SOURCE: MMX

August 15, 2008 09:26 ET

MMX Announces Its 2Q08 Results

RIO DE JANEIRO, BRAZIL--(Marketwire - August 15, 2008) - MMX Mineração e Metálicos S.A. (BOVESPA: MMXM3) (TSX: XMM) ("MMX" or "Company"), announces its results for the second quarter of 2008 (2Q08) and for the first semester of 2008 (1S08). The financial statements presented at the end of this document were prepared in accordance with the usual accounting practices adopted in Brazil, based on Brazilian Corporate Law and CVM regulations ("BR GAAP").

SUMMARY OF THE PERIOD

-- MMX's iron ore production totaled 1.430 thousand tons in the 2Q08, with sales of 1.163 thousand tons, of which 57% to the domestic market and 43% to exports markets.

-- Net revenue reached R$90.1 million in the quarter reflecting the increase in sales volume from MMX Sudeste and Corumbá, higher exports and higher average prices.

-- In April 2008, the Extraordinary Shareholders' Meeting approved the split of MMX's common shares, in the proportion of 20 shares for each existing share.

-- At the Extraordinary Shareholders' Meeting held on June 19, 2008, the partial split-up of the Company was approved, with the allocation of portions of its net worth to IronX and to LLX, under the terms of the sale transaction of certain assets of MMX to Anglo American Participações em Mineração Ltda ("Anglo American").

-- On June 20, the 30-day withdrawal period for shareholders began, due to the partial split-up of the Company. The deadline for the withdrawal rights ended on July 21, with no shareholder exercising its withdrawal rights.

Analysis of the Quarter’s Consolidated Result

Production

MMX's iron ore production totaled 1,430 thousand tons in the 2Q08, of which 1,009 thousand tons from MMX Sudeste and 421 thousand tons from MMX Corumbá. In addition, MMX Corumbá produced 59.2 thousand tons of pig iron in the period. In the first semester of 2008 the iron ore production reached 2,656 thousand tons and the pig iron production totaled 112 thousand tons.

MMX Corumbá has carried on its iron ore production plan, aimed at producing 1.9 million tons in 2008. Up to the 2Q08, the iron ore production totaled 817 thousand tons. The pig iron plant reached its nominal production capacity of 400 thousand tons per year in January 2008, after the operation startup of its second blast furnace. However, in light of the lack of certified charcoal supply in the region, MMX has decided to revise the 2008 production to 230 thousand tons, as released in a Public Announcement on July 24. MMX has decided to adopt even more restrictive criteria than those imposed by law until higher standards are enforced by all MMX suppliers.

Up to the 2Q08, the MMX Sudeste iron ore production totaled 1,839 thousand tons. This level of production could have been even higher if it wasn't for the delay in the closing of a collective agreement with the employees to implement 4-shifts in the operations and in the hiring of workforce, which led MMX to revise its 2008 production to 4.3 million tons. The fourth shift was implemented in mid-May and MMX Sudeste is carrying on its iron ore production plan with estimated recovery of its effective production capacity expected for 2009.

Sales

In the 2Q08, iron ore Sales volume reached 1,163 thousand tons, of which 57% directed to the domestic market and 43% to the export market. Of total sales, MMX Sudeste contributed with 803 thousand tons and MMX Corumbá with 360 thousand tons. MMX Sudeste's sales to the export market were negatively affected by shipment problems at the Itaguaí port, where only 2 vessels were shipped, out of the 10 scheduled. This situation has been partially solved with the confirmation of 8 vessels to be shipped in the coming months. In the first semester of 2008 iron ore sales reached 2,111 thousand tons, of which 66% directed to the domestic market and 34% to the export market, and pig iron sales totaled 87 thousand tons.

Net Revenue

Net revenue in the 2Q08 reached R$90.1 million and was positively influenced by higher sales volume, higher exports volume, as well as higher average market prices, as a result of the annual iron ore price adjustment. Net revenue in the 1S08 was R$250 million.

