxide granule for the year decreased by RMB26,062/ton as compared with the budget, affecting that operating revenue for the year decreased by RMB5,750,000.

  • d. Sales price (tax inclusive) of tungsten concentrates for the year decreased by RMB24,970/ton as compared with the budget, affecting that operating revenue for the year decreased by RMB100,420,000.

  • e. Sales price (tax inclusive) of tungstic acid for the year decreased by RMB29,649/ton as compared with the budget, affecting that operating revenue for the year decreased by RMB85,500,000.

    • a) The change of other products sales prices affected that the revenue decreased by RMB37,160,000.

  • (3) Other revenues for the year decreased by RMB3,380,000 as compared with the budget.

– 17 –

2015 FINANCIAL REPORT

APPENDIX I

  1. Composition of operating revenue:

==> picture [379 x 197] intentionally omitted <==

----- Start of picture text -----

Chart for Composition of Operating Revenue for 2015
Others
9.2% Ferromolybdenum
30.5%
Copper concentrate
34.4%
Molybdenum oxide
Ammonium 7.7%
molybdate Tungstic acid Tungsten concentrate
1.3% 7.3% 9.6%
Ferromolybdenum Molybdenum oxide Tungsten concentrate Tungstic acid Ammonium molybdate Copper concentrate Others
----- End of picture text -----

Table for operation revenue of main products accounting for the total revenue

Unit: RMB0’000 yuan

Product
Ferromolybdenum
Molybdenum oxide
Tungsten concentrate
Tungsten acid
Ammonium molybdate
Copper concentrate
Others
Total		 Actual in 2014
225,792
33.9%
12,696
1.9%
29,663
4.5%
64,712
9.7%
9,070
1.4%
204,942
30.8%
119,363
17.9%
666,238
100%		 Budget in 2015
202,698
37.4%
15,853
2.9%
35,470
6.5%
62,826
11.6%
7,020
1.3%
172,198
31.7%
46,533
8.6%
542,598
100%		 Actual in 2015
128,187
30.5%
32,360
7.7%
40,230
9.6%
30,704
7.3%
5,401
1.3%
144,280
34.4%
38,522
9.2%
419,684
100%		 Actual in 2015
128,187
30.5%
32,360
7.7%
40,230
9.6%
30,704
7.3%
5,401
1.3%
144,280
34.4%
38,522
9.2%
419,684
100%
100%

– 18 –

2015 FINANCIAL REPORT

APPENDIX I

Comparison of the compositions of actual operation revenue in 2014, the budget in 2015 and actual operation revenue in 2015 of main products:

==> picture [371 x 172] intentionally omitted <==

----- Start of picture text -----

Comparison Diagram for 2014 Actual,
2015 Budget and 2015 Actual Operation Income
250,000
200,000
150,000
100,000
50,000
0
Ferromolybdenum Molybdenum Tungsten Tungstic Ammonium Copper Others
oxide concentrate acid molybdate concentrate
2014 Actual 2015 Budget 2015 Actual
----- End of picture text -----

2.1.2 Revenue performance of main products

  1. Impact of changes in sales volume of main products on revenue:

Table for impact of changes in sales volume of main products on sales revenue

Revenue Influenced by Revenue Influenced by
Change of Sales
Auctual in 2014 Budget in 2015 Auctual in 2015 Volume(RMB0’000)
Compared Compared
Sales Unit Sales Unit Sales Unit with last with
Product name volume price volume price volume price year budget
Ferromolybdenum (60%) 28,378 79,566 26,370 76,867 22,653 56,587 -45,549 -28,570
Molybdenum oxide (53%) 1,780 71,337 2,717 58,348 6,870 47,107 36,309 24,229
Tungsten concentrate
(100%) 2,281 130,068 3,320 106,838 4,706 85,496 31,540 14,803
Tungstic acid (100%) 4,647 139,244 5,400 116,344 3,374 91,003 -17,732 -23,572
Gold_(kg)_ 643 231,719 0 231,719 0 231,719 -14,903 0
Silver_(kg)_ 40,868 3,062 0 3,062 0 3,062 -12,515 0
Electrolytic lead 18,259 11,812 0 11,812 0 11,812 -21,568 0

Year-on-year comparison: a decrease in revenue of RMB632,810,000 was caused by a decrease in the sales volume of ferromolybdenum and tungsten acid; a decrease of RMB489,860,000 was caused by the disposal of gold, silver and electrolytic lead businesses; an increase of RMB678,500,000 was caused by an increase in the sales volume of molybdenum oxide and tungsten concentrate.

Comparison to the Budget: a decrease in revenue of RMB521,420,000 was caused by a decrease in the sales volume of ferromolybdenum and tungsten acid; an increase of RMB390,320,000 was caused by an increase in the sales volume of molybdenum oxide and tungsten concentrate.

– 19 –

2015 FINANCIAL REPORT

APPENDIX I

  1. Impact of changes in selling price of main products on revenue:

Table for impact of changes in selling price of main products on revenue

Revenue Influenced by Revenue Influenced by
Change of Sales
Auctual in 2014 Budget in 2015 Auctual in 2015 Volume(RMB0’000)
Compared Compared
Sales Unit Sales Unit Sales Unit with last with
Product name volume price volume price volume price year budget
Ferromolybdenum (60%) 28,378 79,566 26,370 76,867 22,653 56,587 -52,056 -45,941
Molybdenum oxide (53%) 1,780 71,337 2,717 58,348 6,870 47,107 -16,645 -7,722
Tungsten concentrate
(100%) 2,281 130,068 3,320 106,838 4,706 85,496 -20,973 -10,042
Tungstic acid (100%) 4,647 139,244 5,400 116,344 3,374 91,003 -16,276 -8,550
Gold_(kg)_ 643 231,719 0 231,719 0 231,719 0 0
Silver_(kg)_ 40,868 3,062 0 3,062 0 3,062 0 0
Electrolytic lead 18,259 11,812 0 11,812 0 11,812 0 0

Year-on-year comparison: a total decrease in revenue of RMB1,059,500,000 was caused by a decrease in the unit price of ferromolybdenum, molybdenum oxide, tungsten concentrate and tungstic acid.

Comparison to the Budget: a total decrease in revenue of RMB722,550,000 was caused by a decrease in the unit price of ferromolybdenum, molybdenum oxide, tungsten concentrate and tungstic acid.

– 20 –

2015 FINANCIAL REPORT

APPENDIX I

2.2. ANALYSIS ON THE OPERATING COST PERFORMANCE

2.2.1 Total cost performance

  1. Year-on-year contrastive analysis of operating cost:

Year-on-year contrastive analysis sheet of operating costs in 2015

Unit: RMB0’000 yuan

Actual in 2014
Product name
grade
Sales
volume
(ton)
– Domestic:
Molybdenum raw ore
2,025,012
Molybdenum concentrate
47%
696
Molybdenum oxide
53%
1,780
Molybdenum oxide granule
60%
1,566
Ferromolybdenum
60%
28,378
Ammonium molybdate
1,075
Molybdenum powder
49
High-purity molybdenum trioxide
20
Molybdenum disulfide
10
Tungsten concentrate
100%
2,281
Tungstic acid
100%
4,647
APT
100%
0
Gold_(kg)
643
Silver(kg)_
40,868
Electrolytic lead
18,259
Vitriol
59,201
Iron powder
0
Nickel plate
100
Processing charges of molybdenum
oxide
3,648
Processing charges of ferromolybdenum
356
Others
Hotel Incomes
Other revenues
Sub-total
– Australia:
Copper concentrate
53%
Other revenue
60%
Sub-total
Total operation revenue		 Unit cost
33
38,709
31,216
35,105
53,772
68,508
161,694
89,658
123,077
19,751
27,344
84,381
181,772
3,837
13,495
551
202
112,498
624
5,255		 Actual in 2015
Cost of
sales
Sales
volume
(ton)
6,705
2,033,000
2,694
40
5,555
6,870
5,496
258
152,593
22,653
7,365
797
787
169
182
68
126
7
4,504
4,706
12,708
3,374
–
53
11,690
–
15,682
–
24,641
–
3,262
32,075
–
3,475
1,127
–
228
2,155
187
–
19,610
–
6,281
–
6,556
–
287,979
99,164
0
99,164
387,143		 Unit cost
19
51,499
22,984
36,253
46,975
62,035
124,075
46,399
34,592
20,245
22,118
84,381
181,772
3,837
13,495
576
202
112,498
704
–
–
–
–		 Year-on-Year Decrease or Increase of Actual cost
Cost of
sales
Change
of sales
volume
Impact
of sales
volume
Change of
unit cost
Impact of
sales price
3,821
7,988
26
-14
-2,911
207
-656
-2,538
12,790
51
15,789
5,090
15,889
-8,232
-5,655
935
-1,308
-4,591
1,148
30
106,414
-5,725
-30,783
-6,797
-15,397
4,942
-278
-1,907
-6,473
-516
2,101
121
1,951
-37,619
-637
315
48
428
-43,259
-294
25
-3
-36
-88,485
-65
9,526
2,425
4,789
494
233
7,462
-1,273
-3,482
-5,226
-1,763
448
53
448
–
–
–
-643
-11,690
–
–
–
-40,868
-15,682
–
–
–
-18,259
-24,641
–
–
1,846
-27,126
-1,495
24
78
70
3,475
70
–
–
–
-100
-1,127
–
–
152
-1,493
-93
80
17
–
-356
-187
-5,255
–
3,376
-16,234
–
6,385
104
–
5,304
-1,252
–
169,119
-92,033
-26,828
93,126
-6,038
–
–
0
–
93,126
-6,038
0
262,245
-98,070
-26,828		 Total
-2,884
-2,487
10,234
-4,561
-46,179
-2,423
1,314
134
-101
5,022
-5,245
448
-11,690
-15,682
-24,641
-1,416
70
-1,127
-76
-187
-16,234
104
-1,252
-118,861
-6,038
–
-6,038
-124,898

– 21 –

2015 FINANCIAL REPORT

APPENDIX I

The actual sales revenue for the year reached RMB2,622,450,000, representing a decrease of RMB1,248,980,000 as compared the same period of last year.

Including:

  • (1) Changes of product sales volume affected that the operating costs for the year decreased by RMB806,890,000 as compared with that of the current period, including:

  • a. The sales volume of ferromolybdenum for the year decreased by 5,725 tons as compared with the same period of last year, affecting that the operation cost decreased by RMB307,830,000.

  • b. The sales volume of molybdenum oxide for the year increased by 5,090 tons as compared with the same period of last year, affecting that the operation cost increased by RMB158,890,000.

  • c. The sales volume of molybdenum oxide granule for the year decreased by 1,308 tons as compared with the same period of last year, affecting that the operation cost decreased by RMB45,910,000.

  • d. The sales volume of tungsten concentrate for the year increased by 2,425 tons as compared with the same period of last year, affecting that the operation cost increased by RMB47,890,000.

  • e. The sales volume of tungstic acid for the year decreased by 1,273 tons as compared with the same period of last year, affecting that the operation cost decreased by RMB34,820,000.

  • f. The APT product for the year newly increased by 53 tons for selling affected that the operation cost increased by RMB4,480,000.

  • g. Due to the respective selling of the gold business and silver business in 2014 and 2015, a decrease of RMB273,720,000 in operation cost to relevant products was caused.

  • h. Due to the selling of Yongning Gold & Lead Company, a decrease of RMB246,410,000 in electrolytic lead operation cost was caused.

– 22 –

2015 FINANCIAL REPORT

APPENDIX I

  • i. The sales volume of trade product (nickel plate) for the year decreased 100 tons as compared with the same period of last year, affecting that the operation cost decreased by RMB11,270,000.

  • j. The increase or decrease of other product sales volumes affected that the operation cost decreased by RMB37,810,000.

  • k. Affected by Australia businesses, the operation cost decreased by RMB60,380,000 as compared with the same period of last year.

  • (2) The unit selling costs of products for the year were lower than the same period of last year, affecting that the operation cost of the current year decreased by RMB268,280,000, including:

  • a. The unit selling cost of ferromolybdenum for the year decreased by RMB6,797/ton as compared with the same period of last year, affecting that operating cost for the year decreased by RMB153,970,000.

  • b. The unit selling cost of molybdenum oxide for the year decreased by RMB8,232/ton as compared with the same period of last year, affecting that operating cost for the year decreased by RMB56,550,000.

  • c. The unit selling cost of tungsten concentrate for the year increased by RMB494/ton as compared with the same period of last year, affecting that operating cost for the year increased by RMB2,330,000.

  • d. The unit selling cost of tungstic acid for the year decreased by RMB5,226/ton as compared with the same period of last year, affecting that operating cost for the year decreased by RMB17,630,000.

  • e. The increase or decrease of other products costs affected that operation cost decreased by RMB42,460,000.

  • (3) Other costs for the year decreased by RMB173,810,000 as compared with the same period of last year.

– 23 –

2015 FINANCIAL REPORT

APPENDIX I

  1. Comparative Analysis of Operation Cost and the Budget:

Comparative analysis sheet of operation cost and the budget in 2015

Unit: RMB0’000 yuan

Budget in 2015
Product name
Grade
Sales
volume
(ton)
– Domestic:
Molybdenum raw ore
2,078,806
Molybdenum concentrate
47%
–
Molybdenum oxide
53%
2,717
Molybdenum oxide granule
60%
1,200
Ferromolybdenum
60%
26,370
Ammonium molybdate
870
Molybdenum powder
60
High-purity molybdenum trioxide
66
Molybdenum disulfide
–
Tungsten concentrate
100%
3,320
Tungstic acid
100%
5,400
APT
100%
–
Gold_(kg)
–
Silver(kg)_
–
Electrolytic lead
–
Vitriol
37,420
Iron powder
–
Nickel plate
360
Processing charges of molybdenum
oxide
3,085
Processing charges of ferromolybdenum
–
Others
Hotel Incomes
–
Other business revenue
–
Sub-total
– Australia:
Copper concentrate
53%
Other business n revenue
60%
Sub-total
Total operation revenue		 Unit cost
34
51,499
42,732
51,244
57,140
77,149
153,216
111,169
34,592
17,734
25,518
84,381
903
202
90,171
951		 Actual in 2015
Cost of
sales
Sales
volume
(ton)
7,120
2,033,000
–
40
11,610
6,870
6,149
258
150,678
22,653
6,712
797
919
169
734
68
–
7
5,888
4,706
13,780
3,374
–
53
–
–
–
–
–
–
3,378
32,075
–
3,475
3,246
–
293
2,155
–
–
4,586
–
6,115
–
5,554
–
226,762
86,618
–
86,618
313,380		 Unit cost
19
51,499
22,984
36,253
46,975
62,035
124,075
46,399
34,592
20,245
22,118
84,381
–
–
–
576
202
112,498
704
–
–
–
–		 Cost of
sales
3,821
207
15,789
935
106,414
4,942
2,101
315
25
9,526
7,462
448
–
–
–
1,846
70
–
152
–
3,376
6,385
5,304
169,119
93,126
–
93,126
262,245		 Actual cost (Compared with budget)
Change
of sales
volume
Impact
of sales
volume
Change of
unit cost
-45,806
-157
-15
40
207
–
4,153
17,745
-19,748
-942
-4,827
-14,991
-3,717
-21,238
-10,164
-73
-566
-15,114
109
1,675
-29,141
2
22
-64,770
7
25
–
1,386
2,457
2,511
-2,026
-5,170
-3,400
53
448
–
0
–
–
0
–
–
0
–
–
-5,345
-482
-327
3,475
70
–
-360
-3,246
22,327
-930
-88
-247
–
–
–
-1,210
270
-251
-14,317
6,509
–
–
6,509
-7,808		 Impact of
sales price
-3,142
–
-13,566
-387
-23,026
-1,204
-493
-440
–
1,181
-1,147
–
–
–
–
-1,049
–
–
-53
–
–
–
–
-43,327
–
–
-43,327		 Total
-3,299
207
4,179
-5,214
-44,264
-1,770
1,182
-418
25
3,639
-6,317
448
–
–
–
-1,532
70
-3,246
-142
–
-1,210
270
-251
-57,644
6,509
–
6,509
-51,135

– 24 –

2015 FINANCIAL REPORT

APPENDIX I

The actual sales revenue for the year reached RMB2,622,450,000, representing a decrease of RMB511,350,000 as compared the budget, including:

  • (1) Changes of product sales volume affected that the operating costs for the year decreased by RMB66,170,000 as compared with the budget, including:

  • a. The sales volume of ferro molybdenum for the year decreased by 3,717 tons as compared the budget, affecting that the operation cost decreased by RMB212,380,000.

  • b. The sales volume of molybdenum oxide for the year increased by 4,153 tons as compared with the budget, affecting that the operation cost increased by RMB177,450,000.

  • c. The sales volume of molybdenum oxide granule for the year decreased by 942 tons as compared with the budget, affecting that the operation cost decreased by RMB48,270,000.

  • d. The sales volume of tungsten concentrate for the year increased by 1,386 tons as compared with the budget, affecting that the operation cost increased by RMB24,570,000.

  • e. The sales volume of tungstic acid for the year decreased by 2,026 tons as compared with the budget, affecting that the operation cost decreased by RMB51,700,000.

