TSX-listed nickel and cobalt refiner Sherritt International Corporation has received a fuel licence from the US Department of Treasury's Office of Foreign Assets Control (OFAC) which authorises the purchase and delivery of fuel, fuel oil and sulphur to Sherritt's Moa Nickel mining and processing operations in Cuba.

The operations have been under strain owing to US sanctions imposed on Cuba earlier this year, with Sherritt having ceased mining operations in Cuba and refinery operations in Canada. One particular challenge has been that of fuel supply disruption.

Sherritt owns 50% of the Moa joint venture together with State-owned General Nickel Company in Cuba.

The fuel Licence is the first of a series of OFAC emergency licences that will be necessary for Sherritt to be able to restart mining and processing operations at Moa Nickel as well as further processing and refining operations in Canada.

With the granted fuel licence authorising the sale, transportation, export, delivery and payment for fuel, fuel oil, and sulphur to Moa, together with all related services, it extends to Sherritt's licensed fuel supplier and persons acting on their behalf such as banks and vessel operators. 

Sherritt had prepared and submitted its requests for the OFAC emergency licences in close coordination with Gillon Capital, in connection with Gillon Capital’s potential acquisition of a controlling interest in Sherritt - as contemplated by a non-binding term sheet having been signed between Gillon Capital and Sherritt in May. 

The fuel licence is the first of a series of licences that would be necessary for Gillon Capital to acquire a controlling interest in Sherritt.

While the fuel licence and related fuel shipment are expected to allow Moa to meet essential fuel requirements and prepare for a restart, the actual restart of operations at Moa remains subject to receipt of a second OFAC emergency licence, which Sherritt is working to obtain with the continued support of and in close coordination with Gillon Capital.

An initial fuel shipment is expected to ship before the end of the year.

Meanwhile, Sherritt continues to operate under constrained liquidity conditions and faces a material uncertainty that may cast significant doubt on its ability to continue as a going concern.

The company's ability to satisfy obligations to suppliers, service providers and other stakeholders remains dependent on obtaining additional financing and implementing a broader recapitalisation transaction, which the company it is actively pursuing.

Sherritt remains in active discussions with its lenders and potential government and other strategic capital sources, including Gillon Capital.