Sherritt’s Cuban mine back to capacity after power blackout
Sherritt International Inc. [S-TSX] said its nickel mining operation in Cuba has returned to full operating capacity following a nationwide power outage on October 18, 2024, that reduced the Moa Bay site’s operating capacity to 50% to 60%. As a result, the company said its guidance for production volumes, unit operating costs and spending on capital remains unchanged from earlier forecasts.
The reference to the power outage, which made global headlines, is contained in the company’s 2024 third quarter financial statements, which said full operating capacity was restored on October 27, 2018.
Toronto-based Sherritt is a world leader in the mining and refining of nickel and cobalt from lateritic ores. The company ranks as the largest independent energy producer in Cuba, with extensive oil and power operations across the island. Its key asset is a nickel mining joint venture with the Cuban government.
The 50/50 partnership, formed in 1994, involves the extraction and processing of nickel and cobalt from an open pit mine at Moa Bay in eastern Cuba.
The laterite nickel ore is processed on site, producing mixed sulphides (containing nickel and cobalt) that are shipped in bags to Halifax, N.S., and then transported by rail to a refinery in Fort Saskatchewan, Alberta.
In the third quarter, Sherritt’s share of finished nickel and cobalt production at the Moa Joint Venture was 4,333 tonnes and 454 tonnes respectively.
“Our metals division has achieved remarkable progress, with finished nickel production reaching its highest quarterly level in two years,’’ said Sherritt CEO Leon Binedell. “We have successfully reduced our net direct cash costs to US$5.16 per pound, demonstrating a significant year-over-year improvement even with materially lower cobalt by-product prices,’’ he said. “Our Power division has also excelled, recording the highest quarterly electricity production in nine years. Additionally, we completed work to bring another gas turbine online, enabling us to generate electricity from new gas wells, including a new well that began production in October. This will further increase production and allow us to realize higher distributions of dividends in Canada going forward.’’
The shares were unchanged at 19 cents and trade in a 52-week range of 43 cents and 18.5 cents.
Meanwhile, Sherritt said it continues to realize savings in line with its estimated $15 million in annual savings from workforce reductions announced in the first half of 2024. During the quarter, Sherritt made further reductions to streamline its organizational structure which are expected to result in approximately $2.2 million in additional annualized savings.
Nickel revenue in the third quarter of 2024 was $78.8 million, compared to $78.6 million in the third quarter of 2023. Cobalt revenue in the third quarter of 2024 was $11.5 million, compared to $20.4 million in the third quarter of 2023.
Net earnings from continuing operations in the quarter were $1.8 million, or nil per shares. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) was $10.5 million.