  • f. The APT product for the year newly increased by 53 tons for selling affected that the operation cost increased by RMB4,480,000.

  • g. The sales volume of trade product (nickel plate) for the year decreased by 360 tons as compared with the budget, affecting that the operation cost decreased by RMB32,460,000.

  • h. The increase or decrease of other product sales volumes affected that the operation cost increased by RMB7,050,000.

  • i. Affected by Australia businesses, the operation cost increased by RMB65,090,000 as compared with the budget.

– 25 –

2015 FINANCIAL REPORT

APPENDIX I

  • (2) The unit selling costs of products for the year were lower than the budget, affecting that the operation cost of the current year decreased by RMB433,270,000, including:

  • a. The unit selling cost of ferromolybdenum for the year decreased by RMB10,164/ton as compared with the budget, affecting that operating cost for the year decreased by RMB230,260,000.

  • b. The unit selling cost of molybdenum oxide for the year decreased by RMB19,748/ton as compared with the budget, affecting that operating cost for the year decreased by RMB135,660,000.

  • c. The unit selling cost of tungsten concentrate for the year increased by RMB2,511/ton as compared with the budget, affecting that operating cost for the year decreased by RMB11,810,000.

  • d. The unit selling cost of tungstic acid for the year decreased by RMB3,400/ ton as compared with the budget, affecting that operating cost for the year decreased by RMB11,470,000.

  • e. The increase or decrease of other products costs affected that operation cost decreased by RMB67,690,000.

  • (3) Other costs for the year decreased by RMB11,910,000 as compared with the same period of last year.

– 26 –

2015 FINANCIAL REPORT

APPENDIX I

  1. Composition of Operation Cost:

==> picture [367 x 186] intentionally omitted <==

----- Start of picture text -----

Composition Chart of Operation Cost in 2015
Others
9.5%
Ferromolybdenum
40.6%
Copper concentrate
35.5%
Ammonium molybdate Molybdenum oxide
1.9% Tungstic acid 6.0%
2.8%
Tungsten concentrate
3.6%
Ferromolybdenum Molybdenum oxide Tungsten concentrate Tungstic acid Ammonium molybdate Copper concentrate Others
----- End of picture text -----

Composition of operation cost of main products in 2014, 2015 and budget in 2015:

Table for operation cost of main products accounting for the total cost

Unit: RMB0’000 yuan

Product
Ferromolybdenum
Molybdenum oxide
Tungsten concentrate
Tungstic acid
Ammonium molybdate
Copper concentrate
Others
Total		 Actual in 2014
152,593
39.4%
5,555
1.4%
4,504
1.2%
12,708
3.3%
7,365
1.9%
99,164
25.6%
105,254
27.2%
387,143
100%		 Budget in 2015
150,678
48.1%
11,610
3.7%
5,888
1.9%
13,780
4.4%
6,712
2.1%
86,618
27.6%
38,095
12.2%
313,380
100%		 Auctual in 2015
106,414
40.6%
15,789
6.0%
9,526
3.6%
7,462
2.8%
4,942
1.9%
93,126
35.5%
24,985
9.5%
262,245
100%		 Auctual in 2015
106,414
40.6%
15,789
6.0%
9,526
3.6%
7,462
2.8%
4,942
1.9%
93,126
35.5%
24,985
9.5%
262,245
100%
100%

– 27 –

2015 FINANCIAL REPORT

APPENDIX I

2.2.2 Operation Cost Performance of Main Products

  1. Impact of sales volume of main products on operation cost:

Table for Impact of sales volume of main products on operation cost:

Revenue influenced by Revenue influenced by
Actual in 2014 Budget in 2015 Actual in 2015 sales variation (RMB0’000)
Compared Compared
Sales Unit Sales Unit Sales Unit
with		 with
Product name volume cost volume cost volume cost last year budget
Ferromolybdenum (60%) 28,378 53,772 26,370 57,140 22,653 46,975 -30,783 -21,238
Molybdenum oxide (53%) 1,780 31,216 2,717 42,732 6,870 22,984 15,889 17,745
Tungsten concentrate
(100%) 2,281 19,751 3,320 17,734 4,706 20,245 4,789 2,457
Tungstic acid (100%) 4,647 27,344 5,400 25,518 3,374 22,118 -3,482 -5,170
Gold_(kg)_ 643 181,772 – – – – -11,690 –
Silver_(kg)_ 40,868 3,837 – – – – -15,682 –
Electrolytic lead 18,259 13,495 – – – – -24,641 –

Year-on-year comparison: a decrease of RMB342,650,000 was caused by the sales volume decrease of ferromolybdenum and tungsten acid; a decrease of RMB520,130,000 was caused by the fact that gold, silver and electrolytic lead businesses were sold; an increase of RMB206,780,000 was caused by the sales volume increase of molybdenum oxide and tungsten concentrate.

Comparison to the Budget: a decrease of RMB264,080,000 was caused by the sales volume decrease of ferromolybdenum and tungsten acid; an increase of RMB202,020,000 was caused by the sales volume increase of molybdenum oxide and tungsten concentrate.

– 28 –

2015 FINANCIAL REPORT

APPENDIX I

  1. Impact of changes in unit selling cost of main products on operating cost:

Table for Impact of changes in unit selling cost

of main products on operating cost

Cost influenced by Cost influenced by
Actual in 2014 Budget in 2015 Actual in 2015 unit cost(RMB0’000)
Compared Compared
Product Sales Unit Sales Unit Sales Unit with with
name volume cost volume cost volume cost last year budget
Ferromolybdenum
(60%) 28,378 53,772 26,370 57,140 22,653 46,975 -15,397 -23,026
Molybdenum oxide
(53%) 1,780 31,216 2,717 42,732 6,870 22,984 -5,655 -13,566
Tungsten concentrate
(100%) 2,281 19,751 3,320 17,734 4,706 20,245 233 1,181
Tungstic acid (100%) 4,647 27,344 5,400 25,518 3,374 22,118 -1,763 -1,147
Gold_(kg)_ 643 181,772 – – – – – –
Silver_(kg)_ 40,868 3,837 – – – – – –
Electrolytic lead 18,259 13,495 – – – – – –

Year-on-year comparison: a decrease of RMB228,150,000 was caused by the sales volume decrease of ferromolybdenum, molybdenum oxide and tungsten acid; an increase of RMB2,330,000 was caused by the sales volume increase of tungsten concentrate.

Comparison to the Budget: a decrease of RMB377,390,000 was caused by the sales volume decrease of ferromolybdenum, molybdenum oxide and tungsten acid; an increase of RMB11,810,000 was caused by the sales volume increase of and tungsten concentrate.

– 29 –

2015 FINANCIAL REPORT

APPENDIX I

  • 2.3. ANALYSIS ON PRODUCTION COST PERFORMANCE OF MAIN PRODUCTS OF THE COMPANY

2.3.1 Production cost of main products

Comparison of Production cost of main products

Comparison Year-
2015 2015 2014 to the on-year
Item actual budget actual Budget comparison
Unit cost of molybdenum
concentrate 54,204 67,827 62,397 -13,623 -8,193
Unit cost of tungsten concentrate 16,362 17,734 19,481 -1,372 -3,119
Processing cost of
ferromolybdenum 6,662 7,244 7,084 -582 -422

2.3.2 Production cost of molybdenum concentrate

Molybdenum concentrate cost performance

2015 2015 2014 Actual Year-on-year
Cost Item Unit actual budget actual budget comparison
1. Direct mining cost RMB 9.02 9.71 9.76 -0.69 -0.74
2. Direct Stripping Cost RMB 7.12 8.52 7.54 -1.39 -0.41
3. Machinery expenses RMB 4.63 4.75 4.83 -0.12 -0.19
Including: manufacturing expenses RMB 1.22 1.28 1.30 -0.06 -0.08
Machinery operators RMB 1.66 1.63 1.80 0.03 -0.14
Depreciation cost RMB 1.75 1.85 1.73 -0.09 0.03
4. Fixed expenses RMB 7.32 9.43 9.89 -2.11 -2.57
Including: safety expenses RMB 5.00 5.00 5.00 0.00 0.00
Mining rights apportioned
expenses RMB 1.50 1.48 1.54 0.02 -0.05
Resources compensation
expenses RMB 0.82 2.95 3.35 -2.13 -2.53
5. Conversion into ore cost RMB 28.41 32.70 29.64 -4.29 -1.23
Mining quantity 0’000 tons 1,818.41 1,845.00 1,764.28 -26.59 54.13
Stripping quantity 0’000 tons 1,898.82 1,908.60 1,209.14 -9.78 689.68
Stripping ratio times 1.04 1.03 0.69 0.01 0.36

– 30 –

2015 FINANCIAL REPORT

APPENDIX I

Year-on-year comparison: the unit cost of molybdenum raw ore decreased by RMB1.23/ton (that in the same period of last year: RMB29.64/ton). Such change was caused by the fact that the resources compensation was reduced by RMB2.53 while the ore cost had a year-on-year increase of RMB1.3 mainly because the stripping ratio sharply increased by 0.36.

Comparison to the budget: the actual cost of molybdenum raw ore in current year was RMB28.41/ton, meaning a decrease of RMB4.29/ton compared with the budget. Such difference was caused by the fact that mining companies did not assume mineral resources compensation any longer after the adjustment of national resources tax policy and such change resulted in a decrease of RMB2.13 compared with the budgetary cost while the ore cost had a decrease of RMB2.16 compared with the budgetary cost mainly because the transportation cost decreased (mainly due to the reduction of haul distance and freight price per tonnage-kilometer).

2.3.3 Production cost of molybdenum concentrate

Ore Grinding Cost Ore Grinding Cost
Subtotal Ore
Materials Power Labor Manufacturing Grinding Administrative Dressing Concentrate
Budget Ore Cost Expenses Expenses Expenses Expenses Cost of Ore Cost Subtotal Total Ratio Cost
Actual cost in 2014 99 9.91 14.39 13.59 11.23 49.12 1.12 50.24 149.24 449 67,039
Budget cost in 2015 99 10.00 13.66 11.81 12.88 48.35 1.00 49.35 148.35 471 69,929
Actual cost in 2015 99 9.63 12.87 12.29 12.13 46.92 1.11 48.03 147.03 449 66,062
Comparison of actual cost and budget 0 -0.37 -0.80 0.47 -0.74 -1.43 0.11 -1.32 -1.32 -22 -3,867
Comparison of actual cost in current year and
that in last year 0 -0.28 -1.52 -1.31 0.90 -2.20 -0.01 -2.21 -2.21 0.11 -977
Difference from budgetary cost -164 -357 213 -334 -642 49 -593 -593 -3,274 -3,867
Difference from the cost in last year -124 -683 -587 405 -989 -4 -993 -993 16 -977

Year-on-year comparison : the actual unit cost of molybdenum concentrate (47% content) in current year was RMB66,062, indicating a year-on-year decrease of RMB977 and mainly resulting from the change of ore grinding cost change.

Ore dressing ration in current year increased by 0.11 ton, which resulted in a unit cost increase of RMB16 to the concentrate cost.

– 31 –

2015 FINANCIAL REPORT

APPENDIX I

Ore grinding cost in current year was RMB48.03 and decreased by RMB2.21, which resulted in a cost decrease of RMB993 to the concentrate cost. Causes of ore grinding cost decrease included:

  • (1) Materials Expenses: it had a year-on-year decrease of RMB0.28, which resulted in a decrease of RMB124 to the unit production cost of molybdenum concentrate. It is mainly because all ore dressing units enhanced inventory management and optimized technological level and the Group adopted united bid mechanism that the materials expenses was economized.

  • (2) Power Expenses: it had a year-on-year decrease of RMB1.52, which resulted in a decrease of RMB683 to the unit cost of molybdenum concentrate. Thanks to the implementation of peak-valley TOU electricity pricing mechanism since late April of current year, the unit average electricity price of molybdenum dressing had a significant decrease, which resulted in the decrease of power expenses.

  • (3) Labor Expenses: it had a year-on-year decrease of RMB1.31, which resulted in a decrease of RMB587 to the unit cost of molybdenum concentrate. It is mainly because the actual processing capacity of current year increased by 700,000 tons on year-on-year basis that such fixed expenses as cost of labor decreased.

  • (4) Manufacturing Expenses: it had a year-on-year increase of RMB0.9, which resulted in a increase of RMB405 to the unit cost of molybdenum concentrate. It is mainly because safety expenses for mine, phase II and phase III ore dressing and tailings handling expenses for phase I ore dressing had a sharp year-on-year increase that unit cost increased.

  • (5) Subsidiary management fees: it had a year-on-year decrease of RMB0.01, which resulted in a decrease of RMB4 to the unit cost of molybdenum concentrate.

Budget comparison: the actual unit cost of molybdenum concentrate (47% content) in current year was RMB66,062, indicating a budget unit decrease of RMB3,867 and mainly resulting from Ore dressing ration and the change of ore grinding cost change.

Ore dressing ration in current year’s budget decreased by 22 tons, which resulted in a unit cost decrease of RMB3,274 to the concentrate cost.

– 32 –

2015 FINANCIAL REPORT

APPENDIX I

Ore grinding cost in current year was RMB48.03 and decreased by RMB1.32, which resulted in a cost decrease of RMB593 to the concentrate cost. Causes of ore grinding cost decrease included:

  • (1) Materials Expenses: it had a year-on-year decrease of RMB0.37, which resulted in a decrease of RMB164 to the unit production cost of molybdenum concentrate. It is mainly because all ore dressing units enhanced inventory management and optimized technological level and the Group adopted united bid mechanism that the materials expenses was economized.

  • (2) Power Expenses: it had a year-on-year decrease of RMB0.80, which resulted in a decrease of RMB357 to the unit cost of molybdenum concentrate. Thanks to the implementation of peak-valley TOU electricity pricing mechanism since late April of current year, the unit average electricity price of molybdenum dressing had a significant decrease, which resulted in the decrease of power expenses.

  • (3) Labor Expenses: it had a year-on-year increase of RMB0.47, which resulted in a increase of RMB213 to the unit cost of molybdenum concentrate. It is mainly because all the units well fulfilled the performance appraisal indicators and the actual wage payments exceeded the budget.

  • (4) Manufacturing Expenses: it had a year-on-year decrease of RMB0.74, which resulted in a decrease of RMB334 to the unit cost of molybdenum concentrate. It is mainly because the safety expenses was lower than the budget.

  • (5) Subsidiary Management Fees: it had a year-on-year increase of RMB0.11, which resulted in a increase of RMB49 to the unit cost of molybdenum concentrate.

– 33 –

2015 FINANCIAL REPORT

APPENDIX I

2.3.4 Processing cost of ferromolybdenum

Number
Products Names
Cost structure
Actual income
in 2015
1
Molybdenum oxide
Direct materials expenses
222.5
2
Direct power expenses
68.4
3
Direct cost of labor
340.8
4
Manufacturing expenses
626.0
5
Sub-total
1,257.7
6
Ferromolybdenum
Direct materials expenses
3,138.5
7
Direct power expenses
35.2
8
Direct cost of labor
422.7
9
Manufacturing expenses
624.0
10
Sub-total
4,220.4
11
Vitriol
Direct materials expenses
168.3
12
Direct power expenses
188.7
13
Direct cost of labor
76.2
14
Manufacturing expenses
435.4
15
Sub-total
868.7
16
Comprehensive
processing of
ferromolybdenum
Direct materials expenses
3,587.1
17
Direct power expenses
330.5
18
Direct cost of labor
901.5
19
Manufacturing expenses
1,842.6
20
Administrative expenses
1,269.4
21
In Total
7,931.2		 Budget in
2015
167.5
69.0
327.0
682.6
1,246.1
3,780.1
34.1
392.1
570.3
4,776.5
171.3
170.1
80.7
480.6
902.7
4,169.1
308.7
860.2
1,905.7
1,136.9
8,380.6		 Actual Cost
in 2014
167.4
68.9
332.0
600.4
1,168.7
3,788.2
29.0
465.8
535.6
4,818.6
148.7
170.9
79.9
405.3
804.7
4,151.1
304.3
938.6
1,690.3
1,066.6
8,151.0		 Comparison
of Budgetary
Cost
54.9
-0.6
13.8
-56.6
11.6
-641.6
1.1
30.6
53.8
-556.1
-3.0
18.6
-4.5
-45.1
-34.0
-581.9
21.7
41.4
-63.1
132.5
-449.4		 Year-on-Year
Comparison
55.1
-0.5
8.8
25.5
89.0
-649.8
6.2
-43.1
88.4
-598.2
19.6
17.8
-3.6
30.2
64.0
-564.0
26.1
-37.1
152.4
202.8
-219.8

Year-on-year comparison: the comprehensive processing cost of ferromolybdenum in current year was RMB7,931, a decrease of RMB220 to the same period of last year (RMB8,151/ton), including:

The processing cost of molybdenum oxide increased by RMB89. It is mainly because the increase of national molybdenum reserve business resulted the increase of packing expenses and the decrease of molybdenum oxide output caused the increase of unit fixed cost;

– 34 –

2015 FINANCIAL REPORT

APPENDIX I

The processing cost of vitriol increased by RMB64. It is mainly because the vitriol output decreased on year-on-year basis that the unit fixed cost increased;

The processing cost of ferromolybdenum decreased by RMB598. It is mainly because the prices of such main raw materials as silica powder and aluminum granule fell that the cost decrease was caused.

