Noranda Income Fund Unit NNDIF

RE:RE:RE:RE:Contacting Independent Directors - Conference Call

[galvanized]

Sorry Pete, but glencore has very little to do with the hedging strategy.  The idea of the hedging going on is simple.  Every now and then the fund buys a big shipload of concentrate at an agreed price per tonne and then simultaneously sells the metal in the futures market  timed for when they think it will be ready for delivery for the same price.  This way the fund hopes not to experience big losses should the metal price fluctuate in the meantime. But the thing that seems to confuse alot of people is that at the end of every quarter, the fund marks the value of these hedges to market, which causes the fund's income to flucuate like the tide going in and out.  However, over the long run the hedging should net out to more or less zero, (or perhaps slightly less than zero, since the cost of hedging is not free). So the Q2 results were like a king tide when it comes to hedging, The results were due to big fluctuations in the price of zinc, and not due to any special brilliance supplied by glencore.