11

PRESENTATION TO THE MARKETMay, 2011

AGENDAOPENINGSECTORINDUSTRYCORPORATERESULTSFINANCIAL AND RISK MANAGEMENTOUTLOOK

2

DIAS D’ÁVILA - BA SANTO ANDRÉ – SP(UTINGA)

SERRA - ESSANTO ANDRÉ – SP(CAPUAVA)3

OPENING

44

New Times and Challenges ...

• From now on, Paranapanema will experience a new phase given the conclusion of an important financial, tax and corporate restructuring process, the company has achieved:

financial strength focus on profitability focus on quality focus on technology  Strategy:1. Investment focused on: gains of scale and competitiveness•  Strong organic growth cycle from 2009 (cathod and Bus Bar expansion)•  Investment Plan approved for the  Border of Directors with longer maturity terms •  Capex 2010-2013 will be of  R$702 million assigned to: 20% expansion in refined copper production capacity  Expansion of over 50% in the production of semi-manufactured copper products (tubes and rolled products)•  Copper recycling:  improvement of concentrate and scrap mix , aiming at changing from a ratio of 83%/17% in 2010 to 

70%/30% by 2012• Precious metals plant (gold and silver)2. Projects: studies in progress for:•  Mineral rights:  In 2011, studies will be conducted on Paranapanema’s 105 mineral rights registered with DNPM, which 

includes  tin  ore,  copper,  chrome,  lead,  tin  alloy,  molybdenum,  gold,  silver,  nickel,  titanium  and  zinc  reserves,  among others,  aiming  at  checking  the  size  of  reserves  and  exploration  possibilities  in  the  States  of  Amapá,  Pará,  Roraima, Rondônia and Rio Grande do Sul.

• Sell off non-operating assets: Grounds, farms and properties, etc.

55

New Times and Challenges ...

3. Disposal of assets not related to our core business4. Strategy and targets:•  Successful achievement of market share target in the domestic market: 67%•  Search for gains of scale and competitiveness , with reduction of fixed costs •  Focus on profitability.5. Strategic partnerships:•  Strategic partnerships being analyzed for the development of research studies related to:  Reduction of costs Guarantee of long term supplies  More competitive prices  6. Organizational restructuring: corporate governance •  New organizational structure with creation and improvement of management committees approved 

by the board of directors. 7. Outlook•  Period from 2010 to 2016 expected to be extremely promising,  especially on the domestic market•   Expected growth  in GDP and sectors demanding copper products,  supported by sports events and 

PAC government project, which will leverage our business. 

66

Copper Demand Drivers and per capita consumption

Correlated to …  GDP growth   Global consumption   Growth of emerging countries  

Increase in investment infrastructureIncrease in investment infrastructure

Real estate and civil construction marketsReal estate and civil construction markets

Emergent countries ‘ growth above the global average

Emergent countries ‘ growth above the global average

Increase in the use of clean energy(solar, wind and ethanol)

Increase in the use of clean energy(solar, wind and ethanol)

Transportation and automotive sectorsTransportation and automotive sectors

• The Brazilian economy will grow at an accelerated pace  that  may  exceed  5%,  but  in  a  sustainable manner.

•  Copper production chain has reported consumption growth from 1% to 2% above the Brazilian growth average. 

•  Local and foreign direct investment in Brazil, which ceased to be “the country of future” to be “the country of present”.

0.00

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0.15

0.20

0.25

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Belgium

Scan

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South Ko

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Ger

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Italy

Saud

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Spain

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Turkey

Fran

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Brazil

21.7 21.3

15.8 15.613.8

8.9 8.0 7.2 6.9 5.6 5.3 5.2 4.7 3.7 2.5 2.4 1.7

Per capita copper consumption in 2009 (kg/inhabitant)

25.020.0

15.010.0

5.0

0.0

7

SECTOR – Copper Segment Players in the Brazilian copper chain Global copper production indicators Global indicators of refined copper production Refined copper industry in Brazil Prospective Demand for Refined Copper

88

Players in the Brazilian Copper Chain

Brazilian Copper ChainSectors

Number of Companies

 Revenues in 2009 

(US$ million)