Operating Revenue and Expenses

In the 1Q08, administrative expenses totaled R$12.8 million and sales expenses amounted to R$38.3 million in the 2Q08, and in the 1S08 these expenses amounted to R$65.7 million and R$69 million, respectively.

The negative other operating expenses of R$8.8 million in the 1Q08 reflect the goodwill amortization from the Minerminas and AVG acquisitions of R$14.9 million, which was partially offset by the reversion in the provision for inventory write-down to market value, in the amount of R$6.1 million. In the 1S08 the negative other operating expenses of R$24 million is due mainly to the goodwill amortization from the Minerminas and AVG acquisitions.

EBITDA

The 2Q08 EBITDA was R$56 million, positively affected by the decrease in administrative expenses. In the 1S08 the accumulated EBITDA was negative R$21.6 million. This indicator expresses the initial phase of MMX's operations, with production volume at a development phase, aimed at reaching full capacity. The Company expects systematical improvements as operations develop leading to sales increase.

Financial Result and debt

MMX recorded a net financial income of R$76 million in the 1Q08 and R$83 in the 1S08 as a result of: (a) R$22.1 million interest income in the quarter, obtained through the cash investment in marketable securities, and R$61 million interest income in the 1S08; (b) a R$55 million exchange rate variation gain in the quarter -- resulting from the effect of the 9% appreciation of the Brazilian Real in relation to the US Dollar on the foreign denominated debt, and R$68.3 million in the 1S08; and (c) R$1.1 million financial expenses in the quarter, mainly from interest payment on debt, with R$45.9 million financial expenses in the 1S08.

MMX recorded net cash of (R$421) million in the 2Q08:

--  Cash and equivalents balance totaled 528.6 million on June 30, 2008.
    
--  Gross debt of R$950 million.
    

Non Operating Result

In the 2Q08, the Company recorded a negative non operating result of R$252.3 million due to the exclusion of the capital gain obtained as a result of the sale of a 15% stake in the former subsidiary LLX to Ontario Teachers Pension Plan (OTPP). As a result of the partial split-up of the Company's shareholders equity, this amount is no longer a MMX result. In the 1S08 this effect is nullified and the non operating result was of R$2.4 million.

Net Loss

The Company recorded a net loss of R$181.6 million in the 2Q08, mainly due to the negative non operating result which was partially offset by the positive operating and financial results. The Company recorded a net profit of R$2.6 million in the 1S08.

Capex

MMX continued its development plan in course, aimed at achieving the scheduled execution timeline. Total capex in fixed and deferred assets required in the Corumbá and Sudeste operations was of R$43 million in the 1Q08, and the total amount invested to date in MMX's operations reached R$456 million. In the first semester of 2008 investments amounted to R$86 million in MMX's operations, of which R$66 million in the Corumbá and Sudeste operations.

MMX's New Business Plan, disclosed on July 24, 2008, estimates total capex of US$1.5 billion up to 2015, of which US$62 million for MMX Corumbá Mining, US$333 million for MMX Corumbá Metallics, mainly in the billets plant, and US$1.1 billion in the expansion of MMX Sudeste.

Comments regarding the consolidated performance include information regarding future investments and mineral production volume outlook, which are not part of the quarterly revision scope, and therefore, were not revised by KPMG Auditores Independentes.

Parent Company Financial Statements

Listed below are the highlights for the 2Q08 and for the 1S08:

--  Net financial revenue of R$17.9 million in the 2Q08 and R$33.6 million
    in the 1S08;
    
--  General and administrative expenses of R$20.4 million in the 1Q08 and
    R$34.1 million in the 1S08;
    
--  Negative R$252.3 million non operating result in 1Q08 due to the
    exclusion of the capital gain obtained as a result of the sale of a 15%
    stake in the former subsidiary LLX to Ontario Teachers Pension Plan (OTPP).
    As a result of the partial split-up of the Company, this amount is no
    longer a MMX result. In the first semester of 2008 this effect is
    nullified;
    
--  Shareholders' Equity of R$778 million at the quarter end.
    

