(Reuters) - Canadian miner Sherritt International Corp is confident it and its partners in a large Madagascar nickel mine will reach agreement soon with lenders to defer repaying project loans for several years, Sherritt's chief executive said on Tuesday.
Last month, Sherritt and its partners in the Ambatovy joint venture, Japan's Sumitomo Corp and Korea Resources Corp(Kores) [KOREC.UL], got a deferral until Aug. 5 to repay $90 million plus interest to the lenders.
They owe the lenders, which include Export Development Canada and the African Development Bank, $1.6 billion - an amount that is supposed to be repaid from cash produced by the Ambatovy mine. But with nickel prices down nearly 80 percent since 2007, the mine is producing at a loss.
"We are looking for a multi-year deferral period," Sherritt CEO David Pathe said.
"We are at this point reasonably confident that that will get done by the Aug. 5 deadline or shortly thereafter," he said in an interview.
Sherritt owns 40 percent of Ambatovy, Sumitomo 32.5 percent and Kores 27.5 percent.
While Sherritt is "encouraged" by a 22 percent jump in the nickel price to around $4.70 a pound since the beginning of June, much higher prices are needed to revive an industry where about half of nickel operations are producing at a loss, Pathe said.
"The long-term price that really sustains the industry probably needs to be in the $8 to $9-plus range," he said.
Prices of nickel, a top performer among industrial metals in recent months, are overcooked and likely to retreat by the end of the year even though shortages are becoming more severe, a Reuters poll released on Tuesday showed.
Sherritt won approval on Monday from its noteholders for a three-year extension on repaying C$720 million ($545.99 million) worth of debentures.
The company, which also has power and oil operations in Cuba, reported on Monday a bigger-than-expected second-quarter adjusted loss of 40 Canadian cents a share because of steeper costs at the Ambatovy venture and higher taxes.
Reporting by Nicole Mordant in Vancouver; Editing by Peter Cooney