Flora Wood - Investor Relations Steve Wood - Executive Vice President and Chief Operating Office David Pathe - President and Chief Executive Officer Dean Chambers - Executive Vice President and Chief Financial Officer

Greg Barnes - TD Securities Sasha Bukacheva - BMO Cliff Hale-Sanders - Cormark Securities Steve Parsons - National Bank Financial

Thank you, Ron. Good morning, everyone.

Welcome to our second quarter results conference call. Our results were released yesterday at 5:00, and a copy of the press release, the MD&A, financial statements and the presentation are all on the website.

Also available on website are investor slides. Today's conference call is being webcast, so in addition to those on the line, anyone may listen to the call by accessing our website homepage and clicking on the webcast link.

A replay of the webcast will be available on the website later today. Before we begin our comments, I'd like to remind everyone that today's press release and certain comments on this call will include forward-looking statements.

We'd like to refer everyone to the cautionary language included in our press release and to the risk factors described in our SEDAR filings. Steve Wood, our Executive VP and Chief Operating Officer is here today; and will speak after David Pathe, President and CEO; with Dean Chambers, our CFO speaking last.

And with that, I'll turn over to David.

Well, thanks Flora, and good morning, everyone. Before I get into the quarter, let me start with the obvious.

It's been a tough first half of the year in the commodities business and particularly tough for the last few weeks. For the quarter, the nickel price was off, some 40% from the same quarter last year and the oil price was off closer to 50%.

In the week, since the end of the quarter, we have seen a further deterioration in the pricing environment. It's been a tough time to be a shareholder, because the stock has touched to multi-year lows.

Our focus remains the same. However, we're focused on driving down costs, while ramping up production in Ambatovy and protecting our liquidity.

And now that Steve's been here with us for a couple of months, I'm going to ask him to touch on a few operational highlights; and Dean will speak to the financial results and our cash position. But first, there are a few things I do want to touch on.

The highlights on Slide 4 capture our finished nickel production for a little over 8,000 tons in the quarter. It's a quarter that had its share of challenges, on both planned and unplanned.

Moa joint venture production was strong, and particularly in the context of the once in 10-year plan to maintenance shutdown at the refinery in Fort Saskatchewan that we mentioned last quarter. That required 11 maintenance days compared to a more normal five or six days for our annual June turnaround.

We had a number of events that we've told you about in our monthly Ambatovy releases that affected production for the quarter in Madagascar. Notwithstanding these events, we saw net direct cash cost come down in both of our nickel operations this quarter.

Most importantly, since getting one of our two thickeners back online in early July. And we've seen ore throughput numbers at Ambatovy return to the levels we were seeing in January.

And Steve will speak more about that in a few moments. Given our great focus on costs, I wanted to highlight the trend we're seeing in net direct cash cost for the last two quarters out of our two nickel operations.

You can see that trend on Slide 5. Cash cost in Ambatovy, generally get a lot of attention, as we've come through the ramp up, but the reliability of the trend at Moa is very visible here.

The Moa operations have benefited from the drop in oil prices, as all producers have, but you're still seeing a very stable disciplined operation, where our focus on efficiency continues to pay off even this quarter, when production is 11% lower than Q1. Ambatovy costs have also moved down, despite the lower production.

And we still expect that Ambatovy can be posting cost numbers comparable to Moa, as we get closer to full production. We also continue to reduce combined administrative expenses, which you'll see are down 37% year-over-year.

Slide 6 shows the most recent industry cost curve for global nickel production. Given generally lower energy prices and the focus on costs across the industry, net direct cash costs are at the 50th percentile are down $0.28 or about 5% from Q1.

And importantly though, our operations have more than kept the pace and remain firmly in the second quartile. I'm going to speak about the nickel market in a moment, but the other important message from this slide is that at current nickel prices more than half the industry is under water on a cash margin basis.

Never mind, they are sustaining capital and financing requirements, and that's not a situation that can persist indefinitely. Looking at the nickel market, the chart on the right-hand side of Slide 7 may look as the same as the chart we've been showing you for the past year or so, but it's actually been updated recently.

