Ambatovy

Antananarivo, Madagascar
Antananarivo, Madagascar
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News Article | May 1, 2017
Site: www.marketwired.com

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES Sherritt International Corporation ("Sherritt") (TSX: S) is pleased to announce that discussions between Sherrittt and its Ambatovy JV partners, Sumitomo Corporation (Sumitomo) and Korea Resources Corporation (KORES), have advanced to an agreement in principle on the main elements of a revised joint venture partnership structure: David Pathe, President and CEO of Sherritt International, commented, "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." Discussions continue to advance positively among the partners with substantial progress being made to resolve tax, accounting and ancillary business issues associated with the revised structure, in order to complete binding and definitive documentation as soon as possible. Implementation of the revised structure would be subject to certain internal and third party approvals, including senior project lender approvals. Additional details regarding the transaction are expected to be disclosed once partner approvals are obtained. In light of this development, Sumitomo and KORES have agreed to a waiver extension to June 30, 2017 which will automatically be renewed for additional one-month terms until October 30, 2017 unless Sumitomo or KORES provide notice of termination not less than seven business days prior to the end of the prevailing term. This longer extension and automatic renewal is meant to provide sufficient time for binding and definitive documentation to be completed and for execution and closing of the transaction. Sherritt, which is celebrating its 90th anniversary in 2017, is the world leader in the mining and refining of nickel from lateritic ores with projects and operations in Canada, Cuba and Madagascar. The Corporation is the largest independent energy producer in Cuba, with extensive oil and power operations across the island. Sherritt licenses its proprietary technologies and provides metallurgical services to mining and refining operations worldwide. The Corporation's common shares are listed on the Toronto Stock Exchange under the symbol "S".


News Article | May 4, 2017
Site: www.mining-journal.com

Sherritt International’s (CN:S) Ambatovy nickel mine in Madagascar was once the company’s crown jewel, conceived and planned when nickel prices were blowing through the ceiling in the mid-2000s. Of course, nickel fell back to earth, and Ambatovy soon turned into huge balance sheet issue for the Canadian company.


