Full-Year 2019 Overview
- Loss before income taxes were
$0.2 million in 2019, compared to earnings before income taxes of$16 .3 million in 2018 - Adjusted EBITDA1 of
$23.4 million in 2019 compared to$17.0 million in 2018 - Zinc metal production decreased 3% to 262,965 tonnes from 270,076 tonnes in 2018
- Zinc metal sales were 262,341 tonnes, down 5% from 275,676 tonnes in 2018
- By-product revenues from the sale of copper in cake and sulphuric acid of
$34.7 million , compared to$28.3 million for 2018 - On
December 19, 2019 , theBoard of Trustees of the Fund announced a special cash distribution ofCAD$0.03 per unit, payable onJanuary 27, 2020 , to Priority and Ordinary Unitholders
Q4 2019 Overview
- Adjusted EBITDA1 of
$11.2 million in Q4 2019 compared to a loss of$7.1 million in Q4 2018 - 6% decrease in zinc metal production to 70,053 tonnes from 74,676 tonnes in Q4 2018
- 8% decrease in zinc metal sales to 69,446 tonnes from 75,265 tonnes in Q4 2018
“2019 was characterized by production challenges in the first half of the year, which impacted our annual production and sales volumes. Importantly, our operations teams worked diligently throughout the second half of the year to successfully stabilize production and address equipment maintenance issues. This enabled us to achieve our revised 2019 annual production and sales targets and kick off 2020 on more solid footing.
“As we continue to adjust our operations to the processing of higher volumes of higher-impurity zinc concentrate, we have set our 2020 annual production and sales target to between 260,000 and 270,000 tonnes,” said
Full Year 2019 Financial and Operating Results
Loss before income taxes were
Adjusted EBITDA1 was
Production costs before change in inventory in 2019 were
Unit production costs2 were
Cash provided by operating activities in 2019 was
As at
Outlook for the Fund
According to industry analysts such as
As per
The impact of the Covid-19 epidemic on the Chinese zinc industry is starting to be seen in both supply and demand. The long-term impact will depend on the length and extent of the epidemic.
Production and Sales Outlook
The Fund’s estimates for its 2020 zinc metal production and sales are as follows:
Production: | 260,000 to 270,000 tonnes |
Sales: | 260,000 to 270,000 tonnes |
The Fund’s ability to meet the targets identified above is subject to various risks, uncertainties and assumptions, some of which can be found in “Forward-Looking Information”.
Quality and Availability of Zinc Concentrates
The global quality of zinc concentrates has been declining in terms of zinc grade and the level of impurities contained within. The impact on a smelter is an increase in the level of residues to be treated per tonne of zinc produced. The Fund is continually focused on optimizing its existing facilities and is assessing the impact of this global trend on its operating capacities to determine what capital investments could be made to improve production capacity and overall profitability.
Concentrate inventory levels continue to be variable, due to large and irregular offshore deliveries of concentrate and the requirement to mix feed qualities to maximize the Processing Facility’s production. Variations in feed quality and feed mix could impact production and inventory levels.
Fourth Quarter and Full Year 2019 Earnings Conference Call
When:
Dial-in: 1 (877) 291-4570 (toll-free
To access webcast: http://www.norandaincomefund.com/investor/conference.php
The recording will be available until midnight on
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 www.sedar.com.
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.
Further information about
www.norandaincomefund.com.
Key Performance Drivers | ||||
The following table provides a summary of the performance of the Fund’s key drivers: | ||||
Three months ended | Twelve months ended | |||
2019 | 2018 | 2019 | 2018 | |
Zinc concentrate and secondary feed processed (tonnes) | 124,464 | 130,051 | 510,560 | 523,960 |
Zinc grade (%) | 52.9 | 51.5 | 52.6 | 52.1 |
Zinc recovery (%) | 96.3 | 97.7 | 96.5 | 97.5 |
Zinc metal production (tonnes) | 70,053 | 74,676 | 262,965 | 270,076 |
Zinc metal sales (tonnes) | 69,446 | 75,265 | 262,341 | 275,676 |
Zinc cathode converted into zinc metal | - | - | - | 20,000 |
Realized zinc price (US$/pound) | 1.15 | 1.26 | 1.23 | 1.40 |
Average LME zinc price (US$/pound) | 1.08 | 1.19 | 1.16 | 1.33 |
By-product revenues ($ millions) | 10 | 6.5 | 34.7 | 28.3 |
Copper in cake production (tonnes) | 626 | 775 | 2,658 | 2,547 |
Copper in cake sales (tonnes) | 731 | 559 | 2,625 | 2,497 |
Sulphuric acid production (tonnes) | 96,899 | 98,755 | 394,610 | 421,714 |
Sulphuric acid sales (tonnes) | 99,400 | 93,998 | 390,599 | 425,678 |
Average LME copper price (US$/pound) | 2.67 | 2.80 | 2.72 | 2.96 |
Sulphuric acid netback (US$/tonne) | 74 | 48 | 67 | 46 |
