Sherritt Reports Second Quarter 2025 Results and Updated Guidance; Moa JV Expansion Phase Two Ramp Up Commencing; Further Cost Reductions
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Sherritt Reports Second Quarter 2025 Results and Updated Guidance; Moa JV Expansion Phase Two Ramp Up Commencing; Further Cost Reductions
TORONTO – July 29, 2025 – Sherritt International Corporation (“Sherritt”, the “Corporation”) (TSX: S), a world leader in using hydrometallurgical processes to mine and refine nickel and cobalt – metals deemed critical for the energy transition – today reported its financial results for the three and six months ended June 30, 2025. All amounts are in Canadian dollars unless otherwise noted.
Leon Binedell, Executive Chairman, President and CEO of Sherritt commented, “Extensive challenges within Cuba’s operating environment spurred by the escalating U.S. policies against Cuba are continuing unabated, which have directly impacted our Cuban operations and particularly at Moa, resulting in lower than expected production of mixed sulphides. Sherritt has implemented mitigation strategies to protect our interests and operations in Cuba and has a history of overcoming these challenges in collaboration with our partners. We have confidence that we will overcome the current situation; however, it may take additional time to resolve these near-term challenges and to meet our full expansion potential at Moa.
“Our ability to supplement the Moa JV’s production of mixed sulphides with third-party feed to the refinery is very limited as current available feeds are no longer economical due to high Chinese payabilities for intermediate feeds. As a result, we need to lower our Metals production guidance for this year to reflect these realities.
“In addition to the recovery plan being implemented in alignment with our partners — which includes additional expatriate personnel at Moa, and drilling a replacement gas well for CUPET to maintain Energas power production — we have also implemented additional significant cost reduction measures at Sherritt. These measures, including a workforce reduction, are expected to realize approximately $20 million in annualized savings and are in addition to the $17 million annualized savings from the cost reduction measures already taken last year. This decision follows a thorough evaluation of possible cost reduction impacts including an analysis of the potential risks.
“The debt and equity transactions we closed during the quarter strengthened our balance sheet, reduced our outstanding debt obligations, decreased our annual interest expense and extended our debt maturity to late 2031 providing a solid foundation and increased flexibility for future growth. While nickel price remains under pressure, we expect our corrective actions and the completion of the Moa JV’s phase two expansion to translate into stronger performance ahead. We remain confident in our strategy and long-term outlook and remain well positioned to capitalize on a market recovery.”
SECOND QUARTER 2025 SELECTED DEVELOPMENTS
- Closed strategic transactions to consolidate the Corporation’s debt, significantly extending the maturity to November 2031, strengthening the Corporation’s capital structure by reducing debt obligations by $68.0 million(2) and decreasing annual interest expense by approximately $3.0 million.
- Finished nickel and cobalt production at the Moa Joint Venture (“Moa JV”) was 3,431 tonnes and 389 tonnes, respectively (Sherritt’s share(1)).
- Finished nickel and cobalt sales were 3,256 tonnes and 380 tonnes, respectively.
- Net direct cash cost (“NDCC”)(3) was US$5.27/lb benefiting from higher cobalt, fertilizer and other by-product credits and lower maintenance cost.
- Electricity production was 176 GWh. As planned, the Varadero facility continues to operate in frequency control to help support the stability of the Cuban national power grid. Energas S.A. (“Energas”) expects to be fully compensated for the Varadero facility operating in frequency control throughout most of 2025. In addition, Unión Cubapetróleo (“CUPET”) is continuing to advance work to replace declining gas production from one of its legacy wells. Lower gas production from the compromised CUPET gas well continues to be partly offset by increased gas production from the new well that came online in Q4 2024. A replacement well is expected to be in production in Q3 2025.
- Electricity unit operating cost(3) was $24.80/MWh primarily reflecting lower planned maintenance and the impact of lower electricity production and sales.
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- Net earnings from continuing operations was $10.4 million, or $0.02 per share.
- Adjusted net loss from continuing operations(3) was $25.6 million or $(0.06) per share which primarily excludes $32.4 million gain on Sherritt’s debt and equity transactions completed in the quarter.
- Adjusted EBITDA(3) was $2.6 million.
- Updates to 2025 guidance:
- At Metals, as a result of significant challenges in the general operating environment in Cuba resulting in materially lower production of mixed sulphides feed in the first half of the year coupled with limited availability of profitable third-party feeds due to high Chinese payabilities for intermediate feeds, Sherritt is lowering its full year production guidance range. Sherritt still anticipates higher second half production on the back of the commissioning and ramp up of the sixth leach train at Moa and with the implementation of a recovery plan agreed to by the joint venture partners that would also see greater expat involvement in the recovery efforts in Cuba. Sherritt has revised its finished nickel production guidance range from 31,000 to 33,000 tonnes to 27,000 to 29,000 tonnes and its finished cobalt production guidance range from 3,300 to 3,600 tonnes to 3,000 to 3,200 tonnes. The revised guidance ranges reflect limited third-party feed due to the market dynamics mentioned and lower than originally forecast mixed sulphides production from Moa as the impact of near-term challenges from the decline in operating environment is expected to take time to mitigate despite the increased capacity from the expansion being available in the second half of the year.