News Article | February 17, 2017
Site: www.marketwired.com

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES Sherritt International Corporation ("Sherritt" or the "Corporation") (TSX: S), the world leader in the mining and refining of nickel from lateritic ores, today reported its financial results for the year ended December 31, 2016. "This year was about sticking to our strategic priority of liquidity preservation, negotiating a three-year extension of maturities on our public debentures and entering into an Ambatovy lender agreement to defer principal payments for three years," said David Pathe, President and CEO, Sherritt International. "We have pushed out our first public debenture maturity to late 2021 and markets for our products have moved off the multi-year lows we saw in the first half of the year. I look forward to a year in which we expect increased production at our HPAL nickel operations and results from our first oil drilling in Block 10 in Cuba." All amounts are Canadian dollars unless otherwise indicated. (1) For additional information see the Non-GAAP measures section of this press release. In 2016, operating cash flow came mainly from the Oil and Gas and Power operations ($84.4 million), partially offset by the Moa JV operations, which were free cash flow negative. There were no cash contributions to Ambatovy in 2016. During the year, interest received on the CSA Loan was $3.9 million compared to $37.9 million in 2015. Total energy receipts from the Cuban operations were US$129.6 million in 2016 compared to US$232.2 million in 2015, with Cuban overdue receivables of US$74.6 million at the end of 2016 compared to US$53.8 million at the end of 2015. Discussions continue to address the timing of ongoing Cuban payments, with new schedules expected from the Cubans addressing payment over the course of the coming year. The net loss from continuing operations in the fourth quarter of 2016 was $109.6 million, which included $28.3 million of adjusting items, primarily a $25.7 million unrealized foreign exchange loss. For the full year, the net loss from continuing operations was $381.8 million, with $51.9 million in pre-tax adjusting items, and $5.8 million in tax adjustment items for an adjusted net loss from continuing operations of $427.9. The main adjusting items on a full year basis were a $35.9 million unrealized foreign exchange gain, a further gain of $12.6 million on the repurchase of debentures, and a gain of $15.6 million relating to VAT adjustments. On a year-over-year basis, the 2016 nickel average reference price of US$4.36/lb declined by 19% over the 2015 average, with roughly 27% of global production remaining underwater on a cash margin basis at this price. Despite the negative margins experienced by many producers, more significant supply cuts have been slow to materialize, and global inventory levels remain high. In the second half of 2016, prices recovered significantly from the lows of US$3.50/lb reached in the first quarter of 2016 and remained generally above US$4.50/lb through the fourth quarter of 2016. Recent market activity remains bullish on a fundamental basis, as market analysts continue to reinforce projected deficits and forecast stronger prices carrying over from 2016 into 2017. Fundamental supply challenges that have emerged with the Philippines ongoing environmental audits on all mining operations in the country, closures of uneconomic operations, and healthy stainless steel results from North America and Europe have helped propel LME prices to levels previously reached in 2015. After peaking at 470,000 tonnes in June 2015, nickel inventories held in London Metals Exchange warehouses have declined by close to 100,000 tonnes but the year end balance of 372,000 tonnes remains high compared to historical levels. The announced mine closures in the Philippines coupled with improved stainless steel demand are both seen as near-term catalysts for continued strength in the nickel market, although this is being tempered by the ramp up of Nickel Pig Iron (NPI) operations in Indonesia and the announced easing of the ban on ore exports allowing quotas of low grade nickel containing ore to be exported by Indonesian miners who meet criteria which have not yet been fully articulated. The average reference price for cobalt in 2016 was US$11.77/lb or down only 9% from its 2015 comparable, with the outlook remaining positive. The cobalt price recovery from the lows early in 2016 has been more significant than nickel, moving from approximately US$9.85/lb in the first quarter to end the year at approximately US$14.92/lb. While nickel prices experienced a correction in the month of December and since, cobalt prices have gone on to make new highs in January 2017. Refined cobalt supply contracted in 2016 with the suspension of production from Votorantim (Tocantins) in Brazil and Queensland Nickel in Australia. Indications are that the market is approaching balance or slight deficit. Overall cobalt demand is supported by the longer-term outlook for cobalt in rechargeable batteries, a market that utilizes refined forms of cobalt with purity being an important factor in customer demand, and environmental and sustainability concerns from African sourced mines becoming increasingly important. These concerns received media attention after an Amnesty International report in January 2016 which focused on human rights abuses in Democratic Republic of Congo (DRC) cobalt mining operations. Because the DRC is the world's largest producer of cobalt, cobalt customers have responded by requiring more stringent certification of origin procedures, to restrict or prohibit buying cobalt sourced from the DRC. Superalloy demand also remains strong, along with other applications such as magnets, diamond cutting tools, soaps and paint driers which continue to provide strong demand for cobalt. As a result of the positive medium term outlook for cobalt, and the knowledge that most cobalt supply comes as a by-product of copper and nickel production, speculative interest has picked up. The Moa JV finished nickel production of 3,782 tonnes (50% basis) in the fourth quarter is 8% lower than its level last year and 12% lower than third quarter 2016 production. The shutdown of the processing plant during Hurricane Matthew had a modest impact, which was compounded by the bridge collapse in November, and the corresponding impacts on haulage time and distance using secondary access roads. Full year production of finished nickel was relatively flat from 2015, down only 2% despite the impacts in the fourth quarter. The lower mixed sulphides production was partly offset by utilization of third party feed. On a yearly basis, cobalt production was similar to 2015 levels as the third party feed was and continues to be cobalt rich. Revenue in the quarter is down by 9% on a year-over-year basis reflecting lower fertilizer revenue. Fourth quarter fertilizer sales are down $10.1 million or 40% from their prior year level, as the early onset of winter compared to last year resulted in a lower harvest for Fort Site fertilizer customers, and average realized prices for fertilizer were also depressed. On a full year basis, revenue was down 18% over 2015, consistent with the average reference price decline of 19% in nickel. Although the year-over-year price decline was the main factor influencing Moa's results, we have seen an improvement over the course of the year as nickel and cobalt prices have recovered from their lows earlier in 2016. Nickel average reference prices of US$4.90/lb in the fourth quarter of 2016 compare to US$4.27/lb in the comparable quarter of 2015. Cobalt average reference prices of US$13.51/lb in the fourth quarter of 2016 are up 19% from their comparable quarter of 2015. The NDCC of US$3.80/lb of nickel in the fourth quarter is US$0.90/lb higher on a year-over-year basis primarily due to lower production volumes and the lower fertilizer credit, which was approximately US$0.55/lb lower than the prior year's fertilizer credit. These negative effects were partly offset by the benefits from the newly constructed acid plant, which is expected to deliver a further cost benefit in 2017. The cobalt credit in the fourth quarter was US$1.55/lb, the highest experienced since second quarter 2012. Moa's 2017 NDCC guidance range of US$3.20/lb to US$3.70/lb takes into account the acid plant cost benefit, along with higher forecasted energy prices and planned maintenance spending, including an annual refinery shutdown and acid plant shutdown. Cash used by operations of $6.1 million in the fourth quarter reflects the lower production and higher costs, although for the full year, cash used by operations was $2.7 million at full year average reference nickel prices of approximately US$4.36/lb. Capital spending of $2.6 million in the quarter and $32.9 million (US$25 million) in 2016 is significantly lower compared to the same periods last year due to lower planned spending on sustaining capital and the completion of the acid plant which is expected to be approximately US$10 million (100% basis) under budget. Expansion capital spending in the fourth quarter includes a credit for the transfer of spare parts to inventory which is included in Sustaining Capital. Capital spending guidance for 2017 is approximately US$28 million. The Ambatovy JV fourth quarter 2016 finished nickel production was 5,111 tonnes (40% basis), and was the highest for the year, up 39% from third quarter 2016 levels and 5% compared to the fourth quarter of 2015. PAL ore throughput operated at 93% of design capacity during the quarter. This result contributed strongly to full year finished nickel production of 16,842 tonnes (40% basis), down year-over-year following the tailings pipe blockage and subsequent total plant maintenance shutdown that affected second and third quarter production. PAL ore throughput operated at 78% of nameplate capacity for the full year, with refinery nickel averaging 70% of nameplate capacity. Higher cobalt and nickel reference prices in the fourth quarter combined with higher production were the main drivers of increased revenue in the quarter, with cobalt sales benefiting from provisional price adjustments. On a full year basis, overall revenue is down by 20% following the trend in nickel prices and the production impacts described above. The NDCC of US$3.10/lb for the fourth quarter is Ambatovy's best quarterly cost performance since inception, and was significantly under the previous best quarterly NDCC (US$4.07/lb in fourth quarter, 2015). This result demonstrates the cash cost profile achievable when operating at levels closer to 85% of design capacity. Compared to fourth quarter 2015 levels, the 2016 quarterly and yearly NDCC benefited from lower input prices, especially sulphur, ammonia and fuel, and from further fixed cost savings and efficiencies throughout the operations. The full year NDCC of US$4.27/lb is a 12% improvement over 2015 NDCC, despite the lower production volumes. Net Direct Cash Cost guidance for 2017 is a range of US$3.10 - 3.70/lb. Cash used by operations was $34.6 million for the full year, compared to $24.3 million in 2015. Most of the 2016 capital spending of $33.1 million on a 40% basis (US$25 million) was incurred in the fourth quarter and capital spending guidance for 2017 is expected to increase to $61 million (US$45 million), with most of the expenditure relating to new mining development and fleet upgrades. Sherritt has not funded any cash calls since achieving financial completion, with total post-completion funding provided by Sumitomo and KORES of US$173 million as of December 31, 2016. This includes US$20 million in the fourth quarter 2016 and US$143 million in the full year 2016. Funding is intended to cover operating losses, capital spending and interest (US$56 million annually) on the Ambatovy Joint Venture financing as described in Note 6, Investment in an Associate, to the consolidated financial statements. As of December 31, 2016, the cash position at Ambatovy was $76.7 million (100% basis). By agreement amongst the partners, Sherritt is not considered to be a defaulting shareholder under the Shareholders Agreement for amounts not funded through March 10, 2017 after a further extension granted February 16, 2017. Discussions continue regarding the partnership structure and future funding arrangements. Cuba gross working-interest oil production of 15,452 bopd in 2016 is 15% below its 2015 level, reflecting natural reservoir declines and the absence of any contribution from development drilling during the year. Revenue in the fourth quarter of 2016 was stable compared to the same quarter a year ago, as lower production was offset by higher realized prices. On a full year basis, revenue is 33% below 2015 as both production and realized prices are lower by 15% and 22% respectively. The average reference price of GCF6 in 2016 was down 21% from its 2015 comparable level, which is similar to the price decline in nickel over the same period. The recovery in WTI and fuel oil prices over the course of 2016 has been more significant, with fourth quarter 2016 GCF6 prices being up 38% over their comparable quarter in 2015. GCF6 prices have climbed steadily since their lows in the first quarter of 2016, and the spread between GCF6 and WTI prices has narrowed. GCF6 prices averaged 84% of WTI prices in the fourth quarter, compared to only 63% in the first quarter of 2016. Cuba unit operating costs remain competitive, at $10.95/barrel for the fourth quarter and $9.75/barrel for the full year 2016, as lower aggregate operating costs offset the decline in production. Capital spending of $8.2 million in the fourth quarter and $25.9 million for the full year are both lower than expected based on 2016 published guidance due to lower equipment expenditures. Drilling and testing of the first well in Block 10 is now scheduled to be completed in the first quarter of 2017, with results to be disclosed shortly thereafter. A second well is planned to be drilled and tested in the second half of 2017. Test results from these two wells will determine whether or not Sherritt will proceed with commercialization of Block 10. In 2016, Sherritt deferred the expenditures relating to a seismic program on another Block, 8A, which will now be carried out in 2017. Completion of this seismic survey is required to satisfy the first exploration commitment for Block 8A. After the seismic results are known, a decision will be made as to whether or not to proceed to the next exploration phase. Power production in the fourth quarter of 224 GWh and 894 GWh for the full year are both consistent with last year's production. Average realized prices are also consistent as they are covered by long-term contracts fixing the tariff rates at US$45/MWh while construction capital provided by Sherritt is still being repaid, and US$38/MWh for the Base facilities, when all capital costs have been recovered. Thus the change in realized price is usually a function of the US$/C$ exchange rate, as is the case in 2016 compared to 2015. Fourth quarter 2016 revenue of $13.7 million is consistent with its comparable quarter in 2015 and full year revenue is higher this year counting revenue related to the construction of the Puerto Escondido/Yumuri pipeline, under a service concession arrangement. Overall, unit operating costs are up on a year-over-year basis primarily due to a planned major inspection of a gas turbine at Boca de Jaruco. Unit operating cost guidance for 2017 is a range of $18.75 - $19.50/MWh, which is approximately a 15% decline from 2016 levels, mainly because of lower gas turbine maintenance. Cash provided by operations of $8.0 million in 2016 is down from the $61.4 million recorded in 2015, with most of the change being the absence of interest payments received on the CSA loan in 2016. Adjusted EBITDA of $29.5 million for the full year is down marginally from 2015, with the higher unit operating costs. The loss from operations of $5.3 million for the year includes depreciation charges of $34.8 million. Spending on capital and service concession agreements for the year primarily relate to the construction of the new pipeline that delivers gas to be processed at the Puerto Escondido facility, and which became operational in September. On December 15, 2016, Energas received approval from the Cuban Executive Committee to extend the contract term of the Varadero power facilities (173 MW total installed capacity), which was to terminate in 2018, to 2023. The table below lists Sherritt's Strategic Priorities for 2016 and summarizes how the Corporation performed against those priorities in 2016. The table below lists Sherritt's Strategic Priorities for 2017. The 2017 Strategic Priorities reflect the continuing cautious commodity price outlook and the Corporation's responsibility to preserve liquidity, continue to drive down costs, improve organizational effectiveness and execute rational capital allocation plans. Sherritt's purpose, originally communicated in 2014, continues to be a low-cost nickel producer that creates sustainable prosperity for our employees, investors and communities. In 2016, Sherritt made certain modifications to how guidance is presented, showing capital spending estimates in U.S. dollars, as well as their Canadian dollar equivalent. In the quarterly reporting, actual capital spending is presented in Canadian dollars consistent with Sherritt's reporting currency, but estimates and forward looking information continue to be provided in US dollars. This change in presentation is intended to align with Sherritt's capital budgeting practices, and to mitigate the change to capital spending that arises from translation to the Canadian dollar reporting currency. Capital projects in the Metals business are generally U.S. dollar expenditures, while in Oil & Gas, the expenditures are roughly 50% Canadian dollar denominated and 50% U.S. dollar denominated. The Corporation uses combined results, Adjusted EBITDA, average-realized price, unit operating cost, and adjusted operating cash flow, and free cash flow to monitor the performance of the Corporation and its operating divisions and believes these measures enable investors and analysts to compare the Corporation's financial performance with its competitors and evaluate the results of its underlying business. These measures do not have a standard definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. As these measures do not have a standardized meaning, they may not be comparable to similar measures provided by other companies. See Sherritt's Management's Discussion and Analysis for the period ended December 31, 2016 for further information. Sherritt will hold its quarterly conference call and webcast today at 10:00 a.m. Eastern Time. An archive of the webcast will also be available on the website. The conference call will be available for replay until February 22, 2017 by calling 647-436-0148 or 1-888-203-1112, access code 3172353#. COMPLETE FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS Sherritt's complete interim condensed consolidated financial statements and MD&A for the year ended December 31, 2016 are available at www.sherritt.com and should be read in conjunction with this news release. Sherritt, which is celebrating its 90th anniversary in 2017, is the world leader in the mining and refining of nickel from lateritic ores with projects and operations in Canada, Cuba and Madagascar. The Corporation is the largest independent energy producer in Cuba, with extensive oil and power operations across the island. Sherritt licenses its proprietary technologies and provides metallurgical services to mining and refining operations worldwide. The Corporation's common shares are listed on the Toronto Stock Exchange under the symbol "S". 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 set out in the "Outlook" sections of this press release and certain expectations about capital costs and expenditures; production volumes; capital project completion and ramp up dates; future price of key commodities; sales volumes; revenue, costs, and earnings; sufficiency of working capital and capital project funding; results of on-going discussions regarding the partnership structure and future financing arrangements at the Ambatovy Joint Venture; results of discussions regarding timing of ongoing Cuban payments; completion of development and exploration wells; and amounts of certain joint venture commitments. Forward-looking statements are not based on historic facts, but rather on current expectations, assumptions and projections about future events. 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 changes in the global price for nickel, cobalt, oil and gas or certain other commodities, share-price volatility, level of liquidity and access to capital resources, access to financing, risk of future non-compliance with debt restrictions and covenants; risks associated with the Corporation's joint venture partners; discrepancies between actual and estimated production; variability in production at Sherritt's operations in Madagascar and Cuba; potential interruptions in transportation; uncertainty of gas supply for electrical generation; uncertainty of exploration results and Sherritt's ability to replace depleted mineral and oil and gas reserves; the Corporation's reliance on key personnel and skilled workers; the possibility of equipment and other failures; the potential for shortages of equipment and supplies; risks associated with mining, processing and refining activities; uncertainty of resources and reserve estimates; uncertainties in environmental rehabilitation provisions estimates; risks related to the Corporation's corporate structure; political, economic and other risks of foreign operations; risks related to Sherritt's operations in Madagascar and Cuba; risks related to the U.S. government policy toward Cuba, including the U.S. embargo on Cuba and the Helms-Burton legislation; risks related to amounts owed to the Corporation by the Malagasy and Cuban governments; risks related to the accuracy of capital and operating cost estimates; reliance on significant customers; foreign exchange and pricing risks; compliance with applicable environment, health and safety legislation and other associated matters; risks associated with governmental regulations regarding greenhouse gas emissions; maintaining the Corporation's social license to grow and operate; risks relating to community relations; credit risks; shortage of equipment and supplies; competition in product markets; future market access; interest rate changes; 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; risks related to the Corporation's accounting policies; risks associated with future acquisitions; uncertainty in the ability of the Corporation to obtain government permits; 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; uncertainties in growth management; and certain corporate objectives, goals and plans for 2017; and the Corporation's ability to meet other factors listed from time to time in the Corporation's continuous disclosure documents. 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. 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.


