Noranda Income Fund Unit T.NIF.UN

Future for NIF.UN

[opta1]

I don't dexpect mamagement expected the reaction from the market they are getting but given the share volume there is a lot of speculative and day trading happening.
There are many moving parts to this situation.  The concentrate issue is clearly the first but it may not be as dire as suggested.  Trevali mining is restarting a lead/zinc mine in New Brunswick very near the old Bathust mine.  It could provide in the range of 100,000 tonnes of concentrate a year beginning in 2015 and could be expanded in future.Given its location and the history of Bathurst there is reason to believe Nif will get this business.  It essentially had it before the trust agreements were made.
Labour issues are important in the context of the concentrate agreement ending so the stock action will certainly be seen by the workers who themselves could own shares of the company.
The new smelter in North Carolina is a recycler of steel waste and does not appear to compete for concentrate.
Capital cost to replace the NIF smelter is far greater than current value which reduces the likelyhood of a shutdown.
Contrary to the belief that supply of concentrate will decline, if the demand for zinc grows, the price of zinc will rise and new mines will start.  This has always been the case and its not likely to change.
We will see shortly if the board maintains the distribution which if they don't could push the share price even lower and create an opportunity for Glencor to buy back the smelter which they tried to do the last time the share price tanked.