May 1, 2017 / 9:53 PM / in a year

CORRECTED-UPDATE 1-Sherritt to cut Madagascar nickel mine stake for debt relief

(Corrects currency to Canadian dollars, not U.S. dollars. The error also appeared in previous versions of the story.)

May 1 (Reuters) - Sherritt International Corp, Korea Resources Corp (Kores) and Sumitomo Corp, partners in the Ambatovy nickel operation in Madagascar, have agreed in principle to revise their joint venture agreement, Sherritt said on Monday.

As a result, Sherritt’s stake in the joint venture will be reduced to 12 percent from 40 percent in exchange for the elimination of C$1.4 billion ($1.02 billion) of loans it needed to repay, Sherritt said in a statement.

Toronto-based Sherritt will remain as the operator of Ambatovy, which consists of a nickel-cobalt mine and processing and refining facilities, until at least 2024.

The revised terms “removes the largest area of uncertainty for both Ambatovy and Sherritt,” Sherritt Chief Executive David Pathe said. “With this transaction, we eliminate $1.4 billion in debt from Sherritt’s balance sheet,” he said.

Sherritt did not reveal the new shareholdings of its partners in Ambatovy. Previously, Sumitomo owned a 32.5 percent stake and Kores 27.5 percent.

Nearly half the world’s nickel operations are producing metal at a loss, Pathe told Reuters July 26, following a collapse in the nickel price partly due to overcapacity. ($1 = 1.3659 Canadian dollars) (Reporting by Nicole Mordant in Vancouver; Editing by Leslie Adler and James Dalgleish)

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