Mining company profit soars on Cuba nickel output
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| Published on Saturday, February 24, 2007 |
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By Dale Crofts
CHICAGO, USA (Bloomberg): Sherritt International Corp., a miner of nickel in Cuba, said fourth-quarter profit rose more than eightfold to a record because of surging metals prices.
Net income rose to C$78.6 million ($67.8 million), or 47 cents a share, from C$9.1 million, or 5 cents a share, a year earlier, the Toronto-based company said Friday in a statement.
Sales rose 26 percent to C$304.2 million, it said.
Sherritt, a global metals and oil producer, has benefited from the rising price of nickel, which nearly tripled over the last year, surpassing $40,000 a ton this month on the London Metal Exchange. The company, which is accelerating plans to increase capacity in Cuba, doubled the price it received for the metal on average in the quarter to $16.88 per pound, it said.
The company increased its output of nickel, used in stainless-steel production, by about 9 percent to 4,209 tons from 3,854 tons a year earlier. Sherritt is accelerating plans to boost its annual production of the metal by an additional 4,000 tons in 2007.
Shares of Sherritt rose 49 cents, or 3.4 percent, to C$14.99 in Toronto Stock Exchange trading. They have gained about 44 percent in the last year.
Sherritt mines and processes nickel in Cuba in a joint venture with the socialist government. The company also produces oil and gas off the coast and expects to increase its power generation capacity in Cuba to 376 megawatts by midyear.
The company is expanding its Boca de Jaruco power plant by 65 megawatts at a cost of $60 million and may further expand it by 125 megawatt by 2009, it said today.
The company produced about 30,510 barrels of oil equivalent per day in the fourth quarter in Cuba, compared with 29,714 barrels on that basis a year earlier. Output may increase as much as 10 percent this year after the company drilled new wells, it said.
Sherritt's stock is discounted because its business in Cuba prevents it from accessing US capital and markets, Chief Financial Officer Guy Bentinck said in October. The US imposes restrictions on companies that seek to do business with Cuba and bans flights to the country.
"Some investors have expressed concern about a change in regime in Cuba that would be opposed to the current one," said Raymond Goldie, an analyst at Salman Partners in Toronto who rates the shares "buy." "But the company has always been very crafty" in working with the island to secure its interests, he said. |
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