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MMX Mineração e Metálicos S.A. and subsidiaries
(exploration stage companies)

Consolidated financial statements

June 30, 2009 and December 31, 2008

(In thousands of U.S. dollars, unless otherwise stated)

Summary of significant accounting policies and practices

Carve-out

On March 31, 2008, the controlling shareholder of MMX Mineração e Metálicos ("MMX"),
certain members of the Management of MMX and Anglo American Participações e
Mineração Ltda. ("Anglo American Participações"), a wholly owned subsidiary of Anglo
American plc ("Anglo American"), entered into a Share Purchase and Sale Agreement
("Agreement"), whereby Anglo American Participações agreed to purchase, and the
controlling shareholder and certain members of management of MMX agreed to sell,
common shares representing approximately 63.47% of the share capital of IronX Mineração
S.A. ("IronX" - currently denominated Anglo Ferrous Brazil S.A.). IronX is a publicly-held
company, owner of 51% of the share capital of MMX Minas-Rio Mineração S.A. ("MMX
Minas-Rio") and 70% of MMX Amapá Mineração Ltda. ("MMX Amapá"), after the
conclusion of the corporate reorganization of MMX ("Reorganization"). The Reorganization
also involved the transfer to IronX of 100% of the stock capital of MMX Metálicos Amapá
Ltda. ("MMX Metálicos Amapá") and Bay Service Serviços Portuários Ltda. ("Bay
Service").

Reorganization of MMX

As a result of the Reorganization, the shares in IronX and LLX Logística S.A, ("LLX")
owned by MMX were distributed directly to the shareholders of MMX, in the same
proportion as their equity interests in the share capital of MMX. Accordingly, , the
Company's equity in IronX and LLX are shown as a deduction from shareholders equity, as
the income and cash flow statements of these entities have been eliminated. See Note 20.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

ii.

Description of business

MMX Mineração e Metálicos S.A. ("the Company" or "MMX") is a holding company of a
group of subsidiaries.

The object of MMX is to engage in the following main businesses: mining, transformation,
transportation and sale of iron ore; manufacture transformation, transportation and sale of
steel inputs; as well as construction.

Either directly or through subsidiary companies, MMX develops projects in the areas of
mining, logistics and industrial processing of metallic products and steel inputs with added
value, always based on iron ore mined by the Company itself. MMX has mineral resources
resulting from the acquisition of and filing for mining rights whereby the Company itself
performs the prospecting work and mines the iron ore.

iii.

Current six

month- period developments

Issuance of Debentures

On April 2, 2009, the Company issued 45,620 private and perpetual debentures
purchased the main share holder and other related parties, in the total value of $233,757
(equivalents to $456,200 thousand on the issuing date), pursuant to the approval of the
Board on March 30, 2009.

The Debentures have no maturity date, do not bear interest and are redeemable upon the
transfer of the Company's controllership.

The total amount of $ 183,170 was folly paid up June 30, 2009.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Resumption of the operation of MMX Corumbá Mineração and adjustments in its activities

in Mato Grosso do Sul

On April 5, 2009, MMX informed the resumption of the operation of its iron ore mine
located in Corumbá, of the subsidiary MMX Corumbá. The Company had brought
operations in the State to a standstill in December 2008 due to the scenario of the sector
since the middle of last year, characterized by reduction of the demand for ore and its by-
products in the country and the rest of the world, because of the international financial crisis.

Despite the return of mining activities, the Company decided to maintain the suspension of
the operation of the metallic products unit, of the subsidiary MMX Metálicos Corumbá. The
resumption of its production continues contingent upon the recovery of the panorama of the
iron and steel sector in Brazil and in the world. Likewise, the planting activities of the forest
unit in Mato Grosso do Sul, which has a planted area of 6 thousand hectares, will continue at
a standstill with the upkeep of the Planted area maintained.

The subscription of Debentures will be in cash upon their subscription and their maturity of
the perpetual type under the terms of paragraph 3 of art.55 of Law 6,404.

The debentures will be perpetual, all in accordance with §3º of article 55 of Law 6.404/76,
and their maturity will occur exclusively under the following situations: (a) liquidation,
dissolution, winding up, voluntary bankruptcy or bankruptcy; (b) transfer of control of the
Company or of any of its successors after giving effect to a spin-off, amalgamation or
merger, all in accordance with article 254-A of Law 6.404/76, unless the price-per-share
equal to or greater than R$3,00 (three reais).

The proceeds from the issuance of the debentures will be used to finance part of the debt of
the Company, and therefore improving its short-term cash flow profile. This transaction
confirms the commitment of MMX's controlling shareholder with the proper development of
the Company's businesses.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

The Company holds the following corporate interests at June 30, 2009:

As of June 30, 2009, MMX had direct and indirect participation in the following projects through its
subsidiary companies:

70%

99,99%

99,99 %

100%

MMX Corumbá

Mineração S.A.

MMX Trade

Shipping LLC.

MMX Comercial

Exportadora S.A.

100 %

MMX

Properties LLC.

MMX Metálicos

Corumbá Ltda.

MMX Sudeste

Mineração Ltda.

AVG Mineração

S.A.

99,99%

MMX Pig Iron Trading

& Shipping LLC.

100%

MMX

Mineração e

Metálicos S.A.

Mineral Service

Ltda.

100 %

Minera MMX de

Chile S.A.

99,99%

Minerminas

Mineradora

Minas Gerais Ltda.

99,99%

Consorcio das

Mineradoras de

Serra Azul

Terminal de Cargas

de Sarzedo Ltda.

GVA

Mineração Ltda.

33,33%

40%

22,22%

MMX Pig Iron Trading

& Shipping LTD.

100%

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

MMX Corumbá System

The Company, through its subsidiary MMX Corumbá Mineração Ltda. ("MMX Corumbá"),
is the holder and lessee of mining rights in the City of Corumbá, State of Mato Grosso do
Sul. MMX Corumbá is in the current phase of limited production of iron ore through the
operation of its two mines. During the fourth quarter of 2006, the subsidiary started exporting
iron ore.

On November 7, 2008 MMX disclosed that adoption of measures to suit the scenario of
slower global economic growth, to adjust their programs for the production of metal and iron
ore, which resulted in a reduction in the rate of its operations in the last quarter of 2008. This
decision helped to reduce the operating expenses and avoid an increase in inventories. For
this, the MMX fully suspended from the end of November 2008, the activities of the plant,
and Corumba Mine, located in the state of Mato Grosso do Sul. The suspension was
temporary and did not result in layoffs with MMX Corumbá's activities expected to resume
on April 1, 2009. The activities of MMX Metálicos Corumbá have been suspended until May
1, 2009.

Also as a result of the global economic slow-down, MMX decided to postpone indefinitely
its investments in the Corumbá Billets Plant

MMX Sudeste System

On December 4, 2007, the Company acquired 99.99% of the shares in the limited liability
company EDRJ111 Participações Ltda., the legal name of which was changed to AVX
Mineração e Participações Ltda. ("AVX") and whose corporate object is engaging in the
mining and sale of mineral products, being further empowered to hold equity stakes in the
capital of other companies.

Through its subsidiary AVX, on December 13, 2007 the Company acquired 99.99% of the
shares issued by AVG Mineração S.A. ("AVG") for the total amount of $224,000. AVG is an
operational company, which produces iron ore in the location known as Conjunto das
Farofas, in the municipialities of Brumadinho and Igarapé, State of Minas Gerais.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

The Company, by means of a subsidiary of MMX Sudeste, AVG, agreed with LGA -
Mineração e Siderurgia Ltda. ("LGA") the terms and conditions for a legal transaction (the
"Agreement") referring to the purchase of mining rights held by LGA, for an area of 755.65
hectares in the municipality of Bom Sucesso, state of Minas Gerais (the "Mining Right" or
the Bom Sucesso Mine").

On July 3, 2008, MMX, through AVG, a subsidiary of MMX Sudeste, completed the
acquisition of mineral rights of the Bom Sucesso mine, held by LGA.

For the acquisition of the mining rights AVG will pay LGA the amount equivalent to
$193,300 in four installments, the last of which fall due on January 5, 2010. Additional
disbursements may be made depending on the results of exploration to be made as part of a
geologic survey program that the Company will carry out on the mining right within 18
months. Accordingly, should the mineral resources volume, as specified in the Agreement,
exceed 241.6 million tons, AVG will pay LGA the amount of US$0.80 per additional ton
measured.

The Company will, in parallel, start the exploration and engineering studies to establish the
amount of investment necessary for developing the Bom Sucesso Mine. MMX intends to
convey the Bom Sucesso Mine production by railroad down to the LLX Porto Sudeste, in the
state of Rio de Janeiro.

On December 22, 2008, the Company, through its subsidiary AVG, won the competition
organized by the Companhia Siderurgica Nacional S.A. ("CSN") for private use of the Cargo
Terminal of the Porto Itaguaí in Rio de Janeiro, for shipment of iron ore produced in the
MMX Sudeste System. This contract, which has duration of 3 years from January 2009 and
may be renewed for another three years, provides for shipments of 1.2 million tonnes of iron
ore in 2009 and 2 million tonnes per year thereafter, until 2011.

On December 26, 2008 the Company through its subsidiary MMX Sudeste, celebrated the
third amendment to the contract of purchase of the shares of AVG, which anticipated the
payment of two installments of the purchase price of $45,000 each. The first installment was
settled for $41,669 and the second for $37,454 paid on December 29, 2008. A gain on the
settlement of the liability of $13,210 was recognized in the statements of operations in 2008.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

On May 19, 2009 MMX disclosed the main terms of strategic partnership with Wuhan Iron
and Steel Co. ("WISCO")

WISCO offered to buy 9,09% of the Company's capital through a new issuancy of common
sahres amounting to $ 120,000 and, in connection with that, WISC also May buy 23% of the
Company's interets in MMX Sudeste, through the issuance of new shares, amounting to
$280,000.

Additionally, MMX Will simultaneously negociate a long term contract for selling iron ore
to WISCO.

MMX Chile System

On June 11, 2008, MMX acquired 99.99% of the common shares of Minera MMX de Chile
S.A. ("MMX Chile"), organized in Santiago, Chile to acquire mining rights in Chile.

