Welcome!

News Feed Item

Noranda Income Fund Reports Second Quarter Results and Announces a Cash Distibution for the Month of July

SALABERRY-DE-VALLEYFIELD, QUEBEC -- (Marketwired) -- 07/22/14 -- Noranda Income Fund (the "Fund") (TSX: NIF.UN)

Q2 2014 Summary


--  Loss before income taxes of $(2.6) million compared to Q2 2013 -
    earnings of $14.5 million
--  Zinc metal production of 62,645 tonnes compared to Q2 2013 - 68,286
    tonnes
--  Zinc premiums averaged 10.2 cents US per pound (11.1 cents Cdn) compared
    to Q2 2013 - 8.4 cents US per pound (8.6 cents Cdn)
--  Declared monthly cash distributions from May to June 2014 of $0.04167
    per priority unit
--  Commissioning of the Processing Facility's silica removal capacity began
    in May; two of the four tanks are now operational and the project is
    expected to be completed in the third quarter.

"We have had a challenging second quarter. Zinc metal production was negatively impacted by an unplanned maintenance outage and electrical equipment failures which reduced the operating capacity of the cell house. These issues have since been resolved. Lower zinc metal production and sales, the impact of the negative concentrate payable adjustment and higher feed acquisition costs largely resulted in the Fund recording a loss before income taxes of $2.6 million," said Eva Carissimi, President and Chief Executive Officer of the Fund. "In the second half of 2014, zinc metal production is expected to return to normal levels, with the completion of the silica removal capacity project. In addition, a reduction of in-process inventories that built up during the first half of 2014 is also expected to support higher production and sales in the second half of the year."

The current three-year labour agreement will expire on October 31, 2014. Negotiations are expected to begin in the third quarter.

Financial and Operating Highlights (Three month period ended June 30, 2014 compared to the three month period ended June 30, 2013)

Loss before income taxes in the three months ended June 30, 2014 was $2.6 million compared to earnings of $14.5 million in the same period of 2013. The $17.1 million decrease was mainly due to lower zinc metal production, sales and by-product revenues, higher concentrate acquisition costs and reclamation expense, partially offset by higher premiums and a weaker Canadian dollar.

The table below provides a reconciliation of the net earnings before income taxes for the three month period ending June 30, 2013 to the net loss before income taxes for the three month period ending June 30, 2014.


----------------------------------------------------------------------------
($ millions)
----------------------------------------------------------------------------
Net earnings before income taxes for the three months ended June
 30, 2013                                                             $14.5
Volume                                                                (12.5)
Concentrate provisional payable adjustment                             (4.8)
Feed acquisition costs                                                 (3.6)
Derivative financial instruments                                       (2.6)
Reclamation/Depreciation                                               (2.0)
By-products                                                            (1.7)
Costs and other                                                         5.9
Premiums                                                                3.1
Processing fee                                                          0.7
Finance costs                                                           0.4
----------------------------------------------------------------------------
Net loss before income taxes for the three months ended June 30,
 2014                                                                 ($2.6)
----------------------------------------------------------------------------

Cash provided by operating activities in the three months ended June 30, 2014, was $12.6 million, including a negative $0.7 million increase in non-cash working capital. In the same period of 2013, cash provided by operating activities was $49.3 million, which was positively impacted by a $32.0 million decrease in non-cash working capital. Cash distributions of $4.7 million were declared in both the 2014 and 2013 quarterly periods.

For the three months ended June 30, 2014, non-cash working capital increased by $0.7 million in a large part due to an increase in inventories, partially offset by a reduction in accounts receivable and an increase in accounts payables and accrued liabilities.

Financial and Operating Highlights (Six month period ending June 30, 2014 compared to the six month period ending June 30, 2013)

Earnings before income taxes in the six month period ending June 30, 2014 were $8.5 million compared to $41.8 million in the same period a year ago. The $33.3 million decrease was mainly due to lower zinc metal production, sales and by-product revenues and higher concentrate acquisition costs and reclamation expense, partially offset by higher premiums and a weaker Canadian dollar.

The table below provides a reconciliation of the net earnings before income taxes for the six month period ending June 30, 2013 to the net earnings before income taxes for the six month period ending June 30, 2014.


