Sherritt International Corporation (S) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Okay. First of all, can I apologize for my voice, which is close to the -- older members of the audience will recognize it's my imitation of Jack Hawkins, a very well-known British actor. It's because of the woman I've been sleeping with. It happens to be my wife for 57 years and she had this last week, and I brought it with me. If at any stage, it just gets confusing, please tell me if you haven't heard anything I've said, but hopefully, it will work. So welcome to the 2022 Annual Meeting of Sherritt International Corporation. My name is Richard Lapthorne, and I'm the Chair of the Board of Directors. As prescribed by the bylaws of the corporation, I will preside as Chair of this Annual Meeting of Shareholders. In order to mitigate risk to the health and safety of our shareholders, employees and local communities, we're conducting this meeting with limited physical attendance, providing for the ability of registered shareholders and duly appointed proxy holders to listen, ask questions and note virtually. This is my pleasure to welcome shareholders and others present today and to thank you for your interest in Sherritt. And I have to say it, so thank you for the highest voting that we've had in living -- almost in living memory. It really makes it so much easier to arrange for these meetings. With me today on the podium is Leon Binedell, Chief Executive Officer of Sherritt; Yasmin Gabriel, Chief Financial Officer; Ward Sellers, our Senior Vice President, General Counsel and Corporate Secretary; and Director Nominees, Maryse Bélanger, Dr. Peter Hancock, Chih-Ting Lo and John Warwick, I have to remember the American pronunciation, sorry. We're all very pleased to be here with you today. And I hope by having this layout of us sitting up here, or giving you the ability to see what the people actually look like, we're trying to run this business on your behalf. I now formally call the meeting to order and in accordance with the bylaws of the corporation, Mr. Sellers will act as Secretary of this meeting. We will now proceed with the formal business of the meeting. And following the formal business, Leon, the Chief Executive, will provide you with an update on your company and he and I will then be at your disposal to answer questions. Anyone wishing to make a comment or ask a question relating to the business of the meeting may do so at the appropriate time. For those in the room, you may ask a question by approaching one of the microphones on the floor. Thank you. It's a moving one. Please wait to be recognized by the Chair as a matter of procedure, before anyone takes the floor, I will ask them to identify themselves and to confirm that they are either a shareholder or proxy holder. And in the case of a proxy holder, to identify the shareholder on whose behalf they are speaking. Only shareholders or their proxy holders are entitled to take part in and vote at the meeting. For those attending virtually, please use the messaging tab on the left-hand side of your screen. Please note that all questions asked virtually are moderated before being presented in order to eliminate repeated questions and to ensure a 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. As with any new 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. And should you experience technical difficulties during the meeting, please click on the support button and follow the instructions that appear on your screens. 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 18, 2022, the record date for the meeting, or their validly appointed proxy holders are entitled to vote at this meeting. Representatives of TSX Trust Company, the corporation's registrar and transfer agent are located outside the room and have detailed records relating to the holdings of shares on March 18, 2022. If any shareholder or proxy holder present in this room has not yet registered his or her attendance with TSX Trust Company, please do so now. Okay. Registered shareholders received a control number on their proxy form, and shareholders who have validly appointed their own proxy holder to vote at the 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 for the virtual meeting for voting purposes. All others attending as guests are able to listen but are not able to vote at this meeting. The procedures for voting online and in person will be discussed shortly. 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 TSX Trust Company, the registrar and transfer agent for the corporation acting through its representatives, [indiscernible] and Carol Pineda to act as scrutineer of the meeting. Okay. The scrutineer has reported in its preliminary report on attendance that the aggregate number of shares represented by proxy at this meeting totals 123,166,652 shares or 31% 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. The matters to be addressed at today's meeting have been set out in the Notice of Meeting and Management Information Circular, which were mailed to all shareholders. And there are a number of items of business to present it to the meeting today. You'll be asked to receive the consolidated financial statements of the corporation for the financial year ended December 31, 2021, to appoint the external auditor and authorize the directors to set the external auditor's compensation, to 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 made 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 of the meeting and the Management Information Circular were mailed to shareholders on April 7, 2022, and I am tabling an affidavit of mailing from TSX Trust Company confirming the mailing. I've also received a preliminary report on attendance from the scrutineer which indicates that we have quorum and I will table the final scrutineer's report on attendance and voting once it's ready.

Thank you. I now declare this meeting to be properly constituted for the transaction of business. We will conduct the votes on matters considered at the meeting by physical and online ballot. For those in the room, your ballot was provided to you when you registered your attendance with TSX Trust Company. For those attending virtually, please note that in the interest of making the virtual meeting as efficient as possible, 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 vote. 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 should now request the Secretary to table the minutes of the last Annual Meeting of Shareholders of the corporation held on May 20, 2021. The minutes of the May 20 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 May 20, 2021, be taken as read and approved.

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

Mr. Chair, my name is Karolina Fit. And I second the motion.