During the period from June to September 2008, MMX Chile acquired exploration rights
located in the third region of Atacama, called "Bella Lula I uno al dieciséis" and "Teatinos
Uno Al Diez".

In this period MMX Chile also acquired an option agreement for mining rights called
"Fortuna Una Al Cuatro", located in La Comuna Y Província de Copiapó and entered into an
agreement with Andes Pacific Development S.A., involving another exploration right located
in "Província de Chânaral".

These mining rights are located close to the Chilean coast.

The conclusion of exploration campaign which is expected to finalized by the first quarter of
2008.

The amount of $26,500 has already been paid and the amount of $2,500 was paid on
February 27, 2009. The remaining balance amount will be paid upon the conclusion of the
geological plotting.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Geological plotting and the environmental license are already in progress, and the mineralogy
exploration and definition program is estimated to last two years, and should be started
during 2009.

On January 7, 2009 MMX Chile canceled the option agreement for mining rights located in
the third region of Atacama, called "Teatinos Uno Al Diez".

MMX Amapá System

This system made part of the partial spin off of the Company occurred on June 19, 2008 and,
consequently is not part of the Company's operations as from this date.

MMX Minas-Rio System

This system made part of the partial spin off of the Company occurred on June 19, 2008 and,
consequently is not part of the Company's operations as from this date.

Other operations

On August 1, 2007, the Company acquired all of in the capital stock of Nacional Ferrosos
S.A., whose corporate name was changed on August 30, 2007 to MMX Comercial
Exportadora S.A. ("MMX Comercial Exportadora"), that has as its business purpose the
commercialization of iron ore.

On May 29, 2007, the Company acquired the mining rights to explore iron ore in Bahia and
in Piauí, through the acquisition of 120,000 quotas with a par value of R$1 each, equivalent
to 24% of equity interest in Bahia Ferro Mineração Ltda. ("Bahia Ferro"). Accordingly to the
shareholder agreement, such interest grants the control to the Company and, consequently,
the subsidiary's financial statements were consolidated. This purchase had generated
goodwill, amounting to $5,471, on which the Company's Management had considered a full
impairment charge accounted for in 2007. On September 11, 2008, the Company
discontinued this investment.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

iv.

Management of capital risk

The Company considers its share capital and contributed surplus as capital, which at June 30,
2009 totaled $431,709 (December 31, 2008 - $425,716).

The objectives when managing capital are to safeguard the entity's ability to continue as a
going concern in order to continue development of its business and related properties and to
maintain a flexible capital structure which optimizes the cost of capital at an acceptable risk.

The Company manages its capital structure in order to ensure sufficient resources are
available to meet day to day operating requirements and to have the financial ability to grow
its operations through iron ore. Methods used by the Company to manage its capital, taking
into consideration changes in economic conditions, include issuing new share capital or
obtaining debt financing. The Company is not subject to any externally imposed capital
requirements. The Company's Board of Directors takes full responsibility for managing the
Company's capital and does so through quarterly board meetings, review of financial
information and regular communication with Officers and senior management

Going concern

The Company is dependent upon the financial support of the shareholders or capital infusions
from third parties until operations are profitable.

Management is pursuing additional sources of financing to support the operation as well as
seeking reduction of production costs and administrative expenses. The Company also is
dependent on the recovery of iron ore prices and improvement in the general international
market conditions. In the absence of financial support, reduction of costs and expenses and
general improvements market conditions there are substantial uncertainties about the
Company's and subsidiaries' ability to conduct its planned principal operations as a whole.
The accompanying consolidated financial statements do not include any adjustments to reflect
the possible future effects on the recoverability and classification of assets or the amounts and
classifications of liabilities that may result from the possible inability of the Company and its
subsidiaries to continue as going concern.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Summary of significant accounting policies

Impairment of comparison analysis among the periods presented

The comparative and consolidated analysis among the periods presented are impaired due to
the partial spin-off made on June 2008, as mentioned in Note 1 and detailed in Note 20.

Basis

of presentation and consolidation

The consolidated financial statements include the accounts of the Company and all majority
owned subsidiaries in which the Company directly or indirectly has either: (a) a majority of
the equity of the subsidiary or otherwise has management control; or (b) the Company has
determined itself to be the primary beneficiary of a variable interest entity in accordance with
FIN 46 (R).

All significant transactions and balances among the all the companies within the
consolidation have been eliminated.

The companies within MMX's Group were at the exploration stage up to December 31, 2007
and, therefore, statements and notes included information accumulated as from the inception
(January 16, 2001), as required by SFAS 7 Accounting and reporting by Development
Stage Enterprises. As from the first quarter of 2008, majority part of the consolidated
companies within the MMX's Group are no longer at the exploration stage, beginning their
operations as from the first quarter in 2008. Therefore, all 2008 consolidated financial
statements do not consider information accumulated as from the inception.

In the opinion of the management of the Company, the accompanying consolidated financial
statements contain all adjustments (which are normal recurring accruals) necessary to present
fairly its financial position as of June 30, 2009, and its consolidated results of operations and
cash flows for the six- month period ended June 30, 2009 and 2008. The interim financial
statements shall be read in conjunction with the Company's Annual Report for the year ended
December 31, 2008.

The consolidated financial statements have been prepared in accordance with U.S. generally
accepted accounting principles ("US GAAP"), which differ in certain respects from Brazilian

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

accounting principles applied by the Company and its subsidiaries in their statutory financial
statements. U.S. generally accepted accounting principles vary in certain significant respects
from accounting principles generally accepted in Canada ("Canadian GAAP"). The Company
has presented the nature of such differences in Note 27 to the consolidated financial
statements.

The Company and its subsidiaries (collectively "the Companies") maintain their statutory
accounting records in local currency, the real. The U.S. dollar amounts presented in the
consolidated financial statements have been remeasured (translated) from the local currency
amounts in accordance with the criteria set forth in Statement of Financial Accounting
Standards ("SFAS") no. 52 - Foreign Currency Translation.

The Companies determined the local currency (real) as their functional currency and have
translated all assets and liabilities into U.S. dollars at the current exchange rate at
June 30,2009 and December 31,2008 (R$1,9516 and R$2,337 to US$1.00, respectively), and
all amounts in the statements of operations and cash flows at the average rates prevailing
during each of the months within the period June 30, 2009 and 2008, including amounts
relative to local currency indexation and exchange variances on assets and liabilities
denominated in foreign currency. The related translation adjustments are included in
accumulated other comprehensive income (loss), a component of shareholders' equity
(deficit).

The subsidiaries in which minority interest exist have presented losses exceeding the
minority interest in the equity capital of these subsidiaries, such excess applicable to the
minority interest was charged against statements of operations, as there is no obligation for
the minority interest to make good such losses. However, if future earnings do materialize,
the statements of operations will be credited to the extent of such losses previously absorbed.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Use of estimates

The preparation of the consolidated financial statements requires management of the
Company to make a number of estimates and assumptions relating to the reported amounts of
assets and liabilities and the disclosure of contingent assets and liabilities at the date of the
consolidated financial statements, and with respect to the reported amounts of revenues and
expenses during the period. Significant items subject to such estimates and assumptions
include the carrying amount of inventories, property, plant and equipment, intangibles,
deferred income tax assets, environmental liabilities, asset retirement obligations, valuation
of derivative instruments, share-based compensation and fair value of financial instruments.
Actual results could differ from those estimates. The Company reviews the estimates and
assumptions periodically.

Recently adopted accounting standards

FASB Statement 157, Fair Value Measurements ("SFAS 157")

In September 2006, the FASB issued SFAS 157, which became effective for the Company on
January 1, 2008. This standard defines fair value, establishes a framework for measuring fair
value and expands disclosures about fair value measurements. SFAS 157 does not require
any new fair value measurements but would apply to assets and liabilities that are required to
be recorded at fair value under other accounting standards.

In February 2008, the FASB issued FASB Staff Position (FSP) FSP 157-2, "Effective Date of
FASB Statement 157", which became effective for the Company on January 1, 2008. This
FSP delays the effective date of SFAS 157, for non-financial assets and non-financial
liabilities, except for items that are recognized or disclosed at fair value in the financial
statements on a recurring basis (at least annually).

The Company implemented SFAS 157 and FSP 157-2 effective on January 1, 2008 with no
material impact due to the implementation, other than additional disclosures.

SFAS 157 and FSP 157-2 require disclosures that categorize assets and liabilities measured at
fair value on a recurring basis into one of three different levels depending on the
observability of the inputs applied in the measurement. Level 1 inputs are quoted prices in

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

active markets for identical assets or liabilities. Level 2 inputs are observable inputs other
than quoted prices included within Level 1 for the asset or liability, either directly or
indirectly through market-corroborated inputs. Level 3 inputs are unobservable inputs for the
asset or liability reflecting the Company's assumptions about pricing by market participants.

The disclosure requirements of SFAS 157 and FSP 157-2 were applied to the Company's
derivative instruments recognized in accordance with SFAS 115.

The Company's derivatives, cash and cash equivalents, restricted cash and marketable
securities fair values were recognized in accordance with exchanged quoted prices as the
balance sheet date for identical assets in active markets, and, therefore, were classified as
Level 1. (See Note 9).

The fair values of Company's debts and notes payable were calculated using observable
market interest rates and discounting the future cash flows, and, therefore, were classified as
Level 2. (See Note 9).

Recently issued accounting standards

FASB Statement 159 "The Fair Value Option for Financial Assets and Financial
Liabilities" ("SFAS 159")

In February 2007, the FASB issued SFAS 159, that permits the measurement of certain
financial instruments at fair value. Entities may choose to measure eligible items at fair value
at specified election dates, reporting unrealized gains and losses on such items at each
subsequent reporting period. SFAS 159 is effective for fiscal years beginning after November
15, 2007. SFAS 159 became effective for the Company on January 1, 2008 with no impact to
its consolidated financial statements.

