Noranda Income Fund Unit NNDIF

Oh no, more smelter cuts possible! TC spot 200/ton !

[ZincDink]

How can we at Noranda help the world out of this problem?


https://www.metalbulletin.com/Article/5088766/Search-results/Further-uptick-in-zinc-spot-TCs-on-worsening-arbitrage-smelter-cuts-possible.html

The board better not give this all away to GC.

Surprised GC still hasn't taken us out yet. They can offer a 100 % premium, and steal the facility from Canadian sheep just like the Saudis did with Nova Chemicals years ago.

Its idotic, but that is just the way things sometimes seem to work in Canada

[Scotch12]

Thanks for the post and the link ZincDink. I am curious what would be an acceptable price for the independent board if Glencore made an offer.  I personally would not want to accept 3 dollars. Five or six dollars yes, i would be in.  I believe 2/3 of shareholders would have to approve the takeover or at least the buyer would have to acquire 66.6 % of shares to take it private. 

[ZincDink]

I think we should get half the intrinsic value of the plant, which has a replacement value over 1 B$ USD (that would make it $ 10/share, but lets remember, last time, the previous owner was willing to go to 4 per share, but that was before sinking over 100 M$ in upgrades). Its unclear to me how many would need to approve a takeover. Plus, how can they get over that pesky poison pill, lol (strange

[Scotch12]

10 dollars US is about 12.70 Canadian.  So, for 37.5 million shares not already owned by Glencore you are getting pretty close to 500 million  Canadian (using your estimate) for them to own the plant outright .  The question is why would they pay a lot of money for it.  Given the current contract they effectively already call all of the shots with no meaningful financial risk.&

[ZincDink]

If it starts making too much money and they have to pay meaningful dividend. In theory, we could go back to a 2 /yr divy if TC are over $200. Right now, GC is still making us pay for the lack of meaningful investment in the plant over the years.

[ljp0101]

Glencore will never pay fair value for NIF as there's no reason to. The SPA would need to be broken first somehow. Even a take under is kind of risky for them as I think they become on the hook for appraisal rights. If the continental European smelters get permanently closed then CEZ becomes more strategic but that's probably a next year decision for them after Russia energy fallout and

[Bigbird9999]

lpj makes a good point. "Next Glencore shoe to drop will be some usurous working capital facility as credit facility isn't big enough with the price and expansion volume increase at the inventory levels CEZ has been running." At year end, they only had $15 million room left ($165 drawn) on the $180 million abl.  The plant operates with an inventory of 2 - 4 months of zinc

[ZincDink]

Sounds like Aubry is being brought online at half capacity, which is a strange way to operate a mill (maybe its the best deal they could get for electricity).