Thank you, Ms. Fit. If you object to approving the motion and you're attending virtually, 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. If you object to approve in the motion and you're in the room, please come forward now. As we did not receive an objection, I declare that the motion to have the minutes be taken as read and approved as passed. And I declare it carried. The next item of business is a presentation of our 2021 audited consolidated financial statements, together with the auditor's report thereon. A copy of the 2021 annual report, which contains the audited consolidated financial statements and the auditor's report for the year ended December 31, 2021, 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 determination of the auditor's remuneration. May I have a motion with respect to the appointment of auditors?

Mr. Chair, my name is Ian Fiebig. And I move that the firm of Deloitte LLP be appointed auditor of the corporation until the next Annual Meeting of Shareholders. And the directors be authorized to fix their compensation.

Thank you, Mr. Fiebig. May I have a seconder.

Mr. Chair, my name is Ana Milic. And I second the motion.

Thank you, Ms. Milic. The motion is now open for discussion. For those in attendance virtually, any questions may be submitted using the messaging icon with the red circle at the top of your screen. For those in the room, is there any discussion on the matter? 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. For those in the room, please vote by marking an x in the desired box on the ballot. And please note that 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 votes cast. And may I have a motion with respect to the resolution.

Mr. Chair, my name is Ana Milic. 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. Milic. May I have a seconder?

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

Thank you, Mr. Gonzalez. So the motion is now open for discussion. And for those attending virtually, any questions may be submitted using the messaging icon with the red circle at the top of your screen. And for those in the room, is there any discussion on the matter? Okay. We take it later then. As there is no discussion, we will now conduct the vote. The poll is open. As a reminder, proxy holders with control numbers convert by clicking on the voting button. For those in the room, please vote by marking an x in the desired box on the ballot. Please note that the 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. The number of directors to be elected at this meeting has been set by the Board at 7. All 7 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 and particulars relating to the 7 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 Ivo Gonzalez. I am a shareholder of the corporation, and I have the pleasure of nominating the following persons as directors of the corporation: Maryse Bélanger; Leon Binedell, Dr. Peter Hancock; Sir Richard Lapthorne; Chih-Ting Lo; Lisa Pankratz; 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. Gonzalez. May I have a seconder?

Mr. Chair, my name is Karolina Fit, and I second the motion.

Thank you, Ms. Fit. As the corporation's advance notice bylaw, requires any shareholder wishing to make nominations for election as directors to give advanced notice to the corporation and no advance notices were received by the corporation, I declare the nominations closed. As there are 7 spots to be filled on the Board and there are only 7 nominees, it is clear that the 7 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 for those in attendance virtually. Any questions may be submitted using the messaging icon with the red circle at the top of your screen. And for those in the room, is there any discussion on the matter? 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. For those in the room, if you are in favor of the appointment of a nominee, mark an X in the box opposite his or her name under the heading, For. If you are against the appointment of a nominee, mark an x in the box opposite his or her name under the heading, Withhold. You may vote for up to 7 nominees. Please note that registered shareholders who voted in advance of this meeting do not need to resubmit their votes. We have now discussed all items of business. And if you've not cast your votes yet, please do so now. For those in the room, please complete the ballot by printing your name and signing where indicated. If you are a proxy holder, indicate the name of the shareholder for whom you are a proxy. The number of voting shares you or your ballot represents has been completed by the TSX Trust Company and is stated on your ballot. Once you have completed your ballot, please raise your hand and the scrutineer will collect your ballot. And we will pause to allow for any final voting and collections of physical ballots. [Voting]

Okay. The voting is now closed. And the scrutineer is reviewing the results of the physical and online ballots. I have reviewed the preliminary voting report prepared by the scrutineer. And I can confirm the following individuals have received a majority of votes cast for the 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, Leon Binedell, Dr. Peter Hancock, myself, Chih-Ting Lo, Lisa Pankratz; and John Warwick. The say on pay resolution has been approved by a majority 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 the 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 Ana Milic. And I move that the meeting be terminated.

Thank you. Ms. Milic. May I have a seconder?

Mr. Chairman, 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. And in a way to ask you for understanding, given the repetition that we had to go through because running hybrid meetings, as you can understand, is extremely difficult and complicated, and thank you for your patience, whilst you've heard a number of phrases being called out. So we were absolutely correct in how we ran the meeting. Right. So as I said a moment ago, the formal business part of the meeting is now terminated. And before beginning the next part of the meeting, I would now ask the Secretary, Mr. Sellers to read a statement regarding forward-looking information.

Thank you. Before we begin our comments, I'd like to remind everyone that the following discussion will relate to the financial performance and condition of Sherritt International Corporation and may contain forward-looking information about strategies and expected financial results. Various factors, many difficult to predict and to control, could cause actual results to differ materially from forward-looking statements. Forward-looking statements may be made in connection with business objectives and targets, company operations, anticipated financial results and the outlook for the company, its industry and the global economy. Accordingly, the audience is cautioned against undue reliance on these remarks. We refer everyone to the cautionary language regarding forward-looking statements set out in our most recently filed annual information form, annual report and MD&A in the presentation which is available on the corporation's website at www.sherritt.com and on SEDAR at www.sedar.com. Thank you.

