Sherritt International (S) Q3 2025 earnings summary

Executive summary

• Moa JV expansion phase two completed and sixth leach train commissioned, with ramp-up underway to increase mixed sulphide precipitate production and support future growth despite challenging conditions in Cuba and low nickel prices.

• Significant cost reduction initiatives, including a 10% workforce reduction in Canada, are expected to yield $20 million in annual savings, in addition to $17 million from prior year initiatives, with cumulative annualized savings of $37 million since 2021.

• Power division achieved stable operations, supported by new gas wells, increased dividends, and facilities running near full capacity.

• Q3 2025 saw a net loss from continuing operations of $19.5 million and adjusted EBITDA of $1.6 million, reflecting lower metals production and higher costs.

• Major debt restructuring completed, reducing debt by $42.6 million, lowering annual interest by $3 million, and extending debt maturities.

Financial highlights

• Combined revenue for Q3 was $108.4 million, down 14% year-over-year due to a 7% decrease in average realized nickel price and a 23% drop in nickel sales volumes; adjusted EBITDA was $1.6 million, down from $10.5 million in Q3 2024.

• Net loss from continuing operations was $(19.5) million in Q3 and $(49.7) million for the nine months ended September 30, 2025; adjusted net loss from continuing operations was $(15.5) million in Q3.

• Cobalt revenue benefited from a 49% increase in average realized price, nearly offsetting lower sales volumes; fertilizer revenue rose on a 19% improvement in average realized price.

• Cash and cash equivalents at September 30, 2025, were $120.2 million, with $45.2 million available liquidity in Canada.

• Combined free cash flow was negative $24.0 million in Q3 and negative $27.8 million for the nine months.

Outlook and guidance

• 2025 finished nickel production guidance revised to 25,000–26,000 tonnes (from 27,000–29,000) and finished cobalt to 2,700–2,800 tonnes (from 3,000–3,200) due to operational challenges and hurricane impacts.

• NDCC guidance remains unchanged at $5.75–$6.25 per lb, reflecting effective cost management and higher byproduct credits.

• Power segment guidance for production, unit costs, and capital spending remains unchanged.

• 2025 capital spending expected at $69 million, slightly below previous guidance, with some tailings facility expenditures deferred to 2026.

• No expected Q4 distributions under the cobalt swap agreement; shortfall to be added to 2026 minimum payment.