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 an annual adjusted loss of $60.0 million ($0.21 per share)
compared to adjusted earnings of $103.1 million ($0.35 per share) in 2012. On
December 24, 2013, Sherritt announced the sale of its Coal business for
estimated proceeds of $946 million. As a result of this transaction, the Coal
business has been reclassified as a discontinued operation, the net assets of
Coal were recognized at fair value and an impairment charge of $466.8 million
was recognized at year end. This adjustment, as well as other items affecting
earnings is described in the summary tables, below. The adjusted fourth-quarter
2013 net loss was $38.1 million ($0.13 per share), compared with an adjusted
loss of $4.6 million ($0.01 per share) in fourth-quarter 2012.
David Pathe, President and CEO, said, "Sherritt simplified its asset base,
increased its financial flexibility, reduced its cost structure and delivered
strong operating performance in our Metals and Oil and Gas businesses in 2013.
In 2014, we will focus on strengthening our balance sheet through debt and
additional cost reduction initiatives, while investing prudently in the areas of
core strengths - Metals and Cuba. Our efforts will be directed to building the
long-term competitiveness and value of our businesses, while maintaining our
financial flexibility in light of persistently challenging market conditions."
Highlights and Significant Items
-- Full-year 2013 finished nickel and cobalt production increased by 47%
and 26%, respectively, over 2012.
-- Affirmed strategic focus of the Corporation on the nickel and Cuban
businesses, where it has differentiating experience and expertise.
Consequently, in the fourth quarter, the Corporation entered into
agreements to divest the Coal business. Total consideration from the
Coal transaction of $946 million, including cash consideration of $793
million, will further enhance the financial flexibility of the core
businesses. Sherritt is seeking to close the Coal transaction at the end
of first-quarter 2014.
-- Further advanced the optimization of the existing core Metals business
with three major developments:
1. Ambatovy delivered average ore throughput of approximately 53% of
nameplate capacity during fourth-quarter 2013 -- the highest average
quarterly throughput recorded at the operations to date.
2. Ambatovy achieved commercial production, (70% of ore throughput
nameplate capacity in the PAL circuit, averaged over 30 days) in
January 2014.
3. Moa Joint Venture commenced the mobilization of resources for the
construction of the 2,000 tonne per day acid plant at Moa during the
quarter. Construction is scheduled to begin in third-quarter 2014,
and to be completed in late 2015, and is expected to result in a 20%
cost reduction in the existing business.
-- Optimized the core businesses through significant, and permanent, cost
structure reductions, increased financial flexibility and preservation
of liquidity for debt reduction and prudent investment:
1. Realized approximately $23 million in savings in general and
administrative and other costs.
2. Eliminated $20 million of previously planned capital spending and
deferred an additional $40 million of capital spending.
3. Targeting $33 million in cost reductions for 2014.
4. Notified our partner that Sherritt will not be pursuing the Sulawesi
Nickel Project. Sherritt has no further funding obligations with
respect to the Project as of February 1, 2014 and, as a result,
eliminated future funding of approximately $70 million to 2017 under
the project agreements.
5. Sherritt's Board of Directors has declared a quarterly cash dividend
of $0.01 per common share, payable on April 14, 2014 to shareholders
of record as of March 31, 2014. The reduction in the quarterly
dividend payment is prudent in the face of persistently low
commodity prices and will enable Sherritt to meet near-term funding
requirements (funding of Ambatovy's operating cash flow shortfall
and project finance repayments) and enhance the Corporation's
financial flexibility. At the modified payout level, the annual cost
of the dividend will be reduced by approximately $39 million in
2014. Sherritt's Board will set future dividends based on operating
cash flow and market conditions and in recognition of the importance
of a dividend to Sherritt shareholders. For further information,
please see the "Liquidity and Capital Resources" section of this
release.
-- Provided a positive outlook for 2014, including significant projected
increases in nickel and cobalt production and electricity generation,
and a modest expected decrease in oil production.
Adjusted results
Earnings have been segregated into continuing and discontinued operations
following re-categorization of the Coal business as a discontinued operation.
Fourth-quarter and full-year earnings on this basis are presented below.
Q4 2013 Q4 2012
$ millions $/share $ millions $/share
----------------------------------------------------------------------------
Net earnings (loss) from
continuing operations $ (136.8) $ (0.46) $ 7.2 $ 0.02
Net (loss) from
discontinued operations (537.0) (1.81) (24.1) (0.08)
Adjusting items (1) 635.7 2.14 12.3 0.05
----------------------------------------------------------------------------
Adjusted net (loss) (2) $ (38.1) $ (0.13) $ (4.6) $ (0.01)
----------------------------------------------------------------------------
(1) For itemization of adjusting items, see the
"Adjusting items" table, below.
(2) For additional information, see the "Non-GAAP
Measures" section of this release.
Twelve Months Ended, December 31,
2013 2012
$ millions $/share $ millions $/share
----------------------------------------------------------------------------
Net earnings (loss) from
continuing operations $ (158.5) $ (0.53) $ 12.3 $ 0.04
Net earnings (loss) from
discontinued operations (501.8) (1.69) 21.4 0.07
Adjusting items (1) 600.3 2.01 69.4 0.24
----------------------------------------------------------------------------
Adjusted net earnings (loss)
(2) $ (60.0) $ (0.21) $ 103.1 $ 0.35
----------------------------------------------------------------------------
(1) For itemization of non-recurring items, see the "Adjusting items" table,
below.
(2) For additional information, see the "Non-GAAP Measures" section of this
release.
