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Resource Audit

MMX Mineração e Metálicos S.A.

Serra Azul Mines

Brazil

Prepared for:

MMX Mineração e Metálicos S.A. Avenida Prudente de Morais1250

Belo Horizonte, Minas Gerais Brazil

SRK Project Number: 162700.10

Prepared by:

7175 W. Jefferson Avenue, Suite 3000 Lakewood, CO 80235

Effective Date: November 16, 2010

Report Date: January 5, 2011

Author:

Leah Mach, CPG, MSc

MMX Mineração e Metálicos S.A. I Serra Azul Mines Resource Audit

SRK Consulting (U.S.), Inc. January 5, 2011 SerraAzulResource Audit_LMB_003.docx

Table of Contents

1 INTRODUCTION ........................................................................................................... 1-1 1.2.1 Sources of Information ......................................................................... 1-1 1.3.1 Site Visit................................................................................................ 1-2

2 PROPERTY DESCRIPTION AND LOCATION ........................................................... 2-1

3 GEOLOGICAL SETTING .............................................................................................. 3-1 3.1.1 Regional Structure ................................................................................ 3-1 3.2.1 Local Lithology ..................................................................................... 3-4 3.2.2 Alteration .............................................................................................. 3-4 3.2.3 Structure ................................................................................................ 3-4 3.2.4 Metamorphism ...................................................................................... 3-5

4 MINERALIZATION ....................................................................................................... 4-1

5 DRILLING ....................................................................................................................... 5-1

6 SAMPLING METHOD AND ANALYSIS..................................................................... 6-1 6.1.1 Logging and Sampling .......................................................................... 6-1 6.2.1 Logging and Sampling .......................................................................... 6-2 6.4.1 Sample Preparation ............................................................................... 6-3 6.4.2 Sample Analysis.................................................................................... 6-3 6.5.1 Comparison of Assayed and Calculated Global Grades ....................... 6-4 6.5.2 Stoichiometric Closure.......................................................................... 6-4 6.5.3 Certified Reference Material ................................................................. 6-5

7 DATA VERIFICATION ................................................................................................. 7-1

8 MINERAL RESOURCES ESTIMATE .......................................................................... 8-1

9 RECOMMENDATIONS ................................................................................................. 9-1

10 REFERENCES .............................................................................................................. 10-1

11 GLOSSARY .................................................................................................................. 11-1 11.1.1 Mineral Resources .............................................................................. 11-1 11.1.2 Mineral Reserves ................................................................................ 11-1

List of Tables

Table 1: Drilling at the Serra Azul Mine ..................................................................................... IV

Table 2: Serra Azul Mineral Resource Statement, as of November 16, 2010* ........................... VI

Table 1.3.1: Key SRK Project Personnel .................................................................................... 1-2

Table 2.2.1: Serra Azul Land Tenure .......................................................................................... 2-1

Table 5.1.1: Comparison of Twin RC and Core Drillholes ........................................................ 5-1

Table 5.1.2: Drilling at Serra Azul.............................................................................................. 5-2

Table 6.4.1: Laboratories used for Sample Preparation and Analysis ........................................ 6-2

Table 6.4.1: Bureau Veritas Detection Limits ............................................................................ 6-4

MMX Mineração e Metálicos S.A. II Serra Azul Mines Resource Audit


Table 8.1.2: Basic Statistics for Assays ...................................................................................... 8-1

Table 8.2.1: Basic Statistics of Metal Variables by Lithotypes used in Grade Estimation ........ 8-3

Table 8.3.1: Composite Statistics................................................................................................ 8-4

Table 8.4.1: Density of Lithotypes ............................................................................................. 8-5

Table 8.5.1: Variogram Parameters ............................................................................................ 8-6

Table 8.6.1: Block Model Dimensions and Origin ..................................................................... 8-7

Table 8.6.2: Estimation Parameters ............................................................................................ 8-7

Table 8.7.1: Basic Statistics of the Blocks .................................................................................. 8-8

Table 8.8.1: Serra Azul Classification Criteria ........................................................................... 8-9

Table 8.9.1: Serra Azul Mineral Resource Statement, as November 16, 2010* ...................... 8-10

Table 8.10.1: Measured and Indicated Grade and Tonnage by Fe Cutoff. ............................... 8-11

Table 8.10.2: Inferred Grade and Tonnage by Fe Cutoff ......................................................... 8-11

Table 11.2.1: Glossary .............................................................................................................. 11-2

Table 11.2.2: Abbreviations ...................................................................................................... 11-3

List of Figures

Figure 2-1: General Location Map of the Serra Azul Mine ........................................................ 2-2

Figure 3-1: Project Location within the São Francisco Craton ................................................... 3-6

Figure 5-1: Drill Collar Location Map........................................................................................ 5-3

Figure 8-1: Drillhole Location Map with Topography and Mining Concessions .................... 8-13

Figure 8-2: Cross-sections with Geology and Drilling Looking East ....................................... 8-14

Figure 8-3: Oblique View of Cross-sections Showing Change in Bedding Dip ...................... 8-15

Figure 8-4: Omni-Directional and Downhole Variograms for Iron, Friable and Compact Itabirite8-16

Figure 8-5: Cross-sections with Geology, Block Model and Drilling Looking East ................ 8-17

Figure 8-6: Swath Plot Index Map and Iron Swath Plot ........................................................... 8-18

Figure 8-7: Cross-sections with Geology, Block Model Classification and Drilling ............... 8-19

Figure 8-8: Grade Tonnage Curves, Iron .................................................................................. 8-20

MMX Mineração e Metálicos S.A. III Serra Azul Mines Resource Audit


Summary

Property Description and Location

The Serra Azul Mine (the Project) is located in the Serra Azul area in the state of Minas Gerais, Brazil near the town of Igarapé, approximately 60km southwest of Belo Horizonte, the capital of Minas Gerais. The Project consists of an operating mine and two beneficiation plants for the production of lump and sinter feed.

Ownership

The Project is controlled by AVG Mineraçao S/A, a subsidiary of MMX Sudeste Mineração Ltda. (MMX Sudeste), a 100% owned subsidiary of MMX Mineração e Metálicos S.A. (MMX).

Geology and Mineralization

The Project lies within the Quadrilátero Ferrífero (Iron Quadrangle). The geology of the Iron Quadrangle has been studied since the 18th century and is one of the most important metallogenic provinces in the world. The lithologies in this area include the Rio das Velhas and Minas Supergroups, which are part of the crystalline basement. This area is known for its banded iron formation (BIF) deposits.

In the Project area, the Serra das Farofas is composed of rocks from the Minas Supergroup that are underlain by the Rio das Velhas Supergroup in a clear discordant contact. The Minas Supergroup is subdivided, from youngest to oldest, into three groups:

Piracicaba Group;

Itabira Group; and

Caraça Group.

Locally, the stratigraphic sequence is inverted, with the most recent quartzitic formations of the Piracicaba Group overlain by the itabirites of the Cauê Formation, Itabira Group, which, in turn, is capped by the oldest phyllites and quartzites of the Caraça Group.

Within the pit area, the geology is dominated by four formations. From oldest to youngest, these are the Batatal, Cauê, Gandarela and Cercadinho Formations. The Batatal Formation has been thrust over the younger Cauê Formation, which has been thrust over the youngest Cercadinho Formation. The deposit is crosscut by a northwest-trending, high-angle brittle fault that appears to be offset by younger northeast trending faults.

The mineralization at the Project consists of metamorphosed BIF subsequently with strong evidence of hydrothermal syngenetic formation with areas of supergene enrichment through lateritic weathering. This results in a variety of different mineralization types. There are seven distinct lithological ore types observed in this area of the Serra do Curral:

Canga;

Friable siliceous itabirite;

Friable rich itabirite;

Compact itabirite;

Friable hematite;

MMX Mineração e Metálicos S.A. IV Serra Azul Mines Resource Audit


Compact hematite; and

Friable carbonate itabirite.

Exploration

Like most private iron mine operators in Brazil, AVG, Minerminas and prior operators have not had extensive and detailed exploration programs. There has been minimal exploration drilling prior to MMX’s involvement in the Project. Limited channel samples were collected in the pit area.

Since 2005, 213 holes have been drilled at the Project, totaling 18,857M. The drilling consists of both core and reverse circulation drilling. Table 1 lists the number of drillholes by program and company and the laboratory that was used to analyze the samples.

Table 1: Drilling at the Serra Azul Mine

Campaign Number of

Drillholes Type Period

Length

(m)

Number of

Samples Laboratory

FSAVG, FSAVGSB 11 HW Core 2005 440 50 AVG Total AVG 11 2005 440 50 AVGMMX 9 HWL Core 2007 694 88 SGS SEFDSF 26 HQ, HWL 2007-2008 1,459 273 SGS,MMX FSMNM 3 HWL Core 2007-2008 191 34 MMX FDSB, SEFDSB 50 HWL Core 2008 3,190 628 MMX FDSF 6 HWL Core 2008 203 49 MMX RPSF (RC) 19 4 or 5" 2009 2,836 522 SGS FDSA 32 HQ, HN 2010 3,872 448 SGS, Bureau Veritas FDSC 11 HQ 2010 590 * Bureau Veritas RPSA (RC) 46 4.75 or 5" 2010 5,382 551 Bureau Veritas Total MMX 202 2007-2010 18,417 2593

Total 213 2005-2010 18,857 2643

Mineral Resources

MMX prepared the resource estimation for Serra Azul under the direction of Ms Lilian Grabellos, Manager of Resouces and Reserves. Leah Mach, Principal Resource Consultant with SRK, audited the resource.

The drillhole sample database was compiled by MMX and verified by SRK and is determined to be of high quality and suitable for resource estimation. SRK received the drillhole database as four comma separated variable (csv) files consisting of:

Collar: Drillhole ID, easting, northing, elevation, and total depth;

Survey: Depth, azimuth, inclination;

Geology: From, to, lithology and code from drill log, modeled lithology and code from cross-sections; and

Assay: Four files with one file for each of three size fraction groups and one for global, containing from, to, Fe, SiO2, Al2O3, P, Mn and LOI.

Sixty-seven geologic cross-sections were constructed at 100 or 50m intervals depending on the drill spacing. The cross-sections were used to prepare horizontal sections at 10m spacing from

MMX Mineração e Metálicos S.A. V Serra Azul Mines Resource Audit


elevation 9550 to 1,365. The block model was coded from the horizontal sections. The lithotypes that were used in grade estimation are Canga (CG), friable itabirite (IF), friable carbonate itabirite (IFCA), and compact itabirite (IC).

MMX composited the samples on 5m intervals starting at the top of the drillhole with breaks at the lithotype solid boundaries. MMX conducted variography studies on the AVG and Minerminas properties separately because of the difference in the dip of the beds between the two properties. The study included directional and downhole variograms as well as omni-directional variograms. The omni-directional variogram was chosen as showing the best fit for the data.

A block model was created that covers the entire AVG/Minerminas mine area. The block model contains variables for:

Fe, SiO2, Al2O3, Mn, P, and LOI – global and for each of the three size fractions;

Lithotype;

Percentage below topography;

Estimation parameters – number of composites, number of drillholes, average distance of composites used in estimation, and distance to closest composite; and

Class – 1=measured, 2=indicated, 3=inferred, 4=potential.

Block grades were estimated by ordinary kriging in three passes. Blocks were classified as Measured, Indicated or Inferred after each estimation pass. Blocks that did not meet the necessary criteria for classification were re-estimated in the next pass. The search ranges were determined by the iron variogram range with the first pass at the variogram range and the second at 150% of the range. The third pass was at 2000m to fill all the blocks in the model and estimate a mineral potential. The estimation was conducted using block and composite lithotype matching.

The resources were classified according to CIM classification as Measured, Indicated, or Inferred based on the pass in which the block was estimated and the number of drillholes used in the estimation. In order to control the depth to which the blocks could be classified, a surface was generated at the base of the drillholes. This surface was lowered 20m and then uused to limit the classification of measured, indicated, and inferred resources.

The Mineral Resources for the Serra Azul Mine as of November 16, 2010, on a wet tonnes basis are presented in Table 2.

MMX Mineração e Metálicos S.A. VI Serra Azul Mines Resource Audit


Table 2: Serra Azul Mineral Resource Statement, as of November 16, 2010*

ROCK CLASS

Tonnes

(000's) Fe% SiO2% Al2O3% Mn% P% LOI%

IF

Measured 158,368 51.14 23.36 1.8 0.047 0.049 1.261

Indicated 41,621 48.46 26.99 1.67 0.144 0.048 1.333 Total

M&I 199,989 50.58 24.12 1.77 0.07 0.05 1.28

Inferred 17 40.84 38.02 1.11 0.029 0.033 0.774

IC

Measured 384,164 35.82 14.1 0.62 0.031 0.025 0.372

Indicated 252,657 34.32 49.23 0.7 0.082 0.025 0.519 Total

M&I 636,821 35.22 28.04 0.65 0.05 0.03 0.43

Inferred 3,939 30.57 53.25 0.78 0.341 0.049 1.652

IFCA

Measured 37,491 32.97 44.3 3.64 0.832 0.081 2.799

Indicated 13,608 32.9 44 3.72 0.993 0.083 2.926 Total

M&I 51,099 32.95 44.22 3.66 0.87 0.08 2.83

Inferred 0

CG

Measured 4,447 59.4 5.75 4.05 0.022 0.159 4.634

Indicated 7,170 55.37 8.1 5.69 0.037 0.226 5.801 Total

M&I 11,617 56.91 7.2 5.06 0.03 0.2 5.35

Inferred 5,535 53.01 10.98 6.16 0.045 0.218 5.998

Total

Measured 584,440 39.97 40.37 1.16 0.087 0.036 0.801

Indicated 315,056 36.6 45.13 1.07 0.129 0.035 0.851 Total

M&I 899,496 38.79 42.04 1.13 0.1 0.04 0.82

Inferred 9,492 43.67 28.57 3.92 0.168 0.147 4.185 * Cut-off Grade 12% Fe; tonnes on a wet basis.

Recommendations

Analytical and QA/QC Data

MMX has a laboratory quality assurance/quality control program (QA/QC) in place and monitors the laboratory results from these samples on a regular basis. The QA/QC samples includes standard reference samples developed from Serra Azul material and pulp duplicates.

Resource Estimation

SRK recommends that MMX continue to drill additional holes into the compact itabirite to gain additional samples and analysis and increase confidence in the grades at depth and to increase the indicated resources in this rock type.

MMX Mineração e Metálicos S.A. 1-1 Serra Azul Mines Resource Audit


1 Introduction SRK Consulting (U.S.), Inc., (SRK) was commissioned by MMX Mineração e Metálicos S.A. (MMX) to audit resources at the Serra Azul Mine. The Project is located in the Serra Azul area in the state of Minas Gerais, Brazil near the town of Igarapé, located approximately 60km southwest of Belo Horizonte, the capital of Minas Gerais. The Project consists of two contiguous open pit mines and two beneficiation plants for the production of lump and sinter feed. The Tico-Tico Mine was acquired by MMX as part of the acquisition of AVG Mineração S.A. (AVG) in December 2007. The Ipê mine was acquired as part of the acquisition of Mineradora Minas Gerais Ltda (Minerminas) in March 2008. The properties are operated by MMX Sudeste Mineração Ltda. (MMX Sudeste), a 100% owned subsidiary of MMX.

This report is prepared using the industry accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) “Best Practices and Reporting Guidelines” for disclosing mineral exploration information and CIM Definition Standards for Mineral Resources and Mineral Reserves (December 11, 2005).

Certain definitions used in this executive summary are defined in the body of this Technical report on resources and in the glossary in Section 10.

1.1 Terms of Reference and Purpose of the Report

This audit of Mineral Resources is intended to be used by MMX to further the development of the Project by providing an independent audit of the mineral resource estimates and classification of resources. MMX may also use this Report for any lawful purpose to which it is suited.

1.2 Reliance on Other Experts

SRK’s opinion contained herein is based on information provided to SRK by MMX throughout the course of SRK’s investigations as described in Section 1.2.1, which in turn reflect various technical and economic conditions at the time of writing.

SRK reviewed certain materials pertaining to a limited amount of correspondence, pertinent maps and agreements to assess the validity and ownership of the mining concessions. However, SRK did not conduct an in-depth review of mineral title and ownership; consequently, no opinion will be expressed by SRK on this subject.

SRK is of the opinion that the information concerning the properties presented in this report (within or not produced by SRK) adequately describes the properties in all material respects.

1.2.1 Sources of Information

The underlying technical information upon which this Report is based represents a compilation of work performed by MMX. The studies and additional references for this Technical Report on Resources are listed in Section 10. SRK has reviewed the Project data and incorporated the results thereof, with appropriate comments and adjustments as needed, in the preparation of this Report on Resources.

The author reviewed data provided by MMX including hard copy and digital files located in the Project and MMX’s offices in Brazil. Discussions on the geology and mineralization were conducted with MMX’s technical team. The drillhole assay database was prepared by MMX and verified by SRK.



Leah Mach is a Qualified Person as defined by NI 43-101.

1.3 Qualifications of Consultants (SRK)

The SRK Group is comprised of over 900 staff, offering expertise in a wide range of resource engineering disciplines. The SRK Group’s independence is ensured by the fact that it holds no equity in any project and that its ownership rests solely with its staff. This permits SRK to provide its clients with conflict-free and objective recommendations on crucial judgment issues. SRK has a demonstrated record of accomplishment in undertaking independent assessments of Mineral Resources and Mineral Reserves, project evaluations and audits, technical reports and independent feasibility evaluations to bankable standards on behalf of exploration and mining companies and financial institutions worldwide. The SRK Group has also worked with a large number of major international mining companies and their projects, providing mining industry consultancy service inputs.

This report has been prepared based on a technical and economic review by a team of consultants sourced principally from the SRK Group’s Denver, US office. These consultants are specialists in the fields of geology exploration, mineral resource and mineral reserve estimation and classification, open pit mining, mineral processing and mineral economics.

Neither SRK nor any of its employees and associates employed in the preparation of this report has any beneficial interest in MMX or in the assets of MMX. SRK will be paid a fee for this work in accordance with normal professional consulting practice.

The individuals who have provided input to this Report, who are listed below, have extensive experience in the mining industry and are members in good standing of appropriate professional institutions. Ms. Leah Mach is a Qualified Person under Canadian Instrument NI 43-101 guidelines.

Table 1.3.1: Key SRK Project Personnel

Name Responsibility

Leah Mach Geology, Resources, Project Manager Neal Rigby Reviewer

1.3.1 Site Visit

Leah Mach, Qualified Persons for this report, made site visits to the Property on June 27 and October 7, 2007, February 13, 2009 and June 30, 2010. The site visits consisted of reviewing the drill core and logging procedures, visiting the open pit and observing the operations and product types, visiting the beneficiation plant, and touring the property to see the tailings facility and waste dumps.

1.4 Units of Measure

Metric units are used throughout this report, except where otherwise stated.

1.5 Effective Date

The effective date of this Audit of Resources is November 16, 2010. The resource estimation includes drilling through November 10, 2010. The topography is current as of November 16, 2010.



2 Property Description and Location 2.1 Property Location

The Project is located approximately 60km southwest of Belo Horizonte, and approximately 560km northwest of Rio de Janeiro in Minas Gerais State, Brazil (Figures 2-1 and 2-2). The Project consists of three contiguous licenses in the Serra Azul Mountain Range, located near the city of Igarapé in the southwest part of the Quadrilátero Ferrífero (Iron Quadrangle). The Project also includes six exploration claims surrounding the licenses. The licenses lie between 20°07’30”S and 20°06’30S and between 44°17’W and 44°19’W (Figure 2-3). The Project lies within the municipalities of Brumadinho, Igarapé, Itatiaiuçu, Mateus Leme and São Joaquim de Bicas.

2.2 Mineral Titles

MMX holds the mineral rights through leases and ownership. Table 2.2.1 presents the mining and exploration licenses and requests for exploration licenses controlled by MMX in the Serra Azul area. The holder of the three mining licenses is Companhía de Mineração Serra da Farofa (CEFAR) and MMX has lease agreements with CEFAR for each one. Brazilian Mining Law allows holders of Exploration or Mining Licenses to totally or partially assign or transfer these claims to a third party, with DNPM’s approval. The three mining licenses cover 509.71ha, the exploration licenses cover 4,331ha and areas requested for exploration cover 6,393.38ha.

Table 2.2.1: Serra Azul Land Tenure

Claim Holder Location* Mineral(s)

Area

(ha) Permit

Validity

Term

801.908/68 Cia. de Mineração Serra da Farofa - CEFAR

Igarapé, Brumadinho and São Joaquim de Bicas

Iron 351.64 Mining Not

Applicable


Brumadinho and Igarapé Iron 83.37 Mining Not

Applicable


Brumadinho Iron 74.70 Mining Not

Applicable

833.379/2004 AVG Igarapé,Itatiaiuçu,Mateus Leme Iron 1,035.00 Exploration

License September

2012

832.182/2006 AVG Itatiaiuçu,Mateus Leme Iron 1,400.00 Exploration

License May 2013

830.632/2006 AVG Brumadinho, Igarapé Iron 1,896.00 Exploration

License July 2013

830.633/2006 AVG Brumadinho, Igarapé, Itatiaiuçu Iron 1,881.25 Exploration

Request

831.243/2006 AVG Mateus Leme Iron 960.00 Exploration

Request

832.183/2006 AVG Brumadinho, S. Joaquim de Bicas

Iron 1,912.50 Exploration

Request


Iron 7.97 Exploration

Request

831.713/2010 AVG Brumadinho Iron 12.01 Exploration

Request

832.607/2010 AVG Brumadinho Iron 261.47 Exploration

Request


Iron 1,358.18 Exploration

Request

*City or District

SRK Job No.: 162700.10

File Name: Figure 2-1.doc Date: 12/20/10 Approved: LEM Figure: 2-1

Serra Azul Mine, Brazil

Source: MMX Mineração e Metálicos S.A

General Location Map of the

Serra Azul Project Mine

SERRA AZUL MINE

SRK Job No.: 162700.10

File Name: Figure 2-2.doc Date 12/20/10 Approved: LEM Figure: 2-2



Site Location Map of the Serra Azul Mine

SRK Job No.: 162700.10




Mineral Licenses Serra Azul Mine

832182/2006

Exploration License

Mining License

Request for Exploration

Municipal Limits



3 Geological Setting 3.1 Regional Geology

The Project area is situated in the western portion of the Iron Quadrangle near Belo Horizonte, Minas Gerais, in the Serra do Curral homocline. Mineralization is hosted by the Minas Supergroup which is dominated by supracrustal metasedimentary and metavolcanic rocks. Intrusive rocks are rarely found in the area but where present, are basic sills and dikes up to 1m wide. Regional metamorphism reached the greenschist facies during multiple episodes of deformation.

3.1.1 Regional Structure

The Project area lies within the São Francisco Craton tectonic province of South America shown in Figure 3-1. The Project is located in the extreme west of the Serra do Curral homocline and in the north/northwest limit of the Iron Quadrangle. This region has a complex tectonic-metamorphic history and is part of the basement of the southern portion of the São Francisco Craton. The São Francisco Craton (Almeida et al 1981) tectonic province was not affected by the Brazilian deformation but is bordered by Brazilian fold belts that developed during orogenesis culminating in the formation of Gondwana approximately 650 Ma. The basement of the craton was subjected to the Jequié/Rio das Velhas and Transamazonic tectonic-metamorphic events that preceded the Brazilian deformation. There are various evolutionary models proposed for the Iron Quadrangle region, and this area is still extensively studied.

Among the large-scale structures in the Iron Quadrangle are the:

Serra do Curral homocline;

Serra da Moeda syncline; and

Dom Bosco Syncline.

The Serra do Curral homocline is located in the north and has a NE-SW strike and dips SE. Serra Moeda is located in the west part of the Iron Quadrangle and is the west limb of a syncline which has an N-S axis and dips to the south. The Dom Bosco syncline is in the south and has an E-W axis and is connected to the Serra Moeda syncline on the west side. There is also the Falha do Engenho zone of trans-current shearing, the Mariana anticline to the southeast and the Santa Rita syncline to the east. According to Dorr (1969), the Santa Rita syncline corresponds to the major and most complex folding of the region. Finally, the Gandarela isoclinal syncline is located to the northeast with SE dipping limbs and the Fundão-Cambotas fault system that extends for almost the entire length of the east border. Figure 3-2 shows the homocline, synclines and anticlines in the region.

Serra do Curral Homocline

There have been five different interpretations for the formation of the Serra do Curral homocline as listed below:

The homocline is a section of the Serra dos Três Irmãos region (Eichler, 1964);

The homocline is the south limb of the Piedade syncline (Dorr, 1969);

Pires (1979) interpreted the homocline as related to an anticline;



Alkmim and Marshak (1998) interpret the structure as the inverted flank of a regional anticline; and

Oliveira et al. (2005) interpret the homocline as the overturned limb of a recumbent allochthonous megafold, referred to as the Curral Nappe.

Figure 3-3 shows schematic sections showing each author’s interpretation, which are discussed in detail below.

Dorr (1969). The first interpretation was proposed by Eichler (1964) and is shown in Figure 3-3 schematic section (a). Eichler (1964) interprets the homocline as a section of the Serra dos Três Irmãos region that has been brought in through thrust faults that trend to the north.

According to Simmons (1968), the Serra do Curral homocline is the south limb of the Piedade syncline, as suggested by Dorr (1969). This is shown in schematic section (b) in Figure 3-3. This structure is well characterized at the NE limit of the Serra do Curral (Serra da Piedade), where the two limbs of the syncline are recognized, a fact that leads Simmons (1968) to believe that the homocline represents one of the limbs of this megastructure. The Serra do Curral homocline, dipping to the SE, is characterized by secondary folding with axial planes oblique to the direction of the mountain ridge. Also recognized were small reverse faults, direction parallel to the syncline with displacement to the SE and normal faults of high angle that cut the megastructure.

Pires (1979) was the first author to propose that the regional folding is related to an anticline. Through work that was done at the junction of the Serra do Curral homocline with the Moeda syncline, Pires (1979) proposes schematic section (c) shown in Figure 3-3. In this section, Pires (1979) shows an anticline, whose inverse limb (the north limb) would represent the Serra do Curral homocline. This structure is limited at the base by the Falha Curral, a thrust fault and the schists to the north, which are part of the Rio das Velhas Supergroup.

Romano (1989) determined the petrographic and textural characteristics of the metavolcanic rocks of the regions of Mateus Leme to Esmeraldas and of Pará de Minas to the Pitangui. According to the author, such rocks represent the continuity of the Rio das Velhas Supergroup in the Occidental Serra do Curral. In this region, Romano (1989) identified thrust faults sectioning the Rio das Velhas Supergroup, among various other deformational features. The structures are attributed to two phases of regional deformation (Dn and D1). The first deformation affected only the Rio das Velhas Supergroup and the second that extended to the Minas Supergroup in the west portion of the Serra do Curral homocline. The second regional deformation was of a progressive compressional character.

In the contact between the Sabará Group and the Belo Horizonte Metamorphic Complex, in the region of Ibirité, southwest of the city of Belo Horizonte, Marshak et al. (1992) and Jordt-Evangelista et al. (1992), identified a zone of normal shearing and characterized three zones of contact metamorphism. They are, from NW to SE the zones of cordierite-sillimanite, of staurolite-andalusite-cordierite and of biotite. This situation exemplifies the metamorphic aureoles that occur in the contact zones of the supercrustal rocks with the basement metamorphic complexes, in response to the formation of domes and synclines.

Endo and Machado (1997) interpret the Serra do Curral homocline as part of a syncline, characterized by the absence of a northern rim, or limb, at the western limit of the structure. Endo and Machado (1997) observed that on the southern rim/limb the rocks of the Minas



Supergroup are in normal stratigraphic sequence with inclinations that vary from moderate to high while on the northern rim/limb the stratigraphic sequence is inverted. According to Endo and Machado (1997), the Zone of Normal Shearing (the Moeda-Bonfim zone) in contact between the Bonfim Metamorphic Complex and the supracrustal rocks along the Serra da Moeda, extends to the Serra do Curral homocline. Here, the zone of normal shearing it is identified by the Souza Nochese Zone of Shearing. Thus, the principal structural features are:

Sub-orthogonal between the synforms Moeda and Curral;

Breaking and absence of north rim/limb of the syncline;

Normal ductile shearing between the metasediments and the Bonfim Complex; and

Stratigraphic inversions in the south rim/limb of the synform.

Based on these structures, Endo and Machado (1997) propose eight events of deformation for the region: four in the Neo-Archean and four in the Proterozoic, all of co-axial character.

Alkmim & Marshak (1998) observed parasitic asymmetric folding and mesoscopic faults trending to the NW at the western limit of the Serra do Curral homocline. This observation led to the interpretation that the Serra do Curral homocline may be the inverted flank of a regional anticline with polarity to the NW. According to Alkmim & Marshak (1996), at the Curral-Moeda junction, the Curral anticline is refolded the Moeda syncline. The development of the mega-anticline would be related to a compressive event, during the Transamazonic period and older than the extension that resulted in doming and syncline formation. Alkmim and Marshak’s (1998) interpretation is shown in Figure 3-3 section (d).

Finally, the relations proposed by Oliveira et al. (2005) for the region of Itatiaiuçu, is shown in Figure 3-3 section (e). According to the Oliveira et al. (2005), the schistocity observed in the rocks of the Minas Supergroup and Rio das Velhas in the entire Serra do Curral region, is the same that predominates in the sedimentary layering and schistocity in the mesoscopic folds with overturned limbs. According to the authors, the Serra do Curral homocline is the overturned limb of a allochthonous recumbent megafold, trending to the north-northeast, and referred to by Oliveira et al (2005) as the Curral Nappe.

3.2 Local Geology

In the Project area, the Serra das Farofas is composed of rocks from the Minas Supergroup that are underlain by the Rio das Velhas Supergroup in an unconformity. The Minas Supergroup is subdivided, from youngest to oldest, into three groups:

Piracicaba Group;

Itabira Group; and

Caraça Group.

Locally, the stratigraphic sequence is inverted, with the most recent quartzitic formations of the Piracicaba Group overlain by the itabirites of the Cauê Formation, part of the Itabira Group, which, in turn, is capped by the oldest phyllites and quartzites of the Caraça Group. This stratigraphic inversion, as discussed in Section 5.1.1, characterizes the mountain ridge and is most likely the rim of a recumbent fold.



3.2.1 Local Lithology

The Caraça Group is subdivided into the Moeda (lower) and Batatal (upper) Formations. The Moeda Formation is composed, principally, of coarse quartzites, metaconglomerates, and phyllites. According to Renger et al. (1994), the Moeda Formation has a maximum age of 2.65Ga, and was deposited in a fluvial environment. Over time, this depositional environment evolved into a marine-platform identified as the Batatal Formation. The Batatal Formation is composed, predominantly, of phyllites and graphitic phyllites. Its maximum age of deposition is 2.5Ga (Renger et. al. 1994) and the Batatal Formation has a gradational contact with the Itabira Group.

The Itabira Group is essentially composed of chemical sediments, a characteristic that separates it from the Caraça Group. It is of great economic importance, as it hosts world class deposits of iron and manganese, associated with gold and bauxite. It is divided, from base to top, into the Cauê and Gandarela Formations. The Cauê Formation is composed of itabirites, dolomitic itabirites, amphibolitic itabirites, carbonate itabirites and lenses of marl and phyllites. Due to their resistance to weathering, the itabirites form the principal ridges of the region with extensive escarpments, such as the Serra do Curral. The Cauê Formation represents the principal target of research work. Since the Gandarela Formation does not occur in the area researched, is the Cauê Formation is in direct contact with the Piracicaba Group.

The Piracicaba Group is divided, from base to top, into the Cercadinho, Fecho do Funil, Taboões and Barreiro Formations. The Cercadinho Formation is the only one of this group that is identified in the Project area, being composed of quartzites and graphitic phyllites, of light grey coloring that occurs in the north part of the area. According to Renger et al. (1994), this group represents a new period of tectonic movement in the Minas Basin, initiated around 2.4Ga.

The rocks show a general E-W direction with dips varying between 45º and 50º to the south with some local variations occasioned by secondary asymmetric folding and by transverse faulting of the structure.

3.2.2 Alteration

Alteration in the area is described as intense silicification of compact itabirite resulting from hydrothermal activity.

3.2.3 Structure

The dominant structure in the project area is an antiform overturned to the north. The upper limb has been completely eroded, leaving only the inverted lower limb.

As a result of the numerous deformational episodes, bedding is rarely observed and then only in the quartzite and phyllite of the Cercadinho Formation. However, the principal foliation, Sn is well developed in all of the local lithologies. The Sn foliation dips approximately 30º to 40°S in the northern part of the project and increases to about 70°S in the southern part of the area. This suggests that the Project is located on the inverted limb of an isoclinal anticline with vergence to the north. Small scale, asymmetric folds with amplitudes from centimeter to meter scale are observed at the Project where cataclasite has also been observed. These folds are typically tight with E-W axes. Intense folding is seen in the BIF, often obliterating the primary structures.

The contacts between formations show tectonic textures and are interpreted to be thrust faults. Normal faults are also observed in the project area.



3.2.4 Metamorphism

The metamorphism identified in the Project area is related to continental collision during the Transamazonian Orogeny. Metamorphic grade in the Iron Quadrangle increases from west to east as described by Dorr (1969). The rocks of the western and central portions reached greenschist facies whereas those in the east reached the almandine-amphibolite facies. In the Serra do Curral, metamorphism of greenschist facies predominates.

Itabirite is a highly deformed rock with a composition derived by tectonic and metamorphic processes. Small preserved nuclei of magnetite in the interior of hematite crystals suggest that the greater part of these rocks were oxidized by hydrothermal solutions during the deformational processes. The most common minerals in BIF, other than quartz, are siderite, ankerite, ferroan dolomite, magnetite, martite and, locally, chlorite. Martite is a product of altered magnetite and ankerite and is often a secondary mineral.

3.3 Project Geology

Within the pit area, the geology is dominated by four formations. From oldest to youngest, these are the Batatal, Cauê, Gandarela and Cercadinho Formations. The pit geology is shown in Figure 3-4, and Figure 3-5 shows north-south cross-sections 573050 and 574250 through the mine area. The Batatal Formation has been thrust over the younger Cauê Formation, which has been thrust over the youngest Cercadinho Formation. The deposit is crosscut by a northwest-trending, high-angle brittle fault that appears to be offset by younger northeast trending faults.

The dominant structural features consist of Sn foliation, fracture planes and minor fold axes. Foliation is the most conspicuous planar element within the pit and is preferentially developed in the enriched itabirite. The Sn foliation strikes NW-SE and dips both NE and SW suggesting the presence of a larger fold. Parasitic fold axes typically trend 150º to 200º.

Well-defined fracture planes are found in both the friable itabirite and compact itabirite. It is typically more prominent in the compact itabirite. The fracture planes have two predominant orientations. One strikes NW and dips NE the other strikes NNE and dips SE. These fabrics often host breccia zones with areas of significantly enriched iron.

SRK Job No.: 162700.10

File Name: Figure 3-1 Date: 12/20/10 Approved: LEM Figure: 3-1

Serra Azul Mine Brazil

Source: Marshak & Alkmim 1989 and

Alkmim & Marshak 1998

Project Location within the

São Francisco Craton

Três Marias Formation São Francisco Supergroup

Other units of São Francisco Supergroup Espinhaço Supergroup Piracicaba and Sabará Groups

Itabira Group Caraça Group

Rio das Velhas Supergroup Basement Normal Fault

Thrust Fault Foliation

Bedding

Metamorphic Aureole

Serra Azul Mine

SRK Job No.: 162700.10

File Name: Figure 3-2.doc Date: 12/20/10 Approved: DKB Figure: 3-2


Source: Modified from Alkmim & Noce

2006 after Dorr (1969) and Romano (1989)

Location of Large Structures in the

Serra Azul Mine Area

Serra Azul

Mine Area

SRK Job No.: 162700.10


Sources: a) Schematic section proposed by Eichler (1964) in the region of the Serra dos Três Irmãos; b) Section proposed by Dorr (1969), section NW-SE in the Quadrilátero Ferrífero; c) Section proposed by Pires (1979) for the region of junction of the Serra do Curral with the Moeda syncline; d) Section proposed by Alkmim & Marshak (1998) for the region west of the homocline of the Serra do Curral; e) Schematic section proposed by Endo et al (2005) for the region of Itatiaiuçu (Section Itatiaiuçu). (Fm. Formation, Gr. Group, Sgp. Supergroup, ST Topographic Surface).


Geological Sections Proposed for the Region of the

Serra do Curral

SRK Job No.: 162700.10




Geological Map of the Serra Azul Mine Area

COMPACT AMPHIPLITIC ITABIRITE

SRK Job No.: 162700.10


Cross-section 573050 North-South

Cross-section 574250 North-South

Serra Azul Mine

Brazil


North-south Cross-sections through the Serra Mine in the

Minerminas Area



4 Mineralization 4.1 Mineralized Zones

The mineralization at the Project consists of metamorphosed BIF with strong evidence of hydrothermal syngenetic formation with areas of supergene enrichment from subsequent lateritic weathering. This results in a variety of different mineralization types. There are seven distinct mineralization types at the Project:

Canga;

Friable siliceous itabirite;

Friable rich itabirite;

Compact itabirite;

Friable hematite;

Compact hematite; and

Friable carbonate itabirite.

Canga is the product of chemical weathering of all the types of friable ore. It generally has more elevated grades of aluminum, phosphorous, and greater loss on ignition (LOI). It occurs in three stratigraphic locations: at the top of the BIF, in the base of the southern Serra das Farofas and over the schists of the Batatal Formation. In the Batatal Formation, canga is formed in the iron ore colluvium. In some areas, it has elevated iron grades, due to the nature of the source rock. The presence of visible hematite clasts is common and goethite and limonite commonly occur with secondary minerals, increasing the hardness.

The friable itabirite is confined to the proximities of compact itabirite or of zones of silicification. The principal characteristics of this type of ore are the grades of silica that vary from 6% to 10% and in granulometry that is above 19mm. The bands are composed of friable hematite intercalated with bands of recrystallized quartz.

Compact itabirites occurs at the base of the friable itabirites and as small elongated bodies preferentially oriented WNW/ESE within the friable itabirite. These last are protoliths of proto-ore that remain after intense weathering and/or hydrothermal alteration along certain preferential directions such as the axis of folds.

The friable carbonate itabirite is characterized by intercalations of clay bands alternating with bands of friable and compact hematite. The bands of clay are generally light rose colored but locally may be white in color. Where these bands are white, kaolinite is often present. The texture is banded, with bands up to 40 to 50cm in width. Where kaolinite is common in the clay-rich bands, internal breccia texture are observed. The clay bands of clay also contain isolated crystals of euhedral quartz and specularite, both of which are coarse to very coarse in grain size. The euhedral quartz and the specularite are the product of secondary alteration, growing over the original texture of these rocks. The hematite bands are fine and even occur as films intercalated with clay minerals. Friable hematite also occurs disseminated within the clay bands.



4.2 Relevant Geological Controls

The mineralization at the Serra Azul Mine shows strong evidence for both structural and lithological controls. There is also evidence for hydrothermal origin for the iron formation, with later supergene modification that probably caused major enrichment in addition to “softening” of the ore. The hypogene phase is associated with D1 folding during which, hydrothermal fluids ascended to the surface as a result of decompression. This would also permit meteoric fluids to descend along the normal faults causing mixing resulting in oxidizing conditions and the formation of magnetite and carbonates, as described by Rosière et al. (2008). In this model, Fe-rich hydrothermal dolomite could be formed during the tight folding. Later, oxidization of the Fe-rich dolomite caused leaching of Mg, Ca and CO2, resulting in the formation of hematite. Subsequent weathering resulted in supergene enrichment and “softening” of the ore. These same normal faults would be the preferred routes for the meteoric fluids to circulate to deeper parts of the system. At the Project, this faulting could be represented by the high-angle brittle faults observed in the pit.

The genesis of the friable carbonate itabirite with hypogene characteristics, could be controlled by D1 folding, that channelized mineralizing hydrothermal fluids parallel to the layering or compositional banding. Higher-grade ore is concentrated in these folded areas. In the locations where the fluid/rock ratio was higher, bands of compact hematite were generated, possibly by leaching or complete substitution of the pre-existent carbonates. Nearby, where the fluid/rock ratio was less, the leaching/substitution of the carbonates was not complete, some carbonate remained that, subsequently leached during supergene alteration, generating the contaminated friable ore. This high-grade ore is generally porous and almost always contains remnants of weathered carbonate, observed as the orange to ochre colored interstitial material.

Another observation at the Serra Azul Mine, primarily at AVG, is the close relationship between breccias and/or veined areas with the high-grade friable ore and the rich itabirite. It has been observed that in areas with the greatest amount of breccias with carbonate veins and veinlets, it is likely that friable ore or rich itabirite will be present. This is also characteristic of areas only affected by carbonate veins and veinlets. The carbonate veins can be parallel as shown in Figure 7-2 or may crosscut itabirite banding. Portions of compact itabirite are common in the middle of friable ore.

The contacts between friable and compact ores may be sharp or transitional. Where there are carbonate veins/veinlets there is a tendency for the intensity of friability to be greater than the areas without carbonate veining.

Iron remobilization most likely occurred as an association with hydrothermal fluids, resulting in the formation of concordant and discordant hematite veins. These veins are often breccia zones filled by hematite. Some of the remobilized material is composed of magnetite. The process of quartz remobilization was very intense in some areas, resulting in breccia formation and silicification of the itabirite. Quartz remobilization often results in high compactness to the itabirite (hard itabirite). In places, the orientation of these silicified zones appears, to be controlled by the hinges of D1 folds, where it is parallel to the banding. However, in other areas the pattern is rather complex.



5 Drilling 5.1 Type and Extent of Drilling

Core drilling in the Project area by MMX was performed by Vórtice Sondagens e Serviços de Mineração, Ltda. (Vórtice) and Geológica e Sondagens Ltda. (Geosol), both based in Belo Horizonte. MMX also conducted reverse circulation (RC) drilling with contractor, Geosol Geosedna Perfurações and Especiais S.A. (Geosedna), also based in Belo Horizonte.

A total of 18,858m have been drilled at the Project in 149 core holes and 64 RC holes. Holes were drilled on a slightly irregular 100m x 100m grid.

Core

All core holes are HQ or HW sized core (77.8mm), and were drilled using a conventional drill rig. Sixty-one holes are vertical and the remaining holes were drilled at inclinations between -60° and -77° to the north. The hole depth varies from 11m to 268m with an average of 72m.

RC Drilling

The RC holes were drilled with a hammer or tricone depending on the hardness of the rock. The diameter of the hole drilled by hammer is 5in and the diameter of the hole drilled by tricone is 4in. All holes were drilled at an inclination of 70° to the north. The average depth of the holes is 125m, with a minimum of 35m and a maximum of 280m.

The technique of RC drilling was new to the AVG/Minerminas project in 2009. In order to assess the results of RC drilling, two twin holes were drilled for comparison. Table 5.1.1 presents the twin drillholes and the results for the matching intervals. RPSF15 and SEFDSF08 are not true twins as one is vertical and the other angled at -70 to the north, however, the results for the friable and compact itabirite are quite similar. The holes were collared on the fines stockpile, so the initial interval would not necessarily be expected to be similar. The twins, FSAVGB05 and RPSF16, show similar grades in the canga, but the RC hole has higher grades in the friable itabirite.

Table 5.1.1: Comparison of Twin RC and Core Drillholes

Drilled Vertical

Drillhole Orientation From To Interval Thickness Lith Fe SiO2 Al2O3 P Mn LOI

RPSF15 Vertical 0.0 12.0 12.0 12.0 FS 49.10 24.95 2.43 0.072 0.01 2.42 17.0 51.0 34.0 34.0 IF,IC 50.87 26.11 0.47 0.014 0.01 0.27

SEFDSF08 North,-70 0.0 11.3 11.3 10.6 FS 44.40 31.70 1.60 0.052 0.01 1.38 16.9 52.6 35.7 33.5 IF,IC 52.02 24.20 0.52 0.011 0.02 0.17

FSAVGSB05 Vertical 0.0 8.2 8.2 8.2 CG 63.79 2.42 2.57 0.057 0.03 3.51 12.7 39.9 27.2 27.1 IF,IC 47.91 29.67 0.56 0.014 0.02 1.06

RPSF16 Vertical 0.0 5.0 5.0 5.0 CG 60.20 12.00 1.47 0.020 0.01 0.86 12.0 37.0 25.0 25.0 IF 56.84 16.72 1.02 0.012 0.01 0.71

SRK also reviewed the drillholes in cross-section and did not detect a noticeable difference in grades between the RC and core holes.

Table 5.1.2 lists the number of drillholes by program and company.



Table 5.1.2: Drilling at Serra Azul

Campaign Number of

Drillholes Type Period

Length

(m)

Number of

Samples Laboratory

FSAVG, FSAVGSB 11 HW Core 2005 440 50 AVG Total AVG 11 2005 440 50 AVGMMX 9 HWL Core 2007 694 88 SGS SEFDSF 26 HQ, HWL 2007-2008 1,459 273 SGS,MMX FSMNM 3 HWL Core 2007-2008 191 34 MMX FDSB, SEFDSB 50 HWL Core 2008 3,190 628 MMX FDSF 6 HWL Core 2008 203 49 MMX RPSF (RC) 19 4 or 5" 2009 2,836 522 SGS FDSA 32 HQ, HN 2010 3,872 448 SGS, Bureau Veritas FDSC 11 HQ 2010 590 * Bureau Veritas RPSA (RC) 46 4.75 or 5" 2010 5,382 551 Bureau Veritas Total MMX 202 2007-2010 18,417 2593

Total 213 2005-2010 18,857 2643

*Assays not received at time of estimation

5.2 Procedures

The drillhole locations are first determined by the supervising geologist. Drill access is provided by clearing trails and drill pads with the use of a dozer. For inclined holes, a line is drawn between two stakes in the azimuth direction and the drill rig is aligned with it. The inclination of the drill rig is set by a MMX technician using the inclinometer of a Brunton compass. Upon completion of the drillhole, the final collar location is then surveyed by Prisma Produtos e Serviços Ltda. ME (Prisma) using a Topcon Total Station, 239W, 3003W or 3005W. Prisma then generates a Microsoft Excel spreadsheet and/or a certified report in PDF format.

The drilling at the Project has focused on the pit area. In general, the drillholes are on north-south section lines spaced at 100m. The drillholes on section line are about 100m apart. Drilling is limited by pit walls and areas of active mining, so the 100m by 100m is not completely filled. The drillholes were not drilled to a uniform elevation, consequently, the drillhole spacing is wider with depth below the surface. Core recovery is typically in excess of 90%. Figure 5-1 is a plan map showing the location of drillholes.

5.3 Results

The compact and friable itabirites have varying hardness, which may result in different drill recoveries and possible loss of material in friable zones. Core recovery averages more than 90% for all zones and RC recovery was generally greater than 70%. SRK did not observe problems with loss of material in friable intervals. A comparison of twin RC and core holes and visual examination of RC holes by cross-section did not detect a bias between the two drilling methods. MMX is using industry best practices for exploration drilling programs at the Project.

SRK Job No.: 162700.10



Drill Collar Location Map



6 Sampling Method and Analysis 6.1 Core Drilling

At the drill rig, the drill core is placed in wooden boxes, and washed of all foreign material. A technician delivers the boxes to the logging area where they are placed either in the sun or under a roof until they are completely air-dried. The drill core is photographed before and after sampling to record geological descriptions and sampling intervals. Geologic logging and identification of sample intervals are carried out by the project geologist. This process identifies the different litho types, geological contacts, zones of fault or fracture, ferruginous zones and internal waste.

MMX personnel supervise all sample security. The drill core is collected from drill sites, logged and sampled under the direction and control of MMX. SRK is of the opinion that there has been no tampering with the samples.

6.1.1 Logging and Sampling

The HW-sized drill core is first photographed, and then logged by a geologist onto a standardized paper form. Data from the geological log is entered into an acQuire database, the geological database management system developed by acQuire Technology Solutions Pty Ltd. During core logging, the geologist marks the beginning and end of each sample interval on the box. Sample breaks are at changes in lithology and friability with some consideration placed on visual estimations of Fe percentage. Sampling is conducted only within the ferruginous zones. Sample intervals have a minimum length of 1m and a maximum length of 5m. The preferred sample interval ranges between 3m and 5m (80% of samples). Zones of internal waste within mineralized intervals are sampled and material outside the ferruginous zone is not sampled.

Samples are collected by a trained sampler under the supervision of a technician or a geologist following a sampling plan produced by acQuire. The sampling plan contains the identification of primary and check samples according to MMX's QA/QC policy (see Section 11.4). The core is split lengthwise using a diamond core saw in the competent zones and a specially designed scoop in the highly weathered zones. The sample is placed in a plastic bag with a sample tag. The plastic sample bag is further marked in two places on the outside with the sample identification. The sample bags are then sealed and sent to the laboratory for physical and chemical analysis. The remaining core is archived for future reference.

6.2 RC Drilling

The RC drilling is conducted dry, without injecting water. The sample was discharged from the center tube return through a hose to a cyclone. The entire sample was collected over 1m intervals in plastic bags. The bags were marked with the drillhole number and from and to meterage. The bags were weighed by Geosedna personnel and the weights recorded on a form for MMX. A small sample was collected for logging and stored in wooden boxes with 30 compartments and a hinged cover.

MMX personnel supervise all sample security. The samples were collected from drill sites, logged and sampled under the direction and control of MMX. SRK is of the opinion that there has been no tampering with the samples.



6.2.1 Logging and Sampling

The RC chips are logged by the geologist at the core facility and data from the geological log is entered into an acQuire database. The 1m samples are grouped into 5m intervals with breaks at lithological changes and the sample intervals are entered on a sampling form.

Samples are sent to a commercial laboratory in Belo Horizonte where they are composited into the sample intervals indicated by the geologist. The compositing procedure is described in Section 11.

6.3 Factors Impacting Accuracy of Results

The compact and friable itabirites have varying hardness and will have varying drill recoveries. The varying hardness of the mineralized material forces the sampler to use two techniques for core sample collection, which can make it difficult to collect a representative sample. MMX uses a saw for compact material and a trowel for friable material, which is industry standard. Because MMX uses lithological controls for sample intervals that are based on friability versus compactness, the different material hardness does not present a problem. In addition, the core recovery is good to excellent, averaging over 90%. RC drilling may also encounter problems at changes in rock hardness or void spaces. SRK saw no evidence that there is a sampling problem or sample bias introduced at the Project due to varying hardness.

MMX is conducting the sampling according to industry best practices for iron deposits.

6.4 Sample Preparation and Analysis

Before MMX acquired the property, sample preparation and analysis were performed at the AVG laboratory on the AVG property. During the initial exploration phase and in 2009, MMX used SGS Geosol Laboratórios, Ltda. (SGS) located in Belo Horizonte. For part of 2008, MMX used the laboratory at Mine 63 operated by its subsidiary, MMX-Corumbá Mineração Ltda. (MMX-Corumbá). In 2010, MMX used SGS and the Bureau Veritas laboratory in Belo Horizonte. The following sections describe the sample preparation, analysis and Laboratory QA/QC for the samples sent to the Bureau Veritas laboratory. Previous reports by SRK have documented the same information for previous drill campaigns. Table 6.4.1 presents the number of samples sent to each laboratory for the various drill campaigns.

Table 6.4.1: Laboratories used for Sample Preparation and Analysis

Company Year Laboratory Number Samples

AVG 2005 AVG 50

MMX

2007 SGS 88

2007-2008 SGS,MMX 307

2008 MMX 677

2009 SGS 522

2010 SGS 181

2010 BV 850

Total 1825



6.4.1 Sample Preparation

Samples arriving at Bureau Veritas from MMX vary in size and material. The sample is initially checked for sample identification and preservation conditions upon receipt. The core sample preparation process consists of:

Drying in a kiln at 105ºC until the sample is completely dry;

Crushing the whole sample until 95% of the sample passes through a 2mm sieve;

Reducing the volume by homogenization and quartering in a rotary splitter to reduce sample to 300 to 600 g.

Pulverizing the split until 95% passes a 150 mesh sieve;

Quartering in a rotary splitter to a sampling weighing between 25 and 50g for analysis;

Archiving the remaining coarse reject and pulp; and

Record screening tests performed during sample crushing and grinding.

The RC samples are received at the laboratory as the 1m samples originally collected at the drill. The sampling intervals, as noted by the geologist, are sent to the lab with the sample batch. The sample preparation consists of the following steps:

Drying in a kiln at 105ºC until the sample is completely dry;

Jaw crushing until 100% of the sample passes through a 6.3mm sieve;

Compositing samples according to the sample interval plan; and

Splitting in a riffle splitter and dividing the sample into two halves, one for analysis and one retained for additional metallurgical or other testwork.

6.4.2 Sample Analysis

At the Bureau Veritas laboratory, all samples are analyzed using the XRF technique. The typical sample size is 2g and is analyzed for percentage of Fe, Al2O3, SiO2, P, Mn, TiO2, CaO, MgO, K2O, Na2O and LOI.

The steps in the analytic procedure for LOI consist of:

Drying the sample in an oven at around 110ºC for at least one hour;

Weighing the empty container (CV);

Placing 1.5 to 2g of the dried sample in the container and weighing again (C+A);

Placing the container with the sample in a previously heated oven and waiting until the temperature reaches 1000±50ºC and letting it calcine for more than 1 hour; and

Removing the container from the oven, resting it on the refractory plate until it loses incandescence, and then put it in a closed dryer until the container and sample cool.

Weighing and record the final weight. LOI is calculated using the following formula:

100)()(

)()(% x

CVAC

WeightFinalACFW



The detection limits are shown in Table 6.4.1.

Table 6.4.1: Bureau Veritas Detection Limits

Analysis Lower Detection Limit

Fe2O3 0.01% SiO2 0.10% Al2O3 0.10% P2O5 0.01% MnO 0.01% TiO2 0.01% CaO 0.01% MgO 0.10% Na2O 0.10% K2O 0.01%

6.5 MMX Quality Controls and Quality Assurance

MMX has the following QA/QC program in place for its drilling programs:

The insertion of Certified Reference material samples (CRM’s);

Blind duplicates;

Assayed versus calculated global grade comparisons; and

Stoichiometric (chemical) closure calculations.

MMX has used acQuire at its properties as a database management tool since December 2007. AcQuire includes QA/QC protocols within the sample numbering procedure. In the sampling plan, the system inserts two different standards and one pulp duplicate for each 20 samples at random positions. The standard batch size is 40 samples, with 34 primary samples, 2 pulp duplicates and 4 company standards. For each 50 samples, one coarse duplicate is also inserted into the batch at a random position, reducing the primary samples to 33. If the batch is less than 20, the system assures that at least two different standards and one pulp duplicate sample will be inserted in each batch.

6.5.1 Comparison of Assayed and Calculated Global Grades

MMX calculates a global grade of iron and other elements by determining a weighted average based on analysis of different sample of different grain size.

6.5.2 Stoichiometric Closure

MMX calculates stoichiometric closure for analysis at Bureau Veritas from Fe2O3, SiO2, Al2O3, P2O5, MnO, TiO2, CaO, MgO, K2O, Na2O and LOI. This is basically a mass balance calculations and stoichiometric closure is calculated by MMX using the following equation:

S.C.=1.4298*(Fe-0.7773*FeO)+SiO2+Al2O3+2.2915*P+1.2912*Mn+TiO2+CaO+MgO+Na2O+K2O+(LOI+0.1114*FeO)+FeO

Stoichiometric closure is considered acceptable if it falls between 98% and 102%.



6.5.3 Certified Reference Material

MMX has developed its own CRM’s from material at the Serra Azul Mine with the assistance of Agoratek International and SGS. The three CRM’s are:

SAH – Serra Azul Hematite;

SACL – Serra Azul Canga Laterite; and

SAIC – Serra Azul Compact Itabirite (still in preparation).

MMX sent 20 of each samples to SGS in Belo Horizonte, Perth and Ontario, ALS Chemex in Lima and Perth, Intertek, Genalysis, Bureau Veritas, Ultratrace, Amdel and ACTLabs for analysis of Fe, P, SiO2, Al2O3, CaO, TiO2, MgO, K2O, Na2O, FeO and Mn. MMX then performed various statistical tests on the results to arrive at the accepted mean and standard deciation for each element or oxide.

6.6 Interpretation

The samples from Serra Azul are submitted with QA/QC samples, including standards and duplicate samples with standard samples appropriate to the Project. MMX has developed new standards from Serra Azul material. These samples have been sent to several laboratories in a round robin to produce analyses used to calculate an expected mean and standard deviation.

QA/QC sample failures are handled appropriately and are reviewed and investigated to determine the reason for the error. The sampling preparation and analyses follow industry guidelines and the results from the QA/QC samples indicate that the analyses are suitable for a resource database.



7 Data Verification 7.1 Quality Control Measures and Procedures

MMX directly imports data received from the laboratories into its database. SRK has compared assay certificates of 20% of the database and found no errors. The laboratory QA/QC measures are described in the proceeding section.

MMX is monitoring core recovery and is eliminating intervals with low recovery from the resource estimation database.

MMX personnel check topographic updates to be sure that data is correct and check drillhole collars against topography.

7.2 Limitations

The limitations to the QA/QC program are described in the preceding section.

SRK considers the data to be suitably verified and fit for resource estimation.



8 Mineral Resources Estimate This section provides details in terms of key assumptions, parameters and methods used to estimate the mineral resources together with SRK’s opinion as to their merits and possible limitations. The resource estimation for the Serra Azul Mine was prepared by Mr. Elvis Vargas under the direction of Ms Lilian Grabellos, Manager of Resources and Reserves. MMX uses Mintec’s MineSight software for resource estimation and mine planning. Leah Mach, Principal Resource Consultant with SRK, audited the resource.

8.1 Drillhole Database

The drillhole sample database was compiled by MMX and verified by SRK and is determined to be of high quality and suitable for resource estimation. The database consists of assays for 214 holes drilled by AVG, Minerminas, and MMX. The average depth is 88m and the total meterage is 18,858m. About a third of the holes are vertical and the remainder were drilled at approximately -70° to the north.

SRK received the drillhole database as five comma separated variable (csv) files consisting of:

Collar: Drillhole ID, easting, northing, elevation, and total depth;

Survey: Depth, azimuth, inclination;

Recovery: Advance from, to, length, recovered length, recovery percentage;

Geology: From, to, lithology and code from drill log, modeled lithology and code from cross-sections; and

Assay: From, to, Fe, SiO2, Al2O3, P, Mn, LOI, TiO2, CaO, MgO, and FeO.

Table 8.1.2 contains basic statistics for the assay interval and metal variables of all analyzed samples.

Table 8.1.2: Basic Statistics for Assays

Variable Number Minimum Maximum Average

1st

Quartile Median

3rd

Quartile

Standard

Deviation

Coefficient

of

Variation

Interval 2669 0.85 16.20 4.40 3.55 4.80 5.00 1.65 0.31Fe 2669 2.86 68.20 40.55 32.67 38.70 49.85 12.80 .032SiO2 2669 0.70 94.78 38.00 24.04 42.05 50.79 18.59 0.49Al2O3 2669 0.02 29.32 1.92 0.31 0.94 2.52 2.76 1.44P 2669 0.003 1.420 0.050 0.016 0.032 0.063 0.065 1.296Mn 2650 0.002 21.53 0.16 0.001 0.01 0.03 0.86 5.41LOI 2448 -1.95 13.95 1.34 0.10 0.57 1.86 1.91 1.43



8.2 Geology

Sixty-seven geologic cross-sections were constructed at intervals of 100 or 50m depending on the drill spacing. Figure 8-1 is a drillhole location map with mining concessions and topography as of September 2010. The following lithotypes were modeled in the cross-sections:

Stock pile;

Canga;

Friable Itabirite;

Friable Hematite;

Friable Carbonate Itabirite;

Compact Itabirite;

Compact Hematite;

Intrusive;

Quartzite;

Phyllite;

Breccia; and

Quartz Vein.

Figure 8-2 shows typical cross-sections through AVG and Minerminas.

The cross-sections were used to prepare horizontal sections at 10m spacing from elevation 955 to 1,365. The geology was coded into the block model based on the horizontal sections.

Grades were estimated for lithotypes Canga (CG), Friable Itabirite (IF), Friable Carbonate Itabirite (IFCA), and Compact Itabirite (IC). Table 8.2.1 presents basic statistics for these lithotypes.



Table 8.2.1: Basic Statistics of Metal Variables by Lithotypes used in Grade Estimation

Lithotype Statistic Fe SiO2 Al2O3 P Mn LOI

CG

Average 55.90 8.48 5.40 0.154 0.02 5.59 Minimum 26.32 0.70 0.64 0.020 0.00 0.18 Maximum 66.40 59.97 22.81 0.760 0.19 13.08 Median 59.54 5.20 3.36 0.124 0.02 4.60 St. Dev 9.92 10.40 5032 0.123 0.03 3.17 Count 119 119 119 119 117 115

IF

Average 49.35 25.76 1.84 0.058 0.04 1.46 Minimum 13.85 0.70 0.04 0.005 0.00 0.00 Maximum 68.25 74.86 14.98 1.420 2.29 12.81 Median 49.50 26.23 1.34 0.040 0.01 0.97 St. Dev 10.32 15.59 1.83 0.085 0.12 1.68 Count 1513 1513 1513 1513 1497 1345

IC


IFCA


All

Average 39.56 40 1.59 0.051 0.13 138 Minimum 2.86 0.70 0.02 0.002 0.00 0.00 Maximum 68.25 94.78 22.81 1.420 21.53 13.08 Median 37.75 43.45 0.81 0.035 0.01 0.69 St. Dev 11.70 17.29 2.11 0.063 0.73 1.82 Count 4843 4822 4822 4822 4802 3738

8.3 Compositing

The average length of the samples used in grade estimation is 2.23m with a range from 0.02 to 15m. MMX composited the samples on 5m intervals starting at the top of the drillhole with breaks at the lithotype solid boundaries. The variables that were composited include Fe, SiO2, Al2O3, P and Mn. Resulting composites with lengths less than 2.5m at the base of a lithotype change were added to the previous composite, and samples greater than or equal to 2.5 were maintained as such. Table 8.3.1 presents basic statistics of the composites used in grade estimation.



Table 8.3.1: Composite Statistics


CG


IF


IC

Average 35.31 47.91 0.74 0.028 0.04 0.51 Minimum 4.34 3.18 0.02 0.002 0.00 0.00 Maximum 63.36 91.13 14.58 0.318 5.16 12.66 Median 35.41 48.14 0.34 0.020 0.01 0.20 St. Dev .20 10.20 1.13 0.027 0.24 0.89 Count 1068 1068 1068 1068 1066 763

IFCA


All


8.4 Density

Prior to 2010, MMX conducted three programs of density measurements at the project. The work was performed by Prominas under contract to MMX. The first program was done at AVG, the second at Minerminas and third was done at both AVG and Minerminas. During the 2010 drill campaign, MMX has taken additional density measurements on the core samples. The sand flask method was used for the friable lithotypes and the water displacement method for the competent lithotypes. Average values were calculated with and without outlier values by lithotype. The average values without outliers were used in the resource estimation. Table 8.4.1 presents the densities by lithotype.



Table 8.4.1: Density of Lithotypes

Code Abbreviation Description Density (t/m3) Type

1 IF Friable Itabirite 2.80 Ore

2 IC Compact Itabirite 3.34 Ore

3 CG Mineralized Canga 2.90 Ore

4 IN Intrusive 2.00 Waste 5 QTZ Quartzite 2.84 Waste 6 FL Phyllite 2.35 Waste

10 IFCA Friable Carbonate Itabirite 2.09 Ore

11 BR Breccia 2.00 Waste 12 HFMN Friable Hematite 2.70 Waste 16 FS Fine stockpile 2.88 Waste 20 HC Compact Hematite 4.15 Waste 21 VQ Quartz vein 2.60 Waste

8.5 Variogram Analysis and Modeling

MMX conducted variography studies on the AVG and Minerminas properties separately because of the difference in the dip of the beds between the two properties. Figure 8-3 is an oblique view of the cross-sections illustrating the change in bedding at an easting of about 574,650. The study included directional and downhole variograms as well as omni-directional variograms. The omni-directional variogram was chosen as showing the best fit for the data. The downhole variogram was used to determine the nugget. Figure 8-4 displays the omni-directional variograms for iron in the friable and compact itabirites.

The variogram parameters used in the resource estimation are presented in Table 8.5.1.



Table 8.5.1: Variogram Parameters

Parameter

Friable Itabirite

Fe SiO2 Al2O3 P Mn LOI

Nugget 5 5 0.5 0.0001 0.0002 0.05 Structure 1 Sill 72 185 1.5 0.0032 0.0058 1.21 Range (m) 125 146 44 35 150 37 Structure 2 Sill 23 35 1.25 0.0016 0.63 Range (m) 300 300 150 300 240 Model Spherical Spherical Spherical Spherical Spherical Spherical

Parameter

Compact Itabirite


Nugget 6 17 0.1 0.00016 0.01 0.05 Structure 1 Sill 18.4 34 1.05 0.0002 0.01 0.22 Range (m) 48 42 300 43 150 150 Structure 2 Sill 17 34 0.00031 0.23 Range (m) 300 300 300 300 Model Spherical Spherical Spherical Spherical Spherical Spherical

Parameter

Friable Carbonate Itabirite


Nugget 13 13 0.1 0.00010 0.01 0.15 Structure 1 Sill 50 95 2 0.0018 3.36 2.50 Range (m) 123 50 67 53 310 45 Structure 2 Sill 30 61 3.87 0.00074 0.22 Range (m) 300 300 460 300 200 Model Spherical Spherical Spherical Spherical Spherical Spherical

Parameter

Canga


Nugget 2.6 2 1.7 0.0050 0.00001 0.05 Structure 1 Sill 19 40 4.8 0.0007 0.0002 2.16 Range (m) 200 200 280 400 50 52 Structure 2 Sill 2.1 Range (m) 300 300 220 Model Spherical Spherical Spherical Spherical Spherical Spherical



8.6 Grade Estimation

A block model was created with limits and dimensions as shown in Table 8.6.1.

Table 8.6.1: Block Model Dimensions and Origin

Direction Minimum Maximum Block Size No. of Blocks

X (East) 571,100 576600 25 220 Y (North) 7,774,100 7,777,300 25 128 Z (Elevation) 900 1,400 10 50

The block model contains variables for:

Fe, SiO2, Al2O3, Mn, P, and LOI;

Lithotype;

Percentage below topography; and

Estimation parameters – number of composites, number of drillholes, average distance of composites used in estimation, and distance to closest composite.

The block model was coded by lithotype from the lithologic solids produced from the horizontal sections. Up to four lithotypes and percentages could be stored for each block and those variables were used to validate the volume of each of the modeled lithotypes. The majority code was used in estimation and in the mineral resource statement.

The percentage of the block below topography was assigned to the topo percentage variable.

Block grades were estimated by ordinary kriging in three passes. The parameters for each pass are given in Table 8.6.2. Blocks were classified as Measured, Indicated or Inferred after each estimation pass. Blocks which did not meet the necessary criteria for classification were re-estimated in the next pass. Samples were limited by quadrants, with a maximum of eight samples per quadrant.

Table 8.6.2: Estimation Parameters

Parameter Pass 1 Pass 2 Pass 3

Composites Minimum number 4 4 1 Maximum number 32 32 32 Maximum per drillhole 4 4 4 Maximum per quadrant 8 8 8 Distance (m) Friable, compact itabirite, friable carbonate itabirite 300 450 2000 Canga 200 300 2000

The search ranges were determined by the iron variogram range with the first pass at the variogram range and the second at 150% of the range. A third pass was run at 2000m to estimate mineral potential. The estimation was conducted using block and composite lithotype matching.

Figure 8-5 presents cross-sections through the AVG and Minerminas areas with block grades and drillholes.



8.7 Model Validation

The block model was validated by the following methods:

Visual comparison of the block grades to the composite grades on cross-sections and horizontal sections;

Comparison of assay, composite, and block statistics; and

Swath plots.

The visual examination of the block grades to the composite grades was in general quite good, except at depth in the compact itabirite, which was estimated in the third pass. Although MMX has drilled several holes that penetrate the compact itabirite at depth, there are still relatively few samples for the large tonnage in the lithotype. However, the blocks estimated in the third pass are not classified as measured, indicated, or inferred and therefore do not have an effect on the mineral resource statement.

The basic statistics of the blocks estimated in the first pass are presented in Table 8.7.1.

Table 8.7.1: Basic Statistics of the Blocks


CG


IF

Average 50.92 23.61 1.77 0.048 0.07 1.27 Minimum 27.88 1.44 0.24 0.011 0.00 0.18 Maximum 66.28 56.77 9.65 0.596 .92 7.39 Median 51.65 22.98 1.57 0.040 0.02 1.15 St. Dev 6.69 9.91 0.87 0.030 0.13 0.64 Count 13017 13017 13017 13017 13017 13017

IC


IFCA


All




The average iron grades of the composites are somewhat higher than the assays. The composite grades and block grades compare quite well.

A nearest neighbor, or polygonal, estimation was performed as a comparison to the kriged grades. Swath plots were prepared as north-south bands 200m in width and a comparison made to the composite, kriging, and polygonal grades. The swath plots for iron indicate that the kriged and composites track quite well especially in areas where there is more closely spaced drilling as would be expected. Figure 8-6 presents the swath plot for global iron grades.

SRK has also conducted a resource estimation using similar parameters as MMX and has reproduced their results within 2% for tonnage, which is acceptable. SRK considers that MMX has used good practices in its resource estimation.

8.8 Resource Classification

The resources were classified according to CIM classification as Measured, Indicated, or Inferred based on the pass in which the block was estimated and the number of drillholes used in the estimation. Because the drillholes are terminated at different elevations, a surface was constructed at the base of the drillholes for use in resource classification. The surface was dropped 20m (Ore -20m) This surface, the depth of drilling surface, was used to limit the classification of measured, indicated, and inferred resources. Table 8.8.1 presents the criteria used in the classification.

Table 8.8.1: Serra Azul Classification Criteria

Step Class Minimum Drillholes

Distance to closest Composite

Relation to Classification Surface IF, IC, IFCA CG

Step 1

Measured 3 100 70 Above Ore -20m

Indicated 2 300 200 Above Ore -20m

Blocks not classified are re-estimated in Step 2

Step 2

Inferred 1 No Requirement Above Ore -20m

Blocks not classified are re-estimated in Step 3

Step 3 Potential 1 No Requirement Above or below Ore -20m

Final Blocks classified as Measured between Ore -20 and the original base of drilling are reclassified as Indicated

All Measured blocks were required to be above the depth of drilling surface. All Indicated blocks were required to be above or a maximum of 20m below the depth of drilling surface. All blocks estimated in the second pass were classified as Inferred and blocks estimated in the first pass and which were not classified as measured or indicated were classified as inferred as well. Figure 8-7 presents cross-sections through the AVG and Minerminas areas showing block classification.

Blocks estimated in the third pass, at distances up to 2000m, were used to provide an estimate of the potential mineralization for the property. Potential mineralization is conceptual by nature and must be demonstrated with future drilling.



8.9 Mineral Resource Statement

The Mineral Resources of the Serra Azul Mine as of November 16, 2010, on a wet tonne basis are presented in Table 8.9.1. The resources are limited by the DNPM mineral concession boundary.

Table 8.9.1: Serra Azul Mineral Resource Statement, as November 16, 2010*

ROCK CLASS

Tonnes

(000's) Fe% SiO2% Al2O3% Mn% P% LOI%

IF

Measured 158,368 51.14 23.36 1.8 0.047 0.049 1.261

Indicated 41,621 48.46 26.99 1.67 0.144 0.048 1.333 Total

M&I 199,989 50.58 24.12 1.77 0.07 0.05 1.28

Inferred 17 40.84 38.02 1.11 0.029 0.033 0.774

IC

Measured 384,164 35.82 14.1 0.62 0.031 0.025 0.372

Indicated 252,657 34.32 49.23 0.7 0.082 0.025 0.519 Total

M&I 636,821 35.22 28.04 0.65 0.05 0.03 0.43

Inferred 3,939 30.57 53.25 0.78 0.341 0.049 1.652

IFCA

Measured 37,491 32.97 44.3 3.64 0.832 0.081 2.799

Indicated 13,608 32.9 44 3.72 0.993 0.083 2.926 Total

M&I 51,099 32.95 44.22 3.66 0.87 0.08 2.83

Inferred 0

CG

Measured 4,447 59.4 5.75 4.05 0.022 0.159 4.634

Indicated 7,170 55.37 8.1 5.69 0.037 0.226 5.801 Total

M&I 11,617 56.91 7.2 5.06 0.03 0.2 5.35

Inferred 5,535 53.01 10.98 6.16 0.045 0.218 5.998

Total

Measured 584,440 39.97 40.37 1.16 0.087 0.036 0.801

Indicated 315,056 36.6 45.13 1.07 0.129 0.035 0.851 Total

M&I 899,496 38.79 42.04 1.13 0.1 0.04 0.82

Inferred 9,492 43.67 28.57 3.92 0.168 0.147 4.185 * Cut-off Grade 20% Fe; tonnes on a wet basis.



8.10 Mineral Resource Sensitivity

Grade tonnage curves were plotted separately for Total Measured and Indicated Resources and Inferred Resources and are presented Tables 8.10.1 and 8.10.2 and Figure 8-8.

Table 8.10.1: Measured and Indicated Grade and Tonnage by Fe Cutoff.

Cut-off (Fe%) Mt Fe (%) SiO2 (%) Al2O3 (%) P (%) Mn (%) LOI (%)

20 979.11 39.34 41.16 1.18 0.038 0.10 0.87 22 978.92 39.35 41.15 1.18 0.038 0.10 0.87 24 977.71 39.37 41.12 1.17 0.038 0.10 0.87 26 971.21 39.46 41.00 1.17 0.038 0.10 0.86 28 952.21 39.71 40.68 1.17 0.038 0.09 0.86 30 909.18 40.21 40.02 1.16 0.037 0.07 0.83 32 851.21 40.84 39.24 1.12 0.037 0.06 0.81 34 762.40 41.74 38.02 1.10 0.036 0.04 0.80 36 569.09 44.00 34.53 1.24 0.041 0.05 0.93 38 365.70 47.93 28.12 1.63 0.050 0.05 1.24 40 273.95 50.99 23.15 1.93 0.058 0.05 1.49 42 238.02 52.52 20.73 2.05 0.062 0.04 1.61 44 217.37 53.42 19.31 2.10 0.064 0.04 1.67 46 198.20 54.24 18.05 2.12 0.066 0.04 1.71 48 177.16 55.09 16.67 2.16 0.069 0.03 1.77 50 156.00 55.92 15.31 2.21 0.072 0.03 1.85 52 129.09 56.94 13.68 2.24 0.075 0.03 1.93 54 99.92 58.08 11.81 2.30 0.080 0.03 2.04 56 71.27 59.33 10.09 2.26 0.079 0.02 2.05 58 46.32 60.59 8.11 2.34 0.087 0.02 2.22 60 25.77 61.91 6.22 2.29 0.098 0.02 2.37

Table 8.10.2: Inferred Grade and Tonnage by Fe Cutoff

Cut-off (Fe%) Mt Fe (%) SiO2 (%) Al2O3 (%) P (%) Mn (%) LOI (%)

20 14.81 47.21 22.20 4.65 0.167 0.12 4.73 22 14.81 47.21 22.20 4.65 0.167 0.12 4.73 24 14.81 47.21 22.20 4.65 0.167 0.12 4.73 26 14.81 47.21 22.20 4.65 0.167 0.12 4.73 28 14.77 47.27 22.10 4.66 0.167 0.12 4.74 30 12.43 50.66 15.98 5.37 0.188 0.06 5.25 32 11.47 52.36 12.85 5.75 0.200 0.04 5.55 34 11.32 52.61 12.36 5.81 0.202 0.04 5.62 36 11.28 52.67 12.23 5.83 0.203 0.04 5.63 38 10.85 53.31 10.83 6.06 0.210 0.05 5.85 40 10.71 53.49 10.44 6.12 0.212 0.05 5.90 42 10.48 53.77 9.83 6.21 0.214 0.05 5.95 44 10.39 53.87 9.62 6.25 0.215 0.05 5.97 46 10.24 53.99 9.38 6.28 0.216 0.05 5.98 48 9.88 54.24 8.82 6.37 0.219 0.05 6.04 50 9.39 54.51 8.35 6.43 0.223 0.04 6.02 52 7.85 55.22 7.02 6.54 0.238 0.04 6.13 54 5.06 56.51 5.20 6.16 0.279 0.02 6.23 56 2.32 58.09 4.24 5.60 0.263 0.02 5.86 58 1.29 59.09 3.91 4.98 0.255 0.01 5.49 60 0.25 61.40 3.69 3.03 0.199 0.01 4.80



8.11 Mineral Potential

Blocks estimated in the third estimation pass provide a range of potential tonnages, which have not yet been demonstrated to be resources with the current drilling. Potential mineralization is conceptual in nature and it is uncertain that if will be confirmed by future exploration. The potential mineralization at Serra Azul range from 115Mt located between 0 and 40m below the depth of drilling surface to 570Mt at the maximum limits of the estimation. The potential mineralization is predominately compact itabirite and thus far only limited drilling has penetrated this unit to its full thickness. The estimated iron grades are therefore not reliable below the depth of drilling. SRK recommends that MMX continue to drill the compact itabirite in order to investigate iron grades at depth and to increase confidence in this potential.

