Microsoft word mmx earnings release 2 q12 versão final - ingles
1. Earnings Release 2Q12
MMX – Results for 2nd Quarter 2012
Rio de Janeiro, August 13th, 2012 – MMX Mineração e Metálicos S.A. (“Company” or “MMX”)
(Bovespa: MMXM3) releases its results for the second quarter of 2012. Financial and operating
information below is presented on a consolidated basis in accordance with international
accounting standards (IFRS) issued by the International Accounting Standards Board (“IASB”), in
thousands of Reais, except where indicated otherwise.
This was a quarter of recovery for MMX operations after a weak beginning of the year due to the
effects of rain in the region of Minas Gerais. In the period, the Company had an Ebitda of R$ 13.9
million and net revenue of R$ 203.6 million. The highlights of the Company’s second quarter
were: (i) obtaining the Installation License (LI) for the expansion of the Serra Azul Unit, which
enabled the beginning of the expansion work and construction of new processing plant and (ii)
resumption of the navigability of the River Paraguay, allowing the shipping of iron ore from
Corumbá System to export market. However, it is worth noting that the uncertainties
surrounding Europe and instability regarding the behavior of China's economy negatively
impacted the global prices of iron ore.
"At the beginning of this year, MMX sales and operations were greatly affected by natural
phenomena, especially heavy rains, that interfered in our industrial activity. In the second
quarter the situation was normalized and production reached approximately 2 million tons in the
period. In April, MMX received the Installation License (LI) and immediately started work on the
expansion of Serra Azul Unit and the construction of a new processing plant, which will be
capable of producing 29 million tons of iron ore per year, using state-of-the-art technology. The
Serra Azul Unit will have integrated logistics solutions, a crucial step for MMX to consolidate its
strategy to become a competitive mining company in the international market" said Guilherme
Escalhão, CEO and Investor Relations Officer for MMX.
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2. Earnings Release 2Q12
2Q12 highlights and subsequent events:
• Obtaining of environmental Installation License Installation License (LI) for the expansion
of Serra Azul Unit;
• Start of work on the expansion of Serra Azul Unit;
• Public hearings held in the municipalities of Itaguaí and Mangaratiba for the expansion of
the Sudeste Superport to 100 Mtpy;
• Total sale of 1.7 million of tons of iron ore 22% above the 1Q12;
• EGM’s held for PortX and MMX, approving the merger of PortX by MMX;
• On August 10, 2012, it took place the issuance of debentures at the amount of R$ 600
million, by MMX Sudeste Mineração S.A.
Consolidated Highlights
Var. % Var. %
2Q12 1Q12 2Q11
2Q12/1Q12 2Q12/2Q11
Sales - Iron Ore (000 t.) 1,699.5 1,395.3 2,066.9 22% -18%
Gross Revenues (million R$) 216.1 169.7 312.9 27% -31%
Gross Profit (million R$) 113.1 84.8 186.3 33% -39%
EBITDA (million R$) 13.9 4.2 75.2 231% -82%
Net Income (Loss) (million R$) (391.6) 49.3 90.9 n/a n/a
Net Debt (million R$) 1,872.9 1,391.6 255.6 35% 633%
Shareholders' Equity (million R$) 2,578.6 2,949.1 3,129.2 -13% -18%
Economic Context, Scenario and Outlook for the Mining Sector
The average price of iron ore with 62% Fe delivered in China in 1Q12 was 21.5% below the
average price recorded in the same period in the previous year and only 1.2% above the price
reached in 4Q11. This modest price recovery in 1Q12 was possible thanks to the growth in
utilization rates in steel mills combined with a reduced supply in the transoceanic iron ore
market.
In 2Q12, however, pessimism in relation to the world economy, particularly in Europe and China,
had a negative effect on the international market for iron ore.
The economic environment in Europe, which has been unfavorable since 2011, remained
unstable with the inability of governments to prevent the slowing down of the economy, in
addition to the fear that the crisis began in Greece would affect other debtor countries, such as
Italy and Spain.
