Noranda Income Fund Unit NNDIF

RE:Smart management.....

[Bigbird999]

Over 3 quarters of 2015,t he in-process inventory has increased by about $40 MM.  This is due to the fact they now need to keep 2 - 3 months of concentrate inventory compared to 1-2 months when they were getting mostly North American concentrate.  In addition, the finished goods inventory has increased by $30-$40 MM due mostly to seasonal variations in shipments.  They said they expect this to be reduced by year end.  The entire increase in inventory ($70 - $80 MM)is being financed by the ABL line of credit.  So it shows as an increase in debt.  Note that they still have an addition $50 MM available credit on the line of credit. 

The entire increase in debt is offset by an increase in working capital (I.e. inventory) which would be turned into cash if the plant were to close..

Said before many times..... NIF generates about $60 - $80  MM in cash flow.  More than enough to pay down the long term debt to zero by the end of 2016, set aside the required reserves, fund the sustaining capital expenditures and continue to pay the dividend.  A case could be made to INCREASE the dividend.....

B B