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Forward-Looking Statements

Forward-Looking Statements.

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Forward-Looking Statements

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  1. Forward-Looking Statements This presentation contains forward-looking statements with respect to Gerdau AmeriSteel Corporation, including its business operations, strategy, financial performance, and condition. Although management believes that the expectations reflected in such forward-looking statements are reasonable, such statements involve risks and uncertainties. Actual results may differ materially from those expressed or implied by such forward-looking statements. Factors that could cause actual results to differ materially from expectations include, among other things, risk relating to completing the transaction, and general economic and market factors, including demand for steel products, availability and costs of electricity, natural gas, and raw materials, government regulations and trade policies affecting steel imports or exports in Canada and the United States, and other factors discussed in materials filed with applicable securities regulatory authorities from time to time.

  2. Transaction Summary

  3. Transaction Summary Note: All figures throughout this presentation are in C$ unless otherwise stated. 1 Arrangements have been made to squeeze out the minority shareholders of AmeriSteel post-closing (included in 74% ownership).

  4. Investment Highlights

  5. Investment Highlights – Financial Impact • Gerdau AmeriSteel will be one of the premier North American steel companies, commanding an improved valuation outlook 1 As at June 30, 2002 including $125 million of convertible debentures. 2 For the 12-month period ending June 30, 2002. 3 Based on annualized EBITDA for the 6 months ending June 30, 2002. 4 Based on the 6 months ending June 30, 2002. 5 Measured as the standard deviation of the change in EBITDA over the period from 1997 to 2001. 6 IBES estimate (includes effective tax rate of 15%). 7 Synergies excluded from 2002 EPS calculation.

  6. Gerdau AmeriSteel - Calculation of Implied Equity Values • On a consolidated basis, we believe that Gerdau AmeriSteel should trade in a $5.18 to $6.75 per share range, representing a 27% to 65% premium to Co-Steel’s current share price 1 Based on a range of management estimates, see slide 21. 2 Based on pro forma financial statements as at June 30, 2002. 3 Co-Steel’s current multiple based on a $4.08 share price. 4 Converted at 0.65.

  7. Gerdau North America

  8. Gerdau North America – Overview • Gerdau North America’s operations include AmeriSteel (Tampa, FL), MRM Holdings (Selkirk, MB) and Courtice Steel Inc. (Cambridge, ON) Management & Others Gerdau North America 87% 100% 100% 13% AmeriSteel1 MRM Holdings Courtice Steel Inc. 1 Owned through Gerdau USA.

  9. Cambridge, ON (Courtice) Selkirk, MB (MRM) Knoxville, TN Cartersville, GA Charlotte, NC Downstream and Specialty Facilities Tampa, FL Jackson, TN Minimill Facilities Jacksonville, FL Head Office Gerdau North America – Location of Facilities • Gerdau North America has seven minimill steel production facilities in Canada (2) and in the Southeastern U.S. (5) • In addition, Gerdau North America has 26 downstream and specialty facilities located throughout the Northeastern and Southeastern U.S.

  10. Gerdau North America – Capacity • Gerdau North America has an extensive network of modern and efficient minimill melting and rolling operations with capacity to accommodate anticipated increases in demand and no expected major capital expenditure requirements 1 Excludes Cartersville. 2 In December 2001, Gerdau North America acquired the Cartersville assets from Birmingham Steel for US$49 million, increasing merchant/structural capacity by 600,000 tons. 3 Based on run rate production annualized for the month of June 2002.

  11. Gerdau North America – Product Mix • Gerdau North America has a balanced portfolio of products, comprised of approximately 34% merchants, 32% rebar, 24% fabricated and other downstream products, 8% special sections and 2% wire rod products Product Mix1 1 As a percentage of 2001 Trade Shipments.

  12. Gerdau North America – Historical Financial Performance • Gerdau North America has experienced relatively stable revenue and EBITDA over the past three years despite margin pressures attributed to cyclical lows in the steel industry • The recent Section 201 decisions in the U.S. and expected CITT rulings in Canada are expected to have a positive impact on Gerdau North America’s future results Consolidated Revenue Consolidated EBITDA 1 Unaudited results excluding Cartersville. 2 Pro forma for the year ended December 31, 2001. 3 Annualized pro forma results for the 6 months ending June 30, 2002. Cartersville included starting in the quarter ending June 30, 2002.

