Sherritt International Corporation (



Q3 2011 Earnings Conference Call

October 26, 2011 2:00 PM ET


Paula Myson – Managing Director, IR and External Communications

Ian Delaney – Chairman and CEO

Dean Chambers – COO

David Pathe – CFO


John Hughes – Desjardins Securities Inc.

Terry Ortslan – TSO & Associates

Matt Murphy – UBS Securities Canada



Ladies and gentlemen, thank you for standing by. Welcome to the Sherritt’s International Third Quarter 2011 Analyst and Investor Conference Call.

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At this time, all participants are in a listen-only mode. Following the presentation, we will conduct a question and answer session with instructions provided. If anyone has any difficulties hearing the conference, please press the star followed by the zero for operator assistance at any time.

I would like to remind everyone that this conference is being recorded today, Wednesday, October 26, 2011 at 2 pm Easter Time. And I would now turn the conference over to Paula Myson, Managing Director for Investor Relations and External Communication. Please go ahead.

Paula Myson

Thank you and good afternoon, everyone. We issued two press releases this morning. One on our third quarter results and one announcing a debenture offering. Copies of these releases along with the third quarter MD&A and full financial statements are available on the website.

In addition to the analysts and investors the financial press has been invited to listen to today’s call. A replay of the call will be available through a link on our website later today. Before we begin our comments I’d like to remind everyone that today’s press releases and certain of our comments on the call today will include forward-looking statements.

We’d like to refer everyone to the cautionary language included in the press releases and to the risk factors described in our CEDAR filings. On the call today are Ian Delaney, Chairman and Chief Executive Officer, Dean Chambers, Chief Operator Officer, and David Pathe, Chief Financial Officer. After our remarks, we’ll open up the call for questions. So to begin I’ll turn the call over to Ian Delaney.

Ian Delaney

Thank you – thank you, Paula, and thank you to the folks on the phone for taking the time to join us today. I just point out at the start of the call that I am not in Toronto with my colleagues. I’m in one of our field operation and so as we hand this conversation off one to another, hopefully it will – it will be seamless. But in any event, let me – let me begin. A good quarter, predictably boring, good earnings, good operating conditions, the operations of the company all operating two expectations and within budgeted norms, all in all a very satisfactory quarter from an operational point of view and an earnings point of view.

The big – the high level things the company is operating very well. We don’t have any extraordinary problems in any of our operations. The other high level – bit of a good news is we’ve made a tremendous progress at the Ambatovy project and we have now – few days ago handed – completed the construction.

Everything has been turned over to commissioning teams or operating teams and many, many of the facilities are in fact ready to go, doesn’t in any way minimize the complexity of getting a facility up to full operating conditions but not something that we find terribly daunting, very good progress in Ambatovy.

And then I suppose to be the third thing that should be mention is you may have seen a supplementary press release from us this morning saying that we’re refinancing some of the debt on our balance sheet and we have in the marketplace – we are not stay – a bond [ph] in financing to replace our maturities of next year.

So, having said that, let me ask David Pathe to pick up the conversation. David is our Chief Financial Officer, and David will walk you through some of the financials, the conclusion of David’s remarks and David, Dean and I will standby for any questions you might have. So, David Pathe, please.

David Pathe

Okay. Thanks, Ian. I would just touch on a few highlights here probably before we get to the questions. As Ian said, a strong quarter really across all of our operating businesses, few headline numbers is as usual the ETP for the quarter was $0.16 per share. That’s more than double the $0.07 we have for the third quarter 2010 under IFRS.

We have a very strong operating cash flow, 95.8 million well above Capital Expenditures If you exclude Ambatovy for the quarter of 36.8 and nearly double the cash flow we had in the second quarter of 2011.

Impact in the balance sheet in the quarter overall was pretty minimal. So I have about 1.6 million debt – net debt of less than $1 billion after we’re taking off the – close to 600 million we have in cash equivalents on the short-term investments we have in the balance sheet.

Total long-term debt to capital ratio is about 26% and if you eliminate the non-recourse debt from that, it’s actually only about 15% long-term debt to total assets or total capital.

While we’re talking about debt, Ian touched on or announced the debenture offering that we set in motion this morning. The primary objective of that is to take out our 2012 debentures that are maturing in November of next year.

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