TORONTO (miningweeky.com) – Diversified miner Sherritt International has reported a 79% wider adjusted loss year-on-year in the first quarter, as nickel, cobalt and oil prices have plunged during the period.
Excluding special items of about C$79.1-million, Toronto-based Sherritt recorded an adjusted loss of C$126.9-million, or C$0.43 a share, significantly more than analyst forecasts of a C$ 0.35 loss a share during the period.
For the three months ended March 31, the net loss plunged 16% year-on-year to C$48-million, or $0.16 a share.
Consolidated revenues fell 31% to C$191.3-million, as the average realised nickel price fell 35% to $5.17/lb, cobalt prices fell 6% to $13.84/lb and the average realised price for its Cuban oil production fell 47% to $21.8/bl.
"Our focus remains steadfast on maintaining liquidity and enforcing strict cost discipline and smart capital allocation across our business. Consistent with that focus, we continue to decline to fund Ambatovy [in Madagascar] under the current capital structure. Liquidity at the end of the quarter remained strong after a credit facility debt repayment of $45-million," stated Sherritt president and CEO David Pathe.
Nickel and oil prices made new multiyear lows in the quarter, although prices for both commodities rallied somewhat in April, with West Texas Intermediate crude trading in a volatile fashion. The nickel price rally had been more cautious, with recent $4/lb nickel up roughly 15% from the low in February, the company advised.
Strong cobalt and fertiliser production provided some support to mitigate the first-quarter impact of the lower nickel output and lower average realised prices for nickel and oil.
Net direct cash costs of $4.41/lb at Ambatovy and $3.34/lb at the Moa joint venture, remained down 24% on average from the year-earlier quarter.
Sherritt reported that finished nickel production was down 4% year-on-year, owing to Ambatovy's process plant experiencing a number of unrelated reliability issues that increased downtime. Despite this affecting the first-quarter output by about 1 000 t on a 100% basis, replacement components had been installed and no other mitigation had occurred.
The production guidance for Ambatovy remained unchanged at 48 000 t to 50 000 t finished nickel, and the production guidance remained unchanged for all other operations.
Sherritt ended the first quarter with cash, cash equivalents and short-term investments at C$370-million, after repaying and terminating the C$35-million line of credit and making a C$10-million repayment on the revolving term credit facility.
Capital spending guidance has been reduced by $9-million, attributable to lower spending in the oil and gas segment.
Commodity price weakness wreaked havoc on Sherritt's TSX-listed stock listing, which was down by 62% in the last 12 months at C$0.88 a share on Wednesday. However, the stock had clawed back some 20% in value since the start of the year.