Thank you, Mr. Sellers. I'd now like to invite Corporation's CEO, Leon Binedell, to speak with you. And should you have any questions or comments for him or me that you wish to bring forward at today's meeting, you will have an opportunity to do so at the conclusion of his remarks. I -- just before Leon starts, I'd just make a couple of words, which is that it's -- I've been on this Board a long time now, and it's wonderful to be sitting here in a period where we're at last looking forward again because certainly, my first period has been on the lengthiest and most uncertain effect to give ourselves a balance sheet where we could give our Chief Executive choices back because, of course, if you can't give -- have a balance sheet, you can't do your job, because you can't make choices. And I think that when you see what we're talking about and what Leon wants to talk about now, we are now totally focused on what the future might bring as opposed to spending that time looking backwards. Leon?

Excellent. Thank you, Sir, Richard. Good morning, everyone, and it's pleasing to have so many of you online and in-person here today. Today marks my first shareholder meeting as CEO, and I'm so pleased that so many of you could be in the room, which is the first time in 2 years that we are actually able to meet in-person. And so we've conducted this meeting as Sir, Richard said, virtually and in person. I'm hopeful that this means that the worst of the pandemic is behind us and that we will be returning to normal and be able to have these meetings in person going forward. Now that we've dispensed with the formal part of the meeting, I'd like to take the opportunity to review some of the achievements of the past year to discuss some recent developments and share some thoughts around Sherritt's near-term focus and the outlook for the corporation. At the conclusion of my formal remarks, I will open it up to the meeting to ask some questions. Given forward-looking statements being covered by the Secretary, I will pass through those on Slide 4. Slide 5, 2021 was a year like no other for Sherritt. Against the backdrop of volatile commodity prices, continued sanctions against our Cuban partners, disruptions in global supply chains, which is well advertised and multiple waves of COVID-19 during the year, it marked the start of a significant transition for Sherritt as well, a transition represented by a new leadership team and a new focus towards growth. 2021 will also be remembered for a number of milestones we achieved during these challenging conditions. Indeed, if we look back at 2021, Sherritt had a number of important achievements. The most notable are presented on Slide 6. The first and foremost, Sherritt made a number of key appointments to our Board and the senior leadership team. As many of you know, I joined the corporation in June as the CEO. I joined for 2 simple reasons. One, the outlook for nickel and cobalt was and continues to be particularly encouraging. Two, Sherritt was poised for growth. With a number of embedded opportunities, including the expansion of the Moa joint venture, and bringing the solutions developed by our technologies team to market. Other appointments worth noting, starting at the Board level is Dr. Peter Hancock, a veteran of the mining industry with more than 30 years of experience being named as a director in the fall. More recently, Maryse Bélanger was named Deputy Chair; and Chih-Ting Lo was -- an expert in decarbonization and sustainability became a Director in March of this year. Each of these appointments to our Board reflects our commitment to board renewal, good corporate governance and sustainability. At a senior leadership level, we have made a number of internal promotions and appointments, which demonstrate succession planning at Sherritt dealing with some planned retirements as well. We named Yasmin Gabriel as CFO; Chad Ross as the Chief Human Resources Officer on the retirement of Karen; Dan Rusnell as SVP of Metals, following the retirement of Steve and Elvin Saruk, who heads up our Oil and Gas division also to look after growth projects, given his extensive experience in Cuba with executing projects. We also brought in Greg Honig as our Chief Commercial Officer to help us with our commercialization of technologies. These appointments underpin the transformation that Sherritt is undergoing. Each of them are with us here today, and I would like them to stand up so that they could be recognized, other than those on the podium. Our progress in 2021 can also be measured by the strong operating performance and the financial results that we achieved despite the ongoing disruptions and the threats to our employees from the health and safety issues caused by COVID-19. I'm particularly proud of our employees and how they responded to the pandemic and the measures they took to limit the spread of COVID in our operations and the communities in which we operate. I'd like to publicly thank our employees for the hard work in these unprecedented conditions. I'd also like to take my time to respect those families who has lost loved ones during the pandemic. Prior to the rollout of the vaccines, the communities in which we operate in Cuba, particularly, regrettably had a number of losses, and I'd like to reiterate my condolences. Fortunately, the rollout of vaccines in Canada and Cuba had been very successful and the toll of COVID has subsided. Finally, 2021 also saw the launch of our expansion strategy, something which I'm particularly excited about and which I will review in more details during my remarks. We were able to sustain the momentum in '21 into the early parts of 2022 as evidenced by our first quarter results, which we released earlier this week. Our results were marked by strong mixed sulphide production at the Moa Joint Venture and solid performance at the Fort site despite delays in feed delivery due to transportation disruptions. We achieved our highest adjusted quarterly EBITDA since the third quarter of 2014. Sherritt was ranked amongst the lowest quartile cost producers of nickel according to data collected by Wood Mackenzie. We saw a recovery in our power business and perhaps most significantly before, we are starting to make progress on our expansion project. Turning to Slide 8. Improving market dynamics have underpinned some of our recent progress. Strong demand for both nickel and cobalt resulted in near-record prices. Case in point, at last year's AGM, nickel was trading below USD 8 per pound and today nickel is trading around USD 12.50 per pound. Key to Sherritt's growth in the coming years is the strong outlook for nickel and cobalt. Most demand forecasts from industry analysts, including the CRU and Wood Mackenzie are particularly bullish as you can see on the slide on the top 2 graphs. They estimate, for example, the total nickel demand in the battery sector is slated to grow by over 