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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Parallel Mining Corp | TSXV:PAL | TSX Venture | Common Stock |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 0.15 | 0.20 | 0.20 | 0 | 00:00:00 |
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NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN
THE UNITED STATES
All amounts are Canadian dollars unless otherwise indicated
Sherritt International Corporation ("Sherritt" or the "Corporation") (TSX:S)
today reported a fourth-quarter 2012 net loss of $17.3 million ($0.06 per share,
basic), compared to net earnings of $28.1 million ($0.10 per share, basic) for
fourth-quarter 2011. Included in the net loss for fourth-quarter 2012 was $23.5
million ($0.09 per share, basic) in non-cash charges. Adjusted for the non-cash
items, net earnings for fourth-quarter 2012 were $6.2 million ($0.03 per share,
basic).
Net earnings for full-year 2012 were $33.2 million ($0.11 per share, basic),
compared to net earnings of $197.3 million ($0.67 per share, basic) for
full-year 2011. The reduction in net earnings was attributable to lower revenue
(resulting from lower nickel and cobalt reference pricing and lower export
thermal coal sales volumes), higher operating costs in Metals and Coal, higher
depreciation in Coal resulting from a change in environmental rehabilitation
obligations (ERO), and an increase in the net finance expense resulting from the
redemption premium, and deferred cost write-off, associated with the redemption
of the 2014 debentures ($20.5 million or $0.07 per share after tax). Net
earnings for full-year 2012 included $49.6 million ($0.17 per share, basic) of
non-cash charges. Adjusted for the non-cash items, net earnings for full-year
2012 were $82.8 million ($0.28 per share, basic).
The non-cash charges included in fourth-quarter and full-year 2012 net earnings
are presented below:
Twelve months ended
Q4 2012 December 31, 2012
Non-Cash Items
(after-tax, units as ($/share, ($/share,
noted) ($ millions) basic) ($ millions) basic)
----------------------------------------------------------------------------
Coal - Development
project
impairments(1) 16.5 0.06 16.5 0.06
Coal - ERO
adjustments 4.1 0.01 13.1 0.04
Coal - Inventory
impairments - - 5.3 0.02
Metals - Ambatovy
call option
adjustment (0.2) - 13.8 0.05
Oil and Gas -
Impairments,
other(2) 2.2 0.01 4.1 0.01
Provision for
receivables 1.7 0.01 1.7 0.01
Unrealized foreign
exchange (gain) loss (0.8) - 9.5 0.03
Gain on sale of
discontinued
operations(3) - - (4.7) (0.02)
Recognition of non-
capital losses - - (9.7) (0.03)
----------------------------------------------------------------------------
Total non-cash items $ 23.5 $ 0.09 $ 49.6 $ 0.17
----------------------------------------------------------------------------
(1) Impairment relating to Bow City Project ($5.6 million) and Dodds
Roundhill Project ($10.9 million).
(2) Exploration and evaluation impairment ($2.2 million) relating to the
relinquishment of three licenses in the United Kingdom North Sea
prospect area and a 2011 depletion expense adjustment ($1.9 million,
after tax) recorded in 2012.
(3) Gain on sale of Mineral Products business's talc plant to a third
party.
David Pathe, President and Chief Executive Officer, said, "2012 was a
transformational year for Sherritt - marked by Ambatovy's successful transition
from a project to an operation. The production and sale of high-quality finished
nickel and cobalt is the realization of the vision, contributions and commitment
of thousands of people. We are very proud of the achievement, having
successfully addressed market concerns regarding the technical viability of our
technology and process in Madagascar. Our success makes us confident in our
ability to address any additional challenges we may face as Ambatovy continues
its ramp-up."
As announced February 26, 2013, Sherritt's Board of Directors has declared a
quarterly dividend in the amount of $0.043 per common share, payable April 12,
2013 to shareholders of record as of the close of business on March 29, 2013.
The 13% increase in the dividend reflects the Corporation's confidence in
Ambatovy and the ongoing consistency of its other operations.
Operating cash flow for fourth-quarter 2012 was $5.5 million, compared to $103.2
million in fourth-quarter 2011. Operating cash flow for full-year 2012 was
$269.9 million, compared to $354.8 million in full-year 2011.
Spending on capital and intangibles relating to operations totaled $64.0 million
for fourth-quarter 2012, compared to $81.8 million in fourth-quarter 2011.
Spending on capital and intangibles relating to operations totaled $216.2
million for full-year 2012, compared to $235.6 million in full-year 2011.
HIGHLIGHTS
Sales Volumes
-- Sales volumes in 2012 do not include sales from the Ambatovy Joint
Venture. Finished metal sold from the Ambatovy Joint Venture will not be
categorized as sales volumes until the declaration of commercial
production (defined as 70% of ore throughput of nameplate capacity in
the Pressure Acid Leach ("PAL") circuit).
-- Sales volumes for fourth-quarter 2012 (Sherritt's share) totaled 9.7
million pounds of finished nickel, 1.0 million pounds of finished
cobalt, 9.1 million tonnes of thermal coal, 1.0 million barrels of oil
and 162 GWh of electricity.
-- Sales volumes for full-year 2012 (Sherritt's share) totaled 37.8 million
pounds of finished nickel, 4.1 million pounds of finished cobalt, 34.3
million tonnes of thermal coal, 4.1 million barrels of oil and 628 GWh
of electricity.
Operating Highlights
-- Record finished nickel production in fourth-quarter 2012 of 12,281
tonnes (100% basis) was 34% higher than 2011, and full-year 2012
production of 39,958 tonnes (100% basis) was 16% higher than 2011.
-- Record finished cobalt production in fourth-quarter 2012 of 1,306 tonnes
(100% basis) was 26% higher than 2011, and full-year 2012 production of
4,285 tonnes (100% basis) was 11% higher than 2011.
-- Ramp-up of the Ambatovy Joint Venture facilities continued to progress
well during the quarter. Beginning in October 2012, the PAL circuit
achieved a 55% ore throughput rate for a 30-day period. During fourth-
quarter 2012, total operating time in the PAL circuit was 5,352
operating hours and the ore throughput rate averaged 39%, a 1,233 hour
increase when compared to third-quarter 2012. In January 2013, the ore
throughput rate in the PAL circuit averaged 46%.
Coal Update
-- In November 2012, operations at the Obed Mountain mine were suspended
due to weak thermal export prices and an expected increase in operating
costs in new mining areas.
