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Sherritt International announced Q2 results

Mining News - Published on Thu, 02 Aug 2018

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Sherritt International Corporation, a world leader in the mining and hydrometallurgical refining of nickel and cobalt from lateritic ores, announced that its financial results for the three- and six-month periods ended June 30, 2018. All amounts are in Canadian currency unless noted.


1. Adjusted EBITDA was CAD 49.5 million, up 70% from CAD 29.2 million in Q2 2017. Growth was largely due to higher realized nickel and cobalt prices, offsetting the impact of lower oil production due to the expiration of a production sharing contract at Varadero West.

2. Sherritt’s share of finished nickel production at the Moa Joint Venture was 3,749 tonnes while finished cobalt was 388 tonnes. Q2’s production totals, which are consistent with Sherritt’s historical performance, indicate that the production challenges experienced in Q1 2018 that limited the availability of mixed sulphides due to the highest level of rainfall at Moa in more than 20 years and rail transportation delays to the refinery in Fort Saskatchewan, Alberta have been resolved.

3. Net direct cash cost(1) at the Moa JV was USD 1.68 per pound of finished nickel sold, marking the lowest unit operating cost since Q3 2004. Q2’s NDCC represents the fifth 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.

4. Average-reference prices for nickel improved 57% from last year to USD 6.56/lb while average-reference prices for cobalt increased 66% to USD 42.93/lb.
Received CAD 9 million from the Moa JV as a final repayment on a CAD 45 million working capital facility provided by Sherritt. This working capital facility is now fully repaid and future available free cash flow from the Moa JV is expected in the form of dividends commencing in Q3 2018

5. Sherritt reduced its long-term debt to CAD 730.5 million based on the book value of outstanding debt by purchasing for cancellation CAD 10.7 million of outstanding debentures in Q2 2018. Combined with the results of its modified Dutch auction tender offer completed in Q1, Sherritt has eliminated CAD 131.9 million of indebtedness in 2018 and approximately CAD 2 billion since 2014.

6. Sherritt ended the quarter with CAD 197.2 million in cash, cash equivalents and short-term investments, down from CAD 237.3 million at March 31, 2018. The decrease was due to a number of factors, including the timing of fertilizer receipts and the timing of interest payments on debentures. In addition, Sherritt purchased CAD 10.7 million of the Corporation’s debentures for cancellation during Q2 2018.

7. Net earnings for Q2 2018 totaled CAD 2.8 million or CAD 0.01 on a per share basis. In Q2 2017, Sherritt incurred a net loss of CAD 101.9 million or CAD 0.35 per share

8. Announced the successful completion of a pilot-scale test of a proprietary process to upgrade Alberta bitumen at a lower cost. The pilot-scale test was based on Sherritt’s 60 years of experience developing hydrometallurgical processes and use of autoclaves.

Mr David Pathe, President and CEO of Sherritt International siad that “The effects of rising commodity prices and improved production at our Moa Joint Venture combined to produce our strongest quarterly financial results since Q1 2013.”

Mr Pathe said that “Although commodity prices are expected to remain volatile in the near term due to the slower summer customer buying period and to speculation about the impact of tariffs on international trade, our prospects over the longer term are strong. With favorable supply-demand trends emerging as a result of the expected growth of the electric vehicle battery market, we are particularly encouraged by the positive outlook for nickel and cobalt prices.” 2018 Second Quarter Report

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Posted By : Rabi Wangkhem on Thu, 02 Aug 2018
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