Noranda Income Fund Unit NNDIF

RE:RE:RE:RE:RE:RE:RE:RE:Someone knows ...

[iwasgold]

Q3 earnings were $15 million on $20 million of cash provided by operating activities.  All of the cash flow was used to pay down the ABL debt from $133 million to $111 million.  Q4 will be a bit better say $17 million on $22 million of cash provided by operations.  So 2019 should end up with about $10 - $15 million earnings (same as last year) with the ABL debt reduced to $90 million.  2020  will generate cash from operations at a rate of $15 - $20 million per quarter ($60 - $80 million for the year 2020).  They can't hide it but they will say they need to reduce debt, increase reserves and spend capital to treat more crappy concentrate from Glencore.  If they apply all of the cash generated to the debt it will be zero at the end of the year 

I don't know what we can do to ensure that they don't keep all of the cash for these activities but my gut says that they will have a tough time to justify retaining more than half of the cash generated so they will have to distribute the other half ($30 to $40 million)  which translates to a $1 distribution.  



BB,  I don't understand your debt part. From what I know of accounting, when a profit is made it can be used to pay down debt, but that use of the money does not reduce the profit except for by the amount of interest paid.  So paying down principal does not affect the profit reported, and therefore the amount of distributions that should be paid.  Cash flow can be positive without profit, but EBITDA (which is what I assume you mean by earnings) does not include debt principal payment, just interest. They can't reduce earnings by paying down debt, is my point.  In theory then, according to your numbers, we should get more than $1 next year.  If we get even half of $1  I would be shocked. I think your numbers are pure fantasy.  

I read somewhere on the net yesterday that the concentrate the smelter has been getting that has been causing problems in quality and low TC's is from China. Can anyone confirm that? I was under the impression that the low TC's were coming from pre-May 1 Glencore-mined concentrate, but this China thing may mean CEZ signed a deal for Chinese feed at poor terms, for reasons only they know. The term of the contract could be different than the Glencore-sourced concentrate's TCs, hence why we still see it going through the smelter.