- In light of the continued challenging operating and nickel pricing environment, opportunities to decrease or defer certain capital spending items are being implemented at Metals. As a result, 2025 guidance for sustaining capital has been reduced from $35.0 million to $30.0 million and the tailings facility spending has been reduced from $40.0 million to $35.0 million. The lower 2025 spending on the new tailings facility is a deferral of spending; overall spending for the project remains unchanged with the timeline for commissioning still on track and expected in the second half of 2026.
- At Power, the guidance range for electricity production is unchanged. With the interruption of gas supply from a legacy CUPET well, estimated electricity production for the year is expected to be at the lower end of the 2025 guidance range of 800 GWh to 850 GWh. The loss of gas from the compromised well is being partially mitigated with gas from other wells and CUPET is actively working to replace gas production with a new well in Q3.
- The NDCC(3) and unit operating cost(3) ranges in Metals and Power, respectively, as well as spending on capital in Power remain unchanged.
- Available liquidity in Canada as at June 30, 2025 was $45.0 million.
- Power dividends in Canada were $5.6 million in Q2 2025, totaling $9.9 million for the six months ended June 30, 2025.
- The Corporation’s syndicated revolving-term credit facility maturity was extended by one year from April 30, 2026 to April 30, 2027. There were no other significant changes to the terms, financial covenants or restrictions.
- Phase two of the Moa JV expansion is in the final stage of commissioning activities. Ramp up remains expected for H2 2025.
- Copper Mark: In May 2025, Sherritt received confirmation it became a Participant of the Copper Mark as it aims to obtain The Nickel Mark award for its refinery in Fort Saskatchewan. The Nickel Mark is part of the Copper Mark assurance framework that supports responsible production practices and demonstrates commitment to the green transition across the value chains of copper, nickel, molybdenum and zinc. For Sherritt, participation in this assurance process is an essential part of its strategic focus to build customer and key stakeholder value in the critical minerals industry.
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(1) References to operational and financial metrics in this press release, unless otherwise indicated, are to “Sherritt’s share” which is consistent with the Corporation’s definition of reportable segments for financial statement purposes. Sherritt’s share of “Metals” includes the Corporation’s 50% interest in the Moa JV, its 100% interest in the utility and fertilizer operations in Fort Saskatchewan (“Fort Site”) and its 100% interests in subsidiaries established to buy, market and sell certain of the Moa JV’s nickel and cobalt production and the Corporation’s cobalt inventory received under the Cobalt Swap agreement (“Metals Marketing”). Sherritt’s share of Power includes the Corporation’s 33⅓% interest in Energas. References to Corporate and Other and Oil and Gas includes the Corporation’s 100% interest in these businesses. Corporate and Other refers to the Corporate head office and growth and market development support. Fort Site refers to the Corporation’s 100% interest in the utility and fertilizer operations.
(2) Principal amount of Second Lien Notes and PIK Notes at the transaction date and the premium required to be paid on maturity of the Second Lien Notes in November 2026, net of the principal amount of Amended Senior Secured Notes issued. See the Capital Resources section of the MD&A for details.
(3) Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release.
DEVELOPMENTS SUBSEQUENT TO THE QUARTER
Organizational cost reductions
Amid persistent multi-year lows in nickel prices and a materially lower short- to medium-term pricing outlook due to a global slowdown in the EV supply chain expansion outside of China, coupled with the ongoing challenges associated with the operating environment in Cuba, Sherritt has implemented further significant cost reduction measures. These significant measures include, but are not limited to, a 10% workforce reduction, across the Canadian operations with a focus on non-operating roles. The cost reduction initiatives are anticipated to deliver approximately $20.0 million in annualized savings (100% basis) and are in addition to the $17.0 million in annualized savings (100% basis) achieved through the 2024 initiatives.
Over the past several years, Sherritt has rigorously pursued cost optimization, including a 10% workforce reduction at its Corporate office in May 2021, a 10% workforce reduction across Canadian operations in January 2024 and a further 10% workforce reduction at its Corporate office in May and July 2024. The executive management team has also been streamlined from seven members at the start of 2024 to five members currently. These efforts, along with Sherritt’s ongoing pursuit of cost optimization opportunities, demonstrate the Corporation’s commitment to building a leaner, more resilient organization capable of weathering the current challenging market conditions, while continuing to manage and mitigate the risks associated with Sherritt’s operations and Cuban investments.