News Article | October 5, 2016
Site: news.yahoo.com

Dieter Zetsche, CEO of Daimler and Head of Mercedes-Benz, poses in front of a Mercedes EQ Electric car at the Mondial de l'Automobile, the Paris auto show, in Paris, France, September 29, 2016. REUTERS/Jacky Naegelen/File Photo LONDON (Reuters) - Electric cars such as the Nissan Leaf may look no different from the standard family runaround. But the new materials that go into them could revolutionize the market for metals used in the industry, opening up a new field for commodities investors. "We identified electric vehicles as an area where we are at an inflection point for demand," said Duncan Goodwin, portfolio manager of the Baring Global Resources Fund. Around 12 percent of the fund's $378.2 million in assets is exposed to materials that are used in electric vehicles. It has investments in New York-listed Albemarle and Australia's Orocobre, two companies producing lithium, a key element in electric car batteries. Shares in both companies have risen sharply this year. Governments, keen to push growth in electric cars in a bid to meet their carbon emissions targets, are tempting consumers with perks like subsidies, free parking and tax breaks. Growth in the market is in turn creating an opportunity for commodities investments currently estimated at $235 billion. But it is not a simple one-way bet. Predicting how much of any metal will be needed to meet demand for electric vehicles in the longer term is tough and advances in battery technology could alter the mixture. Getting drivers to adopt electric cars remains a challenge - the need to charge them up frequently and time taken to do so have put off many potential buyers. Still, concerns over the pollution created by diesel-powered vehicles mean that electric car prototypes dominated the Paris car show last week. The number of electric and hybrid vehicles on the road worldwide surpassed 1 million last year, according to the International Energy Agency. While estimates vary, IHS Automotive expects electric vehicles to represent nearly 4 percent of all light vehicles worldwide by 2020, equivalent to 3.9 million cars, up from just over 14,000 in 2010. So what sits below the bonnet in these vehicles? Most electric car batteries use lithium nickel manganese cobalt oxide (NMC) cathodes and graphite anodes. "Rare earth" metals dysprosium, neodymium and terbium, chiefly mined in China by companies including Xiamen Tungsten and China Minmetals Rare Earth Co, are used in some electronic components of the motor. "It's clear that electric cars from today's point of view will have lithium ion-based batteries," said Horst Friedrich, director of Germany's Institute of Vehicle Concepts. "We're talking about lithium, and... metals like cobalt, iron phosphate, rare earth elements." Much of the world's lithium comes from an area called the "Lithium triangle" in Chile, Argentina and Bolivia. Mining it is an increasingly lucrative business. Prices of battery grade lithium in China, the biggest lithium ion battery producer, surged to above $20,000 a tonne this summer, nearly three times higher than a year earlier, as demand grew. "The lithium industry is going from 160,000 tonnes of LCE (lithium carbonate equivalent) today to at least 260,000 tonnes by 2020," said Simon Moores, managing director of Benchmark Mineral Intelligence. Albemarle is investing an undisclosed sum to boost its production of battery-grade lithium salts to try to supply half of that projected demand growth, said John Mitchell, the president of Albemarle's lithium unit. Australia's Lithium Power International is preparing its Maricunga Salar project in northern Chile to be able to ship lithium directly to China for use in electric vehicles, and aims to be in production by 2019-2020. Australian rival Orocobre, whose share price has risen by more than 50 percent this year, has nearly completed a scoping study with the aim of at least doubling production capacity over the next two years at a facility in Argentina. Among South American companies, Chile's SQM announced this month that it was investing $30 million to boost its lithium hydroxide capacity by 7,500 tonnes. "The market penetration of electric vehicles in the automotive market will have a significant impact on lithium demand," it said. Critics caution against expecting shortages of lithium as there is an abundance of it in the earth's crust. Others warn against jumping too quickly into smaller companies that may not produce the high grade lithium needed for the batteries. "It's very much buyer beware, it's a fast-moving market, and there is a large degree of ignorance about it," Finntech analyst Martin Potts said, adding that graphite could be more interesting for investors. China dominates the sector for graphite, used in anodes. Benchmark Mineral Intelligence expects 150,000-170,000 tonnes of extra anode grade graphite will be needed by 2020, worth an extra $1.125-1.275 billion. Canada's Eagle Graphite said while the impact of electric vehicles on its business is still to be felt, when global production hits around 1 million cars per year, the draw on graphite supplies will become significant. "The more forward-looking manufacturers are rightly becoming concerned about long term supply," its CEO Jamie Deith said. "Not only is there the question of producing enough graphite, but the fact that China accounts for 100 percent of natural graphite anodes today is an additional concern." "The battery industry has to diversify sources." Meanwhile cobalt prices, up 16 percent this year, are expected to rise another 45 percent by 2020. The U.S. Defense Logistics Agency starting to stockpile cobalt compounds highlights their importance. Sherritt International, one of the largest cobalt producers, said it is set to increase cobalt production at its Ambatovy mine in Madagascar in line with nickel output. As cobalt is mined largely as a by-product of other metals such as nickel and copper, it is hard for producers to crank up output in response to higher demand, it said. That lack of supply elasticity could push prices higher. Not all metals used in car batteries have a rosy future. Demand for manganese, a common component in steel, is expected to remain weak in the near term as the steel sector suffers. Predicting how much of any given metal would be needed to meet demand for electric vehicles in the longer term is tough and advances in battery technology could alter the amounts. Metals such as nickel, cobalt and manganese may not be needed in batteries such as the lithium sulfur battery being developed by Oxis Energy, based in the English city of Oxford. Also in the background are green vehicle technologies, most notably hydrogen fuel cells, being mooted as possible rivals to batteries. But developing new technology to the point where it can be commercialized takes time. "We consider the risk of substitution of lithium to be very low," said CRU Group's Julia Ralph. Guiding the silent, top-of-the-range Leaf around a showroom complex at Nissan London West, salesman Keith Almansury says education is the key to driving growth in the segment. "If people don't love electric cars, it's because they don't know about electric cars," he said, flagging up benefits including environmental friendliness, savings on fuel and servicing, and free parking. "But above all, it's just a really nice drive."


News Article | November 15, 2016
Site: www.theguardian.com

The downturn in commodity prices has hit the mining industry globally but in Madagascar, it coincided with the end of a five-year period of turmoil, precipitated by a coup in 2009. Any hopes for the sector to propel itself back on the development track were dashed. “Lots of mining companies came to Madagascar to explore [before 2009] but then we had the political crisis, with all the uncertainty and lack of visibility it brought, and even though we had elections in 2013, that uncertainty has not really lifted,” said Willy Ranjatoelina, executive secretary of the Madagascar Chamber of Mines. In the mid-2000s, Madagascar had given the green light to two large-scale mining projects: Ambatovy, a $8bn (£6.4bn) nickel and cobalt project developed by a consortium led by Sherritt International, and QMM, a $1bn ilmenite project developed by Rio Tinto. Since then new projects have dried up. While the downturn in fortune in large-scale mining is bad news for Madagascar’s revenue forecasts, it offers the authorities an opportunity to turn their attention to an alternative: artisanal and small-scale mining. Although artisanal mining has been practised in Madagascar for centuries, it’s been neglected as a formal activity – a “missed opportunity”, says Ranjatoelina, considering that around a million people work in the sector, second only to agriculture. Formal recognition by the government, it is argued, could bring greater tax revenue and lead to improvements in health and safety and use of child labour in the sector. Most artisanal mining focuses on gold and precious stones (Madagascar is famed for its sapphires, rubies and emeralds) and production isn’t insignificant – at its peak, Madagascar was thought to produce about 40% of the world’s sapphires and its annual gold production is reckoned to be about 15 tonnes, worth about $450m, but virtually all of it remains under the radar. Officially, 2016 will be the first year that Madagascar exports gold (Anor, the national gold agency set up in 2015, hopes to export 500kg, about $15m), yet in 2011, foreign countries (mainly the United Arab Emirates) reported importing $250m worth of gold and gemstones from Madagascar. One of the reasons why the sector has been overlooked is its poor image: much of the artisanal mining takes place in protected areas [pdf], with serious consequences on Madagascar’s unique biodiversity. Artisanal mining is also associated with various socio-economic problems such as child labour, poor health and safety conditions, limited education and health facilities, trafficking and security issues. Despite these shortcomings, artisanal mining, for gold especially, is a lifeline for many. Gold panning is often a seasonal, family activity, one that complements a miner’s main activity and adds a level of resilience to their livelihood, says Brian Klein, a doctoral researcher at the University of California, Berkeley. It is slow and steady work, with an average day’s work producing about $2-$2.50 worth of gold, whereas gemstone mining is all about striking lucky with an exceptional stone. With turbulent commodity markets, gold also holds a special place as a reliable monetary alternative, says Vololona Rakotonomenjanahary, head of Anor: “With gold, you can’t go wrong. With gemstones, there are issues of quality and size, but with gold, there is just one product.” There are signs that Madagascar is starting to pay more attention to artisanal mining. One of Anor’s mandates is to improve the skills and professional standards of those working in gold, including miners and local officials who issue permits and collect tax. “Artisanal mining creates employment in rural areas and the revenues it generates can help finance local socio-economic infrastructure,” says Rakotonomenjanahary. “Improving our tax collection would allow artisanal mining to boost local development.” Anor is also working on setting up a national gold refinery that will be responsible for certifying and hallmarking gold for export. A number of donors and NGOs are active in this space, including the World Bank, which is supporting artisanal mining in Madagascar to the tune of $1.8m as part of its public sector performance project. Ranjatoelina says Madagascar expects more interest from donors and potential investors in the months ahead, with a major donor conference scheduled for early December. This is good news, although Hermann Fickinger, head of the environment programme at the German development corporation GIZ, says that all these efforts will only be as good as their implementation. Madagascar already has a basic legal and regulatory framework for the sector – it just isn’t implemented across the board. Klein also sounds a note of caution. “Formalisation is seen as a panacea – bringing people out of the shadows will reduce all negative impacts of artisanal mining – but it could be a vehicle for dispossession,” he says. “There is a danger of not taking into account the impact it could have on the livelihood of people and the power dynamics between small scale mining, the government, NGOs and corporate players.” What Madagascar ultimately wants is to be able to commercialise its gold and gemstones under an ethical label such as Fairtrade or the Responsible Jewellery Council. There is still a long way to go, says Fickinger, but the process has started.