SRK Job No.: 162700.10



Drillhole Location Map with Topography and

Mining Concessions

SRK Job No.: 162700.10


Section 572850, Looking East



Cross-sections with Geology and Drilling

Looking East

Quartzite

Quartzite

Phyllite

Phyllite

Compact

Compact Itabirite

Friable

Friable

Canga

SRK Job No.: 162700.10




Oblique View of Cross-sections Showing Change in

Bedding Dip

SRK Job No.: 162700.10

File Name: Figure 8--4.doc Date: 12/20/10 Approved: LEM Figure: 8-4



Omni-Directional Variogram for Iron, Friable and Compact

Itabirite

SRK Job No.: 162700.10




Serra Azul Mine

Brazil

Cross-sections with Geology, Block Model and Drilling

Looking East

Base of Drilling Surface

SRK Job No.: 162700.10




Swath Plot Index Map and Iron Swath Plot

SRK Job No.: 162700.10




Serra Azul Mine

Brazil

Cross-sections with Geology, Block Model Classification

and Drilling

Base of Drilling Surface

Measured

Indicated

Inferred

Potential

SRK Job No.: 162700.10



Grade Tonnage Curves

Iron

35

40

45

50

55

60

65

0

200

400

600

800

1000

1200

20 40 60

Fe

%

To

nn

es

Mil

lio

ns

Cutoff Fe %

Grade Tonnage, Measured and Indicated

Tonnes

Fe (%)

45

50

55

60

65

0

2

4

6

8

10

12

14

16

28 48

Fe

%

To

nn

es

Mil

lio

ns

Cutoff Fe %

Grade Tonnage, Inferred

Tonnes

Fe (%)



9 Recommendations 9.1 Analytical and QA/QC Data

SRK recommends that MMX continue its QA/QC program as part of every drilling program, which includes the insertion of standards and duplicates in the sample stream. Blanks are recommended at all stages of sample preparation to eliminate this as a possible source of QA/QC failures. The QA/QC program is monitored soon after the analyses are received so that sample failures can be recognized and corrected early in the program.

9.2 Resource Estimation

SRK recommends that MMX continue to drill additional holes into the compact itabirite to gain additional samples and analysis and increase confidence in the grades at depth and to increase the indicated resources in this rock type.



10 References Almeida, F. F. M., Brito Neves, B. B. & Fuck, R. A., 1981, Brasilian structural province: an

Dorr, J.V.N. (1969), Physiographic, Stratigraphic and Structural Development of the Quadrilatero Ferrifero, Minas Gerais, Brazil: US Geol Survey Professional Paper 641A

Endo, I. and Machado, R. 1997. Regimes Tectônicos no Segmento Meridional do Cráton do São Francisco: Quadrilátero Ferrífero e Áreas Adjacentes, Minas Gerais. In: Simpósio de Geologia de Minas Gerais, 1997, Ouro preto. Anais do IX Simpósio de Geologia de Minas Gerais. Belo Horizonte : SBG/NÚCLEO Minas Gerais, 1997. p. 58-59.

Jordt-Evangelista, H.; Alkmim, F. F.; Marshak, S. 1992. Metamorfismo Progressivo e a Ocorrencia dos Tres Polimorfos de Al2Sio5 (Cianita, Andaluzita e Silimanita) na Formação Sabara em Ibirite, Quadrilatero Ferrifero, MG. REM - revista da escola de minas, Ouro Preto, v. 45, n. 1-2, p. 157-160.

Alkmim F.F. and Marshak S.; 1989. Proterozoic contraction/extension tectonics of the southern São Francisco region, Minas Gerais, Brazil. Tectonics, 8:555-571.

MMX, 2010, Serra Azul Resource Estimation Methodology, December 2010, Unpublished internal report.

Oliveira, N. V. de; Endo, I.; Oliveira, L. G. S. de . 2005. Geomteria do Sinclinal Gandarela Baseada na Deconvolução Euler 2D E 3D - Quadrilátero Ferrifero (MG). Revista Brasileira de Geofísica, v. 23, p. 221-232.

Pires, F. R. M. 1979. Tectonic Regimes Of The Quadrilatero Ferrifero, Mg. In: I Simp. Geol. do Craton S. Francisco e suas Faixas Marginais. p. 0-0.

Renger F.E., Noce C.M., Romano A.W., Machado N. 1994. Evolução sedimentar do Supergrupo Minas: 500 Ma de registro geológico no Quadrilátero Ferrífero, Minas Gerais, Brasil. Geonomos, 2:1-11.

Romano, A. W. 1989. Evolution Tectonique de la Region nord-ouest du Quadrilatere Ferrifere - Minas Gerais - Bresil (Geocronologie du Socle - Aspects Geochimiques et Petrographiques des Supergroupes Rio das Velhas et Minas). U.E.R. Geosciences et Materiaux, Universite de Nancy I, França, Tese de Doutoramento, 259p.

Simmons,G. C., 1968. Geology and Iron Deposits of the Western Serra do Curral, Minas Gerais, Brazil. USGS/DNPM Professional Paper, 341 (G):1-53.

SRK Consulting (US), Inc. January 2008 MMX/AVG NI 43-101 Technical Report.162703.05, 84pp.

SRK Consulting (US), Inc. July 2008 MMX/Minerminas NI 43-101 Technical Report, 72pp.

SRK Consulting (US), Inc. May 2009 Serra Azul NI 43-101 Technical Report, 72pp.



11 Glossary 11.1 Mineral Resources and Reserves

11.1.1 Mineral Resources

The mineral resources and mineral reserves have been classified according to the “CIM Standards on Mineral Resources and Reserves: Definitions and Guidelines” (December 2005). Accordingly, the Resources have been classified as Measured, Indicated or Inferred, the Reserves have been classified as Proven, and Probable based on the Measured and Indicated Resources as defined below.

A Mineral Resource is a concentration or occurrence of natural, solid, inorganic or fossilized organic material in or on the Earth’s crust in such form and quantity and of such a grade or quality that it has reasonable prospects for economic extraction. The location, quantity, grade, geological characteristics and continuity of a Mineral Resource are known, estimated or interpreted from specific geological evidence and knowledge.

An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes.

An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality, densities, shape and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters, to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, physical characteristics are so well established that they can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters, to support production planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings and drillholes that are spaced closely enough to confirm both geological and grade continuity.

11.1.2 Mineral Reserves

A Mineral Reserve is the economically mineable part of a Measured or Indicated Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified. A Mineral Reserve includes diluting materials and allowances for losses that may occur when the material is mined.



A ‘Probable Mineral Reserve’ is the economically mineable part of an Indicated, and in some circumstances a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.

A ‘Proven Mineral Reserve’ is the economically mineable part of a Measured Mineral Resource demonstrated by at least a Preliminary Feasibility Study. This Study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.

11.2 Glossary

Table 11.2.1: Glossary

Term Definition

Assay: The chemical analysis of mineral samples to determine the metal content. Capital Expenditure: All other expenditures not classified as operating costs. Composite: Combining more than one sample result to give an average result over a larger distance. Concentrate: A metal-rich product resulting from a mineral enrichment process such as gravity concentration or

flotation, in which most of the desired mineral has been separated from the waste material in the ore. Crushing: Initial process of reducing ore particle size to render it more amenable for further processing. Cut-off Grade (CoG): The grade of mineralized rock, which determines as to whether or not it is economic to recover its

gold content by further concentration. Dilution: Waste, which is unavoidably mined with ore. Dip: Angle of inclination of a geological feature/rock from the horizontal. Fault: The surface of a fracture along which movement has occurred. Footwall: The underlying side of an orebody or stope. Gangue: Non-valuable components of the ore. Grade: The measure of concentration of gold within mineralized rock. Hangingwall: The overlying side of an orebody or slope. Haulage: A horizontal underground excavation which is used to transport mined ore. Igneous: Primary crystalline rock formed by the solidification of magma. Kriging: An interpolation method of assigning values from samples to blocks that minimizes the estimation

error. Lithological: Geological description pertaining to different rock types. LoM Plans: Life-of-Mine plans. LRP: Long Range Plan. Material Properties: Mine properties. Milling: A general term used to describe the process in which the ore is crushed and ground and subjected to

physical or chemical treatment to extract the valuable metals to a concentrate or finished product. Mineral/Mining Lease: A lease area for which mineral rights are held. Mining Assets: The Material Properties and Significant Exploration Properties. Ongoing Capital: Capital estimates of a routine nature, which is necessary for sustaining operations. Ore Reserve: See Mineral Reserve. RoM: Run-of-Mine. Sedimentary: Pertaining to rocks formed by the accumulation of sediments, formed by the erosion of other rocks. Sill: A thin, tabular, horizontal to sub-horizontal body of igneous rock formed by the injection of magma

into planar zones of weakness. Stratigraphy: The study of stratified rocks in terms of time and space. Strike: Direction of line formed by the intersection of strata surfaces with the horizontal plane, always

perpendicular to the dip direction. Sulfide: A sulfur bearing mineral. Tailings: Finely ground waste rock from which valuable minerals or metals have been extracted. Thickening: The process of concentrating solid particles in suspension. Total Expenditure: All expenditures including those of an operating and capital nature. Variogram: A statistical representation of the characteristics (usually grade).



Abbreviations

The metric system has been used throughout this report unless otherwise stated. All currency is in U.S. dollars. Market prices are reported in US$ per troy oz of gold and silver. Tonnes are metric of 1,000kg, or 2,204.6lbs. The following abbreviations are used in this report.

Table 11.2.2: Abbreviations Abbreviation Unit or Term

Al2O3 Alumina °C degrees Centigrade Ca Calcium CaO Calcium oxide cm centimeter cm2 square centimeter cm3 cubic centimeter ° degree (degrees) Fe Iron FeO Iron oxide Fe2O3 Iron oxide, also hematite g gram g/t grams per tonne ha hectares kg kilograms km kilometer km2 square kilometer kt thousand tonnes L liter LOI Loss On Ignition m meter m2 square meter m3 cubic meter Mg Magnesium MgO Magnesium oxide masl meters above sea level mm millimeter mm2 square millimeter mm3 cubic millimeter m.y. million years Mn Manganese MnO Manganese oxide NI 43-101 Canadian National Instrument 43-101 Na Sodium Na2O Sodium oxide % percent P Phosphorous P2O5 Phsophorous pentoxide ppb parts per billion ppm parts per million QA/QC Quality Assurance/Quality Control RC rotary circulation drilling RoM Run-of-Mine RQD Rock Quality Description sec second SiO2 Silica dioxide SG specific gravity t tonne (metric ton) (2,204.6 pounds) Ti Titanium TiO2 Titanium dioxide XRD x-ray diffraction y Year

NI 43-101 Technical Report on Resources


Bom Sucesso Project

Minas Gerais, Brazil

Prepared for:



SRK Project Number: 162706

Prepared by:

7175 W. Jefferson Ave.

Suite 3000 Lakewood, CO 80235

Effective Date: May 10, 2009

Report Date: May 11, 2009

Contributors: Endorsed by QP:

George Borinski Leah Mach, CPG, MSc Dorinda Bair

MMX Mineração e Metálicos S.A. i Bom Sucesso Project NI 43-101 Technical Report on Resources

SRK Consulting (US), Inc. May 11, 2009 Bom Sucesso_NI 43-101 Technical Report on Resources_162706_MLM_011.doc

Table of Contents

1 INTRODUCTION (ITEM 4) ........................................................................................... 1-1 1.1 Terms of Reference and Purpose of the Report ................................................... 1-1 1.2 Reliance on Other Experts (Item 5) ..................................................................... 1-1

1.2.1 Sources of Information .......................................................................... 1-1 1.3 Qualifications of Consultants (SRK) ................................................................... 1-2

1.3.1 Site Visit ................................................................................................ 1-2 1.4 Units of Measure .................................................................................................. 1-3 1.5 Effective Date ...................................................................................................... 1-3

2 PROPERTY DESCRIPTION AND LOCATION (ITEM 6) ........................................... 2-1 2.1 Property Location................................................................................................. 2-1 2.2 Mineral Titles ....................................................................................................... 2-1 2.3 Legal Surveys....................................................................................................... 2-2 2.4 Surface Rights ...................................................................................................... 2-2 2.5 Location of Mineralization .................................................................................. 2-2 2.6 Royalties, Agreements and Ecumbrances ............................................................ 2-2 2.7 Environmental Liabilities and Permitting ............................................................ 2-3

2.7.1 Required Permits and Status .................................................................. 2-3 2.7.2 Compliance Evaluation ......................................................................... 2-4 2.7.3 Environmental Liabilities ...................................................................... 2-4

3 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY (ITEM 7) .............................................................................. 3-1

3.1 Topography, Elevation and Vegetation ............................................................... 3-1 3.2 Climate and Length of Operating Season ............................................................ 3-1 3.3 Access to Property ............................................................................................... 3-1 3.4 Surface Rights ...................................................................................................... 3-2 3.5 Local Resources and Infrastructure ..................................................................... 3-2

3.5.1 Access Road, Transportation and Port .................................................. 3-2 3.5.2 Power Supply ......................................................................................... 3-2 3.5.3 Water Supply ......................................................................................... 3-2 3.5.4 Buildings and Ancillary Facilities ......................................................... 3-2 3.5.5 Tailings Storage and Waste Dumps ...................................................... 3-2 3.5.6 Manpower .............................................................................................. 3-2

4 HISTORY (ITEM 8) ........................................................................................................ 4-1 4.1 Ownership ............................................................................................................ 4-1 4.2 Past Exploration and Development ...................................................................... 4-1 4.3 Historic Mineral Resource and Reserve Estimates .............................................. 4-1 4.4 Historic Production .............................................................................................. 4-1

5 GEOLOGIC SETTING (ITEM 9) ................................................................................... 5-1 5.1 Regional Geology ................................................................................................ 5-1

5.1.1 Stratigraphy ........................................................................................... 5-1 5.2 Local Geology ...................................................................................................... 5-3

5.2.2 Alteration ............................................................................................... 5-4 5.2.3 Structure ................................................................................................ 5-4

MMX Mineração e Metálicos S.A. ii Bom Sucesso Project NI 43-101 Technical Report on Resources


6 DEPOSIT TYPE (ITEM 10) ............................................................................................ 6-1 6.1 Geological Model ................................................................................................. 6-1

7 MINERALIZATION (ITEM 11) ..................................................................................... 7-1 7.1 Mineralized Zones ............................................................................................... 7-1 7.2 Surrounding Rock Types ..................................................................................... 7-1 7.3 Relevant Geological Controls .............................................................................. 7-1 7.4 Type, Character and Distribution of Mineralization ............................................ 7-1

8 EXPLORATION (ITEM 12) ........................................................................................... 8-1 8.1 Surveys and Investigations .................................................................................. 8-1 8.2 Interpretation ........................................................................................................ 8-1

9 DRILLING (ITEM 13) .................................................................................................... 9-1 9.1 Procedures ............................................................................................................ 9-1 9.2 Interpretation ........................................................................................................ 9-2

10 SAMPLING METHOD AND APPROACH (ITEM 14) ............................................... 10-1 10.1 Sampling Methods ............................................................................................. 10-1 10.2 Location and Sample Density ............................................................................ 10-1 10.3 Factors Impacting Accuracy of Results ............................................................. 10-2 10.4 Sample Quality and Representativeness ............................................................ 10-2 10.5 Relevant Samples ............................................................................................... 10-2

11 SAMPLE PREPARATION, ANALYSES AND SECURITY (ITEM 15) .................... 11-4 11.1 Sample Preparation ............................................................................................ 11-4 11.2 Sample Analysis................................................................................................. 11-4 11.3 Internal Laboratory Quality Controls and Quality Assurance ........................... 11-5 11.4 Quality Controls and Quality Assurance ........................................................... 11-5 11.5 Interpretation ...................................................................................................... 11-6

12 DATA VERIFICATION (ITEM 16) ............................................................................. 12-1 12.1 Quality Control Measures and Procedures ........................................................ 12-1 12.2 Limitations ......................................................................................................... 12-1

13 ADJACENT PROPERTIES (ITEM 17) ........................................................................ 13-1

14 MINERAL PROCESSING AND METALLURGICAL TESTING (ITEM 18) ........... 14-1 14.1 Procedures .......................................................................................................... 14-1 14.2 Results ................................................................................................................ 14-2 14.3 Conclusions ........................................................................................................ 14-4

15 MINERAL RESOURCES (ITEM 19) ........................................................................... 15-1 15.1 Topography ........................................................................................................ 15-1 15.2 Drillhole Database ............................................................................................. 15-1 15.3 Geology .............................................................................................................. 15-2 15.4 Compositing ....................................................................................................... 15-3 15.5 Density ............................................................................................................... 15-3

16 OTHER RELEVANT DATA AND INFORMATION (ITEM 20) ............................... 16-1

17 INTERPRETATION AND CONCLUSIONS (ITEM 21) ............................................ 17-1 17.1 Field Surveys and Drilling ................................................................................. 17-1 17.2 Analytical and Testing Data............................................................................... 17-1 17.3 Exploration Conclusions .................................................................................... 17-1

MMX Mineração e Metálicos S.A. iii Bom Sucesso Project NI 43-101 Technical Report on Resources


17.4 Resource Estimation .......................................................................................... 17-1

18 RECOMMENDATIONS (ITEM 22) ............................................................................ 18-1 18.1 Costs ................................................................................................................... 18-1

19 REFERENCES (ITEM 23) ............................................................................................ 19-1

20 GLOSSARY .................................................................................................................. 20-1 20.1 Mineral Resources and Reserves ....................................................................... 20-1

20.1.1 Mineral Resources ............................................................................... 20-1 20.1.2 Mineral Reserves ................................................................................. 20-1

20.2 Glossary ............................................................................................................. 20-2

List of Tables

Table 1: Inferred Mineral Resources, April 15, 2009, Tonnes on a Wet Basis ............................III


Table 2.2.1: Obligations of Brazilian Exploration Permit Holders ............................................ 2-1

Table 2.6.1: Financial Obligations of Brazilian Mining Operations .......................................... 2-3

Table 2.7.1.1: Environmental Licensing Stages of Brazilian Mining Projects ........................... 2-4

Table 9.1: Drillhole Statistics ..................................................................................................... 9-1

Table 10.2.1: Sample Interval Statistics. .................................................................................. 10-2

Table 10.5.1: Table of Relevant Composited Samples ............................................................. 10-3

Table 11.2.1: Practical Detection Limits for SGS .................................................................... 11-4

Table 11.4.1: APHP with Standard Deviation (SD)for Calculating Rejection Limits ............. 11-6

Table 11.4.2: CRB1 with Provisional Standard Deviation for Calculating Rejection Limits .. 11-6

Table 11.5.1: MMX’s Recalculated APHP Standard Deviation for Calculating Rejection Limits11-7

Tables 14.2.1: Davis Tube Tests – Friable Itabirite .................................................................. 14-2

Table 14.2.2: Davis Tube Tests – Semi-Compact Itabirite ....................................................... 14-2

Table 14.2.3: Davis Tube Tests – Compact Itabirite 1 ............................................................. 14-3

Table 14.2.4: Davis Tube Tests –Compact Itabirite 2 .............................................................. 14-3

Table 14.2.5: Inbras LIMS test –Compact Itabirite 1 ............................................................... 14-4

Table 14.2.6: Inbras LIMS test –Feed and Product Constituents ............................................. 14-4

Table 15.2.1: Assay Basic Statistics by Company .................................................................... 15-2

Table 15.4.1: Basic Statistics of the Composited Samples ....................................................... 15-3

Table 15.5.1: Block Model Density Values .............................................................................. 15-4

Table 15.6.1: Block Model Origin and Dimensions ................................................................. 15-4

Table 15.7.1: Grade Estimation Parameters ............................................................................. 15-5

MMX Mineração e Metálicos S.A. iv Bom Sucesso Project NI 43-101 Technical Report on Resources


Table 15.7.2: Average Grades in the Block Model. ................................................................. 15-5

Table 15.10.1: Inferred Mineral Resources, April 15, 2009, Tonnes on a Wet Basis .............. 15-6

Table 20.2.1: Glossary .............................................................................................................. 20-2

Table 20.2.2: Abbreviations ...................................................................................................... 20-3

List of Figures

Figure 2-1: General Location Map of the Project ....................................................................... 2-5

Figure 2-2: Bom Sucesso Exploration License ........................................................................... 2-6

Figure 3-1: Location Map and Access to Bom Sucesso ............................................................. 3-3

Figure 5-1: São Francisco Craton, the Iron Quadrangle and Bom Sucesso ................................ 5-5

Figure 5-2: Bom Sucesso Regional Geology .............................................................................. 5-6

Figure 5-3: Bom Sucesso Local Geology ................................................................................... 5-7

Figure 8-1: Bom Sucesso Geology Map ..................................................................................... 8-2

Figure 9-1: Bom Sucesso Drillhole Location Map ..................................................................... 9-3

Figure 11-1: Graphs for Analysis of CRM APHP with Rejection Limits ................................ 11-9

Figure 11-2: Graphs for Analysis of Provisional Standard CRB1 with Rejection Limits ...... 11-10

Figure 11-3: Graphs of Pulp Duplicates ................................................................................. 11-11

Figure 11-4: Graphs of Coarse Duplicates .............................................................................. 11-12

Figure 13-1: MMX Adjacent Mineral Rights ............................................................................ 13-2

Figure 14-1: Inbras LIMS Flowsheet ........................................................................................ 14-5

Figure 15-1: Bom Sucesso Drillhole Location Map, Topography and Block Model Limits ... 15-7

Figure 15-2: Bom Sucesso Vertical Geological Sections, Locations and 3D ........................... 15-8

Figure 15-3: Bom Sucesso Vertical Geologic Cross-Sections ................................................. 15-9

Figure 15-4: Bom Sucesso Horizontal Geologic Sections and Extruded Solids .................... 15-10

Figure 15-5: Bom Sucesso Vertical Cross-Sections with Block Model Fe Grades ................ 15-11

Figure 15-6: Bom Sucesso Horizontal Geologic Sections Elevation 1035 ............................ 15-12

Figure 15-7: Grade Tonnage Curve Inferred Resources ......................................................... 15-13

List of Appendices

Appendix A

Certificate of Author

MMX Mineração e Metálicos S.A. I Bom Sucesso Project NI 43-101 Technical Report on Resources


Summary (Item 3)


The Bom Sucesso Project is located in south central Minas Gerais, Brazil in the municipalities of Bom Sucesso and Ibituruna approximately 150km southwest of Belo Horizonte, the capital of Minas Gerais. The license lies between 20°57’57”S and 21°04’17S and between 44°38’30’W and 44°43’31W and between UTM coordinates 528000E and 538000E and 7670000N and 7684000N.

Ownership

MMX controls one exploration license covering 755.65ha in the Project area:

• DNPM Process Number: 831.408/2004.

The license is issued in the name of LGA Mineração e Siderurgia Ltda. (LGA). In June 2008, MMX acquired the mineral rights of the Bom Sucesso Project through its subsidiary, AVX, from LGA.

The surface rights are held by various landowners and MMX has agreements with most to conduct exploration on their exploration license.


The Project area lies within the São Francisco Craton tectonic province of South America, southwest of the Iron Quadrangle an important iron producing region in Brazil. This region has a complex tectonic-metamorphic history and is composed of an Archean nucleus composed of a granite-greenstone terrane and the Paleoproterozoic Minas Supergroup sequence. Intrusive rocks are of dioritic and granitic composition. The Serra Bom Sucesso ridge, formed by the meta-sedimentary rocks of the Minas Supergroup, divides the basement into two domains, east and west.

The Minas Supergroup is composed of three Groups. The lower group, the Caraça Group, is found on the west slope of Serra de Bom Sucesso and comprises interlayered fine-grained quartz-biotite schist and quartzite. The Itabira Group is the host of the iron formation and consists of quartz itabirite and dolomitic itabirite. The thickness varies from 70 to 220m. At the surface, the quartz-itabirite is friable, fine-grained and is not hydrated. Weathering decreases with depth and the friable itabirite passes to semi-compact and then to compact. Magnetism varies from medium to high and the magnetite is always fine-grained. The upper group, the Piracicaba Group, is exposed on the east side of Serra de Bom Sucesso and is composed of mica quartz schist with sericitic quartzite interlayers. The Piracicaba is about 400m in thickness.

The mineralization at the Project consists of itabirite in the Itabira Group with areas of supergene enrichment through subsequent lateritic weathering. This results in a variety of different mineralization types. There are at least four distinct lithological ore types observed in the Project area:

• Friable quartz itabirite;

• Semi-compact itabirite;

• Compact itabirite; and

MMX Mineração e Metálicos S.A. II Bom Sucesso Project NI 43-101 Technical Report on Resources


• Carbonate itabirite.

Friable quartz itabirite occurs at the surface, as observed in outcrops and roadcuts. As the classification itself suggests, the principal characteristics of this type of ore are the grades of silica that vary between 6% to 10% and in granulometry that is above 19mm. The bands are composed of friable hematite and magnetite intercalated with bands of recrystallized quartz.

The friable itabirite grades into semi-compact and then into compact itabirite with depth below surface. As the degree of weathering decreases, the silica content increases and the iron grades decrease.

Exploration

Prior to 1975, little systematic exploration was conducted on the property. In that year, ICOMI initiated exploration on the Bom Sucesso and Ibituruna mountain ridges. A ground magnetometry geophysical survey was conducted on 36 sections spaced at 500m perpendicular to the iron formation in order to determine the thickness of the unit. Shafts and trenches were also opened to verify the contacts indicated by geophysics. Samples were collected from the shafts and trenches and geochemical and grain size analyses were performed on them.

ICOMI conducted geologic mapping at a scale of 1:5000 within the exploration license area with the use of a handheld GPS and a topographic map generated through aerophotogrametric restitution by Georama Aerofotogrametria Ltda. (Georama).

LGA drilled a total of 23 core holes in 2007 along the strike length of the Bom Sucesso deposit. It is not known if it conducted other exploration activities.

MMX has undertaken a program of geologic mapping at a scale of 1:5000, using a GPS and the topographic base map with 1m contours (described in Section 15). The mapping concentrated on delineating the contacts between the Caraça, Itabira, and Piracicaba Groups and not on defining the individual occurrences of friable, semi-compact and compact itabirite. Pegamite dikes and faults were also mapped.

MMX has drilled an addition 29 core holes on the Bom Sucesso Project.

Analytical Methods

LGA and MMX used SGS Geosol Laboratórios, Ltda. (SGS) located in Belo Horizonte for analysis of drill core during its drilling program at the Project. Samples are analyzed for percentage of Fe, SiO2, Al2O3, K2O Na2O, TiO2, P, Mn, Ca, Mg, Cu, S, FeO and LOI. MMX inserted QA/QC samples throughout the drilling program. The sample preparation and analyses follow industry guidelines and the QA/QC indicate that the results are suitable for a resource database. The analytical techniques and sample preparation are appropriate for the mineralization and deposit type.

Resource

The resource estimation for the Project was prepared for MMX by Prominas Projetos e Serviços de Mineração LTDA (Prominas), an independent geologic and engineering consultant company in Belo Horizonte. The resource was audited by SRK.

MMX estimated values for Fe, SiO2, Al2O3, P, Mn, MgO, CaO, TiO2, LOI, FeO, K2O, Na2O, Cu and S. The grade estimation was done in two passes using the Inverse Distance Squared (ID2)

MMX Mineração e Metálicos S.A. III Bom Sucesso Project NI 43-101 Technical Report on Resources


algorithm. The first pass had a range of 1000m and the second a range of 2000m. A minimum of 1 composite was required for both passes.

Because the estimation in the vertical direction was unconstrained, a surface was created defined by the base of the drillholes to limit the classification of Inferred Resources.

The Inferred Resources were classified according to the following parameters:

• Estimated in Pass 1;

• Maximum distance to the closest composite less than 400m; and

• Above the surface defined by the base of the drillholes.

The Inferred Resources for the Bom Sucesso Project are listed in Table 1.

Table 1: Inferred Mineral Resources, April 15, 2009, Tonnes on a Wet Basis Lithology Class Mt* Fe SiO2 Al2O3 P Mn LOI

Friable Inferred 52 42.05 34.32 1.28 0.049 0.385 2.39 Semi-compact Inferred 21 38.28 40.47 0.67 0.043 0.168 1.53 Compact Inferred 291 27.14 43.29 1.30 0.039 0.169 3.09 Total Inferred 365 29.93 41.84 1.26 0.041 0.200 2.90

*The Total Inferred Resources are not equal to the sum of the tonnages by lithology due to rounding.

MMX has estimated potential resources as all blocks estimated in Pass 2 and blocks estimated in Pass 1 that were not classified as Inferred Resources. The potential resource for the Bom Sucesso Project is between 500 and 740Mt at an approximate Fe grade of 27.5%. The potential resource is about 95% compact itabirite most of which is below the depth of drilling and estimated in the second pass.

Potential resources are highly speculative and there is no guarantee that future drilling will prove up the tonnage or grade.

Conclusions and Recommendations

Field Surveys and Drilling

MMX has conducted surface geologic mapping over the entire extent of the itabirite within its mineral license area at a scale of 1:5000. Mapping was focused on identifying contacts between the Caraça, Itabira, and Piracicaba Groups and not on defining the individual occurrences of friable, semi-compact and compact itabirite within the Itabira Group. Pegamite dikes and faults were also mapped.

LGA drilled 23 core holes with an average depth of 35.2m. The drilling was focused on the friable itabirite and was halted when the compact itabirite was encountered. Core recovery was generally poor.

MMX has drilled 29 core holes with an average depth of 131.1m and drilling continued into the compact itabirite. Core recovery was greater than 95%.

All the drilling has been on sections that are irregularly spaced between 100 and 700m, with a few at 1000m.

SRK considers that the work cone by MMX meets industry best practices for iron ore deposits.

MMX Mineração e Metálicos S.A. IV Bom Sucesso Project NI 43-101 Technical Report on Resources


Analytical and Testing Data

MMX is using appropriate sample preparation and analytical techniques for the mineralization and deposit type, MMX is also meeting industry best practice in the submission of standards and duplicates and the analytical results are valid for resource estimation.

Exploration Conclusions

A total of 52 holes have been drilled over the 5km strike length of the deposit. This density of drilling is adequate for an inferred resource in areas where the holes are more closely spaced.

MMX’s mapping and drilling programs have been conducted according to industry best practices and have produced results that are suitable for resource estimation.

Resource Estimation

The resource estimation for the Project was prepared by Prominas, an independent geologic and engineering consultant company in Belo Horizonte, under MMX supervision and was audited by SRK. The estimation was conducted in two passes, with the first using a search distance of 1000m and the second a search distance of 2000m. The ID2 algorithm was used for the estimation, requiring a minimum of one sample in both passes. Resources were classified as Inferred if estimated in the first pass and if the closest composite was within 400m of the block centroid. Another qualification of inferred classification was that the block centroid had to lie above a surface defined by the base of the drilling. SRK considers that the estimation methodology and classification meet CIM guidelines for estimating and classifying resources.

Recommendations

SRK recommends the following for the Bom Sucesso Project:

• Infill drilling to a 400m by 200m grid – 50 drillholes at an average depth of 135m. This program is designed to produce an Indicated Resource for the property;

o 6750m at a cost of US$300/m, including assays – US$2 million.

• Additional metallurgical and process testing to define a process flowsheet;

o Estimated $US200,000.

SRK recommends the following additions to MMX’s QA/QC program:

• QA/QC results are monitored and reviewed as it is received from the analytical lab during all exploration programs;

• 5% to 10% of the samples be submitted to a secondary laboratory for analysis using the same analytical and preparation techniques used at the primary lab;

o Submission to a secondary lab should be done throughout the exploration program as part of QA/QC.

• Continued monitoring of CRM APHP; and

• Monitor and graph analytical results through time to detect any instrument drift at the laboratory.

MMX Mineração e Metálicos S.A. 1-1 Bom Sucesso Project NI 43-101 Technical Report on Resources


1 Introduction (Item 4) SRK Consulting (US), Inc., (SRK) was commissioned by MMX Mineração e Metálicos S.A. (MMX) to prepare a Canadian Securities Administrators (CSA) National Instrument 43-101 (NI 43-101) compliant Technical Report on Resources for the Bom Sucesso Iron Ore Project (the Project) controlled by AVG Mineraçao S/A, a subsidiary of MMX Sudeste Mineração Ltda. (MMX Sudeste), a 100% owned subsidiary of MMX.

The Project is located in south central Minas Gerais, Brazil in the municipalities of Bom Sucesso and Ibituruna approximately 150km southwest of Belo Horizonte, the capital of Minas Gerais. Bom Sucesso is an early stage exploration project.

Form NI 43-101F1 was used as the format for this report. This report is prepared using the industry accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) “Best Practices and Reporting Guidelines” for disclosing mineral exploration information, the Canadian Securities Administrators revised regulations in NI 43-101 (Standards of Disclosure for Mineral Projects) and Companion Policy 43-101CP, and CIM Definition Standards for Mineral Resources and Mineral Reserves (December 11, 2005).

Certain definitions used in this Technical Report on Resources are defined in the body of text and in the glossary in Section 21.


This Technical Report on Resources is intended to be used by MMX to further the development of the Project by providing an independent audit of the mineral resource estimates and classification of resources.

MMX may also use this Technical Report on Resources for any lawful purpose to which it is suited. This Technical Report on Resources has been prepared in general accordance with the guidelines provided in NI 43-101 Standards of Disclosure for Mineral Projects.

1.2 Reliance on Other Experts (Item 5)



SRK is of the opinion that the information concerning the properties presented in this report (within or not produced by SRK) adequately describes the properties in all material respects.


The underlying technical information upon which this Technical Report is based represents a compilation of work performed by MMX and its contracted independent consulting firms.



The studies and additional references for this Technical Report on Resources are listed in Section 20. SRK has reviewed the Project data and incorporated the results thereof, with appropriate comments and adjustments as needed, in the preparation of this Technical Report on Resources.

The authors reviewed data provided by MMX including hard copy and digital files located in the Project and MMX’s offices in Brazil. Discussions on the geology and mineralization were conducted with MMX’s technical team. The drillhole assay database was prepared by MMX and verified by SRK.

Leah Mach is a Qualified Person as defined by NI 43-101.


The SRK Group is comprised of over 850 staff, offering expertise in a wide range of resource engineering disciplines. The SRK Group’s independence is ensured by the fact that it holds no equity in any project and that its ownership rests solely with its staff. This permits SRK to provide its clients with conflict-free and objective recommendations on crucial judgment issues. SRK has a demonstrated record of accomplishment in undertaking independent assessments of Mineral Resources and Mineral Reserves, project evaluations and audits, technical reports and independent feasibility evaluations to bankable standards on behalf of exploration and mining companies and financial institutions worldwide. The SRK Group has also worked with a large number of major international mining companies and their projects, providing mining industry consultancy service inputs.

This report has been prepared based on a technical and economic review by a team of consultants sourced principally from the SRK Group’s Denver, US office. These consultants are specialists in the fields of geology exploration, mineral resource and mineral reserve estimation and classification, open pit mining, mineral processing and mineral economics.


The individuals who have provided input to this Technical Report are listed below. Ms. Leah Mach is the Qualified Person responsible for all sections and the overall preparation of this Independent Engineer’s Report.

The key Project personnel contributing to this report are listed in Table 1.3.1. Ms. Mach’s Certificate of Author is provided in Appendix A.

Table 1.3.1: Key SRK Project Personnel Name Responsibility

Leah Mach Geology, Resource George Borinski Environmental, Permitting Dorinda Bair Laboratory QA/QC

1.3.1 Site Visit

Leah Mach, the Qualified Person for this report, made a site visit to the Property on February 12, 2009. The site visits consisted of reviewing the drill core and logging procedures, and visiting several outcrops at the Project area.





1.5 Effective Date

The effective date of this Technical Report on Resources is May 10, 2009. The effective date of the resources is April 15, 2009. The resource estimation includes drilling and assays received through March 2009.



2 Property Description and Location (Item 6) 2.1 Property Location

The Project is located approximately 150km southwest of Belo Horizonte, and approximately 250km northwest of Rio de Janeiro in Minas Gerais State, Brazil (Figure 2-1). The Project consists of one exploration license located near the cities of Bom Sucesso and Ibituruna in south central Minas Gerais. The license lies between 20°57’57”S and 21°04’17S and between 44°38’30’W and 44°43’31W and between UTM coordinates 528000E and 538000E and 7670000N and 7684000N (Figure 2-2). The Project lies within the municipalities of Bom Sucesso and Ibituruna.

2.2 Mineral Titles

Mining rights in Brazil are governed by the Mining Code and additional rules enacted by Brazil’s National Department of Mineral Production (DNPM), which is the governmental agency controlling mining activities throughout the country. Each application for an exploration or exploitation permit is represented by a mineral claim submitted to DNPM.

Brazilian mining legislation dictates that the holder of an exploration license will pay annual taxes to the DNPM based on the number of hectares held under the license, pay all expenses related to DNPM site inspections of the permit area, and will submit an exploration work report to the DNPM prior to the expiration date of the permit. The detailed requirements are listed in Table 2.2.1.

Table 2.2.1: Obligations of Brazilian Exploration Permit Holders Rule Description Applicable Law Provision

Payment of DNPM’s Annual Tax

The mineral right holder shall pay to DNPM the Annual Tax per Hectare (TAH) until the end of the exploration work. TAH is charged in the amount of: (i) R$1.55 per hectare, during the effective period of the authorization in its original term and (ii) R$2 per hectare, if the authorization term had been already extended. In case of default, DNPM shall impose penalties. If the penalties are not duly paid, DNPM may even cancel the Exploration Permit.

Mining Code, article 20.

Payment of DNPM’S Expenses for Related Inspections

The mining right holder shall be responsible for expenses incurred by DNPM with inspections in the exploration area.

Mining Code, article 26, forth paragraph.

Exploration Work Report Before the authorization’s expiration date, the mining right holder shall submit to DNPM the due exploration work report.

Mining Code, article 22, V.

Compliance with the obligations mentioned above is essential for the mining right holder to keep its mineral claims in good standing, according to the applicable laws.

At this time, MMX controls one exploration license covering 755.65ha in the Project area:

• DNPM Process Number: 831.408/2004.



The license is issued in the name of LGA Mineração e Siderurgia Ltda. (LGA). In June 2008, MMX acquired the mineral rights of the Bom Sucesso Project through its subsidiary, AVX, from LGA.

The exploration report described in Table 2.2.1 was filed by LGA on September 12, 2007. The DNPM requested additional information and LGA filed the requested information on November 11, 2008. The exploration report was approved on May 6, 2009 and the company now has a year to present an Economic Feasibility Plan (Plano de Aproveitamento Economico) to the DNPM.

A request has been made to change the name of the owner to MMX, but the request may have to be resubmitted following acceptance of the exploration report.

2.3 Legal Surveys

The mineral licenses in Brazil are paper filings and do not require the actual location of monuments on the ground. The filing includes descriptions of the corners of the licenses in Geographical Coordinate System using the South American Provisional 1956 datum.

2.4 Surface Rights

The surface rights are held by various landowners and MMX has agreements with most to conduct exploration on their exploration license. Should the Project progress to the mining phase, agreements will have to be made with, and compensation paid to, the landowners.

2.5 Location of Mineralization

The mineralization described in this report are completely contained within the boundaries of the exploration license.

2.6 Royalties, Agreements and Ecumbrances

In June 2008, MMX acquired the mineral rights of the Bom Sucesso Project through its subsidiary, AVX, from LGA. The purchase price was US$193.3 million payable in four semi-annual consecutive installments, from July 2008 through January 2010. The purchase price may accrete by a variable portion of US$0.80 per additional tonne of iron ore over a base of 241.6 million tonnes, to be measured during an 18-month period following the acquisition and indexed to the Consumer Price Index. LGA will not hold a royalty on future production.

Once an exploration license is converted to a mining license, the owner must also comply with specific rules set forth by Brazil’s mining legislation. These include a tax called the Compensation for the Exploitation of Mineral Resources (CFEM) which is levied on the sale of raw or improved minerals. This tax is based on the type of commodity. The holder of the permit will also financially compensate the entity entitled to the surface rights and provide DNPM an annual report describing production during the preceding year. This report must be received by March 15th of each year. The detailed requirements are listed in Table 2.6.1.



Table 2.6.1: Financial Obligations of Brazilian Mining Operations Rule Description Applicable Law Provision

Payment of CFEM Tax The exploiter shall pay a CFEM tax called Financial Compensation for the Exploitation of Mineral Resources (CFEM), levied on the sale of raw or improved mineral, at a rate of: (i) 3% (three per cent) for manganese, potassium, rock salt and aluminum ore; (ii) 2% (two per cent) for iron, fertilizers, coal and other mineral substances; (iii) 1% (one per cent) for gold; and (iv) 0,2% (zero point two per cent) for precious stones, cuttable gemstones, carbonates and precious metals. According to DNPM Act # 439, article 2, any defaulting party shall not be able to apply (i) for the extension of Exploration Permit terms; (ii) for temporary interruption of the exploitation; (iii) for DNPM’s approval of company mergers, acquisitions or spin-offs, as well as mining rights assignments and transfers.

Federal Law # 7.990, articles 1 and 6. Decree # 01*, article 15. Federal Law # 8.001.

Surface Entitled Person Compensation The exploiter shall also pay the person entitled to the surface area a compensation of 50% (fifty per cent) of CFEM’s due amount.

Mining Code, article 11, item “b”.

Exploitation Annual Report The exploiter shall also present to DNPM, every year, by March 15th, an exploitation annual report. Mentioned report shall describe all the crucial aspects regarding the exploitation during the respective year. In case the report is not presented, DNPM shall impose penalties.

Mining Code, article 47, XVI and article 50.

The Bom Sucesso Project would be subject to the CFEM tax of 2% for iron ore (Table 2.6.1) and a royalty to the landowners equal to 50% of the CFEM tax should it go into production.

2.7 Environmental Liabilities and Permitting

2.7.1 Required Permits and Status

MMX was not required to obtain an environmental license for its drilling program as it was not necessary to disturb the vegetation. For future infill drilling, it will be necessary to obtain the following licenses:

• Licenca de Desmate to cut vegetation and establishment of a Reserva Legal, an environmental preserve to be located outside the license area. The area of the Reserva Legal must be 20% of the disturbance area; and

• Authorization to use water for drilling; and

As required by Brazilian National Environmental Policy, established August 31, 1981 by Federal Law #6.938, all potentially or effectively polluting activities are subject to an environmental licensing process. Rules regarding the licensing procedure were established by resolution #237 of Conselho Nacional do Meio Ambiente (CONAMA), on December 19, 1997. The issuing agency determines the conditions, limits, and measures for the control and use of natural resources, and permits the installation and implementation of a project. The license is issued by either a federal, state or a municipal agency. Authority to issue a license is based on the areal extent for the proposed impact and generally follows the rules established by CONAMA’s Resolution #237/97 listed below:

• Federal entities are responsible for licensing activities, which may cause national or regional environmental impact (more than two federal States);

• State entities and Federal District Entities are responsible for the activities which may cause State environmental impact (two or more cities); and



• Municipal entities are responsible for licensing the activities, which may cause local environmental impact (within city limits).

The license may be issued in one of the forms described in Table 2.7.1.1.

Table 2.7.1.1: Environmental Licensing Stages of Brazilian Mining Projects License Description

Preliminary License (PL) Indicates the enterprise environmental viability. Approves the location and concept of the Project. Is subject to a specific environmental impact assessment and a formal public hearing.

Installation License (IL) Authorizes the initiation of the Project. Permits the engineering work and is subject to the presentation of an environmental control plan, similar to the Environmental Action Plan (EAP).

Operation License (OL) Allows the beginning of the operation. The company is required to provide evidence that all the environmental programs and control systems were duly installed.

For any activities where the environmental impact may be considered significant, an environmental impact study and the EIA/RIMA generated must be presented to the appropriate governmental licensing agency. In addition, the applicable government agency and the Project owner are required to publish all related information and provide for public hearings if required, according to the regulation of each location.

MMX has initiated studies for the Environmental Impact Statement that is required to obtain a PL.

2.7.2 Compliance Evaluation

MMX is in compliance with the environmental requirements for the exploration and drilling state of the Project.

2.7.3 Environmental Liabilities

MMX has informed SRK that there are no environmental liabilities at the Project and none were observed during the site visit.

SRK Job No.: 162706.01


Bom Sucesso Project, Brazil


General Location Map of the Project

SRK Job No.: 162706.01




Bom Sucesso Exploration License



3 Accessibility, Climate, Local Resources, Infrastructure and Physiography (Item 7)

The Project is located approximately 150km southwest of Belo Horizonte, and approximately 250km northwest of Rio de Janeiro in Minas Gerais State, Brazil. The Project area lies between 20°57’57”S and 21°04’17S and between 44°38’30’W and 44°43’31W and between UTM coordinates 528000E and 538000E and 7670000N and 7684000N within the municipalities of Bom Sucesso and Ibituruna.

3.1 Topography, Elevation and Vegetation

The Bom Sucesso Project is located in south central Minas Gerais, an area characterized by gently rolling hills with moderate relief. The Project is located on the Serra do Bom Sucesso, a prominent ridge supported by quartzite and iron formation. The ridge trends N30°E and has an elevation of about 1200masl. The maximum relief in the area is about 400m.

The main drainage in the area is the Rio das Mortes which is a tributary of the Rio Grande. The valleys are open and the drainage pattern is dendritic.

The natural vegetation of the region is semi-humid forest, however, little remains of the original tropical forest. The forests have been cleared for pasture and coffee plantations. Some small areas of natural vegetation remain on the higher slopes of the ridge lines where trees up to 30m in height may be found with shrubs, lychnophore, and creeping vines.

3.2 Climate and Length of Operating Season

The regional climate is semi-humid The average temperature is 19°C, varying between highs of 30 to 36° in the summer months and lows of 4 to 6° in the winter. The hottest months are November and December and the coolest months are June and July.

The seasons are well defined with dry winters and rainy summers. The average annual precipitation is 1600mm, with the maximum of 290mm in January and the minimum of 16mm in July.

Exploration and any future mining operations would not be affected by the climate.

3.3 Access to Property

The Project is located in the municipalities of Bom Sucesso and Ibituruna approximately 150km south of Belo Horizonte. Access from Belo Horizonte is via the Fernão Dias Highway (BR381) to exit 638 and then by MG332 to Bom Successo (Figure 3-1). Fernão Dias Highway is a major highway that connects Belo Horizonte and São Paulo. From Bom Sucesso, the Project can be accessed by either of two routes: the first is 6km of paved road that leads to São Thiago and the second is 6km of paved road and then 4km of unpaved road that leads to Ibituruna.

The city of Bom Sucesso is also served by the Central Atlantic Railway, the Ferrovia Centro Atlântica (FCA).



3.4 Surface Rights

The exploration license contains sufficient land to support any future mining and process operations. Negotiations will have to be made with the local landowners for purchase of land to support any future mining operations.

3.5 Local Resources and Infrastructure

The state of Minas Gerais is a major mining area in Brazil. The Iron Quadrangle, has historically been, and continues to be, a major producer of iron ore.

3.5.1 Access Road, Transportation and Port

Access to the Project is via federal and state highways as described in Section 3.3.

MMX is considering a 40km slurry pipeline from Bom Sucesso to the MRS Logística S.A. railway (MRS). MMX has a long term agreement with MRS to transport its current iron ore production to Sepetiba and/or MMX’s Sudeste port in the State of Rio de Janeiro. Agreement will be expanded to include all of MMX Sudeste’s future production. The Sudeste port is currently being developed by LLX Logística S.A. and operations are planned to start in 2001. Figure 3-1 shows the locations of the Bom Sucesso Project, the MRS railway and the Sudeste port.

3.5.2 Power Supply

There are two power lines that run within 7.5km of the site:

• Energy System Lavras (SE Lavras) with transmission tension of 138kV; and

• Energy System Itutinga (SE Itutinga-Furnas) with transmission tension of 138kV.

3.5.3 Water Supply

MMX contracted Potamos Engenharia e Hidrologia Ltda. to produce a hydrology study in 2008. The conclusion of the study was that sufficient water could be obtained from the Rio Das Mortes to sustain future mining and processing operations.

3.5.4 Buildings and Ancillary Facilities

The office and core facility that supports the exploration activities is located in the city of Bom Sucesso. There are no buildings located at the Project site.

3.5.5 Tailings Storage and Waste Dumps

MMX is currently studying options for tailings and waste rock storage, with a priority of using the pit as the storage facility.

3.5.6 Manpower

The Project is currently being staffed by 40 employees and contracted personal of MMX. Minas Gerais is a major mining center and has a pool of skilled miners. Any future mining operations could be staffed from the local populace.

SRK Job No.: 162706

File Name: Figure 3-1doc Date: 3/19/2009 Approved: LEM Figure: 3-1



Location Map and Access to Bom Sucesso



4 History (Item 8)

4.1 Ownership

Starting in 1949, the Bom Sucesso property was controlled by Sociedade Siderúgia Bom Sucesso, owned by the Castro family. Pig iron was produced between 1954 and 1964. Siderúgia Sudoeste de Minas Gerais (SISUMG) was established in 1959 and produced pig iron from the North and South Mines between 1959 and 1968. This plant was sold, remodeled, and started operations again in 1970. The plant was closed in 1975 and dismantled.

In 1975, Indústria e Comércio de Minérios S.A. (ICOMI) began exploration in the area.

The DNPM issued the exploration license, DNPM Process Number 831.408/2004, to Manoel Ferreira Filho on April 1, 2004. On August 9, 2007, Mr. Ferreira sold the mineral rights to LGA and that agreement was approved by the DNPM on May 13, 2008. The final exploration report was presented to the DNPM on September 12, 2007, signed by both LGA and Mr. Ferreira. The exploration report was approved by the DNPM on May 6, 2009.

4.2 Past Exploration and Development

Prior to 1975, little systematic exploration was conducted on the property. In that year, ICOMI initiated exploration on the Bom Sucesso and Ibituruna mountain ridges. A ground magnetometry geophysical survey was conducted on 36 sections spaced at 500m perpendicular to the iron formation in order to determine the thickness of the unit. Shafts and trenches were also opened to verify the contacts indicated by geophysics. Samples were collected from the shafts and trenches and geochemical and grain size analyses were performed on them.

ICOMI conducted geologic mapping at a scale of 1:5000 within the exploration license area with the use of a handheld GPS and a topographic map generated through aerophotogrametric restitution by Georama Aerofotogrametria Ltda. (Georama).

LGA drilled a total of 23 core holes in 2008 along the strike length of the Bom Sucesso deposit. It is not known if it conducted other exploration activities.

4.3 Historic Mineral Resource and Reserve Estimates

Prior to LGA’s involvement there were no published resources or reserves.

4.4 Historic Production

There are no records of the historic production in the area, but from the extent of the open pit workings, it is considered to be small.



5 Geologic Setting (Item 9) Bom Sucesso is located in the São Francisco craton in south central Minas Gerais. The area was included in a map, São João del Rei, by Erichsen (1929). The lithologies are part of the Minas Supergroup which is one of the major iron formations in the Iron Quadrangle.

Quéméneur and Baraud (1983) mapped the area at a scale of 1:50,000 and developed an interpretation of the geology. A map was published of the southern Serra de Bom Sucesso by Moretzsohn and Soares Filho (1982). Quéméneur (1987) continued mapping at a scale of 1:25,000 principally in the Serra Ibituruna. The regional distribution of the Minas Supergroup is shown in Figures 3-1 and 5-1.

The area is included in the Lavras sheet of the South Minas Project undertaken by the state owned exploration company, Companhia Mineradora de Minas Gerais (COMIG) and the Federal University of Minas Gerais (UFMG) (2003).

5.1 Regional Geology

The Project area lies within the São Francisco Craton tectonic province of South America shown in Figure 5-1. Located southwest of the Iron Quadrangle, the Project is underlain by the same lithological units. This region has a complex tectonic-metamorphic history and is composed of an Archean nucleus composed of a granite-greenstone terrane and the Paleoproterozoic Minas Supergroup sequence. Intrusive rocks are of dioritic and granitic composition.

The São Francisco Craton (Almeida 1977) tectonic province was not affected by the Brazilian deformation. As seen in Figure 5-1, it is a crustal portion bordered by Brazilian fold belts that developed during orogenesis culminating in the formation of Gondwana approximately 650Ma. The basement of the craton was subjected to the Jequié/Rio das Velhas and Transamazonic tectonic-metamorphic events that preceded the Brazilian deformation. There are various evolutionary models proposed for the Iron Quadrangle region, and this area is still extensively studied.

5.1.1 Stratigraphy

The Serra Bom Sucesso ridge, formed by the meta-sedimentary rocks of the Minas Supergroup, divides the basement into two domains, east and west. Figure 5-2 is a geological map of the north-central region of Serra de Bom Sucesso.

Archean and Paleoproterozoic Basement

Western Domain

The western domain exhibits an east-west structural trend corresponding to the oldest structure of the region. It is an Archean terrain comprising gneisses of tonalite-trondhjemite-graodiorite (TTG) composition that have reached the granulite facies of metamorphism. The gneisses enclose mafic and ultramafic rocks as well as Neoarchean intrusive bodies of charnockite and granite. The charnockitic intrusions include numerous lenticular bodies of enderbite, tonalite, anorthosite and gabbro. The granitic intrusions are calc-alkaline or peraluminous. The Bom Sucesso Granite exhibits incipient gneissic characteristics and is calc-alkaline in composition and is rich in potassium, similar to the charnockites. The peraluminous granites also exhibit incipient gneissic characteristics and may be older than the Bom Sucesso Granite. Another important



intrusive body is the ultramafic massif of the Morro das Almas, which is a probable layered intrusion constituted essentially of serpentinite.

Eastern Domain

Paleoproterozoic rocks predominate in the eastern domain and metamorphism does not exceed the amphibolites facies. Greenstone belts are constituted of amphibolites with lesser meta-ultramafic rocks. The amphibolites are predominately tholeiitic metabasalts. The ultramafic rocks vary from komatiite to komatiitic basalt. Layers of gondite occur in the southern greenstones. The greenstone belts are characterized by alternating layers of amphibolites with fine-grained orthogneiss. These two lithotypes form a large-scale fold with an axial plane oriented east-northeast.

Three plutonic suites occur in the Eastern Domain: gabbro-dioritic, tonalitic, and granitic. These suites are part of the magmataic arc which developed on the southern border of the São Francisco Craton. The gabbro-dioritic plutons are predominately diorite and portions were affected by the shearing characteristic of the Serra de Bom Sucesso. There are two main tonalitic intrusions – the Tabuões and Casserita, and a few smaller intrusions. Most of the granitic intrusions are located north of the outcrops of the Andrelândia Megasequence of meta-sediments. The Itutinga and Itumirim granites exhibit marked gneissic foliation formed during the Brazilian Orogenesis. The Ritápolis Granite exhibits almost no deformation. The pegmatites that extend from the Volta Grande to the Rio do Peixe is genetically related to the Ritápolis granite.

Minas Supergroup

The Paleoproterozoic Minas Supergroup forms a narrow band oriented N30°E between 500 and 1000m in width and with a length of about 30km. Three stratigraphic levels have been identified from bottom to top, the Caraça, the Itabira and the Piracicaba Groups.

Caraça Group

The Caraça Group is the basal unit of the Manas Supergroup and consists of inter-layered quartz-biotite schist and fine-grained quartzite. The majority of outcrops of this unit show alteration by weathering. On the western slope of Serra de Bom Sucesso, the thickness of this group is more than 300m.

Itabira Group

The Itabira Group consist of two types of itabirite: quartz-itabirite and dolomitic itabirite. The quartz-itabirite is fine-grained with millimetric banding of layers rich in hematite and magnetite and layers constituted essentially of quartz. The magnetism varies from medium to high and the magnetite is always fine-grained. Weathering has affected the itabirite by removing silica and thereby upgrading the iron content. Friable itabirite grades to semi-compact to compact with depth below surface.

The dolomitic itabirite has been found only in drillholes. It consists of millimetric banding of hematite/magnetite and quartz/calcite/dolomite. The magnetite is fine-grained and highly magnetic. Amphiboles are also found in the foliation. The dolomitic itabirite is from 60 to 270m in thickness. Dikes and sills of metabasic rocks cut this unit.



Piracicaba Group

The Piracicaba Group is exposed on the east side of Serra de Bom Sucesso. It consists of coarse mica quartz schist with interlayered sericitic quartzite. It also contains lenses of itabirite intercalated in the schist. This itabirite was detected in the magnetometry survey conducted by ICOMI. This unit is about 400m thick and it is crossed by dikes and pegmatite sills.

Mesoproterozoic and Neoproterozoic Meta-sediments

Mesoproterozoic and Neoproterozoic meta-sediments are found in nappe structures that evolved during the Brazilian orogensis. The Carandal Mega-sequence consists of meta-pelites and meta- calcareous rocks. The Andrelândia Megasequence comprises biotite gneiss, phyllite, schist and quartzite. Both sequences show metamorphism of greenschist to amphibolites facies.

Mafic Dikes

All of the rocks described above have been cut by a large number of mafic dikes trending northwest-southeast. The dikes are diabase and gabbro in composition and grain size, and contain pyroxene and amphibole. They appear to have been formed in more than one magmatic event and have been age-dated at 2,000 to 700Ma.

5.1.2 Structure

The western domain exhibits an east-west structural trend that corresponds to the oldest structures in the region. The north-northeast structures of Serra de Bom Sucesso is related to the Transamazonic orogenesis and is associated with important zones of shearing with sinistral movement.

Three phases of deformation have been attributed to the Brazilian orogenesis. The first two (D1 and D2) are related to the evolution of the Brasilia Band and are interpreted to have been generated during a phase of progressive deformation that produced nappes with tectonic transport to the southeast (D1) and east-northeast (D2). The D1 folding, at microscopic and macroscopic scale, is better observed in D2 joints. D2 folding is mesoscopic in scale and is generally isoclinal with an axial plane schistosity that corresponds to the principal foliation of the meta-sediments.

The mineral indicators of the metamorphic event associated with D1 and D2 deformation include chlorite chloritoid, biotite, garnet, staurolite and kyanite that appear successively as the metamorphic grade increases. D1 and D2 structures were later deformed by D3, generating patterns of folding of regional dimension. D3 is characterized as a progressive deformation related to tectonic movements to the north-northwest and is attributed to the evolution of the Ribeira Band. This phase of deformation generated folding that passes from open, with steep axial planes trending north-south and sub-horizontal axes to closed folds with sub-vertical axial planes trending southwest.

5.2 Local Geology

Basement rocks and rocks of the Minas Supergroup are found within the license area.

5.2.1 Local Lithology

Basement granite and gneiss outcrop in the northern portion of the license area where the Ribeirão Tabuões crosses Serra de Bom Sucesso.



The Caraça Group is found on the west slope of Serra de Bom Sucesso and comprises interlayered fine-grained quartz-biotite schist and quartzite. The majority of outcrops are highly weathered. The unit is up to 200m thick in the Project area.

The Itabira Group is the host of the iron formation and consists of quartz itabirite and dolomitic itabirite. The thickness varies from 70 to 220m. At the surface, the quartz-itabirite is friable, fine-grained and is not hydrated. Weathering decreases with depth and the friable itabirite passes to semi-compact and then to compact. Magnetism varies from medium to high and the magnetite is always fine-grained. Amphiboles and chlorite give a greenish-gray color to the itabirite.

There are no outcrops of dolomitic itabirite which has been encountered only in drillholes. Dolomitic itabirite exhibits millimetric banding of hematite/magnetite and quartz/calcite/dolomite. It is fine-grained and highly magnetic. Where the calcite/dolomite bands are thicker, in the order of 10cm, millimetric magnetite occurs. Amphibole is noted in the foliation of this itabirite.

The Piracicaba Group is exposed on the east side of Serra de Bom Sucesso and is composed of mica quartz shale with sericitic quartzite interlayers. The Piracicaba is about 400m in thickness.

Mafic and pegamitic dikes cross-cut the three units of the Minas supergroup, with the mafic dikes more prominent in the central part and the pegamitic dikes and sills more prominent in the north.

Figure 5-3 is a geological map of the license area as mapped by ICOMI in the 1970’s.

5.2.2 Alteration

Alteration consist of weathering that has resulted in a decrease of silica in the itabirite with an accompanying upgrade in iron content. Alteration decreases with depth below surface.

5.2.3 Structure

The meta-sedimentary units strike N30°E and have an average dip of 70° to the southeast. The dip varies from 45°SE to near vertical. Secondary folding is evident in roadcuts and drill core. The region is cut by numerous transverse faults and shear zones which strike to the northwest. The fracture zones are evident as breaks in the ridge line. A major fault, offsetting basement and Minas Supergroup rocks, exists where the Ribeirão Tabuões cuts the Serra.

SRK Job No.: 162706


Bom Sucesso Project Brazil

Source: Alkmim & Marshak 1998

São Francisco Craton, the Iron Quadrangle and Bom

Sucesso

Brazilian Belts

Basement (>1.8Ga

Phanerozoic Cover

Proterozoic Cover

São Francisco Craton

Iron Quadrangle

Minas Supergroup

Rio das Vilhas Supergroup

Atlantic Ocean

Bom Sucesso

SRK Job No.: 162706


AVG/Minerminas Mine Brazil

Source: MMX

Bom Sucesso Regional Geology

SRK Job No.: 162706



Source: MMX

Bom Sucesso Local Geology



6 Deposit Type (Item 10) 6.1 Geological Model

Iron mineralization in the Iron Quadrangle and the surrounding area, as in other world locations, is controversial. Various models are proposed, but the most accepted current models are hydrothermal syngenetic and/or supergene enrichment. According to Guild (1957), ferruginous sediments of the Minas Supergroup are chemical precipitates, deposited when iron-bearing river waters mixed with marine waters in a shallow, low energy basin. This basin was isolated from the Proterozoic ocean by a volcanic arch and it is suggested that volcanic ash interacting with saline basin waters lowered the pH of the water, which caused iron deposition. In addition, petrologic observations indicate that this basin received limited clastic material. The ferruginous sediments, formed by precipitation, consist predominantly of iron oxide and colloidal silica with limited carbonate minerals. Carbonate mineral deposition was limited by the low pH of the receiving basin waters.

The deposits within the Minas Supergroup are characterized by banded iron formation (BIF), fine, alternating layers of iron and silica minerals. The iron minerals typically are hematite or magnetite and the silica minerals are chert or quartz. Many of these formations have an iron content too low for profitable exploitation. However, with the formation of laterite during intensive weathering, silica is leached from the rock enriching the residual material in iron and creating a zone of potentially economic iron mineralization. Occurrences of leached BIF’s account for the world’s main source of iron. The BIF’s in Minas Gerais are locally called itabirite named for Pico do Itabirito, the type locale for itabirite. The itabirites are composed of hematite and fine-grained quartz.

The itabirites are typically characterized by the degree of leaching. Three common varieties are friable itabirite, semi-compact itabirite and compact itabirites, each of these signifying a decreasing amount of leaching. Itabirites require dressing to liberate the hematite from the quartz and are very amenable to treatment. Consequently, itabirites and powdery hematite are processed into iron product concentrates, or iron product fines. Fines are preferably sold as sinter feed, but product that contains a significant fraction of particles smaller than 1mm cannot be fed directly into the sintering machine. This finer product is sold as feed for pelletizing plants, or pellet feed.

Pure hematite contains a maximum of 69.94% iron compared to pure magnetite, which contains 72.36% iron. Despite the higher iron content of magnetite, hematite is more valued by the steel industry due to its higher reduction rate. During the steel-making process, hematite (Fe2O3) is progressively reduced to magnetite (Fe3O4), then wüstite (FeO), and finally iron (Fe). Hematite and magnetite have different crystal lattice structures; hematite has a hexagonal lattice, whereas magnetite has a simple cubic lattice. This difference in atomic packing accounts for a volume increase during the loss of oxygen atoms. Consequently, a charge of hematite in a blast furnace undergoes a much higher volume increase during the reduction process than the equivalent iron amount charged as magnetite. The increased porosity resulting from the volume change causes a marked increase in the overall reduction rate, more than offsetting the effect of the lower iron content of hematite.



7 Mineralization (Item 11) 7.1 Mineralized Zones

The mineralization at the Project is hosted by itabirite of the Itabira Group of the Minas Supergroup with areas of supergene enrichment through subsequent lateritic weathering. This results in a variety of different mineralization types. There are at least four distinct lithological ore types observed in the Project area:

• Friable quartz itabirite;

• Semi-compact itabirite;

• Compact itabirite; and

• Carbonate itabirite.

Friable quartz itabirite occurs at the surface, as observed in outcrops and roadcuts. As the classification itself suggests, the principal characteristics of this type of ore are the grades of silica that vary between 6% to 10% and in granulometry that is above 19mm. The bands are composed of friable hematite and magnetite intercalated with bands of recrystallized quartz.

The friable itabirite grades into semi-compact and then into compact itabirite with depth below surface. As the degree of weathering decreases, the silica content increases and the iron grades decrease.

The dolomitic itabirite is characterized by alternating layers of hematite/magnetite with quartz/calcite/dolomite This itabirite has been found only in drillholes and is of the compact type. The rock is fine-grained and highly magnetic. Where the calcite/dolomite bands are thicker, millimetric magnetite occurs. Amphibole is also present in this itabirite.

The quartz itabirite occurs along the entire crestline of Serra de Bom Sucesso from south to north to the Ribeirão Tabuões where it has been faulted away to the north.

7.2 Surrounding Rock Types

The underlying rocks of the Caraça Group lie to the west of the Itabira Group and the overlying rocks of the Piracicaba Group lie to the west.

7.3 Relevant Geological Controls

The iron mineralization is contained within the itabirite of the Itabira Group. Subsequent weathering resulted in supergene enrichment and “softening” of the ore by removing silica and thereby upgrading the iron content. The weathering is stronger in areas where faulting and fracturing are more intense.

7.4 Type, Character and Distribution of Mineralization

The itabirite is a metamorphosed BIF composed predominately of iron oxides and silica. The iron is distributed throughout the itabirite and is richer where the weathering has removed silica and thus upgraded the iron content.



8 Exploration (Item 12)

This section describes exploration work undertaken by MMX since its acquisition of the Project.

8.1 Surveys and Investigations

MMX has undertaken a program of geologic mapping at a scale of 1:5000, using a GPS and the topographic base map with 1m contours (described in Section 15). The mapping concentrated on delineating the contacts between the Caraça, Itabira, and Piracicaba Groups and not on defining the individual occurrences of friable, semi-compact and compact itabirite within the Itabira Group. Pegamite dikes and faults were also mapped. Figure 8-1 presents the geologic map that was the product of this program.

MMX also conducted a drilling program as described in Section 15.

8.2 Interpretation

MMX has produced a geologic map to use in geologic modeling and locating drillhole sites. Because of the massive nature of iron deposits, and because of the good exposure of the itabirites along the crest of the Serra do Bom Sucesso, MMX has produced a map that outlines the occurrence of the itabirite and that can be used in planning future drilling campaigns.

SRK Job No.: 162706

File Name: Figure 8-1 doc Date: 4/16/2009 Approved: LEM Figure 8-1


Source: MMX

Bom Sucesso Geology Map



9 Drilling (Item 13) The drilling at Bom Sucesso was conducted in two separate programs, one by LGA in 2007 and the second by MMX in 2009. Figure 9-1 presents the drilling from both companies. Table 9.1 lists the number of drillholes, total meters, and average depth. All the drilling at the project was performed with coring methods.

Table 9.1: Drillhole Statistics

Company Number Meters

Depth (m)

Minimum Maximum Average

LGA 23 809.8 8.80 50.80 35.2 MMX 29 3802.5 46.35 266.85 131.1 Total 52 4612.3 8.80 266.85 88.7

9.1 Procedures

LGA

All the LGA holes were drilled with H sized core (63.5mm) tools by Geomaster Engenharia de Solos Ltda. All the drilling was vertical except one hole which was drilled with an inclination of 75° to the west. Downhole surveys were not taken and with the shallow depths, little deviation would be expected.

After the hole was concluded, its location was marked with a cement base and a metal tag with the drillhole identification. The collar coordinates were surveyed with a GPS receptor Geodésico 900CS Leica, L1\L2 RTK with Glonass antenna. An MMX contractor, MCE Consultoria e Engenharia Ltda., checked the coordinates with a Garmin GPS.

The drillholes were described on lithologic logs and the core recovery was noted. MMX subsequently verified the lithologic description and interval start and finish points. In general, the core recovery was fair to poor, averaging about 81%.

Sample intervals were designated on a separate form.

MMX

The drillhole locations were first determined by the supervising geologist. Drill access was provided by clearing trails and drill pads with the use of a dozer. For inclined holes a line was drawn between two stakes in the azimuth direction and the drill rig aligned with it. The inclination of the drill rig is set by a MMX technician using the inclinometer of a Brunton compass.

All the MMX drilling was started with H sized core, and in some cases finished with N (52mm), depending on drilling conditions. Twenty holes were drilled to the west-northwest with inclinations between 60 and 70°, one hole was drilled vertically and nine holes were drilled with inclinations of approximately 85° to the west-northwest. The drilling contractor was Geosol Geologia e Sondagens S.A. (Geosol) using a conventional Macsonda drill. Downhole surveys were taken with a DeviFlexTM tool at 4m intervals for holes greater than 100m in length.

Upon completion of the hole, the collar was marked with a cement base and metal tag identifying the drillhole. The collar coordinates were surveyed by an MMX surveyor, using a total station based on 18 points located by Unitopo Topografia e Projeto Ltda, based in Belo Horizonte.



MMX used a standard logging form to record lithology and core recovery. Sample intervals were noted on the box and on a separate logging form.

9.2 Interpretation

Both LGA and MMX used H sized core for drilling which is appropriate for iron ore deposits. The core recovery of the LGA holes averaged about 81% which is not considered a good recovery, however, MMX used the LGA holes only for geologic interpretation and did not use them in resource estimation.

MMX drilling procedures include surveys for downhole deviation and requirements for minimum core recovery by the contractor. Core recovery was greater than 95%. The drillholes are angled in order to intersect the itabirite as close as possible to perpendicular.


SRK considers MMX’s drilling procedures to meet industry standards.

SRK Job No.: 162706



Bom Sucesso Drillhole Location Map



10 Sampling Method and Approach (Item 14) 10.1 Sampling Methods

LGA

The sample handling procedures used by LGA have not been documented. However, the drill core is well preserved in wooden boxes and MMX has the original drill logs. The sample intervals are marked on the core box and the core has been cut with a saw where competent. The geologic logs include core recovery, lithology, friability, and color.

LGA sampled the itabirite and ferruginous zones, but did not sample zones of invernal waste. There was no laboratory QA/QC program in place.

MMX

At the drill rig, the drill core is placed in wooden boxes, and washed of all foreign material. A technician delivers the boxes to the logging area where they are placed either in the sun or under a roof until they are completely air-dried. The drill core is photographed before and after sampling to record geological descriptions and sampling intervals. Geologic logging and identification of sample intervals are carried out by the project geologists on standardized paper forms. This process identifies the different lithology types, geological contacts, zones of fault or fracture, ferruginous zones and internal waste.

During core logging, the geologist marks the beginning and end of each sample interval on the box. Sample breaks are at changes in lithology and friability with some consideration placed on visual estimations of Fe percentage. Sampling is conducted within the itabirite and ferruginous zones and includes zones of internal waste. Sample intervals have a minimum length of 1m and a maximum length of 5m. The preferred sample interval ranges between 3m and 5m.

Samples are collected by a trained sampler under the supervision of a technician or a geologist following a sampling plan produced by acQuire Technology Solutions Pty Ltd. (acQuire). The sampling plan contains the identification of primary and check samples according to MMX's QA/QC policy (see Section 11.4). The core is split lengthwise using a diamond core saw in the competent zones and a specially designed scoop in the highly weathered zones. The sample is placed in a plastic bag with a sample tag. The plastic sample bag is further marked in two places on the outside with the sample identification. The sample bags are then sealed and sent to the laboratory for physical and chemical analysis. The remaining core is archived for future reference.

MMX personnel supervise all sample security. The drill core is collected from drill sites, logged and sampled under the direction and control of MMX. The core is stored in a well maintained facility that is also used for logging. SRK is of the opinion that there has been no tampering with the samples.

Data from the geological log is entered into an acQuire database, the geological database management system developed by acQuire.

10.2 Location and Sample Density

The Bom Sucesso Project has approximately 5km of strike length and has a total of 4600m of drilling in 52 holes. Figure 9-1 shows the location of the drillholes and distinguishes the LGA



holes from the MMX holes. The MMX drilling is on approximately 600m sections with some sections about 1000m apart. Table 10.2.1 describes the sample intervals and the total meters sampled by company.

Table 10.2.1: Sample Interval Statistics. Company Number Average Std Dev Mode Min Max Total Meters Sampled

LGA 97 5.20 2.30 4.50 0.50 14.70 507 MMX 566 3.96 0.79 5.00 2.00 5.00 2245

10.3 Factors Impacting Accuracy of Results

The main factor that could impact the accuracy of the samples is sample recovery, especially in the friable itabirite and in fracture and fault zones.

10.4 Sample Quality and Representativeness

The MMX core has very good recovery and the samples are representative of the interval sampled. The LGA core where there is poor recovery, does not provide a good sample. LGA’s practice of not sampling internal waste zones also poses difficulties, however, MMX has not used the LGA samples for resource estimation.

10.5 Relevant Samples

Table 10.5.1 lists composited samples for the MMX and LGA drilling. The samples were composited over continuous assayed intervals, with breaks at lithotype boundaries and at intervals that were not analyzed. Because of the massive nature of the mineralization, the true thickness is not relevant.



