OREANDA-NEWS. August 17, 2011. Between April and June this year (2Q11), MMX, Eike Batista’s EBX Group mining company, recorded a profit of BRL  90.9 million. The result is 43% higher than in the first quarter of the year (1Q11), when MMX made a profit of BRL  63.8 million. In 2Q11, Ebitda (earnings before interest, taxes, depreciation and amortization) was BRL  73.1 million. The consolidated Ebitda is 84% greater than in the first quarter of the year and 44.117% higher than in the second quarter of 2010. The information was released to the market yesterday (9/8).

According to MMX CEO Roger Downey, the second quarter result reflects the consistency of the company's performance. "Our cash generation capability, as demonstrated over the last year, strengthens our capacity to develop our projects. This was the fifth consecutive quarter in which we have a positive Ebitda ", he said. Downey also stressed that MMX has an BRL  1.1 billion war-chest, which puts the company in a privileged position.

For Downey, the company's priorities today are the "development of projects, the SudesteSuperport, Serra Azul, Bom Sucesso and projects in Chile. During the quarter, we completed the acquisition of the SudesteSuperport and we are already working on the environmental licensing to expand the capacity of the SudesteSuperport to 100 million tons of iron ore per year ". In the second quarter of the year, the company completed the acquisition of the SudesteSuperport and had record iron ore production, which reached 2.2 million tons, a 6% increase in volume over 1Q11.

Compared with the second quarter of last year, production increased by 17%. The company's sales amounted to 2.1 million tons, 29% more than in the first quarter of the year and 13% above 2Q10. 63% of MMX’s sales in the quarter went to the internal market and 37% went to overseas clients. MMX's exports in the period were also a historical record for the company.

Investments

In July, MMX signed a letter of intent with the Government of Minas Gerais, reinforcing its investment of BRL  4 billion in the State.  Resources will be brought in for Serra Azul, whose current installed capacity of 8.7 million tons per year will be expanded to 24 million tons per year.  Also in July, MMX retained Banco Itau BBA and West LB bank as financial advisors for the structuring of financing of USD  1.8 billion, which will be raised from development banks and other national and international financial agents for development, export credit agencies and national and international banks. This amount represents approximately 75% of the total investment for the financing of the expansion of Serra Azul.

At Bom Sucesso, the estimated investment in mine and plant for the 10 million tons per year project is BRL  1.5 billion. Moving along with the environmental licensing process for the project, MMX held a Public Hearing on May 8 with the participation of more than a thousand residents of Bom Sucesso, which is located in the Center-West of Minas Gerais.  The projects in Chile, aiming at developing a system with a capacity of 10 million tons of iron ore per year, and the Pau de Vinho Mine, with 8 million tons of iron ore per year, are at the conceptual engineering and geological research stage.

Capital Markets

Between April and June, MMX shares showed a devaluation of 18.6%, as compared with a devaluation of 9% of the Bovespa index. MMX's shares closed the quarter at BRL  8.35, against BRL  10.26 on March 31, 2011. The market value of the company, as of June 30, 2011, was BRL  5.2 billion.  In May, MMX issued variable compensation bonds based on royalties as form of payment in the acquisition of PortX. Since the start of trading on May 24, the bond has appreciated 10%.

Sustainability

MMX initiated the deployment of its sustainability plan in line with the guidelines of the EBX Group. In April, the company set up an internal committee, which has defined six strategic themes to be developed within an established timeframe: training and retention ofmanpower; local development; Occupational Safety,Healthand Environmental risks; engagement with stakeholders; atmospheric emissions and biodiversity. In June this year, MMX filed with Bovespa its annual diagnostic report on greenhouse gas emissions, covering the year 2010, including theSudeste and Corumba systems and its administrative units. The company is a signatory of the carbon efficient index (ICO2) created by Bovespa and the BNDES.

