Noranda Income Fund Unit T.NIF.UN

Treatment Charges

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According to Open Minerals spot treatment charges in China for low Au/Ag zinc concentrate is currently $225/tonne.  In 2021, Noranda processed 506,378 tonnes of zinc concentrate and is expected to treat at least that amount and probably more in 2022.  The average spot TC's in 2021 was about $80/tonne and Noranda's deal with Glencore was based on spot TC's until April 30th, 2022.  If Noranda and Glencore cannot agree on TC's for the 12 month period beginning May 1, the fall back position reverts to spot TC's.  The math is simple, 506,378(225-80)=$73,424,810 increase in revenue, EBITA and pre tax income from the levels attained in 2021.  Additional upsides for the coming year include higher zinc prices and higher zinc premiums.  Last year Noranda produced about 72 million lbs. of free zinc and the LME price of zinc averaged $1.36/lb.  The current zinc price is $1.76/lb.  If zinc prices remain at this level, it would meand another $29 million increase in revenue from the 2021 level.  In 2021, Noranda agreed to a fixed premium of $0.06/lb. with Glencore for the ensuing 12 month period ending April 30, 2022.  The current metal premiums are at least twice the amount currently being received.  It is highly likely that Noranda and Glencore will resort to what they did in the past and resort to market terms for the metal premium.  This could be another huge upside for Noranda's revenues in the current year.
Bottom line, 2022 is shaping up to being a great year for Noranda.