Sherritt International (S) Q1 2025 earnings summary

Executive summary

• Q1 2025 was marked by challenging market conditions, with nickel and cobalt price volatility driven by shifting government policies and export restrictions in Indonesia, the Philippines, and the DRC, impacting global supply and pricing.

• The operating environment in Cuba remained difficult due to escalating U.S. sanctions, lower tourism, and foreign currency access issues, affecting supply chains and operations.

• Major strategic initiatives were delivered, including strengthening the capital structure, advancing the Moa JV expansion (phase two commissioning underway, ramp-up expected H2 2025), and progressing the MHP project for the EV supply chain.

• Production of mixed sulfides, nickel (2,947t), and cobalt (323t) was lower due to supply chain delays, maintenance, and power outages, but fertilizer sales volumes rose 39% with 16% higher prices.

• Adjusted EBITDA improved to $4.4 million from negative $6.5 million year-over-year, supported by cost containment and higher fertilizer sales.

Financial highlights

• Combined revenue was $125.7 million, down 2% year-over-year, as higher fertilizer and cobalt revenues offset lower nickel and power revenue.

• Net loss from continuing operations was $40.6 million ($0.10 per share); adjusted net loss was $22.8 million, primarily excluding a $15.7 million non-cash loss on environmental rehabilitation provisions.

• Available liquidity in Canada at quarter-end was $55.7 million, supported by strong cash flow and proceeds from asset sales and dividends.

• Cash and cash equivalents at quarter-end were $135.6 million, down from $145.7 million at year-end 2024.

• Adjusted EBITDA was $4.4 million, a significant year-over-year improvement.

Outlook and guidance

• Guidance for 2025 production volumes, unit operating costs, and capital spending remains unchanged, with expectations for higher nickel and cobalt production in H2 2025 as Moa JV expansion ramps up.

• Cobalt prices surged over 35% late in Q1 due to DRC export suspension, with benefits expected in Q2.

• Power production guidance maintained, with higher output forecast for the remainder of the year.

• Total dividends from Energas in Canada expected to be $25–$30 million in 2025.

• Cobalt Swap distributions and Energas dividends in Canada expected in H2 2025.