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MMX: CREATING IRON ORE SUPPLY CHOICES
- 1. MMX: CREATING CHOICES IN SEABORNE IRON ORE SUPPLY Rio de Janeiro | April 2013
- 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. MMXM3: SOLID CONTROLLING SHAREHOLDERS 10.5% Wisco 59.3% Controlling 8.8% SK Networks Shareholders 21.4% Others 94.52% 100% 100% MMX Corumbá Superporto Mineração MMX Sudeste Sudeste 5.48% EBX Serra Bom Azul Sucesso 4
- 5. HIGH QUALITY MINING ASSETS IN TRADITIONAL MINING DISTRICTS Two operating systems: Serra Azul and Corumbá Current Capacity: 10.8 Mtpy Mining rights in traditional iron ore districts: Brazil (Minas Gerais and Mato Grosso do Sul) Production committed with strategic consumers – China and South Korea – Sudeste System through long-term contracts Serra Azul Unit Bom Sucesso Unit Corumbá System Brownfield start up in Brazil Expanding up to around 40 Mtpy in Brazil, through fully integrated systems: Private port Sudeste Superport Strategic port location 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 Infrastructure with integrated logistics 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 Experience management team with implementation and operational expertise Track Record Installed Capacity of 10 Mtpy (Serra Azul and Corumbá sites) 6
- 7. A LOT HAS BEEN DELIVERED April Arrival of 2 Ship Loaders in the Sudeste Superport 2013 Conclusion of the capital increase in the amount of R$ 1.4 billion BNDES approves eligibility for a long term financing for Serra Azul Conclusion of the offshore civil works at the Sudeste Superport 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 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 2011 Deal with Usiminas 7
- 8. FINANCIAL HIGHLIGHTS Gross Profit (R$ million) Net Revenue (R$ million) 700 1,200 600 1,000 500 800 400 600 630 1,036 300 400 725 806 200 427 437 200 100 0 0 2010 2011 2012 2010 2011 2012 EBITDA (R$ million) 200 18.0% 20% 180 160 18.5% 15% 140 120 100 10% 187 6.0% 80 60 134 5% 40 20 49 0 0% 2010 2011 2012 EBITDA EBITDA Margin 8
- 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 Offtakers (Shareholders) Long-Term contract (20 years). Wisco will off-take at least 50% of MMX Sudeste production. Mine Railway Superport 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 (9%). Serra Azul unit is near to the MMX has a long term contract Sudeste Superport will have MRS railway - 10 km from the with MRS railway, which connects 50Mtpy iron ore shipping mine, a distance currently the mine with the CSN’s port and capacity. The Superport will have SK and Wisco will together traversed by trucks. the Sudeste Superport, both a depth of 20 meters, enough to offtake 64% of total production located in Itaguaí. handle Capesize vessels. 11
- 12. Iron ore Quadrangle QUADRILÁTERO FERRÍFERO 12
- 13. RAILWAY Railway access connecting 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: 66.65% P: 0.025% SiO2: 3.23% Mn: 0.018% AL2O3: 0.54% LOI: 0.75% 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 Beneficiation Grinding Primary Crusher Primary Crusher Main Access Pump House, Sump Substation Water Storage Tank Maintenance and Thickeners Water Storage Tank Inc. Workshop Construction Site Grinding Piles Construction Site Administrative and Warehouse Buildings
- 21. Sudeste Superport Location 21
- 22. Offshore Nautical Access Tunnel Stockyard 06 Stockyard 32 Sudeste Superport Artistic View Railway Access 22
- 23. SUDESTE SUPERPORT Overview Licensed to 50 Mtpy, expandable to 100 Mtpy Licensing for 100 Mtpy underway, public hearing held on May, 2012 Navy Approval to 100 Mtpy Loading: 2 ship loaders of 25 Mtpy each Construction works for the tunnel and offshore infrastructure completed Fully funded (BNDES) Sudeste Superport - Itaguaí 23
- 24. 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 of an additional 75 by US-PPI million tons Pau de Vinho target production: 8 Mtpy Volumes: ■ Up to 12 Mtpy Significant synergies with current mining operations at Serra Azul 80% Take-or-Pay 13.5% of production at Pau de Vinho Usiminas can renew the contract in will be delivered to Usiminas 2016 for 1 to 5 years MMX will be responsible for the licensing, CAPEX and operation for 30 years 24
- 25. Sudeste Superport Road&Railway Access Railway Access to Itaguaí Port Road&Railway Access to MMX
- 28. Stockyard 32 Stacker Reclaimer Infrastructure Road Access Stacker Reclaimer Car Dumpers Control Room Rolling Way Car Dumpers Stockyard 6 Sudeste Superport Stockyard Elevation 6 m 28
- 29. Sudeste Superport Stockyard Elevation 6 m 29
- 30. Control Room of Car Dumpers Train Positioners Car Dumpers Sudeste Superport Car Dumpers 30
- 31. Electric Substation Tunnel Entrance Infrastructure Transfer House Concrete Base Sudeste Superport Stockyard Elevation 32 m 31
- 32. 11 m 20.5 m Sudeste Superport Tunnel entrance 32
- 33. Superporto Sudeste Sudeste Superport Estrutura Offshore Offshore Structure 33
- 34. Tunnel Exit Bridge 1 (430 m) Electric Substation Building Bridge 2 (270 m) Sudeste Superport Substation Structure Platform 2 on Platform 1 34
- 35. Superporto Sudeste Sudeste Superport Estrutura Offshore Offshore Structure 35
- 36. Bridge 430 m Bridge 270 m Pier 766 m Superporto Sudeste Sudeste Superport Estrutura Offshore Offshore Structure 36
- 37. Ship Loader Superporto Sudeste Sudeste Superport Estrutura Offshore Ship Loader 37
- 38. Superporto Sudeste Sudeste Superport Estrutura Offshore Ship Loader 38
- 39. Superporto Sudeste Sudeste Superport Estrutura Offshore Ship Loader 39
- 40. 3 CORUMBÁ
- 41. CORUMBÁ Highlights Current Capacity: 2.1 Mtpy Long-term contracts signed with local and international barge operators SRK audit resources report: 192 million tons plus a potential of an additional 123 million tons 41
- 42. Investor Relations Carlos Gonzalez – CEO and IRO Adriana Marques – Manager Daniella Maia - Analyst Phone + 55 21 2163-6197 +55 21 2163-4366 ri@mmx.com.br