10-Q

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

þ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2009

OR

o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from [                     to                     ].

Commission file number: 333-148977

NORANDA ALUMINUM HOLDING CORPORATION

(Exact Name of Registrant as Specified in Its Charter)

Delaware	20-8908550
(State or Other Jurisdiction of Incorporation)	(I.R.S. Employer Identification Number)

801 Crescent Centre Drive, Suite 600 Franklin, Tennessee	37067
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (615) 771-5700

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES þ NO o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding twelve months (or for such shorter period that the registrant was required to submit and post such files). YES o NO o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definition of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer o	Accelerated filer o	Non-accelerated filer þ	Smaller reporting company o
		(Do not check if a smaller reporting company)

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). YES o NO þ

As of October 31, 2009, there were 21,766,789 shares of Noranda common stock outstanding.

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements		2
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		41
Item 3. Quantitative and Qualitative Disclosures about Market Risk		59
Item 4T. Controls and Procedures		61
PART II. OTHER INFORMATION
Item 1. Legal Proceedings		62
Item 1A. Risk Factors		62
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		62
Item 3. Defaults upon Senior Securities		62
Item 4. Submission of Matters to a Vote of Security Holders		62
Item 5. Other Information		62
Item 6. Exhibits		63
SIGNATURES		64
Exhibit 10.1
Exhibit 10.2
Exhibit 10.3
Exhibit 10.4
Exhibit 10.5
Exhibit 10.6
Exhibit 31.1
Exhibit 31.2
Exhibit 32.1

-i-

PART I. FINANCIAL INFORMATION

Item 1.  Financial Statements

NORANDA ALUMINUM HOLDING CORPORATION
Consolidated Balance Sheets
(in thousands, except share and per share amounts)
(unaudited)

	December 31, 2008			September 30, 2009
	$			$
ASSETS
Current assets:
Cash and cash equivalents		184,716			256,516
Accounts receivable, net		74,472			101,846
Inventories		139,019			176,503
Derivative assets, net		81,717			70,481
Taxes receivable		13,125			2,935
Other current assets		3,367			17,035
Total current assets		496,416			625,316
Investments in affiliates		205,657			—
Property, plant and equipment, net		599,623			759,962
Goodwill		242,776			202,576
Other intangible assets, net		66,367			82,780
Long-term derivative assets, net		255,816			115,932
Other assets		69,516			88,552
Total assets		1,936,171			1,875,118
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable:
Trade		34,816			62,147
Affiliates		34,250			—
Accrued liabilities		32,740			61,586
Accrued interest		2,021			246
Deferred tax liabilities		24,277			27,742
Current portion of long-term debt		32,300			—
Total current liabilities		160,404			151,721
Long-term debt		1,314,308			1,020,985
Pension and OPEB liabilities		120,859			140,581
Other long-term liabilities		39,582			62,135
Deferred tax liabilities		262,383			341,667
Unallocated purchase price		—			127,259
Common stock subject to redemption (100,000 shares at December 31, 2008)		2,000			—
Shareholders’ equity:
Common stock (100,000,000 shares authorized; $0.01 par value; 21,746,548 and 21,766,789 shares issued and outstanding at December 31, 2008 and September 30, 2009, respectively; including 100,000 shares subject to redemption at December 31, 2008)		217			218
Capital in excess of par value		14,383			17,444
Accumulated deficit		(176,280	)		(139,799	)
Accumulated other comprehensive income		198,315			149,060
Total Noranda shareholders’ equity		36,635			26,923
Noncontrolling interest		—			3,847
Total shareholders’ equity		36,635			30,770
Total liabilities and shareholders’ equity		1,936,171			1,875,118

See accompanying notes

2

NORANDA ALUMINUM HOLDING CORPORATION
Consolidated Statements of Operations
(in thousands)
(unaudited)

	Three months ended						Nine months ended
	September 30,						September 30,
	2008			2009			2008			2009
	$			$			$			$
Sales		357,410			218,559			1,004,906			540,553
Operating costs and expenses:
Cost of sales		312,906			218,468			846,823			566,532
Selling, general and administrative expenses		12,414			18,739			49,100			51,682
Goodwill and other intangible asset impairment		—			—			—			43,000
Excess insurance proceeds		—			(14,282	)		—			(43,467	)
		325,320			222,925			895,923			617,747
Operating income (loss)		32,090			(4,366	)		108,983			(77,194	)
Other (income) expenses:
Interest expense, net		19,816			12,577			65,043			42,551
(Gain) loss on hedging activities, net		45,496			(5,747	)		50,497			(104,073	)
Equity in net (income) loss of investments in affiliates		1,652			860			(3,862	)		78,961
(Gain) loss on debt repurchase		—			(28,574	)		1,202			(193,224	)
Total other (income) expenses		66,964			(20,884	)		112,880			(175,785	)
Income (loss) before income taxes		(34,874	)		16,518			(3,897	)		98,591
Income tax (benefit) expense		(12,445	)		12,190			(2,153	)		62,110
Net income (loss) for the period		(22,429	)		4,328			(1,744	)		36,481

See accompanying notes

3

NORANDA ALUMINUM HOLDING CORPORATION
Consolidated Statements of Shareholders’ Equity (Deficiency)
(in thousands)

(unaudited)

									Accumulated
			Capital in						other			Non-
	Common		excess			Accumulated			comprehensive			controlling
	stock		of par value			deficit			income (loss)			interest		Total
	$		$			$			$					$
Balance, December 31, 2007		216		11,767			—			(12,059	)		—		(76	)
For the year ended December 31, 2008:
Net loss		—		—			(74,057	)		—			—		(74,057	)
Pension adjustment, net of tax benefit of $31,842		—		—			—			(53,408	)		—		(53,408	)
Net unrealized gains (losses) on cash flow hedges:
Unrealized gains, net of taxes of $159,082		—		—			—			279,201			—		279,201
Reclassification amounts realized in net income, net of tax benefit of $8,786		—		—			—			(15,419	)		—		(15,419	)
Total comprehensive income		—		—			—			—			—		136,317
Distribution to shareholders		—		—			(102,223	)		—			—		(102,223	)
Issuance of shares		1		285			—			—			—		286
Repurchase of shares		—		(45	)		—			—			—		(45	)
Stock compensation expense		—		2,376			—			—			—		2,376
Balance, December 31, 2008		217		14,383			(176,280	)		198,315			—		36,635
Net income		—		—			36,481			—			—		36,481
Pension adjustment, net of tax benefit of $132		—		—			—			(859	)		—		(859	)
Net unrealized gains (losses) on cash flow hedges:
Unrealized gains, net of taxes of $26,767		—		—			—			46,970			—		46,970
Reclassification of amounts realized in net income, net of tax benefit of $54,394		—		—			—			(95,366	)		—		(95,366	)
Total comprehensive loss		—		—			—			—			—		(12,774	)
Issuance of shares		—		41			—			—			—		41
Reclassification of redeemable stock upon expiration of redemption feature		1		1,999			—			—			—		2,000
Repurchase of shares		—		(90	)		—			—			—		(90	)
Stock compensation expense		—		1,111			—			—			—		1,111
Noncontrolling interest		—		—			—			—			3,847		3,847
Balance, September 30, 2009		218		17,444			(139,799	)		149,060			3,847		30,770

See accompanying notes

4

NORANDA ALUMINUM HOLDING CORPORATION
Consolidated Statements of Cash Flows
(in thousands)
(unaudited)

	Nine months ended
	September 30,
	2008			2009
	$			$
OPERATING ACTIVITIES
Net income (loss)		(1,744	)		36,481
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		74,049			66,317
Non-cash interest expense		3,817			25,086
Loss on disposal of property, plant and equipment		2,404			7,260
Insurance proceeds applied to capital expenditures		—			(11,495	)
Goodwill and other intangible asset impairment		—			43,000
(Gain) loss on hedging activities, net of cash settlements		36,416			(63,100	)
Settlements from hedge terminations, net		—			119,722
(Gain) loss on debt repurchase		1,202			(193,224	)
Equity in net (income) loss of investments in affiliates		(3,862	)		78,961
Deferred income taxes		(9,826	)		78,691
Stock compensation expense		1,507			1,111
Changes in other assets		4,034			(8,380	)
Changes in pension and other long-term liabilities		(9,564	)		31,966
Changes in operating assets and liabilities:
Accounts receivable, net		(26,432	)		(7,066	)
Inventories		17,887			20,614
Taxes receivable		(22,516	)		(1,050	)
Other current assets		(4,628	)		18,679
Accounts payable		41,959			13,712
Accrued liabilities		(3,662	)		(25,069	)
Accrued interest		10,644			(1,775	)
Cash provided by operating activities		111,685			230,441
INVESTING ACTIVITIES
Capital expenditures		(37,464	)		(32,211	)
Proceeds from insurance related to capital expenditures		—			11,495
Proceeds from sale of property, plant and equipment		484			7
Cash acquired in business combination		—			11,136
Cash used in investing activities		(36,980	)		(9,573	)
FINANCING ACTIVITIES
Proceeds from issuance of shares		2,225			41
Distribution to shareholders		(102,223	)		—
Repurchase of shares		—			(90	)
Borrowings on revolving credit facility		250,500			13,000
Repayments on revolving credit facility		(25,500	)		(14,500	)
Repayment of long-term debt		(30,300	)		(24,500	)
Repurchase of debt		—			(123,019	)
Cash provided by (used in) financing activities		94,702			(149,068	)
Change in cash and cash equivalents		169,407			71,800
Cash and cash equivalents, beginning of period		75,630			184,716
Cash and cash equivalents, end of period		245,037			256,516

See accompanying notes

5

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

1. ACCOUNTING POLICIES

Basis of presentation

The accompanying consolidated financial statements represent the consolidation of Noranda Aluminum Holding Corporation and all companies that we directly or indirectly control (“Noranda,” “the Company,” “we,” “us,” and “our”). “HoldCo” refers only to Noranda Aluminum Holding Corporation, excluding its subsidiaries.

We are a vertically integrated producer of value-added primary aluminum products and high quality rolled aluminum coils. Our principal operations include an aluminum smelter in New Madrid, Missouri (“New Madrid”) and four rolling mills in the southeastern United States. New Madrid is supported by our alumina refinery in Gramercy, Louisiana (Noranda Alumina, LLC, or “Gramercy”) and a bauxite mining operation in St. Ann, Jamaica (St. Ann Bauxite Limited, or “St. Ann”). As discussed further in Note 23, we report our activities in two segments. Our primary aluminum business (the “upstream business” or “upstream”) comprises New Madrid, Gramercy and St. Ann. Our downstream comprises our four rolling mills, which are located in Huntingdon, Tennessee, Salisbury, North Carolina and Newport, Arkansas.

On May 18, 2007, Noranda Aluminum Acquisition Corporation (“AcquisitionCo”), a wholly-owned subsidiary of HoldCo, purchased all of the outstanding shares of Noranda Intermediate Holding Corporation (“Noranda Intermediate”) from Xstrata plc (together with its subsidiaries, “Xstrata”), and Xstrata (Schweiz) A.G., a direct wholly owned subsidiary of Xstrata (the “Apollo Acquisition”). Noranda Intermediate and its subsidiaries constituted the Noranda aluminum business of Xstrata. HoldCo and AcquisitionCo were formed by affiliates of Apollo Management, L.P. (collectively, “Apollo”) and had no assets or operations prior to the Apollo Acquisition.

All intercompany transactions and accounts have been eliminated in consolidation.

Our accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information. The consolidated financial statements, including these notes, are unaudited and exclude some of the disclosures required in annual financial statements. Consolidated balance sheet data as of December 31, 2008 was derived from audited financial statements. In management’s opinion, the consolidated financial statements include all adjustments (including normal recurring accruals) that are considered necessary for the fair presentation of our financial position and operating results.

The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These financial statements should be read in conjunction with our 2008 annual financial statements included in our Form 10-K, filed with the U.S. Securities and Exchange Commission (“SEC”) on February 25, 2009.

Subsequent events have been evaluated through November 13, 2009, the date these financial statements were issued.

Reclassifications

Certain reclassifications were made to financial statements issued in the prior year. We incurred a $1.2 million loss on debt repayments, which was previously classified in interest expense for the nine months ended September 30, 2008. The reclassification to (gain) loss on debt repurchases is reflected on the consolidated statements of operations as well as the consolidated statements of cash flows.

In connection with the Joint Venture Transaction (defined and discussed in Note 2 below), we re-evaluated our segment structure and determined it was appropriate to exclude corporate expenses from our upstream reportable segment. Corporate expenses will be unallocated. Current year and prior year reported segment results have been adjusted to reflect the new structure.

Foreign currency translation

The primary economic currency of our Jamaican bauxite mining operation is the U.S. dollar. Certain transactions, however, such as salary and wages and local vendor payments, are made in currencies other than the U.S. dollar. These transactions are recorded at the rates of exchange prevailing on the dates of the transactions.

6

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

Exchange differences arising on the settlement of monetary items and on the retranslation of monetary items are immaterial and are included in selling, general and administrative expenses on the statement of operations. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

2. JOINT VENTURE TRANSACTION

On August 3, 2009, we entered into an agreement with Century Aluminum Company (together with its subsidiaries, (“Century”) whereby we would become the sole owner of both Gramercy and St. Ann. The transaction closed on August 31, 2009 (the “Joint Venture Transaction”). In the transaction, Noranda and Gramercy released Century from certain obligations. These obligations included (i) approximately $23.0 million Century owed Gramercy for pre-transaction alumina purchases, and (ii) Century’s guarantee to fund future payments of environmental and asset retirement obligations.

We believe achieving 100% ownership of the Gramercy alumina refinery and the St. Ann bauxite mining operation provides an opportunity for value creation and continues to ensure a secure supply of alumina to our New Madrid smelter.

We adopted FASB ASC Topic 805, Business Combinations (“ASC Topic 805”) on January 1, 2009 and therefore applied its provisions to our accounting for the Joint Venture Transaction. Our circumstances involved two significant areas where ASC Topic 805 changed previous accounting guidance for business combinations.

• The Joint Venture Transaction was a business combination achieved in stages, since we owned 50% of both Gramercy and St. Ann prior to August 31, 2009.

• Under ASC Topic 805, if an acquirer owns a noncontrolling equity investment in the acquiree immediately before obtaining control, the acquirer should re-measure that investment to fair value as of the acquisition date and recognize any remeasurement gains or losses in earnings.

• The preliminary acquisition-date fair value of our previous equity interests is $142.4 million, which exceeds the acquisition-date carrying value of $125.9 million. We have recorded the difference of $16.5 million, net of tax of $4.0 million, as unallocated purchase price in long-term liabilities. Pending the finalization of the valuation, we may record a gain for any remaining difference.

• The Joint Venture Transaction may be a bargain purchase. We assumed the remaining portion of Gramercy and St. Ann in exchange for releasing Century from certain obligations which included (i) approximately $23.0 million Century owed Gramercy for pre-transaction alumina purchases, and (ii) Century’s guarantee to fund future payments of environmental and asset retirement obligations. To the extent permitted by U.S. GAAP, we are assigning a fair value to the liabilities related to the guarantee from which we released Century. We are in the process of reassessing the recognition and measurement of identifiable assets acquired and liabilities assumed. Based on the preliminary fair values assigned to the assets of acquired and liabilities assumed, we have recorded the unallocated purchase price of $114.8 million in long-term liabilities. Pending the conclusion of that reassessment process, we may record a gain on the Joint Venture Transaction resulting from any remaining unallocated purchase price after the reassessment process is completed and the valuations are finalized.

7

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

The calculation of our unallocated purchase price is summarized below (in thousands):

	August 31, 2009
	$
Transaction date preliminary fair value of our previous 50% equity interest:
Transaction date carrying value of our 50% equity interest		125,909
Unallocated purchase price related to revaluing our previous 50% equity interest		16,491		142,400
Noncontrolling interest in SAJBP (see Note 19)				3,847
				146,247
Preliminary fair value of assets acquired and liabilities assumed:
Cash and cash equivalents		11,136
Accounts receivable		61,298
Inventories		63,902
Property, plant and equipment		198,805
Other intangible assets		22,120
Other assets		25,883
Deferred tax liabilities		(38,969	)
Accounts payable and accrued liabilities and other long-term liabilities		(58,507	)
Environmental, land and reclamation liabilities		(24,642	)	261,026
Unallocated purchase price from acquired interests				114,779

Our estimates and assumptions are subject to change, depending on the final identification and evaluation of the fair value of the tangible and intangible assets acquired and liabilities assumed as of the closing date of the transaction. The balance sheet caption “unallocated purchase price” comprises the following components at September 30, 2009 (in thousands):

	$
Unallocated purchase price from acquired interests				114,779
Unallocated purchase price related to revaluing our previous 50% equity interest:
Unallocated purchase price		16,491
Tax effect		(4,011	)	12,480
Total unallocated purchase price, net of taxes				127,259

We are utilizing a third party valuation firm to assist us in determining the preliminary fair values of the assets acquired and liabilities assumed in the Joint Venture Transaction. See Note 22 for further discussion of significant assumptions used so far in measuring these fair values.

Prior to the Joint Venture Transaction, our 50% investment interests in the joint ventures were accounted for by the equity method (see Note 21). The results of operations related to Gramercy and St. Ann are included in our consolidated financial statements from the closing date of the transaction and are recorded in our upstream business. The amount of revenue and earnings of Gramercy and St. Ann included in our consolidated statement of operations from the transaction date to September 30, 2009, is summarized below (in thousands):

	Three and nine months ended
	September 30,
	2009
	$
Sales		19,545
Operating income (loss)		(3,364	)
Net income (loss)		(1,176	)

The following table presents the unaudited pro forma condensed statement of operations data for the three and nine months ended September 30, 2008 and September 30, 2009 and reflects the results of operations as if the Joint Venture Transaction had been effective January 1, 2008. These amounts have been calculated by adjusting the results of Gramercy and St. Ann to reflect the additional inventory cost, depreciation and amortization that would have been charged assuming the fair value adjustments to inventory, property, plant and equipment and intangible assets had been applied on January 1, 2008, together with the consequential tax effects. The unaudited pro forma financial information is not intended to represent the consolidated results of operations we would have reported if the acquisition had been completed at January 1, 2008, nor is it necessarily indicative of future results.

8

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

Pro forma condensed statement of operations is presented below (in thousands):

	Pro Forma						Pro Forma
	Three months ended Sept. 30,						Nine months ended Sept. 30,
	2008			2009			2008		2009
	$			$			$		$
Sales		444,624			277,966			1,271,024		677,640
Operating income (loss)		30,127			(18,651	)		120,869		(102,439	)
Net income (loss)		(24,411	)		(1,154	)		1,925		57,324

3. NEW MADRID POWER OUTAGE

During the week of January 26, 2009, power supply to our New Madrid smelter, which supplies all of the upstream business’ aluminum production, was interrupted several times because of a severe ice storm in Southeastern Missouri. As a result of the damage caused by the outage, we lost approximately 75% of the smelter capacity. The smelter has returned to operating above 65% of capacity as of September 30, 2009.

Management believes the smelter outage has had minimal impact on our value-added shipments of rod and billet. We have been able to continue to supply our value-added customers because the re-melt capability within the New Madrid facility allowed us to make external metal purchases and then utilize our value-added processing capacity. The downstream business has traditionally purchased metal from New Madrid as well as from external sources of supply and increased its purchases from external suppliers to replace the metal New Madrid was not able to supply.

We reached a $67.5 million settlement with our insurance carriers, all of which has been received as of September 30, 2009. Insurance proceeds funded $11.5 million of capital expenditures during the nine months ended September 30, 2009.

The following table shows the insurance activity as presented in our financial statements (in thousands):

	Three months ended								Nine months ended
	September 30, 2009								September 30, 2009
	Expenses		Related			Net			Expenses		Related			Net
	incurred		proceeds			impact			incurred		proceeds			impact
	$		$			$			$		$			$
Cost of sales		3,697		(3,697	)		—			17,464		(17,464	)		—
Selling, general and administrative expenses		396		(396	)		—			6,569		(6,569	)		—
Excess insurance proceeds		—		(14,282	)		(14,282	)		—		(43,467	)		(43,467	)
Total		4,093		(18,375	)		(14,282	)		24,033		(67,500	)		(43,467	)
Insurance cash receipts through September 30, 2009												(67,500	)

In recording costs and losses associated with the power outage, we followed applicable U.S. GAAP to determine asset write-downs, changes in estimated useful lives, and accruals for out-of-pocket costs. To the extent the realization of the claims for costs and losses were considered probable at any interim balance sheet date, we recorded expected proceeds only to the extent that costs and losses were reflected in the financial statements in accordance with applicable U.S. GAAP. For claim amounts resulting in gains or in excess of costs and losses that have been reflected in the financial statements, we recorded such amounts only when those portions of the claims, including all contingencies, were settled.

The line item titled “Excess insurance proceeds” reflects the residual insurance recovery after applying total proceeds recognized against the losses incurred through September 30, 2009. This amount is not intended to represent a gain on the insurance claim, but only a timing difference between proceeds and claim-related costs incurred. We will continue to incur costs into the future related to bringing the production back to full capacity and may incur costs that exceed the total insurance settlement.

4. RESTRUCTURING

In December 2008, we announced a Company-wide workforce and business process restructuring that reduced our operating costs, conserved liquidity and improved operating efficiencies.

The workforce restructuring plan involved a total staff reduction of approximately 338 employees and contract workers. The reduction in the employee workforce included 2 affected corporate employees, and 240 affected employees in our upstream business. These reductions were substantially completed during fourth quarter 2008. The reductions at the downstream facilities included 96 affected employees and were substantially completed during fourth quarter 2008.

9

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

The following table summarizes the impact of the restructuring (in thousands):

				One time involuntary			Total restructuring
	Window benefits(a)			termination benefits(b)			charge
	$			$			$
Restructuring expense:
Corporate		—			386			386
Upstream		1,770			4,197			5,967
Downstream		—			2,792			2,792
Total		1,770			7,375			9,145
Benefits paid in 2008		—			(532	)		(532	)
Balance at December 31, 2008		1,770			6,843			8,613
Benefits paid in 2009 — Corporate		—			(314	)		(314	)
Benefits paid in 2009 — Upstream		(113	)		(3,412	)		(3,525	)
Benefits paid in 2009 — Downstream		—			(2,360	)		(2,360	)
Balance at September 30, 2009		1,657			757			2,414

(a)	Window benefits were recorded in pension liabilities on the consolidated balance sheets. Benefits paid represent estimated expenses. The actual balance will be determined actuarially at the pension remeasurement date.
(b)	One-time involuntary termination benefits were recorded in accrued liabilities on the consolidated balance sheets.

5. SUPPLEMENTAL FINANCIAL STATEMENT DATA

Statements of operations (in thousands):

	Three months ended						Nine months ended
	September 30,						September 30,
	2008			2009			2008			2009
	$			$			$			$
Interest expense		19,986			12,627			66,736			42,687
Interest income		(170	)		(50	)		(1,693	)		(136	)
Interest expense, net		19,816			12,577			65,043			42,551

Statements of cash flows (in thousands):

	Nine months ended
	September 30,
	2008		2009
	$		$
Cash paid for interest		52,102		13,700
Cash (refunded) paid for income taxes		29,768		(8,999	)

6. CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of the following (in thousands):

	December 31, 2008		September 30, 2009
	$		$
Cash		8,107		33,166
Money market funds		176,609		173,350
Short-term treasury bills		—		50,000
Total cash and cash equivalents		184,716		256,516

Cash and cash equivalents include all cash balances and highly liquid investments with a maturity of three months or less at the date of purchase. During 2008, FDIC limits increased and at December 31, 2008 and September 30, 2009, all cash balances, excluding the money market funds and the short-term treasury bills, were fully insured by the FDIC. All of our money market funds are invested entirely in U.S. treasury securities, which we believe do not expose us to significant credit risk. We consider our investments in money market funds and short-term treasury bills to be available for use in our operations. We report money market funds and short-term treasury bills at fair value.

10

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

7. INVENTORIES

We use the last-in-first-out (“LIFO”) method of valuing raw materials, work-in-process and finished goods inventories at our New Madrid smelter and our rolling mills. Inventories at Gramercy and St. Ann are valued at weighted average cost. The components of our inventories are (in thousands):

	December 31, 2008			September 30, 2009
	$			$
Raw materials, at cost		55,311			51,635
Work-in-process, at cost		37,945			48,915
Finished goods, at cost		28,716			26,133
Total inventory, at cost		121,972			126,683
LIFO adjustment(1)		40,379			26,073
Lower of cost or market (“LCM”) reserve		(51,319	)		(15,919	)
Inventory, at lower of cost or market		111,032			136,837
Supplies		27,987			39,666
Total inventories		139,019			176,503

(1) Inventories at Gramercy and St. Ann are stated at weighted average cost and are not subject to the LIFO adjustment. Gramercy and St. Ann inventories comprise 0.0% and 30.7% of total inventories (at cost) at December 31, 2008 and September 30, 2009, respectively.

Work-in-process and finished goods inventories consist of the cost of materials, labor and production overhead costs. Supplies inventory consists primarily of maintenance supplies expected to be used within the next twelve months. In connection with the Joint Venture Transaction, we recorded $15.9 million of maintenance supplies inventory.

During third quarter 2009, due to changes in estimates regarding the usage rates of certain maintenance supplies, we reclassified $5.8 million of maintenance supplies to a non-current supplies account. Non-current maintenance supplies are included in other assets in the accompanying consolidated balance sheets.

An actual valuation of inventories valued under the LIFO method is made at the end of each year based on inventory levels and costs at that time. Quarterly inventory determinations under LIFO are based on assumptions about projected inventory levels at the end of the year. During the nine months ended September 30, 2009, we recorded a LIFO loss of $12.6 million due to a decrement in inventory quantities because management does not expect to rebuild the decrement in 2009.

11

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

8. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at cost. Depreciation is based on the estimated useful lives of the assets computed principally by the straight-line method for financial reporting purposes.

Property, plant and equipment, net consists of the following (in thousands):

	Estimated useful lives		December 31, 2008			September 30, 2009
	(in years)		$			$
Land and improvements		3		11,921			52,985
Buildings and improvements		10 – 47		87,155			101,434
Machinery and equipment		3 – 50		632,834			783,595
Construction in progress		—		22,495			30,540
				754,405			968,554
Accumulated depreciation				(154,782	)		(208,592	)
Total property, plant and equipment, net				599,623			759,962

Cost of sales includes depreciation expense of the following amount in each period (in thousands):

Quarter-to-date	$
Three months ended September 30, 2008		23,774
Three months ended September 30, 2009		19,537

Year-to-date	$
Nine months ended September 30, 2008		71,225
Nine months ended September 30, 2009		63,410

Depreciation expense for 2009 in the tables above excludes insurance recoveries related to the power outage discussed in Note 3.

In connection with the power outage at New Madrid, we wrote off assets with net book values of $0.3 million and $2.1 million for the three and nine months ended September 30, 2009, respectively. In addition, due to damage from the power outage, the lives of certain remaining assets were reduced by approximately one year during first quarter 2009, resulting in $0.7 million and $3.4 million of increased depreciation expense for the respective three and nine month periods ended September 30, 2009. Finally, in connection with the power outage we also continued to depreciate idle pots, recording $0.8 and $3.4 million in depreciation expense during the three and nine months ended September 30, 2009.

In August 2009, based on changes in expectations about the utilization of certain equipment, we wrote off excess downstream segment mill equipment which was previously reported as construction in progress with a net book value of $3.0 million.

9. GOODWILL

Goodwill represents the excess of acquisition consideration paid over the fair value of identifiable net tangible and identifiable intangible assets acquired. Goodwill and other indefinite-lived intangible assets are not amortized, but are reviewed for impairment at least annually, in the fourth quarter, or upon the occurrence of certain triggering events.

We evaluate goodwill for impairment using a two-step process. The first step is to compare the fair value of each of our segments to their respective book values, including goodwill. If the fair value of a segment exceeds the book value, segment goodwill is not considered impaired and the second step of the impairment test is not required. If the book value of a segment exceeds the fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The second step of the impairment test compares the implied fair value of the segment’s goodwill with the book value of that goodwill. If the book value of the segment’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination.

12

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

The following presents changes in the carrying amount of goodwill for the following periods (in thousands):

	Upstream		Downstream			Total
	$		$			$
Balance, December 31, 2007		124,853		131,269			256,122
Changes in purchase price allocations		4,588		(464	)		4,124
Tax adjustments		8,269		(239	)		8,030
Impairment loss		—		(25,500	)		(25,500	)
Balance, December 31, 2008		137,710		105,066			242,776
Impairment loss		—		(40,200	)		(40,200	)
Balance, September 30, 2009		137,710		64,866			202,576

Based upon the final evaluation of the fair value of our tangible and intangible assets acquired and liabilities assumed as of the closing date of the Apollo Acquisition, we recorded valuation adjustments that increased goodwill and decreased property, plant and equipment $4.1 million in March 2008.

For acquisitions entered into prior to January 1, 2009, when income tax uncertainties that resulted from a purchase business combination were resolved, adjustments are recorded to increase or decrease goodwill. Accordingly, in June 2008, we recorded a $10.9 million adjustment to increase goodwill to account for the difference between the estimated deferred tax asset for the carryover basis of acquired federal net operating loss and minimum tax credit carryforwards and the final deferred tax asset for such net operating loss and minimum tax credit carryforwards. In December 2008, we recorded a $2.9 million adjustment to decrease goodwill to reflect the final determination of taxes.

Impairments

During fourth quarter 2008, as the impact of the global economic contraction began to be realized, we recorded a $25.5 million impairment write-down of goodwill in the downstream business. In connection with the preparation of our consolidated financial statements for first quarter 2009, we concluded that it was appropriate to re-evaluate our goodwill and intangibles for potential impairment in light of the power outage at our New Madrid smelter and the accelerated deteriorations of demand volumes in both our upstream and downstream segments. Based on our interim impairment analysis during first quarter 2009, we recorded an impairment charge of $2.8 million on trade names and $40.2 million on goodwill in the downstream segment. No further impairment indicators were noted in the second or third quarters of 2009 regarding the recoverability of goodwill; therefore, no goodwill impairment testing was necessary at June 30, 2009 or September 30, 2009.

Our analyses included assumptions about future profitability and cash flows of our segments, which we believe reflect our best estimates at the date the valuations were performed. The estimates were based on information that was known or knowable at the date of the valuations. It is at least reasonably possible that the assumptions we employed will be materially different from the actual amounts or results, and that additional impairment charges for either or both segments will be necessary.

10. OTHER INTANGIBLE ASSETS

Other intangible assets consist of the following (in thousands):

	December 31, 2008			September 30, 2009
	$			$
Non-amortizable:
Trade names (indefinite life)		20,494			17,694
Amortizable:
Customer relationships (12.9 year weighted average life)		51,288			73,408
Other (2.5 year weighted average life)		689			689
		72,471			91,791
Accumulated amortization		(6,104	)		(9,011	)
Total other intangible assets, net		66,367			82,780

In the Joint Venture Transaction, we recorded identifiable intangible assets with a preliminary value of $22.1 million. These assets consist of contractual and non-contractual customer relationships and will be amortized over a range preliminarily estimated to be 7 — 9 years.

13

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

Amortization expense related to intangible assets is included in selling, general and administrative expenses of the following amount in each period (in thousands):

Quarter-to-date	$
Three months ended September 30, 2008		944
Three months ended September 30, 2009		1,060

Year-to-date	$
Nine months ended September 30, 2008		2,824
Nine months ended September 30, 2009		2,907

As part of our interim impairment analysis of intangible assets during first quarter 2009 discussed in Note 9, we recorded an impairment charge of $2.8 million related to the indefinite-lived trade names in the downstream business. Future impairment charges for either or both segments could be required if we do not achieve cash flow, revenue and profitability projections.

11. DETAILS OF CERTAIN BALANCE SHEET ACCOUNTS

Accounts receivable, net consists of the following (in thousands):

	December 31, 2008			September 30, 2009
	$			$
Trade		76,031			101,996
Allowance for doubtful accounts		(1,559	)		(150	)
Total accounts receivable, net		74,472			101,846

Other current assets consist of the following (in thousands):

	December 31, 2008		September 30, 2009
	$		$
Prepaid expenses		3,068		6,601
Current deferred tax asset		—		3,547
Employee loans receivable, net		—		2,331
Other current assets		299		4,556
Total other current assets		3,367		17,035

Other assets consist of the following (in thousands):

	December 31, 2008		September 30, 2009
	$		$
Deferred financing costs, net of amortization		27,736		19,849
Cash surrender value of life insurance		26,159		21,738
Pension asset (see Note 14)		—		9,609
Restricted cash (see Note 18)		3,412		10,869
Supplies		6,928		17,357
Other		5,281		9,130
Total other assets		69,516		88,552

14

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

Accrued liabilities consist of the following (in thousands):

	December 31, 2008		September 30, 2009
	$		$
Compensation and benefits		16,301		31,737
Workers’ compensation		3,299		3,494
Asset retirement obligations (see Note 18)		2,193		2,077
Land and reclamation obligations (see Note 18)		—		4,103
Pension and OPEB liabilities		2,476		2,881
One-time involuntary termination benefits		6,843		160
Property, sales, and use taxes		138		3,960
Other		1,490		13,174
Total accrued liabilities		32,740		61,586

Other long-term liabilities consist of the following (in thousands):

	December 31, 2008		September 30, 2009
	$		$
Reserve for uncertain tax positions		9,560		9,889
Workers’ compensation		9,159		9,455
Asset retirement obligations (see Note 18)		6,602		12,937
Environmental remediation obligation (see Note 20)		—		3,240
Land and reclamation obligations (see Note 18)		—		10,406
Deferred interest payable		7,344		11,059
Deferred compensation and other		6,917		5,149
Total other long-term liabilities		39,582		62,135

Accumulated other comprehensive income consists of the following (in thousands):

	December 31, 2008			September 30, 2009
	$			$
Net unrealized gains (losses) on cash flow hedges net of taxes of $150,296 and $122,669		263,782			215,386
Pension and OPEB adjustments, net of tax benefit of $39,078 and $39,210		(64,679	)		(66,326	)
Equity in accumulated other comprehensive income of equity-method investees, net of tax benefit of $132 and $0		(788	)		—	(1)
Total accumulated other comprehensive income		198,315			149,060

(1) This balance was reversed through our accounting for the Joint Venture Transaction. The balance at August 31, 2009 immediately prior to the reversal was a $2.0 million loss.

12. RELATED PARTY TRANSACTIONS

In connection with the Apollo Acquisition, we entered into a management consulting and advisory services agreement with Apollo for the provision of certain structuring, management and advisory services for an initial term ending on May 18, 2017. Terms of the agreement provide for annual fees of $2.0 million, payable in one lump sum annually. We expense approximately $0.5 million of such fees each quarter within selling, general and administrative expenses in our consolidated statements of operations.

We purchase alumina in transactions with Gramercy. Until the Joint Venture Transaction on August 31, 2009, Gramercy was our 50% owned joint venture, and purchases from Gramercy were considered related party transactions. Related party purchases from Gramercy prior to the Joint Venture Transaction were as follows (in thousands):

Quarter-to-date	$
Three months ended September 30, 2008		41,019
Period from July 1, 2009 to August 31, 2009		11,323

Year-to-date	$
Nine months ended September 30, 2008		122,984
Period from January 1, 2009 to August 31, 2009		56,019

Subsequent to the Joint Venture Transaction, purchases from Gramercy are eliminated in consolidation as intercompany transactions. Accounts payable to affiliates at December 31, 2008 consisted of a $34.2 million liability to Gramercy. This liability is eliminated in consolidation at September 30, 2009 following the Joint Venture Transaction.

