Sherritt International Corp. press release

Sherritt Reports Second Quarter 2026 Results

2026-08-12

TSX - Toronto Stock Exchange · Nickel · Cobalt · Sulfur · Copper · Zinc · Natural Gas · Oil · Canada · Corporate Finance

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Sherritt International Corporation (“Sherritt”, the “Corporation”) (TSX: S) today reported its financial results for the three and six months ended June 30, 2026. All amounts are in Canadian dollars unless otherwise noted.

“The second quarter was marked by significant challenges and disruption,” said Peter Hancock, Interim President and Chief Executive Officer. “Against this backdrop, we remained focused on preserving liquidity, maintaining safety, maximizing fertilizer production, and advancing stakeholder engagement and strategic initiatives necessary to prepare for a restart of our critical minerals mining and refining operations subject to U.S. government approval. We are continuing to work with urgency and discipline to deliver a solution that supports the long-term stability and viability of our business.”

SECOND QUARTER 2026 SELECTED DEVELOPMENTS (1)

Operational update

On May 7, 2026, as a result of the Executive Order issued by the U.S. administration on May 1, 2026 expanding its sanctions against persons and companies conducting business in Cuba (the “Executive Order”), Sherritt suspended its direct participation in both its Moa and Energas joint venture activities in Cuba.

As a result of fuel supply disruptions in Cuba and challenges procuring other input commodities and supplies at the mine site, feed inventory at the refinery in Fort Saskatchewan, Alberta was depleted on June 22, 2026. Mining and processing operations at the mine ceased near the end of the quarter.

During the refinery downtime, the Corporation will complete necessary maintenance activities that do not require significant capital investment. The Corporation continues to produce fertilizers and sulphuric acid for sale.

Operational performance

Finished nickel and cobalt production at the Moa Joint Venture (“Moa JV”) was 1,319 tonnes and 135 tonnes, respectively, (Sherritt’s share (1) ). Finished nickel and cobalt sales were 1,720 tonnes and 167 tonnes, respectively (1) . Fertilizer sales were 52,328 tonnes (1) as Sherritt prioritized initiatives to maximize fertilizer production at Fort Site. Net direct cash cost (“NDCC”) (2) of US$7.31/lb was primarily impacted by the higher sulphur prices and significantly lower nickel production and sales volumes. Electricity production was 207 GWh. Production was not affected by fuel supply disruptions to Cuba as Energas processes domestically sourced raw natural gas to generate electricity. Electricity unit operating cost (2) was $13.36/MWh primarily reflecting lower maintenance costs and higher electricity production and sales.

Financial performance

Net loss from continuing operations was $71.1 million, or $(0.10) per share. Adjusted net loss from continuing operations (2) was $24.8 million or $(0.04) per share which primarily excludes the $38.6 million loss from operations of Sherritt’s Oil and Gas division, primarily due to a $36.1 million contractually obligated environmental rehabilitation cost update on legacy assets in Spain in Q2 2026. In addition, the current year period excludes a $6.8 million non-cash net loss on revaluation of the GNC (3) receivable and Energas payable pursuant to the Cobalt Swap agreement (4) . Adjusted net loss from continuing operations for Q2 2025 primarily excludes a $32.4 million gain on the Debt and Equity Transactions (5) . Adjusted EBITDA (2) was $(2.0) million. Available liquidity in Canada as at June 30, 2026 was $80.1 million.

Organizational updates

On April 7, 2026, the Corporation completed a non-brokered private placement of common shares, issuing approximately 207 million shares at $0.21 per share for total gross proceeds of $43.6 million. In April 2026, foreign currency payments from the Moa JV to Energas pursuant to the Moa Swap ceased as a result of reduced operations at the Moa JV which reduced the Moa JV’s cash available in major foreign currencies. Dividends from Energas to the Corporation in Canada ceased. On May 1, 2026, the Executive Order was issued by the U.S. administration expanding its sanctions against persons and companies conducting business in Cuba. Sherritt International Corporation, the legal entity, has not, nor has any of its officers or directors, been sanctioned following issuance of the Executive Order. On May 7, 2026 Sherritt announced: It suspended its direct participation in both its Moa and Energas joint venture activities in Cuba, and that it took steps to repatriate Sherritt’s expatriate employees on assignment in Cuba and requested that partners repatriate their expatriate personnel on assignment in Canada. Brian Imrie, Richard Moat and Brett Richards resigned from its board of directors (the “Board”).

