Low Commodities Prices Impact Sherritt's Q3 Results

Sherritt International Corp. (TSX:S) released its financial results for the third quarter of 2015, reporting a net loss from continuing operations of $210 million, or $0.71 per share. President and CEO David Pathe said the “severely depressed commodity pricing environment” impacted the company’s performance, and added that the company has “executed further cost-cutting measures.”
Other Q3 highlights include:

• Nickel prices during the quarter hit a low closing price of US$4.22 per pound on August 24, 2015, a level not seen since 2008, and averaged US$4.78 in the quarter. Crude oil prices also declined since Q2 2015, with WTI crude prices closing at a low of US$38.24 per barrel on the same day and averaging US$46.56 in the quarter. Since quarter end, nickel prices have rebounded modestly from their lows to US$4.75 per pound and WTI is trading at US$44.46 per barrel (both prices at Oct. 26, 2015).
• Preserving cash was the Corporation’s highest priority in the quarter, and cost discipline across all operations mitigated cash funding requirements outside Ambatovy.
• Total available liquidity at September 30, 2015 was $454.5 million, benefiting from a $40 million increase in available credit, after renewing and increasing the size of the syndicated 364-day revolver to $115 million (from $90 million last quarter) and the line of credit to $35 million (from $20 million last quarter). Cash, cash equivalents and short-term investments were $373.8 million at September 30, 2015.
• Finished nickel production in the quarter was up 16% year over year at 9,730 tonnes (Sherritt’s Share), driven by Ambatovy’s strong performance.
• Net direct cash costs fell for the third consecutive quarter this year, to US$4.07 per pound at the Moa JV and US$4.24 per pound at Ambatovy. This demonstrates the longer term potential for Ambatovy’s cash costs to be equal or better than the Moa JV cash costs, as production ramps up to full capacity and maintenance costs continue to decline.
• Ambatovy Financial Completion was announced by press release September 21, 2015. Ten certificates were filed 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 is now non-recourse to all of the partners.
• Reducing combined administrative expenses has been a priority this year, with year to date combined administrative expenses down 25% over the nine month period last year. This quarter’s combined administrative expenses of $18.6 million are down 10% from last year, although higher than their levels in Q2, due to $4.5 million in Ambatovy arbitration award legal costs discussed in Note 6 to the Interim Condensed Consolidated Financial Statements (Financial Statements), and related to the close-out of construction contracts that were in dispute. No other income statement impact was recorded from these awards.

Click here to read the full Sherritt International Corp. (TSX:S) press release.