MMX Mineracao & Metalicos SA (MMXM3), the mining company controlled by billionaire Eike Batista, led the Brazilian Bovespa index after saying it will sell 1.37 billion reais ($646 million) of new shares, reducing funding concerns for its flagship Serra Azul iron-ore project.
MMX, based in Rio de Janeiro, gained 6.2 percent to 3.95 reais at the close in Sao Paulo today after advancing 5.7 percent yesterday, the biggest two-day increase since July 27. The stock was the best performer on the Brazilian benchmark Bovespa index, which declined 1.1 percent today.
MMX will issue 348.9 million voting shares at 3.92 reais each in a private placement, the company said in a statement late yesterday. Batista, who controls MMX with a 46.4 percent stake, agreed to buy all shares not subscribed in the offer, the company said. Boosting capital may alleviate concerns about the funding of MMX’s projects, Brasil Plural CCTVM analysts, led by Renato Antunes, said in a note to clients today.
“The capital increase should put an end to funding concerns and project execution should now be the main theme to monitor,” the analysts said. “A more robust cash balance puts MMX in a better position to negotiate future agreements.”
MMX is spending 4.8 billion reais to expand its Serra Azul unit in Brazil’s Minas Gerais state, where it expects to produce as much as 29 million metric tons of iron-ore a year. The stock slumped to the lowest since April 2009 last month as investors dropped mining stocks amid lower growth in China, the world’s biggest consumer of industrial metals.
Batista, 56, last week lost his title as Brazil’s richest person to Jorge Paulo Lemann after shares of his six publicly traded startup commodity-linked companies tumbled this year, wiping out almost half his wealth since March. Oil producer OGX Petroleo e Gas Participacoes SA (OGXP3), Batista’s biggest holding, has declined 69 percent this year amid disappointing output results.
MMX also said yesterday it delayed the start up of its Sudeste port project in Rio state by six months to the fourth quarter of 2013.
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