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Press release from Marketwire

Sherritt Reports Second-Quarter 2011 Results

Wednesday, July 27, 2011

Sherritt Reports Second-Quarter 2011 Results07:52 EDT Wednesday, July 27, 2011TORONTO, ONTARIO--(Marketwire - July 27, 2011) -NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSSEMINATION IN THE UNITED STATESSherritt International Corporation ("Sherritt" or the "Corporation") (TSX:S) today announced second-quarter 2011 results.Net earnings for second-quarter 2011 were up 20% to $60.1 million ($0.20 per share, basic), compared to net earnings of $50.2 million ($0.17 per share, basic) for second-quarter 2010. Sales volumes for second-quarter 2011 (Sherritt's share) totaled 9.1 million pounds of nickel, 1.1 million pounds of cobalt, 8.0 million tonnes of thermal coal, 1.1 million barrels of oil and 154 GWh of electricity. Cash, cash equivalents and short-term investments were $609.1 million at June 30, 2011, including $37.1 million (50% basis) held by the Moa Joint Venture. Cash held by the Ambatovy Project is included in "Investment in an Associate" and was $15.6 million (40% basis) as at June 30, 2011. Operating cash flow for second-quarter 2011 was $48.5 million, compared to $57.4 million in second-quarter 2010. Spending on capital and intangibles relating to existing operations totaled $25.9 million for second-quarter 2011, compared to $32.7 million in second-quarter 2010. Spending on capital in the Ambatovy Project was $301.1 million (100% basis) for second-quarter 2011, 1% lower than the prior-year period. At the Ambatovy Project, commissioning of the Mine Site is complete and 5,000 tonnes of ore have been fed through the Ore Preparation Plant, with slurry densities consistent with design. Slurry has been pumped down the pipeline to the Plant Site at Toamasina and the pipeline is operating within design parameters. Commissioning of the Power Plant continues and one unit has been generating power for three weeks. The first limestone shipment was received at the port, transported to the Plant Site and discharged to the stockpile during the quarter. Currently 38 of the 56 major process plant modules have been transferred to commissioning teams. Demobilization of contractors and construction workers continued in second-quarter 2011, with approximately 2,000 construction personnel demobilized during the quarter. At June 30, 2011, total available liquidity was approximately $1.1 billion, not including approximately $54 million (40% basis) available under the Ambatovy Joint Venture senior project financing. Total debt at June 30, 2011 was $1.5 billion, including approximately $0.7 billion related to non-recourse Ambatovy partner loans to Sherritt.Summary DataSUMMARY FINANCIAL DATASix months ended June 30,($ millions unless otherwise noted)Q2 2011Q2 201020112010Revenue500.6406.3975.1772.7EBITDA(1)157.9135.0322.3250.2Operating profit105.787.9219.9157.1Net earnings60.150.2123.779.6Basic earnings per share ($ per share)0.200.170.420.27Diluted earnings per share ($ per share)0.200.170.420.27Net working capital(2)1,002.4995.61,002.4995.6Spending on capital and intangibles(3)25.932.749.569.7Total assets6,068.16,029.06,068.16,029.0Shareholders' equity3,575.83,602.83,575.83,602.8Long-term debt to total assets (%)27262726Weighted average number of shares (millions)Basic294.9293.9294.9293.9Diluted296.2296.1296.3296.2(1)For additional information see the 'Non-IFRS Measure – EBITDA' section of this release.(2)Net working capital is calculated as total current assets less total current liabilities.