Table 10.5.1: Table of Relevant Composited Samples DHID From To Length Fe Lithotype Company

FDBS025 113.00 119.25 6.25 27.82 Compact itabirite MMX FDBS026 2.80 14.65 11.85 42.14 Friable itabirite MMX FDBS027 5.35 82.10 76.75 25.44 Compact itabirite MMX FDBS029 97.15 253.80 156.65 19.86 Compact itabirite MMX FDBS030 75.85 169.10 93.25 27.61 Compact itabirite MMX FDBS031 13.00 26.10 13.10 46.87 Friable itabirite MMX FDBS031 38.20 211.20 173.00 28.55 Compact itabirite MMX FDBS032 16.00 22.80 6.80 45.48 Friable itabirite MMX FDBS033 25.40 107.75 82.35 34.28 Friable itabirite MMX FDBS034 28.35 42.40 14.05 43.74 Friable itabirite MMX FDBS036 11.55 18.20 6.65 40.65 Semi-compact itabirite MMX FDBS036 24.25 42.45 18.20 34.07 Semi-compact itabirite MMX FDBS036 53.45 112.90 59.45 32.33 Compact itabirite MMX FDBS037 20.50 31.15 10.65 32.66 Friable itabirite MMX FDBS037 81.65 166.35 84.70 26.23 Compact itabirite MMX FDBS038 0.00 8.20 8.20 43.36 Friable itabirite MMX FDBS038 11.00 62.50 51.50 25.80 Compact itabirite MMX FDBS039 95.20 174.35 79.15 29.94 Compact itabirite MMX FDBS040 9.60 85.25 75.65 36.27 Compact itabirite MMX FDBS040 87.30 107.70 20.40 24.99 Compact itabirite MMX FDBS041 5.80 47.35 41.55 34.10 Compact itabirite MMX FDBS041 74.25 186.30 112.05 28.59 Compact itabirite MMX FDBS042 13.60 101.55 87.95 36.25 Friable itabirite MMX FDBS043 15.95 73.30 57.35 33.02 Compact itabirite MMX FDBS044 4.20 96.15 91.95 32.08 Friable itabirite MMX FDBS045 1.95 132.30 130.35 33.65 Compact itabirite MMX FDBS045 134.40 188.35 53.95 15.81 Compact itabirite MMX FDBS046 22.10 69.75 47.65 34.80 Semi-compact itabirite MMX FDBS047 3.95 72.65 68.70 39.53 Friable itabirite MMX FDBS047 74.65 128.80 54.15 34.76 Compact itabirite MMX FDBS048 5.35 157.90 152.55 28.87 Compact itabirite MMX FDBS048 161.70 191.35 29.65 16.87 Compact itabirite MMX FDBS049 4.35 62.35 58.00 47.43 Friable itabirite MMX FDBS050 11.75 90.10 78.35 33.62 Compact itabirite MMX FDBS051 12.35 87.80 75.45 32.47 Compact itabirite MMX FDBS052 95.50 101.35 5.85 20.37 Compact itabirite MMX FSBSA1 0.00 10.06 10.06 40.92 Compact itabirite LGA FSBSA3 0.00 29.95 29.95 48.42 Friable itabirite LGA FSBSB1 0.00 42.55 42.55 40.97 Friable itabirite LGA FSBSC1 0.00 5.35 5.35 45.10 Friable itabirite LGA FSBSC1 11.20 20.35 9.15 43.09 Friable itabirite LGA FSBSC1 23.45 41.65 18.20 47.64 Friable itabirite LGA FSBSC2 1.40 23.25 21.85 31.53 Compact itabirite LGA FSBSD1 8.85 23.30 14.45 37.53 Friable itabirite LGA FSBSD1 32.10 37.30 5.20 25.40 Compact itabirite LGA FSBSE1 0.00 41.45 41.45 54.65 Friable itabirite LGA FSBSF1 34.05 41.50 7.45 30.69 Compact itabirite LGA FSBSF2 16.15 25.15 9.00 36.09 Friable itabirite LGA FSBSG1 0.00 45.05 45.05 42.79 Friable itabirite LGA FSBSG2 0.00 50.00 50.00 41.47 Friable itabirite LGA FSBSH1 0.00 32.03 32.03 41.32 Compact itabirite LGA FSBSH2 0.00 38.05 38.05 41.13 Friable itabirite LGA FSBSJ1 0.00 17.75 17.75 38.08 Compact itabirite LGA FSBSJ2 9.93 27.30 17.37 35.43 Friable itabirite LGA FSBSK2 4.55 9.95 5.40 47.30 Friable itabirite LGA FSBSK2 14.80 32.40 17.60 37.25 Friable itabirite LGA FSBSL2 0.00 29.60 29.60 35.49 Compact itabirite LGA FSBSL3 7.00 35.00 28.00 35.89 Friable itabirite LGA



11 Sample Preparation, Analyses and Security (Item 15)

LGA and MMX used SGS Geosol Laboratórios, Ltda. (SGS) located in Belo Horizonte for analysis of drill core during its drilling program at the Project. SGS has ISO 9000 and 14001 certification and is in the process of obtaining ISO/IEC 17025 laboratory accreditation (SGS Geosol, 2009).

11.1 Sample Preparation

Samples arriving at SGS from MMX vary in size and material. The sample is initially checked for sample identification and preservation conditions upon receipt. The sample preparation process consists of:

• Drying in a kiln at 105ºC until the sample is completely dry;

• Crushing the whole sample until 90% of the sample passes through a 2mm sieve;

• Reducing the volume by homogenization and quartering in Jones splitter to reduce sample to 250 to 300g;

• Pulverizing the split until 95% passes a 150 mesh sieve;

• Quartering in a Jones splitter to a sampling weighing approximately 125g for analysis;

• Archiving the remaining coarse reject and pulp; and

• Record screening tests performed during sample crushing and grinding.

Data is recorded in the Lab’s Information and Management System (LIMS) at each step in the preparation analytical process.

11.2 Sample Analysis

At the SGS laboratory, MMX samples are analyzed using the techniques shown in Table 11.2.1. Samples are analyzed for percentage of Fe, SiO2, Al2O3, K2O Na2O, TiO2, P, Mn, Ca, Mg, Cu, S, FeO and LOI. Detection limits for these elements and oxides are shown in Table 11.2.1.

Table 11.2.1: Practical Detection Limits for SGS Analysis Technique Lower Detection Limit

Fe XRF 0.01%SiO2 XRF 0.10%Al2O3 XRF 0.01%K2O XRF 0.01%Na2O XRF 0.10%TiO2 XRF 0.01%P XRF 0.01%Mn XRF 0.01%Ca XRF 0.01%Mg XRF 0.06%Cu XRF 0.01%S Leco Analyzer 0.01%FeO Titration 0.14%LOI Gravimetric 0.10%



The steps in the analytic procedure for LOI consist of:

• Drying the sample in an oven at around 110ºC for at least one hour;

• Weighing the empty container (CV);

• Placing 1.5 to 2g of the dried sample in the container and weighing again (C+A);

• Placing the container with the sample in a previously heated oven and waiting until the temperature reaches 1000±50ºC and letting it calcine for more than one hour;

• Removing the container from the oven, resting it on the refractory plate until it loses incandescence, and then put it in a closed dryer until the container and sample cool; and

• Weighing and record the final weight.

LOI is calculated using the following formula:

100)()(

)()(% x

CVAC

WeightFinalACFW

−+−+

=

The detection limit for LOI is 0.10 %. Data is recorded in the LIMS.

11.3 Internal Laboratory Quality Controls and Quality Assurance

SGS’s QA/QC consists of inserting quartz blanks every 40 samples and performing a screen test every 20 samples. Screen test data is recorded using LIMS. In addition a duplicate is inserted every 20 samples and a reference sample is inserted into every sample shipment. The data are transferred directly from the equipment and stored in the LIMS.

11.4 Quality Controls and Quality Assurance

The QA/QC program used by MMX included the random insertion of standards, coarse duplicates and pulp duplicates at regular frequencies in the sample stream. Listed below are the insertion frequencies for each group of control samples:

• Standards are inserted at two per 20 samples (10%) and alternate below a high and low grade Fe standard;

• Coarse duplicates are inserted at one per 50 samples (2%); and

• Pulp duplicates are inserted at one per 20 samples (5%); and

The QA/QC samples for MMX include 70 standard samples (35 each of high and low), 35 pulp duplicates and 14 coarse duplicates.

MMX used two standards created from material from two mines. One is a certified reference material (CRM) and the second is in the process of certification. These are, respectively, Amapá High Phosphorous (APHP) a low grade iron standard, made with iron ore from material from the Amapá Iron Ore Mine, formerly owned by MMX and the Corumbá standard (CRB1) a high grade iron standard from the MMX Corumbá Mineração Ltda operation. APHP was certified by Pierre Gy and Dominique François-Bongarçon of Agoratek International (Agoratek) in 2007 and revised in 2008. Agoratek is in the process of certifying CRB1.

Standard rejection limits are determined by adding and subtracting the standard deviation from the recommended mean. Analysis of a standard is expected to fall within ±2 standard deviation



of the recommended mean. Table 11.4.1 lists Agoratek’s recommended analytical mean for CRM APHP with values for calculating rejection limits at one, two and three standard deviations. Table 11.4.2 lists the same information for provisional standard CRB1. MMX used two standard deviations to calculate rejection limits for both APHP and CRB1.

Table 11.4.1: APHP with Standard Deviation (SD)for Calculating Rejection Limits Element/Oxide Mean (%) 1SD (grade %) 2SD (grade %) 3SD (grade %)

Fe 35.00 0.142 0.284 0.426 Al2O3 6.82 0.065 0.13 0.195 P 0.123 0.0027 0.0054 0.0081 Mn 1.542 0.0387 0.0774 0.1161 SiO2 34.22 0.171 0.342 0.513 TiO2 0.3 0.005 0.01 0.015 LOI 5.06 0.106 0.212 0.318

Table 11.4.2: CRB1 with Provisional Standard Deviation for Calculating Rejection Limits Element/Oxide Mean (%) 1SD (grade %) 2SD (grade %) 3SD (grade %)

Fe 60.05 0.30 0.60 0.90 Al2O3 2.95 0.07 0.14 0.21 P 0.056 0.002 0.004 0.006 Mn 0.02 0.005 0.010 0.015 SiO2 9.21 0.14 0.28 0.42 TiO2 0.15 0.01 0.02 0.03 LOI 1.46 0.28 0.56 0.84

Data is recorded in the LIMS. Original analytical certificates are sent to MMX. Analytical results are also provided electronically in Excel spreadsheets. MMX has used acQuire at its properties as a database management tool since December 2007. The acQuire software package includes QA/QC protocols within the sample numbering procedure.

11.5 Interpretation

The recommended analytical mean and standard deviation used to calculate rejection limits for APHP appeared to be too restrictive for the analytical technique and material being tested. If MMX uses the 2 standard deviations (±0.284%) for Fe as recommended in the sample certification, this results in a 54% failure rate for analysis of APHP. At 3 standard deviations the failure rate for Fe is approximately 35%. Because of this high standard failure rate, MMX reexamined the certificate and recalculated the standard deviation by using all samples including outliers from the certification data. MMX found the standard deviation of the entire population to be 0.38, which is the number MMX used to calculate rejection limits. Using 0.38 as the standard deviation to calculate rejection limits as falling outside two standard deviations, MMX observed a standard failure of approximately 9% for APHP. The analytical results for Fe from SGS for this standard are consistently but not significantly higher than the recommended mean. The average for Fe for SGS is 35.30% Fe while the recommended mean for the standard is 35.00%. Table 11.5.1 lists MMX’s recalculated standard deviations for APHP. Graphs for Fe, Al2O3, SiO2, P and LOI showing standard analysis are shown in Figure 11-1.



Table 11.5.1: MMX’s Recalculated APHP Standard Deviation for Calculating Rejection

Limits Standard Deviations (in % element) for Batch Rejection Limits

Unit Fe Al2O3 P Mn SiO2 TiO2 LOI

Recommended Mean 35.00 6.82 0.124 1.54 34.22 0.300 5.06 1j 0.38 0.12 0.003 0.05 0.43 0.005 0.54 2j 0.76 0.24 0.006 0.10 0.86 0.010 1.08

During certification of APHP, a total of 160 samples were analyzed for Fe2O3, Al2O3, P2O5, MnO, SiO2, TiO2. The analysis was completed at eight laboratories world wide and each laboratory received 20 samples. The samples were to be analyzed at each laboratory in four batches on different days using XRF on fused pellets. Agoratek found that although requested, most of the laboratories did not comply with the request to perform the analysis in four batches on different days and instead ran all of the batches on the same day (Gy et al., 2008).

During standard certification, analysis in batches on different days is a more realistic simulation of actual exploration sample submission and will be more representative of how a sample is analyzed. A batch analyzed on the same day is referred to as within-set and the standard deviation for that set is the within-set standard deviation (Src). The Src gives an indication of the homogeneity of the sample and the labs ability to routinely reproduce the analytical method. Data analyzed on different days is the between-set data and the standard deviation is the between-set standard deviation (SLc). The SLc may be more realistic statistically since it includes all analysis and considers sample homogeneity, method reproducibility, biases between laboratories and differences in sub-samples at different laboratories (Bloom, 2002).

Since the certification laboratories did not perform the analysis as requested and the majority of the analysis was run on the same day, the data is more representative of a within-set database. This may be the reason the standard deviation from the analysis appears to be too restrictive. Agoratek compensated for the abundance of within-batch data, by performing variance analysis on each element and each laboratory to determine the standard deviation used to calculate rejection limits (Gy et al., 2008). However, APHP is consistently performing higher than expected and SRK recommends that this standard continue to be monitored. Should the analytical results from SGS continue to be higher than the mean with a higher standard deviation, a new standard may need to be selected or APHP may need to be recertified.

Standard CRB1 is still in the certification process. MMX provided preliminary standard deviation information for Fe, Al2O3, P, M, SiO2, TiO2 and LOI found in Table 11.4.2. Based on the preliminary data, the SGS laboratory sample average for Fe is slightly higher, but within 0.05 of the recommended mean for CRB1. There were five standard failures for Fe out of 35 analysis for CRB1. Results for Fe, Al2O3, SiO2, P and LOI for standard CRB1 are shown in Figure 11-2. Standard failures are being investigated by MMX.

Pulp duplicates showed good reproducibility for samples for Fe, SiO2 Al2O3 and Mg analysis. There were no duplicate analysis failures for Fe, SiO2 and Mg and one duplicate failure for Al2O3. There were seven duplicates failures for P (approximately 20%) across all results between the detection limit of 0.01% and 0.10%. This may be a result of the analysis near the detection limit and needs to be investigated since P becomes an important contaminant at levels



above 0.04%. MMX is currently investigating sample failures. Figure 11.3 shows graphs for Fe, Al2O3, SiO2 and P of the pulp duplicate data.

There were 14 coarse duplicates in the sample database. Coarse duplicates also showed good reproducibility for Fe, SiO2 and Mg. There was one sample failure for P and eight sample failures for Al2O3. The results for Fe, Al2O3, SiO2 and P are shown in graphs in Figure 11-4.

MMX inserted QA/QC samples throughout the drilling program. Any inconsistencies in analytical results or control sample failures were identified, investigated and if necessary resubmitted for analysis to determine the reason for the failure. The sample preparation and analyses follow industry guidelines and the QA/QC indicate that the results are suitable for a resource database. The analytical techniques and sample preparation are appropriate for the mineralization and deposit type.

SRK recommends that QA/QC, be monitored as part of an ongoing process during all exploration drilling programs. The QA/QC data must be monitored and reviewed as it is received from the analytical lab during the exploration programs so that analytical failures can be quickly identified, investigated and resolved.

MMX does not submit samples to a secondary laboratory or insert sample blanks into the sample stream. SRK recommends that 5% to 10% of the samples be submitted to secondary laboratory for analysis using the same analytical techniques used at SGS. This will help identify sample bias, procedural variations in analysis and sample mixups. Submission to a secondary lab should be done throughout the exploration program as part of QA/QC. SRK also recommends the insertion of sample blanks into the sample stream to monitor any contamination during sample preparation. The use of blank samples is useful to identify sample preparation problems and may be more applicable to elements and oxides other than iron. SRK also recommends that standards be monitored and graphed over time in order to identify possible instrument drift at the laboratory during analysis.

SRK Job No.: 162706



Bom Sucesso APHP Standard Analysis

SRK Job No.: 162706



Bom Sucesso CRB1 Standard Analysis

SRK Job No.: 162706



Bom Sucesso Pulp duplicates

SRK Job No.: 162706



Bom Sucesso Coarse duplicates



12 Data Verification (Item 16) 12.1 Quality Control Measures and Procedures

Drilling

MMX has checked the LGA drillholes for consistency in lithologic logging, core recovery, and sample intervals. The drillhole collars were field checked by a surveyor.

In its own drilling program, MMX has followed industry best practices in logging and sampling and maintaining a laboratory QA/QC program.

Database

MMX receives the data directly from SGS Geosol and it is loaded into an acQuire database without cutting and pasting to ensure that errors are not made.

Sample intervals that do not meet the requirements of having a stoichiometric closure between 98 to 102% are not used in resource estimation. Likewise, intervals with core recovery less than 70% are not used in resource estimation.

SRK’s Data Verification

SRK examined six of the LGA core holes and two of the MMX core holes while conducting the site visit. Comparisons were made to the lithologic logs and to the assay results and no discrepancies were found. SRK also visited the operating core drill and found that Geosol was operating in a professional manner.

Comparisons were made between the database and the assay certificates for six of the LGA holes and six of the MMX holes and no errors were found.

The laboratory QA/QC indicates that the laboratory is performing acceptably.

12.2 Limitations

SRK did not take samples for analysis as the iron mineralization is obvious in the core samples and it was not deemed necessary.



13 Adjacent Properties (Item 17) There are several mineral rights held by others in the Bom Sucesso area (Figure 13-1). None of these have operating mines.

SRK Job No.: 162706



Source: MMX

MMX Adjacent Mineral Rights



14 Mineral Processing and Metallurgical Testing (Item 18)

MMX conducted tests on the Bom Sucesso itabirite to identify the most economical process to produce the richest product.

Tests were carried out under the supervision of the MMX Technological Department staff in the following laboratories:

• Escola de Engenharia of UFMG, Belo Horizonte, Minas Gerais;

• Fundação Gorceix - Ouro Preto, Minas Gerais; and

• Inbras-Eriez, Sorocaba, São Paulo.

The main objective of this research was to determine the concentratability of drilling samples from Bom Sucesso using only low intensity magnetic concentration (LIMS).

14.1 Procedures

Samples

The MMX Technological Development Department received prepared samples from the MMX Geological Department. The preparation was performed by SGS, where the samples were crushed, pulverized and split.

Two groups of samples were composited from the drill samples as follows:

• Group 1: Twelve samples with grain size <0.105mm samples, from separate lithologies and regions of the orebody: friable itabirite, semi-compact itabirite, compact itabirite 1 and compact itabirite 2, from North, Central and South Regions. These samples were used in the concentration tests, mineralogical study and liberation degree determination; and

• Group 2: Three samples with grain size <6.3mm from separate lithologies, friable itabirite, compact itabirite 1 and compact itabirite 2, were used to determine the work index. The semi-compact itabirite was not used because it represents just 6% of all the drill hole samples and it is not included in this preliminary study.

Concentration Tests using Davis Tube

The Group 1 samples were used in the Davis Tube Magnetic Separator at UFMG. The samples were reduced to 95% less than 0.045mm for this concentration test.

The main conditions of the test were:

• Water flow: 1.5 L/min;

• Agitation: average;

• Slope: 50°;

• Time: 10 minutes;

• Intensity: 800 Gauss; and

• Mass: 20g.



Concentration Tests Inbras

A sample composed of North, Central and South compact itabirite 1 was tested at LIMS in Inbras-Eriez. Figure 14-1 illustrates the process flowsheet. The sample was reduced to 97% <0.045mm and fed the first magnetic concentration test at 1350 Gauss with the resulting concentrate feeding a cleaner test at 800 Gauss.

14.2 Results

Concentration Tests using Davis Tube - UFMG

The mineralogical studies have identified mainly magnetite, martite, quartz, hematite and silicate minerals. The liberation degree for the iron minerals were between 0.075mm and 0.038mm. The work index was 6.7kWh/t for the friable itabirite, 10.1kWh/t for compact itabirite 1 and 10.0kWh/t for compact itabirite 2.

Tables 14.2.1 through 14.2.4 show the results from Davis Tube Magnetic Separator for the friable, semi-compact, compact 1 and compact 2 samples, respectively.

Tables 14.2.1: Davis Tube Tests – Friable Itabirite

Region Sample Flow Mass

Recovery

Fe

Recovery

FeO

Recovery

Fe

(%)

SiO2

(%)

Al2O3

(%)

Ca

(%)

K2O

(%)

Mg

(%)

Mn

(%)

P

(%)

FeO

(%)

North Friable Feed 41.0 32.5 3.06 0.84 0.53 0.81 0.31 0.037 7.45

North Friable Concentrate 38% 64% 97% 67.9 3.1 0.69 0.09 0.03 0.06 0.16 0.013 18.84

North Friable Tail 62% 24.2 50.8 4.53 1.30 0.84 1.27 0.40 0.052 0.36

Central Friable Feed 43.1 33.5 1.20 0.08 0.02 <0.10 0.32 0.055 4.70

Central Friable Concentrate 30% 46% 96% 67.8 1.9 0.40 0.03 0.01 <0.06 0.11 0.022 15.25

Central Friable Tail 70% 32.8 46.8 1.53 0.10 0.03 0.16 0.41 0.069 0.28

South Friable Feed 41.0 35.0 1.48 0.34 0.14 1.28 0.43 0.060 5.57

South Friable Concentrate 33% 55% 98% 67.1 3.7 0.43 0.05 0.03 <0.06 0.12 0.021 16.35

South Friable Tail 67% 27.9 50.8 2.01 0.49 0.19 1.11 0.58 0.080 0.14

There were no significant variations in the RoM grades from North, Central and South areas for the friable itabirite. Both regions produced high Fe and FeO grade concentrates with low contaminants. The SiO2 grade obtained is acceptable for commercial purpose, but further concentration steps are going to be checked in order to clean the concentrate. However, the results of pilot tests shown later, indicate better results than the Davis Tube.

Table 14.2.2: Davis Tube Tests – Semi-Compact Itabirite


Recovery

Fe

Recovery

FeO

Recovery

Fe

(%)

SiO2

(%)

Al2O3

(%)

Ca

(%)

K2O

(%)

Mg

(%)

Mn

(%)

P

(%)

FeO

(%)

North Semi-compact Feed 33.6 42.8 1.32 3.45 0.23 1.38 0.17 0.033 7.1

North Semi-compact Concentrate 35% 71% 96% 68.3 3.1 0.28 0.33 0.02 0.10 0.08 0.013 19.5

North Semi-compact Tail 65% 15.0 64.1 1.87 5.12 0.35 2.06 0.21 0.044 0.5

Central Semi-compact Feed 34.7 43.1 0.33 1.77 0.07 1.48 0.14 0.042 6.0

Central Semi-compact Concentrate 32% 60% 95% 64.4 7.2 0.13 0.21 0.01 0.14 0.07 0.015 17.6

Central Semi-compact Tail 68% 20.5 60.3 0.42 2.51 0.10 2.12 0.18 0.055 0.4

South Semi-compact Feed 38.4 41.3 1.59 0.07 0.07 <0.06 0.16 0.042 .3

South Semi-compact Concentrate 35% 61% 97% 66.1 4.8 0.36 0.03 0.01 <0.06 0.06 0.017 17.4

South Semi-compact Tail 65% 23.2 61.2 2.27 0.09 0.10 0.06 0.22 0.056 0.3



The product from the semi-compact itabirite has the highest SiO2 grades among all samples. Mainly in the central and south regions, but a cleaner concentration is being checked to decrease the SiO2 grade and increase Fe as well.

Table 14.2.3: Davis Tube Tests – Compact Itabirite 1


Recovery

Fe

Recovery

FeO

Recovery

Fe

(%)

SiO2

(%)

Al2O3

(%)

Ca

(%)

K2O

(%)

Mg

(%)

Mn

(%)

P

(%)

FeO

(%)

North Compact 1 Feed 31.0 43.7 0.27 4.96 0.16 2.21 0.09 0.034 11.3

North Compact 1 Concentrate 37% 80% 95% 67.9 3.7 0.16 0.54 0.02 0.21 0.05 0.007 29.3

North Compact 1 Tail 63% 9.6 67.0 0.34 7.53 0.24 3.38 0.12 0.049 0.9

Central Compact 1 Feed 31.8 43.8 0.25 4.16 0.16 1.79 0.26 0.035 9.5

Central Compact 1 Concentrate 36% 76% 97% 66.7 4.6 0.13 0.58 0.04 0.24 0.09 0.010 25.2

Central Compact 1 Tail 64% 12.0 66.1 0.32 6.20 0.23 2.67 0.36 0.049 0.5

South Compact 1 Feed 31.4 45.5 1.59 2.56 0.26 1.85 0.22 0.038 8.2

South Compact 1 Concentrate 32% 68% 86% 66.7 5.0 0.27 0.22 0.03 0.14 0.08 0.010 22.2

South Compact 1 Tail 68% 14.9 64.4 2.20 3.66 0.37 2.65 0.28 0.051 1.7

The highest metallurgical Fe recoveries were found in the compact itabirite 1 tests. As in the other lithological types, the product has high Fe and FeO grades. The SiO2 grades could also be lower if combined with a cleaner concentration. The same happens in the compact itabirite 2 shown in Table 14.2.4 below:

Table 14.2.4: Davis Tube Tests –Compact Itabirite 2


Recovery

Fe

Recovery

FeO

Recovery

Fe

(%)

SiO2

(%)

Al2O3

(%)

Ca

(%)

K2O

(%)

Mg

(%)

Mn

(%)

P

(%)

FeO

(%)

North Compact 2 Feed 25.2 40.2 0.35 9.70 0.27 2.40 0.15 0.037 8.5North Compact 2 Concentrate 27% 69% 88% 64.6 6.0 0.14 1.36 0.04 0.33 0.06 0.014 27.6North Compact 2 Tail 73% 10.6 52.9 0.43 12.80 0.35 3.17 0.19 0.045 1.4Central Compact 2 Feed 29.1 41.5 0.34 5.70 0.20 3.41 0.24 0.041 10.1Central Compact 2 Concentrate 31% 72% 88% 66.9 5.1 0.14 0.79 0.03 0.37 0.07 0.007 28.7Central Compact 2 Tail 69% 11.9 58.0 0.43 7.93 0.28 4.79 0.31 0.056 1.7South Compact 2 Feed 25.5 42.7 0.60 7.58 0.31 4.19 0.15 0.046 7.8South Compact 2 Concentrate 22% 59% 83% 68.1 4.0 <0,1 0.66 0.03 0.30 0.04 0.007 29.4South Compact 2 Tail 78% 13.5 53.7 0.90 9.54 0.39 5.29 0.18 0.057 1.7

Compact itabirite 1 and 2 have the highest FeO grades between the studied lithologies, ranging from 22% to 29%.

A FeO metallurgical balance indicates FeO recoveries between 83% and 98%. High recoveries indicate that Fe in the tailings does not come from magnetite mineral.

Concentration Tests LIMS - Inbras

For the LIMS test in Inbras, the sample was the compact itabirite 1 composited from North, Central and South compact itabirite 1.

The results are shown in Table 14.2.5.



Table 14.2.5: Inbras LIMS test –Compact Itabirite 1

Flow Mass

Recovery

Met. Fe

Recovery

Fe

(%)

SiO2

(%)

Al2O3

(%)

Ca

(%)

K2O

(%)

Mg

(%)

Mn

(%)

P

(%)

FeO

(%)

Feed 100% 100% 28.5 47.3 0.72 4.37 0.24 2.12 0.215 0.041 8.2 Tailings (1350 Gauss) 66% 27% 11.5 65.8 0.94 6.00 0.33 2.93 0.270 0.055 0.9 Tailings (800 Gauss) 5% 3% 19.2 56.0 0.82 5.82 0.25 2.66 0.280 0.049 2.0 Concentrate 29% 70% 68.2 4.4 0.20 0.49 0.02 0.23 0.081 0.009 25.6

The results obtained for LIMS were similar to the results obtained with the Davis Tube test, but LIMS was more selective and produced higher Fe grades, 68.2%, and about 4% less mass recovery. The SiO2 and other contaminants had similar behavior in both tests. The mineralogical constituents of the feed and product are given in Table 14.2.6.

Table 14.2.6: Inbras LIMS test –Feed and Product Constituents

Flow

Top

size

(#)

%

Retained

Monocrystaline

Lamelar

Hematite (%)

Monocrystaline

Granular

Hematite (%)

Lobular

Hematite

(%)

Martite

(%)

Magnetite

(%)

Goethite/

Limonite

(%)

Quartz

(%)

Silicates

(%)

Gangue

Liberation

(%)

Irion Ores

Liberation

(%)

Feed >400 9.4 0.1 1.0 0.7 3.3 58.4 0.2 21.4 14.3 96

Feed <400 90.6 0.6 1.3 0.0 1.5 43.1 0.0 34.1 100Tailings (1350 G) >400 6.4 0.4 2.5 1.8 0.4 0.0 0.7 57.0 37.3 94Tailings (1350 G) <400 93.6 1.1 1.5 0.0 0.0 0.0 0.0 62.0 35.4 100Concentrate (800 G) >400 12.5 0.0 0.2 0.2 4.8 88.3 0.0 3.1 2.6 65 97Concentrate (800 G) <400 87.6 0.0 1.1 0.0 3.2 89.2 0.0 4.3 2.0 93 99

A mineralogical study was conducted to identify the SiO2 minerals present in the final products. The study indicates that it comes from non liberated quartz . The small amount present in this size range is enough to increase SiO2 grade in the concentrate to more than 3.5%.

14.3 Conclusions

Both samples seemed to be highly attracted by low magnetic fields, demonstrating that it is possible to use magnetic concentration for itabirites from Bom Sucesso. The products presented high Fe grades, but in some results also have high SiO2 grade. The mineralogical study indicates that quartz comes from the insufficient liberation of gangue minerals. Futures studies are concentrated on a combination of magnetic concentration and flotation.

SRK Job No.: 162706



Source: MMX

Inbras LIMS Flowsheet

Feed

Final Tail

Concentrate

Final Tail

350 Gauss

800 Gauss



15 Mineral Resources (Item 19) This section provides details in terms of key assumptions, parameters and methods used to estimate the mineral resources together with SRK’s opinion as to their merits and possible limitations. The resource estimation for the Project was prepared for MMX by Prominas Projetos e Serviços de Mineração LTDA (Prominas), an independent geologic and engineering consultant company in Belo Horizonte, using Mintec’s MineSight software. MMX directly supervised the work of Prominas. The resource was audited by Leah Mach, QP for this report and Principal Resource Consultant with SRK.

15.1 Topography

MMX contracted Serviços Aéreos Industriais S.I. Ltda (SAI) to generate topographic contours for the project area. The contours were derived from aerophotographs using the UTM Datum SAD69 23S Coordinate System. The control points for the flights were surveyed with a GPS Trimble 5700 L1/L2 following the standards of the Comissão Nacional de Cartografia. The resulting contour intervals are 1m. Figure 15-1 shows the drillholes and topography with only 10m contours for clarity.

15.2 Drillhole Database

The drillhole database consists of 29 core holes drilled by MMX and 23 core holes drilled by LGA. Table 15.2.1 presents statistics for each of the drill campaigns. The results in the two campaigns are quite similar for the friable itabirite, but MMX has lower Fe values in the semi-compact itabirite and the compact itabirite and that is because MMX drilled deeper into those lithologies, where the weathering is less, and therefore the iron grades are lower and the silica higher.



Table 15.2.1: Assay Basic Statistics by Company MMX

Lithotype Statistic Fe SiO2 Al2O3 P LOI

Friable

Average 42.83 32.94 1.31 0.054 2.87 Std Dev 6.05 9.49 1.46 0.028 2.57 Minimum 24.04 6.64 0.18 0.017 0.06 Maximum 56.58 53.91 10.22 0.220 13.69 CV 0.14 0.29 1.12 0.516 0.90 Number 111 111 111 111 110

Semi-compact


Compact


LGA

Lithotype Statistic Fe SiO2 Al2O3 P LOI

Friable


Semi-compact


Compact


15.3 Geology

MMX constructed 30 vertical sections as shown in Figures 15-2 and 15-3. The following lithologies were each modeled separately:

• Itabirite – siliceous and dolomitic friable, semi-compact, compact;

• Intrusive – acid, basic, pegamitite;

• Quartzite, schist, phyllite; and

• Soil, colluvium.



All the drilling and the surface geologic mapping were used to construct the sections.

The vertical sections were then used to generate 45 horizontal sections at 10m intervals (Figure 15-4). The vertical sections were extruded 10m upward to create solids.

SRK has reviewed the results and considers the geologic model to represent the geology of the deposit as currently defined by mapping and drilling.

15.4 Compositing

The samples were composited into 5m intervals with breaks at the geologic solid boundaries. Samples less than 2.5m were added to the previous sample to eliminate composites of short length. The compositing routine excluded the following:

• All LGA drilling because of poor recovery;

• MMX samples where core recovery was less than 70% (4 samples); and

• MMX samples where the stoichiometric closure was outside the acceptable range of 98 to 102% (3 samples).

Table 15.4.1 presents statistics for the composited samples.

Table 15.4.1: Basic Statistics of the Composited Samples Lithotype Statistic Fe SiO2 Al2O3 P Mn LOI

Friable

Average 42.79 33.55 1.17 0.050 0.40 2.59 Std Dev 5.51 8.42 1.02 0.018 0.82 2.02 Minimum 28.10 7.10 0.20 0.017 0.04 0.06 Maximum 56.58 45.48 5.76 0.109 5.60 9.92 CV 0.13 0.25 0.87 0.355 2.06 0.78 Number 82 82 82 82 82 82

Semi-compact


Compact


15.5 Density

MMX conducted measurements on 1583 core samples and 65 surface samples using the water displacement and sand flask methods, respectively. The density values used in the resource estimation are shown in Table 15.5.1.



Table 15.5.1: Block Model Density Values Lithology Wet Density(g/cm3)

Soil 2.20 Colluvium 2.20 Schist 3.00 Friable itabirite 2.31 Semi-compact itabirite 3.14 Compact itabirite 3.28 Friable dolomitic itabirite 2.31 Semi-compact dolomitic itabirite 3.14 Compact dolomitic itabirite 3.28 Phyllite 2.07 Quartzite 2.48 Basic intrusive 1.71 Acid intrusive 1.71 Pegmatite 1.71

15.6 Block Model

A rotated block model was created with the origin and dimensions as shown in Table 15.6.1 and Figure 15-1.

Table 15.6.1: Block Model Origin and Dimensions Direction Minimum Length Block size Number

East 527140 3300 25 132 North 7670550 15600 50 312 Elev 600 1250 10 65

The block model was coded with the following variables prior to grade estimation:

• Percent below topography;

• Percent within the mineral license boundary;

• Primary, secondary and tertiary lithologic codes and percentages for each block; and

• Density value for each lithology code.

The lithology codes and percentages were assigned from the extruded geologic solids and each block could have up to three codes. Density values were assigned to each lithology code.


MMX estimated values for Fe, SiO2, Al2O3, P, Mn, MgO, CaO, TiO2, LOI, FeO, K2O, Na2O, Cu and S. The grade estimation was done in two passes using the Inverse Distance Squared (ID2) algorithm and the parameters shown in Table 15.7.1.



Table 15.7.1: Grade Estimation Parameters Parameter Pass 1 Pass 2

Composites

Minimum 1 1 Maximum 24 24 Maximum/DH 3 3 Maximum/Quadrant 6 6 Search Distance(m)

Major 1000 2000 Semi-Major 500 1000 Minor Free Free Search Orientation 030°,00°,00° 030°,00°,00°

The following variables were also stored in for each block:

• Distance to the closest composite;

• Average distance to the composites used in estimation;

• Number of drillholes used in estimation; and

• Number of composites used in estimation.

Table 15.7.2 contains the average grades in the block model.

Table 15.7.2: Average Grades in the Block Model. Lithotype Fe SiO2 Al2O3 P Mn LOI

Friable 41.94 34.17 1.23 0.050 0.41 2.50 Semi compact 37.62 40.77 0.08 0.043 0.19 1.56 Compact 27.09 44.22 1.90 0.042 0.22 2.97

15.8 Block Model Validation

The block model was verified by:

• SRK re-estimated Fe, SiO2, and P with same parameters as MMX, but using a single pass with a search range of 400m;

• Visual comparison of the drillholes and block grades; and

• Comparison of assay, composite, and block model statistics.

SRK’s compared its estimation to MMX’s estimation considering only blocks within 400m of the closest composite. SRK’s tonnage was less than 1% difference in tonnage and had similar Fe, SiO2, and P grades. Approximately 20% of SRK’s tonnage was estimated with only a single drillhole. The longer MMX search range does not allow a comparison of tonnages compared with a single drillhole.

The visual comparison of the drillholes and block grades and comparison of the assay, composite and block grades indicate that resource estimation has produced results that reflect that data that was used in the estimation.




Because the estimation in the vertical direction was unconstrained, a surface was created defined by the base of the drillholes to limit the classification of Inferred Resources.

The Inferred Resources were classified according to the following parameters:

• Estimated in Pass 1;

• Maximum distance to the closest composite less than 400m; and

• Above the surface defined by the base of the drillholes.

Figures 15-5 and 15-6 present vertical and horizontal sections, respectively, showing the inferred resources.

SRK has reviewed the classification and the spatial distribution of the Inferred Resources and is of the opinion that the classification meets CIM guidelines for classification of resources.

15.10 Mineral Resource Statement and Sensitivity

The Inferred Resources for the Bom Sucesso Project are listed in Table 15.10.1.

Table 15.10.1: Inferred Mineral Resources, April 15, 2009, Tonnes on a Wet Basis Lithology Class Mt* Fe SiO2 Al2O3 P Mn LOI

Friable Inferred 52 42.05 34.32 1.28 0.049 0.385 2.39 Semi-compact Inferred 21 38.28 40.47 0.67 0.043 0.168 1.53 Compact Inferred 291 27.14 43.29 1.30 0.039 0.169 3.09 Total Inferred 365 29.93 41.84 1.26 0.041 0.200 2.90

* The Total Inferred Resources are not equal to the sum of the tonnages by lithology due to rounding.

The mineral sensitivity is shown as a grade tonnage curve in Figure 15-7.

15.11 Potential Resources

MMX has estimated potential resources as all blocks estimated in Pass 2 and blocks estimated in Pass 1 that were not classified as Inferred Resources. The potential resource for the Bom Sucesso Project is between 500 and 740Mt at an approximate Fe grade of 27.5%. The potential resource is about 95% compact itabirite most of which is below the depth of drilling and estimated in the second pass.

Potential resources are highly speculative and there is no guarantee that future drilling will prove up the tonnage or grade.

SRK Job No.: 162706



Bom Sucesso Drillhole Location Map,

Topography and Block Model

Limits

SRK Job No.: 162706


Cross-Section Location Map Cross-sections in 3D


Bom Sucesso Vertical Geological Sections,

Locations and 3D

SRK Job No.: 162706


Section 7 Section 19 Section 26


Bom Sucesso Vertical Geologic Cross-

Sections

SRK Job No.: 162706


Elevation 1035 Horizontal Plan, cut by Topography

Extruded Geologic Solids


Bom Sucesso Horizontal Geologic Sections

and Extruded Solids

SRK Job No.: 162706


Section 7 Section 19 Section 26


Bom Sucesso Vertical Cross-Sections with

Block Model Fe Grades

SRK Job No.: 162706


Extruded Geologic Solids


Bom Sucesso Horizontal Geologic Sections

Elevation 1035

SRK Job No.: 162706



Grade Tonnage Curve Inferred Resources



16 Other Relevant Data and Information (Item 20) There is no other relevant information for the Bom Sucesso Project.



17 Interpretation and Conclusions (Item 21)

17.1 Field Surveys and Drilling

MMX has conducted surface geologic mapping over the entire extent of the itabirite within its mineral license area at a scale of 1:5000. Mapping was focused on identifying contacts between the Caraça, Itabira, and Piracicaba Groups and not on defining the individual occurrences of friable, semi-compact and compact itabirite. Pegamite dikes and faults were also mapped.

LGA drilled 23 core holes with an average depth of 35.2m. The drilling was focused on the friable itabirite and was halted when the compact itabirite was encountered. Core recovery was generally poor.

MMX has drilled 29 core holes with an average depth of 131.1m and drilling continued into the compact itabirite. Core recovery was greater than 95%.


17.2 Analytical and Testing Data

MMX inserted QA/QC samples throughout the drilling program. This includes 35 low iron standards, 35 high iron standards, 35 pulp duplicates and 14 coarse duplicates. Any inconsistencies in analytical results or control sample failures were identified, investigated and if necessary resubmitted for analysis to determine the reason for the failure. The sample preparation and analyses follow industry guidelines and the QA/QC indicate that the results are suitable for a resource database. The analytical techniques and sample preparation are appropriate for the mineralization and deposit type.

17.3 Exploration Conclusions

A total of 52 holes have been drilled over the 5km strike length of the deposit. This density of drilling is adequate for an inferred resource in areas where the holes are more closely spaced.

MMX’s mapping and drilling programs have been conducted according to industry best practices and have produced results that are suitable for resource estimation.


The resource estimation for the Project was prepared for MMX by Prominas, an independent geologic and engineering consultant company in Belo Horizonte and was audited by SRK. The estimation was conducted in two passes, with the first using a search distance of 1000m and the second a search distance of 2000m. The ID2 algorithm was used for the estimation, requiring a minimum of one sample in both passes. Resources were classified as Inferred if estimated in the first pass and if the closest composite was within 400m of the block centroid. Another qualification of inferred classification was that the block centroid had to lie above a surface defined by the base of the drilling. SRK considers that the estimation methodology and classification meet CIM guidelines for estimating and classifying resources.



18 Recommendations (Item 22) SRK recommends the following for the Bom Sucesso Project:

• Infill drilling to a 400m by 200m grid – 50 drillholes at an average depth of 135m; and

• Additional metallurgical and process testing to define a process flowsheet.

• SRK recommends that QA/QC, be monitored and reviewed as it is received from the analytical lab during all exploration programs so that analytical failures can be quickly identified, investigated and resolved. In addition, 5% to 10% of the samples must be submitted to a secondary laboratory for analysis using the same analytical techniques used at the primary lab. This will help identify sample bias, procedural variations in analysis and sample mixups. Submission to a secondary lab should be done throughout the exploration program as part of QA/QC. SRK also recommends the insertion of sample blanks into the sample stream to monitor any contamination during sample preparation. SRK also recommends that CRM APHP continue to be monitored. Should the analytical results from SGS continue to be higher than the mean with a higher standard deviation, a new standard may need to be selected or APHP may need to be recertified. All results from standards should be monitored and graphed over time to identify possible instrument drift at the laboratory during analysis.

18.1 Costs

• Drilling program – 6750m at a cost of US$300/m, including assays – US$2 million; and

• Metallurgical testwork – estimated $US200,000.



19 References (Item 23)

Bloom, L., 2002, Analytical Services and QA/QC, Prepared for the Society of Exploration Geologists, April 2002, Unpublished Report, 24p.

Carneiro, M.A., Barbosa, M.S.C. Implicacoes geologicas e tectonicas da interpretacao magnetometricada regiao de Oliveira, Minas Gerais. Revista Brasileira de Geoffsica - Rev. Bras. Geof. vol.26 no.1 Sao Paulo Jan./Mar. 2008.

Erichsen. A.I., 1929. Geologia da Folha de São João del Rei. Serv. Geol.Miner do Brasil, DNPM, Bol. 36, 26 p.

Fundacao Gorceix, 2008. Avaliacao do Potencial de Concentracao de uma Amostra de Minerio de Ferro Proveniente da Mina De Bonsucesso - Relatorio Tecnico. Arquivo digital "Iga-rev00.doc" Versao de 10 de julho de 2008. Relatorio Interno da LGA Mineração e Siderurgia Ltda., 5p.

Guild P.W. (1960), Geologia e Recursos Minerais do Distrito de Congonhas, Estado de Minas Gerais: Departamento Nacional da Producao Mineral, memoria No. 1Gy, P., François-Bongarçon, D., 2008, Reference Material APHP Mineração MMX Certification Report – Rev1, Agoratek International Reference Material Certificate, 10p.

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MMX S.A., 2008. Relatorio de Avaliacao de Projeto - Projeto: LGA Mineração Ltda. (Bom Sucesso). Arquivo digital: "Laudo Aquisicao_Bom Sucesso.doc" e planilha "Projeto Bom Sucesso.xls". Versao de 23 de julho de 2008. Relatorio interno da Gerencia de Planejamento e Relacoes com Investidores. 3p.

MMX S.A., 2008. Estudos Preliminares com Minerio de Bom Sucesso. Arquivo digital: "Relatorio Preliminar Concentracao do Minerio de Bom Sucesso.doc". Versao de 30 de setembro de 2008. Relatorio interno da Gerencia de Desenvolvimento Tecnologico. 11p.

MMX S.A., 2008. Mercado Mundial e Brasileiro de Minerio de Ferro. Arquivo digital: "Mercado.doc". Versao de 22 de setembro de 2008. Relatorio interno da Gerencia de Planejamento e Orcamento. 5p.

Moretzsohn, José Santos; Soares-Filho, B.S., 1982. Geologia da porção meridional da serra de Bom Sucesso, MG. In: II Simpósio de Geologia da Minas Gerais, Geologia do Precambriano, 1982, Belo Horizonte. Anais II Simpósio de Geologia da Minas Gerais, Geologia do Precambriano, Belo Horizonte: SBG, 1982. v. 3. p. 423-431.

Noce C.M., 1995. Geocronologia dos eventos magmaticos, sedimentares e metamorficos na regiao do Quadrilatero Ferrifero, Minas Gerais. Sao Paulo. Tese de Doutoramento, Instituto de Geociencias/USP. 127p.

Prominas, 2008. Relatorio M04 - Modelamento geologico, estimativa e classificacao de recursos. Arquivo digital: Relatorio_Bom_Sucesso_SET08_ M04.doc Versao de 22 de outubro de 2008. Relatorio Interno da MMX S.A., sob a coordenacao da Gerencia de Recursos e Reservas, 57p.



Prominas, 2008. Relatorio_Bom_Sucesso_otimizacao de cavas_rev5.doc. Versao de 28 de outubro de 2008. Relatorio Interno da MMX S.A., sob a coordenacao da Gerencia de Recursos e Reservas, 9p.

Quéméneur J.J.G., 1987. Petrography of the pegmatites from Rio das Mortes Valley, southeast Minas Gerais, Brazil. Rev. Bras. Geoc., 17(4):595-600.

Quéméneur J.J.G., 1987. Esboco estratigrafico, estrutural e metamorfico da Serra de Bom Sucesso, MG. In: Simposio de TGeologia de Minas Gerais, 04., Belo Horizonte. Anais…, Belo Horizonte, 1987, p135-148.

Quéméneur J.J.G., Baraud, R., 1983. Estrutura do Embasamento Arqueano e geologia economica da area pegmatítica de São João del Rei, MG. In: SBG-MG, Simpósio de Geologia de Minas Gerais, 2, Belo Horizonte, Anais, p. 449-460.

Quéméneur J.J.G., Noce, C.M., 2000. Geochemistry and Petrology of Felsic and Mafic Suites Related to the Paleoproterozoic Transamazonian Orogeny in Minas Gerais, Brazil, Universidade Federal de Minas Gerais, Instituto de Geociências. Av. Antônio Carlos 6627, 31270-901 - Belo Horizonte (MG), Brazil, Marco de 2000.

SGS Geosol, 2009, Online laboratory certification information, http://www.sgsgeosol.com.br., accessed May, 2009.

UFMG, 2007. Amostras de Minerio de Ferro da LGA – Relatorio Final de Concentracao Bom Sucesso – UFMG.pdf e arquivo “Relatorio Final de Concentracao Bom Successo – UFMG.pdf” versao de 10 de outubro de 2007, Relatorio Interno da LGA Mineração e Siderurgia Ltda., 29p.

UFMG, COMIG, 2003. Mapa Geológico, Folha Lavras, Projeto Sul de Minas, Impressão 2003.





20.2 Glossary Table 20.2.1: Glossary

Term Definition

Assay: The chemical analysis of mineral samples to determine the metal content. Capital Expenditure: All other expenditures not classified as operating costs. Composite: Combining more than one sample result to give an average result over a larger distance. Concentrate: A metal-rich product resulting from a mineral enrichment process such as gravity concentration

or flotation, in which most of the desired mineral has been separated from the waste material in the ore.

Crushing: Initial process of reducing ore particle size to render it more amenable for further processing. Cut-off Grade (CoG): The grade of mineralized rock, which determines as to whether or not it is economic to recover

its gold content by further concentration. Dilution: Waste, which is unavoidably mined with ore. Dip: Angle of inclination of a geological feature/rock from the horizontal. Fault: The surface of a fracture along which movement has occurred. Footwall: The underlying side of an orebody or stope. Gangue: Non-valuable components of the ore. Grade: The measure of concentration of gold within mineralized rock. Hangingwall: The overlying side of an orebody or slope. Haulage: A horizontal underground excavation which is used to transport mined ore. Igneous: Primary crystalline rock formed by the solidification of magma. Kriging: An interpolation method of assigning values from samples to blocks that minimizes the

estimation error. Lithological: Geological description pertaining to different rock types. Material Properties: Mine properties. Milling: A general term used to describe the process in which the ore is crushed and ground and

subjected to physical or chemical treatment to extract the valuable metals to a concentrate or finished product.

Mineral/Mining License: A area for which mineral rights are held. Mining Assets: The Material Properties and Significant Exploration Properties. Ore Reserve: See Mineral Reserve. RoM: Run-of-Mine. Sedimentary: Pertaining to rocks formed by the accumulation of sediments, formed by the erosion of other

rocks. Sill: A thin, tabular, horizontal to sub-horizontal body of igneous rock formed by the injection of

magma into planar zones of weakness. Stratigraphy: The study of stratified rocks in terms of time and space. Strike: Direction of line formed by the intersection of strata surfaces with the horizontal plane, always

perpendicular to the dip direction. Tailings: Finely ground waste rock from which valuable minerals or metals have been extracted. Variogram: A statistical representation of the characteristics (usually grade).



Abbreviations

The metric system has been used throughout this report. Currency is in U.S. dollars unless otherwise stated. Tonnes are metric of 1,000kg, or 2,204.6lbs. The abbreviations presented in Table 20.2.2 are general mining terms and may be used within the text of this Technical Report.

Table 20.2.2: Abbreviations Abbreviation Unit or Term

AA atomic absorption Al2O3 alumina (aluminum oxide) °C degrees Centigrade CaO calcium oxide CoG cut-off grade cm centimeter cm2 square centimeter cm3 cubic centimeter ° degree (degrees) dia. diameter EIA/RIMA Environmental Impact Assessment and Environmental Impact Report Fe iron FeO ferrous oxide or wustite ft2 square foot (feet) ft3 cubic foot (feet) g gram gal gallon g/L gram per liter g/t grams per tonne ha hectares ICP induced couple plasma ID2 inverse-distance squared ID3 inverse-distance cubed kg kilograms km kilometer km2 square kilometer kt thousand tonnes kV kilovolt kW kilowatt kWh kilowatt-hour kWh/t kilowatt-hour per metric tonne L liter L/sec liters per second L/sec/m liters per second per meter lb pound LOI Loss On Ignition LoM Life-of-Mine m meter m2 square meter m3 cubic meter masl meters above sea level Ma million years before present Mn manganese MgO magnesium oxide mg/L milligrams/liter mm millimeter mm2 square millimeter mm3 cubic millimeter Mt million tonnes m.y. million years NI 43-101 Canadian National Instrument 43-101 OSC Ontario Securities Commission oz troy ounce



Abbreviation Unit or Term

% percent P phosphorous ppb parts per billion ppm parts per million QA/QC Quality Assurance/Quality Control R$ Real/Reais (Brazilian currency) RQD Rock Quality Description SD Standard Deviation SEC U.S. Securities & Exchange Commission sec second SiO2 silica (silica dioxide) SG specific gravity t tonne (metric ton) (2,204.6 pounds) t/h tonnes per hour t/d tonnes per day t/y tonnes per year TiO2 titanium oxide µm micron or microns, micrometer or micrometers V volts W watt XRD x-ray diffraction y year

Appendix A Certificate of Author

Group Offices in: North American Offices: Australia Denver 303.985.1333 North America Elko 775.753.4151 Southern Africa Reno 775.828.6800 South America Tucson 520-544-3688 United Kingdom Toronto 416.601.1445 Vancouver 604.681.4196 Yellowknife 867-699-2430

SRK Consulting (U.S.), Inc. 7175 West Jefferson Avenue, Suite 3000 Lakewood, Colorado USA 80235 e-mail: [email protected] web: www.srk.com Tel: 303.985.1333 Fax: 303.985.9947

CERTIFICATE of AUTHOR I, Leah Mach, CPG, MSc do hereby certify that: 1. I am currently employed as Principal Resource Geologist of:

SRK Consulting (US), Inc. 7175 W. Jefferson Ave, Suite 3000 Denver, CO, USA, 80235

2. I graduated with a Master of Science degree in Geology from the University of Idaho in 1986. 3. I am a member of the American Institute of Professional Geologists. 4. I have worked as a Geologist for a total of 23 years since my graduation from the University

of Idaho. 5. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI

43-101”) and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

6. I am responsible for all sections of the technical report titled “NI43-101 Technical Report

on Resources, MMX Mineração e Metálicos S.A.,” dated May 11, 2009 (the “Technical Report”) relating to the Bom Sucesso Project. I visited the Bom Sucesso Project property on February 12, 2009.

7. I have not had prior involvement with the property that is the subject of the Technical Report. 8. I am independent of the issuer applying all of the tests in section 1.4 of National Instrument

43-101. 9. I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has

been prepared in compliance with that instrument and form. 10. I consent to the filing of the Technical Report with any stock exchange and other regulatory

authority and any publication by them for regulatory purposes, including electronic publication in the public company files on their websites accessible by the public, of the Technical Report.

SRK Consulting (US), Inc. Page 2 of 2

BomSucesso_COA_Mach_162700_060_esigned.doc

11. As of the date of this certificate, to the best of my knowledge, information and belief, the Technical Report contains all scientific and technical information that is required to be disclosed to make the Technical Report not misleading.

Dated this 11th Day of May, 2009. “Signed” “Sealed”

Leah Mach, CPG, MSc CPG 10940

Item 24

MMX Mineraçò e Metálicos S. A., NI 43-101 Technical Report on Resources, Bom Sucesso Project, Minas Gerais, Brazil, May 11, 2009.

Dated this 11th Day of May, 2009.

“Signed” “Sealed”

Leah Mach, CPG, MSc CPG 10940


Resources and Reserves Audit

Corumbá Iron Project, Mine 63

Brazil

Prepared for:

Mineração e Metálicos S.A. Praia do Flamengo 154/4°

Rio de Janeiro Brasil 22210-030

SRK Project Number 162700.090

7175 West Jefferson Ave., Suite 3000

Lakewood, Colorado USA 80235 Tel: +1.303.985.1333

Fax: +1.303.985.9947 E-mail: [email protected]

Web site: www.srk.com

Report Date: October 20, 010

Authors:

Leah Mach, M.Sc., Geology, CPG Fernando Rodrigues, B.S. Mining, MAusIMM

Afranio Machado Mike Elder, P.E.

Mineração e Metálicos S.A. i Corumbá Iron Project, Mine 63 Resources and Reserves Audit

SRK Consulting (U.S.), Inc. October 20, 2008 Corumba_Resources and Reserves Audit_162700 09_MLM_008.docx

Table of Contents

1 INTRODUCTION ........................................................................................................... 1-1 1.1 Terms of Reference and Purpose of the Report ................................................... 1-1 1.2 Sources of Information ........................................................................................ 1-1 1.3 Effective Date ...................................................................................................... 1-1 1.4 Qualifications of Consultant (SRK) ..................................................................... 1-1

2 PROPERTY DESCRIPTION AND LOCATION ........................................................... 2-1 2.1 Property Location................................................................................................. 2-1 2.2 Mineral Titles ....................................................................................................... 2-1

3 GEOLOGICAL SETTING .............................................................................................. 3-1 3.1 Regional Geology ................................................................................................ 3-1 3.2 Local Geology ...................................................................................................... 3-1

3.2.1 Mineralization ........................................................................................ 3-2

4 EXPLORATION.............................................................................................................. 4-1 4.1 Exploration of Mine 63 ........................................................................................ 4-1 4.2 Drilling ................................................................................................................. 4-1 4.3 Sampling Method and Approach ......................................................................... 4-2 4.4 Sample Preparation, Analysis and Security for Mine 63 ..................................... 4-2

4.4.1 Sample Preparation ................................................................................ 4-3 4.4.2 Sample Analysis .................................................................................... 4-4 4.4.3 Laboratory Quality Control and Quality Assurance .............................. 4-5

4.5 Conclusion ........................................................................................................... 4-9

5 DATA VERIFICATION ................................................................................................. 5-1

6 MINERAL PROCESSING .............................................................................................. 6-2

7 MINERAL RESOURCE ................................................................................................. 7-1 7.1 Density ................................................................................................................. 7-1 7.2 Topography .......................................................................................................... 7-1 7.3 Resource Database ............................................................................................... 7-2 7.4 Geological Model ................................................................................................. 7-3 7.5 Compositing ......................................................................................................... 7-3 7.6 Variography ......................................................................................................... 7-3 7.7 Block Model......................................................................................................... 7-4 7.8 Resource Estimation ............................................................................................ 7-4 7.9 Resource Classification and Resource Statement ................................................ 7-5 7.10 Validation of Resource Model ............................................................................. 7-7

8 RESERVE ESTIMATION .............................................................................................. 8-1 8.1 Geotechnical Studies ............................................................................................ 8-4 8.2 Mining Operations ............................................................................................... 8-5 8.3 Mining Method .................................................................................................... 8-5 8.4 Mine Planning ...................................................................................................... 8-6 8.5 Processing ............................................................................................................ 8-6 8.6 Infrastructure ........................................................................................................ 8-7 8.7 Tailings ................................................................................................................ 8-7 8.8 Shipment Logistics............................................................................................... 8-7

Mineração e Metálicos S.A. ii Corumbá Iron Project, Mine 63 Resources and Reserves Audit


8.9 Environmental Management ................................................................................ 8-7 8.9.1 During the Operational Life of the Mine ............................................... 8-7 8.9.2 Mine Closure ......................................................................................... 8-8

8.10 Taxes and Royalties (OK) .................................................................................... 8-8 8.11 LoM Plan Economics ........................................................................................... 8-8 8.12 Mine Life ............................................................................................................. 8-8

9 RECOMMENDATIONS ................................................................................................. 9-1

10 REFERENCES .............................................................................................................. 10-1

11 GLOSSARY .................................................................................................................. 11-1 11.1 Mineral Resources and Reserves ....................................................................... 11-1 11.2 Glossary ............................................................................................................. 11-2 11.3 Abbreviations ..................................................................................................... 11-3

List of Tables

Table 1: Mine 63 Resources on a Wet Tonnage Basis .................................................................III

Table 2: Mineral Reserves - Mine 63 Corumbá Project* ............................................................ IV

Table 3: Mineral Reserves by Lithology - Mine 63 Corumbá Project* ........................................ V

Table 4: Mine Production Schedule – Mine 63 ............................................................................. V


Table 4.2.1: Drilling in Mine 63, Corumbá Project .................................................................... 4-1

Table 4.4.1 Preparation and Analytical Laboratories .................................................................. 4-3

Table 4.4.2.1: Limits Detection of SGS Iron Ore Analysis ........................................................ 4-4

Table 4.4.2.2: Detection Limits of Iron Ore Analysis ................................................................ 4-5

Table 4.4.3.1: Summary of Percent Difference Between SGS and UT Samples ....................... 4-7

Table 4.4.3.2: Standard Reference Samples ............................................................................... 4-8

Table 4.4.3.3: Percentage of Laboratory Pulp Duplicates within Specific Ranges .................... 4-9

Table 6.1: Plant Main Operating Data ........................................................................................ 6-4

Table 6.2: Mine and Concentration Main Operating Data ......................................................... 6-5

Table 7.1.1: Density on a Wet Basis by Lithotype at Mine 63 ................................................... 7-1

Table 7.3.1: Model Lithotypes .................................................................................................... 7-2

Table 7.3.2: Average Grades by Lithotype ................................................................................. 7-2

Table 7.5.1: Average Grades of Composites by Lithotype ......................................................... 7-3

Table 7.6.1: Variogram Parameters ............................................................................................. 7-4

Table 7.7.1: Block Model Origin and Dimensions ..................................................................... 7-4

Table 7.9.1: Mine 63 Resources on a Wet Tonnage Basis, MMX License Area ....................... 7-6

Mineração e Metálicos S.A. iii Corumbá Iron Project, Mine 63 Resources and Reserves Audit


Table 7.9.2: Mineral Resources by Lithology within Vale Infrastructure Area - Mine 63 Corumbá Project .............................................................................................................. 7-7

Table 8.1: Correlations RoM Grades x Product Grades Grades* ............................................... 8-1

Table 8.2: Optimized Pit for Mine 63, Corumbá Project End of June 2010 ............................... 8-2

Table 8.3: Total Reserves as at September 23, 2010 - Mine 63 Corumbá Project* ................... 8-3

Table 8.4: Mineral Reserves by Lithology - Mine 63 Corumbá Project* .................................. 8-3

Table 8.5: Mine 63 Production, January to August 2010 ........................................................... 8-4

Table 8.6: Mineral Reserves by Lithology within Vale Infrastructure Area - Mine 63 Corumbá Project* ............................................................................................................................ 8-4

Table 8.4.1: Mine Production Schedule – Mine 63 .................................................................... 8-6

Table 8.10.1: MMX Taxes .......................................................................................................... 8-8

List of Figures

Figure 2-1: Location Map of the Corumbá Project ..................................................................... 2-2

Figure 2-2: Mineral Rights Map - Mine 63 ................................................................................ 2-3

Figure 3-1: Stratigraphic Column and Regional Map ................................................................. 3-1

Figure 3-2: Cross-Section of Mine 63 Area Showing Colluvium and Eluvium Deposits .......... 3-2

Figure 3-3: Geologic Map of the Mine 63 Area ......................................................................... 3-3

Figure 4-1: Drillhole and Sample Locations, Mine 63 Corumbá Project ................................. 4-10

Figure 4-2: LCT and SGS vs. UT Analyses for Corumbá Samples ......................................... 4-11

Figure 6-1: Plant Flow Sheet ...................................................................................................... 6-6

Figure 7-1: Sample Locations, Topography and Mineral Boundaries, Mine 63 ........................ 7-8

Figure 7-2: Mine 63 Mineral Resource Classification (A) and Fe Grades (B) ........................... 7-9

Figure 7-3: MMX License Area with Block Classification and Vale Infrastructure Area ....... 7-10

Figure 7-4: Mine 63 Mineral Resource Fe Swath Plots (A) and Location of Swath Plot Lines (B)7-11

Figure 8-1: Spider Graph Showing Sensitivity of the Optimized Pit to Product Price ............... 8-9

Figure 8-2: Current Layout of Mine 63 Corumbá Project ........................................................ 8-10

Figure 8-3: Mine Schedule of Mine 63 Corumbá Project ......................................................... 8-11

Mineração e Metálicos S.A. I Corumbá Iron Project, Mine 63 Resources and Reserves Audit


Summary

SRK Consulting (U.S.), Inc. (SRK) was commissioned by MMX Mineração e Metálicos S.A. (MMX) to audit the Mineral Resources and Reserves of Mine 63, an operating mine which is a part of the Corumbá Iron Project (Corumbá Project) located in Mato Grosso do Sul State, Brazil.

Mine 63 is owned and operated by MMX Corumbá Mineração Ltda (MMX Corumbá) which is 70% owned by MMX and 30% by Centennium Asset Mining Fund LLC. This report reflects the most recent Mineral Resource and Ore Reserve estimation based on data produced through September 23, 2010.

Property Description and Accessibility

Mine 63 is an operating mine, located about 19.5km from the city of Corumbá, the capital of the state of Mato Grosso do Sul. The mine is close to the border of Brazil and Bolivia, at coordinates 19º 11’ 41”S and 57º 36’ 50”W. Access to the property is by paved highway BR-262 for 16km and then by unpaved roads to the property.


Mine 63 lies within the Urucum iron-manganese district which is located along the Brazilian-Bolivian border and extends into the eastern areas of both Paraguay and Bolivia covering 200km2. The Urucum deposits are associated with banded iron formations (BIF), locally known as jaspilites. The iron and manganese deposits are found in the plateaus which rise from the plains of the Paraguay River. The regional geology consists of Proterozoic-age igneous and metamorphic rocks, granite intrusions, and acidic intrusives. The rocks are in faulted and unconformable contact with, and are overlain by, Quaternary sedimentary deposits which account for approximately 60% of the cover in the area.

The mineralization of the Corumbá Project is contained within eluvial and colluvial deposits from a jaspilite source. Weathering has increased the Fe grade through silica leaching. The enrichment factor of the eluvial material, in relation to the primary rock, depends on the dimension of the fragments. The total iron content is directly proportional to the distance from the source and has been enriched by the leaching of silica. The breccia areas have undergone cementation and have a more consolidated nature than the colluvium.

Exploration

Exploration at Mine 63 consists of:

Excavation of a series of hand dug exploration pits or shafts. The shafts, excavated with pick and shovel, are 1.5m2 in plan view and have vertical walls which are up to 6m deep in the colluvium and 10m in the eluvium;

Drilling;

Channel sampling of the pit faces; and

Surface mapping.

The core was split lengthwise with breaks at lithologic contacts, and one-half of the core was bagged and the remainder was stored in wooden boxes. Intervals that were considered to be internal waste were not sampled and intervals within the bedrock were not sampled. The

Mineração e Metálicos S.A. II Corumbá Iron Project, Mine 63 Resources and Reserves Audit


samples were numbered consecutively using a blind numbering sequence. Sample tags were placed in the sample bag and the bag was marked with the sample number as well.

Samples from the shafts were collected from vertical channels in one wall of the shaft. The channel was 10cm wide and 15cm deep and was sampled over the entire length of the mineralized zone in the shaft. The channel was made using a hammer and chisel and the sample was collected in a wooden box. The sample was then transferred to plastic bags. The samples were also numbered consecutively with blind numbers as with the drill samples. The four walls of the shafts are photographed meter by meter.

The channel samples are vertical and were collected from outcrops and mine benches using the same methodology as in the shaft samples.

All samples have been prepared by the Mine 63 laboratory. The 2006 samples were analyzed at LCT in Sao Paulo, but those results were shown to be unreliable and the samples were reassayed at SGS. The 2007 and 2008 samples were analyzed at SGS and the 2010 samples were analyzed at the Mine 63 laboratory.

Resources

The resources were estimated by MMX using data produced through September 2010. The drillhole assays were composited into 5m lengths from the top of the hole, with breaks at the lithologic contacts; intervals of 2.5m or less were included with the preceding composite if the lithologies were the same.

Variography studies were done for each lithotype. A block model was created with a block size of 10m x 10m x 5m. The 3D geologic models were used to assign a lithotype code and percentage to the blocks; there are two block partials for lithotype. Grade was estimated with ordinary kriging in three passes. The search distance in the first pass was set at 100% of the variogram range. Blocks estimated in the first pass were classified as Measured if the closest composite was within 25% of the variogram range and a minimum of three drillholes or shafts were used in the estimation. Blocks were classified as Indicated if the closest composite was within 50% of the search range and a minimum of two drillholes or shafts were used in the estimation. Blocks not classified were re-estimated in the second pass in which the search distance was 150% of the variogram range. Blocks estimated in the second pass were classified as Inferred. The search distance in the third pass was set at 300% of the variogram range and all blocks were classified as Potential. The classification was reduced to Indicated where the samples were on a 200m x 100m grid and to Inferred where the grid was larger.

The Mineral Resources on a Wet Tonnage Basis are presented on Table 1.

Mineração e Metálicos S.A. III Corumbá Iron Project, Mine 63 Resources and Reserves Audit


Table 1: Mine 63 Resources on a Wet Tonnage Basis

Lithotype Classification Tonnage Fe SiO2 Al2O3 P LOI

BRE

Measured 532,000 49.59 22.16 2.98 0.095 2.14

Indicated 3,325,000 49.25 23.03 2.82 0.108 2.03

Total M&I 3,857,000 49.30 22.91 2.84 0.106 2.05

Inferred 5,915,000 49.26 22.60 3.12 0.110 2.20

Potential 396,000 49.43 22.07 3.21 0.097 2.18

COLF

Measured 30,949,000 53.69 15.65 3.58 0.057 1.98 Indicated 13,393,000 48.34 21.44 4.60 0.056 2.46

Total M&I 44,341,000 52.07 17.40 3.88 0.056 2.12

Inferred 4,602,000 46.34 22.62 5.09 0.061 2.62

Potential 0

COLU

Measured 0

Indicated 8,182,000 54.87 16.77 2.49 0.069 1.37

Total M&I 8,182,000 54.87 16.77 2.49 0.069 1.37

Inferred 3,902,000 53.18 19.26 2.29 0.063 1.21

Potential 549,000 54.29 17.65 2.57 0.069 1.31

LIMO

Measured 0 Indicated 537,000 53.90 12.40 5.05 0.151 3.97

Total M&I 537,000 53.90 12.40 5.05 0.151 3.97

Inferred 18,000 61.32 5.96 2.63 0.107 2.54

Potential 0

LIXI

Measured 0

Indicated 0

Total M&I 0

Inferred 87,000 61.85 9.77 0.46 0.075 0.53

Potential 0

PLIX

Measured 0 Indicated 3,444,000 59.91 11.73 1.01 0.056 0.84

Total M&I 3,444,000 59.91 11.73 1.01 0.056 0.84

Inferred 429,000 60.99 9.69 1.31 0.065 1.00

Potential 0

COLG

Measured 18,758,000 48.73 24.34 2.09 0.057 1.34

Indicated 951,000 47.64 24.78 3.12 0.056 1.72

Total M&I 19,709,000 48.68 24.37 2.14 0.057 1.36

Inferred 151,000 44.83 27.04 4.78 0.049 2.77

Potential 0

Total

Measured 50,239,000 51.79 18.96 3.02 0.057 1.74

Indicated 29,832,000 51.64 19.16 3.37 0.067 1.93

Total M&I 80,071,000 51.74 19.04 3.15 0.061 1.81

Inferred 15,103,000 49.76 21.33 3.46 0.081 2.04

Potential 945,000 52.25 19.50 2.84 0.081 1.68

SRK has validated the resource through visual comparison of composites to block grades on vertical cross-sections and by conducting a second estimation as a check. It is SRK’s opinion that the estimation has been conducted according to industry best practices.

Mineração e Metálicos S.A. IV Corumbá Iron Project, Mine 63 Resources and Reserves Audit


Reserves

In September 2010, a Gemcom Whittle® pit optimization routine was run on the Mine 63 mineral resources using the following parameters:

Mass recovery: 58% (49% Lump and 9% Bitolado (BTL);

Average product value: R$122.14/t;

Mine cost RoM: R$6.75/t;

Plant cost: R$6.40/t RoM;

G&A costs:

o Logistics costs – are US$26.16/t-prod LoM,

o Product transport – mine to port - US$3.00/t-prod LoM,

o Port terminal cost is US$2.80/t-prod, and

o Administrative expenses are - US$3.50/t-prod LoM.

Pit slope: 40.5o colluvium; 40.5o eluvium; and

Ore Definition cut-off (Silica) – material has to be below the silica cut-off mentioned below:

o COLF - 10.2 SiO2 cut-off,

o COLU = 7.6 SiO2 cut-off, and

o LIMO/PLIX – 8.0 SiO2 cut-off.

From the Whittle® Optimization pit shells, pit designs with ramp access were designed. Based on the pit design, reserves were estimated. Only Measured and Indicated blocks that met the metallurgical plant blend constraint were classified as RoM material (Ore).

The reserves reported below were depleted for mine production through September 23, 2010. The total reserves for Mine 63 are listed in Table 2.

Table 2: Mineral Reserves - Mine 63 Corumbá Project*

Class Volume Tonnes

RoM Grades Product Grades**

Fe SiO2 Al2O3 P.G LOI Fe SiO2 Al2O3 P.G LOI

Mm3 Mt % % % % % % % % % %

Proven 5.2 16.2 57.91 10.52 3.27 0.06 1.92 63.47 5.69 1.31 0.05 1.02

Probable 1.0 3.1 60.1 9.31 2.27 0.07 1.63 64.72 5.43 0.92 0.06 1.13

Total P&P 6.2 19.3 58.26 10.33 3.11 0.06 1.88 63.67 5.65 1.25 0.06 1.03*Tonnes are reported on a wet basis. **Product tonnes will be reduced by the mass recovery Average iron product price used in reserve is R$122.14. No dilution applied. No mining recovery applied. September 23, 2010 topography used.

Mineração e Metálicos S.A. V Corumbá Iron Project, Mine 63 Resources and Reserves Audit


Table 3 shows mineral reserves classified by lithology.

Table 3: Mineral Reserves by Lithology - Mine 63 Corumbá Project*

LITHOLOGY CLASSIFICATION

RoM Product

Vol. Tonnes Fe SiO2 Al2O3 P LOI Fe SiO2 Al2O3 P LOI

(Mm3) (Mt) % % % % % % % % % %

COLF

PROVEN 5.2 16.3 57.91 10.52 3.27 0.06 1.92 63.47 5.69 1.31 0.05 1.02

PROBABLE 0.1 0.2 60.48 7.17 3.26 0.08 2.18 65.61 2.99 1.31 0.07 1.16

TOTAL 5.3 16.4 57.94 10.48 3.27 0.06 1.93 63.50 5.66 1.31 0.05 1.02

COLU

PROVEN - - - - - - - - - - - -

PROBABLE 0.3 1.0 59.58 9.48 3.03 0.08 1.90 63.91 5.61 1.34 0.07 1.08

TOTAL 0.3 1.0 59.58 9.48 3.03 0.08 1.90 63.91 5.61 1.34 0.07 1.08

LIMO

PROVEN - - - - - - - - - - - -

PROBABLE 0.1 0.3 55.39 10.15 5.07 0.15 4.26 62.83 6.05 1.94 0.10 2.21

TOTAL 0.1 0.3 55.39 10.15 5.07 0.15 4.26 62.83 6.05 1.94 0.10 2.21

PLIX

PROVEN - - - - - - - - - - - -

PROBABLE 0.5 1.7 61.09 9.34 1.26 0.06 1.00 65.39 5.51 0.47 0.05 0.98

TOTAL 0.5 1.7 61.09 9.34 1.26 0.06 1.00 65.39 5.51 0.47 0.05 0.98

TOTAL

PROVEN 5.2 16.3 57.91 10.52 3.27 0.06 1.92 63.47 5.69 1.31 0.05 1.02

PROBABLE 1.0 3.1 60.10 9.31 2.27 0.07 1.63 64.72 5.43 0.92 0.06 1.13

TOTAL 6.2 19.3 58.26 10.33 3.11 0.06 1.88 63.67 5.65 1.25 0.06 1.03 *Tonnes are reported on a wet basis. Average iron product price used in reserve is R$122.14. No dilution applied. No mining recovery applied. September 23, 2010 topography used.

Waste material in the pits totasl 8.0Mt for a 0.41 strip ratio.

Based on the pit design, a yearly schedule was developed. Table 4 shows the LoM schedule for Mine 63.

Table 4: Mine Production Schedule – Mine 63

Year RoM Mt/y Waste Mt/y Total Movement Mt/y

2010* 0.9 0.5 1.32011 3.4 1.7 5.12012 3.3 2.5 5.82013 3.2 1.2 4.42014 3.3 1.2 4.52015 3.3 1.2 4.52016 1.9 0.7 2.6Total 19.3 9.1 28.4

*2010 production is based on September 23, 2010 to December 31, 2010. Tonnes are reported on a wet basis. Average iron product price used in reserve is R$122.14. No dilution applied. No mining recovery applied. September 23, 2010 topography used.