-- In December 2012, an incident at Westshore Terminals ("Westshore")
facilities resulted in Berth 1 being out of commission for an extended
period of time. During this period, Sherritt Coal mitigated the impact
of the incident by utilizing contractual capacity at Ridley Terminals as
well as at Westshore Terminals through Berth 2. Even with mitigation
efforts, the restricted capacity at Westshore resulted in the reduction
of fourth-quarter 2012 sales volumes by approximately 0.4 million
tonnes. Berth 1 was reopened on February 8, 2013. While operations at
Berth 1 have resumed, the incident will have an impact on sales volumes
in first-quarter 2013. Management expects any backlog of material will
be sold over the course of the year.
-- In January 2013, a wholly-owned subsidiary of Sherritt transferred
operations of the Highvale Mine to the owner/customer and the Highvale
mine mining contract was terminated. The contract arrangement was for a
fixed management fee that contributed approximately $8.1 million (or 2%)
of Sherritt's 2012 Adjusted EBITDA. In 2013, the Corporation will earn
$4.0 million in management fees and will receive an estimated $12.0
million in cash upon transfer of mobile equipment at net book value,
following payment of the associated finance lease obligations.
2013 Outlook
-- Consolidated finished nickel production of approximately 78,000 tonnes
(100% basis) is expected in 2013 as Ambatovy continues its ramp-up and
achieves commercial production during the year.
-- Total tonnage of coal mined by Sherritt in 2013 is expected to be lower
than the prior year by approximately 10 million tonnes due to the
transfer of mining operations at the Highvale mine to the
customer/owner. The impact on the Adjusted EBITDA of the business is
limited to the annual fees earned. For further information see the Coal
section of the Review of Operations in this release.
-- Gross working-interest oil production in Cuba for 2013 is expected to be
approximately 18,000 bopd, 11% lower than 2012, due to natural reservoir
declines.
-- Initial electricity production from the Boca de Jaruco Combined Cycle
Project in Cuba is expected in first-half 2013.
Summary Data
SUMMARY FINANCIAL DATA
Twelve months ended
December 31,
($ millions unless otherwise noted) Q4 2012 Q4 2011 2012 2011
----------------------------------------------------------------------------
Revenue 467.9 536.8 1,840.2 1,978.3
Adjusted EBITDA(1) 113.8 172.4 515.5 643.2
Earnings from operations and
associate 26.8 99.0 241.8 410.7
Net earnings (17.3) 28.1 33.2 197.3
Basic earnings per share ($ per
share) (0.06) 0.10 0.11 0.67
Diluted earnings per share ($ per
share) (0.06) 0.09 0.11 0.67
Net working capital balance(2) 979.1 1,016.7 979.1 1,016.7
Spending on capital and
intangibles(3) 64.0 81.8 216.2 235.6
Total assets 6,758.3 6,497.5 6,758.3 6,497.5
Shareholders' equity 3,672.7 3,731.7 3,672.7 3,731.7
Long-term debt to total assets (%) 32 28 32 28
Weighted-average number of shares
(millions)
Basic 296.5 295.4 296.3 294.0
Diluted 297.0 296.6 296.8 296.3
----------------------------------------------------------------------------
(1) For additional information see the 'Non-GAAP Measure - Adjusted EBITDA'
section of this release.
(2) Net working capital is calculated as total current assets less total
current liabilities.
(3) Spending on capital and intangibles includes accruals and does not
include spending on the Ambatovy Joint Venture or service concession
arrangements.
SUMMARY SALES DATA
Twelve months ended
December 31,
($ millions unless otherwise noted) Q4 2012 Q4 2011 2012 2011
----------------------------------------------------------------------------
Sales volumes
Nickel (thousands of pounds, 50%
basis)(1) 9,694 10,166 37,754 38,088
Cobalt (thousands of pounds, 50%
basis) (1) 1,027 1,128 4,123 4,249
Thermal coal - Prairie Operations
(millions of tonnes) 8.3 8.5 30.8 32.0
Thermal coal - Mountain Operations
(millions of tonnes) 0.8 1.3 3.5 4.4
Oil (boepd, net working-interest
production) 10,816 11,486 11,336 12,057
Electricity (GWh, 33 1/3% basis) 162 157 628 618
Average realized prices
Nickel ($/lb) (1) 7.49 8.60 7.82 10.14
Cobalt ($/lb) (1) 11.14 14.18 12.94 15.82
Thermal coal - Prairie Operations
($/tonne) 17.31 16.66 17.48 16.31
Thermal coal - Mountain Operations
($/tonne) 98.21 110.36 101.65 101.61
Oil ($/boe) 67.04 72.30 71.38 68.13
Electricity ($/MWh) 40.83 42.51 41.32 41.00
----------------------------------------------------------------------------
(1) Sales volumes and average realized prices do not include the impact of
the Ambatovy Joint Venture.
Review of Operations
METALS
Twelve months ended
December 31,
($ millions unless otherwise noted) Q4 2012 Q4 2011 2012 2011
----------------------------------------------------------------------------
Production
Mixed sulphides (Ni+Co contained,
tonnes)
Moa Joint Venture (50% basis) 4,742 4,673 19,027 19,320
Ambatovy Joint Venture (40% basis) 1,988 - 3,589 -
----------------------------------------------------------------------------
Total 6,730 4,673 22,616 19,320
----------------------------------------------------------------------------
Nickel (tonnes)
Moa Joint Venture (50% basis) 4,439 4,597 17,132 17,286
Ambatovy Joint Venture (40% basis) 1,361 - 2,278 -
----------------------------------------------------------------------------
Total 5,800 4,597 19,410 17,286
----------------------------------------------------------------------------
Cobalt (tonnes)
Moa Joint Venture (50% basis) 486 519 1,896 1,927
Ambatovy Joint Venture (40% basis) 134 - 197 -
----------------------------------------------------------------------------
Total 620 519 2,093 1,927
----------------------------------------------------------------------------
Fertilizer (tonnes)
Moa Joint Venture (50% basis),
Fort Site (100% basis) 62,968 65,286 263,918 238,535
Ambatovy Joint Venture (40% basis) 6,329 - 6,329 -
----------------------------------------------------------------------------
Total 69,297 65,286 270,247 238,535
----------------------------------------------------------------------------
Sales(1)
Nickel (thousands of pounds, 50%
basis) 9,694 10,166 37,754 38,088
Cobalt (thousands of pounds, 50%
basis) 1,027 1,128 4,123 4,249
Fertilizer (tonnes) 65,121 61,808 183,493 165,208
Reference prices(1)
Nickel (US$/lb) 7.70 8.30 7.95 10.36
Cobalt (US$/lb)(2) 11.95 14.18 13.48 16.44
Realized prices(1)
Nickel ($/lb) 7.49 8.60 7.82 10.14
Cobalt ($/lb) 11.14 14.18 12.94 15.82
Unit operating costs (US$/lb) (1)
Mining, processing and refining
costs 6.57 6.29 6.55 6.12
Third-party feed costs 0.12 0.10 0.10 0.15
Cobalt by-product credits (1.19) (1.54) (1.41) (1.78)
Other (0.30) (0.44) (0.30) (0.14)
----------------------------------------------------------------------------
Net direct cash costs of nickel(3) 5.20 4.41 4.94 4.35
----------------------------------------------------------------------------
Natural gas ($/GJ) 3.18 3.11 2.39 3.50
Fuel oil (US$/tonne) 636 656 666 617
Sulphur (US$/tonne) 253 252 263 239
Sulphuric acid (US$/tonne) 176 197 185 190
Revenue ($ millions)
Nickel 72.6 87.4 295.4 386.2
Cobalt 11.5 16.0 53.4 67.2
Fertilizer, other 37.2 34.3 115.9 97.0
Metal marketing(4) 17.1 - 17.1 -
----------------------------------------------------------------------------
Total revenue 138.4 137.7 481.8 550.4
----------------------------------------------------------------------------
Adjusted EBITDA ($ millions)(5) 29.9 35.7 125.8 200.4
Earnings from operations and
associate ($ millions) 19.0 23.1 87.6 166.3
Spending on capital ($ millions)(1) 13.6 21.4 31.9 44.7
----------------------------------------------------------------------------
(1) Sales volumes, reference and realized prices, unit operating costs and
spending on capital do not include the impact of the Ambatovy Joint
Venture.
