Sherritt International Corporation (S) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Welcome to the 2021 Annual Meeting of Sherritt International Corporation. My name is Sir Richard Lapthorne, and I'm the Chair of the Board of Directors. I'm speaking to you from my home in the United Kingdom. And as prescribed by the bylaws of the corporation, I will preside as Chair of this annual meeting of shareholders. Although we are disappointed that we cannot see each of you today, our thoughts are with you, your families and the communities you serve. We want to thank you for attending this, our second virtual annual meeting, in succession. Ward Sellers, Senior Vice President, General Counsel and Corporate Secretary of your Company, is also participating in today's meeting with me. I now formally call the meeting to order. In accordance with the bylaws of the corporation, Mr. Sellers will act as Secretary of this meeting. In the unlikely event of technological failure disconnecting my audio from this meeting, I have designated David Pathe, President and Chief Executive Officer of Sherritt, to step in as Chair of the meeting. We will now proceed with the formal business of the meeting. Following the formal business, David Pathe will provide you with an update on your company, and he and I will be at your disposal to answer questions. In the circumstance of this virtual meeting, we have determined that registered shareholders or anyone else listening to the meeting who wishes to make a comment or ask a question relating to the business of the meeting may do so at the appropriate time by following the instructions that will appear on your screen. Questions that directly relate to a particular motion will be answered at the appropriate time in the meeting. All other questions that are of a general nature will be answered jointly in the allotted question-and-answer period following the formal business of the meeting. Please note that all questions are moderated before being presented in order to eliminate repeated questions and to ensure normal meeting protocol for appropriateness is adhered to. As your question may be similar in nature to that of another participant, please be aware that the question may be presented to the meeting in a more generic format. Please also note that there may be a slight delay of a few seconds between when you submit your question and when we receive it. As with any technology, unexpected glitches may occur, but our service provider for this platform is very experienced at running this type of meeting and is available to assist. Should you experience technical difficulties during the meeting, please click on the Support button and follow the instructions that appear on your screen. Before proceeding further, on behalf of the Board, I wish to express thanks to those shareholders who have submitted their proxies in advance. And on a final administrative matter, please note that this meeting is being recorded. Please note that only shareholders who held shares at the close of business on March 26, 2021, the record date for the meeting or their validly appointed proxy holders, are entitled to vote at this meeting. Representatives of AST Trust Company Canada, the corporation's registrar and transfer agents, are present in this meeting and have detailed records relating to the holdings of shares on March 26, 2021. Registered shareholders received a control number on their proxy form, and shareholders who have validly appointed their own proxy holder to vote at this virtual meeting by following the proxy appointment process were given a control number by the transfer agent. These control numbers will act as your login credentials to this meeting for voting purposes. The procedure for voting will be discussed shortly. All others attending as guests are able to listen, but are not able to vote at this meeting. To make the best use of our time at this meeting, certain employee shareholders have been asked to move and second the items of business at today's meeting. With the consent of the meeting, I appoint AST Trust Company Canada, the registrar and transfer agent for the corporation acting through its representatives, Radha Mulchan-Singh and Carol Pineda to act as Scrutineer of the meeting. The Scrutineer has reported in his preliminary report on attendance that the aggregate number of shares represented by proxy at this meeting totals 109,423,595 shares or 27.54% of the issued and outstanding shares of the corporation. A final scrutineer's report on attendance and voting will be filed with the records of this meeting. However, before reviewing the order of business for today's meeting, I feel that I must comment on the disappointingly low voter turnout at today's meeting, with only 28% of shares voted. We have barely been able to achieve the 25% quorum threshold of the meeting and of risk having to postpone the meeting to achieve quorum. Voter turnout for our shareholders' meeting in 2020 was only 26%, and it was only 31% in 2019. Looking forward to next year, I really do encourage all shareholders to vote in order to express your views on the resolutions before you and to ensure that quorum can be reached. As an example of the consequence of low voter turnout, this year, we expect to announce approximately 83% of votes in favor of say on pay. This is already a particularly strong result on this resolution, but in practice, only 4.5% of our shareholders have voted against it, not the 17% that are reported voting on say on pay could suggest. And in 2020, we reported only 59.6% in favor, when, in fact, only 10.5% of our shares -- shareholders have voted against the resolution. So voting is important, and it gives you the opportunity to tell us really what you think. The matters to be addressed at today's meeting have been set out in the notice of meeting and management information circular, which were made available to all shareholders. There are a number of items of business to be presented to the meeting today. You will be asked to receive the consolidated financial statements of the corporation for the financial year ended December 31, 2020; appoint the external auditor and authorize the Directors to set the external auditors' compensation; consider a nonbinding advisory resolution relating to the corporation's approach to executive compensation; elect the Directors; and transact such other business, if any, as may properly come before the meeting or any adjournment or postponement of the meeting. Mr. Secretary, has proper notice of the meeting been given?

