Noranda Income Fund Unit T.NIF.UN

RE:RE:Finished goods Inventory

[Bigbird9999]

Not the answer you want to hear but I think they could eat up all $100 million of the finished goods revenue depending on how much con they received or will receive before May 1.  And if they don't use it to pay for con I would expect them to pay the LOC fbalance down to zero. 

They normally receive 45000 tonnes per month of con.  The majority comes in by rail car, direct from the mines and/or road truck.  To put this in perspective they receive about 15 railcars a day.  They have onsite storage for maybe 3 months  but they have unlimited offsite storage at the Port of Montreal and Trois Rivieres where the big ships unload.  They said they received a big ship at the end of Dec which drove the RM inventory up to $115 million (which I calculate to be about 150,000 t of con) but not all of it is on site.  The sea borne cons are unloaded at port and shipped by rail/truck to the plant.  The current SPA is in effect for another 6 weeks.  Hopefully, since the strike started on Feb 12  they have and will continuing to receive 10000 t per week of  the 'cheap' cons available under the current SPA either into the bins at the plant or to the storage at POM.  If the strike does not settle by May 1 the con inventory will grow by 110000 t to be about 270000 t con.  By then they will have run out of storage space or credit because each tonne of con costs them about $1000 CAD (so about $100 million for the 110000 t.  In this case I would expect them to declare force majeure and suspend deliveries.

BB