Higher resource prices boosted this Canadian mining stock’s latest results

Sherritt International Corp., symbol S on Toronto, is a diversified natural-resource company that produces nickel, cobalt, thermal coal, oil and gas. It also licenses its own mining technologies to other metals companies, and manages 376 megawatts of power-generation capacity in Cuba. In the three months ended March 31, 2011, the Canadian mining stock’s earnings jumped 116.3%, to $63.6 million, or $0.22 a share. A year earlier, it earned $29.4 million, or $0.10 a share. Revenue rose 29.5%, to $474.5 million from $366.4 million a year earlier. Higher prices for nickel, coal and oil were the main reasons for the improved results. Operating in Cuba entails political risk. To lower this risk, the company is diversifying its operations by investing in other countries. For example, earlier this year it bought a 46% interest in mining giant Rio Tinto’s huge Sulawesi nickel project in Indonesia. In exchange, Sherritt will pay $110 million U.S. to fund a mine feasibility study on the site. Sherritt’s long-term debt of $1.5 billion is a high 65.2 % of its market cap. However, the company holds cash of $732.0 million, or $2.48 a share. The dividend paying stock’s payout rose 5.6% with the January 2011 payment, to $0.038 from $0.036. The shares now yield 1.9%. If you invest in Canadian mining stocks like Sherritt, you should have a subscription to Stock Pickers Digest, our newsletter for aggressive investing. You can get the latest issue absolutely FREE when you subscribe now. Click here to learn how.

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Jim Bates

Jim is an associate editor at TSI Network. He is the lead reporter and analyst for The Successful Investor and Wall Street Stock Forecaster and a member of the Investment Planning Committee. Jim has held the Chartered Financial Analyst designation since 1992 and spent more than a decade at the Financial Post DataGroup before joining TSI Network. He has a Bachelor of Commerce degree from the University of Toronto.

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