Yes, Mr. Chair. Notice of the meeting was given in accordance with bylaw #1. The notice with -- and access letter containing instructions on how to electronically access the notice of meeting and management information circular was mailed to shareholders on April 14, 2021, and I am tabling an affidavit of mailing from AST Trust Company Canada confirming the mailing. I have also received a preliminary report on attendance from the Scrutineer, which indicates that we have a quorum, and I will table the final Scrutineer's report on attendance and voting once it is ready.

Thank you. I now declare the meeting to be properly constituted for the transaction of business. We will conduct the votes on matters considered at the meeting by online ballot. Please note that in the interest of making this virtual meeting as efficient as possible for all those participating, the poll will be open for all resolutions at the same time and is open now. This will allow you to choose to vote on each resolution immediately or wait until conclusion of discussion on each resolution prior to casting your votes. Voting on all matters will be closed immediately after the last item of business of the meeting, and the voting results on all matters will be announced at that time. If you voted in advance of the meeting and do not wish to revoke your previously submitted proxies, then you do not need to do anything. I shall now request the Secretary to table the minutes of the last Annual Meeting of Shareholders of the corporation held on December 15, 2020. The minutes of the December 15 meeting are available for review by any shareholder. Unless someone wishes to have them read, may I have a motion that the minutes be taken as read and approved?

Mr. Chair, my name is Ivo Gonzalez, and I move that the minutes of the Annual Meeting of Shareholders held on December 15, 2020, be taken as read and approved.

Thank you, Mr. Gonzalez. May I have a seconder?

Mr. Chair, my name is Chad Ross, and I second the motion.

Thank you, Mr. Ross. If you object to approving the motion, please indicate your objection by clicking on the messaging icon with the red circle at the top of your screen and typing I Object in the text box. As we did not receive an objection, I declare that the motion to have the minutes be taken as read and approved has passed, and I declare it carried. The next item of business is the presentation of our 2020 audited consolidated financial statements, together with the auditor's report thereon. A copy of the 2020 annual report, which contains the audited consolidated financial statements and the auditor's report for the year ended December 31, 2020, has been made available to all shareholders. The reports are also available on our website. The Board of Directors has approved these financial statements, and the Secretary will now table the annual report. The next item on the agenda is the appointment of the auditor for the ensuing year and the determination of the auditor's remuneration. May I have a motion with respect to the appointment of auditors?

Mr. Chair, my name is Jenelle Ross, and I move that the firm of Deloitte LLP be appointed auditor of the corporation until the next annual meeting of shareholders and that the Directors be authorized to fix their compensation.

Thank you, Ms. Ross. May I have a seconder?

Mr. Chair. My name is Yasmin Gabriel, and I second the motion.

Thank you, Ms. Gabriel. The motion is now open for discussion. Any questions may be submitted using the messaging icon with the red circle at the top of your screen. As there is no discussion, we will now conduct the vote. The poll is open. As a reminder, those shareholders and proxy holders with control numbers can vote by clicking on the voting button. Registered shareholders who voted in advance of this meeting do not need to resubmit their votes. The next item of business is the consideration of a nonbinding advisory resolution, commonly known as say on pay. The effect of this nonbinding advisory resolution is to give shareholders the opportunity to endorse or not endorse the corporation's approach to its pay program and policies for its executives. The full text of this nonbinding advisory resolution is on Page 9 of the management information circular. In order to be passed, this resolution must be approved by a simple majority of the total cast votes. May I have a vote motion with respect to the resolution?

Mr. Chair, my name is Jenelle Ross, and I move that the nonbinding advisory resolution regarding the corporation's executive pay program and policies, the text of which is in the management information circular, be hereby authorized and approved.

Thank you, Ms. Ross. May I have a seconder?

Mr. Chair, my name is Ivo Gonzalez, and I second the motion.

Thank you, Mr. Gonzalez. The motion is now open for discussion. Any questions may be submitted using the messaging icon with the red circle at the top of your screen. As there is no discussion, we will now conduct the vote. The poll is open. As a reminder, proxy holders with control numbers can vote by clicking on the Voting button. Registered shareholders who voted in advance of this meeting do not need to resubmit their votes. The next item of business is the election of Directors. While the Sherritt Board has consisted of 7 Directors in recent years, Tim Baker has decided not to seek renomination at this meeting, having served as a Director for 7 years. I would like to thank Tim for his viable contributions, both to Sherritt's Board and to the company more widely, and we wish him well. The number of Directors to be elected at this meeting has been set by the Board at 6. All 6 of management's recommended nominees have been approved by the Board of Directors and have consented to stand for election to the Board. All of management's recommended nominees are currently members of the Board. Particulars relating to the 6 nominees recommended by management for election this year are set out in the circular. I now declare the meeting open for nominations.

