Noranda Income Fund Unit T.NIF.UN

from Canaccord

[xomoc8391]

Noranda Income Fund* (NIF.UN : TSX : $1.66), Net Change: -0.70, % Change: -29.66%, Volume: 1,710,401 IN A TOUGH SPOT. Units of Noranda Income Fund traded sharply lower after announcing it was suspending distributions to unitholders because of tough market conditions facing the zinc smelter. Noranda went on to say that there is no assurance that monthly distributions will resume in the future. The fund also announced that Glencore Canada will supply Noranda with all of its zinc concentrate requirements and purchase all of the fund's zinc metal and by-products for the 12 month period ending April 30, 2018. The initial term of the Supply and Processing Agreement expires on May 2, 2017. Glencore Canada has renewed the Supply and Processing Agreement for a five-year term that will end on May 2, 2022. Glencore Canada is the agent for the sale of zinc metal and by-products produced by the fund and, starting on May 3, 2017, Glencore Canada will be obligated to arrange for the purchase of zinc concentrate required by the fund, on market terms rather than the fixed processing fee the Fund has benefitted from since its inception. Noranda has previously disclosed, there has been a significant tightening of the zinc concentrate market throughout 2016 and continuing in 2017 as a result of several large closures over recent years, and the global demand for zinc concentrate leading to a shortage of supply. Spot treatment charges have declined from US$175 per dry metric tonne in December 2015 to US$40 per dry metric tonne in December 2016, with reports of transactions below this level in January 2017. Reflecting the tightness in the concentrate market, the market pricing terms for the 12-month period are not as favourable to the fund as the fixed pricing enjoyed by the fund since its inception. Noranda owns the electrolytic zinc processing facility and ancillary assets 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.