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SALABERRY-DE-VALLEYFIELD, QUEBEC--(Marketwired - Jan 20, 2016) -
This document corrects and replaces the press release that was sent today, January 20, 2016 at 7:45 AM EST. The error occurred at the end of the first paragraph where it should have read "on January 29, 2016".
Noranda Income Fund (TSX:NIF.UN) (the "Fund") announced today that the Board of Trustees of Noranda Operating Trust (the "Board") has approved a distribution for the month of January 2016 of $0.04167 per Priority Unit payable on February 25, 2016 to Priority Unitholders of record as at the close of business on January 29, 2016.
The initial Term of the Supply and Processing Agreement (the "Agreement") between the Noranda Income Limited Partnership ("Partnership") and Glencore Canada Corporation ("Glencore Canada") will expire on May 2, 2017. The Agreement will automatically renew for a five-year term thereafter, unless Glencore Canada provides the Partnership with written notice to the contrary at least 180 days prior. Regardless of whether Glencore Canada renews or not, after May 2, 2017, the Fund will be required to purchase zinc concentrate at market terms, instead of the current fixed processing fee.
The Fund, under the supervision and direction of the Independent Committee of the Board, continues to review several potential scenarios that would enable the Fund to continue to operate profitably after the expiration of the Agreement. There can be no assurance that the Fund will be successful in this regard. The Independent Committee is working diligently on this matter.
As a result of the above, the Board is evaluating the expected future cash flows in a variety of potential scenarios, as well as required reserves under those scenarios. Given the uncertainty of future pricing and market conditions for zinc concentrate, and that several potential scenarios are being considered, including the discontinuation of operations following the expiry of the agreement, the Board is carefully reviewing and, if required, will augment the Fund's reserves. An increase in reserves could have an adverse effect on cash available for distributions.
In determining whether there shall be a distribution and the level thereof, the Board periodically reviews the Fund's financial performance, business environment and prospects, and determines the appropriate levels of reserves. The Board also continues to evaluate on a monthly basis the expected future cash flows of the Fund as well as the reserves that may be required in the future. When not restricted, and as may be considered appropriate, the Fund's policy is to make monthly distributions to Unitholders. There is no assurance that distributions will continue in future, nor is there any assurance that, if they do continue, the level or frequency of such distributions will not vary.
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.
Further information about Noranda Income Fund can be found at www.norandaincomefund.com .
Vice President and Chief Financial Officer,
Canadian Electrolytic Zinc Limited
Noranda Income Fund's Manager