TORONTO, Aug 4 (Reuters) - Canadian miner Sherritt International Corp said on Thursday that lenders for a large Madagascar nickel mine, which it holds with partners, will defer six principal loan payments totaling $565 million until 2021.
The agreement gives additional time for nickel prices to recover and partners to manage their funding requirements, said Sherritt, which holds a 40 percent stake in the Ambatovy joint venture. Japan’s Sumitomo Corp holds a 35 percent stake and Korea Resources Corp (Kores) 27.5 percent.
They owe lenders, including Export Development Canada and the African Development Bank, $1.6 billion. But with nickel prices down nearly 80 percent since 2007, the mine is producing at a loss.
Semi-annual cash interest payments will continue under the deferral plan, Sherritt said, with principal and interest repayments starting in 2021 or earlier, depending on cash flow generation.
Sherritt Chief Executive David Pathe said in an interview last week he was “encouraged” by an increase in nickel prices to around $4.70 a pound, but that long-term prices of $8 to $9 a pound were needed to sustain an industry where about half of nickel operations are producing at a loss.
Prices of nickel, a top performer among industrial metals in recent months, are likely to retreat by the end of the year even though shortages are becoming more severe, according to a Reuters poll released last week.
Reporting by Susan Taylor; Editing by Tom Brown