The supply deficits that have been anticipated for some time have obviously not yet materialized, but our belief in the longer-term supply and demand fundamentals has not changed. There's obviously been greater uncertainty on the demand side, as the world is trying to determine what to make of China, and we've seen lots of financial speculation against nickel, as we have in most commodities in recent weeks.

I think the market is being driven at least in part and particularly in recent weeks by short-term sentiment in speculation, rather than supply and demand fundamentals for physical product. There has been some things I could point out that should be positive for the nickel market.

Chinese thick iron production is falling, as ore stockpiles are depleted. Though there is still not great clarity on how long that process could take.

LME inventories are down a bit from their peaks earlier this year, and there is some signs that that maybe plateauing and starting to come off a little bit. We've seen a significant uptick in Chinese finished nickel imports in the couple months.

Just anecdotally from us, finished nickel exports from Ambatovy to Chinese end-users so far in 2015 already significantly exceed sales to that same end-user group for all of 2014. In Indonesia, the construction of MPI facilities will start to be a real threat to the nickel price, when the original ore ban came into place.

However, it seems that only about half of the announced projects are proceeding along their expected timeline and most haven't yet broken ground. Given the significant infrastructure required, every time one of these projects is permitted, no significant production of those Indonesians smelters is really expected now until at least 2018.

Some analysts are talking more about 2020. Overall, we've seen a lot of volatility.

It was already a pretty volatile market, and obviously the volatility is difficulty to predict. We have long-life low-cost assets though, and I've said in the past, we're in the nickel business for the next 30 years and those assets should give us the ability to ride out the volatility.

I also want to update you on financial completion at Ambatovy. This is something we're currently very focused on.

We got sign-off from the independent engineer on three certificates in the quarter, being the efficiency, environmental and production certificates. And we're now down to two certificates remaining, neither of which requires independent sign-off.

Still outstanding are the legal certificate, which covers a number of compliance items, most of which are already done. Includes regulatory approvals, which have already been received; registration of security interest over the project's assets and real property; and reconfirmation of various legal matters.

This certificate does require some registrations to be filed in the land registry offices in Madagascar, and one impediment to that at the moment is some of those offices are currently on strike. We don't have any particular insight on when that strike will end, although some progress appears to be made with one location, and just recently returning to work.

The final certificate simply requires the funding of a senior debt reserve account covering six months of principal and interest. That account can be funded by the partners to the extent the operation is not producing sufficient free cash flow.

At this point, we are very focused on financial completion, and so expect to be able to achieve it in advance of the September 30 deadline. Upon submission of the final certificates, the $1.7 billion in senior debt outstanding becomes non-recourse to be Ambatovy partners, as the guarantees fall way.

This is the point at which financial completion becomes official. There is a 45-day period, in which all the final certificates submitted can be challenged by the lenders.

But the challenge has to come from a supermajority of the lenders, and has to be on the grounds that one or more of the certificates is false in any respect that is material adverse to the interest of the lenders. Finally, before I let Steve and Dean update you on operations and finance, I just want to touch briefly on our other press release from yesterday morning.

Dean Chambers is going to be retiring from Sherritt in early 2016, and so to that end we announced the hiring of a new Chief Financial Officer yesterday. Dean has been with Sherritt for over eight years and spent a couple of years before that, as the CFO of Dynatec.

Dean will continue as CFO through the third quarter. So you'll hear from him again when we do our Q3 results, and we'll save our goodbyes for then.

But I am very excited that David Bacon will join us in September, and look forward to introducing you to him then. With that, I'm going to let Steve step up here and give you a bit of run-through about the highlights in operations for the quarter.

Steve?

Thank you, David, and good morning, everyone. It's my first time speaking on the call, and I hope to meet or talk by phone with a number of you over the coming year.

Before I get to my slides, let me leave with safety. Overall, health and safety performance at Sherritt is industry and peer leading.

However, it is with sadness that I say that we had a fatality in the second quarter, and that it was the second at Ambatovy this year. Obviously, we expect every employee to get home safely at the end of the day, and these incidents have prompted us to take a closer look at our environment health and safety focus.