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Q2 2025 FINANCIAL HIGHLIGHTS
For the three months ended For the six months ended
| 2025 | 2024 | 2025 | 2024 | |||
| $ millions, except per share amount | June 30 | June 30 | Change | June 30 | June 30 | Change |
| Revenue | $ 43.7 $ | 51.4 | (15%) $ | 82.1 $ | 80.2 | 2% |
| Combined revenue(1) | 135.6 | 163.2 | (17%) | 261.3 | 290.9 | (10%) |
| Loss from operations and joint venture | (19.4) | (1.9) | (921%) | (51.2) | (24.3) (111%) | |
| Net earnings (loss) from continuing operations | 10.4 | (11.5) | 190% | (30.2) | (52.4) | 42% |
| Net earnings (loss) for the period | 10.2 | (11.5) | 189% | (30.4) | (52.0) | 42% |
| Adjusted EBITDA(1) | 2.6 | 13.0 | (80%) | 7.0 | 6.5 | 8% |
| Adjusted loss from continuing operations(1) | (25.6) | (10.0) | (156%) | (47.8) | (34.6) | (38%) |
| Net earnings (loss) from continuing operations ($ per share) | 0.02 | (0.03) | 167% | (0.07) | (0.13) | 46% |
| Adjusted loss from continuing operations ($ per share)(1) | (0.06) | (0.03) | (100%) | (0.11) | (0.08) | (38%) |
Cash provided (used) by continuing operations for operating
| activities | 5.6 | (37.8) | 115% | 6.6 | (24.8) | 127% |
| Combined free cash flow(1) | 2.8 | (27.0) | 110% | (3.8) | (11.2) | 66% |
| Average exchange rate (CAD/US$) | 1.384 | 1.368 | 1% | 1.409 | 1.359 | 4% |
2025 2024 $ millions, as at June 30 December 31 Change
Cash and cash equivalents
| Canada | $ 14.7 $ | 32.1 | (54%) |
| Cuba(2) | 106.4 | 113.0 | (6%) |
| Other | 0.5 | 0.6 | (17%) |
| 121.6 | 145.7 | (17%) | |
| Loans and borrowings | 315.7 | 372.5 | (15%) |
The Corporation's share of cash and cash equivalents in the Moa Joint Venture, not included in the above balances: $ 21.7 $ 5.7 281%
(1) Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release.
(2) As at June 30, 2025, $103.8 million of the Corporation’s cash and cash equivalents was held by Energas (December 31, 2024 - $111.4 million).
Cash and cash equivalents were $121.6 million as at June 30, 2025 compared to $135.6 million as at March 31, 2025.
As at June 30, 2025, total available liquidity in Canada was $45.0 million, composed of cash and cash equivalents in Canada of $14.7 million and available credit facilities of $30.3 million compared to $55.7 million as at March 31, 2025. During the quarter, Sherritt received $5.6 million of dividends from Energas in Canada for a total of $9.9 million in the first half of 2025 and cash provided by operating activities primarily reflecting timing of working capital receipts and payments including timing of maintenance at Power. Offsetting these inflows, Sherritt paid $8.7 million of interest on the Second Lien Notes, $10.3 million of transaction costs on the Debt and Equity Transactions, $4.4 million of expenditures on property, plant and equipment and $6.2 million on contractually obligated environmental rehabilitation costs related to legacy Oil and Gas assets in Spain.
At current spot nickel prices, and based on revised 2025 guidance for Metals, (please refer to the Outlook section of this press release for further details), the Corporation expects that distributions under the Cobalt Swap(2) agreement will be limited, commence in the fourth quarter of 2025 and will not meet the annual minimum amount in 2025.
The Moa JV’s cash and cobalt distributions to the Corporation are determined based on available cash in excess of liquidity requirements. Determinants of the Moa JV’s liquidity include but are not limited to, anticipated nickel and cobalt prices and sales volumes, spending on capital at the Moa JV, financing, working capital, and other liquidity requirements. Available cash is also impacted by changes in working capital primarily related to changes in inventory, and timing of receipts and payments, including receipts on nickel and cobalt sales subsequent to shipment.
Based on 2025 guidance for Power which includes electricity production that is expected to be at the lower end of the guidance range, (please refer to the Outlook section of this press release for further details), Sherritt expects total dividends from Energas in Canada in 2025 to be at the lower end of its previously disclosed range of $25.0 million and $30.0 million.
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For further information on risks related to distributions from the Moa JV and dividends in Canada from Energas, refer to the risks related to Sherritt’s corporate structure in the Corporation’s 2024 Annual Information Form.
As at June 30, 2025, the Corporation was in compliance with all its debt covenants.
