Thursday, July 29, 2010

Sherritt 2nd quarter: Stagnating nickel production, higher earnings

Sherritt 2nd quarter: Stagnating nickel production, higher earnings

Toronto-based Sherritt International said in its second-quarter report
that, although nickel production stagnated and sale volume was down from
the second quarter last year, nickel revenues rose thanks to higher prices.

Sherritt produced 3,740 tons of nickel, down from to 4,261 tons in the
second quarter last year; the company sold 8.27 million pounds of nickel
during the quarter, down from 9.582 million pounds last year. However,
revenues from nickel sales were $88.2 million, up from $65.7 million
last year. The average realized price rose from $6.86 per pound last
year to $10.65 this year.

The company said in its outlook for the remainder of the year that it
expects construction of a 2,000 ton-per-day sulphuric acid plant at its
Moa nickel production facility to be delayed, "subject to securing
adequate financing."

Oil and gas production rose slightly from 20,200 barrels to 21,300 barrels.

Electricity production at the company's combined-cycle gas power plants
was 513 gigawatt-hours, down from 515 gw/h. The company said that gas
shortages continued to affect its power plants, but that CubaPetróleo
was working to optimize existing gas production. The Cuban state company
last year took over a near-shore oil and gas field partly operated by

The company said it decided to accelerate the $247 million expansion of
its Boca de Jaruco combined-cycle power plant, with completion set for
early 2014.

Overall, the energy and mining concern posted net earnings of $15.7
million for the second quarter, down from $24.4 million last year. This
quarter's results were dragged down by a $15.3 million provision after
"taking a more conservative view" on Cuban income taxes on oil and power
operations, and a drop of the Canadian dollar versus the U.S. dollar,
which increased the cost of U.S. dollar-denominated loans Sherritt took
to establish nickel operations in Madagascar.

With major nickel mining operations, on-shore oil and gas production,
and gas power plants, Sherritt is the largest private foreign investor
in Cuba.

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