MOLY MINES LIMITED ABN 32 103 295 521

ANNUAL REPORT

31 DECEMBER 2013

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CORPORATE DIRECTORY

Board of Directors Nelson Chen Chairman Cathie (Wei) Wu Non-Executive Director Douglas Buerger Non-Executive Director Executive Officer Graeme Kininmonth Chief Executive Officer Riccardo Vittino Chief Financial Officer Susan Hunter Company Secretary ASX Code / TSX Code: MOL Principal & Registered Office 50 Kings Park Road West Perth, WA, 6005 Telephone: +61 8 9429 3300 Fax: +61 8 9429 3399 Canadian telephone: +1 416 371 7541 Email: info@molymines.com Website: www.molymines.com Toronto, Canada – Investor Relations Natalie Frame Telephone +1 416 777 1801 Mobile +1 416 371 7541

ASX Share Register Computershare Investor Services Pty Ltd Level 2 / 45 St Georges Terrace Perth, WA, 6000 Telephone: +61 8 9323 2000 1300 850 505 (investors

within Australia) Fax +61 8 9323 2033 Web www.computershare.com TSX Share Register Computershare 100 University Ave 9th Floor, North Tower Toronto, Ontario M5J2YI, Canada Telephone +1 514 982 7888 Fax +1 514 982 7580 Web: www.computershare.com Auditors Deloitte Touche Tohmatsu Australia ABN: 32 103 295 521

CONTENTS

1 Chairman’s Letter 2 Mineral Resources and Ore Reserves 4 Financial Report 2013 81 ASX Additional Information 83 Schedule of Tenements 84 Corporate Governance Statement F

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CHAIRMAN’S LETTER

1

Dear Shareholder With a total cash balance of more than A$76 million, an aligned Board of Directors with international, resource, merger and acquisition experience, a knowledgeable management team and a strategic plan to move forward with the merger or acquisition of a near term producer, Moly Mines is poised to move forward from a year of change, into a year of definition.

2013 was a year of strategic change and alignment for the Company. Against the backdrop of fluctuating iron ore prices and an uncertain market, we significantly de-risked the Company in June of 2013 with the Mine Gate Sale of our Spinifex Ridge Iron Ore Project “Spinifex Ridge”, a small scale project with a short mine life and relatively high costs, to Mineral Resources Limited (“MRL”). . The Company sought to gain value upfront from the operation. On 1 July 2013, the mine gate sale came into effect with MRL and the Company realised an upfront purchase price of $A34.7 million. A remaining final payment will be completed once the economic life of the Spinifex Ridge Mine has been exhausted. This final payment is subject to adjustments to reflect the quantity and quality of iron ore mined during the term of the mine gate sale agreement.

Cost savings initiatives have been an ongoing priority. In 2013 we made significant staff reductions. More overhead reductions and a review of our ongoing commitments will continue into 2014.

In the fourth quarter of 2013, we paid down our debt with our majority shareholder Hanlong Mining Pty Ltd. and in doing so reduced the overall interest rate on our debt balance from 10% to 7% further reducing future costs.

Our primary focus has been and continues to be on the merger and acquisition of low risk, robust, advanced staged gold and copper projects internationally, with strong cash flow generation potential. Our secondary strategy to target a limited number of high quality “drill ready” exploration opportunities, in low to medium risk mining jurisdictions and multiple commodities on a deal by deal basis.

Our management team and Board have been dedicated to reviewing and prioritizing targets that fit strategically with the future growth of the Company.

In view of the continuing low molybdenum prices and the outlook for A$/US$ exchange rate, the Spinifex Ridge Molybdenum/Copper Project remains on care and maintenance for the time being. The Company does not expect to develop this project in the foreseeable future.

The Company is not currently undertaking any exploration activity.

We would like to thank those that are no longer with the Company for their valuable contributions during their time with the Company. We would also like to thank our current Board, management team and staff, for their dedication and support to the Company during 2013.

Finally, we would like to thank our shareholders for their support and patience. Your Board and the management team are committed to creating greater shareholder value in 2014.

Yours sincerely

Nelson Chen Chairman

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Mineral Resources and Ore Reserves

2

The Mineral Resources and Ore Reserves for the Spinifex Ridge Project are stated for the molybdenum and iron projects separately. The Mineral Resource current for Spinifex Ridge Molybdenum Project remains as unchanged from the last technical review dated February 10th 2012. A summary of the estimation process and parameters used in the resource estimate can be found in the release to the Australian Stock Exchange dated 13th February 2012 and lodged with SEDAR (www.sedar.com) on the same date. The Mineral Resource Estimate for the Spinifex Ridge Molybdenum Project is tabled below.

Spinifex Ridge Molybdenum Summary Resource Estimate, 31 July 2008 (JORC 2004)

Classification Tonnes Mo (%)

Contained Mo

(tonnes)

Cu (%)

Contained Cu (tonnes)

Ag (g/t)

Contained Ag

(oz)

Measured 206,812,000 0.06 123,500 0.1 205,000 1.5 10,040,000Indicated 445,458,000 0.04 171,000 0.07 315,400 1.1 16,327,000

Total Mineral Resource 652,270,000 0.05 294,500 0.08 520,300 1.3 26,367,000

Inferred 399,019,000 0.04 148,800 0.07 265,000 1.1 14,625,000 In June 2013 Moly Mines Ltd completed a mine gate sale of the Spinifex Ridge Iron Project to Mineral Resources Limited (MRL) effectively ceasing their ownership of the Spinifex Ridge Iron Ore Project. The mine gate sale was based on two payments; an initial, upfront payment by MRL to MOL calculated at per tonnes rate of the scheduled mineable material available as at 30 June 2013 of approximately $32 million. The second and final payment of ~$3million being withheld until the end of the economic life of the mine and being for any adjustments on the quality and quantity of material extracted. In addition Moly retained a material interest in the project, via a royalty payment, for any future potential additions to the iron ore reserve at Spinifex Ridge, realised through additional exploration. The Mineral Resource and Ore Reserve Estimates are included in the Annual Report to reflect his material interest. There has been no further exploration or resource development drilling on the Spinifex Ridge Iron Ore Project since the date of the last Mineral Resource Estimate at 25th June 2012. The Mineral Resource estimate, un-depleted by mining activities since 25th June 2012, is tabled below and is inclusive of the stated Ore Reserves. Details of the resource estimation process can be found in documents lodged with the Australian Stock Exchange and SEDAR (www.sedar.com) on the 25th June 2012.

Spinifex Ridge Iron Mineral Resource Estimate, 25th June 2012 (JORC 2004)

Classification Tonnes Fe (%) SiO2(%)

Al2O3(%)

P (%)

S (%)

LOI (%)

Measured - - - - - - - Indicated 4,548,000 59.5 9.2 1.2 0.134 0.0075 3.9

Total Mineral Resource 4,548,000 59.5 9.2 1.2 0.134 0.0075 3.9

Inferred 954,000 51.1 24.2 1.3 0.06 0.0032 1.1

TOTAL Measured + Indicated + Inferred 5,502,000 58.0 11.8 1.2 0.122 0.0067 3.4

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Mineral Resources and Ore Reserves

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A review of the Ore Reserve Estimate as depleted by mining activities to November 30 2013 was completed during late 2013, is tabled below. This is an in-ground estimate and does not include low grade or stockpiled material. The Mineral Resource Estimate underlying the November 2013 updated Ore Reserve Estimate remains unchanged from that reported in June 2012 and described above. A review of the modifying factors employed during the November 2012 Ore Reserve Estimate was carried out by Moly Mines and found to be current, as such the November 2013 Ore Reserve Estimate is a simple depletion by mining of the November 2012 Ore Reserve. The difference between the November 2013 Ore Reserve Estimate and the November 2012 Ore Reserve Estimate represents a depletion, by mining, of some 1.798Mt since November 2012. The entire Ore Reserves are classified as Probable Reserves, no Proven Reserves remain at the Spinifex Ridge Iron Ore Project.

