Sherritt International Corp T.S

S needs to focus on cash buffer. Some truths:

[rkhosla]

1) Ni won't stay above $10 forever.  Yes sure it might spike further, and yes sure it might have a nice run for 6-12-18-36 months, and yes sure we sell premium EV amenable Ni Co products, but ultimately will - like all commodities - be victim to its own price/demand success.  The cure for high price is high price

2) Biden - regardless of your politics, pretty clear he is a one term president.  Very likely we have another 9 months of comparative calm up to mid-terms and then worsening US choas, polarization, and radicalism.  

3) Sherritt track reccord of capital allocation is horrendous.  Mistiming the cycle.  Taking moon shots  Enough said.  

4) Sherritt forecasting / market predictions have consistently been wrong / overly rosy.   

5) Sherritt receivables: crickets 

5) Cuba - enough said - getting bad to worse.  They have never been able to balance their financial needs.  Return of tourism will help slow the growing hole but in no way reverse it.  

6) JV Divy - where is it???  

So.... perhaps this time mountains of cash and rosy times are coming.  We are certainly seeing prices that ought to be profitable.  Rather however on banking this lasts a decade, I suggest the company:

1) Focus on running an efficient ship, collect cash / receivables, pay off debt.  (Just drive the bus)

2) Minimize capex to what is neccessary.  $80mil sounds like a lot but they do have quite a maintenance deficit and I would hate to see MOA breakdown at Ni $14/lb so can swallow this.  Sounds like what they are explicitly saying is they need this expenditure to ensure they maintain the 34,876 tons they are using as a baseline based on 2020 (they missed it this past year by quite a bit) HOWEVER:

3) Tie capex (including 'expansion strategy' to receivables.  Cuba pays our share and their share of Capex equal to receivables

4) Expansion strategy.  15-20% above 2020 output total doesn't sound that substantial and definitely not worth blowing our load over.  I do buy into the idea of 'cost dilution', but: Delay it.  Do it multiphase incrementally.  Do not agree to any capex including expansion until capex is tied to receivables.  

5) Power business - why are we still in it? It has generated $160mil hole for us.  The people of Cuba face enough hardships by why are we particupating in generating power for free?  Bargain harder - turn off the lights or get paid.  

We need cash badly.  Cuba needs cash badly.  Rather than be subservient once again to their needs and niavely and mistakenly simply continue to have faith they will one day (?2035) come through, let us stand up firmly for ours.  Capex gets paid out of what they owe us - up to the receivables total - before we agree to spend a penny of our own.  Focus on our own financial stability (achieve profitability, pay off debt).  If this boom is going to last as long as they claim (decades) then no harm delaying unecessary spending a year or two.  That's nothing in the long term

[Snacktime]

I agree with everything you say except Sherritt can't make demands on Cuba: Sherritt is nothing without Cuba since that is where their feedstock comes from and If Cuba ever broke the relationship, any infrastructure in Cuba is worthless to Sherritt in my opinion. Unless the politics between the US and Cuba ever change and after 70 years of BS, I'm not seeing that in my lifetime, both are

[autofocus111]

Snacktime China is the logical suitor. Russia has NILSY which is going to expand production by 30% in the next few years with their existing reserves and resources in the country.