Sherritt Reports Fourth Quarter and Full Year 2023 Results; 2024 Guidance for Metals Outlines Improved Production and Lower Costs
NOT FOR DISTRIBUTION TO
Leon Binedell, President and CEO of
Mr. Binedell continued, “For our part, at the start of the year, we acknowledged that 2023 would be a transitional year at the mine; however, we had not anticipated encountering the more immediate operational issues we found ourselves facing at the mine and consequently at the refinery. Working together with our partner we successfully resolved each of these operational hurdles and we are continuing to work together to materially improve the operational performance at both facilities. In addition, in our fertilizer business, we suffered a significant outage in our ammonia plant. Despite our established multi-year capital refurbishment program, this required the advancement of significant operational spend which would otherwise be covered under our planned capital program and also led to reduced fertilizer sales. In support of our initiatives to improve operational oversight, we have changed Sherritt’s operational leadership to a Chief Operating Officer with considerable experience and recent successes, including working closely with our partner in
Despite the challenges faced in 2023, we accomplished a number of objectives which further build the foundation for our future success. We delivered our technical report for the Moa JV, doubling mine life and extending it beyond 2040. We achieved growth in our power business with energy production in the fourth quarter reaching our highest quarterly production level since 2016. We successfully completed the first year of the Cobalt Swap agreement and we continued advancing the Moa JV expansion on budget and on schedule."
Commenting on managing the lower nickel price environment that is forecasted for 2024 Mr. Binedell added, “The nickel market turned quickly during the third quarter of 2023. Our established process of forecasting long-term cash flows prepared us early to implement an effective cost mitigation and cash conservation program which we expect to begin realizing the benefits from in 2024. With the support from our partner, we have optimized operating plans for 2024 and beyond and combined with the spending reductions during the third quarter and headcount reductions early this year, we are better aligned with the current nickel price environment."
In finishing his remarks, Mr. Binedell closed by saying, “Looking ahead, we will continue to proactively pursue opportunities to improve profitability and liquidity while delivering operational improvements, translating to higher production of nickel and cobalt at lower net direct cash costs. With our stronger operational outlook, we remain well positioned to take advantage of the expected long-term demand growth for the critical minerals we produce.”
FOURTH QUARTER AND FULL YEAR 2023 RESULTS AND SELECTED DEVELOPMENTS
- Sherritt’s share(1) of finished nickel and cobalt production in Q4 2023 at the Moa Joint Venture (“Moa JV”) was 3,744 tonnes and 330 tonnes, respectively. During the quarter, Moa mixed sulphides production was impacted by heavy rainfall which required processing lower grade and quality stockpiled material. Full year 2023 finished nickel and cobalt production on a 100% basis was 28,672 tonnes and 2,876 tonnes, respectively, slightly below their annual guidance(2) ranges.
-
Net direct cash cost (“NDCC”)(3) was
US$7.87 /lb in Q4 2023. Full year 2023 NDCC(3) ofUS$7.22 /lb was within guidance(2). - Electricity production in Q4 2023 was 225 GWh. Full year 2023 production of 745 GWh exceeded guidance(2) due to additional gas from the two gas wells that went into production during Q2 2023 and improved equipment availability.
-
Electricity unit operating cost(3) in Q4 2023 was
$29.16 /MWh. Full year 2023 unit operating costs(3) of$27.70 /MWh was within guidance(2). -
Net loss from continuing operations of
$53.4 million , or$(0.13) per share in Q4 2023 and$64.3 million , or$(0.16) per share for the full year 2023, was primarily impacted by delayed nickel sales, lower fertilizer sales volumes, lower average-realized prices(3), higher maintenance costs, inventory write-downs and an increase in rehabilitation and closure costs related to legacy Oil and Gas assets. -
Adjusted net loss from continuing operations(3), was
$27.9 million or$(0.07) per share in Q4 2023 and$28.1 million or$(0.07) per share for the full year 2023. -
Adjusted EBITDA(3) in Q4 2023 was
$(7.0) million and$46.2 million for full year 2023 and included$2.3 million and$14.6 million in inventory write-downs in Q4 and the full year 2023, respectively. -
Available liquidity in
Canada as atDecember 31, 2023 was$63.0 million . -
Completed the first year of the Cobalt Swap(4) which included receipt of 2,082 tonnes of cobalt from the Moa JV which was sold by
Sherritt realizing cash receipts of$80.3 million , a cash dividend of$64.0 million , and a corresponding reduction in the GNC receivable of$76.0 million . -
Slurry Preparation Plant (“SPP”) construction was completed; commissioning and capacity testing is ongoing, and in
January 2024 , the SPP began processing ore at design capacity. The overall timing and budget of phase two to reach target levels of production remains unchanged and is on schedule for an expected end of year 2024 completion with commissioning and ramp up in 2025.
(1) |
References to “Sherritt’s Share” is consistent with the Corporation’s definition of reportable segments for financial statement purposes. Sherritt’s Share of “Metals” includes the Corporation’s 50% interest in the Moa JV, its 100% interest in the utility and fertilizer operations in |
(2) |
“Guidance” refers to 2023 guidance as most recently disclosed in the Corporation’s Management Discussion and Analysis for the three and nine months ended |
(3) |
Non-GAAP financial measures. In Q4 2023, |
(4) |
For additional information on the Cobalt Swap, see Note 12 – Advances, loans receivable and other financial assets of the consolidated financial statements for the year ended |
2024 ANNUAL GUIDANCE
Nickel and cobalt production are both expected to increase in 2024 compared to 2023 due to increased feed of mixed sulphides from the Moa mine site to the refinery as a result of access to additional ore sources to improve the blend of feed as well as increased quality and feed rates following the ramp-up of the SPP, and reduced downtime from maintenance. NDCC(1) is expected to be lower in 2024 compared to 2023 due to lower expected maintenance activity, cost optimization, and higher expected production and sales, including increased fertilizer by-product sales.
Electricity production is expected to be higher in 2024 compared to 2023 primarily due to the full year receipt of additional gas from the two wells that went into production in Q2 2023. Unit operating cost(1) for electricity in 2024 reflects higher planned maintenance activities related to gas turbines, partly offset by the impact of higher electricity production and sales.
Production and costs:
- finished nickel production of 30,000 to 32,000 tonnes (100% basis);
- finished cobalt production of 3,100 to 3,400 tonnes (100% basis);
-
NDCC(1) of
US$5.50 toUS$6.00 per pound of nickel sold; - electricity production of 775 to 825 GWh (33⅓% basis); and
-
electricity unit operating cost(1) of
$32.50 to$34.00 per MWh.
Spending on capital(1):
-
sustaining: Metals (Moa JV 50% basis, Fort Site 100% basis) of
$40.0 million ; -
sustaining: Power (33⅓% basis) of
$5.5 million ; and -
growth: Metals (Moa JV 50% basis) of
$15.0 million .
(1) |
Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release. |
DEVELOPMENTS SUBSEQUENT TO THE QUARTER
Subsequent to the quarter end:
-
As announced
January 15, 2024 ,Sherritt implemented an organization-wide restructuring and cost-cutting program following a robust internal review conducted during the second half of 2023 to improve operational performance and respond to current market conditions. The changes include:-
consolidated executive oversight over operations into a single role and appointed
Elvin Saruk as Chief Operating Officer; - streamlined the Metals division to deliver value in the near-term while ensuring safe and effective operations;
- restructured Technologies to a reduced scale in line with a narrower focus to deliver essential support and enhancements to internal operations and business development opportunities to expand midstream processing capacity of critical minerals for the electric vehicle supply chain; and
-
reduced the Corporation’s Canadian operations headcount by approximately 10%, with annualized employee cost savings of
$13.0 million expected to be realized.
-
consolidated executive oversight over operations into a single role and appointed
-
The Moa JV signed a sales agreement for nickel deliveries in 2024 with a
$20 million prepayment expected to be received in early February, improving available liquidity. -
As a result of lower realized commodity prices and lower nickel sales volumes over the second half of 2023, coupled with an expected lower pricing environment in the near term,
Sherritt continued its prudent approach to managing its liquidity and elected not to pay cash interest due inJanuary 2024 of$3.4 million and added the payment-in-kind interest to the principal amount owed to noteholders on its 10.75% unsecured PIK option notes (“PIK notes”).
Q4 2023 FINANCIAL HIGHLIGHTS
|
For the three months ended |
|
|
For the year ended |
|
|||||||||||||
$ millions, except per share amount |
2023
|
|
|
2022
|
|
Change |
|
2023
|
|
|
2022
|
Change |
||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Revenue |
$ |
34.8 |
|
$ |
48.6 |
|
(28 |
%) |
$ |
223.3 |
|
$ |
178.8 |
25 |
% |
|||
Combined revenue(1) |
|
140.5 |
|
|
234.6 |
|
(40 |
%) |
|
652.9 |
|
|
834.7 |
(22 |
%) |
|||
(Loss) earnings from operations and joint venture |
|
(43.4 |
) |
|
(0.1 |
) |
nm |
(2) |
|
(43.4 |
) |
|
118.7 |
(137 |
%) |
|||
Net (loss) earnings from continuing operations |
|
(53.4 |
) |
|
(7.3 |
) |
(632 |
%) |
|
(64.3 |
) |
|
63.7 |
(201 |
%) |
|||
Net (loss) earnings for the period |
|
(53.4 |
) |
|
(7.0 |
) |
(663 |
%) |
|
(64.6 |
) |
|
63.5 |
(202 |
%) |
|||
Adjusted EBITDA(1) |
|
(7.0 |
) |
|
35.5 |
|
(120 |
%) |
|
46.2 |
|
|
233.1 |
(80 |
%) |
|||
Adjusted net (loss) earnings from continuing operations |
|
(27.9 |
) |
|
8.4 |
|
(432 |
%) |
|
(28.1 |
) |
|
112.7 |
(125 |
%) |
|||
Net (loss) earnings from continuing operations ($ per share) |
|
(0.13 |
) |
|
(0.02 |
) |
(550 |
%) |
|
(0.16 |
) |
|
0.16 |
(200 |
%) |
|||
Adjusted net (loss) earnings from continuing operations ($ per share) |
|
(0.07 |
) |
|
0.02 |
|
(450 |
%) |
|
(0.07 |
) |
|
0.28 |
(125 |
%) |
|||
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash (used) provided by continuing operations for operating activities |
|
(18.1 |
) |
|
40.3 |
|
(145 |
%) |
|
28.2 |
|
|
90.3 |
(69 |
%) |
|||
Combined free cash flow(1) |
|
(39.1 |
) |
|
43.2 |
|
(191 |
%) |
|
(15.9 |
) |
|
65.1 |
(124 |
%) |
|||
Average exchange rate (CAD/US$) |
|
1.362 |
|
|
1.358 |
|
- |
|
|
1.350 |
|
|
1.301 |
4 |
% |
(1) |
Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release. |
(2) |
nm = not meaningful |
$ millions, as at |
|
2023
|
2022
|
Change |
||||
|
|
|
|
|
|
|
||
Cash and cash equivalents |
|
|
|
|
|
|
||
|
|
$ |
21.5 |
$ |
20.3 |
6 |
% |
|
|
|
|
96.3 |
|
101.7 |
(5 |
%) |
|
Other |
|
|
1.3 |
|
1.9 |
(32 |
%) |
|
|
|
|
119.1 |
|
123.9 |
(4 |
%) |
|
|
|
|
|
|
|
|
||
Loans and borrowings |
|
355.6 |
|
350.9 |
1 |
% |
||
|
|
|
|
|
|
|||
The Corporation's share of cash and cash equivalents in the Moa Joint Venture, not included in the above balances: |
$ |
5.9 |
$ |
21.8 |
(73 |
%) |
(1) |
As at |
Cash and cash equivalents as at
On a full year basis, cash and cash equivalents as at
As at
Subsequent to quarter end, the Moa JV signed a sales agreement for nickel deliveries in 2024 with a
Advances to the Moa JV are interest bearing, at the Corporation’s borrowing rates, and are expected to be repaid during the first half of 2024.
