Noranda Income Fund Unit NNDIF

US Price Premium now 25 to 30 c per pound

[ZincDink]

What were we getting for the previous premium? Think 7 cents a pound.

Stupid the market hasn't recognized what is happening for NIF this year.


https://www.reuters.com/markets/commodities/european-smelter-squeeze-keeps-zinc-close-record-highs-2022-03-29/

[ljp0101]

We're getting a fixed 0.07/lb as physical premium until the end of April. Order of magnitude Glencore made 20m for facilitating the 'hedge'. And a 0.18/lb spread is equivalent to 200/t in TCRCs. I don't think the premium is sustainable at this level through summer though as metal flows west and probably partially migrates into benchmark TCRCs, which Glencore is unlikely to offer to

[ZincDink]

I have to wonder why we accept a fixed premium. It should be easy to word a contract that allows for a sliding scale if the premium changes in the market. The cause of the premium is the unstable electric market in China and primarily the energy market in Europe. I see no indications this will change in the near term (but I didn't see it getting so expensive, so my observations might not be

[ljp0101]

NIF took a fixed premium because we're 'hedging' and our independent directors don't really understand commodities and went along with Glencore's proposal. Hedge everything or nothing but half hedging is a bad idea unless you're taking a directional view, which is best left to the trading houses. This particular hedge was highly convex for Glencore because it wasn't

[Scotch12]

ljp your mention of Extract Capital is interesting.  They own over 10 % of the smelter.  More than 5 million shares.   This is a highly illiquid stock.  It would be virtually impossible for them to exit their position without a takeover or them taking a big hit. What do people think their strategy is?  It is not clear to me if they are adding to their position but I

[ljp0101]

No insider knowledge but I would assume Extract got behind the value thesis and ended up bagholding given how long they've been on the register. The position isn't significant for them so I'd guess it'll just sit in their book until they think valuation is appropriate or close up shop. Extract hasn't traded in a few years based on their filings. If you read the IPO documents

[Eric1212]

Regarding Extract, i had the chance to talk on the phone with Mr Park regarding action noranda. They didn't disclose their exit price but they are here for a 10-bagger'ish investment. As probably most of us. We did agree that for doing any transition plan, we have to figuring out the plan in more details that i could do alone. I did start trying to recontact somes interesting members of

[ljp0101]

Extract has sat on the register for a long time and hasn't achieved anything beyond that presentation, which refuted key portions of the bullish writeups I've seen including liquidation value (environmental closure costs are huge and not provisioned for) as well as arguments that the SPA can be broken. Of course Extract is going to tell you it's a 10x, they're not sellers, and

[Scotch12]

I think the idea that CEZ can't disclose the terms of their annual contract negotiations, to shareholders, is very problematic legally if it was ever challenged in court (the secrecy of course gives the seemingly inept independent board members cover).  Glencore argues revealing it would affect their competitiveness which is an incredibly dubious claim.  This is particularly true

[ZincDink]

The spot TC for zinc TC has been dismal for most years. Seems like South America suppliers prefer spot, but the stupidity that drove this maybe changing just a bit. The European energy market woes are pretty transparent, but China is starting to realize they can't keep supplying energy at the discount they had previously if they want to reach carbon emissions. IMHO, I think China will need to

[ljp0101]

Contango creates structural hedging losses but eyeballing I think it's ~20/t of concentrate worse than normal so not great but one of the smaller moving parts. I don't really think there is a spot zinc concentrate market outside of China and the benchmark deals have volume flex clauses. Nexa is integrated and most of the large South American zinc mines like Antamina are owned by foreign