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FOR: NORANDA INCOME FUND

Noranda Income Fund Provides an Update on Its Sulphuric Acid Business

Aug 21, 2008 - 07:15 ET

SALABERRY-DE-VALLEYFIELD, QUEBEC--(Marketwire - Aug. 21, 2008) - In response to requests for additional information on its sulphuric acid business, the Noranda Income Fund (the "Fund")(TSX:NIF.UN) is providing the following update.

Marketing of Sulphuric Acid

The Fund markets its sulphuric acid through a reseller, a wholly-owned subsidiary of Xstrata Canada Corporation ("Xstrata Canada"), which pools the Fund's output with production from four other smelters, all owned by Xstrata Canada and located in eastern Canada, to obtain distribution efficiencies. The Fund's sulphuric acid has been sold through the reseller since before the Fund's inception in 2002. Most of the pooled production is sold into the North American industrial market with the majority of sales being done under contract in the reseller's name. The sulphuric acid netback for each of the five smelters is calculated by reducing the average pool selling price, by the transportation cost to move each smelter's acid to market and the reseller's profit. The individual smelter transportation cost is determined by recognizing the geographic location of each plant vis-a-vis the ultimate customer. Sulphuric acid prices tend to vary region by region based on supply and demand characteristics.

Sulphuric Acid Production, Sales, Selling Price and Netback for the Fund

The following table provides a summary of the sulphuric acid production, sales, selling price and netback for the second quarter and first half of 2008 and 2007:



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Second Quarter Year-to-date
2008 2007 2008 2007
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Sulphuric acid production (tonnes) 108,421 105,918 211,750 210,181
Sulphuric acid sales (tonnes) 127,139 105,108 219,214 210,422
Average pool selling price (US$/tonne) 120.21 69.53 101.99 68.53
Sulphuric acid netback (US$/tonne)(1) 61.38 15.28 51.66 17.50
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(1) after deduction for transportation and reseller profit (4% service fee)

 


The average pool selling price in the second quarter of 2008 increased to US$120 per tonne from US$70 per tonne in 2007. The improvement in 2008 is the result of higher spot sale prices and the impact from contract business being rolled over at higher prices. Approximately 10% to 15% of the pool's sulphuric acid is sold outside of contractual relationships, and the latest monthly average pool selling price (July 2008) for sales into the North American industrial market was US$302 per tonne.

Sulphuric acid is a hazardous material that requires special equipment for storage and transportation. In addition, most smelters have limited storage capacity on site. Therefore, in order to ensure the continued sale of sulphuric acid in a safe and efficient manner on a long-term basis, the Fund's reseller maintains a high level of contractual business. This contractual business is done over periods ranging from one to three years. Roughly 40% of the pool's contracts will be re-negotiated later this year for sales starting on January 1, 2009. In addition, multi-year contracts representing approximately 20% of the pool's contracts will be re-negotiated in 2009 for sales starting on January 1, 2010.

FORWARD-LOOKING INFORMATION

The Fund has provided Forward-looking Information on its exposure to sulphuric acid pricing. This Information was in response to requests for additional information about the Fund's sulphuric acid business.

This press release contains Forward-looking Information concerning the Fund's exposure sulphuric acid pricing. 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) general business and economic conditions; (2) the demand for sulphuric acid; (3) the ability of the Fund to continue to service customers in the same geographic region; and (4) the ability of the Fund to continue to produce sulphuric acid at normal operating levels. This Forward-looking Information represents our views as of the date of this press release. The Fund anticipates that subsequent events and developments may cause its views to change.

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 byproducts from zinc concentrates purchased from mining operations. The Processing Facility is operated and managed by Canadian Electrolytic Zinc Limited.

Further information about the Noranda Income Fund can be found at www.norandaincomefund.com

FOR FURTHER INFORMATION PLEASE CONTACT:

Canadian Electrolytic Zinc Limited,
Noranda Income Fund's Manager
Michael Boone
Vice President & Chief Financial Officer
(416) 775-1561
Email: mboone@xstrata.ca



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