Paul Tepsich Noranda Income Fund NIF.UN-T COMMENT Apr 25, 2016

Still likes this. Up about 50% from where he bought it. He maintains the view that because it has very important metals processing facilities, it is going to have life after death, which occurs after the end of their contract. It doesn’t make sense that no one buys it or that the contract is not renewed.

A zinc processing facility. Zinc used to be sourced from a closer mine, but mines locally have closed down. One facility in Quebec is very efficient and it is just a matter of getting the zinc out of it. 21% yield.

A zinc processing plant, with Glencore (GLEN-LSE) being the primary customer. The yield seems too good to be true. In this case it is not, because the stock can sustain their yield. An extremely cheap stock. Trades at 2X Price to Earnings, 1.6X EBITDA and has a 17% yield. The contract runs out in 2017, and it is unclear what is going to happen at that point. Trading at about .5X BV. The assets are worth something even after the 1 year is up. If you hold it today, you are going to get 17% of your money back in yield between now and 2017, and then you have optionality beyond that. Not a bad place to be.

Had bought this for its extraordinarily high dividend. Is there a zinc situation that is going to run through this company when the time comes? He just continues collecting his money. Dividend yield of 11%.

This is a play on their one-time contract with Glencore which is up in November. Valuation looks great at 2X cash flow, 1.8X EBITDA with an 11% yield, but it is a fictional yield if that contract winds up. This is much more of an events stock than what he would look for.

They have one client: Gencore. The contract has been renewed, but the challenge is that it is at market pricing. The company may not be able to make a profit at these prices and may not be able to maintain the yield. Stay clear until you get a sense of what the financials look like and what will the yield be.

They had to eliminate their dividend, and the stock has come off. Believes there is still a strike going on, so this company is struggling.

This has been absolutely taken through the wringer. There is a massive strike going on, with no end to it. There are 3 zinc smelters in all of North America, and this is one of them. Realistically, it is a recovery situation of some sort. Management has been running the operation. Glencore is the all-powerful tool behind this company, and they are going to need to have one of the smelters to stay in place. He is not going to leave this one.

There is no dividend. Sales are up but earnings are less negative rather than positive. Earnings growth forecast for this year is zero.