(2) Average Metal Bulletin - Low Grade Cobalt published price.
(3) Net direct cash costs of nickel after cobalt and other by-product
credits.
(4) Under the Ambatovy Joint Venture agreements, the Corporation
established a marketing organization to buy, market and sell certain
Ambatovy nickel production.
(5) For additional information see the 'Non-IFRS Measure - Adjusted EBITDA'
section of this release.
Consolidated production of mixed sulphides (which is presented on a contained
nickel + cobalt basis) and finished metal for both the fourth-quarter and
full-year 2012 was higher than the prior-year periods, primarily reflecting the
addition of Ambatovy production, commencing September 2012, to the relatively
stable production rates achieved at the Moa Joint Venture. Total mixed sulphides
production for fourth-quarter 2012 was 14,453 tonnes (4,969 tonnes Ambatovy,
9,484 tonnes Moa, 100% basis), which was 55% higher than 2011. Full-year 2012
mixed sulphides production was 47,026 tonnes (8,972 tonnes Ambatovy, 38,054
tonnes Moa, 100% basis), 22% higher than full-year 2011.
Fourth-quarter 2012 finished nickel production of 12,281 tonnes (3,403 tonnes
Ambatovy, 8,878 tonnes Moa, 100% basis) was 34% higher than fourth-quarter 2011.
Fourth-quarter 2012 finished cobalt production was 1,306 tonnes (334 tonnes
Ambatovy, 972 tonnes Moa, 100% basis), or 26% higher than the prior-year period.
The addition of Ambatovy production was partially offset by the impact of lower
availability of third-party nickel feed in the Moa Joint Venture. Full-year 2012
finished nickel production of 39,958 tonnes (5,695 tonnes Ambatovy, 34,263
tonnes Moa, 100% basis), was 16% higher than in 2011, and finished cobalt
production of 4,285 tonnes (493 tonnes Ambatovy, 3,792 tonnes Moa, 100% basis),
was 11% higher than full-year 2011. The addition of finished metal production
from Ambatovy during the year was partially offset by lower finished metal
production in the Moa Joint Venture, due mainly to reduced mining equipment
availability and lower availability of third-party nickel feed.
Fertilizer production (50% Moa Joint Venture, 100% Fort Site, 40% Ambatovy) was
higher for fourth-quarter 2012 (6% or 4,011 tonnes), and significantly higher
(13% or 31,712 tonnes) for full-year 2012, compared to the prior-year periods,
respectively, primarily reflecting the addition of Ambatovy fertilizer
production in Madagascar and higher production levels in Canada (Moa Joint
Venture and Fort Site). Canadian production was increased to meet stronger
demand in the Western Canadian market relative to 2011.
Consolidated sales volumes of finished nickel, finished cobalt and fertilizer
for fourth-quarter and full-year 2012 only reflect sales from the Moa Joint
Venture and Fort Site operations. Finished metal and fertilizer sold from the
Ambatovy Joint Venture will not be categorized as sales volumes until the
declaration of commercial production (defined as 70% of ore throughput of
nameplate capacity in the PAL circuit). Fourth-quarter and full-year 2012
finished metals sales volumes from the Moa Joint Venture were lower than the
prior-year periods, consistent with the production trends, described above.
Finished nickel sales volumes were 5% (472,000 lbs, 50% basis) lower for the
quarter and 1% (334,000 lbs, 50% basis) lower for the full-year. Finished cobalt
sales volumes were 9% (101,000 lbs, 50% basis) lower for fourth-quarter 2012 and
3% (126,000 lbs, 50% basis) lower for full-year 2012 compared to the prior-year
periods.
Fertilizer sales volumes (50% Moa Joint Venture, 100% Fort Site), were higher
for fourth-quarter (5% or 3,313 tonnes) and full-year 2012 (11% or 18,285
tonnes), compared to the prior-year periods, driven by stronger demand in the
Western Canadian agricultural market.
Average metals reference prices were lower for fourth-quarter and full-year 2012
compared to the prior-year periods, as global production continued to outpace
demand. The average nickel reference price was 7% (US$0.60/lb) lower in
fourth-quarter 2012 and 23% (US$2.41/lb) lower in full-year 2012 than in the
comparable 2011 periods. The average cobalt reference price was 16% (US$2.23/lb)
lower for fourth-quarter 2012 and 18% (US$2.96/lb) lower for full-year 2012,
compared to 2011.
The net direct cash cost of nickel in the Moa Joint Venture for fourth-quarter
2012 was 18% (US$0.79/lb) higher than fourth-quarter 2011 due to a lower cobalt
by-product credit (resulting from lower pricing and sales volumes), higher
maintenance costs at the mine, and the variability resulting from the timing of
realized nickel prices relative to the nickel reference price. The increase in
the full-year net direct cash cost of nickel (14% or US$0.59/lb) in 2012
compared to 2011, was primarily due to higher input commodity costs (mainly fuel
oil and sulphur), and a lower cobalt by-product credit (resulting from lower
pricing and sales volumes), partially offset by a higher fertilizer by-product
credit.
