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Corporate presentation may 2011
- 1. MMX: Creating choicesin seaborne iron ore supply May, 2011
- 2. Disclaimer This presentation relatingto 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 Beatriz Yoshinaga - Assistant Tel. + 55 21 2555-6197/ 6338 ri@mmx.com.br 2
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- 4. Ingredients for asuccessful iron ore business Guaranteed 100% owned Sudeste Superport at 50 Mtpy, expandable to 100 Mtpy, Logistics provides gateway to seaborne markets. Competitive Integrated infrastructure, with the existing MRS railway providing an Cost Structure efficient link between mine and port Strong Resource 1.5 billion tons of mineral resources certified by SRK, and further Base mineral potential of up to 1.4 billion tons Solid Financial Strong balance sheet and project fundamentals to attract competitive Position funding Current operations provide strong FCF Operational Experienced management team with brownfield start-up expertise. Track Record Current production rate of 10 Mtpy (Serra Azul and Corumbá sites) Secured Offtake 63% of future production already committed through long-term contracts. 4
- 5. The only oneof its kind Location Map MMX uniqueness • 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 pipelines. • Unique port location and strong balance sheet leverage significant value creation through consolidation of stranded iron ore resources in the Southeast of Brazil. Corumbá System • Strong cash generation. Chile System • Proven track record delivering value to shareholders Sudeste System 5
- 6. MMXM3: Solid controllingshareholders Highest levels of Corporate Governance Structure 16% 42% Controlling Shareholders 28% 14% Free Float 70% 100% 100% 92% 30% EBX Brasil S/A 100% 100% Bom Sucesso under basic engineering studies Corumbá System started-up in 2005 (Mining) Assets acquired by MMX (AVG: dec-07; Minerminas: jan-08) 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 • Securities Trading 6
- 7. Senior Management Team Morethan 135 years of iron ore experience Roger Downey 16 years in the mining industry at Vale , Rio Tinto and Caemi Chief Executive Former equity research director of Credit Suisse from 2005 until 2009, and IR Officer responsible for coverage of mining and steel companies in Latin America Guilherme F. Escalhão Approximately 25 years of experience in the mining sector Chief Financial Officer Held senior executive and board positions in companies such as Vale ,Caemi Group and MRS Logística Chequer H. B. Habib More than 40 years of experience in the mining sector Chief Commercial Officer Held senior executive positions in companies such as Vale, S.A Mineração da Trindade (SAMITRI), Ferteco Mineração, GIIC (Vale subsidiary) and AVG Mineração Luciano C. Ferreira More than 25 years of experience in mining, port and steel sectors Chief Port Operations Held senior executive positions in companies such as Caemi, Vale and Officer Companhia Siderúrgica Pecém Antônio A. Schettino Fróes Around 30 years of experience in the mining sector Chief Operations and Project Held senior executive positions in companies such as Caemi, Odebrecht, CSN Development and Implementation and Votorantim Siderurgia Officer 7
- 8. Financial highlights EBITDA (R$million) Sales (million tons) 90 71,7 2,5 Domestic Exports 60 2,0 0,3 39,7 1,5 0,3 30 0,6 1,0 1,7 0 1,3 (23,4) 0,5 0,9 -30 0,0 1Q10 4Q10 1Q11 1Q10 4Q10 1Q11 Net Profit (R$ million) (Net Debt) or Net Cash (R$ billion) 80 900 926 40 72,7 600 63,8 517 0 300 -40 (76,1) 0 (289) -80 -300 1Q10 4Q10 1Q11 1Q10 4Q10 1Q11 8
- 9. Sudeste System Serra Azul& Bom Sucesso
- 10. MMX Sudeste: Integratedlogistics link brownfield start up to seaborne markets Iron ore production connected to Sudeste Superport by MRS Railway 10
- 11. Serra Azul Growththrough consolidation while leveraging existing infrastructure 11
