Sherritt shares slide as outage, strike hit Madagascar mine output

Thu Jun 4, 2015 1:28pm EDT
 
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TORONTO, June 4 (Reuters) - Shares in Sherritt International Corp dropped 5 percent on Thursday after the diversified Canadian miner said an unexpected plant outage and labor disruption had hurt May output at its Ambatovy nickel-cobalt mine in Madagascar.

Ore processing and finished nickel production was reduced after a high voltage transformer failure caused an outage, the company said in a statement late on Wednesday.

A consequent overload damaged two ore thickeners, cutting throughput rates by about 15 percent, Sherritt said. One ore thickener is expected to return to service in July and the other in the third quarter, the Toronto-based company said.

Throughput was also reduced by an April strike at the plant. Ambatovy, operated by Sherritt, is a joint venture with Sumitomo Corp, Korea Resources and SNC Lavalin Group.

Head count at the project has been reduced by about 12 percent, or some 1,100 employees and contractors, due to continued low metal prices, Sherritt said.

"Ambatovy continues to encounter hurdles which individually impact the mine's production temporarily, and in aggregate have significantly limited output," said Desjardins Capital Markets analyst Jackie Przybylowski in a note to clients.

The analyst lowered her second quarter Ambatovy production estimate to 4,300 tonnes of total finished nickel from 4,500 tonnes.

The company's shares were down 13 Canadian cents at C$2.47 on the Toronto Stock Exchange on Thursday. (Reporting by Susan Taylor; Editing by David Gregorio)