MMX in Novo Mercado

MMX is listed on Bovespa's Novo Mercado, under the ticker MMXM3. The Company is included in the Special Corporate Governance Stock Index (IGC), the differentiated tag along index ("ITAG") and the Brasil Index ("IBrX-100"). Shares are priced at unitary price and traded in units.

The capital stock is composed exclusively of common shares and minority shareholders are entitled to the same treatment given to the controlling shareholder in the eventuality of a control block trade (100% tag along rights), as stated in the Company's Bylaws.

On April 7, 2008, following the Company's share split program, disclosed on the IPO memorandum, the third split of the Company's common shares was approved, in the proportion of 20 shares for each existing share. Therefore, the Company's capital stock is now represented by 304,610 thousand shares.

By the end of the 2Q08 MMX's free float reached 32.7%, represented by approximately 2,500 shareholders participating in the Bovespa, of which 2,149 are individual investors.

MMX's share price reached R$49.50 on June 30, 2008, corresponding to a 4.76% appreciation in the second quarter of 2008, a 5.3% appreciation in 2008 and 93% appreciation in 12 months. The market value reached R$15.1 billion.

In the second quarter of 2008, 45,751 thousand shares were traded in 38,747 transactions. MMX's shares were present in 100% of the stock exchange's trading days, with a daily average of 605 transactions, 392% higher than in the 1Q08, indicating an increase in the Company's share liquidity.

MMX's GDRs on the TSX

MMX is listed at the Toronto Stock Exchange (TSX) with its Level 1 Global Depositary Receipts ("GDR"), since June 2007, under the ticker XMM. With this initiative, MMX became the first Brazilian company to be listed in Canada.

After the share split approved in April 2008, each MMX share, which previously corresponded to 20 GDRs, now corresponds to 1 (one) GDR. On June 30, 2008, the GDRs represented 10.7% of the Company's free float, corresponding to 10,704 thousand common shares.

Subsequent Events

Acquisition of the Bom Sucesso Mining Right

On July 3, 2008, the Company, through an indirect subsidiary of MMX Sudeste Ltda., concluded the acquisition of the Bom Sucesso mining right for US$193 million, to be paid in four installments, with maturity in January, 2010. The Bom Sucesso site is a greenfield project to be developed by MMX.

With this acquisition, the MMX Sudeste System is now composed of the Serra Azul Unit -- consisting of the already operationally integrated AVG and Minerminas companies -- and the Bom Sucesso Unit. The Company expects the MMX Sudeste System to reach an annual iron ore production capacity of 33.7 million tons as of 2013, as disclosed in the New Business Plan released in a Public Announcement on July 24, 2008.

Result from End of the Withdrawal Rights Period

On July 22, 2008, MMX released a Notice to Shareholders announcing that no shareholder exercised its withdrawal rights as a result of the partial split-up (the "Partial Split-up"). The deadline for the above mentioned withdrawal rights ended on July 21st 2008.

The shares of IronX, LLX and MMX began trading separately in the BOVESPA Novo Mercado segment on July 28, 2008. The initial share price for each company was calculated by multiplying the portion of the net worth of MMX allocated to each company, according to the Appraisal Report prepared by KPMG Auditores Independentes, by the July 25 closing price of R$43.50. The trading started with an auction having the following prices as reference:

MMX:   42.78% x R$43.50 = R$18.61
LLX:    9.15% x R$43.50 = R$3.98
IronX: 48.07% x R$43.50 = R$20.91

Federal Police Investigation Process

On July 11, 2008, the Federal Police initiated an investigative process carried out through a search warrant issued by the 1st Federal Court of Macapá in MMX Amapá and MMS Logística. On July 23, 2008, MMX Amapá clarified, through a notice to the market, that:

The Amapá Railroad ("EFA" or the "Railway") was built in 1957 by Icomi (part of the Caemi Group) and returned to the State of Amapá in 2004, after an intense legal dispute that took place after the State of Amapá refused to assume the operations of the railroad that was running with recurring monthly losses and with poor maintenance conditions.