- 12. Serra Azul Highlights 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 • Estimated CAPEX: US$ 79/ton Execution Update • EIA/RIMA filed in November 2010 Current Sinter Feed Quality • Public Hearing: March 2011 Fe: 64.5% P: 0.06% • SRK resources audit update: 919 million tons plus a potential SiO2: 4.5% Mn: 0.02% 570 million tons AL2O3: 1.20% H2O: 8.5% • Drilling performed: 24 thousand meters Future Pellet Feed Quality • Equipment procurement underway Fe: 67.0% P: 0.03% • Basic engineering phase complete SiO2: 3.5% Mn: 0.05% AL2O3: 0.5% 12 12
- 13. Serra Azul Geological Section Friable Itabirite Compact Itabirite 13
- 14. Serra Azul Serra Azul Expansion Project Pit New Plant Long distance belt conveyor, transmission line and water pipelines Stockyard and Loading Terminal 14
- 15. Serra Azul CAPEX (R$Million) Production Capacity (Mtpy) * 2,960 25.3 25.3 25.3 24 21.7 24 24 24 9.3 10 9.6 20.4 24 1.3 0.6 1.8 1.3 539 8.7 8.7 6.5 49 1.3 1.3 1.3 1.3 2010 2011 2012-2016 CAPEX 79 USD/ton Current Capacity GVA Expansion * Time adjusted 15
- 16. Usiminas Agreement Pau deVinho Joint Mining Sudeste Superport Handling • Pau de Vinho resources based on Usiminas´s estimates • Handling fee: USD 12.63/ton adjusted by US-PPI at 875 M tons • Volumes: • Pau de Vinho target production: 8 Mtpy • 2012 = 3 Mtpy • Significant synergies with current mining operations at • 2013 = 4 Mtpy Serra Azul • 2014 = 8 Mtpy • 13.5% of production at Pau de Vinho will be delivered to • 2015 = 12 Mtpy Usiminas • 2016 = 12 Mtpy • MMX will be responsible for the licensing, CAPEX and operation for 30 years • 80% Take-or-Pay • Usiminas can renew the contract for 1 to 5 years 16
- 17. Bom Sucesso Highlights Bom Sucesso Unit • High-quality iron ore with magnetite content to supply the seaborne market • Production target: 10 Mtpy • Estimated CAPEX: US$ 81/ton • 65% 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 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% 17
- 18. Bom Sucesso CAPEX (R$Million) Production Capacity (Mtpy) * 1,424 10 9,8 6,5 5 38 2010 2011 2012-2016 2015 2016 2017... CAPEX 81 USD/ton * Time adjusted 18
- 19. Sudeste Superport Highlights Sudeste Superport • 50 mtpy capacity, expandable to 100 mtpy • Capesizes handling • Loading: 2 ship loaders of 25 Mtpy each • Fully funded (BNDES) • Start-up forecast: 3Q12 • 100% of equipment already ordered • Licensing for 100 Mtpy underway Execution Update • Fully licensed to 50 Mtpy • Navy Approval to 100 Mtpy • Tunnel: 1000 meters already done as of May 20th • Tunnel: average speed of excavation: 7 meters per day 19
- 20. Sudeste Superport ´ The only bulk terminal in the Sepetiba Bay to receive a license since CSN´s iron ore terminal Administrative Buildings Iron Ore Yard El. 32 Iron Ore Yard El. 06 Railcar Dumper Rail Loop 20
- 21. Sudeste Superport CAPEX (R$Million) Funding: BNDES FINAME - PSI 1.282 • Total Amount: R$ 407.1 mm • Interest Rate per Year: 4.50% • Amortization: 8 years • Grace Period: 2 years Funding: BNDES FINEM • Total Amount: R$ 805.1 mm 286 • Interest Rate per Year: TJLP + 2.18% • Amortization: 10 years 86 40 63 • Grace Period: 2 years 2007 2008 2009 2010 2011/2012 21
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- 23. Chile Project Highlights Chile • 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 • 290 Mt of iron ore potential already secured Execution Update • Punta Cachos Port fully licensed • Drilling performed: 19 thousand meters • Water permits Expected Quality: Preliminary tests in Ouro Preto Fe: 67.50% SiO2: 2.5% Al2O3: 0.85% P: 0.015% 23
- 24. Chile Punta Cachos 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 24
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- 26. Corumbá Project Highlights Corumbá • 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: 244 million tons plus a potential of an additional 123 million tons 26
- 27. Iron ore volumegrowth by System Estimated Production Capacity (Mtpy) Pau de Vinho + Consolidation provides further volume potential 27
- 28.