Sherritt Issues Letter to Shareholders Highlighting Imminent Threat From a Reckless and Self-Interested Shareholder SC2 Inc., an Affiliate of Seablinc Canada Inc., a Significant Supplier to Sherritt

Sherritt International is urging shareholders to vote for all resolutions at its upcoming meeting, highlighting concerns over SC2 Inc.'s motives, which Sherritt alleges are driven by self-interest and a desire to reverse losses incurred due to Sherritt's improved cost controls impacting SC2's affiliate Seablinc; Sherritt emphasizes its recent financial and operational progress, including debt reduction and expansion of the Moa Joint Venture, and notes that proxy advisor Glass Lewis recommends voting FOR all resolutions.

Analysis

Sherritt International Corporation (TSX:S) is actively defending against an activist campaign by SC2 Inc., which Sherritt alleges is a front for Seablinc Canada Inc., a significant supplier to Sherritt’s Moa Joint Venture (JV). Sherritt contends that SC2’s motives are self-serving, aimed at reversing the decline in Seablinc's revenue from the Moa JV—which fell from approximately US$145 million in 2022 to an expected US$50 million in 2025 due to Sherritt’s enhanced bidding processes and cost discipline—rather than advancing broader shareholder interests. Sherritt has highlighted a history of disruptive actions by SC2/Seablinc, including a failed mini-tender, attempts to block debt restructuring, and misleading public communications, and warns that ceding control to SC2 could trigger defaults under key agreements and accelerate material debt obligations. Conversely, Sherritt points to substantial progress under current leadership, including significant debt reduction through two modified Dutch auctions since 2022 (repurchasing ~$150 million in notes) and transformative transactions in April 2025 that cut debt by a further $68 million (21%), extended maturities to November 2031, and lowered interest expenses. Operationally, Phase One of the Moa JV expansion was completed under budget in early 2024, and Phase Two is expected to increase mixed sulphide precipitate production by 20% in 2025. The Energas division has seen dividend growth from $1.4 million in 2023 to $13 million in 2024, with $25-30 million projected for 2025, supported by a 20-year JV extension to 2043. Sherritt also notes $17 million in annual cost savings from 2024 initiatives and an endorsement from independent proxy advisor Glass Lewis, which recommends shareholders vote FOR all current management resolutions.

Key Decisions for Investors

• Investors should critically assess Sherritt's detailed rebuttal of SC2 Inc.'s campaign, focusing on the alleged conflict of interest tied to Seablinc's declining revenues from the Moa JV (from US$145 million in 2022 to an expected US$50 million in 2025) and the potential negative financial repercussions of a change in control.
• The documented financial and operational achievements by current management, including over $218 million in debt reduction since 2022, the Moa JV expansion targeting a 20% increase in mixed sulphide precipitate production, and significant growth in Energas dividends (projected $25-30 million for 2025), alongside the supportive recommendation from Glass Lewis, warrant careful consideration when voting proxies.
• Closely monitor developments leading up to the June 6, 2025, shareholder meeting, as the outcome of the proxy contest could significantly impact Sherritt's strategic direction, its ability to maintain key agreements, and its debt structure.