MMX: CREATING CHOICES IN SEABORNE IRON ORE SUPPLY Rio de Janeiro | February 2012
MMX: CREATING CHOICES IN SEABORNE IRON ORE SUPPLY
Rio de Janeiro | February 2012
This presentation relating to MMX Mineração e Metálicos S.A. (“MMX”) includes “forward-looking statements”, as that termis defined in the Private Securities Litigation Reform Act of 1995, in Section 27A of the Securities Act of 1933 and Section21E of the U.S. Securities Exchange Act of 1934. All statements other than statements of historical facts are statementsthat 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 orcomments about our objectives, strategy, plans or intentions and results of operations. Forward-looking statements includeprojections 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, bothgeneral and specific. The risk exists that these statements may not be fulfilled or, even if they are fulfilled, the results ordevelopments described in such statements may not be indicative of results or developments in future periods. We cautionparticipants of this presentation not to place undue reliance on these forward-looking statements as a number of factors
DISCLAIMER
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 regulatoryapprovals on a timely basis or at all, exploration for mineral resources and reserves, difficulty in converting geologicalresources into mineral reserves, and changes in economic, political and regulatory conditions. We caution that theforegoing list is not exhaustive. When relying on forward-looking statements to make decisions, investors should carefullyconsider 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 anoffer to sell (which can only be made pursuant to definitive offering documents) nor a solicitation of an offer to buy anysecurities in the United States, or any other jurisdiction. The securities referred to herein have not been registered in anyjurisdiction, and in particular, will not be registered under the U.S. Securities Act of 1933, as amended, or any applicablestate securities laws and may not be offered or sold in the United States absent registration or an applicable exemptionfrom such registration requirements.
This presentation and its contents are proprietary information and may not be reproduced or otherwise disseminated inwhole or in part without MMX’s prior written consent.
A UNIQUE STORY
1
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
Sudeste SystemSerra Azul Unit
Bom Sucesso UnitCorumbá System
Sudeste Superport
Chile System
Unique port location and strong balance sheet leverage significant value creation through consolidation of stranded iron ore resources in the Southeast of Brazil
Strong cash generation
Proven track record delivering value to shareholders
4
ESTRUTURA SOCIETÁRIA
42% ControllingShareholders
42% ControllingShareholders
16% Wisco16% Wisco
14% SK Networks14% SK Networks
28% Free Float28% Free Float
MMXM3: SOLID CONTROLLING SHAREHOLDERS
MMX Corumbá Mineração
MMX Corumbá Mineração MMX SudesteMMX Sudeste Minera MMX
do ChileMinera MMX do Chile
Superporto Sudeste
Superporto Sudeste
Serra AzulSerra Azul
Bom SucessoBom
Sucesso
100% 100% 99%70%
30% EBX
5
SRK certification: 3,1 billion tons of mineral resources, and further mineral
potential of up to 1,4 billion tons. Reserves of 1 billion tons in Serra Azul.
Low strip ratio
Competitive scale – New beneficiation plant
Energy supply contract with MPX
Integrated infrastructure with the existing MRS railway
Resource Base
Competitive Production Cost
Structure
INGREDIENTS FOR A SUCCESSFUL IRON ORE BUSINESS
64% of future production already committed through long-term contracts
Experience management team with implementation and operational expertise
Installed Capacity of 10 Mtpy (Serra Azul and Corumbá sites)
Sudeste Superport at 50 Mtpy, expandable to 100 Mtpy, provides gateway to
seaborne markets
Long Term Railway Contract with MRS
Integrated infrastructure with the existing MRS railway
Secured Off-take
Operational Track Record
GuaranteedLogistics
6
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
January2012
DURING THE YEAR OF 2011, A LOT HAS BEEN DELIVERED
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 UsiminasFebruary2011
7
FINANCIAL HIGHLIGHTS
72.8 75.2
61.6
0
30
60
90
3Q10 2Q11 3Q11*
EBITDA (R$ million)
88.5 90.9
(243.2)
-250
-150
-50
50
3Q10 2Q11 3Q11
Net Profit (R$ million)
*excluding non recurent itens
46%37%
27%
54%63%
73%
0%
50%
100%
3Q10 2Q11 3Q11
Debt profile
Short Term Long Term
1,1 1,3 1,5
0,6
0,8 0,7
0,0
1,0
2,0
3Q10 2Q11 3Q11
Sales (million ton)
Domestic Market Seaborne Market8
SUDESTE SYSTEM
2
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 SuperportRailway
Serra Azul unit is near to theMRS railway - 10 km from themine, a distance currentlytraversed by trucks.
MMX has a long term contractwith MRS railway, which connectsthe mine with the CSN’s Itaguaíport and to the SudesteSuperport.
Sudeste Superport is located inItaguaí and will have 50Mtpy ironore shipping capacity. The Superportwill have a depth of 20 meters,enough to handle Capesize vessels.
Offtakers (Shareholders)
Long-Term contract (20 years) to trade ironore. SK will take-off part of the SudesteSystem yearly production equivalent to itsparticipation in MMX Capital (14%).
