Thoughts on S! I've been out on another project all day and have only now had an opportunity to read the commentary here.
It is amazing to me how investors (and analysts) are surprised by the cash flow (lack of cash flow) results. Sherritt is just a pass through for nickel/cobalt. It is easy to input the average price of nickel in any quarter and estimatee NDCC by virture of the cobalt credit - knowing approximate mining volumes and to know within reason approximately the cash flow..........and yet investors and analysts were surprised. Go figure. The only things that surprised me were the level of production (positive surprise) and the repricing of some 4th Q cobalt sales (negative surprise).
This is true with the balance sheet too. I listened to the earnings call and the TD analyst clearly did not understand that in their sub $200m of liquidity is included the consolidation of the 1/3 rd Energas cash balances or about $70m in local currency (i.e. pesos). I don't know why he didn't previously understand this.
Don't like the price of course, but what has really changed? The Company has improved its productivity at Moa and therefore remains a somewhat improved levered play on higher nickel/cobalt price than it was.
Unlike what some on this Board have speculated for some time there is no event to drive a restructuring - there is no maturing debt for 2.5 years. What could happen over those 2.5 years?
1. the nickel/cobalt theme could work out
2. the agreed "plan" for the recovery of overdue receivables could in fact allow for the repayment of most or all of the '21 maturity ( I think I heard Pathe say he thought it would get ministerial approval next month)
3. at the very worst there is a 2.5 year period to negotiate with the bondholders for an "amend and extend" type arrangement as was seen in the past. There are no substantial activist bondholders at the moment (and less potential for that given the U.S. hard stance on Cuba). Do bondholders really want to end up holding the equity - look at who holds the bonds and the answer is - no they don't.
My own view is to wait to see a receivables deal in place before further averaging my cost. I'll pay more for the stock/bonds but don't mind that given the increased certainty such a deal would bring.
That's just my view.