microsoft word mmx earnings release 2 q12 versão final - ingles

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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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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

2Q12 1Q12 2Q11 Var. % 2Q12/1Q12

Var. % 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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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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Operational Performance and Financial Statements

Iron Ore

Production

Production (´000 tons)

2Q12 1Q12 2Q11 Var. %

2Q12/1Q12 Var. %

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 (´000 tons)

2Q12 1Q12 2Q11 Var. % 2Q12/1Q12

Var. % 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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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”)

R$ Thousands 2Q12 1Q12 2Q11 Var. %

2Q12/1Q12 Var. %

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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Sales Expenses

R$ Thousands 2Q12 1Q12 2Q11 Var. %

2Q12/1Q12 Var. %

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.

R$ Thousands 2Q12 1Q12 2Q11 Var. % 2Q12/1Q12

Var. % 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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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.

R$ Thousands 2Q12 1Q12 2Q11 Var. % 2Q12/1Q12

Var. % 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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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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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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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

1) Road&Railway Access

2) Stockyard 36

Construction

Site and Warehouse

Maintenance

workshop

Benefic.

Substation

Sump and Thickners

Primary

Crushing

Grind

Pile

Construction

Site

Processing

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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.

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.

1) Road&Railway Access

2) Stockyard 06 2) Stockyard 32

Assembly of car dumpers

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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.

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.

Pier

766 m

4) Offshore structure

Bridge

450 m

Bridge

250 m

11 m

20.5 m

3) Tunnel Entrance

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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

Side view of of the shiploaders View of 2 shiploaders (in yellow)

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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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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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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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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 the controlling shareholders

(392,298) 49,284

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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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 Losses

(1,425,774) (1,033,476)

Non-controlling Shareholders 16,485 (60,280)

19


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

[email protected]

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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Business

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