Cuba Owes Partner Canada's Sherritt International Corporation Tens Of Millions Of US Dollars. But, Both Cuba & Patient Company (And Shareholders) Anticipate Profitable Role With Electric Vehicles
/Prensa Latina News Agency
Havana, Republic of Cuba
25 June 2021
Cuba Appreciates The Trust Of Canadian Businessmen
Ottawa, Jun 25 (Prensa Latina) Cuba thanked the eve the trust of Canadian entrepreneurs who do business with the island despite the economic, commercial and financial blockade imposed by the United States, diplomatic sources indicated. The ambassador of Havana in Ottawa, Josefina Vidal, received on Thursday Leon Binedell, the new president and CEO of the Sherritt International Corp. company, and also David Pathe, who previously held that position. In her Twitter account, the official expressed her gratitude to both of them for contributing to the economic development of the Caribbean country.
On the island, Sherritt started a joint venture with the Cuban state since 1995, to exploit deposits and other investments in the energy sector existing until today. The Comandante Pedro Sotto Alba-Moa Nickel S.A. plant, managed by Sherritt, exceeds its 101 percent nickel plus cobalt extraction plans, while compensating the limitations of another similar plant, Cuban authorities reported last December. Currently, the Caribbean nation occupies the ninth place in the world in terms of nickel production and is the fifth global reserve of this metal and the third for cobalt.
The Toronto-based firm maintains its business in Cuba despite the intensification of the US blockade with the activation of Title III of the Helms-Burton Act during the administration of former White House chief Donald Trump. This measure, designed to curb foreign investment, allows the claim in United States courts of compensation for properties nationalized in Cuba when the Revolution triumphed in 1959. However, the Cuban government maintains that foreign companies have total legal security based on Law 80 on the Reaffirmation of Cuban Dignity and Sovereignty, as well as other provisions adopted to guarantee foreign investments in the country.
Sherritt International Corporation
Toronto, Canada
28 April 2021
SELECTED Q1 2021 HIGHLIGHTS · Adjusted EBITDA(1) was $30.2 million, up 602% from last year, and reflective of strong production totals at the Moa Joint Venture (Moa JV), improved nickel and cobalt prices, and reduced administrative costs. Q1’s Adjusted EBITDA total represents Sherritt’s highest since Q3 2018. · Sherritt’s share of finished nickel production at the Moa JV was 4,188 tonnes, up 9% from last year while Sherritt’s share of finished cobalt production was 477 tonnes, up 19%. The growth was largely attributable to high inventories of mixed sulphides at the refinery in Fort Saskatchewan, Alberta and improved refinery reliability. Production totals for Q1 2020 were adversely impacted by the disruption of mixed sulphides deliveries to the refinery caused by rail blockades in Canada and by extended transit times for shipping vessels from Cuba. · NDCC(1) at the Moa JV was US$3.83/lb, the lowest total since Q4 2019. · Received US$5 million in distributions from the Moa JV, indicative of improved nickel and cobalt market conditions. · Received US$5.7 million in Cuban energy payments. Sherritt anticipates continued variability in the timing of collections through the remainder of 2021, and is working with its Cuban partners to ensure timely receipts. · Received a $20.3 million prepayment against nickel deliveries in 2021. The prepayment is consistent with Sherritt’s efforts to enhance its liquidity.
Collections against overdue amounts owed to Sherritt by its Cuban energy partners in Q1 were adversely impacted by a combination of factors, including the ongoing effects of U.S. sanctions against Cuba, Cuba’s reduced access to foreign currency on account of the global pandemic, and the country’s launch of a currency unification process. Total overdue scheduled receivables at March 31, 2021 were US$154.2 million, up from US$145.9 million at December 31, 2020. Subsequent to quarter end, Sherritt received US$4.5 million in Cuban energy payments. Sherritt anticipates variability in the timing and the amount of energy payments through the remainder of 2021, and continues to work with its Cuban partners to ensure timely receipt of energy payments.
During the quarter, US$5.7 million of Cuban energy payments were received compared to US$30.1million in the fourth quarter of 2020.
Cuban energy payments were lower than the agreed-upon payments as COVID-19 and ongoing impact of U.S. sanctions limited Cuba’s access to foreign currency, in addition to the impact of currency unification. Further information on Cuban currency unification is included in note 10 of the Corporation’s condensed consolidated financial statements for the three months ended March 31, 2021.
