Canada-based nickel miner Sherritt (TSX:S) has struck a deal with its partners at the Ambatovy nickel operation in Madagascar, allowing the company to eliminate $1.4 billion in debt.
In a news release, the Toronto-based firm said it will reduce its stake in the joint venture from 40% to 12%, and remain the mine operator. The nickel-cobalt mine and processing facilities are expected to run until 2024.
“After months of negotiation, I am pleased to be able to announce a resolution which removes the largest area of uncertainty for both Ambatovy and Sherritt. With this transaction, we eliminate $1.4 billion in debt from Sherritt’s balance sheet, and maintain our exposure to Ambatovy with a clean 12 per cent interest and continuity as the operator,” CEO David Pathe said in a statement.
Sherritt didn’t say what the mine’s new ownership structure would look like, but previously Sumitomo Corp. owned 32.5% and Korea Resources Corp (Kores) had a 27.5% stake.
In February Sherritt revealed it was looking at exiting Ambatovy – a mine it spent 90% of the $5.5 billion it cost to develop, with its Asian partners – in an effort to relieve a crushing debtload that had caused red ink to spill.
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