Sherritt profit drops on nickel price, coal volume

Wed Jul 25, 2012 9:59am EDT
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(Reuters) - Canada's Sherritt International Corp said on Wednesday its second-quarter profit fell 32 percent on lower nickel prices and lower export thermal coal sales volumes but the drop was less severe than expected and its shares rose.

Earnings fell to C$40.8 million ($40 million), or 14 Canadian cents a share, in the quarter from C$60.1 million, or 20 Canadian cents, a year earlier.

Shares rose 2.8 percent to C$4.71 shortly after market open on the Toronto Stock Exchange on Wednesday, as the second-quarter profit beat average analyst expectations of 13 Canadian cents a share, according to Thomson Reuters I/B/E/S.

Revenue dipped to C$487.9 million, slightly off analyst expectations of C$491.5 million.

Nickel sales volumes rose 9 percent to 9.9 million pounds, but the realized price fell to $7.88 from $10.56 a pound in the year-ago period.

Cobalt sales rose 7 percent to 1.1 million pounds, while thermal coal sales volumes fell in the quarter, partially offset by a slightly higher realized coal prices.

Sherritt warned on Wednesday of a possible delay in operations at its Ambatovy joint venture in Madagascar as the transitional government reviews the project ahead of issuing an operating permit for the processing plant.

The $5.5 billion development project is expected to begin commercial production in early 2013. Toronto-based Sherritt is the operator and holds a 40 percent stake in the project, which will produce some 60,000 metric tons (66,100 tons) of refined nickel a year.

The company spent $18.4 million on development at Ambatovy in the quarter, with cumulative spending at the nickel and cobalt mine reaching $5.3 billion as of June 30.   Continued...