(3)Spending on capital does not include accruals and does not include spending on the Ambatovy Project.SUMMARY SALES DATASix months ended June 30,(units as noted)Q2 2011Q2 201020112010Sales volumesNickel (thousands of pounds, 50% basis)9,0638,27018,50117,662Cobalt (thousands of pounds, 50% basis)1,0551,0152,0691,922Thermal coal – Prairie Operations (millions of tonnes)6.97.615.416.9Thermal coal – Mountain Operations (millions of tonnes)(1)1.10.62.11.1Oil (boepd, net working-interest production)12,29012,47412,38712,423Electricity (GWh, 33 1/3% basis)154171302343Average realized pricesNickel ($/lb)10.5610.6511.169.88Cobalt ($/lb)16.2418.9616.8819.53Thermal coal – Prairie Operations ($/tonne)17.5715.8116.1814.46Thermal coal – Mountain Operations ($/tonne)100.5492.2296.0981.64Oil ($/boe)69.0151.2565.4252.03Electricity ($/MWh)40.2642.2240.4042.43(1)Prior to July 1, 2010, the Corporation proportionately consolidated its 50% interest in the entity that owned the Coal Valley and Obed Mountain mines. Review of OperationsMETALSSix months ended June 30,(units as noted)Q2 2011Q2 201020112010ProductionMixed sulphides (tonnes, 50% basis)4,9314,6849,7759,343Nickel (tonnes, 50% basis)3,9913,7408,2948,005Cobalt (tonnes, 50% basis)449404919872Fertilizers (tonnes)55,59353,670115,166116,905SalesNickel (thousands of pounds, 50% basis)9,0638,27018,50117,662Cobalt (thousands of pounds, 50% basis)1,0551,0152,0691,922Fertilizers (tonnes)70,65185,06388,345111,757Reference pricesNickel (US$/lb)10.9610.1511.609.62Cobalt (US$/lb)(1)17.0519.3617.7219.73Realized pricesNickel ($/lb)10.5610.6511.169.88Cobalt ($/lb)16.2418.9616.8819.53Unit operating costs (US$/lb)Mining, processing and refining costs6.355.595.935.11Third-party feed costs0.150.310.200.35Cobalt by-product credits(1.95)(2.27)(1.93)(2.05)Other(0.29)(0.54)(0.03)(0.09)Net direct cash costs of nickel(2)4.263.094.173.32Sulphur (US$/tonne)242.49145.98221.14129.06Sulphuric acid (US$/tonne)196.68134.77185.98132.53Revenue ($ millions)Nickel95.788.2206.4174.6Cobalt17.119.234.937.5Fertilizers, other36.630.948.542.1Total revenue149.4138.3289.8254.2EBITDA ($ millions)(3)54.452.8120.3100.9Earnings from operations and associate ($ millions)50.144.4107.583.2Spending on capital ($ millions)9.07.715.313.2(1)Average Metal Bulletin – Low Grade Cobalt published price. (2)Net direct cash costs of nickel after cobalt and other by-product credits. (3)For additional information see the 'Non-IFRS Measure – EBITDA' section of this release. Mixed sulphides production for second-quarter 2011 was 5% (494 tonnes, 100% basis) higher than second-quarter 2010, reflecting stable plant operation and ongoing process improvements. This established a production record for the facility for the fourth consecutive quarter. Finished nickel and cobalt production were 7% (502 tonnes, 100% basis) and 11% (90 tonnes, 100% basis) higher, respectively, than second-quarter 2010, largely resulting from stable plant operation and higher availability of mixed sulphides, which allowed for further displacement of third-party feeds.Second-quarter 2011 nickel and cobalt sales volumes were 10% (793 tonnes, 50% basis) higher and 4% (40 tonnes, 50% basis) higher, respectively, than the prior-year period, consistent with production trends. Fertilizer sales volumes were 17% (14,412 tonnes) lower than second-quarter 2010, due the sales impact of spring weather conditions in Manitoba and lower availability of granular ammonium sulphate due to the bi-annual acid plant maintenance turnaround during the quarter.The average nickel reference price in second-quarter 2011 was 8% (US$0.81/lb) higher than second-quarter 2010, due to stronger demand and a weaker U.S. dollar than in the prior-year period. The average cobalt reference price was 12% (US$2.31/lb) lower than second-quarter 2010 due to relatively weaker demand.The net direct cash cost of nickel for second-quarter 2011 was 38% (US$1.17/lb) higher than second-quarter 2010, primarily due to the impact of higher input commodity prices, in particular, a 66% (US$96.51/tonne) increase in the cost of sulphur and a 46% (US$61.91/tonne) increase in the cost of sulphuric acid quarter-over-quarter.Spending on capital in second-quarter 2011 for the Moa Joint Venture was 17% ($1.3 million, 50% basis) higher than in the prior-year period, reflecting higher planned spending in 2011.AmbatovyAmbatovy project expenditures for second-quarter 2011 were US$300.9 million (100% basis). Cumulative capital spending on the Project at June 30, 2011 was US$5.0 billion (100% basis), and US$4.9 billion (100% basis) on a pro-forma basis after adjusting for foreign exchange rates consistent with the original project cost estimates. During