15

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

We sell rolled aluminum products to Berry Plastics Corporation, a portfolio company of Apollo, under an annual sales contract. Sales to this entity were as follows (in thousands):

Quarter-to-date	$
Three months ended September 30, 2008		2,750
Three months ended September 30, 2009		1,703

Year-to-date	$
Nine months ended September 30, 2008		6,850
Nine months ended September 30, 2009		4,057

13. LONG-TERM DEBT

The following table presents the carrying values and fair values of our debt outstanding as of December 31, 2008 and September 30, 2009 (in thousands):

	December 31, 2008					September 30, 2009
	Carrying value			Fair value		Carrying value		Fair value
	$			$		$		$
Noranda:
Senior Floating Rate Notes due 2014 (unamortized discount of $1,842 and $538 at December 31, 2008 and September 30, 2009, respectively)		218,158			30,800		67,996		33,998
AcquisitionCo:
Term B loan due 2014		393,450			393,024		349,012		349,012
Senior Floating Rate Notes due 2015		510,000			153,000		387,047		259,322
Revolving credit facility		225,000			225,000		216,930		216,930
Total debt		1,346,608					1,020,985
Less: current portion		(32,300	)				—
Long-term debt		1,314,308					1,020,985

Secured credit facilities

AcquisitionCo entered into senior secured credit facilities on May 18, 2007, which consists of:

• a $500.0 million term B loan with a maturity of seven years, which was fully drawn on May 18, 2007; of which $151.0 million has been repaid or repurchased (some at a discount) as of September 30, 2009.

• a $242.7 million revolving credit facility which matures in 2013, which includes borrowing capacity available for letters of credit and for borrowing on same-day notice. During the nine months ended September 30, 2009, we repurchased a face value amount of $6.5 million of the revolving credit facility for $4.0 million. As a result of the repurchase, our maximum borrowing capacity was reduced $7.3 million from $250.0 million to $242.7 million. Outstanding letter of credit amounts on the revolving credit facility totaled $24.2 million at September 30, 2009.

The senior secured credit facilities permit AcquisitionCo to incur incremental term and revolving loans under such facilities in an aggregate principal amount of up to $200.0 million. Incurrence of such incremental indebtedness under the senior secured credit facilities is subject to, among other things, AcquisitionCo’s compliance with a Senior Secured Net Debt to Adjusted EBITDA ratio (in each case as defined in the credit agreement governing the term B loan) of 2.75 to 1.0 until December 31, 2008 and 3.0 to 1.0 thereafter. At September 30, 2009, our Senior Secured Net debt to Adjusted EBITDA ratio was below 3.0 to 1.0. At December 31, 2008 and September 30, 2009, AcquisitionCo had no commitments from any lender to provide such incremental loans.

The senior secured credit facilities are guaranteed by us and by all of the existing and future direct and indirect wholly owned domestic subsidiaries of AcquisitionCo that do not qualify as “unrestricted” under the senior secured credit facilities. These guarantees are full and unconditional. NHB Capital LLC (“NHB”), in which we have 100% ownership interest, is the only unrestricted subsidiary and the only domestic subsidiary that has not guaranteed these obligations. See Note 24 for the discussion of NHB. The credit facilities are secured by first priority pledges of all of the equity interests in AcquisitionCo and all of the equity interests in each of the existing and future direct and indirect wholly owned domestic subsidiaries of AcquisitionCo. The senior secured credit facilities are also secured by first priority security interests in substantially all of the assets of AcquisitionCo, as well as those of each of our existing and future direct and indirect wholly owned domestic subsidiaries that have guaranteed the senior secured credit facilities.

16

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

On May 7, 2009, participating lenders approved an amendment to the senior secured credit facilities to permit discounted prepayments of the term B loan and revolving credit facility through a modified “Dutch” auction procedure. The amendment also permits us to conduct open market purchases of the revolving credit facility and term B loan at a discount.

Term B loan

Interest on the loan is based either on LIBOR or the prime rate, at AcquisitionCo’s election, in either case plus an applicable margin (2.00% over LIBOR at December 31, 2008 and September 30, 2009) that depends upon the ratio of AcquisitionCo’s Senior Secured Net Debt to its EBITDA (in each case as defined in the credit agreement governing the term B loan). The interest rates at December 31, 2008 and September 30, 2009 were 4.24% and 2.25%, respectively. Interest on the term B loan is payable no less frequently than quarterly, and such loan amortizes at a rate of 1% per annum, payable quarterly, beginning on September 30, 2007. On June 28, 2007, AcquisitionCo made an optional prepayment of $75.0 million on the term B loan. The optional prepayment was applied to reduce in direct order the remaining amortization installments in forward order of maturity, which served to effectively eliminate the 1% per annum required principal payment.

AcquisitionCo is required to prepay amounts outstanding under the credit agreement based on an amount equal to 50% of our Excess Cash Flow (as calculated in accordance with the terms of the credit agreement governing the term B loan) within 95 days after the end of each fiscal year. The required percentage of AcquisitionCo’s Excess Cash Flow payable to the lenders under the credit agreement governing the term B loan shall be reduced from 50% to either 25% or 0% based on AcquisitionCo’s Senior Secured Net Debt to EBITDA ratio (in each case as defined in the credit agreement governing the term B loan) or the principal amount of term B loan that has been repaid. A mandatory prepayment of $24.5 million pursuant to the cash flow sweep provisions of the credit agreement was paid in April 2009 and was equal to 50% of AcquisitionCo’s Excess Cash Flow for 2008. When the final calculation was performed, the payment was reduced from the estimated amount reported at December 31, 2008 of $32.3 million.

Revolving credit facility

Interest on the revolving credit facility is based either on LIBOR or the prime rate, at AcquisitionCo’s election, in either case plus an applicable margin (2.00% over LIBOR at December 31, 2008 and September 30, 2009) that depends upon the ratio of AcquisitionCo’s Senior Secured Net Debt to its EBITDA (in each case as defined in the applicable credit facility) and is payable at least quarterly. The interest rate on the revolver was 2.46% at December 31, 2008 and 2.25% at September 30, 2009. AcquisitionCo had outstanding letters of credit totaling $7.0 million and $24.2 million under the revolving credit facility at December 31, 2008 and September 30, 2009, respectively. At December 31, 2008, $225.0 million was drawn down on the facility leaving $18.0 million available for borrowing. As a result of the revolving credit facility repurchase, our borrowing capacity was reduced $7.3 million from $250.0 million to $242.7 million, and at September 30, 2009, $216.9 million was drawn down on the facility, leaving $1.6 million available under the facility.

In addition to paying interest on outstanding principal under the revolving credit facility, AcquisitionCo is required to pay:

• a commitment fee to the lenders under the revolving credit facility in respect of unutilized commitments at a rate equal to 0.5% per annum subject to step down if certain financial tests are met; and

• additional fees related to outstanding letters of credit under the revolving credit facility at a rate of 2.0% per annum.

Certain covenants

We have no financial maintenance covenants on any borrowings. Certain covenants contained in our debt agreements governing our senior secured credit facilities and the indentures governing our notes restrict our ability to take certain actions if we are unable to meet defined Adjusted EBITDA to fixed charges and net senior secured debt to Adjusted EBITDA ratios. These actions include incurring additional secured or unsecured debt, expanding borrowings under existing term loan facilities, paying dividends, engaging in mergers, acquisitions and certain other investments, and retaining proceeds from asset sales. As a result of not meeting certain of the minimum and maximum financial levels established by our debt agreements as of September 30, 2009 as conditions to the execution of certain transactions, our ability to incur future indebtedness, grow through acquisitions, make certain investments, pay dividends and retain proceeds from asset sales may be limited.

In addition to the restrictive covenants described above, upon the occurrence of certain events, such as a change of control, our debt agreements could require that we repay or refinance our indebtedness.

17

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

AcquisitionCo notes

In addition to the senior secured credit facilities, on May 18, 2007, AcquisitionCo issued $510.0 million Senior Floating Rate Notes due 2015 (the “AcquisitionCo Notes”). The AcquisitionCo Notes mature on May 15, 2015. The initial interest payment on the AcquisitionCo Notes was paid on November 15, 2007, entirely in cash. For any subsequent period through May 15, 2011, AcquisitionCo may elect to pay interest: (i) entirely in cash, (ii) by increasing the principal amount of the AcquisitionCo Notes or by issuing new notes (the “AcquisitionCo PIK interest”) or (iii) 50% in cash and 50% in AcquisitionCo PIK interest. For any subsequent period after May 15, 2011, AcquisitionCo must pay all interest in cash. The AcquisitionCo Notes cash interest accrues at six-month LIBOR plus 4.0% per annum, reset semi-annually, and the AcquisitionCo PIK interest, if any, will accrue at six-month LIBOR plus 4.75% per annum, reset semi-annually. The PIK interest rate was 7.35% at December 31, 2008 and 6.16% at September 30, 2009.

On May 15, 2009, AcquisitionCo issued $16.6 million in AcquisitionCo Notes as payment for PIK interest due May 15, 2009.

The AcquisitionCo Notes are fully and unconditionally guaranteed on a senior unsecured, joint and several basis by the existing and future wholly owned domestic subsidiaries of AcquisitionCo that guarantee the senior secured credit facilities. As discussed elsewhere in this note, NHB is not a guarantor of the senior secured credit facilities, and is therefore not a guarantor of the AcquisitionCo Notes. See Note 24 for further discussion of NHB. HoldCo fully and unconditionally guarantees the AcquisitionCo Notes on a joint and several basis with the existing guarantors. The guarantee by HoldCo is not required by the indenture governing the AcquisitionCo Notes and may be released by HoldCo at any time. HoldCo has no independent operations or any assets other than its interest in AcquisitionCo. AcquisitionCo is a wholly owned finance subsidiary of HoldCo with no operations independent of its subsidiaries which guarantee the AcquisitionCo Notes.

We have notified the trustee for the HoldCo and AcquisitionCo bondholders of our election to pay the November 15, 2009 and May 15, 2010 interest payments entirely in kind.

The indenture governing the AcquisitionCo Notes limits AcquisitionCo’s and our ability, among other things, to (i) incur additional indebtedness; (ii) declare or pay dividends or make other distributions or repurchase or redeem our stock; (iii) make investments; (iv) sell assets, including capital stock of restricted subsidiaries; (v) enter into agreements restricting our subsidiaries’ ability to pay dividends; (vi) consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; (vii) enter into transactions with our affiliates; and (viii) incur liens.

HoldCo notes

On June 7, 2007, HoldCo issued Senior Floating Rate Notes due 2014 (the “HoldCo Notes”) in aggregate principal amount of $220.0 million, with a discount of 1.0% of the principal amount. The HoldCo Notes mature on November 15, 2014. The HoldCo Notes are not guaranteed. The initial interest payment on the HoldCo Notes was paid on November 15, 2007, in cash; for any subsequent period through May 15, 2012, we may elect to pay interest: (i) entirely in cash, (ii) by increasing the principal amount of the HoldCo Notes or by issuing new notes (the “HoldCo PIK interest”) or (iii) 50% in cash and 50% in HoldCo PIK interest. For any subsequent period after May 15, 2012, we must pay all interest in cash. The HoldCo Notes cash interest accrues at six-month LIBOR plus 5.75% per annum, reset semi-annually, and the HoldCo PIK interest, if any, will accrue at six-month LIBOR plus 6.5% per annum, reset semi-annually. The PIK interest rate was 9.10% at December 31, 2008 and 7.91% at September 30, 2009.

On May 15, 2009, HoldCo issued $3.3 million in HoldCo Notes as payment for PIK interest due May 15, 2009.

As discussed above, we have notified the trustee for the HoldCo and AcquisitionCo bondholders of our election to pay the November 14, 2009 and May 15, 2010 interest payments entirely in kind.

The indenture governing the HoldCo Notes limits AcquisitionCo’s and our ability, among other things, to (i) incur additional indebtedness; (ii) declare or pay dividends or make other distributions or repurchase or redeem our stock; (iii) make investments; (iv) sell assets, including capital stock of restricted subsidiaries; (v) enter into agreements restricting our subsidiaries’ ability to pay dividends; (vi) consolidate, merge, sell or otherwise dispose of all or substantially all of our assets; (vii) enter into transactions with our affiliates; and (viii) incur liens.

18

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

Debt repurchase

For the three month period ended September 30, 2009, we repurchased or repaid $81.1 million principal aggregate amount of our outstanding HoldCo Notes, AcquisitionCo Notes, and term B loan for a price of $52.2 million, plus fees. HoldCo Notes with an aggregate principal balance of $5.5 million and net carrying amount of $5.6 million (including deferred financing fees and debt discounts) were repurchased at a price of $2.5 million, plus fees. AcquisitionCo Notes with an aggregate principal balance of $74.7 million and net carrying amount of $74.5 million (including deferred financing fees and debt discounts) were repurchased at a price of $49.0 million, plus fees. We repurchased a face value amount of $0.9 million of the term B loan for $0.7 million. We recognized a gain of $28.6 million representing the difference between the repurchase price and the carrying amounts of repurchased debt for the three month period ended September 30, 2009.

For the nine month period ended September 30, 2009, we repurchased or repaid $320.8 million principal aggregate amount of our outstanding HoldCo Notes, AcquisitionCo Notes, term B loan and revolving credit facility for a price of $123.0 million, plus fees. HoldCo Notes with an aggregate principal balance of $154.7 million and net carrying amount of $153.8 million (including deferred financing fees and debt discounts) were repurchased at a price of $38.7 million, plus fees. AcquisitionCo Notes with an aggregate principal balance of $139.6 million and net carrying amount of $137.8 million (including deferred financing fees and debt discounts) were repurchased at a price of $67.4 million, plus fees. Of the HoldCo Notes and AcquisitionCo Notes repurchased, we retired a face value amount of $155.4 million during the nine months ended September 30, 2009. In addition to our $24.5 million payment in April 2009 related to 2008 excess cash flows on the term B loan, we repurchased a face value amount of $19.9 million of the term B loan for $13.0 million. We repurchased $6.6 million of our revolving credit facility borrowings for $4.0 million. As a result of the revolving credit facility repurchase, our borrowing capacity was reduced $7.3 million from $250.0 million to $242.7 million. We recognized a gain of $193.2 million representing the difference between the repurchase price and the carrying amounts of repurchased debt for the nine month period ended September 30, 2009.

The gains have been reported as “Gain on debt repurchase” in the accompanying condensed consolidated statements of operations for the three and nine month periods ended September 30, 2009. For tax purposes, gains from our 2009 debt repurchase will be deferred until 2014, and then included in taxable income ratably from 2014 to 2018.

14. PENSIONS AND OTHER POST-RETIREMENT BENEFITS

We sponsor defined benefit pension plans for hourly and salaried employees. Benefits under our sponsored defined benefit pension plans are based on years of service and/or eligible compensation prior to retirement. We also sponsor other post-retirement benefit (“OPEB”) plans for certain employees. Our sponsored post-retirement benefits include life insurance benefits and health insurance benefits. These health insurance benefits cover 21 retirees and beneficiaries. In addition, we provide supplemental executive retirement benefits (“SERP”) for certain executive officers. Plans in existence prior to the Joint Venture Transaction are referred to as “Noranda Plans” below. We acquired the plans in existence at Gramercy and St. Ann in the Joint Venture Transaction. These plans, referred to below as “Gramercy Plans” and “St. Ann Plans,” include defined benefit pension plans and other post retirement benefit plans. The net periodic cost disclosures below include the Gramercy Plans and the St. Ann Plans from the date of the Joint Venture Transaction.

Our pension funding policy is to contribute annually an amount based on actuarial and economic assumptions designed to achieve adequate funding of the projected benefit obligations and to meet the minimum funding requirements of the Employee Retirement Income Security Act (“ERISA”). OPEB benefits are funded as retirees submit claims.

We use a measurement date of December 31 to determine the pension and OPEB liabilities.

19

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

Net periodic benefit costs comprise the following (in thousands):

	Pension						OPEB
	Three months ended September 30,						Three months ended September 30,
	2008			2009			2008			2009
	$			$			$			$
Service cost		2,745			2,183			34			56
Interest cost		5,493			4,709			105			187
Expected return on plan assets		(6,052	)		(3,655	)		—			—
Net amortization and deferral		180			2,038			(10	)		(30	)
Net periodic cost		2,366			5,275			129			213
	Pension						OPEB
	Nine months ended September 30,						Nine months ended September 30,
	2008			2009			2008			2009
	$			$			$			$
Service cost		6,176			6,133			101			123
Interest cost		12,359			13,409			314			397
Expected return on plan assets		(13,617	)		(9,855	)		—			—
Net amortization and deferral		405			5,382			(30	)		(50	)
Settlement		—			406			—			—
Net periodic cost		5,323			15,475			385			470

Pension and OPEB assets and liabilities consist of the following (in thousands):

	December 31, 2008		September 30, 2009
	$		$
Pension assets included in other assets:
St. Ann pension plan		—		9,609
Pension and OPEB liabilities included in accrued liabilities:
Noranda Plans		2,476		2,881
Pension and OPEB liabilities — long term:
Noranda Plans		120,859		132,318
Gramercy Plans		—		2,959
St. Ann OPEB Plan		—		5,304
		120,859		140,581

Employer contributions

We have contributed $2.4 million to the SERP, $0.3 million to the Gramercy pension plan, and $1.3 million to the Noranda pension plan during the nine months ended September 30, 2009. We expect to contribute a minimum of $0.4 million to the Noranda pension plan and $0.1 million to the Gramercy pension plan during the remainder of 2009. We may elect to contribute additional funds to the plans.

20

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

15. SHAREHOLDERS’ EQUITY AND SHARE-BASED PAYMENTS

Common stock subject to redemption

In March 2008, we entered into an employment agreement with Layle K. Smith to serve as our Chief Executive Officer (the “CEO”) and to serve on our board of directors. As part of that employment agreement, the CEO agreed to purchase 100,000 shares of common stock at $20 per share, for a total investment of $2.0 million. The shares purchased include a redemption feature which guarantees total realization on these shares of at least eight million dollars (or, at his option under certain circumstances, equivalent consideration in the acquiring entity) in the event an early change-in-control, as defined in Mr. Smith’s employment agreement occurs prior to September 3, 2009 and the CEO remains employed with us through the 12-month anniversary of such change in control or experiences certain qualifying terminations of employment, after which the per share redemption value is fair value.

Prior to September 2009, because of the existence of the conditional redemption feature, the carrying value of these 100,000 shares of common stock has been reported outside of permanent equity. The redemption feature expired on September 3, 2009, and the carrying amount was reclassified to equity.

On November 12, 2009, our Board of Directors voted to extend to March 3, 2013 the period during which Mr. Smith may be entitled to benefits in the event of an early change-in-control. The Board of Directors also provided that all of Mr. Smith’s stock options will receive the same treatment in the event of an early change-in-control or other change in control of the Company.

Noranda long-term incentive plan

Under our 2007 Long-Term Incentive Plan (the “Incentive Plan”) we have reserved 1,500,000 shares of our common stock for issuance to employees and non-employee directors under the Incentive Plan. Of this amount at September 30, 2009, management investors owned 346,790 shares and there were 1,022,519 option grants outstanding. The remaining 130,691 shares remained available for issuance. On November 12, 2009, our Board of Directors voted to amend and restate the Incentive Plan to increase the number of shares of Company common stock reserved for grant under the Incentive Plan from 1,500,000 shares to 1,900,000 shares.

Options granted under the Incentive Plan generally have a ten year term. Employee option grants historically have consisted of time-vesting options and performance-vesting options. The time-vesting options generally vest in equal one-fifth installments on each of the first five anniversaries of the date of grant or on the closing of Apollo’s acquisition of us, as specified in the applicable award agreements, subject to continued service through each applicable vesting date. The performance-vesting options vest upon our investors’ realization of a specified level of investor internal rate of return (“investor IRR”), subject to continued service through each applicable vesting date.

The employee options generally are subject to our (or Apollo’s) call provision which expires upon the earlier of a qualified public offering or May 2014 and provides us (or Apollo) the right to repurchase the underlying shares at the lower of their cost or fair market value upon certain terminations of employment. A qualified public offering transaction is defined in the documents governing the options as a public offering that raises at least $200.0 million. This call provision represents a substantive performance-vesting condition with a life through May 2014; therefore, we recognize stock compensation expense for service awards through May 2014. Performance-vesting options issued in May 2007 have met their performance-vesting provision. However, the shares underlying the options remain subject to our (or Apollo) call provision. Accordingly, the options currently are subject to service conditions, and stock compensation expense is being recorded over the remaining call provision through May 2014.

At September 30, 2009, the expiration of the call option upon a qualified public offering would have resulted in the immediate recognition of $2.4 million of stock compensation expense related to the cost of options where the investor IRR targets were previously met and $0.7 million of stock compensation expense related to the cost of options where the offering (together with a $4.70 per share dividend paid in June 2008) would cause the performance option to be met. Further, the period over which we recognize stock compensation expense for service awards would change from May 2014 to five years prospectively from the date of the qualified public offering, which, based on options outstanding at September 30, 2009, would increase quarterly stock compensation expense by approximately $0.7 million.

Our Board of Directors declared and we paid a $102.2 million cash dividend ($4.70 per share) in June 2008. The award holders were given $4.70 of value in the form of an immediately vested cash payment of $2.70 per share and a modification of the price of the options from $6 per share to $4 per share and $20 per share to $18 per share.

21

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

The summary of our stock option activity and related information is as follows (in thousands):

	Employee Options and
	Non-Employee Director Options					Investor Director Provider Options
				Weighted average				Weighted average
	Common shares			exercise price		Common shares		exercise price
Outstanding–December 31, 2008		910,224		$	8.61		70,000	$	18.00
Granted		60,000			1.37		—		—
Modified		—			—		—		—
Exercised		—			—		—		—
Expired		—			—		—		—
Forfeited		(17,705	)		4.00		—		—
Outstanding–September 30, 2009		952,519		$	8.24		70,000	$	18.00
Fully vested — end of period (weighted average remaining contractual term of 7.7 years)		447,397		$	5.39		70,000	$	18.00
Currently exercisable — end of period (weighted average remaining contractual term of 7.7 years)		404,487		$	5.54		70,000	$	18.00

The fair value of stock options was estimated at the grant date using the Black-Scholes-Merton option pricing model. The following summarizes information concerning stock option grants:

	Three months ended				Nine months ended
	September 30,				September 30,
	2008		2009		2008			2009
Expected price volatility		—		—		45.0	%		47.0	%
Risk-free interest rate		—		—		3.1	%		4.0	%
Weighted average expected lives in years		—		—		5.9			7.5
Weighted average fair value		—		—	$	7.36		$	0.76
Forfeiture rate		—		—		—			—
Dividend yield		—		—		—			—

We recorded stock compensation expense of the following amounts (in thousands):

Quarter-to-date	$
Three months ended September 30, 2008		399
Three months ended September 30, 2009		371

Year-to-date	$
Nine months ended September 30, 2008		1,007
Nine months ended September 30, 2009		1,111

As of September 30, 2009, total unrecognized stock compensation expense related to non-vested stock options was $7.3 million with a weighted average expense recognition period of 4.7 years.

On November 12, 2009, our Board of Directors voted to amend and restate stock option agreements with certain employees to change the exercise prices of the underlying options and to amend the vesting schedule of those options. The amended and restated option agreements change the exercise price of these options to $2.28 per share. This modification affects 5 employees and 269,500 options. The amendment also provides that the 50% of the options which were originally scheduled to vest based upon Company’s investors’ realization of investor IRR will now vest based on continued service, with 15% scheduled to vest on each of the first and second anniversaries of the amendment and restatement date, 20% scheduled to vest on the third anniversary of the amendment and restatement date and 25% scheduled to vest on each of the fourth and fifth anniversaries of the amendment and restatement date. This modification affected 5 employees and 138,125 options.

22

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

16. INCOME TAXES

Our effective income tax rate was approximately 63.0% for the nine months ended September 30, 2009 and 55.2% for the nine months ended September 30, 2008. The effective tax rates for the nine months ended September 30, 2009 and September 30, 2008 were primarily impacted by, state income taxes, equity method investee income, the Internal Revenue Code Section 199 manufacturing deduction and goodwill impairment in 2009. Each interim period is considered an integral part of the annual period and tax expense is measured using the estimated annual effective tax rate. Estimates of the annual effective tax rate at the end of interim periods are, of necessity, based on evaluations of possible future events and transactions and may be subject to subsequent refinement or revision. For the nine months ended September 30, 2009 and September 30, 2008, we used the annual effective tax rate based on estimated ordinary income for the years ended December 31, 2009 and December 31, 2008, respectively.

As of September 30, 2009 and December 31, 2008, we had unrecognized income tax benefits (including interest) of approximately $11.3 million, and $11.0 million, respectively (of which approximately $7.4 million, if recognized, would favorably impact the effective income tax rate). As of September 30, 2009, the gross amount of unrecognized tax benefits changed by an immaterial amount. It is expected that the unrecognized tax benefits may change in the next twelve months; however, due to Xstrata’s indemnification of us for tax obligations related to periods ending on or before the acquisition date, we do not expect the change to have a significant impact on our results of operations or our financial position.

In April 2009, the Internal Revenue Service (“IRS”) commenced an examination of our U.S. income tax return for 2006. As part of the Apollo Acquisition, Xstrata indemnified us for tax obligations related to periods ending on or before the acquisition date. Therefore, we do not anticipate that the IRS examination will have a material impact on our financial statements.

17. DERIVATIVE FINANCIAL INSTRUMENTS

We use derivative instruments to mitigate the risks associated with fluctuations in aluminum price, natural gas prices and interest rates. We recognize all derivative instruments as either assets or liabilities at fair value in our balance sheet. We designated our fixed-price aluminum sale swaps as cash flow hedges through January 29, 2009, the week of the power outage discussed in Note 3; thus the effective portion of such derivatives was adjusted to fair value through accumulated other comprehensive income (“AOCI”) through January 29, 2009, with the ineffective portion reported through earnings. As of September 30, 2009, the pre-tax amount of the effective portion of cash flow hedges recorded in accumulated other comprehensive income was $338.1 million. Derivatives that do not qualify for hedge accounting or have not been designated for hedge accounting treatment are adjusted to fair value through earnings in gains (losses) on hedging activities in the consolidated statements of operations. As of September 30, 2009, all derivatives were held for purposes other than trading.

Merrill Lynch is the counterparty for a substantial portion of our derivatives. All swap arrangements with Merrill Lynch are part of a master arrangement which is subject to the same guarantee and security provisions as the senior secured credit facilities. At current hedging levels, the master arrangement does not require us to post additional collateral, nor are we subject to margin requirements. We present the fair values of derivatives where Merrill Lynch is the counterparty in a net position on the consolidated balance sheet as a result of our master netting agreement. The following is a gross presentation of the derivative balances as of December 31, 2008 and September 30, 2009 (in thousands):

	December 31, 2008			September 30, 2009
	$			$
Current derivative assets		111,317			91,299
Current derivative liabilities		(29,600	)		(20,818	)
Current derivative assets, net		81,717			70,481
Long-term derivative assets		290,877			140,514
Long-term derivative liabilities		(35,061	)		(24,582	)
Long-term derivative asset, net		255,816			115,932

23

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

The following table presents the carrying values, which were recorded at fair value, of our derivative instruments outstanding (in thousands):

	December 31, 2008			September 30, 2009
	$			$
Aluminum swaps-fixed-price		401,909			229,243
Aluminum swaps-variable-price		(9,500	)		2,570
Interest rate swaps		(21,472	)		(19,669	)
Natural gas swaps		(33,404	)		(25,731	)
Total		337,533			186,413

The September 30, 2009 variable-price aluminum swap balance is net of a $1.7 million broker margin call asset.

We recorded (gains) losses for the change in the fair value of derivative instruments that do not qualify for hedge accounting treatment or have not been designated for hedge accounting treatment, as well as the ineffectiveness of derivatives that do qualify for hedge accounting treatment as follows (in thousands):

	Derivatives qualified as hedges						Derivatives not qualified as hedges
	Amount reclassified			Hedge			Change in
	from AOCI			Ineffectiveness			fair value		Total
	$			$			$		$
Quarter-to-date
Three months ended September 30, 2008		21,887			(1,714	)		25,323		45,496
Three months ended September 30, 2009		(24,245	)		—			18,498		(5,747	)
Year-to-date
Nine months ended September 30, 2008		45,057			(4,138	)		9,578		50,497
Nine months ended September 30, 2009		(149,272	)		(69	)		45,268		(104,073	)

As a result of the hedge de-designation at January 29, 2009 discussed below, as well as revised forecasts during 2009, we expect to reclassify a gain of $87.0 million from accumulated other comprehensive income into earnings from October 1, 2009 through September 30, 2010.

De-designated cash flow hedges

Fixed-price aluminum sale swaps

In 2007 and 2008, we implemented a hedging strategy designed to reduce commodity price risk and protect operating cash flows in the upstream business through the use of fixed-price aluminum sale swaps. As a result of the New Madrid power outage during the week of January 26, 2009, and in anticipation of fixed-price aluminum purchase swaps described below, we discontinued hedge accounting for all of our remaining fixed-price aluminum sale swaps on January 29, 2009. During first quarter 2009, we entered into fixed-price aluminum purchase swaps to lock in a portion of the favorable market position of our fixed-price aluminum sale swaps. The average margin per pound locked in was $0.40 at September 30, 2009. To the extent we have entered into fixed-price aluminum purchase swaps, the fixed-price aluminum sale swaps are no longer hedging our exposure to price risk.

For the three months and nine months ended September 30, 2009, the amount reclassified from accumulated other comprehensive income to earnings was $24.2 million and $149.3 million, respectively. These amounts are noted in the table above. Of these amounts, $78.5 million was reclassified into earnings during the nine months ended September 30, 2009 because it was probable that the original forecasted transactions would not occur. Changes to forecasts had no impact on the three months ended September 30, 2009.

In March 2009, we entered into a hedge settlement agreement with Merrill Lynch. As amended in April 2009, the agreement provides a mechanism for us to monetize up to $400.0 million of the favorable net position of our long-term derivatives to fund debt repurchases. The agreement states that Merrill Lynch will only settle fixed-price aluminum sale swaps that are offset by fixed-price aluminum purchase swaps. We settled offsetting fixed-price aluminum purchase swaps and sale swaps to fund our debt repurchases during the three and nine months ended September 30, 2009. In the three months ended September 30, 2009, we received $49.6 million in proceeds from the hedge settlement agreement. For the nine months ended September 30, 2009, we received $119.7 million in proceeds from the hedge settlement agreement.

24

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

On October 29, 2009, we amended our hedge settlement agreement. The amendment provides that a portion of locked in value from the offsetting swaps may be used to meet collateral posting requirements for any new hedge volumes we enter into with Merrill Lynch.

As of September 30, 2009, we had outstanding fixed-price aluminum sales swaps as follows:

	Average hedged price		Pounds hedged
	per pound		annually
Year	$		(in thousands)
2009		1.09		72,268
2010		1.06		290,541
2011		1.20		272,570
				635,379

Derivatives not designated as hedging instruments

Fixed-price aluminum purchase swaps

As previously discussed, during the nine months ended September 30, 2009, we entered into fixed-price aluminum purchase swaps to offset a portion of our existing fixed-price aluminum sale swaps. Beginning first quarter 2009, we entered into fixed-price purchase swaps to offset the fixed-price sale swaps. The following table summarizes fixed-price aluminum purchase swaps as of September 30, 2009:

	Average hedged price		Pounds hedged
	per pound		annually
Year	$		(in thousands)
2010		0.70		245,264
2011		0.76		231,838
				477,102

Variable-price aluminum swaps

We also enter into forward contracts with our customers to sell aluminum in the future at fixed prices in the normal course of business. Because these contracts expose us to aluminum market price fluctuations, we economically hedge this risk by entering into variable-price aluminum swap contracts with various brokers, typically for terms not greater than one year.

These swap contracts are not designated as hedging instruments; therefore, any gains or losses related to the change in fair value of these contracts were recorded in (gain) loss on hedging activities in the consolidated statements of operations. We recorded a gain of $4.1 million for the three months ended September 30, 2009 and a gain of $8.5 million for the nine months ended September 30, 2009.

The following table summarizes our variable-price aluminum purchase swaps as of September 30, 2009:

	Average hedged price		Pounds hedged
	per pound		annually
Year	$		(in thousands)
2009		0.89		16,321
2010		0.74		14,342

We sold 8.8 million and 34.7 million pounds of aluminum that were hedged with variable-priced aluminum swaps in the three months and nine months ended September 30, 2009, respectively.

Interest rate swap

We have floating-rate debt, which is subject to variations in interest rates. On August 16, 2007, we entered into an interest rate swap agreement to limit our exposure to floating interest rates for the periods from November 15, 2007 to November 15, 2011 with a notional amount of $500.0 million, which such notional amount declines in increments over time beginning in May 2009 at a 4.98% fixed interest rate.

25

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

The interest rate swap agreement was not designated as a hedging instrument. Accordingly, any gains or losses resulting from changes in the fair value of the interest rate swap contracts were recorded in (gain) loss on hedging activities in the consolidated statements of operations.

Natural gas swaps

We purchase natural gas to meet our production requirements. These purchases expose us to the risk of fluctuating natural gas prices. To offset changes in the Henry Hub Index Price of natural gas, we enter into financial swaps, by purchasing the fixed forward price for the Henry Hub Index and simultaneously entering into an agreement to sell the actual Henry Hub Index Price.

The following table summarizes our fixed-price natural gas swap contracts per year at September 30, 2009:

	Average price per		Notional amount
Year	million BTU $		million BTU’s
2009		9.29		1,479
2010		9.00		4,012
2011		9.31		2,019
2012		9.06		2,023

These contracts were not designated as hedges for accounting purposes. Accordingly, any gains or losses resulting from changes in the fair value of the gas swap contracts were recorded in (gain) loss on hedging activities in the consolidated statements of operations.

Subsequent to September 30, 2009, we entered into additional purchase swaps with respect to a portion of our natural gas volume.

18. LAND, RECLAMATION, AND ASSET RETIREMENT OBLIGATIONS

Land and reclamation obligations

St. Ann has a reclamation obligation to rehabilitate land disturbed by St. Ann’s bauxite mining operations. The process to restore the disturbed land to its original condition must be in compliance with the Government of Jamaica’s (“GOJ”) regulations and includes filling the open mining pits and planting vegetation. GOJ regulations require the reclamation process to be completed within three years of the date a mining pit is mined-out certified by the GOJ. Liabilities for reclamation are accrued as lands are disturbed and are based on the approximate acreage to be rehabilitated and the average historical cost per acre to rehabilitate lands. At September 30, 2009, the current and long-term portions of the reclamation obligation of $1.8 million and $5.9 million are included in accrued liabilities and other long-term liabilities, respectively, in the accompanying consolidated balance sheet.

If land to be mined is privately owned, St. Ann offers to purchase the residents’ homes for cash, relocate the residents to another area, or a combination of these two options. These costs are recorded as liabilities are incurred. At September 30, 2009, the current and long-term portions of the land obligation of $2.3 million and $4.5 million are included in accrued liabilities and other long-term liabilities, respectively, in the accompanying consolidated balance sheet.

