RE:Very Rough Sherritt Cash Flows Annualized (Update)I dont disagree entirely in your calculations. If everything goes perfect, it's a reasonable estimade. However, there are serious risks with this company:
- It's enitrely dependent on the Moa JV. Which is a very old asset. An assumption that they can keep 30k tonne + production over the course of the next few years with the current capital profile and NDCC is, in my opinion, too optimisitc. Production has been decreasing since 2016.
- The political risk associated with Cuba is high, especially with our current administration in the US.
- The company is only viable at a high nickel price 6+. It could easily drop down back to 5$ if the chinese and indonesians start puking out NPI
- Management (and everyone seems to agree on this point) is terrible.
- I think they may have troubles with issuing new debt. I think the interest rate will be eextremely high.
- I don't have faith in the management teams ability to neogtiate concessions with the Cubans.In which case, this company is toast.
- The company is too exposed to production risk. 6 months of production loss in Moa, and this company would be severily crippled.
Having said that, no bady got rich buying risk free t-bills.