The adjusting items included in the tables above for fourth-quarter and
full-year 2013 net earnings are presented below:
Twelve months ended
ADJUSTING ITEMS Q4 2013 December 31, 2013
(after-tax, units as ($/share, ($/share,
noted) ($ millions) basic) ($ millions) basic)
----------------------------------------------------------------------------
Coal - Impairment of
assets 466.8 1.57 466.8 1.57
Coal - Obed Mountain Mine
response costs 52.2 0.18 52.2 0.18
Coal - Gain on termination
of Highvale mining
contract - - (16.3) (0.05)
Coal - Restructuring
expenses - - 4.2 0.01
Metals - Impairment of
Phase 2 expansion costs 29.3 0.10 29.3 0.10
Power - Impairment of
Power assets (Energas) 22.1 0.07 22.1 0.07
Power - Reclassification
of Boca de Jaruco Project
costs 8.5 0.03 8.5 0.03
Power - Provision for
Madagascar receivable - - 9.9 0.03
Power - Impairment of
Madagascar assets - - 7.3 0.02
Corporate - De-recognition
of deferred tax asset 50.3 0.17 28.8 0.10
Corporate - Call option
fair value adjustment 12.0 0.04 1.2 -
Corporate - Gain on
release of Mineral
Products ERO - - (2.6) (0.01)
Unrealized foreign
exchange (gain) loss (5.5) (0.02) (11.1) (0.04)
----------------------------------------------------------------------------
Total adjusting items (net
of tax) $ 635.7 $ 2.14 $ 600.3 $ 2.01
----------------------------------------------------------------------------
Twelve months
SUMMARY FINANCIAL DATA ended December
31,
($ millions unless otherwise noted) Q4 2013 Q4 2012 2013 2012
----------------------------------------------------------------------------
Revenue 108.6 130.3 448.5 475.3
Adjusted EBITDA (1) 42.8 79.5 216.7 341.7
Earnings (loss) from operations and
associate and joint venture (37.7) 37.0 34.5 200.3
Net earnings (loss) from continuing
operations (136.8) 7.2 (158.5) 12.3
Net earnings (loss) from discontinued
operations, net of tax (537.0) (24.1) (501.8) 21.4
Net earnings (loss) (673.8) (16.9) (660.3) 33.7
Basic and diluted earnings (loss) per
share ($ per share)
Net earnings (loss) from continuing
operations (0.46) 0.02 (0.53) 0.04
Net earnings (loss) (2.27) (0.06) (2.23) 0.11
Adjusted operating cash flow - total ($
per share) (1) (0.14) 0.17 0.51 0.83
Net working capital balance (2) 481.8 908.4 481.8 908.4
Spending on capital and intangibles (3) 34.6 29.6 101.7 86.9
Total assets 6,457.8 6,587.8 6,457.8 6,587.8
Shareholders' equity 3,107.2 3,645.9 3,107.2 3,645.9
Long-term debt to total assets (%) 39% 32% 39% 32%
Weighted-average number of shares
(millions)
Basic 296.9 296.5 296.7 296.3
Diluted 297.3 297.0 297.1 296.8
----------------------------------------------------------------------------
(1) For additional information see the 'Non-GAAP Measures' 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.
Twelve months
SUMMARY SALES DATA ended December
31,
(units as noted) Q4 2013 Q4 2012 2013 2012
----------------------------------------------------------------------------
Sales volumes
Nickel - Moa Joint Venture (thousands of
pounds, 50% basis) (1) 9,517 9,694 36,855 37,754
Cobalt - Moa Joint Venture (thousands of
pounds, 50% basis) (1) 906 1,027 3,683 4,123
Oil (boepd, net working-interest production) 11,555 10,816 11,331 11,336
Electricity (GWh, 33 1/3% basis) 146 162 589 628
Thermal coal - Prairie Operations (millions
of tonnes) 4.8 8.3 20.3 30.8
Thermal coal - Mountain Operations (millions
of tonnes) 0.7 0.8 3.3 3.5
Average-realized prices(2)
Nickel ($/lb) (1) 6.42 7.49 6.86 7.82
Cobalt ($/lb) (1) 12.33 11.14 12.50 12.94
Oil ($/boe) 69.06 67.04 68.98 71.38
Electricity ($/MWh) 43.09 40.83 42.63 41.32
Thermal coal - Prairie Operations ($/tonne) 18.54 17.31 18.32 17.48
Thermal coal - Mountain Operations ($/tonne) 84.84 98.21 87.84 101.65
----------------------------------------------------------------------------
(1) Sales volumes and average realized prices do not include the impact of
the Ambatovy Joint Venture.
(2) For additional information, see the "Non-GAAP Measures" section of this
release.
CORPORATE AND OTHER
During 2013, the Corporation took steps to optimize the performance of the core
businesses through significant, and permanent, cost structure reductions, as
well as to increase financial flexibility and preserve liquidity for debt
reduction and prudent investment.
As a result of these actions, Sherritt achieved approximately $23 million in
savings in general and administrative and other costs in 2013 and is targeting
$33 million in cost reductions in 2014. Capital expenditures were reduced by
approximately $60 million, comprising an elimination of $20 million of spending
and an additional $40 million in deferrals.
Sherritt has notified its partner that the Corporation will not be pursuing the
Sulawesi Nickel Project and that as of February 1, 2014, Sherritt has no further
funding obligations with respect to the Project. As a result, the Corporation
will achieve savings of approximately $70 million over the next four years
compared to the funding schedule in the earn-in agreement with the partner. The
decision not to pursue the greenfield Sulawesi Project was made in order to
better enable Sherritt to focus on opportunities in its core Metals and Cuban
energy businesses, the view that nickel assets can be purchased on more
attractive terms than they can be built, and an overall corporate focus on
preserving liquidity.
LIQUIDITY, CAPITAL RESOURCES AND USE OF PROCEEDS FROM COAL TRANSACTION
Cash, cash equivalents and short-term investments were $651.8 million at
December 31, 2013. This does not include cash, cash equivalents and short-term
investments of $62.9 million (100% basis) held by the Moa Joint Venture, $36.6
million (100% basis) held by the Ambatovy Joint Venture, or the $793 million of
cash proceeds from the pending sale of the Coal business.
