Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Sherritt International Corporation Q4 2025 results call. At this time, all participants are in listen-only mode. I would like to remind everyone that the conference call is being recorded today, Wednesday, February 11, 2026, at 10:00 A.M. Eastern Time. I will now turn the presentation over to Tom Halton, Director of Investor Relations. Please go ahead.
Thank you, Audrey, and welcome, everyone, to Sherritt's fourth-quarter 2025 conference call. We released our fourth-quarter results last night, and our press release, earnings, and financial statements are available on our website and on SEDAR+. During today's call, we'll be referring to our presentation that is available on our website and on today's webcast. As we will be making forward-looking statements and references to certain non-GAAP financial measures, please refer to the cautionary notes on slide two of our presentation, as well as the material assumptions and risks associated with certain forward-looking statements and reconciliations of non-GAAP measures to the most directly comparable IFRS measures included in the appendix of the presentation. On the call today is Dr. Peter Hancock, our interim Chief Executive Officer, Yasmin Gabriel, our Chief Financial Officer, and Elvin Saruk, our Chief Operating Officer.
Following a review of our results, we'll open the call to questions. It is now my pleasure to pass the call over to Peter.
Thanks, Tom, and good morning, everyone. I'm pleased to be joining the call today for the first time as Interim CEO. I've served on the board since 2021 and have known what a talented team we have. However, working with them every day now has given me an even greater confidence in Sherritt's future. Since our last call, we've made important changes to our board and executive team. I would like to thank Leon Binedell, Shelley Brown, John Ewing, and Greg Honig for their contributions to Sherritt and wish them all the best in their future endeavors. We now welcome Brian Imrie, our new Board Chair, who was appointed in November and who brings extensive leadership with capital markets and mining sector experience to Sherritt. We also welcome Brett Richards to our board. Brett's an experienced mining executive with more than 37 years in the sector.
The addition of Brian and Brett to our board further enhances our depth of expertise as we execute our operational turnaround and ensure a seamless leadership transition that will help drive Sherritt's success in 2026 and beyond. Our search for a permanent CEO is ongoing, but that has not slowed our efforts to move the business forward, far from it. Before getting into our outlook for what's ahead, I'd like to begin by reviewing developments from the fourth quarter and full year. I want to address 2025 head-on. Simply put, our operational performance last year fell well short of the standards we set for ourselves and our expectations to deliver consistent, reliable operational execution for our investors, customers, and all of our other stakeholders. This is why we launched a comprehensive turnaround plan at Moa. This is not a minor course correction.
It's a deliberate, structured effort to fundamentally strengthen how we operate and rebuild the operational foundation that has historically been one of our greatest strengths. While we expect it will take time to see the full benefits, we're confident this plan will stabilize production and position us for stronger performance. Our power division continued to deliver. Last quarter, we received CAD 7.8 million in dividends in Canada from Energas, bringing the full-year total to CAD 26 million. That's double the amount received last year and reflects our multi-year focus on improving gas supply and operations at all our generating facilities. This remains a key source of liquidity for Sherritt. A major milestone this past year was the completion of our debt restructuring in April. We consolidated our debt, extended the maturity to November 2031, reduced our obligations by CAD 68 million, and lowered our annual interest expense by CAD 3 million.
This gives us greater long-term financial flexibility as we advance our turnaround efforts at Moa and position ourselves to take full advantage of our expansion and return to future growth. Our cost-saving measures implemented last year are expected to deliver annual savings of CAD 20 million, this on top of the CAD 17 million in annual savings announced the previous year. These efforts show our ongoing commitment to managing costs in a tough market. To sum it up, in 2025, we put in place the initial foundations for operational recovery in metals, doubled our power dividends, strengthened our balance sheet, and delivered meaningful cost savings. We believe these steps position Sherritt for improved performance in 2026. That said, as we think about this year, I want to touch on the recent geopolitical developments. To date, our operations have not been impacted.
We continue to monitor developments and work closely with our joint venture partner to anticipate and respond quickly, proactively, and decisively to risks. Historically, resources for the country's mining industry are prioritized in Cuba, and we have a track record of navigating complex operating environments throughout the 30-year history of the Moa Joint Venture. Navigating uncertainty is nothing new for Sherritt. We continuously review our contingency measures and are prepared to act to quickly adapt as needed. Turning to slide five, our highest priority today is to address the operational issues at Moa, and we're firmly focused on executing our turnaround plan in close collaboration with our partners. Our operational review identified clear opportunities for improvement, particularly around optimizing mining operations, enhancing our technical expertise, and reducing maintenance downtime.
Building on the insights from our review, our team is implementing targeted actions such as upgrading mining equipment, adding technical expertise, and refining our mining plan. These efforts are already driving better maintenance practices and operational discipline with further debottlenecking initiatives underway to enhance efficiencies. Our goal is to restore mixed sulphides production to pre-2025 levels by the end of this year. Once we've stabilized operations and achieved our immediate targets, we will shift focus to ramping up output and capturing the full benefits of the expansion program that was recently completed. In short, the turnaround at Moa is progressing well, and we're confident these improvements will support stronger performance and a long-term value for Sherritt. We now turn to slide six for key market developments for nickel and cobalt. In the past few months, we've seen several important policy shifts in major producing regions.
