NIF.UN Noranda Income Fund

Noranda Income Fund Reports 2013 Fourth Quarter Earnings Before Income Taxes of $9.3 Million and $65.0 Million for the Year

SALABERRY-DE-VALLEYFIELD, QUEBEC--(Marketwired - Feb 11, 2014) - Noranda Income Fund (the "Fund") (TSX:NIF.UN) had solid financial results for the fourth quarter and the year. They continue to be supported by the stability of the Supply and Processing Agreement1. The operating results were also notable. Management not only maintained production while it introduced new zinc concentrate feed into the production process, but it met the annual target.

Fourth Quarter and 2013 Annual Highlights:

• Earnings before income taxes were $9.3 million (Q4 2012 - $22.1 million) and $65.0 million for the year (2012 - $58.1 million).
• Zinc premiums were 8.7 cents US per pound (Q4 2012 - 7.5 cents US per pound). For the year, premiums were $8.3 million higher than in 2012.
• Zinc metal production was 67,212 tonnes (Q4 2012 - 74,748 tonnes). Zinc metal production for the year was on target at 265,242 tonnes (2012 - 263,697 tonnes).
• Zinc metal sales were 65,248 tonnes (Q4 2012 - 67,511 tonnes). Zinc metal sales for the year were 2% higher than target at 269,807 tonnes (2012 - 260,401 tonnes).
• The Fund issued monthly cash distributions of $0.04167 per unit to Priority Unitholders in each of the twelve months of 2013 ($0.5004 per unit or $18.75 million for the year).
• In preparation for the expiry of the initial term of the Supply and Processing Agreement in 2017, the Manager continues to position the business for the future.
  • In 2013, $9.7 million was invested to increase the Partnership's silica removal capacity.
  • This project is on schedule for completion in the second quarter of 2014, and the investment has been revised downwards to $17.5 million from $20.0 million.
  • The Processing Facility treated a more varied feed quality mix. In 2013, 70% of the concentrate consumed was from domestic mines compared to 88% in 2012.
• The $17.4 million multi-year project to replace the liners protecting the concrete walls in the cell house progressed during the year and is expected to be completed on budget in the first quarter of 2014.
• The Fund remains committed to reduce debt. In 2013,the debt was reduced by 46% to $51.3 million (net of deferred financing fees), down from $95.5 million at the end of December 2012.
• The Fund's cash as at December 31, 2013 totalled $15.5 million compared to $1.3 million at the end of 2012.

1	Glencore Canada Corporation ("Glencore Canada") and the Noranda Income Limited Partnership are parties to a supply and processing agreement dated May 3, 2002 (the "Supply and Processing Agreement").

Conference Call and Webcast:

February 12th, 2014 at 8:30 a.m.
	Dial in number: 416-340-8530
	Toll-free North American number: 1-800-766-6630

In addition, you can listen to the teleconference and view the slide presentation from the Conference Call section of our website: http://www.norandaincomefund.com/investor/conference.html or click on this link: http://www.gowebcasting.com/5207

Recording of the Conference Call:

	Dial in number: 905-694-9451 or
	Toll-free North American number: 1-800-408-3053.
The pass code is 5280 660# and you will be prompted for your name and company.
	The recording will be available until midnight on February 26th, 2014.

Long-Term Strategy

The Board continues to work on the long-term strategy for the Fund.

At the operating level, the Processing Facility successfully treated a wider variety of feeds with a higher level of impurities. In 2013:

• Domestic mines provided 70% of the zinc concentrate (2012 - 88%).
• The silica removal project is on schedule for completion in the second quarter of 2014, and the budget has been revised downwards to $17.5 million from $20.0 million.
• The Manager continues to look for opportunities to increase the flexibility of the Processing Facility so that it can efficiently treat a wider variety of zinc concentrate.

2013 Capital Spending

Capital spending was $33.4 million in 2013 compared to $27.0 million in 2012. Most of the annual 2013 capital investment was spent on sustaining the Fund's operations, including $1.8 million on the cell house rehabilitation project, $8.4 million on replacement anodes for the cell house, $2.1 million for an acid plant converter and $2.3 million for a new pumping station. Investment in the silica removal project totalled $9.7 million in 2013.

Financial and Operating Highlights (Fourth quarter 2013 compared to the fourth quarter 2012)

The Fund reported earnings before income taxes of $9.3 million in the fourth quarter of 2013 compared to $22.1 million in the same quarter a year ago. The $12.8 million decrease was mainly due to lower Net Revenues and higher costs.

Cash provided from operating activities, before net changes in non-cash working capital items in the fourth quarter of 2013, was $14.1 million compared to $17.4 million in the fourth quarter of 2012. During the fourth quarter of 2013, non-cash working capital decreased by $7.6 million. The decrease in working capital resulted primarily from a decrease in accounts receivable and an increase in accounts payable and accrued liabilities, partially offset by an increase in inventories. The increase in inventories in the fourth quarter was a result of additional deliveries of zinc concentrate that were received.