At the Second
REVIEW OF OPERATIONS
Metals
|
For the three months ended |
|
|
|
For the year ended |
|
|
|
|||||||||||
$ millions ( |
2023
|
|
|
2022
|
|
Change |
|
2023
|
|
|
2022
|
|
Change |
||||||
|
|
|
|
|
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|
|||||||||
FINANCIAL HIGHLIGHTS |
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenue(1) |
$ |
125.9 |
|
$ |
223.5 |
|
(44 |
%) |
$ |
603.7 |
|
$ |
795.1 |
|
(24 |
%) |
|||
Cost of sales(1) |
|
146.6 |
|
|
189.5 |
|
(23 |
%) |
|
601.4 |
|
|
587.8 |
|
2 |
% |
|||
(Loss) earnings from operations |
|
(22.0 |
) |
|
30.5 |
|
(172 |
%) |
|
(2.1 |
) |
|
197.9 |
|
(101 |
%) |
|||
Adjusted EBITDA(2) |
|
(8.7 |
) |
|
45.1 |
|
(119 |
%) |
|
53.6 |
|
|
251.8 |
|
(79 |
%) |
|||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
CASH FLOW |
|
|
|
|
|
|
|
|
|
|
|||||||||
Cash provided by continuing operations for operating activities(1) |
$ |
3.4 |
|
$ |
81.6 |
|
(96 |
%) |
$ |
115.9 |
|
$ |
171.6 |
|
(32 |
%) |
|||
Free cash flow(2) |
|
(14.2 |
) |
|
57.7 |
|
(125 |
%) |
|
58.9 |
|
|
107.4 |
|
(45 |
%) |
|||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
PRODUCTION VOLUMES (tonnes) |
|
|
|
|
|
|
|
|
|
|
|||||||||
Mixed Sulphides |
|
3,514 |
|
|
4,000 |
|
(12 |
%) |
|
15,084 |
|
|
16,248 |
|
(7 |
%) |
|||
Finished Nickel |
|
3,744 |
|
|
4,112 |
|
(9 |
%) |
|
14,336 |
|
|
16,134 |
|
(11 |
%) |
|||
Finished Cobalt |
|
330 |
|
|
423 |
|
(22 |
%) |
|
1,438 |
|
|
1,684 |
|
(15 |
%) |
|||
Fertilizer |
|
61,092 |
|
|
62,254 |
|
(2 |
%) |
|
219,707 |
|
|
250,147 |
|
(12 |
%) |
|||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
NICKEL RECOVERY (3) (%) |
|
89 |
% |
|
85 |
% |
5 |
% |
|
88 |
% |
|
87 |
% |
1 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
SALES VOLUMES (tonnes) |
|
|
|
|
|
|
|
|
|
||||||||||
Finished Nickel |
|
3,511 |
|
|
4,486 |
|
(22 |
%) |
|
12,888 |
|
|
15,879 |
|
(19 |
%) |
|||
Finished Cobalt |
|
399 |
|
|
386 |
|
3 |
% |
|
2,720 |
|
|
1,379 |
|
97 |
% |
|||
Fertilizer |
|
55,509 |
|
|
61,664 |
|
(10 |
%) |
|
170,161 |
|
|
170,427 |
|
- |
|
|||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
AVERAGE-REFERENCE PRICE (4) (US$) |
|
|
|
|
|
|
|
|
|
|
|||||||||
Nickel (US$ per pound) |
$ |
7.82 |
|
$ |
11.47 |
|
(32 |
%) |
$ |
9.74 |
|
$ |
11.61 |
|
(16 |
%) |
|||
Cobalt (US$ per pound) |
|
15.69 |
|
|
23.00 |
|
(32 |
%) |
|
16.30 |
|
|
30.75 |
|
(47 |
%) |
|||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
AVERAGE-REALIZED PRICE (2) (CAD) |
|
|
|
|
|
|
|
|
|
|
|||||||||
Nickel ($ per pound) |
$ |
10.87 |
|
$ |
15.55 |
|
(30 |
%) |
$ |
13.36 |
|
$ |
14.93 |
|
(11 |
%) |
|||
Cobalt ($ per pound) |
|
17.23 |
|
|
25.72 |
|
(33 |
%) |
|
17.47 |
|
|
34.26 |
|
(49 |
%) |
|||
Fertilizer ($ per tonne) |
|
414.80 |
|
|
647.03 |
|
(36 |
%) |
|
548.16 |
|
|
759.91 |
|
(28 |
%) |
|||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
UNIT OPERATING COST (2)(US$) |
|
|
|
|
|
|
|
|
|
|
|||||||||
Nickel - net direct cash cost (US$ per pound) |
$ |
7.87 |
|
$ |
7.00 |
|
12 |
% |
$ |
7.22 |
|
$ |
5.14 |
|
40 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
SPENDING ON CAPITAL (2)(CAD) |
|
|
|
|
|
|
|
|
|
|
|||||||||
Sustaining |
$ |
19.0 |
|
$ |
22.3 |
|
(15 |
%) |
$ |
51.3 |
|
$ |
66.7 |
|
(23 |
%) |
|||
Growth |
|
2.3 |
|
|
4.4 |
|
(48 |
%) |
|
11.4 |
|
|
7.4 |
|
54 |
% |
|||
|
$ |
21.3 |
|
$ |
26.7 |
|
(20 |
%) |
$ |
62.7 |
|
$ |
74.1 |
|
(15 |
%) |
(1) |
The Financial Highlights, and cash flow amounts for Metals combine the operations of the Moa JV, Fort Site and Metals Marketing. Breakdowns of revenue, Adjusted EBITDA, and the components of free cash flow (cash provided (used) by continuing operations for operating activities and Property, plant and equipment expenditures) for each of these operations are included in the Combined Revenue, Adjusted EBITDA and Free cash flow reconciliations, respectively, in the Non-GAAP and other financial measures section of this press release. |
(2) |
Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release. |
(3) |
The nickel recovery rate measures the amount of finished nickel that is produced compared to the original nickel content of the ore that was mined. |
(4) |
Reference sources: Nickel – |
Challenging market conditions accelerated in the fourth quarter 2023 through lower demand and reference prices for nickel. Despite management actions taken to reduce costs and protect margins, unplanned maintenance challenges and lower production due to lower ore grades and poor quality ore sources available negated these efforts, negatively impacting operating cost and margins that ultimately contributed to an adjusted EBITDA(1) of
In further response to expected lower pricing commodity market conditions, subsequent to the year end the Corporation streamlined its Metals business unit to improve operating margins in the near-term while ensuring safe and effective operations by reducing senior management costs, operating headcount and non-essential expenditures. Additional operational improvements are expected to further enhance the performance of Metals going forward. Phase one of the Moa expansion is complete and following its ramp-up, is expected to reduce ore haulage distances, lower carbon intensity from mining and increase annual mixed sulphide precipitate (“MSP”) production of contained nickel and cobalt. As outlined in its 2024 guidance for NDCC(1) of
Finished nickel revenue for the three months and year ended
Finished nickel sales volumes for the three months and year ended
Finished cobalt revenue, including cobalt sold by
Cobalt sales volumes based on Sherritt’s 50% share were 375 tonnes in Q4 2023 compared to 386 tonnes in Q4 2022 and 1,692 tonnes for the year ended
Fertilizer revenue for the three months and year ended
Mixed sulphides production at the Moa JV for the three months and year ended
Finished nickel production for the three months and year ended
Finished cobalt production for the three months and year ended
Full year 2023 finished nickel and finished cobalt production were slightly below their respective guidance(2) ranges for the year.
Fertilizer production for the three months and year ended
Mining, processing and refining (“MPR”) costs per pound of nickel sold (“MPR/lb”), which includes Sherritt’s share of cost of Cobalt Swap and Moa JV cobalt sold, for the three months ended
NDCC(1) per pound of nickel sold for the three months ended
Sustaining spending on capital(1) for the three months and year ended
Growth spending on capital(1) for the three months and year ended
In Q1 2023, the Moa JV released its National Instrument 43-101 Technical Report which indicates that the current reserves estimates, without the current expansion impact, are sufficient to extend the life of mine 14 years to 2048.
(1) |
Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release. |
(2) |
“Guidance” refers to 2023 guidance as most recently disclosed in the Corporation’s Management Discussion and Analysis for the three and nine months ended |
(3) |
Cobalt by-product credits include Sherritt’s share of cobalt revenue per pound of nickel sold only. |
Moa JV expansion program update
The Moa JV expansion program was specifically designed to minimize the risks of capital overruns and project delays which were anticipated following the COVID-19 pandemic. This low cost and low capital intensity two-phase expansion program remains on budget and on schedule. Phase one of the expansion, the SPP, is expected to reduce ore haulage distances, lower carbon intensity from mining and increase annual MSP production of contained nickel and cobalt through increased throughput over the mine’s long life. With completion of phase two of the expansion, the Processing Plant, annual MSP production is targeted to increase by 6,500 tonnes of contained nickel and cobalt (100% basis) and is expected to fill the refinery to nameplate capacity to maximize profitability from the joint venture’s own mine feed, displacing lower margin third party feeds and increasing overall finished nickel and cobalt production.
