Q3 Conference Call 14_Q3 - Conference...Q3 Summary $20.5 $14.4 $13.9 $13.4 Q3 2013 Q3 2014 Earnings before income taxes ($ Millions) Cash From Operations* ($ Millions) * Before non-cash

1

Q3 Conference Call November 11, 2014

TSX : NIF.UN

This presentation, including sections entitled “Results of Operations”, “Key Performance Drivers”, “Distribution Policy”, “Liquidity and Capital Resources” and “Outlook”, contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. Forward-looking statements can generally be identified by the use of words such as “anticipates”, “believes”, “plans”, “intends”, “estimates”, “are expected”, “is forecast”, “approximately” or variations of such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or words and expressions of similar nature. Amongst others, the Fund has made forward-looking statements for 2014 expected targets and performance, production, sales, the processing fee and capital expenditures, the Fund and the Operating Trust’s future business plans and operation of the Processing Facility, future liabilities and obligations of the Fund (including capital expenditures), the ability of the Fund to operate profitably after May 2017, the dependence upon the continuing supply of zinc concentrates and competition relating thereto, the ability of the Processing Facility to treat a more varied feed quality stream and run at effective capacity, anticipated trends in zinc concentrate supply and demand, smelting capacity, sulphuric acid market demand and supply, zinc concentrate treatment charges, the anticipated financial and operating results of the Fund and distributions to Unitholders. The Fund provides this information because they are the key drivers of the business. Readers are cautioned that this information may not be appropriate for other reasons. These statements and information are based, among others, on the Fund’s current assumptions, expectations, estimates, objectives, plans and intentions regarding projected revenues and expenses, the economic and industry environments in which the Fund operates or which could affect the Fund’s activities, the Fund’s ability to attract and retain clients and consumers as well as the Fund’s operating costs, raw materials and energy supplies, all of which are subject to a number of risks and uncertainties. Forward-looking information involves known and unknown risks, uncertainties and other factors, which may cause the actual events, results or performance to be materially different from any future events, results or performance expressed or implied by the forward-looking information. As a result, the Fund cannot guarantee that any forward-looking statements will materialize. Assumptions, expectations and estimates made in the preparation of forward-looking statements and risks that could cause the Fund’s actual events, results or performance to differ materially from the Fund’s current expectations are discussed throughout this document and in our other continuous disclosure materials available on SEDAR at www.sedar.com. Examples of such risks, uncertainties and other factors include, but are not limited to: (1) the Fund’s ability to operate at normal production levels;

2

Forward-Looking Statements

Q 3 C O N F E R E N C E C A L L

http://www.sedar.com/

(2) the dependence upon the continuing supply of zinc concentrates (under the terms of the Supply and Processing Agreement); (3) the demand for zinc metal, sulphuric acid and copper in cake; (4) the ability to manage sulphuric acid inventories; (5) changes in future zinc concentrate, zinc grade, impurity levels and inland freight costs and their potential impact on capital expenditure and working capital requirements, costs, production and recoveries; (6) changes to the supply and demand for specific zinc metal products and the impact on the Fund’s realized premiums; (7) reliance on Glencore Canada and certain of its affiliates for the management, operation and maintenance of the Processing Facility, the Fund and the Operating Trust and their credit support in connection with the ABL Facility and Notes; (8) the ability of the Fund to continue to service customers in the same geographic region; (9) general business and economic conditions and the condition of financial and credit markets; (10) legislation governing the operation of the Fund including, without limitation, air emissions, discharges into water, waste including residue ponds, hazardous materials, workers’ health and safety, and many other aspects of the Fund’s operations, as well as the impact of current legislation and regulations on expenses, capital expenditures, taxation and restrictions on the operation of the Processing Facility; (11) loan default and refinancing risk associated with the ABL Facility and Notes; (12) the impact of costs and liabilities related to the closure, decommissioning, reclamation and rehabilitation of the Processing Facility and surrounding lands, including employee severance, pensions, and environmental and reclamation and rehabilitation liabilities, if an acceptable replacement arrangement is not put in place after the expiration of the Supply and Processing Agreement; (13) the sensitivity of the Fund’s Net Revenues to reductions in realized zinc metal prices including premiums, copper prices, sulphuric acid prices; and the strengthening of the Canadian dollar vis-à-vis the US dollar; (14) the impact of month prior pricing; (15) the sensitivity of the Fund’s production costs to increases in electricity rates, other energy costs, labour costs and operating supplies used in its operations, and the sensitivity of the Fund’s interest expense to increases in interest rates; (16) potential negative financial impact from a labour disruption, regulatory investigations, claims, lawsuits and other proceedings; and (17) the other general risks and uncertainties set out in the Fund’s continuous disclosure documents on file with the Canadian Securities Regulatory Authorities. Forward-looking information contained in this MD&A is based on management’s current estimates, expectations and assumptions, which management believes are reasonable as of the current date. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Except as required by law, the Fund does not undertake to update these forward-looking statements, whether written or oral, that may be made from time to time by the Fund or on the Fund’s behalf.

