Sherritt International Corp T.S

Reality

[Contrarian333]

I think its pretty simple.  Nothing has changed.  Its a producer that can only make money at higher nickel (and cobalt prices).  It is a lowest quartile cost producer ONLY when the price of cobalt is decent.  At the risk of being misinterpreted (once again) I repeat that the cash flow is highly torqued to those higher commodity prices.  On the downside we've already seen that the bondholders are in a structurally subordinate position to the equity holders and so were we to get into a prolonged depressed price for the underlying commodities you could expect something similar to what we've seen before.  

As for me, I'm out of the bonds for signifcant gains and have been for a while, I'm also out of my trading position in the stock (at a loss) and have been since August because other more promising short term trading opportunities presented themselves.  I maintain my core investment position on which I am profitable even at these stinky prices albeit not as profitable as I was.  I'll ramp up my trading position again opportunistically when I think the time is right.

George Soros used to say that when you were bullish on a commodity you should buy the low cost producer and the swing cost producer.  Sherritt is some weird combination of the two depending upon the price of cobalt and with a sort of unusual feature of the equity on survivorability in a bad environment given this strange situation with the relationship between the bonds and the equity as evidenced by the previous reorganization.

[YourFriendo]

You've never understood this company. You never will.

[Ernieandbert]

Not so sure about that my friend.   I would say this is as expected given metal prices.  And it would appear cobalt has bottomed. I would also say this is a huge win in that Cuba made the cobalt swap payment of about 23mm.  Thank God 

[Contrarian333]

Don't disagree with any of that. Let's talk tomorrow.

[FCPlady]

Soft financial esults were expected sure, but the company missed its production targets and lowered its guidance for the year.   S is not a well run company.  Their plans for expansion at Moa will mean nothing if they can't produce finished nickel and cobalt at Fort Sask. Teck fired their COO for underperforming.  What is S going to do?  Probably give a boatload of

[Contrarian333]

Teck "retired" their COO for cost overruns at the ramping QB2.  As best we know SCN's expansion is on budget.  I think it is important to differentiate between mixed sulphide production shortfalls and transitory issues relating to finished product sales.  

[rkhosla]

I would be quite surprised if Cobalt has bottomed unfortunately. With these projects coming onboard from Indonesia, it will be pumped out at a fixed ratio and flood the market.

[YourFriendo]

It will float between 15-20

[FCPlady]

By-product credits mask Sherrritt's performnce especially when cobalt and fertilizer prices are trading at multi-year highs.  I expected Sherrri'ts Q3's results to be disappointing because of weak nickel, cobalt and fertilizer prices, but S compounded their misery with weak production results. How can anyone take this company seriously if after 25 years of working in Cuba, S can

[Billmoore]

I know someone that works there, they are in a lot of trouble 

[Contrarian333]

Meaningless drivel 

[rkhosla]

For clarification, you are reffering to this thread or the q3 report?  No, but seriously, I have some concerns - for example 'we' had to lend the JV $15mil.  Why?  And if we had to lend the JV $15mil then how will it make whole the entire cobalt swap amount in H1 of 2024?  And is a Substantial Issuer Bid now totally off the table??  

[Contrarian333]

My meaningless drivel comment was aimed at the guy who posted that he "knows someone who works there and they're in a lot of trouble".  I hate throw away comments like that. Of course at low commodity prices the full payment of the 2024 obligation of the cobalt swap is at risk  IMO.  The build up of working capital at Moa in 2022 is really what allowed for the robust

[rkhosla]

So basically the Cobalt swap / guarantee of $115 mil or whatever the number is per year is dead after year one??!! In fact did not even make it through year one before we had to GIVE BACK $15mil???  LAME

[YourFriendo]

As I said many times on this board...the Cobalt swap is just a complicated way of redirecting the Cuba share of the JV dividends. If those dividends aren't declared, there is no money from the cobalt swap. Also, rember when Contrarion said the company has no problem selling their metal at reference price? We'll they are selling their cobalt at a heck of a discount and can't sell their

[rkhosla]

I just think it is such bold face audacity to in one breath tout the 'success' of year one of the cobalt swap being paid out in 'full' and then in the other report you had to immediately turn around and lend back $15mil....  

[CommonCents123]

Yup...I've mentioned this before.  The Cuban government needs cash and the Cobalt swap agreement might change as a result.  Remember the history, Sherritt was owed money that the Cubans held back. What's to say that doesn't happen again?  The Cubans are being strangled by the US embargo and no amount of assistance from Mexico, Venezuela, the Pope, the BRICS, China

[Contrarian333]

1. The Moa working capital facility is not a new thing and if you look through the financials you will see it has been drawn on seasonally for years.  I don't see a red flag here. 2. I have YourFriendo on "ignore" and so don't see his comments but see a comment he apparently made that is quoted in another post. Of course what he has had to say is once again taken out of

[FCPlady]

The troubles are plain to see: - nickel and cobalt prices are soft and the outlook isn't great - S doesn't have a lot of cash in Canada - S can't sell into the US. - the refiery is old and because S hasn't been to invest it, we get unplanned maintenance problems - the Technology group costs about $7M a year and has delivered 0 ROI. - S still has too much debt despite what they'

[skygarden]

You could add excessively overpaid and poorly managed team to the list.