News Article | February 22, 2017
Site: www.theguardian.com

An obscure US government agency has provided $315m in taxpayer-supported financing over the past decade to a company that has supplied equipment to African mines accused of slave labor, human rights violations and environmental destruction. Between 2007 and 2015, the US Export-Import Bank provided 48 insurance policies to the New Jersey-headquartered Connell Company to pursue deals with at least 17 mining companies in seven sub-Saharan countries. These included a $20,000 policy to supply equipment to the Bisha copper mine in Eritrea, which is being investigated by a Canadian court amid accusations of slavery, according to an investigation of the bank by the Guardian and the Columbia University Graduate School of Journalism’s Energy and Environment Reporting Project. The bank provides US exporters with financing – in the form of loans, guarantees and insurance policies – to sell goods and services overseas. Bank officials say they create US jobs and fill a financing gap by allowing companies to access funding when private lenders will not. But Nevsun Resources, the Canadian mining company that controls Bisha, faces a lawsuit in which 30 plaintiffs allege that the mine engaged two Eritrean state-run contractors and the army to force hundreds of military conscripts to work there under abhorrent conditions. “The financing that Connell is getting is quite significant,” said Doug Norlen, director of economic policy for Friends of the Earth US. “Whether it’s loans or insurance, the same obligations exist to carry out human rights due diligence. Some of these projects are associated with some pretty serious human rights abuses.” The bank also insured export deals between Connell and seven mining companies in the Katanga region of the Democratic Republic of Congo, where the proximity of mines to villages means thousands of people are exposed to fumes, dust, noise and effluent water, says the Centre for Research on Multinational Corporations. “This happens across the board in the region. It’s very hard to prove whether this or that mine is to blame for the environmental damages. The tests are complicated and expensive and it’s hard to prove environmental damage in connection with a specific mine,” said Esther de Haan, a senior researcher with the Dutch center. The group says that addressing Katanga’s human rights and environmental violations requires the engagement of all actors in the mineral supply chain, including mining equipment providers and financiers – such as Connell and the US Export-Import Bank. The Connell Company, an opaque business conglomerate founded in 1926 and managed by four generations of the Connell family, is one the top 40 recipients of the bank’s insurance policies. Commercial banks, such as Wells Fargo and JP Morgan, are the largest recipients – receiving more than $30bn of the more than $50bn the bank authorized in insurance policies between 2007 and 2016. The government-backed insurance policies protected Connell against buyer non-payment, in effect transferring the risk of doing business in these troubled countries to US taxpayers. Caroline Scullin, the bank’s senior vice-president for communications, said that short-term insurance deals – like those it provided Connell – were not subject to environmental and social due diligence procedures. “Short-term insurance does not cover projects per se; rather, it generally covers goods that are not capital in nature or destined for new projects,” she said. But to critics of the bank, this lack of oversight means the US is potentially financing corrupt and dangerous projects across the globe. “In the case of a mine, the mining equipment is the most central thing that enables a project to move forward,” said Norlen. He said the bank’s lack of due diligence violated the UN’s Guiding Principles on Business and Human Rights, which stipulate that export credit agencies are responsible for investigating projects that could involve human rights abuses before financing. The bank, instead, follows guidance from the Organisation for Economic Cooperation and Development, which Norlen says is weaker than the UN’s rules. The Connell Company, which is privately owned, does not release financial information to the public, but its website describes it as “one of the largest diversified” companies in the United States. Connell did not respond to repeated requests for comment. The bank has supplied a safety net of insurance policies for Connell in mineral-rich sub-Saharan countries such as the Democratic Republic of Congo, Liberia, Eritrea and Mauritania, which have been associated with corruption, political violence and internal instability in recent years, according to organizations such as Human Rights Watch and Amnesty International. For instance, in 2010, the bank approved an insurance deal between Connell and Eritrea’s Bisha mine, which is at the center of a slave labor lawsuit brought by 29 men and one woman who say they were forced to work at the mine. In affidavits, claimants say they were abducted from their villages and forced to work shifts of over 12 hours, with barely any food or water. These abuses allegedly began in 2003 and continued after 2010. “The case alleges that military intelligence forces actually operated inside the mine and detained and disappeared people working at Bisha, and that several conscripted laborers were tortured,” said Matt Eisenbrandt, who works as legal director for the Canadian Center for International Justice, and who is part of the legal team representing the claimants. Nevsun issued a statement in October saying it was considering appealing against the supreme court of British Columbia’s decision to proceed with the case, and that the company complies with “international standards of governance, workplace conditions, health, safety and human rights”. The company referred all reporters’ questions to the statement. “Beyond just the issue of forced labor, the bigger picture is that Eritrea is an incredibly repressive country. Any company that is providing funding, or equipment or insurance, has to go in there with its eyes open and do its due diligence,” adds Eisenbrandt. Another Connell client in the region that has received scrutiny is Ambatovy, a cobalt and nickel mine in Madagascar operated by the Toronto-based Sherritt International Corporation. Between 2010 and 2012, Connell was provided with about $500,000 worth of insurance policies to supply goods to the mine. The Ambatovy development includes an ore deposit that covers 1,600 hectares (almost 4,000 acres, or a space roughly five times the size of New York’s Central Park), a 220km (137-mile) pipeline (equal to the distance between Los Angeles to San Diego) and a processing plant the size of 250 football fields. Although Ambatovy has an environmental management program, biologists say this gigantic project has scarred an ecologically unique country whose lush forests are home to hundreds of native animals, including about 100 species of lemurs, as well as the cat-like fossa. “The Ambatovy mine has destroyed a lot of primary rainforest habitat in Madagascar,” said Chris Raxworthy, a curator-in-charge at the American Museum of Natural History, who has studied reptiles and amphibians in the African island country since 1985. “At the moment, it is not clear what positive offsets the mine development has provided for Madagascar’s biodiversity.” According to the Center for Responsive Politics, the Connell Company donated almost $5.8m to politicians from 1990 to 2016. The company’s founder and CEO, Grover Connell, has contributed almost $800,000 over the past 20 years, mainly to the Democratic party, which has long supported the bank on the grounds that it helps export-oriented companies create jobs. While regulatory loopholes allow the bank to skip due diligence procedures for many of Connell’s deals, their 40-year relationship was celebrated in 2014, when the company was honored with the bank’s sub-Saharan Africa Exporter of the Year award. The partnership between the bank and Connell “is bringing new economic opportunity to sub-Saharan Africa, while creating jobs at home”, read a statement released by the bank about the award. “It’s a win-win.” The Energy and Environmental Reporting Project is supported by the Blanchette Hooker Rockefeller Fund, Energy Foundation, Open Society Foundations, Rockefeller Brothers Fund, Rockefeller Family Fund, Lorana Sullivan Foundation and Tellus Mater Foundation. The funders have no involvement in or influence over the articles produced by project fellows in collaboration with the Guardian


