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Bill Harris, CFASherritt International Corp.S.TOPAST TOP PICKNov 19, 2013

(Top Pick Nov 5/12, Down 25.03%) He just can’t find a floor for nickel. Loves the company and the people but Nickel has gone down so much.

Bill Harris, CFA

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$3.44

Stock price when the opinion was issued

$0.12

As of May 19, 2026. Market Open.

integrated mines

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RISKY

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

It is certainly not beyond possibility. Bloomberg default ratio is 7.36%, which is very high for that indicator. Cash flow was negative in the last quarter, yet 12-month interest expenses were $36.1M net. With its small size and Cuban and other issues, we are not sure it could raise a lot of money with a dilutive equity issue. Most debt matures in 2026. Certainly any investment here needs to be considered extremely risky.
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DON'T BUY

Always highly leveraged on risk/reward. Geopolitical risk of Cuba. Nothing compelling in terms of nickel or cobalt options, there are better choices. No dividend.

DON'T BUY

Transformed company from 4-5 years ago. Not a good investment. Looking elsewhere. 96% retail ownership implies speculative asset. Tough business to operate in (mining). Consistently losing money.

WEAK BUY

Getting to the right theme is the most important thing. Has a good basket of assets. Recently pulled back. It's a small cap, so you have to be careful. But it should continue to participate as long as base materials continue to improve.

DON'T BUY

This is a zero, although not priced there yet. That is where it is going. It has been a lousy company for a long time. Madagascar will prove to be their undoing. They defaulted on their debt in February. Their debt is currently worth 54 cents on the dollar so the stock is worth zero.

COMMENT

Historically owned bonds. If the trend for nickel continues, it will do well.

DON'T BUY

He's looking at their bonds. They're misunderstood. They've struggled badly this year as Trump pressure countries like Cuba and Venezuela where Sherritt has interests. Also, the company has a lot of debt to pay.

DON'T BUY

It's trading as if the market thinks its balance sheet will disappear--sell-off. Avoid this.

DON'T BUY

There is evidence of a bottom developing but he thinks we are in a world where growth is slowing. You need a robust economy to invest here, but it may be tradable. The story over 5 years is down.

DON'T BUY

He does not look at stocks trading at this level. This stock could go anywhere. He predicts it goes down.

COMMENT

The share price keeps falling. Why? The biggest thing recently is in Cuba where they have assets and deal with the government to repatriate cash flow, not related to that quarter's cash flow. A quarter ago, Cuba didn't pay. Two weeks ago, they announced a solution, a deal with the Cuban government which is cash-strapped, especially as it deals with the costs of hurricanes that have hit Cuba. Cuba has to pay or else it will scare off other Western companies.

SELL

This is going to 0. The assets are stranded in Cuba. Trump has opened the door to litigation. They have a terrible mine in Madagascar. Sell it, run away.

COMMENT

Cobalt is a partner commodity in the production of lithium batteries. Earnings are expected to be negative in 2019. Cobalt prices have risen sharply, causing manufacturers to find a way to move away from using it -- nickle may replace it (as an aside Sherritt could be a potential benefactor of this). He would consider selling FCC-V in favour of XBC-V (who focuses on garbage dump gas extraction).

HOLD

Most base metals travel together. Copper is down, zinc is down, so he thinks it is following the basic trend. Earnings are expected to improve next year and cash flow suggests it trades at 6 times cash flow. It is supported by EV automobile growth. He would continue to hold.

DON'T BUY

It's fallen on hard times. It bought a big mine in west Africa and has trouble getting it to run at a profit. They took on a lot of debt to buy that mine, and not the credit cycle is turning. Their bonds are trading as if is S is going bankrupt.

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Bill Harris, CFASherritt International Corp.S.TOPAST TOP PICKNov 19, 2013

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