Sherritt Reports Second Quarter 2025 Results and Updated Guidance; Moa
Sherritt International Corporation 1
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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 tha n 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 ov ercome 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 nee d
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.
2025 Second Quarter Report
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2 Sherritt International Corporation
• 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:
o 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.
o 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.
o 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.
o 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.
Sherritt International Corporation 3
(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 co st
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, 202 4 - $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 payment s 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 expect s 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 a lso
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%
NICKEL RECOVERY(4) (%) 83% 88% (6%) 84% 87% (3%)
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)
Sustaining
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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8 Sherritt International Corporation
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.
(1) Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release.
(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.