Spending on capital in fourth-quarter 2012 for the Moa Joint Venture was 36%
($7.8 million, 50% basis) lower than the prior-year period, due to delays
related to the execution of capital projects. Spending on capital for full-year
2012 was 29% ($12.8 million, 50% basis) lower than in full-year 2011, reflecting
the capital spending deferral implemented earlier in 2012 and delays related to
the execution of capital projects.
Ambatovy Update
Ramp-up of the Ambatovy Joint Venture facililties continued to progress well
during the quarter. Beginning in October 2012, the PAL circuit achieved a 55%
ore throughput rate for a 30-day period. A 70% throughput rate in the PAL
circuit is required for the declaration of commercial production. Total
operating time in the PAL circuit of 5,352 operating hours during
fourth-quarter, represented a 39% throughput rate and a 1,233 hour increase when
compared to third-quarter 2012. In January 2013, the ore throughput rate in the
PAL circuit averaged 46%.
Total capital costs for Ambatovy remained US$5.3 billion (100% basis), below the
US$5.5 billion (100% basis) estimate. Total project costs for fourth-quarter
2012 were US$312.8 million (100% basis), 84% higher than the prior quarter, as
working capital demands increased during fourth-quarter 2012 as a result of the
successful ramp-up of the facilities. Cumulative total project costs to December
31, 2012 were US$6.8 billion (100% basis), including financing charges, working
capital and foreign exchange, and will continue to vary until commercial
production is declared. The most significant variability in total project costs
is most likely to arise from the working capital component and the offsetting
production revenue component.
During fourth-quarter 2012, a total of US$312.5 million (100% basis) in funding
was provided by the Ambatovy Joint Venture partners, 84% ($142.5 million, 100%
basis) higher than in third-quarter 2012. The increase is primarily due to a
requirement that Ambatovy maintain in its accounts funds to pay approximately
three months of local expenses and financing charges. Sherritt's 40% share of
the fourth-quarter 2012 funding (US$125.0 million) was sourced from cash on
hand.
COAL
Twelve months ended
December 31,
($ millions unless otherwise noted) Q4 2012 Q4 2011 2012 2011
----------------------------------------------------------------------------
Production (millions of tonnes)
Prairie Operations 8.3 9.8 31.2 32.7
Mountain Operations 1.0 1.3 3.7 4.4
Sales (millions of tonnes)
Prairie Operations 8.3 8.5 30.8 32.0
Mountain Operations 0.8 1.3 3.5 4.4
Realized prices ($/tonne)
Prairie Operations(1) 17.31 16.66 17.48 16.31
Mountain Operations 98.21 110.36 101.65 101.61
Unit operating costs ($/tonne)
Prairie Operations(1) 14.80 12.98 14.91 13.87
Mountain Operations 84.31 75.13 86.48 79.61
Revenue ($ millions)
Prairie Operations
Mining revenue 151.3 148.6 568.9 547.5
Coal royalties 9.3 10.2 40.2 39.3
Potash royalties 3.5 4.1 13.3 18.9
Mountain Operations and other assets 77.9 140.4 352.6 444.8
----------------------------------------------------------------------------
Total revenue 242.0 303.3 975.0 1,050.5
----------------------------------------------------------------------------
Adjusted EBITDA ($ millions)(2)
Prairie Operations 34.5 46.7 138.2 134.7
Mountain Operations and other assets 9.5 42.3 43.6 89.5
----------------------------------------------------------------------------
Total Adjusted EBITDA 44.0 89.0 181.8 224.2
----------------------------------------------------------------------------
Earnings (loss) from operations ($
millions) (10.1) 48.4 30.3 104.5
Spending on capital ($ millions)
Prairie Operations 18.8 29.5 69.1 86.9
Mountain Operations and other assets 15.6 17.1 60.2 34.9
----------------------------------------------------------------------------
Total spending on capital 34.4 46.6 129.3 121.8
----------------------------------------------------------------------------
(1) Prairie Operations realized pricing and unit operating costs exclude
royalties and the results of the char and activated carbon businesses.
(2) For additional information see the 'Non-GAAP Measure - Adjusted EBITDA'
section of this release.
Production volumes for fourth-quarter and full-year 2012 in Prairie Operations
were 15% (1.5 million tonnes) and 5% (1.5 million tonnes) lower than the
prior-year periods, mainly due to decreased customer demand, particularly at the
Highvale mine. Production volumes at Mountain Operations were 23% (0.3 million
tonnes) lower for fourth-quarter 2012 and 16% (0.7 million tonnes) lower for
full-year 2012, when compared to the prior-year periods, as production volumes
at the Obed Mountain mine were reduced to achieve an optimal thermal export
sales mix. In November, operations at the Obed Mountain mine were suspended due
to weak thermal export prices and an expected increase in operating costs in new
mining areas.
Sales volumes for fourth-quarter and full-year 2012 in Prairie Operations were
2% (0.2 million tonnes) and 4% (1.2 million tonnes) lower when compared to the
prior-year period, reflecting the production trends discussed above.
Fourth-quarter and full-year 2012 sales volumes at Mountain Operations were 38%
(0.5 million tonnes) and 21% (0.9 million tonnes) lower, respectively,
reflecting the reduction in Obed Mountain mine production. In addition, in
December 2012, damage to a berth at Westshore Terminals ("Westshore") reduced
Sherritt's shipping capacity at the port to 46% for an extended period of time.
Westshore is the primary port for Mountain Operations export. Sherritt Coal
mitigated the impact of the incident by utilizing contractual capacity at Ridley
Terminals as well as at Westshore Terminals through Berth 2. Even with
mitigation efforts, the restricted capacity at Westshore resulted in the
reduction of fourth-quarter 2012 sales volumes by approximately 0.4 million
tonnes (or $4.5 million in Adjusted EBITDA). Westshore's Berth 1 was reopened on
February 8, 2013. While operations at Berth 1have resumed, the incident will
have an impact on sales volumes in first-quarter 2013. Management expects any
backlog of material will be sold over the course of the year.
Realized pricing (excluding royalties, char and activated carbon) for
fourth-quarter 2012 and full-year 2012 at Prairie Operations was 4%
($0.65/tonne) and 7% ($1.17/tonne) higher than the comparable prior-year
periods, primarily due to higher cost recoveries earned, and lower sales volumes
generated, at a contract mine. Realized pricing at Mountain Operations for
fourth-quarter 2012 was 11% ($12.15/tonne) lower for fourth-quarter 2012, but
marginally higher for full-year 2012, compared to the prior-year periods,
despite weaker prices in the export thermal coal market.