  13. Gerdau AmeriSteel

  14. Gerdau AmeriSteel – Economies of Scale • Gerdau AmeriSteel will have 6.8 million tons of rolling capacity, making it the third largest North American steel producer, and the second largest North American long products producer • More importantly, Gerdau AmeriSteel will become the fourth most profitable North American steel producer on an EBITDA basis, excluding the benefit of any synergies generated through the combination North American Steel Industry Capacity Analysis1 North American EBITDA Analysis (US$)2 3rd largest 4th largest 1 Excludes companies in CCAA, Chapter 11 or Chapter 7 proceedings. 2 EBITDA for the LTM period ending June 30, 2002. US$/C$ exchange rate of 1.57:1 has been used.

  15. Gerdau AmeriSteel – Economies of Scale • Minimill Production and Capacity • The transaction will create the second largest North American minimill steel producer and a world class competitor 1 Represents 50% ownership in facility. 2 Based on run rate production annualized for the month of June 2002.

  16. HO Cambridge, ON (Courtice) Perth Amboy, NJ Sayreville, NJ Selkirk, MB (MRM) Whitby, ON Gallatin County, KY Knoxville, TN Jackson, TN Cartersville, GA EO Charlotte, NC Gerdau AmeriSteel Head Office HO Gerdau AmeriSteel Executive Office EO Gerdau North America Minimill Facilities Jacksonville, FL Co-Steel Minimill Facilities Gerdau AmeriSteel – Product Diversification • The significantly expanded network of 11 mills will allow Gerdau AmeriSteel to serve the U.S. and Canadian markets in a more effective and efficient manner

  17. Gerdau AmeriSteel – Downstream Integration • Gerdau AmeriSteel’s mimimills will be integrated with 29 downstream steel fabricating and specialty product businesses • Approximately 18% total product shipments will be in downstream and specialty products, increasing profit margins and reducing earnings volatility Co-Steel – 2001 Product Mix 1 Gerdau AmeriSteel – 2001 Product Mix 1 Shipments 2.4 million tons Shipments 4.8 million tons 1 As a percentage of 2001 Trade Shipments. 2 Co-Steel “Other” includes Epoxy Rebar, Rounds & Dowels.

  18. Gerdau AmeriSteel – Cost Savings • Management has conservatively estimated approximately $35 million in near-term annual cost savings, without any significant capital expense, to be realized as a result of the combination of Co-Steel and Gerdau North America • Additional synergies such as the adoption of best operating practices and coordination of manufacturing technologies have not been included in the $35 million figure but are expected to yield additional cost savings

  19. Gerdau AmeriSteel - Accretive Transaction • Pro Forma 2002E Financial Performance • Excluding any near-term cost savings, pro forma 2002E EBITDA is expected to be in a range between $310 million and $330 million 1 Based on June 30, 2002 pro forma financials. 2 Based on management estimates. 3 May not add due to rounding.

  20. Gerdau AmeriSteel - Accretive Transaction • 2003E Growth Expectations • In fiscal 2003, Gerdau AmeriSteel’s growth is expected to be derived from price and volume increases resulting from Section 201 and CITT case rulings as well as improved operating efficiencies 1 Forecast EBITDA growth from 2002 to 2003. 2 Excluding synergies. 3 Based on analyst estimates.

  21. Gerdau AmeriSteel - Accretive Transaction • Pro Forma 2002E/2003E EPS • Based on management forecasts for the remainder of fiscal 2002, the proposed transaction is expected to be $0.10 to $0.20 accretive on consensus analyst 2002E EPS estimates of $0.10 • If the growth rate assumptions for 2003 are applied to 2002E EBITDA, the implied pro forma EPS is in a range between $0.80 to $0.94, or approximately 14% to 34% accretive to consensus 2003E EPS of $0.70 • The effective tax rate used for 2003E is 30% versus the IBES estimate of 15% 1 Based on 2002E forecast results and 2003 estimated growth. 2 2002E Net Earnings calculated based on annualized 6 month pro forma depreciation and interest expense for the period ended June 30, 2002 and a blended 30% tax rate.

  22. Gerdau AmeriSteel – Financial Strength • The transaction will immediately reduce net debt/LTM EBITDA (adjusted for non-recurring items) from 8.1x to 3.8x1 on a pro forma basis 43% Decrease 1 Based on pro forma net debt and annualized EBITDA for the 6 months ending June 30,2002. 2 As at June 30, 2002. 3 Including $125 million of convertible debentures and net of $1.5 million of cash for Co-Steel and $13.1 million of cash for Gerdau AmeriSteel. 4 Excluding $125 million of convertible debentures. 5 Based on a pro forma balance sheet as at June 30, 2002.

