Sherritt International Corp T.S

How do a simple man value Sherritt

[FrozenInOntario]

Why do I own Sherritt should be the question every shareholder ask himself.
For myself, I own them because of their 50% JV in Moa and its allocated production of 16,000 MT of Nickel per  year  AND I believe that Nickel is going higher.    So, for me, Sherritt is worth more than $ 500 mm, their current enterprise value.   
Agree with E&B : earnings are not the most important figure for Sherritt.  And it will never be.  For exemple, one would assume that the Cobalt-Swap was a bad deal for them as they booked a 40 mm loss when they did it.  All of this because of the embedded notional interest on the debt.  Really.   Have you look at the calculation of their income taxes ? A joke but so detailed to keep accoutants happy.  BTW, this is another hidden asset for Sherritt, the NOL.  Hey, Enron was booking nice profits until they went bankrupt.
So what is important ?   Cash flows.   They do not lie (almost never should I say).  Else, how on earth do they get the cash to they buy back their debt ?  Moa is cash flowing a lot at current nickel price.    Enough to run rate an annual dividend of 114 mm last quarter.   They can repay all the debt this year for some.    Probably.  Make your own mind.  So if you believe this, and the current enterprise value (Debt +  market cap) is 500 mm, one should believe that it will also be worth 500 mm after they repay the debt.    With 400 mm shares O/S, simple maths gives you a value of 1.25 per share.
So this is my first target for Sherritt.  Not too bad for a $0.56 stock.  A no brainer.   Afterward, it will depend on what management does with the extra cash, if one of the free kickers (power – technology) pays out, how nickel trades, etc…  There is a tendancy for management to piss away the cash when it accumulates in the treasury.    So far, Binedell does not look this way.  Will reassess as the story unfolds.
GLTA

[TheCount11]

I want to flesh out your income statement argument  Is there an issue between CapEx and Depreciation?  Ie the lifespan of the equipment a lot longer?  No unscheduled mine closures for urgent repairs? Interest is an expense.  Shareholders are the residual claim.  I can see ignoring one time costs and benefits. 

[FrozenInOntario]

Dear Count,  One of the problem of the financial is the different accounting treatments of Sherritt operations.   Equity pick up for Moa, 1/3 consolidation for Power and the rest straight consolidation.  So your financials become a bit murky. Page 10 will give you combined Operations including 50% of Moa and 100% of the site.  In essence, what I am investing in Sherrit.&

[TheCount11]

I have 37 tonnes of Cobalt added to inventory however 374 tonnes of Nickel were subtracted from inventory.  CapEx is lumpy hence why depreciation gives a clearer picture. Sherritt utilized CBCA to effect complex debt restructuring due to issues collecting from its Cuban partners.  If revenue recognition ever made sense as a concept here it is as we are at the bartering stage. My point

[FrozenInOntario]

What is your point on Cobalt ? If you prefer depreciation on historical cost as it is easier, whatever rocks your boat.   This is not cash.   If you value 2 mines, the one with lower depreciation is worth more than one with higher depreciation, everything else being equal ? I am a simple man, no idea what is CBCA.    Do not understand your comment on revenue

[Albatross]

Not sure why people are sooo keen to see a posted profit.. They are paying down debt. Anybody who knows a bit about running a business will know that paying down debt will go against earnings. The last thing they want is to have to pay taxes on profit.. They are running it the way it needs to be run for the next year or two until all that overhanging debt disappears. Then the cash engine begins

[Nickbull]

Completely agree cheers

[Stratocheif]

Since when does paying down debt and AVOIDING the imterest EXPENSE go against earnings????. Don't know which planet you come from but paying down debt has 3 results...interest expense drops on the income statement so higher PROFIT, liabilities drop on the balance sheet so higher equity., and a change in cash available on the statement of cash flow.(provided of course that you actually had a

[Stratocheif]