----------------------------------------------------------------------------
($ millions)
----------------------------------------------------------------------------
Net earnings before income taxes for the six months ended June
 30, 2013                                                             $41.8
Volume                                                                (14.6)
Derivative financial instruments                                       (7.8)
Feed acquisition costs                                                 (6.4)
By-products                                                            (6.2)
Reclamation/Depreciation                                               (4.7)
Concentrate provisional payable settlement                             (3.4)
Premiums                                                                7.0
Processing fee                                                          1.3
Finance costs                                                           1.0
Cost and other                                                          0.5
----------------------------------------------------------------------------
Net earnings before income taxes for the six months ended June
 30, 2014                                                              $8.5
----------------------------------------------------------------------------

Cash provided by operating activities in the six months ended June 30, 2014, was $0.2 million, including a negative $21.3 million increase in non-cash working capital. In the same period of 2013, cash provided by operating activities was $43.6 million, which was positively impacted by a $10.9 million decrease in non-cash working capital. Cash distributions of $9.4 million were declared in both six months of both years.

During the six month period ending June 30, 2014, non-cash working capital increased by $21.3 million in a large part due to an increase in inventories partly offset by an increase in accounts payables and accrued liabilities and by a reduction in accounts receivables.

Conference Call and Webcast:

July 22nd, 2014 at 9:30 a.m. ET


     Dial in number: 416-340-2216
     Toll-free North American number: 1-866-223-7781

In addition, you can listen to the teleconference and view the slide presentation from the Conference Call section of the Noranda Income Fund website: http://www.norandaincomefund.com/investor/conference.html or click on this link: www.gowebcasting.com/5662

Recording of the Conference Call:


     Dial in number: 905-694-9451 or
     Toll-free North American number: 1-800-408-3053.

The pass code is 9926 603# and you will be prompted for your name and company.

The recording will be available until midnight on August 5th, 2014.

A full version of the second quarter 2014 Management's Discussion and Analysis ("MD&A") and the unaudited Interim Condensed Consolidated Financial Statements will be posted on www.sedar.com and on the Fund's website at http://www.norandaincomefund.com/investor/financials.html today, July 22, 2014. Readers should be advised that the summarized communication presented in this press release is limited in its disclosure. It is not a suitable source of information for readers who are unfamiliar with the Fund, and it is not in any way a substitute for reading the second quarter unaudited Interim Condensed Consolidated Financial Statements and MD&A because a reader relying on this summary alone might overlook decision critical information.

July Cash Distribution

The Fund also announced today that the Board of Trustees of Noranda Operating Trust has approved a distribution for the month of July 2014 of $0.04167 per Priority Unit payable on August 25, 2014 to Priority unitholders of record as at the close of business on July 31, 2014.

When not restricted, the Fund's policy is to make monthly distributions to Unitholders. In determining whether there is a distribution and the level thereof, the Board of Trustees reviews periodically the Fund's financial performance, business environment and prospects, and determines the appropriate level of reserves.

FORWARD-LOOKING INFORMATION

This press release contains forward-looking information and statements within the meaning of applicable securities laws, including statements on 2014 zinc metal production. Forward-looking information involves known and unknown risks, uncertainties and other factors, which may cause actual events, results or performance to be materially different from any future events, results or performance expressed or implied by the forward-looking information, and as a result, the Fund cannot guarantee that any forward-looking statements or information will materialize.

Such risks and uncertainties include, but are not limited to, the Fund's ability to operate at normal production levels and other general risks and uncertainties set out in the Fund's continuous disclosure documents on available on SEDAR at www.sedar.com. Forward-looking information contained in this press release is based on, among other things, management's current estimates, expectations, assumptions, plans and intentions, which management believes are reasonable as of the current date, and which are subject to a number of risks and uncertainties. Except as required by law, the Fund does not undertake to update these forward-looking statements or information, whether written or oral, that may be made from time to time by the Fund or on the Fund's behalf.

Noranda Income Fund is an income trust whose units trade on the Toronto Stock Exchange under the symbol "NIF.UN". Noranda Income Fund owns the electrolytic zinc processing facility and ancillary assets (the "Processing Facility") located in Salaberry- de-Valleyfield, Quebec. The Processing Facility is the second-largest zinc processing facility in North America and the largest zinc processing facility in eastern North America, where the majority of zinc customers are located. It produces refined zinc metal and various by-products from sourced zinc concentrates. The Processing Facility is operated and managed by Canadian Electrolytic Zinc Limited, a wholly-owned subsidiary of Glencore Canada Corporation.

Further information about Noranda Income Fund can be found at www.norandaincomefund.com.

