1. Mining in Brazil: Challenges and Opportunities Eduardo Ledsham – March, 2016

2. The economy recession, lower commodity prices, lack of progress to reform Brazil’s mining legal framework and tragic accident in Mariana have dramatically hit mining in Brazil  This scenario is leading the mining industry to:  reduce costs and new investments  asset write-downs  the closure of less-profitable operations  falling export revenues despite strong output  projects have been delayed and/or placed under review  major mining companies divesting non-core assets.  junior mining companies in process to consolidate assets.  Samarco dam burst in November 2015 motivated legislators to increase environmental regulation and heightened local opposition to the sector.  The devaluation of Brazilian currency brings competitive advantage: Brazil nowadays has one of the lower cash cost and the price of the assets are cheaper and more available than in the recent past.

3. The devaluation of Brazilian currency open S a window of opportunity for M&A.  Big Mac Index: Jan/2015 – Brazil 04 th position Jan/2016 – Brazil 17 th position Jan/2016 – Brazil 17 th position  Brazil’s Real fell to its lowest level since its introduction two decades ago.  Brazilian markets have been in a free fall in 2015.  The good news: improve international competitiveness for Brazilian mining players – lower cash cost.  The bad news: inflationary pressures and impact the financial health of corporations that have borrowed abroad.  Opportunity: the price of the assets in Brazil are cheaper and more available than in the recent past.

4. The devaluation of Brazilian currency openS a window of opportunity for M&A. Brazil’s mining giant Vale (NYSE:VALE) reported its deepest quarterly net loss ever, becoming at the same time the first of the three largest iron ore producers to put some of its core assets up for sale. Feb. 25, 2016. Beleaguered Anglo American (LON:ALL) is said to be planning a complete exit from Brazil, where the company has already put its $1 billion niobium and phosphate business up for sale. Feb. 1, 2016.

5.  Global consensus: Brazil is one of the top players in mining industry.  Brazil with 8,5 M km 2 has 35% of its terrain with potential for iron ore, base and precious metals.  Mineral productivity in Brazil is 0,9kg/km 2, Canada 3,4kg/km 2 and Australia 5,4kg/km 2  Brazil's share of global iron ore 12%.  Precious and base metals production has grown during the last 03 years.  Most of the deposits are open pit and tremendous potential to develop projects underground. Brazil: high fertility but low maturity. Significant potential for new discoveries and extensions of the current mines.

6.  World class deposits: Fe, Mn, Cu, Au and Ni – open pit mines.  Low maturity – most of the investments with focus in projects in late stage and/or brownfields.  Potential for underground mines is completely open. Carajas Mineral Province: after 40 years since the first exploration program the potential for new discoveries remains open

7.  The Tapajós Gold Province :central northern of Brazil and covers a total of 100,000 km 2 - 30% Nevada  Gold production of almost 700t since 1958.  More than 90% of the gold was extracted from thousands of alluvial deposits.  Mineral exploration efforts started only at the beginning of the 90's.  Until today the Tapajós epithermal deposits were not properly tested. Just a few were drilled effectively. Tapajos: the largest gold province continues open to new discoveries

8.  Iron ore quadrangle is one of the top provinces around of the world  Logistic systems integrated by railway and pipelines. Iron Ore Quadrangle and south system: how to be competitive and sustainable

9.  Social license to operate and environmental concerns,  The new mining code  Innovation and Technology Mining in Brazil is facing at least three critical challenges

10.  Contributing to community development  Transparency and engagement with communities at an early stage  Setting high standards and being compliant  Environmental sustainability  Procedures, requirements and controls will be reinforced by legislators Social licenses to operate: after Samarco’s tailing dams disaster, building trust and reputation with stakeholders must be one of the top priorities.

11.  The discussion on the New Mining Code is in progress in Brazilian National Congress  There is a window opportunity to absorb the new drivers of the market in order to  Maximizing the development of mines in compliance with environmental rules.  Create conditions to attract new investments.  Guarantee the previous contracts. The tremendous changes taking place in the world, and particularly the depth and length of this commodity downturn must be reflected the new mining code.

12.  Cost-cutting programs are in progress since 2014 coming as a result of the dramatic fall of commodity prices.  Theses programs are quite close of the limits to achieve lower costs.  Unique looking forward approach – S11 iron ore project ( Vale) is an example:  mine and plant will use 93% less water and 77% less fuel, and will produce 50% less greenhouse gas emissions, when compared with conventional methods.  Lowest cash cost globally.  New concepts and modern available integrated exploration surveys can speed up the exploration program in Brazil  Strengthening the government's role in the mineral sector, allowing the new National Mining Agency (Agência Nacional de Mineração) (ANM) to become an arm to promote the investments in mineral exploration. Innovation and Technology: the key to be competitive

13.  Brazil has become an agricultural powerhouse and the world’s fourth leading exporter of agri-food.  95% of the potash is imported  55% of the phosphate is imported  The efforts to reduce the gap are in progress:  B&A Mining started phosphate operation in the north of Brazil – new frontier of agricultural growth  Brazil Potash is developing a world class potash basin in Amazon region in the same northern  Current opportunities in M&A:  Anglo decided to divest of the fertilizer and other assets in Brazil  Consolidation with others players Fertilizers: strategic input for Brazil - one of the world´s largest consumer but it is heavily reliant on imports

14.  Commodity prices are at decade lows, global investment in mining projects is slowing, and everyone is becoming more risk adverse  It is a challenging climate at the moment. All the Brazilian economic and political issues are on the table to be settled.  The focus must be on the middle and long term and the conditions that create and underpin development, regardless of what point of the cycle we are in.  Brazil has a solid professional and workforce, with knowledge and skills acquired during last decades and a track record of developing and operating competitive mining projects. Mining in Brazil: there are several opportunities in the short term with challenges to be settled in middle term