SK and Wisco will togetherofftake 64% of total production
Long-Term contract (20 years). Wisco willoff-take at least 50% of MMX Sudesteproduction.
10
SERRA AZUL UNIT
2.1
QUADRILÁTERO FERRÍFEROIron ore Quadrangle
12
RAILWAY
Railway access conecting MRS to the Sudeste Superport
13
SERRA AZUL
Expansion project with integrated logistic and pellet feed iron ore
Highlights
Production target: 24 Mtpy
64% of production already committed through long-termcontracts
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 andvertical mills for the new beneficiation plant for R$ 475million
Contract with CNEC WorleyParsons amounting R$ 255million
Contract with MPX to supply power for 15 years at abase-price of R$125/MWh
Expected Quality – Ouro Preto pilot plant test work
Fe: 67.0% P: 0.03%
SiO2: 3.5% Mn: 0.5%
AL2O3: 0.5% LOI: 0.25%
14
SERRA AZUL
Growth through consolidation while leveraging existing infrastructure
15
SERRA AZUL
Serra Azul Unit Expansion Project
New Beneficiation Plant, transmission line and water pipelines, Stockyard and Loading Terminal
Pit
16
Serra Azul ExpansionBeneficiation Plant
17
Contract signed on December 28th 2011.
Long term contract through 2026.
Provides for a volume of up to 36 million tons of iron ore per year.
Tariff: R$ 26.463/ton , net of tax, readjusted annually by a parametric formula the variation in IGP-DI and in diesel oil.
MRS CONTRACT
MMX signed a long term contract for railway services
formula the variation in IGP-DI and in diesel oil.
18
SUDESTE SUPERPORT
2.2
Sudeste SuperportLocation
Nautical Access
Offshore
Tunnel
Stockyard 32
Stockyard 06
Railway Access
Sudeste SuperportArtistic View
21
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
Sudeste Superport - Itaguaí
Start-up forecast: 1Q13
100% of equipment already ordered
Licensing for 100 Mtpy underway
22
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
Sudeste Superport - Itaguaí
Navy Approval to 100 Mtpy
23
Sudeste SuperportRailway access
24
Sudeste SuperportStockyard Elevation 6 m
25
Sudeste Superport Car Dumpers Elevation 6 m
26
Sudeste SuperportMariquita Hill
27
Sudeste SuperportStockyard Elevation 32 m
28
11 m
20.5 m
Sudeste SuperportTunnel entrance
29
Sudeste SuperportTunnel exit
30
Bridge450 m
Superporto Sudeste Offshore Structure - Bridge
31
Pier766 m
Superporto SudesteOffshore StructureBridge and Pier
Bridge250 m
32
33
Superporto Sudeste Offshore Structure
Funding: BNDES FINAME - PSI
Total Amount: R$ 407.1 mm
Interest Rate per Year: 4.50%
Amortization: 8 years
Grace Period: 2 years1.276
CAPEX
Actual Forecast
SUDESTE SUPERPORT
CAPEX and Funding
Funding: BNDES FINEM
Total Amount: R$ 805.1 mm
Interest Rate per Year: TJLP + 2.18%
Amortization: 10 years
Grace Period: 2 years
Requested Supplementary Funding : R$ 552 million
86 40 63
286 649
2007 2008 2009 2010 2011 to 2013
34
SUDESTE SUPERPORTConstruction schedule
Preliminary License
Construction LIcense
Funding BNDES FINAME-PSI
ANTAQ License
Funding BNDES FINEM
Civil Construction:
��
�
��
1S09 2S09 1S10 2S10 1S11 2S11 1S12 2S12 1Q13
�
Civil Construction:
Stockyard 06
Stockyard 32
Tunnel
Offshore
Road-rail access
Equipment sett up:
Car dumpers
Shiploader
Stacker reclaimer
Belt conveyor
�
35
USIMINAS AGREEMENT
SRK resources audit : 810 million tons plus a potential 75 million tons
Pau de Vinho target production: 8 Mtpy
Significant synergies with current mining operations at Serra Azul
13.5% of production at Pau de Vinho
Handling fee: USD 12.63/ton adjusted by US-PPI
Volumes:
■2013 = 4 Mtpy
■ 2014 = 8 Mtpy
■ 2015 = 12 Mtpy
Pau de Vinho Joint Mining Sudeste Superport Handling
13.5% of production at Pau de Vinhowill be delivered to Usiminas
MMX will be responsible for the licensing, CAPEX and operation for 30 years
■ 2016 = 12 Mtpy
■ Additional 3 Mtpy will be allocated from 2013 until 2016
80% Take-or-Pay
Usiminas can renew the contract for 1 to 5 years
36
BOM SUCESSO UNIT
2.3
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 2010EIA 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%
38
CHILE
3
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%
40
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
41
CORUMBÁ
4
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 SRK audit resources report: 192 million tons plus a potential of an additional 123 million tons
43
Investor RelationsGuilherme Escalhão – CEO and IRO
Camila Anker– ManagerRafaela Gunzburger – AnalystBeatriz Yoshinaga - Analyst
Tel. + 55 21 2555-6197/ [email protected]