Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Sherritt International First Quarter 2024 Results Conference Call and webcast. At this time, all participants are in listen-only mode. I would like to remind everyone that this conference call is being recorded today, Thursday, May 9th, 2024, at 10:00 A.M. Eastern Time. I will now turn the presentation over to Tom Halton, Director, Investor Relations. Please go ahead.
Thank you, Operator, and welcome, everyone, to Sherritt's First Quarter 2024 Conference Call. We released our First Quarter results last night. Our press release, MD&A, and financial statements are available on our website and on SEDAR+. During today's call, we will be referring to our presentation that is available on our website and on today's webcast. As we will be making forward-looking statements and references to certain non-GAAP financial measures, please refer to the cautionary notes on slide three of our presentation. As well, reconciliations of non-GAAP measures to the most directly comparable IFRS measures are included in the appendix of the presentation. On the call today is Leon Binedell, President and Chief Executive Officer, Yasmin Gabriel, Chief Financial Officer, and Alvin Saruk, Chief Operating Officer. Following a review of our results, we will open the call to questions.
It's now my pleasure to pass the call over to Leon.
Thank you, Tom, and good morning, everyone, and thank you for joining us today. I will start on slide 4 of our presentation. Before I begin the call today with our first quarter highlights, I'd like to welcome Alvin Saruk, who is joining the call this quarter. He'll provide more detailed discussion on our operating results. As a reminder, Alvin was appointed Chief Operating Officer earlier this year. He has more than 30 years of experience with Sherritt, including at senior executive level managing large-scale operations, overseeing complex HPAL mining and processing projects, and strengthening partner relations while overseeing operations in Cuba. Most recently, Alvin was Senior Vice President of our oil and gas and power divisions, as well as head of our growth projects, where he has been instrumental in the success of our Moa JV expansion program, bringing phase 1 in under budget and on time.
The new Slurry Preparation Plant was put in service this quarter much faster than expected and has been running at design capacity since the end of January. We are encouraged to see that the nickel market conditions are gradually improving this year, although the first quarter experienced a challenging start as we had guided earlier. I'm pleased that we were able to reduce our mining, processing, and refining costs year-over-year. As previously indicated, the first quarter was anticipated to be our highest-cost quarter of the year. Despite this, we were successful in increasing our available liquidity in Canada from the year-end and reversed the trend of Q3 and 4 of last year. For the full year, we expect NDCC to trend lower and to ultimately average within our $5.50-$6 per pound guidance range.
The improving market conditions during the quarter contributed to our success in reducing our opening nickel inventory as we renewed existing sales contracts and had strong spot sales. We expect to continue to reduce our inventory as the year progresses. Our power division continues to deliver strong performance. We expect higher production levels this year while we work with our Cuban partners to further increase the supply of gas for power generation. We expect that the high levels of production we are achieving will result in additional dividends to Sherritt in Canada this year and into the future. Turning to slide 5, this slide outlines a few key metrics which demonstrate that our efforts to overcome the challenges of 2023 are starting to yield benefits.
Starting from the left-hand chart, quarter-over-quarter we saw higher mixed sulfide production from Moa, a key driver to higher margin nickel and cobalt production. We also saw higher nickel sales and lower NDCC. Our available liquidity in Canada has increased, reversing the negative trend from the second half of last year, as mentioned. I'll now hand over the call to Alvin to provide more details on these metrics in a review of our operations.
Thank you, Leon. Good morning, everyone. Starting with our results for metals, which is on slide 7, production of mixed sulfides was higher during the quarter, benefiting from improved ore blends and better grades. The slurry preparation plant also provided additional processing capacity and efficiencies. We had a minor shipping delay related to weather conditions in Canada that impacted Moa mixed sulfides feed being delivered to the refinery. The delayed shipment was received in April, but finished nickel production for the quarter was still strong despite this, benefiting from nickel-rich third-party feed. The lower mixed sulfide feed and higher nickel-to-cobalt ratio in the third-party feed process accounted for the lower cobalt production. Finally, our fertilizer production during the quarter was in line with our first quarter production last year. Looking ahead, we continue to monitor the ongoing labor negotiations involving Canadian rail workers.
The labor action, if it occurs, will be a challenge across all industries for Canadian supply chains, and we hope for a successful resolution to avoid that outcome. That said, we have contingency plans in place that will limit the impact in the event the strike occurs. Moving on to slide 8, talking about sales volumes, we entered this year with higher finished nickel inventory due to depressed market conditions in the second half of 2023. In 2024, we have been focused on ensuring we renew contracts with our long-term customers and pursuing spot sales. During the quarter, our nickel sales volumes exceeded our production volumes by about 400 tons. We expect this trend to continue, making progress on reducing our inventory throughout the year. For cobalt, sales volumes were lower year-over-year, largely driven by the cobalt swap.