Debt and Equity Transactions
In April 2025, the Corporation completed a transaction pursuant to a plan of arrangement (the “CBCA Plan”) under the Canada Business Corporations Act (the “CBCA”) that exchanged the Corporation’s existing notes obligations, comprised of the 8.50% second lien secured notes due 2026 (“Second Lien Notes”), the 10.75% unsecured PIK option notes due 2029 (“PIK Notes”), for amended 9.25% senior second lien secured notes due November 30, 2031 (the “Amended Senior Secured Notes”) and certain early consent consideration. The Corporation also completed a subsequent exchange transaction (the “Subsequent Exchange Transaction”) with certain holders of Second Lien Notes (the “Subsequent Exchange Noteholders”) involving the exchange of $17.1 million of the Amended Senior Secured Notes for 99 million common shares of the Corporation issued from treasury and commitments for subsequent scheduled repurchases of Amended Senior Secured Notes totaling $45.0 million of such notes from 2025 to 2028. These transactions collectively comprise the Corporation’s Debt and Equity Transactions and significantly improved the Corporation’s capital structure and extended maturity on its debt to late 2031. Refer to the Capital resources section of the Management’s Discussion and Analysis for the three months and six months ended June 30, 2025 (“MD&A”) for further information on the Debt and Equity Transactions.
Corporate update
Sir Richard Lapthorne retired from the Corporation’s Board of Directors for personal reasons on June 9, 2025. Richard Moat was appointed to the Board prior to the Corporation’s annual meeting of shareholders in June (the “Meeting”) following the retirement of Steven Goldman who did not seek reelection at the Meeting. All six director nominees standing for election were elected as directors at the Meeting. To fill the vacancy on the Board resulting from Sir Richard Lapthorne’s retirement and consistent with the Corporation’s ongoing commitment to good governance and Board renewal, following the Meeting, the Board appointed John Ewing as a director of the Corporation, Leon Binedell was appointed Executive Chairman and Shelley Brown, an independent director of Sherritt since August 2024, was named Lead Independent Director.
(1) Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release.
(2) For additional information on the Cobalt Swap, see Note 12 – Advances, loans receivable and other financial assets of the consolidated financial statements for the year ended December 31, 2024.
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REVIEW OF OPERATIONS
Metals
For the three months ended For the six months ended 2025 2024 2025 2024 $ millions (Sherritt's share), except as otherwise noted June 30 June 30 Change June 30 June 30 Change
FINANCIAL HIGHLIGHTS(1)
| Revenue | $ 124.7 $ | 150.6 | (17%) $ | 238.4 $ | 265.7 | (10%) |
| Cost of sales | 130.1 | 144.5 | (10%) | 249.2 | 275.6 | (10%) |
| (Loss) earnings from operations | (7.4) | 2.7 (374%) | (16.0) | (18.3) | 13% | |
| Adjusted EBITDA(2) | 7.8 | 18.0 | (57%) | 13.3 | 10.5 | 27% |
CASH FLOW(1)
Cash provided by continuing operations for operating activities(2) $ 20.0 $ 21.2 (6%) $ 41.9 $ 52.4 (20%) Free cash flow(2) 6.4 13.5 (53%) 17.8 35.2 (49%)
PRODUCTION VOLUMES (tonnes)
| Mixed sulphides ("MSP")(3) | 3,238 | 4,095 | (21%) | 6,395 | 8,147 | (22%) |
| Finished nickel | 3,431 | 3,383 | 1% | 6,378 | 6,980 | (9%) |
| Finished cobalt | 389 | 342 | 14% | 712 | 684 | 4% |
| Fertilizer | 65,207 | 60,355 | 8% | 121,027 | 117,419 | 3% |
| 83% | 88% | (6%) | 84% | 87% | (3%) |
NICKEL RECOVERY(4) (%)
SALES VOLUMES (tonnes)
| Finished nickel | 3,256 | 3,791 | (14%) | 6,695 | 7,814 | (14%) |
| Finished cobalt | 380 | 390 | (3%) | 836 | 752 | 11% |
| Fertilizer | 44,614 | 60,682 | (26%) | 77,734 | 84,591 | (8%) |
AVERAGE-REFERENCE PRICE(5) (US$ per pound)
Nickel $ 6.88 $ 8.35 (18%) $ 6.97 $ 7.94 (12%) Cobalt 17.50 13.34 31% 15.24 13.59 12%
AVERAGE-REALIZED PRICE(2) (CAD)
| Nickel ($ per pound) | $ 9.57 $ | 11.25 | (15%) $ | 9.78 $ | 10.55 | (7%) |
| Cobalt ($ per pound) | 18.19 | 14.32 | 27% | 15.51 | 14.41 | 8% |
| Fertilizer ($ per tonne) | 674.44 | 574.70 | 17% | 591.10 | 528.73 | 12% |
UNIT OPERATING COST(2) (US$)
Nickel - net direct cash cost (US$ per pound) $ 5.27 $ 5.75 (8%) $ 5.64 $ 6.50 (13%)
SPENDING ON CAPITAL(2)(CAD)
| Moa JV (50% basis), Fort Site (100% basis) | $ | 7.6 $ | 4.6 | 65% $ | 16.4 $ | 11.0 | 49% |
| Moa JV - Tailings facility (50% basis) | 5.0 | 2.8 | 79% | 9.8 | 3.8 | 158% | |
| Growth - Moa JV (50% basis) | 2.3 | 0.4 | 475% | 4.0 | 2.4 | 67% | |
| $ | 14.9 $ | 7.8 | 91% $ | 30.2 $ | 17.2 | 76% |
(1) The amounts included in the Financial Highlights, and cash flow sections for Metals above include the combined results of the Moa JV, Fort Site and Metals Marketing. Breakdowns of revenue, Adjusted EBITDA, and the components of free cash flow (cash provided (used) by continuing operations for operating activities and Property, plant and equipment expenditures) for each of these operations are included in the Combined Revenue, Adjusted EBITDA and Free cash flow reconciliations, respectively, in the Non-GAAP and other financial measures section of this press release.
