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Sherritt sees lenders deferring Madagascar repayments

  • Sherritt International (OTCPK:SHERF) CEO David Pathe says he is confident the miner and its partners in the Ambatovy nickel mine in Madagascar will reach agreement soon with lenders to defer repaying project loans for several years.
  • Last month, Sherritt and its partners in the mining venture, Japan's Sumitomo and Korea Resources Corp., won a deferral until Aug. 5 to repay $90M plus interest to the lenders; they owe the lenders $1.6B, which is supposed to be repaid from cash produced by the mine, but the mine is producing at a loss with nickel prices down nearly 80% percent since 2007.
  • Although nickel prices have rallied in recent weeks, Sherritt says more than 60% of global output is losing money on a simple cash margin basis - a figure that would be even higher once capital spending and other costs are added in - showing that the sector is still in the midst of a severe crisis.

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