presentation ri osources conference (merrill lynch)
TRANSCRIPT
PROGRESS REPORT PRESENTATION
RIOsources Conference
Merrill Lynch
February 1-2, 2007
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 RelationsRodolfo Landim – Investor Relations Officer
Elizabeth Cruz – ManagerGina Pinto - Analyst
Tel. 55 21 2555-5634 / 5558/ [email protected]
http://www.mmx.com.br/ri
DISCLAIMER
PROGRESS REPORT PROJECTS PERMITTING SINCE IPO
Construction License granted on August 16, 2006
Leveling and barrage works started on September 26, 2006Acquisition of 100% of the equipment for the operation
Construction License granted on August 17, 2006
Earth movements and civil works started on August 26, 2006First blast furnace operating in May 2007
Environmental License granted on August 22, 2006
Authorization for construction and operation granted by ANTAQ (National Agency of Waterway Transportation) on January 10, 2007
1
PROGRESS REPORT PROJECTS PERMITTING SINCE IPO
Operating License granted on August 16, 2006
Renovation of equipment and railway
Environmental License granted on December 27, 2006
Construction License to be granted in March 2007
Construction License granted on January 14, 2007
Comprises sintering plant, steel and rolling mill
2
PROGRESS REPORT STRATEGIC PARTNERS
Cleveland-Cliffs agrees to purchase Centennial Asset’s 30% stake in MMX Amapá for US$ 133 million
Final closing expected for March 2007
3
PROGRESS REPORT LONG-TERM SUPPLY AGREEMENTS
Signed:
6.5 Mtpy of iron ore fines from AmapáOption for additional supply of 6.5 Mtpy of pellet feed from Minas-Rio to be exercised in March 2007
Gulf Industrial Investment Co.20-year supply contract signed on November 9, 2006
100% export production (excludes South America) - 308.000 tons / year of pig iron from Corumba
Supply agreement signed in January 2007
Advanced negotiations under existing MOU for Minas-Rio
Final Negotiation:
4
PROGRESS REPORT LONG-TERM SUPPLY AGREEMENTS
Trial Cargoes:
LUCCHINI (Italy) – Received 40,000 t lump ore from Corumbá which is being tested as 23%input in the blast furnace burden and has been presenting very good performance
VOESTALPINE (Austria) – 40,000 t lump ore from Corumbá will be sent early February fortesting in the blast furnace
ACEPAR (Paraguay) – Received 13,000 t lump ore from Corumbá which is being tested as 100% input in the charcoal blast furnace burden and has been presenting very good performance
5
PROGRESS REPORT CAPEX
69%
25%
6%
CorumbáAmapáMinas-Rio
CAPEX AND PRODUCTIONCAPEX – Distribution by System
TOTAL: US$3,602 million
6
25252566
308
1.158
1.538
440
38
9
41
38
19
31
38
-
200
400
600
800
1.000
1.200
1.400
1.600
1.800
2006 2007 2008 2009 2010 2011 2012 2013-
5
10
15
20
25
30
35
40
CAPEX Iron Ore Production
(in US$ million) (in million t)
PROGRESS REPORT FINANCING
Mine -> US$ 32 million disbursed @ Libor + 2.7% --> increasing debt maturity
Metallics -> US$ 50 million bridge loan disbursed – to be converted in long-term debt totaling US$ 150 million
Mine & logistic -> US$ 200 million to be signed in mid February
US$ 50 million bridge loan disbursed
US$ 310 M -> 8-year financing for the acquisition of Mining Rights
US$ 675 direct credit from Unibanco and Itaú BBA
US$ 82 million US$ 200 million US$ 1 Billion
7
150
170
190
210
230
250
270
25-J
ul-0
6
08-A
ug-0
6
22-A
ug-0
6
05-S
ep-0
6
19-S
ep-0
6
03-O
ct-0
6
17-O
ct-0
6
31-O
ct-0
6
14-N
ov-0
6
28-N
ov-0
6
12-D
ec-0
6
26-D
ec-0
6
09-J
an-0
7
23-J
an-0
7
IBOV MMXM3
Price (US$)MMXM3: US$246IBOV: 43,573ptsMarket Cap: US$1,870 million
43%
11%
26%20%Brazil
United States
Canada
EU
Capital Stock – 7,607,756 common shares
PROGRESS REPORT MMXM3 IN NOVO MERCADO - BOVESPA
ControllingShareholder andManagement
FreeFloat
8
Geographic Distribution
Volume TradedPerformance MMXM3 X IBOV
31,6
38,1
3,9 4,6
24,1
12,6
56,2
5,31,7 0,2 0,2 0,6
3,01,2
-
10,0
20,0
30,0
40,0
50,0
60,0
Jul-06 Aug-06 Sep-06 Oct-06 Nov-06 Dec-06 Jan-07
Total Daily Average
(in US$ million)
Date Ratio
January 2007 2 → 1 share
July 2007 2 → 1 share
January 2008 10 → 1 share
PROGRESS REPORT
9
MMX IN THE CAPITAL MARKET
Listing in Canada – Toronto Stock Exchange:
Auditing of MMX Systems´ resources and mineral reserves under way – CanadianStandard NI-43.101 – disclosure is expected for 1Q07;
USGAAP Financial Statements to be reported in 1Q07;
Level I Global Depositary Receipts (GDR) Program approved by CVM in December 2006 -GDR per Common Share ratio of 20:1 - estimated GDR CAD$14.5 (Jan 29, 2007 prices).
