The gross income per capital in Vilabouly is about US$721 compared to US$1,270 at the national level. Photo:©MMG/Phoonsab Thevongsa

LEAVING IMPROVED LIVESWe all want something better for our families. That is why we work, we care for ourselves and our communities, we learn and we trade. We have listened and together decided that we can take action in the following areas:

1. Improved Incomes.

More income means more opportunity. By introducing high value crops such as oranges, and hydroponic vegetables, we can increase household incomes. We will learn to increase agricultural production through a range of projects. We expect that this program will eventually reduce dependence on mine wages and employment.

2. Everyone Healthier.

In partnership with the Ministry of Health and UNICEF, LXML is addressing child nutrition in Savannakhet, Saravan, and Attapeu. MMG Limited invested US$1.38 million to distribute four million micronutrient sachets containing important vitamins, iron, zinc and other nutrients to Lao mothers. The project will reach 180,000 children over several years. At the same time, village volunteers and health care workers will improve awareness on child nutrition and hygiene issues with mothers.

3. Learning for the Future.

An educated community earns larger incomes and has a better future. We are working with the Lao Government

and exploring new partnerships to improve school retention and learning outcomes.

4. Roads to Markets.

Good roads encourage trade. LXML has spent millions of dollars building and maintaining road networks in Vilabouly District. Continuing to improve infrastructure will ensure access to markets for agricultural and other produce.

JUNE 2014IN THIS ISSUE

THE NEWSLETTER OF MMG LXML SEPON

SEPON MINE TODAY

2 Focus on Growth2 Improving Lives in Vilabouly

3 Increasing Rice Yield

3 Sharing Secrets of Business Success

4 Preserving Water Quality at Sepon

MMG CEO, Mr Andrew Michelmore presents a cheque for 2013 tax revenue to Finance Minister Dr Lien Thikeo at the Ministry of Finance on 7 April. Photo:©MMG/Chanmy Sisomphone

Thanks to your efforts, LXML contributed US$136 million dollars in direct revenue to the Lao Government in 2013.

MMG CEO, Mr Andrew Michelmore, presented a cheque for the final instalment of US$91 million to Finance Minister, Dr Lien Thikeo, in Vientiane on 7 April 2014.

Since production commenced in 2003, LXML has contributed over US$1.123 billion to the Lao PDR in direct revenue payments, including taxes, royalties, and dividends.

The Lao Government is a ten per cent shareholder of LXML.

“As one of the largest taxpayers, LXML is very proud of our contribution to progress, development, and poverty alleviation, particularly in communities close to the mine,” said Mr Michelmore.

LXML CONTRIBUTES US$136 MILLION TO LAO PDR IN 2013

“We are continuing our efforts to explore and develop the business to extend the life of the mine. I would like to thank the Lao Government for its partnership in achieving these goals,” he said.

The Lao PDR also benefits from hundreds of millions of dollars each year in indirect revenue generated by the mine, through payments to Lao employees, local businesses, and suppliers.

LXML is continuously exploring to expand copper production and extend the life of the Sepon mine. This will ensure the Lao PDR continues to receive significant revenue for development in future.

LXML is committed to cooperating closely with the Lao Government, communities close to the mine, and other development partners to leave improved lives.

ESSENTIAL ANAESTHESIA APPARATUS DONATED to Savannakhet Hospital in May 2014 will make life more comfortable for local patients. This donation extends

previous support to Savannakhet Hospital in 2013 of US$18,000 to purchase essential medical equipment. Many of LXML’s employees live in Savannakhet Province and this donation demonstrates the company’s support to improving health facilities in an important regional medical hub.

17 NEW HIGH SCHOOL APPRENTICE PLACES FOR VILABOULY and surrounding villages will be part of a two year Trades Traineeship program at Savannakhet Technical School. On completion, the trainees will receive a certificate in one of three categories: Electrical, Automotive and Mechanical. The 2014 Apprenticeship program was developed in partnership with Phu Bia Mining and Lao-German Technical College. The program will build capacity by developing skills in Lao educational institutions.