Budget comparison: the comprehensive processing cost of ferromolybdenum in current year was RMB7,931, a decrease of RMB449 to the budget (RMB8,381), including:

The processing cost of molybdenum oxide increased by RMB11.6. It is because the increase of national molybdenum oxide reserves business resulted in the increase of packing cost and at the same time the increase (compared with the budgetary output) of molybdenum oxide output influenced the dilution of fixed cost. The factors above jointly had impact on the cost fluctuation;

The processing cost of vitriol decreased by RMB34. It is mainly because the sufficiency of roasting raw material and the stability of gas concentration resulted in high conversion ratio of vitriol and the output exceeded the budget that the dilution of fixed cost was influenced;

The processing cost of ferromolybdenum decreased by RMB556. It is mainly because all the prices of such main raw materials as silica powder and aluminum granule fell to some extent that the cost decrease was caused.

2.3.5 Production cost of scheelite

Ore Grinding Cost
Materials Power
Labor
Manufacturing		 Ore Dressing Concentrate
Budget Expenses Expenses Expenses Expenses Total Ratio Cost
(100%)
Actual cost in 2014 8.48 2.43 3.44 1.78 16.14 1,379 22,256
Budget in 2015 8.23 2.36 3.22 1.78 15.60 1,391 21,689
Actual cost in 2015 8.28 2.14 3.45 1.74 15.61 1,221 19,064
Comparison of actual cost and budget 0.05 -0.22 0.22 -0.03 0.01 -169 -2,625
Comparison of actual cost in current year
and that in last year -0.21 -0.29 0.00 -0.03 -0.52 -158 -3,192
Difference from budgetary cost 58 -269 270 -41 18 -2,643 -2,625
Difference from the cost in last year -252 -352 3 -39 -640 -2,552 -3,192

– 35 –

2015 FINANCIAL REPORT

APPENDIX I

Year-on-year comparison: the actual unit cost of Tungsten concentrate (100% content) in current year was RMB19,064, a decrease of RMB3,192 to the same period of last year, including:

  1. Ore grinding cost had a year-on-year decrease of RMB0.52, which caused that the production cost of tungsten concentrate decreased by RMB640.

The year-on-year decrease of ore grinding cost was mainly because the decrease of material expenses and power expenses. It is because all ore dressing units enhanced inventory management and optimized technological level and the Group adopted united bid mechanism that the materials expenses was economized. Thanks to the implementation of peak-valley TOU electricity pricing mechanism since late April of current year, the unit average electricity price of tungsten dressing had a significant decrease, which resulted in the decrease of power expenses.

  1. Ore concentration ratio had a year-on-year decrease of 158 ton, which caused that the unit production cost of tungsten concentrate decreased by RMB2,552.

Because the grade and the recovery rate of raw ore had a year-on-year increase, the ore concentration ratio had a year-on-year decrease.

Budget comparison: the actual unit cost of Tungsten concentrate (100% content) in current year was RMB19,064, a decrease of RMB2,625 to the budget unit cost, including:

  1. Ore grinding cost had a year-on-year increase of RMB0.01, which caused that the production cost of tungsten concentrate increased by RMB18.

  2. Ore concentration ratio had a year-on-year decrease of 169 ton, which caused that the unit production cost of tungsten concentrate decreased by RMB2,643.

Because the grade and the recovery rate of raw ore had a year-on-year increase, the ore concentration ratio had a year-on-year decrease.

– 36 –

2015 FINANCIAL REPORT

APPENDIX I

2.4. ANALYSIS OF GROSS PROFIT ACHIEVED

2.4.1 Comparative analysis of actual gross profit in 2015 and that in 2014

Comparative analysis of actual gross profit in 2015 and that in 2014

Unit: RMB0’000 yuan

Actual Income in 2014 Actual Income in 2014 Actual Income in 2015 Actual Income in 2015 Comparison year Comparison year
Sales
Sales Sales Unit Gross Sales Unit Unit Gross Volume Sales Cost
Product name Grade Volume price Cost profit Volume Price Cost profit influence influence influence Total
(ton) (ton)
– Domestic: .
Molybdenum raw ore 2,025,012 78 33 9,000 2,033,000 66 19 9,659 36 -2,288 2,911 659
Molybdenum
concentrate 47% 696 53,640 38,709 1,039 40 51,471 51,499 -0 -979 -9 -51 -1,039
Molybdenum oxide 53% 1,780 71,337 31,216 7,140 6,870 47,107 22,984 16,571 20,421 -16,645 5,655 9,431
Molybdenum oxide
granule 60% 1,566 74,823 35,105 6,219 258 50,374 36,253 364 -5,194 -631 -30 -5,854
Ferromolybdenum 60% 28,378 79,566 53,772 73,198 22,653 56,587 46,975 21,773 -14,766 -52,056 15,397 -51,425
Ammonium molybdate 1,075 84,374 68,508 1,706 797 67,792 62,035 459 -442 -1,321 516 -1,247
Molybdenum powder 49 167,833 161,694 30 169 133,204 124,075 155 74 -586 637 125
High-purity
molybdenum trioxide 20 110,135 89,658 41 68 74,565 46,399 191 98 -242 294 150
Molybdenum disulfide 10 109,865 123,077 -14 7 114,621 34,592 58 4 3 65 72
Tungsten concentrate 100% 2,281 130,068 19,751 25,159 4,706 85,496 20,245 30,704 26,751 -20,973 -233 5,545
Tungstic acid 100% 4,647 139,244 27,344 52,005 3,374 91,003 22,118 23,241 -14,250 -16,276 1,763 -28,763
APT 100% – 94,645 84,381 – 53 94,645 84,381 54 54 – – 54
Gold_(kg)_ 643 231,719 181,772 3,212 – 231,719 181,772 – -3,212 – – -3,212
Silver_(kg)_ 40,868 3,062 3,837 -3,167 – 3,062 3,837 – 3,167 – – 3,167
Electrolytic lead 18,259 11,812 13,495 -3,073 – 11,812 13,495 – 3,073 – – 3,073
Vitriol 59,201 69 551 -2,856 32,075 150 576 -1,366 1,308 260 -78 1,490
Iron powder – 209 202 – 3,475 209 202 3 3 – – 3
Nickel plate 100 117,928 112,498 54 – 117,928 112,498 – -54 – – -54
Processing charges of
molybdenum oxide 3,648 1,790 624 425 2,155 1,748 704 225 -174 -9 -17 -200

– 37 –

2015 FINANCIAL REPORT

APPENDIX I

Product name
Grade
Processing charges of
ferromolybdenum
Others
Hotel Incomes
Other business income
Sub-total
– Australian:
copper concentrates
Other business income
Sub-total
Operating revenue total		 Actual Income in 2014
Sales
Volume
Sales
price
Unit
Cost
(ton)
356
7,264
5,255
–
–
–
–
–
–
–
–
–
–		 Gross
profit
71
-1,846
1,235
412
169,992
105,778
3,325
109,103
279,095		 Actual Income in 2015
Sales
Volume
Unit
Price
Unit
Cost
(ton)
–
7,264
5,255
–
–
–
–
–
–
–
–
–		 Gross
profit
–
611
15
-57
102,662
51,154
3,624
54,777
157,439		 Sales
Volume
influence
-71
2,457
-1,220
-469
16,613
-54,625
299
-54,326
-37,712		 Comparison year
Sales
influence
Cost
influence
–
–
-110,772
26,828
–
–
–
–
–
–
-110,772
26,828		 Total
-71
2,457
-1,220
-469
-67,330
-54,625
299
-54,326
-121,656

In 2015, the Company achieved gross product profit of RMB1,574,390,000 representing year on year decrease of RMB1,216,560,000 specifically as follows:

  • (1) The change in sales of main products led to the increase of RMB158,450,000 in total profit this year.

  • (2) The year-on-year decrease in selling price of main products led to the decrease of RMB1,107,720,000 in total profit this year.

  • (3) The year-on-year decrease in the unit selling price of main products led to the increase of RMB268,280,000 in total profit this year.

  • (4) Other business led to the increase of RMB7,690,000 in total profit this year.

  • (5) The business in Australia led to the decrease of RMB543,260,000 in total profit this year.

– 38 –

2015 FINANCIAL REPORT

APPENDIX I

2.4.2 Comparative analysis of actual and budgetary gross profits in 2015

Contrastive Analysis of Actual and Budgetary Gross Profits in 2015

Unit: RMB0’000

Product name
Grade
– Domestic:
Molybdenum raw ore
Molybdenum
concentrate
47%
Molybdenum oxide
53%
Molybdenum oxide
granule
60%
Ferromolybdenum
60%
Ammonium molybdate
Molybdenum powder
High-purity
molybdenum trioxide
Molybdenum disulfide
Tungsten concentrate
100%
Tungstic acid
100%
APT
100%
Gold_(kg)
Silver(kg)_
Electrolytic lead
Vitriol
Iron powder
Nickel plate
Processing charges of
molybdenum oxide
Processing charges of
ferromolybdenum
Others
Hotel Incomes
Other business income
Sub-total
– Australian:
copper concentrates
Other business income
Sub-total
Operating revenue total		 Sales
Volume
(ton)
2,078,806
–
2,717
1,200
26,370
870
60
66
–
3,320
5,400
–
–
–
–
37,420
–
360
3,085
–
–
–
–		 Budget in 2015
Sales
price
Unit
Cost
78
34
51,471
51,499
58,348
42,732
72,650
51,244
76,867
57,140
80,693
77,149
163,248
153,216
102,906
111,169
114,621
34,592
106,838
17,734
116,344
25,518
94,645
84,381
231,719
0
3,062
0
11,812
0
65
903
209
202
91,026
90,171
1,534
951
7,264
0
–
–
–
–
–
–
–		 Gross
profit
9,020
–
4,243
2,569
52,021
308
60
-55
–
29,582
49,046
–
–
–
–
-3,133
–
31
180
–
235
672
-1,141
143,638
85,581
–
85,581
229,218		 Sales
Volume
(ton)
2,033,000
40
6,870
258
22,653
797
169
68
7
4,706
3,374
53
–
–
–
32,075
3,475
–
2,155
–
–
–
–		 Actual Income in 2015
Unit
Price
Unit
Cost
66
19
51,471
51,499
47,107
22,984
50,374
36,253
56,587
46,975
67,792
62,035
133,204
124,075
74,565
46,399
114,621
34,592
85,496
20,245
91,003
22,118
94,645
84,381
231,719
0
3,062
0
11,812
0
150
576
209
202
117,928
112,498
1,748
704
7,264
5,255
–
–
–
–
–
–		 Gross
profit
9,659
-0
16,571
364
21,773
459
155
191
58
30,704
23,241
54
–
–
–
-1,366
3
–
225
–
611
15
-57
102,662
51,154
3,624
54,777
157,439		 Sales
Volume
influence
-199
-0
6,484
-2,016
-7,332
-26
110
-2
58
12,345
-18,402
54
–
–
–
448
3
-31
-54
–
376
-657
1,084
-7,756
-34,427
3,624
-30,803
-38,559		 Comparison year
Sales
influence
Cost
influence
-2,304
3,142
–
–
-7,722
13,566
-575
387
-45,941
23,026
-1,028
1,204
-509
493
-193
440
–
–
-10,042
-1,181
-8,550
1,147
–
–
–
–
–
–
–
–
271
1,049
–
–
–
–
46
53
–
–
-76,546
43,327
–
–
–
–
–
–
-76,546
43,327		 Total
.
639
-0
12,329
-2,204
-30,248
150
94
246
58
1,122
-25,805
54
–
–
–
1,768
3
-31
45
–
376
-657
1,084
-40,976
-34,427
3,624
-30,803
-71,779

– 39 –

2015 FINANCIAL REPORT

APPENDIX I

In 2015, the Company achieved gross product profit of RMB1,574,390,000 representing year on year decrease of RMB717,790,000 specifically as follows:

  • (1) The change in sales of main products led to the decrease of RMB85,590,000 in total profit this year.

  • (2) The budget decrease in selling price of main products led to the decrease of RMB765,460,000 in total profit this year.

  • (3) The year-on-year decrease in the unit selling price of main products led to the increase of RMB433,270,000 in total profit this year.

  • (4) Other business led to the increase of RMB8,020,000 in total profit this year.

  • (5) The business in Australia led to the decrease of RMB308,030,000 in total profit this year.

Composition of Gross Profit in 2015:

==> picture [205 x 13] intentionally omitted <==

----- Start of picture text -----

Composition of Operating Gross Profit in 2015
----- End of picture text -----

==> picture [324 x 143] intentionally omitted <==

----- Start of picture text -----

copper concentrates
32.5%
Tungsten products
34.3%
Other products
7.9%
molybdenum products
25.3%
molybdenum products Tungsten products copper concentrates Other products
----- End of picture text -----

– 40 –

2015 FINANCIAL REPORT

APPENDIX I

Comparison of the compositions of actual income of main products in 2015, budgetary income of main products in 2015 and actual income of main products in 2014:

Table for Percentages of Main Products in total cost

Product Name
Molybdenum products
Tungsten products
Copper concentrates
Other products
Total		 Product Name
Molybdenum products
Tungsten products
Copper concentrates
Other products
Total		 Product Name
Molybdenum products
Tungsten products
Copper concentrates
Other products
Total		 Actual
Income in 2014
89,856
32.2%
77,163
27.6%
105,778
37.9%
6,297
2.3%
279,095
100%		 Budgetary
in 2015
59,326
25.9%
78,628
34.3%
85,581
37.3%
5,683
2.5%
229,218
100%		 Unit: RMB0’000
Actual
Income in 2015
39,797
25.3%
54,000
34.3%
51,154
32.5%
12,489
7.9%
157,439
100%		 Unit: RMB0’000
Actual
Income in 2015
39,797
25.3%
54,000
34.3%
51,154
32.5%
12,489
7.9%
157,439
100%
Comparison of the compositions of actual income in 2014, budgetary income
of main products in 2015 and actual income of main products in 2015:
90,000
60,000
30,000
0
Actual Income in 2014
Budgetary in 2015
Actual Income in 2015
molybdenum
products
Tungsten
products
copper
concentrates
Other
products
molybdenum
products
Tungsten
products
copper
concentrates
Other
products
Actual Income in 2014
Budgetary in 2015
Actual Income in 2015

2.5. ANALYSIS OF SALES TAX PAID

In 2015, the Group paid the sales tax and surtax of RMB242,473,400 in total, a decrease of RMB107,508,300 comparing with RMB349,981,700 for the same period of the last year. This was the result of year-on-year decrease of RMB52,899,200 in resource tax, RMB9,403,800 in urban maintenance and construction tax, RMB5,561,100 in educational surtax, RMB9,279,000 in tariff, and RMB31,286,100 in the tax paid by the subsidiary in Australia.

– 41 –

2015 FINANCIAL REPORT

APPENDIX I

In 2015, there was a decrease of RMB47,726,600 in sales tax and surtax comparing with the yearly budget of RMB290,200,000. The main reasons are: the resource tax of RMB160,696,600 for the year decreased by RMB60,703,700 compared with the budget; city maintenance and construction tax of RMB13,876,400 decreased by RMB8,703,600 compared with the budget; and the educational surtax of RMB8,087,900 for the year decreased by RMB5,062,100 compared with the budget.

2.6. ANALYSIS OF ADMINISTRATIVE EXPENSES PAID

Breakdown of Administrative Expenses of the Group in 2015

No.
Items
Domestic expenses
1
Labor cost
2
Office allowance
3
Travel expenses
4
Audit and consultancy expenses
5
Director’s fees
6
Car expenses
7
Entertainment fee
8
External payment for
technology development
9
Depreciation and amortization
10
Utility fees and blow-down costs
11
Taxes
12
Other expenses
13
Sub-total
14
Internal transferred technology
development fees
Overseas expenses
15
Labor cost
16
Audit and consultancy expenses
17
Technology development fee
18
Other expenses
Total Administrative Expenses		 Actual income
in 2014
43,124
11,545
499
436
5,117
174
348
490
1,375
6,972
1,408
1,806
1,676
31,846
11,278
1,711
1,188
212
1
309
44,835		 Actual income
in 2015
33,982
10,699
416
375
3,966
216
215
452
444
5,382
1,370
1,777
1,091
26,403
7,578
1,736
1,180
221
0
335
35,717		 Budgetary
income in 2015
32,051
9,026
863
250
2,250
187
215
276
1,205
3,958
1,471
1,334
1,884
22,919
9,132
617
617
32,668		 Comparison
of actual
administrative
expenses in
2015 and 2014
Comparison
of actual and
budgetary
administrative
expenses in 2015
-9,142
1,931
-846
1,673
-83
-447
-61
125
-1,151
1,716
42
29
-133
0
-38
176
-930
-761
-1,590
1,425
-38
-102
-29
443
-585
-793
-5,442
3,484
-3,700
-1,554
25
1,119
-8
1,180
9
221
-1
0
26
-282
-9,118
3,049		 Comparison
of actual
administrative
expenses in
2015 and 2014
Comparison
of actual and
budgetary
administrative
expenses in 2015
-9,142
1,931
-846
1,673
-83
-447
-61
125
-1,151
1,716
42
29
-133
0
-38
176
-930
-761
-1,590
1,425
-38
-102
-29
443
-585
-793
-5,442
3,484
-3,700
-1,554
25
1,119
-8
1,180
9
221
-1
0
26
-282
-9,118
3,049
3,049

– 42 –

2015 FINANCIAL REPORT

APPENDIX I

In 2015, the Company had the administrative expenses of RMB357,170,000, representing a decrease of RMB91,180,000 comparing with RMB448,350,000 for the same period of last year and an increase of RMB30,490,000 comparing with an annual budget of RMB326,680,000.

