April 29, 2009 / 1:07 PM / 9 years ago

UPDATE 2-Sherritt reports loss as metal, oil prices plunge

* EPS loss C$0.15 vs year-ago profit of C$0.38

* Excluding asset loss, EPS C$0.05 vs estimates C$0.01

* Revenue 11 percent higher at C$349 million

* Shares gain 3 pct to C$5.09 (Adds detail)

OTTAWA, April 29 (Reuters) - Sherritt International (S.TO) posted a first-quarter loss on Wednesday after taking a hit on an asset sale and plunging nickel, cobalt and oil prices, but the results topped expectations and shares in the Canadian company jumped.

Sherritt, whose main assets are oil and nickel holdings in Cuba and Madagascar, said it lost C$42.9 million ($35.75 million), or 15 Canadian cents a share, in the quarter ended March 31. That compares with a profit of C$89 million, or 38 Canadian cents, in the year-before quarter.

Excluding an after-tax loss of C$57.4 million, or 20 Canadian cents a share, on the disposal of some oil and gas assets, Sherritt said it earned C$14.5 million, or 5 Canadian cents a share.

Analysts had expected, on average, a profit of 1 Canadian cent a share, before exceptional items, on revenue of C$244 million, according to Reuters Estimates.

The company said revenue rose 11 percent to $349 million.

Shares rose as much as 6 percent in opening trade before edging back to a gain of 16 Canadian cents, or 3 percent, at C$5.09 on the Toronto Stock Exchange on Wednesday.

Sherritt, which has been trying to work out financing for its 40-percent owned Ambatovy nickel deposit in Madagascar, also said talks with partners continue and revised financing agreements should be finalized in the second quarter.

Sherritt said in February construction costs had ballooned to $4.5 billion, and that it was negotiating with project partners Sumitomo Corp [SUMTMS.UL], Korea Resources Corp and SNC Lavalin (SNC.TO).

Construction at Ambatovy, which should one day produce 60,000 tonnes of nickel annually, was 48 percent complete at the end of the quarter.

The company also warned in February that its rising debt-to-earnings ratio could put it at risk of violating a debt covenant on C$200 million in credit facilities.

It said on Wednesday that as of March 31 it was in compliance with all covenants on its short-term credit facilities.

Lenders now propose to amend and extend Sherritt’s C$140 million revolving credit facility, effective May 11, with less restrictive covenants and interest rates tied to current market benchmarks, the company said.

Lenders also agree to similar amendments for two additional short-term faculties totaling C$60 million, Sherritt said.

Sherritt’s shares had dropped 66 percent in the past 12 months, due to plunging oil, nickel and coal prices and tight credit markets.

But the stock has been on the rise recently on optimism that U.S. government plans to ease investment restrictions on Cuba could benefit the company.

Sherritt Chairman Ian Delaney has been acting as the company’s chief executive since Jowdat Waheed took a leave of absence in January to deal with a family health matter. ($1=$1.20 Canadian) (Reporting by Susan Taylor; Editing by Frank McGurty)

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