LXML DONATED US$9,000 in a long-term partnership with Health Frontiers for the Lao Pediatric Medical Conference in Vientiane capital. The annual event, which took place from 27-28 February, brings together pediatricians and health professionals across Laos to share lessons and discuss case studies of emerging diseases. This year the conference focused on ‘Advances on Child Health Care.’ LXML is proud to provide continuing support for a number of primary health initiatives in the Lao PDR.

15 CHANCE FIND ITEMS• 5 ITEMS MADE FROM COPPER INCLUDED INGOT, POT

• OTHER ITEMS INCLUDED 6 ANCIENT WOODEN HAMMERS

• HOSTED 30 CULTURAL OFFICIALS

6 PROSPECTS DRILLED, INCLUDING:•

• MAIN ACTIVITY OCCURRING AT DAO LEUK, NAMKOK WEST, PHAVAT MAIN AND NAKACHAN PROSPECTS

GOLD PRODUCTION CEASED IN DEC 2013• DUE TO DEPLETING AVAILABILITY OF OXIDE GOLD ORE

• EXPLORING FOR BOTH OXIDE AND PRIMARY GOLD ORE

• FOCUSING ON COPPER PRODUCTION

OVERALL SAFETY: MET TARGET• TOTAL RECORDABLE INJURY FREQUENCY RATE = 0.68

• LOST TIME INJURY FREQUENCY RATE = 0.10

• 1,535 PEOPLE ATTENDED SAFETY-RELATED TRAINING

IMPROVING LIVES IN VILABOULY DISTRICTA threefold expansion of community funds in 2014 will benefit an additional 10,000 people and the 13 poorest villages in Vilabouly.LXML is improving living standards by involving communities in decisions affecting their future. This is achieved through the Village Development Funds (VDF) which has increased from US$278,000 in 2013 to over US$877,000 in 2014 to assist the Lao Government with programs to reduce poverty in Vilabouly District.The Village Development program will expand from 29 villages in 2013 to 42 villages in 2014.Village committees select projects that benefit communities directly. Since commencing in 2010, the VDF

In 2013, Sepon produced 90,030 tonnes of copper, exceeding nameplate capacity of 80,000 tonnes per year.Photo:©MMG/Phoosab Thevongsa

ALL STATISTICS ARE FROM JANUARY 1 - 31 MARCH 2014 (THE MOST RECENT QUARTER FOR WHICH ALL DATA IS PUBLICLY AVAILABLE AT THE TIME OF PRINTING)

FOCUS ON GROWTHA revised business plan based on sustainable profit, growth, transformation, people and organisation, and building and maintaining our reputation will ensure LXML continues to grow and operate safely in 2014.

Sepon aims to produce between 88,000-93,000 tonnes of copper in 2014. We are focusing on efficiency initiatives, exploration, and using the existing gold infrastructure

to achieve these targets. We must do this safely while protecting and investing in the community and the environment.

The dream of something better for ourselves and our families is one we all share.

In cooperation with the Lao Government, LXML is supporting healthy and smart children, good businesses and strong communities. This is a shared commitment to improving lives and it is the way we play our part in building national economic and community development.

We also contribute directly by safely achieving production targets and we set a new record of over 90,000 tonnes of copper in 2013. Our direct economic contribution to the Lao PDR in taxes and royalties now exceeds US$1.123 billion. According to survey data, household incomes have increased tenfold in Vilabouly since mine operations commenced.

Indirect benefits through employment, training, local business, and

22,787 TONNES OF COPPER PRODUCED• 2% DECREASE COMPARED TO Q4 2013

• 11% INCREASE COMPARED TO Q1 2013

• 2014 PRODUCTION GUIDANCE IS 88,000-93,000 TONNES

16 DONATIONS MADE, INCLUDING:• VIENTIANE: $9,300 FOR THE 10TH LAO PEDIATRIC CONFERENCE

• HOST COMMUNITIES: $1,866

LETTER FROM

SEPON MINE

THE GENERAL MANAGER

KEY FACTSQUARTER 1 2014

NEWS ROUNDUP

COPPER

CULTURAL HERITAGE

GOLD

DONATIONS

EXPLORATION

SAFETY

SEPON MINE TODAY JUNE 2014 2

POSITIVE RESULTS (PRIMARY GOLD): Houay Yeng - 13.9m @ 6.97 G/T AU

(MET TARGET)

(MET TARGET)

FOR BUDDHA IN MEUNG LUANG VILLAGE

community development are stimulating economic growth, particularly at the grass roots level. We are working with several partners (such as UNICEF and SNV) on education, nutrition, agriculture, and primary health projects.

