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MMX: CREATING CHOICES IN SEABORNE IRON ORE SUPPLY
Rio de Janeiro | July 2012
This presentation relating to MMX Mineração e Metálicos S.A. (“MMX”) includes “forward-looking statements”, as that term is defined in the Private Securities Litigation Reform Act of 1995, in Section 27A of the Securities Act of 1933 and Section 21E of the U.S. Securities Exchange Act of 1934. All statements other than statements of historical facts are statements that could be deemed forward-looking statements and are often characterized by the use of words such as “projects”, “expects”, “anticipates”, “intends”, “plans”, “believes”, “estimates”, “may”, “will”, or “intends”, or by discussions or comments about our objectives, strategy, plans or intentions and results of operations. Forward-looking statements include projections regarding our operating capacity, operating expenditures, capital expenditures and start-up dates.
By their nature, these forward-looking statements involve numerous assumptions, uncertainties and opportunities, both general and specific. The risk exists that these statements may not be fulfilled or, even if they are fulfilled, the results or developments described in such statements may not be indicative of results or developments in future periods. We caution participants of this presentation not to place undue reliance on these forward-looking statements as a number of factors could cause future results to differ materially from these statements.
Forward-looking statements may be influenced in particular by factors such as the ability to obtain all required regulatory approvals on a timely basis or at all, exploration for mineral resources and reserves, difficulty in converting geological resources into mineral reserves, and changes in economic, political and regulatory conditions. We caution that the foregoing list is not exhaustive. When relying on forward-looking statements to make decisions, investors should carefully consider these factors as well as other uncertainties and events.
MMX does not undertake to update our forward-looking statements unless required by law. This presentation is neither an offer to sell (which can only be made pursuant to definitive offering documents) nor a solicitation of an offer to buy any securities in the United States, or any other jurisdiction. The securities referred to herein have not been registered in any jurisdiction, and in particular, will not be registered under the U.S. Securities Act of 1933, as amended, or any applicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from such registration requirements.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without MMX’s prior written consent.
DISCLAIMER
MMX INTRODUCTION
1
HIGH QUALITY MINING ASSETS IN TRADITIONAL
MINING DISTRICTS
Sudeste SystemSerra Azul Unit
Bom Sucesso UnitCorumbá System
Sudeste Superport
Chile System
Mining rights in traditional iron ore districts: Brazil – Minas Gerais and Chile
Production committed with strategic consumers – China and South Korea – through long-term contracts
Brownfield start up in Brazil
Expanding beyond 40 Mtpy in Brazil and Chile, through fully integrated systems: with private ports in Brazil
Unique port location
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42% Controlling Shareholders
16% Wisco
14% SK Networks
28% Free Float
MMX Corumbá Mineração MMX Sudeste
Minera MMX do Chile
Superporto Sudeste
Serra Azul
Bom Sucesso
100% 100% 99%70%
5,48% EBX
MMXM3: SOLID CONTROLLING SHAREHOLDERS
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SRK certification: 3,1 billion tons of mineral resources, and further mineral potential
of up to 1,4 billion tons. Reserves of 1 billion tons in Serra Azul.