Stock Split Program
Iron Ore Fines: 6.5 MtpyPig Iron: 2.0 MtpySemi-finished: 0.5 Mtpy
Iron Ore: 4.9 MtpyPig Iron: 0.4 MtpySemi-finished: 0.5 Mtpy
Engineer Eliezer Batista Natural Reserve
MMX Amapá System
MMX Minas-Rio System
MMX Corumbá System
Iron Ore: 26.6 MtpyPellets: 7.0 Mtpy
PROGRESS REPORT MMX INTEGRATED SYSTEMS
MMX Integrated Systems develop and operate iron ore mines, pig iron and semi-finished plants and a pelletizing plant.
10
MMX CORUMBÁ SYSTEM
11
PROGRESS REPORT
Mine currently operating under Federal Environmental License
Tests performed by Lucchini (Steel Mill, potentialofftaker) – lump ore quality improves blast furnaceoperational performance.
Mine 63 – Industrial Plant
12
MMX CORUMBÁ SYSTEM
Pig Iron Plant Construction
PROGRESS REPORT
Acquisition of two farms in 2006 as the first steptowards self-sufficiency in charcoal production
• Correntes Farm: 8,975 acres for eucalyptus plantation (CVRD)
• Jatiuca Farm: 500 acres for the construction of nursery
PROGRESS REPORT MMX CORUMBÁ SYSTEM
Hired the most renowned eucalyptus plantingcompany in Brazil – Plantar- to plant 48,250 acres in 5 years – in own and third-party lands
13
Certified Charcoal Supply Program
14
MMX AMAPÁ SYSTEM
Primary Crushing
PROGRESS REPORT
15
MMX AMAPÁ SYSTEM
Primary Screening
PROGRESS REPORT
PROGRESS REPORT HIGH QUALITY IRON ORE
Additional iron ore resources from Serra do Sapo
Pelletizing tests performed by SGA/Germanystated:
• high quality direct reduction (DR) grade pellets can be produced with Minas-Rio fines
• high potential for the Minas-Rio pellets willmatch the requirements for a DR-feedstock in all aspects as indicated by thecomparison of the chemical, physical andmetallurgical properties of the Minas-Rio-DR-pellets to the quality of other DR-pelletgrades of the world and to the target data;
• Chemical analysis proves that the Fecontent is high at 68.84%, guanguecontents are low at about 0.9% (SiO2+Al203) 16
PROGRESS REPORT HIGH QUALITY IRON ORE
Tests performed by Outokumpu – Lurgi/Germany
• preliminary test results indicates excellent chemical, physical and metallurgical properties as well as excellent productivity in the pilot plant – final report to be concluded by mid February
17
18
Pipeline with approximately 525 km, passing by 32 municipalities;
Environmental impact study in approval process by IBAMA, Preliminary Licenseexpected for 1Q07;
Detailed topography concluded, right of way to be concluded in mid 2007.
