OREANDA-NEWS. June 27, 2011. Between January and March, 2011, the mining company from Grupo EBX had a net profit of BRL  63.8 million and EBITDA of BRL  39.7 million.

MMX has recorded a net profit for the third consecutive quarter. Between March and January of the current year (1Q11), the mining company from Grupo EBX, owned by businessman Eike Batista, recorded a net profit of BRL  63.8 million and EBITDA (Earnings Before Taxes, Depreciation and Amortization) of BRL  39.7 million. Such numbers were made known to the market today (05/10). The company's net profit grew 184% in comparison to that of 1Q10, when it suffered a loss of BRL  76.1 million. The consolidated EBITDA of BRL  39.7 million was 269% higher than those of the same period.

According to the assessment of MMX president, Roger Downey, MMX results confirm the company's growth trajectory. Downey highlights, however, that heavy rains in the Serra Azul and Corumba Units had an impact on this period's performance. "We have made great progress regarding capacity usage throughout the last year and, despite the impact from heavy rains in the first quarter, MMX kept delivering results consistently," he stated.

Downey also highlighted the company's actions. "We are currently speeding up survey campaigns at the Pau de Vinho Mine and Chile, licensing at Bom Sucesso and the expansion of the Serra Azul Unit. Furthermore, by the end of this month, we will complete the acquisition of Sudeste Superport, which will be a changing event for the company. Thus, we are taking important steps to consolidate ourselves as an integrated and competitive mining company in the seaborne market," he concluded.

During 1Q11, MMX had record-breaking production and sales levels for the period. The company produced 2 million tons of iron ore, a volume 11% higher than that recorded during last year's first quarter. Sales during 1Q11 amounted to 1.6 million tons, a volume 7% higher than that recorded during 1Q10. Company sales were split into 79% for the Brazilian market and 21% for foreign markets.

The period had a positive financial result of BRL  47.5 million, with a BRL  43.8 million revenue, BRL  19.1 million expenses and BRL  22.8 million positive exchange variation. Investments made by SK Networks in October, 2010, and the period's cash generation contributed to increase the quarter's financial revenue.

Investments

As it was previously announced, MMX will invest BRL  3.5 billion to expand the Serra Azul Unit, a project that contemplates building a new iron ore processing plant, with an annual capacity of 24 million tons, a railroad terminal and ten kilometers of conveyor belt, which will be responsible for the transport between the mine and the railroad terminal. Such investment represents BRL  146 per produced ton. The estimated investment in the Bom Sucesso project – mine and plant for 10 million tons – is of BRL  1.5 billion, representing BRL  150 per ton. Projects in Chile to develop a system with a capacity for 10 million tons of iron ore per year, and at the Pau de Vinho Mine, of 8 million tons of iron ore per year, are still in the conceptual engineering and geological survey stage.

In 2011, MMX will be expanding the survey program at Serra Azul, Pau de Vinho Mine, Bom Sucesso and Chile. The Pau de Vinho Mine project, located in the surrounding area of the Serra Azul Unit, shall bring significant investment and operational synergies. Currently, the company is evaluating the Bom Sucesso and Pau de Vinho projects in order to define which one will be prioritized.

Licensing

MMX predicts that the license to expand the Serra Azul Unit will be still obtained in this year's first half. In regard to the environmental licensing for the Bom Sucesso project, the company has been carrying out sectorial meetings with the local community and, in June this year, a Public Hearing will be carried out, in line with the social dialog approach the company adopted at Serra Azul.

Capital market

MMX shares (MMXM3) are listed in Bovespa, in the highest Corporate Governance segment, called Novo Mercado. During 1Q11, MMX shares had a 7.7% devaluation, as the Ibovespa had a 2% devaluation, closing the quarter priced at BRL  10.26. On March 31, 2011, MMX market value was BRL  6 billion.

During the first quarter of 2011, 271,126,200 shares were negotiated in 277,791 transactions. MMX shares were present in 100% of sessions during 1Q11, with a daily average of 4,335 operations.

Sudeste System

Between January and March this year, the Sudeste System produced 1.543 million tons of iron ore, which represented a 20% growth in production compared to the same period last year.

Sales reached 1.4 million tons, of which 88% went to the domestic market and 12% to the foreign market. Sales increased 19% in comparison with 1Q10.

The Sudeste System EBITDA was BRL  56.7 million in 1Q11, a positive variation of 801% relative to 1Q10, mostly justified by an increase in the price of iron ore and also by the company's cost reduction policy.

Corumba System

Production at the Corumba System was 487 thousand tons in this year's first quarter. Such performance was 9% lower than that in the same period of 2010.

Sales amounted to 210 thousand tons, a volume 37% lower than that recorded in 1Q10. Adverse climatic condition, affecting operations and navigation in the Paraguai River, had an impact on sales at the Corumba System. During this quarter of year, the foreign market has been responsible for 80% of sales, while the domestic market has been responsible for 20%.

MMX Corumba had a quarterly negative EBITDA of BRL  2.9 million. Such performance was 87% higher than the one recorded in 1Q10.

Sudeste Superport

On April 20, 2010, the announcement of the Takeover Bid (TOB) of PortX shares was filed, starting a deadline of 30 days for shareholders to opt for participating in the TOB.

Sudeste Superport, currently active and held by the company PortX, is being acquired by MMX for USD  2.2 billion. This asset will contribute to the expansion strategy of the MMX Sudeste System, which comprises the Serra Azul and Bom Sucesso Units and will have produced 34 million tons of iron ore per year by 2016. Sudeste Superport will also leverage MMX plans to consolidate iron ore assets. Furthermore, the company will be able to reach the seaborne market and export all its production as soon as Sudeste Superport becomes operational.

Next TOB stages:

• May 20, until noon: End of TOB acceptance deadline

• May 20, 3 p.m.: TOB auction at BM&FBovespa and MMX Board of Directors approves increase in MMX capital and cancels any excess in issued securities

• May 23, 2011: First day of negotiation of new MMX issued shares and securities

• May 25, 2011: TOB auction liquidation at BM&FBovespa

• The first line, with capacity for 12.5 thousand tons per year, will be ready by 3Q12.

IFRS

After the adoption of the International Financial Reporting Standards (IFRS) for the consolidated result of 2010, MMX also publishes the results of previous quarters, in order to meet IFRS standards.