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FOR: NORANDA INCOME FUND

Noranda Income Fund Announces a Restatement of Its December 31, 2017 Consolidated Financial Statements

Restatement Results From Change in Accounting for Q4 2017 Cathode Sale

Apr 26, 2018 - 17:00 ET

SALABERRY-DE-VALLEYFIELD, QUÉBEC, April 26, 2018 (GLOBE NEWSWIRE) -- Noranda Income Fund (TSX:NIF.UN) (the “Fund”) announces a restatement to its December 31, 2017 consolidated financial statements. Following the filing on March 15, 2018 of the audited consolidated financial statements as at and for the years ended December 31, 2017 and 2016, management and the Fund’s external auditors reconsidered the accounting treatment of the sale of the 20,000 tonnes of zinc cathode to Glencore Canada in November 2017. As previously disclosed, the extra cathode had been produced because of the roasters, leaching plant and cell house operating at 70% of capacity during the second half of the year, while the zinc casting facility operated at 50% of capacity. The sale of cathode decreased the volume of inventory for the Fund and reduced the Fund’s working capital. The transaction had been reported as a sale but, following this reconsideration, the Fund has determined that a correction was required and the accounting treatment has been changed to reflect a financing transaction in light of the tolling requirement should Glencore Canada choose not to ship the cathode to another processing facility.  Therefore, the Fund has restated its previously reported consolidated financial statements as at and for the year ended December 31, 2017 and all related disclosures. The financial statements as at and for the year ended December 31, 2016 are not affected by the restatement. The impact of the correction is as follows (in thousands of US dollars):

Consolidated statement of financial position As reported  Adjustments  Restated
    
Inventories  171,655   60,376   232,031 
Prepaid and other assets  1,854   1,864   3,718 
Deferred tax assets  12,453   (501)  11,952 
    
Trade and other payables  26,835   (1,195)  25,640 
Deferred revenues  -   61,459   61,459 
    
Net assets attributable to Unitholders and
  Non-controlling interest
  156,333    1,475    157,808  
    
Net assets attributable to:   
Priority Unitholders  123,002   1,106   124,108 
Ordinary Unitholders  41,023   369   41,392 
   164,025   1,475   165,500 
Non-controlling interest  (7,692)  -   (7,692)
   156,333    1,475    157,808  

On the amended and restated consolidated statement of financial position, the restatement resulted in the increase in the reported inventories and an increase in deferred revenues reported. The trade and other payables were reduced reflecting the reduction of the transportation and distribution costs. Prepaid and other assets were increased reflecting the prepaid financing cost associated with the transaction.

Consolidated statement of comprehensive loss As reported  Adjustments  Restated
    
Sales  677,159   (59,062)  618,097 
Transportation and distribution costs  (13,503)  1,195   (12,308)
Revenues  663,656    (57,867)  605,789  
Raw material purchase costs  523,058   (51,700)  471,358 
Net revenues less raw material purchase costs  140,598    (6,167)  134,431  
Other expenses - Production  118,902   (7,728)  111,174 
Depreciation  18,100   (948)  17,152 
Loss before finance costs and income taxes  (29,867)  2,509    (27,358)
Finance costs, net  5,211   533   5,744 
Loss before income taxes  (35,078)  1,976    (33,102)
Deferred income tax recovery  (577)  501   (76)
Loss attributable to Unitholders and Non-controlling interest  (26,811)  1,475    (25,336)
Decrease in net assets attributable to Unitholders and
  Non-controlling interest
  (27,522)  1,475    (26,047)
Comprehensive loss  (19,785)  1,475    (18,310)
    
Decrease in net assets attributable to:   
Priority Unitholders  (15,825)  1,106   (14,719)
Ordinary Unitholders  (5,275)  369   (4,906)
   (21,100)  1,475   (19,625)
Non-controlling interest  (6,422)  -   (6,422)
   (27,522)  1,475    (26,047)
Comprehensive loss attributable to:   
Priority Unitholders  (10,940)  1,106   (9,834)
Ordinary Unitholders  (3,645)  369   (3,276)
   (14,585)  1,475   (13,110)
Non-controlling interest  (5,200)  -   (5,200)
   (19,785)  1,475    (18,310)

On the amended and restated consolidated statements of comprehensive loss, the restatement resulted in the reversal of the sales, transportation and distribution costs, raw material purchase costs, production expenses and depreciation associated with the cathode sale. In addition, a finance cost was recorded related to the transaction.

Consolidated statement of cash flows As reported  Adjustments  Restated
    
Operating activities   
Loss before income taxes  (35,078)  1,976   (33,102)
Adjustments to reconcile earnings before income taxes to cash
  used in operating activities
   
Depreciation  18,100   (948)  17,152 
Finance costs, net  5,211   533   5,744 
Working capital adjustments   
  Increase in inventories  12,340   (59,428)  (47,088)
  Decrease (increase) in accounts payable and accrued liabilities  (6,542)  (1,195)  (7,737)
  Increase in deferred revenues  -   61,459   61,459 
Interest paid  (4,578)  (2,397)  (6,975)
Cash used in operating activities  (43,868)  -    (43,868)

On the amended and restated consolidated statement of cash flows, the restatement resulted in classification changes within some of the components of cash used in operating activities, however, there was no change to the reported cash used in operating activities.

The Fund will file on SEDAR the amended and restated consolidated financial statements and amended management’s discussion and analysis shortly.

Annual General Meeting Webcast and Dial-In

When: April 27, 2018 at 11:00 a.m. E.T.

To access the webcast and view the slide presentation from the Noranda Income Fund website, please visit http://www.norandaincomefund.com/investor/presentations.php or click the link below:
http://webcast.servicewebdiffusion.com/noranda-eng. (English)
http://webcast.servicewebdiffusion.com/noranda-fr (French)

To access the webcast by telephone, dial 1-866-830-9441, access code 9192413 (English) or 1-866-518-5884, access code 3722750 (French). Please connect approximately 10 minutes prior to the beginning of the call to ensure participation. The webcast will be archived on the Fund’s website following the meeting date.

A conference call to discuss first quarter 2018 financial results will be held Monday, April 30, 2018 at 10:00 a.m. ET. Webcast and call-in details are below.

First Quarter 2018 Results Conference Call

When: April 30, 2018 at 10:00 a.m. E.T
Dial in number: 647-788-4919 or
Toll-free North American number: 1-877-291-4570

To access the webcast and view the slide presentation from the Noranda Income Fund website: http://www.norandaincomefund.com/investor/conference.php or click on this link: https://edge.media-server.com/m6/p/4ap36svh.

Conference Call Replay

The recording will be available until midnight on May 14, 2018.

Dial in number: 416-621-4642 or 
Toll-free North American number: 1-800-585-8367

The conference ID is 3780219 and you will be prompted to provide your name and company.

Noranda Income Fund is an income trust whose units trade on the Toronto Stock Exchange under the symbol “NIF.UN”. Noranda Income Fund owns the electrolytic zinc processing facility and ancillary assets (the “Processing Facility”) located in Salaberry-de-Valleyfield, Québec. The 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 zinc customers are located. It produces refined zinc metal and various by-products from sourced zinc concentrates. The Processing Facility is operated and managed by Canadian Electrolytic Zinc Limited, a wholly-owned subsidiary of Glencore Canada Corporation.

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

For further information, please contact:
Michael Boone, Vice President & Chief Financial Officer of Canadian Electrolytic Zinc Limited, Noranda Income Fund’s Manager
Tel: 416-775-1561
info@norandaincomefund.com



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