make independent directors feel some heat! The basic problem for NIF unitholders is that our ‘independent’ directors are negotiating bad deals with Glencore. Since January 2018 NIF has generated Adjusted EBITDA (recall that NIF “uses Adjusted EBITDA as an indication of cash generated from operations”) sufficient to spend over $1.85 per unit on capital expenditures (CAPEX) and almost nothing (total of $0.09per unit) on distributions. The directors are allowing Glencore to use our capital, that is the CEZ smelter, without giving us a return on our investment. The money is there; it’s just that our directors are failing to extract a reasonable share of it from Glencore. Bwrbhk22 points out in his March 18, 2021 post that Glencore is currently charging Travali a TC of about $300 per ton while paying NIF a TC of about $80 per ton to treat that concentrate. In 2018 analysis of Travali and NIF financial numbers showed corresponding figures of $280 and $85 per ton of concentrate. (I could send the 2018 analysis to anyone who’d like to see it-contact me at
rjk1234@rogers.com)
What can we do about this? Something more than posts on this Stockhouse forum is needed. Erik1212 in his March 25 posts makes some interesting suggestions, but these would take a long time to try to implement. In the short term we should at least try to make the directors feel some heat and possibly give them a little resolve to do better for unitholders.
Some suggestions are:
1) submit a formal proposal for consideration at the next NIF AGM that the board consider implementing a shut down and sale of remaining assets as suggested by Zinkdink1 in his March 25 post, and by mdaffin and others in earlier posts. This might make even Glencore a little nervous since the CEZ smalter is strategic to its operations.
2) nominate someone for election as an independent member of the NIF board of directors. This would give unitholders an opportunity to vote for someone other that a Glencore nominee. Is anyone willing or know of a tough minded individual who would be suitable? The pay looks pretty good!!
3) submit a formal proposal for consideration at the next NIF AGM to increase the number of independent directors from 4 to 6.
re. #1 & #3 the Ontario Business Corporations Act (https://www.ontario.ca/laws/statute/90b16#BK77) , Section 99, spells out rights of shareholders to submit formal proposals. I have recently submitted the following proposal: It is proposed that the NIF Board of Directors assign a much increased priority to devoting Adjusted EBITDA funds towards resumption of monthly distributions to unitholders, such that they enjoy positive returns from increases in market price of the units and/or distribution yields.
It would be best if someone else took the lead on the above suggestions or other actions so that pressure is seen to be coming from multiple sources.