second-quarter 2011, a total of $260.0 million (100% basis) in funding was provided by the Ambatovy Joint Venture partners; Sherritt's 40% share ($104.2 million) was funded directly from cash on hand. In addition, US$141.0 million was drawn on the senior project finance facility during second-quarter 2011.Commissioning of the Mine Site is complete and 5,000 tonnes of ore have been fed through the Ore Preparation Plant, with slurry densities consistent with design. Slurry has been pumped down the pipeline to the Plant Site at Toamasina and the pipeline is operating within design parameters. Commissioning of the Power Plant continues and one unit has been generating power for three weeks. The first limestone shipment was received at the port, transported to the Plant Site and discharged to the stockpile during the quarter. Currently 38 of the 56 major process plant modules have been transferred to commissioning teams. Demobilization of contractors and construction workers continued in second-quarter 2011, with approximately 2,000 construction personnel demobilized during the quarter.The Project is designed to produce 60,000 tonnes (100% basis) of nickel and 5,600 tonnes (100% basis) of cobalt annually at capacity. The estimated Project capital cost is US$5.5 billion (100% basis), excluding financing charges, working capital, and foreign exchange with production of first metal scheduled for first-quarter 2012.COALSix months ended June 30,(units as noted)Q2 2011Q2 201020112010Production (millions of tonnes)Prairie Operations6.67.215.216.0Mountain Operations(1)1.10.62.21.0Sales (millions of tonnes)Prairie Operations6.97.615.416.9Mountain Operations(1)1.10.62.11.1Realized prices ($/tonne)Prairie Operations(2)17.5715.8116.1814.46Mountain Operations100.5492.2296.0981.64Unit operating costs ($/tonne)Prairie Operations(3)15.8414.8114.1312.61Mountain Operations81.6868.2780.3372.79Revenue ($ millions)Prairie OperationsMining revenue128.8122.6262.0250.9Coal royalties9.79.921.521.0Potash royalties5.23.210.06.5Mountain Operations and other assets110.454.1206.589.5Total revenue254.1189.8500.0367.9EBITDA ($ millions)(4)Prairie Operations25.019.460.256.0Mountain Operations and other assets19.012.631.57.2Total EBITDA44.032.091.763.2Earnings from operations ($ millions)18.628.242.141.4Spending on capital ($ millions)Prairie Operations20.913.636.428.8Mountain Operations and other assets8.06.212.37.3Total spending on capital28.919.848.736.1(1)Prior to July 1, 2010, the Corporation proportionately consolidated its 50% interest in the entity that owned the Coal Valley and Obed Mountain mines. (2)Prairie Operations realized pricing excludes results of the char and activated carbon businesses and royalties. (3)Prairie Operations unit operating costs exclude char and activated carbon results. (4)For additional information see the 'Non-IFRS Measure – EBITDA' section of this release. Second-quarter 2011 production volumes at Prairie Operations were 8% (0.6 million tonnes) lower than second-quarter 2010 mainly due to lower production at the contract Highvale mine, where two generating units were removed from service by the mine's customer in first-quarter 2011, and at the Boundary Dam mine, where haul efforts were impacted by several weeks of heavy rainfall and flooding in southern Saskatchewan. Production volumes at Mountain Operations were 83% (0.5 million tonnes) higher than second-quarter 2010, reflecting the consolidation of all of Mountain Operations production from July 1, 2010 onward as well as improved dragline availability and lower strip ratios at the Obed Mountain mine.Sales volumes at Prairie Operations for second-quarter 2011 were 9% (0.7 million tonnes) lower than the prior-year period, reflecting the lower demand at the Highvale mine and production issues at the Boundary Dam mine previously discussed. Second-quarter 2011 Mountain Operations sales volumes were 83% (0.5 million tonnes) higher than second-quarter 2010, mainly due to the consolidation of all Mountain Operations sales from July 1, 2010 onward.Realized pricing in Prairie Operations (excluding royalties, activated carbon and char) for