64% of future production already committed through long-term contracts
Experience management team with implementation and operational expertise
Installed Capacity of 10 Mtpy (Serra Azul and Corumbá sites)
Sudeste Superport at 50 Mtpy, expandable to 100 Mtpy, provides gateway to
seaborne markets
Long Term Railway Contract with MRS
Low stripping ratio
Competitive scale – New beneficiation plant
Energy supply contract with MPX
Integrated infrastructure with the existing MRS railway
Resource Base
Secured Off-take
Operational Track Record
GuaranteedLogistics
Competitive Production Cost
Structure
INGREDIENTS FOR A SUCCESSFUL IRON ORE
BUSINESS
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Beginning of construction of the Serra Azul Unit expansion
Installation License authorizing the Serra Azul Unit expansion
MMX signs contract for railway services with MRS through 2026
SRK certified 997,4 million tons of mineral reserves at Serra Azul Unit
EIA-RIMA filed for Sudeste Superport expansion to 100 Mtpa
Orders for long lead equipment for Serra Azul expansion
EPCM contract with CNEC Worley Parsons for Serra Azul expansion
Contract with MPX for energy supply for expansion of Serra Azul
Preliminary license of the Serra Azul expansion
Financial advisory contract with Itaú BBA and Bradesco
Acquisition of 99,1% of PortX shares
Deal with Usiminas
May2012
February2011
A LOT HAS BEEN DELIVERED
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FINANCIAL HIGHLIGHTS
38%29% 32%
62%71% 68%
0%
20%
40%
60%
80%
100%
1Q11 4Q11 1Q12
Debt profile
Short Term Long Term
61% 59% 53%
0%
15%
30%
45%
60%
1Q11 4Q11 1Q12
Gross Margin (%)
63.8 69.2
49.3
0
25
50
75
1Q11 4Q11 1Q12
Net Profit (R$ million)
41.7 20.4
4.2
0
15
30
45
1Q11 4Q11 1Q12
EBITDA (R$ million)
SUDESTE SYSTEM
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SERRA AZUL UNIT
2.1
UNIQUE INTEGRATED LOGISTICS
Since Iron ore is a bulk commodity, an integrated logistic (mine railway port) is the key factor for a successful operation
Mine SuperportRailway
Serra Azul unit is near to the MRS railway - 10 km from the mine, a distance currently traversed by trucks.
MMX has a long term contract with MRS railway, which connects the mine with the CSN’s Itaguaí port and to the Sudeste Superport.
Sudeste Superport is located in Itaguaí and will have 50Mtpy iron ore shipping capacity. The Superport will have a depth of 20 meters, enough to handle Capesize vessels.
Offtakers (Shareholders)
Long-Term contract (20 years) to trade iron ore. SK will take-off part of the Sudeste System yearly production equivalent to its participation in MMX Capital (14%).
SK and Wisco will togetherofftake 64% of total production
Long-Term contract (20 years). Wisco will off-take at least 50% of MMX Sudeste production.
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QUADRILÁTERO FERRÍFEROIron ore Quadrangle
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RAILWAY
Railway access conecting MRS to the Sudeste Superport
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SERRA AZUL
Expansion project with integrated logistic and pellet feed iron ore
Highlights
Production target: 29 Mtpy
64% of production already committed through long-term contracts
997.4 million tons of reserves already secured by SRK
Execution Update
Beginning of construction of Serra Azul Unit expansion
Construction license issued in April, 2012
Acquisiion of gyratory crushers, ball mills, SAG mills and vertical mills for the new beneficiation plant
Contract with CNEC WorleyParsons
Contract with MPX to supply power for 15 years at a base-price of R$125/MWh
Expected Quality – Ouro Preto pilot plant test work
Fe: 67.0% P: 0.03%
SiO2: 3.5% Mn: 0.5%
AL2O3: 0.5% LOI: 0.25%
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SERRA AZUL
Growth through consolidation while leveraging existing infrastructure
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SERRA AZUL
Serra Azul Unit Expansion Project
New Beneficiation Plant, transmission line and water pipelines, Stockyard and Loading Terminal
Pit
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Serra Azul ExpansionBeneficiation Plant
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Contract signed on December 28th 2011.
Long term contract through 2026.
Provides for a volume of up to 36 million tons of iron ore per year.
Tariff: R$ 26.463/ton , net of tax, readjusted annually by a parametric formula the variation in IGP-DI and in diesel oil.
