Quarterly loss for Sherritt

The balance sheet of Sherritt Gordon (TSE) tumbled into the red during the first quarter of the year. The metal refiner and fertilizer producer recorded a net loss of almost $2 million for the 3-month period, compared with a net profit of $16.5 million for the same period in 1989. President Charles Heinrich told shareholders at the annual meeting the metals division experienced the largest decline because of lower nickel prices and cost increases. The company, he said, realized an average nickel price of $3.74 per lb. during the quarter, compared with $9.17 for the same period last year.

The fertilizer division reported lower sales volumes and prices and was hurt by higher costs because of an unscheduled shutdown.

Heinrich, who joined Sherritt earlier this year from Alcan, said nickel feed supply is a problem.

“Arrangements are in place to process roughly 40 million lb. nickel this year and efforts continue on a worldwide basis to secure more feed for later this year,” he said. “But, unless additional feed supplies are contracted, we plan to shut down the refinery for up to two months this summer.”

The company’s nickel refinery at Fort Saskatchewan, Alta., has annual capacity of 55 million lb. Future plans call for a plant expansion to handle 75 million lb. per year. (Sherritt also operates a cobalt refinery at Fort Saskatchewan.)

Sherritt is looking to expand its research and development capabilities. Through an initiative known as Westaim, the company is hoping to build a group of specialty businesses dealing in advanced industrial materials. Expenditures of up to $140 million during a 5-year period are envisaged; the federal and Alberta governments will pick up half of the costs.

At the annual meeting, shareholders voted 53.5% in favor of a rights plan intended to make a hostile takeover bidder think twice about pursuing his plans.

An individual considered unfriendly by the board who acquires more than 20% of Sherritt’s voting shares would trigger the rights plan. Holders of the rights would be able to acquire common shares of the company at a 50% discount to the prevailing market price, which would act to dilute the number of shares outstanding, thereby making the takeover more expensive for the bidder.

Sherritt, which had net earnings of $32.2 million in 1989, is moving its head office operations from Toronto to Fort Saskatchewan.006 0508,0206,0304,0008, Sherritt Gordon (TSE) $000s except per share items Quarter ended Mar. 31 1990 1989 Revenue $87,230 $167,404 Net earnings (loss) (1,911 ) 16,522

per share (0.08 ) 0.62 *US dollars.004