We know that it is possible to ensure a safe workplace, as prior to these two incidents Ambatovy had experienced more than 18.5 million hours without a loss time incident. My slide starts with metals and end with power.

Looking at the Moa JV on Slide 10, our production and cost were good in a quarter that included 11 days of planned maintenance at Fort Saskatchewan, as we took our once in 10 year shutdown. A shutdown at the refinery also impacted fertilizer production this quarter, but margins were seasonally strong with average realized prices of $503 per ton.

Dave showed the slide earlier of our cash cost since Q4 of 2013. Our overall cost profile improved for the second consecutive quarter this year.

Compared to Q1, higher mining, processing and refining costs, due to the lower unit volumes and downtime, were more than offset by higher cobalt and fertilizer credit. The next slide, Page 11, shows a new photo from the acid plant under construction at Moa, which will eliminate the dependence on imported sulfuric acid.

Dave talked in the first quarter about the economic benefit of what will be our third acid plant. We continue to estimate a savings of around 15% on an NDCC basis, giving us very attractive payback terms.

I was in Cuba, a few weeks ago, and the timeline is to have the acid plant in operation in the second half of next year. Now on to Ambatovy on Slide 12.

Our 40% share of production in the quarter was 4,158 tons of finished nickel at a net direct cash cost of US$5.48 per pound. Average realized prices of cobalt in the quarter were $18.08 per pound, which reminds me of a question we had in the first quarter about, why the cobalt price is very significantly between Moa and Ambatovy.

In the first quarter, Moa realized prices were $1.80 per pound higher than the realized prices at Ambatovy, and in the second quarter than trend has reversed. In general, these differences reflect sales contract differences and shipping times to customers.

With Ambatovy, deliveries to the biggest customers are taking a much longer time. Looking at the metrics, including power throughput and recoveries, you can see that the thickener damage and limitation of running unthickened ore through the HPAL circuit, adversely impacted throughput, and therefore metal production.

But did not impact overall recovery and did not materially impact on cost, which continue to trend favorably. We've been operating ore thickener number 1 online since July 7, immediately increasing the HPAL autoclave speed density to levels we experience before we commissioned the second thickener in January this year.

Performance is excellent so far. To give you a couple of examples, we've now had a couple of weeks of the PAL operating at better than 100% of nameplate or throughput, which was the same rate we saw in the record month of January.

We're also seeing normal metals recoveries and 100% of nickel production meeting the LME specification. The repairs to the oil thickener number 2 are progressing to plan currently, and are expected to be completed by mid-September.

On to oil and gas. When David talked about nickel's lagging performance among the base metals, he did not mention oil, which is doing even worse.

However, despite the commodity price drop, we continue to have a healthy net back even at these prices, which are now closer to where they were in the first quarter this year. Our oil business contributed $29.9 million to adjusted EBITDA this quarter, up 39% over Q1, as WTI and Brent prices recovered in Q2, but are trending lower again since the end of Q2.

Cuba gross working interest production was down by 6% or roughly 1,100 barrels of oil. But the split between cost recovery oil and profit oil had a much higher cost recovery allocation, which meant higher net working interest production out of Cuba, and steady production from Pakistan and Spain contributing to our total net working interest production of 11,948 barrels of oil or barrels of oil equivalent per day.

Unit operating cost in Cuba increased over Q1, as we add higher well workover cost and lower gross working interest production. Roughly $1.33 per barrel of the increase comes from well workover costs that were anticipated to be capitalized.

However, it has been determined that under IFRS treatment, these costs are more appropriate [technical difficulty]. Our capital budget for the year is about $2 million lower as a result of this accounting treatment.

Capital spending year-to-date of $43.5 million is more than half of our full year outlook, which has been revised downwards for the second consecutive quarter, as drilling results are evaluated and adjusted for the OpEx and CapEx change, I just described. We said last quarter, that some of the initial drilling results in the Yumuri extension PSCs were not meeting our expectations.