second-quarter 2011 was 11% ($1.76/tonne) higher than the prior-year period due to similar contract revenue on lower sales volumes at the Highvale mine and lower sales volumes during the period attributable to decreased production at both the Highvale and Boundary Dam mines. Realized pricing in Mountain Operations in second-quarter 2011 was 9% ($8.32/tonne) higher than second-quarter 2010, due to higher reference pricing, partially offset by the foreign exchange impact of a stronger Canadian dollar relative to the U.S. dollar.Unit operating costs at Prairie Operations were 7% ($1.03/tonne) higher than second-quarter 2010, largely due to the impact of lower production at the Highvale mine. Unit operating costs at Mountain Operations were 20% ($13.41/tonne) higher than in second-quarter 2010, primarily due to higher maintenance costs for loading equipment and temporary coal quality issues at the Coal Valley mine.Total royalties for second-quarter 2011 were 14% ($1.8 million) higher than second-quarter 2010, primarily due to higher potash pricing and production volumes.Spending on capital in Prairie Operations in second-quarter 2011 was 54% ($7.3 million) higher than in the prior-year period due to the replacement of a tub on the Paintearth dragline and the timing of equipment lease additions. Capital spending in Mountain Operations for second-quarter 2011 was 29% ($1.8 million) higher than second-quarter 2010, primarily due to the consolidation of 100% of Mountain Operations spending in third-quarter 2010 and timing of equipment lease additions.During the quarter, the Paintearth coal supply agreements were extended for additional ten-year terms, expiring in 2022. Pricing terms for the extensions are currently under discussion. The Paintearth mine, located in Forestburg, Alberta, has an annual production capacity of approximately 3.5 million tonnes and has been in operation since 1956.OIL AND GASSix months ended June 30,(units as noted)Q2 2011Q2 201020112010Production (boepd)(1)Gross working-interest – Cuba(2), (3)20,90021,23720,88721,626Net working-interest(4)Cuba – cost recovery3,7373,6203,9663,654Cuba – profit oil7,7237,9267,6157,849Cuba – total11,46011,54611,58111,503Spain488564457555Pakistan342364349365Total net working-interest12,29012,47412,38712,423Reference prices (US$/bbl)U.S. Gulf Coast Fuel Oil No.698.4068.6792.4069.52Brent crude118.3278.37111.8377.45Realized pricesCuba ($/bbl)68.9851.2165.4352.10Spain ($/bbl)112.6680.29109.2580.00Pakistan ($/boe)7.877.377.937.38Weighted average ($/boe)69.0151.2565.4252.03Unit operating costsCuba ($/bbl)10.9511.1511.0711.44Spain ($/bbl)30.8127.5331.9928.11Pakistan ($/boe)2.701.093.241.15Weighted average ($/boe)11.5111.6011.6211.88Revenue ($ millions)81.563.7152.0123.0EBITDA ($ millions)(5)65.648.0120.490.8Earnings from operations ($ millions)49.430.888.857.0Spending on capital ($ millions)19.016.633.729.8(1)Oil production is stated in barrels per day ("bpd"). Natural gas production is stated in barrels of oil equivalent per day ("boepd"), which is converted at 6,000 cubic feet per barrel. (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 commerciality 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-IFRS Measure – EBITDA' section of this release. Second-quarter 2011 net working-interest production in Cuba was largely unchanged from second-quarter 2010, while gross working-interest production decreased marginally (2%, 337 bpd) due to a 50% decrease in Sherritt's share of production from a well in the Vardero West field in third-quarter 2010 and natural reservoir declines, partially offset by production from new wells drilled and optimization of production from existing wells. Production in Spain was 13% (76 bpd) lower, and production in Pakistan 6% (22 boepd) lower, than the prior-year period, due to natural reservoir declines at both operations.Average realized prices in second-quarter 2011 were substantially higher than second-quarter 2010 in Cuba (35%, $17.77/bbl) and Spain (40%, $32.37/bbl), and moderately higher in Pakistan (7%, $0.50/boe), as the benefit of increased reference pricing more than offset the impact of a stronger