On May 13, 2026, Sherritt announced: Deloitte LLP resigned as the Corporation’s external auditor, effective May 12, 2026. The resignation was not the result of any disagreement between the Corporation and Deloitte on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure. Deloitte’s reports on the Corporation’s previously issued financial statements did not contain any adverse opinion or a disclaimer of opinion, and was not qualified or modified as to uncertainty, audit scope, or accounting principles. Sherritt commenced a request for proposal process for external audit services to identify a successor auditor. Yasmin Gabriel resigned as Chief Financial Officer.

On May 14, 2026, Sherritt announced that pursuant to its application in the Ontario Superior Court of Justice, Commercial List, it was granted (i) an order under the _Canada Business Corporations Act _(the “CBCA”) permitting the Corporation’s Board to continue to act with two directors until no later than September 30, 2026, (ii) an order under the CBCA permitting the Corporation to continue to operate without an external auditor until no later than September 30, 2026, and (iii) an order extending the time for Sherritt to call its annual meeting of shareholders to not later than September 30, 2026. On May 15, 2026, Sherritt announced that in light of the May 1, 2026 Executive Order, it intended to invoke its dissolution rights under the Moa Shareholders’ Agreement and Energas Association Agreement and seek relief from the Alberta Court of King’s Bench to facilitate accelerated dissolution to the extent possible. The intended outcome was to allow Sherritt to most definitively address the Executive Order by eliminating Sherritt’s Cuban interests. Further, the separation from Cuba was intended to assist Sherritt in addressing issues that could arise from the Executive Order such as difficulties in obtaining an auditor or banking services. On May 19, 2026, following further and ongoing consultation with its advisors, stakeholders and relevant governmental authorities, and in light of additional information available to the Corporation, it would no longer proceed with the dissolution and disclaimer steps relating to its interests in Cuba and would not proceed with its application to the Alberta Court of King’s Bench. On May 20, 2026, Sherritt announced that it had entered into a non-binding term sheet with Gillon Capital, LLC (“Gillon Capital”) with respect to a proposed private placement of a common share purchase warrant (the “Warrant”), exercisable for up to that number of common shares of the Corporation such that, immediately upon exercise in full of the Warrant, Gillon Capital would own 55% of the common shares then issued and outstanding (the “Gillon Private Placement”). The Warrant will be exercisable at a price to be agreed by the parties for a period ending nine months from the closing date, subject to satisfaction of certain conditions precedent, including compliance with the Corporation’s existing contractual arrangements and debt agreements. Given the current circumstances of the Corporation, management expects that such exercise price will be at a discount to the closing price of the common shares on May 15, 2026. The Gillon Private Placement remains subject to the execution of definitive documentation and the transaction is expected to be subject to the satisfaction of customary conditions and the receipt of all required regulatory approvals, including approval of the Toronto Stock Exchange. In connection with the Gillon Private Placement, Sherritt engaged constructively with the United States Department of State, which confirmed that the Department of State and Department of Treasury do not object to Gillon Capital’s engagement in negotiations with the Corporation and, based on the information provided to date, do not consider such negotiations to be contrary to U.S. law. Any subsequent transaction will be subject to approval of the Department of State and Department of Treasury. On June 15, 2026, Sherritt entered into an exclusivity agreement with Gillon Capital providing for a 120-day period of exclusive negotiations with respect to the non-binding term sheet regarding the Gillon Private Placement. The period of exclusivity was entered into to allow the parties to complete their respective due diligence reviews and negotiate a definitive agreement with respect to the Gillon Private Placement. On May 22, 2026, Sherritt announced that its principal regulator, the Ontario Securities Commission, issued a failure-to-file cease trade order (“FFCTO”) against the Corporation, effective May 21, 2026, as a result of the Corporation’s failure to file its first quarter 2026 interim financial statements, management’s discussion and analysis and related officer certifications (collectively, the “Q1 Filing“).by the filing deadline on May 15, 2026. The Corporation was unable to complete the filings as a result of operational and governance disruptions following the Executive Order. The Q1 Filing was made on June 25, 2026 and the FFCTO was revoked on July 9, 2026 with shares commencing trading on July 10, 2026. On June 3, 2026, Sherritt announced it had appointed Fitzroy Richardson as Interim Chief Financial Officer to provide experienced financial leadership as the Corporation works to complete its outstanding quarterly filings, an important step toward seeking a revocation of the FFCTO. Mr. Richardson is a seasoned finance executive with nearly 30 years of experience at Sherritt, where he has held a range of senior finance and treasury roles. On June 14, 2026, Sherritt appointed Tabrez Khan as an independent director, bringing deep M&A, financial and strategic advisory experience to the Board. Mr. Khan was nominated to the Board by Kyma Capital Opportunities Master Fund Limited (“Kyma”), pursuant to Kyma’s nomination right under the investor rights agreement dated as of April 22, 2025 between the Corporation and Kyma. Concurrent with Mr. Khan’s appointment to the Board, he was appointed to the audit committee of the Board (the “Audit Committee”). Following Mr. Khan’s appointment, the Audit Committee consists of Dr. Peter Hancock, Ms. Chih-Ting Lo, and Mr. Khan. As Dr. Hancock is the interim Chief Executive Officer of Sherritt, he is not considered independent under National Instrument 52-110 – _Audit Committees _(“NI 52-110”). Sherritt is relying on the temporary exemption provided in Section 3.5 of NI 52-110 for Dr. Hancock’s membership on the Audit Committee. Following Mr. Khan’s appointment, the Audit Committee is compliant with the requirements of NI 52-110 and the rules of the Toronto Stock Exchange. In respect of the Corporation’s Credit Facility: As a result of the issuance of the Executive Order, a material adverse change to the Corporation's business occurred which would give the administrative agent (on behalf of the lenders) the ability to call an event of default under the Credit Facility and demand repayment of all indebtedness currently owing thereunder. On May 31, 2026, the borrowing base of the Credit Facility was $76.3 million, which was below the then aggregate borrowings of $79.5 million including outstanding letters of credit. As a result of this deficiency, the lenders issued a notice of excess borrowing and required the Corporation to repay the difference of $3.2 million during the three months ended June 30, 2026. During the three months ended June 30, 2026, the Corporation was not in compliance with the EBITDA-to-Interest Expense covenant, as defined in the Credit Facility agreement. The Corporation does not have the ability to make further draws on the Credit Facility at this time. Refer to the Liquidity section of the Corporation’s Management’s Discussion and Analysis for the three and six months ended June 30, 2026 (“MD&A”) for further details.

