SALABERRY-DE-VALLEYFIELD, Québec, March 08, 2019 (GLOBE NEWSWIRE) -- The Noranda Income Fund (TSX:NIF.UN) (the “Fund”) is pleased to report that it has successfully reached an agreement with Glencore Canada, on the terms under which zinc concentrate will be purchased and zinc metal will be sold for the period of May 1, 2019 to April 30, 2020.
Last year, on March 8, 2018, the Fund announced it reached agreements pursuant to which Glencore Canada will supply the Fund with all of its zinc concentrate requirements and purchase all of the Fund’s zinc metal for the four year period ending April 30, 2022. The terms are to be agreed annually in-line with prevailing market conditions and in consultation with the Independent Trustees’ industry consultants.
Over the last several months, treatment charges have rebounded in favour of smelters but the pricing environment threatens to continue to be volatile. The Fund, in that context, has favoured and successfully negotiated a combination of 50% of the concentrate feed at a fixed treatment charge and the remaining 50% at a variable treatment charge that will reflect market movement during that period, in addition to other provisions of the four-year agreement.
Eva Carissimi, President and Chief Executive Officer of Canadian Electrolytic Zinc Limited, the Fund’s manager, commented, "At the end of the initial term of the SPA, in May 2017, after 15 years during which the Fund had enjoyed favourable contractual conditions, the Fund started operating under market conditions. This transition occurred during a period of shortage of supply due to the closure of several large mines in 2016 and 2017, resulting in very low treatment charges. According to industry analysts such as Wood Mackenzie and CRU, the market has recently rebounded, and the terms under which zinc concentrate will be supplied to the Fund, from May 1, 2019 to April 30, 2020, will reflect this more favourable market environment."
The Fund does not expect to realize the full impact of these terms until all inventory purchased prior to May 1, 2019 has been fully processed. This is expected to occur in the third quarter of 2019.
The market terms have not been disclosed, as the terms are commercially sensitive as reflected in the contractual requirement and market practice that the pricing information be kept confidential.
Forward-Looking Information
This press release contains forward-looking information and statements within the meaning of applicable securities laws. Forward-looking information involves known and unknown risks, uncertainties and other factors, which may cause actual events, results or performance to be materially different from any future events, results or performance expressed or implied by the forward-looking information, and as a result, the Fund cannot guarantee that any forward-looking statements or information will materialize.
Such risks and uncertainties include, but are not limited to, the effect of general business and economic conditions, the Fund's ability to operate at normal production levels, the Fund's capital expenditure requirements and other general risks and uncertainties set out in the Fund's continuous disclosure documents on available on SEDAR at www.sedar.com.
Forward-looking information contained in this press release is based on, among other things, management's current estimates, expectations, assumptions, plans and intentions, which management believes are reasonable as of the current date, and which are subject to a number of risks and uncertainties. Except as required by law, the Fund does not undertake to update these forward-looking statements or information, whether written or oral, that may be made from time to time by the Fund or on the Fund's behalf.
Noranda Income Fund is an income trust whose units trade on the Toronto Stock Exchange under the symbol “NIF.UN”. Noranda Income Fund owns the electrolytic zinc processing facility and ancillary assets (the “Processing Facility”) located in Salaberry de-Valleyfield, Québec. The Processing Facility is the second-largest zinc processing facility in North America and the largest zinc processing facility in eastern North America, where the majority of zinc customers are located. It produces refined zinc metal and various by-products from sourced zinc concentrates. The Processing Facility is operated and managed by Canadian Electrolytic Zinc Limited, a wholly-owned subsidiary of Glencore Canada Corporation.
Except where otherwise indicated, all amounts in this press release are expressed in Canadian dollars.
Further information about Noranda Income Fund can be found at
www.norandaincomefund.com
For further information, please contact:
Paul Einarson, Vice President & Chief Financial Officer of Canadian Electrolytic Zinc Limited, Noranda Income Fund’s Manager
Tel: 514-745-9380
info@norandaincomefund.com