MRS CONTRACT
MMX signed a long term contract for railway services
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SUDESTE SUPERPORT
2.2
Sudeste SuperportLocation
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Nautical Access
Offshore
Tunnel
Stockyard 32
Stockyard 06
Railway Access
Sudeste Superport Artistic View
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SUDESTE SUPERPORT
Overview
Sudeste Superport - Itaguaí
Highlights
50 mtpy capacity, expandable to 100 mtpy
Capesizes handling
Loading: 2 ship loaders of 25 Mtpy each
Fully funded (BNDES)
Start-up forecast: 2Q13
100% of equipment already ordered
Licensing for 100 Mtpy underway
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SUDESTE SUPERPORT
Overview
Sudeste Superport - Itaguaí
Highlights
Public hearing for 100 Mtpy held on May, 2012
Tunnel: Meeting of the two excavation fronts as of September 2011
EIA-RIMA for 100 Mtpy filed with Inea in September 2011
Licensed to 50 Mtpy
Navy Approval to 100 Mtpy
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Sudeste SuperportRailway access
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Sudeste Superport Stockyard Elevation 6 m
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Sudeste Superport Car Dumpers Elevation 6 m
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Sudeste Superport Mariquita Hill
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Sudeste Superport Stockyard Elevation 32 m
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11 m
20.5 m
Sudeste Superport Tunnel entrance
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Sudeste Superport Tunnel exit
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Bridge450 m
3131
Superporto Sudeste Offshore Structure - Bridge
Pier766 m
Superporto Sudeste Offshore Structure - Pier
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Superporto Sudeste Offshore Structure
SUDESTE SUPERPORT
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Shiploader (China)
SUDESTE SUPERPORTShiploader (China)
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Assembly of car dumpers
SUDESTE SUPERPORT
SUDESTE SUPERPORTAssembly of car dumpers
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USIMINAS AGREEMENT
SRK resources audit : 810 million tons plus a potential 75 million tons
Pau de Vinho target production: 8 Mtpy
Significant synergies with current mining operations at Serra Azul
13.5% of production at Pau de Vinho will be delivered to Usiminas
MMX will be responsible for the licensing, CAPEX and operation for 30 years
Handling fee: USD 12.63/ton adjusted by US-PPI
Volumes:
■ 12 Mtpy
80% Take-or-Pay
Usiminas can renew the contract for 1 to 5 years
Pau de Vinho Joint Mining Sudeste Superport Handling
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BOM SUCESSO
2.3
BOM SUCESSO
High-quality iron ore with high magnetite content
Highlights
Production target: 10 Mtpy
64% of production already committed through long-term contracts
Execution Update
Conceptual engineering
SRK resources audit update: 365 million tons plus a potential of 741 million tons
Expected Quality – Ouro Preto pilot plant test work
Fe: 67.2% P: 0.033%
SiO2: 2.5% PPC: 0.6%
AL2O3: 0.5% FeO: 8.8%
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CHILE
3
CHILE
Highlights
High-quality iron ore with magnetite content
Production target: 10 Mtpy
50% of production already committed through long-term contracts
460 Mt of iron ore potential
Execution Update
Castilla Port fully licensed
Drilling performed 2011: approximately 43 thousand meters
Water permits
Expected Quality – Ouro Preto pilot plant test work
Fe: 67.50% SiO2: 2.5%
Al2O3: 0.85% P: 0.015%
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CHILE
Castilha Port
BERTH N° 1 – COAL
BERTH N° 2 – IRON ORE
BERTH N° 3 – COPPER
Fully Licensed Port
Deep water port – 28 meter draft: Chinamax vessels
Shared construction with MPX (Sister Company)
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CORUMBÁ
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CORUMBÁ
Highlights
Current Capacity: 2.1 Mtpy
Long-term contracts signed with local and international barge operators
77% of production already committed through long-term contracts
SRK audit resources report: 192 million tons plus a potential of an additional 123 million tons
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Investor RelationsGuilherme Escalhão – CEO and IRO
Adriana Maques – ManagerBeatriz Yoshinaga - Analyst
Tel. + 55 21 2555-6197/ 4240ri@mmx.com.br