Noranda Income Fund

TSX : NIF.UN


Noranda Income Fund

May 15, 2013 18:41 ET

Noranda Income Fund Reports First Quarter Earnings Before Income Taxes of $27.3 Million

SALABERRY-DE-VALLEYFIELD, QUEBEC--(Marketwired - May 15, 2013) - Noranda Income Fund (the "Fund") (TSX:NIF.UN) had a strong first quarter.

Q1 2013 and Subsequent Highlights

  • Earnings before income taxes were $27.3 million (Q1 2012 - $15.4 million)
  • Zinc metal production was 68,413 tonnes (Q1 2012 - 62,813 tonnes)
  • Zinc metal sales were 63,058 tonnes (Q1 2012 - 62,273 tonnes)
  • Zinc premiums averaged 8.4 cents US per pound (Q1 2012 - 7.5 cents US per pound)
  • Sulphuric acid netback remained strong US$72 per tonne (Q1 2012 - US$74 per tonne)
  • Declared monthly cash distributions from January to April 2013 of $0.04167 per priority unit (each a "Priority Unit"); continuing the consistent monthly distribution profile since they were restarted in September 2011
Annual General Meeting
May 16th, 2013 at 2 pm EDT
Location: Gallery Room at the TSX Broadcast & Conference Centre, The Exchange Tower, 130 King Street West, Toronto, Ontario

Come and join us at the TSX Broadcast and Conference Centre, or listen to the AGM and view the slides from the Investor Centre/Presentations section of the Fund website: http://www.norandaincomefund.com/investor/presentations.html or click on this link: http://events.digitalmedia.telus.com/noranda/051613/index.php

Conference Call and Webcast:
May 16th, 2013 at 4:30 p.m. EDT
Dial in number: 416-641-6118
Toll-free North American number: 1-866-225-0198

In addition, you can listen to the teleconference and view the slide presentation from the Conference Call section of the Noranda Income Fund website: http://www.norandaincomefund.com/investor/conference.html or click on this link: http://events.digitalmedia.telus.com/noranda/051613q/index.php

Recording of the Conference Call:
Dial in number: 905-694-9451 or
Toll-free North American number: 1-800-408-3053.
The pass code is 8075 532# and you will be prompted for your name and company.
The recording will be available until midnight on May 30th, 2013.

Financial and Operating Highlights (First quarter 2013 compared to the first quarter 2012)

Earnings before income taxes in the first quarter of 2013 were $27.3 million compared to $15.4 million in the same quarter a year ago. The $11.9 million increase was mainly due to positive concentrate payable settlement adjustments of $7.7 million, stronger premiums and zinc metal sales, and higher processing fee, partially offset by lower by-product revenues.

Cash provided by operating activities in the first quarter of 2013, before net changes in non-cash working capital items, was $15.4 million compared to $18.4 million during the same period of 2012. Cash distributions of $4.7 million were declared in both the 2013 and 2012 quarterly periods. During the first quarter of 2013, non-cash working capital increased by $21.1 million in large part due to an increase in accounts receivable and a reduction in accounts payable and accrued liabilities. During the first quarter of 2012, non-cash working capital increased by $24.0 million due to an increase in accounts receivable and inventories and a decrease in taxes payable, partially offset by an increase in accounts payable and accrued liabilities.

A full version of the first quarter 2013 Management's Discussion and Analysis ("MD&A") and the unaudited Interim Condensed Consolidated Financial Statements will be posted on www.sedar.com and on the Fund's website at http://www.norandaincomefund.com/investor/financials.html today, May 15, 2013. Readers should be advised that the summarized communication presented in this press release is limited in its disclosure. It is not a suitable source of information for readers who are unfamiliar with the Fund, and it is not in any way a substitute for reading the first quarter unaudited Interim Condensed Consolidated Financial Statements and MD&A because a reader relying on this summary alone might overlook decision critical information.

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 Xstrata Canada Corporation.

Except where otherwise indicated, all amounts in this press release are expressed in Canadian dollars.

Further information about the Noranda Income Fund can be found at www.norandaincomefund.com.

