2011 HIGHLIGHTS
Against a challenging global backdrop, we had an outstanding year in 2011.  A strong operational performance and robust demand for our products resulted in the Group’s best ever financial performance, with net earnings rising to $5.8 billion, and operating EBITDA of $11.6 billion. Over $390 million of year-on-year sustainable real cost savings meant that all of our commodity businesses are now amongst the most efficient in their respective industries and in each case in the lower half of industry cost curves.

The delivery of our organic growth strategy continued apace and we commissioned 10 new operations or expansions within budget, many of them ahead of schedule.

Construction of our next phase of major new operations is progressing very well, including the Koniambo nickel operation and the Tintaya-Antapaccay copper expansion, both of which are on track to commence production later this year. By 2015, our organic growth strategy will increase copper-equivalent volumes by over 50% over 2009 production and reduce average operating costs from a suite of approved growth projects that will deliver robust returns, even at conservative long-run price assumptions.

Our reserves and resources base continues to grow and during 2011 we announced significant increases to copper resources, particularly in South America, a key region for our future growth plans. In total, copper resources increased by 15% to 100 million tonnes. Six bolt-on acquisitions during the year have further enhanced our pipeline of further potential growth options.

This excellent performance in challenging market conditions and despite a number of uncontrollable one-off events in our business has been reflected in executive remuneration for 2011.  This is in line with our policy of aligning pay arrangements with strategy and rewarding excellent performance with excellent rewards, rather than adopting a conformist approach, where that may limit our ability to incentivise exceptional performance or recruit and retain the best talent in the highly competitive and tight global labour market for mining executives.

FIRST QUARTER 2012 AND OUTLOOK
Xstrata enters its second decade in a strong position and the group has continued to perform well into 2012. We have today published our first quarter production report and interim management statement.

Total consolidated coal production increased by 9% to over 21 million tonnes in the first quarter, primarily due to increased Australian and South African thermal coal volumes boosted by consistent, uninterrupted production compared to the same period in 2011.

Xstrata Coal expanded its presence in the Peace River Coalfield of northern British Columbia by acquiring the Sukunka hard coking coal deposit and sold 25% of the combined assets to form a joint venture with JX Nippon Oil & Energy Corporation in a transaction that realised immediate value from the coking coal complex we have rapidly established in Western Canada.

Nickel production rose by 8% more than during the same period last year as a result of improved mined production, with a significant increase in ferronickel volumes thanks to the restart of our Falcondo operation in the Dominican Republic.   The major Koniambo ferronickel operation in New Caledonia is on track to send its first ore to the furnace later this year.

In zinc, a 12% increase in production from our Australian operations offset planned lower production from the Antamina copper-zinc joint venture. Mined zinc and zinc metal volumes were maintained at a similar level to last year. We have also today announced the accelerated development of the new Lady Loretta mine in north west Queensland which we now expect to begin production later this year and the extension of the Handlebar Hill mine life to 2014.

In a transitional year for our copper business, new expansions at operations including Lomas Bayas, and Ernest Henry underground mine in Australia are on track to start production in the second half of the year. At Antamina, an expansion project to increase processing capacity to 130,000 tonnes per day was successfully commissioned and has already reached nameplate capacity.

Looking forward, whilst significant short term uncertainty remains, the medium to long-term outlook for commodities remains very positive. As the pace of major emerging markets’ growth moderates to more sustainable levels, economic indicators signify a steady recovery for global growth, with the US economy showing encouraging signs of recovery and the Chinese government’s policy tending towards easing as they navigate towards a ‘soft landing’.  The European sovereign debt crisis remains unresolved, but it seems that steps are being taken to give the policy decisions in each of the Eurozone countries time to take effect. Our own indicators point to stable growth prospects for the two largest economies of the US and China which, coupled with rising prosperity in south-east Asian and African countries, will continue to underpin demand for commodities.

In the longer term, strong demand for the commodities we produce, coupled with continued supply-side constraints, looks set to continue, driven by a recovery in mature economies and growing demand in emerging nations through the increasing number of middle class consumers, rising living standards and large-scale investment in physical infrastructure - all of which point to continued growth in the intensity of use for our products. Xstrata’s portfolio is particularly exposed to a suite of commodities for which demand remains strong across the entire economic development cycle, in countries such as China, India, Brazil, Indonesia, Turkey and other rapidly developing economies.

OUTSTANDING TEN YEARS
Xstrata’s record year in 2011 was a fitting conclusion to an exceptional first decade of growth, operational excellence and value creation for the many stakeholders in our business.  At this important milestone, I would like to take a moment to reflect on the extraordinary success Xstrata plc has enjoyed over its first ten years.  In late 2001, when the current management team joined the former Xstrata AG, the company was in a very different position to today - a small $500 million business with significant debts, a narrowly focused commodity portfolio, modest profits and an uncertain future.  Today, Xstrata’s market value is more than 100 times greater than in 2001, we now employ around 70,000 people and we enjoy leading positions in seven major commodities, with an industry-leading organic growth pipeline and a robust balance sheet. Our record EBITDA in 2011 reached $11.6 billion, compared to $140 million just before the IPO ten years ago and $400 million in 2002.

This remarkable performance is, we believe, to a great extent the result of our stable and cohesive management team which has remained almost entirely intact over ten years.  Our decentralised structure and entrepreneurial culture, together with remuneration policies that link pay firmly to performance, incentivise outperformance and successfully retain key personnel have been important factors in this regard.  Over the first ten years of Xstrata plc’s life, its management has delivered returns to our shareholders of some 350% compared to a FTSE100 index average of around 55% over the same timeframe, indeed the return to shareholders since October 2001 when this team joined Xstrata AG is in excess of 750%.

Our success is not only measured in terms of shareholder value – we also aim to make a lasting, positive contribution to society. We are proud that the natural resources we extract are at the heart of many essential products and services, from the building blocks of new cities to everyday items we all use in our daily lives.  Our multi-billion dollar investments and the taxation and royalties we pay contribute to national and local government revenues in over 20 countries. Community support for our activities is essential for our long-term success and we engage with communities in a spirit of openness and collaboration as early as we can and throughout the life of our operations.  In 2011, we invested $109 million in direct community initiatives on a voluntary basis, and over ten years we have invested more than $550 million, often in partnership with local government, civil society and community groups, to support health, education, community development and enterprise development programmes in the communities in which we work.

Our sustainability framework aims to ensure all of our global operations and projects are managed to consistent, industry-leading standards, with rigorous third-party assurance oversight.  Since joining Xstrata a year ago, I have been very impressed by the extent to which our people display a genuine commitment to health and safety, environmental responsibility and mutually beneficial partnerships with communities at every level of the organisation.  This year I was able to see at first hand Xstrata’s commitment to sustainability and health and safety in action on my recent visit with other directors to the Koniambo nickel project in New Caledonia, and our Mount Isa copper and zinc operations in north-west Queensland.

Safety is, of course, a primary concern for our Board and management team. Last year we achieved another substantial reduction of 26% in total recordable injuries across our global operations and our safety performance ranks amongst the leading companies in our industry.  This is a significant achievement, but I deeply regret to report that six people lost their lives while working at our managed operations during the year.  Any loss of life at our operations is unacceptable. Prevention of fatalities remains our utmost priority and we continue to ensure we act on the lessons learnt from these incidents.

PROPOSED MERGER WITH GLENCORE
The most important task for the independent directors of your Board in 2011 was our consideration of an all-share merger proposal from our largest shareholder, Glencore.   The proposal has required a high degree of scrutiny to assess fairness of the terms, the protections in place for Xstrata’s shareholders and the ability of the merged entity to deliver superior returns.

Xstrata’s prospects as a standalone company remain very strong. Therefore the independent directors’ decision to recommend unanimously the proposed merger to shareholders rests on our assessment that the combination represents an opportunity to create more value for our shareholders than could be created by Xstrata on a standalone basis.

The combined company will create a unique business model in the mining sector, positioned to compete in a complex and changing landscape where the locus of demand has shifted from OECD to developing economies, and where new supplies are being produced from a more diverse range of producers, many located in new and emerging mining regions. It is against this backdrop that an integrated business with capabilities in mining, markets and logistics will be able to unlock value along the entire value and distribution chain, from the mine to the customer.

Our shareholders will continue to benefit from Xstrata’s growth projects, operational expertise and dynamic management team. Through the merger you will gain additional exposure to Glencore’s portfolio of high-return, near-term growth projects, new commodities including alumina, agricultural products and oil, and a portfolio of mining assets in highly prospective emerging regions in which we do not yet have a presence. Glencore is the world’s leading commodities marketing business and its marketing capabilities, logistics network and relationships with thousands of suppliers and customers will provide the merged group with unparalleled insight into opportunities to grow our business that may not be visible to our competitors – a very exciting proposition for the future company. 

