RE:RE:Cobalt Pricing / SwapFriendo, do not believe you understand the cobalt swap.
A) 1041 MT will be received every year from Moa to offsett the Account Receivable of GNC. Title to the cobalt will be transferred to Sherritt. If the value of the Cobalt received over 5 years is less than CAN$ 362 million, GNC will be assess interest on this amount and will need to pay it.
So translation, Sherrit is protected against price decrease.
B) If you imply that Sherritt will need to value the cobalt they receive at an higher price than its realizable value, this is quite a stretch or should I say an impossibility. They will value the cobalt at market value.
C) Sherritt does not need to sell that cobalt, it can sit on it as long as they want in their warehouse. However, this would be speculation that would subject them to market risk. Not a good idea as price can go up or down for extensive period of time.
D) Debt repurchase : you might not be a fan. But you are basically saying that Sherritt should borrow long term at 8.5%/10.75% to finance a cobalt inventory. Interesting strategy. Quite speculative as price go up and down as mentionned above. Management shoudl get fired if they were to do this.
GLTA