Sherritt intends to use the proceeds of the Coal transaction to pay down a
significant portion of the Company's outstanding debentures and to retain
sufficient flexibility to fund Ambatovy and take advantage of potential
investment opportunities in its core businesses. The $525 million revolving
credit facility used primarily for letters of credit and short-term funding for
the Coal business will be terminated on the closing of the Coal sale requiring
repayment of $300 million of outstanding borrowings. Debt covenants related to
the use of proceeds from asset sales require that within 360 days of an asset
sale, Sherritt must either acquire assets, either through investment in existing
businesses or through acquisition, or repay term or revolving debt. Remaining
proceeds after 360 days must be used to make an offer to purchase/redeem
debentures, pro-rata, at 101%. Sherritt has said that any potential asset
purchase would have to satisfy certain investment criteria, including that any
such investment be in a cash-generating metals business and exceed the benefit
of reducing debt and strengthening the balance sheet. (Additional criteria are
listed in the company's recent investor presentation, available on its website.)
Total long-term debt at December 31, 2013 was $2.1 billion, including
approximately $1.0 billion related to non-recourse Ambatovy partner loans to
Sherritt. During the year, the Corporation drew down an additional $257.0
million on its Coal revolving credit facility and a total of $65 million on the
revolving-term credit and line of credit to maximize liquidity.
Review of Operations
METALS Twelve months ended
December 31,
($ millions unless otherwise noted) Q4 2013 Q4 2012 2013 2012
----------------------------------------------------------------------------
Production
Mixed sulphides (Ni+Co contained,
tonnes)
Moa Joint Venture (50% basis) 4,494 4,742 18,187 19,027
Ambatovy Joint Venture (40% basis) 3,644 1,988 11,699 3,589
----------------------------------------------------------------------------
Total 8,138 6,730 29,886 22,616
----------------------------------------------------------------------------
Nickel (tonnes)
Moa Joint Venture (50% basis) 4,428 4,439 16,771 17,132
Ambatovy Joint Venture (40% basis) 2,690 1,361 10,059 2,278
----------------------------------------------------------------------------
Total 7,118 5,800 26,830 19,410
----------------------------------------------------------------------------
Cobalt (tonnes)
Moa Joint Venture (50% basis) 435 486 1,660 1,896
Ambatovy Joint Venture (40% basis) 206 133 833 197
----------------------------------------------------------------------------
Total 641 619 2,493 2,093
----------------------------------------------------------------------------
Fertilizer (tonnes)
Moa Joint Venture (50% basis) 24,454 22,325 92,631 94,059
Fort Site (100% basis) 43,634 40,643 166,536 169,859
Ambatovy Joint Venture (40% basis) 5,005 6,329 26,164 6,329
----------------------------------------------------------------------------
Total 73,093 69,297 285,331 270,247
----------------------------------------------------------------------------
Sales (1)
Nickel (thousands of pounds, 50%
basis) 9,517 9,694 36,855 37,754
Cobalt (thousands of pounds, 50%
basis) 906 1,027 3,683 4,123
Fertilizer (tonnes)
Moa Joint Venture (50%) 20,096 26,045 70,835 85,857
Fort Site (100%) 20,429 39,076 99,257 97,636
----------------------------------------------------------------------------
Total 40,525 65,121 170,092 183,493
----------------------------------------------------------------------------
Reference prices
Nickel (US$/lb) 6.31 7.70 6.81 7.95
Cobalt (US$/lb) (2) 12.60 11.95 12.77 13.48
Average-realized prices (1)
Nickel ($/lb) 6.42 7.49 6.86 7.82
Cobalt ($/lb) 12.33 11.14 12.50 12.94
Unit operating costs (US$/lb) (1)(5)
Mining, processing and refining
costs 6.19 6.57 6.56 6.55
Third-party feed costs 0.15 0.12 0.17 0.10
Cobalt by-product credits (1.12) (1.19) (1.21) (1.41)
Other 0.20 0.30 - (0.30)
----------------------------------------------------------------------------
Net direct cash costs of nickel
(NDCC)(3) 5.42 5.20 5.52 4.94
----------------------------------------------------------------------------
Natural gas ($/GJ) 3.64 3.18 3.21 2.39
Fuel oil (US$/tonne) 614 636 623 666
Sulphur (US$/tonne) 152 253 203 263
Sulphuric acid (US$/tonne) 140 176 148 185
Revenue
Nickel $ 61.1 $ 72.6 $ 252.6 $ 295.4
Cobalt 11.2 11.5 46.1 53.4
Fertilizer, other 22.3 38.7 104.0 120.9
Metal marketing (4) 7.0 17.1 28.0 17.1
----------------------------------------------------------------------------
Total revenue 101.6 139.9 430.7 486.8
----------------------------------------------------------------------------
Adjusted EBITDA (5) 8.9 29.9 53.9 133.1
Depletion, depreciation and
amortization 10.1 10.1 41.5 39.0
Earnings (loss) from operations and
associate (37.9) 19.8 (24.3) 94.1
Spending on capital (1) 14.5 13.6 36.1 31.9
----------------------------------------------------------------------------
(1) Sales volumes, 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 (NDCC) 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-GAAP Measures" section of this
release.
Consolidated production of mixed sulphides (which is presented on a contained
nickel + cobalt basis) and finished metal for both fourth-quarter and full-year
2013 was higher than the prior-year periods, primarily reflecting the addition
of Ambatovy production to the relatively stable production rates achieved at the
Moa Joint Venture. Total mixed sulphides production for fourth-quarter 2013 was
18,099 tonnes (9,111 tonnes Ambatovy, 8,988 tonnes Moa, 100% basis), which was
25% higher than 2012 as the increasing production at Ambatovy was partially
offset by the production impact of the failure of a rake mechanism in October
2013 in one of the five ore thickeners at Moa. The rake mechanism has been
repaired and the thickener was put back into service at the end of January 2014.
Moa production was also affected by the impact of the ore characteristics of the
new mining concessions that were brought into production during the quarter. The
metallurgical behaviour of ore from the new concessions is different from the
behaviour of ore of past concessions, and work is being undertaken to address
the impact of certain processing characteristics seen with the new ore.
