CEO Santiago Zaldumbide, comments: "Our proposal was based on our ability to consolidate the CEZinc refinery into Xstrata Zinc's global operations to secure its long-term future and on our considered view, as the operators and managers of the asset, of its prospects on a standalone basis.

"The trust will lose its tax-free status from 1 January 2011 and later this year must refinance its debts of C$193 million as at 30 June.

"CEZinc faces competition with low-cost processing capacity in China which has driven treatment changes to very low levels.

"In the future, when the current supply contract expires, CEZinc will need to source zinc concentrates at a time when existing Canadian and Western world sources are likely to be constrained and Chinese demand is expected to have grown further.

"In the light of these uncertainties, Xstrata's proposal would have provided unitholders with the certainty of cash."

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