Post by
Bwrbhk on Dec 22, 2021 12:56pm
Zinc prices soaring
Zinc prices are trading at $1.61/lb. today, up from about $1.50/lb. a few days ago due to higher energy prices in Europe and the impact on zinc production.
Noranda produces about 70 million lbs. of free zinc each year (the difference between what they pay the miners and what they recover). In the 3rdQ of this year, Noranda had a cash flow from operations of about $6 million when the LME zinc price averaged $1.36/lb. The current zinc price is $0.25/lb. higher than the 3rdQ average. At the current zinc price and assuming everything else remains the same as in the 3rdQ, Noranda's cash flow would be in the order of $10 million per quarter or about $0.20/share (CDN $0.25/share). It should also be pointed out that treatment charges in the 3rdQ were at very depressed levels and there is a good chance that they will increase next year. Also, in the 1stQ of next year the expansion of the zinc refinery begins commisioning and this will result in lower unit costs and higher revenues and earnings when fully operational.
Seems like there is a good chance that monthly distributions will recommence sometime next year.
Comment by
Scotch12 on Dec 23, 2021 1:54pm
That seems like wishful thinking. Yes, they should be able to charge a premium but Glencore appears to dictate everything to NIF. Even worse and more absurd they don't disclose to shareholders what they have negotiated. I am surprised despite the high price of zinc, and the huge advantage of cheap power the stock has barely budged.
Comment by
ZincDink on Dec 24, 2021 10:54am
Still looks like China refiners are being starved for concentrate in an attempt to keep TC artificially low. When I can see the inventory level of concentrate on Asian Metal site, they have almost zero concentrate inventory. There may also be legitimate problems in transport of concentrate as well