Share %

Mining 3 1,444 22%

Refining 3 1,300 20%

Rolling companies – Semi-manufactured

5 799 12%

Rolling companies - Rods 17 1,138 17%

Wires and Cables 210 1,877 29%

Total 238 6,558 100%

Sources: Sindicel and ABC•  Small number of players at the beginning of the Brazilian copper chain•  Brazilian copper concentrate production is sufficient to meet demand from refiners•  Wires and cables sector includes multinational and family companies •  Only 2 companies are listed on the BM&FBovespa stock exchange (Vale and Paranapanema) •  “Wires and cables” is the largest sub-sector in Brazil’s copper chain

99

Players in the Brazilian Copper Chain

Important national and global companies are present in the country, such as:

Sources: Sindicel and ABC

• Mineração Caraíba• Vale• Yamana Gold

MINING

• Cecil• Paranapanema (formerly

Eluma)• Ibrame• Termomecânica

PROVIDERS OF ROLLED SERVICES

FOR SEMI-MANUFACTU

RED PRODUCTS

• Paranapanema (formerly Caraíba Metais)

• Mineração Caraíba• Vale

REFINING

• There are 17 companies installed in the country, 11 of which are also manufacturers of wires and cables.

PROVIDERS OF ROLLED SERVICES

FOR COPPER WIRE RODS

•The segment includes more than 200 small, midsize and large Brazilian companies, as well as multinationals such as: Draka-Telcon, Furukawa, General Cable, Nexans and Prysmian.

WIRES AND CABLES

1010

Global Copper Indicators

• The world production of copper concentrate increased at an average rate of 1.7% p.a.; • The global demand for copper concentrate by refining companies (smelters) rose 1.8% p.a. on average; • The global demand for refined copper grew 2% p.a. on average; and• The world consumption of refined copper increased at an average rate of 2.7% p.a. 

Source: Brook Hunt Sep/10Since 2008 ...

18

,33

6

18

,35

5

19

,06

7

17

,98

5

17

,49

2

19

,30

3

351 863

(236)

(1,000)

-

1,000

-

5,000

10,000

15,000

20,000

2008 2009 2010

Refined Copper Production and Consumption (kt)

Refined Copper ProductionRefined Copper ConsumptionCooper surplus (deficit) on the market (kt)

15

,74

5

16

,04

1

16

,23

1

14

,23

9

14

,13

9

14

,68

8

1,506

1,902

1,543

0

1,000

2,000

13,000

13,500

14,000

14,500

15,000

15,500

16,000

16,500

2008 2009 2010

Production and Consumption of Copper Concentrate (kt)

Copper Mines production Demand from primary refiners Copper Surplus (deficit)

1111

Global Refined Copper Indicators

• Recovery of cathode premiums vs. copper prices on LME – London Metal Exchange,  expected    for  2011, compared with 2010

• The Treatment Charge (TC) and the Refining Charge (RC)  correspond  to  the  deduction  of  the  discount allowed by miners to refiners on the metal prices on LME

• Average copper prices have been highly volatile   (offer  and  demand  plus  hedge  funds),  having 

increased at an average rate of  46% in 2010 against  2009

• The shutdown/interruption of activities  of smelters in China and  India  favored  the  increase  in TC/RC on the sport market in the second half of 2010

• Prices of refined copper by-products (gold,  silver and sulphuric acid) are also relevant indicators

11

5

80

80

24

9 33

2

34

0

6,956

5,150

7,535

2008 2009 2010

Copper Refiners Indicator

Gross Premium on Cathodes (US$/t) TC/RC (US$/t)

