Noranda Income Fund Reports Fourth Quarter and FY2016 Financial Results
(firmenpresse) - SALABERRY-DE-VALLEYFIELD, QUEBEC -- (Marketwired) -- 03/01/17 -- Noranda Income Fund (TSX: NIF.UN) (the "Fund") today reported its financial results for the three month period and full year ended December 31, 2016. All amounts are in Canadian currency unless otherwise stated.
2016 Fiscal Year Highlights
"Against a backdrop of tightening zinc concentrate supply and resulting reduced treatment charges, we prepared for market terms effective May 2017 through our focus in 2016 on improving plant efficiency, reducing operating costs and improving plant safety," said Ms. Eva Carissimi, President and Chief Executive Officer of Canadian Electrolytic Zinc Limited. "Our efforts were reflected in near-record production of 277,022 tonnes, a 2% reduction in production costs and a strengthening of our balance sheet through debt repayments of $22.5 million. Most significantly, our Supply and Processing Agreement was renewed, removing considerable uncertainty relating to the supply of feed for our operations."
Ms. Carissimi added, "While our recent progress will help us to mitigate some of the near-term challenges facing our industry, we expect our financial results in 2017 will be adversely impacted by the transition to market terms at a time when spot treatment charges are near historic lows. Management is confident that with the contribution of all stakeholders, the Fund will continue to reduce costs, improve capacity and improve safety to remain competitive in the tight zinc concentrate market."
Fourth Quarter 2016 Highlights
Highlights Subsequent to Quarter and Year ended December 31, 2016
2016 Financial and Operating Results
Loss before income taxes was $38.5 million in 2016, down from earnings before income taxes of $49.8 million in 2015. The year-over-year decline was largely due to asset impairment charges recorded in 2016 of $73.0 million compared to asset impairment charges of $10.3 million for 2015. The $73.0 million non-cash impairment charge reflected the significant tightening availability of zinc concentrate supply in 2016, which has resulted in downward pressure on both current and expected future treatment charges for zinc smelters.
The decline in 2016 earnings was also due to lower zinc metal premiums and lower sulphuric acid revenues, although these declines were partially offset by a weaker average Canadian dollar compared to the US dollar, lower depreciation and reclamation costs, higher zinc metal sales and lower unit production costs.
Adjusted Net Revenues for 2016 were $285.8 million, down 5% from $301.0 million for 2015. The decline was mainly due to lower zinc premium and sulphuric acid revenue, though partially offset by higher volume of sales of zinc metal.
Zinc metal production in 2016 increased 2% to 277,022 tonnes from 272,861 tonnes in 2015.
Zinc metal sales in 2016 increased 4% to 273,052 tonnes from 262,719 tonnes sold in 2015. Sales for 2016 were within the Fund''s target for the year of 265,000 to 275,000 tonnes.
Cash provided by operating activities in 2016 was $56.2 million, including a positive $8.5 million decrease in non-cash working capital due mainly to an increase in accounts payable offset by an increase in accounts receivables and inventory. In 2015, cash provided by operating activities was $16.2 million, including a negative $48.1 million increase in non-cash working capital due mainly to an increase in inventories and a reduction in accounts payable and accrued liabilities.
Unit production costs were down 2% from 2015. The production cost decreases were driven largely by lower energy expenses and lower contractor costs although offset by higher labour costs. In November 2016, the Fund submitted an application to the Quebec Ministry of Finance under its program for electricity rate reduction for large industrial electricity consumers. In February 2017, the Fund received notice that its application had been accepted conditional to meeting additional milestones. There can be no assurance that the Fund will be able to meet those milestones.
Cash distributions of $13.7 million, or $0.36668 per unit were declared in 2016. These compare to cash distributions of $18.7 million, or $0.50004 per priority unit, declared in 2015. In light of prevailing market conditions and the need to be prudent with cash reserves, the Fund''s Board of Trustees suspended monthly distributions to unitholders following the distribution paid on February 27, 2017. There is no assurance that monthly distributions will resume in the future.
The Fund remains committed to managing its debt levels as it prepares for market terms in May 2017. As at December 31, 2016, the Fund''s debt was $64.0 million (net of deferred financing fees), down from $92.8 million at the end of December 2015. The reduction of the Fund''s debt was due to the decrease in non-cash working capital during the period. The Fund''s cash as at December 31, 2016 totalled $2.6 million.
On December 28, 2016, the Fund repaid its remaining $15 million balance of Senior Secured Notes from an aggregate principal amount of $90 million issued on July 28, 2011.
On October 31, 2016, the Fund extended the maturity of the asset-based revolving credit facility ("ABL Facility") to November 15, 2017 providing availability of up to $175 million. The terms of the ABL Facility remain essentially the same.
Fourth Quarter Financial and Operating Results
The Fund reported a loss before income taxes of $29.8 million in the three months ended December 31, 2016 compared to earnings before income taxes of $0.9 million in the same period a year ago. The $30.7 million decline is mostly due to the decrease in Net Revenues and an impairment charge of $52.0 million recorded in Q4 2016 compared to $10.3 million in Q4 2015. The non-cash impairment charge reflected the significant tightening availability of zinc concentrate supply in Q4 2016, which has resulted in downward pressure on both current and expected future treatment charges for zinc smelters.
Zinc metal production in Q4 2016 totalled 72,291, up from 71,971 tonnes for Q4 2015. Production in Q4 2016 enabled the Fund to surpass its target for FY2016. Zinc metal sales in Q4 2016 totalled 69,196 tonnes, down from 79,552 tonnes for the same period last year.
Cash provided by operating activities in Q4 2016 was $35.2 million, including a positive $19.6 million decrease in non-cash working capital due to a decrease in accounts receivables and an increase in accounts payable partially offset by an increase in the inventory. In the same period of 2015, cash provided by operating activities was $43.9 million, a total that was positively impacted by a $15.3 million decrease in non-cash working capital due to a reduction in accounts receivable and inventory and an increase in accounts payable.
Outlook for the Fund
With the renewal of the Supply and Processing Agreement, the main challenge now facing the Fund will be to continue to operate its Processing Facility at a profit once market terms take effect May 3, 2017. The Fund''s Board of Trustees is mindful of the expected negative impact that the transition to market terms will have on the Fund''s operations, including its ability to sustain its distribution policy at a time when spot treatment charges are near historic lows. The Board of Trustees is carefully reviewing the Fund''s reserves and will augment the reserves if necessary.
In light of the unionized workers'' strike at the Processing Facility and uncertainty about its duration, the Fund has deferred providing guidance for zinc metal production and sales targets for 2017 until an appropriate time.
To access the webcast and view the slide presentation from the Noranda Income Fund website: or click on this link: http://www.gowebcasting.com/8374
The conference ID is 75422233 and you will be prompted to provide your name and company.
The recording will be available until midnight on March 15, 2017.
A full version of the annual 2016 Management''s Discussion and Analysis (MD&A) and audited Consolidated Financial Statements will be posted on and on the Fund''s website at http://www.norandaincomefund.com/investor/financials.html later today.
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. 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 .
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, Quebec. 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
Key Performance Drivers
The following table provides a summary of the Fund''s key performance drivers:
Contacts:
Michael Boone
Vice President & Chief Financial Officer
of Canadian Electrolytic Zinc Limited
Noranda Income Fund''s Manager
416-775-1561
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Datum: 01.03.2017 - 06:45 Uhr
Sprache: Deutsch
News-ID 1489716
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