SELECTED FINANCIAL AND OPERATING INFORMATION


----------------------------------------------------------------------------
                            Three months ended June   Six months ended June
                                                30,                     30,
($ thousands)                      2014        2013        2014        2013
----------------------------------------------------------------------------

Statements of Comprehensive
 (Loss) Income Information
Revenues                        150,993     162,577     305,338     312,632
Raw material purchase costs      95,123      77,808     173,498     146,841
----------------------------------------------------------------------------
Revenues less raw material
 purchase costs                  55,870      84,769     131,840     165,791
----------------------------------------------------------------------------
Other expenses:
  Production                     45,297      51,158      89,281      90,310
  Selling and administration      5,587       5,359      10,948      10,841
  Foreign currency (gain)
   loss                          (5,521)      3,611      (1,834)      7,102
  Derivative financial
   instruments loss (gain)        1,213        (112)      2,039      (3,420)
  Depreciation of property,
   plant and equipment            8,943      10,031      17,639      18,133
  Rehabilitation expense
   (recovery)                     1,656      (1,476)      2,733      (2,505)
----------------------------------------------------------------------------
(Loss) earnings before
 finance costs and income
 taxes                           (1,305)     16,198      11,034      45,330
----------------------------------------------------------------------------
Finance costs, net                1,314       1,685       2,566       3,559
----------------------------------------------------------------------------
(Loss) earnings before
 income taxes                    (2,619)     14,513       8,468      41,771
Current and deferred income
 tax (recovery) expense            (854)      3,543       1,726       8,639
----------------------------------------------------------------------------
(Loss) earnings attributable
 to Unitholders and Non-
 controlling interest            (1,765)     10,970       6,742      33,132
Distributions to Unitholders      4,687       4,687       9,375       9,375
----------------------------------------------------------------------------
(Decrease) increase in net
 assets attributable to
 Unitholders and Non-
 controlling interest            (6,452)      6,283      (2,633)     23,757
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Other comprehensive (loss)
 income                            (330)      2,962      (2,091)      5,880
----------------------------------------------------------------------------
Comprehensive (loss) income      (6,782)      9,245      (4,724)     29,637
----------------------------------------------------------------------------
----------------------------------------------------------------------------


Statements of Financial                    June 30,                Dec. 31,
 Position Information                          2014                    2013
----------------------------------------------------------------------------
Cash                                          2,223                  15,547
Inventories                                 124,522                  77,580
Accounts receivable                          77,208                  91,898
Income taxes receivable                       4,697                   4,040
Property, plant and
 equipment                                  272,696                 272,341
Total assets                                487,103                 467,075
Accounts payable and accrued
 liabilities                                100,986                  87,844
Total bank and other loans                   57,991                  51,322
Total liabilities excluding
 net assets attributable to
 unitholders                                212,374                 187,542
----------------------------------------------------------------------------
----------------------------------------------------------------------------
                            Three months ended June   Six months ended June
                                                30,                     30,
Statements of Cash Flows
 Information                       2014        2013        2014        2013
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Cash provided by operating
 activities before cash
 distributions and net
 change in non-cash working
 capital items                   18,041      22,001      30,891      42,074
----------------------------------------------------------------------------
Cash distributions               (4,687)     (4,687)     (9,375)     (9,375)
----------------------------------------------------------------------------
(Increase) decrease in non-
 cash working capital items        (714)     31,956     (21,263)     10,855
----------------------------------------------------------------------------
Cash provided by operating
 activities                      12,640      49,270         253      43,554
----------------------------------------------------------------------------
Cash used in investing
 activities                     (11,053)     (5,954)    (19,745)     (9,917)
Cash (used in) provided by
 financing activities            (1,903)    (43,941)      6,168     (33,803)
Net decrease in cash and
 cash equivalents                  (316)       (625)    (13,324)       (166)
----------------------------------------------------------------------------
Cash distributions declared
 per Priority Unit              0.12501     0.12501     0.25002     0.25002
----------------------------------------------------------------------------
----------------------------------------------------------------------------



----------------------------------------------------------------------------
                                  Three months ended        Six months ended
                                            June 30,                June 30,
                                    2014        2013        2014        2013
----------------------------------------------------------------------------
----------------------------------------------------------------------------
Zinc concentrate processed
 (tonnes)                        126,393     124,309     247,437     257,691
Zinc grade (%)                      52.1        53.8        51.9        53.3
Zinc recovery (%)                   97.2        98.2        97.1        97.0
Zinc metal production
 (tonnes)                         62,645      68,286     122,189     136,699
Zinc metal sales (tonnes)         59,598      75,081     120,107     138,139
Processing fee (cents/pound)        40.0        39.5        40.0        39.5
Zinc metal premium (US
 cents/pound)                       10.2         8.4        10.2         8.4
By-product revenues ($
 millions)                           7.9         9.6        14.4        20.6
  Copper in cake production
   (tonnes)                          525         380       1,092       1,000
  Copper in cake sales
   (tonnes)                          709         523         882       1,226
  Sulphuric acid production
   (tonnes)                       96,760     103,270     188,734     209,061
  Sulphuric acid sales
   (tonnes)                       93,690     104,072     188,051     207,305
Average LME copper price
 (US$/pound)                        3.08        3.24        3.14        3.42
Sulphuric acid netback
 (US$/tonne)                          47          72          51          72
Average LME zinc price
 (US$/pound)                        0.94        0.84        0.93        0.88
Average US/Cdn. exchange
 rate                               1.09        1.02        1.10        1.02
----------------------------------------------------------------------------
(i) 1 tonne = 2,204.62 pounds

