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Noranda Income Fund Announces Extension to Its Revolving Facility and Provides Update on Financing

Apr 19, 2010 - 17:00 ET

VALLEYFIELD, QUEBEC--(Marketwire - April 19, 2010) - Noranda Income Fund (the "Fund") (TSX:NIF.UN) announced today that, subject to the satisfaction of certain closing conditions, its subsidiary, Noranda Operating Trust (the "Operating Trust"), has completed an amendment with a syndicate of Canadian chartered banks (the "Syndicate") to extend the maturity date of its existing credit facility (the "Revolving Facility") from May 3, 2010 to November 3, 2010 (the "Extension Period"). The extension will enable the Operating Trust to pursue the refinancing of the $153.5 million senior secured notes (the "Notes") that mature on December 20, 2010.

One of the requirements of the extension of the Revolving Facility is that no cash distributions can be paid to Unitholders during the Extension Period.

Discussions to complete a longer-term extension of the Revolving Facility with the Syndicate will continue with the intention to have the extension coincide with the refinancing of the Notes.

Under the extension of the Revolving Facility, the amount available to be drawn will continue to vary on a quarterly basis and will continue to be based on the same percentages of the Fund's inventory and accounts receivable from the previous quarter. The maximum available to be drawn at any time has been reduced to $120 million from $200 million to reflect the lower zinc price environment since the amendment in the fourth quarter of 2007. The decrease in the maximum available credit will reduce the standby fees that the Operating Trust is currently paying.

Over the course of 2010, the Fund expects to approach the senior secured noteholders with the goal of refinancing the Notes on a long-term basis.

The Fund expects to be required to reduce the amount of long-term debt within its capital structure as it moves towards May 2, 2017 when the current term of the long-term fixed processing fee supply contract (the "Supply and Processing Agreement") expires. As a result, the Fund expects that the refinancing of the long-term debt in 2010 will include mandatory repayments of principle over the remainder of the Supply and Processing Agreement. These mandatory repayments are expected to reduce the Fund's future free cash flow and cash available for distribution.

The Independent Committee of the Board of Trustees of the Fund continues to work with its financial and legal advisors to review financing alternatives with respect to both the Revolving Facility and the Notes, as well as strategic alternatives available to the Fund. The Independent Committee has retained Gryphon Partners to act as financial advisor and Heenan Blaikie LLP to act as legal counsel.

First Quarter 2010 Zinc Production and Sales

In the first quarter of 2010, the Processing Facility operated at its normal operating level, with 66,466 tonnes of production. Sales were 66,554 tonnes. This compares to 58,080 tonnes and 62,248 tonnes, respectively of production and sales in the first quarter of 2009.


The Fund has provided forward-looking information regarding a longer term extension of the Revolving Facility and the refinancing of the Notes. Forward-looking information involves known and unknown risks, uncertainties and other factors, which may cause the actual results or performance to be materially different from any future results or performance expressed or implied by the forward-looking information.

Examples of such risks, uncertainties and other factors include, but are not limited to, the following: (1) loan default and refinancing risk; (2) potential negative financial impact from regulatory investigations, claims, lawsuits and other proceedings; (3) general business and economic conditions ; and (4) the other general risks set out in the Fund's continuous disclosure documents, including its annual information form and management's discussion and analysis related to its 2009 annual financial statements.

Noranda Income Fund is an income trust whose units trade on the Toronto Stock Exchange under the symbol "NIF.UN". Noranda Income Fund was created to acquire Noranda Inc.'s CEZ processing facility and ancillary assets (the "CEZ processing facility") located in Salaberry-de-Valleyfield, Quebec. The CEZ 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 its customers are located. It produces refined zinc metal and various by-products from zinc concentrates purchased from mining operations.


Noranda Income Fund's Manager
Michael Boone
Vice President and Chief Financial Officer

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