MMX Provides Further Details About Amapá's Railway Bidding Process

RIO DE JANEIRO, BRAZIL--(Marketwire - July 22, 2008) - MMX Amapá Mineração Ltda. ("MMX Amapá"), in view of recent news concerning the investigation carried out by the Federal Police in connection with the railway concession granted in favor of its subsidiary MMX Logística do Amapá Ltda. ("MMX Logística") and other alleged facts, hereby elucidates 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 of R$ 300 thousand on average and with poor maintenance conditions. Until 2005, the railroad maintenance conditions constantly exposed its users to risks of accidents, due to a total abandonment by its former operator.

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. Anyone who reviews the rules of the tender, which are available to the public on MMX's website (www.mmx.com.br), will be able to attest that there are no terms of a subjective of eliminative nature or which could be construed as preventing suitable competitors from participating. The bid rules ensured full transparency.

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.

MMX Amapá, in two years, fully recovered a railroad that had been under serving a neglected population and that exposed the life of its users and neighbors on a daily basis. MMX Amapá not only currently provides a public service that is essenctial to the population of the State of Amapá, but also directly employs 665 people, not mentioning thousands of indirect jobs, and has played a key role in revitalizing an economic activity in the region that was dormant since 1999.

The subject matter of the accusations, besides being totally unfounded, neglects all arguments of an economic order. MMX Logística practices "social" rates for its services, engages an activity that is contractually regulated by the State, and does not exercise its railway business as a profit centre, but as the practice of an essential public service.