(2) Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release.
(3) Mixed sulphides = mixed sulphide precipitate (MSP).
(4) The nickel recovery rate measures the amount of finished nickel that is produced compared to the original nickel content of the ore that was mined.
(5) Reference sources: Nickel – London Metal Exchange (“LME”). Cobalt - Average chemical-grade cobalt price published per Argus.
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Revenue
Metals revenue in Q2 2025 was $124.7 million compared to $150.6 million in Q2 2024.
Nickel revenue in Q2 2025 was $68.6 million compared to $94.0 million in Q2 2024. Revenue was lower primarily due to lower average-realized price(1) and lower sales volume. The average-realized price(1) of nickel of $9.57/lb was 15% lower compared to Q2 2024. Sales volume of 3,256 tonnes in line with production, and was 14% lower compared to Q2 2024 when sales volumes exceeded production recovering from the depressed market conditions in 2023 which led to an inventory build up.
Cobalt revenue in Q2 2025 was $15.2 million compared to $12.3 million in Q2 2024 as the higher average-realized price(1) more than offset the lower sales volume. The average-realized price(1) of cobalt of $18.19/lb was 27% higher compared to Q2 2024. Sales volume of 380 tonnes, was 3% lower compared to Q2 2024.
Fertilizer revenue in Q2 2025 was $30.0 million compared to $34.8 million in Q2 2024. The average-realized price(1) of fertilizers of $674.44/tonne was 17% higher compared to Q2 2024. Sales volume of 44,614 tonnes was 26% lower compared to Q2 2024. While overall customer demand was lower for the 2025 spring planting season, the sales volumes during Q2 2025 also reflect the timing of customer purchases. During Q1 2025 sales volumes were 39% higher year-over-year reflecting accelerated purchases which were weighted more heavily toward the first quarter this year.
Cobalt Swap
There were no sales of cobalt from the Cobalt Swap in either Q2 2025 or Q2 2024. In the six months ended June 30, 2025 Sherritt sold 173 tonnes (100% basis) of finished cobalt that it received in Q4 2024 under the Cobalt Swap agreement recognizing revenue of $4.7 million compared to sales of 23 tonnes (100% basis) and revenue of $0.9 million in the same period in 2024.
Variances in cobalt sales volumes, revenue and cost of sales are, in part, dependent upon the timing of receipts of cobalt and their subsequent sale by Sherritt under the Cobalt Swap agreement compared to sales of cobalt produced and sold directly by the Moa JV. Sales volumes, revenue and costs of sales of cobalt received by Sherritt under the Cobalt Swap agreement are recognized by Sherritt on a 100% basis versus a 50% basis for cobalt produced and sold directly by the Moa JV.
While the timing of the sales under the Cobalt Swap or by Moa JV directly results in variances in sales volumes, revenue and cost of sales, it does not have a material impact on earnings from operations, average-realized prices(1), cobalt by-product credits(2), or NDCC(1). This is because the variance in revenue and costs of Sherritt’s share of cobalt under the Cobalt Swap is offset by Sherritt’s share of revenue and costs of the Moa JV and the cost of cobalt sold on volumes of cobalt redirected from GNC is determined based on the in-kind value of cobalt calculated as the cobalt reference price from the month preceding distribution less a mutually agreed selling cost adjustment.
At current spot nickel prices, and based on revised 2025 guidance for Metals, (please refer to the Outlook section of this press release for further details), the Corporation expects that distributions under the Cobalt Swap agreement will be limited, commence in the fourth quarter of 2025 and will not meet the annual minimum amount in 2025.
Refer to the risks related to Sherritt’s corporate structure in the Corporation’s 2024 Annual Information Form for further information on risks related to distributions from the Moa JV.