MMX MINAS-RIO SYSTEMPROGRESS REPORT
PROGRESS REPORTSUPER AÇU PORT
A CONCEPTUAL PLAN
Filteringarea
Iron ore storage area
Offshoresupportinfrastructure
PelletizingPlants
Petroleumprocessingplants
PowerPlants
SteelPlants
Tankingfacilities
SIZE OF RETROAREA – 15,000 ACRES
voltar
FILTERING AREA
voltar
IRON ORE STORAGE AREA
voltar
OFF-SHORE SUPPORT INFRASTRUCTURE
voltar
PELLETIZING PLANTS
voltar
PETROLEUM PROCESSING PLANTS
voltar
POWER PLANTS Coal and LNG 3,500 megawatts
voltar
STEEL PLANTS
voltar
TANKING FACILITIES
Possibilities to interconnect MMX Systems to the existing railway systems
PROGRESS REPORT RAILWAY INTERCONNECTION
Option 2
45km
To beconstructed
by MMX
Option 1
ENVIRONMENTAL RESPONSABILITY
29
PROGRESS REPORT
Eliezer Batista Natural Reserve – MMX´s commitment with environmentalpreservation, 50 thousand acres in the most preserved area in South Pantanal.
APPENDIX
RESOURCES CORUMBÁPROJECT
AREAAreaResource
Classification Tonnage (MT)
Indicated 65
Mine 63 – lump (85%) and sinter feed (15%) production initiated in 2005 Drilling performed: 3,611 meters as of November 2006Of the 21 mining rights, 3 were researched as of September 2006 (2 measured)
Mine 63
TOTAL 1,154
PROGRESS REPORT IRON ORE RESOURCES AND RESERVES
30
GEOLOGICAL RESOURCES – as of March 31, 2006
IndicatedInferred
220155
Taboca andVila do Meio
Indicated Inferred
408159Itapanhoacanga
Inferred 147João Monlevade
MMX Corumbá System
MMX Amapá System
Drilling performed: 28,254 meters as of November 2006Of the 18 mining rights, 3 were researched and measured
MMX Minas-Rio System
Pellet feed production to begin in 2009Drilling performed: 19,736 meters as of November 2006Of the 27 mining rights, 12 were researched as of November
2006 (5 measured)
810
4.300
6.500 6.500
55309
1.300
2.000
490
2007 2008 2009 2010
Iron OrePig IronSemi Finished
PROGRESS REPORT PRODUCTION CAPACITY BY SYSTEM
31
CORUMBÁ
AMAPÁ
AMAPÁ
1.000
3.260
4.870 4.870
400196
375 452
56
2006 2007 2008 2009
MINAS-RIO
8.000
20.000
26.600 26.600
3.000
7.000 7.000
2009 2010 2011 2012
Iron Ore
Pellets
(1000 t)
PROGRESS REPORT CAPEX DISBURSEMENT TIMETABLE
As of September 2006, expenditure of US$ 64.5 million.Disbursement timetable under review, payments carried over to 2007 (approximately US$129 million).
32
CAPEX – By System (US$ million)
254
828995
283
2,377
54330
543297
1,225
2006 2007 2008 2009 - 2013 Total (*)Mine & logistics Metallics
(*) includes 2005 figures
CAPEX – By Activity (US$ million)2006 2007 2008 2009 - 2013 Total (*)
Corumbá 88 93 23 - 220 Mine 42 13 - - 72 Metallics 46 80 23 - 148
Amapá 87 294 382 153 915 Mine 60 54 38 - 152 Logistics 21 59 40 - 120 Metallics 5 181 304 153 643
Minas-Rio 134 772 1,133 427 2,466 Mine 100 282 348 241 971 Logistics 31 420 569 42 1,062 Pellet Plant 3 70 216 144 433
Total 308 1,158 1,538 580 3,602
US$ millionUS$ million
Status (1)Status
US$50 mmBridge Loan
--
DisbursedFirm Commitment
US$ 50 mmBridge Loan
PROGRESS REPORT FINANCING
2,37872273
2,033
1,224148643433
3,602TOTAL
MetallicsCorumbáAmapáMinas-Rio (Pellet Plant)
MineCorumbáAmapáMinas-Rio
CAPEXProject Financing (1)
1,74426
2001,518
2,729
985150510325
ABC/Unibanco/Itaú BBA/BNDES
Itaú BBA, ABCUnibanco/Syndicate/BNDES
Lenders
Credit SuisseItaú BBA/BNDES Itaú BBA/BNDES
Term
3 years7/10 years12 years
7 years10 years10 years
Financing in progress to carry out execution of Business Plan
33
(1) Expected Weighted Average Cost of Borrowing: Libor + 1,5%, assuming 50% funding by BNDES.
Potential lending institutions: BNDES, JBIC, Itaú BBA, Citibank, Votorantim, Santander, BNP Paribas, Bradesco, Banco do Brasil, Caixa, ABC