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3. Earnings Release 2Q12
In this quarter, the major indexes published by the Chinese Government indicated that the
growth rate of the country’s economy would continue to slow down, leading to a reduction in the
apparent consumption of steel and, consequently, of iron ore. The fall in industrial production,
coupled with the use of stockpiled steel, interrupted the growth trend in Chinese steel production
which stabilized at approximately 60 million tons per month. This movement triggered a
reduction of Chinese imports of iron ore at the amount of approximately 4%, when compared the
second quarter with the first quarter of this year.
At the same time as falling demand, the supply of iron ore in the transoceanic market increased
considerably in this second quarter. The main producers in Australia and Brazil were supplying
the market in an attempt to recover lost sales due to climatic effects that affected the two
countries in the first quarter.
The final effect, considering the increased supply combined with falling demand, was the
reduction of iron ore prices on the spot market by approximately 10% between the beginning of
April and the end of June 2012, in addition to a reduction of approximately 20.5% when
compared the average price charged in the 2Q12 against the 2Q11 (iron ore 62% Fe CFR China).
Long Term Outlook
Despite a not so optimistic scenario for the global economy in the coming months, it is believed
that the European market will be able to resolve the issues related to the debt crisis of the Euro
Zone. At the same time, the Chinese Government also has adopted some measures to resume
growth.
In this scenario, it is expected that the global production of steel will remain stable throughout
2012 and resume growth as from 2013, although at lower rates than in the past. Given that
Chinese producers will continue struggling to expand their production of iron ore in view of
increased costs and decreasing quality, it is expected growth in the demand for imported iron
ore.
In this scenario, MMX stands out for its solid, integrated project, with a guarantee of certified
mineral resources and reserves, long-term access to railway infrastructure, besides the Sudeste
Superport, MMX’s private port which is now under construction, for shipping of its own
production.
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4. Earnings Release 2Q12
Operational Performance and Financial Statements
Iron Ore
Production
Production Var. % Var. %
2Q12 1Q12 2Q11
(´000 tons) 2Q12/1Q12 2Q12/2Q11
Sudeste 1,378 1,220 1,564 13% -12%
Corumbá 631 333 593 90% 7%
Total 2,009 1,553 2,157 29% -7%
In the second quarter, the total volume produced by MMX was approximately 2.0 million tons of
iron ore, an increase of 29% compared to 1Q12 and a drop of 7% in relation to the volume
registered in the same period of the previous year.
In 2Q12, the production in the Sudeste System was of 1.4 million tons, 13% above the volume
recorded in 1Q12 and 12% below the registered in 2Q11.
In this quarter, the Corumbá System resumed its pace of production, which had been impacted
by restricted river navigability on the Paraguay River in 1Q12, and recorded production of iron
ore of 631 thousand tons, 90% and 7% above 1Q12 and 2Q11, respectively.
Sales
Sales Var. % Var. %
2Q12 1Q12 2Q11
(´000 tons) 2Q12/1Q12 2Q12/2Q11
Sudeste 1,152 1,165 1,583 -1% -27%
Corumbá 547 230 484 138% 13%
Total 1,699 1,395 2,067 22% -18%
In 2Q12, the sales volume of the Company was of 1.7 million tons of iron ore, 22% higher than
the previous quarter. In comparison with the same period of the previous year there was an 18%
retraction. The domestic market absorbed 64% of that amount and the remainder was directed
to external market.
Sudeste System
Sales in the Sudeste System totaled 1.2 million tons of iron ore, which is in line with the
performance recorded in 1Q12 and 27% less than 2Q11. From the total sales, 86% were
addressed to the domestic market, represented mainly by pig iron producers, steelmakers and
large mining companies. The remaining 14% were exported through the CSN Port, in Itaguaí,
which was made in a single shipment. In this quarter, the Company was able to maintain the
export level of the previous quarter, but in comparison with the same period in the previous
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5. Earnings Release 2Q12
year, a reduction was observed. In relation to the 2Q11, there was one less shipment addressed
to exportation, which resulted in the difference in sales volume between 2Q12 and 2Q11.