In this context, MMX Amapá accepted the burden to operate the Railway on an emergency basis under a 6-month contract, upon the State of Amapá committing to carry out a bidding process for the privatization of the Railway, as determined by a court decision, and to include in the rules of the tender the obligation of the Railway concessionaire to compensate MMX Amapá for the investments made under the terms of the emergency contract. MMX Amapá undertook to invest at least R$3 million in 6 months without any contractual assurances or additional collateral from the State of Amapá, and assumed the obligation to continue operating the Railway at a continuing deficit.

Thereafter, the bidding rules were published by the State of Amapá. In accordance with the rules the winning bidder would simply be the company who made the highest offer for the purchase of the EFA concession. Seven companies declared their interest to participate in the bidding process and conducted a survey of the Railway's facilities. However, on the bid date, January 31, 2006, only one company, of the MMX group posted the required bid bond at an amount of approximately US$1.6 million.

The bidding process for the EFA concession was twice challenged before courts, and all challenges were turned down confirming the legality of the bidding process.

Contrary to what was published by the media -- that the bid had been "influenced" by MMX Amapá -- the concession would be awarded to whomever bid the highest price for the concession, and all requirements and guaranties demanded from the bidders were proportional to the responsibilities from the future operator of the Railway, and there clearly has not been any intention to exclude suitable competitors from the bidding process.

The company of the MMX group that won the bid paid an acquisition price of R$814 thousand for the EFA concession. In addition, MMX Logística committed, as set forth by the bid rules, to make a minimum investment of R$40.7 million during the first 2 years of the concession. The group's investments in the Railways to date have exceeded R$70 million, almost double the minimum required by State. The EFA operates, until today, with successive monthly deficits accumulating more than R$60 million of losses to date.

Besides the investigation on the concession bid, there are investigations concerning alleged offenses related to the evasion of federal taxes by MPBA (through the sale of gold) and an "exchange of favors" that MPBA would have engaged with certain companies indirectly related to the state government. MPBA does not belong to the same group as MMX since January 2004. At that time MPBA did not carry out the production of gold in the State.

After revising all documents related to the investigation, Anglo American's consultants, that company and Eike Batista, MMX's and IronX's controlling shareholder, concluded the operation which led to Anglo American acquiring control of IronX, the company that controls the Minas-Rio and Amapá Systems iron ore projects.

In regards to the ongoing investigation in Brazil, Mr. Batista has offered a personal indemnity, with no additional obligation on MMX, to cover any potential losses that may be incurred by Anglo American Participações as a result of the investigation. Anglo American Participações has accepted the terms of the indemnity.

Anglo American Acquires the Control of IronX

On August 5, 2008, MMX, IronX Mineração S.A. ("IronX") and Anglo American Participações em Mineração Ltda. ("Anglo American"), announced to the market that Anglo American has acquired all shares of IronX directly owned by Mr. Eike Batista and certain other selling shareholders related to Mr. Eike Batista (the "Acquisition").

As a result of the Acquisition, Anglo American purchased, in cash, from Mr. Eike Batista and the other selling shareholders 193,462,160 common shares representing 63.3% of IronX's capital stock for an amount of approximately R$5.4 billion, representing a price of R$28.147 per common share of IronX.

Once the Acquisition has resulted in the transfer of control of IronX, Anglo American will launch a tender offer for the common shares held by the remaining IronX shareholders, in accordance with the terms and conditions of article 254-A of the Brazilian Corporate Law, CVM Instruction No. 361 and item 8.1 of the Rules of the Novo Mercado issued by Bovespa (the "Tag-Along Offer"), at the same IronX price-per-share paid to Mr. Eike Batista and the other selling shareholders. The total purchase, including the Acquisition, for 100% of the outstanding shares of IronX, if the Tag-Along Offer is successful, will amount to approximately R$8.6 billion.

Furthermore, according to a formal communication filed by Anglo American at the headquarters of the Company on March 31st, 2008, Anglo American intends to implement, concurrently to the Tag-Along Offer, a public offer to delist IronX and to withdraw IronX from the Novo Mercado segment of the Bovespa (the "Delisting Offer"). If the valuation made according to the laws and regulations applicable to the Delisting Offer reaches an amount per-share that is higher than the per-share price paid to Mr. Eike Batista and the other selling shareholders, Anglo American will decide whether or not to proceed with the Delisting Offer. If Anglo American decides not to proceed with the Delisting Offer it will nevertheless maintain and implement the Tag-Along Offer.