In the exception of internal transferred technology development fees, the change in administrative expenses is analyzed as follows:

The domestic administrative expenses for the year amounted to RMB264,030,000, representing a decrease of RMB54,420,000 comparing with RMB318,460,000 for the same period of last year. The reasons are mainly as follows:

  1. Labor expenses for the year amounted to RMB106,690,000, representing a decrease of RMB8,460,000 comparing with RMB115,450,000 for the same period of last year. This was the result of the decrease of RMB6,330,000 in the bonus for overseas merger and acquisition projects and decrease of RMB2,430,000 in labor cost;

  2. Audit and consultancy expenses for the year amounted to RMB39,660,000, representing a decrease of RMB11,510,000 comparing with RMB51,170,000 for the same period of last year. This was the result of year-on-year decrease in consultancy expenses for overseas merger and acquisition projects and for convertible bonds;

  3. Technology development fee for the year amounted to RMB4,440,000, representing a decrease of RMB9,300,000 comparing with RMB13,750,000 for the same period of last year;

  4. Depreciation and amortization for the year amounted to RMB53,820,000, representing a decrease of RMB15,900,000 comparing with RMB69,720,000 for the same period of last year. This was the result of disposing KUNYU and Yongning Gold & Lead;

  5. Other expenses for the year amounted to RMB10,910,000, representing a decrease of RMB5,850,000 comparing with RMB16,760,000 for the same period of last year. This was the result of the decrease in relocation compensation, land occupation compensation, landscaping expenses, publicity expenses, and maintenance expenses in Majuan Village;

  6. Director’s fees for the year amounted to RMB2,160,000, representing an increase of RMB420,000 comparing with RMB1,740,000 for the same period of last year. This was the result of more expenses arising from the first Board meeting not convened locally in 2015.

– 43 –

2015 FINANCIAL REPORT

APPENDIX I

Compared with annual budget: Domestic management expenses for the year amounted to RMB264,030,000, representing an increase of RMB34,840,000 comparing with RMB229,190,000 for the same period of last year. The main reasons of the increase are:

  1. Labor expenses for the year amounted to RMB106,990,000, representing an increase of RMB16,730,000 as compared with an annual budget of RMB90,260,000. This was the result of granting the extra-budgetary year-end bonus of RMB6,550,000 in 2015 and no yearly budget for labor cost of RMB9,490,000 in Yongning Gold & Lead;

  2. Travel expenses for the year amounted to RMB3,750,000, representing an increase of RMB1,250,000 as compared with an annual budget of RMB2,500,000. This was the result of the increase of RMB1,350,000 comparing with the yearly budget in Shimoke;

  3. Audit and consultancy expenses for the year amounted to RMB39,660,000, representing an increase of RMB17,160,000 as compared with an annual budget of RMB22,500,000. This was the result of the audit fee of RMB1,920,000 paid to DTT, the increase of RMB12,720,000 in the subsidiary in Hong Kong comparing with the budget, and the increase of RMB3,240,000 in consultancy expenses for overseas merger and acquisition projects;

  4. Director’s fees for the year amounted to RMB2,160,000, representing an increase of RMB290,000 as compared with an annual budget of RMB1,870,000. The main reason for the first board of directors was held in different places by 2015, costs incurred more;

  5. Entertainment fee for the year amounted to RMB4,520,000, representing an increase of RMB1,760,000 as compared with an annual budget of RMB2,760,000. This was the result of the increase of extra-budgetary and reform team related entertainment fee and no yearly budget for the entertainment fee of RMB400,000 in Mudulihao Business;

  6. Depreciation and amortization for the year amounted to RMB53,820,000, representing an increase of RMB14,250,000 as compared with an annual budget of RMB39,580,000. This was the result of no yearly budget for the depreciation and amortization of RMB14,500,000 in Yongning Gold & Lead;

  7. Taxes for the year amounted to RMB17,770,000, representing an increase of RMB4,430,000 as compared with an annual budget of RMB13,340,000. This was the result of the change in sales model leading to increase of stamp duty and no yearly budget for the stamp duty of RMB2,480,000 for transfer of convertible bonds, the stamp duty of RMB200,000 for loan contracts, the stamp duty of RMB1,430,000 in Yongning Gold & Lead, and the stamp duty of RMB230,000 in Shimoke;

– 44 –

2015 FINANCIAL REPORT

APPENDIX I

  1. Office allowance for the year amounted to RMB4,160,000, representing a decrease of RMB4,470,000 as compared with an annual budget of RMB8,630,000. This was the result of the decease of RMB3,220,000 in technology development fee included in service fees of Langchao and office allowance in Shimoke comparing with the yearly budget;

  2. Utility fees and blow-down costs for the year amounted to RMB15,200,000, representing a decrease of RMB1,020,000 as compared with an annual budget of RMB14,710,000. This was the result of the budgetary RMB1,500,000 for water resources management fee not incurred and no yearly budget for the utility fee of RMB560,000 in Yongning Gold & Lead;

  3. Technology development fee for the year amounted to RMB4,440,000, representing a decrease of RMB7,610,000 as compared with an annual budget of RMB12,050,000, technology development fee are primarily the following items:

Technology Internal
development transferred
fee paid technology
to external development
No. Research projects parties fee Total
1 Research on Integrated Safety Warning System for
Disasters in Exposed and Underground Rockmass
Based on High-precision Microseismic Monitor 9 9
2 Research on Application of Langchao ERP System in
Molybdenum Group 73 73
3 Research on the Integrated Technology for the Intensified
Mining of the Open Pit and Treatment of the Open
Areas in Sandaozhuang and Specification 47 47
4 Research on Integration and Boundary for Industrial
Indicators for Molybdenum and Tungsten in Mining of
Sandaozhuang Open Pit 3 3
5 Research on Application of Pre-factory Thickening of
Tungsten Dressing Backwater 21 134 155
6 Research on Improving Tungsten Dressing Recovery Rate
in Winter 66 264 330
7 Experimental Research on Processing of Chlorite
Molybdenum Raw Mines 13 13
8 Research on Improvement of the Recycle Rate of
Molybdenum Roughing 9 378 387
9 Research on Improvement of Homogeneity of Grinding
Graded Overflow Products 68 68

– 45 –

2015 FINANCIAL REPORT

APPENDIX I

Technology Internal
development transferred
fee paid technology
to external development
No. Research projects parties fee Total
10 Research on Application of Cone Crusher CH895 216 216
11 Research and Development of Technologies for Integrated
Recovery and Dressing of Tungsten Flotation Tailings
Fluorite 38 245 283
12 Research on Multiple-system Based Digital Intelligent
Control System of Molybdenum and Tungsten Open Pit 43 10 53
13 Research on Application of 10,000 tons System in
Integrated Recovery of No. 2 Dressing Company 17 779 796
14 Research on Application of Combined Processes of
Cyclone Unit and Thickener in Dehydration of
Scheelite Rough Concentrate 288 288
15 Research on Improvement of Recovery Rate in Scheelite
Selection Process 367 367
16 Experimental Research on High Concentration Flotation
Method for Scheelite Selection 765 765
17 Development and Application of Molybdenum Collector
Magnetizing Device 582 582
18 Research on Application of Equipment for Recycling
Steel Ball from Ores Discharged by Grinding Machine 21 517 538
19 Development of Audit Breakdown System 101 101
20 Research of Thickening Process for Integrated Copper
Recovery of No. 3 Dressing Company 572 572
21 Experimental Research on Dephosphorization of
Molybdenum Concentrate 21 21
22 Secondary Research and Application of 3DMINE in
Sandaozhuang Open Pit 71 71
23 Research on Optimization of Transport and Crushing
System in Sandaozhuang Open Pit of Mine Company 87 1,221 1,308
24 Research on Application of All-process Automation of
No. 3 Dressing Company 20 20
25 Research and Application of Improvement of Scheelite
Rough Concentrate Grade 69 69
26 Research on Fine Grain Molybdenite Flotation 126 126
27 Research on Treatment Technology for Deep Open Areas
below 1,300 in Division D of Sandaozhuang Open Pit 40 40

– 46 –

2015 FINANCIAL REPORT

APPENDIX I

No.
Research projects
28
Research on Optimization of Safe Energy Conservation of
Substation in Sandaozhuang Open Pit
29
Research on Optimized Application of Carbon-Free
Molybdenum Concentrate Calcination Process System
30
Australia
Total		 Technology
development
fee paid
to external
parties
444		 Internal
transferred
technology
development
fee
14
709
0
7,578		 Total
14
709
0
8,022
  1. Other fee incurred this year was RMB10.91 million, representing a decrease of RMB7.93 million comparing with the yearly budget of RMB18.84 million. This was mainly due to the unpredictable fee of RMB10 million in the yearly budget and the unpredictable fee actually incurred included in corresponding fees. With this factor excluded, other expenses actually incurred was increased by RMB2.07 million comparing with the budget for maintenance cost and procurement cost for tea and artware of Mudulihao Business leading to other expenses more than budgeted and no budget for RMB810,000 in the subsidiary in Hong Kong and RMB120,000 in Yongning Gold & Lead.

2.7. ANALYSIS OF FINANCIAL EXPENSES

The financial expenses was RMB46.18 million this year, representing a decrease of RMB135.52 million comparing with RMB181.7 million in the same period of the last year due to risk control, reduction of general wealth management products, increase of structural deposits procurement this year and remarkable year-on-year increase in interest income, and representing a decrease of RMB142.39 million comparing with the yearly budget of RMB188.57 million in 2015 for the conversion of convertible bonds of RMB4.9 billion one month in advance leading to the decrease of RMB140 million in actual convertible bonds cost comparing with the budget in 2015.

– 47 –

2015 FINANCIAL REPORT

APPENDIX I

2.8. ANALYSIS ON ASSETS IMPAIRMENT LOSS

Unit: RMB0’000

Items
Loss on bad debts
Loss from impairment of
inventories
Impairment loss of fixed assets
Loss from disposal of subsidiary
(note)
Total		 Actual loss
in 2015
659
6,196
0
16,189
23,044		 Actual loss
in 2014
2,002
6,001
2,552
10,556		 Increase/
decrease
-1,343
194
-2,552
16,189
12,488		 Percentage
of Increase/
decrease
-67%
3%
-100%
118%

The assets impairment loss was RMB230.44 million this year, representing an increase of RMB124.88 million comparing with the RMB105.56 million in the same period last year. This was mainly due to the loss from disposal of Yongning Gold & Lead.

2.9. ANALYSIS ON RETURN ON INVESTMENT ACHIEVED

The Group achieved the return on investment of RMB160.26 million this year, representing a decrease of RMB371.5 million or 70% comparing with that in 2014 due to the decrease in return on disposing equity in KUNYU the last year and the return on equity in Yulu Mining and Luoyang Fuchuan this year, and representing a decrease of RMB221.07 million or 58% comparing with budget for 2015 due to the decrease in return on equity in Yulu Mining and Luoyang Fuchuan and the decrease in return on wealth management which was the result of risk control, reduction of general wealth management products and increase of structural deposits procurement this year.

– 48 –

2015 FINANCIAL REPORT

APPENDIX I

2.10. ANALYSIS ON NON-OPERATING INCOME AND EXPENSES

  1. Non-operating income:
Items
Profits from disposal of
non-current assets
Government subsidies
Gains from debt restructuring
Merger under non-common
control
Others
Total		 Actual
income in
2015
408
4,513
94
5,015		 Actual
income in
2014
2,167
4,133
182
184
6,666		 Budgetary
income in
2015
2,500
5
2,505		 Increase/
decrease
from actual
income in
2014
-1,759
380
-182
0
-90
-1,651		 Increase/
decrease
from
budgetary
income in
2015
408
2,013
0
89
2,510

In 2015, the non-operating income was RMB50.15 million, representing a decrease of RMB16.51 million comparing with RMB66.66 million for the same period of last year. This was the result of the year-on year decrease of RMB17.59 million in profits from disposal of non-current assets in 2015 and year-on-year decrease of RMB1.82 million in profit from liability restructuring.

In 2015, the non-operating income was RMB50.15 million, representing an increase of RMB25.1 million comparing with the budget of RMB25.05 million. This was mainly due to the profits from disposal of non-current assets in 2015 being RMB4.08 million which was not covered in the yearly budget; in addition, there was an increase of RMB20.13 million in government subsidies as compared with the budget.

– 49 –

2015 FINANCIAL REPORT

APPENDIX I

  1. non-operating expenses:
Items
Loss from disposal of
non-current assets
Donation
Loss on arrangement
Others
Total		 Actual
expenses in
2015
4,212
1,804
2,852
592
9,460		 Actual
expenses in
2014
5,106
415
158
5,679		 Budgetary
expenses in
2015
7,909
1,711
446
10,066		 Increase/
decrease
from actual
expenses in
2014
-894
1,389
2,852
434
3,781		 Increase/
decrease
from
budgetary
expenses in
2015
-3,697
93
2,852
146
-606

In 2015, the non-operating expenses was RMB94.6 million, representing an increase of RMB37.81 million comparing with RMB56.79 million for the same period of last year. This was mainly due to the exemption of dividends receivable of RMB28.52 million from KUNYU and year-on-year donation of RMB13.89 million. In addition, the loss from disposal of non-current assets was deceased by RMB8.94 million for the same period last year.

The non-operating expenses was decreased by RMB6.06 million comparing with the budget in 2015 mainly due to the decrease of RMB36.97 million in loss from disposal of non-current assets comparing with the budget. In addition, the loss on liability restructuring was RMB28.52 million in 2015, and such non-operating expenses was not covered in the yearly budget.

– 50 –

2015 FINANCIAL REPORT

APPENDIX I

2.11. ANALYSIS OF NET PROFIT ACHIEVED

Net profit achieved in the year was RMB703.11 million, representing a decrease of RMB1,097.09 million or 61% from 1,800.20 million for the same period last year, and a decrease of RMB634.85 million or 47% from RMB1,337.96 million of the budget in 2015. It was mainly due to:

  1. The gross profit on sales was decreased by RMB1,216.56 million comparing with the same period last year and by RMB717.79 million comparing with the budget. This was the result of the decrease in gross profit due to decrease in product selling price. Affected by continuous decrease of market price of main products, the overall gross profit of the Group was decreased by 4.4 percentage points as compared with the same period last year. However, the gross profit of products was increased by 1% as compared with the same period last year as a result of product structure adjustment in domestic business and sale of gold, silver and electrolytic lead business with relatively low gross profit margin.

  2. Business taxes and levies in the period was RMB242.47 million, representing a decrease of RMB107.51 million or 31% over the same period last year, and a decrease of RMB47.73 million or 16% comparing with the budget, which was mainly due to the change of the national resources tax policy: changing from fixed levies on amounts to levies on fixed rate ad valorem on company’s resources, resulting in the decrease in tax, and also due to the price decline of products in the period.

  3. Selling expenses in the period was RMB84.67 million, representing a decrease of RMB15.14 million or 15% over the same period last year, and a decrease of RMB17.45 million or 17% comparing with the budget, mainly due to the decrease in the transportation price of relevant products during this period.

  4. Administrative expenses in the period was RMB357.17 million, representing a decrease of RMB91.18 million or 20% over the same period last year, which was mainly due to the decrease in research and development expenditure as compared to the same period last year and the impact of the changes of consolidation scope due to the disposal of a subsidiary in 2015, representing an increase of RMB30.50 million or 9% comparing with the budget. This was mainly due to the increase in internal transferred technology development fees.

  5. Financial expenses in the period was RMB46.18 million, representing a decrease of RMB135.52 million over the same period last year, and a decrease of RMB142.39 million comparing with the budget. This was mainly due to risk control, reduction of general wealth management products, increase of structured deposits purchased, and remarkable increase of interest income this year.

– 51 –

2015 FINANCIAL REPORT

APPENDIX I

  1. Impairment losses of assets was RMB230.44 million, representing an increase of RMB124.88 million for the same period last year, which was mainly due to the loss from disposal of Yongning Gold & Lead this year.

  2. The return on investment was RMB116.59 million in the current period, representing a decrease of RMB415.16 million over the same period last year. It was mainly due to the return on equity transfer from sale of equity in the subsidiary last year and no such return this period and the decrease of RMB264.73 million comparing with the budget, mainly due to the decrease of return on general wealth management and return on equity in Yulu Mining and Luoyang Fuchuan.

  3. Non-operating income in the current period was RMB50.15 million, representing a decrease of RMB16.50 million over the same period last year. It was mainly due to the decrease in profits of disposal of non-current assets in 2015 as compared with the same period of last year, and the increase of RMB25.11 million comparing with the budget, mainly due to the increase of government subsidies.