Production
Mixed sulphides production at the Moa JV in Q2 2025 was 3,238 tonnes compared to 4,095 tonnes in Q2 2024. The lower production in Q2 2025 was primarily attributable to the planned shutdown at the Acid Plant. Due to high acid prices and low nickel prices, the Moa JV elected to not purchase acid during this period which lowered MSP production by approximately 1,000 tonnes (100% basis). The general challenging operating environment in Cuba, due to the challenging economic conditions experienced in the country, continue to negatively impact MSP production. Sherritt and its Cuban partner have agreed on a recovery plan which includes an increase in expatriate personnel. The recovery efforts, coupled with the ramp up of the sixth leach train at Moa is expected to increase MSP production in the second half of the year. Recovery efforts will take time to implement as outlined in the revised 2025 guidance.
Sherritt’s share of finished nickel and cobalt production in Q2 2025 was 3,431 tonnes and 389 tonnes, compared to 3,383 tonnes and 342 tonnes, respectively, in Q2 2024. In the Q2 2025, production was primarily impacted by lower mixed sulphides feed availability from Moa which could not be offset by third-party feeds due to unprofitably high payabilities in the intermediate market. In 2025, Sherritt expects its annual maintenance shutdown will take place in September.
Fertilizer production in Q2 2025 of 65,207 tonnes was 8% higher compared to Q2 2024 primarily due to improved equipment availability as a result of timing of maintenance activities.
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NDCC(1)
NDCC(1) per pound of nickel sold in Q2 2025 was US$5.27/lb, compared to US$5.75/lb in Q2 2024. In Q2 2025, MPR/lb was slightly lower compared to Q2 2024 due to lower planned maintenance costs, lower natural gas, fuel oil and diesel prices, partly offset by higher sulphur prices. In Q2 2025, natural gas, fuel oil and diesel prices were 12%, 10% and 4% lower, respectively while sulphur prices were 40% higher compared to Q2 2024. Third-party feed costs were higher in Q2 2025 compared to the prior year period as a result of processing more third-party feed that was previously acquired. Cobalt by-product credits were higher primarily as a result of 27% higher average-realized cobalt price(1). Fertilizer net by-product credits were higher as a result of 17% higher average-realized fertilizer prices(1) and lower planned maintenance costs in the current year period which more than offset lower fertilizer sales volumes.
Spending on capital(1)
Sustaining spending on capital in Q2 2025 was $7.6 million compared to $4.6 million in Q2 2024. The modestly higher spending during the current year is consistent with spending estimates for the first half of the year.
Sustaining spending on capital related to the tailings facility in Q2 2025 was $5.0 million compared to $2.8 million in Q2 2024.
Growth spending on capital in Q2 2025 was $2.3 million compared to $0.4 million in Q2 2024. The final spending on growth capital is planned to be incurred during ramp up of the Moa JV expansion.
(2) Cobalt by-product credits include Sherritt’s share of cobalt revenue per pound of nickel sold only.
Expansion program and strategic developments
Moa JV expansion program
During the quarter, commissioning of phase two of the Moa JV expansion, the processing plant, continued. This work will be completed by mid-August with ramp up scheduled to occur in the third quarter. Additional MSP from the ramp up of phase two of the expansion is expected to begin to be processed at the refinery in the fourth quarter of this year.
The low capital intensity expansion program, which remains under budget, is expected to fill the refinery to nameplate capacity to maximize profitability from the joint venture’s own mine feed, displacing lower margin third-party feeds and increasing overall finished nickel and cobalt production. The Moa JV could pursue further expansion opportunities at the refinery should sufficient positive margin third-party feeds be available to further expand finished nickel and cobalt production and expand cash flow generation capacity.
Strategic developments
Sherritt, through its mixed hydroxide precipitate processing project (“MHP Project”), has advanced a flowsheet to convert nickel intermediates via midstream processing to produce high-purity nickel and cobalt sulphates, two fundamental feedstock materials for the electric vehicle supply chain.
During the quarter, Sherritt received positive confirmation that the MHP Project was approved for funding of up to $2.4 million through Emissions Reduction Alberta (“ERA”)’s Advanced Materials Challenge that would support integrated piloting and demonstration of an innovative refining flowsheet at Sherritt’s Fort Saskatchewan process technology site over a two-year project period.
As a result of the organization wide cost reduction initiative, work on this project will be paused until broader nickel market conditions improve and greater certainty on the timeline for development of the downstream electric vehicle supply chain in North America.