News Article | December 16, 2016
Site: marketersmedia.com

TORONTO, ON / ACCESSWIRE / December 16, 2016 / DNI Metals Inc. (CNSX: DNI) (FSE: DG7N) (OTC PINK: DMNKF) ("DNI" or the "Company"). DNI completes a Letter Of Intent, "LOI", with Cougar Metals to develop DNI's Vohitsara, Madagascar Graphite Project. Cougar owns 8 drill rigs and has competence to complete a 3,000m drilling program, a 1,000m trenching program, a NI 43-101 resource study, and a NI 43-101 PEA for DNI's Vohitsara Project. As per the LOI, this work should be completed by June 30, 2017. Cougar pays DNI Cash payments of A$300,000 Cougar pays Cash payment of U$150,000 (approx. C$196,000) to previous owner of the Vohitsara project (last payment owed by DNI) When Cougar completes the drilling/resource/PEA, (by June 30, 2017), Cougar will earn 49% of the Vohitsara project. DNI's board had set a budget of C$1.5 million to complete the drilling/resource/PEA. If DNI opts out of its first right, Cougar can purchase DNI's remaining 51% for AUD$2.5 million. The specific terms of the deal are below. Cougar's directors believe the greatest strength of the Toamasina Saprolitic Graphite Project lies in its ability to deliver a high quality product with a low cost base into an existing market. With over a century of supply history, coarse flake graphite concentrates from the Toamasina area of Madagascar are well known in the global end-user market and the Toamasina project is ideally suited to capitalize on this existing '"brand awareness." It is expected that the Toamasina Saprolitic Graphite Project can be placed into production with modest capital costs and can cost effectively expand to meet the demand for its product. The Project is located in east central Madagascar, approximately 50 km south-southwest of the deep-water port city of Toamasina and approximately 50km North of Bass Metals' operating Loharano graphite mine. To view an enhanced version of the Location Map of Madgascsar Saprolitic Graphite Project, please visit: https://www.accesswire.com/uploads/Madagascar_Saprolitic.jpg. Mineralisation has been identified over a combined 3km strike length from visual examination of near surface samples (< 1m from surface). The mineralisation follows a distinct ridge in the area varying in elevation from 40m to 110m AMSL. Access to the initial area of interest is by way of a 1.8km unsealed track leading from the main highway between the port city of Toamasina and the country's capital Antananarivo. The turn off is located 55km by road from the port city of Toamasina. Toamasina is the largest port in the country and is considered the commercial capital of Madagascar. The city and port have been developed extensively since 2008 by major infrastructure investment on the part of Sherritt; who with its partners, have developed the U$8.0Billion Ambatovy HPAL lateritic nickel-cobalt mine 200km inland from Toamasina. Mineralisation has been mapped along a 3km ridge within the project area. Small pits less than 2m in depth were dug to inspect for mineralisation, which is easily identified visually on account of the high % content of large flake graphite. This confirms the potential of the project to host a long-life / low-cost mining operation. Mineralisation most often occurs on topographic highs and generally within 1m of surface; significantly reducing costs associated with pre-stripping for mining. The Toamasina Lateritic Graphite Project is particularly well located, with access being just 55km from the major port city of Toamasina via a sealed road. This proximity to a port and the infrastructure of a major city, will result in significantly lower construction and operating costs than would otherwise be the case. Madagascar has supplied high quality graphite for the international market for over 100 years. In particular, the Toamasina-Brickaville belt; in which the Vohitsara project is centrally located, is well known for the high purity and larger flake-size distribution of its graphite concentrates. The Project area has been subjected to historical artisanal mining in the period between WW2 and 1960 (end of French colonial rule). Visual estimates from site inspection and anecdotal reports from indigenous personnel put this production at just under 100,000T of material. A trenching and limited surface sampling and test pitting program was conducted on the Toamasina Project in 2015, with 4 trenches located within the identified corridor of mineralisation. Trenches were targeted from field observation in conjunction with man-portable ground EM and magnetics along cut lines (using GPS control). Results are shown in Table 1 following: Table 1: Sampling & assay data from the main trend at the Graphite Project Cannot view this image of Table 1: Sampling & assay data from the main trend at the Graphite Project? Please visit: https://www.accesswire.com/uploads/jpegimage1.jpg. Initial screening testwork performed on selected grab and trench samples from the project area returned very encouraging results as shown in Table 2 below: The graphitic carbon content is that of a simple concentration of graphite - prior to any secondary upgrading (re-grinding) of the graphite material. To view an enhanced version of Table 2: Summary of initial screening test work on Toamasina Project graphite flake, please visit: https://www.accesswire.com/uploads/12.16.2016.DNIMetals.jpg A LOI has been executed between Cougar and DNI. The key the terms of the LOI are: Payment of AUD $100,000 that was been received by DNI. Subject to the preparation of a Definitive Agreement Payment of AUD$200,000 by March 15, 2016 or within 10 days of Cougar raising AUD$500,000. Complete a drilling program, a resource study and a Preliminary Economic Assessment (PEA) in accordance with NI 43-101 by June 30, 2017 Cougar to make payment on behalf of the vendor of USD 150,000 on June 12, 2017 unless Cougar has withdrawn from the agreement by April 12, 2017. Upon the conclusion of the PEA one of the four following scenarios will eventuate A 50/50 Joint Venture shall be formed should DNI secure offtake agreements allowing the construction of a 10,000 tpa plant failing which Cougar shall acquire 100% of the Project by payment of AUD 2.5M to the vendor failing which The Vendor shall acquire Cougar's interest by payment to Cougar of AUD 2.5M or Cougar shall retain a 49% interest in the project. A formal agreement will be prepared to document the terms of the LOI. The Company also operates a mineral drilling business in Brazil providing surface diamond, reverse circulation and RAB drilling services to the Brazilian mineral resource industry. The Company currently operates a fleet of 9 rigs. In August 2016, Cougar executed a LOI to acquire an 85% interest in the Ceara Lithium Project, located in north-eastern Brazil. The Project comprises 35 tenements (granted and applications) with an area of ~60,000Ha covering the historical lithium mining centre at Solonopole and an area encompassing the Cristal pegmatite swarm. In addition, Cougar holds an option to acquire a 51% undivided interest in the Shoal Lake Gold East Project, located in the Shoal Lake region of Ontario, Canada; an area containing a number of past gold producers and significant exploration results. Work on the Project is suspended pending the Project vendor complying with arbitration orders. In Australia, the Company holds the laterite nickel and cobalt mineral rights to the Pyke Hill prospect located 40km east of the Murrin Murrin Nickel operations in Western Australia. The prospect contains a Measured and Indicated Resources of 14.7mt @ 0.9% Ni and 0.06% Co. (March 2008). Brian Howlett has resigned as interim CFO, to pursue other opportunities. Dan Weir will take the position as interim CFO, until a replacement has been found. DNI would like to thank Brian for all his support, and wish him well in his future endeavors. We seek Safe Harbour. This announcement may include forward looking statements. While these statements represent DNI's best current judgment, they are subject to risks and uncertainties that could cause actual results to vary, including risk factors listed in DNI's Annual Information Form and its MD&As, all of which are available from SEDAR and on its website. TORONTO, ON / ACCESSWIRE / December 16, 2016 / DNI Metals Inc. (CNSX: DNI) (FSE: DG7N) (OTC PINK: DMNKF) ("DNI" or the "Company"). DNI completes a Letter Of Intent, "LOI", with Cougar Metals to develop DNI's Vohitsara, Madagascar Graphite Project. Cougar owns 8 drill rigs and has competence to complete a 3,000m drilling program, a 1,000m trenching program, a NI 43-101 resource study, and a NI 43-101 PEA for DNI's Vohitsara Project. As per the LOI, this work should be completed by June 30, 2017. Cougar pays DNI Cash payments of A$300,000 Cougar pays Cash payment of U$150,000 (approx. C$196,000) to previous owner of the Vohitsara project (last payment owed by DNI) When Cougar completes the drilling/resource/PEA, (by June 30, 2017), Cougar will earn 49% of the Vohitsara project. DNI's board had set a budget of C$1.5 million to complete the drilling/resource/PEA. If DNI opts out of its first right, Cougar can purchase DNI's remaining 51% for AUD$2.5 million. The specific terms of the deal are below. Cougar's directors believe the greatest strength of the Toamasina Saprolitic Graphite Project lies in its ability to deliver a high quality product with a low cost base into an existing market. With over a century of supply history, coarse flake graphite concentrates from the Toamasina area of Madagascar are well known in the global end-user market and the Toamasina project is ideally suited to capitalize on this existing '"brand awareness." It is expected that the Toamasina Saprolitic Graphite Project can be placed into production with modest capital costs and can cost effectively expand to meet the demand for its product. The Project is located in east central Madagascar, approximately 50 km south-southwest of the deep-water port city of Toamasina and approximately 50km North of Bass Metals' operating Loharano graphite mine. To view an enhanced version of the Location Map of Madgascsar Saprolitic Graphite Project, please visit: https://www.accesswire.com/uploads/Madagascar_Saprolitic.jpg. Mineralisation has been identified over a combined 3km strike length from visual examination of near surface samples (< 1m from surface). The mineralisation follows a distinct ridge in the area varying in elevation from 40m to 110m AMSL. Access to the initial area of interest is by way of a 1.8km unsealed track leading from the main highway between the port city of Toamasina and the country's capital Antananarivo. The turn off is located 55km by road from the port city of Toamasina. Toamasina is the largest port in the country and is considered the commercial capital of Madagascar. The city and port have been developed extensively since 2008 by major infrastructure investment on the part of Sherritt; who with its partners, have developed the U$8.0Billion Ambatovy HPAL lateritic nickel-cobalt mine 200km inland from Toamasina. Mineralisation has been mapped along a 3km ridge within the project area. Small pits less than 2m in depth were dug to inspect for mineralisation, which is easily identified visually on account of the high % content of large flake graphite. This confirms the potential of the project to host a long-life / low-cost mining operation. Mineralisation most often occurs on topographic highs and generally within 1m of surface; significantly reducing costs associated with pre-stripping for mining. The Toamasina Lateritic Graphite Project is particularly well located, with access being just 55km from the major port city of Toamasina via a sealed road. This proximity to a port and the infrastructure of a major city, will result in significantly lower construction and operating costs than would otherwise be the case. Madagascar has supplied high quality graphite for the international market for over 100 years. In particular, the Toamasina-Brickaville belt; in which the Vohitsara project is centrally located, is well known for the high purity and larger flake-size distribution of its graphite concentrates. The Project area has been subjected to historical artisanal mining in the period between WW2 and 1960 (end of French colonial rule). Visual estimates from site inspection and anecdotal reports from indigenous personnel put this production at just under 100,000T of material. A trenching and limited surface sampling and test pitting program was conducted on the Toamasina Project in 2015, with 4 trenches located within the identified corridor of mineralisation. Trenches were targeted from field observation in conjunction with man-portable ground EM and magnetics along cut lines (using GPS control). Results are shown in Table 1 following: Table 1: Sampling & assay data from the main trend at the Graphite Project Cannot view this image of Table 1: Sampling & assay data from the main trend at the Graphite Project? Please visit: https://www.accesswire.com/uploads/jpegimage1.jpg. Initial screening testwork performed on selected grab and trench samples from the project area returned very encouraging results as shown in Table 2 below: The graphitic carbon content is that of a simple concentration of graphite - prior to any secondary upgrading (re-grinding) of the graphite material. To view an enhanced version of Table 2: Summary of initial screening test work on Toamasina Project graphite flake, please visit: https://www.accesswire.com/uploads/12.16.2016.DNIMetals.jpg A LOI has been executed between Cougar and DNI. The key the terms of the LOI are: Payment of AUD $100,000 that was been received by DNI. Subject to the preparation of a Definitive Agreement Payment of AUD$200,000 by March 15, 2016 or within 10 days of Cougar raising AUD$500,000. Complete a drilling program, a resource study and a Preliminary Economic Assessment (PEA) in accordance with NI 43-101 by June 30, 2017 Cougar to make payment on behalf of the vendor of USD 150,000 on June 12, 2017 unless Cougar has withdrawn from the agreement by April 12, 2017. Upon the conclusion of the PEA one of the four following scenarios will eventuate A 50/50 Joint Venture shall be formed should DNI secure offtake agreements allowing the construction of a 10,000 tpa plant failing which Cougar shall acquire 100% of the Project by payment of AUD 2.5M to the vendor failing which The Vendor shall acquire Cougar's interest by payment to Cougar of AUD 2.5M or Cougar shall retain a 49% interest in the project. A formal agreement will be prepared to document the terms of the LOI. The Company also operates a mineral drilling business in Brazil providing surface diamond, reverse circulation and RAB drilling services to the Brazilian mineral resource industry. The Company currently operates a fleet of 9 rigs. In August 2016, Cougar executed a LOI to acquire an 85% interest in the Ceara Lithium Project, located in north-eastern Brazil. The Project comprises 35 tenements (granted and applications) with an area of ~60,000Ha covering the historical lithium mining centre at Solonopole and an area encompassing the Cristal pegmatite swarm. In addition, Cougar holds an option to acquire a 51% undivided interest in the Shoal Lake Gold East Project, located in the Shoal Lake region of Ontario, Canada; an area containing a number of past gold producers and significant exploration results. Work on the Project is suspended pending the Project vendor complying with arbitration orders. In Australia, the Company holds the laterite nickel and cobalt mineral rights to the Pyke Hill prospect located 40km east of the Murrin Murrin Nickel operations in Western Australia. The prospect contains a Measured and Indicated Resources of 14.7mt @ 0.9% Ni and 0.06% Co. (March 2008). Brian Howlett has resigned as interim CFO, to pursue other opportunities. Dan Weir will take the position as interim CFO, until a replacement has been found. DNI would like to thank Brian for all his support, and wish him well in his future endeavors. We seek Safe Harbour. This announcement may include forward looking statements. While these statements represent DNI's best current judgment, they are subject to risks and uncertainties that could cause actual results to vary, including risk factors listed in DNI's Annual Information Form and its MD&As, all of which are available from SEDAR and on its website.


