TORONTO (miningweekly.com) – Diversified miner Sherritt International has increased its net loss by C$158.7-million during the third quarter ended September, as lower prices for nickel, cobalt and oil and gas products weighed on its bottom line.

The Toronto-based firm reported a net loss from continuing operations of C$210-million, or C$0.72 a share, compared with a loss of C$51.3-million, or C$0.17 a share, in the prior-year period.

Excluding special items, the company reported an adjusted loss of C$91.4-million, or C$0.31 a share, missing analyst expectations of a loss of C$0.30 a share, on revenue of C$91.9-million.

Consolidated revenue declined 19% to C$246.5-million for the period, mainly owing to lower nickel and oil prices, which were partly offset by a weaker Canadian dollar relative to the US dollar. The gross working interest (GWI) oil output in Cuba was also lower as oil output from new development wells was not able to offset natural reservoir declines, the company stated.

During the quarter, nickel prices hit a seven-year low closing price of $4.22/lb on August 24 and averaged $4.78 in the quarter. Crude oil prices also declined since the second quarter, with West Texas Intermediate (WTI) crude prices closing at a low of $38.24/bl on the same day and averaging $46.56/bl in the quarter. Since quarter end, nickel prices had rebounded modestly from their lows to $4.75/lb on Tuesday and WTI was trading at $45/bl on Wednesday.

"We continue to operate in a severely depressed commodity pricing environment, with nickel and oil prices declining further during the quarter. In response to this reality, we have executed further cost-cutting measures, including cutting our dividend and reducing expected capital spending for this year and [the] next," president and CEO David Pathe commented.

Sherritt booked an impairment expense of C$80.6-million, or C$0.27 a share, on its oil assets in Cuba and Spain. This impairment was mainly the result of lower oil price forecasts impacting future cash flows, with lower output from the production sharing contract (PSC) extension wells being a contributing factor.

The oil production guidance was reduced to 18 500 bbl/d on a GWI basis and 11 300 bbl/d on a net working interest basis for 2015, down from the previous forecast of 19 000 bbl/d. Sherritt advised that drilling activity on the PSC extension had ended and the capital expenditure of the segment for the full year was expected to reduce to $71-million.

During the quarter, SNC-Lavalin exercised its put option to divest their 5% equity interest in the Ambatovy joint venture (JV), in Madagascar, selling their equity stake and share of partner loans to existing partner Sumitomo Corporation for about C$600-million. Sherritt had the right to acquire this equity stake along with Sumitomo, but declined. As a result, the Ambatovy call option expired, resulting in a $13.7-million noncash loss within the net finance expense this quarter. Sumitomo now owned 32.5% of Ambatovy, with Sherritt at 40% and Korea Resources at 27.5%.

Sherritt announced financial completion of the Ambatovy project on September 21, when it was able to file ten certificates to meet the criteria, covering a range of construction, operational, environmental, financial and legal obligations. With financial completion achieved, the project financing that was put in place for construction was now nonrecourse to all the partners.

Attributable finished nickel output in the quarter was up 16% year-on-year at 9 730 t, driven by Ambatovy's strong performance. Cobalt output also rose 15% over the comparable period in 2014 to 883 t.

The company’s nickel production also benefited this year from lower net direct cash costs for the third consecutive quarter of $4.07/lb at the Moa JV, in Cuba, and $4.24/lb at Ambatovy. This demonstrated the longer-term potential for Ambatovy's cash costs to be equal or better than the Moa JV cash costs, as production ramped up to full capacity and maintenance costs continued to decline, Sherritt noted.

The company's TSX-listed stock had lost more than 67% in value since the start of the year and on Wednesday traded down 1.14% at C$0.87 a share.