Last month, Sherritt and its partners in the Ambatovy joint venture, Japan's Sumitomo Corp and Korea Resources Corp(Kores) [KOREC.UL], got a deferral until Aug. 5 to repay $90 million plus interest to the lenders.

They owe the lenders, which include Export Development Canada and the African Development Bank, $1.6 billion - an amount that is supposed to be repaid from cash produced by the Ambatovy mine. But with nickel prices down nearly 80 percent since 2007, the mine is producing at a loss.

"We are looking for a multi-year deferral period," Sherritt CEO David Pathe said.

"We are at this point reasonably confident that that will get done by the Aug. 5 deadline or shortly thereafter," he said in an interview.

Sherritt owns 40 percent of Ambatovy, Sumitomo 32.5 percent and Kores 27.5 percent.

While Sherritt is "encouraged" by a 22 percent jump in the nickel price to around $4.70 a pound since the beginning of June, much higher prices are needed to revive an industry where about half of nickel operations are producing at a loss, Pathe said.

"The long-term price that really sustains the industry probably needs to be in the $8 to $9-plus range," he said.

Prices of nickel, a top performer among industrial metals in recent months, are overcooked and likely to retreat by the end of the year even though shortages are becoming more severe, a Reuters poll released on Tuesday showed.

Sherritt won approval on Monday from its noteholders for a three-year extension on repaying C$720 million ($545.99 million) worth of debentures.

The company, which also has power and oil operations in Cuba, reported on Monday a bigger-than-expected second-quarter adjusted loss of 40 Canadian cents a share because of steeper costs at the Ambatovy venture and higher taxes.

(Reporting by Nicole Mordant in Vancouver; Editing by Peter Cooney)