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Power
For the three months ended For the six months ended 2025 2024 2025 2024 $ millions (33 ⅓% basis), except as otherwise noted June 30 June 30 Change June 30 June 30 Change
FINANCIAL HIGHLIGHTS
| Revenue | $ 10.6 $ | 11.8 | (10%) $ | 22.0 $ | 23.8 | (8%) |
| Cost of sales | 5.0 | 9.3 | (46%) | 11.9 | 13.3 | (11%) |
| Earnings from operations | 4.3 | 1.2 | 258% | 7.0 | 8.3 | (16%) |
| Adjusted EBITDA(1) | 5.0 | 1.8 | 178% | 8.4 | 9.4 | (11%) |
CASH FLOW
Cash provided (used) by continuing operations for operating activities(1) $ 16.0 $ (7.8) 305% $ 16.9 $ 1.9 789% Free cash flow(1) 15.2 (9.3) 263% 16.0 (2.2) 827%
PRODUCTION AND SALES
Electricity (GWh(2)) 176 205 (14%) 346 415 (17%)
AVERAGE-REALIZED PRICE(1)
Electricity ($/MWh(2)) $ 52.56 $ 52.00 1% $ 53.53 $ 51.62 4%
UNIT OPERATING COSTS(1)
Electricity ($/MWh) $ 24.80 $ 42.74 (42%) $ 31.03 $ 29.81 4%
SPENDING ON CAPITAL(1)
Sustaining $ 0.8 $ 1.5 (47%) $ 0.9 $ 4.1 (78%)
(1) Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release.
(2) Gigawatt hours (“GWh”), Megawatt hours (“MWh”).
Frequency control at Varadero
As a result of the nationwide power outages in Cuba in 2024 and challenges facing the national power grid, the government agency Unión Eléctrica (“UNE”) required Energas to operate the Varadero facility in frequency control to help support the stability of the power grid. Energas expects that the Varadero facility will operate in frequency control throughout most of 2025 with an estimated reduction in electricity volume of approximately 150 GWh (Sherritt’s share). Energas expects to be fully compensated for this reduction and therefore Sherritt expects there will be no impact to Power’s Adjusted EBITDA(1), earnings from operations or dividends from Energas to Sherritt in Canada. Energas’ other facilities are expected to continue operating as usual.
Revenue
Revenue in Q2 2025 was $10.6 million compared to $11.8 million in Q2 2024. Revenue includes full compensation of $0.7 million for the Varadero facility operating in frequency control during the quarter. Lower revenue was largely attributable to lower production as discussed below, partially offset by the weakening of the Canadian dollar which had a positive impact on the U.S. dollar-denominated average-realized price(1) of electricity.
Production
Production volume in Q2 2025 was 176 GWh compared to 205 GWh in Q2 2024. Lower electricity production was primarily a result of the Varadero facility operating in frequency control and the loss of gas production from one of CUPET’s legacy gas wells which experienced an increase in water production in Q1 2025 impacting the amount of gas provided to the power facility. CUPET is actively working to replace production from the well with the development of a new gas well which is expected to be drilled in August and begin production in September. The decrease in gas supply during the quarter was partially offset by increased gas supply from other wells.
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Unit operating cost(1)
Unit operating cost(1) in Q2 2025 was $24.80/MWh compared to $42.74/MWh in Q2 2024 primarily as a result of the timing of planned maintenance. In the current year, Power completed a major turbine inspection during Q1 while two major inspections were completed in Q2 2024. There are no additional major inspections planned during the balance of the year. A weaker Canadian dollar on U.S. dollar-denominated costs and lower electricity volumes from the Varadero facility operating in frequency control in the current year period has a negative impact on unit operating cost(1).
Spending on capital(1)
Spending on capital(1) was $0.8 million in Q2 2025.
Dividends from Energas
Sherritt received $5.6 million of dividends in Canada from Energas in Q2 2025 for a total of $9.9 million in the first half of 2025. Based on 2025 guidance for Power which includes electricity production that is expected to be at the lower end of the guidance range, (please refer to the Outlook section of this press release for further details), Sherritt expects total dividends from Energas in Canada in 2025 to be at the lower end of its previously disclosed range of $25.0 million and $30.0 million. Refer to the risks related to Sherritt’s corporate structure in the Corporation’s 2024 Annual Information Form for further information on risks related to dividends in Canada from Energas.
OUTLOOK
2025 production volumes, unit operating costs and spending on capital guidance
Guidance Year-to-date Updated for 2025 - actuals - 2025 guidance - Production volumes, unit operating costs and spending on capital Total Total Total
Production volumes
Metals - Moa JV (100% basis, tonnes)
| Finished nickel | 31,000 – 33,000 | 12,756 | 27,000 – 29,000 |
| Finished cobalt | 3,300 – 3,600 | 1,424 | 3,000 – 3,200 |
| Power - Electricity (33⅓% basis, GWh) | 800 – 850 | 346 | No change |
Unit operating costs(1)
Metals – NDCC(1) (US$ per pound) $5.75 – $6.25 $5.64 No change Electricity – unit operating cost ($ per MWh) $23.00 – $24.50 $31.03 No change
Spending on capital(1)($ millions)
| Metals - Moa JV (50% basis), Fort Site (100% basis) | $35.0 | $16.4 | $30.0 |
| Metals - Moa JV – Tailings facility (50% basis) | $40.0 | $9.8 | $35.0 |
| Power (33⅓% basis) | $2.0 | $0.9 | No change |
Growth Metals - Moa JV (50% basis) $5.0 $4.0 No change Spending on capital(2) $82.0 $31.1 $72.0
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Metals
As a result of significant challenges in the general operating environment in Cuba resulting in materially lower production of mixed sulphides feed in the first half of the year coupled with limited availability of profitable third-party feeds due to high Chinese payabilities for intermediate feeds, Sherritt is lowering its full year production guidance range. Sherritt still anticipates higher second half production on the back of the commissioning and ramp up of the sixth leach train at Moa and with the implementation of a recovery plan agreed to by the joint venture partners that would also see greater expat involvement in the recovery efforts in Cuba. Sherritt has revised its finished nickel production guidance range from 31,000 to 33,000 tonnes to 27,000 to 29,000 tonnes and its finished cobalt production guidance range from 3,300 to 3,600 tonnes to 3,000 to 3,200 tonnes. The revised guidance ranges reflect limited third-party feed due to the market dynamics mentioned and lower than originally forecast mixed sulphides production from Moa as the impact of near-term challenges from the decline in operating environment is expected to take time to mitigate despite the increased capacity from the expansion being available in the second half of the year.
