COPY OF FINAL PROSPECTUS - Mirabela Nickel

multinational mining companies active in Brazil include Anglo American PLC, Rio Tinto PLC and BHP
Billiton Ltd. CVRD, a Brazilian company, has become the second largest nickel producer in the world following
its acquisition of Inco.
Under the Brazilian Constitution, mineral deposits represent a class of property separate from surface
rights, and belong to the Republic of Brazil. Exploration and mining activities can only be undertaken by
Brazilian individuals or legal entities incorporated in Brazil which hold an authorization or concession granted
by the federal government of Brazil.
The Mining Code of 1967 (the ‘‘Mining Act’’) and the Brazilian Mining Code Regulation 1968
(the ‘‘Regulation’’ and together, the ‘‘Mining Code’’) govern the exploration and commercial exploitation of
mineral resources in Brazil. Under the Mining Code, mining activity requires the grant of a concession from the
DNPM, an agency of the Brazilian federal government responsible for controlling and applying the Mining
Code, and requires an agreement with the relevant landowner regarding surface rights. Accordingly, mining
tenements in Brazil generally consist of one or more prospecting permits, exploration licences and mining
concessions.
The Mining Code does not require that the holder of a granted exploration licence or mining concession
spend a prescribed amount on exploration or mining activities.
The Company holds, directly or indirectly, exploration licences and applications for exploration licences and
is preparing to submit one or more applications for mining concessions.
Exploration Licences
An exploration licence entitles a holder, to the exclusion of all others, to explore for minerals in the area of
the licence but not to conduct commercial mining. The maximum exploration area for nickel is 2,000 hectares in
the States of Bahia and Piaui and 10,000 hectares in the State of Tocantins. An exploration licence is valid for a
maximum period of three years and can be extended by no longer than one additional three year period. The
holder of an exploration licence must (i) inform the DNPM of the discovery of any other mineral substance not
included in the exploration licence; (ii) perform work in accordance with applicable environmental legislation;
(iii) report annually to the DNPM on exploration expenditures; (iv) compensate the surface owner for
occupation of land and for losses caused by the work; and (v) submit a final report of the results of the work to
the DNPM before termination of the exploration licence. In addition, the holder of an exploration licence must
pay an annual exploration fee to the DNPM. The fee is established at progressive values based on the size of
the area and the extension period of the licence.
If the final report demonstrates the existence of a resource which can be both technically and financially
developed, the DNPM will generally approve the report. Once the exploration report is approved, the holder of
an exploration licence has one year to apply for a mining concession. If the holder of an exploration licence fails
to apply for a mining concession within this one year period, the mineral rights over the property will lapse.
Mining Concessions
An application for a mining concession must be addressed to the DNPM and be supported by a
development plan and a mining plan. A mining concession will not be issued until an installation licence has
been granted by the applicable environmental authority. See ‘‘Environmental Licensing’’ below.
A mining concession is granted under ordinance of the Ministry of Mines and Energy. The area of the
mining concession will be limited to (and can be smaller than) the area of the exploration licence from which it is
derived. Subject to complying with its conditions, a mining concession entitles the holder thereof, to the
exclusion of others, to mine the mining lease area indefinitely, until full depletion of the deposit. The holder of a
mining concession is entitled to servitudes over the land covered by the concession for mining, processing and
infrastructure or over adjacent land for processing and infrastructure. In very occasional circumstances mining
rights can be denied where the government mining authority considers that a subsequent public interest exceeds
that of the utility of mineral exploration, in which case the Federal Government must compensate the mining
concession holder.
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