Corporate presentation – may 2007


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Corporate presentation – may 2007

  2. 2. DISCLAIMERThis presentation relating to MMX Mineração e Metálicos S.A. (“MMX”) includes “forward-looking statements”, as that term is defined in the Private SecuritiesLitigation 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 otherthan 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 thatthese 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 ordevelopments in future periods. We caution participants of this presentation not to place undue reliance on these forward-looking statements as a number offactors 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 andregulatory conditions. We caution that the foregoing list is not exhaustive. When relying on forward-looking statements to make decisions, investors shouldcarefully 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 madepursuant to definitive offering documents) nor a solicitation of an offer to buy any securities in the United States, or any other jurisdiction. The securities referredto 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 anyapplicable state securities laws and may not be offered or sold in the United States absent registration or an applicable exemption from such registrationrequirements.This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated in whole or in part without MMX’s priorwritten consent. Investor Relations Rodolfo Landim – Director of Investor Relations Elizabeth Cruz – Manager Gina Pinto - Analyst Tel. 55 21 2555-5634 / 5558/ 5563 2
  3. 3. HIGHLIGHTSA Newborn Company and an option for iron oresupply from Brazil High quality iron ore to be produced in three different regions in Brazil, from three fully integrated independent systems -> 38 million ton/year from 2011. Successful IPO on July 24, 2006: US$ 509 million, the largest offering held in Brazil. Experienced management team to carry out and guarantee the execution of all projects on time. LLX Logística: additional value for MMX’s shareholders and development of opportunities in Brazil. 3
  4. 4. MMX INTEGRATED SYSTEMS MMX Integrated Systems develop and operate iron ore mines, pig iron and semi-finished plants and development of independent MMX Amapá System logistics. Iron Ore Fines: 6.5 Mtpy Pig Iron: 2.0 Mtpy Semi-Finished: 0.5 Mtpy MMX Minas-Rio System Iron Ore Fines: 26.6 Mtpy Pellets: 7.0 Mtpy MMX Corumbá System Iron Ore Fines: 4.9 Mtpy Pig Iron: 0.4 Mtpy Semi-Finished: 0.5 Mtpy Engineer Eliezer Batista Natural Reserve 4
  5. 5. MMX CORUMBÁ SYSTEM Mine 63 – industrial plant operating since December 2005 Production capacity of 3.1 million tons/year of lump (85%) and sinter feed (15%). Tests performed by Lucchini (Steel Mill, potential offtaker) – lump ore quality improves blast furnace operational performance Pig Iron Plant – Construction License granted in August 2006, construction initiated in September 2006 Start-up scheduled for June 2007 Supply agreement signed with Cargill in January 2007 5
  6. 6. MMX CORUMBÁ SYSTEM Acquisition of two farms in 2006 as the first step towards self- sufficiency in charcoal production Hired the most renowed eucalyptus planting company in Brazil – PLANTAR – to plant 48,250 acres in 5 years – in own and third-party landsMMX policy: conciliate economic development withnature preservationEliezer Batista Natural Reserve – MMX’s commitment withenvironmental preservation, 50 thousand acres in themost preserved area in South Pantanal 6
  7. 7. MMX AMAPÁ SYSTEM Amapá Mine – Construction License granted in August 2006, construction initiated in September 2006. Start-up scheduled for 4T07, production capacity of 6.5 million tons/year of iron ore. 20-year supply contract signed with Gulf Industrial Investment Co. in November 2006. Amapá Railway – 20-year concession contract. Railway under operation connecting the mine to the port in Santana. Santana Port Terminal – Preliminary Environmental License granted in August 2006. 7
  8. 8. MMX MINAS-RIO SYSTEM Additional geologic resources; Iron ore production of 26.5 million tons/year from 2011; Off takers – GIIC and Japanese Trading Co. (under negotiation) Pelletizing tests performed by SGA and Outokumpu – Lurgi confirms high quality of the pellets. Pipeline with approximately 525 km, crossing 32 municipalities; Public hearings concluded on April 20, 2007; Detailed topography concluded, right of way to be concluded in September 2007. 8
