UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form CB

TENDER OFFER/RIGHTS OFFERING NOTIFICATION FORM

Please place an X in the box(es) to designate the appropriate rule provision(s) relied upon to file this Form:

Securities Act Rule 801 (Rights Offering)	o

Securities Act Rule 802 (Exchange Offer)	x

Exchange Act Rule 13e-4(h)(8) (Issuer Tender Offer)	o

Exchange Act Rule 14d-1(c) (Third Party Tender Offer)	o

Exchange Act Rule 14e-2(d) (Subject Company Response)	o

Filed or submitted in paper if permitted by Regulation S-T Rule 101(b)(8)	o

SHERRITT INTERNATIONAL CORPORATION

(Name of Subject Company)

N/A

(Translation of Subject Company’s Name into English (if applicable))

Canada

(Jurisdiction of Subject Company’s Incorporation or Organization)

SHERRITT INTERNATIONAL CORPORATION

(Name of Person(s) Furnishing Form)

8% Senior Unsecured Debentures due November 15, 2018

7.5% Senior Unsecured Debentures due September 24, 2020

7.875% Senior Unsecured Notes due October 11, 2022

(Title of Class of Subject Securities)

823901AH6

823901AK9

823901AL7

(CUSIP Number of Class of Securities (if applicable))

Adam Segal

Associate General Counsel
& Assistant Corporate Secretary

181 Bay Street

26th Floor, Brookfield Place

Toronto, Ontario M5J 2T3

Telephone: 416.935.2451

(Name, Address (including zip code) and Telephone Number (including area code) of Person(s) Authorized

to Receive Notices and Communications on Behalf of Subject Company)

Copy to:

Mile Kurta

Torys LLP

1114 Avenue of the Americas

New York, New York 10036

Telephone: 212-880-6000

June 17, 2016

(Date Tender Offer/Rights Offering Commenced)

Part I — INFORMATION SENT TO SECURITY HOLDERS

Item 1. Home Jurisdiction Documents

Exhibit 1.1		Notice of Meeting and Management Information Circular for Holders of Sherritt International Corporation’s (the “Corporation”) 8% Senior Unsecured Debentures due November 15, 2018, 7.5% Senior Unsecured Debentures due September 24, 2020, and 7.875% Senior Unsecured Notes due October 11, 2022 to Consider a Plan of Arrangement under the Canada Business Corporations Act (the “Proposed Arrangement”), dated June 15, 2016 (the “Management Circular”)

Exhibit 1.2		Voting Information and Election Form to Vote in Favor or Against the Proposed Arrangement

Item 2. Informational Legends

The required legends are included under the heading “Notice to Noteholders in the United States” on page 8 of the Management Circular, a copy of which is furnished as Exhibit 1.1 to this Form CB.

PART II — INFORMATION NOT REQUIRED TO BE SENT TO SECURITY HOLDERS

Exhibit 2.1		Annual information form for the Corporation dated March 21, 2016 for the fiscal year ended December 31, 2015

Exhibit 2.2		Management Information Circular dated April 6, 2016 in respect of the Corporation’s annual and special meeting of shareholders held on May 10, 2016

Exhibit 2.3		Consolidated financial statements of the Corporation for the fiscal year ended December 31, 2015 and the auditor’s report thereon

Exhibit 2.4		Management’s Discussion and Analysis of the Corporation for the fiscal year ended December 31, 2015

Exhibit 2.5		Consolidated financial statements of the Corporation for the three months ended March 31, 2016

Exhibit 2.6		Management’s Discussion and Analysis of the Corporation for the three months ended March 31, 2016

Exhibit 2.7		Material change report issued by the Corporation on June 7, 2016 with respect to the transactions contemplated by the Proposed Arrangement

PART III — CONSENT TO SERVICE OF PROCESS

A written irrevocable consent and power of attorney on Form F-X is filed concurrently with the Commission on June 20, 2016.

SIGNATURES

After due inquiry and to the best of their knowledge and belief, the undersigned certify that the information contained in this statement is true, complete and correct.

Dated as of June 20, 2016.

	SHERRITT INTERNATIONAL CORPORATION


	By:	/s/ Adam Segal
		Name: Adam Segal
		Title: Associate General Counsel & Assistant Corporate Secretary

Exhibit 1.1

NOTICE OF MEETING
AND
MANAGEMENT INFORMATION CIRCULAR

FOR HOLDERS OF

8.00% SENIOR UNSECURED DEBENTURES DUE NOVEMBER 15, 2018

AND

7.50% SENIOR UNSECURED DEBENTURES DUE SEPTEMBER 24, 2020

AND

7.875% SENIOR UNSECURED NOTES DUE OCTOBER 11, 2022

OF SHERRITT INTERNATIONAL CORPORATION

TO CONSIDER A PROPOSED PLAN OF ARRANGEMENT

UNDER THE CANADA BUSINESS CORPORATIONS ACT

JUNE 15, 2016

These materials are important and require your immediate attention. They require noteholders of Sherritt International Corporation to make important decisions. If you are in doubt as to how to make such decisions, please contact your financial, legal or other professional advisors. Kingsdale Shareholder Services, as solicitation and information agent on behalf of Sherritt, can be reached by telephone at 416-867-2272 or toll-free at 1-800-749-9197 or by email at contactus@kingsdaleshareholder.com.

TABLE OF CONTENTS

NOTICE OF MEETING OF NOTEHOLDERS	1

GLOSSARY OF TERMS	3

CIRCULAR	7

DOCUMENTS INCORPORATED BY REFERENCE	7

FORWARD-LOOKING STATEMENTS	8

NOTICE TO NOTEHOLDERS IN THE UNITED STATES	8

SUMMARY OF CIRCULAR	10

MATTERS TO BE CONSIDERED AT THE MEETING	16

DESCRIPTION OF THE EXTENSION	16

EARLY CONSENT CONSIDERATION	19

BACKGROUND TO AND REASONS FOR THE EXTENSION	20

RECOMMENDATION OF THE BOARD	21

MATTERS PERTAINING TO VOTING AND ELECTIONS FOR EARLY CONSENT CONSIDERATION	22

TERMS OF THE AMENDED NOTES AND AMENDED AND RESTATED INDENTURE	25

INFORMATION CONCERNING THE CORPORATION	28

RISK FACTORS	28

SECURITIES LAW MATTERS	29

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS	30

EXPERTS	31

INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON	31

OTHER BUSINESS	32

ADDITIONAL INFORMATION	32

APPROVAL OF BOARD OF DIRECTORS	33

CONSENT OF NATIONAL BANK FINANCIAL INC.	34

APPENDICES

APPENDIX A ARRANGEMENT RESOLUTION

APPENDIX B PLAN OF ARRANGEMENT

APPENDIX C ARRANGEMENT AGREEMENT

APPENDIX D VOTING INFORMATION AND ELECTION FORM

APPENDIX E NOTICE OF APPLICATION

APPENDIX F INTERIM ORDER

APPENDIX G NBF OPINIONS

APPENDIX H TERMS OF AMENDED NOTES

June 15, 2016

Dear Noteholder:

The Board of Directors (the “Board”) of Sherritt International Corporation (“Sherritt” or the “Corporation”) invites you to attend a meeting (the “Meeting”) of holders (“Noteholders”) of the Corporation’s 8.00% Senior Unsecured Debentures due November 15, 2018 (the “2018 Notes”), the 7.50% Senior Unsecured Debentures due September 24, 2020 (the “2020 Notes”), and the 7.875% Senior Unsecured Notes due October 11, 2022 (the “2022 Notes” and together with the 2018 Notes and the 2020 Notes collectively, the “Existing Notes”), to be held at the offices of Goodmans LLP at Bay Adelaide Centre, 333 Bay Street, Suite 3400, Toronto, Ontario on July 25, 2016 at 10:00 a.m. (Toronto time).

At the Meeting, you will be asked to consider and vote on a resolution of Noteholders (the “Arrangement Resolution”) to approve a plan of arrangement (the “Arrangement”) under section 192 of the Canada Business Corporations Act (“CBCA”) pursuant to which the amended and restated indenture dated October 10, 2014 governing the Existing Notes (the “Existing Indenture”) will be amended and restated (the “Amended and Restated Indenture”) and all outstanding Existing Notes will be amended and Noteholders will receive in exchange amended Notes (the “Amended Notes”) pursuant to the Amended and Restated Indenture which will reflect an extended maturity date in respect of each series of Existing Notes by three years to November 15, 2021 (for the 2018 Notes), September 24, 2023 (for the 2020 Notes) and October 11, 2025 (for the 2022 Notes), respectively, in accordance with the terms of the Arrangement (which transactions are collectively referred to as the “Extension”). For greater certainty, the amendment and restatement of the Existing Indenture governing the Existing Notes and the issuance of the Amended Notes are not intended to result in the issuance of new indebtedness of the Corporation, but rather, the same indebtedness as evidenced by the Existing Notes will continue to exist, with full force and effect, in amended form.

Noteholders as at June 15, 2016, being the record date of the Meeting (the “Record Date”), who submit a vote in favour of the Arrangement Resolution and the Extension contemplated thereby (as described below) (each, an “Early Consenting Noteholder”) on or prior to 5:00 p.m. on July 19, 2016 (the “Early Consent Deadline”) shall, subject to the terms described herein, be entitled to receive on the Effective Date (conditional on completion of the Arrangement) as consideration (the “Early Consent Consideration”), at the option of the applicable Early Consenting Noteholder, either: (i) cash consideration (the “Early Consent Cash Consideration”) equal to 2% of the principal amount of Existing Notes held by such Early Consenting Noteholder on the Record Date; or (ii) warrants to acquire common shares of the Corporation (the “Early Consent Warrants”) at a rate of 73.25 warrants for each $1,000 of principal amount of Existing Notes held by such Early Consenting Noteholder as at the Record Date, the terms of which are described in further detail in the attached Management Information Circular (the “Circular”).

To be eligible to receive the Early Consent Consideration, a registered Noteholder must submit an executed and completed Voting Information and Election Form (attached as Appendix “D” to the Circular) to the Corporation, by sending to: Computershare Trust Company of Canada, 100 University Avenue, 11th Floor, Toronto, Ontario M5J 2Y1, to be received by no later than the Early Consent Deadline. See “Matters Pertaining to Voting and Election of Early Consent Consideration” for additional information regarding the completion and submission of the Voting Information and Election Form. If you are a non-registered Noteholder and you receive these materials through your broker, custodian, nominee or other intermediary (an “Intermediary”), you should follow the instructions provided by your Intermediary in order to vote your Existing Notes and make an election to receive, if applicable, Early Consent Consideration as described in the Circular. A non-registered Noteholder (a “Beneficial Noteholder”) will not be entitled to the Early Consent Consideration if CDS has not received

instructions in respect thereof from the Beneficial Noteholder’s respective Intermediary by the Early Consent Deadline.

National Bank Financial Inc. (“NBF”) has been engaged as the financial advisor to the Corporation and the Board in connection with the Extension. NBF has delivered (i) an opinion to the Board dated as of June 10, 2016 which concludes that, as of the date thereof, and subject to the qualifications set out therein, the Extension, if implemented, is fair from a financial point of view to the Corporation (the “Fairness Opinion”); and (ii) an opinion to the Board dated as of June 10, 2016 in the form described in paragraph 4.04 of Industry Canada’s Policy Statement 15-1 — Policy Concerning Arrangements under Section 192 of the CBCA (the “CBCA Opinion” and, together with the Fairness Opinion, the “NBF Opinions”)).

After careful consideration of various factors and alternatives and consultations with its financial advisor and its outside legal counsel, the Board has unanimously determined that the Arrangement is in the best interests of the Corporation and its stakeholders and unanimously recommends that Noteholders VOTE FOR the Arrangement Resolution and the Extension contemplated thereby.

The Board and management believe that it is important that the Extension be implemented. Extending the maturities of the Existing Notes for three years treats all Noteholders equally and fairly, and, with no maturity until November 2021 under the Extension, will bring greater stability to the Corporation’s capital structure and better enable the Corporation to weather the ongoing period of weak commodity prices. The Extension offers substantial benefits to the Corporation. It will maintain stability for Sherritt and mitigate the risk associated with an upcoming maturity while giving nickel and oil prices more time to recover.

Enclosed are a Notice of Meeting and the Circular. These documents are also available on SEDAR at www.sedar.com. The Circular and the appendices attached to it, which we urge you to read carefully in consultation with your tax, financial, legal or other professional advisors, describe the Extension and include certain other information (including the full text of the NBF Opinions) to assist you in considering the Arrangement.

In order for the Extension to be implemented, the Arrangement must be approved by the affirmative vote of at least 662/3% of the votes cast by Noteholders present in person or by proxy at the Meeting and entitled to vote on the Arrangement Resolution. All Noteholders will vote as one class under the CBCA plan of Arrangement. Each Noteholder will have one vote for each $1,000 of principal amount of the Existing Notes held by such Noteholder as of the Record Date (June 15, 2016). As of the date hereof, Noteholders representing approximately 44% of the aggregate principal amount of Existing Notes have executed consent and support agreements with the Corporation pursuant to which they have agreed to support the terms of the Extension and have agreed to vote in favour of the Arrangement Resolution at the Meeting.

In addition to Noteholder approval, completion of the Arrangement is subject to a number of conditions, including approval by the Ontario Superior Court of Justice. Pending receipt of such approval and satisfaction of all conditions precedent, the Corporation anticipates that completion of the Arrangement will occur by the end of July 2016.

Yours very truly,

“Harold Stephen”

Harold (Hap) Stephen
Chairman
Sherritt International Corporation

NOTICE OF MEETING OF NOTEHOLDERS

TO: Holders of 8.00% Senior Unsecured Debentures of Sherritt International Corporation (the “Corporation”) due November 15, 2018 (the “2018 Notes”)

AND TO: Holders of 7.50% Senior Unsecured Debentures of the Corporation due September 24, 2020 (the “2020 Notes”)

AND TO: Holders of 7.875% Senior Unsecured Notes of the Corporation due October 11, 2022 (the “2022 Notes” and together with the 2018 Notes and 2020 Notes, collectively, the “Existing Notes”)

NOTICE IS HEREBY GIVEN that a meeting (the “Meeting”) of the holders of the Existing Notes (the “Noteholders”) of the Corporation will be held at the offices of Goodmans LLP at Bay Adelaide Centre, 333 Bay Street, Suite 3400, Toronto, Ontario, on July 25, 2016, at 10:00 a.m. (Toronto time) for the following purposes:

(a) pursuant to an order (the “Interim Order”) of the Ontario Superior Court of Justice (the “Court”) dated June 15, 2016, to consider at the Meeting and, if deemed advisable, to pass, with or without variation, a resolution (the “Arrangement Resolution”), the full text of which is set out in Appendix “A” to the accompanying management information circular (the “Circular”), approving a plan of arrangement (the “Arrangement”) pursuant to Section 192 of the Canada Business Corporations Act, which Arrangement is more particularly described in the Circular; and

(b) to transact such other business as may properly come before the Meeting or any postponement or adjournment thereof.

The record date (the “Record Date”) for entitlement to vote at the Meeting has been set by the Court as June 15, 2016, subject to any further order of the Court.

Subject to any further order of the Court, the quorum for the Meeting is the presence, in person or by proxy, of two or more Noteholders entitled to vote at the Meeting. Subject to any further order of the Court, the vote required to pass the Arrangement Resolution at the Meeting is the affirmative vote of at least 662/3% of the votes cast by Noteholders present in person or by proxy at the Meeting and entitled to vote on the Arrangement Resolution.

Each Noteholder will have one vote for each $1,000 of principal amount of the Existing Notes held by such Noteholder as of the Record Date. All Noteholders will vote as one class under the CBCA plan of arrangement.

In addition to Noteholder approval, the implementation of the Arrangement is subject to the approval of the Court. The matter is scheduled to be heard at such time and date to be set by the Court.

In addition to the Arrangement Resolution, copies of the Plan of Arrangement implementing the Arrangement, the Notice of Application and the Interim Order, as such terms are defined in the Circular, are attached to the Circular as Appendices “B”, “E” and “F”, respectively.

If you are a non-registered Noteholder and you receive these materials through your broker, custodian, nominee or other intermediary, you should follow the instructions provided by your broker, custodian, nominee or other intermediary in order to vote your Existing Notes and make an election to receive certain early consent consideration described in the Circular, if applicable. If you are a registered Noteholder, whether or not you are able to attend the Meeting, you are requested to complete, execute and deliver the applicable enclosed Voting Information and Election Form in accordance with the instructions set forth on the form to the Corporation, to: Computershare Trust Company of Canada, 100 University Avenue, 11th Floor, Toronto, Ontario M5J 2Y1, by no later than 10:00 a.m. (Toronto time) on July 21, 2016 or, if the Meeting is adjourned or postponed, not less than 48 hours (excluding Saturdays, Sundays and holidays) prior to any adjournments or postponements thereof. The time limit for the deposit of proxies may be waived or extended by the Corporation at its sole discretion without notice.

The Voting Information and Election Form to be delivered to Noteholders in connection with the Meeting nominates David V. Pathe or Dean Chambers, each an officer of the Corporation, as proxyholders in connection with the voting

at the Meeting. A Noteholder may attend the Meeting in person or may appoint another person as proxyholder. Non-registered Noteholders who wish to appoint themselves or another person to attend the Meeting on their behalf can contact Kingsdale Shareholder Services, the Corporation’s proxy solicitation and information agent (“Kingsdale”) to request the necessary documentation required. All documentation provided by Kingsdale, including but not limited to a signed Voting Information and Election Form and broker attestation form, will need to be delivered to the Corporation, by mail to: Computershare Trust Company of Canada, 100 University Avenue, 11th Floor, Toronto, Ontario M5J 2Y1, by no later than 10:00 a.m. (Toronto time) on July 21, 2016 or, if the Meeting is adjourned or postponed, not less than 48 hours (excluding Saturdays, Sundays and holidays) prior to any adjournments or postponements thereof. Persons appointed as proxyholders need not be Noteholders.

The Board of Directors unanimously recommends that Noteholders VOTE FOR the Arrangement Resolution.

DATED at Toronto, Ontario, this 15th day of June, 2016.

SHERRITT INTERNATIONAL CORPORATION

BY ORDER OF THE BOARD OF DIRECTORS

(signed) “Ward Sellers”
Ward Sellers
Senior Vice President, General Counsel & Corporate Secretary

GLOSSARY OF TERMS

“2015 AIF” has the meaning ascribed thereto under the heading “Documents Incorporated by Reference”;

“2015 Financial Statements” has the meaning ascribed thereto under the heading “Documents Incorporated by Reference”;

“2015 MD&A” has the meaning ascribed thereto under the heading “Documents Incorporated by Reference”;

“2016 AGM Circular” has the meaning ascribed thereto under the heading “Documents Incorporated by Reference”;

“2016 Interim Financials” has the meaning ascribed thereto under the heading “Documents Incorporated by Reference”;

“2016 Interim MD&A” has the meaning ascribed thereto under the heading “Documents Incorporated by Reference”;

“2018 Notes” means the Corporation’s 8.00% Senior Unsecured Debentures due November 15, 2018 governed by the Existing Indenture;

“2020 Notes” means the Corporation’s 7.50% Senior Unsecured Debentures due September 24, 2020 governed by the Existing Indenture;

“2022 Notes” means the Corporation’s 7.875% Senior Unsecured Notes due October 11, 2022 governed by the Existing Indenture;

“Amended 2021 Notes” means the aggregate 2018 Notes, as amended, which will reflect an extended maturity date to November 15, 2021 to be issued under the Amended and Restated Indenture in exchange for the 2018 Notes pursuant to the Plan of Arrangement;

“Amended 2023 Notes” means the aggregate 2020 Notes, as amended, which will reflect an extended maturity date to September 24, 2023 to be issued under the Amended and Restated Indenture in exchange for the 2020 Notes pursuant to the Plan of Arrangement;

“Amended 2025 Notes” means the aggregate 2022 Notes, as amended, which will reflect an extended maturity date to October 11, 2025 to be issued under the Amended and Restated Indenture in exchange for the 2022 Notes pursuant to the Plan of Arrangement;

“Amended Notes” means collectively, the Amended 2021 Notes, Amended 2023 Notes and Amended 2025 Notes;

“Amended and Restated Indenture” means the amended and restated Existing Indenture to be entered into between the Corporation, the Guarantors and the Indenture Trustee on the Effective Date, which shall govern the Amended Notes, and replace the Existing Indenture upon the Plan of Arrangement becoming effective on the Effective Date, which Amended and Restated Indenture shall include the Existing Indenture amendments as set out in the Plan of Arrangement and described herein under the heading “Terms of Amended Notes and Amended and Restated Indenture” and be in form and substance acceptable to the Corporation and the Majority Supporting Noteholders;

“Arrangement” means the arrangement effected under Section 192 of the CBCA on the terms and subject to the conditions set forth in the Plan of Arrangement;

“Arrangement Agreement” means the arrangement agreement dated June 15, 2016 among the Corporation, and Sherritt International Oil and Gas Limited, Nickel Metal Marketing Inc., Sherritt International (Bahamas) Inc., Sherritt Power (Bahamas) Inc., Sherritt International (Cuba) Oil and Gas Limited, Sherritt Utilities Inc., Canada

Northwest Oils (Europe) B.V., and CNWL Oil (Espana) S.A., (collectively, the “Guarantors”), substantially in the form attached as Appendix “C” to this Circular, as amended or restated from time to time;

“Arrangement Resolution” means the resolution of the Noteholders to approve the Plan of Arrangement to be considered at the Meeting, the full text of which is attached as Appendix “A” to this Circular;

“Articles of Arrangement” means the articles of arrangement of the Corporation in respect of the Plan of Arrangement that are required by the CBCA to be filed with the Director after the Final Order is made in order for the Plan of Arrangement to become effective;

“Beneficial Noteholder” has the meaning ascribed thereto under the heading “Matters Pertaining to Voting and Election of Early Consent Consideration”;

“Business Day” means any day, other than a Saturday or a Sunday, on which commercial banks are generally open for business in Toronto, Ontario;

“Board” means the board of directors of Sherritt;

“CBCA” means the Canada Business Corporations Act, R.S.C. 1985, c. C-44 and the regulations thereto, as now in effect and as it may be amended from time to time prior to the Effective Date;

“CBCA Opinion” means the opinion of NBF attached as Appendix “G” to this Circular and described under the heading “Recommendation of the Board — CBCA Opinion”;

“CDS” means CDS & Co., the nominee of CDS Clearing and Depository Services Inc.;

“Certificate of Arrangement” means the certificate of arrangement to be issued by the Director giving effect to the Plan of Arrangement;

“Circular” means this Management Information Circular of the Corporation dated as of June 15, 2016, including all Appendices hereto, as it may be amended, restated or supplemented from time to time;

“Common Shares” has the meaning ascribed thereto under the heading “Consent Consideration — Early Consent Warrants”;

“Court” means the Ontario Superior Court of Justice;

“CRA” has the meaning ascribed thereto under the heading “Certain Canadian Federal Income Tax Considerations”;

“Director” means the Director appointed under Section 260 of the CBCA;

“Early Consent Cash Consideration” means cash consideration equal to 2% of the principal amount of Existing Notes held by an Early Consenting Noteholder as of the Record Date;

“Early Consent Consideration” means the consideration an Early Consenting Noteholder is entitled to receive on the Effective Date (conditional on completion of the Arrangement) in consideration for voting in favour of the Arrangement and validly submitting a duly completed Voting Information and Election Form by the Early Consent Deadline, which consideration shall be either the Early Consent Cash Consideration or the Early Consent Warrants, at the option of the Early Consenting Noteholder, all as more particularly described in this Circular;

“Early Consent Warrants” means warrants to acquire common shares in the capital of Sherritt, on a basis of one share per Warrant, at an exercise price of $0.74 per share, and having such additional terms and provisions as are described under “Early Consent Consideration - Early Consent Warrants”;

“Early Consent Deadline” means 5:00 p.m. (Toronto time) on July 19, 2016;

“Early Consenting Noteholders” means those Noteholders who have voted in favour of the Arrangement Resolution by validly depositing a duly completed Voting Information and Election Form prior to the Early Consent Deadline indicating an election to receive either the Early Consent Cash Consideration or Early Consent Warrants;

“Effective Date” means the date shown on the Certificate of Arrangement issued by the Director under the CBCA;

“Effective Time” means such time as may be specified by the Corporation in writing, on the Effective Date;

“Existing Indenture” means the amended and restated indenture dated as of October 10, 2014 between the Corporation, Guarantors and the Indenture Trustee, pursuant to which the Existing Notes were issued, as amended or supplemented from time to time;

“Existing Notes” means collectively, the 2018 Notes, the 2020 Notes and the 2022 Notes;

“Extension” means the transactions contemplated by the Plan of Arrangement;

“Fairness Opinion” means the fairness opinion of NBF attached as Appendix “G” to this Circular and described under the heading “Recommendation of the Board — Fairness Opinion”;

“Final Order” means the final order of the Court approving the Plan of Arrangement, as such order may be amended at any time prior to the Effective Date or, if appealed, then unless such appeal is withdrawn or denied, as affirmed or amended on appeal;

“In-Person Noteholder” has the meaning ascribed thereto under the heading “Matters Pertaining to Voting and Election of Early Consent Consideration — Alternate Proxyholder and/or Attendance at the Meeting”;

“Indenture Trustee” means Computershare Trust Company of Canada, as trustee under the Existing Indenture and the Amended and Restated Indenture, and its successors and assigns;

“Interim Order” means the interim order of the Court dated June 15, 2016 pursuant to Section 192 of the CBCA, as such order may be amended at any time prior to the Effective Date or, if appealed, as affirmed or amended on appeal, a draft form of which is attached as Appendix “F” to this Circular;

“Intermediary” has the meaning ascribed to it under the heading, “Matters Pertaining to Voting and Election of Early Consent Consideration” in this Circular;

“Majority Supporting Noteholders” means Supporting Noteholders (or their permitted assigns) that hold in the aggregate not less than a majority of the aggregate principal amount of the Existing Notes which are Relevant Securities (as defined in the Noteholder Support Agreements) as at May 30, 2016;

“Meeting” means the meeting of Noteholders to be held on the Meeting Date in accordance with the Interim Order to consider and, if deemed advisable, to approve the Arrangement Resolution and to consider such other matters as may properly come before such meeting, and any adjournment(s) or postponement(s) thereof;

“Meeting Date” means July 25, 2016, subject to any postponement or adjournment or further Order;

“NBF” means National Bank Financial Inc.;

“NBF Opinions” means collectively, the Fairness Opinion and CBCA Opinion;

“Noteholder Support Agreements” means the consent and support agreements dated May 30, 2016 and all schedules thereto executed among the Corporation and certain Noteholders pursuant to which such Noteholders have agreed to, among other things, support and vote in favour of the Extension and the Arrangement;

“Noteholders” means the holders of the Existing Notes;

“Notice of Application” means the Notice of Application, attached as Appendix “E” to this Circular;

“Order” means any order of the Court relating to the Arrangement including, without limitation, the Interim Order and the Final Order;

“Person” includes any individual, firm, partnership, limited partnership, joint venture, venture capital fund, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate (including a limited liability company and an unlimited liability company), corporation, unincorporated association or organization, governmental authority, syndicate or other entity, whether or not having legal status;

“Plan of Arrangement” means the plan of arrangement pursuant to Section 192 of the CBCA, and the schedules thereto, substantially in the form attached as Appendix “B” to this Circular and any amendments or variations thereto made in accordance with the provisions of the Plan or Arrangement or made by an Order of the Court;

“Proposed Amendments” has the meaning ascribed thereto under the heading “Certain Canadian Federal Income Tax Considerations”;

“Record Date” means June 15, 2016;

“Regulation S” means Regulation S under the U.S. Securities Act;

“Regulations” has the meaning ascribed thereto under the heading “Certain Canadian Federal Income Tax Considerations”;

“Resident Noteholders” has the meaning ascribed thereto under the heading “Certain Canadian Federal Income Tax Considerations”;

“SEDAR” means the System for Electronic Document Analysis and Retrieval;

“Sherritt” or the “Corporation” means Sherritt International Corporation, a corporation continued under the CBCA, and its successors and assigns;

“Supporting Noteholders” means those Noteholders who entered into a Noteholder Support Agreement pursuant to which such Noteholders agreed to support and vote in favour of the Extension and the Arrangement Resolution;

“Tax Act” means the Income Tax Act (Canada) and the regulations thereto, as amended;

“TSX” means the Toronto Stock Exchange;

“United States” or “U.S.” means the United States, as defined in Rule 902(1) under Regulation S under the U.S. Securities Act;

“U.S. Person” means a U.S. person as defined in Rule 902(k) under Regulation S under the U.S. Securities Act, including, but not limited to, any natural person resident in the United States;

“U.S. Securities Act” means the United States Securities Act of 1933, as amended;

“Voting Information and Election Form” or “VIEF” means the form of voting information and consent election to be completed by Noteholders, pursuant to which Noteholders will indicate their vote in respect of the Arrangement Resolution and, in the case of Early Consenting Noteholders who indicate a vote in favour of the Arrangement Resolution on or prior to the Early Consent Deadline, the election by such Early Consenting Noteholder to receive either Early Consent Cash Consideration or Early Consent Warrants as the form of Early Consent Consideration, in the form attached as Appendix “D” to this Circular;

“Warrant Agent” means CST Trust Company, as warrant agent pursuant to the Warrant Indenture;

“Warrant Indenture” means the warrant indenture to be dated as of the Effective Date between the Corporation and the Warrant Agent, pursuant to which the Early Consent Warrants will be issued, as the same may be amended or supplemented or modified; and

“Warrant Shares” means the common shares of the Corporation into which the Early Consent Warrants may be exercised.

CIRCULAR

This Circular is furnished in connection with the solicitation of proxies by and on behalf of the management of the Corporation to be used at the Meeting to be held at the offices of Goodmans LLP at Bay Adelaide Centre, 333 Bay Street, Suite 3400, Toronto, Ontario on July 25, 2016 at 10:00 a.m. (Toronto time) and, at any adjournment or postponement thereof, for the purposes set forth in the accompanying Notice of Meeting of Noteholders.

Certain capitalized terms used in this Circular that are not otherwise defined have the respective meanings set out in the “Glossary of Terms”.

Information in this Circular is given as at June 15, 2016 unless otherwise indicated.

DOCUMENTS INCORPORATED BY REFERENCE

The following documents which have been publicly filed on SEDAR at www.sedar.com or with the securities commission or similar regulatory authority in each of the provinces and territories of Canada, are specifically incorporated by reference into, and form an integral part of this Circular:

(a) the annual information form for the Corporation dated March 21, 2016 for the fiscal year ended December 31, 2015 (the “2015 AIF”);

(b) the management information circular dated April 6, 2016 in respect of the Corporation’s annual and special meeting of shareholders held on May 10, 2016 (the “2016 AGM Circular”);

(c) the consolidated financial statements of the Corporation for the fiscal year ended December 31, 2015 and the auditor’s report thereon (the “2015 Financial Statements”);

(d) the Management’s Discussion and Analysis of the Corporation for the fiscal year ended December 31, 2015 (the “2015 MD&A”);

(e) the consolidated financial statements of the Corporation for the three months ended March 31, 2016 (the “2016 Interim Financials”);

(f) the Management’s Discussion and Analysis of the Corporation for the three months ended March 31, 2016 (the “2016 Interim MD&A”); and

(g) the material change report issued by the Corporation on June 7, 2016 with respect to the Extension.

Material change reports (other than confidential reports), business acquisition reports, interim financial statements and all other documents of the type referred to above after the date of this Circular and before completion or withdrawal of the Extension will be deemed to be incorporated by reference into this Circular.

Any statement contained in a document incorporated or deemed to be incorporated by reference herein will be deemed to be modified or superseded for the purposes of this Circular to the extent that a statement contained in this Circular or in any subsequently filed document that also is or is deemed to be incorporated by reference herein modifies or supersedes such statement. Any statement so modified or superseded will not constitute a part of this Circular, except as so modified or superseded. The modifying or superseding statement need not state that it has modified or superseded a prior statement or include any other information set forth in the document that it modifies or supersedes. The making of such a modifying or superseding statement will not be deemed an admission for any purpose that the modified or superseded statement, when made, constituted a misrepresentation, an untrue statement of a material fact or an omission to state a material fact that is required to be stated or that is necessary to make a statement not misleading in light of the circumstances in which it was made. Copies of documents incorporated herein by reference may be obtained upon request without charge from the Corporate Secretary of Sherritt at 181 Bay Street, 26th

Floor, Brookfield Place, Toronto, Ontario, M5J 2T3, Telephone: (416) 924-4551 and are also available electronically on SEDAR at www.sedar.com.

FORWARD-LOOKING STATEMENTS

This Circular and the documents incorporated by reference herein contain “forward-looking statements” within the meaning of Canadian securities legislation. These forward-looking statements are made as of the date of this Circular or, in the case of documents incorporated by reference herein, as of the date of such documents.

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”, “projected”, “continue” or other similar words or phrases. Specifically, forward-looking statements in this document and the documents incorporated by reference herein include but are not limited to, statements respecting certain expectations regarding capital costs and expenditures; capital project completion dates; sales volumes; revenue, costs and earnings; sufficiency of working capital and capital project funding, completion of development and exploration wells, restructuring plan cost savings, and amounts of certain joint venture commitments.

Forward-looking statements are not based on historic 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; realized prices for production; earnings and revenues; development and exploration wells and enhanced oil recovery in Cuba; environmental rehabilitation provisions; availability of regulatory approvals; compliance with applicable environmental laws and regulations; debt repayments; collection of accounts receivable; and certain corporate objectives, goals and plans for 2016. 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 those assumptions may not be correct and that actual results may differ materially from such predictions, forecasts, conclusions or projections.

These assumptions should be considered carefully by Noteholders. Noteholders are cautioned not to place undue reliance on the forward-looking statements or the assumptions on which our forward-looking statements are based. Noteholders are advised to carefully review and consider the risk factors identified in the 2015 AIF under the heading “Forward Looking Statements”, which is incorporated by reference into this Circular, and in the other documents incorporated by reference herein for a discussion of the factors that could cause the Corporation’s actual results, performance and achievements to be materially different from any anticipated future results, performance or achievements expressed or implied by the forward-looking statements. Noteholders are further cautioned that the foregoing list of assumptions is not exhaustive and it is recommended that Noteholders consult the more complete discussion of the Corporation’s business, financial condition and prospects that is included in the documents incorporated by reference herein. Although the Corporation believes that the assumptions on which the forward-looking statements are based are reasonable, based on the information available to the Corporation on the date such statements were made, no assurances can be given as to whether these assumptions will prove to be correct. The forward-looking statements contained in this Circular and the documents incorporated by reference herein are expressly qualified by this cautionary statement. The forward-looking information and statements contained in this document and the documents incorporated by reference herein are made as of the date hereof and the Corporation undertakes no obligation to update publicly or revise any oral or written forward-looking information or statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. The forward-looking information and statements contained herein are expressly qualified in their entirety by this cautionary statement.

NOTICE TO NOTEHOLDERS IN THE UNITED STATES

NEITHER THE AMENDED NOTES NOR THE EARLY CONSENT WARRANTS HAVE OR WILL BE REGISTERED UNDER THE U.S. SECURITIES ACT. THE AMENDED NOTES AND THE EARLY CONSENT WARRANTS WILL BE ISSUED IN RELIANCE UPON AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE U.S. SECURITIES PROVIDED BY RULE 802 THEREUNDER.

NEITHER THE AMENDED NOTES NOR THE EARLY CONSENT WARRANTS HAVE BEEN APPROVED OR DISAPPROVED BY THE U.S. SECURITIES AND EXCHANGE COMMISSION (“SEC”) OR ANY U.S. STATE SECURITIES COMMISSION NOR HAS THE SEC OR ANY U.S. STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THE OFFER AND CIRCULAR. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

The Arrangement is being made in accordance with the disclosure requirements of Canada. Noteholders should be aware that such requirements are different from those of the United States. The financial statements of Corporation included or incorporated by reference herein have been prepared in accordance with International Financial Reporting Standards and may not be comparable to the financial statements of United States companies.

Noteholders in the United States should be aware that the Arrangement as described herein may have tax consequences both in the United States and in Canada. Such consequences have not been described herein and Noteholders are encouraged to consult their tax advisors.

The solicitation of consents contemplated hereby are being effected in accordance with Canadian corporate and securities laws. The proxy solicitation rules under the U.S. Securities Exchange Act of 1934 are not applicable to the Corporation or this solicitation. Noteholders should be aware that proxy solicitation and disclosure requirements under Canadian laws are different from those requirements under U.S. securities laws.

It may be difficult for you to enforce your rights and any claim you may have arising under the U.S. federal Securities Laws, since the Corporation is located in Canada, and some or all of its officers and directors may be residents of Canada. You may not be able to sue a foreign Corporation or its officers or directors in a foreign court for violations of the U.S. securities laws. It may be difficult to compel a foreign Corporation and its affiliates to subject themselves to a U.S. court’s judgment.

Amended Notes or Early Consent Warrants issuable to any persons within the United States may be resold without restriction under the U.S. Securities Act, except in respect of resales by persons who are “affiliates” of the Corporation at the time of such resale or who have been affiliates of the Corporation within 90 days before such resale. Persons who may be deemed to be “affiliates” of an issuer generally include individuals or entities that control, are controlled by, or are under common control with, the issuer, whether through the ownership of voting securities, by contract or otherwise, and generally include executive officers and directors of the issuer as well as principal shareholders of the issuer. Any resale of such Amended Notes or Early Consent Warrants, as applicable, by such an affiliate (or, if applicable, former affiliate) may be subject to the registration requirements of the U.S. Securities Act and applicable state securities laws, absent an exemption therefrom. Subject to certain limitations, such affiliates (and former affiliates) may immediately resell such Amended Notes or Early Consent Warrants outside the United States without registration under the U.S. Securities Act pursuant to Regulation S under the U.S. Securities Act. Such Amended Notes or Early Consent Warrants, as applicable, may also be resold in transactions completed in accordance with Rule 144 under the U.S. Securities Act, if available.

The Early Consent Warrants will not be exercisable in the United States or by or on behalf of a U.S. Person or a person in the United States, nor will certificates representing the underlying common shares issuable upon exercise of the Early Consent Warrants be registered or delivered to an address in the United States, unless an exemption from registration under the U.S. Securities Act and any applicable state securities laws is available. If you are in the United States at the time you exercise the Early Consent Warrants, you must be an accredited investor (as defined in Rule 501(a) of Regulation D under the U.S. Securities Act) and will be required to provide evidence reasonably satisfactory to the Corporation that you are an accredited investor to exercise the Early Consent Warrants. Prior to the issuance of underlying common shares of the Corporation pursuant to any exercise of Early Consent Warrants, the Corporation also may require, in its discretion, the delivery of an opinion of counsel or other evidence reasonably satisfactory to the Corporation to the effect that the issuance of such common shares does not require registration under the U.S. Securities Act or applicable state securities laws. As a result, a Noteholder located in the United States or is otherwise a U.S. Person may not be able to exercise the Early Consent Warrants it receives in the Arrangement. Notwithstanding the foregoing limitations on exercise, subject to certain limitations, the Early Consent Warrants may be resold outside the United States without registration under the U.S. Securities Act pursuant to Regulation S. You should consult legal counsel or your investment advisor prior to exercising the Early Consent Warrants in the United States or otherwise transferring the Early Consent Warrants.

SUMMARY OF CIRCULAR

The following is a summary of certain information contained elsewhere in this Circular. It is not, and is not intended to be, complete in itself. This is a summary only, and is qualified in its entirety by the more detailed information appearing elsewhere in this Circular and incorporated by reference herein. Noteholders are urged to carefully review this Circular, including the Appendices, and the documents incorporated by reference, in their entirety. Certain capitalized terms used in this Circular have the meanings set forth in the “Glossary of Terms”.

The Meeting

The Meeting will be held on July 25, 2016 at 10:00 a.m. (Toronto time) at the offices of Goodmans LLP at Bay Adelaide Centre, 333 Bay Street, Suite 3400, Toronto, Ontario, for the purpose of considering and, if thought advisable, passing, with or without variation, the Arrangement Resolution, attached as Appendix “A” to this Circular.

The Record Date for determining the Noteholders eligible to receive notice of and vote at the Meeting is 5:00 p.m. (Toronto time) on June 15, 2016.

Subject to any further order of the Court, the quorum for the Meeting is the presence, in person or by proxy, of two or more Noteholders entitled to vote at the Meeting, and the vote required to pass the Arrangement Resolution is the affirmative vote of at least 662/3% of the votes cast by Noteholders present in person or by proxy at the Meeting and entitled to vote on the Arrangement Resolution.

The Extension

Plan of Arrangement

The Extension will be implemented through a plan of arrangement (the “Arrangement”) to be filed in respect of the Corporation pursuant to section 192 of the Canada Business Corporations Act (the “CBCA”) and approved and confirmed pursuant to the Final Order pursuant to which and subject to the specific terms thereof:

(a) the Existing Indenture shall be amended and restated in the form of the Amended and Restated Indenture; and

(b) the Existing Notes shall be amended and the Amended Notes shall be issued in exchange for the Existing Notes;

provided however that the Existing Notes shall not be redeemed, acquired, cancelled, disposed of or extinguished but shall continue in the form of the Amended Notes, and the issuance of the Amended Notes pursuant to the Amended and Restated Indenture is not intended to result in a novation or the issuance of new indebtedness of the Corporation, but rather, the same indebtedness as evidenced by the Existing Notes will continue to exist, with full force and effect, in amended form, under the Amended Notes and the Amended and Restated Indenture.

The Arrangement and obtaining the Final Order pursuant thereto permit the implementation of the Extension without obtaining the unanimous approval of Noteholders as would otherwise be required to effect the Extension under the Existing Indenture without the Arrangement and obtaining the Final Order pursuant thereto.

The implementation of the Arrangement shall be subject to and conditional upon all required Court, regulatory and other approvals, if and to the extent required. Pursuant to the Interim Order, the Noteholders shall form a single class for the purpose of voting on the Arrangement.

Delivery of Amended Notes

Each Noteholder will receive an equivalent principal amount of Amended 2021 Notes in respect of its existing 2018 Notes, Amended 2023 Notes in respect of its existing 2020 Notes, and Amended 2025 Notes in respect of its existing 2022 Notes, respectively.

Payment of Accrued and Unpaid Interest

The Corporation shall not be required to make any payments on account of interest on the Existing Notes prior to or on the Effective Date. The Corporation shall make payments in cash to the Noteholders on scheduled interest payment dates in the ordinary course on account of any and all unpaid interest which has accrued under the Existing Notes from the most recently paid interest payment date on the Existing Notes prior to the Effective Date up to, but excluding the next interest payment date as contemplated under the Amended and Restated Indenture in the same manner and amount as the Corporation pays interest on the Existing Notes currently under the Existing Indenture.

Noteholder Support Agreements

Supporting Noteholders holding approximately 44% of the aggregate principal amount of the Existing Notes have executed the Noteholder Support Agreements pursuant to which they have agreed to the terms of the Extension and agreed to vote in favour of the Arrangement Resolution at the Meeting. For a summary of certain of the terms of the Noteholder Support Agreements, see “Description of the Extension — Noteholder Support Agreements” in this Circular. A copy of the form of Noteholder Support Agreement has been filed on SEDAR at www.sedar.com.

Early Consent Consideration

Early Consenting Noteholders that submit a Voting Information and Election Form with a vote in favour of the Arrangement Resolution on or prior to the Early Consent Deadline shall be entitled to receive on the Effective Date (conditional on completion of the Arrangement), subject to the terms described in this Circular, the Early Consent Consideration, consisting of either the Early Consent Cash Consideration or the Early Consent Warrants, at the election of the Early Consenting Noteholder to be indicated by the Early Consenting Noteholder in the Voting Information and Election Form. Early Consenting Noteholders that submit a Voting Information and Election Form with a vote in favour of the Arrangement Resolution prior to the Early Consent Deadline but do not indicate an election in respect of the Early Consent Consideration, will not be entitled to receive the Early Consent Consideration. Noteholders are urged to carefully review the Voting Information and Election Form attached as Appendix “D” to this Circular and the description of the method for elections set forth in this Circular under the heading “Matters Pertaining to Voting and Election of Early Consent Consideration”.

Conditions to the Arrangement

The Arrangement is subject to the following conditions, among others:

(a) the Plan of Arrangement, the Final Order, the Amended Notes, the Amended and Restated Indenture, and all definitive legal documentation in connection with all of the foregoing, are to be executed and delivered on terms substantially consistent with those described in this Circular;

(b) timely satisfaction by the Corporation and the Supporting Noteholders in all material respects of each of their respective obligations referred to in the Noteholder Support Agreements, as the case may be, that is to be performed on or before the Effective Date;

(c) approval of the Arrangement by the Noteholders at the Meeting held in accordance with the provisions of the Interim Order;

(d) the Final Order shall have been granted and be in full force and effect and consummation of the transactions contemplated by the Arrangement;

(e) no action shall have been instituted and be continuing on the Effective Date for an injunction to restrain, a declaratory judgment in respect of or damages on account of or relating to, the Extension and no cease trading or similar order with respect to any securities of the Corporation shall have become effective or threatened;

(f) the Corporation shall have taken all necessary corporate actions and proceedings in connection with the Extension;

(g) all applicable governmental, regulatory and judicial consents, and any other third party consents, shall have been obtained;

(h) the Effective Date shall have occurred by September 15, 2016; and

(i) the Certificate of Arrangement shall have been issued by the Director.

The conditions precedent to the Arrangement may be waived by the Corporation in accordance with the terms of the Arrangement Agreement, subject to the terms of the Noteholder Support Agreements.

Terms of the Amended Notes and Amended and Restated Indenture

Maturity Dates

The Amended Notes shall have the following respective maturity dates:

Amended 2021 Notes — November 15, 2021

Amended 2023 Notes — September 24, 2023

Amended 2025 Notes — October 11, 2025

Optional Redemption

The Amended and Restated Indenture will reflect the extended maturity dates attaching to the Amended Notes as described in this Circular, as well as the corresponding extension by three years of the time periods set forth in the optional redemption provisions of the Existing Indenture. All other terms and conditions attaching to the Amended Notes, including the principal amounts, pursuant to the Amended and Restated Indenture shall not be amended but shall be the same as currently applies to the Existing Notes pursuant to the Existing Indenture.

Other Terms and Conditions

The Amended Notes are a continuation of the Existing Notes in amended form, and all other terms and conditions attached to the Amended Notes, including the aggregate principal amounts, as contemplated by the Amended and Restated Indenture shall not be amended but shall be the same as contemplated by the Existing Notes under the Existing Indenture. This includes all covenants in the Existing Indenture limiting the Corporation’s ability and that of certain of its material subsidiaries to incur indebtedness, create certain security interests and sell assets, and restricting its ability and that of certain of its material subsidiaries to amalgamate or merge with a third party or transfer all or substantially all of its assets.

The Amended and Restated Indenture will also include, in the identical manner as currently contemplated by the Existing Indenture, all of the same covenants requiring an offer to purchase in a change in control, and provide for customary events of default, which include non-payment of principal or interest, failure to comply with covenants, the bankruptcy or insolvency of the Corporation or a material subsidiary, unsatisfied final judgment against the Corporation or a material subsidiary in excess of 5% of the Corporation’s net worth, and failure by the Corporation or a material subsidiary to pay or otherwise comply with the terms of other indebtedness which singly or in the aggregate is in excess of 5% of the net worth of the Corporation, which default results in an acceleration of such indebtedness.

A detailed description of these unamended terms which will apply to the Amended Notes in the same manner as the Existing Notes, is set out in Appendix “H” for ease of reference.

Terms of the Early Consent Warrants

Each Early Consent Warrant will be freely transferable in Canada and exercisable by the holder thereof, for a period of five years from the Effective Date, into one common share of the Corporation upon payment of an exercise price equal to $0.74 per share. The Early Consent Warrants are not expected to be listed on any stock exchange (unless the Corporation subsequently elects to have them listed, in its discretion), will be CDS eligible and will be delivered to electing Early Consenting Noteholders through the facilities of CDS. The Early Consent Warrants will be governed by the Warrant Indenture. See “Early Consent Consideration - Early Consent Warrants”.

Background to and Reasons for the Extension

The Board believes that the Extension represents a favourable mechanism to improve its capital structure, with the objective of bringing greater stability to the Corporation’s capital structure and treating all stakeholders in a fair and reasonable manner. Please refer to the heading “Background and Reasons for the Extension” in this Circular for a more fulsome summary of the background to the Extension and the conditions and events that led to the Corporation’s decision to pursue the Extension.

Reasons for Extension

Sherritt’s Board has determined that the Extension offers substantial benefits to Sherritt and is in the best interests of the Corporation and its stakeholders.

The following is a summary of the principal reasons for the recommendation of the Board that Noteholders VOTE FOR the Extension.

· The Extension will maintain stability for Sherritt and mitigate the risk associated with an upcoming maturity while giving nickel and oil prices more time to recover.

· Noteholders who entered into confidentiality agreements with the Corporation, holding 44% of the Existing Notes, indicated prior to the public announcement of the Extension, that 90% support the Extension and signed the Noteholder Support Agreements.

· The selected transaction adheres to Sherritt’s values of exploring a range of alternatives, bringing greater stability to the Corporation’s capital structure and treating all stakeholders in a fair and reasonable manner.

· This option was selected after an extensive review of other alternatives.

NBF Opinions — The Fairness Opinion concludes that as of the date thereof, and subject to the qualifications set out therein, the Extension, if implemented, is fair from a financial point of view to the Corporation. The CBCA Opinion concludes that as of the date thereof, and subject to the qualifications set out therein, the Noteholders and the Sherritt shareholders would each be in a better financial position, respectively, upon implementation of the Extension than if the Corporation were liquidated, as in each case, the estimated aggregate value of the securities to be held by the Noteholders and the Sherritt shareholders, respectively, following the Extension would exceed the estimated aggregate value that such Noteholders and the Sherritt shareholders would receive in a liquidation, respectively. Copies of the NBF Opinions are attached, at Appendix “G” to this Circular.

Court Approval of Arrangement — The Arrangement is subject to a determination of the Court that the terms of the Arrangement are fair and reasonable, both procedurally and substantively.

Recommendation of the Board

The Board, after careful consideration of a number of factors and alternatives, and upon consultation and advice with its financial advisor and outside legal counsel, determined unanimously, that the Extension is in the best

interests of the Corporation and its stakeholders and the Board has unanimously determined to recommend to Noteholders that they VOTE FOR the Arrangement Resolution at the Meeting. In making its determination and recommendation, the Board relied upon legal, financial and other advice and information received during the course of its deliberations.

Risk Factors

Risk Factors relating to the business of Corporation are set out in the 2015 AIF which is incorporated by reference into this Circular. Risk factors relating to non-implementation of the Extension are set out in this Circular under the heading “Risk Factors — Risk Factors of Non-Implementation of the Arrangement”. Noteholders should carefully consider these risk factors in considering whether to vote for or against the Arrangement.

Certain Canadian Federal Income Tax Considerations

The Arrangement results in certain income tax consequences to Noteholders. See the heading entitled “Certain Canadian Federal Income Tax Considerations” in this Circular for a discussion of these consequences.

Matters Pertaining to Voting and Election of Early Consent Consideration

Registered Noteholders are requested to complete, execute and deliver the Voting Information and Election Form attached hereto as Appendix “D” in accordance with the instructions set forth on the form to the Corporation, by mail to: Computershare Trust Company of Canada, 100 University Avenue, 11th Floor, Toronto, Ontario M5J 2Y1, by no later than 10:00 a.m. (Toronto time) on July 21, 2016 or, if the Meeting is adjourned or postponed, not less than 48 hours (excluding Saturdays, Sundays and holidays) prior to any adjournments or postponements thereof. The time limit for the deposit of proxies contained in the Voting Information and Election Form may be waived by the Corporation at its sole discretion without notice.

Noteholders that vote in favour of the Arrangement Resolution prior to the Early Consent Deadline will have the option on the VIEF of electing to receive Early Consent Cash Consideration or Early Consent Warrants, to be received on the Effective Date if the Arrangement is implemented. Noteholders that submit a vote in favour of the Arrangement Resolution prior to the Early Consent Deadline but do not duly elect to receive either Early Consent Cash Consideration or Early Consent Warrants will not be entitled to receive any Early Consent Consideration.

If you are a non-registered Noteholder (a “Beneficial Noteholder”) and you receive these materials through your broker, custodian, investment dealer, nominee, bank, trust company or other intermediary (“Intermediary”), you should follow the instructions provided by your Intermediary in order to vote your Notes and make an election for Early Consent Consideration. Your Intermediary may have its own deadlines that are before the deadlines disclosed in this Circular.

Noteholders are urged to carefully review the VIEF and the description of the method for elections set forth in this Circular under the heading “Matters Pertaining to Voting and Election of Early Consent Consideration” prior to completing the VIEF.

Voting and Consent Elections Submitted by Intermediaries through CDS

For Beneficial Noteholders, voting and consent elections as described above can only be validly submitted by the Noteholder’s Intermediary through the electronic book-entry system of CDS. Beneficial Noteholders must provide their instructions and/or deliver their completed VIEF to their Intermediary at least two full business days prior to the deadlines set forth in the Voting Information and Election Form in order to permit the Intermediary sufficient time in advance of the Early Consent Deadline and/or proxy cut-off, as the case may be, to submit the information to CDS. It is the sole and exclusive responsibility of the Beneficial Noteholder to ensure that such vote and/or election is then properly submitted by its Intermediary through the facilities of CDS on or before the deadlines set forth in the VIEF.

ANY EARLY CONSENTING NOTEHOLDER WHO DOES NOT MAKE AN ELECTION IN RESPECT OF THE EARLY CONSENT CONSIDERATION OR WHO DOES NOT PROPERLY COMPLETE AND SUBMIT THE

VOTING INFORMATION AND ELECTION FORM PRIOR TO THE EARLY CONSENT DEADLINE, WILL NOT BE ENTITLED TO RECEIVE THE EARLY CONSENT CONSIDERATION.

NOTEHOLDERS WHO VOTE AGAINST THE ARRANGEMENT OR DO NOT VOTE AT ALL WILL NOT BE ENTITLED TO RECEIVE ANY EARLY CONSENT CONSIDERATION.

MATTERS TO BE CONSIDERED AT THE MEETING

At the Meeting, Noteholders will be asked to consider and, if thought advisable, approve the Arrangement Resolution. Subject to any further order of the Court, the vote required to pass the Arrangement Resolution is the affirmative vote of at least 662/3% of the votes cast by Noteholders present in person or by proxy at the Meeting and entitled to vote on the Arrangement Resolution. The form of the Arrangement Resolution is set out at Appendix “A” to this Circular.

DESCRIPTION OF THE EXTENSION

The Noteholders’ claims against the Corporation pursuant to the Existing Notes and the Existing Indenture shall be addressed in accordance with the steps to be implemented pursuant to the Plan of Arrangement and the Amended and Restated Indenture and the schedules to each of the foregoing (collectively, the “Extension”) described below. The following is a summary of certain of the terms of the Plan of Arrangement, the Amended Notes and the Amended and Restated Indenture. This summary does not purport to be complete. For a complete description of the terms of the Plan of Arrangement, the Amended Notes and the Amended and Restated Indenture, reference should be made to those documents directly, copies of which are appended to this Circular and have been filed on SEDAR at www.sedar.com.

Plan of Arrangement

The Extension will be implemented through the Arrangement to be filed in respect of the Corporation pursuant to section 192 of the Canada Business Corporations Act (the “CBCA”) and approved and confirmed pursuant to a Court Order (the “Final Order”) pursuant to which and subject to the specific terms thereof:

(a) the Existing Indenture shall be amended and restated in the form of the Amended and Restated Indenture; and

(b) the Existing Notes shall be amended and the Amended Notes shall be issued in exchange for the Existing Notes;

The implementation of the Arrangement shall be subject to and conditional upon all required Court, creditor and other approvals, if and to the extent required. The Noteholders shall form a single class of creditors for the purpose of voting on the Arrangement.

Arrangement Agreement

The Arrangement Agreement in substantially the form attached as Appendix “C” to this Circular contains covenants by the Corporation and the Guarantors to make application to the Court to effect the Arrangement pursuant to the Plan of Arrangement, the form of which is attached as Appendix “B” to this Circular.

Delivery of Amended Notes

Each Noteholder will receive Amended 2021 Notes in exchange for an equal principal amount of 2018 Notes, Amended 2023 Notes in exchange for an equal principal amount of 2020 Notes, and Amended 2025 Notes in exchange for an equal principal amount of 2022 Notes, respectively, which Amended Notes shall be issued pursuant to, and governed by, the Amended and Restated Indenture and shall be a continuation of the Existing Notes, as amended. For a description of the key terms of the Amended Notes all of which, other than the extended maturity

date and corresponding extension of dates in the optional redemption provisions, are unamended and are as contemplated currently by the Existing Notes and Existing Indenture, see “Terms of Amended Notes and Amended and Restated Indenture — Summary of Key Terms” in this Circular.

Issuance of Certificates Representing Amended Notes under Arrangement

CDS, as sole registered holder of the Existing Notes on behalf of the Noteholders, will surrender for cancellation certificates representing the Existing Notes to the Indenture Trustee and will receive one or more global Amended Notes. Delivery of the Amended Notes issuable to the Noteholders under the Arrangement will be made through the facilities of CDS to CDS participants who in turn will deliver the Amended Notes to the Noteholders pursuant to standing instructions and the CDS Participant Rules and Procedures.

Payment of Accrued and Unpaid Interest

Noteholder Support Agreements

The following is a summary of certain of the terms of the form of Noteholder Support Agreement. This summary does not purport to be complete. For a complete description of the below summarized terms, reference should be made to the form of Noteholder Support Agreement, a copy of which has been filed on SEDAR at www.sedar.com.

Sherritt and the Supporting Noteholders have entered into Noteholder Support Agreements pursuant to which, among other things, each such Supporting Noteholder has consented to and agreed with the Extension and agreed to support the Extension by, among other things: (i) voting in favour of the Arrangement; (ii) supporting the approval of the Arrangement as promptly as practicable by the Court; (iii) not supporting any action that would impede, interfere with, delay or postpone the approval, consent, ratification, adoption or implementation of the Plan of Arrangement; (iv) waiving, now and in the future, any Event of Default (as defined in the Existing Indenture) that may have occurred or could occur pursuant to Section 6.01 of the Existing Indenture to the extent arising from the commencement and/or continuation of the Arrangement proceedings in conformity with terms described herein and in furtherance of the Extension; (v) do all things that are reasonably necessary and appropriate in furtherance of, and to consummate and make effective, the Extension; and (vi) executing any and all documents and taking all commercially reasonable acts to satisfy its obligations under the Noteholder Support Agreement.

Pursuant to the Noteholder Support Agreements, Supporting Noteholders agree not to (subject to certain circumstances), without prior consent of the Corporation: (i) transfer or otherwise dispose at any time prior to the time the Noteholder Support Agreement is terminated, of any of its Existing Notes or any rights or interests in respect thereof except to other Supporting Noteholders or to such other transferees that agree to be bound by the Noteholder Supporting Agreement; or (ii) transfer any of its rights, interests or obligations under the Noteholder Support Agreement.

The Noteholder Support Agreements may be modified, amended or supplemented with the consent of the Corporation and the Majority Supporting Noteholders, provided that extension of the maturity dates in respect of the Existing Notes pursuant to the Extension, may not be modified without the written agreement of all Supporting Noteholders. If any amendment or modification extends the outside date contemplated by the Noteholder Support Agreement past October 31, 2016 or reduces the Early Consent Consideration, a Supporting Noteholder who objects to such amendment or modification may terminate its obligations under its Noteholder Support Agreement. A Supporting Noteholder also has a right to terminate the Noteholder Support Agreements in certain other circumstances.

To date, Noteholders representing approximately 44% of the aggregate principal amount of the Existing Notes have executed the Noteholder Support Agreements and agreed to vote in favour of the Arrangement at the Meeting. The Arrangement must be approved by at least 662/3% of the votes cast at the Meeting.

Conditions to Extension

The Extension is subject to the following conditions, among others:

(a) the Arrangement, the Final Order, the Amended Notes, the Amended and Restated Indenture, and all definitive legal documentation in connection with all of the foregoing, are to be executed and delivered on terms consistent with the Noteholder Support Agreement;

(b) timely satisfaction by the Corporation and the Supporting Noteholders in all material respects of each of their respective obligations referred to in the Noteholder Support Agreement, as the case may be, that is to be performed on or before the Effective Date;

(c) the Effective Date shall occur by September 15, 2016 or such later date as the Corporation and the Majority Supporting Noteholders may agree;

(d) approval of the Arrangement by the Noteholders at the Meeting held in accordance with the provisions of the Interim Order;

(e) the Final Order shall have been granted and be in full force and effect and the consummation of the transactions contemplated by the Arrangement;

(f) no action shall have been instituted and be continuing on the Effective Date for an injunction to restrain, a declaratory judgment in respect of or damages on account of or relating to, the Extension and no cease trading or similar order with respect to any securities of the Corporation shall have become effective or threatened;

(g) the Corporation shall have taken all necessary corporate actions and proceedings in connection with the Extension;

(h) all applicable governmental, regulatory and judicial consents, and any other third party consents, shall have been obtained; and

(i) the Certificate of Arrangement shall have been issued by the Director.

The conditions precedent to the Arrangement may be waived by the Corporation in accordance with the terms of the Arrangement Agreement, subject to the terms of the Noteholder Support Agreements.

Effective Date

The target effective date of the Extension is July 29, 2016 subject to approval of the Arrangement by the Noteholders at the Meeting and the receipt of the Final Order from the Court and any other regulatory approvals (the date on which the Arrangement is implemented being the “Effective Date”). The outside date for the Effective Date under the terms of the Noteholder Support Agreements is September 15, 2016, subject to extension on consent of the Corporation and a Majority Supporting Noteholders.

Expenses

On the Effective Date, the Corporation shall pay all fees, costs and expenses due to Goodmans LLP, NBF and other advisors to the Corporation, together with all other reasonable fees, costs and expenses of the Indenture Trustee incurred by and due to any of the foregoing in connection with the development, negotiation and implementation of the Extension. The estimated transaction costs payable by the Corporation in connection with the completion of the

Extension including, without limitation, filing fees and printing and mailing costs are currently expected to be approximately $4.75 million.

EARLY CONSENT CONSIDERATION

Early Consenting Noteholders who, on or prior to the Early Consent Deadline, submit a duly completed VIEF with a vote in favour of the Arrangement Resolution and the Extension and an election with respect to the form of Early Consent Consideration they wish to receive, shall, subject to compliance with the terms and procedures described herein, receive on the Effective Date (conditional on completion of the Arrangement) the Early Consent Consideration, which shall consist of either (i) the Early Consent Cash Consideration of 2% of the principal amount of Existing Notes held by such Early Consenting Noteholder as at the Record Date by way of immediately payable funds; or (ii) the Early Consent Warrants, based on a rate of 73.25 Early Consent Warrants for each $1,000 of principal amount of Existing Notes held by such Early Consenting Noteholder as at the Record Date, at the Early Consenting Noteholder’s option.

Early Consenting Noteholders who submit a VIEF with a vote in favour of the Arrangement Resolution prior to the Early Consent Deadline but do not indicate an election in respect of the Early Consent Consideration or do not properly complete and submit such form, will not be entitled to receive any Early Consent Consideration. Noteholders who vote against the Arrangement Resolution or do not vote at all will not be entitled to receive any Early Consent Consideration. Noteholders are urged to carefully review the VIEF attached as Appendix “D” to this Circular and the description of the method for elections set forth in this Circular under the heading “Matters Pertaining to Voting and Election of Early Consent Consideration”.

Delivery of the Early Consent Cash Consideration and Early Consent Warrants to applicable Early Consenting Noteholders under the Arrangement will be made through the facilities of CDS to CDS participants who in turn will deliver the appropriate Early Consent Consideration to the Early Consenting Noteholders pursuant to standing instructions and CDS Participant Rules and Procedures.

Early Consent Warrants

Each one Early Consent Warrant will be freely transferable in Canada and entitles the holder to purchase one common share in the capital of the Corporation at an exercise price of $0.74 per share at any time until the date that is five years from the Effective Date, after which time the Early Consent Warrant will expire and become null and void. The Early Consent Warrants will be delivered to Noteholders through the facilities of CDS and will be held in book based form and not offered in physical certificate form. Under the terms of the Arrangement, the maximum number of Early Consent Warrants issuable is 52,740,000 Early Consent Warrants, which maximum assumes every Noteholder votes in favour of the Arrangement prior to the Early Consent Deadline and elects to receive Early Consent Warrants. The Corporation knows, from the Supporting Noteholder Agreements, that some Noteholders will be electing to receive Early Consent Cash Consideration and not Early Consent Warrants.

The following summary of certain anticipated provisions of the Warrant Indenture does not purport to be complete and is subject in its entirety to the detailed provisions of the executed Warrant Indenture. Reference is made to the Warrant Indenture for the full text of the attributes of the Early Consent Warrants which, following the Effective Date (i) will be filed on SEDAR under the issuer profile of Sherritt at www.sedar.com, or (ii) may be obtained on request without charge from the Corporate Secretary of the Corporation by sending a written request to 181 Bay Street, 26th Floor, Brookfield Place, Toronto, Ontario, M5J 2T3, Telephone: (416) 924-4551.

The Warrant Indenture is expected to provide, in the event of certain alterations of the common shares of the Corporation (the “Common Shares”), that the number of Common Shares which may be acquired by a holder of Warrants upon the exercise thereof will be subject to anti-dilution provisions governed by the Warrant Indenture, including provisions for the appropriate adjustment of the class, number and price of the securities issuable under the Warrant Indenture upon the occurrence of certain events including any subdivision, consolidation, or reclassification of the shares, payment of stock dividends, or the amalgamation/merger/arrangement of the Corporation.

Under the Warrant Indenture, the Corporation will be entitled to purchase Early Consent Warrants on any stock exchange, in the open market, by private contract or otherwise and any Early Consent Warrants so purchased will be cancelled.

From time to time, the Warrant Agent and the Corporation, without the consent of the holders of the Early Consent Warrants, will be able to amend or supplement the Warrant Indenture for certain purposes, including correcting or rectifying any ambiguities, defective provisions, errors or omissions or making any change that does not prejudice the rights of the Warrant Agent or the holders of Early Consent Warrants, as a group. Any amendment or supplement to the Warrant Indenture that is prejudicial to the interests of the holders of Early Consent Warrants, as a group, will be subject to approval by an “extraordinary resolution”, which will be defined in the Warrant Indenture as a motion proposed at a meeting of holders of Early Consent Warrants called for that purpose and held in accordance with the provisions of meetings of holders of Early Consent Warrants at which there are present in person or represented by proxy holders of Early Consent Warrants holding in the aggregate at least 25% of the total number of Early Consent Warrants then outstanding as of the date of the meeting and passed by the affirmative votes of holders of Early Consent Warrants who hold in the aggregate not less than two-thirds of the total number of Early Consent Warrants represented at the meeting and voted on such motion.

The principal transfer office of the Warrant Agent in Toronto, Ontario is the location at which Early Consent Warrants may be surrendered for exercise or transfer.

Exercise of Early Consent Warrants in the United States or by U.S. Persons

The Early Consent Warrants will not be exercisable in the United States or by or on behalf of a U.S. Person or a person in the United States, nor will certificates representing the underlying Warrant Shares issuable upon exercise of the Early Consent Warrants be registered or delivered to an address in the United States, unless an exemption from registration under the U.S. Securities Act and any applicable state securities laws is available. If you are in the United States at the time you exercise the Early Consent Warrants, you must be an accredited investor (as defined in Rule 501(a) of Regulation D under the U.S. Securities Act) and will be required to provide evidence reasonably satisfactory to the Corporation that you are an accredited investor to exercise the Early Consent Warrants. Prior to the issuance of underlying Warrant Shares pursuant to any exercise of Early Consent Warrants, the Corporation also may require, in its discretion, the delivery of an opinion of counsel or other evidence reasonably satisfactory to the Corporation to the effect that the issuance of such Warrant Shares does not require registration under the U.S. Securities Act or applicable state securities laws. As a result, a Noteholder located in the United States or who is otherwise a U.S. Person may not be able to exercise the Early Consent Warrants it receives in the Arrangement. The Warrant Shares issuable upon exercise of the Early Consent Warrants and issued in the United States or to or on behalf of a U.S. Person will be restricted securities within the meaning of Rule 144(a)(3) of the U.S. Securities Act and will carry resale restrictions to the effect that such securities may only be offered, sold or otherwise transferred pursuant to certain exemptions from the registration requirements of the U.S. Securities Act. Notwithstanding the foregoing, subject to certain limitations, Warrant Shares issuable upon exercise of the Early Consent Warrants may be resold outside the United States without registration under the U.S. Securities Act pursuant to Regulation S. You should consult legal counsel or your investment advisor prior to exercising the Early Consent Warrants in the United States or otherwise transferring the Early Consent Warrants.

TSX Listing of Common Shares Issuable on the Exercise of Early Consent Warrants

The TSX has conditionally approved the listing of the Warrant Shares issuable pursuant to the exercise of the Early Consent Warrants, subject to the Corporation fulfilling all of the requirements of the TSX by August 1, 2016 (as such date may be extended by the TSX).

BACKGROUND TO AND REASONS FOR THE EXTENSION

Background to Extension

Sherritt explored a number of potential alternatives to improve its capital structure. After an extensive review, Sherritt concluded that the Extension transaction represents the best available alternative to maximize and preserve value for Sherritt and its stakeholders under the present circumstances. Sherritt entered into confidentiality agreements with certain Noteholders and holders of approximately 90% of the Existing Notes held by the Noteholders consulted by Sherritt have entered into Noteholder Support Agreements with Sherritt. In addition, on May 31, 2016, the Corporation announced in its Extension press release the repurchase of $30 million of 2018 Notes

at a discount to the outstanding principal amount, as permitted by the Existing Indenture. The Corporation completed the note repurchase on June 7, 2016, and thereby reduced the aggregate principal amount of the 2018 Notes to $220 million.

The following describes the general background to the Extension and the conditions and events that led to the Corporation’s decision to pursue the Extension. Based on the circumstances facing the Corporation, the Board believes that the Extension represents a favourable mechanism to improve its capital structure, with the objective of enhancing liquidity and treating all stakeholders in a fair and reasonable manner.

If the Extension is not completed as intended, the Corporation may revisit other potential alternatives to improve its capital structure.

Reasons for Extension

Sherritt’s Board has determined that the Extension offers substantial benefits to Sherritt and is in the best interests of the Corporation and its stakeholders.

The following is a summary of the principal reasons for the recommendation of the Board that Noteholders VOTE FOR the Extension.

· The Extension will maintain stability for Sherritt and mitigate the risk associated with an upcoming maturity while giving nickel and oil prices more time to recover.

· Noteholders who entered into confidentiality agreements with the Corporation, holding 44% of the Existing Notes, indicated prior to the public announcement of the Extension, that they support the Extension and signed the Noteholder Support Agreements.

· This option was selected after an extensive review of other alternatives.

Fairness Opinion — The Fairness Opinion concludes that as of the date thereof, and subject to the qualifications set out therein, the Extension, if implemented, is fair from a financial point of view to the Corporation.

Court Approval of Arrangement — The Arrangement is subject to a determination of the Court that the terms of the Arrangement are fair and reasonable, both procedurally and substantively.

RECOMMENDATION OF THE BOARD

The Board, after careful consideration of a number of factors and alternatives, including the foregoing Reasons for Extension and the Fairness Opinion, and upon consultation and advice with its financial advisor and outside legal counsel, determined unanimously, that the Extension is in the best interests of the Corporation and its stakeholders and the Board has unanimously determined to recommend to Noteholders that they VOTE FOR the Arrangement Resolution at the Meeting. In making its determination and recommendation, the Board relied upon legal, financial and other advice and information received during the course of its deliberations.

NBF Opinions

The Corporation retained NBF as financial advisor in connection with the Extension. NBF has delivered the Fairness Opinion to the Board, which concludes that, as of the date thereof, and subject to the qualifications set out therein, the Extension, if implemented, is fair from a financial point of view to the Corporation.

NBF also provided the Board with the CBCA Opinion in the form described in paragraph 4.04 of Industry Canada’s Policy Statement 15-1 — Policy Concerning Arrangements under Section 192 of the CBCA dated as of May 11,

2010. The CBCA Opinion concludes that as of the date thereof, and subject to the qualifications set out therein, the Noteholders and the Sherritt shareholders would each be in a better financial position, respectively, upon implementation of the Extension than if the Corporation were liquidated, as in each case, the estimated aggregate value of the securities to be held by the Noteholders and the Sherritt shareholders, respectively, following the Extension would exceed the estimated aggregate value that such Noteholders and the Sherritt shareholders would receive in a liquidation, respectively.

The full text of the NBF Opinions which set out, among other things, the assumptions made, information reviewed and matters considered by NBF in rendering the NBF Opinions, as well as the limitations and qualifications the opinions are subject to, are attached as Appendix “G” to this Circular. Noteholders are urged to read the NBF Opinions in their entirety. The summaries of the NBF Opinions in this Circular are qualified in their entirety by reference to the full text of such opinions. The NBF Opinions do not constitute a recommendation to any Noteholder as to how such Noteholder should vote with respect to the Arrangement Resolution.

Credentials of NBF

NBF is a leading Canadian investment dealer whose businesses include corporate finance, mergers and acquisitions, equity and fixed income sales and trading and investment research. The NBF Opinions are the opinions of NBF and the form and content therein has been reviewed and approved for release by a group of managing directors of NBF, each of whom is experienced in merger, acquisition, divestiture, valuation and fairness opinion matters.

MATTERS PERTAINING TO VOTING AND
ELECTIONS FOR EARLY CONSENT CONSIDERATION

Proxy Solicitation

The solicitation of proxies in respect of the Meeting will be primarily by mail, but proxies may be solicited personally or by telephone by Kingsdale, as proxy solicitation and information agent to the Corporation, and directors, officers and regular employees of the Corporation. The Corporation may also cause a soliciting dealer group to be formed, and pay customary fees for such services. The Corporation will bear all costs of this solicitation. The Corporation has arranged for Intermediaries to forward the Meeting materials to beneficial owners of the Existing Notes held of record by those Intermediaries and the Corporation may reimburse the Intermediaries for their reasonable fees and disbursements in that regard.

Voting Information and Election Form

CDS, as sole registered Noteholder is being requested to complete, execute and deliver a Voting Information and Election Form attached hereto as Appendix “D” (or such other manner of reporting total votes and elections as may be acceptable to the Indenture Trustee), which instrument shall serve as a proxy for Noteholders to vote at the Meeting as well as identify, in respect of eligible Early Consenting Noteholders, the election of Early Consent Cash Consideration or Early Consent Warrants as the form of Early Consent Consideration. The VIEF shall be completed and submitted in accordance with the instructions set forth on the form. Votes and elections in respect of Beneficial Noteholders will be required to be submitted by Intermediaries, on the Beneficial Noteholders’ behalf, in advance of the deadlines set forth on the VIEF. Noteholders are urged to carefully review the VIEF prior to completing it.

The VIEF consists of (i) a form of proxy and a vote in respect of the Arrangement Resolution; (ii) to the extent the Noteholder votes in favour of the Arrangement Resolution prior to the Early Consent Deadline, an election in respect of the Early Consent Consideration it wishes to receive; and (iii) such other terms, conditions and acknowledgements of the Noteholder in connection with the foregoing. Failure to properly complete and submit a VIEF by the Early Consent Deadline, or the failure to properly indicate an election in respect of the Early Consent Consideration, shall result in the Noteholder NOT being entitled to receive any Early Consent Consideration.

Deadlines for Eligibility to Receive Early Consent Consideration and Proxy Cut-Off

To be eligible to receive the Early Consent Consideration, CDS, as registered holder of the Existing Notes, must be in receipt of Early Consenting Noteholders’ validly submitted instructions with respect to the VIEF by the Early Consent Deadline, to enable CDS to deliver a duly completed and validly submitted VIEF (or such other aggregate reports) to the Corporation promptly thereafter, by sending to: Computershare Trust Company of Canada, 100 University Avenue, 11th Floor, Toronto, Ontario M5J 2Y1.

Votes against the Arrangement Resolution or votes in favour but without an election to Early Consent Consideration, must be duly submitted to: Computershare Trust Company of Canada, 100 University Avenue, 11th Floor, Toronto, Ontario M5J 2Y1 by no later than 10:00 a.m. (Toronto time) on July 21, 2016 (being two Business Days prior to the Meeting) or, if the Meeting is adjourned or postponed, not less than 48 hours (excluding Saturdays, Sundays and holidays) prior to any adjournments or postponements thereof. The time limit for the deposit of proxies included in the VIEF for the Meeting may be waived by the Corporation at its sole discretion without notice.

Beneficial Noteholders

The following information is of significant importance to Beneficial Noteholders who do not hold Existing Notes in their own name. Beneficial Noteholders should note that the only proxies that can be recognized and acted upon at the Meeting are those deposited by registered Noteholders (those that appear on the records of the Corporation as the registered holders of the Existing Notes).

As the Existing Notes are represented by one or more global certificates which are only registered in the name of CDS and held by CDS as custodian for Intermediaries, voting of your Existing Notes and, to the extent applicable, elections in respect of Early Consent Consideration can only be made through the facilities of CDS and effected through systems and records maintained by CDS. As a result, VIEFs can only be validly submitted by Beneficial Noteholders’ Intermediaries through the electronic book-entry system of CDS. Intermediaries are required to seek voting and election instructions from Beneficial Noteholders in advance of the Meeting and, to the extent applicable, the Early Consent Deadline. Every Intermediary has its own mailing procedures and provides its own return instructions to clients. If you are a Beneficial Noteholder and you receive these materials through your Intermediary, you should follow the instructions provided by your Intermediary in order to vote your Existing Notes and, to the extent applicable, make an election for Early Consent Consideration. Your Intermediary may have its own deadlines that are before the deadlines disclosed in this Circular.

Please contact Kingsdale, the Corporation’s solicitation and information agent, at telephone: 416-867-2272 or toll-free at 1-800-749-9197 or by email at contactus@kingsdaleshareholder.com with any questions.

It is the sole and exclusive responsibility of Beneficial Noteholders to ensure that their instructions on voting and any elections in respect of Early Consent Consideration, to the extent applicable, is then properly submitted by their Intermediary through the facilities of CDS on or before the deadlines set forth in the VIEF. The Corporation will bear no responsibility for failure of a Beneficial Noteholder or an Intermediary to deliver the instructions in respect of a VIEF to CDS prior to the deadlines set out therein.

The form of VIEF (or other method of obtaining instructions) supplied to you by your broker will be similar to the VIEF provided to registered Noteholders by the Corporation. However, its purpose is limited to instructing the Intermediary on how to vote and/or elect on your behalf. CDS will tabulate the results of all instructions received from Intermediaries and provide appropriate instructions respecting the voting of Existing Notes to be represented at the Meeting and the issuance and/or payment of the Early Consent Consideration on the Effective Date, to the extent applicable.

Determination of Validity

All questions as to the validity, form, eligibility, correctness, completeness, accuracy and timely delivery of any proxy or elections pursuant to the VIEF and any of the procedures described above, will be determined by the Corporation in its sole discretion, which determination will be final and binding. The Corporation reserves the absolute right to reject any Voting Information and Election Form determined not to be in proper form, incomplete

or containing errors and/or inaccuracies as well as to reject any elections made pursuant to such Voting Information and Election Form determined by the Corporation not to be validly made.

Such elections will not be deemed to have been validly made until all defects or irregularities in the VIEF have been cured or waived. All questions as to the validity (including time of receipt) of the VIEF will be determined by the Corporation in its sole discretion, which determination shall be final and binding. Neither the Corporation, the Intermediary nor any other person or entity is under any duty to give notification of incorrect, incomplete or inaccurate VIEFs (or other instructions) or any other defects or irregularities in any election, or will incur any liability for failure to give any such notification.

Alternate Proxyholder and/or Attendance at the Meeting

The VIEF to be delivered to Noteholders in connection with the Meeting nominates David V. Pathe or Dean Chambers, each an officer of the Corporation, as proxyholders in connection with the voting at the Meeting.

Although as a Beneficial Noteholder you may not be recognized directly at the Meeting for the purposes of voting Existing Notes registered in the name of your Intermediary, you, or a person designated by you, may attend at the Meeting as proxyholder for your Intermediary and vote your Existing Notes in that capacity.

Beneficial Noteholders who wish to appoint themselves or another person to attend the Meeting on their behalf (each, an “In-Person Noteholder”) are required to contact Kingsdale, the Corporation’s proxy solicitation and information agent, at 416-867-2272 or toll-free at 1-800-749-9197 or by email at contactus@kingsdaleshareholder.com, to request the necessary documentation required. All documentation, including but not limited to a signed VIEF and broker attestation form, will need to be completed by the In-Person Noteholder in the manner instructed by Kingsdale and delivered to the Corporation, to: Computershare Trust Company of Canada, 100 University Avenue, 11th Floor, Toronto, Ontario M5J 2Y1, by no later than (i) the Early Consent Deadline (in respect of eligible Early Consenting Noteholders making an election in respect of Early Consent Consideration); or, (ii) in all other circumstances, 10:00 a.m. (Toronto time) on July 21, 2016 or, if the Meeting is adjourned or postponed, not less than 48 hours (excluding Saturdays, Sundays and holidays) prior to any adjournments or postponements thereof. Persons appointed as proxyholders need not be Noteholders.

Voting by Proxyholder

The persons named in the VIEF will vote the Existing Notes represented thereby in accordance with the instructions on such VIEF on any ballot that may be called for. If you specify a choice with respect to any matter to be acted upon, your Existing Notes will be voted accordingly. The VIEF confers discretionary authority on the persons named therein with respect to any amendment to or variation of any matter identified therein and any other matter that properly comes before the Meeting.

Notice to Noteholders in the United States

The solicitation of proxies and the transaction contemplated in this Circular involve securities of an issuer located in Canada and are being effected in accordance with the corporate federal laws of Canada and securities laws of the provinces of Canada. The proxy solicitation rules under the securities laws of the United States are not applicable to the Corporation or this solicitation, and this solicitation has been prepared in accordance with the disclosure requirements of the securities laws of the provinces and territories of Canada. Noteholders should be aware that disclosure requirements under the securities laws of the provinces and territories of Canada differ from the disclosure requirements under United States securities laws.

The enforcement by Noteholders of civil liabilities under United States federal securities laws may be affected adversely by the fact that the Corporation is continued under the CBCA, certain of its directors and its executive officers are residents of Canada and a substantial portion of its assets and the assets of such persons are located outside the United States. Noteholders may not be able to sue a foreign company or its officers or directors in a foreign court for violations of United States federal securities laws. It may be difficult to compel a foreign company and its officers and directors to subject themselves to a judgment by a United States court.

Revocation of Votes and Elections

In addition to revocation in any other manner permitted by law, a Beneficial Noteholder who has given a proxy for a vote in respect of its Existing Notes and, to the extent applicable, an election in respect of the Early Consent Consideration may revoke it as follows:

(a) if revoking a vote in favour of the Arrangement Resolution which was submitted prior to the Early Consent Deadline together with a duly completed election in respect of the Early Consent Consideration to be received, then a revocation of both the vote and the Early Consent Consideration election will be deemed to be made by instructing your Intermediary to submit new instructions to CDS, as applicable, at any time prior to the Early Consent Deadline, which the Intermediary must then deliver to CDS prior to the Early Consent Deadline. For greater certainty, if a Noteholder elects to vote FOR the Arrangement Resolution prior to the Early Consent Deadline, it may not subsequently revoke such vote after the Early Consent Deadline has passed;

(b) if revoking or changing a duly completed election in respect of the Early Consent Consideration, then a revocation or modification of the Early Consent Consideration election will be deemed to be made by instructing your Intermediary to submit new instructions to CDS, as applicable, at any time prior to the Early Consent Deadline, which the Intermediary must then deliver to CDS prior to the Early Consent Deadline; or

(c) if revoking any other vote in respect of the Arrangement Resolution which was submitted and no election in respect of the Early Consent Consideration was made or available to be made, then a revocation of the vote will be deemed to be made (i) in respect of a change in vote by the Beneficial Noteholder, by instructing your Intermediary to submit new instructions to CDS, as applicable, at any time up to 10:00 am (Toronto time) on July 21, 2016, which the Intermediary must then deliver to CDS prior to such time, or (ii) in respect of a withdrawal of the vote (meaning a switch to having no vote made on its behalf and no action taken), a written statement from a Beneficial Noteholder’s Intermediary indicating the Beneficial Noteholder wishes to have its voting instructions revoked, which written statement must be received by the Indenture Trustee at any time up to 5:00 p.m. (Toronto time) on the last Business Day preceding the date of the Meeting or any adjournment or postponement thereof.

For greater certainty, the foregoing subparagraphs (a) through (c) shall not apply to In-Person Noteholders, and any In-Person Noteholder who wishes to effect a change or revocation of its vote or election shall contact Kingsdale and shall complete separate documentation in accordance with the instructions provided by Kingsdale for purposes thereof.

TERMS OF THE AMENDED NOTES AND AMENDED AND RESTATED INDENTURE

The following is a summary of certain of the terms of the Amended Notes and the Amended and Restated Indenture. This summary does not purport to be complete. For a complete description of the terms of the Amended Notes and the Amended and Restated Indenture, reference should be made to the Amended and Restated Indenture, the final version of which will be filed on SEDAR at www.sedar.com on or promptly following the Effective Date.

Although the key terms of the Amended Notes are settled and are described in this Circular, the Amended and Restated Indenture has not been finalized as of the date of this Circular, but will be substantially consistent (other than in respect of the extended maturity dates) with the Existing Indenture, which is filed on SEDAR at www.sedar.com. Capitalized terms used in this section and not otherwise defined shall have the meanings ascribed to them in the Existing Indenture..

Summary of Key Terms of Amended Notes

The terms of the Existing Notes, other than the maturity date thereunder and the corresponding extension of time periods under the optional redemption provisions, are unamended and continue under the Amended Notes. A summary of certain terms of the Amended Notes under the Amended and Restated Indenture are as follows:

Trustee

Computershare Trust Company of Canada (or its successors or assigns) serves as the Indenture Trustee under the Existing Indenture and shall continue to serve as Indenture Trustee for the holders of the Amended Notes under the Amended and Restated Indenture.

Principal Amount of Amended Notes

The aggregate principal amount of the Amended Notes shall be equal to the aggregate principal amount of the Existing Notes. See the heading “Delivery of Amended Notes” in this Circular.

Currency

The Amended Notes will continue to be denominated in Canadian dollars.

Interest

The interest rates on the Amended Notes will remain unchanged as follows:

(a) The Amended 2021 Notes will bear interest at 8.00% per annum, consistent with the 2018 Notes.

(b) The Amended 2023 Notes will bear interest at 7.50% per annum, consistent with the 2020 Notes.

Interest on the Amended Notes is payable semi-annually in arrears in equal instalments on (1) with respect to the Amended 2025 Notes, April 11 and October 11 of each year until maturity, (2) with respect to the Amended 2023 Notes, March 24 and September 24 of each year until maturity, and (3) with respect to the Amended 2021 Notes, May 15 and November 15 of each year until maturity.

Maturity

The Amended Notes will mature on November 15, 2021 (for the Amended 2021 Notes), September 24, 2023 (for the Amended 2023 Notes), and October 11, 2025 (for the Amended 2025 Notes), with no principal repayments prior to maturity except as contemplated in the Amended and Restated Indenture.

Optional Redemption

The time periods contemplated by the optional redemption provisions attached to the Amended Notes, as set out in the Amended and Restated Indenture, will reflect a three year extension to the time periods currently reflected in the Existing Indenture, consistent with the corresponding extensions to the maturity dates. The amended redemption provisions will be as follows:

The Amended 2021 Notes are redeemable at the option of the Corporation in whole or in part at any time and from time to time. The redemption price for any Amended 2021 Notes redeemed by the Corporation prior to November 15, 2020 shall be an amount equal to the greater of (i) the Canada Yield Price, and (ii) 100% of the aggregate principal amount of the Amended 2021 Notes being redeemed, together in each case with accrued and unpaid interest to the date fixed for redemption. Less than all of the Amended 2021 Notes may be redeemed in accordance with the Amended and Restated Indenture. The redemption price for any Amended 2021 Notes redeemed by the Corporation on or after November 15, 2020 shall be an amount equal to 100% of the aggregate

principal amount of the Amended 2021 Notes being redeemed, together with accrued and unpaid interest to the date fixed for redemption.

The Amended 2023 Notes are redeemable at the option of the Corporation in whole or in part at any time and from time to time. The redemption price for any Amended 2023 Notes redeemed by the Corporation prior to September 24, 2022 shall be an amount equal to the greater of (i) the Canada Yield Price, and (ii) 100% of the aggregate principal amount of the Amended 2023 Notes being redeemed, together in each case with accrued and unpaid interest to the date fixed for redemption. Less than all of the Amended 2023 Notes may be redeemed in accordance with the Amended and Restated Indenture. The redemption price for any Amended 2023 Notes redeemed by the Corporation on or after September 24, 2022 shall be an amount equal to 100% of the aggregate principal amount of the Amended 2023 Notes being redeemed, together with accrued and unpaid interest to the date fixed for redemption.

Except as provided below, the Amended 2025 Notes shall not be redeemable at the option of the Corporation prior to October 11, 2021.

· At any time prior to October 11, 2021, the Corporation may redeem the Amended 2025 Notes, in whole or in part, upon not less than 30 nor more than 60 days’ prior notice mailed to each Holder of the Amended 2025 Notes or otherwise in accordance with the Applicable Procedures at a redemption price equal to the greater of (A) the Canada Yield Price and (B) 101% of the aggregate principal amount of the Amended 2025 Notes, plus accrued and unpaid interest, if any, to (but excluding) the redemption date (subject to the right of the Holders of the Amended 2025 Notes of record on the relevant record date to receive interest due on an Interest Payment Date falling on or prior to such redemption date).

· Prior to October 11, 2021, the Corporation may on any one or more occasions, upon not less than 30 nor more than 60 days’ notice, redeem up to 35% of the original aggregate principal amount of the Amended 2025 Notes (calculated after giving effect to any issuance of Additional Notes of the same Series) with the Net Cash Proceeds of one or more Equity Offerings at a redemption price equal to 107.875% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to (but excluding) the applicable redemption date (subject to the right of Holders of record of the Amended 2025 Notes on the relevant record date to receive interest due on an Interest Payment Date falling on or prior to such redemption date); provided that (A) at least 65% of the original aggregate principal amount of the Amended 2025 Notes (calculated after giving effect to any issuance of Additional Notes of the same Series) remains outstanding after each such redemption; and (B) such redemption occurs within 120 days after the closing of such Equity Offering.

· In the event that Holders of not less than 90% of the aggregate principal amount of the outstanding Amended 2025 Notes accept a Change of Control Offer, and the Corporation purchases all of the Amended 2025 Notes held by such Holders, within 90 days of such purchase, the Corporation shall have the right, upon not less than 30 days’ nor more than 60 days’ prior notice, to redeem all of the Amended 2025 Notes that remain outstanding following such purchase at a redemption price equal to the Change of Control Payment plus, to the extent not included in the Change of Control Payment, accrued and unpaid interest on the Amended 2025 Notes to (but excluding) the date of redemption (subject to the right of Holders of record of the Amended 2025 Notes on the relevant record date to receive interest due on an applicable Interest Payment Date that is on or prior to the redemption date).

On and after October 11, 2021, the Corporation may redeem the Amended 2025 Notes, in whole or in part, on one or more occasions, upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as a percentage of principal amount of the Amended 2025 Notes to be redeemed) set forth below, plus accrued and unpaid interest on the Amended 2025 Notes, if any, to (but excluding) the applicable date of redemption (subject to the right of Holders of record of the Amended 2025 Notes on the relevant record date to receive interest due on an applicable Interest Payment Date falling on or prior to such redemption date), if redeemed during the 12-month period beginning on October 11 of each of the years indicated below:

Year	Percentage
2021	103.938	%
2022	101.969	%
2023 and thereafter	100.000	%

Other Terms and Conditions

The Amended Notes are a continuation of the Existing Notes in amended form and all other terms and conditions attached to the Amended Notes as contemplated by the Amended and Restated Indenture shall be the same as contemplated by the Existing Notes under the Existing Indenture. This includes all covenants in the Existing Indenture limiting the Corporation’s ability and that of certain of its material subsidiaries to incur indebtedness, create certain security interests and sell assets, and restricting its ability and that of certain of its material subsidiaries to amalgamate or merge with a third party or transfer all or substantially all of its assets.

A detailed description of all of the terms which will apply to the Amended Notes (and, except as otherwise noted above, in the same manner as the Existing Notes), is set out in Appendix “H” for ease of reference.

INFORMATION CONCERNING THE CORPORATION

Sherritt is a corporation continued under the CBCA. Sherritt’s principal and head office is located at 181 Bay Street, 26th Floor, Brookfield Place, Toronto, Ontario, M5J 2T3. Sherritt is based in Toronto, Ontario and is a leader in the mining and refining of nickel and cobalt from lateritic ores with projects and operations in Canada, Cuba and Madagascar. The Corporation is the largest independent energy producer in Cuba, with extensive oil and power operations on the island. Sherritt licenses its proprietary technologies and provides metallurgical services to mining and refining operations worldwide. The Corporation’s common shares are listed on the TSX, trading under the symbol “S”. Additional information about the Corporation is set out in the 2015 AIF, the 2015 Financial Statements and related 2015 MD&A, the 2016 Interim Financials and related 2016 Interim MD&A, and the 2016 AGM Circular.

RISK FACTORS

Risk Factors Relating to the Corporation

Certain risk factors relating to the business and securities of the Corporation are contained in the 2015 AIF, which is incorporated by reference in this Circular and which has been publicly filed on SEDAR at www.sedar.com. Noteholders should review and carefully consider the risk factors set forth in the 2015 AIF and consider all other information contained therein and herein and in the Corporation’s other public filings before determining how to vote on the Extension.

Risk Factors Relating to Non-Implementation of the Extension

Certain risk factors relating to the non-implementation of the Extension include that (a) the Corporation is not currently in a position to repay all of the Existing Notes in full on their stated maturities; (b) the Corporation may

have limited ability to raise additional capital on market terms with its current capital structure; and (c) the Corporation’s existing capital structure with existing maturities may limit the options and alternatives for the Corporation to maximize value to all stakeholders or to pursue various strategic initiatives. If the Extension is not completed as intended, the Corporation may look at other potential alternatives in order to enhance its capital structure and liquidity.

SECURITIES LAW MATTERS

Canadian Securities Law Matters

Resale of Amended Notes Received in the Extension

The issuance of the Amended Notes, the Early Consent Warrants and the Warrant Shares will be exempt from the prospectus and registration requirements under Canadian securities legislation. As a consequence of these exemptions, certain protections, rights and remedies provided by Canadian securities legislation, including statutory rights of recession or damages, will not be available in respect of the new securities to be issued under the Extension.

The Amended Notes, Early Consent Warrants and Warrant Shares will be freely transferable subject to normal securities law considerations. Noteholders are advised to seek legal advice prior to any resale of the new securities.

United States Securities Law Matters

The Early Consent Warrants will not be exercisable in the United States or by or on behalf of a U.S. Person or a person in the United States, nor will certificates representing the underlying Warrant Shares issuable upon exercise of the Early Consent Warrants be registered or delivered to an address in the United States, unless an exemption from registration under the U.S. Securities Act and any applicable state securities laws is available. If you are in the United States at the time you exercise the Early Consent Warrants, you must be an accredited investor (as defined in Rule 501(a) of Regulation D under the U.S. Securities Act) and will be required to provide evidence reasonably satisfactory to the Corporation that you are an accredited investor to exercise the Early Consent Warrants. Prior to the issuance of underlying Warrant Shares pursuant to any exercise of Early Consent Warrants, the Corporation also may require, in its discretion, the delivery of an opinion of counsel or other evidence reasonably satisfactory to the Corporation to the effect that the issuance of such Warrant Shares does not require registration under the U.S. Securities Act or applicable state securities laws. As a result, a Noteholder located in the United States or who is otherwise a U.S. Person may not be able to exercise the Early Consent Warrants it receives in the Arrangement. The Warrant Shares issuable upon exercise of the Early Consent Warrants and issued in the United States or to or on behalf of a U.S. Person will be restricted securities within the meaning of Rule 144(a)(3) of the U.S. Securities Act and will carry resale restrictions to the effect that such securities may only be offered, sold or otherwise transferred pursuant to certain exemptions from the registration requirements of the U.S. Securities Act. Notwithstanding the foregoing, subject to certain limitations, Warrant Shares issuable upon exercise of the Early Consent Warrants may be resold outside the United States without registration under the U.S. Securities Act pursuant to Regulation S. You should consult legal counsel or your investment advisor prior to exercising the Early Consent Warrants in the United States or otherwise transferring the Early Consent Warrants.

Stock Exchange Listing for the Warrant Shares

The TSX has conditionally approved the listing of the Warrant Shares issuable pursuant to the Early Consent Warrants subject to the Corporation fulfilling all of the requirements of the TSX by August 1, 2016 (as such date may be extended by the TSX).

CERTAIN CANADIAN FEDERAL INCOME TAX CONSIDERATIONS

The following summary fairly describes the principal Canadian federal income tax considerations under the Income Tax Act (Canada) (the “Tax Act”) generally applicable as of the date hereof to a holder who participates in the Arrangement and who, for purposes of the Tax Act and at all relevant times, holds and will hold his or her Existing Notes and Amended Notes acquired under the Arrangement as capital property, deals at arm’s length with, and is not affiliated with, the Corporation. A holder who meets all of the foregoing requirements is referred to herein as a “Noteholder”, and this summary only addresses such Noteholders.

Existing Notes and Amended Notes will generally be considered to be capital property of a Noteholder provided such Noteholder does not use or hold and is not deemed to use or hold such securities in carrying on a business or in an adventure in the nature of trade. Certain Noteholders whose securities might not otherwise qualify as capital property may, in certain circumstances, be able to make an irrevocable election in accordance with subsection 39(4) of the Tax Act to deem such Existing Notes and Amended Notes, and all other Canadian securities (within the meaning of the Tax Act) owned by such Noteholders in the taxation year of the election and in all subsequent taxation years, to be capital property. Noteholders to whom this election may be relevant should consult with their own tax advisors with respect to all applicable implications in their particular circumstances.

This summary does not apply to a Noteholder (a) that is a financial institution for purposes of the mark to market rules in the Tax Act; (b) that is a specified financial institution for purposes of the Tax Act; (c) an interest in which would be a tax shelter investment within the meaning of the Tax Act; or (d) that has elected under the Tax Act to determine his or her Canadian tax results in a currency other than Canadian currency. Any such persons should contact their own tax advisors with respect to the tax consequences of the Arrangement to them. In addition, this summary does not deal with the circumstances of traders or dealers and does not address other special circumstances.

This summary applies only to Noteholders (as defined above) who, for purposes of the Tax Act and at all relevant times, are or are deemed to be resident in Canada and who participate in the Arrangement. Noteholders who meet these requirements are referred to in this portion of the summary as “Resident Noteholders”, and this portion of the summary only addresses such Resident Noteholders.

This summary is based on the current provisions of the Tax Act and the regulations thereunder (the “Regulations”), all specific proposals to amend the Tax Act or the Regulations that have been publicly announced by or on behalf of the Minister of Finance (Canada) prior to the date hereof (the “Proposed Amendments”), and our understanding of the current published administrative and assessing practices and policies of the Canada Revenue Agency (“CRA”). This summary assumes that the Proposed Amendments will be enacted in the form proposed and does not take into account or anticipate any other changes in law or administrative policy, whether by way of judicial, legislative or governmental decision or action, nor does it take into account provincial, territorial or foreign tax considerations, which may differ significantly from those discussed in this summary. No assurance can be given that the Proposed Amendments will be enacted as currently proposed or at all, or that legislative, judicial or administrative changes will not modify or negate the statements expressed in this summary.

This summary is of a general nature only and is not exhaustive of all possible Canadian federal income tax considerations applicable to the Arrangement. The tax consequences of the Arrangement will vary according to the status of the holder, the jurisdiction in which the holder resides or carries on business, and the holder’s own particular circumstances. This summary is not intended to be, nor should it be construed to be, legal or tax advice to any particular holder and no representations with respect to the income tax consequences of the Arrangement to any particular holder is made. All holders (including Noteholders as defined above) should obtain independent advice from their own tax advisors regarding the tax considerations to them of the Arrangement having regard to their own particular circumstances.

Amendment of Existing Notes

It is not certain whether or not the Extension will result in a disposition of the Existing Notes for Canadian tax purposes. Canadian jurisprudence has held that the amendment of fundamental terms of a debt instrument can result in the creation of a new debt obligation in certain circumstances. There can be no assurance that the CRA would not treat the Extension as a disposition of the Existing Notes, or that a Canadian court would agree with the CRA’s position. Each Resident Noteholder should consult its own tax advisor regarding the proper treatment of the Extension for Canadian tax purposes.

In the event that the Extension does not result in a disposition of the Existing Notes, a Resident Noteholder will not be considered to have disposed of any property for tax purposes, and no capital gain or loss will be realized at the time the Extension becomes effective.

In the event that the Extension does result in a disposition of the Existing Notes, a Resident Noteholder will be deemed to have received proceeds of disposition equal to the fair market value of the Existing Notes owned by the Resident Noteholder at the Effective Time. The Resident Noteholder will recognize a capital gain on the disposition equal to the amount by which the Resident Noteholder’s proceeds of disposition, net of any reasonable costs of disposition, are greater than the adjusted cost base to the Resident Noteholder of the Existing Notes owned at the Effective Time. The cost of the Amended Notes to the Resident Noteholder immediately after the Effective Time will be equal to the fair market value of the Amended Notes at such time. If and to the extent that the fair market value of the Amended Notes received by a Resident Holder is less than the adjusted cost base to the Resident Holder of the Existing Notes exchanged for Amended Notes, the loss otherwise realized will generally be denied for purposes of the Tax Act and will instead be added in computing the Resident Noteholder’s adjusted cost base of the Amended Notes so received.

Early Consent Consideration

While the treatment of the receipt of the Early Consent Consideration is not entirely clear under the Tax Act, a Resident Noteholder who receives the Early Consent Consideration should generally be required to include the amount of such Early Consent Consideration in computing the income of the Resident Noteholder for the taxation year in which such Early Consent Consideration is received. Where the Early Consent Consideration is satisfied through the issuance of Early Consent Warrants, the Early Consent Consideration received should be considered to be the fair market value of such Early Consent Warrants at the time of such receipt.

EXPERTS

Certain Canadian legal matters relating to matters described in this Circular are to be passed upon by Goodmans LLP on behalf of the Corporation. Certain U.S. securities law matters relating to matters described in this Circular are to be passed upon by Torys LLP on behalf of the Corporation. Certain matters relating to the CBCA Opinion described in this Circular are to be passed upon by NBF. As at June 15, 2016, the partners and associates of Goodmans LLP, Torys LLP and NBF, each beneficially owned, directly or indirectly, less than 1% of the outstanding Existing Notes.

INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED UPON

No director or executive officer of the Corporation, or any person who has held such a position since the beginning of the last completed financial year end of the Corporation, nor any associate or affiliate of the foregoing persons, has any substantial or material interest, direct or indirect, by way of beneficial ownership of securities or otherwise, in any matter to be acted on at the Meeting.

OTHER BUSINESS

The Board is not aware of any matters intended to come before the Meeting other than those items of business set forth in the attached Notice of Meeting of Noteholders accompanying this Circular. If any other matters properly come before the Meeting, it is the intention of the persons named in the Proxy to vote in respect of those matters in accordance with their judgment.

ADDITIONAL INFORMATION

Financial information for the Corporation’s most recently completed financial year is provided in the Corporation’s 2015 Financial Statement and 2015 MD&A, and the 2016 Interim Financials and related 2016 Interim MD&A. Copies of these documents, the 2015 AIF, the 2016 AGM Circular and this Circular are available upon written request from the Corporate Secretary of Sherritt at 181 Bay Street, 26th Floor, Brookfield Place, Toronto, Ontario, M5J 2T3, Telephone: (416) 924-4551 and are also available electronically on SEDAR at www.sedar.com.

APPROVAL OF BOARD OF DIRECTORS

The contents and sending of this Circular and its distribution to Noteholders have been approved by the Board of Directors.

DATED at Toronto, Ontario, this 15th day of June, 2016.

SHERRITT INTERNATIONAL CORPORATION

BY ORDER OF THE BOARD OF DIRECTORS

(signed) “David Pathe”
David Pathe
Chief Executive Officer

CONSENT OF NATIONAL BANK FINANCIAL INC.

We hereby consent to the inclusion of our firm’s name and to the references to (i) our firm’s opinion dated June 10, 2016 in the form described in paragraph 4.04 of Industry Canada’s Policy Statement 15-1 — Policy Concerning Arrangements under Section 192 of the Canada Business Corporations Act (the “CBCA Opinion”); and (ii) our firm’s opinion dated June 10, 2016 with respect to the fairness, from a financial point of view, of the Extension to the Corporation (the “Fairness Opinion”), in the management information circular of Sherritt International Corporation (the “Corporation”) dated June 10, 2016 (the “Circular”) and to the inclusion of the CBCA Opinion and Fairness Opinion in their entirety and summaries thereof in the Circular and to the filings thereof, as necessary, by the Corporation with the Director and with the securities regulatory authorities in each province and territory of Canada. In providing our consent herein, we do not intend that any person other than the Board shall rely upon such opinion.

Toronto, Ontario	(signed) “National Bank Financial Inc.”
June 15, 2016

APPENDIX A

ARRANGEMENT RESOLUTION

BE IT RESOLVED THAT:

1. the arrangement (as the same may be, or may have been, amended, modified or supplemented, the “Arrangement”) pursuant to Section 192 of the Canada Business Corporations Act (the “CBCA”) of Sherritt International Corporation (the “Corporation”) and involving Sherritt International Oil and Gas Limited, Nickel Metal Marketing Inc., Sherritt International (Bahamas) Inc., Sherritt Power (Bahamas) Inc., Sherritt International (Cuba) Oil and Gas Limited, Sherritt Utilities Inc., Canada Northwest Oils (Europe) B.V., and CNWL Oil (Espana) S.A. (collectively, the “Guarantors”) as more particularly described and set forth in the Plan of Arrangement (the “Plan”) set forth in Appendix “B” to the management information circular of the Corporation dated June 15, 2016 (the “Circular”), is hereby authorized, approved and adopted;

2. the arrangement agreement (as the same may be, or may have been, amended, modified or supplemented, the “Arrangement Agreement”) dated June 15, 2016 between the Corporation and the Guarantors as described in the Circular, is hereby authorized and approved and the actions of the Board of Directors in approving the Arrangement Agreement and the Arrangement and the actions of the Board of Directors in executing and delivering the Arrangement Agreement and causing the performance by the Corporation of its obligations thereunder, are hereby authorized, ratified and approved;

3. notwithstanding the passing of this resolution, the Board of Directors of the Corporation, without further notice to, or approval of, the Noteholders of the Corporation, are hereby authorized and empowered to (A) amend the Plan and Arrangement Agreement, to the extent permitted by the Plan and Arrangement Agreement and (B) subject to the terms of the Plan and Arrangement Agreement, determine not to proceed with the Arrangement at any time prior to the Arrangement becoming effective pursuant to the provisions of the CBCA;

4. any director or officer of the Corporation be and is hereby authorized and directed, for and on behalf of the Corporation (whether under corporate seal or otherwise), to execute and deliver, or cause to be executed, under the seal of the Corporation or otherwise, and delivered articles of arrangement and any and all other documents, agreements and instruments and to perform, or cause to be performed by, such other acts and things, as in such person’s opinion may be necessary or desirable to give full effect to these resolutions and the matters authorized hereby, including the transactions required and/or contemplated by the Arrangement, such determination to be conclusively evidenced by the execution and delivery of such documents, agreements or other instruments or the doing of any such act or thing; and

5. the proper officers and authorized signatories of Computershare Trust Company of Canada be and are hereby authorized and directed to execute and deliver all documents and instruments and to take such other actions as they may deem necessary or desirable to implement these resolutions and the matters authorized hereby, including the transactions required and/or contemplated by the Arrangement, such determination to be conclusively evidenced by the execution and delivery of such documents or other instruments or the taking of such actions.

