Noranda Income Fund Extends Terms of Agreements With Glencore Canada
TORONTO, Nov. 05, 2020 (GLOBE NEWSWIRE) — Noranda Income Fund (TSX:NIF.UN) (the “Fund”) announced today that it has extended its exclusive agreements with Glencore Canada for the purchase of zinc concentrate and the sale of zinc metal for an additional period of three years through to April 30, 2025. The Supply and Processing Agreement (“SPA”) non-renewal notice period has also been amended to 540 days before April 30, 2025 or any subsequent renewal date thereafter, an increase from the 180 days required by the original agreement.
In addition, in the event of a non-renewal of the SPA, Glencore Canada has agreed to use reasonable commercial efforts to provide the Fund with transitional assistance as may be reasonably required to allow the Fund to secure zinc concentrate and to market the zinc metal it produces following the expiry date of the SPA.“Confirming the extension of our agreements with Glencore Canada at this time represents an important development for the Fund, bringing added stability as we move forward with strategic expansion projects that aim to strengthen our processing facility’s market positioning,” said Anthony Lloyd, Chairman of the Board of Trustees of Noranda Operating Trust. “We are also very pleased with the amended non-renewal notice period and Glencore Canada’s undertaking to provide transitional assistance. This provides the Fund with a longer period of time to plan an orderly transition in the event that Glencore Canada elects for the agreements not to be automatically renewed.”“We are extremely pleased that the agreement with Glencore Canada for the exclusive purchase of concentrate and the sale of zinc metal has been extended through to April 30, 2025. The extension avoids any uncertainty regarding our source of supply through to that period and allows us to put all of our focus on our operations and safely moving forward with our strategic expansion projects,” said Liana Centomo, Chief Executive Officer of Canadian Electrolytic Zinc Limited, the Fund’s manager. Contract Amendments
In January 2017 and March 2018, the Fund entered into agreements pursuant to which Glencore Canada, as principal, will supply the Fund with all of its zinc concentrate requirements and purchase all of the Fund’s metal for the twelve-month period ended April 30, 2018 and the four-year period ending April 30, 2022, which aligns with the end of the current term of the SPA.Today, the Fund extended its exclusive agreements with Glencore Canada for the purchase of zinc concentrate and the sale of zinc metal for an additional period of three years through to April 30, 2025. In addition, the SPA has been amended so that its current term will end on April 30, 2025, and it will renew automatically for five-year terms thereafter, unless Glencore Canada provides a written non-renewal notice at least 540 days prior to the renewal date, an increase from the 180 days required by the original agreement. Corresponding amendments have been made to the Operating and Management Agreement, the Management Services Agreement, and the Administration Agreement. In the event that Glencore Canada provides a written non-renewal notice, Glencore Canada is to use reasonable commercial efforts to assist the Fund in putting into place such arrangements as may be reasonably required by the Fund to secure zinc concentrate and market the zinc metal it produces, following the expiry of the SPA.The extension and amendments have been unanimously approved by the independent trustees of Noranda Operating Trust, after consultation with their independent industry consultants and legal advisors.Asset-based Revolving Credit Facility
On May 13, 2020, the Fund announced the amendment of its asset-based revolving credit facility (“ABL”) for a term to maturity of July 20, 2023 or February 1, 2022 if the SPA with Glencore Canada is not renewed past May 1, 2022. As a result of the extension of the term of the SPA announced today and subject to the approval of the ABL lenders, the maturity date for the ABL becomes July 20, 2023.Forward-Looking InformationCertain information in this press release, including statements regarding the Fund’s production and sales, future business plans and operation of the Processing Facility, future liabilities and obligations of the Fund (including capital expenditures), the ability of the Fund to operate profitably, the dependence upon the continuing supply of zinc concentrates and competition relating thereto, the ability of the Processing Facility to treat a more varied feed quality stream, anticipated trends in zinc concentrate supply and demand, smelting capacity, sulphuric acid market demand and supply, zinc concentrate treatment charges, the anticipated financial and operating results of the Fund, distributions to Unitholders, the scope, timing and completion of the Expansion Projects, the impact of the Expansion Projects on the operations of the Processing Facility, the operating and financial results of the Fund, and the impact of the amendments to the SPA, the Operating and Management Agreement, the Management Services Agreement, the Administration Agreement and the agreements relating to purchases of zinc concentrate and sale of zinc metal are forward-looking information. In some cases, but not necessarily in all cases, forward-looking information can be identified by the use of forward-looking terminology such as “plans”, “targets”, “expects” or “does not expect”, “is expected”, “an opportunity exists”, “is positioned”, “estimates”, “intends”, “assumes”, “anticipates” or “does not anticipate” or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might”, “will” or “will be taken”, “occur” or “be achieved”. Statements containing forward looking information are not historical facts but instead represent management’s expectations, estimates and projections regarding future events.Forward-looking information is necessarily based on a number of opinions, assumptions and estimates that, while considered reasonable as of the date of this press release, are subject to known and unknown risks, uncertainties, assumptions and other factors that may cause the actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information, including but not limited to the factors described in greater detail in the “Risk Factors” section of the Fund’s Annual Information Form dated March 30, 2020 for the year ended December 31, 2019 and the Fund’s other periodic filings available at www.sedar.com. These factors are not intended to represent a complete list of the factors that could affect the Fund; however, these factors should be considered carefully. There can be no assurance that such estimates and assumptions will prove to be correct. The forward-looking statements contained in this press release are made as of the date of this press release, and the Fund expressly disclaims any obligation to update or alter statements containing any forward-looking information, or the factors or assumptions underlying them, whether as a result of new information, future events or otherwise, except as required by law.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.For further information, please contact:
Chief Financial Officer of Canadian Electrolytic Zinc Limited, Noranda Income Fund’s Manager