Sherritt Reports Second Quarter 2026 Results

About this update from Sherritt International Corporation

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE UNITED STATES TORONTO, August 12, 2026 --( BUSINESS WIRE )--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 Financial performance Organizational updates DEVELOPMENTS SUBSEQUENT TO THE QUARTER Credit Facility update Q2 2026 FINANCIAL HIGHLIGHTS 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 On May 7, 2026, Sherritt announced that it suspended its direct participation in both its Moa and Energas joint venture activities in Cuba in response to the Executive Order issued by the U.S. administration on May 1, 2026. Revenue Metals revenue was $117.5 million compared to $124.7 million in the prior year period. Nickel revenue was $42.8 million compared to $68.6 million in the prior year period primarily due to lower nickel sales volume partly offset by higher average-realized price(1). Sales volume of 1,720 tonnes compared to 3,256 tonnes in the prior year period primarily as a result of lower finished production outlined below. The average-realized price(1) of nickel of $11.27/lb was 18% higher compared to the prior year period. Cobalt revenue was $12.8 million compared to $15.2 million in the prior year period primarily due to lower sales volume partly offset by higher average-realized price(1). Sales volume was 167 tonnes compared to 380 tonnes in the prior year period primarily as a result of lower finished production outlined below. The average-realized price(1) of cobalt of $34.51/lb was 90% higher compared to the prior year period. Fertilizer revenue was $36.8 million compared to $30.0 million in the prior year period primarily due to higher sales volume and average-realized price(1). Sales volume of 52,328 tonnes compared to 44,614 tonnes in the prior year period. The average-realized price(1) of fertilizers of $701.78/tonne was 4% higher compared to the prior year period. The Corporation continues to produce fertilizers and sulphuric acid for sale. Other revenue includes 450 tonnes (50% basis) of mixed sulphides sales following Sherritt's suspension of its direct participation in its joint venture activities in Cuba. Production As a result of fuel supply disruptions in Cuba and challenges procuring other input commodities and supplies at the mine site, only small quantities of mixed sulphides were produced during the quarter. Mixed sulphides production at the Moa JV was 934 tonnes compared to 3,238 tonnes in the prior year period. Mining and processing operations at the mine ceased near the end of the quarter. At the refinery in Fort Saskatchewan, Alberta, metals production was maintained at reduced rates during the quarter until June 22, 2026 when the mixed sulphides inventory was depleted and metals refining activity stopped. Sherritt's share of finished nickel and cobalt production was 1,319 tonnes and 135 tonnes, compared to 3,431 tonnes and 389 tonnes, respectively, in the prior year period. Fertilizer production was 56,344 tonnes, compared to 65,207 tonnes in the prior year quarter. Fertilizer production was lower in the current year period primarily due to lower metals production. Sherritt expects to conduct a planned acid plant maintenance shutdown in the third quarter 2026. NDCC (1) NDCC(1) per pound of nickel sold was US$7.31/lb compared to US$5.27/lb in the prior year period. Higher NDCC(1), and its components, were, in part, impacted by significantly lower nickel sales volume compared to the prior year period. Mining, processing and refining costs per pound of nickel sold ("MPR/lb") was higher primarily as a result of higher input commodity prices and the impact of the higher allocation of fixed costs over the significantly lower nickel sales volume. Sulphur, diesel and natural gas prices were 78%, 59% and 27% higher, respectively, while fuel oil prices were 29% lower in the current year period compared to Q2 2025. The joint venture did not purchase additional sulphur during the quarter. Cobalt by-product credits were higher primarily as a result of the higher average-realized price(1) of cobalt. Fertilizer net by-product credits were higher primarily as a result of the impact of significantly lower nickel sales volume on marginally higher net contribution from fertilizer sales during the current year quarter compared to Q2 2025. Spending on capital (1) Sustaining spending on capital was nil compared to $7.6 million and spending on capital related to the tailings facility was $1.8 million compared to $5.0 million, respectively. Spending on capital was lower in the current year period as Metals deferred non-essential capital spending to manage liquidity and the impact of the Executive Order which limited the joint venture's ability to procure or receive delivery of capital assets. Power On May 7, 2026, Sherritt announced that it suspended its direct participation in both its Moa and Energas joint venture activities in Cuba in response to the Executive Order issued by the U.S. administration on May 1, 2026. Revenue Revenue was $14.5 million compared to $10.6 million in the prior year period. primarily due to increased electricity production as discussed below. Production Production volume was 207 GWh compared to 176 GWh in the prior year period primarily as a result of lower maintenance activities in the current year period. Energas processes domestically sourced raw natural gas to generate electricity and has not been affected by fuel supply disruptions in Cuba. Unit operating cost (1) Unit operating cost(1) was $13.36/MWh compared to $24.80/MWh in the prior year period primarily as a result of lower maintenance costs. As a result of the discontinuation of the Moa Swap in April, the joint venture prioritized and deferred certain planned maintenance activities to preserve liquidity and access to foreign currencies. Spending on capital (1) Spending on capital(1) was $0.1 million. Dividends from Energas In April 2026, foreign currency payments from the Moa JV to Energas facilitated by 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. FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS ("MD&A") Sherritt's condensed consolidated financial statements and MD&A for the three and six months ended June 30, 2026 are available at www.sherritt.com or on SEDAR+ at www.sedarplus.ca . and should be read in conjunction with this news release. Financial and operating data can also be viewed in the investor relations section of Sherritt's website. NON-GAAP AND OTHER FINANCIAL MEASURES Management uses the following non-GAAP and other financial