Paranapanema : Material Fact - Santander agreement (10/31/2017)

DIAS D'ÁVILA, OCTOBER 31, 2017. PARANAPANEMA S.A. ("Company", B3: PMAM3), the largest Brazilian non- integrated producer of refined copper, rebars, drawn wires, rolled wires, bars, pipes, fittings and its alloys, in compliance with the provisions of paragraph 4 of Article 157 of Law No. 6,404/76, as amended, and the CVM Instruction No. 358/02, as amended, hereby announces to its investors and the market in general that executed, with Banco Santander (Brazil) S.A. ("Santander"), a Memorandum of Understanding (the "Memorandum") setting out the main negotiating bases for an agreement between the Company and the Santander to end, definitively, judicial and arbitral disputes existing between the parties described in item 4.3 of the Reference Form and in the Company's Explanatory Notes (the "Transaction" and "Processes", respectively).

According to the Memorandum, the Company and Santander will require the suspension of the Proceedings for 90 (ninety) days, from the date hereof. This term will mainly be used for the negotiation of definitive agreements relating to the Transaction and compliance with the suspensive conditions, common in this type of operation.

Upon its execution, the Transaction will be made through in accord and satisfaction, with the delivery of non- operating property of the Company, and duties and obligations attached to it, to Santander, without any cash expenditure. At the same time, the Company and Santander will extinguish the Proceedings.

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

Dias d'Ávila/BA, October 31, 2017.

André Luís da Costa Gaia

CFO and Investor Relations Director

We make forward-looking statements that are subject to risks and uncertainties. These statements are based on estimates and assumptions of our management and information to which the Company currently has access. Forward-looking statements include information on our intentions, beliefs or current expectations, as well as those of the Board of Directors and Officers of the Company. Reservations in relation to statements and information about the future also include information on possible or presumed operating results, as well as statements preceded by, followed by or include the words "believes", "may", "will", "continue" "expects", "anticipates", "intends", "plans", "estimates" or similar expressions. The statements and information about the future are not guarantees of performance. They involve risks, uncertainties and assumptions because they relate to future events and therefore depend on circumstances that may or may not occur. Future results and the creation of value for shareholders may differ materially from those expressed or suggested by statements in the future. Many of the factors that will determine these results and values are beyond our ability to control or predict Paranapanema.