25% per year over the next 5 years. Equally pronounced in the midterm demand for cobalt on the top right which is slated to grow by almost 13% per year over the same time period. Much of this demand, of course, is driven by the rapid adoption of electric vehicles. In fact, industry analysts such as Bernstein anticipate that the growth of EVs or the EV adoption will grow by almost 15% per year, as you can see on the bottom left of the chart. And that is last -- expected to last through 2040, which is remarkable. This demand growth will have significant repercussions for our industry. Indeed, the supply of Class 1 nickel, which is what Sherritt produces, the deficits experienced in 2021 will become more pronounced as you can see on the graph on the bottom right by the middle of the decade as there simply is not enough nickel projects to feed into this market. This encouraging market outlook and the realities underscore our decision to launch the expansion strategy and to focus on our strategic priorities. On Slide 9. In addition to the focus on the expansion strategy, which forms part of our leading green metals producer priority, you'll see our other priorities outlined, achieving balance sheet strength, leveraging our technology solutions for transformational growth, building on our sustainability track record and the recent efforts to date and maximizing value from our Cuban receivables business. These priorities provide our road map for 2022 and beyond. Given the significance of what our expansion project represents, I'd like to spend a few moments to provide some context on the strategy and review our progress to date and outline our near-term milestones. Just to remind everyone, as outlined on Slide 11, the accelerated growth of the Moa Joint Venture is based on 3 key elements. And upon completion, we'll see us increase nickel and cobalt production between 15% and 20% based on 2021 results. More specifically, this would see us increased nickel production around 5,000 to 6,000 tons on a 100% basis annually. Underpinning our growth strategy is the completion of a new slurry preparation plant that will reduce our ore haulage distances, reduce diesel consumption, improve ore sorting and reduce carbon intensity for mining. This part of the expansion project is already underway. The second part relates to completion of the expansion circuits at the Moa processing plant. Also, we're looking at extending the life of mine and conversion of measured and indicated resources into reserves making use of an economic cut of grade and through optimized mine planning. The third and final pillar or element focuses on the debottlenecking of the Fort Site, the refinery, through upgrading and installation of new equipment. We continue to estimate that these projects will require a low capital intensity typically associated with brownfields projects, further reduced by the fact that the Moa expansion includes the completion of a previously suspended expansion. In the first quarter, we completed a preliminary assessment of the costs required to complete this expansion project, and it is consistent with our initial guidance, albeit at the higher end of the USD 20,000 to USD 25,000 per annual tons of nickel capacity we guided the market. In light of a number of uncertainties related to geopolitical developments, the ongoing supply chain disruptions we're seeing, the spread of COVID-19 and the lockdowns in China in particular, inflationary pressures around, particularly on construction materials, equipment and labor cost, we will be further evaluating these estimates once greater certainty around global supply chains are understood, the consequential price impacts, and we have been able to conduct additional engineering and design work. This approach will reduce the execution risk for these projects, reduce the risk of cost overruns as the formal project sanction is not anticipated until the second half of the year. In addition to the cost estimates that we've conducted in Q1, we also continue to make progress on a number of elements. With respect to the slurry preparation plant, we continue to advance construction on site and commence civil works. We completed a raw ore rheological study and the pipeline design. The capital cost of this project to remind everyone is estimated at USD 27 million on a 100% basis and remains on project, budget and schedule. With respect to the processing plant at Moa, we are nearing completion of the feasibility study required by our partners for the sixth leach train or sixth leach plant. We also completed a debottlenecking study and started basic engineering on the acid plant at Moa. In addition, the addition of the sixth leach train and the new acid plant -- acid plant capacity rather are necessary to process the increased ore volumes we were expecting from the new slurry preparation plant and in order to increase mixed sulphide production. With respect to our reserves expansion, our external consultants conducted site visits earlier this year, and they've commenced the development of a new mine plan based on the economic cutoff grade. A new mine plan is expected to be completed in the second half of the year, and it will be submitted to the Cuban National Resource Ministry for formal approval in the second half as planned. Finally, at the Fort site, we commenced the basic engineering on several debottlenecking projects. Combined with our joint venture partners, we've committed additional USD 6 million on a 100% basis to advance these projects ahead of formal sanction of a full project scope outside of the $27 million already approved for the SPP or slurry preparation plant. We expect to build on this momentum established in Q1 through the rest of the year as we complete these projects. As you can see on Slide 13, there are a number of milestones we anticipate in the second half of the year. We anticipate to complete basic engineering on the refinery, the acid plant and acid plant capacity testing. Formal project approval is anticipated, if we'll go ahead in the second half of the year. And as I mentioned, completion of the mine plan and then the subsequent submission of a 43-101 Technical Report. Over the longer-term horizon, we seek to complete the SPP in early 2024 and the remaining projects by the end of that year. We will continue to provide updates at our quarterly results announcements as we move forward with the expansion. It is clear that the expansion will take a significant amount of our attention, but it's important to us to understand that we are taking a balanced approach. The expansion project will provide -- will build on previous investments we have made and efforts to expand. And as a result, the capital requirements are relatively modest and appropriate for the company of our size. This balanced approach is also reflected in our efforts to reduce our debt. Despite the runway of almost 5 years before