Corumbá System
In 2Q12, the Corumbá System sold 547 thousand tons of iron ore, performing 138% above 1Q12
and 13% above 2Q11. More than 80% of such amount was addressed for export and the rest
was sold on the domestic market. The return to normal water levels on the Paraguay River,
allowing navigation of barges carrying iron ore to the port in Argentina, was essential for the
recovery of sales in this quarter.
Cost of Goods Sold (“COGS”)
In 2Q12, MMX recorded COGS of R$ 90.6 million. The COGS/ton this quarter had an average
value of R$ 53.29/ton, in line with the previous quarter. In this quarter, the production cost was
impacted by the effect of the provision of the Tax on Control, Supervision and Monitoring of
Activities related to Research Mining, Exploration and Exploitation of Mineral Resources ("TFRM"),
enacted by the State of Minas Gerais, at the amount of R$ 2.17/ton. It is important to emphasize
that, even considering this provision for the payment of the TFRM, the COGS/ton for 2Q12 was
8% below the 2Q11.
General and Administrative Expenses (“G&A”)
Var. % Var. %
R$ Thousands 2Q12 1Q12 2Q11
2Q12/1Q12 2Q12/2Q11
G&A Operations 13,951 20,315 19,017 -31% -27%
Corumbá System 3,144 3,089 5,179 2% -39%
Sudeste System 10,102 8,347 11,797 21% -14%
Sudeste Superport 1,260 7,967 1,024 -84% 23%
Others (556) 911 1,018 n/a n/a
G&A Parent Company 23,579 17,969 9,232 31% 155%
G&A Consolidated 37,530 38,284 28,249 -2% 33%
% Gross Revenue 17% 23% 9% -23% 92%
G&A/ton 22.08 27.44 13.67 -20% 62%
The G&A consolidated of MMX in 2Q12 was of R$ 37.5 million, 2% less than the recorded on
1Q12 and growth of 33% when compared to 2Q11.The G&A of the Controlling Entity in the 2Q12
was impacted by an increase in the provision for the stock option plan when compared to 1Q12.
This increase results mainly from the growth of the management team to support the Company's
expansion plan.
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6. Earnings Release 2Q12
Sales Expenses
Var. % Var. %
R$ Thousands 2Q12 1Q12 2Q11
2Q12/1Q12 2Q12/2Q11
Sales Expenses 69,739 47,704 73,099 46% -5%
Corumbá System 42,584 15,027 24,919 183% 71%
Sudeste System 27,155 32,486 47,647 -16% -43%
In 2Q12, the sale expenses of the Company, mainly those related to logistics costs for the export
of iron ore, totaled R$ 69.7 million. In relation to 1Q12 there was an increase of 46% and a
reduction of 5% of such expenses in comparison with 2Q11. The increase was due to resumption
of sales at Corumbá, as explained above. Sale expenses include: (i) the port tariff for CSN, (ii)
port charges in Ladário (Corumbá) and in Argentina, (iii) road transport from the Serra Azul Unit
to the railway terminal (valid for export and part of the sales for the internal market) and (iv)
MRS tariffs for the transportation of ore produced in the Sudeste System to the port.
Ebitda
MMX recorded a consolidated Ebitda of R$ 13.9 million in 2Q12, a 231% increase in comparison
with 1Q12 and an 82% reduction in relation to 2Q11. In this quarter, the Company recorded an
Ebitda Margin of 7%, against 3% in 1Q12.