A-1

APPENDIX B

PLAN OF ARRANGEMENT

SEE ATTACHED

B-1

Court File No. CV-16-11426-00CL

ONTARIO SUPERIOR COURT OF JUSTICE
COMMERCIAL LIST

IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS AMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE

AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF SHERRITT INTERNATIONAL CORPORATION AND INVOLVING SHERRITT INTERNATIONAL OIL AND GAS LIMITED, NICKEL METAL MARKETING INC., SHERRITT INTERNATIONAL (BAHAMAS) INC., SHERRITT POWER (BAHAMAS) INC., SHERRITT INTERNATIONAL (CUBA) OIL AND GAS LIMITED, SHERRITT UTILITIES INC., CANADA NORTHWEST OILS (EUROPE) B.V., AND CNWL OIL (ESPANA) S.A.

SHERRITT INTERNATIONAL CORPORATION

Applicant

PLAN OF ARRANGEMENT

July ·, 2016

B-2

TABLE OF CONTENTS

		Page

ARTICLE 1 INTERPRETATION		1
Section 1.1	Definitions	1
Section 1.2	Currency	5
Section 1.3	Articles of Reference	5
Section 1.4	Interpretation Not Affected by Headings	5
Section 1.5	Date for Any Action	5
Section 1.6	Time	5
Section 1.7	Number, Etc.	5
Section 1.8	Statutory References	6
Section 1.9	Successors and Assigns	6
Section 1.10	Governing Law	6

ARTICLE 2 TREATMENT OF NOTEHOLDERS		6
Section 2.1	Treatment of Noteholders	6

ARTICLE 3 ARRANGEMENT		7
Section 3.1	Articles of Arrangement and Effective Date	7
Section 3.2	Binding Effect	7
Section 3.3	Steps of the Arrangement	7
Section 3.4	Other Steps	8
Section 3.5	Fractional Interests	8
Section 3.6	Calculations	8
Section 3.7	Delivery Procedures	9

ARTICLE 4 CONDITIONS PRECEDENT TO PLAN IMPLEMENTATION		9
Section 4.1	Conditions Precedent	9
Section 4.2	Waiver of Conditions	10
Section 4.3	Implementation Provisions	10

ARTICLE 5 MISCELLANEOUS		10
Section 5.1	Amendments to this Plan	10
Section 5.2	Consents, Waivers and Agreements	11
Section 5.3	Paramountcy	11
Section 5.4	Deeming Provisions	11
Section 5.5	Notices	11
Section 5.6	Further Assurances	13

SCHEDULE A ARRANGEMENT RESOLUTION

SCHEDULE B INDENTURE AMENDMENTS

B-3

ARTICLE 1
INTERPRETATION

Section 1.1 Definitions.

In this Plan, unless otherwise stated:

(a) “2018 Notes” means the 8.00% senior unsecured debentures under the Existing Indenture issued by the Company due November 15, 2018;

(b) “2020 Notes” means the 7.50% senior unsecured debentures under the Existing Indenture issued by the Company due September 24, 2020;

(c) “2022 Notes” means 7.875% senior unsecured notes under the Existing Indenture issued by the Company due October 11, 2022;

(d) “Amended 2021 Notes” means the 2018 Notes, as amended, due November 15, 2021 to be issued by the Company under the Amended and Restated Indenture in exchange for the 2018 Notes pursuant to this Plan;

(e) “Amended 2023 Notes” means the 2020 Notes, as amended, due September 24, 2023 to be issued by the Company under the Amended and Restated Indenture in exchange for the 2020 Notes pursuant to this Plan;

(f) “Amended 2025 Notes” means the 2022 Notes due October 11, 2025 to be issued by the Company under the Amended and Restated Indenture in exchange for the 2022 Notes pursuant to this Plan;

(g) “Amended and Restated Indenture” means the amended and restated Existing Indenture to be entered into between the Company, the Guarantors and the Indenture Trustee on the Effective Date, which shall govern the Amended Notes, and replace the Existing Indenture upon this Plan becoming effective on the Effective Date, which Amended and Restated Indenture shall include the Indenture Amendments;

(h) “Amended Notes” means collectively the Amended 2021 Notes, the Amended 2023 Notes and the Amended 2025 Notes;

(i) “Applicable Law” means any law, statute, order, decree, judgment, rule, regulation, ordinance or other pronouncement having the effect of law whether in Canada, the United States or any other country, or any domestic or foreign state, county, province, city or other political subdivision of any Governmental Entity, and includes any securities or stock exchange rules or regulations;

(j) “Arrangement” means the arrangement under Section 192 of the CBCA, on the terms and subject to the conditions set forth in this Plan;

(k) “Arrangement Agreement” means the arrangement agreement dated June 15, 2016 among the Company and each of the Guarantors, as it may be amended, modified,

B-4

supplemented and/or restated from time to time, pursuant to which such parties have agreed to implement the steps required to complete the Arrangement;

(l) “Arrangement Proceedings” means the Court proceedings under the CBCA with respect to the Arrangement;

(m) “Arrangement Resolution” means the resolution of the Noteholders to authorize, adopt and approve the Arrangement and this Plan to be considered and voted upon at the Meeting, in substantially the form attached hereto as Schedule “A”;

(n) “Articles of Arrangement” means the articles of arrangement of the Company in respect of the Arrangement that are required to be filed with the Director after the Final Order is made in order for the Arrangement to become effective on the Effective Date;

(o) “Business Day” means a day, other than a Saturday or a Sunday, on which commercial banks are generally open for business in Toronto, Ontario;

(p) “CBCA” means the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as now in effect and as it may be amended from time to time prior to the Effective Date;

(q) “CDS” means CDS Clearing and Depository Services Inc. and its successors and assigns;

(r) “Certificate of Arrangement” means the certificate of arrangement to be issued by the Director giving effect to this Plan;

(s) “Circular” means the Management Information Circular of the Company dated as of June 15, 2016, including all appendices thereto, as it may be amended, restated or supplemented from time to time, regarding, inter alia, the Arrangement, distributed to Noteholders in connection with the Meeting;

(t) “Company” means Sherritt International Corporation;

(u) “Computershare” means Computershare Trust Company of Canada;

(v) “Court” means the Ontario Superior Court of Justice (Commercial List);

(w) “Director” means the Director appointed under Section 260 of the CBCA;

(x) “Early Consent Cash Consideration” means a cash consent fee of 2% of the principal amount of Existing Notes owned by an Early Consenting Noteholder as at the Record Date;

(y) “Early Consent Consideration” means, collectively, the Early Consent Cash Consideration and the Early Consent Warrants;

(z) “Early Consent Deadline” means 5:00 p.m. (Toronto time) on July 19, 2016, or such other later date as the Company made determine in its sole discretion;

B-5

(aa) “Early Consenting Noteholder” means a Noteholder on the Record Date that has voted its Existing Notes in favour of the Arrangement and delivered its duly completed Election Documents on or prior to the Early Consent Deadline in accordance with this Plan;

(bb) “Early Consent Warrants” means warrants of the Company issued pursuant to the Warrant Indenture with the terms substantially as described in the Circular;

(cc) “Effective Date” means the date shown on the Certificate of Arrangement issued by the Director under the CBCA;

(dd) “Effective Time” means such time on the Effective Date as may be specified in writing by the Company as the time at which the Arrangement implementation steps set forth in Section 3.1 shall be deemed to commence;

(ee) “Election Documents” has the meaning given to such term in Section 3.3(e);

(ff) “Entitlements” means the legal, equitable, contractual and any other rights or claims (whether actual or contingent, and whether or not previously asserted) of any Person with respect to or arising out of, or in connection with the Existing Notes or the Existing Indenture other than those created hereunder;

(gg) “Existing Indenture” means the amended and restated indenture in respect of the Existing Notes dated as of October 10, 2014 among the Company, the Guarantors and the Indenture Trustee, as it may be further amended, modified or supplemented from time to time;

(hh) “Existing Notes” means collectively the 2018 Notes, the 2020 Notes and the 2022 Notes;

(ii) “Final Order” means the final order of the Court approving this Plan as such order may be amended at any time prior to the Effective Date or, if appealed, then unless such appeal is withdrawn or denied, as affirmed or amended on appeal;

(jj) “Governmental Entity” means any government, regulatory authority, governmental department, agency, commission, bureau, official, minister, court, board, tribunal or dispute settlement panel or other law, rule or regulation-making organization or entity: (i) having or purporting to have jurisdiction on behalf of any nation, province, territory or state or any other geographic or political subdivision of any of them; or (ii) exercising, or entitled or purporting to exercise any administrative, executive, judicial, legislative, policy, regulatory or taxing authority or power;

(kk) “Guarantors” means collectively Sherritt International Oil and Gas Limited, Nickel Metal Marketing Inc., Sherritt International (Bahamas) Inc., Sherritt Power (Bahamas) Inc., Sherritt International (Cuba) Oil and Gas Limited, Sherritt Utilities Inc., Canada Northwest Oils (Europe) B.C., and CNWL Oil (Espana) S.A.;

(ll) “Indenture Amendments” has the meaning given to such term in Section 2.1(a);

(mm) “Indenture Trustee” means Computershare as trustee under the Existing Indenture and under the Amended and Restated Indenture, as applicable;

B-6

(nn) “Interim Order” means the interim order of the Court dated June 15, 2016 pursuant to Section 192 of the CBCA, as such order may be amended at any time prior to the Effective Date or, if appealed, then unless such appeal is withdrawn or denied, as affirmed or amended on appeal;

(oo) “Majority Supporting Noteholders” means Supporting Noteholders (or their permitted assigns) that hold in the aggregate not less than a majority of the aggregate principal amount of the Existing Notes which are Relevant Securities (as defined in the Noteholder Support Agreement) as at May 30, 2016;

(pp) “Meeting” means the meeting of the Noteholders to be held on the Meeting Date in accordance with the Interim Order to consider and, if deemed advisable, approve the Arrangement Resolution and to consider such other matters as may properly come before such meeting, and any adjournment(s) or postponement(s) thereof;

(qq) “Meeting Date” means July 25, 2016, subject to any postponement or adjournment of that date pursuant to the Interim Order or other Order of the Court;

(rr) “Noteholder Support Agreement” means collectively the consent and support agreements (including all schedules attached thereto) among the Company and the Supporting Noteholders (including by way of Acknowledgement Agreements (as defined in the Noteholder Support Agreement)), pursuant to which the Supporting Noteholders have agreed to, among other things, support the Arrangement and vote in favour of this Plan, substantially in the form posted by the Company on SEDAR on May 31, 2016, as may be amended, modified or supplemented pursuant to the terms thereof;

(ss) “Noteholders” means the holders of the Existing Notes;

(tt) “Order” means any order of the Court in these proceedings including, without limitation, the Interim Order and the Final Order;

(uu) “Outside Date” has the meaning given to such term in the Noteholder Support Agreement, including as it may be extended pursuant to the terms of the Noteholder Support Agreement;

(vv) “Person” means any individual, firm, partnership, limited partnership, joint venture, fund, association, trust, trustee, executor, administrator, legal personal representative, estate, group, body corporate (including a limited liability company and an unlimited liability company), corporation, unincorporated association or organization, Governmental Entity, syndicate or other entity, whether or not having legal status;

(ww) “Plan” means this plan of arrangement pursuant to Section 192 of the CBCA, as may be amended, modified, or varied pursuant to the terms hereof;

(xx) “Record Date” means June 15, 2016;

(yy) “Sherritt Parties” means collectively the Company and the Guarantors;

B-7

(zz) “Supporting Noteholders” means those Noteholders that have entered into the Noteholder Support Agreement, including by way of an Acknowledgement Agreement (as defined in the Noteholder Support Agreement), as of May 30, 2016;

(aaa) “Voting Information and Election Form” means the form of voting information and consent election to be completed by Noteholders, substantially in the form attached as Appendix “D” to the Circular; and

(bbb) “Warrant Indenture” means the warrant indenture between the Company and CST Trust Company, as warrant agent, or such other warrant agent as may be determined by the Company on or prior to the Effective Date, to be dated the Effective Date pursuant to which the Early Consent Warrants will be issued pursuant to this Plan.

Section 1.2 Currency

Unless otherwise stated, all monetary amounts contained herein are expressed in Canadian dollars.

Section 1.3 Articles of Reference.

The terms “hereof”, “hereunder”, “herein” and similar expressions refer to this Plan and not to any particular article, section, subsection, clause or paragraph of this Plan and include any amended or restated Plan supplemental hereto. In this Plan, a reference to an article, section, subsection, clause or paragraph shall, unless otherwise stated, refer to an article, section, subsection, clause or paragraph of this Plan.

Section 1.4 Interpretation Not Affected by Headings.

The division of this Plan into articles, sections, subsections, clauses and paragraphs and the insertion of a table of contents and headings are for convenience of reference only and shall not affect the construction or interpretation of this Plan.

Section 1.5 Date for Any Action.

In the event that any date on which any action is required to be taken hereunder is not a Business Day, such action shall be required to be taken on the next succeeding day which is a Business Day.

Section 1.6 Time.

All times expressed herein are local time in Toronto, Ontario, Canada unless otherwise stipulated.

Section 1.7 Number, Etc.

In this Plan, where the context requires, a word or words importing the singular number shall include the plural and vice versa; and a word or words importing gender shall include all genders.

B-8

Section 1.8 Statutory References.

Except as provided herein, any reference in this Plan to a statute includes all rules, regulations, policies and blanket orders made thereunder and any and all amendments thereto in force from time to time.

Section 1.9 Successors and Assigns.

This Plan shall be binding upon and shall enure to the benefit of the heirs, administrators, executors, legal personal representatives, successors and assigns of any Person named or referred to in this Plan.

Section 1.10 Governing Law.

This Plan shall be governed by and construed in accordance with the laws of Ontario and the federal laws of Canada applicable therein. All questions as to the interpretation or application of this Plan and all proceedings taken in connection with this Plan shall be subject to the exclusive jurisdiction of the Court.

ARTICLE 2
TREATMENT OF NOTEHOLDERS

Section 2.1 Treatment of Noteholders.

(a) On the Effective Date, and in accordance with the steps and in the sequence set forth in Section 3.3, the Existing Indenture shall be amended and restated as the Amended and Restated Indenture, which Amended and Restated Indenture shall include the following amendments (the “Indenture Amendments”):

(i) Section 3.07 of the Existing Indenture shall be amended to extend each of the applicable dates set out in Section 3.07 of the Existing Indenture relating to the optional redemptions permitted for each series of Existing Notes under the Existing Indenture by a period of three years in respect of each series of Amended Notes, as set out in Schedule “B” hereto, together with conforming changes to applicable defined terms referenced in or applicable to Section 3.07 of the Existing Indenture; and

(ii) such other amendments as may be agreed by the Company and the Majority Supporting Noteholders prior to the Effective Date, subject to the terms and conditions of the Noteholder Support Agreement.

(b) On the Effective Date, and in accordance with the steps and in the sequence set forth in Section 3.3, the Existing Notes shall be amended to reflect the extension of the maturity dates by three years and the Indenture Amendments, the Company shall issue (or cause to be issued) the Amended Notes to the Noteholders, and the Noteholders shall and shall be deemed to irrevocably and finally exchange their Existing Notes for the Amended Notes on the Effective Date, provided however that the Existing Notes shall not be redeemed, acquired, cancelled, disposed of or extinguished but shall continue in the form of the Amended Notes, and the issuance of the Amended Notes pursuant to the Amended and

B-9

Restated Indenture in exchange of the Existing Notes is not intended to result in a novation or the issuance of new indebtedness of the Company, but rather the same indebtedness as evidenced by the Existing Notes will continue to exist, with full force and effect, in amended form, under the Amended Notes and the Amended and Restated Indenture.

(c) On the Effective Date, or soon as practicable thereafter, in accordance with the steps and in the sequence set forth in Section 3.3 and subject to the delivery procedures set forth in Section 3.7, the Early Consenting Noteholders shall be paid their Early Consent Consideration.

ARTICLE 3
ARRANGEMENT

Section 3.1 Articles of Arrangement and Effective Date.

The Certificate of Arrangement shall implement this Plan. As soon as practicable after the satisfaction or waiver of the conditions set forth in Article 4 (excluding conditions that, by their terms, cannot be satisfied until the Effective Date, but subject to the satisfaction of those conditions as of the Effective Date), unless another time or date is agreed to in writing among the Company and the Majority Supporting Noteholders, the Articles of Arrangement shall be filed by the Company with the Director.

Section 3.2 Binding Effect.

This Plan will become effective as of, and be binding as of and after, the Effective Time on: (i) the Sherritt Parties; (ii) the Noteholders; (iii) the holders of any Entitlements with respect to, arising out of or in connection with the Existing Notes and/or the Existing Indenture; and (iv) the Indenture Trustee.

Section 3.3 Steps of the Arrangement.

Starting at the Effective Time, the following shall be deemed to occur, in the following order without any further act or formality:

(a) The Company, the Guarantors and the Indenture Trustee shall enter into the Amended and Restated Indenture, which shall amend and restate the Existing Indenture to reflect the Indenture Amendments as of the Effective Date.

(b) The 2018 Notes shall be amended and shall be and shall be deemed to be irrevocably and finally exchanged for the Amended 2021 Notes.

(c) The 2020 Notes shall be amended and shall be and shall be deemed to be irrevocably and finally exchanged for the Amended 2023 Notes.

(d) The 2022 Notes shall be amended and shall be and shall be deemed to be irrevocably and finally exchanged for the Amended 2025 Notes.

B-10

(e) The Company shall pay (or cause to be paid) the Early Consent Consideration to the Early Consenting Noteholders in accordance with the applicable elections made by the Early Consenting Noteholders under their Noteholder Support Agreements and/or their Voting Information and Election Forms (collectively, the “Election Documents”), subject in each case to the satisfaction of the applicable terms and conditions set out in this Plan and the applicable Election Documents in connection with the receipt of Early Consent Consideration by the Early Consenting Noteholder, as follows:

(i) the Company shall pay (or cause to be paid) to each Early Consenting Noteholder that elected to receive Early Consent Cash Consideration its applicable Early Consent Cash Consideration by way of immediately payable funds; and

(ii) the Company shall issue (or cause to be issued) to each Early Consenting Noteholder that elected to receive Early Consent Warrants 73.25 Early Consent Warrants for each $1,000 of principal amount of Existing Notes held by such Early Consenting Noteholder as at the Record Date,

pursuant to the delivery procedures set forth in Section 3.7.

Notwithstanding the completion of the steps set out in this Section 3.3, including the entering into of the Amended and Restated Indenture and the issuance of the Amended Notes in exchange of the Existing Notes, the Existing Notes shall not be redeemed, acquired, cancelled, disposed of or extinguished but shall continue in the form of the Amended Notes, and the issuance of the Amended Notes pursuant to the Amended and Restated Indenture in exchange of the Existing Notes is not intended to result in a novation or the issuance of new indebtedness of the Company, but rather the same indebtedness as evidenced by the Existing Notes will continue to exist, with full force and effect, in amended form, under the Amended Notes and the Amended and Restated Indenture.

Section 3.4 Other Steps.

The Company and the Guarantors may undertake, at their sole discretion, any other corporate steps or transactions necessary to implement this Plan in a manner and on a date and time determined by the Company in its sole discretion.

Section 3.5 Fractional Interests.

No fractional Early Consent Warrants will be issued under this Plan. Any fractional Early Consent Warrants that would otherwise have been issued shall be rounded down to the nearest whole number.

Section 3.6 Calculations.

All amounts of consideration to be received under this Plan shall be calculated to the nearest cent ($.01) or to the nearest tenth of one percent (0.10), as applicable. All calculations and determinations made by the Company for the purposes of this Plan shall be conclusive, final and binding upon all Persons affected by this Plan.

B-11

Section 3.7 Delivery Procedures.

(a) The delivery of the Amended Notes to the Noteholders under this Plan shall be made by way of a global note issued to CDS (or its nominee) in respect of each of the Amended 2021 Notes, Amended 2023 Notes and Amended 2025 Notes and delivered directly to CDS which, in turn, will make delivery of such Amended Notes to the Noteholders pursuant to the standing instructions and customary practices of CDS.

(b) The delivery of the Early Consent Consideration under this Plan shall be made by way of delivery to CDS (or its nominee) of, or instructions to CDS (or its nominee) to issue, the applicable Early Consent Consideration, and CDS, in turn, will make delivery of such Early Consent Consideration to the Early Consenting Noteholders pursuant to the customary practices of CDS on the Effective Date or as soon as practicable thereafter.

(c) The Sherritt Parties shall have no liability or obligation in respect of deliveries of the Amended Notes or Early Consent Consideration from CDS to the Noteholders.

ARTICLE 4
CONDITIONS PRECEDENT TO PLAN IMPLEMENTATION

Section 4.1 Conditions Precedent.

The implementation of this Plan shall be conditional upon the fulfilment, satisfaction or waiver (in accordance with Section 4.2) of the following conditions precedent:

(a) the Arrangement Agreement shall be in full force and effect and shall have not been terminated by the Sherritt Parties;

(b) this Plan, the structure of the Arrangement and the steps required to complete the Arrangement shall be consistent with the terms of the transaction described in the Noteholder Support Agreement in all materials respects, as may be amended, modified, varied and/or supplemented pursuant to the terms of the Noteholder Support Agreement;

(c) this Plan shall have been approved by the Noteholders as and to the extent required in the Interim Order, by Applicable Law or as otherwise ordered by the Court;

(d) this Plan shall have been approved by the Court pursuant to the Final Order and the Final Order shall be in full force and effect, and binding with no appeal or motion to vary or amend outstanding in respect thereof and all such appeals and motions finally determined;

(e) all material filings under Applicable Law shall have been made and any regulatory consents or approvals that are required in connection with the Arrangement shall have been obtained and, in the case of waiting or suspensory periods, such waiting or suspensory periods shall have expired or been terminated;

(f) there shall not be in effect any preliminary or final decision, order or decree by a Governmental Entity, no application shall have been made to any Governmental Entity, and no action or investigation shall have been announced, threatened or commenced by

B-12

any Governmental Entity, in consequence of or in connection with the Arrangement that restrains, impedes or prohibits (or if granted could reasonably be expected to restrain, impede or inhibit), the Arrangement or any part thereof or requires or purports to require a variation of the Arrangement;

(g) all applicable regulatory and judicial consents, and any other third party consents, including the consent of any Governmental Entity, shall have been obtained;

(h) the Sherritt Parties shall have completed all necessary corporate actions and proceedings as they deem necessary or advisable in connection with the Arrangement and this Plan;

(i) all conditions precedent set out in the Noteholder Support Agreement shall have been satisfied or waived pursuant to the terms of the Noteholder Support Agreement; and

(j) the Director shall have issued the Certificate of Arrangement.

Section 4.2 Waiver of Conditions.

The Company may at any time and from time to time waive the fulfillment or satisfaction, in whole or in part, of the conditions set out herein, subject to any restrictions contained in the Noteholder Support Agreement.

Section 4.3 Implementation Provisions.

If the conditions contained in Section 4.1 are not satisfied or waived in accordance with Section 4.2 by the Outside Date, as may be extended by the Company and the Majority Supporting Noteholders pursuant to the Noteholder Support Agreement, this Plan and the Final Order shall cease to have any further force or effect and will not be binding on any Person.

ARTICLE 5
MISCELLANEOUS

Section 5.1 Amendments to this Plan.

Subject to the terms and conditions of the Noteholder Support Agreement:

(a) the Company reserves the right to amend, modify and/or supplement this Plan at any time and from time to time, provided that (except as provided in subsection (c) below) any such amendment, modification or supplement must be contained in a written document that is (i) filed with the Court and, if made following the Meeting, approved by the Court, and (ii) communicated to the Noteholders in the manner required by the Court (if so required);

(b) any amendment, modification or supplement to this Plan may be proposed by Company at any time prior to or at the Meeting, with or without any prior notice or communication (other than as may be required under the Interim Order), and if so proposed and accepted at the Meeting, shall become part of this Plan for all purposes; and

B-13

(c) any amendment, modification or supplement to this Plan may be made following the Meeting by the Company, without requiring filing with, or approval of, the Court, provided that it concerns a matter which is of an administrative nature and is required to better give effect to the implementation of this Plan and is not materially adverse to the financial or economic interests of the Noteholders.

Section 5.2 Consents, Waivers and Agreements.

At the Effective Time, each Noteholder and the Indenture Trustee will be deemed to have consented and agreed to all of the provisions of this Plan in its entirety. Without limitation to the foregoing, each Noteholder and the Indenture Trustee will be deemed:

(a) to have executed and delivered to the Company all consents, releases, assignments and waivers, statutory or otherwise, required to implement and carry out this Plan in its entirety;

(b) to have waived any non-compliance or default by the Company and/or any of the Guarantors with or of any provision, express or implied, in any agreement or other arrangement, written or oral, existing between such Noteholder or other Person and the Company and/or any of the Guarantors with respect to the Existing Notes or the Existing Indenture that has occurred or exists on or prior to the Effective Time to the extent arising from the commencement and/or continuation of the Arrangement Proceedings in conformity with this Plan and in furtherance of the Arrangement; and

(c) to have agreed that, if there is any conflict between the provisions of any agreement or other arrangement, written or oral, existing between such Noteholder or other Person and the Company and/or any of the Guarantors with respect to the Existing Notes or the Existing Indenture and the provisions of this Plan, then the provisions of this Plan take precedence and priority and the provisions of such agreement or other arrangement are deemed to be amended accordingly.

Section 5.3 Paramountcy.

From and after the Effective Date, any conflict between this Plan and the covenants, warranties, representations, terms, conditions, provisions or obligations, expressed or implied, of any contract, mortgage, security agreement, indenture, trust indenture, loan agreement, commitment letter, by-laws or other agreement, written or oral, and any and all amendments or supplements thereto existing between one or more of the Noteholders and the Company and/or any of the Guarantors as at the Effective Date shall be deemed to be governed by the terms, conditions and provisions of this Plan and the Final Order, which shall take precedence and priority.

Section 5.4 Deeming Provisions.

In this Plan, the deeming provisions are not rebuttable and are conclusive and irrevocable.

Section 5.5 Notices.

Any notices or communication to be made or given hereunder shall be in writing and shall reflect this Plan and may, subject as hereinafter provided, be made or given by the Person making or

B-14

giving it or by any agent of such Person authorized for that purpose by personal delivery, by prepaid mail, by facsimile or by email addressed to the respective parties as follows:

(a) if to the Company or the Guarantors:

c/o Sherritt International Corporation
181 Bay Street

26th Floor, Brookfield Place
Toronto, Ontario M5J 2T3
Canada

Attention:                                         David Pathe / Ward Sellers
Facsimile No.:                   416.924.5015
E-mail:        dpathe@sherritt.com / wsellers@sherritt.com

With a required copy (which shall not be deemed notice) to:

Goodmans LLP
333 Bay Street, Suite 3400
Toronto, Ontario M5H 2S7
Canada

Attention:                                         Robert J. Chadwick / Caroline Descours
Facsimile No.:                   416.979.1234
E-mail:        rchadwick@goodmans.ca / cdescours@goodmans.ca

(b) If to a Noteholder:

To the address for such Noteholder as shown on the records of the Indenture Trustee

or to such other address as any party may from time to time notify the others in accordance with this Section 5.5. In the event of any strike, lock-out or other event which interrupts postal service in any part of Canada, all notices and communications during such interruption may only be given or made by personal delivery, by facsimile or by email and any notice or other communication given or made by prepaid mail within the five Business Day period immediately preceding the commencement of such interruption, unless actually received, shall be deemed not to have been given or made. All such notices and communications so given or made shall be deemed to have been received, in the case of notice by facsimile, email or by personal delivery prior to 5:00 p.m. (local time) on a Business Day, when received or if received after 5:00 p.m. (local time) on a Business Day or at any time on a non-Business Day, on the next following Business Day and, in the case of notice mailed as aforesaid, on the fifth Business Day following the date on which such notice or other communication is mailed. The unintentional failure by the Company to give a notice contemplated hereunder to any particular Noteholder shall not invalidate this Plan or any action taken by any Person pursuant to this Plan.

B-15

Section 5.6 Further Assurances.

Notwithstanding that the transactions and events set out herein will occur and be deemed to occur in the order and in the manner set out in this Plan without any further act or formality, each of the Persons named or referred to herein, affected hereby or subject to this Plan shall make, do and execute, or cause to be made, done and executed, all such further acts, deeds, agreements, transfers, assurances, instruments or documents as may reasonably be required by the Company to accomplish the purpose of this Plan or to better implement this Plan.

B-16

SCHEDULE A
ARRANGEMENT RESOLUTION

BE IT RESOLVED THAT:

(1) the arrangement (as the same may be, or may have been, amended, modified or supplemented, the “Arrangement”) pursuant to Section 192 of the Canada Business Corporations Act (the “CBCA”) of Sherritt International Corporation (the “Corporation”) and involving Sherritt International Oil and Gas Limited, Nickel Metal Marketing Inc., Sherritt International (Bahamas) Inc., Sherritt Power (Bahamas) Inc., Sherritt International (Cuba) Oil and Gas Limited, Sherritt Utilities Inc., Canada Northwest Oils (Europe) B.V., and CNWL Oil (Espana) S.A. (collectively, the “Guarantors”), as more particularly described and set forth in the Plan of Arrangement (the “Plan”) set forth in Appendix “B” to the management information circular of the Corporation dated June 15, 2016 (the “Circular”), is hereby authorized, approved and adopted;

(2) the arrangement agreement (as the same may be, or may have been, amended, modified or supplemented, the “Arrangement Agreement”) dated June 15, 2016 between the Corporation and the Guarantors as described in the Circular, is hereby authorized and approved and the actions of the Board of Directors in approving the Arrangement Agreement and the Arrangement and the actions of the Board of Directors in executing and delivering the Arrangement Agreement and causing the performance by the Corporation of its obligations thereunder, are hereby authorized, ratified and approved;

(3) notwithstanding the passing of this resolution, the Board of Directors of the Corporation, without further notice to, or approval of, the Noteholders of the Corporation, are hereby authorized and empowered to (A) amend the Plan and Arrangement Agreement, to the extent permitted by the Plan and Arrangement Agreement and (B) subject to the terms of the Plan and Arrangement Agreement, determine not to proceed with the Arrangement at any time prior to the Arrangement becoming effective pursuant to the provisions of the CBCA;

(4) any director or officer of the Corporation be and is hereby authorized and directed, for and on behalf of the Corporation (whether under corporate seal or otherwise), to execute and deliver, or cause to be executed, under the seal of the Corporation or otherwise, and delivered articles of arrangement and any and all other documents, agreements and instruments and to perform, or cause to be performed by, such other acts and things, as in such person’s opinion may be necessary or desirable to give full effect to these resolutions and the matters authorized hereby, including the transactions required and/or contemplated by the Arrangement, such determination to be conclusively evidenced by the execution and delivery of such documents, agreements or other instruments or the doing of any such act or thing; and

(5) the proper officers and authorized signatories of Computershare Trust Company of Canada be and are hereby authorized and directed to execute and deliver all documents and instruments and to take such other actions as they may deem necessary or desirable to implement these resolutions and the matters authorized hereby, including the transactions required and/or contemplated by the Arrangement, such determination to be conclusively evidenced by the execution and delivery of such documents or other instruments or the taking of such actions.

B-17

SCHEDULE B
INDENTURE AMENDMENTS

Section 3.07 Optional Redemption.

(a) Except as provided in clauses (1), (2) and (3) of this Section 3.07(a), the 2025 Senior Notes shall not be redeemable at the option of the Company prior to October 11, 2021.

(1) At any time prior to October 11, 2021, the Company may redeem the 2025 Senior Notes, in whole or in part, upon not less than 30 nor more than 60 days’ prior notice mailed to each Holder of the 2025 Senior Notes or otherwise in accordance with the Applicable Procedures at a redemption price equal to the greater of (A) the Canada Yield Price1 and (B) 101% of the aggregate principal amount of the 2025 Senior Notes, plus accrued and unpaid interest, if any, to (but excluding) the redemption date (subject to the right of the Holders of the 2025 Senior Notes of record on the relevant Record Date to receive interest due on an Interest Payment Date falling on or prior to such redemption date).

(2) Prior to October 11, 2021, the Company may on any one or more occasions, upon not less than 30 nor more than 60 days’ notice, redeem up to 35% of the original aggregate principal amount of the 2025 Senior Notes (calculated after giving effect to any issuance of Additional Notes of the same Series) with the Net Cash Proceeds of one or more Equity Offerings at a redemption price equal to 107.875% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to (but excluding) the applicable redemption date (subject to the right of Holders of record of the 2025 Senior Notes on the relevant Record Date to receive interest due on an Interest Payment Date falling on or prior to such redemption date); provided that (A) at least 65% of the original aggregate principal amount of the 2025 Senior Notes (calculated after giving effect to any issuance of Additional Notes of the same Series) remains outstanding after each such redemption; and (B) such redemption occurs within 120 days after the closing of such Equity Offering.

(3) In the event that Holders of not less than 90% of the aggregate principal amount of the outstanding 2025 Senior Notes accept a Change of Control Offer, and the Company purchases all of the 2025 Senior Notes held by such Holders, within 90 days of such purchase, the Company shall have the right, upon not less than 30 days’ nor more than 60 days’ prior notice, to redeem all of the 2025 Senior Notes that remain outstanding following such purchase at a redemption price equal to the Change of Control Payment plus, to the extent not included in the Change of Control Payment, accrued and unpaid interest on the 2025 Senior Notes to (but excluding) the date of redemption (subject to the right of Holders of record of the 2025 Senior Notes on the relevant Record Date to receive interest due on an applicable Interest Payment Date that is on or prior to the redemption date).

1 The defined terms “Canada Yield Price”, “Canada Bond Yield” and “Government of Canada Yield” shall be correspondingly amended to conform with the amendments to Section 3.07 of the Existing Indenture.

B-18

(4) On and after October 11, 2021, the Company may redeem the 2025 Senior Notes, in whole or in part, on one or more occasions, upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as a percentage of principal amount of the 2025 Senior Notes to be redeemed) set forth below, plus accrued and unpaid interest on the 2025 Senior Notes, if any, to (but excluding) the applicable date of redemption (subject to the right of Holders of record of the 2025 Senior Notes on the relevant Record Date to receive interest due on an applicable Interest Payment Date falling on or prior to such redemption date), if redeemed during the 12-month period beginning on October 11 of each of the years indicated below:

Year	Percentage
2021	103.938	%
2022	101.969	%
2023 and thereafter	100.000	%

(b) The 2021 Senior Notes are redeemable at the option of the Company in whole or in part at any time and from time to time, in accordance with this Article 3. The redemption price for any 2021 Senior Notes redeemed by the Company prior to November 15, 2020 shall be an amount equal to the greater of (i) the Canada Yield Price, and (ii) 100% of the aggregate principal amount of the 2021 Senior Notes being redeemed, together in each case with accrued and unpaid interest to the date fixed for redemption. Less than all of the 2021 Senior Notes may be redeemed in accordance with this Article 3 of this Indenture. The redemption price for any 2021 Senior Notes redeemed by the Company on or after November 15, 2020 shall be an amount equal to 100% of the aggregate principal amount of the 2021 Senior Notes being redeemed, together with accrued and unpaid interest to the date fixed for redemption.

(c) The 2023 Senior Notes are redeemable at the option of the Company in whole or in part at any time and from time to time, in accordance with this Article 3 of this Indenture. The redemption price for any 2023 Senior Notes redeemed by the Company prior to September 24, 2022 shall be an amount equal to the greater of (i) the Canada Yield Price, and (ii) 100% of the aggregate principal amount of the 2023 Senior Notes being redeemed, together in each case with accrued and unpaid interest to the date fixed for redemption. Less than all of the 2023 Senior Notes may be redeemed in accordance with this Article 3 of this Indenture. The redemption price for any 2023 Senior Notes redeemed by the Company on or after September 24, 2022 shall be an amount equal to 100% of the aggregate principal amount of the 2023 Senior Notes being redeemed, together with accrued and unpaid interest to the date fixed for redemption.

(d) Any redemption of Additional Notes of a Series other than the Initial Notes shall be made upon such date or dates, upon such notice, upon such terms respecting payment and otherwise in the manner that will have been determined at the time of issue of such Series of Additional Notes and set out in the supplemental indenture providing for the issue of such Series of Additional Notes.

(e) Any redemption pursuant to this Section 3.07 shall be made pursuant to the provisions of Section 3.01 through 3.06.

B-19

(f) Any redemption notice in connection with this Section 3.07 may, at the Company’s discretion, be subject to one or more conditions precedent, including completion of an Equity Offering or other corporate transaction.

B-20

APPENDIX C

ARRANGEMENT AGREEMENT

SEE ATTACHED

C - 1

ARRANGEMENT AGREEMENT

THIS ARRANGEMENT AGREEMENT is made as of June 15, 2016 (the “Agreement”).

AMONG:

SHERRITT INTERNATIONAL CORPORATION, a corporation continued under the laws of Canada
(“Sherritt”)

— and —

SHERRITT INTERNATIONAL OIL AND GAS LIMITED, a corporation incorporated under the laws of the province of Alberta, NICKEL METAL MARKETING INC., a corporation continued under the laws of Bahamas, SHERRITT INTERNATIONAL (BAHAMAS) INC., a corporation incorporated under the laws of Bahamas, SHERRITT POWER (BAHAMAS) INC., a corporation incorporated under the laws of Bahamas, SHERRITT INTERNATIONAL (CUBA) OIL AND GAS LIMITED, a corporation incorporated under the laws of Bahamas, SHERRITT UTILITIES INC., a corporation incorporated under the laws of Bahamas, CANADA NORTHWEST OILS (EUROPE) B.V., a corporation incorporated under the laws of the Netherlands CNWL OIL (ESPANA) S.A., a corporation incorporated under the laws of Spain (collectively, the “Guarantors”)

RECITALS:

A. Sherritt intends to apply to the Ontario Superior Court of Justice (Commercial List) (the “Court”) for an order approving the arrangement (the “Arrangement”), pursuant to Section 192 of the Canada Business Corporations Act (the “CBCA”), as set forth in the plan of arrangement (as may be amended, modified and/or supplemented, the “Plan of Arrangement”) a copy of which is attached hereto as Schedule “A”; and

B. Sherritt and the Guarantors (collectively, the “Parties”) wish to enter into this Agreement to formalize certain matters relating to the foregoing and other matters relating to the Plan of Arrangement;

NOW THEREFORE THIS AGREEMENT WITNESSES THAT, in consideration of the premises and the covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties covenant and agree as follows:

C - 2

ARTICLE 1
INTERPRETATION

1.01 Definitions

All capitalized terms not defined in this Agreement shall have the meaning ascribed to them in the Plan of Arrangement.

1.02 Interpretation Not Affected by Headings

The division of this Agreement into articles, sections and schedules and the insertion of headings are for convenience of reference only and shall not affect the construction or interpretation of this Agreement.

1.03 Article References

Unless reference is specifically made to some other document or instrument, all references herein to articles, sections and schedules are to articles, sections and schedules of this Agreement.

1.04 Incorporation of Schedules

The following schedules are incorporated into and form an integral part of this Agreement:

Schedule A — Plan of Arrangement

1.05 Extended Meanings

Unless the context otherwise requires, words importing the singular number shall include the plural and vice versa; words importing any gender shall include all genders; and words importing persons shall include individuals, partnerships, associations, bodies corporate, trusts, unincorporated organizations, governments, regulatory authorities, and other entities.

1.06 Date for any Action

In the event that any date on which any action required to be taken hereunder by any of the Parties hereto is not a Business Day in the place where the action is required to be taken, such action shall be required to be taken on the next succeeding day which is a Business Day in such place.

1.07 Entire Agreement

This Agreement, together with the schedules attached hereto, constitutes the entire agreement among the Parties pertaining to the subject matter hereof and supersedes all prior agreements, understandings, negotiations and discussions, whether oral or written, among the Parties with respect to the subject matter hereof.

C-3

1.08 Governing Law

This Agreement will be governed by, interpreted and enforced in accordance with the laws of the province of Ontario and the federal laws of Canada.

ARTICLE 2
THE ARRANGEMENT

2.01 Arrangement

As soon as reasonably practicable or in accordance with the timing contemplated under the Plan of Arrangement, Sherritt shall apply to the Court pursuant to Section 192 of the CBCA for an order approving the Arrangement and in connection with such application shall:

(a) forthwith file, proceed with and diligently prosecute an application for the Final Order; and

(b) subject to obtaining the approvals contemplated in the Plan of Arrangement and such other conditions precedent to the implementation of the Arrangement (as set out herein and in the Plan of Arrangement), take steps necessary to submit the Arrangement to the Court and apply for the Final Order.

Subject to the fulfillment of the conditions set forth herein, the Parties shall deliver to the Director, immediately following completion and/or satisfaction of such conditions, articles of arrangement and such other documents as may be required to give effect to the Arrangement.

ARTICLE 3
COVENANTS

3.01 General Covenants

Each of the Parties covenants with the other Parties that it will:

(a) do and perform all such acts and things, and execute and deliver all such agreements, assurances, notices and other documents and instruments as may reasonably be required, both prior to and following the Effective Date, to facilitate the carrying out of the intent and purposes of this Agreement;

(b) use all reasonable efforts to cause each of the conditions precedent set forth in Section 5.01 which are within its control to be satisfied on or before the Effective Date; and

(c) not take any action that would be knowingly contrary with the transactions contemplated by this Agreement and the Plan of Arrangement.

C-4

3.02 Additional Covenants of the Parties

Each Party further covenants and agrees that it will, as applicable:

(a) submit the Arrangement to the Court and apply for the Final Order;

(b) perform the obligations required to be performed by it under this Agreement, the Plan of Arrangement and do all such other acts and things as may be necessary, or within the reasonable discretion of such Party desirable, and within its power and control in order to carry out and give effect to the transactions contemplated by this Agreement, the Plan of Arrangement including (without limitation) using commercially reasonable efforts to:

(i) obtain the required approvals of the Noteholders and the Final Order; and

(ii) obtain such other material consents, approvals and/or waivers as are necessary for the implementation of the Arrangement;

(c) upon issuance of the Final Order and subject to the conditions precedent in Article 5, forthwith proceed to file the Articles of arrangement, the Final Order and all related documents with the Director in accordance with the CBCA;

(d) file such materials, together with other disclosure materials required to be filed in accordance with applicable corporate and securities laws, in a timely and expeditious manner;

(e) execute the Amended and Restated Indenture, as contemplated by the Plan of Arrangement;

(f) in the case of Sherritt, (i) pay (or cause to be paid) the Early Consent Cash Consideration, (ii) to the extent applicable as contemplated by the Plan of Arrangement, issue (or cause to be issued) and deliver (or cause to be delivered) the Early Consent Warrants, and (iii) issue (or cause to be issued) and deliver (or cause to be delivered) the Amended Notes, all as contemplated by the Plan of Arrangement.

ARTICLE 4
REPRESENTATIONS AND WARRANTIES

4.01 Representations and Warranties of the Parties

Each Party represents and warrants to the other Parties as follows, and acknowledges that the other Parties are relying upon such representations and warranties:

(a) such Party is an entity duly formed and validly existing under the laws of the jurisdiction where it was formed and has the power and capacity to own or lease its property and assets, to carry on its business as now conducted by it, to enter into this Agreement, and to perform its obligations hereunder;

C-5

(b) in the case of Sherritt, (i) the 2018 Notes, 2020 Notes and 2022 Notes were validly issued under the Existing Indenture; and (ii) the Amended Notes, when issued and delivered in accordance with the Plan of Arrangement, will have been duly authorized and will be validly issued in accordance with the terms of the Plan of Arrangement and the Amended and Restated Indenture, provided that, for greater certainty, the amendment and restatement of the Existing Indenture and the issuance of the Amended Notes pursuant to the Amended and Restated Indenture are not intended to result in a novation or the issuance of new indebtedness of Sherritt, but rather the same indebtedness as evidenced by the Existing Notes will continue to exist, with full force and effect, in amended form, under the Amended Notes and the Amended and Restated Indenture;

(c) the execution and delivery of this Agreement and all documents to be delivered pursuant hereto and the completion of the transactions contemplated hereby do not and will not, to the best of the knowledge of the officers and employees of such Party who have been involved in the discussions concerning the Plan of Arrangement:

(i) result in any violation of the provisions of the charter or by-laws or similar organizational documents of such Party; and

(ii) violate or conflict with any judgment, order, statute, law, ordinance, rule or regulation applicable to such Party or any of its properties or assets, except, in the case for violations or conflicts that, individually or in the aggregate, would not reasonably be expected to have a material adverse effect on such Party’s ability to execute and deliver this Agreement and to consummate the transactions contemplated hereby; and

(d) the execution and delivery of this Agreement and the completion of the transactions contemplated hereby have been duly approved by the board of directors or applicable governance committee of such Party and this Agreement constitutes a valid and binding obligation of such Party enforceable against it in accordance with its terms.

ARTICLE 5
CONDITIONS PRECEDENT

5.01 Mutual Conditions Precedent

The respective obligations of the Parties to complete the transactions contemplated by this Agreement shall be subject to the fulfilment or satisfaction, on or before the Effective Date, of each of the following conditions, any of which may be waived collectively by them without prejudice to their right to rely on any other condition:

(a) the preliminary steps contemplated as conditions precedent to the implementation of the Plan of Arrangement as set forth in Section 3.3 of the Plan of Arrangement shall have been completed or performed, to the satisfaction of the Parties hereto;

C-6

(b) the Final Order shall have been obtained in form and substance satisfactory to the Parties and shall not have been reversed or amended;

(c) the conditions precedent set out in Article 4 of the Plan of Arrangement shall have been fulfilled, satisfied or waived by the parties pursuant to the terms of the Plan of Arrangement;

(d) the Parties shall have taken all necessary corporate actions and proceedings in connection with, and in order to give effect to, the Plan of Arrangement;

(e) no action shall have been instituted and be continuing on the Effective Date for an injunction to restrain the Arrangement;

(f) all required material consents and material waivers of third parties shall have been obtained to the consummation of the Plan of Arrangement;

(g) the Director shall have issued the Certificate of Arrangement; and

(h) this Agreement shall not have been terminated pursuant to its terms.

ARTICLE 6
NOTICES

6.01 Notices

Any notices or communication to be made or given hereunder shall be in writing and be made or given by the person making or giving it or by any agent of such person authorized for that purpose by personal delivery, by prepaid courier delivery, by facsimile or e-mail addressed to the respective Parties as follows:

If to Sherritt or the Guarantors:

c/o Sherritt International Corporation
181 Bay Street

26th Floor, Brookfield Place
Toronto, Ontario M5J 2T3

Canada

Attention: David Pathe / Ward Sellers
Facsimile: (416) 924-5015

E-mail: dpathe@sherritt.com / wsellers@sherritt.com

With a required (which shall not be deemed notice) to each of:

Goodmans LLP
333 Bay Street, Suite 3400
Toronto, Ontario M5H 2S7

Canada

C-7

Attention:	Robert J. Chadwick / Caroline Descours
Facsimile:	(416) 979-1234
E-mail:	rchadwick@goodmans.ca / cdescours@goodmans.ca

or to such other address as any Party may from time to time notify the others in accordance with this Section 6.01. In the event of any strike, lock-out or other event which interrupts postal service in any part of Canada, all notices and communications during such interruption may only be given or made by personal delivery, by facsimile or by e-mail and any notice or other communication given or made by prepaid mail within the five Business Day period immediately preceding the commencement of such interruption, unless actually received, shall be deemed not to have been given or made. All such notices and communications so given or made shall be deemed to have been received, in the case of notice by facsimile, e-mail or by personal delivery prior to 5:00 p.m. (local time) on a Business Day, when received or if received after 5:00 p.m. (local time) on a Business Day or at any time on a non-Business Day, on the next following Business Day and, in the case of notice mailed as aforesaid, on the fifth Business Day following the date on which such notice or other communication is mailed.

ARTICLE 7
AMENDMENT

7.01 Amendments

This Agreement may, at any time and from time to time, but not later than the Effective Date, be amended in any respect whatsoever by written agreement of the Parties hereto without, subject to applicable law, further notice to or authorization on the part of their respective securityholders.

7.02 Termination

This Agreement shall be terminated if an agreement to terminate it is executed and delivered by all Parties.

ARTICLE 8
GENERAL

8.01 Binding Effect

This Agreement shall be binding upon and enure to the benefit of the Parties hereto and their respective successors and permitted assigns.

8.02 No Assignment

No Party may assign its rights or obligations under this Agreement without the consent of all of the other Parties.

8.03 Equitable Remedies

All covenants herein and opinions to be given hereunder as to enforceability in accordance with the terms of any covenant, agreement or document shall be qualified as to applicable bankruptcy and other laws affecting the enforcement of creditors’ rights generally and to the effect that

C-8

specific performance, being an equitable remedy, may only be ordered at the discretion of the Court.

8.04 Severability

If any one or more of the provisions or parts thereof contained in this Agreement should be or become invalid, illegal or unenforceable in any respect in any jurisdiction, the remaining provisions or parts thereof contained herein shall be and shall be conclusively deemed to be, as to such jurisdiction, severable therefrom and:

(a) the validity, legality or enforceability of such remaining provisions or parts thereof shall not in any way be affected or impaired by the severance of the provisions or parts thereof severed; and

(b) the invalidity, illegality or unenforceability of any provision or part thereof contained in this Agreement in any jurisdiction shall not affect or impair such provision or part thereof or any other provisions of this Agreement in any other jurisdiction.

8.05 Time of Essence

Time shall be of the essence in respect of this Agreement.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]

C-9

IN WITNESS WHEREOF the Parties hereto have executed this Agreement.

	SHERRITT INTERNATIONAL CORPORATION


	Per:	/s/ Ward Sellers
		Name: Ward Sellers
		Title: SVP, General Counsel


	SHERRITT INTERNATIONAL OIL AND GAS LIMITED

	Per:	/s/ Ward Sellers
		Name: Ward Sellers
		Title:


	NICKEL METAL MARKETING INC.

	Per:	/s/ Kevin Drinkwater
		Name: Kevin Drinkwater
		Title: President


	SHERRITT INTERNATIONAL (BAHAMAS) INC.

	Per:	/s/ Martin Vydra
		Name: Martin Vydra
		Title: SVP Metals


	SHERRITT POWER (BAHAMAS) INC.

	Per:	/s/ Elvin Saruk
		Name: Elvin Saruk
		Title:

C-10

	SHERRITT INTERNATIONAL (CUBA) OIL AND GAS LIMITED

	Per:	/s/ Elvin Saruk
		Name: Elvin Saruk
		Title:


	SHERRITT UTILITIES INC.

	Per:	/s/ Elvin Saruk
		Name: Elvin Saruk
		Title:


	CANADA NORTHWEST OILS (EUROPE) B.V.

	Per:	/s/ Elvin Saruk
		Name: Elvin Saruk
		Title: Director A

	Per:	/s/ Authorized Signatory
		Name: Intertrust (Netherlands) B.V.
		Title: Director B


	CNWL OIL (ESPANA) S.A.

	Per:	/s/ Authorized Signatory
		Name: Canada Northwest Oils (Europe) B.V.
		Title: Director

	By:	Intertrust (Netherlands) B.V.,
		Its Director B

	Per:	/s/ Elvin Saruk

	By:	Elvin Saruk,
		Its Director A

C-11

SCHEDULE A

PLAN OF ARRANGEMENT

See Appendix B.

C-12

APPENDIX D

VOTING INFORMATION AND ELECTION FORM

SEE ATTACHED

D - 1

This Voting Information and Election Form requires your immediate attention. You are urged to carefully review this Voting Information and Election Form prior to completing it. Your investment advisor, stockbroker, bank manager, lawyer or other professional advisor can assist you in completing this Voting Information and Election Form.

VOTING INFORMATION AND ELECTION FORM

TO VOTE IN FAVOUR OR AGAINST THE PROPOSED PLAN OF ARRANGEMENT

AND IF VOTING IN FAVOUR BEFORE THE EARLY CONSENT DEADLINE,
TO ELECT TO RECEIVE
EARLY CONSENT CASH CONSIDERATION OR EARLY CONSENT WARRANTS OF

SHERRITT INTERNATIONAL CORPORATION

PURSUANT TO A PROPOSED PLAN OF ARRANGEMENT UNDER
THE CANADA BUSINESS CORPORATIONS ACT

Reference is made to the proposed plan of arrangement of Sherritt International Corporation (the “Corporation”) under Section 192 of the Canada Business Corporations Act (the “Arrangement”), pursuant to which the indenture dated October 10, 2014 (the “Existing Indenture”) governing the Corporation’s outstanding 8.00% senior unsecured debentures due November 15, 2018 (the “2018 Notes”), outstanding 7.50% senior unsecured debentures due September 24, 2020 (the “2020 Notes”) and outstanding 7.875% senior unsecured notes due October 11, 2022 (the “2022 Notes” and together with the 2018 Notes and 2020 Notes collectively, the “Existing Notes”) will be amended and restated (the “Amended and Restated Indenture”) and all outstanding Existing Notes will be amended and Noteholders (as defined below) will receive in exchange amended Existing Notes (the “Amended Notes”) pursuant to the Amended and Restated Indenture which will reflect an extended maturity date in respect of each series of Existing Notes by three years to November 15, 2021 (for the 2018 Notes), September 24, 2023 (for the 2020 Notes) and October 11, 2025 (for the 2022 Notes), respectively, in accordance with the terms of the Arrangement.

Each holder of Existing Notes (a “Noteholder”) as at June 15, 2016, being the record date of the Meeting (the “Record Date”), that votes in favour of the Arrangement (each, an Early Consenting Noteholder”) on or prior to 5:00 p.m. on July 19, 2016 (the “Early Consent Deadline”) will be entitled to receive on closing of the Arrangement as consideration (the “Early Consent Consideration”), at the option of the applicable Early Consenting Noteholder, either:

· cash consent consideration (the “Early Consent Cash Consideration”) equal to 2% of the principal amount of Existing Notes held by such Early Consenting Noteholder as at the Record Date; or

· warrants to acquire common shares of the Corporation (the “Early Consent Warrants”) at a rate of 73.25 warrants for each $1,000 of principal amount of Existing Notes held by such Early Consenting Noteholder as at the Record Date, subject to certain terms and conditions described in the Circular (as defined below).

The Early Consent Warrants will have a term of five years, are not expected to be listed on any exchange and shall have an exercise price of $0.74 per common share. Each one Early Consent Warrant will entitle the holder thereof to acquire one common share in the capital of the Corporation.

D-2

ONLY NOTEHOLDERS THAT VOTE IN FAVOUR OF THE ARRANGEMENT AND ELECT EARLY CONSENT CASH CONSIDERATION OR EARLY CONSENT WARRANTS AND VALIDLY DELIVER THIS VIEF PRIOR TO THE EARLY CONSENT DEADLINE WILL BE ENTITLED TO RECEIVE EARLY CONSENT CONSIDERATION ON THE DATE THE ARRANGEMENT IS IMPLEMENTED. PAYMENT OF EARLY CONSENT CONSIDERATION IS CONDITIONAL ON THE COMPLETION OF THE ARRANGEMENT.

The Corporation has called a meeting of the Noteholders to be held on July 25, 2016 (the “Meeting”), to consider, and if deemed advisable, approve the Arrangement. The Corporation has filed and delivered to Noteholders a management information circular dated June 15, 2016 with respect to the Meeting (the “Circular”) which has been filed on SEDAR at www.sedar.com. The Plan of Arrangement is attached as Appendix “B” to the Circular and the terms of the Arrangement are incorporated by reference into this Voting Information and Election Form (“VIEF”). All references to the Arrangement in this VIEF are qualified in their entirety by references to the full text and terms of the Arrangement. Capitalized terms used but not defined in this VIEF have their respective meanings set out in the Circular.

Registered Noteholders must complete Boxes 1 and 2 of this VIEF evidencing their vote by proxy, whether or not they attend the Meeting in person, and return it to: Computershare Trust Company of Canada (“Computershare”), to the attention of the Corporate Trust Officer or Associate Trust Officer, Computershare Trust Company of Canada, 100 University Ave., 11th Floor, Toronto, Ontario, M5J 2Y1 by no later than (a) the Early Consent Deadline in order to elect Early Consent Cash Consideration or Early Consent Warrants, or (b) by 10:00 a.m. (Toronto time) on July 21, 2016 (the “Proxy Cut-Off”) (being two Business Days prior to the Meeting) or, if the Meeting is adjourned or postponed, not less than 48 hours (excluding Saturday, Sundays and holidays) prior to any adjournments or postponements thereof. Noteholders who vote in favour of the Arrangement after the Early Consent Deadline will not be entitled to receive Early Consent Consideration. The Early Consent Deadline and/or the Proxy Cut-Off for the deposit of the proxies included in this VIEF may be waived by the Corporation at its sole discretion without notice.

The Existing Notes are represented by one or more global certificates registered in the name of CDS & Co., the nominee of CDS Clearing and Depository Services Inc. (“CDS”) and are held by CDS as custodian for institutions which participate in CDS (“CDS Participants”). Non-registered Noteholders (“Beneficial Noteholders”) wishing to vote their Existing Notes and, to the extent applicable, make elections in respect of Early Consent Consideration may only do so via their respective CDS Participant, and such votes and/or elections must be made through the facilities of CDS.

This VIEF can only be validly submitted by Beneficial Noteholders’ Intermediaries, which are CDS Participants, through CDS. Beneficial Noteholders must provide their instructions and/or deliver their completed VIEF to their Intermediary by the deadlines specified by the Intermediary in order to permit the Intermediary sufficient time in advance of the Early Consent Deadline and/or Proxy Cut-Off, as the case may be, to submit the information to CDS. It is the sole and exclusive responsibility of the Beneficial Noteholders to ensure that its instructions on voting, and any elections in respect of Early Consent Consideration, to the extent applicable, are then properly submitted by their Intermediary through the facilities of CDS on or before the deadlines set forth in this VIEF.

D-3

REGISTERED NOTEHOLDERS ARE REQUIRED TO COMPLETE THE FOLLOWING TWO BOXES, AS APPLICABLE, IN ORDER TO PROPERLY COMPLETE THIS VOTING INFORMATION AND ELECTION FORM

BOX 1 — VOTING IN FAVOUR OF OR AGAINST THE ARRANGEMENT AND ELECTION TO RECEIVE EARLY CONSENT CASH CONSIDERATION OR EARLY CONSENT WARRANTS IF ELIGIBLE

o OPTION 1 — NO ACTION TAKEN.

By checking this box, the undersigned Noteholder elects not to vote in favour of or against the Arrangement and therefore, is NOT entitled to receive Early Consent Cash Consideration or Early Consent Warrants.

o OPTION 2 — VOTE IN FAVOUR OF THE ARRANGEMENT AND APPOINT DAVID V. PATHE OR DEAN CHAMBERS, BOTH OFFICERS OF THE CORPORATION, AS PROXYHOLDERS AND ELECT TO RECEIVE EARLY CONSENT CASH CONSIDERATION. To select this option, the undersigned Noteholder must validly deliver its selection prior to the Early Consent Deadline.

o OPTION 3 — VOTE IN FAVOUR OF THE ARRANGEMENT AND APPOINT DAVID V. PATHE OR DEAN CHAMBERS, BOTH OFFICERS OF THE CORPORATION, AS PROXYHOLDERS AND ELECT TO RECEIVE EARLY CONSENT WARRANTS. To select this option, the undersigned Noteholder must validly deliver its selection prior to the Early Consent Deadline.

o OPTION 4 — DO NOT CONSENT/VOTE AGAINST THE ARRANGEMENT.

By checking this box, the undersigned Noteholder votes against the Arrangement and therefore, is NOT entitled to receive Early Consent Cash Consideration or Early Consent Warrants.

o OPTION 5 — VOTE IN FAVOUR OF THE ARRANGEMENT. Only select this option if making the selection after the Early Consent Deadline.

By checking this box, the undersigned Noteholder votes in favour of the Arrangement but does not make an election with respect to Early Consent Consideration and therefore, is NOT entitled to receive Early Consent Cash Consideration or Early Consent Warrants.

D-4

OTHER TERMS, CONDITIONS AND ACKNOWLEDGEMENTS

1. Any election to receive Early Consent Consideration made pursuant to this VIEF is only effective if the Arrangement is duly approved by Noteholders and the Ontario Superior Court of Justice and the Arrangement is completed.

2. The undersigned, by execution of this VIEF, hereby covenants, represents and warrants that the undersigned has full power and authority to execute and deliver this VIEF.

3. The undersigned acknowledges that the Corporation provides no representation or advice as to the consequences, advantages or disadvantages of making an election hereunder.

4. For greater certainty, the amendment and restatement of the Existing Indenture governing the Existing Notes and the issuance of the Amended Notes is not intended to result in the issuance of new indebtedness of the Corporation, but rather, the same indebtedness as evidenced by the Existing Notes will continue to exist, with full force and effect, in amended form.

5. This VIEF must be signed by the registered Noteholder in the space provided in Box 2.

6. All questions as to the validity, form, correctness, completeness and timely delivery of this VIEF may be determined by the Corporation in its sole discretion. The Corporation reserves the absolute right to reject any VIEF that it determines not to be in proper form, inaccurate or incomplete. Neither the Corporation nor any other person shall be required to give notice of any defects or irregularities in any VIEF no liability shall be incurred by any of them for failure to give such notice.

7. The undersigned Noteholder acknowledges and agrees that the election made by a Beneficial Noteholder hereunder shall and can only be submitted to the Corporation through CDS and that it is the sole and exclusive responsibility of the Beneficial Noteholder to ensure that such election is properly submitted to CDS. The Corporation disclaims any and all liability for any failure or error in properly submitting the election of any Beneficial Noteholder in accordance with their elections made pursuant to this VIEF to the Corporation or CDS, as applicable, prior to the Early Consent Deadline or Proxy Cut-Off, as applicable.

8. In addition to revocation in any other manner permitted by law, a Beneficial Noteholder who has given a proxy for a vote in respect of its Existing Notes and, to the extent applicable, an election in respect of the Early Consent Consideration may revoke it as follows:

(a) if revoking a vote in favour of the Arrangement Resolution which was submitted prior to the Early Consent Deadline together with a duly completed election in respect of the Early Consent Consideration to be received, then a revocation of both the vote and the Early Consent Consideration election will be deemed to be made by instructing a Beneficial Noteholder’s Intermediary to submit new instructions to CDS, as applicable, at any time prior to the Early Consent Deadline, which the Intermediary must then deliver to CDS prior to the Early Consent Deadline. For greater certainty, if a Noteholder elects to vote FOR the Arrangement Resolution prior to the Early Consent Deadline, it may not subsequently revoke such vote after the Early Consent Deadline has passed;

(b) if revoking or changing a duly completed election in respect of the Early Consent Consideration, then a revocation or modification of the Early Consent Consideration election will be deemed to be made by instructing a Beneficial Noteholder’s Intermediary to submit new instructions to CDS, as applicable, at any time prior to the Early Consent Deadline, which the Intermediary must then deliver to CDS prior to the Early Consent Deadline; or

D-5

which the Intermediary must then deliver to CDS prior to such time, or (ii) in respect of a withdrawal of the vote (meaning a switch to having no vote made on its behalf and no action taken), a written statement from a Beneficial Noteholder’s Intermediary indicating the Beneficial Noteholder wishes to have its voting instructions revoked, which written statement must be received by the Indenture Trustee at any time up to 5:00 p.m. (Toronto time) on the last Business Day preceding the date of the Meeting or any adjournment or postponement thereof.

For greater certainty, the foregoing subparagraphs (a) through (c) shall not apply to Beneficial Noteholders who wish to appoint themselves or another person to attend the Meeting on their behalf (each, an “In-Person Noteholder”), and any In-Person Noteholder who wishes to effect a change or revocation of its vote or election shall contact Kingsdale Shareholder Services (“Kingsdale”), the Corporation’s proxy solicitation and information agent, at 416-867-2272 or toll-free at 1-800-749-9197 or by email at contactus@kingsdaleshareholder.com and shall complete separate documentation in accordance with the instructions provided by Kingsdale for purposes thereof.

D-6

BOX 2 — NOTEHOLDER SIGNATURE

By completing and signing the below, the undersigned registered Noteholder hereby acknowledges and confirms the elections and certifications made under this VIEF and acknowledges and agrees to the terms and conditions set forth in this VIEF.

DATED at this day of , 2016.

(Name of Noteholder)

(Address and Telephone Number of Noteholder)

(Signature of Noteholder. If the Noteholder is a corporation, signature of an authorized signing officer of the corporation)

(Title of authorized signing officer of the corporation, if applicable)

ELECTION AND DELIVERY INSTRUCTIONS

THIS COMPLETED AND DULY EXECUTED VIEF MUST BE DELIVERED TO THE CORPORATION OR CDS, AS APPLICABLE, BY NO LATER THAN 5:00 P.M. (TORONTO TIME) ON JULY 19, 2016 IN ORDER TO ELECT EARLY CONSENT CASH CONSIDERATION OR EARLY CONSENT WARRANTS.

IN ORDER TO SUBMIT ONLY A VOTE (WITHOUT ANY ELECTION FOR EARLY CONSENT CONSIDERATION), IT IS THE NOTEHOLDER’S SOLE AND EXCLUSIVE RESPONSIBILITY TO ENSURE IT SUBMITS THIS VIEF TO THE CORPORATION OR CDS, AS APPLICABLE, BY NO LATER THAN 10:00 A.M. (TORONTO TIME) ON JULY 21, 2016.

D-7

Any questions and requests for assistance may be directed to the
Proxy Solicitation Agent:

The Exchange Tower
130 King Street West, Suite 2950, P.O. Box 361
Toronto, Ontario
M5X 1E2
www.kingsdaleshareholder.com

North American Toll Free Phone:

1-800-749-9197

Email: contactus@kingsdaleshareholder.com

Facsimile: 416-867-2271

Toll Free Facsimile: 1-866-545-5580

Outside North America, Banks and Brokers Call Collect: 416-867-2272

D-8

APPENDIX E

NOTICE OF APPLICATION

SEE ATTACHED

E - 1

Court File No~\J- \ lo · l \ l\ Z (o-00((_ON1'AR10 SUPERIOR COURT OlF JUSTKCE COMMERCIAL lJ§T IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF 'fHE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, c. C-44, AS AMENDED, AND RULE 14.05(2) OF THE RULES OF CIVIL PROCEDURE AND IN THE MATTER OF A PROPOSED ARRANGEMENT OJF SHERRITT INTERNATIONAL CORPORATION AND INVOLVING SHERRITT INTERNATIONAL OIL AND GAS LIMITED, NICKEL METAL MARKETING INC., SHERRITT INTERNATIONAL (BAHAMAS) INC., SHERRITT POWER (BAHAMAS) INC., SHERRITT INTERNATIONAL (CUBA) OIL AND GAS LIMITED, SHERRITT UTILITIES INC., CANADA NORTHWEST OILS (EUROPE) B.V., AND CNWL OIL (ESP ANA) S.A. SHERRITT INTERNATIONAL CORPORATION Applicant NOTICE OF APPLICATION TO THE RESPONDENTS: A LEGAL PROCEEDING HAS BEEN COMMENCED by the Applicant. The claim made by the Applicant appears on the following page. THIS APPLICATION will come on for a hearing before a Judge presiding over the Commercial List on a date to be set by the Court at 330 University A venue, Toronto, Ontario. IF YOU WISH TO OPPOSE THIS APPLICATION, to receive notice of any step in the application or to be served with any documents in the application, you or an Ontario lawyer acting for you must forthwith prepare a notice of appearance in Form 38A prescribed by the Rules of Civil Procedure, serve it on the Applicant's lawyer or, where the Applicant does not have a lawyer, serve it on the Applicant, and file it, with proof of service, in this court office, and you or your lawyer must appear at the hearing. IF YOU WISH TO PRESENT AFFIDAVIT OR OTHER DOCUMENTARY EVIDENCE TO THE COURT OR TO EXAMINE OR CROSS-EXAMINE WITNESSES ON THE APPLICATION, you or your lawyer must, in addition to serving your notice of appearance, serve a copy of the evidence on the Applicant's lawyer or, where the Applicant does not have a lawyer, serve it on the Applicant, and file it, with proof of service, in the court office where the application is to be heard as soon as possible, but not later than 2 p.m. on the day before the hearing.

E-2

- 2 -IF YOU FAIL TO APPEAR AT THE HEARING, JUDGMENT MAY BE GIVEN IN YOUR ABSENCE AND WITHOUT FURTHER NOTICE TO YOU. IF YOU WISH TO OPPOSE THIS APPLICATION BUT ARE UNABLE TO PAY LEGAL FEES, LEGAL AID MAY BE AVAILABLE TO YOU BY CONTACTING A LOCAL LEGAL AID OFFICE. Date June 13, 2016 Issued by Loct.rrKiJiHar Registrar Address of 330 University Avenue Jtt_'-'.0/ocn-, court office Toronto, Ontario M5G 1ft? TO: COMPUTERSHARE TRUST COMPANY OF CANADA, as Indenture Trustee 100 University A venue 11th Floor, North Tower Toronto, ON M5J 2Yl TO: DELOITTE LLP, Auditors of the Applicant Chartered Professional Accountants Bay Adelaide East 22 Adelaide Street West, Suite 200 Toronto, ON M5H OA9 TO: THE DIRECTOR UNDER THE CANADA BUSINESS CORPORATIONS ACT Compliance & Policy Directorate Corporations Canada, Industry Canada 9th Floor, Jean Edmonds Tower South 365 Laurier Avenue West Ottawa, ON K1A OC8

E-3

- 3 - APPL][CA'f][ON 1. 'fHE APPLICANT MAKES AlP'lP'L][CATION FOR: a) an interim Order for advice and directions pursuant to section 192(4) of the Canada Business Corporations Act, R.S.C. 1985, c. C-44, as amended (the "CBCA") with respect to a proposed arrangement (the "Arrangement") of the Applicant pursuant to a Plan of Arrangement (the "Plan of Arrangement"), including authorizing the Applicant to convene a meeting of the holders of the Applicant's 8.00% senior unsecured debentures due 2018, 7.50% senior unsecured debentures due 2020 and 7.875% senior unsecured notes due 2022, to consider and vote on the Plan of Arrangement, and providing certain ancillary relief; b) an Order approving the Arrangement pursuant to sections 192(3) and 192(4) of the CBCA; and c) such further and other relief as this Court may deem just. 2. THE GROUNDS FOR THE APPLICATION ARE: a) the Applicant is a corporation governed by the CBCA; b) the Applicant wishes to effect fundamental changes m the nature of an arrangement under the provisions of the CBCA; c) all statutory requirements under the CBCA have been or will have been satisfied by the hearing of the within Application; d) all pre-conditions to the approval of the Plan of Arrangement by the Court will have been satisfied prior to the hearing of the within Application, including the directions set out in, and the noteholder approvals required pursuant to, any interim Order this Court may grant; e) it is not practicable for the Applicant to effect the Arrangement under any other provision of the CBCA;

E-4

- 4- f) the Application has been put forward in good faith and is in the best interests of the Applicant and its stakeholders; g) the Arrangement is procedurally and substantively fair and reasonable to all affected parties; h) the Applicant is not insolvent within the meaning of section 192(2) of the CBCA; i) this Notice of Application will be sent to all of those listed in this Notice of Application; j) rules 14.05(2), 14.05(3) and 38 ofthe Rules ofCivil Procedure; k) section 192 ofthe CBCA; and I) such further and other grounds as counsel may advise and this Court may permit. 3. THE FOLLOWING DOCUMENTARY EVIDENCE WILL BE USED AT THE HEARING OF THE APPLICATION: a) such interim Order as may be granted by this Court; b) an affidavit to be sworn on behalf of the Applicant, with exhibits thereto, in connection with a motion for an interim Order; c) a supplementary affidavit to be sworn on behalf of the Applicant, with exhibits thereto, reporting as to compliance with any interim Order and the results of any meeting conducted pursuant to such interim Order; and d) such further and other material as counsel may advise and this Court may permit.

E-5

- 5 - June 13, 2016 GOODMANS LLP Barristers & Solicitors 333 Bay Street, Suite 3400 Toronto, Canada M5H 2S7 Robert J. Chadwick (LSUC#: 35165K) rchadwick@goodmans.ca Caroline Descours (LSUC#: 58251A) cdescours@goodmans.ca Tel: (416) 979-2211 Fax: (416) 79-1234 Lawyers for the Applicant

E-6

IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, C. C-44, AS AMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE AND IN THE MATTER OF A PROPOSED ARRANGEMENT OF SHERRITT INTERNATIONAL CORPORATION AND INVOLVING SHERRITT INTERNATIONAL OIL AND GAS LIMITED, NICKEL METAL MARKETING INC., SHERRITT INTERNATIONAL (BAHAMAS) INC., SHERRITT POWER (BAHAMAS) INC., SHERRITT INTERNATIONAL (CUBA) OIL AND GAS LIMITED, SHERRITT UTILITIES INC., CANADA NORTHWEST OILS (EUROPE) B.V., AND CNWL OIL (ESPANA) S.A. 6571769 ~V - I (o - \ llf l UJ -(X)CL Court File No: ONTARIO SUPERIOR COURT OF JUSTICECOMMERCIAL LIST Proceeding commenced at Toror}to NOTICE OF APPLICATION (Returnable on a date to be set by the Court) GOODMANS LLP Barristers & Solicitors 333 Bay Street, Suite 3400 Toronto, Canada MSH 2S7 Robert J. Chadwick SUC#: 35165K rchadwick@goodrnans.ca Caroline Descours LSUC#: 58251A cdescours@goodrr:tans.ca Tel: (416) 979-2211 Fax: (416) 979-1234 Lawyers for the Applicant

E-7

APPENDIX F

INTERIM ORDER

SEE ATTACHED

F - 1

Court File No. CV-16-11426-00CL ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST WEDNESDAY, THE 15TH THE HONOURABLE MR. ) ) ) ---"'; "J;U.--S"' TICE NEWBOULD DAY OF JUNE, 2016 .."'--....,._..._ 'C\) ,.,..... " , , 'lN ,:THKMATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA \),.. jJffSINESS CORPORATIONS ACT, R.S.C. 1985, C. C-44, AS AMENDED, AND RULES ·'···<' 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE ' ,-''/. ',:AND INTHE MATTER OF A PROPOSED ARRANGEMENT OF SHERRITT INTERNATIONAL OIL AND GAS LIMITED, NICKEL METAL MARKETING INC., SHERRITT INTERNATIONAL (BAHAMAS) INC., SHERRITT POWER (BAHAMAS) INC., SHERRITT INTERNATIONAL (CUBA) OIL AND GAS LIMITED, SHERRITT UTILITIES INC., CANADA NORTHWEST OILS (EUROPE) B.V., AND CNWL OIL (ESPANA) S.A. - INTERNATIONAL CORPORATION AND INVOLVING SHERRITT INTERIM ORDER THIS MOTIONmade by the Applicant, Sherritt International Corporation ("Sherritt"), for an interim order for advice and directions pursuant to section 192 of the Canada Business Corporations Act , R.S.C. 1985, c. C-44, as amended, (the "CBCA") was heard this day at 330 University Avenue, Toronto, Ontario. ON READING the Notice of Motion, the Notice of Application and the affidavit of Dean Chambers sworn June 13, 2016, (the "Chambers Affidavit"), including the Plan of Arrangement (the "Plan of Arrangement"), substantially in the form attached as Appendix B to the draft management information circular of Sherritt (the "Information Circular"), which

F-2

Page 2 is attached as Exhibit A to the Chambers Affidavit, and on hearing the submissions of counsel for Sherritt, and on being advised that the Director appointed under the CBCA (the "Director") does not consider it necessary to appear. Definitions 1. THIS COURT ORDERS that all definitions used in this Interim Order shall have the meaning ascribed thereto in the Information Circular, the Plan of Arrangement or otherwise as specifically defined herein. The Meeting 2. THIS COURT ORDERS that Sherritt is permitted to call, hold and conduct a meeting (the "Meeting") of Noteholders to be held at the offices of Goodmans LLP, 333 Bay Street, Suite 3400, Toronto, Ontario on July 25, 2016 at 10:00 a.m. (Toronto time) in order for the Noteholders to consider and, if determined advisable, pass a resolution authorizing, adopting and approving, with or without variation, the Arrangement and the Plan of Arrangement (collectively, the "Arrangement Resolution"). 3. THIS COURT ORDERS that the Meeting shall be called, held and conducted in accordance with the CBCA and the notice of meeting of Noteholders which accompanies the Information Circular (the "Notice of Meeting"), subject to what may be provided hereafter and subject to further order of this Court. 4. THIS COURT ORDERS that the record date (the "Record Date") for determination ofthe Noteholders entitled to notice of, and to vote at, the Meeting shall be June 15,2016.

F-3

Page 3 THIS COURT ORDERS that the only persons entitled to attend or speak at the 5. Meeting shall be: a) the Noteholders as of the Record Date, or their respective proxyholders, and their respective legal counsel; b) the officers, directors, auditors and advisors of Sherritt; c) the Indenture Trustee and its legal counsel; d) the Director; and e) other persons who may receive the permission ofthe Chair ofthe Meeting. 6. THIS COURT ORDERS that Sherritt may transact such other business at the Meeting as is contemplated in the Information Circular, or as may otherwise be properly before the Meeting. Quorum 7. THIS COURT ORDERS that the Chair of the Meeting shall be determined by Sherritt and that the quorum at the Meeting shall be satisfied if two or more persons entitled to vote at the Meeting are present, in person or represented by proxy, at the outset of the Meeting. Amendments to the Arrangement and Plan of Arrangement THIS COURT ORDERS that Shenitt is authorized to make, subject to paragraph 9 8. below and the Noteholder Support Agreements, such amendments, modifications or supplements to the Arrangement and the Plan of Arrangement as it may determine without any additional notice to the Noteholders, or others entitled to receive notice under paragraph 12

F-4

Page 4 hereof and the Arrangement and Plan of Arrangement, as so amended, modified or supplemented shall be the Arrangement and Plan of Arrangement to be submitted to the Noteholders at the Meeting and shall be the subject of the Arrangement Resolution. Amendments, modifications or supplements may be made following the Meeting, but shall be subject to the Noteholder Support Agreements and review and, if appropriate, further direction by this Court at the hearing for the final approval of the Arrangement. THIS COURT ORDERS that, if any amendments, modifications or supplements to the 9. Arrangement or Plan of Arrangement as referred to in paragraph 8, above, would, if disclosed, reasonably be expected to affect a Noteholder's decision to vote for or against the Arrangement Resolution, notice of such amendment, modification or supplement shall be distributed, subject to further order of this Court, by press release, newspaper advertisement, prepaid ordinary mail, or by the method most reasonably practicable in the circumstances, as Sherritt may determine. Amendments to the Information Circular THIS COURT ORDERS that Sherritt IS authorized to make such amendments, 10. revisions and/or supplements to the draft Information Circular as it may determine and the Information Circular, as so amended, revised and/or supplemental, shall be the Information Circular to be distributed in accordance with paragraph 12. Adjournments and Postponements THIS COURT ORDERS that Sherritt, if it deems advisable, is specifically authorized 11. to adjourn or postpone the Meeting on one or more occasions, without the necessity of first convening the Meeting or first obtaining any vote of the Noteholders respecting the adjournment or postponement, and notice of any such adjournment or postponement shall be

F-5

Page 5 given by such method as Sherritt may determine is appropriate in the circumstances. This provision shall not limit the authority of the Chair of the Meeting in respect of adjournments and postponements. Notice of Meeting and Noteholder Solicitation Process THIS COURT ORDERS that, in order to effect notice of the Meeting, Sherritt shall 12. send the Information Circular (including the Notice of Meeting, the Notice of Application, this Interim Order and the voting information and election form (the "VIEF")), al1 ong with such amendments or additional documents as Sherritt may determine are necessary or desirable and are not inconsistent with the terms of this Interim Order (collectively, the "Meeting Packages"), to Kingsdale Shareholder Services (the "Solicitation Agent") for distribution to the Indenture Trustee and Noteholders, all in accordance with this Interim Order. The Solicitation Agent shall, through the use of Broadridge Investor Communication Solutions, Canada, a subsidiary of Broadridge Financial Solutions, Inc. ("Broadridge"), mail Meeting Packages to beneficial Noteholders as of the Record Date. 13. THIS COURT ORDERS that as soon as practicable after the Record Date, the Indenture Trustee shall provide Sherritt and the Solicitation Agent with a list showing the names and addresses of all persons who are participants (each, an "Intermediary") in CDSX, the clearing, settlement and depository system operated by CDS Clearing and Depository Services Inc. ("CDS") and the principal amount of Existing Notes held by each Intermediary as at the Record Date (the "Intermediaries List"). 14. THIS COURT ORDERS that, upon receipt by the Solicitation Agent of the Intermediaries List or other information identifying Intermediaries, the Solicitation Agent shall

F-6

Page 6 send a Meeting Package to CDS, whose nominee, CDS & Co. is the sole registered Noteholder of the Existing Notes and shall, through the use of CDS and Broadridge, provide sufficient copies of the Meeting Package to Intermediaries in a timely manner, in accordance with customary practices, in order to provide one Meeting Package to each beneficial Noteholder that has an account (directly or indirectly through an agent or custodian) with the Intermediaries. 15. THIS COURT ORDERS that concurrently with the mailing ofthe Meeting Packages to the Intermediaries as contemplated in paragraph 14 above, CDS shall, in accordance with the CDS Participant Rules and Procedures, deliver an electronic version of the VIEF to all Intermediaries for purposes of ensuring that all beneficial Noteholders receive access to a version of the VIEF and can instruct their Intermediary accordingly with respect to voting preferences and, to the extent applicable, elections in respect of the form of Early Consent Consideration they would like to receive, on a timely basis. 16. THIS COURT ORDERS that each Intermediary shall within three (3) Business Days of receipt of the Meeting Packages deliver to each beneficial Noteholder which has an account (directly or through an agent or custodian) with such Intermediary a Meeting Package. The Intermediary shall take any other reasonable action required to assist such beneficial Noteholder in returning to the Intermediary a completed and executed version of the VIEF or such other documentation as the Intermediary may customarily request from a beneficial Noteholder for purposes of properly obtaining their instructions with respect to the completion and submission by the Intermediary of the VIEF (or such other documentation or information required by CDS) on behalf of such beneficial Noteholder.

F-7

Page 7 17. THIS COURT ORDERS that accidental failure or omission by the Solicitation Agent, Sherritt or CDS to give notice of the meeting or to distribute the Meeting Packages to any person entitled by this Interim Order to receive notice, or any failure or omission to give such notice as a result of events beyond the reasonable control of the Solicitation Agent or Sherritt, or the non-receipt of such notice shall, subject to further order of this Court, not constitute a breach of this Interim Order nor shall it invalidate any resolution passed or proceedings taken at the Meeting. If any such failure or omission is brought to the attention of the Solicitation Agent or Sherritt, the Solicitation Agent and Sherritt shall use its best efforts to rectify it by the method and in the time most reasonably practicable in the circumstances. 18. THIS COURT ORDERS that Sherritt is hereby authorized to make such amendments, revisions or supplements to the Meeting Packages as Sherritt may determine ("Additional Information"), and that notice of such Additional Information may, subject to paragraph 9, above, be distributed by press release, CDS bulletins, newspaper advertisement, pre-paid ordinary mail, or by the method most reasonably practicable in the circumstances, as Sherritt may determine. 19. THIS COURT ORDERS that distribution of the Meeting Packages pursuant to paragraph 14 of this Interim Order shall constitute notice of the Meeting and good and sufficient service of the within Application upon the persons described in paragraphs 14 and 15 and that those persons are bound by any orders made on the within Application. Further, no other form of service of the Meeting Packages or any portion thereof need be made, or notice given or other material served in respect of these proceedings and/or the Meeting to such persons or to any other persons, except to the extent required by paragraph 9, above.

F-8

Page 8 Voting by Proxies 20. THIS COURT ORDERS that Sherritt is authorized to use the VIEF substantially in the form of the draft attached as Appendix "D" of the Information Circular, with such amendments and additional information as Sherritt may determine are necessary or desirable. Sherritt is authorized, at its expense, to solicit proxies, directly or through its officers, directors or employees, and through the Solicitation Agent, National Bank Financial Inc. and such other agents, representatives or soliciting dealers as Sherritt may retain for that purpose, and by mail or such other forms of personal or electronic communication as it may determine. Sherritt may waive generally, in its discretion, the time limits set out in the Infonnation Circular for the deposit or revocation of proxies and elections by Noteholders, if Sherritt deems it advisable to do so. 21. THIS COURT ORDERS that in order to cast its vote at the Meeting and make an election, to the extent applicable, in respect of Early Consent Consideration (an "Ea rly Consent Consideration Election"), beneficial Noteholders must submit to their respective Intermediary at least two (2) Business Days prior to the deadlines set forth in the VIEF, or such earlier deadline as an Intermediary may advise the applicable beneficial Noteholder, a duly completed VIEF (or such other documentation as the Intermediary may customarily request from a beneficial Noteholder for purposes of properly obtaining their instructions), to permit their respective Intermediary to duly complete and submit in a timely manner through the electronic systems and facilities of CDS, the beneficial Noteholder's voting preferences and Early Consent Consideration Election, as applicable, by the Early Consent Deadline. 22. THIS COURT ORDERS that in order to cast its vote at the Meeting without making an Early Consent Consideration Election, beneficial Noteholders must submit to their

F-9

Page 9 respective Intermediary at least two (2) Business Days prior to the deadlines set forth in the VIEF, or such earlier deadline as an Intermediary may advise the applicable beneficial Noteholder, a duly completed VIEF (or such other documentation as the Intermediary may customarily request from a beneficial Noteholder for purposes of properly obtaining their instructions), to permit their respective Intermediary to duly complete and submit in a timely manner through the electronic systems and facilities of CDS, the beneficial Noteholder's voting preferences by !O:OOam on July 21, 2016 (the "Proxy Deadline"). 23. THIS COURT ORDERS that each Intermediary shall verify the beneficial Noteholders' holdings of Existing Notes indicated on the VIEFs (or other instructions) submitted by such beneficial Noteholders and shall submit the instructions and confirmation contained in such VIEFs (or other instructions) through the electronic systems and facilities of CDS as soon as practicable following receipt of such beneficial Noteholders' VIEFs (or other instructions). 24. THIS COURT ORDERS that any beneficial Noteholder that wishes to attend the Meeting in person or appoint another person as proxy (other than as contemplated by the VIEF) (each, an "In-Person Noteholder") shall be required to contact the Solicitation Agent and shall be required to complete separate documentation in accordance with the instructions provided by the Solicitation Agent for purposes thereof. 25. THIS COURT ORDERS that by no later than 10:00 a.m. (Toronto time) on the Business Day before the Meeting, the Solicitation Agent shall deliver to Sherritt a summary of all information received by the Indenture Trustee. Notwithstanding the foregoing, Sherritt shall have the discretion to accept for voting purposes any duly completed VIEF filed at the Meeting

F-10

Page 10 prior to the commencement of the Meeting and Sherritt is hereby authorized to use reasonable discretion as to the adequacy of compliance with respect to the manner in which any VIEF is completed and executed, or electronically submitted, and may waive strict compliance with the requirements in connection with the deadlines imposed in connection therewith. 26. THIS COURT ORDERS that, subject to the Noteholder Support Agreements, beneficial Noteholders shall be entitled to revoke their proxies as follows: a) ifrevoking a vote in favour of the Arrangement Resolution which was submitted prior to the Early Consent Deadline together with a duly completed Early Consent Consideration Election, then a revocation of both the vote and the Early Consent Consideration Election will be deemed to be made upon a beneficial Noteholder providing new instructions to such beneficial Noteholder's Intermediary, as applicable, at any time prior to the Early Consent Deadline, which the Intermediary must then deliver to CDS prior to the Early Consent Deadline. For greater certainty, if a Noteholder elects to vote in favour of the Arrangement Resolution prior to the Early Consent Deadline, it may not subsequently revoke such vote after the Early Consent Deadline has passed; b) if revoking or changing a duly completed Early Consent Consideration Election only, then a revocation or modification of the Early Consent Consideration Election will be deemed to be made upon a beneficial Noteholder providing new instructions to such beneficial Noteholder's Intermediary, as applicable, at any time prior to the Early Consent Deadline, which the Intermediary must then deliver to CDS prior to the Early Consent Deadline;

F-11

Page II c) if revoking any other vote in respect of the Arrangement Resolution which was submitted and with respect to which no Early Consent Consideration Election was made or available to be made, then a revocation of the vote will be deemed to be made upon (i) in respect of a change in vote by the beneficial Noteholder, abeneficial Noteholder providing new instructions to such beneficial Noteholder's Intennediary, as applicable, at any time up to the Proxy Deadline, which the Intermediary must then deliver to CDS prior to the Proxy Deadline; or (ii) in respect of a withdrawal of a vote (meaning a switch to no vote made and no action taken), a written statement from a beneficial Noteholder's Intermediary indicating the beneficial Noteholder wishes to have its voting instructions revoked, which written statement must be received by the Indenture Trustee at any time up to 5:00 p.m. (Toronto time) on the last business day preceding the date of the Meeting or any adjournment or postponement thereof; or d) in any other manner permitted by law, provided that the foregoing subparagraphs a) through c) shall not apply to In-Person Noteholders, and any In-Person Noteholder who wishes to effect a change or revocation of its vote or election shall be required to contact the Solicitation Agent and shall be required to complete separate documentation in accordance with the instructions provided by the Solicitation Agent for purposes thereof. 27. THIS COURT ORDERS that paragraphs 20 through 26 hereof, and the instructions contained in the VIEF, shall govern the submission of the VIEF.

F-12

Page 12 Voting 28. THIS COURT ORDERS that the only persons entitled to vote in person or by proxy on the Arrangement Resolution, or such other business as may be properly brought before the Meeting, shall be those beneficial Noteholders as at the Record Date. Illegible votes, spoiled votes, defective votes and abstentions in respect of any ballot(s) conduced at the Meeting shall be deemed to be votes not cast. 29. THIS COURT ORDERS that votes shall be taken at the Meeting on the basis of one vote per $1,000 of principal amount owing to a Noteholder under the Existing Notes as at the Record Date and that in order for the Plan of Arrangement to be implemented, subject to further Order of this Court, the Arrangement Resolution must be passed, with or without variation, at the Meeting by an affirmative vote of at least two-thirds (66213%) of the votes cast in respect of the Arrangement Resolution at the Meeting in person or by proxy by the Noteholders. All Existing Notes shall vote as one class in respect of the Meeting. Such votes shall be sufficient to authorize Sherritt to do all such acts and things as may be necessary or desirable to give effect to the Arrangement and the Plan of Arrangement on a basis consistent with what is provided for in the Information Circular without the necessity of any further approval by the Noteholders, subject only to final approval of the Arrangement by this Court. 30. THIS COURT ORDERS that in respect of matters properly brought before the Meeting pertaining to items of business affecting Sherritt (other than in respect of the Arrangement Resolution), each Noteholder is entitled to one vote for each $1,000 of principal amount owing to such Noteholder under the Existing Notes as at the Record Date.

F-13

Page 13 Early Consent Deadline THIS COURT ORDERS that the deadline by which Noteholders must submit their 31. vote in favour of the Arrangement, pursuant to and subject to the terms set out in paragraphs 32 to 33 of this Order, in order to be entitled to receive the Early Consent Consideration (the "Early Consent Deadline") shall be 5:00p.m. (Toronto time) on July 19, 2016, or such later date as Sherritt may determine. Early Consent Consideration 32. THIS COURT ORDERS that in order to be entitled to receive the Early Consent Consideration, a Noteholder must (a) be a holder of the Existing Notes as of 5:00p.m. (Toronto time) on the Record Date, (b) qualify for such Early Consent Consideration in accordance with the terms of the Plan of Arrangement, and (c) submit its properly duly completed VIEF (or such other documentation as the Intermediary may customarily request from a beneficial Noteholder for purposes of properly obtaining their instructions) to its Intermediary in the manner set out in paragraph 21, with all information required therein, so that such VIEF (or other instruction) is received by the Intermediary prior to the Early Consent Deadline. THIS COURT ORDERS that a beneficial Noteholder will not be entitled to the Early 33. Consent Consideration if CDS has not received instructions in respect thereof from the beneficial Noteholder's respective Intermediary by the Early Consent Deadline. Hearing of Application for Approval of the Arrangement 34. THIS COURT ORDERS that upon approval by the Noteholders of the Plan of Arrangement in the manner set forth in this Interim Order, Sherritt may apply to this Court for final approval ofthe Arrangement.

F-14

Page 14 35. THIS COURT ORDERS that distribution of the Notice of Application and the Interim Order in the Information Circular, when sent in accordance with paragraph 12 shall constitute good and sufficient service of the Notice of Application and this Interim Order and no other form of service need be effected and no other material need be served unless a Notice of Appearance is served in accordance with paragraph 36. 36. THIS COURT ORDERS that any Notice of Appearance served in response to the Notice of Application shall be served on the solicitors for Sherritt, as soon as reasonably practicable, and, in any event, no less than three (3) days before the hearing of this Application at the following addresses: Goodmans LLP 333 Bay Street, Suite 3400 Toronto, ON M5H 2S7 Attention: Robert Chadwick and Caroline Descours Email: rchadwick@goodmans.ca I cdescours@goodmans.ca. 37. THIS COURT ORDERS that, subject to further order of this Court, the only persons entitled to appear and be heard at the hearing of the within application shall be: i) Sherritt; ii) the Director; iii) the Noteholders; iv) the Indenture Trustee; v) any person who has filed a Notice of Appearance herein in accordance with the Notice of Application, this Interim Order and the Rules of Civil Procedure; and

F-15

Page 15 vi) their respective legal counsel. THIS COURT ORDERS that any materials to be filed by Sherritt in suppmi of the 38. within Application for final approval of the Arrangement may be filed up to one day prior to the hearing of the Application without further order of this Court. THIS COURT ORDERS that in the event the within Application for final approval 39. does not proceed on the date set forth in the Notice of Application, and is adjourned, only those persons who served and filed a Notice of Appearance in accordance with paragraph 36 shall be entitled to be given notice of the adjourned date. Stay of Proceedings 40. THIS COURT ORDERS that from 12:01 a.m. (Toronto time) on the date of this Interim Order, until and including the earlier of September 15, 2016 and the Effective Date, no right, remedy or proceeding, including, without limitation, any right to terminate, accelerate, amend or declare in default any contract or agreement, at law or under contract, may be exercised, commenced or proceeded with by the Indenture Trustee or any Noteholder against or in respect of Sherritt or any of its direct or indirect subsidiaries that are guarantors in respect of the Existing Notes (the "Sherritt Parties"), or any of the present or future propetiy, assets, rights or undertakings of Sherritt Parties, or any nature in any location, whether held directly or indirectly by Sherritt Parties, by reason or as a result of: Sherritt having made an application to this Court pursuant to Section 192 of the CBCA; any of Sherritt Parties being a party to or involved in this proceeding, any ancillary proceedings or the Anangement; the provisions of this or any other Order in these proceedings or ancillary proceedings; and the Anangement or

F-16

Page 16 any of the steps, transactions or proceedings contemplated thereby or relating thereto, however or whenever taken, in each case except with the prior consent of Sherritt or leave of this Court. Precedence 41. THIS COURT ORDERS that, to the extent of any inconsistency or discrepancy between this Interim Order and the terms of any instrument creating, governing or collateral to the Existing Notes, or the articles or by-laws of Sherritt, this Interim Order shall govern. Extra-Territorial Assistance THIS COURT seeks and requests the aid and recognition of any court or any judicial, 42. regulatory or administrative body in any province of Canada and any judicial, regulatory or administrative tribunal or other court constituted pursuant to the Parliament of Canada or the legislature of any province and any court or any judicial, regulatory or administrative body of the United States or other country to act in aid of and to assist this Honourable Court in carrying out the terms of this Interim Order. Variance 43. THIS COURT ORDERS that Sherritt shall be entitled to seek leave to vary this Interim Order upon such terms and upon the giving of such notice as this Court may direct. Service THIS COURT ORDERS that the requirement for service of the Notice of Motion is 44. hereby dispensed with and that this Motion is properly returnable today. ·:f TERED AT I INSCRIT A TORONTO JN/BOOKNO: . LEI DANS LE REGISTRE NO: JUi\ 1 5 Z016 PER/PAR: (

F-17

IN THE MATTER OF AN APPLICATION UNDER SECTION 192 OF THE CANADA BUSINESS CORPORATIONS ACT, R.S.C. 1985, C. C-44, AS AMENDED, AND RULES 14.05(2) AND 14.05(3) OF THE RULES OF CIVIL PROCEDURE ANDIN THE MATTER OF APROPOSED ARRANGEMENTOF SHERRITT Court File No: CV-16-11426-00CL INTERNATIONAL OIL ANDGAS INTERNATIONAL CORPORATION AND LIMITED, NICKEL INVOLVING SHERRITT INTERNATIONAL METAL MARKETING INC., SHERRITT (BAHAMAS) INC., SHERRITT POWER (BAHAMAS) INC., SHERRITT INTERNATIONAL (CUBA) OIL AND GAS LIMITED, SHERRITT UTILITIES INC., CANADA NORTHWEST OILS (EUROPE) B.V., AND CNWL OIL (ESPANA) S.A. 6581360 ONTARIO SUPERIOR COURT OF JUSTICE COMMERCIAL LIST Proceeding commenced at Toronto INTERIM ORDER GOODMANSLLP Barristers & Solicitors 333 Bay Street, Suite 3400 Toronto, Canada M5H 2S7 Robert J. Chadwick LSUC#: 35165K rchadwick@goodmans.ca Caroline Descours LSUC#: 58251A cdescours@goodmans.ca Tel: (416) 979-2211 Fax: (416) 979-1234 Lawyers for the Applicant

F-18

APPENDIX G

NBF OPINIONS

SEE ATTACHED

G - 1

June 10, 2016

The Board of Directors

Sherritt International Corporation
181 Bay Street, 26th Floor, Brookfield Place
Toronto, ON
M5J 2T3

Fairness Opinion

To the Board of Directors:

National Bank Financial Inc. (“NBF”, “we”, or “us”) understands that Sherritt International Corporation (“Sherritt or the “Company”) proposes to enter into a transaction to improve its capital structure and financial position (the “Extension”). We understand the Extension is proposed to be implemented pursuant to plan of arrangement (the “Arrangement”) under section 192 of the Canada Business Corporations Act (the “CBCA”). Under the Extension, Sherritt will amend and restate Sherritt’s note indenture to, among other things, extend the maturity dates of Sherritt’s $720 million of outstanding senior unsecured debentures (the “Notes”) under each of Sherritt’s three series of Notes as follows:(i) the maturity date under Sherritt’s $220 million 8.00% Notes due 2018 to be extended to 2021; (ii) the maturity date under Sherritt’s $250 million 7.50% Notes due 2020 to be extended to 2023; and (iii) the maturity date under Sherritt’s $250 million 7.875% Notes due 2022 to be extended to 2025.

Under the Extension, the applicable interest rates and existing covenants for the Notes under the governing note indenture would remain unchanged. Each holder of Notes (a “Noteholder”) that votes in favour of the Extension (each a “Early Consenting Noteholder”) on or prior to a deadline to be established by the Corporation (the “Early Consent Deadline”) will be entitled to receive on closing of the Extension, at the option of the applicable Early Consenting Noteholder, either cash consent consideration equal to 2% of the principal amount of Notes held by such Early Consenting Noteholder as at the record date for voting on the Arrangement (the “Record Date”) or 73.25 warrants (“Warrants”) for each $1,000 of principal amount of Notes held by such Early Consenting Noteholder as at the Record Date. The Warrants will have a five year term at an exercise price of $0.74 per share.

NBF also understands that implementation of the Extension by way of the Arrangement remains subject to, among other things, Noteholder approval at a meeting of Noteholders to be scheduled at a later date to consider the Extension (the “Noteholder Meeting”). As of May 30, 2016, Sherritt had entered into consent and support agreements (such agreements, together with any additional consent and support agreements entered into by the Company, the “Support Agreements”) with Noteholders holding approximately 44% of the Notes. The Noteholders who have entered into the Support Agreements have, pursuant to the Support Agreements, commited to vote their securities in favour

G-2

of the Arrangement and the Extension, subject to the terms and conditions of the Support Agreements.

We understand that the terms and conditions of the Arrangement will be summarized in an information circular (the “Information Circular”) to be prepared by Sherritt and mailed to the Noteholders in connection with the Noteholder Meeting.

Engagement of National Bank Financial Inc.

NBF was formally retained by Sherritt pursuant to an engagement agreement dated effective February 4, 2016 (the “Engagement Agreement”) to provide financial advice to the Company. Pursuant to the Engagement Agreement, Sherritt has requested that we prepare and deliver to the Board of Directors this written opinion as to the fairness, from a financial point of view, of the Extension to Sherritt (the “Fairness Opinion”). Additionally, the Company has requested that we prepare and deliver to the Board of Directors an opinion pursuant to Industry Canada’s Policy Statement 15.1 — “Policy of the Director Concerning Arrangements Under Section 192 of the Canada Business Corporations Act” (the “CBCA Opinion” and collectively with this Fairness Opinion, the “Opinions”).

NBF will be paid a fee for rendering the Opinions and will be paid an additional fee that is contingent upon the completion of the Extension or any alternative recapitalization transaction. A substantial portion of the fees payable to NBF are contingent on the completion of the Extension. In addition, NBF is to be reimbursed for its reasonable out-of-pocket expenses and to be indemnified by Sherritt in certain circumstances.

NBF understands that this Fairness Opinion and a summary thereof will be included in the Information Circular and, subject to the terms of the Engagement Agreement, NBF consents to such disclosure.

Independence of National Bank Financial Inc.

NBF is not an “insider”, “associate” or “affiliate” (as those terms are defined in the Securities Act (Ontario) of Sherritt or any of its associates or affiliates (collectively, the “Interested Parties”).

NBF has not been engaged to provide any financial advisory services, nor has it participated in any financings involving the Interested Parties within the the past two years, other than its engagement to provide the services contemplated by the Engagement Agreement and as set out below. National Bank of Canada acts as administrative agent and NBF acts as lead arranger for Sherritt’s syndicated senior secured revolving-term credit facility. In September 2014, NBF acted as dealer manager and solicitation agent for Sherritt’s offers to purchase for cash $100 million to $150 million of its outstanding 8.00% Senior Unsecured Debentures due November 2018 and $200 million to $250 million principal amount of its outstanding 7.50% Senior Unsecured Debentures due September 24, 2020, as well as for the Company’s concurrent solicitations of consent for proposed amendments to the indentures under which such debentures were issued. In October 2014, NBF acted as co-lead underwriter and joint bookrunner for the Company’s offering of $250 million principal amount of 7.875% Senior Unsecured Notes due October 11, 2022. NBF or its affiliates may, in the future, in the ordinary course of their respective businesses, perform financial advisory or investment banking or other services to Sherritt or any of its associated or affiliated entities.

G-3

NBF acts as a trader and dealer, both as principal and agent, in major financial markets and, as such, may have had and may in the future have positions in the securities of the Company and, from time to time, may have executed or may execute transactions for such companies and clients from whom it received or may receive compensation. NBF, as an investment dealer, conducts research on securities and may, in the ordinary course of its business, provide research reports and investment advice to its clients on investment matters, including with respect to Sherritt.

Credentials of NBF

NBF is a leading Canadian investment dealer whose businesses include corporate finance, mergers and acquisitions, equity and fixed income sales and trading and investment research. This Fairness Opinion is the opinion of NBF and the form and content herein has been reviewed and approved for release by a group of managing directors of NBF, each of whom is experienced in merger, acquisition, divestiture, valuation and fairness opinion matters.

Scope of Review

In connection with rendering this Fairness Opinion, we have reviewed and relied upon, or carried out (as the case may be), among other things, the following:

a) a draft of the plan of arrangement to implement the Extension;

b) copies of the Support Agreements dated May 30, 2016;

c) publicly available documents regarding Sherritt, including annual and quarterly reports, financial statements, annual information forms, management information circulars, prospectuses, and other filings deemed relevant;

d) certain non-public documents regarding Sherritt, including operational and financial information relating to the business, operations and financial condition of the Company;

e) internal management forecasts, projections, estimates and budgets prepared or provided by or on behalf of manangement of the Company;

f) known, feasible alternative transactions to the Extension;

g) trading statistics and related financial information in respect of Sherritt and other selected public companies considered by NBF to be relevant;

h) public information with respect to selected precedent transactions we considered relevant;

i) commodity prices and the impact of various commodity pricing assumptions on the business, prospects and financial forecast of the Company;

j) discussions with senior management of the Company relating to potential realizations in a liquidation;

k) various reports published by equity research analysts, industry sources and credit rating agencies regarding Sherritt and other public companies considered by NBF to be relevant;

G-4

l) discussions with senior management of the Company relating to the Company’s current business, forecasts, plan, financial condition and prospects;

m) discussions with the legal counsel to the Board of Directors of Sherritt;

n) representations contained in the certificate, addressed to NBF and dated the date hereof, from the Chief Executive Officer and Chief Financial Officer of the Company as to the completeness and accuracy of the information upon which this Fairness Opinion is based and certain other matters; and

o) other information, analysis, investigations and discussions we considered necessary or appropriate in the circumstances.

NBF has not, to the best of its knowledge, been denied access by Sherritt to any information under the control of Sherritt that has been requested by NBF.

Assumptions and Limitations

With the Board of Directors’ approval and as provided for in the Engagement Agreement, we have relied upon the completeness, accuracy and fair presentation of all financial and other information, data, advice, opinions, representations and other material obtained by us from public sources, or provided to us, either directly or indirectly, orally or in writing, by or on behalf of Sherritt or any of its affiliates or any of its or their agents or representatives in connection with NBF’s engagement (collectively, the “Information”). Our Fairness Opinion is conditional upon the completeness, accuracy and fair presentation of the Information. We have not been requested to, nor, subject to the exercise of professional judgment, have we attempted to verify independently the completeness, accuracy or fair presentation of the Information.

NBF has not been engaged to provide and has not provided: (i) an opinion as to the relative fairness of the Extension among and between Sherritt shareholders and Noteholders; (ii) a formal valuation or appraisal of Sherritt or any or its securities or assets; (iii) an opinion concerning the future trading price of any securities of Sherritt following completion of the Extension; or (iv) a recommendation to any Sherritt shareholder or Noteholder as to whether or not such shareholder’s shares or such Noteholder’s Notes respectively should be held or sold or whether the voting rights of such Noteholder with respect to its Notes should be voted for or against the Extension; and this Fairness Opinion should not be construed as such. This Fairness Opinion is not intended to be and does not constitute a recommendation to the Board of Directors as to whether it should approve the Arrangement.

