corporate presentation – october 2009
TRANSCRIPT
October 2009
MMX MMX
The only one of its kindThe only one of its kind
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.
Investor Relations
Roger Downey – CEO & IRO
Priscylla Setimi - IR
Tel. 55 21 2555-5558 / 5234
An EBX Group Company
EBX´s publicly held companies
All companies are listed in BOVESPA´s Novo Mercado Corporate Governance segment, consolidating a
market capitalization of close to US$ 34.0 Bi*.
Core Business: Logistics
Market Cap:
US$ 2.6 Bi*
Controlling Shareholder:
50.0%
Core Business: Power Generation
Market Cap: US$ 1.5 Bi*
Controlling Shareholder:
76.0%
Core Business: Oil & Gas
Market Cap: US$ 27.9 Bi*
Controlling Shareholder:
61.0%
Core Business: Mining
Market Cap:
US$ 1.9 Bi*
Controlling Shareholder:
63.5%
*Source: Broadcast as of October, 02 2009; BRL 1,7844/USD (BACEN)
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A unique story
Since IPO (July’06), a lot has been delivered…
� MMX Amapá System, mine, railroad and port: system operational in a 14-month record time;
�MMX Corumbá iron ore mine: operational in 8 months;
� MMX Corumbá pig iron furnaces: implemented in 12 months;
� Partnership with Anglo American and Cleveland Cliffs;
� Spin off of LLX
� Sale of assets to Anglo American: MMX Minas-Rio and MMX Amapá;
� Development of MMX Sudeste System: acquisition of assets, logistics secured and expansion
plans to 33.7 million tons per year of iron ore;
� Minera MMX de Chile: acquisition of mining rights and logistics already identified;
� MoU with Wuhan: supply of iron ore and sale of stake both in MMX and MMX Sudeste;
� Agreement with Vetorial: sale of Corumba’s pig iron facility.
July 2006
Sept.2009
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MMX structure
MMX Sudeste
100%
Minera MMX
de Chile
30% Centennial Asset Corumbá
Corumbá System
100%70%
MMX Corumbá
Mineração
MMX Corumbá
Mineração
MMX Metálicos
Corumbá
MMX Metálicos
Corumbá
Bom Sucesso under basic engineering studies
Assets acquired by MMX (AVG: dec-07; Minerminas: jan-08)
100%
100%
Sudeste SystemBom Sucesso
AVGAVG MinerminasMinerminasBom SucessoBom Sucesso
100%
MMX SudesteMMX Sudeste
100%
Free Float
34.93%
Controlling Shareholders
65.07%
Corumbá System started-up in 2005 (Mining)
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MMX Sudeste
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The only one of its kind
MMX uniqueness:
� high quality iron ore;
� low cash cost, due to the high in situ ore content
and high productivity;
�secured logistics, through long-term agreements with
rail, barges and port services providers, including LLX
Sudeste Port, its sister company;
� the unique independent operating Brazilian junior
mining company;
� experienced Management in selecting high value
mining assets, implementing and operating mining
projects;
� proven ability in delivering value to shareholders.
Corumbá
SystemSudeste
System
MMX de
Chile
Domestic Market
Foreign Market
Nowadays After the expansion plan (40 Mtpy)
Sales
� Port capacity secured with CSN Terminal de Carga de Itaguaí Port: 2 million tons per year, from 2009
to 2011;
� MMX Corumbá Mineração entered into a long term iron supply agreement with Vetorial, in an amount
sufficient to guarantee a production of 400 thousand tons per year of pig iron;
� MMX and Wuhan: negotiation for the Off-take of the entire MMX Sudeste production at benchmark
prices.9
MMX Resources
10
Bom Sucesso – A promising world class resource
MMX Mineral Resources Consolidation
Measured
(Mt)Fe%
Indicated
(Mt)Fe%
Inferred
(Mt)Fe% Total (Mt) Fe%
Total MMX Corumbá 5,37 56,98 74,60 52,45 46,84 51,64 126,81 52,34
Total MMX Sudeste 332,18 41,99 399,50 37,47 21,95 44,31 753,63 39,66
Total MMX 337,55 42,23 474,10 39,83 68,79 49,30 880,44 41,49
Tonnes in wet basis
* Measured, Indicated and Inferred Resources at Mine 63 and Urucum Ne were audited by SRK in March, 2008.