Mr. Chair. My name is Chad Ross. I'm a shareholder of the corporation, and I have the pleasure of nominating the following 6 persons as Directors of the corporation: Maryse Bélanger; Sir Richard Lapthorne; Adrian Loader; Lisa Pankratz; David Pathe; and John Warwick, and move that they be elected Directors to hold office until the next annual meeting of shareholders or until their successors are duly elected or appointed.

Thank you, Mr. Ross. May I have a seconder?

Mr. Chair, my name is Yasmin Gabriel, and I second the motion.

Thank you, Ms. Gabriel. As the corporation's advanced notice bylaw requires, any shareholder wishing to make nominations for election as Directors to give advance notice to the corporation, and no advanced notices were received by the corporation. I declare the nominations closed. As there are 6 spots to be filled on the Board and there are only 6 nominees, it is clear that the 6 nominees will be elected. We will nevertheless conduct the vote by way of ballot in accordance with the corporation's majority voting policy. The motion is now open for discussion. Any questions may be submitted using the messaging icon with the red circle at the top of your screen. As there is no discussion, we will now conduct the vote. The poll is open. As a reminder, those shareholders and proxy holders with control numbers can vote by clicking on the Voting button. Registered shareholders who voted in advance of this meeting do not need to resubmit their votes. We have now discussed all items of business. If you have not cast your vote yet, please do so now. We will pause for a few seconds to allow for any final voting. [Voting]

The voting is now closed, and the Scrutineer is reviewing the results of the online ballots. We will pause now for a few seconds to allow for the Scrutineer to deliver its report. I have reviewed the preliminary online ballot report prepared by the Scrutineer, and I can confirm the following individuals have received a majority of votes cast for their election and have been elected to hold office until the end of the next annual meeting or the date their successors are elected: Maryse Bélanger; Sir Richard Lapthorne; Adrian Loader; Lisa Pankratz; David Pathe; and John Warwick. The say on pay resolution has been approved by approximately 83% of the votes cast by shareholders present in person or by proxy. The motion to approve the appointment of auditors was passed, and I declare it carried. Following this meeting, the complete results of the online ballot, as calculated by the Scrutineer, will be filed on SEDAR and will be available for viewing under the corporation's profile at www.sedar.com. That concludes the formal agenda items. May I now have a motion to terminate the formal portion of the meeting?

Mr. Chair, my name is Yasmin Gabriel, and I move that the meeting be terminated.

Thank you, Ms. Gabriel. May I have a seconder?

Mr. Chair, my name is Ivo Gonzalez, and I second the motion.

Thank you, Mr. Gonzalez. Ladies and gentlemen, this concludes the business of the meeting, and I declare that the meeting is terminated. The formal part of the meeting is now terminated, as I've just said, but I would now like to invite David Pathe to speak to you.

