Photo by: Bloomberg
TORONTO (miningweekly.com) – Diversified Canadian miner Sherritt International on Monday said that it had completed the C$946-million divesture of its Canadian coal business, which would allow it to focus on its nickel and oil businesses.
The company, which is currently engaged in a proxy battle put forward by dissident shareholder George Armoyan, said that a “significant” portion of the cash proceeds would be used to strengthen the corporation's balance sheet through debt reduction.
“This transaction benefits Sherritt by rationalising our asset base, significantly enhancing liquidity and providing the opportunity to strengthen our balance sheet. We are continuing to execute on our strategy to build positive momentum and create sustainable shareholder value,” Sherritt CEO David Pathe said.
Sherritt revealed that it had started debt-reduction discussions with advisers and debt holders. Proceeds not used for debt reduction would be used for general corporate purposes, including funding the ramp-up of its Ambatovy nickel project, in Madagascar.
Sherritt received C$793-million in cash on closing the transaction, which saw Westmoreland Coal taking control of the prairie and mountain operations.
Sherritt sold its entire royalty portfolio and stake in coal development assets to a group led by mining company Altius Minerals for C$481-million.
Westmoreland Coal bought Sherritt's operating coal assets - Prairie and Mountain Operations - for C$465-million.
Sherritt had a C$525-million revolving credit facility used primarily for letters of credit and short-term funding for the coal business. The C$300-million drawn on this facility was repaid from Sherritt's existing cash balances immediately before closing of the transaction. The facility was subsequently terminated.
Sherritt said that it would continue to work with Westmoreland on the Obed Mountain mine remediation plan, and would continue to meet all financial obligations resulting from the October 2013 Obed Mountain mine containment pond breach.