The following is a reconciliation of the aggregate carrying amount of liabilities for the reclamation and land obligations at St. Ann (in thousands):

	For the month ended
	September 30, 2009
	$
Liabilities assumed in connection with the Joint Venture Transaction		14,540
Additional liabilities incurred		143
Liabilities settled		(174	)
Balance, end of period		14,509

Asset retirement obligations

Our asset retirement obligations (“ARO”) consist of costs related to the disposal of certain spent pot liners associated with the New Madrid smelter, as well as costs associated with the future closure of red mud lakes and the removal of hazardous materials at the Gramercy refinery. We believe the AROs recorded represent reasonable estimates of the costs associated with these future costs. However, given the relatively long time until closure of these assets, such estimates are subject to changes due to a number of factors including, changes in regulatory requirements, costs of labor and materials, and other factors. In addition, we may have other obligations that may arise in the event of a facility closure.

26

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

The current portion of the liability of $2.2 million and $2.1 million relates to the disposal of spent pot-liners at New Madrid and is recorded in accrued liabilities in the accompanying consolidated balance sheets at December 31, 2008 and September 30, 2009, respectively. The remaining non-current portion of $6.6 million and $12.9 million is included in other long-term liabilities in the accompanying consolidated balance sheets at December 31, 2008 and September 30, 2009, respectively.

The following is a reconciliation of the aggregate carrying amount of liabilities for the asset retirement obligations (in thousands):

	Year ended			Nine months ended
	December 31, 2008			September 30, 2009
	$			$
Balance, beginning of period		8,802			8,795
Additional liabilities incurred		1,558			1,475
Liabilities assumed in connection with the Joint Venture Transaction		—			6,864
Liabilities settled		(2,161	)		(2,745	)
Accretion expense		596			625
Balance, end of period		8,795			15,014

For the period ended September 30, 2009, ARO balances reported in the above reconciliation have been adjusted in connection with the asset disposals and additions related to the power outage at our New Madrid smelter.

At September 30, 2009, we had $6.2 million of restricted cash in an escrow account as security for the payment of red mud lake closure obligations that would arise under state environmental laws upon the termination of operations at the Gramercy facility. This amount is included in other assets in the accompanying consolidated balance sheet.

19. NONCONTROLLING INTEREST

Through St. Ann, we hold a 49% partnership interest in St. Ann Jamaica Bauxite Partners (“SAJBP”), in which the GOJ holds 51% interest. SAJBP mines bauxite, approximately 50% of which is sold to Gramercy, with the balance sold to third parties.

St. Ann is a party to several agreements (collectively the “Mining Agreements”) with the GOJ. St. Ann and the GOJ have equal voting rights in SAJBP’s executive committee. St. Ann manages the mining operations under a management agreement. St. Ann receives bauxite from SAJBP at SAJBP’s cost and pays the GOJ a return on its investment in SAJBP through the fees discussed below. St. Ann has a special mining lease with the GOJ for the supply of bauxite. The lease ensures access to sufficient reserves to allow St. Ann to ship annually 4.5 million dry metric tonnes (“DMT”) of bauxite from mining operations in a specified concession area through September 30, 2030. In return for these rights, St. Ann is required to pay annual fees consisting of:

• Dedication fee — Base dedication fee of $0.6 million per year is tied to a land base of 13,820 acres. The sum actually paid will vary with the current total of bauxite lands owned by the GOJ which is still being used by SAJBP expressed as a proportion of the total land base.

• Depletion fee — A base depletion fee of $0.2 million is paid on a base shipment of 4,000,000 DMT per annum. Variations in amounts paid will be proportional to changes in shipments.

• Asset usage fee — St. Ann also pays the GOJ 10% annually on the GOJ’s 51% share of the mining assets. For the period ended December 31, 2008, payments were $1.7 million

• Production levy — A production levy is determined by a formula applied to the average realized price of primary aluminum as determined by regulation of the GOJ, on all bauxite shipped from Jamaica other than sales to the GOJ and its agencies.

• Royalty — Royalties are payable to any person for the mining of bauxite at a rate of US $1.50 per dry metric ton of monohydrate bauxite shipped and US $2.00 per dry metric ton of trihydrate bauxite shipped, provided that during any period when the production levy is payable the royalty shall be at a rate of US $0.50 per dry metric ton.

27

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

We have determined that SAJBP is a variable interest entity under U.S. GAAP, and St. Ann is SAJBP’s primary beneficiary. Therefore, we consolidate SAJBP into our financial statements beginning with the date of the Joint Venture Transaction. Due to the consolidation of SAJBP, we reflect the following amounts in our balance sheet (in thousands):

	September 30, 2009
	$
Cash and cash equivalents		311
Accounts receivable		11,931
Inventories, consisting of maintenance supplies inventory and fuel		10,651
Property, plant and equipment		33,707
Other assets		1,817
Accounts payable and accrued liabilities		(43,137	)
Environmental, land and reclamation liabilities		(7,736	)
Net assets		7,544
Noncontrolling interest (at 51%)		3,847

The liabilities recognized as a result of consolidating SAJBP do not represent additional claims on our general assets. SAJBP’s creditors have claims only on the specific assets of SAJBP and St. Ann. Similarly, the assets of SAJBP we consolidate do not represent additional assets available to satisfy claims against our general assets.

St. Ann receives bauxite from SAJBP at SAJBP’s cost therefore, SAJBP operates at breakeven. Further, all returns to the GOJ are provided through the payments from St. Ann under the various fees, levies, and royalties described above. In these circumstances, no portion of SAJBP’s net income (loss) or consolidated comprehensive income (loss) is allocated to the noncontrolling interest. We do not expect the balance of the non-controlling interest to change from period-to-period unless there is an adjustment to the fair value of inventory or property, plant and equipment, as may occur in a LCM or asset impairment scenario.

20. COMMITMENTS AND CONTINGENCIES

Labor commitments

We are a party to nine collective bargaining agreements which expire at various times. Agreements with two unions at St. Ann expire in May and December 2010, respectively. Our agreement with the union at Gramercy expires in September 2010. All other collective bargaining agreements expire within the next five years.

Legal contingencies

We are a party to legal proceedings incidental to our business. In the opinion of management, the ultimate liability with respect to these actions will not materially affect our financial position, results of operations, and cash flows.

Environmental matters

In addition to our asset retirement obligations discussed in Note 18, we have identified certain environmental conditions requiring remedial action or ongoing monitoring at the Gramercy refinery. As of September 30, 2009, we recorded a $3.2 million liability for remediation of Gramercy’s known environmental conditions. This liability is recorded on the balance sheet in other long-term liabilities. Pursuant to the terms of the purchase agreement for Gramercy in 2004, $1.2 million remains in escrow from the previous owner to reimburse Gramercy for expenses to be incurred in the performance of the environmental remediation. This restricted cash is included in other assets in the accompanying consolidated balance sheet at September 30, 2009.

We believe our environmental liabilities are not likely to have a material adverse effect on financial position, results of operations, and cash flows. However, it is at least reasonably possible that future requirements will result in material liabilities.

Production Levy

The production levy provided for in the Mining Agreements (see Note 19) was formally waived by the GOJ for St. Ann through December 31, 2007. The waiver continued informally through December 31, 2008. We are actively involved in negotiations with the GOJ to formalize the waiver of the levy for 2008, as well as the process for establishing the fiscal regime structure beyond 2008 which will include addressing the levy and related funding issues. Although St. Ann has prepared its financial statements under the assumption that the production levy continues to be waived through September 30, 2009, there is a possibility that St. Ann would pay a production levy ranging up to $5.0 million for bauxite mined prior to September 30, 2009.

28

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

Guarantees

In connection with the 2005 disposal of a former subsidiary, American Racing Equipment of Kentucky, Inc (“ARE”), we guaranteed certain outstanding leases for the automotive wheel facilities located in Rancho Dominguez, Mexico. The leases have various expiration dates that extend through December 2011. Since March 2008, we were released from the guarantee obligation on one of the properties, resulting in a reduction of the remaining maximum future lease obligations. As of September 30, 2009 the remaining maximum future payments under these lease obligations totaled approximately 18% per year. We have concluded that it is not probable that we will be required to make payments pursuant to these guarantees and we have not recorded a liability for these guarantees. Further, ARE’s purchaser has indemnified us for all losses associated with the guarantees.

Power Contract

On July 24, 2009, Ameren, Missouri’s largest electric utility, which provides electric service to our New Madrid smelter, petitioned the Missouri Public Service Commission (“MoPSC”) for a general rate increase of approximately 18% across all customer categories, including Noranda. Ameren also requested that our contract be modified to include a take-or-pay arrangement. Although we cannot predict the outcome of the rate case, if MoPSC grants Ameren’s entire rate request, our rate would increase approximately 18% or $24.0 million per year. We expect the case to be decided by the MoPSC in June 2010, if not settled prior to that time.

21. INVESTMENTS IN AFFILIATES

Through August 31, 2009, we held a 50% interest in Gramercy and in St. Ann. On August 31, 2009, we became sole owner of Gramercy and St. Ann. See Note 2 for further information regarding the Joint Venture Transaction.

Summarized financial information for the joint ventures (as recorded in their respective financial statements, at full value, excluding the amortization of the excess carrying values of our investments over the underlying equity in net assets of the affiliates), is presented as of August 31, 2009, prior to the Joint Venture Transaction. Since the transaction date, the results of operations of Gramercy and St. Ann have been included in our condensed consolidated financial statements.

Summarized balance sheet information is as follows (in thousands):

	December 31, 2008
	$
Current assets		173,661
Non-current assets		110,933
Total assets		284,594
Current liabilities		89,736
Non-current liabilities		17,558
Total liabilities		107,294
Equity		177,300
Total liabilities and equity		284,594

29

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

Summarized statements of operations information is as follows (in thousands):

			Period from					Period from
	Three months		July 1			Nine months		January 1
	ended		through			ended		through
	September 30,		August 31,			September 30,		August 31,
	2008		2009			2008		2009
	$		$			$		$
Net sales (1)		137,054		51,342			403,491		208,135
Gross profit (loss)		4,738		(5,144	)		26,552		5,783
Net income (loss)		1,548		(187	)		20,065		11,309

⁽¹⁾ Net sales include sales to related parties, which include alumina sales to us and our joint venture partner, and bauxite sales from St. Ann to Gramercy (in thousands):

			Period from				Period from
	Three months		July 1		Three months		January 1
	ended		through		ended		through
	September 30,		August 31,		September 30,		August 31,
	2008		2009		2008		2009
	$		$		$		$
St. Ann to Gramercy		11,908		8,852		40,730		29,057
St. Ann to third parties		17,331		6,608		47,342		19,987
Gramercy to us and our joint venture partner		83,996		22,294		246,209		112,149
Gramercy to third parties		23,819		13,588		69,210		46,942
		137,054		51,342		403,491		208,135

Impairment

Beginning in fourth quarter 2008 and continuing through second quarter 2009, the cost of alumina purchased from the Gramercy refinery exceeded the spot prices of alumina available from other sources. Because of the reduced need for alumina caused by the smelter power outage and depressed market conditions, during first quarter 2009 Gramercy reduced its annual production rate of smelter grade alumina from approximately 1.0 million metric tonnes to approximately 0.5 million metric tonnes and implemented other cost saving activities.

These production changes led us to evaluate our investment in the joint ventures for impairment in first quarter 2009, which resulted in a $45.3 million write down ($39.3 million for St. Ann and $6.0 million for Gramercy). In second quarter 2009, we recorded a $35.0 million impairment charge related to our equity-method investment in St. Ann. This impairment reflects second quarter 2009 revisions to our assumptions about St. Ann’s future profitability and cash flows. Each impairment expense is recorded within equity in net (income) loss of investments in affiliates in the consolidated statements of operations.

Our analyses included assumptions about future profitability and cash flows of the joint ventures, which we believe to reflect our best estimates at the date the valuations were performed. The estimates were based on information that was known or knowable at the date of the valuations, and it is at least reasonably possible that the assumptions employed by us will be materially different from the actual amounts or results.

Carrying value compared to underlying equity

The excess of the carrying values of our share of the investments over the amounts of underlying equity in net assets totaled $117.0 million at December 31, 2008. This excess was attributed to long-lived assets such as plant and equipment at Gramercy and mining rights at St. Ann. At September 30, 2009 the excess has been written off, after the effects of business combination accounting in connection with the Joint Venture Transaction.

30

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

Prior to the Joint Venture Transaction, the excess was amortized on a straight-line basis for each affiliate as part of recording our share of each joint venture’s earnings or losses. Amortization expense recorded in equity in net (income) loss of investments in affiliates is as follows (in thousands):

Quarter-to-date	$
Three months ended September 30, 2008		1,872
Period from July 1, 2009 to August 31, 2009		765

Year-to-date	$
Nine months ended September 30, 2008		5,616
Period from January 1, 2009 to August 31, 2009		4,279

22. FAIR VALUE MEASUREMENTS

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). We incorporate assumptions that market participants would use in pricing the asset or liability, and utilize market data to the maximum extent possible. Our fair value measurements incorporate nonperformance risk (i.e., the risk that an obligation will not be fulfilled). In measuring fair value, we reflect the impact of our own credit risk on our liabilities, as well as any collateral. We also consider the credit standing of our counterparties in measuring the fair value of our assets.

We use any of three valuation techniques to measure fair value: the market approach, the income approach, and the cost approach. We determine the appropriate valuation technique based on the nature of the asset or liability being measured and the reliability of the inputs used in arriving at fair value.

The inputs used in applying valuation techniques include assumptions that market participants would use in pricing the asset or liability (i.e., assumptions about risk). Inputs may be observable or unobservable. We use observable inputs in our valuation techniques, and classify those inputs in accordance with the fair value hierarchy, which prioritizes those inputs. The fair value hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).

Level 1 inputs — Unadjusted quoted prices in active markets for identical assets or liabilities that we have access as of the reporting date. Active markets are those in which transactions for the asset or liability occur in sufficient frequency and volume to provide pricing information on an ongoing basis. Fair value measurements that may fall into Level 1 include exchange-traded derivatives or listed equities.

Level 2 inputs — Inputs other than quoted prices included in Level 1, which are either directly or indirectly observable as of the reporting date. A Level 2 input must be observable for substantially the full term of the asset or liability. Fair value measurements that may fall into Level 2 could include financial instruments with observable inputs such as interest rates or yield curves.

Level 3 inputs — Unobservable inputs that reflect our own assumptions about the assumptions market participants would use in pricing the asset or liability. Fair value measurements that may be classified as Level 3 could, for example, be determined from our internally developed model that results in our best estimate of fair value. Fair value measurements that may fall into Level 3 could include certain structured derivatives or financial products that are specifically tailored to a customer’s needs.

Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement in its entirety. Our assessment of the significance of a particular input to the fair value measurement requires judgment, and may affect the fair value of assets and liabilities and their placement within the fair value hierarchy.

31

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

Valuations on a recurring basis

The table below sets forth by level within the fair value hierarchy our assets and liabilities that were measured at fair value on a recurring basis as of September 30, 2009 (in thousands):

	Level 1		Level 2			Level 3		Total Fair Value
	$		$			$		$
Cash equivalents		223,350		—			—		223,350
Derivative assets		—		231,813			—		231,813
Derivative liabilities		—		(45,400	)		—		(45,400	)
Total		223,350		186,413			—		409,763

Cash equivalents are invested entirely in U.S. treasury securities and short-term treasury bills. These instruments are valued based upon unadjusted, quoted prices in active markets and are classified within Level 1.

Fair values of all derivative instruments are classified as Level 2. Those fair values are primarily measured using industry standard models that incorporate inputs including: quoted forward prices for commodities, interest rates, and current market prices for those assets and liabilities. Substantially all of the inputs are observable throughout the full term of the instrument. The counterparty of our derivative trades is Merrill Lynch, with the exception of a small portion of our variable price aluminum swaps.

In Note 13, we disclose the fair values of our debt instruments. Those fair values are classified as Level 2 within the hierarchy. While the Senior Floating Rates Notes due 2014 and 2015 have quoted market prices, we do not believe transactions on those instruments occur in sufficient enough frequency or volume to warrant a Level 1 classification. Further, the fair values of the term B loan and revolving credit facility are based on interest rates available at each balance date, resulting in a Level 2 classification as well.

Valuations on a non-recurring basis

Fair value of goodwill, trade names and investment in affiliates (prior to the Joint Venture Transaction) are classified as Level 3 within the hierarchy, as their fair values are measured using management’s assumptions about future profitability and cash flows. Such assumptions include a combination of discounted cash flow and market-based valuations. Discounted cash flow valuations require assumptions about future profitability and cash flows, which we believe reflects the best estimates at the date the valuations were performed. Key assumptions used to determine discounted cash flow valuations at March 31, 2009 and June 30, 2009 include: (a) each with cash flow periods of five years; (b) terminal values based upon long-term growth rates ranging from 1.0% to 2.0%; and (c) discount rates based on a risk-adjusted weighted average cost of capital ranging from 12.5% to 13.8% for intangibles and to 19.0% for investment in affiliates.

Accounting for the Joint Venture Transaction involved a number of individual measurements based on significant inputs that are not observable in the market and, therefore, represent a Level 3 measurement.

• Preliminary fair value of consideration:

• Fair value of 50% equity interest. The fair values of our existing 50% interests in Gramercy and St. Ann were based on discounted cash flow valuations. These valuations require assumptions about future profitability and cash flows, which we believe reflects the best estimates at August 31, 2009. Key assumptions include: (a) cash flow periods of five years; (b) terminal values based upon long-term growth rates ranging from 1.0% to 2.0%; and (c) discount rates based on a risk-adjusted weighted average cost of capital ranging 17.0% to 20.0%.

• Noncontrolling interest. The value of GOJ’s noncontrolling interest in SAJBP was calculated as 51% of the net fair value of SAJBP’s assets and liabilities.

32

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

• Preliminary fair values of assets acquired and liabilities assumed:

• Cash and cash equivalents, accounts receivable, other assets, and accounts payable and accrued liabilities balances were recorded at their carrying values, which approximate fair value.

• Inventories were valued at their net realizable value. Except for supplies inventory, the fair value of acquired inventory was a function of the inventories stage of production, with separate values established for finished goods, work-in-process, and raw materials. Key inputs included ultimate selling cost, costs to complete in-process material, and disposal or selling costs.

• Property, plant and equipment were valued using a market approach where we were able to identify comparable sales of real estate and used machinery and equipment. Where comparable sales of used machinery and equipment were not available, we estimated fair value based on the replacement cost of new plant and equipment, less depreciation and decreases in value due to physical depreciation, functional obsolescence and economic obsolescence. Whether valuations were based on comparable sales or depreciated replacement cost, we considered the highest and best use for the assets being valued, which was determined to be their current use in the production of alumina or the mining of bauxite.

• Intangible assets consist of contractual and non-contractual customer relationships. Valuations for these assets were based on discounted cash flow valuations. These valuations require assumptions about future profitability and cash flows, which we believe reflects the best estimates at August 31, 2009. Key assumptions include: (a) cash flow periods over the estimated contract lives based on customer retention rates, and (b) discount rates based on a risk-adjusted weighted average cost of capital ranging 20.0% to 23.0%

• Asset retirement obligations and reclamation liabilities were valued at fair value using a discounted cash flow approach with credit-adjusted risk free rates ranging from 9.0% to 10.0%.

33

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

23. SEGMENTS

In connection with the Joint Venture Transaction, we re-evaluated our segment structure and now exclude corporate expenses from our upstream reportable segment. Corporate expenses going forward will be unallocated. Prior year segment disclosures have been adjusted to reflect the new structure. Refer to Note 1 for a description of the segments. The following tables summarize the operating results and assets of our reportable segments (in thousands):

	Three months ended September 30, 2009
	Upstream			Downstream		Corporate			Eliminations			Consolidated
	$			$		$			$			$
Sales:
External customers		108,678			109,881		—			—			218,559
Intersegment		5,784			—		—			(5,784	)		—
		114,462			109,881		—			(5,784	)		218,559
Costs and Expenses:
Cost of sales		127,071			97,181		—			(5,784	)		218,468
Selling, general and administrative expenses		4,266			5,234		9,239			—			18,739
Goodwill and other intangible asset impairment		—			—		—			—			—
Excess insurance proceeds		(14,282	)		—		—			—			(14,282	)
		117,055			102,415		9,239			(5,784	)		222,925
Operating income (loss)		(2,593	)		7,466		(9,239	)		—			(4,366	)
Interest expense, net													12,577
(Gain) loss on hedging activities, net													(5,747	)
Equity in net (income) loss of investments in affiliates													860
(Gain) loss on debt repurchase													(28,574	)
Income before income taxes													16,518
Depreciation and amortization		16,625			4,909		102			—			21,636
Capital expenditures		8,721			552		578			—			9,851

	Nine months ended September 30, 2009
	Upstream			Downstream			Corporate			Eliminations			Consolidated
	$			$			$			$			$
Sales:
External customers		235,592			304,961			—			—			540,553
Intersegment		24,640			—			—			(24,640	)		—
		260,232			304,961			—			(24,640	)		540,553
Costs and Expenses:
Cost of sales		317,346			273,826			—			(24,640	)		566,532
Selling, general and administrative expenses		14,476			11,542			25,664			—			51,682
Goodwill and other intangible asset impairment		—			43,000			—			—			43,000
Excess insurance proceeds		(43,467	)		—			—			—			(43,467	)
		288,355			328,368			25,664			(24,640	)		617,747
Operating income (loss)		(28,123	)		(23,407	)		(25,664	)		—			(77,194	)
Interest expense, net														42,551
(Gain) loss on hedging activities, net														(104,073	)
Equity in net (income) loss of investments in affiliates														78,961
(Gain) loss on debt repurchase														(193,224	)
Income before income taxes														98,591
Depreciation and amortization		49,412			16,659			246			—			66,317
Capital expenditures		27,483			3,095			1,633			—			32,211
Segment assets, as of September 30, 2009		896,457			455,025			525,984			(2,348	)		1,875,118

34

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

	Three months ended September 30, 2008
	Upstream		Downstream		Corporate			Eliminations			Consolidated
	$		$		$			$			$
Sales:
External customers		182,548		174,862		—			—			357,410
Intersegment		27,427		—		—			(27,427	)		—
		209,975		174,862		—			(27,427	)		357,410
Costs and Expenses:
Cost of sales		169,503		170,830		—			(27,427	)		312,906
Selling, general and administrative expenses		3,526		2,602		6,286			—			12,414
		173,029		173,432		6,286			(27,427	)		325,320
Operating income (loss)		36,946		1,430		(6,286	)		—			32,090
Interest expense, net												19,816
(Gain) loss on hedging activities, net												45,496
Equity in net (income) loss of investments in affiliates												1,652
Income (loss) before income taxes												(34,874	)
Depreciation and amortization		17,565		6,983		170			—			24,718
Capital expenditures		11,091		2,990		107			—			14,188

	Nine months ended September 30, 2008
	Upstream		Downstream		Corporate			Eliminations			Consolidated
	$		$		$			$			$
Sales:
External customers		522,823		482,083		—			—			1,004,906
Intersegment		80,937		—		—			(80,937	)		—
		603,760		482,083					(80,937	)		1,004,906
Costs and Expenses:
Cost of sales		454,982		472,778		—			(80,937	)		846,823
Selling, general and administrative expenses		14,882		9,260		24,958			—			49,100
		469,864		482,038		24,958			(80,937	)		895,923
Operating income (loss)		133,896		45		(24,958	)		—			108,983
Interest expense, net												65,043
(Gain) loss on hedging activities, net												50,497
Equity in net (income) loss of investments in affiliates												(3,862	)
(Gain) loss on debt repurchase												1,202
Income (loss) before income taxes												(3,897	)
Depreciation and amortization		53,709		20,094		246			—			74,049
Capital expenditures		30,544		6,569		351			—			37,464
Segment assets at December 31, 2008		792,205		506,165		640,380			(2,579	)		1,936,171

35

NORANDA ALUMINUM HOLDING CORPORATION
Notes to Unaudited Condensed Consolidated Financial Statements

24. NON-GUARANTOR SUBSIDIARY

In February 2009, we formed NHB, a 100%-owned subsidiary of AcquisitionCo for the purpose of acquiring outstanding HoldCo Notes. During the nine months ended September 30, 2009, we contributed capital of $36.1 million to NHB to fund these debt purchases. As of September 30, 2009, NHB had acquired HoldCo Notes with an aggregate principal balance totaling $138.9 million, for an aggregate purchase price of $36.0 million, plus fees. None of the Holdco Notes purchased by NHB have been retired.

• At September 30, 2009, NHB’s only assets were an immaterial amount of cash and the acquired HoldCo Notes, which are carried at their fair value of $71.8 million, including $4.3 million of accrued interest. At September 30, 2009, NHB owed $1.2 million to a guarantor affiliate for the payment of fees on NHB’s behalf, and carried a $5.9 million liability to a guarantor affiliate for estimated taxes.

• During the nine months ended September 30, 2009, NHB’s only cash activities were $36.1 million of capital contributions, $0.2 million of cash receipts from AcquisitionCo to pay transaction costs, and the purchase of HoldCo Notes with an aggregate principal balance of $138.9 million for the price of $36.0 million, plus fees.

36

NORANDA ALUMINUM HOLDING CORPORATION
Consolidated Balance Sheet
As of September 30, 2009
(in thousands)
(unaudited)

	HoldCo			Guarantors			NHB			Eliminations			Consolidated
	$			$			$			$			$
Current assets:
Cash and cash equivalents		21,527			234,958			31			—			256,516
Accounts receivable, net		—			101,846			—			—			101,846
Interest due from affiliates		—			—			4,332			(4,332	)		—
Inventories		—			176,503			—			—			176,503
Derivative assets, net		—			70,481			—			—			70,481
Taxes receivable		63			2,872			—			—			2,935
Other current assets		169			16,866			—			—			17,035
Total current assets		21,759			603,526			4,363			(4,332	)		625,316
Investments in affiliates		211,083			64,788			67,536			(343,407	)		—
Advances due from affiliates		—			5,910			(5,910	)		—			—
Property, plant and equipment, net		—			759,962			—			—			759,962
Goodwill		—			202,576			—			—			202,576
Other intangible assets, net		—			82,780			—			—			82,780
Long-term derivative assets, net		—			115,932			—			—			115,932
Other assets		601			87,951			—			—			88,552
Total assets		233,443			1,923,425			65,989			(347,739	)		1,875,118
Current liabilities:
Trade accounts payable		4			62,143			—			—			62,147
Accrued liabilities		—			61,586			—			—			61,586
Accrued interest:
Third parties		—			246			—			—			246
Affiliates		4,332			—			—			(4,332	)		—
Deferred tax liabilities		(6,544	)		34,286			—			—			27,742
Current portion of long-term debt		—			—			—			—			—
Total current liabilities		(2,208	)		158,261			—			(4,332	)		151,721
Long-term debt		212,934			952,990			—			(144,939	)		1,020,985
Pension and OPEB liabilities		—			140,581			—			—			140,581
Other long-term liabilities		2,108			60,027			—			—			62,135
Advances due to affiliates		3,190			(4,391	)		1,201			—			—
Deferred tax liabilities		68			277,615			—			63,984			341,667
Unallocated purchase price		—			127,259			—			—			127,259
Shareholders’ equity:
Common stock		218			—			—			—			218
Capital in excess of par value		17,444			216,605			36,088			(252,693	)		17,444
Accumulated deficit		(178,018	)		(179,382	)		3,900			213,701			(139,799	)
Accumulated other comprehensive income		173,860			173,860			24,800			(223,460	)		149,060
Total Noranda shareholders’ equity		13,504			211,083			64,788			(262,452	)		26,923
Noncontrolling interest		3,847			—			—			—			3,847
Total shareholders’ equity		17,351			211,083			64,788			(262,452	)		30,770
Total liabilities and shareholders’ equity		233,443			1,923,425			65,989			(347,739	)		1,875,118

37

NORANDA ALUMINUM HOLDING CORPORATION
Consolidated Statements of Operations
(in thousands)
(unaudited)

	Three months ended September 30, 2009
	HoldCo			Guarantors			NHB			Eliminations			Consolidated
	$			$			$			$			$
Sales		—			218,559			—			—			218,559
Operating costs and expenses:
Cost of sales		—			218,468			—			—			218,468
Selling, general and administrative expenses		724			18,011			4			—			18,739
Excess insurance proceeds		—			(14,282	)		—			—			(14,282	)
		724			222,197			4			—			222,925
Operating income (loss)		(724	)		(3,638	)		(4	)		—			(4,366	)
Other (income) expenses
Interest expense (income), net		4,372			11,128			(2,923	)		—			12,577
Gain (loss) on hedging activities, net		—			(5,747	)		—			—			(5,747	)
Equity in net (income) loss of investments in affiliates		(7,312	)		155			—			8,017			860
(Gain) loss on debt repurchase		(69	)		(25,500	)		—			(3,005	)		(28,574	)
Total other (income) expenses		(3,009	)		(19,964	)		(2,923	)		5,012			(20,884	)
Income (loss) before income taxes		2,285			16,326			2,919			(5,012	)		16,518
Income tax (benefit) expense		(2,643	)		9,014			2,214			3,605			12,190
Net income (loss) for the period		4,928			7,312			705			(8,617	)		4,328

	Nine months ended September 30, 2009
	HoldCo			Guarantors			NHB			Eliminations			Consolidated
	$			$			$			$			$
Sales		—			540,553			—			—			540,553
Operating costs and expenses:
Cost of sales		—			566,532			—			—			566,532
Selling, general and administrative expenses		2,356			49,315			11			—			51,682
Goodwill and other intangible asset impairment		—			43,000			—			—			43,000
Excess insurance proceeds		—			(43,467	)		—			—			(43,467	)
		—			—			—			—			615,380
Operating income (loss)		(2,356	)		(74,827	)		(11	)		—			(77,194	)
Other (income) expenses
Interest expense (income), net		13,960			38,919			(10,328	)		—			42,551
Gain (loss) on hedging activities, net		—			(104,073	)		—			—			(104,073	)
Equity in net (income) loss of investments in affiliates		1,811			75,061			—			2,089			78,961
(Gain) loss on debt repurchase		(11,078	)		(79,943	)		—			(102,203	)		(193,224	)
Total other (income) expenses		4,693			(70,036	)		(10,328	)		(100,114	)		(175,785	)
Income (loss) before income taxes		(7,049	)		(4,791	)		10,317			100,114			98,591
Income tax (benefit) expense		(5,311	)		(2,980	)		6,417			63,984			62,110
Net income (loss) for the period		(1,738	)		(1,811	)		3,900			36,130			36,481

38

NORANDA ALUMINUM HOLDING CORPORATION
Condensed Consolidated Statement of Cash Flows
Nine months ended September 30, 2009
(in thousands)
(unaudited)

	HoldCo			Guarantors			NHB			Eliminations			Consolidated
	$			$			$			$			$
OPERATING ACTIVITIES
Cash provided by (used in) operating activities		(4,140	)		234,790			485			(694	)		230,441
INVESTING ACTIVITIES
Capital expenditures		—			(32,211	)		—			—			(32,211	)
Purchase of debt		—			—			(36,742	)		36,742			—
Proceeds from insurance related to capital expenditures		—			11,495			—			—			11,495
Proceeds from sale of property, plant and equipment		—			7			—			—			7
Cash acquired in business combination		—			11,136			—			—			11,136
Cash provided by (used in) investing activities		—			(9,573	)		(36,742	)		36,742			(9,573	)
FINANCING ACTIVITIES
Proceeds from issuance of shares		—			41			—			—			41
Distribution to shareholders		—			—			—			—			—
Repurchase of shares		(90	)		—			—			—			(90	)
Issuance of shares		—			—			—			—			—
Borrowings on revolving credit facility		—			13,000			—			—			13,000
Repayments on revolving credit facility		—			(14,500	)		—			—			(14,500	)
Repurchase of debt		(2,673	)		(84,298	)		—			(36,048	)		(123,019	)
Repayment of long-term debt		—			(24,500	)		—			—			(24,500	)
Intercompany advances		3,049			(3,249	)		200			—			—
Capital contribution (to subsidiary) from parent		—			(36,088	)		36,088			—			—
Distribution (to parent from subsidiary)		1,280			(1,280	)		—			—			—
Cash provided by (used in) financing activities		1,566			(150,874	)		36,288			(36,048	)		(149,068	)
Change in cash and cash equivalents		(2,574	)		74,343			31			—			71,800
Cash and cash equivalents, beginning of period		24,101			160,615			—			—			184,716
Cash and cash equivalents, end of period		21,527			234,958			31			—			256,516

39

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40

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Overview

Noranda Aluminum Holding Corporation is controlled by affiliates of Apollo Management, L.P. (collectively, “Apollo”). Unless otherwise specified or unless the context otherwise requires, references to (i) “HoldCo” refer only to Noranda Aluminum Holding Corporation, excluding its subsidiaries; (ii) “AcquisitionCo” refer only to Noranda Aluminum Acquisition Corporation, the wholly owned direct subsidiary of HoldCo, excluding its subsidiaries; and (iii) “the Company,” “Noranda,” “we,” “us” and “our” refer collectively to HoldCo and its subsidiaries.

We are a vertically integrated producer of value-added primary aluminum products and high quality rolled aluminum coils. Our principal operations include an aluminum smelter in New Madrid, Missouri (“New Madrid”) and four rolling mills in the southeastern United States. New Madrid is supported by our alumina refinery in Gramercy, Louisiana (NorandaAlumina, LLC, or “Gramercy”) and a bauxite mining operation in St. Ann, Jamaica (St. Ann Bauxite Limited, or “St. Ann”). As discussed further in Note 23, we report our activities in two segments. Our primary aluminum business (the “upstream business” or “upstream”) comprises New Madrid, Gramercy and St. Ann. Our downstream business comprises our four rolling mills, which are located in Huntingdon, Tennessee, Salisbury, North Carolina and Newport, Arkansas. New Madrid produces approximately 575 million pounds (261,000 metric tonnes) of primary aluminum per year at full capacity. This represents approximately 15% of total United States primary aluminum production, according to production statistics from The Aluminum Association. Our downstream business consists of four rolling mills in the southeastern United States. With a combined annual production capacity of approximately 495 million pounds, we are one of the largest aluminum foil producers in North America, according to data from The Aluminum Association.

Our third quarter 2009 operating results reflect these significant events:

• On August 31, 2009, we became the sole owner of each of Gramercy and St. Ann (the “Joint Venture Transaction”). This transaction is consistent with our vertical integration strategy by consolidating our access to a secure supply of alumina.

• Following significant weakness related to the 2008 global recession and credit crisis, aluminum prices have begun to recover since June 2009. Current LME prices are nearly 50% above their record lows reached in February 2009. Still, global inventories remain high and end-market demand, particularly in North America, has been slow to recover.

• During third quarter 2009, the average Midwest Transaction Price (“MWTP”) was $0.87 per pound, compared to $0.72 per pound in second quarter 2009 and $1.31 per pound in third quarter 2008.

• The year-over-year rate of volume decline has continued to slow in the downstream segment because of targeted growth programs in less cyclical market segments. In third quarter 2009, we saw also that rod sales held steady with third quarter 2008. Billet shipments continue to be lower than 2008 levels, but the rate of quarter-over-quarter decline has slowed. Despite some positive signs in both demand and price, there is substantial uncertainty in the market place.

• We reached an insurance settlement with our carriers related to the January 2009 power outage at our Mew Madrid smelter in the amount of $67.5 million, all of which had been received as of September 30, 2009. By the end of third quarter 2009, the New Madrid smelter was operating above 65% capacity and we believe that the facility will operate at or near our effective annual capacity for 2010.

• The New Madrid smelter produced 22% more aluminum in third quarter 2009 than it did in second quarter 2009.

