VANCOUVER (miningweekly.com) – Canadian diversified miner Sherritt International has signed a definitive agreement to restructure the Ambatovy Joint Venture (JV), which will see Sherritt transfer its 28% stake in return to eliminate debt from its balance sheet.
Under the terms of the JV restructuring, which was first revealed in May, the Toronto-based company will retain a 12% stake in the Madagascar nickel/cobalt mine, and cancel C$1.3-billion of accrued partner loans from its balance sheet.
Sherritt, which owned a 40% stake in Ambatovy, had for several quarters not been funding capital cash calls by its partners Sumitomo Holding (32.5%) and Korea Resources (Kores) (27.5%), balking against the ‘40 for 12’ issue.
Sherritt CEO David Pathe explained in a recent interview with Mining Weekly Online that it no longer made sense to fund 40c of every $1 capital, for only an effective 12c return on Ambatovy cash distributions. Owing to the structure of the Ambatovy partner loans, at current nickel prices, Sherritt’s 40% ownership is reduced to a 12% economic interest.
“The signing of a definitive agreement to restructure our Ambatovy joint venture partnership represents a significant milestone. This agreement addresses our ’40 for 12’ issue and eliminates the uncertainty caused by the Ambatovy non-recourse debt, while ensuring that we retain an ownership stake in the world’s largest finished nickel laterite mine.
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