In October, the Democratic Republic of Congo lifted its export ban on cobalt and introduced a quota system capping exports. In December, Indonesia signaled plans to restrict nickel ore mining quotas starting in 2026, and this was confirmed in January with officials announcing a reduction of more than 30% in nickel ore quotas from 2025 levels. These policy actions have supported improved nickel and cobalt prices in early 2026, and as the market weighs the potential for government intervention continuing to support pricing. While the pricing environment remains supply-driven, these developments are certainly promising. We look forward to benefiting from more constructive price levels at a time when we're looking to position ourselves for a return to growth. I will now turn the call over to Elvin for a deeper dive on our operational performance.
Thank you, Peter. Turning to slide eight now for our results from the metals business. I'd like to first speak more about the operations at Moa and the impact it had on our production during the year. We've continued to face challenges with mined ore volumes coming in below plan, but as Peter mentioned, our operational turnaround plan is specifically designed to tackle this. In addition, there were a few other factors that impacted production during the quarter. We had lower leach train availability and a minor fuel oil supply disruption, which was related to logistics and not to recent geopolitical events. As well, Hurricane Melissa, which hit Cuba in late October, impacted the national power grid, forcing a controlled shutdown of operations and cutting back our operating rates for a few days.
With all of this, we ended up with less mixed sulphides than expected, which meant we had less feed for the refinery. That, in turn, led to lower finished production of both nickel and cobalt. Fertilizer output was also down, partially because nickel and cobalt volumes were down and also because we carried out our scheduled biannual turnaround at the ammonia plant. For the full year, we produced 25,240 tons of nickel and 2,728 tons of cobalt on a 100% basis, which were within the guidance ranges we revised last quarter in response to the operational challenges. Turning now to slide nine to review our NDCC, our Net Direct Cash Cost. For the fourth quarter, our NDCC came in at $6.01 per pound. Our mining, processing, and refining costs per pound were higher this quarter mainly because of the increases in input commodity prices. sulpher prices were up 90%.
Natural gas was up 71% compared to the same period last year. Sulphur costs represent approximately 30% of the Moa operating budget. On top of that, lower nickel sales negatively impacted the results. Conversely, higher cobalt prices resulted in better cobalt byproduct credits, but fertilizer net byproduct credits were down. Even with slightly higher fertilizer revenues, the higher production costs, mainly due to higher natural gas prices and more planned maintenance, ended up more than offsetting those gains. Looking at the full year, our NDCC was $5.96 per pound, which was right in the middle of the guidance range that we set at the beginning of the year. Moving to slide 10 for our 2026 metals outlook. Looking ahead, we're expecting a solid recovery in mixed sulphides production this year. Our target is 30,000-32,000 of contained nickel and cobalt on a 100% basis.
It's important to note that we see this production weighted towards the second half of the year as the changes we're making with our operational turnaround plan start yielding results. With improved production at Moa, we're anticipating stronger finished nickel and cobalt output, which will help us rebound from last year. On costs, our NDCC should stay pretty much in line with what we saw in 2025. That's thanks to higher expected production and sales, our ongoing work to optimize costs, and higher byproduct credits from cobalt. We are also factoring in some higher input costs, specifically for sulphur. On capital, we are planning to spend between CAD 35 million-CAD 40 million this year on sustaining capital. A portion of that is going to our operational turnaround plan at MOA. This covers new mining equipment arriving this year as well as refurbishment of other processing equipment.
We've also budgeted CAD 25 million-CAD 30 million for the joint venture's new tailings facility. The good news here is that we found ways to trim some costs and defer a bit of spending into 2027, so our spending this year is less than what we originally estimated. Even so, the project is on schedule and will be operational by year-end, providing a tailings solution at Moa for the next 25 years. Finally, we're planning to invest CAD 2.5 million-CAD 5 million in the debottlenecking project at Moa. The goal here is to improve mining and processing performance. The capital includes things like in-pit screening equipment and further improving processing equipment and readiness to fully capture the benefits from our expansion work when we get mining volumes up. As we have higher capital spent at Moa this year, we are also looking into some options for financing.
Moving to slide 11 on our power business, we saw a continuation of higher power production during the quarter, reaching 210 GWh, largely attributable to the increase in natural gas being supplied to Energas. Specifically, we brought a new well online in Q4 2024 and then added a replacement gas well in Q3 2025. This additional supply has significantly improved output. Looking at the full year, we generated 799 GWh of electricity, which is pretty much in line with the lower end of our guidance. We could have produced more, but the Cuban national grid asked Energas to operate the Boca facility in frequency control towards the end of the year to help stabilize the national power grid. While we factored in frequency control of Varadero into our guidance, we had not at Boca.