• Our reported third quarter 2009 actual New Madrid cash cost was $0.76 per pound versus $0.67 per pound in second quarter 2009. Third quarter 2009 cash costs were higher than second quarter as a result of peak power rates in third quarter and the timing of recognition of insurance settlement proceeds in second quarter. Our year-to-date actual New Madrid cash costs were $0.76 per pound.

• Year-to-date we have achieved $35.0 million of cost savings through our productivity projects.

• At the end of third quarter 2009 we had $256.5 million of cash and cash equivalents.

• We continued to improve our balance sheet by repurchasing $81 million face value of debt for $52 million during the quarter, resulting in gains of $28.6 million during third quarter 2009.

• We sold $14 million of excess alumina from New Madrid, freeing up a significant amount of working capital that was tied up in inventory.

41

Forward-looking Statements

This report contains “forward-looking statements” which involve risks and uncertainties. You can identify forward-looking statements because they contain words such as “believes,” “expects,” “may,” “should,” “seeks,” “approximately,” “intends,” “plans,” “estimates,” or “anticipates” or similar expressions that relate to our strategy, plans or intentions. All statements we make relating to our estimated and projected earnings, margins, costs, expenditures, cash flows, growth rates and financial results or to our expectations regarding future industry trends are forward-looking statements. In addition, we, through our senior management, from time to time make forward-looking public statements concerning our expected future operations and performance and other developments. These forward-looking statements are subject to risks and uncertainties that may change at any time, and, therefore, our actual results may differ materially from those that we expected. We derive many of our forward-looking statements from our operating budgets and forecasts, which are based upon many detailed assumptions. While we believe that our assumptions are reasonable, we caution that it is very difficult to predict the impact of known factors, and it is impossible for us to anticipate all factors that could affect our actual results. All forward-looking statements herein are based upon information available to us on the date of this report. All forward looking statements contained in documents incorporated herein by reference are based upon information available to us on the date of the filing of such incorporated documents.

Important factors that could cause actual results to differ materially from our expectations, which we refer to as cautionary statements, are disclosed under “Risk Factors” included in our Form 10-K filed on February 25, 2009, including, without limitation, in conjunction with the forward-looking statements included in this report. All forward-looking information in this report and subsequent written and oral forward-looking statements attributable to us, or persons acting on our behalf, are expressly qualified in their entirety by the cautionary statements. Some of the factors that we believe could affect our results include:

• delays in restoring our New Madrid smelter to full capacity;

• the cyclical nature of the aluminum industry and fluctuating commodity prices, which cause variability in our earnings and cash flows;

• a downturn in general economic conditions, including changes in interest rates, as well as a downturn in the end-use markets for certain of our products;

• losses caused by disruptions in the supply of electrical power;

• fluctuations in the relative cost of certain raw materials and energy compared to the price of primary aluminum and aluminum rolled products;

• restrictive covenants in our indebtedness that may adversely affect our operational flexibility;

• the effectiveness of our hedging strategies in reducing the variability of our cash flows;

• unexpected issues arising in connection with the integration of Gramercy and St. Ann into our operations;

• the effects of competition in our business lines;

• the relative appeal of aluminum compared with alternative materials;

• the loss of order volumes from our largest customers would reduce our revenues and cash flows;

• our ability to retain customers, a substantial number of which do not have long-term contractual arrangements with us;

• our ability to fulfill our business’ substantial capital investment needs;

• the cost of compliance with and liabilities under environmental, safety, production and product regulations;

• natural disasters and other unplanned business interruptions;

• labor relations (i.e., disruptions, strikes or work stoppages) and labor costs;

• unexpected issues arising in connection with our operations outside of the United States;

• our ability to retain key management personnel;

• our expectations with respect to our acquisition activity, or difficulties encountered in connection with acquisitions, dispositions or similar transactions; and

• the ability of our insurance to cover fully our potential exposures.

We caution you that the foregoing list of important factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this report may not in fact occur. Accordingly, investors should not place undue reliance on those statements. We undertake no obligation to publicly update or revise any forward-looking statement as a result of new information, future events or otherwise, except as otherwise required by law.

42

Reconciliation of Net Income between AcquisitionCo and HoldCo

HoldCo’s principal asset is our wholly owned subsidiary, AcquisitionCo. The following table reconciles the results of operations of HoldCo and AcquisitionCo (in millions): 

	Three months ended						Nine months ended
	September 30,						September 30,
	2008			2009			2008			2009
	$			$			$			$
Consolidated net income (loss) of AcquisitionCo		(19.1	)		7.3			9.6			(1.8	)
HoldCo interest expense		(4.9	)		(4.4	)		(16.2	)		(14.0	)
HoldCo director and other fees		(0.2	)		(0.7	)		(1.2	)		(2.4	)
HoldCo gains on debt repurchases		—			3.1			—			113.4
HoldCo tax effects		1.8			(1.0	)		6.1			(58.7	)
Consolidated net income (loss) of HoldCo		(22.4	)		4.3			(1.7	)		36.5

Critical Accounting Policies and Estimates

Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“U.S. GAAP”). Preparation of these statements requires management to make significant judgments and estimates. Some accounting policies have a significant impact on amounts reported in these financial statements. Our financial position and/or results of operations may be materially different when reported under different conditions or when using different assumptions in the application of such policies. In the event estimates or assumptions prove to be different from actual amounts, adjustments are made in subsequent periods to reflect more current information. The preparation of interim financial statements involves the use of certain estimates that are consistent with those used in the preparation of our annual financial statements. Significant accounting policies, including areas of critical management judgments and estimates, include the following financial statement areas:

• Revenue recognition

• Impairment of long-lived assets

• Goodwill and other intangible assets

• Insurance accounting

• Business combinations

• Inventory valuation

• Asset retirement obligations

• Derivative instruments and hedging activities

• Investment in affiliates

See Note 1 of the notes to our condensed consolidated financial statements for the fiscal year ended December 31, 2008 included in our Annual Report on Form 10-K, filed February 25, 2009, for a discussion of our critical accounting policies. Hereinafter, “Note” refers to the notes to the condensed consolidated financial statements elsewhere in this report unless the context otherwise requires.

Insurance Accounting

Due to the power outage that damaged our New Madrid smelter on January 26, 2009, which is discussed further in Note 3 management has determined that accounting for insurance represents a significant accounting policy.

In recording costs and losses associated with the power outage, we follow applicable U.S. GAAP to determine asset write-downs, changes in estimated lives, and accruing for out-of-pocket costs. To the extent the realization of the claims for costs and losses are probable, we record expected proceeds only to the extent that costs and losses have been reflected in the financial statements in accordance with applicable U.S. GAAP. For claim amounts resulting in gains or in excess of costs and losses that have been reflected in the financial statements, we record such amounts only when those portions of the claims, including all contingencies, are settled.

Goodwill and other intangible assets

We evaluate goodwill for impairment using a two-step process. The first step is to compare the fair value of each of our segments to their respective book values, including goodwill. If the fair value of a segment exceeds the book value, segment goodwill is not considered impaired and the second step of the impairment test is not required. If the book value of a segment exceeds the fair value, the second step of the impairment test is performed to measure the amount of impairment loss, if any. The second step of the impairment test compares the implied fair value of the segment’s goodwill with the book value of that goodwill. If the book value of the segment’s goodwill exceeds the implied fair value of that goodwill, an impairment loss is recognized in an amount equal to that excess. The implied fair value of goodwill is determined in the same manner as the amount of goodwill recognized in a business combination.

43

During first quarter 2009, we recorded a $43.0 million impairment write-down in the downstream business for goodwill and trade name intangible assets, reflecting the severe first quarter deterioration in volume. Our impairment analyses included a combination of discounted cash flow and market-based valuations. Discounted cash flow valuations require that we make assumptions about future profitability and cash flows of our reporting units, which we believe reflected the best estimates at March 31, 2009, the date the valuations were performed. Key assumptions used to determine reporting units’ discounted cash flow valuations at March 31, 2009 include: (a) cash flow periods of seven years; (b) terminal values based upon long-term growth rates ranging from 1.5% to 2.0%; and (c) discount rates ranging from 12.5% to 13.8% based on a risk-adjusted weighted average cost of capital for each reporting unit.

In the downstream business, a 1% increase in the discount rate would have decreased the reporting unit fair value, and consequently increased the total impairment write-down, by approximately $13 million. In the downstream business, a 10% decrease in the cash flow forecast for each year would have decreased the reporting unit fair value, and consequently increased the goodwill impairment write-down, by approximately $29 million. In the upstream business, a 1% increase in the discount rate would have decreased the reporting unit fair value by approximately $26 million and a 10% decrease in the cash flow forecast for each year would have decreased the reporting unit fair value by approximately $43 million, neither of which would have resulted in upstream impairment at March 31, 2009.

No further deterioration was noted in the third quarter 2009 regarding the recoverability of goodwill; therefore, no goodwill impairment testing was necessary at September 30, 2009; however, future impairment charges could be required if we do not achieve our current cash flow, revenue and profitability projections.

Investments in affiliates

Through August 31, 2009 we held a 50% interest in each of Gramercy and St. Ann, which we accounted for using the equity method. On August 31, 2009, we became sole owner of Gramercy and St. Ann. Therefore we no longer have any equity method investees. See Note 2 to our condensed consolidated financial statements for further information regarding the Joint Venture Transaction.

Prior to the Joint Venture Transaction, we evaluated an equity method investment for impairment when adverse events or changes in circumstances indicated, in management’s judgment, that the investments may have experienced a decline in value. When evidence of loss in value occurred, we compared the investment’s estimated fair value to its carrying value in order to determine whether impairment had occurred. If the estimated fair value was less than the carrying value and management considered, based on various factors, such as historical financial results, expected production activities and the overall health of the investment’s industry, the decline in value to be other-than-temporary, the excess of the carrying value over the estimated fair value was recognized in the financial statements as an impairment.

During first quarter 2009, because of the reduced need for alumina caused by the smelter power outage and depressed market conditions, Gramercy reduced its annual production rate of smelter grade alumina from approximately 1.0 million metric tonnes to approximately 0.5 million metric tonnes. At March 31, 2009, these production changes led us to evaluate our investment in these joint ventures for impairment, which resulted in a $45.3 million write-down ($39.3 million for St. Ann and $6.0 million for Gramercy) during first quarter 2009. In second quarter 2009, we recorded a $35.0 million impairment charge related to our equity-method investment in St. Ann. This impairment reflects second quarter 2009 revisions to our assumptions about St. Ann’s future profitability and cash flows.

Our impairment analyses were based on discounted cash flows valuations that require us to make assumptions about future profitability and cash flows of each joint venture. The assumptions used reflect our best estimates at the date the valuations were performed. Key assumptions used to determine reporting units’ discounted cash flow valuations for March 31, 2009 and June 30, 2009 include: (a) cash flow projections for five years; (b) terminal values based upon long-term growth rates ranging from 1% to 2%; and (c) discount rates ranging 17% to 19% based on a risk-adjusted weighted average cost of capital for each investment.

For Gramercy, a 1% increase in the discount rate would have decreased our investment’s fair value by approximately $7.7 million and $15.0 million during first quarter and third quarter 2009, respectively. A 10% decrease in the cash flow forecast for each year would have decreased our investment’s fair value by approximately $4.8 million and $19.8 million during first quarter and second quarter 2009, respectively. Neither a 1% increase in the discount rate or a 10% decrease in the cash flow forecast would have resulted in an impairment charge for Gramercy for second quarter 2009. For St. Ann, a 1% increase in the discount rate would have decreased our investment’s fair value, and consequently increased the total impairment write-down, by approximately $2.7 million and $3.6 million during first quarter and second quarter 2009, respectively. A 10% decrease in the cash flow forecast for each year would have decreased our investment’s fair value, and consequently increased the impairment write-down, by approximately $7.1 million and $5.6 million during first quarter and second quarter 2009, respectively.

44

In connection with the Joint Venture Transaction, we became the sole owner of Gramercy and St. Ann. See “Business Combination” for further discussion on this transaction.

Derivative instruments and hedging activities

During 2008, we designated fixed-price aluminum sale swaps as cash flow hedges, thus the effective portion of such derivatives was adjusted to fair value through other comprehensive income (loss), with the ineffective portion reported through earnings. The effective portion of any gain or loss on the derivative was reported as a component of accumulated other comprehensive income.

As a result of the New Madrid power outage in January 2009, management concluded that certain hedged sale transactions were no longer probable of occurring, and we discontinued hedge accounting for all our aluminum fixed-price sale swaps on January 29, 2009. At that date, the accounting for amounts in accumulated other comprehensive income did not change. Amounts recorded in accumulated other comprehensive income are reclassified into earnings in the periods during which the hedged transaction affects earnings, unless it is determined that it is probable that the original forecasted transactions will not occur, at which point a corresponding amount of accumulated other comprehensive is immediately reclassified into earnings. Forecasted sales represent a sensitive estimate in our accounting for derivatives because they impact the determination whether any amounts in accumulated other comprehensive income should be reclassified into earnings in the current period. For the three months and nine months ended September 30, 2009, the amount reclassified from accumulated other comprehensive income to earnings was $24.2 million and $149.3 million, respectively. These amounts are stated in the table in Note 17. Of these amounts, $77.8 million was reclassified into earnings because it was probable that the original forecasted transactions would not occur for the nine months ended September 30, 2009.

Business combinations

On August 3, 2009, we entered into an agreement with Century Aluminum Company (together with its subsidiaries, (“Century”) pursuant to which we became the sole owner of both Gramercy and St. Ann. The transaction closed on August 31, 2009 (the “Joint Venture Transaction”). In the transaction Noranda and Gramercy released Century from certain obligations. These obligations included (i) approximately $23 million Century owed Gramercy for pre-transaction alumina purchases, and (ii) Century’s guarantee to fund future payments of environmental and asset retirement obligations.

As discussed further in Note 2 of the footnotes to our condensed consolidated financial statements (“Note 2”), we accounted for the Joint Venture Transaction under FASB ASC Topic 805, Business Combinations (“ASC Topic 805”).

• The Joint Venture Transaction may be a business combination achieved in stages, since we owned 50% of both Gramercy and St. Ann prior to August 31, 2009. Applying the provisions of ASC Topic 805, we re-measured our previous 50% investment to fair value as of the acquisition date.

• The Joint Venture Transaction was a bargain purchase. We assumed the remaining portion of Gramercy and St. Ann in exchange for releasing Century from guarantees to fund future environmental and asset retirement obligations. To the extent permitted by U.S. GAAP, we have assigned a fair value to the liabilities related to the guarantee from which we released Century. We are in the process of reassessing the recognition and measurement of identifiable assets acquired and liabilities assumed.

Our preliminary determination of the fair value of assets acquired and liabilities assumed is summarized in Note 2. Our estimates and assumptions are subject to change, depending on the final evaluation of the fair value of the tangible and intangible assets acquired and liabilities assumed as of the closing date of the transaction. Pending the final determination of the fair value of consideration transferred and the fair value of assets acquired and liabilities assumed we may record a gain on the Joint Venture Transaction resulting from any remaining unallocated purchase price remaining after the final determination of fair values. See Note 2 for the calculation of the unallocated purchase price.

45

Results of Operations 

	Three months ended						Nine months ended
	September 30,						September 30,
	2008			2009			2008			2009
(in millions)	$			$			$			$
Statements of Operations Data(1):
Sales		357.4			218.6			1,004.9			540.6
Operating costs and expenses:
Cost of sales		312.9			218.5			846.8			566.5
Selling, general and administrative expenses		12.4			18.7			49.1			51.7
Goodwill and other intangible asset impairment		—			—			—			43.0
Excess insurance proceeds		—			(14.3	)		—			(43.5	)
		325.3			222.9			895.9			617.7
Operating income (loss)		32.1			(4.4	)		109.0			(77.2	)
Other (income) expenses
Interest expense, net		19.9			12.6			65.1			42.6
(Gain) loss on hedging activities, net		45.5			(5.7	)		50.5			(104.1	)
Equity in net (income) loss of investments in affiliates		1.6			0.9			(3.9	)		79.0
(Gain) loss on debt repurchase		—			(28.6	)		1.2			(193.2	)
Gain on business combination		—			—			—			—
Income (loss) before income taxes		(34.9	)		16.5			(3.9	)		98.6
Income tax (benefit) expense		(12.5	)		12.2			(2.2	)		62.1
Net income (loss) for the period		(22.4	)		4.3			(1.7	)		36.5
Balance sheet data:
Cash and cash equivalents											256.5
Property, plant and equipment, net											760.0
Long-term debt(2)											1,021.0
Total shareholders’ equity											30.8
Working capital(3)											473.6
Cash flow data:
Operating activities								111.7			230.4
Investing activities								37.0			(9.6	)
Financing activities								94.7			(149.1	)
Financial and other data:
Average realized Midwest transaction price(4)		1.34			0.86			1.31			0.75
Net cash cost for primary aluminum (per pound shipped)(5)		0.91			0.76			0.80			0.76
Shipments:
Upstream:
External aluminum (pounds, in millions)		127.7			76.6			374.5			221.9
Intersegment aluminum (pounds, in millions)		20.7			6.8			61.2			34.4
Total aluminum shipments (pounds, in millions)		148.4			83.4			435.7			256.3
External alumina (kMts)		—			103.5			—			103.5
External bauxite (kMts)		—			145.0			—			145.0
Downstream		94.9			84.4			273.3			235.3

(1)	Figures may not add due to rounding.
(2)	Long-term debt includes long-term debt due to third parties. The long-term debt does not include issued and undrawn letters of credit under the existing revolving credit facility.
(3)	Working capital is defined as current assets net of current liabilities.
(4)	The price for primary aluminum consists of two components: the price quoted for primary aluminum ingot by the London Metal Exchange (“LME”) and the Midwest transaction premium, a premium to LME price reflecting domestic market dynamics as well as the cost of shipping and warehousing. As a significant portion of our value-added products are sold at the prior month’s MWTP plus a fabrication premium, we calculate a “realized” MWTP which reflects the specific pricing of sale transactions in each period.
(5)	Unit net cash cost for primary aluminum per pound represents our net cash costs of producing commodity grade aluminum as priced on the LME plus the Midwest premium. We have provided unit net cash cost for primary aluminum per pound shipped because we believe it provides investors with additional information to measure our operating performance. Using this metric, investors are able to assess the prevailing LME price plus Midwest premium per pound versus our unit net cash costs per pound shipped. Unit net cash cost per pound is positively or negatively impacted by changes in production and sales volumes, natural gas and oil related costs, seasonality in our electrical contract rates, and increases or decreases in other production related costs.
	Unit net cash costs is not a measure of financial performance under U.S. GAAP and may not be comparable to similarly titled measures used by other companies in our industry. Unit net cash costs per pound shipped has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our results under U.S. GAAP.

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The following table summarizes the unit net cash costs for primary aluminum for the upstream segment for the periods presented:

	Three months ended				Nine months ended
	September 30,				September 30,
	2008		2009		2008		2009
Total upstream cash cost (in millions)	$	135.5	$	63.0	$	347.2	$	194.8
Total shipments (pounds in millions)		148.4		83.4		435.6		256.3
Net upstream cash cost per pound for primary aluminum(a)	$	0.91	$	0.76	$	0.80	$	0.76

The following table reconciles the upstream segment’s cost of sales to the total upstream cash cost for primary aluminum for the periods presented:

	Three months ended						Nine months ended
	September 30,						September 30,
	2008			2009			2008			2009
(in millions)	$			$			$			$
Upstream cost of sales		169.5			127.1			454.9			317.3
Downstream cost of sales		170.8			97.2			472.8			273.8
Intersegment cost of sales		(27.4	)		(5.8	)		(80.9	)		(24.6	)
Total cost of sales		312.9			218.5			846.8			566.5
Upstream cost of sales		169.5			127.1			454.9			317.3
LIFO and lower of cost or market adjustments(b)		(7.4	)		2.3			(20.3	)		3.7
Fabrication premium(c)		(10.4	)		(8.6	)		(33.2	)		(24.1	)
Depreciation expense–upstream		(17.2	)		(13.2	)		(52.5	)		(40.9	)
Joint ventures impact(d)		(0.5	)		(0.3	)		(7.6	)		(9.8	)
Selling, general and administrative expenses(e)		3.3			6.0			10.3			15.9
Insurance proceeds(f)		—			(1.0	)		—			(12.9	)
External alumina and bauxite(g)		—			(34.0	)		—			(34.0	)
Other(h)		(1.8	)		(15.3	)		(4.4	)		(20.4	)
Total upstream cash cost of primary aluminum		135.5			63.0			347.2			194.8

(a)	During 2009, we refined our cash cost calculation methodologies to reflect an adjusted EBITDA based calculation (see the “Covenant Compliance” section for a full description and reconciliation of adjusted EBITDA). As a result, prior year figures may not tie to cash costs as presented in 2008 filings.
(b)	Reflects the conversion from LIFO to FIFO method of inventory costing, including removing the effects of adjustments to reflect the lower of cost or market value.
(c)	Our value-added products, such as billet, rod and foundry, earn a fabrication premium over the MWTP. To allow comparison of our upstream per unit costs to the MWTP, we exclude the fabrication premium in determining upstream cash costs for primary aluminum.
(d)	Our upstream business is fully integrated from bauxite mined by St. Ann to alumina produced by Gramercy to primary aluminum metal manufactured by our aluminum smelter in New Madrid, Missouri. To reflect the underlying economics of the vertically integrated upstream business, this adjustment reflects the favorable impact that third-party joint venture sales have on our upstream cash cost for primary aluminum.
(e)	Represents certain selling, general and administrative expenses which management believes are a component of upstream cash costs for primary aluminum, but which are not included in cost of goods.
(f)	Excess insurance proceeds reduce our cash costs to the extent we determine those proceeds will offset future costs, rather than be spent on capital expenditures.
(g)	Represents the impact of external bauxite and alumina offset of sales as the cash costs presented are for primary aluminum only.
(h)	Reflects various other cash cost adjustments, such as cash settlements on derivative transactions, the elimination of the effects of any intercompany profit in inventory, as well as any purchase accounting adjustments.

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Discussion of Operating Results

The following discussion of the historical results of operations is presented for the three and nine months ended September 30, 2008 and September 30, 2009.

You should read the following discussion of our results of operations and financial condition in conjunction with the unaudited condensed consolidated financial statements and related notes included elsewhere herein.

Three months ended September 30, 2009 compared to three months ended September 30, 2008.

Sales

Sales in the three months ended September 30, 2009 were $218.6 million compared to $357.4 million in the three months ended September 30, 2008.

Sales to external customers in our upstream business were $108.7 million, a 40.4% decrease from the $182.5 million reported in three months ended September 30, 2008, driven primarily by the decline in LME prices, lower volumes of value-added shipments due to declining end-market demand and lower sow volumes related to the New Madrid power outage.

• The decline in pricing, due to a 36.3% decrease in realized MWTP, reduced external revenues by $80.6 million. In the three months ended September 30, 2009 and the three months ended September 30, 2008, average LME aluminum prices per pound were $0.82 and $1.27, respectively.

• Total upstream aluminum shipments for the three months ended September 30, 2009 decreased 65.0 million pounds to 83.4 million pounds or 43.8% compared to the three months ended September 30, 2008.

• Intersegment shipments to our downstream business decreased 13.9 million pounds to 6.8 million pounds or 67.3%, as a result of the New Madrid power outage. The downstream business has sufficient external alternate sources of supply to meet its aluminum needs.

• External aluminum shipments in the upstream business decreased to 76.6 million pounds in the three months ended September 30, 2009 from 127.7 million pounds in the three months ended September 30, 2008. This 40.1% decrease in external shipments resulted in reduced external revenues of $73.1 million and is largely the result of the lower production levels because of the smelter power outage and continued decline in demand for value-added products. Shipments of value-added products totaled 76.0 million pounds in the three months ended September 30, 2009 and represented a 26.2% decrease compared to the three months ended September 30, 2008. This lower volume was driven by lower end-market demand in transportation and building markets. The power outage at the New Madrid smelter had minimal impact on these value-added volume declines, as we sourced third party metal to offset the hot metal production outage. The re-melt capability and value-added processing capacity within the New Madrid facility were sufficient to serve our customers’ demands for products such as billet and rod.

• Third quarter 2009 revenues include $29.4 million related to 103.5 kilometric tons (“kMt”) of alumina shipped to external customers and $4.4 million related to 145 kMt of bauxite shipped to external customers.

Sales in our downstream business were $109.9 million, a decrease of 37.2%, compared to the three months ended September 30, 2008, primarily due to the decrease in LME prices, as well as lower shipments to external customers.

• The LME price decline contributed $45.6 million to the sales decrease. Fabrication premiums were relatively unchanged.

• Decreased shipment volumes reduced revenues by $19.3 million. Downstream shipment volumes decreased 10.5% to 84.4 million pounds primarily due to lower end-market demand in the building and construction markets.

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Cost of sales

Cost of sales for the three months ended September 30, 2009 was $218.5 million compared to $312.9 million in the three months ended September 30, 2008. Costs related to the New Madrid power outage totaled $3.7 million in the three months ended September 30, 2009, all of which were offset by insurance proceeds. The decrease in cost of sales was mainly the result of lower shipment volumes for value-added products to external customers. Cost of sales for the three months ended September 30, 2009 also included $5.1 million of expenses associated with the purchase accounting step-up of property, plant and equipment values and inventory values due to the Joint Venture Transaction.

Selling, general and administrative expenses

Selling, general and administrative expenses in the three months ended September 30, 2009 were $18.7 million compared to $12.4 million in the three months ended September 30, 2008, a 50.8% increase. This increase was due to a variety of factors including the effects of one month operations for Gramercy and St. Ann, increased amortization of intangible assets from the Joint Venture Transaction, and higher expenses from employee benefits such as pension and incentive plans.

• Third quarter 2009 selling, general and administrative expenses included a $3.0 million write-down of an unused mill in the downstream business.

Excess insurance proceeds

We reached a settlement with our insurance carriers in the three months ended September 30, 2009. The third quarter settlement proceeds of $18.4 million were allocated to cost of sales and selling, general and administrative expenses to the extent losses were realized and eligible for recovery under our insurance policies. The line item titled “Excess insurance proceeds” reflects the residual after applying the total proceeds recognized against losses incurred through September 30, 2009. This amount is not intended to represent a gain on the insurance claim, but only a timing difference between proceeds recognized and claim-related costs incurred. We will continue to incur costs and may incur costs that exceed the total $67.5 million in proceeds, all of which has been received as of September 30, 2009.

Operating income (loss)

Operating income in the three months ended September 30, 2009 was a $4.4 million loss compared to operating income of $32.1 million in the three months ended September 30, 2008. The 113.7% decrease relates to quarter-over-quarter sales margin (sales minus cost of sales) reductions of $44.4 million, and a $6.3 million increase in selling, general and administrative expenses, offset by the favorable impact of $14.3 million excess insurance proceeds.

• Sales margin for the three months ended September 30, 2009 was $0.1 million compared to $44.5 million in the three months ended September 30, 2008. This $44.4 million decrease resulted from the impact of a 36.3% decrease in realized MWTP coupled with a decrease in higher margin sales of value-added products and higher production costs (as a percent of sales) in the upstream aluminum business.

• Selling, general and administrative expenses were $18.7 million in the three months ended September 30, 2009 compared to $12.4 million in the three months ended September 30, 2008, due to increased incentive compensation expenses, as well as the write-down of unused mill equipment in the downstream business.

• Operating income was also impacted favorably by excess insurance proceeds in the three months ended September 30, 2009 of $14.3 million.

Interest expense, net

Interest expense in the three months ended September 30, 2009 was $12.6 million compared to $19.9 million in the three months ended September 30, 2008, a decrease of $7.3 million. Decreased interest expense is related to lower LIBOR interest rates as well as lower average debt outstanding on the term B loan (due to the $24.5 million principal payment in April 2009) and the AcquisitionCo Notes and HoldCo Notes (due to the repurchase of debt, discussed further below). These reductions in principal balance were partially offset by the increased revolver balance; however, the revolver maintains a lower interest rate than the HoldCo Notes and AcquisitionCo Notes.

 

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(Gain) loss on hedging activities, net

Gain on hedging activities was $5.7 million in the three months ended September 30, 2009 compared to a $45.5 million loss in the three months ended September 30, 2008. We discontinued hedge accounting for our entire remaining aluminum fixed-price sale swaps on January 29, 2009. For the three months ended September 30, 2009, the amount reclassified from accumulated other comprehensive income to earnings was $24.2 million.

Equity in net (income) loss of investments in affiliates

Equity in net income of investments in affiliates was a loss of $0.9 million for the three months ended September 30, 2009, compared to a loss of $1.6 million for the three months ended September 30, 2008, an increase of $0.7 million. For 2009, the amount represents only July and August activity, as Gramercy and St. Ann are included in our consolidated results beginning August 31, 2009.

Gain on debt repurchase

We repurchased or repaid $81.1 million aggregate principal amount of outstanding HoldCo Notes, AcquisitionCo Notes, and term B loan borrowings for a price of $52.2 million plus fees, resulting in a $28.6 million gain.

Income tax expense (benefit)

Income tax expense totaled $12.2 million in the three months ended September 30, 2009, compared to a tax benefit of $12.5 million in the three months ended September 30, 2008. The provision for income taxes resulted in an effective tax rate for continuing operations of 73.8% for the three months ended September 30, 2009, compared with an effective tax rate of 35.7% for the three months ended September 30, 2008. The increase in the effective tax rate for the three months ended September 30, 2009 was primarily impacted by state income taxes, equity method investee income, and the Internal Revenue Code Section 199 manufacturing deduction. Each interim period is considered an integral part of the annual period and tax expense is measured using the estimated annual effective tax rate. Estimates of the annual effective tax rate at the end of interim periods are, of necessity, based on evaluations of possible future events and transactions and may be subject to subsequent refinement or revision. For the nine months ended September 30, 2009 and September 30, 2008, we used the annual effective tax rate based on estimated ordinary income for the year ended December 31, 2009 and December 31, 2008, respectively.

Net income (loss)

Net income increased from a $22.4 million loss in the three months ended September 30, 2008 to income of $4.3 million in the three months ended September 30, 2009. This $26.7 million increase was the result of the net effect of the items described above.

Nine months ended September 30, 2009 compared to nine months ended September 30, 2008.

Sales

Sales in the nine months ended September 30, 2009 were $540.6 million compared to $1,004.9 million in the nine months ended September 30, 2008, a decrease of 46.2%.

Sales to external customers in our upstream aluminum business were $235.6 million in the first nine months of 2009; a 54.9% decrease from the $522.8 million reported in the nine months ended September 30, 2008, driven primarily by a decline in LME aluminum prices, lower volumes of value-added shipments due to a decline in end-market demand and lower sow volumes related to the New Madrid power outage.

• The decline in pricing, due to a 42.8% decrease in realized MWTP, resulted in a decrease of $74.1 million in external revenues. In the first nine months of 2009 and the first nine months of 2008, the average LME aluminum price per pound was $0.71 and $1.28, respectively.

• Total upstream aluminum shipments for the first nine months of 2009 decreased 179.4 million pounds to 256.3 million pounds or 41.2% compared to the first nine months of 2008. Intersegment shipments to our downstream business decreased 26.8 million pounds to 34.4 million pounds or 43.8%, as a result of the power outage at New Madrid. The downstream business has sufficient external alternate sources of supply to meet its aluminum needs.

• External aluminum shipments decreased to 221.9 million pounds in the first nine months of 2009 from 374.5 million pounds in the first nine months of 2008. This 40.7% decrease in external shipments resulted in lower external revenues of $213.1 million and is largely the result of lower production levels because of the smelter outage and the continued decline in demand for value-added products. Shipments of value-added products totaled 214.6 million pounds in the first nine months of 2009 compared to 331.4 million pounds in the first nine months of 2008. This lower volume was driven by lower end-market demand in transportation and building markets. The power outage at the New Madrid smelter had minimal impact on these value-added volume declines, as we sourced third party metal to offset the hot metal production outage. The re-melt capability and value-added processing capacity within the New Madrid facility were sufficient to serve our customers’ demands for products such as billet and rod.

50

• Revenues for the first nine months of 2009 include $29.4 million related to 103.5 kMt of alumina shipped to external customers and $4.4 million related to 145 kMt of bauxite shipped to external customers.

Sales in our downstream business were $305.0 million for the first nine months of 2009, a decrease of 36.7% compared to sales of $482.1 million for the first nine months of 2008. The decrease was primarily due to a negative impact from pricing, as well as lower shipments to external customers.

• The LME price decline contributed $110.1 million to the sales decrease. Fabrication premiums were relatively unchanged.

• Decreased shipment volumes reduced revenues by $67.0 million. Downstream shipment volumes decreased to 235.3 million pounds in the first nine months of 2009 from 273.3 million pounds in the first nine months of 2008. This 13.9% decrease was primarily due to lower end-market demand in the building and construction markets.

Cost of sales

Cost of sales decreased to $566.5 million for the first nine months of 2009 from $846.8 million in the first nine months of 2008. Costs incurred related to the New Madrid power outage totaled $17.5 million in the nine months ended September 30, 2009, which were offset entirely by insurance proceeds. The 33.1% decrease was mainly the result of lower shipment volumes for value-added products to external customers, offset by increases in the cost of raw materials.

Selling, general and administrative expenses

Selling, general and administrative expenses in the nine months ended September 30, 2009 were $51.7 million compared to $49.1 million in the nine months ended September 30, 2008, a 5.3% increase.

• Selling, general and administrative expenses increased due to a $10.2 million increase in pension expense in the first nine months of 2009 compared to the first nine months of 2008 due to lower return on plan assets per our actuarial estimates. Additionally, we wrote off an unused mill in the downstream business resulting in $3.0 million of increased expenses.

• Professional and consulting fees decreased $3.5 million year over year, as a result of our cost-saving initiatives.

• Stock option modification costs in the first nine months of 2009 decreased from the prior years due to a modification of certain stock options resulting in a payout of $2.4 million during 2008.

• All selling, general and administrative expenses associated with the power outage at New Madrid of $6.6 million were offset by insurance proceeds for the first nine months of 2009.

Goodwill and other intangible asset impairment

In connection with the preparation of our condensed consolidated financial statements for first quarter 2009, we concluded that it was appropriate to re-evaluate our goodwill and intangibles for potential impairment in light of the power outage at the New Madrid smelter and accelerated deteriorations of demand volumes in both our upstream and downstream segments. Based on our interim impairment analysis during first quarter 2009, we recorded an impairment charge of $2.8 million on trade names in the downstream segment and $40.2 million on goodwill in the downstream segment. We finalized certain valuations related to the goodwill impairment analysis during second quarter 2009, which did not result in any adjustments to the impairment charges recorded during first quarter. No further deterioration was noted in the third quarter 2009; therefore, no goodwill impairment testing was necessary at September 30, 2009. However, future impairment charges could be required if we do not achieve our cash flow, revenue and profitability projections.

Our analyses included assumptions about future profitability and cash flows of our segments, which we believe reflects our best estimates at the date the valuations were performed. The estimates were based on information that was known or knowable at the date of the valuations, and is at least reasonably possible that the assumptions we employed will be materially different from the actual amounts or results, and that additional impairment charges for either or both segments will be necessary during 2009. No further deterioration was noted in third quarter 2009; therefore, no goodwill impairment testing was necessary at September 30, 2009. Future impairment charges could be required if we do not achieve our current cash flow, revenue and profitability projections.

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Excess insurance proceeds

We reached a $67.5 million settlement with our insurance carriers all of which has been received as of September 30, 2009. The settlement proceeds of $67.5 million were allocated to cost of sales and selling, general and administrative expenses to the extent losses were realized and eligible for recovery under our insurance policies. The line item titled “Excess insurance proceeds” reflects the residual after applying the total proceeds recognized against losses incurred through September 30, 2009. This amount is not intended to represent a gain on the insurance claim, but only a timing difference between proceeds recognized and claim-related costs incurred. We will continue to incur costs and may incur costs that exceed the total $67.5 million in proceeds.

