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Corporate Presentation – April 2012
- 1. MMX: CREATING CHOICES IN SEABORNE IRON ORE SUPPLY Rio de Janeiro | April 2012
- 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.
- 4. THE ONLY ONE OF ITS KIND MMX Uniqueness Production committed to important global consumers – China and South Korea – through long- term contracts Brownfield start up Expanding beyond 50 Mtpy in Brazil and Chile, through fully integrated systems: own deep water superports and pipelines Unique port location and strong balance sheet leverage significant value creation through Sudeste System consolidation of stranded iron ore resources in the Serra Azul Unit Corumbá System Bom Sucesso Unit Southeast of Brazil Strong cash generation Chile System Proven track record delivering value to shareholders Sudeste Superport 4
- 5. MMXM3: SOLID CONTROLLING SHAREHOLDERS ESTRUTURA SOCIETÁRIA 16% Wisco 42% Controlling Shareholders 14% SK Networks 28% Free Float 70% 100% 100% 99% MMX Corumbá Minera MMX Superporto MMX Sudeste Mineração do Chile Sudeste 30% EBX Serra Bom Azul Sucesso 5
- 6. INGREDIENTS FOR A SUCCESSFUL IRON ORE BUSINESS SRK certification: 3,1 billion tons of mineral resources, and further mineral Resource Base potential of up to 1,4 billion tons. Reserves of 1 billion tons in Serra Azul. Low strip ratio Competitive Competitive scale – New beneficiation plant Production Cost Structure Energy supply contract with MPX Integrated infrastructure with the existing MRS railway Sudeste Superport at 50 Mtpy, expandable to 100 Mtpy, provides gateway to Guaranteed seaborne markets Logistics Long Term Railway Contract with MRS Secured Off-take 64% of future production already committed through long-term contracts Operational Track Experience management team with implementation and operational expertise Record Installed Capacity of 10 Mtpy (Serra Azul and Corumbá sites) 6
- 7. DURING THE YEAR OF 2011, A LOT HAS BEEN DELIVERED January 2012 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 SRK certified 2,5 billion tons of resources at Serra Azul and Pau de Vinho Preliminary license of the Serra Azul expansion MOU with Minerinvest Financial advisory contract with Itaú BBA and WestLB Acquisition of 99,1% of PortX shares at the VTO auction Deal with Usiminas February 2011 7
- 8. FINANCIAL HIGHLIGHTS Net Renevue (R$ million) EBITDA (R$ million) 1,200 400 240 180 187 134 900 150 14 600 -100 1,036 725 -350 300 314 (467) -600 0 2009 2010 2011 2009 2010 2011 EBITDA Ajusted EBITDA * Debt profile Gross Margin (%) 61% 100% 60% 59% 80% 48% 45% 59% 73% 71% 60% 30% 40% 15% 20% 41% 27% 29% 0% 0% 4Q10 3Q11 4Q11 2009 2010 2011 Short Term Long Term
- 10. 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 Railway Superport 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%). MMX has a long term contract Sudeste Superport is located in Serra Azul unit is near to the with MRS railway, which connects Itaguaí and will have 50Mtpy iron Long-Term contract (20 years). Wisco will MRS railway - 10 km from the the mine with the CSN’s Itaguaí ore shipping capacity. The Superport off-take at least 50% of MMX Sudeste mine, a distance currently port and to the Sudeste will have a depth of 20 meters, production. traversed by trucks. Superport. enough to handle Capesize vessels. SK and Wisco will together offtake 64% of total production 10
- 12. Iron ore Quadrangle QUADRILÁTERO FERRÍFERO 12
- 13. RAILWAY Railway access conecting MRS to the Sudeste Superport 13
- 14. SERRA AZUL Expansion project with integrated logistic and pellet feed iron ore Highlights Production target: 24 Mtpy 64% of production already committed through long-term contracts 997.4 million tons of reserves already secured by SRK Execution Update Preliminary license issued in August, 2011 Acquisiion of gyratory crushers, ball mills, SAG mills and vertical mills for the new beneficiation plant for R$ 475 million Contract with CNEC WorleyParsons amounting R$ 255 million Contract with MPX to supply power for 15 years at a base-price of R$125/MWh Expected Quality – Ouro Preto pilot plant test work Fe: 67.0% P: 0.03% SiO2: 3.5% Mn: 0.5% AL2O3: 0.5% LOI: 0.25% 14