News Article | December 16, 2016
Site: www.accesswire.com

TORONTO, ON / ACCESSWIRE / December 16, 2016 / DNI Metals Inc. (CNSX: DNI) (FSE: DG7N) (OTC PINK: DMNKF) ("DNI" or the "Company"). DNI completes a Letter Of Intent, "LOI", with Cougar Metals to develop DNI's Vohitsara, Madagascar Graphite Project. Cougar owns 8 drill rigs and has competence to complete a 3,000m drilling program, a 1,000m trenching program, a NI 43-101 resource study, and a NI 43-101 PEA for DNI's Vohitsara Project. As per the LOI, this work should be completed by June 30, 2017. The specific terms of the deal are below. Cougar's directors believe the greatest strength of the Toamasina Saprolitic Graphite Project lies in its ability to deliver a high quality product with a low cost base into an existing market. With over a century of supply history, coarse flake graphite concentrates from the Toamasina area of Madagascar are well known in the global end-user market and the Toamasina project is ideally suited to capitalize on this existing '"brand awareness." It is expected that the Toamasina Saprolitic Graphite Project can be placed into production with modest capital costs and can cost effectively expand to meet the demand for its product. The Project is located in east central Madagascar, approximately 50 km south-southwest of the deep-water port city of Toamasina and approximately 50km North of Bass Metals' operating Loharano graphite mine. To view an enhanced version of the Location Map of Madgascsar Saprolitic Graphite Project, please visit: https://www.accesswire.com/uploads/Madagascar_Saprolitic.jpg. Mineralisation has been identified over a combined 3km strike length from visual examination of near surface samples (< 1m from surface). The mineralisation follows a distinct ridge in the area varying in elevation from 40m to 110m AMSL. Access to the initial area of interest is by way of a 1.8km unsealed track leading from the main highway between the port city of Toamasina and the country's capital Antananarivo. The turn off is located 55km by road from the port city of Toamasina. Toamasina is the largest port in the country and is considered the commercial capital of Madagascar. The city and port have been developed extensively since 2008 by major infrastructure investment on the part of Sherritt; who with its partners, have developed the U$8.0Billion Ambatovy HPAL lateritic nickel-cobalt mine 200km inland from Toamasina. Mineralisation has been mapped along a 3km ridge within the project area. Small pits less than 2m in depth were dug to inspect for mineralisation, which is easily identified visually on account of the high % content of large flake graphite. This confirms the potential of the project to host a long-life / low-cost mining operation. Mineralisation most often occurs on topographic highs and generally within 1m of surface; significantly reducing costs associated with pre-stripping for mining. The Toamasina Lateritic Graphite Project is particularly well located, with access being just 55km from the major port city of Toamasina via a sealed road. This proximity to a port and the infrastructure of a major city, will result in significantly lower construction and operating costs than would otherwise be the case. Madagascar has supplied high quality graphite for the international market for over 100 years. In particular, the Toamasina-Brickaville belt; in which the Vohitsara project is centrally located, is well known for the high purity and larger flake-size distribution of its graphite concentrates. The Project area has been subjected to historical artisanal mining in the period between WW2 and 1960 (end of French colonial rule). Visual estimates from site inspection and anecdotal reports from indigenous personnel put this production at just under 100,000T of material. A trenching and limited surface sampling and test pitting program was conducted on the Toamasina Project in 2015, with 4 trenches located within the identified corridor of mineralisation. Trenches were targeted from field observation in conjunction with man-portable ground EM and magnetics along cut lines (using GPS control). Results are shown in Table 1 following: Table 1: Sampling & assay data from the main trend at the Graphite Project Cannot view this image of Table 1: Sampling & assay data from the main trend at the Graphite Project? Please visit: https://www.accesswire.com/uploads/jpegimage1.jpg. Initial screening testwork performed on selected grab and trench samples from the project area returned very encouraging results as shown in Table 2 below: The graphitic carbon content is that of a simple concentration of graphite - prior to any secondary upgrading (re-grinding) of the graphite material. To view an enhanced version of Table 2: Summary of initial screening test work on Toamasina Project graphite flake, please visit: https://www.accesswire.com/uploads/12.16.2016.DNIMetals.jpg A LOI has been executed between Cougar and DNI. The key the terms of the LOI are: A formal agreement will be prepared to document the terms of the LOI. The Company also operates a mineral drilling business in Brazil providing surface diamond, reverse circulation and RAB drilling services to the Brazilian mineral resource industry. The Company currently operates a fleet of 9 rigs. In August 2016, Cougar executed a LOI to acquire an 85% interest in the Ceara Lithium Project, located in north-eastern Brazil. The Project comprises 35 tenements (granted and applications) with an area of ~60,000Ha covering the historical lithium mining centre at Solonopole and an area encompassing the Cristal pegmatite swarm. In addition, Cougar holds an option to acquire a 51% undivided interest in the Shoal Lake Gold East Project, located in the Shoal Lake region of Ontario, Canada; an area containing a number of past gold producers and significant exploration results. Work on the Project is suspended pending the Project vendor complying with arbitration orders. In Australia, the Company holds the laterite nickel and cobalt mineral rights to the Pyke Hill prospect located 40km east of the Murrin Murrin Nickel operations in Western Australia. The prospect contains a Measured and Indicated Resources of 14.7mt @ 0.9% Ni and 0.06% Co. (March 2008). Brian Howlett has resigned as interim CFO, to pursue other opportunities. Dan Weir will take the position as interim CFO, until a replacement has been found. DNI would like to thank Brian for all his support, and wish him well in his future endeavors. We seek Safe Harbour. This announcement may include forward looking statements. While these statements represent DNI's best current judgment, they are subject to risks and uncertainties that could cause actual results to vary, including risk factors listed in DNI's Annual Information Form and its MD&As, all of which are available from SEDAR and on its website.


News Article | February 15, 2017
Site: www.marketwired.com

TORONTO, ONTARIO--(Marketwired - Feb. 15, 2017) - Dundee Precious Metals Inc. (TSX:DPM) ("DPM" or "the Company") is pleased to announce the appointment of Ms. Juanita Montalvo to the board of directors of DPM. "We are delighted to welcome Juanita to the board and to the health, safety and environment committee of DPM," said Jonathan Goodman, Executive Chairman. "With decades of international experience in operations support, sustainability and risk management oversight, her diversity of skills and perspective will be a valuable addition to the Company." Ms. Montalvo brings to the DPM board 25 years of experience in developing and leading strategies to drive performance through excellence in corporate governance, partnership and joint venture management and good business practice. She is currently a Managing Partner with Acasta Cuba Capital, a leading advisory and investment firm dedicated to business opportunities in Cuba. Previously, she was a Senior Vice President at Sherritt International Corporation, a world leader in mining and refining of nickel from lateritic ores and Cuba's largest foreign investor - building and operating in mining, oil & gas, and power production. Ms. Montalvo served as Country Manager in Madagascar during the construction of the Ambatovy Joint Venture. From 2006 until 2014, Ms. Montalvo held a number of board positions with subsidiaries of Sherritt International Corporation and on Executive Committees to the board. She is also a director and Deputy Chairman of the board of Canada's National Ballet School. Ms. Montalvo holds a B.Sc. Biology and Biochemistry, a B.A. in International Development Studies and a Masters in Development Economics, all from Dalhousie University in Halifax, Nova Scotia. Ms. Montalvo also completed financial courses for executives at the Richard Ivey School of Management and the Canadian Securities course. Dundee Precious Metals Inc. is a Canadian based, international gold mining company engaged in the acquisition of mineral properties, exploration, development, mining and processing of precious metals. The Company's continuing operating assets include the Chelopech operation, which produces a copper concentrate containing gold and silver and a pyrite concentrate containing gold, located east of Sofia, Bulgaria; and the Tsumeb smelter, a complex copper concentrate processing facility located in Namibia. DPM also holds interests in a number of developing gold and exploration properties located in Bulgaria, Serbia, and northern Canada, including the Krumovgrad gold project currently under construction, which is expected to commence production in the fourth quarter of 2018, and its 10.7% interest in Sabina Gold & Silver Corp.