Year-to-date, we have drilled six wells on the area covered by the extension, of which four are producing, one was a dry hole and one is still to be evaluated. A seventh well is in progress and will also require evaluation.

At the end of this year, counting the well that is currently in progress, we have drilled, completed and evaluated the seven commitment wells required under the terms of the extension area PSC. We have also performed three workovers of existing wells, where two have incrementally increased production and the third is still being evaluated.

We may have additional workovers that now make economic sense as a result of the extension. Turning to power on Slide 14.

We saw production levels higher than they were in Q1 and adjusted EBITDA of $7.6 million, consistent with Q1. Operating costs were up over their levels in Q1, mainly from equipment repairs and replacement.

Power continues to be a stable business unit with additional capacity that could be increased with higher availability of gas from neighboring oil fields, including our own. Dean will have some explanation of the cash flow changes from power.

And with that, I'll turn it over to Dean.

Thank you, Steve, and good morning, everyone. I normally start by directing your attention to any changes we've made to in an effort to enhance our public disclosure.

This quarter, there is really nothing substantive. We've not introduced any new non-GAAP measures this quarter.

However, we have made a few minor presentation changes, and I will highlight those as I go through my comments this morning. One item is that you will see a change in revenue and cost of sales under the Moa Joint Venture shown on Page 14 and 15 of the MD&A.

Recognizing that some confusion exists in how we formally included sulphuric acid under the fertilizer category, this quarter and going forward, we have reclassified sulphuric acid revenue and cost of sales from the fertilizer category to other and adjusted prior periods accordingly. Now, onto Slide 16 which maybe my most important slide of this quarter.

The prospect of us burning through $80 million of cash each quarter at current commodity price levels is unsettling to me and it is to shareholders and bondholders. The purpose of this slide is to go through the major category that generated or consumed cash in the quarter and implications for the future.

The operating cash flow of $26.7 million that we start with excludes items that are singled out in the waterfall. There is also a net of approximately $11 million between the dividend payment and corporate expenses.

Changes in working capital of $63.7 million, is the most significant impact upon cash. Looking at the cash flow Note 21 to the financial statements, you can see a summary of changes in working capital.

Trade receivables increased by approximately $27 million. We do have a build-up of oil and gas receivables of approximately US$66 million that are past due, but we have received payments in July of approximately US$13.5 million and we expect oil and gas receivables to be close to current by yearend based on an agreed payment plan.

The other big change in working capital comes from fertilizer pre-buys. For customers pay in advanced for fertilizer, they expect to receive in time for planting season.

We received the cash for those prepayments in Q4 and Q1 and deliveries then took place this quarter. This is booked as deferred revenue and represents up over $34 million of the working capital change.

Interest payments on our publicly traded debentures were $19.9 million in the quarter on the 2018 and 2022 debentures, compared to $9.4 million last quarter from the 2020s. Given the semi-annual payment obligations on these debentures, we pay interest of approximately $20 million in Q2 and Q4 and approximately $10 million in Q1 and Q3.

Interest and principal repayments that we receive from loans to our Cuban businesses breakdown as follows: we received $4.9 million in interest on the Moa JV loan and a total of $23.7 million in the form of principal repayments and interest on the Energas CSA loan in our power business. The total CSA payment of $23.7 million is similar to what we received in Q1, but in Q1 the payment was mainly in the form of interest, which makes a cash flow and the cash flow per share much higher, because interest received is a component of cash provided by operating activities, while principal payments are included in cash provided by investment activities.

In Q2, the breakdown was $15.5 million as a principal repayment and $8.2 million in interest. Now, we have made a small change to our cash flow statement, such that interest received on the CSA loan is now included in the interest receive line.

Previously, it was netted with interest paid. This does not change the total cash flow from operations, it's simply a reclassification.

I will point out that we've also made related changes to our net finance expense notes, Note 8 to the financial statement, but I will not go into those details now. The point to emphasize with these repayments is that we've continued to see regular cash flow from our power business.

Our share of Ambatovy funding for the quarter was $43.9 million or US$36 million. This funding requirement was primarily due to the principal interest payment on the senior project debt, which was paid in June.

