DBRS Comments on Xstrata’s Disposal of Its Aluminum Assets

DBRS notes that Xstrata plc (Xstrata or the Company) today announced the disposal of Xstrata Aluminum, comprising all of Xstrata’s aluminum interests, to Apollo Management LP for a total cash consideration of $1.15 billion. DBRS deems the sale to be positive as the aluminum assets are not core to the Company’s business (and also lack scale compared with other Xstrata business/metal units). The funds from this sale can be used to partially fund Xstrata’s proposed LionOre Mining International Ltd. $4.0 billion acquisition.

The aluminum assets, known as Noranda Aluminum, comprise a 100% owned primary smelter in New Madrid, Tennessee and three modern rolling mills in Tennessee, North Carolina and Arkansas, together with a 50% interest in the Gramercy aluminum refinery in Louisiana and St Ann bauxite mine in Jamaica, both of which are owned through a joint venture with Century Aluminum Inc.

The transaction is subject to regulatory approval under the Hart-Scott-Rodino Act and is expected to complete in the second quarter of 2007.

For more information on Xstrata, please see DBRS’s rating report published on December 15, 2006.

Notes:
All figures are in U.S. dollars unless otherwise noted.