Sherritt International (S) Q2 2025 earnings summary

Executive summary

• Ongoing operational challenges in Cuba, including U.S. policy pressures and supply chain issues, led to lower mixed sulphides, nickel, and cobalt production, with a recovery plan and Moa JV phase II expansion underway to boost output in H2 2025.

• Major debt and equity transactions reduced obligations by $68 million, extended maturities to 2031, lowered annual interest by $3 million, and improved liquidity, with available liquidity in Canada at $45 million at quarter-end.

• Significant cost reduction initiatives, including a 10% workforce reduction and executive team streamlining, are projected to deliver $20 million in annualized savings, building on $17 million from prior efforts.

• Net earnings from continuing operations were $10.4 million in Q2 2025, but adjusted net loss was $25.6 million, excluding a $32.4 million gain from debt/equity transactions.

• Moa JV expansion phase II commissioning is on track for mid-August completion, with ramp-up expected in H2 2025 to increase mixed sulphide precipitate production.

Financial highlights

• Combined Q2 2025 revenue was $135.6 million, down 17% year-over-year, reflecting lower nickel and cobalt sales volumes and prices.

• Adjusted EBITDA was $2.6 million in Q2 2025, down 80% year-over-year; adjusted EBITDA margin was 1.9%.

• Cash and cash equivalents at June 30, 2025, were $121.6 million; available liquidity in Canada was $45 million.

• Net earnings from continuing operations were $10.4 million; adjusted net loss was $25.6 million.

• NDCC for nickel improved to US$5.27/lb in Q2 2025, down from US$5.75/lb year-over-year.

Outlook and guidance

• 2025 finished nickel production guidance lowered to 27,000–29,000 tonnes (from 31,000–33,000); cobalt to 3,000–3,200 tonnes (from 3,300–3,600).

• Sustaining capital for metals reduced to $30 million (from $35 million); tailings facility spending reduced to $35 million (from $40 million).

• Power production guidance maintained at 800–850 GWh, but expected at the lower end due to gas supply issues.

• Cobalt swap distributions expected to be limited and below the annual minimum in 2025, commencing in Q4.

• NDCC guidance for Metals unchanged at US$5.75–6.25/lb; Power unit cost guidance unchanged at $23–24.50/MWh.