Average CAD/US exchange rate | 0.76 | 0.76 | 0.75 | 0.77 |
* 1 tonne = 2,204.62 pounds | ||||
SELECTED FINANCIAL AND OPERATING INFORMATION | |||||||||||
Three months ended | Twelve months ended | ||||||||||
($ thousands) | 2019 | 2018 | 2019 | 2018 | |||||||
Statements of Comprehensive Income (Loss) Information | |||||||||||
Net revenues | 168,608 | 192,114 | 727,043 | 909,144 | |||||||
Raw material purchase costs | 128,486 | 171,554 | 542,634 | 726,576 | |||||||
Derivative financial instruments gain | (16,166 | ) | (19,616 | ) | (146 | ) | (19,900 | ) | |||
Net revenues less raw material purchase costs and derivative financial instruments gain | 56,288 | 40,176 | 184,555 | 202,468 | |||||||
Other expenses: | |||||||||||
Production | 36,707 | 38,061 | 140,806 | 145,712 | |||||||
Selling and administration | 4,243 | 3,337 | 15,668 | 15,068 | |||||||
Foreign currency loss (gain) | 446 | 185 | 743 | (379 | ) | ||||||
Depreciation of property, plant and equipment | 4,544 | 4,551 | 15,949 | 17,569 | |||||||
Rehabilitation (recovery) expense | (965 | ) | 869 | 2,202 | 79 | ||||||
Earnings (loss) before finance costs and income taxes | 11,313 | (6,827 | ) | 9,187 | 24,419 | ||||||
Finance costs, net | 2,995 | 1,390 | 9,337 | 8,150 | |||||||
Earnings (loss) before income taxes | 8,318 | (8,217 | ) | (150 | ) | 16,269 | |||||
Current and deferred income tax expense (recovery) | 1,389 | (948 | ) | 502 | 4,298 | ||||||
Earnings (loss) attributable to Unitholders and Non-controlling interest | 6,929 | (7,269 | ) | (652 | ) | 11,971 | |||||
Distributions to Unitholders - net of tax recovery | 914 | 855 | 914 | 855 | |||||||
Increase (decrease) in net assets attributable to Unitholders and Non-controlling interest | 6,015 | (8,124 | ) | (1,566 | ) | 11,116 | |||||
Other comprehensive income (loss) | 4,623 | (1,950 | ) | 840 | 341 | ||||||
Comprehensive income (loss) | 10,638 | (10,074 | ) | (726 | ) | 11,457 | |||||
Statements of Financial Position Information | |||||||||||
Cash | 1,082 | 732 | |||||||||
Inventories | 157,975 | 149,916 | |||||||||
Accounts receivable | 144,157 | 163,635 | |||||||||
Income taxes receivable | 4,187 | - | |||||||||
Property, plant and equipment | 113,776 | 106,807 | |||||||||
Total assets | 437,779 | 439,177 | |||||||||
Accounts payable and accrued liabilities | 96,286 | 97,707 | |||||||||
Deferred revenues | 879 | 2,412 | |||||||||
ABL revolving facility | 136,019 | 133,672 | |||||||||
Total liabilities excluding net assets attributable to Unitholders | 269,240 | 269,912 | |||||||||
Three months ended | Twelve months ended | ||||||||||
Statements of Cash Flows Information | 2019 | 2018 | 2019 | 2018 | |||||||
Cash (used in) provided by operating activities before cash | |||||||||||
distributions and net change in non-cash working capital items | (4,946 | ) | (21,150 | ) | 5,735 | 34,437 | |||||
Cash distributions | - | - | (1,099 | ) | - | ||||||
Net change in non-cash working capital items | (11,612 | ) | (3,539 | ) | 14,315 | (41,905 | ) | ||||
Cash (used in) provided by operating activities | (16,558 | ) | (24,689 | ) | 18,951 | (7,468 | ) | ||||
Cash used in investing activities | (7,259 | ) | (6,349 | ) | (20,948 | ) | (18,595 | ) | |||
Cash provided by financing activities | 24,461 | 31,209 | 2,347 | 24,976 | |||||||
Net increase (decrease) in cash | 644 | 171 | 350 | (1,087 | ) | ||||||
1Adjusted EBITDA is used by the Fund as an indication of cash generated from operations. Adjusted EBITDA is not a recognized measure under International Financial Reporting Standards and therefore the Fund’s method of calculating Adjusted EBITDA is unlikely to be comparable to methods used by other entities. The Fund’s Adjusted EBITDA is calculated by starting from earnings before finance costs and income taxes and adjusting for non-cash items such as depreciation, gain or loss on the sale of assets and changes in fair value of embedded derivatives. In addition, an adjustment is made to reflect the net change in the rehabilitation liabilities (reclamation (recovery) expense less site restoration expenditures), the increase (decrease) in inventory margin and the net change in employee benefits (non-cash employee benefit expenses less employer contributions).
2 Unit production costs is not a recognized measure under International Financial Reporting Standards and therefore the Fund’s method of calculating unit production costs may not be comparable to methods used by other entities. Unit production costs means production costs divided by total tonnes of zinc produced. The Fund uses unit production costs as it believes it provides the best indication of the costs of production in a period and provides the ability to compare production costs in different periods.
For further information, please contact:
Chief Financial Officer of
Tel: 514-745-9380
info@norandaincomefund.com
Source: Fonds de revenu Noranda
2020 GlobeNewswire, Inc., source