In order to protect its balance sheet in the face of depressed commodity prices, TSX-listed Sherritt International after market close on Thursday announced that the board had decided to suspend the C$0.01 per share quarterly dividend and to implement siginificant capital spending cuts in 2016.

Capital expenditures for 2015 were at the end of the second quarter revised downward by $15-million, to the current $195-million, and for 2016, based on an early capital allocation review, could range between 25% to 35% less than 2015’s allocation.

The base metals and oil and gas producer advised that at current spot prices of about $4.50/lb, nickel was down 32% since the first quarter of 2014, when the dividend was last reduced from $0.043 to $0.01 per share quarterly. Nickel and crude oil were both trading at lows last seen in 2009.

We are taking action to protect our balance sheet and to withstand a commodity pricing environment where more than 60% of global nickel production is underwater on a cash cost basis. Our assets in Cuba, both at Moa and in oil and gas, have produced profitably for over 20 years, and Ambatovy is proving its potential as one of the world’s largest and lowest-cost integrated laterite nickel operations.

“The nickel reserves in Moa and Ambatovy are expected to support commercial production for the next 20 years. We see cash on our balance sheet as critical in managing through this challenging period, and being able to capitalize on the next cycle of rising prices,” president and CEO David Pathe commented.

Sherritt advised that suspending dividend payments and cutting capital spending and operating costs were both part of a broader strategy, with actions already in progress or to be implemented through 2016, to achieve the strategic objectives of increasing liquidity by conserving Sherritt’s cash, cash equivalents and short-term investments; managing capital spending and operating costs for the Sherritt business units by aligning capital spending with cash-flow generation in 2016; and achieving financial completion at Ambatovy by month-end, after which time the $1.7-billion Ambatovy Joint Venture Financing would become ‘non-recource’ to all the Ambatovy partners.

Sherritt confirmed that the Moa JV acid plant construction would continue as scheduled, with non-recource financing for the project being provided by a Cuban financial institution.

• [Editor:Juan]