The Moa JV continued to advance the expansion program at the mine site. Progress included:
SPP:
-
Construction of the SPP was completed under budget; commissioning and capacity testing is ongoing, and in
January 2024 the SPP began processing ore at design capacity.
Processing Plant:
- Civil construction and structural erection is ongoing on those areas not completed in the prior expansion.
-
Some of the long-lead items will be delivered in Q1 2024 for the Sixth
Leah Train which will allow mechanical construction to commence in Q2 2024; and - engineering for the Fifth Sulphide Precipitation Train has been completed and ordering of equipment and materials will commence in 2024.
- In response to the current lower nickel price environment, the joint venture optimized the timing of certain capital spending items shifting some phase two spending to beyond 2024. This deferral is not expected to impact the timing of the ramp up of MSP production from the expansion.
The overall timing and budget to reach target production remains unchanged and is on schedule for an expected end of year 2024 completion with commissioning and ramp up in 2025.
Power
|
For the three months ended |
|
For the year ended |
|
|||||||||||
$ millions (33 ⅓% basis), except as otherwise noted |
2023
|
|
2022
|
Change |
2023
|
|
2022
|
Change |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||
FINANCIAL HIGHLIGHTS |
|
|
|
|
|
|
|
|
|
|
|||||
Revenue |
$ |
14.0 |
$ |
10.5 |
33 |
% |
$ |
47.1 |
$ |
37.1 |
27 |
% |
|||
Cost of sales |
|
7.1 |
|
4.9 |
45 |
% |
|
22.7 |
|
24.2 |
(6 |
%) |
|||
Earnings from operations |
|
5.9 |
|
4.5 |
31 |
% |
|
20.7 |
|
8.7 |
138 |
% |
|||
Adjusted EBITDA(1) |
|
6.6 |
|
6.1 |
8 |
% |
|
23.2 |
|
22.3 |
4 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|
|||||
CASH FLOW |
|
|
|
|
|
|
|
|
|
|
|||||
Cash provided by continuing operations for operating activities |
$ |
7.4 |
$ |
13.5 |
(45 |
%) |
$ |
16.9 |
$ |
37.4 |
(55 |
%) |
|||
Free cash flow(1) |
|
6.1 |
|
12.0 |
(49 |
%) |
|
13.7 |
|
32.3 |
(58 |
%) |
|||
|
|
|
|
|
|
|
|
|
|
|
|||||
PRODUCTION AND SALES |
|
|
|
|
|
|
|
|
|
|
|||||
Electricity (GWh(2)) |
|
225 |
|
159 |
42 |
% |
|
745 |
|
568 |
31 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|
|||||
AVERAGE-REALIZED PRICE (1) |
|
|
|
|
|
|
|
|
|
|
|||||
Electricity ($/MWh(2)) |
$ |
57.96 |
$ |
58.54 |
(1 |
%) |
$ |
57.45 |
$ |
56.47 |
2 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|
|||||
UNIT OPERATING COSTS (1) |
|
|
|
|
|
|
|
|
|
|
|||||
Electricity ($/MWh) |
|
29.16 |
|
21.41 |
36 |
% |
|
27.70 |
|
19.39 |
43 |
% |
|||
|
|
|
|
|
|
|
|
|
|
|
|||||
SPENDING ON CAPITAL (1) |
|
|
|
|
|
|
|||||||||
Sustaining |
$ |
1.3 |
$ |
1.6 |
(19 |
%) |
$ |
3.2 |
$ |
5.1 |
(37 |
%) |
|||
|
|
|
|
|
|
|
|
|
|
|
(1) |
Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release. |
(2) |
Gigawatt hours (“GWh”), Megawatt hours (“MWh”). |
Revenue for the three months and year ended
Electricity production for the three months and year ended
Unit operating costs(1) for the three months and year ended
Sustaining spending on capital(1) for the three months and year ended
During 2023,
(1) |
Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release. |
(2) |
“Guidance” refers to 2023 guidance as most recently disclosed in the Corporation’s Management Discussion and Analysis for the three and nine months ended |
Technologies
During the three months ended
-
continued to advance development of strategic growth opportunities for
Sherritt , provide technical support, process optimization and technology development services to the Moa JV and the Fort Site and support the Moa JV’s expansion program; - continued to progress near-term partnerships and development opportunities to expand midstream processing capacity of critical minerals for the electric vehicle supply chain;
-
completed the continuous pilot test of the on-going MHP test program, which is supported by a funding commitment from
Natural Resources Canada (NRCan), as part of Sherritt’s strategic objective for expanding midstream processing capacity; - advanced its venture analysis, flowsheet enhancements, and batch test work related to its next-generation laterite (“NGL”) processing technology to support discussions with external parties; and
- continued to progress on commercialization activities around proprietary technologies and innovative industry solutions.
Subsequent to the quarter-end, Technologies was restructured to reduce headcount, including management, and decrease costs in line with a narrower focus to deliver essential support and enhancements to internal operations and business development. Business development will primarily focus on near-term partnerships and development opportunities to expand midstream processing capacity of critical minerals for the electric vehicle supply chain which
OUTLOOK
2023 and 2024 production volumes, unit operating costs(1) and spending on capital(1) guidance
Production volumes, unit operating costs(3) and spending on capital(3) |
2023
|
|
Year-to-date
|
|
2024
|
|
|
|
|
||
Production volumes |
|
|
|
||
Moa Joint Venture (tonnes, 100% basis) |
|
|
|
||
Nickel, finished(1) |
29,000 - 30,000 |
28,672 |
30,000 - 32,000 |
||
Cobalt, finished(1) |
2,900 - 3,100 |
2,876 |
3,100 - 3,400 |
||
Electricity (GWh, 33⅓% basis)(2) |
650 - 700 |
745 |
775 - 825 |
||
|
|
|
|
||
Unit operating costs(3) |
|
|
|
||
Metals - NDCC (US$ per pound) |
|
|
|
||
Electricity - unit operating cost ($ per MWh) |
|
|
|
||
|
|
|
|
||
Spending on capital (3)($ millions) |
|
|
|
||
Sustaining |
|
|
|
||
Moa Joint Venture (50% basis), Fort Site (100% basis)(1) |
|
|
|
||
Power (33⅓% basis) |
|
|
|
||
Growth |
|
|
|
||
Moa Joint Venture (50% basis)(1) |
|
|
|
||
Spending on capital(4) |
|
|
|
(1) |
2023 guidance updated |
(2) |
2023 guidance was updated |
(3) |
Non-GAAP financial measures. For additional information, see the Non-GAAP and other financial measures section. |
(4) |
Excludes spending on capital of the Metals Marketing, Technologies, Oil and Gas and Corporate segments. |
Metals
Nickel and cobalt production are both expected to increase in 2024 compared to 2023 due to increased feed of mixed sulphides from the Moa mine site to the refinery as a result of access to additional ore sources to improve the blend of feed as well as increased quality and feed rates following the ramp-up of the SPP, and reduced downtime from maintenance.
NDCC(1) is expected to be lower in 2024 compared to 2023 due to lower expected maintenance activity, cost optimization, and higher expected production and sales, including increased fertilizer by-product sales. NDCC(1) includes by-product credits and input commodities that are subject to considerable change given the volatility of cobalt, fertilizers, sulphur, diesel and fuel prices. NDCC(1) guidance for 2024 is based on a forecast cobalt reference price of
Sustaining spending on capital(1) of
Growth spending on capital(1) of
Power
Electricity production is expected to be higher in 2024 compared to 2023 primarily due to the full year receipt of additional gas from the two wells that went into production in Q2 2023.
Unit operating cost(2) for electricity in 2024 reflects higher planned maintenance activities related to gas turbines, partly offset by the impact of higher electricity production and sales.
Sustaining spending on capital(1) of
(1) |
Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release. |
CONFERENCE CALL AND WEBCAST
North American callers, please dial: |
1 (800) 717-1738 Passcode: 78950 |
|
International callers, please dial: |
1 (289) 514-5100 Passcode: 78950 |
|
Live webcast: |
Please dial in 15 minutes before the start of the call to secure a line. Alternatively, listeners can access the conference call and presentation via the webcast available on Sherritt’s website.
An archive of the webcast and replay of the conference call will also be available on the website.
FINANCIAL STATEMENTS AND MANAGEMENT’S DISCUSSION AND ANALYSIS
Sherritt’s consolidated financial statements and MD&A for the year ended
NON-GAAP AND OTHER FINANCIAL MEASURES
Management uses the following non-GAAP and other financial measures in this press release and other documents: combined revenue, adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), average-realized price, unit operating cost/net direct cash cost (“NDCC”), adjusted net earnings/loss from continuing operations, adjusted net earnings/loss from continuing operations per share, spending on capital, combined cash provided (used) by continuing operations for operating activities and combined free cash flow.
Management uses these measures to monitor the financial performance of the Corporation and its operating divisions and believes these measures enable investors and analysts to compare the Corporation’s financial performance with its competitors and/or evaluate the results of its underlying business. These measures are intended to provide additional information, not to replace International Financial Reporting Standards (“IFRS”) measures, and do not have a standard definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. As these measures do not have a standardized meaning, they may not be comparable to similar measures provided by other companies.
