Sherritt International

Sherritt has made encouraging progress on several fronts. Cuban tax rates have fallen from 30%-45% to 15%-22.5% this year and the net asset value (NAV) is calculated by various analysts at between $3.44 and $9.18, with an average of $5.87, depending upon the valuation attributed to Ambatovy and Moa. Despite this, I am recommending a Sell rating for Sherritt, until it is apparent that production and the nickel price have risen sufficiently to restore investor confidence. As with other resource stocks I have recommended selling this year, such as Ensco (NYSE: ESV) and Anglo Pacific (TSX: APY), the change in prices and sentiment has led to non-cash write-offs as valuations have changed and cuts in dividends as management decided to conserve cash. - Gavin Graham