Unit operating costs at Prairie Operations were higher for fourth-quarter 2012
(14% or $1.82/tonne) and full-year 2012 (7% or $1.04/tonne) relative to
prior-year periods, due mainly to the impact of both lower production volumes
and higher operating costs at a contract mine. Unit operating costs at Mountain
Operations for fourth-quarter 2012 were 12% ($9.18/tonne) higher than
fourth-quarter 2011, and full-year 2012 costs were 9% ($6.87/tonne) higher than
2011, mainly due to the impact of higher production costs and lower production
volumes at the Obed Mountain mine.
Royalties for fourth-quarter 2012 were 10% ($1.5 million) lower than the
prior-year period, as potash royalties were affected by lower production volumes
and coal royalties were negatively affected by the timing of mining in royalty
assessable areas. Royalties for full-year 2012 were 8% ($4.7 million) lower than
full-year 2011, primarily due to a 30% ($5.6 million) reduction in potash
royalties, which reflected both lower potash pricing and lower potash production
volumes.
Spending on capital at Prairie Operations for fourth-quarter 2012 and full-year
2012 was 36% ($10.7 million) and 20% ($17.8 million) lower, respectively, than
in the comparable prior-year periods, reflecting the timing of equipment
arrivals at the mines and efforts to reduce capital spending. Spending on
capital at Mountain Operations was 9% ($1.5 million) lower for fourth-quarter
2012 compared to fourth-quarter 2011, due to the timing of lease expenditures.
Spending on capital for full-year 2012 was 72% ($25.3 million) higher than in
2011, and was primarily directed to loading equipment and infrastructure
development in the Yellowhead Tower and Robb Trend mining areas.
Operations Update
In January 2013, Prairie Operations and the customer/owner of the Highvale mine,
agreed to transfer operations to the customer/owner and terminate the Highvale
mine mining contract. On January 17, 2013 the customer/owner assumed
responsibility for direct mining activities with a transition process expected
to be completed over the next six months. The mining contract contributed $8.1
million (2%) of the Corporation's full-year 2012 Adjusted EBITDA.
As part of the transition agreement the Corporation will receive an estimated
$12 million in cash from the customer/owner upon transfer of mobile equipment at
net-book-value following payment of the associated finance lease obligations. No
accounting gain or loss will result from this net tangible asset transfer. In
addition, a non-cash gain will be recognized upon transfer of the defined
benefit pension obligation to the customer/owner that will be partly offset by a
non-cash write-off of $17 million for intangible assets associated with this
mining contract. Measurement of this gain will be based on the actuarial
valuation of the plan at the time of transfer. Based on the December 31, 2012
actuarial valuation performed in accordance with IAS 19 (2011), which was
adopted by the Corporation on January 1, 2013, this defined pension obligation
gain is estimated to be $40 million.
OIL AND GAS
Twelve months ended
December 31,
($ millions unless otherwise noted) Q4 2012 Q4 2011 2012 2011
----------------------------------------------------------------------------
Production (boepd)(1)
Gross working-interest - Cuba(2),
(3) 19,220 21,023 20,164 20,888
Net working-interest(4)
Cuba - cost recovery 2,764 2,307 2,871 3,430
Cuba - profit oil 7,405 8,422 7,782 7,856
----------------------------------------------------------------------------
Cuba - total 10,169 10,729 10,653 11,286
Spain 301 398 332 416
Pakistan 346 359 351 355
----------------------------------------------------------------------------
Total net working-interest 10,816 11,486 11,336 12,057
----------------------------------------------------------------------------
Reference prices (US$/bbl)
U.S. Gulf Coast Fuel Oil No.6 94.23 98.22 99.31 95.41
Brent crude 111.06 110.34 112.44 112.14
Realized prices
Cuba ($/bbl) 67.84 72.93 72.21 68.47
Spain ($/bbl) 108.03 111.28 111.42 110.16
Pakistan ($/boe) 8.07 8.11 8.09 8.03
----------------------------------------------------------------------------
Weighted average ($/boe) 67.04 72.30 71.38 68.13
----------------------------------------------------------------------------
Unit operating costs
Cuba ($/bbl) 13.68 13.59 12.69 12.07
Spain ($/bbl) 54.93 45.74 49.96 46.51
Pakistan ($/boe) 3.23 4.79 3.48 3.44
----------------------------------------------------------------------------
Weighted average ($/boe) 14.52 14.43 13.58 13.01
----------------------------------------------------------------------------
Revenue ($ millions) 68.2 74.4 300.9 304.9
Adjusted EBITDA ($ millions)(5) 50.5 54.7 232.7 235.9
Earnings from operations ($
millions) 31.8 37.8 162.1 170.0
Spending on capital ($ millions)(6) 12.8 12.3 45.2 62.6
----------------------------------------------------------------------------
(1) Oil production is stated in barrels of oil per day ("bopd"). Natural
gas production is stated in barrels of oil equivalent per day
("boepd"), which is converted at 6,000 cubic feet per barrel.
(2) In Cuba, Oil and Gas delivers all of its gross working-interest oil
production to Union Cubapetroleo (CUPET) at the time of production.
Gross working-interest oil production excludes: (i) production from
wells for which commercial viability has not been established in
accordance with production-sharing contracts, and (ii) working-interest
of other participants in the production sharing contracts.
(3) Gross working-interest oil production is allocated between Oil and Gas
and CUPET in accordance with production-sharing contracts. The
Corporation's share, referred to as 'net working-interest oil
production', includes: (i) cost recovery oil (based upon the
recoverable capital and operating costs incurred by Oil and Gas under
each production-sharing contract), and (ii) a percentage of profit oil
(gross working-interest production remaining after cost recovery oil is
allocated to Oil and Gas). Cost recovery pools for each production-
sharing contract include cumulative recoverable costs, subject to
certification by CUPET, less cumulative proceeds from cost recovery oil
allocated to Oil and Gas. Cost recovery revenue equals capital and
operating costs eligible for recovery under the production-sharing
contracts.
(4) Net working-interest production (equivalent to net sales volume)
represents the Corporation's share of gross working-interest
production.
(5) For additional information see the 'Non-GAAP Measure - Adjusted EBITDA'
section of this release.
(6) Exploration and evaluation spending incurred prior to the technical
feasibility and commercial viability of extracting the resources is
recorded as an intangible asset.