Let's talk about Ambatovy funding. I had previously disclosed that we had forecasted Sherritt's funding for 2015 to be in the $50 million to $100 million range.

On our last call, I indicated that it would be at the high-end of that range. To be frank, we had not expected in our analysis for nickel prices to be consistently below $5.50 a pound.

Using current nickel prices and our revised production outlook, I now expect total funding for the year to be in the range of US$100 million to US$135 million. Significant amount of the total is expected to occur in the third quarter, including our pro rata of funding of the senior debt reserve account, which is approximately US$48 million, and of course, is necessary in order to achieve financial completion.

We are working closely with our partners and the project to mitigate future funding requirements. Capital expenditures in the quarter account for $28 million of the cash used.

And finally, the net proceeds from the sale of corporate office was approximately $21 million. I would also mention that those Ambatovy and the Moa JV have an excess of $50 million on a 100% basis on their respective balance sheets, which is not included in our consolidated cash.

So looking forward to our liquidity position, if current nickel and oil prices persist, and with Ambatovy funding requirements in particular to achieve financial completion, I do expect our cash balance to be somewhat lower by yearend, but still with substantial liquidity. We have a range of options available to us to manage our liquidity throughout the rest of 2015 and 2016 and we do plan to manage capital spending to match available cash generated.

My next two slides are also waterfalls, the first showing the change in combined adjusted operating cash flow, which is similar to what we covered in the previous slide, excluding any reference to changes in working capital. The waterfall on Slide 18 shows the change in net loss per share from Q1 to Q2.

You can see that generally lower earnings at Ambatovy and Moa due primarily to lower nickel prices accounts for $0.08 per share. There are two unusual adjustments to earnings this quarter.

One is that we recognize a $19 million gain on the sale of our corporate office. In addition, we also recognize a tax recovery in Q2, resulting from the timing of clarification received from the Cuban tax authority.

When Cuba introduced their new foreign investment laws and changes to taxation in 2014, it was unclear initially, which tax rate would apply to our oil and gas operations. Q1 of 2015, we received clarification from the Cuban tax authority that the applicable tax rate for 2015 and onwards would be 22.5%.

We have received further clarification that the tax applicable for 2014 was in fact 15%. As a result of this further clarification regarding the 2014 taxation year, we have booked a one-time current tax recovery in the quarter of $13.2 million.

I'm ending my remarks with slide on Ambatovy that some of you've seen before, for example, in our Investor Day presentation. This is Slide 19.

I wanted to raise a topic of Ambatovy distributable cash flow, as we've had a few questions from analysts and shareholders concerning the Ambatovy Joint Venture additional partner loans, which has a balance of $1.1 billion at June 30; and the Ambatovy Joint Venter partner loans, which has a balance of $120 million at June 30, plus including compound interest. This slide, of course, shows that 70% of our share of cash distributed by the project goes to repaying these loans, but these loans are often described together, but do have an important difference.

And that the smaller partner loan has a maturity date in 2023. If sufficient cash flows do not exist to repay that loan prior to maturity, it is recourse to Sherritt and must be repaid.

We have the options to repay in cash or in shared shares. The additional partner loans, on the other hand, have no fixed maturity.

If the additional partner loans have an outstanding balance at the end of the line life and cash flow was never sufficient to pay them off due to lower nickel prices, the only recourse is to our residual interest in the project. In that scenario, Sherritt would receive 12% of the distributable cash, 30% of our 40% interest for the life of the project, but would have no obligation to repay any outstanding balance on these loans.

I have one last comment regarding the future outlook. Given the decline in commodity prices, in particular, nickel and oil, we are regularly evaluating whether these changes are long-term in nature, which could affect our carrying values going forward.

That concludes my remarks. I will now ask the operator to open up the call to take your questions.

Dean, can you talk about what your additional liquidity options are into 2016, if nickel prices stay where they are?

Let me mention a couple of things and let Dean add whatever he wants to add to it as well. From our Investor Day, you saw the forecast of spending a lot of capital in the oil and gas business in 2016.