Reducing expenses is never a bad thing. Regardless of wether its reducing interest expense, salary, gen & admin, consulting fees, unrecoverable R&D, etc, or even capital expenditures because they are depreciated so that's an expense. Sherritt doesn't want to see it that way. Profit is all that matters and that's why (along with the geopolitical issues of course) that it's

[Albatross]

Last I checked, diverting cash to make debt payments reduces profit. Therefore they don't have to show as much profit and therefore not pay as much tax. Once they have completed their debt obligations they will be able to show full profit and hopefully return to shareholders in the form of dividends and buybacks... the downside is they will then have to pay tax on that profit.  The

[rkhosla]

It is a receivable. Therefore have they not already paid taxes on it? When I do my corp taxes I am obliged to pay tax on my receivables even though I do not have the cash in hand. Is it not the same? So whatever they do with the money there oughtto be no tax on receivables am I not correct?  

[Stratocheif]

You are both causing confusion and mixing separate issues. The government thru the tax act allows businesses...by thier own election...to (1) pay taxes on receivables ( money earned  but not yet received ) in the year in question, or (2) to have thar amount included only in the year it is received. The only rule is that this is done the same way each year. This allows for different business

[rkhosla]

Perfect - I don't need to take an accounting course, I just need you.  It was Albatross's statement that using these receivables to pay down debt reduced profit that alarmed me - and you have confirmed, as I already believed, that this is incorrect.  So, on issue number 2, what merhod does Sherritt use?  I believe they use accrual accounting and have already booked their

[FrozenInOntario]

Hey, They  will not pay taxes in Canada for the foreseable future... As at December 31, 2022, the Corporation had non-capital losses of $962.2 million (December 31, 2021 - $948.2 million) and capital losses of $1,128.5 million (December 31, 2021 - $1,128.8 million) which may be used to reduce future taxable income. The Corporation has not recognized a deferred tax asset on $962.2 million

[autofocus111]

A cool $1.2B deferred tax asset and another $1.1B capital loss that can be applied against futute capital gains huh. That's a fantastic bonus to any large company that wants to acquire Sherritt. And yet, no-one has expressed interest in doing so. NILSY or a Chinese mining compnay probably has held off expecting Canadian government rejection of any deal. And the likes of BHP, VALE, RIO can'

[Stratocheif]

What planet did you just arrive from?    1) the Moa mine belongs to the Cuban communist government. THEY decide who operates there, not Sherritt. So how is sherritt going to sell itself. What are they offering a prospective buyer??? Hey BHP or VALE, would you like to give us money so we can leave and you can step in and deal with a deadbeat government mine owner that you will have no

[FrozenInOntario]

Hey Strato, Agree with that Sherritt is curently not marketable to firms doing business in the States. But, the States have not crushed Sherritt yet.  Why should they wait until it is sold ? Hey, why did you go on a date with a fat ugly gal ?  Maybe your recollections are biaised if you did not get what you wanted from her ? When Sherritt finishes paying their debt and begin 

[Stratocheif]

You need to take some accounting and taxation courses. It will help you in your business and investing endeavours

[rkhosla]

So... are you looking at Sherritt's inventory or the JV's inventory?  The two are not the same.  

[Nickbull]

Frozen you make a great comment about the cobalt is held up as inventory (approximately 40mil or .11$/share). This stock will go much higher as they clear this inventory, continue to pay off debt and continue to receive 21 mil in cobalt swap a quarter. They are in the position to be debt free by the end of the year. I would expect they don't pay it all down perhaps 200mill. Either way there

[Nickbull]

Frozen you make a great comment about the cobalt is held up as inventory (approximately 40mil or .11$/share). This stock will go much higher as they clear this inventory, continue to pay off debt and continue to receive 21 mil in cobalt swap a quarter. They are in the position to be debt free by the end of the year. I would expect they don@t pay it all down perhaps 200mill. Either way there will

[VerificateASAP]

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