Sherritt Falls After Earnings Miss Estimates: Toronto Mover

Sherritt International Corp. (S), a Toronto-based miner with operations in Cuba, fell the most in more than three months after the company lowered 2012 output forecasts and reported earnings that trailed analysts’ estimates.

Sherritt declined 4.5 percent to C$4.28 at 10:54 a.m. in Toronto. The shares earlier dropped as much as 5.6 percent, the most intraday since July 23.

Sherritt reported a third-quarter loss of C$22.6 million ($22.61 million), or 8 cents a share, compared with net income of C$45.5 million, or 16 cents, a year earlier, the company said today in a statement. Profit excluding charges related to the redemption of bonds and other one-time items was 3 cents a share. That was 6 cents less than the average of seven estimates compiled by Bloomberg. Revenue fell 9.5 percent, to C$422.2 million.

The results reflect decreased nickel prices and production and lower export thermal coal volumes compared with a year ago, partly offset by higher fertilizer revenue and the impact of a weaker Canadian dollar relative to the U.S. dollar, Sherritt said. Nickel production was affected by planned maintenance work during the quarter, the company said.

Sherritt has operations in Canada, Cuba, Pakistan and Spain and started metal production at a new nickel and cobalt mine in Madagascar, Ambatovy, during the third quarter. While the company left its forecasts for nickel production this year from its joint venture with the Cuban government unchanged, “they did notch down guidance” on Ambatovy,’’ John Hughes, an analyst at Desjardins Securities Inc. in Toronto, said by phone.

“I think the market might have a little concern that the startup at that big operation, their flagship mine, maybe is going to be longer term versus shorter term,” he said.

Sherritt lowered its 2012 consolidated production forecast for finished nickel production at Ambatovy to 6,400 tons, from a July 25 forecast of 8,000 tons. The company said it expects to reach commercial production at the operation by early 2013.

To contact the reporter on this story: Liezel Hill in Toronto at lhill30@bloomberg.net

To contact the editor responsible for this story: Simon Casey at scasey4@bloomberg.net

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