61 yesterday at the London Stock Exchange

The Swiss mining group Xstrata yesterday presented surge in half-year accounts. The figures that the company headed by Mick quote displays could not fall at a better time to only 12 days of the arrival due to its hostile offer on the Canadian Falconbridge. Their good conduct, which surprised many analysts, strengthens the credibility of the proposal for grouping and confirms the quality of management of the Swiss firm. On the first six months of 2006, Xstrata won a net result of 1,133 billion, for a turnover of 5,178 billion. Which corresponds to an increase of 42.1 over the same period of 2005.

But what is more important is the ability to generate profits from operations, emerged to 2,263 billion ( 67.9), and, thereby, to identify available in large quantities cash 1.3 billion despite the investments made in the first half ($183 million). Net debt, on the other hand, was reduced by 36.4 to 1.66 billion at June 30, against 2.61 billion at December 31, 2005. In the aftermath, the ratio of net debt to equity melted 18.6 end 2005 to 12.7 end of June. Xstrata management effort also focused on the control of operational costs. "Excluding the impact of general inflation of prices and specific to the mining activity, the Group has done actual savings in the first half of $ 11 million", said Mick specifications. Champions in the field: the divisions which have reduced their actual costs of $ 42 million about zinc and copper. Together, these two activities account for about 65 of the operating income of the Group on the past twelve months.

External growth efforts

Despite the good figures published by the group, the market has expressed some concerns about the ability of Xstrata to cope with the flight of capital expenditures ( 30.8 in one year, $ 459 million). In the first half, Xstrata has not spared its efforts of external growth. Apart from the launch of the giant OPA on Falconbridge, the Group has completed two acquisitions for $ 2.4 billion: the redemption of one third of mine coal from Cerrejon (Colombia $1.7 billion) and the resumption of all of the copper mine of Tintaya in Peru ($750 million). On the financing of the purchase while currency of Falconbridge, which appears now as likely, Xstrata will mobilize its credit lines of $ 19 billion, including a $ 7 billion in credit-relay. The group is committed to cover part of the debt created by the activation of its credit lines by one or more share issues.

In addition to wise management, the results of the diversified mining company fired great price advantage raffermis sale and the strengthening of the dollar against the currencies of the countries where Xstrata performs its operations. In particular, higher sales prices have contributed to height of 958 million in the operational income before interest and taxes of 1.95 billion ( 83 compared to the six first months of 2005). Finally, Mick Davis said he was confident that the market of raw materials would remain bullish despite three years of inflation. The pattern of Xstrata said including the basic very conducive to firm prices of copper and zinc, two metals to base the Group lighthouse. But he also expressed his full confidence in the ferrochrome which the market will be drawn in the second half by a stainless steel increasing demand and coal heat through the maintenance of growth in the United States and the resurgence of interest in the fossil fuel in Europe and Asia.

After a meeting in the red, the Xstrata stock finally won 0.61, yesterday at the London Stock Exchange.