Gross working-interest (GWI) oil production in Cuba decreased 9% (1,803 bopd)
for fourth-quarter 2012 and 3% (724 bopd) for full-year 2012, compared to the
prior-year periods, primarily due to natural reservoir declines, partially
offset by production from new wells drilled and the optimization of production
from existing wells. Cost-recovery oil production in Cuba for fourth-quarter
2012 was 20% (457 bopd) higher than fourth-quarter 2011, due to higher cost
recovery expenditures and lower realized oil prices. Cost recovery oil
production decreased 16% (559 bopd) for full-year 2012, primarily due to higher
oil prices and lower cost-recovery spending. Profit-oil production, which
represents Sherritt's share of production after cost recovery volumes are
deducted from GWI volumes, decreased 12% (1,017 bopd) for fourth-quarter 2012
and 1% (74 bopd) for full-year 2012, compared to the same periods in 2011. Net
working-interest production in Spain was 24% (97 bopd) lower for fourth-quarter
2012 and 20% (84 bopd) lower for full-year 2012, compared to the prior-year
periods, due to natural reservoir declines and the loss of production from a
well that was shut-in and is currently being evaluated. Production in Pakistan
was marginally lower in fourth-quarter and full-year 2012, compared to the
prior-year periods, due to natural reservoir declines.
The average-realized price for oil produced in Cuba was 7% ($5.09/bbl) lower in
fourth-quarter 2012 compared to the prior-year period, reflecting the impact of
both lower reference prices and a stronger Canadian dollar relative to the U.S.
dollar. Full-year 2012 realized prices in all jurisdictions were higher than in
full-year 2011, as a result of higher reference prices and the impact of a
weaker Canadian dollar relative to the U.S. dollar.
Unit operating costs in Cuba during fourth-quarter 2012 were consistent with the
prior-year period, while full-year 2012 unit operating costs were 5% ($0.62/bbl)
higher than full-year 2011, due to lower net production. Unit operating costs in
Spain increased 20% ($9.19/bbl) in fourth-quarter 2012 and 7% ($3.45/bbl) in
full-year 2012, compared to the prior-year periods due to lower net production,
partly offset by the effect of a stronger Canadian dollar relative to the Euro.
Spending on capital for fourth-quarter 2012 was marginally ($0.5 million) higher
than in fourth-quarter 2011. Spending on capital was 28% ($17.4 million) lower
for full-year 2012 compared to 2011, due to reduced development drilling
expenditures and a decrease in facilities, equipment and inventory spending.
Full-year 2012 spending on capital was directed mainly toward development
drilling activities ($26.1 million), facility improvements ($2.1 million), as
well as equipment and inventory purchases ($9.5 million). During fourth-quarter
2012, two development wells were initiated and two development wells were
completed. During 2012, six development wells were drilled and completed in
Cuba, with the drilling of a seventh well in progress. Of the six wells
completed, four are in production. Exploration spending in 2012 continued to be
focused in the United Kingdom North Sea prospect area and in the Alboran Sea
prospect area off the southern coast of Spain. During 2012, the Corporation
relinquished three licenses in the United Kingdom North Sea prospect area
resulting in an impairment loss of $2.2 million. In 2011, the Corporation
discontinued exploration in the Cuban Block 8 prospect area. In addition, a
Cuban production-sharing agreement related to the Varadero enhanced oil recovery
project expired during 2011. In 2011, these events in Cuba resulted in
impairment losses of $2.0 million and $2.8 million respectively.
POWER
Twelve months ended
December 31,
($ millions unless otherwise noted) Q4 2012 Q4 2011 2012 2011
----------------------------------------------------------------------------
Electricity sold (GWh, 33 1/3%
basis) 162 157 628 618
Realized price ($/MWh) 40.83 42.51 41.32 41.00
Unit operating cost ($/MWh)
Base(1) 13.38 16.30 14.51 17.35
Non-base(2) 4.23 (0.14) 2.11 2.70
----------------------------------------------------------------------------
Total unit cash operating costs 17.61 16.16 16.62 20.05
----------------------------------------------------------------------------
Net capacity factor (%) 77 69 69 71
Revenue ($ millions) 17.0 18.6 70.0 60.0
Adjusted EBITDA ($ millions)(3) 3.8 7.4 22.0 25.1
Earnings from operations ($
millions) 1.1 4.7 11.0 14.5
Spending on capital ($ millions, 33
1/3% basis)(4) 1.7 1.0 6.1 5.7
Spending on projects ($ millions, 33
1/3% basis)(5) 7.4 8.3 32.0 21.7
----------------------------------------------------------------------------
Total spending on capital and
projects 9.1 9.3 38.1 27.4
----------------------------------------------------------------------------
(1) Base costs relate to the operations in Cuba and do not include the
impairment of receivables that relates to the operations in Madagascar.
(2) Costs incurred at the Boca de Jaruco and Puerto Escondido facilities
that otherwise would have been capitalized if these facilities were not
accounted for as service concession arrangements.
(3) For additional information see the 'Non-GAAP Measure - Adjusted EBITDA'
section of this release.
(4) Spending on capital includes sustaining capital at the Varadero site as
well as capitalized interest relating to the 150 MW Boca de Jaruco
Combined Cycle Project.
(5) Sherritt provides 100% of the funding for the 150 MW Boca de Jaruco
Combined Cycle Project and accounts for the Project as a "Service
Concession Arrangement". As a result, two thirds of the project
spending (relating to the non-Sherritt partners' share) is recorded as
a loan receivable. The remaining one third of project spending
(Sherritt's share) is recorded as a construction cost, and is offset by
the same amount recorded as construction revenue.
Electricity production for fourth-quarter 2012 and full-year 2012 were 3% (5
MWh, 33 1/3% basis) and 2% (10 MWh, 33 1/3% basis) higher than the respective
prior-year periods, mainly due to a small increase in gas supply in the quarter
and year, as well as a decrease in maintenance activities in 2012.
The average realized price of electricity was 4% ($1.68/MWh) lower in
fourth-quarter 2012 compared to the prior-year period, due to the stronger
Canadian dollar relative to the U.S. dollar, while the average realized price
for full-year 2012 was largely unchanged compared to 2011.
Total unit operating costs increased 9% ($1.45/MWh) in fourth-quarter 2012,
compared to the prior-year period, due to major maintenance activity at Boca de
Jaruco, partially offset by a decrease in routine repairs and maintenance costs.
Total unit operating costs decreased by 17% ($3.43/MWh), compared to full-year
2011 primarily due to a decrease in maintenance costs and higher major
inspection costs at Puerto Escondido in 2011.