The non-GAAP and other financial measures are reconciled to their most directly comparable IFRS measures in the Appendix below. This press release should be read in conjunction with Sherritt’s consolidated financial statements for the three months and year ended
ABOUT
FORWARD-LOOKING STATEMENTS
This press release contains certain forward-looking statements. Forward-looking statements can generally be identified by the use of statements that include such words as “believe”, “expect”, “anticipate”, “intend”, “plan”, “forecast”, “likely”, “may”, “will”, “could”, “should”, “suspect”, “outlook”, “potential”, “projected”, “continue” or other similar words or phrases. Specifically, forward-looking statements in this document include, but are not limited to, statements regarding strategies, plans and estimated production amounts resulting from expansion of mining operations at the Moa Joint Venture; growing and increasing nickel and cobalt production; the Moa Joint Venture expansion program update as it relates to the Slurry Preparation Plant and the Processing Plant; statements set out in the “Outlook” section of this press release; certain expectations regarding production volumes and increases, inventory levels, operating costs, capital spending and intensity; sales volumes; revenue, costs and earnings; the availability of additional gas supplies to be used for power generation; the effect of maintenance challenges at the Moa mine, refinery and fertilizer operations; the timing of repayments of the revolving line of credit by the Moa JV, the amount and timing of dividend distributions from the Moa JV, including in the form of finished cobalt or cash under the Cobalt swap, sales of finished cobalt and associated receipts related to cobalt received pursuant to the Cobalt Swap; timing and development of strategic growth and commercial opportunities and partnerships in Technologies projects; growing shareholder value; expected annualized employee cost savings on the corporate restructuring announced in
Forward-looking statements are not based on historical facts, but rather on current expectations, assumptions and projections about future events, including commodity and product prices and demand; the level of liquidity and access to funding; share price volatility; production results; realized prices for production; earnings and revenues; global demand for electric vehicles and the anticipated corresponding demand for cobalt and nickel; the commercialization of certain proprietary technologies and services; advancements in environmental and greenhouse gas (GHG) reduction technology; GHG emissions reduction goals and the anticipated timing of achieving such goals, if at all; statistics and metrics relating to Environmental, Social and Governance (ESG) matters which are based on assumptions or developing standards; environmental rehabilitation provisions; environmental risks and liabilities; compliance with applicable environmental laws and regulations; risks related to the
The Corporation cautions readers of this press release not to place undue reliance on any forward-looking statement as a Corporation cautions readers of this press release not to place undue reliance on any forward-looking statement as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, security market fluctuations and price volatility; level of liquidity and the related ability of the Moa Joint Venture to pay dividends; access to capital; access to financing; the risk to Sherritt’s entitlements to future distributions (including pursuant to the Cobalt Swap) from the Moa Joint Venture, , the impact of global conflicts; changes in the global price for nickel, cobalt, fertilizers, or certain other commodities; risks related to Sherritt’s operations in
The Corporation, together with its Moa Joint Venture is pursuing a range of growth and expansion opportunities, including without limitation, process technology solutions, development projects, commercial implementation opportunities, life of mine extension opportunities and the conversion of mineral resources to reserves. In addition to the risks noted above, factors that could, alone or in combination, prevent the Corporation from successfully achieving these opportunities may include, without limitation: identifying suitable commercialization and other partners; successfully advancing discussions and successfully concluding applicable agreements with external parties and/or partners; successfully attracting required financing; successfully developing and proving technology required for the potential opportunity; successfully overcoming technical and technological challenges; successful environmental assessment and stakeholder engagement; successfully obtaining intellectual property protection; successfully completing test work and engineering studies, prefeasibility and feasibility studies, piloting, scaling from small scale to large scale production, procurement, construction, commissioning, ramp-up to commercial scale production and completion; and securing regulatory and government approvals. There can be no assurance that any opportunity will be successful, commercially viable, completed on time or on budget, or will generate any meaningful revenues, savings or earnings, as the case may be, for the Corporation. In addition, the Corporation will incur costs in pursuing any particular opportunity, which may be significant. Readers are cautioned that the foregoing list of factors is not exhaustive and should be considered in conjunction with the risk factors described in the Corporation’s other documents filed with the Canadian securities authorities, including without limitation the “Managing Risk” section of the Management’s Discussion and Analysis for the three months and year ended
The Corporation may, from time to time, make oral forward-looking statements. The Corporation advises that the above paragraph and the risk factors described in this press release and in the Corporation’s other documents filed with the Canadian securities authorities should be read for a description of certain factors that could cause the actual results of the Corporation to differ materially from those in the oral forward-looking statements. The forward-looking information and statements contained in this press release are made as of the date hereof and the Corporation undertakes no obligation to update publicly or revise any oral or written forward-looking information or statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. The forward-looking information and statements contained herein are expressly qualified in their entirety by this cautionary statement.
APPENDIX – NON-GAAP AND OTHER FINANCIAL MEASURES
Management uses the measures below to monitor the financial performance of the Corporation and its operating divisions and believes these measures enable investors and analysts to compare the Corporation’s financial performance with its competitors and/or evaluate the results of its underlying business. These measures are intended to provide additional information, not to replace IFRS measures, and do not have a standard definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. As these measures do not have a standardized meaning, they may not be comparable to similar measures provided by other companies.
The non-GAAP and other financial measures are reconciled to the most directly comparable IFRS measure as presented in the consolidated financial statements for the three months and year ended
Combined revenue
The Corporation uses combined revenue as a measure to help management assess the Corporation’s financial performance across its core operations. Combined revenue includes the Corporation’s consolidated revenue, less Oil and Gas revenue, and includes the revenue of the Moa JV within the Metals reportable segment on a 50% basis. Revenue of the Moa JV is included in share of earnings of Moa Joint Venture, net of tax, as a result of the equity method of accounting and excluded from the Corporation’s consolidated revenue.
Revenue at Oil and Gas is excluded from Combined revenue as the segment is not currently exploring for or producing oil and gas and its financial results relate to ancillary drilling services provided to a customer and CUPET and environmental rehabilitation costs for legacy assets, which are not reflective of the Corporation’s core operating activities or revenue generation potential. The exclusion of revenue at Oil and Gas from Combined revenue represents a change in the composition of Combined revenue during the year ended
Management uses this measure to reflect the Corporation’s economic interest in its operations prior to the application of equity accounting to help allocate financial resources and provide investors with information that it believes is useful in understanding the scope of Sherritt’s business, based on its economic interest, irrespective of the accounting treatment.
The table below reconciles combined revenue to revenue per the financial statements:
|
For the three months ended |
|
|
|
For the year ended |
|
|
|
|||||||||||
$ millions |
2023
|
|
|
2022
|
|
Change |
|
2023
|
|
|
2022
|
|
Change |
||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Revenue by reportable segment |
|
|
|
|
|
|
|
|
|
|
|||||||||
Metals(1) |
$ |
125.9 |
|
$ |
223.5 |
|
(44 |
%) |
$ |
603.7 |
|
$ |
795.1 |
|
(24 |
%) |
|||
Power |
|
14.0 |
|
|
10.5 |
|
33 |
% |
|
47.1 |
|
|
37.1 |
|
27 |
% |
|||
Technologies |
|
0.3 |
|
|
0.5 |
|
(40 |
%) |
|
1.3 |
|
|
1.8 |
|
(28 |
%) |
|||
Corporate |
|
0.3 |
|
|
0.1 |
|
200 |
% |
|
0.8 |
|
|
0.7 |
|
14 |
% |
|||
Combined revenue |
$ |
140.5 |
|
$ |
234.6 |
|
(40 |
%) |
$ |
652.9 |
|
$ |
834.7 |
|
(22 |
%) |
|||
Adjustment for Moa Joint Venture |
|
(107.7 |
) |
|
(188.5 |
) |
|
|
(442.2 |
) |
|
(672.1 |
) |
|
|||||
Adjustment for Oil and Gas |
|
2.0 |
|
|
2.5 |
|
|
|
12.6 |
|
|
16.2 |
|
|
|||||
Financial statement revenue |
$ |
34.8 |
|
$ |
48.6 |
|
(28 |
%) |
$ |
223.3 |
|
$ |
178.8 |
|
25 |
% |
(1) |
Revenue of Metals for the three months ended |
Adjusted EBITDA
The Corporation defines Adjusted EBITDA as (loss) earnings from operations and joint venture, which excludes net finance expense, income tax expense and loss from discontinued operations, net of tax, as reported in the financial statements for the period, adjusted for: depletion, depreciation and amortization; impairment losses on non-current non-financial assets and investments; and gains or losses on disposal of property, plant and equipment of the Corporation and the Moa JV. The exclusion of impairment losses eliminates the non-cash impact of the losses.
Earnings/loss from operations at Oil and Gas (net of depletion, depreciation and amortization, if applicable) is deducted from/added back to Adjusted EBITDA as the segment is not currently exploring for or producing oil and gas and its financial results relate to ancillary drilling services provided to a customer and CUPET and environmental rehabilitation costs for legacy assets, which are not reflective of the Corporation’s core operating activities or cash generation potential. The adjustment for earnings/loss from operations at Oil and Gas (net of depletion, depreciation and amortization, if applicable) represents a change in the composition of Adjusted EBITDA during the year ended
Management uses Adjusted EBITDA internally to evaluate the cash generation potential of Sherritt’s operating divisions on a combined and segment basis as an indicator of ability to fund working capital needs, meet covenant obligations, service debt and fund capital expenditures, as well as provide a level of comparability to similar entities. Management believes that Adjusted EBITDA provides useful information to investors in evaluating the Corporation’s operating results in the same manner as management and the Board of Directors.