Sherritt anticipates variability in the timing and the amount of energy payments through the remainder of 2021 and continues to work with its Cuban partners to ensure timely receipt of energy payments.
The Corporation’s cash balances are deposited with major financial institutions rated A-or higher by Standard and Poor’s except for institutions located in Cuba that are not rated.
The total cash held in Cuban bank deposit accounts was $78.6 million as at March 31, 2021 (December 31, 2020 -$80.0 million). As at March 31, 2021, $74.4 million of the Corporation’s cash and cash equivalents was held by Energas (December 31, 2020 -$75.0 million). These funds are for use locally by the joint operation and will be transferred to the Corporation upon foreign exchange approval.
On January 1, 2021, the Cuban government unified its two currencies and discontinued use of the Cuban convertible peso (CUC), with a six-month transition period for the CUC to be phased out of the economy. The Cuban peso (CUP) remains as the sole Cuban currency at a current exchange rate of 24 CUP:US$1. Further legislation and regulation may be enacted in 2021 as the Cuban government evaluates the impact of the currency unification process.
There was no impact to the functional currencies of the Corporation’s Cuban entities as a result of currency unification and the U.S. dollar remains the functional currency of these Cuban entities.
While receipts of overdue amounts owed to the Corporation during the three months ended March 31, 2021 were lower than the agreed-upon payments, in part due to currency unification, the Corporation expects this delay in repayment to be temporary while the Cuban government transitions to a single currency.
During the three months ended March 31, 2021, the Corporation also incurred lower labour and other service costs at its Cuban entities as a result of Cuban currency unification. The Corporation continues to monitor the impact of currency unification on its Cuban operations. All Cuban receivables remain owing to the Corporation and are denominated in U.S. dollars.
Finished nickel and cobalt production at the Moa Joint Venture and Fort Site during the three months ended March 31, 2021wasnot materially impacted by COVID-19. While cobalt market conditions have improved since the start of 2021, some near-term volatility is expected as a result of the continued negative impact of COVID-19 on the global economy. Receipts of Cuban energy payments from the Oil and Gas and Power segments were limited as COVID-19and ongoing impact of U.S. sanctions limited Cuba’s access to foreign currency during the three months ended March 31, 2021, in addition to the impact of Cuban currency unification. The timing and amount of receipts of Cuban energy payments is dependent upon Cuba’s economy and access to foreign currency.
Sherritt International Corporation
Toronto, Canada
8 June 2021
Sherritt Receives US$28 Million in Distributions; Reschedules Refinery Shutdown to Q3
TORONTO--(BUSINESS WIRE)-- Sherritt International Corporation (“Sherritt”) (TSX:S), a world leader in the mining and refining of nickel and cobalt, today announced that it has received a combined total of US$28 million in distributions as a result of the latest dividend declared by the Moa Joint Venture (“Moa JV”).
The combined total consists of Sherritt’s 50% share of the distribution, or US$14 million, and US$14 million re-directed by the General Nickel Company, Sherritt’s joint venture partner, from its 50% share to be applied against amounts owed to Sherritt from Energas. Through June 4, Sherritt has received a total of US$33 million in distributions from the Moa JV in 2021.
“The receipt of 100% of dividends declared by the Moa JV is indicative of strong operational performance and improved nickel and cobalt prices in 2021,” said Leon Binedell, President and CEO of Sherritt International. “Just as important, it demonstrates the flexibility and resourcefulness of our Cuban partners in addressing overdue amounts owed in light of the economic challenges the country faces as a result of ongoing U.S. sanctions and the impact of COVID-19.” The Corporation also announced that its planned full-facility maintenance shutdown of the refinery in Fort Saskatchewan, Alberta will be deferred to August from the previously scheduled June period to mitigate the risk of COVID-19 on employee and contractor health and safety.
“Ensuring the health and safety of our employees and the communities in which we operate are of paramount importance,” Mr. Binedell said. “While the number of local COVID-19 cases is declining and vaccinations accelerating, we elected to take extra caution and deferred the plant-wide maintenance shutdown until the third quarter. Although this rescheduling will not impact our guidance for the year, it will result in finished production totals to be higher in Q2 and lower in Q3 than previously anticipated.” Consistent with previous disclosure, Sherritt’s full-facility shutdown will last approximately 11 days and include all of the refinery and utility plants. Sherritt’s guidance for 2021 production, unit cost and capital spend at the Moa JV will not be impacted by the rescheduling of the shutdown.
