Glencore Xstrata (Price: 332p | Target: 308p | Rec: Sell) In light of recent media speculation over an imminent sale of Las Bambas, we review the ramifications of selling or keeping it.

We estimate that a US$4.5bn sales price could free up as much as US$4.7bn of free cashflow post base case dividends, which could be applied to a share buyback and/or a special dividend for FY14E.

Any acquirer(s) would likely need to source US$7-10bn to get to production, not a small sum by any measure, with few companies able to access such resources in our view. * A successful sale?: The terms agreed with the Chinese regulatory authorities require that Glencore Xstrata sell Las Bambas, subject to certain valuation metrics, by 30th September 2014.

In our forecasts, we assume a sale price of US$4.5bn in H1 of this year.

Taking the free cashflow pre scheduled debt repayments and post base case dividends, then we see a possible 35.1cps (US$4.7bn) surplus in FY14E.

This implied surplus could contribute to a transaction, or special dividends and/or a share buyback. * Failure to sell: Las Bambas is a tier 1 high quality copper asset, which should add value to the company longer term if retained.

However, not selling would delay potential for special dividends from free cashflow, particularly for FY14E.

We note also that if kept it could take as long as to FY22E before the company recovers the cash that would have been generated and capex not incurred if sold.

We believe the company has ample resources to see Las Bambas to production, however, a failure to sell would likely weigh on the share price. * We remain sellers of Glencore Xstrata based on a TP methodology that combines NPV, P/E and dividend multiples of a peer group.

Near term, we expect developments on Las Bambas and copper price movements to drive the price.

A protracted sales process could undermine the share price.
To access the full note please click here Analyst: Marc Elliott +44 (0)20 7597 5189
To UNSUBSCRIBE from this email and/or to change your mailing list preferences, please email .
IMPORTANT NOTICE: This communication forms part of an electronic communication sent to the intended recipient (or such persons authorised representative) for their sole use and is subject to important legal and regulatory restrictions, qualifications and disclaimers that may be accessed and read in the attached research publication.

If you cannot access the disclaimer, please obtain a copy thereof from us by sending an e-mail to in the case of SA or in the case of the UK or Australia: The disclaimer is deemed to form part of this communication.

In the event of a conflict between the disclaimer and this notice, the disclaimer shall take precedence.

This communication is confidential for the information of the addressee only (and may not be reproduced in whole or in part, copies circulated, or disclosed to another party, unless permitted pursuant to and in accordance with the disclaimer. If you are not the intended recipient of this e-mail, then: (a) please notify the sender of this e-mail immediately by return e-mail, facsimile or telephone and delete this message from your system; (b) you may not print, store, forward or copy this message or any part thereof or disclose or cause information in this message to be disclosed to any other person. Nothing in this message constitutes an offer, warranty or representation from us.

None of our employees or representatives are permitted to send unsolicited messages ("spam") and our company cannot be held liable therefore.

If you regard this message as spam, please inform us immediately by sending an e-mail to in the case of SA or in the case of the UK or Australia: Unless otherwise agreed: (a) We are only deemed to have received an e-mail once we have confirmed receipt thereof to you; (b) We are deemed to have sent an e-mail once reflected as “sent” on our e-mail server. If this message contains offensive, derogatory or defamatory statements or materials, it means the message has been sent outside the sender’s scope of employment with us and only the sender can be held liable in his/her personal capacity.

Our corporate information and names of our office bearers can be accessed by sending an e-mail to in the case of SA or in the case of the UK or Australia: The disclaimer applies to our original message, any attachments and all subsequent messages or attachments we may send.
_____________________________________________________________________ Investec Bank plc is authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Registered in England and Wales (No.

489604).

Registered office at 2 Gresham St, London EC2V 7QP. Investec Asset Finance Plc is a subsidiary of Investec Bank plc.

Registered in England and Wales (No.

2179313).

Registered office at Reading International Business Park, Reading RG2 6AA. We may monitor e-mail traffic data and the content of email.

Calls may be monitored and recorded. This email and any files transmitted with it are confidential and intended solely for the use of the individual or entity to whom they are addressed.

If you have received this email in error please notify the sender.

This e-mail is subject to terms available at the following link: www.investec.co.uk/emaildisclaimer.

By communicating electronically with us, you consent to these terms. _____________________________________________________________________ _____________________________________________________________________ This email has been scanned by the Symantec Email Security.cloud service. For more information please visit http://www.symanteccloud.com Private & Confidential / Disclaimer: This document is private and confidential and remains the property of Bell Pottinger.

Its contents may not be copied, forwarded or duplicated in any form or by any means without the permission of Bell Pottinger.

Bell Pottinger is made up of Bell Pottinger Private Limited, a limited company registered in England & Wales with registered number 08024999 and Bell Pottinger LLP, a limited liability partnership registered in England & Wales with registered number OC380478, together with their subsidiaries.

Our registered office is at 6th Floor, Holborn Gate, London WC1V 7QD.

A list of the members of Bell Pottinger LLP is open for inspection at our registered office.