SELECTED FINANCIAL AND OPERATING INFORMATION
First Quarter
($ thousands) 2013 2012
Statements of Comprehensive Income Information
Revenues 150,055 145,756
Raw material purchase costs 69,033 78,479
Revenues less raw material purchase costs 81,022 67,277
Other expenses:
Production 39,152 40,257
Selling and administration 5,482 5,300
Foreign currency loss (gain) 3,491 (1,639)
Loss (gain) on derivative financial instruments (3,308) (913)
Depreciation of property, plant and equipment 8,102 7,622
Rehabilitation expense (1,029) (819)
Earnings before finance costs and income taxes 29,132 17,469
Finance costs, net 1,874 2,047
Earnings before income taxes 27,258 15,422
Current and deferred income tax (recovery) expense 5,096 5,389
Earnings attributable to Unitholders and Non-controlling interest 22,162 10,033
Distributions to Unitholders 4,688 4,688
Current income tax recovery on distribution - (1,367)
Increase in net assets attributable to Unitholders and Non-controlling interest 17,474 6,712
Other comprehensive income (loss) 2,918 (470)
Comprehensive income 20,392 6,242
Statements of Financial Position Information Mar. 31, 2013 Dec. 31, 2012
Cash 1,762 1,303
Inventories 88,101 91,697
Accounts receivable 103,353 98,347
Income taxes receivable 4,706 4,801
Property, plant and equipment 267,860 270,867
Total assets 479,194 477,629
Accounts payable and accrued liabilities 50,299 72,448
Total bank and other loans 105,920 95,509
Total liabilities excluding net assets attributable to unitholders 223,794 242,621
First Quarter
Statements of Cash Flows Information 2013 2012
Cash provided by operating activities before cash distributions and net change in non-cash working capital items 20,073 23,052
Cash distributions (4,688) (4,688)
Net change in non-cash working capital items (21,101) (23,994)
Cash used in operating activities (5,716) (5,630)
Cash used in investing activities (3,963) (4,651)
Cash provided by financing activities 10,138 10,542
Net increase in cash 459 261
Cash distributions declared per Priority Unit 0.12501 0.12501
First Quarter
2013 2012
Zinc concentrate processed (tonnes) 133,382 132,141
Zinc grade (%) 52.9 53.5
Zinc recovery (%) 96.0 96.7
Zinc metal production (tonnes) 68,413 62,813
Zinc metal sales (tonnes) 63,058 62,273
Processing fee (cents/pound) 39.5 39.2
Zinc metal premium (US$/pound) 0.084 0.075
By-product revenues ($ millions) 11.0 12.4
Copper in cake production (tonnes) 620 737
Copper in cake sales (tonnes) 703 747
Sulphuric acid production (tonnes) 105,791 110,286
Sulphuric acid sales (tonnes) 103,233 110,333
Average LME copper price (US$/pound) 3.60 3.77
Sulphuric acid netback (US$/tonne) 72 74
Average LME zinc price (US$/pound) 0.92 0.92
Average US/Cdn. exchange rate 1.01 1.00
* 1 tonne = 2,204.62 pounds

Adjusted Earnings before Distributions to Unitholders, Finance Costs, Income Taxes, Depreciation and Amortization ("Adjusted EBITDA")

Adjusted EBITDA is used by the Fund as an indication of cash generated from operations. Adjusted EBITDA is not a recognized measure under IFRS and therefore the Fund's method of calculating Adjusted EBITDA is unlikely to be comparable to methods used by other entities.

The Fund's Adjusted EBITDA is calculated by adjusting earnings before finance costs and income taxes for all of the non-cash items such as depreciation, rehabilitation (recovery) expense, net change in employee benefits, (gain) loss on the sale of assets, changes in fair value of embedded derivatives and non-cash (gain) loss on derivative financial instruments.

The Fund's Adjusted EBITDA is currently supported by the stability provided in the Supply and Processing Agreement. It is expected that the Fund's Adjusted EBITDA will be subject to more variability once this agreement expires in May 2017.

A reconciliation of Adjusted EBITDA for the first quarters of 2013 and 2012 is provided below:

Adjusted EBITDA Q1/2013 Q1/2012 Change
($ thousands)
Earnings before finance costs and income taxes $ 29,132 $ 17,469 $ 11,663
Depreciation of property, plant and equipment 8,102 7,622 480
Net change in rehabilitation liability (1,046 ) (1,017 ) (29 )
(Gain) loss on derivative financial instruments (4,686 ) 364 (5,050 )
Change in fair value of embedded derivatives (3,955 ) 3,716 (7,671 )
(Gain) loss on sale of assets (329 ) 218 (547 )
Net change in employee benefits (198 ) (193 ) (5 )
$ 27,020 $ 28,179 $ (1,159 )

Contact Information

  • Financial information:
    Michael Boone, Vice President & Chief Financial Officer of
    Canadian Electrolytic Zinc Limited,
    Noranda Income Fund's Manager
    416 775-1561
    info@norandaincomefund.com