Mineração e Metálicos S.A. VI Corumbá Iron Project, Mine 63 Resources and Reserves Audit


Metallurgy and Process

Metallurgical testing at Mine 63 consisted of:

A study of the correlation between run-of-mine (RoM) and Lump to establish the cut-off grade; and

A study of the mass recovery to define the product yield of Lump and BTL.

The results of the tests indicate that at Mine 63 the average grade of the RoM must be 54.8% Fe with a maximum of 10.2% silica The mass recovery percentages for Lump and BTL are 49% and 9%, respectively.

The plant treats the ore using crushing, screening and washing in screens and drums. Currently a new pneumatic jig station is treating the BTL in order to reduce the SiO2 content to about 4.5%.

Economic Analysis – Mine 63

SRK has reviewed MMX’s economic model and is in agreement with the methodology.

Mineração e Metálicos S.A. 1-1 Corumbá Iron Project, Mine 63 Resources and Reserves Audit


1 Introduction SRK Consulting (U.S.), Inc., (SRK) was commissioned by MMX Mineração e Metálicos S.A. (MMX) to audit the Mineral Resources and Reserves of Mine 63, an operating mine which is a part of the Corumbá Iron Project (Corumbá Project) located in Mato Grosso do Sul State, Brazil.

Mine 63 is owned and operated by MMX Corumbá Mineração Ltda (MMX Corumbá) which is 70% owned by MMX and 30% by Centennium Asset Mining Fund LLC. This report reflects the most recent Mineral Resource and Ore Reserve estimation based on data produced through September 23, 2010.


This Report is intended to be used by MMX to further the development of the Property by providing an audit of the mineral resource and ore reserve estimates, classification of resources and reserves in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) classification system, and evaluation of the project.

MMX may also use the Technical Report for any lawful purpose to which it is suited.

1.2 Sources of Information

The underlying technical information upon which this Report is based represents a compilation of work performed by MMX. The studies and additional references for this Technical Report are listed in Section 10. SRK has reviewed and audited the project data and procedures used to produce the Mineral Resources and Ore Reserves.

1.3 Effective Date

The effective date of the resources is June 17, 2010 and reserves is September 3, 2010.

1.4 Qualifications of Consultant (SRK)

The SRK Group comprises of 950 staff, offering expertise in a wide range of resource engineering disciplines. The SRK Group’s independence is ensured by the fact that it holds no equity in any project and that its ownership rests solely with its staff. This permits SRK to provide its clients with conflict-free and objective recommendations on crucial judgment issues. SRK has a demonstrated record of accomplishment in undertaking independent assessments of mineral resources and mineral reserves, project evaluations and audits, technical reports and independent feasibility evaluations to bankable standards on behalf of exploration and mining companies and financial institutions worldwide. The SRK Group has also worked with a large number of major international mining companies and their projects, providing mining industry consultancy service inputs.

This report has been prepared based on a technical and economic review by a team of consultants sourced from the SRK Group’s Denver and Belo Horizonte offices. These consultants are specialists in the fields of geology, exploration, mineral resource and mineral reserve estimation and classification, open pit mining, mineral processing and mineral economics.




The individuals who have provided input to this technical report, who are listed below, have extensive experience in the mining industry and are members in good standing of appropriate professional institutions. The key project personnel contributing to this report are listed in Table 1.4.1.

Leah Mach has visited Mine 63 three times and Fernando Rodrigues and Afranio Machado visited the site once. During the site visits, they inspected the exploration shafts and drill core, laboratory, visited the processing plant, reviewed the general infrastructure of the mine, and toured the mine site.


Name Discipline

Leah Mach Resources, Project Manager Fernando Rodrigues Reserves Michael Elder Technical Economic Model Afranio Machado Processing



2 Property Description and Location 2.1 Property Location

Mine 63 is located near the city of Corumbá in the state of Mato Grosso do Sul, Brazil near the border with Bolivia, at coordinates 19º 11’ 41”S and 57º 36’ 50”W, shown in Figure 2-1. The project consists of several prospects and one operating mine, Mine 63, which is the subject of this audit. Figure 2-2 shows the mining concessions at Mine 63.

2.2 Mineral Titles

The reserves described in this report are restricted to the area covered by mining permits 004.019/48 and 004.084/58. The registered owner of mining permit 004.019/48 is Sociedade Brasileira de Imoveis (SBI) and the owner of 004.084/58 is MMX Corumbá. MMX Corumbá controls 004.019/48 through a lease agreement with SBI.

There are an additional five exploration licenses in the Mine 63 area. Applicatiob for icenses 868.046/05, 868.090/05, 868.126/05 and 868.138/05 were originally made by Eike Batista, the principal shareholder of MMX, and the respective assignment of the right to MMX was requested from DNPM on June 23, 2006. Permit 868.251/05 is owned by EBX Corumba. One exploration licence, 868.138/05, was requested from DNPM in June 30, 2005.

Permit 868.083/05 was originally owned by Albertina Maria Brazoli; the permit was purchased from Brazoli and the assignment of the right to MMXCorumbá was requested from DNPM on November 22, 2006.

SRK Job No.: 162700.09

File Name: Figure 2-1.doc Date: 10/14/2010 Approved: LM Figure: 2-1

Corumbá Project, Mine 63 Brazil

Source: MMX Mineração & Metálicos S.A.

Location Map of the

Corumbá Project

SRK Job No.: 162700.09



Source: MMX Mineração &

Metálicos S.A.S.A.

Mineral Concessions Mine 63



3 Geological Setting 3.1 Regional Geology

The Corumbá Project is in the state of Mato Grosso do Sul and lies within the Urucum iron-manganese district which is located along the Brazilian-Bolivian border and extends into the eastern areas of both Paraguay and Bolivia, and includes an area of 200km2. The Urucum deposits are associated with banded iron formations (BIF), locally known as jaspilites. The iron and manganese deposits are found in the plateaus which rise from the plains of the Paraguay River.

The regional geology consists of Proterozoic-age igneous and metamorphic rocks, granite intrusions, and acidic intrusives. The rocks are in faulted and unconformable contact with, and are overlain by, Quaternary sedimentary deposits which account for approximately 60% of the cover in the area. Figure 3-1 shows the stratigraphic column for the project area based on work by CPRM and the Geological Map of the Corumbá Region.

The basement rocks are a part of the southern Amazon Craton and are composed of the Lower to Middle Proterozoic Rio Apa Complex of metamorphic rocks. These rocks include gneiss, granite gneiss, biotite gneiss, granite, diorite, and schist as well as quartz diorite and quartz gabbro dikes. The rocks have a complex evolutionary history including a period of ductile deformation and simultaneous recrystalization during the transamazonic thermo-tectonic event.

The deposits of iron and manganese are related to the Jacadigo Group, of upper Proterozoic age (about 900 Ma). The rocks of the Jacadigo Group form plateaus rising up to 950m over the plains. The youngest formation of the Jacadigo Group, the Banda Alta, comprises a package of ferruginous sediments at least 320m thick. The Banda Alta is characterized by alternating layers of jaspilites with ferruginous clastic sediments, containing up to four layers of manganese in the basal portion of the sequence, one of which is 4m in thickness.

Quaternary sediments cover most of the lowlands and plains related to the Paraguay River. They include the Pantanal Formation, of Pleistocene age, and the Pantanal deposits, the Xaraiés Formation and the Alluvial Deposits of Holocene age.

3.2 Local Geology

The Colluvial Domain is characterized by the detrital deposits around Urucum and Rabicho Mountains, with fan or elongate shapes distributed on the flanks of the Mountain and the plains area (Figure 3-2). They comprise packages of sediments, with thicknesses varying from 0.5 to 32m and an average of 13m. These deposits are composed of ferruginous sediments from the Banda Alta Formation that were deposited on the Córrego das Pedras Formation.

The angular fragments vary from pebble to boulder size and are primarily composed of banded hematite, ferruginous jaspilite and rarely ferruginous arkose. The fragments are randomly distributed, although the size tends to decrease in proportion to the distance from the base of the Mountain.

A sedimentary breccia occurs in the central west portion of Mine 63 area and is contemporaneous with the colluvial deposits. This breccia consists of fine to medium sized clasts of hematite jaspilite that are partially to totally leached, coarse clasts of ferruginous sandstone and hematite jaspilite partially leached with limonitic cement. The breccia trends east-



west and is about 2,500m long, 50 to 200m wide, and averages about 10m thick, with a maximum thickness of 16m.

The colluvial deposits are classified as proximal, medial or distal deposits according to their distance from the source area. The higher Fe contents are related to the deposits near the source area while the laterite deposits are far from the source area.

The eluvial domain was generated by in situ weathering action through total and/or partial hydrolyzation, in a process of silica leaching and subsequent enrichment of iron in the hematite jaspilites of the Banda Alta Formation.

In the area of Mine 63, the eluvium is located on the top and upper slope of the Urucum Mountain, and has an average thickness of 15m. The effects of leaching decrease from the top toward the base of the sequence, followed by an increase in the SiO2 concentration and a decrease of Fe. In general, the silica leaching increases with the increased frequency of the fractures. Figure 3-3 presents a geologic map of the Mine 63 area..

3.2.1 Mineralization

The mineralization at Mine 63 is contained within eluvial and colluvial deposits from a jaspilite source. Weathering has increased the Fe grade through silica leaching. The enrichment factor of the eluvial material, in relation to the primary rock, depends on the grain size and the dimension of the fragments. At the marginal parts of the basin, where sedimentation was mainly clastic, the enrichment of the eluvial material is directly proportional to the iron content in the jaspilite from which it originated. The same is not true in the central part of the basin, where sedimentation is mainly chemical. The colluvium is formed by recent clastic deposition composed mainly of angular fragments of leached hematite jaspilites and arkose. The colluvial deposits which are richer in hematite fragments and jaspilite, leached or not, concentrate near the rock source, that is, near the mountain. The total iron content is directly proportional to the distance from the source and has been enriched by the leaching of silica. The breccia areas have undergone cementation and have a more consolidated nature than the colluvium.

SRK Job No.: 162700.09

File Name: Figure 3-1.docx Date: 10/14/2010 Approved: LEM Figure: 3-1



Metálicos S.A.

Stratigraphic Column and

Regional Map of the Corumbá Area

Rabicho

SRK Job No162700.09

File Name: Figure 3-2.docx Date: 10/14//2010 Approved: LEM Figure: 3-2



Metálicos S.A

Cross-Section of Mine 63 area

showing Colluvium and Eluvium deposits

SRK Job No162700.09

File Name: Figure 3-3.docx Date: 10/14//2010 Approved: LEM Figure: 3-3



Metálicos S.A

Geologic Map of the Mine 63

Area



4 Exploration 4.1 Exploration of Mine 63

The exploration methods of the previous owners of the Corumbá Project are unknown. However, it is the understanding of the MMX geologists that there was no exploration as such and that mining proceeded based on the surface expression of the iron-bearing rock.

Exploration at Mine 63 consists of:

Excavation of a series of hand dug exploration pits. The pits, excavated with pick and shovel, are 1.5m2 in plan view and have vertical walls which are up to 6m deep in the colluvium and 10m in the eluvium;

Drilling;

Channel sampling in the pit faces; and

Surface mapping.

The drilling and sampling procedures used by MMX are further described in the following sections.

The exploration identified a large area of mineralization associated with the colluvium and eluvium. SRK considers the methods used by MMX to be appropriate for this type of deposit.

4.2 Drilling

The drilling at Mine 63 was conducted in two phases, the first in 2005 and the second in 2009 and 2010. All drillholes were vertical and no downhole surveys were taken because of the short length of the holes. The mineralization forms a shallow zone, from less than 1m to about 40m over the bedrock, and is best drilled with vertical holes. The lack of downhole surveys is not a concern in these short holes. The resource database consists of drillholes, channel samples, and pits and will be referred to as drilling in this report. A summary of the drilling is given in Table 4.2.1 and the locations are shown in Figure 4-1.

Table 4.2.1: Drilling in Mine 63, Corumbá Project

Sample Type Number

Total

(m)

Average Depth

(m)

Minimum Depth

(m)

Maximum Depth

(m)

Channel Samples 530 1,853.5 3.5 4.4 5.4 Shafts 469 1,931.1 4.1 0.1 12.0 Drill Holes 121 2,157.3 17.8 4.1 41.0 Total 1,120 5,941.9

The majority of the drilling in the colluvium area is on a north-south grid with sections 200m apart and the holes spaced at 100m on section. The drillholes in the eluvium area are on a 100m x 100m grid oriented N50oE. The holes in both areas were drilled into the bedrock before being halted, and thus penetrate the entire mineralized length.

The drill core was placed in wooden boxes approximately 1m long with 3 sections to contain the core. The drill intervals were marked with wooden plates and the recovery was measured by the



drill contractor with supervision by MMX personnel. The core was photographed, logged, split, and sampled by MMX personnel in a core facility at Mine 63.

The drillhole collars are marked with a small concrete slab with the hole number inscribed on an aluminum tag. The drill hole collars were surveyed by BXF.

The shafts were excavated by pick and shovel to a maximum depth of 16m and were 1.5m x 1.5m in plan view. The shafts were sampled in vertical channels by MMX personnel. The shafts have infilled the drilling sections to 100m x 100m. MMX has excavated shafts on a 100m x 100m grid in an additional area to the north and on a 200m x 100m grid in the northwest and southeast.

Channel samples were taken during the pre-stripping phase of mining and in the pit faces during mining.

4.3 Sampling Method and Approach

The core was split lengthwise with breaks at lithologic contacts. One-half of the core was bagged and the remainder was stored in wooden boxes. Intervals that were considered to be internal waste were not sampled and intervals within the bedrock were not sampled. The samples were numbered consecutively using a blind numbering sequence. Sample tags were placed in the sample bag and the bag was marked with the sample number as well.

Samples from the shafts were collected from vertical channels in one wall of the shaft. The channel was 10cm wide and 15cm deep and was sampled over the entire length of the mineralized zone in the shaft. The channel was made using a hammer and chisel and the sample was collected in a wooden box. The sample was then transferred to plastic bags. The samples were also numbered consecutively with blind numbers as with the drill samples. The four walls of the shafts are photographed meter by meter.

The channel samples are vertical and were collected from outcrops and mine benches using the same methodology as in the shaft samples.

SRK considers the samples to be representative of the mineralized zones and sections. The colluvial and eluvial material was sampled over the entire length of the mineralization, with the exception of the internal waste zones as mentioned above. The core recovery and the size of the shaft and channel samples are sufficient to provide a reliable database for resource estimation.

4.4 Sample Preparation, Analysis and Security for Mine 63

The laboratories used in sample preparation and analysis have evolved during the project history as shown in Table 4.4.1.



Table 4.4.1 Preparation and Analytical Laboratories

Type Prefix Number Meters Preparation Analysis Year

Channels CAE 6 25.9 MMX MMX 2010 CAM 168 601.8 MMX MMX 2007-2009 CRCAM 356 1225.8 MMX MMX 2007-2009

Drillholes FR 33 600.9 MMX SGS 2006 FRT 88 1556.4 MMX SGS 2006

Shafts

DENSI 2 20.0 NOT SAMPLED G-H-I-J 13 82.0 MMX SGS 2007 L2000-2600 42 111.0 MMX MMX 2006 L1-10 59 180.3 MMX SGS 2006 Linha 9 38.0 MMX SGS 2008 PC* 24 216.6 MMX LCT -SGS 2006 - 2008 POE 38 182.3 MMX MMX 2010 POM 10 39.7 MMX MMX 2010

T 272 1061.3 MMX SGS 2006-2008

MMX originally used the Technological Characterization Laboratory (LCT) of the Polytechnic School at the University of São Paulo for analysis of the shaft and channel samples; the lab is not internationally certified. The drill samples were analyzed at SGS Geosol Laboratorios Limitada (SGS); SGS has ISO 9001(2000) and ISO 14001(2001) certification. At the suggestion of MMX’s Quality Control/Quality Assurance (QA/QC) consultant, 5% of the total samples were sent to the Ultra Trace Analytical Laboratories Pty Ltd (UT) in western Australia for check assays. UT has ISO 17025 and National Association of Testing Authorities, Australia Certifications. At the suggestion of SRK, MMX decided to reassay all available pulps which were initially analyzed by LCT at SGS. Only 14 samples remain in the database with only the LCT analysis. The following sections describe sample preparation for the MMX and SGS laboratories.


MMX

The 200kg-sample is dried and then crushed in a closed circuit with a 38mm screen until all material is less than 38mm. The crushed material is then fed into a rotary splitter. Half the sample is filed as an archive and the other half is fed into rotary splitting again. The second splitting generates two portions, one is used for the global analysis and the other for the size fraction test. The sample is screened at 25mm, 19mm, 12mm, 6.35mm and 4mm. A small portion is taken from the 25mm to 19mm fraction for a crepitation test. The remainder of that fraction is mixed with the 19mm to 12mm fraction. The <4mm fraction is wet screened to generate three more fractions: 4mm to 1mm, 1mm to 0.15mm and <0.15mm. The resulting size fractions are:

25mm to 12mm;

12mm to 6.35mm;

6.35mm to 4mm;

4mm to 1mm;



1mm to 0.15mm, and

<0.15mm.

All six size fractions and the global samples are sent to chemical analysis preparation. This process consists of successive crushing and splitting until the last stage when a pulp is taken for chemical analysis. The first stage is crushing to 8mm. All crushed material is fed into rotary splitting until one 3kg portion is obtained. This portion is crushed again to 2mm and dried at 105°C. Then the dried sample is fed into the rotary splitter until a 200g portion is obtained. This portion is pulverized and split again. One-half is sent for chemical analysis and the other half is stored as an archive.

The global sample and the fractions 25mm to 19mm, 19mm to 12mm and 12mm to 6.35mm pass through the chemical analysis preparation process from the beginning starting with the 8mm-crushing. The fraction 6.35mm to 4mm starts the process in the next stage, where the 3kg portion is obtained. The fractions 4mm to 1mm and 1mm to 0.15mm are sent directly to the drying stage and the fraction <0.15mm is filtered before also being sent to the drying stage.

All chemical analyses are done by XRF for the elements Fe, SiO2, Al2O3, P, MnO, CaO, MgO, K2O, Na2O, TiO2 and gravimetric analysis for LOI (Loss on Ignition).


SGS

The sample is dried at 100+10oC and then a 0.50g sample is combined with a lithium tetraborate solvent which is fused and poured into a mold to form a disk. The samples are analyzed by XRF, LOI is analyzed by heating the sample at 110oC for one hour, placing 1.5 to 2g of the sample in a crucible, heating at 1000+50oC for one hour, cooling, and weighing the sample and crucible again. The data are transferred directly from the equipment and stored in the Laboratory Management and Information System (LIMS). SGS detection limits are given in Table 4.4.2.1.

Table 4.4.2.1: Limits Detection of SGS Iron Ore Analysis

Element Detection Limit (%) Upper Limit (%)

Al2O3 0.10 90 Fe2O3 0.01 100 K2O 0.01 15 MgO 0.10 45 MnO 0.01 70 Na2O 0.10 15 P2O5 0.01 45 SiO2 0.10 100 TiO2 0.01 100

MMX

All six size fractions and the global samples are sent to chemical analysis preparation. This process consists of successive crushing and splitting until the last stage when a pulp is taken for chemical analysis. The first stage is crushing to 8mm. All crushed material is fed into rotary splitting until one 3kg portion is obtained. This portion is crushed again to 2mm and dried at 105°C. Then the dried sample is fed into the rotary splitter until a 200g portion is obtained. This



portion is pulverized and split again. One-half is sent for chemical analysis and the other half is stored as an archive.


All chemical analyses are done by XRF for the elements Fe, SiO2, Al2O3, P, MnO, CaO, MgO, K2O, Na2O, TiO2. The steps in the analytic procedure for LOI consist of:

Drying the sample in an oven at about 110ºC for at least one hour;

Weighing the empty container (CV);

Placing 1g of the dried sample in the container and weighing again (C+A);

Placing the container with the sample in a previously heated oven and waiting until the temperature reaches 1,000±50ºC and letting it calcine for more than one hour.

Removing the container from the oven, resting it on the refractory plate until it loses incandescence, and then putting it in a closed dryer until the container and sample cool;

Weighing and recording the final weight; and

Calculating LOI using the following formula:

100)()(

)()(% x

CVAC

WeightFinalACFW

Data is entered into Microsoft Excel worksheets by a lab technician. Original, signed assay certificates and worksheets are provided to MMX. The detection limits for analysis are shown in Table 4.4.2.2

Table 4.4.2.2: Detection Limits of Iron Ore Analysis


Fe 0.01% SiO2 0.10% Al2O3 0.01% MnO 0.01%

P 0.01% TiO2 0.01% LOI 0.10%

4.4.3 Laboratory Quality Control and Quality Assurance

Internal SGS QA/QC

SGS internal QA/QC procedures consist of:

LIMS software is used during the acquisition of data in the laboratory to eliminate errors in the manual entry of data. The software is also used in statistical treatment of the Quality controls;



Calibration of all critical equipment every six months;

Daily verification of scales and spectrometers;

5% of the samples are weighed after each step of sample preparation, with 3% as an acceptable loss in sample weight;

5% of the samples are measured for sample size during preparation with 95% passing the mesh size being the acceptable value;

The batch size is 40 samples. Duplicate samples are prepared for each 20 samples; standard reference samples are inserted in the sample stream at a rate of 1 in 20 samples and one blank sample is inserted in each batch; and

Samples with anomalous results are repeated. If the repeat does not duplicate the original, then a new sample is prepared from the reject.

Internal MMX QA/QC

The internal QA/QC procedures of the Mine 63 consists of inserting samples of Certified Reference Materials (standards) into each lab batch and inserting a replicate for each 10 samples. The standard sample is IPT 123, a certified reference material produced by the Institute for Technological Research in Brazil. In addition, one screen test is performed for each 10 samples to verify that 95% of the sample passes through the 8.0, 2.0 and 0.106mm screens.

MMX QA/QC 2006/2007

Analytical Solutions Ltd reviewed the QA/QC data in 2007 and this section is taken from her report. As mentioned in the introduction to this section, LCT analyzed the shaft and channel samples and SGS analyzed the drillhole samples. Five percent of the samples were sent to the UT Laboratory in Australia for check analysis, including 17 pulps originally analyzed by LCT. In general, there was poor correspondence between the UT and LCT data (Figure 4-2). As suggested by other MMX consultants, the LCT data was not considered reliable for resource estimation and MMX decided to have all the pulps reanalyzed by SGS for use in the resource estimation.

For check analysis purposes, a total of 82 pulps analyzed by SGS in 2006 were reanalyzed by UT. Both SGS and UT used fused disk (glass bead) XRF for determination of the major oxides. In general, there is good agreement between the two sets of data. Figure 4-2 summarizes the percentage difference between SGS and UT assays relative to the SGS determination (with no implication that SGS or UT provided the preferred data). One sample is excluded for LOI where values of 0.01 and 0.59% were reported which results in a large percentage difference and may be due to data handling issues. Table 4.4.3.1 documents the percent difference between SGS and UT samples.

Table 4.4.3.1 documents the percentage of samples within ± 5%, 10%, 20%, etc.



Table 4.4.3.1: Summary of Percent Difference Between SGS and UT Samples

Element N 5% 10% 20% 25% 50%

>

+50%

Fe 82 82

100%

MnO 82 59 61 70 74 81 1

72% 74% 85% 90% 99% 1%

SiO2 82 76 80 82

93% 98% 100%

Al2O3 82 49 72 78 80 82

60% 88% 95% 98% 100%

P 82 59 77 82

72% 94% 100%

TiO2 82 41 65 77 78 82

50% 79% 94% 95% 100%

LOI 82 38 57 71 75 79 3

46% 70% 87% 91% 96% 4%

The key observations are:

Eleven Fe values agree within 5%;

93% of SiO2 values agree within 5%;

Al2O3 values show good correspondence above 1% and 88% of all the samples agree within +10%;

The majority of P values are less than 0.1% and close to detection limits for the XRF method; there is a bias equal to approximately 3% of the P concentration with higher values reported by SGS than UT (similar to the observation for Minas-Rio);

The majority of values of TiO2 are less than 0.2%. TiO2 show good correspondence and 79% of the agree within +10%. The majority of results which do not agree within +10% are almost within 10 times detection limit and precision is expected to be in the order of +100%;

74% of the Mn values agree within ±10%; values less than 0.1% do not agree within ±10% but are within ten times detection limits and precision is expected to be poor; and

65% of the LOI values reported by SGS are higher than those reported by UT. UT refers to the analyses as done by a robotic Thermogravimetric Analyzer (TGA) with the furnaces set 100o and 1000ºC. The temperature used for LOI at SGS should be determined and the two analytical methods compared. The majority of the LOI values are less than 2% and the variance between the laboratories is in the order of 5% of the reported values.

In general, there is good correspondence between SGS and UT major oxide determinations. Some elements (MnO, P and TiO2) are found in concentrations within ten times the detection limit of the XRF method. If these determinations are required more accurately, it is recommended that a lithium metaborate fusion – ICP method, with detection limits in the range of 1 to 10ppm, be used.



SRK considers the sample preparation, analysis and security to follow industry standards and that the assays are reliable for resource estimation.

A standard, IPT21A developed by Agoratek international (Agoratek) was submitted with the SGS samples in 2006. Agoratek reviewed the results and had the following comments:

The plots show a general mismatch between SGS variations and the '2-sigma' rejection limits thus derived. This is due to the large differences in analytical methods. At this point, only the accuracy can be evaluated from these data. The rate of operational errors remains inaccessible. Table 3.1 summarizes the parameters that were calculated for the most obvious biases that could be observed on the plots. Two very different characteristics were evaluated in each case: meaningfulness, i.e. whether the amplitude of the bias warrants any concern; and statistical significance, that was tested using Student's t-test.

The only possible real concern lies with MnO, for which there is a both meaningful and statistically significant bias. However, SGS returned only two different values (0.02 and 0.03 %MnO, with only two samples at 0.03 %MnO) while the certification of the standard using ICP varied from 0.016 to 0.018 %MnO. Additional XRF data provided in the certificate indicated a range of 0.018 to 0.019 %MnO for XRF assaying. The low-grade value is also artificially responsible for the large relative bias.

The general conclusion, in spite of this minimal, only internal and quite imperfect QA-QC dataset, is that no accuracy concern seems to exist for the assaying of the Corumbá drillholes at SGS. This conclusion, however, needed to be validated with a limited, post-mortem re-assaying, accompanied with proper, external control samples.

MMX QA/QC 2009/2010

The MMX exploration team utilizes one standard reference sample: APHP is a standard prepared by Agoratek International from material from the Amapa deposit previously owned by MMX. Table 4.4.3.2 presents a summary of the test results for APHP. Failures are defined as more than three standard deviations from the certified average. There are no failures at the three standard deviation level and one sample below two standard deviations for Fe and three for Al2O3.

Table 4.4.3.2: Standard Reference Samples

Sample Element/Oxide Total Certified Lab

> 2 SD < 2 SD >3 SD < 3 SD Average SD Average SD

APHP

Fe 30 35.000 0.380 34.98 0.320 1 0 0 0 SiO2 30 34.220 0.430 34.18 0.340 0 0 0 0 Al2O3 30 6.820 0.120 6.74 0.151 3 0 0 0 P 30 0.124 0.003 0.125 0.004 0 0 0 0 Mn 30 1.540 0.050 1.58 0.078 0 0 0 0 TiO2 30 0.300 0.010 0.27 0.048 0 0 0 0

MMX also submits duplicate pulp samples within the sample stream. The results show that 94% of the iron values, 100% of the silica, manganese and titanium dioxide and 97% of the alumina and phosphorous fall within 10% of the original (Table 4.4.3.3).



Table 4.4.3.3: Percentage of Laboratory Pulp Duplicates within Specific Ranges

Element/Oxide Number

Number Falling Within Plus or Minus

5% 10% 20% 25% 50% >50%

Fe 31 29 29 30 30 31 0

94% 94% 97% 97% 100% 0%

SiO2 31 30 31 31 31 31 0

97% 100% 100% 100% 100% 0%

Al2O3 31 29 30 30 31 31 0

94% 97% 97% 100% 100% 0%

P 31 26 30 31 31 31 0

84% 97% 100% 100% 100% 0%

Mn 31 30 31 31 31 31 0

97% 100% 100% 100% 100% 0%

TiO2 31 26 31 31 31 31 0

84% 100% 100% 100% 100% 0%

4.5 Conclusion

It is SRK’s opinion that the sampling, preparation and analytical procedures meet industry standards. The laboratory QA/QC procedures internal to the laboratory and instituted by the exploration group meet industry best practices.

SRK Job No.: 162700.09



Figure 4-1

Drillhole and Sample Locations, Mine 63 Corumbá Project

Channel Sample outlined in orange

Shaft, not outlined

Drillhole outlined in blue

SRK Job No.: 162700.09



Source: Analytical Solutions Ltd.

Figure 4-2

LCT and SGS vs. UT Analyses for

Corumbá Samples

Corumba QAQC - LCT Check Assays

(N = 17) (y-axis capped at +100%)

-100

-80

-60

-40

-20

0

20

40

60

80

100

0.01 0.10 1.00 10.00 100.00

Original Assay (LCT)

Re

lati

ve P

erc

en

t D

iffe

ren

ce (

LC

T A

ssay l

ess U

LT

As

sa

y w

ith

re

sp

ec

t to

av

era

ge

as

sa

y)

(%)

Fe MnO SiO2 Al2O3

P TiO2 LOI

Corumba QAQC - SGS Check Assays


-100

-80

-60

-40

-20

0

20

40

60

80

100

0.001 0.010 0.100 1.000 10.000 100.000

Original Assay (SGS)

Re

lati

ve P

erc

en

t D

iffe

ren

ce (

SG

S A

ssay l

ess U

LT

As

say w

ith

res

pect

to S

GS

As

say)

(%)

Fe MnO SiO2 Al2O3

P TiO2 LOI



5 Data Verification The assays are received from the laboratory as electronic files and as hard copies of the assay certificates. The assays are entered into an Acquire database where it is checked for errors in duplication of fields, sample intervals, and total depth. SRK has verified 10% of the database against assay certificates and found no significant errors. The laboratory QA/QC results indicate that the data is suitable for resource estimation.



6 Mineral Processing This section is a brief description of the Mineral Processing Route. Figure 6-1 is a flow sheet of the Mine 63 process.

The run-of-mine (RoM) is transported by trucks to the primary crushing area and discharged onto the ore bin. A RoM pile besides the bin allows the ore to be fed to the primary crushing circuit by the use of shovels in case of emergency. The ore is reclaimed from the bin by the apron feeder AL-210C-01. The discharge of the feeder is transferred to the vibrating grizzly GR-210-01. The oversize of the grizzly goes to the primary jaw crusher BR-210C-01 and the undersize of the grizzly joins the crusher product and the ore is transferred to the two-deck vibrating screen PN-220C-01.

The screen can run in dry or wet mode. When running dry, the lower deck undersize (-4mm) is discharged as reject to a reject pile. When running wet, the lower deck undersize is pumped to the spirals classifier circuit. The oversize of the upper deck (+ 38mm) is stockpiled as pebble or sent directly to the secondary cone crusher BR-220C-01. The pebble can be reclaimed back to the circuit and fed to the secondary crusher by the use of shovels and the belt feeder AL-220C-02. The intermediate size fraction or the oversize of the lower deck (-38mm + 4mm) is sent to the trommel washing circuit.

The product of the secondary crusher is discharged onto the two-deck vibrating screen PN-230C-02 running in dry mode. The undersize of the lower deck (-4mm) is discharged as reject. The intermediate fraction or the oversize of the lower deck (-38mm + 4mm) is sent to the trommel washing circuit. The oversize of the upper deck (+ 38mm) is transported to the tertiary cone crusher BR-230C-02 that runs in closed circuit with the two-deck vibrating screen PN-230C-01. The product of the tertiary crusher feeds the screen PN-230C-01, whereas the oversize of the upper deck of the screen returns to the tertiary crusher thereby closing the circuit. The undersize of the lower deck is rejected and transported to the reject pile. The intermediate size fraction or the oversize of the lower deck (-38mm + 4mm) joins the other similar fractions and feeds the trommel washing circuit.

The trommel washing circuit is composed of two rotating drums running in parallel, being fed by the ore reclaimed by two belt feeders AL-240C-01 & 02 from two bins SL-240C-01 & 02. The two trommels TM-240C-01 & 02 discharge the washed product onto two two-deck vibrating screens PN-240C-01 & 02. The screens run in dry mode and produce two size fractions, lump (-38mm + 8mm) and the bitolado (BTL) (-8mm + 4mm) which are stockpiled separately. Both products are reclaimed and dispatched using both shovels and trucks. The third size fractions or the undersize of the lower decks (mm4mm) are pumped to the classification area for further processing.

The duplex spiral classifier CS-250C-01 receives the -4mm fractions in slurry form and provides two size fractions: the underflow (-4mm + 0.15mm) and the overflow (-0.15mm). The underflow is discharged onto the horizontal vibrating screen PN-250C-01 where it is dewatered. The oversize of the screen is transported by the belt conveyor TR-250C-01 to the reject pile. The underflow of the screen is pumped back to the spiral classifier. The overflow of the spiral classifier is pumped to the tailings dam. Water is reclaimed from the tailings dam to be re-used in the plant operation. Process water is kept in a water reservoir for distribution to the plant.



There are three kinds of water quality used at site. Raw water is collected from wells and pumped to the fresh make-up water reservoir. Potable water is also collected from wells and treated in the water treatment station before being consumed. Process water is reclaimed from the tailings dam and pumped to the water reservoir for distribution as aforementioned.

Coarse rejects (-4mm) are treated in a jigging station to produce the sinter feed product.

According to the design mass balance the capacity of the plant is 3.3Mt/y of RoM and 1.9Mt/y of washed lump. Tables 6.1 and 6.2 as follows show the main plant and mine operating data as recorded in 2010.



Table 6.1: Plant Main Operating Data

PRODUCTS UNIT MAY-10 JUNE-10 JULY-10 AUG-10 SEPT-10YEAR

AVG.YEAR TOTAL

Lump t/day 89,076 129,335 145,288 168,698 140,948 134,669 673,346Sinter-feed t/day 13,679 13,679 13,679

BTL t/day 17,797 29,211 20,654 24,772 21,078 22,702 113,512Hematitinha t/day 2,343 6,643 12,781 7,256 21,767Jigged Sinter-feed t/day 1,588 16,918 9,253 18,506

Total t/day 106,873 174,568 172,585 195,058 191,725 168,162 840,810

Fino Primário Area 220 t/day 29,946 42,034 42,513 54,734 38,175 41,480 207,402Fino Secundário Área 250 t/day 20,099 25,552 23,732 26,377 21,207 23,393 116,967Rejeito (Lama) t/day 29,940 50,962 44,559 59,466 46,167 46,219 231,093

FEED

ROM t/day 179,508 277,462 276,614 330,672 278,531 268,557 1,342,787Pebble t/day 7,350 1,975 6,775 3,375 1,825 4,260 21,300

Total t/day 186,858 279,437 283,389 334,047 280,356 272,817 1,364,087

PLANT DATA

Plant Mass Yield % 59.54% 57.99% 62.39% 58.51% 62.76% 60.22% 60.22%

Lump Mass Yield % 49.62% 46.61% 52.52% 51.02% 50.60% 50.15% 50.15%

Lump II Mass Yield % 0.00% 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%

BTL Mass Yield % 9.91% 10.53% 7.47% 7.49% 7.57% 8.45% 8.45%

Hematitinha Mass Yield % 0.00% 0.84% 2.40% 0.00% 4.59% 1.62% 1.62%

Area 220 Primary Fines % 16.68% 15.15% 15.37% 16.55% 13.71% 15.45% 15.45%Area 250 Secondary Fines % 16.68% 9.21% 8.58% 7.98% 7.61% 549.14% 8.71%Reject % 16.68% 18.37% 16.11% 17.98% 16.58% 17.21% 17.21%

RoM Solids Rate t/h 478.69 546.90 557.82 644.96 625.68 574.80 574.80Lump Solids Rate t/h 237.54 254.93 292.99 329.04 316.62 288.24 288.24BTL Solids Rate t/h 47.46 0.00 41.32 0.86 44.09 48.59 48.59Hematitinha solids Rate t/h 57.58 36.88

% Availability % 90.82% 79.44% 79.61% 86.22% 71.76% 81.21% 81.21%% Utilization % 71.97% 89.69% 83.72% 79.93% 86.16% 83.18% 83.18%% Operating Yield % 65.36% 71.25% 66.65% 68.91% 61.83% 67.55% 67.55%

Hours - Simple Circuit

Calendar h/day 576.00 720.00 744.00 744.00 720.00 700.80 3504.00Electrical h 7.32 21.34 17.18 6.30 14.57 13.34 66.71Mechanics h 40.26 71.87 98.58 61.38 136.43 81.71 408.53

Mine - Operation h 18.33 18.86 10.63 10.75 16.40 14.99 74.97Plant - Operation h 118.11 37.48 72.07 115.77 41.63 77.01 385.06External h 0.82 2.40 1.73 2.23 13.47 4.13 20.65Quality Control h 0.00 0.83 0.00 0.00 0.00 0.17 0.83

Process h 10.84 0.00 0.00 0.00 0.00 2.17 10.84Transportation h 0.00 5.07 11.98 0.00 0.00 3.41 17.05Planned Maintenance h 5.33 54.81 35.93 34.87 52.33 36.65 183.27Total Shut Down Hours h 201.00 212.66 248.12 231.30 274.83 233.58 1167.91

Total Running Hours h 375.00 507.34 495.88 512.70 445.17 467.22 2336.09

MTBF hMTTR h

QUALIDADE LUMP

Fe % 63.08 64.42 64.94 64.01 64.83Al2O3 % 0.77 0.86 0.83 0.91 0.77SiO2 % 7.73 5.64 5.00 6.16 5.26

P % 0.046 0.062 0.048 0.061 0.049

Mn % 0.22 0.15 0.15 0.13 0.12K % 0.04 0.03 0.03 0.02 0.03> 38 mm % 0.13 0.43 1.02 1.22 1.82< 6.35 mm % 1.18 1.19 1.96 1.75 1.49

TRANSPORTATION

Mine - Port t 91,038 139,559 161,391 124,087 93,410 121,897 609,485Shipping (Port) t 127,936 117,324 151,414 134,559 69,778 120,202 601,011Sinter-feed Transportation t 12,431 184 16,237 15,350 11,051 44,203

Sinter-feed Dispatch t 15,346 15,607 9,038 13,330 39,991Sold LUMP t 25,608 21,162 16,393 12,193 10,186 17,108 85,542Sold BTL t 11,443 16,220 22,754 23,375 10,142 16,787 83,934Sold Hematitinha t 2,968 7,382 5,175 10,350

Sold Jigged Sinter-feed t 0

64.25

0.83

5.96

0.05

0.15

0.03

0.92

1.52

PL

AN

T



Table 6.2: Mine and Concentration Main Operating Data

MINE STOCK

Lump I t 355,246 323,860 291,363 323,781 361,134 - -

Lump ll t 461,110 461,110 461,110 327,573 266,914 - -

Sinter-feed t 839330 826899 810662 810662 808092 - -

BTL t 62418 63966 61866 63264 74229 - -

Hematitinha t 8986 2968 8383 - -

Jigged Sinter-feed t 2528Total t 1,718,104 1,675,834 1,633,988 1,528,248 1,521,281 - -

MINE

ROM t/day 253,425 225,450 210,025 317,100 234,475 248,095 1,240,475

Storage t/day 92,125 46,200 33,825 57,383 172,150

Waste t/day 20325 10300 24875 12115 11080 15,739 78,695

Total t/day 273,750 235,750 327,025 375,415 279,380 298,264 1,491,320

INTERNAL

TRANSPORTATION

PRODUCT AND REJECTS

Product t/day 213,000 180,775 196,888 393,775Fine Reject t/day 99,595 74,900 87,248 174,495Plant residuals t/day 34,675 73,550 54,113 108,225Pebble Storage t/day 625 625 625Total t/day 347,895 329,225 338,560 677,120

JIGGED SINTER-FEED

QUALITYUNIT

Fe % 61.70

Al2O3 % 1.61

SiO2 % 4.22

P % 0.06Mn % 0.16>9,53 mm % 1.19FEED

Lump ll t/day 1,983 20,936 11,460 11,460

BTL - R (Jig) t/dayTotal t/day 1,983 20,936 11,460 11,460

CO

NC

EN

TR

AT

ION

61.70

1.61

4.22

0.060.161.19

MIN

E

SRK Job No.: 162700.09

File Name: Figure 6-1.doc Date: 10/14/2010 Approved: AM Figure: 6-1


Source: Mineração & Metálicos S.A.

Plant Flow Sheet



7 Mineral Resource The resource was estimated by MMX in August 2010. SRK reviewed the resource estimation procedures and results and performed separate validation procedures. MineSight® software was used by MMX and Vulcan® software by SRK. SRK received the database as a Microsoft Excel file with four sheets containing the collar coordinates, downhole surveys, assays, and lithologic information. The MineSight® surfaces and 3D solids were exported as dxf files and were imported into Vulcan® by SRK. The MineSight® block model was exported as an ascii file and was imported into Vulcan® by SRK.

Channel samples, shafts, and drillholes are all used in the resource database. Figure 7-1 is location map of all channel samples, shafts, and drillholes in the database.

7.1 Density

Bulk density measurements were made on samples collected from the shafts in the colluvium and eluvium areas of Mine 63. The sampling and analysis were done by Projetos e Serviços de Mineração Ltda (Prominas), a Brazilian company with experience in the procedures. The specific gravity (SG) measurements were done on a wet basis.

The tests to determine density were carried out in accordance with the established Brazilian Association of Technical Standards (ABNT), listed below:

NBR 7.185/1986 – Determination of Apparent Specific Mass, in situ, with use of sand flask; and

NBR 10.838/1988 – Determination of Apparent Specific Mass of undeformed samples, with the use of a hydrostatic scale – displacement of volume in dense medium.

For the eluvium, the test was displacement of volume in dense medium which is the methodology used for compact or hard samples. For colluvium material, the sand flask method was used because this type of material consist of unconsolidated rock.

Table 7.1.1 lists the densities adopted by MMX for the resource estimation.

Table 7.1.1: Density on a Wet Basis by Lithotype at Mine 63

Lithotype Density (t/m3)

Colluvium 3.1 Eluvium 3.31 Breccia 3.86 Leached Jaspilite 3.31 Fresh Jaspilite 3.87 Arkose 1.72

7.2 Topography

The initial topographic contours and locations of the drillhole collars, shafts and channel samples were surveyed by BXF Topographia Ltda (BXF), a topographic survey company with headquarters in Ladário, MS. In June 2010, the Mine 63 area was flown by Esteio Engenharia e Aerolevantamentos SA. to obtain 1m contours. The topographic data was subsequently updated to September 23, 2010 by the mine surveyors.



7.3 Resource Database

The database contains the following information:

Collar – drillhole identification, easting, northing, elevation, total length.

Survey – drillhole identification, from, to, azimuth and inclination.

Lithology – drillhole identification, from, to, lithotypes as described in drill logs, lithotypes as relogged, modeled Lithotypes and code for channel samples.

Assays – drillhole identification, from, to, , global recovery and global Fe, SiO2, Al2O3, P, and LOI for all samples and Mn, CaO, MgO and TiO2 for about a third of the samples.

The lithotypes used in modeling are shown in Table 7.3.1 and the average grades of the assays by lithotype are shown in Table 7.3.2.

Table 7.3.1: Model Lithotypes

Lithotype Type Abbreviation Code

Argillite, friable Waste ARGI 12 Arkose Waste ARC 11 Colluvium - Fine Ore type COLF 2 Colluvium - Coarse Ore type COLG 7 Colluvium without arkose clasts Ore type COLU 3 Colluvium - argillic Waste COLA 13 Colluvium - waste Waste COLR 14 Colluvium - Jacare, Coarse Marginal COJG 23 Colluvium - Jacare, Fine Marginal COJF 22 Eluvium - Jacare Marginal ELUJ 17 Eluvium - Potential Potential ELPT 31 Granite Waste GRT 18 Hematita Jaspilite, leached Ore type LIXI 5 Hematita Jaspilite, limonitic Ore type LIMO 4 Hematita Jaspilite, not leached Waste NLIX 19 Hematita Jaspilite, partially leached Ore type PLIX 6 Manganese Waste MN 20 Sedimentary Breccia Marginal BRE 1

Table 7.3.2: Average Grades by Lithotype

Lithotype Fe SiO2 Al2O3 P LOI

BRE 48.24 24.64 2.76 0.106 1.95 COLF 55.35 13.94 3.10 0.057 1.88 COLU 57.32 12.98 2.74 0.074 1.64 LIMO 56.96 9.99 4.21 0.125 3.28 LIXI 61.56 10.01 0.50 0.074 0.51 PLIX 59.84 11.98 0.90 0.057 0.85 COLG 49.58 22.96 2.07 0.054 1.47 Total 53.82 16.91 2.63 0.064 1.69



7.4 Geological Model

MMX modeled all lithotypes in Table 7.3.1, except arkose. The lithotypes were modeled by constructing geological cross sections on the principal section lines (about 100m spacing) and then infilling those sections at 10m spacings. The base of the lithotype units was digitized on each section and then a surface was generated for the base of each of the units. A solid was generated for each lithotype using the base of that unit and the base of the next higher unit or the topographic surface if there was only a single lithotype.

Five stockpile areas containing organic material, RoM, rejects and product were modeled and designated as such in the block model.

MMX has detected nine containment basins in the area used by Vale SA (Vale) for its facilities. MMX has modeled the colluvium in those areas considering the current topography as the original. The original topography, prior to the basins’ construction, is not known. Therefore, in the area where the nine basins are located the colluvium was modeled in a higher position than the real one. It is SRK’s opinion that this assumption does not affect the total amount of colluvium estimated by MMX in the resources and will have a neglible effect on the strip ratio in that area.

7.5 Compositing

The original sample length varies from 0.1m to 10m and averages 2.65m. In order to regularize the sample length for the resource estimation, the samples were composited into 5m lengths from the top of the hole or shaft with breaks at changes in lithology. Samples less than 2.5m in length were added to the previous sample if the lithotypes were the same. Samples greater than 2.5m were maintained as such. Table 7.5.1 presents the average grades of the composites by lithotype.

Table 7.5.1: Average Grades of Composites by Lithotype

Lithotype Fe SiO2 Al2O3 P LOI

BRE 48.23 24.67 2.761 0.106 1.944 COLF 55.3 14.01 3.108 0.057 1.887 COLU 57.5 12.89 2.632 0.075 1.573 LIMO 57.31 9.65 4.176 0.123 3.226 LIXI 61.65 9.89 0.505 0.074 0.509 PLIX 59.93 11.97 0.831 0.058 0.806 COLG 49.51 23.07 2.071 0.055 1.466 Total 53.79 16.97 2.627 0.064 1.684

7.6 Variography

Variographic analysis and modeling were conducted for Fe, SiO2, Al2O3, P and LOI for each lithotype using assay samples. Omni-directional variograms were selected because directional variograms did not result in good structure. Table 7.6.1 presents the nugget (C0), sill (C1) and range for each of the variables.

SRK checked the variograms for Fe and reproduced the variograms achieved by MMX. SRK also notes that there are relatively few samples for the lithotypes other than COLF and COLG and that the variograms were poor for those lithotypes.



Table 7.6.1: Variogram Parameters

Lithotype

Fe SiO2 Al2O3 P LOI

C0 C1

Range

(m) C0 C1

Range

(m) C0 C1

Range

(m) C0 C1

Range

(m) C0 C1

Range

(m)

BRE 38.0 7.2 130 55.0 29.3 130 0.3 1.9 250 0.00 0.001 150 1.00 0.58 430COLF 11.2 40.5 600 17.0 53.0 600 1.3 1.8 600 0.00 0.000 400 0.00 0.37 500COLU 13.5 14.3 200 25.0 25.6 150 1.9 1.5 500 0.00 0.000 300 1.00 0.27 150LIMO 13.5 19.0 200 20.0 16.5 150 6.0 3.6 180 0.00 0.003 220 2.00 2.84 150LIXI 10.0 6.1 200 22.0 11.3 100 0.1 0.3 100 0.00 0.000 160 0.00 0.04 150PLIX 8.0 5.3 150 13.0 22.7 150 0.6 2.8 300 0.00 0.000 420 0.00 0.90 380COLG 18.0 30.1 500 33.0 37.0 360 0.7 0.9 600 0.00 0.000 420 0.00 0.43 600

7.7 Block Model

A block model was constructed in MineSight® with origin and dimensions as shown in Table 7.7.1.

Table 7.7.1: Block Model Origin and Dimensions

Direction Minimum Maximum Size Number

Easting 432000 438000 12.5 480 Northing 7873500 7879000 12.5 440 Elevation 0 1000 5 200

The block model contains the following variables:

Fe, SiO2, Al2O3, P, LOI – global;

Percentage of block below topography;

Lithotype 1 and 2 and Waste – as block partials;

Code for Stockpiles;

Density of Lithotypes 1 and 2 and Waste;

Density of Lithotypes 1 and 2 and Waste;

Distance to the closest composite and average distance to composites;

Number of samples used in the estimation;

Number of drillholes used in the estimation; and

Class of Lithotype 1 and 2

Lithotypes 1 and 2 and Waste and the percentage for each were assigned from the wireframes for each of the solids. MMX compared the volume of the lithotype solids to the volume of the block and the difference was less than 1% for each of the lithotypes and about 0.2% overall.


The grades were estimated with ordinary kriging using all shaft, drillhole and channel sample composites which were at least 1% below topography. The estimation was conducted in three passes according to Table 7.8.1 and the variogram parameters in Table 7.6.1. The blocks were



estimated using only composites with the same lithotype as the blocks. The blocks were classified as Measured or Indicated after the first pass and then blocks which were not classified were re-estimated in the second pass.

Table 7.8.1: Search Distances and Resource Classification

Pass Search Range as % of

Fe Variogram Range Class Criteria

1 100%

Measured Nearest sample within 25% of the variogram range, and Minimum of 3 drillholes or shafts* Indicated Nearest Sample within 50% of the variogram range, and Minimum of 2 drillholes or shafts*

2 150% Inferred All estimated blocks 3 300% Potential All estimated blocks

*Blocks designated as LIMO, LIXI, PLIX, or COLU were estimated with a search range of 900m to eliminate bullseyes of Measured and Indicated blocks

7.9 Resource Classification and Resource Statement

The resources were classified as described in Section 7.8 and then modified so that where the samples were on a 200 x 100m grid, the classification was lowered to Indicated and where the samples were on a larger grid, the blocks were lowered in Inferred. Figure 7-2 illustrates the classification of the blocks and the Fe grades. Table 7.9.1 contains the total resources and by lithotype.



Table 7.9.1: Mine 63 Resources on a Wet Tonnage Basis, MMX License Area


BRE

Measured 532,000 49.59 22.16 2.98 0.095 2.14

Indicated 3,325,000 49.25 23.03 2.82 0.108 2.03

Total M&I 3,857,000 49.30 22.91 2.84 0.106 2.05

Inferred 5,915,000 49.26 22.60 3.12 0.110 2.20

Potential 396,000 49.43 22.07 3.21 0.097 2.18

COLF


Total M&I 44,341,000 52.07 17.40 3.88 0.056 2.12

Inferred 4,602,000 46.34 22.62 5.09 0.061 2.62

Potential 0

COLU

Measured 0

Indicated 8,182,000 54.87 16.77 2.49 0.069 1.37

Total M&I 8,182,000 54.87 16.77 2.49 0.069 1.37

Inferred 3,902,000 53.18 19.26 2.29 0.063 1.21

Potential 549,000 54.29 17.65 2.57 0.069 1.31

LIMO

Measured 0 Indicated 537,000 53.90 12.40 5.05 0.151 3.97

Total M&I 537,000 53.90 12.40 5.05 0.151 3.97

Inferred 18,000 61.32 5.96 2.63 0.107 2.54

Potential 0

LIXI

Measured 0

Indicated 0

Total M&I 0

Inferred 87,000 61.85 9.77 0.46 0.075 0.53

Potential 0

PLIX

Measured 0 Indicated 3,444,000 59.91 11.73 1.01 0.056 0.84

Total M&I 3,444,000 59.91 11.73 1.01 0.056 0.84

Inferred 429,000 60.99 9.69 1.31 0.065 1.00

Potential 0

COLG

Measured 18,758,000 48.73 24.34 2.09 0.057 1.34

Indicated 951,000 47.64 24.78 3.12 0.056 1.72

Total M&I 19,709,000 48.68 24.37 2.14 0.057 1.36

Inferred 151,000 44.83 27.04 4.78 0.049 2.77

Potential 0

Total

Measured 50,239,000 51.79 18.96 3.02 0.057 1.74

Indicated 29,832,000 51.64 19.16 3.37 0.067 1.93

Total M&I 80,071,000 51.74 19.04 3.15 0.061 1.81

Inferred 15,103,000 49.76 21.33 3.46 0.081 2.04

Potential 945,000 52.25 19.50 2.84 0.081 1.68

The stated resources include an area within the MMX license that is currently being used by Vale for its plant. The resources contained in that area are given in Table 7.9.2 and shown in Figure 7-3.



Table 7.9.2: Mineral Resources by Lithology within Vale Infrastructure Area - Mine 63

Corumbá Project


BRE

Measured 97,000 50.32 18.03 3.84 0.112 2.95

Indicated 384,000 47.98 21.44 3.96 0.120 2.99

Total M&I 481,000 48.30 20.97 3.95 0.119 2.98

Inferred 763,000 47.07 21.87 4.92 0.113 3.32

Potential 5,000 43.94 25.87 5.65 0.131 3.01

COLF


Total M&I 7,646,000 57.47 10.25 3.77 0.059 2.13

Inferred 0

Potential 0

COLG

Measured 6,000 52.19 21.99 1.53 0.066 0.90

Indicated 0

Total M&I 6,000 0.00 0.00 0.00 0.000 0.00

Inferred 0

Potential 0

Total

Measured 5,620,000 57.56 9.96 3.88 0.057 2.17

Indicated 2,513,000 55.59 12.84 3.58 0.073 2.21

Total M&I 8,133,000 55.59 12.84 3.58 0.073 2.21

Inferred 763,000 47.07 21.87 4.92 0.113 3.32

Potential 5,000 43.94 25.87 5.65 0.131 3.01

7.10 Validation of Resource Model

MMX validated the block model by comparison of average composite and block grades and in swath plots on north-south lines (Figure 7-4).

SRK validated the block model by visual inspection of composite and block grades in east-West and north-south cross-sections and also conducted a second resource estimation as a check on the MMX model. In its estimation, SRK composited the samples into 5m lengths and used the Inverse Distance Squared (ID2) algorithm with a 300m search range and a minimum of three and a maximum of eight composites for all lithotypes. The composites were length weighted in the estimation to account for different sample lengths. Blocks that were estimated with a minimum of three drillholes or shafts were classified as Measured or Indicated, undifferentiated. In a comparison to the MMX Measured and Indicated resource, SRK had about 8% more tonnes at slightly lower Fe and SiO2 grades.

It is SRK’s opinion that the MMX resource model has been conducted according to industry standards, but that the use of an unlimited number of composites has resulted in a model that has very smoothed grades. The use of fewer composites could result in a model with better local variation.

SRK Job No.: 162700.09




Metálicos S.A.

Figure 7-1 Sample Locations, Topography

and Mineral Boundaries Mine 63

SRK Job No.: 162700.09




Metálicos S.A.

Figure 7-2 Mine 63 Mineral Resource

Classification (A) and Fe Grades (B)

A B

SRK Job No.: 162700.09




Metálicos S.A.

Figure 7-3 MMX License Area with Block

Classification and Vale Infrastructure Area

Vale Infrastructure Area

SRK Job No.: 162700.09




Metálicos S.A.

Figure 7-4 Mine 63 Mineral Resource

Fe Swath Plots (A) and Location of Swath Plot Lines (B)

A

B



8 Reserve Estimation The reserve estimation was conducted by Prominas under the supervision of MMX. Measured and Indicated Resources and material with a silica content of less than 10.2% were used in the Whittle® pit optimization program to define the pit limits. After Whittle® was run, a detailed pit design with ramps was developed. The pit optimization and pit design were conducted at the end of September 2010.

The average grades required for the mined ore were established from correlation studies between RoM ore and product specifications. Table 8.1 summarizes the correlation of RoM and Product. MMX created a linear regression for each element and this regression was used in deriving the product grades.

Table 8.1: Correlations RoM Grades x Product Grades Grades*

Lithology Fe SiO2 AL2O3 P LOI

BRE FEP = 0.830*(FEG) +15.41

SIP = 0.804*(SIG) - 2.771

ALP = 0.220*(ALG) + 0.589

PP = 0.666*(PG) + 0.016

LOIP = 0.565*(LOIG) - 0.072

COLF FEP = 0.713*(FEG) + 21.43

SIP = 0.794*(SIG) - 1.919

ALP = 0.716*(ALG) - 0.836

PP = 0.890*(PG) - 0.001

LOIP = 0.839*(LOIG) - 0.513

COLU FEP = 0.449*(FEG) + 37.96

SIP = 0.668*(SIG) - 0.730

ALP = 0.385*(ALG) - 0.012

PP = 0.534*(PG) + 0.021

LOIP = 0.377*(LOIG) + 0.604

LIMO FEP = 0.449*(FEG) + 37.96

SIP = 0.668*(SIG) - 0.731

ALP = 0.385*(ALG) - 0.013

PP = 0.534*(PG) + 0.022

LOIP = 0.377*(LOIG) + 0.605

PLIX FEP = 0.449*(FEG) + 37.97

SIP = 0.668*(SIG) - 0.732

ALP = 0.385*(ALG) - 0.014

PP = 0.534*(PG) + 0.023

LOIP = 0.377*(LOIG) + 0.606

COLG FEP = 0.797*(FEG) + 16.08

SIP = 0.863*(SIG) - 2.423

ALP = 0.496*(ALG) - 0.111

PP = 1.001*(PG) + 0 LOIP = 0.482*(LOIG) + 0119

*valueP is grade in the Product, valueG is the grade in the RoM.

Based on the product specifications from each buyer, final blended cut-off grades were established at 10.2% SiO2 for the COLF material, 7.6% SiO2 for the COLU material, 8.00% for the LIMO, LIXI and PLIX material. To arrive at the correct blend for each product buyer, different cut-offs were simulated near to the cut-off values to maximize the mineable reserves, maintaining the required average grade for the RoM ore.

For this version of the resource model, MMX decided to use a partial block model created in Mintec MineSight® software where each 12.5m X 12.5m x 5m block contains a percentage of each material. Within each partial, grades were evaluated and estimated separately. The model used for the reserve estimation had three partials: the first and second partial contains all material that can be considered ore and the third partial is all waste. Because less than 18% of the product is sold domestically, the higher product selling price for the international market was used to simplify the pit optimization. Furthermore, the logistics costs were also applied to the domestic and international shipping products and this resulted in a conservative pit optimization and simplified the pit optimization study. It is important to note that the main driver for the pit optimization is the availability of low silica material that can be processed. On average any RoM material with a silica above 10.2% is considered waste below this cut-off. The parameters below were used for the pit optimization.

Mass recovery (MR)= 58% (49% Lump and 9% BTL);

Average Product Value = R$122.14/t;



Mining Cost/t RoM = R$6.75/t; including Royalty and CFEM;

Mining Cost/t Waste = R$6.75/t;

Plant Cost = R$6.40/t RoM;

Sundry Costs (Sundry costs include: planning and quality control, administration and others)= R$6.32/t product;

Transportation Cost = R$57.54/t product; and

Pit Slope Angle = 40.5o.

CFEM is a 2% tax applied to Gross Revenue after other taxes such as PIS and COFINS has been deducted.

Table 8.2 contains ore and waste in the optimized pit which was used as the base for the designed pit and subsequent mine planning. The average product value of US$122.14.02 is an average of the projected future prices used in the cash flow model. As a check on the sensitivity of the pit optimization to the product price, a spider graph was created to demonstrate the economic sensitivity. The results given in Figure 8-1, indicate that the pit is very robust in regard to product price and that the use of a higher iron price has no effect on the pit optimization results.

Table 8.2: Optimized Pit for Mine 63, Corumbá Project End of June 2010

Tonnes RoM Grade Product Grade

Total

(Mt)

Ore

(Mt) Waste(Mt)

Fe SiO2 Al2O3 P.G LOI Product Fe SiO2 Al2O3 P.G LOI

% % % % % (Mt) % % % % %

40.08 19.28 20.8 58.21 10.37 3.12 0.06 1.88 11.18 63.64 5.67 1.25 0.06 1.03

After the pit was designed with the inclusion of ramps, the average grade of the mineable areas was very close to the grade required for the product specifications. The cut-off grade (CoG) within the designed pit was kept the same since the difference was 0.02% in the silica grade. Table 8.3 presents the Ore Reserves for Mine 63 as of September 23, 2010. The strip ratio through the life of mine is estimated to be 0.41. This waste equates to 3.7 Mm3 or 8.0Mt.

There is a difference in the waste tonnes reported in the pit optimization and the pit design results. This difference is due to the way MMX chose to compile reserves within the pit design in the MineSight® software. Within MineSight®, there is the ability to select an option called “take ore first”. This option takes an ore partial and leaves the waste in situ. It is important to note that the RoM material is at surface and for this reason minimal waste will be mined. This practice has been used for the last three years and it has proved to be accurate. This option is not available in Whittle® and this results in a difference in waste tonnes. Below is an explanation from the MineSight® software online help describing how “take ore first” works. Based on the mining production from last three years, strip ratios have been around 0.05 and this reserve carry a 0.41 strip ratio which is very conservative in relation to the historical actual number.

MineSight®’s online help explanation of “take ore first” states “If the ore has been interpreted so that it is clipped at the topography, the user must make sure that all the ore is mined from the surface blocks. The normal calculation is to take the block partial x topography and apply it to all



material types. For example, if ore had been clipped at topography such that ore%=60 and topography %=80 and 100% of the block was being mined, the normal method would be to mine 1.0 * 0.8 * 0.6 = 0.48 for ore and 1.0 * 0.8 * 0.4 = 0.32 for the waste. This means that 12% of the ore is accounted as waste. If the "ore first option" is used, it takes all the ore (60%) first, and the rest (20%) is considered to be waste. The "take ore first" for all blocks should be used when the pit bottom follows the footwall of the ore. The same example as above could be used reversing the partial and the topography to 80% and 100% respectively.”

Table 8.3: Total Reserves as at September 23, 2010 - Mine 63 Corumbá Project*

Class Volume Tonnes

Ore Grades Product Grades**

Fe SiO2 Al2O3 P.G LOI Fe SiO2 Al2O3 P.G LOI

Mm3 Mt % % % % % % % % % %

Proven 5.2 16.2 57.91 10.52 3.27 0.06 1.92 63.47 5.69 1.31 0.05 1.02

Probable 1.0 3.1 60.1 9.31 2.27 0.07 1.63 64.72 5.43 0.92 0.06 1.13

Total P&P 6.2 19.3 58.26 10.33 3.11 0.06 1.88 63.67 5.65 1.25 0.06 1.03*Tonnes are reported on a wet basis. **Product tonnes will be reduced by the mass recoveryAverage iron product price used in reserve is R$122.14. No dilution applied. No mining recovery applied. September 23, 2010 topography used.

Waste material found in reserves is 8.0Mt for a 0.41 strip ratio.

Table 8.4 shows mineral reserves classified by lithology.

Table 8.4: Mineral Reserves by Lithology - Mine 63 Corumbá Project*




(Mm3) (Mt) % % % % % % % % % %

COLF

PROVEN 5.2 16.3 57.91 10.52 3.27 0.06 1.92 63.47 5.69 1.31 0.05 1.02

PROBABLE 0.1 0.2 60.48 7.17 3.26 0.08 2.18 65.61 2.99 1.31 0.07 1.16

TOTAL 5.3 16.4 57.94 10.48 3.27 0.06 1.93 63.50 5.66 1.31 0.05 1.02

COLU

PROVEN - - - - - - - - - - - -

PROBABLE 0.3 1.0 59.58 9.48 3.03 0.08 1.90 63.91 5.61 1.34 0.07 1.08

TOTAL 0.3 1.0 59.58 9.48 3.03 0.08 1.90 63.91 5.61 1.34 0.07 1.08

LIMO

PROVEN - - - - - - - - - - - -

PROBABLE 0.1 0.3 55.39 10.15 5.07 0.15 4.26 62.83 6.05 1.94 0.10 2.21

TOTAL 0.1 0.3 55.39 10.15 5.07 0.15 4.26 62.83 6.05 1.94 0.10 2.21

PLIX

PROVEN - - - - - - - - - - - -

PROBABLE 0.5 1.7 61.09 9.34 1.26 0.06 1.00 65.39 5.51 0.47 0.05 0.98

TOTAL 0.5 1.7 61.09 9.34 1.26 0.06 1.00 65.39 5.51 0.47 0.05 0.98

TOTAL

PROVEN 5.2 16.3 57.91 10.52 3.27 0.06 1.92 63.47 5.69 1.31 0.05 1.02

PROBABLE 1.0 3.1 60.10 9.31 2.27 0.07 1.63 64.72 5.43 0.92 0.06 1.13

TOTAL 6.2 19.3 58.26 10.33 3.11 0.06 1.88 63.67 5.65 1.25 0.06 1.03 *Tonnes are reported on a wet basis. **Product tonnes will be reduced by the mass recoveryAverage iron product price used in reserve is R$122.14. No dilution applied. No mining recovery applied. September 23, 2010 topography used.



Mine production from January to August 2010 is shown in Table 8.5.

Table 8.5: Mine 63 Production, January to August 2010

Tonnes Mass Recovery %

RoM Processed Product Total Lump BLT

2,262,578 2,018,055 1,184,372 59% 49% 9%

The MMX license area includes a portion that is currently being used by Vale. These reserves were included in the total reserves stated in Table 8.3. Table 8.6 shows the reserves within the Vale area.

Table 8.6: Mineral Reserves by Lithology within Vale Infrastructure Area - Mine 63

Corumbá Project*




(Mm3) (Mt) % % % % % % % % % %

COLF PROVEN 2.02 6.25 58.64 8.82 3.71 0.06 2.09 64.08 4.32 1.41 0.06 1.11 PROBABLE 0.06 0.19 60.48 7.17 3.26 0.08 2.18 65.61 2.99 1.31 0.07 1.16 TOTAL 2.08 6.44 58.70 8.77 3.69 0.06 2.09 64.13 4.28 1.40 0.06 1.11

COLU PROVEN - - - - - - - - - - - - PROBABLE - - - - - - - - - - - - TOTAL - - - - - - - - - - - -

LIMO PROVEN - - - - - - - - - - - - PROBABLE - - - - - - - - - - - - TOTAL - - - - - - - - - - - -

PLIX PROVEN - - - - - - - - - - - - PROBABLE - - - - - - - - - - - - TOTAL - - - - - - - - - - - -

TOTAL PROVEN 2.02 6.25 58.64 8.82 3.71 0.06 2.09 64.08 4.32 1.41 0.06 1.11 PROBABLE 0.06 0.19 60.48 7.17 3.26 0.08 2.18 65.61 2.99 1.31 0.07 1.16 TOTAL 2.08 6.44 58.70 8.77 3.69 0.06 2.09 64.13 4.28 1.40 0.06 1.11

*Tonnes are reported on a wet basis. **Product tonnes will be reduced by the mass recovery Average iron product price used in reserve is R$122.14. No dilution applied. No mining recovery applied. September 23, 2010 topography used.

Waste material found in the reserves within the Vale infrastructure area is 1Mt for a 0.3 strip ratio.

8.1 Geotechnical Studies

In the area of Mine 63, the hillsides are steep and sustained by the competence of primary hematite jaspilite which is the protolith of the eluvial ore. The thickness of the eluvium is between 15 and 20m. The material still presents a certain rocky continuity that confers competence, although inferior to the competence of the unleached jaspilite.

The colluvium forms on the hillside below the almost vertical wall of Urucum Mountain. It is composed of reddish clayey soil, with gravel, blocks and small pebbles of jaspilite with dimensions of centimeters to tens of centimeters. The thickness of the colluvium is variable from a few meters at elevations between 500 and 620m, to a maximum of 25 to 30m locally. The average thickness is about 12m and the proportion of blocks of larger dimensions decreases from the base of the cliff toward the toe of the colluvial fan.



There are two water levels: the first at the level of silica leaching of the jaspilite in the higher elevations and the second in the colluvium. The water level varies according to the season and the lines of concentration of the subterranean flow, probably predominating at the base of this formation.

For the final pit design angles MMX used 56 degrees face angle and 3.45m berm widths.

8.2 Mining Operations

MMX started iron ore mining and processing operations at Mine 63 in January 2006. Current mine operations produce iron ore by surface mining methods. Initial production was processed through the refurbished mobile crushing plant (AZTECA plant) which is no longer in use. In July 2006, MMX started operating the main crushing and washing plant and the first batch of Lump ore was shipped through Ladário Port later that month.

The reserve is based on annual ore production of 3.3Mt/y of ore from Mine 63, producing 1.6Mt of Lump and 0.3Mt of BTL. To meet the processing rate, the average mining rate for total material movement (ore and waste) will vary from 7,500t/d to 16,605t/d on an annual basis. Processing operations are scheduled 24 hours/day, and the mine production is scheduled to directly feed the processing operations.

The mine layout is shown in Figure 8-2.

8.3 Mining Method

MMX uses contract mining at Mine 63. The surface operations include:

Topsoil removal;

Ripping, drilling and blasting (only the eluvium requires drilling and blasting – less than 10% of reserves);

Loading and haulage; and

General maintenance and services.

Topsoil Removal

Topsoil operations consists of removing the cover in order to expose the ore and waste material The topsoil is stockpiled for future reclamation activities or direct placed during reclamation activities. Mine 63 operations utilize CAT D6 and D8, or similar type of dozer equipment.

Ripping, Drilling and Blasting

Mine 63 scarifies or rips waste and ore material with D8 dozer class equipment. Drilling and blasting for eluvium, as required, is conducted by drilling and blasting contractors. A hydraulic breaker adapted to a 25t digging machine reduces the size of any remaining large blocks.

Grade control samples are obtained from percussive drilling and channel samples are collected and analyzed.

Loading and Haulage

Ore and waste are separately loaded into haulage trucks. A CAT330 class backhoe with 2.4m3 capacity is the primary loader. Alternatively, a CAT 980 class front-end loader with a 5m3 bucket is used as a backup loader.



Ore is transported to the primary crusher pad and waste is transported to the waste dumps with

25 to 30t rear dump haul trucks. Haul roads are 10m wide, with a maximum 12% grade and 1% drainage cross-slope.

General Maintenance and Services

Ore is hauled continuously to the primary crusher. As required, RoM material will feed the primary crusher. A CAT 980 type class loads the material from the RoM piles.

Haul road construction and maintenance, waste dump operations, sedimentation pond operations and other general maintenance activities utilize the reclamation dozer, Cat 140H class grader, water truck, various maintenance equipment and pickups.

8.4 Mine Planning

The RoM reserves have an average grade of 58.26% Fe, 10.33% SiO2, 3.11% Al2O3, 0.06% P and 1.88% LOI. Grades in the individual sectors vary from 51.2 to 64.05% Fe and 4.08 to 10.2% SiO2. The average product grade is calculated at 63.67% Fe and 5.65 SiO2 for the LoM.

Table 8.4.1 below presents the planned RoM, waste and total material mined in the LoM Plan.

Table 8.4.1: Mine Production Schedule – Mine 63

Year RoM Mt/y Waste Mt/y Total Movement Mt/y

2010* 0.9 0.5 1.32011 3.4 1.7 5.12012 3.3 2.5 5.82013 3.2 1.2 4.42014 3.3 1.2 4.52015 3.3 1.2 4.52016 1.9 0.7 2.6Total 19.3 9.1 28.4

*2010 reserves based on September 23, 2010 to December 31, 2010. Tonnes are reported on a wet basis. Average iron product price used in reserve is R$122.14. No dilution applied. No mining recovery applied. September 23, 2010 topography used.

Figure 8-3 shows the mine schedule by year.

There is no dilution added to the reserves and there are no mining losses deducted from the reserves. MMX considers that internal dilution is adequately represented in the resource estimation and they intend to recover all economic material in the LoM Plan.

There are 284 employees from contractors and 172 MMX employees working for the mine, plant, port, shipping, administration, tailings and exploration. This number may fluctuate depending on the total tonnes moved by year.

8.5 Processing

See Section 6 for process flowsheet.



8.6 Infrastructure

The operational infrastructure consists primarily of:

Power transmission line 2km long and 34.5kV; connected to the main line which supplies the “Vale das Mineradoras” from Corumbá;

Five sub-stations with a principal step-down sub-station of 1,100kVA (34.5kV/440V) and four of variable potency;

Roads and access;

Products stockpile areas before shipping, placed near Highway BR-262, with 600,000t capacity;

Water well system, water treatment system, reservoirs for recovered water, and storage tanks;

Industrial and administrative facilities (workshops, stockroom, offices and others.); and

Two tailings facilities for rejects with storage capacity of 12Mt of solids, the first dam is currently at 50% capacity and the second dam constructed after 2 to 3 years of operation.

8.7 Tailings

The main plant will produce approximately 200,000 to 400,000t of slurry tailings/yr, with fine particles <0.15mm and a solids content of 6%. The total capacity is 0.5Mm3 . It is expected that the tailings will need to be raised by August of 2011. Currently, 50% of the capacity has been used. The facility will also store rainwater which will be collected from the mine site.

8.8 Shipment Logistics

Domestic sales are FOB Mine. The remaining product is transported by truck to the port terminal of Granel Química on the Paraguay River in Ladário, a distance of 28km from Mine 63. Part of the international product is sold FOB port and part is CIF.

For the cash flow analysis, which considers FOB prices at the port terminal, the costs of port terminal movements are included. The port terminal belongs to the Norwegian company Odfjell, is fully authorized for exports and is capable of moving products by the waterway from either road or rail access. The products can be stored in a 15,000m2 stockyard and then loaded onto the ships.

8.9 Environmental Management

8.9.1 During the Operational Life of the Mine

The plan for rehabilitation of areas impacted by mining includes the following activities during mine operations:

After the authorization to proceed with the vegetation removal in the mining areas is given, the topsoil is removed and stockpiled during the mining period;

Training program for the orientation of professionals on operational planning and best practices for environmental administration of mining projects;



As soon as the mine slopes and areas reach the final geometry, in any point of the mine life, those surfaces receive stabilization treatment, in a way to provide efficient drainage; and

Once the re-contouring is done, a topsoil layer is applied and it will be revegetated with native seeds.

8.9.2 Mine Closure

The following areas will be recontoured and revegetated after the mine operations are completed:

Tailings dam;

Mining areas; and

Plant and waste dumps.

Every area cited above will be subjected to the following reclamation program:

Topographic reconstruction;

Vegetation species selection; and

Conditioning of berms and pit walls.

After the implementation of the reclamation plan, a monitoring program will be instituted for flora, fauna and human activity.

8.10 Taxes and Royalties (OK)

Taxes are included on Gross Revenues as well as the 34% Income Tax on Net Income Before Tax (NIBT). There are four taxes identified by MMX as indicated in Table 8.10.1. The 34% Income Tax/Social Security Tax is calculated on the NIBT.

Table 8.10.1: MMX Taxes

Taxes and Royalties Percentage Comments

PIS 1.65% Applied to Internal Production Only COFINS 7.60% Applied to Internal Production Only CFEM 2.00% Applied to Total Production Land Owner Rights 1.00% Applied to Total Production

8.11 LoM Plan Economics

SRK has reviewed MMX’s economic model and is in agreement with the methodology.

8.12 Mine Life

Mine 63 has a projected life of approximately six years. The mine will operate from the last quarter of 2010 through 200 days into 2016.