Spinifex Ridge Iron Ore Reserve Estimate November 2013 (JORC 2004)

Pit Ore (kt) Fe (%)

Al2O3(%)

SiO2 (%)

P (%)

S (ppm)

LOI (%)

Proven 0 - - - - - -Probable Auton 570 58.3 0.97 8.77 0.14 66 4.84 Dalek 140 64.5 0.28 6.54 0.05 27 0.40 Gallifrey 620 61.7 0.67 5.84 0.16 54 4.36Total Probable 1,300 60.6 0.76 7.17 0.14 56 4.14Total Ore Reserves 1,300 60.6 0.76 7.17 0.14 56 4.14

FINANCE REPORT 2013

4 Directors’ report

22 Statement of profit or loss and other comprehensive income

23 Statement of financial position

24 Statement of changes in equity

25 Statement of cash flows

26 Notes to the financial statements

Corporate information

Summary of significant accounting policies

44 Other income and expenses

45 Income tax

48 Cash and cash equivalents

Receivables

49 Prepayments

Inventories

50 Non-current assets held for sale

51 Plant and equipment

52 Exploration and evaluation

53 Mine property development

54 Trade and other payables

Borrowings

Deferred revenue

55 Provisions

56 Contributed equity

57 Reserves

Derivative financial instruments

Key management personnel

61 Earnings / (loss) per share

Commitments & contingencies

63 Cash flow reconciliation

64 Financial risk management

69 Related party disclosure

70 Segment Information

73 Share-based payment plans

75 Auditor’s remuneration

76 Parent entity information

Significant events after the reporting date

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DIRECTORS’ REPORT

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The Directors present their report together with the financial report of Moly Mines Limited (“Moly Mines” or the “Company”) and of the consolidated entity, being the Company and its controlled entities (the “Group”) for the year ended 31 December 2013, and the auditor’s report thereon. In this report and the financial statements, references to:

“Hanlong” are to Hanlong Mining Investment Pty Ltd. “Sichuan Hanlong Group” are to Sichuan Hanlong Group, a private company incorporated in China. “Hanlong Group” are to the Chinese companies controlled by Sichuan Hanlong Group, including Hanlong and

Sichuan Hanlong Group itself. DIRECTORS The names and details of the Company’s Directors in office during the year and until the date of this report are set out below. Directors were in office for the entire year unless otherwise stated. Director Qualifications, Experience and Other Directorships Committee

Membership Nelson Chen Non-Executive Chairman

Appointed 31 May 2013. Appointed Chairman 20 December 2013. Mr Chen was an alternate director for Mr Liu from 23 April 2010 until 31 May 2013. Mr Chen is a Director of Hanlong (Australia) Resources Pty Ltd and a Chartered Accountant in Australia. He holds postgraduate degrees in finance and accounting. Prior to joining Hanlong, Mr Chen spent over 11 years with PricewaterhouseCoopers, Sydney office in their audit and M&A advisory practices. Mr Chen has served on the board of Australia China Business Council, NSW branch for over 6 years. Details of Mr Chen’s other listed public company directorships over the past 3 years are: Marenica Energy Limited, appointed 4 October 2011, continuing. General Moly, Inc. (NYSE Amex and TSX ) appointed 14 September 2011,

continuing.

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Douglas Buerger Non-Executive, independent

Appointed 17 January 2014. Mr Buerger specialises in exploration, geochemistry and geology with over 40 years’ experience in the resources industry in base metals, gold and uranium. He has extensive experience in project management, general management and executive management roles. Most recently he held the position of Managing Director and CEO of Bendigo Mining Limited. Prior to his role with Bendigo Mining Limited, Mr Buerger worked in a number of general manager and exploration manager positions in Australasia and Africa. He is experienced with equity markets, having raised substantial funds on international markets for exploration and mine development. Mr Buerger holds a Bachelor of Science and a MPhil and is a Fellow of the Australian Institute of Mining and Metallurgy and a Member of the Australian Institute of Company Directors. Details of Mr Buerger’s other listed public company directorships over the past 3 years are: Marenica Energy Limited, appointed 16 September 2011, continuing.

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DIRECTORS’ REPORT

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Alan Edwards Non-Executive, independent

Appointed 28 October 2013. Mr Edwards is a mining professional with three decades of diverse mining industry experience. He is a graduate of the University of Arizona, where he obtained a Bachelor of Science in Mining Engineering and an MBA (Finance). Mr Edwards is currently President of AE Consulting, a Colorado-based company. He previously served as President and CEO of Copper One, President and CEO of Frontera Copper Corporation, and Executive Vice President and Chief Operation Officer of Apex Silver Mines Corporation, where he directed the engineering, construction and development of the San Cristobal project in Bolivia. Mr Edwards has also held executive positions with Kinross Gold Corporation, P.T. Freeport Indonesia, Cyprus Amax Minerals Company and Phelps Dodge Mining Company, where he began his career. Details of Mr Edwards’ other listed public company directorships over the past 3 years are: Entree Gold Inc., appointed 10 March 2011, continuing. AuRico Gold Inc., appointed 14 June 2011, continuing. AQM Copper Inc., appointed 5 October 2011, continuing. Oracle Mining Corp., appointed 12 October 2011, continuing. U.S. Silver and Gold Inc., appointed 13 August 2012, continuing. U.S Silver Corp., appointed 23 June 2011, resigned August 2012. Gammon Gold Inc., appointed 13 May 2010, resigned June 2011. Copper One Inc., appointed 17 December 2009, resigned 25 February 2013.

Audit and Risk Management –

Chairman, Remuneration

from 28 October 2013

Kang Huan Jun Non-Executive

Appointed 25 June 2012. Mr Kang is the executive director and the acting Chief Executive Officer of Hanlong Resources Limited and Vice President of Sichuan Hanlong Group Company Limited. Mr Kang has held lecturing positions at Hebei University and gained his PhD at the China University of Social Sciences. Since leaving academia and prior to joining the Sichuan Hanlong Group, Mr. Kang held positions with the China Securities Committee, China Zhongqi Investments and was the Chief Executive Officer of Hong Kong Fengshou Investment Company. Mr Kang is a Board nominee of Hanlong and a director of Hanlong, and has not been a director of any other listed public companies in the last 3 years.

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Cathie (Wei) Wu Non-Executive, independent

Appointed 17 January 2014. Ms Wu is a professional executive who has extensive experience in both the Chinese and Australian business communities. She has advised numerous Chinese companies and Australian resource companies to either manage direct investments in Australia or attract investments from China in the base metals, alumina, iron ore, coal and mineral sands sectors. She previously served at UBS SDIC Fund Management Company as a project development manager. Ms Wu holds a Bachelor of Science from Fudan University in Shanghai, China and a MPhil (Research) in Infosys from the University of New South Wales. Details of Ms Wu’s other listed public company directorships over the past 3 years are: Queensland Mining Corporation Limited, appointed Alternative Director 16

March 2012 and appointed Director 9 October 2012, resigned 8 August 2013.

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DIRECTORS’ REPORT

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Paul Eagland Non-Executive, independent

Appointed 28 October 2013, resigned 20 February 2014. Mr Eagland was the founder of Global Stone Corporation, a company involved in the limestone sector, which went public on the Toronto Stock Exchange in 1993 and was sold for $250 million in 1998. Mr Eagland’s background is in mining finance. He was the Chairman of the Board of Oracle Mining Corp. (OMN-TSXV), a Canadian corporation which is developing the Oracle Ridge high-grade, underground copper mine in Arizona. His primary responsibility at Oracle was project finance. The company has raised $56 million of capital to date through a combination of equity offerings, off-take and royalty sales, and has secured a letter of intent from a major Swiss bank to provide a further $70 million in project financing once a bankable feasibility study has been completed. Mr Eagland is also the chairman of Orepass Mining Limited, a merchant bank which is actively involved in the acquisition of mining properties. Details of Mr Eagland’s other listed public company directorships over the past 3 years are: Oracle Mining Corp., appointed 30 March 2010, resigned 13 November 2013.

Audit and Risk Management, Remuneration

– Chairman from 28

October 2013 until 20

February 2014

Peter Mansell Non-Executive

Appointed 28 October 2013, resigned 17 January 2014. Mr Mansell was an alternate director for Mr Kang from 25 June 2012 until 28 October 2013. Until he retired as partner, Mr Mansell practiced as a corporate resources lawyer at Herbert Smith Freehills and was Managing Partner (Perth) and Chairman of the national firm at various times. He has also served as the President of the Council of the Australian Institute of Company Directors, Western Australian Division. Mr Mansell holds a Bachelor of Commerce, Bachelor of Laws and Higher Diploma in Tax Law, all from the University of Witwatersrand, Johannesburg. Details of Mr Mansell’s other listed public company directorships over the past 3 years to when he resigned are: Ampella Mining Limited (Chairman), appointed 8 November 2011, continuing. Bullabulling Gold Limited (Chairman), appointed 10 April 2012, continuing. Nyrstar NV (a company listed on Euronext in Belgium), appointed 31 August

2007, resigned 24 April 2013. BWP Trust, appointed 16 September 1998, resigned 4 December 2013.

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Bruno Camarri AM Non-Executive Chairman

Appointed 28 October 2013, resigned 20 December 2013. Mr Camarri has worked as a corporate lawyer since 1969, primarily representing clients in the energy, mining, construction and technology industries. He was a partner at Australian law firm Freehills (now Herbert Smith Freehills) for 30 years, served as managing partner of the Perth office and a member of Freehills’ national board from 1979 to 1987, and now acts as a consultant with that firm. He has held a number of board positions on listed and unlisted companies in the construction, manufacturing and mining industries, and is currently a director of Barminco Limited. Previous directorships include UGL Ltd, LinQ Capital Ltd and Bristile Ltd. Mr Camarri was made a member of the Order of Australia in June 2008. He is in the Australian Best Lawyers List in the specialty of mining.

Details of Mr Camarri’s other listed public company directorships over the past 3 years to when he resigned are: Linq Resources Fund., appointed 18 July 2002, delisted from Australia

Securities Exchange 12 April 2013.

Audit and Risk Management, Remuneration

from 28 October 2013

until 20 December

2013

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DIRECTORS’ REPORT

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Michael Braham Non-Executive Chairman, independent

Appointed a Director on 20 October 2010 and Chairman on 1 December 2010, resigned 28 October 2013.