Sources: Brook Hunt - Dec/10, Cru Monitor and LME

5,933

7,642 7,712

7,188

7,796

8,443

7,680

3,905

3,428

4,663 5,859

6,648

7,232 7,027 7,243

8,637

2.11

1.98 1.92

1.791.74

1.66 1.67

2.28

2.31

2.07

1.87

1.74

1.80 1.791.75

1.70

1.60

1.80

2.00

2.20

2.40

0

5000

10000

1T07 2T07 3T07 4T07 1T08 2T08 3T08 4T08 1T09 2T09 3T09 4T09 1T10 2T10 3T10 4T10

R$

Aver

age

Pric

e US

$/t

Metal Prices (LME) x Average Dollar

Copper Average DollarSources: Bacen and LME

1212

Supply of and Demand for Refined Copper in Brazil

Paranapanema’s strategic actions: Domestic market expansion from 42%(2009) to 60% (2010); Expansion in sales of products with higher value added, such as rods and stretched copper wires; Expansion in installed capacity from 240,000 t/year to ~280,000 t/year until 2013 at Bahia’s unit; CAPEX of ~R$ 702 million in refined copper expansion from 2010 to 2013;   Logistic services to clients, reducing delivery terms, financial costs and transportation management 

risks  with  the  creation  of  CDPC  –  Copper  Products  Distribution  Center  in  Itatiaia,  State  of  Rio  de Janeiro;

Intermodal logistics: cabotage, road and rail transportation.

*Estimated

Apparent Consumption of Refined Copper in Brazil

Products (Thousand t) 2008 2009 2010Change 2010/09

CAGR 2008-10

Refined Copper Production 230.0 227.0 220.0 -3.1% -2.2%Changes in inventories 1.0 (17.0) (4.0) -76.5% NSRefined Copper Imports 251.0 204.0 252.0 23.5% 0.2%Refined Copper Exports (93.0) (89.0) (45.0) -49.4% -30.4%Apparent Consumption in Brazil 389.0 325.0 423.0 30.2% 4.3%Population (Millions) 184.0 186.2 191.0 2.6% 1.9%Per capita Consumption (kg/inhabitant) 2.1 1.7 2.2 26.9% 2.3%Sources: Sindicel - Sindicato da Indústria de Condutores Elétricos, Trefilação e Laminação de Metais Não Ferrosos

do Estado de São Paulo ; ABC - Associação Brasileira do Cobre; MDIC/Secex; IBGE(População Estimada).

13

SECTOR – Copper Segment Importance of Eluma brand in the segment of semi-manufactured

products Distribution of revenues from semi-manufactured products Outlooks on the consumption of semi-manufactured products

1414

Eluma Brand: Breakdown of Revenues by Segment

• Diversification as competitive advantage• Entry in the segment of copper wires and bus bars as from 2009• Semi-manufactured products rose 37% in revenues and 21% in volume in 2010 over 2009

Clothing5%

Automotive11%

Civil Construction

28%

Consumer Electronics

11%

Military Materials

4%

Mechanic and Metallurgy

8%

Others 1%

Refrigeration16%

Resale16%

Net Revenue by Segment 2009

Clothing6%

Automotive10%

Civil Construction

27%

Consumer Electronics

14%

Military Materials

2%

Mechanic and Metallurgy

11%

Others 3%

Refrigeration12%

Resale15%

Net Revenue by Segment 2010

15

•  Favorable Brazilian and global economic outlook for 2009-2016;•  Estimates on demographic trends in Brazil:

• Housing investments:

    

    

 

15

Outlooks for semi-manufactured copper products

2009 2016 CAGR* p.y.

Population (in millions of inhabitants) 190 209.3 1.2%

# of households (in millions) 57.7 71.4 2.7%

Source: ABRAMAT / FGV - Dec/09

From 2009 to 2016 (In billions of Reais) Annual average  % of GDP

Investments 227.1 6.3%

New housing 147.8 4.1%

Source: ABRAMAT / FGV - Dec/09

*CAGR: Compound average growth rate

16

INDUSTRY – PRIMARY COPPER BUSINESS Copper Production Chain Production Capacity – State of Bahia Production Flow Chart Main Production Cost Pointers Investments in 2010 and 2011/2013 - Opportunities

17

Copper Production Chain

17

Relevant presence in the Copper Division: 98% of total revenuesRelevant presence in the Copper Division: 98% of total revenues

MINING

•Copper extraction from mines;

•Copper ore contents between (0.5% and 2%);

•Processed at the mine, it is transformed into copper concentrate with about 30% of copper, 30% of sulphur, in addition to gold, silver and other elements.

•75% equity purchased on the foreign market (Chile).

