Sherritt International (S) Q2 2025 earnings summary

Executive summary

• Lower finished nickel and cobalt production resulted from operational challenges in Cuba, including U.S. policy pressures, supply chain issues, and reduced mixed sulphides output at Moa; a recovery plan is underway.

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

• Significant cost reduction initiatives, including workforce reductions and restructuring, are projected to deliver $20 million in annualized savings, building on $17 million from prior measures.

• Debt and equity transactions closed, reducing debt by $68 million, lowering annual interest by $3 million, extending principal maturity to late 2031, and improving liquidity.

• Available liquidity in Canada at quarter-end was $45 million, with Energas dividends contributing $5.6 million.

Financial highlights

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

• Net earnings from continuing operations were $10.4 million ($0.02/share), compared to a loss of $11.5 million in Q2 2024.

• Adjusted net loss from continuing operations was $25.6 million ($-0.06/share), excluding a $32.4 million gain from debt and equity transactions.

• Adjusted EBITDA was $2.6 million, down from $13.0 million year-over-year.

• NDCC for nickel was $5.27/lb in Q2 2025, down from $5.75/lb in Q2 2024, driven by lower energy costs and higher by-product credits.

Outlook and guidance

• 2025 finished nickel production guidance revised down 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 operating cost guidance unchanged at $23.00–$24.50/MWh.