This year, we are expecting to start receiving cobalt from the cobalt swap agreement in the second half of the year, which largely drove the lower sales compared to last year when we entered the year with a significant cobalt swap dividend in Q1. For fertilizers, the first quarter is not typically a strong sales quarter due to the seasonal nature of the business. Sales were lower year-over-year, primarily due to timing with some delayed demand ahead of the spring season. We still expect to have a strong second quarter in line with historical seasonal trends, as evidenced by our prebuys. Finally, a last point on sales, average realized prices were meaningfully lower year-over-year, and Yasmin will go over this in more detail in a few minutes and its financial impacts. Moving on to slide 9, addressing our net direct cash costs, NDCC.
As we had indicated last quarter, our first quarter in 2024 had a higher NDCC. This was primarily due to the higher-cost opening inventory sold in addition to lower cobalt and fertilizer byproduct credits. The higher-cost opening inventory contributed approximately $0.70 per pound to our NDCC, and therefore, without that, our NDCC would have been around $6.50 per pound. Despite the expected higher overall NDCC for the quarter, we saw a 13% year-over-year decrease in our mining, processing, and refining costs per pound of nickel sold, which is our key controllable cost measure. In March, we also saw NDCC decrease to $6.82 per pound, trending towards the 2024 guidance. Looking forward, we expect to see significantly higher fertilizer byproduct credits in the second and fourth quarter, in line with seasonal sales trends. Moving on to slide 10 for an update on the low-capital-intensity Moa Joint Venture expansion project.
At the start of the year, we commissioned the Slurry Preparation Plant, which has now been successfully operating at design capacity since the end of January. We are very pleased at the pace we were able to bring this phase of the expansion into operations, with better-than-expected ramp-up time and projected project coming in under budget. As a reminder, the Slurry Preparation Plant reduces ore haulage distances, lowers carbon intensity from mining, and increases our production of mixed sulfides. The second phase of the project, the processing plant, continues to advance during the quarter. Piping installation will commence this month, and we expect to start ramp-up of the processing plant in 2025.
As for our power results, going on to slide 11, we continue to see solid results from power, with electricity production 33% higher year-over-year, primarily attributable to the additional gas we began receiving at the end of the second quarter of last year from the two new wells that went into production. We are pursuing further opportunities with our Cuban partners to increase gas supply through the drilling of additional gas wells to support increased power generation at the two facilities. We expect the higher levels of production, which we are currently achieving, will translate into higher dividend payments in Canada starting later this year. I will now turn the call over to Yasmin, who can provide an overview of our financial results.
Thanks, Alvin. I'll begin with our financial performance on slide 13. While we've been successful in achieving higher nickel sales volumes, as Alvin mentioned earlier, our financial performance this quarter was significantly impacted by lower average realized prices and continuation from last year's depressed pricing environment. Average realized prices for nickel, cobalt, and fertilizers were lower year-over-year by 40%, 24%, and 27%, respectively. Consolidated revenue for the fourth quarter, which does not include Sherritt's share of revenue from the Moa joint venture, was CAD 28.8 million compared to CAD 58.6 million in the first quarter of 2023. The decrease was primarily related to the lower realized prices and lower cobalt swap sales.
As you'll recall, we entered 2023 with excess cobalt inventory and strong Moa JV liquidity, and as a result, just over 60% of cobalt swap volume was distributed to Sherritt in the first quarter of 2023, and we sold the majority of that volume in that same quarter. In the current year, as we indicated, we expect to begin receiving cobalt under the Cobalt Swap in the second half of the year. Combined revenue was CAD 127.7 million, includes the corporation's consolidated revenue and revenue from the Moa JV on a 50% basis, and more holistically reflects our performance. Combined revenue was impacted by lower realized prices I mentioned earlier, partly offset by higher nickel sales volumes. The impact of lower average realized prices also drove Adjusted EBITDA of -CAD 6.5 million and a net loss from continuing operations of CAD 40.9 million.
Adjusted net loss from continuing operations was CAD 24.6 million, excludes a non-cash CAD 9.1 million revaluation loss on the net Cobalt Swap receivable and CAD 3.5 million of severance costs related to the restructuring completed earlier this quarter. Turning now to slide 14, we ended the quarter with almost CAD 68 million of available liquidity in Canada, an increase from the prior quarter. Key changes in liquidity during the quarter included CAD 11.3 million of cash provided by operating activities at the Fort Site, driven by strong fertilizer pre-sales, CAD 3.7 million used for property, plant and equipment, and CAD 7.4 million used for rehabilitation and closure costs related to legacy oil and gas assets. In addition, the Moa JV repaid CAD 3 million on the CAD 30 million short-term advance from Sherritt at the end of last year. Since then, we've received an additional CAD 10 million and continue to expect full repayment of the remaining balance in Q2.
