RE:RE:Room for zinc prices to continue increasing...
https://www.marketwired.com/press-release/noranda-income-fund-announces-agreement-with-glencore-canada-purchase-concentrate-sale-tsx-nif.un-2192437.htm
This article relates to operational impact on "the Processing Facility that is the second-largest zinc processing facility in North America and the largest zinc processing facility in eastern North America" by replacing a fixed term contract for concentrates for a new contact that provides concentrates at market prices...
Huge difference in profitability by getting concentrates on market terms 5million vs 46 million
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As previously disclosed by the Fund, there has been a significant tightening of the zinc concentrate market throughout 2016 and continuing in 2017 as a result of several large closures over recent years, and the global demand for zinc concentrate leading to a shortage of supply. Spot treatment charges have declined from US$175 per dry metric tonne in December 2015 to US$40 per dry metric tonne in December 2016, with reports of transactions below this level in January 2017. Reflecting the tightness in the concentrate market, the market pricing terms for the 12-month period are not as favorable to the Fund as the fixed pricing enjoyed by the Fund since its inception. To illustrate the financial impact, management has calculated the Adjusted EBITDA1 the Fund would have realized for the nine months ended September 30, 2016 under the terms agreed for the 12 months ended April 2018 and using the current market price for zinc metal. Adjusted EBITDA would have been $5 million for the nine month period as compared to the $46 million of actual Adjusted EBITDA reported by the Fund for that period. This illustrative calculation is not necessarily indicative of future results, which will be impacted by future prices of zinc metal as well as other factors such as levels of production, foreign exchange, zinc premiums and by-product prices.
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