Operating income (loss)

Operating loss in the first nine months of 2009 was $77.2 million compared to operating income of $109.0 million in the first nine months of 2008. The decrease relates to period-over-period sales margin (sales minus cost of sales) reductions of $184.1 million, and a $2.6 million increase in selling, general and administrative and other expenses.

• Sales margin for the first nine months of 2009 was a $26.0 million loss compared to income of $158.1 million in the first nine months of 2008. This $184.1 million decrease resulted from the impact of a 42.8% decrease in realized MWTP coupled with a decrease in higher margin sales of value-added products and higher production costs (as a percent of sales) in the upstream business.

• Selling, general and administrative expenses were $51.7 million in the first nine months of 2009 and were relatively stable compared to $49.1 million in the first nine months of 2008.

• Operating income was also impacted by goodwill and other intangible asset impairment charges in the first nine months of 2009 of $43.0 million, offset by excess insurance proceeds of $43.5 million.

Interest expense, net

Net interest expense in the nine months ended September 30, 2009 was $42.6 million compared to $65.1 million in the nine months ended September 30, 2008, a decrease of $22.5 million. Decreased interest expense is related to lower LIBOR interest rates as well as lower average debt outstanding on the term B loan (due to the $24.5 million principal payment in April 2009) and the AcquisitionCo Notes and HoldCo Notes (due to the debt repurchases, discussed further below). These reductions in principal balance were partially offset by the increased revolver balance; however, the revolver maintains a lower interest rate than the HoldCo Notes and AcquisitionCo Notes.

(Gain) loss on hedging activities, net

Gain on hedging activities was $104.1 million in the nine months ended September 30, 2009 compared to the $50.5 million loss in the nine months ended September 30, 2008. We discontinued hedge accounting for our entire remaining aluminum fixed-price sale swaps on January 29, 2009. For the nine months ended September 30, 2009, the amount reclassified from accumulated other comprehensive income to earnings was $149.3 million. As a result of the de-designation, $77.8 million was reclassified into earnings because it is probable that the original forecasted transactions will not occur.

Equity in net (income) loss of investments in affiliates

Equity in net (income) loss of investments in affiliates was a $79.0 million loss for the nine months ended September 30, 2009, compared to income of $3.9 million for the nine months ended September 30, 2008. This decrease was primarily attributable to impairment charges of $80.3 million during the first nine months of 2009.

Our analyses of impairment included assumptions about future profitability and cash flows of the joint ventures, which we believe reflect our best estimates at the date the valuations were performed. The estimates were based on information that was known or knowable at the date of the valuations, and it is at least reasonably possible that the assumptions we employed will be materially different from the actual amounts or results.

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Gain on debt repurchase

For the nine months ended September 30, 2009, we repurchased $320.8 million principal aggregate amount of our outstanding HoldCo Notes, AcquisitionCo Notes, term B loan and revolving credit facility for a price of $123.0 million, plus fees. Of this amount, we repaid $6.6 million of our revolving credit facility borrowings, resulting in our borrowing capacity being reduced $7.3 million to $242.7 million.

We recognized a gain of $193.2 million representing the difference between the reacquisition price and the carrying amount of repurchased debt.

Income tax expense (benefit)

Our effective income tax rates were approximately 63.0% for the nine months ended September 30, 2009 and 55.2% for the nine months ended September 30, 2008. The increase in the effective tax rates for the nine months ended September 30, 2009 and September 30, 2008 were primarily impacted by state income taxes, equity method investee income, the Internal Revenue Code Section 199 manufacturing deduction and goodwill impairment in 2009. Each interim period is considered an integral part of the annual period and tax expense is measured using the estimated annual effective tax rate. Estimates of the annual effective tax rate at the end of interim periods are, of necessity, based on evaluations of possible future events and transactions and may be subject to subsequent refinement or revision. For the nine months ended September 30, 2009 and September 30, 2008, we used the annual effective tax rate based on estimated ordinary income for the years ended December 31, 2009 and December 31, 2008, respectively.

As of September 30, 2009 and December 31, 2008, we had unrecognized income tax benefits (including interest) of approximately $11.3 million and $11.0 million, respectively (of which approximately $7.4 million, if recognized, would favorably impact the effective income tax rate). As of September 30, 2009, the gross amount of unrecognized tax benefits (excluding interest) increased by an immaterial amount. It is expected that the unrecognized tax benefits may change in the next twelve months; however, due to Xstrata’s indemnification of us for tax obligations related to periods ending on or before the acquisition date, we do not expect the change to have a significant impact on our results of operations or our financial position.

In April 2009, the Internal Revenue Service (“IRS”) commenced an examination of our U.S. income tax return for 2006. As part of the Apollo Acquisition, Xstrata indemnified us for tax obligations related to periods ending on or before the acquisition date. Therefore, we do not anticipate that the IRS examination will have a material impact on our financial statements.

Net income (loss)

Net income was $36.5 million in the nine months ended September 30, 2009 compared to a $1.7 million loss in the nine months ended September 30, 2008. This $38.2 million increase was the net effect of the items described above.

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Liquidity and Capital Resources

Our primary sources of liquidity are cash provided by operating activities and cash on hand. For the nine months ended September 30, 2009, cash provided by operating activities amounted to $230.4 million. At that date we had cash on hand of $256.5 million. Of our revolving credit facility’s (“the facility”) $242.7 million borrowing capacity, we had a drawn balance of $216.9 million and outstanding letters of credit of $24.2 million, resulting in $1.6 million available for borrowing under the facility at September 30, 2009.

We incurred substantial indebtedness in connection with our 2007 acquisition by Apollo. As of September 30, 2009, our total indebtedness was $1,020.9 million.

Our main continuing liquidity requirements will be to finance working capital, capital expenditures and acquisitions, and debt service. We believe that cash provided by operating activities plus available cash will be adequate to meet our short-term liquidity needs. We cannot assure you, however, that our business will generate sufficient cash flow from operations to enable us to repay all of our indebtedness or to fund our other liquidity needs. In addition, certain events, such as a change of control, could require us to repay or refinance our indebtedness. We cannot assure you that we will be able to refinance any of our indebtedness on commercially reasonable terms or at all.

The following table sets forth consolidated cash flow information for the periods indicated:

	Nine months ended
	September 30,
	2008			2009
(in millions)	$			$
Cash provided by operating activities		111.7			230.4
Cash used in investing activities		(37.0	)		(9.6	)
Cash used in financing activities		94.7			(149.0	)
Net change in cash and cash equivalents		169.4			71.8

Operating Activities

Cash provided by operating activities in the first nine months of 2009 reflected $119.7 million of proceeds from hedge terminations under our hedge settlement agreement with Merrill Lynch (the “H-SA”) and $18.0 million from reduction of working capital.

Investing Activities

Capital expenditures amounted to $32.2 million through September 2009 and $37.5 million in the comparable 2008 period. This amount is offset in 2009 by $11.1 million of cash acquired during the Joint Venture Transaction. $11.5 million of our capital spending in 2009 related to the New Madrid restart all of which was funded with insurance proceeds. Except for the New Madrid restart, we expect to devote our remaining 2009 capital expenditures primarily to maintenance spending.

Financing Activities

During the first nine months of 2009, our financing cash flows mainly reflected debt reduction. We utilized net proceeds from the H-SA to repurchase $320.8 million aggregate principal amount of our HoldCo and AcquisitionCo Notes for a total price of $123.0 million (plus transaction fees). Additionally, we made a required $24.5 million repayment of our term B loan and repaid $1.5 million of borrowings under our revolving credit facility.

We have made a permitted election under the indentures governing our HoldCo and AcquisitionCo Notes, to pay all interest due hereunder on November 15, 2009 entirely in kind.

In June 2008, we paid a $102.2 million dividend to our common stockholders.

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Debt Ratings

Our debt facilities are rated as follows:

	Outstanding balance at		Ratings at
	September 30, 2009		November 13, 2009
(in millions)	$		Moody’s		S&P
HoldCo:
Senior Floating Rate Notes due 2014		68.0	Caa3			D
AcquisitionCo:
Term B loan due 2014		349.0		B2
Senior Floating Rate Notes due 2015		387.0	Caa2			D
Revolving credit facility		216.9		B2
Total debt		1,020.9

Covenant Compliance and Financial Ratios

Certain covenants contained in the credit agreement governing our senior secured credit facilities and the indentures governing our notes restrict our ability to take certain actions (including incurring additional secured or unsecured debt, expanding borrowings under existing term loan facilities, paying dividends, engaging in mergers, acquisitions and certain other investments, and retaining proceeds from asset sales) if we are unable to meet defined ratios: the Adjusted EBITDA to fixed charges (“fixed-charge coverage ratio”) and the net senior secured debt to Adjusted EBITDA (“leverage ratio”). In addition, upon the occurrence of certain events, such as a change of control, we could be required to repay or refinance our indebtedness.

Further, the interest rates we pay under our senior secured credit facilities are determined in part by the Net Senior Secured Leverage Ratio. Furthermore, our ability to take certain actions, including paying dividends and making acquisitions and certain other investments, depends on the amounts available for such actions under the covenants, which amounts accumulate with reference to our Adjusted EBITDA on a quarterly basis. Adjusted EBITDA is computed on a trailing four quarter basis and the minimum or maximum amounts generally required by those covenants and our performance against those minimum or maximum levels are summarized below:

The relevant ratios and our performance against those ratios are summarized below:

		Actual
		December 31,	September 30,
	Threshold	2008	2009(1)
HoldCo:
Senior Floating Rate Notes fixed charge coverage ratio(2)	Minimum 1.75 to 1	2.5 to 1	1.3 to 1
AcquisitionCo:
Senior Floating Rate Notes fixed charge coverage ratio(2)	Minimum 2.0 to 1	3.2 to 1	1.7 to 1
Term B loan and revolving credit facility leverage ratio(3)	Maximum 3.0 to 1(4)	1.9 to 1	3.2 to 1

(1)	Pro forma effect is given to adjusted EBITDA for ratio calculation purposes as if the Joint Venture Transaction had occurred at the beginning of the trailing four-quarter period.
(2)	Fixed charges are the sum of consolidated interest expenses and all cash dividend payments except for common stock dividends. Pro forma effect is given to any repayment or issuance of debt as if such transaction occurred at the beginning of the trailing four-quarter period. The table shows higher actual fixed charge coverage ratios for AcquisitionCo than for HoldCo because the calculation for AcquisitionCo does not include HoldCo’s interest expenses.
(3)	“Net senior secured debt”, as used in calculating the leverage ratio, means the amount outstanding under our term B loan plus the revolving credit facility, less “unrestricted cash” and “permitted investments” (as defined). At December 31, 2008, senior secured debt was $618.5 million and unrestricted cash and permitted investments amounted to $160.6 million, resulting in net senior secured debt of $457.9 million. At September 30, 2009, senior secured debt was $565.9 million and unrestricted cash and permitted investments aggregated $235.0 million, resulting in net senior secured debt of $330.9 million.
(4)	The Maximum ratio was 2.75 to 1 at December 31, 2008 and changed to 3.0 to 1 at January 1, 2009.

Our debt instruments contain no financial “maintenance” covenants. However, because we do not currently meet the ratios referenced above we generally may not currently incur additional debt (other than revolving credit facility borrowings), make acquisitions or certain other investments, pay dividends or retain proceeds from asset sales. These restrictions do not currently interfere with the day-to-day-conduct of our business. Consummation of our agreement with Century in respect of Gramercy and St. Ann was permissible under our debt agreements.

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Under our debt instruments, “Adjusted EBITDA” means net income before income taxes, net interest expense and depreciation and amortization, adjusted to eliminate related party management fees, certain charges resulting from the use of purchase accounting and specified other non-cash items of income or expense. For covenant compliance calculations, Adjusted EBITDA is computed on a trailing four-quarter basis.

Adjusted EBITDA is not a measure of financial performance under GAAP, and may not be comparable to similarly titled measures used by other companies in our industry. Adjusted EBITDA should not be considered in isolation from or as an alternative to net income, income from continuing operations, operating income or any other performance measures derived in accordance with GAAP. Adjusted EBITDA has limitations as an analytical tool and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. For example, Adjusted EBITDA excludes certain tax payments that may represent a reduction in cash available to us; does not reflect any cash requirements for the assets being depreciated and amortized that may have to be replaced in the future; does not reflect capital cash expenditures, future requirements for capital expenditures or contractual commitments; does not reflect changes in, or cash requirements for, our working capital needs; and does not reflect the significant interest expense, or the cash requirements necessary to service interest or principal payments, on our indebtedness. Adjusted EBITDA also includes incremental stand-alone costs and adds back non-cash hedging gains and losses, and certain other non-cash charges that are deducted in calculating net income. However, these are expenses that may recur, vary greatly and are difficult to predict. In addition, certain of these expenses can represent the reduction of cash that could be used for other corporate purposes. You should not consider our Adjusted EBITDA as an alternative to operating or net income, determined in accordance with GAAP, as an indicator of our operating performance, or as an alternative to cash flows from operating activities, determined in accordance with GAAP, as an indicator of our cash flows or as a measure of liquidity.

The following table reconciles net income to Adjusted EBITDA for the periods presented:

	Twelve months			Last twelve			Nine months			Nine months			Three months			Three months
	ended			months ended			ended			ended			ended			ended
	December 31,			September 30,			September 30,			September 30,			September 30,			September 30,
	2008			2009			2008			2009			2008			2009
(in millions)	$			$			$			$			$			$
Net income (loss) for the period		(74.1	)		(35.9	)		(1.7	)		36.5			(22.4	)		4.3
Income tax (benefit) expense		(32.9	)		31.4			(2.2	)		62.1			(12.4	)		12.2
Interest expense, net		88.0			65.6			65.0			42.6			19.8			12.6
Depreciation and amortization		98.2			83.8			74.0			59.6			24.6			19.1
Joint venture EBITDA(a)		13.2			12.3			9.4			8.5			4.0			1.2
LIFO adjustment(b)		(11.9	)		(17.9	)		31.2			25.2			(0.4	)		16.5
LCM adjustment(c)		37.0			9.2			(7.6	)		(35.4	)		6.7			(20.0	)
(Gain) loss on debt repurchase		1.2			(193.2	)		1.2			(193.2	)		—			(28.6	)
New Madrid power outage(d)		—			(30.6	)		—			(30.6	)		—			(13.3	)
Charges related to termination of derivatives		—			17.8			—			17.8			—			6.1
Non-cash hedging gains and losses(e)		47.0			(69.6	)		36.4			(80.2	)		35.3			1.1
Goodwill and other intangible asset impairment		25.5			68.5			—			43.0			—			—
Joint Venture impairment		—			80.3			—			80.3			—			—
Purchase accounting(f)		—			8.5			—			8.5						8.5
Other items, net(g)		43.7			49.0			19.9			25.2			5.4			8.9
Adjusted EBITDA		234.9			79.2			225.6			69.9			60.6			28.6

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The following table reconciles cash flow from operating activities to Adjusted EBITDA for the periods presented:

	Twelve months			Last twelve			Nine months			Nine months
	ended			months ended			ended			ended
	December 31,			September 30,			September 30,			September 30,
	2008			2009			2008			2009
(in millions)	$			$			$			$
Cash flow from operating activities		65.5			184.2			111.7			230.4
Loss on disposal of property, plant and equipment		(5.3	)		(10.2	)		(2.4	)		(7.3	)
Gain (loss) on hedging activities		(47.0	)		52.5			(36.4	)		63.1
Settlements from hedge terminations, net		—			(119.7	)		—			(119.7	)
Insurance proceeds applied to capital expenditures		—			11.5			—			11.5
Equity in net income of investments in affiliates		7.7			5.2			3.9			1.4
Stock compensation expense		(2.4	)		(2.0	)		(1.5	)		(1.1	)
Changes in deferred charges and other assets		(7.5	)		4.9			(4.0	)		8.4
Changes in pension and other long-term liabilities		(0.2	)		(41.8	)		9.6			(32.0	)
Changes in asset and liabilities, net		(28.3	)		(33.0	)		(13.3	)		(18.0	)
Income tax expense (benefit)		40.5			16.2			7.7			(16.6	)
Interest expense, net		82.9			39.3			61.2			17.5
Joint venture EBITDA(a)		13.2			12.3			9.4			8.5
LIFO adjustment(b)		(11.9	)		(17.9	)		31.2			25.2
LCM adjustment(c)		37.0			9.2			(7.6	)		(35.4	)
New Madrid power outage(d)		—			(30.6	)		—			(30.6	)
Non-cash hedging gains and losses(e)		47.0			(69.6	)		—			(80.2	)
Charges related to termination of derivatives		—			17.8			36.4			17.8
Purchase accounting(f)		—			8.5			—			8.5
Other items, net(g)		43.7			42.4			19.7			18.5
Adjusted EBITDA		234.9			79.2			225.6			69.9

(a) Prior to the Joint Venture Transaction at August 31, 2009 our reported Adjusted EBITDA includes 50% of the net income of Gramercy and St. Ann, based on transfer prices that are generally in excess of the actual costs incurred by the joint venture operations. To reflect the underlying economics of the vertically integrated upstream business, this adjustment eliminates the following components of equity income to reflect 50% of the EBITDA of the joint ventures, for the following aggregated periods (in millions):

	Last twelve			Last twelve			Nine months			Nine months			Three months			Three months
	months ended			months ended			ended			ended			ended			ended
	December 31,			September 30,			September 30,			September 30,			September 30,			September 30,
	2008			2009			2008			2009			2008			2009
	$			$			$			$			$			$
Depreciation and amortization		16.0			12.6			12.1			8.7			4.6			1.9
Net tax expense		(2.7	)		(0.3	)		(2.6	)		(0.2	)		(0.6	)		(0.7	)
Interest income		(0.1	)		—			(0.1	)		—			—			—
Impairment adjustment		—			—			—			—			—			—
Total joint venture EBITDA adjustments		13.2			12.3			9.4			8.5			4.0			1.2

(b)	Our New Madrid smelter and downstream facilities use the LIFO method of inventory accounting for financial reporting and tax purposes. This adjustment restates net income to the FIFO method by eliminating LIFO expenses related to inventory held at the New Madrid smelter and downstream facilities. Inventories at St. Ann and Gramercy are stated at lower of weighted average cost or market, and are not subject to the LIFO adjustment.
(c)	Reflects adjustments to reduce inventory to the lower of cost (adjusted for purchase accounting) or market value.
(d)	Represents the portion of the insurance settlement used for claim-related capital expenditures.

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(e) We use derivative financial instruments to mitigate effects of fluctuations in aluminum and natural gas prices. This adjustment eliminates the non-cash gains and losses resulting from fair market value changes of aluminum swaps, but does not affect the following cash settlements (received)/ paid (in millions):

	Last twelve		Last twelve			Nine months			Nine months			Three months			Three months
	months ended		months ended			ended			ended			ended			ended
	December 31,		September 30,			September 30,			September 30,			September 30,			September 30,
	2008		2009			2008			2009			2008			2009
	$		$			$			$			$			$
Aluminum swaps — fixed-price		5.3		(88.6	)		18.9			(75.0	)		10.7			(18.9	)
Aluminum swaps — variable-price		8.0		35.9			(5.7	)		22.2			(0.8	)		3.2
Natural gas swaps		3.7		27.7			0.3			24.3			0.3			8.9
Interest rate swaps		6.0		10.1			0.6			4.7			—			—
Total		23.0		(14.9	)		14.1			(23.8	)		10.2			(6.8	)

The previous table presents cash settlement amounts net of early terminations of fixed-price aluminum swaps and bond buybacks.

(f)	Represents impact from inventory step-up and other adjustments arising from adjusting assets acquired and liabilities assumed in the Joint Venture Transaction to their fair values.
(g)	Other items, net, consist of the following (in millions):

	Last twelve		Last twelve		Nine months		Nine months		Three months		Three months
	months ended		months ended		ended		ended		ended		ended
	December 31,		September 30,		September 30,		September 30,		September 30,		September 30,
	2008		2009		2008		2009		2008		2009
	$		$		$		$		$		$
Sponsor fees		2.0		2.0		1.5		1.5		0.5		0.5
Pension expense — non-cash portion		3.8		9.1		0.7		6.0		0.5		2.3
Employee compensation items		5.4		2.4		4.4		1.4		0.4		0.4
Loss on disposal of property, plant and equipment		8.6		11.3		2.5		5.2		1.1		3.5
Interest rate swap		6.0		10.1		0.6		4.7		—		—
Consulting and non-recurring fees		9.3		4.7		8.3		3.7		1.6		1.0
Restructuring-project renewal		7.4		7.4		—		—		—		—
Other		1.2		2.0		1.9		2.7		1.3		1.2
Total		43.7		49.0		19.9		25.2		5.4		8.9

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Item 3. Quantitative and Qualitative Disclosures about Market Risk

Aluminum

In 2007 and 2008, we implemented a hedging strategy designed to reduce commodity price risk and protect operating cash flows in the upstream business. Beginning in first quarter 2009, we entered into fixed-price aluminum purchase swaps to lock in a portion of the favorable position of our fixed-price sale swaps. The average margin per pound was $0.40 locked in as of September 30, 2009. To the extent we have entered into offsetting fixed-price swaps, we are no longer hedging our exposure to price risk. In addition, in March 2009, we entered into a hedge settlement agreement allowing us to monetize a portion of these hedges and use these proceeds to repurchase debt.

Specifically, we entered into fixed-price aluminum sales swaps with respect to a portion of our expected future upstream shipments. Under this arrangement, if the fixed-price of primary aluminum established per the swap for any monthly calculation period exceeds the average market price of primary aluminum (as determined by reference to prices quoted on the LME) during such monthly calculation period, our counterparty in this hedging arrangement will pay us an amount equal to the difference multiplied by the quantities as to which the swap agreement applies during such period. If the average market price during any monthly calculation period exceeds the fixed-price of primary aluminum specified for such period, we will pay an amount equal to the difference multiplied by the contracted quantity to our counterparty.

Effective January 1, 2008, we designated these contracts for hedge accounting treatment, and therefore, gains or losses resulting from the change in the fair value of these contracts were recorded as a component of accumulated other comprehensive income and reclassified into earnings in the same period or periods during which the hedged transaction affects earnings.

As a result of the New Madrid power outage during the week of January 26, 2009, and in anticipation of fixed-price aluminum purchase swaps described below, we discontinued hedge accounting for all of our aluminum fixed-price sale swaps on January 29, 2009.

As of September 30, 2009, we had outstanding fixed-price aluminum sale and purchase swaps that were entered into to hedge aluminum shipments:

 

	Average hedged		Pounds hedged
	price per pound		annually
Year	$		(in thousands)
2009		1.09		72,268
2010		1.06		290,541
2011		1.20		272,570
				635,379

	Average hedged		Pounds hedged
	price per pound		annually
Year	$		(in thousands)
2010		0.70		245,264
2011		0.76		231,838
				477,102

The net asset for the 477,102 pounds of sale swaps offset by purchase swaps is $191.3 million.

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Natural Gas

We purchase natural gas to meet our production requirements. These purchases expose us to the risk of changing market prices. To offset changes in the Henry Hub Index Price of natural gas, we entered into financial swaps, by purchasing the fixed forward price for the Henry Hub Index and simultaneously entering into an agreement to sell the actual Henry Hub Index Price. The natural gas financial swaps were not designated as hedging instruments. Accordingly, any gains or losses resulting from changes in the fair value of the financial swap contracts were recorded in (gain) loss on hedging activities in the consolidated statements of operations. The following table summarizes our fixed price natural gas swaps per year as of September 30, 2009:

	Average price per		Notional amount
Year	million BTU $		million BTU’s
2009		9.29		1,479
2010		9.00		4,012
2011		9.31		2,019
2012		9.06		2,023

Subsequent to September 30, 2009, we entered into additional purchase swaps with respect to a portion of our natural gas volume.

Interest Rates

We have floating-rate debt, which is subject to variations in interest rates. On August 16, 2007, we entered into an interest rate swap agreement to limit our exposure to floating interest rates for the periods from November 15, 2007 to November 15, 2011. The interest rate swap agreement was not designated as a hedging instrument. Accordingly, any gains or losses resulting from changes in the fair value of the interest rate swap contract are recorded in (gain) loss on hedging activities in the consolidated statements of operations. As of September 30, 2009, the fair value of that contract was a $19.9 million liability. The following table presents the interest rate swap schedule as of September 30, 2009:

	Int Rate Swap values
Date	($ in millions)
11/16/2009		400.0
05/17/2010		250.0
11/15/2010		250.0
05/16/2011		100.0
11/15/2011		100.0
12/31/2011		—

Non-Performance Risk

Our derivatives were recorded at fair value, the measurement of which includes the effect of our non-performance risk for derivatives in a liability position, and of the counterparty for derivatives in an asset position. As of September 30, 2009, our $186.4 million of derivative fair value was in an asset position, which is net of a broker margin asset of $1.7 million. As such, in accordance with our master agreement described below, we used our counterparty’s credit adjustment for the fair value adjustment.

Merrill Lynch is the counterparty for a substantial portion of our derivatives. All swap arrangements with Merrill Lynch are part of a master arrangement which is subject to the same guarantee and security provisions as the senior secured credit facilities. At current hedging levels, the master arrangement does not require us to post additional collateral, nor are we subject to margin requirements. While management may alter our hedging strategies in the future based on their view of actual forecasted prices, there are no plans in place that would require us to post additional collateral or become subject to margin requirements under the master agreement with Merrill Lynch.

We have also entered into variable-priced aluminum swaps with counterparties other than Merrill Lynch. To the extent those swap contracts are in an asset position for us, management believes there is minimal counterparty risk because these counterparties are backed by the LME. To the extent these contracts are in a liability position for us, the swap agreements provide for us to establish margin accounts in favor of the broker. These margin account balances are netted in the settlement of swap liability. At September 30, 2009, the margin account balances were $1.7 million.

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Item 4T. Controls and Procedures

Evaluation of Disclosure Controls and Procedures. Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), as of the end of the period covered by this quarterly report. Based on such evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, our disclosure controls and procedures are effective.

There have been no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the fiscal quarter to which this report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings

There are no material changes from the description of our legal proceedings previously disclosed in our Form 10-K filed on February 25, 2009.

Item 1A. Risk Factors

There are no material changes from the risk factors previously disclosed in our Form 10-K filed on February 25, 2009.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

None.

Item 3. Defaults upon Senior Securities

None.

Item 4. Submission of Matters to a Vote of Security Holders

None.

Item 5. Other Information

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Amendment and Restatement of Certain Stock Options

In order to ensure that the stock options originally granted to certain Company employees, including Messrs. Smith and Lorentzen, continue to serve their intended retentive and incentive purposes, the Company entered into amended and restated stock option agreements with certain of its employees, including agreements with Messrs. Smith (covering 200,000 options) and Lorentzen (covering separate grants of 50,000 options and 6,750 options), which reduce the exercise prices of the underlying options and amend the vesting schedule of the options, as described below. The amended and restated option agreements reduce the exercise price of these options to $2.28 per share and provide that the 50% of the options which were originally scheduled to vest based upon Company’s investors’ realization of a specified level of investor internal rate of return will now vest based on continued service, with 15% scheduled to vest on each of the first and second anniversaries of the amendment and restatement date, 20% scheduled to vest on the third anniversary of the amendment and restatement date and 25% scheduled to vest on each of the fourth and fifth anniversaries of the amendment and restatement date.

Amendment of Smith and Lorentzen Employment Term Sheets

In connection with, and in order to reflect, the amendment and restatement of Messrs. Smith’s and Lorentzen’s stock option agreements, the Company entered into amendments to their respective employment term sheets. In the case of Mr. Lorentzen, the amendment is set forth in his amended and restated stock option agreement. The amendment to Mr. Smith’s term sheet extends the period during which Mr. Smith may be entitled to benefits in the event of an “Early CIC” (as defined in Mr. Smith’s term sheet) from the 18-month anniversary of his commencement of employment with the Company to the 60-month anniversary of his commencement of employment with the Company and provides that all of his stock options will receive the same treatment in the event of an Early CIC or other change in control of the Company. The amendment to Mr. Lorentzen’s term sheet caps the number of “Subsequent Shares” (as defined in Mr. Lorentzen’s term sheet) that he may purchase in the future at 5,750, and provides for time-based vesting of any future “Subsequent Options” (as defined in Mr. Lorentzen’s term sheet) that are granted to Mr. Lorentzen by the Company.

New Option and Subscription Agreements; Amendment and Restatement of Long-Term Incentive Plan

Including the actions described above, on November 12, 2009, the Company entered into an option agreement with Mr. Lorentzen, pursuant to which the Company granted Mr. Lorentzen options to purchase up to 17,000 shares of Company common stock at an exercise price of $2.28 per share, vesting, subject to Mr. Lorentzen’s continued service, as to 15% of the options on each of the first and second anniversaries of the date of grant, 20% of the options on the third anniversary of the date of grant and 25% of the options on each of the fourth and fifth anniversaries of the date of grant. Mr. Lorentzen’s new options are subject to partial or complete forfeiture in the event that he fails to purchase up to 8,000 shares of Company common stock at a purchase price of $2.28 per share within 30 days of the date of grant of the options. The Company entered into similar agreements with certain of its other employees. In connection with the Company’s entry into these agreements, the Company further amended and restated its 2007 Long-Term Incentive Plan (the “LTIP”) to increase the number of shares of Company common stock reserved for grant under the LTIP from 1,500,000 shares to 1,900,000 shares.

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Item 6. Exhibits

10.1	Amended and Restated Noranda Aluminum Holding Corporation Long-Term Incentive Plan, dated November 12, 2009.
10.2	Amendment to the Management Equity Investment and Incentive Term Sheet, dated November 12, 2009, between Noranda Aluminum Holding Corporation and Layle K. Smith.
10.3	Amended and Restated Non Qualified Stock Option Agreement, dated November 12, 2009, between Noranda Aluminum Holding Corporation and Layle K. Smith.
10.4	Amended and Restated Non Qualified Stock Option Agreement, dated November 12, 2009, between Noranda Aluminum Holding Corporation and Kyle D. Lorentzen.
10.5	Form of Amended and Restated Non Qualified Stock Option Agreement, (Management Holders).
10.6	Form of Non Qualified Stock Option Agreement (Management Holders).
31.1	Certification of the Chief Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a) Promulgated Under the Securities Exchange Act of 1934, as amended.
31.2	Certification of the Chief Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a) Promulgated Under the Securities Exchange Act of 1934, as amended.
32.1	Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on our behalf by the undersigned thereunto duly authorized.

	NORANDA ALUMINUM HOLDING CORPORATION
Date: November 13, 2009	/s/ Robert B. Mahoney
	Robert B. Mahoney
	Chief Financial Officer

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EX-10.1

Exhibit 10.1

SECOND AMENDED AND RESTATED
NORANDA ALUMINUM HOLDING CORPORATION
2007 LONG-TERM INCENTIVE PLAN

ARTICLE I

PURPOSE OF THE PLAN

The purpose of the NORANDA ALUMINUM HOLDING CORPORATION SECOND AMENDED AND RESTATED 2007 LONG-TERM INCENTIVE PLAN (the “Plan”) is (i) to further the growth and success of Noranda Aluminum Holding Corporation, a Delaware corporation (the “Company”), and its Subsidiaries (as hereinafter defined) by enabling directors and employees of and, consultants or Investor Director Providers (as hereinafter defined) to, the Company or any of its Subsidiaries to acquire Shares (as hereinafter defined), thereby increasing their personal interest in such growth and success, and (ii) to provide a means of rewarding outstanding performance by such persons to the Company and/or its Subsidiaries. Awards granted under the Plan (the “Awards”) shall be nonqualified stock options (referred to herein as “Options” or “NSOs”), rights to purchase Shares, restricted stock (referred to herein as “Restricted Stock”), restricted stock units (referred to herein as “Restricted Stock Units”) and other awards settleable in, or based upon, Common Stock (as hereinafter defined) (“Other Stock-Based Awards”).

ARTICLE II

DEFINITIONS

As used in the Plan, the following terms shall have the meanings set forth below:

“Adoption Agreement” means an agreement between the Company and a holder of Shares, pursuant to which such holder agrees to become a party to the Securityholders Agreement, in the form attached as Exhibit A thereto.

“Affiliate” means with respect to any Person, any other Person that, directly or indirectly through one or more intermediaries controls, is controlled by, or is under common control with, such Person and/or one or more Affiliates thereof. As used in this definition and the definition of “Change in Control”, the term “control,” including the correlative terms “controlling,” “controlled by” and “under common control with,” means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies (whether through the ownership of securities or any partnership or other ownership interests, by contract or otherwise) of a Person. The term “Affiliate” shall not include at any time any portfolio companies of Apollo Management VI, L.P. or Noranda Holdings, LP or any of their respective Affiliates, other than the Company and its Subsidiaries.

“Award” has the meaning set forth in Article I hereof.

“Award Agreement” means any writing setting forth the terms of an Award that has been duly authorized and approved by the Board or the Committee.

“Board” means the Board of Directors of the Company.

“Capital Stock” means any and all shares of, interests and participations in, and other equivalents (however designated) of stock, including without limitation all Common Stock.

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“Cause” means, with respect to a Termination of Relationship: (i) if such Participant is at the time of a Termination of Relationship a party to an Award Agreement which was entered into under this Plan and defines such term, the meaning given in the Award Agreement; and (ii) otherwise if such Participant is at the time of a Termination of Relationship a party to an employment, consulting or similar agreement with the Company or any of its Subsidiaries which defines such term, the meaning given in such agreement.

“Change in Control” means (i) the acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (other than the Sponsor, a Sponsor-controlled entity, or an Affiliate of the Company immediately prior to such acquisition) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of more than 50%, indirectly or directly, of the voting power of the Company (other than any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any of its Subsidiaries) or (ii) consummation of an amalgamation, a merger, consolidation, recapitalization or similar business combination transaction of the Company or any direct or indirect subsidiary thereof with any other entity (other than the Sponsor, a Sponsor-controlled entity, or an Affiliate of the Company immediately prior to such transaction) or a sale or other disposition of all or substantially all of the assets of the Company to any other person or entity (other than the Sponsor, a Sponsor-controlled entity, or an Affiliate of the Company immediately prior to such transaction), following which the voting securities of the Company that are outstanding immediately prior to such transaction cease to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity (or the person or entity that owns substantially all of the Company’s assets either directly or through one or more subsidiaries) or any parent or other affiliate thereof) at least 50% of the combined voting power of the securities of the Company or, if the Company is not the surviving entity, such surviving entity (or the person or entity that owns substantially all of the Company’s assets either directly or through one or more subsidiaries) or any parent or other affiliate thereof, outstanding immediately after such transaction.

“Closing Date” shall have the meaning ascribed thereto in the Stock Acquisition Agreement, dated as of April 10, 2007, by and among Noranda Finance LLC, Noranda Aluminum Acquisition Corporation (formerly named Music City Acquisition Corporation), a Delaware corporation and Xstrata (Schweiz) A.G.

“Code” means the Internal Revenue Code of 1986, as amended.

“Committee” means the Compensation Committee of the Board or such other committee appointed by the Board to administer the Plan.

“Common Stock” means the common stock of the Company, par value $0.01 per share.

“Company” has the meaning set forth in Article I hereof.

“Corporate Transaction” has the meaning set forth in Section 10.1 hereof.