Together, Glencore Xstrata will have increased scale, the most diverse earnings in the sector and an improved financial position. We will benefit from a governance structure that is designed to protect the interests of Xstrata shareholders and that reflects the earnings profile of the combined group, which will be substantially weighted towards the industrial assets. A number of Glencore managers who are significant shareholders in the company have indicated their support for the governance structure for two years and retention packages will be put in place for key Xstrata managers whose continued commitment is essential to achieve the new company’s full potential and ensure a smooth integration. Xstrata management will optimise the value of the mining portfolio while Glencore management will focus on marketing the combined company’s products and seeking out new opportunities.  Both management teams will work together to identify new value creation opportunities for the combined group. 

The proposed merger ratio is earnings accretive for Xstrata shareholders and provides them with a disproportionate share of the combined company based on a number of historic and forward-looking metrics, and the undisturbed market values of both companies before merger discussions became public. Xstrata shareholders will also share in the $500 million of annual pre-tax synergies we expect to achieve from the first full year.  In the judgment of the independent directors, the terms of the proposal are fair and reasonable and the proposal represents a significant opportunity to create a distinctive business with very strong prospects to generate superior returns for our shareholders. 

We have therefore recommended that shareholders vote in favour of the proposal at the Court-convened and general meeting of the Company which are likely to be convened in early July.  Approval is also required from Glencore’s shareholders at a general meeting to be convened at around the same time.  We expect to send out formal documents relating to the transaction by the end of this month and we continue to expect the merger to become effective in the third quarter of this year.

To conclude ahead of the formal business of this meeting, Xstrata enters its second decade in a strong position, well placed to benefit from ongoing demand growth for commodities from Asia, with a robust balance sheet to fund our substantial organic growth programme and to pursue opportunistic value accretive bolt-on acquisitions. The proposed merger with Glencore offers a number of benefits that are uniquely available from the combination, with a governance structure that protects the interests of Xstrata shareholders and harnesses the best of both management teams, a unique business model and an entrepreneurial management team capable of executing the many opportunities we see in the combination.

End

Neither the content of the company's website nor the content of any other website accessible from hyperlinks on the company's website is incorporated into, or forms part of, this announcement

Xstrata contacts:

Alison Flynn
Telephone +44 20 7968 2838
Mobile +44 7769 314374
Email aflynn@xstrata.com

Claire Divver
Telephone +44 20 7968 2871
Mobile +44 7785 964340
Email cdivver@xstrata.com

Aura Financial
Michael Oke
Telephone +44 20 7321 0033
Mobile +44 7834 368 299

Andy Mills
Telephone +44 20 7321 0034
Mobile +44 7841 748 911

Notes to editors

About Xstrata plc

We are a major producer of a range of vital commodities used in everything from constructing buildings and delivering electricity, to developing jet engines and mobile phones. We are one of the top five global producers of copper, thermal and metallurgical coal, ferrochrome, zinc and nickel and we also produce silver, lead, platinum, gold, cobalt and vanadium.

Founded in 2002 and headquartered in Switzerland, we operate in over 20 countries and employ over 70,000 people at more than 100 operations and projects around the world. We work in a responsible and sustainable way, with an entrepreneurial spirit and dynamic approach. For more information, visit www.xstrata.com.

Xstrata Zinc is accelerating production from the Lady Loretta underground mine and further extending the life of the Handlebar Hill open cut operation in Queensland, Australia, generating a net increase in annual zinc production of 5% (or 25,000 tonnes).

Construction of the Lady Loretta project commenced in July 2011 to develop a greenfield underground zinc-lead-silver mine 140km north-west of Mount Isa, originally expected to commence production by the end of 2013 at a rate of 1 million tonnes per annum (Mtpa).  Work on the decline development, surface infrastructure and services are progressing well ahead of schedule. 

A further AUD57 million has been approved to accelerate the development of the mine, increasing the annual ore production rate from 1.0Mt to 1.2Mt and bringing forward the start of production by one year to late 2012.   Work has commenced immediately to secure key equipment and redesign the development infrastructure, mining plan and associated road upgrades to accommodate the increased annual ore volume.

The accelerated development of Lady Loretta has been supported by an increase in total resources ¹ from 12.6 million tonnes in June 2010 to 13.3 million tonnes in December 2011.  This assessment increases the amount of zinc metal contained by 12% to 1,406kt and lead metal contained by 10% to 448kt over a 12 year mine life.

Xstrata Zinc Australia Chief Operating Officer Brian Hearne said expansions of both mines through a total additional investment of AUD87 million would realise significant value from our Australian zinc business, including an estimated 30 new direct jobs.

“We are accelerating the delivery of ore from Lady Loretta to Mount Isa by developing the upper ore bodies independently to the deeper underground resources,” Mr Hearne said.

“At the same time, we are investing in a further expansion of the Handlebar Hill operation following improvements in mining methods and metallurgical performance since the mine was designed in 2007.”

The improvements have allowed us to look at mining previously marginal ore.”

The AUD30 million Handlebar Hill Open Cut South project supports the third stage of expansion of this operation, 20km north of Mount Isa, and extends the life of mine by a year to 2014.

Developing a narrow cutback to the south of the pit and targeting deeper ore from under the first two stages of development adds approximately 1 million tonnes of ore at 8.7% zinc, 2.7% lead and 44g/t silver to the existing Handlebar Hill open pit reserves.  

Neither the content of the company's website nor the content of any other website accessible from hyperlinks on the company's website is incorporated into, or forms part of, this announcement

Xstrata Zinc contacts:

Joanne Pafumi
GM Corporate Affairs, Community Relations and Human Resources
Xstrata Zinc Australia
Telephone +61 7 3295 7586
Mobile +61 411 759 683
Email jpafumi@xstratazinc.com.au

Fran Rossberg
Manager Corporate Affairs and Community Relations
Xstrata Zinc Australia
Telephone +61 7 3295 1584
Mobile +61 0422 980 120
Email frossberg@xstratazinc.com.au

www.xstratazinc.com
www.mcarthurrivermine.com.au

Notes to editors

About Xstrata Zinc

Headquartered in Madrid, Spain, we are one of the world’s largest vertically integrated producers of zinc, with an annual production of about a million tons of mined zinc. We have operations in Australia, America, and Europe, including world-class mines and deposits in Northern and East Australia, Canada, Peru, and processing and refining facilities in Spain, Germany and the United Kingdom.

Zinc is a versatile material that plays a vital role in modern society. It is an essential nutrient in human health and very useful in crop yield improvement. Zinc in galvanizing protects steel against corrosion for its use in automobiles, buildings and others. It is also used for the production of zinc die-casting alloys, brass and oxide, and in manufacturing batteries and other electrical and consumer goods.

For more information, visit www.xstratazinc.com

About Xstrata plc

We are a major producer of a range of vital commodities used in everything from constructing buildings and delivering electricity, to developing jet engines and mobile phones. We are one of the top five global producers of copper, thermal and metallurgical coal, ferrochrome, zinc and nickel and we also produce silver, lead, platinum, gold, cobalt and vanadium.

Founded in 2002 and headquartered in Switzerland, we operate in over 20 countries and employ over 70,000 people at more than 100 operations and projects around the world. We work in a responsible and sustainable way, with an entrepreneurial spirit and dynamic approach. For more information, visit www.xstrata.com

Highlights

• Thermal coal, mined nickel, ferronickel and lead volumes rose compared to the first quarter of 2011
• Major projects continue to make good progress and remain on schedule:
• The Koniambo ferronickel project in New Caledonia is on schedule to produce first metal in the second half of 2012, with the ore preparation plant and overland conveyor now in pre-operational testing
• Pre-stripping and blasting commenced in March at the Antapaccay copper project in Peru where construction is more than 70% complete ahead of planned commissioning in the third quarter of 2012
• An expansion to the Antamina copper-zinc joint venture in Peru was successfully commissioned and is operating at its increased milling capacity of 130,000 tonnes per day
• The Lady Loretta underground zinc-lead-silver mine in Australia will commence one year earlier than planned in late 2012 and annual ore production will rise from 1 million to 1.2 million tonnes from 2015
• In February, we announced a recommended all-share merger with Glencore to create a major, unique $90 billion natural resources group
• Xstrata Coal acquired the Sukunka hard coking coal deposit from Talisman Energy Inc for $500 million. Sukunka is located in British Columbia, Canada and supplements our existing First Coal and Lossan coking coal tenements in the region. JX Nippon Oil & Energy Corporation subsequently paid $435 million to acquire a 25% stake in our combined British Columbia coking coal assets
• In March, the Queensland Land Court recommended the Queensland Government approve Xstrata Coal’s Mining Lease Applications for the 22 million tonnes per annum Wandoan Coal Project. The New South Wales Land and Environment Court declined to impose any greenhouse gas offset conditions on the project approval for Ulan coal mine’s continued operations project.
• Xstrata Zinc announced that Brunswick Mine in Canada will close no later than March 2013, after almost half a century of mining operations
• In April, Origin Energy Limited (Origin) acquired a 51% interest in the Energía Austral hydroelectric development company in Chile.  Xstrata Copper will retain a 49% stake. At full capacity, Energía Austral’s hydropower supply will generate 1,000 MW of clean energy
• In the period from 1 January 2012, our operating and financial performance continues to be strong and the company’s financial position remains robust.