To this extent, the current management of IronX has called an extraordinary shareholders' meeting to be held on August 18th, 2008, which will decide upon, amongst other things, the (i) delisting of IronX from the Novo Mercado segment, and the (ii) engagement of the financial institution or specialized firm responsible for the preparation of the valuation report of the economic value of the shares of the Company.

Comments regarding parent company performance include information regarding future investments and mineral production volume outlook, which are not part of the quarterly revision scope, and therefore, were not revised by KPMG Auditores Independentes.


MMX Mineração e Metálicos S.A.
(Public Company)
Balance Sheet
as of June 30, 2008 and December 31, 2007
(In R$ '000)

                                Parent Company          Consolidated
                           ----------------------- -----------------------
Assets
                               6/30/08    12/31/07     6/30/08    12/31/07
  Current
    Cash and equivalents       393,235     368,931     528,579   1,424,938
    Accounts Receivable              -           -      61,104      40,510
    Inventories                      -           -     140,826     153,968
    Sundry advances              3,756       5,715      18,028      41,147
    Recoverable taxes           31,102      23,118      43,606      36,479
    Restricted Deposits          4,848       6,375       4,848       6,375
    Contractual retention       11,438      42,992      11,438      42,992
    Prepaid expenses                58          58         742       1,924
    Accounts Receivable -
     transfer of fixed
     assets                          -      13,359           -           -
    Other receivables              140           6         577       1,368
                           ----------- ----------- ----------- -----------

                               444,577     460,554     809,748   1,749,701
                           ----------- ----------- ----------- -----------

  Non Current
   Long Term
    Sundry advances                  -           -      11,230      41,621
    Recoverable taxes              223         124      23,891      47,877
    Prepaid expenses               179         203         233         257
    Judicial deposits                8           8         306         611
    Subsidiaries and
     associated companies      168,950     316,417       3,455       4,449
    Loans to third party             -           -       2,887       2,774
    Inventories                      -           -       2,872           -
                           ----------- ----------- ----------- -----------

                               169,360     316,752      44,874      97,589
                           ----------- ----------- ----------- -----------
  Permanent Assets
    Investments                242,141   1,077,377       1,214       3,396
    Intangible                     604         810     619,014     744,746
      Provision for
       investment losses         (9780)      (9780)      (9780)      (9780)
      Goodwill from the
       acquisition of
       subsidiaries              9,784       9,990     571,826     457,499
      Mining rights and
       concessions                 600         600      52,013     285,156
      Obligations related to
       withdrawal of assets          -           -       4,955      10,101
      Right of Way                   -           -           -       1,770
    Fixed                       39,155      16,698     370,618   1,115,104
    Deferred                         -           -      49,166     278,953
                           ----------- ----------- ----------- -----------

                               281,900   1,094,885   1,040,012   2,142,199
                           ----------- ----------- ----------- -----------


                               895,837   1,872,191   1,894,634   3,989,489
                           =========== =========== =========== ===========



MMX Mineração e Metálicos S.A.
(Public Company)
Balance Sheet
as of June 30, 2008 and December 31, 2007
(In R$ '000)

                                Parent Company           Consolidated
                            ----------------------- -----------------------
Liabilities
                                6/30/08    12/31/07     6/30/08    12/31/07
  Current
    Suppliers                     8,987      15,351      40,593     129,116
    Loans and Financing             754         548     333,263     701,900
    Taxes and contributions
     payable                      4,106      13,594      27,580      61,420
    Salaries and payroll            274       4,528       2,621      17,564
    Provision for losses
     from derivaties                  -           -           -      20,495
    Investment acquisition
     liabilities                      -           -     144,549     149,192
    Fixed assets
     acquisition
     liabilities                      -           -           -      12,004
    Subsidiaries and
     associated companies         1,211         682         544       2,851
    Income tax and social
     contribution payable             -           -       2,948      84,859
    Provision for uncovered
     liabilities                 14,824      12,959           -           -
    Third party payables         78,906                  78,906
    Other liabilities             1,560       2,948       7,917      41,360
                            ----------- ----------- ----------- -----------

