Sherritt International (TSE:S) outlined a wide-ranging operational turnaround effort at its Moa Joint Venture during its fourth-quarter 2025 results call, while emphasizing continued strength in its power business and the financial flexibility gained from a completed debt restructuring. Interim CEO Dr. Peter Hancock said 2025 performance “fell well short” of internal standards, prompting what he described as a deliberate, structured plan to stabilize production and rebuild operating reliability.
Leadership changes and turnaround focus at Moa
Hancock, appearing on the earnings call for the first time as interim CEO, said the company has made “important changes” to its board and executive team since the prior update. He thanked several departing leaders for their contributions and highlighted the appointment of Brian Imrie as board chair in November, along with the addition of Brett Richards to the board. The company said its search for a permanent CEO remains ongoing.
The company’s near-term goal is to restore mixed sulphides production to pre-2025 levels by the end of 2026. Once stability is achieved, management said it intends to shift focus toward increasing output and capturing the benefits of a previously completed expansion program.
Metals results pressured by operational challenges and higher inputs
Chief Operating Officer Elvin Saruk said the metals business continued to face challenges with mined ore volumes below plan, in addition to several quarter-specific issues that reduced production. He cited lower leach train availability, a minor fuel oil supply disruption related to logistics (and not recent geopolitical events), and Hurricane Melissa, which impacted Cuba’s national power grid and forced a controlled shutdown for several days.
With less mixed sulphides produced, the refinery had less feed, resulting in lower finished nickel and cobalt production. Fertilizer output also declined, in part due to lower nickel and cobalt volumes and a scheduled biannual turnaround at the ammonia plant.
For the full year, Sherritt reported production of 25,240 tons of nickel and 2,728 tons of cobalt on a 100% basis, which Saruk said was within the guidance ranges revised in the prior quarter in response to operational challenges.
Net Direct Cash Cost (NDCC) for the fourth quarter was $6.01 per pound, reflecting higher mining, processing, and refining costs per pound driven mainly by rising input commodity prices. Saruk said sulphur prices increased 90% and natural gas prices rose 71% compared to the same period last year, noting sulphur represents roughly 30% of Moa’s operating budget. Lower nickel sales also weighed on results, while higher cobalt prices improved cobalt byproduct credits. Full-year NDCC was $5.96 per pound, which management said was in the middle of its original guidance range.
2026 outlook: second-half weighted recovery and higher capital spending
Looking ahead, Saruk said the company expects a “solid recovery” in mixed sulphides production in 2026, targeting 30,000 to 32,000 tons of contained nickel and cobalt on a 100% basis. Production is expected to be weighted toward the second half of the year as the turnaround plan begins to yield results.
Management expects NDCC to remain broadly in line with 2025 levels, supported by higher anticipated production and sales, continued cost optimization, and higher cobalt byproduct credits. The company also expects some higher input costs, particularly for sulphur.
Capital spending plans for 2026 include:
- CAD 35 million to CAD 40 million in sustaining capital, including spending tied to the operational turnaround at Moa such as new mining equipment and processing equipment refurbishment
- CAD 25 million to CAD 30 million for the joint venture’s new tailings facility, which the company said remains on schedule to be operational by year-end and provide a tailings solution for the next 25 years
- CAD 2.5 million to CAD 5 million for a debottlenecking project intended to improve mining and processing performance
Saruk added that the company reduced some costs and deferred a portion of tailings-related spending into 2027, lowering expected spending in 2026 compared with prior estimates. With higher capital planned at Moa, Sherritt said it is also reviewing financing options.
Power business delivers higher output and record dividends
Sherritt’s power division continued to provide liquidity. Hancock said the company received CAD 7.8 million in dividends in Canada from Energas during the fourth quarter, bringing full-year dividends to CAD 26 million, which he said was double the prior year’s amount.
Saruk reported fourth-quarter power production of 210 GWh, driven largely by increased natural gas supply to Energas following the introduction of a new well in Q4 2024 and a replacement gas well in Q3 2025. Full-year generation was 799 GWh, near the lower end of guidance, as Energas was asked to operate the Boca facility in frequency control late in the year to support grid stability. While frequency control at Varadero had been included in guidance, Boca had not; management noted Energas is fully compensated for any production loss related to frequency control operation.
Unit operating cost in the quarter was CAD 23.48 per MWh, similar to the full-year result, which was within guidance and “well below” the prior year due to lower maintenance. For 2026, Sherritt expects another solid year of power production, with Varadero expected to operate in frequency control for most of the year and unit operating costs anticipated to increase slightly due to planned maintenance in the first half. Power capital spending is budgeted at CAD 3 million.
Financial results, liquidity, and hedging
Chief Financial Officer Yasmin Gabriel said the company faced a difficult operating environment at Moa in the fourth quarter as nickel prices remained under pressure and input costs—particularly sulphur and natural gas—rose significantly. She noted the average realized cobalt price in the quarter was more than double the level from the same quarter last year, and the power division’s performance contributed to higher Energas dividends in Canada.
Gabriel reported combined revenues of CAD 163.2 million for the quarter, including the Moa Joint Venture on a 50% basis. Revenue was slightly higher year-over-year, as higher cobalt, fertilizer, and electricity revenue more than offset lower nickel revenue. Nickel revenue declined due to a 5% decrease in average realized price and a 14% drop in sales volume tied primarily to lower production. Cobalt revenue rose nearly 120% year-over-year as higher realized prices more than offset lower sales volumes, while fertilizer revenue increased 7% on higher realized pricing despite lower volumes.
Adjusted EBITDA declined year-over-year, primarily due to lower nickel sales and higher mining, processing, and refining costs driven by sulphur prices, Gabriel said.
Sherritt ended the year with CAD 43.7 million of available liquidity in Canada, slightly lower than at the end of the third quarter. Fourth-quarter liquidity changes included Energas dividends, fertilizer pre-buy proceeds, interest paid on the amended senior secured note, and property, plant, and equipment expenditures.
For 2026, the company expects Energas dividends in Canada of CAD 20 million to CAD 25 million, lower than 2025 due mainly to higher planned maintenance. Based on guidance for production and costs and planned capital spending, Sherritt said it does not expect distributions under the Cobalt Swap Agreement in 2026, with any shortfall in the annual minimum payment amount to be added to the following year.
Gabriel also disclosed that in January the company purchased put options on 3,750 tons of nickel with an exercise price of $7.48 per pound for a six-month period beginning February 1, describing the strategy as providing full exposure to nickel price upside while protecting against downside during periods of high volatility.
Hancock said the company’s 2025 actions—including its Moa turnaround initiation, higher power dividends, debt restructuring, and cost savings—were intended to position Sherritt for improved performance in 2026. The call concluded without any questions from participants.
About Sherritt International (TSE:S)
Sherritt International Corp is engaged in the mining and refining of nickel from lateritic ores with projects and operations in Canada, Cuba, and North America. Its segment includes Moa JV and Fort site, Metals Other, Power, and Technologies and Corporate. The Moa JV and Fort site segment includes the mining, processing, and refining of nickel and cobalt. Metals Other segment is comprised of buying, marketing and selling certain of Moa Joint Venture’s nickel and cobalt production. Its Power segment constructs and operates an electricity generating plant whereas The Technologies and Corporate segment consist of the metallurgical technology business and general corporate activities.
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