Noranda Income Fund Unit T.NIF.UN

RE:Zinc price and treatment charges both heading higher?

[Bigbird9999]

As much as I would like to see this, I do not believe that TC's will increase from 2016 levels.  Rather, they will be lower BUT NOT AS LOW as the gloom and doom scenario that keeps being presented.  We do not know the average TC for 2017 because it has not yet been determined.  I expect they will release some kind of indication when they release the 4th quarter results.  I expect  it to be something like $150 - $170 which will provide sufficient revenue to maintain the dividend.  With considerable upside from the Zn price and US$ FX.

The reason that the Zn price is high is because the mine production of Zn is less then the demand for metal.  This means the demand for concentrate is higher than the supply (i.e. there is a shortage of concentrate).  Simple supply and demand economics mean that the smelters must pay more for the concentrate they require.  A higher concentrate price equates to a lower TC which the miner pays to the smelter. I.e. higher net revenue for the miner and LOWER TC revenues for the smelter.

It is worth noting that Glencore has still not announcded a restart of the 500,000 tones of zinc production from their idled OZ mines.  There are many games afoot as smelter scramble for feed and the miners try to maximize their net revenues.  Glencore has iit's feet in both markets, (metal and concentrate).  Meanwhile the stock market (with help from somewhere) seems to be committed to maintaining the sp at $2.50. 

BB