Nyrstar NV

Published : October 01st, 2013

enters into European strategic marketing agreement for commodity grade zinc metal with Noble, a majo

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Published: 07:00 CEST 01-10-2013 /Thomson Reuters /Source: Nyrstar /XBRU: NYR /ISIN: BE0003876936

Nyrstar enters into European strategic marketing agreement for commodity grade zinc metal with Noble, a major step in delivering a new global commercial strategy

Regulated information

Noble to acquire 1% interest in Nyrstar

1 October 2013

Nyrstar today announced that it has entered a strategic offtake and marketing agreement with Noble Group Limited ("Noble") to market and sell a significant portion of commodity grade zinc metal produced at its European smelters. For Nyrstar, the agreement represents a major step in delivering a new global commercial strategy which started with the establishment of a new Marketing, Sourcing and Sales segment earlier in 2013. It is also a first step in executing a European zinc metal plan aimed at actively marketing Nyrstar's product to increase optionality in terms of customers, product mix and geography which is expected to deliver improved margins.

The agreement follows a structured process undertaken by Nyrstar to determine the most suitable channel(s) to market and sell commodity grade zinc metal produced at its European smelters. This process was triggered by the requirement for Glencore International AG to terminate its Commodity Grade Off-take Agreement for the sale and marketing of commodity grade zinc metal produced by Nyrstar within the European Union, as part of the remedy package agreed by the European Commission in relation to its merger with Xstrata Plc.

Summarised terms of the strategic offtake and marketing agreement with Noble are as follows:

  • Nyrstar has decided to make available 200,000 tonnes per annum of commodity grade zinc metal (special high grade (SHG) and continuous galvanising grade (CGG)) to Noble 
  • The agreement has a term of 4 years, commencing 1 January 2014 (the European component of the off-take agreement with Glencore Xstrata will be fully unwound by 31 December 2013) 
  • The metal will be sold and marketed through an arrangement that leverages both company's insights and expertise 
  • Nyrstar will receive market price plus a benchmark premium per tonne of zinc metal, with a profit sharing mechanism for any upside  
  • Financing of the metal will be at comparable terms to that received under the previous off-take agreement  

 

As part of its new global commercial strategy Nyrstar has concluded that the best way to market its European commodity grade zinc metal is though a multi-channel approach and therefore limited the annual tonnage covered by the agreement with Noble. Nyrstar continues to discuss direct sales, marketing and financing opportunities with a number of market participants for the remaining 150,000 tonnes (approximately) of commodity grade zinc metal produced in Europe and will provide an update on these negotiations in due course.

To support the implementation of the agreement with Noble, the European zinc metal plan and overall global commercial strategy, Nyrstar has made a number of senior level appointments to its Marketing, Sourcing and Sales segment.

As previously mentioned, the sale of commodity grade zinc and lead produced from Nyrstar's smelters outside of the European Union (Clarksville, Hobart and Port Pirie) will continue, as before, under the Off-take Agreement with Glencore Xstrata.

Noble has agreed to acquire from Nyrstar's treasury shareholding 1,700,225 common shares in Nyrstar, representing 1% of total shares, for a price of EUR 3.76 per share (a premium of 5% to the 3-day volume weighted average price of Nyrstar shares on 27 September 2013), for a total cash consideration of EUR 6.4 million.

Commenting on the strategic offtake and marketing agreement with Noble, Bob Katsiouleris, Nyrstar's Senior Vice President Marketing, Sourcing and Sales said:

"The strategic offtake and marketing agreement with Noble is an exciting commercial opportunity and represents a major step in executing Nyrstar's new global commercial strategy, which is to produce a series of products that will be marketed and sold at above industry returns through a better strategic understanding of the markets. The agreement with Noble, a central part of our European zinc metal plan, is much more than a traditional off-take. It is an active marketing agreement, by which Noble and Nyrstar will target markets where there is real demand for our product. By leveraging Noble's market-leading supply chain expertise and trading capabilities, and utilising Nyrstar's industrial assets and European zinc market insight, we will be flexible and responsive to changing end-user requirements. Combined with the competitive financing terms provided by Noble, the agreement will deliver a strategic and financial benefit to Nyrstar.

While the agreement with Noble is a central part of our European zinc metal plan, we believe there is significant value in having a multi-channel approach to actively market our zinc metal product. We have made significant progress in determining the best routes to market for our remaining commodity grade zinc metal volume, including on-going discussions on a number of potential partnerships with market participants , and are confident that when fully implemented our European zinc metal plan will deliver above industry returns."

Noble's Global Head of Metals, Mark Hansen said:

"Noble Group is pleased to enter into this mutually beneficial multi-year offtake and marketing relationship which we believe will form the basis for new opportunities for Noble to bring its leading logistics and supply services to zinc metal consumers with the reliable market leading Nyrstar production. We are pleased to work with a market leader like Nyrstar and look forward to a successful long term partnership."

- end -

About Nyrstar
Nyrstar is an integrated mining and metals business, with market leading positions in zinc and lead, and growing positions in other base and precious metals; essential resources that are fuelling the rapid urbanisation and industrialisation of our changing world. Nyrstar has mining, smelting, and other operations located in Europe, the Americas, China and Australia and employs over 7,000 people. Nyrstar is incorporated in Belgium and has its corporate office in Switzerland. Nyrstar is listed on NYSE Euronext Brussels under the symbol NYR. For further information please visit the Nyrstar website, www.nyrstar.com

About Noble
Noble Group (SGX: N21) manages a portfolio of global supply chains covering a range of agricultural and energy products, as well as metals, minerals and ores. Operating from over 140 locations and employing more than 70 nationalities, Noble facilitates the marketing, processing, financing and transportation of essential raw materials. Sourcing bulk commodities from low cost regions such as South America, South Africa, Australia and Indonesia, the Group supplies high growth demand markets, particularly in Asia and the Middle East. In order to ensure the integrity of its supply chains, the Group has a portfolio of interests in strategic logistics and processing assets which form an integral part of facilitating its key trade flows. Noble is ranked number 76 in the 2013 Fortune Global 500. For further information please visit Noble's website, www.thisisnoble.com

For further information contact:
Jaideep Thatai   Manager Investor Relations   T: +41 44 745 8103   M: +41 79 722 3089  jaideep.thatai@nyrstar.com
Sheela Pawar de Groot   Group Manager Corporate Affairs T: +41 44 745 8154  M: +41 79 722 6917   sheela.pawar@nyrstar.com
Geert Lambrechts   Manager Corporate External Communications   T: +32 14 449 646   M: +32 473 637 892  geert.lambrechts@nyrstar.com


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Nyrstar NV

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CODE : NYR.BE
ISIN : BE0003876936
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Nyrstar is a zinc and silver producing company based in Belgium.

Nyrstar produces zinc, silver, copper, gold and lead in Mexico and in Peru, and holds various exploration projects in Mexico.

Its main assets in production are CORICANCHA in Peru and G-9 CAMPO MORADO in Mexico and its main exploration properties are CAMPO MORADO, EAST TENNESSEE and MIDDLE TENNESSEE in Mexico.

Nyrstar is listed in Germany. Its market capitalisation is €UR 459.4 millions as of today (US$ 588.4 millions, € 400.0 millions).

Its stock quote reached its highest recent level on June 24, 2005 at €UR 2.70, and its lowest recent point on November 28, 2008 at €UR 0.38.

Nyrstar has 935 640 000 shares outstanding.

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BERLIN (NYR.BE)
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