All right. Well, thank you, Richard, and let me add my good morning, and welcome, and thank you for everyone for joining us today. As Richard said, it's unfortunate that we're having to conduct this virtually once again. It was certainly our hope to be with you in person, but given the stay-at-home order in Ontario and the current state of COVID here, obviously, a virtual meeting is necessary once again. I'm sure we said this last time, but it's certainly our hope that next time we do this, we'll be able to meet with you in person. And given the trajectory of infections now in Ontario and the progress that we appear to be making on vaccines, I think we're more opportunistic that we'll be able to do that. As we've done in the past, I'm going to make a few comments now about your company and the environment that we find ourselves in today, and then Richard and I will be available to take any questions that any of you may have. So getting started, they'll be -- on your screen, you should be able to see a few slides that I'm going to speak to as we go through this presentation. First off, you'll see our forward-looking statements disclaimer. Some of the statements I will be had will be forward-looking or prospective in nature. And obviously, all of those statements are qualified by the disclosure you see there and then the risk factor disclosure in our circular. Those of you who have been at a number of annual meetings for us recently will have seen that, very much so in recent years, we've been dealing with challenges in our business, and our annual meetings have been looking backwards. We're counting what we've done in the preceding year to try and address some of those challenges and the ongoing issues that we were facing. Given where we are now and the success of our restructuring last year and the fact that we've actually just had an AGM, or is it now 4 or 5 months ago, where we actually recounted a lot of the events of 2020, this seems an opportune time and an opportunity now for Sherritt to start to look forward. So I'm a bit of a different tack this time around, and I'd like to spend a bit of time looking at what we are going to be doing in the environment we're operating in going forward and give you a sense of where we think your company is going. We find ourselves now in a much more positive environment, and there are a number of potential catalysts for growth in the future, both external and internal. And the way that the external market is unfolding creates opportunity for us, and I'm going to touch on them on a few of those this morning. In the near term, we've seen nickel prices rally in the last 6 or 9 months, and we think we're going to continue to see some volatility in nickel prices, as we come out of the global pandemic here. But we have seen prices strengthened, and we think that trend will continue as the world gets back to growth. We think we're going to see stainless steel demand continue to pick up, which is a traditional driver of the nickel market as the world gets back to growth, and spending on hospitality industry and restaurants and infrastructure and all those factors that drive GDP growth that ultimately drive stainless steel continue to get stronger. I want to spend some time talking about the macro trends that are unfolding that also create opportunity for us, and the transition to a low carbon future as the world battles climate change and the opportunity that creates for metals, like nickel and cobalt, that we produce and the trend that's leading to greater demand for cleaner sources of metal and cleaner resources and the opportunity that, that creates for our technology business. Looking at nickel demand, the demand forecast for nickel in the next 20 years are very strong. You'll see on the next slide there that nickel demand is expected to grow by 86% in the next 20 years through to 2040. That's certainly driven by the economic recovery that will come out -- as we come out of the global pandemic, but the long-term growth in that is certainly driven by electric vehicles. And we've talked about electric vehicles in the past. I'm going to give you a bit of an update on where that is going. But certainly, as we see commercial activity resume, and we've started to see that in parts of the world already that are driving the recovery in nickel prices that we've seen since the middle of last year, but certainly, longer term, the demand growth that we're expecting to see in nickel and in cobalt is largely on the back of electric vehicle adoption. So we're very much focused now on this low carbon future as the world comes to -- coming to grips with climate change and how it's going to collectively address those issues. A big part of that strategy is the electrification of transportation. The adoption of electric vehicles is part of the longer-term trend of moving towards more environmentally and more sustainable modes of transportation. The move towards a low carbon future is going to have far-reaching impacts across any number of industries and everyday life in the next 10, 15, 20 years. But certainly, the strategy around electrification of transportation is only -- on the storage of energy is really only possible because of certain key metals. Sherritt is a low-cost, high priority producer of 2 of them in nickel and cobalt, and we believe that Sherritt stands to benefit greatly from this trend, and we are going to experience that benefit for years to come. Looking at electric vehicles, the rate of adoption is accelerating, as you'll see on the graph there on the next slide. Despite the pandemic, there were more than 3 million electric vehicles sold in 2020, and that is consistent with the forecast that have been out there for the rates of vehicle adoptions for the last couple 3 years. Industry analysts are expecting that growth to continue with an exponential rate, such that by 2040, electric vehicle sales will represent 50 million vehicles a year and a market penetration rate of over 50% of all vehicles sold. A number of factors are combined to drive that growth. The implementations of bans on the use of gas-powered vehicles in the future by governments around the world, massive amounts of investment by auto companies and more specific demands from end users and from retail customers looking to green their daily consumption habits. Banning of gas-powered vehicles is actually potentially coming sooner than you think. Norway, a ban on internal combustion engine sales takes effect in less than 5 years. In France, it's less than 10 years. California and China, it's less than 15 years. And most Canadian provinces have bans starting in 2040. To meet these new sales targets, the automated -- the automotive industry is making massive investments in retooling its manufacturing facilities and redesigning its lines. Just some recent examples of that. General Motors has announced that they're investing USD 27 billion over the next 5 years towards EV production and design and plans to have the majority of its fleet electric by 2035. Ford has just announced plans to spend $29 billion through 2025, doubling its initial investment plans in electric vehicles, including electrifying, its most popular F-150 pickup truck. And those of you who may have seen the news this week, Joe Biden was in Michigan, actually, test driving the new electric F-150 just the other day. Volkswagen has made a massive commitment, committing to spend USD 86 billion over the