In light of the continued challenging operating and nickel pricing environment, opportunities to decrease or defer certain capital spending items are being implemented at Metals. As a result, 2025 guidance for sustaining capital has been reduced from $35.0 million to $30.0 million and the tailings facility spending has been reduced from $40.0 million to $35.0 million. The lower 2025 spending on the new tailings facility is a deferral of spending; overall spending for the project remains unchanged with the timeline for commissioning still on track and expected in the second half of 2026.
Based on NDCC(1) for the six months ended June 30, 2025 and estimated production volumes and costs to the end of the year, NDCC range of US$5.75/lb to US$6.25/lb, remains unchanged.
Power
The guidance range for electricity production is unchanged, with the interruption of gas supply from a legacy CUPET well, estimated electricity production for the year is expected to be at the lower end of the 2025 guidance range of 800 GWh to 850 GWh.
Based on unit operating cost(1) in the first half of 2025, and the absence of planned major maintenance activities in the second half of the year, Sherritt continues to expect unit operating cost(1) to be within the 2025 guidance range of $23.00/MWh to $24.50/MWh.
CONFERENCE CALL AND WEBCAST
Sherritt will hold its conference call and webcast July 30, 2025, at 10:00 a.m. Eastern Time to review its second quarter 2025 results. Dial-in and webcast details are as follows:
North American callers, please dial: 1 (800) 717-1738 Passcode: 22560
International callers, please dial: 1 (289) 514-5100 Passcode: 22560
Live webcast: www.sherritt.com
Please dial in 15 minutes before the start of the call to secure a line. Alternatively, listeners can access the conference call and presentation via the webcast available on Sherritt’s website.
An archive of the webcast and replay of the conference call will also be available on the website.
FINANCIAL STATEMENTS AND MANAGEMENT’S DISCUSSION AND ANALYSIS (“MD&A”)
Sherritt’s condensed consolidated financial statements and MD&A for the three and six months ended June 30, 2025 are available at www.sherritt.com or on SEDAR+ at www.sedarplus.ca. and should be read in conjunction with this news release. Financial and operating data can also be viewed in the investor relations section of Sherritt’s website.
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NON-GAAP AND OTHER FINANCIAL MEASURES
Management uses the following non-GAAP and other financial measures in this press release and other documents: combined revenue, adjusted earnings before interest, taxes, depreciation and amortization (“adjusted EBITDA”), average-realized price, unit operating cost/net direct cash cost (NDCC), adjusted net earnings/loss from continuing operations, adjusted net earnings/loss from continuing operations per share, spending on capital, combined cash provided (used) by continuing operations for operating activities and combined free cash flow.
Management uses these measures to monitor the financial performance of the Corporation and its operating divisions and believes these measures enable investors and analysts to compare the Corporation’s financial performance with its competitors and/or evaluate the results of its underlying business. These measures are intended to provide additional information, not to replace IFRS® Accounting Standards (“IFRS”) measures, and do not have a standard definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. As these measures do not have a standardized meaning, they may not be comparable to similar measures provided by other companies.
The non-GAAP and other financial measures are reconciled to their most directly comparable IFRS measures in the Appendix below.
ABOUT SHERRITT
Sherritt is a world leader in using hydrometallurgical processes to mine and refine nickel and cobalt – metals deemed critical for the energy transition. Sherritt’s Moa JV has an estimated mine life of approximately 25 years and is advancing an expansion program focused on increasing annual MSP production by 20% of contained nickel and cobalt. The Corporation’s Power division, through its ownership in Energas, is the largest independent energy producer in Cuba with installed electrical generating capacity of 506 MW, representing approximately 10% of the national electrical generating capacity in Cuba. The Energas facilities are comprised of two combined cycle plants that produce low-cost electricity from one of the lowest carbon emitting sources of power in Cuba. Sherritt’s common shares are listed on the Toronto Stock Exchange under the symbol “S”.
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