Noranda Income Fund Unit NNDIF

Simple math

[Bigbird999]

They did it for us in the Q3 report. 

Under the current concentrate supply agreement, earnings YTD are $53 million on processing of ~400,000 tones of con.  So It earns about $130 per ton of concentrate processed.  If they had been forced to purchase feed at the more expensive world benchmark terms, earnings would have been reduced by about $16 million to $36 million which is about $90 per ton of con processed.  Spot pricing is just smoke as is the statement that they may not be able to  secure concentrate beyond 2017.  This is one of the largest, most efficient plants in the world with one of the lowest power costs.  And its location allows it to command a 10% premium on sales.  Add to that that there is a non-recurring increase of $30 million in inventory,most of which will come out as product in future months.  Slab production was 5000 tonnes or ~$12 million more than sales in Q3 so there will likely be a major working capital decrease in Q4.

Granted, they are going to have to compete for feed stocks, but when you consider that the cost of a new Zn refinery is $2000 - $3000 per annual tonne of production, the $500 - $700 million investment required is a major barrier to entry into the Zinc refining business. 

I was a buyer yesterday and probably will be a buyer tomorrow.  This whole thing smells of Glencore (who runs the show) and stock shorting, manipulating the market. 

This plant will be running profitably for a long time past 2017.