next 5 years, the largest investment of any of the traditional automakers. And key to all this investment from Sherritt's perspective is that most EV batteries are using chemistries that are heavily reliant on nickel and cobalt. Over the next slide, you will see the way that the composition of batteries, specifically the cathodes within battery, has evolved in recent years and the heavy nickel content that we see in both of them. Nickel, manganese, cobalt, the NMC, as you see on the second from the right and the final one, the right, the nickel -- the NCA or nickel, cobalt, aluminum batteries are the prevalent battery technologies and chemistries that are being used in electric vehicles today. And those are truly emerging as the dominant chemistries in the market. You will hear other talk around other battery chemistries, including LFP, or the lithium-iron-phosphate battery, but none of those battery technologies are anywhere near as advanced as the NMC and NCA chemistries. And the reality of the LFP chemistry is that the iron in that, well, can act as a cathode. It's not nearly as efficient as the nickel from an energy storage and energy density perspective. In fact, the iron battery will only hold about 2/3 of the energy that a nickel-based battery will hold, resulting that nickel batteries been -- in fact, have 50% more driving range than LFP batteries. And so higher-end, long range -- longer-range vehicles are all going to be nickel-based, and that's why so many battery manufacturers and automobile manufacturers are actually moving to higher nickel content. It's the nickel content that gives that energy density in batteries, that gives to extend driving range. And it's the cobalt, while they've been working hard to engineer down the volume of cobalt in a battery, it is ultimately that cobalt that provides the stability in batteries through temperature changes and multiple charging cycles. On the next graph, you can see what the nickel supply and demand balance looks like. We've obviously been through a long period of low nickel prices, and that has impacted investment in the nickel supply side of the industry over the last 10 or 15 years since the financial crisis. And so there is a looming deficit when you look at the forecast of what adoptions of electric vehicles is going to look like. And the amount of nickel that, that will take to meet that demand, that amount of nickel production simply does not exist in the world today. And in many cases, it takes nickel prices higher than where we are today to make the economics work on new projects, and we think that is going to bode well for these looming nickels deficit -- supply deficits bode well for nickel demand and nickel prices in the future. Just to touch on the story on cobalt, a very similar story, frankly. As you look at the slide on the next page, cobalt demand scheduled to grow 87% over the next 5 years, and limited ability for the industry to respond to that. Nickel -- unlike nickel and unlike copper -- cobalt, in most cases, a byproduct of nickel or cobalt production, and so the ability to produce more nickel will be tied to the growth in -- sorry, to produce more cobalt will be tied to the ability to grow nickel and copper production. But that demand, even with the diminishing content of cobalt in a battery by volume is still expected to experience significant growth, and that we expect to be positive for prices as well. Looking at Sherritt's role in this, I mean, we are obviously a player in this low carbon future, not just from participating in nickel and cobalt markets, but we are also looking to lower our emissions and be a greener provider of metals into that low carbon future. We are looking at a variety of initiatives and have already begun to implement some. I wanted to just give you a highlight. One example of that is we are already implementing electric vehicles into our light vehicle fleet at the mine in Moa. We are looking this year to expand on that program and looking at replacing more vehicles and more heavier equipment with electric in time. We are looking at other opportunities in our capital -- sustaining capital spending programs at Moa and the Fort to continue to lower emissions as we update equipment. Examples of that would be some of the equipment at the refinery, potentially the use of solar panels at Moa for generating supplemental electricity, those are the kind of initiatives we are investigating today. And you'll certainly be hearing more from us in the future about our ongoing efforts to improve our ESG profile and our emissions profile from our existing operations. That is all driven by market dynamics that we think create further opportunities for us beyond the growing demand for nickel and cobalt in this low carbon future. Part of the ancillary to that is a demand for cleaner resources, cleaner metals. And that opportunity, we believe, creates a real opportunity for our technologies business. Our technologies group for the last few years, we've continued to make investment in our technologies group. Despite the economic circumstances that we've been in the last few years, we've made a concerted effort to keep that group intact and invested. And they have been working in a variety of projects with different objectives that I think are in demand by the industry today and will be in greater demand by the industry in the future. Projects and the objectives of these projects include improving the purity of metals, reducing the greenhouse emissions of the processing and -- mining and processing process, extending the life of mines, reducing tailings and other wastes, increasing the recoverability of high-value metals, reducing operating costs and reducing the capital intensity of mining projects. The number of projects that our technologies group is working on, I'm going to just highlight a couple of them for you today. To tell you a little bit about our technologies group, Sherritt has always been a leader in hydrometallurgical and high-pressure acid leaching technology. We've registered over 1,700 patents since 1948. There are more than 40 companies in operations around the world that use our technology and then -- our processes in their day-to-day operations. And that technologies group today includes 14 PhDs and more than 1,000 cumulative years of experience in hydrometallurgical process development. So I want to tell you a little bit about a couple of the projects that they're currently advancing. One addresses a significant issue in the copper industry. And for all of the story I've told you around growth in nickel and cobalt demand as a result of the electrification of transportation in the future, I could tell you, an equally similar and compelling story about copper, and we've seen copper prices run very nicely so far in 2021 as well. Our team has been working on addressing a significant issue in the copper industry and a real inhibitor of growth in copper supply, and that's the high arsenic content in some copper concentrates. Arsenic has obviously a poisonous element that is very difficult to handle and store economically, and many sources of copper in the world just have naturally occurring high levels of arsenic that, in some cases, make them difficult to treat or render them an economic. Our technologies group has developed a hydrometallurgical process that is unlike any other process that's currently been developed for and offers real advantages over other