Noranda Income Fund Reports First Quarter Net Loss of $2.7 Million
The Noranda Income Fund (the "Fund") (CA:NIF.UN: news , chart , profile ) reported a net loss of $2.7 million for the first quarter of 2009, compared to net earnings of $6.3 million in the same quarter a year ago. Cash realized from operations before changes in working capital was $12.2 million, compared to $11.8 million in 2008. The Fund would have recorded net earnings of $2.4 million in the first quarter of 2009, instead of a net loss, had it not been for the negative impact of two non-cash items. The combined impact of the commodity financial instrument loss and the change in the value of embedded derivatives relating to the provisional pricing in zinc concentrate purchases, negatively impacted net earnings in the quarter by $6.8 million, or $5.1 million after minority interest. "During the first quarter of 2009, the Fund witnessed very weak demand for zinc and sulphuric acid. This translated into lower zinc premiums for the quarter as some spot sales were required to manage inventories. As previously announced, poor demand for sulphuric acid required the Fund to reduce March output by approximately 20%, compared to the first quarter of 2008. Copper prices, which were almost 50% lower than a year ago, negatively impacted copper revenues. Lower copper byproduct revenue, was offset by higher sulphuric acid netbacks as compared to the first quarter of 2008 as a result of the contracts that were negotiated in 2008. In response to these market conditions, the Fund has taken a number of steps to maintain liquidity and a strong balance sheet, including reducing the monthly distribution." said Mario Chapados, President and Chief Executive Officer of the Noranda Income Fund’s Manager. "For the second quarter of 2009, the Fund expects that premiums to be about 3.5 to 4.0 cents US per pound." The outlook for second quarter 2009 premiums is subject to various risks and uncertainties. The assumptions can be found in the "Forward-looking Information" below. Financial Results This analysis of the financial position and results of operations of the Fund should be read in conjunction with the unaudited consolidated interim financial statements of the Fund for the three months ended March 31, 2009 and with the audited consolidated financial statements of the Fund and the notes thereto for the period ended December 31, 2008. This press release is based on various assumptions (see "Forward-looking Information" below.) All dollar amounts are shown in Canadian dollars unless otherwise specified. The analysis has been prepared as of May 4, 2009. Additional information relating to the Fund, including the Fund’s annual information form is available on SEDAR at www.sedar.com.