The document summarizes the proposed transaction between MMX and SK Networks. Key points include:
- SK Networks will invest up to $2.2 billion in MMX through a capital increase in exchange for shares and rights to iron ore offtake.
- MMX will acquire Sudeste Superport, valued at $2.2 billion, through a combination of shares, cash, and royalties.
- SK Networks will receive 50% of production from MMX Chile mines and a percentage of MMX Sudeste production, securing them long-term supply.
The transaction aims to accelerate MMX's consolidation strategy and secure logistics and offtake for both companies.
2. 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.
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.
Investor Relations
Roger Downey – CEO & IRO
Camila Anker– IR Manager
Rafaela Gunzburger – Analyst
Tel. + 55 21 2555-6197/ 6338 2
ri@mmx.com.br
4. Seaborne Iron Ore Supply/Demand
DEMAND
SUPPLY
Source: Credit Suisse Estimates
• Seaborne market already at record levels. September is now very near the peak levels of June 2008.
• Iron Ore Markets are tight and should be even tighter in 2010 and 2011.
• Shipments-to-capacity could reach ~ 98%.
4
5. Chinese local iron ore production has been replaced by
imports. It represented 75% of the total imported
volume in Nov/2009.
Source: Credit Suisse
5
6. Brazil´s iron ore exports in march 2010 grew 24%
on a year-over-year basis.
China represented 50% of iron ore exports.
Source: Credit Suisse
6
7. Iron ore prices are expected to remain
above US$ 100/ton through 2012
7
8. Crude Steel Production
Crude Steel Production
(million tons)
2000
1600
1200
800
400 CAGR China 6.0%aa
0
China Others World
• Chinese crude steel production has rebounded and is forecast to grow at least 6.0 (CAGR).
• The world crude steel output is expected to recover back to pre-crisis levels by 2010.
8
11. Since IPO (July’06), a lot has
been delivered…
September
2010 • Definitive agreement with SK Networks
• Wisco’s Investment in MMX and Iron Ore offtake from MMX Sudeste;
• Sale of Corumba’s pig iron facility to Vetorial;
• MoU with Wuhan: supply of iron ore and sale of stake in MMX;
• Minera MMX de Chile: acquisition of mining rights and logistics already
identified;
• Development of MMX Sudeste System: acquisition of assets, logistics
secured and expansion plans to 33.7 million tons per year of iron ore;
• Sale of assets to Anglo American: MMX Minas-Rio and MMX Amapá;
• Spin off of LLX;
• Partnership with Anglo American and Cleveland Cliffs;
• MMX Corumbá pig iron furnaces: implemented in 12 months;
• MMX Corumbá iron ore mine: operational in 8 months;
July
• MMX Amapá System, mine, railroad and port: operational in a 14-month
2006
record time;.
11
12. MMX structure
Controlling Shareholders
42.62%
Free Float
21.52%
35.86%
30% EBX
Brasil S/A
Bom Sucesso under basic
engineering studies
Corumbá System started-up
in 2005 (Mining)
Assets acquired by MMX (AVG:
dec-07; Minerminas: jan-08) 12
13. The only one of its kind
MMX uniqueness:
High quality iron ore;
Low cash cost, due to the high in situ
ore content and high productivity;
Secured logistics, through long-term
agreements with rail, barges and port
services providers, including LLX
Sudeste Port, its sister company;
The unique independent operating
Brazilian junior mining company;
Experienced Management in
selecting high value mining assets,
implementing and operating mining
projects;
Proven ability in delivering value to
shareholders.
13
17. Serra Azul
8.7 Mtpy of capacity reached in Oct’08
OPERATIONS SALES & LOGISTICS
• Assets acquisition concluded in Jan./2008;
• Railway capacity secured
• Construction of Magnetic Concentration through long-term
Plant and operational enhancements: 8.7 agreement with MRS up to 15
million tons as annual installed production Mtpy;
capacity in Oct./2008.
• Port capacity from mid-2011
untill 2032 secured through
long-term agreement with
LLX Sudeste Port;
• Long-term agreements with
domestic and international
customers;
• Wysco will off-take at least
50% of MMX Sudeste
production.
Magnetic Concentration Plant – Start-up Oct./2008 17
18. Serra Azul Complex:
Growth and proximity to existing infrastructure
MMX is the natural consolidator in the region 18
19. Bom Sucesso:
Outstanding magnetite content and logistics
• Acquisition of mining rights concluded in July/2008;
• Unique magnetite content (close to 30%);
• The closest iron ore asset to Sepetiba Bay – 240km;
Expected Quality: • Greenfield basic engineering studies and environmental licensing
Fe: 67.2% P: 0.033% under development;
SiO2: 2.5% PPC: 0.6%
• Rail capacity under negotiation with MRS to extend current contract
AL2O3: 0.5% FeO: 8.8% for additional 17 mt up to 2032. 19
20. MMX Sudeste System: competitive high-grade
iron ore producer with efficient logistics
Environmental and
Construction
Licenses obtained;
Long term financing under
negotiation;
50 million ton/year of iron ore
Can be expanded to 100
million ton;
Start-up second half 2011.
