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Event Brief of Xstrata Proposed Cash Offer for Lonmin Plc - Investment Market Conference Call - Final.

Article Excerpt
Original Source: FD (FAIR DISCLOSURE) WIRE

PARTICIPANTS

. Mick Davis, Xstrata Plc, CEO . Trevor Reid, Xstrata Plc, CFO . Min Tang-Varner, Principal Global Investors, Analyst . Jim Richard, Nevsky Capital, Analyst . Chris LaFemina, Lehman Brothers, Analyst

. John DeMassi, Jet Capital, Analyst . Tobias Woerner, MF Global, Analyst . John Spitzer, ASB Advisors, Analyst

OVERVIEW

Co. intends to make an offer or looking to make an offer for Lonmin shares of GBP33 per share.

FINANCIAL DATA

A. Key Data From Call 1. Co. intends to make an offer or looking to make an offer for Lonmin shares of GBP33 per share.

PRESENTATION SUMMARY

S1. Cash Offer for Lonmin (M.D.) 1. Highlights: 1. Intends to make an offer or looking to make an offer for Lonmin shares of GBP33 per share. 1. Premium of 42% of 08/05/08 closing price.

2. On 08/05/08, after close of market, approached one or two

shareholders. 1. Gained some shares of just north of 8% and acquired more shares in the market today. 3. Currently holds 10.7% of Lonmin. 2. Transaction reflects XTAN.S intention to establish a significant business in platinum. 1. It's a commodity, which Co. values highly in terms of demand side being represented by strong industrial demand and an industry structure, which is tight and primarily in one geography. 3. Established a platform in platinum last year when Co. bought Elandsfontein mine. 1. With development of that mine and concentrator, as well as Mototolo JV with Anglo Platinum and with new developments, Co. also announced on 08/06/08 with JV with NKWE and Genorah, Co. is of the opinion that it has sufficient base to actually turn Lonmin business around and to get assets to produce at their full potential. 2. This will take some time, because Co. will need to reinvest in development of various areas of production to ensure that there is sufficient development to create a situation where Co. can produce at almost 1m ounces of platinum a year. 4. Operating philosophy of the Co. is to operate on a highly decentralized basis. 1. Has a small head office. 2. Essentially passes on full accountability, but authority to act to people at the operations. 1. Will intend to do this with [Lonrho] if Co. acquired the assets. 2. Lonrho head office shared services. 3. Exploration will be trimmed down to reflect this operating philosophy. 5. Looked at inherent potential of the assets. 1. Looked at what Co. thinks a reasonable value is. 2. Looked into risks associated with it. 6. Lonmin shareholders will study from perspective of premium that Co. is paying from spot price, from fact that Lonmin's operations have consistently under-performed forecasts over last couple of years. 1. Current guidance is about 765,000-770,000 ounces of platinum for the year ending 09/30/08. 1. 18% decline in sales from levels achieved two years ago. 2. Current guidance has been reduced by 15% in four separate downgrades through Sept....