| (1) | References to operational and financial metrics in this press release, unless otherwise indicated, are to “Sherritt’s share” which is consistent with the Corporation’s definition of reportable segments for financial statement purposes. Sherritt’s share of “Metals” includes the Corporation’s 50% interest in the Moa Joint Venture (“Moa JV”), its 100% interest in the utility and fertilizer operations in Fort Saskatchewan (“Fort Site”) and its 100% interests in subsidiaries established to buy, market and sell certain of the Moa JV’s nickel and cobalt production and the Corporation’s cobalt inventory received under the Cobalt Swap agreement (“Metals Marketing”). Sherritt’s share of Power includes the Corporation’s 33⅓% interest in Energas S.A. (“Energas”). References to Corporate and Other and Oil and Gas includes the Corporation’s 100% interest in these businesses. Corporate and Other refers to the Corporate head office and growth and market development support. Fort Site refers to the Corporation’s 100% interest in the utility and fertilizer operations. | | (2) | Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release. | | (3) | General Nickel Company S.A. (“GNC”). | | (4) | For additional information on the “Cobalt Swap”, see Note 13 – Advances, loans receivable and other financial assets of the consolidated financial statements for the year ended December 31, 2025. | | (5) | For more information on the “Debt and Equity Transactions”, see Note 16 – Loans, borrowings and other financial liabilities of the consolidated financial statements for the year ended December 31, 2025. |

DEVELOPMENTS SUBSEQUENT TO THE QUARTER

Credit Facility update

On June 30, 2026, the borrowing base of the Credit Facility was $43.1 million, which was below the amount of the then aggregate borrowings of $76.3 million including outstanding letters of credit. As a result of this deficiency, the lenders issued a notice of excess borrowing and the Corporation repaid 50% of the June 30, 2026 borrowing base deficiency amounting to $16.6 million subsequent to period end in return for the lenders agreeing not to act on the Corporation’s default to pay the full amount of the deficiency. As of August 12, 2026, the administrative agent under the Credit Facility has not issued a notice of an event of default and no demand for repayment of the loan obligations has been made, other than the notices of excess borrowings noted above.

