OREANDA-NEWS. In the first quarter of 2013, MMX, the EBX Group mining company, recorded an increase in exports of approximately 120%, from 442,000 tons in the fourth quarter of last year to 970,000 tons in 1Q13. This number was made possible by the growth in the number of MMX shipments through the CPBS Terminal (Companhia Portuaria Baia de Sepetiba). The numbers were reported to the market today (29/4) and refer to the release of the company's results for the first quarter of 2013. During the period, the company's production totaled 1.5 million tons, with sales of 1.4 million tons.

The company’s Net Operating Revenue amounted to RSUSD 237 million and Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) to RSUSD 3.1 million, both higher than those reported in the last quarter of 2012. This improved performance is mainly attributable to the increase in the company’s exports, allied to a rise in the average price of iron ore in the international market.

For Carlos Gonzalez, MMX’s CEO, the implementation of the expansion of the Serra Azul Unit will proceed at a slower pace pending the obtaining of all necessary permits for the project. He also highlighted important achievements in the quarter, such as the company finalizing its capital increase in the amount of approximately RSUSD 1.4 billion.

Gonzalez also commented on the earthmoving work in the area where the new iron ore beneficiation plant for the Serra Azul Unit will be installed and also the arrival of the two shiploaders at the Sudeste Superport.

In the first quarter of the year, MMX’s iron ore production was 1.5 million tons. This volume represents a decrease of 7% compared to 4Q12 and 1% in relation to 1Q12.

During the period, the company's sales totaled 1.4 million tons of iron ore, a decrease of 28% and 2% in relation to 4Q12 and 1Q12, respectively. However, exports figured significantly as a share of total sales, increasing from 23% in 4Q12 to 71% this quarter.

MMX’s Consolidated General and Administrative Expenses in the quarter totaled RSUSD 34.4 million, an amount 38% and 10% lower, respectively, than 4Q12 and 1Q12. The numbers were impacted by the non-recurrence of the effects of MMX’s withdrawal from the project in Chile.

EBITDA

In 1Q13, MMX recorded an Adjusted EBITDA of RSUSD 3.1 million. The effects related to the results of the Sudeste and Corumba Systems are described below.

Financial Results

In 1Q13, the company reported a net financial result of negative RSUSD 44.5 million, of which: (i) RSUSD 15.8 million of interest income, (ii) RSUSD 98.7 million of interest expenses, favored this quarter by a smaller negative impact of long-term liabilities represented by the present value of the expected stream of royalty payments to holders of variable remuneration bonds (MMXM11) and (iii) RSUSD 38.4 million foreign in exchange gains, due to the appreciation of the Brazilian Real with Dollar denominated liabilities.

Net Results

In 1Q13, net loss was RSUSD 55.2 million compared to RSUSD 348.7 million reported in 4Q12 and a net income of RSUSD 49.3 million in 1Q12. The 1Q12 report did not include the negative impact of the adjustment to present value of royalties.

SUDESTE SYSTEM

Exports increased with shipments made from the CPBS Terminal (Companhia Portuaria Baia de Sepetiba) in Itaguai, made possible by MMX’s participation in the auction which ensured it a slot to export 750,000 tons of iron ore in the first half of this year. MMX has also contracted a slot for one million tons of iron ore per year in the CSN terminal, located in the same region.

The share of exports in total sales in this system increased from 18% in 4Q12 to 69% in 1Q13.

Sales to the domestic market, mainly represented by producers of pig iron, steel mills and large mining companies who buy iron ore to blend their products for export, accounted for 31% of sales in the Sudeste System. The lower sales volume, compared to previous quarters, was due to the redirecting of part of the production to the export market, as well as a lower demand for iron ore by local customers who were having operational problems.

The Sudeste System recorded an Adjusted EBITDA of RSUSD 36.7 million, about 3% lower than 4Q12, but 26% higher than recorded in 1Q12. Despite showing a lower volume of sales compared to 4Q12, the increase in the average selling price charged by the company resulted in an increase in its Net Operating Revenue. The average price obtained was higher due to two factors: (i) changes in the sales mix, since sales to the overseas market were higher than sales to the domestic market (69% vs. 31%) and (ii) the increase in the average price of iron ore in this period. However, the EBITDA for the Sudeste System was negatively impacted by increased Sales Costs, as explained above.

CORUMBA

Although still suffering from the effect of reduced demand for iron ore in the region, which explains the lower volumes compared to 1Q12, the Corumba System recorded production of 242 thousand tons in 1Q13, a recovery of 163% compared to 4Q12, the quarter in which the Company decided to reduce production because of the low levels of navigability of the Paraguay River.

Sales in the Corumba System totaled 149 thousand tons of iron ore in the period. The main factor impacting sales performance in 1Q13 was the slowdown in the local market for iron ore. Exports, meanwhile, accounted for 91% of total sales of this System.

For the Corumba System, the 1Q13 EBITDA was a negative RSUSD 9.6 million. The performance improvement compared to 4Q12 was mainly due to (i) the increase in Net Operating Income, with higher export volumes and better average selling price for iron ore, (ii) the reduction of selling expenses and (iii) the fact that costs due to the stoppage of operations ended, which occurs seasonally in 4Q12 due to climatic factors that prevent the movement of production of iron ore on the Paraguay River.

SUDESTE PORT

Continuing the implementation of the 50 million ton project, the civil engineering work at the Sudeste Superport advanced on four fronts: road-rail access, storage yards, tunnel and offshore area.

The Sudeste Superport is in the final stages of construction on the Ilha da Madeira in Itaguai (RJ), with start-up of operations scheduled for the last quarter of 2013.