  9. 9. LLX LOGÍSTICA S.A. AÇU PORT HOLDING COMPANY FOR MMX’S LOGISTICS DIVISIONThe corporate reorganization created two newcompanies: LLX Minas-Rio Logística Sa., which will ownthe slurry pipeline and a 300-hectare iron ore port facilityat the Açu Port, and LLX Açu Operações Portuárias S.A.,which will own the remaining port area (5,700 hectares). Filtering Area Iron ore Offshore Pelletizing Petroleum Power Plants Steel Plants Tanking storage area support Plants processing facilities infrastructure plants 9
  10. 10. CAPEX DISTRIBUTION AND SOURCES Financing advancing according to the Business Plan CAPEX – Distribution by System CAPEX – Sources Pelletizing Plant Debt - Being US$ 0.4 B structured US$ 1.1 B 6% 27%Corumbá Equity - MMXAmapá US$ 0.6 BMinas-Rio 67% Equity - Strategic Partners US$ 0.2 B Debt - Firm commitment US$ 1.4 B TOTAL: US$3.7 billion 10
  11. 11. CORPORATE STRUCTURE Participation of Strategic Partners 70% 70% 51% 100% 100% MMX Corumbá MMX Amapá MMX Minas-Rio MMX Metálicos LLX Logistics 30% Centennial 30% Cleveland 49% Anglo Asset Corumbá Cliffs American 51% 70% LLX Minas-Rio LLX Açu Oper. Logística SA Portuária SA. On April 23, 2007, Anglo American and MMX entered into an agreement for the sale of a 49% interest in MMX Minas-Rio Iron Ore Project. 49% Anglo American 30% Centennial Asset 11
  12. 12. MMX and Anglo American Transaction Overview Anglo American plc (“Anglo”), MMX Mineração e Metálicos S.A. (“MMX”) and Centennial Asset Mining Fund LLC (“Centennial Asset”) have entered into an agreement in connection with the following MMX assets (jointly, the “Minas- Rio Companies”): • MMX Minas-Rio Mineração Ltda (“MMX Minas-Rio”) • LLX Minas-Rio Logística Ltda. (“LLX Minas-Rio” – together with MMX Minas-Rio, the “Minas-Rio Companies”) According to the agreement: • Anglo will purchase 100% of Centennial Asset’s shares in the Minas-Rio Companies • Anglo will subscribe for additional shares of MMX Minas-Rio and LLX Minas-Rio, resulting in Anglo owning 49.0% ownership interest in both assets Transaction will be divided in two steps: I. US$ 704mm cash payment to Centennial Asset and US$ 874mm capital contribution to the Minas-Rio Companies, implying a pre-money valuation of US$ 2,347mm for 100% of the Minas-Rio Companies II. Earn-out comprising additional cash payment of US$ 346mm to Centennial Asset and additional capital contribution of US$ 526mm to the Minas-Rio Companies, implying a pre-money valuation of US$ 3,500mm for 100% of the Minas-Rio Companies and a post-money total valuation of US$4.9mm. i. Earn-out will be dependent upon the confirmation of the projected capacity expansion of the Minas-Rio Companies, starting in 2012 Transaction is still dependent on Anglo, MMX and Centennial Asset agreeing on the final terms of the purchase 12
  13. 13. Step I – 49% in MMX Minas-Rio and LLX Minas-Rio Centennial Centennial Asset Asset 1 70% 30% US$ 704,081,671Transaction 1 cash payment Structure 2 US$ 874,349,787 capital contribution Minas-Rio Minas-Rio Companies Companies 2 Implied pre-money valuation ofPro-Forma 51% 49% US$ 1,150,000,063 for 49% stake orStructure US$ 2,346,938,904 for 100% stake Minas-Rio Minas-Rio Companies Companies 13
  14. 14. Step II – Earn-Out Dependent on Phase II (1) Leading to 50% Ownership Interest Centennial Centennial Asset Asset 1 51% 49% Transaction Structure US$ 345,918,367 1 additional cash payment US$ 525,650,262 Minas-Rio Minas-Rio 2 additional capital contribution Companies Companies 2 Implied new pre-money valuation of Pro-Forma 50% 50% US$ 3,500,000,126 for 100.0% stake Structure and US$4.9 million, post-money, i.e., after giving effect to the capital contributions. Minas-Rio Minas-Rio Companies Companies(1) Phase II refers to the envisioned expansion with the doubling of the Minas-Rio Companies capacity, subject to certain conditions, including Minas-Rio Companies confirming sufficient reserves and obtaining the relevant environmental permits. 14