  4. Non-operating expenses in the current period was RMB94.60 million, representing an increase of RMB37.81 million over the same period last year, such increase was mainly attributable to the waiver of dividends receivable from Kunyu Mining of RMB28.52 million in the period, and the decrease of RMB6.06 million comparing with the budget, mainly due to the decrease in loss from non-current asset disposal comparing with the budget.

  5. Effect of income tax expenses: the income tax expenses of the Group in the period amounted to RMB-20.29 million, representing a decrease of RMB368.15 million from RMB347.86 million for the same period last year, and a decrease of RMB372.65 million comparing with the budget. Such decrease was mainly due to the decrease in profit in this period as compared with the same period last year and the recognition of deferred income tax assets due to the loss of equity investment and debt arising from the disposal of Luomu Precious Metals and Yongning Gold & Lead.

– 52 –

2015 FINANCIAL REPORT

APPENDIX I

CHAPTER 3 CHANGES IN BALANCE SHEET

Contrastive Analysis of Assets and Liabilities

Unit: RMB0’000

Items
Current assets:
Bank Balances and Cash
Financial assets at fair value through
profit or loss
Bills receivable
Accounts receivable
Prepayments
Interests receivable
Dividends receivable
Other receivables
Inventories
Other current assets
Total current assets
Non-current assets:
Available-for-sale financial assets
Long-term equity investment
Fixed assets
Construction in progress
Inventories
Intangible assets
Long-term deferred expenses
Deferred income tax assets
Other non-current assets
Total non-current assets
Total assets		 31 December
2015
1,041,448
484
60,208
74,425
22,711
8,630
12,006
59,250
294,014
1,573,176
237,317
126,051
449,525
47,868
27,506
383,603
12,447
41,294
189,267
1,514,877
3,088,053		 31 December
2014
932,558
115,814
85,136
27,245
5,530
6,123
4,895
43,275
255,910
1,476,486
0
148,457
498,350
37,252
30,774
391,584
11,522
30,783
180,280
1,329,002
2,805,488		 Increase/
Decrease
108,890
484
-55,606
-10,711
-4,535
3,100
-6,123
7,111
15,975
38,104
96,690
237,316
-22,406
-48,825
10,615
-3,268
-7,981
925
10,511
8,987
185,875
282,565		 Percentage
of Increase/
Decrease
12%
-48%
-13%
-17%
56%
-100%
145%
37%
15%
7%
48,156,663%
-15%
-10%
28%
-11%
-2%
8%
34%
5%
14%
10%

– 53 –

2015 FINANCIAL REPORT

APPENDIX I

Items
Current liabilities:
Short-term borrowings
Financial liabilities at fair value
through profit or loss
Notes payable
Accounts payable
Receipts in advance
Payroll payable
Taxes payable
Interests payable
Dividends payable
Other payables
Non-current liabilities due within one
year
Other current liabilities
Total current liabilities
Non-current liability:
Long-term borrowings
Bonds payable
Provision
Other non-current liabilities
Total non-current liabilities
Total liabilities		 31 December
2015
290,620
150,591
78,273
23,738
3,778
11,352
-12,361
5,394
2,789
20,840
249,490
52,390
876,894
194,159
200,000
29,091
6,241
429,490
1,306,384		 31 December
2014
30,595
99,869
15,690
19,279
7,678
13,778
20,779
4,706
2,789
25,331
57,828
1,665
299,987
416,092
543,872
28,095
2,988
991,047
1,291,034		 Increase/
Decrease
260,025
50,722
62,583
4,458
-3,900
-2,426
-33,140
688
–
-4,491
191,662
50,724
576,906
-221,933
-343,872
996
3,253
-561,557
15,349		 Percentage
of Increase/
Decrease
850%
51%
399%
23%
-51%
-18%
-159%
15%
0%
-18%
331%
3,046%
192%
-53%
-63%
4%
109%
-57%
1%

– 54 –

2015 FINANCIAL REPORT

APPENDIX I

Items
Shareholders’ equity:
Share capital
Capital reserve
Other comprehensive income
Special reserve
Surplus reserve
Undistributed profits
Total equity attributable to the
shareholders of the parent company
Minority interests
Total shareholders’ equity
Total liabilities and shareholders’
equity		 31 December
2015
337,744
1,072,031
-63,249
11,520
78,605
298,698
1,735,348
46,321
1,781,669
3,088,053		 31 December
2014
101,523
952,987
-20,855
27,192
70,490
332,020
1,463,357
51,096
1,514,453
2,805,488		 Increase/
Decrease
236,221
119,044
-42,394
-15,672
8,115
-33,322
271,991
-4,775
267,216
282,565		 Percentage
of Increase/
Decrease
233%
12%
203%
-58%
12%
-10%
19%
-9%
18%
10%

3.1. EXPLANATIONS ON CHANGES IN TOTAL ASSETS

As at 31 December 2015, total assets of the Company amounted to RMB30,880.53 million, representing an increase of RMB2,825.65 million or 10% as compared with the beginning of the year, including RMB15,731.76 million of current assets, RMB15,148.77 million of non-current assets, representing an increase of RMB966.90 million or 7% and a decrease of RMB1,858.75 million or 14% respectively as compared with the beginning of the year.

The increase in the current assets was mainly attributable to the increase in bank balances and cash resulting from production and operation and issuance of short-term financing instruments. The specific analysis is as follows:

  • (1) The main reason for increase of bank balances and cash was discount of notes and normal operation;

  • (2) The main reason for decrease of notes receivable was discount of notes for financing;

– 55 –

2015 FINANCIAL REPORT

APPENDIX I

  • (3) The main reason for inventory increase was increase of product inventory during the current period;

  • (4) The main reason for increase of other current assets was recovery of due wealth management products of banks. The main reason for increase of non-current assets was increase of external equity investment and assets management plan of the Group during the current period.

3.2. EXPLANATIONS ON CHANGES IN TOTAL LIABILITIES

As at 31 December 2015, total liabilities of the Company amounted to RMB13,063.84 million, representing an increase of RMB153.49 million or 1% as compared with the beginning of the year. The current liabilities amounted to RMB8,768.94 million, representing an increase of RMB5,769.06 million or 192% from RMB2,999.87 million of the beginning of the year, which was mainly due to the increase in short-term financing and long-term borrowings due within one year. The non-current liabilities amounted to RMB4,294.90 million, representing a decrease of RMB5,615.57 million or 57% as compared with the beginning of the year, which was mainly due to the decrease in long-term borrowings and bonds payable resulting from the conversion of A share convertible corporate bonds issued in 2014 and the transfer of long-term borrowings into current liabilities.

3.3. EXPLANATIONS ON CHANGES IN EQUITY ATTRIBUTABLE TO SHAREHOLDERS OF THE PARENT COMPANY

As at 31 December 2015, the total equity attributable to the shareholders of parent company was RMB17,816.69 million, representing an increase of RMB2,672.16 million or 18% as compared with RMB15,144.53 million at the beginning of the year, which was mainly due to the conversion of convertible corporate bonds in the year.

– 56 –

2015 FINANCIAL REPORT

APPENDIX I

CHAPTER 4 MAIN FINANCIAL INDICATORS

Comparison of Main Financial Indicators

Percentage
Increase/ of Increase/
Items 2015 2014 Decrease Decrease
Indicators for solvency
Assets liability ratio 42% 46% -0.04 -8%
Current ratio 179% 492% -3.13 -64%
Quick ratio 173% 478% -3.05 -64%
Indicators for assets liability
management capability
Total asset turnover ratio 14% 27% -0.12 -47%
Current asset turnover ratio 28% 61% -0.33 -55%
Inventory turnover ratio 5.12 6.18 -1.06 -17%
Accounts receivable turnover ratio 5.26 8.04 -2.78 -35%
Indicators for profitability
Net profit ratio on sales 17% 27% -0.10 -38%
Total return on assets 2.3% 7.2% -0.049 -68%
Net return on assets 4.1% 13% -0.09 -68%
Earnings per share_(RMB/share)_ 0.05 0.12 -0.07 -58%
Net asset per share_(RMB/share)_ 1.06 2.98 -1.93 -65%

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2015 FINANCIAL REPORT

APPENDIX I

4.1. SOLVENCY INDICATORS

4.1.1 Assets liability ratio

Assets liability ratio in 2015 was 42%, representing a decrease of 4 percentage points from 46% last year, which was mainly due to the conversion of A share convertible corporate bonds of 2014.

4.1.2 Current ratio and quick ratio

Current ratio in the year was 179%, representing a decrease of 64% from 492% last year; quick ratio was 173%, representing a decrease of 64% from 478% last year, which was mainly due to the due long-term borrowings of USD306 million adjusted to short-term borrowings.

4.2 VARIOUS FINANCIAL INDICATORS REFLECTING CAPABILITY OF ASSET AND LIABILITY MANAGEMENT

The total asset turnover ratio and current asset turnover ratio for the period were 14% and 28%, representing a year-on-year decrease of 47% and 55% respectively, the accounts receivable turnover ratio was 5.26 times, representing year-on-year decrease of 2.78 times due to the year-on-year decrease of market price of molybdenum and tungsten products. In the context of downturn of molybdenum and tungsten product market, the inventory turnover ratio was 5.12 times, representing a year-on-year decrease of 1.06 times, reflecting an increase in pressure from destocking compared with the same period last year.

4.3 VARIOUS FINANCIAL INDICATORS REFLECTING PROFITABILITY

Among the financial indicators reflecting profitability this year, year-on-year decreases occurred in net return on sales, total return on assets, net return on assets, net asset per share and earnings per share, mainly due to year-on-year decrease in market price of main products of the Company.

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2015 FINANCIAL REPORT

APPENDIX I

CHAPTER 5 CHANGES IN CASH FLOW

Net increase in cash and cash equivalents in the year was RMB3,356.58 million, representing a decrease of RMB464.42 million from RMB3,821.00 million last year, including a decrease of RMB2,276.28 million in net cash flow from operating activities, an increase of RMB3,913.75 million in net cash flow from investing activities, a decrease of RMB2,215.05 million in net cash flow from financing activities, an increase of RMB113.16 million in effect of foreign exchange rate changes on cash and cash equivalents.

In this year, net cash flow from operating activities was RMB1,358.77 million, net cash flow from investing activities was RMB-165.51 million, net cash flow from financing activities was RMB2,074.20 million, and effect of foreign exchange rate changes on cash and cash equivalents was RMB89.12 million.

Comparison of Cash Flow Statement

Unit: RMB0’000

Items
I.
Cash flow from operating activities:
Cash received from sales of goods and
provision of services
Refunds of taxes
Cash inflows from other operating
activities
Sub-total of cash inflows from operating
activities
Cash payments for goods purchased and
services received
Cash payments to and on behalf of
employees
Payments of various types of taxes
Cash outflows from other operating
activities
Sub-total of cash outflows from
operating activities
Net cash flow from operating activities		 2014
785,962
11,959
797,921
237,222
69,188
109,280
18,726
434,416
363,505		 2015
462,721
48,870
511,592
188,783
63,992
90,909
32,030
375,715
135,877		 Increase/
Decrease

-323,240
36,912
-286,329
-48,439
-5,196
-18,371
13,304
-58,701
-227,628		 Percentage
of Increase/
Decrease
-41.13%
308.66%
-35.88%
-20.42%
-7.51%
-16.81%
71.05%
-13.51%
-62.62%

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2015 FINANCIAL REPORT

APPENDIX I

Items
II. Cash flows from investing activities:
Cash receipts from disposals and recovery
of investments
Cash receipts from investment income
Cash receipts from disposals of fixed
assets, intangible assets and other
long-term assets
Net cash receipts from disposals of
subsidiaries and other business units
Cash inflows from other investing activities
Sub-total of cash inflows from investing
activities
Cash payments to acquire or construct
fixed assets, intangible assets and other
long-term assets
Cash payments to acquire investments
Net cash payments for acquisitions of
subsidiaries and other business units
Other cash payment relating investing
activities
Sub-total of cash outflows from investing
activities
Net cash flow from investing activities		 2014
466,836
29,230
7,323
81,437
3,420
588,247
60,157
922,900
13,116
996,172
-407,926		 2015
1,222,331
25,087
1,252
0
16,371
1,265,041
59,298
1,212,285
9
10,000
1,281,592
-16,551		 Increase/
Decrease

755,495
-4,143
-6,072
-81,437
12,951
676,794
-858
289,385
9
-3,116
285,419
391,375		 Percentage
of Increase/
Decrease
161.83%
-14.18%
-82.91%
-100.00%
378.68%
115.05%
-1.43%
31.36%
100.00%
-23.76%
28.65%
-95.94%

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2015 FINANCIAL REPORT

APPENDIX I

Items
III. Cash flows from financing activities:
Cash receipts from investments
Cash receipts from borrowings
Other cash receipts relating to financing
activities
Sub-total of cash inflows from financing
activities
Cash repayments of borrowings
Cash payments for distribution of dividends
or profits and settlement of interests
Other cash payments relating to financing
activities
Sub-total of cash outflows from
financing activities
Net cash flow from financing activities
IV. Effect of foreign exchange rate changes
on cash and cash equivalents
V. Net increase in cash and cash equivalents
Add: Opening balance of cash and cash
equivalents
VI. Closing balance of cash and
cash equivalents		 2014
532,640
99,209
631,849
62,882
97,426
42,616
202,924
428,925
-2,404
382,100
180,458
562,558		 2015
728,955
148,257
877,212
428,542
133,335
107,915
669,792
207,420
8,912
335,658
562,558
898,216		 Increase/
Decrease

196,315
49,048
245,363
365,660
35,909
65,299
466,868
-221,505
11,316
-46,442
382,100
335,658		 Percentage
of Increase/
Decrease
36.86%
49.44%
38.83%
581.50%
36.86%
153.22%
230.07%
-51.64%
-470.69%
-12.15%
211.74%
59.67%

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2015 FINANCIAL REPORT

APPENDIX I

5.1. NET CASH FLOW FROM OPERATING ACTIVITIES

In this year, net cash flow from operating activities was RMB1,358.77 million, representing a decrease of RMB2,276.28 million or 62.62% as compared with the same period last year, mainly due to significant decrease in revenue as a result of the substantial decrease in major products’ prices, resulting in the decrease in net cash flow from operating activities.

5.2. NET CASH FLOW FROM INVESTING ACTIVITIES

  1. In this year, net cash flow from investing activities was RMB-165.51 million, representing an increase of RMB3,913.75 or 95.94%. The reasons for the change are mainly due to:

  2. (1) In this year, cash receipt from recovery of investments was RMB12,223.31 million, representing an increase of RMB7,554.95 million, mainly due to the increase in cash receipt from wealth management in this year as compared with that of last year.

  3. (2) In this year, cash receipt from investment income was RMB250.87 million, representing a decrease of RMB41.43 million as compared with the same period last year, mainly due to the decrease in dividend receipt from Yulu Company in this year as compared with the same period last year.

  4. (3) In this year, cash receipt from disposal of fixed assets, intangible assets and other long-term assets was RMB12.52 million, representing a decrease of RMB60.72 million, mainly due to cash receipt from disposal of the office in Luoyang in the same period last year while no such cash received this year.

  5. (4) In this year, cash receipt from disposal of subsidiaries and other business units decreased by RMB814.37 million as compared with the same period last year, mainly due to cash receipt from disposal of Kunyu Company in the same period last year while no such cash received this year.

  6. (5) In this year, other cash inflow relating to investing activities was RMB163.71 million, representing an increase of RMB129.51 million, mainly due to cash receipt from disposal of subsidiaries in this year.

  7. (6) In this year, cash payment to acquire or construct fixed assets, intangible assets and other long-term assets of the Company remained flat as compared to that of last year.

  8. (7) In this year, cash payment to acquire investments was RMB12,122.85 million, representing an increase of RMB2,893.85 million as compared with the same period last year, mainly due to the increase in size of purchase of wealth management products this year as compared with that of last year.

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2015 FINANCIAL REPORT

APPENDIX I

5.3. NET CASH FLOW FROM FINANCING ACTIVITIES

In this year, net cash flow from financing activities was RMB2,074.2 million, representing a decrease of RMB2,215.05 million or 51.64% as compared with RMB4,289.25 million of the same period last year. The reasons for the change are mainly due to:

  • (1) In this year, cash receipt from borrowings was RMB7,289.55 million, representing an increase of RMB1,963.15 million, mainly due to the significant amount of low-cost funds borrowed by the Company in this year.

  • (2) In this year, other cash receipt relating to financing activities was RMB1,482.57 million, representing an increase of RMB490.48 million, mainly due to cash receipt from gold leasing business of RMB1,040 million and RMB443 million conducted with Industrial and Commercial Bank of China and China Construction Bank, respectively, by the Company this year, totaling RMB1,483 million, while cash receipt from gold leasing business of RMB888 million and RMB103 million conducted with Industrial and Commercial Bank of China and HSBC, respectively, by the Company last year, totaling RMB992 million.

  • (3) In this year, cash repayment of borrowings was RMB4,285.42 million, representing an increase of RMB3,656.6 million as compared with the same period last year, mainly due to significant amount of low-cost funds borrowed by the Company in this year and the repayment of all discounted commercial paper of RMB1,400 million at banks due this year.

