OREANDA-NEWS. February 22, 2011. Paranapanema S.A. ("Company"), a company listed on BM&FBovespa Corporate Governance Level 1 (Ticker: PMAM3), the largest producer of refined electrolytic copper in Brazil, and leader in revenues in the Brazilian market for semi-manufactured copper products and alloys , hereby informs its shareholders and the market, as provided for in Paragraph 4 of Article 157 of Law No. 6404/76 and CVM Instruction No. 358/02, that, during the meeting held today, the Board of Directors unanimously approved the Company's Investment Plan for the period from 2011 to 2013 in the amount of RUSD 630,000,000.00.

Taking into account the estimated growth in Brazilian GDP, as well as the expected investments in infrastructure, civil construction, electric energy and clean energy - most of them driven by the sports events to take place in the country from 2014 to 2016 and strengthened by the governmental programs PAC1 and PAC2 announced for the next 5 years - the management of Paranapanema S.A. will take the Company's strategic planning forward. The Company's decision to expand its installed capacity and to upgrade its technology for both copper refining and semi­manufactured copper products and alloys is based on such macroeconomic assumptions for the 2011 to 2016 period, as well as on the history of and prospects for the prices of its products. In the event that such assumptions are prove to be true, the Company's profitability and cash generation are expected to record significant growth.

Taken together, these factors will leverage the demand for products of the copper chain, as well as the Company's business. Based on this rationale and on market research, the following projects included in the Investment Plan to be implemented as from 2011 were approved:

I. Project for refined copper expansion and technological improvement

(i)         To be implemented at our Dias D'Avila unit, in the State of Bahia, the project was initiated recently and will be concluded in the first half of 2012. It includes technological upgrade and expansion in refined copper production at the unit, which produces cathodes, rods and stretched copper wires under the Caralba brand. Total installed capacity for copper refining will increase from 230,000 to 280,000 tons per year, with investments of RUSD 290,000,000.00 between 2011 and 2012.

(ii)        In addition to the above project, the Board of Directors also approved the immediate installation, at this same Caralba unit, in the State of Bahia, of a plant for the refining of precious metals, with investments of RUSD 28,000,000.00. This project, aimed at refining anodic sludge, will enable recovery and sale of precious metals, such as gold, silver, platinum, selenium, and other high value-added metals. The production is expected to start in the second half of 2012.

II.         Semi-manufactured copper expansion projects

(i)         Expansion and technological improvement of Paranapanema's cold rolling processes, to be installed in one of the current production units under the Eluma brand, whose capacity for production of laminated products will increase from 28,000 to 55,000 tons/year, with investments of RUSD 142,000,000.00, to be implemented from 2011 to 2013;

(ii)        In order to meet the growth mentioned above, the Company's installed capacity for hot rolling production will also be increased from 60,000 to 200,000 tons/year, and together with technological improvements totaling investments of RUSD 170,000,000.00 from 2011 to 2013;

(iii)        In addition to the rolling projects mentioned in items (i) and (ii) above, the Company will also apply cutting-edge technology to implement the project approved by the Board of Directors in February 2010 aiming at expanding the tubes plant, whose installed capacity will double from 18,000 to 36,000 tons/year. The project will be concluded in March 2012, with investments of approximately RUSD 72,000,000.00.

III.         Sources of funds for the projects approved

Investments in such projects will total RUSD 630,000,000.00, in addition to the copper tubes project previously approved in the amount of RUSD 72,000,000.00.

The Company will use its own funds from operations, as well as funds from third parties through special financing facilities for investment to be extended by financial institutions and investment banks.

After the successful restructuring process undertaken by management from 2008 to 2010, and considering the current approval of the project to expand its capacity, Paranapanema S.A. sees the beginning of a new virtuous cycle with positive results for the Company.