The tables below reconcile (loss) earnings from operations and joint venture per the financial statements to Adjusted EBITDA:
$ millions, for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
2023 |
|
||||||||||||||
Metals(1) |
|
|
Power |
|
Techno-
|
|
|
Oil and
|
|
|
Corporate |
|
|
Adjustment
|
|
|
Total |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
(Loss) earnings from operations and joint venture per financial statements |
$ |
(22.0 |
) |
$ |
5.9 |
$ |
(3.5 |
) |
$ |
(23.3 |
) |
$ |
(1.6 |
) |
$ |
1.1 |
|
$ |
(43.4 |
) |
|||||||
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Depletion, depreciation and amortization |
|
2.8 |
|
|
0.7 |
|
- |
|
|
- |
|
|
0.2 |
|
|
- |
|
|
3.7 |
|
|||||||
Oil and Gas loss from operations |
|
- |
|
|
- |
|
- |
|
|
23.3 |
|
|
- |
|
|
- |
|
|
23.3 |
|
|||||||
Adjustments for share of earnings of Moa Joint Venture: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Depletion, depreciation and amortization |
|
10.5 |
|
|
- |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
10.5 |
|
|||||||
Net finance expense |
|
- |
|
|
- |
|
- |
|
|
- |
|
|
- |
|
|
1.9 |
|
|
1.9 |
|
|||||||
Income tax recoveries |
|
- |
|
|
- |
|
- |
|
|
- |
|
|
- |
|
|
(3.0 |
) |
|
(3.0 |
) |
|||||||
Adjusted EBITDA |
$ |
(8.7 |
) |
$ |
6.6 |
$ |
(3.5 |
) |
$ |
- |
|
$ |
(1.4 |
) |
$ |
- |
|
$ |
(7.0 |
) |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ millions, for the three months ended |
|
|
|
|
|
|
|
|
|
|
|
2022 |
|
||||||||||||||
Metals(1) |
|
Power |
|
Techno-
|
|
|
Oil and
|
|
|
Corporate |
|
|
Adjustment
|
|
|
Total |
|||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Earnings (loss) from operations and joint venture per financial statements |
$ |
30.5 |
|
$ |
4.5 |
|
$ |
(4.4 |
) |
|
$ |
(17.1 |
) |
|
$ |
(11.6 |
) |
|
$ |
(2.0 |
) |
|
$ |
(0.1 |
) |
||
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Depletion, depreciation and amortization |
|
2.8 |
|
|
1.6 |
|
|
- |
|
|
|
- |
|
|
|
0.3 |
|
|
|
- |
|
|
|
4.7 |
|
||
Oil and Gas loss from operations |
|
- |
|
|
- |
|
|
- |
|
|
|
17.1 |
|
|
|
- |
|
|
|
- |
|
|
|
17.1 |
|
||
Adjustments for share of earnings of Moa Joint Venture: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||
Depletion, depreciation and amortization |
|
11.8 |
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
11.8 |
|
||
Net finance income |
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
(1.6 |
) |
|
|
(1.6 |
) |
||
Income tax expense |
|
- |
|
|
- |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3.6 |
|
|
|
3.6 |
|
||
Adjusted EBITDA |
$ |
45.1 |
|
$ |
6.1 |
|
$ |
(4.4 |
) |
|
$ |
- |
|
|
$ |
(11.3 |
) |
|
$ |
- |
|
|
$ |
35.5 |
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ millions, for the year ended |
|
|
|
|
|
|
|
|
|
2023 |
|
||||||||||||||||
Metals(2) |
|
|
Power |
|
Techno-
|
|
|
Oil and
|
|
|
Corporate |
|
|
Adjustment
|
|
|
Total |
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
(Loss) earnings from operations and joint venture per financial statements |
$ |
(2.1 |
) |
$ |
20.7 |
$ |
(15.4 |
) |
$ |
(30.2 |
) |
$ |
(16.2 |
) |
$ |
(0.2 |
) |
$ |
(43.4 |
) |
|||||||
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Depletion, depreciation and amortization |
|
10.6 |
|
|
2.5 |
|
0.1 |
|
|
0.2 |
|
|
0.9 |
|
|
- |
|
|
14.3 |
|
|||||||
Oil and Gas loss from operations, net of depletion, depreciation and amortization |
|
- |
|
|
- |
|
- |
|
|
30.0 |
|
|
- |
|
|
- |
|
|
30.0 |
|
|||||||
Adjustments for share of earnings of Moa Joint Venture: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Depletion, depreciation and amortization |
|
43.6 |
|
|
- |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
43.6 |
|
|||||||
Impairment of property, plant and equipment |
|
1.5 |
|
|
- |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
1.5 |
|
|||||||
Net finance income |
|
- |
|
|
- |
|
- |
|
|
- |
|
|
- |
|
|
(0.5 |
) |
|
(0.5 |
) |
|||||||
Income tax expense |
|
- |
|
|
- |
|
- |
|
|
- |
|
|
- |
|
|
0.7 |
|
|
0.7 |
|
|||||||
Adjusted EBITDA |
$ |
53.6 |
|
$ |
23.2 |
$ |
(15.3 |
) |
$ |
- |
|
$ |
(15.3 |
) |
$ |
- |
|
$ |
46.2 |
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ millions, for the year ended |
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|||||||||||||
|
Metals(2) |
|
|
Power |
|
|
Techno-
|
|
|
Oil and
|
|
|
Corporate |
|
|
Adjustment
|
|
|
Total |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Earnings (loss) from operations and joint venture per financial statements |
$ |
197.9 |
$ |
8.7 |
$ |
(14.8 |
) |
$ |
(16.3 |
) |
$ |
(27.4 |
) |
$ |
(29.4 |
) |
$ |
118.7 |
|||||||||
Add (deduct): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Depletion, depreciation and amortization |
|
10.4 |
|
13.6 |
|
0.1 |
|
|
0.8 |
|
|
1.1 |
|
|
- |
|
|
26.0 |
|||||||||
Oil and Gas loss from operations, net of depletion, depreciation and amortization |
|
- |
|
- |
|
- |
|
|
15.5 |
|
|
- |
|
|
- |
|
|
15.5 |
|||||||||
Adjustments for share of earnings of Moa Joint Venture: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Depletion, depreciation and amortization |
|
43.5 |
|
- |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
43.5 |
|||||||||
Net finance expense |
|
- |
|
- |
|
- |
|
|
- |
|
|
- |
|
|
5.1 |
|
|
5.1 |
|||||||||
Income tax expense |
|
- |
|
- |
|
- |
|
|
- |
|
|
- |
|
|
24.3 |
|
|
24.3 |
|||||||||
Adjusted EBITDA |
$ |
251.8 |
|
$ |
22.3 |
$ |
(14.7 |
) |
$ |
- |
|
$ |
(26.3 |
) |
$ |
- |
|
$ |
233.1 |
(1) |
Adjusted EBITDA of Metals for the three months ended |
(2) |
Adjusted EBITDA of Metals for the year ended |
Average-realized price
Average-realized price is generally calculated by dividing revenue by sales volume for the given product in a given segment. The average-realized price for power excludes by-product revenue, as this revenue is not earned directly for power generation. Transactions by a Moa JV marketing company, included in other revenue, are excluded.
Management uses this measure, and believes investors use this measure, to compare the relationship between the revenue per unit and direct costs on a per unit basis in each reporting period for nickel, cobalt, fertilizer and power and provide comparability with other similar external operations.
Average-realized price for fertilizer is the weighted-average realized price of ammonia and various ammonium sulphate products.
Average-realized price for nickel and cobalt are expressed in Canadian dollars per pound sold, while fertilizer is expressed in Canadian dollars per tonne sold and electricity is expressed in Canadian dollars per megawatt hour sold.
The tables below reconcile revenue per the financial statements to average-realized price:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
$ millions, except average-realized price and sales volume, for the three months ended |
|
|
|
|
|
|
|
2023 |
|||||||||||||||||||
|
Metals |
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Nickel |
|
|
Cobalt |
|
|
Fertilizer |
|
|
Power |
|
|
|
Other(1) |
|
|
Adjustment
|
|
|
|
Total |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Revenue per financial statements |
$ |
84.1 |
$ |
15.2 |
$ |
23.1 |
$ |
14.0 |
|
$ |
4.1 |
$ |
(107.7 |
) |
$ |
32.8 |
|||||||||||
Adjustments to revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
By-product revenue |
|
- |
|
- |
|
- |
|
(1.0 |
) |
|
|
|
|
|
|
||||||||||||
Revenue for purposes of average-realized price calculation |
|
84.1 |
|
15.2 |
|
23.1 |
|
13.0 |
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Sales volume for the period |
|
7.7 |
|
0.9 |
|
55.5 |
|
225 |
|
|
|
|
|
|
|
||||||||||||
Volume units |
|
Millions of
|
|
|
|
Millions of
|
|
|
|
Thousands
|
|
|
|
Gigawatt
|
|
|
|
||||||||||
Average-realized price(2)(3)(4) |
$ |
10.87 |
$ |
17.23 |
$ |
414.80 |
$ |
57.96 |
|
|
|
|
|
|
|
$ millions, except average-realized price and sales volume, for the three months ended |
|
|
|
|
|
|
|
2022 |
|||||||||||||||||||
|
Metals |
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Nickel |
|
|
Cobalt |
|
|
Fertilizer |
|
|
Power |
|
|
|
Other(1) |
|
|
Adjustment
|
|
|
|
Total |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Revenue per financial statements |
$ |
153.8 |
$ |
22.0 |
$ |
40.4 |
$ |
10.5 |
|
$ |
7.9 |
$ |
(188.5 |
) |
$ |
46.1 |
|||||||||||
Adjustments to revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
By-product revenue |
|
- |
|
- |
|
- |
|
(1.2 |
) |
|
|
|
|
|
|
||||||||||||
Revenue for purposes of average-realized price calculation |
|
153.8 |
|
22.0 |
|
40.4 |
|
9.3 |
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Sales volume for the period |
|
9.9 |
|
0.9 |
|
61.7 |
|
159 |
|
|
|
|
|
|
|
||||||||||||
Volume units |
|
Millions of
|
|
|
|
Millions of
|
|
|
|
Thousands
|
|
|
|
Gigawatt
|
|
|
|
|
|
|
|||||||
Average-realized price(2)(3)(4) |
$ |
15.55 |
$ |
25.72 |
$ |
647.03 |
$ |
58.54 |
|
|
|
|
|
|
|
$ millions, except average-realized price and sales volume, for the year ended |
|
|
|
|
|
|
|
2023 |
|||||||||||||||||||
|
Metals |
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Nickel |
|
|
Cobalt |
|
|
Fertilizer |
|
|
Power |
|
|
|
Other(1) |
|
|
Adjustment
|
|
|
|
Total |
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Revenue per financial statements |
$ |
379.6 |
$ |
104.8 |
$ |
93.3 |
$ |
47.1 |
|
$ |
28.1 |
$ |
(442.2 |
) |
$ |
210.7 |
|||||||||||
Adjustments to revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
By-product revenue |
|
- |
|
- |
|
- |
|
(4.3 |
) |
|
|
|
|
|
|
||||||||||||
Revenue for purposes of average-realized price calculation |
|
379.6 |
|
104.8 |
|
93.3 |
|
42.8 |
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Sales volume for the period |
|
28.4 |
|
6.0 |
|
170.2 |
|
745 |
|
|
|
|
|
|
|
||||||||||||
Volume units |
|
Millions of
|
|
|
|
Millions of
|
|
|
|
Thousands
|
|
|
|
Gigawatt
|
|
|
|
|
|
|
|||||||
Average-realized price(2)(3)(4) |
$ |
13.36 |
$ |
17.47 |
$ |
548.16 |
$ |
57.45 |
|
|
|
|
|
|
|
$ millions, except average-realized price and sales volume, for the year ended |
|
|
|
|
|
|
|
2022 |
|||||||||||||||||||
|
Metals |
|
|
|
|
|
|
|
|
||||||||||||||||||
|
Nickel |
|
|
Cobalt |
|
|
Fertilizer |
|
|
|
Power |
|
|
|
Other(1) |
|
|
Adjustment
|
|
|
|
Total |
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Revenue per financial statements |
$ |
522.8 |
$ |
104.2 |
$ |
129.5 |
$ |
37.1 |
|
$ |
41.1 |
$ |
(672.1 |
) |
$ |
162.6 |
|||||||||||
Adjustments to revenue: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
By-product revenue |
|
- |
|
- |
|
- |
|
(5.0 |
) |
|
|
|
|
|
|
||||||||||||
Revenue for purposes of average-realized price calculation |
|
522.8 |
|
104.2 |
|
129.5 |
|
32.1 |
|
|
|
|
|
|
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Sales volume for the period |
|
35.0 |
|
3.0 |
|
170.4 |
|
568 |
|
|
|
|
|
|
|
||||||||||||
Volume units |
|
Millions of
|
|
|
|
Millions of
|
|
|
|
Thousands
|
|
|
|
Gigawatt
|
|
|
|
|
|
|
|||||||
Average-realized price(2)(3)(4) |
$ |
14.93 |
$ |
34.26 |
$ |
759.91 |
$ |
56.47 |
|
|
|
|
|
|
|
(1) |
Other revenue includes revenue from the Oil and Gas, Technologies and Corporate reportable segments. |
(2) |
Average-realized price may not calculate exactly based on amounts presented due to foreign exchange and rounding. |
(3) |
Power, average-realized price per MWh. |
(4) |
Fertilizer, average-realized price per tonne. |
Unit operating cost/NDCC
With the exception of Metals, which uses NDCC, unit operating cost is generally calculated by dividing cost of sales as reported in the financial statements, less depreciation, depletion and amortization in cost of sales, the impact of impairment losses, gains and losses on disposal of property, plant, and equipment and exploration and evaluation assets and certain other non-production related costs, by the number of units sold.