our first debt notes become due, we believe that eliminating debt and reducing cash interest payments in the current environment of high nickel, cobalt and fertilizer prices is a prudent course of action and in the best interest of our investors. That is why we announced the debt transaction earlier this week aimed at repurchasing $50 million of our notes. Completing this debt transaction will be supported by ongoing cash receipts from distributions from the Moa Joint Venture and fertilizer sales. Over the longer term, we also anticipate that incremental cash from distributions from the Moa nickel joint venture, cash flows from overdue receivables as well as commercialization of technologies and the expansion will help us service the debt obligations. Under the terms of the offer that we made, Sherritt will purchase all tender junior notes at a fixed price per $1,000 of principal amount plus a 3% premium for those who tendered before the initial expiration date. Any funds that remain after the purchase of the junior notes will have the option -- we will have the option to purchase tendered notes on the second lien by a way of modified Dutch auction. We would encourage you to review the press release and supporting documentation available on SEDAR, as we've pointed out. Turning to other priorities. Our powerful growth is being carved out by technologies as well. We're focusing on commercializing innovative solutions that will help resource companies reduce the environmental footprint and increase the economic value of the resources. The team is primarily based out of the Fort Site and has made considerable progress in advancing a number of solutions. On Slide 18, 3 of the most promising ones are outlined on the left of the slide. The most advanced represented in the darkest green, our dense slurry hydro processing solution is a process originally designed for the upgrading of heavy fuel oils but has been expanded for use cases in biofuels, refinery upper grade applications as well. We're also advancing with the development of a process to treat copper concentrates with high arsenic content. And our solution represents a significant step change for the industry to stabilize arsenic in solid waste, producing net-zero carbon emissions from the process and extending the life of aging copper mines. We expect further advancements on these before we will move forward on a demonstration stage and are engaging with potential customers. A third solution worth noting is our next-generation lateritic ore process, which we have not named yet. I'm particularly excited by this particular project. The goal of the solution is to make processing from lateritic ores more economically viable and sustainable, while enabling the supply of nickel and cobalt products from lateritic ore specifically for the battery sector. We have started pilot testing on this novel flowsheet and conducted third-party site test earlier in Q1 and are now doing additional pilot testing at our own sites in Q2. The technology group also adds additional value through their skills and expertise in developing internal solutions for us to use within the joint venture. They also provide support for merger and acquisition evaluations. Another key priority for us, as outlined on Slide 19 relates to building on our ESG successes to date. In fact, we have a number of ambitious targets that we set out for both the near and the longer term. We've set our ambition for net-zero greenhouse gases by 2050, obtaining 15% of our energy from renewable sources by 2030, reducing nitrogen oxide emissions by 2024, and increasing the number of women in our workforce to 36% by 2030, which is a doubling of the number of women in workforce from when we set the goal. Achieving the climate and environmental targets will require some innovation, investments and considerable effort leveraging evolving technologies. We have identified to date around 60% of carbon emissions we can reduce. Examples of some of these near-term efforts is making use of solar power and the introduction of electric vehicles in our operations. Finally, I'd like to turn to our Cuban Energy business and our efforts to maximize value from it. As we reported in Q1, our Power business experienced a recovery in the first quarter and posted robust results. But looking ahead, there are 3 key elements that we're focusing on. The most obvious is recovering efforts on our overdue receivables. I have met with the Cuban President Díaz-Canel recently and reiterated this important point as part of our discussions. Our partners fully understand and support the need to make good on these amounts owing to us, and we are working on a long-term solution to resolve this. Although the timing of our Cuban receivable receipts continue to be a challenge in the near term, given the restrictions on travel and tourism as a result of COVID-19 and the impact of U.S. sanctions against Cuba, we are looking at extracting more value from our overdue receivables by expanding the utilization of our Moa Joint Venture for this purpose. More details on these will be shared in due course. The second area of focus is on extending our power agreement, which currently expires in March 2023. In the first quarter, we submitted our required feasibility study to the Cuban authorities. And we anticipate a final decision from them before the end of the year. Finally, we are also working with our Cuban partners to increase our availability of natural gas to produce power. As a reminder, our Cuban partners are responsible to provide the fuel for energy production. And we are working with our partners to solve long-term supply issues. However, we have seen some encouraging near-term supply increases. I want to thank you for joining me today. As you have heard, Sherritt's outlook is particularly encouraging. And for the first time in many years our prospects for growth are particularly strong, given that we are well positioned to capitalize on improving market conditions. In particular, our expansion project is slated for completion by the end of 2024, and we have a number of catalysts to support our share price over this time frame horizon. In tandem with our growth, we expect exponential -- sorry, with -- in tandem with our growth expected for the expansion, we also expect our technologies group to help generate transformational growth opportunities for us through commercialization of these solutions. As we execute on our growth and reduce our debt -- as we have announced this week, we look forward to a bright future for Sherritt. These conclude my formal remarks, and we will hand over for some questions. We will first take questions from the floor before we take online questions. We ask that you please identify yourself and whether you're a shareholder or a noteholder prior to answering -- asking a question for those who are online to hear who's asking questions in the room.