FOUNDRY AND REFINING

•Copper concentrate is processed in the foundry, resulting in 99.5% pure anode.

•The electrolytic refining process transforms anodes into 99.99% pure cathodes (purity  needed to obtain optimal electrical features).

PRODUCTION OF DE SEMI-MANUFACTURED COPPER PRODUCTS AND COPPER ALLOYS

• SEMI-MANUFACTURED PRODUCTS

• Continuous lamination process; 

• Products: laminates, bars, wires, seamless tubes and stretched copper wires and copper alloys  (fed by cathodes and scrap);

• Copper alloys + zinc = brass; 

• Copper alloys + tin = bronze.

• MANUFACTURED PRODUCTS

• Products with highest added value ;

• Tubes, connections and “hidrolar” used in civil construction. 

LOGISTICS

•Distribution of Paranapanema  and Eluma copper products through the CDPC(Copper Products Distribution Center) – Itatiaia – State of Rio de Janeiro,  to the Southeast, South and Mid-West Regions;

•Next to major clients;• Fast delivery .

Suppliers

1818

Production Capacity – State of Bahia

Electrolytic Copper ........................ 240,000 t/year

Wire Rods .......................................220,000 t/year

Drawn Wire …................................... 18,000 t/year

Sulphuric Acid .................................570,000 t/year

Oleum ................................................70,000 t/year

Oxygen – Free Rods ......................... …6,000 t/year

Gold*..............................................    2,000 kg/year            2,400 kg/year

Silver*.............................................. 32,000 kg/year            33,500 kg/year

Ferrous Granulated**..................................360,000 t/year * Typical values contained in anode slimes

** Materials used in the segments of cement production, paving and metal structure blasting.

19

Metallurgy Process Flow Chart

19

COPPER WIRE RODS

OLEUM

SULPHURIC ACID

WIRESOxyFree RODS

CATHODES DRAWN

ACID 45 %

UpCast

IMPURE NICKEL SULPHATE

DECOPPERIZED SLUDGE

Chile: 70–75%Portugal: 4–6%Brazil: 20–25%

ROLLED

RECEPTION AND STORAGE OF CONCENTRATE

EXTERNAL SCRAP

Ferrous Granulated

FOUNDRY

ANODES

GASES

NICKEL SULPHATE

PLANT

SULPHURIC ACID PLANT

ELECTROLYTIC REFINING

2020

Investments – CAPEX

Investments in 2010: R$51 million88% to copper segment:•52% to Bahia’s unit , R$ 26.7 million, focused on the recovery and tool up of principal equipments and small-scale technical stoppage 

•36% to São Paulo’s units (Tubes  expansion project – Cast & Roll) and Espírito Santo’s unit R$18.4 million

•12% to the Fertilizers segment• Investments from 2011 to 2013• Expansion/modernization  of  refined  copper  production  capacity  to  230  kt  to  280  kt  per year by 2013 – Bahia’s unit amount of R$290 million

•New precious metals refining plant: R$28 million• Increase in external scrap processing capacity.• Increasing capacity and technological improvement  of semi-manufactured copperSeamless tubes of 18 up to 36 kt p.y.: R$ 72 million of 2010-12Cold rolling of 28 up to 55 kt p.y.: R$ 142 millionHot rolling of 60 up to 200 kt p.y.: R$ 170 million•Co-generation installation with capacity for 10 MW (uses the heat from boilers)

21

Capital Budget Proposal for 2011

21

Capital Budget Proposal ad referendum of the Annual Shareholders’ Meeting (AGM) of April 29, 2011 in accordance with the provisions of:• Article 196 of Law 6404/76, updated by Law 10.303/01;• Article 25, item (iii) of its Bylaws; and• The guidelines of CVM/SEP Circular No 004/2011 of item 25 (CAPITAL BUDGET).I. Investment Plan for the period 2011-2013 and estimated disbursements for 2011: Investment and maintenance projects for 2011 R$ thousand • Upgrading and expansion of the refined copper plant 120,000• Expansion of seamless copper tubes plant 65,192• Expansion of rolled products plant (hot and cold rolled) 81,000• Precious metals refining plant 9,000• Other projects and maintenance 112,242 Total investments in 2011 387,434 Of the expenditures proposed above, about R$275 million are part of the total R$702 million reported in a Relevant Fact on February 17, 2011. The investment’s strategic goal is organic growth, aiming to change the technological level of the Company, extend the range and mix of products, focus on the domestic market, and add value to the portfolio, for greater competitiveness and profitability for shareholders; II. Sources of funds to finance capital expenditureMain sources R$ thousand• Own funds from operations• Funding from third parties• Disposal of non-operating assets