Adjusted Earnings before Distributions to Unitholders, Finance Costs, Income Taxes, Depreciation and Amortization ("Adjusted EBITDA")

Adjusted EBITDA is used by the Fund as an indication of cash generated from operations. Adjusted EBITDA is not a recognized measure under IFRS and therefore the Fund's method of calculating Adjusted EBITDA is unlikely to be comparable to methods used by other entities.

The Fund's Adjusted EBITDA is calculated by starting from earnings before finance costs and income taxes and adjusting for all of the non-cash items such as depreciation, gain or loss on the sale of assets, changes in fair value of embedded derivatives and non- cash gain or loss on derivative financial instruments. In addition, an adjustment is made to reflect the net change in the rehabilitation liability (reclamation (recovery) expense less site restoration expenditures) and the net change in employee benefits (non-cash employee benefit expenses less employer contributions).

The Fund's Adjusted EBITDA is currently supported by the stability of the Supply and Processing Agreement. It is expected that the Fund's Adjusted EBITDA will be subject to more variability once this agreement expires in May 2017.

A reconciliation of Adjusted EBITDA for the three and six month periods ending June 30, 2014 compared to the same periods in 2013 are provided below:


----------------------------------------------------------------------------
                                             Three months ended
                                                       June 30,
Adjusted EBITDA                                2014        2013      Change
----------------------------------------------------------------------------
($ thousands)
(Loss) earnings before finance costs and
 income taxes                             $  (1,305)  $  16,198   $ (17,503)

Depreciation of property, plant and
 equipment                                    8,943      10,031      (1,088)
Net change in rehabilitation liability        1,657      (1,693)      3,350
Loss (gain) on derivative financial
 instruments                                  1,838        (724)      2,562
Change in fair value of embedded
 derivatives                                  7,531       2,726       4,805
Loss (gain) on sale of assets                   113        (233)        346
Net change in employee benefits                (372)       (134)       (238)
----------------------------------------------------------------------------
                                          $  18,405   $  26,171   $  (7,766)
----------------------------------------------------------------------------


----------------------------------------------------------------------------
                                               Six months ended
                                                       June 30,
Adjusted EBITDA                                2014        2013      Change
----------------------------------------------------------------------------
($ thousands)
Earnings before finance costs and income
 taxes                                    $  11,034   $  45,330   $ (34,296)

Depreciation of property, plant and
 equipment                                   17,639      18,133        (494)
Net change in rehabilitation liability        2,739      (2,739)      5,478
Loss (gain) on derivative financial
 instruments                                  2,354      (5,410)      7,764
Change in fair value of embedded
 derivatives                                  2,154      (1,229)      3,383
Loss (gain) on sale of assets                    12        (562)        574
Net change in employee benefits                (743)       (332)       (411)
----------------------------------------------------------------------------
                                          $  35,189   $  53,191   $ (18,002)
----------------------------------------------------------------------------