Neither the content of the company's website nor the content of any other website accessible from hyperlinks on the company's website is incorporated into, or forms part of, this announcement

Xstrata contacts:

Xstrata plc

Claire Divver
Telephone +44 20 7968 2871
Mobile +44 7785 964340
Email cdivver@xstrata.com

Alison Flynn
Telephone +44 20 7968 2838
Mobile +44 7769 314374
Email aflynn@xstrata.com

Investors & analysts
Martin Fewings
Telephone +44 20 7968 2893
Mobile +44 7990 591536
Email mfewings@xstrata.com

Caroline Yates
Telephone +44 20 7968 2878
Mobile +44 7824 826546
Email cyates@xstrata.com

Notes to editors

About Xstrata plc
We are a major producer of a range of vital commodities used in everything from constructing buildings and delivering electricity, to developing jet engines and mobile phones.  We are one of the top five global producers of copper, thermal and metallurgical coal, ferrochrome, zinc and nickel and we also produce silver, lead, platinum, gold, cobalt and vanadium.

Founded in 2002 and headquartered in Switzerland, we operate in over 20 countries and employ over 70,000 people at more than 100 operations and projects around the world.  We work in a responsible and sustainable way, with an entrepreneurial spirit and dynamic approach.  For more information, visit www.xstrata.com.

Copper

2012 marks a transition year for Xstrata Copper as new expansion projects ramp up in the second half of the year at our Antamina joint venture and new Antapaccay mine in Peru, Ernest Henry underground mine in Australia and Lomas Bayas mine in Chile.  Following the closure of the Ernest Henry open pit mine in December last year and with our Tintaya pit entering its final year of production in 2012, the transition period has resulted in planned lower mined copper output in the first quarter, with production 18% lower than the first quarter of 2011.

At Antamina, the expansion project to increase processing capacity by 38% to 130,000 tonnes per day was successfully commissioned in the first quarter and reached nameplate capacity in March 2012. As a result, our share of Antamina copper production increased by 24% with higher mill throughput from the increased capacity, together with planned higher grades and recoveries. 

Higher ore throughput, improved head grades and recoveries increased copper production at the Alumbrera mine by 13% in the first quarter of 2012, as the mine was able to regain access to higher grade zones after a geotechnical event restricted access last year. 

The Ernest Henry open-pit mine, which produced over 100,000 tonnes of copper last year, reached the end of its life in December 2011 and underground ore production commenced, initially at a lower rate and with lower grades, contributing 7,300 tonnes of copper in the first quarter. Underground annualised ore mining rates will increase progressively from a rate of approximately 2 million tonnes at present to 3 million tonnes by the end of this year, increasing to 6 million tonnes per annum after an underground hoisting shaft is commissioned at the end of 2013.  

Planned lower grades and recoveries at Collahuasi, together with adverse weather conditions and an unplanned ball mill outage in March, decreased our share of copper in concentrate production by 34% to 29,400 tonnes in the first quarter.  We expect Collahuasi’s copper production to improve in the second half of 2012 as the mine plan moves into a higher-grade ore zone.  An incremental expansion to 160,000 tonnes per day will be commissioned in 2013, further increasing copper production to an annual rate of more than 500,000 tonnes per annum.  

Record rainfall at our Tintaya mine restricted mining rates and access to higher ore grades, contributing to reduced copper production of 53% to 11,500 tonnes over the corresponding period as Tintaya enters its final year of operations. The adjacent Antapaccay project is on track to commence operations in the third quarter of this year and is scheduled to progressively ramp up to reach initial production rates of 160,000 tonnes per annum in 2013.

Gold production decreased by 34% to 86,800 ounces in the first quarter of 2012 compared to the previous year, mainly due to Ernest Henry’s transition to a lower production underground operation and to lower grades at Alumbrera and Tintaya. 

Total mined and third party copper cathode production increased by 2% compared to the first quarter of 2011, mainly due to improved production at the Townsville refinery which experienced a shut down in the same quarter of 2011 in response to a severe cyclone event in North Queensland.  

Coal

Total consolidated coal production increased by 9% to 21.1 million tonnes in the first quarter of 2012.  This was primarily due to increased Australian and South African thermal coal volumes resulting from more consistent, uninterrupted production compared to the same period in 2011, when performance was significantly impacted by a number of uncontrollable events.

Australian thermal coal production, including metallurgical volumes, increased by 8% or 0.9 million tonnes, mainly as a result of improved performance at the Rolleston open cut and Ulan underground operations, compared to the first quarter of 2011 when flooding impacted production. The full impact of improved volumes from the Australian operations was not wholly realised due to the end of mine life closures in 2011 at the Beltana, Ravensworth West and Baal Bone operations, which were still producing in the first three months of 2011.

Australian coking coal production was down by 0.3 million tonnes in the first three months of 2012 mainly due to the timing of longwall moves at the Oaky Creek underground complex in Queensland.

South African thermal coal production increased by 20% or 0.8 million tonnes due to improved performance in the first quarter of the year, as our sites continued their transition to large scale, low cost, primarily open-cut, complexes, with Goedgevonden and ATCOM East producing at steady state volumes.

At Cerrejón, our joint venture operation in Colombia, volumes were 15% or 0.4 million tonnes higher compared to the first quarter of 2011, when production levels were impacted by more rainfall than in the first quarter of 2012.

Nickel

We produced 26,381 tonnes of nickel in the first quarter of 2012, 8% more than the same period last year as a result of improved mined production from both our Integrated Nickel Operations (INO) and our Falcondo ferronickel operation.

Mined nickel in concentrate production from our INO mines increased by 2%, driven by higher volumes and grade at our Raglan and Sudbury mines in Canada.  A 5% increase in the volume of INO ore milled in the period was offset by lower grades from our Australian mines, as we mined disseminated ore bodies with inherently lower nickel content. 

Total nickel in ferronickel production from our Falcondo operation in the Dominican Republic rose 89% to 3,576 tonnes in the first quarter, after we restarted mining activities in February 2011 to 50% of installed capacity.  Falcondo’s run-rate in the first quarter of 2012 remained above planned capacity.

Our mined copper production reached 13,769 tonnes, up 10% over the same period last year, reflecting a period of significant copper contained in Sudbury’s Nickel Rim South ore.  This increased mined copper production contributed to a 15% increase in refined copper production at the Nikkelverk refinery in Norway, which produced 9,385 tonnes of copper metal in the first quarter of 2012.

Zinc

A 12% increase in production at our Australian operations helped to offset a planned reduction in volumes at Antamina, where the mine plan continues to operate in a predominantly copper ore zone. Overall, our total zinc in concentrate production achieved similar volumes to the first quarter in 2011. Zinc metal production at our smelters was also consistent with the same period in 2011.

Total lead in concentrate production increased by 7% during the first quarter of 2012, mainly due to higher production volumes at our Australian operations as a result of improved ore grades.

As a result of higher production at Mount Isa and improvements to shipping schedules for lead bullion shipments to our UK refinery, total lead metal production was 14% higher than the same period in 2011.

Alloys

Attributable ferrochrome production volumes were 20% lower than the first quarter of 2011, mainly due to the rescheduling of maintenance programmes and power buyback deals with Eskom, the South African national electricity supplier.  In total, seven furnaces were impacted by Eskom’s requirements for consumption reductions to support their maintenance programmes.

Ferrochrome producers achieved a 17% increase in the average European benchmark price from $1.15 per pound in the first quarter to $1.35 per pound in the second quarter, driven by reduced supply in the market. Margins, however, remain under pressure as a result of continued strong mining inflation, increased standing charges and a relatively strong rand compared to the US dollar.

PGM volumes were lower than the corresponding quarter in 2011 as Eland mine continued to transition to an underground operation following the cessation of opencast operations in the final quarter of 2011.  Mototolo Mine achieved nameplate production volumes with a slight increase over the comparative period in 2011.