* Measured, Indicated and Inferred Resources at Mine 63 were updated up to December 31st, 2008.
* Serra Azul includes AVG+Minerminas and resources were audited by SRK in July, 2009 (base April/09).
* Serra Azul has fines stockpiles audited by SRK (12,157 Mt @52,82% Fe - inferred), in July 2009.
Serra Azul & Bom Sucesso
Sudeste System
MMX Sudeste System: high grade iron ore, low cost
and secured logistics
BOM SUCESSO TENEMENT
� Environmental and Construction licenses
obtained;
� Long term financing under negotiation;
� 50 million ton/year of iron ore can be
expanded to 100 million tons;
� Start-up: second half 2011.
� Consolidation opportunity: mines in Serra Azul
can produce 60-80 million tons/year of iron ore
� MRS has potential for ~ 300 tons/year.
12SUDEST PORT
Serra Azul overview
Magnetic Concentration Plant
�� Acquisition of the assets concluded in JanAcquisition of the assets concluded in Jan’’08; 08;
�� Construction of Magnetic Concentration Plant Construction of Magnetic Concentration Plant
and operational enhancements: 8.7 and operational enhancements: 8.7 MtpyMtpy as as
annual installed production capacity in Oct, 2008.annual installed production capacity in Oct, 2008.
Serra Azul site: 8.7 Mtpy of capacity reached on Oct’08
�� Railway capacity secured through longRailway capacity secured through long--term term
agreement with MRS up to 15 agreement with MRS up to 15 MtpyMtpy;;
�� Port capacity secured with CSN Terminal de Port capacity secured with CSN Terminal de
CargaCarga de de ItaguaItaguaíí Port: 2 million tons per year, from Port: 2 million tons per year, from
2009 to 2011;2009 to 2011;
�� Port capacity from midPort capacity from mid--2011 2011 untilluntill 2032 secured 2032 secured
through longthrough long--term agreement with LLX term agreement with LLX SudesteSudeste
Port;Port;
�� LongLong--term Offterm Off--take agreements with domestic take agreements with domestic
miners and steel makers;miners and steel makers;
�� Wuhan will be the main offWuhan will be the main off--taker of MMX taker of MMX
SudesteSudeste production.production.
Operations Sales & Logistics
Magnetic Concentration Plant – Start-up Oct 30’0814
MMX Sudeste System: High Grade Iron Ore, low cost
and secured logistics.
Bom Sucesso: outstanding magnetite content and
logistics
View from the west hillside of the Bom Sucesso mountain ridge
�� Acquisition of mining rights concluded in JulyAcquisition of mining rights concluded in July’’08;08;
�� Unique magnetite content (close to 30%);Unique magnetite content (close to 30%);
�� The closest iron ore asset to the shore The closest iron ore asset to the shore –– 240km (lower rail tariff);240km (lower rail tariff);
�� Greenfield basic engineering studies and environmental licensinGreenfield basic engineering studies and environmental licensing under g under
development;development;
�� Rail capacity under negotiation with MRS to extend current contRail capacity under negotiation with MRS to extend current contract for ract for
additional 17 additional 17 mtmt up to 2032.up to 2032.