My name is David Emery. I'm a long-term shareholder in Sherritt and a bondholder. And it's very exciting coming to this meeting because we've heard the term past and future and transition. And I think shareholders would want to really thank the Board for their hard efforts in resolving the debt spiral that Sherritt was in these past few years. And I think more importantly, to thank Leon for his vision into the future and his team that he's put together. With that in mind, I have 2 questions. And I thought it was inappropriate to ask a question during the shareholder resolution to give the Board guidance in terms of the employee compensation -- the executive compensation plan because that's passed. But look, I'm concerned as a shareholder about the future and the impact of the unit plan on the motivation and alignment of the executives with shareholders and shareholder value. I note Sherritt shareholders are almost all unsophisticated retail investors. There's virtually no institutions that have power. There are people who don't understand 140 pages or time to read it. They don't have time to read 73 pages of a compensation plan, which, by the way, is very detailed and very good, in my opinion, except for the bottom line, which I'll get to. I believe and other shareholders believe that shareholders need better guidance about this unit executive compensation plan. What is the true bottom line? And put out there with the highlights at the beginning what the significant expense is and why it's necessary. And certainly, because it's a significant liability and ongoing liability, perhaps put it as a separate item on Page 67 in the cash flow, Yasmin. Shareholder has asked its unsophisticated investors to vote on the current executive unit play scheme. But there has not been a traditional transparency that I have known and Sherritt has been proud of and should be proud of. I believe that there are very few shareholders who have looked at the impact going into the future of this scheme. So my question -- well my question is, will Sherritt make the current payments and future obligations transparent to shareholders by publishing the executive cash payout and the obligations in the financial highlights section rather than burying them in pages and in the #18 note. Secondly, I really am excited about Leon taking over the leadership of this company, not because of his words, but because of his actions. He's reached into his private resources, his pocket and like ordinary, unsophisticated investors has put his money at stake by buying shares on the open market. And in fact, by my calculations, he's bought in the last 8 months 3x the amount in this way that the executive and the Board had bought in the last 10 years. Correct me if I'm wrong. However, whatever the figure is, you're to be congratulated and your leadership shows because other members have dug into their pocket. And what they're showing us, Leon, is that you've got confidence in the future and your ability to deliver on what you said. Well done. Now what's my question? Is that okay with you, Leon? Will the Board consider reverting to the existing option plan to motivate our executives. Our executives should be rewarded if they can accomplish what they suggested expansion, adding value with technology. But the difference is that instead of cash, which is taxed at 50%, shares are capital gain. They have more money in their pocket for the same impact. Second of all, this is not a small figure. The amounts put aside right now in the first quarter is $26.7 million. That's a year of payments on a $350 million bond holders. This is a significant. We talked about the dividends that Sherritt has paid, $25.2 million. It all goes to this instead of the bottom line. What would the shareholders feel about seeing a profit instead of $0.04, a profit of $0.08, $0.09 or $0.10 for this quarter. The other thing is that when these awards are given with units, they're given in cash. And I have not seen any evidence of moving that cash into buying shares of this company to align the executives and the Board with the shareholders who've put their own money at risk. So my question number one is will Sherritt -- and I address this to Sir Richard because we don't have any longer the Head of the Compensation Committee. Number one, I suppose to keep it -- I've been rather verbose, but yes or no. Will Sherritt consider making the impact in each quarter as well as the obligations, a transparent and highlighted so shareholders can next year knowingly vote on guidance to the Board about their reaction to it. And second of all, will the Board reconsider instituting the option plan, which awards shares in a tax effective way and aligns the interest of the executive and the Board to shareholders.

