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Name | Symbol | Market | Type |
---|---|---|---|
Noranda Income Fund | TSX:NIF.UN | Toronto | Trust |
Price Change | % Change | Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 1.97 | 1.97 | 1.98 | 0 | 01:00:00 |
SALABERRY-DE-VALLEYFIELD, QUEBEC--(Marketwired - Feb 11, 2014) - Noranda Income Fund (the "Fund") (TSX:NIF.UN) had solid financial results for the fourth quarter and the year. They continue to be supported by the stability of the Supply and Processing Agreement1. The operating results were also notable. Management not only maintained production while it introduced new zinc concentrate feed into the production process, but it met the annual target.
Fourth Quarter and 2013 Annual Highlights:
1 | Glencore Canada Corporation ("Glencore Canada") and the Noranda Income Limited Partnership are parties to a supply and processing agreement dated May 3, 2002 (the "Supply and Processing Agreement"). |
Conference Call and Webcast:
February 12th, 2014 at 8:30 a.m. | |
Dial in number: 416-340-8530 | |
Toll-free North American number: 1-800-766-6630 |
In addition, you can listen to the teleconference and view the slide presentation from the Conference Call section of our website: http://www.norandaincomefund.com/investor/conference.html or click on this link: http://www.gowebcasting.com/5207
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 5280 660# and you will be prompted for your name and company. | |
The recording will be available until midnight on February 26th, 2014. |
Long-Term Strategy
The Board continues to work on the long-term strategy for the Fund.
At the operating level, the Processing Facility successfully treated a wider variety of feeds with a higher level of impurities. In 2013:
2013 Capital Spending
Capital spending was $33.4 million in 2013 compared to $27.0 million in 2012. Most of the annual 2013 capital investment was spent on sustaining the Fund's operations, including $1.8 million on the cell house rehabilitation project, $8.4 million on replacement anodes for the cell house, $2.1 million for an acid plant converter and $2.3 million for a new pumping station. Investment in the silica removal project totalled $9.7 million in 2013.
Financial and Operating Highlights (Fourth quarter 2013 compared to the fourth quarter 2012)
The Fund reported earnings before income taxes of $9.3 million in the fourth quarter of 2013 compared to $22.1 million in the same quarter a year ago. The $12.8 million decrease was mainly due to lower Net Revenues and higher costs.
Cash provided from operating activities, before net changes in non-cash working capital items in the fourth quarter of 2013, was $14.1 million compared to $17.4 million in the fourth quarter of 2012. During the fourth quarter of 2013, non-cash working capital decreased by $7.6 million. The decrease in working capital resulted primarily from a decrease in accounts receivable and an increase in accounts payable and accrued liabilities, partially offset by an increase in inventories. The increase in inventories in the fourth quarter was a result of additional deliveries of zinc concentrate that were received.
Financial and Operating Highlights (2013 compared to 2012)
Earnings before income taxes in 2013 were $65.0 million compared to $58.1 million a year ago. The $6.9 million increase was mainly due to higher zinc metal production and sales, processing fee and premiums and a weaker Canadian dollar, partially offset by lower by-product revenues.
Cash provided by operating activities in 2013, before net changes in non-cash working capital items, was $62.6 million compared to $64.6 million in 2012. During 2013, non- cash working capital decreased by $28.6 million due to a decrease in accounts receivable and inventories and an increase in accounts payable and accrued liabilities. During 2012, non-cash working capital increased by $39.3 million due to an increase in accounts receivable and inventories.
OTHER DEVELOPMENTS
On December 2, 2013, Chris Eskdale and Dirk Vollrath joined John Whyte as the Glencore representatives on the Board. Mr. Eskdale currently leads the zinc industrial assets group of Glencore. Mr. Vollrath has been an Asset Manager of Glencore since joining the Company in 1995. Their expertise in the zinc industry will be an important contribution to the Board and to the Fund.
As previously announced, Manuel Álvarez Dávila and Neil Wardle resigned from the Board on November 5, 2013 and November 29, 2013, respectively.
A full version of the annual 2013 MD&A and the audited Consolidated Financial Statements will be posted on www.sedar.com and on the Fund's website at http://www.norandaincomefund.com/investor/financials.html later today, February 11, 2014. 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 Consolidated Financial Statements and MD&A because a reader relying on this summary alone might overlook decision critical information.