Expected Quality:
Fe: 67.2%
SiO2: 2.5%
AL2O3: 0.5%
P: 0.033%
PPC: 0.6%
FeO: 8.8%
Tests
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MMX Sudeste: aggressive expansion plan to become an international player
Production Capacity
2009 to 2013 *
Expansion plan built up in 3 phases:
Phase I: the installed annual capacity to
reach 8.7 Mtpy was achieve in Oct’08 upon
the start-up of the Magnetic Concentration
Plant;
Phase II: Serra Azul brownfield expansion up
to 16.3 Mtpy
Current under detailed engineering and licensing
studies
Phase III: Bom Sucesso greenfield project,
adding 17.4 Mtpy of high magnetite iron ore Current under basic engineering studies
*Timeline and Capex to be confirmed upon conclusion of detailed engineering studies and analysis of market conditions
PHASE I
CONCLUDED
3.48.7 8.7
18.514.7 16.3
17.417.4
3.4
8.7 8.7
18.5
32.133.7
2008 2009 2010 2011 2012 2013
Bom Sucesso
Serra Azul
PHASE I PHASE II PHASE III
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MMX Sudeste: Connected to Sudeste Super Port by MRS
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MMX Sudeste will export 32 million tons per year through
Sudeste Super Port
Sudeste Super Port can be expanded
to 100 million tons per year19
Chile
Preliminary tests in Ouro Preto pilot plant:
- Fe: 67.50%- SiO2: 2.5%- Al2O3: 0.85%- P: 0.015%
Iron Ore in Chile: quality & logistics
Patrícia
Bella
Fortuna-
Fierro
Teatino
s
50km distant from the Chilean coastapprox 1,760 hectares
Pellet feed with high magnetite content
Existing railroad (FERRONOR)
4 mining rights (2 purchase and options agreements)
USD 44.5 million
21
EBX has 240,000 ha property in the Atacama region
Permits to develop the urban, industrial and port
zones
Water availability with permits
Guaranteed site contract for:
89 ha of premium area (port)
782 ha of retro-area
Unlimited scalability for a long-term
development
Located close to mining players
Opportunities for industrial businesses:
Port / Thermo
Puerto
Punta Cachos
Logistics: Puerto Punta Cachos
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Corumbá System
MMX Corumbá Mineração
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Ladário Port
� High Quality Lump yield;
� Current Capacity: 2.1 Mtpy
� MMX has Long Term Supply Agreements – 5
years, in average - with traditional steel makers in
South America and Europe.
� Transport barges down the Paraguay River to
Rosario Port;
� MMX has long-term contracts with local and
international barge operators;
� Rosario Port in Argentina: Handymax vessels to
Europe;
� Pig Iron operation sold on September 2009 to
Vetorial for R$ 100 million: 84% was already paid.
Recent Events
MoU among MMX, LLX and Wuhan Steel
Non-exclusive, non-binding MoU with relevant opportunities for MMX and EBX group
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• Integrated 5 million ton per year steel
plant at Açu Super Port;
• WISCO off-take of MMX Sudesteproduction;
• Restatement of the port services agreement among WISCO, MMX and LLX;
• Acquisition of stake in MMX and MMX Sudeste;
• Supply of steel products by WISCO to OSX (Oil Service S.A. – an EBX GroupCompany)
The Announcement
• Off-take of the entire MMX Sudeste
production at benchmark prices;
• Restatement of the port services
agreement among WISCO, MMX and
LLX; and
• Sale of a stake in MMX (9.09% for
US$ 120 million) and MMX Sudeste
(23% for US$ 280 million) – cash in to
face CAPEX programs.
MMX potential upsides
Currently in due diligence
Who is Wuhan
27
� The Chinese Wuhan Iron and Steel Corporation (WISCO) was created in 1955;
� WISCO is the first giant iron and steel complex established after the founding of the People’s
Republic of China;
� WISCO has an annual production capacity of 31 million tons, ranking the third in China and the 7th
largest steel producer in the world;
� WISCO plans to expand its steel production capacity to 50 million tons per year, what will require a
supply of 80 million tons per year of iron ore;
� The CEO of Wuhan happens to be also the President of CISA (China Iron and Steel Association);
� WISCO is making great efforts to enter into the rank of the 500 top enterprises in the world and
become an important automobile sheets producer in China by 2010.
MMX Performance
$7.29 $7.09$6.25 $5.93 $5.66
10/26/2009 VWAP 20d VWAP 45d VWAP 60d VWAP 90d'
Source: Bloomberg as per October 2th, 2009.Notes: VWAP is the volume weighted average price for the period indicated (in business days).
MMXM3 share price performance (R$ per share)
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Share Price Performance (R$)
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Volume Price
R$ 12.50R$ 10.36 R$ 9.96 R$ 9.64 R$ 9.28
10/26/2009 VWAP 20d VWAP 45d VWAP 60d VWAP 90d
MMXM3 share price performance (US$ per share)
Source: Bloomberg as per October 2th, 2009.Notes: VWAP is the volume weighted average price for the period indicated (in business days).
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Share Price Performance (US$)
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Volume Price
Capital Market
MMX number of shares: 305.123.440
MMX is listed in BOVESPA´s Novo Mercado Corporate Governance segment.
Market Capitalization: US$ 1.9 billion
MMX holds Global Depositary Receipts – Level I (”GDRs”), negotiated in the U.S. over the
counter market.
31
Free Float
34.93%
Controling
Shareholder and
Management
65.07%