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“Disability” means, with respect to each Participant, unless otherwise defined in such Participant’s Award Agreement, that the Participant (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident, disability or health plan covering employees of the Company.

“Effective Date” means the date the Plan is adopted by the Board.

“Exchange Act” means the Securities Exchange Act of 1934, as amended.

“Fair Market Value” means, on the Closing Date, the price the Investor pays to acquire the Common Stock after taking into account any additional capital contributions and as of any subsequent, specified date, the closing price of the Common Stock on any national securities exchange or any national market system (including, but not limited to, The NASDAQ National Market) on that date, or if no prices are reported on that date, on the last preceding date on which such prices of the Common Stock are so reported. If the Common Stock is not then listed on any national securities exchange but is traded over the counter at the time determination of its Fair Market Value is required to be made, its Fair Market Value shall be deemed to be equal to the average between the reported high and low sales prices of Common Stock on the most recent date on which Common Stock was publicly traded. If the Common Stock is not publicly traded at the time a determination of its Fair Market Value is made, the Board shall reasonably determine its Fair Market Value in good faith as it deems appropriate (such determination will be made in the manner that satisfies Section 409A of the Code and in good faith, and may be based on the advice of an independent investment banker or appraiser recognized to be an expert in making such valuations, but will not take into account any reduction in value of the Common Stock because the Common Stock (x) represents a minority position; (y) is subject to restrictions on transfer and resale; or (z) lacks liquidity).

“Good Reason” means with respect to a Termination of Relationship: (i) if such Participant is at the time of a Termination of Relationship a party to an Award Agreement which was entered into under this Plan and defines such term, the meaning given in the Award Agreement; and (ii) otherwise if such Participant is at the time of a Termination of Relationship a party to an employment, consulting or similar agreement with the Company or any of its Subsidiaries which defines such term, the meaning given in such agreement.

“Investor” means, collectively, Apollo Investment Fund VI, L.P. and each of its Affiliates and any other investment fund or vehicle managed by Apollo Management, L.P. or any of its Affiliates (including any successors or assigns of any such manager).

“Investor Director Provider” means any investor in the Company that makes available for service as members of the Board certain individuals who provide services to, own equity interests in or are otherwise employed by such investor or any of its Affiliates.

“Investor Investment” means direct or indirect investments in Shares or other Capital Stock of the Company made by the Investor on or after the Closing Date, but excluding any purchases or repurchases of Shares on any securities exchange or any national market system after an initial Public Offering.

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“Investor IRR” means the pretax compounded annual internal rate of return realized by the Investor on the Investor Investment, based on the aggregate amount invested by the Investor for all Investor Investments and the aggregate amount of cash received by the Investor in respect of all Investor Investments, assuming all Investor Investments were purchased by one Person and were held continuously by such Person. The Investor IRR shall be determined based on the actual time of each Investor Investment and actual cash received by the Investor in respect of all Investor Investments and including, as a return on each Investor Investment, any cash dividends, cash distributions, cash sales or cash interest made by the Company or any Subsidiary in respect of such Investor Investment during such period, but excluding any other amounts payable that are not directly attributable to an Investor Investment, including, without limitation, any fees payable pursuant to (x) the Management Fee Agreement, dated as of May 18, 2007, by and among the Company, Apollo Management VI, L.P., and Apollo Alternative Assets, L.P. and (y) the Transaction Fee Agreement, dated as of May 18, 2007, by and among the Company, Apollo Management VI, L.P. and Apollo Alternative Assets, L.P.

“Notice” has the meaning set forth in Section 5.7 hereof.

“NSOs” has the meaning set forth in Article I hereof.

“Option” has the meaning set forth in Article I hereof.

“Option Price” has the meaning set forth in Section 5.4 hereof.

“Option Shares” has the meaning set forth in Section 5.7(b) hereof.

“Participant” has the meaning set forth in Article IV hereof.

“Person” shall be construed broadly and shall include, without limitation, an individual, a partnership, a corporation, an association, a joint stock company, a limited liability company, a trust, a joint venture, an unincorporated organization and a governmental entity or any department, agency or political subdivision thereof.

“Plan” has the meaning set forth in Article I hereof.

“Purchase Price” has the meaning set forth in Section 6.2 hereof.

“Qualified Public Offering” means an underwritten public offering of Common Stock by the Company pursuant to an effective Registration Statement filed by the Company with the U.S. Securities and Exchange Commission (other than (i) a registration relating solely to an employee benefit plan or employee stock plan, a dividend reinvestment plan, or a merger or a consolidation, (ii) a registration incidental to an issuance of securities under Rule 144A, (iii) a registration on Form S-4 or any successor form, or (iv) a registration on Form S-8 or any successor form) under the Securities Act, pursuant to which the aggregate offering price of the Common Stock sold in such offering is at least $200,000,000.

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“Registration Statement” means a registration statement filed by the Company with the U.S. Securities and Exchange Commission.

“Reserved Shares” means, at any time, an aggregate of 1,900,000 Shares, as the same may be adjusted at or prior to such time in accordance with Section 10.1.

“Restricted Stock” means an Award granted to a Participant pursuant to Article VII hereof.

“Restricted Stock Unit” means an Award granted to a Participant pursuant to Article VIII hereof.

“Securities Act” means the Securities Act of 1933, as amended.

“Securityholders Agreement” means the Securityholders Agreement, by and among the Company and certain of its securityholders, dated as of May 29, 2007, as it is amended, supplemented, restated or otherwise modified from time to time.

“Shares” means shares of Common Stock.

“Sponsor” means Apollo Management VI, L.P. and its Affiliates.

“Stock Award” means an Award of the right to purchase Shares under Article VI of the Plan.

“Subsidiary” means any corporation or other entity of which the Company owns securities or interests having a majority, directly or indirectly, of the ordinary voting power in electing the board of directors, managers, general partners or similar governing Persons thereof.

“Termination Date” means the tenth anniversary of the Effective Date.

“Termination of Relationship” means (i) if the Participant is an employee of the Company or any Subsidiary, the termination of the Participant’s employment with the Company and its Subsidiaries for any reason; (ii) if the Participant is a consultant to the Company or any Subsidiary, the termination of the Participant’s consulting relationship with the Company and its Subsidiaries for any reason; (iii) if the Participant is a director of the Company or any Subsidiary, the termination of the Participant’s service as a director of the Company or such Subsidiary for any reason; and (iv) if the Participant is an Investor Director Provider to the Company or any Subsidiary, the termination of such Investor Director Provider’s right to appoint at least one member of the Board; including, in the case of clauses (i), (ii), (iii) or (iv), as a result of such Subsidiary no longer being a Subsidiary of the Company because of a sale, divestiture or other disposition of such Subsidiary by the Company (whether such disposition is effected by the Company or another subsidiary thereof). Notwithstanding the foregoing, a Termination of Relationship shall not be deemed to have occurred if a Participant remains an employee, consultant or director of the Company or any Subsidiary. In the event that an Award hereunder is intended to be “deferred compensation” compliant with to Section 409A of the Code, the Committee may modify the definition of “Termination of Relationship” to facilitate such compliance.

“Vested Options” means Options that have vested in accordance with the applicable Award Agreement.

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ARTICLE III

ADMINISTRATION OF THE PLAN; SHARES SUBJECT TO THE PLAN

3.1 Committee.

The Plan shall be administered by the Board or the Committee. The term “Committee” shall, for all purposes of the Plan, be deemed to refer to the Board if the Board is administering the Plan.

3.2 Procedures.

The Committee shall adopt such rules and regulations as it shall deem appropriate concerning the holding of meetings and the administration of the Plan. The entire Committee shall constitute a quorum and the actions of the entire Committee present at a meeting, or actions approved in writing by the entire Committee, shall be the actions of the Committee.

3.3 Interpretation; Powers of Committee.

Except as may otherwise be expressly reserved to the Board as provided herein, and with respect to any Award, except as may otherwise be provided in the Award Agreement evidencing such Award or an employment or consulting agreement between the Participant and Company, the Committee shall have all powers with respect to the administration of the Plan, including the authority to:

(a) determine eligibility and the particular persons who will receive Awards;

(b) grant Awards to eligible persons, determine the price and number of securities to be offered or awarded to any of such persons, determine the other specific terms and conditions of Awards consistent with the express limits of the Plan, establish the installments (if any) in which such Awards will become exercisable or will vest and the respective consequences thereof (or determine that no delayed exercisability or vesting is required), and establish the events of termination or reversion of such Awards;

(c) approve the forms of Award Agreements, which need not be identical either as to type of Award or among Participants;

(d) construe and interpret the provisions of the Plan and any Award Agreement or other agreement defining the rights and obligations of the Company and Participants under the Plan, make factual determinations with respect to the administration of the Plan, further define the terms used in the Plan, and prescribe, amend and rescind rules and regulations relating to the administration of the Plan;

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(e) cancel, modify, or waive the Company’s rights with respect to, or modify, discontinue, suspend, or terminate any or all outstanding Awards held by Participants, subject to any required consent under Article XIII;

(f) accelerate or extend the exercisability or extend the term of any or all outstanding Awards, subject to any consent required under Article XIII; and

(g) make all other determinations and take such other action as contemplated by this Plan or as may be necessary or advisable for the administration of this Plan and the effectuation of its purposes.

All decisions of the Board or the Committee, as the case may be, shall be reasonable and made in good faith and shall be conclusive and binding on all Participants in the Plan.

3.4 Compliance with Code Section 162(m).

In the event the Company becomes a “publicly-held corporation” as defined in Section 162(m)(2) of the Code, the Company may establish a committee of outside directors meeting the requirements of Section 162(m)(2) of the Code to (i) approve Awards that might reasonably be anticipated to result in the payment of employee remuneration that would otherwise exceed the limit on employee remuneration deductible for income tax purposes by the Company pursuant to Section 162(m) of the Code; and (ii) administer the Plan. In such event, the powers reserved to the Committee in the Plan shall be exercised by such compensation committee. In addition, Awards under the Plan may be granted upon satisfaction of the conditions to such grants provided pursuant to Section 162(m) of the Code and any Treasury Regulations promulgated thereunder.

3.5 Number of Shares.

Subject to the provisions of Article X (relating to adjustments upon changes in capital structure and other corporate transactions), the aggregate number of Shares with respect to which Awards may be granted under the Plan shall not exceed the Reserved Shares. Shares that are subject to or underlie Options granted under the Plan that expire or for any reason are canceled or terminated without having been exercised (or Shares subject to or underlying the unexercised portion of any Options, in the case of Options that were partially exercised at the time of their expiration, cancellation or termination), as well as Shares that are subject to Stock Awards made under the Plan that are not actually purchased pursuant to such Stock Awards and Shares that are subject to Restricted Stock or Restricted Stock Units that are forfeited, will again, except to the extent prohibited by law or applicable listing or regulatory requirements, be available for subsequent Award grants under the Plan.

3.6 Reservation of Shares.

The number of Shares reserved for issuance with respect to Awards granted under the Plan shall at no time be less than the maximum number of Shares which may be issued or delivered at any time pursuant to outstanding Awards.

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ARTICLE IV

ELIGIBILITY

Awards may be granted under the Plan only to persons who are employees or directors of, or consultants or Investor Director Providers to, the Company or any of its Subsidiaries on the date of the grant. Each such person to whom an Award is granted under the Plan is referred to herein as a “Participant”.

ARTICLE V

STOCK OPTIONS

5.1 General.

Options may be granted under the Plan at any time and from time to time on or prior to the Termination Date. Each Option granted under the Plan shall be designated as an NSO and shall be subject to the terms and conditions applicable to NSOs set forth in the Plan. Each Option shall be evidenced by an Award Agreement incorporating the terms and provisions of the Plan that shall be executed by the Company and the Participant. The Award Agreement shall specify the number of Shares for which such Option shall be exercisable, the Option Price (as defined in Section 5.4 below) for such Shares and the other terms and conditions of the Option.

5.2 Vesting.

The Committee, in its sole discretion, shall determine and set forth in the Award Agreement whether and to what extent any Options are subject to vesting based upon the Participant’s continued service to, or the Participant’s performance of duties for, the Company and its Subsidiaries, or upon any other basis.

5.3 Date of Grant.

Except as may be otherwise provided in an Award Agreement, the date of grant of an Option under this Plan shall be the date as of which the Committee approves the grant.

5.4 Option Price.

The Option Price shall be determined by the Committee and set forth in the Award Agreement. In no event, however, may the Committee determine an Option Price that is less than the Fair Market Value of the Share on the date of grant.

5.5 Automatic Termination of Options.

Each Option granted under the Plan, to the extent not previously exercised, shall automatically terminate and shall become null and void and be of no further force or effect upon such date or dates as are set forth in the applicable Award Agreement, consistent with the terms of the Plan.

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5.6 Payment of Option Price.

The aggregate Option Price shall be paid in cash (by wire transfer of immediately available funds to a bank account of the Company designated by the Committee or by delivery of a personal or certified check payable to the Company); provided that the Committee may, in its sole discretion, specify one or more of the following other forms of payment which may be used by a Participant (but only to the extent permitted by applicable law) upon exercise of his Option:

(a) by surrender of shares of Common Stock (by delivery of such shares or by attestation) with a Fair Market Value equal to the Option Price which were obtained by the Participant in the public market (but, subject in any case, to the applicable limitations of Rule 16b-3 under the Exchange Act);

(b) to the extent permitted by applicable law, if the Common Stock is a class of securities then listed or admitted to trading on any national securities exchange or traded on any national market system (including, but not limited to, The Nasdaq National Market), in compliance with any cashless exercise program authorized by the Board or the Committee for use in connection with the Plan at the time of such exercise (but, subject in any case, to the applicable limitations of Rule 16b-3 under the Exchange Act); or

(c) a combination of the methods set forth in this Section 5.6.

5.7 Notice of Exercise.

A Participant (or other person, as provided in Section 11.2) may exercise an Option (for the Shares represented thereby) granted under the Plan in whole or in part (but for the purchase of whole Shares only), as provided in the Award Agreement evidencing his Option, by delivering a written notice (the “Notice”) to the Secretary of the Company. The Notice shall state:

(a) that the Participant elects to exercise the Option;

(b) the number of Shares with respect to which the Option is being exercised (the “Option Shares”);

(c) the method of payment for the Option Shares (which method must be available to the Participant under the terms of his Award Agreement);

(d) the date upon which the Participant desires to consummate the purchase of the Option Shares (which date must be prior to the termination of such Option); and

(e) any additional provisions consistent with the Plan as the Committee may from time to time require.

The exercise date of an Option shall be the date on which the Company receives the Notice from the Participant. Such Notice shall also contain, to the extent such Participant is not then a party to the Securityholders Agreement (and the Securityholders Agreement has not been terminated prior to such date), an Adoption Agreement, in form and substance satisfactory to the Board pursuant to which the Participant agrees to become a party to the Securityholders Agreement.

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5.8 Issuance of Certificates.

The Company shall issue stock certificates in the name of the Participant (or other person exercising the applicable Option in accordance with the provisions of Section 11.2), representing the Shares purchased upon exercise of the Option as soon as practicable after receipt of the Notice and payment of the aggregate Option Price for such Shares; provided that the Company, in its sole discretion, may elect to not issue any fractional Shares upon the exercise of an Option (determining the fractional Shares after aggregating all Shares issuable to a single holder as a result of an exercise of an Option for more than one Share) and, in lieu of issuing such fractional Shares, shall pay the Participant the Fair Market Value thereof as determined by the Board in good faith. Neither the Participant nor any person exercising an Option in accordance with the provisions of Section 11.2 shall have any privileges as a stockholder of the Company with respect to any Shares of stock issuable upon exercise of an Option granted under the Plan until the date of issuance of stock certificates representing such Shares pursuant to this Section 5.8.

ARTICLE VI

STOCK AWARDS

6.1 General.

Stock Awards may be granted under the Plan at any time and from time to time on or prior to the Termination Date. Each Stock Award shall be evidenced by an Award Agreement that shall be executed by the Company and the Participant. The Award Agreement shall specify the terms and conditions of the Stock Award, including without limitation the number of Shares covered by the Stock Award, the Purchase Price (as defined in Section 6.2 below), if any, for such Shares and the deadline for the purchase of such Shares.

6.2 Purchase Price; Payment.

The price (the “Purchase Price”), if any, at which each Share covered by the Stock Award may be purchased upon exercise of a Stock Award shall be determined by the Committee and set forth in the applicable Award Agreement. The Company will not be obligated to issue certificates evidencing Shares purchased under this Article VI unless and until it receives full payment of the aggregate Purchase Price therefor and all other conditions to the purchase, as reasonably determined by the Committee, have been satisfied. The Purchase Price of any shares subject to a Stock Award must be paid in full at the time of the purchase.

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ARTICLE VII

RESTRICTED STOCK

7.1 General.

Shares of Restricted Stock may be awarded either alone or in addition to other Awards granted under the Plan. The Committee shall determine the employees, consultants, directors and Investor Director Providers to whom and the time or times at which grants of Restricted Stock will be awarded, the number of Shares to be awarded to any Participant, the conditions for vesting, the time or times within which such Awards may be subject to forfeiture and any other terms and conditions of the Awards, in addition to those contained in Section 7.3.

The Committee may, prior to grant, condition the vesting of Restricted Stock upon continued service of the Participant. The provisions of Restricted Stock Awards need not be the same with respect to each recipient.

7.2 Awards and Certificates.

Shares of Restricted Stock shall be evidenced in such manner as the Committee may deem appropriate, including book-entry registration or issuance of one or more stock certificates. Any certificate issued in respect of Shares of Restricted Stock shall be registered in the name of such Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award.

The Committee may require that the certificates evidencing such Shares be held in custody by the Company until the restrictions thereon shall have lapsed and that, as a condition of any Award of Restricted Stock, the Participant shall have delivered a stock power, endorsed in blank, relating to the Common Stock covered by such Award.

7.3 Terms and Conditions.

Shares of Restricted Stock shall be subject to the following terms and conditions:

(a) Subject to the provisions of the Plan and the Award Agreement referred to in Section 7.3(d), during the restricted period, the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Shares of Restricted Stock. Within these limits, the Committee may provide for the lapse of restrictions based upon period of service in installments or otherwise and may accelerate or waive, in whole or in part, restrictions based upon period of service.

(b) Except as provided in this paragraph (b) and paragraph (a), above, and the Award Agreement, the Participant shall have, with respect to the shares of Restricted Stock, all of the rights of a stockholder of the Company holding the class or series of Shares that is the subject of the Restricted Stock, including, if applicable, the right to vote the Shares and the right to receive any cash dividends. Dividends payable in Shares and other non-cash dividends and distributions and extraordinary cash dividends shall be held subject to the vesting of the underlying Restricted Stock, unless the Committee determines otherwise in the applicable Award Agreement or makes an adjustment or substitution to the Restricted Stock pursuant to Section 10.1 in connection with such dividend or distribution.

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(c) If and when any applicable Restriction Period expires without a prior forfeiture of the Restricted Stock, unlegended certificates for such Shares shall be delivered to the Participant upon surrender of the legended certificates.

(d) Each Award of Restricted Stock shall be confirmed by, and be subject to, the terms of an Award Agreement.

ARTICLE VIII

RESTRICTED STOCK UNITS

8.1 Nature of Award.

Restricted Stock Units are Awards denominated in Shares that will be settled, subject to the terms and conditions of the Restricted Stock Units, either by delivery of Shares to the Participant or by the payment of cash based upon the Fair Market Value of a specified number of Shares. Restricted Stock Units may be awarded either alone or in addition to other Awards granted under the Plan. The Committee shall determine the employees, consultants, directors and Investor Director Providers to whom and the time or times at which grants of Restricted Stock Units will be awarded, the number of Shares to be awarded to any Participant, the conditions for vesting, the time or times within which such Awards may be subject to forfeiture and any other terms and conditions of the Awards, in addition to those contained in Section 8.2.

8.2 Terms and Conditions.

The Committee may, in connection with the grant of Restricted Stock Units, condition the vesting thereof upon the continued service of the Participant. Each Award of Restricted Stock Units shall be confirmed by, and be subject to, the terms of an Award Agreement. The applicable Award Agreement shall specify the consequences for the Restricted Stock Units of the Participant’s Termination of Relationship. An Award of Restricted Stock Units shall be settled as and when the Restricted Stock Units vest or at a later time specified by the Committee or in accordance with an election of the Participant, if the Committee so permits. Restricted Stock Units may not be sold, assigned, transferred, pledged or otherwise encumbered until they are settled, except to the extent provided in the applicable Award Agreement in the event of the Participant’s death. The Award Agreement for Restricted Stock Units shall specify whether, to what extent and on what terms and conditions the applicable Participant shall be entitled to receive current or deferred payments of cash, Common Stock or other property corresponding to the dividends payable on the Common Stock (subject to Section 21.3 below).

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ARTICLE IX

OTHER STOCK-BASED AWARDS

Other Awards of Common Stock and other Awards that are valued in whole or in part by reference to, or are otherwise based upon, Common Stock, including (without limitation) dividend equivalents and convertible debentures, may be granted under the Plan.

ARTICLE X

ADJUSTMENTS

10.1 Changes in Capital Structure.

In the event of an extraordinary stock dividend, stock split, reverse stock split, share combination, or recapitalization or similar event affecting the capital structure of the Company, an extraordinary cash dividend, separation, spinoff or a reorganization (each, an “Adjustment Event”), the Committee or the Board shall make such substitutions or adjustments as it deems appropriate and equitable to: (A) the aggregate number and kind of Shares or other securities reserved for issuance and delivery under the Plan, (B) the number and kind of Shares or other securities subject to outstanding Awards; (C) performance metrics and targets underlying outstanding Awards; and (D) the Option Price of outstanding Options. In the event of a merger, consolidation, acquisition of property or shares, stock rights offering, liquidation, disaffiliation, or similar event affecting the Company or any of its Subsidiaries (each, a “Corporate Transaction”), the Committee or the Board may in its discretion make such substitutions or adjustments as it deems appropriate and equitable to: (A) the aggregate number and kind of Shares or other securities reserved for issuance and delivery under the Plan, (B) the number and kind of Shares or other securities subject to outstanding Awards; (C) performance metrics and targets underlying outstanding Awards; and (D) the Option Price of outstanding Options. In the case of Corporate Transactions, such adjustments may include, without limitation, (1) the cancellation of outstanding Awards in exchange for payments of cash, property or a combination thereof having an aggregate value equal to the value of such Awards, as determined by the Committee or the Board in its sole discretion (it being understood that in the case of a Corporate Transaction with respect to which shareholders of Common Stock receive consideration other than publicly traded equity securities of the ultimate surviving entity, any such determination by the Committee that the value of an Option shall for this purpose be deemed to equal the excess, if any, of the value of the consideration being paid for each Share pursuant to such Corporate Transaction over the Option Price of such Option shall conclusively be deemed valid); and (2) the substitution of other property (including, without limitation, cash or other securities of the Company and securities of entities other than the Company) for the Shares subject to outstanding Awards.

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10.2 Special Rules.

The following rules shall apply in connection with Section 10.1 above:

(a) No adjustment shall be made for non-extraordinary cash dividends or the issuance to stockholders of rights to subscribe for additional Shares or other securities (except in connection with a Corporate Transaction); and

(b) Any adjustments referred to in Section 10.1 shall be made by the Committee or the Board in its discretion and shall, absent manifest error, be conclusive and binding on all Persons holding any Awards granted under the Plan.

ARTICLE XI

RESTRICTIONS ON AWARDS

11.1 Compliance With Securities Laws.

No Awards shall be granted under the Plan, and no Shares shall be issued and delivered pursuant to Awards granted under the Plan, unless and until the Company and/or the Participant shall have complied with all applicable Federal, state or foreign registration, listing and/or qualification requirements and all other requirements of law or of any regulatory agencies having jurisdiction.

The Committee in its discretion may, as a condition to the delivery of any Shares pursuant to any Award granted under the Plan, require the applicable Participant (i) to represent in writing that the Shares received pursuant to such Award are being acquired for investment and not with a view to distribution and (ii) to make such other representations and warranties as are deemed reasonably appropriate by the Committee. Stock certificates representing Shares acquired under the Plan that have not been registered under the Securities Act shall, if required by the Committee, bear such legends as may be required by the Securityholders Agreement and the applicable Award Agreement.

11.2 Nonassignability of Awards.

No Award granted under this Plan shall be assignable or otherwise transferable by the Participant, except by designation of a beneficiary, by will or by the laws of descent and distribution. An Award may be exercised during the lifetime of the Participant only by the Participant, unless the Participant becomes subject to a Disability. If a Participant dies or becomes subject to a Disability, his Options shall thereafter be exercisable, during the period specified in the applicable Award Agreement (as the case may be), by his designated beneficiary or if no beneficiary has been designated in writing, by his executors or administrators to the full extent (but only to such extent) to which such Options were exercisable by the Participant at the time of (and after giving effect to any vesting that may occur in connection with) his death or Disability. Before granting any Awards or issuing any Shares under the Plan to any person who is not already a party to the Securityholders Agreement, the Company shall obtain an executed Adoption Agreement from such person, unless a Public Offering shall have already occurred prior to such grant or issuance.

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11.3 No Right to an Award or Grant.

Neither the adoption of the Plan nor any action of the Board or the Committee shall be deemed to give an employee, director, consultant or Investor Director Provider any right to be granted an Option to purchase Common Stock, receive an Award under the Plan except as may be evidenced by an Award Agreement duly executed on behalf of the Company, and then only to the extent of and on the terms and conditions expressly set forth in the Award Agreement. The Plan will be unfunded. The Company will not be required to establish any special or separate fund or to make any other segregation of funds or assets to assure the payment of any Award.

11.4 No Evidence of Employment or Service.

Nothing contained in the Plan or in any Award Agreement shall confer upon any Participant any right with respect to the continuation of his employment by or service with the Company or any of its Subsidiaries or interfere in any way with the right of the Company or any such Subsidiary, in its sole discretion (subject to the terms of any separate agreement to the contrary), at any time to terminate such employment or service or to increase or decrease the compensation of the Participant from the rate in existence at the time of the grant of an Award.

11.5 No Restriction of Corporate Action.

Nothing contained in the Plan or in any Award Agreement will be construed to prevent the Company or any Subsidiary or Affiliate of the Company from taking any corporate action which is deemed by the Company or by its Subsidiaries and Affiliates to be appropriate or in its best interest, whether such action would have an adverse effect on the Plan or any Award made under the Plan. No Participant or beneficiary of a Participant will have any claim against the Company or any Affiliate as a result of any corporate action.

ARTICLE XII

TERM OF THE PLAN

This Plan shall become effective on the Effective Date and shall terminate on the Termination Date. No Awards may be granted after the Termination Date. Any Award outstanding as of the Termination Date shall remain in effect and the terms of the Plan will apply until such Award terminates as provided in the Plan or the applicable Award Agreement.

ARTICLE XIII

AMENDMENT OF PLAN

The Plan may be modified or amended in any respect, and at any time or from time to time, by the Board or by the Committee with the prior approval of the Board. Notwithstanding the foregoing, the Plan may not be modified or amended as it pertains to any existing Award Agreement without the consent of an applicable Participant where such modification or amendment would materially impair the rights of such Participant. In addition, no such amendment shall be made without the approval of the Company’s stockholders to the extent such approval is required by applicable law or regulation or the listing standards of the securities exchange, which is, at the applicable time, the principal market for the Common Stock.

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ARTICLE XIV

CAPTIONS

The use of captions in the Plan is for convenience. The captions are not intended to provide substantive rights.

ARTICLE XV

WITHHOLDING TAXES

Upon any exercise or payment of any Award, the Company shall have the right at its option and in its sole discretion to (i) require the Participant to pay or provide for payment of the amount of any taxes which the Company or any Subsidiary may be required to withhold with respect to such exercise or payment; (ii) deduct from any amount payable to the Participant in cash or securities in respect of the Award the amount of any taxes which the Company may be required to withhold with respect to such exercise or payment; or (iii) reduce the number of Shares to be delivered to the Participant in connection with such exercise or payment by the appropriate number of Shares, valued at their then Fair Market Value, to satisfy the minimum withholding obligation. In no event will the value of Shares withheld under clause (iii) above exceed the minimum amount of required withholding under applicable law.

ARTICLE XVI

SECTION 83(B) ELECTION

To the extent permitted by the Board or Committee, each Participant of a Stock Award or Restricted Stock may, but is not obligated to, make an election under Section 83(b) of the Code to be taxed currently with respect to any Award issued under this Plan. The election permitted under this Article XVI shall comply in all respects with and shall be made within the period of time prescribed under Section 83(b) of the Code. Each Participant shall prepare such forms as are required to make an election under Section 83(b) of the Code. The Company shall have no liability to any grantee who fails to make a permitted Section 83(b) election in a timely manner.

ARTICLE XVII

CODE SECTION 409A COMPLIANCE

If any distribution or settlement of an Award pursuant to the terms of this Plan or an Award Agreement would subject a Participant to tax under Section 409A of the Code, the Company may modify the Plan or applicable Award Agreement in the least restrictive manner necessary in order to comply with the provisions of Section 409A, other applicable provision(s) of the Code and/or any rules, regulations or other regulatory guidance issued under such statutory provisions and, in each case, without any material diminution in the value of the payments to an affected Participant.

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ARTICLE XVIII

SECTION 16 COMPLIANCE

In the event that the Company becomes subject to Section 16 of the Exchange Act, it is intended that the Plan and any Award made to a Participant subject to Section 16 of the Exchange Act will meet all of the requirements of Rule 16b-3. Accordingly, unless otherwise provided by the Committee, if any provisions of the Plan or any Award would disqualify the Plan or the Award, or would otherwise not comply with Rule 16b-3, such provision or Award will be construed or deemed amended to conform to Rule 16b-3.

ARTICLE XIX

OTHER PROVISIONS

Each Award granted under the Plan may contain such other terms and conditions not inconsistent with the Plan as may be determined by the Committee, in its sole discretion.

ARTICLE XX

NUMBER AND GENDER

With respect to words used in the Plan, the singular form shall include the plural form, the masculine gender shall include the feminine gender, and vice versa, as the context requires.

ARTICLE XXI

MISCELLANEOUS

21.1 Subsidiary Employees.

In the case of a grant of an Award to an employee or consultant of any Subsidiary of the Company, the Company may, if the Committee so directs, issue or transfer the shares of Common Stock, if any, covered by the Award to the Subsidiary, for such lawful consideration as the Committee may specify, upon the condition or understanding that the Subsidiary will transfer the shares of Common Stock to the employee or consultant in accordance with the terms of the Award specified by the Committee pursuant to the provisions of the Plan. All shares of Common Stock underlying Awards that are forfeited or canceled should revert to the Company.

21.2 Foreign Employees and Foreign Law Considerations.

The Committee may grant Awards to individuals who are eligible to participate in the plan who are foreign nationals, who are located outside the United States or who are not compensated from a payroll maintained in the United States, or who are otherwise subject to (or could cause the Company to be subject to) legal or regulatory provisions of countries or jurisdictions outside the United States, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan, and, in furtherance of such purposes, the Committee may make such modifications, amendments, procedures, or subplans as may be necessary or advisable to comply with such legal or regulatory provisions.

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21.3 Limitation on Dividend Reinvestment and Dividend Equivalents.

Reinvestment of dividends in additional Restricted Stock at the time of any dividend payment, and the payment of Shares with respect to dividends to Participants holding Awards of Restricted Stock Units, shall only be permissible if sufficient Shares are available under Section 3.5 for such reinvestment (taking into account then outstanding Options and other Awards).

ARTICLE XXII

GOVERNING LAW

All questions concerning the construction, interpretation and validity of the Plan and the instruments evidencing the Awards granted hereunder shall be governed by and construed and enforced in accordance with the domestic laws of the State of Delaware, without giving effect to any choice or conflict of law provision or rule (whether of the State of Delaware or any other jurisdiction) that would cause the application of the laws of any jurisdiction other than the State of Delaware. In furtherance of the foregoing, the internal law of the State of Delaware will control the interpretation and construction of this Plan, even if under such jurisdiction’s choice of law or conflict of law analysis, the substantive law of some other jurisdiction would ordinarily apply.

* * * * * *

As adopted by the Board of Directors of NORANDA ALUMINUM HOLDING CORPORATION on May 29, 2007, as amended and restated on October 23, 2007 and as further amended and restated on November 12, 2009.

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EX-10.2

Exhibit 10.2

AMENDMENT TO LAYLE K. SMITH’S TERM SHEET DATED MARCH 3, 2008

This Amendment (the “Amendment”) to the Management Equity Investment and Incentive Term Sheet (the “Termsheet”), dated as of March 3, 2008, between Noranda Aluminum Holding Corporation (the “Parent”), Noranda Aluminum, Inc. (the “Company”) and Layle K. Smith (the “Executive”), is made and entered into as of the 12^th day of November, 2009.

1. The reference to “the 18-month anniversary of the Effective Date” in the definition of “Early CIC” in the section of the Termsheet entitled “Treatment of Purchased Equity and Parent Options Upon a Change in Control” is hereby replaced with the following words: “the sixty-month anniversary of the Effective Date”.

2. All references to “Tranche A Options” in the section of the Termsheet entitled “Treatment of Purchased Equity and Parent Options Upon a Change in Control” are hereby deemed to refer to all of the Parent Options.

3. Except as expressly amended by this Amendment, all terms and conditions of the Termsheet remain in full force and effect and are unmodified hereby.

IN WITNESS WHEREOF, Executive has hereunto set Executive’s hand, and Parent and Company have caused these presents to be executed in its name on its behalf, all as of the day and year first above written.

EXECUTIVE
Layle K. Smith
NORANDA ALUMINUM HOLDING CORPORATION
By
	Name:
	Title:
NORANDA ALUMINUM, INC.
By
	Name:
	Title:

EX-10.3

Exhibit 10.3

AMENDED AND RESTATED NON QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) dated as of November 12, 2009 (the “Amendment Date”), between NORANDA ALUMINUM HOLDING CORPORATION, a Delaware corporation (the “Company”), and the Optionee set forth on the signature page to this Agreement (the “Optionee”).

WHEREAS, on February 22, 2008 the Company and the Executive entered into a definitive term sheet (the “Term Sheet”) with respect to the Executive’s employment as the Chief Executive Officer of the Company and of Noranda Aluminum, Inc. (“OpCo.”) and certain related terms;

WHEREAS, in connection with entry into the Term Sheet, on March 3, 2008 (the “Grant Date”), the Company and the Optionee entered into an option agreement (the “Original Option Agreement”) pursuant to which the Company, acting through the Committee with the consent of the Company’s Board of Directors (the “Board”) granted to the Optionee, options (the “Options”) under the Amended and Restated Noranda Aluminum Holding Corporation 2007 Long-Term Incentive Plan (the “Plan”) to purchase a number of shares of the Company’s common stock (“Shares”) on the terms and subject to the conditions set forth in this Agreement and the Plan; and

WHEREAS, the Committee has determined that such Options no longer serve their intended retentive and incentive purposes; and

WHEREAS, the Committee believes it is in the best interests of the Company to amend and restate the terms of the Options and the Original Option Agreement to reduce the exercise prices thereof and to modify the vesting terms thereof; and

WHEREAS, in connection with the Optionee’s entry into the Original Option Agreement, the Optionee entered into a subscription agreement with the Company on March 3, 2008(the “Subscription Agreement”), pursuant to which the Optionee purchased Shares (as defined in the Subscription Agreement), and in connection therewith, entered into an adoption agreement, pursuant to which the Optionee become a party to the Amended and Restated Securityholders Agreement relating to the Company, by and among the Company and certain of its securityholders, dated as of October 23, 2007, as the same may be amended from time to time (the “Securityholders Agreement”);

WHEREAS, the Company is as of the date hereof granting for consideration to the Optionee the Shares pursuant to the Subscription Agreement, dated as of the date hereof, between the Company and the Optionee (the “New Subscription Agreement”);

WHEREAS, future securities in the Company (including those being acquired pursuant to this Agreement) owned by the Optionee shall be subject to the terms of the Securityholders Agreement; and

WHEREAS, the parties wish to enter into this Amended and Restated Option Agreement in order to effect the foregoing.