News Article | October 28, 2016
Site: www.marketwired.com

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES Sherritt International Corporation ("Sherritt" or the "Corporation") (TSX: S), the world leader in the mining and refining of nickel from lateritic ores, today reported its financial results for the three and nine months ended September 30, 2016. "The nickel and oil price rally and strong Cuban energy receipts contributed to a $33 million increase in our ending cash balance since last quarter. We concluded September with $345 million, even after cash consent fees and other transaction expenses of around $15 million related to our bond maturity extension," said David Pathe, President and CEO, Sherritt International. "We also had two remarkable safety achievements in the quarter, as Ambatovy has now been Lost Time Injury-free for a year, and our Moa Joint Venture operations and surrounding communities in Cuba came through Hurricane Matthew with zero casualties and no material production impact expected." All amounts are Canadian dollars unless otherwise indicated. (1) For additional information see the Non-GAAP measures section of this press release. Sherritt has expended $62.4 million this year in repurchasing debt and repaying credit facilities. This is the main use of cash year to date, as the cash, cash equivalents and short term investments balance has declined by $90.2 million to $345.2 million at September 30, 2016. Although the change from the end of last year to September 30 is a use of cash, cash balances increased by $32.6 million from the end of the second quarter of 2016, despite consent fees and other transaction costs of $14.6 million incurred on the debenture extension. During the third quarter of 2016, US$59.6 million of Cuban energy payments were received. These payments were primarily directed towards Oil & Gas and resulted in a US$38.9 million reduction in overdue Oil & Gas receivables from US$70.5 million overdue at June 30, 2016 to US$31.6 million overdue at September 30, 2016. The Cuban partners have prioritized reducing the Oil & Gas receivables, with only $3.6 million interest received on the Energas CSA during the quarter, and no principal repayment. Discussions continue to address the timing of ongoing Cuban payments; however the significant change in the overdue Oil & Gas balance is a positive indicator for future energy receipts. Fertilizer prepayments received in the third quarter for future fertilizer deliveries also contributed to the increased cash position, and are consistent with seasonality in fertilizer. Cash receipts generally come in the second half of the year, while sales seasonality is generally the second and fourth quarter of the year. During the third quarter, $16.5 million or $0.06 per share in adjusting items occurred, primarily a $12.8 million loss on unrealized foreign exchange with the weakening of the Canadian dollar, and the $6.6 million impairment expense. These were offset to some degree by a $2.9 million gain for VAT payments received. Recent market activity remains bullish both on a technical and fundamental basis, as market analysts continue to reinforce projected deficits and forecast stronger prices for 2016 and 2017 due in part to fundamental supply challenges that have emerged with the Philippines ongoing environmental audits on all mining operations in the country. Prices have recovered significantly from the lows of US$3.50/lb reached in the first quarter this year and have remained generally above US$4.50/lb, but the price recovery has not been enough to change the fundamental problem of a significant portion of the world's nickel production being underwater on a cash margin basis. Despite the negative margins experienced by many producers, supply cuts have been slow to materialize, and global inventory levels remain high. The announced mine closures in the Philippines coupled with improved stainless steel demand are both seen as near-term catalysts for continued strength in the nickel market, although this is being mitigated by the ramp up of Nickel Pig Iron (NPI) operations in Indonesia which puts downward pressure on possible price run ups. Like nickel, the cobalt spot price is also holding above US$12.50/lb compared to a narrow range of around US$9.82 - US$10.85 from January through June this year. Cobalt metal supply has contracted in 2016 with the announced suspension of production from Votorantim (Tocantins) in Brazil. Indications are that the metal market is approaching balance or slight deficit, which has resulted in stabilized prices, with average reference prices in the third quarter this year being US$12.33/lb. Overall cobalt demand is supported by the longer-term outlook for cobalt in rechargeable batteries, a market that will utilize either metal or chemical forms of cobalt, with purity being an important factor in the decision-making. Superalloy demand also remains strong, along with other applications such as magnets, diamond cutting tools, soaps and paint driers which are growing but at a slower rate. As a result of the positive medium term outlook for cobalt, and the knowledge that most cobalt supply comes as a by-product of copper and nickel production, speculative interest has picked up. Adjusted EBITDA of $7.5 million in the quarter is a 12% improvement over second quarter 2016 levels, as nickel sales of $55 million exceeded second quarter nickel sales by approximately 22% on higher average realized prices and higher volumes. Despite the higher nickel sales, the Moa JV third quarter revenue was lower than second quarter revenue, as fertilizer sales in the second quarter were $27 million compared to $8.7 million in the third quarter consistent with historical seasonality in fertilizers. This seasonality in fertilizer sales is also the major factor in the difference between Adjusted EBITDA and cash provided by operations, as fertilizer cash received as pre-buys for expected fertilizer deliveries in the future was the main source of cash provided by operations. Finished nickel production of 4,295 tonnes (50% basis) in the third quarter of 2016 was an improvement on both first and second quarter production levels this year, which were impacted by the annual refinery shutdown and lower quality ore. On a year over year basis, however, the third quarter production was roughly 5% lower than the comparable quarter last year. The lower quality ore has been a factor all year as mining has moved into new concession areas, and continues to be a challenge for the HPAL operation in dealing with increased deleterious elements. Mixed sulphides production improved in the third quarter compared to the two prior quarters this year, but is still down 7% on a nine-month basis from last year. Cobalt production was similar to second quarter levels, although cobalt production year-to-date remains up 9% from last year, as third party feed has been mainly cobalt-rich. This trend is expected to continue over the balance of the year. The NDCC of US$3.55/lb of nickel in the third quarter of 2016 is US$0.61/lb higher than levels in the second quarter of 2016, due to the reduced fertilizer credit. The net fertilizer credit in the second quarter this year was $0.82/lb higher than the current quarter, but expectation is that the fourth quarter credit will reflect the usual seasonality. Mining, processing and refining costs have been consistent all three quarters this year, and are expected to improve by as much as $0.50/lb with the newly constructed third acid plant in production. In September, the acid plant fulfilled all performance tests, producing at a 100% rate over a 72 hour period and was deemed fully commissioned and turned over to operations. The acid plant is now producing sulphuric acid and is expected to provide full benefits by the end of the fourth quarter this year when existing commitments for purchases of sulphuric acid have been fulfilled. The acid plant project was concluded within the established construction timeline and completion budget of US$65 million (100% basis), and was Moa Nickel's first capital project to be fully financed by a Cuban financial institution. Capital spending of $11.1 million in the quarter was split between growth capital for the acid plant and sustaining capital spending for the year is still expected to be US$38 million. As announced by press release October 12, 2016, the Moa JV operations in Cuba came through Hurricane Matthew with no injuries or fatalities, and a relatively minor impact to production given the severity of the Category 4 storm. The operations were shut down in advance of the hurricane, and resumed when the Cuban Civil Defense allowed a return to site. Operations were resumed in a staged process, but are now running at full capacity. Finished nickel production for the year is expected to be at the lower end of the guidance range, accounting for the lost production days. As announced on August 4, 2016, the Ambatovy Joint Venture financing lenders and the Ambatovy Joint Venture have agreed to up to six principal payment deferrals totaling US$565 million (100% basis), which are to be repaid on a schedule starting in June 2021, or earlier subject to cash flow generation. Until June 2019, the Ambatovy Joint Venture will pay semi-annual interest payments only (approximately US$56 million per year) and will not make semi-annual principal payments unless there is sufficient cash flow after required deductions. Deferred principal will be subject to an additional 2% accrued interest calculated from the date of each deferral. Subject to cash flow generation, from June 2019 to June 2021, semi-annual payments of approximately US$28 million interest and US$94 million principal will be payable, and from June 2021 to the end of term in 2024, semi-annual amortized deferred principal and accrued interest repayments will be payable together with the regular semi-annual principal and interest payments. Total post financial completion cash funding provided by Sherritt's partners is US$153 million, pursuant to total cash calls of US$255 million, with cash funding of US$81 million and US$123 million provided during the three and nine months ended September 30, 2016, respectively. Funding in the third quarter deposited cash into the Senior Debt Reserve Account to cover a semi-annual interest payment. The balance of funding covers actual and expected capital spending through year end (approximately US$27 million) and operating losses. Sherritt has not funded any portion of these cash calls, and continues not to fund. By agreement amongst the partners, Sherritt is not considered to be a defaulting shareholder under the Shareholders Agreement for amounts not funded through January 15, 2017. Discussions continue regarding the partnership structure and future funding arrangements. Ambatovy production in the third quarter of 2016 was 3,669 tonnes finished nickel (40% basis), or 61% of design capacity, with PAL throughput in the same quarter of 75% of design capacity. Third quarter production was materially impacted by the tailings pipe blockage and subsequent total plant maintenance shutdown that was announced by press release June 24, 2016 and which affected both second and third quarter production. Following the shutdown, production was ramped back towards full capacity, with September production of 4,185 tonnes being the highest volume to date this year. Full year nickel production guidance has been reduced to a range between 40,000 - 42,000 tonnes (100% basis) to reflect the slower than anticipated ramp up in July and August following the shutdown. Finished cobalt production guidance remains unchanged at 2,900 - 3,300 tonnes. Adjusted EBITDA in the third quarter of 2016 was $(4.5) million compared to Adjusted EBITDA of $(2.5) million in the same quarter last year, due to the production shortfall and lower nickel prices. Even with the production shortfall in the third quarter, the third quarter 2016 NDCC of US$4.67/lb was 9% better than in the second quarter this year on similar production, mainly driven by an 11% improvement in Mining, Processing and Refining Costs which were US$5.13/lb. This improvement was offset marginally by other costs of US$0.36/lb mainly for maintenance