Spending on capital for fourth-quarter 2012 was 70% ($0.7 million) higher than
the prior-year period, mainly due to the difference in capitalized interest on
the 150 MW Boca de Jaruco Combined Cycle Project. Full-year 2012 spending on
capital was 7% ($0.4 million) higher than full-year 2011, due to the increase in
capitalized interest that was only partially offset by a reduction in sustaining
capital expenditures. Spending on sustaining capital was largely directed to the
purchase of equipment and major long-term spare parts. Excluding capitalized
interest, spending on sustaining capital in 2011 was higher as a result of major
turbine maintenance at the Varadero facility.
150 MW Boca de Jaruco Combined Cycle Project
Spending on the Project for the quarter was 11% ($2.7 million, 100% basis) lower
than in fourth-quarter 2011, while full-year 2012 spending was 47% ($30.9
million, 100% basis) higher than full-year 2011, reflecting the increased level
of project activity in 2012. Cumulative spending on the Project at December 31,
2012 was $246.0 million (100% basis). The Project is scheduled to begin
production in first-half 2013. The total project cost estimate remains $271.0
million.
CASH, DEBT AND FINANCING
Cash, cash equivalents and short-term investments were $526.8 million at
December 31, 2012, including $8.6 million held by Energas S.A. (33 1/3% basis)
and $23.6 million (50% basis) held by the Moa Joint Venture. Cash, cash
equivalents and short-term investments held by the Ambatovy Joint Venture are
included in "Investment in an Associate" and were $52.4 million (40% basis) as
at December 31, 2012.
Total long-term debt at December 31, 2012 was $2.0 billion, including
approximately $0.8 billion related to non-recourse Ambatovy partner loans to
Sherritt. At December 31, 2012, Sherritt had approximately $0.6 billion of
credit available under various facilities.
Outlook
Projected production volumes, royalties and spending on capital for full-year
2013 are shown below.
Actual for the Projected for
year ended the year ending
December 31, December 31,
(units as noted) 2012 2013
----------------------------------------------------------------------------
Production volumes
Mixed sulphides (tonnes, Ni+Co contained,
100% basis)
Moa Joint Venture 38,054 38,000
Ambatovy Joint Venture 8,972 40,000
----------------------------------------------------------------------------
Total 47,026 78,000
----------------------------------------------------------------------------
Nickel, finished (tonnes, 100% basis)
Moa Joint Venture 34,263 34,000
Ambatovy Joint Venture 5,695 35,000
----------------------------------------------------------------------------
Total 39,958 69,000
----------------------------------------------------------------------------
Cobalt, finished (tonnes, 100% basis)
Moa Joint Venture 3,792 3,350
Ambatovy Joint Venture 493 3,000
----------------------------------------------------------------------------
Total 4,285 6,350
----------------------------------------------------------------------------
Coal - Prairie Operations (millions of
tonnes) 31 22
Coal - Mountain Operations (millions of
tonnes) 3.7 3.5
Oil - Cuba (gross working-interest, bopd) 20,164 18,000
Oil - All operations (net working-interest,
boepd) 11,336 10,700
Electricity (GWh, 33 1/3% basis) 628 630
Royalties ($ millions)
Coal 40 40
Potash 13 11
Spending on capital ($ millions)
Metals - Moa Joint Venture (50% basis),
Fort Site (100% basis)(1) 32 51
Metals - Ambatovy Joint Venture (40% basis) - 29
Coal - Prairie Operations 69 76
Coal - Mountain Operations 60 52
Oil and Gas - Cuba(2) 38 54
Oil and Gas - Other(2) 7 18
Power (33 1/3% basis)(3) 6 5
----------------------------------------------------------------------------
Spending on capital (excluding Projects and
Corporate) 212 285
----------------------------------------------------------------------------
Spending on projects
Metals - Ambatovy Joint Venture (US$
millions, 100% basis) 73 -
Power - 150 MW Boca de Jaruco ($ millions,
100% basis)(4) 96 25
----------------------------------------------------------------------------
(1) Spending on capital relating to the Corporation's 50% share of the Moa
Joint Venture and to the Corporation's 100% interest in the fertilizer
and utilities assets in Fort Saskatchewan.
(2) Exploration and evaluation spending incurred prior to the technical
feasibility and commercial viability of extracting the resources is
recorded as an intangible asset.
(3) Spending on capital for Power includes sustaining capital at the
Varadero site as well as capitalized interest in respect of the 150 MW
Boca de Jaruco Combined Cycle Project.
(4) Sherritt provides 100% of the funding for the 150 MW Boca de Jaruco
Combined Cycle Project and accounts for the Project as a "Service
Concession Arrangement". As a result, two thirds of the project
spending (relating to the non-Sherritt partners' share) is recorded as
a loan receivable. The remaining one third of project spending
(Sherritt's share) is recorded as a construction cost.
-- In Metals, production guidance (for mixed sulphides and finished metal)
reflects the first full year of contribution from both operations, the
Moa Joint Venture (Cuba/Canada) and the Ambatovy Joint Venture
(Madagascar). While Moa Joint Venture production guidance is largely
consistent with 2012 levels, Ambatovy production levels are expected to
ramp up over the course of 2013, reaching full capacity rates by the end
of the year. Spending on capital of $80 million (Sherritt's share) for
all operations reflects sustaining expenditures in all jurisdictions.
-- In Metals-Sulawesi Project, the Corporation expects to fund exploration
and development activities to meet the US$30 million requirement under
the Project's earn-in agreement by October 2013. This requirement, among
others, must be satisfied in order for Sherritt to obtain ownership of a
46% economic interest in the Project. After spending US$30 million and
obtaining its ownership interest in the Project, Sherritt may elect to
spend an additional US$80 million by June 2017, directed towards
additional exploration drilling and producing a feasibility study. If
Sherritt does not elect to spend additional funds, or does not complete
the additional spending, the Corporation would forfeit its ownership
interest.
-- In Coal-Prairie Operations, full-year 2013 production is expected to be
22 million tonnes, 29% (9 million tonnes) lower than 2012, primarily due
to the transfer of mining operations at the Highvale mine to the
customer/owner. Full-year 2013 spending on capital at Prairie Operations
is expected to be 10% ($7 million) higher than the prior year, largely
due to pre-strip mining equipment at the Paintearth mine.
-- In Coal-Mountain Operations, full-year 2013 production is expected to be
5% (0.2 million tonnes) lower than 2012, primarily due to the suspension
of operations at the Obed Mountain mine in November 2012. Full-year 2013
spending on capital at Mountain Operations is expected to be 13% ($8
million) lower than 2012, mainly due to comparatively lower loading
equipment capital additions.