                                110,622      50,610     638,921   1,220,761
                            ----------- ----------- ----------- -----------


  Non current
   Long Term
    Loans and Financing           6,823       7,909     108,069     388,239
    Taxes and contributions
     payable                          -           -         511         972
    Investment acquisition
     liabilities                      -           -     364,109     437,038
    Obligation related to
     withdrawal of assets
     and reforestation                -           -       5,758      12,431
    Provision for
     contingencies                    -           -       4,042         242

    Fixed assets
     acquisition
     liabilities                                  -                       0
    Results for future
     years                            -           -           -      68,774
    Other liabilities                 -           -         804       3,776
                            ----------- ----------- ----------- -----------

                                  6,823       7,909     483,293     911,472
                            ----------- ----------- ----------- -----------

   Minority Interest                  -           -      (5,972)     43,584
                            ----------- ----------- ----------- -----------

  Shareholders' Equity
    Capital stock               775,799   1,142,804     775,799   1,142,804
    Profit Reserve                    -     670,868           -     670,868
    Accumulated losses            2,593           -       2,593           -
                            ----------- ----------- ----------- -----------

                                778,392   1,813,672     778,392   1,813,672
                            ----------- ----------- ----------- -----------

                                895,837   1,872,191   1,894,634   3,989,489
                            =========== =========== =========== ===========



MMX Mineração e Metálicos S.A.
(Public Company)
Income of Statement
as of June 30, 2008 and 2007
(In R$ '000)

                                Parent Company           Consolidated
                           ----------------------- -----------------------
                              06/30/08    06/30/07    06/30/08    06/30/07

Gross operating revenue              -           -     269,862      50,551

    Deductions                       -           -     (19,704)       (601)

                           ----------- ----------- ----------- -----------

Net operating revenue                -           -     250,158      49,950

Cost of goods sold and
 services rendered                   -           -    (167,401)    (38,486)
                           ----------- ----------- ----------- -----------

Gross income (lost)                  -           -      82,757      11,464
                           ----------- ----------- ----------- -----------

Other operating revenue
 (expenses)
  Administrative and
   general                     (34,128)    (20,318)    (65,738)    (29,590)
  Selling                            -           -     (69,031)    (35,666)
  Financial revenues            35,011      58,792      60,989      61,000
  Financial expenses              (552)     (1,147)    (45,898)    (16,712)
  Exchange rate variation,
   net                            (889)        225      68,298      13,171
  Equity result                 14,566      (9,575)          -           -
  Provision for uncovered
   liabilities                 (11,415)           -           -           -
  Provision for the booking
   of inventories at market
   value                             -           -       3,647           -
  Goodwill amortization                                (27,827)
  Other operating revenue
   (expenses)                        -    (12,174)         181       2,823
                           ----------- ----------- ----------- -----------
Operating income (loss)          2,593      15,803       7,378       6,490

  Non operating result               -           -       2,357           -
                           ----------- ----------- ----------- -----------

Income (loss) before income
 tax and social
 contribution                    2,593      15,803       9,735       6,490
                           ----------- ----------- ----------- -----------

  Income tax and social
   contribution                      -     (7,732)     (10,621)     (7,732)

Income (loss) before
 minority interest               2,593       8,071        (886)     (1,242)
                           ----------- ----------- ----------- -----------

  Minority interest                  -           -       3,479       9,313
                           ----------- ----------- ----------- -----------

Net income (loss) for the
 period                          2,593       8,071       2,593       8,071
                           ----------- ----------- ----------- -----------

Net income (loss) per '000
 shares - R$                         -           1
                           =========== ===========

Number of shares at the end
 of the period (per '000
 shares)                                     7,608
                           =========== ===========




MMX Mineração e Metálicos S.A.
(Public Company)
Statements of Cash Flow
As of June 30, 2008 and 2007
(In R$ '000)