Financial and Operating Highlights (2013 compared to 2012)

Earnings before income taxes in 2013 were $65.0 million compared to $58.1 million a year ago. The $6.9 million increase was mainly due to higher zinc metal production and sales, processing fee and premiums and a weaker Canadian dollar, partially offset by lower by-product revenues.

Cash provided by operating activities in 2013, before net changes in non-cash working capital items, was $62.6 million compared to $64.6 million in 2012. During 2013, non- cash working capital decreased by $28.6 million due to a decrease in accounts receivable and inventories and an increase in accounts payable and accrued liabilities. During 2012, non-cash working capital increased by $39.3 million due to an increase in accounts receivable and inventories.

OTHER DEVELOPMENTS

On December 2, 2013, Chris Eskdale and Dirk Vollrath joined John Whyte as the Glencore representatives on the Board. Mr. Eskdale currently leads the zinc industrial assets group of Glencore. Mr. Vollrath has been an Asset Manager of Glencore since joining the Company in 1995. Their expertise in the zinc industry will be an important contribution to the Board and to the Fund.

As previously announced, Manuel Álvarez Dávila and Neil Wardle resigned from the Board on November 5, 2013 and November 29, 2013, respectively.

A full version of the annual 2013 MD&A and the audited Consolidated Financial Statements will be posted on www.sedar.com and on the Fund's website at http://www.norandaincomefund.com/investor/financials.html later today, February 11, 2014. Readers should be advised that the summarized communication presented in this press release is limited in its disclosure. It is not a suitable source of information for readers who are unfamiliar with the Fund, and it is not in any way a substitute for reading the Consolidated Financial Statements and MD&A because a reader relying on this summary alone might overlook decision critical information.

FORWARD-LOOKING INFORMATION

This press release contains forward-looking information and statements within the meaning of applicable securities laws, including statements on the completions of and budgets for the liner replacement project in the cell house and the silica removal project. Forward-looking information involves known and unknown risks, uncertainties and other factors, which may cause actual events, results or performance to be materially different from any future events, results or performance expressed or implied by the forward- looking information, and as a result, the Fund cannot guarantee that any forward-looking statements or information will materialize.

Such risks and uncertainties include, but are not limited to, the effect of general business and economic conditions, the Fund's ability to operate at normal production levels, the Fund's capital expenditure requirements and other general risks and uncertainties set out in the Fund's continuous disclosure documents on available on SEDAR at www.sedar.com.

Forward-looking information contained in this press release is based on, among other things, management's current estimates, expectations, assumptions, plans and intentions, which management believes are reasonable as of the current date, and which are subject to a number of risks and uncertainties. Except as required by law, the Fund does not undertake to update these forward-looking statements or information, whether written or oral, that may be made from time to time by the Fund or on the Fund's behalf.

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.

Except where otherwise indicated, all amounts in this press release are expressed in Canadian dollars.

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

SELECTED FINANCIAL AND OPERATING INFORMATION

		Fourth Quarter				Year
($ thousands)		2013		2012		2013		2012
Statements of Comprehensive Income Information
Revenues		148,313		150,779		609,405		577,676
Raw material purchase costs		75,617		66,003		294,459		288,047
Revenues less raw material purchase costs		72,696		84,776		314,946		289,629
Other expenses:
	Production	45,819		42,858		182,725		169,593
	Selling and administration	6,532		5,436		21,794		21,201
	Foreign currency loss (gain)	2,360		1,413		7,446		(681	)
	(Gain)/loss on derivative financial instruments	(993	)	1,641		(1,080	)	(940	)
	Depreciation of property, plant and equipment	8,785		9,062		36,351		33,502
	Rehabiliation (recovery) expense	(519	)	266		(3,683	)	922
Earnings before finance costs and income taxes		10,712		24,100		71,393		66,032
Finance costs, net		1,368		2,009		6,371		7,981
Earnings before income taxes		9,344		22,091		65,022		58,051
Current and deferred income tax expense (recovery)		2,510		(5,173	)	14,247		7,482
Earnings attributable to Unitholders and Non-controlling interest		6,834		27,264		50,775		50,569
Distributions to Unitholders		4,687		4,687		18,750		18,750
Current income tax recovery on distribution		(603	)	(35	)	(603	)	(4,136	)
Increase in net assets attributable to Unitholders and Non-controlling interest		2,750		22,612		32,628		35,955
Other comprehensive income (loss)		4,863		(2,257	)	11,897		(5,091	)
Comprehensive income		7,613		20,355		44,525		30,864
Statements of Financial Position Information		Dec. 31, 2013				Dec. 31, 2012
Cash				15,547				1,303
Inventories				77,580				91,697
Accounts receivable				91,898				98,347
Income taxes receivable				4,040				4,801
Property, plant and equipment				272,341				270,867
Total assets				467,075				477,629
Accounts payable and accrued liabilities				87,844				72,448
Total bank and other loans				51,322				95,509
Total liabilities excluding net assets attributable to unitholders				187,542				242,621
		Fourth Quarter				Year
Statements of Cash Flows Information		2013		2012		2013		2012
Cash provided by operating activities before cash distributions and net change in non-cash working capital items		18,786		22,100		81,385		83,361
Cash distributions		(4,687	)	(4,687	)	(18,750	)	(18,750	)
Net change in non-cash working capital items		7,572		(36,450	)	28,560		(39,297	)
Cash provided by operating activities		21,671		(19,037	)	91,195		25,314
Cash used in investing activities		(14,002	)	(8,499	)	(31,657	)	(24,632	)
Cash used in financing activities		(7,312	)	22,754		(45,294	)	(876	)
Net increase/(decrease) in cash and cash equivalents		357		(4,782	)	14,244		(194	)
Cash distributions declared per Priority Unit		0.12501		0.12501		0.50004		0.50004