Our core value at LXML is the safety of our employees and our local communities. We are strongly committed to ensuring that everyone has the right skills for the job and follows correct processes to identify hazards at work and at home. Our goal is to completely eliminate injuries and fatalities.

At the same time, we have significantly increased the number of Lao employees in management positions in the company in accordance with our commitments to the Lao Government. We are continuing to invest in training to develop the next generation of Lao leaders.

Rick Watsford, Director and General Manager MMG LXML Sepon

Community members enjoy clean water supported by LXML Photo:©MMG/Phoonsab Thevongsa

has supported communities near Sepon mine to build schools, roads, latrines, fish ponds, access to water, and village offices.

FROM THE MINISTRY OF INFORMATION AND CULTURE

To share the secrets of better growing, LXML engaged Mrs Nui Oumahard, a member of a local vegetable group, to provide training on hydroponics to other community members at Houay Kong Training Centre, Savannakhet province.

Mrs Nui is one of the successful members of local business groups that Sepon has assisted to generate sustainable income for local community members by building sustainable independent business enterprises.

The training consists of various lessons, such as how to build a greenhouse, arrange tables, sow seeds, and prepare fertiliser. It also covers how to manage water, pack produce, and deliver it to market.

“What I am going to deliver is not only the lessons I have learned, but also the practical knowledge and experience I acquired in setting up my business over the years,” says

COMMUNITY MEMBER SHARES SECRETS OF BUSINESS SUCCESS

GREATER CROP YIELDS IMPROVE INCOMES AND CREATE OPPORTUNITY.

COMMUNITY8,500 BENEFICIARIES OF COMMUNITY INVESTMENT• US$363,901 SPENT ON COMMUNITY DEVELOPMENT

• US$811,057 COMBINED TURNOVER

• US$382,914 SPENT FROM 2014 TRUST FUND

115 ITEMS OF UNEXPLODED ORDNANCE CLEARED• AREA CLEARED FOR MINE OPERATIONS: 32.19 HECTARES

• NO CLEARANCE REQUEST FOR COMMUNITY OR MINE ROADS

• 609 PEOPLE ATTENDED UXO-RELATED TRAINING

3,356: TOTAL WORKFORCE• 1,883 LAO EMPLOYEES OF LXML

• 144 EXPATRIATE EMPLOYEES OF LXML

• 1,329 EMPLOYEES OF SUBCONTRACTORS

57% OF MMG STAFF UNDERTOOK TRAINING• AN AVERAGE OF 8.3 DIFFERENT TRAINING COURSES TAKEN

• 24,159 CLASSROOM TRAINING HOURS

• 2,833 ON-THE-JOB TRAINING HOURS

5.79 HECTARES OF LAND REHABILITATED• 48 HA OF PREVIOUSLY REHABILITATED LAND MAINTAINED

• TOTAL LAND REHABILITATED SINCE 2003: 163.79 HA

• APPROX 1,256 HA STILL REQUIRE REHABILITATION

ALL STATISTICS ARE FROM JANUARY 1 - 31 MARCH 2014 (THE MOST RECENT QUARTER FOR WHICH ALL DATA IS PUBLICLY AVAILABLE AT THE TIME OF PRINTING)

Mrs Nui’s son tends the family hydroponic garden at Bounkham village, Vilabouly district, Savannakhet province.Photo:©MMG/Phoonsab Thevongsa

Mrs Nui. “It took me a long time to make this successful. It was not easy. I learned many lessons along the way.”

Mrs Nui started hydroponic gardening at her small farm with initial support from MMG LXML Sepon. The garden is thriving and supplies about 70 kilos of lettuce per week to the mine. She earns up to 10 million kip per month.