FORWARD-LOOKING INFORMATION
This press release contains forward-looking information and statements within the meaning of applicable securities laws, including statements on the completions of and budgets for the liner replacement project in the cell house and the silica removal project. 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 the Noranda Income Fund can be found at www.norandaincomefund.com
SELECTED FINANCIAL AND OPERATING INFORMATION
Fourth Quarter | Year | ||||||||
($ thousands) | 2013 | 2012 | 2013 | 2012 | |||||
Statements of Comprehensive Income Information | |||||||||
Revenues | 148,313 | 150,779 | 609,405 | 577,676 | |||||
Raw material purchase costs | 75,617 | 66,003 | 294,459 | 288,047 | |||||
Revenues less raw material purchase costs | 72,696 | 84,776 | 314,946 | 289,629 | |||||
Other expenses: | |||||||||
Production | 45,819 | 42,858 | 182,725 | 169,593 | |||||
Selling and administration | 6,532 | 5,436 | 21,794 | 21,201 | |||||
Foreign currency loss (gain) | 2,360 | 1,413 | 7,446 | (681 | ) | ||||
(Gain)/loss on derivative financial instruments | (993 | ) | 1,641 | (1,080 | ) | (940 | ) | ||
Depreciation of property, plant and equipment | 8,785 | 9,062 | 36,351 | 33,502 | |||||
Rehabiliation (recovery) expense | (519 | ) | 266 | (3,683 | ) | 922 | |||
Earnings before finance costs and income taxes | 10,712 | 24,100 | 71,393 | 66,032 | |||||
Finance costs, net | 1,368 | 2,009 | 6,371 | 7,981 | |||||
Earnings before income taxes | 9,344 | 22,091 | 65,022 | 58,051 | |||||
Current and deferred income tax expense (recovery) | 2,510 | (5,173 | ) | 14,247 | 7,482 | ||||
Earnings attributable to Unitholders and Non-controlling interest | 6,834 | 27,264 | 50,775 | 50,569 | |||||
Distributions to Unitholders | 4,687 | 4,687 | 18,750 | 18,750 | |||||
Current income tax recovery on distribution | (603 | ) | (35 | ) | (603 | ) | (4,136 | ) | |
Increase in net assets attributable to Unitholders and Non-controlling interest | 2,750 | 22,612 | 32,628 | 35,955 | |||||
Other comprehensive income (loss) | 4,863 | (2,257 | ) | 11,897 | (5,091 | ) | |||
Comprehensive income | 7,613 | 20,355 | 44,525 | 30,864 | |||||
Statements of Financial Position Information | Dec. 31, 2013 | Dec. 31, 2012 | |||||||
Cash | 15,547 | 1,303 | |||||||
Inventories | 77,580 | 91,697 | |||||||
Accounts receivable | 91,898 | 98,347 | |||||||
Income taxes receivable | 4,040 | 4,801 | |||||||
Property, plant and equipment | 272,341 | 270,867 | |||||||
Total assets | 467,075 | 477,629 | |||||||
Accounts payable and accrued liabilities | 87,844 | 72,448 | |||||||
Total bank and other loans | 51,322 | 95,509 | |||||||
Total liabilities excluding net assets attributable to unitholders | 187,542 | 242,621 | |||||||
Fourth Quarter | Year | ||||||||
Statements of Cash Flows Information | 2013 | 2012 | 2013 | 2012 | |||||
Cash provided by operating activities before cash distributions and net change in non-cash working capital items | 18,786 | 22,100 | 81,385 | 83,361 | |||||
Cash distributions | (4,687 | ) | (4,687 | ) | (18,750 | ) | (18,750 | ) | |
Net change in non-cash working capital items | 7,572 | (36,450 | ) | 28,560 | (39,297 | ) | |||
Cash provided by operating activities | 21,671 | (19,037 | ) | 91,195 | 25,314 | ||||
Cash used in investing activities | (14,002 | ) | (8,499 | ) | (31,657 | ) | (24,632 | ) | |
Cash used in financing activities | (7,312 | ) | 22,754 | (45,294 | ) | (876 | ) | ||
Net increase/(decrease) in cash and cash equivalents | 357 | (4,782 | ) | 14,244 | (194 | ) | |||
Cash distributions declared per Priority Unit | 0.12501 | 0.12501 | 0.50004 | 0.50004 |
Fourth Quarter | Year | ||||
2013 | 2012 | 2013 | 2012 | ||
Zinc concentrate processed (tonnes) | 126,302 | 124,296 | 506,209 | 497,183 | |
Zinc grade (%) | 52.9 | 53.5 | 53.1 | 54.0 | |
Zinc recovery (%) | 97.1 | 97.6 | 97.2 | 97.2 | |