 
“Over the past decade, Xstrata Coal has evolved, as has our business strategy, and core to that is a focus on larger volume mining complexes,” said Peter Freyberg, Chief Executive, Xstrata Coal. “We believe the Donkin Coal project is a valuable asset to a qualified partner and remain positive about its viability.  We will continue to work closely with Erdene and the Province of Nova Scotia to secure an operating partner to advance the project to production”. 

It is anticipated that the sale process will be concluded during 2012, with the selection of an entity with the mining experience, technical expertise and financial capability to operate this underground mine safely and efficiently.  Erdene has a 60-day right of first refusal on the sale by Xstrata Coal of its interest in the Donkin project.
During this process the project timelines will be maintained with the planned completion of the environmental assessment, progression of engineering work and obtaining the necessary approvals for commencement of the underground exploration phase. The Canadian Environmental Assessment Agency (“CEAA”) approval process, which is required for project permission, is on track and full environmental approval is anticipated in early 2013.  It’s estimated the Donkin mine will produce 2.75 million washed product tonnes per year and will directly employ about 300 people, targeting commencement of coal production by mid-2014.

Xstrata Coal, under the joint venture agreement, is committed to fund the first $10 million of Erdene’s development funding requirement. Xstrata Coal will bring forward up to $1 million of this to cover Erdene’s share of expenditure on the project during the sales process.

Donkin Coal Project Overview

An independent NI 43-101 Technical Report (Marston & Marston, Inc. of St. Louis, Missouri) was completed in June 2011, indicating a $1.06 billion Net Present Value (“NPV”) at an 8% discount rate and a 36% Internal Rate of Return.  This equates to an NPV of $265 million for Erdene’s 25% interest in the Project.  The Report confirms the technical and economic viability of the Project and supports advancing the project to the next phase.  The Donkin project is based on a multiple continuous miner underground operation with potential to advance to a longwall operation. Mine infrastructure includes twin 3.6 kilometre tunnels to the coal face with plans for a coal processing plant and marine or rail transportation options that allow for loading of Cape Size vessels proximal to the project site.  The Harbour Seam coal has previously been marketed to domestic power utilities and steel manufacturers as well as steel plants in Europe, Brazil and Asia while regional electrical utilities consume greater than 2.5 million tonnes, largely imported.

Neither the content of the company's website nor the content of any other website accessible from hyperlinks on the company's website is incorporated into, or forms part of, this announcement

Contacts:

Kathryn Lamond
Telephone +612 9253 6789
Mobile +61 (0) 417 074 751
Email klamond@xstratacoal.com

Peter C Akerley or Ken W. MacDonald
Telephone +1 902 423-6419
Email info@erdene.com

About Xstrata plc
We are a major producer of a range of vital commodities used in everything from constructing buildings and delivering electricity, to developing jet engines and mobile phones. We are one of the top five global producers of copper, thermal and metallurgical coal, ferrochrome, zinc and nickel and we also produce silver, lead, platinum, gold, cobalt and vanadium.
Founded in 2002 and headquartered in Switzerland, we operate in over 20 countries and employ over 70,000 people at more than 100 operations and projects around the world. We work in a responsible and sustainable way, with an entrepreneurial spirit and dynamic approach. For more information, visit www.xstrata.com.

About Xstrata Coal
We are the world's largest seaborne exporter of high energy thermal coal used to generate electricity and a significant producer of coal used to make steel.  Headquartered in Sydney, Australia, we have interests in over 30 operating coal mines in Australia, South Africa and Colombia, as well as development projects in Canada.   For the fifth consecutive year, Xstrata retains its position as Mining Sector Leader in the annual Dow Jones Sustainability Index review 2011/12. 
For more information on Xstrata Coal, visit www.xstratacoal.co

About Erdene
Erdene Resource Development Corp. is a diversified resource company with multiple projects at various stages of development from exploration to production; all focused on high-growth commodities.  Erdene is a TSX listed company with headquarters in Halifax, Nova Scotia and an office in Ulaanbaatar, Mongolia.  In addition to its interest in the Donkin Coal Project, the Company is very active in Mongolia where Erdene's management have over 15 years of experience in the country's resource sector. A dedicated technical and management team has assembled a strong portfolio of molybdenum-copper, copper-gold, and coal projects throughout the country.  In addition, the company is active in industrial mineral projects in North America through a royalty interest in an operating quarry, equity in a TSX-V listed producer, and direct interests in early stage projects.  Erdene has 95,802,901 common shares issued and outstanding and a fully diluted position of 103,410,901 common shares. 

For more information on Erdene, visit www.erdene.com.

Forward-Looking Statements
Certain information regarding Erdene contained herein may constitute forward-looking statements within the meaning of applicable securities laws.  Forward-looking statements may include estimates, plans, expectations, opinions, forecasts, projections, guidance or other statements that are not statements of fact.  Although Erdene believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct.  Erdene cautions that actual performance will be affected by a number of factors, most of which are beyond its control, and that future events and results may vary substantially from what Erdene currently foresees.  Factors that could cause actual results to differ materially from those in forward-looking statements include market prices, exploitation and exploration results, continued availability of capital and financing and general economic, market or business conditions.  The forward-looking statements are expressly qualified in their entirety by this cautionary statement.  The information contained herein is stated as of the current date and subject to change after that date.

NO REGULATORY AUTHORITY HAS APPROVED OR DISAPPROVED THE CONTENTS OF THIS RELEASE

Xstrata Copper and Origin Energy Limited (Origin) have completed a transaction under which Origin has acquired a 51% interest in Xstrata Copper’s Energía Austral hydroelectric development company in Chile.  Xstrata Copper will retain a 49% stake, whilst introducing a partner with a demonstrated track record, expertise and experience in hydropower and renewable energy to support Energía Austral’s development.

Under the terms of the agreement, Origin has gained majority ownership of Energía Austral and will progressively invest over the  next several years project development costs of US$75 million for the completion of a detailed project feasibility study, and, if the project is deemed feasible, an additional US$75 million towards a final investment decision.  Xstrata Copper will be entitled to deferred payments by Origin Energy when the project is operational and if certain revenue threshold targets are met.

Energía Austral’s hydroelectric projects in the Aysén Region of southern Chile have been designed under Xstrata’s industry-leading sustainable development standards. They comprise up to three hydroelectric plants – Cuervo, Blanco and Condor - with capacity of approximately 1,000 MW that will deliver clean energy through a new transmission system to the nation’s Central Interconnected Grid (SIC). At full capacity, Energía Austral’s hydropower supply will avoid the generation of three million tonnes of carbon dioxide per annum compared to fossil fuel electricity generation.

Xstrata Copper Chief Executive Officer Charlie Sartain said “We are delighted to secure Australia’s leading integrated energy company as a partner in Energía Austral. Origin has impressive international energy industry credentials and a demonstrated commitment to the highest levels of sustainability.

“I am proud of the fact that our Energía Austral team has developed strong, respectful relationships with our stakeholders in the project over the past five years.  I am confident that with Origin’s contribution and our continuing support, Energía Austral’s projects will now be successfully advanced to the next stage of development to provide an economic and social stimulus for the Aysén Region and a long-term, clean source of energy for Chile.”

Origin Managing Director Grant King said “Energía Austral will play an important role in providing the nation with an efficient, flexible and reliable supply of electricity from a renewable source.

“Origin’s investment in Energía Austral is consistent with our company’s pursuit of a portfolio of renewable energy opportunities in markets with attractive growth options.  It also complements Origin’s existing footprint in Chile through its 40 per cent interest in the nation’s leading geothermal exploration company, Energía Andina.”

Energía Austral General Manager, Mr Alberto Quinones, said, “Origin’s investment in Energía Austral, which follows our extensive assessment of the projects’ technical, environmental and social aspects, represents a significant milestone in the development of these important electricity generation projects.”

Energía Austral’s projects are situated in an area of reliable rainfall and stable water flows, making it ideal for hydroelectric power generation. The projects are in the feasibility study stage and we anticipate a final investment decision to proceed to construction in 2015/2016.

Energía Austral has the potential to contribute substantially to the social and economic development of the Aysén Region. During construction, a workforce of approximately 4,000 people will be required, providing significant local opportunities for employment and suppliers.  The projects also include initiatives to promote tourism in the region.

End

Neither the content of the company's website nor the content of any other website accessible from hyperlinks on the company's website is incorporated into, or forms part of, this announcement

Xstrata Copper contacts:

Emily Russell
Telephone: +562 478 2204
Mobile: + 569 9443 3571
Email: erussell@xstratacopper.com

Viviana Alarcón
Telephone: +56 2 478 2235
Mobile: +56 9 9552 4557
Email: valarcon@xstratacopper.com
www.xstratacopper.com

Notes to editors
About Xstrata plc

We are a major producer of a range of vital commodities used in everything from constructing buildings and delivering electricity, to developing jet engines and mobile phones. We are one of the top five global producers of copper, thermal and metallurgical coal, ferrochrome, zinc and nickel and we also produce silver, lead, platinum, gold, cobalt and vanadium.