SRK Job No.: 162700.09

File Name: Figure 8-1.doc Date: 10/14/2010 Approved: FR Figure: 8-1


Spider Graph Showing Sensitivity of the Optimized Pit to

Product Price

SRK Job No.: 162700.09



Current Layout of Mine 63

Corumbá Project

SRK Job No.: 162700.09



Mine Schedule of Mine 63

Corumbá Project



9 Recommendations Some points that could be addressed in order to improve the plant and mine operation performances are:

Concentration by jigging of the current products (lump, BTL, ‘hematitinha’) according to promising results obtained in tests carried out by MMX. The said results show that it is possible to increase the ore reserves using concentration.

Concentration of the fine fraction (-0.15mm) that is currently being discarded to the tailings dam should be tested in the laboratory in order to assess its technical feasibility. In such a case a new product could be produced and the overall metallurgical performance would be enhanced.

The overall plant hour operating yield currently at 67.55% at the yearly basis could be increased (See Table 6.2 above). The yearly production rate would then be increased as a consequence.

SRK also recommends the following:

MMX should review the estimation parameters to see if a better local estimation could be achieved. This could result in a somewhat lower silica grades.

Conduct a mined to model reconciliation of the resource model to determine if the model is performing efficiently in predicting grade and tonnage.

Create sub-block models instead of partial models, possibly lowering the strip ratio.

A study to evaluate if the processing plant can lower the silica content of the product by an extra 1%. If a lower silica grade product can be produced, it will increase the current reserves.



10 References Agoratek International (2007). Memorandum, Corumbá QA-QC Review v2.

MMX Mineração e Metálicos S.A. (May 2007). NI 43-101 Technical Report, Corumbá Iron Project, Brazil.

MMX Mineração e Metálicos S.A. (September 2010). Relatorio de Recursos 2010 – Corumbá Mina 63 rev01,Internal Report.




Mineral Resources

The mineral resources and mineral reserves have been classified according to the “CIM Standards on Mineral Resources and Reserves: Definitions and Guidelines” (August 2000). Accordingly, the Resources have been classified as Measured, Indicated or Inferred, the Reserves have been classified as Proven, and Probable based on the Measured and Indicated Resources as defined below.





Mineral Reserves






11.2 Glossary

Assay: The chemical analysis of mineral samples to determine the metal content.

Capital Expenditure: All other expenditures not classified as operating costs.

Composite: Combining more than one sample result to give an average result over a larger distance.

Crushing: Initial process of reducing ore particle size to render it more amenable for further processing.

Cut-off Grade (CoG): The grade of mineralized rock, which determines as to whether or not it is economic to recover its gold content by further concentration.

Dilution: Waste, which is unavoidably mined with ore.

Dip: Angle of inclination of a geological feature/rock from the horizontal.

Fault: The surface of a fracture along which movement has occurred.

Grade: The measure of concentration of gold within mineralized rock.

Haulage: A horizontal underground excavation which is used to transport mined ore.

Kriging: An interpolation method of assigning values from samples to blocks that minimizes the estimation error.

Lithological: Geological description pertaining to different rock types.

LoM Plans: Life-of-Mine plans.

Milling: A general term used to describe the process in which the ore is crushed and ground and subjected to physical or chemical treatment to extract the valuable metals to a concentrate or finished product.

Mineral/Mining Lease: A lease area for which mineral rights are held.

Mining Assets: The Material Properties and Significant Exploration Properties.

Ongoing Capital: Capital estimates of a routine nature, which is necessary for sustaining operations.

Ore Reserve: See Mineral Reserve.

RoM: Run-of-Mine.



Sedimentary: Pertaining to rocks formed by the accumulation of sediments, formed by the erosion of other rocks.

Shaft: An opening cut downwards from the surface for transporting personnel, equipment, supplies, ore and waste. In the case of this report the shafts were used for sampling the colluvial and eluvial deposits.

Stratigraphy: The study of stratified rocks in terms of time and space.

Strike: Direction of line formed by the intersection of strata surfaces with the horizontal plane, always perpendicular to the dip direction.

Tailings: Finely ground waste rock from which valuable minerals or metals have

Total Expenditure: All expenditures including those of an operating and capital nature.

Variogram: A statistical representation of physical characteristics (usually grade).

11.3 Abbreviations

The metric system has been used throughout this report unless otherwise stated. All currency is in U.S. dollars. Market prices are reported in US$25.75/t fob and US$15.75/t fob of iron ore. Tonnes are metric of 1,000kg, or 2,204.6lbs. The following abbreviations are used in this report.


A ampere AA atomic absorption A/m2 amperes per square meter Al2O3 Aluminum Oxide °C degrees Centigrade CoG cut-off-grade cm centimeter cm2 square centimeter cm3 cubic centimeter ° degree (degrees) dia. Diameter Fe Iron g gram Ga billion years before present gpt grams per tonne ha hectares ID2 inverse-distance squared ID3 inverse-distance cubed kg kilograms km kilometer km2 square kilometer kt thousand tonnes kt/d thousand tonnes per day kt/y thousand tonnes per year kV kilovolt



kW kilowatt kWh kilowatt-hour kWh/t kilowatt-hour per metric tonne l liter lps liters per second LOI Loss On Ignition LoM Life-of-Mine lps liters per second m meter m2 square meter m3 cubic meter mg/l milligrams/liter mm millimeter mm2 square millimeter mm3 cubic millimeter Mn Manganese MnO Manganese oxide Mt million tonnes Mt/y million tonnes per year MW million watts NI 43-101 Canadian National Instrument 43-101 % percent P Phosphorous ppb parts per billion ppm parts per million QA/QC Quality Assurance/Quality Control RoM Run-of-Mine s second SiO2 Silica SG specific gravity t tonne (metric ton) (2,204.6 pounds) TiO2 Titanium Oxide tph tonnes per hour t/d tonnes per day t/y tonnes per year µ micron or microns V volts W watt XRF x-ray diffraction fluorescence y year

MMX Mineração e Metálicos S.A. NI 43-101 Technical Report

Corumbá Iron Project Brazil

Mineração e Metálicos S.A.

Praia do Flamengo 154/4° Rio de Janeiro Brasil 22210-030

SRK Project Number 162703

7175 West Jefferson Ave., Suite 3000

Lakewood, Colorado USA 80235

Tel: +1.303.985.1333

Fax: +1.303.985.9947

E-mail: [email protected]

Web site: www.srk.com

Effective Date: September 30, 2007

Report Date: March 10, 2008

Contributors: Endorsed by QP’s:

Dr. Neal Rigby CEng, MIMMM, PhD Dr. Neal Rigby CEng, MIMMM, PhD Leah Mach MS Geology, CPG Leah Mach MS Geology, CPG Antonio Carlos Girodo S E E Johansson, MSAIMM J. Michael Elder, P.E. George Borinski S E E Johansson, MSAIMM Antonio Peralta, PhD _______________________________ _________________________________ Project Consultants Qualified Persons

Mineração e Metálicos S.A. i Corumbá Project Technical Report

SRK Consulting (US), Inc. March 10, 2008 MMX.Corumba.NI 43-101 Technical Report.162703.KG.009.doc

Table of Contents

SUMMARY (ITEM 3) .......................................................................................................................... I

1 INTRODUCTION AND TERMS OF REFERENCE (ITEM 4)........................................... 1-1 1.1 Terms of Reference and Purpose of the Report ......................................................... 1-1 1.2 Sources of Information .............................................................................................. 1-1 1.3 Effective Date ............................................................................................................ 1-1 1.4 Reliance on Other Experts (Item 5) ........................................................................... 1-1 1.5 Material Litigation ..................................................................................................... 1-1 1.6 Qualifications of Consultant (SRK)........................................................................... 1-1

2 PROPERTY DESCRIPTION AND LOCATION (ITEM 6)................................................. 2-1 2.1 Property Location....................................................................................................... 2-1 2.2 Mineral Titles............................................................................................................. 2-1

2.2.1 Brazilian Mining Legislation....................................................................... 2-1 2.2.2 Authorization for Exploration ..................................................................... 2-1 2.2.3 Concession for Mining Exploitation ........................................................... 2-2 2.2.4 MMX’s Mineral Claims in Corumbá .......................................................... 2-2 2.2.5 Maintenance of Mineral Claims .................................................................. 2-4

2.3 Location of Mineralization ........................................................................................ 2-4 2.4 Legal Surveys............................................................................................................. 2-5 2.5 Royalty Agreements and Encumbrances ................................................................... 2-5 2.6 Environmental Liabilities........................................................................................... 2-5 2.7 Permits and Licenses.................................................................................................. 2-5 2.8 Surface Access ........................................................................................................... 2-6

3 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY (ITEM 7) ............................................................................................................ 3-1

3.1 Access ........................................................................................................................ 3-1 3.2 Climate....................................................................................................................... 3-1 3.3 Physiography.............................................................................................................. 3-1 3.4 Vegetation .................................................................................................................. 3-1 3.5 Local Resources and Infrastructure ........................................................................... 3-2

3.5.1 Water Supply and Water Management........................................................ 3-2 3.5.2 Electrical Power Supply .............................................................................. 3-2 3.5.3 Buildings and Ancillary Facilities ............................................................... 3-3 3.5.4 Fuel Storage Area ........................................................................................ 3-3 3.5.5 Sewage and Waste Disposal ........................................................................ 3-3 3.5.6 Laboratory ................................................................................................... 3-3 3.5.7 Communications.......................................................................................... 3-4 3.5.8 Security........................................................................................................ 3-4

4 HISTORY (ITEM 8).............................................................................................................. 4-1 4.1 Ownership .................................................................................................................. 4-1 4.2 Project Expenditures .................................................................................................. 4-2 4.3 Historic Exploration................................................................................................... 4-2 4.4 Historic Mineral Resource Estimates......................................................................... 4-2

5 GEOLOGICAL SETTING (ITEM 9).................................................................................... 5-1

Mineração e Metálicos S.A. ii Corumbá Project Technical Report


5.1 Regional Geology ...................................................................................................... 5-1 5.1.1 Lithology and Stratigraphy.......................................................................... 5-1

5.2 Structural Geology..................................................................................................... 5-4 5.3 Local Geology............................................................................................................ 5-5

5.3.1 Santa Cruz Formation - Córrego das Pedras Member................................. 5-5 5.3.2 Santa Cruz Formation - Banda Alta Member.............................................. 5-5 5.3.3 Mine 63 Geology......................................................................................... 5-6 5.3.4 Urucum NE Geology................................................................................... 5-6

6 DEPOSIT TYPES (ITEM 10) ............................................................................................... 6-1

7 MINERALIZATION (ITEM 11)........................................................................................... 7-1 7.1 Eluvial Deposits ......................................................................................................... 7-1 7.2 Colluvial Deposits...................................................................................................... 7-1

8 EXPLORATION (ITEM 12) ................................................................................................. 8-1 8.1 Exploration of Mine 63.............................................................................................. 8-1 8.2 Exploration of Urucum NE........................................................................................ 8-1

8.2.1 Geophysics .................................................................................................. 8-2

9 DRILLING (ITEM 13) .......................................................................................................... 9-1 9.1 Mine 63 ...................................................................................................................... 9-1 9.2 Urucum NE ................................................................................................................ 9-1

10 SAMPLING METHOD AND APPROACH (ITEM 14)..................................................... 10-1

11 SAMPLE PREPARATION, ANALYSES AND SECURITY (ITEM 15).......................... 11-1 11.1 Sample Preparation, Analysis and Security for Mine 63......................................... 11-1

11.1.1 Sample Preparation.................................................................................... 11-1 11.1.2 Sample Analysis ........................................................................................ 11-2 11.1.3 Laboratory Quality Control and Quality Assurance.................................. 11-3

11.2 Sample, Preparation and Analysis for Urucum NE ................................................. 11-5 11.2.1 Sample Preparation Procedures................................................................. 11-5 11.2.2 Chemical Analysis Procedures .................................................................. 11-6 11.2.3 Quality Control Procedures (QA/QC) ....................................................... 11-7 11.2.4 Sample Security......................................................................................... 11-9 11.2.5 ISO 9000 Certification .............................................................................. 11-9

12 DATA VERIFICATION (ITEM 16) ................................................................................... 12-1

13 ADJACENT PROPERTIES (ITEM 17).............................................................................. 13-1

14 MINERAL PROCESSING AND METALLURGICAL TESTING (ITEM 18) ................. 14-1 14.1 Mineral Processing and Metallurgical Testing for Mine 63 .................................... 14-1

14.1.1 Technological Parameters of the Process .................................................. 14-1 14.1.2 Mineralogical Analysis.............................................................................. 14-3 14.1.3 Calculation of Mass Balance ..................................................................... 14-5

14.2 Mineral Processing and Metallurgical Testing - Urucum NE ................................. 14-5 14.2.1 Location and Preparation of Metallurgical Samples ................................. 14-5 14.2.2 Methodology.............................................................................................. 14-6 14.2.3 Results ....................................................................................................... 14-6 14.2.4 Conclusion............................................................................................... 14-10

15 MINERAL RESOURCE AND RESERVE ESTIMATES (ITEM 19)................................ 15-1

Mineração e Metálicos S.A. iii Corumbá Project Technical Report


15.1 Mineral Resource and Reserve Estimation for Mine 63.......................................... 15-1 15.1.1 Database .................................................................................................... 15-1 15.1.2 Geological Model ...................................................................................... 15-1 15.1.3 Resource Database..................................................................................... 15-1 15.1.4 Compositing .............................................................................................. 15-3 15.1.5 Density....................................................................................................... 15-4 15.1.6 Topography................................................................................................ 15-5 15.1.7 Variography............................................................................................... 15-5 15.1.8 Resource Estimation................................................................................ 15-10 15.1.9 Resource Classification ........................................................................... 15-12

15.2 Mineral Resource Estimation – Urucum NE ......................................................... 15-13 15.2.1 Database .................................................................................................. 15-13 15.2.2 Geologic Model ....................................................................................... 15-14 15.2.3 Gridded Seam Block Model .................................................................... 15-15 15.2.4 Density..................................................................................................... 15-15 15.2.5 Topography.............................................................................................. 15-16 15.2.6 Compositing ............................................................................................ 15-16 15.2.7 Variography............................................................................................. 15-17 15.2.8 Resource Estimation................................................................................ 15-17 15.2.9 Resource Statement ................................................................................. 15-18

15.3 Reserve Estimation Mine 63................................................................................. 15-19

16 OTHER RELEVANT DATA AND INFORMATION (ITEM 20)..................................... 16-1 16.1 Potential Resources.................................................................................................. 16-1

16.1.1 Mine 63...................................................................................................... 16-1 16.1.2 Additional Targets ..................................................................................... 16-1

16.2 Process Improvements ............................................................................................. 16-1

17 ADDITIONAL REQUIREMENTS FOR OPERATING PROPERTIES AND PRODUCTION PROPERTIES (ITEM 25)..................................................................................... 17-1

17.1 Geotechnical Studies................................................................................................ 17-1 17.2 Mining Operations ................................................................................................... 17-1 17.3 Mining Method ........................................................................................................ 17-2 17.4 Mine Planning.......................................................................................................... 17-2 17.5 Processing ................................................................................................................ 17-4 17.6 Infrastructure............................................................................................................ 17-5

17.6.1 Tailings ...................................................................................................... 17-5 17.7 Contracts .................................................................................................................. 17-5 17.8 Markets .................................................................................................................... 17-5

17.8.1 Shipment Logistics .................................................................................... 17-6 17.9 Environmental Management.................................................................................... 17-6

17.9.1 During the Operational Life of the Mine................................................... 17-6 17.9.2 Mine Closure ............................................................................................. 17-6

17.10 Economic Analysis .................................................................................................. 17-7 17.11 Taxes and Royalties ................................................................................................. 17-7 17.12 LoM Plan Economics............................................................................................... 17-7 17.13 Sensitivities ............................................................................................................ 17-10 17.14 Mine Life ............................................................................................................... 17-10

Mineração e Metálicos S.A. iv Corumbá Project Technical Report


18 INTERPRETATION AND CONCLUSIONS (ITEM 21) .................................................. 18-1

19 RECOMMENDATIONS (ITEM 22) .................................................................................. 19-1

20 REFERENCES (ITEM 23) .................................................................................................. 20-1

21 GLOSSARY ........................................................................................................................ 21-1 21.1 Mineral Resources and Reserves ............................................................................. 21-1 21.2 Glossary ................................................................................................................... 21-2

List of Tables

Table 1: Mineral Resources – Mine 63- Corumbá Project* .............................................................. III

Table 2: Mineral Resources – Urucum NE- Corumbá Project* ........................................................ III

Table 3: Ore Reserves - Mine 63 Corumbá Project*......................................................................... IV

Table 4: LoM Economic Results (US$000s) ..................................................................................... VI

Table 1.6.1: Key SRK Project Personnel.......................................................................................... 1-2

Table 2.2.4.1: Mineral Rights – Corumbá Project, Mine 63 and Surroundings ............................... 2-3

Table 4.4.1: Mineral Resources* – Mine 63- Corumbá Project as at December 2006..................... 4-3

Table 4.4.2: Ore Reserves* – Mine 63 Corumbá Project as at December 2006............................... 4-3

Table 5.3.1: Local Stratigraphy – Mine 63 Area .............................................................................. 5-5

Table 9.1.1: Drilling in Mine 63, Corumbá Project.......................................................................... 9-1

Table 9.2.1: Shafts at Urucum NE, Corumbá Project....................................................................... 9-2

Table 10.1: Sample Interval Statistics for Mine 63 and Urucum NE ............................................. 10-1

Table 11.1.3.1: Summary of Percent Difference Between SGS and UT Samples ......................... 11-4

Table 11.2.2.1: Limits Detection of SGS Iron Ore Analysis .......................................................... 11-6

Table 11.2.2.2: Detection Limits in ALS Chemex Iron Ore Analysis............................................ 11-7

Table 14.1.1.1: Colluvial Ore –Chemical Analysis: RoM and Lump ............................................ 14-2

Table 14.1.1.2: Eluvial Ore –Chemical Analysis: RoM and Lump................................................ 14-2

Table 14.1.2.1: Mineralogical Analyses of Samples from Mine 63 ............................................... 14-4

Table 14.1.3.1: Average Results of Mass Recovery – Lump and Sinter Feed ............................... 14-5

Table 14.2.1.1: Characteristics of Samples Analyzed in Heavy Medium Concentration............... 14-6

Table 14.2.3.1: Mass Yield of Different Products After Processing .............................................. 14-7

Table 14.2.3.2: Average Chemical Analysis Before Gravimetric Concentration........................... 14-7

Table 14.2.3.3: Average Chemical Quality of Sinter Feed............................................................. 14-7

Table 14.2.3.4: Results of Heavy Medium Tests for the Fraction <38.00> - LUMP1................... 14-8

Table 14.2.3.5: Results of Heavy Medium Tests for the Fraction < 25.00 >9.52 – LUMP3 ......... 14-9

Mineração e Metálicos S.A. v Corumbá Project Technical Report


Table 15.1.3.1: Resource Database, Mine 63 .................................................................................. 15-2

Table 15.1.3.2: Basic Statistics – Original Assays– Colluvium Area ............................................ 15-2

Table 15.1.3.3: Statistics – Original Assays – Eluvium Area......................................................... 15-3

Table 15.1.4.1: Basic Statistics Composite Data Set – Colluvium Area ........................................ 15-4

Table 15.1.4.2: Basic Statistics Length Composite Data Set – Eluvium Area ............................... 15-4

Table 15.1.7.1: Variography – Colluvium Area .............................................................................. 15-7

Table 15.1.7.2: Variography – Eluvium Area.................................................................................. 15-7

Table 15.1.7.3: Telescoped Variograms – Colluvium Area ........................................................... 15-9

Table 15.1.7.4: Telescoped Variograms – Eluvium Area............................................................... 15-9

Table 15.1.8.1: Parameters of Block Model .................................................................................. 15-10

Table 15.1.8.2: Statistics of the Colluvium Block Model............................................................. 15-11

Table 15.1.8.3: Statistics of the Eluvium Block Model................................................................ 15-11

Table 15.1.8.4: Mineral Resources – Mine 63 Corumbá Project*................................................ 15-12

Table 15.2.1.1: Summary of Exploration Shafts, Urucum NE ..................................................... 15-13

Table 15.2.1.2: Basic Statistics – Global Assay Urucum NE Area .............................................. 15-14

Table 15.2.3.1: Parameters of Block Model ................................................................................. 15-15

Table 15.2.6.1: Size Fractions of Sample Analyses....................................................................... 15-17

Table 15.2.8.2: Basic Statistics for Block Model, Composites and Original Assays .................. 15-18

Table 15.2.9.1: Summary of Resources Urucum NE.................................................................... 15-18

Table 15.3.1: Correlations RoM x Lump...................................................................................... 15-19

Table 15.3.2: Optimized Pit for Mine 63, Corumbá Project End of December 2006 .................. 15-20

Table 15.3.3: Sensitivity of the Optimized Pit to Product Price in Colluvium Area Only........... 15-20

Table 15.3.4: Total Reserves as at December 2006 - Mine 63 Corumbá Project*...................... 15-20

Table 15.3.5: Mine 63 Production, January to September 2007................................................... 15-21

Table 15.3.6: Total Proven and Probable Reserves at Mine 63 Corumbá Project*, September 30, 2007.................................................................................................................................... 15-21

Table 17.4.1: Mine Production Schedule – Mine 63 ...................................................................... 17-3

Table 17.4.2: Mine Personnel Requirements.................................................................................. 17-4

Table 17.11.1: MMX Royalties ...................................................................................................... 17-7

Table 17.12.1: Operating Costs (US$/t of product)......................................................................... 17-8

Table 17.12.2: LoM Economic Results (US$000s) ........................................................................ 17-9

Table 17.13.1: Project Sensitivity (NPV10% US$000’s) ............................................................... 17-10

Mineração e Metálicos S.A. vi Corumbá Project Technical Report


List of Figures

Figure 2-1: Location Map of the Corumbá Project........................................................................... 2-7

Figure 2-2: Mineral Rights Map - MMX Corumbá Project.............................................................. 2-8

Figure 2-3: Surface Owners of Urucum NE and Mine 63 Areas...................................................... 2-9

Figure 3-1: Location Map of MMX Corumbá Project...................................................................... 3-5

Figure 4-1: Schematic View of Mine 63 Project and Urucum NE Exploration Targets .................. 4-4

Figure 5-1: Stratigraphic Column and Regional Map....................................................................... 5-7

Figure 5-2: Regional Structural Map Corumbá Project.................................................................... 5-8

Figure 5-3: Geologic Map of the Mine 63 Area ............................................................................... 5-9

Figure 9-1: Drillhole and Sample Locations, Mine 63 Corumbá Project ......................................... 9-3

Figure 9-2: Shaft Locations, Urucum NE......................................................................................... 9-4

Figure 11-1: LCT and SGS versus UT Analyses for Corumbá Samples...................................... 11-10

Figure 14-1: Location of Metallurgical Samples, Mine 63........................................................... 14-11

Figure 14-2: Iron Percentage RoM Versus Lump, Mine 63 ......................................................... 14-12

Figure 15-1: All Drillholes, Channel Samples, and Shafts – Mine 63 ......................................... 15-22

Figure 15-2: Colluvium and Eluvium Areas of Mine 63.............................................................. 15-23

Figure 15-3: Colluvium 3D Solids in Plan and Cross-Section ..................................................... 15-24

Figure 15-4: Eluvium 3D Solids in Plan and Cross-Section......................................................... 15-25

Figure 15-5: Location of Samples in Resource Database – Mine 63 ........................................... 15-26

Figure 15-6: Iron Variograms - Colluvium................................................................................... 15-27

Figure 15-7: Iron Variograms – Eluvium Area............................................................................. 15-28

Figure 15-8: Colluvium and Eluvium Block Models Mine 63 ..................................................... 15-29

Figure 15-9: Colluvium and Eluvium Block Grades Plan View .................................................. 15-30

Figure 15-10: Colluvium and Eluvium Block Model Cross-Section ........................................... 15-31

Figure 15-11: Swath Plots Mine 63 .............................................................................................. 15-32

Figure 15-12: Colluvium Solid Urucum NE................................................................................. 15-33

Figure 15-13: Final Colluvium Solid for Resource Estimation .................................................... 15-34

Figure 15-14: Iron Variogram Urucum NE .................................................................................. 15-35

Figure 15-15: Blocks by Classification Urucum NE .................................................................... 15-36

Figure 15-16: CoG Curve Colluvium and Eluvium...................................................................... 15-37

Figure 15-17: Mine 63 Pit Colluvium and Eluvium Areas........................................................... 15-38

Figure 17-1: Layout of Mine 63 Corumbá Project ....................................................................... 17-11

Mineração e Metálicos S.A. vii Corumbá Project Technical Report


Figure 17-2: Plant Design ............................................................................................................. 17-12

Figure 17-3: Simplified Process Flowsheet .................................................................................. 17-13

List of Appendices

Appendix A

Certificates of Author

Mineração e Metálicos S.A. I Corumbá Project Technical Report


Summary (Item 3)

SRK Consulting (US), Inc., (SRK) was commissioned by MMX Mineração e Metálicos S.A. (MMX) to prepare a Canadian Securities Administrators (CSA) National Instrument 43-101 (NI 43-101) Technical Report for the Corumbá Iron Project (Corumbá Project) located in Mato Grosso do Sul State, Brazil. The subject of this report is Mine 63, an operating mine producing Lump and Sinter Feed, and an exploration property, Urucum NE. The project is owned and operated by MMX Corumbá Mineração Ltda (MMX Corumbá), a subsidiary of MMX.

Property Description and Accessibility

The Corumbá Project is located near the city of Corumbá in the state of Mato Grosso do Sul, close to the border of Brazil and Bolivia, at coordinates 19º 11’ 41”S and 57º 36’ 50”W.

The Corumbá Project consists of Mine 63, an operating mine, and the Urucum NE and Rabicho exploration areas. Mine 63 is located approximately 19.5km from the city of Corumbá, the capital of Mato Grosso do Sul, Brazil; access is by paved highway BR-262 for 16km and then by unpaved roads to the property. Urucum NE is located at about 5 km eastern of Mine 63. Access is by paved highway BR-262 for 10 km from the city of Corumbá and then by unpaved road for 10 km

Project History and Ownership

MMX Corumbá controls 20 mineral rights in the Corumbá Project area, including two mining concessions covering the mine area, 16 exploration permits, and two requests for surveys. The mining concessions and permits cover a total area of 9495.98ha. The mineral resources and ore reserves reported in this report are completely contained within the mining and exploration concessions. MMX Corumbá controls the surface rights at the mine through lease agreements with the property owners and has permission from the landowners to conduct exploration on the Urucum NE resource area.

Sociedade Brasileira de Imoveis (SBI) started mining in the area in 1958, with the extraction of colluvial iron ore, and production of pig iron at its plant near the SBI port. When the price of pig iron dropped in 1973, SBI constructed a beneficiation plant for iron and manganese ore, which operated between 1974 and 1986. Between 1986 and 2000, activity was limited to underground mining for manganese ore. After 2000, production was restricted to mining and beneficiation of iron ore. MMX Corumbá acquired the mining concessions and the beneficiation plant in 2005 and started mining and processing operations in January 2006. Exploration at Urucum NE started in 2007.


The Corumbá Project lies within the Urucum iron-manganese district which is located along the Brazilian-Bolivian border and extends into the eastern areas of both Paraguay and Bolivia, and includes an area of 200km2. The Urucum deposits are associated with banded iron formations (BIF), locally known as jaspelites, that are found in the Banda Alta Formation. The regional geology consists of Proterozoic-age igneous and metamorphic rocks, granite intrusions, and acid intrusives. The rocks are in faulted and unconformable contact and are overlain by Quaternary sedimentary deposits which account for approximately 60% of the cover in the area.

The mineralization at Mine 63 is hosted in deposits of colluvium and eluvium, and the mineralization at Urucum NE is hosted by colluvium. The Eluvium is located on the flank of

Mineração e Metálicos S.A. II Corumbá Project Technical Report


Urucum Mountain and was formed by in situ silica leaching and the subsequent enrichment of iron in the jaspelite of the Banda Alta Formation. The Colluvium consists of a detrital deposit that forms an elongate fan at the base of Urucum Mountain. The iron grade in the colluvium is higher near the source rock and decreases with distance from the source.

Exploration

MMX Corumbá conducted the first exploration at Mine 63 in November 2005. Although mining occurred on the property prior to the acquisition by MMX, no exploration had been done. MMX’s exploration program consisted of hand digging exploration pits, referred to as shafts, channel sampling, and diamond core drilling. Assaying was initially done by Laboratório de Caracterização Tecnológica (LCT) in Sao Paulo and later by SGS Geosol Laboratorios Limitada (SGS) in Belo Horizonte. The pulps initially analyzed at LCT were subsequently sent to SGS/Geosol for check analysis. Laboratory QA/QC consisted of sending pulps to Ultra Trace Analytical Laboratories Pty Ltd (UT) in Australia for analysis. There was generally good correspondence between SGS and UT, and the SGS results were deemed acceptable for resource estimation purposes.

Exploration at Urucum NE started in 2007, with a program of shaft excavation. The samples were prepared at the Mine 63 laboratory and were analyzed at SGS in Belo Horizonte. Laboratory QA/QC consisted of inserting standards samples and duplicates into the sample stream, and a check assay program with ALS Chemex Laboratory in Australia. Analysis of the QA/QC by Agoratek International indicated that there may be a low bias in Al2O3 and a high bias in P by SGS. The bias is being further investigated by Agoratek, and the database is considered acceptable for resource and reserve estimation.

Resources and Reserves

The resources were estimated by Prominas, a geologic and engineering consulting company in Belo Horizonte, Brazil. The Mine 63 area was divided into two separate models: the Eluvium area and Colluvium area. The Eluvium area has two rock types: eluvium and a smaller component of colluvium. The Colluvium area also has two rock types: colluvium and a smaller component of cemented breccia. Three dimensional solids were constructed for the two areas based on drillhole cross-sections.

The drillhole assays were composited into 5m lengths from the top of the hole, with breaks at the lithologic contacts; intervals of 2m or less were included with the preceding composite if the lithologies were the same, resulting in a minimum length of 3m and a maximum of 7m. Shaft and channel samples with lengths greater than 6m or which were located within 10m of a drillhole were excluded from the compositing routine. Internal waste intervals which were not assayed were assigned a value of zero prior to compositing.

Variography studies were done for each rock type in the Colluvium and Eluvium areas. Separate block models were created for the Colluvium and Eluvium areas with block sizes of 50 x 50 x 5m and 25 x 25 x 5m respectively. The 3D geologic models were used to assign a rock code and percentage to the blocks. Variography studies were done for each rock type in each area. Grade was estimated with ordinary kriging. Classification into Measured, Indicated, and Inferred Resources was based on kriging variance and regression slope. The total mineral resources, including ore reserves, of Mine 63 are tabulated in Table 1.

Mineração e Metálicos S.A. III Corumbá Project Technical Report


Table 1: Mineral Resources – Mine 63- Corumbá Project*

Classification Mt Fe (% ) SiO2 (% ) Al2O3 (% ) P (% ) Mn (% )

O2

(% ) LOI (% )

Measured 5.2 60.92 8.27 2.62 0.08 0.03 0.14 1.75

Indicated 40.4 51.90 16.81 2.67 0.06 0.53 0.14 1.51

Stockpiles 0.1 60.40 9.28 2.53 0.08 0.05 0.14 1.69

Total Indicated 40.5 51.92 16.79 2.67 0.06 0.53 0.14 1.51

Measured and Indicated 45.6 53.06 15.85 2.67 0.06 0.47 0.14 1.54Inferred 14.0 53.26 16.08 2.83 0.06 0.55 0.15 1.67

* Tonnes are reported on a wet basis Fe Cut-off grade is 30%

At Urucum NE, there is a single geologic domain, the Colluvium. The deposit was modeled as a gridded seam model (GSM), where the x and y dimensions of the block are fixed and the z dimension is variable. The assays were composited into a single composite for each shaft, resulting in an average length of 4.4m, with a minimum of 2m and a maximum of 5m. The 3D geologic solid was used to assign a rock code and percentage to the blocks. Variography was conducted in all horizontal directions and no preferred orientation was found was selected as best representing the mineralization. Grade estimation was by ordinary kriging in a three-pass procedure where each succeeding pass used a longer search range. The blocks were were assigned a resource classification according to the pass in which they were estimated. The resources at Urucum NE are given in Table 2.

Table 2: Mineral Resources – Urucum NE- Corumbá Project*

Classification Tonnage (M t)* Fe(%) SiO2 (%) Al2O3 (%) P(%) Mn(%) TiO2 (%) LOI (%)

Measured 3.17 55.23 15.2 3.09 0.056 0.12 0.18 1.72

Indicated 34.00 53.03 18.14 2.97 0.055 0.34 0.18 1.8Measured and Indicated 37.17 53.22 17.89 2.98 0.055 0.32 0.18 1.79

Inferred 32.84 50.95 19.53 3.78 0.054 0.44 0.2 2.19

*Tonnes are reported on a wet basis Fe cut-off grade (CoG) is 20%

Ore Reserves – Mine 63

In December 2006, a Lerchs Grossman pit optimization routine was run on the Mine 63 mineral resources in December 2006 using the following parameters:

• Mass recovery: 66%;

• Average product value: US$32/t;

• Mine cost RoM: US$1.38/t; Mine cost waste: US$1.00/t;

• Plant cost: US$3.39/t product;

• Transportation cost: US$3.12/t product;

Mineração e Metálicos S.A. IV Corumbá Project Technical Report


• GandA: US$0.68/t product;

• Density: Colluvium 3.16g/cm3; Eluvium 3.60g/cm3; and

• Pit slope: 47o Colluvium; 48o Eluvium.

The reserves reported below were depleted for mine production through September 2007. The total reserves for Mine 63 are listed in Table 2.

Table 3: Ore Reserves - Mine 63 Corumbá Project*

Classification Kt Fe (%) SiO2 (%) Al2O3 (%) P (%) Mn (%) TiO2 (%) LOI (%)

Proven 4.3 61.03 8.26 2.55 0.08 0.03 0.14 1.67Probable 25.0 54.74 14.96 2.51 0.06 0.43 0.14 1.45 Stockpile 0.1 60.40 9.28 2.53 0.08 0.05 0.14 1.69

Total Probable 25.1 54.76 14.94 2.51 0.06 0.43 0.14 1.45

Total Proven and Probable 29.4 55.68 13.96 2.51 0.06 0.37 0.14 1.48

* Tonnes are reported on a wet basis. Fe (CoG) for Eluvium is 48.0% and Fe (CoG) for Colluvium is 56.1%. Average Fe price used in reserve isUS$32.02.

Metallurgy and Process

Metallurgical testing at Mine 63 consisted of:

• A study of the correlation between run-of-mine (RoM) and Lump to establish the cut-off grade; and

• A study of the mass recovery to define the product yield of Lump and Sinter Feed.

The results of the tests indicate that at Mine 63 the average grade of the RoM must be 54.8% Fe. The mass recovery percentages for Lump and Sinter Feed are 55% and 11%, respectively.

Environmental

The environmental program at Mine 63 includes reclamation concurrent with mining and at the end of the mine life. The reclamation plan consists of recontouring and revegetation of the tailings facility, the mine and plant areas and the waste dumps. The reclamation will be monitored following closure of the mine for a period of five years.

Economic Analysis – Mine 63

The LoM plan and economics are based on the following:

• Reserves of 29.4Mt at an average grade of 55.7% Fe;

• A mine life of 8 years, at a designed production rate of 4,101ktpy;

• An overall average process recovery rate of 55% for Lump product and 11% for Sinter product over the LoM;

o Mining costs per tonne of product are based on contract mining and are US$3.46 for 2008 and US$3.30 for the remaining LoM, and

o Process costs per tonne of product are US$3.79 for 2008 and US$2.98 for the remaining LoM.

Mineração e Metálicos S.A. V Corumbá Project Technical Report


• G&A costs are as shown;

o Sundry costs - mine planning, quality control, administration - US$1.90/t-product for 2008 and US$1.58/t-product for the remaining LoM,

o Product transport – mine to port - US$1.99/t-product for 2008 and US$1.69/t-product for the remaining LoM,

o Port terminal cost are included in the sales expenses, and

o Corporate costs – miscellaneous - US$2.22/t-product for 2008 and US$1.78/t-product for the remaining LoM.

• A cash operating cost of US$8.55/t-ore (US$12.97/t-product combined);

• Total capital expenditures of US$32.8M have been incurred in 2005, 2006, and 2007. These capital costs are amortized/depreciated in accordance with a straight-line depreciation method supplied by MMX. However, the capital costs are not included in the financial model; and

• Total sustaining capital costs of US$26.8M LoM are included. MMX included mine closure costs in the sustaining capital. There is no allowance for salvage value.

The base case economic analysis results, shown in Table 4, indicate an after-tax net present value of US$76M at a 10% discount rate.

Mineração e Metálicos S.A. VI Corumbá Project Technical Report


Table 4: LoM Economic Results (US$000s)

Description LoM Value

Ore

Ore RoM (Mt) 29.4 Grade Iron 55.7%Lump Ore

Process Recovery 55%Sinter Ore

Process Recovery 11%Gross Revenue

Lump Product $430,108 Sinter Product $77,272

Gross Revenue $507,380

Royalty (Taxes)

Royalties ($22,662)Gross Income from Mining $484.718

US$/-ore t $16.51 US$/t-product $25.03

Gross Income from Mining $484,718

Operating Costs

Mining ($64,259) Process ($86,798) GandA (100,097)

Operating Costs ($251,154)

US$/t-ore $8.55 US$/t-product $12.97

Operating Margin $233,564

US$/t-ore $7.95

US$/t-product $1206

Income Tax

Income Tax ($71,847)Total Tax ($71,847)

US$/t-ore $2.45 US$/t-product $3.71

NIAT $161,717

US$/t-ore $5.51

US$/t-product $8.35

Capital Costs

Sustaining $34,866 Equipment – sunk capital – operating mine $0 Mine Closure/Reclamation – incl in sustaining $0

Total Capital ($34,866)

Cash Flow $126,738

NPV10% $76,069

Mineração e Metálicos S.A. VII Corumbá Project Technical Report


Conclusions

The Corumbá Project consists of an operating mine that has been in production since July 2006, Mine 63, and an exploration property, Urucum NE. The mineral resources and ore reserves have been estimated by Prominas under the direction of MMX. The project is well documented with original sources of drill logs, assays, and various reports, as well as an electronic database.

SRK has reviewed and validated the sample database, topography, geologic interpretation, and the resource estimation parameters. The resource block model has been verified through visual examination and by construction of swath plots through the deposit. The resource estimate follows industry standards and the resource classification is in accordance with CIM guidelines.

The metallurgical testwork has been reviewed by SRK and found to be valid.

MMX has the necessary mining and environmental permits and surface agreements to operate Mine 63 at the Corumbá Project and to conduct exploration at the resource area of Urucum NE.

The Corumbá Project team draws on its experience in the design and operation of Mine 63. The LoM is relatively short, the initial capital has been spent, and as such, the project is straightforward and does not require the extensive sensitivity analysis which is typical with long life projects. It is very likely this ore body will be extracted in the manner and time frame proposed by the operators.

The project economics indicate that:

• The Corumbá Project exhibits robust economics with a NPV10% of US$76M; and

• SRK considers the Corumbá Project to be a relatively low-risk project given its relatively short mine life, good mining conditions,and conventional mining and processing methods.

Recommendations

The resource database could be improved by the following procedures in future programs:

• Sample intervals should be no longer than the bench height at the mine. This procedure would eliminate the problem of sample support where intervals longer than 6m were excluded from the compositing routine; and

• Intervals of internal waste should be analyzed with the same procedures as the surrounding samples. This would eliminate the doubts about the grade and the subsequent assignment of zero gradeto these intervals. MMX has instituted this practice with the 2007 exploration programs.

The resource estimate procedure at Mine 63 should be re-examined following future drilling and sampling programs to see if it could be simplified. The current estimation procedure is technically correct, but may be more complex than required for this deposit.

As mining progresses, a program of mined to model reconciliation should be instituted. This is a standard practice in mine operations and aids in evaluation and refining of the resource model.

The laboratory quality assurance/quality control (QA/QC) at Urucum NE indicates that there may be a bias in analyses of Al2O3 and P by SGS. SRK recommends this bias be further investigated.

Mineração e Metálicos S.A. 1-1 Corumbá Project Technical Report


1 Introduction and Terms of Reference (Item 4) SRK Consulting (US), Inc., (SRK) was commissioned by MMX Mineração e Metálicos S.A. (MMX) to prepare a Technical Report for Mine 63 and Urucum NE of the Corumbá Iron Project (Corumbá Project) located in Mato Grosso do Sul State, Brazil to meet the requirements of Canadian National Instrument 43-101 (NI 43-101). Mine 63 is a producing iron ore mine and Urucum NE is an exploration property, both owned and operated by MMX Corumbá Mineração Ltda (MMX Corumbá) which is 70% owned by MMX and 30% by Centennium Asset Mining Fund LLC. Certain definitions used in this executive summary are defined in the body of this technical report.

This report reflects the most recent mineral resource and ore reserve estimation based on data produced through September 30, 2007.


This Technical Report is intended to be used by MMX to further the development of the Property by providing an audit of the mineral resource and ore reserve estimates, classification of resources and reserves in accordance with the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) classification system, and evaluation of the project.

MMX may also use the Technical Report for any lawful purpose to which it is suited. This Technical Report has been prepared in general accordance with the guidelines provided in NI 43-101 Standards of Disclosure for Mineral Projects.

1.2 Sources of Information

The underlying technical information upon which this Technical Report is based represents a compilation of work performed by MMX and several independent consulting firms. The studies and additional references for this Technical Report are listed in Section 20. SRK has reviewed the project data and incorporated the results thereof, with appropriate comments and adjustments as needed, in the preparation of the Technical Report.

1.3 Effective Date

The effective date of the resources and reserves stated in this report is September 30, 2007. The report date is March 10, 2008.


SRK’s opinion contained herein is based on information provided to SRK by MMX throughout the course of SRK’s investigations. The sources of information include data and reports supplied by MMX and MMX Corumbá personnel as well as documents cited in Section 20.

1.5 Material Litigation

SRK has been advised by MMX that there is no litigation concerning the Corumbá property.

1.6 Qualifications of Consultant (SRK)

The SRK Group comprises of 750 staff, offering expertise in a wide range of resource engineering disciplines. The SRK Group’s independence is ensured by the fact that it holds no equity in any project and that its ownership rests solely with its staff. This permits SRK to



provide its clients with conflict-free and objective recommendations on crucial judgment issues. SRK has a demonstrated record of accomplishment in undertaking independent assessments of mineral resources and mineral reserves, project evaluations and audits, technical reports and independent feasibility evaluations to bankable standards on behalf of exploration and mining companies and financial institutions worldwide. The SRK Group has also worked with a large number of major international mining companies and their projects, providing mining industry consultancy service inputs.

This report has been prepared based on a technical and economic review by a team of consultants sourced principally from the SRK Group’s Denver US office. These consultants are specialists in the fields of geology exploration, mineral resource and mineral reserve estimation and classification, open pit mining, mineral processing and mineral economics.


The individuals who have provided input to this technical report, who are listed below, have extensive experience in the mining industry and are members in good standing of appropriate professional institutions. The key project personnel contributing to this report are listed in Table 1.6.1.

Dr. Neal Rigby, Leah Mach, and Sten Johansson are the Qualified Persons (QP) for this report. Leah Mach visited the site between September 25 and 27, 2007. During the site visit, Ms Mach inspected the exploration shafts and drill core, laboratory, visited the processing plant, reviewed the general infrastructure of the mine, and toured the mine site. Ms Mach is responsible for the overall preparation of the report and specifically for Sections 1 through 13, 15.1 through 15.2, 16 and 18 through 22 of this Technical Report. Dr. Rigby visited the Corumbá Project property on January 6, 2006. Dr. Rigby inspected the exploration shafts, inspected the drill core, reviewed the general infrastructure of the mine, and toured the mine site. Dr. Rigby is the Qualified Person responsible for the review of the report and specifically for Sections 15.3 and 17. Sten Johansson, a qualified person for the report, also visited the site on September 25 through 27 and is responsible for Section 14. George Borinski visited the site on September 25 through 27, 2007.

Certificate of Authors are provided in Appendix A.


Name Discipline

Leah Mach Resource Estimation, Project Manager, QP Antonio Carlos Girodo Resource Estimation and Reserve Conversion Michael Elder Mining and Infrastructure S E E Johansson Processing, QP George Borinski Environmental and Permitting Dr. Antonio Peralta Project Economics and Valuation Dr. Neal Rigby Project Review, Mining, QP




The Corumbá Project is located near the city of Corumbá in the state of Mato Grosso do Sul, Brazil near the border with Bolivia, at coordinates 19º 11’ 41”S and 57º 36’ 50”W, shown in Figure 2-1. The project consists of several prospects and one operating mine. The operating mine, Mine 63, and the Urucum NE Project are the subjects of this Technical Report. Figure 2-2 shows the mining concessions and Figure 2-3 shows surface property ownership.

2.2 Mineral Titles

2.2.1 Brazilian Mining Legislation

According to Brazil’s Constitution, the survey, exploration and exploitation of mineral resources shall occur under federal authorization or concession and only Brazilian citizens or companies organized under Brazilian laws with headquarters located in the country may be entitled to practice such activities and, therefore, to obtain mining rights.

In addition, mining rights in Brazil are governed by the Mining Code and further rules enacted by Brazil’s National Department of Mineral Production (DNPM), which is the governmental agency which controls mining activities throughout the country.

2.2.2 Authorization for Exploration

As stipulated in Article 14 of the Mining Code and Article 18 of the Decree, mineral exploration comprises the work necessary to measure and evaluate a resource and its technical and economic feasibility. The cited legislation also determines that the exploration may be carried out by means of on-site and laboratory studies, geological and geophysical studies, and any other type of geological exploration work.

DNPM’s Local Officer grants the authorization to an interested party by means of an exploration permit, the “Alvará de Pesquisa”. In order to obtain the Exploration Permit, the titleholder files an application with the DNPM. After analysis of the application, DNPM may issue an Exploration Permit valid for a period of one to three years. This period may be extended, subject to analysis of the exploration by the DNPM. The holder of the Exploration Permit (i) may assign or transfer it, provided that the assignee fulfills the legal conditions to hold the title; (ii) may, at any time, waive the Exploration Permit; (iii) shall be exclusively responsible for damages caused to third parties as a result of the performance of the exploration; and (iv) that the holder shall submit to DNPM a detailed report on the exploration activities prior to the final term of the Exploration Permit.

After DNPM reviews the detailed technical report on the exploration activities, the agency decides whether the development is technically and economically feasible. DNPM may withhold approval of the exploration process in cases where the work is insufficient or in the case of technical deficiencies in the report.

If the exploitation is considered technically and economically feasible, DNPM will approve the project. The holder of the Exploration Permit will then have one year to apply for the mining exploitation permit or negotiate the mining right with third parties. DNPM will only provide one extension to this time period. The extension must be obtained prior to the expiration of the first one-year term, and there is only one allowed extension for one additional year.



2.2.3 Concession for Mining Exploitation

After DNPM’s approval of the exploration report, the interested party may apply for the concession of the mining exploitation, which is granted by Brazil’s Ministry of Mines and Energy by means of a specific permit titled “Concessão de Lavra”. Prior to granting the Exploitation Permit, DNPM shall verify that all legal requirements are fulfilled, including the prior exploration and the approval of the technical report by DNPM.

Under the Exploitation Permit, the holder of the mining rights shall be entitled to: (i) exploit the mine until it is completely exhausted; (ii) assign or transfer the title, provided that the assignee fulfills the legal conditions to hold the title; and (iii) waive the Exploitation Permit, subject to authorization by DNPM.

The holder of the exploitation permit has the responsibility to (i) exploit the mine according to a mining plan previously approved by DNPM; (ii) not interrupt the mining operation for a period of more than six consecutive months after the beginning of the operation; (iii) extract only minerals expressly mentioned in the Exploitation Permit; (iv) respect the applicable Environmental Law; (v) pay a financial compensation for the exploitation, the Financial Compensation for the Exploitation of Mineral Resources (CFEM).

2.2.4 MMX’s Mineral Claims in Corumbá

MMX controls twenty mineral rights in the Corumbá Project area listed in Table 2.2.4.1 below. The total area covered by the mineral rights is 9495.98ha.



Table 2.2.4.1: Mineral Rights – Corumbá Project, Mine 63 and Surroundings

DNPM

Process Target Municipality

Granting or

Application

Date Former / Actual

Owner

Area

(ha) Substance

Current

Situation

807.200/71 Urucum NE Ladário 26/03/1975 Luiz Arthur 995..62 Fe Mining Request

823.955/71 Urucum NE Ladário 26/12/1975 Mário Sérgio 370.04 Fe, Mn Exploration Permit

868.253/05 Urucum NE Ladário 13/09/2006 MMX Corumbá 635.24 Fe Exploration Permit

868.045/05 Urucum NE Ladário 08/09/2005 Eike Batista / MMX Corumbá 406.69 Fe

Exploration Permit

003.275/65 Rabicho Ladário / Corumbá 28/02/1979 Gabrielle Haralyi 499.80 Fe

Mining Request

003.276/65 Rabicho Corumbá 03/02/1975 Gabrielle Haralyi 500.10 Fe Mining Request

003.277/65 Rabicho Corumbá 29/09/1976 Gabrielle Haralyi 392.10 Fe Mining Request

806.106/68 Rabicho Ladário 31/08/1970 Mineração Dobrados 491.00 Fe

Mining Request


Mining Request


Mining Request

824.873/71 Rabicho Corumbá 18/07/1973 Mineração Dobrados 999.45 Fe

Mining Request

868.252/05 Rabicho Ladário 13/09/2006 MMX Corumbá 867.44 Fe Exploration Permit

004.019/48 Mine 63 Corumbá/MS 6/02/84 SBI/ EBX Corumbaense (1) 349.33 Mn Mining Permit

004.084/58 Mine 63 Corumbá/MS 21/05/81 SBI/ EBX Corumbaense 375.74 Fe Mining Permit

868.046/05 Mine 63 Surroundings Corumbá/MS 08/09/05

EFB / MMX (1)

Corumbá 930.20 Fe Exploration Permit


Albertina / EBX Corumbaense 58.98 Fe

Exploration Permit


EFB / MMX Corumbá 25.46 Fe

Exploration Permit


EFB / MMX Corumbá 116.34 Fe

Exploration Permit


EFB / MMX Corumbá 700.95 Fe Survey Request

868.251/05 Mine 63 Surroundings Ladário/MS 31/10/05 EBX Corumbaense 2.02 Fe Survey Request

(1) CFEM – Financial Compensation for the Exploitation of Mineral Resources

Mine 63 and Surrounding Area

The reserves described in this report are restricted to the area covered by mining permits 004.019/48 and 004.084/58. Mining permit 004.019/48 was originally related to manganese ore. Subsequently, this was communicated to DNPM, as the first step to the new substance amendment. The feasibility report for iron ore was provided to DNPM using appropriate reporting procedures and forms, on March 22, 2006, together with the request for amendment of the title to also include iron.

The registered owner of mining permits 004.019/48 and 004.084/58 is Sociedade Brasileira de Imoveis (SBI). MMX Corumbá is the present owner of 004.084/58 through a purchase agreement and is awaiting the change of ownership in the DNPM. MMX Corumbá controls 004.019/48 through a lease agreement with SBI.



There are an additional six exploration licenses in the Mine 63 area. The applications for permits 868.046/05, 868.090/05, 868.126/05 and 868.138/05 were originally made by Eike Batista, the principal shareholder of MMX, and the respective assignment of the right to MMX was requested from DNPM on June 23, 2006.

Permit 868.083/05 was originally owned by Albertina Maria Brazoli; the permit was purchased from Brazoli and the assignment of the right to MMX was requested from DNPM on November 22, 2006.

Urucum NE and Rabicho

There are four mineral permits in the Urucum NE area including three exploration permits and one application for mining. In the Rabicho area there are eight mineral permits including one exploration permit and seven applications for mining. All these permits, except two in the Urucum NE area which are held by MMX Corumbá, are controlled by the Haralyi family as individuals or through Mineração Dobrados. The permits held by individuals of the Haralyi family are in the process of being transferred to Mineração Dobrados.

MMX Corumbá executed a contract in July 2006 with the Haralyi family in which it was agreed that MMX Corumbá would purchase all shares in Mineração Dobrados for US$14M once all the permits were transferred to Mineração Dobrados. MMX Corumbá has paid US$1M as a down payment and will pay the remainder immediately upon transferal of all permits to Mineração Dobrados. MMX expects that the transfer will be complete in the first half of 2008.

2.2.5 Maintenance of Mineral Claims

In order to maintain the exploration permits in good standing, the holder must:

• Pay an Annual Tax per Hectare (TAH) to the DNPM until the end of exploration. The TAH is charged in the amount of (i) R$1.55/ha during the original term of the permit and (ii) R$2.34/ha during the extensions of the term. Note that costs per hectare are in Brazilian Reais;

• Pay expenses incurred by DNPM during inspections of the exploration area; and

• Submit an exploration work report before the expiration date of the term.

In order to maintain the exploitation permits (mining concessions) in good standing, the holder must:

• Pay the CFEM tax mentioned in Section 2.2.3 of this report;

• Pay the surface owner a compensation of 50% of the CFEM tax; and

• Present an annual report by March 15th of each year, describing all aspects of the mineral exploitation.


SRK reviewed correspondence, pertinent maps and agreements to assess the validity of land tenure and ownership of the mining rights for the properties held by MMX. Mine 63 is located within the area covered by the mining permits 004.019/48 and 004.084/58 (shown in Figure 2-2). The Urucum NE resource is contained within exploration permits 807.200/71 and 823.955/71.



2.4 Legal Surveys

The mineral concessions in Brazil are paper filings and do not require the actual location of monuments on the ground. The filing includes descriptions of the corners of the concessions in Geographical Coordinate System with the South American Provisional 1956 datum (DATUM SAD_69).

The northern and eastern boundaries of the mineral concessions of Mine 63 are contiguous with Companhía Vale do Rio Doce’s (Vale) boundaries and those corners are marked with concrete monuments. The monuments were established by Vale and have been confirmed by MMX.

2.5 Royalty Agreements and Encumbrances

There are no royalties as such on the Corumbá property. There is a tax, the Compensation for the Exploitation of Mineral Resources (CFEM), levied on the sale of raw or improved minerals. This tax is based on the type of commodity. The holder of the permit also is required to financially compensate the holder of the surface rights by an amount equal to 50% of the CFEM tax.

2.6 Environmental Liabilities

MMX has informed SRK that there are no known environmental liabilities in relation to the mineral rights and its previous owners.

2.7 Permits and Licenses

MMX Corumbá has been granted the following licenses and permits to conduct exploration and operate Mine 63:

• Permit for disturbance of vegetation, ASV 073/2005, issued on October 26, 2005 by the Brazilian Institute for the Environment (IBAMA), for the installation of the mine infrastructure and for the development of mining operations covering 19.3ha;

• Permit for disturbance of vegetation, ASV 089/2006, issued on July 11, 2006 by IBAMA, for the execution of geological surveys covering 8.11ha;

• Operating License LO 002/1991 (Amended), issued on October 26, 2005 by IBAMA, authorizing 3.3Mtpy;

• Renewal of Operating License LO 002/1991 (Amended), issued on November 01, 2007 by IBAMA, authorizing 3.3Mtpy until November 1, 2011;

• Operating License LO 387/2006, issued on September 28, 2006 by Special Environment Secretariat/Mato Grosso do Sul (SEMA/MS) for the use of groundwater in the mine operations;

• Permit for vegetal suppression ASV 194/2007, issued on November 1, 2007 by IBAMA, for the construction of tailing dam, stockpile and opening new mining areas; and

• Statement of the State Environmental Agency authorizing exploration at Urucum NE area.

MMX has informed SRK that no other permits are required to conduct exploration or operate Mine 63 or conduct exploration at Urucum NE.



2.8 Surface Access

MMX Corumbá does not own the surface rights in the area of Mine 63, but has lease agreements with the owners. Part of the area is on SBI land and part is on the Fazenda São Francisco do Urucum. The lease agreement with the owner of the farm includes access to the plant area, and permission to use an area of 6ha for the tailings facility and to collect borrow material for the tailings dam from a 4ha area. MMX has exploration agreements with the surface owners at Urucum NE to open access roads, dig exploration shafts and collect samples.

The area of the mining concessions and the surface agreements are shown in Figure 2-3.

SRK Job No.: 162703.03

File Name: Figure 2-1.doc Date: 02-27-08 Approved: LM Figure: 2-1

Corumbá Project, Brazil


Figure 2-1

Location Map of the Corumbá Project

SRK Job No.: 162703.03




Figure 2-2

Mineral Rights Map - MMX Corumbá Project

SRK Job No.: 162703.03




Figure 2-3

Surface Owners of Urucum NE and Mine 63 Areas




3.1 Access

The Corumbá Project is located approximately 19.5km by road from the city of Corumbá, Mato Grosso do Sul, Brazil. Access is by paved highway BR-262 for 16km and then by unpaved roads owned by Vale (Figure 3-1). Urucum Ne is located about 5km east of Mine 63. Access is by paved highway BR-262 for 10km from the city of Corumbá and by unpaved road for an additional 10km.

3.2 Climate

The climate in the project area is determined by factors related to geography and elevation, which ranges from less than 100m in the lowland depression near the city of Corumbá in Brazil and Puerto Suarez/Puerto Quijarro in Bolivia, to more than a 1,000m in the iron-rich mountains close to the Bolivian border.

The climate is tropical with marked rainy and dry seasons. The weather is controlled by the Amazon Basin to the north, the Brazilian plateau to the east, and the Andes Mountains to the west. The dry period lasts for four to five months, from approximately May to September. The rainy season occurs from December to February. Annual average rainfall is 1,500mm at the higher elevations and 1,000mm in the lowlands.

Average temperatures range from 23° to 25°C with lower temperatures in the plateaus and higher temperatures in the Mato Grosso do Sul and Bolivian lowlands. The maximum temperature can exceed 40°C in the lowlands. Rarely, minimum temperatures may reach 0°C, mainly in the Bolivian Chaco region.

3.3 Physiography

Three geomorphologic units are present in the study area: the Mato Grosso Plains and Mato Grosso Lowlands, the Paraguay River Depression, and the Urucum-Amolar Residual Plateaus. The elevation above mean sea level ranges from approximately 60 to 80m in the Paraguay River Depression to over 1,000m in the Residual Plateaus, which include Morraria do Urucum and Serra do Rabicho. Elevations in the study area range from 500 to 1,000m.

3.4 Vegetation

The Mato Grosso lowlands (Pantanal) are part of the upper Paraguay basin and are the largest continuous flooded plains in South America. The vegetation found in the Pantanal is a mosaic of habitats with differing flora defined by the large ecosystems of this area. The northern boundary is dominated by vegetation of the Amazon Basin, while to the east is cerrado (savannah) type vegetation related to the Central Plateau. To the south lies the southern rainforests, and to the west the lowland deciduous forests of the Chaco found in Bolivia and Paraguay.

Mine 63 and Urucum NE lie in an area originally covered by cerrado type vegetation and deciduous forests. The Brazilian cerrado biome is typically comprised of grasses, shrubs and small trees. In the upper parts of the iron-rich mountain ranges close to the city of Corumbá, the soil supporting this vegetation tends to be acidic.



The deciduous and semi-deciduous forests in the project area are restricted to the remains of gallery forests and pockets of forests found in environmental conservation areas and on the slopes of the mountain ranges. The forests have a distinct biotic characteristic, growing with a deficit of water in the dry season and an excess of water in the wet season.


The city of Corumbá has excellent transportation and infrastructure, and can be accessed by road, air or river (Figure 3-1). By road, Corumbá is accessed from the capital of the state, Campo Grande, via paved Federal Highway BR-262. The area is also accessed by the Northwest Brazil Railway (Estrada de Ferro Noroeste do Brasil), which connects Corumbá and Campo Grande to São Paulo and the Port of Santos. The Paraguay River allows transportation by barge to ports in Bolivia, Paraguay, Uruguay and Argentina, providing excellent logistic options for the shipment of goods and products. Corumbá has a population sufficient to provide the work force for the mine.

3.5.1 Water Supply and Water Management

The water for the project comes from wells inside the project area. One well has been drilled and more will be drilled if required.

The following three types of water will be used for the project:

• Untreated water – water pumped directly from the wells into the water storage tank;

• Drinking water – water from the wells that has been treated in the project treatment plant; and

• Process water – water recovered from the sedimentation ponds and pumped to the process water recovery tank.

The water from the wells will be used for the following: drinking water, service water, process make-up water, and firefighting water.

Water distribution from the water storage tank is by gravity or pumping, according to its use, in individual lines for each circuit.

After passing through the treatment plant, the treated water is stored in a nearby dedicated tank. From here, the treated water is pumped to consumption points. Treatment consists of filtration, flocculation and chlorination.

Process water is recovered from the sedimentation ponds, and used as re-pulping water in the trommels, as washing water in the screens and for the maintenance of the required levels in pump boxes. Occasionally it is used to control dust in industrial areas.

3.5.2 Electrical Power Supply

Empresa Energética do Mato Grosso do Sul SA (ENERSUL) supplies electricity to the project area by a 34.5kV transmission line. There is a 2km conventional line from the distribution point close to BR-262 to the project’s sub-station. The first step-down to 13.8kV is performed at the sub-station before distribution to the load points. The main load is the processing plant sub-station where tension is further reduced to 440, 220, and 120V, to supply electricity to the electrical motors, lighting circuits, process control equipment, auxiliary equipment and other electrical devices.



Total power required is estimated 2.3MW, as negotiated with ENERSUL.


The buildings for Mine 63 include:

• Central administrative office in the city of Corumbá;

• Maintenance shop for the plant facility;

• Kitchen and dining room for 200 employees;

• Change room;

• Laboratory;

• Warehouse; and

• Small administrative office at Mine 63.

3.5.4 Fuel Storage Area

Petrobrás provides a mobile fuel station at Mine 63 with a capacity of 15,000L. Petrobrás maintains the fuel station according to governmental requirements.

3.5.5 Sewage and Waste Disposal

Sewage is treated through:

• Septic tank; and

• Anaerobic filter.

3.5.6 Laboratory

The laboratory at Mine 63 began operations May 15, 2007. The laboratory provides sample preparation and analytical assays to support exploration and mining operations for MMX Corumbá, and quality control for the pig iron plant owned by MMX Metálicos.

The laboratory has 30 employees, 23 in sample preparation, six in the assay laboratory and one supervisor. The laboratory capacity per day is 240 sample preparations and 320 analyses. The actual production rate is about 950 samples per month with a planned increase to about 2,000 samples per month in 2008.

The laboratory procedures include:

• Sample preparation;

• Size screening;

• Iron analysis;

o Decrepitation index, and

o Tumble and abrasion index.

• Loss on ignition (LOI);

• X-ray fluorescence (XRF) analysis;

• Pig iron analysis;



o Carbon and sulfur LECO analyses.

3.5.7 Communications

The office in Corumbá has complete access to telephone and internet. The communication in the area of Mine 63 is by radio or mobile phone.

3.5.8 Security

Security is provided by a contracted company, Maxima Segurança e Vigilância Patrimonial Ltda, with headquarters in Corumbá. The main access to the mine has a gate which is manned by the security company.

SRK Job No.: 162703.03




Figure 3-1

Location Map of MMX Corumbá Project



4 History (Item 8)

The Corumbá Project area is located in the Corumbá municipality, Mato Grosso do Sul State, Brazil. The main economic activity of the region is mining of iron ore, manganese ore, limestone, and sand. The iron and manganese deposits have been known since the end of the nineteenth century. All manganese ore is extracted using underground mining methods while the iron ore is mined from open pits. The principal mining companies active in the region are MMX Corumbá, Mineração Urucum (Vale), Minerações Corumbaenses Reunidas (RTZ) and Fábrica de Cimento Itaú (Cement Factory -Votorantin Group).

Mining has gone on in the region for some time, but the first mining decree was issued in 1881, for the area of Morraria do Urucum (Urucum Hill Ridge). This area has a long mining history related to the Laiz and Ema Mines, which are located in the MMX mining concessions. In 1958, the mining company Sociedade Brasileira de Imoveis (SBI) started mining in the Laiz Mine area, with the extraction of colluvial iron ore. The RoM was dry beneficiated, producing 80,000t of Lump ore. The ore was transported by conventional trucks to a pig iron plant belonging to the same group, located near the SBI Port, on the road connecting Ladario to Corumbá.

In 1973, due to the low price of pig iron, work at the pig iron plant, the mine, and the ore beneficiation plant were suspended. After 1974, SBI constructed a processing plant to beneficiate the iron and manganese ore, in place of the old steel plant. This plant had the capacity to beneficiate 140,000tpy of iron ore and 30,000tpy of manganese ore. During this time, the Laiz and Ema Mines were opened. Both mines were designed to produce iron ore by open pit and manganese ore by underground methods. From 1974 to 1986, SBI produced 425,000t of Lump ore and 420,500t of manganese ore.

Between 1986 and 1993, the mining activities were restricted to underground manganese mining while the operations were leased to the Companhia Paulista de Ferro Ligas. From 1993 to 2000, SBI leased the underground manganese mine and open pit mine to Minefer LTDA.

After 2000, the mining activities were restricted to mining and beneficiation of iron ore at the Laiz Mine. SBI sold the iron ore as RoM to the Sidersul/Vetorial Group, who processed the ore using the Laiz Mine’s mobile plant. In August 2005, EBX Corumbaense, presently MMX Corumbá, acquired the mineral rights for these mines, as well as the existing beneficiation plant.

After refurbishing the existing mobile crushing plant (the AZTECA plant) MMX started iron ore mining and processing operations at Mine 63 in January 2006. In July 2006, MMX started operating the main plant, and the first batch of Lump ore was shipped through Ladario Port later that month.

There has been no production at Urucum NE.

Figure 4-1 shows a schematic view of the Mine 63 project area and Urucum NE.

4.1 Ownership

Mine 63

SBI is the registered owner of mining concessions 004.019/48 and 004.084/58. MMX Corumbá is the present owner of 004.084/58 through a purchase agreement and is awaiting the change of ownership in the DNPM. MMX Corumbá controls 004.019/48 through a lease agreement with SBI.



The applications for exploration permits 868.046/05, 868.090/05, 868.126/05 and 868.138/05 were originally made by Eike Batista, the principal shareholder of MMX. The assignment of the permits to MMX was requested from DNPM on June 23, 2006.

The exploration permit 868.083/05 was purchased from Albertina Maria Brazoli, and assignment of the permit to MMX was requested from DNPM on November 22, 2006.

Urucum NE

The transfer of ownership for the mining and exploration permits at Urucum NE is in progress, pending the approval of the Conselho de Defesa Nacional (National Defense Council) (CDN). The CDN is a federal bureau charged with verifying compliance with Law 6.634, which deals with the border zone and controls the procedures and requirements that are followed by businesses located in this region. Although MMX holds a previously issued permit (assentimento prévio) allowing MMX to operate in the border zone, new documents must be submitted to the CDN for each new mine acquisition. During the review process by the CDN, the mining and exploration permits in the DNPM remain in the name of former owner. Ownership will be transferred to MMX upon approval by the CDN after the completion of their review.

4.2 Project Expenditures

There are no records of investments by the former owner in this area. MMX has invested about US$28M, on mineral rights acquisition, exploration, beneficiation plant, environmental work and other studies at Mine 63. MMX has spent about US$306,000 in exploration and $1.0M in acquisition of mineral rights at Urucum NE. An additional $13M must be paid once all mineral rights are transferred.

4.3 Historic Exploration

The exploration methods of the previous owners of Mine 63 are unknown. However, it is the understanding of the MMX geologists that there was no exploration as such and that mining proceeded based on the surface expression of the iron-bearing rock.

Exploration activities in the Urucum NE area were initiated in the mid 1900’s by Nicolas Haralyi, a mining engineer, and continued by his son Nicolau, a mining engineer and geologist. Exploration by the Haralyi’s consisted of hand-excavated shafts on a 200m grid. MMX became interested in the area for the potential to produce Lump ore. In February 2007, MMX initiated an exploration campaign in this area, also digging had excavated shafts on 400m, 200m and 100m grids.

4.4 Historic Mineral Resource Estimates

There were no published mineral resource or reserve statements for Mine 63 prior to MMX’s involvement. MMX presented the first mineral resource estimates to the Bolsa de Valores de São Paulo (BOVESPA) in July 2006 during the Initial Public Offering of MMX common shares. The total geological resources of the Mine 63 were reported to be 65.0Mt of Measured and Indicated Resources and 23.7Mt of Inferred Resources at an average grade of 58% Fe. These resource numbers conform to the Brazilian Mining Code Definitions of Resources/Reserves Classification and are not compliant with NI 43-101 guidelines. MMX produced a NI 43-101 Technical Report on Resources and Reserves as of December 2006 in May 2007 in conjunction



with listing on the Toronto Stock Exchange (TSX). The resources and reserves listed in that report are contained in Tables 4.4.1 and 4.4.2 respectively.

Table 4.4.1: Mineral Resources* – Mine 63- Corumbá Project as at December 2006

Tonnes Fe SiO2 Al2O3 P Mn TiO2 LOI

Classification (Mt) (%) (%) (%) (%) (%) (%) (%)

Measured 6.5 61.1 8.08 2.59 0.08 0.04 0.14 1.70 Indicated 40.7 52.1 16.75 2.67 0.06 0.05 0.14 1.51 Measured and Indicated 47.2 53.2 15.56 2.66 0.06 0.05 0.14 1.54 Inferred 14.2 53.4 15.96 2.82 0.06 0.55 0.15 1.66 * Tonnes are reported on a wet basis Fe CoG is 30%

Table 4.4.2: Ore Reserves* – Mine 63 Corumbá Project as at December 2006

Tonnes Fe SiO2 Al2O3 P Mn LOI TiO2


Proven 5.7 61.1 8.07 2.56 0.08 0.03 1.68 0.14 Probable 25.3 54.8 14.92 2.49 0.06 0.43 1.45 0.14 Total 31.0 56.0 13.7 2.50 0.06 0.37 1.49 0.14 *Tonnes are reported on a wet basis Fe CoG Eluvium is 48.0% and in Colluvium is 56.1% Average Fe price used in reserve is US$32.02

The Haralyi family estimated resources at Urucum NE at 34.4Mt at 60% Fe and submitted those numbers to the DNPM in their Exploration Final Report. The iron content was estimated through a correlation with density data. The volume of the area was based on surface mapping and the average thickness of the mineralized intervals in the exploration shafts. The Haralyi resource is not compliant with NI 43-101 guidelines and should not be relied upon.

This report presents the mineral resources and ore reserves of Mine 63 updated by depletion through September 2007 and mineral resources at Urucum NE according to CIM standards and NI 43-101 guidelines.

SRK Job No.: 162703.03




Figure 4-1

Schematic View of Mine 63 Project

and Urucum NE Exploration Targets



5 Geological Setting (Item 9) 5.1 Regional Geology

The Corumbá Project lies within the Urucum iron-manganese district which is located along the Brazilian-Bolivian border and extends into the eastern areas of both Paraguay and Bolivia, and includes an area of 200km2. The Urucum deposits are associated with banded iron formations (BIF), locally known as jaspelites. The iron and manganese deposits are found in the plateaus which rise from the plains of the Paraguay River and near Mutum Mountain.

The iron ore deposits of Corumbá have been known since the end of the 19th century and the region has been the object of numerous publications.

The regional stratigraphy of the area is based on the 1:1,000,000 scale Geological Map of Brazil compiled in 2004 by Companhia de Pesquisa e Recursos Minerais (Brazilian Geological Survey) (CPRM). The regional geology consists of Proterozoic-age igneous and metamorphic rocks, granite intrusions, and acid intrusives. The rocks are in faulted and unconformable contact and are overlain by Quaternary sedimentary deposits which account for approximately 60% of the cover in the area. Figure 5-1 shows the stratigraphic column for the project area based on work by CPRM and the Geological Map of the Corumbá Region.

5.1.1 Lithology and Stratigraphy

Basement Rocks

The basement rocks are a part of the southern Amazon Craton and are composed of the Lower to Middle Proterozoic Rio Apa Complex of metamorphic rocks. These rocks include gneiss, granite gneiss, biotite gneiss, granite, diorite, and schist as well as quartz diorite and quartz gabbro dikes. The rocks have a complex evolutionary history including a period of ductile deformation and simultaneous recrystalization during the Transamazonic thermo-tectonic event. Toward the end of this period, the rocks underwent potassic alteration. The complex has been dated at 1.7Ga.

The regional stratigraphic sequence also includes the following, which are not observed in the Corumbá Project area:

• Pontes e Lacerda Group – metavolcanic sediments of Middle Proterozoic age;

• Santa Helena Intrusive Rocks – syenogranites and monzogranites with late aplite and pegmatite phases;

• Aguapei Group – metasedimentary rocks; and

• Cuiabá Group – metasedimentary rocks.

In the Corumbá Project area, the rio Apa Comples is overlain by the following rock groups.

Jacadigo Group

The rocks of the Jacadigo Group of Upper Proterozoic age, host the iron and manganese deposits. These rocks form plateaus rising up to 950m over the Pantanal plains, distributed in an area of 500km². On the Brazil-Bolivia border, the Mountains of Santa Cruz, São Domingos, Grande, Rabichão, Urucum, Tromba dos Macacos and Jacadigo/Mutum are composed of the Jacadigo Group. In the Yacuses area, in Bolivia, about 50km west of Mutum, small hills are



found, which are also composed of magnetic non-leached jaspelites. The presence of jaspelites in this area of Bolivia indicates that the deposition basin of the iron sequence was large and not restricted to the Corumbá region.

Dorr (1945) divided this group into three formations, from base to top: Urucum, Córrego das Pedras and Banda Alta. This division is used by the other mining companies in the area and at Mine 63 with some adaptations as described in Section 5.3 on Local Geology.

The Urucum Formation, at the base of the Group, is composed of arkose and conglomerate with limy cement and has a maximum thickness of 400m. Toward the top, the cement is predominantly iron-manganese, characterizing the transition to a more ferruginous depositional environment. The overlying Córrego das Pedras Formation is a package of ferruginous clastic rocks with iron-manganese cement, about 100m thick, composed of ferruginous arkose, quartz sandstone, and some intercalations of jaspelite. Near the top, the ferruginous arkose grades to sandstone and to ferruginous jaspelite with intercalations of manganese (criptomelane). The Banda Alta Formation is a package of ferruginous sediments with manganese intercalations at the. Locally, there are layers of jasper, some centimeters thick with irregular shapes due to fragmentation and deformation with subordinate dropstones of granite.

The Banda Alta Formation has a maximum thickness of 320m and is characterized by the alternating layers of jaspelites and clastic ferruginous sediments. The jaspelite has an average Fe content of 55% in the area of Mineração Corumbaense Reunida S/A - MCR, and is considered to be one of the highest primary contents among the deposits in the world. In the Mutum area the average content found in the jaspelites is in the order of 46% Fe.

Almeida in 1945 (cited by Del’Arco et al., 1982) proposed the division of the Jacadigo Series into two groups: the lower, Urucum, composed of arkose, conglomerate, and limy and pyritiferous siltstones; and the upper, Santa Cruz, composed of jaspelite, arkose sandstone, with manganese oxide lenses, layers of jasper and a package of alternating jasper and hematite laminae, constituting a banded iron ore formation.

The two above mentioned studies, performed by Dorr II (1945) and Almeida in 1945 (cited by Del’Arco et al., 1982), form the basis of subsequent studies. In recent studies, the Jacadigo Group has been subdivided into the Urucum Formation and Santa Cruz Formation. This nomenclature is used in more recent work, including the geological map of Brasil – CPRM (2004), which is the base for the regional geological map of the Corumbá region presented herein.