Mr Braham is a chartered accountant (NZ) with many years of experience in investment banking and administration. For the past 15 years he has served as a Non-Executive Director on company boards currently including, the D&D Technology Group and the Home Appliances (Euromaid) Group. Mr Braham’s former roles include Executive Director with investment bank Schroders Australia (1978-90), Regional Commissioner for New South Wales for the Australian Securities Commission (1990-95) and Chairman of the listed Galileo Shopping America Trust and a Non-Executive Director of Sydney Ports Corporation. Previously he was a World Bank consultant in Sri Lanka and a New Zealand partner of Arthur Young (now Ernst & Young). Mr Braham has not been a director of any other listed public companies in the last 3 years.

Audit and Risk Management

until 28 October 2013

David Craig Non-Executive, independent

Appointed Chairman 19 May 2009, passed the Chair to Michael Braham on 1 December 2010, resigned 28 October 2013. Mr Craig is a lawyer who has held and holds executive and board positions in the fields of law, financial services, engineering and construction, oil and gas exploration and production, and mining, exploration and production. Details of Mr Craig’s public company directorships over the past 3 years to when he resigned are: Southern Hemisphere Mining Limited (TSX listed), appointed 2 December

2009, continuing. Appointed Chairman 28 April 2011. Nomad Building Solutions Limited, appointed 29 November 2010, resigned 31

July 2012. Forge Group Limited, appointed 8 March 2011, continuing. Appointed

Chairman 8 June 2012, resigned 11 February 2014. Gunson Resources Limited, appointed 8 March 2011, continuing. Appointed

Chairman 8 March 2011.

Audit and Risk Management –

Chairman, Remuneration

– Chairman until 28

October 2013

John David Nixon (David) Non-Executive, independent

Appointed 10 June 2008, resigned 31 May 2013. Mr Nixon is a mechanical engineer with over 40 years’ experience in the mining and construction industries in Australia, Southern Africa, New Zealand, Canada and Indonesia and with extensive experience in bulk commodity and precious metals mining operations.

Details of Mr Nixon’s other listed public company directorships over the past 3 years to when he resigned are: Swick Mining Services Limited, appointed 1 January 2007, continuing. Brockman Resources Limited, appointed 23 March 2009, resigned 16

September 2011.

Audit and Risk Management, Remuneration

until 31 May 2013

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DIRECTORS’ REPORT

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Han Liu Non-Executive

Appointed 23 April 2010, removed 31 May 2013. Mr Liu is the CEO of Sichuan Hanlong Group and its subsidiaries and CEO and chairman of Sichuan Jinlu Company (publicly listed). He is the founder and CEO of Guanghan Pingyuan Development Company. Over the past 10 years, Mr Liu has built the Sichuan Hanlong Group into a modern, international company to be one of the twenty largest privately held companies in Sichuan Province. Mr Liu is an advisor to the Sichuan Province Economic Advisory Committee and Vice Principal of the Deyang City Economic Council. Mr Liu holds a Bachelor of Economics, International Trade from South-Western University of Finance and Economics, Chengdu, China and a Masters of Business Administration from Sichuan University, Chengdu, China. Mr Liu was a Board nominee of Hanlong and a director of Hanlong.

Remuneration until 31 May

2013

Andy Zhmurovsky Non-Executive

Appointed 23 April 2010, resigned 20 May 2013. Mr Zhmurovsky has a Bachelor of Business Administration with Honours from the University of Texas at Austin. He commenced his employment in Houston with the Energy Investment Banking Group of CIBC World Markets before joining EIG Global Energy Partners (“EIG”) (formerly TCW Energy) as Senior Vice President within the Energy and Infrastructure Group. Mr Zhmurovsky is a Board nominee of EIG. Details of Mr Zhmurovsky’s other listed public company directorships over the past 3 years to when he resigned are: Manabi S.A. (listed in Brazil), appointed 30 November 2012.

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COMPANY SECRETARY Ms Susan Hunter Ms Hunter has over 19 years’ experience in the corporate finance industry. She is founder and managing director of consulting firm Hunter Corporate Pty Ltd, which specialises in the provision of corporate governance and company secretarial advice to ASX listed companies, and has previously held senior management roles at Ernst & Young, Pricewaterhouse Coopers and Bankwest both in Perth and Sydney. Ms Hunter holds a Bachelor of Commerce, is a Member of the Australian Institute of Chartered Accountants, a Fellow of the Financial Services Institute of Australasia, a Graduate Member of the Australian Institute of Company Directors and an Associate of the Governance Institute of Australia Ltd. She is currently company secretary for several ASX listed companies.

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DIRECTORS’ REPORT

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INTERESTS IN THE SHARES, OPTIONS AND WARRANTS OF THE COMPANY As at the date of this report, the interests (directly or indirectly held) of the Directors in the shares, options and warrants of Moly Mines were: Director Ordinary Shares Options over Unissued

Ordinary Shares Warrants over Unissued

Ordinary Shares N. Chen (i) 207,244,146 - -

D. Buerger - - -

A. Edwards - - -

H. Kang (ii) 207,244,146 - -

C. Wu - - -

(i) Mr Chen is a director of Hanlong (Australia) Resources Pty Ltd. Its ultimate parent entity, Hanlong, holds

207,244,146 shares in the Company. (ii) Mr Kang is a director of Hanlong Resources Limited. Its ultimate parent entity, Hanlong, holds 207,244,146

shares in the Company. DIRECTORS’ AND EXECUTIVE OFFICERS’ REMUNERATION Details of remuneration paid to Directors and other specified Executive Officers are set out in the Remuneration Report. DIRECTORS’ MEETINGS The number of meetings of the Board of Directors and Committees of the Board held during the year and the numbers of meetings attended by each Director were as follows:

Directors’ Meetings

Audit and Risk Management Committee Meetings

Remuneration Committee Meetings

Material Investment Committee

Attended

Eligible to

Attend

Attended

Eligible To

Attend

Attende

d

Eligible to

Attend

Attended

Eligible to

Attend

N. Chen 10 10 - - - - - -

A. Edwards 2 2 - - - - - -

H.J. Kang (alternate P. Mansell until 28 October 2013)

10 18 1 1 - - - -

P. Mansell 4 4 - - - - - -

P. Eagland 2 2 - - - - - -

B. Camarri 3 3 - - - - - -

M. Braham 15 15 3 3 - - - -

D. Craig 15 15 3 3 - -

H. Liu (alternate N.Chen until 31 May 2013)

7 8 - - 5 5 5 5

D. Nixon 7 8 2 2 5 5 5 5

A. Zhmurovsky 7 7 - - 5 5 5 5

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DIRECTORS’ REPORT

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REMUNERATION REPORT (AUDITED)

This report outlines the remuneration arrangements in place for Directors and Senior Executives of the Company and the Group in accordance with the requirements of the Corporations Act 2001 and its regulations. For the purposes of this report, Key Management Personnel (“KMP”) of the Group are defined as those persons having authority and responsibility for planning, directing and controlling the major activities of the Company and the Group, directly or indirectly, including any Director (whether Executive or otherwise) of the Company. For the purposes of this report, the term ‘Executive’ encompasses the Chief Executive Officer (“CEO”), any Executive Director and the Executive Officers of the Company and the Group. The KMP of the Group are:

Name Title Date Appointed/Resigned

Directors Nelson Chen Chairman (Non-Executive) Appointed 31 May 2013 (appointed Alternate

Director 23 April 2010)

Douglas Buerger Director (Non-Executive) Appointed 17 January 2014

Alan Edwards Director (Non-Executive) Appointed 28 October 2013

Kang Huan Jun Director (Non-Executive) Continuing

Cathie Wu Director (Non-Executive) Appointed 17 January 2014

Paul Eagland Director (Non-Executive) Appointed 28 October 2013, resigned 20 February 2014

Peter Mansell Director (Non-Executive) Appointed 28 October 2013 (appointed Alternate Director 25 June 2012), resigned 17 January 2014

Bruno Camarri Chairman (Non-Executive) Appointed 28 October 2013, resigned 20 December 2013

Michael Braham Chairman (Non-Executive) Resigned 28 October 2013

David Craig Director (Non-Executive) Resigned 28 October 2013

Han Liu Director (Non-Executive) Removed 31 May 2013

David Nixon Director (Non-Executive) Resigned 31 May 2013

Andy Zhmurovsky Director (Non-Executive) Resigned 20 May 2013

Executive Officers David Pass Acting Chief Executive Officer Appointed 28 October 2013 (appointed General

Manager Operations 1 December 2012)

Alan Howells Acting Chief Financial Officer Appointed 28 October 2013

Collis Thorp Acting Chief Executive Officer Ceased employment 28 October 2013

John McEvoy Chief Financial Officer Ceased employment 28 October 2013

Martijn Bosboom General Counsel & Company Secretary

Ceased employment 30 June 2013

There were no other changes to KMP after the reporting date and before the date this financial report was authorised for issue. Remuneration Committee It is the Company’s objective to provide maximum stakeholder benefit from the retention of high quality KMP by remunerating fairly and appropriately with reference to relevant employment market conditions. The Remuneration Committee assists the Board in meeting its responsibilities for ensuring the existence of effective policies, processes

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and practices for rewarding KMP and for succession management. The primary role of the Remuneration Committee is to provide non-executive and independent oversight of the Company’s remuneration practices. The members of the Remuneration Committee are:

Douglas Berger – Independent Non-Executive – Chairman Alan Edwards – Independent Non-Executive

The Remuneration Committee meets at least once per year. Where the Remuneration Committee discusses matters relating to remuneration of individual Directors, the conflicted Director abstains from that deliberation. The Company Secretary acts as secretary to the Committee. Specifically the Remuneration Committee will:

Review and recommend to the Board remuneration policies and strategy by reference to prevailing employment market conditions.

