Newspaper article The Canadian Press

Sherritt Posts $17.3 Million Q4 Net Loss, Adjusted Earnings Miss Estimates

Newspaper article The Canadian Press

Sherritt Posts $17.3 Million Q4 Net Loss, Adjusted Earnings Miss Estimates

Article excerpt

Sherritt misses Q4 profit estimates


TORONTO - Sherritt International Corp. is focused on ramping up production at its Ambatovy project in Madagascar this year as the nickel mine heads toward commercial production.

"While the exact timing is difficult to predict because of the natural and uncertain nature of ramp-ups, at this point we are highly confident of our ability to get the project up to nameplate capacity and hopefully beyond," Sherritt chief executive David Pathe told a conference call with analysts.

The ramp-up comes after the company reported a $17.2-million loss in its latest quarter as it wrote down the value of two coal-related projects in Western Canada due to economic conditions.

The mining and power company reported the loss amounted to six cents per share for the quarter, compared with a profit of $28.1 million or 10 cents per share a year ago.

Construction of the $5.5-billion Ambatovy project has been plagued with delays and increased costs that have driven its price tag hundreds of millions of dollars higher than originally estimated.

Ambatovy is designed for annual production of 60,000 tonnes of nickel, 5,600 tonnes of cobalt and 200,000 tonnes of ammonium sulphate, with an estimated life of 30 years.

Sherritt, which holds a 40 per cent stake in Ambatovy, cited a litany of problems during construction, including poor performance by contractors and inaccurate estimates on the project in the island country off the east coast of Africa.

However, Pathe told analysts Wednesday that certainty on Ambatovy's completion helped allow it to increase its quarterly dividend earlier this week.

"The range of potential outcomes from a capital perspective are now narrow enough that we can see the project through to cash flow neutrality without further jeopardizing our balance sheet," Pathe said.

On Tuesday, Sherritt increased its quarterly dividend to 4.3 cents per share from 3.8 cents.

During its most recent quarter, Sherritt wrote off $10.9 million in development costs at its Dodds-Roundhill coal gasification project and $5.6 million related to its investment on its Bow City Power project.

After adjusting for the writedowns and other non-cash items, Sherritt (TSX:S) said net earnings were $6.2 million or three cents per share.

Analysts had estimated 11 cents per share of net income and six cents per share of adjusted earnings.

Sherritt's revenue was down from last year as it received lower prices for the commodities it produces, but came in slightly above analyst estimates. …

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