Puga Formation

The Puga Formation, which is not found in the Corumbá Project area, contains paraconglomerates and diamictites with boulders of granite, quartzite, schist, limestone and quartz with silty or sandy cement. To some authors, this formation is at the base of the Corumbá Group.

Corumbá Group

The stratigraphic relation between the Jacadigo Group and the Corumbá Group has been the subject of interest of various authors, but as of yet there is no consensus. Almeida in 1945 and in 1965 (cited by Del’Arco et al., 1982), suggested an interdigitation between the Jacadigo Group and the Corumbá Group. Other authors suggested joining the two groups into a single unit. The Corumbá Group, of Upper Proterozoic age, contains three formations: Cerradinho, Bocaina and



Tamengo Formations. The Cerradinho Formation, which does not outcrop in the Corumbá Project area., is composed of sandstones, siltstones, shales, marls, limestones, dolomites and thin chert beds, with arkose and conglomerate at the base. The Bocaina Formation contains dolomite, dolomitic limestones with oolites and stromatolitic structures, and marls. This package of carbonate rocks is up to 300m in thickness. The Tamengo Formation is characterized by dark grey limestone alternating with red and grey shales and siltstone and thin layers of micaceous and limy sandstone and oolites. This package, about 120m thick, presents parallel and cross stratification, ripple marks and intraformational breccia. Sedimentary deposits of the Quaternary cover Tamengo Formation.

The following units are part of the regional stratigraphy, but are not present in the Corumbá Project area:

• The Upper Proterozoic Alto Paraguai Group - contains marls, limestone, dolomite sandstone, shale and conglomerate;

• São Vicente Intrusive Rocks – granitic rocks that intrude the metasediments of the Cuiabá Group and are related to Vulcanicas Mimoso, a group of volcanic rocks. The rocks have been dated at 506Ma;

• Coimbra Formation – Silurian age sandstone and conglomerate with silty-ferruginous cement;

• Paleozoic sedimentary rocks related to the Paraná sedimentary basin;

• Ponta do Morro Intrusives – granite and riebeckite dated at 84Ma; and

• Tertiary sediments – lateritic deposits, with local ferruginous concretions.

Quaternary Sediments

These sediments cover most of the lowlands and plains related to the lowlands of the Paraguay River. They include the Pantanal Formation, of Pleistocene age, and the Pantanal deposits, the Xaraiés Formation and the Alluvial Deposits of Holocene age.

Pantanal Formation

The Pantanal Formation consists of colluvium, eluvium and alluvium found in the lowlands and plains. Three facies can be distinguished: the Colluvial Deposits, the Alluvial Terraces and the Alluvial Deposits.

The Colluvial Deposits consist of detrital sediments, partially laterized, of conglomerate, sand, silt and clay. The distribution of the deposits is irregular. They occur at the northwestern edge of the Paraná Basin and at the foot of the slopes of the Urucum, Santa Cruz, Grande and Rabichão Mountains.

The colluvial deposits at the foot of the slopes of the Urucum Mountains contain detrital sediments, and boulders of jaspelite and banded hematite, which originated mainly from the Santa Cruz Formation. These rudaceous fragments, together with a ferruginous cement in the clay-sandy matrix, constitute a limonitic hardpan. The silica in the fragments has been leached thereby increasing the Fe grade. These deposits host the highest-grade material in the Corumbá Project area.



The alluvium terraces are formed by semi-consolidated clay-sandy sediments, partially laterized, and with an irregular distribution around the mountains.

The alluvium deposits are formed by clay, silt and sand sediments with a continuous distribution in the flood plain areas that are a part of the hydrographic basin of the Paraguay River.

Lowland Deposits

The lowland deposits are related to the areas of seasonal floods and contain sand and clay sediments, rich in organic material.

Xaraiés Formation

The Xaraiés Formation is characterized by limestone tuff with fossil plants, travertine with gastropods, and conglomerates with limy cement. This formation occurs in the regions located between the Jacadigo Mountains and Morrinhos Stream, to the west of Lagoa Negra and to the south of Zanetti Mountains, overlaying rocks of the Corumbá and Jacadigo Group.

Alluvial Deposits

The Alluvial Deposits are formed by unconsolidated material, such as sand, gravel, silt and clay related to the deposits of the flooded plain areas belonging to the hydrographic basin of the Paraguay River.

5.2 Structural Geology

The Proterozoic units exhibit folds and faults related to the compressive and extensional events in the area. There is a direct correlation between the structures and the lithology. The rocks of the Rio Apa Complex are sheared and show cataclastic features related to different tectonic phases. Almeida in 1965, 1966 and 1967 (cited in Marini et al., 1984) and Almeida in 1968 suggested that the sediments of the Cuiabá, Jacadigo, Corumbá and Alto Paraguai Groups are related to the Paraguay-Araguaia Geosyncline and each one of these groups present distinct structural behavior. The Cuiabá Group located in the inner portion of the geosycline, represents the earliest sedimentation and is highly folded and metamorphized to greenschist facies. The other groups are younger than the Cuiabá Group and are located in the outer portion of the orogenic arch, near the Amazon craton. The Jacadigo and Corumbá Groups contain folds with axes striking NNW-SSE and normal faults.

The dominant regional structures are northeast-trending faults between the Mountains of Mutum and Jacadigo, Urucum and Tromba dos Macacos, and Urucum and Santa Cruz. One of the most important structures is the Urucum Fault System, a set of northeast striking normal faults. Figure 5-2, taken from the geological map of the RADAM Project (1982), illustrates the structural trends.

Locally, the Urucum Mountains are cut by a set of normal faults that strike northeast. The fault separating the Urucum and Santa Cruz Mountains trends N50°E with a maximum offset of 300m, with the Urucum block down-dropped relative to the Santa Cruz block. Almeida in 1945 (cited in Del’Arco et al., 1982), considered that the Urucum Fault System underwent reactivation through time with the last movement in the Tertiary period during the Andean Orogenesis.

The rocks of the Jacadigo Group form a regional anticlinal structural cut by northeast-striking faults, sub-parallel to the anticlinal axis resulting in horst and graben structures. The faults and



associated fractures in the jaspelite bodies provided the ground preparation that favored the enrichment of the iron ore in the region.

In the Corumbá region the limestones of the Corumbá Group also exhibit faults parallel to the Urucum Fault System. The Lajinha synclinal structure located northeastern of the Urucum Mountain is triangular in shape with the axis striking N55°E. This fold is bound by faults to the northeast and south. The southern limb is in fault contact with the gneiss-granites of the Rio Apa Complex.

5.3 Local Geology

Mine 63 and Urucum NE are located on the western and eastern flanks, respectively, of Urucum Mountain which is composed of rocks of the Jacadigo Group overlying the basement granite and gneisses. MMX Corumbá uses Almeida’s (1945, cited by Del’Arco et al., 1982) description of the Jacadigo Group in which it is composed of the Urucum and Santa Cruz Formations with the latter consisting of two members, the Córrego das Pedras and the Banda Alta. Table 5.3.1 summarizes the local stratigraphy in the immediate area of Mine 63 and Figures 5-3 and 5-4 show the geology in the immediate vicinity of Mine 63 and Urucum NE, respectively.

Table 5.3.1: Local Stratigraphy – Mine 63 Area

Group Formation Member Facies Heading

Deposit

Type Lithology Description

Pantanal Colluvium Partially laterized conglomerates and sediments

Banda Alta Murucu Morro Grande Banded Chert

Santa Cruz Água Verde Eluvium Jaspelite/Eluvium

Banded Mn/Nodular Mn and Jacadigo

Córrego das Pedras Urucum Rabicho Arkose/Conglomerate with hematitic cement.

5.3.1 Santa Cruz Formation - Córrego das Pedras Member

The Córrego das Pedras Member of the Santa Cruz Formation outcrops near Highway BR-292 and underlies the colluvium deposits that surround the nearby Urucum Mountain. These rocks consist of ferruginous arkose, arkosic sandstone and conglomerate. The arkose is generally massive, dark gray, fine- to coarse-grained and has a quartz-feldspar composition. Cross and parallel stratifications are commonly exhibited. The sandstones are predominantly gray, with some red units, fine-grained to conglomeratic and occur as intercalated beds with the arkose. Some intercalations of siltstones are also found in the sequence.

The colluvium deposits rest unconformably on the sandstones, arkoses and conglomeratic sandstones. Where exposed to surface weathering, this unit develops a yellowish clay-sandy soil.

5.3.2 Santa Cruz Formation - Banda Alta Member

The Banda Alta Member of the Santa Cruz Formation is characterized by jaspelites with millimeter scale bandings and subordinate layers of quartz-feldspar sediments. The basal portion of the sequence contains clastic and ferruginous sediments, with up to four manganese layers varying from 0.5m to 4m thick.



5.3.3 Mine 63 Geology

Colluvial Domain

The Colluvial Domain is characterized by the detrital deposits around Urucum Mountain, with fan or elongate shapes distributed on the flanks of the Mountain and the plains area. They comprise packages of sediments, with thickness varying from 0.5 to 32m, with an average of 13m. These deposits are composed of ferruginous sediments from the Banda Alta Formation that were deposited on the Córrego das Pedras Formation.

The angular fragments vary from pebble to boulder size and are constituted mainly of banded hematite, ferruginous jaspelite and by rare ferruginous arkose. The fragments are randomly distributed, although the size tends to decrease in proportion to the distance from the base of the Mountain.

A sedimentary breccia occurs in the central west portion of Mine 63 area. It is contemporary to the colluvial deposits and it consists of fine to medium sized clasts of hematite jaspelite, partially to totally leached, and by coarse clasts of ferruginous sandstone and of hematite jaspelite partially leached with limonitic cement. The breccia trends east-west and is about 2,500m long, 50 to 200m wide, and averages about 10m thick, with a maximum thickness of 16m.

The colluvial deposits are classified as proximal, medial or distal deposits according to their distance from the source area. The higher Fe contents are related to the deposits near the source area while the laterite deposits are far from the source area.

Eluvial Domain

The Eluvial Domain was generated by in situ weathering action through total and/or partial hydrolyzation, in a process of silica leaching and subsequent enrichment of iron in the hematite jaspelites of the Banda Alta Formation.

In the area of Mine 63, the eluvium is located on the top and upper slope of the Urucum Mountain, and has an average thickness of 15m. The effects of leaching decrease from the top toward the base of the sequence, followed by an increase in the SiO2 concentration and a decrease of Fe. In general, the silica leaching increases with the increased frequency of the fractures.

5.3.4 Urucum NE Geology

Colluvial Domain

The geology of the Urucum Project area is related to the colluvial deposits of the northeast region of the Santa Cruz Mountain. These colluvial deposits are composed of clastic hematite-jaspelite, arkoses, ferriferous sandstone, as well as erratic milky quartz and granitoid fragments. The bedrock consists of a saprolitic sequence formed from the arkose and, in some cases, the granitoid basement.

In the southern portion of the deposit, a morphologic depression is observed at the top of the colluvial deposit. A colluvial channel was detected through a geophysical survey which may be related to fault zones that increase the erosive processes on the hillside.

SRK Job No.: 162703.03




Figure 5-1

Stratigraphic Column and Regional Map

SRK Job No.: 162703.03



Source: RADAM Geological Map (1982)

Figure 5-2

Regional Structural Map Corumbá Project

SRK Job No.: 162703.03




Figure 5-3

Geologic Map of the Mine 63 Area

SRK Job No.: 162703.03




Figure 5-4

Geologic Map of Urucum NE



6 Deposit Types (Item 10) According to Haralyi and Walde (1986), the iron ore of the Jacadigo Group is described as jaspelite, banded hematite or Banded Iron Formation (BIF). In the central part of the basin, there is an interlayering of hematite laminae and ferruginous jasper. At the margin of the basin, there is no banded character, passing to a chemical sedimentation with major clastic contribution. There is a polymictic conglomerate with ferruginous cement in the marginal parts of the basin and on top of the iron sequence.

Haralyi and Barbour (1974), studying the Banda Alta Member at the Urucum Mountain, noted a progressive increase of the average grade of silica in the depositional sequence corresponding to a diminishing of the relative thickness of hematite compared to jaspelite. The variation in layers is related to a gradual diminishment of the Fe++ element in the water of the basin, culminating with the deposition of only silica extracts. Laterally, the diminishing of the average thickness of laminae of hematite and in the increase of jasper laminae can also be noted.

In the area of the Urucum Mountain, the central part of the basin, the average Fe content in the banded hematite ranges from 55% to 60.5%. At the margins of the basin, the Fe contents range from 35% to 50%.

The origin of the iron in this thick jaspelite sequence with high primary Fe content is quite controversial. The jaspelite package in the project area and surrounding areas is characterized by alternating layers of extremely fine hematite and jasper, without magnetite. Some jaspelites exhibit small lenses of jasper eyes. No carbonates are observed, although some textures resemble carbonate substitution by silica. There are two explanations for the absence of carbonate in the jaspelites: a) the carbonate was replaced by silica in the diagenetic process; b) the carbonate was totally destroyed by the climatic conditions, caused by the intense percolation of the meteoric waters, facilitated by the high degree of fracturing of the jaspelite package. The presence of carbonates in the Mutum area is outstanding, in the form of siderite, calcite and, dolomite, in percentages varying from 10 to 15%. The presence of magnetite in the jaspelites of Mutum and north of Rabicho is probably an indication of deeper more reducing waters, or could also be a result of the slightly higher metamorphic degree in Mutum area.

The resource and reserves at Mine 63 and Urucum NE are contained within elluvial and colluvial deposits related to the weathering of the jaspelites and BIF.



7 Mineralization (Item 11) 7.1 Eluvial Deposits

The eluvium originates in the primary jaspelite which has been fractured and undergone weathering and leaching of silica. The Fe content of the eluvium is directly related to the content of the original primary rock. At the marginal parts of the basin, there is lateral variation and even a banding in the Fe contents of the eluvial ore, indicating primary variations in the content of the iron.

The iron enrichment in the eluvium resulted from in situ silica leaching of the primary jaspelite and therefore forms a nearly continuous zone over the bedrock of the jaspelite. At Mine 63, it is located on the top and slopes of Urucum Mountain and has a thickness that varies from less than 1m to over 30m, with an average of about 15m. There is no eluvium at the Urucum NE deposit.

The enrichment factor of the eluvial material, in relation to the primary rock, depends on the grain size and the dimension of the fragments. At the marginal parts of the basin, where sedimentation was mainly clastic, the enrichment of the eluvial material is directly proportional to the iron content in the jaspelite from which it originated. The same is not true in the central part of the basin, where sedimentation is mainly chemical.

7.2 Colluvial Deposits

The colluvium is the material deposited at the base of Urucum Mountain where the Banda Alta member outcrops. The main source rock is the jaspelite, with a secondary contribution from the arkose of the Urucum Formation. The colluvium is formed by recent clastic deposition composed mainly of angular fragments of leached hematite jaspelites and arkose. The colluvial deposits which are richer in hematite fragments and jaspelite, leached or not, concentrate near the rock source, that is, near the mountain. The total iron content is directly proportional to the distance from the source and has been enriched by the leaching of silica. The breccia area has undergone cementation and has a more consolidated nature than the colluvium.

The colluvium, including the breccia, at Mine 63 has an elongate shape, about 3km long and 1.25km wide, and varies from less than 1m to over 30m in thickness, with the thickest sections closest to the source rock and average thickness of 22m. The colluvium at Urucum NE is more than 6km in length and 2km in width.




8.1 Exploration of Mine 63

The exploration methods of the previous owners of the Corumbá Project are unknown. However, it is the understanding of the MMX geologists that there was no exploration as such and that mining proceeded based on the surface expression of the iron-bearing rock.

The first exploration work by MMX in the region of Mine 63 was the excavation of a series of hand dug exploration pits. The pits, excavated with pick and shovel, are 1.5m2 in plan view and have vertical walls which are 6m deep in the colluvium and 10m deep in the eluvium. Because of the shape of the pits, they are referred to as shafts. The shafts were excavated on a grid of 100m x 100m in the eluvium area and on a grid of 200m x 100m in the colluvium, and were excavated through the mineralized zone and into the bedrock.

Following this first stage of exploration, a core drilling program was implemented using a Brazilian contractor, Geosol – Geologia e Sondagens Ltda (Geosol). The drilling extended the grid in the colluvium to the north and also twinned some of the exploration shafts.

Additional exploration consisted of channel samples collected during the pre-stripping phase of the mine, where vertical samples were taken in the face of the mountain and surface mapping at a scale of 1:5000.

The drilling and sampling procedures used by MMX are further described in the following sections.

The exploration identified a large area of mineralization associated with the colluvium and eluvium. SRK considers the methods used by MMX to be appropriate for this type of deposit.

8.2 Exploration of Urucum NE

The exploration method employed by the former owners of Urucum NE consisted of the excavation of more than one hundred exploration shafts on a 200m x 200m grid. The exploration methods were not rigorous and the shaft grades and size fractions were inferred using a correlation formula between density and iron grade.

In February 2007, MMX Corumbá started an exploration campaign in which shafts were manually excavated to bedrock or to a maximum depth of 5.0m. The shafts were centered on 100m, 200m and 400m grids).

Exploration lines with spacing at 400m, 200m and 100m, were surveyed by BXF Topographia Ltda (BXF), a topographic survey company with headquarters in Ladário, MS, with supervision by the MMX exploration staff. The surveying was done with a total station Topcon, model GPT3000LW and a total station Pentax, model PCS1S. The methodology was by open polygonal, linked to the mark 1,065 IBGE (Brazilian Official Mark on Santa Cruz Hill) with the UTM coordinates N-7,876,829.21 and E-437,739.16, elevation of 1,065.44 m, DATUM SAD 69. The topographic surface was generated using points on the exploration lines, and a laser survey (ALTM - Airborne Laser Terrain Mappper) performed by GEOID Company, between the lines. The surface was generated using Autodesk software AutoCAD 2006.

The locations of the shafts were surveyed by BXF with supervision of MMX team, using a total station Topcon. The exploration campaign was completed with 159 shafts.



8.2.1 Geophysics

Geophysical surveys in the Urucum NE project were conducted by HGeo – Tecnologia e Informação em Geociência Ltda (HGeo), a contracted company. They used IP method (Induced Polarization), an electrical geophysical method, in lines L27 (2,020m), L28 (2,480m), L29 (2,480m) and L34 (1,400m). The main goal was to determine the contact between the colluvial cover and the arkose basement and, in some cases, the contact with granitic-gneissic basement.

The results were presented in electroresistivity sections, where the scale of colors varies from red (more resistive) to blue (more conductive). The colluvial cover is more resistive than the basement. The transition between the conductive and resistive regions of the sections can be interpreted as the contact between two units.

The preliminary results show an error of about 10% in the maximum depth in the more level areas and about 15% in the regions with irregular relief. This means the interpreted contact in the resistivity sections in the exploration area could show an error up to 6m, depending on the relief.

MMX will continue with this type of geophysical survey, developing more tests on the areas with drilling information at Mine 63, to better calibrate the basal contact delineation. MMX hopes to use this methodology to complement drilling information and support inferred resources estimation.



9 Drilling (Item 13)

9.1 Mine 63

The first drilling at Mine 63 was initiated in November 2005 by MMX. All drilling was conducted by Geosol, a Brazilian company with experience in iron ore drilling. The holes were drilled to an average depth of 16m, with a maximum depth of 40m, with core size of 6.4cm (HQ). All drillholes were vertical and no downhole surveys were taken because of the short length of the holes. The mineralization forms a shallow zone, from less than 1m to about 40m over the bedrock, and is best drilled with vertical holes; the lack of downhole surveys is not a concern in these short holes.

Drilling in the colluvium area is on a north-south grid with sections 200m apart and the holes spaced at 100m on section. The drillholes in the eluvium area are on a 100m x 100m grid oriented N50oE. The holes in both areas were drilled into the bedrock before being halted, and thus penetrate the entire mineralized length.

The drill core was placed in wooden boxes approximately 1m long with 3 sections to contain the core. The drill intervals were marked with wooden plates and the recovery was measured by the drill contractor with supervision by MMX personnel. The core was photographed, logged, split, and sampled by MMX personnel in a core facility at Mine 63.

The drillhole collars are marked with a small concrete slab with the hole number inscribed on an aluminum tag. The drill hole collars were surveyed by BXF.

The shafts were excavated by pick and shovel to a maximum depth of 16m and were 1.5m x 1.5m in plan view. The shafts were sampled in vertical channels by MMX personnel. Channel samples were taken during the pre-stripping phase of mining.

The resource database consists of drillholes, channel samples, and shafts and will be referred to as drilling in this report. A summary of the drilling is given in Table 9.1.1 and the locations are shown in Figure 9-1.

Table 9.1.1: Drilling in Mine 63, Corumbá Project

Sample Type Number Total (m) Average Depth (m) Minimum Depth (m) Maximum Depth (m)

Channel Samples 18 210.2 11.7 4.4 20.6Shafts 102 640.3 6.3 0.1 13.6Drill Holes 81 1312.0 16.2 4.1 41.0Total 201 2,162.5

9.2 Urucum NE

The excavation of exploration shafts in the Urucum NE area began in February 2007. The exploration shafts were excavated manually with pickaxes and shovels to a maximum depth of 5m and with plan dimensions of 1.5m x 1.5m. Material from the shafts was placed in separate piles for each 1m of depth; this material was used for metallurgical tests. Geological samples were collected in vertical channel samples located in the center of one wall of the shaft. The channel was 0.2m wide and 0.3m deep, and the length of the sample was determined by lithology. Shafts where the colluvium was less than 1.5m were not sampled.



The shafts were located on three different grids: 400m x 400m, 200m x 200m and 100 x 100m The 400 x 400 m spacing is the initial exploration grid. MMX later infilled the grid spacing to 200 x 200m and 100 x 100m. A summary of the exploration shafts is given in Table 9.2.1 and the locations are shown in Figure 9-2.

Table 9.2.1: Shafts at Urucum NE, Corumbá Project

Sample Type Number Total (m) Average Depth (m) Minimum Depth (m) Maximum Depth (m)

Shaft 159 703.42 4.4 0.09 5.0

SRK Job No.: 162703.03




Figure 9-1

Drillhole and Sample Locations, Mine 63 Corumbá Project

Channel Sample

Shaft

Drillhole

SRK Job No.: 162703.03




Figure 9-2

Shaft Locations Urucum NE



10 Sampling Method and Approach (Item 14) The sampling of the core followed the customary procedures for iron ore in Brazil. The core was split lengthwise with breaks at lithologic contacts, and one-half of the core was bagged and the remainder was stored in wooden boxes. Intervals that were considered to be internal waste were not sampled and intervals within the bedrock were not sampled. The samples were numbered consecutively using a blind numbering sequence. Sample tags were placed in the sample bag and the bag was marked with the sample number as well.

Samples from the shafts were collected from vertical channels in one wall of the shaft. The channel was 10cm wide and 15cm deep and was sampled over the entire length of the mineralized zone in the shaft. The channel was made using a hammer and chisel and the sample was collected in a wooden box. The sample was then transferred to plastic bags. The samples were also numbered consecutively with blind numbers as with the drill samples. The four walls of the shafts are photographed meter by meter. The samples from Urucum NE were sent directly to SGS in Belo Horizonte for preparation and analysis.

The channel samples are vertical and were collected from outcrops and benches, using the same methodology as in the shaft samples.

At Urucum NE, a sample of 200kg is collected to provide enough material for a global sample, size fraction samples and for an archive with enough weight for duplicate tests if necessary. The colluvium with total thickness less than 2.0m was not sampled as 2m is considered to be a minimum mining thickness and because their metallogenic potential is considered lower. The sedimentary breccia domain is not considered as resources in this estimation, because it is very hard and massive making manual excavation difficult.

The samples are identified by shaft number and depth and sent to the MMX preparation laboratory. The pulps are bagged and are transported by a dispatching company to the SGS Lab in Belo Horizonte, Minas Gerais State for analysis.

Table 10.1 lists the statistics for the number and type of samples at Mine 63 and Urucum NE

Table 10.1: Sample Interval Statistics for Mine 63 and Urucum NE

Intervals

Sample Type Number Average (m) Minimum (m) Maximum (m)

Mine 63 Channel Sample 27 6.70 3.0 15.4Shaft 122 5.16 0.5 10.0Drill Hole 452 2.36 0.5 5.9Total Mine 63 595

Urucum NE Shaft 150 4.04 1.5 5.0

The unsampled intervals are considered waste and assigned a value of zero for the compositing routine. The channel samples and shaft samples tend to be long intervals over the entire mineralized section of the unit. The drillhole samples are nominal 2m intervals with breaks at changes in lithology. The resulting database contains samples with highly variable sample



intervals, many of which are longer than the compositing length. SRK recommends the sample length be uniform at 5m (with breaks for lithology) and that the internal waste intervals also be assayed to eliminate ambiguity in the assignment of a value to that material.

All the drillholes, shafts, and channels shown in Figures 9-1 and 9-2 were sampled. The area sampled is more than 3km in length east-west and about 1.25km north-south at Mine 63 and about 7km in length and 1.5km in width at Urucum NE.

SRK considers the samples to be representative of the mineralized zones and sections. The colluvial and eluvial material was sampled over the entire length of the mineralization, with the exception of the internal waste zones as mentioned above. The core recovery and the size of the shaft and channel samples are sufficient to provide a reliable database for resource estimation.




11.1 Sample Preparation, Analysis and Security for Mine 63

The sample preparation and analysis procedures have evolved during the project history as shown below:

First Stage Second Stage Third StageMay 2005 June to November 2005 December 2005 to Present

First 5 shafts Shafts, Channel Samples All drillholes

Project Preparation Project Preparation Project Preparation

PCM Preparation

LCT Preparation LCT Preparation SGS Preparation

LCT Analysis LCT Analysis SGS Analysis

MMX originally used the Technological Characterization Laboratory (LCT) of the Polytechnic School at the University of São Paulo for analysis of the shaft and channel samples; the lab is not internationally certified. The drill samples were analyzed at SGS Geosol Laboratorios Limitada (SGS); SGS has ISO 9001(2000) and ISO 14001(2001) certification. At the suggestion of MMX’s Quality Control/Quality Assurance (QA/QC) consultant, 5% of the total samples were sent to the Ultra Trace Analytical Laboratories Pty Ltd (UT) in western Australia for check assays. UT has ISO 17025 and National Association of Testing Authorities, Australia Certifications. At the suggestion of SRK, MMX decided to reassay all available pulps which were initially analyzed by LCT at SGS and to use that laboratory for future work. Only 14 samples remain in the database with only the LCT analysis. Current laboratory QA/QC consists of using SGS internal controls, the use of a standard reference sample, and check assays of 5% of the samples at UT. The following sections describe the sample preparation and analysis procedures used for Corumbá samples. The final section reviews the QA/QC program.


The initial sample preparation is done by MMX at the Mine 63 facility. The reduced sample is then shipped to the commercial laboratory for further preparation and analysis.

MMX

The current sample preparation consists of:

• Drying the sample in the sun for 4 to 12 hours;

• Jaw crushing to 2.5cm; and

• Homogenization and splitting with a Jones splitter to a 2kg sample.



Initially a 10kg sample was sent to the laboratory Processamento e Caracterização Mineral Ltda (PCM) and later a 2kg sample was sent to LCT Laboratory. PCM does not have international certification.

PCM

PCM Laboratory was used for sample preparation for the first five shafts to dry, crush and reduce the sample to 2kg before sending to LCT for analysis.

LCT

The sample preparation at LCT consisted of:

• Drying in an oven at a temperature between 80 and 100oC;

• Jaw crushing;

• Disc or roller mill;

• Samples greater than 35g were split to 30g with a Jones splitter;

• Drying in oven for two hours; and

• Pulverization with Herzog mill to grain size less than 0.05mm.

SGS

The sample preparation at SGS consist of:

• Drying in oven at 100+10oC;

• Crush to 90% less than 2mm;

• Homogenization and splitting with Jones splitter to 250 to 300g;

• Pulverization to 95% less than 150 mesh; and

• Splitting to 125g.


LCT

Between 7 to 10g of sample is combined with Hoescht resin (10% of the sample weight) and the resulting mixture is then weighed. The sample and resin are homogenized and then pressed in a Herzog press to form a disk.

The samples are analyzed with an X-ray Fluorescence Spectroscopy (XRF) spectrometer. LOI is analyzed by placing 1.000g + 0.0001g of sample in a porcelain crucible, heating in a furnace for one hour at 1050oC and cooling with a dryer. The sample is reweighed and the LOI calculated.

SGS

The sample is dried at 100+10oC and then a 0.50g sample is combined with a lithium tetraborate solvent which is fused and poured into a mold to form a disk. The samples are analyzed by XRF, LOI is analyzed by heating the sample at 110oC for one hour, placing 1.5 to 2g of the sample in a crucible, heating at 1000+50oC for one hour, cooling, and weighing the sample and crucible again. The LOI is calculated with a detection limit of 0.01%.



The data are transferred directly from the equipment and stored in the Laboratory Management and Information System (LIMS).

UT

The sample is fused in a Bradway electric rocking furnace and cast into 40mm diameter beads using 12.22 flux containing 5% sodium nitrate. The beads are analyzed with XRF. LOI is analyzed by heating a pre-dried portion of the sample in an electric furnace set to the client’s requested temperature.

11.1.3 Laboratory Quality Control and Quality Assurance

Internal SGS QA/QC

SGS internal QA/QC procedures consist of:

• LIMS software is used during the acquisition of data in the laboratory to eliminate errors in the manual entry of data. The software is also used in statistical treatment of the Quality controls;

• Calibration of all critical equipment every six months;

• Daily verification of scales and spectrometers;

• 5% of the samples are weighed after each step of sample preparation, with 3% as an acceptable loss in sample weight;

• 5% of the samples are measured for sample size during preparation with 95% passing the mesh size being the acceptable value;

• The batch size is 40 samples. Duplicate samples are prepared for each 20 samples; standard reference samples are inserted in the sample stream at a rate of 1 in 20 samples and one blank sample is inserted in each batch; and

• Samples with anomalous results are repeated. If the repeat does not duplicate the original, then a new sample is prepared from the reject.

MMX QA/QC

Analytical Solutions Ltd reviewed the QA/QC data and this section is taken from her report. As mentioned in the introduction to this section, LCT analyzed the shaft and channel samples and SGS analyzed the drillhole samples. Five percent of the samples were sent to the UT Laboratory in Australia for check analysis, including 17 pulps originally analyzed by LCT. In general, there was poor correspondence between the UT and LCT data (Figure 11-1). As suggested by other MMX consultants, the LCT data was not considered reliable for resource estimation and MMX decided to have all the pulps reanalyzed by SGS for use in the resource estimation.

For check analysis purposes, a total of 82 pulps analyzed by SGS in 2006 were reanalyzed by UT. Both SGS and UT used fused disk (glass bead) XRF for determination of the major oxides. In general, there is good agreement between the two sets of data. Figure 11-1 summarizes the percentage difference between SGS and UT assays relative to the SGS determination (with no implication that SGS or UT provided the preferred data). One sample is excluded for LOI where values of 0.01 and 0.59% were reported which results in a large percentage difference and may be due to data handling issues. Table 11.1.3.1 documents the percent difference between SGS and UT samples.



Table 11.1.3.1 documents the percentage of samples within ± 5%, 10%, 20%, etc.

Table 11.1.3.1: Summary of Percent Difference Between SGS and UT Samples

Element N 5% 10% 20% 25% 50% > +50%

82 Fe 82

100% 59 61 70 74 81 1

MnO 82 72% 74% 85% 90% 99% 1%

76 80 82 SiO2 82

93% 98% 100% 49 72 78 80 82

Al2O3 82 60% 88% 95% 98% 100%

59 77 82 P 82

72% 94% 100% 41 65 77 78 82

TiO2 82 50% 79% 94% 95% 100%

38 57 71 75 79 3 LOI 82

46% 70% 87% 91% 96% 4%

The key observations are:

• Eleven Fe values agree within 5%;

• 93% of SiO2 values agree within 5%;

• Al2O3 values show good correspondence above 1% and 88% of all the samples agree within +10%;

• The majority of P values are less than 0.1% and close to detection limits for the XRF method; there is a bias equal to approximately 3% of the P concentration with higher values reported by SGS than UT (similar to the observation for Minas-Rio);

• The majority of values of TiO2 are less than 0.2%. TiO2 show good correspondence and 79% of the agree within +10%. The majority of results which do not agree within +10% are almost within 10 times detection limit and precision is expected to be in the order of +100%;

• 74% of the Mn values agree within ±10%; values less than 0.1% do not agree within ±10% but are within ten times detection limits and precision is expected to be poor; and

• 65% of the LOI values reported by SGS are higher than those reported by UT. UT refers to the analyses as done by a robotic Thermogravimetric Analyser (TGA) with the furnaces set 100o and 1000ºC. The temperature used for LOI at SGS should be determined and the two analytical methods compared. The majority of the LOI values are less than 2% and the variance between the laboratories is in the order of 5% of the reported values.

In general, there is good correspondence between SGS and UT major oxide determinations. Some elements (MnO, P and TiO2) are found in concentrations within ten times the detection limit of the XRF method. If these determinations are required more accurately, it is



recommended that a lithium metaborate fusion – ICP method, with detection limits in the range of 1 to 10ppm, be used.

SRK considers the sample preparation, analysis and security to follow industry standards and that the assays are reliable for resource estimation.

11.2 Sample, Preparation and Analysis for Urucum NE

11.2.1 Sample Preparation Procedures

Sample preparation takes place at the MMX Corumbá Laboratory. SGS Laboratory, in Belo Horizonte, did all the chemical analysis and ALS Chemex Laboratory, in Australia, was used for check assaying as the second lab.

The 200kg-sample is crushed in a closed circuit with a 38mm screen until all material is less than 38mm. The crushed material is then fed into a rotary splitter. Half the sample is filed as an archive and the other half is fed into rotary splitting again. The second splitting generates two portions, one is used for the global analysis and the other for the size fraction test. The sample is screened at 25mm, 19mm, 12mm, 6.35mm and 4mm. A small portion is taken from the 25mm to 19mm fraction for a crepitation test. The remainder of that fraction is mixed with the 19mm to 12mm fraction. The <4mm fraction is wet screened to generate three more fractions: 4mm to 1mm, 1mm to 0.15mm and <0.15 mm. The resulting size fractions are:

• 25mm to 12mm;

• 12mm to 6.35mm;

• 6.35mm to 4mm;

• 4mm to 1mm;

• 1mm to 0.15mm, and

• <0.15mm.



All chemical analyses are done by XRF for the elements Fe, SiO2, Al2O3, P, MnO, CaO, MgO, K2O, Na2O, TiO2 and gravimetric analysis for LOI (Loss on Ignition).



11.2.2 Chemical Analysis Procedures

SGS Procedures

SGS receives the pulverized samples and dries them at a temperature of 100 ± 10ºC. A portion of 0.50g is taken from the dried samples and a solvent with a lithium tetraborate base is added in a quantity sufficient for the total fusion of the sample. The mixture of the sample and solvent is then homogenized and fused in a platinum crucible, using an automatic fusion machine for between 15 and 20 minutes. The fused material is poured into a platinum mold, forming a disk with a flat surface.

The SGS internal laboratory QA/QC procedures consist of inserting a duplicate sample or a replicate sample, alternately, for each ten samples in a batch. At least one reference sample is inserted into each batch. The samples are stored individually in plastic bags and maintained in a dryer until the spectrometer reading. The samples are analyzed by XRF.

The data are transferred directly from the equipment and stored in the LIMS.

Table 11.2.2.1: Limits Detection of SGS Iron Ore Analysis

Element Detection Limit (%) Upper Limit (%)

Al2O3 0.10 90 Fe2O3 0.01 100 K2O 0.01 15 MgO 0.10 45 MnO 0.01 70 Na2O 0.10 15 P2O5 0.01 45 SiO2 0.10 100 TiO2 0.01 100

Loss on Ignition is performed by a gravimetric method. The sample is heated to approximately 110ºC for a minimum of one hour. A clean, dry crucible is weighed and the weight is recorded (CV). 1.5 to 2g of the heated sample is added to the crucible, which is then weighed again (C+A). The crucible with the sample is placed in an oven which is heated to a temperature of 1000 ± 50ºC. The sample is left to cremate for a period of more than one hour. The crucible is removed from the furnace and placed on a refractory plate until it loses its incandescence. It is then placed in a dryer until the crucible and sample are cooled and then it is weighed again (final weight).

The calculation of results is:

( ) ( )( ) ( ) 010 x

CV - A + C

WeightlFinal - A + C F.W. % =

The detection limit is 0.01% and the data are recorded in the LIMS.

ALS Chemex Procedures

ALS Chemex uses the lithium metaborate fusion method and XRF for its analysis of iron ore samples. A prepared sample (0.5g) is fused with a lithium metaborate flux at about 1000°C which is then analyzed by RXR spectrometry.



The samples were analyzed with ALS Chemex 19 element package. The elements determined by XRF are listed below in Table 11.2.2.2.

The analysis includes a LOI determination at 1000°C, undertaken with a TGA. This allows for an addition of the oxides, generated at the ignition temperature and the LOI, to arrive at a total (oxides plus LOI). The LOI is due to the loss of water from hydrated minerals (goethite, gibbsite and kaolinite), decomposition of carbonates (calcite, siderite and dolomite) and the volatilization of organic compounds.

Table 11.2.2.2: Detection Limits in ALS Chemex Iron Ore Analysis

Element Symbol Units Lower Limit Upper Limit

Aluminum Al2O3 % 0.01 30Arsenic As % 0.001 0.6Barium Ba % 0.005 0.3Calcium CaO % 0.01 10Cobalt Co % 0.005 2Chromium Cr % 0.005 5Copper Cu % 0.005 3Iron Fe % 0.01 75Potassium K2O % 0.001 5Magnesium MgO % 0.01 10Manganese MnO % 0.001 75Sodium Na2O % 0.01 5Nickel Ni % 0.005 3Phosphorus P % 0.001 5Sulphur S % 0.001 5Silicon SiO2 % 0.01 70Vanadium V % 0.005 1Zinc Zn % 0.005 5

11.2.3 Quality Control Procedures (QA/QC)

SGS Quality Control

• SGS uses software developed by LIMS used by geochemical laboratories in various countries (such as Brazil, Chile, Canada and Germany) for on-line acquisition of data, eliminating errors in the manual entry of information. Information relative to quality control (blanks, duplicates and standards) is also retrieved with this software;

• Calibration of all critical equipment related to the process every six months;

• Daily verification of scales and spectrometers through standard weights or control samples;

• Control of mass in 5% of samples prepared in the steps of crushing and pulverization, through weighing samples before and after each step, a maximum loss of 3% of material being acceptable for each step;

• Control of screening in 5% of samples prepared in the steps of crushing and pulverization through the screening analysis of samples after each step, a minimum percentage of 95% below the mesh reference being acceptable;



• With each 20 samples prepared, a sample is divided into two parts after the process of crushing and the final preparation is made of each of these parts (preparation of duplicates);

• The analyses are done in batches of up to 40 samples;

• Samples of internal reference and certified material are inserted in each 20 samples;

• Inclusion of blanks of reagents in each batch analyzed; and

• Anomalous results are repeated and when the result obtained does not confirm the first assay, the analysis of a new sample is prepared using the waste of the material received.

ALS Chemex Quality Control

ALS Chemex uses a web-based LIMS control system which is used by geochemical laboratories in various countries with on-line acquisition of data from equipment used in the laboratory, eliminating errors in the manual entry of information. The system provides additional assurance of the quality of data by providing on-line access to complete audit trails and important QC data and control charts.

Standard specifications for sample preparation are clearly defined and monitored. ALS Chemex standard operating procedures require that at least one sample per day be taken from each sample preparation station.

The ALS Chemex LIMS inserts quality control samples (reference materials, blanks and duplicates) in each analytical run, based on the rack sizes associated with the method. The rack size is the number of samples, including QC samples, included in a batch. The blank is inserted at the beginning, standards are inserted at random intervals, and duplicates are analyzed at the end of the batch. Quality control samples are inserted based on rack sizes specific to the method. XRF methods use two standards, one duplicate and one blank, with rack size of 39 samples.

Quality Control Limits for reference materials and duplicate analyses are established according to the precision and accuracy requirements of the particular method.

MMX Quality Control

MMX initialized a QA/QC program at the beginning of the Urucum NE exploration. The program consists of introducing one iron ore standard, OREAS40, one blank, and one pulp duplicate per batch. Additionally 117 samples were sent to ALS Chemex in Australia for check assaying.

Agoratek International (Agoratek) reviewed the following laboratory QA/QC data for MMX:

• SGS internal QA/QC data;

• SGS vs ALS Chemex pairs of check assays;

• SGS assays of MMX standard OREAS40; and

• A few assays of OREAS40 and APHP standards at ALS Chemex.

Agoratek made the following observations:



• Standard IPT123, the SGS internal commercial standard, is ill-certified and can be used only as a measure of accuracy and cannot be used to assess SGS’s general performance;

• Standard OREAS40 has good certification and has been validated by Agoratek in the past. SGS performs well on this standard for Fe and SiO2, but may show bias with Al2O3 and P;

• A comparison of the SGS and ALS Chemex check assays indicates that there may be a high bias on P by SGS and a low bias on Al2O3; and

• The samples submitted as blanks actually were not blank and therefore the results are not usable.

11.2.4 Sample Security

MMX has maintained control of samples from collection to the production of individual samples in sealed shipping packets at the MMX project site. These packets are delivered from the Mine site to the SGS Lab in Belo Horizonte by a transport company.

MMX retains the pulps and coarse rejects from their samples at their secure office at Mine 63.

11.2.5 ISO 9000 Certification

SGS has ISO 9001(2000) and ISO 14001(2001) Certification.

SRK Job No.: 162703.03




Figure 11-1

LCT and SGS vs. UT Analyses for Corumbá Samples

Corumba QAQC - LCT Check Assays


-100

-80

-60

-40

-20

0

20

40

60

80

100

0.01 0.10 1.00 10.00 100.00

Original Assay (LCT)

Re

lati

ve P

erc

en

t D

iffe

ren

ce (

LC

T A

ssay l

ess U

LT

As

sa

y w

ith

re

sp

ec

t to

av

era

ge

as

sa

y)

(%)

Fe MnO SiO2 Al2O3

P TiO2 LOI

Corumba QAQC - SGS Check Assays


-100

-80

-60

-40

-20

0

20

40

60

80

100

0.001 0.010 0.100 1.000 10.000 100.000

Original Assay (SGS)

Re

lati

ve P

erc

en

t D

iffe

ren

ce (

SG

S A

ssay l

ess U

LT

As

say w

ith

res

pect

to S

GS

As

say)

(%)

Fe MnO SiO2 Al2O3

P TiO2 LOI



12 Data Verification (Item 16) The data is received from the laboratory as electronic files and as hard copies of the assay certificates. The data is entered into Excel spreadsheets with four sheets for collar coordinates, assays, downhole surveys, and lithologic information. The laboratory certificates are received as hard copies.

During SRK’s verification process for Mine 63 data in the previous Technical Report, some problems were noticed with the values of the MnO variable where in some cases the values appeared to be for Mn and in others the values were for MnO. SRK rebuilt the entire database using the original spreadsheets from SGS. After the database was rebuilt, SRK performed checks on 10% of the data against the assay certificates. SRK also checked the drillhole collars against the database and also reviewed selected lithologic intervals against the core photos and drill logs.

SRK has verified 10% of the Urucum NE database against assay certificates and found no significant errors.

SRK did not independently collect samples for assay because the rock shows obvious mineralization and the database samples have undergone extensive assaying and check assaying.



13 Adjacent Properties (Item 17) Vale operates the Urucum Mine immediately northeast of Mine 63 and RTZ operates the Corumbaense Reunidas Mine in the nearby Santa Cruz Mountains. MMX did not utilize any information from these mines in the preparation of this report.




14.1 Mineral Processing and Metallurgical Testing for Mine 63

14.1.1 Technological Parameters of the Process

This section describes the procedures and results of metallurgical tests to define the parameters used in the development of the process flowsheet and product recoveries and includes:

• Description and location of samples used in bench tests;

• Description of bench tests;

• Study of the correlation between RoM and Lump for the Eluvium and Colluvium ore types, with a view to obtaining the relation of enrichment and establish cut-offs; and

• Study of mass recovery, with the definition of factors of product yield of Lump and Sinter Feed.

Bench Tests and Chemical Analyses

The bench test samples were composed of coarse rejects from 35 shaft samples. Figure 14-1 shows the location of the samples for the bench tests and the pit outline. The eluvial area is well represented by the bench test samples. The samples in the colluvial area were taken in areas close to the source material and also at points at some distance from the source. The overall representativeness of the samples appears to be good. The procedures followed the standard NBR ISO 3082, which deals with the principles of iron ore sampling and preparation of samples.

The samples were prepared by PCM Laboratory with the following procedure:

• An initial sample was taken from the coarse reject for the RoM sample;

• Homogenization of the remainder of each sample;

• The sample was dried and weighed to verify the initial volume of the sample;

• The sample was crushed to less than 25.4mm;

• The sample was combined with an alkaline dispersant, sodium silicate (ph~10), to about 50% solids;

• Scrubbing was conducted in a mixer with visual control of desegregation;

• Wet screening was accomplished with a Manupen type screen into the following sample bands 25.4 – 19.6 – 12.5 – 9.6 – 6.35 – 4.0 – 2.0 – 1.0 – 0.5 – 0.25 and 0.15mm; and

• The range for Lump was considered to be 25.4 to 6.35mm and Sinter Feed was 6.35 to 1.00mm.

Samples of RoM and Lump were sent to the Technological Characterization Laboratory – (LCT) of the Polytechnic School at the University of São Paulo for chemical analysis. The results are shown in Tables 14.1.1.1 and 14.1.1.2.



Table 14.1.1.1: Colluvial Ore –Chemical Analysis: RoM and Lump

Coordinates RoM Lump

X Y Z Hole Id Laboratory Name From To Fe SiO2 AI2O3 P MnO CaO MgO TiO2 LOI NºLCT Hole Id Fe SiO2 A12O3 P Mn TiO2 LOI

435800.8 7877646 618.03 Can_T6 EBX075 0.00 7.70 65.230 4.19 1.89 0.05 <0.10 na na 0.16 2.51 7084/05 CAN T6 67.498 2.12 1.01 0.054 <0.10 0.13 1 434600.1 7877503 403.06 T0_00 EBX118 0.00 10.00 58.309 13.36 1.87 0.05 <0.10 na na 0.15 1.42 7552/05 T0/00 65.135 5.8 0.61 0.053 <0.10 <0.10 0.58

434405 7877393 378.22 T01_100S EBX069 0.00 6.00 56.005 12.80 2.00 0.06 2.01 na na 0.17 2.48 7066/05 T01/100S 64.8 6.10 0.79 0.06 0.64 <0.10 1.20 434199.6 7877484 344.96 T02_00 EBX149 0.00 5.60 56.991 15.76 1.33 0.05 0.35 na na 0.12 1.60 7606/05 T02/00 62.578 9.030 0.62 0.054 0.115 <0.10 0.53 434204.3 7877384 357.41 T02_100S EBX090 0.00 6.00 54.001 15.03 3.31 0.07 0.70 na na 0.20 3.11 7129/05 T02/100S 63.062 8.28 0.48 0.056 0.342 <0.10 1.7

434209 7877284 352.99 T02_200S EBX079 0.00 6.00 52.563 16.83 1.59 0.07 2.14 na na 0.14 2.78 7096/05 T02/200S 62.954 7.8 0.46 0.051 0.831 <0.10 0.82 434004.5 7877375 330.5 T03_100S EBX089 0.00 5.05 61.320 7.90 2.46 0.08 0.42 na na 0.18 2.42 7126/05 T03/100S 65.442 3.49 1.32 0.062 <0.10 0.1 1.74 434982.3 7877772 458.93 T2_250N EBX086 0.00 2.47 63.803 4.90 2.49 0.08 <0.10 na na 0.16 2.68 7117/05 T2/250N 65.111 3.13 2.22 0.05 <0.10 0.12 2.37 435194.6 7877629 493.82 T3_100N EBX066 0.00 5.00 60.954 8.21 2.11 0.06 0.20 na na 0.18 2.59 7057/05 T3/100N 67.413 2.83 0.7 0.063 <0.10 <0.10 1.28 435181.8 7877765 491.54 T3_236N EBX057 0.00 2.90 65.523 3.66 1.40 0.06 0.15 na na 0.12 1.91 6668/05 T3/236N 67.9 2.16 1.19 0.06 <0.10 <0.10 0.99 435400.5 7877541 557.73 T4_00 EBX058 0.00 8.15 61.193 7.42 2.64 0.05 <0.10 na na 0.21 2.68 6671/05 T4/00 68.7 2.33 0.72 0.06 <0.10 0.09 0.84 435395.4 7877640 531.56 T4_100N EBX073 0.00 5.40 61.662 7.94 2.24 0.06 0.10 na na 0.18 2.11 7078/05 T4/100S 68.154 3.01 0.53 0.05 <0.10 <0.10 0.8 435410.7 7877341 596.65 T4_200S EBX059 0.00 6.00 59.334 8.48 4.12 0.06 <0.10 na na 0.25 3.75 6674/05 T4/200S 68.8 1.82 0.37 0.06 <0.10 <0.10 0.63 435387.6 7877791 527.78 T4_250N EBX061 0.00 2.60 59.009 7.98 2.96 0.09 0.51 na na 0.19 3.49 6680/05 T4/250N 65.2 4.97 1.05 0.08 <0.10 <0.10 1.39 435600.1 7877551 595.54 T5_00 EBX078 0.00 8.70 59.430 9.15 3.82 0.08 <0.10 na na 0.20 2.93 7093/05 T5/00 67.155 3.16 0.82 0.056 <0.10 <0.10 0.86 435605.3 7877451 619.66 T5_100S EBX062 0.00 6.00 60.292 7.17 3.50 0.05 <0.10 na na 0.26 3.18 6683/05 T5/100S 68.5 1.73 0.75 0.05 <0.10 <0.10 0.89 435610.4 7877351 635.34 T5_200S EBX065 0.00 6.00 62.793 6.87 1.70 0.05 <0.10 na na 0.16 2.28 7054/05 T5/200S 67.697 3.14 0.3 0.052 <0.10 <0.10 0.73 435799.9 7877561 641.54 T_00 EBX083 0.00 9.80 63.685 7.60 0.89 0.06 <0.10 na na 0.10 2.11 7108/05 T6/00 67.865 1.8 0.34 0.055 <0.10 <0.10 1.43

435805 7877461 672.88 T6_100S EBX068 0.00 6.00 63.109 5.17 2.61 0.05 <0.10 na na 0.21 2.59 7063/05 T6/100S 66.738 2.03 0.82 0.065 1.102 <0.10 1.01 435810.1 7877361 704.98 T6_200S EBX072 0.00 6.00 64.767 4.21 1.81 0.05 0.25 na na 0.16 2.14 7075/05 T6/200S 66.471 2.15 1.06 0.053 0.771 <0.10 2.45 435999.6 7877571 689.83 T7_00 EBX080 0.00 8.00 63.697 5.72 1.90 0.07 <0.10 na na 0.16 2.39 7099/05 T7/00 68.4 2.65 0.66 0.07 <0.10 <0.10 0.87 435994.4 7877671 672.51 T7_100N EBX088 0.00 6.00 64.355 4.62 2.03 0.06 <0.10 na na 0.17 2.14 7153/05 T7100N 68.55 1.61 0.4 0.052 <0.10 <0.10 1.39 436004.7 7877471 736.43 T7_100S EBX074 0.00 6.00 62.158 6.42 2.83 0.05 0.31 na na 0.25 3.02 7081/05 T7/100S 63.284 7.15 0.75 0.069 1.154 0.1 1.15

Table 14.1.1.2: Eluvial Ore –Chemical Analysis: RoM and Lump

Coordinates RoM Lump

X Y Z Hole Id Laboratory Name From To Fe SiO2 AI2O3 P MnO CaO MgO TiO2 LOI NºLCT Hole Id Fe SiO2 A12O3 P Mn TiO2 LOI

436368.1 7877088.2 890.33 A3 EBX3 0.00 10.00 59.900 6.12 4.22 0.09 0.04 na na 0.22 5.39 A3 65.1 3.39 2.48 0.08 3.28 436306.0 7877164.5 863.04 A4 EBX4 0.00 10.00 64.200 6.20 1.33 0.07 0.04 na na 0.12 1.87 A4 67.32 3.42 0.35 0.06 1.2 436122.0 7877380.2 827.40 A7_CAN4A EBX 107 0.00 4.20 64.587 4.390 2.320 0.040 <0.10 na na 0.190 2.020 7177/05 A7 (0-4.2m) 68.9 1.48 0.18 0.05 <0.10 <0.10 1.07 436149.1 7877355.7 849.51 CAN_3A (0-6m) EBX104 0.00 6.00 66.370 4.96 0.97 0.04 <0.10 na na 0.11 1.08 7168/05 CAN_3A (0-6m) 67.5 2.68 0.32 0.04 <0.10 <0.10 1.70 436149.1 7877355.7 849.51 CAN_3A (6-10.20m) EBX105 6.00 10.20 61.098 12.3 0.40 0.05 <0.10 na na <0.10 0.97 7171/05 CAN_3A (6-10.20m) 63.6 7.61 0.10 0.04 0.14 <0.10 1.99 436075.8 7877285.9 857.79 CAN_3B EBX84 0.00 15.40 62.217 7.12 2.68 0.09 <0.10 na na 0.19 2.67 7111/05 CAN 3B 65.0 6.72 0.18 0.04 <0.10 <0.10 1.37 436015.4 7877208.4 861.71 CAN_3C EBX87 0.00 11.30 64.072 6.78 0.95 0.05 <0.10 na na 0.11 2.00 7120/05 CAN 3C 65.7 4.55 0.58 0.04 <0.10 <0.10 1.62 435949.3 7877141.8 846.56 CAN 3D (0.0 a 5.0m) EBX97 0.00 5.00 62.079 9.85 0.58 0.05 <0.10 na na <0.10 1.79 7147/05 CAN 3D (0.0 a 5.0m) 64.7 6.99 0.22 0.04 <0.10 <0.10 1.09 435949.3 7877141.8 846.56 CAN 3D (5-11.65m) EBX98 5.00 11.65 66.536 3.25 1.06 0.05 <0.10 na na 0.10 1.63 7150/05 CAN 3D (5-11.65m) 67.5 2.16 0.67 0.05 <0.10 <0.10 1.70 436049.8 7877306.6 833.66 CAN 4B (0-6.90m) EBX101 0.00 6.90 64.796 4.16 1.92 0.05 <0.10 na na 0.16 2.39 7159/05 CAN 4B (0-6.90m) 65.6 1.41 1.25 0.12 <0.10 0.10 1.34 436049.8 7877306.6 833.66 CAN 4B(6.90-11.80m) EBX102 6.90 11.90 64.375 5.63 0.84 0.05 <0.10 na na 0.12 1.68 7162/05 CAN 4B(6.90-11.80m) 66.7 3.81 0.47 0.05 <0.10 0.10 1.13 435945.2 7877145.8 844.36 CAN 4D (0.0 a 7.20m) EBX95 0.00 7.20 64.517 4.04 2.34 0.04 <0.10 na na 0.16 2.50 7141/05 CAN 4D 0.94(0.0 a 7.20m) 67.4 1.27 1.12 0.04 <0.10 <0.10 2.14 435905.8 7877058.9 841.53 CAN 4E (0 a 6.20m) EBX125 0.00 6.20 60.571 9.31 2.01 0.05 <0.10 na na 0.17 2.15 7567/05 CAN 4E (0 a 6.20m) 66.3 3.31 0.94 0.04 <0.10 <0.10 0.98

435905.8 7877058.9 841.53 CAN-4E (10.05 a 13.05) EBX125 10.05 13.05 64.628 7.80 0.43 0.05 <0.10 na na <0.10 1.30 7579/05 CAN-4E (10.05 a 13.05) 66.3 3.94 0.12 0.04 <0.10 <0.10 0.60

436263.6 7876744.1 860.15 D1 EBX54 0.00 10.00 45.565 30.0 1.78 0.10 <0.10 na na 0.19 2.21 6659/05 D1 49.9 27.3 0.46 0.06 <0.10 <0.10 0.78 436065.8 7876839.6 973.16 E3 EBX 1 0.00 10.00 63.500 4.07 2.91 0.10 0.02 na na 0.17 2.87 6665/05 E3 69.8 1.38 0.37 0.09 <0.10 <0.10 0.74 435999.8 7876916.8 851.24 E4 EBX67 0.00 10.00 61.982 9.30 1.03 0.06 <0.10 na na 0.11 1.89 7060/05 E4 66.3 4.57 0.45 0.05 <0.10 0.10 0.63



Correlation RoM x Lump

The iron grade of RoM and Lump for each sample was plotted on separate graphs for colluvium and eluvium. The equations that relate the grade of Fe in RoM with the grade of Fe in the Lump was obtained by linear regression. The results for the two kinds of ore present in the area, eluvial and colluvial are discussed below.

The first graph presented in Figure 14-2, shows the correlation curve for the grade of Fe of the eluvial type ore. A good correlation is shown between the tests. For the eluvial graph for Fe, the following linear equation is observed: Lump = 0.85 x RoM + 12.454. Therefore, substituting the iron grade in RoM, the value of the iron grade in Lump is obtained. Considering that the grade of iron expected in the product at Mine 63 is 64.2%, the average grade of feed for RoM shall be 60.9% Fe.

The second graph presented in Figure 14-2 shows the correlation curve for the grade of colluvial type ore. In this case, the low correlation between the grades can be noted. This result can be explained by the characteristics of this type of ore that presents high variability in the distribution of iron grades because of the clastic nature of the material.

For the graph of Fe in Colluvium, the following linear equation is observed: Lump = 0.3657 x RoM + 44.144. Therefore, substituting the x for the grade of Fe in RoM, the value will be obtained of Fe in Lump. Considering that the grade of iron expected in the product of Mine 63 is 64.2%, the average grade of feed for RoM should be 54.8% Fe. Because of the high variability obtained in the colluvium samples, additional tests are planned, using a larger number of samples. In addition, the particle size will be considered as well as the global chemistry.

14.1.2 Mineralogical Analysis

The mineralogical contents for seven samples with three product sizes each are presented in Table 14.1.2.1. The major contents of the samples are iron oxides and hydroxides in aggregate or in mixed particles. The principal mineral is hematite. Goethite/limonite is very porous and is found free or interspersed among other iron oxide crystals and may show coloform texture, bordering hematite aggregates. Martitic hematite is extremely rare and occurs as very porous crystals, with shapes varying from anhedric to subhedric and grain sizes ranging from cryptocrystalline to very fine. Specular hematite is also rare, and occurs as elongate, oriented crystals, which are rarely acicular. Quartz is anhedric and free of inclusions. Occasionally, quartz occurs within aggregates and shows a reddish coloration due to a fine goethite/limonite cover. Kaolinite occurs freely, associated with goethite/limonite and sometimes overlain by it. Cryptocrystalline and lamellar manganese oxides occur freely associated to goethite/limonite and, rarely containing inclusions of hematite and quartz. Free leucoxene, probably a product of an alteration process of rutile, is present with goethite/limonite aggregates. Phosphorous is present in the samples as apatite, which occurs in anhedric and subhedric crystals included in hematite or as an aggregate of cryptocrystalline crystals included or associated with goethite/limonite.

Yellow and red or brown agglomerates formed by an association of goethite/limonite, argillaceous minerals, hematite, quartz and manganese oxides are present in almost all the fines samples, except AM 0053 and AM 058.



Table 14.1.2.1: Mineralogical Analyses of Samples from Mine 63

Hematite Goethite Goethite/Aggregate Free Quartz Quartz/Aggregate Manganese Kaolin Gibbsite Sample VOL (%) Weight (%) VOL (%) Weight (%) VOL (%) Weight (%) VOL (%) Weight (%) VOL (%) Weight (%) VOL (%) Weight (%) VOL (%) Weight (%) VOL (%) Weight (%)

AM - 11 Lump 96.80 97.70 0.00 0.00 3.10 2.20 0.00 0.00 0.10 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Sinter Feed 76.20 81.30 7.90 7.00 13.30 10.00 11.30 0.60 0.00 0.00 0.00 0.00 1.70 0.90 0.20 0.20 Pellet Feed 46.10 57.10 1.30 1.30 33.80 30.10 0.00 7.00 0.00 0.00 0.00 0.00 7.50 4.50 0.00 0.00 AM - 13 Lump 58.10 66.00 14.80 13.00 23.00 18.70 0.80 0.00 0.00 0.00 0.00 0.00 4.10 2.30 0.00 0.00 Sinter Feed 45.60 55.80 4.80 4.80 38.20 33.30 3.60 0.50 0.00 0.00 0.00 0.00 10.60 6.30 0.00 0.00 Pellet Feed 3.50 5.50 5.10 6.80 42.30 48.60 0.40 2.90 0.00 0.00 0.60 0.70 44.10 34.70 0.80 0.80 AM - 20 Lump 90.50 93.10 0.30 0.30 8.00 6.00 10.30 0.20 0.30 0.10 0.20 0.20 0.30 0.10 0.00 0.00 Sinter Feed 56.00 65.90 0.00 0.00 31.30 26.60 19.30 6.10 1.30 0.80 0.00 0.00 1.10 0.60 0.00 0.00 Pellet Feed 24.40 35.10 0.00 0.00 32.90 34.20 25.10 14.00 0.00 0.00 0.20 0.20 23.20 16.50 0.00 0.00 AM - 47 Lump 36.70 47.50 16.00 17.30 15.60 14.60 21.40 16.40 1.50 1.00 0.00 0.00 5.10 3.30 0.00 0.00 Sinter Feed 37.50 49.80 7.30 8.10 18.60 17.80 29.50 14.30 3.30 2.20 0.00 0.00 11.90 7.80 0.00 0.00 Pellet Feed 35.60 47.90 6.80 7.60 17.90 17.40 32.70 20.00 0.00 0.00 1.10 1.00 9.10 6.00 0.00 0.00 AM - 48 Lump 59.40 74.00 0.00 0.00 1.70 1.60 19.20 20.50 2.60 1.60 0.00 0.00 3.60 2.20 0.00 0.00 Sinter Feed 62.00 73.90 0.00 0.00 12.50 10.80 33.70 11.50 2.60 1.60 0.50 0.40 3.10 1.80 0.00 0.00 Pellet Feed 32.50 44.40 6.40 7.20 21.30 21.00 5.10 23.20 0.00 0.00 0.10 0.10 6.00 4.10 0.00 0.00 AM - 53 Lump 39.90 45.90 47.20 45.10 5.80 4.80 15.60 2.90 1.00 0.60 0.40 0.30 0.70 0.40 0.00 0.00 Sinter Feed 22.70 30.60 38.10 42.70 0.00 0.00 0.00 10.60 14.90 10.10 0.70 0.60 8.10 5.40 0.00 0.00 Pellet Feed 19.10 28.90 14.70 18.50 6.60 7.20 51.50 39.20 0.70 0.60 0.30 0.30 7.10 5.30 0.00 0.00 AM - 58 Lump 98.30 98.90 0.40 0.30 0.50 0.40 0.50 0.20 0.20 0.10 0.00 0.00 0.10 0.10 0.00 0.00 Sinter Feed 67.50 77.30 0.00 0.00 15.50 12.80 16.60 9.60 0.00 0.00 0.10 0.10 0.20 0.10 0.00 0.00 Pellet Feed 18.10 28.40 3.40 4.50 15.50 17.60 53.40 42.20 1.70 1.40 0.00 0.00 7.80 6.00 0.00 0.00



14.1.3 Calculation of Mass Balance

The mass balance is used to quantitatively establish the efficiency, yield and the dimensioning of the process plant.

For this study several size fractions characteristic of Lump and Sinter Feed were considered, in order to determine the mass recovery (product yield) of these materials. A total of 110 samples were analyzed; the results are summarized in Table 14.1.3.1 below and the sample locations are shown in Figure 14-3. The samples used in the mass balance calculation cover the entire mine area and are therefore quite representative of the material to feed the beneficiation plant.

Table 14.1.3.1: Average Results of Mass Recovery – Lump and Sinter Feed

Lump Fractions Lump Sinter Feed Fractions Sinter Feed

<25.40m

m

>19.00m

m

Weight%

<19.00mm

>12.50mm

Weight%

<12.50mm

>9.50mm

Weight%

<9.50mm

>6.35mm

Weight%

<25.40mm

>6.35mm

Weight%

<6.35mm

>4.75mm

Weight%

<4.75mm

>3.35mm

Weight%

<3.35mm

>2.00mm

Weight%

<2.00mm

>1.00mm

Weight%

<6.35mm

>1mm

Weight%

MEAN 12.63 30.41 15.46 10.23 68.73 5.48 5.62 4.01 2.17 17.27STD.DEV. 6.15 4.27 2.85 2.05 5.68 1.51 1.41 1.08 0.69 3.93MIN 1.80 20.89 9.51 6.77 55.45 2.48 3.45 1.90 0.91 9.57MAX 27.95 42.29 22.60 16.23 83.57 10.01 10.92 7.46 4.28 31.83

The size fractions for Lump are between 25.4 and 6.35mm and for Sinter Feed between 6.35 and 1.00mm. In Lump, the average weight percent is 68.7%, with minimum and maximum values of 55.5% and 83.6% respectively. The decision was to adopt 55%, the lowest value, as the project premise. The average weight percent in Sinter Feed is 17.3% with a minimum of 9.6% and maximum of 31.8%. A mass recovery of 11% of Sinter Feed was adopted as the premise for the project.

14.2 Mineral Processing and Metallurgical Testing - Urucum NE

MMX Corumbá performed bench scale tests of partition and gravimetric concentration in order to evaluate the potential of the resources in Urucum NE area for the production of Lump and Sinter Feed.

These tests were designed to evaluate the concentration properties of the resource considering mass and metallurgical recovery. The optimal methods obtained for concentration of the ore were based on gravity concentration processes.

14.2.1 Location and Preparation of Metallurgical Samples

Twenty-five samples were collected in the Urucum NE area from the same exploration shafts used in the geologic model. The sample locations are shown in Figure 14-4 and the principal chemical characteristics of these samples are presented in Table 14.2.1.1.



Table 14.2.1.1: Characteristics of Samples Analyzed in Heavy Medium Concentration

Sample ID Fe Al2O3 SiO2 P Mn TiO2 LOI K2O

L14_2400S 46.00 5.50 24.70 0.054 0.66 0.26 3.30 0.34L14_2600S 57.20 2.30 13.50 0.053 0.09 0.16 1.53 0.11L15_2400S A 59.60 2.30 10.10 0.055 0.15 0.15 1.28 0.11L15_2600S 60.20 2.30 8.50 0.055 0.37 0.16 1.55 0.13L15_2800S A 52.50 3.50 17.30 0.049 0.42 0.16 1.95 0.19L15_2800S B 60.10 2.80 7.60 0.051 0.37 0.16 1.65 0.13L16_2400S 49.60 2.70 21.30 0.055 1.50 0.18 1.74 0.28L16_2600S 53.70 2.50 15.60 0.055 1.10 0.17 1.55 0.23L17_2200S 52.50 2.70 17.00 0.053 1.01 0.18 1.68 0.26L17_2400S 59.90 2.10 8.40 0.059 0.85 0.17 1.41 0.16L17_3000S A 59.60 3.00 7.00 0.066 0.02 0.18 1.92 0.11L17_3000S B 60.00 3.00 9.50 0.059 0.02 0.20 1.60 0.15L17_3200S A 60.30 2.80 6.90 0.059 0.05 0.18 1.70 0.10L17_3200S B 59.30 2.40 8.40 0.059 0.02 0.16 1.46 0.14L18_2200S 52.20 2.30 17.40 0.054 1.32 0.16 1.47 0.25L18_2400S 53.80 2.10 16.50 0.055 0.46 0.15 1.96 0.22L18_3000S 62.40 2.10 7.50 0.053 0.02 0.14 1.11 0.08L18_3200S 58.30 1.90 13.40 0.056 0.02 0.13 1.33 0.08L19_2200S 55.00 4.70 13.40 0.066 0.27 0.24 2.49 0.14L19_2400S 60.30 2.70 8.70 0.052 0.12 0.15 1.45 0.06L19_2800S 55.20 2.00 15.80 0.051 0.08 0.13 1.52 0.11L19_3000S A 62.70 2.40 7.90 0.059 0.05 0.18 1.57 0.13L19_3200S 59.00 1.80 11.90 0.054 0.02 0.12 1.12 0.11L20_2600S 59.30 2.70 11.00 0.052 0.07 0.16 1.50 0.08L20_3000S 54.20 2.60 16.90 0.067 0.36 0.14 1.76 0.16Average 56.92 2.69 12.65 0.056 0.38 0.17 1.66 0.15

14.2.2 Methodology

All samples were prepared according to flowchart in Figure 14-5 before the gravimetric concentration tests were carried out.

The sample preparation resulted in three size fractions to be used in the gravimetric tests and one sample considered waste, as described below:

• Fraction <38 mm > 6.35 mm –concentration test - Lump 1;

• Fraction <25 mm >9.52mm –concentration test - Lump 3;

• Fraction < 6.35mm > 1.00mm –concentration test - Sinter Feed; and

• Fraction < 1.00 mm – considered tailings.

The heavy medium used in the assays was a suspension of atomized Ferrosilicon with a density of approximately 7.00g/cm³. A suspension with 83.3% solids was prepared to obtain a stable pulp with a density of 3.50g/cm³.

14.2.3 Results

The samples, after preparation, presented size fraction mass yield and chemical analysis described in Tables 14.2.3.1 and 14.2.3.2.



Table 14.2.3.1: Mass Yield of Different Products After Processing

Shaft ID < 38.0 mm >6.3 mm (%) < 6.35 mm >1.00 mm (%) <1.00 mm (%)

L14_2400S 53.92 21.18 24.90L14_2600S 76.15 16.99 6.86L15_2400S A 75.18 15.95 8.87L15_2600S 72.01 19.40 8.59L15_2800S A 70.23 20.39 9.38L15_2800S B 65.39 17.77 16.84L16_2400S 70.44 18.41 11.15L16_2600S 70.26 20.11 9.63L17_2200S 70.24 18.53 11.23L17_2400S 72.77 19.25 7.98L17_3000S A 70.06 21.14 8.80L17_3000S B 69.45 20.20 10.35L17_3200S A 68.33 23.66 8.01L17_3200S B 68.22 22.82 8.96L18_2200S 71.28 18.89 9.83L18_2400S 68.31 19.77 11.92L18_3000S 67.69 18.81 13.50L18_3200S 76.97 16.39 6.64L19_2200S 72.54 19.11 8.35L19_2400S 75.23 18.78 5.99L19_2800S 71.97 21.33 6.70L19_3000S A 69.15 25.27 5.58L19_3200S 74.03 18.12 7.85L20_2600S 73.47 19.99 6.54L20_3000S 73.86 16.24 9.90Average 70.69 19.54 9.77

Table 14.2.3.2: Average Chemical Analysis Before Gravimetric Concentration

Fraction Fe Al2O3 SiO2 P P.F. K2O MnO TiO2

Lump1 62.88 1.08 7.85 0.060 0.76 0.11 0.47 0.09Lump3 62.44 0.87 9.19 0.060 0.70 0.11 0.55 0.10Sinter Feed 55.38 2.23 15.12 0.070 1.80 0.18 0.67 0.18

The results of the gravity concentration tests in Sinter Feed, Lump 1 and Lump 3 are presented in Tables 14.2.3.3, 14.2.3.4 and 14.2.3.5, respectively. The average grades obtained in the tests with Lump 1 were 65.02% Fe and 4.86% SiO2 and with Lump 3, 64.76% Fe and 5.76% SiO2. When the results of the concentration of the two types of products (Lump 1 and Lump 3) are compared, it is noted that there is not a significant difference in grade, indicating that the reduction of top size of the Lump to 25mm does not bring a gain in its quality. The mass and metallurgical recoveries of the concentration tests were on average of 83% and 86% for LUMP 1 and of 88% and 91% for LUMP 3.

Table 14.2.3.3: Average Chemical Quality of Sinter Feed

Fe Al2O3 SiO2 P P.F. K2O MnO TiO2

Sinter feed concentrate 64.30 1.64 4.78 0.05 1.05 0.06 0.15 0.11



Table 14.2.3.4: Results of Heavy Medium Tests for the Fraction <38.00> - LUMP1



Table 14.2.3.5: Results of Heavy Medium Tests for the Fraction < 25.00 >9.52 – LUMP3



14.2.4 Conclusion

The first indicative tests with samples from Urucum NE showed good results for the production of iron ore products adequate for the current market. According to the technological characterization of the samples, approximately 57% of the mass of RoM can be transformed into Lump with average grades of 65% Fe and 5% SiO2 using dense media concentration (DMS). As with the Lump, the Sinter Feed also presented good indicative results.

Partition and concentration tests are in progress with other samples from Urucum NE to increase the representativity both in the number of samples and in spatial and quality distribution.

SRK Job No.: 162703.03




Figure 14-1

Location of Metallurgical Samples, Mine 63

SRK Job No.: 162703.03


Eluvium Area

Colluvium Area



Figure 14-2

Iron Percentage RoM vs. Lump, Mine 63

SRK Job No.: 162703.03




Figure 14-3

Mass Balance Samples, Mine 63

SRK Job No.: 162703.03




Figure 14-4

Location Map of Metallurgical Samples, Urucum NE

SRK Job No.: 162703.03




Figure 14-5

Flowchart of Preparation of Samples

for Dense Medium Tests, Urucum NE



15 Mineral Resource and Reserve Estimates (Item

19)

The resource was estimated by Prominas, an independent geologic and engineering consultant company based in Belo Horizonte, under the supervision of MMX personnel. SRK reviewed the resource estimation procedures and results and performed separate validation procedures. MineSight software was used by Prominas and Vulcan software by SRK. SRK received the database as a Microsoft Excel file with four sheets containing the collar coordinates, downhole surveys, assays, and lithologic information. The MineSight surfaces and 3D solids were exported as Vulcan surfaces and solids by Prominas and given to SRK.

15.1 Mineral Resource and Reserve Estimation for Mine 63

The resource estimate uses all data through December 2006 and is depleted for production through September 2007. The resource estimation procedure was first described in a NI43-101 Technical Report by SRK in May 2007.

15.1.1 Database

The assays are received from the laboratory as electronic files and as hard copies of the assay certificates. The assays ares entered into an Acquire database where it is checked for errors in duplication of fields, sample intervals, and total depth. Channel samples, shafts, and drillholes are all used in the resource database. Figure 15-1 is location map of all channel samples, shafts, and drillholes in the database.

15.1.2 Geological Model

For the purposes of the resource and reserve evaluation, the area of Mine 63 was divided into two separate models: Eluvium Model and the Colluvium Model. Two types of material were modeled in the Colluvium area, colluvium (COL) and breccia (BRE); and two types were modeled in the Eluvial area, COL and Eluvium (LIX).

Two sets of vertical cross sections were generated and interpreted for each model. In the eluvium area, sections are oriented NE-SW and NW-SE and in the colluvium area, the sections are N-S and E-W. The geological contacts were justified between the two sets of sections for each area, and digitized. 3D solids were created for the COL, BRE, and LIX. Figure 15-2, 15-3 and 15-4 illustrate the 3D solids of Mine 63.

15.1.3 Resource Database

Fifty-four shaft and channel samples were excluded from the database for the resource estimation procedure. Two different criteria were used to exclude samples: samples with length of more than 6m or less than 1m and samples within 10.0m of drillholes. SRK has reviewed the excluded samples and notes that the average grade is 57.9% Fe which is somewhat higher than the average grade of the samples which were retained. The revised database with 142 drillholes was obtained after the application of the criteria cited above. The sample locations in the resource database are shown in Figure 15-5 and are summarized in Table 15.1.3.1.