FASB Statement No. 141 (revised 2007), Business Combinations ("SFAS 141-R")

In December 2007, the FASB issued SFAS 141-R, which will become effective for business
combination transactions having an acquisition date on or after January 1, 2009. This
standard requires the acquiring entity in a business combination to recognize the assets

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the
acquisition date to be measured at their respective fair values. SFAS 141-R changes the
accounting treatment for the following items: acquisition-related costs and restructuring costs
to be generally expensed when incurred; in-process research and development to be recorded
at fair value as an indefinite-lived intangible asset at the acquisition date; changes in deferred
tax asset valuation allowances and income tax uncertainties after the acquisition to be
generally recognized in income tax expense; acquired contingent liabilities to be recorded at
fair value at the acquisition date and subsequently measured at either the higher of such
amount or the amount determined `under existing guidance for non-acquired contingencies.
SFAS 141-R also includes a substantial number of new disclosures requirements. The impact
on the application of SFAS 141-R in the consolidation financial statements will depend on
the business combinations arising during 2009 and thereafter.

FASB Statement No. 160, Noncontrolling Interests in Consolidated Financial
statements, an amendment of ARB No. 51 ("SFAS 160")

In December 2007, the FASB issued SFAS 160, that establishes new accounting and
reporting standards for the noncontrolling interest in a subsidiary and for the deconsolidation
of a subsidiary. SFAS 160 requires the recognition of a noncontrolling interest (minority
interest) as equity in the combined financial statements and separate from the parent's equity.
The amount of net income attributable to the noncontrolling interest will be included in
combined net income on the face of the income statement. Certain changes in a parent's
ownership interest are to be accounted for as equity transactions and when a subsidiary is
deconsolidated, any noncontrolling equity investment in the former subsidiary is to be
initially measured at fair value. SFAS 160 also includes expanded disclosure requirements
regarding the interests of the parent and its noncontrolling interest and is effective for fiscal
years, and interim periods within those fiscal years, beginning on or after December 15,
2008. The Company's presentation of income statement and balance sheet will be
significantly changed by the application of SFAS 160.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

FASB Statement No. 161, Disclosures about Derivative Instruments and Hedging
Activities, an amendment of FASB Statement No. 133 ("SFAS 161")

In March 2008, the FASB issued SFAS No. 161, "Disclosures about Derivative Instruments
and Hedging Activities - an amendment of FASB Statement No. 133." This statement
requires enhanced disclosures about the use of derivative instruments, the accounting for
derivative instruments under SFAS 133 and related interpretations, and the impact of
derivative instruments and related hedged items on financial position, financial performance,
and cash flows, particularly from a risk perspective. SFAS 157 is effective for fiscal years
beginning after November 15, 2008. Adoption of this statement is not expected to have a
material impact on the Company's financial position or results of operations.

FASB Statement 165 "Subsequent Events"

In May 2009, the FASB issued No 165, "Disclousures about Subsequent Events".This
Statement should not result in significant changes in the subsequent events that an entity
reports--either through recognition or disclosure--in its financial statements. This Statement
introduces the concept of financial statements being available to be issued. It requires the
disclosure of the date through which an entity has evaluated subsequent events and the basis
for that date, that is, whether that date represents the date the financial statements were issued
or were available to be issued. SFAS 165 beginning after June 15, 2009. Adoption of this
statement is not expected to have a material impact on the Company's financial position and
recognition disclosure.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Marketable securities and restricted cash

Marketable securities represent amounts invested in exclusive funds managed by financial
institutions and linked to federal government securities and private securities ("CDB") of first-
class financial institutions, as well as private securities (Bank Credit Notes and Debentures)
issued by companies and financial institutions, all having average profitability equivalent to
DI Cetip (CDI - Interbank Deposit Certificate).

The portfolio of marketable securities is broken down as follows:

Financial institution

Nature of investments

Government

Bonds

Purchase and

sales

commitment

CDB (a)

Total June

31, 2009

Total December

31, 2008

Exclusive funds:

Banco UBS Pactual

96,764

3,082

99,893

68,498

Total exclusive funds

96,764

3,082

99,893

68,498

Other marketable

securities:

Banco Itaú

Pactual CI

BPN Paribas Brasil

ABN Amro

257

2,149

Total other marketable securities

337

2,221

Total marketable securities

96,764

3,419

100,230

70,719

Restricted cash (b)

(257)

(2,149)

Total marketable securities, net

96,764

3,162

99,973

68,570

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

(a)

Bank deposit certificates issued by Brazilian banks

(b)

The amount of $257 refers to the interest earning deposits made in a checking account on behalf of the Company

as part of the payment for the acquisition of the real estate named "Fazenda Caruara", located in the Municipality

of São João da Barra, State of Rio de Janeiro. The release of this amount is subject to a future condition, pursuant

to the rules set forth in the purchase and sale agreement, in guarantee of the contingency liabilities of the seller.

Exclusive funds, which are regularly reviewed by independent auditors, are subject to obligations
limited to the payment of services rendered by asset management, attributed to the operation of
investments, such as custody and auditing fees and other expenses. There are no material
financial obligations, nor Company's assets, to guarantee such obligations.

Restricted cash

In June 2009, two standby letters of credit given as a guarantee to the barge transportation logistic
service agreement with Interbarge were due. Due to of the adverse market scenario and raising of
prices in bank credit lines, the Company has decided to replace the standby letters of credit with
cash collateral through an escrow account (Account Pledge Agreement) with Citibank, in the
value of $18,480.

Additionally, the Company holds a portion of its marketable securities as restricted cash, as
mentioned in Note 3, in the amount of $257 ($2,149 at December 31, 2008).

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Trade account receivable

Trade accounts receivable are related to iron ore and pig iron sales, transport fees and are broken
down as follows:

June

30, 2009

December

31, 2008

Domestic

2,056

1,387

Foreign

10,300

23,264

Total

12,356

24,651

Recoverable taxes

Recoverable taxes are comprised of the following:

June

30, 2009

December

31, 2008

Withholding taxes ("IRRF")

22,251

6,353

Value added tax ("ICMS")

14,446

11,868

Income taxes ("IRPJ")

12,383

15,742

Social Contribution ("CSLL")

4,078

3,085

Tax for Social Security Financing ("COFINS")

8,328

5,977

Other

2,088

1,771

Total

63,574

44,796

Current assets

48,330

33,895

Non-current assets

15,244

10,901

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Inventories

The inventories are comprised by finished goods of iron ore and pig iron, raw material and
warehouse, as follows:

June

30, 2009

December

31, 2008

Finished goods

68,681

87,356

Raw material

562

Warehouse

2,305

3,576

Total

71,016

91,494

Current assets

69,544

90,265

Non-current assets

1,472

1,229

Financial instruments

The Company's subsidiaries have derivative financial instruments to manage their exposure on
its foreign currency denominated debt instruments. The Company's subsidiaries do not enter into
derivative financial instruments for any purpose other than cash flow hedging purposes. That is,
the subsidiaries do not speculate by using derivatives. In order to reduce the impact of
fluctuations in the exchange rate, the subsidiaries have adopted a policy of entering into swap
contracts.

By using derivative financial instruments to manage exposures to changes in exchange rates, the
subsidiaries expose themselves to credit risks and market risks. Credit risk is the failure of the
counterparty to perform under the terms of the derivative contract. When the fair value of a
derivative contract is positive, the counterparty owes the subsidiaries, which creates a credit risk
for the subsidiaries. When the fair value of a derivative contract is negative, the subsidiaries owe

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

the counterparty and, therefore, they do not posses a credit risk. The subsidiaries reduce their
credit risk in derivative financial instruments by entering into transactions with high quality
counterparties.

Market risk, in this case, is the adverse effect on the value of a financial instrument that results
from a change in currency exchange rates, managed by establishing and monitoring parameters
that limit the types and degree of market risks that may be undertaken.

Management monitors and evaluates its overall position daily in order to evaluate financial
results and impact on the subsidiaries' cash flows. All financial derivative instruments
are marked-to-market at each balance sheet date, with the impact of changes in their fair value
recorded as financial income (expenses).

Credit risks

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial
instrument fails to meet its contractual obligation. The Company's exposure arises principally
from its short term investments and concentrate awaiting settlement. Historically, the Company
has not experienced any losses related to individual customers and does not believe it is exposed
to a significant concentration of credit risk.

Interest earning bank deposits held are basically, in exclusive funds managed by financial
institutions and backed on federal government securities and private securities (CDB) of prime
financial institutions, as well as private securities (Bank Credit Notes - CCB and Debentures)
issued by companies and financial institutions, all having average profitability equivalent to DI
Cetip (Interbank Deposit Certificate - CDI), and are subject to the credit risk of the respective
corporate and financial institutions issuers of such securities.

Interest rate risk

The results of the Company and its subsidiaries are susceptible to variations arising from
financing and loan operations contracted at floating interest rates.

The Company and its subsidiaries use derivative financial instruments to protect or reduce
volatility the financial costs of the financing operations and investments.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Exchange rate risk

The Company's revenues, in their largest portion, will be generated in U.S. dollars and most of its
capital investment needs (CAPEX) are in reais. As a strategy to prevent and reduce the effects of
the exchange rate fluctuation, Management has adopted the policy of using currency forward
options to economically hedge the exchange rate volatility in the related assets.

The results of the Company and its subsidiaries are susceptible to significant variations, due to
the effects of the volatility of the foreign exchange rate on assets and liabilities denominated in
foreign currencies, especially the U.S. dollar, which closed the six-month period ended June 30,
2009 with a variation of (16,49%).

The Company also uses offsetting foreign currency, assets and liabilities to reduce the impact of
exchange rate variations.

During the six-month period ended June 30, 2009 and 2008, loss of $18,354 and gain of, $13,823
respectively, were effectively realized and unrealized gains of $36,422 and $2,088 respectively,
for the same period mentioned above were recorded in the statements of operations.

Fair value of financial instruments

The following estimated fair value amounts have been determined using available market
information and appropriate valuation methodologies. However, considerable judgment is
required to interpret market data and to develop the estimates of fair value. Accordingly, the
estimates presented herein are not necessarily indicative of the amounts the Company could
realize in a current market exchange. Certain assumptions were used to estimate the fair value of
each class of financial instruments for which it is practicable to estimate that value. The estimated
fair values of financial instruments, comprised by levels according to SFAS 157, are as follows:

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

As of June 30, 2009

Level 1

Level 2

Level 3

Carrying

Fair Carrying

Fair

Carrying

Fair

Amounts

value amounts

Value

amounts

Value

Financial assets:

Cash and cash
equivalents

26,420

Marketable securities

99,973

Restricted cash

18,737

Debentures

57,591

Financial liabilities:

Debt:

In foreign currency

536,904

540,196

In local currency

2,357

878

Debentures Related
parties

183,006

Derivatives financial
instruments

- (145,516)

(145,516)

Notes payable:

In foreign currency

218,964

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Criteria, assumptions and limitations used to calculate the market value

Cash and cash equivalents

The accounting value approximates the market value of the trading securities due to the short-
term maturity of these instruments.

