Paranapanema : Material Fact - Binding Agreement Santander

DIAS D'ÁVILA, JUNE 13, 2018. PARANAPANEMA S.A. ("Company", B3: PMAM3), the largest Brazilian non-integrated producer of refined copper, rebar, drawn wire, rolled wire, bars, pipes, fittings and alloys, in compliance with paragraph 4 of article 157 of Law No. 6,404/76, as amended, and CVM Instruction 358/02, as amended, hereby informs its investors and the market in general that it has entered into an agreement with Banco Santander (Brasil) S.A. ("Santander"), the Binding Agreement with the purpose of definitively terminating the existing judicial disputes and disputes in arbitration between the parties (the "Binding Agreement" and the "Disputes", Respectively), as described in item 4.3 of the Reference Form and the Notes to the Company's Financial Statements, which state the cause classified as a possible risk for the amount of R$ 731 million.

The conclusion of the object set forth in the Binding Agreement is subject to satisfying certain normal Conditions Precedent for this type of agreement, and provides for an admission of debt of R$ 150 million, to be paid in annual installments in 10 years. Once the Conditions Precedent have been satisfied, the Parties shall conclude the object set forth in the Binding Agreement, that is, the definitive termination of the Disputes, regardless of any decisions that may be pronounced during that period, where the terms of the Binding Agreement shall prevail.

The Company will keep its shareholders and the market in general informed if there is any progress in relation to the matter hereby stated, in accordance with the applicable regulations. More information can be obtained from the Investor Relations department of the Company, through the telephone number [phone], or by [e-mail].

Dias d'Ávila/BA, June 13, 2018.

André Luís da Costa Gaia

Chief Financial and Investor Relations Officer