Subtotal - new funds to raise 375,517

Reinvestment of own funds (Retained earnings) 11,917

Total source of funds to raise 387,434

The proposed retention of earnings for 2010, generated from operating activities, aims to provide reserves to cope with future disbursements for investment. 

SECTOR – Fertilizers Segment CIBRAFERTIL Paranapanema’s fertilizers business Simple Superphosphate market in the State of Bahia, Northeast

Region and Brazil Outlook for the Fertilizers sector

2323

Fertilizers producing company (SSP in powder or granulate, and NPK) 

BusinessFertilizers productionLocation: 1 plant in the Camaçari Petrochemical Complex (State of Bahia) Logistic advantages (distances)Salvador: 45 KmParanapanema: 5 KmPort of Aratu(State of Bahia): 25 KmPetrobrás Fafen: 2 KmPrincipal Clients: 20 KmTotal Area : 108,336 m²Total Built Area:  17,834 m² 

ProductionSuperphosphate PlantInstalled Capacity: 50  t  /  hour ~300,000 t / yearProduct:  SIMPLE  SUPERPHOSPHATE (SSP) 18% P2O5 and NPK/NP

Raw materials Phosphate  rock with 30% to 32% 

of  P2O5,  imported  through  the Port  of  Aratu,  from  countries such  Israel,  Togo,  Egypt  and   Algeria

98%  Sulphuric  Acid: Paranapanema,  through  the         acid pipeline 

TradingTrading policy Industrial  sales  of  Simple 

Superphosphate    to  be  used  as raw  material  in  fertilizers mixtures;  reselling by mixers and resellers;  and

Direct  sales  to  farmers  from  the western  region  of  the  State  of Bahia,  southern  region  of  the State  of    Piauí  and  State  of Maranhão.

Principal clients: Farmers: 38%Heringer: 23%Fertipar: 20%Yara: 5%Mosaic: 5%Other : 9%

Fertilizers Division

Strategic role in the integration with Paranapanema due to the use of the sulphuric acid generated from the metallurgic process.

2424

SSP Production Growth Estimates

• The Brazilian production of SSP should reach ~ 7 million t /year in 2020;• The Northeast Region (important agricultural area) will rise from a share of 11% in national production in 2010 to 

13.5% in 2020, according to estimates;•  Cibrafértil expands its market share in the Northeast Region, of 30.7% in 2010 to 31.3% in 2020 without  assigning 

large investments.   

Sources: Ministry of Agriculture and Cibrafértil

0

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2006 2007 2008 2009 2010* 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

tho

usa

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Cib

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/No

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east

th

ou

san

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s.

SIMPLE SUPERPHOSPHATE *Until Oct, 2010 and Forecast

Northeast Region CIBRAFERTIL Brazil

2525

Outlook for the Fertilizers Sector

New outlook from 2010 on• Sector consolidated with  the arrival of Vale  to  the  fertilizers sector, with  the production of 

phosphated  products  through  acquisitions,  and  operating  only  industrial  sales:  Fosfertil, Bunge, Mosaic and Yara;

• Repositioning of main market players with Bunge operating just as a mixer, Yara and Mosaic concentrated on reselling imported products;

• Recovery  of  the  sector  in  2010,  both  in  volumes  and  margins,  getting  closer  to  the production record reported in 2007;

• Brazilian GDP rose 7.5% and agricultural sector add to it 6.5% in 2010; • The GDP growth should level off in the next years in 5%;• Brazil like large exporter and producer of agricultural commodities such as cotton, sugarcane, 

soybeans,  corn,  coffee  and meat  benefited  for  increase  of  global  demand  and  population and shortage of farmlands in several countries;

• Estimative fertilizers consumption in Brazil boomed 6% for the 2011 based on harvest  grains trends 2010/11 and 2011/12.

