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FOR: NORANDA INCOME FUND

Noranda Income Fund Announces That Sulphuric Acid and Zinc Production Will Return to Full Capacity Due to Improvements in the Sulphuric Acid Market

Sep 28, 2009 - 08:00 ET

VALLEYFIELD, QUEBEC--(Marketwire - Sept. 28, 2009) - The Noranda Income Fund (the "Fund") (TSX:NIF.UN) announced that it has received notice from its sales agent, Xstrata Canada Corporation ("Xstrata Canada"), that current market conditions now permit Xstrata Canada to arrange for all the sales of sulphuric acid in quantities equal to the Processing Facility's normal rate of production.

As disclosed in the Q2 2009 Interim Report, there were signs that the fundamentals for sulphuric acid might improve in the remainder of the year. In the past few months, the Fund has seen stronger market conditions as a result of the strike of the Vale Inco operations in Sudbury and improved sales to both spot and contract customers. The Fund expects to be back to full capacity by the beginning of October.

Since March 2009, production of sulphuric acid and zinc was reduced by approximately 20% due to the weakness in sulphuric acid demand and the lack of sulphuric acid storage capacity.

On July 20, 2009, the Fund suspended monthly cash distributions to Priority Unitholders as a result of the reduced profitability and cash flow from operating the Processing Facility at less than full capacity and because of weak market conditions. Monthly distributions have not been paid to Ordinary Unitholders since February 2009. The Board of Trustees decided that it was prudent to stop paying the monthly cash distribution until there is an overall improvement in the economic outlook of the Fund.

While the return to full capacity is positive, the Fund still faces some challenges, such as low zinc premiums and acid netbacks and a stronger Canadian dollar. In addition, the Fund, as disclosed in the Q2 2009 Interim Report, is in discussion with the Revolving Facility syndicate about the expected Current ratio and possible Leverage ratio covenant breaches. The Board of Trustees will continue to assess all these factors as they consider any change to the current monthly distribution policy. At this point in time, the monthly cash distribution remains suspended.

FORWARD-LOOKING INFORMATION

The Fund has provided Forward-looking Information on the ability to operate at full capacity. 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) the Fund's ability to operate at normal production levels; (2) the demand for sulphuric acid; (3) the impact on the sulphuric acid fundamentals when the current labour unrest is settled; and (4) the ability to manage sulphuric acid inventories.

Noranda Income Fund is an income trust whose units trade on the Toronto Stock Exchange under the symbol "NIF.UN". The Noranda Income Fund owns the CEZinc processing facility and ancillary assets (the "CEZinc processing facility") located in Salaberry-de-Valleyfield, Quebec. The CEZinc 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. The Processing Facility is operated and managed by Canadian Electrolytic Zinc Limited. 

FOR FURTHER INFORMATION PLEASE CONTACT:

Financial information: Michael Boone
Vice President & Chief Financial Officer
of Canadian Electrolytic Zinc Limited
Noranda Income Fund's Manager
416-775-1561
mboone@xstrata.ca / www.norandaincomefund.com



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