Review the remuneration package of the CEO, by reference to independent external advice if considered required, and recommend changes to CEO remuneration to the Board.

Review the recommendations of the CEO for other KMP remuneration packages and recommend changes to KMP remuneration to the Board.

Recommend to the Board fees and remuneration packages for Non-Executive Directors. Remuneration Policy and Philosophy The Remuneration Committee continuously reviews remuneration policies and philosophies to ensure remuneration packages remain effective and competitive given the Company’s business activities and the evolving employment markets and practices. The structure of remuneration packages will be assessed within the following general framework:

provide competitive rewards to attract, retain and incentivise high calibre people; link rewards to shareholder value; transparency; and capital management.

Remuneration packages may include consulting fees, base salary, superannuation, non-cash benefits and short and / or long term variable awards. The components of remuneration packages for KMP are determined on a case-by-case basis depending on their role and responsibility within the organisation. The Company aims to benchmark its base salaries at or around the 75th percentile of resources industry salary packages based on independent market research. The objective for variable remuneration is to reward KMP in a manner that aligns remuneration with the interests of the Company’s shareholders. Accordingly, variable remuneration may be awarded to KMP who can reasonably influence or impact the Company’s ability to maximise shareholder returns. Cash performance bonus awards may also apply. The Company has in place an Employee Incentive Option Scheme. The purpose of the grant of options is to provide an incentive to KMP to continue to be dedicated and committed to the Company and to maximise their efforts for the benefit of shareholders generally over the long term. Allocations of options are at the discretion of the Board. Vesting conditions are considered when awarding options. No elements of KMP 2013 remuneration were directly related to performance. The Australian Securities Exchange Corporate Governance best practice recommendations specify that options should not be issued to Non-Executive Directors. However, the Board considers that in view of the financial, legal and other responsibilities assumed by Directors of public companies, the payment of monetary fees alone to Directors is not always an adequate reward and does not provide an adequate incentive to enable the Company to attract and retain Non-Executive and Executive Directors with the requisite level of experience and qualifications. Equity participation by

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way of the grant of options to members of the Board may be appropriate for these purposes and contributes to the preservation of Company cash reserves. Company Performance The remuneration philosophy for KMP endeavours to link the overall level of compensation to the Company’s earnings and growth in shareholder wealth of the Company, mainly through variable awards. Consideration of the Company’s earnings will be more relevant as the Company matures and becomes profitable. The chart below compares, assuming an initial investment of A$100, the yearly change in the cumulative total shareholder return versus the S&P/ASX 200 Index for the Company’s six most recently completed reporting periods, covering five and a half years due to the change in financial year end for the reporting period ended 31 December 2010.

30 June 09 30 June 10 31 Dec 10 31 Dec 11 31 Dec 12 31 Dec 13

Moly Mines Limited A$100 A$96 A$229 A$56 A$25 A$21

S&P/ASX 200 Accumulation Index A$100 A$109 A$120 A$103 A$118 A$135 Moly Mines Limited loss ($48,179,00) ($74,608,000) ($130,418,000) ($29,842,000) ($49,618,000) ($4,874,000) Non-Executive Directors’ Remuneration Clause 59 (1) of the Company’s Constitution provides that Non-Executive Directors are entitled to receive Non-Executive Directors’ fees within the limits approved by shareholders in general meeting. Shareholders approved the aggregate remuneration to be paid to Non-Executive Directors to be $800,000 per annum on 27 November 2007. Each Non-Executive Director’s actual remuneration for the years ended 31 December 2013 and 31 December 2012 is shown on page 16. Each Non-Executive Director has an unspecified term of appointment, which is subject to the Company’s Constitution. Conditions are reviewed at least annually by the Remuneration Committee. There are no termination benefits for any Non-Executive Director.

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Base fees for each director during their period in office were as follows:

Non-Executive Director Base Fees

$

Audit and Risk Management

Committee Fee $

Remuneration Committee Fee

$

Investment Committee Fee

$

Superannuation

% Nelson Chen ( i) ( i i i ) 150,000 - - 5,000 1

Douglas Buerger 75,000 - 7,500 - -

Alan Edwards(ii i ) 75,000 7,500 5,000 5,000 -

Kang Huan Jun 75,000 - - - -

Cathie Wu 75,000 5,000 - - -

Paul Eagland(i i i ) 75,000 5,000 5,000 7,500 -

Peter Mansell 75,000 - - - 10

Bruno Camarri 150,000 5,000 5,000 - -

Michael Braham 150,000 5,000 - - 10

David Craig 87,000 7,500 7,500 - 10

David Nixon 75,000 5,000 5,000 - 10

Han Liu ( i) 75,000 - 5,000 - 10

Andy Zhmurovsky (i i) 75,000 - - - -

(i) Mr Chen’s base fees of $150,000 applied from his appointment as a chairman on 28 October 2013, prior to then, he was appointed as a director on 31 May 2013 and was paid a base fee of $75,000 pa. Prior to that date he was an alternate director for Mr Liu, who directed that Non-Executive Director fees and committee membership fees earned by him be directed to Mr Chen.

(ii) Fees paid to Mr Zhmurovsky were paid to companies associated with EIG Global Energy Partners (formerly TCW Energy).

(iii) The investment committee fee commenced from 10 February 2014. No options were issued to Non-Executive Directors during the financial year. Executive Remuneration The Company aims to reward KMP with a level of remuneration commensurate with their position and responsibilities within the Company in accordance with the overall remuneration philosophy. Base Salary and Fees Base salaries and fees paid to the Executive Officers for the year ended 31 December 2013 are disclosed in Remuneration Table 1. Bonus Arrangements From time to time the Company provides short-term cash bonuses to KMP and staff. Short-term bonuses are discretionary, vary between individuals and are based on performance measures that advance the interests of shareholders. Retention bonuses form part of the Company’s remuneration philosophy and is a policy that may extend to all staff. There are currently no bonus arrangements in respect of KMP. Options During the year ended 31 December 2012, options were issued to KMP, including the five highest remunerated officers of the Group, under the Employee Option Incentive Scheme. The second tranche of these options were earned in February 2013. Details of the options are shown in Note 21 (b) and Note 28 of the financial statements.

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Options awarded, exercised and lapsed during the year ended 31 December 2013

Number of options awarded

during the year

Number of options vested

during the year

Number of options lapsed

during the year Executives D. Pass - - -

A. Howells - - -

C. Thorp (i) - - 916,667

J. McEvoy (ii) - - 633,334

M. Bosboom (iii) - - 366,667

(i) Mr Thorp ceased employment on 28 October 2013 and his Tranche 3 options were cancelled. (ii) Mr McEvoy ceased employment on 28 October 2013 and his Tranche 3 options were

cancelled. (iii) Mr Bosboom ceased employment on 30 June 2013 and his Tranche 2 and Tranche 3 options

were cancelled.

Value of options awarded, exercised and lapsed during the year ended 31 December 2013

Value of options granted during

the year

Value of options exercised

during the year

Value of options lapsed during the

year

% of Remuneration consisting of

options for the year Executives D. Pass - - - 19.1 A. Howells - - - 4.3 C. Thorp (i) - - 106,891 15.1

J. McEvoy (ii) - - 73,852 16.4 M. Bosboom (iii) - - 41,711 -

(i) Mr Thorp ceased employment on 28 October 2013 and his Tranche 3 options were cancelled. (ii) Mr McEvoy ceased employment on 28 October 2013 and his Tranche 3 options were

cancelled. (iii) Mr Bosboom ceased employment on 30 June 2013 and his Tranche 2 and Tranche 3 options

were cancelled.

Service Agreements Remuneration and other terms of employment for Non-Executive Directors are described above. Executive Directors and specified KMP terms of employment are formalised in service agreements or employment contracts. The major provisions of the agreements relating to remuneration are as follows: Executive Officers David Pass

Base salary – $435,000 plus 10% superannuation. Retention bonus of 20% payable 12 months after becoming Acting CEO. Project transaction bonus at the absolute discretion of the Board. Payment of a benefit of five weeks base salary on termination (other than for gross misconduct) by the

Company. Payment of a benefit of four weeks’ pay for each completed year of service pro-rated, if the officer’s position is

made redundant. Conditions reviewed at least annually by Remuneration Committee.