Metals’ NDCC is calculated by dividing cost of sales, as reported in the financial statements, adjusted for the following: depreciation, depletion, amortization and impairment losses in cost of sales; cobalt by-product, fertilizer and other revenue; cobalt gain/loss; and other costs primarily related to the impact of opening and closing inventory values, by the number of finished nickel pounds sold in the period.
Unit operating costs for nickel and electricity are key measures that management and investors uses to monitor performance. NDCC of nickel is a widely-used performance measure for nickel producers. Management uses unit operating costs/NDCC to assess how well the Corporation’s producing mine and power facilities are performing and to assess overall production efficiency and effectiveness internally across periods and compared to its competitors.
Unit operating cost (NDCC) for nickel is expressed in
The tables below reconcile cost of sales per the financial statements to unit operating cost/NDCC:
|
|
|
|
|
|
|
|
|
|
|
|||||||||
$ millions, except unit cost and sales volume, for the three months ended |
|
|
|
|
|
|
|
2023 |
|||||||||||
|
Metals |
|
|
|
Power |
|
|
|
Other(1) |
|
|
|
Adjustment
|
|
|
|
Total |
||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of sales per financial statements |
$ |
146.6 |
|
$ |
7.1 |
|
$ |
28.6 |
$ |
(122.2 |
) |
$ |
60.1 |
||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Depletion, depreciation and amortization in cost of sales |
|
(13.3 |
) |
|
(0.5 |
) |
|
|
|
|
|
|
|||||||
|
|
133.3 |
|
|
6.6 |
|
|
|
|
|
|
|
|||||||
Adjustments to cost of sales: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Cobalt by-product, fertilizer and other revenue |
|
(41.8 |
) |
|
- |
|
|
|
|
|
|
|
|||||||
Cobalt gain |
|
- |
|
|
- |
|
|
|
|
|
|
|
|||||||
Impact of opening/closing inventory and other(2) |
|
(7.8 |
) |
|
- |
|
|
|
|
|
|
|
|||||||
Cost of sales for purposes of unit cost calculation |
|
83.7 |
|
|
6.6 |
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Sales volume for the period |
|
7.7 |
|
|
225 |
|
|
|
|
|
|
|
|||||||
Volume units |
|
Millions of
|
|
|
|
Gigawatt
|
|
|
|
|
|
|
|||||||
Unit operating cost(3)(4) |
$ |
10.81 |
|
$ |
29.16 |
|
|
|
|
|
|
|
|||||||
Unit operating cost (US$ per pound) (NDCC)(5) |
$ |
7.87 |
|
|
|
|
|
|
|
|
|
$ millions, except unit cost and sales volume, for the three months ended |
|
|
|
|
|
|
|
2022 |
|||||||||||
|
Metals |
|
|
|
Power |
|
|
|
Other(1) |
|
|
|
Adjustment
|
|
|
|
Total |
||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of sales per financial statements |
$ |
189.5 |
|
$ |
4.9 |
|
$ |
22.0 |
$ |
(159.7 |
) |
$ |
56.7 |
||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Depletion, depreciation and amortization in cost of sales |
|
(14.6 |
) |
|
(1.5 |
) |
|
|
|
|
|
|
|||||||
|
|
174.9 |
|
|
3.4 |
|
|
|
|
|
|
|
|||||||
Adjustments to cost of sales: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Cobalt by-product, fertilizer and other revenue |
|
(69.7 |
) |
|
- |
|
|
|
|
|
|
|
|||||||
Impact of opening/closing inventory and other(2) |
|
(11.4 |
) |
|
- |
|
|
|
|
|
|
|
|||||||
Cost of sales for purposes of unit cost calculation |
|
93.8 |
|
|
3.4 |
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Sales volume for the period |
|
9.9 |
|
|
159 |
|
|
|
|
|
|
|
|||||||
Volume units |
|
Millions of
|
|
Gigawatt
|
|
|
|
|
|
|
|||||||||
Unit operating cost(3)(4) |
$ |
9.48 |
|
$ |
21.41 |
|
|
|
|
|
|
|
|||||||
Unit operating cost (US$ per pound) (NDCC)(5) |
$ |
7.00 |
|
|
|
|
|
|
|
|
|
$ millions, except unit cost and sales volume, for the year ended |
|
|
|
|
|
|
|
2023 |
|||||||||||
|
Metals |
|
|
|
Power |
|
|
|
Other(1) |
|
|
|
Adjustment
|
|
|
|
Total |
||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of sales per financial statements |
$ |
601.4 |
|
$ |
22.7 |
|
$ |
57.8 |
$ |
(416.4 |
) |
$ |
265.5 |
||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Depletion, depreciation and amortization in cost of sales |
|
(54.2 |
) |
|
(2.0 |
) |
|
|
|
|
|
|
|||||||
|
|
547.2 |
|
|
20.7 |
|
|
|
|
|
|
|
|||||||
Adjustments to cost of sales: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Cobalt by-product, fertilizer and other revenue |
|
(224.1 |
) |
|
- |
|
|
|
|
|
|
|
|||||||
Cobalt gain |
|
(2.7 |
) |
|
- |
|
|
|
|
|
|
|
|||||||
Impact of opening/closing inventory and other(2) |
|
(43.5 |
) |
|
- |
|
|
|
|
|
|
|
|||||||
Cost of sales for purposes of unit cost calculation |
|
276.9 |
|
|
20.7 |
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Sales volume for the period |
|
28.4 |
|
|
745 |
|
|
|
|
|
|
|
|||||||
Volume units |
|
Millions of
|
|
Gigawatt
|
|
|
|
|
|
|
|||||||||
Unit operating cost(3)(4) |
$ |
9.75 |
|
$ |
27.70 |
|
|
|
|
|
|
|
|||||||
Unit operating cost (US$ per pound) (NDCC)(5) |
$ |
7.22 |
|
|
|
|
|
|
|
|
|
$ millions, except unit cost and sales volume, for the year ended December 31 |
|
|
|
|
|
|
|
2022 |
|||||||||||
|
|
Metals |
|
|
|
Power |
|
|
|
Other(1) |
|
|
|
Adjustment
|
|
|
|
Total |
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Cost of sales per financial statements |
$ |
587.8 |
|
$ |
24.2 |
|
$ |
45.3 |
$ |
(494.6 |
) |
$ |
162.7 |
||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Depletion, depreciation and amortization in cost of sales |
|
(53.9 |
) |
|
(13.2 |
) |
|
|
|
|
|
|
|||||||
|
|
533.9 |
|
|
11.0 |
|
|
|
|
|
|
|
|||||||
Adjustments to cost of sales: |
|
|
|
|
|
|
|
|
|
|
|||||||||
Cobalt by-product, fertilizer and other revenue |
|
(272.3 |
) |
|
- |
|
|
|
|
|
|
|
|||||||
Impact of opening/closing inventory and other(2) |
|
(27.7 |
) |
|
- |
|
|
|
|
|
|
|
|||||||
Cost of sales for purposes of unit cost calculation |
|
233.9 |
|
|
11.0 |
|
|
|
|
|
|
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Sales volume for the period |
|
35.0 |
|
|
568 |
|
|
|
|
|
|
|
|||||||
Volume units |
|
Millions of
|
|
Gigawatt
|
|
|
|
|
|
|
|||||||||
Unit operating cost(3)(4) |
$ |
6.68 |
|
$ |
19.39 |
|
|
|
|
|
|
|
|||||||
Unit operating cost (US$ per pound) (NDCC)(5) |
$ |
5.14 |
|
|
|
|
|
|
|
|
|
(1) |
Other is composed of the cost of sales of the Oil and Gas and Technologies reportable segments. |
(2) |
Other is primarily composed of royalties and other contributions, sales discounts and other non-cash items. |
(3) |
Unit operating cost/NDCC may not calculate exactly based on amounts presented due to foreign exchange and rounding. |
(4) |
Power, unit operating cost price per MWh. |
(5) |
Unit operating costs in US$ are converted at the average exchange rate for the period. |
Adjusted net earnings/loss from continuing operations and adjusted net earnings/loss from continuing operations per share
The Corporation defines adjusted net earnings/loss from continuing operations as net earnings/loss from continuing operations less items not reflective of the Corporation’s current or future operational performance. These adjusting items include, but are not limited to, inventory write-downs/obsolescence, impairment of assets, gains and losses on the acquisition or disposal of assets, unrealized foreign exchange gains and losses, gains and losses on financial assets and liabilities and other one-time adjustments that have not occurred in the past two years and are not expected to recur in the next two years. While some adjustments are recurring (such as unrealized foreign exchange (gain) loss and revaluations of allowances for expected credit losses (ACL)), management believes that they do not reflect the Corporation’s current or future operational performance.