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
The emerging Internet of Everything creates tremendous new opportunities for customer engagement and business model innovation. However, enterprises must overcome a number of critical challenges to bring these new solutions to market. In his session at @ThingsExpo, Michael Martin, CTO/CIO at nfrastructure, outlined these key challenges and recommended approaches for overcoming them to achieve speed and agility in the design, development and implementation of Internet of Everything solutions with...
In their general session at 16th Cloud Expo, Michael Piccininni, Global Account Manager - Cloud SP at EMC Corporation, and Mike Dietze, Regional Director at Windstream Hosted Solutions, reviewed next generation cloud services, including the Windstream-EMC Tier Storage solutions, and discussed how to increase efficiencies, improve service delivery and enhance corporate cloud solution development. Michael Piccininni is Global Account Manager – Cloud SP at EMC Corporation. He has been engaged in t...
Cloud Expo, Inc. has announced today that Andi Mann returns to 'DevOps at Cloud Expo 2017' as Conference Chair The @DevOpsSummit at Cloud Expo will take place on June 6-8, 2017, at the Javits Center in New York City, NY. "DevOps is set to be one of the most profound disruptions to hit IT in decades," said Andi Mann. "It is a natural extension of cloud computing, and I have seen both firsthand and in independent research the fantastic results DevOps delivers. So I am excited to help the great t...
Every successful software product evolves from an idea to an enterprise system. Notably, the same way is passed by the product owner's company. In his session at 20th Cloud Expo, Oleg Lola, CEO of MobiDev, will provide a generalized overview of the evolution of a software product, the product owner, the needs that arise at various stages of this process, and the value brought by a software development partner to the product owner as a response to these needs.
In 2014, Amazon announced a new form of compute called Lambda. We didn't know it at the time, but this represented a fundamental shift in what we expect from cloud computing. Now, all of the major cloud computing vendors want to take part in this disruptive technology. In his session at 20th Cloud Expo, John Jelinek IV, a web developer at Linux Academy, will discuss why major players like AWS, Microsoft Azure, IBM Bluemix, and Google Cloud Platform are all trying to sidestep VMs and containers...
SYS-CON Events announced today that MobiDev, a client-oriented software development company, will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. MobiDev is a software company that develops and delivers turn-key mobile apps, websites, web services, and complex softw...
SYS-CON Events announced today that Enzu will exhibit at SYS-CON's 20th International Cloud Expo®, which will take place on June 6-8, 2017, at the Javits Center in New York City, NY, and the 21st International Cloud Expo®, which will take place October 31-November 2, 2017, at the Santa Clara Convention Center in Santa Clara, CA. Enzu’s mission is to be the leading provider of enterprise cloud solutions worldwide. Enzu enables online businesses to use its IT infrastructure to their competitive ad...
Smart Cities are here to stay, but for their promise to be delivered, the data they produce must not be put in new siloes. In his session at @ThingsExpo, Mathias Herberts, Co-founder and CTO of Cityzen Data, discussed the best practices that will ensure a successful smart city journey.
In his session at 19th Cloud Expo, Claude Remillard, Principal Program Manager in Developer Division at Microsoft, contrasted how his team used config as code and immutable patterns for continuous delivery of microservices and apps to the cloud. He showed how the immutable patterns helps developers do away with most of the complexity of config as code-enabling scenarios such as rollback, zero downtime upgrades with far greater simplicity. He also demoed building immutable pipelines in the cloud ...
Choosing the right cloud for your workloads is a balancing act that can cost your organization time, money and aggravation - unless you get it right the first time. Economics, speed, performance, accessibility, administrative needs and security all play a vital role in dictating your approach to the cloud. Without knowing the right questions to ask, you could wind up paying for capacity you'll never need or underestimating the resources required to run your applications.
Traditional on-premises data centers have long been the domain of modern data platforms like Apache Hadoop, meaning companies who build their business on public cloud were challenged to run Big Data processing and analytics at scale. But recent advancements in Hadoop performance, security, and most importantly cloud-native integrations, are giving organizations the ability to truly gain value from all their data. In his session at 19th Cloud Expo, David Tishgart, Director of Product Marketing ...
Technology vendors and analysts are eager to paint a rosy picture of how wonderful IoT is and why your deployment will be great with the use of their products and services. While it is easy to showcase successful IoT solutions, identifying IoT systems that missed the mark or failed can often provide more in the way of key lessons learned. In his session at @ThingsExpo, Peter Vanderminden, Principal Industry Analyst for IoT & Digital Supply Chain to Flatiron Strategies, will focus on how IoT depl...
Adding public cloud resources to an existing application can be a daunting process. The tools that you currently use to manage the software and hardware outside the cloud aren’t always the best tools to efficiently grow into the cloud. All of the major configuration management tools have cloud orchestration plugins that can be leveraged, but there are also cloud-native tools that can dramatically improve the efficiency of managing your application lifecycle. In his session at 18th Cloud Expo, ...
The pace of innovation, vendor lock-in, production sustainability, cost-effectiveness, and managing risk… In his session at 18th Cloud Expo, Dan Choquette, Founder of RackN, discussed how CIOs are challenged finding the balance of finding the right tools, technology and operational model that serves the business the best. He also discussed how clouds, open source software and infrastructure solutions have benefits but also drawbacks and how workload and operational portability between vendors an...
With the proliferation of both SQL and NoSQL databases, organizations can now target specific fit-for-purpose database tools for their different application needs regarding scalability, ease of use, ACID support, etc. Platform as a Service offerings make this even easier now, enabling developers to roll out their own database infrastructure in minutes with minimal management overhead. However, this same amount of flexibility also comes with the challenges of picking the right tool, on the right ...