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To: Golconda who wrote (57117)	12/10/2004 12:11:51 PM
From: Golconda	Respond to of 74559

Xstrata slams WMCR defence Published: 11:25 Friday 10 December 2004 < PREV \| 1 \| 2 \| 3 \| NEXT > TOTAL PAGES: 3 By Douglas Bence, Companies Correspondent Printable Version Related Articles Xstrata launches hostile bid for WMC: 11:27 Mon 22 November 2004 read The Australian war of words continues in the battle for control of the copper, nickel and uranium reserves of Victoria-based mining group WMC Resources. Swiss-backed predators Xstrata has spurned a WMC Resources scheme to scupper the A$7.4 billion bid by showering shareholders with cash. On 9 December, WMCR revised its profits for the year and came up with what it called ‘proposed management initiatives’. These include extending its share buy-back programme to purchase up to 3% of WMCR’s issued capital at a cost of A$250 million, the extra 7.2 million shares taking the total to 35.5 million at current prices. Shareholders have to approve the proposals which if implemented allow Xstrata to reduce or withdraw its bid which it doesn’t at this stage intend to do. Xstrata shares (XTA) added 2p to 885. Xstrata chief executive Mick Davis dismissed the plan: ‘It seeks to disguise an apparently weak operating performance under the guise of a profit upgrade generated by one-off benefits such as tax credits,’ he said. ‘Further, the purported benefit to shareholders of handing back up to one billion Australian dollars of cash is largely illusory as it includes not only the final 2004 ordinary dividend shareholders expect, and the buyback program already announced, but also the interim 2004 dividend already paid.' The real issue comes down to each company’s view of WMCR’s copper and uranium reserves at Olympic Dam in South Australia. WMCR says the Xstrata offer makes no allowance of these. But Davis said that as the Olympic Dam expansion feasibility study will not be complete before February 2008, so the project, if it is to proceed at all, remains a long way off. ‘In the absence of even a pre-feasibility study and resolution on the mining method and financing plan, both the project and any value attributed to it are subject to significant risk and any real value to shareholders would likely only be realized after many years into the project's operating life’ he said. The 9 December announcement is an attempt to distract shareholders from the central issue of value, he added. ‘All it does is highlight the attraction of Xstrata’s cash offer which would provide shareholders with the certainty of a cash amount at a fair and full premium to WMCR’s pre-speculation share price’.