OTCPK:NNDIF - Post by User
Post by
Bigbird9999on Feb 21, 2017 4:42pm
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Post# 25873830
2017 TC revisited
2017 TC revisitedI have been away so could not post….
Firstly, I am long, maybe too long, in NIF……Not short as insinuated by Showme/Zinc Investor…
Secondly, I will state again that there is NO WAY that a TC of $40 has been agreed to. A $40 TC applied to the 9 months (Q3) results would reduce the EBITDA by $75 million to negative $30 million NOT the $41 million reduction that they presented in the Jan 31 press release.
Showme claimed my calculations were wrong so I have redone them below. NIF’s results are subject to HUGE swings due to changes in inventory value caused by both quantity (which can go up down 25000 tonnes of Zn) wild swings in the LME and FX. To cut through all of the accrual accounting bafflegab and changes in inventory, etc. My calcs assume that the inventory remains constant at 3 months concentrate, 2 weeks WIP and 2 weeks finished metal and that the value of the inventory remains constant at the current LME price. This is not exact but it is a close approximation, especially over a long period where the Zn recovered from cons received is equal to the tonnage of Zn metal produced and Zn metal sales.
On this basis, over 9 months the plant would treat 397000 dmt con @ 52.2% Zn at a recovery of 97.7% to produce 202500 tonnes of Zn metal. Assuming LME price of Zn = $2865 (Jan 31) and US FX of 1.32 and the reported revenues for by products, I calculate as follows:
Under the current SPA
Metal gain 97.7% recovered vs. 96% paid ………………………………………..$13 million
Premiums to LME 202500 tonnes at 7 cents/lb US …………………………….$47 million
By product Revenues as reported …..…………………………………………….$18 million
TC at 41 cents CAD per lb of Zn in con x 96% payable..………………....…….$180 million
Total Revenue ……………………………………………………………………..$258 million
This revenue produced an EBITDA of $46 million.
The board estimates that EBITDA would have been $5 million ($41 million less) under the negotiated market terms with LME = $2865 and FX = 1.32. It follows that the Total revenues under the negotiated terms would be $41 million less than $258 million = $217 million.
Under the negotiated SPA as follows:
Metal gain 97.7% recovered vs. 85% paid ………………………………………..$100 million
Premiums to LME 202500 tonnes at 7 cents/lb US same as current……..…….$47 million
By product Revenues same as current ……………..…………………………….$18 million
TC at ??? TC ………………………………………………………………………….$XXX million
Total Revenue ………………………………………………………………………..$217 million
Thus the TC revenue can be calculated to be 217 – 100 – 18 – 47 =…………$52 million
$52 million TC revenue at 1.32 FX = USD $39 million on 397000 dmt con = USD$99 per tonne
They will, no doubt, provide some sort of EBITDA calculation when the Q4 results are released. I believe that we have a right to know the terms of the contract that has been signed as it is material to the valuation of the fund. However, I fear that they will claim that these terms are “confidential” and will continue their practice of obfuscation and deceptive, confusing accounting practices.
What I do not know is how we can make this happen.
BB