Marketable securities and restricted cash

Both carrying amount and fair value of the marketable securities, including "the part restricted as
collateral", are calculated based on current market rates applicable for such type of debt
securities.

Debt

The fair value of the Company's debt is estimated by discounting the future cash flows of each
instrument at rates currently offered to the Company for similar debt instruments of comparable
maturities by the Company's bankers.

Notes payable

The fair value of notes payable is calculated and recorded through the discounting of the
Company's cash flows using a market interest rate of 8%, whenever the notes do not include an
explicit interest rate. This results in reflecting a more favorable condition that would otherwise
have been available to the subsidiary. The fair value of notes payable with explicit interest rates,
approximates the carrying value due to the short-term maturity of such notes.(See note 16)

Derivatives financial instruments

The fair value is determined based on quotations provided by the financial institutions which
issued the financial instruments.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

The following table presents the estimated fair values of the Company's derivative financial
instruments:

Fair value

June

30, 2009

December

31, 2008

Currency transactions:

For a $25,000 amount (Banco Bradesco), maturing April 1, 2009

(7,546)

For a $20,000 amount (Banco Unibanco), maturing April 1, 2009

(6,005)

For a $50,000 amount (Banco Unibanco), maturing May 4, 2009

(14,917)

For a $50,000 amount (Banco Pactual), maturing August 3, 2009

(5,583)

(13,914)

For a $50,000 amount (Banco Itau BBA), maturing August 3, 2009

(13,814)

For a $50,000 amount (Banco Itau BBA), maturing August 3, 2009

(5,456)

(13,764)

For a $100,000 amount (Banco Unibanco), maturing August 3, 2009

(10,454)

(27,268)

For a $85,000 amount (Banco Bradesco), maturing August 3, 2009

(8,410)

(22,804)

For a $5,000 amount (Banco Bradesco), maturing August 3, 2009

(1,041)

For a $10,000 amount (Banco Itau BBA), maturing August 3, 2009

(1,857)

For a $10,000 amount (Banco Unibanco), maturing August 3, 2009

(1,827)

For a $10,000 amount (Banco Unibanco), maturing August 3, 2009

(1,812)

For a $10,000 amount (Banco Unibanco), maturing August 3, 2009

(1,822)

For a $10,000 amount (Banco Itau BBA), maturing August 3, 2009

(1,751)

For a $10,000 amount (Banco Bradesco), maturing August 3, 2009

(2,050)

For a $10,000 amount (Banco Bradesco), maturing August 3, 2009

(1,807)

For a $15,000 amount (Banco Itau BBA), maturing August 3, 2009

(1,618)

For a $20,000 amount (Banco Itau BBA), maturing August 3, 2009

(3,695)

For a $20,000 amount (Banco UBS), maturing August 3, 2009

(3,733)

For a $20,000 amount (Banco Itau BBA), maturing August 3, 2009

(3,575)

For a $30,000 amount (Banco UBS), maturing August 3, 2009

(5,450)

For a $35,000 amount (Banco Itau BBA), maturing August 3, 2009

(3,775)

For a $40,000 amount (Banco Itau BBA), maturing August 3, 2009

(7,516)

For a $70,000 amount (Banco Unibanco), maturing August 3, 2009

(12,579)

For a $30,000 amount (Banco Bradesco), maturing August 3, 2009

(2,968)

(8,535)

For a $35,000 amount (Banco UNIBANCO), maturing August 3, 2009

(3,525)

(9,439)

For a $25,000 amount (Banco Itau BBA), maturing February 2, 2009

(7,104)

For a $30,000 amount (Banco Bradesco), maturing August 3, 2009

(8,049)

For a $5,000 amount (Banco Unibanco), maturing August 3, 2009

(1,096)

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Fair value

June

30, 2009

December

31, 2008

For a $5,000 amount (Banco Unibanco), maturing August 3, 2009

(1,099)

For a $5,000 amount (Banco Unibanco), maturing August 3, 2009

(1,107)

For a $5,000 amount (Banco Unibanco), maturing August 3, 2009

(1,074)

For a $5,000 amount (Banco Unibanco), maturing August 3, 2009

(1,072)

For a $5,000 amount (Banco Unibanco), maturing August 3, 2009

(1,055)

For a $5,000 amount (Banco Unibanco), maturing August 3, 2009

(1,053)

For a $50,000 amount (Merrill Lynch), maturing July 1, 2009

(4,934)

(13,549)

For a $50,000 amount (Merrill Lynch), maturing July 1, 2009

(4,934)

(13,550)

For a $39,024 amount (UBS), maturing February 2, 2009

(1,680)

For a $10,000 amount (Merrill Lynch), maturing July 1, 2009

(2,090)

For a $5,000 amount (Merrill Lynch), maturing July 1, 2009

(1,041)

For a $5,000 amount (Merrill Lynch), maturing July 1, 2009

(1,041)

For a $5,000 amount (Merrill Lynch), maturing July 1, 2009

(1,036)

For a $10,000 amount (Merrill Lynch), maturing July 1, 2009

(2,036)

For a $10,000 amount (Merrill Lynch), maturing July 1, 2009

(2,031)

For a $10,000 amount (Merrill Lynch), maturing July 1, 2009

(2,023)

For a $10,000 amount (Merrill Lynch), maturing July 1, 2009

(2,021)

For a $10,000 amount (Merrill Lynch), maturing July 1, 2009

(2,021)

For a $10,000 amount (Merrill Lynch), maturing July 1, 2009

(2,011)

For a $15,000 amount (Merrill Lynch), maturing July 1, 2009

(2,974)

Others

(15,463)

Total

(145,516)

(181,938)

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Investments in non-consolidated companies

As of June 30, 2009 and December 31, 2008 the investments in subsidiaries companies accounted
for under the equity method consist of 22.22% of the common stock of Terminal de Cargas de
Sarzedo Ltda. ("TCS"), 40% of the common stock of GVA Mineração Ltda. ("GVA") and
33.33% of the common stock of Consórcio das Mineradoras de Serra Azul.

The summary financial information for the investments as of June 30, 2009 and 2008 are as
follows:

June 30, 2009

December 31, 2008

TCS

GVA

TCS

GVA

Financial position:

Current assets

1,452

1,823

1,190

664

Other noncurrent assets

Property, plant, and equipment, net

7,558

6,007

9,010

1,823

7,197

664

Current liabilities

2,669

1,847

2,893

610

Long-term liabilities

Shareholders' equity

6,341

(24)

4,244

9,010

1,823

7,197

664

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

June 30, 2009

December 31, 2008

TCS

GVA

TCS

GVA

Statements of income

Operating loss

1,605

(81)

5,100

(770)

Other income

(95)

(542)

Income tax

(412)

(1,066)

1,098

(81)

3,492

(770)

The financial information for Consorcio das Mineradoras de Serra Azul has not been presented
in the table above due to the insignificant amounts.

In June 2009 the Company's investment in these subsidiaries totaled $1,386

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Property, plant and equipment

June 30, 2009

December 31, 2008

Annual

depreciation -

depletion

rates (%)

Cost

Accumulated

depreciation

Carrying

amount

Cost

Accumulated

depreciation

Carrying

amount

Mining rights

(*)

513,005

(6,584)

506,421

428,756 (6,047)

422,709

Asset retirement obligation

(*)

1,596

3,243

- 3,243

Land

33,595

28,373

- 28,373

Forest

(**)

18,874

18,874 13,354

- 13,354

Building and improvements

8,669

(855)

7,814

5,663

(633)

5,030

Machinery and equipment

71,382

(11,186)

60,196

98,281

(15,414)

82,867

Furniture and fixture

2,032

(399)

1,633

1,858

(291)

1,567

Vehicles

5,808

(3,420)

2,388

4,941

(1,626)

3,315

Data processing equipment

2,005

(624)

1,381

2,264

(579)

1,685

Construction in progress

20,072

20,072 49,912

- 49,912

Provision for recoverability of assets

(a)

Other

3,980

(1,066)

2,914 6,083

(636) 5,447

Total

681,018

(24,134)

656,884

642,728

(25,226)

617,502

(*) Units of production method.

(**) The depletion of the forest reserves will be calculated based on the volume of timber cut in relation to the

potential existing volume.

(a)

During the six month period ended June, 2009, the Company has recognized impairment

charges of $41,205, related to property plant and equipment of the subsidiary MMX Metálicos
Corumbá due to the suspension of its operations for an undetermined period. Additionaly, those
assets were transferred to current asset as items to by disposed of.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

During the six - month period ended June 30, 2009 and 2008, the Company had capitalized
interest in the amount of $2,203 and $5,048 respectively.

All property, plant and equipment items are located in Brazil and will be employed in the mining
business. The Company's management believes that the net remaining balance of its fixed
assets, after the recognition of the impairment is recoverable through cash flows from its future
operations.

Mining rights

Mining rights are detailed as follows:

Subsidiary

State

Mining

right

June

30, 2009

December

31, 2008

Acquisitions:

MMX Corumbá(a)

Mato Grosso do Sul

Iron ore

14,837

12,390

AVG(b)

Minas Gerais

Iron ore

11,574

9,665

AVG (c)

Minas Gerais

Iron ore

154,239

128,803

AVG (d)

Minas Gerais

Iron ore

179,207

149,752

Minerminas (d)

Minas Gerais

Iron ore

110,593

92,357

Mineral Service (d)

Mato Grosso do Sul

Iron ore

12,170

10,163

MMX Chile (e)

Chile

29,616

24,984

Other

769

642

513,005

428,756

Accumulated depletion:

MMX Corumbá

(921)

(737)

AVG

(5,622)

(4,442)

Minerminas

(41)

(868)

(6,584)

(6,047)

Total

506,421

422,709

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

(a)

Located in the Municipality of Corumbá, acquired by the subsidiary MMX Corumbá in
August 2005, at an initial cost of $12,500, which was fully paid in 2005.