Q2 2026 FINANCIAL HIGHLIGHTS

| | For the three months ended | | | | For the six months ended | | | | | | | | | | | | | | | | $ millions, except per share amount | 2026 June 30 | | 2025 June 30 | Change | | 2026 June 30 | | 2025 June 30 | Change | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Revenue | $ | 59.3 | | | $ | 43.7 | | 36 | % | | $ | 93.3 | | | $ | 82.1 | | 14 | % | | Combined revenue (1) | | 132.1 | | | | 135.6 | | (3 | %) | | | 238.7 | | | | 261.3 | | (9 | %) | | Loss from operations and joint venture | | (52.7 | ) | | | (19.4 | ) | (172 | %) | | | (64.8 | ) | | | (51.2 | ) | (27 | %) | | Net (loss) earnings from continuing operations | | (71.1 | ) | | | 10.4 | | (784 | %) | | | (80.3 | ) | | | (30.2 | ) | (166 | %) | | Net (loss) earnings for the period | | (71.1 | ) | | | 10.2 | | (797 | %) | | | (80.3 | ) | | | (30.4 | ) | (164 | %) | | Adjusted EBITDA (1) | | (2.0 | ) | | | 2.6 | | (177 | %) | | | 5.6 | | | | 7.0 | | (20 | %) | | Adjusted loss from continuing operations (1) | | (24.8 | ) | | | (25.6 | ) | 3 | % | | | (36.7 | ) | | | (47.8 | ) | 23 | % | | Net (loss) earnings from continuing operations ($ per share) | | (0.10 | ) | | | 0.02 | | (600 | %) | | | (0.14 | ) | | | (0.07 | ) | (100 | %) | | Adjusted loss from continuing operations ($ per share) (1) | | (0.04 | ) | | | (0.06 | ) | 33 | % | | | (0.06 | ) | | | (0.11 | ) | 45 | % | | | | | | | | | | | | | | | | | | | | | | | Cash provided by continuing operations for operating activities | | 38.9 | | | | 5.6 | | 595 | % | | | 25.8 | | | | 6.6 | | 291 | % | | Combined free cash flow (1) | | 35.0 | | | | 2.8 | | nm (2) | | | 30.3 | | | | (3.8 | ) | 897 | % | | | Average exchange rate (CAD/US$) | | 1.384 | | | | 1.384 | | - | | | | 1.378 | | | | 1.409 | | (2 | %) |

| $ millions, as at | | | | 2026 June 30 | | 2025 December 31 | Change | | | | | | | | | | | | | | | | | | | | | Cash and cash equivalents | | | | | | | | | | | | | | Canada | | | | | | $ | 80.1 | | $ | 13.4 | 498 | % | | Cuba (3) | | | | | | | 119.8 | | | 109.4 | 10 | % | | Other | | | | | | | 3.9 | | | 2.1 | 86 | % | | | | | | | | | 203.8 | | | 124.9 | 63 | % | | | | | | | | | | | | | | | | Loans and borrowings | | | | | | | 323.2 | | | 316.0 | 2 | % | | | | | | | | | | | | | | | | The Corporation's share of cash and cash equivalents in the Moa Joint Venture, not included in the above balances: | | $ | 5.4 | | $ | 12.8 | (58 | %) | | | | |

| (1) | Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release. | | (2) | Not Meaningful (“nm”) | | (3) | As at June 30, 2026, $115.5 million of the Corporation’s cash and cash equivalents was held by Energas (December 31, 2025 - $103.3 million). |

Cash and cash equivalents were $203.8 million as at June 30, 2026 compared to $123.6 million at March 31, 2026. As at June 30, 2026, total available liquidity in Canada was $80.1 million, composed of cash and cash equivalents in Canada. The Corporation did not have availability under its Credit Facility at the end of the quarter.

During the quarter, Sherritt received $42.5 million in net proceeds from the common share private placement completed on April 7, 2026.

As well during the three months ended June 30, 2026, the Corporation received $128.7 million of cash receipts for nickel, cobalt and fertilizer sales and other working capital items from the Moa JV in the Corporate and Other segment in response to the Executive Order and the Corporation’s suspension of its direct participation in joint venture activities in Cuba effective May 7, 2026 and is being used to fund working capital. The cash receipts are recognized as accounts payable to the Moa JV and included in trade accounts payable and accrued liabilities and settled through the incurrence of costs by the Corporation on behalf of the Moa JV’s Canadian operations.

See the Liquidity section of the MD&A for additional details on the Credit Facility and cash flows.

