Sherritt announces spending cuts

Sherritt announces spending cuts



CUBA STANDARD — Following a major loss in the fourth quarter last year

and a small profit in the first quarter, Sherritt International Corp.

announced another loss for its second quarter. As a consequence, the

company said it will cut capital spending 13 percent this year.



For the three months that ended June 30, the company declared a net loss

of $10.7 million, compared to a net profit of $40.8 million in the same

quarter last year. Revenues dropped to $338.5 million from $377.1

million in the second quarter of 2012.



"We continue to recognize a positive medium- and long-term outlook for

all of our businesses, especially our base metals," said CEO David Pathe

in a press release, referring to nickel and cobalt. "In order to address

the near-term volatility and pressure in commodity markets, we have

chosen to reduce or defer our anticipated 2013 capital spending by

approximately 13 percent ($37 million) to maintain our financial

strength and flexibility."



The Toronto-based mining and energy concern is Cuba's largest foreign

private investor. According to Sherritt, $7 million worth of capital

spending cuts will be implemented at the Moa nickel joint venture in

eastern Cuba. In contrast, at its 150 mw Boca de Jaruco power plant,

Sherritt will more than double capital spending this year, to $23

million, "due to delays in completing the project."



Sherritt, which blamed declining commodity prices, lower nickel sales,

and write-offs at a nickel mining joint venture in Madagascar for

declining revenues and losses, saw its shares drop from $4.35 on July 30

to $3.95 upon the news. In early 2012, shares traded at a high of $6.50.



The Moa joint venture in Cuba reported lower nickel production volumes;

Sherritt blamed "minor mechanical issues, which were rectified during

the quarter." A lack of haul trucks at Moa in the first half of this

year was overcome in the second quarter; thanks to the second-quarter

delivery of the trucks, nickel production should rise again in the

second quarter, Sherritt said.



Oil production in Cuba was 2 percent lower than a year ago. Natural

reservoir declines were mostly offset by production increases from new

wells and optimized output from existing wells, the company said.



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