Those forecasts were put together a year ago now or close to a year ago when we were doing our long range planning and budgeting for 2015 and beyond, and that was done into different oil price environment than where we are now, and so those numbers are being revised, and where we are now compared to then capital will be lower in that business than what we were previously have been talking about. And the Ambatovy financing is the other place where we're spending a lot of money.

What I can tell you there to date, Greg, is that we're very focused on financial completion in getting through that and then talking to our partners about that. But those are the numbers that at least are forecasted there for the rest of the year, in terms of making the December principal repayment and ongoing operating cost and looking at ways that we can minimize the capital spending in Ambatovy.

Those are the main things that we're looking at. We're still obviously focused on costs and other places.

I don't know if that gives you some sense, Greg, or we can carry on. Dean, those are the principle things, further anything you'd add to that.

No, I think that's right, Dave. Obviously, the biggest levers for us is capital spending.

And I think, as I mentioned, it would be restricted to any cash available generated in the business and Ambatovy funding. And I think those are the biggest things that we're looking at.

So are you implying that once you've got financial completion in September then you may go back to the lenders and talk about the repayment schedule again?

At this point, Greg, we're just focused on getting through financial completion, yes.

So Dean, in 2016 at $5.50 nickel, let's say, what would be the cash burn at Ambatovy?

I generally would expect Ambatovy to be able to cover its operating costs and sustaining capital, the big cash burn or drain to the partners would be senior debt service.

Which is what next hitting?

It's roughly on a 100% basis to $100 million.

I think I'm going to stay within here. I had a question regarding whether or not SNC-Lavalin had exercised their right to the 5% share put that they have.

So I was wondering if that has happened. And if so, like how do you think about the value and then when that payments might be required?

Dean, you want to talk on the mechanics of SNC put?

Sure. So SNC-Lavalin has a right to put their 5% following financial completion, so since that has not yet occurred, that right has not yet kicked in.

Today, we would expect, and under the terms of their put, basically, Sumitomo would be required to acquire their 5%.

And so I guess you also had a call option on that stake, so are you currently planning to let it lapse or how do you think about that?

Yes, we have no intention to exercise our call at this time.

Really, just kind of looking at the potential cash stream next year from a different point of view, given the, I would say, relatively solid performance at Ambatovy despite the operating issues. Can you kind of guesstimate or update your target cost levels if we hit full production rates in the latter part of this year?

Is that, I guess, $3 to $4 range, a more appropriate level now given where you already are and the lower input costs?

Yes, I'll start on that, Cliff. I mean the guidance we've been giving there for the last year or so is that we should be on the $4 to $6 range at 90% capacity, and then sort of $3 to $5 range, as we get up closer to a 100%.

Certainly in the last couple of quarters, we've been able to put up numbers there at the good end of those ranges. The biggest driver of variability in our net direct cash costs is the suite of input commodity prices, and obviously, cheaper fuel oil, and Ambatovy for power generation cheaper coal is helping us a bit.

We are seeing sulphur come down a little bit as well in that, which has a benefit on our variable costs. And we've been making progress and perhaps better progress than we were anticipating a year ago on getting more fixed costs out of this system as we demobilized contractors and get a workforce appropriately sized there.

So we have always said, and I continue to believe, that whatever we're doing at Moa ultimately we should be able to do that or better at Ambatovy and that focus on those initiatives to get cost down primarily to ramping up production and simplifying the organization there will continue as fast as we can.

Just on a slightly different comment, given the apparent move towards normalizations with the Cuba, with the U.S. and how that evolves over the next year depending on the rate of change or what not, does that kind of open up new opportunities for you to look at divesting either the oil and gas or the power division if the market was to improve in those areas, and obviously provide a new source of liquidity, perhaps streamline the company a little bit more.

Is that something you're considering at that point?

Certainly, we would look at anything that would better demonstrate the value of our assets and maintain a strong liquidity position. We've seen things open up somewhat in Cuba.

I was down there last week when the embassies opened up and there was certainly much excitement around that. Progress is still slow on the bigger issues in the relationship in terms of actually ending the embargo and repealing Helms-Burton, both of which should be a big benefit to us.