26

OPENING

SECTOR

INDUSTRY

CORPORATE

RESULTS

FINANCIAL AND RISK MANAGEMENT

OUTLOOK

28

23.96%

17.23%

11.81%EWZ LLC8.32%

Market38.68%

28

Shareholding Structure

Shareholding Structure

Consolidated position of Paranapanema S.A. as of October 31, 2010.

Principal Shareholders

More than 10,000 shareholders

Shareholders for segment Reference date: March 31, 2011

Segment Common shares Share

Pension funds 135,824,086 42.55%Banks with Investment Portfolios 59,874,112 18.76%Individuals 42,508,165 13.32%Foreign Investiment Funds 39,465,277 12.36%Non-institutional Corporations 18,729,112 5.87%Investment Funds 18,224,024 5.71%Investment Clubs 3,256,532 1.02%Stock Brokers/Distributors 1,217,592 0.38%Other 53,537 0.02%Treasure 24,505 0.01%

Total 319,176,942 100.00%

2929

Corporate Governance• Share Trading and Relevant Disclosure Policies• Review of the Code of Ethics and Conduct • Creation and restructuring of Advisory Committees to the Board of Directors     Audit Committee     Finance, Risk and Contingency Committee  Compensation and Management Committee• 100% of common shares with 100% Tag Along• Review of the by-laws, aiming at adjusting to the new regulations of the Novo Mercado of BM&FBovespa• Engagement of consulting services for implementation of  internal controls based on SoX principles.  

Capital Markets• Engagement of Market Maker since January 2010• Improved liquidity  with the inclusion of the SmallCap and IBRx100 indices since the first 4-month period of 2010 • Growth of 126% in the volume of securities traded until October 31, 2010 against the daily average in 2009• Increase of 122% in the financial volume in the same period• Business volume tripled in 2010 against 2009

Corporate Governance and Capital Market

3030

Sustainability and Recognitions

• Adhesion to the Global Compact of the United Nations in June 2008• Sustainability Report based on GRI (Global Reporting Initiative) methodology• Awards (2009-2010) Paranapanema was among the five finalists of IR Magazine in the category “Greatest Developments in Investor Relations (RI)”;

Bahia’s  unit  (Caraíba  brand)  received  two  Top  Social  ADVB  2009  awards  granted  by  the  Brazilian Association of Sales and Marketing Managers;

Eluma brand received the Rui Otake Award granted by Revenda magazine to the best product for the civil construction sector; 4th “Mérito Lojista” Award as one of the best suppliers of civil construction materials; and the ANAMACO award, as best manufacturer of copper tubes and connections. 

• CertificationsISO  9001 – Dias D’Ávila unit (State of Bahia); Utinga and Capuava units (State of São Paulo) and Serra unit (State of Espírito Santo);

ISO 14001 – Dias D’Ávila unit (State of Bahia)  and Serra unit (State of Espírito Santo);ISO 14001 – implementation in progress at the Santo André unit – UTINGA (State of São Paulo)  

Concerns about the quality of products and sustainability... Environment, Community, Clients, Suppliers, Employees and Investors

OPENING

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INDUSTRY

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RESULTS

FINANCIAL AND RISK MANAGEMENT

OUTLOOK

3232

Sales Volume by Segment and Net Revenues

• Copper Segment have 98% of revenues and fertilizers 2% with total growth of 3% in volume sales

• Revenues have rose 27%, R$680 million addicted with higher added value products in 2010 and 29% up in the 4Q10

• Copper segment  volume increased 5.3% and fertilizers 12.5% up in the 4Q10

752

969

2,51

2

3,19

2

4Q09 4Q10 2009 2010

Net revenue (R$ thousand)

59

62

235

242

44

50

187

181

4Q09 4Q10 2009 2010

Sales Volume by Segment (t)

Copper Fertilizer

3333

Copper Segment Volume

• New and higher added value products

• Increase  13.5%  in  the  volume  of  semi-manufactured copper products  in 2010 over 2009 and level off in the 4Q10

• Refined copper volume remain stable in 2010 and up 9.3% in the 4Q10

• The highlight was on copper wire and rods sales in 2010  and  cathod  and  by-products(sulphuric  acid) in 4Q10 

41

45

175

174

4Q09 4Q10 2009 2010

Sales Volume of Refined Copper (t)

17

17

60

68

4Q09 4Q10 2009 2010

Sales Volume of Semi-manufactured Copper (t)

34

• Positive  evolution  over  net  revenues  of foreign market in 2010.