  15. 15. Transaction Details – Implied value for 49.0% of Minas-Rio Companies (pre-money): US$ 1,150,000,063 – Pre-Money Valuation for 100.0% of Minas-Rio Companies = US$ 2,346,938,904 – Calculation for the capital contribution: Payment to Centennial Asset + Capital ContributionStep I = 49% Pre-Money Valuation + Capital Contribution – Payment to Centennial Asset = 30.0% * Pre-Money Valuation = US$ 704,081,671 – Capital Contribution = US$ 874,349,787 – Implied value for 100.0% of Minas-Rio Companies (pre-money): US$ 3,500,000,126 US$ 1,150,000,063 + Earn-out of US$ 600,000,000 = 3,500,000,126 50% – Implied value for Centennial Asset’s stake = 30.0% * New Pre-Money Valuation = US$ 1,050,000,038 – Additional value to be received by Centennial Asset = 1,050,000,038 - 704,081,671 = US$ 345,918,367Step II – Calculation for the capital contribution: Total Payments to Centennial Asset + Total Capital Contributions = 50% New Pre-Money Valuation + Total Capital Contributions – Total Capital Contributions = US$ 1,400,000,049 – Additional Capital Contribution = 1,400,000,049 - 874,349,787 = US$ 525,650,262 – Total Post-Money valuation = US$4.9 million 15
  16. 16. A Compelling Transaction Agreement with blue-chip Anglo American confirms MMX’s status as the best development- stage iron ore asset outside the majors Powerful combination of MMX’s skill sets in Brazil with Anglo American’s globally renowned capabilities to develop and operate premium assets Perfect strategic fit, given Anglo American’s future growth strategy and long standing experience in Brazil Joins two successful teams with experienced professionals Significant reduction in MMX Minas-Rio’s future capital requirements Earn-out structure fully aligned with shareholder’s interests Unlocks value for MMX shareholders 16
  17. 17. MMX CORPORATE GOVERNANCE Commited to following the best corporate governance practices: Board of Directors composed of 9 members, 6 independent with 1-year mandate Audit Committee composed of 3 members, all independent Hiring of independent auditors according to internationally accepted criteria Capital stock composed entirely of common shares, with 100% tag along Free float greater than 25% Stock Option program for the executives, with no dilution for minority shareholders Corporate Policy for disclosing information to the public Ethics Code Arbitrage for solving corporate issues 17
  18. 18. MMX - BOARD OF DIRECTORS & EXECUTIVE OFFICERS Eike Batista Chairman & CEOBoard of Directors Board of Executive Officers Michael Raphael de Rodolfo Landim Executive President Eliezer Stephen Almeida Investor Relations Batista Vitton Magalhães Adriano Vaz Administrative & Independent Members HSEC Gilberto Hans José Luiz Peter Samir Chief Operating Dalton Nosé Sayão Mende Alqueres Nathanial Zraick Officer, Metallics Joaquim Martino Chief Operating Special Advisor Officer, Mining Amaury Temporal Nelson Guitti Chief Financial Officer Audit Commitee Paulo Gouvêa General Counsel Samir José Luiz Peter Ricardo Antunes Commercial Zraick Alqueres Nathanial Director 18
  19. 19. MMXM3 IN NOVO MERCADO - BOVESPA Capital Stock – 7,607,756 common shares Geographic Distribution 1,0% Controlling Shareholder and 16% Management 26% 68% Brazil United States Canada EU 32% Other 16% FreeFloat 41% MMXM3 composes the Diferentiated Corporate Governance Stock Index Level I GDR Program initiated on February 5, 2007 – GDR per share ratio of 20:1 Toronto Stock Exchange: listing in Canada expected for May 2007 Stock split program initiated in January 2007 19
  20. 20. MMXM3 IN NOVO MERCADO - BOVESPAPositive progress is being recognized by the capital market: market cap reached US$ 3.4 billion Price (R$) 1040 MMXM3 X IBOVESPA Volume (R$ million) 80.00 940 MMXM3 121.50% 70.00 IBOVESPA 38.8% 840 MMXM3 60.00 740 50.00 640 IBOVESPA 540 40.00 440 30.00 340 20.00 240 10.00 140 40 0.00 22 ov ay 1- l 15 ar 23 ar ar 11 r 19 r 27 r 8- r 22 g ug 20 p 28 p 11 p 4- v 15 ec 28 ec 10 c 18 n 29 n an 15 b 26 ct 7- t 27 b eb Ju c Ap p p p o e Au Se e e a a Fe e -O -O M -M -A -A -A -M N M -N D -D -D -J -J -J -A -S -S -F -F - 2- 24 7- 6- 6- 20
  21. 21. MMX MULTIPLYING VALUE Experienced management team Integrated and Long term Independent supply logistics relationships Health, Safety, Environmental And Social Responsibility Low production High value-added cost at projects, vertically competitive integrated capital expenditure levels Mineral Resources with characteristics that enable high quality ptoducts 21