-- In Oil and Gas, full-year 2013 GWI production in Cuba is expected to be
lower (11% or 2,164 bopd) than in 2012, reflecting the natural reservoir
decline rates and the impact of a limited drilling program in 2012 and
2013. Total net working-interest production for full-year 2013 is
expected to follow the same trend. Spending on capital for 2013 is
expected to increase 42% ($16 million) in Cuba and 157% ($11 million) in
other jurisdictions, reflecting increased spending on equipment,
facilities and workovers in Cuba as well as seismic work in the United
Kingdom North Sea prospect area and in the Alboran Sea prospect area off
the southern coast of Spain.
-- In Power, full-year 2013 production is expected to be consistent with
2012 levels. Full-year 2013 spending on capital is expected to be
relatively unchanged from the prior-year.
-- In Power-150 MW Boca de Jaruco Combined Cycle Project, initial
production is scheduled to commence in first-half 2013. Sherritt's
estimate of the total project cost remains $271.0 million.
Non-GAAP Measure - Adjusted EBITDA
Management uses Adjusted EBITDA to monitor financial performance and provide
additional information to investors and analysts. Adjusted EBITDA does not have
a standard definition under IFRS and should not be considered in isolation or as
a substitute for measures of performance prepared in accordance with IFRS. As
Adjusted EBITDA does not have a standardized meaning, it may not be comparable
to similar measures provided by other companies.
The Corporation defines Adjusted EBITDA as net earnings (loss) from operations
and associate as reported in the financial statements, adjusted for amounts
included in net earnings or net loss during the period for depletion,
depreciation and amortization; impairment charges for property, plant and
equipment, intangible assets, goodwill and investments; gain or loss on disposal
of property, plant and equipment; and the Corporation's share of income or loss
of associate.
About Sherritt
Sherritt is a world leader in the mining and refining of nickel from lateritic
ores with projects and operations in Canada, Cuba, Indonesia and Madagascar. The
Corporation is the largest thermal coal producer in Canada and is the largest
independent energy producer in Cuba, with extensive oil and power operations
across the island. Sherritt licenses its proprietary technologies and provides
metallurgical services to mining and refining operations worldwide. The
Corporation's common shares are listed on the Toronto Stock Exchange under the
symbol "S".
Forward-Looking Statements
This press release contains certain forward-looking statements. Forward-looking
statements can generally be identified by the use of statements that include
such words as "believe", "expect", "anticipate", "intend", "plan", "forecast",
"likely", "may", "will", "could", "should", "suspect", "outlook", "projected",
"continue" or other similar words or phrases. Specifically, forward-looking
statements in this document include statements respecting certain future
expectations about capital expenditures; capital project commissioning and
completion dates; commodity and product prices and demand; production volumes;
realized prices for production; future reserves and mine life; environmental
rehabilitation provisions; availability of regulatory approvals; earnings and
revenues; compliance with applicable environmental laws and regulations; debt
repayments; compliance with financial covenants; sufficiency of working capital
and capital project funding; the impact of regulations related to greenhouse gas
emissions and credits; collection of accounts receivable; and certain corporate
objectives, plans or goals for 2013, including development and exploratory wells
and enhanced oil recovery in Cuba. These forward-looking statements are not
based on historic facts, but rather on current expectations, assumptions and
projections about future events. By their nature, forward-looking statements
require the Corporation to make assumptions and are subject to inherent risks
and uncertainties. There is significant risk that predictions, forecasts,
conclusions or projections will not prove to be accurate, that those assumptions
may not be correct and that actual results may differ materially from such
predictions, forecasts, conclusions or projections. The Corporation cautions
readers of this press release not to place undue reliance on any forward-looking
statement as a number of factors could cause actual future results, conditions,
actions or events to differ materially from the targets, expectations, estimates
or intentions expressed in the forward-looking statements.
Key factors that may result in material differences between actual results and
developments and those contemplated by this press release include global
economic conditions, and business, economic and political conditions in Canada,
Cuba, Madagascar, Indonesia, and the principal markets for the Corporation's
products. Other such factors include, but are not limited to, uncertainties in
the development, construction and ramp-up of large mining, processing and
refining projects; risks related to the availability of capital to undertake
capital initiatives; changes in capital cost estimates in respect of the
Corporation's capital initiatives; risks associated with the Corporation's
joint-venture partners; future non-compliance with financial covenants;
potential interruptions in transportation; political, economic and other risks
of foreign operations; the Corporation's reliance on key personnel and skilled
workers; the possibility of equipment and other unexpected failures; the
potential for shortages of equipment and supplies; risks associated with mining,
processing and refining activities; uncertainty of gas supply for electrical
generation; uncertainties in oil and gas exploration; risks related to foreign
exchange controls on Cuban government enterprises to transact in foreign
currency; risks associated with the United States embargo on Cuba and the
Helms-Burton legislation; risks related to the Cuban government's ability to
make certain payments to the Corporation; drilling and development programs;
uncertainties in reserve estimates; risks associated with access to reserves and
resources; uncertainties in environmental rehabilitation provisions estimates;
the Corporation's reliance on significant customers; risks related to the
Corporation's corporate structure; foreign exchange and pricing risks;
uncertainties in commodity pricing; credit risks; competition in product
markets; the Corporation's ability to access markets; risks in obtaining
insurance; uncertainties in labour relations; uncertainties in pension
liabilities; the ability of the Corporation to enforce legal rights in foreign
jurisdictions; risks associated with future acquisitions; the ability of the
Corporation to obtain government permits; risks associated with government
regulations and environmental, health and safety matters; uncertainties in
growth management and other factors listed from time to time in the
Corporation's continuous disclosure documents. Statements relating to "reserves"
or "resources" are deemed to be forward-looking statements, as they involve
assessments based on certain estimates or assumptions. Readers are cautioned
that the foregoing list of factors is not exhaustive and should be considered in
conjunction with the risk factors described in this press release and the
Corporation's other documents filed with the Canadian securities authorities.
The Corporation may, from time to time, make oral forward-looking statements.
The Corporation advises that the above paragraph and the risk factors described
in this press release and in the Corporation's other documents filed with the
Canadian securities authorities should be read for a description of certain
factors that could cause the actual results of the Corporation to differ
materially from those in the oral forward-looking statements. The
forward-looking information and statements contained in this press release are
made as of the date hereof and the Corporation undertakes no obligation to
update publicly or revise any oral or written forward-looking information or
statements, whether as a result of new information, future events or otherwise,
except as required by applicable securities laws. The forward-looking
information and statements contained herein are expressly qualified in their
entirety by this cautionary statement.
FOR FURTHER INFORMATION PLEASE CONTACT:
Sherritt International Corporation
Investor Relations
416.935.2451 or Toll Free: 1.800.704.6698
investor@sherritt.com
www.sherritt.com
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