Founded in 2002 and headquartered in Switzerland, we operate in over 20 countries and employ over 70,000 people at more than 100 operations and projects around the world. We work in a responsible and sustainable way, with an entrepreneurial spirit and dynamic approach. For more information, visit www.xstrata.com

About Xstrata Copper

We are the fourth largest global copper producer and one of the world’s largest producers of smelter, refined and recycled copper, including from third party materials. The copper we produce is essential to our modern society, being used extensively in electronic, consumer and building products, and with its use in green-technologies, anti-microbial applications and ability to be recycled, it is playing a vital role in our sustainable future.  

Headquartered in Brisbane, Australia, we have operations and projects in eight countries and employ over 20,000 people. We play an essential role in the communities in which we live and work, by providing jobs, training, infrastructure, income for suppliers and support for social development. We are present in Chile through our Lomas Bayas copper mine and Altonorte Metallurgical Complex in Antofagasta Region, our 44% interest in the Collahuasi joint venture in Tarapacá Region and our 49% holding in the Energía Austral hydroelectric project in Aysén Region. For more information, visit www.xstratacopper.com

About Energía Austral

Energía Austral is developing three hydroelectric plants and a transmission line in southern Chile’s Aysén Region. The three plants, Cuervo, Blanco and Cóndor, have the potential to provide approximately 1,000 MW of clean energy to Chile’s Central Interconnected Grid (SIC). Energía Austral has offices in Puerto Aysén, Coyhaique and Santiago. Asset Chile acted as financial adviser to Xstrata Copper in this transaction. For more information, visit www.energiaaustral.cl

About Origin Energy

Origin Energy (ASX: ORG) is the leading Australian integrated energy company focused on gas and oil exploration and production, power generation and energy retailing. A member of the S&P/ASX 20 index, the company has around 5,600 employees and is a leading producer of gas in eastern Australia. Origin is Australia’s largest energy retailer servicing 4.4 million electricity, natural gas and LPG customer accounts and has one of the country’s largest and most flexible generation portfolios with more than 5,310 MW of capacity, through either owned generation or contracted rights. Origin’s strategic positioning and portfolio of assets provide flexibility, stability and significant opportunities for growth across the energy industry. Through Australia Pacific LNG, its incorporated joint venture with ConocoPhillips and Sinopec, Origin is developing one of Australia’s largest CSG to LNG projects based on Australia’s largest 2P CSG reserves base.

In New Zealand, Origin is the major shareholder in Contact Energy, the country's leading integrated energy company, operating geothermal, thermal and hydro generation facilities and servicing electricity, gas and LPG customers across both the North and South islands. Origin also operates several oil and gas projects in New Zealand and is one of the largest holders of petroleum exploration acreage in the country.

Origin has a strong focus on ensuring the sustainability of its operations, is the largest green energy retailer in Australia and has significant investments in renewable energy technologies. For more information go to www.originenergy.com.au

Xstrata Coal and JX Nippon Oil & Energy Corporation (“JX”) announce the creation of a joint venture comprising contiguous metallurgical coal assets in the Peace River Coalfields in Western Canada.  JX Nippon Oil & Energy（Australia）Pty Ltd (“JX Australia”), a subsidiary of JX, has paid US$435 million in cash to acquire a 25% interest in Xstrata Coal British Columbia (“XCBC”).  XCBC comprises a 100% interest in the following metallurgical coal assets:

• First Coal Corporation (“First Coal”) tenements, acquired by Xstrata Coal in August 2011, representing over 100,000 hectares of contiguous coal licenses and applications;
• The Lossan coal deposit acquired by Xstrata Coal in October 2011; and
• The Sukunka coal deposit, the acquisition of which was announced on 8 March 2012 and which completed today.

Xstrata Coal has retained a 75% interest in XCBC and will develop, operate and manage the assets on behalf of the joint venture.  Together with its 25% interest in XCBC through JX Australia, JX will be the exclusive marketing agent for First Coal and Sukunka coal sold into Japan. 

Technical studies indicate that the two most advanced XCBC projects, Sukunka and Suska, have the potential to produce up to approximately 9.5 million tonnes per annum.  The majority of this production is expected to comprise hard coking coal with the balance expected to be PCI coal.

Xstrata Coal has combined the project formerly known as Lossan with neighbouring First Coal tenements to create an expanded open cut coal project, now known as the Suska Coal Project (“Suska”), of significantly larger scale.

Sukunka has an NI 43-101 compliant coal resource of 236 million tonnes in the Measured and Indicated categories.  Norwest Corporation has completed a pre-feasibility study for a longwall mine producing hard coking coal.  Xstrata Coal’s technical studies indicate the potential to realise further value from the resource.

Both historical exploration reports and recent studies highlight the prospectivity of the First Coal tenements for significant deposits of export quality metallurgical coals.  An exploration programme is on track to commence in 2012 following receipt of approvals.

Yasushi Kimura, President of JX Nippon Oil & Energy, commented:

“JX and Xstrata Coal have built a strong relationship over the years via our Oakbridge joint venture.  This opportunity has great significance for JX as it marks our entry into the hard coking coal market.

Our existing coal business focuses on the supply of thermal coal to utility companies, and this joint venture enables a full-scale expansion of our business into hard coking coal, which is essential for steel manufacturing.

Xstrata Coal has a strong track record of developing projects and extracting maximum value from coal assets, which will prove invaluable as we build a significant new business that will contribute to the long term stable supply of hard coking coal.”

Peter Freyberg, Xstrata Coal Chief Executive, commented:

“JX and Xstrata Coal have had a strong and successful partnership for many years through the Oakbridge joint venture in Australia.  We are pleased to work with JX again as our long term partner in building a substantial metallurgical coal business in Western Canada.

Our consolidation of the First Coal, Lossan and Sukunka assets since August 2011 will enable Xstrata Coal to increase our exposure to metallurgical coal further.  There are meaningful synergies between these assets, creating the opportunity to develop a substantial and efficient complex of mining assets, unlocking significant value for our shareholders and other stakeholders in our operations.”

The parties have entered into a joint venture relationship agreement for the XCBC assets.

J.P.Morgan acted as financial adviser to JX, while JT Boyd acted as technical adviser and Norton Rose acted as legal adviser.  Bennett Jones and King & Wood Mallesons acted as legal advisers to Xstrata Coal.

End

Neither the content of the company's website nor the content of any other website accessible from hyperlinks on the company's website is incorporated into, or forms part of, this announcement

Xstrata contacts:

Kathryn Lamond
Telephone +612 9253 6789
Mobile +61 (0) 417 074 751
Email klamond@xstratacoal.com

Alison Flynn
Telephone +44 20 7968 2838
Mobile +44 7769 314374
Email aflynn@xstrata.com

JX contacts:

Public Relations Dept
Telephone +813 6275 5046
www.noe.jx-group.co.jp/english/

Notes to editors

About Xstrata plc

We are a major producer of a range of vital commodities used in everything from constructing buildings and delivering electricity, to developing jet engines and mobile phones. We are one of the top five global producers of copper, thermal and metallurgical coal, ferrochrome, zinc and nickel and we also produce silver, lead, platinum, gold, cobalt and vanadium.

Founded in 2002 and headquartered in Switzerland, we operate in over 20 countries and employ over 70,000 people at more than 100 operations and projects around the world. We work in a responsible and sustainable way, with an entrepreneurial spirit and dynamic approach. For more information, visit www.xstrata.com.

About Xstrata Coal

We are the world's largest exporter of high energy thermal coal used to generate electricity and one of the largest producers of coal used to make steel.  Headquartered in Sydney, Australia, we have interests in over 30 operating coal mines in Australia, South Africa and Colombia, as well as development projects in Canada.   For the fifth consecutive year, Xstrata retains its position as Mining Sector Leader in the annual Dow Jones Sustainability Index review 2011/12. 

For more information on Xstrata Coal, visit www.xstratacoal.com.

About JX

JX Nippon Oil & Energy is a diversified energy company that is a wholly owned subsidiary of JX Holdings and a core operating company of the JX Group.  JX Nippon Oil & Energy’s main business activities include refining and marketing of petroleum and petrochemical products, importing and selling of gas and coal, supply of electricity and developing, manufacturing and marketing of fuel cells.  JX Holdings is listed on the Tokyo Stock Exchange under the ticker 5020.  For more information, visit http://www.noe.jx-group.co.jp/english/.