Currently, there are 26 groups and more than 350 people earn a living from local business enterprises. In 2013, local business groups earned almost US$3 million selling produce to Sepon mine and nearby markets.

AN UNEDITED GUEST COLUMN. THIS ISSUE’S CONTRIBUTOR IS MR KENEKEO SAYARATH, SNV SENIOR VALUE CHAIN ADVISOR - RICE DEVELOPMENT PROJECTI work with LXML on the ‘Enhancing Milled Rice Production Project in Vilabouly’ or ‘EMRIP-V.’ Our aim is to help low income farmers to increase rice yield and quality. We started a rice business group and rice millers to increase access to the program. The private partner is responsible for providing agricultural inputs and financing. SNV has successfully used this approach for many years in other parts of the Lao PDR.

LXML invited us to replicate this success in Vilabouly and provided funding support of US$331,600. We happily agreed. After initial research, the project started in April 2013. We work with a rice business group and rice millers, which buys the rice from farmer groups, does quality control and then supplies the mining operation and other buyers with the product.

By the end of the project in April 2016, with the help of EMRPI-V, the mine will buy 100% of its rice from local producers. This is a win-win-situation and brings economic growth to this remote district.

The partnership has been extremely constructive from the start. There is less bureaucracy, and our colleagues from the mine always answer quickly, clearly and are very impact-oriented. We talk about results, not about formalities. We work together on any obstacles.

Our reliable and uncomplicated partnership is one of the reasons for the excellent results of the project. Our plan was to work with 500 smallholder farmers by April 2016. But in just one year, 1,300 households have already signed up.

Rice production per hectare and household increased by US$105. Millers paid 2,000 instead of 1800 kip per kilo of sticky rice. The average yield per hectare increased from 2.5 to 3 tonnes. The newly grown varieties are more delicious to eat and other villages are seeking access to the program.

The people of Vilabouly welcomed the project with great enthusiasm. It was the first time that someone has focused on improving rice quality in the region. We organised farmer groups and the local authorities to support us. The project is a good example of public-private partnership, which fits into the national development policy of the Lao Government.

Our work here is also sustainable. The farmers are able to independently sell high quality sticky rice to the Lao market to improve incomes.

This is the first time that SNV has received a grant in the agriculture sector from a private company. LXML is one of few companies that supports development and is quite unique in this regard.

I would like to expand our cooperation in the future, by first scaling up the rice project and later look at other value chains. Maybe vegetables? Fruit? Or pigs?

Kenekeo Sayarath, National Senior Value Chain Advisor Photo:©SNV/Lukas Messmer

A local farmer is happily receiving rice seeds. Photo:©SNV/Lukas Messmer

Group of Farmers actively participate on the capacity building activity.Photo:©SNV/Lukas Messmer

3

PERSPECTIVES

UXO CLEARANCE SKILLS

EMPLOYEES ENVIRONMENT

SEPON MINE TODAY JUNE 2014

OF THE LOCAL SMALL BUSINESSES WHICH SUPPLY THE MINE

TOTAL TRUST FUND FOR 2014 = US$750,000

TOTAL OF PERMANENT AND CASUAL

TOTAL LAO ANDEXPATRIATE, BOTH PERMANENT AND CASUAL

- All data correct as at 31 March 2014- Note: large areas of land can only be rehabilitated after mining ceases. - Rehabilitation work involves revegetation in order to stabilise landforms and prevent erosion. Follow on maintenance is required for several years.-Total rehabilitation figure excludes rehabilitation for exploration access and drilling

4

ALL FIGURES IN US$

Water is used across every part of the mining lifecycle and therefore security of water supply is critical to maintaining operations, particularly in dry climates.

In addition, local communities and ecosystems may be affected by mine use and discharge of water.

The key challenges to managing water at Sepon is the intense and volume of rainfall, potential acid generating of the minerals, and shared land-uses. Sepon developed and maintains an Environmental Management and Monitoring Plan and a Water Management Plan specifically to guide site water management that aligns with MMG Environmental Standards and international leading practices. Sepon uses three main guiding principles for water management on site.