NOW, THEREFORE, in consideration of the promises and of the mutual agreements contained in this Agreement, the parties hereto hereby agree as follows:

Section 1. The Plan. The terms and provisions of the Plan are hereby incorporated into this Agreement as if set forth herein in their entirety. In the event of a conflict between any provision of this Agreement and the Plan, the provisions of this Agreement shall control. A copy of the Plan may be obtained from the Company by the Optionee upon request. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Plan or the Securityholders Agreement, as the case may be.

Section 2. Option; Option Price. Effective on the Grant Date, on the terms and subject to the conditions of the Plan and this Agreement, the Company granted to the Optionee the option (the “Option”) to purchase Shares pursuant to Tranche A options (“Tranche A Options”) and Tranche B options (“Tranche B Options”). Effective on the Amendment Date, on the terms and subject to the conditions of the Plan and this Agreement, the Company hereby amends and restates the terms of the Option to cover that number of Shares at the price per Share (the “Option Price”) set forth on the signature page hereto. To the extent permitted by the Committee, payment of the Option Price may be made in any manner specified by Section 5.6 of the Plan. The Option is not intended to qualify for federal income tax purposes as an “incentive stock option” within the meaning of Section 422 of the Code. The amendment and restatement of the Options pursuant to this Agreement shall be and become effective upon the delivery of an executed counterpart of this Agreement to the Company by Optionee. Notwithstanding the foregoing or any other provision of this Agreement, (x) in the event that the Optionee does not purchase the Shares as provided for in the New Subscription Agreement within 14 days of the Amendment Date, all Options, whether or not vested, shall be immediately forfeited and (y) no Option, whether or not vested, shall be exercisable prior to such purchase.

Section 3. Term. The term of the Option (the “Option Term”) shall commence on the Grant Date and expire on the tenth anniversary of the Grant Date, unless the Option shall have sooner been terminated in accordance with the terms of the Plan (including, without limitation, Article V of the Plan) or this Agreement.

Section 4. Vesting. Subject to the Optionee’s not having a Termination of Relationship prior to the applicable vesting date and except as otherwise set forth in Section 7, the Options shall become non-forfeitable and exercisable (any Options that shall have become non-forfeitable and exercisable pursuant to Section 4, the “Vested Options”) according to the following provisions:

(a) Tranche A Options. Twenty-percent (20%) of the Tranche A Options shall become Vested Options on each of the first five anniversaries of the Grant Date.

(b) Tranche B Options. Fifteen-percent (15%) of the Tranche B Options shall become Vested Options on each of the first and second anniversaries of the Amendment Date, twenty-percent (20%) of the Tranche B Options shall become Vested Options on the third anniversary of the Amendment Date and twenty-five percent (25%) of the Tranche B Options shall become Vested Options on each of the fourth and fifth anniversaries of the Amendment Date.

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(c) Change in Control Acceleration. In the event of the consummation of a Change in Control of the Company on or prior to the 60-month anniversary of the Grant Date, each then-outstanding Option which has not theretofore become a Vested Option shall become a Vested Option. In the event of the consummation of a Change in Control of the Company after the 60-month anniversary of the Grant Date, each then-outstanding Option which has not theretofore become a Vested Option and which is scheduled to based on anniversaries of the Amendment Date will vest upon the earlier of (i) the Optionee’s continued employment with the Company for 18 months after such Change in Control or (ii) a Termination of Relationship for any reason other than for Cause (as defined in Section 22), within 18 months following the consummation of such Change in Control, provided that the Options shall otherwise continue to vest in accordance with the terms of Section 4(b). Except as otherwise provided herein, all unvested Options will immediately terminate upon a Termination of Relationship.

(d) Acceleration upon Certain Events. In the event of a Termination of Relationship as a result of the Optionee’s death or Disability, the Tranche A Options and Tranche B Options, in each case, composing the next applicable tranche of such Options which have not theretofore vested pursuant to Sections 4(a) and 4(b) above shall become Vested Options, and the remaining Options which are not Vested Options shall be forfeited. In the event of the consummation of a Change in Control, each Option which has not theretofore become a Vested Option and which is scheduled to vest on each of the remaining vesting dates based on anniversaries of the Grant Date or the Amendment Date, as the case may be, will vest upon the earlier of (i) the Optionee’s continued employment with the Company for 18 months after such Change in Control or (ii) a Termination of Relationship by the Company or its Subsidiaries without Cause (as defined in Section 22) or by the Optionee with Good Reason (as defined in Section 22), in each case within 18 months following the consummation of such Change in Control. In all cases involving the consummation of a Change in Control, Options shall otherwise continue to vest in accordance with the terms of Section 4(a) or Section 4(b), as applicable. Except as otherwise provided herein, all unvested Options will immediately terminate upon a Termination of Relationship.

Section 5. Restriction on Transfer/Securityholders Agreement. The Option may not be transferred, pledged, assigned, hypothecated or otherwise disposed of in any way by the Optionee, except (i) if permitted by the Board or the Committee, (ii) by will or the laws of descent and distribution or (iii) pursuant to beneficiary designation procedures approved by the Company. The Option shall not be subject to execution, attachment or similar process. Shares of Common Stock acquired pursuant to the exercise of Options hereunder will be subject to the Securityholders Agreement. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions of this Agreement or the Securityholders Agreement shall be null and void and without effect.

Section 6. Optionee’s Employment. Nothing in this Agreement or in the Option shall confer upon the Optionee any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or its Subsidiaries, as the case may be, in its sole discretion, to terminate the Optionee’s employment or to increase or decrease the Optionee’s compensation at any time.

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Section 7. Termination.

(a) The Option shall automatically terminate and shall become null and void, be unexercisable and be of no further force and effect upon the earliest of:

(i) the tenth anniversary of the Grant Date;

(ii) as follows in the case of a Termination of Relationship for death or Disability: (x) in the event the Shares are traded on any national securities exchange or any national market system (“Publicly Traded”), the 180^th day following the Termination of Relationship, (y) in the event the Shares are not Publicly Traded, but either Apollo or the Investor (each, as defined in the Term Sheet) communicates prior to the 150^th day following the Termination of Relationship an offer to repurchase, effective upon or shortly following the conclusion of the 180-day period following the Termination of Relationship, the Shares subject to the then-outstanding Options at Fair Market Value (a “Repurchase Offer”), the 180^th day following the Termination of Relationship and (z) in the event the Shares are not Publicly Traded and neither the Parent nor the Investor has made a Repurchase Offer, until the earlier of (1) the first date on which the Parent or the Investor offers to repurchase the Shares subject to the then-outstanding Options at Fair Market Value (a “Subsequent Repurchase Offer”) or (2) the tenth anniversary of the Grant Date;

(iii) as follows in the case of a Termination of Relationship that is neither for Cause nor due to death or Disability: (x) in the event the Shares are Publicly Traded, the 90^th day following the Termination of Relationship, (y) in the event the Shares are not Publicly Traded, but either Apollo or the Investor communicates prior to the 60^th day following the Termination of Relationship a Repurchase Offer effective upon or shortly following the conclusion of the 90-day period following the Termination of Relationship, the 90^th day following the Termination of Relationship and (z) in the event the Shares are not Publicly Traded and neither the Parent nor the Investor has made a Repurchase Offer, until the earlier of (1) the first date on which a Subsequent Repurchase Offer is made or (2) the tenth anniversary of the Grant Date; and

(iv) the day of the Termination of Relationship in the case of a Termination of Relationship with Cause.

(b) Except as otherwise provided in Section 4(a) of this Agreement, upon a Termination of Relationship for any reason, the unvested portion of the Option (i.e., that portion which does not constitute Vested Options) shall terminate on the date the Termination of Relationship occurs.

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Section 8. Securities Law Representations. The Optionee acknowledges that the Option and the Shares are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), based, in part, on either (i) reliance upon an exemption from registration under Securities and Exchange Commission Rule 701 promulgated under the Securities Act or (ii) the fact that the Optionee is an “accredited investor” (as defined under the Securities Act and the rules and regulations promulgated thereunder), and, in each of (i) and (ii) above, a comparable exemption from qualification under applicable state securities laws, as each may be amended from time to time. The Optionee, by executing this Agreement, hereby makes the following representations to the Company and acknowledges that the Company’s reliance on federal and state securities law exemptions from registration and qualification is predicated, in substantial part, upon the accuracy of these representations:

(a) The Optionee is an “accredited investor” within the meaning of Rule 501(a)(1), (2) or (3) of the Securities Act.

(b) The Optionee is acquiring the Option and, if and when he exercises the Option, will acquire the Shares solely for the Optionee’s own account, for investment purposes only, and not with a view to or an intent to sell, or to offer for resale in connection with any unregistered distribution, all or any portion of the Shares or Option within the meaning of the Securities Act and/or any applicable state securities laws.

(c) The Optionee acknowledges that he has not acquired the Option or the Shares as a result of any general solicitation or general advertising in the United States, including any meeting whose attendees have been invited by general solicitation or general advertising.

(d) The Optionee has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Option and the restrictions imposed on any Shares purchased upon exercise of the Option. The Optionee has been furnished with, and/or has access to, such information as he considers necessary or appropriate for deciding whether to exercise the Option and purchase the Shares. However, in evaluating the merits and risks of an investment in the Shares, the Optionee has and will rely only upon the advice of his own legal counsel, tax advisors, and/or investment advisors.

(e) The Optionee is aware that the Option may be of no practical value, that any value it may have depends on its vesting and exercisability as well as an increase in the Fair Market Value of the underlying Shares to an amount in excess of the Option Price, and that any investment in common shares of a closely held corporation such as the Company is non-marketable, non-transferable and could require capital to be invested for an indefinite period of time, possibly without return, and at substantial risk of loss.

(f) The Optionee understands that the Option and the Shares are being offered in an acquisition not involving any public offering within the United States within the meaning of the Securities Act and that the Option and the Shares have not been and will not be registered under the Securities Act, and that the Option and the Shares are “restricted securities” as defined by Rule 144(a)(3) under the Securities Act, and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances, including in accordance with the conditions of Rule 144 promulgated under the Securities Act or in an offshore acquisition meeting the requirements of Rule 903 or 904 of Regulation S under the Securities Act, each as presently in effect. The Optionee acknowledges reviewing a copy of Rule 144 promulgated under the Securities Act and Regulation S under the Securities Act, as presently in effect, and represents that he is familiar with such rule, and understands the resale limitations imposed thereby and by the Securities Act and the applicable state securities law.

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(g) The Optionee agrees that he will comply with all applicable laws and regulations in effect in any jurisdiction in which he sells any of the securities or otherwise transfers any interest therein.

(h) The Optionee has read and understands the restrictions and limitations set forth in the Securityholders Agreement, the Plan and this Agreement.

(i) The Optionee understands and acknowledges that, if and when he exercises the Option, (i) any certificate evidencing the Shares (or evidencing any other securities issued with respect thereto pursuant to any stock split, stock dividend, merger or other form of reorganization or recapitalization) when issued shall bear any legends which may be required by applicable federal and state securities laws, and (ii) except as otherwise provided under the Securityholders Agreement, the Company has no obligation to register the Shares or file any registration statement under federal or state securities laws.

Section 9. Designation of Beneficiary. The Optionee may appoint any individual or legal entity in writing as his beneficiary to receive any Option (to the extent not previously terminated or forfeited) under this Agreement upon the Optionee’s death or Disability. The Optionee may revoke his designation of a beneficiary at any time and appoint a new beneficiary in writing. To be effective, the Optionee must complete the designation of a beneficiary or revocation of a beneficiary by written notice to the Company under Section 11 of this Agreement before the date of the Optionee’s death. In the absence of a beneficiary designation, the legal representative of the Optionee’s estate shall be deemed the beneficiary.

Section 10. Notices. All notices, claims, certifications, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally-recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:

If to the Company, to it at:

If to the Company or OpCo., to:

Noranda Aluminum Holding Corporation
c/o Apollo Management VI, L.P.
9 West 57^th Street
43^rd Floor
Facsimile: (212) 515-3288
Attention: Eric Press

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with a copy (which shall not constitute notice) to:

Apollo Management, L.P.
9 West 57th Street
43rd Floor
New York, New York 10019
Facsimile: (212) 515-3288
Attention: Eric Press

and

Wachtell, Lipton, Rosen & Katz
51 West 52^nd Street
New York, New York 10019
Facsimile: (212) 403-2269
Attention: Andrew J. Nussbaum, Esq.

If to the Optionee, to him at the address set forth on the signature page hereto; or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. Any such notice or other communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery (or if such date is not a business day, on the next business day after the date of delivery), (b) in the case of nationally-recognized overnight courier, on the next business day after the date sent, (c) in the case of telecopy transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.

Section 11. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach.

Section 12. Optionee’s Undertaking. The Optionee hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Optionee pursuant to the express provisions of this Agreement and the Plan; provided, however, that such additional actions and documents are consistent with the terms of this Agreement.

Section 13. Modification of Rights. The rights of the Optionee are subject to modification and termination in certain events as provided in this Agreement and the Plan (with respect to the Options granted hereby). Notwithstanding the foregoing, the Optionee’s rights under this Agreement and the Plan may not be materially impaired without the Optionee’s prior written consent.

Section 14. Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

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Section 15. Restrictive Covenants. The grant, vesting and exercise of Options pursuant to this Agreement shall be subject to the Optionee’s continued compliance with the restrictive covenants in Section 9 of the Securityholders Agreement, as modified pursuant to the Term Sheet.

Section 16. Withholding. As a condition to exercising this Option in whole or in part, the Optionee will pay, or make provisions satisfactory to the Company for payment of, any Federal, state and local taxes required to be withheld in connection with such exercise.

Section 17. Adjustment. In the event of any event described in Article X of the Plan occurring after the Grant Date, the adjustment provisions (including cash payments) as provided for under Article X of the Plan shall apply.

Section 18. Counterparts. This Agreement may be executed in one or more counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts together shall constitute but one agreement.

Section 19. Entire Agreement. This Agreement and the Plan (and the other writings referred to herein) constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto, including, without limitation, the Original Option Agreement.

Section 20. Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

Section 21. Waiver of Jury Trial. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, trial by jury in any suit, action or proceeding arising hereunder.

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Section 22. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

(a) “Cause” means a Termination of Relationship by the Company or any of its Subsidiaries due to the Optionee’s: (i) commission of a crime or an act of moral turpitude; (ii) willful commission of a material act of dishonesty involving OpCo.; (iii) material breach of the Optionee’s obligations under any agreement entered into between the Optionee and OpCo. or any of its Subsidiaries or Affiliates; (iv) willful or continued failure to perform the Optionee’s duties; (v) material breach of OpCo.’s material policies or procedures that is not reasonably curable in OpCo.’s discretion; or (vi) any other willful misconduct which causes material harm to OpCo. or its business reputation, including due to adverse publicity; provided, however, that none of the events described in the foregoing clauses (iii), (iv) or (v) shall constitute Cause unless the Company has notified the Optionee in writing describing the events which constitute Cause and then only if the Optionee fails to cure such events within 30 days after the Optionee’s receipt of such written notice (provided that, in the event such breach is not curable, no notice period shall be required).

(b) “Disability” means (i) the Optionee’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) the Optionee is, by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident, disability or health plan covering employees of the Company. Whether the Optionee has incurred a “Disability” shall be determined by a physician selected by the Company or its insurers, which physician is reasonably acceptable to the Optionee (or the Optionee’s legal representative).

(c) “Good Reason” means a Termination of Relationship by the Optionee within 90 days after any of the following actions are taken by OpCo. or any of its Subsidiaries without the Optionee’s written consent: (i) a reduction of the Optionee’s annual base salary or target bonus opportunity under any bonus plan maintained by OpCo. or any of its Subsidiaries (but not including any diminution related to a broader compensation reduction that is not limited to any particular employee or executive of OpCo. or any of its Subsidiaries); (ii) the assignment to the Optionee of duties materially inconsistent with the Optionee’s duties set forth in the Term Sheet or a material diminution in the Optionee’s responsibilities; (iii) a material breach by OpCo. of the Term Sheet; or (iv) a notice by OpCo. of non-extension of the term of employment set forth in the Term Sheet; provided, however, that none of the events described in the foregoing clauses (i), (ii), (iii) or (iv) shall constitute Good Reason unless the Optionee has (within 90 days of becoming aware of the events which constitute Good Reason) notified OpCo. in writing describing the events which constitute Good Reason and then, only if OpCo. fails to cure such events within 30 days after OpCo.’s receipt of such written notice.

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IN WITNESS WHEREOF, the parties hereto have executed this Nonqualified Stock Option Agreement as of the date first written above.

NORANDA ALUMINUM HOLDING CORPORATION
By:
	Name:	Robert B. Mahoney
	Title:	Chief Financial Officer
LAYLE K. SMITH See attached signature page

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LAYLE K. SMITH

Last address on the records of the Company:

1894 Seacrest Drive

Lummi Island, WA 98262-8624

Number of Shares of Common Stock subject to Options:		200,000
Option Price:	$2.28 each

EX-10.4

Exhibit 10.4

AMENDED AND RESTATED NON QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) dated as of November 12, 2009 (the “Amendment Date”), between NORANDA ALUMINUM HOLDING CORPORATION, a Delaware corporation (the “Company”), and the Optionee set forth on the signature page to this Agreement (the “Optionee”).

WHEREAS, on May 8, 2008 (the “Grant Date”), the Company and the Optionee entered into an option agreement (the “Original Option Agreement”) pursuant to which the Company, acting through the Committee with the consent of the Company’s Board of Directors (the “Board”) granted to the Optionee, options (the “Options”) under the Amended and Restated Noranda Aluminum Holding Corporation 2007 Long-Term Incentive Plan (the “Plan”) to purchase a number of shares of the Company’s common stock (“Shares”) on the terms and subject to the conditions set forth in this Agreement and the Plan; and

WHEREAS, the Committee has determined that such Options no longer serve their intended retentive and incentive purposes; and

WHEREAS, the Committee believes it is in the best interests of the Company to amend and restate the terms of the Options and the Original Option Agreement to reduce the exercise prices thereof and to modify the vesting terms thereof; and

WHEREAS, in connection with the Optionee’s entry into the Original Option Agreement, the Optionee entered into a subscription agreement with the Company on May 8, 2008 (the “Subscription Agreement”), pursuant to which the Optionee purchased Shares (as defined in the Subscription Agreement), and in connection therewith, entered into an adoption agreement, pursuant to which the Optionee become a party to the Amended and Restated Securityholders Agreement relating to the Company, by and among the Company and certain of its securityholders, dated as of October 23, 2007, as the same may be amended from time to time (the “Securityholders Agreement”);

WHEREAS, future securities in the Company (including those being acquired pursuant to this Agreement) owned by the Optionee shall be subject to the terms of the Securityholders Agreement; and

WHEREAS, the parties wish to enter into this Amended and Restated Option Agreement in order to effect the foregoing.

NOW, THEREFORE, in consideration of the promises and of the mutual agreements contained in this Agreement, the parties hereto hereby agree as follows:

Section 1. The Plan. The terms and provisions of the Plan are hereby incorporated into this Agreement as if set forth herein in their entirety. In the event of a conflict between any provision of this Agreement and the Plan, the provisions of this Agreement shall control. A copy of the Plan may be obtained from the Company by the Optionee upon request. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Plan or the Securityholders Agreement, as the case may be.

Section 2. Option; Option Price. Effective on the Grant Dates, on the terms and subject to the conditions of the Plan and this Agreement, the Company granted to the Optionee the option (the “Option”) to purchase Shares pursuant to Tranche A options (“Tranche A Options”) and Tranche B options (“Tranche B Options”). Effective on the Amendment Date, on the terms and subject to the conditions of the Plan and this Agreement, the Company hereby amends and restates the terms of the Option to cover that number of Shares at the price per Share (the “Option Price”) set forth on the signature page hereto. To the extent permitted by the Committee, payment of the Option Price may be made in any manner specified by Section 5.6 of the Plan. The Option is not intended to qualify for federal income tax purposes as an “incentive stock option” within the meaning of Section 422 of the Code. The amendment and restatement of the Options pursuant to this Agreement shall be and become effective upon the delivery of an executed counterpart of this Agreement to the Company by Optionee.

Section 3. Term. The term of the Option (the “Option Term”) shall commence on the Grant Date and expire on the tenth anniversary of the Grant Date, unless the Option shall have sooner been terminated in accordance with the terms of the Plan (including, without limitation, Article V of the Plan) or this Agreement.

Section 4. Vesting. Subject to the Optionee’s not having a Termination of Relationship prior to the applicable vesting date and except as otherwise set forth in Section 7, the Options shall become non-forfeitable and exercisable (any Options that shall have become non-forfeitable and exercisable pursuant to Section 4, the “Vested Options”) according to the following provisions:

(a) Tranche A Options. Twenty-percent (20%) of the Tranche A Options shall become Vested Options on each of the first five anniversaries of the “Commencement Date” (as defined in the Original Option Agreement).

(b) Tranche B Options. Fifteen-percent (15%) of the Tranche B Options shall become Vested Options on each of the first and second anniversaries of the Amendment Date, twenty-percent (20%) of the Options shall become Vested Options on the third anniversary of the Amendment Date and twenty-five percent (25%) of the Options shall become Vested Options on each of the fourth and fifth anniversaries of the Amendment Date.

(c) Acceleration upon Certain Events. In the event of a Termination of Relationship as a result of the Optionee’s death or Disability, the Tranche A Options and Tranche B Options, in each case, composing the next applicable tranche of such Options which have not theretofore vested pursuant to Sections 4(a) and 4(b) above shall become Vested Options, and the remaining Options which are not Vested Options shall be forfeited. In the event of the consummation of a Change in Control, each Option which has not theretofore become a Vested Option and which is scheduled to vest on each of the remaining vesting dates based on anniversaries of the Commencement Date or the Amendment Date, as the case may be, will vest upon the earlier of (i) the Optionee’s continued employment with the Company for 18 months after such Change in Control or (ii) a Termination of Relationship by the Company or its Subsidiaries without Cause (as defined in Section 22) or by the Optionee with Good Reason (as defined in Section 22), in each case within 18 months following the consummation of such Change in Control. In all cases involving the consummation of a Change in Control, Options shall otherwise continue to vest in accordance with the terms of Section 4(a) or Section 4(b), as applicable. Except as otherwise provided herein, all unvested Options will immediately terminate upon a Termination of Relationship.

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Section 5. Restriction on Transfer/Securityholders Agreement. The Option may not be transferred, pledged, assigned, hypothecated or otherwise disposed of in any way by the Optionee, except (i) if permitted by the Board or the Committee, (ii) by will or the laws of descent and distribution or (iii) pursuant to beneficiary designation procedures approved by the Company. The Option shall not be subject to execution, attachment or similar process. Shares of Common Stock acquired pursuant to the exercise of Options hereunder will be subject to the Securityholders Agreement. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions of this Agreement or the Securityholders Agreement shall be null and void and without effect.

Section 6. Optionee’s Employment. Nothing in this Agreement or in the Option shall confer upon the Optionee any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or its Subsidiaries, as the case may be, in its sole discretion, to terminate the Optionee’s employment or to increase or decrease the Optionee’s compensation at any time.

Section 7. Termination.

(a) The Option shall automatically terminate and shall become null and void, be unexercisable and be of no further force and effect upon the earliest of:

(i) the tenth anniversary of the Commencement Date;

(ii) the 180^th day following the Termination of Relationship in the case of a Termination of Relationship for death or Disability;

(iii) the 90^th day following the Termination of Relationship in the case of a Termination of Relationship without Cause or due to a voluntary termination by the Optionee; and

(iv) the day of the Termination of Relationship in the case of a Termination of Relationship with Cause.

(b) Except as otherwise provided in Section 4(a) of this Agreement, upon a Termination of Relationship for any reason, the unvested portion of the Option (i.e., that portion which does not constitute Vested Options) shall terminate on the date the Termination of Relationship occurs.

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Section 8. Securities Law Representations. The Optionee acknowledges that the Option and the Shares are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), based, in part, on either (i) reliance upon an exemption from registration under Securities and Exchange Commission Rule 701 promulgated under the Securities Act or (ii) the fact that the Optionee is an “accredited investor” (as defined under the Securities Act and the rules and regulations promulgated thereunder), and, in each of (i) and (ii) above, a comparable exemption from qualification under applicable state securities laws, as each may be amended from time to time. The Optionee, by executing this Agreement, hereby makes the following representations to the Company and acknowledges that the Company’s reliance on federal and state securities law exemptions from registration and qualification is predicated, in substantial part, upon the accuracy of these representations:

(a) The Optionee is an “accredited investor” within the meaning of Rule 501(a)(1), (2) or (3) of the Securities Act.

(b) The Optionee is acquiring the Option and, if and when he exercises the Option, will acquire the Shares solely for the Optionee’s own account, for investment purposes only, and not with a view to or an intent to sell, or to offer for resale in connection with any unregistered distribution, all or any portion of the Shares or Option within the meaning of the Securities Act and/or any applicable state securities laws.

(c) The Optionee acknowledges that he has not acquired the Option or the Shares as a result of any general solicitation or general advertising in the United States, including any meeting whose attendees have been invited by general solicitation or general advertising.

(d) The Optionee has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Option and the restrictions imposed on any Shares purchased upon exercise of the Option. The Optionee has been furnished with, and/or has access to, such information as he considers necessary or appropriate for deciding whether to exercise the Option and purchase the Shares. However, in evaluating the merits and risks of an investment in the Shares, the Optionee has and will rely only upon the advice of his own legal counsel, tax advisors, and/or investment advisors.

(e) The Optionee is aware that the Option may be of no practical value, that any value it may have depends on its vesting and exercisability as well as an increase in the Fair Market Value of the underlying Shares to an amount in excess of the Option Price, and that any investment in common shares of a closely held corporation such as the Company is non-marketable, non-transferable and could require capital to be invested for an indefinite period of time, possibly without return, and at substantial risk of loss.

(f) The Optionee understands that the Option and the Shares are being offered in an acquisition not involving any public offering within the United States within the meaning of the Securities Act and that the Option and the Shares have not been and will not be registered under the Securities Act, and that the Option and the Shares are “restricted securities” as defined by Rule 144(a)(3) under the Securities Act, and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances, including in accordance with the conditions of Rule 144 promulgated under the Securities Act or in an offshore acquisition meeting the requirements of Rule 903 or 904 of Regulation S under the Securities Act, each as presently in effect. The Optionee acknowledges reviewing a copy of Rule 144 promulgated under the Securities Act and Regulation S under the Securities Act, as presently in effect, and represents that he is familiar with such rule, and understands the resale limitations imposed thereby and by the Securities Act and the applicable state securities law.

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(g) The Optionee agrees that he will comply with all applicable laws and regulations in effect in any jurisdiction in which he sells any of the securities or otherwise transfers any interest therein.

(h) The Optionee has read and understands the restrictions and limitations set forth in the Securityholders Agreement, the Plan and this Agreement.

(i) The Optionee understands and acknowledges that, if and when he exercises the Option, (i) any certificate evidencing the Shares (or evidencing any other securities issued with respect thereto pursuant to any stock split, stock dividend, merger or other form of reorganization or recapitalization) when issued shall bear any legends which may be required by applicable federal and state securities laws, and (ii) except as otherwise provided under the Securityholders Agreement, the Company has no obligation to register the Shares or file any registration statement under federal or state securities laws.

Section 9. Designation of Beneficiary. The Optionee may appoint any individual or legal entity in writing as his beneficiary to receive any Option (to the extent not previously terminated or forfeited) under this Agreement upon the Optionee’s death or Disability. The Optionee may revoke his designation of a beneficiary at any time and appoint a new beneficiary in writing. To be effective, the Optionee must complete the designation of a beneficiary or revocation of a beneficiary by written notice to the Company under Section 11 of this Agreement before the date of the Optionee’s death. In the absence of a beneficiary designation, the legal representative of the Optionee’s estate shall be deemed the beneficiary.

Section 10. Notices. All notices, claims, certifications, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally-recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:

If to the Company, to it at:

If to the Company, to:

Noranda Aluminum Holding Corporation
c/o Apollo Management VI, L.P.
9 West 57th Street
43rd Floor
Facsimile:	(212) 515-3288
Attention:	Eric Press

with a copy (which shall not constitute notice) to:

Apollo Management, L.P.

9 West 57th Street

43rd Floor

New York, New York 10019

Facsimile: (212) 515-3288

Attention: Eric Press

and

Wachtell, Lipton, Rosen & Katz

51 West 52^nd Street

New York, New York 10019

Facsimile: (212) 403-2269

Attention: Andrew J. Nussbaum, Esq.

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If to the Optionee, to him at the address set forth on the signature page hereto; or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. Any such notice or other communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery (or if such date is not a business day, on the next business day after the date of delivery), (b) in the case of nationally-recognized overnight courier, on the next business day after the date sent, (c) in the case of telecopy transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.

Section 11. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach.

Section 12. Optionee’s Undertaking. The Optionee hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Optionee pursuant to the express provisions of this Agreement and the Plan; provided, however, that such additional actions and documents are consistent with the terms of this Agreement.

Section 13. Modification of Rights. The rights of the Optionee are subject to modification and termination in certain events as provided in this Agreement and the Plan (with respect to the Options granted hereby). Notwithstanding the foregoing, the Optionee’s rights under this Agreement and the Plan may not be materially impaired without the Optionee’s prior written consent.

Section 14. Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

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Section 15. Restrictive Covenants. The grant, vesting and exercise of Options pursuant to this Agreement shall be subject to the Optionee’s continued compliance with the restrictive covenants in Section 9 of the Securityholders Agreement, as modified by the Management Equity Investment and Incentive Term Sheet, dated as of May 5, 2008, between the Optionee and the Company (the “Term Sheet”).

Section 16. Withholding. As a condition to exercising this Option in whole or in part, the Optionee will pay, or make provisions satisfactory to the Company for payment of, any Federal, state and local taxes required to be withheld in connection with such exercise.

Section 17. Adjustment. In the event of any event described in Article X of the Plan occurring after the Grant Dates, the adjustment provisions (including cash payments) as provided for under Article X of the Plan shall apply.

Section 18. Counterparts. This Agreement may be executed in one or more counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts together shall constitute but one agreement.

Section 19. Entire Agreement. This Agreement and the Plan (and the other writings referred to herein) constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto, including, without limitation, the Original Option Agreement. The Optionee and the Company (on behalf of itself and Noranda Aluminum, Inc.) hereby agree that the provisions of the Term Sheet titled “Subsequent Share Purchase” and “Subsequent Options Grant” are hereby amended to provide that (x) the number of Shares that shall be available hereafter for purchase as Subsequent Shares (within the meaning of the Term Sheet) shall be 5,750 (subject to adjustment in the event of the occurrence of an event described in Article X of the Plan), and the Optionee hereby waives any right to purchase additional Subsequent Shares, and (y) any Subsequent Options granted in connection with any such purchase of Subsequent Shares shall vest on the same schedule as Tranche B Options vest pursuant to Section 4(e) hereof (but treating references therein to the Amendment Date as references to the date of grant of the applicable Subsequent Options).

Section 20. Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

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Section 21. Waiver of Jury Trial. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, trial by jury in any suit, action or proceeding arising hereunder.

Section 22. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

(a) “Cause” means a Termination of Relationship by the Company or any of its Subsidiaries due to the Optionee’s: (i) commission of a felony or a crime of moral turpitude; (ii) willful commission of a material act of dishonesty involving the Company or any of its Affiliates or Subsidiaries; (iii) a material breach of the Company’s policies or procedures; (iv) willful failure to perform the Optionee’s material duties; (v) willful misconduct which causes material harm to the Company or its Subsidiaries or Affiliates or their respective business reputations, including due to any adverse publicity; or (vi) a material breach of the Optionee’s obligations under any agreement entered into between the Optionee and the Company or any of its Subsidiaries or Affiliates; provided, however, that none of the events described in the foregoing clauses (iii), (iv), (v) or (vi) shall constitute Cause unless the Company has notified the Optionee in writing describing the events which constitute Cause and then only if the Optionee fails to cure such events within 15 days after the Optionee’s receipt of such written notice (provided that, in the event such breach is not curable, no notice period shall be required).

(b) “Disability” means (i) the Optionee’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) the Optionee is, by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident, disability or health plan covering employees of the Company. Whether the Optionee has incurred a “Disability” shall be determined by a physician selected by the Company or its insurers, which physician is reasonably acceptable to the Optionee (or the Optionee’s legal representative).

(c) “Good Reason” means a Termination of Relationship by the Optionee within 90 days after any of the following actions are taken by the Company or any of its Subsidiaries without the Optionee’s written consent: (i) a reduction of the Optionee’s annual base salary or target bonus opportunity under any bonus plan maintained by the Company or any of its Subsidiaries (but not including any diminution related to a broader compensation reduction that is not limited to any particular employee or executive of the Company or any of its Subsidiaries); (ii) a material reduction or adverse change in the Optionee’s title, duties or responsibilities; or (iii) a notice by the Company of non-extension of the Term (as defined in the Term Sheet) of the Term Sheet; provided, however, that none of the events described in the foregoing clauses (i), (ii) and (iii) shall constitute Good Reason unless the Optionee has notified the Company in writing describing the events which constitute Good Reason and then only if the Company fails to cure such events within 30 days after the Company’s receipt of such written notice.

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IN WITNESS WHEREOF, the parties hereto have executed this Nonqualified Stock Option Agreement as of the date first written above.

NORANDA ALUMINUM HOLDING CORPORATION
By:
	Name:	Robert B. Mahoney
	Title:	Chief Financial Officer
KYLE D. LORENTZEN See attached signature page

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KYLE D. LORENTZEN

Last address on the records of the Company:

9968 Glasgow Court, Dublin, OH 43017

Number of Shares of Common Stock subject to Options:		50,000
Option Price:	$2.28 each

EX-10.5

Exhibit 10.5

AMENDED AND RESTATED NON QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) dated as of November 12, 2009 (the “Amendment Date”), between NORANDA ALUMINUM HOLDING CORPORATION, a Delaware corporation (the “Company”), and the Optionee set forth on the signature page to this Agreement (the “Optionee”).

WHEREAS, on [insert original grant date] (the “Grant Date”), the Company and the Optionee entered into an option agreement (the “Original Option Agreement”) pursuant to which the Company, acting through the Committee with the consent of the Company’s Board of Directors (the “Board”) granted to the Optionee, options (the “Options”) under the Amended and Restated Noranda Aluminum Holding Corporation 2007 Long-Term Incentive Plan (the “Plan”) to purchase a number of shares of the Company’s common stock (“Shares”) on the terms and subject to the conditions set forth in this Agreement and the Plan; and

WHEREAS, the Committee has determined that such Options no longer serve their intended retentive and incentive purposes; and

WHEREAS, the Committee believes it is in the best interests of the Company to amend and restate the terms of the Options and the Original Option Agreement to reduce the exercise prices thereof and to modify the vesting terms thereof; and

WHEREAS, in connection with the Optionee’s entry into the Original Option Agreement, the Optionee entered into a subscription agreement with the Company on [insert date] (the “Subscription Agreement”), pursuant to which the Optionee purchased Shares (as defined in the Subscription Agreement), and in connection therewith, entered into an adoption agreement, pursuant to which the Optionee become a party to the Amended and Restated Securityholders Agreement relating to the Company, by and among the Company and certain of its securityholders, dated as of October 23, 2007, as the same may be amended from time to time (the “Securityholders Agreement”);

WHEREAS, the Company is as of the date hereof granting for consideration to the Optionee the Shares pursuant to the Subscription Agreement, dated as of the date hereof, between the Company and the Optionee (the “New Subscription Agreement”);

WHEREAS, future securities in the Company (including those being acquired pursuant to this Agreement) owned by the Optionee shall be subject to the terms of the Securityholders Agreement; and

WHEREAS, the parties wish to enter into this Amended and Restated Option Agreement in order to effect the foregoing.