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Alan Howells Base salary – $276,000 plus 10% superannuation. Retention bonus of 20% payable 12 months after becoming Acting CFO. Project transaction bonus at the absolute discretion of the Board. Payment of a benefit of five weeks base salary on termination (other than for gross misconduct) by the

Company. Payment of a benefit of four weeks’ pay for each completed year of service pro-rated, if the officer’s position is

made redundant. Conditions reviewed at least annually by Remuneration Committee.

Collis Thorp – ceased employment 28 October 2013

Base salary – $538,000 plus 10% superannuation. Payment of a benefit of three months base salary on termination (other than for gross misconduct) by the

Company. Payment of a benefit of four weeks’ pay for each completed year of service pro-rated, if the officer’s position is

made redundant. Conditions reviewed at least annually by Remuneration Committee.

John McEvoy – ceased employment 28 October 2013

Base salary – $369,250 plus 10% superannuation. Payment of a benefit of one month’s base salary on termination (other than for gross misconduct) by the

Company. Payment of a benefit of four weeks’ pay for each completed year of service pro-rated, if the officer’s position is

made redundant. Conditions reviewed at least annually by Remuneration Committee.

Martijn Bosboom – ceased employment 30 June 2013

Base salary – $339,007 plus 10% superannuation Payment of a benefit of one month’s base salary on termination (other than for gross misconduct) by the

Company. Payment of a benefit of four weeks’ pay for each completed year of service pro-rated, if the officer’s position is

made redundant. Conditions reviewed at least annually by Remuneration Committee.

Directors' and Executive Officers’ Remuneration Details of the nature and amount of each major element of the remuneration of each Director of the Company and each of the specified Executive Officers of the Company for the years ended 31 December 2013 and 31 December 2012 are set out on the following page.

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Remuneration of KMP

Table 1: Remuneration for the years ended 31 December 2013 and 31 December 2012

Short Term Remuneration

Long Term Remuneration

Post Employment Share Based Termination Payment

Total

Performance Related

Base Salary / Fees $

Bonus $

Long Service Leave Super Contributions

$

$

$

$

%

Dec 2013

Dec 2012

Dec 2013

Dec 2012

Dec 2013

Dec 2012

Dec 2013

Dec 2012

Dec 2013

Dec 2012

Dec 2013

Dec 2012

Dec 2013

Dec 2012

Dec 2013

Dec 2012

Non-Executive Directors

N. Chen (I) 81,558 80,000 - - - - 816 1,400 - - - - 82,374 81,400 - - P. Eagland ( i i) 15,543 - - - - - - - - - - - 15,543 - - - A. Edwards (i i i ) 15,543 - - - - - - - - - - - 15,543 - - - H.J. Kang ( iv) 75,000 38,943 - - - - - - - - - - 75,000 38,943 - - P. Mansell (v) 13,654 - - - - - 1,365 - - - - - 15,019 - - - B. Camarri (v i) 28,575 - - - - - - - - - - - 28,575 - - - M Braham (v i i) 127,378 157,260 - - - - 12,738 15,726 - - - - 140,116 172,986 - - D. Craig (v i i i ) 83,823 112,625 - - - - 8,382 11,263 - - - - 92,205 123,888 - - D. Nixon ( ix) 35,417 85,000 - - - - 3,542 8,500 - - - - 38,959 93,500 - - H. Liu (x) - - - - - - - - - - - - - - - - A. Zhmurovsky (xi) 29,032 75,000 - - - - - - - - - - 29,032 75,000 - -

Executive Directors D. Fisher (x i i) - 280,000 - - - - - - - - - 787,500 - 1,067,500 - -

Executive Officers D. Pass (xi i i ) 388,084 31,123 33,208 - 32,062 - 24,960 2,080 55,523 4,526 - - 533,837 37,729 - - A. Howells (xiv ) 46,692 - - - 1,164 - 4,669 - 2,096 - - - 54,621 - - - C. Thorp (xv) 465,794 544,654 74,659 - 18,035 - 34,373 38,605 38,055 84,419 429,218 - 1,060,134 667,678 - - J. McEvoy (xv) 313,248 375,212 71,924 - 4,295 - 21,003 30,942 26,292 58,327 218,751 - 655,513 464,481 - - M. Bosboom (xv i) 173,954 29,542 31,076 - - - 12,480 2,080 (12,722) 1,606 75,625 - 280,413 33,228 - - A. Worland (xv i i) - 354,626 - - - - - 28,484 - 66,581 - 232,819 - 682,510 - -

Total 1,893,295 2,163,985 210,867 - 55,556 - 124,328 139,080 109,244 215,459 723,594 1,020,319 3,116,884 3,538,843 - -

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(i) Mr Chen was appointed director on 31 May 2013 and Chairman on 20 December 2013. He was formerly an alternate director for Mr Liu. Mr Liu directed that Non-Executive Director fees and committee membership fees earned by him be directed to Mr Chen.

(ii) Mr Eagland was appointed 28 October 2013. (iii) Mr Edwards was appointed 28 October 2013. (iv) Mr Kang was appointed on 25 June 2012. (v) Mr Mansell was appointed director on 28 October 2013. He was formerly an alternate director for Mr Kang. (vi) Mr Camarri was appointed on 28 October 2013 and resigned on 20 December 2013. (vii) Mr Braham resigned on 28 October 2013. He was paid an additional $2,260 during the year ended 31 December 2012 for services not paid in the year ended 31

December 2011. (viii) Mr Craig resigned on 28 October 2013. On 1 June 2012 his base Director fees were reduced down from $112,500 to $87,000 as a result of the position of Deputy

Chairman being abolished. (ix) Mr Nixon resigned on 31 May 2013. (x) Mr Liu was removed as a director on 31 May 2013. (xi) Mr Zhmurovsky resigned on 20 May 2013. Directors’ fees earned by Mr Zhmurovsky were paid to companies associated with EIG Global Energy Partners

(formerly TCW Energy). (xii) Mr Fisher resigned on 15 March 2012. (xiii) Mr Pass was appointed Acting Chief Executive Officer on 28 October 2013 and General Manager Operations on 1 December 2012.During the period the Board

approved a discretionary service bonus of $16,604 and a discretionary retention bonus of $16,604 be paid. (xiv) Mr Howells was appointed Acting Chief Financial Officer on 28 October 2013. He previously served as Financial Controller. (xv) Mr Thorp and Mr McEvoy ceased employment on 28 October 2013. Mr Thorp and Mr McEvoy were paid out their long service leave on cessation of employment

which amounted to $112,235 and $70,995 respectively. During the period the Board approved a discretionary service bonus of $24,659 and a gratuity bonus of $50,000 be paid to Mr Thorp. During the period the Board approved a discretionary service bonus of $16,924 and a gratuity bonus of $55,000 be paid to Mr McEvoy.

(xvi) Mr Bosboom ceased employment on 30 June 2013. During the period the Board approved a discretionary service bonus of $15,538 and a discretionary retention bonus of $15,538 be paid.

(xvii) Mr Worland ceased employment on 30 November 2012. His salary included a long service leave payout of $67,959.

End of Remuneration Report. F

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DIRECTORS’ REPORT

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SHARE OPTIONS Unissued shares Details of options over unissued shares as at the date of this report are: Issuing Entity Number of Shares

under Option Class of Shares Exercise Price

of Option Expiry Date of

Options

Moly Mines Limited 7,533,322 Ordinary $0.55 14 February 2016

Details of warrants over unissued shares as at the date of this report are: Issuing Entity Number of Shares

under Warrant Class of Shares Exercise Price

of Warrant Expiry Date of

Warrant

Moly Mines Limited 4,832,157 Ordinary $0.0001 15 February 2020

Option and warrant holders do not have any right, by virtue of the option, to participate in any share issue of the Company or any related body corporate. Shares issued as a result of the exercise of options and warrants No options or warrants were exercised during the year. OPERATING AND FINANCIAL REVIEW Principal Activities The principal activity of the Group during the year was the operation of the Spinifex Ridge Iron Ore Mine and evaluating acquisition activities. Result from Operations and Financial Position Moly Mines is a company limited by shares that is incorporated in Australia and listed on the Australian Securities Exchange (ASX) and the Toronto Stock Exchange (TSX). Since the Company’s incorporation in January 2003 and since listing on the ASX in March 2004, the Company’s financial performance and result has been, and will continue to be, attributable to its ongoing exploration, evaluation, planned development activities and mining operations on its ground holdings. The net loss after taxation attributable to the members of the Group for the year ended 31 December 2013 was $4,874,000 (net loss for year ended 31 December 2012: $49,618,000). The basic loss per share for the Group for the year was 1.27 cents per share (Dec 2012: loss of 12.9 cents per share) and the diluted loss per share was 1.27 cents per share (Dec 2012: loss of 12.9 cents per share). The Group’s current year financial performance has been affected by impairment losses of $6,578,000 (Dec 2012: impairment losses and exploration write-offs of $42,162,000). The impairment losses are made up of $5,000,000 impairment of development costs (Dec 2012: $36,255,000) and $756,000 impairment of financial assets (Dec 2012: $408,000). The December 2012 impairment losses also included impairment of non-current assets held for resale of $3,831,000 and reversal of impairment of receivables of $500,000, plus exploration write-offs of $2,168,000. As at 31 December 2013, the Company had $76,057,000 cash on hand and net working capital (current assets less current liabilities, not including non-current assets held for resale) of $52,642,000. The Hanlong Loan of $11,550,000 (Dec 2012: $14,830,000) is not due for repayment until 23 April 2020. For full details of the Hanlong Loan refer to Note 2 of the financial statements.

