Friday the 13th AGMAGM material is posted on website. Here is the link (bottom) and the Sir Richard's letter:
Over the past year Sherritt has been able to switch its focus from looking backwards at what would have been its unsustainablefinancing structure to one of looking forward in exploiting its significant resources and reserves in nickel and cobalt whilst also seeking to capitalize on its associated intellectual property developed within its Technologies Group.
Initially, the strategic options being developed are bound to contain execution risk whether by their association with the significant restrictions placed on Cuba or by the bringing to demonstration plant scale the potentially attractive Technologies conversations.
To these must be added the ambition of the new executive team led by Leon Binedell to increase and accelerate the required rate of change throughout the company. Without risk there can be no risk-related returns and the Board is alert in carrying out its checks and balances as the options emerge and develop. The rapid adoption of the first phase of the proposal to increase our metals output is a good example of this process working quickly and effectively.
Building on the momentum established late in 2020 with the successful completion of the balance sheet initiative that eliminated more than $300 million of debt, reduced annual cash interest payments by $15 million and extended our first debt maturity to November 2026 – all without any dilutive impact to shareholders – Sherritt had an eventful 2021, a year that was marked by strong financial results, transition, and considerable promise.
Among our achievements included some of our best financial metrics in three years, such as highest combined revenue, highest adjusted EBITDA, and lowest net direct cash costs for nickel sold since 2018. These improved financial results were indicative of higher nickel and cobalt prices, and good cost control despite inflationary pressure on input costs as experienced by organizations around the world for much of the year.
Operationally, we met our unit cost targets for 2021 for each of our business units and achieved our updated production guidance for the year despite the impact of COVID-19 on our employees and global supply chains.
2021 will also be remembered for a number of important transitions we made. The most notable being the appointment of Leon Binedell as President and CEO in June followed by the appointments of Yasmin Gabriel as Chief Financial Officer, Greg Honig as Chief Commercial Officer, and Chad Ross as Chief Human Resources Officer in August, and the promotions announced in
December of Dan Rusnell as Senior Vice President of Metals and Elvin Saruk as Head of Growth Projects in addition to his accountabilities as Senior Vice President, Oil and Gas and Power.
These senior leadership changes helped to facilitate another important and strategic transition for Sherritt. For the first time in more than 10 years, we embarked on a growth strategy focused on expanding nickel and cobalt production by up to 20% and extending the life of mine at Moa beyond 2040.
Completion of our expansion plans is expected to take approximately two years once fully approved with our partner. Given the low capital intensity relative to greenfield or new mine development projects the lower risk in executing this expansion will allow us to capitalize on the growing demand for high purity nickel and cobalt being driven by the accelerated adoption of electric vehicles. Indeed, industry analysts expect that the compound growth rate for annual nickel demand will be 3.5% over the next 20 years.
While our growth plans were only announced in the fourth quarter of 2021, we have already made considerable progress to date, completing a feasibility study for a new slurry preparation plant and approved this first component of the expansion. This initiative is expected to result in a number of benefits, including reduced ore haulage distance, lower carbon intensity from mining, and increased production of mixed sulphides by approximately 1,700 tonnes, commencing in mid-2024. Other expansion plan initiatives are expected to deliver comparable benefits, including removing production bottlenecks and replacing aging equipment at the refinery in Fort Saskatchewan.
Another component of our growth strategy relates to efforts to commercialize the process solutions developed by our Technologies Group. This, too, marks a transition for Sherritt as historically our Technologies group was a cost centre. Instead, we are now focused on bringing our proprietary solutions to market by enabling other resource companies to improve operational performance and product quality, reduce carbon emissions, and improve profitability. Industry response to date has been encouraging.
One of our most advanced solutions includes a process that fully upgrades heavy oil while increasing economic value of oil transported to downstream markets and reducing energy consumption and carbon emissions. Another relates to mitigating the deleterious impacts of high arsenic content in copper concentrates. By stabilizing the harmful effects of arsenic content, Sherritt’s innovative solution extends the life of aging copper mines, reduces treatment costs, and produces zero carbon emissions. A third longer term solution, the development of a new process for processing laterite, will make a major contribution towards reducing the environmental impact of nickel production.
Successful completion of our expansion strategy and the ongoing efforts to commercialize our process solutions will allow us to grow value over the coming years. Reaction to our senior leadership changes, achieving our production and unit cost targets for 2021, and making progress on growth strategy has been favorable.
While executing our strategic plans is the key area of focus, simplifying and adapting our management structure to support our ambitions has remained a priority. As a consequence, we have already seen a 10% reduction in head office personnel and combined with other initiatives we expect to see an annual saving of approximately $3 million in 2022.
Another important milestone in 2021 was the release of our Sustainability Report that featured several upgraded environmental, social, and governance (ESG) targets. Among them included achieving net zero greenhouse emissions by 2050, obtaining 15% of overall energy from renewable sources by 2030, reducing nitrogen oxide emission intensity by 10% by 2024, and increasing the number of women in the workforce to 36% by 2030.
2021 was not without its challenges. Despite a change in administrations, the U.S. federal government maintained its punitive sanctions against our Cuba partners. Coupled with the reduced availability of foreign currency caused by the impact of the pandemic on tourism, Cuba’s primary economic driver, our ability to collect on overdue amounts from our Cuban partners was severely limited throughout the year.
For much of the pandemic, our operations in Cuba and in Fort Saskatchewan were largely unaffected by COVID-19 due to the rigorous health and safety protocols we implemented. The rapid spread of the Delta variant in July and August, however, took a toll on the local communities in which we operate and the supply chains we rely on and negatively impacted our results in the third quarter.
The impact of COVID on our performance has since abated with the additional health and safety measures implemented and the successful rollout of vaccines in the local communities in which we operate.
I would like to thank all of our employees for their tremendous efforts in challenging circumstances in 2021, and all of our shareholders for your patience and support over recent years. I would also like to thank Adrian Loader for his significant contributions to Sherritt’s Board over the years. Having served as a director for almost nine years Adrian has decided to retire and not stand for nomination in 2022.
Consistent with our commitment to board renewal, we appointed Dr. Peter Hancock, a mining industry executive with more than 34 years of experience, and Chih-Ting Lo, a de-carbonization expert with nearly 20 years of experience developing industry solutions at reducing greenhouse emissions, to our Board. We also named Maryse Blanger, a director since 2018, as Deputy Chair.
The notice of the meeting and the attached management information circular provide specific details about the matters to be presented at this year’s meeting for shareholder approval. Last year only 25.2% of our shareholders voted at the AGM and we were fearful of failing to obtain a quorum at the AGM. It is very important that you vote and I would encourage you to vote your shares by proxy if you are unable to attend this year’s meeting.
On behalf of the Board and Sherritt’s senior management team, I would like to thank you for your support. We continue to work in the best interests of Sherritt shareholders, and we look forward to success in the years ahead as we capitalize on our expansion plans and the growing demand for nickel, cobalt and process solutions developed by our Technologies group.
Sincerely,
Sir Richard Lapthorne
Chair, Sherritt’s Board of Directors
https://www.sherritt.com/English/Investor-Relations/Annual-Meeting-Material/default.aspx