Canadian dollar relative to the U.S. dollar.Second-quarter 2011 unit operating costs in Cuba were largely unchanged from second-quarter 2010, with a marginal decline (2%, $0.20/bbl) due to the impact of a stronger Canadian dollar relative to the U.S. dollar. Unit operating costs in Spain were 12% ($3.28/bbl) higher than second-quarter 2010 due mainly to lower production. The increase in unit operating costs in Pakistan for the same comparable periods was due to changes in the classification of royalties. Prior to 2011, royalties in Pakistan were deducted from revenue; beginning in 2011, royalties in Pakistan are included in operating costs.Spending on capital in second-quarter 2011 was 14% ($2.4 million) higher than second-quarter 2010, and was primarily due to increased development drilling and completion activity. In second-quarter 2011, drilling on three development wells commenced and three development wells were completed, one of which is producing. This compares to four development wells commenced and three development wells completed in second-quarter 2010.POWERSix months ended June 30,(units as noted)Q2 2011Q2 201020112010Electricity sold (GWh, 33 1/3% basis)154171302343Realized price ($/MWh)40.2642.2240.4042.43Unit cash operating cost ($/MWh)24.689.9421.858.75Net capacity factor (%)66716471Revenue ($ millions)13.012.327.423.7EBITDA ($ millions)(1)6.57.211.314.8Earnings from operations ($ millions)3.94.36.19.1Spending on capital ($ millions)1.60.72.21.8Spending on service concession arrangements ($ millions)(2)3.61.79.12.9(1)For additional information see the 'Non-IFRS Measure – EBITDA' section of this release. (2)Costs incurred to maintain or enhance the Boca de Jaruco and Puerto Escondido operating assets are expensed on the consolidated statements of comprehensive income, including items which may have formerly been capitalized. As a result, maintenance and construction activities at Boca de Jaruco, including the 150 MW Boca de Jaruco Combined Cycle Project, are expensed as incurred. The Corporation records an intangible asset and a corresponding construction revenue amount to reflect the right to charge the Cuban government for the future supply of electricity. The net result is a nil impact to net earnings. Electricity production for second-quarter 2011 was 10% (17 GWh, 33 1/3% basis) lower than second-quarter 2010, due to a turbine failure at Varadero as the unit was being brought online after a scheduled major inspection, and gas supply shortages at Varadero and Boca de Jaruco. The gas turbine at Varadero is expected to be returned to service in third-quarter 2011.Second-quarter 2011 unit cash operating costs were 148% ($14.74/MWh) higher than second-quarter 2010, due to higher costs resulting from the turbine failure, the reclassification of administrative recoveries from cost of sales to administrative costs, and lower production.Spending on capital, including capitalized interest, and spending on service concession arrangements were 117% ($2.8 million, 33 1/3% basis) higher than the prior-year period, due to increased activity on the 150 MW Boca de Jaruco Combined Cycle Project.CASH, DEBT AND FINANCINGCash, cash equivalents and short-term investments were $609.1 million at June 30, 2011. Of the cash balance, $37.1 million (50% basis) was held by the Moa Joint Venture and is for the exclusive use of the joint venture. Cash held by the Ambatovy Project is included in "Investment in an Associate" and was $15.6 million (40% basis) as at June 30, 2011.At June 30, 2011, the amount of credit available under various facilities was $466 million, not including approximately $54 million (40% basis) available under the Ambatovy Joint Venture senior project financing.OutlookProjections for Sherritt's production volumes, royalties and spending on capital for the year 2011 are shown below. (units as noted)2011Production volumesMixed sulphides (tonnes)38,300Nickel (tonnes, 100% basis)34,300Cobalt (tonnes, 100% basis)3,700Coal – Prairie Operations (millions of tonnes)33Coal – Mountain Operations (millions of tonnes)4.4Oil – Cuba (gross working-interest, boepd)20,500Oil – All