Good morning, everyone, and thank you for joining us today. We released our results last night after market closed.

And our materials, including MD&A, financial statements and press release are on our website as well as on SEDAR. Before we begin, I'd like to remind everyone that we will be making use of a presentation that is available from our website at sherritt.com.

And as well, we will be making forward-looking statements, and risks associated with these statements are detailed in our presentation. With me are David Pathe, our CEO; Steve Wood, our Chief Operating Officer; and Andrew Snowden, our Chief Financial Officer, who will be reviewing our results in more detail imminently.

I'd like to turn over the call now to David.

Okay. Thanks, Joe, and good morning.

Quite a lot going on at the moment, both internally and externally, so a number of things that we want to tell you a bit about this morning before we get to your questions. As ever, Steve will talk a bit about operational things, and Andrew will highlight a few things for the financials before I come back and give updates on a few of the bigger things that are going on.

But first, I just want to touch on a couple of highlights and a bit on what we're seeing in markets. Operationally, it was a very good quarter for us.

The efforts that we've been making on operational excellence and getting greater and more reliable production out of Moa continue to pay off. We had good consistent quarter in production and a significant improvement on Q1 of last year when production was affected by rain - heavy rains and rail service disruptions in Western Canada.

The refinery in the first quarter this year hit the milestone that we talked about before of 3 billion pounds of nickel production over its 65 years in existence. The world has changed immeasurably in the 65 years that operation has been running.

And for that operation to continue to be a world-class nickel and cobalt facility, I think, is a real testament to the agility and capability of the people on the ground there running that and making that happen on a day-to-day basis. And I want to acknowledge all of them for that significant and important milestone.

We've talked often in the past about volatility in commodity prices in nickel and cobalt markets. This past quarter has been a particularly wild ride.

Dramatic movements in the cobalt prices have had a pretty significant effect on our net direct cash costs and our earnings in the quarter, and Andrew will shed a bit more light on that as he comes up in a few minutes. Looking at cobalt markets now, I'm on Slide 6 in our presentation.

Here, you can really see what happened over the course of the quarter. We came out of last year in a declining nickel and cobalt price environment.

The second half of last year was marked by pretty significant declines in pricing for both compared to where we were a year ago. What we saw in the first quarter is - are some diversions there.

Nickel really bottomed out and showed some signs of recovery. Thus far in the quarter, it's kind of been able to hold on to those gains reasonably well but with a little volatility.

But the move in cobalt prices was quite dramatic. You can see there in our graph that it was down 28% on the LME reference price.

The Fastmarkets quote, which is what we actually use for pricing a lot more of our nickel, and our nickel sales was actually more dramatic, started off the quarter about $27 a pound and finished the quarter around $14, so nearly a 50% decline in the quarter on commodity price for cobalt. And that had quite an impact on our net direct cash costs, including the - resulting in some adjustments to pricing from the previous quarter that were scheduled to actually be finally settled in Q1.

And Andrew will give you a bit of sense of that as well. In terms of what's driving that, we did see some easing of - although we don't seem to have a final agreement yet between China and the U.S., some easing over the course of the quarter in terms of the level of concern about that.

We continue to see actually pretty good fundamentals in the nickel market. Reasonable tightness led to some recovery in the price.

Cobalt, on the other hand, was pretty abundant in the quarter. And the downward pressure continued as cobalt consumers destocked inventory rather than buying, and others looking to buy cobalt deferred in the falling price environment.

Coming into Q2, we do seem to have seen that finally bottom out in what was a relatively free-falling cobalt price in the middle of the quarter. Now it seems to have leveled out and recovered a little, but - and we're hoping that we'll see that cobalt kind of find its feet and gain some strength over the rest of the year.

In terms of underlying fundamentals, looking longer term, we think the prospects of nickel continue to look very strong. Slide 8 shows you the trend in global inventories over the last 1.5 years or so.

The inventory decline that started in late '16 and '17 accelerated and picked up pace in 2018 and has continued into 2019. Inventories are down by more than half since the 1st of January.

And that's on the back of pretty strong stainless demand and continuing growth in battery and nickel demand. Demand for batteries is expected to grow by about 1/3 this year and stainless steel by 3%, 4%, 5% as well.

There's still no really meaningful supply side response to nickel, particularly for Class 1 nickel, due to the lack of investment in the industry, really, for the past 10 years since the financial crisis. So we continue to be confident in the long-term fundamentals of the nickel market, particularly Class 1 nickel that we produce.

Slide 9 shows you what we've seen really just quarter-to-date through April here. That highlights the bounce that we've seen in the cobalt price.

We are seeing our discounts and the premiums. And so that cobalt price finally start to narrow a bit with caution to the reference price compared to what we were seeing in the quarter, so we are getting a bit of added benefit from that as well.

So we're feeling a little bit better about the cobalt market, but obviously, it has a way to go from where people were predicting it would be at this time last year. Nickel markets have been relatively flat this quarter, come off a little bit this week, but the underlying story there, I think, continues to be strong as well.

There are a few other external events that I want to give you a bit more context on, but before I come back and do that, Steve's going to tell you a little bit about a few of the highlights from our operations this quarter.

Okay. Thanks, Dave, and good morning, everybody.

As I normally do, I will comment on our health and safety improvement plans before getting into the details of our production numbers. We continued to see improvements as a result of our work on visible felt leadership and fatal risk prevention.

And more recently, we've had increasing efforts on process safety management and are expecting to further improve our safety results. Moving on to Slide 11.

I'll talk a bit about the metals enterprise production highlights. On a 50% basis, Moa produced 4,397 tonnes of nickel and 426 tonnes of cobalt in the quarter.

Combined, this total represents our best production result for a first quarter period ever. This record total was achieved as a result of several operational excellence initiatives that we have launched over the past 18 months, and I'll elaborate on those initiatives in a couple of minutes.

When we compare our production results from the first quarter of this year to that of last year, it's important to remember that our results last year were impacted by reduced availability of mixed sulfides due to the heaviest rainfall we had at Moa in more than 20 years as well as some transportation delays to the refinery in Fort Saskatchewan as a result of some issues with the railway service provider. I'd also like to point out that consistent with previous years, we're slated to have our planned maintenance shutdown in June of this year.

The planned maintenance shutdown is slated to last approximately 10 days. And as is to be expected, it will have a bearing on our production results for the quarter but is absolutely necessary to continue to produce at a reliable and high rate that we have been experiencing.

NDCC in the quarter was $4.53 a pound, and that's up $2.06 from last year in the same quarter. The increase was due to a number of factors and was largely driven by the 70% decline in realized cobalt prices.

The sharp decline of cobalt prices in the quarter also resulted in adjustments to some of the provisionally priced contracts from the previous quarter of 2018. And the effect of these adjustments was an increase on NDCC of approximately $0.40 a pound.

By way of context, we generated about $1.15 of cobalt credits per pound in Q1 of 2019, and that's down from $4.27 of cobalt credits for last year in the same quarter, despite selling 135 more tonnes of cobalt this year in that quarter. And as a reminder, just for those who are new to the concept, the revenue from the sale of the finished cobalt is treated as a credit and used to offset unit costs involved in the production of the finished nickel.

Turning to Slide 12 now. I'd like to talk a little bit about the operational excellence initiatives that have been underway and the results we're starting to see from those efforts we put in over the last couple of years.

During the time, we have launched a number of initiatives aimed at improving efficiencies, reducing costs and increasing output. And as evidenced by our record first quarter production total, our commitment to operational excellence is working.

Our initiative aimed at improving mining equipment availability, for example, was particularly effective. Starting in Q2 of 2018, we acquired a number of new mining trucks and related equipment, and that included 24 of the trucks additionally in Q1 of this year.

The new equipment is more reliable, less expensive to operate and helping to grow our production numbers down there in Moa. Related to improving the mining equipment availability, of course, is our initiative to increase ore stockpiles.

And this was undertaken to mitigate the effects of the rainy season and any other issues that we might experience during the year. Currently, we have about three months' worth of stockpiles built.

We recently completed another initiative, that is we commissioned the slurry prep plant dump pocket. And that helps us to improve our ore screening and reduce waste haulage, and we expect to see increasing benefits of this dump pocket in the coming quarters.

Now turning to Oil and Gas on Slide 13. We produced 1,776 barrels of oil equivalent per day on a net working basis in the quarter.

This total marked a decline of approximately 55% from last year when we produced 3,916 barrels per day. The decrease was due to a number of factors, the most notable of them being the decline in profit oil percentage from 45% to 6% at PE/Yumori as a result of the extension of the contract there.

The decrease was also due to the natural decline of the maturing fields that we're producing from. And as is to be expected, the decrease in the number of barrels produced had a negative impact on our unit costs.

Unit costs in Cuba for the quarter were $21.19 a barrel, and that's up from the $20.83 for the same quarter of last year. Our unit costs were also negatively affected by the weakening of the Canadian dollar relative to the U.S.

dollar. On Slide 14, I'll talk a little bit about the Power highlights.

We produced 173 gigawatts of electricity in the quarter, and that's down 14% from last year in the same quarter when we produced 202. The decline is largely due to the reduced availability of the natural gas that we use to produce the electricity as well as the rescheduling of some maintenance activities on our steam turbine at Varadero that carried over from the previous year.

And as with Oil and Gas division, our unit costs were negatively impacted by the depreciation of Canadian dollar. That concludes my comments on the operational results.

And so now I'll turn it over to our CFO, Andrew Snowden.

Okay. Thanks, Steve.

So as you've heard from David, volatile cobalt prices did have a significant impact on our financial results in the first quarter. The significant decline in cobalt prices resulted in approximately a $20 million decline in our share of Moa's cobalt revenue.

In this slide, you'll see the significant decrease in the cobalt reference price quarter-over-quarter. The cobalt reference price represents the market price that we sell our cobalt at, which is based on data provided by Fastmarkets.

And this decline is based on the factors which David reviewed earlier in the presentation. You'll see there from a cobalt realized price perspective, the realized price year-over-year fell by a larger decline of about 52%.

And looking at the slide here, you'll see that, that fell 70% quarter-over-quarter. And that's because in addition to the lower market price or the lower reference price, we also had very significant provisional pricing adjustment in the quarter, and that's based on sales which were made in the fourth quarter of last year but the pricing wasn't finalized until Q1 this year.

We had approximately 200 tonnes of cobalt contracts where that provisional pricing existed at the end of 2018. And as Steve referenced earlier, that, as well as impacting revenue, obviously impacted our NDCC as well by approximately $0.40 in the quarter.

With the rise in the cobalt price in April there, we should see both of these trends start to reverse through the quarter of Q2. Turning now to Slide 17.

I just wanted to review our adjusted EBITDA Q1 of this year versus Q4 of last year. I should point out that both of these totals exclude Ambatovy as Ambatovy is no longer considered an operating segment, and that's due to our defaulting shareholder status following our decision not to fund the Ambatovy cash call in March.

As you can see from this slide, the most significant impact to EBITDA Q4 to Q1 of this year is really the significant decline in the cobalt price and also the provisional price adjustments that we refer to. That's clearly the key driver behind our weaker EBITDA in Q1.

On Slide 18, I just want to make a few comments on our liquidity. We ended the quarter with $177 million of consolidated cash and cash equivalents, which compares to $207 million at the end of December.

The main driver behind that decrease in cash through the course of Q1 relates to a negative change in working capital of about $27 million during the quarter, and that's due to primarily timing differences on our fertilizer collections but also the lower-than-expected collections on our Cuban energy receivables. Generally speaking, working capital changes, they are - they represent timing differences, and to put that in perspective, working capital change in the fourth quarter of last year was a positive impact of $13 million.

I do also want to just remind everyone that of the $177 million consolidated cash we had at the end of the year, that does include a 1/3 consolidation of Energas' cash balance. And due to the delayed payments from Energas to Sherritt, this 1/3 share of Energas' cash balance that's included in the $177 million is approximately $17 million at the end of Q1.

The final slide I have some comments on here is on Slide 19. I just wanted to review a couple of the key implications described in our March press release as a result of Sherritt becoming a non-funding Ambatovy shareholder.

Just as a reminder, at the beginning of March, we received a cash call from Ambatovy of $5.4 million, which represented our 12% share of the $45 million cash call that was requested. Consistent with our strategy of preserving liquidity, we did elect not to fund that cash call.

And there were a number of implications as a result of that, and I'll just review a couple of the key ones here. I mean certainly, despite not funding our cash call, our current ownership interest in Ambatovy has not changed, but our economic interests have as now the new funding provided by Sumitomo and Kores does sit above our distribution in the Ambatovy waterfall and will be repaid to Sumitomo and Kores in priority to amounts paid to Sherritt.

Sumitomo and Kores also do have the option to fund on our behalf. They haven't made that decision yet.

But if they did, they could also elect to receive an equivalent amount of our highest-ranking debt, which would result in a further dilution of our economic interests. One of the points I want to just highlight is the impact it has on our Ambatovy partner loans.

This is the approximately $150 million you'll see on our balance sheet. There's been no change to a 2023 maturity on these loans, but the lenders do potentially have recourse to Sherritt, which is limited to our interest in Ambatovy.

And due to that potential to call on our interest, that has resulted in a reclassification of the loans from noncurrent to current, and you'll see that reported on our balance sheet at the end of March. I do want to highlight, though, that, that has no impact on our cash requirements on that liability.

As I mentioned, the maturity for that liability remains in 2023, and we don't expect there'll be any cash payments until 2023 or beyond. Finally, just on disclosure, just to recap a comment I made earlier.

We have concluded that Ambatovy is no longer an operating segment, and you will see that impact some of our disclosure in our MD&A. So we have reduced the level of disclosure on Ambatovy, particularly some of the financial metrics.

And so that will be something that will, I'm sure, be highlighted if you review our MD&A. So that concludes my comments, and I'll pass the call back to Dave.

All right. Thanks, Andrew.

There are 2 or 3 other matters here that I wanted to just give you a bit of color and context on before we come to take your questions. The first is the Helms-Burton Act and changes in application of the Helms-Burton Act.

This has attracted some interest and attention in recent weeks and headlines and we have had phone calls from a number of you, so I do want to provide a little context on that. Helms-Burton Act, you recall, and those who have followed us a long time will be familiar with it as it dates back to 1996.

It's the Helms-Burton Act. It was an act of the U.S.

government against - to take various actions against Cuba. It's the Helms-Burton Act Title IV that the State Department continues to deny entry to the U.S.

for much of the senior management team here at Sherritt. And it's now this Title III that you have heard of, they are now contemplating actually allowing to come into force.

Title III provides a right for parties that had assets expropriated by the Cuban government to take action against anybody who is subsequently participating in those assets, and we are potentially doing that in our activities in Cuba. This was quite controversial when it was enacted in 1996 and attracted pretty strong opposition from the Canadian government, European Union and others that led to a provision that entitled the U.S.

President to defer implementation of the Helms-Burton Act for periods of up to six months. And for the last 23 years, presidents of both [indiscernible] in the U.S.

have exercised their discretion to defer implementation for successive six month periods. What we've seen happen over the course of the first quarter this year is a couple of shorter deferrals and now most recently an announcement that come the 2nd of May, the U.S.

government is going to allow Title III to actually come into effect. What that means for us, we think, is not terribly significant, but it will attract some attention.

Those of you that have followed us a long time will know that frankly our business has been organized for this eventuality since the Helms-Burton Act came into effect in 1996. We have no businesses in the U.S.

We have no assets in the U.S. And that has been very conscious decision the way Sherritt was reorganized in the onset of the Helms-Burton Act in 1996, and we have maintained that.

Subsequent to that, the reaction of Canadian and other governments has been to object to the extraterritorial nature of the way Helms-Burton and Title III is applied. The Canadian government and other governments around the world and the EU and Mexico and others have enacted blocking statutes to make enforcement of Helms-Burton judgments illegal in Canada and also give a rise of a right of an equal and opposite right of action for anybody that does commence the Helms-Burton action where we could take action against them in Canada for whatever amount that they were able to be awarded by U.S.

court. So in the upshot of this, we don't expect this to have any material impact in our operations.

From a business perspective, it's business as usual for us in Cuba, and we continue in all the activities that we have been. But you may well see this continue to - it creates some noise and headlines in the newspapers in the week ahead.

Slide 22, we just highlight the statement that - the joint statement the Canadian and EU put out in the wake of the announcement of the implementation of Title III. The Canadian government has been very strong on this.

We've been working very closely and continue to work very closely with global affairs on this matter. They've been very supportive, and we're appreciative of that relationship.

And we continue to work with them on how this will get managed going forward as implementation takes place next week. Cuban receivables, disappointing quarter frankly from a collections perspective.

We collected about $5.5 million. Foreign currency continues to be a difficult issue in Cuba, made somewhat more difficult by U.S.

actions towards Cuba at the moment. We had a bit better start to the second quarter.

We've collected about $5.5 million, $5.7 million, I think, in April thus far. And we continue to work with our given partners on getting access to liquidity.

We did talk in February in our year-end call that we have an agreement in principle on some arrangements that would give us access - more direct line access to hard currency. Foreign currency plans in Cuba require quite a number of hoops to be jumped through.

We do feel that we're making progress on that. The intention is that gets done, and we're hoping to see that potentially as soon as next month.

We would capture a portion of foreign currency that our Moa joint venture uses each month to purchase local currency to pay local suppliers and local expenses in the Moa area. We're hoping we'll be able to capture about $2.5 million of that a month in Energas and have that available to us against the Energas receivables.

We're also looking at an arrangement that would see us capture a share of the - capture the Cuban share of Moa dividends above $60 million. So obviously, how much we can recover on that will be a function of commodity prices over the rest of the year.

But that is the general regime that we are working towards getting finalized with our Cuban partners. Lastly, I want to provide another quick update for you on where we are on Block 10, picking up on where we left off and we discussed this in February.

We did carry on through the first quarter in getting our plans and getting equipment on site for this new drilling or casing technology that we now have access to. A lot of work has been done understanding what the geology that led to the instability that we are finding in the hole and a few flip over from 24 to 25.

There's a bit of a schematic where you get through into the - down below the green zones in the upper reservoir to what's labeled there as the Constancia and the Lower Vega Alta. That's where we were encountering hole instability that led us to abandon a couple of attempts to get casing behind - those sections of the geology behind casing before progressing into the lower darker green reservoirs, which are our target on this well.

We were able to resume drilling on the 1st of April with new mud chemistry and new tools and pressure management drilling in this drag-along casing, ready to go when it's time to start in certain casing. We have drilled now through the Constancia and through the Lower Vega Alta.

We are basically on the cusp of that lower reservoir. And once we're confident we're in that lower reservoir, that's when we'll stop and then deploy the drag-along casing to try and get that hole sealed off behind casing and then proceed with the last 1,000 meters of the hole through the several zones of the lower reservoir there.

Thus far, the drilling has proceeded pretty well according to plan. We seem to have quite a clean and stable hole.

The changes in mud chemistry that we've made seem to be having some positive effect on maintaining stability and keeping the hole relatively clean. And in the coming days and weeks here, we'll be getting that hole behind casing and progressing down in the reservoir.

And we hope to have some more results for you, to share with you on what we're actually finding down in that lower reservoir this coming quarter. So that's where we stand on that.

Overall, as you've kind of got a sense of - from the conversation and commentary from the three of us today, it is a particularly busy time for us here, both internally and reacting to some pretty volatile external events. But we remain focused on operations and continued solid production.

I think we're lined up pretty well in terms of mixed sulfide in the pipeline and inventory rates to keep the pressure on the refinery where we want to see it for the production through the next couple of quarters here. And that's where our focus will remain.

So with that, operator, we'd be happy to take any questions any one might have.

A couple questions for me. First of all, with respect to the overdue Cuban receivables, Andrew, can you just walk us through exactly where these are sitting and how they're disclosed on your balance sheet?

Sure. And I think the slide - let me just go back to the slide - to Slide 23, just provide a bit more detail behind some of the line items for these receivables.

You'll see - I mean of the total of $171 million or $172 million that's outstanding, approximately, what's that, $55 million related to trade receivables, both in Oil and Gas and Power. And so that sits within our receivable line item on the balance sheet, so that's all within trade receivables.

At the current liability?

At the current liability, correct - sorry, current receivable, current receivable. And then the Energas CSA amount, which is the larger amount thereof $115 million, that sits within the advances line item, which is advances and loans receivable.

And then the total amount there that I think is in the region of $220 million, that's owed on the Energas CSA, of which $115 million is due and payable today.

Okay. And you mentioned earlier that - I believe it's $73 million of your consolidated cash balance is held by Energas.

Is that - can you just remind me, is that - mean it's stuck in Cuba? Or is that cash actually available to you to service your corporate bonds and things like that?

Or is that effectively locked in Cuba?

So that cash, Orest, sits within the Energas operation in Cuba. And that's - I mean that point is really tied to the overdue receivables in that if the Cuban government was current with its receivable to Sherritt, then that cash, which currently sits within the Energas entity, should be repaid to Sherritt.

And if that is repaid, then obviously our overdue receivables and particularly this Energas CSA balance will reduce and the Energas cash balance will reduce. And in return for that, obviously, Sherritt's cash balance, the top level here in Canada, will increase.

Okay. And so are we at a point yet that we're getting concerned with corporate liquidity if that cash is unavailable because of the overdue receivables?

I mean it sounds like you've got really corporate cash spend of, call it, $100 million.

That's right, Orest. I think right now, our cash within Canada is somewhere in the region of $100 million to $105 million.

Okay. And then just switching to Ambatovy.

How come this is not being recognized as a discontinued operation?

Sorry, I missed that question, Orest. Can you just...

Just on Ambatovy, like if you're effectively stripping it out now, why is it not considered a discontinued operation from your perspective?

So I mean from a disclosure perspective, Orest, we're limited to the kind of IFRS accounting rules. And at this point, there's no - to be a discontinued operation or a held-for-sale asset, we would have to have a plan to sell that business.

At this point, we're a defaulting shareholder. We don't have the ability to buy back in to Ambatovy if we chose to because of that, the current accounting framework, i.e., equity accounting will continue.

Okay. And like I'm assuming you are to get diluted to zero here, but why is Sherritt staying in this as an operator?

Staying in as operator is far more the commitments we made at least until 2024 in connection with the restructuring that were completed when we went from being a 40% shareholder to a 12% shareholder. That's when we got $1.5 billion in debt off the balance sheet and - through that reduction in our equity ownership.

But one of the value we still bring to this project from the senior lenders and from our partners' perspective is the technical advice that we still give to the management team down there. And that was one of the few bargaining chips we had in the context of that restructuring, and that was the commitment we made whenever it was we closed that 40% for 12% mix.

First, a couple of questions on Ambatovy. So what was it that prompted the change in your disclosures for Ambatovy?

I mean in the past, you've opted to not fund cash calls, and the financial reporting remained unchanged.

Look, last time around, Don, when we didn't fund the cash calls, we were in negotiations with our shareholders on trying to reduce our equity interest from 40% to 12%, and we're undecided on what that would mean in terms of cash into Ambatovy. At this point now, we're a non-funding shareholder in Ambatovy.

We don't have any plans to commence funding. And so the defaulting shareholder status that we currently see ourself in is a more permanent position or more permanent situation, and really, that's reducing the level of disclosure that we require from Ambatovy and obviously results in the way that - changing the way that we see the business and the change in our disclosure.

Okay. And on this, maybe if you could provide a little bit more color on why the JV partner loan was classified as current.

And is there any conditions - if any, conditions would you be required to actually pay this debt out in 12 months?

So just to reiterate, Don, that no requirement for us to pay that in cash until 2023. So that's the maturity date of that liability, and that remains unchanged.

The reason we reclassified it to current is really again an accounting requirement based on the fact that there is a potential for the lenders to call on the limited recourse security, which will be our shares in Ambatovy because there is that potential that exists out there that results in this reclassification to a current liability, which, to me, further make complete sense because obviously from a cash perspective, there's no cash outflow until 2023 or beyond. But that's the kind of accountant conclusion we were - we had to adopt.

Okay. And so even if you're diluted to zero, the obligation to Sumitomo and Kores would still be - would still mature in 2023.

You're not going to have a - it's reported as current, but you don't anticipate under any circumstances that you'd actually have to pay it out sooner than 2023.

Correct.

Okay. Then shifting over to the Cuban receivables, it wasn't clear to me, what is the time line that you're hopeful for, for a full repayment of this $172 million?

Do you think it would come ahead of the 2021 maturities?

Don, that's certainly been our objective in the context of our conversations with the Cubans and trying to put some arrangements in place. If we do, do get something in place so finalized along the lines of what I was just talking about there, how much we see this year and next year will clearly be a function of the nickel and cobalt price.

But - yes, but seeing that balance come down back into current between now and the Q4 2021 when we face our first debt maturity is what we've told the Cubans is our imperative.

Andrew, I guess a question for you again around this $70 million held at the Energas level in cash. Is that actual cash in Cuba at Energas?

Yes. So I mean Energas has - within Cuba has its own cash balance that's owned by that joint operation.

And we consolidate 1/3 of that cash balance, which is the $70 million on our consolidated balance sheet. So it does exist within Energas' bank accounts.

But in terms of that being repaid to Sherritt, that is all linked to this overdue receivable matter that we're trying to resolve. And really, the transfer of that cash to Sherritt is dependent on foreign currency availability within Cuba.

That I don't understand. What is preventing it from being transferred to you to offset the receivable?

They don't have the cash or they do have the cash?

It's cash in the bank in the local currency, Greg. And so it's - the issue is the Cubans' liquidity of foreign cash reserves through us to be able to repatriate that in Canadian or U.S.

dollars. So it sits in a Cuban bank on a local currency.

To be fulsome on our receivables disclosure, we don't consider that paid from a receivables perspective until it's available to us in hard currency. So although we have it in the bank in Cuba, that's available to us and we use it to pay local taxes, local expenses and Energas.

But we still consider it overdue until it's available to us in a foreign currency that we can repatriate to Canada. And that's where the Cuba's national foreign reserves liquidity issue affects us.

I got you. Okay.

That's clearer. And again, Andrew, on the partner loan, what's preventing Sumitomo and Kores to saying, okay, we'll take your 12% stake in Ambatovy, be done with it and the partner loans taken care of?

So from our discussions with Sumitomo and Kores, they have no interest in doing that. I mean, clearly, if either Sumitomo or Kores were to do that, that would increase their own ownership interest in Ambatovy and their own exposure to Ambatovy.

And right now, Ambatovy is obviously draining cash rather than providing cash. So based on our discussions with both of - with our both - the other Ambatovy shareholders, they provided verbal confirmation that they have no interest in looking at holding that security.

Okay. So no one wants it basically.

Just a little further context on that, Greg, and for everyone, the - you'll also recall that the project financing down there had a three-year deferral on the amortization schedule that actually expires in June. So the focus of our partners right now is on ongoing conversations with the banks on what a further deferral on the amortization schedule down there might like.

That payment right now is a 90-odd-million dollar principal repayment coming due in June that Ambatovy simply won't have the cash flow to make. And so that's been well recognized by the partners and the lenders for some time.

So there is an ongoing series of conversations around that issue, which is where the partners' focus is at the moment. As that resolves itself in some form, expect that in the wake of that, we'll be then looking for a more permanent solution to the rest of the capital structure again with respect to our equity ownership and the CFA loans.

We've been clear throughout this - for some period that we don't have the capacity to make further cash payments into the project. And so the mantra of no cash in, no cash out for the foreseeable future that we've been touting for some time in Ambatovy continues to be our priority in this, and that's the basis of some of the actions that we've taken.

You mentioned destocking of cobalt inventory by consumers. As it will come to an end, was the most - the more recent price rally due to the lack of selling pressure?

Or are we actually seeing the consumers now coming back into the market and buying? Second question would be also on commodities - commodity prices.

Nickel, as you pointed out, nickel inventories were down year-on-year. Looks like the market is in deficits.

Any hope on nickel would be hitting $6, $7, $8? When do you see that, please?

So into your first question, I think we are seeing the beginnings of that. We're seeing there's a bit more uptick in demand.

There's been a little upward pressure on the price this month, and there are people out buying cobalt. Again, now these are looking to buy cobalt in the way that they weren't a couple of months ago.

But I think we're kind of in the early days of that this month, and we'll see how that - whether that kind of trend of reversing itself of what we've seen in cobalt for the last 2 or 3 quarters, that reversing trend has kind of just begun in the last few weeks, continues and gaining strength. But that is what I think where we're seeing the beginnings of now.

On nickel, you see, I mean I really wish I knew what to tell you, Tony. We have this kind of, I think, unsustainable over the long term pricing going on right now where physical markets continue to be reasonably tight and global inventories continue to come down, consumption continues to exceed production with no prospect of meaningful additions to production of Class 1 in the near term, and yet we haven't seen any meaningful response in the price.

We believe that the underlying fundamentals of that, that we are particularly - where there isn't - the capacity of a supply side to respond to meaningful increases in demand for Class 1 nickel on a short-term basis at some point does have to impact the price. When that happens and where that takes it, I have proven to not be any better predicting that than anybody else.

But we do think ultimately to create the incentive prices it's going to need to create more Class 1 nickel supply, that price is higher than $5.63 or wherever we are this morning. And so we continue to believe that in the longer - over the medium to long term here, nickel prices for Class 1 nickel need to move higher.

Just in the short term then, I guess like crystal ball gazing, my call is no better than yours. Are your traders, your marketing guys, seeing any softening in demand?

You've obviously seen some weakening. Any economic stats sale in the EU and some other parts of the world that are coming through has reduced demand for nickel?

Or can you sell every ton you make?

Yes, just selling nickel even through the end of last year when it was really bottom. I mean selling nickel wasn't really an issue for us in any great way.

Selling cobalt in the first quarter was tough at times, and there was a lot of cobalt around. Cobalt, anybody looking to buy cobalt in February, March had quite a number of people calling them up.

But the supply and demand dynamics for actual physical metal in the nickel market have been pretty good throughout this period of declining prices that we've rarely seen since the second quarter last year and now bounced back a bit. But the underlying physical markets seem pretty good.

I just wanted to discuss the Cuban receivables one more time. What I'm having a bit of a trouble understanding is given the pressure that Cuba is under, which seems to be increasing from the U.S., what today gives you confidence that the Cubans actually have the ability to start repaying this?

And what I'm wondering is, is it possible we could see the opposite here in terms of these receivables actually continue to increase rather than decrease? Any color on this would be very helpful.

Obviously, it is a big issue for us, Orest. And the economic circumstances that Cuba are in as the U.S.

makes their life more difficult continues to put pressure on their foreign currency transaction capability. What helps us is if we can get these arrangements that we've been talking about, Don, for some - Orest, actually, a direct line for us to the hard currency in the form of the hard currency revenue of the Moa joint venture.

Moa sells its nickel internationally. Our Cuban receivables issue always arises in our Power business and our Oil business because the customer is various entities of the Cuban states or exposed to Cuban credit in our Power business and our Oil business.

The Moa joint venture is different in that the customers are all international and it's hard currency sales, and the revenue for that all flows into the marketing arm of the joint venture in the Bahamas. And then each party takes their share home from there.

So we've never had a receivables issue in the Moa joint venture. If we can get these arrangements that we've been talking to the Cubans about and they are, in my belief, working in good faith to get that done, we would actually be able to capture some of that hard currency directly in the form of revenue that the Moa - hard currency that the Moa Joint Venture currently uses to buy local currency from the central bank to pay local expenses in Moa and will instead buy that local currency, at least to the tune of $2.5 million a month roughly from Energas, and then that Energas balance that we have there and then that hard currency that goes in Energas can be available for distribution to us.

Initially, if we can get the arrangements finalized where we capture a share of the Cubans' dividends in the Moa joint venture, rather than us taking our 50% share and them taking their 50% share from the Bahamas when we divide the pot at the end of the day, we can capture that. That is another source of hard currency that we can then apply and offset against Cuban receivables.

We're not dependent on the local Cuban economy's ability to generate hard currency to repay us.

And your understanding is that there's buy-in from the Cubans on this proposal?

Yes, and that's the agreement in principle that we have in February. And as you can imagine, foreign currency reserves are pretty tightly managed in Cuba at the best of times, and so there are a number of different ministries that need to approve this and ultimately the council of ministers.

But it has been going through reviews with the Central Bank and the Ministry of Economic Planning and the Ministry of Finance, in addition to the Ministry of Energy and Mining where we - and Ministry of Foreign Investment where we negotiated this over the first half and the first quarter. It's my belief, for what it's worth, that they are in good faith trying to get this done and still intend to see us made hole on that.

