Further to the announcement in May by Brazilian mining company MMX Mineração e Metálicos S.A. (MMX), MMX announced on Tuesday, June 23, that it received from China's third largest steelmaker Wuhan Iron and Steel Co. (WISCO) a non-binding offer pursuant to which WISCO would acquire a minority equity participation in MMX and its subsidiary MMX Sudeste Mineração S.A. (MMX Sudeste).
In accordance with the terms of the non-binding agreement, WISCO would purchase, by means of a new issue of MMX common shares, a 9.09 percent participation in MMX for a total price of US$120 million, and would further acquire a 23 percent equity interest in MMX Sudeste, by means of a new share issue, for the purchase price of US$280 million.
MMX said in a statement, "MMX intends to work closely with WISCO towards completing the transaction contemplated in the non-binding agreement in the shortest time possible, and would simultaneously negotiate a bankable long-term off-take agreement for the supply of iron ore by MMX Sudeste to WISCO."
"The non-binding agreement is non-binding in nature, and, therefore, both WISCO and MMX have the right to withdraw from and discontinue the transaction until a mutual and binding agreement is reached," added MMX.
In the May 19, 2009 announcement, MMX said that it had entered into talks with WISCO over a potential commercial partnership.
Meanwhile, in another statement MMX filed on Tuesday to the Securities and Exchange Commission of Brazil (CVM), MMX said that it clinched a deal to sell its Corumba pig iron plant for Reais 100 million (around US$50 million) to Brazilian pig iron producer Vetorial Siderurgica (Vetorial).
Commenting on the deal, MMX said, "84 percent of this value will be paid up front upon signing of the contract." MMX went on to add, "The accord establishes additionally that MMX Corumba Mineracao Ltda, a subsidiary of MMX, and Vetorial will sign a supply contract for a quantity of iron ore from MMX, sufficient to produce up to 400,000 mt of pig iron a year."
The deal in question is subject to due diligence on Vetorial's part and will need to be approved by the board of MMX.
In the same statement, MMX said that its Bolivian subsidiary EBX Siderurgica would also sell its iron plant in the city of Puerto Suarez, Germán Busch Province, Bolivia to Vetorial for Reais 26 million (US$13 million).
US$1 = Reais 1.98