Sherritt International CEO Discusses Q3 2010 Results - Earnings Call Transcript

Sherritt International CEO Discusses Q3 2010 Results - Earnings Call Transcript
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Sherritt International Corporation (



Q3 2010 Earnings Conference Call

October 27, 2010 2 PM ET


Paula Myson – Director, IR

Ian Delaney – Chairman, President and CEO

Dean Chambers – SVP, Finance and CFO


Lawrence Smith – Scotia Capital

Robin Kozar – RBC Capital Markets

Anoop Prihar – GMP Securities



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Good afternoon, ladies and gentleman. Thank you for standing by. Welcome to the Sherritt International Corporation Q3 results conference call. (Operator instructions).

I would like to remind everyone that this conference call is being recorded today, Wednesday, October 27, 2010 at 2:00 pm Eastern Time. I will now turn the conference over to Mrs. Paula Myson, Managing Director Investor Relations and External Communications. Please go ahead.

Paula Myson

Thank you and good afternoon everyone. Welcome to Sherritt’s Q3 2010 earnings conference call. Our press release was issued this morning. A copy of that release, our MD&A, and full financials are available on our website.

In addition to analysts and investors the media will participate in this call on a listen only basis and we’ll put a replay of the call on our website this afternoon. I’d like to remind everyone that comments in our press release and in this call include forward-looking statements. Please refer to the cautionary language in the press release and the risk factors described in our CEDAR filings.

On the call today are Ian Delaney, our Chairman and Chief Executive Officer, and Dean Chambers, the Senior Vice President of Finance and Chief Financial Officer. We’ll open with a few brief comments on the quarter and then take some questions. So let’s begin, I’ll turn the call over to Ian.

Ian Delaney

Thank you Paula and thank you to those on the phone for taking the time to be with us this afternoon. I will just, on a slight technical note, unlike the usual case, I’m in one of our field operations today so I’m not sitting in the room in Toronto with my colleagues so there may be a pause between responses and in that I would like to assure (inaudible) the operations of the company, all units are operating satisfactorily. No particular variances that are of concern to us.

Of course our principal preoccupation these days is the completion of our Ambatovy project in Madagascar, and to that end, fortunately all of the available time, think, emotion and labor in the organization is devoted there. We are blessed with good operating management in most of our other divisions, all of our other divisions, so that in fact if we can devote our time and energies to that.

We are making great progress. The mine is actually in operation as we speak. The pipeline was completed ten days ago, four facilities are done, rail facilities are done. Our intention these days is all riveted on the refinery and power plant at the refinery site. These things are coming along and responding.

Total project basis are approaching 85% complete. We don’t think there’s much scope here for dramatic variance from our published capital numbers. We’re still looking for our first metal in the second quarter of next year.

All our component parts are on the ground in Madagascar. We’re wrestling with just the power plant; it’s perhaps the one we’re getting the most heartburn on simply because the steam turn on rate is the critical item there. But it is coming into line.

So in the main we’re pretty comfortable with schedule and capital. Capital’s- a big variability in capital right now is probably weather. If we get several days or weeks of bad weather we will be delayed by that much. But that doesn’t account for matter very much in the capital account.

Issues which we are immediately trying to address; we’ve had some labor (inaudible) there, simply occasioned by the fact that on a project of this scale, I think we employ at a peak, I think we probably had 18,000 people on the ground. We’re looking at demobilization schedules now. And so we are looking demobilizing several thousands of Malagasy.

There’s no social safety nets to speak of in Madagascar and so it’s been a little troubling. There have been some labor interruptions. Trying to accommodate that, I think we’ve dealt with that and I think we’re going to work out various ways of easing the shift back into the Malagasy economy for some of those employees that we’re laying off. I think we’ve dealt with the problem and that’s the long and short of it.

In other areas of the business metals business is generally operating quite well. All of our company is operating quite well. The coal business level off mark because of lower power requirements in western Canada and our mine mouth coal business there. The volumes there are a direct function of electricity demand and those are down slightly. And we’re still having some teething issues in our mountain operations. We expect to revert to norms there sometime in the next few months.

So having said that, let me turn this part of the discussion over to Dean Chambers and at the conclusion of Dean’s remarks we’ll answer questions that anybody on the phone might have. Dean–

Dean Chambers

Yes, thank you Ian and good afternoon to everyone on the call. I’d like to spend a few minutes going through some of the key parameters that had an impact on our results that we announced earlier today.

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