existing technologies for treating high arsenic copper concentrates. At the moment, the copper industry is expecting to spend literally billions, tens of billions of dollars in the next 10 years addressing high arsenic copper -- high arsenic levels and copper concentrate, and our technologies group has developed a system of -- a method of treating it that not only removes the arsenic, but actually renders it inert and, therefore, no longer a poisonous risk and, therefore, easy to store compared to current existing methods. The process we developed has no carbon -- no incremental carbon emissions, so it's very attractive from an ESG and an emissions perspective, and has the potential to extend the life of aging copper mines where ore bodies in our segmental levels in those bodies is creeping up. And to make some ore bodies that are continually considered uneconomic today because of their high arsenic content can certainly make them economic because our process can work with arsenic levels as high as 5% or 6%. That was -- as I say, copper demand expected to grow by 30% over the next 10 years, and the amount that the industry is looking to invest in addressing this high arsenic issue, we think that's a real opportunity for us to capitalize on that, and you'll be hearing more on that project from us in the quarters to come. Another project I want to highlight for you in terms of our capability of our technologies group to address environmental and economic concerns in producers of resources, looking to green and improve their production in the future is our bitumen project. We've spoken in the past about our -- the capability and the process that we have developed for upgrading Western Canadian bitumen. That process has continued to evolve and is now actually a full upgrading process that we believe is vastly superior to existing upgrading methodologies, both from an economic perspective and from an environmental perspective, and that our process does not create massive amounts of slag waste, and it has lower carbon emissions than existing upgrading technologies. Additionally, it has the ability to improve pipeline capacity without new investment in pipeline capacities. Those of you who are familiar with the bitumen industry will know that the industry currently spends billions of dollars a year diluting bitumen with diluent in order to make that liquid enough to be able to pump through pipelines, and about 1/3 of what's actually moving through bitumen pipelines today is diluent. Our upgrading process eliminates the need for diluent and, therefore, the pipeline capacity we can use off for moving bitumen rather than cycling bitumen around the continent. So our process involves a significant economic and environmental advantages over current methodologies today. We have had some discussions with bitumen producers, and we'll be looking to continue those. And our hope is that we'll be able to put together a plan to build the demonstration plant to demonstrate the commercial viability of the process that we've developed. I also -- while I have a moment with you to spend a little bit of time just talking about Cuba. Cuba obviously remains vitally important to us as a partner and as a business. Our nickel business is obviously based on our Moa joint venture where we've been partners with our Cuban partners since 1994. In addition to our business there, we do continue to have -- obtained the rights to a number of different blocks along the North Coast of Cuba in our oil business that are -- that we believe will remain high potential. And while we're not investing any incremental capital in those opportunities at the moment, we do continue to have conversations with potential partners around partnering on those contracts to look to do some further drilling there in the future. Our Power business has always been a dependable contributor of cash flow to Sherritt. We are looking now at extending the contracts on our Power business, which is currently scheduled to mature in 2023, and we're optimistically we will be able to get that done this year as well, which will permit more time to recover the amounts that we're owed in that business, that the Power business in Cuba is vitally important from a strategic perspective to our Cuban partners. And despite COVID, we've been able to maintain our good relationships with Cuba and our partners there, and we will be continuing to work at that over the course of 2021. Cuba has had a difficult time of it in the last few years, as we have talked about, both due to the pandemic, the impact that, that has had, both from a disease perspective on the island itself and from an economic perspective, impacting their imports and exports and a devastating impact on their tourism industry, which is obviously a significant source of their foreign exchange income. Their economic situation has been further hampered over the last few years by upwards of 200 incremental moves by the Trump administration to put more sanctions on Cuba, including the broadening of the application of Helms-Burton and other restrictions on goods and services going in and out of Cuba and their ability to move cash. We are optimistic, as we've said in the past, now with the change in administration in the U.S. Certainly, during the election campaign, the Biden campaign made a number of references to -- looking to restore relations with Cuba and move back towards more of an Obama-era policy towards Cuba. We have not seen much progress on that thus far in the Biden administration in the first 100 days, while the Biden administration deals with larger priorities around the pandemic and their infrastructure bill, foreign relations with China and Iran, and the immigration on the Southern border have loomed larger on the agenda. But we remain optimistic that we will see improvement in that relationship over the course of the Biden administration, and we expect that to be positive for Cuba and the domestic Cuban economy and consequently for us as well. From a disease perspective, Cuba has struggled as many countries have. They have now actually made progress developing their own vaccine candidates. They have 2 vaccine candidates that are now in final trials, and they've actually begun vaccinating people in Havana. It is ultimately their plan to not only be able to vaccinate their entire population with their own domestically developed vaccines, but also ultimately export vaccines, and I think that is a testament both to the resourcefulness and the strength of the Cuban pharmaceutical industry and then their commitment to be able to do that in the face of the embargo and restrictions that they face in dealing internationally. So that kind of summarizes what I wanted to tell you about today. I mean, for 2021, we are off to a strong start from a production perspective. As you would have seen in our first quarter release, there are a number of potential catalysts for us in place now for growth as the world turns and evolves towards this low carbon future, and we are certainly working hard to position ourselves in that. As -- I think it's the most promising and particularly encouraging outlook that we've had in some years now with our restructuring behind us. And in the coming months, you will hear more updates from us on all these initiatives. With that, Joe, or whoever is on the line, I think that Richard is going to make a quick comment or 2, and then we're going to take your questions.

