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 Click Here for more Noranda Income Charts.
Noranda Income (TSX:NIF.UN)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more Noranda Income Charts.