Senior officers of Sherritt have separately represented to NBF in a certificate delivered as of the date hereof, among other things, that (i) the Information provided to NBF, either directly or indirectly, orally or in writing by, or on behalf of Sherritt or any of its affiliates or any of its or their agents or representatives in connection with the Extension, was, at the date the Information was provided to NBF and is as of the date hereof, complete, true and correct in all material respects, and did not and does not contain a misrepresentation (as defined in the Securities Act (Ontario)); and (ii) since the dates on which the Information was provided to NBF, except as disclosed to NBF, there has been no material change, financial or otherwise, in the financial condition, assets, liabilities (contingent or otherwise), business, operations or prospects of Sherritt, which would reasonably be expected to have a material effect on this Fairness Opinion.

G-5

With respect to any forecasts, projections, estimates and/or budgets provided to NBF and used in its analyses, NBF notes that projecting future results of any company is inherently subject to uncertainty. NBF has assumed, however, that such forecasts, projections, estimates and/or budgets (i) were prepared using the assumptions identified therein; (ii) reflect commercially reasonable estimates and judgments of management of Sherritt; (iii) reasonably represent the views of management of Sherritt of the financial prospects and forecasted performance regarding the Company, the assets of the Company, the Extension and the Assumption; and (iv) are not, in the reasonable belief of management of Sherritt, misleading in any material respect in light of the assumptions used therefor.

NBF has assumed that, in all respects material to its analysis, the Extension will be implemented in substantially the form of the draft plan of arrangement provided to us. NBF has also assumed that all material approvals and consents required in connection with the consummation of the Extension will be obtained and that, in connection with obtaining any necessary approvals and consents, no limitations, restrictions or conditions will be imposed that would have a material adverse effect on Sherritt. We have also assumed that the Extension will be completed substantially in accordance with its terms and all applicable laws and the Information Circular will disclose all material facts related to the Extension and will satisfy all applicable legal requirements.

We have also assumed that the Support Agreements that have been or will be entered into by the Noteholders are substantially in the form of the signed agreements provided to us, that all of the representations and warranties contained or to be contained in the Support Agreements will be correct as of the date hereof and that the Noteholders who enter into the Support Agreements will vote in favour of the Extension.

We are not legal, tax or accounting experts and we express no opinion concerning any legal, tax or accounting matters concerning the Arrangement and have relied upon, without independent verification, the assessment by Sherritt and its legal and tax advisors with respect to such matters.

This Fairness Opinion is rendered as at the date hereof and on the basis of securities markets, economic and general business and financial conditions prevailing as at the date hereof and the conditions and prospects, financial and otherwise, of Sherritt as they are reflected in the Information and as they were represented to us in our discussions with the management of Sherritt. In our analyses and in connection with the preparation of our Fairness Opinion, we made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of NBF and any party involved in the Extension. This Fairness Opinion is provided to the Board of Directors for its use only and may not be relied upon by any other person and may not be referred to, summarized, circulated, publicized or reproduced or disclosed to or used or relied upon by any party without the express written consent of NBF. NBF disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting this Fairness Opinion which may come or be brought to the attention of NBF after the date hereof. Without limiting the foregoing, in the event that there is any material change in any fact or matter affecting this Fairness Opinion after the date hereof, NBF reserves the right to change, modify or withdraw this Fairness Opinion.

NBF believes that its financial analyses must be considered as a whole and that selecting portions of its analyses and the factors considered by it, without considering all factors and analyses together, could create a misleading view of the process underlying this Fairness Opinion. The preparation of a fairness opinion is complex and is not necessarily susceptible to partial analysis or summary

G-6

description and any attempt to carry out such could lead to undue emphasis on any particular factor or analysis.

Approach to Fairness

For the purposes of this Fairness Opinion, we considered that the Extension would be fair, from a financial point of view, to Sherritt if the transaction:

· provides the Company with a more appropriate capital structure, by reducing the total amount of debt maturing in the near-term;

· reduces the risk that the Company’s cash flow from operations and available liquidity would be insufficient to provide adequate funds to finance the operating and capital expenditures necessary to execute its operating strategy and service its debt;

· provides Sherritt with an enhanced opportunity to regain access to capital to execute its business plan should such capital be available to it in an improved commodity price environment; and

· based on these criteria, is better than other known, feasible alternatives.

Approach to Fairness - Analysis

In preparing this Fairness Opinion, we have relied upon the discussions, documents and materials referred to under “Scope of Review”, reviewed with Sherritt’s management the alternatives reasonably available to the Company, and considered the following matters:

· in the event the Company has insufficient liquidity to continue to operate the business or the Company is unable to service its debt and refinance its debt as it matures, a likely result, in the absence of implementing the Extension, is an insolvency process which would be expected to have a negative impact on the overall enterprise value of the Company;

· the Extension would extend the existing Note maturities by three years, thereby eliminating any Note maturities prior to 2021;

· the Company has the opportunity, at this time, to effect an Extension with the approval of certain Noteholders in accordance with applicable law; and

· NBF and the Company are not aware of any feasible alternative transactions that are better than the Extension.

Conclusion

Based upon and subject to the foregoing and such other matters as NBF considered relevant, NBF is of the opinion, as of the date hereof, that the Extension, if implemented, is fair from a financial point of view to the Company.

Yours very truly,



NATIONAL BANK FINANCIAL INC.

G-7

June 10, 2016

The Board of Directors

Sherritt International Corporation
181 Bay Street, 26th Floor, Brookfield Place
Toronto, ON
M5J 2T3

CBCA Opinion

To the Board of Directors:

National Bank Financial Inc. (“NBF”, “we”, or “us”) understands that Sherritt International Corporation (“Sherritt or the “Company”) proposes to enter into a transaction to improve its capital structure and financial position (the “Extension”). We understand the Extension is proposed to be implemented pursuant to a plan of arrangement (the “Arrangement”) under section 192 of the Canada Business Corporations Act (the “CBCA”). Under the Extension, Sherritt will amend and restate Sherritt’s note indenture to, among other things, extend the maturity dates of Sherritt’s $720 million of outstanding senior unsecured debentures (the “Notes”) under each of Sherritt’s three series of Notes as follows:(i) the maturity date under Sherritt’s $220 million 8.00% Notes due 2018 to be extended to 2021; (ii) the maturity date under Sherritt’s $250 million 7.50% Notes due 2020 to be extended to 2023; and (iii) the maturity date under Sherritt’s $250 million 7.875% Notes due 2022 to be extended to 2025.

NBF also understands that implementation of the Extension by way of the Arrangement remains subject to, among other things, Noteholder approval at a meeting of Noteholders to be scheduled at a later date to consider the Extension (the “Noteholder Meeting”). As of May 30, 2016, Sherritt had entered into consent and support agreements (the “Support Agreements”) with Noteholders holding approximately 44% of the Notes. The Noteholders who have entered into the Support Agreements have, pursuant to the Support Agreements, commited to vote their securities in favour of the Arrangement and the Extension, subject to the terms and conditions of the Support Agreements.

G-8

Engagement of National Bank Financial Inc.

NBF was formally retained by Sherritt pursuant to an engagement agreement dated effective February 4, 2016 (the “Engagement Agreement”) to provide financial advice to the Company. Pursuant to the Engagement Agreement, Sherritt has requested that we prepare and deliver to the Board of Directors this written opinion pursuant to Industry Canada’s Policy Statement 15.1 — “Policy of the Director Concerning Arrangements Under Section 192 of the Canada Business Corporations Act” (the “CBCA Opinion”). Additionally, the Company has requested that we prepare and deliver to the Board of Directors an opinion as to the fairness, from a financial point of view, of the Extension to Sherritt (the “Fairness Opinion” and collectively with this CBCA Opinion, the “Opinions”).

NBF understands that this CBCA Opinion and a summary thereof will be included in the Information Circular and, subject to the terms of the Engagement Agreement, NBF consents to such disclosure.

Independence of National Bank Financial Inc.

G-9

it received or may receive compensation. NBF, as an investment dealer, conducts research on securities and may, in the ordinary course of its business, provide research reports and investment advice to its clients on investment matters, including with respect to Sherritt.

Credentials of NBF

NBF is a leading Canadian investment dealer whose businesses include corporate finance, mergers and acquisitions, equity and fixed income sales and trading and investment research. This CBCA Opinion is the opinion of NBF and the form and content herein has been reviewed and approved for release by a group of managing directors of NBF, each of whom is experienced in merger, acquisition, divestiture, valuation and fairness opinion matters.

Scope of Review

In connection with rendering this CBCA Opinion, we have reviewed and relied upon, or carried out (as the case may be), among other things, the following:

a) a draft of the plan of arrangement to implement the Extension;

b) copies of the Support Agreements dated May 30, 2016;

d) certain non-public documents regarding Sherritt, including operational and financial information relating to the business, operations and financial condition of the Company;

e) internal management forecasts, projections, estimates and budgets prepared or provided by or on behalf of management of the Company;

f) known, feasible alternative transactions to the Extension;

g) trading statistics and related financial information in respect of Sherritt and other selected public companies considered by NBF to be relevant;

h) public information with respect to selected precedent transactions we considered relevant;

i) commodity prices and the impact of various commodity pricing assumptions on the business, prospects and financial forecast of the Company;

j) discussions with senior management of the Company relating to potential realizations in a liquidation;

k) various reports published by equity research analysts, industry sources and credit rating agencies regarding Sherritt and other public companies considered by NBF to be relevant;

l) discussions with senior management of the Company relating to the Company’s current business, forecasts, plan, financial condition and prospects;

G-10

m) discussions with the legal counsel to the Board of Directors of Sherritt;

n) representations contained in the certificate, addressed to NBF and dated the date hereof, from the Chief Executive Officer and Chief Financial Officer of the Company as to the completeness and accuracy of the information upon which this CBCA Opinion is based and certain other matters; and

o) other information, analysis, investigations and discussions we considered necessary or appropriate in the circumstances.

NBF has not, to the best of its knowledge, been denied access by Sherritt to any information under the control of Sherritt that has been requested by NBF.

Assumptions and Limitations

With the Board of Directors’ approval and as provided for in the Engagement Agreement, we have relied upon the completeness, accuracy and fair presentation of all financial and other information, data, advice, opinions, representations and other material obtained by us from public sources, or provided to us by Sherritt and its subsidiaries (as defined in National Instrument 45-106 Prospectus and Registration Exemptions) or any of its respective representatives in connection with NBF’s engagement (collectively, the “Information”). Our CBCA Opinion is conditional upon the completeness, accuracy and fair presentation of the Information. We have not been requested to, nor, subject to the exercise of professional judgment, have we attempted to verify independently the completeness, accuracy or fair presentation of the Information.

NBF has not been engaged to provide and has not provided: (i) an opinion as to the relative fairness of the Extension among and between Sherritt shareholders and Noteholders; (ii) a formal valuation or appraisal of Sherritt or any or its securities or assets; (iii) an opinion concerning the future trading price of any securities of Sherritt following completion of the Extension; or (iv) a recommendation to any Sherritt shareholder or Noteholder as to whether or not such shareholder’s shares or such Noteholder’s Notes respectively should be held or sold or whether the voting rights of such Noteholder with respect to its Notes should be voted for or against the Extension; and this CBCA Opinion should not be construed as such. This CBCA Opinion is not intended to be and does not constitute a recommendation to the Board of Directors as to whether it should approve the Arrangement.

With respect to any forecasts, projections, estimates and/or budgets provided to NBF and used in its analyses, NBF notes that projecting future results of any company is inherently subject to

G-11

uncertainty. NBF has assumed, however, that such forecasts, projections, estimates and/or budgets (i) were prepared using the assumptions identified therein; (ii) reflect commercially reasonable estimates and judgments of management of Sherritt; (iii) reasonably represent the views of management of Sherritt of the financial prospects and forecasted performance regarding the Company, the assets of the Company, the Extension and the Assumption; and (iv) are not, in the reasonable belief of management of Sherritt, misleading in any material respect in light of the assumptions used therefor.

NBF has also assumed that a liquidation of Sherritt in an insolvency process would, for a number of reasons outlined in the “Analysis” section below, have a material negative impact on value of the Company and its business.

This CBCA Opinion is rendered as at the date hereof and on the basis of securities markets, economic and general business and financial conditions prevailing as at the date hereof and the conditions and prospects, financial and otherwise, of Sherritt as they are reflected in the Information and as they were represented to us in our discussions with the management of Sherritt. In our analyses and in connection with the preparation of our CBCA Opinion, we made numerous assumptions with respect to industry performance, general business, market and economic conditions and other matters, many of which are beyond the control of NBF and any party involved in the Extension. This CBCA Opinion is provided to the Board of Directors for their use only and may not be relied upon by any other person and may not be referred to, summarized, circulated, publicized or reproduced or disclosed to or used or relied upon by any party without the express written consent of NBF. NBF disclaims any undertaking or obligation to advise any person of any change in any fact or matter affecting this CBCA Opinion which may come or be brought to the attention of NBF after the date hereof. Without limiting the foregoing, in the event that there is any material change in any fact or matter affecting this CBCA Opinion after the date hereof, NBF reserves the right to change, modify or withdraw this CBCA Opinion.

G-12

could create a misleading view of the process underlying this CBCA Opinion. The preparation of a fairness opinion is complex and is not necessarily susceptible to partial analysis or summary description and any attempt to carry out such could lead to undue emphasis on any particular factor or analysis.

Terms of Reference

Industry Canada’s Policy Statement 15.1 — “Policy of the Director Concerning Arrangements Under Section 192 of the Canada Business Corporations Act” recommends that corporations seeking to implement a plan of arrangement purusant to Section 192 of the CBCA that contemplates the compromise of debt obtain an opinion as to whether “each class of security holders would be in a better financial position under that arrangement than if the corporation were liquidated”.

For the purposes of this CBCA Opinion, NBF considered that the Noteholders and Sherritt’s shareholders would each be in a better financial position under the Extension than if the Company were liquidated if the estimated aggregate value of the securities to be held by the Noteholders and the Sherritt shareholders, respectively, upon implementation of the Extension exceeds the estimated aggregate value that such holders would receive if the Company were liquidated, respectively.

Analysis

In preparing this CBCA Opinion, we have relied upon the discussions, documents and materials referred to under “Scope of Review”, reviewed with Sherritt’s management the alternatives reasonably available to the Company, and considered the following matters:

· in a liquidation process, prospective buyers will be aware that the vendor is compelled to sell the assets. This may have a negative impact on the value realized;

· a liquidation process is likely to have a negative impact on the value of the Company’s business as customers, suppliers and employees react to protect their interests;

· a liquidation process would give rise to significant incremental costs as new, senior secured “debtor in possession” financing would be required to replace lost trade credit and fund the operations during the process. Additional legal and financial advisory costs would be incurred to implement the liquidation and engage in the associated legal proceedings. These costs would be recovered out of sale proceeds that would otherwise be available to the Noteholders and Sherritt’s shareholders;

· the current weak conditions in the nickel industry and geographic concentration of assets in Cuba would likely reduce the field of prospective bidders and constrain the bidding of participants in a liquidation process;

· generally, in a liquidation process, holders of common equity recover nothing; and

· the Extension would significantly reduce the total amount of debt maturing in the near-term and would reduce the risk that the Company’s cash flow from operations and available liquidity would be insufficient to provide adequate funds to finance the operating and capital expenditures necessary to execute its operating strategy and service its debt. Post-Extension, the Company has the opportunity to generate incremental value by operating as a going concern and by benefiting from any recovery in the nickel industry.

G-13

Conclusion

Based upon and subject to the foregoing and such other matters as we considered relevant, it is our opinion, as of the date hereof, that the Noteholders and the Sherritt shareholders would each be in a better financial position, respectively, under the Extension than if the Company were liquidated, as in each case, the estimated aggregate value of the securities to be held by the Noteholders and the Sherritt shareholders, respectively, upon implementation of the Extension would exceed the estimated aggregate value that such Noteholders and the Sherritt shareholders would receive in a liquidation, respectively.

Yours very truly,



NATIONAL BANK FINANCIAL INC.

G-14

APPENDIX H

TERMS OF AMENDED NOTES

This description of Amended Notes is intended to be a useful overview of the material provisions of the Amended Notes and the Amended and Restated Indenture. Since this is only a summary, it does not contain all of the details that will be found in the full text of, and is qualified in its entirety by the provisions of, the Amended Notes and the Amended and Restated Indenture. You may request copies of the Amended Notes and the Amended and Restated Indenture, which will contain a complete description of the obligations of the Corporation and the Guarantors and your rights, at our address at 181 Bay Street, 26th Floor, Brookfield Place, Toronto, Ontario, M5J 2T3.

You will find the definitions of capitalized terms used in this description under the heading “—Certain Definitions.” For purposes of this description, references to “the Corporation,” “we,” “our” and “us” refer only to Sherritt International Corporation and not to its Subsidiaries. Certain defined terms used in this description but not defined herein have the meanings assigned to them in the Amended and Restated Indenture. References to “$” are to Canadian dollars. The Amended Notes will be denominated in Canadian dollars, and all payments on the Amended Notes will be made in Canadian dollars.

The Holder of an Amended Note will be treated as such Amended Note’s owner for all purposes. Only Holders will have rights under the Amended and Restated Indenture.

General

The Amended Notes:

· will be initially issued in an aggregate principal amount of $720.0 million, consisting of:

· $220 million of Amended 2021 Notes;

· $250 million of Amended 2023 Notes; and

· $250 million of Amended 2025 Notes.

· will mature on the following dates:

· November 15, 2021 (for the Amended 2021 Notes);

· September 24, 2023 (for the Amended 2023 Notes); and

· October 11, 2025 (for the Amended 2025 Notes).

· will be unconditionally Guaranteed on a senior unsecured basis by each of the Corporation’s Wholly-Owned Restricted Subsidiaries that are not Immaterial Subsidiaries. See “— Amended Note Guarantees”;

· will be issued in denominations of $1,000 and integral multiples of $1,000 in excess thereof; and

· will be represented by one or more registered Amended Notes in global form, but in certain circumstances may be represented by Amended Notes in certificated form. See “Book-Entry, Settlement and Clearance.”

Interest on the Amended Notes will:

· accrue at the following rates:

H - 1

· 8.00% per annum (for the Amended 2021 Notes);

· 7.50% per annum (for the Amended 2023 Notes); and

· 7.875% per annum (for the Amended 2025 Notes).

· accrue from the date of original issuance or, if interest has already been paid, from the most recent interest payment date;

· be payable in cash semi-annually in arrears on (i) April 11 and October 11 of each year with respect to the Amended 2025 Notes, (ii) March 24 and September 24 of each year with respect to the Amended 2023 Notes, and (iii) May 15 and November 15 each year with respect to the Amended 2021 Notes;

· be payable to the Holders of record at the close of business on the 15th day immediately preceding the related interest payment dates; and

· be computed on the basis of a 365-day or 366-day year, as applicable.

For purposes of the Interest Act (Canada), the yearly rate of interest to which interest calculated under an Amended Note for any period in any calendar year (the “Calculation Period”) is equivalent to the rate payable under the Amended Note in respect of the Calculation Period multiplied by a fraction the numerator of which is the actual number of days in such calendar year and the denominator of which is the actual number of days in the Calculation Period. The principle of deemed reinvestment of interest does not apply to any interest calculation under the Amended Notes or Amended and Restated Indenture. The rates of interest stipulated in the Amended Notes and the Amended and Restated Indenture are intended to be nominal rates and not effective rates or yields.

Ranking

The Amended Notes

· will be senior unsecured obligations of the Corporation;

· will rank equally in right of payment with any existing and future senior unsecured Indebtedness of the Corporation;

· will be senior in right of payment to any future Subordinated Obligations of the Corporation;

· will be effectively subordinated to any existing and future Secured Indebtedness of the Corporation to the extent of the value of the assets securing such Indebtedness; and

· will be structurally subordinated to all liabilities of any Subsidiary of the Corporation that is not a Guarantor, including the liabilities of the Unrestricted Subsidiaries and the Non-Guarantors, and the liabilities of any Joint Venture in which the Corporation has an interest.

Each Amended Note Guarantee of a Guarantor:

· will be a senior unsecured obligation of such Guarantor;

· will rank equally in right of payment with any existing and future senior unsecured Indebtedness of such Guarantor;

· will be senior in right of payment to any future Guarantor Subordinated Obligations of such Guarantor; and

H - 2

· will be effectively subordinated to any existing and future Secured Indebtedness of such Guarantor to the extent of the value of the assets of such Guarantor securing such Indebtedness.

Although the Amended and Restated Indenture will limit the amount of Indebtedness that the Corporation and its Restricted Subsidiaries may incur, such Indebtedness may be substantial, and a significant portion of such Indebtedness may be secured or structurally senior to the Amended Notes and the Amended Note Guarantees.

In the event of bankruptcy, insolvency, receivership, liquidation, reorganization or other winding up of the Corporation or the Guarantors or upon a default in payment with respect to, or the acceleration of, any Secured Indebtedness, the assets of the Corporation and the Guarantors that secure such Secured Indebtedness will be available to pay obligations on the Amended Notes and the Amended Note Guarantees only after all Secured Indebtedness has been repaid in full from such assets.

Amended Note Guarantees

The obligations of the Corporation under the Amended and Restated Indenture and the Amended Notes will be fully and unconditionally guaranteed, jointly and severally, on a senior unsecured basis by each of the Corporation’s current and future Wholly-Owned Restricted Subsidiaries that are not Immaterial Subsidiaries (to the extent permitted by local law in the case of subsidiaries organized in jurisdictions other than Canada and the United States). See “—Certain Covenants—Future Guarantors.”

The Amended and Restated Indenture will provide that each Amended Note Guarantee by a Guarantor will be automatically and unconditionally released and discharged upon:

(a) any sale, assignment, transfer, conveyance, exchange or other disposition (by merger, amalgamation, arrangement, consolidation, winding up or otherwise) of (i) all or substantially all of the assets of such Guarantor or (ii) the Capital Stock of such Guarantor after which the applicable Guarantor is no longer a Restricted Subsidiary of the Corporation, which sale, assignment, transfer, conveyance, exchange or other disposition in each case does not violate the provisions of the Amended and Restated Indenture described under “—Repurchase at the Option of Holders—Asset Dispositions” and “—Certain Covenants—Merger and Consolidation” (it being understood that only such portion of the Net Available Cash as is required to be applied on or before the date of such release in accordance with the terms of the Amended and Restated Indenture needs to be applied in accordance therewith at such time);

(b) the proper designation of any Guarantor as an Unrestricted Subsidiary; or

(c) the Corporation’s exercise of its legal defeasance option or covenant defeasance option as described under “—Defeasance” or the discharge of the Corporation’s obligations under the Amended and Restated Indenture in accordance with the terms of the Amended and Restated Indenture.

The Amended and Restated Indenture will provide that an Amended Note Guarantee by a Guarantor may, at the option of the Corporation, be unconditionally released and discharged upon such Guarantor becoming an Immaterial Subsidiary.

The Corporation shall be required to deliver to the Indenture Trustee an Officer’s Certificate and Opinion of Counsel each stating that all conditions precedent provided for in the Amended and Restated Indenture relating to such transaction and/or release have been satisfied.

Payments on the Amended Notes; Paying Agent and Registrar

The Corporation will pay, or cause to be paid, the principal of, premium, if any, and interest on the Amended Notes at the office or agency designated by the Corporation. The Corporation has initially designated the Indenture Trustee to act as its paying agent (the “Paying Agent”) and registrar (the “Registrar”) at its corporate trust office. The

H - 3

Corporation may, however, change the Paying Agent or Registrar without prior notice to the Holders, and the Corporation or any of its Restricted Subsidiaries may act as Paying Agent or Registrar.

The Corporation will pay principal of, premium, if any, and interest on, Amended Notes in global form registered in the name of or held by CDS or its nominee in immediately available funds to CDS or its nominee, as the case may be, as the registered Holder of such global Amended Note.

Payment of Additional Amounts

All amounts paid or credited by the Corporation under or with respect to the Amended Notes will be made net of any withholding or deduction for or on account of any present or future Taxes imposed or levied by or on behalf of the government of Canada, any province or territory of Canada or any political subdivision or any authority or agency therein or thereof having power to tax, or any jurisdiction in which the Corporation is organized, resident, or doing business for tax purposes, or from or through which the Corporation (or its agents) makes any payment on the Amended Notes, or any taxing authority thereof, and the Corporation will not be required to pay any additional amounts to Holders in respect of any Taxes to the extent that such Taxes at any time become payable.

All payments made by or on behalf of any Guarantor (each such payor, a “Payor”) under or with respect to any Amended Note Guarantee will be made free and clear of and without withholding or deduction for or on account of, any present or future Taxes, imposed or levied by or on behalf of any jurisdiction in which such Guarantor is organized, carrying on business in for tax purposes, or is resident for tax purposes or any jurisdiction from or through which payment is made (including the jurisdiction of any paying agent) (each, a “Relevant Taxing Jurisdiction”), unless such Payor is required to withhold or deduct Taxes by law or by the interpretation or administration thereof. If any Payor is so required to withhold or deduct any amount for or on account of Taxes imposed by a Relevant Taxing Jurisdiction from any payment made under or with respect to any Amended Note Guarantee, such Payor will be required to pay such additional amounts (“Additional Amounts”) as may be necessary so that the net amount received by a Holder or beneficial owner of Amended Notes (including Additional Amounts) after such withholding or deduction will not be less than the amount such Holder or beneficial owner of Amended Notes would have received if such Taxes had not been withheld or deducted; provided that no Additional Amounts will be payable with respect to any Taxes payable by virtue of:

(a) the applicable Payor not dealing at arm’s length (within the meaning of the Tax Act) with such Holder or beneficial owner at the time of the payment;

(b) such Holder or beneficial owner being either (i) a “specified non-resident shareholder” of the Corporation or a relevant Guarantor or (ii) a non-resident person who does not deal at arm’s length with a specified shareholder of the Corporation or a Guarantor, in each case for purposes of subsection 18(5) of the Tax Act;

(c) any connection between such Holder or beneficial owner of Amended Notes and the Relevant Taxing Jurisdiction other than a connection resulting from the mere acquisition, ownership, holding or disposition of, or the enforcement of rights under or the receipt of payments in respect of, any Amended Notes or Amended Note Guarantees or beneficial interests therein;

(d) such Holder or beneficial owner failing to duly and timely comply (where such Holder or beneficial owner is legally eligible to do so) with a timely request of the Corporation to comply with information, documentation, certification or other evidentiary requirements concerning such Holder’s or beneficial owner’s nationality, residence, entitlement to treaty benefits, identity or connection with the Relevant Taxing Jurisdiction, if and to the extent that due and timely compliance with such request would have resulted in the reduction or elimination of any Taxes as to which Additional Amounts would have otherwise been payable to such Holder or beneficial owner of Amended Notes but for this clause (d), and provided that the Corporation provides written notice of such requirement to the applicable Holder or beneficial owner at least 30 days prior to the date of the payment in respect of which Additional Amounts would be payable;

(e) such Holder or beneficial owner being a fiduciary, a partnership or not the beneficial owner of any payment on an Amended Note, if and to the extent that, as a result of an applicable tax treaty, no Additional Amounts would have been payable had the beneficiary, partner or beneficial owner owned the Amended Note directly (but only if there is no material cost or expense associated with transferring such Amended Note to such beneficiary, partner or

H - 4

beneficial owner and no restriction on such transfer that is outside the control of such beneficiary, partner or beneficial owner);

(f) such Tax being an estate inheritance, gift, sales, transfer or personal property Tax or any similar Tax with respect to an Amended Note; or

(g) any combination of the foregoing clauses (a) to (f).

(Any Taxes, other than Taxes described in the foregoing clauses (a) to (g), being “Indemnified Taxes”.)

The applicable Payor will make any required withholding or deduction and remit the full amount deducted or withheld to the Relevant Taxing Jurisdiction in accordance with applicable law. Upon request, the Corporation will provide the Indenture Trustee with official receipts or other documentation evidencing the payment of the Taxes with respect to which Additional Amounts are paid. Each Guarantor will indemnify and hold harmless each Holder and beneficial owner for the amount of (A) any Indemnified Taxes not withheld or deducted by such Guarantor and levied or imposed and paid by such Holder or beneficial owner as a result of payments made under or with respect to the Guarantees, (B) any liability (including penalties, interest and expenses) arising therefrom or with respect thereto, and (C) any Indemnified Taxes imposed with respect to any reimbursement under clauses (a) or (b) above.

If a Payor is or will become obligated to pay Additional Amounts under or with respect to any payment made on an Amended Note Guarantee, then at least 30 days prior to the date of such payment (or, if such obligation to pay Additional Amounts arises shortly before or after the 30th day prior to such date, promptly after the date that the obligation to pay Additional Amounts arises), such Payor will deliver to the Indenture Trustee an Officer’s Certificate stating the fact that Additional Amounts will be payable and the amount so payable and such other information necessary to enable the Paying Agent to pay such Additional Amounts to Holders on the relevant payment date.

Whenever in the Amended and Restated Indenture there is mentioned in any context:

(1) the payment of principal;

(2) redemption prices or purchase prices in connection with a redemption or purchase of Amended Notes;

(3) interest; or

(4) any other amount payable on or with respect to any of the Amended Notes or any Amended Note Guarantee;

such reference shall be deemed to include payment of Additional Amounts as described under this heading to the extent that, in such context, Additional Amounts are, were or would be payable in respect thereof.

The obligations described under this heading will survive any termination, defeasance or discharge of the Amended and Restated Indenture and any transfer by an applicable Holder or beneficial owner of its Amended Notes to another applicable Holder or beneficial owner, and will apply, mutatis mutandis, to any jurisdiction in which any successor to the Corporation or any Guarantor is incorporated, engaged in business for tax purposes or resident for tax purposes, or any jurisdiction from or through which such successor makes any payment on an Amended Note Guarantee and, in each case, any department or political subdivision thereof or therein.

Transfer and Exchange

A Holder may transfer or exchange Amended Notes in accordance with the Amended and Restated Indenture. The Registrar may require a Holder, among other things, to furnish appropriate endorsements and transfer documents and such other documents as may be reasonably requested by it documenting the identity and/or signatures of the transferor and the transferee. No service charge will be imposed by the Corporation, the Indenture Trustee or the Registrar for any registration of transfer or exchange of Amended Notes, but the Corporation may require a Holder to pay a sum sufficient to cover any transfer tax or other governmental taxes and fees required by law or permitted

H - 5

by the Amended and Restated Indenture except to the extent any such tax or fee is to be reimbursed by the Corporation or Guarantor as an Indemnified Tax. The Corporation is not required to transfer or exchange any Amended Note selected for redemption. Also, the Corporation is not required to transfer or exchange any Amended Note for a period of 15 days before the day of mailing of a notice of redemption of Amended Notes to be redeemed.

The registered Holder of an Amended Note will be treated as the owner of it for all purposes.

Optional Redemption

Except as described under this heading and under the heading “—Repurchase at the Option of Holders—Change of Control—Stub Redemption,” the Amended 2025 Notes are not redeemable until October 11, 2021. On and after October 11, 2021, the Corporation may redeem the Amended Notes, in whole or in part, on one or more occasions, upon not less than 30 nor more than 60 days’ notice, at the redemption prices (expressed as a percentage of principal amount of the Amended 2025 Notes to be redeemed) set forth below, plus accrued and unpaid interest on the Amended 2025 Notes, if any, to (but excluding) the applicable date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on an interest payment date falling on or prior to such redemption date), if redeemed during the 12-month period beginning on October 11 of each of the years indicated below:

Year	Percentage
2021	103.938	%
2022	101.969	%
2023 and thereafter	100.00	%

Prior to October 11, 2021, the Corporation may on any one or more occasions, upon not less than 30 nor more than 60 days’ notice, redeem up to 35% of the original aggregate principal amount of the Amended 2025 Notes (calculated after giving effect to any issuance of Additional Notes of the same Series) with the Net Cash Proceeds of one or more Equity Offerings at a redemption price equal to 107.875% of the aggregate principal amount thereof, plus accrued and unpaid interest, if any, to (but excluding) the applicable redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on an interest payment date falling on or prior to such redemption date); provided that

(1) at least 65% of the original aggregate principal amount of the Amended 2025 Notes (calculated after giving effect to any issuance of Additional Notes of the same Series) remains outstanding after each such redemption; and

(2) such redemption occurs within 120 days after the closing of such Equity Offering.

In addition, at any time prior to October 11, 2021, the Corporation may redeem the Amended 2025 Notes, in whole or in part, upon not less than 30 nor more than 60 days’ prior notice mailed to each Holder of the Amended 2025 Notes or otherwise in accordance with the procedures of CDS at a redemption price equal to the greater of (i) the Canada Yield Price and (ii) 101% of the aggregate principal amount of the Amended 2025 Notes, plus accrued and unpaid interest, if any, to (but excluding) the redemption date (subject to the right of Holders of record on the relevant record date to receive interest due on an interest payment date falling on or prior to such redemption date).

H - 6

If the optional redemption date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid to the Person in whose name the Amended Note is registered at the close of business on such record date, and no additional interest will be payable to Holders whose Amended Notes will be subject to redemption by the Corporation.

In the case of any partial redemption, selection of the Amended Notes for redemption will be made in compliance with the requirements of the principal national securities exchange, if any, on which the Amended Notes are listed or, if the Amended Notes are not listed but are in global form, then by lot or otherwise in accordance with the procedures of CDS or, if the Amended Notes are not listed and not in global form on a pro rata basis, by lot or by such other method as the Indenture Trustee in its sole discretion will deem to be fair and appropriate, although no Amended Note of $1,000 in original principal amount or less will be redeemed in part. If any Amended Note is to be redeemed in part only, the notice of redemption relating to such Amended Note will state the portion of the principal amount thereof to be redeemed. A new Note in principal amount equal to the unredeemed portion thereof will be issued in the name of the Holder thereof upon cancellation of the original Amended Note.

Any redemption notice may, at the Corporation’s discretion, be subject to one or more conditions precedent, including completion of an Equity Offering or other corporate transaction.

Mandatory Redemption; Open Market Purchases

The Corporation is not required to make any mandatory redemption or sinking fund payments with respect to the Amended Notes. However, under certain circumstances, the Corporation may be required to offer to purchase the Amended Notes as described under the heading “—Repurchase at the Option of Holders.”

The Corporation may acquire Amended Notes by means other than a redemption, whether by tender offer, open market purchases, negotiated transactions or otherwise, in accordance with applicable securities laws and regulations, including, without limitation, Canadian Securities Legislation, so long as such acquisition does not otherwise violate the terms of the Amended and Restated Indenture.

Repurchase at the Option of Holders

Change of Control

If a Change of Control occurs, unless the Corporation has given notice to redeem all of the outstanding Amended Notes as described under “—Optional Redemption,” the Corporation will, within 30 days following such Change of Control, make an offer to purchase all of the outstanding Notes (a “Change of Control Offer”) at a purchase price in cash equal to 101% of the principal amount of such outstanding Amended Notes plus accrued and unpaid interest, if any, to (but excluding) the date of purchase (the “Change of Control Payment”) (subject to the right of Holders of record on the relevant record date to receive interest due on an interest payment date falling on or prior to the date of purchase).

The Corporation will mail a notice of such Change of Control Offer to each Holder or otherwise give notice in accordance with the applicable procedures of CDS, with a copy to the Indenture Trustee, stating:

(1) that a Change of Control Offer is being made and that all Series of Amended Notes properly tendered pursuant to such Change of Control Offer will be accepted for purchase by the

H - 7

Corporation at a purchase price in cash equal to 101% of the principal amount of such Amended Notes plus accrued and unpaid interest, if any, to the date of purchase (subject to the right of Holders of record on a record date to receive interest on an interest payment date);

(2) the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice is mailed) (the “Change of Control Payment Date”); and

(3) the procedures determined by the Corporation, consistent with the Amended and Restated Indenture, that a Holder must follow in order to have its Amended Notes repurchased.

On the Change of Control Payment Date, the Corporation will, to the extent lawful:

(1) accept for payment all Amended Notes or portions of Amended Notes (of $1,000 or integral multiples of $1,000 in excess thereof) validly tendered and not validly withdrawn pursuant to the Change of Control Offer;

(2) deposit with the Paying Agent an amount equal to the Change of Control Payment in respect of all Amended Notes or portions of Amended Notes so accepted for payment; and

(3) deliver or cause to be delivered to the Indenture Trustee for cancellation the Amended Notes so accepted for payment together with an Officer’s Certificate to the Indenture Trustee stating the aggregate principal amount of Amended Notes or portions of Amended Notes being purchased by the Corporation in accordance with the terms of this covenant.

The Paying Agent will promptly pay to each Holder of Amended Notes so accepted for payment the Change of Control Payment for such Amended Notes, and the Indenture Trustee, upon receipt of an authentication order from the Corporation will promptly authenticate and mail (or cause to be transferred by book entry) to each such Holder a new Amended Note equal in principal amount to any unpurchased portion of the Amended Notes surrendered, if any; provided that each such new Amended Note will be in a principal amount of $1,000 or integral multiples of $1,000 in excess thereof.

If the Change of Control Payment Date is on or after an interest record date and on or before the related interest payment date, the accrued and unpaid interest, if any, will be paid on the relevant interest payment date to the Person in whose name the Amended Note is registered at the close of business on such record date, and no additional interest will be payable to Holders whose Amended Notes are tendered pursuant to the Change of Control Offer.

Notwithstanding anything to the contrary herein, a Change of Control Offer may be made in advance of a Change of Control, and conditioned upon the occurrence of such Change of Control, if a definitive agreement is in place for the Change of Control at the time of making the Change of Control Offer.

The Change of Control provisions described above will be applicable whether or not any other provisions of the Amended and Restated Indenture are applicable. Except as described above with respect to a Change of Control, the Amended and Restated Indenture will not contain provisions that permit the Holders to require that the Corporation repurchase or redeem the Amended Notes in the event of a takeover, recapitalization or similar transaction.

The Corporation’s Credit Facilities contain, and future agreements may contain, prohibitions of certain events, including events that would constitute a Change of Control or an Asset Disposition, or repurchases of the Amended Notes upon a Change of Control or Asset Disposition, or events of default relating thereto. The exercise by the Holders of their right to require the Corporation to repurchase the Amended Notes upon a Change of Control or an Asset Disposition could cause a default under these other agreements, even if the Change of Control or Asset Disposition itself does not, due to the prohibition under these other agreements of such repurchases or the financial effect of such repurchases on the Corporation. In such circumstances, the Corporation could seek the consent of their other lenders to such consequences of a purchase of Amended Notes or could attempt to refinance such other borrowings. If the Corporation does not obtain a consent or repay those borrowings, any failure by the Corporation to purchase tendered notes would constitute an Event of Default under the Amended and Restated Indenture which

H - 8

could, in turn, constitute a default under the other Indebtedness. Finally, the Corporation’s ability to pay cash to the Holders upon a repurchase may be limited by the Corporation’s then existing financial resources.

The Corporation will not be required to make a Change of Control Offer upon a Change of Control if a third party makes an offer to purchase all of the outstanding Amended Notes in the manner, at the times and otherwise in compliance with the requirements set forth in the Amended and Restated Indenture applicable to a Change of Control Offer, and such third party purchases all Amended Notes validly tendered and not validly withdrawn pursuant to such offer to purchase.

The Corporation will comply with all applicable securities laws and regulations, including, without limitation, Canadian Securities Legislation and any other securities laws or regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of Amended Notes pursuant to a Change of Control Offer. To the extent that the provisions of any applicable securities laws or regulations conflict with provisions of the Amended and Restated Indenture, the Corporation will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations described in the Amended and Restated Indenture by virtue of the conflict.

The definition of “Change of Control” includes a disposition of all or substantially all of the property and assets of the Corporation and its Restricted Subsidiaries, taken as a whole, to any Person. Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve a disposition of “all or substantially all” of the property or assets of the Corporation and its Restricted Subsidiaries, taken as a whole. As a result, it may be unclear as to whether a Change of Control has occurred and whether a Holder may require the Corporation to make a Change of Control Offer. Certain provisions under the Amended and Restated Indenture relating to the Corporation’s obligation to make a Change of Control Offer may be waived or modified with the written consent of the Holders of a majority in principal amount of the Amended Notes.

Stub Redemption

In the event that Holders of not less than 90% of the aggregate principal amount of the outstanding Series of Amended Notes accept a Change of Control Offer and the Corporation purchases all of the Amended Notes of such Series held by such Holders, within 90 days of such purchase, the Corporation will have the right, upon not less than 30 days’ nor more than 60 days’ prior notice, to redeem all of the Amended Notes of such Series that remain outstanding following such purchase at a redemption price equal to the Change of Control Payment plus, to the extent not included in the Change of Control Payment, accrued and unpaid interest on the Amended Notes of such Series to (but excluding) the date of redemption (subject to the right of Holders of record on the relevant record date to receive interest due on an interest payment date that is on or prior to the redemption date).

Asset Dispositions

The Corporation will not, and will not permit any of its Restricted Subsidiaries to, consummate any Asset Disposition unless:

(1) the Corporation or such Restricted Subsidiary, as the case may be, receives consideration at least equal to the Fair Market Value (such Fair Market Value to be determined on the date of contractually agreeing to such Asset Disposition) of the shares and assets subject to such Asset Disposition; and

(2) at least 75% of the consideration from such Asset Disposition received by the Corporation or such Restricted Subsidiary, as the case may be, is in the form of cash or Cash Equivalents.

For the purposes of clause (2) above and for no other purpose, the following will be deemed to be cash:

(a) any liabilities (as shown on the Corporation’s or such Restricted Subsidiary’s most recent balance sheet) of the Corporation or any of its Restricted Subsidiaries (other than

H - 9

Subordinated Obligations or Guarantor Subordinated Obligations) that are assumed by the transferee of any such assets and from which the Corporation and all such Restricted Subsidiaries have been validly released by all creditors in writing;

(b) any Designated Non-Cash Consideration received by the Corporation or any of its Restricted Subsidiaries in such Asset Disposition having an aggregate Fair Market Value, taken together with all other Designated Non-Cash Consideration received pursuant to this clause (b) and clause (2) of the second last paragraph of this section that is at that time outstanding, not to exceed the greater of (x) $50 million and (y) 1.0% of Total Assets at the time of the receipt of such Designated Non-Cash Consideration (with the Fair Market Value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value);

(c) any securities, notes or other obligations received by the Corporation or any of its Restricted Subsidiaries from the transferee that are converted by the Corporation or such Restricted Subsidiary into cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received) within 180 days following the closing of such Asset Disposition; and

(d) any Additional Assets.

Within 360 days from the later of the date of such Asset Disposition or the receipt by the Corporation or such Restricted Subsidiary, as the case may be, of Net Available Cash from such Asset Disposition, the Corporation or such Restricted Subsidiary, as the case may be, may apply, at its option, an amount equal to 100% of the Net Available Cash from such Asset Disposition as follows:

(i) to repay (and if such Secured Indebtedness is revolving credit facility Indebtedness, to permanently reduce commitments with respect thereto) Secured Indebtedness of the Corporation (other than any Disqualified Stock or Subordinated Obligations) or Secured Indebtedness of a Restricted Subsidiary of the Corporation (other than any Disqualified Stock or Guarantor Subordinated Obligations) or Indebtedness of a Non-Guarantor Restricted Subsidiary, in each case other than Indebtedness owed to the Corporation or a Restricted Subsidiary of the Corporation;

(ii) to repay other Indebtedness of the Corporation (other than any Disqualified Stock or Subordinated Obligations) or other Indebtedness of a Restricted Subsidiary of the Corporation (other than any Disqualified Stock or Guarantor Subordinated Obligations), in each case other than Indebtedness owed to the Corporation or a Restricted Subsidiary of the Corporation; provided that the Corporation shall equally and ratably reduce obligations under the Amended Notes as provided under “—Optional Redemption,” through open market purchases (to the extent such purchases are at or above 100% of the principal amount thereof) or by making an offer (in accordance with the procedures set forth below for an Asset Disposition Offer) to all Holders to purchase their Amended Notes at 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but excluding) the date of purchase (subject to the right of Holders of record on the relevant record date to receive interest due on an interest payment date falling on or prior to the date of purchase);

(iii) to invest in Additional Assets or make capital expenditures that are used or useful in a Similar Business; or

(iv) a combination of reductions and investments permitted by the foregoing clauses (i) through (iii);

provided that pending the final application of any such Net Available Cash in accordance with clause (i), (ii), (iii) or (iv) above, the Corporation and its Restricted Subsidiaries may temporarily reduce Indebtedness or otherwise invest such Net Available Cash in any manner not prohibited by the Amended and Restated Indenture; provided, further,

H - 10

that in the case of clause (iii), a binding commitment to invest in Additional Assets or to make capital expenditures that are used or useful in a Similar Business shall be treated as a permitted application of the Net Available Cash on the date of such commitment so long as the Corporation or such Restricted Subsidiary enters into such commitment with the good faith expectation that such Net Available Cash will be applied to satisfy such commitment within 135 days of such commitment (an “Acceptable Commitment”), it being understood that if an Acceptable Commitment is later cancelled or terminated for any reason before such Net Available Cash is applied pursuant thereto, then such Net Available Cash shall constitute Excess Proceeds (as defined herein) until such Net Available Cash is applied or invested as provided in this paragraph.

Any Net Available Cash from Asset Dispositions that is not applied or invested as provided in the preceding paragraph will be deemed to constitute “Excess Proceeds”. On the 361st day after an Asset Disposition, or earlier at the Corporation’s option, if the aggregate amount of Excess Proceeds exceeds $40.0 million, the Corporation will be required to make an offer (“Asset Disposition Offer”) to all Holders and, to the extent required by the terms of outstanding Pari Passu Indebtedness, to all holders of such Pari Passu Indebtedness, to purchase the maximum aggregate principal amount of Amended Notes and any such Pari Passu Indebtedness that may be purchased out of the Excess Proceeds, at an offer price in cash in an amount equal to 100% of the principal amount thereof, plus accrued and unpaid interest, if any, to (but excluding) the date of purchase (subject to the right of Holders of record on a record date to receive interest due on the relevant interest payment date), in accordance with the procedures set forth in the Amended and Restated Indenture or the agreements governing the Pari Passu Indebtedness, as applicable. The Corporation shall commence an Asset Disposition Offer with respect to Excess Proceeds by mailing (or otherwise communicating in accordance with the procedures of CDS) the notice required pursuant to the terms of the Amended and Restated Indenture, with a copy to the Indenture Trustee.

To the extent that the aggregate amount of Amended Notes and Pari Passu Indebtedness validly tendered and not validly withdrawn pursuant to an Asset Disposition Offer is less than the Excess Proceeds, the Corporation or the applicable Restricted Subsidiary may use any remaining Excess Proceeds for general corporate purposes, subject to other covenants contained in the Amended and Restated Indenture. If the aggregate principal amount of Amended Notes surrendered by Holders thereof and other Pari Passu Indebtedness surrendered by holders thereof or lenders thereunder, collectively, exceeds the amount of Excess Proceeds, the Amended Notes to be repurchased shall be selected in compliance with the requirements of the principal national securities exchange, if any, on which the Amended Notes are listed or, if the Amended Notes are not listed but are in global form, then by lot or otherwise in accordance with the procedures of CDS or, if the Amended Notes are not listed and not in global form on a pro rata basis, by lot or by such other method as the Indenture Trustee in its sole discretion will deem to be fair and appropriate, and the Corporation shall select Pari Passu Indebtedness to be purchased on a pro rata basis on the basis of the aggregate accreted value or principal amount of tendered Amended Notes and Pari Passu Indebtedness. Upon completion of such Asset Disposition Offer, regardless of the amount of Excess Proceeds used to purchase Amended Notes or other Pari Passu Indebtedness pursuant to such Asset Disposition Offer, the amount of Excess Proceeds shall be reset at zero.

The Asset Disposition Offer will remain open for a period of 20 Business Days following its commencement, except to the extent that a longer period is required by applicable law (the “Asset Disposition Offer Period”). No later than five Business Days after the termination of the Asset Disposition Offer Period (the “Asset Disposition Purchase Date”), the Corporation will apply all Excess Proceeds to the purchase of the aggregate principal amount of Amended Notes and, if applicable, Pari Passu Indebtedness (on a pro rata basis, if applicable) required to be purchased pursuant to this covenant (the “Asset Disposition Offer Amount”) or, if less than the Asset Disposition Offer Amount of Amended Notes (and, if applicable, Pari Passu Indebtedness) has been so validly tendered and not validly withdrawn, all Amended Notes and Pari Passu Indebtedness validly tendered and not validly withdrawn in response to the Asset Disposition Offer.

On or before the Asset Disposition Purchase Date, the Corporation will, to the extent lawful, accept for payment, by lot or on a pro rata basis, as applicable, the Asset Disposition Offer Amount of Amended Notes and Pari Passu Indebtedness or portions thereof validly tendered and not validly withdrawn pursuant to the Asset Disposition Offer, or if less than the Asset Disposition Offer Amount has been validly tendered and not validly withdrawn, all Amended Notes and Pari Passu Indebtedness so tendered and not withdrawn, in the case of the Amended Notes in integral multiples of $1,000; provided that if, following repurchase of a portion of an Amended Note, the remaining principal amount of such Amended Note outstanding immediately after such repurchase would be less than $1,000, then the portion of such Amended Note so repurchased shall be reduced so that the remaining principal amount of

H - 11

such Note outstanding immediately after such repurchase is $1,000. The Corporation will deliver, or cause to be delivered, to the Indenture Trustee the Amended Notes so accepted and an Officer’s Certificate stating the aggregate principal amount of Amended Notes or portions thereof so accepted and that such Amended Notes or portions thereof were accepted for payment by the Corporation in accordance with the terms of this covenant. In addition, the Corporation will deliver all certificates and notes required, if any, by the agreements governing the Pari Passu Indebtedness. The Paying Agent or the Corporation, as the case may be, will promptly, but in no event later than five Business Days after termination of the Asset Disposition Offer Period, mail or deliver to each tendering Holder or holder or lender of Pari Passu Indebtedness, as the case may be, an amount equal to the purchase price of the Amended Notes or Pari Passu Indebtedness so validly tendered and not properly withdrawn by such holder or lender, as the case may be, and accepted by the Corporation for purchase, and, if less than all of the Amended Notes tendered are purchased pursuant to the Asset Disposition Offer, the Corporation will promptly issue a new Amended Note, and the Indenture Trustee, upon delivery of an authentication order from the Corporation, will authenticate and mail or deliver (or cause to be transferred by book-entry) such new Amended Note to such Holder (it being understood that, notwithstanding anything in the Amended and Restated Indenture to the contrary, no Opinion of Counsel or Officer’s Certificate will be required for the Indenture Trustee to authenticate and mail or deliver such new Note) in a principal amount equal to any unpurchased portion of the Amended Note surrendered; provided that each such new Amended Note will be in a principal amount of $1,000 or an integral multiple of $1,000 in excess thereof. In addition, the Corporation will take any and all other actions required by the agreements governing the Pari Passu Indebtedness. Any Amended Note not so accepted will be promptly mailed or delivered by the Corporation to the Holder thereof. The Corporation will publicly announce the results of the Asset Disposition Offer on the Asset Disposition Purchase Date.

The Corporation will comply with all applicable securities laws and regulations, including, without limitation, Canadian Securities Legislation and any other securities laws or regulations thereunder to the extent those laws and regulations are applicable in connection with the repurchase of Amended Notes pursuant to an Asset Disposition Offer. To the extent that the provisions of any applicable securities laws or regulations conflict with provisions of the Amended and Restated Indenture, the Corporation will comply with the applicable securities laws and regulations and will not be deemed to have breached its obligations under the Amended and Restated Indenture by virtue of any conflict.

The Corporation will not permit any Sherritt Ambatovy Subsidiary to, (a) sell, transfer or otherwise dispose of (excluding any issuance of Capital Stock which is governed by clause (b) below) Capital Stock of an Ambatovy Entity (other than directors’ qualifying shares and shares issued to foreign nationals as required by law) or (b) issue any Capital Stock of a Sherritt Ambatovy Subsidiary (other than an issuance of Capital Stock to the Corporation or a Restricted Subsidiary and other than directors’ qualifying shares and shares issued to foreign nationals as required by law) having a Fair Market Value in excess of $25.0 million unless:

(1) such Sherritt Ambatovy Subsidiary receives consideration at least equal to the Fair Market Value (such Fair Market Value to be determined on the date of contractually agreeing to such disposition or issuance) of the Capital Stock disposed or issued, and

(2) at least 75% of the consideration received by such Sherritt Ambatovy Subsidiary is in the form of cash or Cash Equivalents.

To the extent the Net Available Cash from a sale, transfer, disposition or issuance described in the preceding paragraph is received by the Corporation or a Restricted Subsidiary, by way of a dividend, distribution or payment of principal or interest from a Sherritt Ambatovy Subsidiary, and not reinvested in the Ambatovy Project, within 360 days of the receipt of such Net Available Cash, the Corporation or such Restricted Subsidiary shall apply at its option an amount equal to 100% of such Net Available Cash received by the Corporation or such Restricted Subsidiary, and not reinvested in the Ambatovy Project, in compliance with the second or third paragraph of this covenant.

For purposes of clause (2) of the second preceding paragraph and for no other purpose, the following will be deemed to be cash:

(1) any liabilities (as shown on the Corporation’s or such Restricted Subsidiary’s or Sherritt Ambatovy Subsidiary’s most recent balance sheet) of the Corporation or any of its Restricted

H - 12

Subsidiaries or any Sherritt Ambatovy Subsidiary (other than Subordinated Obligations or Guarantor Subordinated Obligations) that are assumed by the transferee of any such Capital Stock and from which the Corporation and all such Restricted Subsidiaries and Ambatovy Subsidiaries have been validly released by all creditors in writing;

(2) any Designated Non-Cash Consideration received by the Corporation, any of its Restricted Subsidiaries or any Sherritt Ambatovy Subsidiary in such Asset Disposition having an aggregate Fair Market Value, taken together with all other Designated Non-Cash Consideration received pursuant to this clause (2), and clause 2(b) of the first paragraph under the heading “—Asset Dispositions”, that is at that time outstanding, not to exceed the greater of (x) $50 million and (y) 1.0% of Total Assets at the time of the receipt of such Designated Non-Cash Consideration (with the Fair Market Value of each item of Designated Non-Cash Consideration being measured at the time received and without giving effect to subsequent changes in value);

(3) any securities, notes or other obligations received by the Corporation or any of its Restricted Subsidiaries or any Sherritt Ambatovy Subsidiary from the transferee that are converted by the Corporation, such Restricted Subsidiary or such Sherritt Ambatovy Subsidiary into cash or Cash Equivalents (to the extent of the cash or Cash Equivalents received) within 180 days following the closing of such Disposition or issuance; and

(4) any commitment by the transferee to fund the future capital requirements of the Ambatovy Project which relieves the Corporation, its Restricted Subsidiaries’ and the Sherritt Ambatovy Subsidiaries’ obligation to fund in an amount equal to the budgeted capital contribution requirements otherwise allocated to the Corporation, its Restricted Subsidiaries and the Sherritt Ambatovy Subsidiaries.

In addition to the foregoing, if an Ambatovy Entity (other than a Sherritt Ambatovy Subsidiary) completes any sale, lease (other than an operating lease entered into in the ordinary course of business), transfer, other disposition, or a series of related sales, leases, transfers, or dispositions that are part of a common plan, of shares of Capital Stock of a Subsidiary or Joint Venture (other than directors’ qualifying shares and shares issued to foreign nationals as required by law), property or other assets, that, in each case, would otherwise constitute an Asset Disposition if effected by the Corporation or a Restricted Subsidiary, and cash proceeds of such disposition are distributed to the investors in the Ambatovy Joint Venture, then the amount of such cash proceeds received by the Corporation, a Restricted Subsidiary or a Sherritt Ambatovy Subsidiary will, after deduction of all amounts applied to repay Indebtedness under the APIL Loans and the CFA Loans, be deemed to be Net Available Cash hereunder (received on the day distributed to the Corporation, a Restricted Subsidiary or a Sherritt Ambatovy Subsidiary) and will be applied in accordance with the third and fourth paragraphs of this covenant.

The Corporation’s obligation to make an Asset Disposition Offer to the Holders of any Series following an Asset Disposition that has been consummated may be waived or modified after the occurrence of such Asset Disposition with the written consent of Holders of such Series by way of Extraordinary Resolution.

Certain Covenants

Effectiveness of Covenants

Following the first day:

(a) the Amended Notes have an Investment Grade Rating from one or more of the Rating Agencies; and

(b) no Default or Event of Default has occurred and is continuing under the Amended and Restated Indenture,

the Corporation and its Restricted Subsidiaries will not be subject to the provisions of the Amended and Restated Indenture summarized under the following headings:

H - 13

· “—Repurchase at the Option of Holders—Asset Dispositions,”

· “—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock,”

· “—Limitation on Restricted Payments,”

· “—Limitation on Restrictions on Distributions from Restricted Subsidiaries,” and

· “—Limitation on Affiliate Transactions”

(collectively, the “Suspended Covenants”). If at any time the Amended Notes’ credit rating is downgraded from an Investment Grade Rating by any Rating Agency or if a Default or Event of Default occurs and is continuing, then the Suspended Covenants will thereafter be reinstated as if such covenants had never been suspended (the “Reinstatement Date”) and be applicable pursuant to the terms of the Amended and Restated Indenture (including in connection with performing any calculation or assessment to determine compliance with the terms of the Amended and Restated Indenture), unless and until the Amended Notes subsequently attain an Investment Grade Rating and no Default or Event of Default is in existence (in which event the Suspended Covenants shall no longer be in effect for such time that the Amended Notes maintain an Investment Grade Rating and no Default or Event of Default is in existence); provided, however, that no Default, Event of Default or breach of any kind shall be deemed to exist under the Amended and Restated Indenture, the Amended Notes or the Amended Note Guarantees with respect to the Suspended Covenants based on, and none of the Corporation or any of its Subsidiaries shall bear any liability for, any actions taken or events occurring during the Suspension Period (as defined below), regardless of whether such actions or events would have been permitted if the applicable Suspended Covenants remained in effect during such period. The period of time between the date of suspension of the covenants and the Reinstatement Date is referred to as the “Suspension Period.”

On the Reinstatement Date, all Indebtedness incurred during the Suspension Period will be classified to have been incurred pursuant to the first paragraph of “—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock” or one of the clauses set forth in the second paragraph of “—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock” (to the extent such Indebtedness would be permitted to be incurred thereunder as of the Reinstatement Date and after giving effect to Indebtedness incurred prior to the Suspension Period and outstanding on the Reinstatement Date). To the extent such Indebtedness would not be so permitted to be incurred pursuant to the first or second paragraph of “—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock,” such Indebtedness will be deemed to have been outstanding on the Issue Date, so that it is classified under clause (3) of the second paragraph of “—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock”. On the Reinstatement Date, any contract, agreement, loan, advance or Guarantee with, or for the benefit of, any Affiliate of the Corporation entered into during the Suspension Period will be deemed to have been in effect as of the Issue Date for purposes of clause (6) of the second paragraph of “— Limitation on Affiliate Transactions”. Calculations made after the Reinstatement Date of the amount available to be made as Restricted Payments under “—Limitation on Restricted Payments” will be made as though the covenant described under “—Limitation on Restricted Payments” had been in effect since the Issue Date and throughout the Suspension Period. Accordingly, Restricted Payments made during the Suspension Period will reduce the amount available to be made as Restricted Payments under the first paragraph of “—Limitation on Restricted Payments.”

During any period when the Suspended Covenants are suspended, the Board of Directors of the Corporation may not designate any of the Corporation’s Subsidiaries as Unrestricted Subsidiaries pursuant to the Amended and Restated Indenture.

There can be no assurance that the Amended Notes will ever achieve or maintain an Investment Grade Rating.

The Corporation will provide the Indenture Trustee and the Holders with prompt written notice of any suspension of the Suspended Covenants or the subsequent reinstatement of such Suspended Covenants.

H - 14

Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock

The Corporation will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, incur any Indebtedness (including Acquired Indebtedness); provided, however, that the Corporation and the Guarantors may incur Indebtedness if on the date thereof and after giving effect thereto on a pro forma basis, the Consolidated Coverage Ratio for the Corporation and its Restricted Subsidiaries is at least 2.00 to 1.00.

The first paragraph of this covenant will not prohibit the incurrence of the following Indebtedness:

(1) Indebtedness of the Corporation or any Restricted Subsidiary incurred under a Debt Facility and the issuance and creation of letters of credit, bankers’ acceptances, performance or surety bonds and other similar instruments thereunder (with any such undrawn instruments and reimbursement obligations relating to any payables that are satisfied within 30 days being deemed not to be Indebtedness, and bankers’ acceptances being deemed to have a principal amount equal to the face amount thereof) in an aggregate amount not to exceed the greater of (x) $200 million and (y) 4% of Total Assets at the time of such incurrence;

(2) Indebtedness represented by the Amended Notes (including any Amended Note Guarantee) (other than any Additional Notes);

(3) Indebtedness of the Corporation and any of its Restricted Subsidiaries in existence on the Issue Date (including without limitation the Ambatovy Guarantee and the CFA Loans, but excluding Indebtedness described in clauses (1), (2), (4), (5), (7), (9), (10) and (11) of this paragraph);

(4) Guarantees by (a) the Corporation or Guarantors of Indebtedness permitted to be incurred by the Corporation or a Guarantor in accordance with the provisions of the Amended and Restated Indenture; provided that in the event such Indebtedness that is being Guaranteed is a Subordinated Obligation or a Guarantor Subordinated Obligation, then the related Guarantee shall be subordinated in right of payment to the Amended Notes or the Amended Note Guarantee, as the case may be, and (b) Non-Guarantors of Indebtedness incurred by Non-Guarantors in accordance with the provisions of the Amended and Restated Indenture;

(5) Indebtedness of the Corporation owing to and held by any of its Restricted Subsidiaries or Indebtedness of a Restricted Subsidiary of the Corporation owing to and held by the Corporation or any other Restricted Subsidiary of the Corporation; provided, however, that:

(a) if the Corporation is the obligor on Indebtedness owing to a Non-Guarantor, such Indebtedness is expressly subordinated in right of payment to all Obligations with respect to the Amended Notes;

(b) if a Guarantor is the obligor on such Indebtedness and a Non-Guarantor is the obligee, such Indebtedness is expressly subordinated in right of payment to the Amended Note Guarantee of such Guarantor; and

(c) (i) any subsequent issuance or transfer (other than Permitted Liens until the assets subject thereto have been foreclosed upon) of Capital Stock or any other event which results in any such Indebtedness being beneficially held by a Person other than the Corporation or any of its Restricted Subsidiaries; and

(ii) any sale or other transfer (other than Permitted Liens until the assets subject thereto have been foreclosed upon) of any such Indebtedness to a Person other than the Corporation or any of its Restricted Subsidiaries,

shall be deemed, in each case under this clause (5)(c), to constitute an incurrence of such Indebtedness by the Corporation or such Restricted Subsidiary, as the case may be;

H - 15

(6) Indebtedness of (x) any Person incurred and outstanding on the date on which such Person became a Restricted Subsidiary of the Corporation or was acquired by, or merged into or amalgamated, arranged or consolidated with, the Corporation or any of its Restricted Subsidiaries or (y) such Persons or the Corporation or any of its Restricted Subsidiaries incurred (A) to provide all or any portion of the funds utilized to consummate the transaction or series of related transactions pursuant to which such Person became a Restricted Subsidiary of the Corporation or was otherwise acquired by, or merged into or amalgamated, arranged or consolidated with the Corporation or any of its Restricted Subsidiaries or (B) otherwise in connection with, or in contemplation of, such acquisition, merger, amalgamation, arrangement or consolidation; provided, however, in each case set forth in clause (x) or (y), that at the time such Person is acquired, merged, amalgamated, arranged or consolidated or such Indebtedness was incurred, either:

(a) the Corporation would have been able to incur $1.00 of additional Indebtedness pursuant to the first paragraph of this covenant after giving effect to such transaction or series of related transactions and the incurrence of such Indebtedness pursuant to this clause (6); or

(b) the Consolidated Coverage Ratio of the Corporation and its Restricted Subsidiaries would have been higher than such ratio immediately prior to such acquisition, merger, amalgamation, arrangement or consolidation, after giving effect to such transaction or series of related transactions and the incurrence of such Indebtedness pursuant to this clause (6);

(7) Indebtedness under Hedging Obligations that are not incurred for speculative purposes;

(8) Indebtedness (including Capitalized Lease Obligations) of the Corporation or any of its Restricted Subsidiaries incurred to finance the purchase, design, lease, construction, repair, replacement or improvement of any property (real or personal), plant or equipment used or to be used in a Similar Business through the direct or indirect purchase of such property, plant or equipment, provided such Indebtedness is incurred within 365 days of the construction, acquisition or improvement of such property, plant or equipment, and any Indebtedness of the Corporation or any of its Restricted Subsidiaries that serves to refund or refinance any Indebtedness incurred pursuant to this clause (8), in an aggregate outstanding principal amount which, when taken together with the principal amount of all other Indebtedness incurred pursuant to this clause (8) then outstanding, will not exceed the greater of (x) $125.0 million and (y) 2.50% of Total Assets, at any time outstanding;

(9) Indebtedness incurred by the Corporation or any of its Restricted Subsidiaries in respect of (a) workers’ compensation claims, health, disability or other employee benefits; (b) self-insurance obligations or property, casualty, liability or other insurance; and (c) statutory, appeal, completion, export, import, customs, revenue, performance, bid, surety, reclamation, remediation and similar bonds and completion guarantees (not for borrowed money) provided in the ordinary course of business;

(10) Indebtedness arising from agreements of the Corporation or any of its Restricted Subsidiaries providing for indemnification, adjustment of purchase price, earn-out or similar obligations, in each case, incurred or assumed in connection with the disposition of any business or assets of the Corporation or any business, assets or Capital Stock of any of its Restricted Subsidiaries, other than Guarantees of Indebtedness incurred by any Person acquiring all or any portion of such business, assets or Capital Stock for the purpose of financing such acquisition; provided that:

(a) the maximum aggregate liability in respect of all such Indebtedness shall at no time exceed the gross proceeds, including non-cash proceeds (the Fair Market Value of such non-cash proceeds being measured at the time received and without giving effect to subsequent changes in value) actually received by the Corporation and its Restricted Subsidiaries in connection with such disposition; and

H - 16

(b) such Indebtedness is not reflected as indebtedness on the balance sheet of the Corporation or any of its Restricted Subsidiaries (contingent obligations referred to in a footnote to financial statements and not otherwise reflected on the balance sheet will not be deemed to be reflected on such balance sheet for purposes of this clause (10));

(11) Indebtedness arising from the honoring by a bank or other financial institution of a check, draft or similar instrument (except in the case of daylight overdrafts) drawn against insufficient funds in the ordinary course of business; provided, however, that such Indebtedness is extinguished within five Business Days of incurrence;

(12) Indebtedness in the form of letters of credit, and reimbursement obligations relating to letters of credit that are satisfied within 30 days of being drawn;

(13) the incurrence or issuance by the Corporation or any of its Restricted Subsidiaries of Refinancing Indebtedness that serves (or will serve) to extend, renew, replace, defease, discharge, retire for value, refund or refinance any Indebtedness incurred as permitted under the first paragraph of this covenant or clauses (2), (3), (6), (19) or (20) of this second paragraph of this covenant or this clause (13), or any Indebtedness issued to so extend, renew, replace, defease, discharge, retire for value, refund or refinance such Indebtedness, including additional Indebtedness incurred to pay premiums (including reasonable, as determined in good faith by Senior Management, tender premiums), defeasance costs, accrued interest and fees and expenses in connection therewith;

(14) Indebtedness of the Corporation or any of its Restricted Subsidiaries consisting of the financing of insurance premiums incurred in the ordinary course of business;

(15) Indebtedness of the Corporation or any of its Restricted Subsidiaries consisting of take-or-pay obligations contained in supply arrangements incurred in the ordinary course of business;

(16) Non-Recourse Debt;

(17) Indebtedness of the Corporation, to the extent the net proceeds thereof are promptly (a) used to purchase the Amended Notes tendered in connection with a Change of Control Offer or (b) deposited to defease or discharge the Amended Notes as described under “Defeasance” or “Satisfaction and Discharge”;

(18) Indebtedness of the Corporation or any of its Restricted Subsidiaries in respect of Cash Management Agreements entered into in the ordinary course of business;

(19) Indebtedness of the Corporation or any of its Restricted Subsidiaries with respect to Guarantees of Indebtedness of Unrestricted Subsidiaries and Joint Ventures, in an aggregate principal amount under this clause (19) at any one time outstanding not to exceed the greater of (x) $150 million and (y) 3.0% of Total Assets; and

(20) in addition to the items referred to in clauses (1) through (19) above, Indebtedness of the Corporation and its Restricted Subsidiaries in an aggregate principal amount under this clause (20) at any one time outstanding not to exceed the greater of (x) $200 million and (y) 4.0% of Total Assets.

For purposes of determining compliance with, and the outstanding principal amount of any particular Indebtedness incurred pursuant to and in compliance with, this covenant:

(1) in the event that Indebtedness meets the criteria of more than one of the types of Indebtedness described in the second paragraph of this covenant or can be incurred pursuant to the first paragraph of this covenant, the Corporation, in its sole discretion, will classify such item of Indebtedness on the date of incurrence and may later classify such item of Indebtedness in any manner that complies with the first or second paragraph of this covenant and only be required to

H - 17

include the amount and type of such Indebtedness in the first paragraph or one of such clauses under the second paragraph of this covenant provided that all Indebtedness outstanding under the Credit Facilities on the Issue Date will be treated as incurred on the Issue Date under clause (1) of the second paragraph of this covenant;

(2) Guarantees of, or obligations in respect of letters of credit relating to, Indebtedness that is otherwise included in the determination of a particular amount of Indebtedness shall not be included;

(3) if obligations in respect of letters of credit are incurred pursuant to a Debt Facility and are being treated as incurred pursuant to clause (1) of the second paragraph above and the letters of credit relate to other Indebtedness, then such other Indebtedness shall not be included;

(4) the principal amount associated with any Disqualified Stock of the Corporation or any of its Restricted Subsidiaries, or Preferred Stock of a Non-Guarantor, will be equal to the greater of the maximum mandatory redemption or repurchase price (not including, in either case, any redemption or repurchase premium) or the liquidation preference thereof;

(5) Indebtedness permitted by this covenant need not be permitted solely by reference to one provision permitting such Indebtedness but may be permitted in part by one such provision and in part by one or more other provisions of this covenant permitting such Indebtedness;

(6) the principal amount of any Indebtedness outstanding in connection with a securitization transaction or series of securitization transactions is the amount of obligations outstanding under the legal documents entered into as part of such transaction that would be characterized as principal if such transaction were structured as a secured lending transaction rather than as a purchase relating to such transaction; and

(7) the amount of Indebtedness issued at a price that is less than the principal amount thereof will be equal to the amount of the liability in respect thereof determined in accordance with IFRS.

Accrual of interest, accrual of dividends, the accretion of accreted value, the amortization of debt discount, the payment of interest in the form of additional Indebtedness, and the payment of dividends in the form of additional shares of Preferred Stock or Disqualified Stock will not be deemed to be an incurrence of Indebtedness for purposes of this covenant. The amount of any Indebtedness outstanding as of any date shall be (i) the accreted value thereof in the case of any Indebtedness issued with original issue discount or the aggregate principal amount outstanding in the case of Indebtedness issued with interest payable in kind and (ii) the principal amount or liquidation preference thereof, together with any interest thereon that is more than 30 days past due, in the case of any other Indebtedness.

For purposes of determining compliance with any Canadian dollar-denominated restriction on the incurrence of Indebtedness, the Canadian dollar-equivalent principal amount of Indebtedness denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date such indebtedness was incurred, in the case of term Indebtedness, or first committed, in the case of revolving credit Indebtedness; provided that if such Indebtedness is incurred to refinance other Indebtedness denominated in a foreign currency, and such refinancing would cause the applicable Canadian dollar-denominated restriction to be exceeded if calculated at the relevant currency exchange rate in effect on the date of such refinancing, such Canadian dollar-denominated restriction shall be deemed not to have been exceeded so long as the principal amount of such Refinancing Indebtedness does not exceed the principal amount of such Indebtedness being refinanced. If at any time an Unrestricted Subsidiary becomes a Restricted Subsidiary of the Corporation, any Indebtedness of such Subsidiary shall be deemed to be incurred by a Restricted Subsidiary of the Corporation as of such date (and, if such Indebtedness is not permitted to be incurred as of such date under this “—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock” covenant, the Corporation shall be in Default of this covenant).

Notwithstanding any other provision of this covenant, the maximum amount of Indebtedness that the Corporation and its Restricted Subsidiaries may incur pursuant to this covenant shall not be deemed to be exceeded solely as a result of fluctuations in the exchange rate of currencies. The principal amount of any Indebtedness incurred to refinance other Indebtedness, if incurred in a different currency from the Indebtedness being refinanced, shall be

H - 18

calculated based on the currency exchange rate applicable to the currencies in which such Refinancing Indebtedness is denominated that is in effect on the date of such refinancing.

Limitation on Restricted Payments

The Corporation will not, and will not permit any of its Restricted Subsidiaries, directly or indirectly, to:

(1) declare or pay any dividend or make any distribution (whether made in cash, securities or other property) on or in respect of its or any of its Restricted Subsidiaries’ Capital Stock (including any payment in connection with any merger, amalgamation, arrangement or consolidation involving the Corporation or any of its Restricted Subsidiaries) other than:

(a) dividends or distributions payable solely in Capital Stock of the Corporation (other than Disqualified Stock); and

(b) dividends or distributions by a Restricted Subsidiary of the Corporation, so long as, in the case of any dividend or distribution payable on or in respect of any Capital Stock of a Restricted Subsidiary of the Corporation that is not a Wholly-Owned Restricted Subsidiary, the Corporation or any of its Restricted Subsidiaries holding such Capital Stock receives at least its pro rata share of such dividend or distribution;

(2) purchase, redeem, retire or otherwise acquire for value, including in connection with any merger, amalgamation, arrangement or consolidation, any Capital Stock of the Corporation held by Persons other than the Corporation or any of its Restricted Subsidiaries (other than in exchange for Capital Stock of the Corporation (other than Disqualified Stock));

(3) make any principal payment on, or purchase, repurchase, redeem, defease or otherwise acquire or retire for value, in each case prior to any scheduled repayment, scheduled sinking fund payment or scheduled maturity, any Subordinated Obligations or Guarantor Subordinated Obligations, other than:

(a) Indebtedness of the Corporation owing to and held by any Restricted Subsidiary or Indebtedness of a Restricted Subsidiary owing to and held by the Corporation or any Restricted Subsidiary permitted under clause (5) of the second paragraph of the covenant “—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; or

(b) the making of any principal payment on, or the purchase, repurchase, redemption, defeasance or other acquisition or retirement of, Subordinated Obligations or Guarantor Subordinated Obligations in anticipation of satisfying a sinking fund obligation, principal installment or final maturity, in each case due within one year of the date of purchase, repurchase, redemption, defeasance or other acquisition or retirement; or

(4) make any Restricted Investment.

(all such payments and other actions referred to in clauses (1) through (4) (other than any exception thereto) shall be referred to as a “Restricted Payment”), unless, at the time of and after giving effect to such Restricted Payment:

(a) no Default shall have occurred and be continuing (or would result therefrom);

(b) immediately after giving effect to such transaction on a pro forma basis, the Corporation could incur $1.00 of additional Indebtedness under the provisions of the first paragraph of the “—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock” covenant; and

(c) the aggregate amount of such Restricted Payment and all other Restricted Payments declared or made subsequent to the Issue Date (without duplication and excluding Restricted Payments made

H - 19

pursuant to clauses (1), (2), (3), (4), (7), (8), (9), (10), (11), (12), (13) and (14) of the next succeeding paragraph) would not exceed the sum of (without duplication):

(i) 50% of Consolidated Net Income for the period (treated as one accounting period) from October 1, 2014 to the end of the most recent fiscal quarter ending prior to the date of such Restricted Payment for which internal financial statements are available (or, in case such Consolidated Net Income is a deficit, minus 100% of such deficit); plus

(ii) 100% of the aggregate Net Cash Proceeds, or Fair Market Value of assets, received by the Corporation from the issue or sale of its Capital Stock (other than Disqualified Stock) or other capital contributions subsequent to the Issue Date other than Net Cash Proceeds, or Fair Market Value of assets received, by the Corporation from the issue or sale of such Capital Stock to a Restricted Subsidiary of the Corporation or to an employee stock ownership plan, option plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by the Corporation or any of its Restricted Subsidiaries unless such loans have been repaid with cash on or prior to the date of determination; plus

(iii) the amount by which Indebtedness of the Corporation or any of its Restricted Subsidiaries is reduced on the Corporation’s consolidated balance sheet upon the conversion or exchange subsequent to the Issue Date of any Indebtedness of the Corporation or any of its Restricted Subsidiaries (other than any such Indebtedness held by a Restricted Subsidiary of the Corporation) convertible or exchangeable for Capital Stock (other than Disqualified Stock) of the Corporation (less the amount of any cash, or the Fair Market Value of any other property, distributed by the Corporation upon such conversion or exchange); plus

(iv) an amount equal to:

(x) 100% of the amount received in cash and the Fair Market Value of marketable securities or other property received by the Corporation or any of its Restricted Subsidiaries by means of (A) repurchases or redemptions of Restricted Investments or of Similar Business Investments made in reliance on clause (14) of the definition of “Permitted Investment”, in each case by the Person in which such Restricted Investment or Similar Business Investment was made, (B) proceeds realized upon the sale of Restricted Investments or Similar Business Investments made in reliance on clause (14) of the definition of “Permitted Investment” to an unaffiliated purchaser, or (C) payments on and repayments of loans or advances or other transfers of assets (including by way of dividend, distribution and the payment of interest) to the Corporation or any of its Restricted Subsidiaries (other than for reimbursement of tax payments), including dividends, distributions, loan repayment and payments of interest received from Unrestricted Subsidiaries, in each case under this clause (C) to the extent made in respect of a Restricted Investment or a Similar Business Investment made in reliance on clause (14) of the definition of “Permitted Investment”, which amount in each case under this clause (x) was included in the calculation of the amount of Restricted Payments available; provided, however, that no amount will be included under this clause (x) to the extent it is already included in Consolidated Net Income;

(y) the Fair Market Value of the Investment (excluding any Investment referred to in clause (16) of the definition of “Permitted Investment”) in an Unrestricted Subsidiary that is being redesignated as a Restricted Subsidiary of the Corporation or upon the merger, amalgamation, arrangement or consolidation of such Unrestricted Subsidiary with and into the Corporation or any of its Restricted Subsidiaries (valued in each case as provided in the definition of “Investment”) not to exceed the amount of Investments (excluding any

H - 20

Investment referred to in clause (16) of the definition of “Permitted Investment”) previously made by the Corporation or any of its Restricted Subsidiaries in such Unrestricted Subsidiary, which amount in each case under this clause (y) was included in the calculation of the amount of Restricted Payments available; or

(z) upon the release of any Guarantee that constituted a Restricted Investment when it was granted, the amount of the Restricted Investment made upon the granting of such Guarantee; less

(v) any Investment that is a Similar Business Investment made in reliance on clause (14) of the definition of “Permitted Investment.”

The provisions of the preceding paragraph will not prohibit:

(1) any Restricted Payment made by exchange for, or out of the proceeds of the substantially concurrent sale of, Capital Stock of the Corporation (other than Disqualified Stock and other than Capital Stock issued or sold to a Subsidiary or an employee stock ownership plan or similar trust to the extent such sale to an employee stock ownership plan or similar trust is financed by loans from or Guaranteed by the Corporation or any of its Restricted Subsidiaries unless such loans have been repaid with cash on or prior to the date of determination); provided, however, that the Net Cash Proceeds from such sale of Capital Stock to the extent used for such Restricted Payment will be excluded from clause (c)(ii) of the preceding paragraph;

(2) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Subordinated Obligations or Guarantor Subordinated Obligations made by exchange for, or out of the proceeds of the substantially concurrent issuance or sale of, Subordinated Obligations or Guarantor Subordinated Obligations, so long as such refinancing Subordinated Obligations or Guarantor Subordinated Obligations are permitted to be incurred pursuant to the covenant described under “—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock” and constitute Refinancing Indebtedness;

(3) any purchase, repurchase, redemption, defeasance or other acquisition or retirement of Preferred Stock or Disqualified Stock of the Corporation or any of its Restricted Subsidiaries at the Stated Maturity thereof or made by exchange for or out of the proceeds of the substantially concurrent issuance or sale of Preferred Stock or Disqualified Stock of the Corporation or a Restricted Subsidiary, as the case may be, so long as such refinancing Preferred Stock or Disqualified Stock is permitted to be incurred pursuant to the covenant described under “—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock” and constitutes Refinancing Indebtedness;

(4) the purchase, repurchase, redemption, defeasance or other acquisition or retirement for value of any Subordinated Obligation (a) at a purchase price not greater than 101% of the principal amount of such Subordinated Obligation in the event of a Change of Control in accordance with provisions similar to the “—Repurchase at the Option of Holders—Change of Control” covenant or (b) at a purchase price not greater than 100% of the principal amount thereof in accordance with provisions similar to the “—Repurchase at the Option of Holders—Asset Dispositions” covenant; provided that, prior to or simultaneously with such purchase, repurchase, redemption, defeasance or other acquisition or retirement, the Corporation has made the Change of Control Offer or Asset Disposition Offer, as applicable, as provided in such covenant with respect to the Amended Notes and has completed the repurchase or redemption of all Amended Notes validly tendered for payment in connection with such Change of Control Offer or Asset Disposition Offer;

(5) any purchase or redemption of Subordinated Obligations or Guarantor Subordinated Obligations from Net Available Cash to the extent permitted under the Asset Dispositions covenant;

H - 21

(6) (a) dividends paid within 60 days after the date of declaration if at such date of declaration such dividend would have complied with this covenant and (b) the redemption of Subordinated Obligations or Guarantor Subordinated Obligations within 60 days after the date on which notice of such redemption was given, if on the date of the giving of such notice of redemption, such redemption would have complied with this covenant;

(7) the purchase, redemption or other acquisition, cancellation or retirement for value of Capital Stock or equity appreciation rights of the Corporation held by any existing or former employees, officers or directors of the Corporation or any Subsidiary of the Corporation or their assigns, estates or heirs, pursuant to any management equity plan or stock option plan or any other management or employee benefit plan or arrangement, provided that such redemptions or repurchases pursuant to this clause (7) will not exceed $10.0 million in the aggregate during any calendar year (with any unused amounts in any calendar year being carried over to the immediately succeeding calendar year, not to exceed $20.0 million in any calendar year), although such amount in any calendar year may be increased by an amount not to exceed:

(a) the Net Cash Proceeds from the sale of Capital Stock (other than Disqualified Stock) of the Corporation to existing or former employees, officers or directors of the Corporation or any of its Subsidiaries that occurs after the Issue Date, to the extent the Net Cash Proceeds from the sale of such Capital Stock have not otherwise been applied to the payment of Restricted Payments (provided that the Net Cash Proceeds from such sales or contributions will be excluded from clause (c)(ii) of the preceding paragraph); plus

(b) the cash proceeds of key man life insurance policies received by the Corporation or its Restricted Subsidiaries after the Issue Date; less

(c) the amount of any Restricted Payments previously made with the Net Cash Proceeds described in clauses (a) and (b) of this clause (7);

(8) the declaration and payment of dividends to holders of any class or series of Disqualified Stock or Preferred Stock issued in accordance with the terms of the Amended and Restated Indenture to the extent such dividends are included in the definition of “Consolidated Interest Expense”;

(9) (A) the declaration and payment of quarterly dividends on the Corporation’s Common Stock or (B) the purchase, redemption or other acquisition, cancellation or retirement for value of Capital Stock pursuant to a normal course issuer bid or other stock purchase repurchase program approved by the Toronto Stock Exchange; provided that (a) the total amount of Restricted Payments made pursuant to this clause (9) does not exceed $30.0 million in the aggregate in the fiscal year in which such Restricted Payment is made (with any unused amounts in any fiscal year being carried over to the immediately succeeding fiscal year, not to exceed $60.0 million in any fiscal year) and (b) as of the date of declaration (in the case of any dividend) or payment (in any other case), no Event of Default shall have occurred and be continuing or would occur as a consequence thereof;

(10) repurchases of Capital Stock deemed to occur upon the exercise of stock options, warrants, other rights to purchase Capital Stock or other convertible securities or similar securities if such Capital Stock represents a portion of the exercise price thereof (or withholding of Capital Stock to pay related withholding taxes with regard to the exercise of such stock options or the vesting of any such restricted stock, restricted stock units, deferred stock units or any similar securities);

(11) payments in lieu of the issuance of fractional shares of Capital Stock in connection with any transaction otherwise permitted under the Amended and Restated Indenture;

(12) payments or distributions to holders of the Capital Stock of the Corporation or any of its Restricted Subsidiaries pursuant to appraisal or dissenter rights required under applicable law or pursuant to a court order in connection with any merger, amalgamation, arrangement, consolidation or sale, assignment, conveyance, transfer, lease or other disposition of assets;

H - 22

(13) other Restricted Payments in an aggregate amount, when taken together with all other Restricted Payments made pursuant to this clause (13) (as reduced by the Fair Market Value returned from any such Restricted Payments that constituted Restricted Investments) not to exceed $50.0 million; and

(14) any additional Restricted Payment so long as immediately after giving effect to the making of such Restricted Payment, the Corporation’s Total Leverage Ratio does not exceed 3.00 to 1.00;

provided, however, that at the time of, and after giving effect to, any Restricted Payment permitted under clauses (7), (8), (13) and (14), no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof.

For purposes of determining compliance with this covenant, if a Restricted Payment meets the criteria of more than one of the types of Restricted Payments described in clauses (1) through (14) above, the Corporation may, in its sole discretion, divide and classify (or later reclassify in whole or in part, from time to time in its sole discretion) such transaction in any manner that complies with this covenant.

The amount of all Restricted Payments (other than cash) will be the Fair Market Value on the date of such Restricted Payment of the assets or securities proposed to be transferred or issued by the Corporation or any of its Restricted Subsidiaries, as the case may be, pursuant to such Restricted Payment.

The amount of all Restricted Payments paid in cash shall be its face amount. For purposes of determining compliance with any Canadian dollar-denominated restriction on Restricted Payments, the Canadian dollar- equivalent of a Restricted Payment denominated in a foreign currency shall be calculated based on the relevant currency exchange rate in effect on the date the Corporation or the Restricted Subsidiary, as the case may be, first commits to such Restricted Payment.

For purposes of designating any Restricted Subsidiary of the Corporation as an Unrestricted Subsidiary, all outstanding Investments by the Corporation and its Restricted Subsidiaries (except to the extent repaid) in the Subsidiary so designated will be deemed to be Investments in an amount determined as set forth in the definition of “Investment.” Such designation will be permitted only if an Investment in such amount would be permitted at such time and if such Subsidiary otherwise meets the definition of an Unrestricted Subsidiary. Unrestricted Subsidiaries will not be subject to any of the restrictive covenants set forth in the Amended and Restated Indenture. For all purposes of the Amended and Restated Indenture, the Sherritt Ambatovy Subsidiaries shall be Unrestricted Subsidiaries, but the Corporation has agreed to limit the activities of the Sherritt Ambatovy Subsidiaries pursuant to the covenant described under “—Certain Covenants—Asset Dispositions”).

Limitation on Liens

The Corporation will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create, incur, assume or suffer to exist any Lien (other than Permitted Liens) upon any of its property or assets (including Capital Stock of Subsidiaries), whether owned on the Issue Date or acquired after that date, which Lien secures any Indebtedness, unless contemporaneously with the incurrence of such Liens:

(1) in the case of Liens securing Subordinated Obligations or Guarantor Subordinated Obligations, the Amended Notes and related Amended Note Guarantees are secured by a Lien on such property or assets that is senior in priority to such Liens; or

(2) in all other cases, the Amended Notes and related Amended Note Guarantees are equally and ratably secured or are secured by a Lien on such property or assets that is senior in priority to such Liens.

Any Lien created for the benefit of Holders pursuant to this covenant shall be automatically and unconditionally released and discharged upon the release and discharge of each of the Liens described in clauses (1) and (2) above.

H - 23

Limitation on Restrictions on Distributions from Restricted Subsidiaries

The Corporation will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, create or otherwise cause or permit to exist or become effective any consensual encumbrance or consensual restriction on the ability of any Restricted Subsidiary of the Corporation to:

(1) pay dividends or make any other distributions on its Capital Stock to the Corporation or any of its Restricted Subsidiaries, or with respect to any other interest or participation in, or measured by, its profits, or pay any Indebtedness or other obligations owed to the Corporation or any of its Restricted Subsidiaries (it being understood that the priority of any Preferred Stock in receiving dividends or liquidating distributions prior to dividends or liquidating distributions being paid on Common Stock shall not be deemed a restriction on the ability to make distributions on Capital Stock, and the subordination of loans or advances made to the Corporation or any of its Restricted Subsidiaries to other Indebtedness incurred by the Corporation or any of its Restricted Subsidiaries shall not be deemed a restriction on the ability to pay any Indebtedness or other obligation);

(2) make any loans or advances to the Corporation or any of its Restricted Subsidiaries (it being understood that the subordination of loans or advances made to the Corporation or any of its Restricted Subsidiaries to other Indebtedness incurred by the Corporation or any of its Restricted Subsidiaries shall not be deemed a restriction on the ability to make loans or advances); or

(3) sell, lease or transfer any of its property or assets to the Corporation or any of its Restricted Subsidiaries (it being understood that such transfers shall not include any type of transfer described in clause (1) or (2) above).

The preceding provisions will not prohibit encumbrances or restrictions existing under or by reason of:

(a) the Amended and Restated Indenture, the Amended Notes and the Amended Note Guarantees;

(b) any agreement or instrument existing on the Issue Date (except for the Amended and Restated Indenture, the Amended Notes or the Amended Note Guarantees);

(c) (x) any agreement or other instrument of a Person acquired by the Corporation or any of its Restricted Subsidiaries in existence at the time of such acquisition (but not created in contemplation thereof) or (y) any agreement or other instrument with respect to a Restricted Subsidiary of the Corporation that was previously an Unrestricted Subsidiary pursuant to or by reason of an agreement that such Subsidiary is a party to or entered into before the date on which such Subsidiary became a Restricted Subsidiary of the Corporation (but not created in contemplation thereof), in the case of (x) and (y) above, which encumbrance or restriction is not applicable to any Person, or the properties or assets of any Person, other than the Person and its Subsidiaries, or the property or assets of the Person and its Subsidiaries, so acquired or so designated, as applicable (including after-acquired property);

(d) any amendment, restatement, modification, renewal, supplement, refunding, replacement or refinancing of an agreement or instrument referred to in clauses (a), (b) or (c) of this paragraph; provided, however, that such amendments, restatements, modifications, renewals, supplements, refundings, replacements or refinancings are, in the good faith judgment of Senior Management, not materially more restrictive, when taken as a whole, than the encumbrances and restrictions contained in the agreements referred to in clauses (a), (b) or (c) of this paragraph on the Issue Date, the acquisition date or the date such Restricted Subsidiary became a Restricted Subsidiary of the Corporation or was merged into a Restricted Subsidiary of the Corporation, whichever is applicable;

(e) any Debt Facility of the Corporation or any Restricted Subsidiary permitted to be incurred under the Amended and Restated Indenture; provided, that the applicable

H - 24

encumbrances and restrictions contained in the agreement or agreements governing such Debt Facility are not materially more restrictive, taken as a whole, than those contained in the Credit Facilities as in effect on the Issue Date;

(f) (x) customary non-assignment or subletting provisions in leases governing leasehold interests to the extent such provisions restrict the transfer of the lease or the property leased thereunder and (y) security agreements or mortgages securing Indebtedness of a Restricted Subsidiary of the Corporation to the extent such encumbrance or restriction restricts the transfer of the property subject to such security agreements or mortgages;

(g) in the case of clause (3) of the first paragraph of this covenant, Liens permitted to be incurred under the provisions of the covenant described under “—Limitation on Liens” that limit the right of the debtor to dispose of the assets securing such Indebtedness;

(h) purchase money obligations, Capitalized Lease Obligations and Sale/Leaseback Transactions permitted under the Amended and Restated Indenture, in each case, that impose encumbrances or restrictions of the nature described in clause (3) of the first paragraph of this covenant on the property so acquired;

(i) contracts for the sale of assets, including customary restrictions with respect to a Subsidiary of the Corporation pursuant to an agreement that has been entered into for the sale or disposition of all or a portion of the Capital Stock or assets of such Subsidiary;

(j) restrictions on cash or other deposits or net worth imposed by customers, suppliers or landlords under contracts entered into in the ordinary course of business;

(k) any customary provisions in joint venture, partnership, shareholders’ and limited liability Corporation agreements relating to joint ventures that are not Restricted Subsidiaries of the Corporation and other similar agreements entered into in the ordinary course of business;

(l) any customary provisions (including non-assignment and non-transfer provisions) in leases, subleases or licenses (including licenses of intellectual property) and other agreements entered into by the Corporation or any of its Restricted Subsidiaries in the ordinary course of business;

(m) encumbrances or restrictions arising or existing by reason of applicable law or any applicable rule, regulation, order or permit;

(n) (x) other Indebtedness incurred or Preferred Stock issued by a Guarantor in accordance with “—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock” that, in the good faith judgment of Senior Management, are not materially more restrictive, taken as a whole, than those applicable to the Corporation in the Amended and Restated Indenture on the Issue Date (which results in encumbrances or restrictions at a Restricted Subsidiary of the Corporation level comparable to those applicable to the Corporation in the Amended and Restated Indenture) or (y) other Indebtedness incurred or Preferred Stock issued by a Non-Guarantor, in each case permitted to be incurred subsequent to the Issue Date pursuant to the provisions of the covenant described under “—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; provided that with respect to clause (y), such encumbrances or restrictions will not materially affect the Corporation’s ability to make anticipated principal and interest payments on the Amended Notes (in the good faith judgment of Senior Management);

(o) any agreement with a governmental entity providing for developmental financing;

H - 25

(p) agreements relating to Hedging Obligations permitted under clause (7) of the covenant described under “—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; and

(q) easements entered into in the ordinary course of business.

Limitation on Affiliate Transactions

The Corporation will not, and will not permit any of its Restricted Subsidiaries to, directly or indirectly, enter into or conduct any transaction (including the purchase, sale, lease or exchange of any property or asset or the rendering of any service) with any Affiliate of the Corporation (an “Affiliate Transaction”) involving aggregate consideration in excess of $75.0 million, unless:

(1) the terms of such Affiliate Transaction are not materially less favourable to the Corporation or such Restricted Subsidiary, as the case may be, than those that could have been obtained by the Corporation or such Restricted Subsidiary in a comparable transaction at the time of such transaction in arm’s-length dealings with a Person that is not an Affiliate; and

(2) in the event such Affiliate Transaction involves an aggregate consideration in excess of $50.0 million, the terms of such transaction have been approved by a majority of the members of the Board of Directors of the Corporation and by a majority of the members of such Board of Directors having no personal stake in such transaction, if any (and such majority or majorities, as the case may be, determines that such Affiliate Transaction satisfies the criteria in clause (1) above).

The preceding paragraph will not apply to:

(1) any transaction between the Corporation and any of its Restricted Subsidiaries or between any Restricted Subsidiaries of the Corporation, including any Guarantees issued by the Corporation or a Restricted Subsidiary of the Corporation for the benefit of the Corporation or any of its Restricted Subsidiaries, as the case may be, in accordance with “—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

(2) any Restricted Payment permitted to be made pursuant to the covenant described under “— Limitation on Restricted Payments” and any Permitted Investments (other than the Investments described in subclause (14) of the definition of “Permitted Investments”);

(3) any issuance of securities or other payments, awards or grants in cash, securities or otherwise pursuant to, or as the funding of, employment, consulting or similar agreements and severance and other compensation arrangements, options to purchase Capital Stock of the Corporation, restricted stock plans, long-term incentive plans, stock appreciation rights plans, participation plans or similar employee benefits plans and/or indemnity provided on behalf of officers, directors, employees and consultants in the ordinary course of business or approved by the Board of Directors of the Corporation;

(4) the payment of reasonable and customary fees and reimbursements or employee benefits paid to, and indemnity provided on behalf of, directors, officers, employees or consultants of the Corporation or any of its Restricted Subsidiaries;

(5) loans or advances (or cancellations of loans or advances) to employees, officers or directors of the Corporation or any of its Subsidiaries in the ordinary course of business, in an aggregate amount not in excess of $2.0 million at any one time outstanding;

(6) any agreement as in effect as of the Issue Date, as these agreements may be amended, modified, supplemented, extended or renewed from time to time, so long as any such amendment, modification, supplement, extension or renewal is not more disadvantageous to the Holders in any

H - 26

material respect in the good faith judgment of Senior Management of the Corporation, when taken as a whole, than the terms of the applicable agreement in effect on the Issue Date;

(7) (i) any agreement between any Person and an Affiliate of such Person existing at the time such Person is acquired by, merged into or amalgamated, arranged or consolidated with the Corporation or any of its Restricted Subsidiaries; provided that such agreement was not entered into in contemplation of such acquisition, merger, amalgamation, arrangement or consolidation, and (ii) any amendment thereto (so long as any such amendment is not disadvantageous in any material respect to the Holders in the good faith judgment of Senior Management of the Corporation, when taken as a whole, as compared to the applicable agreement as in effect on the date of such acquisition, merger, amalgamation, arrangement or consolidation);

(8) transactions (i) with customers, clients, suppliers, joint venture partners or purchasers or sellers of goods or services or any management services or support agreements, in each case in the ordinary course of business and otherwise in compliance with the terms of this Amended and Restated Indenture; provided that in the reasonable determination of members of the Board of Directors or Senior Management of the Corporation, such transactions or agreements are on terms that are not materially less favourable, when taken as a whole, to the Corporation or the relevant Restricted Subsidiary than those that could have been obtained at the time of such transactions or agreements in a comparable transaction or agreement by the Corporation or such Restricted Subsidiary with an unrelated Person; and (ii) for the provision of services to joint ventures in the ordinary course of the business of the Corporation and its Restricted Subsidiaries and otherwise in compliance with the terms of the Amended and Restated Indenture, and amendments, modifications, supplements, extensions, and revisions thereto or waivers thereof, which are fair to the Corporation and its Restricted Subsidiaries, taken as a whole, in the good faith judgment of Senior Management;

(9) any issuance or sale of Capital Stock (other than Disqualified Stock) to Affiliates of the Corporation and any agreement that grants registration and other customary rights in connection therewith or otherwise to the direct or indirect securityholders of the Corporation (and the performance of such agreements);

(10) any transaction with a Person that would not constitute an Affiliate Transaction if the Corporation or any of its Restricted Subsidiaries did not own any equity interest in or otherwise control such Person;

(11) transactions between the Corporation or any of its Restricted Subsidiaries and any Person that is an Affiliate solely because one or more of its directors is also a director of the Corporation or any of its Restricted Subsidiaries; provided that such director abstains from voting as a director of the Corporation or such Restricted Subsidiary, as the case may be, on any matter involving such other Person;

(12) any merger, amalgamation, arrangement, consolidation or other reorganization of the Corporation with an Affiliate solely for the purpose and with the sole effect of forming a holding Corporation or reincorporating the Corporation in a new jurisdiction;

(13) the entering into of a tax sharing agreement, or payments pursuant thereto, between the Corporation and one or more Subsidiaries or between Subsidiaries;

(14) any employment, deferred compensation, consulting, non-competition, confidentiality or similar agreement entered into by the Corporation or any of its Restricted Subsidiaries with its employees, directors, officers or consultants in the ordinary course of business and payments and other benefits (including bonus, retirement, severance, health, stock option and other benefit plans) pursuant thereto;

(15) pledges of Capital Stock or Indebtedness of Unrestricted Subsidiaries and Joint Ventures; and

H - 27

(16) transactions in which the Corporation or any of its Restricted Subsidiaries delivers to the Indenture Trustee a letter from an Independent Financial Advisor stating that such transaction is fair to the Corporation or such Restricted Subsidiary from a financial point of view or stating that the terms are not materially less favourable, when taken as a whole, than those that might reasonably have been obtained by the Corporation or such Restricted Subsidiary in a comparable transaction at such time on an arms’ length basis from a Person that is not an Affiliate.

Reports

The Amended and Restated Indenture will provide that so long as any Amended Notes are outstanding, the Corporation will furnish without cost to each Holder and deliver to the Indenture Trustee:

(1) on or prior to the later of (A) 90 days after the end of each fiscal year of the Corporation or (B) the date on which the Corporation is required to file (after giving effect to any available extension) such information pursuant to Canadian Securities Legislation, the Annual MD&A and audited financial statements in respect of such fiscal year that the Corporation would be required to file as a reporting issuer under Canadian Securities Legislation; and

(2) on or prior to the later of (A) 45 days after the end of each of the first three fiscal quarters of each fiscal year of the Corporation or (B) the date on which the Corporation is required to file (after giving effect to any available extension) such information pursuant to Canadian Securities Legislation, the quarterly MD&A and unaudited quarterly financial statements in respect of the relevant interim period that the Corporation would be required to file as a reporting issuer under Canadian Securities Legislation.

The Corporation shall (i) schedule and participate in quarterly conference calls to discuss its results of operations and (ii) use commercially reasonable efforts to provide any Rating Agency that maintains a public rating of the Amended Notes with information on a periodic basis as such Rating Agency shall reasonably require in order to maintain public ratings of the Amended Notes. With respect to the reports referred to in clauses (1) and (2) above, so long as the Corporation is a “reporting issuer” (or its equivalent) in any province or territory of Canada, the Corporation shall file such reports electronically on the Canadian Securities Administrators’ SEDAR website (or any successor system), which shall satisfy the Corporation’s obligations to furnish such materials to the Holders and deliver such materials to the Indenture Trustee. In the event that the Corporation ceases to be a “reporting issuer” (or its equivalent) in all provinces and territories of Canada, the Corporation will be required to maintain a website to which Holders, prospective investors and securities analysts are given access, on which the Corporation makes available such reports and provides details about how to access on a toll-free basis the quarterly conference calls described above.

Notwithstanding anything herein to the contrary, the Corporation will not be deemed to have failed to comply with any of its obligations hereunder for purposes of clause (4) under “Events of Default” until 90 days after the date any report hereunder is due to be furnished to the Holders and delivered to the Indenture Trustee in accordance with the first paragraph of this covenant “—Reports.”

To the extent any information is not provided as specified in this section “Reports” and such information is subsequently provided, the Corporation will be deemed to have satisfied its obligations with respect thereto at such time, and any Default or Event of Default with respect thereto shall be deemed to have been cured.

Delivery of reports, information and documents to the Indenture Trustee is for informational purposes only, and its receipt of such reports shall not constitute constructive notice of any information contained therein or determinable from information contained therein, including the Corporation’s, any Guarantor’s or any other Person’s compliance with any of its covenants under the Amended and Restated Indenture or the Amended Notes (as to which the Indenture Trustee is entitled to rely exclusively on the Officer’s Certificates delivered pursuant to the Amended and Restated Indenture).

The Indenture Trustee shall not be obligated to monitor or confirm, on a continuing basis or otherwise, the Corporation’s, any Guarantor’s or any other Person’s compliance with the covenants described herein or with respect to any reports or other documents filed under the Amended and Restated Indenture.

H - 28

Merger and Consolidation

The Corporation will not merge with or into, or amalgamate or consolidate with, or wind up into, in each case including by way of an arrangement, (whether or not the Corporation is the surviving corporation), or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets, in one or more related transactions, to any Person unless:

(1) the continuing, resulting, surviving or transferee Person (the “Successor Corporation”) is a Person (other than an individual) organized and existing under the laws of Canada, any province or territory thereof, or of the United States, any state or territory thereof or the District of Columbia;

(2) the Successor Corporation (if other than the Corporation) expressly assumes all of the obligations of the Corporation under the Amended Notes and the Amended and Restated Indenture pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Indenture Trustee;

(3) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing;

(4) immediately after giving pro forma effect to such transaction and any related financing transactions, as if such transactions had occurred at the beginning of the applicable four-quarter period,

(a) the Successor Corporation would be able to incur at least $1.00 of additional Indebtedness pursuant to the first paragraph of the “—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock” covenant; or

(b) the Consolidated Coverage Ratio for the Successor Corporation and its Restricted Subsidiaries would be greater than such ratio for the Corporation and its Restricted Subsidiaries immediately prior to such transaction;

(5) if the Corporation is not the surviving corporation, each Guarantor (unless it is the other party to the transactions above, in which case clause (1) of the following paragraph shall apply) shall have by supplemental indenture confirmed that its Amended Note Guarantee shall apply to such Successor Corporation’s obligations under the Amended and Restated Indenture and the Amended Notes; and

(6) the Corporation shall have delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, merger, amalgamation, arrangement, winding up or disposition, and such supplemental indenture, if any, comply with the Amended and Restated Indenture.

The Successor Corporation will succeed to, and be substituted for, the Corporation under the Amended and Restated Indenture and the Amended Notes. Notwithstanding the clauses (3) and (4) of the preceding paragraph,

(1) any Restricted Subsidiary of the Corporation may consolidate with, amalgamate with, merge with or into, wind up into or transfer all or part of its properties and assets to (in each case including by way of an arrangement) the Corporation so long as no Capital Stock of the Restricted Subsidiary of the Corporation is distributed to any Person other than the Corporation; and

(2) the Corporation may consolidate with, amalgamate with, merge with or into or wind up into (in each case including by way of an arrangement) an Affiliate of the Corporation for the purpose of reincorporating the Corporation in a province or territory of Canada or in a state or territory of the United States or the District of Columbia.

H - 29

In addition, the Corporation will not permit any Guarantor to merge with or into, or amalgamate or consolidate with, or wind up into, in each case including by way of an arrangement (whether or not the Guarantor is the surviving corporation), or sell, assign, convey, transfer, lease or otherwise dispose of all or substantially all of its properties and assets, in one or more related transactions, to any Person (other than to the Corporation or another Guarantor) unless:

(3) immediately after giving effect to such transaction, no Default or Event of Default shall have occurred and be continuing; and

(4) either:

(a) the resulting, surviving or transferee Person (the “Successor Guarantor”) is a Person (other than an individual) organized and existing under the same laws as the Guarantor was organized under immediately prior to such transaction, the laws of Canada, any province or territory thereof, or of the United States, any state or territory thereof or the District of Columbia; the Successor Guarantor, if other than such Guarantor, expressly assumes all the obligations of such Guarantor under the Amended and Restated Indenture, the Amended Notes and its Amended Note Guarantee pursuant to a supplemental indenture or other documents or instruments in form reasonably satisfactory to the Indenture Trustee; and the Corporation will have delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel, each stating that such consolidation, amalgamation, arrangement, merger, winding up or disposition and such supplemental indenture (if any) comply with the Amended and Restated Indenture; or

(b) the transaction does not violate the covenant described under “—Repurchase at the Option of Holders—Asset Dispositions” (it being understood that only such portion of the Net Available Cash as is required to be applied on the date of such transaction in accordance with the terms of the Amended and Restated Indenture needs to be applied in accordance therewith at such time).

The Successor Guarantor will succeed to, and be substituted for, such Guarantor under the Amended and Restated Indenture and the Amended Note Guarantee of such Guarantor.

