Sherritt International Investor Day!

Date Added: June 18, 2018 | Comments Off on Sherritt International Investor Day! | Filed under: Blog

On May 30 Sherritt held an Investor Day at its Fort Site refinery in Fort Saskatchewan, Alberta. We thought it would be a good opportunity to meet and talk with Sherritt’s executives beyond the formal presentations (available online ) as well as meet with some of the local management. I asked J Dominique from our office to fly to Alberta and attend the presentations. This is his report.

Our overall impression is that Sherritt is showing, following a number of decisive actions, renewed strength.

The march from cycle peak in 2007 to cycle bottom in spring 2016 has been painful – for the company as well as shareholders. Sherritt had the misfortune (together with many other mining companies) to enter the commodity down cycle with a large, expensive project under development. As commodity prices declined, project revenues became increasingly insufficient to cover cash outlays, both for development completion and financing repayments.

Fortunately, Sherritt had two great advantages at the time: first, solid cash flows from its oil business, and second a debt structure for the financing of Ambatovy that offered the company much needed protection in the sense that C$1.4 billion out of the roughly 1.5 billion borrowed was non-recourse to the company, protecting it from the consequences of failure.

Unfortunately, this fact was mostly ignored by the market and Sherritt’s share price suffered accordingly. The bottom in nickel and cobalt prices was reached in February 2016, at US$3.50 per pound for nickel and US$10 for cobalt. Since then, cobalt prices have quadrupled to close to US$40, nickel prices have doubled to US$7, the C$1.4

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