RE:RE:A simple man view on the cobalt swapHey Nick,
Remember that per the agreement, the JV partners will not received all the cobalt produced as dividend but only 60% of it. Of course, in the end, the will also benefit from the cobalt sold by the JV accounting wise.
Sherrit will receive more cash if the price of cobalt goes higher. Management has indicated that this agreement could lead to the debt being repaid faster. I am impressed by Binedell, he retained the upside but covered the downside. This guy deserve a big bonus. He did not call this agreement transformational for nothing.
On the timing of the dividends, again a big kudo to Binedell. The cobalt production and the inventory appeared to have been allocated first to the swap. Gee, they received 39% of it in the first month of the year. Talk about getting accellerated dividend and debt repayment.
And any shortfall, to be covered in cash, would not be paid at the end of year but sooner as per the CFO when she answered the analyst question. I would translate this as being reconciled and paid out as soon as the partners receive the 2 082 tons mentionned in the agreement.
Binedell deserves a big bonus. And I plan on thanking him myself at the AGM.