• Revenues growth of 29% in 4Q10 and 27% in 2010

• Domestic market  revenues  increased 94.5%  in  the 4Q10 and 82.4% in 2010

• Well-done  strategy  focused  on  domestic  market with 60% of revenues in 2010 over 42% in 2009

34

Share of Revenues by Market75

2

969

2,51

2

3,19

2

292

568

1,05

2

1,91

9

460

401

1,46

0

1,27

3 4Q09 4Q10 2009 2010

Consolidated Net Revenue by Market (R$ million)

Net Revenue Domestic Market Foreign Market

39%

59%42%

60%

61%

41%58%

40%

4Q09 4Q10 2009 2010

Net Revenue by Market (%)

Foreign Market Domestic Market

3535

Gross Profit

• Significant recovery of gross profit increasing 86.9% in 4Q10• Net revenues and sales volume overcame  level of costs verified

27

51

(13)

156

4Q09 4Q10 2009 2010

Gross Profit (Loss) - R$ million

3636

EBITDA

• Adjusted EBITDA totaled R$131 million with 5% net revenues margin in 2010 and better operating performance, improving the negative situation of 2009

19

49

(41)

131

4Q09 4Q10 2009 2010

Adjusted EBITDA (R$ million)

3737

Net Income

• Sound  recovery of R$43 million  in net  income and net margin of 2%  in 9M10 against  loss of R$110 million in 9M09.

• Shareholders’ equity of R$ 1.8 billion, R$ 5.55 per share

• Total assets of R$ 3.7 billion

317

7 198

48

4Q09 4Q10 2009 2010

Net Income (R$ million)

135

15

57

73

4Q09 4Q10 2009 2010

Adjusted Net Income (R$ million)

• AGM approved dividends payment up to R$70.2 million on April 29, 2011;• Calculus basis: provides for minimum mandatory dividends of 25% of net income for the year, 

adjusted  by  constitution  of  a  legal  reserve  and  supplementary  dividends  accounted  into shareholders’ equity

• Calculus demonstration of dividends proposal: 

• Dividends right: shareholders enrolled in the company on April 29, 2011;• Ex-dividends shares: May 02/2011;• Dividends payment: as of May 16, 2011 no payment or monetary update.

Dividends Payment Proposal

38

R$ thousand 10/12/31Net income for the year 47.532 (-) 5% legal reserve 2.377

Base for calculation of dividends 45.155 Earnings from realization of revaluation reserve 25.064

Total proposed dividend payment 70.219

Dividends payable (legal minimum of 25%) 11.289 Supplementary dividends in excess of mandatory minimum 58.930

Total dividends (minimum + supplementary) 70.219

Number of shares (ex-treasury) 319,152,465

Dividend per share (R$) 0.22

39

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OUTLOOK

4040

Risk Management Concept

To define business and

risk management

objectives

Identification and

measurement of risks

To define hedge

objectives and limits

To design and implement

hedge strategies

Performance monitoring

and measurement

4141

Objectives of Integrated Risk Management – Enterprise Risk Management (ERM)

Value to Shareholders

Ensure Revenues

Optimization of Operating Costs

Efficiency of Assets

Meeting  expectations 

•  Profitability•  Default

•  Contractual obligations

• Cash flow • Compliance/  Regulations

Strategic Risks: Governance, Business Model

Operating Risks: Processes, Personnel, IT, Environment

Financial Risks: Market, Liquidity, Credit

Regulatory Risks: Legal, Tax

4242

Paranapanema Market Risks

Foundry and Refining(Caraíba)

Mining/Scrap

Semi-Manufactured(Eluma)

EBITDACathodes

CathodesPremium (US$)

