Sherritt International Corp T.S

2026 Sherritt Bonds

[thenorthvanman]

Anyone know what they are currently selling for?

[Contrarian333]

Approximately $65. Not much trading. People waiting for second Q results.

[thenorthvanman]

Thx. Hopefully, they were able to buy more than the measly 5 mil worth of notes they did last q.

[Contrarian333]

You're welcome.  I'm not counting on bonds having been purchased this Q what with a new CEO, new budgets, etc. but I would expect purchases to be made in subsequent quarters.  They are well aware of the competing ROC opportunity in buying bonds vs other projects, opportunities available to them.

[rkhosla]

But they had moore cash and less expenditure Q2 - $5mil fertilizer stockpile and deferred Fort sask overhaul expenses - so they certainly were in a position to retire some more debt... i hope they did

[Contrarian333]

from TD re bonds: We estimate that each US$1/lb change in the nickel price impacts SCN's annual EBITDA by ~C$45MM (before hedging), with the current environment very favourable for the SCN 8.5/26 1st lien notes and the 10.75/29 senior unsecured PIKs

[thenorthvanman]

Given that any all excess cash past the minimum dividend threshold goes to Sherritt from the Moa operation this is understated.

[rkhosla]

There was a TD report sometime back it said they needed an average nickel price over the next five years I believe it was of approximately $8.37 to retire all their debt. My thoughts are they should be paying a minimum of $10 million face off per quarter. This is totally achievable at prices of about nine dollars a pound. It makes them essentially debt-free in five years.

[thenorthvanman]

What was their baseline Co spot price assumption as that seems a bit high and did they include the debt repayment from their Cuban partners? I'm hoping for larger debt reductions than 10 M per Q in the quarters ahead.

[rkhosla]

I will try and dig this up tonight my recollection though is that there was no cobalt assumptions.  So a significant rise and Cobalt prices is essentially bonus.  I eat from what I recall they were just using the present NDCC

[thenorthvanman]

Whatever the NDCC of the time was would effectively be the price assumption for cobalt as its used as a credit to lower NDCC. Roughly when did that report come out? Would of course be very relevant what their assumptions were on our Cuban receivables as well. Our debt looks quite manageable if one is to assume we are paid in full.

[rkhosla]

Here is the answer pasted below.  They say $7.50 Ni over 6 years pays-off the 2026 notes.  Of note, at the time the total outstanding of these notes was $318million and is since I believe reduced to around $280million.  Their long term Ni forcast has not changed much acutally but has increased a little - still under $8.  I believe this will change.  There is no mention

[thenorthvanman]

I'm presuming that the receivables are not part of the projections.

[rkhosla]

[rkhosla]

Sorry about that blank post. I don't have it in front of me but my clear recollection is that they ascribed zero value to the receivables. The other thing to keep in mind is that it is not typically a company's goal to pay off all it's debt. Typically it is rolled over. Obviously we have a bad history.  So to stay afloat if our ability to generate profit has improved significantly

[Nickbull]

Lots to unpack with all of this easy math is every dollar increase in CO lowers the NDCC by .10$ (So yes cobalt can add a lot of torque) With Nickel North of 8$ on a 50% basis adds 500k to the bottom line the company is making good money for their size. They still need to manage the debt but putting all free cash against debt is a waste. What they need to do is prove out a growth plan that

[rkhosla]

I for one don't want any brilliant ideas.  This company has had too much *excitment* and too many business plans deviating from its core.  I want plain and boring - methodically paying of debt and seeking efficiencies where they can find them....  maybe some supply agreements.  dabble in bitumen upgrading.  nothing fancy or draumatic or exciting for me please

[national10]

I had a LARGE stake in S up until it popped to 60 cents and sold the holding.  Generated a 5 banger on the risk this business was for 5 years.  Now, it now seems to be in another challenge with a Cuban revolution. If you want safety and a dividend, look at RSI. I have been in and out of it for years.  Usually sell at $6-6.50 and buy back at $4.50.  Pays a great dividend. 

[thenorthvanman]

That of course dramatically changes the outlook for Sherritt and thus far the Cubans seem to be living up to the Moa dividend arrangement that they have in place with Sherritt. A spot price spike radically changes the landscape for S. They are double leveraged to it.

[thenorthvanman]

That of course dramatically changes the outlook for Sherritt and thus far the Cubans seem to be living up to the Moa dividend arrangement that they have in place with them. A spot price spike radically changes the landscape for S as they are double leveraged to it.

[satchmo6]

only 5 more months till CHRISTMAS---  shares will still be under 77 cents

[Stratocheif]

If nickel stays at $8, if cuba doesnt descent into anarchy, if sherritt gets the money from cuba. All kinds of ifs here. The reality is that after the ambatovy catastrophy, sherritt entered an irriversible downward slide having lost so much money and now trying to survive under a huge debt load. By definition companies with huge debt loads paying sky high intetest with not enough cash flow to

[rkhosla]

One persons's Zombie company is another's High Risk/High Reward opportunity.  It just depends how you look at it.  Sherritt is no Zombie and this is literally a historical opportunity with the EV revolution in its infancy.  

[Albatross]

I will also be happy to see them do the responsible thing and pay down debt. They can also market their 'expertise' and look at filing more service niches for the mining industry. They need to get themselves into a position to be able to take advantage when a good opportunity comes along.. like maybe partner with spacex to mine nickel on some asteroid  XD 

[Nickbull]

No agruments from me that they have incinerated billions in the last 15 years. They passed the cheque onto the partners and bond holders. Both who took something rather than nothing. Ambatovy was a disaster, chalk that up to bad timing and greed. The HPAL is a solid process with in scale. Reset the clock and the debt is very manageable. Management needs to be smart but once again will have the