Full-year mixed sulphides production was 65,622 tonnes (29,248 tonnes Ambatovy,
36,374 tonnes Moa, 100% basis), 40% higher than full-year 2012.
Fourth-quarter 2013 finished nickel production of 15,581 tonnes (6,725 tonnes
Ambatovy, 8,856 tonnes Moa, 100% basis) was 27% higher than fourth-quarter 2012.
Fourth-quarter 2013 finished cobalt production was 1,385 tonnes (515 tonnes
Ambatovy, 869 tonnes Moa, 100% basis), or 6% higher than the prior-year period.
Full-year 2013 finished nickel production of 58,690 tonnes (25,148 tonnes
Ambatovy, 33,542 tonnes Moa, 100% basis), was 47% higher than in 2012, and
finished cobalt production of 5,402 tonnes (2,083 tonnes Ambatovy, 3,319 tonnes
Moa, 100% basis), was 26% higher than full-year 2012. The addition of increasing
finished metal production from Ambatovy during the year was partially offset by
lower finished metal production at the Moa Joint Venture, as reduced mining
equipment availability during the first half of the year and the rake failure
(described above) in fourth-quarter 2013, resulted in lower Moa mixed sulphides
availability.
Fertilizer production (50% Moa Joint Venture, 100% Fort Site, 40% Ambatovy) was
higher for fourth-quarter 2013 (5% or 3,796 tonnes), and full-year 2013 (6% or
15,084 tonnes), compared to the prior-year periods, respectively, primarily
reflecting the addition of Ambatovy fertilizer production in Madagascar and
stable production levels in Canada (Moa Joint Venture and Fort Site).
Consolidated sales volumes of finished nickel, finished cobalt and fertilizer
for fourth-quarter 2013 reflect sales only from the Moa Joint Venture and Fort
Site operations. For accounting purposes, finished metal and fertilizer sold by
the Ambatovy Joint Venture will not be categorized as sales volumes until the
commencement of commercial production on February 1, 2014. Fourth-quarter and
full-year 2013 finished metal and fertilizer sales volumes were lower than in
the prior-year periods, consistent with current production levels. Finished
nickel sales volumes were 2% (0.2 million lbs, 50% basis) lower for the quarter
and 2% (0.9 million lbs, 50% basis) lower for the full-year. Finished cobalt
sales volumes were 12% (0.1 million lbs, 50% basis) lower for fourth-quarter
2013 and 11% (0.4 million lbs, 50% basis) lower for full-year 2013 compared to
the prior-year periods. Fertilizer sales volumes were 38% (24,596 tonnes) lower
for fourth-quarter 2013 and 7% (13,401 tonnes) lower for full-year 2013
reflecting decreased fourth-quarter demand and a wet spring season.
The average nickel reference price was 18% (US$1.39/lb) lower in fourth-quarter
2013 compared to the prior year as market surplus continued without any
significant production capacity closures. The average cobalt reference price was
5% (US$0.65/lb) higher in fourth-quarter 2013 compared to the prior year as
industrial demand remained robust in key markets. Average reference prices for
nickel and cobalt decreased in 2013 compared to the prior year as global nickel
production remained in oversupply and there was limited producer response to the
continued growth of nickel pig iron production (NPI) in China. The
average-realized nickel price decreased 12% ($0.96 per pound) and the
average-realized cobalt price decreased 3% ($0.44 per pound) in 2013 compared to
the prior year.
The net direct cash cost (NDCC) of nickel at the Moa Joint Venture for
fourth-quarter 2013 was 4% (US$0.22/lb) higher than fourth-quarter 2012
primarily due to lower fertilizer by-product credits (resulting from lower
pricing and sales volumes), partly offset by lower sulphuric acid and sulphur
prices. The increase in the full-year NDCC (12% or US$0.58/lb) in 2013 compared
to 2012 was primarily due to lower fertilizer and cobalt by-product credits, and
higher third-party feed costs. Mining, processing and refining costs were
largely unchanged as lower sulphuric acid, fuel oil and sulphur input commodity
prices were offset by lower production volumes, higher natural gas costs and
higher maintenance costs. Higher third-party feed costs primarily reflected
higher utilization of third-party feed.
Spending on capital in fourth-quarter 2013 for the Moa Joint Venture increased
by 7% ($0.9 million, 50% basis) over the prior-year period, due primarily to
planned expenditures for engineering and procurement related to the construction
of the 2,000 tonne per day acid plant at Moa. The Moa Joint Venture has obtained
project financing for the estimated capital cost of the plant (US$65 million)
from a Cuban financial institution, and completed the first draw on the facility
during the quarter. Construction is scheduled to begin in third-quarter 2014,
and initial production from the facility is expected in fourth-quarter 2015.
Ambatovy Update
Average ore throughput during fourth-quarter 2013 of approximately 53% of
nameplate capacity was the highest average quarterly throughput recorded at the
operations, and compared to a 39% average rate the previous quarter. Higher ore
throughput was achieved as a result of improved autoclave mechanical
availability, higher solids density and higher volumetric flows to the leach
autoclaves during the quarter. On January 22, 2014, Sherritt announced
commercial production had been achieved at Ambatovy. For purposes of Sherritt's
financial statements, Sherritt's share of earnings (losses) from Ambatovy will
be recognized beginning February 1, 2014.
Autoclave operating hours of 5,633 hours in fourth-quarter 2013, a 17% increase
from 4,808 hours in third-quarter 2013, reflected significant operational
improvements at Ambatovy. In early October 2013, design modifications were
implemented on the ore thickener upstream of the leach autoclaves. These
modifications have resulted in improved slurry densities and are expected to
improve overall ore throughput going forward. External repairs to Autoclave 3 to
address damage caused by the acid injection system failure in July have been
completed and the unit is back in service.