But I think they were probably on course in a process here, now that it is irreversible, but politics being what they are, that's still going to take some time. I think one of the greatest advantages of it to us, if the embargo were to be lifted and there'd be some incremental cost savings in terms of accessing U.S.

suppliers and being able to run Caterpillar equipment in the mine, and get access to the U.S. Gulf Coast for our oil business would be some incremental saving there.

But I think it would also change that the way our assets are viewed and removes some of the stigma around those assets, so that from our experience has always been somewhat overblown and that certainly has the potential to create new opportunity for us.

Question for you on the potential to cut capital programs and those mentioned as potential ways to manage liquidity, seems the bulk of the opportunity here would be to cut CapEx in the oil business. I just wonder if you could speak to, so as you make cuts to the CapEx here, what sort of decline rate you would expect for oil production.

And even with respect to the cuts of the 2015 budget there, what sort of decline rates should we expect in terms of production?

Yes, we've made some reductions in each quarter so far this year in our oil and gas spending. We're not expecting that to have any immediate impact.

We've got about three wells to get evaluated to the next three or four months here, which would really tell the tale of how the rest of this year will play out with some of the workover activity we've been able to do, that has now made sense, given the longer run life on the area we've been able to add some incremental production that way. But some of the drilling results have not been what we've expected them to be, and in these prices some of the drilling that got contemplated is not as economic as it was previously.

And so we've scaled back our drilling plans a bit for this year. And that's where the capital savings are primarily coming from.

But at the moment, we still think we're shooting for that at 90,000 tons a year, as was our guidance at the beginning of the year. For next year, we'll see.

I mean, there are obviously long-term tradeoffs between capital spending and longer term production. And some of the work that's being done now in the context of budgeting for next year is understanding where some of those tipping points are at varying levels of capital spending in terms of what amounts of production we could expect to see at different capital spending levels and we'll work through that as we plan our spending for next year, and so I don't have any specifics for you in terms of any particular level of capital spending and what resultant level of production that would lead to by the end of 2016.

But as a general principle, we are going to expect our oil and gas business to live within its means and to the extent there is cash flow in the oil and gas business that can fund development drilling in [indiscernible] next year. And we may be in a position, where we are having to make some decisions in terms of preserving short-term liquidity at the expense of longer-term production, but we'll update you on that quarter-by-quarter as we go.

The advantage of the capital spending in the oil and gas business is it can be done under drill hole by drill hole basis. We can evaluate the spending as we go, based on what we learned with each successful drill hole result and what we're seeing in terms of production out of incremental new wells, and the pricing environment that we're in at the time.

Dave, you mentioned that the flow rates or the production rates on the wells you drilled on the new extensions they weren't what you were expecting? How far below what you're expecting were they?

Well, we had one hole that Steve mentioned that didn't pan out as we are expecting. We talked a bit about that in the first quarter as well.

So on the two sides of the block, Puerto Escondido and Yumuri; and on side we were getting as expected; on the other side, we had one that was a bit of a bust compared to what we are expecting and that was why we had slowdown our drilling a bit after the first quarter. So in rough numbers, probably a few hundred barrels.

But with capital being at a premium with the moment it is, we're taking our time in what we do before we move forward there.

And Dean you mentioned, if current quantity prices hang around a while, you might have to look at impairments. What are the carrying value for Ambatovy and Moa?

And what do you base those on?

If you look at our financial statements, you can see the carrying values both are -- you can look at the individual balance sheet for Ambatovy. So that's our carrying value in that business.

I don't know if I have the oil and gas carrying value off the top of my head.

What long-term nickel price do you use in your --

Well, in fact, that is the important feature, right. Right now we're using analyst forecast of long-term nickel prices.

And if those forecast start to drop, then in nickel a lot to look at that.

So you're probably using something in the $9 to $10 range long-term?

Yes, in that range.

Thank you, Ron. I think that's all we have.

And if you have any additional questions, we're always happy to hear from you after the call. And we'll speak next quarter.