TC/RC(US$)

CopperPrice 

(LME andUS$)

Costs(R$)

EBITDA PMA

 Product  Premium(US$)

Sale of Products

Costs(R$)

EBITDAProduct

CopperPrice

(LME andUS$)

CopperPrice

(LME e US$)

Cathode Sales

MPAcquisition

Chart not in scale

time

•Capital and Liquidity management keeping  better capital structure to suport the business;•Greater need for working capital for raw materials acquisitions;•Small  leverege  ratio  and  sound  financial  situation  with  liquidity  key  of  1.6  and  loans  and financing of 0.4 

Liquidity Indicators

43

Paranapanema S.A. - Consolidated (R$ thousand) 08/12/31 09/12/31 10/12/31Change

%Loans and financing 667,608 486.290 763.168 56.9%

Short term 441,906 402.439 507.468 26.1%Long term 225,702 83.851 255.700 NS

Derivative Financial Instruments payable 86,786 40.386 129.240 NSAvailable funds (685,315) (667.721) (583.319) -12.6%

Cash and cash equivalents (164,289) (100.032) (126.828) 26.8%Financial investments (521,026) (567.689) (456.491) -19.6%

Derivative Financial Instruments receivable (34,848) (16.547) (693) -95.8%(=) Net debt (cash) 34,231 (157.592) 308.396 NS

Shareholders’ equity 1,512,044 1,728,513 1,771,375 2.5%

Shareholders’ equity + net debt 1,546,275 1,570,921 2,079,771 32.4%Leverage ratio 2.21% -10.03% 14.83%

44

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4545

Potential Growth Accelerators

*PAC = Growth Acceleration Program of the federal government Source: Federal Government website

2007 2008 2009

Oil findings in the pre-salt layer

Creation of PAC*1Brazil chosen to host the

2014 FIFA World Cup

Brazil chosen to host the 2016 Olympic

Games

2010

Creation of PAC*2

4646

Growth Acceleration Program

Logistics (highways, railways, ports, airports and waterways) US$31 billion

Energy (Power generation and transmission; production, exploration and transportation of oil, natural gas and renewable fuels)

US$153 billion

Social and Urban (sanitation, housing, subways, urban trains, “Luz para Todos” program and water resources)

US$95 billion

PAC 1 – Investments of US$179 billion – Strong assignment of funds to the economy

Source: Federal Government website

• Investments will stimulate the demand for copper in coming years.• CARAÍBA and ELUMA brands are well positioned to compete on the market...• ... due to the expansion in the capacity to offer high quality products, with adequate profitability.

4747

Potential Growth Accelerators

Period from 2011 to 2014 US$497 billion

Sanitation US$32 billion

Health, day care centers and schools US$13 billion

Housing US$154 billion

Water and “Luz para Todos” electricity program US$17 billion

Transportation US$58 billion

Energy US$223 billion

Period from 2014 on US$319 billion

Transportation US$2.5 billion

Energy US$316.5 billion

PAC 2 – Investments of US$816 billion

Sectors with increased growth potential regarding copper consumptionSource: Federal Government website

4848

Investments related to Sports Events

Brazil will host four major sports events.

2011 – The Army Olympics, in Rio de Janeiro

2014 – FIFA World Cup

2016 – Olympic Games

These important events will result in additional investments of US$33.0 billion.

Source: FGV / Abramat – Dec/09

This requires investments in infrastructure, which will result in copper consumption

49

• Brazilian macroeconomic outlook favorable in 2010-2016, with GDP growth of ~5% p.a.• Positive Outlook for the demand of copper products • Relevant factors for the Brazilian copper chain due to:

 Investments in infrastructure

     Investments in electricity and clean energy

     Investments in civil construction 

     Gap between housing demand and supply

      2014 FIFA World Cup in Brazil

      2016 Olympic Games in Brazil  • Brazil offers excellent investment opportunities • Growth estimates for BRIC countries • Demand from Asia and other emerging markets, rising above the global average •  Strategic actions planned by the Company to increase profitability (strategic partnerships and copper recycling)• Opportunity sources: mining rights and sale of non-operating assets

     

49

Final Considerations