Fresh from abandoning its proposal to merge with Anglo American, Xstrata has released some mixed production figures, causing a dip in its share price.
Copper production in the third quarter was down 10% due to lower ore grades, but its other key commodity, coal, rose 9% helped by acquisitions. The company also warned that the strong rand - compared to the weak dollar in which commodities are priced - was putting margins under pressure.
Charles Kernot at Evolution Securities issued a sell note on the business, saying:
We believe that the market is failing to take account of the negative effects of operating currency strength which, as Xstrata itself points out, detracts from US dollar commodity price strength.
Despite increasing our near-term earnings per share forecast, our overall Xstrata valuation stays at 820p. One of the company's non-executives, David Rough, sold £143,000 worth of shares at £10.21 on Friday last week and we now think others should follow.
Xstrata's shares are currently down 12p at £10.15.