Thank you, David. As most of you know, we made an important announcement on Tuesday appointing Leon Binedell as Sherritt's new CEO and President effective from the 1st of June. Before I welcome Leon, I'd like to say a few words about David. On behalf of the Board of Directors, I really would like to take this opportunity to thank him for his numerous achievements over the years with the company. Most notably, his performance as Chief Executive was critical to Sherritt during a difficult and extremely volatile period for the nickel market, a period that, frankly, provided little room for financial comfort. His tireless work over many years addressing financial recovery from the consequences of the Ambatovy investment produced a remarkable balance sheet restructuring we completed last year. And I've got to add, of course, a restructuring achieved without any dilution to shareholders. Just as important, he was able to forge excellent relations with our Cuban partners, and it ensures strong operational performance against the backdrop of harsh U.S. sanctions during his tenure as Chief Executive. And you've just heard from his presentation that these accomplishments have enabled Sherritt to stop needing to spend all our time looking backwards. Indeed, we now have a way to look to the future with confidence and optimism. Not only is an outlook for nickel and cobalt particularly bullish, but we also have a number of credible options to setting the company on to a positive trajectory. That is David's legacy. It's what he and Sherritt investors should be proud of. And true to his character, David has kindly offered to help with Leon's transition into his role. And the key to this seamless transition, we'll be making proper introductions and handoffs with our Cuban partners. And thank you, David. On behalf of the Board, we wish you nothing but the greatest of success in your future endeavors. I'd now like to take this opportunity to publicly welcome Leon to Sherritt. I'm delighted, really delighted with this appointment. Leon's range of expertise across the sector and his proven ability to deliver results in complex stakeholder, multi-jurisdictional landscapes will be great advantages for Sherritt for many years to come. And, of course, that's the world we live in. The process we took to find, vet and appoint Leon as CEO was amongst the most robust I've been involved in over the years. It's one of the reasons why the appointment took longer than many might have expected. We retained the services of a global executive research firm that conduct a comprehensive international search. And in setting out its requirements, the Board was mindful of the need to recruit a candidate with the strategic capability to drive Sherritt's future agenda, whilst, at the same time, possessing a thorough understanding of mining. Of the candidates we interviewed, Leon's possession of the skills required to build the future Sherritt especially impressed us. His strategic mindset and proactive style were particularly important when combined with his experience in an understanding of the mining industry. I believe these attributes will make him a true asset, and I'm confident in Sherritt's ability to create significant value under his leadership. In time, investors will have the opportunity to meet him, hear about his vision for the company and discuss ongoing progress with him. We will now open up the floor to any questions you may have. I would ask that you restrict your questions, please to today's presentation.