operations (net working-interest, boepd)12,200Electricity (GWh, 33 1/3% basis)588Royalties ($ millions)Coal42Potash16Spending on capital ($ millions)Metals – Moa Joint Venture (50% basis)50Coal – Prairie Operations100Coal – Mountain Operations46Oil and Gas – Cuba(1)64Oil and Gas – Other(1)9Power (33 1/3% basis)(2)35Total spending on capital (excluding Ambatovy)304Metals – Ambatovy (US$ millions, 100% basis)1,000(1)Exploration and evaluation spending incurred prior to the technical feasibility and commercial viability of extracting the resources is recorded as an intangible asset. (2)Includes projected spending related to the 150 MW Boca de Jaruco Combined Cycle Project that is expensed as incurred and is included in cost of sales on the consolidated statement of comprehensive income. In Metals – Moa Joint Venture, guidance for full-year 2011 production of mixed sulphides has increased 2% (600 tonnes, 100% basis) to reflect the strong performance of operations in first-half 2011. Finished nickel production guidance increased 1% (200 tonnes, 100% basis) and finished cobalt production guidance increased 3% (100 tonnes, 100% basis) reflecting both the increase in mixed sulphides production in Moa and the offsetting reduction in third-party feed. Guidance for spending on capital in the Moa Joint Venture remains unchanged from the prior quarter. The Moa Joint Venture partners continue to review options for the completion of the Phase 2 Expansion and construction of a sulphuric acid plant at Moa. Guidance for spending on capital does not include any expansion-related expenditures, other than capitalized interest. In Metals – Ambatovy Joint Venture, the projected increase in spending on capital reflects the change in the total projected capital cost for the Project of US$5.5 billion (100% basis), excluding financing charges, working capital, and foreign exchange announced in June 2011. During third-quarter 2011, it is expected that the second unit of the Power Plant will be operational, the remaining major process plant modules will be turned over to the commissioning teams, and demobilization of the contractors and construction personnel will continue. The third and final unit of the Power Plant is expected to be commissioned in fourth-quarter 2011. In Metals – Sulawesi Project, projected spending for 2011 remains at $13 million and will be directed toward the next phase of the resource drilling program and advancing environmental and social baseline studies as well as project prefeasibility work. In Coal – Prairie Operations, guidance for full-year 2011 production is 6% (2 million tonnes) lower than in the prior quarter, reflecting the impact of the production issues in first-half 2011 at both the Highvale and Boundary Dam mines due to customer demand and excessive rainfall in Saskatchewan, respectively. Spending on capital in Prairie Operations is 7% ($7 million) lower than prior estimates, reflecting anticipated delays in delivery of mining equipment based on longer manufacturing leadtimes. In Coal – Mountain Operations, production guidance is 8% (0.4 million tonnes) lower than prior guidance, reflecting the production impact of equipment-related challenges at the Coal Valley mine in first-half 2011. Spending on capital in Mountain Operations remains similar to prior estimates. In Oil and Gas, guidance relating to full-year 2011 gross working-interest oil production in Cuba increased 4% (800 bpd), reflecting strong production in first-half 2011. Total net working-interest production for 2011 increased 3% (300 boepd), largely reflecting the change in gross working-interest production. Spending on capital for 2011 in Cuba decreased 36% ($36 million) primarily due to delays in the receipt of permits for the enhanced oil recovery project and grants of new blocks, while spending on capital in other jurisdictions decreased 17% ($2 million) due to lower exploration activity outside of Cuba. In total, seven development wells and one exploration well are planned for 2011. In Power, guidance for 2011 full-year production has increased marginally from prior estimates, reflecting the performance in