Noranda Income Fund Unit T.NIF.UN

MMG TCRC commentary dated 21 October

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Zinc and lead prices and the concentrate market Zinc and lead were two of the better performing metals on the LME during the quarter, with average prices 3% and 9% higher respectively compared to the previous quarter. Investor sentiment remains positive towards zinc and lead on the back of the announcement of significant infrastructure investments in Europe, China and USA, including the encouraging progress of the USA’s $1 trillion infrastructure bill. In addition, fears of a growing risk to smelter metal production due to government-imposed power rationing in China and higher energy prices in Europe have also been supportive for the zinc and lead price. During the quarter several major zinc and lead smelters in China announced they have reduced their metal production in order to curb their power usage and two major smelters in Europe announced they will reduce their metal output due to the sharp rise in energy prices. This is expected to keep the zinc price high in the near term.

The market for concentrate remains tight with spot treatment charges favourable to miners and trading at around US$80/t of concentrate, well below the annual benchmark level of US$159/t. While power cuts in key zinc and lead smelting provinces in China mean the amount of concentrate available to other smelters has increased, the buying appetite for imported concentrates remains strong with a number of major Chinese smelters seeking material ahead of the winter season when many domestic mines will close.