Notwithstanding the foregoing, any Guarantor may (i) merge with or into, or amalgamate or consolidate with, or wind up into, in each case including by way of an arrangement (whether or not the Guarantor is the surviving corporation), or transfer all or part of its properties and assets to, any other Guarantor or the Corporation or (ii) merge with or into, or amalgamate or consolidate with, or wind up into, in each case including by way of an arrangement (whether or not the Guarantor is the surviving corporation), a Restricted Subsidiary of the Corporation for the purpose of reincorporating the Guarantor in Canada or any province or territory of Canada, any state or territory of the United States or the District of Columbia, British Virgin Islands, Bahamas, Barbados, any member state of the European Union or any other jurisdiction in which such Guarantor is organized at the time of such transaction, so long as (in the case of this clause (ii)) the amount of Indebtedness of such Guarantor and its Subsidiaries is not increased thereby.

For purposes of this covenant, the sale, assignment, conveyance, transfer, lease or other disposition of all or substantially all of the properties and assets of one or more Subsidiaries of the Corporation, which properties and assets, if held by the Corporation instead of such Subsidiaries, would constitute all or substantially all of the properties and assets of the Corporation on a consolidated basis, will be deemed to be the disposition of all or substantially all of the properties and assets of the Corporation.

Although there is a limited body of case law interpreting the phrase “substantially all,” there is no precise established definition of the phrase under applicable law. Accordingly, in certain circumstances there may be a degree of uncertainty as to whether a particular transaction would involve “all or substantially all” of the property or assets of a Person.

Upon the completion of any transaction described above, the Corporation and the applicable Guarantors will be released from their obligations under the Amended and Restated Indenture, the Amended Notes and the Amended

H - 30

Note Guarantees, as applicable, and the Successor Corporation and the Successor Guarantors, as the case may be, will succeed to, and be substituted for, and may exercise every right and power of, the Corporation or the applicable Guarantors, as applicable, under the Amended and Restated Indenture, the Amended Notes and the Amended Note Guarantees; provided that, in the case of a lease of all or substantially all its assets, the Corporation will not be released from the obligation to pay the principal of and interest on the Amended Notes, and a Guarantor will not be released from its obligations under its Amended Note Guarantee.

Future Guarantors

The Corporation will cause each Person that becomes a Wholly-Owned Restricted Subsidiary, other than any Immaterial Subsidiary, after the Issue Date, and may at its option cause any other Restricted Subsidiary, to execute and deliver to the Indenture Trustee a supplemental indenture to the Amended and Restated Indenture pursuant to which such Restricted Subsidiary will, subject to the second succeeding paragraph, irrevocably and unconditionally guarantee, on a joint and several basis, the full and prompt payment of the principal of, premium, if any, and interest in respect of the Amended Notes and all other obligations under the Amended and Restated Indenture on a senior unsecured basis.

Each Amended Note Guarantee shall be released in accordance with the provisions of the Amended and Restated Indenture described under “— Amended Note Guarantees.”

Future Amended Note Guarantees provided by Guarantors organized in jurisdictions other than Canada and the United States may be Limited Guarantees if the Board of Directors or Senior Management, in consultation with local counsel, makes a reasonable determination that such limitations are required due to legal requirements within such jurisdiction.

Limitation on Business Activities

The Corporation will not, and will not permit any of its Restricted Subsidiaries to, engage in any business other than a Similar Business, except to such extent as would not be material to the Corporation and its Restricted Subsidiaries taken as a whole.

Events of Default

Each of the following is an “Event of Default”:

(1) default in any payment of interest on any Note when due, continued for 30 days;

(2) default in the payment of principal of or premium, if any, on any Note when due at its Stated Maturity, upon optional redemption, upon required repurchase, upon declaration or otherwise;

(3) failure by the Corporation or any Guarantor to comply with its obligations under “—Certain Covenants—Merger and Consolidation”;

(4) failure by the Corporation or any Guarantor to comply for 60 days after notice as provided below with its other agreements contained in the Amended and Restated Indenture or the Amended Notes (other than a failure that is the subject of the foregoing clause (1), (2), or (3));

H - 31

(5) default under any mortgage, indenture or instrument under which there is issued or by which there is secured or evidenced any Indebtedness for money borrowed by the Corporation or any of its Restricted Subsidiaries (or the payment of which is Guaranteed by the Corporation or any of its Restricted Subsidiaries), other than Non-Recourse Debt and other than Indebtedness owed to the Corporation or its Restricted Subsidiary, whether such Indebtedness or Guarantee now exists, or is created after the Issue Date, which default:

(a) is caused by a failure to pay the principal of such Indebtedness at its Stated Maturity (after giving effect to any applicable grace period provided in such Indebtedness) (“payment default”); or

(b) results in the acceleration of such Indebtedness prior to its maturity (the “cross acceleration provision”);

and, in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a payment default or the maturity of which has been so accelerated and remains unpaid, aggregates $50.0 million or more (or its foreign currency equivalent);

(6) failure by the Corporation or any Significant Subsidiary or any group of Restricted Subsidiaries of the Corporation that, taken together, would constitute a Significant Subsidiary to pay final judgments aggregating in excess of $50.0 million (or its foreign currency equivalent) (net of any amounts for which an insurance Corporation is liable), which judgments are not paid, discharged or stayed for a period of 60 days or more after such judgment becomes final and non-appealable (the “judgment default provision”);

(7) certain events of bankruptcy, insolvency or reorganization of the Corporation or a Significant Subsidiary or any group of Restricted Subsidiaries of the Corporation that, taken together, would constitute a Significant Subsidiary (the “bankruptcy provisions”); or

(8) any Amended Note Guarantee of a Significant Subsidiary or any group of Guarantors that, taken together, would constitute a Significant Subsidiary, ceases to be in full force and effect (except as contemplated by the terms of the Amended and Restated Indenture) or is declared null and void in a final and non-appealable judicial proceeding or any Guarantor that is a Significant Subsidiary or any group of Guarantors that, taken together, would constitute a Significant Subsidiary, denies or disaffirms its obligations under the Amended and Restated Indenture or its Amended Note Guarantee.

However, a default under clause (4) of this paragraph will not constitute an Event of Default until the Indenture Trustee (acting at the direction of the Holders of at least 25% in principal amount of the then outstanding Amended Notes) or the Holders of at least 25% in principal amount of the then outstanding Amended Notes notify the Corporation of the default and the Corporation does not cure such default within the time specified in clause (4) of this paragraph after receipt of such notice.

If an Event of Default (other than an Event of Default described in clause (7) above with respect to the Corporation) occurs and is continuing, the Indenture Trustee (acting at the direction of the Holders of at least 25% in principal amount of the then outstanding Amended Notes of a Series voting as a single series) by written notice to the Corporation, specifying the Event of Default, or the Holders of at least 25% in principal amount of the then outstanding Amended Notes of a Series voting as a single series may by notice to the Corporation and the Indenture Trustee, may, and the Indenture Trustee at the request of such Holders shall, declare the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Amended Notes of an affected Series to be due and payable.

In the event of a declaration of acceleration of the Amended Notes because an Event of Default described in clause (5) under “—Events of Default” has occurred and is continuing, the declaration of acceleration of the Amended Notes shall be automatically annulled if the default triggering such Event of Default pursuant to clause (5) shall be remedied or cured by the Corporation or any of its Restricted Subsidiaries or waived by the holders of the relevant Indebtedness within 20 days after the declaration of acceleration with respect thereto and if (1) the annulment of the acceleration of the Amended Notes would not conflict with any judgment or decree of a court of competent

H - 32

jurisdiction and (2) all existing Events of Default, except nonpayment of principal, premium, if any, or interest on the Amended Notes that became due solely because of the acceleration of the Amended Notes, have been cured or waived. Notwithstanding the foregoing, if an Event of Default described in clause (7) above with respect to the Corporation occurs and is continuing, the principal of, premium, if any, and accrued and unpaid interest, if any, on all the Amended Notes of a Series then outstanding will become and be immediately due and payable without any declaration or other act on the part of the Indenture Trustee or any Holders of such Series of Amended Notes. The Holders of the Amended 2021 Notes and Amended 2023 Notes, by way of Extraordinary Resolution and the Holders of any other Series of Amended Notes, by way of Ordinary Resolution, may, on behalf of all Holders of all of the Amended Notes of such Series, waive all past defaults (except with respect to nonpayment of principal, premium or interest) and rescind any such acceleration with respect to the Amended Notes of such Series and its consequences if rescission would not conflict with any judgment or decree of a court of competent jurisdiction.

Except to enforce the right to receive payment of principal, premium, if any, or interest when due, no Holder of any Series may pursue any remedy with respect to the Amended and Restated Indenture or the Amended Notes of any Series unless:

(1) such Holder has previously given the Indenture Trustee written notice that an Event of Default is continuing;

(2) Holders of at least 25% in principal amount of the then outstanding Amended Notes of such Series have requested the Indenture Trustee to pursue the remedy;

(3) such Holders have offered the Indenture Trustee security or indemnity reasonably satisfactory to it against any loss, liability or expense;

(4) the Indenture Trustee has not complied with such request within 60 days after the receipt of the request and the offer of security or indemnity; and

(5) the Holders of a majority in principal amount of the then outstanding Amended Notes of such Series have not given the Indenture Trustee a direction that, in the opinion of the Indenture Trustee, is inconsistent with such request within such 60-day period.

Subject to certain restrictions, the Holders of a majority in principal amount of the then outstanding Amended Notes may direct the time, method and place of conducting any proceeding for any remedy available to the Indenture Trustee or of exercising any trust or power conferred on the Indenture Trustee. The Amended and Restated Indenture provides that in the event an Event of Default has occurred and is continuing, the Indenture Trustee will be required in the exercise of its powers to use the degree of care that a prudent person would use under the circumstances in the conduct of its own affairs. The Indenture Trustee, however, may refuse to follow any direction that conflicts with law or the Amended and Restated Indenture, the Amended Notes or any Amended Note Guarantee, or that it determines in good faith is unduly prejudicial to the rights of any other Holder or that would involve that Indenture Trustee in personal liability.

Subject to the provisions of the Amended and Restated Indenture relating to the duties of the Indenture Trustee, if an Event of Default occurs and is continuing, the Indenture Trustee will be under no obligation to exercise any of the rights or powers under the Amended and Restated Indenture, the Amended Notes and the Amended Note Guarantees at the request or direction of any of the Holders unless such Holders have offered to the Indenture Trustee indemnity or security reasonably satisfactory to it against any loss, liability or expense.

The Amended and Restated Indenture will provide that if a Default or Event of Default occurs and is continuing and is actually known to a responsible officer of the Indenture Trustee, the Indenture Trustee will mail to each Holder notice of the Default within 90 days after it occurs. Except in the case of a default in the payment of principal of, premium, if any, or interest on any Note, the Indenture Trustee may withhold from the Holders notice of any continuing Default or Event of Default if the Indenture Trustee determines in good faith that withholding the notice is in the interests of the Holders. In addition, the Corporation is required to deliver to the Indenture Trustee, within 90 days after the end of each fiscal year ending after the Issue Date, a certificate indicating whether the signers thereof know of any Default or Event of Default that occurred during the previous year. The Corporation also is required to deliver to the Indenture Trustee, within 30 Business Days after the occurrence thereof, written notice of

H - 33

any events which would constitute a Default or Event of Default, their status and what action the Corporation is taking or proposing to take in respect thereof.

If a Default or Event of Default is deemed to occur solely because a Default or Event of Default (the “Initial Default”) already existed, and such Initial Default is subsequently cured and is not continuing, the Default or Event of Default resulting solely because the Initial Default existed shall be deemed cured, and will be deemed annulled, waived and rescinded without any further action required.

Amendments and Waivers

Except as provided in the next two succeeding paragraphs, the Amended and Restated Indenture, the Amended Notes of any Series and the Amended Note Guarantees may be amended or supplemented with the consent of the Holders of a majority in principal amount of the Amended Notes of such Series then outstanding (including Additional notes of eth same Series, if any) voting as a single class presented or represented by proxy at a meeting of the Holders of such series or by a resolution (including without limitation, consents obtained in connection with a purchase of, or tender offer or exchange offer for, such Series of Amended Notes) and, subject to certain exceptions, any past default or compliance with any provisions may be waived with the consent of the Holders of a majority in principal amount of the Amended Notes of such Series then outstanding (including Additional notes of the same Series, if any) voting as a single class (including, consents obtained in connection with a purchase of, or tender offer or exchange offer for, Amended Notes of such Series). However, without the consent of each Holder affected thereby, no amendment, supplement or waiver may, among other things:

(1) reduce the principal amount of Amended Notes of such Series whose Holders must consent to an amendment, supplement or waiver;

(2) reduce the stated rate of interest or extend the stated time for payment of interest on any Amended Note of such Series;

(3) reduce the principal of or extend the Stated Maturity of any Amended Note of such Series ;

(4) waive an Event of Default arising from a failure to pay the principal of, premium, if any, or interest on the Amended Notes of such Series (except a rescission of acceleration of such Amended Notes by the Holders of at least a majority in aggregate principal amount of the then outstanding Amended Notes with respect to an Event of Default other than an Event of Default arising from such a failure to pay principal, premium or interest, and a waiver of the Event of Default that resulted from such acceleration);

(5) reduce the premium payable upon the redemption or repurchase of any Note or change the time at which any Amended Note of such Series may be redeemed as described above under “—Optional Redemption,” whether through an amendment or waiver of provisions in the covenants, definitions or otherwise (except amendments to the definitions of “Change of Control” or “Asset Dispositions”, or changes to any notice provisions, which may be amended with the consent of the Holders of a majority in principal amount of the Amended Notes then outstanding);

(6) make any Amended Note of such Series payable in money other than that stated in the Amended Note;

(7) impair the right of any Holder of such Series of Amended Notes to receive payment of principal of, premium, if any, or interest on such Holder’s Amended Notes on or after the due dates therefor or to institute suit for the enforcement of any payment on or with respect to such Holder’s Amended Notes;

(8) make any change in the amendment or waiver provisions which require each Holder’s consent; or

(9) modify the Amended Note Guarantees in any manner adverse to the Holders of Amended Notes of such Series.

H - 34

Notwithstanding the foregoing, without the consent of any Holder of the Amended Notes of any Series, the Corporation, the Guarantors and the Indenture Trustee may amend the Amended and Restated Indenture, the Amended Notes and the Amended Note Guarantees to:

(1) cure any ambiguity, omission, defect or inconsistency;

(2) provide for the issuance of Additional Notes, or notes of any additional series, in compliance with “—Certain Covenants—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

(3) provide for the assumption by a successor of the obligations of the Corporation or any Guarantor under the Amended and Restated Indenture, the Amended Notes of such Series or the Amended Note Guarantees in accordance with “—Certain Covenants—Merger and Consolidation”;

(4) provide for or facilitate the issuance of uncertificated Amended Notes of such Series in addition to or in place of certificated Amended Notes of the same Series;

(5) comply with the rules of any applicable depositary;

(6) (i) add Guarantors with respect to the Amended Notes or (ii) release a Guarantor from its obligations under its Amended Note Guarantee or the Amended and Restated Indenture in accordance with the applicable provisions of the Amended and Restated Indenture;

(7) secure the Amended Notes of such Series and the Amended Note Guarantees;

(8) add covenants of the Corporation or its Restricted Subsidiaries or Events of Default for the benefit of Holders of such Series, or make changes that would provide additional rights to such Holders, or surrender any right or power conferred upon the Corporation or any Guarantor;

(9) in the case of any Series of Amended Notes other than the Amended 2021 Notes and Amended 2023 Notes, make any change that does not adversely affect the legal rights under the Amended and Restated Indenture of any Holder and, in the case of any Series of Amended 2021 Notes and Amended 2023 Notes, may any change for a purpose not inconsistent with the terms of the Amended and Restated Indenture which is not materially prejudicial to the interests of the Holders of such Amended Notes;

(10) evidence and provide for the acceptance of an appointment under the Amended and Restated Indenture of a successor trustee, provided that the successor trustee is otherwise qualified and eligible to act as such under the terms of the Amended and Restated Indenture, and in the case of any Series of Amended 2021 Notes and Amended 2023 Notes, provided such appointment has been approved by the Holders of such Series by way of Extraordinary Resolution;

(11) conform the text of the Amended and Restated Indenture, the Amended Notes or the Amended Note Guarantees to any provision of this “Terms of Amended Notes” to the extent that such provision in this “Description of Amended Notes” was intended to be a verbatim recitation of a provision of the Amended and Restated Indenture, the Amended Notes or the Amended Note Guarantees, as set forth in an Officer’s Certificate; or

(12) make any amendment to the provisions of the Amended and Restated Indenture relating to the transfer and legending of such Series of Amended Notes as permitted by the Amended and Restated Indenture, including, without limitation, to facilitate the issuance and administration of such Series of Amended Notes or, if incurred in compliance with the Amended and Restated Indenture, Additional Notes or notes of any additional series; provided, however, that (A) compliance with the Amended and Restated Indenture as so amended would not result in such Series of Amended Notes being transferred in violation of Canadian Securities Legislation or any

H - 35

other applicable securities laws and regulations and (B) such amendment does not materially and adversely affect the rights of Holders to transfer such Series of Amended Notes.

The consent of the Holders will not be necessary under the Amended and Restated Indenture to approve the particular form of any proposed amendment, supplement or waiver. It is sufficient if such consent approves the substance of the proposed amendment or supplement. A consent to any amendment, supplement or waiver under the Amended and Restated Indenture by any Holder given in connection with a tender of such Holder’s Amended Notes will not be rendered invalid by such tender. After an amendment, supplement or waiver under the Amended and Restated Indenture becomes effective, the Corporation is required to give to the Holders of such Amended Notes of any Series affected thereby a written notice briefly describing such amendment, supplement or waiver. However, the failure to give such notice to the Holders, or any defect in such notice will not impair or affect the validity of the amendment, supplement or waiver.

Defeasance

The Corporation may, at its option and at any time, elect to have all of its obligations and all of the obligations of the Guarantors discharged with respect to all outstanding Amended Notes of a Series issued under the Amended and Restated Indenture (“legal defeasance”) except for:

(1) the rights of Holders of such Series to receive payments in respect of the principal of, premium, if any, or interest on such Amended Notes when such payments are due, solely out of the trust referred to below;

(2) the Corporation’s obligations with respect to the Amended Notes of such Series concerning issuing temporary Amended Notes, registration of such Amended Notes, mutilated, destroyed, lost or stolen Amended Notes and the maintenance of an office or agency for payment and money for Amended Note payments held in trust;

(3) the rights, powers, trusts, duties and immunities of the Indenture Trustee, and the Corporation’s obligations in connection therewith; and

(4) the legal defeasance provisions of the Amended and Restated Indenture.

If the Corporation exercises the legal defeasance option, the Amended Note Guarantees in effect at such time will terminate.

The Corporation at any time may terminate its obligations and the obligations of its Restricted Subsidiaries described under “—Repurchase at the Option of Holders” and under the covenants described under “—Certain Covenants” (other than “—Merger and Consolidation” with respect to the Corporation), the operation of the cross-default upon a payment default, cross acceleration provisions, the bankruptcy provisions with respect to Significant Subsidiaries, the judgment default provision described under “—Events of Default” above and the limitations contained in clause (4) under “—Certain Covenants—Merger and Consolidation” above (“covenant defeasance”).

If the Corporation exercises the covenant defeasance option, the Amended Note Guarantees in effect at such time will terminate.

The Corporation may exercise its legal defeasance option notwithstanding its prior exercise of its covenant defeasance option. If the Corporation exercises its legal defeasance option, payment of the Amended Notes of the applicable Series may not be accelerated because of an Event of Default with respect to the Amended Notes of such Series. If the Corporation exercises its covenant defeasance option, payment of the Amended Notes may not be accelerated because of an Event of Default specified in clause (3) (only with respect to the failure of the Corporation to comply with clause (4) under “—Certain Covenants—Merger and Consolidation” above), (4) (only with respect to covenants that are released as a result of such covenant defeasance), (5) (only with respect to covenants that are released as a result of such covenant defeasance), (6), (7), (8) (with respect only to Significant Subsidiaries or any group of Restricted Subsidiaries of the Corporation that, taken together would constitute a Significant Subsidiary) or (9) under “—Events of Default” above.

H - 36

In order to exercise either legal defeasance or covenant defeasance under the Amended and Restated Indenture with respect to a particular Series of Amended Notes:

(1) the Corporation must irrevocably deposit with the Indenture Trustee, in trust, for the benefit of the Holders of the outstanding Amended Notes of such Series, cash in Canadian dollars, Government Securities, or a combination thereof, in amounts as will be sufficient, in the opinion of an Independent Financial Advisor, without consideration of any reinvestment of interest, to pay the principal of, and premium, if any, and interest due on such outstanding Amended Notes on the Stated Maturity or on the applicable redemption date, as the case may be, and the Corporation must specify whether such Amended Notes are being defeased to maturity or to a particular redemption date;

(2) in the case of legal defeasance or covenant defeasance, the Corporation has delivered to the Indenture Trustee an opinion of counsel qualified to practice in Canada (such counsel acceptable to the Indenture Trustee, acting reasonably) or a ruling from the Canada Revenue Agency (or successor agency) to the effect that Holders and beneficial owners of the outstanding Amended Notes of such Series will not recognize income, gain or loss for Canadian federal, provincial and territorial income tax purposes as a result of such legal defeasance or covenant defeasance, as applicable, and will only be subject to Canadian federal, provincial and territorial income tax on the same amounts, in the same manner and at the same times as would have been the case had if such legal defeasance or covenant defeasance, as applicable, had not occurred;

(3) such legal defeasance or covenant defeasance will not result in a breach or violation of, or constitute a default under any material agreement or instrument (other than the Amended and Restated Indenture) to which the Corporation or any of its Restricted Subsidiaries is a party or by which the Corporation or any of its Restricted Subsidiaries is bound;

(4) no Default or Event of Default has occurred and is continuing on the date of such deposit (other than a Default or an Event of Default resulting from the borrowing of funds to be applied to make such deposit and any similar and simultaneous deposit relating to other Indebtedness and, in each case, the granting of Liens in connection therewith);

(5) the Corporation has delivered to the Indenture Trustee an Officer’s Certificate stating that the deposit was not made by the Corporation with the intent of defeating, hindering, delaying or defrauding creditors of the Corporation, any Guarantor or others;

(6) the Corporation has delivered to the Indenture Trustee an Officer’s Certificate and an Opinion of Counsel (which Opinion of Counsel may be subject to customary assumptions and exclusions), each stating that all conditions precedent relating to the legal defeasance or the covenant defeasance, as the case may be, have been complied with; and

(7) the Corporation has delivered irrevocable instructions to the Indenture Trustee to apply the deposited money toward the payment of the Amended Notes of the applicable Series at maturity or the redemption date, as the case may be (which instructions may be contained in the Officer’s Certificate referred to in clause (5) above).

Satisfaction and Discharge

The Amended and Restated Indenture will be discharged and will cease to be of further effect, except as to surviving rights of registration of transfer or exchange of Amended Notes, as to any Series of Amended Notes, when either:

(1) all Amended Notes of such Series that have been authenticated, except lost, stolen or destroyed Amended Notes that have been replaced or paid and such Amended Notes for which payment money has been deposited in trust or segregated and held in trust by the Indenture Trustee and is thereafter repaid to the Corporation or discharged from the trust, have been delivered to the Indenture Trustee for cancellation; or

H - 37

(2)

(a) all Amended Notes of such Series not theretofore delivered to the Indenture Trustee for cancellation have become due and payable by reason of the giving of a notice of redemption or otherwise, will become due and payable within one year or may be called for redemption within one year under arrangements satisfactory to the Indenture Trustee for the giving of notice of redemption by the Indenture Trustee in the name, and at the expense, of the Corporation, and the Corporation or any Guarantor has irrevocably deposited or caused to be deposited with the Indenture Trustee, as trust funds in trust solely for the benefit of the Holders of such Series, cash in Canadian dollars, Government Securities, or a combination thereof, in such amounts as will be sufficient, in the opinion of an Independent Financial Advisor, without consideration of any reinvestment of interest, to pay and discharge the entire Indebtedness on such Amended Notes not theretofore delivered to the Indenture Trustee for cancellation for principal, premium, if any, and accrued interest to the date of maturity or redemption;

(b) no Default or Event of Default has occurred and is continuing on the date of the deposit or will occur as a result of the deposit (other than a Default or an Event of Default resulting from borrowing of funds to be applied to such deposit and the grant of any Lien securing such borrowing), and the deposit will not result in a breach or violation of, or constitute a default under, any material agreement or instrument (other than the Amended and Restated Indenture) to which the Corporation or any Guarantor is a party or by which the Corporation or any Guarantor is bound;

(d) the Corporation has delivered irrevocable instructions to the Indenture Trustee to apply the deposited money toward the payment of the Amended Notes of such Series at maturity or the redemption date, as the case may be.

In addition, the Corporation must deliver an Officer’s Certificate and an Opinion of Counsel to the Indenture Trustee stating that all conditions precedent to satisfaction and discharge have been satisfied.

No Personal Liability of Directors, Officers, Employees and Shareholders

No past, present or future director, officer, employee, incorporator, member, manager, partner or shareholder of the Corporation or any Guarantor shall have any liability for any obligations of the Corporation or any Guarantor under the Amended Notes, the Amended Note Guarantees or the Amended and Restated Indenture or for any claim based on, in respect of, or by reason of, such obligations or their creation. Each Holder by accepting an Amended Note waives and releases all such liability. This waiver and release are part of the consideration for issuance of the Amended Notes.

Notices

Notice or communication mailed to a Holder shall be mailed by first-class mail (certified or registered, return receipt requested) or by overnight air courier guaranteeing next day delivery to such Holder at such Holder’s address as it appears on the registration books of the Registrar or by such other delivery system as the Indenture Trustee deems acceptable and shall be deemed to be sufficiently given if so sent within the time prescribed. Failure to send a notice or communication to a Holder or any defect in it shall not affect its sufficiency with respect to other Holders. Any written notice or communication that is delivered in person or mailed by first-class mail to the designated address will be deemed duly given, regardless of whether the addressee receives such notice.

Notwithstanding any other provision of the Amended and Restated Indenture or any Amended Note, where the Amended and Restated Indenture or any Amended Note provides for notice of any event (including any notice of redemption) to any Holder of an interest in a global Amended Note (whether by mail or otherwise), such notice shall

H - 38

be sufficiently given if given to CDS or any other applicable depositary for such Amended Note (or its designee) according to the applicable procedures of CDS or such depositary.

Concerning the Indenture Trustee

Computershare Trust Company of Canada is the Indenture Trustee under the Amended and Restated Indenture and has been appointed by the Corporation as Registrar and Paying Agent with regard to the Amended Notes following issuance and delivery thereof.

Governing Law

The Amended and Restated Indenture will provide that it, the Amended Notes and any Amended Note Guarantee will be governed by, and construed in accordance with, the laws of the Province of Ontario and the federal laws of Canada applicable therein.

Certain Definitions

Set forth below are certain defined terms used in the Amended and Restated Indenture. For purposes of the Amended and Restated Indenture, unless otherwise specifically indicated, the term “consolidated” with respect to any Person refers to such Person on a consolidated basis in accordance with IFRS, but excluding from such consolidation any Unrestricted Subsidiary as if such Unrestricted Subsidiary were not an Affiliate of such Person.

“Acquired Indebtedness” means, with respect to any specified Person, Indebtedness (a) of such Person or any of its Subsidiaries existing at the time such Person becomes a Restricted Subsidiary of the Corporation, (b) assumed in connection with the acquisition of assets from such Person, in each case whether or not incurred by such Person in connection with, or in anticipation or contemplation of, such Person becoming a Restricted Subsidiary of the Corporation or such acquisition, or (c) secured by a Lien encumbering any asset acquired by such specified Person. Acquired Indebtedness shall be deemed to have been incurred, with respect to clause (a) of the preceding sentence, on the date such Person becomes a Restricted Subsidiary of the Corporation and, with respect to clauses (b) and (c) of the preceding sentence, on the date of consummation of such acquisition of assets.

“Additional Assets” means:

(1) any property, plant, equipment or other asset (excluding working capital or current assets) to be used by the Corporation or any of its Restricted Subsidiaries in a Similar Business; or

(2) the Capital Stock of a Person that becomes a Restricted Subsidiary of the Corporation as a result of the acquisition of such Capital Stock by the Corporation or its Restricted Subsidiary; or

(3) the Capital Stock constituting a minority interest in any Person that at such time is a Restricted Subsidiary of the Corporation; or

(4) Similar Business Investments (a) to the extent of Net Available Cash arising from Asset Dispositions of Capital Stock of an Unrestricted Subsidiary or Joint Venture, or of Capital Stock of a Restricted Subsidiary that derives all or substantially all of its value from the Corporation’s interest in an Unrestricted Subsidiary or Joint Venture, or (b) otherwise in an amount, together with all other Similar Business Investments which are treated as a use of Net Available Cash pursuant to this clause (4), not to exceed 15% of Total Assets at the time of such Investment;

provided, however, that, in the case of clauses (2) and (3), such Restricted Subsidiary is primarily engaged in a Similar Business.

“Affiliate” of any specified Person means any other Person, directly or indirectly, controlling or controlled by or under direct or indirect common control with such specified Person. For the purposes of this definition, “control” (including, with correlative meanings, the terms “controlling,” “controlled by” and “under common control with”) when used with respect to any Person means possession, directly or indirectly, of the power to direct the

H - 39

management and policies of such Person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise; and the terms “controlling” and “controlled” have meanings correlative to the foregoing.

“Ambatovy Entities” means (i) the Sherritt Ambatovy Subsidiaries, (ii) Ambatovy Minerals S.A. and Dynatec Madagascar S.A. and each of their successors, and (iii) any other Person through which the Corporation holds an indirect interest in the Ambatovy Joint Venture.

“Ambatovy Financial Completion” means the date on which the project financing in respect of the Ambatovy Project ceases to be guaranteed pursuant to the Ambatovy Guarantee and constitutes Non-Recourse Debt hereunder. The Corporation will promptly publicly announce the occurrence of Ambatovy Financial Completion.

“Ambatovy Guarantee” means the guarantee in effect as of the Issue Date by the Corporation and certain other guarantors in favour of HSBC Bank plc as security trustee and the lenders to the Ambatovy Joint Venture from time to time in respect of 40 percent of the project financing debt of the Ambatovy Joint Venture, as the same may be amended, restated, modified, renewed or replaced from time to time; provided that pursuant to the terms of any amendment, restatement, modification, renewal or replacement thereof occurring after the Issue Date, (i) no Restricted Subsidiary is an obligor thereunder unless such Restricted Subsidiary is a Guarantor, (ii) the Corporation’s and any other obligor’s obligations thereunder remain guaranteed by the other partners of the Ambatovy Joint Venture or supported by letters of credit issued on behalf of such other partners, except to the extent that any reduction in the amount of such guarantee or letter of credit support is deemed to constitute an incurrence of Indebtedness by the Corporation in the amount of such reduction and made in accordance with “Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock”, and (iii) scheduled debt service payments thereunder are not required to be made by the Corporation or any Restricted Subsidiary except to the extent of cash dividends, principal and interest payments on Joint Venture Loans or other cash distributions received by the Corporation or a Restricted Subsidiary from the Sherritt Ambatovy Subsidiaries.

“Ambatovy Joint Venture” means the joint venture in respect of the Ambatovy Project carried on by Ambatovy Minerals S.A. and Dynatec Madagascar S.A. and the respective successors and assigns from time to time.

“Ambatovy Project” means the assets, business and operations consisting of the Ambatovy project in Madagascar.

“Amended Note Guarantee” means, individually, any Guarantee of payment of the Amended Notes and the Corporation’s other Obligations under the Amended and Restated Indenture by a Guarantor pursuant to the terms of the Amended and Restated Indenture or any supplemental indenture thereto, and, collectively, all such Guarantees.

“APIL” means Ambatovy Project Investments Ltd.

“APIL Loans” means the loans made as of or after the Issue Date by each of Summit Ambatovy Mineral Resources Investment B.V., The Export-Import Bank of Korea and SNC-Lavalin Inc., or any of their respective Affiliates, as lenders, to APIL, as borrower, related to the Ambatovy Project.

“Asset Disposition” means (A) any sale, lease (other than an operating lease entered into in the ordinary course of business), transfer, other disposition, or a series of related sales, leases, transfers, or dispositions that are part of a common plan, of shares of Capital Stock of a Subsidiary or Joint Venture (other than directors’ qualifying shares and shares issued to foreign nationals as required by law), property or other assets (each referred to for the purposes of this definition as a “disposition”) by the Corporation or any of its Restricted Subsidiaries, including any disposition by means of a merger, amalgamation, consolidation, arrangement or similar transaction, and (B) any issuance of shares of Capital Stock (other than directors’ qualifying shares and shares issued to foreign nationals as required by law) by a Restricted Subsidiary of the Corporation.

Notwithstanding the preceding, the following items shall not be deemed to be Asset Dispositions:

(1) a disposition of assets by a Restricted Subsidiary to the Corporation or by the Corporation or any of its Restricted Subsidiaries to a Restricted Subsidiary of the Corporation;

(2) a disposition of Cash Equivalents or Investment Grade Securities;

H - 40

(3) a disposition of inventory or other assets in the ordinary course of business or the disposition of an account receivable in connection with the collection or compromise thereof in the ordinary course of business;

(4) a disposition of obsolete, damaged or worn out property or equipment, or property or equipment that is no longer used or useful in the conduct of the business of the Corporation and its Restricted Subsidiaries;

(5) the disposition of all or substantially all of the assets of the Corporation in a manner permitted pursuant to “—Certain Covenants—Merger and Consolidation” or any disposition that constitutes a Change of Control pursuant to the Amended and Restated Indenture;

(6) an issuance of Capital Stock by a Restricted Subsidiary of the Corporation to the Corporation or to a Restricted Subsidiary of the Corporation;

(7) any Permitted Investment or Restricted Payment made in compliance with “—Certain Covenants—Limitation on Restricted Payments”;

(8) dispositions of assets in a single transaction or a series of related transactions with an aggregate Fair Market Value of less than $25.0 million;

(9) the creation of a Permitted Lien and dispositions in connection with Permitted Liens;

(10) the issuance by a Restricted Subsidiary of the Corporation of Preferred Stock or Disqualified Stock that is permitted by the covenant described under “—Certain Covenants—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

(11) the licensing or sublicensing of intellectual property or other general intangibles and licenses, leases or subleases of other property in the ordinary course of business which do not materially interfere with the business of the Corporation and its Restricted Subsidiaries;

(12) foreclosure on or expropriation of assets;

(13) any issuance or sale of Capital Stock in, or Indebtedness or other securities of, an Unrestricted Subsidiary (other than a Sherritt Ambatovy Subsidiary, it being understood, for the avoidance of doubt, that any such issuance or sale is governed by the eighth, ninth and tenth paragraphs of the covenant described under “Repurchase at the Option of Holders — Asset Dispositions”);

(14) the unwinding of any Hedging Obligations;

(15) the surrender or waiver of contract rights or the settlement, release or surrender of contract, tort or other claims;

(16) dispositions to the extent required by, or made pursuant to, customary buy/sell arrangements between the joint venture parties set forth in joint venture arrangements and similar binding agreements;

(17) the lease, assignment, sub-lease, license or sub-license of any real or personal property in the ordinary course of business;

(18) dispositions in connection with royalty or precious metals stream or similar transactions that are customary in the mining business (as determined in good faith by Senior Management); and

(19) any exchange of assets for other assets (which other assets may, in whole or in part, include cash, Cash Equivalents, Capital Stock or any securities convertible into, or exercisable or exchangeable for, Capital Stock, but which assets may not include any Indebtedness) issued by or related to a

H - 41

Similar Business if such other assets are of comparable or greater market value or usefulness to the business of the Corporation and its Restricted Subsidiaries, taken as a whole, compared with the assets being exchanged, which in the event of an exchange of assets with a Fair Market Value in excess of (a) $15 million shall be evidenced by an Officer’s Certificate and (b) $50 million shall be set forth in a resolution approved by at least a majority of the members of the Board of Directors of the Corporation; provided that the Corporation shall apply any cash or Cash Equivalents received in any such exchange of assets as described in the second paragraph under ‘‘Repurchase at the Option of Holders—Asset Dispositions”.

“Attributable Indebtedness” in respect of a Sale/Leaseback Transaction means, as at the time of determination, the present value (discounted at the interest rate implicit in the transaction) of the total obligations of the lessee for rental payments during the remaining term of the lease included in such Sale/Leaseback Transaction (including any period for which such lease has been extended), determined in accordance with IFRS; provided, however, that if such Sale/Leaseback Transaction results in a Capitalized Lease Obligation, the amount of Indebtedness represented thereby will be determined in accordance with the definition of “Capitalized Lease Obligations.”

“Average Life” means, as of the date of determination, with respect to any Indebtedness or Preferred Stock, the quotient obtained by dividing (1) the sum of the products of the numbers of years from the date of determination to the dates of each successive scheduled principal payment of such Indebtedness or redemption or similar payment with respect to such Preferred Stock multiplied by the amount of such payment by (2) the sum of all such payments.

“Board of Directors” means:

(1) with respect to a corporation, the board of directors of the corporation or (other than for purposes of determining Change of Control) a committee of the Board of Directors;

(2) with respect to a partnership, the board of directors of the general partner of the partnership; and

(3) with respect to any other Person, the board or committee of such Person serving a similar function.

“Business Day” means each day that is not a Saturday, Sunday or other day on which banking institutions in Toronto, Ontario are authorized or required by law to close.

“Canada Bond Yield” means, on any date, the bid yield to maturity on such date compounded semi-annually which a non-callable non-amortizing Government of Canada nominal bond would be expected to carry if issued, in Canadian dollars in Canada, at 100% of its principal amount on such date with a term to maturity which most closely approximates the remaining term of the Amended Notes to October 11, 2018 on such date, as determined by the Corporation based on a linear interpolation of the yields represented by the arithmetic average of bids observed in the market place at or about 11:00 a.m. (Toronto time), on the relevant date for each of the two (2) outstanding non-callable non-amortizing Government of Canada nominal bonds which have the terms to maturity which most closely span the remaining term of the Amended Notes to October 11, 2018 on such date, where such arithmetic average is based in each case on the bids quoted to an independent investment dealer acting as agent of the Corporation by two (2) independent registered members of the Investment Industry Regulatory Organization of Canada selected by the Corporation (such independent registered members to be acceptable to the Indenture Trustee, acting reasonably), calculated in accordance with standard practice in the industry.

“Canada Yield Price” means (1) with respect to the Amended 2025 Notes, as determined by an independent investment dealer selected by the Corporation (such independent investment dealer to be acceptable to the Indenture Trustee, acting reasonably), as of the Business Day immediately preceding the day on which the notice of redemption for prepayment is given, equal to the sum of the present values of (i) the redemption price of the Amended 2025 Notes on October 11, 2021 (such redemption being described under “—Optional Redemption”) plus (ii) all scheduled interest payments due on the Amended 2025 Notes through October 11, 2021 (not including any portion of the scheduled payments of interest accrued as of the relevant redemption date) discounted to the relevant redemption date on a semi-annual basis (assuming a 365-day year) at the discount rate equal to the sum of the Canada Bond Yield for such Amended 2025 Notes and the Canada Yield Spread; (2) with respect to the Amended 2021 Notes, a price equal to the price of the Amended 2021 Notes calculated to provide a yield to November 15, 2020, compounded semi-annually, equal to the Government of Canada Yield, calculated on the Business Day

H - 42

preceding the date on which the Corporation gives notice of redemption of such Amended 2021 Notes pursuant to the Amended and Restated Indenture, plus the Canada Yield Spread, and (3) with respect to the Amended 2023 Notes, a price equal to the price of the Amended 2023 Notes calculated to provide a yield to September 24, 2022, compounded semi-annually, equal to the Government of Canada Yield, calculated on the Business Day preceding the date on which the Company gives notice of redemption of such Amended 2023 Notes pursuant to the Amended and Restated Indenture, plus the Canada Yield Spread.

“Canada Yield Spread” means 1.00% (or 100 basis points) per annum.

“Canadian Securities Legislation” means all applicable securities laws in each of the provinces and territories of Canada, including, without limitation, the Province of Ontario, and the respective regulations and rules under such laws together with applicable published rules, policy statements, blanket orders, instruments, rulings and notices of the regulatory authorities in such provinces or territories.

“Capital Stock” of any Person means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated) equity of such Person, including any Preferred Stock and limited liability or partnership interests (whether general or limited), but excluding any debt securities convertible or exchangeable into such equity.

“Capitalized Lease Obligations” means an obligation that would have been required to be classified and accounted for as a finance lease for financial reporting purposes in accordance with IFRS as in effect on the Issue Date. The amount of Indebtedness represented by such obligation will be the amount of the liability for such obligation at the time any determination thereof is to be made as determined in accordance with IFRS, and the Stated Maturity thereof will be the date of the last payment of rent or any other amount due under such lease prior to the first date such lease may be terminated without penalty.

“Cash Equivalents” means:

(1) Canadian dollars, U.S. dollars or, in the case of any Restricted Subsidiary, such other local currencies held by it from time to time in the ordinary course of business;

(2) securities issued or directly and fully Guaranteed or insured by the Canadian or U.S. government or any agency or instrumentality of Canada or the United States (provided that the full faith and credit of Canada or the United States, as applicable, is pledged in support thereof), having maturities of not more than one year from the date of acquisition;

(3) marketable general obligations issued by any province of Canada or state of the United States or any political subdivision of any such province or state or any public instrumentality thereof maturing within one year from the date of acquisition and, at the time of acquisition, having a credit rating of “A” or better from either Standard & Poor’s Ratings Group, Inc. or Moody’s Investors Service, Inc., or carrying an equivalent rating by a nationally recognized Rating Agency, if both of the two named Rating Agencies cease publishing ratings of investments;

(4) certificates of deposit, time deposits, eurodollar time deposits, overnight bank deposits or bankers’ acceptances having maturities of not more than one year from the date of acquisition thereof issued by any commercial bank the long-term debt of which is rated at the time of acquisition thereof at least “A” or the equivalent thereof by Standard & Poor’s Ratings Group, Inc., or “A” or the equivalent thereof by Moody’s Investors Service, Inc., or carrying an equivalent rating by a nationally recognized Rating Agency, if both of the two named Rating Agencies cease publishing ratings of investments, and having combined capital and surplus in excess of $500.0 million;

(5) repurchase obligations with a term of not more than 365 days for underlying securities of the types described in clauses (2), (3) and (4) above entered into with any bank meeting the qualifications specified in clause (4) above;

H - 43

(6) commercial paper rated at the time of acquisition thereof at least “A-2” or the equivalent thereof by Standard & Poor’s Ratings Group, Inc. or “P-2” or the equivalent thereof by Moody’s Investors Service, Inc., or carrying an equivalent rating by a nationally recognized Rating Agency, if both of the two named Rating Agencies cease publishing ratings of investments, and in any case maturing within one year after the date of acquisition thereof; and

(7) interests in any investment Corporation or money market fund which invests 95% or more of its assets in instruments of the type specified in clauses (1) through (6) above.

“Cash Management Agreements” means any agreement providing for treasury, depository, purchasing card or cash management services, including in connection with any automated clearing house transfer of funds or any similar transaction entered into in the ordinary course of business.

“CFA Loans” means the “carry finance” loans made as of or after the Issue Date to the Corporation by each of Summit Ambatovy Mineral Resources Investment B.V., The Export-Import Bank of Korea and SNC-Lavalin Inc., or any of their respective Affiliates, as lenders, related to the Ambatovy Project.

“Change of Control” means:

(1) any Person or group or Persons acting jointly or in concert (any such group, a “Group”) becomes the beneficial owner, directly or indirectly, of more than 50% of the total voting power of the Voting Stock of the Corporation (or its successor by merger, consolidation, amalgamation, arrangement or purchase of all or substantially all of its assets); or

(2) the first day on which a majority of the members of the Board of Directors of the Corporation are not Continuing Directors; or

(3) the direct or indirect sale, assignment, conveyance, transfer, lease or other disposition (other than by way of merger, consolidation, amalgamation or arrangement), in one or a series of related transactions, of all or substantially all of the assets of the Corporation and its Restricted Subsidiaries taken as a whole to any Person or Group (other than to one or more Wholly-Owned Restricted Subsidiaries); or

(4) the adoption by the shareholders of the Corporation of a plan or proposal for the liquidation or dissolution of the Corporation.

“Commodity Agreement” means any commodity futures contract, commodity swap, commodity option or other similar agreement or arrangement entered into by the Corporation or any of its Restricted Subsidiaries designed to protect the Corporation or any of its Restricted Subsidiaries against fluctuations in the price of commodities actually produced or used in the ordinary course of business of the Corporation and its Restricted Subsidiaries.

“Common Stock” means with respect to any Person, any and all shares, interest or other participations in, and other equivalents (however designated and whether voting or nonvoting) of such Person’s common stock, whether or not outstanding on the Issue Date, and includes, without limitation, all series and classes of such common stock.

“Consolidated Coverage Ratio” means as of any date of determination, with respect to any Person, the ratio of (x) the aggregate amount of Consolidated EBITDA of such Person for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which financial statements are internally available to (y) Consolidated Interest Expense for such four fiscal quarters; provided, however, that:

(1) if the Corporation or any of its Restricted Subsidiaries:

(a) has incurred any Indebtedness (other than Indebtedness that constitutes ordinary working capital borrowings) since the beginning of such period that remains outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio includes an incurrence of Indebtedness (other than

H - 44

Indebtedness that constitutes ordinary working capital borrowings), Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such Indebtedness as if such Indebtedness had been incurred on the first day of such period (except that in making such computation, the amount of Indebtedness under any revolving Debt Facility outstanding on the date of such calculation will be deemed to be:

(i) the average daily balance of such Indebtedness during such four fiscal quarters or such shorter period for which such facility was outstanding; or

(ii) if such facility was created after the end of such four fiscal quarters, the average daily balance of such Indebtedness during the period from the date of creation of such facility to the date of such calculation),

and the discharge of any other Indebtedness repaid, repurchased, redeemed, retired, defeased or otherwise discharged with the proceeds of such new Indebtedness as if such discharge had occurred on the first day of such period; or

(b) has repaid, repurchased, redeemed, retired, defeased or otherwise discharged any Indebtedness since the beginning of the period that is no longer outstanding on such date of determination or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio includes a repayment, redemption, retirement, defeasance or other discharge of Indebtedness (in each case, other than Indebtedness incurred under any revolving Debt Facility unless such Indebtedness has been permanently repaid and the related commitment terminated and not replaced), Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving effect on a pro forma basis to such discharge of such Indebtedness, including with the proceeds of such new Indebtedness, as if such repayment, redemption, retirement, defeasance or other discharge had occurred on the first day of such period;

(2) if since the beginning of such period, the Corporation or any of its Restricted Subsidiaries will have made any Asset Disposition or disposed of or accounted for as discontinued operations (as defined under IFRS) any Corporation, division, operating unit, segment, business, group of related assets or line of business or if the transaction giving rise to the need to calculate the Consolidated Coverage Ratio is such an Asset Disposition:

(a) the Consolidated EBITDA for such period will be reduced by an amount equal to the Consolidated EBITDA (if positive) directly attributable to the assets that are the subject of such disposition or discontinuation for such period or increased by an amount equal to the Consolidated EBITDA (if negative) directly attributable thereto for such period; and

(b) Consolidated Interest Expense for such period will be reduced by an amount equal to the Consolidated Interest Expense directly attributable to any Indebtedness of the Corporation or any of its Restricted Subsidiaries repaid, repurchased, redeemed, retired, defeased or otherwise discharged (to the extent the related commitment is permanently reduced) with respect to the Corporation and its continuing Restricted Subsidiaries in connection with such transaction for such period (or, if the Capital Stock of any Restricted Subsidiary of the Corporation is sold or in the case of discontinued operations, the Consolidated Interest Expense for such period directly attributable to the Indebtedness of such Restricted Subsidiary or discontinued operations to the extent the Corporation and its continuing Restricted Subsidiaries are no longer liable for such Indebtedness after such sale);

(3) if since the beginning of such period the Corporation or any of its Restricted Subsidiaries (by merger, consolidation, amalgamation, arrangement or otherwise) will have made an Investment in any Restricted Subsidiary of the Corporation (or any Person that becomes a Restricted Subsidiary of the Corporation or is merged with or into the Corporation or any of its Restricted Subsidiaries)

H - 45

or an acquisition of assets, including any acquisition of assets occurring in connection with a transaction causing a calculation to be made hereunder, which constitutes all or substantially all of a Corporation, division, operating unit, segment, business, group of related assets or line of business, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto (including the incurrence of any Indebtedness) as if such Investment or acquisition occurred on the first day of such period; and

(4) if since the beginning of such period any Person (that subsequently became a Restricted Subsidiary of the Corporation or was merged with or into the Corporation or any of its Restricted Subsidiaries since the beginning of such period) will have incurred any Indebtedness or repaid, redeemed, retired, defeased or otherwise discharged any Indebtedness, made any disposition or any Investment or acquisition of assets that would have required an adjustment pursuant to clause (1), (2) or (3) above if made by the Corporation or its Restricted Subsidiary during such period, Consolidated EBITDA and Consolidated Interest Expense for such period will be calculated after giving pro forma effect thereto as if such transaction occurred on the first day of such period.

For purposes of this definition, whenever pro forma effect is to be given to any calculation under this definition, the pro forma calculations will be determined in good faith by a responsible financial or accounting officer of the Corporation. If any Indebtedness bears a floating rate of interest and is being given pro forma effect, the interest expense on such Indebtedness will be calculated as if the rate in effect on the date of determination had been the applicable rate for the entire period (taking into account any Interest Rate Agreement applicable to such Indebtedness if such Interest Rate Agreement has a remaining term in excess of 12 months). If any Indebtedness that is being given pro forma effect bears an interest rate at the option of the Corporation, the interest rate shall be calculated by applying such optional rate chosen by the Corporation.

“Consolidated EBITDA” for any period means, with respect to any Person, the Consolidated Net Income of such Person for such period:

(1) increased (without duplication) by the following items to the extent deducted in calculating such Consolidated Net Income:

(a) Consolidated Interest Expense; plus

(b) Consolidated Income Taxes; plus

(d) other non-cash charges reducing Consolidated Net Income, including any write-offs or write-downs (excluding any such non-cash charge to the extent it represents an accrual of or reserve for cash charges in any future period or amortization of a prepaid cash expense that was capitalized at the time of payment); plus

(e) any expenses or charges related to any Equity Offering, Permitted Investment, merger, amalgamation, consolidation, arrangement, acquisition, disposition, recapitalization or the incurrence of Indebtedness permitted to be incurred by the Amended and Restated Indenture (including a refinancing thereof) (whether or not successful), including (i) fees, expenses or charges related to the offering of the Amended Notes and the Tender Offer in respect of the Amended 2021 Notes and Amended 2023 Notes and (ii) any amendment or other modification of the Amended Notes and the Amended 2021 Notes and Amended 2023 Notes; plus

(f) any restructuring charges, integration costs or costs associated with establishing new facilities (which, for the avoidance of doubt, shall include retention, severance, relocation, workforce reduction, contract termination, systems establishment costs and facilities consolidation costs) certified by the chief financial officer of the Corporation and deducted (and not added back) in computing Consolidated Net Income; provided that

H - 46

the aggregate amount of all charges, expenses and costs added back under this clause (f) shall not exceed $30 million in any consecutive four-quarter period; plus

(g) accretion of asset retirement obligations, net of cash payments by such Person for such asset retirement obligations; plus

(h) the greater of (x) the Corporation’s equity in the net income of any Person (other than the Persons comprising the MOA Joint Venture or any other Joint Venture if, on the date of determination, the Corporation or a Wholly-Owned Restricted Subsidiary directly owns neither more nor less than 50% of the outstanding Capital Stock (measured in terms of economic interest rather than number of shares or voting power) of such Person) that is not a Restricted Subsidiary, that is accounted for by the equity method of accounting for such period and (y) the aggregate amount of cash actually distributed by such Person during such period to the Corporation or any of its Restricted Subsidiaries in accordance with clause (1) of the definition of “Consolidated Net Income”; provided that the adjustment pursuant to this clause (h) may be incremental to (but not duplicative of) any amount included in Consolidated Net Income pursuant to one of the exceptions described in subclauses (a) or (b) of clause (1) of the definition of “Consolidated Net Income”;

(2) decreased (without duplication) by non-cash items increasing Consolidated Net Income of such Person for such period (excluding the accrual of revenue in the ordinary course of business and any items which represent the reversal of any accrual of, or reserve for, anticipated cash charges that reduced Consolidated EBITDA in any prior period), and

(3) increased or decreased (without duplication) to eliminate to the extent reflected in Consolidated Net Income effects of adjustments (including the effects of such adjustments pushed down to the Corporation and its Restricted Subsidiaries) in any line item in such Person’s consolidated financial statements resulting from the application of purchase accounting in relation to any completed acquisition.

Notwithstanding the foregoing, clauses (1)(b) through (g) above relating to amounts of a Restricted Subsidiary or Joint Venture of a Person will be added to Consolidated Net Income to compute Consolidated EBITDA of such Person only to the extent (and in the same proportion) that the net income (loss) of such Restricted Subsidiary or Joint Venture was included in calculating the Consolidated Net Income of such Person and, in the case of the Restricted Subsidiary, to the extent the amounts set forth in clauses (1)(b) through (g) above are in excess of those necessary to offset a net loss of such Restricted Subsidiary or if such Restricted Subsidiary has net income for such period included in Consolidated Net Income, only if a corresponding amount would be permitted at the date of determination to be dividended to the Corporation by such Restricted Subsidiary without prior approval (that has not been obtained), pursuant to the terms of its charter and all agreements, instruments, judgments, decrees, orders, statutes, rules and governmental regulations applicable to that Restricted Subsidiary or its shareholders.

“Consolidated Income Taxes” means, with respect to any Person for any period, provision of such Person for such period (calculated on a consolidated basis in accordance with IFRS) in respect of taxes for such period imposed upon such Person or for other payments required to be made by such Person by any governmental authority which taxes or other payments are calculated by reference to the income or profits or capital of such Person or such Person and its Restricted Subsidiaries (to the extent such income or profits were included in computing Consolidated Net Income for such period), including, without limitation, federal, provincial and territorial, state, franchise and similar taxes and foreign taxes regardless of whether such taxes or payments are required to be remitted to any governmental authority.

H - 47

“Consolidated Interest Expense” means, with respect to any Person, for any period, the total interest expense of such Person and its consolidated Restricted Subsidiaries, net of any interest income received by such Person and its consolidated Restricted Subsidiaries, whether paid or accrued (other than interest income on Joint Venture Loans, excluding the MOA Joint Venture Loan), plus, to the extent not included in such interest expense:

(1) interest expense attributable to Capitalized Lease Obligations and the interest portion of rent expense associated with Attributable Indebtedness in respect of the relevant lease giving rise thereto;

(2) amortization of debt discount (including the amortization of original issue discount resulting from the issuance of Indebtedness at less than par) and debt issuance cost; provided, however, that any amortization of bond premium will be credited to reduce Consolidated Interest Expense unless such amortization of bond premium has otherwise reduced Consolidated Interest Expense;

(3) non-cash interest expense, but any non-cash interest income or expense attributable to the movement in the mark-to-market valuation of Hedging Obligations or other derivative instruments shall be excluded from the calculation of Consolidated Interest Expense;

(4) commissions, discounts and other fees and charges owed with respect to letters of credit and bankers’ acceptance financing;

(5) the interest expense on Indebtedness of another Person that is Guaranteed by such Person or one of its Restricted Subsidiaries or secured by a Lien on assets of such Person or one of its Restricted Subsidiaries, other than a Lien permitted by clause (25) of the definition of “Permitted Liens”;

(6) costs associated with entering into Hedging Obligations (including amortization of fees) related to Indebtedness;

(7) interest expense of such Person and its Restricted Subsidiaries that was capitalized during such period;

(8) the product of (a) all dividends paid or payable, in cash, Cash Equivalents or Indebtedness or accrued during such period on any series of Disqualified Stock of such Person or on Preferred Stock of its Non-Guarantors payable to a party other than the Corporation or a Restricted Subsidiary, times (b) a fraction, the numerator of which is one and the denominator of which is one minus the then current combined Canadian federal, provincial, territorial, municipal and local and foreign statutory tax rate of such Person, expressed as a decimal, in each case on a consolidated basis in accordance with IFRS;

(9) Receivables Fees;

(10) the cash contributions to any employee stock ownership plan or similar trust to the extent such contributions are intended to be used by such plan or trust to pay interest or fees to any Person (other than the Corporation and its Restricted Subsidiaries) in connection with Indebtedness incurred by such plan or trust; and

(11) the proportionate interest of the Corporation in the Consolidated Interest Expense of the Persons comprising the MOA Joint Venture or any other Joint Venture if, on the date of determination, the Corporation or a Wholly-Owned Restricted Subsidiary directly owns neither more nor less than 50% of the outstanding Capital Stock (measured in terms of economic interest rather than number of shares or voting power) of such Person or Joint Venture, as applicable (with such interest expense calculated in substantially the same manner as Consolidated Interest Expense of the Corporation and its Restricted Subsidiaries);

provided that Consolidated Interest Expense shall exclude (i) interest on the CFA Loans, to the extent that such interest is by its terms payable only to the extent of cash dividends, principal and interest payments on

H - 48

Joint Venture Loans or other cash distributions from the Sherritt Ambatovy Subsidiaries, (ii) interest expense on Indebtedness (in an amount not to exceed the principal amount guaranteed on the Issue Date pursuant to the Ambatovy Guarantee) of the Ambatovy Joint Venture guaranteed pursuant to the Ambatovy Guarantee, and (iii) interest expense attributable to non-controlling interests.

For the purpose of calculating the Consolidated Coverage Ratio, the calculation of Consolidated Interest Expense shall include all interest expense (including any amounts described in clauses (1) through (11) above) relating to any Indebtedness of such Person or any of its Restricted Subsidiaries described in the final paragraph of the definition of “Indebtedness.”

For purposes of the foregoing, total interest expense will be determined (i) after giving effect to any net payments made or received by such Person and its Subsidiaries with respect to Interest Rate Agreements and (ii) exclusive of amounts classified as other comprehensive income in the balance sheet of such Person. Notwithstanding anything to the contrary contained herein, without duplication of clause (9) above, commissions, discounts, yield and other fees and charges incurred in connection with any transaction pursuant to which such Person or its Restricted Subsidiaries may sell, convey or otherwise transfer or grant a security interest in any accounts receivable or related assets shall be included in Consolidated Interest Expense.

“Consolidated Net Income” means, for any period, the net income (loss) of the Corporation and its consolidated Subsidiaries determined on a consolidated basis in accordance with IFRS; provided, however, that there will not be included in such Consolidated Net Income:

(1) any net income (loss) of any Person if such Person is not a Restricted Subsidiary of the Corporation or that is accounted for by the equity method of accounting (other than the Persons comprising the MOA Joint Venture or any other Joint Venture if, on the date of determination, the Corporation or a Wholly-Owned Restricted Subsidiary directly owns neither more nor less than 50% of the outstanding Capital Stock (measured in terms of economic interest rather than number of shares or voting power) of such Persons) except that:

(a) subject to the limitations contained in clauses (3) through (11) below, the Corporation’s equity in the net income of any such Person for such period will be included in such Consolidated Net Income up to the aggregate amount of cash actually distributed by such Person during such period to the Corporation or any of its Restricted Subsidiaries as a dividend or other distribution, or as a principal payment, provided, however, that in the case of a dividend distribution or other such payment by a Sherritt Ambatovy Subsidiary, such amount will be reduced by the amount of any payments of principal and interest on the CFA Loans or APIL Loans made from the proceeds of such dividend distribution or other payment; and

(b) the Corporation’s equity in a net loss of any such Person (other than, in respect of any period or portion of a period occurring prior to the occurrence of Ambatovy Financial Completion, the Ambatovy Entities) for such period will be included in determining such Consolidated Net Income to the extent such loss has been funded with cash from the Corporation or its Restricted Subsidiary;

(2) solely for the purpose of determining the amount available for Restricted Payments under clause (c)(i) of the first paragraph of “—Certain Covenants—Limitation on Restricted Payments,” any net income (but not loss) of any Restricted Subsidiary of the Corporation (other than a Guarantor) if such Restricted Subsidiary is subject to prior government approval or other restrictions due to the operation of its charter or any agreement, instrument, judgment, decree, order, statute, rule or government regulation (which have not been waived), directly or indirectly, on the payment of dividends or the making of distributions by such Restricted Subsidiary, directly or indirectly, to the Corporation, except that:

(a) subject to the limitations contained in clauses (3) through (11) below, the Corporation’s equity in the net income of any such Restricted Subsidiary for such period will be included in such Consolidated Net Income up to the aggregate amount of cash that could

H - 49

have been distributed by such Restricted Subsidiary during such period to the Corporation or another Restricted Subsidiary of the Corporation as a dividend or other distribution (subject, in the case of a dividend or other distribution to another Restricted Subsidiary of the Corporation, to the limitation contained in this clause); and

(b) the Corporation’s equity in a net loss of any such Restricted Subsidiary for such period will be included in determining such Consolidated Net Income;

(3) any gain or loss (less all fees and expenses relating thereto) realized upon sales or other dispositions of any assets of the Corporation or such Restricted Subsidiary, other than in the ordinary course of business, as determined in good faith by Senior Management;

(4) any income or loss from the early extinguishment of Indebtedness or Hedging Obligations or other derivative instruments;

(5) any extraordinary, unusual or non-recurring gain or loss;

(6) any unrealized net gain or loss resulting in such period from Hedging Obligations or other derivative instruments;

(7) any net income or loss included in the consolidated statement of operations with respect to non- controlling interests;

(8) the cumulative effect of a change in accounting principles;

(9) consolidated impairment charges;

(10) any non-cash compensation charges, including any such charges arising from stock options, restricted stock grants or other equity incentive programs;

(11) any net gain or loss resulting in such period from currency translation gains or losses; and

(12) interest income, to the extent accrued but not paid in cash, on Joint Venture Loans (other than the MOA Joint Venture Loan, provided that the Corporation or a Wholly-Owned Restricted Subsidiary directly owns neither more nor less than 50% of the outstanding Capital Stock (measured in terms of economic interest rather than number of shares or voting power) of the MOA Joint Venture).

For the avoidance of doubt, an amount equal to the proportionate interest of the Corporation in the net income (loss) for such period of the MOA Joint venture and any other Joint Venture (such net income (loss) to be determined with the same additions and subtractions as are provided for in clause (1) through clause (11) above) will be included in such Consolidated Net Income, provided that on the date of determination the Corporation or a Wholly-Owned Restricted Subsidiary directly owns neither more nor less than 50% of the outstanding Capital Stock (measured in terms of economic interest rather than number of shares or voting power) of such Joint Venture.

“Continuing Directors” means, as of any date of determination, any member of the Board of Directors of the Corporation: (1) who was a member of such Board of Directors on the Issue Date or (2) whose election or nomination for election to such Board of Directors was not opposed by a majority of the Continuing Directors who were at the time of such nomination or election members of such Board.

“Corefco” means The Cobalt Refinery Corporation Inc.

“Credit Facilities” means (i) the amended and restated credit agreement dated as of October 31, 2008 among the Corporation, as borrower, ICCI and Corefco, as guarantors, National Bank of Canada, as administrative agent, and the lenders party thereto from time to time, and (ii) the credit agreement dated as of February 6, 2008 among the Corporation, as borrower, and The Bank of Nova Scotia, as lender, in each case, as the same may be amended,

H - 50

restated, modified, renewed, refunded, replaced or refinanced in whole or in part from time to time (including to change the borrowers or increase the amount loaned thereunder; provided that such additional Indebtedness is incurred in accordance with the covenant described under “—Certain Covenants—Limitation on Indebtedness”).

“Currency Agreement” means, in respect of a Person, any foreign exchange contract, currency swap agreement, futures contract, option contract or other similar agreement as to which such Person is a party or a beneficiary.

“Debt Facility” means one or more debt facilities (including, without limitation, the Credit Facilities) or commercial paper facilities with banks or other institutional lenders providing for revolving credit loans, term loans, receivables financing (including through the sale of receivables to such lenders or to special purpose entities formed to borrow from such lenders against such receivables) or letters of credit or issuances of debt securities evidenced by notes, debentures, bonds, indentures or similar instruments, in each case as amended, restated, modified, renewed, refunded, replaced or refinanced (including by means of sales of debt securities to institutional investors) in whole or in part from time to time (and whether or not with the original administrative agent, lenders or trustees or another administrative agent or agents, other lenders or trustees and whether provided under any credit or other agreement or indenture).

“Default “ means any event that is, or after notice or passage of time or both would be, an Event of Default.

“Designated Non-Cash Consideration” means the Fair Market Value of non-cash consideration received by the Corporation or any of its Restricted Subsidiaries in connection with an Asset Disposition that is designated as “Designated Non-Cash Consideration” pursuant to an Officer’s Certificate, setting forth the basis of such valuation, less the amount of cash or Cash Equivalents received in connection with a subsequent sale, redemption or payment of, on or with respect to such Designated Non-Cash Consideration.

“Disqualified Stock” means, with respect to any Person, any Capital Stock of such Person that by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable) or upon the happening of any event:

(1) matures or is mandatorily redeemable pursuant to a sinking fund obligation or otherwise;

(2) is convertible into or exchangeable for Indebtedness or Disqualified Stock (excluding Capital Stock which is convertible or exchangeable solely at the option of the Corporation or its Restricted Subsidiaries (it being understood that upon such conversion or exchange it shall be an incurrence of such Indebtedness or Disqualified Stock)); or

(3) is redeemable at the option of the holder of the Capital Stock in whole or in part,

in each case on or prior to the date 91 days after the earlier of the final maturity date of the Amended Notes or the date the Amended Notes are no longer outstanding; provided, however, that only the portion of Capital Stock which so matures or is mandatorily redeemable, is so convertible or exchangeable or is so redeemable at the option of the holder thereof prior to such date will be deemed to be Disqualified Stock; provided, further, that any Capital Stock that would constitute Disqualified Stock solely because the holders thereof have the right to require the Corporation or its Restricted Subsidiaries to repurchase such Capital Stock upon the occurrence of a Change of Control or Asset Disposition (each defined in a substantially identical manner to the corresponding definitions in the Amended and Restated Indenture) shall not constitute Disqualified Stock if the terms of such Capital Stock (and all such securities into which it is convertible or exchangeable or for which it is redeemable) provide that the Corporation or its Restricted Subsidiaries, as applicable, are not required to repurchase or redeem any such Capital Stock (and all such securities into which it is convertible or exchangeable or for which it is redeemable) pursuant to such provision prior to compliance by the Corporation with the provisions of the Amended and Restated Indenture described under the headings “—Repurchase at the Option of Holders—Change of Control” and “—Repurchase at the Option of Holders—Asset Dispositions” and such repurchase or redemption complies with “—Certain Covenants—Limitation on Restricted Payments.”

“Energas Joint Venture” means the joint venture in respect of the Energas power plant joint venture in Cuba carried on by Energas S.A. and its successors and assigns from time to time;

H - 51

“Equity Offering” means a public offering or private placement for cash by the Corporation of its Capital Stock, other than (x) any issuances pursuant to employee benefit plans or otherwise in compensation to officers, directors or employees, (y) an issuance to any Restricted Subsidiary, or (z) an offering of Common Stock issued in connection with a transaction that constitutes a Change of Control.

“Event of Default” means each event described under “—Events of Default” and any other event defined as an “Event of Default” in the Amended and Restated Indenture.

“Fair Market Value” means, with respect to any asset or liability, the fair market value of such asset or liability as determined by Senior Management of the Corporation in good faith; provided that if the fair market value exceeds $50.0 million, such determination shall be made by the Board of Directors of the Corporation in good faith (including as to the value of all non-cash assets and liabilities).

“Government Securities” means securities that are (a) direct obligations of Canada for the timely payment of which its full faith and credit is pledged or (b) obligations of a Person controlled or supervised by and acting as an agency or instrumentality of Canada the timely payment of which is unconditionally Guaranteed as a full faith and credit obligation of Canada which are not callable or redeemable at the option of the issuer thereof.

“Guarantee” means any obligation, contingent or otherwise, of any Person directly or indirectly guaranteeing any Indebtedness of any other Person and any obligation, direct or indirect, contingent or otherwise, of such Person:

(1) to purchase or pay (or advance or supply funds for the purchase or payment of) such Indebtedness of such other Person (whether arising by virtue of partnership arrangements, or by agreement to keep-well, to purchase assets, goods, securities or services, to take-or-pay, or to maintain financial statement conditions or otherwise); or

(2) entered into for purposes of assuring in any other manner the obligee of such Indebtedness of the payment thereof or to protect such obligee against loss in respect thereof (in whole or in part);

provided, however, that the term “Guarantee” will not include (i) endorsements for collection or deposit in the ordinary course of business or (ii) Liens permitted by clause (25) of the definition of “Permitted Liens.”

“Guarantor” means each Wholly-Owned Restricted Subsidiary of the Corporation that is not an Immaterial Subsidiary in existence on the Issue Date that provides an Amended Note Guarantee on the Issue Date and any other Restricted Subsidiary of the Corporation that provides an Amended Note Guarantee after the Issue Date in accordance with the Amended and Restated Indenture; provided that upon release or discharge of any Restricted Subsidiary of the Corporation from its Amended Note Guarantee in accordance with the Amended and Restated Indenture, such Restricted Subsidiary shall cease to be a Guarantor.

“Guarantor Subordinated Obligation” of a Guarantor means any Indebtedness of such Guarantor (whether outstanding on the Issue Date or thereafter incurred) that is expressly subordinated in right of payment to the obligations of such Guarantor under its Amended Note Guarantee pursuant to a written agreement.

“Hedging Obligations” of any Person means the obligations of such Person pursuant to any Interest Rate Agreement, Currency Agreement or Commodity Agreement.

“Holder” means a Person in whose name an Amended Note is registered on the Registrar’s books. “ICCI” means International Cobalt Company Inc.

“IFRS” means, at any time, international financial reporting standards as issued by the International Accounting Standards Board as in effect at such time. All ratios and computations based on IFRS contained in the Amended and Restated Indenture will be computed in conformity with IFRS.

“Immaterial Subsidiary” means, at any date of determination, any Restricted Subsidiary of the Corporation (1) the total assets of which (when combined with the assets of such Restricted Subsidiary’s Restricted Subsidiaries and after interCorporation eliminations) at the last day of the most recent fiscal year ending prior to the date of

H - 52

determination for which internal financial statements are available were less than 1.0% of Total Assets at the last day of such fiscal year and (2) the total revenues of which (when combined with the revenues of such Restricted Subsidiary’s Restricted Subsidiaries and after interCorporation eliminations) for the most recent fiscal year period ending prior to the date of determination for which internal financial statements are available were less than 1.0% of the consolidated total revenue of the Corporation and its Restricted Subsidiaries for such period.

“incur” means issue, create, assume, Guarantee, incur or otherwise become liable for; provided, however, that any Indebtedness or Capital Stock of a Person existing at the time such Person becomes a Restricted Subsidiary of the Corporation (whether by merger, consolidation, amalgamation or arrangement, acquisition or otherwise) will be deemed to be incurred by such Restricted Subsidiary at the time it becomes a Restricted Subsidiary of the Corporation; and the terms “incurred” and “incurrence” have meanings correlative to the foregoing.

“Indebtedness” means, with respect to any Person on any date of determination (without duplication):

(1) the principal of and premium (if any) in respect of indebtedness of such Person for borrowed money;

(2) the principal of and premium (if any) in respect of obligations of such Person evidenced by bonds, debentures, notes or other similar instruments;

(3) the obligations of such Person for the reimbursement of any obligor on any letter of credit, bankers’ acceptance or other similar instrument (other than obligations with respect to letters of credit securing obligations (other than obligations described in clauses (1), (2), (4) or (5) of this definition) entered into in the ordinary course of business of such Person to the extent such letters of credit are not drawn upon or, if and to the extent drawn upon, such drawing is reimbursed within 30 days of payment on the letter of credit);

(4) the principal component of all obligations of such Person to pay the deferred and unpaid purchase price of property (including earn-out obligations) that are recorded as liabilities under IFRS, and which purchase price is due after the date of placing such property in service or taking delivery and title thereto, except any such balance that constitutes a trade payable or similar obligation to a trade creditor, in each case accrued in the ordinary course of business;

(5) Capitalized Lease Obligations and all Attributable Indebtedness of such Person (whether or not such items would appear on the balance sheet of such Person);

(6) the principal component or liquidation preference of all obligations of such Person with respect to the redemption, repayment or other repurchase of any Disqualified Stock or, in the case of any Preferred Stock issued by a Non-Guarantor, such Preferred Stock (but excluding, in each case, any accrued dividends);

(7) all Indebtedness of other Persons secured by a Lien on any asset of such Person, whether or not such Indebtedness is assumed by such Person (other than as permitted by clause (25) of the definition of “Permitted Liens”); provided, however, that the amount of such Indebtedness will be the lesser of (a) the Fair Market Value of such asset at such date of determination and (b) the principal component of such Indebtedness of such other Persons;

(8) the principal component of Indebtedness of other Persons to the extent Guaranteed by such Person (whether or not such items would appear on the balance sheet of such Person);

(9) to the extent not otherwise included in this definition, net obligations of such Person under Hedging Obligations (the amount of any such obligations to be equal at any time to the termination value of such agreement or arrangement giving rise to such Obligation that would be payable by such Person at such time); and

H - 53

(10) to the extent not otherwise included in this definition, the amount of obligations outstanding under the legal documents entered into as part of a securitization transaction or series of securitization transactions that would be characterized as principal if such transaction were structured as a secured lending transaction rather than as a securitization transaction or series of securitization transactions pursuant to which the Corporation or any of its Restricted Subsidiaries sells or grants a security interest in accounts receivable to a Person that is not a Restricted Subsidiary.

Notwithstanding the foregoing: (i) money borrowed and set aside at the time of the Incurrence of any Indebtedness in order to pre-fund the payment of interest on such Indebtedness shall not be deemed to be Indebtedness; provided that such money is held to secure the payment of such interest; (ii) obligations in respect of royalty or precious metals stream or similar transactions shall not be deemed to be “Indebtedness”; (iii) in connection with the purchase by the Corporation or any of its Restricted Subsidiaries of any business, the term “Indebtedness” will exclude indemnification or post-closing payment adjustments or earn-out or similar obligations to which the seller may become entitled to the extent such payment is determined by a final closing balance sheet or such payment depends on the performance of such business after the closing; provided, however, that at the time of closing, the amount of any such payment is not determinable or not reflected as a liability on the balance sheet of the Corporation (excluding any notes thereto) and, to the extent such payment thereafter becomes fixed and determined, the amount is paid within 30 days thereafter; and (iv) “Indebtedness” shall be calculated without giving effect to any increase or decrease in Indebtedness for any purpose under the Amended and Restated Indenture as a result of accounting for any embedded derivatives created by the terms of such Indebtedness. For the avoidance of doubt, Reclamation Obligations are not and will not be deemed to be Indebtedness.

In addition, “Indebtedness” of the Corporation and its Restricted Subsidiaries shall include (without duplication) Indebtedness described in the preceding paragraph that would not appear as a liability on the balance sheet of the Corporation and its Restricted Subsidiaries if:

(1) such Indebtedness is the obligation of a Joint Venture;

(2) the Corporation or any of its Restricted Subsidiaries is a general partner of the Joint Venture (a “General Partner”); and

(3) there is recourse, by contract or operation of law, with respect to the payment of such Indebtedness to property or assets of the Corporation or any of its Restricted Subsidiaries, other than in respect of Liens permitted by clause (25) of the definition of “Permitted Liens”;

and then such Indebtedness shall be included in an amount not to exceed:

(a) the lesser of (i) the net assets of the General Partner and (ii) the amount of such obligations to the extent that there is recourse, by contract or operation of law, to the property or assets of the Corporation or any of its Restricted Subsidiaries; or

(b) if less than the amount determined pursuant to clause (a) immediately above, the actual amount of such Indebtedness that is recourse to the Corporation or any of its Restricted Subsidiaries, if the Indebtedness is evidenced by a writing and is for a determinable amount.

“Independent Financial Advisor” means an accounting, appraisal, investment banking firm or consultant to Persons engaged in advising Similar Businesses of nationally recognized standing that is, in the good faith judgment of the Corporation, qualified to perform the task for which it has been engaged.

“interest” with respect to the Amended Notes means interest with respect thereto.

“Interest Rate Agreement” means, with respect to any Person, any interest rate protection agreement, interest rate future agreement, interest rate option agreement, interest rate swap agreement, interest rate cap agreement, interest rate collar agreement, interest rate hedge agreement or other similar agreement or arrangement as to which such Person is party or a beneficiary.

H - 54

“Investment” means, with respect to any Person, all investments by such Person in other Persons (including Affiliates) in the form of any direct or indirect advance, loan (other than advances or extensions of credit to customers, suppliers or vendors in the ordinary course of business) or other extensions of credit (including by way of Guarantee or similar arrangement, but excluding any debt or extension of credit represented by a bank deposit (other than a time deposit)) or capital contribution to (by means of any transfer of cash or other property to others or any payment for property or services for the account or use of others), or any purchase or acquisition of Capital Stock, Indebtedness or other similar instruments issued by, such Person; provided that none of the following will be deemed to be an Investment:

(1) Hedging Obligations entered into in the ordinary course of business and in compliance with the Amended and Restated Indenture;

(2) endorsements of negotiable instruments and documents in the ordinary course of business; and

(3) an acquisition of assets, Capital Stock or other securities by the Corporation or a Subsidiary for consideration to the extent such consideration consists of Capital Stock (other than Disqualified Stock) of the Corporation.

For purposes of “—Certain Covenants—Limitation on Restricted Payments,”

(1) “Investment” will include the portion (proportionate to the Corporation’s equity interest in a Restricted Subsidiary of the Corporation that is to be designated an Unrestricted Subsidiary) of the Fair Market Value of the net assets of such Restricted Subsidiary at the time that such Restricted Subsidiary is designated an Unrestricted Subsidiary; provided, however, that upon a redesignation of such Subsidiary as a Restricted Subsidiary of the Corporation, the Corporation will be deemed to continue to have a permanent “Investment” in an Unrestricted Subsidiary in an amount (if positive) equal to (a) the Corporation’s aggregate “Investment” in such Subsidiary as of the time of such redesignation less (b) the portion (proportionate to the Corporation’s equity interest in such Subsidiary) of the Fair Market Value of the net assets of such Subsidiary at the time that such Subsidiary is so redesignated a Restricted Subsidiary of the Corporation;

(2) any property transferred to or from an Unrestricted Subsidiary other than cash will be valued at its Fair Market Value at the time of such transfer; and

(3) if the Corporation or any of its Restricted Subsidiaries sells or otherwise disposes of any Voting Stock of any Restricted Subsidiary of the Corporation such that, after giving effect to any such sale or disposition, such entity is no longer a Subsidiary of the Corporation, the Corporation shall be

deemed to have made an Investment on the date of any such sale or disposition equal to the Fair Market Value of the Capital Stock of such Subsidiary not sold or disposed of.

“Investment Grade Rating” means a rating equal to or higher than Baa3 (or the equivalent) by Moody’s Investors Service, Inc., BBB- (or the equivalent) by Standard & Poor’s Ratings Group, Inc., or BBB(low) (or the equivalent) by DBRS Ltd. or any equivalent rating by any Rating Agency, in each case, with a stable or better outlook.

“Investment Grade Securities” means (1) securities issued or directly and fully Guaranteed or insured by governments and supranational institutions having a “AAA” or higher rating by Standard & Poors Ratings Group, Inc. or the equivalent from another Rating Agency, or any agency or instrumentality thereof (other than Cash Equivalents); (2) debt securities or debt instruments with a rating of “A” or higher from Standard & Poor’s Ratings Group, Inc., or “A3” or higher by Moody’s Investors Service, Inc. or the equivalent of such rating by such rating organization or, if no rating of Moody’s Investors Service, Inc. or Standard & Poor’s Ratings Group, Inc., then exists, the equivalent of such rating by any other Ratings Agency, but excluding any debt securities or instruments constituting loans or advances among the Corporation and its Subsidiaries; and (3) investments in any fund that invests exclusively in investments of the type described in clauses (1) and (2) above which fund may also hold cash and Cash Equivalents pending investment or distribution.

H - 55

“Issue Date” means October 10, 2014.

“Joint Venture” means each of the MOA Joint Venture, the Ambatovy Joint Venture, the Energas Joint Venture, and any other joint venture or partnership in which the Corporation or a Restricted Subsidiary has an equity interest from time to time, which is not a Subsidiary of the Corporation and which constitutes a “joint arrangement” for purposes of IFRS.

“Joint Venture Loans” means loans by the Corporation or a Restricted Subsidiary to a Joint Venture or to an Unrestricted Subsidiary which directly or indirectly has an equity interest in a Joint Venture.

“Lien” means, with respect to any asset, any mortgage, lien (statutory or otherwise), pledge, hypothecation, deed of trust, deemed trust, charge, security interest, preference or encumbrance of any kind in respect of such asset, whether or not filed, recorded or otherwise perfected under applicable law, including any conditional sale or other title retention agreement, any lease in the nature thereof, and any option or other agreement to sell or give a security interest; provided that in no event shall a lease that would have been classified as an operating lease in accordance with IFRS as in effect on the Issue Date be deemed to constitute a Lien.

“Limited Guarantee” means a Guarantee by a Person organized other than in Canada or the United States, the amount of which is limited pursuant to, or in order to comply with, applicable requirements of law in the jurisdiction of organization of the applicable Person.

“MOA” means Moa Nickel S.A.

“MOA Joint Venture” means MOA Nickel joint venture carried on by MOA, ICCI and Corefco and their successors and assigns from time to time.

“MOA Joint Venture Loan” means the Joint Venture Loan by the Corporation to the MOA Joint Venture.

“Net Available Cash” from an Asset Disposition, or from a sale, transfer, disposition or issuance of Capital Stock of a Sherritt Ambatovy Subsidiary, means cash payments received (including any cash payments received by way of deferred payment of principal pursuant to an Amended Note or installment receivable or otherwise and net proceeds from the sale or other disposition of any securities or other assets received as consideration, but only as and when received, but excluding any other consideration received in the form of assumption by the acquiring Person of Indebtedness or other obligations relating to the properties or assets that are the subject of such Asset Disposition or such other disposition or issuance, or received in any other non-cash form) therefrom, in each case net of:

(1) all legal, accounting, investment banking, title and recording tax expenses, commissions and other fees and expenses incurred, and all Canadian federal, provincial, territorial, municipal and local taxes, and all foreign taxes, required to be paid or accrued as a liability under IFRS (after taking into account any available tax credits or deductions and any tax sharing agreements), as a consequence of such Asset Disposition;

(2) all payments made on any Indebtedness that is secured by any assets subject to such Asset Disposition, in accordance with the terms of any Lien upon such assets, or which must by its terms, or in order to obtain a necessary consent to such Asset Disposition, or by applicable law be repaid out of the proceeds from such Asset Disposition;

(3) all distributions and other payments required to be made to unaffiliated interest holders in Subsidiaries or joint ventures as a result of such Asset Disposition; and

(4) the deduction of appropriate amounts to be provided by the seller as a provision, in accordance with IFRS, against any liabilities associated with the assets disposed of in such Asset Disposition and retained by the Corporation or any of its Restricted Subsidiaries after such Asset Disposition.

“Net Cash Proceeds,” with respect to any issuance or sale of Capital Stock, means the cash proceeds of such issuance or sale, net of attorneys’ fees, accountants’ fees, underwriters’ or placement agents’ fees, listing fees,

H - 56

discounts or commissions and brokerage, consultant and other fees and charges actually incurred in connection with such issuance or sale and net of taxes paid or payable as a result of such issuance or sale (after taking into account any available tax credit or deductions and any tax sharing arrangements).

“Non-Guarantor” means any Restricted Subsidiary of the Corporation that is not a Guarantor. “Non-Recourse Debt” means Indebtedness of a Person:

(1) as to which neither the Corporation nor any of its Restricted Subsidiaries (a) provides any Guarantee or credit support of any kind (including any undertaking, Guarantee, indemnity, agreement or instrument that would constitute Indebtedness, but excluding any off-take agreement), other than Indebtedness secured by Liens permitted by clause (25) of the definition of “Permitted Liens” or (b) is directly or indirectly liable (as a guarantor or otherwise), other than as a result of Indebtedness secured by Liens permitted by clause (25) of the definition of “Permitted Liens”;

(2) no default with respect to which would permit (upon notice, lapse of time or both) any holder of any other Indebtedness of the Corporation or any of its Restricted Subsidiaries, other than Indebtedness secured by Liens permitted by clause (25) of the definition of “Permitted Liens,” to declare a default under such other Indebtedness or cause the payment thereof to be accelerated or payable prior to its Stated Maturity; and

(3) the explicit terms of which provide, or as to which the lenders have agreed in writing, that there is no recourse against any of the assets of the Corporation or its Restricted Subsidiaries, other than in respect of Liens permitted by clause (25) of the definition of “Permitted Liens.”

“Obligations” means any principal, interest (including any interest accruing subsequent to the filing of a petition in bankruptcy, reorganization or similar proceeding at the rate provided for in the documentation with respect thereto, whether or not such interest is an allowed claim under applicable Canadian federal or provincial law or under any foreign law), other monetary obligations, penalties, fees, indemnifications, reimbursements (including reimbursement obligations with respect to letters of credit and banker’s acceptances), damages and other liabilities, and Guarantees of payment of such principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities, payable under the documentation governing any Indebtedness.

“Officer” means the Chairman of the Board of Directors, the Chief Executive Officer, the President, the Chief Financial Officer, any Senior Vice President, the Treasurer, the Corporate Secretary or the Assistant Corporate Secretary of the Corporation or, in the event that the Corporation is a partnership or a limited liability Corporation that has

no such officers, a person duly authorized under applicable law by the general partner, managers, members or a similar body to act on behalf of the Corporation. Officer of any Guarantor has a correlative meaning.

“Officer’s Certificate” means a certificate signed by an Officer of the Corporation.

“Opinion of Counsel” means a written opinion from legal counsel who is licensed to practice in the applicable jurisdiction. The counsel may be an employee of, or counsel to, the Corporation or the Indenture Trustee.

“Pari Passu Indebtedness” means Indebtedness that ranks equally in right of payment to the Amended Notes, in the case of the Corporation, or the Amended Note Guarantees, in the case of any Guarantor (without giving effect to collateral arrangements).

“Permitted Investment” means any of the following Investments:

(1) an Investment in the Corporation or a Restricted Subsidiary of the Corporation;

H - 57

(2) an Investment in a Person if as a result of such Investment:

(a) such Person becomes a Restricted Subsidiary of the Corporation; or

(b) such Person, in one transaction or a series of related transactions, is merged or consolidated with or into, or transfers or conveys substantially all of its assets to, or is liquidated into, the Corporation or any of its Restricted Subsidiaries,

and, in each case, any Investment held by such Person; provided that such Investment was not acquired by such Person in contemplation of such acquisition, merger, consolidation, amalgamation, arrangement or transfer;

(3) an Investment in Cash Equivalents or Investment Grade Securities;

(4)

(a) endorsements for collection or deposit in the ordinary course of business, and

(b) receivables owing to the Corporation or any of its Restricted Subsidiaries created or acquired in the ordinary course of business and payable or dischargeable in accordance with customary trade terms; provided, however, that such trade terms may include such concessionary trade terms as the Corporation or any such Restricted Subsidiary deems reasonable under the circumstances;

(5) payroll, travel, commission, entertainment, relocation and similar advances to cover matters that are expected at the time of such advances ultimately to be treated as expenses for accounting purposes and that are made in the ordinary course of business;

(6) loans or advances to employees, officers or directors of the Corporation or any of its Restricted Subsidiaries in the ordinary course of business in an aggregate amount not in excess of $2.0 million with respect to all loans or advances made since the Issue Date (giving effect to the repayment of any such loan, but without giving effect to the forgiveness of any such loan);

(7) any Investment acquired by the Corporation or any of its Restricted Subsidiaries:

(a) in exchange for any other Investment or accounts receivable held by the Corporation or any such Restricted Subsidiary in connection with or as a result of a bankruptcy, workout, reorganization or recapitalization of the issuer of such other Investment or accounts receivable or in satisfaction of judgments or otherwise in resolution or compromise of litigation, arbitration or disputes; or

(b) as a result of a foreclosure by the Corporation or any of its Restricted Subsidiaries with respect to any secured Investment or other transfer of title with respect to any secured Investment in default;

(8) Investments made as a result of the receipt of non-cash consideration from an Asset Disposition that was made pursuant to and in compliance with “—Repurchase at the Option of Holders— Asset Dispositions” or any other disposition of assets not constituting an Asset Disposition;

(9) Investments in existence on the Issue Date, or made pursuant to contractual obligations in existence on the Issue Date, or an Investment consisting of any extension, modification or renewal of any such Investment existing on, or made pursuant to a contractual obligation existing on, the Issue Date; provided that the amount of any such Investment may be increased in such extension, modification or renewal only (a) as required by the terms of such Investment, or (b) as otherwise permitted under the Amended and Restated Indenture;

H - 58

(10) Currency Agreements, Interest Rate Agreements, Commodity Agreements and related Hedging Obligations, which transactions or obligations are incurred in compliance with “—Certain Covenants—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

(11) Guarantees issued in accordance with “—Certain Covenants—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

(12) Investments made in connection with the funding of contributions under any non-qualified retirement plan or similar employee compensation plan in an amount not to exceed the amount of compensation expense recognized by the Corporation and its Restricted Subsidiaries in connection with such plans;

(13) Investments consisting of the licensing or contribution of intellectual property pursuant to joint marketing arrangements with other Persons;

(14) any Similar Business Investment if (a) the Corporation’s Total Leverage Ratio immediately after giving effect to the making of such Investment does not exceed 3.00 to 1.0, or (b) the amount of such Investments, together with all other Investments made pursuant to this clause (14), does not exceed the greater of (i) $750 million, and (ii) 15% of Total Assets at the time of such Investment;

(15) Investments by the Corporation or any of its Restricted Subsidiaries, together with all other Investments pursuant to this clause (15), in an aggregate amount at the time of such Investment not to exceed the greater of (x) $100.0 million and (y) 2.0% of Total Assets, at any one time outstanding (in each case, with the Fair Market Value of such Investment being measured at the time made and without giving effect to subsequent changes in value); and

(16) Investments in Ambatovy Entities completed prior to the occurrence of Ambatovy Financial Completion.

“Permitted Liens” means, with respect to any Person:

(1) Liens securing (x) Indebtedness and other obligations permitted to be incurred under the provisions described in clause (1) of the second paragraph under “—Certain Covenants— Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock,” including interest, fees and other obligations relating thereto or for related banking services and Liens on assets of Restricted Subsidiaries of the Corporation securing Guarantees of such Indebtedness and such other obligations of the Corporation and (y) any other Indebtedness (other than Subordinated Obligations and Guarantor Subordinated Obligations); provided that at the time that the Lien securing such Indebtedness pursuant to this clause (1)(y) is created, and after giving effect to the incurrence of such Indebtedness, the creation of such Lien and the application of the proceeds from such Indebtedness on a pro forma basis, the Secured Leverage Ratio of the Corporation would not exceed 1.75 to 1.0;

(2) pledges or deposits by such Person under workers’ compensation laws, unemployment insurance laws, pension laws or similar legislation, or good faith deposits in connection with bids, tenders, contracts (other than for the payment of Indebtedness) or leases to which such Person is a party, or deposits to secure public or statutory obligations of such Person or deposits of cash or Government Securities to secure surety or appeal bonds to which such Person is a party, or deposits as security for contested taxes or import or customs duties or for the payment of rent, in each case incurred in the ordinary course of business;

(3) Liens imposed by law, including carriers’, warehousemen’s, mechanics’, landlords’, materialmen’s and repairmen’s Liens, incurred in the ordinary course of business;

H - 59

(4) Liens for taxes, assessments or other governmental charges not yet subject to penalties for non- payment or that are being contested in good faith by appropriate proceedings provided appropriate provisions required pursuant to IFRS have been made in respect thereof;

(5) Liens in favour of issuers of surety or performance bonds or letters of credit or bankers’ acceptances or similar obligations issued pursuant to the request of and for the account of such Person in the ordinary course of its business;

(6) minor survey exceptions, encumbrances, ground leases, easements or reservations of, or rights of others for, licenses, rights of way, sewers, electric lines, telegraph and telephone lines and other similar purposes, or zoning, building codes or other restrictions (including, without limitation, minor defects or irregularities in title and similar encumbrances) as to the use of real properties or Liens incidental to the conduct of the business of such Person or to the ownership of its properties that do not in the aggregate materially adversely affect the value of said properties or materially impair their use in the operation of the business of such Person;

(7) Liens securing Hedging Obligations that are not incurred for speculative purposes;

(8) leases, licenses, subleases and sublicenses of assets (including, without limitation, real property and intellectual property rights) that do not materially interfere with the ordinary conduct of the business of the Corporation or any of its Restricted Subsidiaries;

(9) judgment Liens not giving rise to an Event of Default;

(10) Liens securing Indebtedness permitted to be incurred pursuant to clause (8) of the second paragraph under “—Certain Covenants—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock”; provided that such Liens are created within 365 days of construction, acquisition or improvement of such assets or property and do not encumber any other assets or property of the Corporation or any of its Restricted Subsidiaries other than such assets or property and assets affixed or appurtenant thereto and the proceeds thereof;

(11) Liens arising solely by virtue of any statutory or common law provisions relating to Liens in favour of trustees and escrow agents, banker’s Liens, margin Liens, rights of set-off or similar rights and remedies as to deposit accounts or other funds maintained with a depository institution; provided that:

(a) such deposit account is not a dedicated cash collateral account ; and

(b) such deposit account is not intended by the Corporation or any of its Restricted Subsidiaries to provide collateral to the depository institution;

(12) Liens arising from Personal Property Security Act (Ontario) (or similar statutes in other jurisdictions) financing statement filings regarding operating leases entered into by the Corporation and any of its Restricted Subsidiaries in the ordinary course of business;

(13) Liens existing on the Issue Date (other than Liens permitted under clause (1) of this definition);

(14) Liens on property or shares of stock of a Person at the time such Person becomes a Restricted Subsidiary of the Corporation; provided, however, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such other Person becoming a Restricted Subsidiary of the Corporation; provided, further, however, that any such Lien may not extend to any other property owned by the Corporation or any of its Restricted Subsidiaries (other than the proceeds thereof);

(15) Liens on property at the time the Corporation or a Restricted Subsidiary of the Corporation acquired the property, including any acquisition by means of a merger, amalgamation,

H - 60

arrangement or consolidation with or into the Corporation or any of its Restricted Subsidiaries; provided, however, that such Liens are not created, incurred or assumed in connection with, or in contemplation of, such acquisition; provided, further, however, that such Liens may not extend to any other property owned by the Corporation or any of its Restricted Subsidiaries (other than the proceeds thereof);

(16) Liens securing Indebtedness or other obligations of a Restricted Subsidiary of the Corporation owing to the Corporation or another Restricted Subsidiary of the Corporation;

(17) Liens securing the Amended Notes and the Amended Note Guarantees;

(18) Liens securing Refinancing Indebtedness incurred to refinance, refund, replace, amend, extend or modify, as a whole or in part, Indebtedness that was previously so secured pursuant to clauses (10), (13), (14), (15), (17) and this clause (18) of this definition; provided that any such Lien is limited to all or part of the same property or assets (plus improvements, accessions, proceeds or dividends or distributions in respect thereof) that secured (or, under the written arrangements under which the original Lien arose, could secure) the Indebtedness being refinanced or is in respect of property that is the security for a Permitted Lien hereunder;

(19) any interest or title of a lessor under any Capitalized Lease Obligation, Sale/Leaseback Transaction or operating lease;

(20) Liens in favour of the Corporation or any of its Restricted Subsidiaries;

(21) Liens under industrial revenue, municipal or similar bonds;

(22) (a) Liens incurred in the ordinary course of business not securing Indebtedness and not in the aggregate materially detracting from the value of the properties of the Corporation and its Restricted Subsidiaries or the use of such properties in the operation of their business and (b) Liens arising out of conditional sale, title retention, consignment or similar arrangements for the sale of goods entered into in the ordinary course of business;

(23) Liens on specific items of inventory or other goods and proceeds of any Person securing such Person’s obligations in respect of bankers’ acceptances or other instruments issued or created for the account of such Person to facilitate the purchase, shipment or storage of such inventory or other goods;

(24) deposits made in the ordinary course of business to secure liability to insurance carriers;

(25) Liens on the Capital Stock or Indebtedness of an Unrestricted Subsidiary or Joint Venture (or any other right, title or interest relating thereto, including any right to receive interest on such Indebtedness or dividends or other distributions on Capital Stock, or any right, title or interest in or to any agreements or instruments relating thereto, including under any related shareholder, limited partnership, joint venture, loan or security agreements), in each case securing Non- Recourse Debt;

(26) Liens on assets pursuant to merger, amalgamation or arrangement agreements, stock or asset purchase agreements and similar agreements in respect of the disposition of such assets;

(27) Liens securing Indebtedness (other than Subordinated Obligations and Guarantor Subordinated Obligations) in an aggregate principal amount outstanding at any one time not to exceed the greater of (x) $100.0 million and (y) 2.0% of Total Assets;

(28) Liens granted in connection with royalty or precious metals stream or similar transactions that are customary in the mining business (as determined in the good faith by Senior Management);

H - 61

(29) Liens securing Obligations in respect of Cash Management Agreements in the ordinary course of business; and

(30) options, put and call arrangements, rights of first refusal and similar rights relating to Investments in joint ventures, partnerships and the like permitted to be made under the Amended and Restated Indenture.

“Person” means any individual, corporation, limited liability Corporation, partnership, joint venture, association, joint stock Corporation, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

“Preferred Stock,” as applied to the Capital Stock of any corporation, means Capital Stock of any class or classes (however designated) that is preferred as to the payment of dividends or the distribution of assets upon liquidation, dissolution or winding up.

“Rating Agency” means each of Standard & Poor’s Ratings Group, Inc., Moody’s Investors Service, Inc. and DBRS Ltd. or, if Standard & Poor’s Ratings Group, Inc. or Moody’s Investors Service, Inc. or DBRS Ltd. or all three of them shall not make a rating on the Amended Notes publicly available, a nationally recognized statistical rating agency or agencies, as the case may be, selected by the Corporation (as certified by a resolution of the Board of Directors) which shall be substituted for Standard & Poor’s Ratings Group, Inc. or Moody’s Investors Service, Inc. or DBRS Ltd. or all three of them, as the case may be.

“Receivable” means a right to receive payment arising from a sale or lease of goods or the performance of services by a Person pursuant to an arrangement with another Person pursuant to which such other Person is obligated to pay for goods or services under terms that permit the purchase of such goods and services on credit and shall include, in any event, any items of property that would be classified as an “account,” “chattel paper,” or “instrument” under the Personal Property Security Act (Ontario) as so defined.

“Receivables Fees” means any fees or interest paid to purchasers or lenders providing the financing in connection with a securitization transaction, factoring agreement or other similar agreement, including any such amounts paid by discounting the face amount of Receivables or participations therein transferred in connection with a securitization transaction, factoring agreement or other similar arrangement, regardless of whether any such transaction is structured as on-balance sheet or off-balance sheet or through a Restricted Subsidiary of the Corporation or an Unrestricted Subsidiary.

“Reclamation Obligations” means statutory, contractual, constructive or legal obligations, including the principal component of any obligations in respect of letters of credit, bank guarantees, performance or surety bonds or other similar instruments, associated with decommissioning of mining operations, oil and gas operations and power operations and reclamation and rehabilitation costs, including the cost of complying with applicable environmental regulation.

“Refinancing Indebtedness” means Indebtedness that is incurred to refund, refinance, replace, exchange, renew, repay or extend (including pursuant to any defeasance or discharge mechanism) (collectively, “refinance,” “refinances” and “refinanced” shall each have a correlative meaning) any Indebtedness existing on the Issue Date or incurred in compliance with the Amended and Restated Indenture (including Indebtedness of the Corporation that refinances Indebtedness of any of its Restricted Subsidiaries and Indebtedness of any of its Restricted Subsidiaries that refinances Indebtedness of another Restricted Subsidiary of the Corporation) including Indebtedness that refinances Refinancing Indebtedness; provided, however, that:

(1) (a) if the Stated Maturity of the Indebtedness being refinanced is earlier than the Stated Maturity of the Amended Notes, the Refinancing Indebtedness has a Stated Maturity no earlier than the Stated Maturity of the Indebtedness being refinanced or (b) if the Stated Maturity of the Indebtedness being refinanced is later than the Stated Maturity of the Amended Notes, the Refinancing Indebtedness has a Stated Maturity at least 91 days later than the Stated Maturity of the Amended Notes;

H - 62

(2) the Refinancing Indebtedness has an Average Life at the time such Refinancing Indebtedness is incurred that is equal to or greater than the Average Life of the Indebtedness being refinanced;

(3) such Refinancing Indebtedness is incurred in an aggregate principal amount (or if issued with original issue discount, an aggregate issue price) that is equal to or less than the sum of the aggregate principal amount (or if issued with original issue discount, the aggregate accreted value) then outstanding of the Indebtedness being refinanced (plus, without duplication, any additional Indebtedness incurred to pay interest or premiums required by the instruments governing such existing Indebtedness and fees and expenses (including any costs of defeasance) incurred in connection therewith);

(4) if the Indebtedness being refinanced is subordinated in right of payment to the Amended Notes or the Amended Note Guarantees, such Refinancing Indebtedness is subordinated in right of payment to the Amended Notes or the Amended Note Guarantees on terms at least as favourable to the Holders as those contained in the documentation governing the Indebtedness being refinanced; and

(5) Refinancing Indebtedness shall not include Indebtedness of a Non-Guarantor that refinances Indebtedness of the Corporation or a Guarantor.

“Restricted Investment” means any Investment other than a Permitted Investment.

“Restricted Subsidiary” of a Person means any Subsidiary of the referent Person (or if no such Person is specified, the Corporation) that is not an Unrestricted Subsidiary.

“Sale/Leaseback Transaction” means an arrangement relating to property now owned or hereafter acquired whereby the Corporation or its Restricted Subsidiary transfers such property to a Person (other than the Corporation or any of its Subsidiaries) and the Corporation or its Restricted Subsidiary leases it from such Person.

“Secured Indebtedness” means any Indebtedness (other than Non-Recourse Debt) of the Corporation or any of its Restricted Subsidiaries secured by a Lien on assets of the Corporation or such Restricted Subsidiary or against the assets of the MOA Joint Venture.

“Secured Leverage Ratio” means, as of any date of determination with respect to any Person, the ratio of (1) Secured Indebtedness of such Person and its Restricted Subsidiaries as of such date of calculation (determined on a consolidated basis in accordance with IFRS) to (2) Consolidated EBITDA of such Person for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which internal financial statements prepared on a consolidated basis in accordance with IFRS are available; provided, however, that solely for purposes of the calculation of the Secured Leverage Ratio, in connection with the incurrence of any Lien pursuant to clause (1)(y) of the definition of “Permitted Liens,” the Corporation and its Restricted Subsidiaries shall treat the maximum amount of Indebtedness that is permitted to be incurred pursuant to clauses (1) and (8) of the second paragraph of “—Certain covenants—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock” at the time of such calculation as being Secured Indebtedness Incurred and outstanding at such time. In the event that the Corporation or any of its Restricted Subsidiaries incurs or redeems any Secured Indebtedness subsequent to the commencement of the period for which the Secured Leverage Ratio is being calculated but prior to the event for which the calculation of the Secured Leverage Ratio is made, then the Secured Leverage Ratio shall be calculated giving pro forma effect to such incurrence or redemption of Indebtedness as if the same had occurred at the beginning of the applicable four fiscal quarter period. The Secured Leverage Ratio shall be calculated in a manner consistent with the definition of “Consolidated Coverage Ratio,” including any pro forma adjustments to Consolidated EBITDA as set forth therein (including for acquisitions).

“Senior Management” means any one of the chief executive officer, chief operating officer, chief financial officer and general counsel (or, in each case, any equivalent position) of the Corporation.

“Series” or “Series of Amended Notes” means the Amended 2021 Notes, the Amended 2023 Notes, the Amended 2025 Notes or any series of Additional Notes.

H - 63

“Sherritt Ambatovy Subsidiaries” means (i) APIL, Dynatec Corporation (BVI) Inc. and Madagascar Minerals Investments Ltd. and each of their successors, and (ii) any other Subsidiary of the Corporation (a) that holds any Equity Interests in an Ambatovy Entity or (b) through which the Corporation holds an indirect interest in the Ambatovy Joint Venture.

“Significant Subsidiary” means any Restricted Subsidiary of the Corporation: (a) whose proportionate share of the consolidated total assets of the Corporation and all of its Subsidiaries (after interCorporation eliminations) exceeds 10.0% as of the end of the most recently completed four fiscal quarters for which internal annual or quarterly financial statements are available; or (b) that contributed in excess of 10.0% of the consolidated net income of the Corporation and its Subsidiaries for the most recently completed four fiscal quarters for which internal annual or quarterly financial statements are available.

“Similar Business” means any business conducted or proposed to be conducted by the Corporation, its Subsidiaries and the Joint Ventures on the Issue Date (including, without limitation, the exploiting, exploring for, acquiring, developing, processing, gathering, producing, transporting, trading and marketing of commodities) or any other business that is similar, reasonably related, incidental, ancillary or complementary thereto.

“Similar Business Investments” means Investments made in (A) the ordinary course of, or of a nature that are customary in, the mining, oil and gas or power generation businesses as a means of exploiting, exploring for, acquiring, developing, processing, gathering, producing, transporting, trading or marketing precious or base metals, oil and gas or power, including through agreements, acquisitions, transactions, interests or arrangements which permit one to share (or have the effect of sharing) risks or costs, comply with regulatory requirements regarding ownership or satisfy other customary objectives in the mining, oil and gas or power generation business, and in any event including, without limitation, Investments made in connection with or in the form of (i) direct or indirect ownership interests in properties or facilities and (ii) operating agreements, development agreements, area of mutual interest agreements, pooling agreements, service contracts, joint venture agreements, partnership or limited liability Corporation agreements (whether general or limited), or other similar or customary agreements, transactions, properties, interests or arrangements, and Investments and expenditures in connection therewith or pursuant thereto; and (B) Persons engaged in a Similar Business.

“Stated Maturity” means, with respect to any security or Indebtedness, the date specified in the agreement governing or certificate relating to such security or Indebtedness as the fixed date on which the final payment of principal of such security or Indebtedness is due and payable, including pursuant to any mandatory redemption provision, but not including any contingent obligations to repay, redeem or repurchase any such principal prior to the date originally scheduled for the payment thereof.

“Subordinated Obligation” means any Indebtedness of the Corporation (whether outstanding on the Issue Date or thereafter incurred) that is subordinated or junior in right of payment to the Amended Notes pursuant to a written agreement.

“Subsidiary” of any Person means (a) any corporation, association or other business entity (other than a partnership, joint venture, limited liability Corporation or similar entity) of which more than 50% of the total ordinary voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof (or Persons performing similar functions) or (b) any partnership, joint venture, limited liability Corporation or similar entity of which more than 50% of the capital accounts, distribution rights, total equity and voting interests or general or limited partnership interests, as applicable, is, in the case of clauses (a) and (b), at the time owned or controlled, directly or indirectly, by (1) such Person, (2) such Person and one or more Subsidiaries of such Person or (3) one or more Subsidiaries of such Person. Unless otherwise specified herein, each reference to a Subsidiary will refer to a Subsidiary of the Corporation.

