MMX Mineracao & Metalicos SA, the iron-ore producer controlled by Brazilian billionaire Eike Batista, said its financing plans will remain in place after Guilherme Escalhao was named to replace Roger Downey as chief executive officer.
MMX, based in Rio de Janeiro, is working to get funding for its 4 billion-real ($2.27 billion) Serra Azul project and expects to use credit lines from Brazil’s BNDES and other development banks to help finance the deposit, Escalhao said late yesterday on a conference call with analysts.
“We have a good chance of passing through this process without dramatic changes,” Escalhao said of the financing process. He plans to go to South Korea to hold talks with banks.
MMX will have $1.8 billion in loans for its Serra Azul project completed before year-end, Downey said in an interview Aug. 11. Downey, 44, a former mining equity analyst at Credit Suisse Group AG, has been MMX’s CEO since August 2009. Guido Germani was named to replace Escalhao as chief financial officer, MMX said yesterday.
Downey’s resignation is “negative” for MMX as he leaves when the company is still in negotiations to finance its key iron ore project, Banco BTG Pactual SA analysts led by Edmo Chagas in Rio de Janeiro said in a note to clients today.
“Although we are confident in MMX’s financial ability to deliver its expansion plans, we remain concerned about delays, cost overruns and balance sheet risks,” they said.
The reason for his resignation is “exclusively personal,” Downey said during the same conference call. He said he wants to “live life a little bit slower, closer to my family.” He plans to remain a shareholder in the company.
A former executive of Vale SA, Escalhao has been CFO of MMX since January. He trained in business administration at the Rio de Janeiro-based Getulio Vargas Foundation and has more than 25 years of experience in the mining industry, MMX said in a press release yesterday.
MMX lost 1.1 percent to 7.02 reais in Sao Paulo at 11:22 a.m. The stock has dropped about 37 percent this year, compared with a 21 percent decline for Vale, the world’s largest iron-ore producer.