Noranda Income Fund Unit T.NIF.UN

RE:RE:RE:Position disclosure

[Bigbird9999]

Well, I think they would trade up if the TC was revealed to be US $100 per dmt rather than the $40 spot terms that everyone seems to be worried about.  But that is not the point.  Why do the shareholders have to guess and speculate about the terms of supply of concentrate?

How about if they just release the contract terms and provide a pro forma EBITDA calculation of the 12 months of the new contract term using the new TC, the current (or their projected) LME Zn price and US FX?  Or even just release the contract terms and let us poor dumb rubes calculate the EBITDA using our own personal crystal ball to determine the 12 month average LME and FX rate.  This is a very simple calculation if one knows the TC.   I've done it for the 12 months assuming a TC of $100 and FX 1.32 and the same by product and premium revenuses as 2016 and I get an EBI?DA of $59 million CAD.  This is more than enough to pay the $30 million capital, $1 million pension and residue pond reserves and $3 million interest on the LOC and leaves $25 million in cash for distribution.   Of course this is extremely sensitive to the TC which causes the EBITDA move up/down by $7 million for every $10 change in the TC.  So if $40 TC is the new deal, the EBITDA will be reduced by $42 million to $17 million and as you say, there will be a $10 - $20 million cash bleed. 

Up until now, under the expiring/expired SPA the unit holders of this income trust knew exactly how much feed to the plant would cost based on payable Zn of 96% at LME and a TC of 41cents CAD per lb. Now that the TC has been set, I do not understand why as unit holders, we are not entitled to know the terms under which NIF will be purchasing concentrate post May, just like we do today.  Keeping the TC secret benefits only Glencore in their negotiations with other smelters on the world concentrate market and, I believe, it harms the other unit holders.

The valuation of the enterprise and the cash generating capacity of the enterprise is dependent on the TC.  Up until the contract was signed, nobody (including the board) knew the future TC.  Any number was speculation.  But today, the board knows exactly what the TC revenue will be post May.  I maintain that THE UNIT HOLDERS HAVE A RIGHT TO KNOW THESE TERMS OF SUPPLY BECAUSE THE TC IS  FUNDAMENTAL TO THE VALUATION OF NIF.  Some shareholders (Glencore and friends) have this information so they have an advantage over the shareholders who do not have this information. 

Any light you can shed on the legality or justification the board has in withholding this information from one group of shareholders would be welcome.

BB