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REVIEW OF OPERATIONS AND PROJECT DEVELOPMENT ACTIVITIES The highlights of the Company’s operations and project development activities during the year and to the date of this financial report are summarised as follows: Spinifex Ridge Iron Ore Mine For the period under review, the Spinifex Ridge Iron Ore Mine was operated by the Company until 30 June 2013 at approximately 1 million tonnes of iron ore per annum utilising contract mining, crushing and haulage services. From 1 July 2013 the mine was operated by Mineral Resources Limited (MRL, ASX: MIN) subject to a mine gate sale agreement for iron ore produced at the Company’s Spinifex Ridge Iron Ore Mine to the end of the mine life. Details of the agreement are described below. Mine Operations to 30 June 2013 Mining activities operated on day shift only focussed on drill and blast and ore haulage from three open pit deposits to the run of mine pad. The crushing and screening plant also operated on a day shift only to produce an iron ore fines product

DIRECTORS’ REPORT

20

A$33.0 million was received on 12 July 2013 with a further A$1.7 million received on 16 August 2013 including proceeds from the sale of the iron ore stocks. On the completion of the mine a further A$3.0 million is due to be received subject to adjustments for the amount and quality of the ore mined compared to the original mine plan. To enable the Transaction to proceed MMA and Hanlong Metals Ltd (Hanlong Metals) agreed to terminate the Off-take Agreement whereby MMA appointed Hanlong Metals as its agent to sell iron ore produced from the Spinifex Ridge Iron Ore Mine. As compensation for this termination Hanlong Metals received a one-off termination fee of A$1 million and a termination royalty of A$1.20 per tonne of ore sold by MMA after termination. The sum of the one-off payment and the royalty is capped at A$4 million and the royalty will not be payable in respect of any ore mined after 31 December 2015. MRL has advised that 738,068 tonnes have been transported from Spinifex Ridge during the six months to 31 December 2013. MRL are currently hauling ore at 1.8 million tonnes per annum. Based on this rate it is expected that site operations will cease late in the 2014 year. Spinifex Ridge Molybdenum / Copper Project Development of the Spinifex Ridge Molybdenum/Copper Project has been postponed as the Project’s economics do not currently support the completion of full funding for the Project and a final investment decision. BUSINESS STRATEGIES AND PROSPECTS The Company’s primary assets are the Spinifex Ridge Iron Ore Mine and the Spinifex Ridge Molybdenum / Copper Project, both of which are within the Company’s existing mining leases. The Spinifex Ridge Iron Ore Mine was divested to MRL by a mine gate sale agreement and is expected to cease production during the second half of 2014. Development of the Spinifex Ridge Molybdenum / Copper Project has been postponed as the Project economics do not currently support the completion of full funding for the Project and a final investment decision. In view of the Iron Ore Mine divestment and the unlikelihood that the Spinifex Ridge Molybdenum / Copper Project will become economically viable in the near future, the Company is continuing to search for a project acquisition. With higher quality mining assets becoming available, the Board has continued its focus on identifying and evaluating value opportunities against their costs and associated risks. The Federal Government has introduced the Mineral Resource Rent Tax (MRRT) which applies to Australian iron ore and coal operations. The MRRT became effective on 1 July 2012. Based on current iron prices, the Company’s carry forward tax losses and other activities, it is unlikely the Group will generate sufficient earnings in the foreseeable future to meet the minimum tax paying threshold under the MRRT. SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS All significant changes in the state of affairs of the Group during the year are discussed in detail above. DIVIDENDS The Directors of Moly Mines have resolved not to recommend a dividend for the year ended 31 December 2013. No dividends were declared or paid during the year. SIGNIFICANT EVENTS AFTER THE REPORTING DATE On 17 February 2014 $1 million cash was received from Unity Mining Limited Other than as stated above, and as stated under the Operating and Financial Review and the Review of Operations and Project Development Activities sections, there has not arisen in the interval between the end of the reporting period and the date of this financial report any other item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Group, the results of those operations or the state of affairs of the Group, in future financial years.

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LIKELY DEVELOPMENTS AND EXPECTED RESULTS Likely future developments in the operations of the Group are referred to elsewhere in this financial report. Other than as referred to elsewhere in this financial report and announcements to the Australian and Toronto Stock Exchanges, ENVIRONMENTAL REGULATION AND PERFORMANCE The Group is subject to significant environmental regulation in respect to its exploration and development activities. The Group aims to ensure the appropriate standard of environmental care is achieved, and in doing so, that it is aware of and complies with all environmental legislation. The Directors of the Group are not aware of any breach of environmental legislation for the period under review. INDEMNIFICATION AND INSURANCE OF DIRECTORS AND OFFICERS The Company has made an agreement to indemnify all the Directors and Officers of the Company against all losses or liabilities incurred by each Director and Officer incurred in good faith in the ordinary course of business in their capacities as Directors and Officers of the Company. During or since the end of the reporting period, the Company has paid premiums in respect of a contract insuring all the Directors of Moly Mines legal costs incurred in defending proceedings for conduct involving: A wilful breach of duty. A contravention of sections 182 or 183 of the Corporations Act 2001, as permitted by section 199B of the

Corporations Act 2001. The total amount of insurance contract premiums paid during the year was $102,161 (Dec 2012: $91,503). ROUNDING The amounts contained in this report and in the financial report have been rounded to the nearest thousand (when rounding is applicable) under the option available to the Company under ASIC CO 98/0100. The Company is an entity to which the class order applies. NON-AUDIT SERVICES The Directors are satisfied that the provision of non-audit services is compatible with the general standard of independence for auditors imposed by the Corporations Act. The nature and scope of each type of non-audit service provided means that auditor independence was not compromised. Details of amounts paid or payable to the auditor for non-audit services provided during the year are outlined in Note 29 to the financial statements. AUDITOR’S INDEPENDENCE DECLARATION We have obtained the attached independence declaration from our auditors, Deloitte, which forms part of this report. Signed in accordance with a resolution of the Directors.

Nelson Chen Chairman Perth 28 February 2014

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CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2013 FOR THE YEAR ENDED 31 DECEMBER 2012

22

Consolidated 31 Dec 31 Dec 2013 2012 Note A$’000 A$’000 Sales revenue – iron ore 65,095 93,968

Cost of sales 3 (57,812) (91,227)

Gross profit 7,283 2,741 Interest income 1,539 1,428

Royalty income 10 4,000 -

Foreign currency gains 3 2,012 -

Realised fair value movement on derivative financial instruments 20 2,244 2,034

Reversal of impairment of receivables - 500 Expenses:

Administrative expenses 3 (9,868) (11,860) Hanlong Metals off-take termination fee and royalty (4,000) -

Foreign currency losses 3 - (323)

Loss on sale of assets (800) (235)

Impairment of development costs 14 (5,000) (36,255)

Impairment of non-current assets classified as held for sale 9(b) - (3,831)

Impairment of financial assets classified as available for sale 10 (756) (408)

Exploration expenses (written off) / refund received 12 21 (2,168)

Finance costs 3 (1,549) (1,241)

Loss before income tax

(4,874) (49,618) Income tax expense / (benefit) 4 - -

Loss after income tax (4,874) (49,618) Other comprehensive income - - Total comprehensive loss for the period (4,874) (49,618) Earnings per share for loss attributable to the ordinary equity holders of the Company: Basic and diluted loss per share (cents per share) 22 1.27 (12.9)

The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying Notes. F

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CONSOLIDATED STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 DECEMBER 2013

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Consolidated Note 31 Dec 31 Dec 2013 2012 A$’000 A$’000 Current Assets Cash and cash equivalents 5 76,057 41,115 Receivables 6 8,153 11,875 Prepayments 7 162 186 Inventories 8 - 5,682

84,372 58,858 Non-current assets classified as held for sale 9 14,500 14,500

Total Current Assets 98,872 73,358 Non-Current Assets Financial assets classified as available for sale 10 396 1,152 Receivables 6 410 3,056 Plant and equipment 11 4,680 7,721 Exploration and evaluation 12 - - Mine property development 13 19,016 31,309

Total Non-Current Assets 24,502 43,238

Total Assets 123,374 116,596 Current Liabilities Trade and other payables 14 3,681 10,632 Borrowings 15 - 53 Deferred revenue 16 23,471 - Provisions 17 4,578 2,317

Total Current Liabilities 31,730 13,002 Non-Current Liabilities Borrowings 15 11,550 14,830 Provisions 17 194 4,290

Total Non-Current Liabilities 11,744 19,120

Total Liabilities 43,474 32,122

Net Assets 79,900 84,474 Equity Contributed equity 18 402,673 402,673 Reserves 19 14,261 13,961 Accumulated losses (337,034) (332,160)

Total Equity

79,900 84,474

The above consolidated statement of financial position should be read in conjunction with the accompanying Notes.

