UPDATE 1-Sherritt profit lifted by volume, price increases

* Q2 EPS C$0.20 Vs C$0.17 a yr ago

* Nickel sales volumes up nearly 10 pct in the qtr

* Profit also lifted by gains in coal, oil prices

TORONTO, July 27 (Reuters) - Diversified Canadian miner Sherritt International Corp (S.TO) said on Wednesday its quarterly profit rose 20 percent, driven by increased nickel sales, along with stronger coal and oil prices.

Net income in the second-quarter ended June 30 rose to C$60.1 million, or 20 Canadian cents a share, up from a profit of C$50.2 million, or 17 Canadian cents a share, a year earlier.

The nickel and coal miner, which also owns large oil and power operations in Cuba, said that its nickel sales volumes in the period rose nearly 10 percent, while pricing for coal from both its Prairie and its Mountain operations in Canada also rose in the quarter.

Sherritt is also close to completing the development of its huge US$5.5 billion Ambatovy nickel-cobalt project in Madagascar. The project, which is being developed in partnership with South Korean investor Korea Resources Corp, Japan's Sumitomo Corp (8053.T) and engineering contractor SNC Lavalin Group Inc (SNC.TO), is expected to begin production in the first quarter of 2012. [ID:nL3E7HE1PW] (Reporting by Euan Rocha, editing by Gerald E. McCormick)