Higher realized nickel prices helped
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 partly due to the inclusion of Luscar Coal, in which Sherritt acquired a half-interest in May 2001. Second-quarter revenue from the coal business was $73.4 million, more than doubling the $30.2 million generated a year earlier.
For the first six months of 2002, Sherritt earned just under $47 million (28 per share) on revenue of $402 million, compared with a profit of $37.3 million (25 per share) on $261 million in the first half of last year. The coal business contributed $106.1 million in revenue.
Sherritt expects the coal business to experience even better sales volumes for the balance of the year as power plants come back online after scheduled maintenance shutdowns during the first half of the year. The company also anticipates 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.
Nickel and cobalt production is expected to remain flat for the balance 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.
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