(b)

Mining right acquired by Companhia de Mineração Serro da Farofa ("CEFAR"), in the
location known as Conjunto das Farofas, in the municipalities y Brumadinho and Igarapé,
State of Minas Gerais.

(c)

Mining right acquired "Mine de Bonsucesso" by AVG in july, 2008 in the location known
the municipalities y Bonsucesso, state of Minas Gerais

(d)

The acquisition of Minerminas, AVG and Mineral Services resulted in the purchase price
allocation of $307,975 to the mining rights at the acquisition date.

(e)

MMX Chile acquired exploration rights located in the third region of Atacama, called "Bella
Lula I uno al dieciséis" in an area of 100 hectares and "Teatinos Uno Al Diez" in an area of
96 hectares. In this period MMX Chile also acquired the option agreement of mining rights
called "Fortuna Una Al Cuatro", located in La Comuna Y Província de Copiapó and entered
into an agreement with Andes Pacific Development S.A., involving another exploration right
located in "Província de Chânaral".

Aircraft lease-back operation

The subsidiary MMX Metálicos acquired an aircraft in February 2006, at the price of $6,000,
and, subsequently, on May 16, 2006, the subsidiary signed an aircraft sale-lease-back agreement
in the amount of $5,400, for a term of 120 months and with a residual value of $1,350.

In December 2008, the Board of Directors decided to sell the Aircraft. The net amount (cost less
accumulated depreciation) of this asset was reclassified from property, plant and equipment to
asset to be disposed of.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Asset available for sale

The activities of Iron and Steel Production Plant of MMX Metálicos Corumbá were suspended
for an indefinite period. An Impairment charge was accounted for to reduce assets'book value to
their realizable value.

On June 23, 2009, MMX entered into an agreement for the sale of the metal product plant to
Vetorial Siderurgia Ltda. ("Vetorial") for $ 51,241, with 84% upon in the signing of the contract
of sale. The agreement provides exclusivity for a period of 60 days in favor of the Vector.

The completion of the transaction of sale is subject to completion of statutory audit of the assets
by Vector and the negotiation of definitive agreements. The sale is subject to the approval of
independent members of the Board of Directors of MMX.

The item still has the balance of the aircraft Legacy in the amount of $ 4,879 ($ 4,074 on
December 31, 2008). There was no provision for loss established in view the market value of
assets is greater than the residual value.

The assets were registered under the labor "Assets to be disposed of" in current assets and non-
current.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

June 30, 2009

Cost

Accumulated

depreciation

Carrying

amount

Land

753

Improvement

5.344

(88)

5.256

Industrial machinery and equipament

89.956

(8.296)

81.661

Utilities

1.602

(428)

1.174

Vehicle

110

(30)

Rights depreciable

176

(80)

Construction in progress

2.248

Advance of property, plant and equipament

1.761

Raw material inventories

1.121

Storeroom Inventories

120

To be used in inventory buildup

(-) Provision for recoverability of assets

(43.033)

60.163

(8.922)

51.241

Industrial machinery

2.600

Aircraft

5.322

(444)

4.879

(-) Provision for recoverability of assets

(2.037)

5.886

(444)

5.442

66.049

(9.366)

56.683

Current

60.726

(8.922)

51.804

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Non current

5.322

(444)

4.879

Held to maturity securities - financial debentures

On August 1, 2008, the Company subscribed and paid up private debentures issued by Anglo
Ferrous Brazil divided in two series. The debentures will earn participation rights, as described
below, based on Earnings Before Interest, Tax and Depreciation and Amortization ("EBITDA")
of Minas-Rio and Amapá Systems, which were spun off from MMX and acquired by Anglo
Ferrous Brazil S.A..

MMX intends to hold these financial instruments until maturity. MMX will assess these
debentures for impairment each reporting period.

Serie - Minas-Rio

Serie Amapá

Amount denominated

$44,993 (equivalent to

R$88,808 thousand)

$12,598 (equivalent to

R$24,586 thousand)

Term

41 years

39 years

Acquisition date

August 1, 2008

Maturity date

December 31, 2049

December 31, 2047

Repayment of principal

20% p.y as from 2045

20% p.y as from 2043

Participation rights

Based on EBITDA,

limited to $50,000

during the years from

2025 to 2049

Based on EBITDA,

limited to $14,000

during the years from

2023 to 2047

Inflation adjustment (*)

U.S Consumer Price

Index ("US CPI")

U.S Consumer Price

Index ("US CPI")

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

(*) The US CPI will apply to the participation rights.

As the generation of annual EBITDA is not possible to be determined in advance, the Company
will recognize its participation rights in each year when the EBITDA is determinable.

Asset retirement obligation

The Company has asset retirement obligations arising from regulatory requirements to perform
certain asset retirement activities when the right to perform mining activities is over. The
liability is initially measured at fair value and subsequently adjusted for accretion expense and
changes in the amount or timing of the estimated cash flows. The corresponding asset retirement
costs are capitalized and for the operational assets are being depreciated over the related long-
lived asset's useful life by the unit of production method. The following table presents the
activity for the asset retirement obligations

June

30, 2009

December

31, 2008

Beginning balance:

3,697

4,498

Liabilities incurred

903

Decrease expense net

(1,416)

648

Exclusion of balances (effects of the spin off and non-
consolidated companies previously consolidated) and
other

(2,352)

Ending Balance

2,281

3,697

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Transactions with related parties (Other than the Debentures as per

Note 18)

Assets

Liabilities

June

30, 2009

December

31, 2008

June

30, 2009

December

31, 2008

OGX Petróleo e Gás Ltda.

267

223

EBX Siderurgia da Bolívia Ltda.

305

255

1,050

1,334

Other

204

1,163

776

1,641

1,050

1,334

Current

1,641

1,050

1,334

Long-term

776

The balances as of June 30, 2009 and December 31, 2008 resulted from transactions of
the Company with its direct and indirect subsidiaries, which were made under usual
market conditions for the respective types of operations.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Notes payable

Notes are related to the acquisition of mines and subsidiaries and are detailed as follows:

June 30, 2009

December 31, 2008

Current

Long-

term

Current

Long-

term

$47,934 face amounts as of June 30,

2009, non-interest bearing (less unamortized
discount based on imputed interest rate of
3.92% - 2009: $4,969), due in December
2011.

(a)

42,965

41,104

$7,800 face amounts as of June 30, 2009,
non-interest bearing (less unamortized
discount based on imputed interest rate of
8% - 2009: $618), due in August 2011.

(b)

2,586

4,596

2,485

4,417

$84,280 face amounts as of June 30, 2009,
non-interest bearing (less unamortized
discount based on imputed interest rate of
3,92% - 2009: $396), due in January 2010.

(c)

83,884

40,952

40,669

$84,933 face amount, bearing market
interest

(d)

41,088

43,845

36,241

51,449

Total

127,558

91,406

79,678

137,639

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

(a)

Outstanding balance payable to the seller, due in four annual installments restated according
to the United States Consumer Price Index (USCPI) on August 30, 2011. In 2008 the
Company paid in advance the two installments that related to the August 30, 2009 and 2010
maturities and recorded a gain in the statement of $2,808 operations for this early settlement
in the amount of $13,210.

(b)

Remaining balance payable to the seller, payable in three annual installments of $2,600 in
August 30, 2009, 2010 and 2011, respectively, as detailed in Note 11.

(c)

Remaining balance payable in connection with the acquisition of Bom Sucesso due in three
six-monthly installments restated according to the United States Consumer Price
Index(USCPI), each of a sum equal to US$43,450 on the payment date, with maturity in
January 2010.

(d)

Remaining balance payable in connection with the acquisition of Minerminas, due in five
monthly installments, each of a sum equal to $14,200, approximately, on the payment date,
with maturities in January and July 2009, 2010 and January 2011, respectively, restated
according to the CDI variation.

The mining rights have been pledge as security for all the notes described above.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Debt

Interest

Final

maturity

June

December

Institutions

Currency

% p.a. Garantees

Date

30, 2009

31, 2008

Leasing Aircraft

US$

Libor + 2.85%

(a)

7/1/2016

4,286

4,489

Banco Fibra

US$

5.95%

(b)

1/29/2010

2,000

Banco Votorantim S.A.

US$

8,50%

(b)

1/14/2010

25,000

Banco Bradesco S.A

U$$

6.70%

(b)

1/29/2010

10,000

Banco Votorantim S.A.

US$

11.50%

(b)

2/3/2009

10,000

Banco Votorantim S.A.

US$

12.20%

(b)

2/6/2009

15,000

Banco Votorantim S.A.

US$

13.10%

(b)

10/11/2010

25,000

Banco Votorantim S.A

USS

6.10%

(b)

1/29/2010

30,400

Banco Unibanco S.A

USS

Libor+2.85%

(b)

6/14/2010

60,000

Banco Safra S.A

US$

5.94%

(b)

8/6/2009

30,000

Banco Unibanco S.A./
BNDES

12.60%

(a)

3/15/2010

126

154

Banco Itaú BBA S.A./
BNDES

12.60%

(a)

10/15/2010

468

522

Banco Votorantim S.A.

US$

9.40%

(b)

6/9/2009

4,000

Banco Citibank S/A

U$$

10.70%

(b)

3/25/2009

10,000

Banco Itaú BBA S.A./
BNDES

11.60%

(a)

8/16/2010

1,464

1,744

Banco Itaú BBA S.A./
BNDES

5.60%

(a)

8/16/2010

299

347

Banco Votorantim S.A.

U$$

13.10%

(b)

10/10/2010

25,000

Banco Bradesco S.A.

US$

6.70%

(b)

1/29/2010

10,000

Banco Bradesco S.A.

US$

6.10%

(b)

1/29/2010

10,000

Banco ABC Brasil S.A.

US$

5.55%

(b)

2/20/2009

5,000

Banco Safra

US$

5.65%

(b)

1/12/2009

15,000

Banco Safra

US$

5.90%

(b)

7/10/2009

30,000

Banco Fibra S.A

USS

5.95%

(b)

1/29/2010

2,000

Banco Fibra S.A.