The good news is that Energas is fully compensated for any production loss from operating in frequency control. On our cost, for the quarter, our unit operating cost came in at CAD 23.48 per MWh, similar to our full-year total, which was within our guidance and well below last year. Our lower operating costs for the year are due to lower maintenance. This year, we had only one major turbine inspection, and that was completed in Q1. Last year, the maintenance activities were higher in Q2 and Q3 with planned major inspection on three gas turbines, plus additional costs to bring another turbine online to handle the gas from the new well that started production in Q4 2024.
Now, to slide 12 for the guidance for our power business, we're expecting another solid year for power production, even though the Varadero facility is expected to operate in frequency control again for most of this year. As I mentioned earlier, Energas is fully compensated for any production loss from operating in frequency control. On the cost side, we do anticipate a slight increase in unit operating costs this year because of the planned maintenance we have scheduled, which will occur in the first half of the year. As for capital spend, the budget is CAD 3 million. With that, I'll turn things over to Yasmin for the financial results.
Thanks, Elvin. I'll begin with our financial performance on slide 14. As Peter and Elvin mentioned, we faced a challenging operating environment at Moa during the fourth quarter. The nickel price remained under pressure, and the cost of inputs, particularly sulphur and natural gas, were significantly higher, negatively impacting our financial performance. During the quarter, our average realized price for cobalt was more than double the price in the same quarter last year, and our power division continued to deliver solid results, which is translating into the significantly higher dividends in Canada from Energas. So despite the headwinds in the fourth quarter, we have encouraging signs in a few key areas to look forward to.
During the quarter, combined revenues of CAD 163.2 million, which includes revenue from the Moa Joint Venture on a 50% basis and which more holistically reflects our performance, with slightly higher year-over-year as higher cobalt, fertilizer, and electricity revenue more than offset lower nickel revenue. Nickel revenue in the fourth quarter was lower year-over-year due to a 5% decrease in average realized price and a 14% decrease in sales volume, primarily as a result of lower production. Cobalt revenue was almost 120% higher compared to Q4 2024, benefiting from the improvement in the average realized price, which more than offset lower sales volume. Fertilizer revenue was 7% higher at the higher average realized price, more than offset lower sales volume. Adjusted EBITDA in the fourth quarter was lower year-over-year, primarily driven by the lower nickel sales, as discussed, and higher mining, processing, and refining costs driven by higher sulfur prices.
As we look ahead, our operational turnaround plan is set to deliver improved production, and with nickel prices moving higher and the cost optimizations we've put in place, we're set up for much stronger financial performance in the coming quarters. Turning now to liquidity on slide 15. We ended the year with CAD 43.7 million of available liquidity in Canada, which is slightly lower than at the end of the third quarter. Key changes in liquidity during the fourth quarter included CAD 7.8 million of dividends from Energas in Canada, CAD 8.2 million of fertilizer pre-buy, CAD 12.3 million of interest paid on our amended senior secured note, and CAD 5.8 million in property, plant, and equipment expenditures. Looking ahead at 2026, at power, we expect that total dividends from Energas in Canada will be in the range of CAD 20 million-CAD 25 million.
This is slightly lower than the CAD 26 million we received in 2025, primarily due to higher expected planned maintenance in 2026. Based on our guidance estimates for production and costs, and given the higher capital spending planned this year, we are not expecting distributions under the Cobalt Swap Agreement. We will continue to work with our JV partner to complete the operational turnaround to increase production and improve the JV's liquidity. As a reminder, any shortfall in the annual minimum payment amount will be added to the following year. Finally, with the increase in nickel prices, in January, we purchased put options on 3,750 tons of nickel at an exercise price of $7.48 per pound for a six-month period, which began on February 1st. Our nickel price hedging strategy provides Sherritt with full exposure to upward changes in nickel while protecting against downward changes during these periods of high volatility.
I will now turn the call back to Peter for closing comments.
Thank you, Yasmin. Before we move to questions, let me briefly recap. We've made meaningful progress initiating and advancing our turnaround and building a stronger foundation for the future. At Moa, our efforts to restore production and reliability are well underway. We're also pursuing operational efficiencies through debottlenecking and equipment upgrades. Our power division is now providing us with a reliable, high level of dividends, with Energas delivering record dividends in Canada in 2025, doubling the prior year's total, and further supporting our liquidity. The completion of our debt restructuring was a significant milestone, which extended our maturity and increased our financial flexibility. Additional cost reduction measures are also enhancing our margins, even as market conditions remain challenging.
Although these actions have not only strengthened Sherritt today but have positioned us to capture greater value and drive sustainable growth in the years ahead. With that, we're ready for your questions.
Thank you. Ladies and gentlemen, we will now begin question-and-answer session. Should you have a question, please press the star followed by the one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment. It looks like we don't have any questions today. I will now turn the call over to Tom Halton for closing remarks. Please continue.
Thank you, Operator. If anyone has any follow-up questions, please feel free to reach out. Thank you for joining us today.
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.