RE:RE:scotia on S: 0.75 target !!!Event Sherritt announced that it has reached an agreement in principle with its JV partners over the Ambatovy capital structure. The defaulting shareholder waiver has been extended to June 30, 2017. Impact: POSITIVE Elimination of $1.4 billion in Ambatovy partner loans and reduced equity interest to 12% — Key elements of the proposed revised joint venture partnership include an elimination of $1.4 billion in additional partner loans and a reduction of the company's current 40% equity interest to 12%. The agreement also stipulates that Sherritt will resume funding its 12% interest retroactive to 2015, requiring ~US$24-million payment at close and to escrow ~US$23 million for future funding requirements. Sherritt will remain the operator of Ambatovy until at least 2024. $132 million remaining in partner loans — The company will still have $132 million in outstanding Ambatovy joint venture partner loans. The partner loan carries interest based on six-month LIBOR plus 1.125% and matures in 2023. The loan is repaid through a portion of the company's distributions from Ambatovy (70%, if the current terms hold and the additional partner loans are fully eliminated). If the loan is not fully paid at maturity, the company has the option to either repay the outstanding balance in cash or common shares. Discussions are still ongoing; waiver extended to June 30 — We highlight that the terms are not final and that discussions between the joint venture partners are ongoing. Sumitomo and Kores have agreed to extend the waiver to June 30, 2017, which will be automatically renewed for additional one-month terms until October 30, 2017. In our view, the elimination of $1.4 billion in debt, together with continued exposure to the Ambatovy joint venture through its 12% interest, is a positive outcome for Sherritt. TD Investment Conclusion We raising our recommendation to SPECULATIVE BUY (from Hold) and increasing our target price to $2.00 (from $1.50 previously). We highlight to investors that the nickel industry continues to face significant challenges as global inventory levels remain high and mining policy uncertainties play out in Indonesia and the Philippines.