Sudeste System

During the quarter, the Sudeste System produced 1.6 million tons, similar toprevious quarters. Sales from the SudesteSystem totaled 1.6 million tons of iron ore, 13% more than was sold in 1Q11 and 12% more than during the same period last year. Of the total sold, 81% went to the internal market and 19% went abroad.

Sudeste Ebitda

In the second quarter MMX SudesteEbitda was BRL  73.2 million, 29% higher than in 1Q11 and 28% above 2Q10. The iron ore price hike and the volume soldon the seaborne market had a positive impacton the result.

Sustainability

With a view to improvingits environmental management systems, as from April MMX began training its employees in the Environmental Licensing process. In June, solid waste management was chosen as the subject of MMX's activities in Environment Week, being covered in lectures and in training of internal teams. The process of selective collection was started at the administrative unit in Belo Horizonte.

In May, the Positive Health Campaign held a safety blitz at the Serra Azul operation. Introductory training in Health, Safety and Environment totals more than 12 thousand man-hours. As part of its relationship program with the communities surrounding Serra Azul, MMX continued the Interaction program, a socio-educational program conducted with schools in the municipalities of Igarape and Sao Joaquim de Bicas – and also began the Roots program, which aims to contribute to the preservation of the cultural heritage of these municipalities. In June, a public meeting was held in Bom Sucesso, located in the Center-West of Minas Gerais, with the presence of more than a thousand people from various sectors of local society.

Corumba System

At Corumba, production in the second quarter amounted to 593 thousand tons, 22% above the first quarter of the year and 111% higher than in the second quarter last year. In 2Q11, Corumba had a record operating performance. In 2Q11, 484 thousand tons were sold, representing an increase of 131% and 14%,respectively, compared with 1Q11 and 2Q10. In this quarter, MMX reached a historical record atCorumba. The external market accounted for 96% of sales, while the internal market contributed 4%.

Corumba Ebitda

MMX Corumba Mineracao presented a positive quarterly Ebitdaof BRL  24.1 million. On a quarterly basis, there was an increase of 945% and 151%, respectively, in relation to 1Q11 and 2Q10. The result was positively impacted by the normalization of sales, with no impact from non-recurring costs, as in prior quarters.

Sustainability

In June, MMX strengthened its interaction with various segments of local society, participating in the event commemorating World Environment Day in Corumba. In the same month Mining Accident Prevention Week (Sipatmin) was held, with the theme "Quality of Life is your Safest Way."

Sudeste Superport

The Sudeste Superport will contribute to the expansion and integration strategy of the MMX Sudeste System, which comprises Serra Azul and BomSucesso, to produce 34 million tons of iron ore per year by 2016. Continuing the development of the 50 million ton project, in August MMX received the first consignment of dumper wagons, purchased from ThyssenKrup.

The Sudeste Superport will also leverage MMX’s plans for consolidation of iron ore assets in the region of Serra Azul and other areas of the Iron Quadrangle, in line with the agreements made with Usiminas and Minerinvest.  In addition, once the Sudeste Superport is in operation, the company will be able to enter the seaborne market and export its entire production, with larger margins due to higher prices and lower logistics costs.

Ebitda

At the Sudeste Superport, the quarterly Ebitda was a negative BRL  864 thousand. As the asset was acquired during the second quarter of 2011, there is no comparison with previous quarters. The Sudeste Superport is under construction and therefore does not generate revenue.

Sustainability

In June, MMX began the Environmental Education Program in conjunction with Senai/Firjan in the community of Ilha da Madeira and surrounding areas of the municipalities of Itaguai and Mangaratiba, aiming to contribute to a better understanding of the project, the area, and how it will be managed. Courses for Environmental Agents for 50 community leaders and Workshops on Environmental Reporting, Photography and Video Editing for 150 young people from the region were held.  In partnership with the fishing colonies, local fishermens’ associations and municipal authoritiesin the environs of Sepetiba Bay, MMX has concluded, after a year of research, the first phase of the studies of fishing statistics in the region, producing data and making the survey available to fishing organizations.