  23. Gerdau AmeriSteel – Earnings Stability • On a pro forma basis, Gerdau AmeriSteel’s larger scale and higher margin products will provide greater earnings stability • Over the 5 year period from 1997 to 2001, the standard deviation of the change in EBITDA for Gerdau North America has averaged 15% compared to 57% for Co-Steel Standard Deviation on EBITDA1 1 Measured as the standard deviation of the change in EBITDA from 1997 to 2001.

  24. Gerdau AmeriSteel – Management • Phil Casey - Chief Executive Officer and President • CEO of AmeriSteel since 1994 • Chairman of Steel Manufacturers’ Association • Over 15 years of experience in the steel industry • André Bier Johannpeter - Chief Operating Officer, Canada • Currently Corporate Executive Vice President of Gerdau SA responsible for business operations in North America • Over 23 years of experience working in a wide range of areas for the Gerdau Group, including sales, human resources, information technology, and strategic planning • Mike Mueller - Vice President, US Operations • Appointed VP, Steel Mill Operations at AmeriSteel in 2001 after rejoining the company from Auburn Steel where he served as CEO since 1998 • André Beaudry - Vice President, Marketing • Joined AmeriSteel as Vice President, Mill Product Sales in September 2001 • President of Gerdau Courtice Steel from 1998 until he joined AmeriSteel, and prior to that held a number of management positions at Gerdau Courtice Steel and Sidbec-Dosco • Tom Landa - Chief Financial Officer • VP and CFO of AmeriSteel since April 1995 • 20 years of experience in various financial management positions with Exxon Corporation and its affiliates worldwide

  25. Gerdau AmeriSteel – Board Composition • The Board of Gerdau AmeriSteel will be comprised of 4 Co-Steel directors and 5 Gerdau directors * Independent directors.

  26. Gerdau AmeriSteel – Strong Sponsorship • Gerdau S.A. – Overview • 101 years of tradition focused on steel production • Installed capacity of 12 million tons of steel under management • 22nd largest world steel producer (IISI) • Largest Latin American long steel producer • Distribution network with 70 sales points • 5 service centers for flat steel • 26 fabrication shops for civil construction • 19 steel plants (10 in Brazil, 9 abroad) • Shares listed on Brazilian stock exchanges since 1947 and on NYSE (ADRs) since 1999

  27. MRM Courtice AmeriSteel Cearense Açonorte Gerdau S.A. Usiba Barão de Cocais Divinópolis ‘ Açominas Açominas Cosigua Guaíra Aza Laisa Riograndense Piratini Sipar (1) GERDAU S.A. AÇOMINAS Gerdau AmeriSteel – Strong Sponsorship • Gerdau S.A. – Installed Capacity 12 MILLION TONS PER YEAR ABROAD * 4.3 million tons of crude steel * 4.0 million tons of rolled products BRAZIL * 7.9 million tons of crude steel * 5.2 million tons of rolled products (1) Rolling mill, 38% owned JV

  28. Gerdau AmeriSteel – Strong Sponsorship • Gerdau S.A. – Financial Summary Revenue Output EBITDA Net Income

  29. Gerdau AmeriSteel – Strong Sponsorship • Gerdau S.A. – Leverage Ratios 1 Excludes monetary and exchange rate variations.

  30. Gerdau AmeriSteel - Summary • Financial Rationale • Decreases Co-Steel’s leverage position • Improves profit margin and reduces earnings volatility • Creates significant cost synergies • Highly accretive to Co-Steel shareholders • Strategic Rationale • Creates a leading North American steel company • Complementary facilities create a leading long products player in North America • Improves product mix and reduces earnings volatility • Provides strong sponsorship of Gerdau SA The transaction creates a better-positioned, financially stronger industry leader in Gerdau AmeriSteel

  31. Gerdau AmeriSteel – Comparable Company Analysis1 • On a pro forma basis, Gerdau AmeriSteel compares favourably with its industry peers Capacity Revenues Flat rolled EBITDA Margins Net Debt to EBITDA 1 Financial results for the last twelve months ending June 30, 2002. 2 Pro forma financial results annualized for the six months ending June 30, 2002. 3 Assumes US$615 million of incremental debt to finance purchase of Birmingham Steel plus the addition of US$70 million of EBITDA. 4 Assumes US$175 million proceeds from June 17, 2002 equity offering filing are used to repay debt.

  32. Enhancing Shareholder Value August 13, 2002 — CONFIDENTIAL —

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