All dollar amounts are in Canadian, except otherwise noted

3

Forward-Looking Statements


Eva Carissimi President and Chief Executive Officer

4 Q 3 C O N F E R E N C E C A L L

Q3 Summary

$20.5

$14.4

$13.9 $13.4

Q3 2013 Q3 2014

Earnings before income taxes ($ Millions)

Cash From Operations* ($ Millions)

* Before non-cash working capital changes and cash distributions

5 Q 3 C o n f e r e n c e C a l l

Q3 2013 Q3 2014

YTD Summary

$62.6

$45.3

YTD 2013 YTD 2014

$55.7

$21.9

YTD 2013 YTD 2014

Earnings before income taxes ($ Millions)

Cash From Operations* ($ Millions)



Q3 Summary

Zinc concentrate processed was 136,771 tonnes (Q3 2013 – 122,216 tonnes) Zinc metal production of 68,653 tonnes (Q3 2013 – 61,331 tonnes) Zinc premiums averaged 10.2 cents US per pound (11.1 cents Cdn) compared to Q3 2013 – 8.4 cents US per pound (8.7 cents Cdn)

Q 3 C o n f e r e n c e C a l l 7


Silica Removal Project Completed on Time & Budget

Michael Boone Vice President and Chief Financial Officer


61,331 68,653

2013 2014


Q3 2014 Production and Sales

66,420 63,570

2013 2014

Sales (tonnes)

Production (tonnes)

35.2 35.6 36.1 36.5 37.0 37.5 38.0 38.5 38.9 39.2 39.5 40.0

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014


2014 Processing Fee

The processing fee is adjusted annually by (1) upward by 1% and (2) upward or downward by 10% of the year-over-year percentage change in the average cost of electricity per megawatt hour for the Processing Facility.

(Cdn cents/lb)

5.0 5.1

6.0

7.2

11.2

5.7

3.5

4.4

5.9

7.5

8.4

10.3 10.2 10.2

2003 2005 2007 2009 2011 2013 Q1 Q3


Q3 2014 Premiums

The increase in realized premiums compared to last year reflected the impact of improved market conditions and product mix.

(US cents/lb)

2014

Q3 2014 By-products

9.9

21.7 24.6

35.7 30.5

46.7

27.6

34.5

50.4

43.4 38.7

6.5 7.9 8.1

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1 Q2 Q3

($M)

2014

Q 3 C O N F E R E N C E C A L L 13


Breakdown of By-product Revenues

$26.7

$8.9

$20.1 $22.8

$34.3 $28.9

$45.1

$33.5

$50.0

$42.1 $38.7

$6.5 $7.9 $8.1

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Q1 Q2 Q3

Copper Sulphuric Acid

($M)

2014

62.6 10.2

6.2 2.0 0.9 (16.9)

(9.2)

(3.2) 45.3 (7.3)

Cash Provided by Operating Activities* ($ Millions)

YTD 2014 vs. YTD 2013 Cash Flow Variance

Income tax

Processing Fee

Feed costs

YTD 2014 Cash flow


YTD 2013 Cash flow

Volumes Premiums


Finance Costs

By- products

Inv. Margin and Other

Total budget: $38 million 9 Months Capital investments: $27.3 million

$8.4 million for additional silica capacity, $7.4 million for new anodes and $11.5 million for sustaining capital $18.9 million sustaining capital


2014 Capital Investment Program

Silica removal plant

Debt: $84.2 million ($58.0 million at Q2 2014; $51.3 million at Q4 2013)

Non-cash working capital increased by $30.6 million, largely due to an increase in inventories partly offset by an increase in accounts payable and accrued liabilities and by a reduction in accounts receivable

Cash: $0.7 million

Excess availability on revolving credit facility: $58.4 million

$45 million outstanding Senior Secured Notes scheduled to be repaid by Dec 2016


Liquidity and Capital Resources (as at Sept. 30, 2014)

$53.3

$36.8

$6.7

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

9 Months 2014 actual under the Supply and Processing Agreement9 Months 2014 estimate under Benchmark Terms9 Months 2014 estimate under Spot Terms


Adjusted EBITDA*

($M) Market terms and assumptions used for this calculation: Zinc price US$0.97; Cdn/US exchange rate 1.09; realized benchmark treatment charge US$235 per dmt of concentrate; spot treatment charge of US$155 per dmt of concentrate; market payable metal in concentrate 85%; Zinc metal sales 183,677 tonnes; Zinc metal recovery 97.2%.

* 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.

Industry trend towards a mix of benchmark and spot terms.

Distribution Outlook


The initial term of the Supply and Processing Agreement ends on May 2, 2017, and with it, the favourable pricing of concentrate supply comes to an end.

There is a risk that zinc concentrate in quantities and the blend of qualities necessary for the smelter to operate profitably may not be available after May 2, 2017.

The Fund is considering several scenarios including the possibility that operations be discontinued.

As a result, reserves may be required in advance of May 2017, including to provide for the costs related to a potential discontinuance of operations, with a corresponding effect on cash available for distributions.

Eva Carissimi President and Chief Executive Officer


Modest growth in manufacturing activity

Automotive sales and spending on construction healthy


US Economy Growing Modestly

35

45

55

65

Apr-

11

Jul-1

1

Oct

-11

Jan-

12

Apr-

12

Jul-1

2

Oct

-12

Jan-

13

Apr-

13

Jul-1

3

Oct

-13

Jan

14

Apr-

14

Jul-1

4

Oct

-14

US PMI

Expansion

Contraction

50

Production: 260,000 tonnes

Sales: 260,000 tonnes

Processing Fee: 40 cents a pound

Capital Expenditures: $38 million

22

2014 Guidance


Silica capacity plant

1. Treat a wider variety of feeds

2. Renew collective bargaining agreement

3. Manage plant at effective capacity

4. Assist Board in developing long-term strategy

23

Silica treatment tank

2014 Priorities


24

Q3 Conference Call November 11, 2014

TSX : NIF.UN

Documents

Q3 Conference Call 14_Q3 - Conference...Q3 Summary $20.5 $14.4 $13.9 $13.4 Q3 2013 Q3 2014 Earnings before income taxes ($ Millions) Cash From Operations* ($ Millions) * Before non-cash