mmx corporate presentation - september 2011

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MMX: Creating choices in seaborne iron ore supply September, 2011

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Page 1: MMX Corporate Presentation - September 2011

MMX: Creating choices in seaborne iron ore supply

September, 2011

Page 2: MMX Corporate Presentation - September 2011

Disclaimer

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. 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.

Page 3: MMX Corporate Presentation - September 2011

A Unique Story

A Unique Story

Page 4: MMX Corporate Presentation - September 2011

Ingredients for a successful iron ore business

Strong Resource Strong Resource Strong Resource Strong Resource BaseBaseBaseBase

3.1 billion tons of mineral resources certified by SRK, and further mineral potential of up to 1.4 billion tons

GuaranteedGuaranteedGuaranteedGuaranteedLogisticsLogisticsLogisticsLogistics

100% owned Sudeste Superport at 50 Mtpy, expandable to 100 Mtpy, providesgateway to seaborne markets.

Competitive Cost Competitive Cost Competitive Cost Competitive Cost StructureStructureStructureStructure

Integrated infrastructure, with the existing MRS railway providing an efficient link between mine and port

4

Secured Secured Secured Secured OfftakeOfftakeOfftakeOfftake

Operational Operational Operational Operational Track RecordTrack RecordTrack RecordTrack Record

BaseBaseBaseBase potential of up to 1.4 billion tons

62% of future production already committed through long-term contracts.

Experienced management team with brownfield start-up expertise.Current production rate of 10 Mtpy (Serra Azul and Corumbá sites)

Solid Financial Solid Financial Solid Financial Solid Financial Position Position Position Position

Strong balance sheet and project fundamentals to attract competitive fundingCurrent operations provide strong FCF

Page 5: MMX Corporate Presentation - September 2011

The only one of its kind

Location MapLocation MapLocation MapLocation Map

• Production committed to important global

consumers – China and South Korea – through

long-term contracts.

• Brownfield start up

• Expanding beyond 50 million tpy in Brazil and

Chile, through fully integrated systems: own

deep water Chinamax enabled superports and

MMX UniquenessMMX UniquenessMMX UniquenessMMX Uniqueness

deep water Chinamax enabled superports and

pipelines.

• Unique port location and strong balance sheet

leverage significant value creation through

consolidation of stranded iron ore resources in

the Southeast of Brazil.

• Strong cash generation.

• Proven track record delivering value to

shareholders

Corumbá SystemCorumbá SystemCorumbá SystemCorumbá System

Chile SystemChile SystemChile SystemChile System

Sudeste SystemSudeste SystemSudeste SystemSudeste System

5

Page 6: MMX Corporate Presentation - September 2011

MMXM3: Solid controlling shareholders Highest levels of Corporate Governance

StructureStructureStructureStructure

Bom Sucesso under basic engineering studies

MMX Corumbá MMX Corumbá MMX Corumbá MMX Corumbá MineraçãoMineraçãoMineraçãoMineração

MMX MMX MMX MMX

SudesteSudesteSudesteSudeste

Minera MMX Minera MMX Minera MMX Minera MMX

do Chiledo Chiledo Chiledo Chile

SuperportoSuperportoSuperportoSuperporto

Sudeste Sudeste Sudeste Sudeste

28%28%28%28%Free Float

30% 30% 30% 30% EBX Brasil S/A

14%14%14%14%

42%42%42%42%

Acionista Controlador

16%16%16%16%

70%70%70%70% 100%100%100%100% 100%100%100%100% 99%99%99%99%

Corporate Governance

•• Novo Mercado

• Stringent corporate governance standards

• Single-class of common shares with unrestricted voting rights

• Shareholders have 100% tag-along rights, preemptive rights

• Independent Board Members

• Related-Parties Transaction Disclosure

• Audit Committee

• MMX Policies

• Disclosure and use of information

• Corporate Governance

• Monitoring of Securities Trading

Bom Sucesso under basic engineering studies

Corumbá System started-up in 2005 (Mining)

Assets acquired by MMX (AVG: dec-07; Minerminas: jan-08)

6

100%100%100%100% 100%100%100%100%

SerraSerraSerraSerra

AzulAzulAzulAzul

Bom Bom Bom Bom

SucessoSucessoSucessoSucesso

Page 7: MMX Corporate Presentation - September 2011

Senior Management Team More than 135 years of iron ore experience

� 16 years in the mining industry at Vale , Rio Tinto and Caemi

� Former equity research director of Credit Suisse from 2005 until 2009,

responsible for coverage of mining and steel companies in Latin America

Roger DowneyRoger DowneyRoger DowneyRoger DowneyChief Executive and IR Officer

� More than 40 years of experience in the mining sector

� Held senior executive positions in companies such as Vale, S.A Mineração da

Trindade (SAMITRI), Ferteco Mineração, GIIC (Vale subsidiary) and AVG

Chequer H. B. Chequer H. B. Chequer H. B. Chequer H. B. HabibHabibHabibHabibChief Commercial Officer

� Approximately 25 years of experience in the mining sector

� Held senior executive and board positions in companies such as Vale ,Caemi

Group and MRS Logística

Guilherme F. Guilherme F. Guilherme F. Guilherme F. EscalhãoEscalhãoEscalhãoEscalhãoChief Financial Officer

Trindade (SAMITRI), Ferteco Mineração, GIIC (Vale subsidiary) and AVG

Mineração

Luciano C. Ferreira Luciano C. Ferreira Luciano C. Ferreira Luciano C. Ferreira Chief Port Operations Officer

� More than 25 years of experience in mining, port and steel sectors

� Held senior executive positions in companies such as Caemi, Vale and

Companhia Siderúrgica Pecém

AntônioAntônioAntônioAntônio A. Schettino A. Schettino A. Schettino A. Schettino FróesFróesFróesFróesChief Operations and ProjectDevelopment and ImplementationOfficer

� Around 30 years of experience in the mining sector

� Held senior executive positions in companies such as Caemi, Odebrecht, CSN

and Votorantim Siderurgia

7

Page 8: MMX Corporate Presentation - September 2011

Financial highlights

Sales (Sales (Sales (Sales (millionmillionmillionmillion tons)tons)tons)tons)EBITDA (R$ EBITDA (R$ EBITDA (R$ EBITDA (R$ millionmillionmillionmillion))))

1.3 1.3 1.3

0.5 0.3 0.8

0,0

1,0

2,0

3,0

2Q10 1Q11 2Q11

MI ME

55,2

39,7

73,1

0

30

60

90

2Q10 1Q11 2Q11

G&AG&AG&AG&A / Gross / Gross / Gross / Gross RevenueRevenueRevenueRevenue (%)(%)(%)(%)Net Net Net Net ProfitProfitProfitProfit (R$ (R$ (R$ (R$ millionmillionmillionmillion))))

8

2Q10 1Q11 2Q11

(38.5)

63.8 89.6

-50

0

50

100

2Q10 1Q11 2Q11

13%13%13%13%15%15%15%15%

9%9%9%9%

0%

5%

10%

15%

2Q10 1Q11 2Q11

2Q10 1Q11 2Q11

Page 9: MMX Corporate Presentation - September 2011

Sudeste SystemSerra Azul & Bom Sucesso

Page 10: MMX Corporate Presentation - September 2011

MMX Sudeste: Integrated logistics link brownfieldstart up to seaborne markets

Iron ore production connected to Sudeste Superport by MRS Railway

10

Page 11: MMX Corporate Presentation - September 2011

Serra Azul

Growth through consolidation while leveraging existing infrastructure

11

Page 12: MMX Corporate Presentation - September 2011

Serra Azul

• Competitive production costs and integrated logistics

• High-quality iron ore to supply the seaborne market

• 65% of production already secured by long-term contracts

• Consolidation opportunities and synergies drive additional

value creation

• Significant growth potential through geographic expansion

HighlightsHighlightsHighlightsHighlights

Execution UpdateExecution UpdateExecution UpdateExecution Update

• Preliminary License in August 2011

• SRK resources audit update: 1.7 billion tons plus a potential

457 million tons

• Drilling performed: 31 thousand meters

• Equipment procurement underway

• Basic engineering phase complete

Current Sinter Feed QualityCurrent Sinter Feed QualityCurrent Sinter Feed QualityCurrent Sinter Feed Quality

Fe: 64.5% P: 0.06%

SiO2: 4.5% Mn: 0.02%

AL2O3: 1.20% H2O: 8.5%

Fe: 67.0% P: 0.03%

SiO2: 3.5% Mn: 0.05%

AL2O3: 0.5%

Future Pellet Feed QualityFuture Pellet Feed QualityFuture Pellet Feed QualityFuture Pellet Feed Quality

Serra Azul

12

Page 13: MMX Corporate Presentation - September 2011

Serra Azul

Friable Itabirite

Compact Itabirite

Geological Section

13

Page 14: MMX Corporate Presentation - September 2011

Serra Azul

Pau de Vinho

Pit

New Plant, Long distancebelt conveyor, transmission line andwater pipelines, Stockyard and LoadingTerminal

Serra Azul Expansion Project

14

Page 15: MMX Corporate Presentation - September 2011

Serra Azul

ProductionProductionProductionProduction CapacityCapacityCapacityCapacity ((((MtpyMtpyMtpyMtpy) *) *) *) *CAPEX (R$ CAPEX (R$ CAPEX (R$ CAPEX (R$ BillionBillionBillionBillion))))

1.2

1.8

21.721.721.721.7

25.325.325.325.3 25.325.325.325.3 25.325.325.325.324242424 24242424

* Time adjusted

0.4

0.6

2011 2012 2013 2014

8.78.78.78.7 8.78.78.78.7 8.78.78.78.7

0.60.60.60.6 1.31.31.31.3 1.31.31.31.3

1.31.31.31.3 1.31.31.31.3 1.31.31.31.3 1.31.31.31.3

20.420.420.420.424242424 24242424 24242424

24242424 242424249.39.39.39.3 10101010 10101010

Current Capacity GVA Expansion

15

Page 16: MMX Corporate Presentation - September 2011

Usiminas Agreement

Sudeste Sudeste Sudeste Sudeste SuperportSuperportSuperportSuperport HandlingHandlingHandlingHandlingPau de Vinho Pau de Vinho Pau de Vinho Pau de Vinho JointJointJointJoint MiningMiningMiningMining

• 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

• Handling fee: USD 12.63/ton adjusted by US-

PPI

• Volumes:

• 2012 = 3 Mtpy

• 2013 = 4 Mtpy

• 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

• 2013 = 4 Mtpy

• 2014 = 8 Mtpy

• 2015 = 12 Mtpy

• 2016 = 12 Mtpy

• 80% Take-or-Pay

• Usiminas can renew the contract for 1 to 5

years

16

Page 17: MMX Corporate Presentation - September 2011

MinerivestMinerivestMinerivestMinerivest DealDealDealDealHighlights

Sudeste Sudeste Sudeste Sudeste SuperportSuperportSuperportSuperport HandlingHandlingHandlingHandlingIronIronIronIron Ore Ore Ore Ore PurchasePurchasePurchasePurchase

• Price: USD 64.00/dry ton (63.5% Fe content)

• Readjustment in proportion to the change in

the price of iron ore in the seaborne market

(relative to the 2Q11)

• Price: USD 19.77/ton (tariff net of taxes: USD

16.95/ton)

• Readjustment in proportion to the change in

the price of iron ore in the seaborne market(relative to the 2Q11)

• Price floor: USD 30/dry ton

• Volumes: up to 5 Mtpa valid for 10 years from

the start of operations at the Sudeste Superport

(50% of Minerinvest production)

• Delivered to a railroad terminal on MRS

• 40% of the annual volume will be sold to a large

European steel producer at market price.

the price of iron ore in the seaborne market

(relative to the 2Q11)

• Price floor: USD 15.90/ton (tariff net of taxes:

USD 13.63/ton)

• Volumes: up to 5 Mtpa valid for 10 years from

the start of operations at the Sudeste Superport

(50% of Minerinvest production)

• 80% Take-or-Pay

17

Page 18: MMX Corporate Presentation - September 2011

MinerivestMinerivestMinerivestMinerivest DealDealDealDealMining rights at the Iron Ore Quadrangle: quality resources, mining traditionand proximity to MRS railway

Minerinvest Iron Ore mining rights location

18

Page 19: MMX Corporate Presentation - September 2011

Bom Sucesso

HighlightsHighlightsHighlightsHighlights

•• High-quality iron ore with high magnetite content

to supply the seaborne market

• Production target: 10 Mtpy

• 65% of production already committed through

long-term contracts

Execution UpdateExecution UpdateExecution UpdateExecution UpdateExecution UpdateExecution UpdateExecution UpdateExecution Update

•• Conceptual engineering

• EIA RIMA filed in November, 2010

• SRK resources audit update: 365 million tons plus

a potential of 741 million tons

• Public Hearing: June 2011

Expected Quality Expected Quality Expected Quality Expected Quality –––– OuroOuroOuroOuro PretoPretoPretoPreto pilot plant test pilot plant test pilot plant test pilot plant test workworkworkwork

Fe: 67.2% P: 0.033%

SiO2: 2.5% PPC: 0.6%

AL2O3: 0.5% FeO: 8.8% Bom Sucesso Unit

19

Page 20: MMX Corporate Presentation - September 2011

Bom Sucesso

ProductionProductionProductionProduction CapacityCapacityCapacityCapacity ((((MtpyMtpyMtpyMtpy) *) *) *) *CAPEX (R$ CAPEX (R$ CAPEX (R$ CAPEX (R$ MillionMillionMillionMillion))))

6,56,56,56,5

9,89,89,89,8 10101010

1,424

* Time adjusted

2015 2016 2017...

5 38

2010 2011 2012-2016

20

Page 21: MMX Corporate Presentation - September 2011

Sudeste Superport

•• 50 mtpy capacity, expandable to 100 mtpy

• Capesizes handling

• Loading: 2 ship loaders of 25 Mtpy each

• Fully funded (BNDES)

• Start-up forecast: 3Q12

• 100% of equipment already ordered

HighlightsHighlightsHighlightsHighlights

• 100% of equipment already ordered

• Licensing for 100 Mtpy underway

Execution UpdateExecution UpdateExecution UpdateExecution Update

•• Fully licensed to 50 Mtpy

• Navy Approval to 100 Mtpy

• Tunnel: 95% meters already done as of August

30th

• Tunnel: average speed of excavation: 7 meters

per daySudeste Superport

21

Page 22: MMX Corporate Presentation - September 2011

Sudeste Superport

AdministrativeAdministrativeAdministrativeAdministrativeBuildingsBuildingsBuildingsBuildings IronIronIronIron Ore Ore Ore Ore YardYardYardYard El. 32El. 32El. 32El. 32 IronIronIronIron Ore Ore Ore Ore YardYardYardYard El. 06El. 06El. 06El. 06

RailRailRailRail LoopLoopLoopLoopRailcarRailcarRailcarRailcar DumperDumperDumperDumper

TheTheTheThe onlyonlyonlyonly bulkbulkbulkbulk terminal in terminal in terminal in terminal in thethethethe SepetibaSepetibaSepetibaSepetiba BayBayBayBay to to to to receivereceivereceivereceive a a a a licenselicenselicenselicense sincesincesincesince CSNCSNCSNCSN ´́́́s s s s ironironironiron ore terminalore terminalore terminalore terminal

22

Page 23: MMX Corporate Presentation - September 2011

Sudeste Superport

FundingFundingFundingFunding: BNDES FINAME : BNDES FINAME : BNDES FINAME : BNDES FINAME ---- PSI PSI PSI PSI CAPEX (R$ CAPEX (R$ CAPEX (R$ CAPEX (R$ MillionMillionMillionMillion))))

• Total Amount: R$ 407.1 mm

• Interest Rate per Year: 4.50%

• Amortization: 8 years

• Grace Period: 2 years

1.282

FundingFundingFundingFunding: BNDES FINEM : BNDES FINEM : BNDES FINEM : BNDES FINEM

• Total Amount: R$ 805.1 mm

• Interest Rate per Year: TJLP + 2.18%

• Amortization: 10 years

• Grace Period: 2 years86

40 63

286

2007 2008 2009 2010 2011/2012

23

Page 24: MMX Corporate Presentation - September 2011

Chile

Page 25: MMX Corporate Presentation - September 2011

Chile

Project HighlightsProject HighlightsProject HighlightsProject Highlights

•• One of the lowest cost additions to seaborne

supply

• High-quality iron ore with magnetite content to

supply the seaborne market

• Production target: 10 Mtpy

• 50% of production already committed through

long-term contracts

•• 460 Mt of iron ore potential already secured

Execution UpdateExecution UpdateExecution UpdateExecution Update

•• Punta Cachos Port fully licensed

• Drilling performed: 19 thousand meters

• Water permits

Expected Quality: Preliminary tests in Expected Quality: Preliminary tests in Expected Quality: Preliminary tests in Expected Quality: Preliminary tests in OuroOuroOuroOuro PretoPretoPretoPreto

Fe: 67.50% SiO2: 2.5%

Al2O3: 0.85% P: 0.015% Chile

25

Page 26: MMX Corporate Presentation - September 2011

Chile

Punta Punta Punta Punta CachosCachosCachosCachos PortPortPortPort

• EBX has 240,000 ha property in the Atacama region

• Fully Licensed Port

• Deep water port – 28 meter draft: Chinamax vessels

• Water availability with permits

• MPX Thermal Power Plant

BERTH N° 1 – COAL

BERTH N° 2 – IRON ORE

BERTH N° 3 – COPPER

26

Page 27: MMX Corporate Presentation - September 2011

Corumbá

Page 28: MMX Corporate Presentation - September 2011

Corumbá

HighlightsHighlightsHighlightsHighlights

• Unique high quality lump

• 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

Chile

28

Page 29: MMX Corporate Presentation - September 2011

Iron ore volume growth by System

Estimated Production Capacity (Mtpy)

35.3

30

35

40Chile Corumbá Sudeste

1.3*

Pau de Vinho + Minerinvest + Consolidation provides further volume potential

0

10

2.1 2.1

8.7

0

5

10

15

20

25

2011 2016E

34

29

Page 30: MMX Corporate Presentation - September 2011

Investor RelationsRoger Downey – CEO & IROCamila Anker– IR Manager

Rafaela Gunzburger – AnalystBeatriz Yoshinaga - Assistant

Tel. + 55 21 2555-6197/ [email protected]