“Tax Act” means the Income Tax Act (Canada).

“Taxes” means any present or future tax, duty, levy, impost, assessment or other government charge (including penalties, interest and any other liabilities related thereto) imposed or levied by or on behalf of a Taxing Authority.

“Taxing Authority” means any government or any political subdivision or territory or possession of any government or any authority or agency therein or thereof having power to tax.

H - 64

“Total Assets” means the total consolidated assets of the Corporation and its Restricted Subsidiaries on a consolidated basis determined in accordance with IFRS, as shown on the most recent consolidated balance sheet of the Corporation (for greater certainty, excluding any assets held by an Unrestricted Subsidiary or Joint Venture other than the equity interests of an Unrestricted Subsidiary or Joint Venture held directly by the Corporation or a Restricted Subsidiary); provided that, for purposes of calculating “Total Assets” for purposes of testing the covenants under the Amended and Restated Indenture in connection with any transaction, such total consolidated assets of the Corporation and its Restricted Subsidiaries shall be adjusted to reflect any acquisitions and dispositions of assets out of the ordinary course that have occurred during the period from the date of the applicable balance sheet through the applicable date of determination.

“Total Leverage Ratio” means, as of any date of determination with respect to any Person, the ratio of (1) the total Indebtedness of such Person and its Restricted Subsidiaries as of such date of calculation (determined on a consolidated basis in accordance with IFRS) to (2) Consolidated EBITDA of such Person for the period of the most recent four consecutive fiscal quarters ending prior to the date of such determination for which internal financial statements prepared on a consolidated basis in accordance with IFRS are available. In the event that the Corporation or any of its Restricted Subsidiaries incurs or redeems any Total Indebtedness subsequent to the commencement of the period for which the Total Leverage Ratio is being calculated but prior to the event for which the calculation of the Total Leverage Ratio is made, then the Total Leverage Ratio shall be calculated giving pro forma effect to such incurrence or redemption of Indebtedness as if the same had occurred at the beginning of the applicable four fiscal quarter period. The Total Leverage Ratio shall be calculated in a manner consistent with the definition of “Consolidated Coverage Ratio,” including any pro forma adjustments to Consolidated EBITDA as set forth therein (including for acquisitions).

“Unrestricted Subsidiary” means:

(1) APIL and any other Subsidiary of the Corporation which at the time of determination shall have been designated an Unrestricted Subsidiary by the Board of Directors of the Corporation in the manner provided below; and

(2) any Subsidiary of an Unrestricted Subsidiary.

The Board of Directors of the Corporation may designate any Subsidiary of the Corporation (including any newly acquired or newly formed Subsidiary or a Person becoming a Subsidiary through merger, consolidation, amalgamation, arrangement or Investment therein) to be an Unrestricted Subsidiary only if:

(1) such Subsidiary or any of its Subsidiaries does not own any Capital Stock or Indebtedness of or have any Investment in, or own or hold any Lien on any property of, any other Subsidiary of the Corporation that is not a Subsidiary of the Subsidiary to be so designated or otherwise an Unrestricted Subsidiary;

(2) to the extent the Indebtedness of the Subsidiary is not Non-Recourse Debt, any Guarantee or other credit support thereof by the Corporation or its Restricted Subsidiaries is permitted under “Certain covenants—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock”;

(3) such designation and the Investment of the Corporation in such Subsidiary complies with “—Certain Covenants—Limitation on Restricted Payments”;

(4) such Subsidiary, either alone or in the aggregate with all other Unrestricted Subsidiaries, does not operate, directly or indirectly, all or substantially all of the business of the Corporation and its Subsidiaries;

H - 65

(5) such Subsidiary is a Person with respect to which neither the Corporation nor any of its Restricted Subsidiaries has any direct or indirect obligation (excluding, for the avoidance of doubt, any Guarantee or other credit support not otherwise prohibited under the Amended and Restated Indenture):

(a) to subscribe for additional Capital Stock of such Person; or

(b) to maintain or preserve such Person’s financial condition or to cause such Person to achieve any specified levels of operating results; and

(6) on the date such Subsidiary is designated an Unrestricted Subsidiary, such Subsidiary is not a party to any agreement, contract, arrangement or understanding with the Corporation or any of its Restricted Subsidiaries that would not be permitted under the covenant described under “—Certain Covenants—Limitation on Affiliate Transactions”.

Any such designation by the Board of Directors of the Corporation shall be evidenced to the Indenture Trustee by filing with the Indenture Trustee a resolution of the Board of Directors of the Corporation giving effect to such designation and an Officer’s Certificate certifying that such designation complies with the foregoing conditions. If, at any time, any Unrestricted Subsidiary would fail to meet the foregoing requirements as an Unrestricted Subsidiary, it shall thereafter cease to be an Unrestricted Subsidiary for purposes of the Amended and Restated Indenture, and any Indebtedness of such Subsidiary shall be deemed to be incurred as of such date.

The Board of Directors of the Corporation may designate any Unrestricted Subsidiary to be a Restricted Subsidiary of the Corporation; provided that immediately after giving effect to such designation, no Default or Event of Default shall have occurred and be continuing or would occur as a consequence thereof and the Corporation could incur at least

$1.00 of additional Indebtedness pursuant to the first paragraph of “—Certain Covenants—Limitation on Indebtedness and Issuance of Disqualified Stock and Preferred Stock” on a pro forma basis taking into account such designation.

“Voting Stock” of a Person means all classes of Capital Stock of such Person then outstanding and normally entitled to vote in the election of directors, managers or trustees, as applicable, of such Person.

“Wholly-Owned Restricted Subsidiary” means a Restricted Subsidiary of the Corporation, all of the Capital Stock of which (other than directors’ qualifying shares) is owned by the Corporation or another Wholly-Owned Restricted Subsidiary.

H - 66

Any questions and requests for assistance may be directed to the

Proxy Solicitation Agent:

The Exchange Tower

130 King Street West, Suite 2950, P.O. Box 361

Toronto, Ontario

M5X 1E2

www.kingsdaleshareholder.com

North American Toll Free Phone:

1-800-749-9197

Email: contactus@kingsdaleshareholder.com

Facsimile: 416-867-2271

Toll Free Facsimile: 1-866-545-5580

Outside North America, Banks and Brokers Call Collect: 416-867-2272

Exhibit 1.2

VOTING INFORMATION AND ELECTION FORM

TO VOTE IN FAVOUR OR AGAINST THE PROPOSED PLAN OF ARRANGEMENT

AND IF VOTING IN FAVOUR BEFORE THE EARLY CONSENT DEADLINE,
TO ELECT TO RECEIVE
EARLY CONSENT CASH CONSIDERATION OR EARLY CONSENT WARRANTS OF

SHERRITT INTERNATIONAL CORPORATION

PURSUANT TO A PROPOSED PLAN OF ARRANGEMENT UNDER
THE CANADA BUSINESS CORPORATIONS ACT

· cash consent consideration (the “Early Consent Cash Consideration”) equal to 2% of the principal amount of Existing Notes held by such Early Consenting Noteholder as at the Record Date; or

REGISTERED NOTEHOLDERS ARE REQUIRED TO COMPLETE THE FOLLOWING TWO BOXES, AS APPLICABLE, IN ORDER TO PROPERLY COMPLETE THIS VOTING INFORMATION AND ELECTION FORM

BOX 1 — VOTING IN FAVOUR OF OR AGAINST THE ARRANGEMENT AND ELECTION TO RECEIVE EARLY CONSENT CASH CONSIDERATION OR EARLY CONSENT WARRANTS IF ELIGIBLE

o OPTION 1 — NO ACTION TAKEN.

o OPTION 4 — DO NOT CONSENT/VOTE AGAINST THE ARRANGEMENT.

By checking this box, the undersigned Noteholder votes against the Arrangement and therefore, is NOT entitled to receive Early Consent Cash Consideration or Early Consent Warrants.

o OPTION 5 — VOTE IN FAVOUR OF THE ARRANGEMENT. Only select this option if making the selection after the Early Consent Deadline.

OTHER TERMS, CONDITIONS AND ACKNOWLEDGEMENTS

2. The undersigned, by execution of this VIEF, hereby covenants, represents and warrants that the undersigned has full power and authority to execute and deliver this VIEF.

3. The undersigned acknowledges that the Corporation provides no representation or advice as to the consequences, advantages or disadvantages of making an election hereunder.

5. This VIEF must be signed by the registered Noteholder in the space provided in Box 2.

(a) if revoking a vote in favour of the Arrangement Resolution which was submitted prior to the Early Consent Deadline together with a duly completed election in respect of the Early Consent Consideration to be received, then a revocation of both the vote and the Early Consent Consideration election will be deemed to be made by instructing a Beneficial Noteholder’s Intermediary to submit new instructions to CDS, as applicable, at any time prior to the Early Consent Deadline, which the Intermediary must then deliver to CDS prior to the Early Consent Deadline. For greater certainty, if a Noteholder elects to vote FOR the Arrangement Resolution prior to the Early Consent Deadline, it may not subsequently revoke such vote after the Early Consent Deadline has passed;

(b) if revoking or changing a duly completed election in respect of the Early Consent Consideration, then a revocation or modification of the Early Consent Consideration election will be deemed to be made by instructing a Beneficial Noteholder’s Intermediary to submit new instructions to CDS, as applicable, at any time prior to the Early Consent Deadline, which the Intermediary must then deliver to CDS prior to the Early Consent Deadline; or

BOX 2 — NOTEHOLDER SIGNATURE

DATED at this day of , 2016.

(Name of Noteholder)

(Address and Telephone Number of Noteholder)

(Signature of Noteholder. If the Noteholder is a corporation, signature of an authorized signing officer of the corporation)

(Title of authorized signing officer of the corporation, if applicable)

ELECTION AND DELIVERY INSTRUCTIONS

Exhibit 2.1

CONTENTS


Introduction		i
Forward-Looking Statements		ii
Scientific and Technical Information		iii
Glossary of Terms		iii

1.	Overview of the Business	1
	1.1 Three-Year History	2
2.	Corporate Structure	7
	2.1 Name and Incorporation	7
	2.2 Intercorporate Relationships	7
3.	Description of the Business	8
	3.1 Metals	8
	3.2 Oil and Gas	20
	3.3 Power	38
	3.4 Technologies	41
	3.5 Environment, Health and Safety and Sustainability	41
	3.6 Employees	46
	3.7 Risk Factors	46
	3.8 Other Disclosure Relating to Operations in Emerging Markets	63
4.	Dividends	66
5.	Capital Structure	66
6.	Market for Securities	68
7.	Directors and Officers	69
8.	Transfer Agent and Registrar	73
9.	Material Contracts	73
10.	Interest of Experts	74
11.	Additional Information	75
	11.1 Additional Documents	75
	11.2 Audit Committee	75
Schedule ‘A’ – Glossary of Terms		77
Schedule ‘B’ – Technical Information		82
Schedule ‘C’ – Greenhouse Gas Emission Frameworks		95
Schedule ‘D’ – Mandate of the Audit Committee		98

Sherritt International Corporation

Annual Information Form

For the year ended December 31, 2015

Dated as of March 21, 2016

Introduction

This annual information form (“Annual Information Form” or “AIF”) contains important information that will help you make an informed decision about investing in Sherritt International Corporation. It describes Sherritt International Corporation, its businesses and activities as well as risks and other factors that affect its business.

The information contained in this Annual Information Form relates to Sherritt International Corporation, its subsidiaries, its interest in an associate, and its proportionate interest in joint ventures for the year ended December 31, 2015, where applicable, unless otherwise indicated.

The information, including any financial information, disclosed in this Annual Information Form is stated as of December 31, 2015 or for the year ended December 31, 2015, as applicable, unless otherwise indicated. In this Annual Information Form, references to the “Corporation” or “Sherritt” are to Sherritt International Corporation together with its subsidiaries, its interest in an associate, and its proportionate interest in joint ventures. References to “management” are, unless otherwise indicated, to senior management of the Corporation.

Except as otherwise indicated, all dollar amounts in this Annual Information Form are expressed in Canadian dollars and references to “$” are to Canadian dollars. As of December 31, 2015 and March 18, 2016, the noon United States/Canada Dollar exchange rates, as reported by the Bank of Canada, were US$0.7225/Cdn.$1.3840 and US$0.7703/Cdn.$ 1.2982, respectively.

Sherritt International Corporation | 2015 Annual Information Form

Forward-Looking Statements

This Annual Information Form 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”, “projected”, “continue” or other similar words or phrases. Specifically, forward-looking statements in this document include but are not limited to, statements respecting certain expectations regarding capital costs and expenditures; capital project completion dates; sales volumes; revenue, costs and earnings; sufficiency of working capital and capital project funding; completion of development and exploration wells; restructuring plan cost savings; and amounts of certain joint venture commitments.

The Corporation cautions readers of this Annual Information Form 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, changes in the global price for nickel, cobalt, oil and gas or certain other commodities; share-price volatility; level of liquidity; and access to capital; access to financing; risk of future non-compliance with debt restrictions and covenants; risks associated with the Corporation’s joint venture partners; variability in production at Sherritt’s operations in Madagascar and Cuba; risks associated with the completion of capital projects; potential interruptions in transportation; uncertainty of gas supply for electrical generation; uncertainty of exploration results and Sherritt’s ability to replace depleted mineral and oil and gas reserves; the Corporation’s reliance on key personnel and skilled workers; the possibility of equipment and other failures; the potential for shortages of equipment and supplies; risks associated with mining, processing and refining activities; uncertainty of resources and reserve estimates; uncertainties in environmental rehabilitation provisions estimates; risks related to the Corporation’s corporate structure; political, economic and other risks of foreign operations; risks related to Sherritt’s operations in Madagascar and Cuba; risks related to the U.S. government policy toward Cuba, including the U.S. embargo on Cuba and the Helms-Burton legislation; risks related to the accuracy of capital and operating cost estimates; reliance on significant customers; foreign exchange and pricing risks; compliance with applicable environment, health and safety legislation and other associated matters; risks associated with governmental regulations regarding greenhouse gas emissions; maintaining the Corporation’s social license to grow and operate; risks relating to community relations; credit risks; shortage of equipment and supplies; competition in product markets; future market access; interest rate changes; risks in obtaining insurance; uncertainties in labour relations; uncertainty in the ability of the Corporation to enforce legal rights in foreign jurisdictions; uncertainty regarding the interpretation and/or application of the applicable laws in foreign jurisdictions; legal contingencies; risks related to the Corporation’s accounting policies; risks associated with future acquisitions; uncertainty in the ability of the Corporation to obtain government permits; failure to comply with, or changes to, applicable government regulations; bribery and corruption risks, including failure to comply with the Corruption of Foreign Public Officials Act or applicable local anti-corruption law; uncertainties in growth management; and certain corporate objectives, goals and plans for 2016; and the Corporation’s ability to meet other factors listed from time to time in the Corporation’s continuous disclosure documents. Readers are cautioned that the foregoing list of factors is not exhaustive and should be considered in conjunction with the risk factors described in this Annual Information Form and in the Corporation’s other documents filed with the Canadian securities authorities.

The Corporation may, from time to time, make oral forward-looking statements. The Corporation advises that the above paragraph and the risk factors described in this Annual Information Form and in the Corporation’s other documents filed with the Canadian securities authorities should be read for a description of certain factors that could cause the actual results of the Corporation to differ materially from those in the oral forward-looking statements. The forward-looking information and

statements contained in this Annual Information Form are made as of the date hereof and the Corporation undertakes no obligation to update publicly or revise any oral or written forward-looking information or statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. The forward-looking information and statements contained herein are expressly qualified in their entirety by this cautionary statement.

Scientific and Technical Information

Proven and Probable Mineral Reserves and Measured, Indicated and Inferred Mineral Resources have been estimated in accordance with the definitions of these terms adopted by the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) in November 2010 and incorporated in National Instrument 43-101 — Standards of Disclosure for Mineral Projects (“NI 43-101”) by Canadian securities regulatory authorities. All of the Corporation’s oil and gas reserves have been evaluated, on an annual basis, in accordance with National Instrument 51-101 — Standards of Disclosure for Oil and Gas Activities (“NI 51-101”) and the COGE Handbook.

Glossary of Terms

Please see Schedule ‘A’ of this AIF for a glossary of certain terms and abbreviations used in this document.

iii

1. Overview of the Business

Sherritt is based in Toronto, Ontario and is a leader in the mining and refining of nickel and cobalt from lateritic ores with projects and operations in Canada, Cuba and Madagascar. The Corporation is the largest independent energy producer in Cuba, with extensive oil and power operations on the island. Sherritt licenses its proprietary technologies and provides metallurgical services to mining and refining operations worldwide. The common shares (“Shares”) of the Corporation are listed on the Toronto Stock Exchange, trading under the symbol “S”.

METALS

Sherritt is an industry leader in the mining, processing and refining of nickel and cobalt from lateritic ore bodies. Sherritt has a 50/50 partnership with General Nickel Company S.A. (“GNC”) of Cuba (the “Moa Joint Venture”) and a 40% interest in the Ambatovy Minerals S.A. (“AMSA”) and Dynatec Madagascar S.A. (“DMSA” and together with AMSA, the “Ambatovy Joint Venture”) which owns a significant nickel operation in Madagascar. In addition, Sherritt has wholly-owned fertilizer, sulphuric acid, utilities and storage facilities in Fort Saskatchewan, Alberta, Canada (“Fertilizers”) that provides additional sources of income.

The Moa Joint Venture mines, processes and refines nickel and cobalt for sale worldwide (except in the United States). The Moa Joint Venture has mining operations and associated processing facilities in Moa, Cuba, and refining facilities in Fort Saskatchewan, Alberta. Continuous optimization of production facilities, combined with the implementation of innovative technologies at the Moa Joint Venture assists Sherritt in continuing to be one of the world’s lower-cost producers of nickel and cobalt from lateritic ore. The Moa Joint Venture’s experienced and knowledgeable workforce and management team, combined with consistently high on-stream time and equipment reliability, have been the key to safe and responsible utilization of production assets. The refinery facilities in Fort Saskatchewan have a production capacity of approximately 35,000 (100% basis) tonnes of nickel and approximately 3,800 (100% basis) tonnes of cobalt.

The Ambatovy Joint Venture is one of the world’s largest nickel mining, processing and refining operations utilizing lateritic ore. Sherritt is the operator of the mine and refining facilities and has as its partners Sumitomo Corporation (“Sumitomo”) and Korea Resources Corporation (“KORES”) (and together Sherritt, Sumitomo and KORES form the “Ambatovy Partners”). The Ambatovy Joint Venture has two nickel deposits located near Moramanga (eastern-central Madagascar) which are planned to be mined over a 19-year period. Additionally, reclamation of low-grade ore stockpiles is expected to extend project life by nine years. The ore from these deposits is initially processed at the mine site and then delivered as slurry to the processing plant and refinery located near the Port of Toamasina (north-eastern Madagascar). The Ambatovy Joint Venture has an estimated annual nameplate capacity of 60,000 tonnes (100% basis) of nickel and 5,600 tonnes (100% basis) of cobalt. The Ambatovy Joint Venture achieved financial completion in September 2015.

OIL AND GAS

Sherritt explores for and produces oil and gas, primarily from fields situated in Cuba. All of Sherritt’s oil sales in Cuba in 2015 were to an agency of the Government of Cuba at the first point of sale. Under the terms of its oil and gas production-sharing contracts

(“PSCs”), Sherritt’s share of production is made up of an allocation from gross working-interest production (cost-recovery oil) to allow recovery of all approved costs in addition to a negotiated percentage of the remaining production (profit oil). The pricing for oil produced by Sherritt in Cuba is based on a discount to Gulf Coast Fuel Oil 6 (“GCF06”) reference prices.

The Corporation has developed expertise in the exploration and development of fold and thrust geological plays along the north coast of Cuba. Reservoirs are located offshore in close proximity to the coastline. As a result, specialized long reach directional drilling methods have been developed to economically exploit the reserves from land based drilling locations.

In addition, Sherritt holds working-interests in several oil fields located in the Gulf of Valencia in Spain, an interest in the related production platform, and a working-interest in a natural gas field in Pakistan.

POWER

Sherritt’s power generating assets are located in Cuba at Varadero, Boca de Jaruco and Puerto Escondido. These assets are held by Sherritt through its one-third interest in Energas S.A. (“Energas”), which is a Cuban joint arrangement established to process raw natural gas and generate electricity for sale to the Cuban national electrical grid. Cuban government agencies Union Electrica (“UNE”) and Unión Cubapetróleo (“CUPET”) hold the remaining two-thirds interest in Energas.

Raw natural gas that would otherwise be flared is supplied to Energas by CUPET free of charge. The processing of raw natural gas produces clean natural gas, used to generate electricity, as well as by-products such as condensate and liquefied petroleum gas. All of Energas’ electrical generation is purchased by UNE under long-term fixed-price contracts while the by-products are purchased by CUPET at market based prices. Sherritt provides the financing for the construction of the Energas facilities and is repaid from the cash flows generated by the facilities.

CORPORATE AND OTHER

Technologies

Sherritt technologies (“Technologies”) provides technical support to Sherritt’s operating divisions and identifies opportunities for the Corporation as a result of its international activities and research and development activities. Technologies specializes in evaluating, developing and commercializing process technologies for natural resource based industries, in particular for the hydrometallurgical recovery of non-ferrous metals. Technologies’ process development is conducted in laboratory and pilot plant facilities where new technologies are developed, tested and demonstrated.

1.1 Three-Year History

2013

Dividend

On February 26, 2013, the Corporation approved an increase in its quarterly dividend from $0.038 per Share to $0.043 per Share, on the basis of steady cash flows from its coal and nickel businesses and Cuban operations, and with a focus on returning value to shareholders.

Financing

On July 1, 2013, the lenders (the “Ambatovy Senior Lenders”) under the $2.1 billion Ambatovy Joint Venture financing (the “Ambatovy Financing Agreements”) agreed to extend the financial completion date by two years, to September 30, 2015, subject to certain conditions.

In October 2013, agreements regarding the third-party financing for the construction of the acid plant at Moa for approximately US$65 million were finalized. Mobilization of resources for this project began in the fourth quarter of 2013, with initial production from the facility expected in 2016.

On November 29, 2013, the Corporation amended the terms of its syndicated 364 day revolving term credit facility (the “Syndicated Facility”) to, among other things, extend the maturity date to November 28, 2014 and amend certain covenants.

On November 29, 2013, the Corporation amended its $20 million line of credit (the “Line of Credit”) to extend the maturity date to November 28, 2014 and amend certain other provisions.

Shareholder Requisition

On December 24, 2013, Sherritt’s Board of Directors (the “Board”) announced that it had received a requisition pursuant to section 105 of Business Corporations Act (Ontario) (the “Requisition”). The Requisition requested that a special meeting of Sherritt’s shareholders be called to consider removing from office certain of the independent directors of Sherritt currently in place, and electing nominees submitted by the requisitioning shareholders.

Sulawesi Project

On December 30, 2013, the Corporation notified its partner, a subsidiary of Rio Tinto plc, that it would not be pursuing the Sulawesi Nickel Project (the “Sulawesi Project”) and its interest in the Sulawesi Project was terminated effective January 31, 2014. As of February 1, 2014, the Corporation has no further funding obligations with respect to the Sulawesi Project.

2014

Dividend

On February 19, 2014, the Corporation announced the reduction of its quarterly cash dividend from $0.043 to $0.01 per common share, in the face of persistently low commodity prices and to enhance the Corporation’s financial flexibility.

Shareholder Requisition

On January 10, 2014, Sherritt responded to the Requisition, stating that it had determined that it is in the best interests of its shareholders to proceed to call the special meeting to be held on May 6, 2014 together with the annual general meeting.

On January 10, 2014, Sherritt also announced the adoption of an advance notice by-law (the “By-law”) relating to the nomination of directors by shareholders. The purpose of the By-law is to provide a fair and transparent procedure for nominating directors. The By-law ensures that Sherritt and its shareholders receive adequate prior notice of director nominations, as well as sufficient information on all the nominees, by requiring shareholders to submit a notice of director nominations within a prescribed period in advance of a shareholder meeting for the election of directors. This facilitates an orderly and efficient meeting process. The By-law is effective as of announcement and was ratified by the shareholders at the annual and special meeting of shareholders held on May 6, 2014. Shareholders of the Corporation voted for the nine directors nominated by management and in favour of management’s recommendations for all other resolutions presented to that meeting of the shareholders.

Ambatovy Joint Venture

On January 22, 2014, the Corporation announced that the requirements for commercial production (an average of 70% of ore throughput based on nameplate capacity in the PAL circuit, over a 30 day period) had been achieved by the Ambatovy Joint Venture, and that effective February 1, 2014, Sherritt’s share of operating earnings (losses) from the Ambatovy Joint Venture began to be recognized.

On September 29, 2014, Sherritt filed a NI 43-101 compliant technical report entitled “NI 43-101 Technical Report on the Ambatovy Nickel Project in Madagascar” dated the same date (the “Ambatovy Technical Report”).

Extension and Award of Production-Sharing Contracts

On May 29, 2014, the Corporation executed an agreement with the Government of Cuba to amend the PSC covering the Puerto Escondido/Yumuri oil fields for a ten year extension of the term to March 2028. The extension of the PSC applies to new wells drilled in the development area. The PSC will terminate with respect to existing wells as of its original expiry date of March 2018. Under the terms of the amendment Sherritt has now fulfilled its commitment to drill a minimum of seven new wells in the development area. The program had poor results and no further wells are planned for the development area.

In addition, on December 18, 2014, the Corporation signed two new PSCs with the Government of Cuba covering Block 8A in Central Cuba and Block 10 in the Bay of Cardenas on the north coast of Cuba. The new blocks encompass areas of 967 and 261 square kilometres, respectively. The PSCs have 25 year terms. The initial exploration commitments for the two new PSCs include, among other things, the review and re-processing of existing seismic data and the acquisition and processing of new seismic data. In each case, upon completion of the initial phase of the exploration commitments, the Corporation may elect to proceed to the exploratory drilling phase or to relinquish the PSC in question. The Corporation is awaiting final approval of the PSCs for two additional exploration blocks relating to exploration prospects on the north coast of Cuba west of Havana.

Coal Transaction

Pursuant to an agreement dated December 24, 2013, on April 28, 2014 the Corporation completed the divestiture of its coal business for total consideration of $946 million. The operating assets of the coal business were sold to Westmoreland Coal Company for total consideration of $465 million. The Corporation’s royalty portfolio and interest in coal development assets were sold to a group led by Altius Minerals Corp., for cash consideration of $481 million. The amount outstanding under the coal revolving credit facility, which was used primarily for letters of credit and short-term funding of the coal business, was repaid in full and subsequently terminated.

The divestiture of the coal business is in keeping with the Corporation’s strategy of focusing its portfolio of assets on areas of core strength, specifically in its Metals operations where it possesses unique capabilities in mining, processing and technical solutions and its Cuba platform, where it has successfully operated for over two decades, highlighted by the Cuban oil business.

Debt Reduction

A significant portion of the cash proceeds of the coal transaction were used to strengthen the Corporation’s balance sheet through debt reduction. To this end, the Corporation made tender offers to purchase between $100 million and $150 million principal amount of its then outstanding 8.00% Senior Unsecured Debentures due November 15, 2018 (the “8.00% Debentures”) and between $200 million and $250 million principal amount of its 7.50% Senior Unsecured Debentures due September 24, 2020 (the “7.50% Debentures”), together with the solicitation of consent for certain amendments to the indentures under which those debentures were issued. The Corporation made payment on $150 million principal amount of its 8.0% Debentures and $250 million principal amount of its 7.50% Debentures and amended and restated the indentures governing the 8.0% and 7.50% Debentures on October 10, 2014. As of December 31, 2014, $250 million principal amount of the 8.00% Debentures and $250 million of the principal amount of the 7.50% Debentures remained outstanding.

On October 10, 2014, the Corporation completed its previously announced offering of $250 million principal amount of 7.875% Senior Unsecured Notes due October 11, 2022 (the “7.875% Debentures”, and together with the 8.00 Debentures and the 7.50% Debentures, the “Debentures”). The net proceeds of the offering, together with cash on hand, were used to redeem all of the $275 million outstanding principal amount of its 7.75% Senior Unsecured Debentures due October 15, 2015, including the applicable make-whole premiums on November 10, 2014.

Normal Course Issuer Bid

On October 29, 2014, the Corporation received TSX approval of its previously announced normal course issuer bid (“NCIB”) to purchase up to 14,875,944 Shares (representing 5% of its Shares as of October 28, 2014) for cancellation over a 12-month period.

As of December 31, 2014, the Corporation had purchased and canceled 3,960,300 million Shares under the NCIB at an average cost of $2.52 per Share for an aggregate cost of $10 million. The NCIB expired on November 2, 2015.

Financings

On November 30, 2014, the Corporation amended the terms of its $90 million Syndicated Facility to, among other things, extend the maturity date to November 30, 2015 and amend certain covenants.

On November 30, 2014, the Corporation extended the maturity date of its Line of Credit to November 30, 2015.

2015

Tax Rate Reductions in Cuba

During the first quarter of 2015, clarification was received from the Cuban government regarding the application of tax rate reductions in Cuba due to a new foreign investment law.

Operation	Prior Statutory Tax Rate		Revised Statutory Tax Rate
Oil and Gas	30	%	22.5	%
Power	30	%	15	%
Metals — Moa	45	%	22.5	%

As a result of these changes, for the twelve months ended December 31, 2015 the Corporation recognized a tax recovery of $40.7 million in Oil and Gas and $2.6 million in the Moa Joint Venture.

Dividend

On September 17, 2015, the Corporation announced that as part of a comprehensive initiative to cut operating costs and capital spending, the $0.01 per Share quarterly dividend was suspended, and has not been reinstated.

Ambatovy Financial Completion

Ambatovy financial completion was announced by press release on September 21, 2015. Ten certificates were filed to meet the financial completion criteria, covering a range of construction, operational, environmental, financial and legal obligations. With financial completion achieved, the Ambatovy Financing Agreements are now non-recourse to all of the Ambatovy Partners.

Financings

On September 28, 2015, the Corporation amended the terms of the Syndicated Facility to extend the maturity date to November 30, 2016 and increase the maximum credit available from $90 million to $115 million.

On September 28, 2015, the Corporation amended the terms of its Line of Credit to extend the maturity date to November 30, 2016 and increase the maximum credit available from $20 to $35 million. This facility was subject to the same financial covenants and borrowing rates as Syndicated Facility. The Line of Credit was repaid and terminated in February 2016.

LME Acceptance

On September 29, 2015, Sherritt received notice that the Ambatovy Joint Ventures’s finished nickel briquettes met the standards to qualify for delivery to London Metal Exchange (“LME”) warehouses. With the Ambatovy Joint Venture’s LME acceptance, nickel briquettes from all of Sherritt’s nickel operations are LME deliverable, allowing Sherritt or its customers the flexibility and commercial advantage of delivering nickel product to LME warehouses where logistics benefits exist or to mitigate short term variance in customer demand.

Sale of SNC-Lavalin 5% interest in Ambatovy Joint Venture

During the third quarter, SNC-Lavalin Inc. (“SNC”) exercised its put option to divest its 5% equity interest in the Ambatovy Joint Venture, selling its equity stake and share of the Partner Loans (defined below) to Sumitomo for approximately $600 million.

Impairments

In the third quarter of 2015, the Corporation recorded an impairment expense of $80.6 million on its oil assets in Cuba and Spain. This impairment is a result of lower oil price forecasts and poor drilling results from development wells at the Puerto Escondido/Yumuri extension.

In the fourth quarter of 2015, the Ambatovy Joint Venture recorded an impairment of US$2.4 billion (100% basis) due to lower forecast nickel prices. The impairment recorded at the Sherritt level is $1.6 billion after tax, consisting of $1.3 billion representing Sherritt’s 40% share of the Ambatovy Joint Venture’s impairment and $0.3 billion from the incremental carrying value of Sherritt’s Ambatovy Joint Venture assets, primarily related to mineral rights acquired from Dynatec Corporation (“Dynatec”) in 2007.

2016

Ambatovy Joint Venture Funding

Pursuant to cash calls due in January and March, 2016, an additional US$51.0 million was provided to the Ambatovy Joint Venture by Sumitomo and KORES. Total cash calls of US$85.0 million were made, with Sherritt not funding its 40% pro-rata share (US$34.0 million). By agreement amongst the Ambatovy Partners, Sherritt’s unfunded amounts remain payable to the Ambatovy Joint Venture, with accrued interest. These amounts will be subtracted from future Ambatovy Joint Venture distributions, or may be off set by the Ambatovy Joint Venture against certain other amounts owed to Sherritt. Sherritt also has the option to pay the amounts in cash at any time, at Sherritt’s election. Until the funding deficit is cured, and subject to continued discussions with the Ambatovy Partners, Sherritt will not be exercising its Ambatovy Joint Venture voting rights.

Sherritt determined not to fund further cash calls at this time to preserve liquidity and due to the current structure of the Partner Loans (defined below), which, at current nickel prices, effectively reduce Sherritt’s 40% interest in the Ambatovy Joint Venture to a 12% economic interest.1 At this time, Sherritt continues to serve as operator, and constructive discussions are ongoing between Partners and Ambatovy Senior Lenders regarding future funding of the Ambatovy Joint Venture and modifications to the existing senior principal amortization schedule.

1 70% of Sherritt’s distributable cash flow from the Ambatovy Joint Venture (after opex, capex and project debt service goes to Partner Loan repayment, leaving Sherritt with 30%; 30% of Sherritt’s 40% being 12%.)

2. Corporate Structure

2.1 Name and Incorporation

Sherritt International Corporation, formerly Sherritt International Corp., was incorporated on October 4, 1995 by articles of incorporation under the Business Corporations Act (New Brunswick). The articles of incorporation were amended in 1995 and in 2004 to provide for the Corporation’s current name and capital structure. The articles provide for an authorized capital consisting of an unlimited number of Shares.

On June 14, 2007, Sherritt and Dynatec were amalgamated under the Business Corporations Act (New Brunswick), with the amalgamated corporation named Sherritt International Corporation.

On August 1, 2007, Sherritt continued under the Business Corporations Act (Ontario) by filing articles of continuance.

On December 1, 2010, Sherritt amalgamated with two of its wholly-owned subsidiaries, with the amalgamated corporation named Sherritt International Corporation.

Sherritt International Corporation’s registered and head office is at 181 Bay St., 26th Floor, Toronto, ON M5J 2T3.

2.2 Intercorporate Relationships

Name	Jurisdiction	% of Voting Securities Held (directly or indirectly)
Ambatovy Minerals S.A.	Madagascar	40
Dynatec Madagascar S.A.	Madagascar	40
Energas S.A.	Cuba	331/3
International Cobalt Company Inc.	Bahamas	50
Moa Nickel S.A.	Cuba	50
Sherritt International Oil and Gas Limited	Alberta	100
Sherritt International (Cuba) Oil and Gas Limited	Barbados	100
The Cobalt Refinery Company Inc.	Alberta	50

3. Description of the Business

3.1 Metals

The Corporation’s Metals operations (“Metals”) consists of (i) a 50% interest in the Moa Joint Venture; (ii) a 40% interest in the Ambatovy Joint Venture; and (iii) Fertilizers.

Sherritt possesses unique capabilities in mining, processing and technical solutions, and provides metallurgical services to mining and refining operations worldwide (excluding the United States). The Corporation also owns certain fertilizer, sulphuric acid, utilities, storage and other assets located in Fort Saskatchewan, Alberta.

For the year ended December 31, 2015, Metals incurred a loss from operations, associate and joint venture of $1.9 billion (after an impairment of $1.6 billion) on revenue of $805.1 million compared to a loss from operations, associate and joint venture of $118.1 million on revenue of $813.8 million for the year ended December 31, 2014. The Ambatovy Joint Venture incurred a loss from operations, associate and joint venture of $1.9 billion on revenue of $332 million compared to a loss from operations, associate and joint venture of $158.4 million on revenue of $291.8 million for the year-ended December 31, 2014. The Moa Joint Venture and Fertilizers incurred a loss of $4.4 million from operations, associate and joint venture on revenue of $412.6 million compared to a gain of $39 million from operations, associate and joint venture on revenue of $457.4 million for the year ended December 31, 2014.

Capital expenditures at the Moa Joint Venture and Fertilizers of $64.1 million (50% basis) including expansion capital related to the construction of a third acid plant. Capital spending of $23.8 million (40% basis) at the Ambatovy Joint Venture was directed towards sustaining activities focused on the construction of Phase II of the Tailings Management Facility (“TMF”). During 2015, the Moa Joint Venture incurred exploration and development expenditures of US$363,552 (50% basis), compared to US$800,000 (50% basis) in 2014.

MARKET OVERVIEW

Nickel

In recent years, the worldwide nickel market price experienced a continued decline as global production has exceeded demand with significant growth in low grade ferronickel, more commonly referred to as nickel pig iron (“NPI”). Nickel prices on the London Metal Exchange (“LME”) were lower in 2015 than in 2014. The LME average cash settlement price for 2015 was US$5.37 per pound, a 30% decrease from the 2014 average of US$7.65 per pound. Nickel opened 2015 at US$6.75 per pound and closed the year at US$3.93 per pound, and traded in a range between US$3.70 and US$7.01 per pound.

Nickel is a heavy silver-coloured metal whose principal economic value lies in its resistance to corrosion and oxidation and excellent strength and toughness at high temperatures.

Nickel is used in the production of stainless steel, which accounts for approximately two-thirds of worldwide nickel consumption. Nickel is also used in the production of industrial materials, including non-ferrous steels, alloy steels, plated goods, rechargeable batteries, catalysts and chemicals. In 2015, approximately 86% of world primary nickel production was consumed in North America, Europe, Japan and China. Nickel demand is strongly influenced by world macro-economic conditions, which in turn influence the state of the world stainless steel industry, the single largest consumer of nickel.

According to CRU International Limited, a leading provider of market analysis in the mining and metals industry, in 2015, MMC Norilsk Nickel, a Russian company, was the world’s largest producer of refined nickel. Vale S.A., a Brazilian company and Jinchuan Non-Ferrous Metals Co. Ltd., a Chinese company, were the second and third largest producers, respectively. Combined production from the Moa Joint Venture and the Ambatovy Joint Venture was 80,977 tonnes (100% basis) or approximately 3.92% of annual world refined nickel production, making Sherritt one of the world’s top 10 largest nickel producers. The Moa Joint Venture’s 2015 production totaled 33,706 tonnes or approximately 1.74% of 2015 annual world refined nickel production. The Ambatovy Joint Venture produced 47,271 tonnes of nickel in 2015 or approximately 2.4% of 2015 annual world refined nickel production. Current world supply of refined nickel is estimated to be approximately 1,937 million tonnes per annum. World nickel supply is broadly classified into primary and secondary nickel. Primary nickel is further subdivided into refined nickel (Class I) having a minimum

nickel content of 99%, and charge nickel (Class II) having a nickel content of less than 99%. The main physical forms of Class I nickel are electrolytic nickel (cathode and rondelles), pellets, briquettes, granules and powder. Class II nickel includes ferronickel, nickel oxide sinter and utility nickel. Secondary nickel is the nickel contained in scrap metal, principally stainless steel scrap. World nickel supply has also been impacted by the growth of NPI in China. NPI is the lowest purity of what is considered refined nickel (as low as 2% nickel content) and is primarily used in China to make stainless steel. CRU, estimates that NPI production in China was approximately 310,000 tonnes of nickel equivalent in 2015, a decline of 35% from 2014.

Most major refined nickel producers supply nickel at grades ranging from 98.4% to 99.9% in purity. The Moa Joint Venture’s and the Ambatovy Joint Venture’s sintered nickel briquettes, produced at a minimum of 99.8% purity, are well suited for stainless steel and alloy steel production and certain chemical applications, and are expected to continue to be sold to such industries. The Moa Joint Venture’s “steel grade” (unsintered) nickel briquettes having a typical purity of 99.4% nickel are well suited for stainless steel production and foundry use.

Cobalt

Cobalt is a hard, lustrous, grey metal that is used in the production of high temperature, wear-resistant super alloys, catalysts, paint dryers, cemented carbides, magnetic alloys, pigments, rechargeable batteries and chemicals. The cobalt market is much smaller and more specialized than the nickel market.

The cobalt market has been subject to significant price volatility due to the lack of a liquid terminal market. The LME introduced a 99.3% cobalt contract in February 2010. The LME reported that 8,688 tonnes of cobalt traded on the LME in 2015, representing approximately 20% of global refined metal production or 9.5% of total refined metal and chemical production. Other base metal contracts on the LME experience trading volumes of 50 or more times total production indicating that the LME cobalt contract is still in its infancy and remains a secondary pricing mechanism to the more widely accepted Metal Bulletin as discussed below. At least two producers, representing about 12% of global primary cobalt production have reportedly adopted the LME price as their benchmark sales contract price. Some cobalt producers have adopted the LME cobalt price as a basis for long term and spot sales, however, the transition to LME pricing has been slower than expected.

Cobalt supply has evolved over the years from a reliance on unstable output associated with copper production in central Africa, to more diverse supply sources with material coming from a wider geographic area. Refined mainly as a by-product of nickel and copper mining, approximately 66% of cobalt global production is processed through copper refining, 31% through nickel refining and 3% by primary cobalt operations. The “copper belt” located in the Democratic Republic of the Congo (DRC) contains close to half of the world’s cobalt reserves. Australia, Cuba, Zambia, New Caledonia, Canada, Russia and Brazil hold most of the remainder. Cobalt production does not respond to cobalt demand. In the longer term, significant increases in supply are planned to be brought on-stream from new large-scale international projects targeting copper production.

The Moa Joint Venture and the Ambatovy Joint Venture are producing finished cobalt (briquettes and powder) at 99.9% purity, which exceeds the current LME specification. Based on data from CRU International Limited, worldwide supply of primary cobalt for 2016 is estimated to be approximately 92,015 tonnes, an increase of approximately 1.6% from 2015. Sherritt is among the leading suppliers of metallic cobalt to world markets. In 2015, cobalt was produced by ten Cobalt Development Institute (“CDI”) member companies, with additional supplies coming from a variety of other companies. The non-CDI sources included individual companies such as Norilsk in Russia, Votorantim in Brazil and QNI in Australia, as well as production from multiple refiners in China. Sherritt’s operations supplied 7,198 tonnes (100% basis) (3,734 tonnes (100% basis) supplied by the Moa Joint Venture and 3,464 tonnes (100% basis) by the Ambatovy Joint Venture) or approximately 7.8% (4.0% and 3.8% attributable to the Moa Joint Venture and the Ambatovy Joint Venture respectively) of world primary cobalt in 2015. The Corporation is the world’s 2nd largest producer of refined cobalt metal and metal powder (100% basis). The relative importance of the different uses of cobalt has changed over the years, with demand for older, more established uses, such as pigment, magnets and carbides showing only modest, if any, growth over the period. Many of these traditional uses are strongly reliant on industrial growth for demand increases, so demand for these uses tends to rise and fall with global economic performance. Over the last decade growth in the chemical sector, primarily in battery chemicals, has increased the demand for cobalt. The world’s reliance on global communications in the form of mobile phones and tablet technology has been a driving force for increased cobalt consumption.

Strong recovery from the superalloy sector has also helped the market remain in relative balance. Over the long term, positive growth is expected in the rechargeable battery sector (hybrid vehicle applications) and coal-to-liquid and gas-to-liquid catalyst sectors.

The Metal Bulletin Low Grade average cobalt price weakened during the year starting at US$14.20 per pound and closing the year at US$10.30 per pound. In 2015, Low Grade average cobalt was quoted by the Metal Bulletin in a range between US$9.90 per pound and US$14.38 per pound, averaging US$12.99 (Low Grade high/low year average) per pound, 9% lower than the average price for 2014 of US$14.16 per pound. In 2015, the LME daily cash settlement price averaged US$12.98 per pound with a low of US$10.43 per pound and a high of US$15.17 per pound. The LME price is considered the lowest openly traded market price for metallic cobalt meeting a minimum purity level of 99.3% with limited specifications for impurities.

MOA JOINT VENTURE

The Moa Joint Venture is a vertically-integrated nickel and cobalt mining, processing, refining and marketing joint venture between subsidiaries of Sherritt and GNC, a Cuban company. The operations of the Moa Joint Venture are carried on through three companies:

· Moa Nickel S.A. (“Moa Nickel”) — owns and operates the Moa, Cuba mining and processing facility

· The Cobalt Refinery Company Inc. (“CRC”) — owns and operates the Fort Saskatchewan, Alberta metals refinery

· International Cobalt Company Inc. (“ICCI”) — located in Nassau, Bahamas, acquires mixed sulphides from Moa Nickel and third parties, contracts with CRC for the refining of such purchased materials and then markets finished nickel and cobalt.

Sherritt and GNC each holds 50% of the issued and outstanding shares of each of these companies, the financial results of which are equity accounted into Sherritt’s consolidated financial statements.

Moa Nickel mines lateritic ore by open pit methods and processes it at its facilities at Moa into mixed sulphides containing nickel and cobalt. The mixed sulphides are purchased, free on board, from Moa Nickel by ICCI pursuant to the terms and conditions of an agreement (the “Mixed Sulphides Supply Agreement”), which expires June 30, 2017, between Moa Nickel and ICCI.

The mixed sulphides from Moa Nickel are transported by ocean freight to Canada and then by rail to Fort Saskatchewan. CRC refines this material together with other nickel and cobalt feed materials purchased by ICCI pursuant to the terms and conditions of a tolling agreement between ICCI and CRC, which expires June 30, 2017, with ICCI retaining ownership of the product throughout the refining process.

Once the mixed sulphides and other feed materials are refined by CRC, the resulting nickel and cobalt products are sold by ICCI to various markets, primarily in Europe, Japan and China. ICCI does not sell nickel and cobalt into the United States due to an embargo. For further information, please see 3.7 “Risk Factors — Risks related to Sherritt’s Operations in Cuba”.

In 2015, approximately 97% of the nickel input and 88% of the cobalt input for CRC’s refinery was derived from mixed sulphides from Moa Nickel. Under the terms of the Mixed Sulphides Supply Agreement, the price paid by ICCI to Moa Nickel is discounted from, in the case of nickel, the official LME cash price and, in the case of cobalt, the price received from ICCI customers. ICCI also purchases other nickel and cobalt feed materials from third parties for refining at CRC’s refinery and subsequently sells the finished products in international markets.

Status under Cuban Law

Under the terms of its constitution, the Cuban state is the unconditional owner of all land and natural resources lying within Cuban territory, and in accordance with section 15 thereof, it is authorized to sell land in Cuba when it is in the interest of the development of the country. The property and assets of the Moa Joint Venture were conveyed through a deed of sale, which was approved by the Executive Committee of the Council of Ministers. The Moa Joint Venture also received a mining concession by means of a decree or resolution granting exploration and mining rights. The deed of sale was later registered in the registry of property of Cuba, and Moa Nickel was registered in the commercial registry and the registry of the Chamber of Commerce of the Republic of Cuba.

The resolution of the Executive Committee of the Council of Ministers forming the Moa Joint Venture provides specific protection and guarantees over and above any future laws that the Government of Cuba may introduce, such as the current Foreign Investment Law of Cuba (“Law 118”). Law 118 authorizes the government of Cuba to enter into economic associations with foreign investors for the exploitation of natural resources and the development of industrial projects in Cuba. Law 118 provides a variety of guarantees for foreign investors including: (1) a guarantee that their assets cannot be expropriated and if such is required in the public interest, indemnification is made in freely convertible currency equal to the commercial value of the property taken, (2) the right to have such “commercial value” determined by an expert if the parties to the economic association cannot agree on such a price, and (3) a guarantee of the free transference abroad in freely convertible currency of net profits or dividends received from the investment as well as funds received by way of indemnification from the Cuban State.

The Cuban government also required the Moa Joint Venture to obtain an environmental permit in connection with its water and air discharges and a permit to operate bank accounts for each currency in which the joint venture does business in Cuba.

Marketing and Sales

ICCI owns and sells the nickel and cobalt toll refined by CRC. ICCI expects to use both the LME and Metal Bulletin cobalt prices as reference prices for sales contracts in 2016, as the transition to the LME cobalt prices has not been fully adopted. For further information on LME and Metal Bulletin pricing, please refer to “Description of the Business — Metals — Market Overview — Cobalt”. Sherritt may act, from time to time, as agent for ICCI.

ICCI’s primary markets for nickel and cobalt products are Europe, Japan and China. Products are transported by truck, rail and ship.

The following table sets out the Corporation’s 50% share of sales volumes from the Moa Joint Venture, as well as its average-realized prices for the periods indicated:

Sales Volumes (50% Basis) and Average-realized Prices

	Year Ended December 31, 2015		Year Ended December 31, 2014
Sales (tonnes)
Nickel	16,980		16,604
Cobalt	1,885		1,623

Average-realized Prices (dollars per pound)
Nickel	$	6.72	$	8.23
Cobalt	$	15.69	$	15.20

Properties

Information with respect to the Mineral Resources comprising the Moa Joint Venture, being the Central Moa nickel laterite operations and the La Delta and Cantarrana nickel laterite properties (collectively referred to is as the “Eastern Satellites”), is contained in Schedule ‘B’ — Technical Information attached hereto.

AMBATOVY JOINT VENTURE

The Ambatovy Joint Venture is a vertically-integrated nickel and cobalt mining, processing, refining and marketing joint venture between subsidiaries of Sherritt (40%) and Sumitomo (32.5%) and KORES (27.5% ownership). Sherritt is the operator of the facilities. Located in Madagascar, the Ambatovy Joint Venture is the largest finished nickel and finished cobalt operation from lateritic ore in the world.

The Ambatovy Joint Venture has an annual design capacity of 60,000 tonnes of nickel and 5,600 tonnes of cobalt. The mine is planned to be mined over 19 years, with an additional nine-years of reclamation of low-grade ore stockpiles. Commissioning and start-up of the plant facilities were completed in 2012. In February 2014, the Ambatovy Joint Venture reached commercial

production. For the full year of 2014, the Ambatovy Joint Venture produced 37,053 tonnes (100% basis) of finished nickel. Full year production in 2015 (100% basis) was 47,271 tonnes of finished nickel. Annual production rates are projected to vary throughout the life of the mine, largely dependent on ore grades.

The Ambatovy Joint Venture comprises (i) a mine and an ore preparation plant located in the immediate vicinity of the ore bodies near Moramanga in eastern central Madagascar, (ii) a pipeline, approximately 220 kilometres long, to transport the mined laterite ore in the form of prepared slurry from the ore preparation plant at the mine to the processing plant which is located just south of the port city of Toamasina, and (iii) a processing plant, including a refinery, that produces LME-grade finished nickel, as well as cobalt metal.

Joint Venture Costs

Capital spending for the Ambatovy Joint Venture in 2015 was $59.5 million (100% basis). In 2015, Sherritt provided funding to Ambatovy of US$105.6 million.

Pursuant to cash calls due in January and March 2016, an additional US$51 million was provided to the Ambatovy Joint Venture by Sumitomo and KORES. Total cash calls of US$85 million were made, with Sherritt not funding its 40% pro-rata share (US$34 million). By agreement amongst the Ambatovy Partners, Sherritt’s unfunded amounts accrue interest at LIBOR plus 3.0%. These amounts will be subtracted from future Ambatovy Joint Venture distributions, or may be off set by the Ambatovy Joint Venture against other amounts owed to Sherritt. Sherritt also has the option to pay the amounts in cash at any time, at Sherritt’s election. Until the funding deficit is cured, and subject to continued discussions amongst the Ambatovy Partners, Sherritt will not be exercising its Ambatovy Joint Venture voting rights.

For additional information please see section 3.7 “Risk Factors — Ambatovy Liquidity and Funding Risks”.

Ownership and Financing

The Corporation acquired its 40% interest in the Ambatovy Joint Venture through its acquisition of Dynatec in 2007. As at December 31, 2015, the Ambatovy Joint Venture was considered to be an associate of the Corporation. As such, the Corporation’s 2015 audited consolidated financial statements, including comparative figures, include the Corporation’s equity interest in the Ambatovy Joint Venture’s assets and earnings (loss) as a single line item on the statement of financial position and statement of comprehensive income, respectively.

The Ambatovy Joint Venture borrowed US$2.1 billion (US$1.6 billion as at December 31, 2015) to finance construction under the Ambatovy Financing Agreements. All of the Ambatovy Joint Venture’s assets and the interests of its shareholders in the Ambatovy Joint Venture have been pledged as security for this financing. In connection with this financing, the Corporation also provided a US$840 million guarantee to the Ambatovy Senior Lenders for its 40% pro rata portion of the loan. Ambatovy financial completion was announced by press release on September 21, 2015. Ten certificates were filed to satisfy the financial completion criteria, covering a range of construction, operational, environmental, financial and legal obligations. With financial completion achieved, the completion guarantee agreement was terminated and the outstanding project financing debt became non-recourse to the Corporation and the Ambatovy Partners, subject to the Ambatovy Senior Lenders continuing security interest in the Ambatovy Joint Venture’s assets and the interests of its shareholders therein.

A portion of the Corporation’s pro rata shareholder funding for the Ambatovy Joint Venture construction was initially provided by the other Ambatovy Partners through subordinated partner loans with a 15-year term at an interest rate of LIBOR plus 1.125% (the “Initial Partner Loans”). The Initial Partner Loans ($134.6 million as at December 31, 2015) were made directly to the Corporation and are generally repayable by Sherritt or a wholly-owned subsidiary of Sherritt solely from the proceeds of distributions from the Ambatovy Joint Venture. If the Initial Partner Loans have not been repaid in full by August 2023 or the Ambatovy Senior Lenders exercise remedies as a result of a default by the Ambatovy Joint Venture under the Ambatovy Financing Agreements, Sherritt is required to repay any outstanding amount of the Initial Partner Loans in cash or Shares.

On June 24, 2009 the Corporation finalized arrangements with the other Ambatovy Partners to fund a further portion of the Corporation’s pro rata share of shareholder funding for the Ambatovy Joint Venture. The arrangements created a mechanism by

which the other Ambatovy Partners provided new loans to a wholly-owned subsidiary of Sherritt to fund a portion of the Corporation’s pro rata shareholder funding obligations (the “Additional Partner Loans”, together with the Initial Partner Loans, the “Partner Loans”). From and after June 24, 2009 no further drawdowns were made under the Initial Partner Loans. The Additional Partner Loans ($1,303.2 million as at December 31, 2015) carry interest at a rate of LIBOR plus 7% per annum.

Each lender individually has the right to exchange some or all of its Additional Partner Loans for up to a maximum 15% equity interest, in aggregate for all lenders, in the Ambatovy Joint Venture at any time. Exercise of these rights in full would reduce Sherritt’s interest in the Ambatovy Joint Venture to 25%. This right is subject to Ambatovy Senior Lender consent, if required, and Sherritt’s right to repay all three such loans on a pro rata basis to avoid the reduction in its equity interest. As the capital costs of the Ambatovy Joint Venture have exceeded US$4.52 billion, the other Ambatovy Partners may exchange the Additional Partner Loans without being subject to the 15% cap. However, based on the total shareholder funding and the aggregate outstanding amount of Additional Partner Loans as at December 31, 2015, an exchange of the total outstanding Additional Partner Loans by all lenders would not have exceeded a15% interest on that date.

For so long as Sherritt is not in default under the Additional Partner Loans, 45% of the Corporation’s share of distributions will be applied to repay the Additional Partner Loans, 25% will be applied to repay the Initial Partner Loans and the remaining 30% will be payable to the Corporation. When one loan has been repaid in full, 70% of such distributions will be applied to repay the loan that remains outstanding and the Corporation will receive the balance of the distributions until such time as both loans have been repaid in full and the Corporation is entitled to receive all of its distributions.

For additional information please see section 3.7 “Risk Factors — Restrictions in Debt Instruments, Debt Covenants and Mandatory Repayments”.

Madagascar

The Ambatovy Joint Venture is located on the island nation of Madagascar. Madagascar is the world’s fourth largest island, covering approximately 587,000 square kilometres. It is located approximately 500 kilometres east of the African continent with a population of approximately 24 million. The official languages are Malagasy and French. The legal system is based on French civil law. The mine site is inland from the east coast, and just north of the main road that runs between Madagascar’s capital city of Antananarivo and the country’s principal port of Toamasina.

Mining investment in Madagascar is regulated by the Code Minier (the “Mining Code”) and the Loi sur les Grands Investissements Miniers (Large Mining Investment Act or “LGIM”). The Mining Code, which was amended in 2005, covers all aspects of mining, except in the case of LGIM eligible projects, where certain aspects are specifically modified by the LGIM. The Mining Code sets out the conditions for both exploration and exploitation permits which must be applied for sequentially. The exploitation permit required that an environmental impact assessment be approved by the Office National pour l’Environnement (the “O.N.E.”). The Corporation is in possession of all exploration and mining exploitation permits required for the Ambatovy Joint Venture.

The LGIM, which was enacted in 2002 (and amended in 2005) and developed with the support and assistance of the World Bank, establishes the legal framework for developing and operating large-scale-resource projects in the country and provides the equivalent of a stability agreement for at least 25 years. The LGIM guarantees that the terms of a mining permit will not be changed after it has been granted, except with the project’s express consent, or in the case where it would be necessary to protect the health, safety and welfare of the public. Additionally, the LGIM provides for legal stability, and provides investment incentives for qualifying projects. The LGIM also contains a guarantee that goods, rights, titles and interests of an eligible project cannot be nationalized or expropriated, except in a very limited number of circumstances, all of which provide for indemnification payments to the project. In 2007, the Ambatovy Joint Venture received notification from the Malagasy government of the Ambatovy Joint Venture’s eligibility certification under the LGIM. Following his accession to power as a result of political unrest in the first quarter of 2009, Andry Rajoelina, the President of the Malagasy Transitional Authority which came to power in March 2009, spoke publicly of reviewing the country’s agreements with foreign resource companies to ensure the country is receiving its “fair share” of royalties from the exploitation of Malagasy resources. At that time, representatives of the President advanced arguments that the Ambatovy Joint Venture’s LGIM eligibility certification may have been invalid. The Ambatovy Joint Venture and its legal advisors categorically rejected, and continued to reject, this position and vigorously defended the legality of the LGIM certification and

engaged in a substantial program of public information to explain the economics of the Ambatovy Joint Venture and the benefits it brings to Madagascar. On July 7, 2014, the Ambatovy Joint Venture received a letter from the Commission sur les Grands Investissements Miniers (“CGIM”), the government agency responsible for the administration of the LGIM, confirming that there was no need to re-certify the Ambatovy Joint Venture under the LGIM. After five years of political crisis during which the Malagasy Transitional Authority remained in power, Presidential elections were held on October 25, 2013 (first round) and December 20, 2013 (second round). Hery Rajaonarimampianina (the former Minister of Finance) was declared the winner with 54% of the votes and the electoral process was met with general approval from the international community, including the Southern African Development Community, European Union and African Union. Mr. Roger Kolo was appointed as Prime Minister and appointed ministers for his new government in spring 2014. In early 2015, Mr. Kolo resigned and Mr. Jean Ravelonarivo was named as Prime Minister by President Rajaonarimampianina. Mr. Ravelonarivo’s announced the appointment of his government on January 25, 2015.

Since his election in late 2013, President Rajaonarimampianina has been active in reinstating normal working relationships with the international community and especially with the international financing institutions. As a result, foreign help started to flow again to Madagascar’s treasury at the end of 2014, and this has helped the country to meet certain of its commitments, including certain of its commitments to the Ambatovy Joint Venture.

The government of Madagascar has publicly expressed an interest in updating the legislation governing the mining sector, but has also stated that new legislation would not affect existing projects.

The government presented successive drafts for an amended Mining Code during the year 2015, and engaged in comprehensive consultations with the mining sector as well as with civil society, with the objective of reaching a common agreement on the terms of the future Mining Code. Ambatovy Joint Venture has been very active on this matter, through the Chamber of Mines of Madagascar. However, in early December 2015, the government put an end to the consultations and prepared to present its latest draft to parliament in early 2016. The latest draft includes provisions that the Corporation feels will be detrimental to the country’s attractiveness for future mining investment, but it recognizes the Ambatovy Joint Venture is guaranteed fiscal and legal stability under the LGIM. It is expected that a new Mining Code will be adopted in the course of 2016 and that the Ambatovy Joint Venture will continue to advocate amendments to the proposed text that would enhance the business climate.

The Ambatovy Joint Venture continues to monitor the political climate in Madagascar and to engage in ongoing communication with representatives of the national, regional and local governments as well as multilateral institutions and key embassies. The Corporation has active communication with relevant Ministers and officials of the Malagasy government and continues its engagement with multilateral institutions and key embassies.

Marketing and Sales

In 2012, the Corporation established a subsidiary (the “Metals Marketing Company”) to buy, market and sell certain Ambatovy Joint Venture nickel production. The Metals Marketing Company transports nickel to customers by ship, truck and rail.

The Ambatovy Joint Venture expects to use both the LME and Metal Bulletin cobalt prices as reference prices for sale contracts in 2016, as the transition to LME cobalt prices has not been fully adopted. For further information on LME and Metal Bulletin pricing, please refer to “Description of the Business — Metals — Market Overview — Cobalt.”

The following table sets out the Corporation’s 40% share of sales volumes from the Ambatovy Joint Venture, as well as its average-realized prices for the periods indicated:

Sales Volumes (40% Basis) and Average-realized Prices

	Year Ended December 31, 2015		Year Ended December 31, 2014
Sales (tonnes)
Nickel	18,857		13,559
Cobalt	1,362		1,071
Average-realized Prices (dollars per pound)
Nickel	$	6.64	$	8.37
Cobalt	$	14.50	$	14.93

Property

Certain information with respect to the Mineral Resources comprising the Ambatovy Joint Venture, being the Ambatovy and Analamy deposits, is contained in Schedule ‘B’ — Technical Information attached hereto.

FERTILIZERS

The Corporation’s Metals business also includes Sherritt’s 100%-owned fertilizer and utilities operation located in Fort Saskatchewan which provides inputs for the metals refinery and produces agricultural fertilizer for sale in western Canada. The Ambatovy Joint Venture produces ammonium sulphate agricultural fertilizer, which is an inorganic water-soluble salt, as a by-product of the hydrometallurgical nickel and cobalt refining process. The Ambatovy Joint Venture’s ammonium sulphate is sold to international export markets and to the domestic market in Madagascar.

Canada

The Corporation owns certain fertilizer, utilities, storage and other assets located in Fort Saskatchewan. These assets produce ammonia, sulphuric acid and utilities for use in the refinery’s hydrometallurgical process and for sale to third parties. The refinery, in turn, produces crystalline ammonium sulphate, a fertilizer, as a by-product. Additionally, Sherritt produces a premium grade, granular ammonium sulphate fertilizer for the agricultural market. These assets also serve as a back-up hydrogen supply for CRC’s refinery. Results for these operations are included in the Metals results.

Revenue from the fertilizer business is derived from the sale of ammonia and fertilizers principally into the Western Canadian market. Fertilizer revenue also includes third-party sulphuric acid sales and the sale of CO2, a by-product of ammonia production. Demand for fertilizer products is seasonal, consisting of a spring season and a fall season. Sales volumes are usually higher during the spring application season.

The posted reference price for Sherritt ammonia averaged $813 per tonne during 2015, 9% lower than the price for 2014. The average Western Canadian price for Sherritt’s premium ammonium sulphate fertilizer product (ammonium super sulfate) was $425 per tonne during 2015, 3% lower than the 2014 price of $392 per tonne.

Including ammonia, granular ammonium sulphate and 50% of the ammonium sulphate from CRC’s refinery, Sherritt, excluding sales from the Ambatovy Joint Venture, sold 182,065 tonnes of fertilizer products in 2015. Nitrogen fertilizer prices in Western Canada are strongly influenced by world prices. Ammonia and ammonium sulphate prices in Western Canada are driven by market conditions in Western Canada and the U.S. Pacific Northwest. These products are transported in bulk by surface means.

Madagascar

The Ambatovy Joint Venture produces crystalline ammonium sulphate as a by-product of nickel and cobalt refining at the refinery in Madagascar, which is then sold primarily into agricultural markets in western Africa and south-east Asia. Timing of fertilizer applications in these and other markets ensures regular shipments throughout the calendar year. The Ambatovy Joint Venture uses a third party marketing and logistics company to sell 100% of its ammonium sulphate production. In 2015, the Ambatovy Joint Venture sold 139,433 tonnes (100% basis) of ammonium sulphate at an average selling price of US$153.30 per tonne.

MINERAL RESERVE AND MINERAL RESOURCE ESTIMATES

Moa Joint Venture

Mining Concessions

Moa Nickel received its original mining concessions in the province of Holguin near the town of Moa pursuant to a decree of the Executive Committee of the Council of Ministers of the Republic of Cuba dated November 30, 1994 (the “1994 Decree”). The mining concessions initially included a land area of 4,964 ha. Further concessions of 14,548 ha were granted through 2006 and further concessions of 1,323 ha were granted in 2013.

As a result of the original concessions, as well as concessions granted subsequent to the 1994 Decree, the current area of the resource concessions at Moa as at December 31, 2015 are as follows:

Central Moa Project		Hectares
Moa Occidental(1)		962
Moa Oriental(1)		1,539
Yagrumaje Oeste(1)		569
Playa la Vaca-Zona Septentrional II		754
Limestone Mud(1)		805
Camarioca Norte(1)		2,007
Camarioca Sur(1)		2,367
Eastern Satellites Project
La Delta(2)		1,482
Cantarrana		871
Santa Teresita		925
Total		12,282

Notes:

(1) Exploitation concession.

(2) Area of mineralization outside Humboldt Park. Approximately 20 additional ha is located inside the park but contains no mineralization and is not intended for exploration.

The expansion of both the Moa and Fort Saskatchewan facilities, pursuant to the terms and conditions of a expansion agreement dated March 3, 2005 between GNC and the Corporation (the “Expansion Agreement”), is based upon the commitment by GNC to ensure that a competent Cuban governmental authority grants mineral concessions of economic limonite reserves in the Moa area sufficient to permit Moa Nickel to operate at the expanded capacity for a period of no less than 25 years. In 2013, additional concessions in the Central Moa area (Yagrumaje Oeste and Playa la Vaca-Zona Septentrional II) were granted to Moa Nickel.

Moa Nickel pays the Cuban state a royalty calculated on the basis of 5% of the net sales value (free on board Moa port, Cuba) of its production of nickel and cobalt contained in mixed sulphides, and an annual canon of US$2.00, US$5.00 or US$10.00 for each ha of each concession depending on whether the area is a prospecting, exploration or exploitation area.

Mineral Reserves and Mineral Resources

The Mineral Resources and Reserves data below are derived from: (a) the Central Moa Technical Report (defined below); (b) the Eastern Satellites Technical Report (defined below); and (c) updated exploration drill results. Resource models have been reviewed by R. Mohan Srivastava, B.Sc., M.Sc., P.Geo, a “qualified person” (as such term is defined in NI 43-101) retained by the Corporation.

The following table provides a summary of the Proven and Probable Reserves for the consolidated Moa Joint Venture (100% basis), which includes the Central Moa Project and the Eastern Satellites Project, as of December 31, 2015.(1)

	Contained Metal
Reserve Classification(2)	Tonnage		Ni	Co	Fe	Ni	Co
	(millions of tonnes)		(%)	(%)	(%)	(000 t)	(000 t)
Proven
Central Moa Project	47.24		1.14	0.12	43.5
Eastern Satellites Project	11.03		1.18	0.14	45.5
Sub-total	58.27		1.15	0.12	43.9	670.0	71.0
Probable
Central Moa Project	2.22		1.13	0.11	42.3
Eastern Satellites Project	0		0	0	0
Sub-total	2.22		1.13	0.11	42.3	25.1	2.4
Total Proven and Probable Reserves	60.48	(3)	1.15	0.12	43.8	695.1	73.5

Notes:

(1) Proven and Probable Reserve estimate, as at December 31, 2014, was 55.80 million tonnes.

(2) Cut-off grades vary. All assumptions, parameters, and methods used to estimate the mineral resources and reserves are disclosed in the Central Moa Technical Report and the Eastern Satellites Technical Report.

(3) Totals may not sum exactly due to each component number being rounded to its nearest decimal.

This year the estimate of Proven and Probable Reserves is 4.7 million tonnes higher than as at the end of the prior year, due to drilling andupdated model which resulted in an increase in Reserves and an upgrade of Probable to Proven Reserves.

Moa Nickel has rights to additional Mineral Resources that are exclusive to the Mineral Reserves reported or which have not been sufficiently drilled to allow for the detailed economic analysis required to qualify as Mineral Reserves. Measured and Indicated Resources exclusive of the Mineral Reserves also includes encumbrances, some of which may eventually be economically mineable and will be reviewed in the course of Moa Nickel’s five-year planning process.

Moa Nickel also recovers material deposited into reject ponds that is not included in the Mineral Reserve estimates as some of it was previously accounted for as depleted material in the Reserve base. In 2015, approximately 0.22 million tonnes were mined from the reject ponds, and when added to previously recovered material from the reject ponds there is an estimated 3.0 million tonnes of recoverable material remaining as at December 31, 2015.

The following table provides a summary of the Mineral Resources that are exclusive of Mineral Reserves for the consolidated Moa Joint Venture (100% basis), which includes the Central Moa Project and the Eastern Satellites Project, inclusive of the recently granted Yagrumaje Oeste and Playa la Vaca — Zona Septentrional II concessions, as of December 31, 2015.

Moa Joint Venture Mineral Resources not Included in Mineral Reserves

Project	Resources Classification(1)	Tonnage	Ni	Co	Fe
		(millions of tonnes)	(%)	(%)	(%)
Central Moa Project	Measured	10.92	1.16	0.14	44.1
Central Moa Project	Indicated	7.54	1.25	0.13	43.0
Central Moa Project	Inferred	5.60	1.46	0.10	47.4
Eastern Satellites Project	Measured	3.29	1.24	0.15	45.5
Eastern Satellites Project	Indicated	0	—	—	—
Eastern Satellites Project	Inferred	4.36	1.30	0.14	45.2

Note:

(1) Cut-off grades vary. All assumptions, parameters, and methods used to estimate the mineral resources and reserves are disclosed in the Central Moa Technical Report and the Eastern Satellites Technical Report.

In 2013, Moa Nickel was granted the right to mine some of the saprolite underlying limonite in many of its deposits, for feed to the process plant. This recognizes current practices of intentional dilution at the bottom of the limonite ore zone to maximize ore recovery subject to the ability of the plant to process the material. The available quantity of saprolite is unknown, but exceeds that which can be economically processed with the limonite ore. The saprolite has not been quantified and included in the resources statements as the permit only allows it to be extracted in relation to processing capability. Moa Nickel believes that the capacity for including saprolite in the process will diminish, and therefore has not reported it as a Mineral Resource. Due to the uncertainty which may attach to Inferred Resources, it cannot be assumed that all or any part of an Inferred Mineral Resource will be upgraded to an Indicated or Measured Resource as a result of continued exploration. Confidence in the estimate is insufficient to allow the meaningful application of technical and economic parameters or to enable an evaluation of economic viability.

Historically, the Oficina Nacional de Recursos Minerales (“ONRM”) has defined the limonite zone as that layer of ore where nickel concentration exceeds 1% and iron concentration exceeds 35% of the total ore mined. Recognizing that the economic value of the ore comes from both nickel and cobalt, Moa Nickel defines the limonite zone in some deposits using a “nickel equivalent” grade which combines nickel and cobalt. With recoveries of nickel and cobalt being essentially the same at the Moa Nickel plant, a “nickel equivalent” grade cut-off that takes into account the relative long-term price expectations for the metals when a minimum nickel grade of 0.9% is used.

In Zona A and Moa Oriental nickel equivalent grades are being used to define the limonite zone. In each of these deposits, comparisons were made of the limonite zone defined using the historical definitions and using an approach that incorporates cobalt into the definition. The following were ultimately selected for reserve estimates: Zona A: %NiEq is greater than or equal to 1.35; %Ni is greater than or equal to 0.90; and %Fe is greater than or equal to 35 and Moa Oriental: %NiEq is greater than or equal to 1.25; %Ni is greater than or equal to 0.90; and %Fe is greater than or equal to 35.

Currently, in all other deposits, including Camarioca Norte and Sur, Yagrumaje Oeste, Playa la Vaca — Zona Septentrional II, La Delta, Cantarrana and Santa Teresita, the definition of the limonite zone follows the historical tradition, using a 1% Ni and 35% Fe cutoff.

Moa Nickel has been producing successfully from the Central Moa Concessions since 1994. At a similar annual production rate as in the recent past, Moa Nickel is continuing its mining operations onto contiguous concessions that contain geologically similar deposits.

The current Mineral Reserves provide very strong assurances of adequate plant feed for years to come. Cost control is well managed by virtue of Sherritt’s and GNC’s management of the Moa Joint Venture. At current world prices for nickel and cobalt, the nickel equivalent cutoff being used to define the limonite zone for mining purposes yields a head grade of nickel plus cobalt that is above the economic breakeven cutoff where revenue meets operating, processing and general and administrative costs.

The Mineral Reserve estimate also assumes that the exploration concessions currently held by Moa Nickel on the Eastern Satellites Project will be converted by the ONRM into exploitation concessions.

For further detail regarding the extent to which the estimates of Mineral Resources and Reserves may be materially affected by external factors, please refer to section 3.7 “Risk Factors — Uncertainy of Resources and Reserve Estimates”.

Ambatovy Joint Venture

Mining Concessions

The Ambatovy Joint Venture was granted a mining permit for the mine site on September 7, 2006. This permit is valid for 40 years. The permit allows for the extraction of nickel, cobalt, copper, platinum, zinc, and chrome. An annual permit fee of approximately US$36,320 (117,171,200 MGA) (plus VAT) was paid to the Malagasy Transitional Authority in 2015. For 2016, the permit fee will be approximately US$50,200 (159,413,920 MGA) (plus VAT).

Mineral Reserves and Mineral Resources

The Mineral Reserve and Resource data below is derived from the Ambatovy Technical Report and has been reviewed by R. Mohan Srivastava, B.Sc., M.Sc., P.Geo, a “qualified person(s)” (as such term is defined in NI 43-101). Changes to the Mineral Reserve and Resource estimates from those contained in the Ambatovy Technical Report reflect adjustments made for depletion and stockpile movements.

The following table provides a summary of the Proven and Probable Reserves for the Ambatovy Joint Venture (100% basis), as of December 31, 2015.

	Contained Metal
Reserve Classification(1)(2),(3)(4)(5)	Tonnage	Ni	Co	Ni	Co
	(millions of tonnes)	(%)	(%)	(000 t)	(000 t)
Proven	68.7	0.87	0.08	597.3	54.8
Probable	112.0	0.82	0.07	915.4	78.7
Total Proven and Probable Reserves	180.7	0.84	0.07	1,512.7	133.5

Notes:

(1) Mineral Reserve estimates are based on a cut-off grade of 0.6% nickel. All assumptions, parameters and methods used to estimate the Mineral Reserves are disclosed in the Ambatovy Technical Report. Cobalt grade does not enter into the definition of reporting cut-off grade since the vast majority (over 80%) of the Ambatovy Joint Venture’s revenue comes from nickel.

(2) Totals may not sum exactly due to each component number being rounded to its nearest decimal.

(3) Mineral Reserves include materials that have been mined and stockpiled at the mine site, and that, as of December 31, 2015, had not yet been slurried and pumped down the pipeline to the processing plant at Toamasina.

(4) Mineral Reserves are based upon an average mill processing rate of 6.5 Mt/y.

(5) Mineral Reserves were calculated on a long-term nickel price of US$7.37/lb and a cobalt price of US$12.20/lb.

The Ambatovy Joint Venture also has rights to additional Mineral Resources that are exclusive to the Mineral Reserves reported or which have not been sufficiently drilled to allow for the detailed economic analysis required to qualify as Mineral Reserves. Measured and Indicated Resources exclusive of the Mineral Reserves also include encumbrances, some of which may eventually be economically mineable and will be reviewed in the course of the Ambatovy Joint Venture’s five-year planning process.

The following table provides a summary of the Mineral Resources that are exclusive of Mineral Reserves for the Ambatovy Joint Venture (100% basis) as of December 31, 2015.

Resource Classification (exclusive of the Mineral Reserves)	Tonnage	Ni	Co
	(millions of tonnes)	(%)	(%)
Measured	3.0	0.75	0.07
Indicated	27.8	0.75	0.08
Total Measured and Indicated Resources(1)	30.8	0.75	0.08
Inferred	62.9	0.76	0.07

Note:

(1) Mineral Resource estimates are based on a cut-off grade of 0.6% nickel. Cobalt grade does not enter into the definition of reporting cut-off grade since the vast majority (over 80%) of the Ambatovy Joint Venture’s revenue comes from nickel. All assumptions, parameters and methods used to estimate the Mineral Reserves are disclosed in the Ambatovy Technical Report.

Due to the uncertainty which may attach to Inferred Mineral Resources, it cannot be assumed that all or any part of an Inferred Resource will be upgraded to an Indicated or Measured Resource as a result of continued exploration. Confidence in the estimate is insufficient to allow the meaningful application of technical and economic parameters or to enable an evaluation of economic viability.

The majority of the Inferred Resource at the Ambatovy Joint Venture is attributable to limonite material on the fringes of the ore body and saprolite material that is located at the base of the limonite material.

For details regarding the extent to which the estimates of mineral resources and reserves may be materially affected by external factors, please see section 3.7 “Risk Factors — Uncertainy of Resources and Reserve Estimates”.

3.2 Oil and Gas

The Corporation explores for, develops and produces oil and gas from fields in Cuba, Spain and Pakistan. In 2015, approximately 95% of the Corporation’s worldwide oil and gas production was produced in Cuba with the remainder produced from its interests in several oil fields off the coast of Spain and from a gas field in Pakistan.

In 2015, the Corporation’s Oil and Gas operations generated revenues of $162.6 million compared with $269.3 million during 2014, resulting in a loss from operations of $71.6 million during 2015 after an impairment expense of $80.6 million and compared to earnings from operations of $110.7 million during 2014. Exclusive of changes in working capital, the Corporation invested $54.5 million in Oil and Gas capital projects during 2015 and $65.4 million during 2014, all of which were funded by cash flows generated by the Corporation’s Oil and Gas operations.

The disclosure regarding the Corporation’s Oil and Gas activities in this Annual Information Form is required under NI 51-101, with an effective date of December 31, 2015 and a preparation date of January 22, 2016.

WORLDWIDE PRODUCTION

The following table sets out the average daily production volumes of crude oil and natural gas for the Corporation for the past three years.

Production Volumes (boepd)

	Year Ended December 31
	2015	2014	2013
Gross Working-Interest Production
Cuba	18,257	19,456	20,042
Other Countries	721	590	634
Total Gross Working-Interest Production	18,978	20,046	20,676
Net Working-Interest Production Cuba:
Cost recovery oil	4,059	3,395	3,043
Profit oil	6,378	6,975	7,654
Total Cuba	10,437	10,370	10,697
Other Countries	721	590	634
Total Net Working-Interest Production	11,158	10,960	11,331

OPERATIONS IN CUBA

Within Cuba, the Corporation holds and operates exploration and production rights under PSCs with CUPET, the Cuban state oil company. As operator under the terms of the PSCs, Sherritt International (Cuba) Oil and Gas Limited (“SICOG”) enters into long-term leasehold arrangements with the Cuban state for the use of all land required for petroleum operations for the duration of the term of the PSCs. The Corporation indirectly holds 100% working-interests in four PSCs in Cuba, as described in the following table, covering a total of approximately 129,963 net ha:

Block	Location	Current Status
Block II (Varadero West)	Fold and thrust region — north coast of Cuba	Exploitation phase — development of Varadero West oil field
Puerto Escondido/Yumuri	Fold and thrust region — north coast of Cuba	Exploitation phase — development of Puerto Escondido and Yumuri oil fields
Block 8A	Central Cuba	Exploration Phase
Block 10	Fold and thrust region — north coast of Cuba	Exploration Phase

The terms of the PSCs for Block II (Varadero West) and Puerto Escondido-Yumuri will expire on November 21, 2017 and March 20, 2018, respectively, and the Corporation will have no rights or obligations in respect of crude oil production from those properties following those dates. During 2014, however, an extension of the term of the Puerto Escondido/Yumuri PSC until March 20, 2028 was granted for new wells drilled in the development area. This contract will expire as of March 20, 2018 in respect of the existing wells. Under the terms of the extension, the Corporation has fulfilled its commitment to drill a minimum of seven new wells within a two year period. The program had poor results and no further wells are planned for the development area.

Since 1992, the Corporation’s Cuban Oil operations have produced over 210 million barrels of heavy oil on a gross working-interest basis. The Corporation has a strong track record in directional drilling in the fold and thrust belt located along the north coast of Cuba. All of the Corporation’s producing wells are directionally drilled from onshore locations along the north coast of Cuba between Havana and Cardenas. These directional wells target oil reservoirs situated offshore below the adjacent seabed. These oil bearing reservoirs typically produce at depths ranging from 1,200 metres to 2,000 metres below sea level. Using current

equipment and technology, the Corporation has drilled directional wells up to 5,600 metres in length, extending laterally up to 4,700 metres from the surface location.

Principal Commercial Oil Fields

The following table summarizes key information regarding the Corporation’s principal commercial oil fields, all of which are located in Cuba:

	Puerto Escondido		Yumuri		Varadero West
Working-Interest	100	%	100	%	100	%
Total Proved Reserves (MMbbl):(1)
Gross reserves	0.8		3.0		5.1
Net reserves	0.6		2.2		2.5
Average Daily Production (bopd):(1)
Gross Working-Interest Production	2,091		6,702		9,464
Net Working-Interest Production	1,487		4,538		4,411
Oil Quality (oAPI)	12		11.5		10
Number of Operated Wells	22		33		20

Note:

(1) Production rates are daily averages for the year ended December 31, 2015 and reserves are as at December 31, 2015, per the McDaniel Report (see section 3.3 — “Oil and Gas — Oil and Gas Reserves”).

The following table summarizes the Corporation’s immediate and near-term development plans for its principal commercial oil fields:

Puerto Escondido	No new development wells are currently planned in 2016. Well workovers and remediation programs are currently being studied for existing wells in order to optimize field production.

Yumuri	No new development wells are currently planned for 2016. Workover operations are currently being studied for existing wells in order to optimize field production.

Block II (Varadero West)	The well optimization program is currently planned to continue in 2016.

Exploration Prospects

During 2014 the Corporation was awarded two new PSCs covering Blocks 8A and 10 in Cuba (see section 3.2 “Properties with no Attributed Reserves”). The Corporation is currently evaluating reprocessed seismic data in Block 10 and may elect during 2016 to proceed to drill up to two exploration wells. In addition, it is anticipated that the Corporation will conduct a seismic data acquisition program in Block 8A during 2016.

The Corporation also has applications pending for two additional PSCs relating to exploration prospects on the north coast of Cuba, west of Havana.

Production Sharing Contracts

Under the terms of its constitution, the Cuban state is the unconditional owner of all land and natural resources lying within Cuban territory. Pursuant to its foreign investment law, the government of Cuba is authorized to enter into economic associations with foreign investors for the exploitation of natural resources and the development of industrial projects in Cuba. Law 118 provides a variety of guarantees for foreign investors including: (1) a guarantee that their assets cannot be expropriated and if such is required in the public interest, indemnification is made in freely convertible currency equal to the commercial value of the property taken, (2) the right to have such “commercial value” determined by an expert if the parties to the international economic

association cannot agree on such a price, and (3) a guarantee of the free transference abroad in freely convertible currency of net profits or dividends received from the investment as well as funds received by way of indemnification from the Cuban state.

Cuban oil and natural gas exploration and production are governed by various PSCs between CUPET and foreign investors or “contractors” such as the Corporation. Under the PSCs, the contractor has the right to produce crude oil from the contract area until the end of the term and any extensions thereto. Each of the PSCs has a defined term, ranging from 15 to 25 years, subject to earlier termination if a declaration of commerciality is not made or if the contractor does not fulfill its work commitments on a timely basis.

Under the terms of a PSC, the contractor is obliged to supply all capital, machinery, installations, equipment, technology and personnel necessary to carry out operations in accordance with the terms of the contract. During the exploration period, the contactor is obliged to carry out a specified minimum exploration program, which may be divided into two or more sub-periods. At the end of each sub-period, the contractor may elect to enter the next sub-period provided it has fulfilled the exploration work commitments for the current sub-period.

If the contractor discovers crude oil within the contract area during the exploration period, the contractor may conduct an appraisal program to determine whether the discovery can be economically exploited. Any crude oil production during the appraisal period must be delivered to CUPET and the contractor is only entitled to share in such production if a declaration of commerciality is approved by regulatory authorities following completion of the appraisal program. Upon such approval, the contractor is entitled to share retroactively in all cumulative production from the discovery and appraisal wells in the field, and to receive revenue from the sale of that production. Upon approval of a declaration of commerciality, the contractor is obliged to implement a development plan for the field in question.

Once a declaration of commerciality has been made, the contractor will be allocated cost recovery oil as reimbursement for approved capital and operating costs, including any costs accumulated in cost recovery pools since the inception of the contract. The volume of cost recovery oil for each PSC is determined by dividing the balance of approved capital and operating costs in the cost recovery pool by the average net selling price per barrel of oil produced during such quarter. Allocation of cost recovery oil may not exceed a specified percentage of total production for a fiscal quarter. However, any unrecovered cost recovery pool amounts are carried forward to future periods. The remaining profit oil is allocated between the parties in accordance with agreed percentages which may vary depending on oil quality and production rates. The volume of profit oil is calculated by subtracting the cost recovery oil from gross working-interest production.

Such PSCs are authorized as “international economic association contracts” pursuant to Law 118. Resolutions confirming the authorization and validity of each of these contracts were issued by the Executive Committee of the Council of Ministers. SICOG is registered with the Chamber of Commerce of Cuba and obtained a customs registration number that allows it to import supplies and materials to the country and export its production. SICOG is also registered with the Office of National Tax Administration. The Cuban government also requires SICOG to obtain environmental licenses and a permit to operate bank accounts for each currency in which SICOG does business in Cuba. As operator under the terms of the PSCs, SICOG enters into long-term lease arrangements with the Cuban state for surface land rights necessary for oil and gas production facilities and for the performance of petroleum operations.

Sales to Cuba

Historically, all profit oil and cost recovery oil allocated to SICOG under the PSCs have been sold to agencies of the government of Cuba at the first point of sale. In recent years, the selling prices for the Corporation’s share of production have been based on 71% to 75% of the GCFO6 reference price. The GCFO6 reference price reflects consumption and supply of heavier oil products (such as heating oil, fuel oil and transportation fuels) in the U.S. Gulf Coast region and global consumption and supply of crude oil. The selling contracts are typically made for one-year terms and are re-negotiated on an annual basis.

The following table sets out average historical oil prices for GCFO6, WTI and the realized price from sales by the Corporation to agencies of the government of Cuba since 2013.

	Year Ended December 31
	2015	2014	2013
Prices ($ per bbl):
WTI Benchmark (US$)	48.69	93.17	97.95
GCFO6 Benchmark (US$)	40.68	82.55	92.99
Realized price (US$)	30.23	60.14	67.59

Cuban Payment Arrangements

During 2015, payment of Oil and Gas receivables owing in Cuba was generally made to SICOG on a timely basis by the applicable Cuban government agency. However, as at December 31, 2015, the Corporation’s overdue Oil and Gas receivables in Cuba were US$49.6 million.

OTHER INTERNATIONAL OPERATIONS

Spain

The Corporation holds a 14.5% working-interest in the Casablanca oil field, a 15.6% working-interest in the Rodaballo oil field, a 29% working-interest in the Boquerón oil field, and an 18.4% working-interest in the Barracuda oil field, all located in the Gulf of Valencia, offshore Spain. There are minor amounts of gas produced in association with the light crude oil, which is either used as fuel for power generation or is flared.

During 2015, these fields produced a combined average of approximately 426 bopd of light crude oil, net to the Corporation, using the Casablanca production platform and pipeline infrastructure. Required repairs to subsea production equipment in the Rodoballo field were completed in early 2015 allowing for the resumption of production shortly thereafter.

The Corporation, in conjunction with its joint venture partners, intends to acquire three dimensional or 3D seismic data over the Casablanca oil field and adjacent lands in order to delineate additional development and exploration opportunities. The application for a permit to conduct the seismic data acquisition program was filed in 2014. The Spanish government authorities have not processed the application and it is uncertain when the program will be conducted. The Casablanca joint venture has applied to Spanish authorities for an exploration license covering such adjacent lands.

During 2015, the Corporation relinquished four exploration licenses in the Alboran Sea region in southern Spain as a result of the failure by Spanish government authorities to grant regulatory approval of the Corporation’s application for a seismic data acquisition program in the contract area. There were no penalties associated with such relinquishment and the Corporation will have no liability under the terms of the licenses for any unfulfilled work commitments. In addition, under applicable regulations and procedures, the Corporation has initiated a claim against the government of Spain for reimbursement of expenditures made by the Corporation in respect of the Alboran Sea licenses up to the time of relinquishment.

Pakistan

The Corporation holds a 15.79% working-interest in an exploitation concession covering the Badar gas field, located in the Indus Basin in central Pakistan.

During 2015, the Badar field produced approximately 1.8 MMcfpd of conventional natural gas, net to the Corporation.

During 2015, the Corporation entered into an agreement for the sale of its interest in the Badar gas field. It is anticipated that, subject to regulatory approval, the transaction will be completed during the first half of 2016.

United Kingdom

During 2015, the Corporation sold its entire interest in its three remaining licenses in the prospect area for cash consideration.

OIL AND GAS RESERVES

The following is a summary of the Corporation’s estimated oil and gas reserves and the estimated net present values of future net revenue from those reserves. For the purpose of stating the Corporation’s oil and gas reserves publicly, Sherritt retained the services of McDaniel & Associates Consultants Ltd. (“McDaniel & Associates”), who are independent qualified reserves evaluators appointed by the Corporation pursuant to NI 51 — 101, to conduct independent evaluations of all of the Corporation’s oil and gas properties. McDaniel & Associates has provided the Corporation with an evaluation (the “McDaniel Report”) prepared on January 22, 2016 in compliance with NI 51-101 in respect of the Corporation’s oil and gas reserves as at December 31, 2015.

The Corporation determines and reports reserves information in accordance with NI 51-101, using terminology, definitions and categories prescribed therein and in the COGE Handbook. Disclosure of reserves or of sales of oil, gas or associated by-products has been made only in respect of marketable quantities, reflecting the quantities and prices for the product in the condition (upgraded or not upgraded, processed or unprocessed) in which it is to be, or was, sold at the first point of sale.

The estimated future net revenue figures contained in the following tables do not necessarily represent the fair market value of the Corporation’s reserves. There is no assurance that the forecast price and cost assumptions contained in the McDaniel Report will be attained and variances could be material. Other assumptions relating to costs and other matters are included in the McDaniel Report. The recovery and reserves estimates attributed to the Corporation’s properties described herein are estimates only. The actual reserves attributed to the Corporation’s properties may be greater or less than those calculated.

The determination of oil and gas reserves involves the preparation of estimates that have an inherent degree of associated uncertainty. For further information see section 3.7 — “Risk Factors — Uncertainty of Resources and Reserve Estimates”. Categories of proved and probable reserves have been established to reflect the level of these uncertainties and to provide an indication of the probability of recovery. The estimation and classification of reserves requires the application of professional judgment combined with geological and engineering knowledge to assess whether or not specific reserves classification criteria have been satisfied. Knowledge of concepts including uncertainty and risk, probability and statistics, and deterministic and probabilistic estimation methods is required to properly use and apply reserves definitions. These concepts are presented and discussed in greater detail within the guidelines in Section 5.5 of the COGE Handbook.

Sale of Pakistan Interest

During 2015, the Corporation entered into an agreement for the purchase and sale of its interest in the Badar gas field in Pakistan. Although the Corporation expects that the closing of the transaction will occur in the first half of 2016, there is no guarantee that the transaction will be completed. Accordingly, the reserves pertaining to the Corporation’s interests in the Badar gas field have been included in the McDaniel Report as at December 31, 2015.

Rounding

Please note that columns in certain of the following tables may not add up due to rounding.

Reserves

The following definitions apply to both estimates of individual reserve entities and the aggregate of reserves for multiple entities:

“Reserves”, as referred to in section 3.2 of this document, are estimated remaining quantities of oil and natural gas and related substances anticipated to be recoverable from known accumulations, as of a given date, based on:

· analysis of drilling, geological, geophysical and engineering data;

· the use of established technology; and

· specified economic conditions, which are generally accepted as being reasonable, and which are disclosed.

Reserves are classified according to the degree of certainty associated with the estimates:

· “Proved reserves” are those reserves that can be estimated with a high degree of certainty to be recoverable. It is likely that the actual remaining quantities recovered will exceed the estimated proved reserves.

· “Probable reserves”, as referred to in section 3.2 of this document, are those additional reserves that are less certain to be recovered than proved reserves. It is equally likely that the actual remaining quantities recovered will be greater or less than the sum of the estimated proved plus probable reserves.

Development and Production Status

Each of the reserves categories (proved and probable) may be divided into developed and undeveloped categories:

· “Developed reserves” are those reserves that are expected to be recovered from existing wells and installed facilities or, if facilities have not been installed, that would involve a low expenditure (for example, when compared to the cost of drilling a well) to put the reserves on production. The developed category may be subdivided into producing and non-producing.

· “Developed producing reserves” are those reserves that are expected to be recovered from completion intervals open at the time of the estimate. These reserves may be currently producing or, if shut-in, they must have previously been on production, and the date of resumption of production must be known with reasonable certainty.

· “Developed non-producing reserves” are those reserves that either have not been on production, or have previously been on production, but are shut-in, and the date of resumption of production is unknown.

· “Undeveloped reserves” are those reserves expected to be recovered from known accumulations where a significant expenditure (for example, when compared to the cost of drilling a well) is required to render them capable of production. They must fully meet the requirements of the reserves category (proved, probable) to which they are assigned.

In multi-well pools it may be appropriate to allocate total pool reserves between the developed and undeveloped categories or to subdivide the developed reserves for the pool between developed producing and developed non-producing. This allocation should be based on the estimator’s assessment as to the reserves that will be recovered from specific wells, facilities and completion intervals in the pool and their respective development and production status.

Levels of Certainty for Reported Reserves

The qualitative certainty levels referred to in the definitions above are applicable to “individual reserve entities”, which refers to the lowest level at which reserves calculations are performed, and to “reported reserves”, which refers to the highest level sum of individual entity estimates for which reserve estimates are presented. Reported reserves should target the following levels of certainty under a specific set of economic conditions:

· at least a 90% probability that the quantities actually recovered will equal or exceed the estimated proved reserves; and

· at least a 50% probability that the quantities actually recovered will equal or exceed the sum of the estimated proved plus probable reserves.

A quantitative measure of the certainty levels pertaining to estimates prepared for the various reserves categories is desirable to provide a clearer understanding of the associated risks and uncertainties. However, the majority of reserves estimates will be prepared using deterministic methods that do not provide a mathematically derived quantitative measure of probability. In principle, there should be no difference between estimates prepared using probabilistic or deterministic methods.

Significant Factors or Uncertainties

Aside from the potential impact of material fluctuations in commodity prices and foreign exchange rates, other significant factors or uncertainties that may affect either the Corporation’s reserves or the future net revenue associated with such reserves include:

· Certain newly drilled or developed properties may be considered less predictable insofar as estimating reserves and future net revenue are concerned until more historical production performance data is available; and

· Changes to existing taxation, fiscal terms, and regulations may occur.

See section 3.7 “Risk Factors — Depletion of Reserves” and “Risk Factors — Uncertainty of Resources and Reserve Estimates”.

In addition, the Corporation may incur significant abandonment and reclamation costs in connection with its oil and gas operations. The following criteria have been utilized in determining the abandonment and reclamation costs to be taken into account in the calculation of the future net revenue attribution to the Corporation’s reserves:

· Generally, the Corporation is responsible for its share of abandonment and reclamation costs for oil and gas wells and for related facilities and infrastructure. The Corporation’s financial statements include provisions for these environmental rehabilitation obligations in accordance with generally accepted accounting principles.

· In Cuba, the PSCs permit the Corporation to recover abandonment and reclamation costs from producing contract areas. The Corporation is obligated to abandon and reclaim all of its wells in Cuba together with related facilities and pipelines. However, agencies of the Cuban government have historically taken over the ownership and operation of most wells that the Corporation has determined to be uneconomic, thereby releasing the Corporation from its associated liabilities for abandonment and reclamation costs. The Corporation estimates abandonment and reclamation costs based on the expectation that it will be responsible for abandonment and reclamation of 10% of all remaining wells in Cuba.

· In Spain, the Corporation’s share of the estimated abandonment and reclamation costs of the production platform in the Casablanca oil field, and related oil wells, is currently estimated to be 40.0 million Euros. The cost estimate is based on information provided by the operator of the properties who is ultimately responsible for carrying out the abandonment and reclamation program. Based on current production, anticipated production from new wells in the vicinity (in which the Corporation holds no interest) and selling price forecasts, it is anticipated that abandonment and reclamation activities will be postponed until approximately 2023 upon the occurrence of either of the following events: (1) the award of an exploration licence to the Casablanca joint venture on lands adjacent to the Casablanca oil field, or (2) the identification of further development drilling locations in the Casablanca oil field. For further information, please see the section entitled “Other International Operations — Spain” above.

· In Pakistan, abandonment and reclamation costs for wells are estimated internally based on the Corporation’s operational experience.

The following table summarizes the Corporation’s estimates of abandonment and reclamation costs for surface leases, wells, facilities and pipelines, net of estimated salvage value. As at December 31, 2015, there were 72.3 net wells to be abandoned in Cuba, 3.1 net wells in Spain and 0.3 net wells in Pakistan, for a total of 75.8 net wells to be abandoned.

Summary of Estimated Future Abandonment and Reclamation Costs

December 31, 2015

	Heavy Crude Oil (Cuba)	Light and Medium Crude Oil (Spain)	Conventional Natural Gas (Pakistan)	Total
	$(millions)	$(millions)	$(millions)	$(millions)
Estimated costs, without discount	4.1	66.1	1.1	66.3
Estimated costs, 10% discount	3.3	31.2	0.7	35.2
Costs not deducted from future net revenue(1)	0.7	57.0	1.1	58.8
Costs not deducted from future net revenue, 10% discount(1)	0.7	29.3	0.7	30.7
Costs expected to be paid within three years	0.0	0.0	0.0	0.0
Costs expected to be paid within three years, 10% discount	0.0	0.0	0.0	0.01

Note:

(1) Future abandonment and reclamation costs not deducted from future net revenue include the costs of abandoning gathering systems and reclaiming wellsites.

The Corporation estimates that future abandonment and reclamation costs will be $66.3 million on an undiscounted basis. These costs are reflected in Sherritt’s audited consolidated financial statements as at December 31, 2015 as an environmental rehabilitation obligation of $64.5 million.

There are however, no significant abandonment and reclamation costs, unusually high development costs or operating costs or contractual obligations to produce and sell a significant proportion of production subsidized prices that could be reasonably expected to affect the anticipated production of the Corporation’s oil and gas Reserves.

Reserves Data

The following tables provide information regarding the Corporation’s oil and gas reserves as at December 31, 2015 using forecast prices and costs and information regarding the estimated net present value of future net revenue related thereto. The Corporation produces heavy crude oil in Cuba, light crude oil in Spain and conventional natural gas in Pakistan.

Summary of Oil and Gas Reserves

Forecast Prices and Costs

December 31, 2015

	Heavy Crude Oil		Light and Medium Crude Oil		Conventional Natural Gas
	Cuba		Spain		Pakistan
Reserves Category	Gross	Net	Gross	Net	Gross	Net
	(Mbbl)	(Mbbl)	(Mbbl)	(Mbbl)	(MMcf)	(MMcf)
Proved
Proved developed producing	8,909	5,241	531	531	2,064	1,806
Proved developed non-producing	—	—	—	—	—	—
Proved undeveloped	—	—	—	—	—	—
Total Proved	8,909	5,241	531	531	2,064	1,806
Total Probable	1,118	609	181	181	3,256	2,849
Total Proved Plus Probable	10,027	5,850	713	713	5,320	4,655

Summary of Net Present Value of Future Net Revenue

Attributable to Oil and Gas Reserves

Forecast Prices and Costs

December 31, 2015

	Net Present Values of Future Net Revenue
	Before Income Taxes Discounted at (%/year)					After Income Taxes Discounted at (%/year)
Reserves Category	0	5	10	15	20	0	5	10	15	20	Unit Value(1) before Income Tax Discounted at 10%/year
	(US $millions)	(US $millions)	(US $millions)	(US $millions)	(US $millions)	(US $millions)	(US $millions)	(US $millions)	(US $millions)	(US $millions)	(US$/Mcf) (US$/bbl) (US$/boe)
CUBA
Proved developed producing	78.4	74.9	71.8	68.9	66.3	61.1	58.4	55.9	53.7	51.7	13.70
Proved developed non-producing	—	—	—	—	—	—	—	—	—	—	—
Proved undeveloped	—	—	—	—	—	—	—	—	—	—	—
Total proved reserves	78.4	74.9	71.8	68.9	66.3	61.1	58.4	55.9	53.7	51.7	13.70
Probable	14.4	13.4	12.5	11.8	11.1	11.8	11.0	10.2	9.6	9.0	20.58
Total Proved Plus Probable Reserves	92.9	88.4	84.3	80.7	77.4	72.9	69.3	66.2	63.3	60.7	14.41
SPAIN
Proved developed producing	10.1	9.1	8.3	7.5	6.9	10.1	9.1	8.3	7.5	6.9	15.56
Proved developed non-producing	—	—	—	—	—	—	—	—	—	—	—
Proved undeveloped	—	—	—	—	—	—	—	—	—	—	—
Total Proved reserves	10.1	9.1	8.3	7.5	6.9	10.1	9.1	8.3	7.5	6.9	15.56
Probable	7.0	5.6	4.6	3.7	3.1	7.0	5.6	4.6	3.7	3.1	25.11
Total Proved Plus Probable Reserves	17.1	14.7	12.8	11.3	10.0	17.1	14.7	12.8	11.3	10.0	17.99
PAKISTAN
Proved developed producing	0.5	0.5	0.4	0.4	0.4	0.5	0.5	0.4	0.4	0.4	0.24
Proved developed non-producing	—	—	—	—	—	—	—	—	—	—	—
Proved undeveloped	—	—	—	—	—	—	—	—	—	—	—
Total Proved reserves	0.5	0.5	0.4	0.4	0.4	0.5	0.5	0.4	0.4	0.4	0.24
Probable	1.0	0.9	0.8	0.7	0.6	1.0	0.9	0.8	0.7	0.6	0.27
Total Proved Plus Probable Reserves	1.5	1.3	1.2	1.1	1.0	1.5	1.3	1.2	1.1	1.0	0.26
TOTAL
Proved developed producing	89.0	85.5	80.5	76.9	73.6	71.7	67.9	64.6	61.7	59.0	13.25
Proved developed non-producing	—	—	—	—	—	—	—	—	—	—	—
Proved undeveloped	—	—	—	—	—	—	—	—	—	—	—
Total Proved reserves	89.0	84.5	80.5	76.9	73.6	71.7	67.9	64.6	61.7	59.0	13.25
Probable	22.4	19.9	17.8	16.2	14.8	19.8	17.4	15.5	14.0	12.7	14.10
Total Proved Plus Probable Reserves	111.5	104.4	98.3	93.0	88.4	91.5	85.4	80.2	75.7	71.7	13.40

Note:

(1) Unit values are calculated using estimated net present value of future net revenue before income taxes using a discount rate of 10%. Unit values are presented on a US$/bbl basis for heavy crude oil reserves in Cuba and light and medium crude oil reserves in Spain and on a US$/Mcf basis for conventional natural gas reserves in Pakistan. The unit values for the Corporation’s total reserves are presented on a US$/boe basis. (see “Glossary of Terms” for information regarding presentation of boe information)

Total Future Net Revenue

(Undiscounted)

as of December 31, 2015

Forecast Prices and Costs

Reserves Category	Revenue	Royalties	Operating Costs	Development Costs	Abandonment and Reclamation Costs	Future Net Revenue before Income Taxes	Income Taxes	Future Net Revenue after Income Taxes
	(US$millions)	(US$millions)	(US$millions)	(US$millions)	(US$millions)	(US$millions)	(US$millions)	(US$millions)
HEAVY CRUDE OIL (Cuba)
Proved Reserves	142.2	—	57.8	3.6	2.4	78.4	17.4	61.1
Proved Plus Probable Reserves	160.5	—	61.6	3.6	2.4	92.2	20.0	72.9
LIGHT AND MEDIUM CRUDE OIL (Spain)
Proved Reserves	33.5	—	19.3	1.3	2.8	10.1	—	10.1
Proved Plus Probable Reserves	48.3	—	26.9	1.3	2.9	17.1	—	17.1
CONVENTIONAL NATURAL GAS (Pakistan)
Proved Reserves	2.8	0.3	1.7	0.2	0.0	0.5	—	0.5
Proved Plus Probable Reserves	7.2	0.9	4.6	0.2	0.0	1.5	—	1.5
TOTAL
Proved Reserves	178.5	0.3	78.7	5.1	5.3	89.0	17.4	71.7
Proved Plus Probable Reserves	216.0	0.9	93.1	5.1	5.4	111.5	20.0	91.5

Future Net Revenue by Product Type

as of December 31, 2015

Forecast Prices and Costs

Reserves Category	Product Type(1)	Future Net Revenue before Income Taxes (Discounted at 10%/Year)	Unit Value(2)
		(US$millions)	(US$/bbl) (US$/Mcf) (US$/boe)
Proved Reserves	Heavy Crude Oil	71.8	13.70
	Light and Medium Crude Oil	8.3	15.56
	Conventional Natural Gas	0.4	0.24
	Total	80.5	13.25
Proved Plus Probable Reserves	Heavy Crude Oil	84.3	14.41
	Light and Medium Crude Oil	12.8	17.99
	Conventional Natural Gas	1.2	0.26
	Total	98.3	13.40

Notes:

(1) Includes associated by-products for each product type.

(2) Unit values are calculated using estimated net present value of future net revenue before income taxes using a discount rate of 10%. Unit values are presented on a US$/bbl basis for heavy crude oil reserves in Cuba and light and medium crude oil reserves in Spain and on a US$/Mcf basis for conventional natural gas reserves in Pakistan. The unit values for the Corporation’s total reserves are presented on a US$/boe basis. See “Glossary of Terms” for information regarding presentation of boe information.

Forecast Prices Used in Estimates

The forecast benchmark reference product price and inflation rate assumptions reflected in the reserves data, together with the Corporation’s weighted average historical prices during 2015, are summarized below. All product price assumptions are stated in US$ and therefore no exchange rate assumptions are required. These forecast assumptions were provided in the McDaniel Report, including McDaniel & Associates price forecasts as of December 31, 2015. For information on the sales price of heavy oil in Cuba, see Operations in Cuba — Sales in Cuba” above.