Following this, we expect to start receiving cobalt distributions under the Cobalt Swap. In addition to the dividends from the Moa JV, we expect to also receive dividends in Canada from our power business, as Alvin mentioned earlier. With higher electricity production, we are expecting to receive higher dividends from power as compared to the prior year, which may commence in the second quarter. Finally, following the quarter end, we extended the maturity of our syndicated revolving-term credit facility by one year from April 30th, 2025, to April 30th, 2026, on similar terms. Looking ahead, we expect our operating margin and cash flow to improve significantly in 2024, with our outlook for higher production and sales with lower operating costs. Beyond this, we continue to pursue opportunities to optimize costs, streamline operations, and improve profitability and liquidity.
We demonstrated this earlier this year, reducing the workforce at our Canadian operations by 10%, and subsequent to the quarter end, we announced a further reduction of 10% of our corporate workforce, as well as reductions to other corporate office-related costs, resulting in a total future annual cost savings of CAD 15 million. That concludes my remarks. I will pass it back to Leon.
Thank you, Yasmin. Before I conclude, I wanted to mention a further achievement that was made during the quarter, as outlined on slide 16. Sherritt's technical expertise has always been a key differentiator for the company. During the quarter, our team advanced an MHP mixed hydroxide precipitate midstream processing flow sheet for the production of nickel and cobalt sulfate, with a focus on the EV battery supply chain. This flow sheet also reduces sodium sulfate effluent, providing a solution for a key environmental challenge for the industry and also a permitting challenge. I am pleased with our progress on this project, which is an important step to help unlock the processing value chain for the North American EV sector and provide a catalyst for domestic mine production.
Over the remainder of the year, we are planning to accelerate this project with efforts focused on site identification in collaboration with provincial and federal governments, advancing customer and partner arrangements, and to continue to refine our process flow sheet and expand project definition as we work towards a feasibility study. This project will be a critical enabler needed in North American EV supply chain to counter the Chinese dominance in refining of battery materials. Concluding on slide 17, we continue to make significant advancements during the quarter, increasing our liquidity in Canada, delivering strong nickel sales volumes, operating the new slurry prep plant at design capacity, and advancing the MHP midstream processing flow sheet. We are looking forward to delivering strong results in the year ahead, building on the first quarter. We expect improved margins due to significantly lower NDCC, leading to distributions from the cobalt swap agreement.
We also expect higher dividends this year from our power business. With that, we conclude our remarks today. I'd like to thank everyone for their time, and operator, I'd like to pass the call over for questions at this time.
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. Should you have a question, please press the star followed by the 1 on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the 2. If you are using a speakerphone, please lift the handset before pressing any keys. Our first question comes from Gordon Lawson from Paradigm. Please go ahead.
Hey, good morning, everyone. My first question's on the swap agreement. So with the quantity prices where they are, if they continue to show weakness going into Q3 and Q4, would delaying this year's swap agreement to next year be a possibility?
Hi, Gordon. Thanks for the question. Yeah, the swap agreement has been designed in such a nature that any amounts that are not covered in a particular year automatically roll over into the following year. And ultimately, if all payments are not collectively made by the end of the 5-year term, there's a retroactive interest component on the remaining outstanding balance, and it will become due and payable immediately. So we do expect if there's any amount that's not covered this year, that it will be reflected into 2025.
Okay. So that covers the maximum cobalt tonnage delivery. I think that's 2,000 tons or so, correct?
That's correct.
Okay. And on the MHP program, the plant expansion, the language in the MD&A is a little confusing. It discusses site preparation for this year and a few mentions of deliveries beyond 2024, but it also states that, including your corporate presentation, completion by the end of the year. So can you clarify which components are expected to be complete this year and the components expected for 2025, what they add to the project?
Sure thing. So this is for MSP production at Moa as part of the Moa expansion. So what we are anticipating to complete this year is the sixth leach train, which is the principal asset that will increase production capacity done at Moa for additional mixed sulfides. Some of the components of the project that we're deferring for cash conservation this year is attached mainly to the MSP tanks for storage of additional MSP, and those will be completed in 2025. But we do not anticipate that those would have a material impact on the expected outcome of the project-desired increase in production, but we'll have some operational challenges in managing our MSP balances.
We're still looking at a total 20% production increase?
That's correct.
Okay. Okay. Thank you very much. That's it from me.
Thanks, Gordon.
There are no further questions. I will now turn the call over to Leon.
Well, thank you, operator. Following our call today is our annual general meeting of shareholders. We'd like to thank our shareholders who have continued to support Sherritt over the years and welcome all who are able to attend this year's meeting at 79 Wellington Street West, Suite 3300, here in Toronto. Our meeting will begin shortly after this call at 11:00 A.M. Eastern Time. We hope to see you there shortly, and thank you for your participation.
Ladies and gentlemen, this concludes the call for today. Thank you for calling in. Please go ahead and disconnect your line.