Sherritt narrows Q1 headline loss
VANCOUVER (miningweekly.com) – Canadian diversified miner Sherritt International has increased headline earnings in the March quarter as significantly higher nickel, cobalt and oil prices boosted the bottom line.
The Toronto-based company reported a loss, adjusted for special items, totalling C$82.7-million, or C$0.25 a share for the first three months of the year.
Combined revenue was 24% higher at C$72.4-million, supported by higher realised prices for nickel, cobalt and oil, partly offset by lower sales volumes.
Year-over-year, the average reference price for nickel was 21% higher, while cobalt was 85% higher because of steady demand from the aerospace segment. Sherritt noted strong projections for future cobalt consumption in batteries and increased interest from financial investors.
The average reference price for Gulf Coast Fuel Oil #6 was 116% higher than the same period in 2016, as the market recovers from the multi-year low prices experienced at the beginning of 2016.
Well development in the period was negatively affected when the lower leg of a new hole in Block 10 was abandoned after geotechnical instability in the wellbore. However, by using part of the first well, the capital cost to drill the second well, again targeting the Lower Veloz formation, will be significantly less, estimated at C$8-million.
The company’s 40%-owned Ambatovy mine that it also operates, in Madagascar, reported a 14% year-over-year drop in nickel output, and down 25% from fourth quarter, reflecting the impact of a power trip in late January as well as limited acid production in February caused by unplanned repairs required on a molten sulphur tank. Equipment reliability related to acid production remains a risk in the second quarter, due to ongoing repairs and maintenance, Sherritt advised.
Overall output was lower for the quarter, with finished nickel and cobalt falling 12% to 7 657 t and 759 t, respectively.
For 2017, Sherritt expects to lift finished nickel output to between 81 000 t and 86 000 t this year, up from 75 033 t in 2016. Cobalt output is also expected to rise to 7 300 t and 7 900 t, up from the 6 967 t produced in 2016, while oil output in Cuba is expected to fall to between 11 500 bbl/d and 12 500 bbl/d.
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