		Fourth Quarter		Year
		2013	2012	2013	2012
Zinc concentrate processed (tonnes)		126,302	124,296	506,209	497,183
Zinc grade (%)		52.9	53.5	53.1	54.0
Zinc recovery (%)		97.1	97.6	97.2	97.2
Zinc metal production (tonnes)		67,212	74,748	265,242	263,697
Zinc metal sales (tonnes)		65,248	67,511	269,807	260,401
Processing fee (cents/pound)		39.5	39.2	39.5	39.2
Zinc metal premium (US$/pound)		0.087	0.075	0.084	0.075
By-product revenues ($ millions)		8.9	11.1	38.7	42.1
	Copper in cake production (tonnes)	491	790	1,821	2,526
	Copper in cake sales (tonnes)	338	734	1,937	2,275
	Sulphuric acid production (tonnes)	99,232	99,884	405,993	408,849
	Sulphuric acid sales (tonnes)	95,966	97,419	401,235	410,358
Average LME copper price (US$/pound)		3.24	3.59	3.32	3.61
Sulphuric acid netback (US$/tonne)		69	80	71	76
Average LME zinc price (US$/pound)		0.87	0.89	0.87	0.88
Average US/Cdn. exchange rate		1.05	0.99	1.03	1.00
* 1 tonne = 2,204.62 pounds

Adjusted Earnings before Distributions to Unitholders, Finance Costs, Income Taxes, Depreciation and Amortization ("Adjusted EBITDA")

Adjusted EBITDA is used by the Fund as an indication of cash generated from operations. Adjusted EBITDA is not a recognized measure under IFRS and therefore the Fund's method of calculating Adjusted EBITDA is unlikely to be comparable to methods used by other entities.

The Fund's Adjusted EBITDA is calculated by starting from earnings before finance costs and income taxes and adjusting for all of the non-cash items such as depreciation, (gain) loss on the sale of assets, changes in fair value of embedded derivatives and non- cash gain on derivative financial instruments. In addition, an adjustment is made to reflect the net change in the rehabilitation liability (reclamation (recovery) expense less site restoration expenditures) and the net change in employee benefits (non-cash employee benefit expenses less employer contributions).

A reconciliation of Adjusted EBITDA for the fourth quarters and years of 2013 and 2012 is provided below:

					restated
Adjusted EBITDA		Q4/2013			Q4/2012			Change
($ thousands)
Earnings before finance costs and income taxes	$	10,712		$	24,100		$	(13,388	)
Depreciation of property, plant and equipment		8,785			9,062			(277	)
Net change in residue ponds rehabilitation liability		(568	)		55			(623	)
Derivative financial instruments gain		(835	)		(699	)		(136	)
Change in fair value of embedded derivatives		3,315			(4,670	)		7,985
Loss/(gain) on sale of assets		64			(268	)		332
Net change in employee benefits		(186	)		(545	)		359
	$	21,287		$	27,035		$	(5,748	)
					restated
Adjusted EBITDA		2013			2012			Change
($ thousands)
Earnings before finance costs and income taxes	$	71,393		$	66,032		$	5,361
Depreciation of property, plant and equipment		36,351			33,502			2,849
Net change in residue ponds rehabilitation liability		(4,098	)		521			(4,619	)
Derivative financial instruments gain		(5,761	)		(2,899	)		(2,862	)
Change in fair value of embedded derivatives		2,309			5,593			(3,284	)
Gain on sale of assets		(457	)		(380	)		(77	)
Net change in employee benefits		(771	)		(1,709	)		938
	$	98,966		$	100,660		$	(1,694	)

The Fund's Adjusted EBITDA is currently supported by the pricing feature under the Supply and Processing Agreement. It is expected that the Fund's Adjusted EBITDA will be more sensitive to market prices after the expiry of the initial term of the Agreement in May 2017.

Financial information:Michael Boone, Vice President & Chief Financial Officer ofCanadian Electrolytic Zinc Limited,Noranda Income Fund's Manager416-775-1561info@norandaincomefund.com