Nickel and cobalt miner Sherritt International Corporation says it met its 2021 production and unit cost targets at each of its business units, despite continued sanctions against Cuba, where it is a 50% partner in the Moa project; rising input costs; and persistent Covid-19 impacts.
This while market fundamentals remain robust for nickel and cobalt as many industries are adopting green initiatives and rolling out electric vehicles.
The fourth quarter of last year capped a year of transition for Sherritt, as it pivots towards growth and expansion, says Sherritt president and CEO Leon Binedell.
He adds that the company’s share of finished nickel and cobalt production at the Moa joint venture (JV) project, of 4 266 t and 476 t, respectively, enabled Sherritt to meet its production guidance for the year.
Overall, the Moa project produced 15 592 t of finished nickel in 2021, on par with that produced in 2020, and 1 763 t of finished cobalt, a 5% improvement on cobalt output in 2020.
The Moa refinery underwent its six-yearly full shutdown period for maintenance in the year, which sould have lasted for ten days, however, it was extended by three more days owing to limited contractor availability, as a result of Covid-19. The refinery had a speedy recovery during the fourth quarter in efforts to meet targets.
Sherritt expects finished nickel production of between 32 000 t and 34 000 t and between 3 400 t and 3 700 t of finished cobalt production this year.
Unit operating costs of $23.06/MWh for Sheritt’s power business in the 2021 financial year were lower than guidance, largely owing to the impacts of a stronger Canadian dollar and the unification of Cuba’s currencies.
Sherritt has forecast unit costs for the power business for 2022 to be between C$26.50/MWh and C$28/MWh.
Net direct cash cost was $4.11/lb in 2021 and should average between $4/lb and $4.50/lb this year.
Meanwhile, Sherritt improved its net earnings from continuing operations by $72.3-million in the year ended December 31, 2021, as a result of strengthened nickel, cobalt and fertiliser prices and efforts to reduce operating and corporate costs.
Adjusted earnings before interest, taxes, depreciation and amortisation were $112.2-million, up 188% compared with the prior year.
The net loss from continuing operations amounted to $0.03 apiece in the year under review, compared with a net loss from continuing operations of $0.22 apiece posted in the prior year – marking an 86% improvement year-on-year.
Sherritt ended the year with cash and cash equivalents of $145-million, of which $79-million is held by Energas in Cuba, down from $167-million at the end of the 2020 financial year.
Binedell says the lower cash position was owing to lower energy payments from Cuban partners on account of their reduced access to foreign currency and by the deferral of distributions expected from the Moa JV in the fourth quarter, as a process of assessing the impact of delays in product deliveries on account of flooding in British Columbia was under way.
In January this year Sherritt received $8.1-million as its share of Moa JV distributions.
Sherritt anticipates an additional distribution in the first quarter of the year and expects greater than $35-million of distributions from the JV in the 2022 financial year.
GROWTH PLAN
In support of a growth strategy announced on November 3, 2021, aimed at growing finished nickel and cobalt production by 15% to 20% of combined totals achieved in the 2021 financial year and extending the life-of-mine at Moa beyond 2040, the Moa JV completed a feasibility study for a new slurry preparation plant (SPP) and received approval for planned expenditures from the board.
The SPP, which is estimated to cost $27-million and be completed in early 2024, will deliver a number of benefits, including reduced ore haulage, lower carbon intensity from mining and an increase in production of mixed sulphides by about 1 700 t/y starting in mid-2024.
“As we commercialise projects developed by Sherritt Technologies, increase our combined nickel and cobalt production capacity by up to 20%, and extend the mine life of Moa beyond 2040, we expect to significantly grow shareholder value over the coming years,” Binedell highlights.