RE:Glencore/NIF ?Ah so you know nothing......well, it is a long story. SUffice to say Glencore has total control of inputs, outputs, costs, prices, the works....The (only) two people on the quarterly conference call are Glencore employees.The trust structure that defines the relationship can only be modified in any significant way with a virtual 100% turnout of non-Glencore shareholders. There are 4 (out of 7) trustees of Noranda that are supposedly independent, ie they represent our interests. They will not answer your questions in writing, they are paid VERY well (on the order of $200k per year), they do not attend conference calls, and on and on....it is sooooo depressing.
For those who care, here is a transcript of the first (of two) questions on the conference call and Noranda's answers.
Steven Green (TD analyst)
Question regarding the guidance and resulting change in the illustrative EBITDA. So your sales guidance declined roughly 5%,it’s a very small decline but your illustrative EBITDA declined about 23%,so is it much bigger hit to that than you would expect just given the decline in sales guidance. Can you tell us what else changed in that calculation?
Paul Einarson (Noranda's CFO but actually a Glencore employee)
Yes, Steven, there was no other changes to the assumptions there. As we push through obviously with the sales guidance we would have also as you saw in the press release also revised the concentrate that was being pushed through but there would be some impact on the treatment charges well through that calculation.
Steven Green
And is that because you have more of the older volumes?
Paul Einarson
But if we are producing less zinc, obviously we’re processing less concentrate.
Steven Green
Right, but that changes like I said is very small compared to the change in the EBITDA guidance, so how that works?
Paul Einarson
No. The only changes we made in the assumptions Steven were on the volumes of concentrate and zinc.
Steven Green
And it seems that time you previously gave that guidance, spot TCs have actually increased, you know back in March I think they were ahead in the 250 range. Now they are closer to 270 I believe. So when there is some exposure that as well given the fact that you are 50% fixed, 50% floating?
Paul Einarson
Yes. What we wanted to do is to keep that base level the same, so we did have in the original illustrative guidance. We use the range of treatment charges to develop that range. So we did not adjust the assumptions in this latest round because we felt that we have taken that into account already in the first base case. [huh?]
Steven Green
Okay. But all it’s been equal, if we do see changes in spot increases or decreases, we could expect that to flow through to results as well?
Paul Einarson
Yes. So in fact that -- yes, so its 50-50 fixed and floating on variable through the - for any concentrate that's purchased from May 1 through that onwards. So we would expect to see some variability through the next 12 plus months – 12 months I guess as spot prices change. [huh again!]
Does anybody understand what Paul was saying???