Export target of 32 million
tons per year
20
21. Sudeste Superport
General view: onshore site
Administrativ Iron Ore Yard El. 32
e Buildings Iron Ore Yard El. 06
Railcar
Dumper
Rail Loop
Last available location for a Bulk Terminal in Sepetiba region 21
22. Sudeste Superport
Milestones
Sudeste Superport will start its operation in 1H 2012
2H06 1H07 2H07 1H08 2H08 1H09 2H09 1H10 2H10 1H11 2H11 1H12
Sudeste Superport
Pedreira
Development Environmental EIA EIA RIMA Environmental Construction
Sepetiba Start up
start-up Studies RIMA Completed License License
Acquisition
Navy ANTAQ
Approval Authorization
Construction
Under Construction
begins
Development
Construction
Operations
22
23. Sudeste Superport
Volume and Capex
Sudeste Superport Total CAPEX: R$ 1.8 billion
CAPEX (R$ Million) Volume Ramp up (mtpy)
800 50,0 50,0 50,0 50,0 50,0 50
50,0
700
40,0
600 40,0
500
30,0
400
741 712
300 20,0
14,5
200
100 10,0
86 63 115
0 40
-
2007 2008 2009 2010 2011 2012 2012 2013 2014 2015 2016 2017 2018... ...2032
Actual
Source : Verax Feasibility Study as of March 2010 23
25. Iron Ore in Chile:
Quality, logistics and competitiveness
• 4 mining rights (2
purchase and options
agreements);
• USD 44.5 million;
• 50km from the Chilean
coast, approx. 1,760
hectares;
• Pellet feed with high
magnetite content;
• Existing railroad
(FERRONOR).
Preliminary tests in
Ouro Preto pilot plant:
Fe: 67.50% SiO2: 2.5%
Al2O3: 0.85% P: 0.015%
25
26. Logistics: Puerto Punta Cachos
• EBX has 240,000 ha property in the
Atacama region;
• Permits to develop the urban, industrial
and port zones;
• Water availability with permits;
• Guaranteed site contract for:
• 89 ha of premium area (port);
• 782 ha of retro-area;
• Unlimited scalability for a long-
term development;
• Located close to mining players;
• Opportunities for industrial businesses:
• Port / Thermo.
26
28. MMX Corumbá Mineração
• Unique high quality lump yield;
• Current Capacity: 2.1 Mtpy.
• MMX has Long Term Supply Agreement
with traditional steel makers in South
America and Europe;
• Transport barges down the Paraguay
River to Rosario Port;
• MMX has long-term contracts with local
and international barge operators;
• Rosario Port in Argentina: Handymax
vessels to Europe;
28
29. Iron ore volumes estimates by System
35
40 Sude ste
Chile Corumbá 1,3 *
35
30
25 33 ,7
20
15 10
8,7
10
2,1
5 2,1
0
0 20 15 E
20 09
* GVA acquisition – 1,3 Mtpy until 2017
29
31. Transaction Highlights
Capital increase in MMX of up to US$2.2 billion
Capital increase of common shares at R$13.963
The Controlling Shareholder will convert part of the perpetual debentures issued
by MMX and held by the Controlling Shareholder into MMX equity at R$13.963
per share
Acquisition of Sudeste Superport, valued at US$ 2.2 billion in (i) MMX shares or cash (ii)
and royalties
MMX’s strategy to consolidate iron ore assets may accelerate the second phase of
Sudeste Superport
Long-term iron ore off-take agreement granting SK Networks entitlement to:
50% of the production of MMX Chile’s mines
Part of MMX Sudeste’s production equal to at least the percentage of SK's
shareholding in MMX immediately following the consummation of the
Transaction(1)
(1) Applicable from 2013 and beyond. In 2011, SK will receive two capesize ships from MMX’s Serra Azul mines and in 2012 one million tons, subject to availability, from MMX’s Serra Azul mines 31
32. SK Network Profile
SK Networks, a SK Group affiliate based in the Republic of Korea, operates in 22 countries with its businesses
ranging from energy sales to mobile phone distribution, trading and retail
– SK Networks recorded US$ 17.1 billion in sales and US$ 274.6 million in operating income in 2009
– Its parent company, SK Group is one of the largest conglomerates in the Republic of Korea and recorded US$
69.8 billion in sales and US$ 3.2 billion in operating income in 2009
• Developing partnerships and making strategic acquisitions to secure access to
overseas natural resources and investing in mine & smelter projects
