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MMX: CREATING CHOICES IN SEABORNE IRON ORE SUPPLY
- 1. MMX: CREATING CHOICES IN SEABORNE IRON ORE SUPPLY Rio de Janeiro | September 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. HIGH QUALITY MINING ASSETS IN TRADITIONAL MINING DISTRICTS Mining rights in traditional iron ore districts: Brazil – Minas Gerais and Chile Production committed with strategic consumers – China and South Korea – through long-term contracts Brownfield start up in Brazil Expanding beyond 40 Mtpy in Brazil and Chile, Sudeste System through fully integrated systems: with private Serra Azul Unit Corumbá System ports in Brazil Bom Sucesso Unit Unique port location Chile System Sudeste Superport 4
- 5. MMXM3: SOLID CONTROLLING SHAREHOLDERS 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 5,48% 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 stripping 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. A LOT HAS BEEN DELIVERED September Conclusion of the offshore civil works at the Sudeste Superport 2012 Issuance of debentures at the amount of R$ 600 million Approval of the merger of PORTX into MMX Public hearings in Itaguaí and Mangaratiba for the expansion of the Sudeste Superport to 100 Mtpy Beginning of construction of the Serra Azul Unit expansion Installation License authorizing the Serra Azul Unit expansion MMX signs contract for railway services with MRS through 2026 SRK certified 997,4 million tons of mineral reserves at Serra Azul Unit 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 Financial advisory contract with Itaú BBA and Bradesco February Deal with Usiminas 2011 7
- 8. FINANCIAL HIGHLIGHTS Net Profit (R$ million) EBITDA (R$ million) 200 90 100 75 90.9 49.3 0 60 -100 45 75.2 -200 -391.6 30 13.9 15 4.2 -300 0 -400 2Q11 1Q12 2Q12 2Q11 1Q12 2Q12 Debt profile Gross Margin (%) 100% 60% 61% 80% 53% 56% 45% 63% 68% 67% 60% 30% 40% 15% 20% 37% 32% 33% 0% 0% 2Q11 1Q12 2Q12 2Q11 1Q12 2Q12 Short Term Long Term
- 11. 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 11
- 12. Iron ore Quadrangle QUADRILÁTERO FERRÍFERO 12
- 13. RAILWAY Railway access conecting MRS to the Sudeste Superport 13
- 14. 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. 14
- 15. SERRA AZUL Expansion project with integrated logistic and pellet feed iron ore Highlights Production target: 29 Mtpy 64% of production already committed through long-term contracts 997.4 million tons of reserves already secured by SRK Execution Update Beginning of construction of Serra Azul Unit expansion Construction license issued in April, 2012 Acquisition of gyratory crushers, ball mills, SAG mills and vertical mills for the new beneficiation plant Contract with CNEC WorleyParsons 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% 15
- 16. SERRA AZUL Growth through consolidation while leveraging existing infrastructure 16
- 17. SERRA AZUL Serra Azul Unit Expansion Project Pit New Beneficiation Plant, transmission line and water pipelines, Stockyard and Loading Terminal 17
- 18. Serra Azul Expansion Beneficiation Plant 18
- 19. SERRA AZUL Earthwork Grind Sump and Processing Thickners Construction Pile Site and Benefic. Warehouse substation Maintenance Primary workshop Construction Crushing Administrative Site Buildings 1
- 21. Sudeste Superport Location 21
- 22. Offshore Nautical Access Tunnel Stockyard 06 Stockyard 32 Sudeste Superport Artistic View 22 Railway Access
- 23. 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: 2Q13 100% of equipment already ordered Licensing for 100 Mtpy underway Sudeste Superport - Itaguaí 23
- 24. SUDESTE SUPERPORT Overview Highlights Public hearing for 100 Mtpy held on May, 2012 Construction works for the tunnel and offshore infraestructure completed EIA-RIMA for 100 Mtpy filed with Inea in September 2011 Licensed to 50 Mtpy Navy Approval to 100 Mtpy Sudeste Superport - Itaguaí 24
- 26. Sudeste Superport Stockyard Elevation 6 m 26
- 27. Sudeste Superport Car Dumpers Elevation 6 m 27
- 29. Sudeste Superport Stockyard Elevation 32 m 29
- 30. 11 m 20.5 m Sudeste Superport Tunnel entrance 30
- 32. Superporto Sudeste Offshore Structure - Bridge Bridge 450 m 32
- 36. SUDESTE SUPERPORT Assembly of car dumpers
- 37. SUDESTE SUPERPORT Assembly of car dumpers 37
- 38. 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: Significant synergies with current mining operations at Serra Azul ■ 12 Mtpy 13.5% of production at Pau de Vinho 80% Take-or-Pay will be delivered to Usiminas MMX will be responsible for the licensing, CAPEX and operation for 30 Usiminas can renew the contract for 1 years to 5 years 38
- 39. 2.3 BOM SUCESSO
- 40. BOM SUCESSO High-quality iron ore with high magnetite content Highlights Production target: 10 Mtpy 64% of production already committed through long-term contracts Execution Update Conceptual engineering 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% 40
- 41. 3 CHILE
- 42. CHILE Highlights High-quality iron ore with magnetite content Production target: 10 Mtpy 50% of production already committed through long- term contracts 460 Mt of iron ore potential Execution Update 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% 42
- 43. CHILE Castilha Port Deep water port – 28 meter draft: Chinamax vessels Shared construction with MPX (Sister Company) BERTH N° 1 – COAL BERTH N° 2 – IRON ORE BERTH N° 3 – COPPER 43
- 44. 4 CORUMBÁ
- 45. CORUMBÁ 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 45
- 46. Investor Relations Guilherme Escalhão – CEO and IRO Adriana Marques – Manager Daniella Maia - Analyst Phone + 55 21 2163-6197 +55 21 2163-4366 ri@mmx.com.br