- 15. SERRA AZUL Growth through consolidation while leveraging existing infrastructure 15
- 16. SERRA AZUL Serra Azul Unit Expansion Project Pit New Beneficiation Plant, transmission line and water pipelines, Stockyard and Loading Terminal 16
- 17. Serra Azul Expansion Beneficiation Plant 17
- 18. MRS CONTRACT MMX signed a long term contract for railway services Contract signed on December 28th 2011. Long term contract through 2026. Provides for a volume of up to 36 million tons of iron ore per year. Tariff: R$ 26.463/ton , net of tax, readjusted annually by a parametric formula the variation in IGP-DI and in diesel oil. 18
- 20. Sudeste Superport Location 20
- 21. Offshore Nautical Access Tunnel Stockyard 06 Stockyard 32 Sudeste Superport Artistic View 21 Railway Access
- 22. SUDESTE SUPERPORT Overview Highlights 50 mtpy capacity, expandable to 100 mtpy Capesizes handling Loading: 2 ship loaders of 25 Mtpy each Fully funded (BNDES) Start-up forecast: 1Q13 100% of equipment already ordered Licensing for 100 Mtpy underway Sudeste Superport - Itaguaí 22
- 23. SUDESTE SUPERPORT Overview Highlights 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 Sudeste Superport - Itaguaí 23
- 25. Sudeste Superport Stockyard Elevation 6 m 25
- 26. Sudeste Superport Car Dumpers Elevation 6 m 26
- 28. Sudeste Superport Stockyard Elevation 32 m 28
- 29. 11 m 20.5 m Sudeste Superport Tunnel entrance 29
- 31. Bridge 450 m Superporto Sudeste Offshore Structure - Bridge 31
- 32. Superporto Sudeste Offshore Structure Bridge and Pier Pier 766 m Bridge 250 m 32
- 33. Superporto Sudeste Offshore Structure 33
- 34. SUDESTE SUPERPORT Shiploader 34
- 35. Equipment Car dumpers (Silo and Feeders) 35
- 37. SUDESTE SUPERPORT CAPEX and Funding CAPEX Funding: BNDES FINAME - PSI Total Amount: R$ 407.1 mm Actual Forecast Interest Rate per Year: 4.50% Amortization: 8 years 1.276 Grace Period: 2 years Funding: BNDES FINEM Total Amount: R$ 805.1 mm Interest Rate per Year: TJLP + 2.18% Amortization: 10 years 286 649 Grace Period: 2 years 86 40 63 Requested Supplementary Funding : R$ 552 million 2007 2008 2009 2010 2011 to 2013 37
- 38. SUDESTE SUPERPORT Construction schedule 1S09 2S09 1S10 2S10 1S11 2S11 1S12 2S12 1Q13 Preliminary License Construction LIcense Funding BNDES FINAME- PSI ANTAQ License Funding BNDES FINEM Civil Construction: Stockyard 06 Stockyard 32 Tunnel Offshore Road-rail access Equipment sett up: Car dumpers Shiploader Stacker reclaimer Belt conveyor 38
- 39. USIMINAS AGREEMENT Pau de Vinho Joint Mining Sudeste Superport Handling SRK resources audit : 810 million tons Handling fee: USD 12.63/ton adjusted plus a potential 75 million tons by US-PPI Pau de Vinho target production: 8 Mtpy Volumes: ■2013 = 4 Mtpy Significant synergies with current mining operations at Serra Azul ■ 2014 = 8 Mtpy ■ 2015 = 12 Mtpy 13.5% of production at Pau de Vinho ■ 2016 = 12 Mtpy will be delivered to Usiminas ■ Additional 3 Mtpy will be allocated from MMX will be responsible for the 2013 until 2016 licensing, CAPEX and operation for 30 80% Take-or-Pay years Usiminas can renew the contract for 1 to 5 years 39
- 41. BOM SUCESSO High-quality iron ore with high magnetite content to supply the seaborne market Highlights Production target: 10 Mtpy 64% of production already committed through long-term contracts Execution 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 – Ouro Preto pilot plant test work Fe: 67.2% P: 0.033% SiO2: 2.5% PPC: 0.6% AL2O3: 0.5% FeO: 8.8% 41
- 42. 3 CHILE
- 43. CHILE One of the lowest cost additions to seaborne supply Highlights 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 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% 43
- 44. CHILE Castilha Port 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 44
- 45. 4 CORUMBÁ
- 46. CORUMBÁ Unique high quality lump 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 46
- 47. Investor Relations Guilherme Escalhão – CEO and IRO Rafaela Gunzburger – Analyst Beatriz Yoshinaga - Analyst Tel. + 55 21 2555-6197/ 6338 ri@mmx.com.br