Glencore Xstrata : Production Report

Baar, 6 May 2014

IMS & First Quarter 2014 Production Report

Following completion of the GlencoreXstrata merger on 2 May 2013, production information for all periods covered in this report has been presented on a combined basis.

-      Own source copper production up 24% to 382,000 tonnes, driven by the expansions at Mutanda and Ernest Henry and improved production at Collahuasi and Antamina.

-      Own source zinc production was 306,000 tonnes, down 18% due to Perseverance and Brunswick reaching the end of their mine lives in June 2013. Excluding their impact, zinc production was broadly in line with the prior period.

-      Ferrochrome production up 29% to 335,000 tonnes, primarily reflecting the electricity power buy-back program during Q1 2013, which limited production. The Lion phase 2 smelter started production on 6 April 2014 with the second furnace expected to come on line at the end of Q2 2014 / early Q3 2014.

-      Own sourced coal production up 4% to 34.1 million tonnes, reflecting the impact of the lengthy Cerrejón strike in Q1 2013 and productivity improvements / growth at expansion projects within Australian thermal coal.

-      Gross oil E&P production was 7.4 million barrels, up 37% or up 48% on a net Glencore entitlement basis, due to the commencement of new production from the Alen (Equatorial Guinea) and Badila (Chad) fields at the end of June and September 2013, respectively.

-      Sequential quarterly own source production of copper, zinc and gold were down 10%, 9% and 12% respectively, primarily due to planned mine sequencing and / or processing of lower grade ores at a number of operations (including Collahuasi, Antamina and Alumbrera) and ongoing power issues affecting operations and commissioning at Katanga.

-      On 13 April 2014, Glencore signed an agreement to sell its interest in the Las Bambas copper project to a consortium owned 62.5% by MMG Limited, 22.5% by GUOXIN International Investment Corporation Limited and 15% by CITIC Metal Co., Limited. The consideration is approximately $5.85 billion, payable in cash on closing. In addition, all capital expenditure and other costs incurred in developing Las Bambas in the period from 1 January 2014 to closing will be payable by the Consortium. At the end of March 2014, capital expenditure and other costs incurred since the start of the year amounted to some $400 million.

-      On 14 April 2014, Glencore reached an agreement to acquire Caracal Energy Inc. via an all cash consideration of £5.50 per common share by way of a Plan of Arrangement. Caracal is the majority owner and operator of the various Chad oil production and exploration fields, in which Glencore is currently a minority partner. The transaction is expected to close towards the end of Q2 2014.

-      On 24 April 2014, the 7 million tonnes p.a. Askaf North iron ore project in Mauritania was approved. The forecast construction cost is $0.9 billion, with first production expected in early 2017.

-      We expect to close the Clermont coal transaction late in Q2 2014.

-      Marketing performance during the quarter, across all business segments, was strong and in line with our expectations.

To view the full report please click here http://www.rns-pdf.londonstockexchange.com/rns/3097G_-2014-5-6.pdf

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