Keep clean water clean - intercept and divert clean water runoff around mining pits and disturbed areas, erosion control and prevention of acid rock drainage generation through progressive capping acid generating wastes.

Minimize consumption of water from natural sources - reduce the operation’s water requirement from the main Namkok River by reusing process water and rainwater to greatest extent possible in the processing plant.

Contain, treat and test - contaminated water - low in pH and high in metals - are drained into an engineered water retention structure, where water is tested and treated as requires to IFC guidelines by lime addition or through the water treatment plant. Under the Water Discharge Authorization process, treated water is tested again to ensure compliance is achieved before it can be released into the natural environment.

Water samples from over 190 surface, ground and potable water monitoring points are collected on a daily basis to assess compliance against Lao and the Word Bank water guidelines.Photo:©MMG/ Bart Verweij

How long have you been working in this position and what are your responsibilities?

I started working with LXML at the beginning of 2005 as Data Entry Clerk. My job is to enter data into geological database for resource drilling.

What are the reasons why you choose to work at LXML?

I like working here because Sepon mine is in my home town, so it allows me to stay close to my family. The company also provides an opportunity for local high school graduates - who cannot continue their higher education - to work and gain experience.

What training have you received in your work?

I have been trained to be an expert on computer programs. In particular, I have practical experience with Microsoft Office programs, Geological Borehole Information System (GBIS), acquire, English skills, and site operating permits, as well as safety and health procedures.

03:00 MINUTE GUIDE TO... WATER MANAGEMENT

AN INTERVIEW WITH MS THIPHAVANH BOUTTAKHOTHJOB TITLE: DATA ENTRYYEARS AT LXML: 8.5PLACE OF BIRTH: VILABOULY

DIRECT BENEFITS TO THE LAO GOVERNMENT

What is the most rewarding part of your job?

I’m proud that I can earn living by myself which I never thought of when I studied at high school. Working with computers and using some of the technical software is always fun and enjoyable. I’m also proud that I can accomplish my responsibilities on time.

What is the most challenging aspect of your job, and how do you deal with it?

Learning new things is always a challenging task but I am always ready to take on new challenges to prove my skills.

How do you like your job at LXML?

I love my job! Even though I have been on this task for many years, there are still many challenges that I want to overcome. I also love my working roster of 28 day-work and 14 day-off because it allows me to have longer break and have more time with family.

Ms Thiphavanh is always ready to take on new challenges to prove her skills.

CONTACT USsomsavath.phanthady@mmg.com / 021 268 407 / mmg.comSEPON MINE TODAY JUNE 2014

*includes VAT payment and tax payment for prior years (entertainment)

TYPE OF PAYMENT 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

PROFIT TAX NIL NIL 7,084,614 49,597,408 90,415,551 77,982,072 57,519,277 92,272,996 145,250,403 * 124,830,996* 91,045,147*

ROYALTIES (GOLD) 1,407,039 1,669,479 3,112,153 4,375,575 3,346,908 3,549,102 4,731,818 5,799,523 5,024,415 5,490,591 2,538,117

ROYALTIES (COPPER) NIL NIL 4,054,570 16,994,322 19,294,801 18,570,338 14,565,258 20,733,547 31,364,657 30,377,666 30,607,325

INCOME TAX 1,100,818 1,537,938 1,942,753 1,946,614 2,727,263 3,892,520 3,376,719 5,052,700 5,055,462 5,877,222 5,727,974

TENEMENT RENTAL FEE 4,796 33,469 33,469 33,469 - - 113,200 - 90,000 - 144,570

FUEL TAX 2,000,000 2,000,000 2,000,000 4,200,000 2,000,000 2,500,000 4,835,361 4,822,086 4,152,299

DIVIDEND NIL NIL NIL NIL 9,302,583 1 1,300,000 2,000,000 32,900,000 15,000,000 28,500,000 10,000,000

TOTAL 2,507,857 3,207,417 18,227,559 74,947,388 127,087,106 122,994,032 84,306,272 159,258,764 205,639,319 189,133,480 135,733,376

CUMULATIVE TOTAL 1,123,042,571