In fourth-quarter 2013, Ambatovy sold 15.1 million pounds (100% basis) of
finished nickel and 1.1 million pounds (100% basis) of finished cobalt, compared
to 9.9 million pounds (100% basis) of finished nickel and 0.8 million pounds
(100% basis) of finished cobalt in the same period last year. Based on
fourth-quarter sales volumes at approximately 50% of finished metal capacity,
the NDCC for Ambatovy was within the expected range and consistent with previous
guidance. For full-year 2013, Ambatovy sold 56.2 million pounds (100% basis) of
finished nickel and 4.6 million pounds (100% basis) of finished cobalt. All
revenue from the sale of finished nickel and finished cobalt is capitalized
until accounting for commercial production commences on February 1, 2014.
Total capital costs for Ambatovy are expected to remain within the US$5.5
billion (100% basis) estimate. Cumulative spending on capital at Ambatovy to
December 31, 2013 was US$5.3 billion (100% basis), excluding financing charges,
working capital and foreign exchange.
Total project costs (including operating costs, financing charges, working
capital and foreign exchange, and net of sales revenue) in fourth-quarter 2013
were US$127.9 million (100% basis), compared to US$150.2 million (100% basis)
for the previous quarter. Cumulative total project costs to December 31, 2013
were US$7.2 billion (100% basis). Total project costs will vary until commercial
production is effective on February 1, 2014. The most significant variability in
total project costs is likely to arise from the working capital requirements,
operating costs and sales revenue (which are netted from these costs).
In the fourth quarter of 2013, a total of US$184.0 million (100% basis) in
funding was provided by the Ambatovy Joint Venture partners. Sherritt's 40%
share of funding for fourth-quarter 2013 was US$73.6 million ($77.9 million),
and was sourced from cash on hand.
Twelve months
OIL AND GAS ended December 31,
($ millions unless otherwise noted) Q4 2013 Q4 2012 2013 2012
----------------------------------------------------------------------------
Production (boepd) (1)
Gross working-interest - Cuba (2), (3) 19,741 19,220 20,042 20,164
Net working-interest (4)
Cuba - cost recovery 3,690 2,764 3,043 2,871
Cuba - profit oil 7,241 7,405 7,654 7,782
----------------------------------------------------------------------------
Cuba - total 10,931 10,169 10,697 10,653
Spain 297 301 303 332
Pakistan 327 346 331 351
----------------------------------------------------------------------------
Total net working-interest 11,555 10,816 11,331 11,336
----------------------------------------------------------------------------
Reference prices (US$/bbl)
U.S. Gulf Coast Fuel Oil No.6 91.22 94.23 92.99 99.31
Brent crude 109.78 111.06 109.52 112.44
Average-realized prices (5)
Cuba ($/bbl) 69.64 67.83 69.66 72.21
Spain ($/bbl) 114.14 108.03 111.33 111.42
Pakistan ($/boe) 8.65 8.07 8.39 8.09
----------------------------------------------------------------------------
Weighted average ($/boe) 69.06 67.04 68.98 71.38
----------------------------------------------------------------------------
Unit operating costs (5)
Cuba ($/bbl) 13.57 13.68 12.76 12.69
Spain ($/bbl) 30.79 54.93 26.21 49.96
Pakistan ($/boe) 6.82 3.23 5.85 3.48
----------------------------------------------------------------------------
Weighted average ($/boe) 13.85 14.52 12.98 13.58
----------------------------------------------------------------------------
Revenue 74.9 68.2 291.4 300.9
Adjusted EBITDA (5) 57.7 50.5 229.2 232.7
Depletion, depreciation and amortization 14.5 16.5 65.9 68.4
Earnings from operations 43.2 31.8 163.3 162.1
Spending on capital (6) 17.0 12.9 54.8 45.2
----------------------------------------------------------------------------
(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. Oil and natural gas production
are referred to collectively as "boepd".
(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 Measures' 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 increased 3% (521 bopd) for
fourth-quarter 2013 and was comparable for full-year 2013, compared to the
prior-year periods, as natural reservoir declines were offset by production
increases from new wells drilled and the optimization of production from
existing wells. Cost-recovery oil production in Cuba increased 34% (926 bopd)
for fourth-quarter and 6% (172 bopd) in 2013 compared to the prior-year periods.
The increase for fourth-quarter 2013 was primarily due to higher recoverable
spending, partly offset by higher oil prices, whereas the increase for full-year
2013 was primarily due to lower oil prices, partly offset by lower recoverable
spending. Profit-oil production, which represents Sherritt's share of production
after cost recovery volumes are deducted from GWI volumes, decreased 2% for
fourth-quarter and full-year 2013, compared to 2012. Production in Spain and
Pakistan was lower due to natural reservoir declines.
The average-realized price for oil produced in Cuba increased 3% ($1.81/bbl) in
fourth-quarter 2013 compared to the prior-year period, due to a weaker Canadian
dollar relative to the U.S. dollar. Full-year 2013 realized prices in Cuba were
4% ($2.55/bbl) lower compared to the prior year primarily as a result of a lower
Gulf Coast Fuel Oil No. 6 reference price, partially offset by a weaker Canadian
dollar relative to the U.S. dollar. The average-realized price for oil produced
in Spain was 6% ($6.11/bbl) higher in fourth-quarter 2013, compared to the
prior-year period due to a weaker Canadian dollar relative to the U.S. dollar.
Full-year realized pricing in Spain was consistent with the prior year primarily
as a result of a lower Brent reference price, which was offset by a weaker
Canadian dollar relative to the U.S. dollar. Oil and Gas receivables in Cuba
were current as of December 31, 2013.
Unit operating costs in Cuba during fourth-quarter and full-year 2013 were
consistent with the prior year. Unit operating cost in Spain decreased 44%
($24.14/bbl) in fourth-quarter 2013 and 48% ($23.75/bbl) in full-year 2013
compared to the prior-year periods, primarily due to a reduction in costs
allocated to Sherritt following the addition of new third-party production to
the production facility, partly offset by the effect of a weaker Canadian dollar
relative to the Euro.
Spending on capital in fourth-quarter 2013 was 32% ($4.1 million) higher and
full-year spending on capital was 21% ($9.6 million) higher than in the
prior-year periods primarily due to the timing of equipment and inventory
purchases for Cuba, and higher facilities spending. In 2013, development and
facilities capital spending was composed primarily of $26.3 million for
development drilling activities, $4.2 million related to facility improvements
and $13.6 million related to equipment and inventory purchases. During 2013,
three development wells were drilled and completed in Cuba. Two of the wells are
currently producing, and the third well was shut-in and is undergoing a
technical review. A fourth development well initiated in 2013 was completed in
February 2014 and is now producing oil.
Negotiations with Cuban authorities are in the final stages for the extension of
one existing production-sharing contract (PSC) and for four additional,
exploration PSCs. Approval for the extension of the PSC and the four new PSCs is
anticipated in first-quarter 2014 and first-half 2014, respectively.
Exploration spending in 2013 was focused in the United Kingdom North Sea
prospect area. A seismic program was completed in the North Sea in July 2013.
Processing and interpretation of the seismic data has been completed and has
satisfied our contractual obligation under the leases. The Corporation will not
be spending additional funds to develop the prospect area, but will instead look
to farm-out the lease opportunity.
POWER Twelve months
ended December
31,
($ millions unless otherwise noted) Q4 2013 Q4 2012 2013 2012
----------------------------------------------------------------------------
Electricity sold (GWh, 33 1/3% basis) 146 162 589 628
Average-realized price ($/MWh) (3) 43.09 40.83 42.63 41.32
Unit operating cost ($/MWh) (3)
Base (1) 20.67 13.38 18.96 14.51
Non-base (2) 4.75 4.23 6.12 2.11
----------------------------------------------------------------------------
Total unit cash operating costs 25.42 17.61 25.08 16.62
----------------------------------------------------------------------------
Net capacity factor (%) 62 77 63 69
Revenue 10.6 17.0 54.8 70.0
Adjusted EBITDA (3) (3.3) 3.8 (1.6) 22.0
Depletion, depreciation and amortization 2.3 2.7 9.9 11.0
Impairment of property, plant and
equipment 22.1 - 29.4 -
Earnings (loss) from operations (27.7) 1.1 (40.9) 11.0
Spending on capital (33 1/3% basis) (4) 3.0 1.9 9.4 6.1
Spending on SCAs (33 1/3% basis) (5) 2.0 7.4 19.8 32.0
----------------------------------------------------------------------------
Total spending on capital and SCAs 5.0 9.3 29.2 38.1
----------------------------------------------------------------------------
(1) Base costs relate to the operations in Cuba and do not include the
impairment of receivables and property, plant and equipment related to the
operations in Madagascar or the impairment of intangible assets.
(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. Excludes a credit
adjustment in fourth-quarter 2013 related to pipeline costs incurred during
that year.
(3) For additional information see the 'Non-GAAP Measures' 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) Service Concession Arrangement ("SCA") spending is primarily related to
the 150 MW Boca de Jaruco Combined Cycle Project. Sherritt provided 100% of
the funding for the 150 MW Boca de Jaruco Combined Cycle Project and
accounts for the Project as an SCA. 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 2013 and full-year 2013 were 10% (16
GWh, 33 1/3% basis) and 6% (39 GWh, 33 1/3% basis) lower than the respective
prior-year periods, mainly due to an increase in maintenance activities and a
temporary decrease in production due to the construction of the 150 MW Boca de
Jaruco Combined Cycle Project.
The average-realized price of electricity was 6% ($2.26/MWh) and 3% ($1.31/MWh)
higher than the comparable periods in 2012, primarily due to a weaker Canadian
dollar relative to the U.S. dollar. Power receivables in Cuba were current as of
December 31, 2013.
Total unit operating costs were 44% ($7.81/MWh) and 51% ($8.46/MWh) higher in
fourth-quarter and full-year 2013 compared to the prior year. When compared to
the prior-year periods, base unit operating costs in fourth-quarter 2013
increased 54% ($7.29/MWh) and 31% ($4.45/MWh) for full-year 2013 primarily due
to an increase in maintenance, freight and duty and lower production. For
fourth-quarter 2013, non-base unit operating costs were consistent with the
prior-year period. Full-year 2013 non-base unit operating costs were 190%
($4.01/MWh) higher than in 2012 primarily due to scheduled major inspections at
Boca de Jaruco which accounted for $3.29 per MWh.
Spending on capital and service concession arrangements (SCA) for 2013 was 46%
($4.3 million) lower in the fourth-quarter and 23% ($8.9 million) lower for the
full-year when compared to prior-year periods, due to lower spending on the 150
MW Boca de Jaruco Combined Cycle Project as it neared completion. Sustaining
capital expenditures were primarily related to facilities and the purchase of
equipment.
150 MW Boca de Jaruco Combined Cycle Project
Service concession arrangement expenditures primarily relate to the 150 MW Boca
de Jaruco Combined Cycle Project. The project was substantially completed by the
end of fourth-quarter 2013, and was fully operational in early February 2014.
The project was completed for a total cost of $304.1 million and is expected to
run at approximately 47% of capacity until additional fuel sources are
identified.
DISCONTINUED OPERATIONS - COAL
On December 24, 2013, the Corporation announced that it had entered into
agreements to sell its Coal operations for total consideration of $946 million
to two separate companies for total cash consideration of $793 million and
assumption of capital leases of approximately $153 million, subject to closing
adjustments. Sherritt is seeking to close the Coal transaction at the end of
first-quarter 2014.
As a result of entering into the agreements, Coal has been classified as a
discontinued operation. The loss from discontinued operations, net of tax, for
the year ended December 31, 2013 was $508.1 million primarily due to the
recognition of impairments of intangibles, net of tax, of $466.8 million,
including $307.9 million of goodwill.
On the close of the transaction, the Corporation will retain the obligations
associated with the Obed Mountain Mine containment pond breach which occurred in
October 2013.
DISCONTINUED OPERATIONS - COAL Twelve months
ended December
31,
($ millions unless otherwise noted) Q4 2013 Q4 2012 2013 2012
----------------------------------------------------------------------------
Production (millions of tonnes)
Prairie Operations 5.3 8.3 21.2 31.2
Mountain Operations 1.0 1.0 3.3 3.7
----------------------------------------------------------------------------
Total production 6.3 9.3 24.5 34.9
----------------------------------------------------------------------------
Sales (millions of tonnes)
Prairie Operations 4.8 8.3 20.3 30.8
Mountain Operations 0.7 0.8 3.3 3.5
----------------------------------------------------------------------------
Total sales 5.5 9.1 23.6 34.3
----------------------------------------------------------------------------
Average-realized prices ($/tonne) (1),(2)
Prairie Operations 18.54 17.31 18.32 17.48
Mountain Operations 84.84 98.21 87.84 101.65
Unit operating costs ($/tonne) (1),(2)
Prairie Operations 13.15 14.80 13.78 14.91
Mountain Operations 67.30 84.31 82.81 86.48
Revenue
Prairie Operations
Mining revenue 95.9 151.3 398.8 568.9
Coal royalties 9.9 9.3 38.9 40.2
Potash royalties 2.4 3.5 11.2 13.3
Mountain Operations and other assets 57.6 77.9 288.2 352.6
----------------------------------------------------------------------------
Total revenue 165.8 242.0 737.1 975.0
----------------------------------------------------------------------------
Adjusted EBITDA (2)
Prairie Operations 40.9 34.4 136.8 138.1
Mountain Operations and other assets (46.3) 9.5 (45.3) 43.6
----------------------------------------------------------------------------
Total Adjusted EBITDA (5.4) 43.9 91.5 181.7
----------------------------------------------------------------------------
Depletion, depreciation and amortization 32.6 37.6 116.9 135.0
Earnings (loss) from operations (556.9) (10.2) (522.3) 30.2
Spending on capital
Prairie Operations 6.4 18.8 44.0 69.1
Mountain Operations and other assets 5.6 15.6 41.5 60.2
----------------------------------------------------------------------------
Total spending on capital 12.0 34.4 85.5 129.3
----------------------------------------------------------------------------
(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 Measures' section of this
release.
Production volumes in Prairie Operations were 36% (3.0 million tonnes) lower in
fourth-quarter 2013 and 32% ($10.0 million tonnes) lower in full-year 2013,
compared to the prior-year periods, primarily due to the transfer of the
Highvale mining contract to the customer in January 2013. Production volumes in
Mountain Operations in fourth-quarter 2013 were comparable to the prior-year
quarter, while full-year 2013 production volumes were 11% (0.4 million tonnes)
lower than 2012, reflecting the impact of an optimized mine plan at Coal Valley
in the latter half of the year and the suspension of operations at the Obed
Mountain mine in late 2012.
Sales volumes in Prairie Operations were 42% (3.5 million tonnes) lower in
fourth-quarter 2013 and 34% (10.5 million tonnes) lower in full-year 2013,
compared to the prior-year periods, primarily due to the transfer of the
Highvale mining contract to the customer in January 2013. In Mountain
Operations, lower sales volumes reflected the production trends, discussed
above.
Average-realized pricing (excluding royalties, char and activated carbon) at
Prairie Operations was 7% ($1.23 per tonne) higher for fourth-quarter 2013 and
5% ($0.84 per tonne) higher for full-year 2013, compared to the prior-year
periods, due to general contract escalations and the impact of a contract
extension for a new mining area at the Paintearth mine. In Mountain Operations,
average-realized pricing was 14% lower for the quarter ($13.37 per tonne) and
14% lower ($13.81 per tonne) for the year due to a decrease in international
coal reference prices because of weak Asian demand.
Unit operating costs at Prairie Operations were 11% ($1.65 per tonne) lower in
fourth-quarter 2013 and 8% lower ($1.13 per tonne) in full-year 2013 compared to
the prior-year periods due to the transfer of the Highvale mining contract to
the customer in January 2013. Excluding the contract mining business, unit
operating costs in fourth-quarter and full-year 2013 increased due to
unscheduled dragline maintenance required at the Boundary Dam mine in the latter
half of 2013.
Unit operating costs in Mountain Operations were 20% ($17.01 per tonne) lower
for fourth-quarter 2013 compared to the prior-year period due to operating cost
improvements at the Coal Valley mine. Fourth-quarter and full-year 2013 unit
operating costs exclude the Obed Mountain mine. As a result of the optimized
mine plan and cost reduction initiatives, unit operating costs in Mountain
Operations were 4% ($3.67 per tonne) lower for full-year 2013 when compared to
the prior year. Throughout 2013 operating costs at the Coal Valley mine
decreased due to a cost containment plan largely focusing on lower cost mining
areas and achieving higher equipment utilization.
Royalties were 4% ($0.5 million) lower for fourth-quarter 2013 and 6% ($3.4
million) lower for full-year 2013 compared to the prior-year period. Coal
royalties were slightly lower reflecting the timing of mining activities in
royalty assessable areas at the Paintearth mine and potash royalties were lower
reflecting weaker potash pricing.
Results for Coal include the fourth-quarter 2013 impairments of goodwill and
intangibles related to the sale transaction ($466.8 million, net of tax) as well
as a first-quarter 2013 non-cash gain ($16.3 million, net of tax) related to the
transfer of a defined benefit pension liability to the customer at the Highvale
mine.
Spending on capital at Prairie Operations was 66% ($12.4 million) lower in
fourth-quarter 2013 and 36% ($25.1 million) lower in full-year 2013 compared to
prior-year periods due to deferrals and cost-cutting reductions aimed at
maintaining a disciplined capital spending profile in light of challenging coal
market conditions. Spending on capital in Mountain Operations decreased 64%
($10.0 million) for fourth-quarter 2013 and 31% ($18.7 million) for full-year
2013, compared to prior-year periods, due to deferrals and cost-cutting
reductions aimed at maintaining a disciplined capital spending profile in light
of challenging coal market conditions.
