Reuters reported that Sherritt International has posted a 70% fall in second quarter profit, hurt by lower nickel, cobalt and oil prices resulting from weakened global industrial demand.

It earned CAD 24.4 million in the quarter ended June 30th 2009 as compared with a profit of CAD 80.3 million in the year earlier period. The profit met the average expectation of analysts polled by Reuters for 8 Canadian cents a share, excluding exceptional items.

Revenue fell by 19% YoY to CAD 357.7 million as average nickel prices in the quarter were down 50% from the year before and average cobalt prices were down 71%. Net nickel mining costs rose due to the weaker cobalt prices, which Sherritt uses to offset nickel mining costs.

Mr Dean Chambers CFO of Sherritt said that "We still have not yet recognized the full impact of declining sulfur pricing in the marketplace, and we would expect to realize that as the year progresses."

Sherritt's main development asset is its 40% stake in the USD 4.5 billion Ambatovy nickel project in Madagascar, which is currently under construction and expected to begin production in 2011. It overcame an obstacle to the project last month when it arranged a financing deal with its partners, which include Japan's Sumitomo Corporation, Korea Resources Corporation and Canadian engineering firm SNC Lavalin.

(Sourced from www.reuters.com)