Noranda Income Fund Provides an Update on Operational and Production Challenges and Announces a Cellhouse Maintenance Shutdown
October 19 2022 - 05:15PM
Noranda Income Fund (TSX:NIF.UN) (the “Fund”) today provided an
update regarding its previously disclosed challenges with cellhouse
operating conditions and equipment fragility, which have been
adversely affecting zinc production volumes and output quality.
Due to an accelerated deterioration in cellhouse
operating conditions, the Fund is proceeding with the proactive
repair of numerous cells, to be completed during a shutdown of the
cellhouse. In addition to completing targeted cell repairs, which
is expected to take four to six weeks, the team will undertake a
cell-by-cell integrity assessment and proceed with additional
repairs as necessary, which could extend the timeline further. The
shutdown, which is expected to start by the end of October, will
continue until all cell repairs deemed necessary are completed and
will negatively impact production volumes for 2022.
While the Fund believes that the above-described
extensive cell repair program will contribute to stabilizing
near-term cellhouse operating conditions, the repairs will not
fully address the underlying issues impacting operating conditions.
Evaluations undertaken thus far have led to the conclusion that a
replacement of all cells in the cellhouse will be necessary to
stabilize and improve operating conditions. Therefore, a careful
review by Management is ongoing to assess potential replacement
options and related capital investment requirements and therefore,
no decision has yet been made by the Fund on next steps. As part of
this review process, Management has engaged third-party engineering
firms to perform studies of the required cell replacements, as well
as the previously planned crane replacements. The Fund is also
exploring financing options and evaluating the impact on the
business. It is likely that a full cell and crane replacement would
not be completed before the end of 2024 due to the procurement of
long lead items, and would require a shutdown of all operations for
a period of approximately seven weeks. The cost of a full cell and
crane replacement is currently estimated to be approximately US$100
million. More updates will follow once a decision on the plan for
long-term cellhouse replacement has been finalized and the
financing has been secured.
As a result of the cellhouse maintenance
shutdown commencing by the end of this October 2022 and uncertainty
regarding its duration, the Fund does not expect to meet its
previously disclosed annual production and sales guidance for 2022,
last updated on July 25, 2022, of between 225,000 and 240,000
tonnes of zinc. Furthermore, the Fund does not intend to provide
annual production and sales guidance for the foreseeable future, as
the Processing Facility’s production capacity will remain
constrained until the underlying issues impacting cellhouse
operating conditions are fully addressed.
“With the health and safety of our people always
our number one priority, we are moving forward with a shutdown of
cellhouse operations to repair cells and mitigate risk until such
time as we can finalize our plans to replace all cells and
implement such plans. Although lower production levels are having a
negative impact on our overall profitability, the current positive
market conditions are providing an important level of financial
support during this period,” said Mr. Einarson, Chief
Executive Officer of Canadian Electrolytic Zinc Limited, Noranda
Income Fund’s Manager.
2022 Third Quarter Results
Release The Fund intends to report its financial and
operational results for the third quarter ended September 30, 2022
in November. At that time, the Fund expects to be able to provide
an update on the cellhouse maintenance shutdown. The date of the
third quarter release will be confirmed approximately one week
prior to the earnings release date.
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
InformationCertain information in this press release,
including statements regarding the Fund’s ability to repair its
existing cellhouse, to finance and realize a full cell and crane
replacement and the expected impact of such repairs and replacement
on production and sales, is “forward-looking information” within
the meaning of Canadian provincial securities laws and
“forward-looking statements” within the meaning of Canadian
provincial securities laws. 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, 2022 for the year ended December 31, 2021 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.
About the Noranda Income
FundNoranda 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. Further information about Noranda Income Fund
can be found at: www.norandaincomefund.com
For more information: |
Paul EinarsonChief Executive Officer of Canadian Electrolytic
Zinc Limited, Noranda Income Fund’s ManagerTel.:
514-745-9380info@norandaincomefund.com |
Noranda Income (TSX:NIF.UN)
Historical Stock Chart
From Feb 2024 to Mar 2024
Noranda Income (TSX:NIF.UN)
Historical Stock Chart
From Mar 2023 to Mar 2024