Noranda Income Fund Unit T.NIF.UN

Zinc prices soaring

[Bwrbhk]

Zinc prices are trading at $1.61/lb. today, up from about $1.50/lb. a few days ago due to higher energy prices in Europe and the impact on zinc production.
Noranda produces about 70 million lbs. of free zinc each year (the difference between what they pay the miners and what they recover).  In the 3rdQ of this year, Noranda had a cash flow from operations of about $6 million when the LME zinc price averaged $1.36/lb.  The current zinc price is $0.25/lb. higher than the 3rdQ average.  At the current zinc price and assuming everything else remains the same as in the 3rdQ, Noranda's cash flow would be in the order of $10 million per quarter or about $0.20/share (CDN $0.25/share).  It should also be pointed out that treatment charges in the 3rdQ were at very depressed levels and there is a good chance that they will increase next year.  Also, in the 1stQ of next year the expansion of the zinc refinery begins commisioning and this will result in lower unit costs and higher revenues and earnings when fully operational.
Seems like there is a good chance that monthly distributions will recommence sometime next year.