Table 15.1.3.1: Resource Database, Mine 63

Types of Drilling # Drilling # Samples Sampled Meters % Meters

Channel 7 15 83 7%Drill Hole 81 384 919 74%Shaft 54 65 237 19%Total 142 464 1,239 100%

A statistical analysis was performed on the samples in each area, Colluvium and Eluvium, type of material (LIX, COL and BRE) and type of drilling (channel, drill hole and shaft). After the statistical analysis it was decided to use all types of samples in the resource estimate because the statistics showed no bias and the method used for the channel samples and shaft samples are similar to the sampling support of the drill holes.

Unassayed Intervals

Some intervals contained within the COL, BRE, or LIX 3D solids had not undergone laboratory analysis. In the original geologic description, some of these intervals that are internal to the mineralized area were described as arkose and are considered internal waste material. Other intervals were not analyzed because there was no core recovery. It was decided to assign a value of zero to all elements in the intervals considered to be internal waste and to assign a value of -1 to those intervals where core was not recovered. In the compositing procedure, the internal waste would be calculated with a value of zero, and the non-recovered intervals would not be used.

Tables 15.1.3.2 and 15.1.3.3 present summaries of the descriptive statistics for the original samples including the internal waste material.

Table 15.1.3.2: Basic Statistics – Original Assays– Colluvium Area

Fe (%) SiO2 (%) Al2O3 (%) P (%) Mn (%) TiO2 (%) LOI (%)

Sample 241 241 241 241 241 241 241 Minimum - - - - - - - Maximum 66.3 51.1 11.2 0.2 4.49 0.46 5.83 Mean 51.39 17.04 2.85 0.054 0.6 0.15 1.55 Std. Devn. 13.11 10.59 2.05 0.018 0.9 0.09 1.07 Variance 171.74 112.19 4.22 0 0.81 0.01 1.15

COL

Co. of Variation 0.26 0.62 0.72 0.34 1.49 0.57 0.69 Sample 48 48 48 48 48 48 48 Minimum - - - - - - - Maximum 64.2 47.8 6 0.3 2.71 0.28 4.66 Mean 49.92 20.96 2.27 0.1 0.46 0.12 1.66 Std. Devn. 10.55 10.08 1.22 0.067 0.5 0.05 1.17 Variance 111.39 101.56 1.48 0.004 0.25 0 1.37

BRE

Co. of Variation 0.21 0.48 0.54 0.67 1.08 0.44 0.71 Sample 289 289 289 289 289 289 289 Minimum - - - - - - - Maximum 66.3 51.1 11.2 0.3 4.49 0.46 5.83 Mean 51.13 17.74 2.74 0.062 0.58 0.15 1.57 Std. Devn. 12.7 10.61 1.95 0.037 0.84 0.08 1.09 Variance 161.4 112.55 3.78 0.001 0.71 0.01 1.19

All

Co. of Variation 0.25 0.6 0.71 0.59 1.46 0.56 0.69



Table 15.1.3.3: Statistics – Original Assays – Eluvium Area


Sample 164 164 164 164 164 164 164 Minimum - - - - - - - Maximum 68.6 33.9 14.6 0.284 0.29 0.62 9.95 Mean 60.39 8.67 2.51 0.072 0.04 0.14 1.65 Std. Devn. 6.15 5.78 2.44 0.04 0.04 0.11 1.72 Variance 37.76 33.43 5.96 0.002 0 0.01 2.97

LIX

Co. of Variation 0.1 0.67 0.97 0.55 1.04 0.78 1.04 Sample 41 41 41 41 41 41 41 Minimum 37.4 1.3 0.22 0.036 0.01 0.02 0.25 Maximum 66.7 41.3 8.6 0.44 2.25 0.4 5.77 Mean 57.84 12.77 2.43 0.078 0.14 0.15 1.71 Std. Devn. 6.7 9.44 1.92 0.039 0.39 0.09 1.32 Variance 44.86 89.08 3.67 0.002 0.15 0.01 1.75

COL

Co. of Variation 0.12 0.74 0.79 0.5 2.84 0.61 0.77 Sample 205 205 205 205 205 205 205 Minimum - - - - - - - Maximum 68.6 41.3 14.6 0.44 2.25 0.62 9.95 Mean 59.94 9.41 2.49 0.073 0.06 0.14 1.66 Std. Devn. 6.32 6.77 2.36 0.04 0.17 0.11 1.66 Variance 39.99 45.88 5.55 0.002 0.03 0.01 2.75

All

Co. of Variation 0.11 0.72 0.94 0.54 3.08 0.75 1

15.1.4 Compositing

The original samples were composited into 5m lengths with breaks at the geologic contacts. Intervals less than 2.0m were included in the previous interval if both intervals were inside the same lithologic domain. The compositing procedure resulted in 282 composite samples For grade estimation, only composites with lengths between 3 and 7m were used. Tables 15.1.4.1 and 15.1.4.2 present summary statistics for composites used in resource estimation. The composites excluded from resource estimation because they had lengths outside the accepted range include:

• Colluvium area: 21 composites in the colluvium with a mean grade of 44.8% Fe and seven composites in the breccia with a mean grade of 57.6% Fe; and

• Eluvium area: nine samples in the LIX with a mean grade of 61.1% Fe and five in the colluvium with a mean grade of 59.2% Fe.

SRK notes that the more customary method of limiting the influence of composites with lengths less than the nominal compositing length is to use length weighting in the estimation procedure. However, the validation of the block grade models indicates that this procedure of excluding composites has not created a grade bias in the estimation.



Table 15.1.4.1: Basic Statistics Composite Data Set – Colluvium Area


Sample 148 148 148 148 148 148 148 Minimum 12.66 3.5 0.15 0.013 0.01 0.01 0.04 Maximum 66.11 39.45 11.2 0.3 4.03 0.45 4.92 Mean 50.93 17.88 2.64 0.062 0.59 0.14 1.48 Std. Devn. 9.98 9.03 1.74 0.033 0.78 0.07 0.96 Variance 99.6 81.62 3.02 0.001 0.6 0.01 0.92

All

Co. of Variation 0.2 0.51 0.66 0.53 1.32 0.51 0.65

Table 15.1.4.2: Basic Statistics Length Composite Data Set – Eluvium Area


Sample 94 94 94 94 94 94 94 Minimum 38.95 2.1 0.3 0.035 - 0.01 - Maximum 68.3 38.2 9.09 0.242 1.36 0.47 7.14 Mean 59.78 9.6 2.52 0.074 0.06 0.14 1.71 Std. Devn. 5.1 6.5 2.12 0.037 0.14 0.1 1.5 Variance 26.03 42.25 4.47 0.001 0.02 0.01 2.26

All

Co. of Variation 0.09 0.68 0.84 0.5 2.52 0.67 0.88

Histograms of the iron in the colluvium and eluvium areas show different distributions. The eluvial ore presents a smaller variation of iron content with a minimum iron grade of 45.28%. The variation of the iron content in the colluvial ore is larger, with iron grades between 12 and 66%. The difference is explained by the genesis of each type of mineralization. The eluvial ore deposit is an “in situ” enrichment from the jaspelite. The colluvial ore deposit represents a depositional process. This type of iron ore contains clasts of eluvial ore as well as fragments of jaspelite and arkose within a clay matrix.

15.1.5 Density

Bulk density measurements were made on samples collected from the shafts in the colluvium and eluvium areas of Mine 63. The sampling and analysis were done by Prominas, a Brazilian company with experience in the procedures. The specific gravity (SG) measurements were done on a wet basis.

Methodology

The tests to determine density were carried out in accordance with the established Brazilian Association of Technical Standards (ABNT), listed below:

• NBR 7.185/1986 – Determination of Apparent Specific Mass, in situ, with use of sand flask; and

• NBR 10.838/1988 – Determination of Apparent Specific Mass of undeformed samples, with the use of a hydrostatic scale – displacement of volume in dense medium.

For the eluvium, the test was displacement of volume in dense medium which is the methodology used for compact or hard samples. For colluvium material, the sand flask method was used because this type of material consist of unconsolidated rock.



Eluvium

Sixty-four samples of eluvium material were collected in the walls of exploration shafts, using small pieces of compact material. The data are presented in Table 15.1.4.2. The average density for the eluvium was 3.603g/cm³, standard deviation 0.4397g/cm³ and variance 2.07g/cm³, with maximum and minimum values of 4.67 and 2.60g/cm³ respectively.

Colluvium

The method used for lab tests on colluvium material was the sand flask. Twenty-five samples of Colluvium Ore Type were collected beside or inside the exploration shafts.

The average density was 3.158g/cm³, the standard deviation was 0.3598g/cm³, the variance was 1.52g/cm³ with maximum and minimum values of 3.9 and 2.38g/cm³ respectively.

15.1.6 Topography

The preliminary survey of Mine 63 was carried out by BXF, which used a Topcon DT 209 electronic theodolite, optical plummet with angular accuracy of 20” (twenty seconds) and distances measured by tape; after setting a baseline, a Pentax PCS1S Total Station was used, with angular accuracy of 10” (ten seconds), optical plummet, 5” (five seconds) reading, 800m range with 1 circular prism and 1,100m range, with three prisms, HP 48GX calculator-type external data collector, Pawertopolite system. The calculations and drawings were made with use of topoGRAPH 98 and AutoCAD 2004 software.

The tie-in point (PA) had landmark M_24 on top of the Urucum Hill (observation deck) as a station, and its UTM coordinates (Universal Transverse Mercator System) are N 7877220.20 E 436598.27 Z 935.93.

The topography used in the original resource estimation was current as of December 2006. The topography used in this report is current as of September 2007.

BXF also surveyed the location of the drillhole collars, shafts, and channel samples

15.1.7 Variography

Variographic analysis and modeling were made for both Colluvium and Eluvium areas. The variables studied were Fe, SiO2, Al2O3, P, MnO, TiO2 and LOI in each of the areas and by individual material types.

After analysis of the directional variograms and taking into account the small number of available samples, it was decided to develop omnidirectional horizontal semi-variograms. Semi-variograms in the vertical direction were made to assess the continuity in the vertical direction and the nugget value.

The spherical model using up to two nested structures. The parameters are:

• C0 = nugget effect;

• C1 = sill 1st structure;

• C2 = sill 2nd Structure;

• A1 = range 1st structure; and

• A2 = range 2nd structure.



Figures 15-6 and 15-7 present the variograms developed for Fe in the Colluvium and Eluvium areas and tables 15.1.7.1 and 15.1.7.2 summarize all variographic models adjusted for the regional variables modeled in Colluvium and Eluvium areas.



Table 15.1.7.1: Variography – Colluvium Area

Horizontal Sill Vertical Sill Horizontal Range Vertical Range VR COD C0 C1 C2 Total C1 C2 Total A1 A2 A1 A2

COL 24.26 33.09 15.22 72.57 10.54 37.78 72.57 138.6 500 6.78 14.93 FE ALL 34.25 23.34 9.99 67.58 33.33 - 67.58 173.28 499.2 19.27 -

COL 35.57 44.38 19.84 99.79 68.76 - 104.33 116.24 467.53 17.11 - SiO2 ALL 39 49.72 9.37 98.09 62.03 - 101.03 151.7 532.87 20.31 -

COL 1.28 1.353 1.356 3.989 2.336 - 3.616 169.08 500 11.15 - Al2O3 ALL 1.6 1.022 0.897 3.52 1.758 - 3.358 129.42 499.18 11 -

COL 0.2993 0.5803 0.2164 1.096 0.0795 - 0.3788 101.15 367.38 3.77 - P ALL 0.18 0.6981 0.1925 1.0706 0.2934 - 0.4734 78.46 344.75 10 -

COL 0.55 0.276 0.154 0.981 0.502 - 1.052 152.95 325 15.47 - MnO ALL 0.458 0.394 0.041 0.893 0.482 - 0.94 135.2 318 10.82 -

COL 0.004 0.0005 0.0029 0.0074 0.0027 - 0.0067 208.3 420.38 11.48 - TiO2 ALL 0.004 0.0012 0.0011 0.0063 0.0025 - 0.0065 249.87 454.53 12.83 -

COL 0.403 0.549 0.24 1.191 0.791 - 1.194 56.2 347.55 10.17 - LOI ALL 0.199 0.901 0.091 1.191 0.991 - 1.19 64.6 306.21 9.9 -

Table 15.1.7.2: Variography – Eluvium Area

Horizontal Sill Vertical Sill Horizontal Range Vertical Range VR COD C0 C1 C2 Total C1 C2 Total A1 A2 A1 A2

LIX 0.43 0.31 0.29 1.03 1.07 - 1.5 26.32 398.56 12.1 - FE

ALL 13.3 1.89 7.4 22.59 8.65 - 21.95 118.11 381.5 16.94 - LIX 17.8 6.08 4.03 27.9 5.61 - 23.41 84.71 338.82 9.26 -

SiO2 ALL 25.5 4.6 7.83 37.93 3.28 - 28.78 88.08 393.08 10.03 - LIX 0.31 1.785 3.77 5.865 4.387 - 4.697 81.16 521.83 12.63 -

Al2O3 ALL 0.25 1.729 3.316 5.295 3.001 - 3.251 75.87 490.26 11.7 - LIX 0.0001 0.0004 0.0007 0.0012 0.0008 - 0.0009 76.38 353.47 24.51 -

P ALL 0.0001 0.0005 0.0006 0.0012 0.0008 - 0.0009 108.56 435.83 17.05 - LIX 0.011 0.002 0.001 0.014 0.002 0.001 0.013 81.69 241.92 4.44 14.04

MnO ALL 0.01 0.002 0.0013 0.013 0.037 - 0.047 74.37 210.83 14.68 - LIX 0.002 0.0031 0.0079 0.013 0.008 - 0.01 32.68 495 12.88 -

TiO2 ALL 0.0018 0.0028 0.0066 0.0112 0.0048 - 0.0066 64.57 441.79 10.78 - LIX 0.013 0.001 - 0.014 1.905 - 1.918 184.82 - 6.38 -

LOI ALL 0.042 0.003 0.004 0.049 1.129 0.799 1.97 83.95 259.1 4.68 10.16



The adjusted models presented geometric anisotropy related to the range in the horizontal plane. In some cases, the models also presented zonal anisotropy. The vertical variograms do not show good structure, because of the small thickness of the layers and the consequent few sample numbers.

To solve the problem of anisotropy, the technique of telescoping was employed. This technique was described by Campos (1989) and developed in the algorithm of decomposition of variograms that deals with complex situations such as nested structures with geometric and zonal anisotropies. This method was adopted by Girodo and colleagues (personal communication, 2007) in the evaluation of iron ore mines in the Iron Ore Quadrangle of Minas Gerais.

The results of the telescoping study are shown in Table 15.1.7.3 and Table 15.1.7.4. The range in the z direction was set to an artificially high number so that the kriging weight would not be limited in the vertical direction.



Table 15.1.7.3: Telescoped Variograms – Colluvium Area

Structures Ranges Structure 1 Ranges Structure 2 Ranges Structure 3 VR/Type Code Nugget Sill 1 Sill 2 Sill 3 X Y Z X Y Z X Y Z

COL 24.26 10.54 22.56 15.22 139 139 7 139 139 15 500 500 15 Fe ALL 34.25 23.34 9.99 - 173 173 19 499 499 19 - - -

COL 35.57 44.38 19.84 4.54 116 116 17 468 468 17 99999 99999 17 SiO2 ALL 39.00 49.72 9.37 2.94 152 152 20 533 533 20 99999 99999 20

COL 1.28 1.35 0.98 0.37 169 169 11 500 500 11 500 500 99999 Al2O3 ALL 1.60 1.02 0.74 0.16 129 129 11 499 499 11 499 499 99999

COL 0.30 0.08 0.50 0.22 101 101 8 101 101 99999 367 367 99999 P ALL 0.18 0.29 0.40 0.19 78 78 10 78 78 99999 345 345 99999

COL 0.55 0.28 0.15 0.07 153 153 15 325 325 15 99999 99999 15 Mn ALL 0.46 0.39 0.04 0.05 135 135 20 318 318 20 99999 99999 20

COL 0.00 0.00 0.00 0.00 208 208 11 420 420 11 420 420 99999 TiO2 ALL 0.00 0.00 0.00 0.00 250 250 13 455 455 13 99999 99999 13

COL 0.40 0.55 0.24 0.00 56 56 10 348 348 10 99999 99999 10 LOI ALL 0.20 0.90 0.09 0.00 65 65 10 306 306 10 306 306 99999

Table 15.1.7.4: Telescoped Variograms – Eluvium Area

Structures Ranges Structure 1 Ranges Structure 2 Ranges Structure 3 VR/Type Code Nugget Sill 1 Sill 2 Sill 3 X Y Z X Y Z X Y Z

LIX 8.20 5.91 5.54 8.92 26 26 12 399 399 12 99999 99999 12 Fe ALL 13.30 1.89 6.77 0.64 118 118 17 382 382 17 382 382 99999

LIX 17.80 5.61 0.47 4.03 85 85 9 85 85 99999 339 339 99999 SiO2 ALL 25.50 3.28 1.32 7.83 88 88 10 88 88 99999 393 393 99999

LIX 0.31 1.79 2.60 1.17 81 81 13 522 522 13 522 522 99999 Al2O3 ALL 0.25 1.73 1.27 2.04 76 76 12 490 490 12 490 490 99999

LIX 0.00 0.00 0.00 0.00 76 76 25 353 353 25 353 353 99999 P ALL 0.00 0.00 0.00 0.00 109 109 17 436 436 17 436 436 99999

LIX 0.01 0.00 0.00 0.00 82 82 4 82 82 14 242 242 99999 Mn ALL 0.01 0.00 0.00 0.03 74 74 10 211 211 10 99999 99999 10

LIX 0.00 0.00 0.00 0.00 33 33 13 495 495 13 495 495 99999 TiO2 ALL 0.00 0.00 0.00 0.00 65 65 11 442 442 11 442 442 99999

LIX 0.01 0.00 1.90 - 185 185 6 99999 99999 6 - - - LOI ALL 0.04 0.00 0.00 1.12 84 84 5 259 259 5 99999 99999 5



15.1.8 Resource Estimation

Block Model

Following the same strategy applied to the geologic model, the area was divided into two separate block models. The Colluvium block model is oriented north-south and the Eluvium block model is rotated with an azimuth of 312°, from the reference point X = 436,150 (East UTM Location) and Y = 7,875,700 (North UTM Location).

The two block models were constructed with different cell sizes related to the sample grid spacing of each domain. The parameters of the two models are described in the Table 151.8.1. The Eluvium block model coordinates are local, the origin of the block model is the reference point cited above.

Table 15.1.8.1: Parameters of Block Model

Model Direction Minimum Maximum Block Sizes (m) No. of Blocks

X 433 000 436 250 50 65 Y 7 875 500 7 878 500 50 60 Colluvium Z 200 1 200 5 200 X 0 2 000 25 80 Y 0 2 000 25 80 Eluvium Z 500 1 200 5 140

The blocks were assigned a rock code from the 3D solids using MineSight software; the percentage of the block within the solid was also assigned to the block. Blocks that intersected more than one solid were assigned the majority rock code.

Figure 15-8 illustrates the Mine 63 Block Models.

Estimation

The variables Fe, SiO2, P, Al2O3, Mn and TiO2 were estimated by ordinary kriging, using the following parameters:

• Composite samples with length between 3.0 and 7.0m;

• The minimum number of samples was two and the maximum number of samples was 27;

• A maximum of three composites per hole were used in the estimation of each block;

• Selection of composite samples by quadrants, with a maximum of seven composites per quadrant;

• The search distance in the horizontal direction was defined by the maximum range of the variogram with no restriction in the vertical search, which is limited by the geologic solid;

• Discretization of the blocks equal to 5m x 5m x 2m in X, Y and Z; and

• Only composite samples of the same geological domain were used in each estimation.

In addition to Fe, SiO2, P, Al2O3, Mn and TiO2, the following variables were included in the estimation:



• VK – Kriging Variance;

• RS – Regression Slope;

• DISTC = distance from the center of the block to the nearest composite sample used in the block estimation;

• DISTM = average distance from the center of the block to the samples used in the block estimation;

• NA = number of samples used in the block estimation; and

• NF = number of holes used in the estimation.

For the COL (Colluvium area) and LIX (Eluvium area) geologic domains the respective variographic models were used. For the BRE geologic domain in the Colluvium area, the variographic model ALL was used but only samples of the BRE domain were used. For the COL geologic domain in the Eluvium area, the variographic model ALL was used but only samples of the COL domain was used. Tables 15.1.8.2 and 15.1.8.3 present the statistics of the estimated blocks for the Colluvium and Eluvium areas and Figures 15-9 and 15-10 present a plan view and cross-sections of the block model.

Table 15.1.8.2: Statistics of the Colluvium Block Model


# Block 4 281 4 283 4 281 4 243 4 227 4 271 4 241 Minimum 31.9 4.84 1.02 0.038 0.03 0.07 0.75 Maximum 62.6 32.18 7.42 0.23 2.52 0.28 4.14 Mean 51.43 17.53 2.83 0.06 0.62 0.15 1.59 Std. Devn. 5.39 5.07 0.85 0.022 0.47 0.03 0.48 Variance 29.08 25.73 0.72 0.001 0.22 0 0.23

All

Co. of Variation 0.1 0.29 0.3 0.37 0.76 0.22 0.3

Table 15.1.8.3: Statistics of the Eluvium Block Model


# Block 2 913 2 913 2 913 2 913 2 911 2 913 2 913 Minimum 49.67 5.48 0.47 0.039 0.01 0.05 0.09 Maximum 65.89 21.9 7.31 0.209 1.03 0.32 6.21 Mean 60.24 9.66 2.42 0.077 0.05 0.14 1.66 Std. Devn. 2.58 2.94 1.19 0.024 0.08 0.05 1.12 Variance 6.65 8.62 1.41 0.001 0.01 0 1.24

All

Co. of Variation 0.04 0.3 0.49 0.32 1.69 0.35 0.67

Model Validation

SRK validated the block model by constructing swath plots comparing iron grades of composites and block model grades in the east-west and north-south directions as shown in Figure 15-11. The plots include data from both block models and all composites, regardless of sample length. The plots show good agreement between the composite and block grades. SRK also visually compared the block model to composites by cross-section and by bench.



15.1.9 Resource Classification

The Mineral Resources are classified under the categories of Measured, Indicated and Inferred Mineral resources according to CIM guidelines. Tonnes are reported on a wet basis. The resource classification of the Colluvium and Eluvium areas was based on the kriging variance and/or the regression slope between the kriged-estimated value and the real value.

The mineral resources of the Colluvium area were classified based on the following criterion:

For the COL geologic domain:

• Indicated: Kriging Variance < 43; and

• Inferred: Kriging Variance >= 43.

For the BRE domain:

• Indicated: Kriging Variance < 40; and


The mineral resources of the Eluvium area were classified based on the following criterion:

For the LIX geologic domain:

• Measured: Kriging Variance < 13 and Regression Slope > 0.9;

• Indicated: Kriging Variance < 13 and Regression Slope <= 0.9; and


For the COL geologic domain:

• Indicated: Kriging Variance < 9.5; and

• Inferred: Kriging Variance >= 9.5.

Resource Statements

The resources for the Corumbá iron deposit are declared at a 30% Fe cut-off. The resources were depleted for mine production through September 2007. Table 15.1.8.4 lists the total resources, including ore reserves, for Mine 63 of the Corumbá Project as at September 30, 2007.

Table 15.1.8.4: Mineral Resources – Mine 63 Corumbá Project*

Classification Mt Fe (%)SiO2

(%)

Al2O3

(%)P (%) Mn (%) TiO2 (%) LOI (%)

Measured 5.2 60.92 8.27 2.62 0.08 0.03 0.14 1.75Indicated 40.4 51.90 16.81 2.67 0.06 0.53 0.14 1.51

Stockpiles 0.1 60.40 9.28 2.53 0.08 0.05 0.14 1.69Total Indicated 40.5 51.92 16.79 2.67 0.06 0.53 0.14 1.51Measured and Indicated 45.6 53.06 15.85 2.67 0.06 0.47 0.14 1.54

* Tonnes are reported on a wet basis Fe Cut-off grade is 30%



15.2 Mineral Resource Estimation – Urucum NE

15.2.1 Database

The database of the Urucum NE Project consists of 162 exploration shafts and represents the available data through September 2007. Three of these shafts were removed from the resource database because they are less than 1m in depth. An additional 22 shafts were not sampled because they did not encounter favorable lithologies. These 22 shafts were used in in the database that defined the geologic model, but are outside the model and therefore not used in the resource estimation. The resource database therefore contains 137 shafts that were used for statistical analysis and grade estimation. Table 15.2.1.1 presents the summary of the Urucum NE shafts.

Table 15.2.1.1: Summary of Exploration Shafts, Urucum NE

Number Meters % Meters

Shafts 159 703.42 100Sampled 137 605.42 86

The database consists of four Microsoft Excel spreadsheets:

• Header: collar co-ordinates of the shafts with 159 records;

• Survey: shaft surveys with 159 records; all shafts are vertical;

• Geology: final geological description with 421 records; and

• Assay: eight assays tables were generated with the global analysis (GL) and seven analyses corresponding to the granulometric intervals (F1 to F7). Samples with values below the detection limit received a value of half of the detection limit. Unsampled intervals were designated as -1.

These files were imported to the MineSight© software and during the import routines no errors were found in relation to duplicated fields or different length between the tables.

The basic statistics for the global analyses by rock type are shown in Table 15.2.1.2.



Table 15.2.1.2: Basic Statistics – Global Assay Urucum NE Area

Fe (%) Al2O3(%) SiO2(%) P(%) Mn(%) TiO2(%) LOI(%)

Valid 52 52 52 52 52 52 52

Minimum 19.4 0.8 8.2 0.025 0.02 0.06 0.9

Maximum 62.4 12.5 52.9 0.18 1.4 0.57 5.92

Mean 50.085 4.049 20.407 0.0559 0.321 0.219 2.272

1st Quartile 45.598 2.596 13.607 0.0451 0.03 0.17 1.542

3rd Quartile 56.305 5.1 25.111 0.062 0.601 0.25 2.601

Std. Devn. 8.614 2.294 9.422 0.0212 0.4 0.09 1.093

Variance 74.196 5.263 88.769 0.0004 0.16 0.008 1.194

Entire Samples COFM

Co. of Variation 0.172 0.567 0.462 0.3793 1.244 0.412 0.481

Valid 17 17 17 17 17 17 17

Minimum 45.5 1.3 8.4 0.038 0.02 0.1 0.82

Maximum 60 4.5 29.3 0.081 1.6 0.29 2.49

Mean 51.9 2.491 20.776 0.0574 0.284 0.166 1.469

1st Quartile 47.521 1.8 19.382 0.052 0.049 0.14 1.07

3rd Quartile 53.508 3.099 25.203 0.06 0.37 0.17 1.729

Std. Devn. 4.761 0.893 6.72 0.011 0.411 0.044 0.527

Variance 22.666 0.798 45.153 0.0001 0.169 0.002 0.278

Entire samples COMG

Co. of Variation 0.092 0.358 0.323 0.1918 1.447 0.264 0.359

Valid 50 50 50 50 50 50 50

Minimum 40.7 1.4 6.7 0.036 0.02 0.12 1.04

Maximum 63.1 6.13 35 0.077 1.5 0.28 4.27

Mean 54.79 2.796 15.938 0.0574 0.3 0.174 1.759

1st Quartile 51.716 1.999 9.819 0.053 0.04 0.15 1.371

3rd Quartile 59.582 3.005 20.814 0.064 0.391 0.19 1.921

Std. Devn. 5.273 1.176 6.587 0.009 0.384 0.035 0.663

Variance 27.809 1.383 43.391 0.0001 0.148 0.001 0.439

Mixed samples COFM

Co. of Variation 0.096 0.421 0.413 0.1567 1.28 0.202 0.377

Valid 31 31 31 31 31 31 31

Minimum 28.6 1.5 7.5 0.03 0.02 0.12 0.73

Maximum 62.7 6.4 48.9 0.073 1.32 0.35 2.93

Mean 54.519 2.789 16.597 0.0542 0.245 0.171 1.613

1st Quartile 52.197 2.198 11.02 0.051 0.03 0.15 1.329

3rd Quartile 59.101 2.9 19.521 0.059 0.36 0.19 1.812

Std. Devn. 6.471 0.942 7.985 0.0079 0.363 0.042 0.399

Variance 41.88 0.887 63.754 0.0001 0.132 0.002 0.159

Mixed samples COMG

Co. of Variation 0.119 0.338 0.481 0.1464 1.485 0.245 0.247

Valid 150 150 150 150 150 150 150

Minimum 19.4 0.8 6.7 0.025 0.02 0.06 0.73

Maximum 63.1 12.5 52.9 0.18 1.6 0.57 5.92

Mean 52.775 3.194 18.172 0.0562 0.294 0.188 1.874

1st Quartile 49.706 2.186 11.99 0.05 0.03 0.15 1.34

3rd Quartile 58.184 3.684 23.217 0.062 0.391 0.2 2.17

Std. Devn. 7.072 1.709 8.188 0.0144 0.386 0.065 0.841

Variance 50.017 2.919 67.047 0.0002 0.149 0.004 0.708

All samples

Co. of Variation 0.134 0.535 0.451 0.2563 1.311 0.348 0.449

15.2.2 Geologic Model

The geologic model of the Urucum NE area was created in MineSight© software using a Gridded Seam Model (GSM).



Originally, the colluvium of the Urucum NE area was classified by grain size, mineralogy and matrix characteristics, as fine to medium colluvium (COFM) and medium to coarse colluvium (COMG). The geologic model was simplified by combining the two groups into a single colluvium layer, COL, because the density and chemical qualities were not significantly different. In Urucum NE area, the lithologic layers are well defined as soil (SOL), colluvium (COL), breccia (BRE) and basement saprolite (SAP). The colluvium is sub-horizontal following the topographic surface. This allows modeling the geology as a sub-horizontal GSM, with a cell size of 15m x 15m in plan. Data points were created in the database to allow smoother transitions to areas where the saprolite is near to the surface and the colluvium is thin or non-existent. The generation of top and bottom surfaces of the colluvium layer (COL) was made through the an inverse distance (IDW) methodology, interpolating the thickness of this layer with the length of the composite intervals. A 3D solid of the colluvium was created covering the entire map area (Figure 15-12), using the contact surfaces.

To validate the solid model, two sets of vertical cross sections, NS and EW, were created with spacing based on the grid of the shafts and the solid was visually compared to the shafts.

The geologic colluvium solid was modified to obtain the final solid used in resource estimation as follows:

• The geologic solid was cut to a maximum thickness of 5m;

• Isopach curves were created and the solid was cut by the 2m isopach curves as it is considered that 2m is the minimum mining thickness;

• The solid was cut by the limits of the exploration licenses; and

• The solid was cut by the original topography surface.

Figure 15-13 illustrates the final solid.

15.2.3 Gridded Seam Block Model

The block model was generated in the MineSight© GSM module. This results in blocks with set x and y dimensions and variable z dimensions, dependent on the thickness of the layer. The block model limits are described in table 15.2.3.1.

Table 15.2.3.1: Parameters of Block Model

Direction Minimum Maximum Block Sizes (m) Nº of Blocks

X 437,600 445,600 50 160 Y 7,875,000 7,882,200 50 144 Z 100 950 variable 1

The colluvium solid was used to code the lithology variable and the percentage of the block within the solid.

15.2.4 Density

Density measurements were performed by MMX personnel, who had been trained by a Prominas technician. The methodology followed the procedures described in Section 15.1.5.

The 132 samples of colluvium were collected at the collar, middle and bottom of the exploration shafts. In order to check any variability, samples were taken in the two types of colluvium ore:



98 samples in the fine to medium colluvium and 34 samples in the medium to coarse colluvium. Table 15.2.4.1 presents the statistics of the data obtained from the tests.

The fine to medium colluvium has an average density of 2.87g/cm³ and the medium to coarse colluvium has an average density of 2.84g/cm³. The colluvium as assigned a density of 2.86 based on the density tests.

Table 15.2.4.1: Statistics of Density Tests – Colluvium Ore Type

Wet Density (g/cm3)

Parameters All Fine to medium Medium to coarse

Number 132 98 34Minimum 2.01 2.14 2.01Maximum 4.05 3.92 4.05Mean 2.86 2.87 2.84Median 2.85 2.87 2.79Standard deviation 0.37 0.35 0.44Variance 0.14 0.12 0.19Kurtosis 1.03 0.93 1.12

15.2.5 Topography

Exploration lines with spacing at 400m, 200m and 100m, were surveyed by BXF Topographia Ltda (BXF), a topographic survey company with headquarters in Ladário, MS, with supervision by the MMX exploration staff. The surveying was done with a total station Topcon, model GPT3000LW and a total station Pentax, model PCS1S. The methodology was by open polygonal, linked to the mark 1,065 IBGE (Brazilian Official Mark on Santa Cruz Hill) with the UTM coordinates N-7,876,829.21 and E-437,739.16, elevation of 1,065.44 m, DATUM SAD 69. The topographic surface was generated using points on the exploration lines, and a laser survey (ALTM - Airborne Laser Terrain Mappper) performed by GEOID Company, between the lines. The surface was generated using Autodesk software AutoCAD 2006. BXF also surveyed the location of the exploration shafts.

15.2.6 Compositing

The original assay data was composited using the MineSight seam composite procedure whereby a single composite was calculated for the colluvium layer. The minimum length of the composite is 2m, the maximum is 5m, and the average is 4.4m.

The database consists of analyses of seven different elements (Fe, SiO2, Al2O3, P, Mn, TiO2 and LOI) for each of the eight size fractions shown in Table 15.2.6.1, and the mass recovery for each size fraction. The principal estimation was done using grades for the global fraction. The grades of the individual size fractions and their respective mass recoveries were also estimated for use in future reserve estimates.



Table 15.2.6.1: Size Fractions of Sample Analyses

Variable name Size Fraction

F1 >3/4inF2 >1/2” <3/4 inF3 >1/4” < 1/2 inF4 >4mm < 1/4 inF5 >1mm <4mmF6 >0.15mm < 1mmF7 <0.15mmGlobal Size undifferentiated

15.2.7 Variography

Variography analysis was conducted with only the global Fe variable in the colluvium. Variograms in different directions were inspected to define the best structure indicative of the spatial continuity, but it was determined that the an omnidirectional horizontal variogram was the best option. The global Fe semivariogram is presented in Figure 15-14.

15.2.8 Resource Estimation

The geology of Urucum NE Area consists of a single layer of colluvium and it was modeled as a single mineralized unit.

The blocks grades were estimated with the Inverse Distance Squared (ID2) algorithm in a 3-pass procedure as presented in Table 15.2.8.1. After the estimation had been concluded, it was observed that some blocks had not been adequately classified and that there were instances of isolated measured or indicated blocks within indicated or inferred areas. These blocks were adjusted manually. The total number of modified blocks was 87. Of these, 22 were reclassified from indicated to inferred resource, 14 from measured to indicated resource and one block from inferred to indicated resource. The distribution of blocks by classification is shown in Figure 15-15.

Table 15.2.8.1: Resources Classification Criteria

Search Ellipsoid

Resource Classification Variographic

Parameter

Search Ratio –

Horizontal Plane Min./Max. No. of Samples

Measured ¼ Range 118 m 4/6Indicated ½ Range 235 m 2/16Inferred 1 Range 470 m 1/16



Comparison of the basic statistics for the assays, composites, and block model are given in Table 15.2.8.2

Table 15.2.8.2: Basic Statistics for Block Model, Composites and Original Assays

# Min. Max. Mean 1st Quartile Median 3rd Quartile Std.Devn. Variance

Block Model 2,782 20.05 62.93 52.25 48.78 52.03 55.09 4.66 21.75

Composite 137 19.40 63.10 53.06 49.72 53.53 57.22 6.50 42.26Fe(%)

Assay 150 19.40 63.10 53.06 49.72 53.53 58.22 6.66 44.33

Block Model 2,782 1.17 11.67 3.31 2.44 2.89 4.01 1.29 1.67

Composite 137 1.13 11.90 3.06 2.21 2.71 3.71 1.38 1.90Al2O3(%)

Assay 150 0.80 12.50 3.06 2.19 2.71 3.69 1.47 2.17

Block Model 2,782 7.08 52.13 18.59 15.14 18.93 23.11 5.56 30.93

Composite 137 6.70 52.90 17.96 12.94 17.34 22.88 7.64 58.40SiO2 (%)

Assay 150 6.70 52.90 17.96 12.03 17.26 23.18 7.80 60.78

Block Model 2,782 0.026 0.180 0.055 0.049 0.054 0.059 0.009 0.000

Composite 137 0.025 0.180 0.056 0.050 0.054 0.062 0.012 0.000P(%)

Assay 150 0.025 0.180 0.056 0.050 0.055 0.062 0.012 0.000

Block Model 2,782 0.02 1.60 0.37 0.07 0.26 0.61 0.37 0.13

Composite 137 0.02 1.60 0.30 0.03 0.09 0.41 0.39 0.15Mn(%)

Assay 150 0.02 1.60 0.30 0.03 0.09 0.39 0.40 0.16

Block Model 2,782 0.10 0.45 0.19 0.16 0.18 0.21 0.05 0.00

Composite 137 0.10 0.46 0.18 0.15 0.17 0.20 0.05 0.00TiO2 (%)

Assay 150 0.06 0.57 0.18 0.15 0.17 0.20 0.06 0.00

Block Model 2,782 0.86 5.46 1.95 1.50 1.74 2.31 0.69 0.48

Composite 137 0.73 5.46 1.81 1.40 1.70 2.19 0.69 0.48LOI(%)

Assay 150 0.73 5.92 1.81 1.34 1.66 2.17 0.74 0.55

SRK validated the resource by creating a conventional 3D block model, compositing the database, and estimating grades with the same search distances and parameters as MMX. The block tonnage and grade were within 5% of MMX’s resource, which is a good validation.

15.2.9 Resource Statement

Table 15.2.9.1 below lists the resources of Urucum NE Area.

Table 15.2.9.1: Summary of Resources Urucum NE

Classification Tonnage (M t)* Fe(%) SiO2 (%) Al2O3 (%) P(%) Mn(%) TiO2 (%) LOI (%)

Measured 3.17 55.23 15.2 3.09 0.056 0.12 0.18 1.72

Indicated 34.00 53.03 18.14 2.97 0.055 0.34 0.18 1.8Measured and Indicated 37.17 53.22 17.89 2.98 0.055 0.32 0.18 1.79

Inferred 32.84 50.95 19.53 3.78 0.054 0.44 0.2 2.19(*) Tonnes reported in wet basis. Density = 2.86 g/cm³. Cut off = 20% Fe.



15.3 Reserve Estimation Mine 63

The reserve estimation used measured and indicated resources to define the pit limits through a Lerchs-Grossman pit optimization program. Prominas was responsible for the reserve estimation under the supervision of MMX. The pit optimization was conducted at the end of 2007 as reported in the May 2007 NI 43-101 Technical Report.

Based on correlation studies between RoM ore and product specifications, the average grades required for the mined ore were established. Table 15.3.1 summarizes the correlation of RoM and Lump as detailed in Section 14.

Table 15.3.1: Correlations RoM x Lump

Colluvium Eluvium

Fe Y = 0.3657 x + 44.144 Y = 0.85 x + 12.454 SiO2 Y = 0.4999 x – 0.321 Y = 0.954 x + 2.5395 Al2O3 Y = 0.294 x + 0.7128 Y = 0.3831 x + 0.0224 P Y = 0.2208 x + 0.0447 Y = 0.4477 x + 0.0262

The results were 54.4% Fe for the colluvial ore and 60.8% Fe for the eluvial ore. These grades result in an average grade of product equal to 64.03% Fe and 64.13% Fe, respectively.

Figure 15-16 presents the parameterization of measured and indicated resources for the two areas. Based on the curves for the resources, cut-off grades were established at 51.7% Fe for the Colluvium area and 59.0% Fe for the Eluvium area. Based on these result, different cuts were simulated near to the cutoff values to maximize the mineable reserves, maintaining the required average grade for the RoM ore.

The Colluvium and Eluvium block models were optimized separately, using the parameters listed below:

• RM (mass recovery)= 66% (55% Lump and 11% Sinter-feed);

• Average Product Value = US$32.02/t (Lump US$35.50/t and Sinter-Feed US$15.00/t; prices as of December 2006);

• Mine Cost RoM = US$1.38/t;

• Mine Cost Waste = US$1.00/t;

• Plant Cost = US$3.39/t product;

• Sundry Costs (Sundry costs include: planning and quality control, administration and others)= US$0.68/t product;

• Transportation Cost = US$3.12/t product (from Mine 63 to the Ladário Port);

• Colluvium Block Model;

o Density – 3.16 Colluvium and Breccia; 1.72 Waste,

o Volume - 12,500m³, and

o Pit Slope – 47o.

• Eluvium Block Model;



o Density – 3.60 Colluvium and Breccia; 3.87 Waste,

o Volume - 3,125m³, and

o Pit Slope - 48o.

Table 15.3.2 contains ore and waste in the optimized pit which was used as the base for a designed pit and subsequent mine planning. The average product value of US$32.02 is higher than the projected future prices used in the cash flow. As a check on the sensitivity of the pit optimization to the product price, two additional optimizations were run on the Colluvium area only, using US$30.00 and US$20.00. The results, given in Table 15.3.3, indicate that the pit is very robust in regard to product price and that the use of a higher iron price has no effect on the pit optimization results.

Table 15.3.2: Optimized Pit for Mine 63, Corumbá Project End of December 2006

Colluvium Eluvium Total

Class Mt Fe% Mt Fe% Mt Fe%Proven and Probable 22.69 54.41 7.85 60.81 30.53 56.05Waste 19.12 Total Pit 49.65 Strip Ratio 0.63

Table 15.3.3: Sensitivity of the Optimized Pit to Product Price in Colluvium Area Only

Average Product Price Mt Fe%

$32 22.687 54.41 $30 22.669 54.41 $20 22.463 54.41

After the pit was designed with the inclusion of ramps, the average grade of the Colluvium area was slightly above the grade required for the product specifications. The CoG within the designed pit was then lowered from 48.85% to 48.00%, increasing the Mineable Reserve by 1.09Mt. In the Eluvium area, the CoG was adjusted to 56.1% from 55.85% in order to achieve the specified product grade, resulting in a loss of 0.09Mt. The Measured Resources at or above the CoG within the designed pit were converted to Proven Reserves and the Indicated Resources at the CoG were converted to Probable Reserves. Table 15.3.4 presents the Ore Reserves for Mine 63 as of December 2006.

Table 15.3.4: Total Reserves as at December 2006 - Mine 63 Corumbá Project*

Tonnes Fe SiO2 Al2O3 P Mn LOI TiO2


Proven 5.7 61.1 8.07 2.56 0.08 0.03 1.68 0.14 Probable 25.3 54.8 14.92 2.49 0.06 0.43 1.45 0.14 Total 31.0 56.0 13.66 2.51 0.06 0.35 1.49 0.14 Waste 15.3 SR 0.49

* Tonnes are reported on a wet basis. Fe cut-off grade for Eluvium is 48.0% and for Colluvium is 56.1%. Average Fe price used is US$ 32.02.



Mine production from January to September 2007 is shown in Table 15.3.5.

Table 15.3.5: Mine 63 Production, January to September 2007

Product Mass Recovery

RoM (t) Stockpile (t) Processed (t) Lump (t) Sinter (t) Total Lump Sinter Total

1,746,334 79,600 1,666,734 844,684 225,897 1,070,581 50.68 13.55 64.23

Production from January to September 2007 was subtracted from the 2006 year-end reserves to arrive at the reserves as of September 30, 2007. The total reserves, including stockpiles, are listed in Table 15.3.6. Figure 15-17 illustrates the final pit layout of the Mine 63 project.

Table 15.3.6: Total Proven and Probable Reserves at Mine 63 Corumbá Project*,

September 30, 2007

Classification Mt Fe (%) SiO2 (%) Al2O3 (%) P (%) Mn (%) TiO2 (%) LOI (%)

Proven 4.3 61.03 8.26 2.55 0.08 0.03 0.14 1.67Probable 25.0 54.74 14.96 2.51 0.06 0.43 0.14 1.45Stockpile 0.1 60.40 9.28 2.53 0.08 0.05 0.14 1.69

Total Probable 25.1 54.76 14.94 2.51 0.06 0.43 0.14 1.45Total 29.4 55.68 13.96 2.51 0.06 0.37 0.14 1.48

* Tonnes are reported on a wet basis Fe CoG for Eluvium is 48.0% and Fe CoG for Colluvium is 56.1% Average Fe price isUS$32.02

SRK Job No.: 162703.03




Figure 15-1

All Drillholes, Channel Samples,

and Shafts – Mine 63

SRK Job No.: 162703.03

File Name: Figure 15-2.doc Date: 02-27-08 Approved: LM Figure: 15-2 Date: 02-27-08



Figure 15-2

Colluvium and Eluvium Areas of Mine 63

Colluvium Area

Eluvium Area

SRK Job No.: 162703.03




Figure 15-3

Colluvium 3D Solids in Plan and Cross-Section

SRK Job No.: 162703.03

File Name: Figure 15-4.doc Date: 02-27-08 Approved: LM Figure: 15-4 Date: 02-27-08



Figure 15-4

Eluvium 3D Solids in Plan and Cross-Section

SRK Job No.: 162703.03




Figure 15-5

Location of Samples in Resource Database - Mine 63

SRK Job No.: 162703.03




Figure 15-6

Iron Variograms–Colluvium

SRK Job No.: 162703.03




Figure 15-7

Iron Variograms–Eluvium Area

SRK Job No.: 162703.03




Figure 15-8

Colluvium and Eluvium Block Models Mine 63

SRK Job No.: 162703.03




Figure 15-9

Colluvium and Eluvium Block Grades Plan View

B

BB

AA

A

SRK Job No.: 162702.03




Figure 15-10

Colluvium and Eluvium Block Model Cross-Section

A AA

BB B

SRK Job No.: 162703.03



Figure 15-11

Swath Plots Mine 63

East-West Swath Cuts

0.000

10.000

20.000

30.000

40.000

50.000

60.000

70.000

4332

0043

3500

4338

0043

4100

4344

0043

4700

4350

0043

5300

4356

0043

5900

4362

0043

6500

Easting

Fe (

%)

Blocks

Composites

North-South Swath Cuts

0

10

20

30

40

50

60

70

7876

400

7876

500

7876

600

7876

700

7876

800

7876

900

7877

000

7877

100

7877

200

7877

300

7877

400

7877

500

7877

600

7877

700

7877

800

7877

900

Northing

Fe (

%)

Blocks

Composites

SRK Job No.: 162702.03




Figure 15-12

Colluvium Solid Urucum NE

SRK Job No.: 162702.03




Figure 15-13

Final Colluvium Solid for Resource Estimation Urucum NE

SRK Job No.: 162703.03




Figure 15-14

Iron Variogram Urucum NE

SRK Job No.: 162702.03




Figure 15-15

Blocks by Classification Urucum NE

Adjusted blocks Adjusted

blocks Measured Indicated Inferred Unclassified

SRK Job No.: 162703.03


Colluvium Area

Eluvium Area



Figure 15-16

CoG Curve Colluvium and Eluvium

Fe COG ≥ 48.85 ú Feavg = 54.4

Fe COG ≥ 55.85 ú Feavg = 60.8%

SRK Job No.: 162703.03




Figure 15-17

Mine 63 Pit Colluvium and Elluvium Areas



16 Other Relevant Data and Information (Item 20) 16.1 Potential Resources

16.1.1 Mine 63

MMX Corumbá plans to upgrade a portion of the inferred material to indicated and a portion of the indicated material to measured and to increase the total amount of resources through an exploration program that includes 1,500m of shafts, geochemical analysis by size fraction, complete implementation of a QA/QC program and maintenance of the data in Acquire database software.

16.1.2 Additional Targets

MMX Corumbá holds additional exploration permits in the Corumbá Region, located in the Rabicho Mountains. The initial exploration work in these new targets suggests a potential for new geologic resources in both colluvium and eluvium iron ore types. Development of these potential resources is part of MMX’s long-term strategy for the region

16.2 Process Improvements

A processing route using heavy liquid separation is being studied for the concentration of coarse material at Corumbá, with a view to increasing the iron grade in the Lump product and thus increasing the realized price. The process of separation in a heavy liquid involves removal of contaminants through gravity separation and the subsequent enrichment of the Lump ore. In the colluvium material, the arkose particles may be removed with this process, which will help to lower the cut-off grade and accordingly increase the reserve tonnage.

Tests have been conducted at the EMITANG installations (Empresa de Mineração Tanguá Ltda.) in Tanguá – Rio de Janeiro. Bulk samples of Lump from four different locations were collected at Mine 63, comprising 1,100t of material. The test was divided into four different categories, according to the chemical quality of the samples to be tested. These samples were submitted to the Heavy Medium Drum equipment for size separation. After the conclusion of the tests, the four different samples were submitted to “reprocessing” with the intention of evaluating the influence of the resident time in separation.

The results indicate the applicability of the process of heavy liquid separation as an alternative for the enrichment of Lump at Corumbá. However, the plant used as pilot in this third phase of development has been modified from its original characteristics. Additional tests will be run which will also test the separation with greater densities.

MMX is in the process of dimensioning the industrial plant with heavy medium drums. The commercial proposal, together with a description of the project, is in progress by the Dorr-Oliver EIMCO.



17 Additional Requirements for Operating Properties and Production Properties (Item 25)

Mine 63 is an operating property. Current mine operations produce iron ore by surface methods. Previous mining operations produced both iron ore and manganese ore by surface and underground methods.

17.1 Geotechnical Studies

In the area of Mine 63, the hillsides are steep and sustained by the competence of primary hematite jaspelite which is the protolith of the eluvial ore. The thickness of the eluvium is between 15 and 20m. The material still presents a certain rocky continuity that confers competence, although inferior to the competence of the unleached jaspelite.

The colluvium forms on the hillside below the almost vertical wall of Urucum Mountain. It is composed of reddish clayey soil, with gravel, blocks and small pebbles of jaspelite with dimensions of centimeters to tens of centimeters. The thickness of the colluvium is variable from a few meters at elevations between 550 and 600m, to a maximum of 25 to 30m locally. The average thickness is about 12m and the proportion of blocks of larger dimensions decreases from the base of the cliff toward the toe of the colluvial fan.

There are two water levels: the first at the level of silica leaching of the jaspelite in the higher elevations and the second in the colluvium. The water level varies according to the season and the lines of concentration of the subterranean flow, probably predominating at the base of this formation.

Various simulations have been conducted to achieve the optimal pit angles with the following results:

• For the final slope in colluvium: a bench face angle of 55º and a berm width of 4.7m, results in an average slope angle of 47º; and

• For slopes in eluvium with ultimate heights of 100m, a bench face angle of 75º and a berm width of 6m results in an average slope angle of 48º.

17.2 Mining Operations

MMX started iron ore mining and processing operations at Mine 63 in January 2006. Current mine operations produce iron ore by surface methods. Initial production was processed through the refurbished mobile crushing plant (AZTECA plant) which is no longer in use. In July 2006, MMX started operating the main crushing and washing plant and the first batch of Lump ore was shipped through Ladario Port later that month.

This Technical Report is based on annual ore production of 4.1Mtpy from Mine 63, producing 2.7Mt of Lump and Sinter Feed. To meet the processing rate, the average mining rate for total material movement (ore and waste) varies from 14,000tpd to 17,550tpd. Processing operations are scheduled 24 hours/day, and the mine production is scheduled to directly feed the processing operations.

The mine layout is shown in Figure 17-1.



17.3 Mining Method

MMX uses contract mining at Mine 63. A contract with Julio Simões Transportes e Serviços Ltda was signed on June 1, 2007 and is valid for 36 months form that date. The mine operates 348 days per year, three shifts per day.

The surface operations include:

• Topsoil removal;

• Ripping, drilling and blasting;

• Loading and haulage; and

• General maintenance and services.

Topsoil Removal

Topsoil operations consists of removing the cover in order to expose the ore and waste material The topsoil is stockpiled for future reclamation activities or direct placed during reclamation activities. Mine 63 operations utilize CAT D6 and D8, or similar type of dozer equipment.

Ripping, Drilling and Blasting

Mine 63 scarifies or rips waste and ore material with D8 dozer class equipment. Drilling and blasting, as required, is conducted by drilling and blasting contractors. A hydraulic breaker adapted to a 25t digging machine reduces the size of any remaining large blocks.

Grade control samples are obtained from percussive drilling and channel samples are collected and analyzed.

Loading and Haulage

Ore and waste are separately loaded into haulage trucks. A CAT330 class backhoe with 2.4m3 capacity is the primary loader. Alternatively, a CAT 980 class front-end loader with a 5m3 bucket is used as a backup loader.

Ore is transported to the primary crusher pad and waste is transported to the waste dumps with

25-30t rear dump haul trucks. Haul roads are 10m wide, with a maximum 12% grade and 1% drainage cross-slope.

General Maintenance and Services

Ore is hauled continuously to the primary crusher. As required, RoM material will feed the primary crusher. A CAT 980 type class loads the material from the RoM piles.

Haul road construction and maintenance, waste dump operations, sedimentation pond operations and other general maintenance activities utilize the reclamation dozer, Cat 140H class grader, water truck, various maintenance equipment and pickups.

17.4 Mine Planning

The mine is laid out with ten sectors in the Colluvial area and five sectors in the Eluvial area. The Colluvium reserves have an average grade of 54.4% Fe and the Eluvium reserves have an average grade of 60.81% resulting in an average mine reserve grade of 55.96% Fe. Grades in the individual sectors vary from 49.66 to 62.30% Fe. The average RoM ore grade is estimated at 55.7% for the LoM.



Table 17.4.1 below presents the planned RoM, waste and total material mined in the LoM Plan.

Table 17.4.1: Mine Production Schedule – Mine 63

Year RoM Mtpy Waste Mtpy Total Movement Mtpy

2007 0.675 0.283 0.9582008 3.723 1.604 4.8772009 4.101 2.009 6.1102010 4.101 2.009 6.1102011 4.101 2.009 6.1102012 4.101 2.009 6.1102013 4.101 2.009 6.1102014 4.101 2.009 6.1102015 0.812 0.398 1.210Total 29.366 14.333 43.705

The mine production schedule in Table 17.4.1 includes all Proven and Probable Reserves as of September 30, 2007. The quantities are based on cutoff grades of 48.85% for Colluvium and 55.85% for Eluvium. There is no dilution added to the reserves and there are no mining losses deducted from the reserves. MMX considers that internal dilution is adequately represented in the resource estimation and they intend to recover all economic material in the LoM Plan.



Table 17.4.2: Mine Personnel Requirements

Position Each Schedule Days/shifts/hrs

Supervisory/Technical Personnel Mining General Mgr 1 250,1,8 Maintenance Mgr 1 250,1,8 Operations Mgr 1 250,1,8 Planning, Mine and QC Mgr 1 250,1,8 Supply Coordinator (Sr Eng) 1 250,1,8 Safety Engineer (Sr Eng) 1 250,1,8 Environmental Eng (Jr Eng) 1 250,1,8 Junior Geologist 1 250,1,8 Supervisors 8 348,3,8 Administrative 1 1 250,1,8 Administrative 2 2 250,1,8 Administrative 3 2 250,1,8 Physics/Chem Lab (Jr Tech) 4 348,3,8 Mine Planning (Eng) 1 250,1,8 Jr Admin Adviser (Jr Eng) 1 250,1,8 Physics/Chem Lab (Tech) 1 250,1,8 Surveyor (Sr Tech) 1 250,1,8 Grade Control (Sr Tech) 1 250,1,8 Acctg (Eng) 1 250,1,8 Security/Medic 1 250,1,8 Sub-total Supervisory/Technical Staff 32 Process Operations/Maintenance Mechanics 21 348,3,8 Operators 32 348,3,8 Quality Control 4 348,3,8 Sr Operators/Mechanics 14 348,3,8 Operators/Mechanics 15 348,3,8 Jr Operators/Mechanics 9 348,3,8 Sp Tech Operators/Mechanics 1 250,1,8 Laborers 3 250,1,8 Sub-total Operations/Maintenance Staff 99 Total Mine Workforce 131

17.5 Processing

The process plant for Mine 63 ore is a simple crushing and washing plant for the production of Lump and Sinter Feed. The plant has a capacity of 4.1Mtpy. The plant has been designed to perform the following operations as shown in Figure 17-2 and the simplified flowsheet in Figure 17-3:

• Primary crushing with a conventional jaw crusher;

• Secondary and tertiary crushing with cone crushers and classification screens;

• Washing and dewatering of Lump product with trommel and screens;

• Classification and dewatering of Sinter Feed with spiral classifier with double helix and dewatering screens;

• Deposition of slurry with tailings in sedimentation ponds;



• Storage of dry tailings for possible future use, for construction of dams and for reclamation of disturbed areas; and

• Transport and storage of products.

17.6 Infrastructure

The operational infrastructure consists primarily of:

• Power transmission line 2km long and 34.5kV; connected to the main line which supplies the “Vale das Mineradoras” from Corumbá;

• Five sub-stations with a principal step-down sub-station of 1,100kVA (34.5kV/440V) and four of variable potency;

• Roads and access;

• Products stockpile areas before shipping, placed near Highway BR-262, with 80,000t capacity;

• Water well system, water treatment system, reservoirs for recovered water, and storage tanks;

• Industrial and administrative facilities (workshops, stockroom, offices and others.); and

• Two tailings facilities for rejects with storage capacity of 12Mt of solids, the first dam being constructed for the first phase and the second dam constructed after 4 to 5 years of operation.

17.6.1 Tailings

The main plant will produce approximately 300,000t of slurry tailings/yr, with fine particles <0.15mm and a solids content of 6%. According to the environmental permit construction of the tailings site will begin in the last half of 2008. The tailings facility was designed by Dam Projetos de Engenharia Ltda based in Belo Horizonte, Minas Gerais. The total capacity is 1Mm3 118,000m3 of water and 882,000m3 of tailings. The maximum height of the dam is 23m; overflow water will be returned to the beneficiation plant. The facility will also store rainwater which will be collected from the mine site.

For the first years of operation, a series of four sedimentation ponds will be used to decant water from the tailings. The ponds are successively allowed to dry and the dry tailings are removed and trucked to a dry tailings pile. Three ponds are currently in use and a fourth will be constructed in March 2008.

17.7 Contracts

MMX has negotiated a contract with Julio Simões Transportes e Serviços Ltda, signed June 1, 2007 and valid for 36 months from that date for mining ore and waste at Mine 63. MMX also has other small contracts for providing food and cleaning services.

17.8 Markets

The iron ore products from Corumbá are transported either to the pig iron plant operated by MMX Metálicos near Corumbá or to the Ladário Port on the Paraguay River from where they



can be transported to domestic markets or to the San Nicholas port in Argentina. The export destinations are Argentina, Europe, and China.

Mine 63 is also very close to a rising pig iron market in the region of Corumbá/Campo Grande.

Currently all sales from Corumbá are negotiated at spot price due to the elevated price of iron ore product. MMX will consider negotiations for long-term contracts as part of its long-term strategy. MMX will also investigate the possibility of strategic partners for the project.

17.8.1 Shipment Logistics

Lump ore is trucked directly to the pig iron plant operated by MMX Metálicos near Corumbá. Products to be sold to domestic or international markets are transported by truck to the port terminal of Granel Química on the Paraguay River in Ladario, a distance of 28km from Mine 63, and 45km from the areas of Urucum NE and Rabicho Sul

For the cash flow analysis, which considers FOB prices at the port terminal, the costs of port terminal movements are included. The port terminal belongs to the Norwegian company Odfjell, is fully authorized for exports and is capable of moving products by the waterway from either road or rail access. The products can be stored in a 15,000m2 stockyard and then loaded onto the ships.

17.9 Environmental Management

17.9.1 During the Operational Life of the Mine

The plan for rehabilitation of areas impacted by mining includes the following activities during mine operations:

• After the authorization to proceed with the vegetation removal in the mining areas is given, the topsoil is removed and stockpiled during the mining period;

• Training program for the orientation of professionals on operational planning and best practices for environmental administration of mining projects;

• As soon as the mine slopes and areas reach the final geometry, in any point of the mine life, those surfaces receive stabilization treatment, in a way to provide efficient drainage; and

• Once the re-contouring is done, a topsoil layer is applied and it will be revegetated with native seeds.

17.9.2 Mine Closure

The following areas will be recontoured and revegetated after the mine operations are completed:

• Tailings dam;

• Mining areas; and

• Plant and waste dumps.

Every area cited above will be subjected to the following reclamation program:

• Topographic reconstruction;

• Vegetation species selection; and



• Conditioning of berms and pit walls.

After the implementation of the reclamation plan, a monitoring program will be instituted for flora, fauna and human activity.

17.10 Economic Analysis

SRK has reviewed the internal LoM technical and financial model prepared by MMX for Corumbá Mine 63. The Mine has been operating since mid-2006 and the financial projections indicates a positive cash flow throughout the remaining life of the Mine. The economic analysis is presented on a post-tax basis and assumes 100% equity to provide a clear picture of the technical merits of the project.

The LoM plan, technical and economic projections in the LoM model include forward looking statements that are not historical facts and are required in accordance with the reporting requirements. These forward-looking statements are estimates and involve risks and uncertainties that could cause actual results to differ materially.

17.11 Taxes and Royalties

Taxes are included on Gross Revenues as well as the 34% Income Tax on Net Income Before Tax (NIBT). There are four royalties identified by MMX as indicated in Table 17.11.1. The 34% Income Tax/Social Security Tax is calculated on the NIBT.

Table 17.11.1: MMX Royalties

Royalty Percentage Comments

PIS 1.65% Applied to Internal Production Only COFINS 7.60% Applied to Internal Production Only CFEM 2.00% Applied to Total Production Land Owner Rights 1.00% Applied to Total Production

17.12 LoM Plan Economics

The SRK LoM plan and economics are based on the following:

• Reserves of 29.4Mt at an average grade of 55.7% Fe;

• A mine life of eight years, at a designed rate of 4,101ktpy;

• An overall average process recovery rate of 55% for Lump product and 11% for Sinter product over the LoM;

• Operating Costs are shown in Table 17.12.1;

• G&A costs:

o Sundry costs – include mine planning, quality control, administration - US$1.90/t-product for 2008 and US$1.58/t product for the remaining LoM,

o Product transport – mine to port - US$1.99/t-product for 2008 and US$1.69/t-product for the remaining LoM,

o Port terminal cost is included in sales expenses, and



o Corporate costs – miscellaneous - US$2.22/t-product for 2008 and US$1.78/t-product for the remaining LoM.

• A cash operating cost of US$8.55/t-ore or US$12.97/t of total product;

• Total capital costs of US$35.8M have been spent in 2005, 2006, and 2007. The capital costs are amortized/depreciated in accordance with MMX supplied straight-line depreciation methods. However, the capital costs are not included in the financial model; and

• Total sustaining capital costs of US$26.8M LoM are included for years 2008-2015. MMX included mine closure costs in the sustaining capital. There is no provision for salvage value.

The base case economic analysis results, shown in Table 17.12.2, indicate an after-tax net present value of US$76M at a 10% discount rate.

Table 17.12.1: Operating Costs (US$/t of product)

Description 2008 LoM

Mining 3.46 3.30 Process 3.79 2.98 Ore handling 1.74 1.37 Sundry cost 1.90 1.58 Transport cost to port 1.99 1.69 Port terminal cost 0.00 0.00 Corporate cost 2.22 1.78 Total 15.10 12.70



Table 17.12.2: LoM Economic Results (US$000s)

Description LoM Value

Ore

Ore RoM (Mt) 29.4 Grade Iron 55.7%Lump Ore

Process Recovery 55%Sinter Ore

Process Recovery 11%Gross Revenue

Lump Product $430,108 Sinter Product $77,272Gross Revenue $507,380

Royalty (Taxes)

Royalties ($22,662)Gross Income from Mining $484.718

US$/-ore t $16.51US$/t-product $25.03Gross Income from Mining $484,718

Operating Costs

Mining ($64,259) Process ($86,798) G & A (100,097)Operating Costs ($251,154)

US$/t-ore $8.55US$/t-product $12.97Operating Margin $233,564

US$/t-ore $7.95

US$/t-product $1206

Income Tax

Income Tax ($71,847)Total Tax ($71,847)

US$/t-ore $2.45US$/t-product $3.71NIAT $161,717

US$/t-ore $5.51

US$/t-product $8.35

Capital Costs

Sustaining $34,866 Equipment – sunk capital – operating mine $0 Mine Closure/Reclamation – incl in sustaining $0Total Capital ($34,866)

Cash Flow $126,738

NPV10% $76,069



17.13 Sensitivities

Sensitivity analysis for the key economic parameters are shown in Table 17.13.1. The analysis was carried out varying the base case values by +10%. The analysis suggests that the project is most sensitive to market price. Being a short life operating mine with initial capital already expensed, the project is least sensitive to ongoing capital costs.

Table 17.13.1: Project Sensitivity (NPV10% US$000’s)

Discount Rate Opex Market Prices Lump Recovery Capex

Factor % NPV

Variation

% NPV

Variation

% NPV

Variation

% NPV

Variation

% NPV Variation %

-10 79,812 4.92 86,412 13.60 55,590 -26.92 68,470 -9.99 78,157 2.7 0 76,069 0.00 76,069 0.00 76,069 0.00 76,069 0.00 76,069 0.0

10 72,546 -4.63 65,639 -13.71 96,407 26.74 83,656 9.97 73,945 -2.8

17.14 Mine Life

Mine 63 has a projected life of approximately 8 years. The mine will operate from the last quarter of 2007 through 71 days into 2015.

SRK Job No.: 162703.03



Source: Mineração & Metálicos S.A

Figure 17-1

Layout of Mine 63 Corumbá Project

SRK Job No.: 162703.03




Figure 17-2

Plant Design

SRK Job No.: 162703.03




Figure 17-3

Simplified Process Flowsheet



18 Interpretation and Conclusions (Item 21) The Corumbá Project is an operating mine that has been in production since July 2006. The Resource and Reserve have been estimated by Prominas under the direction of MMX. The Project is well documented with original sources of drill logs, assays, and various reports, as well as an electronic database.

SRK has reviewed and validated the sample database, topography, geologic interpretation, and the resource estimation parameters. The resource block model has been verified through visual examination and by construction of swath plots through the deposit. The resource database and the resource estimate follow industry standards and resource classification is in accordance with CIM guidelines.

The metallurgical testwork has been reviewed by SRK and found to be adequate for the project.

MMX has the necessary mining and environmental permits and surface agreements to operate Mine 63 at the Corumbá Project.

The LoM is relatively short and as such, the project is straightforward with the initial capital expended and does not require complex sensitivity analysis typical with long life projects.

The project economics indicate that:

• The Corumbá Project exhibits robust economics with a NPV10% of US$76M; and

• SRK considers the Corumbá Project to be a relatively low-risk project given its relatively short mine life, good mining conditions, conventional processing methods, sunk capital, and contracts for sales of its iron products.



19 Recommendations (Item 22) The resource database could be improved by the following procedures in future programs:

• Sample intervals should be no longer than the bench height of the mine. This procedure would eliminate the problem of sample support where intervals longer than 6m were excluded from the compositing routine; and

• Intervals of internal waste should be analyzed with the same procedures as the surrounding samples. This would eliminate the doubts about the grade and the subsequent assignment of zero to those intervals. MMX has instituted this practice in 2007 at Urucum NE.

The resource estimate procedure should be re-examined following future drilling and sampling programs to see if it could be simplified. The current procedure is technically correct, but may be more complex than required for this deposit.

As mining progresses, a program of mined to model reconciliation should be instituted. This is a standard practice in mine operations and aids in evaluation of the resource model.

The laboratory QA/QC at Urucum NE indicates that there may be a bias in SGS analysis of Al2O3 and P. SRK recommends that MMX continue its investigation into the issue.



20 References (Item 23) ALMEIDA, F.F. Evolução Tectônica do Centro-Oeste Brasileiro no Proterozóico Superior.

Anais da Academia Brasileira de Ciências, Rio de Janeiro, 40: 285-95, 1968. Suplemento.

CAMPOS, C. , paper given at VII Congresso Brasileiro de Mineração, 1989

DEL’ARCO J.O., SILVA R.H., TARAPAVOFF I., FREIRE F.A., PEREIRA L.G.M., SOUZA S.L., LUZ D. S., PALMEIRA R.C.B. and TASSINARI C.C.G. Geologia. In: BRASIL. Ministério das Minas e Energia. Departamento Nacional da Produção Mineral. Projeto RADAMBRASIL. Folha SE-21-Corumbá e parte da Folha SE-20. Rio de Janeiro, 1982, v.5, 448 p.

DORR II, J. van N. (1945), Manganese and Iron Deposits of Morro do Urucum, Mato Grosso, Brazil. Geological Survey Bulletin, Washington (946-A):1-47

GIRODO and colleagues (2007), personal communication

HARALYI N.L.E. and BARBOUR, A. P. Bandeamento do minério de Ferro e Manganês de Urucum e suas implicações tectônicas. In: CONGRESSO BRASILEIRO DE GEOLOGIA, 28., Porto Alegre, 1974. Anais. Porto Alegre, Sociedade Brasileira de Geologia, 1974, v.6, p. 211-9.

HARALYI N.L.E. and WALDE D.H.G. Os Minérios de Ferro e Manganês da região de Urucum, Corumbá, Mato Grosso do Sul. In: DNPM/VALE. Principais Depósitos Minerais do Brasil. Brasília, 1986, v.2, p.127-44.

MARINI O.J., FUCK R.A., DANNI J.C.M., DARDENNE M.A., LOGUERCIO S.O.C. and RAMALHO, R. As Faixas de Dobramentos Brasília, Uruaçu e Paraguai-Araguaia e o Maciço Mediano de Goiás. In: SCHOBBENHAUS C., CAMPOS D.A., DERZE G.R. and ASMUS H.E., ed. Geologia do Brasil. Brasília, DNPM. 1984. p. 252-303.

MMX Mineração e Metálicos S.A., (April 2007), Internal Report

MMX Mineração e Metálicos S.A., (February 2008), Internal Report

MMX Mineração e Metálicos S.A. (May 2007), NI 43-101 Technical Report, Corumbá Iron Project, Brazil




Mineral Resources

The mineral resources and mineral reserves have been classified according to the “CIM Standards on Mineral Resources and Reserves: Definitions and Guidelines” (August 2000). Accordingly, the Resources have been classified as Measured, Indicated or Inferred, the Reserves have been classified as Proven, and Probable based on the Measured and Indicated Resources as defined below.





Mineral Reserves






21.2 Glossary

Assay: The chemical analysis of mineral samples to determine the metal content.

Capital Expenditure: All other expenditures not classified as operating costs.

Composite: Combining more than one sample result to give an average result over a larger distance.

Concentrate: A metal-rich product resulting from a mineral enrichment process such as gravity concentration or flotation, in which most of the desired mineral has been separated from the waste material in the ore.

Crushing: Initial process of reducing ore particle size to render it more amenable for further processing.

Cutoff Grade (CoG): The grade of mineralized rock, which determines as to whether or not it is economic to recover its gold content by further concentration.

Dilution: Waste, which is unavoidably mined with ore.

Dip: Angle of inclination of a geological feature/rock from the horizontal.

Fault: The surface of a fracture along which movement has occurred.

Grade: The measure of concentration of gold within mineralized rock.

Haulage: A horizontal underground excavation which is used to transport mined ore.

Hydrocyclone: A process whereby material is graded according to size by exploiting centrifugal forces of particulate materials.

Igneous: Primary crystalline rock formed by the solidification of magma.

Kriging: An interpolation method of assigning values from samples to blocks that minimizes the estimation error.

Level: Horizontal tunnel the primary purpose is the transportation of personnel and materials.

Lithological: Geological description pertaining to different rock types.

LoM Plans: Life-of-Mine plans.

Material Properties: Mine properties.



Milling: A general term used to describe the process in which the ore is crushed and ground and subjected to physical or chemical treatment to extract the valuable metals to a concentrate or finished product.

Mineral/Mining Lease: A lease area for which mineral rights are held.

Mining Assets: The Material Properties and Significant Exploration Properties.

Ongoing Capital: Capital estimates of a routine nature, which is necessary for sustaining operations.

Ore Reserve: See Mineral Reserve.

RoM: Run-of-Mine.

Sedimentary: Pertaining to rocks formed by the accumulation of sediments, formed by the erosion of other rocks.

Shaft: An opening cut downwards from the surface for transporting personnel, equipment, supplies, ore and waste. In the case of this report the shafts were used for sampling the colluvial and eluvial deposits.

Stratigraphy: The study of stratified rocks in terms of time and space.

Strike: Direction of line formed by the intersection of strata surfaces with the horizontal plane, always perpendicular to the dip direction.

Tailings: Finely ground waste rock from which valuable minerals or metals have been extracted.

Thickening: The process of concentrating solid particles in suspension.

Total Expenditure: All expenditures including those of an operating and capital nature.

Variogram: A statistical representation of physical characteristics (usually grade).

Abbreviations

The metric system has been used throughout this report unless otherwise stated. All currency is in U.S. dollars. Market prices are reported in US$25.75/t fob and US$15.75/t fob of iron ore. Tonnes are metric of 1,000kg, or 2,204.6lbs. The following abbreviations are used in this report.


A ampere

AA atomic absorption

A/m2 amperes per square meter

Al2O3 Aluminum Oxide

°C degrees Centigrade

CoG Cut-off-Grade

cm centimeter



cm2 square centimeter

cm3 cubic centimeter

cfm cubic feet per minute

° degree (degrees)

dia. Diameter

Fe Iron

Fe++ Ferrous iron

g gram

Ga billion years before present

gpt grams per tonne

ha hectares

ID2 inverse-distance squared

ID3 inverse-distance cubed

kA kiloamperes

kg kilograms

km kilometer

km2 square kilometer

kt thousand tonnes

ktpd thousand tonnes per day

ktpy thousand tonnes per year

kV kilovolt

kW kilowatt

kWh kilowatt-hour

kWh/t kilowatt-hour per metric tonne

l liter

lps liters per second

LOI Loss On Ignition

LoM Life-of-Mine

lps liters per second

m meter

m2 square meter

m3 cubic meter

mg/l milligrams/liter



mm millimeter

mm2 square millimeter

mm3 cubic millimeter

Mn Manganese

MnO Manganese oxide

Mt million tonnes

Mtpy million tonnes per year

MW million watts

NI 43-101 Canadian National Instrument 43-101

OSC Ontario Securities Commission

% percent

P Phosphorous

ppb parts per billion

ppm parts per million

QA/QC Quality Assurance/Quality Control

RoM Run-of-Mine

s second

SiO2 Silica

SG specific gravity

t tonne (metric ton) (2,204.6 pounds)

TiO2 Titanium Oxide

tph tonnes per hour

tpd tonnes per day

tpy tonnes per year

µ micron or microns

V volts

W watt

XRD x-ray diffraction

yr year

Appendix A

Certificates of Authors



CERTIFICATE of AUTHOR I, Neal Rigby, CEng do hereby certify that: 1. I am a Principal of:

SRK Consulting (US), Inc. 7175 W. Jefferson Ave, Suite 3000 Lakewood, CO, USA, 80235

2. I graduated with a BSc degree in Mineral Exploitation with first class honors in 1974 and a PhD in

Mining Engineering in 1977 both from the University of Wales, UK. 3. I am a member of the Institute of Materials, Mining and Metallurgy. 4. I have worked as a mining engineer for a total of 33 years since my graduation from university. 5. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”)

and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

6. I am responsible for Section 15.3 and 17, as well as, the content, compilation, and editing of all

sections of the technical report, titled, MMX Mineração e Metálicos S.A. NI 43-101 Technical Report, Corumbá Iron Project, and dated March 10, 2008 (the “Technical Report”) relating to the Corumbá Iron Project. I personally visited the Corumbá Iron Project on January 6, 2006.

