Noranda Income Fund Unit NNDIF

New Quarter - Fingers Crossed on Production Figures

[schocor]

Well with the quarter now completed, I really HOPE that we had better production that the first two quarters of this year.
 
I believe that is all that is holding this stock back from a higher valuation; Europe is going to be an energy mess for years, and the spill over of that mess should mean higher gas prices worldwide – but especially in China and Korea. This mined concentrate has to go somewhere (else), and I hope Noranda is able to get higher TCF that the first half of this year as well.

[Hugooooo]

it will be flat in my opinion. Ultimately, having NIF is be a shareholder of one and unique plant... It is micromanagement, they have to revolve their staff issue and smelter improvement done. And many thanks to Hydro Qubec for the power deal.

[ZincDink]

No way will it be flat. This quarter will see the new TC kick in. Provided they don't frack production, we should see 15 - 20 M$ in real earnings. Now, how much of the hedge money will we have??? Haven't worked that out, but considering we have unrealized 50 M$ gains last quarter, we have a lot of wiggle room.

[Scotch12]

Was the unrealized gain not 130 million US last Q (reduced by an involuntary write down of $16.8 million)?   My take from the last PR and conf call  was that they did not expect to have the production issues resolved.  This  management team never  appears to have positive upside surprizes (except for those that favour Glencore). "The Fund has revised its annual

[ZincDink]

Sorry, you are absolutely right on hedge gain. I was talking off top of head and was using my rough estimate for what the final hedge should look like. That original hedge gain surpassed what I thought they would get. Good point on the tone of the previous update being negative. I can't see us suffering another quarter production loss, but since I didn't think it would happen last

[ljp0101]

Most important aspect of 3Q earnings is production guidance / comments about if CEZ is back at capacity. Everything else is noise, unless we find out the premium hedge is truly terrible. Backwards looking performance will be sloppy and we should have a hedging gain and reasonable adjusted EBITDA, though hard to feel confident about anything with how the production problems disrupt so many aspects

[ZincDink]

So, in theory, we could be making over 50 M$ on premiums in a quarter alone, ignoring increases in TC (apprently spot zinc TC up again this month, not sure how much). This company is poised to be sucking up so much cash (yes they will leave a lot probably on the table). Even GC won't be able to syphon it all up. I would have thought the European makret would have the high premiums though

[Bwrbhk]

Not sure how you calculated the 50 M$ on premiums in a quarter.  Noranda and Glencore agreed to fixed premiums (not market related premiums) and for the last two quarters they were $0.13/lb.  In the 2nd Q they produced 125,636,000 lb. of zinc, which would mean a premium of about $16 million.  I wish that your numbers were correct.

[ZincDink]

Well, the 50 mill is assuming they get 800 premium per ton, which is not happening.  I didn't think they disclosed the premium.  The 13 cents seems low, but who knows how much mo ey our board is going to payout to gc. 

[ljp0101]

Going to lose some revenue / EBITDA in Q3 from lower free metal given zinc price was lower. Europe (Nordics) has always had surplus refined and exported to the US. Now US needs to source marginal refined from Asia, which is why NA trades at a premium to Europe. This should be a twofer for CEZ because should be reaping a relative transport cost advantage on concentrate as the concentrate that was

[ZincDink]

Thanks for the explanation.

[Bwrbhk]

The $0.13/lb. Is the difference between their realized price and the LME average price for the quarter, both of which are disclosed in the MD&A.

[ZincDink]

Thanks Now, even though the premium we collect is incredibly low to what it could be, this is the highest premium they have ever collected (think they got 11 cents once, with a tyoical price of 7 cents. I don't think they ever had spot price on it.

[Bwrbhk]

In the past, during recessions, the premium has been as low as $0.02/lb.

[ljp0101]

Implied premium calculation has some limitations because it's average LME vs ASP so there can be a timing mismatch embedded, which is more likely when there are production disruptions like 2Q and in volatile markets. It also includes a quality component so if there's a purity issue it shows up in the differential.

[Bwrbhk]

The difference between the LME average and the realized price has been very consistent for the last couple of quarters.

[deev869]

I believe if Glenncore has managed to manipulate the contract again to ensure the trust fund does not go back to paying monthly dividends which there is no reason why noranda shouldn't be making money now then they should be investigated they're being charged around the world for bribery and contract manipulation so I don't understand why in Canada they're not looking into them

[Bwrbhk]

Someone has to take them to court.  Will have to be a deep pocket institution.