Var. % Var. %
R$ Thousands 2Q12 1Q12 2Q11
2Q12/1Q12 2Q12/2Q11
EBITDA Consolidated 13,905 4,205 75,226 231% -82%
EBITDA from Operational
Companies
Sudeste 26,657 29,247 73,196 -9% -64%
Corumbá Mineração 10,340 (903) 24,087 n/a -57%
Sudeste Superport (610) (5,874) (864) n/a n/a
The Sudeste System recorded an Ebitda of R$ 26.7 million in 2Q12, a 9% reduction compared
with 1Q12 and 64% reduction compared with 2Q11. The result of this quarter was influenced by:
(i) reduction in the weighted average of the price of iron ore resulting from deceleration of the
global market, partially offset by an 11% increase in the average exchange rate compared with
1Q12 and (ii) provision for TFRM, which impacted COGS in the period. In 2Q12, the Ebitda
margin for the Sudeste System remained in line with 1Q12.
For the Corumbá System, 2Q12 Ebitda was of R$ 10.3 million. This result was due to higher
sales volume in the period, combined with an increase in the average dollar value when
compared to 1Q12.
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7. Earnings Release 2Q12
The Sudeste Superport, under construction in Sepetiba Bay (in Itaguaí-RJ), recorded negative
Ebitda of R$ 610 thousand, given its current phase of deployment. In relation to 2Q11, the
comparison does not apply, because, the port started to be recorded in MMX's results as from its
purchase dated as of May 2011.
Financial Result
MMX's financial result in 2Q12 was negative at R$ 411.6 million, of which we highlight: (i) R$ 5.9
million in financial income, (ii) R$ 186.1 million from the sum of financial expenses with the
adjustment of long-term liabilities represented by present amounts of the expected payment flow
of royalties to the holders of securities of variable compensation (MMXM11) and (iii) R$ 231.4
million negative exposure to exchange variations, mainly from long-term liabilities represented
by the above royalties. It should be noted that this liability has no cash effect on the Company.
Var. % Var. %
R$ Thousands 2Q12 1Q12 2Q11
2Q12/1Q12 2Q12/2Q11
Financial Income 5,910 20,412 37,189 -71% -84%
Financial Expenses (186,110)* (18,345) (23,188) n/a n/a
Exchange Variance (231,365) 54,874 37,379 n/a n/a
Net Financial Result (411,565) 56,941 51,380 n/a n/a
* Includes adjustment for long-term liability related to royalties (MMXM11)
Net Income
In 2Q12, the net income was negative at the amount of R$ 391.6 million, mainly impacted by the
devaluation of the Real and the consequent negative effect on long-term liabilities. It is worth
noting that such effect is accounting only with no cash effect on the Company.
Cash, Debt and Acquisitions
Cash
Net position:
The cash position at the end of 2Q12 was R$ 355 million, distributed as follows: (i) R$ 219
million in short-term investments with high liquidity, remunerated at a charge-free rate
equivalent to 101.5% of the CDI (Interbank Offered Rate) marked to market at 101.9% effective
interest rate and (ii) R$ 136 million in cash and banks. The Company's cash reduced during this
period, mainly due to: (i) investment in the Sudeste Superport construction work in the amount
of R$ 180 million and (ii) investments in the Serra Azul Project in the amount of R$ 120 million.
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8. Earnings Release 2Q12
Debt:
In the second quarter of 2012, MMX had total financial debt of R$ 2.1 billion, being R$ 696
million related to short-term debts, and R$ 1.4 billion to long-term debts. Drawdowns from
BNDES to finance the Sudeste Superport contributed to the increase in debt of R$ 37.8 million.
In addition, the following borrowings and amortizations occurred: (i) new short-term debts in
Export Contract Financing totaling US$ 85 million, (ii) long-term debt of US$ 30 million and R$
129 million and (iii) amortization of debts in the amount of US$ 119 million and R$ 2.5 million.