Forward-Looking Statements
This press release contains certain forward-looking statements. Forward-looking statements can generally be identified by the use of statements that include such words as “believe”, “expect”, “anticipate”, “intend”, “plan”, “forecast”, “likely”, “may”, “will”, “could”, “should”, “suspect”, “outlook”, “potential”, “projected”, “continue” or other similar words or phrases. Specifically, forward-looking statements in this document include, but are not limited to, statements regarding rescheduled shutdown timing and anticipated production, unit cost and capital spend at the Moa JV.
Forward looking statements are not based on historical facts, but rather on current expectations, assumptions and projections about future events, including commodity and product prices and demand; the level of liquidity and access to funding; production results; realized prices for production; rehabilitation provisions; availability of regulatory and creditor approvals and waivers; compliance with applicable environmental laws and regulations; and certain corporate objectives, goals and plans. By their nature, forward looking statements require the Corporation to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that predictions, forecasts, conclusions or projections will not prove to be accurate, that those assumptions may not be correct and that actual results may differ materially from such predictions, forecasts, conclusions or projections.
The Corporation cautions readers of this press release not to place undue reliance on any forward looking statement as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward looking statements.
These risks, uncertainties and other factors include, but are not limited to, the impact of the COVID-19 pandemic; changes in the global price for nickel, cobalt, oil and gas, fertilizers or certain other commodities; level of liquidity; access to capital; access to financing; the risk to Sherritt’s entitlements to future distributions from the Moa Joint Venture; risks associated with the Corporation’s joint venture partner; variability in production at Sherritt’s operations in Cuba; risks related to Sherritt’s operations in Cuba; risks related to the U.S. government policy toward Cuba, including the U.S. embargo on Cuba and the Helms-Burton legislation; potential interruptions in transportation; uncertainty of gas supply for electrical generation; the Corporation’s reliance on key personnel and skilled workers; the possibility of equipment and other failures; risks associated with mining, processing and refining activities; uncertainty of resources and reserve estimates; the potential for shortages of equipment and supplies, including diesel; supplies quality issues; risks related to environmental liabilities including liability for reclamation costs, tailings facility failures and toxic gas releases; risks related to the Corporation’s corporate structure; political, economic and other risks of foreign operations; risks associated with Sherritt’s operation of large projects generally; risks related to the accuracy of capital and operating cost estimates; foreign exchange and pricing risks; compliance with applicable environment, health and safety legislation and other associated matters; risks associated with governmental regulations regarding climate change and greenhouse gas emissions; risks relating to community relations and maintaining the Corporation’s social license to grow and operate; credit risks; competition in product markets; risks in obtaining insurance; uncertainties in labour relations; uncertainty in the ability of the Corporation to enforce legal rights in foreign jurisdictions; uncertainty regarding the interpretation and/or application of the applicable laws in foreign jurisdictions; legal contingencies; identification and management of growth opportunities; uncertainty in the ability of the Corporation to obtain government permits; risks to information technologies systems and cybersecurity; failure to comply with, or changes to, applicable government regulations; bribery and corruption risks, including failure to comply with the Corruption of Foreign Public Officials Act or applicable local anti-corruption law; the ability to accomplish corporate objectives, goals and plans for 2021; and the Corporation’s ability to meet other factors listed from time to time in the Corporation’s continuous disclosure documents. Additional risks, uncertainties and other factors include, but are not limited to, the ability of the Corporation to achieve its financial goals; the ability of the Corporation to implement and successfully achieve its business priorities; and the ability of the Corporation to comply with its contractual obligations, including, without limitation, its obligations under debt arrangements. Readers are cautioned that the foregoing list of factors is not exhaustive and should be considered in conjunction with the risk factors described in this press release and in the Corporation’s other documents filed with the Canadian securities authorities, including without limitation the Management’s Discussion and Analysis for the three months ended March 31, 2021 and the Annual Information Form of the Corporation dated March 17, 2021 for the year ended December 31, 2020, which is available on SEDAR at www.sedar.com.
The Corporation may, from time to time, make oral forward-looking statements. The Corporation advises that the above paragraph and the risk factors described in this press release and in the Corporation’s other documents filed with the Canadian securities authorities should be read for a description of certain factors that could cause the actual results of the Corporation to differ materially from those in the oral forward-looking statements. The forward-looking information and statements contained in this press release are made as of the date hereof and the Corporation undertakes no obligation to update publicly or revise any oral or written forward-looking information or statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. The forward-looking information and statements contained herein are expressly qualified in their entirety by this cautionary statement.