Click here for location of Sukunka (red), First Coal tenements (black) and Suska Project (purple)

Xstrata Coal has agreed to acquire the Sukunka hard coking coal deposit (“Sukunka”) from Talisman Energy Inc for US$500 million in cash, subject to customary conditions.

Sukunka is located in the Peace River Coalfield of northern British Columbia, contiguous with First Coal Corporation and Lossan tenements acquired by Xstrata Coal in August and October 2011 respectively.

Sukunka has an NI 43-101 compliant coal resource of 236 million tonnes in the Measured and Indicated categories.  Norwest Corporation has completed a pre-feasibility study for a longwall mine producing hard coking coal.  Xstrata Coal’s technical studies indicate the potential to realise further value from the resource.

Xstrata Coal Chief Executive, Peter Freyberg, said:

“Based on our due diligence and technical analysis, Sukunka has the potential to be a high quality metallurgical coal mine.  Once developed, Sukunka would meaningfully increase our exposure to hard coking coal, while unlocking synergies with our neighbouring assets in the Peace River coalfield and providing additional regional scale.”

End

Neither the content of the company's website nor the content of any other website accessible from hyperlinks on the company's website is incorporated into, or forms part of, this announcement

Xstrata contacts:
Kathryn Lamond                       
Telephone +612 9253 6789            
Mobile   +61 (0) 417 074 751                  
Email    klamond@xstratacoal.com

Alison Flynn
Telephone +44 20 7968 2838
Mobile   +44 20 7769 314374
Email    aflynn@xstrata.com

www.xstratacoal.com

Notes to editors
About Xstrata plc
We are a major producer of a range of vital commodities used in everything from constructing buildings and delivering electricity, to developing jet engines and mobile phones. We are one of the top five global producers of copper, thermal and metallurgical coal, ferrochrome, zinc and nickel and we also produce silver, lead, platinum, gold, cobalt and vanadium.

Founded in 2002 and headquartered in Switzerland, we operate in over 20 countries and employ over 70,000 people at more than 100 operations and projects around the world. We work in a responsible and sustainable way, with an entrepreneurial spirit and dynamic approach. For more information, visit www.xstrata.com.

About Xstrata Coal
We are the world's largest exporter of high energy thermal coal used to generate electricity and one of the largest producers of coal used to make steel.  Headquartered in Sydney, Australia, we have interests in over 30 operating coal mines in Australia, South Africa and Colombia, as well as development projects in Canada.  For the fifth consecutive year, Xstrata retains its position as Mining Sector Leader in the annual Dow Jones Sustainability Index review 2011/12. 

For more information, visit www.xstratacoal.com.  

Talisman Energy
Talisman Energy Inc. is a global, diversified, upstream oil and gas company, headquartered in Canada.  Talisman’s three main operating areas are North America, the North Sea and Southeast Asia. The company also has a portfolio of international exploration opportunities. Talisman is committed to conducting business safely, in a socially and environmentally responsible manner, and is included in the Dow Jones Sustainability (North America) Index. Talisman is listed on the Toronto and New York stock exchanges under the symbol TLM.  For more information, visit http://www.talisman-energy.com.

Click here for location of Sukunka (red), First Coal (black and blue) and Lossan (green) licenses & applications

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A Draft Environmental Impact Statement (EIS) for the proposed AUD270 million expansion of McArthur River Mining (MRM) has revealed the project would deliver more benefits for the Northern Territory than first thought.

The project will increase MRM’s operational workforce by 67%, creating 295 new jobs when in operation and bringing the total workforce to 735 at its peak by 2020, compared to initial estimates of 550 jobs.  The expansion has been designed to sustain the long-term future of the mine at a higher rate of production.  Our investment into the local, regional and national economies would increase commensurately, including a further AUD11.3 million of investment through the MRM Community Benefits Trust.

We lodged the draft EIS with the Northern Territory Government today. It proposes increasing capacity at the mine from 2.5 million tonnes of ore per annum to 5.5 million tonnes, producing approximately 800,000 dry metric tonnes per annum of zinc-lead concentrate for export markets.

Xstrata Zinc Australia Chief Operating Officer Mr Brian Hearne said: “Our earlier estimates have now gone through the robust process of an EIS and we’re looking at being able to offer more jobs, a longer mine life and greater financial investment into the community in which we operate and the Northern Territory and Australian economies.”

The project proposes:

• increasing MRM’s mineable reserves from an identified 53 million tonnes to 115 million tonnes
• extending the life of mine by nine years from 2027 to 2036
• expanding the current pit within the existing bund from a footprint of 145 hectares to 210 hectares and the depth from 210 metres to 420 metres
• increasing our operational workforce by 67% at its peak from 440 currently to 735 by 2020 and sustaining a high level of Indigenous workforce participation
• extending the life of our MRM Community Benefits Trust to 2036, which will allow an additional AUD11.3 million to be invested in the community and bring total investment by the Trust to AUD43.3 million since 2007
• increasing the capacity of the existing tailings storage facility, including an already planned, new, lined water management dam
• generating approximately 530 million tonnes of additional overburden to be accommodated in one existing and two new overburden emplacement facilities 
• expanding the power station at the mine to a capacity of 45-50 MW
• building a temporary construction camp and expanding existing accommodation facilities.

Over its lifetime the project is expected to produce approximately 20 million tonnes of zinc-lead concentrate for export.

Mr Hearne said: “The expansion will enable MRM to meet demand for zinc in concentrates more competitively. 

“Aside from the direct employment benefits, we will require a wide range of products and services from other business sectors, predominantly in the Northern Territory, to support and service an expanded operation.”

The project is expected to boost industry output by AUD8.4 billion within the Northern Territory economy and AUD9.3 billion nationally during the construction, operational and decommissioning periods. This includes the benefits of direct and indirect investment and employment as well as all goods and services procured.

As part of the comprehensive draft EIS, we completed more than 40 detailed baseline studies and assessments of flora, fauna, land resources, surface water, groundwater, air quality, noise, traffic and cultural heritage working with external experts.

“The project also provides opportunities to introduce advances in environmental management techniques, particularly in managing tailings and waste rock,” Mr Hearne said.

Nearly 300 people, including representatives from government departments and agencies, community groups, businesses, Traditional Owners and other community members have already provided feedback to us in the past 10 months as part of the EIS consultation process. We have received overwhelming support for the project from stakeholders, particularly in relation to the benefits of employment, local contracts and our community investment under the MRM Community Benefits Trust.

The public comment period begins on 4 February and ends on 16 March 2012. You can find the complete EIS  online at www.mcarthurrivermine.com.au from 4 February 2012.

The proposed expansion of MRM is currently in the feasibility study stage and is subject to approval by Xstrata.

End

Neither the content of the company's website nor the content of any other website accessible from hyperlinks on the company's website is incorporated into, or forms part of, this announcement

Xstrata Zinc contacts:

Joanne Pafumi
GM Corporate Affairs, Community Relations and Human Resources
Xstrata Zinc Australia
Telephone +61 7 3295 7586
Mobile +61 411 759 683
Email jpafumi@xstratazinc.com.au

Fran Rossberg
Manager Corporate Affairs and Community Relations
Xstrata Zinc Australia
Telephone +61 7 3295 1584
Mobile +61 0422 980 120
Email frossberg@xstratazinc.com.au

www.xstratazinc.com
www.mcarthurrivermine.com.au

Notes to editors

About Xstrata Zinc

Headquartered in Madrid, Spain, Xstrata Zinc is one of the world’s largest producers of zinc and one of the commodity business units within the major global diversified mining group Xstrata plc. Xstrata’s zinc and lead operations and exploration projects are located in Australia, Canada, Germany, Peru, Spain and the United Kingdom.

Xstrata Zinc’s operations in Spain comprise the San Juan de Nieva zinc smelter and the Arnao zinc semis plant in Asturias, and the Hinojedo roasting plant in Cantabria.

In Australia, operations comprise: the Mount Isa, George Fisher underground, Handlebar Hill open cut and Black Star open cut zinc-lead mines, zinc-lead concentrator, lead smelter and Bowen Coke Works in north Queensland; the McArthur River open pit zinc-lead mine, processing and loading facility in the Northern Territory; and the Lady Loretta mine in north-west Queensland.

In Canada, operations and exploration projects include the Brunswick zinc-lead mine and lead smelter in New Brunswick; 25% of the CEZ zinc smelter near Montreal; and the Perseverance zinc deposit in Quebec.

Xstrata Zinc also operates the Nordenham zinc smelter in northern Germany; the Northfleet lead refinery in the United Kingdom; and owns 33.75% of the Antamina mine in Peru.

Around half of all zinc currently consumed is used for galvanizing steel, which is an environmentally friendly method of protecting steel against corrosion. Zinc also finds application in the manufacture of die-cast alloys, brass and the production of zinc oxides and chemicals.

