core sector communique

XSTRATA COPPER ENTERS INTO AGREEMENT TO ACQUIRE ADVANCED COPPER PROJECTS IN NORTH WEST QUEENSLAND

Brisbane, 20 April 2011

Xstrata Copper has entered into an agreement with Exco Resources Ltd (“Exco”) to acquire the E1 and Monakoff copper tenements in north west Queensland, Australia for a cash purchase price of AUD175 million, to expand production at its Ernest Henry Mining operation. The transaction remains subject to a number of conditions being satisfied including Exco shareholder approval. The Exco Board has endorsed the transaction.

Strategically located close to the Ernest Henry Mining processing facilities, the E1 and Monakoff tenements contain open pit copper mineral resources with completed Feasibility Studies. The production from these deposits would make an incremental contribution to Ernest Henry’s production profile from the second half of 2012, including gold by-product credits. Ore would be trucked from the E1 and Monakoff copper projects to Ernest 

Henry and processed through the operation’s existing concentrator.

Xstrata Copper North Queensland Division Chief Operating Officer, Steve de Kruijff, said:

“Ernest Henry’s open pit operations are scheduled to finish later this year and we are currently in the process of transforming the site into a major underground mining operation with an associated magnetite extraction plant.

“The E1 and Monakoff copper projects offer an attractive opportunity to expand Ernest Henry’s expected production profile by utilising the remaining capacity of the Ernest Henry concentrator while leveraging other significant synergies available through our existing site infrastructure, equipment and workforce.

“Subject to the transaction completing and the necessary government approvals, we expect initial production from the E1 and Monakoff copper projects to commence in the second half of 2012.

“We anticipate that the development and operation of the E1 and Monakoff copper projects will create around 100 full-time jobs, some of which will be sourced from Ernest Henry’s existing open pit workforce.”

The E1 and Monakoff deposits have a combined JORC compliant resource of 52.1 million tonnes grading 0.77% Cu and 0.23g/t gold at a cut-off grade of 0.3% copper for E1 and 0.5% copper for Monakoff. ¹ This represents 401,000 tonnes of contained copper metal and 384,000 ounces of contained gold metal. 

The E1 and Monakoff tenements are located 8 kilometres east and 21 kilometres south respectively of the Ernest Henry Mining operation.

^{1 Source: Exco Resources Ltd. Press release dated 7 April 2010. See Exco Resources Ltd website.}