Net earnings/loss from continuing operations at Oil and Gas is deducted from/added back to adjusted earnings/loss from continuing operations as the segment is not currently exploring for or producing oil and gas and its financial results relate to ancillary drilling services provided to a customer and CUPET and environmental rehabilitation costs for legacy assets, which are not reflective of the Corporation’s core operating activities or future operational performance. The adjustment for net earnings/loss from continuing operations at Oil and Gas represents a change in the composition of adjusted net earnings/loss from continuing operations during the year ended December 31, 2023 to better reflect the Corporation’s core operating activities and future operational performance and the prior year measure has been restated for comparative purposes.
Adjusted net earnings/loss from continuing operations per share is defined consistent with the definition above and divided by the Corporation’s weighted-average number of common shares outstanding.
Management uses these measures internally and believes that they provide investors with performance measures with which to assess the Corporation’s current or future operational performance by adjusting for items or transactions that are not reflective of its current or future operational performance.
The table below reconcile net (loss) earnings from continuing operations and net (loss) earnings from continuing operations per share, both per the financial statements, to adjusted net (loss) earnings from continuing operations and adjusted net (loss) earnings from continuing operations per share, respectively:
For the three months ended December 31 |
$ millions |
|
2023
|
|
$ millions |
|
2022
|
||||||||
|
|
|
|
|
|
|
|
|
|||||||
Net loss from continuing operations |
$ |
(53.4 |
) |
$ |
(0.13 |
) |
$ |
(7.3 |
) |
$ |
(0.02 |
) |
|||
|
|
|
|
|
|
|
|
|
|||||||
Adjusting items: |
|
|
|
|
|
|
|
|
|||||||
|
|
0.9 |
|
|
- |
|
|
4.1 |
|
|
0.01 |
|
|||
Corporate - Gain on repurchase of notes |
|
- |
|
|
- |
|
|
(7.1 |
) |
|
(0.02 |
) |
|||
Corporate - Transaction finance charges on repurchase of notes |
|
- |
|
|
- |
|
|
1.1 |
|
|
- |
|
|||
Metals - Moa JV - Inventory write-down/obsolescence |
|
1.6 |
|
|
- |
|
|
1.6 |
|
|
- |
|
|||
Metals - Fort Site - Inventory write-down/obsolescence |
|
0.7 |
|
|
- |
|
|
0.6 |
|
|
- |
|
|||
Power - Gain on modification of Cuban receivables |
|
- |
|
|
- |
|
|
(2.0 |
) |
|
(0.01 |
) |
|||
Power - Loss (gain) on revaluation of GNC receivable |
|
3.5 |
|
|
0.01 |
|
|
(2.4 |
) |
|
(0.01 |
) |
|||
Power - (Gain) loss on revaluation of Energas payable |
|
(1.3 |
) |
|
- |
|
|
4.0 |
|
|
0.01 |
|
|||
Oil and Gas - Net loss from continuing operations |
|
20.1 |
|
|
0.05 |
|
|
15.0 |
|
|
0.04 |
|
|||
Total adjustments, before tax |
$ |
25.5 |
|
$ |
0.06 |
|
$ |
14.9 |
|
$ |
0.02 |
|
|||
Tax adjustments |
|
- |
|
|
- |
|
|
0.8 |
|
|
- |
|
|||
Adjusted net (loss) earnings from continuing operations |
$ |
(27.9 |
) |
$ |
(0.07 |
) |
$ |
8.4 |
|
$ |
0.02 |
|
For the year ended December 31 |
$ millions |
|
|
2023
|
|
|
$ millions |
|
|
2022
|
|||||
|
|
|
|
|
|
|
|
|
|||||||
Net (loss) earnings from continuing operations |
$ |
(64.3 |
) |
$ |
(0.16 |
) |
$ |
63.7 |
|
$ |
0.16 |
|
|||
|
|
|
|
|
|
|
|
|
|||||||
Adjusting items: |
|
|
|
|
|
|
|
|
|||||||
|
|
1.1 |
|
|
- |
|
|
(5.4 |
) |
|
(0.01 |
) |
|||
Corporate - Gain on repurchase of notes |
|
(3.5 |
) |
|
(0.01 |
) |
|
(20.9 |
) |
|
(0.05 |
) |
|||
Corporate - Transaction finance charges on repurchase of notes |
|
- |
|
|
- |
|
|
2.3 |
|
|
0.01 |
|
|||
Metals - Moa JV - Impairment of property, plant and equipment |
|
1.5 |
|
|
- |
|
|
- |
|
|
- |
|
|||
Metals - Moa JV - Inventory write-down/obsolescence |
|
4.6 |
|
|
0.01 |
|
|
2.1 |
|
|
0.01 |
|
|||
Metals - Fort Site - Inventory write-down/obsolescence |
|
8.9 |
|
|
0.03 |
|
|
0.6 |
|
|
- |
|
|||
Metals - Metals Marketing - Inventory write-down/obsolescence |
|
1.1 |
|
|
- |
|
|
- |
|
|
- |
|
|||
Metals - Metals Marketing - Cobalt gain |
|
2.7 |
|
|
0.01 |
|
|
- |
|
|
- |
|
|||
Power - Trade accounts receivable, net ACL revaluation |
|
- |
|
|
- |
|
|
1.4 |
|
|
- |
|
|||
Power - Gain on modification of Cuban receivables |
|
- |
|
|
- |
|
|
(2.0 |
) |
|
(0.01 |
) |
|||
Power - Energas conditional sales agreement ACL revaluation(1) |
|
- |
|
|
- |
|
|
49.0 |
|
|
0.12 |
|
|||
Power - Gain on revaluation of GNC receivable |
|
(14.7 |
) |
|
(0.04 |
) |
|
(2.4 |
) |
|
(0.01 |
) |
|||
Power - Loss on revaluation of Energas payable |
|
7.6 |
|
|
0.02 |
|
|
4.0 |
|
|
0.01 |
|
|||
Oil and Gas - Net loss from continuing operations |
|
26.6 |
|
|
0.07 |
|
|
19.5 |
|
|
0.05 |
|
|||
Total adjustments, before tax |
$ |
35.9 |
|
$ |
0.09 |
|
$ |
48.2 |
|
$ |
0.12 |
|
|||
Tax adjustments |
|
0.3 |
|
|
- |
|
|
0.8 |
|
|
- |
|
|||
Adjusted net (loss) earnings from continuing operations |
$ |
(28.1 |
) |
$ |
(0.07 |
) |
$ |
112.7 |
|
$ |
0.28 |
|
(1) |
In the comparative period, Power recognized a non-cash loss of $49.0 million for the year ended December 31, 2022 on the revaluation of the ACL on the Energas CSA as a result of the Cobalt Swap signed by the Corporation subsequent to the comparative period end and, in part, due to the suspension of interest over the five-year period of the agreement. |
Spending on capital
The Corporation defines spending on capital for each segment as property, plant and equipment and intangible asset expenditures on a cash basis adjusted to the accrual basis in order to account for assets that are available for use by the Corporation and the Moa Joint Venture prior to payment and includes adjustments to accruals. The Metals segment’s spending on capital includes the Fort Site’s expenditures, plus the Corporation’s 50% share of the Moa Joint Venture’s expenditures, which is accounted for using the equity method for accounting purposes.
Combined spending on capital is the aggregate of each segment’s spending on capital or the Corporation’s consolidated property, plant and equipment and intangible asset expenditures and the property, plant and equipment and intangible asset expenditures of the Moa Joint Venture on a 50% basis, all adjusted to the accrual basis.
Combined spending on capital is used by management, and management believes this information is used by investors, to analyze the Corporation and the Moa Joint Venture’s investments in non-current assets that are held for use in the production of nickel, cobalt, fertilizers, oil and gas and power generation.
The tables below reconcile property, plant and equipment and intangible asset expenditures per the financial statements to combined spending on capital, expressed in Canadian dollars:
$ millions, for the three months ended December 31 |
|
|
|
|
|
|
|
|
|
2023 |
||||||||||||
|
Metals |
|
|
|
Power |
|
|
|
Other(1) |
|
|
|
Combined
|
|
|
|
Adjustment
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Property, plant and equipment expenditures(2) |
$ |
17.6 |
$ |
1.3 |
$ |
- |
|
$ |
18.9 |
$ |
(13.4 |
) |
$ |
5.5 |
||||||||
Intangible asset expenditures(2) |
|
- |
|
- |
|
- |
|
|
- |
|
- |
|
|
- |
||||||||
|
|
17.6 |
|
1.3 |
|
- |
|
|
18.9 |
$ |
(13.4 |
) |
$ |
5.5 |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrual adjustment |
|
3.7 |
|
- |
|
(0.1 |
) |
|
3.6 |
|
|
|
|
|||||||||
Spending on capital |
$ |
21.3 |
$ |
1.3 |
$ |
(0.1 |
) |
$ |
22.5 |
|
|
|
|
$ millions, for the three months ended December 31 |
|
|
|
|
|
|
|
|
|
2022 |
||||||||||||
|
Metals |
|
|
|
Power |
|
|
|
Other(1) |
|
|
|
Combined
|
|
|
|
Adjustment
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Property, plant and equipment expenditures(2) |
$ |
24.0 |
$ |
2.1 |
|
$ |
0.1 |
|
$ |
26.2 |
$ |
(15.9 |
) |
$ |
10.3 |
|||||||
Intangible asset expenditures(2) |
|
- |
|
- |
|
|
0.8 |
|
|
0.8 |
|
- |
|
|
0.8 |
|||||||
|
|
24.0 |
|
2.1 |
|
|
0.9 |
|
|
27.0 |
$ |
(15.9 |
) |
$ |
11.1 |
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrual adjustment |
|
2.7 |
|
(0.5 |
) |
|
(0.3 |
) |
|
1.9 |
|
|
|
|
||||||||
Spending on capital |
$ |
26.7 |
$ |
1.6 |
|
$ |
0.6 |
|
$ |
28.9 |
|
|
|
|
$ millions, for the year ended December 31 |
|
|
|
|
|
|
|
|
|
2023 |
||||||||||||
|
Metals |
|
|
|
Power |
|
|
|
Other(1) |
|
|
|
Combined
|
|
|
|
Adjustment
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Property, plant and equipment expenditures(2) |
$ |
57.0 |
$ |
3.2 |
$ |
0.2 |
|
$ |
60.4 |
$ |
(40.3 |
) |
$ |
20.1 |
||||||||
Intangible asset expenditures(2) |
|
- |
|
- |
|
1.2 |
|
|
1.2 |
|
- |
|
|
1.2 |
||||||||
|
|
57.0 |
|
3.2 |
|
1.4 |
|
|
61.6 |
$ |
(40.3 |
) |
$ |
21.3 |
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrual adjustment |
|
5.7 |
|
- |
|
(0.8 |
) |
|
4.9 |
|
|
|
|
|||||||||
Spending on capital |
$ |
62.7 |
$ |
3.2 |
$ |
0.6 |
|
$ |
66.5 |
|
|
|
|
$ millions, for the year ended December 31 |
|
|
|
|
|
|
|
|
|
2022 |
||||||||||||
|
Metals |
|
|
|
Power |
|
|
|
Other(1) |
|
|
|
Combined
|
|
|
|
Adjustment
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Property, plant and equipment expenditures(2) |
$ |
64.2 |
$ |
5.1 |
$ |
0.2 |
$ |
69.5 |
$ |
(41.8 |
) |
$ |
27.7 |
|||||||||
Intangible asset expenditures(2) |
|
- |
|
- |
|
0.8 |
|
0.8 |
|
- |
|
|
0.8 |
|||||||||
|
|
64.2 |
|
5.1 |
|
1.0 |
|
70.3 |
$ |
(41.8 |
) |
$ |
28.5 |
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrual adjustment |
|
9.9 |
|
- |
|
0.3 |
|
10.2 |
|
|
|
|
||||||||||
Spending on capital |
$ |
74.1 |
$ |
5.1 |
$ |
1.3 |
$ |
80.5 |
|
|
|
|
(1) |
Includes property, plant and equipment and intangible asset expenditures of the Oil and Gas and Corporate segments. |
(2) |
Total property, plant and equipment expenditures and total intangible asset expenditures as presented in the Corporation’s consolidated statements of cash flow. |
Combined cash provided (used) by continuing operations for operating activities and combined free cash flow
The Corporation defines cash provided (used) by continuing operations for operating activities by segment as cash provided (used) by continuing operations for operating activities for each segment calculated in accordance with IFRS and adjusted to remove the impact of cash provided (used) by wholly-owned subsidiaries. Combined cash provided (used) by continuing operations for operating activities is the aggregate of each segment’s cash provided (used) by continuing operations for operating activities including the Corporation’s 50% share of the Moa JV’s cash provided (used) by continuing operations for operating activities, which is accounted for using the equity method of accounting and excluded from consolidated cash provided (used) by continuing operations for operating activities.