REVIEW OF OPERATIONS

Metals

| | For the three months ended | | | For the six months ended | | | | | | | | | | | | | | | | | $ millions (Sherritt's share), except as otherwise noted | 2026 June 30 | | 2025 June 30 | Change | | 2026 June 30 | | 2025 June 30 | Change | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | FINANCIAL HIGHLIGHTS (1) | | | | | | | | | | | | | | | | | | | | | Revenue | $ | 117.5 | | | $ | 124.7 | | (6 | %) | | $ | 211.3 | | | $ | 238.4 | | (11 | %) | | Cost of sales | | 130.8 | | | | 130.1 | | 1 | % | | | 232.5 | | | | 249.2 | | (7 | %) | | Loss from operations | | (14.9 | ) | | | (7.4 | ) | (101 | %) | | | (24.1 | ) | | | (16.0 | ) | (51 | %) | | Adjusted EBITDA (2) | | 0.3 | | | | 7.8 | | (96 | %) | | | 6.0 | | | | 13.3 | | (55 | %) | | | | | | | | | | | | | | | | | | | | | | | CASH FLOW (1) | | | | | | | | | | | | | | | | | | | | | Cash (used) provided by continuing operations for operating activities (2) | $ | (26.2 | ) | | $ | 20.0 | | (231 | %) | | $ | (27.9 | ) | | $ | 41.9 | | (167 | %) | | Free cash flow (2) | | (28.0 | ) | | | 6.4 | | (538 | %) | | | (35.1 | ) | | | 17.8 | | (297 | %) | | | | | | | | | | | | | | | | | | | | | | | PRODUCTION VOLUMES (tonnes) | | | | | | | | | | | | | | | | | | | | | Mixed sulphides ("MSP") (4) | | 934 | | | | 3,238 | | (71 | %) | | | 2,745 | | | | 6,395 | | (57 | %) | | Finished nickel | | 1,319 | | | | 3,431 | | (62 | %) | | | 3,204 | | | | 6,378 | | (50 | %) | | Finished cobalt | | 135 | | | | 389 | | (65 | %) | | | 348 | | | | 712 | | (51 | %) | | Fertilizer | | 56,344 | | | | 65,207 | | (14 | %) | | | 109,348 | | | | 121,027 | | (10 | %) | | | | | | | | | | | | | | | | | | | | | | | NICKEL RECOVERY (5) (%) | | 74 | % | | | 83 | % | (11 | %) | | | 79 | % | | | 84 | % | (6 | %) | | | | | | | | | | | | | | | | | | | | | | | SALES VOLUMES (tonnes) | | | | | | | | | | | | | | | | | | | | | Finished nickel | | 1,720 | | | | 3,256 | | (47 | %) | | | 3,964 | | | | 6,695 | | (41 | %) | | Finished cobalt | | 167 | | | | 380 | | (56 | %) | | | 370 | | | | 836 | | (56 | %) | | Fertilizer | | 52,328 | | | | 44,614 | | 17 | % | | | 79,700 | | | | 77,734 | | 3 | % | | | | | | | | | | | | | | | | | | | | | | | AVERAGE-REFERENCE PRICE (6) (US$ per pound) | | | | | | | | | | | | | | | | | | | | | Nickel | $ | 8.22 | | | $ | 6.88 | | 19 | % | | $ | 8.05 | | | $ | 6.97 | | 15 | % | | Cobalt | | 26.50 | | | | 17.50 | | 51 | % | | | 26.24 | | | | 15.24 | | 72 | % | | | | | | | | | | | | | | | | | | | | | | | AVERAGE-REALIZED PRICE (2) (CAD) | | | | | | | | | | | | | | | | | | | | | Nickel ($ per pound) | $ | 11.27 | | | $ | 9.57 | | 18 | % | | $ | 10.93 | | | $ | 9.78 | | 12 | % | | Cobalt ($ per pound) | | 34.51 | | | | 18.19 | | 90 | % | | | 33.54 | | | | 15.51 | | 116 | % | | Fertilizer ($ per tonne) | | 701.78 | | | | 674.44 | | 4 | % | | | 630.62 | | | | 591.10 | | 7 | % | | | | | | | | | | | | | | | | | | | | | | | UNIT OPERATING COST (2) (US$) | | | | | | | | | | | | | | | | | | | | | Nickel - net direct cash cost (US$ per pound) | $ | 7.31 | | | $ | 5.27 | | 39 | % | | $ | 7.13 | | | $ | 5.64 | | 26 | % | | | | | | | | | | | | | | | | | | | | | | | SPENDING ON CAPITAL (2) (CAD) | | | | | | | | | | | | | | | | | | | | | Sustaining | | | | | | | | | | | | | | | | | | | | | Moa JV (50% basis), Fort Site (100% basis) | $ | - | | | $ | 7.6 | | (100 | %) | | $ | 0.7 | | | $ | 16.4 | | (96 | %) | | Moa JV - Tailings facility (50% basis) | | 1.8 | | | | 5.0 | | (64 | %) | | | 6.5 | | | | 9.8 | | (34 | %) | | Growth - Moa JV (50% basis) | | - | | | | 2.3 | | (100 | %) | | | - | | | | 4.0 | | (100 | %) | | | $ | 1.8 | | | $ | 14.9 | | (88 | %) | | $ | 7.2 | | | $ | 30.2 | | (76 | %) |