Noranda Income Fund Unit T.NIF.UN

RE:RE:Q2 report

[Bigbird999]

I was going to go to the AGM today.  But when I weighed a dip in the pool against a 2 hour commute on the hottest day of the year......the pool won.  Besides, the Q2 conference call is what will be really interesting. 

Only one thing in the MD&A suprised me.....and it was a pleasant surprise....
All of the previous quarterly reports have played the same tune with respect to the "favourable" terms of the SPA and how in the future, when the fund had to acquire concentrate at market terms that it would be less profitable and impact funds available for distribution.  Up until now the difference in EBITDA between the SPA and market terms has been about $18 million per year less.  They have shown this in a column graph in every quarterly report accompanied by a bunch of "the sky is falling" language that panics the market.

THIS TIME IT IS DIFFERENT (see P3 of MD&A)
The EBITDA under the SPA for H1 2015 was $44.9 million 
The EBITDA if all concentrate had been purchased at market terms would have been $51.3 milion
I.E. ~$11 million more per year than (2 x $5.5 for 6 months) under th SPA. 
I am not saying that this will continue but I will be very interested to see how they cover this in the Q2 CC this afternoon.

There is a lot of volatility in the market terms vs. the stable terms of the SPA and it is complicated by the fact the SPA is in $Canadian and market terms are in $US.  But the fact remains that for the first 6 months of this year, the fund would have been better off buying concentrate at market terms than under the SPA.  It is worth noting, that for the past 6 months, Glencore made more money supplying concentrate under the SPA than it would have made under market terms.

Like you said the CC will be interesting.
BB