Mine & Smelter • Coal Mine Project in Australia
• Lead & Zinc Mine Project in China
• Gold Mine Project in Uzbekistan
• 4th largest refining capacity in Asia
Energy & • 25 E&P blocks across 14 countries
Chemicals • LNG production accounting for 56% of domestic demand
• World’s fourth largest Polyester film production capacity
Information & • No. 1 Korea mobile service provider with 20 million subscribers
Telecomunication • First succeeded in developing CDMA and DMB services for Korea
• Building B2C networks
Other • Largest carrier of crude oil and LNG in Korea
• Hotel & stock brokerage business
32
Source: Company website and presentations
34. Step 1: Subscription of Capital
Increase in MMX
A Before capital increase Key considerations
Controlling MMX’s Board of Directors will approve the issue of up
Free float
Shareholder
to 266.7 million MMX common shares at
42.1% 21.5% 36.4%
R$13.963/share
Capital increase (1):
Up to US$ 2.2 billion
The Controlling Shareholder will partially assign to SK
his pre-emptive rights in MMX, so as to allow SK to
New MMX shares
issued: Up to 267.2 subscribe and purchase US$700 million(2) worth of
million MMX common shares
B After capital increase The Controlling Shareholder will convert and
contribute to MMX part of the perpetual debentures
Controlling
Free Float
issued by MMX and held by the Controlling
Shareholder
Shareholder in the amount of R$ 375.7 million. The
30.5% 21.5%(1) 11.6% 36.4%(1) balance of the Perpetual Debentures (R$ 112.4
million) will be paid to the Controlling Shareholder
through the delivery of IronX debentures(3)
MMX will not disburse any cash as payment of the
(1) Assumes 100% subscription from Wisco and free float
Perpetual Debentures
(2) For illustrative purposes only. FX rate of R$ 1.7053/US$
(3) Non-convertible debenture bonds issued by IronX Mineraçao S.A. and held by MMX 34
35. Step 2: LLX Spin-Off
A Before spin-off B After spin-off
Controlling Controlling
Free float Free float
Shareholder Shareholder (1)
53.9% 46.1% 67.6% 32.4%
70% 51% 70% PortX
LLX Açu LLX Minas-Rio
Sudeste
30%
Centennial
Sudeste
(1) Includes EBX and Centennial stakes in LLX Sudeste Port 35
36. Step 3: Voluntary Exchange
Tender Offer
Controlling
Free Float Key considerations
Shareholder
30.5% 21.5%(1) 11.6% 36.4%(1) MMX will launch a voluntary exchange tender
offer (“OPA”) for the totality of the share
capital of PortX (2)
Total Value: US$ 2.2 billion, divided into:
Voluntary
Exchange Tender - US$ 1.796 billion in royalties: MMX would pay
Offer (“OPA”)
to LLX Sudeste shareholders US$ 5/ton of iron
Free float ore shipped through Sudeste Superport
Controlling
Shareholders(3) (Former LLX
shareholders)
- US$ 441 million in cash or MMX shares
67.6% 32.4%
MMX shares in the OPA priced at R$ 13.963
PortX
Total new MMX shares issued in the OPA:
− Controllingshareholder: 36.4 million (US$
Sudeste
298.1 million)(4)
(1) Assumes 100% subscription from WISCO and free float
(2) This type of OPA does not trigger preemptive rights for existing MMX shareholders
(3)
(4)
Includes EBX and Centennial stakes in LLX Sudeste Port
For illustrative purposes only. FX rate of R$ 1.7053/US$
− Free float: 17.4 million (US$ 142.7 million)(4) 7
37. Final Outcome
Before LLX Sudeste Superport acquisition After LLX Sudeste Superport acquisition(2)
A 100% LLX Sudeste free float receiving MMX royalties + MMX shares
Controlling Controlling
Free Float Shareholder
Free float
Shareholder
33.4% 19.9% 10.7% 36.0%
30.5% 21.5%(1) 11.6% 36.4%(1)
70% 100% 100% 100%
Minera MMX
MMX Corumbá MMX Sudeste
de Chile PortX
Sudeste
70% 100% 100%
Minera MMX de B 100% LLX Sudeste free float receiving MMX royalties + cash
MMX Corumbá MMX Sudeste
Chile
Controlling
Free float
Shareholder
34.2% 20.4% 11.0% 34.4%
70% 100% 100% 100%
Minera MMX
MMX Corumbá MMX Sudeste
de Chile PortX
(1) Assumes 100% subscription from WISCO and free float Sudeste
(2) The Controlling Shareholder will be paid by a combination of newly issued MMX shares + MMX royalties 37