U$$

8,70%

(b)

7/15/2009

3,000

Banco Itaú BBA S.A.

U$$

8,70%

(b)

3/15/2010

10,000

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Interest

Final

maturity

June

December

Institutions

Currency

% p.a. Garantees

Date

30, 2009

31, 2008

Banco Bradesco S.A

US$

5.90%

(b)

9/5/2009

15,000

Banco Bradesco S.A

USS

5.90%

(b)

1/30/2010

5,000

Banco Bradesco S.A

U$$

Libor + 4.70%

(b)

8/28/2011

50,000

Banco Itaú BBA S.A.

U$$

9.90%

(b)

12/29/2011

120,000

Banco Votorantim S.A.

US$

3.50%

(b)

1/29/2010

10,000

Banco ABC Brasil S.A.

US$

3.07%

(b)

2/20/2009

5,000

Unibanco S.A

US$

5.05%

(b)

6/23/2010

60,000

Banco Bradesco S.A.

U$$

14.03%

(c)

8/8/2009

Banco Mercantil

U$$

14.03%

(c)

7/12/2009

Banco Mercantil

U$$

14.03%

(c)

5/31/2010

116

198

Banco Mercantil

U$$

14.03%

(b)

7/4/2009

Other

223

539,261

566,255

Short-term

313,439

219,014

Long-term

225,822

347,241

539,261

566,255

Accrued interest short term

15,736

13,103

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

All debts mentioned above will be paid in one installment at maturity date.

Guarantees:

(a)

All debts are guaranteed by personal guarantee from the controlling shareholder as
intervening party or co-obligor.

(b)

Consolidated subsidiaries' debts guaranteed by the Company.

(c)

Pledge of equipment.

Composition of foreign currency denominated debt by currency:

June

30, 2009

December

31, 2008

Currency

United States dollars

536,904

563,265

Local currency (reais)

2,357

2,990

Total

539,261

566,255

At June 30, 2009, the Company's total debt matures as follows:

2010

75,900

2011

147,162

2012

502

2013 and after

2,258

Total

225,822

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

During the six month period ended june 30, 2009, the loaner banks have extended the maturities
dates of $75,987 loans with rates 9.57% higher than the ones previously agreed.

Debentures

On April 2, 2009, the Company issued private and perpetual debentures, in single series of
45,620 debentures which are simple, registered, subordinated, non-convertible debentures, in the
total amount of R$456,200 (equivalent to $200.000) at the issuance date, as approved by the
Board of Directors on March 30, 2009.

Additionally , such debentures will not bear interest or any other type of remuneration and will be
redeemable in the case of a transfer of MMX controllership. In this case, debentures will be
redeemable adjusted by IGP-M ( a local inflation Index).

The Debentures will be subscribed through a subscription bulletin without the mediation of
Custódia e Liquidação Financeira de Títulos S.A. (CETIP - Clearing House for the Custody and
Financial Settlement of Securities), within up to 180 days after their registration at the Rio de
Janeiro State Board of Trade, at unit par value, plus monetary variation by IGP-M.

$156,719 was paid up (R$357,486) in this quarter.The payment of the debentures was made in
cash upon their subscription and their maturity of the perpetual type under the terms of paragraph
3 of art.55 of Law 6404.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Quantity paid up

Unit amount

Total paid up
($)

Total

adjusted by

inflation

(IGPM) ($)

14.04.2009

11.435

5,1106

58,440

58,360

30.04.2009

6.853

5,1163

35,063

35,003

19.06.2009

17.548

5,1101

89,671

89,643

35.836

183,174

183,006

Income Taxes

Income tax expense attributable to income from continuing operations was $,12,904 and $6,155
respectively, for the six-month periods ended June 30, 2009 and 2008 differed from the
amounts computed by applying the Brazilian Federal income tax rate of 34% (combined rate of
federal income tax of 25% and social contribution of 9%) to pretax income from continuing
operations as a result of the following:

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Six-month

period ended

June 30, 2009

Six-month

period

ended June

30, 2008

Second quarter

period ended

June 30, 2009

Second

quarter

period

ended June

30, 2008

Income (loss) before income

taxes and minority interest

(50,519)

14,562

5,379

81,000

Expected federal income and

social contribution tax benefit

at statutory rates - 34%

17,176

(4,951)

(1,829)

(27,540)

Permanent differences:

Offering costs expensed

(deductible) for tax

purposes

Share-based compensation

(2,501)

(9,303)

(1,526)

(6,189)

Equity pick up

2,801

Other

37,115

(5,946)

36,342

(5,902)

51,861

(20,200)

33,007

(36,830)

Valuation allowance

allocated to deferred

income tax expense

(64,765)

14,045

(44,417)

34,067

Income taxes for the period

(*)

(12,904)

(6,155)

(114,410)

(2,763)

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

(*) The subisidiaries Minerminas and TCS calculate income and social contribution taxes based
on presumed profit and recognized an expense the period. These Companies have chosen to use
an option of the Brazilian tax legislation to calculate the taxable income at 8% (12% for social
contribution tax) of the operating revenues plus 100% of other revenues. Under this regime
temporary differences cannot be used for income tax purposes and tax losses can not be
carryforward.

The tax effects of temporary differences that give rise to significant portions of the deferred tax
assets are presented below:

June

30, 2009

December

31, 2008

Deferred tax assets (liabilities):

Tax loss carryforwards

216,436

148,934

Temporary differences - differences between the Brazilian

tax basis and the reporting basis raised from:

Start-up costs deferred for statutory accounting purposes

4,539

8,003

Other

(2,509)

(8,282)

Total gross deferred tax asset, net

218,466

148,655

Less valuation allowance

(213,420)

(148,655)

Net deferred tax assets

5,046

Tax loss carryforwards may be carried-forward indefinitely against the profits of future periods;
however, the offset is limited to 30% of current year taxable income. Total tax loss
carryforwards are $636,576 and $438,041 for June 30, 2009 and December 31, 2008 respectively.
No carry-back of losses is allowed.

The valuation allowance for deferred tax assets as of June 30, 2009 and December 31, 2008 was
$213,420 and $148,655, respectively. The net change in the total valuation allowance for the
periods ended June 30, 2009 and 2008, was $(64,765) and $14,045, respectively.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

In assessing the realizability of deferred tax assets, management considers whether it is more
likely than not that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of future taxable
income during the periods in which those temporary differences become deductible.
Management considers the scheduled reversal of deferred tax liabilities, projected future taxable
income and tax planning strategies in making this assessment. In order to fully realize the
deferred tax asset, the Company will need to generate future taxable income. Management
considers that the subsidiaries will not generate future taxable income in the short-term, as from
the start up of its operations, in order to fully or partially recover such tax asset. As a result, a
100% valuation allowance on the deferred tax asset has been recorded.

Shareholder's equity (deficit)

At June 30, 2009 and December 31, 2008, the capital stock was comprised of 304,866,640,
respectively, with no fair value.

Information about the Partial Spin-off Proposal of MMX occurred on June 19, 2008:

On April 7, 2008 MMX submitted to the consideration of its stockholders at an Extraordinary
General Meeting a proposal to partially spin off the Company, with transfer of part of its assets to
IronX, a joint stock corporation under Brazilian law presently in the process of going public,
according to the terms and conditions presented below ("Partial Spin-off").

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

The Partial Spin-off of MMX comprised: (a) the conversion of part of the spun-off shareholders'
equity of MMX corresponding to its interest in LLX Logística to LLX Logística itself and, as a
result, the interest of MMX in LLX Logística being assigned directly to the current shareholders
of MMX, in the exact proportion of their interest in the capital stock of MMX and (b) the
conversion to IronX of part of the spun-off shareholders' equity of MMX corresponding: (i) to its
direct and indirect interests, as applicable, in MMX Minas-Rio, MMX Serro, Borbagato, MMX
Amapá, MMX Logística do Amapá, MMX Metálicos Amapá and Bay Service (all jointly
designated "Subsidiaries of IronX"); and (ii) other direct assets and obligations, resulting in a
capital increase of IronX with the consequent issuance of new shares by IronX, to be assigned to
the current shareholders of MMX, in proportion to their interest in the capital stock of MMX, on
the date of approval of the Partial Spin-off.
Ownership interest in subsidiaries MMX Corumbá, MMX Metálicos Corumbá and MMX
Sudeste and other assets remain as investments in MMX S.A.

By means of the partial spin-off, MMX shareholders became shareholders of two publicly-held
companies to be listed in the BOVESPA New Market, the IronX and LLX Logística, in addition
to MMX itself, which remained as a publicly-held company with shares listed in the BOVESPA
New Market.

The Partial Spin-off proposal was approved by the Boards of Directors of MMX, LLX Logística
and IronX ("Companies") in meetings held on April 7, 2008, at which the managements of the
Companies were authorized to sign the Protocol and Justification of Partial Spin-off of MMX
("Protocol"). The Protocol was signed by the managements of the Companies also on April 7,
2008.

As a result of the Partial Spin-off, the portion of spun-off shareholders' equity corresponding to
net assets of MMX transferred to LLX Logística for shares of LLX Logística (which shares were
delivered directly to the shareholders of MMX, in proportion to the interest held thereby in the
capital stock of MMX) is treated as a distribution to the shareholders of MMX for accounting
purposes.

In addition, as a result of the Partial Spin-off, certain assets and liabilities of MMX listed in the
Protocol were transferred to IronX, and new shares of IronX were issued to MMX. MMX
distributed these IronX shares to the current shareholders of MMX (shareholders on the date of

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

approval of the Partial Spin-off), in proportion to the interest held thereby in the capital stock of
MMX. This has been accounted for as a distribution to the shareholders of MMX.

The base date for appraisal of the spun-off portions of net assets of MMX is December 31, 2007.
The appraisal was performed at book value, with a basis on the annual financial statements of
MMX brought up on December 31, 2007.

The equity variations of MMX occurring between December 31, 2007 and the date of the Partial
Spin-off were properly entered in the books by LLX Logística or by IronX, if said variations are
related to the portion of shareholders' equity of MMX converted to each one of these companies,
respectively, or (ii) withheld by MMX, if they are related to the assets that should remain with
this company.