• Record annual production from our Australian thermal coal operations following the successful commissioning of the greenfield Mangoola mine on budget and ahead of schedule, the expansion of Newlands Underground thermal coal operation and a strong second half performance;
• Record production of mined nickel, including first ore ahead of schedule from the Kikialik expansion at Raglan mine and record nickel metal volumes from a second successive record year at Nikkelverk;  
• We completed an expansion to extend the life of the Kidd copper mine in Canada on time and within budget and began commissioning the expansion at the Antamina copper-zinc joint venture in Peru at the end of 2011;
• During the second half, we commissioned the 120,000 tonnes per annum Black Star Deeps and 40,000 tonnes per annum Handlebar Hill zinc-lead projects on schedule and on budget;
• Our Falcondo ferronickel operation in the Dominican Republic exceeded expectations to operate at an annual rate of almost 15,000 tonnes per annum, following its restart in Februaryy;
• We approved seven key projects representing total capital expenditure of $2.6 billion during the year:
  • The 7 million tonnes per annum Ulan Open Cut thermal coal project in Australia;
  • The Tweefontein optimisation coal project in South Africa, which will, subject to receipt of final environmental approvals, produce 4 million tonnes per annum of thermal coal;
  • The 6,000 tonnes per annum Fraser Morgan nickel mine and expansion to 40,000 tonnes per annum at Raglan nickel mine, both in Canada;
  • Our share of capital to expand the joint venture Cerrejón thermal coal operation in Colombia to 40 million tonnes per annum;
  • The 126,000 tonnes per annum greenfield Lady Loretta zinc project in the Mount Isa region, Australia; and 
  • Mount Margaret, a 30,000 tonnes per annum copper project in Australia.
• During 2011, we announced significant increases in mineral resource estimates at the Antamina copper and zinc mine and Las Bambas and Coroccohuayco copper projects in Peru, the El Pachón copper project in Argentina and the Frieda River copper-gold project in Papua New Guinea.

Neither the content of the company's website nor the content of any other website accessible from hyperlinks on the company's website is incorporated into, or forms part of, this announcement 

Xstrata contacts:

Alison Flynn
Telephone +44 20 7968 2838
Mobile +44 7769 314374
Email aflynn@xstrata.com

Investors & analysts

Martin Fewings
Telephone +44 20 7968 2893
Mobile +44 7990 591536
Email mfewings@xstrata.com

Caroline Yates
Telephone +44 20 7968 2878
Mobile +44 7824 826546
Email cyates@xstrata.com

Notes to editors

About Xstrata plc

Xstrata is a major producer of a range of essential commodities used in everything from constructing buildings and delivering electricity, to developing jet engines and mobile phones. We are one of the top five global producers of copper, thermal and metallurgical coal, ferrochrome, zinc and nickel and we also produce silver, lead, platinum, gold, cobalt and vanadium.

Founded in 2002 and headquartered in Switzerland, Xstrata plc now operates in over 20 countries and employs over 70,000 people at more than 100 operations and projects around the world. For more information, visit www.xstrata.com

Copper

Copper production was 3% lower than in 2010 as we enter a transition period in which a number of operations are approaching the end of their mine life and new lower cost production is on track to commence from the second half of 2012, notably at Antapaccay.  

We increased copper in concentrate production at Ernest Henry by 34% compared to 2010 to reach a total of 100,300 tonnes.  Production from the final high grade ore zone of the open pit operation and processing stockpiled ore boosted volumes, despite mining less material overall as a result of our ongoing project to convert the operation into an underground mine.

Our share of copper in concentrate production at Antamina increased by 11% to 112,600 tonnes, due to higher mill throughput as a result of de-bottlenecking initiatives and higher grades and recoveries.
Our Lomas Bayas operation benefited from increased run-of-mine (ROM) tonnes from the new Fortuna de Cobre pit as part of the Lomas 2 project. At Tintaya in Peru, we mined and processed higher grade sulphide ore resulting in increased copper production.

Production at our Alumbrera mine decreased by 17% to 116,700 tonnes compared to the previous year, primarily as a result of delayed access to high grade zones in the mine caused by geotechnical events in the latter part of 2010.  Our share of production from the Collahuasi joint venture reduced by 10% to 199,400 tonnes mainly due to lower milled copper grades, extended maintenance and repairs to the main ore conveyor belt and adverse weather conditions in the first and third quarters of the year.  Our Mount Isa operations produced 6% less copper in concentrate than in 2010 due to lower grades and reduced production from the Enterprise mine.  At our Kidd underground mine in Canada, production of copper concentrate was affected by lower grades and volumes due to restricted access caused by two seismic events in the second half of the year.

Total gold production was marginally lower in 2011 at 517,900 ounces compared to 524,800 ounces in 2010 as improved ore grades at Ernest Henry largely offset lower head grades and recoveries at Alumbrera.

Our Mount Isa smelter and Altonorte custom smelter both achieved record production in 2011. However, total combined custom and mined copper cathode production decreased by 9% to 650,900 tonnes in 2011 as a result of the closure of the Kidd metallurgical plant in May 2010 and a temporary plant shutdown at the Townsville refinery in the first quarter of 2011 in response to a severe tropical cyclone in North Queensland.

Coal

We produced 85.3 million tonnes of coal on a consolidated basis in 2011, an increase of 7% compared to 2010.

Our Australian thermal coal operations produced 49.8 million tonnes of thermal and semi-soft coal, a 12% increase on the previous year, primarily due to the successful commissioning of the Mangoola open cut mine ahead of schedule and on budget in February.

The positive impact of additional volumes from Mangoola partly offset the flooding at the beginning of the year in Queensland and in New South Wales, the temporary suspension of operations at the Blakefield South mine due to an underground fire and interruptions to the Ulan longwall as a result of significant underground water, all of which occurred in the first quarter.  In the third quarter, production from the Ulan longwall had fully recovered and we recommenced development at Blakefield South. 

We maintained total coking coal production volumes for the year at 7.6 million tonnes, a similar level to 2010, as a result of the rapid recovery from flooding in Queensland during the first quarter.

Production from our South African thermal coal operations fell by 3% due to industrial action and the impact of our ongoing strategy to transition our operations from underground mines to three large and more efficient open cut complexes.

Cerrejón, our joint venture operation in Colombia, achieved record production, 7% higher than 2010, when excessive rainfall impacted production.

Nickel

We produced a record 105,925 tonnes of nickel in 2011, 15% more than the previous year.  Our Falcondo ferronickel operation in the Dominican Republic was responsible for the majority of this increase, producing 13,498 tonnes of nickel in ferronickel since reopening in February 2011 following a 30-month period of care and maintenance.  Falcondo’s restart outperformed our expectations, generating 8% more nickel than planned and operating at an annualised run-rate of almost 15,000 tonnes of nickel in ferronickel.

At our Nikkelverk refinery, we achieved an all-time record production of 92,427 tonnes of refined nickel, significantly exceeding the operation’s annualised nameplate capacity of 87,000 tonnes when we took over the business in 2006.   Copper metal production of 36,292 tonnes was slightly higher than last year, reflecting an increase in the amount of copper we processed from the polymetallic feed sent to Nikkelverk.

Our production at our Sudbury mines increased by 28% to 19,795 tonnes of nickel in concentrate compared to last year with our Nickel Rim South mine continuing to operate at full capacity.  The significant copper contained in Nickel Rim South ore and mining at Fraser’s copper zone, which restarted in February 2010, led to record mined copper in concentrate production of 49,887 tonnes from our Strathcona Mill, up 38% from 2010.  The Sudbury smelter produced 69,459 tonnes of nickel in matte, 6% less than last year, but in line with our plans for the year of 69,000 tonnes due to lower planned concentrate grades, a reduction in custom feed materials processed by the smelter and the impact of deferring a one-week maintenance shutdown from December 2010 to January 2011. 

Raglan mine operated at full capacity and treated 1.3 million tonnes of ore.  However, because of a planned period of lower nickel head grade, the production of nickel in concentrate fell 3% to 27,274 tonnes.  We expect head grade to decline further in 2012 in accordance with our mine plan.  Raglan’s head grade will improve significantly beyond 2013 with the development of the higher-grade Qakimajurq and Mine 2 Lower Zone deposits. 

At our Australian mines, we increased the volume of ore processed by 46% to 778,073 tonnes to offset the impact of mining more disseminated ore bodies with inherently lower nickel head grades. As a result, the production of nickel in concentrate from Xstrata Nickel Australasia increased slightly over 2010 to 17,034 tonnes.