In 2Q12, the average debt term in foreign currency was of 21 months, while the average term of
debt in Brazilian Reais was of 60 months. The weighted average cost of dollar-denominated debt
in 2Q12 was 6.12% p.a., an improvement in relation to 1Q12, which was 6.29% p.a., plus
exchange variation in US dollars. The average cost of debt in Reais, composed essentially of
BNDES credit lines, was 8.17% p.a.
The graph below shows the evolution of the debt profile of the Company:
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9. Earnings Release 2Q12
Acquisitions
MMX ended 2Q12 with a debt of R$ 115.4 million, related to the purchase of mining rights and of
the company GVA Mineração Ltda. (“GVA”), an increase of 6% compared to the previous quarter.
Below is the breakdown of the balance of purchases at the end of 2Q12:
R$ million 2Q12
Corumbá 3.6
GVA 78.7
Chile 33.1
Total 115.4
Investments
The main focuses for MMX investments are currently: continuation of the expansion work at the
Serra Azul Unit operations initiated in 2Q12 and completion of the Sudeste Superport
construction work, which will begin operating next year. In a second stage, the Company will
return its focus to the development of new projects, such as Pau de Vinho, Bom Sucesso and
Chile.
Serra Azul
In 2Q12, continuing the development of the Serra Azul Unit project, MMX started the expansion
work immediately after obtaining the Installation License in April of this year.
In July 2012, as a subsequent event to the closing of the quarter, MMX informed the market that
it had received approval, in an EGM, to complete the acquisition of PortX by MMX.
The iron ore produced at Serra Azul will be exported through the Sudeste Superport, which,
combined with the MRS rail network, gives the project unique characteristics in terms of
integrated logistics and location. The construction of the Sudeste Superport is currently well
advanced in the municipality of Itaguaí (RJ) and is projected as a private mixed-use port terminal
with capacity to transport up to 50 million tons of iron ore per year, in a first phase, which may
be expanded in the future to up to 100 million tons per year.
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10. Earnings Release 2Q12
Grind
Sump and Processing
Thickners Construction
Pile Site
Benefic.
and Warehouse
Substation
Maintenance
Primary workshop
Construction
Crushing
Site
Sudeste Superport
The Sudeste Superport will contribute significantly to the expansion and integration of the Serra
Azul Unit. The beginning of its operations, starting next year, will give MMX an opportunity to
expand its exports, a strategy that will ensure greater margins when combined with the higher
prices charged in the international market and lower costs, guaranteed by its integrated logistics.
Continuing the implementation of the 50 million ton project, the civil construction work at the
Sudeste Superport is developing in four fronts:
4) Offshore structure
3) Tunnel
2) Stockyard 06
2) Stockyard 36
1) Road&Railway 10
Access
11. Earnings Release 2Q12
1) Road-rail access: The rail access runs for 2.3 Kms linking the MRS line to the MMX rail balloon
loop. In 2Q12, the infrastructure work progressed satisfactorily, especially regarding the
construction of the railway bridge and the road viaduct.
1) Road&Railway Access
2) Stockyards: The two stockyards (elevation 6m and 32 m above sea level) have a total static
capacity of 2.5 million tons of iron ore. In Yard 6, the first to start operating, the
infrastructure work and the electromechanical assembly of the car-dumpers is moving
forward. The construction of the foundations for the conveyor belts and transfer points have
already begun. The removal of the Morro do Capitão hill is in the final stages. In Yard 32 the
leveling of the terrain and preparation for the construction work on the foundations for the
equipment is progressing.
2) Stockyard 06 2) Stockyard 32
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Assembly of car dumpers
12. Earnings Release 2Q12
3) Tunnel: 1.8 km long, 11 meters high and 20.5 meters wide, this connects the stockyards to
the offshore structure and is already finished. In 2Q12 the work on the foundations (stub
columns) was started; these will support the metal structures of the conveyor belts.
11 m
20.5
m
3) Tunnel Entrance
4) Offshore structure: the infrastructure for the Pier access bridges and the platform that
connects the two bridges are ready. The work on assembling the beams and blocks for the
pier was also completed. In this quarter, the Company moved ahead with dredging and with
the access platform infrastructure for the first bridge. The two ship loaders are in the final
stages of construction in China.