Summary of Pricing Assumptions and Inflation Rate

December 31, 2015

Forecast Prices and Costs

Year	Heavy Crude Oil (Cuba)	Light and Medium Crude Oil (Spain)	Conventional Natural Gas (Pakistan)	WTI Benchmark	Gulf Coast Fuel Oil #6	Inflation Rates
	(US$/bbl)	(US$/bbl)	(US$/Mcf)	(US$/bbl)	(US$/bbl)	(%/Year)
2015 (actual weighted average)	30.23	52.70	1.39	48.69	40.68
2016	24.47	47.24	1.35	45.00	37.35	2.00
2017	29.48	55.95	1.35	53.60	44.49	2.00
2018	36.87	64.75	1.35	62.40	51.79	2.00
2019	—	71.44	1.35	69.00	57.57	2.00
2020	—	75.55	1.35	73.10	60.67	2.00
Inflation after 2020						2.00

Reconciliation of Reserves

The following table provides information regarding the reconciliation of the Corporation’s gross reserves by product type during 2015:

Reconciliation of Corporation Gross

Reserves by Product Type

	Heavy Crude Oil (Cuba)						Light and Medium Crude Oil (Spain)					Conventional Natural Gas (Pakistan)
Factors	Gross Proved		Gross Probable		Gross Proved Plus Probable		Gross Proved		Gross Probable	Gross Proved Plus Probable		Gross Proved		Gross Probable		Gross Proved Plus Probable
	(Mbbl)		(Mbbl)		(Mbbl)		(Mbbl)		(Mbbl)	(Mbbl)		(MMcf)		(MMcf)		(MMcf)
December 31, 2014	14,989		2,794		17,783		465		133	598		2,861		3,622		6,483
Extensions and Improved Recovery	—		—		—		—		—	—		—		—		—
Technical Revisions	504		(1,708	)	(1,204	)	222		48	270		(150	)	(366	)	(516	)
Discoveries	80		32		112		—		—	—		—		—		—
Acquisitions	—		—		—		—		—	—		—		—		—
Dispositions	—		—		—		—		—	—		—		—		—
Economic Factors	—		—		—		—		—	—		—		—		—
Production	(6,664	)	—		(6,664	)	(155	)	—	(155	)	(647	)	—		(647	)
December 31, 2015	8,909		1,118		10,027		531		181	713		2,064		3,256		5,320

Undeveloped Reserves

All of the Corporation’s proved and probable undeveloped reserves are located in Cuba. In general, the Corporation will attribute proved and probable reserves only for a maximum of one step-out development drilling location and for any infill development locations where there is satisfactory evidence of reservoir continuity. As a result of the poor results obtained in the 2015 development drilling program, the Corporation does not intend to drill any additional development wells in the Puerto Escondido and Yumuri oil fields in Cuba in 2016. The following table discloses for each of the Corporation’s product types, the volumes of proved undeveloped reserves and probable undeveloped reserves that were first attributed in each of the three most recent financial years. All properties in respect of which undeveloped reserves have been attributed are currently under production. The information under the “Booked” columns represents the Corporation’s booked undeveloped reserves as of December 31 of the applicable year.

Undeveloped Reserves by Product Type

	Heavy Crude Oil (Cuba)		Light and Medium Oil (Spain)		Conventional Natural Gas (Pakistan)
Proved Undeveloped	First Attributed	Booked	First Attributed	Booked	First Attributed	Booked
	(MMbbl)	(MMbbl)	(MMbbl)	(MMbbl)	(MMcf)	(MMcf)
2013	1.1	1.1	—	—	—	—
2014	0.7	1.0	0.1	0.1	—	—
2015	—	—		—	—	—

Probable Undeveloped	First Attributed	Booked	First Attributed	Booked	First Attributed	Booked
	(MMbbl)	(MMbbl)	(MMbbl)	(MMbbl)	(MMcf)	(MMcf)
2013	0.4	1.3	—	0.1	1,516	1,516
2014	0.8	0.9	—	0.1		—
2015	—	—	—	—	—	—

Future Development Costs

A summary of the estimated development costs, on an undiscounted basis, deducted in the estimation of future net revenue attributable to the proved and the proved plus probable reserves categories, using forecast prices and costs, is presented below.

Summary of Estimated Future Development Costs

Attributable to Reserves

December 31, 2015

	Heavy Crude Oil (Cuba)	Light and Medium Crude Oil (Spain)	Conventional Natural Gas (Pakistan)	Total
	(US$millions)	(US$millions)	(US$millions)	(US$millions)
Proved Reserves
2016	3.5	1.3	0.2	5.1
2017	—	—	—	—
2018	—	—	—	—
2019	—	—	—	—
2020	—	—	—	—
Thereafter	—	—	—	—
Total Future Development Costs	3.5	1.3	0.2	5.1

Proved and Probable Reserves
2016	3.5	1.3	0.2	5.1
2017	—	—	—	—
2018	—	—	—	—
2019	—	—	—	—
2020	—	—	—	—
Thereafter	—	—	—	—
Total Future Development Costs	3.5	1.3	0.2	5.1

The Corporation expects to fund its estimated future development costs from various sources, including internally generated cash flow, equity or debt financing, or the possible sale of existing assets owned by the Corporation. Any costs the Corporation may incur in connection with the sale of equity or assets or from borrowing against bank debt facilities are not expected to be material relative to the incremental revenue stream generated.

Producing and Non-Producing Wells

The following table provides information regarding the Corporation’s interests in producing and non-producing wells as at December 31, 2015. For additional information regarding the Corporation’s principal properties, see “Operations in Cuba” above.

Summary of Producing and Non-Producing Wells

December 31, 2015

	Heavy Crude Oil (Cuba)	Light and Medium Oil (Spain)	Conventional Natural Gas (Pakistan)	Total
	(wells)	(wells)	(wells)
Gross Wells(1)
Producing(3)	54	6	1	61
Non-producing(4)	21	12	1	34
Total Gross Wells	75	18	2	95
Net Wells(2)
Producing(3)	51.3	1.0	0.2	52.5
Non-producing(4)	21.0	2.1	0.2	23.3
Total Net Wells	72.3	3.1	0.4	75.8

Notes:

(1) “Gross Wells” represent the number of wells in which the Corporation has a working-interest.

(2) “Net Wells” represent the number of wells obtained by aggregating the Corporation’s working-interests in each of its Gross Wells.

(3) “Producing” includes wells presently producing and contributing revenue or wells presently producing that are expected to contribute revenue in the foreseeable future through the sale of presently produced oil.

(4) “Non-Producing” includes wells that are presently non-producing or wells presently producing but are not expected to contribute revenue in the foreseeable future through the sale of presently produced oil.

Properties with No Attributed Reserves

The Corporation believes that certain of its undeveloped oil and gas properties have the potential to contain commercial oil and gas deposits even though the Corporation has not assigned proved or probable reserves to such properties.

During 2014, the Corporation was awarded two new PSCs covering Blocks 8A and 10 in Cuba comprising approximately 121,750 gross ha (121,750 net ha) of undeveloped oil and gas properties. The initial work commitments on these blocks includes the review and re-processing of existing seismic data and the acquisition and processing of new seismic data during the initial two years of the term of the contract at an estimated cost of $8.4 million. Following the completion of the initial work commitments, the Corporation may elect to proceed to the exploratory drilling stage on each of the Blocks, failing which the PSCs will terminate at the end of the initial exploration sub-period. If the election is not made with respect to Block 10 the PSC will expire in June 2016. If the election is not made with respect to Block 8A the PSC will expire in early 2018.

The Corporation indirectly holds approximately 12,672 gross ha (2,550 net ha) of undeveloped oil and gas properties in the Gulf of Valencia, offshore Spain. These undeveloped oil and gas properties have no associated work. The Corporation is working with the operator to develop several prospects on these lands for future drilling. None of the Corporation’s rights to these properties are scheduled to expire during 2016.

There are no significant abandonment and reclamation costs, unusually high development costs or operating costs or contractual obligations to produce and sell a significant portion of production at subsidized prices that could be reasonably expected to affect the anticipated development or production activities in relation to the Corporation’s undeveloped oil and gas properties.

Forward Contracts

The Corporation is not party to any forward contracts regarding the sale of its oil and gas production (see “Operations in Cuba — Sales to Cuba” above).

Costs Incurred

The following table provides information regarding the Corporation’s costs incurred in relation to its oil and gas properties:

Summary of Costs Incurred

Year Ended December 31, 2015

	Cuba	Spain	Pakistan	Other	Total
	($millions)	($millions)	($millions)	($millions)	($millions)
Acquisition of Proved properties	—	—	—	—	—
Acquisition of Unproved properties	—	—	—	—	—
Total property acquisition costs	—	—	—	—	—
Exploration and appraisal costs	1.4	—	—	—	1.4
Development costs	51.0	1.6	0.1	0.4	53.1
Total Capital Expenditures	52.4	1.6	0.1	0.4	54.5

Exploration and Development Activities

The following table provides information regarding the Corporation’s oil and gas exploration and development drilling activities in Cuba during 2015. No wells were drilled in Spain, Pakistan or the United Kingdom during 2015.

Summary of Exploratory and Development Wells Drilled

	Cuba		Spain		Pakistan		2015 Total
Type of Well	Gross Wells(1)	Net Wells(2)	Gross Wells(1)	Net Wells(2)	Gross Wells(1)	Net Wells(2)	Gross Wells(1)	Net Wells(2)
Exploratory
Oil	—	—	—	—	—	—	—	—
Gas	—	—	—	—	—	—	—	—
Service	—	—	—	—	—	—	—	—
Dry	—	—	—	—	—	—	—	—
Stratigraphic Test	—	—	—	—	—	—	—	—
Total Exploratory	—	—					—	—
Development
Oil	5.0	5.0	—	—	—	—	5.0	5.0
Gas	—	—	—	—	—	—	—	—
Service	—	—	—	—	—	—	—	—
Dry	2.0	2.0	—	—	—	—	2.0	2.0
Stratigraphic Test	—	—	—	—	—	—	—	—
Total Development	7.0	7.0			—	—	7.0	7.0
Oil	5.0	5.0	—	—	—	—	5.0	5.0
Gas	—	—	—	—	—	—	—	—
Service	—	—	—	—	—	—	—	—
Dry	2.0	2.0	—	—	—	—	2.0	2.0
Stratigraphic Test	—	—	—	—	—	—	—	—
Total Drilled	7.0	7.0			—	—	7.0	7.0

Notes:

(1) Gross Wells represent the total number of wells in which the Corporation has a working-interest.

(2) Net Wells represent the number of wells obtained by aggregating the Corporation’s working-interests in each of its Gross Wells.

Production Estimates

Estimated production volumes for the first year of the estimates of future net revenue prepared in conjunction with the Corporation’s reserves data (and included in the McDaniel Report) are provided in the following table. Each of the Yumuri and Varadero West fields in Cuba are estimated to account for more than 20% of estimated production.

Summary of 2016 Production Estimates

Forecast Prices and Costs	Heavy Crude Oil (Cuba)	Light and Medium Oil (Spain)	Conventional Natural Gas (Pakistan)
	(Mbbls)	(Mbbls)	(MMcf)
Proved reserves — Gross Working-Interest
Yumuri (Cuba)	1,765	—	—
Varadero West (Cuba)	3,014	—	—
Other	467	123	777
Total Estimated 2016 Production from Proved Reserves — Gross Working-Interest	5,246	123	777
Probable reserves — Gross Working-Interest
Yumuri (Cuba)	143	—	—
Varadero West (Cuba)	143	—	—
Other	39	3	115
Total Estimated 2016 Production from Probable Reserves — Gross Working-Interest	325	3	115
Proved and probable reserves — Gross Working-Interest
Yumuri (Cuba)	1,909	—	—
Varadero West (Cuba)	3,157	—	—
Other	505	125	892
Total Estimated 2016 Production from Proved and Probable Reserves — Gross Working-Interest	5,571	125	892

Production History

The following table provides information regarding the Corporation’s share of average daily oil and gas production and the average netbacks to the Corporation for the periods indicated:

Summary of Production and Netbacks

	Year Ended December 31, 2015
	First Quarter		Second Quarter		Third Quarter		Fourth Quarter		Yearly Average
Heavy Crude Oil (Cuba)
Net Working-Interest Production (bopd)
Yumuri	3,970		5,025		4,593		4,559		4,538
Varadero West	4,538		4,457		4,381		4,273		4,412
Other	1,593		1,669		1,380		1,313		1,487
Total	10,101		11,151		10,354		10,145		10,437
Average netback ($ per bbl)
Revenue	41.44		45.71		36.36		29.38		38.35
Royalties	—		—		—		—		—
Production costs(1)	(16.12	)	(16.90	)	(15.44	)	(18.18	)	(16.66	)
Netback(2)	25.32		28.81		20.92		11.20		21.69
Light and Medium Crude Oil (Spain)
Net Working-Interest Production (bopd)	542		498		374		292		426
Average netback ($ per bbl)
Revenue	65.33		78.87		66.03		53.39		67.37
Royalties	—		—		—		—		—
Production costs(1)	(79.52	)	(54.88	)	(43.82	)	(60.40	)	(61.12	)
Netback(2)	(14.19	)	23.99		22.21		(7.01	)	6.25
Conventional Natural Gas (Pakistan)
Net Working-Interest Production (MMcfpd)	1.77		1.79		1.79		1.74		1.77
Average netback ($ per Mcf)
Revenue	1.76		1.66		1.83		1.84		1.77
Royalties	(0.13	)	(0.14	)	(0.15	)	(0.14	)	(0.14	)
Production costs(1)	(1.23	)	(1.14	)	(1.28	)	(1.51	)	(1.29	)
Netback(2)	0.40		0.38		0.40		0.19		0.34

Note:

(1) Calculated using net production costs in accordance with NI 51-101. For the calculation of the Corporation’s gross production costs please see page 25 of the Corporation’s Management, Discussion and Analysis for the year ending December 31, 2015, available at www.sedar.com.

(2) Netbacks are calculated by subtracting royalties and production costs from revenue.

3.3 Power

CUBA

The Corporation holds a one-third interest in Energas, a Cuban joint venture corporation established to operate facilities for the processing of raw natural gas and the generation of electricity for sale and delivery to the Cuban national electrical grid system. The remaining two-thirds interest in Energas is held equally by two Cuban agencies, CUPET and UNE.

The Corporation has financed, constructed and commissioned each of the integrated gas treatment and power generation facilities located near the Varadero, Boca de Jaruco, and Puerto Escondido oil fields located in Cuba. As at December 31, 2015, these facilities had a total capacity of 506 MW.

The Energas joint venture is authorized as an economic association pursuant to foreign investment laws in Cuba to engage in the generation of electricity for sale to the Cuban electrical grid. Resolutions confirming the authorization and validity of the establishment of Energas and its capacity to construct and operate electrical power generation plants and to sell electricity to Cuban agencies have been issued by the Executive Committee of the Council of Ministers. Energas is registered with the Chamber of Commerce of Cuba and has obtained a customs registration number that allows it to import supplies and materials to the country and has also registered with the Office of National Tax Administration. The Cuban government also requires that Energas obtain environmental licenses relating to the commissioning and operation of the plant sites operated by Energas and a permit to operate bank accounts for each currency in which Energas does business in Cuba.

Association Agreement

The establishment and operation of Energas is governed by an association agreement entered into among Sherritt, CUPET and UNE, the joint venture partners of Energas (“Association Agreement”). The terms of the Association Agreement specify the obligations of each of the joint venture partners — the Corporation provides financing for the capital costs associated with the procurement, construction and commissioning of each power generation project that is approved by the shareholders of Energas and authorized by the Executive Committee of the Council of Ministers. CUPET supplies gas as feedstock for the facilities at no cost to Energas, and UNE purchases the electricity produced by Energas under long-term fixed-price contracts.

Under the terms of the Association Agreement, all management decisions concerning Energas require the unanimous agreement of the joint venture partners. Day-to-day operations of Energas are the responsibility of the General Manager of Energas, who is appointed by Sherritt, until such time as it has recovered its financing costs, and thereafter by mutual agreement of the joint venture partners.

The following table provides information in respect of each phase of development of the power generation facilities operated by Energas.

Phase	Location	Start Date	End of Term	Capacity (MW)	Economic Unit	Description
1	Varadero	1998	2017	65	Base	2 gas turbines, gas processing facility
2	Varadero	1998	2018	33	Base	1 gas turbine, gas processing facility
3	Varadero	2003	2018	75	Base	Combined cycle facility with supplementary firing
4	Boca de Jaruco	1999	2023	33	Base	1 gas turbine, gas processing facility
6	Puerto Escondido	2006	2023	20	Expansion	1 gas turbine, gas processing facility
6	Boca de Jaruco	2006	2023	65	Expansion	2 gas turbines, pipeline
7	Boca de Jaruco	2007	2023	65	Expansion	2 gas turbines
8	Boca de Jaruco	2014	2023	150	Expansion	Combined cycle facility with supplementary firing
Total capacity				506

Pursuant to the terms of the Association Agreement, the operations of Energas have been divided into two economic units. The first economic unit (“Base”) comprises phases 1 through 4 noted above and the second economic unit (“Expansion”) comprises Phases 6 through 8 noted above.

The profits from each of the Base and Expansion economic units are paid out in the following order of priority: first, to the Corporation in repayment of all financing costs for the construction of the facilities; second, to the government of Cuba for land rights granted in connection with the power plant sites; and finally, subject to mutual agreement, to the Energas shareholders in the form of dividends. In the event there is a shortage in the supply of natural gas that results in the curtailment of operations at the Expansion facilities, the joint venture partners of Energas have agreed to contribute their respective dividends from the Base facilities, to the extent required, to ensure that the Corporation recovers its financing costs pertaining to the Expansion facilities.

During 2005, Energas completed the repayment of financing in respect of the construction of the Base facilities. Subsequently, payment was made to the government of Cuba for the land rights to these facilities. As a result, the profits from the Base facilities are distributed to the joint venture partners of Energas in the form of dividends. Regular dividend payments commenced during 2006 and profits from the Base facilities are subject to a Cuban profit tax.

The Corporation believes that, to the extent its share of dividends from Energas are reinvested in construction of the Expansion facilities, the Corporation is entitled to receive reinvestment credits. Such credits are payable from income taxes paid by Energas. In mid-2007, the Corporation was advised that the Cuban tax authority disagrees with the Corporation’s interpretation as to the amount of credits to which Sherritt is entitled. Sherritt continues to dispute the interpretation of the amount of reinvestment credits payable. Notwithstanding the dispute, the Cuban tax authority has indicated they will make payments to Sherritt in accordance with the Cuban tax authority’s interpretation. During 2015, however, no payments were received.

Energas and UNE have entered into an agreement providing for the purchase by UNE of all of the electric power generated by Energas from the Base facilities up to a maximum of 1,680 GWh per year. The purchase obligation commenced in October 1998, when the first phase of the Varadero facility commenced commercial production, and will continue as long as the Association Agreement is in effect. The electricity tariff was US$0.045/kWh prior to completion of the repayment of financing and payment of land rights. The tariff is now US$0.038/kWh. A second agreement provides for the purchase by UNE of all of the electricity generated from the Expansion facilities up to a maximum of 1,180 GWh per year. Under this third agreement, the electricity tariff is set at US$0.045/kWh during the period prior to repayment of financing for the Expansion facilities and payment of land rights. Subsequently, the tariff will be US$0.038/kWh.

In addition to the agreements with UNE, Energas has entered into agreements with other agencies of the government of Cuba, on the basis of international reference prices, for the purchase and sale of sulphur, LPG and natural gas condensates which are recovered from the processing of raw gas.

During 2015, the Corporation’s Power division incurred a loss from operations of $3.7 million on revenue of $52.7 million compared to earnings from operations of $4.3 million in 2014 on revenue of $49.0 million. Total non-expansion capital expenditures during 2015 in respect of power operations were $4.4 million and were primarily directed towards sustaining capital for Cuban operations.

Locations

Energas does not own the surface land rights for its power facilities in Cuba, but has entered into leases with the Cuban State for the duration of the term of the joint venture.

Varadero

The Varadero facility is located approximately 140 kilometres east of Havana, Cuba. The facility consists of two integrated raw gas processing plants, three gas turbines and associated electric generators, a heat exchange system for generating high-pressure steam, and a steam turbine and associated electric generator. In addition, the Varadero site includes an electrical substation and transformers to facilitate connection of the facility to the Cuban national grid system and an integrated maintenance facility. The aggregate net power capacity of this facility is approximately 173 MW. Sherritt’s share of 2015 electricity sales was 264,032 MWh. In 2014, Sherritt’s share of electricity sales was 246,252 MWh.

The two integrated gas plants at the Varadero site have a combined rated capacity of approximately 50 MMcfpd of raw gas inlet, which would yield approximately 43 MMcfpd of sweet gas, 60 Tpd of sulphur, 438 bopd of LPG, and 226 bopd of condensate.

Boca de Jaruco and Puerto Escondido

The Boca de Jaruco facilities, located approximately 50 kilometres east of Havana, Cuba, consist of a raw gas processing plant and five gas turbines and associated electric generators, a heat exchange system for generating high pressure steam and a steam turbine and associated electric generator. The aggregate power capacity of this facility is approximately 313 MW. The gas plant has a rated capacity of approximately 12 MMcfpd of raw gas inlet, which would yield approximately 10 MMcfpd of processed natural gas, 10 Tpd of sulphur and 58 bopd of condensate. The Boca de Jaruco site also includes an electrical substation and transformers to facilitate connection to the Cuban national grid system and an integrated administrative and maintenance facility.

The Puerto Escondido facilities, located approximately 75 kilometres east of Havana, Cuba consist of a raw gas processing plant and a gas turbine and associated electrical generator with a net power capacity of 20 MW. The gas plant has a rated capacity of 70 MMcfpd of raw gas inlet, yielding approximately 61.5 MMcfpd of processed natural gas, 400 bopd of condensate and 475 bopd of LPG. The Puerto Escondido site also includes an electrical substation and transformers to facilitate connection to the Cuban national grid system.

In 2015, Sherritt’s share of electricity sales at the Boca de Jaruco and Puerto Escondido sites was 638,397 MWh. In 2014, Sherritt’s share of electricity sales was 600,470 MWh, reflecting the addition of electricity sales from the 150 MW Combined Cycle Project facilities during the year.

Under the terms of the Association Agreement, Energas has assumed responsibility for the processing of all the gas produced in the regional vicinity of the Boca de Jaruco oil field, including the portion of gas used by CUPET for the supply of domestic fuel to Havana for which CUPET pays a tariff to Energas.

Cuban Payment Arrangements

During 2015, Energas generally received payment for receivables within 30 days of the due date. At December 31, 2015, there were no overdue receivables.

Gas Supply from CUPET

Under the terms of the Association Agreement, CUPET is obligated to supply, at no cost to Energas, gas that is owned by CUPET and is produced in association with crude oil from oil fields in the regional vicinity of the Varadero, Boca de Jaruco and Puerto Escondido plant sites (the “Oilfields”) up to maximum plant capacity. CUPET’s obligation to supply such gas is subject to its pre-existing obligation to supply clean, processed gas from the Puerto Escondido, Yumuri and Canasi fields for domestic fuel to Havana. Energas does not own the gas reserves in the Oilfields, nor does it control the rate or manner in which such gas reserves are produced. Continuing shortages in gas supply occurred throughout 2015 at both the Varadero and Boca de Jaruco plant sites (see section 3.7 “Risk Factors — Uncertainty of Gas Supply to Energas”).

During 2014, the Corporation carried out a program involving the attempted recompletion of two existing wells and the drilling of a third well to test potential zones for the production of natural gas from the Puerto Escondido and Yumuri oil fields. The program was unsuccessful. The Corporation is working with CUPET to optimize gas conservation in the Puerto Escondido and Yumuri field areas for use as feedstock. In addition, Energas has obtained a permit from Cuban authorities to construct a pipeline to transport associated gas production from the Seboruco and Yumuri oil fields via pipeline to the Boca de Jaruco plant site. The pipeline is expected to be operational in late 2016, providing an additional 200 MMcfpd of raw gas for use as feedstock at the Boca de Jaruco plant site.

As a result, Energas is evaluating the feasibility of using alternative fuels as feedstock. Firstly, the Association Agreement currently provides for the use of a supplementary oil-fired boiler facility to provide additional steam capacity to offset shortages in the supply of raw gas. Should the use of an oil-fired boiler facility be adopted, crude oil will be supplied at no net cost to Energas. Sherritt is responsible for financing the costs of the oil-fired boiler facility pursuant to the terms of the Association Agreement. In

addition, the use of liquid petroleum gases as feedstock and the conversion of the gas turbines to dual fuel capability are currently being evaluated. A decision by Energas regarding the use of alternate fuels to alleviate shortages in raw gas supply is anticipated during 2016.

MADAGASCAR

The Corporation leases a 25 MW heavy fuel oil-fired facility to Madagascar’s national water and electricity company, JIRAMA. The Corporation did not receive any payments in respect of this lease since June 2011 and on June 30, 2013 fully impaired its investment by recording an impairment on the facility of $7.3 million and a provision on receivables of $9.9 million. Subsequent to this date, revenue has not been recorded.

3.4 Technologies

In early 2015 Technologies was merged with Sherritt’s technical services group in Fort Saskatchewan which allowed for Technologies to provide a wider range of technical services to Sherritt’s business units and external clients. Technologies is comprised of project managers, research scientists, engineers, technologists and support staff focused on the development and commercial application of hydrometallurgical technologies and the use of high pressure autoclave technologies in other applications in support of the Corporation’s business units as well as provision of such technologies to existing and emerging external producers. The group also aids in identifying opportunities for the Corporation as a result of its international activities and research and development activities. More than 35 commercial plants worldwide have adopted Technologies’ hydrometallurgical processes for the treatment of a wide range of ores, concentrates, mattes and other feed materials for the recovery of non-ferrous and precious metals. Hydrometallurgical and high pressure autoclave processes are developed, tested and demonstrated extensively at Technologies’ laboratory and pilot plant facilities, the data from which forms the basis for Technologies’ engineers to design commercial plants. The Ambatovy Joint Venture, for example, features the Technologies’ proprietary process technology for nickel and cobalt recovery from laterite ores, which has been successfully applied at the commercial scale for more than half a century. Technologies is currently engaged in assisting with training and increased production activities at the Ambatovy Joint Venture.

In addition to technologies for extracting and refining nickel and cobalt, proprietary technologies for the recovery of gold, silver and other precious metals, and for copper, zinc and other industrial metals from sulphidic feeds have been widely commercialized by many of the world’s major non-ferrous mining companies, Sherritt’s technologies for sulphidic materials can provide an environmentally preferable option to conventional processing as there is not corresponding production of sulphur dioxide. Technologies provided technology and a commercial design for AngloGold Ashanti’s gold pressure oxidation plant in Brazil, which was successfully commissioned in 2012. Technologies also provided technology and the design for a new zinc refinery in China, which is currently being commissioned. The group remains active in the development of commercial facilities for gold, copper and zinc projects in China, Brazil, Canada and Chile and in the development and application of hydrometallurgical and associated technologies for application to other resource-based industries.

With Sherritt’s divestiture of its coal business in early 2014, Technologies is no longer focused on the development of clean coal initiatives. However, Technologies is continuing to examine the application of the use of high pressure autoclave technology to add value to hydrocarbons.

3.5 Environment, Health and Safety and Sustainability

Enterprise oversight of Environment, Health, Safety & Sustainability (“EHS&S”) functions is provided by the Corporate Affairs and Sustainability Department and the Corporate Director of Environment, Health and Safety (“EH&S”). Both the Corporate Affairs and Sustainability Department and the EH&S Department report to the Chief Operating Officer. The EHS&S functions are managed within a sustainability framework that was introduced in 2013.

SUSTAINABILITY FRAMEWORK

Sherritt’s sustainability framework (the “Framework”) provides a focused and practical approach to prioritizing, managing and measuring sustainability performance. The Framework consists of a core commitment to sustainability and a series of issue-specific commitments, which are supported by management systems with policies, procedures and processes to guide planning, implementation, measurement, reporting and assurance of sustainability efforts across Sherritt.

The Framework addresses the sustainability issues most material to the achievement of the Corporation’s goals and future business needs. To develop the Framework, a list of sustainability issues important to the Corporation’s business was identified based on potential risks, corporate policies and a review of current and emerging sustainability issues facing the natural resources sector.

Each issue was analysed on the basis of the level of expected business impact and degree of stakeholder interest. Generally, the most material sustainability issues are addressed in individual commitments in the Framework shown below. These issues are reviewed periodically to ensure emerging issues are properly identified and captured in the Framework accordingly.

In 2014, Sherritt became a corporate member of The Voluntary Principles on Security and Human Rights and the Extractive Industries Transparency Initiative. These memberships reinforce the Corporation’s sustainability commitments.

Sherritt received recognition for the Corporation’s sustainability program in 2015. Sherritt was presented with the Canadian Institute of Mining, Metallurgy and Petroleum’s Syncrude Award for Excellence in Sustainable Development for the Corporation’s comprehensive program at the Ambatovy Joint Venture. Sherritt was also awarded the Canadian Issues/Crisis Management Campaign of the year and the Hermes 2015 Gold Award for Crisis Communication, Media Response and Communications/Marketing Plan.

EHS&S Committee of the Board

The Corporation’s EHS&S Committee assists the Board in its oversight of EH&S and Sustainability issues by providing corporate direction to, and monitoring and reviewing of, environment, health and safety, security and other sustainability management systems, policies, programs and targets. The mandate of the EHS&S Committee can be found on the Corporation’s website.

Sustainability Reporting

The Corporation publically reports its sustainability performance in an on-line sustainability report. The report is aligned with the Global Reporting Initiative, an international standard which has been endorsed by the Canadian Government for use by extractive companies operating in the international sphere. The Corporation expects to produce a 2015 sustainability report in 2016.

ENVIRONMENT, HEALTH AND SAFETY

Environmental

The Corporation’s operations are subject to certain EH&S laws and conventions in various jurisdictions. These laws and conventions cover areas such as employee health and safety; air quality; water quality and availability; the protection and enhancement of the environment (including the protection of plants and wildlife); development approvals; the generation, handling, use, storage, transportation, release, disposal and cleanup of regulated materials, including wastes; and the reclamation and restoration of mining properties after mining is completed, among others. The consequences of a breach of EH&S laws can be serious and could include the temporary suspension of operations, the imposition of fines, other penalties (including administrative penalties and regulatory prosecution), and government orders, which could potentially have a material adverse effect on operations.

The Corporation’s compliance with relevant environmental laws begins with its assessment of environmental impacts before it initiates major new projects or undertakes significant changes to existing operations and how compliance will be demonstrated and managed. In Madagascar, the Ambatovy Joint Venture was required to complete a comprehensive social and environmental assessment in order to design an environmental and social management plan (“ESMP”). The ESMP was designed in accordance with International Finance Committee (“IFC”) Performance Standards. Terms of reference for the assessment were developed in consultation with the Malagasy government and included both environmental and social issues.

Once planning and development has been completed, the Corporation’s various operations must remain in compliance with their permits and the relevant environmental laws. Throughout its operations, the Corporation actively investigates, tests and implements continuous improvements to mitigate the effects of the operations on the environment as well as on the health and safety of workers and adjacent residents. The Corporation is in material compliance with the applicable environmental laws and conventions relating to its operations.

In Cuba, Moa Nickel has been working under specific operating standard regimes since 1994, which provide for Moa Nickel to work with the Cuban authorities in understanding, assessing and mitigating Moa Nickel’s effects on the environment. Cuban agencies conduct periodic inspections to ensure that Moa Nickel is in compliance with the site-specific operating standard issued by the Cuban regulatory authorities.

At the Corporation’s Oil, Gas and Power operations, a Cuban environmental agency conducts ground water and air quality surveys several times per year to monitor compliance with emission standards under Cuban law.

The Corporation holds an operating approval under the Alberta Environmental Protection and Enhancement Act for the refinery in Fort Saskatchewan which expires on January 31, 2019. Environmental management activities are coordinated with other companies in the Fort Saskatchewan area through its active involvement the Northeast Capital Industrial Association (“NCIA”). The NCIA endorses principles which promote sustainable industrial growth and high quality of life and works with provincial authorities. Anticipated changes to federal and provincial legislation regarding emission levels, including the passing of Specified Gas Emitters Regulation 2007, the adoption of the Air Quality Management System in Alberta, and the implementation of federal Base Line Intensity Requirements are expected to require that air emissions from the refinery be reduced, which will require capital expenditures on the part of the Corporation.

The Ambatovy Joint Venture’s operations are subject to regular inspections by the O.N.E., the Malagasy environmental regulator, and an independent engineer on behalf of the Ambatovy Senior Lenders (defined below) to confirm compliance with applicable Malagasy environmental laws, the ESMPs and the IFC Performance Standards as required pursuant to the Ambatovy Financing Agreements.

All Ambatovy Joint Venture facilities are designed, and built, operated and reclaimed in a manner that materially complies with applicable Malagasy laws and regulations, World Bank guidelines, the Equator Principles and IFC Performance Standards. For example, the mine site is located within a forest zone of low commercial timber value but of high biodiversity importance. Extensive work was undertaken to evaluate and minimize potential impacts and develop suitable mitigation and compensation measures. This includes a commitment to maintaining a forest buffer zone around the mining area, two forest set-asides over the ore-body, forest de-fragmentation work through targeted reforestation as well as a plan to establish forest conservation areas (offsets) in the mine region and in an area of similar ecological value elsewhere in the eastern rainforest corridor. The offset areas are being implemented as part of the Business and Biodiversity Offset Program, an international partnership of industry, NGOs and conservation experts to develop common standards for biodiversity offsets. The Ambatovy Joint Venture’s offset program is run in collaboration with various international and national NGOs.

Reclamation

The Corporation includes provisions in its financial statements for environmental rehabilitation obligations based on estimates of future site restoration costs, estimated remaining lives of properties, environmental laws and regulations, and estimated lives of reserves. The current estimate of the Corporation’s share of the total anticipated undiscounted future cost of abandonment and reclamation costs to be incurred over the life of the Corporation’s various assets and investments is estimated at approximately $107.8 million (excluding operating expenses). See Note 22 to the Corporation’s audited consolidated financial statements as at December 31, 2015. The Corporation’s reclamation of its mine sites is continuous and on-going. The Corporation has received certain indemnifications from its predecessor, Viridian Inc., with respect to any claims for environmental damage relating to the operations at the Fort Saskatchewan refinery prior to 1994 and with respect to any claims in relation to the Corporation’s fertilizer business prior to 1996. The Corporation has assumed Viridian’s obligations to GNC in respect of environmental indemnities, but has also received indemnification from Viridian to the same extent, with respect to matters occurring prior to the commencement of operations of the Moa Joint Venture in 1994.

The Corporation and Moa Nickel have been indemnified by GNC with respect to a number of environmental matters. More particularly, damage arising from claims concerning identified or latent conditions relating to the operation of Moa Nickel facilities prior to the formation of the Moa Joint Venture, including health-related claims and required remediation of environmental damage done prior to the formation of the Moa Joint Venture, are subject to indemnification by GNC.

Moa Nickel is obliged to maintain a financial reserve for the purpose of reforestation of the areas that Moa Nickel has mined. Moa Nickel is not responsible for the reforestation of areas mined prior to November 30, 1994.

The Power division’s Varadero, Boca de Jaruco and Puerto Escondido plant sites are subject to regulation under Cuban environmental laws. The area in the vicinity of these sites has been used for the development and production of petroleum and natural gas and other industrial activity for many years. Baseline environmental surveys conducted prior to commencement of operations have confirmed the presence of pre-existing ground water contamination at each of the Varadero, Boca de Jaruco and Puerto Escondido plant sites. The Corporation believes that Energas has no liability under Cuban law for any pre-existing contamination at these sites.

For information on the Corporation’s abandonment and reclamation costs for its oil and gas business, see “Oil and Gas Reserves — Abandonment and Reclamation Costs” above.

Health and Safety

The Corporation is also subject to legal requirements governing the health and safety of the workforce. The Corporation believes that safe operations are essential for a productive and engaged workforce and sustainable growth. The Corporation is committed to workplace incident prevention and makes expenditures towards the necessary human and financial resources and site-specific systems to ensure compliance with its health and safety policies. For example, Sherritt is in the process of implementing enhanced health and safety and tailings management systems to improve how significant risks are prioritized, controlled, and monitored.

Sherritt’s approach to workplace health and safety includes involving its stakeholders, who include all of Sherritt’s employees and the communities where it operates, along with customers, investors, partners and service providers. The Corporation’s commitment to health and safety extends throughout the entire enterprise, starting with the Board.

In 2015, the Corporation experienced four fatalities. The Corporation has embarked on an enterprise-wide program to educate and train all employees on fatal risks and review its facilities. The Total Recordable Injuries index for employees was 0.41 and its Lost-Time Injuries index for employees was 0.14, compared to targets of 0.50 and 0. 18 respectively. Any injuries that occur are investigated to determine root cause and to establish necessary controls with the goal of preventing recurrence.

Greenhouse Gas Emission Frameworks

For information on the Federal and Provincial Greenhouse Gas Emission Frameworks, together with the United Nations clean development mechanism and other Federal, Provincial and regional initiatives, please refer to Schedule C — Greenhouse Gas Emission Frameworks of this Annual Information Form.

COMMUNITY INVESTMENT

Sherritt’s Community Investment initiatives focus on projects which support socio-economic development, public health and safety and natural and cultural heritage in the communities in which the Corporation operates.

In 2014, the Cuba corporate social responsibility (“CSR”) program provided support for public infrastructure in Moa, Cardenas, Matanzas, Santa Cruz del Norte and in several smaller communities, as well as providing materials such as public lighting, road repaving supplies and used buses. Projects undertaken to date as part of this program include the installation of sound and lighting equipment in the newly renovated cultural centre in Moa, the construction of an urban agricultural farm, providing lighting for public health facilities, freezers to food rationing outlets, materials to repair a water line leading to Moa and sewer access to a poultry farm. The Corporation also routinely makes personnel and equipment available to assist with cleanup and recovery from hurricanes.

Specific initiatives in Madagascar have included support to regional programs to improve the capacity of educators, training programs, agricultural techniques at schools in Toamasina, Brickaville and Moramanga, the development of small-, micro-, and-medium-sized businesses (through the Ambatovy Local Business Initiative run by the Ambatovy Joint Venture’s supply chain management department), training of local youth in maintaining healthy lifestyles and avoiding HIV/AIDS, and close collaboration with local authorities to establish measures that will protect the community from potential industrial accidents. In partnership with UNICEF, the Ambatovy Joint Venture built four cyclone-proof eco-schools (with a clean-water source and latrine facilities, as well as a sports field) made of ecologically friendly materials. The structured assistance plan that was put in place in earlier years to help workers transition from employment at the Ambatovy Joint Venture to new employment elsewhere was completed in 2013. The plan was started as construction ended and the workforce began to decline towards a steady-state operating level. The Ambatovy Joint Venture will continue to support local communities in the coming years through direct assistance. However, the majority of its efforts will be concentrated in assisting these communities in receiving a fair share of the royalties paid by the Ambatovy Joint Venture to the Malagasy Government and helping such communities in making maximum beneficial use of this income. Substantial progress has been made towards this objective in 2015: the Ambatovy Joint Venture, with the assistance of specialized consultants, worked in collaboration with national, regional and local authorities to design and propose mechanisms and structures that will ensure transparent and beneficial use of the royalties. In December 2015, the Minister of Finance formally approved the Ambatovy Joint Venture’s proposals. The Corporation expects an interministerial decree to be issued in early 2016 to authorize the creation of these structures, and the flow of royalties should reach the communities in the course of the year.

3.6 Employees

At December 31, 2015, the Corporation, including its subsidiaries and joint ventures, employed 6,372 individuals as set forth in the following table:

Metals(1)		5,544
Oil and Gas(2)		357
Power(3)		283
Technologies		128
Corporate(4)		60
Total		6,372

Notes:

(1) Includes Sherritt and GNC employees seconded to the Moa Joint Venture (100% basis) and local employees of Sherritt seconded to the Ambatovy Joint Venture (100% basis) and others working at Ambatovy.

(2) Includes employees of the entities through which the Corporation carries on its Oil and Gas business.

(3) Includes employees of Energas.

(4) Includes employees in the Havana corporate office.

The table above does not include contractors or service providers. 4,973 contractors were working at the Ambatovy Joint Venture as of December 31, 2015.

3.7 Risk Factors

An investment in securities of the Corporation is subject to certain risks. Before making any investment decision, a potential investor should carefully consider the risks described below, as well as the other information contained in and incorporated by reference in this Annual Information Form. These risks may not be the only risks faced by the Corporation. Additional risks and uncertainties not presently known by the Corporation or which are presently considered immaterial may also adversely impact the Corporation’s business, results of operations, and financial performance.

MARKET CONDITIONS

Generally

There has been, and continues to be, a climate of global economic uncertainty, which includes reduced economic growth, reduced confidence in financial markets, bank failures and credit availability concerns.

These economic events have had a negative effect on the mining and minerals and oil and gas sectors in general. The Corporation will continue to consider its future plans and options carefully in light of prevailing economic conditions.

Should these conditions continue or intensify, they could have a material adverse effect on the Corporation’s business, results of operations and financial performance.

Commodity Risk

Sherritt’s principal businesses include the sale of several commodities. Revenues, earnings and cash flows from the sale of nickel, cobalt, oil and gas are sensitive to changes in market prices, over which the Corporation has no control. The Corporation’s earnings and financial condition depend largely upon the market prices for nickel, cobalt, oil, gas and other commodities, which are volatile. The prices for these commodities can be affected by numerous factors beyond the Corporation’s control, including expectations for inflation, speculative activities, relative exchange rates to the U.S. dollar, production activities of mining and oil and gas companies, global and regional supply and demand, supply and market prices for substitute commodities, political and economic conditions and production costs in major producing regions. The prices for these commodities have fluctuated widely

in recent years. Significant further reductions in commodity prices or sustained low commodity prices could have a material adverse effect on the Corporation’s business, results of operations and financial performance.

Sherritt’s current businesses are dependent upon commodity inputs such as natural gas, sulphur, sulphuric acid, coal, electricity, fuel oil, diesel and related products, and materials that are subject to prevailing commodity prices. Costs and earnings from the use of these products are sensitive to changes in market prices over which Sherritt has no control.

Market Fluctuations and Share Price Volatility

In recent years, the securities markets in Canada and the rest of the developed world have experienced price and volume volatility, which have affected the market price of Sherritt’s securities. The market prices of Sherritt’s securities have been and, may continue to be, affected by these fluctuations, as well as varying in response to a number of other events and factors. These factors may include, but are not limited to: the price of commodities, Sherritt’s operating performance; the public’s reaction to the Corporation’s press releases, other public announcements and the Corporation’s filings with the various securities regulatory authorities; changes in earnings estimates or recommendations by research analysts who trade the Corporation’s common shares or the shares of other companies in the resource sector. In the past year, the market price and trading volume of Sherritt’s securities has decreased significantly, resulting in the Corporation’s Shares being removed from the composite index of the Toronto Stock Exchange. The lower trading price of Sherritt’s Shares has also led to an increase in price volatility, as small increases or decreases in trading price result in a larger proportional percentage change than would have occurred at higher values.

In addition to the factors listed above, securities markets have recently experienced a large degree of price and volume volatility and the market price of many companies have experienced wide fluctuations which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. As such. there can be no assurance that price and volume fluctuations in the market price of Sherritt’s securities, will not continue to occur.

Liquidity and Access to Capital

Sherritt’s ability to fund its capital and operating expenses and to meet its financial obligations depend on its ability to generate sufficient cash flow from its operations and its ability to obtain additional financing and/or refinance its existing credit facilities and loans on terms that are acceptable to the Corporation. As noted in the risk factor entitled “Commodity Risk” above, Sherritt’s earnings and financial condition are highly dependent upon the market prices for nickel, cobalt, oil, gas and other commodities, which are highly volatile in nature. Should the current negative trend in commodity prices continue, Sherritt may find itself unable to access sufficient capital to fund its operations in the manner required for the long-term viability of the business and/or remain in compliance with its debt covenants. Failure to adequately fund its operations or meet its financial obligations could have a material adverse effect on Sherritt’s business, results of operations and financial performance.

Sherritt’s current financing includes, among other things, a $115 million Syndicated Facility and $750 million in Debentures. The total available draw under the Corporation’s Syndicated Facility is based on eligible receivables and inventory, and the facility is currently fully drawn. If commodity prices remain at similar levels or continue to decline this could result in materially fewer funds being available to Sherritt under the Syndicated Facility. Certain debt covenants under the Syndicated Facility are based on ratios involving the Corporation’s EBITDA and/or equity, which would also be negatively affected by decreased commodity prices. As at December 31, 2015, Sherritt exceeded the financial debt to equity covenant of the Syndicated Facility as a result of the impairment charges recognized in the assets of the Ambatovy Joint Venture. Subsequent to year end, the Corporation received a waiver for this covenant on the Syndicated Facility as at December 31, 2015. There can be no assurance that this waiver will be extended. Unless the lenders otherwise agree, a breach of such covenants could result in a default and could lead to an acceleration of repayment and early termination of the Syndicated Facility, which could have a material adverse impact on the Corporation’s liquidity, and its business, results of operations and financial performance.

Please see the risk factor entitled “Ambatovy Liquidity and Funding Risk”.

There is no guarantee that the Corporation will be able to refinance its Debentures, as they come due, on terms and conditions that would be acceptable to the Corporation. Similarly, there is a risk that Sherritt will not be able to raise funds in the equity capital markets on terms that are acceptable to the Corporation.

Please see the risk factor entitled “Restrictions in Debt Instruments, Debt Covenants and Mandatory Repayments” for more information on Sherritt’s loans and borrowings and on the effect of non-compliance with certain debt covenants.

AMBATOVY LIQUIDITY AND FUNDING RISKS

Due to the current nickel pricing environment, the Ambatovy Joint Venture will likely require ongoing financing in order to support debt service repayments and continued operations. Although the Ambatovy Joint Venture has successfully secured sufficient financing from its shareholders and third party lenders in the past, there can be no assurance that it will be successful in securing additional financing or creditor concessions when required or on favourable terms. If the Ambatovy Joint Venture is unable to continue operations, this would have a material adverse effect on Sherritt’s investment in the Ambatovy Joint Venture, and on the Corporation’s business, results of operations and financial performance.

The Ambatovy Joint Venture borrowed US$2.1 billion (US$1.6 billion as at December 31, 2015) under the Ambatovy Financing Agreements and all of the Ambatovy Joint Venture’s assets and the interests of its shareholders in the Ambatovy Joint Venture have been pledged as security for the financing. If the Ambatovy Joint Venture is unable to make semi-annual interest and principal repayments, the Ambatovy Senior Lenders could realize upon their security and seize all of the Ambatovy Joint Venture’s assets and all of Sherritt’s interest therein. This would have a material adverse effect on Sherritt’s investment in the Ambatovy Joint Venture, and on the Corporation’s business, results of operations and financial performance. Please see “Liquidity and Access to Capital”, above, and “Restrictions in Debt Instruments, Debt Covenants and Mandatory Repayments” and “Reliance on Partners”, below, for additional information.

Total cash calls of US$85 million were due to the Ambatovy Joint Venture in January and March 2016, and Sherritt did not fund its 40% pro-rata share (US$34 million). By agreement amongst the Ambatovy Partners, Sherritt is not considered to be a defaulting shareholder under the Ambatovy Joint Venture Shareholders Agreement (the “Shareholders Agreement”) as a consequence of such non-funding and Sherritt’s unfunded amounts accrue interest at LIBOR +3%. These amounts (including accrued interest) will be subtracted from future Ambatovy Joint Venture distributions, or may be off set by the Ambatovy Joint Venture against certain other amounts owed to Sherritt. Sherritt also has the option to pay such amounts in cash at any time at Sherritt’s election. Until the funding deficit is cured, and subject to continued discussions amongst the Ambatovy Partners, Sherritt will not receive any Ambatovy Joint Venture distributions and will not exercise its voting rights at the Ambatovy Joint Venture’s Executive Committee, its corporate Boards of Directors and its Shareholder Meetings. The Ambatovy Partners and the Ambatovy Senior Lenders continue to seek a solution on future Ambatovy Joint Venture funding and debt service. In the event that a solution satisfactory to Sherritt is not achieved, there can be no assurance that Sherritt will resume its funding, nor that the existing arrangements between the Ambatovy Partners will be extended to funding any future cash calls.

Unless otherwise agreed with the other Ambatovy Partners, Sherritt would be in breach of the Shareholders Agreement if it fails to resume funding approved cash calls. As a consequence of such breach, Sherritt would become a defaulting shareholder and until its funding deficit was cured: (a) any unfunded amounts would continue to accrue interest at LIBOR +3%; (b) Sherritt would not receive any Ambatovy Joint Venture distributions; (c) Sherritt would lose its voting rights at the Ambatovy Joint Venture’s Executive Committee, its corporate Boards of Directors and its Shareholder Meetings; (d) Sherritt would lose its right to attend and be represented at meetings of the Ambatovy Joint Venture’s Executive Committee and its corporate Boards of Directors; (e) it will be required to offer its 40% shareholder interest and subordinated loans pro rata to the other Ambatovy Partners who have the right to purchase them at the lower of fair market value and book value; (f) the other Ambatovy Partners can elect to cure Sherritt’s funding deficit by funding on Sherritt’s behalf, in which case such funding is deemed to be a loan to Sherritt, payable on demand, which accrues interest at LIBOR +3% and is limited recourse to Sherritt’s interest in the Ambatovy Joint Venture and repayable from future distributions; and (g) the other Ambatovy Partners can elect to dilute Sherritt’s interest by converting such deemed loans or by funding on Sherritt’s behalf and electing dilution of Sherritt’s interest, without any deemed loan. In the event that any of the other Ambatovy Partners elect to purchase the Corporation’s interest pursuant to paragraph (e), there can be no assurance that the Corporation will receive any proceeds once such purchase price is offset against amounts outstanding under the Partner Loans.

Due to the Ambatovy Joint Venture’s current and projected funding requirements, and the distribution sharing arrangements under the Partner Loans, in a persistently low nickel price environment there can be no certainty that Sherritt will receive any distributions from the Ambatovy Joint Venture. Accordingly, Sherritt’s continued funding and ongoing involvement in the

Ambatovy Joint Venture may not be commercially or economically justified. Sherritt’s future involvement as operator and equity partner in the Ambatovy Joint Venture will be significantly impacted by the outcome of the ongoing discussions between and amongst Sherritt, the other Ambatovy Partners, and the Ambatovy Senior Lenders regarding future funding of Ambatovy Joint Venture and modifications to the terms of the Ambatovy Joint Venture Financing. There can be no assurance that these discussions will result in concessions or favourable terms for Sherritt. Whether as a result of Sherritt not funding cash calls or otherwise (and unless the other Ambatovy Partners otherwise agree), Sherritt’s equity interest in the Ambatovy Joint Venture and entitlements to future distributions could be at risk and there is no assurance that it will be able to retain all or any portion of its equity interest or entitlement to future distributions, which could have a materially adverse effect on the Corporation’s business, results of operations, and financial performance.

Please see the risk factors entitled “Restrictions in Debt Instruments, Debt Covenants and Mandatory Repayments”, below, for additional information.

RESTRICTIONS IN DEBT INSTRUMENTS, DEBT COVENANTS AND MANDATORY REPAYMENTS

Sherritt is a party to certain agreements in connection with the Syndicated Facility, as well as the trust indenture governing its 7.875% Notes, its 7.50% Notes and its 8.00% Notes (collectively, the “Indenture”). Sherritt is also a party to various agreements with the Ambatovy Senior Lenders relating to the US$2.1 billion (US$1.6 billion as at December 31, 2015) Ambatovy Financing Agreements. In addition, Sherritt has two tranches of loans — the Partner Loans — with the other Ambatovy Partners (and certain other parties) that were used to fund Sherritt’s contributions to the Ambatovy Joint Venture. These agreements and loans contain covenants which could have the effect of restricting Sherritt’s ability to react to changes in Sherritt’s business or to local and global economic conditions. In addition, Sherritt’s ability to comply with these covenants and other terms of its indebtedness may be affected by changes in the Corporation’s business, local or global economic conditions or other events beyond the Corporation’s control. Failure by Sherritt to comply with the covenants contained in the Indenture, the Syndicated Facility, the Ambatovy Financing Agreements, the Partner Loans or any future debt instruments or credit agreements, could materially adversely affect the Corporation’s business, results of operations, and financial performance.

The Corporation provided certain completion guarantees to the Ambatovy Senior Lenders under the Ambatovy Financing Agreements. These guarantees became non-recourse to the Corporation once the Ambatovy Joint Venture achieved financial completion in September 2015. As a result, the Ambatovy Senior Lenders’ recourse under the Ambatovy Joint Venture Financing Agreements, including for repayment of semi-annual of principal and interest, is limited to the Ambatovy Joint Venture and Sherritt’s and the other Ambatovy Partners’ interests therein.

The Initial Partner Loans ($134.6 million as at December 31, 2015) are generally repayable by Sherritt or a wholly-owned subsidiary of Sherritt solely from the proceeds of distributions from the Ambatovy Joint Venture. Recourse under these loans is generally limited to Sherritt’s interest in the Ambatovy Joint Venture and is subordinate to the security interests therein held by the Ambatovy Senior Lenders. If Sherritt becomes a defaulting shareholder under the terms of the Shareholders Agreement, for example, by failing to fund a cash call, a cross-default to the Initial Partner Loans would be triggered and the lenders could elect to accelerate repayment. However, due to the limited recourse nature of the loans, such acceleration will not require Sherritt to repay the loans until after August 2023 and the lenders’ recourse is effectively limited to their subordinated security interest over Sherritt’s interest in and future distributions from the Ambatovy Joint Venture. While recourse is generally limited, Sherritt can be obligated to repay any outstanding amount of the Initial Partner Loans if they have not been repaid in full by August 2023 or if the Ambatovy Senior Lenders exercise remedies as a result of a default by the Ambatovy Joint Venture under the Ambatovy Financing Agreements. In either case, Sherritt has the option to repay in cash or, provided its Shares are trading on the Toronto Stock Exchange at the time of payment, in common shares. Unless the lenders otherwise agree, the Initial Partner Loans also require repayment in cash within five business days in the event of the sale of all or substantially all of the assets of Sherritt, the acquisition of more than 50% of the Shares of Sherritt or a corporate restructuring of Sherritt. Repayment of the Initial Partner Loans in cash could have significant consequences for Sherritt’s liquidity and could materially adversely affect the Corporation’s business, results of operations and financial performance. In those cases where it has the option, if Sherritt elects to repay all or any portion of the Initial Partner Loans in Shares this could result in significant dilution to existing shareholders depending on the prevailing Share price at the time of payment.

The Additional Partner Loans ($1,303.2 million as at December 31, 2015) are repayable by a wholly-owned subsidiary of Sherritt solely from the proceeds of distributions from the Ambatovy Joint Venture. Recourse for a default under these loans is generally limited to Sherritt’s interest in and future distributions from the Ambatovy Joint Venture, and is also subordinate to the security interests therein held by the Ambatovy Senior Lenders. These loans are recourse to Sherritt in circumstances where there is a breach of specific restrictions in the loan documents by Sherritt or its wholly-owned subsidiaries that hold Sherritt’s interest in the Ambatovy Joint Venture. These restrictions are generally aimed at preserving the lenders’ security interests by restricting the activities of such subsidiaries, for example, by prohibiting the pledging of Sherritt’s interest in the Ambatovy Joint Venture or a corporate reorganization of a subsidiary that holds such interest.

If Sherritt becomes a defaulting shareholder under the terms of the Shareholders Agreement, a cross-default to the Initial Partner Loans would be triggered, which in turn could trigger a cross-default under the Syndicated Facility. However, the lenders under the Syndicated Facility have waived any default attributable to Sherritt becoming a defaulting shareholder under the Shareholders Agreement due to non-funding and any cross-default under the partner loans that would be triggered as a result of thereof. Certain breaches of the Shareholders Agreement could also trigger a default under the Additional Partner Loans. However, this would not trigger a cross-default under the Syndicated Facility.

If a cross-default to the Partner Loans is triggered, and the lenders under those loans were to accelerate repayment, although generally such acceleration would not require repayment by Sherritt until after August 2023 it could in turn trigger a cross-default under the Indenture. Such a cross-default under the Indenture could result in acceleration of the Debentures unless the default is cured by repaying the partner loan or waived in accordance with the Indenture. Sherritt likely would not have sufficient cash and short term investments to repay all or any portion of the amounts outstanding under any or all series of outstanding Debentures (in the aggregate, $750 million principal amount as at December 31, 2015) and there can be no assurance that Sherritt could refinance such amounts. Acceleration of the Partner Loans and/or the Debentures would, in turn, trigger an event of default under the Syndicated Facility. Accordingly, acceleration of any one or more series of debentures could materially adversely affect the Corporation’s business, results of operations, and financial performance.

RELIANCE ON PARTNERS

The Corporation holds its interest in certain projects and operations through joint ventures or partnerships. A failure by a partner to comply with its obligations under applicable partnership or similar joint venture arrangements, to continue to fund such projects or operations, or a breakdown in relations with its partners could have a material adverse effect on the Corporation’s business, results of operations and financial performance.

In addition, the Corporation is currently in discussions with its Ambatovy Partners regarding modifications to the Ambatovy Joint Venture financing structure. Failure to achieve modifications that are satisfactory to the Corporation could lead Sherritt to be in breach of its obligations under the Ambatovy Joint Venture funding arrangements. For information regarding the possible consequences of a failure to comply with such arrangements please see “Ambatovy Liquidity and Funding Risks” for additional information.

OPERATING RISKS

Variability in production at the Sherritt’s operations in Madagascar and Cuba are most likely to arise from following categories of potential risk: (i) Parts and Equipment — the inherent risk that parts and equipment may fail or fail to perform in accordance with design due to mechanical or engineering issues. Given the location and associated logistics, replacement components may not be immediately available; and (ii) Operational Risk — production is directly affected by the performance of core operators and maintenance teams. Supplementary operators and maintenance personnel, experienced in steady-state operations, have been mobilized to assist in training and to mitigate risks.

Please see the Risk Factors entitled “Risks Related to Sherritt’s Operations in Madagascar” and “Risks Related to Sherritt’s Operations in Cuba” for additional information.

COMPLETION OF THE MOA JOINT VENTURE ACID PLANT

The Corporation and GNC have agreed on the terms to complete the 2,000 tonne per day acid plant at Moa. Agreement was reached with a Cuban financial institution to fund the full amount of the estimated US$67.2 million required to complete this project and funding has occurred since 2013. The issues which have caused previous delays in the construction of the acid plant have largely been resolved and construction is progressing well. There can be no assurance that the completion of the acid plant may not be further delayed for reasons outside of the Corporation’s control. Any delay would postpone the Moa Joint Venture’s ability to realize the cost savings anticipated from the completion of the acid plant. Further, should additional delays occur or if the cost of completion exceeds $67.2 million further funding may not be available.

TRANSPORTATION

Sherritt’s operations depend on an uninterrupted flow of materials, supplies, equipment, services and finished products. Due to the geographic location of many of Sherritt’s properties and operations, this flow is highly dependent on third parties for the provision of rail, port, marine, shipping and other transportation services. Sherritt negotiates prices for the provision of these services in circumstances where it may not have viable alternatives to using specific providers, or have access to regulated rate setting mechanisms. Contractual disputes, demurrage charges, classification of commodity inputs and finished products, rail, marine and port capacity issues, availability of vessels and rail cars, weather problems, labour disruptions or other factors could have a material adverse effect on Sherritt’s ability to transport materials according to schedules and contractual commitments and could have a material adverse effect on the Corporation’s business, results of operations and financial performance.

In particular, the Corporation’s metals process plants rely on access to rail, port and marine shipping for certain raw material inputs and for the export of refined metals and fertilizers.

UNCERTAINTY OF GAS SUPPLY TO ENERGAS

Energas does not own the gas reserves contained in the Oilfields located in the vicinity of the Energas plant sites, nor does it control the rate or manner in which such gas reserves are produced. CUPET reserves the right to produce crude oil from such fields at such rates as the Government of Cuba may deem necessary in the national interest, which may affect the future supply of gas to Energas. Although the Corporation believes that generation of electricity will remain a key priority of the Government of Cuba and that the Oilfields will be operated in a manner which optimizes gas production, gas reserves are being depleted and there can be no certainty that sufficient quantities of gas will be available to operate the Energas facilities at maximum or economic capacity for the duration of the term of the Energas joint venture. Power generation fluctuates on a yearly basis when pipeline capacity and transport gas is inadequate. For example, a new pipeline is being constructed in 2016, during which time gas supply will be restricted to volumes below those experiences in 2015. Adequate future supplies of gas may depend, in part, upon the successful development of new oil fields as the existing fields are being depleted and the introduction of production practices designed to optimize the recovery of oil and gas reserves. No independent reserve report has been prepared with respect to gas reserves in Cuba, due to a lack of available technical information from CUPET.

DEPLETION OF RESERVES

Subject to any future expansion or other development, production from existing operations at the Corporation’s mines and wells will typically decline over the life of the mine or well. As a result, Sherritt’s ability to maintain or increase its current production of nickel, cobalt and oil and gas and generate revenues therefrom will depend significantly upon the Corporation’s ability to discover or acquire and to successfully bring new mines and wells into production and to expand mineral and oil and gas reserves at existing operations. Exploration and development of mineral and oil and gas properties involves significant financial risk. Very few exploratory properties are developed into operating mines or wells. Whether a deposit will be commercially viable depends on a number of factors, including: the particular attributes of the deposit, such as size, grade and proximity to infrastructure; commodity prices, which are highly cyclical; political and social stability; and government regulation, including regulations relating to prices, taxes, royalties, land tenure, land use, importing and exporting of natural resources and environmental protection. Even if the Corporation identifies and acquire an economically viable deposit, several years may elapse from the initial stages of development. Significant expenses could be incurred to locate and establish reserves, to develop the required extractive processes and to construct mining or drilling and processing facilities. The original PSCs are scheduled to revert to Cuban

ownership in 2017 and 2018, and the Corporation does not expect to carry out any further drilling activity on the original PSCs or for the original PSCs to be extended. Accordingly, after 2017/2018 any future oil and gas production presently will depend on new reserves in Block 10 and 8A. Sherritt cannot provide assurance that its exploration or development efforts will result in any new commercial operations or yield new mineral or oil and gas reserves to replace or expand current reserves.

RELIANCE ON KEY PERSONNEL AND SKILLED WORKERS

Sherritt’s operations require employees and contractors with a high degree of specialized technical, management and professional skills, such as engineers, trades people and plant and equipment operators. In some geographic areas, the Corporation competes with other local industries for these skilled workers. For example, in its Cuba operations, the Corporation is dependent on the government for the provision of skilled workers. In its Madagascar operations, the Corporation is required to recruit many skilled workers internationally and train locally, due to the limited number of local skilled workers in Madagascar. This challenge is further intensified by high expectations, from both the Malagasy government and the local community, for Sherritt to provide local employment.

If Sherritt is unable to find an adequate supply of skilled workers, a decrease in productivity or an increase in costs may result which could have a material adverse effect on the Corporation’s business, results of operations and financial performance. The success of Sherritt’s operations and activities is dependent to a significant extent on the efforts and abilities of its senior management team, as well as outside contractors, experts and its partners. The loss of one or more members of senior management, key employees, contractors or partners, if not effectively replaced in a timely manner, could have a material adverse effect on the Corporation’s business, results of operations and financial performance.

EQUIPMENT FAILURE AND OTHER UNEXPECTED FAILURES

Interruptions in Sherritt’s production capabilities would be expected to increase its production costs and reduce its profitability. The Corporation may experience material shutdowns or periods of reduced production because of equipment failures and this risk may be increased by the age of certain of the Corporation’s facilities or facilities of third parties in which the Corporation’s products are processed. In addition to equipment failures, the Corporation’s facilities are also subject to the risk of loss due to unanticipated events such as fires, explosions or adverse weather conditions. Shutdowns or reductions in operations could have a material adverse effect on the Corporation’s business, results of operations and financial performance. Remediation of an interruption in production capability could require the Corporation to make large expenditures. Further, longer-term business disruptions could result in a loss of customers. All of these factors could have a material adverse effect on the Corporation’s business, results of operations and financial performance.

MINING, PROCESSING AND REFINING RISKS

The business of mining, processing and refining involves many risks and hazards, including environmental hazards, industrial accidents, labour-force disruptions, supply problems and delays, unusual or unexpected geological or operating conditions, geology-related failures, change in the regulatory environment, weather conditions, floods, earthquakes and water conditions. Such occurrences could result in damage to, or destruction of, mineral properties or production facilities, personal injury or death, environmental damage, delays in mining, monetary losses and possible legal liability. As a result, Sherritt may incur significant liabilities and costs that could have a material adverse effect upon its business, results of operations and financial performance.

Other risks and uncertainties which could impact the performance of mining projects include factors such as the ore characteristics; adverse impacts from construction or commissioning activities on ongoing operations; and difficulties with commissioning, changing geological conditions and integrating the operations of newly constructed mines and processing facilities.

UNCERTAINTY OF RESOURCES AND RESERVE ESTIMATES

Sherritt has reserves of nickel, cobalt, oil and gas. Reserve estimates are imprecise and depend partly on statistical inferences drawn from drilling, which may prove to be unreliable. Future production could differ from reserve estimates for the following reasons:

· mineralization or formations could be different from those predicted by drilling, sampling and similar examinations;

· declines in the market price of nickel, cobalt, oil and gas or increases in operating costs and processing costs may render the production of some or all of Sherritt’s reserves uneconomic;

· the grade or quality of reserves may vary significantly from time to time and there is no assurance that any particular level of nickel, cobalt, oil or gas may be recovered from the reserves; and

· legislative changes and other political changes in jurisdictions in which Sherritt operates may result in changes to Sherritt’s ability to exploit reserves.

Any of these or other factors may require Sherritt to reduce its reserve estimates, reduce its production rates, or increase its costs. Past drilling results are not necessarily indicative of future drill results. Should the market price of any of the above commodities fall, or unit operating costs prove to be higher than expected, Sherritt could be required to materially write down its investment in its resource properties or delay or discontinue production or the development of projects.

ENVIRONMENTAL REHABILITATION PROVISIONS

Sherritt has estimated environmental rehabilitation provisions which management believes will meet current regulatory requirements. These future provisions are estimated by management using closure plans and other similar plans which outline the requirements that are expected to be carried out to meet the provisions. The provisions are dependent on legislative and regulatory requirements which could change. Because the estimate of provisions is based on future expectations, a number of assumptions and judgments are made by management in the determination of these provisions which may prove to be incorrect. As a result, estimates may change from time to time and actual payments to settle the provisions may differ from those estimated and such differences may be material.

The provision for: (i) costs incurred due to the October 31, 2013 breach at the Obed Mountain mine; and (ii) future costs of reclamation activities at the Coal Valley mine are subject to uncertainties. Such uncertainties are caused by the dynamic nature of the response effort, the range of remediation alternatives available and the corresponding costs of various clean-up methodologies and uncertainty regarding the extent and nature of the cost of remediation activities that may be necessary to meet the Corporation’s reclamation obligations, respectively. Sherritt is awaiting approval from regulatory agencies regarding certain portions of the Obed Mountain remediation plan which will determine the nature of the remaining remediation efforts. The outcome of the regulatory agencies’ review, along with various other factors such as adverse weather and temperature changes, could escalate total costs.

The Corporation has an obligation under applicable mining, oil and gas and environmental legislation to reclaim certain lands that it disturbs during mining, oil and gas production or other industrial activities. The Corporation is required to provide financial security to certain government authorities for some of its future reclamation costs. Currently, the Corporation provides this reclamation security by way of bank guarantees, corporate guarantees and irrevocable letters of credit issued under its senior credit facilities. The Corporation may be unable to obtain adequate financial security or may be required to replace its existing security with more expensive forms of security, including cash deposits, which would reduce cash available for operations. In addition, any increase in costs associated with reclamation and mine closure or termination of oil and gas field operations resulting from changes in the applicable legislation (including any additional bonding requirements) could have a material adverse effect on the Corporation’s business, results of operations and financial performance.

RISKS RELATED TO SHERRITT’S CORPORATE STRUCTURE

of dividends or other distributions by these subsidiaries to the Corporation is subject to statutory regimes applicable to those entities. There can be no assurance that the applicable Canadian government, or some or all of the holding company jurisdictions will not adopt law and/or regulations more restrictive than those currently in effect which could have a material adverse effect on the Corporation’s financial performance. While these jurisdictions have experienced political stability for some time, we continue to regularly monitor changes to applicable laws and regulations.

POLITICAL, ECONOMIC AND OTHER RISKS OF FOREIGN OPERATIONS

Sherritt has operations located in Cuba, Madagascar, Spain and Pakistan. There can be no assurance that assets of companies operating in industries which are deemed of national or strategic importance in the countries in which the Corporation operates or has assets, including energy, mineral and petroleum exploration, development and production, will not be nationalized. Changes in policy that alter laws regulating the mining, oil and gas or energy sectors could have a material adverse effect on the Corporation. There can be no assurance that the Corporation’s assets in these countries will not be subject to nationalization, requisition or confiscation, whether legitimate on not, by an authority or body.

Sherritt is also subject to other political, economic and social risks relating to foreign operations which include, but are not limited to, forced modification or cancellation of existing contracts or permits, currency fluctuations and devaluations, unfavourable tax enforcement, changing political conditions, political unrest, civil strife, uncertainty regarding the interpretation and/or application of applicable laws in foreign jurisdictions, and changes in governmental regulations or policies with respect to, among other things, currency, production, price controls, profit repatriation, export controls, labour, taxation, trade, and environmental, health and safety matters or the personnel administering those regulations or policies. Any of these risks could have a material adverse effect on the Corporation’s business, results of operations and financial performance.

RISKS RELATED TO SHERRITT’S OPERATIONS IN MADAGASCAR

The Corporation is the operator of, and indirectly holds significant interests in the Ambatovy Joint Venture in Madagascar. Sherritt is subject to political, economic and social risks related to operating in Madagascar.

In 2002, the government of Madagascar passed the LGIM, which is legislation to manage large-scale mining projects. The Ambatovy Joint Venture is the first and currently the only project to be developed under the LGIM’s terms and provisions, which have been largely untested. Although the Ambatovy Joint Venture has received its eligibility certification under the LGIM, it is possible that the LGIM could be interpreted or amended in a manner that has a material adverse effect on the Ambatovy Joint Venture.

Madagascar has a history of political instability and there is no assurance that continuing political stability will be achieved.

In 2009, Madagascar experienced an unexpected change of government and the Transitional Government of Madagascar took control of the country. At several points during the following five year political crisis, the Transitional Government indicated that the Ambatovy Joint Venture’s status under the LGIM could be subject to review. However, the Ambatovy Joint Venture’s eligible status under the LGIM has since been confirmed by the CGIM, the government body responsible for overseeing the LGIM, on July 7, 2014. The Malagasy government is currently in the process of revising the Mining Code. While the amendments included in the current draft legislation do not affect the Ambatovy Joint Venture’s rights under the LGIM, there is no guarantee that such amendments could not be made in the future.

The political crisis came to an end with the holding of internationally recognized presidential elections in December 2013, whereby Mr. Hery Rajaonarimampianina was elected as the President of the Republic of Madagascar. While Mr. Rajaonarimampianina remains in power, the resignation of the Prime Minister, Mr. Roger Kolo on January 12, 2015 and subsequent appointment of Mr. Jean Ravelonarivo has triggered the appointment of a new government. The government may continue to have direct or indirect impact on the Ambatovy Joint Venture, and may adversely affect the Corporation’s business. Any changes in regulations or shifts in political attitudes are beyond the control of Sherritt and may adversely affect its business. Operations may be affected in varying degrees by the Government of Madagascar regulations with respect to production, price controls, export controls (including the recent requirement for the registration of imports and exports), income taxes or

investment tax credits, tax reimbursements, royalties and fees, expropriation of property, environmental legislation, land use, water use and mine and plant safety or changes to the LGIM.

Operations in Madagascar may also be affected by the fact that Madagascar’s location potentially exposes it to cyclones and tropical storms of varying intensities. The risk of damage is dependent upon such factors as intensity, footprint, wind direction and the amount of precipitation associated with the storm and tidal surges. While the Ambatovy Joint Venture maintains comprehensive disaster plans and its facilities have been constructed to the extent reasonably possible to minimize damage, there can be no guarantee against severe property damage and disruptions to operations.

Madagascar is one of the poorest countries in the world, with low levels of economic activity and high levels of unemployment. These conditions are conducive to social unrest and instability that could, under certain circumstances, have an impact on the Ambatovy Joint Venture’s ability to produce and export its products. The Ambatovy Joint Venture continues to foster active working relations with relevant Malagasy authorities and civil society to mitigate social risk, maintain its social license, and facilitate operational activities.

Agencies of the Malagasy government have significant payment obligations to the Corporation in connection with the Ambatovy Joint Venture. This exposure to the Malagasy government and its potential inability or failure to fully pay such amounts could have an adverse effect on the Corporation’s financial condition and results of operations.

RISKS RELATED TO SHERRITT’S OPERATIONS IN CUBA

The Corporation directly or indirectly holds significant interests in mining, metals processing, exploration for and production of crude oil and the generation of electricity in Cuba. The operations of the Cuban businesses may be affected by economic pressures on Cuba. Risks include, but are not limited to, fluctuations in official or convertible currency exchange rates and high rates of inflation. Any changes in regulations or shifts in political attitudes are beyond the control of Sherritt and may adversely affect its business. Operations may be affected in varying degrees by such factors as Cuban government regulations with respect to currency conversion, production, project approval and execution, price controls, import and export controls, income taxes or reinvestment credits, expropriation of property, environmental legislation, land use, water use and mine and plant safety.

Operations in Cuba may also be affected by the fact that, as a Caribbean nation, Cuba regularly experiences hurricanes and tropical storms of varying intensities. The risk of damage is dependent upon such factors as intensity, footprint, wind direction and the amount of precipitation associated with the storm and tidal surges. While the Corporation, its joint venture partners and agencies of the Government of Cuba maintain comprehensive disaster plans and the Corporation’s Cuban facilities have been constructed to the extent reasonably possible to minimize damage, there can be no guarantee against severe property damage and disruptions to operations.

The Cuban government has allowed, for more than two decades, foreign entities to repatriate profits out of Cuba. However, there can be no assurance allowing foreign investment and profit repatriation will continue or that a change in economic conditions will not result in a change in the policies of the Cuban government or the imposition of more stringent foreign investment or foreign exchange restrictions. Such changes are beyond the control of Sherritt and the effect of any such changes cannot be accurately predicted.

Agencies of the Cuban government have significant payment obligations to the Corporation in connection with the Corporation’s Oil and Gas, Metals and Power operations in Cuba. This exposure to the Cuban government and its potential inability to fully pay such amounts could have a material adverse effect on the Corporation’s financial condition and results of operations.

RISKS RELATED TO U.S. GOVERNMENT POLICY TOWARDS CUBA

The United States has maintained a general embargo against Cuba since the early 1960s, and the enactment in 1996 of the Cuban Liberty and Democratic Solidarity (Libertad) Act (commonly known as the “Helms-Burton Act”) extended the reach of the U.S. embargo. In December 2014, President Obama announced his intention to normalize diplomatic relations between the United States and Cuba and to reduce certain restrictions on travel, commercial and personal transactions between Americans and Cubans. Bilateral discussions between the U.S. and Cuba have been advancing to some extent since that time.

The U.S. Embargo

In its current form, apart from the Helms-Burton Act, the embargo applies to most transactions involving Cuba or Cuban enterprises, and it bars all “U.S. Persons” from participating in such transactions unless such persons have general or specific licenses from the U.S. Department of the Treasury (“Treasury”) authorizing their participation in the transactions. U.S. Persons include U.S. citizens, U.S. residents, individuals or enterprises located in the United States, enterprises organized under U.S. laws and enterprises owned or controlled by any of the foregoing. Subsidiaries of U.S. enterprises are subject to the embargo’s prohibitions. The embargo also extends to entities deemed to be owned or controlled by Cuba (“specially designated nationals” or “SDNs”). The three entities constituting the Moa Joint Venture in which Sherritt holds an indirect 50% interest have been deemed SDNs by Treasury. Sherritt is not an SDN. The U.S. embargo generally prohibits U.S. Persons from engaging in transactions involving the Cuban-related businesses of the Corporation. Furthermore, despite the relaxation of certain restrictions over the past year, generally U.S.-originated technology, U.S.-originated goods, and many goods produced from U.S.-originated components or with U.S.-originated technology cannot under U.S. law be transferred to Cuba or used in the Corporation’s operations in Cuba. In 1992, Canada issued an order pursuant to the Foreign Extraterritorial Measures Act (Canada) to block the application of the U.S. embargo under Canadian law to Canadian subsidiaries of U.S. enterprises. In addition, Sherritt conducts its Cuba-related operations so as not to require U.S. Persons to violate the U.S. embargo. The general embargo limits Sherritt’s access to U.S. capital, financing sources, customers, and suppliers.

The Helms-Burton Act

Separately from the general embargo, the Helms-Burton Act authorizes sanctions on individuals or entities that “traffic” in Cuban property that was confiscated from U.S. nationals or from persons who have become U.S. nationals. The term “traffic” includes various forms of use of Cuban property as well as “profiting from” or “participating in” the trafficking of others.

The Helms-Burton Act authorizes damage lawsuits to be brought in U.S. courts by U.S. claimants against those “trafficking” in the claimants’ confiscated property. No such lawsuits have been filed because all Presidents of the United States in office since the enactment of the Helms-Burton Act have exercised their authority to suspend the right of claimants to bring such lawsuits for successive periods of up to six months. Pursuant to this authority, the President has suspended the right of claimants for successive six-month periods since 1996; the latest suspension extends through to July 31, 2016. The Corporation has nevertheless received letters from U.S. nationals claiming ownership of certain Cuban properties or rights in which the Corporation has an indirect interest. Even if the suspension were permitted to expire, Sherritt does not believe that its operations would be materially affected by any Helms-Burton Act lawsuits, because Sherritt’s minimal contacts with the United States would likely deprive any U.S. court of personal jurisdiction over Sherritt. Furthermore, even if personal jurisdiction were exercised, any successful U.S. claimant would have to seek enforcement of the U.S. court judgment outside the U.S. in order to reach material Sherritt assets. Management believes it unlikely that a court in any country in which Sherritt has material assets would enforce a Helms-Burton Act judgment.

The Foreign Extraterritorial Measures Act (Canada) was amended as of January 1, 1997 to provide that any judgment given under the Helms-Burton Act will not be recognized or enforceable in any manner in Canada. The amendments permit the Attorney General of Canada to declare, by order, that a Canadian corporation may sue for and recover in Canada any loss or damage it may have suffered by reason of the enforcement of a Helms-Burton Act judgment abroad. In such a proceeding, the Canadian court could order the seizure and sale of any property in which the defendant has a direct or indirect beneficial interest, or the property of any person who controls or is a member of a group of persons that controls, in law or in fact, the defendant. The property seized and sold could include shares of any corporation incorporated under the laws of Canada or a province.

The Government of Canada has also responded to the Helms-Burton Act through diplomatic channels. Other countries, such as the members of the European Union and the Organization of American States, have expressed their strong opposition to the Helms-Burton Act as well.

Nevertheless, in the absence of any judicial interpretation of the scope of the Helms-Burton Act, the threat of potential litigation discourages some potential investors, lenders, suppliers and customers from doing business with Sherritt.

In addition to authorizing private lawsuits, the Helms-Burton Act also authorizes the U.S. Secretary of State and the U.S. Attorney General to exclude from the United States those aliens who engage in certain “trafficking” activities, as well as those aliens who are corporate officers, principals, or controlling shareholders of “traffickers” or who are spouses, minor children, or agents of such excludable persons. The U.S. Department of State has deemed Sherritt’s indirect 50% interest in Moa Nickel S.A. to be a form of “trafficking” under the Helms-Burton Act. In their capacities as directors or officers of the Corporation, certain individuals have been excluded from entry into the U.S. under this provision. Management does not believe the exclusion from entry into the U.S. of such individuals will have any material effect on the conduct of the Corporation’s business.

The U.S. Department of State has issued guidelines for the implementation of the immigration provision, which state that it is “not sufficient in itself for a determination” of exclusion that a person “has merely had business dealings with a person” deemed to be “trafficking”. Also, the statutory definition of “traffics” relevant to the Helms-Burton Act’s immigration provision explicitly excludes “the trading or holding of securities publicly traded or held, unless the trading is with or by a person on the SDN List”.

The general embargo has been, and may be, amended from time to time, as may the Helms-Burton Act, and therefore the U.S. sanctions applicable to transactions with Cuba may become more or less stringent. The stringency and longevity of the U.S. laws relating to Cuba are likely to continue to be functions of political developments in the United States and Cuba, over which Sherritt has no control. President Obama’s announced intention to relax the general embargo may or may not result in further reductions in sanctions, but the pace and extent of any changes are uncertain and beyond Sherritt’s control. There can be no assurance that the general embargo and the Helms-Burton Act will not have a material adverse effect on the Corporation’s business results of operations or financial performance.

PROJECT DEVELOPMENT

Generally

Sherritt’s business includes the development, construction and operation of large mining, metals refining projects and electrical generation projects. Unforeseen conditions or developments could arise during the course of these projects that could delay or prevent completion of, and/or substantially increase the cost of construction and/or could affect the current and projected level of production, the sustaining capital requirements or operating cost estimates relating to the projects. Such conditions or developments may include, without limitation, shortages of equipment, materials or labour; delays in delivery of equipment or materials; customs issues; labour disruptions; poor labour productivity; community protests; difficulties in obtaining necessary services; delays in obtaining regulatory permits; local government issues; political events; regulatory changes; investigations involving various authorities; adverse weather conditions; unanticipated increases in equipment, material and labour costs; unfavourable currency fluctuations; access to financing; natural or man-made disasters or accidents; and unforeseen engineering, technical and technological design, geotechnical, environmental, infrastructure or geological problems. Any such event could delay commissioning, and affect production and cost estimates. There can be no assurance that the development or construction activities will proceed in accordance with current expectations or at all.

These risks and uncertainties could have a material adverse effect on the Corporation’s business, results of operations and financial performance.

Capital and Operating Cost Estimates

Capital and operating cost estimates made in respect of the Corporation’s operations and projects may not prove accurate. Capital and operating costs are estimated based on the interpretation of geological data, feasibility studies, anticipated climatic conditions and other factors. Any of the following, among the other events and uncertainties described herein, could affect the ultimate accuracy of such estimates: unanticipated changes in grade and tonnage to be mined and processed; incorrect data on which engineering assumptions are made; unanticipated transportation costs; the accuracy of major equipment and construction cost estimates; failure to meet scheduled construction completion dates and metal production dates due to any of the foregoing events and uncertainties; expenditures in connection with a failure to meet such scheduled dates; unsatisfactory construction quality resulting in failure to meet such scheduled dates; capital overrun related to the end of the construction phase in connection with, among other things, the demobilization of contractors and construction workers at any project; labour negotiations; unanticipated costs related to commencing operations, ramping up and/or sustaining production; changes in

government regulation (including regulations regarding prices, cost of consumables, royalties, duties, taxes, permitting and restrictions on production quotas or exportation of the Corporation’s products); and unanticipated changes in commodity input costs and quantities.

SIGNIFICANT CUSTOMERS

The Ambatovy Joint Venture has entered into long-term nickel offtake agreements with two companies (the “Ambatovy Offtakers”). The Ambatovy Offtakers have each agreed to purchase 50% of nickel production up to the stated refined nickel capacity (60,000 tonnes per year) on open account terms net 30 days after shipment, for re-sale in global markets. The Moa Joint Venture derives a material amount of revenue from certain customers in Europe and Asia. Payment is made by way of an irrevocable letter of credit in a form acceptable to the Ambatovy Senior Lenders or through open account terms that are secured by accounts receivable insurance or by payment upon presentation of documents at the time of shipment. Any cancellation of shipments would result in nickel being placed with other customers through the spot markets; however, prices realized could vary from those negotiated with the customer. Both the Moa Joint Venture and the Ambatovy Joint Venture’s finished nickel products qualify for delivery to the LME which provides a terminal market in the event that significant customers are unable to meet their contractual obligations.

All sales of Sherritt’s oil production in Cuba are made to an agency of the Government of Cuba, as are all electricity sales made by Energas. The access of the Cuban government to foreign exchange is severely limited. As a consequence, from time to time, the Cuban agencies have had difficulty in discharging their foreign currency obligations. During such times, Sherritt has worked with these agencies in order to ensure that Sherritt’s operations continue to generate positive cash flow. However, there is a risk, beyond the control of Sherritt, that receivables and contractual performance due from Cuban entities will not be paid or performed in a timely manner, or at all. If any of these agencies or the Cuban government are unable or unwilling to conduct business with Sherritt, or satisfy their obligations to Sherritt, Sherritt could be forced to close some or all of its Cuban businesses, which could have a material adverse effect upon Sherritt’s results of operations and financial performance.

Sherritt is entitled to the benefit of certain assurances received from the Government of Cuba and certain agencies of the Government of Cuba that protect it in many circumstances from adverse changes in law, although such changes remain beyond the control of the Corporation and the effect of any such changes cannot be accurately predicted.

FOREIGN EXCHANGE AND PRICING RISKS

Many of Sherritt’s businesses operate in currencies other than Canadian dollars and their products may be sold at prices other than prevailing spot prices at the time of sale. Sherritt is also sensitive to foreign exchange exposures when commitments are made to deliver products quoted in foreign currencies or when the contract currency is different from the product-pricing currency. The Moa Joint Venture derives the majority of its revenue from nickel and cobalt sales that are typically based on U.S. dollar reference prices over a defined period of time and collected in currencies other than U.S. or Canadian dollars in accordance with sales terms that may vary by customer and sales contract. Similarly, Oil and Gas and Power derives substantially all of their revenues from sales in U.S. dollars. Additionally, input commodities for Metals and other operating costs for Metals and the Corporation’s other operations are denominated in U.S. dollars. Accordingly, fluctuations in Canadian dollar exchange rates and price movements between the date of sale and final settlement may have a material adverse effect on the Corporation’s business, results of operations and financial performance.

ENVIRONMENT, HEALTH AND SAFETY

The Corporation’s worldwide operations are subject to extensive EH&S laws including: employee health and safety; air quality; water quality and availability; the protection and enhancement of the environment (including the protection of plants and wildlife); land-use zoning; development approvals; the generation, handling, use, storage, transportation, release, disposal and cleanup of regulated materials, including wastes; and the reclamation and restoration of mining properties after mining is completed. The Corporation’s operations are regulated by a variety of federal, provincial or state legislation and local by-laws. A breach of EH&S laws may result in the temporary suspension of operations, the imposition of fines, other penalties (including administrative penalties and regulatory prosecution), and government orders, which could potentially have a material adverse effect on operations.

EH&S laws require the Corporation to obtain certain operating licenses and impose certain standards and controls on the Corporation’s activities, and on the Corporation’s distribution and marketing of its products. Compliance with EH&S laws and operating licenses can require significant expenditures, including expenditures for pollution control equipment, clean-up costs and damages arising out of contaminated properties or as a result of other adverse environmental occurrences. There can be no assurance that the costs to ensure future or current compliance with EH&S laws would not materially affect the Corporation’s business, results of operations or financial performance.

The Corporation must comply with a variety of EH&S laws that restrict air emissions. Because many of the Corporation’s mining, drilling and processing activities generate air emissions from various sources, compliance with EH&S laws requires the Corporation to make investments in pollution control equipment and to report to the relevant government authorities if any emissions limits are exceeded. The Corporation is also required to comply with a similar regime with respect to its wastewater. EH&S laws restrict the amount of pollutants that the Corporation’s facilities can discharge into receiving bodies of water, such as groundwater, rivers, lakes and oceans, and into municipal sanitary and storm sewers. Other EH&S laws regulate the generation, storage, transport and disposal of hazardous wastes and generally require that such waste be transported by an approved hauler and delivered to an approved recycler or waste disposal site. Regulatory authorities can enforce these and other EH&S laws through administrative orders to control, prevent or stop a certain activity; administrative penalties for violating certain EH&S laws; and regulatory proceedings.

In addition, the operations of the Ambatovy Joint Venture in Madagascar are conducted in environmentally sensitive areas. In particular, the mine footprint is partly on first growth forest and portions of the pipeline traverse environmentally sensitive areas. Although the Ambatovy Joint Venture believes it is currently in material compliance with applicable laws, there can be no guarantee that it will remain in compliance or that applicable laws or regulations will remain the same.

The Corporation’s tailings storage facilities are subject to various EH&S laws and/or applicable management practices that govern the design, operation, and closure of such facilities. Risks associated with the failure of the tailings storage facilities include but are not limited to: biological and land use impacts, material property and economic loss, serious health and safety impacts, regulatory censure, and public concern. The Corporation believes that it is taking every reasonable precaution to prevent failures of its tailings storage facilities however, there can be no assurance that such incidents will not occur or that such incidents would not have a material adverse effect on the Corporation’s business, results of operations or financial performance.

The Corporation assesses environmental impacts before initiating major new projects and before undertaking significant changes to existing operations. The approval process can entail public hearings and may be delayed or not achieved, reducing the ability of the Corporation to continue portions of its business at expanded or even existing levels. Furthermore, the Corporation’s existing approvals could potentially be suspended, or future required approvals denied, which would reduce the ability of the Corporation to meet project schedules or cost objectives and to continue portions of its business at expanded or even existing levels.

The Corporation is subject to legal requirements governing the health and safety of the workforce. The Corporation believes that safe operations are essential for a productive and engaged workforce and sustainable growth. The Corporation is committed to workplace incident prevention and makes expenditures towards the necessary human and financial resources and site-specific systems to ensure compliance with its health and safety policies. Any injuries that may occur are investigated to determine root cause and to establish necessary controls with the goal of preventing recurrence. While the Corporation has implemented extensive health and safety initiatives to ensure the safety of its employees, contractors and surrounding communities, there can be no assurance that such measures will eliminate the occurrence of accidents or other incidences which could result in personal injury or property damage or result in regulatory fines or civil suits.

New or amended EH&S laws may further require the protection and enhancement of the environment, and, as a consequence, mining activities may be even more closely regulated. Such legislation and changes to legislation, as well as future interpretations of laws and increased enforcement, may require substantial increases in mining equipment and operating costs and delays, interruptions or a termination of operations, the extent of which cannot be predicted.

on the Corporation’s financial condition, product demand and methods of production and distribution. Independently and through involvement in various associations, the Corporation responds to potential changes to EH&S laws by participating, as appropriate, in the public review process, thus ensuring the Corporation’s position is understood and considered in the decision-making process. The Corporation seeks to anticipate and prepare for public and regulatory concerns well in advance of such projects. Communication with regulators and the public is considered a key tool in gaining acceptance and approval for new projects.

CLIMATE CHANGE/GREENHOUSE GAS EMISSIONS

The federal government has repeatedly announced its intention to implement a regulatory framework that would require significant reductions of GHG emissions by Canada’s largest industrial sectors. This includes the industrial sectors to which the Corporation provides its products, the majority of the facilities in Canada from which the Corporation ultimately obtains power, and some of the Corporation’s facilities.

In addition, various Canadian provincial governments and other regional initiatives are moving ahead with GHG reduction and other initiatives designed to address climate change. Given the present uncertainty around the practical application of specific provisions in any federal regulations and the impact of other provincial or regional initiatives, it is not yet possible to estimate with specificity the impact to the Corporation’s operations. However, the Corporation’s Canadian operations are large facilities, so the establishment of emissions regulations (whether in the manner described above or otherwise) may well affect them and may have a material adverse effect on the Corporation’s business, results of operations and financial performance. In addition, the Corporation’s operations require large quantities of power and future taxes on or regulation of power producers or the production of oil and gas or other products may also add to the Corporation’s operating costs.

COMMUNITY RELATIONS AND SOCIAL LICENSE TO GROW AND OPERATE

The Corporation’s relationship with the communities in which it operates is critical to ensure the future success of its existing operations and the further development of its projects. There is an increasing level of public concern relating to the perceived effect of mining activities on the environment and on communities impacted by such activities. Certain organizations and individuals are vocal critics of the resource industries and their practices. Adverse publicity generated by such organizations or individuals related to extractive industries generally, or to the Corporation’s operations specifically, could have an adverse effect on the Corporation’s reputation or financial condition and may impact its relationship with the communities in which it operates. While the Corporation is committed to sustainable practices and has implemented certain initiatives with respect thereto, there is no guarantee that the Corporation’s efforts will mitigate this potential risk.

CREDIT RISK

Sherritt’s sales of nickel, cobalt, oil, gas and electricity expose the Corporation to the risk of non-payment by customers. Sherritt manages this risk by monitoring the creditworthiness of its customers, covering some exposure through receivables insurance, documentary credit and seeking prepayment or other forms of payment security from customers with an unacceptable level of credit risk. There are also certain credit risks that arise due to the fact that all sales of oil and electricity in Cuba are made to agencies of the Cuban government (see “Risks Related to Sherritt’s Operations in Cuba”). Additionally, there are credit risks that arise due to the fact that there are currently value-added tax receivables and receivables related to the Corporation’s Power business that are outstanding from the Malagasy government (see “Risks Related to Sherritt’s Operations in Madagascar”). Although Sherritt seeks to manage its credit risk exposure, there can be no assurance that the Corporation will be successful in eliminating the potential material adverse impacts of such risks.

SHORTAGE OF EQUIPMENT AND SUPPLIES

The global demand for some of the equipment and related goods used in Sherritt’s operations vary and may exceed supply. If equipment or other supplies cannot be procured on a timely or competitive basis, Sherritt’s expansion activities, production, development or operations could be negatively affected.

COMPETITION IN PRODUCT MARKETS

The business of mining, processing and refining is intensely competitive and even if commercial quantities of mineral resources are developed, a profitable market may not exist for the sale of these commodities. Sherritt competes with companies that may have greater assets and financial resources, and may be able to sustain larger losses than Sherritt to develop or continue business. The Corporation’s competitive position is determined by its costs in comparison to those of other producers in the world. If Sherritt’s costs increase relative to its competitors, its earnings may be adversely affected.

FUTURE MARKET ACCESS

Sherritt’s access to markets in which it operates may be subject to ongoing interruptions and trade barriers due to policies and tariffs of individual countries and the actions of interest groups to restrict the import of certain commodities. There can be no assurance that Sherritt’s access to these markets will not be restricted.

INTEREST RATE CHANGES

The Corporation’s exposure to changes in interest rates results from investing and borrowing activities undertaken to manage its liquidity and capital requirements. The Corporation has incurred indebtedness that bears interest at fixed and floating rates. There can be no assurance that the Corporation will not be adversely affected by interest rate changes.

INSURABLE RISK

Sherritt employs risk management practices to reduce and mitigate operational risks and other hazard risks and exposures, although it is impossible to completely protect its operations from all such risks. The Corporation places types and an amount of insurance that it considers consistent with industry practice to the extent coverage is available and cost effective. Such coverage includes third-party liability insurance and property and business interruption insurance. Such insurance, however, contains exclusions and limitations on coverage. Accordingly, the Corporation’s insurance policies may not provide coverage for all losses related to the Corporation’s business. The occurrence of losses, liabilities or damage not covered by insurance policies could have a material adverse effect on the Corporation’s business, results of operations and financial performance.

Sherritt cannot be certain that insurance will be available to the Corporation, or that appropriate insurance will be available on terms and conditions acceptable to the Corporation. The difficulty in obtaining certain levels of insurance has increased over time as a result of reduced market capacity due to the limited participation of insurers in certain industries and also Caribbean- and Madagascar-based risks. In some cases, coverage is not available or considered too expensive relative to the perceived risk. The Corporation may also become liable for damages arising from unforeseen events which it cannot insure or chooses to self-insure. Costs incurred to repair uninsured damage or to pay associated liabilities may have a material adverse effect on the Corporation’s business, results of operation and financial performance.

LABOUR RELATIONS

Some of the Corporation’s employees are unionized. Strikes, lockouts or other work stoppages could have a material adverse effect on the Corporation’s business, results of operations and financial performance. In addition, any work stoppage or labour disruption at key customers or service providers could impede the Corporation’s ability to supply products, to receive critical equipment and supplies for its operations or to collect payment from customers encountering labour disruptions. Work stoppages or other labour disruptions could increase the Corporation’s costs or impede its ability to operate one or more of its operations.

In 2015, Sherritt reported two separate instances of labour disruption at the Ambatovy Joint Venture, one being at the mine site and one being at the plant site. Both of the strikes were of relatively short duration, and involving only part of the work force. However, as organized labour develops in Madagascar, future grievances could also result in strikes or other labour disruptions.

LEGAL RIGHTS

arbitration. If Sherritt is unsuccessful in enforcing its rights under the agreements to which it is a party, it could have a material adverse effect on Sherritt’s business, results of operations and financial performance.

LEGAL CONTINGENCIES

Sherritt may become party to legal claims arising in the ordinary course of business, including as a result of activities of joint ventures in which it has an interest. There can be no assurance that unforeseen circumstances resulting in legal claims will not result in significant costs.

ACCOUNTING POLICIES

The Corporation’s audited consolidated financial statements for the year ended December 31, 2015, filed on SEDAR, were prepared using accounting policies and methods prescribed by IFRS as issued by the International Accounting Standards Board. Significant accounting policies under IFRS are described in more detail in the notes to the audited consolidated financial statements.

Sherritt has internal controls over financial reporting. These controls are designed to provide reasonable assurance that transactions are properly authorized, assets are safeguarded against unauthorized or improper use, and transactions are properly recorded and reported. These controls cannot provide absolute assurance with respect to the reliability of financial reporting and financial statement preparation.

RISKS ASSOCIATED WITH FUTURE ACQUISITIONS

Sherritt continually examines opportunities to replace and expand its reserves through the exploration of its existing properties and through acquisitions of interests in new properties or of interests in companies which own such properties. The development of Sherritt’s business will be in part dependent on management’s ability to identify, acquire and develop suitable acquisition targets in both new and existing markets. In certain circumstances, acceptable acquisition targets might not be available. Sherritt may also not be able to identify suitable partners with whom it could make such acquisitions. Acquisitions involve a number of risks, including: (i) the possibility that the Corporation, as a successor owner, may be legally and financially responsible for liabilities of prior owners; (ii) the possibility that the Corporation may pay more than the acquired company or assets are worth; (iii) the additional expenses associated with completing an acquisition and amortizing any acquired intangible assets; (iv) the difficulty of integrating the operations and personnel of an acquired business; (v) the challenge of implementing uniform standards, controls, procedures and policies throughout an acquired business; (vi) the inability to integrate, train, retain and motivate key personnel of an acquired business; and (vii) the potential disruption of the Corporation’s ongoing business and the distraction of management from its day-to-day operations. These risks and difficulties, if they materialize, could disrupt the Corporation’s ongoing business, distract management, result in the loss of key personnel, increase expenses and otherwise have a material adverse effect on the Corporation’s business, results of operations and financial performance.

GOVERNMENT PERMITS

Government approvals and permits are currently required in connection with a number of the Corporation’s activities and further approvals and permits may be required. The duration and success of the Corporation’s efforts to obtain permits are contingent upon many variables outside of the Corporation’s control. Obtaining government permits may increase costs and cause delays depending on the nature of the activity to be permitted and the interpretation of applicable requirements implemented by the permitting authority. There can be no assurance that all necessary permits will be obtained and, if obtained, that the costs involved will not exceed the Corporation’s estimates or that the Corporation will be able to maintain such permits. To the extent such approvals are not obtained or maintained, the Corporation may be prohibited from proceeding with planned drilling, exploration, development or operation of properties which could have a material adverse effect on the Corporation’s business, results of operations and financial performance.

GOVERNMENT REGULATION

activities are also subject to various laws and regulations relating to the protection of the environment. Although the Corporation believes that its activities are currently carried out in all material respects in accordance with applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner that could limit or curtail production or development of the Corporation’s properties or otherwise have a material adverse effect on the Corporation’s business, results of operations and financial performance.

ANTI-CORRUPTION AND BRIBERY

Sherritt is subject to Canada’s Corruption of Foreign Public Officials Act (“CFPOA”), as well as various local anti-corruption laws. The CFPOA prohibits Canadian (and Canadian-controlled) corporations and their intermediaries from making or offering to make an improper payment of any kind to any kind of foreign public official, or any other person for the benefit of foreign public official, where the ultimate purpose is to obtain or retain a business advantage.

Sherritt’s Anti-Corruption Policy prohibits the violation of the CFPOA and other applicable anti-corruption laws. Some of the Corporation’s operations are located in jurisdictions where governmental and commercial corruption presents a significant risk. The Corporation uses a risk-based approach to mitigate risks associated with corruption which includes training for employees and the logging of government payments. Despite the safeguards the Corporation has put in place, there can be no assurance that violations of the CFPOA or other applicable anti-corruption law by the Corporation, its employees or agents will not occur. Such violations of the CFPOA could result in substantial civil and criminal penalties and could have a material adverse effect on the business, operations or financial results of the Corporation.

MANAGEMENT OF GROWTH

In order to manage its current operations and any future growth effectively, the Corporation will need to continue to implement and improve its operational, financial and management information systems and to hire, train, motivate, manage and retain its employees. If and when any such growth occurs, there can be no assurance that the Corporation will be able to manage such growth effectively, that its management, personnel or systems will be adequate to support the Corporation’s operations or that the Corporation will be able to achieve the increased levels of revenue commensurate with increased levels of operating expenses associated with this growth, and failure to do so could have an adverse effect on the Corporation’s business, financial condition and results of operations.

3.8 Other Disclosure Relating to Operations in Emerging Markets

Controls Relating to Corporate Structure Risk

The Corporation has adopted several measures to ensure control of its wholly-owned subsidiaries and oversight of its non-controlled joint ventures. These measures are overseen by the Board, and implemented by the Corporation’s senior management. Some of these measures are listed below.

Corporation’s Control and Oversight of Subsidiaries and Joint Ventures

The Corporation’s corporate structure has been designed to ensure that the Corporation controls, or has a measure of direct oversight over the operations of its subsidiaries and material joint ventures. Sherritt’s subsidiaries which are engaged in its Oil and Gas and Power businesses in Cuba and elsewhere are wholly-owned by the Corporation and the Corporation directly controls the appointment of all the directors of these subsidiaries. In the case of the Corporation’s material joint ventures Cuba and Madagascar, the Corporation directly controls the appointment of a number of directors (or, in the case of the Ambatovy Joint Venture, assuming it is not a Defaulting Shareholder pursuant to the Shareholders Agreement, may appoint members to vote on the Executive Committee which controls AMSA and DMSA) which reflects its proportional ownership interest of its subsidiaries. The directors of the Corporation’s subsidiaries or joint ventures who are appointed by the Corporation are ultimately accountable to the Corporation (as the shareholder appointing him or her), and therefore are accountable to the Board and senior management.

Appointment of Local Management

The Corporation’s foreign subsidiaries which are engaged in its Oil and Gas and Power businesses are typically managed by a senior officer or employee of the Corporation who holds the most senior title or second most senior title in the local organization.

In the case of the Ambatovy Joint Venture, the Corporation exercises effective operating control of the local day-to-day operations through an operating agreement. The CEO of the Ambatovy Joint Venture, Tim Dobson, is also a Senior Vice President of Sherritt and reports directly to the Corporation. The Executive Committee, on which Sherritt has proportional representation (so long as it is not a Defaulting Shareholder), must approve the appointment of the CEO and is responsible for approving the higher level decisions of the Ambatovy Joint Venture.

In addition, in the case of its material joint ventures, Sherritt has personnel seconded from the Corporation to the local organization and resident in the local jurisdiction, which ensures a degree of oversight and control in the day-to-day operations which would not be present in a passive investment.

Strategic Direction

The Board is responsible for the overall stewardship of the Corporation and, as such, supervises the management of the business and affairs of the Corporation. More specifically, the Board is responsible for reviewing the strategic business plans and corporate objectives, and approving acquisitions, dispositions, investments, capital expenditures and other transactions and matters that are thought to be material to the Corporation including those of its material subsidiaries and joint ventures.

Internal Controls over Financial Reporting

For significant operations in the foreign jurisdictions over which the Corporation has operational control (“foreign operations”), internal controls over financial reporting are designed to operate in accordance with Canadian business, accounting and internal control standards and practices. These foreign operations are subject to the same internal reporting processes, policies and timelines as the Corporation’s domestic operations, specifically:

(i) Foreign operations, specifically in Cuba and Madagascar, are under the senior leadership of persons or expatriates familiar with Canadian business, accounting and internal control standards and practices;

(ii) The Corporation has established and oversees entity-wide policies and procedures which are applicable to all domestic and foreign operations;

(iii) Each of the Corporation’s foreign operations has its own audit committee which includes representation from the Corporation’s management or from Canadian-based senior management;

(iv) Foreign operations have a compliance department which undertakes periodic reviews of operations in accordance with the Corporation’s compliance program. This program is directly overseen by corporate management who report to the Corporation’s Audit Committee;

(v) Each of the Corporation’s foreign operations has an established National Instrument 52-109 — Certification of Disclosure in Issuers’ Annual and Interim Filings (“NI 52-109”) internal control over financial reporting evaluation program (overseen by corporate management) designed to address risks and identify controls specific to the local business, cultural and accounting environment;

(vi) As part of its quarterly reporting process, the Corporation’s foreign operations’ management are required to provide corporate management with certifications based on Form 52-109F2, quarterly, and Form 52-109F1, annually. These certifications confirm that internal controls over financial reporting for the foreign operations are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements of the foreign operations in accordance with the Corporation’s generally accepted accounting principles. In addition, the foreign

operations’ management are required to report to corporate management any material weaknesses in internal control over financial reporting design and/or operating effectiveness;

(vii) Internal control over financial reporting design and operating effectiveness at the foreign operations is evaluated annually by applying the Committee of Sponsoring Commissions of the Treadway Commission (COSO-2013) framework consistent with the Corporation’s domestic operations;

(viii) The Corporation’s management reviews the foreign operations’ reporting documents, certifications, disclosure controls and procedures checklists and internal control over financial reporting design/results of effectiveness testing memos and provides reports, as necessary, to the Board of Directors;

(ix) Reporting documents containing material information of the foreign operations are reviewed quarterly by the Corporation’s senior management and the Audit Committee;

(x) Management undertakes independent, periodic reviews of the foreign operations’ NI 52-109 compliance and reports to the Audit Committee;

(xi) Periodic internal control reviews of the foreign operations are initiated by the Board of Directors using the Corporation’s independent internal audit department (separate from the Corporation’s NI 52-109 internal control over financial reporting compliance program) in accordance with identified priorities as per the annual internal audit plan; and

(xii) The Corporation has established, among other policies governing operating activities, a code of conduct, reportable concerns and foreign anti-corruption policies which are applicable to the foreign operations.

The Corporation has also taken steps to ensure that it is collecting the information required to comply with the Extractive Sectors Transparency Measures Act (“ESTMA”) which came into force on June 1, 2015 and applies to the parts of the Corporation’s business engaged in extractive activities.

Fund Transfers to the Corporation

Cash management is overseen by the Corporation’s Canadian-based treasury department and in accordance with the Corporation’s Delegation of Authority Policy. In addition to the internal control procedures identified above, the Corporation has implemented the following controls specific to the flow of funds between Canada and its foreign operations:

(i) the Corporation’s treasury department oversees or reviews the cash management policies specific to the foreign operations; and

(ii) annually, operating effectiveness of cash management controls for the Corporation and its foreign operations are evaluated and, as necessary, results are reported to the Board as part of the Corporation’s annual CEO/CFO certification process.

The Corporation’s Anti-Corruption Policy contains specific references to prohibited uses of funds in foreign countries.

