NEW YORK Noranda Income Fund, the majority owner of Canadian Electrolytic Zinc Ltd. (CEZinc), posted lower third-quarter financial results as it also announced a "reorganization" of its tax arrangements.
Net income fell 81.1 percent to Canadian $1.43 million ($1.426 million) from C$7.56 million in the same 2011 quarter, on sales that fell 20.1 percent to C$128.56 million ($128.25 million) from C$160.87 million.
The drop was "mainly due to lower zinc sales and by-product revenues, partially offset by higher zinc premiums and processing fees, and lower finance costs," the Salaberry-de-Valleyfield, Quebec-based company said.
Zinc premiums averaged 7.6 cents per pound for the quarter, up from 5.8 cents a year earlier, while zinc metal sales volumes fell to 60,953 tonnes from 66,219 tonnes.
Meanwhile, an "internal reorganization" will be finalized by year-end, the company said.
It had engaged an independent advisor to help it review "the tax impact and other consequences ... for the Fund to convert to a corporation, while also considering the impact of remaining as a trust." It ultimately decided against the conversion, having been unable to reach an agreement with Toronto-based Xstrata Canada Corp., the holder of Noranda Income Limited Partnerships ordinary units.
As an alternative, the parties have approved a reorganization eliminating the requirement for the Fund to declare an annual in-kind distribution to reduce its effective tax rate.