I think both your comments represent an interest in looking at it with perhaps fresh eyes. And what we will do is, we will undertake to think about both the suggestions you've suggested. As I said to you in our discussion before we came in here, each of these issues, unfortunately, is never one dimensional. And I accept that you've approached it from a particular dimension and you're entitled to do that. That's why you're here. But yes, we will take both your comments on board. And by the way, we do have a Chairman of the Remuneration Committee or the HR Committee. It's Peter because, of course Adrian finished yesterday. In fact, we're all, initially when we're thinking what we will say, we'd say, we're terribly sorry, he left yesterday. But we haven't done that. But yes, I mean, look, you're serious. You've been with the company and following us for a long time. You've done those ups and downs. And yes, we'll take your suggestion seriously. We'll think about them. And for the record, as I explained, I bought my 3x, my pay shares at $4.95. And it took me 7 years on this Board before I broke even with my after-tax fees equaling the loss I made on my shares. So we did do the money because we try to be reasonable and show we have the right level of interest. But thank you for your comments. Are there any other, Daniel?

Good morning. My name is Daniel [Owen] and I'm a former 22-year Director of Sherritt International, starting in 1990 and finishing in 2012. So it's been a fascinating ride watching Sherritt first run by, what I might call a dealmaker and secondly, run by someone desperately trying to solve a financial balance sheet and debt obligation problem, David Pathe, I'm referring to. Those 2 had a certain style and certain jobs to perform. This time, for the first time, we have an operating CEO who has technical understanding of the industry we're in. And so far, has been extremely promising. What we've seen so far, Leon, has been a wonderful uplift for people who have been long-term shareholders of Sherritt. For the first time, for many years, we look as though we have a path forward. And other people have paid you these complements, let me add to it by saying, if we can carry on like this, we really, really have such a future. However, to turn back to some of the points that David Emery made, and I mentioned this in this context. Management and the Board are focusing quite properly on operating our company and making that operation go better and better, and they do not dance to market maneuvers. That's not the job. And I credit them for that. Nevertheless, new board or management can be unaware of the disconnect we have between the operational successes that Sherritt's enjoying and the extraordinary share price. Anxiety has been expressed by David Emery and by 1 or 2 other people about the reward system we employ for the Board and for management and how there is a possibility that if the disconnect is ignored that excessive rewards are possibly going to be given to people because of the disconnect between the price of the shares in the market and the achievements we're accomplishing. So let me propose, if I can, 2 things. One is that we recognize that disconnect and try to do something with our reward system that takes account of the fact that the current share price at Sherritt does not reflect the value of the company's operations. Secondly, let me propose that management engage 2 or 3 or more worthwhile, well-known, long-term shareholders to meet with them and to discuss how they can change or help the optics of the present reward system so that it appears less offensive to the shareholders as we go on forward. If we can do that, I think we've got a great deal to look forward to. Congratulations again to a wonderful improvement in operations, Leon. Long way, continue and I look forward to surviving long enough to enjoy the fruits.

Thank you, Daniel. We appreciate those comments. We're certainly looking forward to delivering on those objectives. Maybe just a brief comment on compensation. As Sir Richard had pointed out, we do engage with our shareholder base and with independent advisers to seek good counsel on what the best remuneration structures would be to achieve the objectives of attracting and retaining the talent that we require to deliver on our objectives, but also that is balanced and aligned with shareholder experience. And so inevitably, there is tied to shareholder experience, both the ups and downs. And these do occur and sometimes could be quite volatile as a result. We continue to engage, and we'll seek to continue to engage and align our executive compensation structures to what is considered appropriate given the circumstances for the corporation and aligning with the objectives of the corporation. I am pleased to say that we've seen some great alignment in executive compensation behavior relative to stock price performance, which is, I think, one of the design criteria and the desire to do so. So we'll continue to engage and seek to enhance as we go. But thank you for your comment.

Michael Graham. Sir Richard, wonderful to see you again, and John and to meet you, Leon and finally we come from the same place in the Western province as well as we meet both again. And I love your accent. Just a couple of questions. First of all, Ambatovy. Is that finished and done or the skeletons gone? Is it out of our system forever and ever. Maybe that's question number one. Perhaps I'll stop there.

To just answer that question immediately. Yes, the answer is, a definitive, a short, yes.

Yes. I'll just add to that, though. What was surprising was that everybody focused on whether we had our debt to build Ambatovy is recourse to Sherritt or not. Nobody recognized that when it went nonrecourse but Sherritt, it went recourse to Ambatovy. Of which we were a shareholder who could be asked to contribute. And if we did not contribute, we were a defaulting shareholder which could cross default to the debentures. So to me, and we never really talked too much about this. To me, that was the overwhelming issue which said, you're finally out when we got KORES and Sumitomo to take our 12% in return for giving us forgiveness on the intercompany debts. So the answer I agree with Leon is just -- but it's probably more profound, and I think people thought the risk was at the time.