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CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE YEAR ENDED 31 DECEMBER 201331 DECEMBER 2012

24

Contributed Equity

Accumulated Losses

Share Based Payments Reserve

Warrants Reserve

Total Equity

$’000 $’000 $’000 $’000 $’000

(Note 18) (Note 19) (Note 19) CONSOLIDATED

At 1 January 2012 402,768 (282,542) 4,157 9,390 133,773

Loss for the period - (49,618) - - (49,618)

Other comprehensive income - - - - -

Total comprehensive income/(loss) for the period - (49,618) - - (49,618) Equity Transactions

Issue of options - 414 - 414

Cost of prior period share issue (95) - - - (95) At 31 December 2012 402,673 (332,160) 4,571 9,390 84,474

At 1 January 2013 402,673 (332,160) 4,571 9,390 84,474

Profit for the period - (4,874) - - (4,874)

Other comprehensive income - - - - -

Total comprehensive income for the period - (4,874) - - (4,874) Equity Transactions

Options expensed over vesting period - - 300 - 300

At 31 December 2013 402,673 (337,034) 4,871 9,390 79,900

The above consolidated statement of changes in equity should be read in conjunction with the accompanying Notes.

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CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2013

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Consolidated 31 Dec 31 Dec 2013 2012 Note A$’000 A$’000 Cash flows from operating activities Receipts from customers 99,396 93,629 Payments to suppliers and employees (68,591) (104,413) Interest received 1,270 1,549

Interest paid (1,579) (1,686)

Net cash flows (used in) / from operating activities 24 30,496 (10,921)

Cash flows from investing activities Proceeds from / (payments for) security deposits 2,646 (221)

Payments for mine property development activities - (1,680)

Deferred proceeds from disposal of subsidiary 10 1,000 -

Payments for plant and equipment (98) (3,962)

Proceeds from disposal of plant and equipment 64 11,759

Net cash flows from investing activities

3,612 5,896

Cash flows from financing activities Proceeds from borrowings - 204,002 Repayment of borrowings (5,492) (204,002) Refund for / (payment of) borrowing costs 415 (21) Proceeds from derivative financial instrument 2,796 2,394 Payment for derivative financial instrument (552) (360) Finance lease principal repaid (115) (49)

Net cash flows (used in) / from financing activities

(2,948) 1,964

Net increase / (decrease) in cash and cash equivalents 31,160 (3,061) Net foreign exchange difference 3,782 (411) Cash and cash equivalents at beginning of the period 41,115 44,587

Cash and cash equivalents at end of the period 5 76,057 41,115

The above consolidated statement of cash flows should be read in conjunction with the accompanying Notes.F

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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013

26

1. CORPORATE INFORMATION The financial report of Moly Mines Limited (“Moly Mines” or the “Company”) and its subsidiaries (the “Group”) for the year ended 31 December 2013 was authorised for issue in accordance with a resolution of the Directors on 28 February 2014.

Moly Mines is a Company limited by shares incorporated and domiciled in Australia whose shares are publicly traded on both the Australian Securities Exchange and the Toronto Stock Exchange. The ultimate Australian parent of Moly Mines is Hanlong, which owns 53.8% of the issued share capital. The ultimate parent of Hanlong is Sichuan Hanlong Group, a private company incorporated in China. The nature of the operations and principal activities of Moly Mines is mining, exploration and development of mineral resources. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Preparation The financial report is a general purpose financial report which has been prepared in accordance with the Corporations Act 2001, Australian Accounting Standards and other authoritative pronouncements of the Australian Accounting Standards Board. The financial report has been prepared on a historical cost basis except for available-for-sale investments, held-for-trading investments and derivative financial instruments, which have been measured at fair value. Non-current assets classified as held for sale have been measured at the lower of historical cost and fair value less costs to sell. The financial report is presented in Australian dollars. All values are rounded to the nearest thousand dollars ($’000) unless stated under the option available to the Company under ASIC CO 98/0100. The Company is an entity to which that class order applies. For the purposes of preparing the consolidated financial statements, the Company is a for-profit entity. Compliance Statement The financial report complies with Australian Accounting Standards and International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board. New Accounting Standards and Interpretations The accounting policies adopted are consistent with those of the previous financial year except as follows: (i) Changes in accounting policy and disclosures

The Group has adopted the following new and amended Australian Accounting Standards and Interpretations as of 1 January 2013:

AASB 10 Consolidated Financial Statements AASB 11 Joint Arrangements AASB 12 Disclosure of Interests in Other Entities AASB 13 Fair Value Measurement AASB 119 Employee Benefits (2011 Revised) Interpretation 20 Stripping Costs in the Production Phase of a Surface Mine AASB 2011-9 Amendments to Australian Accounting Standards – Presentation of Other Comprehensive Income AASB 2012-2 Amendments to Australian Accounting Standards – Disclosures – Offsetting Financial Assets and

Financial Liabilities AASB 2012-5 Amendments to Australian Accounting Standards arising from Annual Improvements 2009-2011

Cycle

The adoption of these Standards and Interpretations did not have a significant impact on the amounts reported in these financial statements and disclosures, but may affect the accounting for future transactions or arrangements.

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(ii) Accounting Standards and Interpretations issued but not yet effective

Australian Accounting Standards and Interpretations that have recently been issued or amended but are not yet effective have not been adopted by the Group for the year ended 31 December 2013. These are outlined the following table. Reference Title Summary of change Application

date of standard

Application date for Group

AASB 9

Financial Instruments

AASB 9 includes requirements for the classification and measurement of financial assets. It was further amended by AASB 2010-7 to reflect amendments to the accounting for financial liabilities.

These requirements improve and simplify the approach for classification and measurement of financial assets compared with the requirements of AASB 139. The main changes are described below.

(a) Financial assets that are debt instruments will be classified based on: (1) The objective of the entity’s business

model for managing the financial assets; (2) The characteristics of the contractual

cash flows. (b) Allows an irrevocable election on initial

recognition to present gains and losses on investments in equity instruments that are not held for trading in other comprehensive income. Dividends in respect of these investments that are a return on investment can be recognised in profit or loss and there is no impairment or recycling on disposal of the instrument.

(c) Financial assets can be designated and measured at fair value through profit or loss at initial recognition if doing so eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities, or recognising the gains and losses on them, on different bases.

(d) Where the fair value option is used for financial liabilities the change in fair value is to be accounted for as follows: The change attributable to changes in credit

risk are presented in other comprehensive income (OCI)

The remaining change is presented in profit or loss

If this approach creates or enlarges an accounting mismatch in the profit or loss, the effect if the changes in credit risk are also presented in profit and loss.

Consequential amendments were also made to other standards as a result of AASB 9, introduced by AASB 2009-11 and superseded by AASB 2010-7 and 2010-10.

1 January 2017

1 January 2017

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Reference Title Summary of change Application date of standard

Application date for Group

AASB 9 (continued)

Financial Instruments (continued)

The AASB issued a revised version of AASB 9 (AASB 2013-9) during December 2013. The revised standard incorporates three primary changes:

1. New hedge accounting requirements including changes to hedge effectiveness testing, treatment of hedging costs, risk components that can be hedged and disclosures;

2. Entities may elect to apply only the accounting for gains and losses from own credit risk without applying the other requirements of AASB 9 at the same time; and

3. The mandatory effective date moved to 1 January 2017.

The impact of this standard will depend on the Group’s financial assets and liabilities at the time of application.

1 January 2017

1 January 2017

AASB 2011-4 Amendments to Australian Accounting Standards to Remove Individual Key Management Personnel Disclosure Requirements [AASB 124]

This standard makes amendments to remove individual key management personnel disclosure requirements from AASB 124 for disclosing entities that are not companies. It also removes the individual KMP disclosure requirements for all disclosing entities in relation to equity holdings, loans and other related party transactions. This amendment will reduce the Group’s disclosure requirements for KMP equity holdings.

1 July 2013

1 January 2014

AASB 2012-3 Amendments to Australian Accounting Standards – Offsetting Financial Assets and Financial Liabilities

AASB 2012-3 adds application guidance to AASB 132 Financial Instruments: Presentation to address inconsistencies identified in applying some of the offsetting criteria of AASB 132, including clarifying the meaning of “currently has a legally enforceable right of set-off” and that some gross settlement systems may be considered equivalent to net settlement.

This amendment is not expected to affect the Group.

1 January 2014

1 January 2014

Interpretation 21

Levies This Interpretation confirms that a liability to pay a levy is only recognised when the activity that triggers the payment occurs. Applying the going concern assumption does not create a constructive obligation. This interpretation is not expected to affect the Group.

