Sherritt’s quarter coal-fired

Higher realized nickel and oil prices have helped Sherritt International (S-T) to improved second-quarter net earnings of $24.6 million.

The profit, which translates into 15 per diluted share, is a marked improvement on the year-ago net profit of $15 million (10 per share). Similarly, revenue between the two periods jumped by nearly $56 million to $217.6 million. Cash provided by operations (before working capital changes) rose by $5.9 million to $49.6 million.

The improved performance is also thanks to the inclusion of Luscar Coal, in which Sherritt acquired a half-interest in May 2001, for a full quarter. Second-quarter revenue from the coal business was $73.4 million, more than doubling the year-earlier $30.2 million.

For the first six months of 2002, Sherritt’s net earnings rang in just under $47 million (28 per share) on revenue of $402 million, compared with earnings of $37.3 million (25 per share) on $261 million. The coal business is again responsible for much of the increase chipping in about $106.1 million in revenue.

Operations provided $101.5 million (before working capital changes), up $13.8 million from the previous year.

Sherritt expects the coal business to experience even better sales volumes for the balance of the year as power plants come back on line after scheduled maintenance shutdowns during the first half of the year. The company also expects increased production from the Line Creek mine in British Columbia.

Second-quarter nickel and cobalt metal production rose from the previous year, at 4,140 tonnes nickel and 376 tonnes cobalt. Nickel and cobalt sulphide production edged up to 4,236 tonnes. The company realized US$7,076 per tonne for its nickel, up slightly from a year earlier, and US$7.62 per lb. for its cobalt, off 30%. During the recent quarter, nickel averaged US$6.945 per tonne on the London Metal Exchange and cobalt spot prices averaged US$7.64 per lb.

For the first six months of 2002, production rang in at 8,201 tonnes nickel, 768 tonnes cobalt, and 8,435 tonnes of mixed nickel and cobalt sulphides. Realized prices were little changed from the second quarter.

The metals business recorded operating earnings of $11.3 million on revenue of $84.8 million during the three months ended June 30, both significantly higher than a year earlier. Similarly, operating earnings climbed to $22.5 million on revenue of $141.4 million during the six-month period.

Nickel and cobalt production is expected to remain flat for the balance of the year.

The refrain was the same in the company’s oil and gas business where operating earnings rose to $24.2 million and $42 million in the quarter and half-year, respectively. Revenues jumped to $51.3 million and $94 million, respectively. Oil production is expected to remain relatively steady for the remainder of the year.

At the end of June, Sherritt had cash and short-term investments totalling $219.4 million. The company’s long-term debt decreased by $12.3 million to $247 million.