                                Parent Company           Consolidated
                           ----------------------- -----------------------
                              06/30/08    06/30/07    06/30/08    06/30/07

Cash flow from operating
 activities
   Net income (loss) for
    the period                   2,593       8,071       2,593       8,071
     Items not affecting
      working capital
       Depreciation and
        amortization               837          82      44,472       4,906
       Equity result            14,566       9,575           -           -
       Provision for
        uncovered
        liabilities              1,865      12,174           -           -
       Monetary variation
        and interest            11,047      (9,560)    (36,449)    (30,083)
       Minority interest             -           -     131,389      49,780
       Gain from change in
        percentage of
        interest held in
        subsidiraries                -           -           -           -
       Residual cost on
        disposal of fixed
        assets                      15           -      45,762       3,804
     Changes in assets and
      liabilities
       Increase in
        contractual
        retentions              31,554     104,539      31,554     104,539
       Increase (decrease)
        in restricted
        deposits                 1,528        (146)      1,527        (146)
       Increase (decrease)
        in inventories               -           -      (1,959)    (84,539)
       Increase (decrease)
        in accounts
        receivable                   -      (8,984)    (36,190)    (71,256)
       Subsidiaries and
        associated companies         -           -         561           -
       Increase in other
        credits                  7,125           -    (110,851)          -
       Increase (decrease)
        in suppliers            (6,365)       (674)    (28,206)     30,300
       Increase in payable
        income tax and
        social contributions         -           -      42,852           -
       Increase in payable
        taxes and
        contributions          (9,488)           -       8,098           -
       Investment
        acquisition
        liabilities                  -           -      39,169           -
       Increase (decrease)
        in other liabilities    73,263      10,812       (312)     540,006
       Increase in
        investment
        acqusition
        liabilities                  -           -      39,116           -
       Increase in future
        results                      -           -     288,502           -

                           ----------- ----------- ----------- -----------
   Net cash generated by
    (used in) operating
    activities                 128,540     125,889     461,628      69,382

Cash flow from investing
 activities
   Credit from related parties
      Acquiried loans         (173,422)   (204,517)          -           -
      Settled loans            311,507     170,817           -           -
   Provision for losses with
    derivatives                      -           -     (20,495)          -
   Acquisition for permanent
    investments in other
    companies                 (333,887)   (147,222)   (204,152)     (9,780)
   Decrease in the amount for
    investment acquisition           -           -           -    (76,967)
   Obligation related to
    withdrawal of assets             -           -     (1,360)           -
   Acquisition of permanent
    assets                     (23,309)       (557)   (607,169)   (361,985)
   Write-off rights                  -           -           -         525
   Acquisition of mining
    rights                           -           -      17,383     (11,027)
   Additions to deferrred
    assets                           -           -   (264,464)      51,764
                           ----------- ----------- ----------- -----------

   Net cash generated by
    (used in) investing
    activities                (219,111)   (181,479) (1,080,257)   (407,470)
                           ----------- ----------- ----------- -----------

Cash flow from financing
 activities
   Capital decrease, net      (367,005)          -           -           -
   Decrease in profit
    reserves                  (670,868)          -           -           -
   Loans and financing
      Acquired loans                 -           -     704,077     464,711
      Settled loans               (334)    (10,038)   (416,342)   (158,033)
Debits with related parties
      Acquired loans            57,230           -           -           -
      Settled loans            (58,911)          -           -           -
                           ----------- ----------- ----------- -----------


   Net cash generated by
    (used in) financing
    activities              (1,039,888)    (10,038)    287,735     306,678

   Net effect from split-up  1,154,763           -    (565,465)          -
                           ----------- ----------- ----------- -----------

Statement of increase
 (decrease) in the cash and
 equivalents

   At the beggining of the
    period                     368,931     727,843   1,424,938     779,212
   At the end of the period    393,235     662,215     528,579     747,802
                           ----------- ----------- ----------- -----------

   Increase (decrease) in
    cash and equivalents        24,304     (65,628)   (896,359)    (31,410)
                           =========== =========== =========== ===========