Bridge
450 m
Bridge
250 m
Pier
766 m
4) Offshore structure
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13. Earnings Release 2Q12
Side view of of the shiploaders View of 2 shiploaders (in yellow)
Other items
In Chile, MMX is investing in the development of a project with the potential to reach up to 10
million tons of iron ore per year capacity.
In Minas Gerais, in an area adjacent to Serra Azul, it is located the Pau de Vinho Mine, where
early studies point to an additional capacity of 8 million tons of iron ore per year.
Both projects are in the stage of conceptual engineering and geological research.
In 2Q12, MMX invested R$ 454.6 million, mainly in the Sudeste Superport (R$ 201 million), in
the Serra Azul Units (R$ 243 million) and in Chile (R$ 10.6 million).
Sustainability
MMX is moving forward with the implementation of the Integrated Management System for
Sustainability (“SGS”), with steering committees and sustainability managers in all its units,
focused on the implementation of the documents that make up the system.
Sudeste System
MMX Sudeste created another 920 places in its Professional Qualification Program, in the
municipalities of São Joaquim de Bicas and Igarapé with training programs for work in the civil,
mechanical and electrical industries and in the industrial cooking sector. The goal is to contribute
to the increase of professional qualifications in the local community and enable MMX to increase
the number of hires from this labor force in its projects. With this in mind, MMX signed a
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14. Earnings Release 2Q12
partnership agreement with Sebrae-MG for the development of a training program for local
businesses to raise their potential as service providers in the region.
MMX has opened new channels of direct communication with the communities of São Joaquim de
Bicas, Igarapé and Brumadinho. In July, MMX opened the Casa de Diálogo, a place where
information can be exchanged with the community surrounding the new ore processing plant
under construction in São Joaquim de Bicas; the Company also set up a 0800 line for answering
questions as well as some other tools to complement the web hotsite specially dedicated to the
project: http://www.mmx.com.br/serraazul.
In the Interaction Program for social and environmental education, developed with schools in the
region, teachers and students were involved in defining the scope of the research that will be
developed during the year.
As part of the Raízes (“Roots”) Program, which aims to preserve local history and cultural
identity, MMX's participation in the 14th edition of the Festa da Farofa (Manioc Flour Festival) in
São Joaquim de Bicas was noteworthy. During the event, the Company recorded testimonies and
pictures that will be part of a book and a video about the cultural history of the neighborhood of
Nossa Senhora da Paz, also known as Serra das Farofas. The book and the video will be released
along with a booklet of recipes for manioc flour dishes created by the local community.
In the environmental area, the Company initiated a project to plant seedlings of Atlantic Rain
Forest trees in an area of 163 hectares, which is a vital part of the Serra Azul environmental
project.
Corumbá System
The Dialog Platform experience (MS) was brought to the Humanities Forum, a program that ran
parallel to the Rio +20 event, as one of the examples of a successful experience with dialogue
between NGOs and companies. The platform discusses strategies for the promotion of
sustainable development of wetland and MMX has an important role in this since its inception.
This month the Forum agreed on strategic lines of action geared to the conservation of
biodiversity and water resources management in the region. The Company was also a supporter
of the largest international event for mammalian fauna, which took place in Corumbá in July,
when the Homem Pantanero Institute, an MMX partner in environmental matters, presented the
monitoring program for fauna in the area of impact of the Company’s project.
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15. Earnings Release 2Q12
Sudeste Superport
On April 13th, the inaugural class of the 3rd Phase of the Professional Qualification Program was
inaugurated. The goal is to offer training to the resident population in the areas of influence of
the Sudeste Superport, developing professionals for the opportunities that will be generated by
the project. 120 places were offered in courses on Electrical Installations in Buildings and
Painting Techniques in Masonry. On May 10th, the graduation ceremony for 116 students was
held.