Funds are transferred by the foreign subsidiaries to the Corporation pursuant to a variety of methods. In the case of wholly-owned subsidiaries, the Corporation has majority control of the boards of directors and therefore through the actions of the shareholders or boards of directors, is able to determine if and when funds are distributed. Funds are typically distributed, when available and appropriate, to the shareholders by way of dividends. Other distributions are made to repay principal and interest in accordance with various agreements between the Corporation and the subsidiaries or joint ventures.

In addition, the foreign subsidiaries may transfer funds to the Corporation for chargeback of costs undertaken on behalf of the foreign subsidiaries via intercompany invoices by the Corporation and repayment of loans related to project funding. The method of transfer varies and is dependent on the funding arrangement established between the Corporation and the applicable foreign subsidiary.

Removal of Directors of Subsidiaries

The removal of directors of subsidiaries is done in accordance with the laws of the jurisdiction in which the particular subsidiary is incorporated.

The agreements governing the operations of the Corporation’s joint ventures set out the rights of the shareholders relating to the appointment and removal of directors of the applicable boards which are based on the Corporation’s proportional ownership interest in each joint venture company.

Records Management of the Corporation and its Subsidiaries

The original minute books and corporate seals, where applicable, of the material foreign subsidiaries and joint ventures are kept at the offices of their representative agent in the local jurisdiction and/or the Corporation’s head office in Toronto.

The corporate records of the material foreign subsidiaries and joint venture are maintained at their registered offices or operating sites. In certain circumstances, e.g., transaction record books, copies are also maintained at the Corporation’s head office in Toronto.

4. Dividends

Dividends are payable on the Shares of the Corporation if and when declared by the Board.

Dividends are, and future dividends will be, designated as “eligible dividends” within the meaning given to that term in subsection 89(1) of the Income Tax Act (Canada).

As part of a comprehensive initiative to manage liquidity, the Board suspended the $0.01 per share quarterly dividend, effective September 2015.

Total dividends per Share declared by the Corporation in the three years ended December 31, 2015 are as follows:

Year	Total Dividends per Common Share
2013	$	0.172
2014	$	0.040
2015	$	0.020

5. Capital Structure

The Corporation’s authorized share capital consists of an unlimited number of Shares. Each Share is entitled to one vote with respect to matters brought before shareholders for approval. In the event of dissolution, liquidation or winding up of the Corporation, whether voluntary or involuntary, or any other distribution of assets of the Corporation among its shareholders for the purpose of winding up its affairs, holders of the Shares will be entitled to receive the remaining property and assets of the Corporation.

The Corporation also has several series of senior unsecured debentures outstanding:

(a) the 8.00% Debentures ($400 million in aggregate principal) issued November 2, 2011 pursuant to a trust indenture dated November, 2011 between the Corporation and Computershare Trust Company of Canada, as trustee (as amended or supplemented, the “2011 Indenture”) and a first supplemental indenture dated November 2, 2011. On October 10, 2014

the Corporation completed the purchase of $150 million of the 8.00% Debentures and certain amendments to the 2011 Indenture (the “2014 Amendments”) were adopted;

(b) the 7.50% Debentures ($500 million in aggregate principal) issued September 24, 2012 pursuant to the 2011 Indenture and a second supplemental indenture dated September 24, 2012, as amended by the 2014 Amendments (the “Amended Indenture”). The Corporation completed the purchase of $250 million of the 7.50% Debentures on October 10, 2014;

(c) the 7.875% Debentures ($250 million in aggregate principal) issued October 10, 2014, pursuant to the Amended Indenture.

As of December 31, 2015, $250 million principal amount of the 8.00% Debentures, $250 million of the principle amount of the 7.50% Debentures and $250 million principal amount of the 7.875% Debentures were outstanding. The Amended Indenture under which the Debentures are issued contains covenants limiting the Corporation’s ability and that of certain of its material subsidiaries to incur indebtedness, create certain security interests and sell assets, and restricting its ability and that of certain of its material subsidiaries to amalgamate or merge with a third party or transfer all or substantially all of its assets. The Indentures also contain covenants requiring an offer to purchase in a change in control.

The Amended Indenture contains optional redemption provisions and provide for customary events of default, which include non-payment of principal or interest, failure to comply with covenants, the bankruptcy or insolvency of the Corporation or a material subsidiary, unsatisfied final judgment against the Corporation or a material subsidiary in excess of 5% of the Corporation’s net worth, and failure by the Corporation or a material subsidiary to pay or otherwise comply with the terms of other indebtedness which singly or in the aggregate is in excess of 5% of the net worth of the Corporation, which default results in an acceleration of such indebtedness.

The Debentures are direct, unsecured obligations of the Corporation which rank equally and rateably with each other and all other unsecured and unsubordinated indebtedness of the Corporation, except to the extent prescribed by law.

Ratings

On October 14, 2015 DBRS downgraded Sherritt’s issuer rating and Debenture rating to B (stable) from BB (low), Negative.

DBRS’ rating system ranges between “AAA Highest” to “D In Arrears”. The definition of the B rating is published on DBRS’ web site and is defined as follows:

“Long-term debt rated B is defined to be highly speculative credit quality. The capacity for the payment of financial obligations is uncertain. Vulnerable to future events.”

Credit ratings are not recommendations to purchase, sell or hold a financial obligation in as much as they do not comment on market price or suitability for a particular investor. Ratings are subject to revision or withdrawal at any time by the rating organization.

Rating trends provide guidance in respect of DBRSs opinion regarding the outlook for the rating in question, with rating trends falling into one of three categories — “Positive”, “Stable” or “Negative”. The rating trend indicates the direction in which DBRS considers the rating is headed should present tendencies continue, or in some cases, unless challenges are addressed. In general, the DBRS view is based primarily on an evaluation of the issuing entity itself, but may also include consideration of the outlook for the industry or industries in which the issuing entity operates.

6. Market for Securities

Sherritt’s Shares are listed and posted for trading on the TSX under the symbol “S”. The Corporation’s 8.00% Debentures, the 7.50% Debentures and the 7.875% Debentures trade in the over-the-counter bond market.

The following table sets out the 2015 monthly price ranges and volume data for the Shares and the price ranges for the 8.00% Debentures, the 7.50% Debentures and the 7.875% Debentures

	Shares			8.00% Debentures(1)		7.50%% Debentures(1)		7.875% Debentures(1)
2015	High	Low	Volume	High	Low	High	Low	High	Low
January	3.01	2.00	21,774,700	99.00	97.00	95.00	93.00	94.00	91.50
February	2.61	2.05	24,281,500	98.00	97.00	93.50	92.00	92.00	91.00
March	2.58	2.01	19,844,100	98.60	97.25	93.75	92.00	92.50	91.50
April	2.44	2.05	26,118,500	98.00	97.20	94.75	92.00	92.25	91.50
May	3.24	2.33	40,058,600	98.25	98.00	95.38	94.75	92.75	92.25
June	2.64	2.04	18,821,500	98.25	98.00	95.25	94.75	92.75	92.25
July	2.25	1.32	33,117,700	98.00	93.00	94.50	89.25	92.25	86.25
August	1.38	0.94	29,811,500	93.00	76.00	89.25	73.00	86.25	69.00
September	1.21	0.72	46,905,400	76.00	64.00	73.00	62.00	69.00	59.50
October	1.15	0.72	26,108,200	64.00	62.00	62.00	60.00	60.00	58.00
November	0.96	0.72	19.129,100	62.00	59.00	61.00	58.00	59.00	57.00
December	0.81	0.63	18,839,800	60.00	56.00	58.50	54.00	58.00	52.00

Notes:

(1) The highs and the lows for the 8.00% Debentures, the 7.50% Debentures and the 7.875% Debentures are provided by a particular dealer and therefore may not reflect all trading in such debentures. Volume data is not available.

7. Directors and Officers

The following table sets forth, as at March 18, 2016, the names, province of residence and principal occupation of the directors of the Corporation and the period of service as a director of the Corporation.

Name and Province of Residence		Principal Occupation	Director Since
1)	Harold (Hap) Stephen(3) (Ontario, Canada)	Chairman and Chief Executive Officer of Stonecrest Capital Inc.; Chairman of the Corporation	May 2012
2)	Peter Gillin(2)(3)(4)(5) (Ontario, Canada)	Corporate Director	January 2010
3)	Sir Richard Lapthorne(2)(3) (London, England)	Corporate Director	September 2011
4)	Adrian Loader(1)(3)(5) (London, England)	Corporate Director	July 2013
5)	Edythe (Dee) Marcoux(3)(4)(5) (British Columbia, Canada)	Corporate Director	May 2006
6)	Timothy Baker(1)(3)(4) (Ontario, Canada)	Corporate Director	May 2014
7)	David Pathe (Ontario, Canada)	President and Chief Executive Officer of the Corporation	January 2012
8)	Lisa Pankratz(2)(3)(4) (British Columbia, Canada)	Corporate Director	November 2013

Notes:

(1) Member of the Reserves and Projects Committee.

(2) Member of the Audit Committee.

(3) Member of the Nominating and Corporate Governance Committee.

(4) Member of the Environment, Health, Safety and Sustainability Committee.

(5) Member of the Human Resources Committee.

Directors hold office until the next annual meeting of the shareholders of the Corporation.

The following sets out as at March 18, 2016 the principal occupations of the directors for the past five years and provides additional information about the directors:

Harold (Hap) Stephen has served as a director of the Corporation since May 2012. He currently serves as a director of TD Mutual Funds Corporate Class Ltd. and Algoma Central Corporation, a shipping company. Mr. Stephen is the Chairman and Chief Executive Officer of Stonecrest Capital Inc., a leading Canadian restructuring firm and a director of Stephen Capital Inc. He has served as Chief Restructuring Officer in the court-supervised restructurings of Grant Forest Products Inc., Canwest Global Communications Corporation, Stelco Inc., Mosaic Group Inc., Algoma Steel Inc., and Athletes World Inc. He advised the Office of the Superintendent of Financial Institutions on the pension plan issues related to the Air Canada restructuring. He also acted as Chairman of a Special Committee reporting to the Minister of National Defence with a mandate to review the structure and operations of the Department of National Defence and provide recommendations to lower operating costs and improve efficiency. Mr. Stephen also served as Chairman of Repap Enterprises Inc., a pulp and paper producer with operations in Canada and the United States from June 1999 to November 2000 and Executive Vice President and CFO of T. Eaton Company Limited from October 1997 to October 1999. From 1977 to 1997 he was a partner of Ernst & Young and from 1985 to 1997 was responsible for the management of Ernst & Young’s financial restructuring and corporate finance practices.

Mr. Stephen is a Chartered Professional Accountant and a Chartered Accountant. He is currently serving as a member of the Independent Review Committee of TD Asset Management Inc.

Timothy Baker has served as a director of the Corporation since May 2014. He currently serves as a director of Antofagasta PLC and is also Chairman of Golden Star Resources Ltd. Mr. Baker retired from his positions as Executive Vice President and Chief Operating Officer of Kinross Gold Corporation in October 2010. Prior to joining Kinross in 2006, Mr. Baker was with Placer Dome, where he served in several key roles including Executive General Manager of Placer Dome Chile and of Placer Dome Tanzania, and Senior Vice President of the copper producing Compania Minera Zaldivar. Mr. Baker also served as a director of Pacific Rim Mining Corp. (until November 2013), Augusta Resource Corporation (until October 2014) and Eldorado Gold Corporation (until December 2012). Mr. Baker holds a B.Sc. (Geology) and the ICD.D certification from the Institute of Corporate Directors.

Peter Gillin has served as a director of the Corporation since January 1, 2010. He is currently a director of Silver Wheaton Corp., Dundee Precious Metals Inc., TD Mutual Funds Corporate Class Ltd., Turquoise Hill Resources Ltd. (formerly Ivanhoe Mines Inc.) and Barlow Mine Inc. and has been a member of the Independent Review Committee of TD Asset Management Inc. since 2003. Mr. Gillin also served as a director of HudBay Minerals Inc. from April 2008 to March 2009. From October 2003 to September 2008, Mr. Gillin served as Chairman and Chief Executive Officer of Tahera Diamond Corporation (“Tahera”), a diamond exploration, development and production company. In January 2008, Tahera filed for protection under the CCAA. As a consequence of its financial difficulties, Tahera failed to file financial statements for the year ended December 31, 2007 and subsequent financial periods. As a result, Tahera was delisted from the TSX in November 2009 and issuer cease trade orders were issued in 2010 by the securities regulatory authorities of Ontario, Quebec, Alberta and British Columbia, which orders have not been revoked. Tahera subsequently sold its tax assets to Ag Growth International and certain properties, including the Jericho diamond mine, to Shear Minerals Ltd., and the monitoring process under the CCAA concluded by order of the Superior Court of Justice in September 2010. From October 2002 to March 2003, Mr. Gillin was President and Chief Executive Officer of Zemex Corp, an industrial minerals producer. Prior thereto, Mr. Gillin served as Vice Chairman of NM Rothschild and Sons Canada Limited. Mr. Gillin is a CFA and also holds the ICD.D certification from the Institute of Corporate Directors.

Sir Richard Lapthorne has served as a director of the Corporation since September 2011. He has served as a Finance Director or as Chairman of various FTSE 100 and non-quoted companies in the United Kingdom since 1986, and is an advisor to and Chair of the Public Interest Body of PricewaterhouseCoopers. He is currently Chairman of Cable & Wireless Communications plc and Cable & Wireless plc. Between June 2009 and April 2010, he served as Chairman of McLaren Group Limited. From 1996 to May 2003 he was Chairman of Amersham International plc (now GE Healthcare) having joined its board as a Non-executive Director in 1989. He was Finance Director of British Aerospace plc from July 1992 and Vice Chairman from April 1998 until his retirement in 1999. He is also a fellow of each of the Chartered Institute of Management Accountants, Chartered Institute of Certified Accountants and the Institute of Corporate Treasurers in the United Kingdom.

Adrian Loader has served as a director of the Corporation since July 2013. He has extensive international experience from Royal Dutch Shell in energy management, projects, strategy, business development and new market entry. Mr. Loader held regional responsibility for Royal Dutch Shell’s operations in Latin America/Africa, Middle East/Far East and Europe. He was subsequently the Royal Dutch Shell Director responsible for Strategy and Business Development, as well as for Scenarios, Group Planning, Health, Safety & Environment, and External Affairs. Before retiring from Royal Dutch Shell at the end of 2007, Mr. Loader served as President and Chief Executive Officer of Shell Canada (“Shell Canada”) where he was responsible, inter alia, for Shell Canada’s oil sands open pit mining activities and their expansion. Mr. Loader has served on the following public company boards — Alliance-Unichem, Shell Canada Ltd., Alliance-Boots, Candax Energy Inc. and Compton Petroleum. In January 2008, he joined the Board of Toronto-based Candax Energy Inc. and was Chairman until June 2010. He then served as Chairman of Compton Petroleum, Calgary, until August 2012. He is currently Chairman of the Board of Directors of Oracle Coalfields PLC, London (an international coal developer in Pakistan) as well as director of LarfargeHolcim Ltd. (a Swiss global supplier of cement and aggregates) and Alderon Iron Ore Corp. (a Canadian iron ore project developer). Mr. Loader is a Fellow of the Chartered Institute of Personnel and Development and holds a Master’s degree in History from Cambridge University, England.

Edythe (Dee) Marcoux has served as a director of the Corporation since May 2006. Ms. Marcoux, Bachelor of Applied Science (Metallurgical Engineering), M.B.A, is a retired executive, with over 30 years’ experience in the energy industry and five years’ experience in the mineral industry. Ms. Marcoux served as director on the boards of SNC (until May 2013), OPTI Canada Inc. (“OPTI”) (until November 2011) and Placer Dome Inc. (until January 2006). On July 13, 2011, OPTI commenced proceedings for creditor protection under the CCAA. The TSX delisted OPTI’s common shares on August 26, 2011. The TSX approved the listing of

OPTI’s common shares on the TSXV which commenced trading on August 29, 2011. OPTI’s common shares were subsequently delisted from the TSXV at the close of business on November 29, 2011, following the closing of the acquisition of OPTI’s second lien notes and all of the outstanding shares of OPTI by indirect wholly-owned subsidiaries of CNOOC Limited.

From 2003 until 2005, she served as a strategic consultant and advisor to Ensyn Petroleum Inc. and held an ownership position in Ensyn Energy Inc. until 2005 when Ensyn Petroleum was purchased by Ivanhoe Energy Inc. From 1998 to 2003, Ms. Marcoux worked as a consultant and served on the board of Southern Pacific Petroleum NL, a company developing shale oil resources in Australia. From 1998 to 2002, Ms. Marcoux served in varying capacities with Ensyn Group Inc., a company developing heavy oil upgrading technology. She held the position of President and CEO of Ensyn Energy Corp during this period.

Ms. Marcoux previously worked for: Gulf Canada, as President of Heavy Oil (1997-1998); CS Resources as President (1996-1997); Suncor (1991-1996) as Executive Vice-President of Oil Sands Group; Ontario Hydro (1990- 1991) in supply and services; PetroCanada (1983-1990) in business development and refinery management; and Imperial Oil Ltd. (1976-1983) in process and project engineering, logistics and finance.

Lisa Pankratz has served as a director of the Corporation since November 2013. Ms. Pankratz has over 28 years’ experience in the investment industry and capital markets in both executive and advisory capacities working with multinational and international companies. For over 14 years, she has served as a board member of corporations in the financial services and global media industries. Ms. Pankratz currently serves on the boards of IA Clarington Investments Inc., CIR Investment Research Ltd., UBC Investment Management Trust Inc. and the Canadian Museum for Human Rights. Ms. Pankratz is also a member of the HSBC Independent Review Committee of HSBC Global Asset Management (Canada) Limited and an advisor to the investment committees of Pacific Blue Cross and BC Life & Casualty Company

She previously served on the boards Canwest Media, Inc. (2005-2008), The Insurance Corporation of British Columbia (2001-2007), and was a member of the Accounting Policy and Advisory Committee advising the Ministry of Finance for the Province of British Columbia (2002-2004). From 2006 to 2010, Ms. Pankratz served as the President of Mackenzie Cundill Investment Management Ltd. and from 2002 until 2006 as the President, Chief Compliance Officer and Director of Cundill Investment Research Ltd. and the Chief Compliance Officer of The Cundill Group.

Ms. Pankratz also served on the board of CanWest Global Communications Corp. from 2005 until her resignation in February 2010. CanWest Global Communications Group filed for court protection from its creditors October 2009. CanWest’s newspaper subsidiary filed separately under the CCAA in January 2010.

Ms. Pankratz is a Fellow of the Institute of Chartered Professional Accountants of British Columbia and a Chartered Financial Analyst charter holder. She received an Honours Bachelor of Arts in Business Administration from the Richard Ivey School of Business at the University of Western Ontario.

David Pathe has served as a director of the Corporation since January 2012. Mr. Pathe was appointed as President and Chief Executive Officer of the Corporation effective January 1, 2012. Prior to that, Mr. Pathe served as Senior Vice President, Finance and Chief Financial Officer of the Corporation from March 2011, as Senior Vice President, General Counsel and Corporate Secretary from July 2009, as Vice President, General Counsel and Corporate Secretary from October 2008 and as Assistant General Counsel and Assistant Corporate Secretary from June 2007.

The following table sets forth as at March 18, 2016 the names, province of residence and office of the executive officers of the Corporation.

Name and Province of Residence		Office with the Corporation
1.	Harold (Hap) Stephen (Ontario, Canada)	Chairman
2.	David Pathe (Ontario, Canada)	President and Chief Executive Officer
3.	Stephen Wood (Ontario, Canada)	Executive Vice-President and Chief Operating Officer
4.	Dean Chambers (Ontario, Canada)	Executive Vice President and Chief Financial Officer
5.	Timothy Dobson (Toamasina, Madagascar)	Senior Vice President, Ambatovy
6.	Elvin Saruk (Alberta, Canada)	Senior Vice President, Oil & Gas and Power
7.	Edward (Ward) Sellers (Ontario, Canada)	Senior Vice President, General Counsel and Corporate Secretary
8.	Karen Trenton (Ontario, Canada)	Senior Vice President, Human Resources
9.	Martin Vydra (Alberta, Canada)	Senior Vice President, Metals

The following sets out as at March 18, 2016, the principal occupations of the executive officers (other than Mr. Stephen and Mr. Pathe, in respect of whom information is provided above) for the past five years:

Dean Chambers was appointed Executive Vice President and Chief Financial Officer effective December 10, 2012. Prior to that, Mr. Chambers served as Executive Vice President, Development from February 1, 2012. Prior to that, Mr. Chambers served as Senior Vice President and Chief Operating Officer from March 1, 2011, having previously served as Senior Vice President, Finance and Chief Financial Officer from November 2007 and as Managing Director, Finance from June 2007.

Timothy Dobson was appointed Senior Vice President, Ambatovy effective March 1, 2015, having previously served as Vice-President, Operations at the Ambatovy Joint Venture. Prior to joining the Ambatovy Joint Venture, Mr. Dobson served as the Project Executive for Southern Cross Goldfields Limited from August 2013 to May 2014 and as Managing Director/CEO of Anova Metals Limited/Kimberly Rare Earths Limited from June 2011 to August 2013.

Elvin Saruk was appointed Senior Vice President, Oil & Gas and Power effective April 3, 2012, having previously served as Senior Vice President, Ambatovy Construction from August 2009, and as Senior Vice President, Oil & Gas and Power from July, 2007.

Edward (Ward) Sellers was appointed Senior Vice President, General Counsel and Corporate Secretary effective October 9, 2013. Prior to joining the Corporation, Mr. Sellers was a partner in a major Canadian law firm from 1996, serving in various capacities, including as Co-Chair of the firm’s M&A group, and as head of its Montreal office and corporate department.

Karen Trenton was appointed Senior Vice President, Human Resources effective February 2014. Prior to this appointment, Ms. Trenton served as Vice President, Human Resources from February 2007.

Steve Wood was appointed Executive Vice-President and Chief Operating Officer in April 2015. Prior to joining the Corporation, Mr. Wood served as the President and CEO of ArcelorMittal Mining Canada G.P. from February 2013 and Vice-President, ArcelorMittal from November 2011 until January 2013.

Martin Vydra was appointed Senior Vice President, Metals effective February 16, 2012. Prior to this appointment Mr. Vydra served as Managing Director, Sulawesi from October 2011 and Managing Director, Commercial Contracts and Marketing from February 2009.

The number and percentage of voting securities of the Corporation beneficially owned, directly or indirectly, or over which control or direction is exercised by all directors and executive officers of the Corporation as a group, as at March 18, 2015, was as follows:

Security		Number of voting securities		Approximate percentage of outstanding voting securities(1)
Common shares		872,005		0.29	%

(1) Sherritt had 293,880,001 Shares issued and outstanding as of March 18, 2016.

Effective September 19, 2014, the non-executive director shareholder requirement increased from three times to five times, the cash component of non-executive director annual remuneration which is required to be held in either common shares or director deferred share units (“DDSUs”). Each non-executive director has 5 years from the later of: (1) the date of election or appointment to the board; and (2) the date of the policy change to comply with the policy. For purposes of determining compliance with the non-executive director share ownership policy Shares owned and/or controlled by the non-executive director along with DDSUs are valued using the greater of the acquisition/grant date value and the market value on December 31. The number of DDSUs granted to each non-executive director is calculated by dividing the compensation value of the award by the market price in respect of the specific acquisition/grant date. The number of DDSUs held by all non-executive directors, as at March 18, 2016, was as follows:

Security		Number of securities
Directors’ Deferred Share Units		1,029,054

8. Transfer Agent and Registrar

The Corporation’s transfer agent and registrar for its Shares is CST Trust Company (“CST”). The Corporation’s transfer agent and registrar for its Debenture is Computershare Trust Company of Canada (“Computershare”). The location at which transfer of the Corporation’s securities may be affected by CST or Computershare (as applicable) is as follows:

Security		Transfer Locations
Shares		Toronto, Montreal, Calgary and Vancouver
8.00% Debentures		Toronto
7.50% Debentures		Toronto
7.875% Debentures		Toronto

9. Material Contracts

Set out below are descriptions of Sherritt’s material contracts, as filed on SEDAR (www.sedar.com).

Amended and Restated Indenture dated October 10, 2014 among Sherritt, certain Sherritt subsidiaries (as guarantors) and Computershare regarding the Debentures.

Third Amendment and Restatement of the Shareholders Agreement dated October 18, 2006, among Sherritt, Madagascar Mineral Investments Limited (“MMI”), KORES, SNC, SNC-Lavalin Madagascar Venture Inc., Sumitomo, Summit Ambatovy Mineral Resources Investment B.V. (“SAMRI”), DMSA and AMSA dated May 29, 2012, which governs, among other things, the manner in which AMSA, DMSA and the Ambatovy Joint Venture are managed.

Development Carry Finance Agreement among Sherritt, MMI, Dynatec Corporation (BVI) Inc. (“BVI”), the Export-Import Bank of Korea (K-EXIM) and KORES dated March 24, 2008, as amended by the Supplemental Agreement dated June 24, 2009, whereby KORES provided US$108 million in shareholder funding to Sherritt in connection with the Ambatovy Joint Venture as contemplated in the Shareholders Agreement.

Development Carry Finance Agreement among Sherritt, MMI, BVI, SAMRI and Sumitomo dated March 26, 2008, as amended by the Supplemental Agreement dated June 24, 2009, whereby SAMRI provided US$108 million in shareholder funding to Sherritt in connection with the Ambatovy Joint Venture as contemplated in the Shareholders Agreement.

Development Carry Finance Agreement among Sherritt, MMI, BVI and SNC dated March 26, 2008, as amended by the Supplemental Agreement dated June 24, 2009, whereby SNC provided US$20 million is shareholder funding to Sherritt in connection with the Ambatovy Joint Venture as contemplated in the Shareholders Agreement.

KORES Additional Loan Agreement dated June 24, 2009, among Sherritt, MMI, BVI, K-EXIM, KORES and Ambatovy Project Investments Ltd. (“APIL”), as amended and restated on April 8, 2011, whereby KORES provided an additional $275.4 million to APIL, as contemplated in the Shareholders Agreement, for the purpose of fulfilling Sherritt’s shareholder funding requirements in connection with the Ambatovy Joint Venture.

SAMRI Additional Loan Agreement dated June 24, 2009, among Sherritt, MMI, BVI, SAMRI and APIL, as amended and restated on April 8, 2011, whereby SAMRI provided APIL with an additional US$275.4 million, as contemplated in the Shareholders Agreement, for the purpose of fulfilling Sherritt’s shareholder funding requirement in connection with the Ambatovy Joint Venture.

Restated SNC Additional Loan Agreement dated June 24, 2009 among Sherritt, MMI, BVI, SNC-Lavalin Inc. and APIL, as amended and restated on April 8, 2011, whereby SNC provided APIL with an additional US$50.1 million as contemplated in the Shareholders Agreement, for the purpose of fulfilling Sherritt’s shareholder funding requirement in connection with the Ambatovy Joint Venture. This loan agreement was assigned to SAMRI upon Sumitomo’s purchase of SNC’s 5% interest in the Ambatovy Joint Venture.

10. Interest of Experts

Auditors

Deloitte LLP, Chartered Professional Accountants (“Deloitte”), are the Corporation’s auditors and have issued an opinion with respect to Sherritt’s consolidated financial statements as at and for the year ended December 31, 2015.

Deloitte are independent within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of Ontario.

Qualified Persons

The technical information regarding the Moa Joint Venture and the Ambatovy Joint Venture included in this AIF has been approved by R. Mohan Srivastava, B.Sc., M.Sc., P.Geo and has been included in reliance on Mr. Srivastava’s expertise. Mr. Srivastava is a “qualified person” as such term is defined in NI 43-101. P.M. Taylor, C. Eng. MEI, P.Eng., of McDaniel & Associates prepared a report pursuant to NI 51-101 relating to the Corporation’s oil and gas reserves presented in this AIF.

The Corporation has been advised that each of the foregoing experts holds less than 1% of the securities of any class issued by the Corporation.

11. Additional Information

Additional information relating to Sherritt may be found on SEDAR at www.sedar.com.

11.1 Additional Documents

Additional information, including directors’ and officers’ remuneration and indebtedness, principal holders of the Corporation’s securities and securities authorized for issuance under equity compensation plans, is contained in the Corporation’s information circular dated April 6, 2015 for its most recent annual meeting of shareholders held May 12, 2015 and involving the election of directors.

Additional financial information is provided in the Corporation’s financial statements and management’s discussion and analysis for the 2015 financial year, filed on SEDAR and available at www.sedar.com.

11.2 Audit Committee

The Audit Committee may from time to time request that an audit service proposal be sent to certain select audit firms, including the incumbent, and make a recommendation to the Board to propose the appointment by shareholders of a certain auditor. In early 2006, the Audit Committee received proposals. Following a review of the proposals, the Board accepted the recommendation of the Audit Committee to propose the appointment by shareholders of Deloitte, as auditor, which was approved by shareholders at the annual meeting held on May 25, 2006. The Corporation annually proposes, at shareholder meetings, the appointment of its auditor by shareholders.

The mandate of the Audit Committee, along with the mandates of the Board and all other committees of the Board, are reviewed annually. The current mandate of the Audit Committee is attached as Appendix I.

COMPOSITION OF THE AUDIT COMMITTEE

The members of the Audit Committee are: Mr. R. Peter Gillin (Chair), Sir Richard Lapthorne and Ms. Lisa Pankratz. Each member is independent and financially literate as those terms are defined in National Instrument 52- 110 — Audit Committees.

EDUCATION AND EXPERIENCE

Mr. Peter Gillin has served as Chair of the Audit Committee since May 2013 and has been a member of the Audit Committee since 2010. He has been a Chartered Financial Analyst since 1978 and has 35 years of experience in investment banking.

Sir Richard Lapthorne has served as a member of the Audit Committee since 2011. Sir Richard holds a Bachelor of Commerce, specialized in accounting and served as a Finance Director at various FTSE 100 companies between 1986 and 1998. Sir Richard is also a fellow of each of the Chartered Institute of Management Accountants, Chartered Institute of Certified Accountants and the Institute of Corporate Treasurers in the United Kingdom.

Ms. Pankratz has served as a member of the Audit Committee since November 2013. She is a Chartered Professional Accountant and a Chartered Financial Analyst. She is a Fellow of the Institute of Chartered Professional Accountants of British Columbia, and a member of the Institute of Chartered Professional Accountants of Ontario, the Vancouver Society of Financial Analysts, and the CFA Institute.

PRE-APPROVAL POLICIES AND PROCEDURES

In accordance with its mandate, the Audit Committee pre-approves the nature and fees of all non-audit services provided by the external auditor.

AUDIT FEES

The following table sets out total fees paid to the Corporation’s external auditor, Deloitte, Chartered Accountants, relating to audit fees, audit-related fees, tax fees and other fees during 2015 and 2014:

	2015		2014
Audit fees(1)	$	2,843,000	$	3,145,000
Audit-related fees(2)	$	14,000	$	629,000
Tax-related fees(3)	$	619,000	$	543,000
Other fees(4)	$	165,000	$	84,000
Total fees	$	3,641,000	$	4,401,000

Notes:

(1) Audit fees consist of fees for the audit and review of the Corporation’s annual and quarterly consolidated financial statements, respectively, or services that are normally provided in connection with statutory and regulatory filings or engagements. During 2015 and 2014, the services provided in this category included research of accounting and audit-related issues and assurance audits.

(2) Audit-related fees consist of fees for assurance and related services that are reasonably related to the performance of the audit or review of the Corporation’s consolidated financial statements and are not reported as audit fees. During 2014, the services provided in this category included additional assurance audits related to the disposition of the Corporation’s Coal operations.

(3) Tax-related fees consist of fees for assistance and advice in relation to the preparation of corporate income tax returns and expatriate services, other tax compliance and advisory services.

(4) Other fees related to data analysis and training and development consulting services.

Schedule ‘A’

Glossary of Terms

The following are brief explanations of certain terms and abbreviations used in this document:

“abandonment and reclamation costs” means all costs associated with the process of restoring a reporting issuer’s property that has been disturbed by oil and gas activities to a standard imposed by applicable government or regulatory authorities.

“API” or “degrees API” refers to the generally accepted measurement standard for the density of oil using the American Petroleum Institute Scale.

“appraisal program” means a series of activities, including drilling of wells, necessary to determine whether a discovery of hydrocarbons can be developed for commercial production.

“bbl” means barrel or 34.962 imperial gallons or 42 U.S. gallons or 158.987 litres.

“block” or “Block” means a geographic area that is subject to a production-sharing contract or other form of oil and gas permit.

“boe” means barrels of oil equivalent derived by converting gas to oil in the ratio of six thousand cubic feet of gas to one barrel of oil (6 Mcf: 1 bbl). Expressing natural gas volumes in boe may be misleading, particularly if used in isolation. A boe conversion ratio of 6 Mcf: 1 bbl is based on an energy equivalency conversion method primarily applicable at the burner tip and does not represent a value equivalency at the wellhead.

“boepd” means barrels of oil equivalent per day.

“bopd” means barrels of oil per day.

“Co” means cobalt.

“CO2” means carbon dioxide.

“COGE Handbook” means the “Canadian Oil and Gas Evaluation Handbook” prepared by the Society of Petroleum Evaluation Engineers (Calgary Chapter), as amended from time to time.

“condensate” means a mixture of pentanes and heavier hydrocarbons recovered as a liquid from field separators, scrubbers or other gathering facilities or at the inlet of a processing plant before gas is processed.

“conventional natural gas” means natural gas that has been generated elsewhere and has migrated as a result of hydrodynamic forces and is trapped in discrete accumulations by seals that may be formed by localized structural, dispositional or erosional geologic features.

“cost recovery oil” means the crude oil allocated to the Corporation under a production-sharing contract in respect of eligible capital and operating expenses.

“cost recovery pool” means, in respect of a production-sharing contract, cumulative eligible capital expenditures and operating expenses, less the value of cumulative cost recovery oil allocated from past production, which may be recovered against future crude oil production.

“crude oil” or “oil” means a mixture consisting mainly of pentanes and heavier hydrocarbons that exists in the liquid phase in reservoirs and remains liquid at atmospheric pressure and temperature. Crude oil may contain small amounts of sulphur and other non-hydrocarbon compounds but does not include liquids obtained from the processing of natural gas.

“development well” means a well drilled inside the established limits of an oil or gas reservoir, or in close proximity to the edge of the reservoir, to the depth of a stratigraphic horizon known to be productive.

“directional drilling” or “directional well” means the intentional deviation of the trajectory of an oil and gas well to a target that is not located vertically beneath a drilling rig.

“Equator Principles” means the financial industry benchmark used for determining, assessing and managing social and environmental risk in project financing.

“exploratory well” means a well that is not a development well, a service well or a stratigraphic test well.

“Fe” means iron.

“field” means a defined geographic area consisting of one or more pools.

“first point of sale” means the first point after initial production at which there is a transfer of ownership of a product type.

“fold and thrust belt” means a geological trend where geological formations have undergone compressional stress and have been either thrust over one another so that they are repeated, or bent into large scale folds.

“forecast prices and costs” means future prices and costs that are: (a) generally accepted as being reasonable outlook of the future; (b) if, and only to the extent that, there are fixed or presently determinable future prices or costs to which the reporting issuer is legally bound by contractual or other obligation to supply a physical product, including those for an extension period of a contract that is likely to be extended, those prices or costs rather than the prices and costs referred to in subparagraph (a).

“free on board” means that the seller pays for transportation of the goods to the port of shipment, plus loading costs. The buyer pays the cost of marine freight transport, insurance, unloading, and transportation from the arrival port to the final destination.

“future net revenue”, in the context of Oil and Gas, means a forecast of revenue, estimated using forecast prices and costs, arising from the anticipated development and production crude oil, net of associated royalties, operating costs, development costs and abandonment and reclamation costs.

“gas” or “natural gas” means a naturally occurring mixture of hydrocarbon gases and other gases.

“GCFO6” means U.S. Gulf Coast Fuel Oil No.6, 3% Sulphur, a benchmark residual fuel oil.

“GHG” means greenhouse gas and, more specifically, can be any of the commonly used gasses that are known to have the potential to add to global warming. These are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexfluoride (SF6). Some of these have subcategories. Each GHG has a global warming potential in relation to CO2.

“gross reserves” means a working-interest (operating or non-operating) share of oil and gas reserves before deduction of royalty obligations and of reserves to be allocated to government authorities under a production-sharing contract or other oil and gas permit.

“gross wells” means the total number of wells in which the Corporation has a working interest.

“gross working-interest production” means a working-interest (operating or non-operating) share of gross oil and gas production before deduction of royalty obligations and of production to be allocated to government authorities under a production-sharing contract or other oil and gas permit.

“GW” means gigawatt; equivalent to one million kilowatts.

“GWh” means a gigawatt hour; equivalent to one million kilowatt hours.

“ha” means hectares, a metric unit of land measure equal to 10,000 square metres or 2.47 acres.

“heavy crude oil” means crude oil with a relevant density greater than 10 degrees API and less than or equal to 22.3 degrees API.

“hydrocarbon” means a compound consisting of hydrogen and carbon, which, when naturally occurring, may also contain other elements such as Sulphur.

“Indicated Resource” is that part of a Mineral Resource for which quantity, grade or quality, densities, shape, and physical characteristics can be estimated with a level of confidence sufficient to allow the appropriate application of technical and economic parameters to support mine planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration and testing information gathered from locations such as outcrops, trenches, pits, workings, and drill holes that are spaced closely enough for geological and grade continuity to be reasonably assumed.

“Inferred Resource” is that part of a Mineral Resource for which quantity and grade or quality can be estimated on the basis of geological evidence and limited sampling and reasonably assumed, but not verified, geological and grade continuity. The estimate is based on limited information and sampling gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings, and drill holes.

“kJ” means a kilojoule or 1,000 joules; equivalent to one kilowatt of electric power radiated or dissipated for one second.

“kJ/kg” means kilojoule per kilogram.

“kW” means a kilowatt; equivalent to 1,000 watts of electric power.

“kWh” means kilowatt hour; equivalent to the supply of one kilowatt of electric power for a continuous one hour period.

“laterite” means a soil layer that is rich in iron oxide and derived from a wide variety of rocks weathering under strongly oxidizing and leaching conditions.

“LIBOR” means the London Inter-Bank Offer Rate.

“light crude oil” means crude oil with a relative density greater than 31.1 degrees API.

“limonite” means the yellow-brown clay-like material that is the principal ore-bearing layer in nickel laterite deposits, synonymous with ferralite.

“LPG” means liquefied petroleum gases consisting predominantly of propane, butanes and ethane.

“Mbbl” means thousands of barrels.

“Mcf” means thousand cubic feet.

“Measured Resource” is that part of a Mineral Resource for which quantity, grade or quality, shape, and physical characteristics are so well established that it can be estimated with confidence sufficient to allow the appropriate application of technical and economic parameters to support production, planning and evaluation of the economic viability of the deposit. The estimate is based on detailed and reliable exploration, sampling and testing information gathered through appropriate techniques from locations such as outcrops, trenches, pits, workings, and drill holes that are spaced closely enough to confirm both geological and grade continuity.

“medium crude oil” means crude oil which a relative density greater than 22.3 degrees API and less than or equal to 31.1 degrees API gravity.

“Metal Bulletin Low Grade” means metallic cobalt typically 99.3% to 99.6% in cobalt content.

“Mineral Resource” means, in respect of mineral properties, an Inferred, Indicated or Measured Resource.

“Mineral Reserve” means, in respect of mineral properties, a Proven or Probable Reserve.

“MMbbl” means millions of barrels.

“MMcf” means million cubic feet.

“MMcfpd” means millions of cubic feet per day.

“MT” means millions of tonnes.

“MW” means a megawatt; equivalent to one thousand kilowatts.

“MWh” means a megawatt hour; equivalent to one thousand kilowatt hours.

“net reserves” means a working-interest (operating or non-operating) share of oil and gas reserves after deduction of royalty obligations and of reserves to be allocated to government authorities under a production-sharing contract or other oil and gas permit.

“net wells” represents the number of wells obtained by aggregating the Corporation’s working-interest in each of its gross wells.

“net working-interest production” means a working-interest (operating or non-operating) share of oil and gas production after deduction of royalty obligations and of production allocated to government authorities under a production-sharing contract or other oil and gas permit. Under a production-sharing contract,

“net working-interest production” equals the sum of the volume of cost recovery oil and the share of profit oil allocated to the contractor.

“Ni” means nickel.

“OIMS” means the Operating Integrity and Management System, an environment, health and safety management system.

“overburden” means materials that overlie a mineral deposit.

“production sharing contract” or “PSC” means a form of contract between a contractor and an agency of the government of the Republic of Cuba under which the contractor acquires the right to explore for and develop hydrocarbon deposits within a specified geographic area.

“profit oil” means the volume of oil to be allocated under a production-sharing contract after cost recovery oil has been allocated to the contractor.

“Probable Reserve” means, in a context other than oil and gas, the economically mineable part of an Indicated Resource and, in some circumstances, a Measured Resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction can be justified.

“Proven Reserve” means, in a context other than oil and gas, the economically mineable part of a Measured Resource demonstrated by at least a preliminary feasibility study. This study must include adequate information on mining, processing, metallurgical, economic, and other relevant factors that demonstrate, at the time of reporting, that economic extraction is justified.

“reservoir” means a porous and permeable subsurface rock formation that contains a separate accumulation of petroleum that is confined by impermeable rock or water barriers and is characterized by a single pressure system.

“saprolite” — From the Greek for — rotten rock, a soft, decomposed rock that is rich in clay; a secondary ore- bearing layer in nickel laterite deposits that lies beneath limonite and that has high magnesium, making it undesirable as feed to a PAL process.”

“service well” means a well drilled or completed for the purpose of supporting production in an existing field. Specific purposes of service wells include gas injection, water injection, steam injection, air injection, salt water disposal, water supply for injection, observation or injection for combustion.

“stratigraphic test well” means a drilling effort, geologically directed, to obtain information pertaining to a specific geologic condition, ordinarily without the intention of being completed for hydrocarbon production.

“sulphur” for the purposes of the Oil and Gas business, means elemental sulphur recovered by the conversation of hydrogen sulphide and other sulphur compounds extracted from crude oil or natural gas.

“supernatant liquid” means the usually clear liquid overlying material deposited by settling, precipitation, or centrifugation.

“Tpd” means tonnes per day.

“working-interest” means the interest held by the Corporation in an oil or gas property, which interest normally bears its proportionate share of the costs of exploration, development and operation as well as any royalties or other production burdens, including the allocation of crude oil to government authorities under a production-sharing contract.

“workover” means the re-entry of an existing well to conduct various operations intended to restore or increase production.

“WTI” means West Texas Intermediate, a benchmark crude oil.

Schedule ‘B’

Technical Information

MOA JOINT VENTURE

Properties

The resources comprising the Moa Joint Venture are the Central Moa Project and the Eastern Satellites Project. Certain information set out below is derived from the technical report entitled “43-101 Technical Report on the Central Moa Nickel Laterite Operation in Eastern Cuba” dated September 22, 2011 (the “Central Moa Technical Report”) and the technical report entitled “La Delta and Cantarrana Nickel Laterite Properties in Cuba” dated May 8, 2009 (the “Eastern Satellites Technical Report”), respectively.

Central Moa Project

Property Location and Description

The Central Moa deposits are located approximately four kilometres to the south and southeast of the city of Moa in the province of Holguin in northeastern Cuba. The Moa Nickel plant lies on the southern edge of the residential area of the city of Moa.

In Cuba, mineral rights are the property of the state. Mineral exploration and mining rights are granted under decrees or resolutions administered by the ONRM, the Cuban government agency that oversees and regulates mining activity. In the case of the rights granted to Moa Nickel, the key features of the decrees and resolutions are:

· Moa Nickel has the right to mine the limonite, along with normal mining dilution at the top and bottom of the limonite horizon;

· Moa Nickel has received official approval to mine and utilize in the existing process a portion of the saprolite underlying the limonite ore in the deposit areas. Moa Nickel has the right to utilize saprolite underlying the Moa Oriental deposit and portions of the Moa Occidental deposit (total 2504 ha), and to utilize saprolite with more than 1% nickel and 25% to 35% iron underlying the Camarioca Norte and Camarioca Sur deposits (total 4374 ha); and

· when the property rights revert to the ONRM, the mining rights to the saprolite may be granted to another company.

The Central Moa deposits lie on six separate mineral concessions: Moa Occidental, Moa Oriental, Camarioca Norte, Camarioca Sur, Yagrumaje Oeste, and Playa La Vaca-Zona Septentrional II (together the “Central Moa Concessions”). The first two of these were granted under the 1994 Decree, the Camariocas concessions were granted under Resolution 40/2005, and the latter two under Agreements 7361 and 7401 in 2013. The Central Moa Concessions cover a total of 8,199 ha.

Accessibility, Climate, Local Resources, Infrastructure and Physiography

The city of Moa has a population of approximately 71,000 and lies along the paved highway that connects the provincial capital of Holguin to the smaller towns of Cueto, Mayari, Nicaro and Sagua de Tanmano. Holguin is about 190 kilometres to the west of the city of Moa (driving time of about 21/2 to 3 hours). There is public bus service to all neighbouring towns. The city has been and continues to provide all necessary mining personnel to Moa Nickel under the terms established with the formation of the Moa Joint Venture.

The city of Moa has a small commercial airport with limited schedules (currently once a week) to other Cuban cities. The nearest large international airports are at Holguin, to the west, and at Santiago de Cuba, on the southern coast.

Moa Nickel’s main facilities, the site of the processing plant and the offices for technical and administrative work, are easily accessible from Moa, with many workers commuting to the plant by local buses.

A well-developed network of secondary paved roads and dirt roads provides access from the plant site to the operating mining areas of Moa Occidental and Moa Oriental that lie south of the city and the plant site. A network of dirt roads provides access from Moa Oriental into Camarioca Norte and Camarioca Sur (together, the “Camarioca Concessions”). This road network is better developed in Camarioca Norte, where mining is active, and less developed in Camarioca Sur, where development drilling has only recently been completed.

The water supply for the city of Moa and the processing plant are drawn from one water-bore at La Veguita, near the Moa Nickel plant, and from the Nuevo Mundo reservoir which feeds into the Moa River, 10 kilometres south southwest of the Moa Nickel plant.

Water from the Moa River enters an intake at a small dam just upstream from the haulage road bridge linking the plant to Moa Oriental.

The city of Moa and the Moa Nickel plant are served by the national electric power grid and grid power-lines cross the mine site. The nearest large power plant is at Felton, west of the Nicaro plant, some 85 kilometres west of Moa.

Moa Nickel has the required surface rights and necessary infrastructure in place, including bridge access, roads, maintenance shops, power supplies and offices to support its current mining operations.

The Moa region has a tropical humid climate, with average daily high temperatures above 30°C in summer and average daily lows below 20°C in the winter. Monthly rainfall is well above 100 millimetres in the late spring and early fall, and below 50 millimetres from December through March.

There is a risk of tropical storms and hurricanes in the summer and fall. In October 2012, Hurricane Sandy hit Santiago de Cuba, as well as the Moa area. A Category 2 hurricane, it impacted production at the Moa Plant, requiring the shutdown of operations for approximately five days.

Moa Nickel’s mineral deposits lie on both the northern slope of the Cuchillas del Moa, an east-west trending range of forested mountains with a maximum elevation of approximately 1,775 metres, and a neighbouring coastal plain. The northern slope of the Cuchillas del Moa range is dissected by a network of ravines that serve as tributaries to the Moa River.

Vegetation on the northern slope of the Cuchillas del Moa includes areas of pine forest with a dense understory of broad-leaved saplings and small trees, broad-leaved trees and open pine forest. At lower elevations, such as Zona Central, laterite is covered by broad-leaved thicket and semi-open meadows.

History

Viable nickel and cobalt resources in eastern Cuba were first identified in the 1940s. By the late 1950s, just prior to the Cuban Revolution, an American company had begun mining nickel laterites near Moa.

From the early 1960s to the early 1990s, the Cuban government’s state mining company mined the Moa Occidental concession. In 1994, the Corporation and GNC formed Moa Nickel. Moa Nickel was granted mining rights on December 1, 1994. It continued mining operations at the Moa Occidental concession and initiated mining operations at Moa Oriental in 2000.

The Camarioca Concessions were first explored in the early to mid-1970s by Soviet geologists. Evaluation of the Camarioca Concessions was resumed by Empresa Geominera Oriente, the Cuban state contractor for geological and exploration activities, (“Geominera”) in 2003. In 2005, Moa Nickel was granted the right to continue the exploration and evaluation of the Camarioca Concessions deposits.

Moa Nickel obtained its rights to the Yagrumaje Oeste and Playa La Vaca-Zona Septentrional II deposits in 2013 under Agreements 7361 and 7401, with data regarding previous exploration results provided to the Moa Nickel by the ONRM. The Yagrumaje Oeste deposit had been mined prior to Moa Nickel obtaining its rights and the mineralized had been drilled on a 33 metre grid.

Geology and Mineralization

The Central Moa Concessions are situated on the Moa-Baracoa complex. The Moa-Baracoa complex is composed primarily of a tectonised harzburgite that is highly depleted by 20 — 30% partial melting. To the east of the Central Moa Concessions, a number of podiform chromitite bodies lie along a west-northwest trending line. Several intersections of chromitite also exist in the northwest extremity of Camarioca Norte. The region also contains several bodies of gabbros and north-east trending gabbroic dikes.

The nickeliferous laterite deposits in the Moa region occur as a thick surface blanket of residual soils, clays and partially decomposed rock. The thickest and most homogenous laterite deposits are generally associated with rounded ridge crests and spurs representing the least eroded portion of the laterite blanket.

The upper zone of the commercial laterite profile called limonite is defined either by a nickel cut-off of 1% and an iron cut-off of 35% or, in certain deposits, by a ‘nickel equivalent’ grade cut-off that reflects the relative long-term price expectations for nickel and cobalt. The nickel equivalent cut-off grade typically ranges between 1.25% and 1.35%, depending mainly upon the ore haulage distance and overburden stripping ratios for the ore body. The limonite zone as defined typically varies from three to seven metres in thickness, locally increasing to a thickness of up to 20 metres. The lower contact of the limonite zone is defined by the 35% iron grade cut-off and is highly irregular with frequent ‘ribs’ and ‘pinnacles’ of decomposing bedrock material projecting up into the limonite. Saprolite zone mineralization is usually encountered below the limonite zone. The original mining concession granted the right to mine in the limonite zone only. However, the ORNM has granted the Moa Joint Venture the rights to mine the upper portions of the saprolite zone on certain mineral concessions.

Exploration and Drilling

The drilling campaigns conducted at the Central Moa Project have generally been carried out on surveyed square grid patterns, using continuous-spiral and hollow-stem auger drills to extract samples from each metre of penetration in vertical holes.

The majority of the deposits were drilled prior to the formation of the Moa Joint Venture using progressively closer grid spacings from 300 to 33 metres. In addition, test pits were excavated to yield information on mineralogy, moisture content and tonnage factors. Drilling campaigns conducted by the Moa Joint Venture have generally drilled exploration on grids of 100 metres and 33-35 metres-spacings and drilled exploration grids at 16 metre-spacing for definition of the overburden thickness, grade control and metallurgical characterization of the ore. In 2015, the drilling campaign consisted of further exploration works in Camarioca Norte.

In addition to drilling, Moa Nickel also dug several dozen criollo pits in each of the four mineral concession areas prior to production and conducted field trials of ground penetrating radar technology in the Camarioca Concessions.

A hollow core auger with an 89 millimetre outer diameter and 71 millimetre inner diameter was also used to penetrate bedrock regions where mapping of the bedrock geology had been recommended. Moa Nickel contracted Geominera to conduct various drilling programs using a truck-mounted 135 millimetre diameter spiral auger drill between 2005 and 2008.

In 2008, Moa Nickel acquired its own Canadian-built rotary-head M5Xd drilling machine mounted on a Japanese-built MST 800 Morooka Carrier for use in the large development drilling programs on the Camarioca Concessions. The drill fleet consists of four units capable of drilling 178 millimetre diameter solid stem auger holes, 95 millimetre diameter hollow auger holes, and 71 millimetre diameter core holes.

Sampling and Analysis and Security of Samples

Sample Preparation

Drill cuttings are logged manually by field geologists in a notebook at the drill site. Logged notes are then later entered into a computer data base in the office. Each interval, usually 1 metre, is divided in half, one part for chemical analysis and the other for metallurgical test work, including sedimentation tests. The samples are removed from the auger spirals, placed in plastic bags and tagged with the sample number. The sample numbers are simple sequences without the borehole number. In selected holes, a composite sample of 3-4 kilograms is taken for leaching tests. For every tenth sample, the geologist takes a duplicate assay sample for use as an internal control and another duplicate sample for use as an external control.

When external contractors, like Geominera, have been contracted to perform the drilling and sampling, a Moa Nickel geologist usually observes the contractor’s activities in the field.

Through early September 2007, samples were shipped by truck to Geominera’s facilities in Santiago de Cuba. Since September 2007, assay pulp preparation has been carried out at a new facility in Moa and the pulps shipped to Santiago de Cuba for assay at the Elio Trincado Figueredo Laboratory operated by Geominera. An independent consultant retained by the Corporation has examined the sample preparation facilities and the Geominera assay laboratory and reviewed their procedures, and believes that they are satisfactory. The Geominera work at the new sample preparation facility in Moa has been directly monitored by a Moa Nickel geologist.

Sample analyses

Analysis of Ni, Co, Al2O3, Cr2O3, Fe2O3, MgO, MnO and SiO2 are done by sodium carbonate fusion inductively coupled plasma atomic emission spectroscopy (ICP-AES), an emission spectrophotometric technique that uses the fact that excited electrons emit energy at a given wavelength as they return to their ground state. The quality assurance and quality control program used to monitor the reliability of the analyses is externally reviewed annually. For the past many years, the annual production reconciliations have confirmed that there is no systematic bias in resources and reserves calculated from the drill hole data.

From time to time, Fe is checked volumetrically by titration with potassium dichromate.

Routine assays are done by the Geominera assay laboratory in Santiago de Cuba; external check assays have been done by Laboratorios Isaac del Corral in Havana and by SGS Labs in South Africa. In the producing areas of the mine, check analyses are also done at the Moa Nickel process control laboratory where routine production sampling of trucks and thickener slurry is done. The process control lab uses pressed pellet XRF analysis calibrated regularly by atomic absorption analysis.

Security of Samples

The lateritic material from auger holes is laid on the polyethylene sheet at the drill site and visually logged to record its geological characteristics. The clayey material is then cut into samples 1 metre in length, numbered and sealed in polyethylene bags. The sample bags are transported by truck from the field directly to the processing facility operated by Geominera in Moa. At no point are the bags re-opened until the laboratory begins its preparation work. If bags are broken, have become unsealed or appear to be contaminated with other material, which occurs very rarely, the laboratory does not process the sample and no analytical data is available for that sample interval.

Data Verification

Quality assurance and quality control (“QA/QC”) of the analytical data and the assay data bases is conducted by Geominera, who uses reference materials to monitor the accuracy of assay data and to detect systematic biases, and internal duplicates to monitor the precision or repeatability of assays. Additional duplicate samples checked by external labs provide additional data for monitoring the reliability of assay data. Blanks are currently not used; these would provide information on any cross-contamination that may be occurring during sample preparation.

Geominera’s procedures for the analysis of this data, and the use of it to reject batches of unreliable assays, are not as rigorous and intensive as current international norms. The Corporation’s personnel and consultants continue to work with Geominera, and the Corporation continues to conduct check assays at an external lab to ensure validity of results.

To address the specific weaknesses in Geominera’s QA/QC protocols and procedures, the Corporation’s consultants have met with the Geominera staff to discuss how to resolve certain issues. The Geominera staff have been willing to implement practical ideas to ensure alignment with approaches used by commercial assay laboratories faced with similar problems elsewhere in the world.

Despite the issues mentioned above, there is a general consistency between grades predicted from Geominera assay data and grades actually mined, as measured by Moa Nickel’s own plant process control data, as well as with the external check assays.

Eastern Satellites Project

Property Description and Location

The La Delta, Cantarrana and Santa Teresita mineral concessions (together, the “Eastern Satellites Concessions”) lie 10 to 15 kilometres southeast of the Moa Nickel processing plant.

Resolutions 5859 and 5860, dated December 29, 2006, of Cuba’s Comité Ejecutivo del Consejo de Ministros granted Moa Nickel the right and obligation to evaluate the limonitic nickel mineralization on the La Delta and Cantarrana concessions. These Resolutions detail 28 obligations, most of which relate to: 1) geological education and safety of employees; 2) road construction, protection of environment near rivers, protection of forest cover; and 3) rehabilitation measures after work programs have been completed.

The Eastern Satellites Concessions cover a total of 3,277 ha. The boundaries of the Eastern Satellites Concessions are subject to review and potential adjustment every three years by the ONRM.

For mining to commence on the Eastern Satellites Concessions, Moa Nickel will have to apply to the ONRM at the appropriate time to have the exploration concessions set out above converted to exploitation concessions.

Accessibility, Climate, Local Resources, Infrastructure and Physiography

A network of secondary dirt roads provides access from the paved coastal highway to each of the Eastern Satellites Concessions. In the dry season, these dirt or gravel roads can be navigated by pickup trucks; in the wet season, even four wheel drive trucks sometimes have difficulty navigating the dirt roads. Via the paved highway, the distance from the front entrance of the Moa Nickel plant to the local access roads to La Delta and Cantarrana is about 13 and 16 kilometres, respectively. Other than as disclosed in this paragraph, the information in respect of the accessibility, climate, local resources, infrastructure and physiography of the Eastern Satellites Project is the same as Central Moa. For further details, please see “Central Moa Project — Accessibility, Climate, Local Resources, Infrastructure and Physiography” above.

History

Cantarrana and La Delta were first explored in the 1960s. A second exploration program was conducted by Geominera for Gencor Ltd. in 1996 (the “Gencor Campaign”) as a due diligence check on the earlier work. In 2006, Moa Nickel was granted the right to explore and evaluate the Eastern Satellite Concessions. Inferred Resources have been estimated for Santa Teresita, but its reserve potential has not yet been reliably established. For further detail regarding the history of exploration in the region, please see “Central Moa Project — History” above.

Geology and Mineralization

The Cantarrana ultramafic body is surrounded by gabbro and the same gabbro body sets the eastern limit of the La Delta ultramafic. Isolated in the ultramafic is a small body of gabbro, approximately 2x1 kilometres, which limits the southern extent of the La Delta deposit.

The analysis of mineralization of the Eastern Satellites Concessions is based on the assays taken from the drilling programs discussed in “Eastern Satellites Concessions — Exploration and Drilling” below. The drilling campaign conducted in the 1960s assayed for Fe, Ni and Co. The Gencor Campaign analyzed for Fe, Ni, Co, Mg, Mn, Al, Si and Ca and the moisture content of each sample was also reported. The 2008 campaign assayed for Fe, Ni, Co, Mg, Mn, Al, Cr and Si.

For a discussion of the regional geology, please refer to “Central Moa Project — Geology and Mineralization” above.

Exploration and Drilling

Exploration on the Eastern Satellites Concessions began in the 1960s and included drilling on a 100 metre square grid. The Gencor Campaign in-filled a number of the existing lines to 33 metre spacing. In 2008, Moa Nickel undertook a drilling campaign (conducted by Geominera) in certain regions where the historical data suggested high laterite block mineralization. The 2008 drilling was done on a square 100 metre grid, offset from the historical grid, creating a regular grid with hole spacing of approximately 70 metres along the diagonals of the grid.

All stages of drilling used Russian, truck-mounted spiral augers.

In 2015, the ONRM approved final exploration reports submitted by the Moa Joint Venture on Cantarrana and La Delta, and a drilling campaign in Santa Teresita was completed.

Sampling and Analysis and Security of Samples

Please see “Central Moa Project — Sampling and Analysis and Security of Samples”.

The following section relates to the Moa Joint Venture as a whole.

Moa Joint Venture Mining and Processing, Refining, Expansion, Marketing and Sales

Mining and Processing

The mining method used by Moa Nickel consists of an excavator/truck operation. Bench mining is executed in opened deposits using hydraulic backhoe excavators equipped with 6.0 m3 buckets and a combination of rigid and articulated mine haulage trucks. The mine operates 365 days per year.

Mining has been carried out within the area covered by the Moa Occidental concession for more than 50 years. Prior to the formation of the Moa Joint Venture, the property was operated by the Cuban state. Production commenced in 1961 and in the period to the end of 1994, the annual mining rate averaged approximately 1.6 million tonnes of ore. In 2015, a total of 3.47 million tonnes of ore was mined, as compared to 3.54 million tonnes in 2014.

Ore is processed through the ore preparation plant where the ore is slurried with water in logwashers and the resultant slurry is screened at 0.8 millimetres to reject partially or wholly unweathered material which has high magnesium content. The oversize reject material is processed through a reject treatment circuit that achieves a high recovery of the limonite contained in the material. The final dry-rock reject is used for road construction or is deposited into mined-out areas.

The fine fraction of the screened ore is thickened and pumped to an acid pressure leaching circuit consisting of vertical, steam-agitated pachucas (reactors). Sulphuric acid is added to dissolve nickel and cobalt from the ore. The leach discharge slurry is processed through a countercurrent decantation wash circuit to separate the nickel and cobalt-containing solution from the leach residue slurry that is impounded in a tailings pond. Excess sulphuric acid in the solution is neutralized with limestone mud and the gypsum residue is processed through the wash circuit. Nickel and cobalt are recovered from the solution by precipitation, at an elevated temperature and pressure, with hydrogen sulphide gas to produce mixed sulphides.

In 2015, production of nickel and cobalt contained in mixed sulphides at Moa Nickel was 37,020 tonnes (100% basis), compared to production of 36,410 tonnes (100% basis) in 2014.

Refining

In the refining process, which occurs in Fort Saskatchewan, nickel and cobalt present in the Moa mixed sulphides and various other feeds are blended and leached in an ammonia and ammonium sulphate solution. Nickel, cobalt and other metals are dissolved and sulphide sulphur is oxidized and combined with ammonia to form ammonium sulphate. Any unleached material is separated from the metal-rich solution, washed, filtered and sold pursuant to short-term contracts.

Nickel is recovered in powder form. After washing and drying, powder can be packaged or compacted into briquettes, which can be sintered (passed through a furnace) or left unsintered. The relative proportion of powder, sintered and unsintered material changes and is based upon prevailing market conditions. Cobalt is also recovered in powder form and is compacted and sintered into briquettes or packaged as powder for sale.

The remaining, essentially metal-free, solution is evaporated to crystalline ammonium sulphate, dried and sold as fertilizer. Ammonium sulphate, a fertilizer by-product of this refining process, is produced at an on-site ammonium sulphate plant, which has an annual capacity of approximately 190,000 tonnes. Other metals present in the feed, such as copper and zinc, are collected in the form of sulphide residues and sold.

In 2015, total production of finished nickel and cobalt was 33,705 tonnes and 3,733 tonnes (100% basis), respectively, compared to 32,909 tonnes and 3,210 tonnes (100% basis), respectively, in 2014.

The refinery is maintaining its ISO 9001:2008 certification for nickel and cobalt production.

Expansion

The Expansion Agreement provides for an expansion of the annual production capacity at its Moa Nickel facilities by 16,000 tonnes of nickel plus cobalt in mixed sulphides, to a total of 49,000 tonnes, and a corresponding expansion of the CRC

facilities to process the additional mixed sulphides. Following completion of basic engineering for the expansion in the fall of 2006 at both the Moa and Fort Saskatchewan facilities, the Corporation and GNC agreed to execute the expansion in phases.

The first phase of expansion was completed in 2008, increasing annual production capacity to a total of 37,000 tonnes of nickel plus cobalt contained in mixed sulphides. In response to weakening commodity markets, the Corporation announced a temporary suspension of capital contributions to the Moa/Fort Saskatchewan expansion in the fourth quarter of 2008. Demobilization of the construction workforce was substantially completed by the end of 2008 and equipment and material on the site are being preserved, where possible, to allow for resumption of the expansion project. Expansion at Moa remains an important growth initiative that will continue to use proven process technologies that have successfully processed nickel and cobalt for nearly 60 years. The expansion would take advantage of the significant infrastructure in place at Moa. During the fourth quarter of 2013, the expansion strategy was revised to prioritize the completion of circuits at Moa in stages to focus on those circuits that will provide the greatest economic return. Increasing production capacity at Moa allows for lower third-party feed purchases as well as providing the opportunity for better utilization of mineral resources and longer mine life. Under the revised strategy, expansion at Fort Saskatchewan is unlikely to occur given the magnitude of the investment and limited returns. The operations at Fort Saskatchewan will continue to pursue debottlenecking initiatives under the sustaining capital replacement program and infrastructure maintenance.

Additionally at the time of suspension, a 2,000 tonne per day sulphuric acid plant was under construction at Moa to coincide with the completion of expansion. In October 2013, the Moa Joint Venture partners reached an agreement to complete this plant at an estimated cost of approximately US$65.0 million. It is anticipated that the plant will enhance the efficiency of operations by producing sufficient acid to eliminate all sulphuric acid purchases at the current rate of production and future acid requirements for when the next phase of expansion is completed. Production of lower cost acid is expect to support higher acid consumption and better metallurgical recoveries in the pressure acid leach process in addition to generating steam that will displace a proportion of higher cost steam currently produced in oil-fired boilers. Also in October 2013, agreements regarding the third-party financing for the construction of the acid plant were finalized. The agreement provides access to US$57.6 million in financing, with access to a further US$7.4 million pending further Cuban governmental approvals. Mobilization of resources for this project began in the fourth quarter of 2013 and extended over the course of 2014 while arrangements were being finalized with a Cuban construction company. Construction began in the first quarter of 2015 and commissioning is expected to be completed before the end of second quarter of 2016, subject to achieving the agreed to construction productivity rates.

AMBATOVY JOINT VENTURE

Property

Certain information below is derived from the Ambatovy Technical Report.

Property Description and Location

The Ambatovy Joint Venture mine area is located 80 kilometres east of the capital city of Antananarivo and 11 kilometres north of the town of Moramanga.

The mine site property covers 143.75 square kilometres and consists of 368 contiguous 625 metre by 625 metre blocks (carrés). All necessary titles and permits for the mine site property are held by AMSA. The exploitation permit for the mine, which grants exploitation rights until September 6, 2046, was issued to AMSA on September 7, 2006 by the Ministry of Energy and Mines of Madagascar. The permit includes the exploitation rights for nickel, cobalt, copper, platinum, chrome and zinc covering the known nickel laterite deposits.

In order to maintain the exploitation permit in good standing, AMSA must file an annual report with the Ministry of Mines, pay an annual administration fee of approximately US$ 36,320 (117,171,200 MGA) (plus VAT) payable under the Mining Code, and remain in compliance with the Environment and Social Management Plan (“ESMP”), which is attached as an appendix to the environmental permit.

Under Malagasy law, the Ambatovy Joint Venture is considered a foreign company and therefore is not entitled to purchase land in Madagascar. The surface rights of the mine site property consist of a 50-year lease with the Malagasy State. The contract for the

lease is registered with the Malagasy fiscal authority and the lease is registered at the appropriate local land titles registry. The lease is conditional to the payment of annual fees and compliance with land usage, which is mining and the establishment of a forest conservation area according to the Ambatovy Joint Venture’s environmental commitment. The mine site property is also subject to a US$250,000 annual fee (subject to adjustment every two years for inflation) for the term of the lease.

The mine property is subject to the following payments, in addition to those mentioned immediately above:

· Annual land tax (IFT) which is equivalent to 1% of the value of the land (land tax capped at approximately US$100,000 pursuant to the LGIM);

· Annual property tax on buildings which is equivalent to 1% of the annual rental value of the buildings. The Ambatovy Joint Venture is entitled to a five-year exemption upon the completion of construction pursuant to the LGIM; and

· Mining royalties payable on the production which are equivalent to 1% of finished metal sales pursuant to the Mining Code and the LGIM.

The Ambatovy Joint Venture’s environmental permit was issued on December 1, 2006 and is conditional upon the implementation of an ESMP and is subject to an annual review process. The ESMP requires the Ambatovy Joint Venture to, among other things, operate a ‘no net loss’ biodiversity strategy based on measures to avoid or minimize impacts. The ESMP also requires the utilization of offsets to compensate for unavoidable biodiversity loss.

In addition to the environmental permit, the Ambatovy Joint Venture is also obliged to obtain forest cutting permits for each parcel cleared. The Ambatovy Joint Venture agreed to establish a US$50.0 million environmental surety to compensate the Government of Madagascar should the Ambatovy Joint Venture fail to correct any material breach of applicable environmental laws, regulations and permits governing the Ambatovy Joint Venture’s environmental obligations, including closure obligations. The Ambatovy Partners provided interim letters of credit which were to remain in place as the indenture for the surety was negotiated with the Malagasy government. The interim letters of credit were in place for two years and have expired as the Malagasy government took no steps to negotiate a long-term escrow agreement for the surety despite numerous attempts by the Ambatovy Joint Venture to initiate discussions. The Ambatovy Joint Venture currently has the necessary exploitation and exploration permits and the infrastructure in place, including bridge access, roads, maintenance shops, power supplies, offices and housing to support its mining operations.

Environmental management actions are accompanied by social support and compensation measures. Currently, comprehensive social baseline surveys are being undertaken to provide the basis for monitoring local livelihoods.

A reclamation and closure plan has been prepared by consultants and will be put in place for all aspects of the Ambatovy Joint Venture. The cost of project remediation and reclamation in connection with the mine site is estimated at US$39.0 million.

Accessibility, Climate, Local Resources, Infrastructure and Physiography

The nickel deposits are located on a plateau at an elevation of approximately 1,100 metres above sea level. The topography of the deposits varies from gently undulating hills to a steeply dissected remnant plateau. Locally, the relief is 100 metres. The plateau surface is fairly uneven with numerous depressions that form ephemeral pools. Small headwater streams originate in the mine area and flow away in all directions as part of a six basin configuration.

The mine site property is covered with natural forests. The surrounding area includes intact and degraded forests and scrublands, areas dominated by grasses, eucalyptus plantations, woodlots and rice paddies. The soils in the mine region are generally known as laterites, which are highly-weathered iron-rich tropical soils.

Local resources include a small nearby aggregate quarry, the Mangoro River which is the water supply for the mine site and a 138 kV power line which passes approximately 8 kilometres south of the mine site property.

Local infrastructure includes the town of Moramanga, which has a population of approximately 30,000, and a one metre gauge railway line that runs from Antananarivo to Moramanga and to the port of Toamasina. The port is located approximately 12 km from the plant site and is connected to the plant site by rail.

The Ambatovy Joint Venture has access to the requisite mining personnel through the use of the local population for unskilled and semi-skilled labour, as well as having on-site residential facilities for necessary expatriate and national senior staff employees.

Please refer to the sub-heading below entitled “Ambatovy Joint Venture — Processing Facilities” for information regarding the processing plant site and the tailings management facility.

The capital city, Antananarivo, is serviced by commercial air flights from Paris, France, four times per week and daily from Johannesburg, South Africa. Regular flights also run between Antananarivo and Saint-Denis, Réunion, Mahébourgh, Mauritius, Mahé, Seychelles, Dubai, United Arab Emirates and Nairobi, Kenya. The mine site, located near the town of Moramanga, is approximately 120 kilometres by road from Antananarivo. Major asphalt paved national roads link Antananarivo to Moramanga with a high quality 11 kilometre gravel road leading from Moramanga to the mine site.

A charter plane, operated on behalf of the Ambatovy Joint Venture, flies regularly between Antananarivo, Toamasina and Moramanga.

Buses run daily between Moramanga and the mine site to transport employees to the mine.

The climate is equatorial to tropical, with average monthly rainfall which historically has exceeded 135 millimetres in the period from November to March and has been less than 66 millimetres in the period from April to October, evaporation from 600 to 800 millimetres and temperature varying from 5 to 35°C with an average temperature of 17°C. The cyclonic season occurs from January to March.

History

The presence of the Ambatovy nickel laterite deposits was first noted by the Malagasy Service Géologique in 1960. Limited pitting and auger drilling were undertaken to assess the surface iron potential. In the early 1970s, a consortium composed of Société Le Nickel, Ugine Kuhlman, Anglo American and Bureau des Recherches Géologiques et Minières carried out a major exploration program that included 368 vertical diamond drill holes over both the Ambatovy and Analamay deposits (described below), an aerial photographic survey, geological mapping and geochemical surveys. The next major exploration program was conducted by PD Madagascar SARL (“PD”) between 1995 and 1998. Work included 369 vertical diamond drill holes, test pits, various surveys and metallurgical testwork for the region known as Ambatovy West. This work culminated in a feasibility study.

In 2003, PD and Dynatec signed a joint venture agreement to continue the development of the property, which later resulted in Dynatec receiving a 53% interest in the Ambatovy Joint Venture. Dynatec and PD conducted exploratory drilling and started to develop a thorough feasibility study with a detailed environmental and social impact assessment.

In 2005, Dynatec acquired the remaining 47% interest in the Ambatovy Joint Venture from PD and Sumitomo took up a 25% stake in the Ambatovy Joint Venture. In February 2005, a technical report prepared in accordance with NI 43-101 was completed. The report was revised in May 2005. Definition drilling continued in 2006 and 2007, mostly in the Ambatovy Central sub-block, with 100 HQ holes drilled for a total of 5,675 metres. A subsequent NI 43-101 technical report was filed in October 2011, as discussed in “Property” above.

In 2007, the Ambatovy Joint Venture was certified by the Government of Madagascar under the LGIM. The Corporation acquired Dynatec in June 2007 for approximately US$1.7 billion. The Corporation assumed Dynatec’s ownership position in the Ambatovy Joint Venture and was named project operator.

In 2008, the Ambatovy Joint Venture received construction permits for work at the port and plant site. Definition drilling started again, mainly on the Ambatovy West sub-block. A total of 168 drill holes for a total of 8,605 metres were drilled between June 2008 and November 2009.

In 2010, commissioning of the mining equipment commenced. Mining of material for stockpiling started in July. In 2011, commissioning of the ore preparation plant at the mine site commenced, as well as commissioning of the utilities facilities at the plant site. This was followed in 2012 with the start of ore processing in the pressure acid leach autoclaves and with mixed

sulphides being delivered to the refinery in May 2012. The first finished nickel and cobalt briquettes were produced from the refinery in September 2012, and the Ambatovy Joint Venture continued its ramp-up towards full production.

In January 2014, Sherritt announced that the requirements for commercial production, defined as an average of 70% of ore throughput based on nameplate capacity, in the pressure acid leach circuit, over 30 day period, had been achieved by the Ambatovy Joint Venture. Throughout the year, the Ambatovy Joint Venture continued ramping up towards full production. Nearly 8.2Mt of material was mined, 4.4Mt of ore was sent to the Plant Site and 39,968 tonnes of finished nickel and cobalt were produced.

In March 2015, the Ambatovy Joint Venture completed an average of 90% production of the nameplate capacity over a 90 day period. Financial completion was validated September 30, 2015. Throughout 2015, 8.5 Mt of material was mined, 5.4 Mt of ore was sent to the Plant Site and 50,735 tonnes of finished nickel and cobalt produced.

Geology and Mineralization

The Ambatovy ore body consists of two large, thick, weathered ultramafic lateritic nickel deposits located approximately 3 kilometres apart (the “Ambatovy Deposit” and the “Analamay Deposit”, or collectively, the “Deposits”).

The regional geological setting is a north-south belt of basic gneisses and migmatites, which are part of the high grade metamorphic rocks underlying the eastern two-thirds of Madagascar. The dominant feature of the Ambatovy Joint Venture is the Antampombato Complex, a large intrusive that cuts the metamorphic rocks. The intrusive is composed of gabbroic to syenitic rocks with two small outer ultramafic bodies rimming the intrusive. Exploration suggests that the complex represents multiple, magmatic intrusions that commenced with the ultramafic intrusive, then was followed by gabbroic intrusives and terminated with the more felsic intrusive.

The Ambatovy Deposit occurs towards the southern margin of the complex and is approximately 3 kilometres by 2.4 kilometres and oriented in a WNW-ESE direction. A north-west trending gabbroic intrusive cuts the Ambatovy Deposit resulting in three sub-blocks: Ambatovy West, Central and Southeast. The Analamay Deposit is located at the eastern margin of the complex and is approximately 4 kilometres by 2.8 kilometres, oriented north-south and it also is divided into sub-blocks known as Analamay North, Central and South. Ambatovy West is cut by numerous block faults that strike northwest/southeast with a conjugate set, striking northeast/southwest. Evidence indicates that faulting continued during the laterization.

The Deposits cover an area of about 1,300 ha, and range in thickness from 20 to 100 metres, with the average thickness being approximately 40 metres. Within the lateritic profile, there are three distinct zones:

· Ferricrete is the uppermost layer, and forms an extremely hard, coherent crust of iron oxides up to 3 metres thick and acts as a deterrent to mechanical erosion.

· Limonite, referred to locally as ferralite, constitutes more than 90% of the economic grade nickel mineralization and is predominately a spongy mass with iron concentrations of 40 to 50%, predominately in goethite. Enriched nickel and cobalt grades are largely achieved by depletion of other elements through the weathering process, rather than additions to the system. The nickel grade of the laterite is influenced by the nickel content of the underlying bedrock.

· Saprolite lies at the base of the lateritic zone, on top of the bedrock.

Exploration and Drilling

Since 2009, definition drilling has been continuously carried out by the Ambatovy Joint Venture on the Ambatovy Joint Venture property, focusing first in completion of 50 metre spacing diamond drill holes in Ambatovy West and South East for better resources definition and increased information on the surrounding contacts with gabbroic material. 50 metre-spaced campaigns still need to be implemented for Ambatovy Central to transform Indicated Resources to Measured Resources, but this part of the deposit is expected to enter the mining sequence in 2021.

Since mid-2012, definition drilling has been conducted on the Analamay Deposit, starting in the southern, north-western and north-eastern areas where sedimentation dams need to be established prior to any mining activity.

In-fill drilling was conducted in the Ambatovy West and Ambatovy South East areas in 2013. This program was designed to better define the ore body in the area where mining initially took place. In 2014, a definition drilling program, which utilized a 50 metre × 50 metre grid, was carried out in Ambatovy South East, Ambatovy Central and the northern part of Ambatovy West. In 2015, the definition drilling program was focused on the Analamay Waste Dump area, which was not sufficiently mineralized and then increased in density in the Ambatovy South Eastern intrusion, where mining will begin in 2017.

In-fill drilling in Analamay will be conducted in 2016 and 2017 with both 100 metre × 100 metre and 50 metre × 50 metre drill patterns to enable the transfer of Indicated Mineral Resources to Measured Mineral Resources and further define the deposit’s Mineral Reserves. Pre- production drillings are also conducted prior to mining. Twenty metre-spaced air core drill holes are drilled down to the bedrock and supplementary 10 metre- spaced auger drill holes are implemented on the active benches for a depth of 12 metres. This combination of pre-production drilling data is used to design the mining panels, separating the different qualities of ore.

Sampling and Analysis and Security of Sample Facilities

At the mine site, the core is measured and the depths marked in metres, photographed and logged according to the principal lithologies and degrees of weathering. Sampling is done at one-metre intervals, but broken at sub-metre intervals at significant lithological contacts. The highly weathered core is split in half with a knife. For the boulder saprolite, the sections with minus 10 centimetre boulders and fines are divided in half and the boulders sawn. The plus 10 centimetre “fresh” boulders are measured and their percentage of interval recorded, but the boulders are not sampled. Up to 2009, the half-core samples were placed in plastic bags, tagged and shipped in sealed drums to UltraTrace Analytical Laboratories (“UltraTrace”) in Perth Australia. The remaining half core was sheathed in polythene tubes, placed in core boxes and sent to an on-site storage area. Since 2009, all analytical measures have been done by the AMSA laboratory, while duplicate samples are sent to UltraTrace for validation.

Since 2009, when the on-site lab became operational, there has been a continuous QA/QC program that uses certified standards and duplicates to monitor the accuracy and precision of the analytical data. In the years when the on-site laboratory has been operating, there has been no systematic problem with the reliability of the analytical data, and the data have been deemed reliable for resource and reserve evaluation by the qualified person, as defined by NI 43-101, responsible for that section of the Ambatovy Technical Report. Prior to 2009, the QA/QC program in place during the drilling coordinated by Dynatec was reviewed by the qualified persons, as defined by NI 43-101, of the technical report prepared in 2005, who found that these data were reliable for resource and reserve estimation. During the 2005 feasibility study, it was established through analysis of duplicates at umpire laboratories that there were small systematic biases in the aluminum and cobalt assays from the PD drilling campaign in the early 2000s. These biases have been corrected by making an across-the-board adjustment to the aluminum and cobalt assays from the PD drill holes. The reliability of the earliest analytical data, from a French consortium in the early 1970s, was checked using closely-spaced pairs of old and new drill holes. These closely-spaced pairs confirm that there is no systematic bias in the earliest analytical data, and that they can be used for resource and reserve estimation. The wet weight of the sample is measured, and then the sample is dried for 24 hours at 105°C. Following the measurement of the dry weight, the moisture content is determined from the difference between the weights before and after drying. Density and moisture content are taken every fifth metre down the drill hole.

Prior to 2005 when the cores were sent to UltraTrace, the half HQ core samples were crushed, pulverized and split into subsamples with 55% of the subsamples assayed by UltraTrace. The remaining 45%, plus 20% of those subsamples assayed by UltraTrace, were sent to Dynatec Fort Saskatchewan (“DYFS”) for analysis. In 2005, Dynatec started the complete sample preparation on site. The procedure for sample preparation remains equivalent to the UltraTrace procedure described above. The pulps produced during the sample preparation on site were shipped to DYFS in Canada and UltraTrace in Australia. The facility and the procedures were kept the same when the Corporation took over Dynatec.

Today, the on-site laboratory is the primary lab for the Ambatovy Joint Venture and uses the same procedures as described above. The UltraTrace laboratory is used as the secondary lab.

Samples at the Ambatovy Joint Venture are also collected for metallurgical pilot plant and batch tests. More than 26,000 total samples were processed at DYFS and UltraTrace with 14 analytical determinations carried out on each sample.

A QA/QC program has been implemented for the assays from the beginning by Dynatec. This specific QA/QC program was reviewed by AMEC in 2006. This review led to the introduction of a bench scale which directly measures the dry weight of core samples, as well as the weight when immersed in water, and led to improved consistency when calculating the moisture content and dry density of the samples.

Early in 2009, an Inductively Coupled Plasma Atomic Emission Spectroscopy analytical laboratory was installed at the mine site. A validation test has been completed to ensure that quality from the new analytical labs was satisfactory.

The samples are collected and handled at the drill site by Ambatovy Joint Venture personnel. The samples are under the direct control of Ambatovy Joint Venture personnel from the drilling site to the on-site laboratory or until they are shipped to UltraTrace. This ensures control of custody by the Ambatovy Joint Venture from the drill sites to the analytical laboratory.

Mine and Ore Preparation Facilities

The mine-site facilities consist of three camps, mine infrastructure (including offices, workshops, change-house, clinic, etc.), the Mangoro pumping station, the ore preparation plant and the slurry transfer pumping plant. These facilities are located between the Deposits.

The average electrical power requirement at the mine site is estimated to be 15 MW, which is supplied by locally installed diesel generators.

The mining method used by the Ambatovy Joint Venture consists of an excavator/truck operation. Bench mining is executed in opened deposits using hydraulic backhoe excavators equipped with 5.4 cubic metre buckets and a combination of rigid and articulated haulage trucks. The mine operates 365 days per year. Ore is either directly fed to the ore preparation plant, or stockpiled for future processing. As of December 31, 2015, a total of 5.95 million tonnes of material with an average grade of 0.78% Ni and 0.06% Co were in the stockpile.

Ore is processed through the ore preparation plant where it is slurried with water in a rotary drum scrubber and the resultant slurry is screened at <0.8 millimetres to reject partially or un-weathered material with a high magnesium content. The screened oversize material is processed through a second scrubber and screening circuit that achieves high recovery of the limonite contained in the ore. The final reject material is used for road construction or is deposited into mined-out areas. The product ore slurry is thickened and transported down a 600 millimetre diameter pipeline that is approximately 220 kilometres to the processing plant.

The route selected for the pipeline is as direct as practical, but some significant deviations were required to avoid environmentally and culturally sensitive areas.

The design for the pipeline was prepared by Pipeline Systems Incorporated, a Canadian company.

The mine-life at the Ambatovy Joint Venture is estimated at 28 years.

Processing Facilities

The nickel and cobalt recovery process from lateritic ores that has been selected by the Ambatovy Joint Venture uses Sherritt- developed technology which is in operation at other facilities.

The processing plant, located near the port of Toamasina, includes a pressure acid leaching plant, a metals refinery, and associated utility and ancillary plants including: water treatment, steam and power, hydrogen, hydrogen sulphide, sulphuric acid, air separation, limestone comminution, and lime-calcining and slaking. Site facilities include a medical clinic, training centres, change-house, canteen, stores, workshops, fuel storage, laboratory, gatehouse and main offices. The Ambatovy Joint Venture holds several long-term leases for the land on which the plant and nearby tailings management facility are located. Such leases are registered at the appropriate local land titles registries.

At the processing plant, the slurry is thickened and pumped to an acid pressure leaching circuit consisting of horizontal, mechanically-agitated autoclaves. Sulphuric acid is added to the autoclaves to dissolve nickel and cobalt from the slurried ore. The discharged slurry is partially neutralized with limestone and processed through a counter-current decantation wash circuit to separate the nickel and cobalt-containing solution from the leach residue. The leach residue is impounded in a tailings pond, following further neutralization with limestone and lime. In the nickel and cobalt rich solution, any excess sulphuric acid is neutralized with limestone and the resulting gypsum residue is processed through the wash circuit. Nickel and cobalt are recovered from the solution by precipitation, at elevated temperature and pressure, with hydrogen sulphide gas to produce mixed sulphides.

In the refining process, nickel and cobalt present in the mixed sulphide feed are leached in an oxidizing solution in autoclaves at elevated temperature and pressure. From the mixed sulphides, cobalt, nickel and other metals are dissolved and the sulphur is oxidized. Following solution purification, nickel and cobalt are separated by solvent extraction. Nickel is then recovered in powder form, and, after washing and drying, is compacted into briquettes. Cobalt is also recovered in powder form and compacted into briquettes or packaged as powder. The remaining, essentially metal-free, solution is evaporated to crystallized ammonium sulphate which is to be dried and sold as fertilizer. Ammonium sulphate fertilizer, a by-product of this refining process, is produced at an on-site ammonium sulphate plant, which is expected to have an annual output of approximately 210,000 tonnes. Other metals present in the feed, such as copper and zinc, are collected in sulphide residues and sold.

The tailings facility, located several kilometres inland from the plant site, has been designed to specific international standards as set out by the Canadian Dam Association, International Commission on Large Dams, and the Mining Association of Canada. The design provides for neutralization and precipitation of the tailings slurry with limestone and lime prior to discharge to the tailings basin. At its current size, the tailings facility has capacity remaining to sustain operations through the second quarter of 2015. The second phase of TMF construction will sustain operations for an additional three years. The detailed engineering for the third phase of the TMF started in 2015 and is expected to be finished in early 2016. The construction will be undertaken in stages with the first phase due to be finished by late 2018 to provide sufficient storage capacity for the remaining mine life.

Containment in the tailings basin is achieved by progressive elevation of embankments encompassing the tailings facility. Groundwater modeling indicates that due to the low permeability of the regional soils and subsequent tailings layer that will be present, seepage losses will be low. A network of groundwater interception wells is in place to identify and prevent any contaminant migration.

The entire tailings surface area will continue to be utilized through to the end of the life of the Ambatovy Joint Venture, at which point the surface will be contoured, drained and revegetated.

Various tests were completed to determine the characteristics of the tailings, and to estimate the in-situ density that will be achieved in the tailings basin after deposition. A dry density of 1.0 tonne/cubic metre was subsequently selected for the tailings.

Consideration of water management for the tailings basin is essential in this rainfall region. The water management plan involves containing supernatant and surface water run-off to allow for solids settlement to permit ultimate discharge to the ocean. A portion of this discharge is recycled back to the plant site for re-use. Extensive study produced a water management system design and discharge criteria that are established to result in no adverse effects on the local environment.

Schedule ‘C’

Greenhouse Gas Emission Frameworks

Federal

The most recent periodic conferences of the parties to the United Nations Framework Convention on Climate Change (the “Convention”) have not resulted in a legally binding GHG emissions reduction commitments to succeed the Kyoto Protocol, which expired at the end of 2012. However, most nations, including the United States, China, Brazil, India and Canada entered into a commitment referred to as the Paris Agreement in December 2015, under which countries submit voluntary mitigation targets and plans and revisit those targets and plans every five years. Under the Paris Agreement, the Canadian federal government has proposed to reduce its emissions by 30% below 2005 levels by 2030.

The current Canadian federal government has also proposed to coordinate with the provinces on developing a national approach to achieving GHG emissions reductions. In this context, the federal government has discussed with the provinces the possibility of setting a national baseline price on GHG emissions. It remains to be seen whether and how such an approach will be adopted by the federal government.

For information on the Air Quality Management System adopted by representatives of the Council of Ministers of the Environment, and federal, provincial and territorial representatives, see the heading entitled “3.7 — Environment, Health and Safety and Sustainability”.

Alberta

In addition to the federal commitments being made, Alberta has implemented the first regulation in Canada requiring industrial GHG reductions under the CCEM, called the Specified Gas Emitters Regulation. These enactments required certain existing facilities that released 100,000 tonnes or more of GHG emissions in certain calendar years to reduce their emissions intensity by up to 12%. The net emissions intensity for a year for an established facility must not exceed 88% of the baseline emissions intensity for the facility. For a new facility (for the purposes hereof, defined as a facility that has completed less than eight years of operation), the net emissions intensity limits are dependent on the number of years in which the new facility has been in commercial operation. In the case of the fourth, fifth, sixth, seventh and eighth year of commercial operation of the new facility, the net emissions intensity for that year of commercial operation cannot exceed 98%, 96%, 94%, 92% and 90%, respectively, of the baseline emissions intensity for the facility. Once a new facility has completed eight years of commercial operation, it becomes an established facility subject to the 88% net emissions limit for all years thereafter.

The Government of Alberta introduced a complementary Specified Gas Reporting Regulation, which came into force in October 2004. This legislation requires all industrial emitters emitting 50,000 tonnes or more of CO2e to report their annual GHG emissions in accordance with the specified Gas Reporting Standard published by the Government of Alberta.

The companies that operate these facilities are given options under the Specified Gas Emitters Regulation to aid them in achieving the required reductions in emissions. These compliance options include using emission offsets, emission performance credits and fund credits (obtained by contributing money (currently $15 per tonne of GHG emissions, and escalating to $20/tonne as of January 1, 2016 and $30/tonne as of January 1, 2017) to the Climate Change and Emissions Management Fund (the “Fund”)) against their total emissions. The Fund will invest in projects and technology to reduce GHG emissions in Alberta. Furthermore, under the CCEM and associated regulations, a facility that releases specified gases into the environment at or in excess of prescribed levels must comply with reporting obligations regarding details of the facility and specified gases released.

Audited emissions information is not available for the Metals Fort Saskatchewan site for 2014 at the time of writing. For the 2013 compliance period, GHG emissions by the Fort Saskatchewan site were 44,437 tonnes CO2e over what was required in order to meet the 12% reduction. The purchase of 44,437 tonnes of Fund credits at $15/credit results in a total cost of $666,555. It is anticipated that for the next several years, Fort Saskatchewan will continue to comply with the Specified Gas Emitters Regulation by contributing to the Fund and will consider emerging GHG emission efficiency options as they are developed.

In 2015, following provincial elections, the newly elected Government of Alberta proposed changes to the regulatory framework established under the Specified Gas Emitters Regulation. Under the proposed changes, a greater number of industrial facilities in the province would be subject to GHG emissions regulations. The covered facilities would be subject to a price of $20 per tonne of GHG emissions as of January 1, 2017, with that price escalating to $30/tonne as of January 1, 2018, and further escalating in each subsequent year. In addition to covering these facilities, the price would also be applied to certain distributors and importers of transportation and heating fuels based on the emissions attributable to the end-use of those fuels. The details of the proposed regulatory changes are still being finalized by the Government of Alberta.

Other Jurisdictions

The Power division has registered a project with the United Nations clean development mechanism which allows GHG emission-reduction projects in developing countries to earn certified emission reduction (“CER”) credits, each equivalent to one tonne of CO2. These CERs can be traded and sold, and used to meet certain emission reduction targets. The mechanism is intended to stimulate sustainable development and emission reductions and to provide flexibility in meeting certain emission reduction targets. The Energas Varadero Conversion from Open Cycle to Combined Cycle Project, United Nations Framework Convention on Climate Change Project 0918, achieved a verified GHG reduction of 342,235 metric tonnes CO2 equivalent from January 2007 to June 2008. Verification of a further 638,392 CER credits for the period from July 1, 2008 to December 31, 2010 has been completed. Verification of CER credits for the period from January 1, 2011 to the present has been suspended for the time being as a result of low market prices for CERs. No sales of CERs were recorded in 2015.

The process of registering the 150 MW Boca de Jaruco Combined Cycle Project with United Nations authorities has been suspended until market prices for CERs have improved.

Other Federal, Provincial and Regional Initiatives

Representatives of the Canadian Council of Ministers of the Environment, and federal, provincial and territorial representatives have adopted the Air Quality Management System which includes Base Level Industrial Emission Requirements and an air zone management system in Alberta. For information, see section 3.1 — “Metals — Environment, Health and Safety — Canada”.

In May 2008, British Columbia passed the Greenhouse Gas Reduction (Cap and Trade) Act, which was given Royal Assent on May 29, 2008. This legislation provides the statutory basis for setting up a market-based cap-and-trade framework to reduce GHG emissions from large emitters operating in the province.

British Columbia, Ontario and Quebec are each partners in the Western Climate Initiative (“WCI”) — a collaboration among these provinces and California to identify, evaluate, and implement policies to tackle climate change at a regional level. Of the WCI’s Canadian partners, British Columbia and Quebec have passed, and Ontario has proposed, legislation enabling the provincial governments to regulate GHG emissions through cap-and-trade regimes that are compatible with the framework endorsed by the WCI. California and Quebec have also issued regulations that established such cap-and-trade regimes as of January 1, 2013. Ontario has also proposed regulations for a cap-and-trade regime that would take effect as of January 1, 2017.

In Saskatchewan, Bill 126, The Management and Reduction of Greenhouse Gases Act, was passed in 2010 but is not yet proclaimed in force. The legislation provides a framework for the control of GHG emissions by regulated emitters and will be proclaimed once accompanying draft regulations are finalized. The draft regulations under the Act have set a provincial GHG emissions reduction target of 20% below the level of emissions in 2006 (or a three year average) by 2020. The standards will apply to a regulated facility (including the mining or processing of coal) emitting over 50,000 tonnes of CO2e in any year. For a facility that emits greater than 25,000 CO2e in a year, a report to the minister must be submitted annually indicating the level of greenhouse gases generated by the facility. Facilities from one emitter are grouped together if the emission activity relates to the generation of thermal electric power or steam. A Baseline Emission Level (“BEL”) application is required within 180 days after the legislation is proclaimed. The BEL will determine the annual cap and carbon compliance payment for regulated facilities if GHG emissions exceed the cap. The first year of annual returns must be verified by an independent third party. It remains unclear whether the

Government of Saskatchewan intends to proclaim the Management and Reduction of Greenhouse Gases Act in force, given the significant length of time since it was passed.

Quebec implemented a carbon tax in October 2007 and British Columbia implemented a carbon tax in July of 2008. These taxes may signal a policy trend as jurisdictions across North America continue to consider measures to reduce GHG emissions.

As it is unclear at this time what shape additional regulation will ultimately take, it is not yet possible to estimate the extent to which such regulations will impact the Corporation’s operations. However, the Corporation’s Canadian operations involve large facilities, so the setting of emissions targets (whether in the manner described above or otherwise) may well affect them and may have a material adverse effect on the Corporation’s business, results of operations and financial performance. In addition to directly emitting GHGs, the Corporation’s operations require large quantities of power. Future taxes on or regulation of power producers or the production of oil and gas or other products may also add to the Corporation’s operating costs.

The increased regulation of GHG emissions may also reduce the demand for the Corporation’s products.

To monitor the potential impact of, and opportunities arising out of, climate change, the Corporation has conducted a number of meetings with politicians and regulators at both the federal and provincial levels and closely monitors the regulatory activities of these governments. The Corporation’s facilities have implemented programs for the collection of emissions data as part of an overall environmental monitoring system. Any eventual costs related to emissions targets may be partially offset by credits earned through internal measures and research and development projects. The Corporation has already engaged in one such project utilizing waste exhaust heat to generate power for Energas facilities in Cuba, resulting in a reduction of GHG emissions. The environmental benefits achieved through the reduction of GHG emissions at the Energas operations were recognized by the granting of Kyoto Clean Development Mechanism status for the Phase 3 facilities of Energas pursuant to the provisions of the Kyoto Protocol.

Schedule ‘D’

Mandate of the Audit Committee

1. Mandate

The mandate of the Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of Sherritt International Corporation (the “Corporation”) is to assist the Corporation in ensuring the integrity and accuracy of the Corporation’s financial reporting and disclosure controls and procedures. The Committee shall fulfill its mandate by providing an open avenue of communication among management, the auditors (external and internal) and the Board.

2. Duties and Responsibilities

a) review and approve the Corporation’s interim financial statements, MD&A and earnings press releases prior to disclosure;

b) review and recommend for approval to the Board the Corporation’s annual financial statements, MD&A and earnings press releases and report to the Board thereon;

c) ensure the adequacy of procedures for the review of other corporate disclosure that is derived or extracted from the financial statements and periodically assess the adequacy of those procedures;

d) ensure that management fulfills its responsibilities to maintain effective disclosure controls and procedures and an effective system of internal control over financial reporting; report any deficiencies to the Board;

e) ensure management adequately identifies, manages, monitors and discloses the principal financial and business risks that could impact the Corporation’s financial results and reporting;

f) recommend and propose guidelines for the disclosure of information, such that relevant information is disclosed in a timely manner and is not selective;

g) ensure that, taken together, the work of the external and internal auditors provides an appropriate level of audit coverage and is effectively coordinated, to the extent appropriate;

h) oversee procedures for the receipt, retention and treatment of complaints received regarding accounting, internal controls or auditing matters, and procedures to allow confidential and anonymous submission of concerns regarding questionable accounting or auditing matters;

i) review all material public documents relating to the Corporation’s financial performance, financial position or financial analyses prior to release, including the AIF;

j) review the accounting principles and practices to be applied and followed by the Corporation during the fiscal year and any significant changes from those applied and followed during the previous year;

k) review all litigation and claims involving the Corporation which could materially affect its financial position and which the auditors or General Counsel may refer to the Committee;

l) review the Corporation’s tax status, significant tax issues and reviews by tax authorities;

m) review the adequacy of insurance coverage;

n) review management identification and evaluation of risks and risk mitigation procedures (including hedging);

o) review other information provided by management relating to the financial affairs of the Corporation;

p) review, at least annually, the quality and sufficiency of the Corporation’s accounting and financial personnel; and

q) perform any other duties or responsibilities expressly delegated to the Committee by the Board from time to time.

With regard to fulfilling their obligations as set out above, Committee members or the Board may request management, from time to time, to present information to the Committee on such matters relating to the financial affairs of the Corporation as deemed appropriate.

RELATIONSHIP WITH EXTERNAL AUDITORS

The external auditors report directly to the Committee and are accountable to the Board and the Committee. The Committee shall:

a) recommend for approval to the Board the appointment and oversee the work of the external auditors engaged for the purpose of preparing or issuing an auditors’ report or performing other audit, review or attest services;

b) approve the audit plan (including scope, timing and materiality);

c) review the qualifications and performance of the external auditors and recommend approval of fees

d) report to the Board regarding the nomination, remuneration and other material terms of the engagement of the external auditors as well as their performance;

e) review the results of the external auditors’ work. The external auditors’ report on the results of their work should include their views on the quality, not just the acceptability, of the implementation of generally accepted accounting principles, with a particular focus on the accounting estimates made by management and management’s selection of accounting principles;

f) assess working relationships with management and resolve any disagreements between management and the external auditors about financial reporting;

g) pre-approve the nature and fees of non-audit services; and

h) review and approve the hiring policies regarding partners and employees and former partners and employees of the present and former external auditors.

The Committee should review and discuss a written report by the external auditors detailing all factors that might have an impact on the external auditors’ independence, including all services provided and fees charged. The Committee should satisfy itself regarding the independence of the external auditors and report its conclusions and the basis for those conclusions to the Board.

The external auditors are entitled to receive notice of every meeting of the Committee and be heard thereat.

The external auditors are entitled to and are responsible for providing their views directly to the shareholders if they disagree with an approach being taken by the Committee.

RELATIONSHIP WITH CHIEF INTERNAL AUDITOR

The Chief Internal Auditor reports to the Senior Vice President, General Counsel and Corporate Secretary and is accountable to the Committee. The Chief Internal Auditor must be independent from the CFO. The Committee shall:

a) approve the mandate for the internal audit department and annually review its objectives, goals and staffing levels;

b) ensure that the Chief Internal Auditor has direct and open communication with the Committee with respect to progress on planned audits, significant audit findings, recommendations made and management’s response;

c) approve the appointment or removal of the Chief Internal Auditor; and

d) review management’s decisions related to the need for an internal audit.

3. Composition and Chair

The members of the Committee shall, subject to appointments made as a result of resignations or retirements, be appointed annually by the Board on the recommendation of the Nominating and Corporate Governance Committee.

The Committee shall consist of not less than three directors, each of whom shall be “independent” as determined under applicable Canadian securities laws. All members of the Committee are required to be financially literate. The requirements for qualification of Committee members shall be determined and interpreted by the Board from time to time based upon recommendations by the Nominating and Corporate Governance Committee.

The Board shall annually designate a Committee Chair from among the Committee members on the recommendation of the Nominating and Corporate Governance Committee. If, in any year, the Committee does not appoint a Chair, the incumbent Chair of the Committee will continue in office until a successor is appointed.

4. Meetings

The Committee shall meet as often as the Committee determines is necessary to fulfill its responsibilities.

Notice of every meeting will be given to each member.

A majority of the Committee members will constitute a quorum. No business may be transacted by the Committee except at meetings at which a quorum is present.

The Committee may invite such members of management or such outside advisors as it may see fit from time to time to attend its meetings and assist in the discussion and consideration of any matter.

A meeting of the Committee may be convened by the Chair or any two Committee members.

An in-camera session will be held at each regularly schedule Committee meeting with the following groups:

· Management;

· External auditors; and

· Chief Internal Auditor.

5. Reporting

The Committee will:

· regularly report to the Board on all significant matters it has addressed and with respect to such other matters that are within its responsibilities; and

· oversee the preparation of any disclosure required under applicable Canadian securities laws with respect to matters that are within its responsibilities.

6. Resources and Authority of the Committee

The Committee shall have the resources and authority appropriate to discharge its duties and responsibilities, including the authority to select, retain, terminate and approve the fees and other retention terms of special counsel or other experts or consultants, as it deems appropriate, provided that if the fees and expenses of any such special counsel or other experts or consultants retained by the Committee exceed, or are expected to exceed C$150,000, the approval of the full Board will be obtained.

The Committee has the authority to communicate directly with the internal and external auditors.

The Committee may engage outside experts to provide education relevant to the mandate of the Committee.

The Committee must pre-approve any experts or consultants retained by the Corporation if such experts or consultants are currently or have previously been retained by the Committee.

100

7. Tenure

Each member shall hold office until his or her term as a Committee member expires or is terminated.

8. Removal and Vacancies

Any Committee member may be removed and replaced at any time by the Board and shall cease to be a Committee member upon ceasing to be a director. The Board shall fill vacancies in the Committee by appointment from among the members of the Board. If a vacancy exists on the Committee, the remaining member shall exercise all of the Committee’s powers so long as a quorum remains in office.

101

Exhibit 2.2

TABLE OF CONTENTS

	Page
CHAIRMAN’S LETTER	i
NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS	ii
SHERRITT MANAGEMENT INFORMATION CIRCULAR — QUESTIONS AND ANSWERS	iii
MANAGEMENT INFORMATION CIRCULAR
SOLICITATION OF PROXIES AND VOTING INSTRUCTIONS	1
BUSINESS OF THE MEETING	1
APPOINTMENT OF PROXIES AND VOTING INSTRUCTIONS	8
Registered Shareholder Voting	8
Beneficial (Non-Registered) Shareholder Voting	9
Shares	10
Principal Holder of Voting Securities	10
INFORMATION CONCERNING THE CURRENT BOARD AND SHERRITT NOMINEES FOR ELECTION AS DIRECTORS	11
Sherritt Nominees	11
Meeting Attendance	19
Serving Together on Boards of Other Public Companies	19
Orders and Bankruptcies	19
ABOUT THE BOARD OF DIRECTORS	20
Independence	20
Position Descriptions	20
Meeting in Camera	21
Director Orientation	21
Board Skills Matrix	24
Board Succession and Renewal	24
CORPORATE GOVERNANCE PRACTICES	25
Share Ownership Requirements	25
Retirement Policy and Term Limits	25
Diversity Policy	26
Board Evaluation	26
Ethical Business Conduct	26
Disclosure Policy	27
Strategic Planning and Risk Management	27
Shareholder Engagement	27
Communication with the Board	27
COMMITTEES OF THE BOARD OF DIRECTORS	28
Audit Committee	28
Environment, Health, Safety and Sustainability Committee	29
Nominating and Corporate Governance Committee	30
Reserves Committee	30
Human Resources Committee	31
LETTER FROM THE CHAIR OF THE HUMAN RESOURCES COMMITTEE	33
COMPENSATION DISCUSSION & ANALYSIS	35
Executive Summary	35
Compensation Governance	37
Managing Compensation Risk	37
Comparator Group	38
Director Compensation	38
Executive Compensation	42
Determining Short-Term Incentive Awards	48
Notional Value of Total Compensation	63
Performance Graph	64
Summary Compensation Table	65
Incentive Plan Awards	66
Pension Benefits	75
Termination and Change of Control Benefits	75
INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS	78
INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED ON	78
INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS	78
DIRECTORS’ AND OFFICERS’ INSURANCE	79
ADDITIONAL INFORMATION	79
DIRECTORS’ APPROVAL	79
SCHEDULE “A” — SHERRITT INTERNATIONAL CORPORATION MANDATE OF THE BOARD OF DIRECTORS	A-1
SCHEDULE “B” — CONTINUANCE RESOLUTION	B-1
SCHEDULE “C” — ARTICLES OF CONTINUANCE	C-1
SCHEDULE “D” — EXCERPT OF SECTION 185 OF THE ONTARIO BUSINESS CORPORATIONS ACT	D-1
SCHEDULE “E” — BY-LAW RESOLUTION	E-1
SCHEDULE “F” — BY-LAW NO. 1	F-1

April 6, 2016

Dear fellow shareholders,

On behalf of the Board of Directors and the management of Sherritt International Corporation, I invite you to attend the annual and special meeting of shareholders being held at Roy Thomson Hall 60 Simcoe St, Toronto, Ontario on May 10, 2016 at 10:00 a.m. (Toronto time).

