Noranda 3Q zinc output rebounds from 2017 strike

Noranda Income Fund boosted zinc metal production by 78pc in the third quarter from a year earlier and pushed up its 2018 output target to as much as 270,000t.

Noranda's Salaberry-de-Valleyfield facility in Quebec produced 60,214t of zinc metal in the third quarter, up from 33,802t in the same quarter a year earlier. The gain reflected a return to full production following a strike that occurred in February-November 2017, when the facility operated at 50-60pc capacity.

Zinc metal sales totaled 60,975t in the third quarter, up by 83pc from 33,395t a year earlier.

The company raised its output and sales target for the year to 260,000-270,000t from a prior target of 255,000-265,000t.

Noranda's realized zinc price fell to $1.22/lb in the latest quarter from $1.41/lb a year earlier.

Unit production costs were $523/t in the quarter compared to $493/t in the same quarter of 2017.

Revenues rose to $244mn in the third quarter from $95mn a year earlier. By-product revenues doubled to $8.8mn from $4mn. Gains from financial derivative transactions rose to $27mn from $700,000 a year earlier.

Raw material purchase costs surged to $172mn from $85mn. Production costs rose to $33.7mn from $16.8mn because of higher labor, contractor and supply costs.

The facility processed 138,944t of zinc concentrate and secondary feed in the latest quarter, compared with 96,786t a year earlier.

The company swung to a profit of $1.4mn in the latest quarter from a loss of $12.2mn a year earlier.

Glencore Canada has agreed to supply Noranda with all of its zinc concentrate requirements and purchase all of the fund's zinc metal for the four-year period ending 30 April 2022 under a new purchase agreement that took effect 1 May 2018.

Treatment charges for the supply will be fixed for the first year through April 2019 and will be negotiated each of the following three years based on market conditions.

Sulfuric acid production, a by-product of zinc refining, increased by 38pc to 113,000t during the third quarter from a year earlier, while sales rose by 49pc to 122,000t. The increases reflect the restrained supply in the third quarter 2017 because of the strike.

Netbacks for sulfuric acid doubled to $52/t, amid a tighter sulfuric acid market and increases in contract prices in 2018 from 2017.

The company is also aiming to toll 20,000t of Glencore Canada-owned cathode in 2018 at the Salaberry-de-Valleyfield facility.

Toronto-based Noranda is 75pc owner of the second-largest electrolytic zinc processing facility in North America. Glencore Canada owns the remaining 25pc.