Zinc metal production (tonnes) | 67,212 | 74,748 | 265,242 | 263,697 | |
Zinc metal sales (tonnes) | 65,248 | 67,511 | 269,807 | 260,401 | |
Processing fee (cents/pound) | 39.5 | 39.2 | 39.5 | 39.2 | |
Zinc metal premium (US$/pound) | 0.087 | 0.075 | 0.084 | 0.075 | |
By-product revenues ($ millions) | 8.9 | 11.1 | 38.7 | 42.1 | |
Copper in cake production (tonnes) | 491 | 790 | 1,821 | 2,526 | |
Copper in cake sales (tonnes) | 338 | 734 | 1,937 | 2,275 | |
Sulphuric acid production (tonnes) | 99,232 | 99,884 | 405,993 | 408,849 | |
Sulphuric acid sales (tonnes) | 95,966 | 97,419 | 401,235 | 410,358 | |
Average LME copper price (US$/pound) | 3.24 | 3.59 | 3.32 | 3.61 | |
Sulphuric acid netback (US$/tonne) | 69 | 80 | 71 | 76 | |
Average LME zinc price (US$/pound) | 0.87 | 0.89 | 0.87 | 0.88 | |
Average US/Cdn. exchange rate | 1.05 | 0.99 | 1.03 | 1.00 | |
* 1 tonne = 2,204.62 pounds |
Adjusted Earnings before Distributions to Unitholders, Finance Costs, Income Taxes, Depreciation and Amortization ("Adjusted EBITDA")
Adjusted EBITDA is used by the Fund as an indication of cash generated from operations. Adjusted EBITDA is not a recognized measure under IFRS and therefore the Fund's method of calculating Adjusted EBITDA is unlikely to be comparable to methods used by other entities.
The Fund's Adjusted EBITDA is calculated by starting from earnings before finance costs and income taxes and adjusting for all of the non-cash items such as depreciation, (gain) loss on the sale of assets, changes in fair value of embedded derivatives and non- cash gain on derivative financial instruments. In addition, an adjustment is made to reflect the net change in the rehabilitation liability (reclamation (recovery) expense less site restoration expenditures) and the net change in employee benefits (non-cash employee benefit expenses less employer contributions).
A reconciliation of Adjusted EBITDA for the fourth quarters and years of 2013 and 2012 is provided below:
restated | |||||||||
Adjusted EBITDA | Q4/2013 | Q4/2012 | Change | ||||||
($ thousands) | |||||||||
Earnings before finance costs and income taxes | $ | 10,712 | $ | 24,100 | $ | (13,388 | ) | ||
Depreciation of property, plant and equipment | 8,785 | 9,062 | (277 | ) | |||||
Net change in residue ponds rehabilitation liability | (568 | ) | 55 | (623 | ) | ||||
Derivative financial instruments gain | (835 | ) | (699 | ) | (136 | ) | |||
Change in fair value of embedded derivatives | 3,315 | (4,670 | ) | 7,985 | |||||
Loss/(gain) on sale of assets | 64 | (268 | ) | 332 | |||||
Net change in employee benefits | (186 | ) | (545 | ) | 359 | ||||
$ | 21,287 | $ | 27,035 | $ | (5,748 | ) | |||
restated | |||||||||
Adjusted EBITDA | 2013 | 2012 | Change | ||||||
($ thousands) | |||||||||
Earnings before finance costs and income taxes | $ | 71,393 | $ | 66,032 | $ | 5,361 | |||
Depreciation of property, plant and equipment | 36,351 | 33,502 | 2,849 | ||||||
Net change in residue ponds rehabilitation liability | (4,098 | ) | 521 | (4,619 | ) | ||||
Derivative financial instruments gain | (5,761 | ) | (2,899 | ) | (2,862 | ) | |||
Change in fair value of embedded derivatives | 2,309 | 5,593 | (3,284 | ) | |||||
Gain on sale of assets | (457 | ) | (380 | ) | (77 | ) | |||
Net change in employee benefits | (771 | ) | (1,709 | ) | 938 | ||||
$ | 98,966 | $ | 100,660 | $ | (1,694 | ) |
The Fund's Adjusted EBITDA is currently supported by the pricing feature under the Supply and Processing Agreement. It is expected that the Fund's Adjusted EBITDA will be more sensitive to market prices after the expiry of the initial term of the Agreement in May 2017.
Financial information:Michael Boone, Vice President & Chief Financial Officer ofCanadian Electrolytic Zinc Limited,Noranda Income Fund's Manager416-775-1561info@norandaincomefund.com
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