Cobalt SwapNot a lot of discussion on their teach in presentation. However, some points of interest that I did not know which are positives.
- The cobalt swap is front loaded and they expect to receive all cobalt by the end of the first half. They also mention that all cobalt will be sold before the end of the year. I would expect them to sell this cobalt as soon as possible and have a positive impact on the treasury.
- Regular MOA dividend will resume after the annual cobalt swap is completed for the year. The slide illustrating their quote share of cash flow generated by MOA and the Fort operations at Ni $ 10/pound - 120 million and $ 12/pound (180 millions) gets the point across.
- Metals Marketing, which is 100% fully owned by Sherritt, will sell ALL Moa Cobalt including the Cobalt Swap. Note that Metals Marketing (Sherritt) assume the market risk between the moment the cobalt is valued for the Cobalt swap is valued and the moment the cobalt swap is sold. This is why you see a loss on their example on page 10 as cobalt is sold at a lower price than what it was valued for swap purposes. However, this can go the other way but it opens up a world of possibilities where they can hedge their production or get into long term contract to protect themselves on the downside but keep a big part of the upside.
A couple of other nuggets : Power will be self funding but will not generate any dividend this year. Their target is CAN 10 million a year. This has some value on the upside for Sherrit valuation. Lets see when we get some cash but it will be signaled when they access more natural gaz.
Share based compensation : expect 20 million charge this quarter for the 2020 Sus vesting. We already knew this at the end of February.
Would really not be surprised to see a debt buy back pretty soon.
GLTA
P.S. Anybody had a link on the replay of this presentation ?