Proxy Fight or Pyrrhic Victory? SC2's Rebellion Exposes Sherritt's Governance Collapse

In a move that could redefine corporate accountability in Canada, SC2 Inc. has declared war on Sherritt International's entrenched board, demanding a full overhaul of leadership to salvage the company's dying prospects. With Sherritt's shares down 76% over three years and liquidity nearing collapse, the proxy battle set for June 10 is less a governance dispute and more a fight for corporate survival. Here's why shareholders must heed SC2's call to vote out the current directors—and fast.

The Anatomy of a Governance Disaster

Sherritt's board has overseen a steady erosion of shareholder value, operational credibility, and strategic focus. Let's break down the failures:

1. Operational Collapse Under the Radar

Sherritt's mixed sulphide production—the lifeblood of its Cuban Moa JV—has plummeted to near-historic lows despite a costly Phase 1 expansion. Worse, net direct cash costs (NDCC) for nickel rose in Q1 2025, a lagging indicator suggesting further deterioration. Meanwhile, Canadian liquidity is critically low, with just $30 million left to avoid covenant breaches. To survive, Sherritt has resorted to pre-selling nickel at fire-sale prices, sacrificing long-term value for short-term breathing room.

2. Compensation Farce in a Value-Free Zone

While shareholders bleed, executives are feasting. In 2024, top management pocketed $7 million in compensation—10% of Sherritt's entire market cap—despite overseeing a 55% annual stock price drop. Stock awards (RSUs/PSUs) continue flowing like confetti, even as the company's market cap withers. This misalignment screams of a board more loyal to its own perks than shareholder interests.

3. Governance Theater, Not Governance

The board's refusal to engage with SC2—granting just one one-hour meeting in a year—exposes a culture of arrogance. Denying shareholder meeting requests on technicalities, issuing cease-and-desist letters to critics, and hiding material agreements ahead of AGMs are not oversight; they're evasion. Transparency is dead at Sherritt, and accountability is buried under a mountain of speculative projects.

4. Strategic Drift into Oblivion

While the Moa JV is Sherritt's only cash cow, the board has spent years chasing moonshots like the Ambatovy disaster and Block 10 bitumen folly. Today's mixed hydroxide precipitate project feels like more of the same: throwing good money after bad. With “Corporate and Other” expenses hitting $8.4 million in Q1 2025—40% of the company's market cap—the board isn't managing costs; it's wasting capital.

The Moa JV: Lifeline or Liability?

SC2's case hinges on one fact: the Moa JV holds the key to Sherritt's future. But without leadership capable of unlocking its value, this asset could become a millstone. The JV's new tailings facility—a $60 million Cuban-backed project—is critical to extending its 25-year lifespan. However, without operational discipline, cost controls, and a focus on core assets, even this could fail.

Why Voting Against the Board is a Survival Imperative

The CBCA's “one-share, one-vote” rule means directors must secure majority support to stay. If fewer than three directors are elected, Sherritt must call a special meeting—a seismic shift. SC2's demand to oust all but the independent Richard Moat is not radical; it's rational.

The Risks of Inaction

• Liquidity Catastrophe: With $30M left and no buffer, a production hiccup or nickel price dip could trigger a liquidity spiral.
• Credit Downgrade: Sherritt's debt hangs by a thread; any covenant breach invites default.
• Strategic Paralysis: Without a board focused on the Moa JV, Sherritt risks squandering its last chance.

The Path Forward: Vote with Your Wallet

SC2's stance is clear: vote AGAINST all directors except Richard Moat. This is not a board refresh—it's a reset. A new leadership team must:
1. Focus on the Moa JV: Prioritize operational excellence, cost discipline, and capital allocation to its sole viable asset.
2. End the compensation farce: Tie pay to shareholder returns, not vanity metrics.
3. Transparency over obfuscation: Disclose agreements, engage shareholders, and abandon “too big to fail” delusions.

Final Warning: The Clock is Ticking

Sherritt's June 10 vote is a binary moment. A board re-election failure would force urgent change. A victory for incumbents means more of the same: declining production, rising costs, and a market cap in freefall.

Act now: Vote against Binedell, Blaise, Brown, Hancock, Lapthorne, and Lo. This is not a proxy fight—it's a corporate governance reckoning. Survival demands nothing less than a board revolution.

The stakes couldn't be higher. For Sherritt's shareholders—and its future—the choice is clear.