Our first question is why does Sherritt need the number of its Directors given its size.

Sherritt is a business, which is in a regulated industry. We even discussed yesterday the capacity to deal with all the things that we need to deal with, and the number of -- none of the Directors just turns up. Everyone is involved in following what's going on in the committees, in following what's going on in the Board, in participating with them. And if we thought that we could do with less Directors, we would have less. But in practice, we've got certainly no less than that we would want to run the business that we're intending to run.

Is there any consideration to spending out the technologies group?

I think you have to always have considerations, but it's certainly not in our present planning.

Are you looking at any domestic nickel and cobalt production opportunities?

Dave, would you like to address that?

Sure. I mean, there are certainly opportunities to continue to expand our existing operation, both from an expansion that was underway back before the financial crisis. That was suspended during the financial crisis and has never been fully completed. We have completed elements of that over the years and, more recently, in terms of the acid plant we constructed a few years ago, in the slurry preparation plant that we're currently evaluating our elements of that expansion. But for the last period of time, the nickel prices and cobalt prices simply haven't supported broader expansion programs of our existing operations. As we move into a world now of potentially stronger prices, that opportunity becomes more real, and work is being done to update the estimates of what it would take to complete that expansion. And there are further opportunities beyond that in Cuba as well in terms of other ore bodies in Cuba that are not currently being exploited in any way. That whole Eastern end of Cuba is, I believe, the world's fourth largest nickel reserve, and so we do not feel resource constrained over the long term in Cuba. And developing plans to do that as economic circumstances permit is certainly now a real discussion than it has been for the last few years.

I think your question raises this whole issue of capital allocation as well. And clearly, as a Board, we're having to be mindful of guess what the demands might be in nickel and in the metals business. We also have to be mindful of what the potential is and the degree to which that potential firms up into real projects, or shall I say, real partnerships when it comes to some of the third-party discussions that we would hope to have with technologies. And of course, inevitably, you've got the tactical elements of what we're doing regarding any bond purchases, which people bring up. But I think the important thing here is to make sure that we are growing the business to make it a sustainable business and provide long-term sustainable value, therefore, to all our stakeholders. So it's a sort of simple one-dimensional question that's asked. But actually, in considering the answer, we probably have to go into one -- more than that single dimension.

With respect to the EV battery market, are you looking to sell specific directly to the battery makers themselves? Or are you also looking into entering relationships with the car manufacturers?

David, do you want to describe how that market is still evolving and the thinking has not yet settled down, really?

Yes. So we currently sell nickel, both into Asia and into Europe to a variety of customers, some -- both longstanding and relatively new. The nickel market is currently in somewhat of a state of flux as the automakers work to understand how they are going to set up their global supply chains and whether they're going to get into the battery manufacturing business themselves or whether they're going to outsource battery production, what form that nickel is going to be in an optimal form for battery production. And the automakers are currently working through what their procurement strategies should be, whether that's going to require capital investment on their part or simply contracting. The commodity markets are different from most markets that automaker traditionally operate. And from a supplier perspective, where there's much less price certainty over the long-term given the historic volatility in commodity prices. And so that is the exercise that the auto industry is currently going through to determine how that -- how they're going to set up their supply chains as they move more significantly into electric vehicles, and I think that will play out over the next couple of years. And being part of those conversations will dictate where in the market we participate.

And of course, if we think of the fact that we produce nickel in a country, which whenever anybody else might think actually is stable, is reliable in terms of understanding what their support to long-term supply. It's obviously an interesting place if people get over the issue of sanctions, which is probably obstructing something, which will be very sensible for America as a whole to be looking at.

David, there are no more -- any additional questions that have come in. Over to you.

All right. Well, great. Thank you, everyone, for your questions. Given our announcement this week and the appointment of Leon, today marks my 10th and final AGM as Chief Executive, so if you'll indulge me for a moment, I would like to just say a couple of thank yous. I'd like to thank the Board. This Board over the entirety of my tenure has been steadfast in their commitment to share it and to acting in the best interest of Sherritt, and that has -- by the way, and in some cases, particularly with the expansion of Helms-Burton, that has been with no small amount of personal sacrifice on their part. But for that commitment, I owe them a debt of gratitude, and I'd like to thank them all for that. I'd like to thank Tim Baker, in particular, for his counsel and his commitment over the years, as he's retiring from the Board today. I'd like to thank the shareholders as well. I mean, obviously, it's been a rocky ride though at some point over this, but we have got quite a number of shareholders that have been with us throughout that process, and I've always valued your support, and so thank you for that. And lastly, I'd like to thank our employees. Sherritt is home to a tremendous number of talented and dedicated people, and the ability to come to work each day and work with and learn from them has been a great experience for me, and I want to thank all of them for that. Lastly, I want to congratulate Leon on his appointment and wish him all the luck in the world as he takes on this role. I've had an opportunity to get to know Leon through this process, and I'm really excited about what he brings to Sherritt, both as a leader and as a person. I have every confidence that his tenure in this role is going to be a great success, and I'm certainly committed to doing all that I can to contribute to that and help ensure that's the case. So with that, I will leave it there. Thank you, everyone, once again for joining us today. We will look forward to our next AGM this time next year, hopefully, live and in person. Until then, have a great day. Thank you.