  • (4) In this year, cash payments for distribution of dividends or profits or settlement of interest expenses were RMB1,333.35 million, representing an increase of RMB359.09 million as compared with the same period last year, mainly due to the increase in dividends of RMB303 million paid by the Company as compared with the same period last year.

  • (5) In this year, other cash payment relating to financing activities was RMB1,079.15 million, representing an increase of RMB652.99 million as compared with the same period last year, mainly due to the increase in repayment of funds in relation to the gold leasing business as compared with the same period last year.

Please consider the above report.

China Molybdenum Co., Ltd.*

23 March 2016

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2015 WORK REPORT OF INDEPENDENT DIRECTORS

APPENDIX II

China Molybdenum Co., Ltd.

2015 Work Report of Independent Directors

As the independent Directors of China Molybdenum Co. , Ltd. * (hereinafter referred to as the “ Company ”), we have honestly, diligently, responsibly and independently performed the duties of independent Directors in strict compliance with the Company Law, the Provisions on Strengthening the Protection of Rights and Interests of Public Shareholders, the Rules Governing the Listing of Stocks on Shanghai Stock Exchange, the Guidelines on the Establishment of Independent Directorship of Listed Companies and other relevant laws, regulations, regulatory documents, and the stipulations and requirements of the Articles of Association of China Molybdenum Co. , Ltd. *, the Working Rules for Independent Directors and relevant rules. We have actively attended the relevant meetings, issued our independent opinions in an objective and fair manner on significant matters of the Company, played an important role as the independent Directors and safeguarded the legal interest of the Company and Shareholders and, in particular, the minority Shareholders. The performance description for the year 2015 is set out as follows:

I. BASIC INFORMATION OF THE INDEPENDENT DIRECTORS

(i) Personal working experience, professional background and part-time situation

  1. Bai Yanchun: has been an independent non-executive Director of the Company, chairman of both of the nomination committee and remuneration committee and a member of the strategic committee since August 2012. He is currently a member of All China Lawyers Association holding a practising solicitor certificate in the PRC. Mr. Bai graduated from China University of Political Science and Law with a bachelor’s degree of laws in 1988. He studied the postgraduate courses at the Center for Chinese and American Studies of Johns Hopkins University in the United States in 1992 and obtained a master’s degree from the School of Law of Stanford University in the United States in 2003. From 1988 to 1992, he worked at the China Council for the Promotion of International Trade. In 1993, he participated in the founding of King &Wood Mallesons and has been engaging in professional legal services such as securities, mergers and acquisitions. Mr. Bai currently serves as an arbitrator of China International Economic and Trade Arbitration Commission. Mr. Bai was appointed as a member of the ninth session of Issuance Examination Committee of China Securities Regulatory Commission in 2008. Mr. Bai currently engages in legal services for Commerce & Finance Law Offices in Beijing.

  2. Xu Shan: has been an independent non-executive Director of the Company since August 2012. He is also the chairman of the audit committee and a member of the nomination committee of the Company. He is a PRC certified public accountant and a PRC registered tax agent. Mr. Xu graduated from the Department of Computing

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2015 WORK REPORT OF INDEPENDENT DIRECTORS

APPENDIX II

and Systematic Science of Xiamen University in 1991 and obtained a doctorate degree in management (accounting) from Xiamen University in 2001. At present, he concurrently acts as the chairman of Xiamen Tianjian Consulting Firm (廈門天 健諮詢公司) and an independent director of Sunshine Insurance Group Corporation Limited (陽光保險集團股份有限公司) , Beijing Kalends Science &Technology Company Limited (北京昆侖萬維科技股份有限公司) and Xin Hee Co., Ltd. (欣賀股 份有限公司) , a part-time professor of the MPAcc Program of Xiamen University and a consultant of the Private Banking Center of Xiamen Branch of China Construction Bank. Mr. Xu served as the manager of Xiamen Nongxin Accounting Firm (廈門農信 會計師事務所) from June 1994 to August 1996, the manager of the Accounting Firm of Xiamen University (廈門大學會計師事務所) from September 1996 to December 1998 as well as a director and partner of Tianjian Zhengxin Accounting Firm (天健 正信會計師事務所) from December 1998 to December 2011. He concurrently served as a special member of the ninth session of Issuance Examination Committee of China Securities Regulatory Commission from 2007 to 2008.

  1. Cheng Gordon: has been an independent non-executive Director of the Company since August 2012 and he is also a member of the audit committee, nomination committee and remuneration committee. Mr. Cheng graduated from the University of Sydney (Australia) with a bachelor degree in commerce in 1996 and a bachelor degree in law in 1998. He is the founder and partner of GD China Clean Energy Capital Partners. He also served as the senior advisor of Deutsche Bank Global Climate Change Advisors and United Nations Industrial Development Organization (UNIDO) in China. From 2010 to 2011, Mr. Cheng had been the China Chief Representative of LaSalle Fund. Prior to 2010, he served as the Chief Financial Officer and Chief Investment Officer of Sunshine 100 Real Estate Development Group (“ Sunshine 100 ”). Before joining Sunshine 100, he served as the Executive Vice President of Vimicro International Corporation (“ Vimicro ”), which was successfully listed on NASDAQ in the United States in 2005 under his leadership. Before joining Vimicro, he has worked at the investment banking department of globally renowned J.P. Morgan and Credit Suisse. Mr. Cheng has extensive experience in financing, investing as well as merger and acquisitions, both globally and in China.

(ii) Statement on whether the independence is affected

We are qualified as the independent Directors. As the independent Directors of the Company, none of us holds any duties other than that of the independent Directors, or holds any duties in major Shareholders’ units of the Company. There is no relationship between us and the Company and its major Shareholders that may have impact on our independent and objective judgments.

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2015 WORK REPORT OF INDEPENDENT DIRECTORS

APPENDIX II

II. OVERVIEW OF THE PERFORMANCE OF DUTIES BY THE INDEPENDENT DIRECTORS FOR THE YEAR

Since we were appointed as independent Directors of the Company, we were diligent and responsible to actively attend the Board meetings and meetings of specialized committees convened by the Company, carefully reviewed meeting materials, participated in the discussion of various proposals, and gave our clear opinions on the meeting agendas, thus contributing to sound decisionmaking of the Board.

  • (i) Attendance at the general meetings, Board meetings and the meetings of specialized committees for the year of 2015
Attendance in person/Required attendance
Extraordinary
General
Meeting of the Meeting of the Meeting of the Meeting of Annual Meeting/Class
Board Remuneration Audit Nomination the Strategic General Meeting of
Meeting Committee Committee Committee Committee Meeting Shareholders
Mr. Bai Yanchun 15/15 2/2 N/A 2/2 1/1 1/1 2/3
Mr. Xu Shan 15/15 N/A 5/5 2/2 N/A 0/1 0/3
Mr. Cheng Gordon 15/15 1/1 5/5 2/2 N/A 0/1 0/3
Mr. Xu Xu 8/8 1/1 N/A 1/1 1/1 1/1 2/2

Note: Mr. Xu Xu resigned at the conclusion of the annual general meeting held on 26 June 2015.

(ii) Voting at the meetings

Since we were appointed as the independent Directors of the Company, the Board meetings and general meetings of the Company have been convened in compliance with statutory requirements, and all significant matters have passed relevant approval procedures. We have carefully reviewed various proposals at the Board meetings, and considered that these proposals do not impair the interest of Shareholders and, in particular, the minority Shareholders. All of us voted in favor of the relevant proposals, without against and abstentions.

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2015 WORK REPORT OF INDEPENDENT DIRECTORS

APPENDIX II

(iii) Issuance of independent opinions

Since we were appointed as the independent Directors of the Company, we have earnestly reviewed the proposals submitted to the Board and each specialized committee prior to the meetings, and honestly, diligently and independently performed the duties as independent Directors, in accordance with the provisions and requirements under the Articles of Association and the Rules of Procedure for the Board of Directors. We have actively attended relevant meetings and issued independent opinions on significant matters of the Company, thereby safeguarding the legal interest of the Company and Shareholders and, in particular, the minority Shareholders. The detailed independent opinions are set out as follows:

Date of

No. opinions given Issues involved in independent opinions

  • 1 23 March 2015 Matters in relation to re-appointment of the external auditors institution for 2015 and the remuneration arrangement thereof, matters in relation to report on the 2014 internal control assessment, matters in relation to candidates for the Directors of the fourth session of the Board, matters in relation to determination of the basic remuneration of the candidates of the fourth session of the Board and the supervisory committee of the Company, matters in relation to the amendments to Articles of Association of the Company, matters in relation to the mandate to the Board to issue short-term financing bonds, matters in relation to the mandate to the Board to issue medium-term notes, matters in relation to the mandate to the Board to issue bonds in overseas market and provide related guarantees

  • 2 2 April 2015 Matters in relation to the purchase of financing product

  • 3 14 May 2015

  • Matters in relation to the adjustment of the provision for production maintenance fee and use of remaining balance

  • 4 26 May 2015

  • Matters in relation to the use of not more than RMB2 billion self-owned fund for subscription of new shares and securities investment

  • 5 29 May 2015 Matters in relation to the purchase of not more than RMB2.5 billion wealth management products

  • 6 27 June 2015

  • Matters in relation to the appointment of general manager, deputy general manager, chief financial officer, secretary to the Board and joint company secretary of the Company; matters in relation to the determination of basic remuneration of other senior management

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2015 WORK REPORT OF INDEPENDENT DIRECTORS

APPENDIX II

  • (iv) On-site inspection and listed company’s cooperation in the work with independent Directors

During the reporting period, the Company has provided us with the necessary conditions to perform the duties of independent Directors according to the regulatory requirements where the Company is listed. Firstly, the office of the Board regularly provided us with summary reports on the Company’s operation and information on changes in laws and regulations. Secondly, when we visited the Company and attended the meetings, the Company could provide relevant materials and information in a timely manner and reported its operating performance, thus protecting our rights to know. Prior to giving our independent opinions, the Company was able to provide the intermediaries’opinions on related matters as well as special instructions and other materials issued by the responsible department of the Company, thus providing the supporting basis for our independent opinions. Thirdly, the Company delivered to us the resolutions and records of general meetings, Board meetings and meetings of specialized committees and the status of implementation thereof for our review and inspection in a timely manner. In addition, the Company promptly notified us on significant events and material information via telephone, emails, WeChat and other various manners, which helped us to keep abreast of the Company’s condition and provided us with important reference for decision-making.

III. KEY CONCERNS ON THE PERFORMANCE OF DUTIES OF INDEPENDENT DIRECTORS FOR THE YEAR

(i) Connected transactions

In 2015, the Company did not enter into any connected transactions as defined in the Rules Governing the Listing of Stocks on Shanghai Stock Exchange and the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

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2015 WORK REPORT OF INDEPENDENT DIRECTORS

APPENDIX II

(ii) External guarantee and funds occupation

1. External Guarantee of the Company

Unit: RMB0’000

External Guarantee of the Company (excluding those provided to subsidiaries)
Relationship Date of Guarantee
between guarantee
The		 provided
guarantor (Date of
Commencement
guarantee		 Is counter to the
and listed Guaranteed
signing
date of
Expiry date
Type of
is fully		 Overdue guarantee related Connected
Guarantor company Guarantee
amount
agreement)
guarantee
of guarantee
guarantee
performed		 Overdue amount available parties relationship
The Company Major office Luoyang
14, 850. 00
23 May 2014
23 May 2014
22 May 2017
Suretyship of
No		 No No Yes Joint venture
of the Fuchuan
joint and
Company several
liability
Total guarantee incurred during the reporting period
(excluding those provided to subsidiaries) -8,250.00
Total balance of guarantee as at the end of the reporting period (A)
(excluding those provided to subsidiaries) 14,850.00
Guarantees given by the Company for its subsidiaries
Total guaranteed amount for subsidiaries during
the reporting period 58,442.40
Total balance of the guaranteed amount for subsidiaries at the end
of the reporting period (B) 610,877.42
Total guarantee given by the Company (including the guarantees for subsidiaries)
Total guaranteed amount (A+B) 625,727.42
Percentage of the total guaranteed amount to absolute net assets of
the Company_(%)_ 35.12
Including:
Guaranteed amount provided to shareholders, de facto controlling
parties and their connected parties (C) 0
Guaranteed amount provided directly or indirectly to the
guaranteed party with gearing ratio over 70% (D) 0
Total guaranteed amount over 50%of the net asset (E) 0
Sum of the above three guarantees (C+D+E) 0

Note: The Company was involved in the guarantee denominated in foreign currencies, the amount of which have been presented in RMB based on the standard exchange rate announced by the State Administration of Foreign Exchange on 31 December 2015.

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2015 WORK REPORT OF INDEPENDENT DIRECTORS

APPENDIX II

2. Fund Occupancy of the Company

There was no occupation of fund of the Company in 2015.

(iii) Nomination and remuneration of senior management

1. Nomination of senior management

During the reporting period, the Company has elected Mr. Li Chaochun as the chairman of the fourth session of the Board of the Company, Mr. Ma Hui as the vice chairman of the fourth session of the Board of the Company, appointed Mr. Li Faben as the general manager of the Company, Mr. Wang Qinxi as standing deputy general manager, Mr. Yang Jianbo, Mr. Wang Bin and Mr. Jiang Zhongqiang as the deputy general manager of the Company, Ms. Gu Meifeng as the chief financial officer of the Company and Mr. Zhang Xinhui as the secretary to the Board of the Company. After examining the information provided by the nomination committee, we consider that the qualifications of the candidates are legitimate and in compliance with the provisions of the Company Law and the Articles of Association;the nomination eligibility of the nominators complies with the provisions of the Company Law and the Articles of Association;the nomination and consideration procedures are also in compliance with the provisions of the Company Law and the Articles of Association.

2. Remuneration of senior management

During the reporting period, the remuneration committee of the fourth session of the Board considered and passed the Resolution in Relation to Determination of Basic Remuneration of Other Senior Management, adjusted and determined the basic remuneration for certain senior management. We considered that the remuneration packages of the Directors and senior management disclosed in 2015 Annual Report of the Company were in compliance with the administrative provisions on the performance evaluation and remuneration system of the Company and the actual payment was in accordance with the disclosure in 2015 Annual Report of the Company. Adjustments to the basic remuneration of some Directors and senior management are in compliance with the requirements on management of the Company’s remuneration system, which did not impair the interests of the Company and Shareholders.

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2015 WORK REPORT OF INDEPENDENT DIRECTORS

APPENDIX II

(iv) Preliminary results announcement and results updates

During the reporting period, the Company published one preliminary result announcement, i. e. Announcement on Expected Profit Decreases for the Year 2015 of CMOC. For details, please refer to the announcement dated 30 January 2016 published by the Company on the websites of the Shanghai Stock Exchange and the Company.

There were no adjustments made on forecasted figures upon the release of the preliminary results announcement by the Company.

(v) Appointment or change of auditors

During the reporting period, the Company continued to appoint Deloitte Touche Tohmatsu Certified Public Accountants LLP (Special General Partnership) as its external auditor, with the terms of office until the conclusion of the forthcoming annual general meeting of the Company;the Company did not change its accounting firm.

(vi) Cash dividends and other returns to investors

On 26 June 2015, the 2014 profit distribution plan was considered and approved at the 2014 annual general meeting of the Company. The particulars of the profit distribution were as follows: the Company distributed a total cash dividend to all Shareholders of the Company of RMB1,013,231,921.94 (RMB0.18 per Share (tax inclusive) ) based on the total share capital of 5,629,066,233 Shares. The said profit distribution plan had been completely implemented;

On 30 October 2015, the proposal in respect of the issue of bonus shares by way of capitalisation of the capital reserve for the 2015 interim period of the Company was considered and approved at the 2015 first extraordinary general meeting of the Company. The particulars of the distribution were as follows: As of 30 June 2015, the capital reserve of the Company was RMB9,956,670,829.38. A total of 11,258,132,466 bonus shares were issued by way of capitalisation of the capital reserve of the Company on the basis of 20 bonus shares for every 10 existing shares of the Company, based on its total share capital of 5,629,066,233 Shares of the Company as of 31 July 2015. The total share capital after completion of bonus issue was 16,887,198,699 Shares. The said distribution has been completely implemented.

We are of the view that the above mentioned profit distribution of the Company complied with the provisions of the Company Law, the Articles of Association and the relevant laws and regulations.

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2015 WORK REPORT OF INDEPENDENT DIRECTORS

APPENDIX II

(vii) Performance of undertakings of the Company and its Shareholders

During the reporting period, the Company, the Controlling Shareholder, substantial Shareholders and the related parties of the Company strictly performed their undertakings made during the reporting period and the previous periods.

(viii) Execution of information disclosures

During the reporting period, in order to comprehensively, accurately, and fairly handle information disclosures of the Company in a timely manner, the Company formulated the Registration and Filing System of Insiders of Inside Information to strengthen the management of the insiders of inside information and promote the Company and related parties to fulfill the information disclosure obligation in compliance with laws. The examination indicated that during the reporting period, the Company published 130 announcements and documents on the SSE; 162 announcements and documents on the Hong Kong Stock Exchange; and 39 announcements and documents on the interbank market. The contents of information disclosures included periodic reports and other temporary announcements, basically covering all significant matters of the Company, thereby to enable investors to be aware of the recent development of the Company more rapidly through these announcements and protect the interests of investors.