The portion of shareholders' equity of MMX to be converted to LLX Logística was valued, under
the terms of articles 183 and 184 of Law nº. 6,404/76. As said portion is formed by the actual
interest held by MMX in LLX Logística, there was no capital increase in LLX Logística.
Immediately before the Partial Spin-off, at the same general meeting of shareholders' of LLX
Logística that decided on the split of the shares of LLX Logística, in the proportion of
59.4940978:1 and, as a result of this operation, the total number of shares of the LLX Logística
immediately before the Partial Spin-off was 358,364 book-entry nominative common shares with
no par value.

The existing shares of LLX, formerly held by MMX, after the split mentioned in item 1.1 above,
were delivered directly to the current shareholders of MMX in the proportion of 1 share of LLX
Logística to every 1 share of MMX.

The portion of shareholders' equity of MMX converted to IronX was valued, under the terms of
articles 183 and 184 of Law nº. 6,404/76 In this manner, with the approval of the Partial Spin-off,
the capital stock of IronX was increased through the issuance of 1,633,543,454 new nominative
common shares with no par value, of IronX, resulting in a total quantity of 1,633,544,254 shares
of IronX. Immediately after the aforesaid capital increase there was a reverse split of shares of
IronX in the proportion of 5.3627402647:1. As a result of the aforesaid reverse split of shares and
of the Partial Spin-off, if approved, the capital stock of IronX was be divided into 304,609,989
book-entry nominative common shares with no par value.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

The shares of capital stock of IronX issued by IronX as a result of the abovementioned capital
increase and after the aforementioned reverse split of shares, were assigned directly to the current
shareholders of MMX, in the proportion of 1 share of IronX to every 1 share of MMX.

As a result of the partial spin-off, the capital stock of MMX and other shareholders' equity
accounts were decreased by a total amount of $776,724 (equivalent to R$1,037,873 thousands at
local books under the Brazilian GAAP).

The capital decrease of MMX does not imply a change in the quantity of shares into which this
capital is divided.

On June 19, 2008, MMX S.A, in compliance with the provisions of article 157, paragraph 4, of
Law No. 6404/76 and CVM instructions No. 319/99 and 358/02, informs that its shareholders
had approved, in an Ordinary and Extraordinary Shareholders' Meeting held on that day, a spin-
off of the Company with transfer of portions of its assets to IronX and to LLX Logística, under
the terms and conditions described in the Significant Matter Notice published by the Company on
April 8, 2008, and in accordance with the Partial Spint-Off Justification and Protocol
("Protocol").

Share-based options plans

Equity plan

In order to encourage increased performance by the Company's top executives, in June and in
March 2007, the controlling shareholder granted 200.581 call options (16.046.480 after all
regular and reverse splits) for shares of MMX belonging to him, on behalf of 7 Company officers
and 20 of the main managers. This granting of options by the Company's controlling shareholder
represents a mechanism of remuneration and retention, for the period of five years, of the
Company's officers and executives, without implying any cost or dilution to the minority
shareholders of the Company. The contribution of the shares by the controller shareholder has
been accounted for as capital contribution. On behalf of the officers, the controlling shareholder
granted options for them to acquire globally over 5.5% of his own shares. The options granted to
these officers can be exercised in a period varying from immediately to 6 years after the initial
public offering of the Company. The beneficiaries of the option will be subject to the sale
restrictions described in the Final Prospectus of the primary public offering of shares of the

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Company, filed with the CVM on July 21, 2006, which forbids the sale of shares for a 3-year
period, beginning from the date of the public offering, except if they obtain express authorization
of the Company's controlling shareholder.

The price per share in the public offering, of R$10,1875 (equivalent to $4.3592), and that can be
exercised mainly in the proportion of 20% at each one of the first 5 anniversaries of the public
offering.

As the above described stock-based awards have a graded-vesting and the vesting is based only
on a service condition, the Company has elected to recognize compensation cost for the awards
over the requisite service period for each separately vesting portion of the awards as if the
awards, is in-substance, multiple awards.

In the spin off transaction, the equity sock compensation awards of MMX were not modified,
however each holder of an equity award was granted an additional equity stock compensation
award of each Iron X and LLX. These additional awards represent the grant of awards and
represent a modification that were accounted for as compensation or service cost.

The stock-based awards had their fair value based on the following assumptions:

Options

granted on

March 1,

2007

Options granted

on July 21, 2006

Options

granted on

June 19, 2008

Expected annual volatility

from 31.37

to 32.85%

from 30.79 to

33.03%

From 34.72 to

42.67%

Weighted average volatility

31.91%

31.74%

37.34%

Expected dividends

Expected remaining option life (in years)

1.69 years

1.58 years

1.65 years

Weighted average risk free rate

12.08% p.a.

15.20% p.a.

17.79% p.a.

Weighted average value per option

10.18

16.97

15.76

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Expected term - The Company's expected term represents the period that the Company's stock-
based awards are expected to be outstanding and was determined based on expected experience
of similar awards, giving consideration to the contractual terms of the share-based awards,
vesting schedules and expectations of future employee behavior as influenced by changes to the
terms of its share-based awards.

Expected volatility - The Company uses the trading history and implied volatility of the stocks of
similar mining companies (as the recent public offering at July 21, 2006) in determining an
estimated volatility factor when using option-pricing formula to determine the fair value of
options granted.

Expected dividend - The Company has not declared dividends. Therefore, the Company uses a
zero value for the expected dividend value factor when using the option-pricing formula to
determine the fair value of options granted.

Risk-free interest rate - The risk-free rate for periods within the contractual term of the share
option is based on the Brazilian Treasury yield curve in effect at the time of grant.

Estimated forfeitures - When estimating forfeitures, the Company considers voluntary and
involuntary termination behavior as well as analysis of actual option forfeitures.

As required by SFAS 123(R), the Company made an estimate of expected forfeitures and is
recognizing compensation cost only for those equity awards expected to vest. As of June31,
2009, the total compensation cost related to unvested stock-based awards granted to employees
under the Company's stock option plans but not yet recognized was $10,508, net of estimated
forfeitures. This cost will be amortized on straight-line basis over a weighted average term of
1.59 years and will be adjusted for subsequent changes in estimated forfeitures. A summary of
share option activity under the Plan as of June 30, 2009 is presented as follows:

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

MMX Plan

Options

Exercise price

($ per thousands)

Weighted-average

remaining

contractual term

Aggregate

intrinsic value

($)

Outstanding at December 31, 2007

11,054,360

5.44

2.66

293,256

Transfer to other company within the

group

(2,588,840)

2.66

(80,478)

Exercises

- -

Forfeitures or expirations

Outstanding at December 31, 2008

8,465,520

4.13

2.10

9,999

Outstanding at June 30, 2009

8,465,520

5.13

1.59

27,121

Exercisable at June 30, 2009

1,379,580

5.13

1.59

27,121

Exercisable at December 31, 2008

1,121,964

4.13

2.10

9,999

IronX Plan

As the acquisition of IronX by the Anglo American Group in Brazil occurred in August 2008,
9.403.552 options became fully vested and exercised. As such, the Company has recorded an
additional expense of compensation cost due to those vested options amounting to $67,608.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

LLX Plan

Options

Weighted-average

exercise price

($ per thousands)

Weighted-average

remaining

contractual term

Aggregate

intrinsic value

($)

Granting on June 19, 2008

9,403,552

6.28

1.68

28,869

Exercises

Forfeitures or expirations

Outstanding at December 31,

2008

9,403,552

4.13

2.15

6,037

Outstanding at June 30, 2009

9,403,552

5.12

1.65 17,952

The aggregate intrinsic value in the table above represents the total pretax intrinsic value, the
difference between the Company's closing stock price at equivalent to $17,952 (after the split) on
the last trading day of June 30, 2009 and the exercise price of $5.12 per thousand , times the
number of option that would have been received by the option holders had all option holders
exercised their options on June 30, 2009. This amount changes are based on the fair market value
of the Company's common stock.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Liability plan

In addition to this remuneration mechanism, the Company, in an Extraordinary General Meeting
held on April 28, 2006, approved a company issued share call option program. According to the
share call option program, the Board of Directors can grant share call options on behalf of
officers, executives and associates of the Company that represent no more than 1% of the shares
in circulation. However, at the same General Meeting of Shareholders, it was determined that the
Board would not grant any share call options in the fiscal year of 2006, whereas the only share
call options to be granted were on behalf of seven of the full members of the Board of Directors
and to one advisor of the Board of Directors. All participants already have the mutual
understanding of such share option granting. The Company granted 1,712,000 call options of
shares (originally 21,400 before all splits occurred) that have a financial fair value at the granting
date of July 21, 2006 amounting to US$5,135, which may be exercised in the proportion of 20%
at each of the first 5 anniversaries of the Offering, at a current average strike price equivalent to
$0.25 per share, adjusted by IPCA - inflation index up to the exercising date.

As the above described stock-based awards have a graded-vesting and the vesting is based only
on a service condition, the Company has elected to recognize compensation cost for the awards
over the requisite service period for each separately vesting portion of the awards as if the
awards, is in-substance, multiple awards.

Considering the provisions of SFAS 123R, the option price contains an inflation index (IPCA),
which is considered to be an "other condition". As a result, the Company accounts for this option
plan as a liability plan.

The fair value of stock-based awards was estimated based on the following assumptions for
period ended June 30, 2009:

Expected annual volatility

31.38% a 64.14%

Weighted average volatility

64.14%

Expected dividends

Expected remaining option life (in years)

1.65 years

Weighted average risk free rate

5.71% p.a.

Expected inflation

5.71%

Value per option

2.54%

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Expected term - The Company's expected term represents the period that the Company's stock-
based awards are expected to be outstanding and was determined based on expected experience
of similar awards, giving consideration to the contractual terms of the share-based awards,
vesting schedules and expectations of future employee behavior as influenced by changes to the
terms of its share-based awards.

Expected volatility - The Company uses the trading history and implied volatility of the stocks of
similar mining companies (as the recent public offering at July 21, 2006) in determining an
estimated volatility factor when using option-pricing formula to determine the fair value of
options granted.

Expected dividend - The Company has not declared dividends. Therefore, the Company uses a
zero value for the expected dividend value factor when using the option-pricing formula to
determine the fair value of options granted.