Zinc

A strong operational performance at our Australian mines helped to partially offset the substantially lower volumes from the joint venture Antamina copper-zinc mine, where the mine plan favoured copper rich ores, and slightly lower volumes from the Canadian operations. Improved productivity at Mount Isa and McArthur River enabled us to raise zinc in concentrate volumes by 2%, despite the impact of weather-related issues in the first quarter of the year, and, at Mount Isa, electricity supply outages in the second half and lower grades.  Zinc in concentrate volumes at our Canadian operations fell slightly due to lower grades, despite achieving increased ore production. Overall zinc in concentrate volumes were just under 5% lower than in 2010. 

Zinc metal production increased at our San Juan de Nieva and Nordenham smelters by 2% and 6% respectively, following the commissioning in January of the new 20,000 tonnes per year direct leaching plant at Nordenham. These increases partially offset the impact of the closure of the Kidd Creek Metallurgical site in May 2010 and total zinc metal production decreased by 4%. 

The ore treated by our Mount Isa and McArthur River Mine operations increased by 8% and 6% respectively, partly offsetting the lower lead grades at Mount Isa. Total lead in concentrate decreased by 4% compared to 2010.

Alloys

Following a strong start to the year, we progressively reduced capacity utilisation at our ferrochrome smelters from the second quarter in response to weakening Chinese demand for South African ferrochrome.  Average capacity utilisation fell to an average of 72% for 2011 and ferrochrome volumes were 12% lower than in 2010.  Industrial action also impacted operating capacity at a number of operations during the second half.

The average European benchmark ferrochrome price for 2011 of $1.25 per pound remained at a similar level to the average price in 2010.  We recently settled the European benchmark price for the first quarter of 2012 at $1.15 per pound, 5¢ per pound lower than in the fourth quarter due to weaker demand from developed countries for stainless steel, the principal market for ferrochrome.

Following the depletion of all high grade, near-surface ore during the third quarter, all open pit production from our Eland platinum operation ceased and we started producing development ore from underground operations.  Reduced volumes also reflect the impact on grades of the transition from open pit mining and a slower than anticipated ramp-up of underground operations due to poor ground conditions.

Ferrochrome

Vanadium

Platinum

Ends

Xstrata Coal South Africa (XCSA) is pleased to announce that it has completed the sale of its Spitzkop and Tselentis collieries and supporting coal assets, located in Mpumalanga, South Africa, to the Imbawula Group (Imbawula) for an undisclosed amount. The transaction has effect from 1 January 2012.

Imbawula has acquired, as a going concern, the Spitzkop and Tselentis opencast and underground mining operations, all supporting infrastructure, including land, movable assets, buildings and coal beneficiation plants.  In addition, Imbawula Mining has acquired prospecting and mining rights in the area which support the long term operation of this business.

All affected XCSA employees will be transferred to Imbawula and the represented unions have been consulted.

Murray Houston, XCSA Chief Operating Officer, commented:

“I believe this transaction is a positive outcome for Xstrata Coal, Spitzkop and Tselentis employees and the operations’ many stakeholders. We have a long and established relationship with the executives and shareholders of Imbawula. I am pleased that we are transferring ownership of these two collieries to a growing coal producer. Imbawula is gaining a highly competent team of employees and the company has an ongoing commitment to working responsibly and safely.   From our perspective, the disposal of these assets allows us to focus on our core portfolio of large production complexes, including the ongoing development of our existing and future resource base”. 

Mr Pius Mokgokong and Mr Yacoob Mansoor, directors of Imbawula stated:

“Our group owns and operates various other coal mines in the region and this acquisition is a compelling and natural fit.  We have an established management team in place and this transaction will deliver significant synergies for our group over a relatively short time frame. While this acquisition supplements our resources to support our core business, which is the supply of coal to Eskom, it also offers diversification away from Eskom with exposure to the export markets. Xstrata Coal will purchase export coal from us over a ten year period at a market related price. The benefits derived from this acquisition ensure that Imbawula will be the pre-eminent BEE coal mining company in this area, and the employees will be working in an environment filled with opportunity”.

In addition XCSA has agreed to assist Imbawula during a transition period to ensure a smooth handover of various aspects related to the business, including accounting systems, procurement and payroll functions, and other key issues including IT/IS migration processes. XCSA will also continue its HIV/Aids community work in the region, including the completion of a new community clinic in Breyten.

The required approvals from the Competition Tribunal and the Department of Mineral Resources have been obtained for the transaction.

Ends

Neither the content of the company's website nor the content of any other website accessible from hyperlinks on the company's website is incorporated into, or forms part of, this announcement

Xstrata contacts

Name Gugulethu Maqetuka
Telephone +2711 7720650
Mobile +2782 944 6572
Email gmaqetuka@xstratacoal.co.za

Sagittarius Mines, Inc. (SMI) confirms it has received official notification from the Department of Environment and Natural Resources (DENR) denying its application for an Environmental Compliance Certificate (ECC) for the Tampakan Mine Project until issues with the use of open pit mining methods have been resolved with the Provincial Government of South Cotabato.

SMI President Peter Forrestal said SMI was extremely disappointed with the decision.

“SMI intends immediately to file an appeal for a reconsideration of the decision as permitted under the ECC application process.

“We are concerned this decision was not made on the merits of our Mine Project Environmental Impact Statement (EIS), which fully complies with the requirements of the DENR’s own ECC process and is backed by a world-class environmental impact assessment study.

“Our EIS is one of the most comprehensive environmental impact assessment studies ever undertaken in the Philippines, which was prepared in line with international standards and further strengthened by the feedback gained from a two-year consultation process that involved more than 9,000 stakeholders.  

“During the 40 day review period of our ECC application by the Environmental Impact Assessment Review Committee, an independent panel of experts established by the DENR’s Environmental Management Bureau, all queries regarding SMI’s EIS and its ECC application were addressed to the satisfaction of that committee.

”The decision to deny SMI’s ECC application on the basis that the open-pit ban in South Cotabato must be resolved before the national government can issue an ECC is inconsistent with the DENR’s established procedures for the processing of ECC applications. 

“We believe this decision sets a precedent that contradicts the publicly stated views of the Aquino Administration - namely that national laws which permit open-pit mining methods should have precedence over conflicting provincial ordinances.

“This lack of consistency by the national government poses a very real threat to investment confidence in the Philippines and introduces significant uncertainty to national government approval processes.

“It also hampers the Project’s potential to make what would be a significant contribution to the economic and social development of Southern Mindanao and the Philippines,“ Mr Forrestal said.

(ends)

Contact Person:
John B. Arnaldo
Corporate Communications Manager
Sagittarius Mines, Inc.
Mobile: (+63 928) 550-3847
SMI Media Care Hotline
Mobile: (+63 918) 864-4685

Notes to editors:
ABOUT THE TAMPAKAN PROJECT
The Tampakan Copper-Gold Project is located on the southern Philippine island of Mindanao, approximately 40 kilometres north of General Santos City. The Project is situated on the boundaries of four provinces: South Cotabato, Sarangani, Sultan Kudarat and Davao del Sur, and represents one of the world’s largest undeveloped copper-gold deposits.

The Tampakan Project is a 2.4 billion metric ton deposit, containing 13.5 million metric tons of copper and 15.8 million ounces of gold at a 0.3% cut-off grade. In 2010, the Project employed approximately 372 employees and rotational shift work for a further 1,185 contractors.
The Project is operated by Philippine-based affiliate Sagittarius Mines, Incorporated (SMI), whose 40% controlling equity is a joint venture among Xstrata Copper (62.5%) and Indophil Resources NL (37.5%). The 60% non-controlling equity shareholders of SMI are the Tampakan Mining Corporation and Southcot Mining Corporation (known as the Tampakan Group of Companies).

Subject to all necessary community, government and shareholder approvals, SMI estimates that production from the $5.9 billion Tampakan Project could commence by 2016. If developed, it is estimated that the Project would contribute an average of PhP134 billion (USD2.8 billion) to Philippine GDP; an equivalent of 1% annual increase to the Philippine GDP over the life of the Project.

ABOUT XSTRATA COPPER
Xstrata Copper is the fourth largest global copper producer with attributable mined production in 2010 of 913,500 tonnes of copper in cathodes and concentrates. The company is also one of the world’s largest producers of smelter and refined copper, including from third party materials.
Headquartered in Brisbane, Australia, Xstrata Copper is one of the commodity business units within the major global diversified mining group Xstrata plc. Its mining and metallurgical operations and development projects span eight countries: Argentina, Australia, Canada, Chile, Peru, the Philippines, Papua New Guinea and the USA. Its operations and projects are administered through a regional divisional management structure, which ensures that critical decisions are taken close to the related businesses. It also has a recycling business (Xstrata Recycling) with plants in the United States and offices in Canada and Asia.