Since 2010, the Company has been developing the Professional Qualification Program. Courses in
welding, carpentry and bricklaying have already been held. In all, more than 300 residents of
Itaguaí and Mangaratiba received training during the first and second phases of the program.
On May 16th, a meeting of the Sudeste Superport Committee for the Environment and Social
Responsibility was held. The Committee was created in September 2010, with the goal of
monitoring the implementation of MMX’s environmental management and social responsibility
system.
On May 23, 2012, the planting of more than 200 thousand Atlantic Forest tree seedlings was
completed on the banks of the Guandu River, in the municipality of Seropédica and Queimados
(RJ). The initiative is part of the Cultivar Project, a partnership between Firjan with Inea, which
benefited from a R$ 4 million contribution from MMX. The seedlings were planted by students
from public schools in the region and MMX employees. In all, the Cultivar Project is reforesting
an area of more than 100 hectares. MMX will monitor the development of these trees for 42
months.
On May 28th and 29th the State Commission for Environmental Control (“CECA”) held public
hearings in Itaguaí and Mangaratiba on the expansion of the operational capacity of the Sudeste
Superport. About 800 people attended the events and were able to learn more about the project,
its Environmental Impact Report (“RIMA”) and the socio-environmental and economic
compensation schemes. The sessions are part of the first stage of the environmental licensing
process for duplicating the handling capacity of the port terminal from 50 to 100 million tpy.
On June 12th, MMX initiated the second stage of the Environmental Education Program (“PEA”) in
Itaguaí and Mangaratiba. More than 100 public school students attended lectures on sanitation
and quality of life, environmental health and selective garbage collection. The PEA intends to hold
40 more lectures for teachers and students, in addition to the courses to train environmental
agents and education/communication workshops.
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16. Earnings Release 2Q12
On June 14th, the Public Notification was made for the 2nd phase of the Social Investment Plan
for Fisheries (“PSIP”). The program encourages fishing activity in the region of Sepetiba Bay. The
plan will include projects that strengthen the associations, the production chains for fishing
(production and distribution) and the qualification of the management of the fishermen's
associations, bringing real benefits in social organization and the fisheries production chain.
Just as in the first phase of the plan, the associations receive technical guidance for writing and
formatting projects. All investments will be accompanied by representatives of MMX and the
fishermens’ associations.
Museum of Mines and Metal
MMX is one of the supporters of the activities of the Museum of Mines and Metal, a cultural
center which has been fully restored and equipped by the EBX Group. The Museum incorporates
the Cultural Circuit of Liberty Square in Belo Horizonte, Minas Gerais, and is dedicated to telling
the story of mining in the State, through a physical collection and virtual and interactive
attractions. Moreover, it has an extensive educational program for the public and for State
schools, including the municipalities in the area of influence of MMX's projects. In this quarter the
Museum received more than 18 thousand visitors and 6,500 visits under its educational program.
RPPN Eliezer Batista
In the region of the Southern Mato-grosso wetland (“pantanal”) MMX maintains an area of 20
thousand hectares, dedicated to the preservation of local biodiversity. The management is
carried out in partnership with the Homem Pantanero Institute (IHP), a regional NGO, which puts
into practice the goals of conservation and research of the area. In this quarter, research to
consolidate the biological data of the reserve was completed with a view to cataloging the wealth
of nature that exists in the area.
