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Sherritt International announced Q3 result

Metal News - Published on Fri, 02 Nov 2018

Image Source: Business Wire
Sherritt International Corporation a world leader in the mining and hydrometallurgical refining of nickel and cobalt from lateritic ores, reported its financial results for the three- and nine-month periods ended September 30, 2018. Mr David Pathe, President and CEO of Sherritt International said that “Our performance in the third quarter was marked by clear signs of progress. We ended Q3 with a stronger balance sheet, our first dividend distribution from the Moa JV in more than three years, and higher nickel production at Moa. While the momentum that nickel and cobalt prices established at the start of the year has recently been dampened by concerns over international trade disputes and the impacts of tariffs, underlying fundamentals for physical metal remain strong and the outlook is encouraging. Since the start of 2018, we have witnessed a decline in global Class 1 nickel inventory stocks by almost 40%. With no new nickel production coming online in the near term and demand expected to continue to grow, especially as the electric vehicle battery market expands, we anticipate favorable market fundamentals to continue.”

All amounts are in Canadian currency unless noted.

Q3 2018 HIGHLIGHTS

Adjusted EBITDA was USD 40.6 million, up 20% from USD 33.8 million in Q3 2017. The increase was largely due to higher realized nickel and cobalt prices, more than offsetting the impact of lower oil production due to the expiration of a production sharing contract at Varadero West as well as the impact of higher mining and input costs, including increased sulphur and energy expenses. Year-to-date adjusted EBITDA for 2018 has improved by 26% to USD 126.5 million.

Sherritt’s share of finished nickel production at the Moa Joint Venture was 4,457 tonnes, up 10% from last year, while finished cobalt was 465 tonnes, flat from Q3 2017.

Nickel production in Q3 2018 improved largely due to the arrival of new mining equipment that enabled Moa to surpass its target mixed sulphide production for the quarter.

Net direct cash cost at the Moa JV was USD 2.16 per pound of finished nickel sold, representing the sixth consecutive quarter that the Moa JV is in the lowest cost quartile relative to other nickel producers based on annualized information tracked by Wood Mackenzie.

NDCC in Q3 2018 was impacted, however, by higher sulphur and energy prices relative to Q3 2017 when the NDCC at the Moa JV was USUSD 1.94 per pound of finished nickel sold.

The average-reference price for nickel improved 26% from last year to USD 6.01/lb while the average-reference price for cobalt increased 22% to USUSD 35.21/lb.

Received USD 5.2 million in dividend distributions from the Moa Joint Venture. The dividend marks the first that Sherritt has received since Q1 2015, and reflects generally improved nickel market conditions.

Sherritt ended the quarter with USD 207.1 million in cash, cash equivalents and short-term investments, up from USD 197.2 million at June 30, 2018. Net loss was USD 13.3 million or USD 0.03 on a per share basis.

In Q3 2017, Sherritt incurred a net loss of USD 69.5 million or USD 0.24 per share.

As previously reported, Sherritt resumed drilling on Block 10 in early July. Drilling continues today. During the quarter, the expandable casing technology imported to address the loss circulation zones in the upper reservoir was successfully deployed. Drilling continued to a total depth of approximately 5,000 meters of the planned 5,960 meters. Recently, wellbore instability has been encountered between the upper and lower reservoirs. To manage the wellbore instability, a portion of the wellbore below the upper reservoir is currently being re-drilled and results are anticipated within 90 days.

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Posted By : Joykumar Irom on Fri, 02 Nov 2018
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