On October 31, 2013 a breach of an onsite water containment pond occurred at the
Obed Mountain mine near Hinton, Alberta. The release consisted of 670,000 cubic
meters of process water, containing water mixed with clay, mud, shale and coal
particles. There were no injuries resulting from this incident and remedial work
on the containment pond and the affected downstream area is ongoing. Total
response costs are estimated to be $52.2 million, with approximately $11.0
million of that amount incurred in fourth-quarter 2013.
Outlook
Production volumes and spending on capital for full-year 2013 and projected for
full-year 2014 are shown below.
Actual Projected
for the year ended for the year ending
(units as noted) December 31, 2013 December 31, 2014
----------------------------------------------------------------------------
Production volumes
Mixed sulphides (tonnes, Ni+Co
contained, 100% basis)
Moa Joint Venture 36,374 38,000
Ambatovy Joint Venture 29,248 44,000 - 50,000
----------------------------------------------------------------------------
Total 65,622 82,000 - 88,000
----------------------------------------------------------------------------
Nickel, finished (tonnes, 100%
basis)
Moa Joint Venture 33,542 34,000
Ambatovy Joint Venture 25,148 40,000 - 45,000
----------------------------------------------------------------------------
Total 58,690 74,000 - 79,000
----------------------------------------------------------------------------
Cobalt, finished (tonnes, 100%
basis)
Moa Joint Venture 3,319 3,350
Ambatovy Joint Venture 2,083 3,300 - 3,800
----------------------------------------------------------------------------
Total 5,402 6,650 - 7,150
----------------------------------------------------------------------------
Oil - Cuba (gross working-interest,
bopd) 20,042 19,000
Oil - All operations (net working-
interest, boepd) 11,331 11,200
Electricity (GWh, 33 1/3% basis) 589 750
Spending on capital ($ millions)
Metals - Moa Joint Venture (50%
basis), Fort Site (100% basis) (1) 36 70
Metals - Ambatovy Joint Venture (40%
basis) 24 34
Oil and Gas (2) 55 73
Power (33 1/3% basis) (3) 9 4
----------------------------------------------------------------------------
Spending on capital (excluding
Corporate) 124 181
----------------------------------------------------------------------------
(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.
-- In Metals, production guidance (for mixed sulphides and finished metal)
is expected to be higher in 2014 compared to 2013 due to additional
production delivered from the Ambatovy ramp up, enhancing the strong,
stable production profile of the Moa Joint Venture. Production at Moa is
expected to be largely consistent with 2013 levels despite the impact of
a change in ore characteristics first experienced in fourth-quarter
2013. Spending on capital at the Moa Joint Venture is expected to
increase 94% ($34 million, Sherritt's share), reflecting spending on
construction of the third acid plant beginning in third-quarter 2014.
-- In Oil and Gas, full-year 2014 GWI production in Cuba is expected to be
5% (1,042 bopd) lower than in 2013, reflecting the natural reservoir
decline rates partly offset by success in the 2013 and 2014 drilling
programs. Total net working-interest production for full-year 2014 is
expected to follow the same trend. Spending on capital for 2014 is
expected to increase in Cuba due to increased equipment costs to replace
aging equipment, increasing well-servicing requirements in mature
fields, and higher drilling and facility costs. In addition to this base
capital estimate for Cuba, contingent capital of $28 million is being
contemplated. The contingent capital would be confirmed upon
finalization of the extension of one existing production-sharing
contract (PSC) and the receipt of four additional PSCs. The contingent
capital would be directed toward starting a second drilling rig,
shooting seismic, purchasing support equipment and making facility
improvements to facilitate the development of the new PSCs. Negotiations
with Cuban authorities are in the final stages for the extension of one
existing PSC and for four additional, exploration PSCs. Approval for the
extension of the existing PSC and the four new PSCs is anticipated in
first-quarter 2014 and first-half 2014, respectively.
-- In Power, full-year 2014 production is expected to be 27% (161 GWh)
higher than 2013, due to the start-up of the 150 MW Boca de Jaruco
Combined Cycle in early February 2014. Full-year 2014 spending on
capital is expected to be 56% ($5 million) lower than the prior-year due
to reduced capitalized interest with the completion of the Boca de
Jaruco Combined Cycle Project.
-- In 2009, Sherritt purchased two Cuban certificates of deposit totaling
US$162.0 million. The CDs were issued to Sherritt by a Cuban bank, and
have paid principal and interest (LIBOR + 5%) weekly over five years.
The final weekly payment on the CDs is expected in March 2014.
Non-GAAP Measures
The Corporation uses adjusted net earnings, adjusted EBITDA, average-realized
price, unit operating cost, and adjusted operating cash flow to monitor the
performance of the Corporation and its operating divisions and believes these
measures enable investors and analysts to compare the Corporation's financial
performance with its competitors and evaluate the results of its underlying
business. These measures do 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 these measures do not have a standardized
meaning, they may not be comparable to similar measures provided by other
companies. See pages 64 - 69 of Sherritt's Management's Discussion and Analysis
for the year ended December 31, 2013 for further information.
About Sherritt
Sherritt is a world leader in the mining and refining of nickel from lateritic
ores with projects and operations in Canada, Cuba, 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 on
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, but are not limited to, statements set out
in the "Outlook section, statements regarding the closing of the Coal
transaction, statements respecting certain future expectations about capital
expenditures; sufficiency of working capital and capital project funding;
capital project commissioning and completion dates; earnings, costs and
revenues; and production volumes. 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, 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. Information 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, including, but not limited to, the
Corporation's Annual Information Form for the year ended December 31, 2013,
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 1.800.704.6698
investor@sherritt.com
www.sherritt.com
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