measures in this press release and other documents: combined revenue, adjusted earnings before interest, taxes, depreciation and amortization ("adjusted EBITDA"), average-realized price, unit operating cost/net direct cash cost (NDCC), adjusted net earnings/loss from continuing operations, adjusted net earnings/loss from continuing operations per share, spending on capital, combined cash provided (used) by continuing operations for operating activities and combined free cash flow. Management uses these measures to monitor the financial performance of the Corporation and its operating divisions and believes these measures enable investors and analysts to compare the Corporation's financial performance with its competitors and/or evaluate the results of its underlying business. These measures are intended to provide additional information, not to replace IFRS® Accounting Standards ("IFRS") measures, and do not have a standard definition under IFRS and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. As these measures do not have a standardized meaning, they may not be comparable to similar measures provided by other companies. The non-GAAP and other financial measures are reconciled to their most directly comparable IFRS measures in the Appendix below. ABOUT SHERRITT Sherritt is a world leader in using hydrometallurgical processes to mine and refine nickel and cobalt – metals deemed critical for the energy transition. Leveraging its technical expertise and decades of experience in critical minerals processing, Sherritt is committed to expanding domestic refining capacity and reducing reliance on foreign sources. The Corporation operates a strategically important refinery in Alberta, Canada, recognized as the only significant cobalt refinery and one of just three nickel refineries in North America. Sherritt's common shares are listed on the Toronto Stock Exchange under the symbol "S". FORWARD-LOOKING STATEMENTS This press release contains certain forward-looking statements. Forward-looking statements can generally be identified by the use of statements that include such words as "believe", "expect", "anticipate", "intend", "plan", "forecast", "likely", "may", "will", "could", "should", "suspect", "outlook", "potential", "projected", "continue" or other similar words or phrases. Specifically, forward-looking statements in this document include, but are not limited to the reduction or cessation of mining operations at Moa; the timing and ability to secure necessary fuel and other input commodities and supplies in Cuba following the issuance of the Executive Order; the anticipated duration of the shut down at the Fort Saskatchewan refinery; the potential impact of fuel and other input commodity supply disruption on production levels; measures to preserve and maximize liquidity, including managing expenditures and exploring potential sources of temporary funding support; the timing of updated 2026 guidance and the resumption of full operations of the mine at Moa and refinery at Fort Saskatchewan; sales volumes; revenue, costs and earnings; the amount and timing of dividend distributions from the Moa JV, including in the form of finished cobalt or cash under the Cobalt Swap; the amount and timing of dividend distributions from Energas; growing shareholder value; sufficiency of working capital management and capital project funding; strengthening the Corporation's capital structure; amounts of certain other commitments; the auditor request for proposal process; the appointment of a new external auditor; statements regarding the Gillon Private Placement, including the completion and timing thereof, the terms on which it may be completed and the receipt of all required approvals; the ability of the parties to complete their respective due diligence reviews and negotiate a definitive agreement during the period of exclusivity; the ability of the parties to resolve the legal, regulatory and commercial complexities identified through due diligence; the ongoing engagement with relevant governmental and regulatory authorities and other stakeholders in furtherance of the regulatory approvals and other matters required to complete the Gillon Private Placement. Forward-looking statements are not based on historical facts, but rather on current expectations, assumptions and projections about future events, including commodity and product prices and demand; the level of liquidity and access to funding; share price volatility; nickel, cobalt and fertilizer production results; realized prices for production; earnings and revenues; risks related to the U.S. government policy toward Cuba, including impacts of the Executive Order; current and future economic conditions in Cuba; the level of liquidity and access to funding; global demand for electric vehicles and the anticipated corresponding demand for cobalt and nickel; revenues and net operating results; environmental risks and liabilities; compliance with applicable environmental laws and regulations; advancements in environmental and greenhouse gas ("GHG") reduction technology; GHG emissions reduction goals and the anticipated timing of achieving such goals, if at all; statistics and metrics relating to Environmental, Social and Governance ("ESG") matters which are based on assumptions or developing standards; environmental rehabilitation provisions; environmental risks and liabilities; compliance with applicable environmental laws and regulations; Sherritt share price volatility; and certain corporate objectives, goals and plans for 2026. By their nature, forward-looking statements require the Corporation to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that predictions, forecasts, conclusions or projections will not prove to be accurate, that the assumptions may not be correct and that actual results may differ materially from such predictions, forecasts, conclusions or projections. The Corporation cautions readers of this press release not to place undue reliance on any forward-looking statement as a number of factors could cause actual future results, conditions, actions or events to differ materially from the targets, expectations, estimates or intentions expressed in the forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, risks related to Sherritt's operations in Cuba; risks related to the U.S. government policy toward Cuba, including the Executive Order, U.S. embargo on Cuba and the Helms-Burton legislation, including litigation under Title III thereof; level of liquidity of Sherritt, including access to capi...

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