expenses incurred in the quarter. Improvement in WTI and Gulf Coast Fuel Oil 6 prices in the third quarter were the main factor contributing to Adjusted EBITDA in the third quarter of $11.1 million compared to Adjusted EBITDA in the second quarter of $8.9 million despite lower production. Cuba GWI production of 14,709 bopd is down 9% from its levels in the second quarter this year due to natural reservoir declines, but Cuba NWI production is down 19% with natural reservoir declines combined with lower cost recovery barrels due to lower cost recovery spending and higher Gulf Coast Fuel Oil 6 prices. On a year-to-date basis, Cuba GWI and NWI production remain consistent with the guidance for the year. The quarterly average Gulf Coast Fuel Oil 6 price of US$34.88 per barrel improved for a second consecutive quarter this year, and is now up 65% from the US$21.13 per barrel average in the first quarter this year. The spread between Gulf Coast Fuel Oil 6 and WTI crude has also narrowed considerably in the third quarter, continuing the trend from last quarter. In the third quarter this year, Gulf Coast Fuel Oil 6 prices averaged 78% of WTI, compared to a historical low of only 63% of WTI in the first quarter this year. Historically, with WTI around the current price of US$50 per barrel, Gulf Coast Fuel Oil 6 prices have averaged approximately 70% of WTI. Cuba unit operating costs of $9.31 per barrel on a GWI basis in the third quarter remained low with selective activity focused on cost reduction. On a three and nine month basis this year, the oil business has generated free cash flow of $46.5 million and $47.1 million respectively. In the current quarter, most of the cash provided by operations comes from the receipt of overdue receivables, as the overdue receivables balance declined by US$38.9 million to US$31.6 million at September 30, 2016. Capital spending of US$27 million is still expected for the year. The first well to be drilled on Block 10 was spud in mid-August this year and drilling will continue throughout December, with first results expected by year end. The cost to drill this well is approximately US$14 million of the total capital expenditure this year. This first Block 10 appraisal well follows the discovery made by Sherritt in 1994 and will be drilled horizontally to a projected depth of 5,800 metres (vertical depth of 2,400 metres). Additional disclosure will be provided after testing. Future capital spending is discretionary depending on the results of this well. Third quarter 2016 revenue of $14.4 million is consistent with its comparable quarter in 2015 and down marginally from second quarter 2016 revenue. Quarterly Adjusted EBITDA of $6.6 million in the third quarter this year is down from its comparable period last year, and consistent with second quarter 2016 levels. Unit operating costs increased significantly compared to third quarter 2015, with most of the increase being in non-base costs, as was the case in the second quarter this year. These non-base costs are associated with maintenance and equipment replacements at Boca de Jaruco. Major maintenance items in the third quarter and major inspections in the second quarter increased the year to date unit operating costs compared to the first nine months of 2015 when only one major gas turbine inspection was performed. Quarterly unit operating costs fluctuate significantly between quarters, and full year average unit operating costs are dependent on scheduled maintenance activities performed on gas and steam turbines. This activity is slightly higher in 2016 which will result in a 2016 unit operating cost of approximately $22.50 per MWh, compared to the 2015 cost of $21.00/MWh. Production in the third quarter of 2016 is down 7% from its comparable quarter last year due to an increase in planned maintenance activities which reduced operating runtime. Production on a nine month basis is consistent with the same period last year. Average realized prices are also consistent. Spending on capital and service concession agreements so far this year primarily relates to the construction of a new pipeline that will conserve gas that is currently being flared, which will be processed at the Puerto Escondido facility. The pipeline construction is now complete, and has become operational. The new pipeline is expected to increase production by up to 8% on a go-forward basis. Free cash flow generation of $5.1 million in the quarter is less than in the prior year quarter, and is also lower on a year to date basis than the same period of 2015. The Cuban partners have prioritized reducing the Oil and Gas receivables, with only $3.6 million interest received on the Energas CSA during the quarter, and no principal repayment. Discussions continue to address the timing of ongoing Cuban payments; however the significant change in the overdue Oil and Gas balance is a positive indicator for future energy receipts. The table below lists Sherritt's strategic priorities for 2016. The 2016 Strategic Priorities reflect the continuing depressed commodity outlook and the Corporation's responsibility to preserve liquidity, continue to drive down costs, and execute rational capital allocation plans. Sherritt's purpose, originally communicated in 2014, continues to be a low-cost nickel producer that creates sustainable prosperity for our employees, investors and communities. In 2016, Sherritt has made certain modifications to how guidance is presented. For example, capital spending estimates are presented in U.S. dollars. In the quarterly reporting, actual capital spending is presented in Canadian dollars consistent with Sherritt's reporting currency, but estimates and forward looking information continue to be provided in U.S. dollars. This change in presentation is intended to align with Sherritt's capital budgeting practices, and to mitigate the change to capital spending that arises from translation to the Canadian dollar reporting currency. In Sherritt's full year and Q4 2015 reporting, when guidance was first presented, the forecast exchange rate was C$1.36 per U.S. dollar. Capital projects in the Metals business are generally U.S. dollar expenditures, while in Oil & Gas, the expenditures are roughly 50% Canadian dollar denominated and 50% U.S. dollar denominated. Full year Ambatovy nickel production guidance has been reduced by 2,000 tonnes to a range between 40,000 - 42,000 tonnes (100% basis) to reflect the slower than anticipated ramp up in July and August following the shutdown. Finished cobalt production guidance remains unchanged at 2,900 - 3,300 tonnes. The Corporation uses combined results, Adjusted EBITDA, average-realized price, unit operating cost, and adjusted operating cash flow to monitor the performance of the Corporation and its operating divisions and believes these measures enable investors and analysts to compare the Corporation's financial performance with its competitors and evaluate the results of its underlying business. These measures do not have a standard definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. As these measures do not have a standardized meaning, they may not be comparable to similar measures provided by other companies. See Sherritt's Management's Discussion and Analysis for the period ended September 30, 2016 for further information. Sherritt will hold its quarterly conference call and webcast today at 11:30 a.m. Eastern Time. An archive of the webcast will also be available on the website. The conference call will be available for replay until October 30, 2016 by calling 647-436-0148 or 1-888-203-1112, access code 5561051#. COMPLETE FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS Sherritt's complete interim condensed consolidated financial statements and MD&A for the three and nine months ended September 30, 2016 are available at www.sherritt.com and should be read in conjunction with this news release. Sherritt is the world leader in the mining and refining of nickel from lateritic ores with operations in Canada, Cuba, and Madagascar. The Corporation is the largest independent energy producer in Cuba, with extensive oil and power operations on the island. Sherritt licenses its proprietary technologies and provides metallurgical services to commercial metals operations worldwide. The Corporation's common shares are listed on the Toronto Stock Exchange under the symbol "S". 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", "projected", "continue" or other similar words or phrases. Specifically, forward-looking statements in this document include, but are not limited to, statements set out in the "Outlook" sections of this press release and certain expectations about capital costs and expenditures; production volumes; capital project completion and ramp up dates; future price of key commodities; sales volumes; revenue, costs, and earnings; sufficiency of working capital and capital project funding; results of on-going discussions regarding the partnership structure and future financing arrangements at the Ambatovy Joint Venture; results of discussions regarding timing of ongoing Cuban payments; completion of development and exploration wells; and amounts of certain joint venture commitments. certain Ambatovy Joint Venture loans; completion of development and exploration wells; and amounts of certain joint venture commitments. Forward-looking statements are not based on historic facts, but rather on current expectations, assumptions and projections about future events. 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 changes in the global price for nickel, cobalt, oil and gas or certain other commodities, share-price volatility, level of liquidity and access to capital resources, access to financing, risk of future non-compliance with debt restrictions and covenants; risks associated with the Corporation's joint venture partners; discrepancies between actual and estimated production; variability in production at Sherritt's operations in Madagascar and Cuba; risks associated with the ramp-up of Moa Joint Venture Acid Plant; potential interruptions in transportation; uncertainty of gas supply for electrical generation; uncertainty of exploration results and Sherritt's ability to replace depleted mineral and oil and gas reserves; the Corporation's reliance on key personnel and skilled workers; the possibility of equipment and other failures; the potential for shortages of equipment and supplies; risks associated with mining, processing and refining activities; uncertainty of resources and reserve estimates; uncertainties in environmental rehabilitation provisions estimates; risks related to the Corporation's corporate structure; political, economic and other risks of foreign operations; risks related to Sherritt's operations in Madagascar and Cuba; risks related to the U.S. government policy toward Cuba, including the U.S. embargo on Cuba and the Helms-Burton legislation; risks related to amounts owed to the Corporation by the Malagasy and Cuban governments; risks related to the accuracy of capital and operating cost estimates; reliance on significant customers; foreign exchange and pricing risks; compliance with applicable environment, health and safety legislation and other associated matters; risks associated with governmental regulations regarding greenhouse gas emissions; maintaining the Corporation's social license to grow and operate; risks relating to community relations; credit risks; shortage of equipment and supplies; competition in product markets; future market access; interest rate changes; 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; risks related to the Corporation's accounting policies; risks associated with future acquisitions; uncertainty in the ability of the Corporation to obtain government permits; 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; uncertainties in growth management; and certain corporate objectives, goals and plans for 2016; and the Corporation's ability to meet other factors listed from time to time in the Corporation's continuous disclosure documents. 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. 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.

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