(ix) Execution of internal control

During the reporting period, we have carefully verified the internal control system of the Company, and reviewed the 2015 Self-Evaluation Report on Internal Control issued by the Company. We considered that the Company had basically established a relatively comprehensive internal control system, which could be effectively executed. The 2015 SelfEvaluation Report on Internal Control objectively and truly reflected the establishment and operation of the internal control system of the Company.

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2015 WORK REPORT OF INDEPENDENT DIRECTORS

APPENDIX II

(x) Matters regarding the review of Company’s compliance with the corporate governance responsibilities

After reviewing, we are of the view that all Directors have actively attended relevant meetings and participated in the Company’s affairs, and have allocated sufficient time to perform their duties; all Directors received and read the relevant materials including updates of laws and regulations provided by the office of the Board of the Company. During the year 2015, the Directors, Supervisors and senior management in accordance with their duties attended various trainings and warning educations organized by the SSE, China Securities Regulatory Committee, Henan Branch and Association of Listed Companies in Henan. The Company encouraged all Directors and seniors management to participate in continuous professional development in order to develop and update their knowledge and skills, so as to ensure their continuous contributions to the Board with comprehensive and required information; the corporate governance policies and practice of the Company are relatively completed, and the detailed policies and practice are set out in the Corporate Governance Report. In addition, pursuant to amendments and requirements regarding internal control and risk management under the Corporate Governance Code and Corporate Governance Report set out in Appendix 14 to the Hong Kong Listing Rules, the Company revised the Terms of Reference and Operation Rules of the Audit Committee on 28 August 2015 and formulated completed internal rules and regulations to ensure the compliance with applicable laws and regulatory requirements. During the year 2015, the Directors and employees of the Company have all complied with the requirements in the Corporate Governance Code and internal system. Save for the absence of all of the members of the audit committee from the annual general meeting of the Company held on 26 June 2015 due to other work commitment and the absence of Mr. Xu Shan and Mr. Cheng Gordon from the extraordinary general meeting held on 30 October 2015 due to other work commitment, the Company has complied with the Corporate Governance Code, the Listing Rules and all of the laws and regulations applicable to the Company, and the Company did not receive any report on the deviation of the above codes, the Corporate Governance Code, the Listing Rules and all of the applicable laws and regulatory requirements. Relevant information on the compliance with the Corporate Governance Code has been fully disclosed in the Corporate Governance Report;the Company has strictly executed Shareholders Communication Policy, encouraging Shareholders to actively develop a close relationship with the Company, thereby improving effective communications with Shareholders and other stakeholders and facilitating Shareholders to effectively exercise their rights as Shareholders. During the reporting period, the Company has reviewed the effectiveness of internal control system, including the sufficiency of resources, qualifications and experience of employees from accounting and financial reporting department and their training courses and budgets. During the review period, we did not discover any material problems, and we are satisfied with the results of the review of all of the above matters.

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2015 WORK REPORT OF INDEPENDENT DIRECTORS

APPENDIX II

(xi) Operation of the Board and its specialized committee

During the reporting period, the Board of the Company functioned in an orderly manner in accordance with relevant provisions and requirements of the Articles of Association and the Rules for Board Meeting. The specialized committees of the Board faithfully performed their duties in an earnest, responsible, diligent and honest manner and functioned in an orderly manner in accordance with the respective Terms of Reference and Operation Rules.

IV. OVERALL EVALUATION AND RECOMMENDATIONS

In 2015, in the spirit of integrity and diligence, we performed the duties of independent Directors in an objective, fair and independent manner, made use of our professional knowledge and experience to provide independent, objective and reasonable opinions and recommendations on the production, operation and relevant matters of the Company, and earnestly safeguarded the legal interest of all Shareholders especially of the minority Shareholders. Our independent performance of duties was not influenced by the substantial Shareholders, the de facto controller and other companies or individuals that are interested parties of the Company. We would hereby express our heartfelt gratitude to the full cooperation and substantial support extended by all Shareholders, the Board, the Supervisory Committee and the management when the independent Directors were performing their duties.

In 2016, we will further enhance the learning of laws, regulations and relevant systems. By integrating with our professional advantages, we will continue to be committed to our duties, and faithfully and diligently perform the duties as independent Directors to boost the function of the Company in an orderly manner. We will also further strengthen communication with the Board, the Supervisory Committee and the management, closely monitor the corporate governance, production and operation of the Company, utilize the role as independent Directors, enhance the decisionmaking ability and leadership of the Board, make use of our professional knowledge and experience to provide more positive and effective opinions and recommendations, thereby promoting the stable operation and the orderly function of the Company, improving the decision-making ability and operating performance, so as to keep the Company developing in a continuous, stable and sound way. We will give satisfactory returns to substantial investors and safeguard the legal interests of all Shareholders and, in particular, the minority Shareholders.

– 74 –

2015 WORK REPORT OF INDEPENDENT DIRECTORS

APPENDIX II

Signatures of independent Directors:

Bai Yanchun

Xu Shan

Cheng Gordon

– 75 –

EXPLANATORY STATEMENT ON THE GENERAL MANDATE FOR REPURCHASE OF H SHARES

APPENDIX III

This explanatory statement contains the information required under Rule 10.06(1)(b) of the Hong Kong Listing Rules. Its purpose is to provide Shareholders with information reasonably necessary to enable them to make an informed decision on whether to vote for or against the resolution in relation to granting of the Repurchase Mandate.

1. HONG KONG LISTING RULES

The Hong Kong Listing Rules permit companies with a primary listing on the Hong Kong Stock Exchange to repurchase their securities subject to certain restrictions. Repurchases must be funded out of funds legally available for the purpose and in accordance with the company’s constitutional documents and the applicable laws of the jurisdiction in which the company is incorporated or otherwise established. Any repurchase must be made out of funds which are legally available for the purpose and in accordance with the laws of the PRC and the memorandum and articles of association of the company. Any premium payable on a repurchase over the par value of the shares may only be deducted from the balance of distributable profits and the proceeds from issuance of new shares for the purpose of repurchase of the existing shares.

2. SHARE CAPITAL

As at the Latest Practicable Date, the registered share capital of the Company was RMB3,377,439,739.8 comprising 3,933,468,000 H Shares of RMB0.20 each and 12,953,730,699 A Shares of RMB0.20 each.

Subject to the passing of the proposed resolutions in respect of the granting of the Repurchase Mandate and the approval of the regulatory authorities as required by the laws, rules and regulations of the PRC being obtained and the Company not being required by any of its creditors to repay or to provide guarantee in respect of any amount due to any of them (or if the Company is so required by any of its creditors, the Company having, in its absolute discretion, repaid or provided guarantee in respect of such amount) pursuant to the notification procedure under Article 27 of the Articles of Association, on the basis that no further Shares are issued prior to the AGM, the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting, the Company would be allowed under the Repurchase Mandate to repurchase a maximum of 393,346,800 H Shares (representing 10% of the number of the H Shares in issue as at the date of granting of the Repurchase Mandate) during the proposed repurchase period.

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EXPLANATORY STATEMENT ON THE GENERAL MANDATE FOR REPURCHASE OF H SHARES

APPENDIX III

3. REASONS FOR REPURCHASE OF H SHARES

The Board believes that the repurchase of H Shares is in the best interests of the Shareholders as a whole and the Company. It can strengthen the investors’ confidence on the Company and promote a positive effect for maintaining the Company’s image in the capital market. The repurchase of Shares will only be exercised when the Directors believe such repurchase will benefit the Company and the Shareholders.

4. EXERCISE OF THE REPURCHASE MANDATE

Subject to the passing of the special resolutions approving the granting of the Repurchase Mandate to the Board proposed at the forthcoming AGM, the A Shareholders’ Class Meeting and the H Shareholders’ Class Meeting, respectively, the Board will be granted the Repurchase Mandate until the conclusion of the Relevant Period (as defined in the special resolutions set out in the notices of AGM, A Shareholders’ Class Meeting and H Shareholders’ Class Meeting, respectively). In addition, the exercise of the Repurchase Mandate shall be subject to: (1) the approval of the relevant PRC regulatory authorities as required by the laws, rules and regulations of the PRC being obtained; and (2) the Company not being required by its creditors to repay or to provide guarantee in respect of any amount due to any of them (or if the Company is so required by any of its creditors, the Company having, in its absolute discretion, repaid or provided guarantee in respect of such amount) pursuant to relevant requirements in respect of reducing the registered capital under the Articles of Association.

5. FUNDING OF REPURCHASES

In repurchasing its H Shares, the Company intends to apply funds from the Company’s internal resources (which include surplus funds and retained profits) legally available for such purpose in accordance with the Articles of Association and the applicable laws, rules and regulations of the PRC.

The Company is empowered by its Articles of Association to repurchase its H Shares. Under the PRC laws, H Shares so repurchased shall be treated as cancelled and the Company’s registered capital shall be reduced by an amount equivalent to the aggregate nominal value of the H Shares so cancelled. The Company may not repurchase securities on the Hong Kong Stock Exchange for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the Hong Kong Stock Exchange as amended from time to time.

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EXPLANATORY STATEMENT ON THE GENERAL MANDATE FOR REPURCHASE OF H SHARES

APPENDIX III

There might be an adverse impact on the working capital or gearing ratio of the Company as compared with the position disclosed in the audited consolidated accounts contained in the annual report of the Company for the year ended 31 December 2015 in the event that the repurchase of H Shares were to be carried out in full at any time during the proposed repurchase period. However, the Directors do not propose to exercise the repurchase of H Shares to such extent as would, in the circumstances, have a material adverse effect on the working capital requirements or the gearing levels of the Company.

6. H SHARES PRICES

The highest and lowest traded prices for the H Shares on the Hong Kong Stock Exchange during each of the previous 12 months preceding the Latest Practicable Date were as follows:

H Share prices
(per share)
Highest Lowest
HK$ HK$
2015
May 2.67 2.30
June 2.41 1.76
July 2.00 1.26
August 1.80 1.28
September 1.48 1.24
October 1.49 1.26
November 1.85 1.41
December 1.61 1.37
2016
January 1.49 1.06
February 1.25 0.99
March 1.42 1.20
April 1.35 1.20
May (up to the Latest Practicable Date) 1.55 1.30

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EXPLANATORY STATEMENT ON THE GENERAL MANDATE FOR REPURCHASE OF H SHARES

APPENDIX III

7. GENERAL INFORMATION

The Directors have undertaken to the Hong Kong Stock Exchange that, so far as the same may be applicable, they will exercise the powers of the Company to make repurchases pursuant to the Repurchase Mandate in accordance with the Hong Kong Listing Rules, the Articles of Association and the applicable laws, rules and regulations of the PRC.

None of the Directors, to the best of their knowledge upon having made all reasonable enquiries, nor their close associates, has any present intention to sell any H Shares to the Company or its subsidiaries under the Repurchase Mandate if such resolutions are approved by the Shareholders.

No other core connected persons (as defined in the Hong Kong Listing Rules) have notified the Company that they have a present intention to sell H Shares to the Company or its subsidiaries, or have undertaken not to do so, in the event that the Repurchase Mandate is approved by the Shareholders.

8. TAKEOVERS CODE

If on the exercise of the powers to repurchase H Shares pursuant to the Repurchase Mandate, a Shareholder’s proportionate interest in the voting rights of the Company increases, such increase will be treated as an acquisition for the purposes of Rule 32 of the Takeovers Code. As a result, a Shareholder or group of Shareholders acting in concert, could obtain or consolidate control of the Company and become obliged to make a mandatory offer in accordance with Rule 26 of the Takeovers Code.

As at the Latest Practicable Date, to the best of the knowledge and belief of the Directors, Cathay Fortune Corporation and Luoyang Mining Group Co., Ltd. held approximately 31.58% and 31.56% of the total registered capital of the Company, respectively. In the event that the Directors should exercise the proposed Repurchase Mandate in full, the shareholding of Cathay Fortune Corporation and Luoyang Mining Group Co., Ltd. would be increased to approximately 32.33% and 32.31% of the total registered capital of the Company, respectively (if both parties do not participate in such repurchase). The Directors are not aware of any consequences which will arise under the Takeovers Code and/or other relevant applicable law, as a result of any repurchases to be made under the Repurchase Mandate. Moreover, the Directors will not repurchase Shares on the Hong Kong Stock Exchange if such repurchase would violate the requirements under Rule 8.08 of the Hong Kong Listing Rules.

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EXPLANATORY STATEMENT ON THE GENERAL MANDATE FOR REPURCHASE OF H SHARES

APPENDIX III

9. H SHARES REPURCHASED BY THE COMPANY

The Company had not repurchased any H Shares (whether on the Hong Kong Stock Exchange or otherwise) during the six months immediately prior to the Latest Practicable Date.

10. OTHER MATTERS IN RELATION TO THE REPURCHASE OF H SHARES

(I) The Price Range for Repurchase

Pursuant to the Hong Kong Listing Rules, the repurchase price shall not be higher than 5% of the average closing price for the five trading days prior to the actual repurchase. The repurchase price shall be determined according to the actual condition of the market and the Company when the repurchase is made.

(II) Disposal of Shares Repurchased

Pursuant to requirements of applicable laws and regulations, H Shares repurchased under this general mandate can only be cancelled and the registered capital of the Company shall be reduced accordingly.

(III) Time Constraint for Repurchase

In accordance with the requirements of regulatory authorities, a listed company shall not repurchase its shares prior to convening meetings of board of directors for periodic reports and publishing periodic reports (i.e. within 60 days prior to the annual results announcement and 30 days prior to other periodic results announcement), or during the period of the existence of inside information (including, but not limited to, the major asset acquisitions, asset restructuring, disposal of assets), during the period from formal negotiations to the release of inside information.

– 80 –

NOTICE OF ANNUAL GENERAL MEETING

==> picture [431 x 78] intentionally omitted <==

(Stock Code: 03993)

NOTICE OF ANNUAL GENERAL MEETING

NOTICE IS HEREBY GIVEN that the annual general meeting (“ AGM ”) of China Molybdenum Co., Ltd. (the “ Company ”) will be held at 1:00 p.m. on Wednesday, 29 June 2016 at the International Conference Room of Mudu-Lee Royal International Hotel at No. 239, Kaiyuan Street, Luolong District, Luoyang City, Henan Province, the People’s Republic of China (the “ PRC ”) for the purposes of considering and, if thought fit, passing (with or without modifications) the following resolutions. Unless otherwise indicated, capitalised terms used herein have the same meanings as those defined in the circular of the Company dated 13 May 2016 (the “ Circular* ”).

ORDINARY RESOLUTIONS

  1. “To receive and consider the proposal in respect of the financial report of China Molybdenum Co., Ltd.* for the year 2015.”

  2. “To receive and consider the proposal in respect of the financial statements of China Molybdenum Co., Ltd.* for the year 2015.”

  3. “To consider and approve the proposal in respect of the budget report of China Molybdenum Co., Ltd.* for the year 2016.”

  4. “To consider and approve the proposal in respect of the profit distribution plan of China Molybdenum Co., Ltd.* for the year 2015.”

  5. “To receive and consider the proposal in respect of the report of the Board of China Molybdenum Co., Ltd.* for the year 2015.”

  • For identification purposes only

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NOTICE OF ANNUAL GENERAL MEETING

  1. “To receive and consider the proposal in respect of the report of the supervisory committee of China Molybdenum Co., Ltd.* for the year 2015.”

  2. “To receive and consider the proposal in respect of the annual report of China Molybdenum Co., Ltd.* for the year 2015.”

  3. “To consider and approve the proposal in respect of the re-appointment of the external auditors for the year 2016 and its remuneration arrangement.”

  4. “To consider and approve the proposal in respect of the renewal of liability insurance for the Directors, Supervisors, senior management.”

  5. “To consider and approve the proposal in respect of the authorisation to the Board to deal with all matters in relation to the distribution of interim dividend and quarterly dividend for the year 2016.”