1 January 2014

1 January 2014

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Reference Title Summary of change Application

date of standard

Application date for Group

AASB 1053 Application of Tiers of Australian Accounting Standards

This Standard establishes a differential financial reporting framework consisting of two Tiers of reporting requirements for preparing general purpose financial statements:

Tier 1: Australian Accounting Standards Tier 2: Australian Accounting Standards –

Reduced Disclosure Requirements Tier 2 comprises the recognition, measurement and presentation requirements of Tier 1 and substantially reduced disclosures corresponding to those requirements. The following entities apply Tier 1 requirements in preparing general purpose financial statements:

(a) For-profit entities in the private sector that have public accountability (as defined in this Standard)

(b) The Australian Government and State, Territory and Local Governments

The following entities apply either Tier 2 or Tier 1 requirements in preparing general purpose financial statements:

(a) For-profit private sector entities that do not have public accountability

(b) All not-for-profit private sector entities (c) Public sector entities other than the

Australian Government and State, Territory and Local Governments.

Consequential amendments to other standards to implement the regime were introduced by AASB 2010-2, 2011-2, 2011-6, 2011-11, 2012-1, 2012-7 and 2012-11. This standard will not affect the Group as it is a listed entity that already applies all Australian Accounting Standards.

1 July 2013

1 January 2014

AASB 2013-3 Amendments to ASSB 136 – Recoverable Amount Disclosures for Non-Financial Assets

AASB 2012-3 amends the disclosure requirements in AASB 136 Impairment of Assets. The amendments include the requirement to disclose additional information about the fair value measurement when the recoverable amount of impaired assets is based on fair value less costs of disposal.

This amendment may require the Group to make additional disclosures.

1 January 2014

1 January 2014

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Reference Title Summary of change Application

date of standard

Application date for Group

AASB 2013-4 Amendments to Australian Accounting Standards – Novation of Derivatives and Continuation of Hedge Accounting [AASB 139]

AASB 2013-4 amends AASB 139 to permit the continuation of hedge accounting in specified circumstances where a derivative, which has been designated as a hedging instrument, is novated from one counterparty to a central counterparty as a consequence of laws or regulations. This amendment is not expected to affect the Group.

1 January 2014

1 January 2014

AASB 2013-5 Amendments to Australian Accounting Standards – Investment Entities

These amendments define an investment entity and require that, with limited exceptions, an investment entity does not consolidate its subsidiaries or apply AASB 3 Business Combinations when it obtains control of another entity. These amendments require an investment entity to measure unconsolidated subsidiaries at fair value through profit or loss in its consolidated and separate financial statements. These amendments also introduce new disclosure requirements for investment entities to AASB 12 and AASB 127. This amendment is not expected to affect the Group as it is not an investment entity.

1 January 2014

1 January 2014

Annual Improvements 2010-2012 Cycle

Annual Improvements to IFRS 2010-2012 Cycle

This standard sets out amendments to International Financial Reporting Standards (IFRS) and the related bases for conclusions and guidance made during the International Accounting Standards Board’s Annual Improvements process. These amendments have not yet been adopted by the AASB.

1 July 2014

1 January 2015

Annual Improvements 2011-2013 Cycle

Annual Improvements to IFRS 2011-2013 Cycle

This standard sets out amendments to International Financial Reporting Standards (IFRS) and the related bases for conclusions and guidance made during the International Accounting Standards Board’s Annual Improvements process. These amendments have not yet been adopted by the AASB.

1 July 2014

1 January 2015

AASB 1031 Materiality The revised AASB 1031 is an interim standard that cross-references to other standards and the Framework (issued December 2013) that contains guidance on materiality. AASB 1031 will be withdrawn when references to AASB 1031 in all standards and interpretations have been removed.

1 January 2014

1 January 2014

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Reference Title Summary of change Application date of standard

Application date for Group

AASB 2013-9 Amendments to Australian Accounting Standards – Conceptual Framework, Materiality and Financial Instruments

The standard contains three main parts and makes amendments to a number of standards and interpretations.

Part A makes consequential amendments arising from the issuance of AASB CF 2013-1.

Part B makes amendments to particular standards to delete references to AASB 1031 and make minor editorial amendments to various other standards.

Part C makes amendments to a number of standards, including incorporating Chapter 6 Hedge Accounting into AASB 9 Financial Instruments.

These amendments are not expected to affect the Group.

Part A – 20 December 2013; Part B – 1 January 2014; Part C – 1 January 2015

Part A – 1 January 2014; Part B – 1 January 2014; Part C – 1 January 2015

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Basis of Consolidation The consolidated financial statements comprise the financial statements of Moly Mines Limited (the parent entity) and its subsidiaries at the reporting date (the “Group”). Subsidiaries are fully consolidated from the date the Group obtains control until such time as control ceases. An investor controls an investee when: i) it has power over an investee; ii) it is exposed, or has rights, to variable returns from its involvement with the investee; and iii) has the ability to use its power to affect its returns.

All three of these criteria must be met for an investor to have control over an investee. Previously, control was defined as the power to govern the financial and operating policies of an entity so as to obtain benefits from its activities. The financial statements of subsidiaries are prepared for the same reporting period as the parent entity, using consistent accounting policies. In preparing the consolidated financial statements, all intercompany balances and transactions, income and expenses and profit and losses arising from intra-group transactions are eliminated in full. The acquisition of subsidiaries is accounted for using the acquisition method of accounting. The acquisition method involves recognising at acquisition date, separately from goodwill, the identifiable assets acquired, the liabilities assumed and any non-controlling interest in the acquiree. The identifiable assets acquired and the liabilities assumed are measured at their acquisition date fair values. The difference between the above items and the fair value of the consideration (including the fair value of any pre-existing investment in the acquiree) is goodwill or a discount on acquisition.    A change in the ownership interest of a subsidiary that does not result in a loss of control is accounted for as an equity transaction. Investments in subsidiaries are detailed in Note 26. Significant accounting judgments, estimates and assumptions (i) Significant accounting judgments In the process of applying the Group's accounting policies, management has made the following judgments, apart from those involving estimations, which have a significant effect on the amounts recognised in the financial statements: Determination of mineral resources and ore reserves The determination of reserves affects the accounting for asset carrying values, depreciation and amortisation rates, deferred stripping costs and provisions for decommissioning and restoration. Moly Mines estimates its mineral resources and ore reserves in accordance with the Group Policy for the Reporting of Mineral Resources and Ore Reserves. This policy requires that the Australian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves 2004 (the 'JORC code') be used as a minimum standard. The information on mineral resources and ore reserves were prepared by or under the supervision of Competent Persons as defined in the JORC code. The amounts presented are based on the mineral resources and ore reserves determined under the JORC code. There are numerous uncertainties inherent in estimating mineral resources and ore reserves and assumptions that are valid at the time of estimation may change significantly when new information becomes available. Changes in the forecast prices of commodities, exchange rates, production costs or recovery rates may change the economic status of reserves and may, ultimately, result in the reserves being restated. (ii) Significant accounting estimates and assumptions The carrying amounts of certain assets and liabilities are often determined based on estimates and assumptions of future events. The key estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of certain assets and liabilities within the next annual reporting period are:

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(a) Impairment of capitalised exploration and evaluation expenditure The future recoverability of capitalised exploration and evaluation expenditure is dependent on a number of factors, including whether the Group decides to exploit the related lease itself or, if not, whether it successfully recovers the related exploration and evaluation asset through sale. Factors that could impact the future recoverability include the level of reserves and resources, future technological changes, which could impact the cost of mining, future legal changes (including changes to environmental restoration obligations), changes to commodity prices, and changes to US Dollar / Australian dollar exchange rates. To the extent that capitalised exploration and evaluation expenditure is determined not to be recoverable in the future, profits and net assets will be reduced in the period in which this determination is made. In addition, exploration and evaluation expenditure is capitalised if activities in the area of interest have not yet reached a stage that permits a reasonable assessment of the existence or otherwise of economically recoverable reserves. To the extent it is determined in the future that this capitalised expenditure should be written off, profits and net assets will be reduced in the period in which this determination is made. (b) Impairment of capitalised mine property development expenditure The future recoverability of capitalised mine property development expenditure is dependent on a number of factors, including the level of proved, probable and inferred mineral resources, future technological changes that could impact the cost of mining, future legal changes (including changes to environmental restoration obligations) and changes to commodity prices. To the extent that capitalised mine property development expenditure is determined not to be recoverable in the future profits and net assets will be reduced in the period in which this determination is made. Key assumptions used to determine impairment are disclosed in Note 13. (c) Impairment of plant and equipment and assets held for sale Plant and equipment, including assets held for sale, is reviewed for impairment if there is any indication that the carrying amount may not be recoverable. Where a review for impairment is conducted, the recoverable amount is assessed by reference to the higher of ‘value in use' (being the net present value of expected future cash flows of the relevant cash generating unit) and ‘fair value less costs to sell'. In determining value in use, future cash flows are based on: estimates of the quantities of ore reserves and mineral resources for which there is a high degree of confidence

of economic extraction; future production levels; future commodity prices; and future cash costs of production. Variations to the expected future cash flows, and the timing thereof, could result in significant changes to any impairment losses recognised, if any, which could in turn impact future financial results. Key assumptions used to determine impairment are disclosed in Notes 9 and 13. (d) Provisions for decommissioning and restoration costs Decommissioning and restoration costs are a normal consequence of mining, and the majority of this ex