Risk-free interest rate - The risk-free rate for periods within the contractual term of the share
option is based on the Brazilian Treasury yield curve in effect at the time of grant.

Estimated forfeitures - When estimating forfeitures, the Company considers voluntary and
involuntary termination behavior as well as analysis of actual option forfeitures.

Inflation - Expected inflation determined based on the information available with BACEN
(Brazilian Central Bank).
The changes in this liability plan were as follows:

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Number of

options

Fair value

($)

Granted options at July 21, 2006

1,712,000

7,531

Changes up to December 31, 2006:

Changes in the fair value of the plan

1,115

Recognition as expense

(771)

Balance of unrecognized compensation cost - December 31, 2006 to

be recognized in 3.6 years in average

1,712,000

7,875

Changes during 2007 up to December 31, 2007:

Changes in the fair value of the plan

34,122

Recognition as expense

(23,589)

Exercises in 2007

(299,600)

1,412,400

18.408

Changes during 2008 up to December 31, 2008

Changes in the fair value of the plan

(30,259)

Recognition as revenue

13,613

Exercises in 2008

(256,800)

Balance of unrecognized compensation cost - December 31, 2008

1,155,600

1,762

Changes during 2009 up to June 30, 2009

Changes in the fair value of the plan

236

Recognition as expenses

(1,353)

1,155,600

645

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

The movement of the recorded stock option liability as from the grant date (July 2006) to
June 30, 2009 is as follows:

Number of

options

Fair value

($)

Total recognized from the grant date(July, 2006) to June 30, 2009:

1,712,000

12,100

Exercises in 2007

(299,600)

(7,792)

Exercises in 2008

(256,800)

(286)

Balance of the stock option liability

1,155,600

4,022

The fair value of the recognized compensation cost, in the amount of $4,022 has been classified
within stock options in long-term liabilities, and the compensation expense as general and
administration expense.

Net income (loss) per share

There were no adjustments to net loss in calculating diluted net loss per share. In addition, as the
Company had a net loss from continuing operations for the six-month periods ended June 30,
2009 and 2008, the dilutive effect of the 1,155,600 dilutive stock options for each period were not
considered in the diluted per share calculation.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Financial income

Six month- period

ended June 30,

2009

Six month- period

ended June 30,

2008

Second quarter

ended June 30,

2009

Second quarter

ended June 30,

2008

Interest income

12,516

23,275

5,547

(1,473)

Gain on derivative

instruments

18,354

13,823

586

12,467

Foreign exchange gain

132,220

40,708

122,834

40,708

163,090

77,806

128,967

51,702

Financial expenses

Six month- period

ended June 30,

2009

Six month-

period ended

June 30,

2008

Second quarter

ended June 30,

2009

Second

quarter ended

June 30,

2008

Interest expense

(48,964)

(27,020)

(19,427)

(8,344)

Capitalized interest

2,203

5,048

(3,798)

2,418

Foreign exchange loss

(17,363)

(16,455)

(64,124)

(21,972)

(39,680)

(5,926)

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Commitments

At June 30, 2009, the Company and its subsidiaries had commitments with suppliers of goods
and services as follows:

Object of service contract

Date of

signing

Due date

June

30, 2009

Basic engineering, detailed engineering,

supply management and

implementation management

5/2//2008

7/1/2011

10,104

Contracts related to the operation of the

of the processing plant of Mine 63

3/20/2008

7/17/2018

497,601

Contracts related iron purchase

12/29/2007

4/1/2009

13,223

Contracts related to the construction of

Mine 63

2/25/2008

3/17/2013

6,532

Contracts for energy supply sistema

Sudeste

9/22/2006

12/31/2011

5,543

Contracts related to acquisition of Mining
righth Bom Success in Minas Gerais.

7/3/2008

1/5/2010

98,116

Contracts for Services Port

5/1/2008

3/23/2013

10,214

Others

19,032

660,363

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Subsequent events

MMX filed an application to cease to be a reporting issuer in Canada

On July 24, 2009, the Company filed an application with the Ontario Securities Commission
("OSC") to cease to be a reporting issuer in Canada, after its voluntary delisting from the Toronto
Stock Exchange ("TSX") in November 2008.

If the application isapproved by the OSC, the Company will no longer be a reporting issuer in
any jurisdiction in Canada. Therefore, the Company will no longer be obliged to file and disclose
financial statements and the other documents required by Canadian regulatory authorities. This
decision will not affect the listing of its shares on the São Paulo Stock Exchange (BOVESPA)
and, just like the other shareholders of the Company, Canadian shareholders will continue to have
access to financial statements and other documents disclosed.

MMX announces its new CEO

On August 3, 2009 MMX disclosed to its shareholders and the market in general a change in the
members of its Executive Committee, as approved in the Board of Directors' meeting which
appointed Roger Allan Downey as MMX'x new chief executive Officer, in the office held by
Eike Batista who was doubling as CEO and the Company's Chairman of the Board.

Roger Downey was formerly at Credit Suisse, where he was in charge covering the mining and
steel businesses in Latin America since 2005. Prior to that, he worked during 14 years in the
mining industry and was active in sales, marketing, new business, and strategy involving the
major world producers of iron ore, such as Companhia Vale do Rio Doce and Rio Tinto.

Chequer Hanna Bou-Habib, who held the posts of Commercial Director and Investor Relations
Executive Officer, will remain as Commercial Director.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

LLX gets an installation license for the Southeastern Port

On August 3, MMX informed that LLX subsidiary, LLX Southeast, got the Installation License
for construction of the Southeastern Port, a port terminal with the capacity to move 50 million
tons of iron ore per year. The Installation License is a condition for beginning port construction,
which should occur during the second semester of 2009.

The Southeastern Port, located in the municipality of Itaguaí, 80 km from the city of Rio de
Janeiro, and only 4 km from the MRS railroad grid, will be the main route for exporting iron ore
produced at the MMX Southeastern System mines in Minas Gerais. The long-term contract with
LLX for storing and handling iron ore at the Southeastern Port has already been signed and it
projects the flow of all production destined for exportation from the MMX Southeastern System.

The MMX Southeastern System, together with LLX's Southeastern Port, constitutes an integrated
and competitive solution in Brazil, gathering high quality iron ore and independent, efficient and
safe logistics for exportation.

Summary of principal differences between Canadian and USGAAP

These consolidated financial statements have been prepared in accordance with generally
accepted accounting principles in the United States of America ("US GAAP"). Material
variations in the accounting principles, practices and methods used in preparing these
consolidated financial statements from principles, practices and methods accepted by generally
accepted accounting principles in Canada ("Canadian GAAP") are described below.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Description of GAAP differences

(i) Mineral properties

Under US GAAP, acquisition costs and exploration costs must be expensed as incurred
unless the resource properties have proven and probable reserves at which time costs
incurred to bring the mine into production are capitalized as development costs.

Under Canadian GAAP, resource property acquisition costs and exploration costs may
be deferred and amortized to the extent they meet certain criteria. The accounting
practice adopted by the Company under Canadian GAAP is to expense exploration costs
as incurred.

(ii) Pre-operating costs

US GAAP requires pre-operating costs to be expensed as incurred.

Canadian GAAP allows pre-operating costs to be capitalized until commercial
production is established. The accounting practice adopted by the Company under
Canadian GAAP is to expense pre-operating costs as incurred.

(iii) Stock options

U.S. GAAP requires stock option compensation awards that contain other condition,
such as inflation, to be recognized as liability awards and remeasured at each reporting
period.

Canadian GAAP requires such award to be classified as equity and its compensation
cost determined only at the grant date.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

Reconciliation of the differences between US GAAP and Canadian GAAP

ii.

Net income

June 30, 2009

June 30, 2008

Loss under US GAAP

(63,423)

8,407

Stock option compensation (iii)

714

8,237

Loss under Canadian GAAP

(62,709)

16,644

Shareholders' equity

June 30, 2009

December 31,

2008

Shareholders' equity(deficit) under US GAAP

(115,403)

(45,303)

Stock option compensation (iii)

4,022

2,669

Shareholders' equity under Canadian GAAP

(111,381)

(42,634)

Canadian GAAP supplementary information:

(i)

Recently issued accounting standards

Goodwill and Intangible Assets

In February 2008, the CICA issued Section 3064, ``Goodwill and Intangible Assets''
(``Section 3064'') which is effective for the Company on January 1, 2009. Section 3064
establishes standards for the recognition, measurement, presentation and disclosure of
goodwill and intangible assets by profit-oriented enterprises. The Company is currently
evaluating the impact of this standard.

MMX Mineração e Metálicos S.A. and subsidiaries

Consolidated financial statements

(In thousands of U.S. dollars, unless otherwise stated)

(ii)

Recently adopted accounting standards

Financial instruments -Disclosure and Presentation

In December 2006, the Canadian Institute of Chartered Accountants ("CICA")
published the following two sections of the CICA Handbook: Section 3862 Financial
Instruments- Disclosures and Section 3863, Financial Instruments-Presentation.
These standards introduce disclosure and presentation requirements that will enabled
financial statements' users to evaluate, and enhance their understanding of, the
significance of financial instruments for the entity's financial position, performance
and cash flows, and the nature and extent of risks arising from financial instruments
to which the entity is exposed, and how those risks are managed. The Company
adopted this standard in the 2008 fiscal year. See Note 7 for additional details.

Capital Disclosures

In December 2006, the CICA published section 1535 of the Handbook, Capital
disclosures, which requires disclosure of (i) an entity's objectives, policies and
processes for managing capital; (ii) quantitative data about what the entity regards as
capital; (iii) whether the entity has complied with any capital requirements; (iv) if it
has not complied, the consequences of such non-compliance. This information will
enable financial statements' users to evaluate the entity's objectives, policies and
processes for managing capital.

Inventories

In January 2007, the CICA published section 3031 of the Handbook, Inventories,
which prescribes the accounting treatment for inventories. Section 3031 provides
guidance on determination of costs and its subsequent recognition as an expense, and
provides guidance on the cost formulas used to assign costs to inventories. The
Company concluded that was no impact of these new recommendations on its
financial statements on January 1, 2008, the date of adoption.

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