They understand the significance of the cash to us. They understand the significance of our debt position, and we're an important part to them.

And I still believe they are working in good faith to deal with that in what are and I believe pretty difficult circumstances for them right now.

Can you give us an idea of how long you have been having those discussions with the Cuban government over the receivables proposal?

I mean the flippant answer to that is we've been talking to the Cuban government about receivables for 20 years. We've had ebbs and flows to the receivables balance.

Going back to 2008 when it got well up north of $200 million, $250 million, we put an arrangement in place to have weekly amortizing notes from the Central Bank that ultimately paid out like clockwork and made us whole again. There's been an ebb and flow to the availability of hard currency in Cuba since the revolution, but they have always been able to muddle through, and they've never denied that they owe us money and they've always ultimately made us whole.

The receivables balance that we have now has obviously crept up over the last 18 months or so. And we've had ongoing conversations with them over the course of last year.

The - more specifically, I think that's where your question is really going, is in terms of - on this kind of receivables arrangement that we're trying to put in place now, that really began getting some traction for us kind of in November, December this year and then in January announced a series of meetings that I and Andrew Snowden and Elvin Saruk who runs the Power business we're at, that led to the kind of agreement in principle kind of term sheet that they could then start taking around the different houses in Havana to get approval, got finalized in early February, and we're still working through them to get those final approvals in place. Does that give you a bit of a context of what this - if I haven't answered your question.

That's exactly what I was asking for, just a little more background. And secondly, on - I just want to clarify on that Ambatovy JV.

You are certainly implying that there would be no cross-defaults on the rest of your debt regarding that project loan, number one, and I think you can affirm that. And then secondly, does your operating position, does that give you - provide you some leverage on the restructuring of that JV, whereby you might be able to retain an equity stake on the back end of a pro forma restructuring?

I mean I think we'll see how that plays out. We are not - and so we do have - in terms of that right to accelerate on the equity in Ambatovy, they have acknowledged for now that they will not exercise that right.

And that will be up for renewal as we get closer to the June deadline for the senior debt, and that will ultimately become parts of the conversation going on. Our objective in this has been to not see any more cash come out of our balance sheet and given our priority of maximizing liquidity and eliminating debt from our balance sheet for the last few years.

How this plays out will depend whether the partners and the lenders do still see value in us being in the project and being engaged as operator. And we'll see - as Andrew mentioned before, I don't think our partners are - either of them are really interested in seeing their equity positions go up.

But as they work through the process with the senior lenders and see what kind of commitment for additional funding that Koreans and the Japanese are prepared to contemplate in exchange for those deferrals, then that will then trickle down in terms of how they want to handle our position and the capital structure vis-à-vis those - the 12% and our CFA loans. But ultimately, everybody's objective here is stability in the capital structure.

That's what the project needs ultimately in terms of certainty of its funding and consistency in the capital structure. There are a number of conversations, I think, that need to play out in sequence here beginning with the senior lenders.

But the scenario you put out in terms of us ultimately coming out of this at the other end with greater clarity on what these loans look like and what our equity - what the funding looks like and still some form of an equity position is certainly a possibility.

Great. And then last question.

On the Block 10, you might possibly be exploring partnerships or farmdown possibilities. Have you made any progress on that?

So there are a couple of entities and people that we've talked to who have at least expressed preliminary interest. The reality is that it can't go much beyond that until we can actually show them some data.

The two obvious hurdles in getting anybody who's going to be willing to put up some capital for further drilling against some proportionate interest in the block will be how much oil can we show them and what kind of reservoir pressures and production rates can we show them in terms of what the economics on subsequent wells will look like. And hopefully, we'll get a clearer idea on that once we get this well on and run it for a few months to see what it looks like.

And the second hurdle will obviously be for anybody that's going to contemplate to put up new capital for investment in Cuba is, again, we demonstrate to them a path to repayment on a timely basis. And that will be part and parcel of how our conversations around receivables go and the arrangements we're trying to get in place.

So beyond that, we haven't been able - until we get some data and can show people some actual well results and technical data, it's tough to progress beyond the sort of expression of interest, but we'll be looking to begin that process in more earnest once we get this well on and actually hope we'd be able to show the world and to potential partners some actual production.

All right. Well, thanks again for taking the time to join us.

As ever, we are all around if further questions come up. There's obviously quite a lot of moving parts at the moment.

We're happy to talk about those to give you as much insight and visibility into those as we can. We will be holding our Annual General Meeting in the second week of June, so we look forward to seeing as many of you there as we can.

And we'll be speaking to you again in July when we get together again to talk about the second quarter release. Thanks very much.

Have a good weekend.