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17. Earnings Release 2Q12
FINANCIAL PERFORMANCE
INCOME STATEMENT 2Q12 1Q12
Gross operating revenues 216,134 169,698
MI 109,908 116,454
ME 106,226 53,244
Taxes (12,500) (10,498)
Net Revenue 203,634 159,200
Cost of goods sold (90,564) (74,369)
Gross Profit 113,070 84,831
Selling (69,739) (47,704)
Administrative (37,529) (38,284)
Others operating expenses 167 (2,259)
Equity pickup 4,187 422
Net Financial Result (411,565) 56,941
Operating Income (401,409) 53,947
Income and Social Contribution Taxes 23,206 (9,107)
Discontinued operations (13,365) 2,389
Net income (loss) for the period (391,568) 47,229
Non-Controlling Shareholderso Interest 730 (2,055)
Net income (loss) for the period attributed to
(392,298) 49,284
the controlling shareholders
EBITDA 2Q12 1Q12
Net income (loss) for the period (391,568) 47,229
Discontinued Operations 13,365 (2,389)
Income and Social Contribution Taxes (23,206) 9,107
Exchange Variation 231,364 (54,874)
Financial Expenses 186,110 18,345
Financial Income (5,910) (20,412)
Equity pickup (4,187) (422)
EBIT 5,968 (3,415)
Depreciation, Amortization and Depletion 7,937 7,620
EBITDA 13,905 4,204
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18. Earnings Release 2Q12
Assets 06/30/2012 03/31/2012
Total Assets 6,600,203 6,510,286
Current Assets 712,410 949,250
Cash and cash equivalents 354,772 586,181
Credits 225,606 245,251
Inventories 132,032 152,969
Noncurrent Assets 5,887,793 5,561,036
Long Term Assets 296,635 346,045
Permanent Assets 5,591,158 5,214,991
Liabilities 06/30/2012 03/31/2012
Total Liabilities 6,600,203 6,510,286
- -
Current Liabilities 964,421 863,933
Loans and Financing 639,630 543,406
Suppliers 112,935 98,841
Taxes, Duties and Contributions 67,597 69,151
Related Parties Debts 4,229 7,317
Debenture 56,426 51,950
Others 83,604 -
- -
Noncurrent Liabilities 3,057,228 2,697,258
Loans and Financing 1,416,499 1,269,252
Debentures - -
Others 1,640,729 1,428,006
- -
Shareholder Equity 2,578,554 2,949,095
Capital 3,987,844 3,988,744
Capital Reserves (30,823) 54,604
Equity Valuation Adjustments 30,822 (497)
Retained Earnings/Accumulated
(1,425,774) (1,033,476)
Losses
Non-controlling Shareholders 16,485 (60,280)
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19. Earnings Release 2Q12
Conference Call Information:
Tuesday, August 14 at 13:00 (Brasília time); 12:00 (NY time)
Telephone Brazil: 55 11 4688-6341
Telephone USA: 1 888-700-0802
Telephone other countries: 1 786-924-6977
Code: MMX
Webcast in Portuguese: www.ccall.com.br/mmx/2t12.htm
Webcast in English: www.ccall.com.br/mmx/2q12.htm
The audio will be available in the website: www.mmx.com.br/ri
The conference call will be conducted in English with simulatenous translation to Portuguese.
Contacts MMX
Investors:
Guilherme Escalhão
Adriana Marques
Daniella Maia
Beatriz Yoshinaga
+55 21 2555 6197/4240
ri@mmx.com.br
Press:
Rachel Porfirio
Juliana Campos
+55 31 3516 7512/7542
About MMX:
MMX, Eike Batista’s EBX Group mining company, was created in 2005. With two systems in
operation – the Sudeste System, in Minas Gerais, and the Corumbá System, in Mato Grosso do
Sul – MMX has installed capacity to produce 10.8 million tons of iron ore per year. MMX is also
present in Rio de Janeiro, with the Sudeste Superport, which is being built in Sepetiba Bay. MMX
also owns iron ore mining rights in Chile and in Bom Sucesso (MG).The goal of the company is to
increase its installed capacity to more than 40 million tons of iron ore per year. Currently, MMX’s
main investment is the expansion of the Serra Azul Unit (MG). In an area adjacent to its
operations in Serra Azul, MMX will operate the Pau de Vinho Mine which should produce 8 million
tons of iron ore per year. For further information, visit the site at: http://www.mmx.com.br/ri.
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