DBRS Releases Report on Noranda Operating Trust

DBRS Limited (DBRS) has today released a report on Noranda Operating Trust (the Trust) that provides further detail on the recent confirmation of the Trust’s Senior Secured Notes rating at BB (high) with a Stable trend.

The Trust remains a well-established and currently profitable processor of zinc concentrates strategically located to serve North American zinc metal markets, but it is highly dependent on a zinc concentrate supply and processing agreement (Supply and Processing Agreement) with Glencore Canada Corporation that ends its initial term in May 2017.

The Trust has invested significant capital to maintain and enhance the operating capabilities of its zinc processing facility (CEZinc), but the economic viability of CEZinc post-May 2017 is uncertain, as it will need to replace (or continue) the Supply and Processing Agreement at terms DBRS expects will likely be less favourable than currently.

The Trust has continued to restrict distributions to its unitholders in order to provide funds to maintain the operational capability of CEZinc and to build resources to accommodate any transition/remediation/closure costs that may be incurred post-May 2017. DBRS views this as a prudent action given that the viability of the CEZinc facility post-May 2017 remains in doubt.

Today’s report and the July 8, 2015, press release are available at www.dbrs.com or by contacting us at info@dbrs.com.