The Corporation defines free cash flow for each segment as cash provided (used) by continuing operations for operating activities by segment, less cash expenditures on property, plant and equipment and intangible assets, including exploration and evaluation assets. Combined free cash flow is the aggregate of each segment’s free cash flow or the Corporation’s consolidated cash provided (used) by continuing operations for operating activities, less consolidated cash expenditures on property, plant and equipment and intangible assets, including exploration and evaluation assets, less distributions received from Moa JV, plus cash provided (used) by continuing operations for operating activities for the Corporation’s 50% share of the Moa JV, less cash expenditures on property, plant and equipment and intangible assets for the Corporation’s 50% share of the Moa JV.
The Corporate segment’s cash used by continuing operations for operating activities is adjusted to exclude distributions received from Moa JV. Distributions from the Moa JV excluded from Corporate cash used by continuing operations for operating activities are included in the Adjustment for Moa Joint Venture to arrive at total cash provided (used) by continuing operations for operating activities per the financial statements.
The Metals segment’s free cash flow includes the Fort Site and Metals Marketing’s free cash flow, plus the Corporation’s 50% share of the Moa JV’s free cash flow, which is accounted for using the equity method for accounting purposes.
Combined cash provided (used) by continuing operations for operating activities and combined free cash flow are used by management, and management believes this information is used by investors, to analyze cash flows generated from operations and assess its operations’ ability to provide cash or its use of cash, and in the case of combined free cash flow, after funding cash capital requirements, to service current and future working capital needs and service debt.
The tables below reconcile combined cash provided (used) by continuing operations for operating activities to cash provided (used) by continuing operations per the financial statements to combined free cash flow:
$ millions, for the three months ended December 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2023 |
|||||||||||||||
|
Metals(1)(2) |
|
Power |
|
Technol-
|
|
Oil and
|
|
Corporate |
|
Combined
|
|
Adjustment
|
|
|
Total
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash provided (used) by continuing operations for operating activities |
$ |
3.4 |
|
$ |
7.4 |
|
$ |
(3.5 |
) |
$ |
(14.9 |
) |
$ |
(12.6 |
) |
$ |
(20.2) |
$ |
2.1 |
$ |
(18.1) |
||||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Property, plant and equipment expenditures |
|
(17.6 |
) |
|
(1.3 |
) |
|
- |
|
|
- |
|
|
- |
|
|
(18.9) |
|
13.4 |
|
(5.5) |
||||||||
Intangible expenditures |
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
|
- |
|
- |
|
- |
||||||||
Free cash flow |
$ |
(14.2 |
) |
$ |
6.1 |
|
$ |
(3.5 |
) |
$ |
(14.9 |
) |
$ |
(12.6 |
) |
$ |
(39.1) |
$ |
15.5 |
$ |
(23.6) |
$ millions, for the three months ended December 31 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2022 |
|||||||||||||||
|
Metals(1)(2) |
|
|
Power |
|
|
Technol-
|
|
|
Oil and
|
|
|
Corporate |
|
|
Combined
|
|
Adjustment
|
|
|
|
Total
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash provided (used) by continuing operations for operating activities |
$ |
81.6 |
|
$ |
13.5 |
|
$ |
(4.5 |
) |
$ |
(1.7 |
) |
$ |
(19.9 |
) |
$ |
69.0 |
$ |
(28.7 |
) |
$ |
40.3 |
|||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Property, plant and equipment expenditures |
|
(23.9 |
) |
|
(1.5 |
) |
|
- |
|
|
- |
|
|
(0.2 |
) |
|
(25.6) |
|
15.9 |
|
|
(9.7) |
|||||||
Intangible expenditures |
|
- |
|
|
- |
|
|
- |
|
|
(0.2 |
) |
|
- |
|
|
(0.2) |
|
- |
|
|
(0.2) |
|||||||
Free cash flow |
$ |
57.7 |
|
$ |
12.0 |
|
$ |
(4.5 |
) |
$ |
(1.9 |
) |
$ |
(20.1 |
) |
$ |
43.2 |
$ |
(12.8 |
) |
$ |
30.4 |
$ millions, for the year ended December 31 |
|
|
|
|
|
|
|
|
|
|
|
2023 |
|||||||||||||||||
|
Metals(3)(4) |
|
|
Power |
|
|
Technol-
|
|
|
Oil and
|
|
|
Corporate |
|
|
Combined
|
|
Adjustment
|
|
|
|
Total
|
|||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash provided (used) by continuing operations for operating activities |
$ |
115.9 |
|
$ |
16.9 |
|
$ |
(16.5 |
) |
$ |
(11.1 |
) |
$ |
(59.5 |
) |
$ |
45.7 |
$ |
(17.5 |
) |
$ |
28.2 |
|||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Property, plant and equipment expenditures |
|
(57.0 |
) |
|
(3.2 |
) |
|
- |
|
|
(0.2 |
) |
|
- |
|
|
(60.4) |
|
40.3 |
|
|
(20.1) |
|||||||
Intangible expenditures |
|
- |
|
|
- |
|
|
- |
|
|
(1.2 |
) |
|
- |
|
|
(1.2) |
|
- |
|
|
(1.2) |
|||||||
Free cash flow |
$ |
58.9 |
|
$ |
13.7 |
|
$ |
(16.5 |
) |
$ |
(12.5 |
) |
$ |
(59.5 |
) |
$ |
(15.9) |
$ |
22.8 |
|
$ |
6.9 |
$ millions, for the year ended December 31 |
|
|
|
|
|
|
|
|
|
|
|
2022 |
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Metals(3)(4) |
|
|
Power |
|
|
Technol-
|
|
|
Oil and
|
|
|
|
Corporate |
|
|
Combined
|
|
Adjustment
|
|
|
|
Total
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Cash provided (used) by continuing operations for operating activities |
$ |
171.6 |
|
$ |
37.4 |
|
$ |
(15.1 |
) |
$ |
(3.9 |
) |
$ |
(54.6 |
) |
$ |
135.4 |
$ |
(45.1 |
) |
$ |
90.3 |
|||||||
Less: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Property, plant and equipment expenditures |
|
(64.2 |
) |
|
(5.1 |
) |
|
- |
|
|
(0.1 |
) |
|
(0.1 |
) |
|
(69.5) |
|
41.8 |
|
|
(27.7) |
|||||||
Intangible expenditures |
|
- |
|
|
- |
|
|
- |
|
|
(0.8 |
) |
|
- |
|
|
(0.8) |
|
- |
|
|
(0.8) |
|||||||
Free cash flow |
$ |
107.4 |
|
$ |
32.3 |
|
$ |
(15.1 |
) |
$ |
(4.8 |
) |
$ |
(54.7 |
) |
$ |
65.1 |
$ |
(3.3 |
) |
$ |
61.8 |
(1) |
Cash (used) provided by continuing operations for operating activities for the Moa JV, Fort Site and Metals Marketing was $(2.2) million, $4.0 million and $1.6 million, respectively, for the three months ended December 31, 2023 (December 31, 2022 - $85.8 million, $(0.1) million and $(4.1) million, respectively). |
(2) |
Property, plant and equipment expenditures and intangible expenditures for the Moa JV, Fort Site and Metals Marketing was $13.5 million, $4.1 million and nil, respectively, for the three months ended December 31, 2023 (December 31, 2022 - $15.9 million, $8.0 million and nil, respectively). |
(3) |
Cash provided (used) by continuing operations for operating activities for the Moa JV, Fort Site and Metals Marketing was $49.4 million, $(13.4) million and $79.9 million, respectively, for the year ended December 31, 2023 (December 31, 2022 - $145.8 million, $31.3 million and $(5.5) million, respectively). |
(4) |
Property, plant and equipment expenditures and intangible expenditures for the Moa JV, Fort Site and Metals Marketing was $40.3 million, $16.7 million and nil, respectively, for the year ended December 31, 2023 (December 31, 2022 - $41.8 million, $22.4 million and nil, respectively). |
View source version on businesswire.com: https://www.businesswire.com/news/home/20240206673677/en/
For further investor information contact:
Director, Investor Relations and Corporate Affairs
Telephone: (416) 935-2451
Toll-free: 1 (800) 704-6698
E-mail: investor@sherritt.com
Bay Adelaide Centre, East Tower
22
www.sherritt.com
Source: