O NOVO PARADIGMAO Impacto dos desafios de fornecimento na indústria brasileira de

Minério de Ferro

Jayme Nicolato, CEO Ferrous

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This presentation and its contents are confidential and may not be reproduced, redistributed or passed on, directly or indirectly, to any other person or

published, in whole or in part, for any purpose without the written consent of Ferrous.

This presentation does not constitute or form part of any offer or invitation to sell or issue, or any solicitation of any offer to purchase or subscribe for

any securities, or a proposal to make a takeover bid in any jurisdiction. Neither this document nor the fact of its distribution nor the making of the

presentation constitutes a recommendation regarding any securities. This presentation is being provided to you for information purposes only. You are

responsible for your own investment decisions and for properly analysing and verifying any information or projections you intend to rely upon. You

should be capable of evaluating the merits and risks of any investments you intend to make and no reliance may be placed on this presentation in

connection with any decisions on your part. Any decision to purchase any securities in any offering should be made solely on the basis of the information

contained in the relevant prospectus and specific documentation for that purpose.

Certain statements, beliefs and opinions contained in this presentation, particularly those regarding the possible or assumed future financial or other

performance of Ferrous or any members of its group (the “Group”), anticipated iron ore demand and consumption, global economic outlook, commodity

price forecasts, industry growth or other trend projections are or may be forward-looking statements. By their nature, forward-looking statements

involve risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future and may be beyond

Ferrous’s ability to control or predict. Important factors that could cause the Group’s actual results of operations, financial condition and development of

the industry in which it operates to differ from the impression created by any forward-looking statement and include, but are not limited to, general

economic and business conditions, commodity price volatility, industry trends, competition, changes in government and other regulation, including in

relation to the environment, health and safety and taxation, labour relations and work stoppages, changes in political and economic stability and

currency fluctuations.

Other than in accordance with regulatory requirements, Ferrous is not under any obligation and Ferrous expressly disclaims any intention or obligation to

update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

No representation or warranty, express or implied, is given by or on behalf of Ferrous or any other person or their members, directors, officers, advisers,

agents or employees as to the accuracy or completeness of the information, opinions, projections or assumptions contained in this presentation and, to

the extent permitted by law, no liability whatsoever (in negligence or otherwise) is accepted by Ferrous nor any other person for any loss howsoever

arising, directly or indirectly, from any use of such information, projections, assumptions or opinions or otherwise arising in connection therewith.

Disclaimer

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Iron ore market dynamics Through 2020, China will need an additional 400 Mt in iron ore

from the Seaborne Market

Seaborne iron ore demand is expected to grow significantly over the next 10 years, mainly driven by demand growth from

China.

0

200

400

600

800

1000

1200

2000 2011 2021

111148

208275

326383

444628 619

687750

818898

968

1.045

0

200

400

600

800

1.000

1.200

CHINA CRUDE STEEL PRODUCTION

(Mmt)

SOURCE: CRU AND MARKET INFORMATION

+545Mt

+ 260 Mt

+9%

Y-o-Y

CHINA IRON ORE ANNUAL IMPORTS

(Mmt)

CHINA IRON ORE MONTHLY IMPORTS

(Mmt)

45

50

55

60

65

70

JAN FEV MAR APR MAY JUN JUL AUG SEP OCT NOV DEC

2011 2012

SOURCE: TEX REPORT AND BLOOMBERG

SOURCE: TEX REPORT, CRU AND MACQUARIE

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Iron ore market dynamics China overcapitcity in aluminium and steel keep the

international prices low

Since 2000 production of almost every metal has at least doubled, China’s strategy of keeping the production higher than

the demand inorder to keep lower prices and cheaper urbanization plan.

Source: CRU, SBB and Macquarie

100

200

300

400

0

100

200

300

400

500

600

700

800

100

200

300

400

500

0

50

100

150

200

250

300

350

400

100

200

300

400

500

600

0100200300400500600

Consumption Production Price

COPPER ALUMINIUM STEELIndex: 2002 = 100 Index: 2002 = 100Index: 2002 = 100

Steel price: China Domestic HRC

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Iron ore market dynamics Iron Ore Seaborne Market - Australia x Brazil

159 172194

216231

261

282310

313 325 335337

365

370

207215 216

256 271

296

333

375

420

470

510

563

647

693

100

200

300

400

500

600

700 Brazil AustraliaF´cast

Through 2015, seaborne supply additions are estimated to be above 300Mt, with Australia accounting for around 50% of total growth, and Brazil

less than 30%. Australia continues to gain share in the Chinese import market, largely at the expense of India whose market share has slipped to

a record low of 8% in Jan-Feb 2012. Stricter environmental rules have been a reality globally, which should result in higher lead times to bring on

new capacity. Slow permitting processes in Brazil have fueled even more constant delays (approx. 2 years).

SOURCE: BARCLAYS AND FERROUS

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Iron ore market dynamics Iron Ore Cost Curve

Brazil and Australia are well known for their high quality reserves and efficient logistics solutions. The

back end of the cost curve is mainly comprised of high cost Chinese and Indian producers with average

cash cost levels above US$120/ton. Poor quality reserves and highly un-mechanized/small mines are the

main reasons for high marginal costs in China.

SOURCE: DEUTSCHE

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50

70

90

110

130

150

170

190

210

Platts IO Daily 62% Platts IO 62% Average Annual Price

Platts IO 62% Average Annual Price YTD

Iron ore market dynamics Volatility of prices is high, but the quarterly mean is

over $110/dmt

7

2012 - IT MAY BE SLOWING BUT IT´S STILL GROWING

USD

/dm

t

Despite all the rhetoric regarding slower Chinese growth and European recession, the reality is that 2012 will be another

tight year for global seaborne iron ore supply especially for spot proces below $110/dmt

IRON ORE PRICES (USD/DMT)

AVERAGE OF THE ACTUAL QUARTER

IRON ORE PRICES

* QTD: 02/11/2012

SOURCE: PLATTS, DEUTSCHE AND MARKET

142 143 141

113 116

Q4' 11 Q1' 12 Q2' 12 Q3' 12 Q4' 12

(QTD)*

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0

20

40

60

80

100

120

140

160

180

Daily Platts 62% CFR China FOB

I.O. Price 62%Fe Asia (USD/dmt) BENCHMARK

I.O. Price 62%Fe Asia (USD/dmt) QUARTELY MOVING AVERAGE

I.O. Price 62%Fe Asia (USD/dmt) MONTHLY AVERAGE

I.O. PRICE 62%FE ASIA (USD/DMT)

• Increased market confidence

• Chinese government supporting growth,

Iron ore market dynamicsA Challenging Short Term Scenario

85

105

125

145

165

185

US

D/d

mt

Iron Ore Fines 62% CFR North China ($/dmt)

122.00

42

52 55

83

115

155 155

0

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40

60

80

100

120

140

160

180

50

60

70

80

90

100

110

120

130

140

150

160

170

180

2010 2011 2012 2013 2014 2015 2016

Mt

US

D/d

mt

FMG Iron Ore Tonnage Iron Ore Price 62% CFR China Iron Ore Price Forecast 62% CFR China

Iron Ore Price 58% FOB China Iron Ore Price Forecast 58% FOB China Iron Ore Price 58% CFR China

Iron Ore Price Forecast 58% CFR China

WOULD IT BREACH DEBT COVENANTS?

Iron ore market dynamics FMG situation USD 120/dmt 62% CFR China?

Total Cost

USD 95~105/t

Total Cost

USD 65~75/t

~USD -21/dmt

9

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Sharp fall in steel mills inventories cannot last forever – the depth of destocking has been greater than initially anticipated, his is putting

continued downside pressure on iron ore prices. Although it seams similar to last year (September/October/2011), there are some important

differences such as level of purchasing activity specifically of imported iron ore against the spot price for imported ore. Iron ore purchasing

activity at the smaller mills has not slowed much in recent months but still the iron ore price is falling . Over September-October 2011, the

smaller mills reduced inventory by simply buying less iron ore. This year, purchasing activity has hardly been reduced and inventory volumes

have been run down instead by increasing the rate of consumption of iron ore – by keeping pig iron and crude steel production volumes at a

high level. This goes someway to explaining why the reported crude steel production numbers remain persistently high.

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Iron ore market dynamicsA Challenging Scenario, new paradigm

CHINA IRON ORE MARKET

SOURCE: MACQUARIE

*

*the mills produce less than 5mtpa of steel and account for ~30% of Chinese production

IRON ORE INVENTORY (DAYS OF USE) HELD BY 50 SMALLER

STEEL MILLS * X INTERNATIONAL SPOT PRICES

IMPLIED IRON ORE PURCHASING (CONSUMPTION NET

OF STOCK CHANGES), VS SPOT PRICE

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20

30

40

50

60

70

80

50

70

90

110

130

150

170

190

Mt

US

D/d

mt

TOTAL 367 Mt

TOTAL 444 Mt TOTAL 384 Mt

Vale

25%

BHP

14%Rio

Tinto

22%FMG;

0%

Others

39%

Vale

18%

BHP

15%Rio

Tinto

22%

FMG

3%

Others

45%

Iron ore market dynamicsChina market share competition

IRON ORE PRICE X I.O. TONNAGE IMPORTED BY CHINA

CHINA OVERSUPPLY – CHINA MARKET SHARE COMPETITION

During previous crisis (2008) some players reduced tonnage offer in an attempt to hold the prices but others continued to sell iron ore to

market unrestrainedly. In the 1995–2003 period, anywhere between 20 and 30 countries satisfied the Chinese market. However, as the call on

seaborne material increased, so material from additional suppliers was sought, with 30–45 exporters to China through 2010. In 2011,

however, this number jumped to 59, with countries such as Kenya, Azerbaijan and even the UK exporting ore to China. This again highlights

the ever-expanding horizon of Chinese buyers to source any available iron units.

CHINA IMPORTS OF IRON ORE BY ORIGIN

2007 2008

SOURCE: PLATTS, VALE, UMETAL, MACQUARIE AND CRU

Vale -

7%

11

Vale

17%

Australia

49%

Others

34%

1H’12

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0

20

40

60

80

100

120

140

160

180

200Daily Platts 62% Fe CFR China

Daily Platts 62% Fe FOB China

Iron Ore Prices

SOURCE: PLATTS , THE TEX REPORT, WOODMACQUENZIE E CRU

123 122127 128

118 117 120

I.O. PRICE 62%FE CHINA (USD/dmt)

PROJECTION

+ USD 33,50

~ + 38%

97

117116

55

Iron ore prices reached USD 122/dmt CFR China, USD 33,50dmt above the lowest point this year which reflects the fact that, at the beginning

of last week the Chinese mills returned to the market after the Chinese new year holiday. Given that Chinese steelmakers currently rely on

low stock of iron ore, today are in urgent need to replenish them.

122

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Ferrous overviewHighlights

INCORPORATED IN FEB´07 TO FOCUS ON THE DEVELOPMENT AND OPERATION OF IRON ORE

ASSETS IN BRAZIL

THE COMPANY HAS INVESTED OVER USD 1BN IN ITS IRON ORE PROJECTS

ASSETS COMPRISED OF 5 MINERAL AREAS IN THE IRON ORE QUADRANGLE AND A WHOLLY-

OWNED INTEGRATED LOGISTICS SYSTEM

IN 2010, FERROUS INITIATED MINING ACTIVITIES AND IS CURRENTLY OPERATING AT A RUN-RATE

OF 3.6 MTPA

FERROUS HAS ALSO RECEIVED LICENSES FOR ITS INTEGRATED IRON ORE DEVELOPMENT,

INCLUDING 15MTPA PRODUCTION AT VIGA MINE, AND ITS PIPELINE AND PORT LOGISTICS SYSTEM

FERROUS IS THE 4TH IRON ORE COMPANY IN BRAZIL TO OBTAIN A LICENSE FOR A PRIVATE PORT.

VALE, MMX AND SAMARCO ARE THE ONLY OTHERS

CURRENTLY PRODUCING AND GENERATING POSITIVE EBITDA

1

2

3

4

5

6

7

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Ferrous assets JORC-compliant Resources

JORC: Australasian Joint Ore Reserves Committee, provide a minimum standard for reporting of exploration results, Mineral Resources and

Ore Reserves, ensure that public reports on these matters contain all the information which investors and their advisers would reasonably

require for the purpose of making a balanced judgment regarding the results and estimates being reported.

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Ferrous overviewMRS System

ATLANTIC

OCEAN

MRS CENTRAL

RAIL LINEMRS STEEL

RAIL LINE

MarianaEsperança

Belo

Horizonte

Vale

Mines

Anglo Minas-Rio

Itabira

IRON QUADRANGLE

Third party ports

Sepetiba bay

Rio de

Janeiro

Barra do Pirai

Port Tubarao

VitoriaViga

Port Ubu

EFVM

RAIL LINE

Brismar

Port Açu

Samarco

pipeline

Ferrous Proposed Pipeline Route

Anglo Ferrous Proposed Pipeline

Samarco Pipeline

Existing Railways

Vitória - Minas

0 50 100 200km

Ouro Branco

(Gerdau/Açominas)

Viga Norte

Olhos d´água

Andaime

Serrinha

Viga

Viga Norte

Esperança

Serrinha

Santanense

FERROUS’ MINES IN THE IRON

ORE QUADRANGLE

Santanense

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Ferrous assets Comprised of 5 mineral areas in the Iron Ore Quadrangle

VIGA

SERRINHA

VIGA NORTE

EMESASANTANENSE

Source: MMX

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• In November 2011, Ferrous completed the construction of a rail terminal at Viga with 18mtpa

loading capacity;

• The terminal provides a cost advantage of at least $7/t for Viga versus peers without onsite logistics;

• Ferrous aims to replicate this success at its other properties in order to reduce logistics costs and

sell 3rd-party terminal services.

Viga rail terminal

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Because of the strategic location of EMESA in the Serra Azul region, we see a significant

opportunity to generate returns through the sale of railway terminal loading capacity.

EMESA rail terminalStrategic Location

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Ferrous Licences

Asset Operation LP LI LO

EMESA Mine Production of 2mtpa finished

products� � �

Santanense Mine Mining and processing of 860kt

ROM� � �

Viga Mine Production of 2mtpa finished

products� � �

Viga Mine Production of 15mtpa finished

products� �

Viga Norte Production of 10mtpa finished

products

EIA/RIMA Dec’12

LP Dec’13

Serrinha Production of 8mtpa finished

products

EIA/RIMA Dec’12

LP Dec’13

Pipeline from Viga to

Presidente Kennedy Port

Transportation of 25mtpa finished

products�

Scheduled to

Q2 2013

Presidente Kennedy Port Export of 25mpta finished products�

Scheduled to

Q2 2013

LP: Preliminary License – Validates environmental viability of the project

LI: Installation License – Authorizes construction of the project

LO: Operational License – Approves completion of construction and authorizes operation of the project

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2012 ~ 2015

Chemical (dry basis)

Typical

%

Guaranteed

%

Fe 62.5 62.0 Min

P 0.070 0.090 Max

S 0.020 0.040 Max

Al2O3 1.50 2.00 Max

SiO2 6.50 8.00 Max

H2O 8.00 10.0 Max

Size (wet basis)

Typical

%

Guaranteed

%

>6.50mm 15.0 30.00 Max

<0.106mm 30.0 40.00 Max

2016 ~ 2020 via railway 2021 onwards via pipeline

Chemical (dry basis)

Minimum (e)

%

Maximun(e)

%

Minimum (e)

%

Maximun(e)

%

Fe 65.0 65.5 -

P - 0.065 - 0.060

S - 0.025 - 0.025

Al2O3 - 0.7 - 0.60

SiO2 - 3.6 - 3.80

H2O - 10.5 - 10.5

LOI - 2.5 - 2.40

Size (dry basis) ISO

standardsTypical % Guaranteed % Typical % Guaranteed %

< 0.0150 mm 65.0 - 98.0 -

< 0.045 mm 20.0 - 75.0 -

Blaine (cm2/g) 350 - 1200 -

Ferrous overviewProduct Specification – Iron Ore Fines

Long Term Business Plan

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A combination of grade degradation, infrastructure risk, difficulty in financing, permitting issues and spiraling capital

intensity will cause the supply side to underperform relative to plan. This has been a consistent problem for the past five

years and will probably remain until the end of the decade.SOURCE: FERROUS

EVOLUTION OF FORECASTS FOR BRAZILIAN

SEABORNE SUPPLY (MTPA)

EVOLUTION OF FORECASTS FOR AUSTRALIAN

SEABORNE SUPPLY (MTPA)

280

350

400

450

500

560

600

660

700

280

330

370

420

470

530

600

670

720

270 270

430

460

510

560

600

670

250

300

350

400

450

500

550

600

650

700

750

2007 2008f 2009f 2010f 2011f 2012f 2013f 2014f 2015f

jun/08 set/09

mai/11 abr/12

270

300

350

400

440

490

510530 540

270

320

350

400

440

500

545

270270

270

300

320340 340

365 370

250

300

350

400

450

500

550

600

650

700

750

2007 2008f 2009f 2010f 2011f 2012f 2013f 2014f 2015f

jun/08 set/09

mai/11 abr/12

Iron ore market dynamics Seaborne Supply Forecast has been constantly reduced

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Sepetiba Bay

Inlet Ship Channel

Ship Channel - 21 Miles

TIG - Vale

Railway - MRS

1- Public Terminal – CDRJ

2- TECAR – CSN

3- CPBS - Vale

Sudeste Port – MMX

Alternatives of Ports in Sepetiba Bay

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SOURCE: MARKET AND FERROUS

Iron ore market dynamics MRS System Brazil Iron Ore and Iron Ore

Domestic Market Supply BalanceAdjusted

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• Engineering

• Procurement

• Construction

• Management

Start up

PROJECT

EXECUTION

FEL 3FEL 3

FEL 2FEL 2

FEL 1FEL 1

1 MINE

2 GOOD

PROJECTS

4 IRON ORE

DEPOSITS

15 MINERAL

DEPOSITS

100 POSSIBLE

TARGETS

PR

OJE

CT

CR

EA

TIO

N

TAR

GE

T C

RE

AT

ION

TAR

GE

T S

TU

DIE

S

AD

VA

NC

ED

PR

OJE

CT

S

• Is there a deposit or not?

• Deposit sizing (volume, grade..)

• Attractiveness evaluation

• Scoping Study

• Conceptual Engineering

• Technical economic feasibility

• Basic Engineering

Abandoned Projects: 75%

Investment expense: 0,5%

Abandoned Projects: 50%

Investment expense: 1,5%

Abandoned Projects: 1%

Investment expense: 4,5%

1000

ANOMALIES

FERROUS WILL UTILIZE THE FEL 3 METHODOLOGY IN ORDER TO EVALUATE DEVELOPMENT PROJECTS PRIOR TO IMPLEMENTATION

FERROUS WILL UTILIZE THE FEL 3 METHODOLOGY IN ORDER TO EVALUATE DEVELOPMENT PROJECTS PRIOR TO IMPLEMENTATION

Long Term VisionFeasibility methodology

Capítulo 1

3 5 5 5

10

17

33

35

47

-

5

10

15

20

25

30

35

40

45

50

2012 2013 2014 2015 2016 2017 2020 2021 2028

26

Ferrous Time Line

Completion of Feasibility Study

Completion of Construction

Mt

Ferrous’ current resource base provides an

opportunity to grow annual production to 47 mtpa

VIGA NORTE 10 mtpa

SERRINHA 8 mtpa

SERRINHA 15 mtpa

EMESA 2 mtpa

LOGISTICS

VIGA + EMESA

VIGA 4MTPA

VIGA 15 mtpa

SANTANENSE 5 mtpa

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SOURCE: BARCLAYS RESEARCH

VIGA

15Mt

USD 80/t

VIGA

15Mt

USD 80/t

Industry average

Ferrous x iron ore projectsCapex Intensity of development Iron Ore Projects

3 17

935

92

2.5Mtpa Expansion

4.0Mtpa Expansion

15Mtpa Expansion

FEL 3 & License Maintenance

65992

80

43 2436

Plant Mining Equipment

Tailings Dam - 7 & 7/A Tailings Dam - 8

Waste Dump Railway

Engineering / Other

VIGA CAPEX (US$mm)

Viga Capex Breakdown – US$mmReal Terms through 2020

28

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PRODUCTION

• 3Mt production for 2012

• Expansion of production capacityto 5.0mtpa for 2013

• Zero “lost-time” accident rate

• Positive recurring EBITDA

PROJECT DEVELOPMENT

• BFS for Viga 15mtpa project by July2013

• LI for Pipeline and Port to remainon track for early Q3 2013

• Completion of EIA/RIMA andconceptual engineering forSerrinha 8mtpa by Q2 2013

• Completion of EIA/RIMA andconceptual engineering for VigaNorte 10mtpa by Q2 2013

FERROUS HAS ESTABLISHED A NUMBER OF KEY OPERATIONAL MILESTONES THAT WE EXPECT TO COMPLETE PRIOR TO VIGA 15MTPA IMPLEMENTATION

Business plan

Thank you