Noranda Income Fund Unit NNDIF

Comparing to China smelters

[ZincDink1]

I was curious to understand how we compare in valuations to China mills. So, what I decided as the easiet way was to look up reported market value and revenues on Investing.com which are reported in the local currency and compare the valuations to Noranda (in USD). The mills are some of the smelters I could find, including Korea Zinc. Note that many of the mills, while large zinc smelters, may have significant other smelting business.

	Rev	MV	rev/MV
Zhuzhou	18.9	4.22	0.22
Korea Zinc	7055	7331	1.04
Shenzen	27.4	17.4	0.64
Henan	17.9	6.15	0.34
Huludao	7.1	4.9	0.69
Yunnan	16.7	23.7	1.42
Baiyin	67	21.8	0.33
Noranda	833.56	42.3	0.05

I think the Zhuzhou makes the best comparison in some ways. They closed down a 500 kt smelter to open up a new 300 kt smelter. So mr market values them 4x greater than NIF. Must be the Nrystar story that has the market concerned along with the drop in TC.

Note that Zhuzhou values its mill at 3387 yuan or about 500 MUSD compared to NIF at 117 MUSD. Historically, NIF was never below 250 until Mr Sunshine took more than 80 M$ in impairment charges.

While South America has recovered from corona and has no second wave (for now at least), TC of zinc are still in the dumpster.

[Finalsay]

I dont understand how they can simulatenously justify, or rather, enthusiasticly describe an upgrade to the plant where we are paying $2000 per additional tonne of annual production when the plant is currently valued on the balance sheet at 117,791,000 / 270,000 tonnes = $436 to $453 per tonne. I wish management would help me connect the dots here? 

[Finalsay]

I'm looking at Q3 income statement. There are separate line items for transportation and distribution costs, raw material purchase costs, and then a bunch of different line items under other costs, including production costs. Under other costs there are selling and adminstration costs that look like they will run up for $18 million this year. Never looked at this too closely and just wondering