NOW, THEREFORE, in consideration of the promises and of the mutual agreements contained in this Agreement, the parties hereto hereby agree as follows:

Section 1. The Plan. The terms and provisions of the Plan are hereby incorporated into this Agreement as if set forth herein in their entirety. In the event of a conflict between any provision of this Agreement and the Plan, the provisions of this Agreement shall control. A copy of the Plan may be obtained from the Company by the Optionee upon request. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Plan or the Securityholders Agreement, as the case may be.

Section 2. Option; Option Price. Effective on the Grant Date, on the terms and subject to the conditions of the Plan and this Agreement, the Company granted to the Optionee the option (the “Option”) to purchase Shares pursuant to Tranche A options (“Tranche A Options”) and Tranche B options (“Tranche B Options”). Effective on the Amendment Date, on the terms and subject to the conditions of the Plan and this Agreement, the Company hereby amends and restates the terms of the Option to cover that number of Shares at the price per Share (the “Option Price”) set forth on the signature page hereto. To the extent permitted by the Committee, payment of the Option Price may be made in any manner specified by Section 5.6 of the Plan. The Option is not intended to qualify for federal income tax purposes as an “incentive stock option” within the meaning of Section 422 of the Code. The amendment and restatement of the Options pursuant to this Agreement shall be and become effective upon the delivery of an executed counterpart of this Agreement to the Company by Optionee. Notwithstanding the foregoing or any other provision of this Agreement, (x) in the event that the Optionee does not purchase the Shares as provided for in the New Subscription Agreement within 30 days of the Amendment Date, all Options, whether or not vested, shall be immediately forfeited and (y) no Option, whether or not vested, shall be exercisable prior to such purchase.

Section 3. Term. The term of the Option (the “Option Term”) shall commence on the Grant Date and expire on the tenth anniversary of the Grant Date, unless the Option shall have sooner been terminated in accordance with the terms of the Plan (including, without limitation, Article V of the Plan) or this Agreement.

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Section 4. Vesting. Subject to the Optionee’s not having a Termination of Relationship prior to the applicable vesting date and except as otherwise set forth in Section 7, the Options shall become non-forfeitable and exercisable (any Options that shall have become non-forfeitable and exercisable pursuant to Section 4, the “Vested Options”) according to the following provisions:

(a) Tranche A Options. Twenty-percent (20%) of the Tranche A Options shall become Vested Options on each of the first five anniversaries of the Grant Date.

(b) Tranche B Options. Fifteen-percent (15%) of the Tranche B Options shall become Vested Options on each of the first and second anniversaries of the Amendment Date, twenty-percent (20%) of the Options shall become Vested Options on the third anniversary of the Amendment Date and twenty-five percent (25%) of the Options shall become Vested Options on each of the fourth and fifth anniversaries of the Amendment Date.

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(c) Acceleration upon Certain Events. In the event of a Termination of Relationship as a result of the Optionee’s death or Disability, the Tranche A Options and Tranche B Options, in each case, composing the next applicable tranche of such Options which have not theretofore vested pursuant to Sections 4(a) and 4(b) above shall become Vested Options, and the remaining Options which are not Vested Options shall be forfeited. In the event of the consummation of a Change in Control, each Option which has not theretofore become a Vested Option and which is scheduled to vest on each of the remaining vesting dates based on anniversaries of the Grant Date or the Amendment Date, as the case may be, will vest upon the earlier of (i) the Optionee’s continued employment with the Company for 18 months after such Change in Control or (ii) a Termination of Relationship by the Company or its Subsidiaries without Cause (as defined in Section 22) or by the Optionee with Good Reason (as defined in Section 22), in each case within 18 months following the consummation of such Change in Control. In all cases involving the consummation of a Change in Control, Options shall otherwise continue to vest in accordance with the terms of Section 4(a) or Section 4(b), as applicable. Except as otherwise provided herein, all unvested Options will immediately terminate upon a Termination of Relationship.

Section 5. Restriction on Transfer/Securityholders Agreement. The Option may not be transferred, pledged, assigned, hypothecated or otherwise disposed of in any way by the Optionee, except (i) if permitted by the Board or the Committee, (ii) by will or the laws of descent and distribution or (iii) pursuant to beneficiary designation procedures approved by the Company. The Option shall not be subject to execution, attachment or similar process. Shares of Common Stock acquired pursuant to the exercise of Options hereunder will be subject to the Securityholders Agreement. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions of this Agreement or the Securityholders Agreement shall be null and void and without effect.

Section 6. Optionee’s Employment. Nothing in this Agreement or in the Option shall confer upon the Optionee any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or its Subsidiaries, as the case may be, in its sole discretion, to terminate the Optionee’s employment or to increase or decrease the Optionee’s compensation at any time.

Section 7. Termination.

(a) The Option shall automatically terminate and shall become null and void, be unexercisable and be of no further force and effect upon the earliest of:

(i) the tenth anniversary of the Grant Date;

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(ii) the 180^th day following the Termination of Relationship in the case of a Termination of Relationship for death or Disability;

(vi) the 90^th day following the Termination of Relationship in the case of a Termination of Relationship without Cause or with Good Reason;

(vii) the 60^th day following the Termination of Relationship in the case of a Termination of Relationship occurring because the Optionee resigns his employment without Good Reason; and

(viii) the day of the Termination of Relationship in the case of a Termination of Relationship with Cause.

(b) Except as otherwise provided in Section 4(a) of this Agreement, upon a Termination of Relationship for any reason, the unvested portion of the Option (i.e., that portion which does not constitute Vested Options) shall terminate on the date the Termination of Relationship occurs.

Section 8. Securities Law Representations. The Optionee acknowledges that the Option and the Shares are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), based, in part, on either (i) reliance upon an exemption from registration under Securities and Exchange Commission Rule 701 promulgated under the Securities Act or (ii) the fact that the Optionee is an “accredited investor” (as defined under the Securities Act and the rules and regulations promulgated thereunder), and, in each of (i) and (ii) above, a comparable exemption from qualification under applicable state securities laws, as each may be amended from time to time. The Optionee, by executing this Agreement, hereby makes the following representations to the Company and acknowledges that the Company’s reliance on federal and state securities law exemptions from registration and qualification is predicated, in substantial part, upon the accuracy of these representations:

(a) The Optionee is an “accredited investor” within the meaning of Rule 501(a)(1), (2) or (3) of the Securities Act.

(b) The Optionee is acquiring the Option and, if and when he exercises the Option, will acquire the Shares solely for the Optionee’s own account, for investment purposes only, and not with a view to or an intent to sell, or to offer for resale in connection with any unregistered distribution, all or any portion of the Shares or Option within the meaning of the Securities Act and/or any applicable state securities laws.

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(c) The Optionee acknowledges that he has not acquired the Option or the Shares as a result of any general solicitation or general advertising in the United States, including any meeting whose attendees have been invited by general solicitation or general advertising.

(d) The Optionee has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Option and the restrictions imposed on any Shares purchased upon exercise of the Option. The Optionee has been furnished with, and/or has access to, such information as he considers necessary or appropriate for deciding whether to exercise the Option and purchase the Shares. However, in evaluating the merits and risks of an investment in the Shares, the Optionee has and will rely only upon the advice of his own legal counsel, tax advisors, and/or investment advisors.

(e) The Optionee is aware that the Option may be of no practical value, that any value it may have depends on its vesting and exercisability as well as an increase in the Fair Market Value of the underlying Shares to an amount in excess of the Option Price, and that any investment in common shares of a closely held corporation such as the Company is non-marketable, non-transferable and could require capital to be invested for an indefinite period of time, possibly without return, and at substantial risk of loss.

(f) The Optionee understands that the Option and the Shares are being offered in an acquisition not involving any public offering within the United States within the meaning of the Securities Act and that the Option and the Shares have not been and will not be registered under the Securities Act, and that the Option and the Shares are “restricted securities” as defined by Rule 144(a)(3) under the Securities Act, and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances, including in accordance with the conditions of Rule 144 promulgated under the Securities Act or in an offshore acquisition meeting the requirements of Rule 903 or 904 of Regulation S under the Securities Act, each as presently in effect. The Optionee acknowledges reviewing a copy of Rule 144 promulgated under the Securities Act and Regulation S under the Securities Act, as presently in effect, and represents that he is familiar with such rule, and understands the resale limitations imposed thereby and by the Securities Act and the applicable state securities law.

(g) The Optionee agrees that he will comply with all applicable laws and regulations in effect in any jurisdiction in which he sells any of the securities or otherwise transfers any interest therein.

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(h) The Optionee has read and understands the restrictions and limitations set forth in the Securityholders Agreement, the Plan and this Agreement.

(i) The Optionee understands and acknowledges that, if and when he exercises the Option, (i) any certificate evidencing the Shares (or evidencing any other securities issued with respect thereto pursuant to any stock split, stock dividend, merger or other form of reorganization or recapitalization) when issued shall bear any legends which may be required by applicable federal and state securities laws, and (ii) except as otherwise provided under the Securityholders Agreement, the Company has no obligation to register the Shares or file any registration statement under federal or state securities laws.

Section 9. Designation of Beneficiary. The Optionee may appoint any individual or legal entity in writing as his beneficiary to receive any Option (to the extent not previously terminated or forfeited) under this Agreement upon the Optionee’s death or Disability. The Optionee may revoke his designation of a beneficiary at any time and appoint a new beneficiary in writing. To be effective, the Optionee must complete the designation of a beneficiary or revocation of a beneficiary by written notice to the Company under Section 11 of this Agreement before the date of the Optionee’s death. In the absence of a beneficiary designation, the legal representative of the Optionee’s estate shall be deemed the beneficiary.

Section 10. Notices. All notices, claims, certifications, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally-recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:

If to the Company, to it at:

If to the Company, to:

Noranda Aluminum Holding Corporation
c/o Apollo Management VI, L.P.
9 West 57^th Street
43^rd Floor
Facsimile:  (212) 515-3288
Attention:  Eric Press

with a copy (which shall not constitute notice) to:

Apollo Management, L.P.
9 West 57th Street
43rd Floor
New York, New York 10019
Facsimile:  (212) 515-3288
Attention:  Eric Press

and

Wachtell, Lipton, Rosen & Katz
51 West 52^nd Street
New York, New York 10019
Facsimile:  (212) 403-2269
Attention:  Andrew J. Nussbaum, Esq.

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If to the Optionee, to him at the address set forth on the signature page hereto; or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. Any such notice or other communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery (or if such date is not a business day, on the next business day after the date of delivery), (b) in the case of nationally-recognized overnight courier, on the next business day after the date sent, (c) in the case of telecopy transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.

Section 11. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach.

Section 12. Optionee’s Undertaking. The Optionee hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Optionee pursuant to the express provisions of this Agreement and the Plan; provided, however, that such additional actions and documents are consistent with the terms of this Agreement.

Section 13. Modification of Rights. The rights of the Optionee are subject to modification and termination in certain events as provided in this Agreement and the Plan (with respect to the Options granted hereby). Notwithstanding the foregoing, the Optionee’s rights under this Agreement and the Plan may not be materially impaired without the Optionee’s prior written consent.

Section 14. Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

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Section 15. Restrictive Covenants. The grant, vesting and exercise of Options pursuant to this Agreement shall be subject to the Optionee’s continued compliance with the restrictive covenants in Section 9 of the Securityholders Agreement.

Section 16. Withholding. As a condition to exercising this Option in whole or in part, the Optionee will pay, or make provisions satisfactory to the Company for payment of, any Federal, state and local taxes required to be withheld in connection with such exercise.

Section 17. Adjustment. In the event of any event described in Article X of the Plan occurring after the Grant Date, the adjustment provisions (including cash payments) as provided for under Article X of the Plan shall apply.

Section 18. Counterparts. This Agreement may be executed in one or more counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts together shall constitute but one agreement.

Section 19. Entire Agreement. This Agreement and the Plan (and the other writings referred to herein) constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto, including, without limitation, the Original Option Agreement.

Section 20. Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

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Section 21. Waiver of Jury Trial. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, trial by jury in any suit, action or proceeding arising hereunder.

Section 22. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

(a) “Cause” means a Termination of Relationship by the Company or any of its Subsidiaries due to the Optionee’s: (i) commission of a felony or a crime of moral turpitude; (ii) willful commission of a material act of dishonesty involving the Company or any of its Affiliates or Subsidiaries; (iii) a material breach of the Company’s policies or procedures; (iv) willful failure to perform the Optionee’s material duties; (v) willful misconduct which causes material harm to the Company or its Subsidiaries or Affiliates or their respective business reputations, including due to any adverse publicity; or (vi) a material breach of the Optionee’s obligations under any agreement entered into between the Optionee and the Company or any of its Subsidiaries or Affiliates; provided, however, that none of the events described in the foregoing clauses (iii), (iv), (v) or (vi) shall constitute Cause unless the Company has notified the Optionee in writing describing the events which constitute Cause and then only if the Optionee fails to cure such events within 15 days after the Optionee’s receipt of such written notice (provided that, in the event such breach is not curable, no notice period shall be required).

(b) “Disability” means (i) the Optionee’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) the Optionee is, by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident, disability or health plan covering employees of the Company. Whether the Optionee has incurred a “Disability” shall be determined by a physician selected by the Company or its insurers, which physician is reasonably acceptable to the Optionee (or the Optionee’s legal representative).

(c) “Good Reason” means a Termination of Relationship by the Optionee within 90 days after any of the following actions are taken by the Company or any of its Subsidiaries without the Optionee’s written consent: (i) a [material] reduction of the Optionee’s annual base salary or target bonus opportunity under any bonus plan maintained by the Company or any of its Subsidiaries (but not including any diminution related to a broader compensation reduction that is not limited to any particular employee or executive of the Company or any of its Subsidiaries); (ii) a material reduction or adverse change in the Optionee’s title, duties or responsibilities; or (iii) a notice by the Company of non-extension of the Term (as defined in the Term Sheet) of the Term Sheet; provided, however, that none of the events described in the foregoing clauses (i), (ii) and (iii) shall constitute Good Reason unless the Optionee has notified the Company in writing describing the events which constitute Good Reason and then only if the Company fails to cure such events within 30 days after the Company’s receipt of such written notice.

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IN WITNESS WHEREOF, the parties hereto have executed this Nonqualified Stock Option Agreement as of the date first written above.

NORANDA ALUMINUM HOLDING CORPORATION
By:
	Name:
	Title:
[NAME] See attached signature page

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	[NAME]
	Last address on the records of the Company:
Number of Shares of Common Stock subject to Options:		[          ]
Option Price:		$2.28 each

EX-10.6

Exhibit 10.6

PRIVILEGED AND CONFIDENTIAL
ATTORNEY WORK PRODUCT

NON QUALIFIED STOCK OPTION AGREEMENT (this “Agreement”) dated as of November _____, 2009, between NORANDA ALUMINUM HOLDING CORPORATION, a Delaware corporation (the “Company”), and the Optionee set forth on the signature page to this Agreement (the “Optionee”).

WHEREAS, the Company, acting through the Committee with the consent of the Company’s Board of Directors (the “Board”), has agreed to grant to the Optionee, effective on November [______], 2009 (the “Grant Date”), an option under the Noranda Aluminum Holding Corporation Amended and Restated 2007 Long-Term Incentive Plan (the “Plan”) to purchase a number of shares of the Company’s common stock (“Shares”) on the terms and subject to the conditions set forth in this Agreement and the Plan; and

WHEREAS, the Company is as of the date hereof granting for consideration to the Optionee the Shares pursuant to the Subscription Agreement, dated as of the date hereof, between the Company and the Optionee (the “Subscription Agreement”);

WHEREAS, pursuant to that certain adoption agreement dated as of [insert original date/insert date of grant for new grantees], the Optionee entered into an adoption agreement, pursuant to which the Optionee became a party to the Amended and Restated Securityholders Agreement relating to the Company, by and among the Company and certain of its securityholders, dated as of October 23, 2007, as the same may be amended from time to time (the “Securityholders Agreement”);

WHEREAS, future securities in the Company (including those being acquired pursuant to this Agreement) owned by the Optionee shall be subject to the terms of the Securityholders Agreement.

NOW, THEREFORE, in consideration of the promises and of the mutual agreements contained in this Agreement, the parties hereto hereby agree as follows:

Section 1. The Plan. The terms and provisions of the Plan are hereby incorporated into this Agreement as if set forth herein in their entirety. In the event of a conflict between any provision of this Agreement and the Plan, the provisions of this Agreement shall control. A copy of the Plan may be obtained from the Company by the Optionee upon request. Capitalized terms used herein and not otherwise defined herein shall have the respective meanings ascribed thereto in the Plan or the Securityholders Agreement, as the case may be.

Section 2. Option; Option Price. Effective on the Grant Date, on the terms and subject to the conditions of the Plan and this Agreement, the Company hereby grants to the Optionee the option (the “Option”) to purchase Shares at the price per Share (the “Option Price”) and in the amounts set forth on the signature page hereto. To the extent permitted by the Committee, payment of the Option Price may be made in any manner specified by Section 5.6 of the Plan. The Option is not intended to qualify for federal income tax purposes as an “incentive stock option” within the meaning of Section 422 of the Code. The Options granted hereby shall be and become effective upon the delivery of an executed counterpart of this Agreement to the Company by Optionee. Notwithstanding the foregoing or any other provision of this Agreement, (a) in the event that the Optionee does not purchase the full amount of Shares subject to the Subscription Agreement (such full number, the “Subject Shares”) by the end of the 30th day following the Grant Date (the “Purchase End Date”), a number of Options equal to the product of (1) the total number of Subject Shares that the Optionee did not purchase and (2) the quotient of (x) the total number of Options granted to the Optionee under this Agreement and (y) the total number of Subject Shares, whether or not vested, shall be immediately forfeited and (b) no Option, whether or not vested, shall be exercisable prior to a purchase of Subject Shares assuring that such Option will not be forfeited pursuant to this sentence (the provisions of this sentence shall be subject to adjustment in the event of the occurrence prior to the Purchase End Date of an event described in Article X of the Plan).

Section 3. Term. The term of the Option (the “Option Term”) shall commence on the Grant Date and expire on the tenth anniversary of the Grant Date, unless the Option shall have sooner been terminated in accordance with the terms of the Plan (including, without limitation, Article V of the Plan) or this Agreement.

Section 4. Vesting. Subject to the Optionee’s not having a Termination of Relationship prior to the applicable vesting date and except as otherwise set forth in Section 7, the Options shall become non-forfeitable and exercisable (any Options that shall have become non-forfeitable and exercisable pursuant to Section 4, the “Vested Options”) according to the following provisions: fifteen-percent (15%) of the Options shall become Vested Options on each of the first and second anniversaries of the Grant Date, twenty-percent (20%) of the Options shall become Vested Options on the third anniversary of the Grant Date and twenty-five percent (25%) of the Options shall become Vested Options on each of the fourth and fifth anniversaries of the Grant Date. In the event of a Termination of Relationship as a result of the Optionee’s death or Disability, the Option composing the next applicable tranche of Options which has not theretofore vested pursuant to the immediately preceding sentence shall become Vested Options, and the remaining Options which are not Vested Options shall be forfeited. In the event of the consummation of a Change in Control, each Option which has not theretofore become a Vested Option and which is scheduled to vest on each of the remaining vesting dates based on anniversaries of the Grant Date will vest upon the earlier of (i) the Optionee’s continued employment with the Company for 18 months after such Change in Control or (ii) a Termination of Relationship by the Company or its Subsidiaries without Cause (as defined in Section 22) or by the Optionee with Good Reason (as defined in Section 22), in each case within 18 months following the consummation of such Change in Control. In all cases involving the consummation of a Change in Control, Options shall otherwise continue to vest in accordance with the terms of the first sentence of this Section 4. Except as otherwise provided herein, all unvested Options will immediately terminate upon a Termination of Relationship.

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Section 5. Restriction on Transfer/Securityholders Agreement. The Option may not be transferred, pledged, assigned, hypothecated or otherwise disposed of in any way by the Optionee, except (i) if permitted by the Board or the Committee, (ii) by will or the laws of descent and distribution or (iii) pursuant to beneficiary designation procedures approved by the Company. The Option shall not be subject to execution, attachment or similar process. Shares of Common Stock acquired pursuant to the exercise of Options hereunder will be subject to the Securityholders Agreement. Any attempted assignment, transfer, pledge, hypothecation or other disposition of the Option contrary to the provisions of this Agreement or the Securityholders Agreement shall be null and void and without effect.

Section 6. Optionee’s Employment. Nothing in this Agreement or in the Option shall confer upon the Optionee any right to continue in the employ of the Company or any of its Subsidiaries or interfere in any way with the right of the Company or its Subsidiaries, as the case may be, in its sole discretion, to terminate the Optionee’s employment or to increase or decrease the Optionee’s compensation at any time.

Section 7. Termination.

(a) The Option shall automatically terminate and shall become null and void, be unexercisable and be of no further force and effect upon the earliest of:

(i) the tenth anniversary of the Grant Date;

(ii) the 180^th day following the Termination of Relationship in the case of a Termination of Relationship for death or Disability;

(iii) [the 90^th day following the Termination of Relationship in the case of a Termination of Relationship without Cause or due to a voluntary termination by the Optionee; and]¹

(iv) [the 90^th day following the Termination of Relationship in the case of a Termination of Relationship without Cause or with Good Reason;

(v) the 60^th day following the Termination of Relationship in the case of a Termination of Relationship occurring because the Optionee resigns his employment without Good Reason; and]²

(vi) the day of the Termination of Relationship in the case of a Termination of Relationship with Cause.

(b) Except as otherwise provided in Section 4 of this Agreement, upon a Termination of Relationship for any reason, the unvested portion of the Option (i.e., that portion which does not constitute Vested Options) shall terminate on the date the Termination of Relationship occurs.

1	For Lorentzen.
2	For all but Lorentzen.

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Section 8. Securities Law Representations. The Optionee acknowledges that the Option and the Shares are not being registered under the Securities Act of 1933, as amended (the “Securities Act”), based, in part, on either (i) reliance upon an exemption from registration under Securities and Exchange Commission Rule 701 promulgated under the Securities Act or (ii) the fact that the Optionee is an “accredited investor” (as defined under the Securities Act and the rules and regulations promulgated thereunder), and, in each of (i) and (ii) above, a comparable exemption from qualification under applicable state securities laws, as each may be amended from time to time. The Optionee, by executing this Agreement, hereby makes the following representations to the Company and acknowledges that the Company’s reliance on federal and state securities law exemptions from registration and qualification is predicated, in substantial part, upon the accuracy of these representations:

(a) [The Optionee is an “accredited investor” within the meaning of Rule 501(a)(1), (2) or (3) of the Securities Act.]³

(b) The Optionee is acquiring the Option and, if and when he exercises the Option, will acquire the Shares solely for the Optionee’s own account, for investment purposes only, and not with a view to or an intent to sell, or to offer for resale in connection with any unregistered distribution, all or any portion of the Shares or Option within the meaning of the Securities Act and/or any applicable state securities laws.

(c) The Optionee acknowledges that he has not acquired the Option or the Shares as a result of any general solicitation or general advertising in the United States, including any meeting whose attendees have been invited by general solicitation or general advertising.

(d) The Optionee has had an opportunity to ask questions and receive answers from the Company regarding the terms and conditions of the Option and the restrictions imposed on any Shares purchased upon exercise of the Option. The Optionee has been furnished with, and/or has access to, such information as he considers necessary or appropriate for deciding whether to exercise the Option and purchase the Shares. However, in evaluating the merits and risks of an investment in the Shares, the Optionee has and will rely only upon the advice of his own legal counsel, tax advisors, and/or investment advisors.

(e) The Optionee is aware that the Option may be of no practical value, that any value it may have depends on its vesting and exercisability as well as an increase in the Fair Market Value of the underlying Shares to an amount in excess of the Option Price, and that any investment in common shares of a closely held corporation such as the Company is non-marketable, non-transferable and could require capital to be invested for an indefinite period of time, possibly without return, and at substantial risk of loss.

(f) The Optionee understands that the Option and the Shares are being offered in an acquisition not involving any public offering within the United States within the meaning of the Securities Act and that the Option and the Shares have not been and will not be registered under the Securities Act, and that the Option and the Shares are “restricted securities” as defined by Rule 144(a)(3) under the Securities Act, and that, under such laws and applicable regulations, such securities may be resold without registration under the Securities Act only in certain limited circumstances, including in accordance with the conditions of Rule 144 promulgated under the Securities Act or in an offshore acquisition meeting the requirements of Rule 903 or 904 of Regulation S under the Securities Act, each as presently in effect. The Optionee acknowledges reviewing a copy of Rule 144 promulgated under the Securities Act and Regulation S under the Securities Act, as presently in effect, and represents that he is familiar with such rule, and understands the resale limitations imposed thereby and by the Securities Act and the applicable state securities law.

³ To be deleted for each Optionee who does not meet this requirement.

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(g) The Optionee agrees that he will comply with all applicable laws and regulations in effect in any jurisdiction in which he sells any of the securities or otherwise transfers any interest therein.

(h) The Optionee has read and understands the restrictions and limitations set forth in the Securityholders Agreement, the Plan and this Agreement.

(i) The Optionee understands and acknowledges that, if and when he exercises the Option, (i) any certificate evidencing the Shares (or evidencing any other securities issued with respect thereto pursuant to any stock split, stock dividend, merger or other form of reorganization or recapitalization) when issued shall bear any legends which may be required by applicable federal and state securities laws, and (ii) except as otherwise provided under the Securityholders Agreement, the Company has no obligation to register the Shares or file any registration statement under federal or state securities laws.

Section 9. Designation of Beneficiary. The Optionee may appoint any individual or legal entity in writing as his beneficiary to receive any Option (to the extent not previously terminated or forfeited) under this Agreement upon the Optionee’s death or Disability. The Optionee may revoke his designation of a beneficiary at any time and appoint a new beneficiary in writing. To be effective, the Optionee must complete the designation of a beneficiary or revocation of a beneficiary by written notice to the Company under Section 11 of this Agreement before the date of the Optionee’s death. In the absence of a beneficiary designation, the legal representative of the Optionee’s estate shall be deemed the beneficiary.

Section 10. Notices. All notices, claims, certifications, requests, demands and other communications hereunder shall be in writing and shall be deemed to have been duly given and delivered if personally delivered or if sent by nationally-recognized overnight courier, by telecopy, or by registered or certified mail, return receipt requested and postage prepaid, addressed as follows:

If to the Company, to it at:

If to the Company, to:

Noranda Aluminum Holding Corporation
c/o Apollo Management VI, L.P.
9 West 57th Street
43rd Floor
Facsimile:	(212) 515-3288
Attention:	Eric Press

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with a copy (which shall not constitute notice) to:

Apollo Management, L.P.

9 West 57^th Street

43^rd Floor

New York, New York 10019

Facsimile: (212) 515-3288

Attention: Eric Press

and

Wachtell, Lipton, Rosen & Katz

51 West 52^nd Street

New York, New York 10019

Facsimile: (212) 403-2269

Attention: Andrew J. Nussbaum, Esq.

If to the Optionee, to him at the address set forth on the signature page hereto; or to such other address as the party to whom notice is to be given may have furnished to the other party in writing in accordance herewith. Any such notice or other communication shall be deemed to have been received (a) in the case of personal delivery, on the date of such delivery (or if such date is not a business day, on the next business day after the date of delivery), (b) in the case of nationally-recognized overnight courier, on the next business day after the date sent, (c) in the case of telecopy transmission, when received (or if not sent on a business day, on the next business day after the date sent), and (d) in the case of mailing, on the third business day following that on which the piece of mail containing such communication is posted.

Section 11. Waiver of Breach. The waiver by either party of a breach of any provision of this Agreement must be in writing and shall not operate or be construed as a waiver of any other or subsequent breach.

Section 12. Optionee’s Undertaking. The Optionee hereby agrees to take whatever additional actions and execute whatever additional documents the Company may in its reasonable judgment deem necessary or advisable in order to carry out or effect one or more of the obligations or restrictions imposed on the Optionee pursuant to the express provisions of this Agreement and the Plan; provided, however, that such additional actions and documents are consistent with the terms of this Agreement.

Section 13. Modification of Rights. The rights of the Optionee are subject to modification and termination in certain events as provided in this Agreement and the Plan (with respect to the Options granted hereby). Notwithstanding the foregoing, the Optionee’s rights under this Agreement and the Plan may not be materially impaired without the Optionee’s prior written consent.

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Section 14. Governing Law. THIS AGREEMENT WILL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT GIVING EFFECT TO ANY CHOICE OR CONFLICT OF LAW PROVISION OR RULE (WHETHER OF THE STATE OF DELAWARE OR ANY OTHER JURISDICTION) THAT WOULD CAUSE THE LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF DELAWARE TO BE APPLIED. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE STATE OF DELAWARE WILL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS AGREEMENT, EVEN IF UNDER SUCH JURISDICTION’S CHOICE OF LAW OR CONFLICT OF LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY APPLY.

Section 15. Restrictive Covenants. The grant, vesting and exercise of Options pursuant to this Agreement shall be subject to the Optionee’s continued compliance with the restrictive covenants in Section 9 of the Securityholders Agreement[, as modified by the Management Equity Investment and Incentive Term Sheet, dated as of [insert original date], between the Optionee and the Company (the “Term Sheet”)].⁴

Section 16. Withholding. As a condition to exercising this Option in whole or in part, the Optionee will pay, or make provisions satisfactory to the Company for payment of, any Federal, state and local taxes required to be withheld in connection with such exercise.

Section 17. Adjustment. In the event of any event described in Article X of the Plan occurring after the Grant Date, the adjustment provisions (including cash payments) as provided for under Article X of the Plan shall apply.

Section 18. Counterparts. This Agreement may be executed in one or more counterparts, and each such counterpart shall be deemed to be an original, but all such counterparts together shall constitute but one agreement.

Section 19. Entire Agreement. This Agreement and the Plan (and the other writings referred to herein) constitute the entire agreement between the parties with respect to the subject matter hereof and thereof and supersede all prior written or oral negotiations, commitments, representations and agreements with respect thereto.

Section 20. Severability. It is the desire and intent of the parties hereto that the provisions of this Agreement be enforced to the fullest extent permissible under the laws and public policies applied in each jurisdiction in which enforcement is sought. Accordingly, if any particular provision of this Agreement shall be adjudicated by a court of competent jurisdiction to be invalid, prohibited or unenforceable for any reason, such provision, as to such jurisdiction, shall be ineffective, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. Notwithstanding the foregoing, if such provision could be more narrowly drawn so as not to be invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such jurisdiction, be so narrowly drawn, without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction.

Section 21. Waiver of Jury Trial. Each party hereto hereby irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, trial by jury in any suit, action or proceeding arising hereunder.

⁴ To the extent applicable (applies to Lorentzen).

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Section 22. Definitions. As used in this Agreement, the following terms shall have the meanings set forth below:

(a) [“Cause” means a Termination of Relationship by the Company or any of its Subsidiaries due to the Optionee’s: (i) commission of a felony or a crime of moral turpitude; (ii) willful commission of a material act of dishonesty involving the Company or any of its Affiliates or Subsidiaries; (iii) a material breach of the Company’s policies or procedures; (iv) willful failure to perform the Optionee’s material duties; (v) willful misconduct which causes material harm to the Company or its Subsidiaries or Affiliates or their respective business reputations, including due to any adverse publicity; or (vi) a material breach of the Optionee’s obligations under any agreement entered into between the Optionee and the Company or any of its Subsidiaries or Affiliates; provided, however, that none of the events described in the foregoing clauses (iii), (iv), (v) or (vi) shall constitute Cause unless the Company has notified the Optionee in writing describing the events which constitute Cause and then only if the Optionee fails to cure such events within 15 days after the Optionee’s receipt of such written notice (provided that, in the event such breach is not curable, no notice period shall be required).

(b) “Disability” means (i) the Optionee’s inability to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than 12 months, or (ii) the Optionee is, by reason of any medically determinable physical or mental impairment which can be expected to last for a continuous period of not less than 12 months, receiving income replacement benefits for a period of not less than three months under an accident, disability or health plan covering employees of the Company. Whether the Optionee has incurred a “Disability” shall be determined by a physician selected by the Company or its insurers, which physician is reasonably acceptable to the Optionee (or the Optionee’s legal representative).

(c) “Good Reason” means a Termination of Relationship by the Optionee within 90 days after any of the following actions are taken by the Company or any of its Subsidiaries without the Optionee’s written consent: (i) a [material] reduction of the Optionee’s annual base salary or target bonus opportunity under any bonus plan maintained by the Company or any of its Subsidiaries (but not including any diminution related to a broader compensation reduction that is not limited to any particular employee or executive of the Company or any of its Subsidiaries); (ii) a material reduction or adverse change in the Optionee’s title, duties or responsibilities; or (iii) a notice by the Company of non-extension of the Term (as defined in the Term Sheet) of the Term Sheet; provided, however, that none of the events described in the foregoing clauses (i), (ii) and (iii) shall constitute Good Reason unless the Optionee has notified the Company in writing describing the events which constitute Good Reason and then only if the Company fails to cure such events within 30 days after the Company’s receipt of such written notice.]⁵

⁵ Definition is from Lorentzen’s option agreement. Definitions from each optionee’s original option agreement to be maintained in this agreement.

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IN WITNESS WHEREOF, the parties hereto have executed this Nonqualified Stock Option Agreement as of the date first written above.

NORANDA ALUMINUM HOLDING CORPORATION
By:
	Name:
	Title:
OPTIONEE See attached signature page

9

[NAME]

Last address on the records of the Company:

Number of Shares of Common Stock subject to Options:
Option Price:	$	2.28 each

EX-31.1

Exhibit 31.1

CHIEF EXECUTIVE OFFICER CERTIFICATION

I, Layle K. Smith, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2009 of Noranda Aluminum Holding Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2009	/s/ Layle K. Smith
	Layle K. Smith
	Chief Executive Officer

EX-31.2

Exhibit 31.2

CHIEF FINANCIAL OFFICER CERTIFICATION

I, Robert B. Mahoney, certify that:

1. I have reviewed this Quarterly Report on Form 10-Q for the period ended September 30, 2009 of Noranda Aluminum Holding Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b. Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

c. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b. Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 13, 2009	/s/ Robert B. Mahoney
	Robert B. Mahoney
	Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER
AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Noranda Aluminum Holding Corporation (the “Company”) on Form 10-Q for the period ended September 30, 2009 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), Layle K. Smith, as Chief Executive Officer of the Company, and Robert B. Mahoney, as Chief Financial Officer of the Company, each hereby certifies, pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to his knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 13, 2009	/s/ Layle K. Smith
	Layle K. Smith
	Chief Executive Officer
Date: November 13, 2009	/s/ Robert B. Mahoney
	Robert B. Mahoney
	Chief Financial Officer