Sherritt International Reports 2015 Second Quarter Results

Sherritt International Corporation (TSX:S) announced its operational and financial results for the three and six months ending June 30, as well as provided an outlook for the remainder of 2015. The company also announced its quarterly conference call and webcast, which will take place on July 29 at 10 a.m. EST.
Second quarter highlights:

• Average reference prices for our primary products were down significantly year over year, with nickel down 30% and oil down 45% from the same quarter last year.
• Finished nickel production was 8% higher at 8,035 tonnes, in a quarter that included a once-in-10 year maintenance shutdown at Fort Saskatchewan and Ambatovy production impacts from a strike and damage to ore thickeners.
• Net direct cash costs fell for the second consecutive quarter this year, to US$4.12 per pound at the Moa JV and US$5.48 per pound at Ambatovy.
• Ambatovy’s Independent Engineer signed off on the Efficiency, Production and Environmental Certificates, leaving two remaining certificates required for Financial Completion.
• Adjusted EBITDA decreased 47% from the same quarter last year, and 9% from Q1 2015 Adjusted EBITDA, consistent with the decline in metal and oil prices.
• Combined adjusted operating cash flow per share increased to $0.09 per share in the second quarter this year from $0.06 per share in the same quarter last year.
• Combined administration expenses declined for the second consecutive quarter this year, to $17.3 million compared to $27.5 million in the second quarter of 2014.

Outlook:

• We lowered production guidance at Ambatovy and narrowed the expected production range to 45,000 – 48,000 tonnes (100% basis) finished nickel, from the original guidance of 47,000 – 52,000 tonnes finished nickel (100% basis). Mixed sulphide and cobalt production expectations have also been revised as presented in the Outlook table. This change recognizes the production impacts in the second quarter, and our schedule to return to operations with both thickeners online.
• We reduced expected capital spending in Oil and Gas to $81 million from the $96 million projection provided as part of the Q1 2015 disclosure, which was itself a downward revision from the original $107 million estimate. These revisions are consistent with the objective of preserving capital and adjusting capital spending as new results are analyzed.
• In the first quarter this year, we had a tax recovery of $30.1 million due to the reduction in statutory tax rates in Cuba accompanying Cuba’s new foreign investment regime. In the second quarter, we had an additional tax recovery of $13.2 million in Oil and Gas, as we received clarification from the Cuban tax authority pertaining to a further recovery, which will be a non-recurring item.
• We recorded a $19.1 million gain on the sale of our corporate head office.

David Pathe, president and CEO of Sherritt International, commented:

Our metals business continues to provide stable production while we find ways to lower cash costs. Our business-wide emphasis on controlling costs while ramping up to full production at Ambatovy contributed to lower cash costs of US$5.48 at Ambatovy, and US$4.12 at Moa. Despite a once in ten year maintenance shutdown at Fort Saskatchewan and some unplanned disruptions at Ambatovy in the quarter, we saw overall nickel production increase by 8% over the prior year period,” continued Pathe. “During the quarter, we obtained three more certificates from the Independent Engineer, leaving two outstanding certificates to attain financial completion at the end of September.

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