SPECIAL RESOLUTIONS

  1. “To consider and approve the proposed granting of a general mandate to the Board to repurchase H Shares as follows:

  2. (a) subject to paragraphs (b) and (c) below, the exercise by the directors of the Company during the Relevant Period (as defined in paragraph (d) below) of all the powers of the Company to repurchase H Shares in issue on the Hong Kong Stock Exchange, subject to and in accordance with all applicable laws, rules and regulations and/or requirements of the governmental or regulatory body of securities in the PRC, the Hong Kong Stock Exchange or of any other governmental or regulatory body;

  3. (b) the number of H Shares authorised to be repurchased pursuant to the approval in paragraph (a) above during the Relevant Period shall not exceed 10% of the number of H Shares in issue as at the date of the passing of this resolution;

  4. (c) the approval in paragraph (a) above shall be conditional upon:

    • (i) the passing of a special resolution in the same terms as the resolution set out in this paragraph (except for this sub-paragraph (c)(i)) at the A Shareholders’ Class Meeting (or on such adjourned date as may be applicable) and the H Shareholders’ Class Meeting (or on such adjourned date as may be applicable);

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NOTICE OF ANNUAL GENERAL MEETING

  • (ii) the approval of all the competent regulatory authorities as may be required by the laws, rules and regulations of the PRC being obtained by the Company if appropriate; and

  • (iii) the Company not being required by any of its creditors to repay or to provide guarantee in respect of any amount due to any of them (or if the Company is so required by any of its creditors, the Company having, in its absolute discretion, repaid or provided guarantee in respect of such amount) pursuant to the notification procedure set out in Article 27 of the Articles of Association;

  • (d) for the purpose of this special resolution, “Relevant Period” means the period from the passing of this special resolution until whichever is the earlier of:

  • (i) the conclusion of the 2016 annual general meeting of the Company; or

  • (ii) the date on which the authority set out in this special resolution is revoked or varied by a special resolution of the shareholders of the Company in any general meeting; and

  • (e) Subject to the approval of all relevant government authorities in the PRC for the repurchase of such H Shares being granted, to authorise the directors of the Company to:

  • (i) formulate and implement detailed repurchase plan, including but not limited to repurchase price, number of shares to be repurchased, timing of repurchase and period of repurchase etc.;

  • (ii) notify creditors and make announcement in accordance with the requirements of relevant laws, regulations and normative documents as well as the Articles of Association;

  • (iii) open overseas share accounts and to carry out related change of foreign exchange registration procedures;

  • (iv) carry out relevant approval and filing procedures as required by regulatory authorities and the stock exchanges where the Shares of the Company are listed;

  • (v) carry out cancellation procedures for repurchased shares, reduce the registered capital of the Company, and make corresponding amendments to the Articles of Association relating to total share capital and shareholding structure etc., and to carry out statutory registrations and filings within and outside China; and

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NOTICE OF ANNUAL GENERAL MEETING

  • (vi) execute and handle other documents and matters relating to share repurchase.”

  • For the purpose of increasing the flexibility and efficiency in operation of the Company, to give a general mandate to the Board to issue, allot and deal with additional A Shares not exceeding 20% of the number of A Shares in issue on the date of passing of this special resolution and additional H Shares not exceeding 20% of the number of H Shares in issue on the date of passing of this special resolution and authorise the Board to make corresponding amendments to the Articles of Association as it thinks fit so as to reflect the new share capital structure upon the allotment or issuance of Shares:

“ THAT

  • (a) To authorise the Board a general mandate to allot, issue and deal with, or agree conditionally or unconditionally to allot, issue and deal with additional H Shares and A Shares with the number of Shares not exceeding 20% of the number of the same class of shares in issue on the date of passing of this special resolution, and subject to paragraph (b) below to determine the number of Shares to be allotted and issued;

  • (b) To authorise the Board to exercise the general mandate in accordance with the applicable laws (including but not limited to the Company Law of the PRC, the Hong Kong Listing Rules and the Rules Governing the Listing of Stocks on Shanghai Stock Exchange) and obtain approvals from all governmental and/or regulatory institutions (if any);

  • (c) The general mandate shall remain effective from the passing of this resolution until the earlier of the following:

  • (i) the conclusion of the 2016 annual general meeting of the Company; or

  • (ii) the date on which the general mandate under this resolution is revoked by an ordinary resolution approved by shareholders of the Company at a general meeting;

  • (d) To authorise the Board to approve, execute and act, or to procure the execution and acts for, all such documents, deeds and things as it may consider necessary in connection with the allotment and issue of any new Shares pursuant to the exercise of the general mandate referred to in the above paragraphs; and

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NOTICE OF ANNUAL GENERAL MEETING

  • (e) To authorise the Board to make appropriate amendments to the Articles of Association after completion of the allotment and issuance of new Shares in accordance with the method, type and number of new Shares to be allotted and issued by the Company and the actual share capital structure of the Company upon completion of the allotment and issuance of new Shares.”

By Order of the Board China Molybdenum Co., Ltd.* Li Chaochun Chairman

Luoyang City, Henan Province, the PRC, 13 May 2016

Notes:

  • (1) Pursuant to the requirements under the Rules of Shareholders’ Meeting of Listed Companies of the China Securities Regulatory Commission, independent directors shall issue a work report at the annual general meeting. Such report will be submitted to shareholders for consideration but not for shareholders’ approval. The 2015 Work Report of Independent Directors of the Company is set out in Appendix II to the Circular for shareholders’ information.

  • (2) All resolutions at the meeting will be taken by poll except where the chairman, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands pursuant to the Hong Kong Listing Rules. The results of the poll will be published on the websites of the Hong Kong Stock Exchange and the Company in accordance with the Hong Kong Listing Rules.

  • (3) H Shareholders who intend to attend the AGM in person or by proxy should return the reply slip to the office of the Board at the Company’s principal place of business in the PRC 20 days before the meeting, i.e. before Thursday, 9 June 2016 by hand, by post or by facsimile. The contact details of the Company’s office of the Board are set out in note (10) below.

  • (4) Each H Shareholder who has the right to attend and vote at the AGM is entitled to appoint in writing one or more proxies, whether a Shareholder or not, to attend and vote on his/her behalf at the AGM. The instrument appointing a proxy must be in writing under the hand of the appointor or his/her attorney duly authorised in writing. In case that an appointor is a body corporate, the instrument must be either under the common seal of the body corporate or under the hand of its director or other person, duly authorised. If the instrument appointing a proxy is signed by an attorney of the appointor, the power of attorney authorising that attorney to sign, or other documents of authorisation, must be certified by a notary public. For H Shareholders, the form of proxy and the notarially certified power of attorney or other documents of authorisation must be delivered to the Company’s H Share registrar at the address stated in note (9) below by post or facsimile (for H Shareholders only), not less than 24 hours before the time appointed for holding the AGM or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude a Shareholder from attending and voting at the AGM or any adjournment should he/she so wish.

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NOTICE OF ANNUAL GENERAL MEETING

  • (5) In order to determine the list of H Shareholders who will be entitled to attend and vote at the AGM, the Company’s register of members of H Shares will be closed from Monday, 30 May 2016 to Wednesday, 29 June 2016 (both days inclusive), during which period no transfer of shares will be effected. H Shareholders whose names appear on the register of members of H Shares of the Company at 4:30 p.m. on Friday, 27 May 2016 shall be entitled to attend and vote at the AGM. In order for the H Shareholders to qualify for attending and voting at the AGM, Shareholders whose H Shares are not registered in their names should complete and lodge their respective instruments of transfer with the relevant H Share certificates with Computershare Hong Kong Investor Services Limited, the Company’s H Share registrar in Hong Kong, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, and in any case no later than 4:30 p.m. on Friday, 27 May 2016.

  • (6) In order to determine the list of H Shareholders who are entitled to receive the Final Dividend, the Company’s register of members of H Shares will be closed from Friday, 8 July 2016 to Wednesday, 13 July 2016 (both days inclusive), during which period no transfer of shares will be effected. H Shareholders whose names appear on the register of members of H Shares of the Company on Wednesday, 13 July 2016 shall be entitled to receive the Final Dividend. In order for the H Shareholders to qualify for receiving the Final Dividend, Shareholders whose H Shares are not registered in their names should complete and lodge their respective instruments of transfer with the relevant H Share certificates with Computershare Hong Kong Investor Services Limited, the Company’s H Share registrar in Hong Kong, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, and in any case no later than 4:30 p.m. on Thursday, 7 July 2016.

  • (7) Shareholders or their proxies must present proof of their identities upon attending the AGM. Should a proxy be appointed, the proxy must also present copies of his/her proxy form, or copies of appointing instrument and power of attorney, if applicable.

  • (8) A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the death or loss of capacity of the appointor, or the revocation of the proxy or of the authority under which the proxy was executed, or the transfer of shares in respect of which the proxy is given, provided that no notice in writing of these matters shall have been received by the Company prior to the commencement of the AGM.

  • (9) The address and contact details of the H Share registrar of the Company, Computershare Hong Kong Investor Services Limited, are as follows:

17M Floor Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong Telephone No.: (+852) 2862 8555 Facsimile No.: (+852) 2865 0990/(+852) 2529 6087

  • (10) The address and contact details of the Company’s office of the Board at its principal place of business in the PRC are as follows:

North of Yihe Huamei Shan Road Chengdong New District Luanchuan County Luoyang City Henan Province People’s Republic of China Postal code: 471500 Telephone No.: (+86) 379 6865 8017 Facsimile No.: (+86) 379 6865 8030

  • (11) The AGM is expected to last not more than one day. Shareholders or proxies attending the AGM are responsible for their own transportation and accommodation expenses.

– 86 –

NOTICE OF THE 2016 FIRST CLASS MEETING OF H SHAREHOLDERS

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(Stock Code: 03993)

NOTICE OF THE 2016 FIRST CLASS MEETING OF H SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the 2016 first class meeting of H Shareholders of China Molybdenum Co., Ltd. (the “ Company ”) will be held immediately after the AGM and the 2016 first class meeting of A Shareholders and any adjournments thereof, on Wednesday, 29 June 2016 at the International Conference Room of Mudu-Lee Royal International Hotel at No. 239, Kaiyuan Street, Luolong District, Luoyang City, Henan Province, the People’s Republic of China (the “ PRC ”) for the purposes of considering and, if thought fit, passing (with or without modifications) the following resolution. Unless otherwise indicated, capitalised terms used herein have the same meanings as those defined in the circular of the Company dated 13 May 2016 (the “ Circular* ”).

SPECIAL RESOLUTION

“To consider and approve the proposed granting of a general mandate to the Board to repurchase H Shares as follows:

  • (a) subject to paragraphs (b) and (c) below, the exercise by the directors of the Company during the Relevant Period (as defined in paragraph (d) below) of all the powers of the Company to repurchase H Shares in issue on the Hong Kong Stock Exchange, subject to and in accordance with all applicable laws, rules and regulations and/or requirements of the governmental or regulatory body of securities in the PRC, the Hong Kong Stock Exchange or of any other governmental or regulatory body;

  • (b) the number of H Shares authorised to be repurchased pursuant to the approval in paragraph (a) above during the Relevant Period shall not exceed 10% of the number of H Shares in issue as at the date of the passing of this resolution;

  • For identification purposes only

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NOTICE OF THE 2016 FIRST CLASS MEETING OF H SHAREHOLDERS

  • (c) the approval in paragraph (a) above shall be conditional upon:

  • (i) the passing of a special resolution in the same terms as the resolution set out in this paragraph (except for this sub-paragraph (c)(i)) at the AGM (or on such adjourned date as may be applicable) and the A Shareholders’ Class Meeting (or on such adjourned date as may be applicable);

  • (ii) the approval of all the competent regulatory authorities as may be required by the laws, rules and regulations of the PRC being obtained by the Company if appropriate; and

  • (iii) the Company not being required by any of its creditors to repay or to provide guarantee in respect of any amount due to any of them (or if the Company is so required by any of its creditors, the Company having, in its absolute discretion, repaid or provided guarantee in respect of such amount) pursuant to the notification procedure set out in Article 27 of the Articles of Association;

  • (d) for the purpose of this special resolution, “Relevant Period” means the period from the passing of this special resolution until whichever is the earlier of:

  • (i) the conclusion of the 2016 annual general meeting of the Company; or

  • (ii) the date on which the authority set out in this special resolution is revoked or varied by a special resolution of the shareholders of the Company in any general meeting; and

  • (e) Subject to the approval of all relevant government authorities in the PRC for the repurchase of such H Shares being granted, to authorise the directors of the Company to:

  • (i) formulate and implement detailed repurchase plan, including but not limited to repurchase price, number of shares to be repurchased, timing of repurchase and period of repurchase etc.;

  • (ii) notify creditors and make announcement in accordance with the requirements of relevant laws, regulations and normative documents as well as the Articles of Association;

  • (iii) open overseas share accounts and to carry out related change of foreign exchange registration procedures;

  • (iv) carry out relevant approval and filing procedures as required by regulatory authorities and the stock exchanges where the Shares of the Company are listed;

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NOTICE OF THE 2016 FIRST CLASS MEETING OF H SHAREHOLDERS

  • (v) carry out cancellation procedures for repurchased shares, reduce the registered capital of the Company, and make corresponding amendments to the Articles of Association relating to total share capital and shareholding structure etc., and to carry out statutory registrations and filings within and outside China; and

  • (vi) execute and handle other documents and matters relating to share repurchase.”

By Order of the Board China Molybdenum Co., Ltd.* Li Chaochun Chairman

Luoyang City, Henan Province, the PRC, 13 May 2016

Notes:

  • (1) Resolution at the meeting will be taken by poll except where the chairman, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands pursuant to the Hong Kong Listing Rules. The results of the poll will be published on the websites of the Hong Kong Stock Exchange and the Company in accordance with the Hong Kong Listing Rules.

  • (2) H Shareholders who intend to attend the Class Meeting of H Shareholders in person or by proxy should return the reply slip to the office of the Board at the Company’s principal place of business in the PRC 20 days before the meeting, i.e. before Thursday, 9 June 2016 by hand, by post or by facsimile. The contact details of the Company’s office of the Board are set out in note (8) below.

  • (3) Each H Shareholder of the Company who has the right to attend and vote at the Class Meeting of H Shareholders is entitled to appoint in writing one or more proxies, whether a Shareholder or not, to attend and vote on his/her behalf at the Class Meeting of H Shareholders. The instrument appointing a proxy must be in writing under the hand of the appointor or his/her attorney duly authorised in writing. In case that an appointor is a body corporate, the instrument must be either under the common seal of the body corporate or under the hand of its director or other person, duly authorised. If the instrument appointing a proxy is signed by an attorney of the appointor, the power of attorney authorising that attorney to sign, or other documents of authorisation, must be certified by a notary public. The form of proxy and the notarially certified power of attorney or other documents of authorisation must be delivered to the Company’s H Share registrar at the address stated in note (7) below by post or facsimile, not less than 24 hours before the time appointed for holding the Class Meeting of H Shareholders or any adjournment thereof (as the case may be). Completion and return of the form of proxy will not preclude a Shareholder from attending and voting at the Class Meeting of H Shareholders or any adjournment should he/she so wish.

  • (4) In order to determine the list of H Shareholders who will be entitled to attend and vote at the Class Meeting of H Shareholders, the Company’s register of members of H Shares will be closed from Monday, 30 May 2016 to Wednesday, 29 June 2016 (both days inclusive), during which period no transfer of shares will be effected. H Shareholders whose names appear on the register of members of H Shares of the Company at 4:30 p.m. on Friday, 27 May 2016 shall be entitled to attend and vote at the Class Meeting of H Shareholders. In order for the H Shareholders to qualify for attending and voting at the Class Meeting of H Shareholders, Shareholders whose H Shares are not registered in their names should complete and lodge their respective instruments of transfer with the relevant H Share certificates with Computershare Hong Kong Investor Services Limited, the Company’s H Share registrar in Hong Kong, at Shops 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong, and in any case no later than 4:30 p.m. on Friday, 27 May 2016.

– 89 –

NOTICE OF THE 2016 FIRST CLASS MEETING OF H SHAREHOLDERS

  • (5) Shareholders or their proxies must present proof of their identities upon attending the Class Meeting of H Shareholders. Should a proxy be appointed, the proxy must also present copies of his/her proxy form, or copies of appointing instrument and power of attorney, if applicable.

  • (6) A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the death or loss of capacity of the appointor, or the revocation of the proxy or of the authority under which the proxy was executed, or the transfer of shares in respect of which the proxy is given, provided that no notice in writing of these matters shall have been received by the Company prior to the commencement of the Class Meeting of H Shareholders.

  • (7) The address and contact details of the H Share registrar of the Company, Computershare Hong Kong Investor Services Limited, are as follows:

17M Floor Hopewell Centre 183 Queen’s Road East Wanchai Hong Kong Telephone No.: (+852) 2862 8555 Facsimile No.: (+852) 2865 0990/(+852) 2529 6087

  • (8) The address and contact details of the Company’s office of the Board at its principal place of business in the PRC are as follows:

North of Yihe Huamei Shan Road Chengdong New District Luanchuan County Luoyang City Henan Province People’s Republic of China Postal code: 471500 Telephone No.: (+86) 379 6865 8017 Facsimile No.: (+86) 379 6865 8030

  • (9) The Class Meeting of H Shareholders is expected to last not more than one day. Shareholders or proxies attending the Class Meeting of H Shareholders are responsible for their own transportation and accommodation expenses.

– 90 –

The Circular (“ Circular ”) in Chinese and English version has been published on the Company’s website (http://www.chinamoly.com). Shareholders who choose to receive the corporate communications of the Company (including but not limited to annual reports, summary financial reports (if applicable), interim reports, interim summary reports (if applicable), notice of meeting, listing documents, circulars and proxy forms) and have difficulties in receiving corporate communications published on the Company’s website for any reason can request for the free printed Circular sent by post. Shareholders can change the way of receiving the corporate communications of the Company and the selection of language version at any time.

Shareholders can request for the printed Circular or to change the way of receiving the corporate communications of the Company and the selection of language version by giving a written notice to the Company within a reasonable period of time. Such written notice should be given to the share registrar for H shares of the Company, i.e. Computershare Hong Kong Investor Services Limited (address: 17M Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong), or e-mail to [email protected].

– 91 –

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