7. I have had prior involvement with the property that is the subject of the Technical Report. The nature

of my prior involvement with the property was as the qualified person for the preparation of Sections 14, 15.9 and 17 and the overall preparation of the Technical Report titled NI 43-101 Technical Report, Mineração & Metálicos S.A. Corumbá Project, Brazil, and dated May 04, 2007.

8. I am not aware of any material fact or material change with respect to the subject matter of the

Technical Report that is not reflected in the Technical Report, the omission to disclose which makes the Technical Report misleading.

9. I am independent of the issuer applying all of the tests in Section 1.4 of National Instrument 43-101.


10. I have read National Instrument 43-101 and Form 43-101F1, and the Technical has been prepared in compliance with that instrument and form.

Dated March 10, 2008. ____________________________ Neal Rigby, CEng., MIMMM, PhD (signed)



CERTIFICATE of AUTHOR I, Leah Mach, CPG do hereby certify that: 1. I am a Principal Resource Geologist of:

SRK Consulting (US), Inc. 7175 W. Jefferson Ave, Suite 3000 Lakewood, CO, USA, 80235

2. I graduated with a Master of Science degree in Geology from the University of Idaho in 1986. 3. I am a member of the American Institute of Professional Geologists. 4. I have worked as a Geologist for a total of 22 years since my graduation in minerals exploration, mine

geology, project development and resource estimation. 5. I have read the definition of “qualified person” set out in National Instrument 43-101 (“NI 43-101”)

and certify that by reason of my education, affiliation with a professional association (as defined in NI 43-101) and past relevant work experience, I fulfill the requirements to be a “qualified person” for the purposes of NI 43-101.

6. I am responsible for the responsible for the overall preparation of the report and specifically for

Sections 1 through 13, 15.1 through 15.2, 16 and 18 through 22 of the technical report, titled, MMX Mineração e Metálicos S.A. NI 43-101 Technical Report, Corumbá Iron Project, and dated March 10, 2008 (the “Technical Report”) relating to the Corumbá Iron Project. I personally visited the Corumbá Iron Project on September 25 through 27, 2007.

7. I have had prior involvement with the property that is the subject of the Technical Report. The nature

of my prior involvement with the property was as the qualified person for the preparation of Sections 2 through 13, and 15.1 through 15.8 of the Technical Report titled NI 43-101 Technical Report, Mineração & Metálicos S.A., Minas-Rio Project, Brazil, and dated May 4, 2007.

8. I am not aware of any material fact or material change with respect to the subject matter of the

Technical Report that is not reflected in the Technical Report, the omission to disclose with makes the Technical Report misleading.

9. I am independent of the issuer applying all of the tests in Section 1.4 of National Instrument 43-101.


10. I have read National Instrument 43-101 and Form 43-101F1, and the Technical Report has been prepared in compliance with that instrument and form.

Dated March 10, 2008. ____________________________ Leah Mach, CPG, MSc (signed) CPG 10940 (sealed)

MMX Mineração e Metálicos S.A. NI 43-101 Technical Report, Corumbá Project, Brazil, September 30, 2008. Dated March 10, 2008 Dr. Neal Rigby CEng, MIMMM, PhD (signed) Leah Mach MS Geology, CPG (signed) CPG 10940 (sealed)

S E E Johansson, MAXIM (signed)

Technical Report on Resources

MMX Mineração e Metálicos S. A.

Rabicho Project

Mato Grosso do Sul, Brazil

Prepared for:



SRK Project Number: 162700.07

Prepared by:

7175 W. Jefferson Ave.

Suite 3000 Lakewood, CO 80235

Effective Date: December 10, 2009

Report Date: January 20, 2010

Endorsed by QP:

Leah Mach, CPG, MSc

MMX Mineraçò e Metálicos S.A. i Rabicho Project Technical Report on Resources

SRK Consulting (U.S.), Inc. January 20, 2010 Rabicho_Technical Report on Resources_162700.07.MG.004.docx

Table of Contents

1 INTRODUCTION (ITEM 4) ................................................................................................. 1-1 1.1 Terms of Reference and Purpose of the Report ......................................................... 1-1 1.2 Reliance on Other Experts (Item 5) ........................................................................... 1-1

1.2.1 Sources of Information ................................................................................ 1-1 1.3 Qualifications of Consultants (SRK) ......................................................................... 1-2

1.3.1 Site Visit ...................................................................................................... 1-2 1.4 Effective Date ............................................................................................................ 1-2 1.5 Units of Measure ........................................................................................................ 1-2

2 PROPERTY DESCRIPTION AND LOCATION (ITEM 6) ................................................. 2-1 2.1 Property Location....................................................................................................... 2-1 2.2 Mineral Titles ............................................................................................................. 2-1

2.2.1 Brazilian Mining Legislation ....................................................................... 2-1 2.2.2 Authorization for Exploration ..................................................................... 2-1 2.2.3 Concession for Mining Exploitation ........................................................... 2-2 2.2.4 MMX’s Mineral Claims in Corumbá .......................................................... 2-2

2.3 Location of Mineralization ........................................................................................ 2-3 2.4 Surface Rights ............................................................................................................ 2-3 2.5 Legal Surveys............................................................................................................. 2-3 2.6 Royalties, Agreements and Encumbrances ................................................................ 2-3 2.7 Environmental Liabilities and Permitting .................................................................. 2-4

2.7.1 Required Permits and Status ........................................................................ 2-4 2.7.2 Compliance Evaluation ............................................................................... 2-5

3 ACCESSIBILITY, CLIMATE, LOCAL RESOURCES, INFRASTRUCTURE AND PHYSIOGRAPHY (ITEM 7) ............................................................................................................ 3-1

3.1 Topography and Elevation ......................................................................................... 3-1 3.2 Climate and Length of Operating Season .................................................................. 3-1 3.3 Vegetation .................................................................................................................. 3-1 3.4 Access to Property ..................................................................................................... 3-2 3.5 Local Resources and Infrastructure ........................................................................... 3-2

3.5.1 Power and Water Supply ............................................................................ 3-2 3.5.2 Port .............................................................................................................. 3-2 3.5.3 Buildings and Ancillary Facilities ............................................................... 3-3 3.5.4 Tailings Storage Area and Waste Rock Disposal ........................................ 3-3 3.5.5 Manpower .................................................................................................... 3-3

4 HISTORY (ITEM 8) .............................................................................................................. 4-1 4.1 Ownership .................................................................................................................. 4-1 4.2 Past Exploration and Development ............................................................................ 4-2 4.3 Historic Mineral Resource and Reserve Estimates .................................................... 4-2 4.4 Historic Production .................................................................................................... 4-2

5 GEOLOGIC SETTING (ITEM 9) ......................................................................................... 5-1 5.1 Regional Geology ...................................................................................................... 5-1 5.2 Local Geology ............................................................................................................ 5-2

6 DEPOSIT TYPE (ITEM 10) .................................................................................................. 6-1

MMX Mineraçò e Metálicos S.A. ii Rabicho Project Technical Report on Resources


7 MINERALIZATION (ITEM 11) ........................................................................................... 7-1 7.1 Eluvial Deposits ......................................................................................................... 7-1 7.2 Colluvial Deposits ...................................................................................................... 7-1

8 EXPLORATION (ITEM 12) ................................................................................................. 8-1 8.1 Surveys and Investigations ........................................................................................ 8-1 8.2 Interpretation .............................................................................................................. 8-1

9 DRILLING (ITEM 13) .......................................................................................................... 9-4

10 SAMPLING METHOD AND APPROACH (ITEM 14) ..................................................... 10-1

11 SAMPLE PREPARATION, ANALYSES AND SECURITY (ITEM 15) .......................... 11-1 11.1 Sample Preparation .................................................................................................. 11-1 11.2 Sample Analysis....................................................................................................... 11-1 11.3 Internal Laboratory Quality Controls and Quality Assurance ................................. 11-2 11.4 MMX Quality Controls and Quality Assurance ...................................................... 11-2

12 DATA VERIFICATION (ITEM 16) ................................................................................... 12-1

13 ADJACENT PROPERTIES (ITEM 17) .............................................................................. 13-1

14 MINERAL PROCESSING AND METALLURGICAL TESTING (ITEM 18) ................. 14-1

15 MINERAL RESOURCES (ITEM 19) ................................................................................. 15-1 15.1 Topography .............................................................................................................. 15-1 15.2 Database ................................................................................................................... 15-1 15.3 Geology .................................................................................................................... 15-1 15.4 Compositing ............................................................................................................. 15-2 15.5 Density ..................................................................................................................... 15-2 15.6 Grade Estimation ..................................................................................................... 15-3 15.7 Resource Classification ............................................................................................ 15-3 15.8 Mineral Resource Sensitivity ................................................................................... 15-4

16 OTHER RELEVANT DATA AND INFORMATION (ITEM 20) ..................................... 16-1

17 INTERPRETATION AND CONCLUSIONS (ITEM 21) .................................................. 17-1 17.1 Field Surveys ........................................................................................................... 17-1 17.2 Analytical and Testing Data..................................................................................... 17-1 17.3 Resource Estimation ................................................................................................ 17-1

18 RECOMMENDATIONS (ITEM 22) .................................................................................. 18-1 18.1 Recommended Work Programs ............................................................................... 18-1

19 REFERENCES (ITEM 23) .................................................................................................. 19-1

20 GLOSSARY ........................................................................................................................ 20-1 20.1 Mineral Resources and Reserves ............................................................................. 20-1

20.1.1 Mineral Resources ..................................................................................... 20-1 20.1.2 Mineral Reserves ....................................................................................... 20-1

20.2 Glossary ................................................................................................................... 20-3

MMX Mineraçò e Metálicos S.A. iii Rabicho Project Technical Report on Resources


List of Tables

Table 1: Indicated and Inferred Resources, on a Dry Tonnes Basis, at a Cutoff of 28% Fe ............... II

Table 2: Potential Resources ...............................................................................................................III

Table 2.2.4.1: MMX Mineral Licenses at the Rabicho Project ........................................................ 2-2

Table 2.4.1: Landowners at the Rabicho Project .............................................................................. 2-3

Table 2.7.1.1: Environmental Licenses Required for Mining .......................................................... 2-4

Table 4.2.1: Exploration by Previous Owners of Rabicho ............................................................... 4-2

Table 11.2.2.1: Detection Limits of Iron Ore Analysis .................................................................. 11-2

Table 11.4.1: Standard Reference Samples .................................................................................... 11-3

Table 11.4.1: Percentage of Laboratory Pulp Duplicates within Specific Ranges ......................... 11-3

Table 15.2.1: Basic Statistics of Rabicho Pit Samples ................................................................... 15-1

Table 15.3.1: Dimensions of Rabicho Block Model ....................................................................... 15-2

Table 15.6.1: Volume, tonnage and grades in Rabicho Block Model ............................................ 15-3

Table 15.7.1: Indicated and Inferred Resources, on a Dry Tonnes basis, at a Cutoff of 28% Fe ... 15-4

Table 15.7.2: Potential Resources ................................................................................................... 15-4

Table 15.8.1: Grade Tonnage for Indicated and Inferred Resources .............................................. 15-4

Table 20.2.1: Glossary .................................................................................................................... 20-3

Table 20.2.2: Abbreviations ............................................................................................................ 20-4

List of Figures

Figure 1-1: Location Map of the Rabicho Project ............................................................................ 1-3

Figure 2-1: Mineral Rights Map – Rabicho Project .......................................................................... 2-6

Figure 2-2: Surface Landowners – Rabicho Project ......................................................................... 2-7

Figure 3-1: Access to the Rabicho Project ........................................................................................ 3-4

Figure 5-1: Stratigraphic Column and Regional Map ....................................................................... 5-3

Figure 5-2: Regional Structural Map ................................................................................................ 5-4

Figure 5-3: Geologic Map of the Rabicho Project ............................................................................ 5-5

Figure 8-1: Drillhole and Sample Locations, Rabicho Project ......................................................... 8-2

Figure 8-2: Photo of Excavated Pit and Sampling ............................................................................ 8-3

Figure 15-1: Distribution of Sampled Pits, Rabicho Project .......................................................... 15-6

Figure 15-2: Resource Classification, Rabicho Project .................................................................. 15-7

MMX Mineraçò e Metálicos S.A. I Rabicho Project Technical Report on Resources


Summary (Item 3)


SRK Consulting (U.S.), Inc., (SRK) was commissioned by MMX Mineração e Metálicos S.A. (MMX) to prepare a Canadian Securities Administrators (CSA) National Instrument 43-101 (NI 43-101) compliant Technical Report on Resources for the Rabicho Iron Ore Project (the Project) located in Mato Grosso do Sul State, Brazil. The Project is owned by MMX Corumbá Mineração Ltda (MMX Corumbá), a 100% owned subsidiary of MMX and is close to the operating Mine 63 owned and operated by MMX Corumbá.

Ownership

MMX controls seven mineral rights in the Rabicho Project area all of which are Requests for Mining Exploitation. The total area covered by the mineral rights is 3661.93ha.

The mineralization described in this report is contained entirely within DNPM Process Number 824.873/1971.


The Corumbá iron-manganese district is located in the extreme west of Brazil, approximately in the center of South America, and extends into the eastern areas of both Paraguay and Bolivia. The basement rocks are part of the Rio Apa Shield, a geotectonic entity that includes gneissic terrains and associated sedimentary cover.

The deposits of iron and manganese are related to the Jacadigo group, of upper Proterozoic age (about 900 Ma), whose youngest formation, the Banda Alta, consists of a package of ferruginous sediments at least 320m in thickness. The Banda Alta is characterized by alternating layers of jaspelites with ferruginous clastic sediments, containing up to four layers of manganese in the basal portion of the sequence, one of which is 4m in thickness.


The Eluvium Deposits originate in the primary jaspelite which has been fractured and undergone weathering and leaching of silica. The Fe content of the eluvium is directly related to the content of the original primary rock.

The Colluvial Deposits consist of detrital sediments, partially laterized, of conglomerate, sand, silt and clay. The distribution of the deposits is irregular. They occur at the northwestern edge of the Paraná Basin and at the foot of the slopes of the Urucum, Santa Cruz, Grande and Rabichão Mountains.

Exploration

The past owners have excavated exploration pits and submitted exploration reports and requests for mining concessions to the DNPM.

MMX started exploration at Rabicho in December 2007 with the location of topographic survey points in the DNPM license area 824.873/1971. Exploration lines were set out at 200m in the

MMX Mineraçò e Metálicos S.A. II Rabicho Project Technical Report on Resources


south and 400m in the north. A total of 116.2km of exploration lines were cleared of brush and mapped.

Subsurface exploration consisted of a series of pits manually excavated to bedrock or to a maximum depth of 5.0m. The pits were sampled by digging channels 0.1m in width and 0.05m in depth along one wall of the pit. The lithology of the channel was noted – as soil, colluvium, eluvium, saprolite, or bedrock. The channel was sampled along the entire length, excluding soil, with breaks at changes in lithology.

All sample preparation and analyses are performed at Mine 63, owned and operated by MMX Corumbá. Six size fractions are separated from the sample at sizes greater than 19mm, 12mm, 6.35mm, 4mm, 1mm, 0.15mm and less than 0.15mm. A global sample is also prepared. All chemical analyses are done by XRF for the elements Fe, SiO2, Al2O3, P, MnO, CaO, MgO, K2O, Na2O, TiO2. LOI is determined by weighing the sample, heating in an oven at 1000±50ºC and weighing again. Analyses are carried out on each size fraction and the global fraction.

The MMX lab has a standard laboratory QA/QC procedure as does the MMX geology department.

Resource Estimation and Classification

The resource estimated was conducted by the consultant Prominas under the direction of MMX using MineSight®software. The Gridded Seam Model (GSM) was used for modeling the layers of colluvium and eluvium. Grade estimation was carried out using Inverse Distance Squared (ID2) for Fe, Al2O3, SiO2, P, Mn, Cao, MgO and LOI. SRK has audited the resource estimation by reproducing the composite file and reviewing the block estimation methodology and visually comparing the results to the drillholes in cross-sectional view.

The resources were in general classified as indicated where the pits are on a 200m grid and as potential where the grid is 400m or more. However, because not all the pits in the 200m grid area were sampled, polygons were drawn around the unsampled pits and the indicated resources within the polygons were downgraded to inferred.

The Indicated and Inferred Resources are listed in Table 1 and the Potential resources are listed in Table 2.

Table 1: Indicated and Inferred Resources, on a Dry Tonnes Basis, at a Cutoff of 28% Fe

Class Seam Mt Fe Al2O3 SiO2 P Mn Pf CaO MgO

Indicated

Eluvium1 0.22 62.59 3.05 5.48 0.10 0.04 1.68 0.05 0.05

Colluvium1 22.58 48.55 5.35 21.16 0.08 0.31 2.71 0.05 0.08

Eluvium2 0.13 55.00 6.24 12.20 0.15 0.03 2.87 0.02 0.05

Colluvium2 0.24 46.00 3.70 26.80 0.07 0.04 1.73 0.05 0.05

Total 23.16 48.69 5.32 21.02 0.08 0.30 2.69 0.05 0.08

Inferred

Eluvium1

Colluvium1 4.32 47.69 4.81 23.22 0.07 0.43 2.33 0.05 0.09

Eluvium2

Colluvium2 0.06 46.00 3.70 26.80 0.07 0.04 1.73 0.05 0.05

Total 4.38 47.67 4.79 23.27 0.07 0.42 2.32 0.05 0.09

MMX Mineraçò e Metálicos S.A. III Rabicho Project Technical Report on Resources


Table 2: Potential Resources

Class Seam Mt

Potential

Eluvium1 10.00

Colluvium1 21.00

Eluvium2 4.00

Colluvium2 0.00

Total 35.00

Conclusions and Recommendations

Field Surveys

MMX has used exploration pits with a maximum depth of 5m for researching the colluvium and eluvium at Rabicho. Unfortunately, all the pits were not sampled and analyzed before the program was discontinued due to budgetary constraints. The pits are a very good method of obtaining samples at relatively shallow depths.

Analytical and Testing Data

MMX has used industry best practices in excavating and sampling the exploration pits. The samples are analyzed at MMX Corumbá’s laboratory at Mine 63. The lab has been inspected by Agoratek International and has QA/QC practices in place.

The MMX exploration group also has QA/QC procedures as a check on laboratory results.

Resource Estimation

MMX has used the Gridded Seam Model approach in constructing the geologic model and for use in grade estimation. The grade estimation in the southern portion of the deposit where the pits are on a 200m grid is adequate for the deposit type. The estimation will be more robust once all the pits have been sampled. In the northern part of the resource area, there are only four pits used in estimation and the resource in this area is considered to be potential.

Recommendations

SRK recommends the following for the Rabicho Project:

• Sample and analyze the unsampled pits;

• Conduct a program of infill sampling either with drilling or more exploration pits;

• More density measurements should be taken;

A metallurgical test program should be developed to determine the optimal means of processing Rabicho material.

MMX Mineraçò e Metálicos S.A. 1-1 Rabicho Project Technical Report on Resources


1 Introduction (Item 4) SRK Consulting (U.S.), Inc., (SRK) was commissioned by MMX Mineração e Metálicos S.A. (MMX) to prepare a Canadian Securities Administrators (CSA) Technical Report on Resources for the Rabicho Iron Ore Project (the Project) located in Mato Grosso do Sul State, Brazil. The project is owned by MMX Corumbá Mineração Ltda (MMX Corumbá), a 100% owned subsidiary of MMX and is close to the operating Mine 63, owned and operated by MMX Corumbá.

The Project is located near the city of Corumbá in the state of Mato Grosso do Sul, Brazil near the border with Bolivia (Figure 1-1).

Form NI 43-101F1 was used as the format for this report. This report is prepared using the industry accepted Canadian Institute of Mining, Metallurgy and Petroleum (CIM) “Best Practices and Reporting Guidelines” for disclosing mineral exploration information, the Canadian Securities Administrators revised regulations in NI 43-101 (Standards of Disclosure for Mineral Projects) and Companion Policy 43-101CP, and CIM Definition Standards for Mineral Resources and Mineral Reserves (December 11, 2005).

Certain definitions used in this Technical Report on Resources are defined in the body of text and in the glossary in Section 20.


This Technical Report on Resources is intended to be used by MMX to further the development of the Project by providing an independent audit of the mineral resource estimates and classification of resources.

MMX may also use this Technical Report on Resources for any lawful purpose to which it is suited. This Technical Report on Resources has been prepared in general accordance with the guidelines provided in NI 43-101 Standards of Disclosure for Mineral Projects.




SRK is of the opinion that the information concerning the property presented in this report adequately describes the property in all material respects.


The underlying technical information upon which this Technical Report is based represents a compilation of work performed by MMX and its contracted independent consulting firms.



The studies and additional references for this Technical Report on Resources are listed in Section 19. SRK has reviewed the Project data and incorporated the results thereof, with appropriate comments and adjustments as needed, in the preparation of this Technical Report on Resources.

The author reviewed data provided by MMX including hard copy and digital files located in the Project and MMX’s offices in Brazil. Discussions on the geology and mineralization were conducted with MMX’s technical team. The drillhole assay database and the resource block model were prepared by MMX and verified by SRK.


The SRK Group is comprised of over 900 staff, offering expertise in a wide range of resource and engineering disciplines. The SRK Group’s independence is ensured by the fact that it holds no equity in any project and that its ownership rests solely with its staff. This permits SRK to provide its clients with conflict-free and objective recommendations on crucial judgment issues. SRK has a demonstrated record of accomplishment in undertaking independent assessments of Mineral Resources and Mineral Reserves, project evaluations and audits, technical reports and independent feasibility evaluations to bankable standards on behalf of exploration and mining companies and financial institutions worldwide. The SRK Group has also worked with a large number of major international mining companies and their projects, providing mining industry consultancy service inputs.

This report has been prepared based on a technical review by a qualified person sourced from the SRK Group’s Denver, US office. This consultant is a specialist in the fields of geology exploration, mineral resource and mineral reserve estimation and classification, open pit mining, mineral processing and mineral economics.


Ms. Leah Mach is the Qualified Person responsible for all sections and the overall preparation of this Technical Report.

1.3.1 Site Visit

Leah Mach, the Qualified Person for this report, made a site visit to the Property on December 7 and 8, 2009. The site visit consisted of visiting several exploration pits and reviewing logging and sampling procedures. The laboratory at Mine 63 was also visited and the sample preparation and analytical procedures reviewed.

1.4 Effective Date

The effective date of this report is January 20, 2010; the effective date of the resource estimation is December 10, 2009.



SRK Job No.: 162700.07


Rabicho Project, Brazil

Source: MMX Mineração & Metálicos

S.A.

Figure 1-1 Location Map of the

Rabicho Project




The Rabicho Project is located near the city of Corumbá in the state of Mato Grosso do Sul, Brazil near the border with Bolivia, at coordinates 19º 12’ S and 57º 30’ W, shown in Figure 1-1. The Project is a part of the overall Corumbá Project which consists of several prospects and one operating mine. The subject of this report is the Rabicho Project located near the operating mine, Mine 63, and the Urucum NE Project. Figure 2-1 shows the mining concessions and Figure 2-2 shows surface property ownership.

2.2 Mineral Titles

2.2.1 Brazilian Mining Legislation

According to Brazil’s Constitution, the survey, exploration and exploitation of mineral resources shall occur under federal authorization or concession and only Brazilian citizens or companies organized under Brazilian laws with headquarters located in the country may be entitled to practice such activities and, therefore, to obtain mining rights.

In addition, mining rights in Brazil are governed by the Mining Code and further rules enacted by Brazil’s National Department of Mineral Production (DNPM), which is the governmental agency that controls mining activities throughout the country.

2.2.2 Authorization for Exploration

As stipulated in Article 14 of the Mining Code and Article 18 of the Decree, mineral exploration comprises the work necessary to measure and evaluate a resource and its technical and economic feasibility. The cited legislation also determines that the exploration may be carried out by means of on-site and laboratory studies, geological and geophysical studies, and any other type of geological exploration work.

DNPM’s Local Officer grants the authorization to an interested party by means of an exploration permit, the “Alvará de Pesquisa”. In order to obtain the Exploration Permit, the titleholder files an application with the DNPM. After analysis of the application, DNPM may issue an Exploration Permit valid for a period of one to three years. This period may be extended, subject to analysis of the exploration by the DNPM. The holder of the Exploration Permit (i) may assign or transfer it, provided that the assignee fulfills the legal conditions to hold the title; (ii) may, at any time, waive the Exploration Permit; (iii) shall be exclusively responsible for damages caused to third parties as a result of the performance of the exploration; and (iv) that the holder shall submit to DNPM a detailed report on the exploration activities prior to the final term of the Exploration Permit.

After DNPM reviews the detailed technical report on the exploration activities, the agency decides whether the development is technically and economically feasible. DNPM may withhold approval of the exploration process in cases where the work is insufficient or in the case of technical deficiencies in the report.

If the exploitation is considered technically and economically feasible, DNPM will approve the project. The holder of the Exploration Permit will then have one year to apply for the mining exploitation permit or negotiate the mining right with third parties. DNPM will only provide one



extension to this time period. The extension must be obtained prior to the expiration of the first one-year term, and there is only one allowed extension for one additional year.

2.2.3 Concession for Mining Exploitation

After DNPM’s approval of the exploration report, the interested party may apply for a mining exploitation concession, which is granted by Brazil’s Ministry of Mines and Energy by means of a specific permit titled “Concessão de Lavra”. Prior to granting the Exploitation Permit, DNPM shall verify that all legal requirements are fulfilled, including the prior exploration and the approval of the Technical Report by DNPM.

Under the Exploitation Permit, the holder of the mining rights shall be entitled to: (i) exploit the mine until it is completely exhausted; (ii) assign or transfer the title, provided that the assignee fulfills the legal conditions to hold the title; and (iii) waive the Exploitation Permit, subject to authorization by DNPM.

The holder of the exploitation permit has the responsibility to (i) exploit the mine according to a mining plan previously approved by DNPM; (ii) not interrupt the mining operation for a period of more than six consecutive months after the beginning of the operation; (iii) extract only minerals expressly mentioned in the Exploitation Permit; (iv) respect the applicable Environmental Law; (v) pay a financial compensation for the exploitation, the Financial Compensation for the Exploitation of Mineral Resources (CFEM).

2.2.4 MMX’s Mineral Claims in Corumbá

MMX controls seven mineral rights in the Rabicho Project area (Table 2.2.4.1) all of which are Requests for Mining Exploitation. The total area covered by the mineral rights is 3661.93ha.

Table 2.2.4.1: MMX Mineral Licenses at the Rabicho Project

DNPM

PROCESS Area (ha) Status Owner License No. Expiration Municipality

003275/1965 499.80 Request for Mining Mineral Service* 493 NA Corumbá/Ladário 003276/1965 500.10 Request for Mining Mineral Service* 1.591 NA Corumbá 003277/1965 392.10 Request for Mining Mineral Service* 1.592 NA Corumbá 806106/1968 491.00 Request for Mining Mineral Service* 1.945 NA Ladário 806107/1968 279.48 Request for Mining Mineral Service* 1.995 NA Ladário 806108/1968 500.00 Request for Mining Mineral Service* 1.276 NA Ladário 824873/1971 999.45 Request for Mining Mineral Service* 919 NA Corumbá

Total 3661.93 7

*Mineral Service is a subsidiary of MMX Corumbá

The mineralization described in this report is contained entirely within DNPM Process Number 824.873/1971. The research license, No 959, of this process was granted to Mário Duarte Garcia on July 18, 1973 for a two-year period. The license was renewed as No 919 for an additional year. The final exploration report was submitted on August 3, 1977 and was approved on May 3, 1978. In 1979, a request was made for cession of the mineral right to Mineração Dobrados S.A. Indústria e Comércio (Dobrados) who also requested the license for Mining Exploitation. In May 2009, the following transfers were made: (1) Dobrados to Corumbá Mineraçãò Ltda, (2) Corumbá Mineraçãò Ltda to Mineral Service Ltda (Mineral Service) which is 100% owned by MMX Corumbá.




The mineralization described in this report is contained entirely within DNPM Process Number 824.873/1971.

2.4 Surface Rights

MMX Corumbá does not own the surface rights in the Rabicho Project area, but has lease agreements with several of the owners. Table 2.4.1 lists the owners of the surface rights and the DNPM Process number underlying the properties. MMX has agreements for exploration with all the landowners except MPP Mineração.

The area of the mining concessions and the surface landowners is shown in Figure 2-2.

Table 2.4.1: Landowners at the Rabicho Project

Landowners Process Farm Name Agreement Família Navarro 824.873/71, 003.275/65 Fazenda São José Yes Celso Golim/Antonio 824.873/71 Fazenda Morro Azul Yes Wilson Pereira da Rosa 824.873/71 Nossa Senhora Aparecida Yes Mercedes Lacarias Dischoff

824.873/71 Fazenda Santa Ana Yes

Fabiana Bellan Barbosa et al

824.873/71,806.107/68, 003.277/65, 003.276/65, 003.275/65

Fazenda Bela Vista e Água Verde Yes

MPP - Mineração 824.873/71 No Hideo Saito 868.108/68 Fazenda Progresso Yes Paulo Saito 868.108/68 Yes João Marcos Dolabani 868.082/05 868.045/05, 806.106/68,

806.107/68, 806.107/68 Posse S.S. Carandá Yes

2.5 Legal Surveys

The mineral concessions in Brazil are paper filings and do not require the actual location of monuments on the ground. The filing includes descriptions of the corners of the concessions in Geographical Coordinate System with the South American Provisional 1956 datum (DATUM SAD_69).

2.6 Royalties, Agreements and Encumbrances

In order to maintain the exploration permits in good standing, the holder must:

• Pay an Annual Tax per Hectare (TAH) to the DNPM until the end of exploration. The TAH is charged in the amount of (i) R$1.55/ha during the original term of the permit and (ii) R$2.34/ha during the extensions of the term. Note that costs per hectare are in Brazilian Reais;

• Pay expenses incurred by DNPM during inspections of the exploration area; and

• Submit an exploration work report before the expiration date of the term.

In order to maintain the exploitation permits (mining concessions) in good standing, the holder must:

• Pay the CFEM tax mentioned in Section 2.2.3 of this report;



• Pay the surface owner a compensation of 50% of the CFEM tax; and

• Present an annual report by March 15th of each year, describing all aspects of the mineral exploitation.

2.7 Environmental Liabilities and Permitting

MMX has informed SRK that there are no known environmental liabilities in relation to the mineral rights and its previous owners.

2.7.1 Required Permits and Status

As required by the Brazilian National Environmental Policy, created on August 31, 1981 by Federal Law N° 6,938, all potential or effective polluting activities are subject to environmental licensing. The rules relative to the licensing were established by Resolution N° 237/97, of the National Council of the Environment (CONAMA), on 19th of December of 1997. The entity issuing the environmental licenses determines the conditions, limits, and measures for the control and utilization of natural resources, and permits the installation and implementation of a project.

The license may be issued by any environmental entity that is in the federal, state or municipal sphere. The issuance of a license is based on the areal extent, the proposed impact and, generally, follows the rules established by the Resolution of CONAMA 237/97, listed below:

• The federal entities are responsible for licensing activities that can cause environmental impact of a national or regional nature (more the two States of the Federation);

• The state entities and those of the Federal District are responsible for activities that may cause state environmental impact to two or more cities, and

• Municipal entities are responsible for the licensing of the activities that may cause local environmental impact within the limits of the municipality.

The licenses required for Mining are listed in Table 2.7.1.1.

Table 2.7.1.1: Environmental Licenses Required for Mining

License Description

Preliminary License (LP)

Indicates environmental viability of the undertaking. Approves the location and the conception of the project. It is subject to an evaluation of environmental impact and a form of public audience.

Installation License (LI)

Authorizes the initiation of the Project. Permits the work of construction and is subject to the presentation of a plan of environmental control.

Operating License (LO)

Permits the beginning of the operation. The company is obliged to supply proof that all the environmental programs and systems of control were properly installed.

For the activities in which the environmental impact are considered significant, an EIA (Study of Environmental Impact) and its respective RIMA (Report of Impacts on the Environment), must be presented to the environmental licensing entity.

In addition to this, the environmental entity responsible for the licensing and the licensee are obliged to publish all the related information and, if necessary, hold public audiences according to the rules of each location.



Pit excavation is an activity of low environmental impact which does not require tree cutting and therefore does not require an environmental license. For future campaigns of involving drilling, it will be necessary to obtain the following licenses:

• Authorization for Vegetal Suppression for the removal of vegetation and registering the legal reserves of the properties directly impacted by the exploration.

• In the state of Mato Grosso do Sul the area of legal reserve must total 20% of the total area of the property.

2.7.2 Compliance Evaluation

MMX has informed SRK that it is in compliance with all environmental regulations applicable to the Rabicho Project.

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Figure 2-1

Mineral Rights Map - Rabicho

Project

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Figure 2-2

Surface Landowners- Rabicho

Project




3.1 Topography and Elevation

The regional geomorphology of the Rabicho Project and the surrounding area consists of the following four groups:

• The Paraguay River Depression is a vast depression comprising extensive lowlands predominately covered by recent sediments;

• The plains and swamplands of Mato Grosso (the Pantanal) covers approximately 70% of the area west of the Paraguay River. The Pantanal is a basin that is subject to seasonal flooding and desiccation;

• The Residual Urucum Plateau is located south of the city of Corumbá and includes the Urucum, Santa Cruz, São Domingos, Grande, Rabicho and Tromba dos Macacos Hills rising from relatively flat lowlands. Elevations in the area range from 300m above sea level in the lowlands to 900m on the hills; and

• The Bodoquena Plateau is located between the Paraquay River to the west and the Apa and Miranda Rivers to the east. It comprises a group of hills that are oriented north-south.

The Rabicho Project is located between the Rabicho Hills and the Pantanal. Elevations vary from less than 100m in the lowlands to over 1,000m in the hills.

3.2 Climate and Length of Operating Season

The climate in the project area is determined by geography and elevation, which ranges from less than 100m in the lowland depression near the city of Corumbá to more than a 1,000m in the iron-rich mountains close to the Bolivian border.

The climate is tropical with marked rainy and dry seasons. The weather is controlled by the Amazon Basin to the north, the Brazilian plateau to the east, and the Andes Mountains to the west. The dry period lasts for four to five months, from approximately May to September. The rainy season occurs from December to February. Annual average rainfall is 1,500mm at the higher elevations and 1,000mm in the lowlands.

The temperature ranges from 0 to 40°C with an average of about 25°C with lower temperatures in the plateaus and higher temperatures in the Mato Grosso do Sul and Bolivian lowlands.

The operating season is not affected by the climate except at times of unusually heavy rainfall when operations may have to cases for some hours.

3.3 Vegetation

The Mato Grosso lowlands (Pantanal) are part of the upper Paraguay basin and are the largest continuous flooded plains in South America. The vegetation found in the Pantanal is a mosaic of habitats with differing flora defined by the large ecosystems of this area. The northern boundary is dominated by vegetation of the Amazon Basin, while to the east is cerrado (savannah) type



vegetation related to the Central Plateau. To the south lies the southern rainforests, and to the west the lowland deciduous forests of the Chaco found in Bolivia and Paraguay.

The Rabicho Project lies in an area originally covered by cerrado type vegetation and deciduous forests. The Brazilian cerrado biome typically comprises grasses, shrubs and small trees. In the upper parts of the iron-rich mountain ranges close to the city of Corumbá, the soil supporting this vegetation tends to be acidic.

The deciduous and semi-deciduous forests in the project area are restricted to the remains of gallery forests and pockets of forests found in environmental conservation areas and on the slopes of the mountain ranges. The forests have a distinct biotic characteristic, growing with a deficit of water in the dry season and an excess of water in the wet season.

3.4 Access to Property

The cities of Ladário and Corumbá are accessible by highway, rail, airline, and river. From Campo Grande, the highway route to Corumbá is via BR-262. The federal railroad, Estrada de Ferro Noroeste do Brasil, controlled by Novoeste and, at present, by the ALL – América Latina Logística, links Corumbá to Campo Grande, with connections for São Paulo and Porto de Santos. By air, Corumbá is served by a daily flight of Empresa TRIP, from Campo Grande. By river, it is linked to the Bacia Platina and to the state of São Paulo, via the river Paraná.

The Rabicho Project is located south-southeast of Corumbá via BR-262, MS-228 and an unimproved dirt road to the site (Figure 3-1).


The city of Corumbá has excellent transportation and infrastructure, and can be accessed by road, air or river. By road, Corumbá is accessed from the capital of the state, Campo Grande, via paved Federal Highway BR-262. The area is also accessed by the Northwest Brazil Railway (Estrada de Ferro Noroeste do Brasil), which connects Corumbá and Campo Grande to São Paulo and the Port of Santos. The Paraguay River allows transportation by barge to ports in Bolivia, Paraguay, Uruguay and Argentina, providing excellent logistic options for the shipment of goods and products. Corumbá has a population sufficient to provide the work force required for exploration and mining.

The Rabicho Project is envisioned as a source of feed for the process plant at Mine 63 which is an operational mine.

3.5.1 Power and Water Supply

There is no water or power supply to the Project at this time. Mine 63 has water and power for its process plant.

3.5.2 Port

The Paraguay River allows transportation by barge to ports in Bolivia, Paraguay, Uruguay and Argentina, providing excellent logistic options for the shipment of goods and products.

Iron ore from Mine 63 is transported by barge from the port of Ladário to the port of Rosário in Argentina, where it is embarked in ships for delivery to international clients.




There are no buildings on site. There is an exploration office located nearby and Mine 63, owned and operated by MMX, has facilities to support exploration including an analytical laboratory.

3.5.4 Tailings Storage Area and Waste Rock Disposal

The mineral rights controlled by MMX include a sufficient area of tailings and waste rock disposal. Surface rights would have to be secured from the local landowners.

3.5.5 Manpower

The city of Corumbá has a sufficient population to supply the work force required for exploration and mining. At present, 450 people are employed by MMX Corumbá.

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Figure 3-1

Access to the Rabicho Project

Rabicho



4 History (Item 8)

The Rabicho Project area is located in the Corumbá and Ladário municipalities, Mato Grosso do Sul State, Brazil. The main economic activity of the region is mining of iron ore, manganese ore, limestone, and sand. The iron and manganese deposits have been known since the end of the nineteenth century. All manganese ore is extracted using underground mining methods while the iron ore is mined from open pits. The principal mining companies active in the region are MMX Corumbá, Mineração Urucum (Vale), Minerações Corumbaenses Reunidas (RTZ) and Fábrica de Cimento Itaú (Cement Factory -Votorantin Group).

Mining has gone on in the region for some time, but the first mining decree was issued in 1881, for the area of Morraria do Urucum (Urucum Hill Ridge). This area has a long mining history related to the Laiz and Ema Mines, which are located in the MMX mining concessions at Mine 63. In 1958, the mining company Sociedade Brasileira de Imoveis (SBI) started mining in the Laiz Mine area, with the extraction of colluvial iron ore. The RoM was dry beneficiated, producing 80,000t of Lump ore. The ore was transported by conventional trucks to a pig iron plant belonging to the same group, located near the SBI Port, on the road connecting Ladário to Corumbá.

In 1973, due to the low price of pig iron, work at the pig iron plant, the mine, and the ore beneficiation plant were suspended. After 1974, SBI constructed a processing plant to beneficiate the iron and manganese ore, in place of the old steel plant. This plant had the capacity to beneficiate 140,000t/y of iron ore and 30,000t/y of manganese ore. During this time, the Laiz and Ema Mines were opened. Both mines were designed to produce iron ore by open pit and manganese ore by underground methods. From 1974 to 1986, SBI produced 425,000t of Lump ore and 420,500t of manganese ore.

Between 1986 and 1993, mining activities were restricted to underground manganese mining while the operations were leased to the Companhia Paulista de Ferro Ligas. From 1993 to 2000, SBI leased the underground manganese mine and open pit mine to Minefer LTDA.

After 2000, the mining activities were restricted to mining and beneficiation of iron ore at the Laiz Mine. SBI sold the iron ore as RoM to the Sidersul/Vetorial Group, who processed the ore using the Laiz Mine’s mobile plant. In August 2005, EBX Corumbaense, presently MMX Corumbá, acquired the mineral rights for these mines, as well as the existing beneficiation plant.

After refurbishing the existing mobile crushing plant (the AZTECA plant) MMX started iron ore mining and processing operations at Mine 63 in January 2006. In July 2006, MMX started operating the main plant, and the first batch of Lump ore was shipped through Ladario Port later that month.

4.1 Ownership

The mineralization described in this report is contained entirely within DNPM Process Number 824.873/1971. The research license, No 959, of this process was granted to Mário Duarte Garcia on July 18, 1973 for a two-year period. The license was renewed as No 919 for an additional year. The final exploration report was submitted on August 3, 1977 and was approved on May 3, 1978. In 1979, a request was made for cession of the mineral right to Mineração Dobrados S.A. Indústria e Comércio (Dobrados) who also requested the license for Mining Exploitation. In May 2009, the following transfers were made: (1) Dobrados to Corumbá Mineraçãò Ltda, (2)



Corumbá Mineraçãò Ltda to Mineral Service Ltda (Mineral Service) which is 100% owned by MMX Corumbá.

4.2 Past Exploration and Development

The past owners have excavated exploration pits and submitted exploration reports and requests for mining concessions to the DNPM. Table 4.2.1 lists the DNPM process number and the exploration work and status of mineral rights.

Table 4.2.1: Exploration by Previous Owners of Rabicho

DNPM Process

Exploration Pits

Mineral Right Status Exploration Report Submitted Number Meters Avg Depth

003.275/1965 68 102 1.5 Mining concession request January 8, 2009

003.276/1965 63 61 1.0 Mining concession request January 8, 2009

003.277/1965 68 56.55 0.8 Mining concession request January 8, 2009

806.106/1968 142 130.83 0.9 Mining concession request December 2, 1974

806.107/1968 147 134.25 0.9 Mining concession request December 2, 1974

824.873/1971 250 364.25 1.5 Mining concession request August 3, 1977

4.3 Historic Mineral Resource and Reserve Estimates

There are no historic mineral resource or reserve estimates.

4.4 Historic Production

There has been no production from the Rabicho Project.



5 Geologic Setting (Item 9) 5.1 Regional Geology

The Corumbá iron-manganese district is located in the extreme west of Brazil, approximately in the center of South America, and extends into the eastern areas of both Paraguay and Bolivia. The basement rocks are part of the Rio Apa Shield, a geotectonic entity that includes gneissic terrains and associated sedimentary cover. The Lower to Middle Proterozoic Rio Apa Complex consists of gneiss, granite gneiss, biotite gneiss, granite, diorite, and schist as well as quartz diorite and quartz gabbro dikes. Amphibolites, leptinites, metagranites and, subordinate trondhjemites, tonalites, and granodiorites also occur. The rocks have a complex evolutionary history including a period of ductile deformation and simultaneous recrystalization during the Transamazonic thermo-tectonic event. Toward the end of this period, the rocks underwent potassic alteration. The complex has been dated at 1.7Ga. The contact with the overlying metamorphic rocks of the Alto Tererê and Amoguijá Groups are tectonic through faulting and, locally, can be discordant and intrusive. Contacts with the Corumbá and Jacadigo groups, in general, are discordant and rarely tectonic through extensional faults. Contacts with the recent superficial coverings (Pantanal and Xaraiés formations, as well as deposits of talus) are always erosive discordances.

The deposits of iron and manganese are related to the Jacadigo group, of upper Proterozoic age (about 900 Ma), whose youngest formation, the Banda Alta, is constituted by a package of ferruginous sediments at least 320m in thickness. The Banda Alta is characterized by alternating layers of jaspelites with ferruginous clastic sediments, containing up to four layers of manganese in the basal portion of the sequence, one of which is 4m in thickness.

Quaternary sediments cover most of the lowlands and plains related to the Paraguay River. They include the Pantanal Formation, of Pleistocene age, and the Pantanal deposits, the Xaraiés Formation and the Alluvial Deposits of Holocene age.


The Colluvial Deposits consist of detrital sediments, partially laterized, of conglomerate, sand, silt and clay. The distribution of the deposits is irregular. They occur at the northwestern edge of the Paraná Basin and at the foot of the slopes of the Urucum, Santa Cruz, Grande and Rabichão Mountains (Figure 5-2).

The colluvial deposits at the foot of the slopes of the Urucum Mountains contain detrital sediments and boulders of jaspelite and banded hematite, which originated mainly from the Santa Cruz Formation. These rudaceous fragments, together with ferruginous cement in the clay-sandy matrix, constitute a limonitic hardpan. The silica in the fragments has been leached thereby increasing the Fe grade. These deposits host the highest-grade material in the Corumbá Project area.

Structural-Tectonic Domains

There are six regional structural-tectonic domains:

• Cratonic, represented by the Rio Apa Complex;



• Alto Tererê Mobile Belt of low to medium metamorphic grade, formed by rock of the Metamorphic Alto Tererê;

• Plutonic Suite and the Amoguijá Volcanics, represented by the volcanic rock of the Serra da Bocaina and Alumiador intrusives;

• Platform Cover, represented by the Jacadigo and Corumbá groups and the Coímbra Formation;

• Alkaline Plutonic-Volcanic Suite, corresponding to the alkaline rocks of Fecho dos Morros, and

• Superficial Cover, represented by the Pantanal and Xaraiés formations, as well as the recent coluvium, eluvium and alluvium deposits.

5.2 Local Geology

The major part of the area is found above a planar surface constituted of ferruginous canga (approximately 60% of the area), composed of fragments of hematite-jaspelites leached nodules, arkose and scattered fragments of granitoid cemented by ferruginous material.

The colluvial deposits are composed of clastic hematite-jaspelite, arkoses, ferriferous sandstone, as well as erratic milky quartz and granitoid fragments. The bedrock consists of a saprolitic sequence formed from the arkose and, in some cases, the granitoid basement.

The local geology is shown in Figure 5-3.

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Figure 5-1

Stratigraphic Column and Regional Map

Rabicho

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File Name: Figure 5-2.doc Date 01-22-10 Approved: LM Figure: 5-2


Source: RADAM Geological Map (1982)

Figure 5-2

Regional Structural Map

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Figure 5-3

Geologic Map of the Rabicho Project



6 Deposit Type (Item 10) According to Haralyi and Walde (1986), the iron ore of the Jacadigo Group is described as jaspelite, banded hematite or Banded Iron Formation (BIF). In the central part of the basin, there is an interlayering of hematite laminae and ferruginous jasper. At the margin of the basin, there is no banded character, passing to a chemical sedimentation with major clastic contribution. There is a polymictic conglomerate with ferruginous cement in the marginal parts of the basin and on top of the iron sequence.

Haralyi and Barbour (1974), studying the Banda Alta Member at the Urucum Mountain, noted a progressive increase of the average grade of silica in the depositional sequence corresponding to a diminishing of the relative thickness of hematite compared to jaspelite. The variation in layers is related to a gradual diminishment of the Fe++ element in the water of the basin, culminating with the deposition of only silica extracts. Laterally, the diminishing of the average thickness of laminae of hematite and in the increase of jasper laminae can also be noted.

The origin of the iron in this thick jaspelite sequence with high primary Fe content is quite controversial. The jaspelite package in the project area and surrounding areas is characterized by alternating layers of extremely fine hematite and jasper, without magnetite. Some jaspelites exhibit small lenses of jasper eyes. No carbonates are observed, although some textures resemble carbonate substitution by silica. There are two explanations for the absence of carbonate in the jaspelites: a) the carbonate was replaced by silica in the diagenetic process; b) the carbonate was totally destroyed by the climatic conditions, caused by the intense percolation of the meteoric waters, facilitated by the high degree of fracturing of the jaspelite package. The presence of carbonates in the Mutum area is outstanding, in the form of siderite, calcite and, dolomite, in percentages varying from 10 to 15%. The presence of magnetite in the jaspelites of Mutum and north of Rabicho is probably an indication of deeper more reducing waters, or could also be a result of the slightly higher metamorphic degree in Mutum area.

The iron deposits at Mine 63, Urucum NE and Rabicho are contained within eluvial and colluvial deposits related to the weathering of the jaspelites and BIF.



7 Mineralization (Item 11) 7.1 Eluvial Deposits

The eluvium originates in the primary jaspelite which has been fractured and undergone weathering and leaching of silica. The Fe content of the eluvium is directly related to the content of the original primary rock. At the marginal parts of the basin, there is lateral variation and even a banding in the Fe contents of the eluvial ore, indicating primary variations in the content of the iron.

The iron enrichment in the eluvium resulted from in situ silica leaching of the primary jaspelite and therefore forms a nearly continuous zone over the bedrock of the jaspelite. At Mine 63, it is located on the top and slopes of Urucum Mountain and has a thickness that varies from less than 1m to over 30m, with an average of about 15m. There is no eluvium at the Urucum NE deposit and small amounts at Rabicho.

The enrichment factor of the eluvial material, in relation to the primary rock, depends on the grain size and the dimension of the fragments. At the marginal parts of the basin, where sedimentation was mainly clastic, the enrichment of the eluvial material is directly proportional to the iron content in the jaspelite from which it originated. The same is not true in the central part of the basin, where sedimentation is mainly chemical.

7.2 Colluvial Deposits

The colluvium is the material deposited at the base of residual hills where the Banda Alta member outcrops. The colluvium is formed by recent clastic deposition composed mainly of angular fragments of leached hematite jaspelites and arkose. The colluvial deposits which are richer in hematite fragments and jaspelite, leached or not, concentrate near the rock source, that is, near the mountain. The total iron content is directly proportional to the distance from the source and has been enriched by the leaching of silica. The breccia areas have undergone cementation and have a more consolidated nature than the colluvium.

The colluvium, including the breccia, at Mine 63 has an elongate shape, about 3km long and 1.25km wide, and varies from less than 1m to over 30m in thickness, with the thickest sections closest to the source rock and average thickness of 22m. The colluvium at Urucum NE is more than 6km in length and 2km in width. The colluvium in DNPM Process Number 824.873/1971 at Rabicho is about 4.5km long and 2.4km wide. The thickness of the colluvium is about 5m; however, the estimated thickness is limited by the depth of the excavated pits and may be thicker.




8.1 Surveys and Investigations

MMX started exploration at Rabicho in December 2007 with the location of topographic survey points in the DNPM license area 824.873/1971 (Figure 5-3). Exploration lines were set out at 200m in the south and 400m in the north. A total of 116.2km of exploration lines were cleared of brush and mapped.

Subsurface exploration consisted of a series of pits manually excavated to bedrock or to a maximum depth of 5.0m. In plan view, the pits are square with 1.5m sides. The pits are centered on a 200m grid in the south and a 400m grid in the north. A total of 148 pits were excavated, but only 76 were sampled. The usual procedure was to not sample intervals less than 2m in thickness because MMX considers 2m to be a minimum mining thickness. In addition, some drillholes were not sampled because the program was ended due to budgetary constraints. Figure 8-1 shows the location of the exploration pits within the license boundary. Figure 8-2 presents photos of the pit and excavation of the channel within the pit.

Material from the pits was removed in 20L buckets which were pulled to the surface by winch and placed in individual piles containing material from 1m depth of excavation.

The pits were sampled by digging channels 0.1m in width and 0.05m in depth along one wall of the pit. The lithology of the channel was noted – as soil, colluvium, eluvium, saprolite, or bedrock. The channel was sampled along the entire length, excluding soil, with breaks at changes in lithology.

The following lithotypes were used for description of the pit samples:

• Soil;

• Eluvium, partially or totally leached;

• Colluvium, fine, medium, and coarse grained; and

• Waste – clay-rich and saprolitic colluvium and saprolite

8.2 Interpretation

The method of excavating exploration pits to sample unconsolidated material provides a large bulk sample which can be used for metallurgical tests and also provides a good visual examination of the colluvium and eluvium. The channel sample that is used in the resource estimation is also a large sample, in fact, larger than would be available from drilling.

MMX has excavated the pits and channels with care producing samples that are representative of the material sampled.

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Figure 8-1

Drillhole and Sample Locations, Rabicho Project

Sampled

Not Sampled

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Figure 8-2

Photos of Excavated Pit and Sampling



9 Drilling (Item 13) All exploration at the Rabicho Project consists of exploration pits described in Section 8.



10 Sampling Method and Approach (Item 14) Samples from the pits were collected from vertical channels in one wall of the shaft. The channel was 10cm wide and 15cm deep and was sampled over the entire length of the mineralized zone in the pit. The channel was made using a hammer and chisel and the sample was collected in a wooden box. The sample was then transferred to plastic bags. The samples were numbered consecutively with blind numbers. The four walls of the pits are photographed meter by meter. The samples from Rabicho were sent directly to the Mine 63 laboratory for preparation and analysis.

A sample of 200kg is collected to provide enough material for a global sample, size fraction samples and for an archive with enough weight for duplicate tests if necessary. The colluvium with total thickness less than 2.0m was not sampled as 2m is considered to be a minimum mining thickness and because their metallogenic potential is considered lower. In addition, some pits were not sampled because the program was ended due to budgetary constraints.

The channel samples tend to be long intervals over the entire mineralized section of the unit with breaks at changes in lithology. The resulting database contains samples with highly variable sample intervals.

The area with pits excavated on a 200m grid has dimensions of about 5km by 1.2km and the area with pits on a 400m grid has dimensions of about 2.4km by 2.8km. Not all of the pits within this grid were sampled.

SRK considers the samples to be representative of the mineralized material. The colluvial and eluvial material was sampled over the entire length of the mineralization. The size of the channel samples is sufficient to provide a reliable database for resource estimation. However, SRK strongly recommends that all the pits be sampled to provide information to increase the classification confidence in the resource.




All sample preparation and analysis is done at Mine 63 owned and operated by MMX Corumbá.

11.1 Sample Preparation

At the laboratory, the sample is initially checked for sample identification and preservation condition. The sample is then weighed and dried in an oven at 105ºC. The 200kg-sample is crushed in a closed circuit with a 38mm screen until all material is less than 38mm. The crushed material is then fed into a rotary splitter. Half the sample is filed as an archive and the other half is fed into rotary splitting again. The second splitting generates two portions, one is used for the global analysis and the other for the size fraction test. The sample is screened at 25mm, 19mm, 12mm, 6.35mm and 4mm. A small portion is taken from the 25mm to 19mm fraction for a crepitation test. The remainder of that fraction is mixed with the 19mm to 12mm fraction. The <4mm fraction is wet screened to generate three more fractions: 4mm to 1mm, 1mm to 0.15mm and <0.15 mm. The resulting size fractions are:

• 25mm to 12mm;

• 12mm to 6.35mm;

• 6.35mm to 4mm;

• 4mm to 1mm;

• 1mm to 0.15mm, and

• <0.15mm.

11.2 Sample Analysis



All chemical analyses are done by XRF for the elements Fe, SiO2, Al2O3, P, MnO, CaO, MgO, K2O, Na2O, TiO2. The steps in the analytic procedure for LOI consist of:

• Drying the sample in an oven at about 110ºC for at least one hour;

• Weighing the empty container (CV);

• Placing 1g of the dried sample in the container and weighing again (C+A);



• Placing the container with the sample in a previously heated oven and waiting until the temperature reaches 1,000±50ºC and letting it calcine for more than one hour.

• Removing the container from the oven, resting it on the refractory plate until it loses incandescence, and then putting it in a closed dryer until the container and sample cool;

• Weighing and recording the final weight; and

• Calculating LOI using the following formula:

100)()(

)()(% x

CVAC

WeightFinalACFW

−+−+

=

Data is entered into Microsoft Excel worksheets by a lab technician. Original, signed assay certificates and worksheets are provided to MMX. The detection limits for analysis are shown in Table 11.2.2.1

Table 11.2.2.1: Detection Limits of Iron Ore Analysis


Fe 0.01% SiO2 0.10% Al2O3 0.01% MnO 0.01% P 0.01% TiO2 0.01% LOI 0.10%

11.3 Internal Laboratory Quality Controls and Quality Assurance

The internal QA/QC procedures of the MMX-Corumbá laboratory consists of inserting samples of Certified Reference Materials (standards) into each lab batch and inserting a replicate for each 10 samples. The standard sample is IPT 123, a certified reference material produced by the Institute for Technological Research in Brazil. In addition, one screen test is performed for each 10 samples to verify that 95% of the sample passes through the 8.0, 2.0 and 0.106mm screens.

11.4 MMX Quality Controls and Quality Assurance

The MMX exploration team utilizes two standard reference samples: OREAS40 is standard prepared by Ore Research and Exploration and APHP is a standard prepared by Agoratek International from material from the Amapa deposit previously owned by MMX. Table 11.4.1 presents a summary of the test results for the two standard samples. Failures are defined as more than three standard deviations from the certified average. For iron, there is one failure in the APHP standard and none in OREAS40. There are four and three failures, respectively for silica and one and four failures, respectively for alumina. The failures in OREAS40 for manganese are probably related to the low average grade near detection limit.



Table 11.4.1: Standard Reference Samples

Sample Element/Oxide Total Certified Lab

> 2 SD < 2 SD >3 SD < 3 SD Average SD Average SD

APHP

Fe 35 35.000 0.380 35.260 0.515 2 0 1 0 SiO2 35 34.220 0.430 34.520 0.669 7 1 3 1 Al2O3 35 6.820 0.120 6.810 0.182 3 1 0 1 P 35 0.124 0.003 0.128 0.005 1 0 1 0 Mn 35 1.540 0.050 1.540 0.082 0 8 0 2 TiO2 35 0.300 0.010 0.290 0.015 1 1 1 1

OREAS40

Fe 34 66.720 0.390 66.930 0.510 6 0 0 0 SiO2 34 4.640 0.070 4.630 0.120 5 3 2 1 Al2O3 34 0.130 0.020 0.140 0.040 5 2 2 2 P 34 0.004 0.002 0.005 0.001 1 0 1 0 Mn 34 0.020 0.001 0.012 0.010 1 23 1 23 TiO2 34 0.050 0.004 0.050 0.010 8 8 0 0

MMX also submits duplicate pulp samples within the sample stream. The results show that 100% of the iron values fall within 5% of the original; 97% of the silica and alumina results fall within 10% of the original and 91% of the phosphorous values fall within 10% of the original. Manganese and titanium oxide performed less well at 81% and 84% respectively falling within 10% of the original.

Table 11.4.1: Percentage of Laboratory Pulp Duplicates within Specific Ranges

Element/Oxide Number

Number Falling Within Plus or Minus

5% 10% 20% 25% 50% >50%

Fe 77 77 77 77 77 77 0

100% 100% 100% 100% 100% 0%

SiO2 77 73 75 77 77 77 0

95% 97% 100% 100% 100% 0%

Al2O3 77 67 75 77 77 77 0

87% 97% 100% 100% 100% 0%

P 77 51 70 77 77 77 77

66% 91% 100% 100% 100% 100%

Mn 77 53 62 68 71 74 3

69% 81% 88% 92% 96% 4%

TiO2 77 47 65 75 77 77 0

61% 84% 97% 100% 100% 0%



12 Data Verification (Item 16) The data is received from the laboratory as electronic files and as hard copies of the assay certificates. The data is entered into Excel spreadsheets with four sheets for collar coordinates, assays, downhole surveys, and lithologic information. The laboratory certificates are received as hard copies.

SRK has verified 20% of the Rabicho database against assay certificates and found no errors.

SRK did not independently collect samples for assay because the rock shows obvious mineralization and the database samples have undergone extensive assaying and check assaying



13 Adjacent Properties (Item 17) There are several mines in the Corumbá area. MMX operates Mine 63, Vale operates the Urucum Mine immediately northeast of Mine 63 and RTZ operates the Corumbaense Reunidas Mine in the nearby Santa Cruz Mountains. Neither SRK nor MMX utilized any information from these mines in the preparation of this report.




There has been no metallurgical testing on material from Rabicho.



15 Mineral Resources (Item 19) The resource estimated was conducted by the consultant Prominas under the direction of MMX using MineSight®software. The Gridded Seam Model (GSM) was used for modeling the layers of colluvium and eluvium. SRK has audited the resource estimation by reproducing the composite file and reviewing the block estimation methodology and visually comparing the results to the drillholes in cross-sectional view.

15.1 Topography

Topographic contours were generated through an aerial topographic survey contracted to Geoid Ltda supplemented with field surveys by surveyors employed by MMX at Mine 63. The topography has 5m contours and is shown in Figure 8-1 with the exploration pits and the outline of the DNPM license.

15.2 Database

The database consists of lithologic information from 148 pits and analytical information from 75 pits. The maximum depth of the pits is 5m and the minimum is 0.4m with an average of 3.39m. The database includes 76 sample intervals, one from each of 75 pits and two from one pit. The sample interval size ranges from 1.6 to 5m with an average of 3.72m. The database includes analytical information for Fe, Al2O3, SiO2,

P, Mn, TiO2, PF, CaO, MgO, K2O and Na2O in size

fractions > 3/4,>1/2, > 4mm, >0.15mm, <0.15mm and global. The distribution of the sampled pits is shown in Figure 15-1.

Of the 76 samples, 70 are in colluvium, 3 are in eluvium and 3 are in waste. Basic statistics of the samples are presented in Table 15.2.1.

Table 15.2.1: Basic Statistics of Rabicho Pit Samples

Element/oxide Minimum Average Maximum

Standard

Deviation

Coefficient

of Variation

Fe 23.80 47.70 64.70 8.44 0.18 Al2O3 1.63 5.65 13.30 2.34 0.41 SiO2 4.65 22.04 51.00 10.21 0.46 P 0.040 0.080 0.170 0.030 0.375 Mn 0.01 0.29 5.18 0.85 2.93 TiO2 0.08 0.25 0.52 0.09 0.36 PF 1.01 2.85 8.41 1.24 0.44 CaO 0.01 0.05 0.29 0.04 0.80 MgO 0.05 0.09 0.33 0.06 0.67 K2O 0.01 0.27 1.50 0.25 0.93 Na2O 0.01 0.01 0.18 0.02 2.00

15.3 Geology

A GSM was used to model the geology because of the short depth of the pits in relation to the areal extent of the deposit. In this model, the blocks were defined as 10m x 10m in plan view and of variable vertical thickness. The dimensions of the block model are shown in Table 15.3.1.



Table 15.3.1: Dimensions of Rabicho Block Model

Direction Minimum Maximum Block Size Number of Blocks

East 444,000 452,500 10 850 North 7,874,000 7,880,500 10 650 Elevation 0 700 1 8

The following lithotypes were grouped for modeling:

• Soil;

• Eluvium, partially or totally leached;

• Colluvium, fine, medium, and coarse grained; and

• Waste – clay-rich and saprolitic colluvium and saprolite.

Because colluvial and eluvial deposits form as a result of weathering and gravitational transportation, there can be interfingering of the layers. MMX generated the following seams for use in the GSM:

• Soil;

• Eluvium1;

• Waste;

• Colluvium1;

• Eluvium2;

• Waste2;

• Colluvium3; and

• Waste3.

Fourteen sections were generated with geological information for use in defining the thickness and depth of the various layers. Inverse Distance Squared (ID2) was used to interpolate the depth and thickness from the drillhole information. The search distance was 400m x 400m. Not all seams are present in all locations and where the seam is not present, it was given a thickness of 0m.

15.4 Compositing

The samples were composited within the seam in which the sample is located. Because the seams are based on the sample thickness, the composites should be essentially the same as the original samples. MMX performed a validation check to ensure that this was so.

15.5 Density

MMX conducted density measurements on samples from the excavated pits using the sand flask technique following procedures established by the Brazilian Association of Technical Norms (ABNT). Twenty-four samples of colluvium were collected for density measurements. The average of the 24 samples is 2.37kg/m3 on a dry basis.




Grades for each of the 8 elements/oxides and PF listed in Table 15.2.1 were estimated in the colluvium and eluvium using ID2 with a search range of 200m in the X and Y directions. The estimation required a minimum of 1 and maximum of 8 composites with a maximum of 2 samples per quadrant. In the north where the drilling is sparse, a search of 3,000m was used to populate the entire block model. There are only four samples in the northern part of the resource area which is inadequate to give more than an indication of the potential there.

Table 15.6.1 lists the volume, tonnage, and grades in the block model by lithotype, prior to resource classification. The density is 2.37t/m3 in the colluvium and 3.603t/m3 in the eluvium. The density of the eluvium at Mine 63 was used as there were an insufficient number of eluvium density samples at Rabicho.

Table 15.6.1: Volume, tonnage and grades in Rabicho Block Model

Seam Volume (Mm3) Mt Fe Al2O3 SiO2 P Mn Pf CaO MgO

Soil 2.08

Eluvium1 2.91 10.50 51.75 5.83 14.19 0.12 0.02 3.47 0.02 0.05

Waste1 0.24

Colluvium1 20.31 48.14 45.00 6.09 25.52 0.10 0.19 3.14 0.05 0.09

Eluvium12 1.10 3.96 55.00 6.24 12.20 0.15 0.03 2.87 0.02 0.05

Waste2 0.62

Colluvium2 0.13 0.30 46.00 3.70 26.80 0.07 0.04 1.73 0.05 0.05

Waste3 3.57

Total 30.96 62.90 46.76 6.04 22.80 0.11 0.15 3.17 0.04 0.08

SRK considers that the resource estimation in the southern part of the resource area has produced an estimate that meets CIM guidelines for indicated and inferred resources.


The resources were in general classified as indicated where the pits are on a 200m grid and as potential where the grid is 400m. However, because not all the pits in the 200m grid area were sampled, polygons were drawn around the unsampled pits and the indicated resources within the polygons were downgraded to inferred. Figure 15-2 presents the polygons used in resource classification. The Indicated and Inferred Resources are stated at a cut-off grade of 28% Fe and are listed in Table 15.7.1 and the Potential resources are listed in Table 15.7.2.



Table 15.7.1: Indicated and Inferred Resources, on a Dry Tonnes basis, at a Cutoff of 28%

Fe

Class Seam Mt Fe Al2O3 SiO2 P Mn Pf CaO MgO

Indicated

Eluvium1 0.22 62.59 3.05 5.48 0.10 0.04 1.68 0.05 0.05 Colluvium1 22.58 48.55 5.35 21.16 0.08 0.31 2.71 0.05 0.08 Eluvium2 0.13 55.00 6.24 12.20 0.15 0.03 2.87 0.02 0.05 Colluvium2 0.24 46.00 3.70 26.80 0.07 0.04 1.73 0.05 0.05 Total 23.16 48.69 5.32 21.02 0.08 0.30 2.69 0.05 0.08

Inferred

Eluvium1 Colluvium1 4.32 47.69 4.81 23.22 0.07 0.43 2.33 0.05 0.09 Eluvium2 Colluvium2 0.06 46.00 3.70 26.80 0.07 0.04 1.73 0.05 0.05 Total 4.38 47.67 4.79 23.27 0.07 0.42 2.32 0.05 0.09

Table 15.7.2: Potential Resources

Class Seam Mt

Potential

Eluvium1 10.00 Colluvium1 21.00 Eluvium2 4.00 Colluvium2 0.00 Total 35.00

15.8 Mineral Resource Sensitivity

The Mineral Resource Sensitivity is shown in Table 15.8.1 and in the charts below.

Table 15.8.1: Grade Tonnage for Indicated and Inferred Resources

Cut-off Fe%

Indicated Inferred

Mt Fe% Mt Fe%

40.0 21.4 49.88 3.6 50.56 40.5 21.2 49.97 3.5 50.69 41.0 21.0 50.06 3.5 50.78 41.5 20.8 50.17 3.5 50.80 42.0 20.5 50.27 3.5 50.83 42.5 20.2 50.39 3.5 50.85 43.0 19.8 50.56 3.4 51.10 43.5 18.6 51.01 3.2 51.48 44.0 17.9 51.30 3.1 51.63 44.5 17.6 51.42 3.1 51.69 45.0 17.0 51.67 3.1 51.79 45.5 16.7 51.77 3.0 51.89 46.0 16.3 51.91 2.9 52.04 46.5 15.6 52.17 2.8 52.24 47.0 15.1 52.36 2.8 52.32 47.5 14.4 52.61 2.7 52.53 48.0 13.6 52.91 2.6 52.67 48.5 12.0 53.54 2.3 53.21 49.0 11.0 53.94 2.1 53.84 49.5 10.2 54.32 1.9 54.21



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Grade Tonnage Curve ど Indicated

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SRK Job No.: 162700.07




S.A.

Figure 15-1

Distribution of Sampled Pits, Rabicho Project

SRK Job No.: 162700.07




S.A.

Figure 15-2

Resource Classification, Rabicho Project



16 Other Relevant Data and Information (Item 20) There is no other relevant data for this project.



17 Interpretation and Conclusions (Item 21)

17.1 Field Surveys

MMX has used exploration pits with a maximum depth of 5m for researching the colluviums and eluvium at Rabicho. Unfortunately, all the pits were not sampled and analyzed before the program was discontinued due to budgetary constraints. The pits are a very good method of obtaining samples at relatively shallow depths.

17.2 Analytical and Testing Data

MMX has used industry best practices in excavating and sampling the exploration pits. The samples are analyzed at MMX Corumbá’s laboratory at Mine 63. The lab has been inspected by Agoratek International and has QA/QC practices in place.

The MMX exploration group also has QA/QC procedures as a check on laboratory results.


MMX has used the Gridded Seam Model approach in constructing the geologic model and for use in grade estimation. The grade estimation in the southern portion of the deposit where the pits are on a 200m grid is adequate for the deposit type. The estimation will be more robust once all the pits have been sampled. In the northern part of the resource area, there are only three samples used in estimation and the resource in this area is considered to be potential.



18 Recommendations (Item 22) 18.1 Recommended Work Programs

SRK recommends the following for the Rabicho Project:

• Sample and analyze the unsampled pits;

• Conduct a program of infill sampling either with drilling or more exploration pits;

• More density measurements should be taken; and

• A metallurgical test program should be developed to determine the optimal means of processing Rabicho material.



19 References (Item 23)

Agoratek International (US), Inc., 2009, Serra Azul Iron Ore Project A Review of QA-QC Data, Unpublished internal report generated for MMX, 17p

HARALYI N.L.E. and BARBOUR, A. P. Bandeamento do minério de Ferro e Manganês de Urucum e suas implicações tectônicas. In: CONGRESSO BRASILEIRO DE GEOLOGIA, 28., Porto Alegre, 1974. Anais. Porto Alegre, Sociedade Brasileira de Geologia, 1974, v.6, p. 211-9.

HARALYI N.L.E. and WALDE D.H.G. Os Minérios de Ferro e Manganês da região de Urucum, Corumbá, Mato Grosso do Sul. In: DNPM/VALE. Principais Depósitos Minerais do Brasil. Brasília, 1986, v.2, p.127-44.

MMX Mineração e Metálicos S.A., (December 2009), Internal Report, Rabicho sul_relatorio de recursos_rev00_Prominas

MMX Mineração e Metálicos S.A., (December 2009), Internal Report, Aspectos Gerais Rabiho



20.2 Glossary

Table 20.2.1: Glossary

Term Definition

Assay: The chemical analysis of mineral samples to determine the metal content. Capital Expenditure: All other expenditures not classified as operating costs. Composite: Combining more than one sample result to give an average result over a larger distance. Concentrate: A metal-rich product resulting from a mineral enrichment process such as gravity concentration or

flotation, in which most of the desired mineral has been separated from the waste material in the ore. Crushing: Initial process of reducing ore particle size to render it more amenable for further processing. Cut-off Grade (CoG): The grade of mineralized rock, which determines as to whether or not it is economic to recover its

gold content by further concentration. Dilution: Waste, which is unavoidably mined with ore. Dip: Angle of inclination of a geological feature/rock from the horizontal. Fault: The surface of a fracture along which movement has occurred. Footwall: The underlying side of an orebody or stope. Gangue: Non-valuable components of the ore. Grade: The measure of concentration of gold within mineralized rock. Hangingwall: The overlying side of an orebody or slope. Haulage: A horizontal underground excavation which is used to transport mined ore. Hydrocyclone: A process whereby material is graded according to size by exploiting centrifugal forces of particulate

materials. Igneous: Primary crystalline rock formed by the solidification of magma. Kriging: An interpolation method of assigning values from samples to blocks that minimizes the estimation

error. Level: Horizontal tunnel the primary purpose is the transportation of personnel and materials. Lithological: Geological description pertaining to different rock types. LoM Plans: Life-of-Mine plans. LRP: Long Range Plan. Material Properties: Mine properties. Milling: A general term used to describe the process in which the ore is crushed and ground and subjected to

physical or chemical treatment to extract the valuable metals to a concentrate or finished product. Mineral/Mining Lease: A lease area for which mineral rights are held. Mining Assets: The Material Properties and Significant Exploration Properties. Ongoing Capital: Capital estimates of a routine nature, which is necessary for sustaining operations. Ore Reserve: See Mineral Reserve. Pillar: Rock left behind to help support the excavations in an underground mine. RoM: Run-of-Mine. Sedimentary: Pertaining to rocks formed by the accumulation of sediments, formed by the erosion of other rocks. Shaft: An opening cut downwards from the surface for transporting personnel, equipment, supplies, ore and

waste. Sill: A thin, tabular, horizontal to sub-horizontal body of igneous rock formed by the injection of magma

into planar zones of weakness. Smelting: A high temperature pyrometallurgical operation conducted in a furnace, in which the valuable metal

is collected to a molten matte or doré phase and separated from the gangue components that accumulate in a less dense molten slag phase.

Stope: Underground void created by mining. Stratigraphy: The study of stratified rocks in terms of time and space. Strike: Direction of line formed by the intersection of strata surfaces with the horizontal plane, always

perpendicular to the dip direction. Sulfide: A sulfur bearing mineral. Tailings: Finely ground waste rock from which valuable minerals or metals have been extracted. Thickening: The process of concentrating solid particles in suspension. Total Expenditure: All expenditures including those of an operating and capital nature. Variogram: A statistical representation of the characteristics (usually grade).



Abbreviations

The metric system has been used throughout this report unless otherwise stated. All currency is in U.S. dollars. Tonnes are metric of 1,000kg, or 2,204.6lbs. The following abbreviations are typical to the mining industry and may be used in this report.

Table 20.2.2: Abbreviations


AA atomic absorption Al2O3 alumina (aluminum oxide) °C degrees Centigrade CaO calcium oxide CoG cut-off grade cm centimeter cm2 square centimeter cm3 cubic centimeter ° degree (degrees) dia. diameter EIA/RIMA Environmental Impact Assessment and Environmental Impact Report Fe iron FeO ferrous oxide or wustite ft2 square foot (feet) ft3 cubic foot (feet) g gram gal gallon g/L gram per liter g/t grams per tonne ha hectares ICP induced couple plasma ID2 inverse-distance squared ID3 inverse-distance cubed kg kilograms km kilometer km2 square kilometer kt thousand tonnes kV kilovolt kW kilowatt kWh kilowatt-hour kWh/t kilowatt-hour per metric tonne L liter L/sec liters per second L/sec/m liters per second per meter lb pound LOI Loss On Ignition LoM Life-of-Mine m meter m2 square meter m3 cubic meter masl meters above sea level Ma million years before present Mn manganese MgO magnesium oxide mg/L milligrams/liter mm millimeter mm2 square millimeter mm3 cubic millimeter Mt million tonnes m.y. million years NI 43-101 Canadian National Instrument 43-101 OSC Ontario Securities Commission




oz troy ounce % percent P phosphorous ppb parts per billion ppm parts per million QA/QC Quality Assurance/Quality Control R$ Real/Reais (Brazilian currency) RQD Rock Quality Description SD Standard Deviation SEC U.S. Securities & Exchange Commission sec second SiO2 silica (silica dioxide) SG specific gravity t tonne (metric ton) (2,204.6 pounds) t/h tonnes per hour t/d tonnes per day t/y tonnes per year TiO2 titanium oxide µm micron or microns, micrometer or micrometers V volts W watt XRD x-ray diffraction y year

Aa

Technology

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