As we -- next question if I may. As we switch now to Cuba. Cuba and Oh, gosh, the fog of U.S. politics and Florida politics and your liaison was the Cuban government, which you gave the encouragement as you mentioned. Just reflect a little bit on Cuba. How do we get through that fog of Cuba and how do we build on it or cut through it.

Sure. Cuba is quite unique in many circumstances to any country where one can operate. But there are some basics that's common across in operating in a country is, there's understanding what the operating environment is and how to navigate a successful pathway through that. There is very little we can do to really affect U.S. sanctions and U.S. politics, although it doesn't stop there. We do make our attempts to have our voice heard and sway influence there. And we engaged quite effectively with the Canadian government to support our efforts in that regard. And we engage with our Cuban partners to understand their perspective on the same aspects. It's fairly easy to understand U.S. perspectives because it's all over the media. My prevailing view on Cuba sanctions and the Cuban environment is, we have a reliable partner that is faithful to work with, that is honorable, and that has successfully cooperated with us for 27 years and it's a very strong relationship. And it goes all the way to the very top of their country and the very top of our organization. And so on that basis, I think we can all recognize that on a relational basis, it is easier to solve problems. And so we tend to work together to look at challenges and find solutions, put ourselves in each other shoes and seek solutions. And we found solutions to our problems over the last 27 years, and we'll continue to do so. I am particularly pleased by the positive reception I've received in Cuba. How they perceive Sherritt as a valuable partner. The fact that they see us as part of the country and part of the fabric and that they are looking to help us be successful -- for them to be successful. So I do feel that the ingredients for success are there, and we will navigate the challenges as they come up as we have recently by example, sanctions against Russia that impacted our sulphur supply into Cuba. Around half of our sulphur supply comes from Russia or used to, and we pivoted away to non-Russian supply. Whilst there was a cost impact associated with that, we very rapidly found alternative sources of supply. So we are able to and have been able to navigate these complexities. Some come with an added cost, unfortunately. And we would all love for us to operate in a world without these restrictions, but we are seeking ways and continue to seek ways to operate regardless of the restrictions.

And I'd just add to what Leon said and it's something I've said when we were meeting shareholders earlier this year. And despite protests of some stakeholder groups, we sit on the same side of the table when we talk to the Cubans. There's no point sitting on an opposite table, shouting at them when actually, whatever problem we're discussing is a shared problem. And I think that when you're dealing with the government, particularly again, a President who's new but different and the way Leon operates, you end up with dialogue. And I think we're getting the reward of that. But it is about working through things together. And remembering that notwithstanding the ups and downs over the years, we have never had a payment failure. I mean we've had timing failures, but we have never been let down in this relationship. And I just think -- I mean, I admire enormously what's happened. We were very bothered when we were losing one CEO who had formed these relationships, how did you make sure that works successfully. And Leon just did a marvelous job of being very open, clear with them, what he wanted to do and not trying to bulls*** or be clever. Sorry, it doesn't mean -- he is clever. When we talked about what he might say, but you know what I mean, because they see it through -- they see through it. And they will seek to undermine the relationship.

One more. Now I'll be done, if I may. -- the 400 -- and you touched on it, you're addressing your questions. 400 million shares, but not much of an institutional following. I guess, U.S. institutions can't buy us anyway, but just how do we do retail, not much institutional. How do we address that?

It's an interesting question and something that's been on our mind over time. And whilst we're not favoring one particular shareholder group over another, there are some benefits to having a larger institutional shareholder base. What we have done and continue to do is to effectively engage in non-deal roadshows as we refer to it, to engage potential investors to seek for them to understand what it is that we're trying to do, give greater clarity around the Cuba risks. Often, we have found that many investors see the name Cuba and move on, if you will, in a very crowded investment space but the efforts that we make is to educate the Street and ensure that people understand. And I think we've seen some increase in institutional holding over the last couple of months. And there's not many places to invest into nickel and particularly in the Canadian landscape and in an operating company that is exposed to nickel as opposed to a yet to be permitted adventure, if you will. And so we do see greater interest, but we don't want to negatively impact our existing shareholders in whatever avenues we move forward with.

So many questions. I will be done. Are you taking Spanish? Are they helping you there, payment cost you're getting Spanish language.

It's quite interesting. Our Cuban partners, at least at senior levels do understand English quite well. But we have these obligations to go through, translators to ensure that we deal with do protocol as well. And it is on my objectives to be more fluent in ability to engage socially because it makes a big difference from a relationship perspective. But they also appreciate that I've come in with quite a large mandate and many things to do. It is just one of those many objectives that we're working on. Joe, any questions online?

No questions online, Leon.

No further questions in the room. We will conclude today's meeting, and thank you very much for everyone attending in person. And for those attending online. We appreciate your engagement and interest in Sherritt and hope to see you on our journey to success. Thank you.