OREANDA-NEWS. May 26, 2011. The company presents first positive annual Ebitda of BRL  120.6 million, and historic record iron ore production and sales

MMX Mineracao e Metalicos closed 2010 with net earnings of BRL  46.6 million. The company recorded the first Ebitda positive, annual result, and iron ore production and sales records: 7.7 and 7.2 million tons, respectively. The numbers were disclosed yesterday (23/3) after the market closing. This was the first time that the company used the International Financial Reporting Standards (IFRS). Until the third quarter of last year, MMX used the BRGAAP.  MMX is one of the five publicly traded companies of the EBX Group, of entrepreneur Eike Batista.

In the assessment of MMX’s president, Mr. Roger Downey, company business has never been this good. “2010 was the year of change. We recorded significant improvement in our operational and commercial performances, which led to the recapitalization of the company through partnerships with Wisco and SK Networks, allowing the proposal to buy the Southeast Superport. We closed the year with a solid balance sheet, good cash generation, showing that the company is ready to continue growing.  Today, we are a company with integrated logistics and rich portfolio of projects. Our resource base, increased through our partnership with Usiminas, sustains a pipeline that allows us to plan beyond our goal of 46 million tons/year”.

In the year, MMX presented net earnings of BRL  46.6 million against loss of BRL  185.1 million in 2009. The company’s annual Ebitda was of BRL  120.6 million, a performance of 126% above that of 2009. MMX’s cash closed positively with BRL  1.9 billion, and financial debt total of BRL  792 million, including exchange debentures with Banco Votorantim.

Production

MMX production in 2010 registered a record 7.7 million tons, 48% higher than in 2009. In spite of the year’s result, it is important to point out that climatic factors recorded over the last months of the year affected the company’s production. The excess rainfall in the Serra Azul region and the scheduled stop in the operations of the Corumba Unit, caused by the seasonal effect of River Paraguay, transport waterway for the unit’s ore production, prevented MMX’s operational performance from being higher.

It is important to point out that the company recorded production close to its capacity, but production was affected by the bad weather in the regions of its units.

MMX’s operational performance in the year is the result of investments to upgrade the processing plant of the Southeast and Corumba Systems. The company also reduced the bottlenecks identified in the production process.

Sales

Record sales were also registered in 2010:  7.2 million tons of iron ore. Sales went up 53% in comparison to 2009. The domestic and export market sales registered 59% and 41% respectively. The major clients abroad were: Sojitz, Wisco, and Ternium.

Commercial Expenses

MMX’s commercial expenses in the year dropped by 13% in comparison to 2009. In 2010, they totaled BRL  260.3 million against BRL  299.1 million in the previous year. The data for 2010 was affected by the non-recurrent payment of BRL  65 million to Kristen for the termination of the time charter shipping agreement, as previously disclosed.

Financial Income

MMX presented positive result of BRL  1.5 million in 2010. This amount is the consequence of revenues of BRL  89.2 million, expenses of BRL  127.8 million, and BRL  40.1 million of creditor exchange gain variation.

Investments

As already disclosed, MMX will invest BRL  3.5 billion, ex. tax, in the expansion of the Serra Azul Unit, which represents investment of USD  79 per ton. The estimated investment for the development of the Bom Sucesso project (mine and plant) for the production of 10 million tons/year is of BRL  1.5 billion ex. tax, equivalent to USD  81 per ton.

The projects in Chile, of 10 million tons of iron ore per year, and of the development of the Pau de Vinho Mine, of 8 million tons of iron ore per year, are in the engineering design and geological research stage.

Last year, MMX invested BRL  166 million in more borings, purchase of equipment, purchase of land and licensing in Serra Azul and Bom Sucesso. The expansion projects of the Serra Azul Unit and implementation of the Bom Sucesso Unit are in their environmental licensing stage. In both cases, the company had already registered the Environmental Impact Studies (EIA-Rima), last year. The next step is to hold public audiences, which are tools that promote transparency and the exchange of information between the company and the local community.

A public audience was held last Tuesday, March 22, for the licensing of the expansion of the Serra Azul Unit in Sao Joaquim de Bicas (MG), town to receive a significant portion of the investment. Over one thousand people were present. MMX also held a series of meetings between different sectors, in an innovative action, presenting the project and explaining doubts, thus promoting the information to the local community on the expansion project of the Serra Azul Unit. MMX hopes to obtain the pre-license for the expansion of the Serra Azul Unit no later than the first half of 2011.

The company has been holding meetings with the community in Bom Sucesso, and will be holding the Public Audience in the town (located in the Midwest of Minas Gerais) in the second quarter.

Capital Market

MMX stock rose in price by 12.08% in comparison to 2010/2009. On December 30 of the year before, the stock had been worth BRL  11.23, and a year before that, BRL  10.02. In the same comparison, the Ibovespa went up by 1.04%

Sustainability

In line with the Sustainability Policy of the EBX Group, its directives and norms for sustainable development, MMX implements socioenvironmental projects of direct responsibility of the company, linked to the licensing of its ventures. It also voluntarily implements socioenvironmental projects.

MMX continued in 2010 with the Interaction Program held for the past two years with the Secretariats of Education of the cities of Igarape, Sao Joaquim de Bicas and Brumadinho, in Minas Gerais. In 2010, there were activities to strengthen the relations with the local community, raise their knowledge of MMX’s activities and promote educational projects. In the month of November of last year, the company sponsored an Exhibition of Productions by the schools participating in the Interaction, in which the works of students during the year were presented to the community. Newspapers, plays, parodies, mockups, posters, fashion parade, and even a television news program won the attention in the stands and on the stage erected by the schools.

In response to a request from the city hall of Igarape late last year. MMX donated 10 thousand fruit and flower tree seedlings to the city. The trees were chosen according to the environmental characteristics of the region and the fact of their being planted in urban areas. Igarape is a town with 30 thousand inhabitants, and after the trees were planted, there will be more than one tree for each three inhabitants, and index that contributes to the town’s life quality.

The participative licensing, a pioneering project of MMX, is developed in Bom Sucesso, in partnership with the local community. In 2010, MMX held several meetings with the community to discuss issues related to the implementation project of a company unit in the town.

In Belo Horizonte, MMX contributed to the maintenance of the Mines and Metal Museum. The MMM, which integrates the Cultural Circuit of Praca da Liberdade, was inaugurated on March 22, 2010, and it is the result of BRL  25 million in investments made by the EBX Group in partnership with the Minas Gerais Government.

Southeast System

Between January and December of last year, the Southeast System presented positive Ebitda of BRL  161.8 million, growth of 439% in comparison to 2009, when there was negative Ebitda of BRL  47.7 million.

The Southeast System production reached a record volume of 5.9 million tons in 2010, growth of 43% in comparison to 2009, attesting to the commitment of MMX with the production ramp-up, for higher use of the installed capacity of 8.7 million tons.

The sales of the Southeast System were of 5.6 million tons, representing 78% of the total volume sold by the company and growth of 45% in comparison to sales performance in 2009. In the accrued of the year, export sales represented 20%, and domestic sales 80%.

Corumba System

In the year’s accrued, the Corumba System presented positive Ebitda of BRL  4.3 million (+103%). A year later, the company recorded negative Ebitda of BRL  170 million in the Corumba System.

Corumba Unit’s production of iron ore in 2010 was of 1.8 million tons, representing growth of 69% in relation to 2009. Sales amounted to 1.5 million tons, 92% more than what was sold in 2009. Per markets, 61% went to international clients while 39% went to domestic clients.