first-half 2011 and the expected gas supply and maintenance schedule for second-half 2011. Projected spending on capital, which is primarily related to the 150 MW Boca de Jaruco Combined Cycle Project, decreased 31% ($16 million) due to the movement of equipment purchases to 2012 from the current year. Non-IFRS Measure – EBITDAThe Corporation's definition of EBITDA is earnings (loss) from operations and associate as reported in the IFRS financial statements, excluding amounts included in net earnings or net loss for income taxes, financing income, financing expense, depletion, depreciation, and amortization in cost of sales and administrative expenses, impairment charges for property, plant and equipment, goodwill and investments, gain or loss on disposal of property, plant and equipment, and share of income or loss of associate.About SherrittSherritt is a world leader in the mining and refining of nickel from lateritic ores with projects and operations in Canada, Cuba, Indonesia and Madagascar. The Corporation is the largest coal producer in Canada and is the largest independent energy producer in Cuba, with extensive oil and power operations across 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 StatementsThis press release contains certain forward-looking statements. Forward-looking statements generally can be identified by the use of statements that include words such 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 statements respecting certain future expectations about the Corporation's capital and project development spending; capital project commissioning and completion dates; production volumes; royalty revenues; and other corporate objectives, plans or goals for 2011. These forward-looking statements are not based on historic facts, but rather on current expectations, assumptions and projections about future events. 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. Sherritt cautions readers of this press release not to place undue reliance on any forward-looking statements 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. By their nature, forward-looking statements require Sherritt to make assumptions and are subject to inherent risks and uncertainties.Key factors that may result in material differences between actual results and developments and those contemplated by this press release include global economic conditions, business, economic and political conditions in Canada, Cuba, Indonesia, Madagascar, and the principal markets for Sherritt's products. Other such factors include, but are not limited to, uncertainties in the development and construction of large mining 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 Sherritt's joint venture partners; future non-compliance with financial covenants; potential interruptions in transportation; political, economic and other risks of foreign operations; Sherritt'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; 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; development programs; uncertainties in reserve estimates; uncertainties in asset-retirement and reclamation cost estimates; Sherritt's reliance on significant customers; foreign exchange and pricing risks; uncertainties in commodity pricing; credit risks; competition in product markets; Sherritt's ability to access markets; risks in obtaining insurance; uncertainties in labour relations; uncertainties in pension liabilities; the ability of Sherritt to enforce legal rights in foreign jurisdictions; the ability of Sherritt to obtain government permits; risks associated with government regulations and environmental health and safety matters; differences between Canadian GAAP and IFRS; and other factors listed from time to time in Sherritt's continuous disclosure documents.Further, any forward-looking statement speaks only as of the date on which such statement is made, and except as required by law, Sherritt undertakes no obligation to update any forward-looking statements.FOR FURTHER INFORMATION PLEASE CONTACT: Investor RelationsSherritt International Corporation416.935.2451 or Toll-free: 1.800.704.6698investor@sherritt.comwww.sherritt.com