The annual and special meeting is your opportunity to exercise your voting rights and meet with the Board of Directors and the management team of Sherritt. As part of our commitment to good governance practices and seeking input from our shareholders, we are once again asking you to vote on the Corporation’s executive compensation practices through a say-on-pay vote. Please consider reviewing the section entitled “Compensation Discussion & Analysis — Executive Compensation” at page 35, together with the letter from the Chair of the Human Resources Committee on page 33 of the accompanying Management Information Circular before you cast your vote. We hope you find that our approach to executive compensation is in line with your expectations and reflective of the management team’s performance in 2015.

All eight of the current Sherritt directors are standing for re-election at the annual and special meeting. Following the formal business of the meeting, David Pathe, our CEO, will review Sherritt’s performance in 2015 and share with you our plans for the future. Should you have questions about our past performance or future direction, this is an excellent forum to seek answers. Should you be unable to attend the meeting in person, we urge you to vote your shares in advance of the meeting by delivering your completed proxy or voting instructions as explained in the accompanying Management Information Circular.

If you require additional information, please visit the investor relations section of our website at www.sherritt.com. Also available online is Sherritt’s Annual Information Form for the year ended December 31, 2015, Sherritt’s annual audited financial statements for the year ended December 31, 2015 and related management’s discussion and analysis, as well as other useful information.

Last year we brought greater focus and discipline to the business, and delivered results against our strategic priorities for the year in order to significantly lower costs, increase production and protect our liquidity. In the face of difficult business conditions and weak commodity markets, we would like to thank you for your continued support. Our management team continues to execute upon its goal of creating a focused, low-cost nickel company, and we look forward to continued success for our company in 2016 and beyond.

Sincerely,

Harold (Hap) Stephen

Chairman

Sherritt International Corporation

NOTICE OF ANNUAL AND SPECIAL MEETING OF SHAREHOLDERS

NOTICE IS HEREBY GIVEN that the annual and special meeting (the “Meeting”) of shareholders (the “Shareholders”) of Sherritt International Corporation (the “Corporation” or “Sherritt”) will be held at Roy Thomson Hall, 60 Simcoe St, Toronto, Ontario on May 10, 2016 at 10:00 a.m. (Toronto time).

BUSINESS OF THE MEETING

At the Meeting, Shareholders will be asked to:

1. receive the audited consolidated financial statements of the Corporation for the financial year ended December 31, 2015, together with the report of the external auditor thereon;

2. re-appoint the external auditor for the ensuing year and authorize the directors to fix the external auditor’s compensation;

3. consider the following non-binding advisory resolution: “resolved, on an advisory basis and not to diminish the roles and responsibilities of the Board, that the Shareholders accept the approach to executive compensation disclosed in the Circular”;

4. elect directors;

5. to consider, and if deemed appropriate, to adopt a special resolution, with or without variations, authorizing the Corporation to make an application for the continuance of the Corporation under the Canada Business Corporations Act (“CBCA”)(the “Continuance”), the full text of which is set forth in Schedule “B” to the accompanying Management Information Circular (the “Circular”);

6. to consider, and if deemed appropriate, to adopt a resolution, with or without variations, confirming a new general By-Law No. 1 for the Corporation and repealing By-Law No. 1 of the Corporation, as amended January 10, 2014 and By-Law No. 2 of the Corporation, effective January 10, 2014, conditional upon the Continuance becoming effective, in the form attached to Schedule “E” to the Circular (the “By-Law Resolution”); and

7. transact such other business, if any, as may properly come before the Meeting or any adjournment or postponement thereof.

The accompanying Circular provides additional information relating to the matters to be dealt with at the Meeting and forms part of this Notice of Annual and Special Meeting.

The Board of Directors has fixed March 31, 2016 as the record date (the “Record Date”) for the Meeting. Only Shareholders of record at the close of business on the Record Date are entitled to vote at the Meeting or any adjournment or postponement thereof.

Your vote is important regardless of the number of common shares of the Corporation you own.

All proxies must be received by 10:00 a.m. (Toronto time) on Friday, May 6, 2016 and, if the Meeting is adjourned or postponed, no later than 10:00 a.m. on the date (excluding Saturdays, Sundays and holidays) preceding the date of an adjourned or postponed Meeting.

Late proxies may be accepted or rejected by the Chairman of the Meeting at his discretion and the Chairman of the Meeting is under no obligation to accept or reject any particular late proxy. The time limit for deposit of proxies may be waived or extended by the Chairman of the Meeting at his discretion without notice.

If you have any questions about the information contained in the Circular or require assistance to complete your proxy, please consult your professional advisor or contact the Corporation’s proxy solicitation agent, Kingsdale Shareholder Services by toll-free telephone in North America at 1-800-749-9197 or collect call outside North America at 416-867-2272, or by email at contactus@kingsdaleshareholder.com.

DATED at Toronto, Ontario, this 6th day of April, 2016.

	By Order of the Board of Directors

	“Ward Sellers”

	Ward Sellers
	Senior Vice President, General Counsel & Corporate Secretary

SHERRITT MANAGEMENT INFORMATION CIRCULAR — QUESTIONS AND ANSWERS

Please refer to the accompanying Management Information Circular (the “Circular”) for definitions of uppercase terms not otherwise defined herein.

Q: What am I being asked to vote on at the Meeting?

A: The Meeting is being held to consider the ordinary annual business of the Corporation, including the election of directors and the re-appointment of auditors and special business of the Corporation, being the continuance of the Corporation under the CBCA (the “Continuance”) and the adoption of a new general by-law of the Corporation and the repeal of the existing By-Law No. 1 and By-Law No. 2 of the Corporation (the “By-Law Resolution”). Shareholders are also being asked to vote on an advisory (non-binding) resolution regarding executive compensation, often referred to as a “Say-on-Pay” resolution (the “Say-on-Pay Resolution”).

Q. What does the Board recommend?

A. Sherritt’s Board unanimously recommends that Shareholders use their proxy to vote as follows:

· FOR the reappointment of auditors named in the Circular and the authorization of the directors to fix remuneration of the auditors;

· FOR the Say-on-Pay Resolution;

· FOR the Sherritt Nominees named in the Circular for election to the Board;

· FOR the Continuance; and

· FOR the By-law Resolution.

Please read the section of the Circular entitled “Business of the Meeting” for more information.

Q. What if I can’t attend the Meeting in person?

A. If you cannot attend the Meeting in person please ensure that the enclosed proxy is received by either Sherritt’s transfer agent, CST Trust Company, or Sherritt’s proxy solicitation agent, Kingsdale Shareholder Services (“Kingsdale”) by 10:00 a.m. (Toronto time) on Friday, May 6, 2016 to ensure your Shares are voted at the Meeting. The proxy includes instructions as to how you may vote by mail, telephone, fax or via the internet. The Chairman of the Meeting may waive this cut-off time at his discretion without notice.

Q. Who is soliciting my proxy?

A. The Board and management of Sherritt are soliciting the proxy for use at the Meeting. In connection with this solicitation, the Board and management of Sherritt have provided this Circular.

Q. How will the solicitation be made?

A. The solicitation will be made primarily by mail. In addition to the solicitation of proxies by mail, directors and officers and certain employees of the Corporation may solicit proxies personally by telephone or other telecommunication but will not receive additional compensation for doing so. The Corporation has also engaged Kingsdale as proxy solicitation agent for the Meeting and will pay fees of approximately $30,000 (plus certain out-of-pocket expenses) to Kingsdale for the proxy solicitation service. The Corporation may also reimburse brokers or other persons holding Shares in their name or in the name of their nominees for costs incurred in sending proxy materials to their principals or beneficial holders in order to obtain their proxies.

Shareholders can contact Kingsdale either by mail at Kingsdale Shareholder Services, The Exchange Tower, 130 King Street West, Suite 2950, P.O. Box 361, Toronto, Ontario M5X 1E2, by toll-free telephone in North America at 1-800-749-9197 or collect call outside North America at 416-867-2272, or by e-mail at contactus@kingsdaleshareholder.com.

Q. What documents have been sent to Shareholders?

A. In addition to the accompanying Notice of Meeting and Circular, Shareholders have been sent a letter to Shareholders, and a proxy or voting instruction form (“VIF”). Copies of these documents (other than the VIF) are available from Sherritt’s profile at www.sedar.com and on Sherritt’s website at www.sherritt.com.

iii

Q. When do I submit my proxy?

A. In order to be valid and acted upon at the Meeting, your proxy must be received no later than 10:00 a.m. (Toronto time) on Friday, May 6, 2016 or no later than 10:00 a.m. on the date (excluding Saturdays, Sundays and holidays) preceding the date of an adjourned or postponed Meeting. The time limit for depositing proxies may be waived or extended by the Chairman of the Meeting at his discretion without notice.

Q. How many Shares are eligible to vote?

A. The number of Shares outstanding on the Record Date (as set forth in the accompanying Notice of Meeting) will be equal to the number of eligible votes. On the Record Date, the Corporation had 293,880,001 Shares outstanding. Shareholders are entitled to one vote in respect of each Share held on those items of business identified in the accompanying Notice of Meeting.

Q. What is the quorum for the Meeting?

A. A quorum is two or more persons present in person and entitled to vote at such meeting holding or representing by proxy not less than 25% of the votes entitled to be cast at such meeting.

Q. Are there any Shareholders who hold more than 10% of the Shares?

A. To the knowledge of the directors and executive officers of the Corporation, no one person or entity beneficially owns or exercises direction or control over, directly or indirectly, more than 10% of the Shares, except for Foyston, Gordon & Payne Inc., which has publicly disclosed that, acting in its capacity as an investment advisor to a number of pooled investment funds and managed accounts, it exercises control and direction over an aggregate of 30,368,571 Shares, representing 10.33% of the issued and outstanding Shares as at March 31, 2016.

Q. Who will count the votes?

A. Votes will be counted and tabulated by CST Trust Company, the Corporation’s transfer agent. Proxies are referred to Sherritt only in cases where a Shareholder clearly intends to communicate with management, the validity of the proxy is in question or where it is necessary to do so to meet the requirements of applicable law.

Q. Who can vote at the Meeting?

A. If you held Shares at the close of business on Thursday, March 31, 2016, you are eligible to vote your Shares in respect of the matters to be acted on (as noted in the accompanying Notice of Meeting) at the Meeting.

Each Share is entitled to one vote. If your Shares are held in the name of a bank, intermediary or broker (a “Nominee”), please see the instructions below under the heading “Appointment of Proxies and Voting Instructions — Beneficial (Non-registered) Shareholder Voting” on page 9 of the Circular.

Q. How do I determine what type of Shareholder I am?

A. There are several steps you must take in order to vote your Shares at the Meeting. For the purpose of voting at the Meeting, you must first determine what type of Shareholder you are: a Registered Shareholder or a Beneficial (Non-registered) Shareholder.

Registered Shareholder: You are a “Registered Shareholder” if your Shares are held in your personal name and you are in possession of a share certificate that indicates the same.

Beneficial (Non-registered) Shareholder: The majority of Shareholders are non-registered. You are a “Beneficial (Non-registered) Shareholder” if your Shares are:

· held in the name of a Nominee;

· deposited with a bank, a trust, a brokerage firm or other type of institution, and such Shares have been transferred out of your name; or

· held either (a) in the name of the intermediary that the Shareholder deals with (being securities dealers or brokers and trustees or administrators of self-administered RRSPs, RRIFs, RESPs and similar plans); or (b) in the name of a clearing agency (such as CDS) with which your Nominee deals.

Follow the steps in the appropriate category below once you have determined your Shareholder type. Please note that only Registered Shareholders or duly appointed proxyholders are permitted to vote at the Meeting.

Q. How can a Registered Shareholder vote?

A. If you are a Registered Shareholder, you may vote in person or by submitting your proxy as follows:

By Mail: by completing, signing, dating and returning the enclosed proxy to the Corporation’s transfer agent:

CST Trust Company

Attention: Proxy Department

P.O. Box 721

Agincourt, Ontario

M1S 0A1

Online: by visiting www.cstvotemyproxy.com and following the instructions. Please have the 13 digit control number on the enclosed proxy available as you will be prompted to enter this number for identification purposes.

By Telephone: by dialing 1-888-489-7352 from a touch-tone phone and following the voice instructions. Please have the 13 digit control number on the enclosed proxy available as you will be prompted to enter this number for identification purposes.

By Fax: by completing, signing, dating and returning the enclosed proxy to CST Trust Company at (416) 368-2502 or 1-866-781-3111.

In Person: If you are able to join us in person for the Meeting, and wish to vote your Shares in person, you do not need to complete and return the enclosed proxy. Before the official start of the Meeting on May 10, 2016, please register with the representatives(s) from CST Trust Company, which will be acting as scrutineer at the Meeting, who will be situated at a welcome table just outside the room in which the Meeting will be held. Once you are registered with CST Trust Company, your vote will be requested and counted at the Meeting.

Proxies must be received no later than 10:00 a.m. (Toronto time) on Friday, May 6, 2016, or, if the Meeting is adjourned or postponed, no later than 10:00 a.m. on the date (excluding Saturdays, Sundays and holidays) proceeding the date of an adjourned or postponed Meeting. Please note that your vote can only be counted if the person you appointed attends the Meeting and votes on your behalf and the proxy has been properly completed and executed.

The Shares will be voted or withheld from voting in accordance with the instructions of the Shareholder on any ballot that may be called for and, if the Shareholder specifies a choice with respect to any matter to be acted upon at the Meeting, the Shares will be voted accordingly.

Q. How can a Beneficial (Non-registered) Shareholder vote?

A. If your Shares are not registered under your name, they will likely be registered under the name of your broker or an agent of that broker (the “Intermediary”). Each Intermediary has its own procedures; please follow them carefully to ensure that your Shares are voted at the Meeting according to your instructions.

Beneficial (Non-Registered) Shareholders, including both Non-Objecting Beneficial Owners (“NOBO”) and Objecting Beneficial Owners (“OBO”) may vote in the following ways:

Online: by visiting www.proxyvote.com and following the instructions.

By telephone: by dialing the applicable number set out below and following the instructions

Canadian NOBO/OBO Shareholders: 1-800-474-7493 (English) or 1-800-474-7501 (French).

US NOBO/OBO Shareholders: 1-800-454-8683.

In Person: if you are able to join us in person for the Meeting, and wish to vote your Shares in person you may do so by either (i) inserting your own name in the space provided on the enclosed VIF or form of proxy provided by your Nominee or (ii) submitting any other document in writing to your Nominee that requests that the Beneficial (Non-registered) Shareholder or nominees thereof should be appointed as proxy. Then, follow the signing and return instructions provided by your Nominee. If you do not properly follow the return instructions provided by your Nominee, you may not be able to vote such Shares. Before the official start of the Meeting on May 10, 2016, please register with the representatives(s) from CST Trust Company, who will be situated at a welcome table just outside the Meeting room. Once you are registered with CST Trust Company, and, provided the instructions you provided to your Nominee have been forwarded by your nominee to CST Trust Company, your vote will be requested and counted at the Meeting.

Late proxies from non-registered holders may be accepted or rejected by the Chairman of the Meeting at his or her discretion, and the Chairman of the Meeting is under no obligation to accept or reject any particular late proxy. The time

limit for deposit of proxies may be waived or extended by the Chairman of the Meeting at his or her discretion, without notice.

If you have any questions or need assistance completing your proxy or VIF, please call Kingsdale Shareholder Services at 1-800-749-9197 toll-free in North America, collect at 416-867-2272 outside of North America, or email at contactus@kingsdaleshareholder.com.

Q. How do I appoint someone else to vote for me?

A. If you are not able to attend the Meeting in person, or if you wish to appoint a representative to vote on your behalf, you have the right to appoint a person or entity, who may or may not be a Shareholder of the Corporation, to attend and represent you at the Meeting and vote on your behalf. You do this by appointing them as your proxyholder as described below.

Use the accompanying form of proxy or another proper form of proxy. The persons named in the accompanying proxy are officers of the Corporation and are nominees of management. You can choose to have management’s appointee vote your Shares or may appoint a person or entity (who need not be a Shareholder of the Corporation) of your choice by striking out the printed names and inserting the desired person’s name and address in the blank space provided. Complete the balance of the proxy, sign it and return it to CST Trust Company at the address indicated above. Please note that your vote can only be counted if the person you appointed attends the Meeting and votes on your behalf and the proxy has been properly completed and executed.

You may not vote both by proxy and in person. If you have voted by proxy, you will not be able to vote your Shares in person at the Meeting, unless you revoke your proxy (see “Appointment of Proxies and Voting Instructions — Registered Shareholder Voting — Revoking your Proxy” on page 9).

Q. How will my proxy be voted?

A. If either Mr. David Pathe or Mr. Dean Chambers, management’s nominees as indicated on the enclosed proxy, are appointed as your proxyholder, and you do not specify how you wish your Shares to be voted, your Shares will be voted as follows:

· FOR the reappointment of auditors named in the Circular and the authorization of the directors to fix remuneration of the auditors;

· FOR the Say-on-Pay Resolution;

· FOR the Sherritt Nominees named in Circular for election to the Board;

· FOR the Continuance; and

· FOR the By-law Resolution.

YOUR VOTE IS VERY IMPORTANT — SUBMIT YOUR PROXY TODAY. FOR ASSISTANCE VOTING YOUR PROXY PLEASE CONTACT KINGSDALE SHAREHOLDER SERVICES BY TOLL-FREE TELEPHONE IN NORTH AMERICA AT 1-800-749-9197 OR COLLECT CALL OUTSIDE NORTH AMERICA AT 416-867-2272, OR BY E-MAIL AT CONTACTUS@KINGSDALESHAREHOLDER.COM.

Q. What if I want to revoke my proxy?

A. You may revoke your proxy at any time before it is acted on. In order to revoke your proxy, you must send a written statement indicating your wish to have your proxy revoked. This written statement must be received by CST Trust Company at the address indicated on the accompanying Notice of Meeting at any time up to and including the last business day preceding the day of the Meeting or any adjournment or postponement of the Meeting, or with the Chairman of the Meeting prior to Meeting’s commencement on the day of the Meeting or any adjournment or postponement of the Meeting, or in any other manner permitted by law.

Q. Who should I contact for more information or assistance in voting my Shares?

A. If you have any questions, please contact Kingsdale Shareholder Service by toll-free telephone in North America at 1-800-749-9197 or collect call outside North America at 416-867-2272, or by e-mail at contactus@kingsdaleshareholder.com.

MANAGEMENT INFORMATION CIRCULAR

SOLICITATION OF PROXIES AND VOTING INSTRUCTIONS

The information contained in this Management Information Circular (the “Circular”) is furnished in connection with the solicitation of proxies by management of Sherritt International Corporation (“Sherritt” or the “Corporation”) from registered holders of common shares of the Corporation (the “Shares”) (and of voting instructions in the case of non-registered holders of Shares) to be used at the annual and special meeting (the “Meeting”) of shareholders (“Shareholders”) of the Corporation to be held on May 10, 2016 at 10:00 a.m. (Toronto time) at Roy Thompson Hall, 60 Simcoe St, Toronto, Ontario and at all adjournments or postponements of the Meeting, for the purposes set forth in the accompanying Notice of Annual and Special Meeting of Shareholders (the “Notice of Meeting”).

The information contained in this Circular is given as at March 31, 2016, except where otherwise noted.

If you have any questions about information contained in this Circular or require assistance in completing your proxy, please consult your professional advisors or contact the Corporation’s proxy solicitation agent, Kingsdale Shareholder Services (“Kingsdale”) by toll-free telephone in North America at 1-800-749-9197 or collect call outside North America at 416-867-2272, or by email at contactus@kingsdaleshareholder.com.

BUSINESS OF THE MEETING

The annual business to be considered at the Meeting is as follows:

1. receive the audited consolidated financial statements of the Corporation for the financial year ended December 31, 2015, together with the report of the external auditor thereon;

2. re-appoint the external auditor for the ensuing year and authorize the directors to fix the external auditor’s compensation;

3. consider the following advisory (non-binding) resolution: “resolved, on an advisory basis and not to diminish the roles and responsibilities of the Board, that the Shareholders accept the approach to executive compensation disclosed in this Circular” (the “Say-on-Pay Resolution”);

4. elect directors; and

5. transact such other business, if any, as may properly come before the Meeting or any adjournment or postponement thereof.

The special business to be considered at the Meeting is the continuance of the Corporation (The “Continuance”) under the Canada Business Corporations Act (“CBCA”) and the adoption of a new By-law No 1. of the Corporation and repeal of the existing By-law No.1 and By-law No. 2 of the Corporation, conditional upon the Continuance.

Annual Business

1. Presentation of Financial Statements and Auditors’ Report

The Shareholders will be asked to receive the audited consolidated financial statements of the Corporation and the notes thereto, which comprise the consolidated statements of financial position as at December 31, 2015 and December 31, 2014 and January 1, 2015, and the consolidated statements of comprehensive (loss) income, consolidated statements of changes in shareholders’ equity and consolidated statements of cash flow for the years ended December 31, 2015 and December 31, 2014, together with the report of the auditor thereon.

2. Appointment of Auditor

The auditor of the Corporation is Deloitte LLP, Chartered Professional Accountants, Chartered Accountants, Licensed Public Accountants (“Deloitte LLP”). Deloitte LLP has served as auditor of the Corporation since November 1995.

Deloitte LLP is independent with respect to the Corporation and its subsidiaries within the meaning of the Rules of Professional Conduct of the Institute of Chartered Accountants of Ontario.

The aggregate fees paid for professional services rendered by Deloitte LLP, for the year ended December 31, 2015 and the year ended December 31, 2014, are presented below:

Fees	2015		2014
Audit fees(1)	$	2,843,000	$	3,145,000
Audit-related fees(2)	$	14,000	$	629,000
Tax-related fees(3)	$	619,000	$	543,000
Other fees(4)	$	165,000	$	84,000
Total fees	$	3,641,000	$	4,401,000

Notes:

(3) Tax-related fees consist of fees for assistance and advice in relation to the preparation of corporate income tax returns and expatriate services, other tax compliance and advisory services.

(4) Other fees related to data analysis and training and development consulting services.

Approval of the resolution to reappoint Deloitte LLP to serve as external auditor of the Corporation for the ensuing year and for authorization of the directors to fix the external auditor’s compensation will require an affirmative vote of a majority of the votes cast at the Meeting.

Board Recommendation

The Board of Directors (the “Board”) recommends that Shareholders vote FOR the reappointment of Deloitte LLP to serve as external auditor of the Corporation for the ensuing year and the authorization of the directors to fix the external auditor’s compensation, and unless a proxy specifies that the Shares it represents are to be voted against the matter proposed above, the proxyholders named in the accompanying proxy intend to vote FOR the reappointment of Deloitte LLP to serve as external auditor of the Corporation for the ensuing year and for authorization of the directors to fix the external auditor’s compensation.

3. Say-on-Pay Resolution

Sherritt’s executive compensation policies and procedures are based on the principle of pay for performance designed to align the interests of Sherritt’s executive team with the long-term interests of Shareholders. This non-binding advisory shareholder resolution, commonly known as a “say-on-pay” resolution, gives Shareholders the opportunity to endorse or not endorse Sherritt’s approach to its executive pay program and policies. Such resolutions are increasingly common in Canadian practice and the inclusion of a “say-on-pay” vote at this Meeting reflects Sherritt’s continued commitment to corporate governance best practices.

Because this vote is advisory, it will not be binding upon the Board. However, the Board will review the results of this advisory vote and will consider the outcome when considering future executive compensation arrangements. If a significant number of the Shares represented in person or by proxy at the Meeting are voted against this advisory resolution, the Board will review the approach to executive compensation and any concerns expressed by Shareholders in the context of such vote. Following such review by the Board, the Corporation intends to disclose a summary of the process undertaken by the Board and an explanation of any changes being implemented in relation to the Corporation’s executive compensation. Sherritt will provide this disclosure within six months of the Meeting and, in any case, not later than the date it distributes a Management Information Circular for the next meeting of Shareholders.

Shareholders are encouraged to read the section in this circular entitled “Compensation Discussion & Analysis” at page 35 below. The results of the Say-on-Pay advisory vote will be disclosed as part of the report on voting results for the Meeting. Shareholders supported the executive compensation approach in 2014 by voting 93.67% “FOR” and 6.33% “AGAINST” the say-on-pay resolution at the 2015 annual meeting of Shareholders.

Resolution

The text of the Say-on-Pay Resolution is as follows:

RESOLVED THAT:

on an advisory basis and not to diminish the role and responsibilities of the Board of Directors, that the Shareholders accept the approach to executive compensation disclosed in the Management Information Circular of the Corporation delivered in connection with the 2016 annual and special meeting of Shareholders of the Corporation.

Approval of the above resolution will require an affirmative vote of a majority of the votes cast at the Meeting.

Board Recommendation

The Board recommends that Shareholders vote FOR Sherritt’s approach to executive compensation, as described in the Compensation Discussion & Analysis section of this Circular, and unless a proxy specifies that the Shares it represents are to be voted against the matter proposed above, the proxyholders named in the accompanying proxy intend to vote FOR the Say-on-Pay Resolution.

4. Election of Directors

Sherritt’s current Board is strong, independent and experienced with sound corporate governance practices. Three highly qualified independent directors have been added to the Corporation’s already strong Board within the past three years. The eight Sherritt Nominees bring a robust mix of expertise across disciplines and industry sectors, including strengths in the mining and/or resource industry, international business, government relations, capital projects, reserve evaluation, enterprise management, financial literacy and reporting, corporate governance, operations, human resources/executive compensation, environment, health, safety and sustainability, risk management/evaluation, finance and mergers and acquisitions, and board leadership.

The Board has fixed the number of directors to be elected for the current year at eight. The term of office of each director so elected will expire at the next annual meeting of the Shareholders unless he or she shall resign his or her office or his or her office becomes vacant by death, removal or other cause at an earlier date.

All of the Sherritt Nominees are currently directors. Management of the Corporation does not contemplate that any of the Sherritt Nominees will be unable, or for any reason will become unwilling, to serve as a director. Should this occur for any reason prior to the Meeting, the persons named in the accompanying proxy or the VIF reserve the right to vote for another nominee, at their discretion, unless the Shareholder has specified in the form of proxy or the VIF his or her Shares are to be withheld from voting in the election of any of the directors.

The section entitled “Information Concerning the Current Board and Sherritt Nominees for Election of Directors” below, provides detailed information with respect to each of the Sherritt Nominees.

Majority Voting Policy

Shareholders can vote FOR or WITHHOLD from voting separately for each nominee director. In 2009, the Board adopted a majority voting policy for the election of directors. Under the terms of the policy, if a nominee receives more “withhold” votes than “for” votes at a meeting that is not a contested meeting, he or she will submit his or her resignation to the Board. The Nominating and Corporate Governance Committee will review the offer of resignation and, except in situations where exceptional circumstances would warrant the director to continue to serve on the Board, will recommend that the Board accept the resignation. Such director will not participate in any Board or committee deliberations on the matter. The resignation will be effective when accepted by the Board. The Board’s decision (including, if the resignation is not accepted, the reason for not accepting it) will be announced in a press release within 90 days of the annual meeting where such election was held. If the Board accepts the resignation, it may appoint a new director to fill the vacancy.

A contested meeting is defined as a meeting at which the number of directors nominated for election is greater than the number of seats available on the Board. As the Meeting is not a contested meeting, the Corporation’s Majority Voting Policy will apply.

At the 2015 annual meeting of Shareholders, each of the eight Sherritt Nominee directors were elected by a substantial majority. For the number of votes cast FOR and WITHHELD from each director at the Corporation’s 2015 annual general meeting, see the voting results filed on SEDAR at www.sedar.com. Voting results for each of the Sherritt Nominees elected

at the 2015 annual meeting who are standing for re- election can also be found under “Information concerning the current Board and Sherritt Nominees for elections as Directors — Sherritt Nominees” below.

Board Recommendation

The Board recommends that Shareholders vote FOR the Sherritt Nominees for election to the Board: Harold (Hap) Stephen, Timothy Baker, R. Peter Gillin, Sir Richard Lapthorne, Adrian Loader, Edythe (Dee) Marcoux, Lisa Pankratz and David Pathe. The proxyholders named in the accompanying proxy intend to vote FOR the Sherritt Nominees.

Special Business

Continuance under the CBCA

At the Meeting, Shareholders will be asked to consider and, if thought fit, to pass, with or without amendment, a special resolution (the “Continuance Resolution”) in the form set out in Schedule “B” to this Circular, authorizing, subject to regulatory approval, the Continuance.

In order to become effective, the Continuance Resolution must be approved by a vote of not less than two-thirds (2/3) of the votes cast by Shareholders at the meeting. Notwithstanding approval of the Continuance by a special resolution of the Shareholders, the Board may, without further approval of Shareholders, abandon the application for Continuance at any time prior to the issuance of a certificate of continuance by the director under the CBCA (the “CBCA Director”).

The Continuance

The rights of shareholders are currently governed, as to matters of corporate law, by the Ontario Business Corporations Act (the “OBCA”). Under the OBCA, a corporation may, if authorized by special resolution of its shareholders and the director appointed under the OBCA (the “OBCA Director”), apply under the CBCA for a certificate of continuance provided the corporation satisfies the OBCA Director that its proposed continuance in another jurisdiction will not adversely affect its creditors or shareholders. Accordingly, upon the issuance of a certificate of continuance in respect of the Corporation, the OBCA will cease to apply to the Corporation and the rights of Shareholders, as to matters of corporate law, will be governed by the CBCA.

The Board believes that the Continuance is in the best interests of the Corporation in order to more effectively manage the business and affairs of the Corporation.

The proposed articles of continuance (the “Articles of Continuance”) of the Corporation are set out in Schedule C to this Circular. Upon the Continuance becoming effective, the Corporation’s authorized and issued share capital, as well as the terms and conditions attached thereto, will remain unaltered.

Comparison of Shareholder Rights under the OBCA and the CBCA

While it is not practical to summarize all aspects of the rights of shareholders as governed by the OBCA or the CBCA in this Circular, certain differences which the Corporation considers could affect the rights of shareholders, are set forth below. The Corporation is of the view that the CBCA will provide Shareholders with substantively the same rights as are available to shareholders under the OBCA, including rights of dissent and appraisal, and rights to bring derivative actions and oppression actions. This summary is not an exhaustive review of the two statutes, and reference should be made to the full text of both statutes for particulars of the differences. Shareholders should consult their professional advisors with respect to the detailed provisions of the CBCA and their rights under it.

Shareholder Proposals

Both the OBCA and the CBCA provide for shareholder proposals. Under the OBCA, any registered shareholder may submit shareholder proposals relating to matters that the shareholder wishes to raise at a shareholders’ meeting. However, under the CBCA, the registered or beneficial shareholder must have owned for six months not less than 1% of the total number of voting shares or voting shares with a fair market value of at least $2,000 to be eligible to submit a shareholder proposal.

Fundamental Change

Compared to the CBCA, the OBCA contains a slightly narrower range of “fundamental changes” which require the approval of 662/3% of all shareholder votes cast. The CBCA also provides that that each share of an amalgamating corporation carries the right to vote in respect of an amalgamation whether or not it otherwise carries the right to vote. Under the OBCA, the holders of a class or series of shares of an amalgamating corporation not otherwise entitled to vote are only entitled to

vote on an amalgamation if they are affected in any of the manners listed in section 170 of the OBCA. Under both the OBCA and the CBCA, dissent and appraisal rights follow the right to vote on an amalgamation.

Director Residency Requirements

Under both the OBCA and the CBCA, subject to certain exceptions, at least 25% of a company’s directors must be resident Canadians, which in the case of the CBCA, must also be met at each valid meeting of the directors. The OBCA does not require that a minimum of 25% of the directors at each meeting of the directors be resident Canadians. However, under both statutes, where a corporation has less than four directors, at least one director shall be a resident Canadian.

Independent Directors

Under the OBCA, at least one third of the members of the board of directors of the company cannot be officers or employees of the company or its affiliates. Under the CBCA, the requirement is that at least two of the directors of the company not be officers or employees of the company or its affiliates.

Quorum of Directors’ Meetings

Both the CBCA and OBCA state that quorum of directors’ meetings consists of a majority of directors or the minimum number of directors required by the articles, although the OBCA also stipulates that in no case may a quorum be less than two-fifths of the number of directors or the minimum number of directors.

Place of Directors’ Meetings

The OBCA generally requires that meetings of the board of directors of a corporation occur at that corporation’s head office. However, where the by-laws of the Corporation so provide, meetings of the board of directors may be held within or outside Ontario. Under the CBCA, the directors may meet at any place within or outside of Canada stipulated in the by-laws, unless the articles or by-laws stipulate otherwise.

Registered Office

The OBCA requires that a corporation’s head office be located in Ontario at the location specified in the articles of incorporation and that it may be relocated to a different municipality or geographic township only by special resolution. The CBCA provides that a corporation’s registered head office may be located in any province in Canada and may be changed within such province without approval of the shareholders or amendment to the articles.

Corporate Records

The OBCA and related Ontario statutes require records to be kept in Ontario. The CBCA permits corporate and accounting records to be kept outside of Canada, although there are still requirements to keep records and books of account within Canada under the Income Tax Act (Canada) and other statutes administered by the Minister of National Revenue. The CBCA does requires companies to provide access to their records kept outside Canada at a location in Canada, by computer terminal or other technology.

Access to Information

Shareholders under the CBCA have a right of access to the minutes of meetings at which directors make mandatory disclosure of material interests in transactions and contracts that involve the company. There is no similar provision in the OBCA.

Notice of Shareholders’ Meetings

Under the OBCA, a public company must give notice of a meeting of shareholders not less than 21 days and not more than 50 days before the meeting. Under the CBCA, such notice must be provided not less than 21 days and not more than 60 days before the meeting.

Place of Shareholders’ Meetings

Under the OBCA, subject to the company’s articles of incorporation and any unanimous shareholder agreement, a shareholders’ meeting may be held at such place in or outside Ontario (including outside Canada) as the directors may determine. Under the CBCA, a shareholders’ meeting may be held at any place in Canada, or at a place outside Canada if

such place is specified in the articles of the company or if all the shareholders entitled to vote at the meeting agree to a meeting at such place outside Canada.

Effects of Continuance

General

The Continuance does not create a new legal entity, nor will it prejudice or affect the continuity of the Corporation. The Continuance will not result in any change in the business of the Corporation. The persons who constitute the Board will continue to be those persons elected by the Shareholders at the Meeting. The officers of the Corporation will continue to be those persons appointed by the Board.

Under the CBCA, upon Continuance, the Corporation will continue to: (i) possess all the Corporation’s property, rights, privileges and franchises; (ii) be subject to all the liabilities, including civil, criminal or quasi-criminal and all contracts, disabilities and debts of the Corporation; (iii) be subject to the enforcement by or against the Corporation of a conviction, or ruling, order or judgment in favour of or against the Corporation; and (iv) be the party plaintiff or the party defendant, as the case may be, in any civil action commenced by or against the Corporation. Furthermore, any Shares issued before the Continuance are deemed to have been issued in compliance with the CBCA and with the Articles of Continuance.

Required Shareholder Approval and Conditions

In order for the Continuance to be implemented, the Continuance Resolution must be passed by a majority of not less than two-thirds (2/3) of the votes cast by Shareholders, present in person or by proxy, at the Meeting.

If the Continuance is approved at the Meeting, subject to the discretion of the Board to decide otherwise, the Corporation will seek approval of the OBCA Director for the continuance of the Corporation under the CBCA as required by the CBCA. The Corporation intends to file Articles of Continuance pursuant to section 187 of the CBCA as soon as practicable after the Meeting. Subject to appropriate shareholder approval and such filings, the Continuance will be effective on the date of the certificate of continuance, which shall be issued by the CBCA Director upon receipt of Articles of Continuance pursuant to subsection 187(4) of the CBCA. The Corporation will file notice with the OBCA Director of the continuance under the CBCA at which point the OBCA Director, upon being satisfied of the continuance into another jurisdiction and that no creditors or Shareholders will be adversely affected, will file the notice and issue a certificate of discontinuance. The OBCA will cease to apply to the Corporation on the date of the certificate of discontinuance, which shall be dated the same date as the continuance under the CBCA.

The Continuance Resolution provides that the Board is authorized, in its sole discretion, to abandon the application for a certificate of continuance, or determine not to proceed with the Continuance, without further approval of the Shareholders. In particular, the Board may determine not to present the Continuance Resolution to the Meeting or, if the Continuance Resolution is presented to the Meeting and approved, may determine not to proceed with completion of the Continuance and filing of the Articles of Continuance under the CBCA if a significant number of Shareholders dissent in respect of the Continuance Resolution.

Dissent Rights

The following description of the dissent rights of the Shareholders (the “Dissent Rights”) is not a comprehensive statement of the procedures to be followed by a registered Shareholder who dissents in respect of the Continuance Resolution (a “Dissenting Shareholder”) and is qualified in its entirety by reference to the full text of Section 185 of the OBCA which is attached to this circular as Schedule “D”. A Dissenting Shareholder who intends to exercise Dissent Rights should carefully consider and comply with the provisions of Section 185 of the OBCA. Failure to comply strictly with the provisions of Section 185 of the OBCA, and to adhere to the procedures established therein may result in the loss of all rights thereunder.

Any registered holder of Shares is entitled to be paid the fair value of such shares in accordance with Section 185 of the OBCA if the Shareholder dissents to the Continuance Resolution and complies strictly with the requirements of Section 185 of the OBCA, and if such Continuance becomes effective. Only registered holders of Shares may dissent. Persons who are beneficial owners of Shares registered in the name of a broker, custodian, nominee or other intermediary who wish to dissent should be aware that only the registered owner is entitled to dissent. A registered holder, such as a broker, who holds Shares as nominee for beneficial holders, some of whom wish to dissent, must exercise Dissent Rights on behalf of such beneficial owners with respect to the Shares held for such beneficial owners. In such case, the demand for dissent should set forth the number of Shares covered by it.

A Shareholder is not entitled to object with respect to his, her or its shares if he, she or it votes any of such shares in favour of any resolutions authorizing the Continuance.

The Dissenting Shareholder is required to send a written objection to the resolution to the Corporation at or prior to the Meeting. A vote against the Continuance Resolution or an abstention does not constitute a written objection. Within 10 days after the Continuance Resolution is adopted by the Shareholders, the Corporation must notify the Dissenting Shareholder who is then required, within 20 days after receipt of such notice (or if he, she or it does not receive such notice, within 20 days after he, she or it learns of the adoption of the Continuance Resolution), to send to the Corporation a written notice containing his, her or its name and address, the number of Shares in respect of which he, she or it dissents and a demand for payment of the fair value of such shares and, within 30 days after sending such written notice, to send to the Corporation the appropriate share certificate or certificates.

The Corporation shall, not later than seven days after the later of the day on which the actions approved by the Continuance Resolution becomes effective, or the day the Corporation received the aforementioned demand for payment of fair value, make a written offer to pay such amount and shall pay for the Dissenting Shareholder’s Shares an amount considered by the directors to be the fair value thereof, accompanied by a statement showing how the fair value was determined, to the Dissenting Shareholder within 10 days following the date such offer is made, unless such offer is not accepted within 30 days of such date. Where the Corporation fails to make an offer or the Dissenting Shareholder fails to accept an offer, the Corporation may, within 50 days after the action approved by the resolution is effective or within such further period as a court may allow, apply to a court to fix a fair value for the shares of any Dissenting Shareholder. If the Corporation fails to apply to a court, a Dissenting Shareholder may apply to a court for the same purpose within a further period of 20 days or within such further period as a court may allow.

There is no obligation on the Corporation to apply to the court. If an application is made by either party, the Dissenting Shareholder will be entitled to be paid the amount fixed by the court which may be greater or less than the value of the Shares which the Dissenting Shareholder would have otherwise received under the Corporation’s written offer.

Shareholders who may wish to dissent should seek legal advice, as failure to comply with the strict requirements set out in Section 185 of the OBCA may result in the loss or unavailability of any right to dissent. Dissenting Shareholders should note that the exercise of Dissent Rights can be a complex, time consuming and expensive process. Persons who are beneficial owners of Shares registered in the name of a broker, custodian, nominee or other intermediary who wish to dissent should contact the registered Shareholder for assistance with exercising the Dissent Rights.

Address for Dissent Notices

All notices to the Corporation pursuant to Section 185 of the OBCA should be addressed to Sherritt International Corporation, 181 Bay Street, 26th Floor, Brookfield Place, Toronto, Ontario, M5J 2T3, Attention Ward Sellers, Senior Vice President, General Counsel & Corporate Secretary.

The Board may elect not to proceed with the Continuance if any notices of dissent are received.

Board Recommendation

The Board of Directors recommends that the Shareholders vote in favour of the Continuance Resolution. Unless specified in the form of proxy that the Shares shall be voted against the Continuance Resolution, the persons named in the enclosed form of proxy intend to vote FOR the Continuance Resolution.

Adoption of new By-law No. 1 and repeal of existing By-law No. 1 and By-law No. 2

Introduction

At the Meeting, or any adjournment thereof, the Shareholders will be asked to consider and, if thought fit, to pass, with or without amendment, a resolution confirming new By-law No. 1 and repealing the existing By-law No. 1 and By-law No. 2 (the “By-law Resolution”) in the form set out in Schedule “E” to this Circular.

In order to become effective, the By-law Resolution must be approved by a majority of the votes cast by the Shareholders at the Meeting and the Continuance must be approved by Shareholders pursuant to the Continuance Resolution and effected by the Corporation.

The proposed new By-law No. 1 of the Corporation is set out as Schedule “F” to this Circular. New By-law No. 1 is consistent with the provisions of the CBCA and is substantially cumulatively equivalent to the existing By-law No. 1 and By-law No. 2 of the Corporation, but as amended to reflect the differences between the OBCA and the CBCA described above.

Recommendation of Directors

The Board of Directors recommends that the Shareholders vote in favour of the By-law Resolution. Unless specified in the form of proxy that the shares shall be voted against the By-law Resolution, the persons named in the enclosed form of proxy intend to vote FOR the By-law Resolution.

APPOINTMENT OF PROXIES AND VOTING INSTRUCTIONS

REGISTERED SHAREHOLDER VOTING

You are a “Registered Shareholder” if your Shares are held in your personal name and you are in possession of a share certificate that indicates the same. If you are a Registered Shareholder, you may vote in person at the Meeting, you may appoint another person to represent you as proxyholder and vote your Shares at the Meeting or may vote by internet and telephone. If you wish to attend the Meeting, you may complete and return the enclosed proxy or you may vote in person at the Meeting. Please register with the scrutineers, being the Corporation’s transfer agent, CST Trust Company, when you arrive at the Meeting. If you wish to vote by internet or telephone, please see the enclosed proxy for further instructions.

To Vote by Proxy

If you are not able to attend the Meeting in person, or if you wish to appoint a representative to vote on your behalf, you have the right to appoint a person or entity other than the person designated in the proxy, who may or may not be a Shareholder, to represent you at the Meeting and vote on your behalf. You do this by appointing them as your proxyholder in writing in the proxy or another form of proxy as described below.

Use the enclosed proxy or another proper form of proxy. The persons named in the accompanying proxy are officers of the Corporation and are nominees of management. You can choose to have management’s appointee vote your Shares or may appoint a person or entity of your choice by striking out the printed names and inserting the desired person’s name and address in the blank space provided.

Registered Shareholders may vote in any of the following ways:

By Mail: by completing, signing, dating and returning the enclosed proxy to the Corporation’s transfer agent:

CST Trust Company

Attention: Proxy Department

P.O. Box 721

Agincourt, Ontario

M1S 0A1

By Fax: by completing, signing, dating and returning the enclosed proxy to CST Trust Company at (416) 368-2502 or 1-866-781-3111.

In Person: If you are able to join us in person for the Meeting, and wish to vote your Shares in person, you do not need to complete and return the enclosed proxy. Before the official start of the Meeting on May 12, 2015, please register with the representatives(s) from CST Trust Company, which will be acting as scrutineer at the Meeting, who will be situated at a welcome table just outside the room in which the Meeting will be held. Once you are registered with CST Trust Company, your vote will be requested and counted at the Meeting.

Proxies must be received no later than 10:00 p.m. (Toronto time) on Friday, May 6, 2015, or, if the Meeting is adjourned or postponed, no later than 10:00 a.m. on the date (excluding Saturdays, Sundays and holidays) preceding the date of an adjourned or postponed Meeting. Please note that your vote can only be counted if the person you appointed attends the Meeting and votes on your behalf and the proxy has been properly completed and executed.

Voting your Proxy

The management representatives designated in the enclosed proxy will vote for or against or withhold from voting your Shares in respect of which they are appointed by proxy on any vote that may be called for in accordance with your instructions as indicated on the proxy and, if you specify a choice with respect to any matter to be acted upon, the Shares will be voted accordingly.

In the absence of any direction, your Shares will be voted by the management representatives:

· FOR the reappointment of auditors named in this Circular and the authorization of the directors to fix remuneration of the auditors;

· FOR the Say-on-Pay Resolution;

· FOR the Sherritt Nominees for election to the Board;

· FOR the Continuance; and

· FOR the By-law Resolution.

The accompanying proxy confers discretionary authority upon the management representatives designated in the form of proxy with respect to voting on amendments to matters identified in the Notice of Meeting and with respect to other matters that may properly come before the Meeting. At the date of this Circular, the directors and management of the Corporation know of no such amendments, variations or other matters.

Revoking your Proxy

If you have submitted a proxy and later wish to revoke it, you can do so by re-voting your proxy online, by fax or by completing and signing a proxy bearing a later date and sending it to CST Trust Company. Your vote must be received no later than 10:00 a.m. (Toronto time) on Friday, May 6, 2015. A later dated proxy automatically revokes any previously submitted proxy. You can also send a written statement indicating you wish to have your proxy revoked. This written statement must be received by CST Trust Company at Proxy Department, P.O. Box 721 Agincourt, Ontario M1S 0A1, at any time up to 5:00 p.m. (Toronto time) on the last business day preceding the day of the Meeting, or any adjournment or postponement thereof, at which the proxy is to be used; (ii) with the Chairman of the Meeting before the Meeting starts on the day of the Meeting or any adjournment or postponement thereof; or (iii) in any other manner permitted by law.

BENEFICIAL (NON-REGISTERED) SHAREHOLDER VOTING

If your Shares are not registered under your name, they will likely be registered under the name of your broker or an agent of that broker (the “Intermediary”). Each Intermediary has its own procedures; please follow them carefully to ensure that your shares are voted at the Meeting according to your instructions.

Beneficial (Non-Registered) Shareholders, including both Non-Objecting Beneficial Owners (“NOBO”) and Objecting Beneficial Owners (“OBO”) may vote in the following ways:

Online: by visiting www.proxyvote.com and following the instructions.

By telephone: by dialing the applicable number set out below and following the instructions

Canadian NOBO/OBO Shareholders: 1-800-474-7493 (English) or 1-800-474-7501 (French).

US NOBO/OBO Shareholders: 1-800-454-8683.

Late proxies from non-registered holders may be accepted or rejected by the Chairman of the Meeting at his discretion, and the Chairman of the Meeting is under no obligation to accept or reject any particular late proxy. The time limit for deposit of proxies may be waived or extended by the Chairman of the Meeting at his discretion, without notice.

Whether you choose to vote your beneficially held Shares by proxy, VIF or in person, you must carefully follow the instructions that accompany either the VIF or proxy, including those regarding when and where the VIF or proxy is to be delivered, and the deadline for delivery.

Revoking Voting Instructions

If you have submitted a VIF and later wish to revoke it, you can do so by re — voting your VIF online, by fax or by completing and signing a VIF bearing a later date and sending it to the address set out on the VIF. Your vote must be received no later than 10:00 a.m. (Toronto time) on Friday, May 6, 2016. A later dated VIF automatically revokes any previously submitted VIF. You can also revoke by following the procedures provided by your Nominee. Your Nominee must send a written statement indicating you wish to have your voting instructions revoked. This written statement must be received by CST Trust Company at Proxy Department, P.O. Box 721 Agincourt, Ontario M1S 0A1, at any time up to 5:00 p.m.(Toronto time) on the last business day preceding the day of the Meeting, or any adjournment or postponement thereof, at which the proxy is to be used; (ii) with the Chairman of the Meeting before the Meeting starts on the day of the Meeting or any adjournment or postponement thereof; or (iii) in any other manner permitted by law.

SHARES

The authorized capital of the Corporation consists of an unlimited number of Shares. As of March 31, 2016, the Corporation had 293,880,001 Shares issued and outstanding. Each Shareholder of record at the close of business on March 31, 2016, the record date (the “Record Date”) established for notice of the Meeting and for voting, will be entitled to vote on all matters proposed to come before the Meeting on the basis of one vote for each Share held. A quorum for the transaction of business at the Meeting will consist of two or more individuals present in person and each being entitled to vote thereat, representing in person or by proxy at least 25% of the total number of Shares entitled to vote at a meeting of Shareholders.

PRINCIPAL HOLDER OF VOTING SECURITIES

To the knowledge of the directors and executive officers of the Corporation, no one person or entity beneficially owns or exercises direction or control over, directly or indirectly, more than 10% of the Shares, except for Foyston, Gordon & Payne Inc., which has publicly disclosed that, acting in its capacity as an investment advisor to a number of pooled investment funds and managed accounts, it exercises control and direction over an aggregate of Shares, representing 10.33% of the issued and outstanding Shares as at March 31, 2016.

INFORMATION CONCERNING THE CURRENT BOARD AND SHERRITT NOMINEES

FOR ELECTION AS DIRECTORS

SHERRITT NOMINEES

The tables below provide information about each of the Sherritt Nominee directors to assist Shareholders with their voting decisions. The tables include information regarding each director’s other directorships, membership on Board committees, attendance record in 2015, experience, areas of expertise, amount of securities of the Corporation each holds and the number of votes each received at the last annual meeting of the Shareholders. Seven of the eight Sherritt Nominees are independent, as defined by applicable securities laws, which means they are independent of management. A nominated director is non-independent if he or she has a direct or indirect material relationship that the Board believes could be reasonably expected to interfere with his or her ability to exercise independent judgment. Mr. Pathe is non-independent as he serves as President and Chief Executive Officer of the Corporation.

Harold (Hap) Stephen

Director and Chairman

Residence: Ontario, Canada

Age: 69

Director Since: May 24, 2012

Independent

Mr. Stephen currently serves as a director of TD Mutual Funds Corporate Class Ltd. and Algoma Central Corporation, a shipping company. Mr. Stephen is the Chairman and Chief Executive Officer of Stonecrest Capital Inc., a leading Canadian restructuring firm and a director of Stephen Capital Inc. He has served as Chief Restructuring Officer in the court supervised restructurings of Grant Forest Products Inc., Canwest Global Communications Corporation, Stelco Inc., Mosaic Group Inc., Algoma Steel Inc. and Athletes World Inc. He advised the Office of the Superintendent of Financial Institutions on the pension plan issues related to the Air Canada restructuring. He also acted as Chairman of a Special Committee reporting to the Minister of National Defence with a mandate to review the structure and operations of the Department of National Defence and provide recommendations to lower operating costs and improve efficiency. Mr. Stephen also served as Chairman of Repap Enterprises Inc., a pulp and paper producer with operations in Canada and the United States from June 1999 to November 2000 and Executive Vice President and CFO of T. Eaton Company Limited from October 1997 to October 1999. From 1977 to 1997 he was a partner of Ernst & Young and from 1985 to 1997 was responsible for the management of Ernst & Young’s financial restructuring and corporate finance practices.

Mr. Stephen is a Chartered Professional Accountant and a Chartered Accountant. He is currently serving as a member of the Independent Review Committee of TD Asset Management Inc.

Board/Committee Membership	Overall Attendance in 2015		Areas of Expertise
Board of Directors	7 of 7	100%	· Enterprise Management
Nominating and Corporate Governance	3 of 3	100%	· Financial Literacy and Reporting
			· Corporate Governance
			· Risk Management/Evaluation
			· Finance and M&A
			· Board Leadership

Other Public Board Memberships in the Past Five Years(1)

Algoma Central Corporation

Labrador Iron Ore Royalty Corporation (until May 2014)

Public Board Interlocks:

None(1)

Securities Held(2)(3)

Year	Shares	DDSUs	Total Shares and DDSUs	Total Value of Shares and DDSUs(4)		Minimum Ownership Met(5)(6)
2015	100,000	247,976	347,976	$	902,625	Yes
2014	100,000	86,135	186,135	$	727,071	In progress

Options Held:

None

Voting Results of 2015 Annual Meeting(7)	Votes For	Votes Withheld	Total Votes Cast
# of votes	149,464,656	7,087.044	156,551,700
% of votes	95.47	4.53	100

Timothy Baker

Director

Residence: Ontario,Canada

Age: 64

Director Since:May 6, 2014

Independent

Mr. Baker brings over 30 years of extensive project development and operations experience to Sherritt. He currently serves as a director of Antofagasta PLC and is also Chairman of Golden Star Resources Ltd. Mr. Baker retired from his positions as Executive Vice President and Chief Operating Officer of Kinross Gold Corporation in 2010. Prior to joining Kinross in 2006, Mr. Baker was with Placer Dome Inc., where he served in several key roles including Executive General Manager of Placer Dome Chile and of Placer Dome Tanzania, and Senior Vice President of the copper producing Compania Minera Zaldivar. Mr. Baker also served as a director of Augusta Resources Corporation, Pacific Rim Mining Corp. and Eldorado Gold Corporation. Mr. Baker holds a B.Sc. (Geology) and the ICD.D certification from the Institute of Corporate Directors.

Board/Committee Membership	Overall Attendance in 2015		Areas of Expertise
Board of Directors	7 of 7	100%	· Mining and/or Resource Industry
Environment, Health, Safety and Sustainability (Chair)(8)	4 of 4	100%	· International Business
			· Capital Projects
Nominating and Corporate Governance	3 of 3	100%	· Reserve Evaluation
			· Operations
Reserves(9)	3 of 3	100%	· Human Resources/Executive Compensation
			· Environment, Health, Safety & Sustainability
			· Risk Management/Evaluation
			· Board Leadership

Other Public Board Memberships in the Past Five Years

Augusta Resources Corporation (until October 2014)

Antofagasta PLC

Golden Star Resources Ltd.

Pacific Rim Mining Corp. (until September 2013)

Eldorado Gold Corporation (until December 2012)

Public Board Interlocks:

None

Securities Held(2)(3)

Year	Shares	DDSUs	Total Shares and DDSUs	Total Value of Shares and DDSUs(4)		Minimum Ownership Met(5)(6)
2015	22,100	101,438	123,538	$	203,531	In Progress
2014	22,100	20,730	42,830	$	133,964	In Progress

Options Held:

None

Voting Results of 2015 Annual Meeting(7)	Votes For	Votes Withheld	Total Votes Cast
# of votes	151,091,700	5,460,000	156,551,700
% of votes	96.51	3.49	100

R. Peter Gillin

Director

Residence: Ontario, Canada

Age: 67

Director Since: January 1, 2010

Independent

Mr. Gillin is currently a director of Silver Wheaton Corp., Dundee Precious Metals Inc., TD Mutual Funds Corporate Class Ltd., Turquoise Hill Resources Ltd. (formerly Ivanhoe Mines Inc.) and Barlow Mine Inc. and has been a member of the Independent Review Committee of TD Asset Management Inc. since 2003. Mr. Gillin also served as a director of HudBay Minerals Inc. from April 2008 to March 2009. From October 2003 to September 2008, Mr. Gillin served as Chairman and Chief Executive Officer of Tahera Diamond Corporation, a diamond exploration, development and production company. From October 2002 to March 2003, Mr. Gillin was President and Chief Executive Officer of Zemex Corp, an industrial minerals producer. Prior thereto, Mr. Gillin served as Vice Chairman of NM Rothschild and Sons Canada Limited. Mr. Gillin is a CFA and also holds the ICD.D certification from the Institute of Corporate Directors.

Board/Committee Membership	Overall Attendance in 2015		Areas of Expertise
Board of Directors	7 of 7	100%	· Mining and/or Resource Industry
Audit (Chair)	8 of 8	100%	· International Business
Human Resources	5 of 5	100%	· Capital Projects
Nominating and Corporate Governance	3 of 3	100%	· Enterprise Management
			· Financial Literacy and Reporting
Environment, Health, Safety and Sustainability	4 of 4	100%	· Operations
			· Human Resources/Executive Compensation
			· Risk Management/Evaluation
			· Finance and M&A
			· Board Leadership

Other Public Board Memberships in the Past Five Years(1)

Dundee Precious Metals Inc.

Silver Wheaton Corp.

Turquoise Hill Resources Ltd. (formerly Ivanhoe Mines Inc.)

Public Board Interlocks:

None(1)

Securities Held(2)(3)

Year	Shares	DDSUs	Total Shares and DDSUs	Total Value of Shares and DDSUs(4)		Minimum Ownership Met(5)
2015	25,380	149,560	174,940	$	583,676	Yes
2014	25,380	68,384	93,764	$	495,701	Yes

Options Held:

None

Voting Results of 2015 Annual Meeting(7)	Votes For	Votes Withheld	Total Votes Cast
# of votes	149.023,151	7,528,549	156,551,700
% of votes	95.19	4.81	100

Sir Richard Lapthorne

Director

Residence: United Kingdom

Age: 72

Director Since: September 14, 2011

Independent

Sir Richard Lapthorne has served as a Finance Director or as Chairman of various FTSE 100 and non-quoted companies in the United Kingdom since 1986 and is advisor to and Chair of the Public Interest Body of PricewaterhouseCoopers. He is currently Chairman of Cable & Wireless Communications plc and Cable & Wireless plc. Between June 2009 and April 2010, he served as Chairman of McLaren Group Limited. From 1996 to May 2003 he was Chairman of Amersham International plc (now GE Healthcare) having joined its board as a Non-executive Director in 1989. He was Finance Director of British Aerospace plc from July 1992 and Vice Chairman from April 1998 until his retirement in 1999. He is also a fellow of each of the Chartered Institute of Management Accountants, Chartered Institute of Certified Accountants and the Institute of Corporate Treasurers in the United Kingdom.

Board/Committee Membership	Overall Attendance in 2015		Areas of Expertise
Board of Directors	7 of 7	100%	· International Business
Audit	7 of 8	88%	· Government Relations
Nominating and Corporate Governance (Chair)	3 of 3	100%	· Capital Projects
			· Enterprise Management
Reserves(9)	2 of 2	100%	· Financial Literacy and Reporting
			· Corporate Governance
			· Operations
			· Human Resources/Executive Compensation
			· Risk Management/Evaluation
			· Finance and M&A
			· Board Leadership

Other Public Board Memberships in the Past Five Years

Cable & Wireless Communications plc (Chairman)

Cable & Wireless plc (Chairman)

Public Board Interlocks:

None

Securities Held(2)(3)

Year	Shares	DDSUs	Total Shares and DDSUs	Total Value of Shares and DDSUs(4)		Minimum Ownership Met(5)
2015	45,500	134,610	180,110	$	562,627	Yes
2014	45,500	53,580	99,080	$	474,949	Yes

Options Held:

None

Voting Results of 2015 Annual Meeting(7)	Votes For	Votes Withheld	Total Votes Cast
# of votes	150,184,122	6,367,578	156,551,700
% of votes	95.93	4.07	100

Adrian Loader

Director

Residence: London, England

Age: 67

Director Since: July 29, 2013

Independent

Mr. Loader has extensive international experience with Royal Dutch Shell in energy management, projects, strategy, business development and new market entry. Mr. Loader held regional responsibility for Royal Dutch Shell’s operations in Latin America/Africa, Middle East/Far East and Europe. He was subsequently the Royal Dutch Shell Director responsible for Strategy and Business Development, as well as for Scenarios, Group Planning, Health, Safety & Environment, and External Affairs. Before retiring from Royal Dutch Shell at the end of 2007, Mr. Loader served as President and Chief Executive Officer of Shell Canada where he was responsible, inter alia, for Shell Canada’s oil sands open pit mining activities and their expansion. Mr. Loader has served on the following public company boards — Alliance-Unichem, Shell Canada, Alliance-Boots, Candax Energy and Compton Petroleum. In January 2008, he joined the Board of Toronto-based Candax Energy and was Chairman until June 2010. He then served as Chairman of Compton Petroleum, Calgary, until August 2012. He is currently Chairman of Oracle Coalfields PLC, London (an international coal developer with a major project in Pakistan), as well as a director of LaFargeHolcim (a Swiss global supplier of cement and aggregates) and Alderon Iron Ore Corp. (a Canadian Iron Ore project developer). Mr. Loader also serves as a member of the UK Advisory Board of Navigant (an American consulting company). Mr. Loader is a Fellow of the Chartered Institute of Personnel and Development and holds a Master’s degree in History from Cambridge University, England.

Board/Committee Membership	Overall Attendance in 2015		Areas of Expertise
Board of Directors	7 of 7	100%	· Mining and/or Resource Industry
Human Resources	5 of 5	100%	· International Business
Nominating and Corporate Governance	3 of 3	100%	· Government Relations
			· Capital Projects
Reserves (Chair)(9)	3 of 3	100%	· Reserve Evaluation
			· Enterprise Management
			· Corporate Governance
			· Operations
			· Human Resources/Executive Compensation
			· Environment, Health, Safety and Sustainability
			· Risk Management/Evaluation
			· Finance and M&A
			· Board Leadership

Other Public Board Memberships in the Past Five Years

Alderon Iron Ore Corp.

Oracle Coalfields plc (Chairman)

LaFargeHolcim

Compton Petroleum (Chairman) (until December 2012)

Public Board Interlocks:

None

Securities Held(2)(3)

Year	Shares	DDSUs	Total Shares and DDSUs	Total Value of Shares and DDSUs(4)		Minimum Ownership Met(5)(6)
2015	19,000	118,530	137,530	$	299,576	In progress
2014	19,000	37,657	56,657	$	212,217	In progress

Options Held:

None

Voting Results of 2015 Annual Meeting(7)	Votes For	Votes Withheld	Total Votes Cast
# of votes	150,087.967	6,463,733	156,551,700
% of votes	95.87	4.13	100

Edythe A. (Dee) Marcoux

Director

Residence: British Columbia, Canada

Age: 67

Director Since: May 25, 2006

Independent

Ms. Marcoux, Bachelor of Applied Science (Metallurgical Engineering), M.B.A, is a retired executive, with over 30 years of experience in the energy industry and five years of experience in the mining industry. Ms. Marcoux previously served as a director on the boards of SNC Lavalin Inc., OPTI Canada Inc. and Placer Dome Inc. She was Vice Chair of the National Roundtable for the Economy and the Environment for 2005 and 2006.

From 2003 until 2005, she served as a strategic consultant and advisor to Ensyn Petroleum Inc. and held an ownership position in Ensyn Energy Inc. until 2005 when Ensyn Petroleum was purchased by Ivanhoe Energy Inc. From 1998 to 2003 Ms. Marcoux worked as a consultant and served on the board of Southern Pacific Petroleum NL, a company developing shale oil resources in Australia. From 1998 to 2002 Ms. Marcoux served in varying capacities with Ensyn Group Inc., a company developing heavy oil upgrading technology. She held the position of President and CEO of Ensyn Energy Corp during this period.

Ms. Marcoux previously worked for: Gulf Canada as President of Heavy Oil (1997-1998); CS Resources as President (1996-1997), Suncor (1991-1996) as Executive Vice- President of Oil Sands Group; Ontario Hydro (1990-1991) in supply and services; Petro Canada (1983-1990) in business development and refinery management; and Imperial Oil Ltd. (1976-1983) in process and project engineering, logistics and finance.

Board/Committee Membership	Overall Attendance in 2015		Areas of Expertise
Board of Directors	7 of 7	100%	· Mining and/or Resource Industry
Environment, Health, Safety and Sustainability(8)	4 of 4	100%	· International Business
			· Capital Projects
Human Resources (Chair)	5 of 5	100%	· Reserve Evaluation
Nominating and Corporate Governance	3 of 3	100%	· Enterprise Management
			· Financial Literacy and Reporting
			· Corporate Governance
			· Operations
			· Human Resources/Executive Compensation
			· Environment, Health, Safety and Sustainability
			· Risk Management/Evaluation

Other Public Board Memberships in the Past Five Years

SNC Lavalin Group Inc. (until May 2013)

OPTI Canada Inc. (until November 2011)

Public Board Interlocks:

None

Securities Held(2)(3)

Year	Shares	DDSUs	Total Shares and DDSUs	Total Value of Shares and DDSUs(4)		Minimum Ownership Met(5)
2015	110,000	164,537	274,537	$	983,192	Yes
2014	110,000	83,214	193,214	$	932,930	Yes

Options Held:

None

Voting Results of 2015 Annual Meeting(7)	Votes For	Votes Withheld	Total Votes Cast
# of votes	149,173,333	7,378,367	156,551,700
% of votes	95.29	4.71	100

Lisa Pankratz

Director

Residence: British Columbia, Canada

Age: 55

Director Since: November 13, 2013

Independent

Ms. Pankratz has over 28 years of experience in the investment industry and capital markets in both executive and advisory capacities working with multinational and international companies. For over 14 years, she has served as a board member of corporations in the financial services and global media industries. Ms. Pankratz currently sits on the boards of IA Clarington Investments Inc., UBC Investment Management Trust Inc., CIR Investment Research Ltd. and the Canadian Museum for Human Rights, none of which are publicly listed. She is also a member of the HSBC Independent Review Committee of HSBC Global Asset Management (Canada) Limited and an advisor to the investment committees of Pacific Blue Cross and BC Life & Casualty Company.

She previously served on the boards of Canwest Global Communications Corp. (2005-2010), Canwest Media, Inc. (2005-2008), the Insurance Corporation of British Columbia (2001-2007) and was a member of the Accounting Policy and Advisory Committee advising the Ministry of Finance for the Province of British Columbia (2002-2004). From 2006 until 2010, Ms. Pankratz served as the President of Mackenzie Cundill Investment Management Ltd. and from 2002-2006 as the President, Chief Compliance Officer and Director of Cundill Investment Research Ltd. and the Chief Compliance Officer of The Cundill Group.

Board/Committee Membership	Overall Attendance in 2015		Areas of Expertise
Board of Directors	7 of 7	100%	· International Business
Audit	8 of 8	100%	· Capital Projects
Environment, Health, Safety and Sustainability	4 of 4	100%	· Enterprise Management
			· Financial Literacy and Reporting
Nominating and Corporate Governance	3 of 3	100%	· Corporate Governance
			· Operations
			· Human Resources/Executive Compensation
			· Risk Management/Evaluation
			· Finance and M&A

Other Public Board Memberships in the Past Five Years

None

Public Board Interlocks:

None

Securities Held(2)(3)

Year	Shares	DDSUs	Total Shares and DDSUs	Total Value of Shares and DDSUs(4)		Minimum Ownership Met(5)(6)
2015	29,300	112,403	141,703	$	277,379	In progress
2014	29,300	31,589	60,889	$	200,871	In progress

Options Held:

None

Voting Results of 2015 Annual Meeting(7)	Votes For	Votes Withheld	Total Votes Cast
# of votes	149,185,971	7,378,367	156,551,700
% of votes	95.29	4.71	100

David V. Pathe

President and Chief Executive Officer

Residence: Ontario, Canada

Age: 45

Director Since: January 1, 2012

Non-Independent

Mr. Pathe was appointed as President and Chief Executive Officer of the Corporation effective January 1, 2012. Prior to that, Mr. Pathe served as Senior Vice President, Finance and Chief Financial Officer of the Corporation from March 2011, as Senior Vice President, General Counsel and Corporate Secretary from July 2009, as Vice President, General Counsel and Corporate Secretary from October 2008 and as Assistant General Counsel and Assistant Corporate Secretary from June 2007.

Board/Committee Membership	Overall Attendance in 2015		Areas of Expertise
Board of Directors	7 of 7	100%	· Mining and/or Resource Industry
			· International Business
			· Capital Projects
			· Enterprise Management
			· Financial Literacy and Reporting
			· Corporate Governance
			· Risk Management/Evaluation
			· Finance and M&A

Other Public Board Memberships in the Past Five Years

None

Public Board Interlocks:

None

Securities Held(2)(3)

Year	Shares	Restricted Share Units (“RSUs”)	Restricted Stock	Total Shares, RSUs and Restricted Stock	Total Value of Shares, RSUs and Restricted Stock(10)		Minimum Ownership Met(11)
2015	209,220	815,623	27,000	1,051,843	$	2,817,410	Yes
2014	108,291	392,970	27,000	558,461	$	1,997,985	No

Options Held:

See charts under “Compensation Discussion & Analysis — Executive Compensation — Summary Compensation Table” and “Compensation Discussion & Analysis — Executive Compensation — Incentive Plan Awards — Outstanding Option Based Awards and Share Based Awards”.

Voting Results of 2015 Annual Meeting(7)	Votes For	Votes Withheld	Total Votes Cast
# of votes	149.924.326	6,627,374	156,551,700
% of votes	95.77	4.23	100

Notes to Sherritt Nominee Tables:

(1)		This excludes TD Mutual Funds Corporate Class Ltd., which is a mutual fund set up within a corporate structure, and is not a publicly-listed company.
(2)		The information as to Shares beneficially owned or over which the foregoing directors exercise control or direction (other than restricted stock (“Restricted Stock”) issued to employees under the Corporation’s Restricted Stock Plan), not being within the knowledge of the Corporation, has been furnished by the respective directors individually.
(3)		DDSUs are granted pursuant to the Corporation’s non-executive Directors’ Deferred Share Unit Plan (the “DDSU Plan”). The DDSU Plan has been in effect since December 6, 2002 and participation in the plan is limited to non-executive directors. See “Compensation Discussion & Analysis — Director Compensation — Directors’ Deferred Share Unit Plan” for additional information.
(4)		Values reflect the amounts calculated for Director share ownership requirements as at December 31, 2015 and 2014, respectively. See “Compensation Discussion & Analysis — Director Compensation — Director Share Ownership Requirements” for more information. The securities held are valued at the greater of (a) the grant or purchase price and (b) the closing price of the Shares on the Toronto Stock Exchange (“TSX”) on December 31 of the respective year, or the last trading day immediately preceding such date if December 31 was not a trading day. For 2014, the same methodology was used and the closing price was $3.00.
(5)		See “Compensation Discussion & Analysis — Director Compensation — Director Share Ownership Requirements” for more information regarding the share and share-based ownership requirements for non-executive directors.
(6)		Each of Mr. Stephen, Mr. Baker, Mr. Loader and Ms. Pankratz has until September 19, 2019 to satisfy the share ownership requirements (being the fifth anniversary the adoption of the most recent director share ownership requirements in September 2014). See “Compensation, Discussion & Analysis — Director Compensation — Director Share Ownership Requirements”.
(7)		Voting results from the 2015 annual meeting reflect the total number of votes cast for or withheld from voting in respect of each director who was elected at such meeting, as reported to the Corporation by the scrutineer of the meeting. Total votes cast for each director may vary and the percentage of votes reported for each director is determined by dividing the votes cast for or withheld from voting by the total number of votes cast for each such director.
(8)		Ms. Marcoux ceased to be Chair of the Environment, Health, Safety and Sustainability Committee effective May 12, 2015. Mr. Baker became chair of the Environmental, Health, Safety and Sustainability Committee on the same date.
(9)		The name of the “Reserves and Capital Projects Committee” was changed to the “Reserves Committee” on May 12, 2015. On the same date, Sir Richard Lapthorne ceased to be a member of the Reserves Committee and Mr. Loader was appointed as Chair. Sir Richard Lapthorne attended all meetings as a member of the Reserves and Capital Project Committee before ceasing to be a member on May 12, 2015.
(10)		Values reflect the amounts calculated for Executive SOR Holdings as at December 31, 2015 and 2014, respectively. See “Compensation Discussion & Analysis — Executive Compensation — Executive Share Ownership Requirements” for more information. For 2014, the same methodology was used and the closing price was $3.00.
(11)		See “Compensation Discussion & Analysis — Executive Compensation — Executive Share Ownership Requirements” for more information regarding the share and share-based ownership requirements for Mr. Pathe.

MEETING ATTENDANCE

Regular Board and committee meetings are set at least a year in advance, with special meetings being scheduled as required. The Board expects directors to attend all Board meetings and all meetings of the committees to which they are appointed, to come to such meetings fully prepared and to remain in attendance for the duration of the meetings. In 2015 there were five regularly scheduled Board meetings, seven regularly scheduled Audit Committee meetings, five regularly scheduled Human Resources Committee meetings, four Environmental, Health and Safety and Sustainability Committee meetings, three regularly scheduled Nominating and Corporate Governance Committee meetings and the two regularly scheduled Reserves Committee meetings). All other meetings were special meetings called with limited advance notice.

Name	Board		Audit		Human Resources		Nominating and Corporate Governance		Reserves		EHS&S
	#	%	#	%	#	%	#	%	#	%	#	%
T. Baker	7	100					3	100	3	100	4	100
P. Gillin	7	100	8	100	5	100	3	100	—	—	4	100
R. Lapthorne(1)	7	100	7	88	—	—	3	100	2	100	—	—
A. Loader	7	100	—	—	5	100	3	100	3	100	—	—
E. Marcoux	7	100	—	—	5	100	3	100	—	—	4	100
L. Pankratz	7	100	8	100	—	—	3	100	—	—	4	100
D. Pathe	7	100	—	—	—	—	—	—	—	—	—	—
H. Stephen	7	100	—	—	—	—	3	100	—	—	—	—

Notes:

(1) Sir Richard Lapthorne attended all meetings as a member of the Reserves Committee before ceasing to be a member effective May 12, 2015.

SERVING TOGETHER ON BOARDS OF OTHER PUBLIC COMPANIES

As of the date of this Circular, none of the proposed directors serve together on the board of directors of any other public company.

ORDERS AND BANKRUPTCIES

From October 2003 to September 2008, Mr. Gillin served as Chairman and Chief Executive Officer of Tahera Diamond Corporation (“Tahera”). In January 2008, Tahera filed for protection under the Companies’ Creditors Arrangement Act (“CCAA”). As a consequence of its financial difficulties, Tahera failed to file financial statements for the year ended December 31, 2007 and subsequent financial periods. As a result, Tahera was delisted from the TSX in November 2009 and issuer cease trade orders were issued in 2010 by the securities regulatory authorities of Ontario, Quebec, Alberta and British Columbia, which orders have not been revoked. Tahera subsequently sold its tax assets to Ag Growth International and certain properties, including the Jericho diamond mine, to Shear Minerals Ltd. The monitoring process under the CCAA was concluded by order of the Superior Court of Justice in September 2010.

Ms. Marcoux was a director and member of the Audit Committee of OPTI Canada Inc. (“OPTI”) from July 2008 to November 2011. On July 13, 2011, OPTI commenced proceedings for creditor protection under the CCAA. The TSX delisted OPTI’s common shares on August 26, 2011. The TSX approved the listing of OPTI’s common shares on the TSX Venture Exchange (“TSXV”) which commenced trading on August 29, 2011. OPTI’s common shares were subsequently delisted from the TSXV at the close of business on November 29, 2011, following the closing of the acquisition of OPTI’s second lien notes and all outstanding shares of OPTI by indirect wholly-owned subsidiaries of CNOOC Limited. Ms. Marcoux resigned as a director of OPTI on November 28, 2011.

Ms. Pankratz was on the board of CanWest Global Communications Corp. (“CanWest”) from 2005 until her resignation in February 2010. She served on the Audit and Pension Committees of that board and was Chair of the Pension Committee from 2008 until her resignation. CanWest filed for court protection from its creditors October 2009. CanWest’s newspaper subsidiary filed separately under the CCAA in January 2010.

ABOUT THE BOARD OF DIRECTORS

The Board is responsible for overseeing management of the business and affairs of the Corporation. The Corporation’s articles stipulate that the Board must consist of not less than three and not more than 15 directors. In accordance with the Corporation’s by-laws and a special resolution of Shareholders, the Board is authorized to determine the number of directors from time to time. The Board is currently fixed at nine members and the directors have approved a resolution to reduce the Board to eight members as of the date of the Meeting. The Board has a written mandate that establishes its purpose, responsibilities and composition. A copy of the mandate is attached as Schedule “A” to this Circular.

In assisting the Board in fulfilling its oversight responsibilities in relation to corporate governance, the Board has delegated responsibility to the Nominating and Corporate Governance Committee. The Nominating and Corporate Governance Committee is responsible for making recommendations to the Board regarding the Corporation’s approach to corporate governance issues (including the annual review of the Corporation’s governance policy).

INDEPENDENCE

All directors, other than the President and Chief Executive Officer, are independent. The Corporation determines the independence of its directors using the definition set out in National Instrument 58-101 — Disclosure of Corporate Governance Practices (“NI 58-101”). This definition provides that to be independent, a director must have no direct or indirect material relationship with the Corporation. A material relationship exists where the Board believes that a relationship could be reasonably expected to interfere with the director’s independent judgment and is deemed to exist under certain prescribed circumstances set out in NI 58-101. The Board currently consists of seven directors that are independent (Messrs. Baker, Gillin, Loader and Stephen, Sir Richard Lapthorne and Ms. Marcoux and Ms. Pankratz) and each committee is comprised entirely of independent directors. Mr. Pathe is non-independent as he serves as President and Chief Executive Officer of the Corporation.

A director who has a real or perceived conflict of interest regarding any matter under consideration is required to recuse him or herself from all Board deliberations or discussions relating to such matter.

POSITION DESCRIPTIONS

The Chairman of the Board

The Board has developed terms of reference for the independent, non-executive Chairman of the Board. The principal role of the Chairman of the Board is to provide leadership to the Board. The Chairman is responsible for effectively managing the affairs of the Board and ensuring that the Board is properly organized and that it functions efficiently and independently of management. The Chairman also advises the President and Chief Executive Officer in all matters concerning the interests of the Corporation, the Board and the relationships between management and the Board. A copy of the Chairman’s terms of reference is available at www.sherritt.com.

Committee Chairs

The Chair of each committee is responsible for, amongst other things:

· determining the date, time and location of meetings of the committee in consultation with the Chairman of the Board, the Corporate Secretary and the committee members, as appropriate and convening meetings of the committee as often as necessary to carry out the committees responsibilities effectively;

· chairing all meetings of the committee;

· confirming that the duties and responsibilities of the committee, as set forth in its mandate, are well understood by the committee members and executed effectively;

· in consultation with the Chairman of the Board, committee members, and the Corporate Secretary, as appropriate, reviewing meeting agendas to ensure that required business is brought before the committee to enable the committee to carry out its responsibilities;

· communicating with appropriate members of senior management in fulfilling the duties and responsibilities set forth in the committee’s mandate;

· with the assistance of the Corporate Secretary, ensuring that agenda items for all committee meetings are ready for presentation and that adequate information is distributed to committee members in advance of such meetings in order that committee members may properly inform themselves on matters to be acted upon;

· ensuring that minutes are kept of all committee meetings and signing minutes once approved by the committee;

· reporting to the Board at its next meeting following any decision or recommendation arising from any meeting of the committee or the signing of a written resolution evidencing a decision or recommendation of the committee, including reporting on the considerations that led to such decision or recommendation;

· providing leadership to enable the committee to act effectively in carrying out its responsibilities; and

· ensuring that the committee periodically evaluates its effectiveness in fulfilling the duties and responsibilities set forth in its mandate.

President and Chief Executive Officer

The Board and the Chief Executive Officer have developed a written position description for the President and Chief Executive Officer which delineates that officer’s roles and responsibilities. The President and Chief Executive Officer has the primary responsibility for the management of the business and affairs of the Corporation in accordance with the Corporation’s strategy and objectives approved by the Board within the authority limitations delegated by the Board. Specific duties and responsibilities of the President and Chief Executive Officer are set out in the President and Chief Executive Officer terms of reference, a copy of which is available at www.sherritt.com.

MEETING IN CAMERA

In camera sessions in which independent directors meet without management are held at every in-person meeting of the Board and the Chairman of the Board leads these sessions. Board committees consist of independent directors and meet in camera at each in-person committee meeting where considered necessary and operate independently of management in fulfilling their mandates and making recommendations to the Board. The Chair of each committee presides over these meetings. At least once per quarter, the Audit Committee meets with the Corporation’s external auditor, Deloitte LLP, and the Corporation’s Chief Internal Auditor separately to discuss the financial affairs of the Corporation without management being present. In addition, the independent directors may meet separately at such other times as any independent director may request.

The Chairman of the Board and the committee Chairs update management on the substance of the in camera meetings if action is required.

DIRECTOR ORIENTATION

The Corporation’s orientation program ensures that new directors have a clear understanding of director responsibilities in Canada, develop a good working relationship with current Board members and become familiar with the operations and management team so they can actively participate in meetings when they join the Board. New directors are invited to attend as an observer, meetings of committees of which the new director is not a member. The Nominating and Corporate Governance Committee is responsible for confirming that procedures are in place and resources are made available to provide new directors with a proper orientation to both the Corporation and their duties and responsibilities as directors.

The Corporation currently takes the following steps to orient new directors:

1. Face to face meetings or telephone calls: During the recruitment process, candidates meet with the Chairman of the Board, the Chair of the Nominating and Corporate Governance Committee (or if unavailable, another director) and the President and Chief Executive Officer to discuss the expectations the Corporation has of its Board members (as described in the Mandate of the Board found at Schedule “A” to this Circular). Candidates also receive an overview of the business of the Corporation in these meetings.

2. New director’s package: The new director’s package includes: a handbook containing relevant corporate and business information (articles, by-laws, organization and corporate charts, Board mandate, committee mandates, etc.), current continuous disclosure documents, and Board presentations given within the previous year.

3. Site visits: Within the first year of their appointment, new directors are invited to visit the Corporation’s business units and major projects.

4. Interact with key management: Within the first year of their appointment, new directors are provided an opportunity to meet with all key management team members.

5. Legal obligations: New directors attend a session with the Corporation’s outside counsel to ensure each has a full understanding of his or her legal obligations as a director.

6. Committee Orientation: Committee Chairs, together with appropriate management representatives, provide committee orientation to new directors regarding the committees they will be joining.

Continuing Education

The Corporation expects its directors to be informed about the issues affecting its business, including the industries it participates in, governance and other related issues. The Corporation undertakes continuing education efforts that include meetings among management and the Board, and where appropriate, outside experts, to discuss, among other things, regulatory changes, developments in corporate governance, developments in the mining and oil and gas industries and market conditions.

The Corporation’s directors and executive officers also complete continuing education sessions and attend briefings on various topics relating to the jurisdictions in which its subsidiaries and joint ventures operate, including the various political, regulatory and economic environments. The Corporation issues to the directors quarterly updates on Sherritt’s foreign operations, which includes updates on political, economic and social developments in Cuba and Madagascar. The Corporation also retains the services of consultants, including former Canadian diplomatic personnel, with knowledge of the political and economic situation in Cuba and Madagascar to advise the directors and executive officers on current developments in those countries from time to time. The directors also participate in scheduled trips to the Corporation’s operations in Canada, Cuba and Madagascar, where they meet with the senior executives responsible for local operations; attend site visits; meet with government officials, local leaders and stakeholders; and learn about the local business culture and practices.

The table below lists, by way of example, the internal and external conferences, seminars, courses and site tours that the nominee directors attended between January 1, 2015 and December 31, 2015.

Topic	Presented/Hosted By	Attended By (Current Directors)
Site Visit: Ambatovy Project, Madagascar	Tim Dobson, Senior Vice President, Ambatovy	Timothy Baker, Dee Marcoux and Lisa Pankratz
Site Visit: Metals Operations, Moa, Cuba	Martin Vydra, Senior Vice President, Metals; Steve Wood, Executive Vice President and Chief Operating Officer	Timothy Baker and Lisa Pankratz
Site Visit: Oil & Gas Operations, Cuba	Elvin Saruk, Senior Vice President, Oil & Gas and Power; David Pathe, President and CEO; Steve Wood, Executive Vice President and Chief Executive Officer	Timothy Baker, Peter Gillin and Lisa Pankratz
Site Visit: Metals Operations, Fort Saskatchewan, Alberta	Martin Vydra, Senior Vice President, Metals	Timothy Baker
External Seminar: Pay for Performance	Meridian Compensation Partners	Timothy Baker
External Seminar: Enhancing Audit Committee Oversight of the External Auditor	Institute of Corporate Directors	Timothy Baker
External Seminar: Directors’ Liability and Insurance	Institute of Corporate Directors	Timothy Baker
External Seminar: Aligning Compensation Frameworks with Corporate Strategy	Institute of Corporate Directors	Timothy Baker
External Seminar: Board Composition — Supporting Strategy	Institute of Corporate Directors	Peter Gillin
External Seminar: Sustainability & Development: A View from the Board Room	Devonshire Initiative	Timothy Baker (panelist) and Peter Gillin
External Seminar: Executive Compensation in a Changing Environment	Hugessen Consulting	Peter Gillin

Topic	Presented/Hosted By	Attended By (Current Directors)
External Seminar: The Board’s Role in Strategy Development	Institute of Corporate Directors	Peter Gillin
External Seminar: How Time Consuming is it to be a Canadian Director	Korn Ferry Associates	Peter Gillin
Governance Summit — Insights from the Inside	Kingsdale Shareholder Services	Peter Gillin
External Seminar: “Disruption and Innovation — are Directors Sufficiently Engaged?”	Deloitte Directors’ Series	Lisa Pankratz
External Seminar: “Focus on the Audit Committee”	Deloitte Directors’ Series	Lisa Pankratz
External Seminar: “Institutional Investor Education Seminar”	Phillips, Hagar & North	Lisa Pankratz
External Seminar: “CEO Succession and Talent Management”	Institute of Corporate Directors	Lisa Pankratz
External Seminar: “Developments in Financial & Regulatory Reporting for Public Enterprises	PWC	Lisa Pankratz

The Corporation reimburses directors for continuing education out-of-pocket expenses.

BOARD SKILLS MATRIX

The following skills matrix sets out the skills and expertise that the Board considers important to fulfill its oversight role in respect of the Corporation, the specific skills and expertise that each Sherritt Nominee is identified as having and reflects the proposed makeup of the Board as a whole.

Skills & Experience

Harold
(Hap)
Stephen

Timothy
Baker

R. Peter
Gillin

Sir
Richard
Lapthorne

Adrian
Loader

Edythe A.
(Dee)
Marcoux

Lisa
Pankratz

David
Pathe

Total

Appointment Date

05/24/12

05/06/14

01/01/10

09/14/11

07/29/13

05/25/06

11/13/13

01/01/12

Mining and/or Resource Industry

International Business

Government Relations

Capital Projects

Reserve Evaluation

Enterprise Management

Financial Literacy and Reporting

Corporate Governance

Operations

Human Resources/Executive Compensation

Environment, Health, Safety and Sustainability

Risk Management/Evaluation

Finance and M&A

Board Leadership

The Board maintains this skills matrix to identify and evaluate the competencies and skills of its members based on the individual experience and background of each director. The skills matrix is reviewed and updated each year based on self-assessment by each director whereby each director is asked to rate his or her experience and background in a variety of key subject areas. This data is compiled into a matrix representing the broad skills for current directors. This matrix is maintained to identify areas for strengthening the Board, if any, and address them through the recruitment of new members.

Board Experience in Jurisdictions of Sherritt’s Foreign Operations

The working language of the Corporation is English and all internal documents and material documents provided to the Board are prepared and presented in English. The official languages of Madagascar and Cuba, the main jurisdictions of Sherritt’s foreign operations, are Malagasy and French, and Spanish, respectively. Four directors are fluent in French and two directors are fluent in Spanish. The Corporation considers fluency in the languages of these jurisdictions as an additional skill. Relevant foreign language skills enable directors to better interact with local stakeholders, including government officials and employees.

BOARD SUCCESSION AND RENEWAL

The Nominating and Corporate Governance Committee is responsible for making recommendations to the Board regarding the qualifications for and selection of nominees for election or appointment to the Board to fill vacancies. The Corporation’s objective with respect to board composition is for the Board to have a sufficient range of skills, expertise and experience to ensure that the Board can carry out its responsibilities effectively.

In making recommendations of nominee directors to the Board, the Nominating and Corporate Governance Committee considers:

· the competencies and skills that are necessary to serve on the Board;

· the competencies and skills that each existing director contributes to the Board;

· the competencies and skills that each new nominee would contribute to the Board;

· whether each new nominee would enhance the effective functioning of the Board as a whole; and

· whether each new nominee can devote sufficient time and resources to his or her duties as a member of the Board.

When considering nominee directors, the Nominating and Corporate Governance Committee also takes into account factors such as whether the nominee is a strong leader in his or her field, ideally from an industrial background with experience in mining, energy, operations or large capital intensive industry; has strong experience in either corporate strategy and/or operations within an industrial setting; and whether the nominee has the ability to engender trust and respect in the boardroom setting.

The Corporation monitors Board renewal in order to ensure reasonable turnover and renewal of directors. Board renewal is expected to be achieved primarily through a skills gap assessment performed by the Nominating and Corporate Governance Committee, as described above, and the Board evaluation process described under “Board Evaluation” below, together with ordinary attrition as directors elect not to stand for re-election. In circumstances where sufficient renewal does not occur through this process the Committee will take appropriate incremental steps to ensure reasonable renewal. There is no expectation that any director will remain on the Board for any particular “term” or period of time, and renewal processes apply equally to short and long serving directors.

As part of regular Board renewal in the past four years one new independent director joined the Board in 2014, two new independent directors joined the Board in 2013 and one new independent director joined in 2012.

CORPORATE GOVERNANCE PRACTICES

The Board believes that sound corporate governance practices are essential to the well-being of the Corporation and the promotion and protection of its Shareholders’ interests. The Board oversees the functioning of the Corporation’s governance system, in part, through the work of the Nominating and Corporate Governance Committee.

The Board promotes fair reporting, including financial reporting, to Shareholders and other interested persons as well as ethical and legal corporate conduct through an appropriate system of corporate governance, internal controls and disclosure controls. The Board believes that the Corporation is best served by a Board which functions independently of management and is informed and engaged.

NI 58-101 requires disclosure concerning an issuer’s corporate governance practices. The Corporation operates under the guidelines set out in this section, “Corporate Governance Practices”. These guidelines as well as the disclosure in “About the Board of Directors”, above, address the requirements of NI 58-101 and the guidance suggested by National Policy 58- 201 — Corporate Governance Guidelines.

SHARE OWNERSHIP REQUIREMENTS

The Corporation has established share ownership requirements for directors and senior executive officers which are designed to align the interests of the directors and senior executive officers with the long term interests of Shareholders. See page 39 for a detailed discussion of director share ownership requirements and page 73 for a detailed discussion of executive share ownership requirements.

RETIREMENT POLICY AND TERM LIMITS

The Board has not adopted a mandatory retirement policy or term limit for directors. The Board believes that mandatory retirement and term limits may result in the loss of effective directors with deep knowledge of the Corporation. Instead, Sherritt follows a director assessment process each year to ensure that director effectiveness and renewal of the Board are considered together. This process is discussed in more detail under the heading “Board Evaluation”, below. It serves to ensure that Sherritt has a high performing Board comprised of directors with a diversity of skills, experience and background and a reasonable level of board renewal. Sherritt’s process includes, among other things, a periodic self and peer evaluation, which considers the skills and expertise of each director and assesses the contribution made to Sherritt and to the Board by each director, and a periodic independent third party board evaluation process.

DIVERSITY POLICY

Sherritt recognizes the value of diversity (which includes gender, among other things) and believes that the Corporation can benefit from the insight and good judgment that comes from including a variety of perspectives in the decision making and strategic planning process. To this end, the Corporation has adopted a Diversity Policy that makes diversity of the Board one of the criteria for the Nominating and Corporate Governance Committee to consider in recruiting and selecting potential directors. The Diversity Policy also makes diversity one of the criteria for senior management to consider in evaluating the suitability of a candidate for an executive officer position.

The Corporation does not have set targets for diversity at the Board or senior management level, as it believes that the final determination for the recruitment, selection and appointment of directors and executive officers should be made based on an individual’s abilities and achievements.

As of March 31, 2016, Sherritt has two women non-executive directors (representing 25% of the Board) and one woman executive officer (representing 20% of the executive officers). In accordance with the terms of the Diversity Policy, the Nominating and Corporate Governance Committee and Management will consider gender, among other factors, when seeking suitable directors and executive officers, respectively.

BOARD EVALUATION

Currently, the Chairman of the Board or a director acting on the Chairman’s behalf provides annual performance reviews for Board members. The Chairman or his nominee solicits feedback from each of the director’s peers on the Board to solicit feedback on the particular director’s performance over the course of the past year. The Chairman or the Chair of the Nominating and Corporate Governance Committee discusses and issues arising from such solicitation with each director as part of the annual performance review. This process seeks to identify individual performance issues and effectively respond to them by discussing them with each director. In addition, the Chair of the Nominating & Governance Committee, or a director acting on his or her behalf, speaks with each director (other than the Chief Executive Officer) to solicit feedback on the Chairman’s performance over the course of the past year. The Chair of the Nominating & Governance Committee then discusses any issues arising from this evaluation with the Chairman in order to effectively convey and respond to any identified performance issues. The Board evaluation process also contemplates periodic effectiveness reviews by an independent third party, including an assessment of individual director performance and the contributions of each director to the Board as a whole. This process involves interviews with each director, key executives and senior personnel of the Corporation, and external advisors. The independent third party reports to the Chair of the Governance Committee, in respect of the Chair of the Board and to the Chair of the Board in respect of all other directors. In 2014, Watson Inc. was retained to perform this review and provide its recommendations, including regarding measures to enhance overall Board effectiveness.

ETHICAL BUSINESS CONDUCT

The Board has approved and adopted a written code of business conduct and ethics (the “Code”) that contains the rules and guidelines for ethical behavior at the Corporation. The Code is based on the Corporation’s values and the laws, regulations and rules that apply to the businesses and govern the conduct of the directors, officers and employees of the Corporation. All new employees and directors must read the Code when hired and acknowledge that they will abide by the Code. The Code is available on the Corporation’s SEDAR profile at www.sedar.com.

The Board, through the Audit Committee, monitors compliance with the Code. The Corporation’s internal auditor regularly monitors compliance with the Code and reports to the Audit Committee. The Corporation has also adopted a policy (the “Reportable Concerns Policy”) for employees to report concerns regarding, amongst other things, violations of the Code. These concerns may be reported anonymously to the Corporation’s Chief Internal Auditor who will raise any such reports with the Audit Committee for further investigation and response. In addition, under the Reportable Concerns Policy, the Corporation has a third party-managed ethics hotline that allows employees to report any concerns about inappropriate business conduct confidentially and anonymously. Employees can report these concerns online or by phone.

The Board has not granted any waiver of the Code in favour of any director, officer or employee since its adoption by the Board. Accordingly, no material change report in respect of a waiver of the Code has been required or filed.

The Corporation finalized its Anti-Corruption Policy in 2012, and it was subsequently updated and amended in 2014. Throughout its worldwide operations, the Corporation seeks to avoid any impropriety or the appearance of impropriety in the actions of its directors, officers, employees, and agents. Accordingly, the prohibitions and requirements of the Anti-Corruption Policy are designed not merely to comply with Canada’s Corruption of Foreign Public Officials Act and other applicable anti-corruption laws, but to avoid even the appearance of questionable conduct in connection with Sherritt operations and business activities. Training sessions have been carried out across the Corporation to ensure that certain employees, especially those who interact significantly with government and other third parties, understand the policy and

know how to apply it. Updated training sessions were conducted throughout Sherritt’s operations in 2015, with additional targeted training sessions for specific departments to take place in 2016.

DISCLOSURE POLICY

Management of the Corporation has established a Disclosure Committee to ensure that it is communicating with Shareholders, employees and the public openly and in a timely way, as well as complying with its continuous disclosure obligations under securities laws.

The Disclosure Committee reviews all news releases and public filings prior to their release and the Corporation has mechanisms in place to evaluate the design and effectiveness of disclosure controls. In addition, all press releases and public filings disclosing the financial performance of the Corporation are then reviewed by the Audit Committee. The Disclosure Committee currently has four members: the Executive Vice President and Chief Financial Officer, the Executive Vice President and Chief Operating Officer, the Senior Vice President, General Counsel & Corporate Secretary, and the Director, Investor Relations and Communications.

Each Board committee reviews the public disclosure relevant to its mandate, where applicable, prior to the Board considering the item for approval. For example, the Audit Committee is responsible for reviewing the annual and interim financial statements and management’s discussion and analysis and the Board then considers for approval the annual financial statements and management’s discussion and analysis.

STRATEGIC PLANNING AND RISK MANAGEMENT

The Board, with the assistance of its committees, is responsible for assessing and approving the Corporation’s strategic plan and approving annual business plans developed and proposed by management. The Board provides advice and input regarding strategic opportunities, as well as issues and concerns which create risk for the Corporation. The Board is also responsible for approving the business and operational policies which govern the Corporation’s approach to capital expenditures, acquisitions and dispositions, disclosure and communications, finance and investment, risk management and human resources and reviewing and discussing with management the processes used to assess and manage risk. Management updates the Board as to the principal risks of the Corporation’s business at each regularly scheduled Board meeting.

SHAREHOLDER ENGAGEMENT

The Corporation communicates with its Shareholders in a variety of ways including through its website, disclosure documents and management’s quarterly conference calls with analysts, which Shareholders and the public can access. Specific Shareholder inquiries are handled by Investor Relations.

COMMUNICATION WITH THE BOARD

The Board welcomes and is responsive to input and comments from Shareholders. Input or comments for the Board or its committees should be directed to the Corporate Secretary at:

Board of Directors of Sherritt International Corporation

c/o Corporate Secretary

Sherritt International Corporation

181 Bay St.

26th Floor

Toronto, Ontario M5J 2T3

COMMITTEES OF THE BOARD OF DIRECTORS

The Board has five standing committees, each of which is composed entirely of independent directors:

· Audit Committee;

· Environment, Health, Safety and Sustainability Committee;

· Human Resources Committee;

· Nominating and Corporate Governance Committee; and

· Reserves Committee.

Each of the committees has its own mandate, which sets forth its duties and responsibilities and can be found on the Corporation’s website at www.sherritt.com. Each committee meets and operates independently of management in fulfilling its mandate and in making recommendations to the Board. Subject to appointments made as a result of resignations or retirements, the members of each committee are selected by the Board annually on the recommendation of the Nominating and Corporate Governance Committee.

AUDIT COMMITTEE

Members: Peter Gillin (Chair), Sir Richard Lapthorne, Lisa Pankratz

The Audit Committee is composed entirely of directors who are both independent and financially literate within the meaning of Multilateral Instrument 52-110 — Audit Committees (“MI 52-110”). The Audit Committee’s mandate is to assist the Corporation in ensuring the integrity and accuracy of the Corporation’s financial reporting and disclosure controls and procedures.

The Audit Committee:

· reviews the Corporation’s financial statements and management’s discussion and analysis of financial and operating results;

· assists the Board in its oversight of the integrity of:

· the Corporation’s financial statements and other relevant public disclosures;

· the Corporation’s compliance with legal and regulatory requirements relating to financial reporting;

· the external auditor’s qualifications and independence;

· the performance of the internal and external auditors;

· oversees management’s responsibility for ensuring that all significant risks to the Corporation, regardless of sources, are proactively identified and managed;

· ensures that management fulfills its responsibilities to maintain effective disclosure controls and procedures and an effective system of internal control over financial reporting and reports any deficiencies to the Board;

· ensures management adequately identifies, manages, monitors and discloses the principal financial and business risks that could impact the Corporation’s financial results and reporting;

· oversees procedures for the receipt, retention and treatment of complaints received regarding accounting, internal controls or auditing matters, and procedures;

· reviews the accounting principles and practices to be applied and followed by the Corporation during the fiscal year and any significant changes from those applied and followed during the previous year;

· reviews all litigation and claims involving the Corporation which could materially affect its financial position and which the auditors or General Counsel may refer to the Audit Committee;

· reviews the Corporation’s tax status, significant tax issues and reviews by tax authorities;

· reviews the adequacy of insurance coverage; and

· reviews, at least annually, the quality and sufficiency of the Corporation’s accounting and financial personnel.

The external auditors report directly to the Audit Committee and are accountable to the Board and the Audit Committee. The Audit Committee shall: (a) recommend for approval to the Board the appointment, and oversee the work of, the external auditors; (b) approve the audit plan; (c) review the qualifications and performance of the external auditors; (d) report to the Board regarding the performance of the external auditors; (e) review the results of the external auditors’ work; (f) assess working relationships with management and resolve any disagreements between management and the external auditors

about financial reporting; (g) pre-approve the nature and fees of the non-audit services; and (h) review and approve the hiring policies regarding partners and employees and former partners and employees of the present and former external auditors.

The Chief Internal Auditor reports to the Senior Vice President, General Counsel and Corporate Secretary and is accountable to the Audit Committee. The Chief Internal Auditor must be independent from the Chief Financial Officer. The Audit Committee shall: (a) approve the mandate for the internal audit department; (b) ensure that the Chief Internal Auditor has direct and open communication with the Audit Committee; (c) approve the appointment or removal of the Chief Internal Auditor; and (d) review management’s decisions related to the need for an internal audit.

The Audit Committee has access to the resources and has the authority that is necessary to discharge its duties and responsibilities, including the authority to select, retain, terminate and approve the fees and other retention terms of special counsel or other experts or consultants. If such fees and expenses exceed, or are expected to exceed C$150,000, the Audit Committee must obtain the approval of the full Board.

The Audit Committee has a written mandate that establishes its purpose, responsibilities and membership of the Audit Committee ensures that it fulfills the responsibilities contemplated by MI 52-110. The Audit Committee mandate is attached as Schedule D to the annual information form of the Corporation for the year ended December 31, 2015 (the “2015 AIF”) as filed on SEDAR and is available under the Corporation’s profile at www.sedar.com. The mandate of the Audit Committee is also available on the Corporation’s website at www.sherritt.com.

ENVIRONMENT, HEALTH, SAFETY AND SUSTAINABILITY COMMITTEE

Members: Timothy Baker (Chair), Dee Marcoux, Lisa Pankratz

The Environment, Health, Safety and Sustainability Committee assists the Board in its oversight of environmental, health and safety, security and other sustainability management systems, policies, programs and targets.

The Environment, Health, Safety and Sustainability Committee:

· reviews and makes recommendations to the Board regarding the scope of environment, health and safety, security and sustainability risks to the Corporation’s operations and future growth;

· reviews and makes recommendations to the Board on compliance with legal and regulatory requirements and any voluntary commitments the Corporation has made related to environment, health and safety, security and sustainability;

· ensures that the Corporation monitors trends and reviews current and emerging legislation and regulation, international norms, stakeholder expectations and industry best practices on the environment, health and safety, security and sustainability;

· regularly reviews management reports on environment, health and safety, security and sustainability performance;

· reviews the Corporation’s annual sustainability report for external audiences;

· reviews the Corporation’s processes for the selection, preparation and disclosure of sustainability performance data and information to external stakeholders and the public;

· reviews corporate-level audits and management responses/plans in the areas of environment, health and safety, security and sustainability;

· reviews the Corporation’s corporate-level crisis management plan and other plans relating to emergency and disaster response;

· ensures alignment with the Audit Committee on the assessment and adequacy of controls to manage environment, health and safety, security and sustainability risks; and

· consults with the Reserves and Projects Committee regarding the identification and monitoring of environment, health and safety, security and sustainability risks and actual performance in connection with the Corporation’s current or future capital projects.

The Environment, Health, Safety and Sustainability Committee has access to the resources and has the authority that is necessary to discharge its duties and responsibilities, including the authority to select, retain, terminate and approve the fees and other retention terms of special counsel or other experts or consultants. If such fees and expenses exceed, or are expected to exceed $150,000, the Environment, Health, Safety and Sustainability Committee must obtain the approval of the full Board.

The Environment, Health, Safety and Sustainability Committee has a written mandate that establishes its purpose, responsibilities and membership. A copy of the mandate is located on the Corporation’s website at www.sherritt.com.

NOMINATING AND CORPORATE GOVERNANCE COMMITTEE

Members: Sir Richard Lapthorne (Chair), Timothy Baker, Peter Gillin, Adrian Loader, Dee Marcoux, Lisa Pankratz, Hap Stephen

The Nominating and Corporate Governance Committee assists the Board in establishing the Corporation’s corporate governance policies and practices. It is also responsible for identifying new candidates for nomination to the Board for approval and also reviewing the composition and functioning of the Board and its committees.

The Nominating and Corporate Governance Committee makes recommendations to the Board with respect to: (a) the size and composition of the Board; (b) the qualifications for and selection of nominees for election or appointment to the Board to fill Board vacancies; (c) the number, composition and mandates of committees of the Board; (d) the Corporation’s Timely Disclosure and Confidentiality Policy and Insider Trading Policy; (e) procedures to assess the effectiveness and contribution of the Board, its committees and individual directors; (f) the Corporation’s approach to corporate governance issues; and (g) the development and review of position descriptions for the President and Chief Executive Officer, the Chairman of the Board and the Chair of each committee of the Board.

The Nominating and Corporate Governance Committee:

· develops and maintains a succession plan for the Board and assists the Board in ensuring that management maintains a process for succession planning of senior management;

· confirms that procedures are in place and resources are made available to provide orientation and an education program for new Board and committee members;

· reviews all proposed related-party transactions and situations involving an actual or potential conflict brought to its attention; and

· reviews and assesses the Corporation’s code of business conduct and ethics.

The Nominating and Corporate Governance Committee has access to the resources and has the authority that is necessary to discharge its duties and responsibilities, including the authority to select, retain, terminate and approve the fees and other retention terms of special counsel or other experts or consultants. If such fees and expenses exceed, or are expected to exceed $150,000, the Nominating and Corporate Governance Committee must obtain the approval of the full Board.

The Nominating and Corporate Governance Committee has a written mandate that establishes its purpose, responsibilities and membership. A copy of the mandate is located on the Corporation’s website at www.sherritt.com.

RESERVES COMMITTEE

Members: Adrian Loader (Chair), Timothy Baker

The Reserves Committee is responsible for reviewing the mineral reserves (including oil and gas reserves) of the Corporation and its affiliated and related entities and for overseeing the availability, maintenance, growth and integrity of the Corporation’s reported reserve base, including any additional potential reserves.

With respect to all reserves and resources, the Reserves Committee will receive and review a report prepared by the Corporation’s legal counsel, which addresses counsel’s assessment regarding regulatory compliance of the technical reports and the Corporation’s proposed disclosure in connection with the technical reports.

With respect to the Corporation’s mineral reserves and resources, the Reserves Committee:

· reviews the selection criteria and the appointment of the Corporation’s designated qualified person(s) both independent and internal;

· reviews the reserves and resources information and the report of the qualified person(s) prior to publication of new reserves and resources estimates and prior to the disclosure of the Corporation’s annual reserves and resources information;

· reviews an annual reconciliation of reserves to mine production;

· reviews the Corporation’s internal controls and disclosure controls and procedures relating to reserves and resources estimation and the report of the qualified person(s) thereon;

· receives internal reports from management on all material matters related to reserves and resources estimation;

· receives reports from management on industry standards and regulations respecting the estimation and publication of reserves and resources and developments;

· reviews with the qualified person(s) the Corporation’s material and/or major mineral reserves and resources risk exposures and the steps management has taken to monitor and control such exposures;

With respect to the Corporation’s oil and gas reserves, the Reserves Committee:

· reviews the Corporation’s procedures relating to the disclosure of information with respect to oil and gas activities;

· reviews the selection of the qualified reserves evaluators or auditors chosen to report to the Board on the Corporation’s oil and gas reserves and resource data; and

· reviews the Corporation’s annual reserves and resource estimates prior to public disclosure.

The Reserves Committee has access to the resources and has the authority that is necessary to discharge its duties and responsibilities, including the authority to select, retain, terminate and approve the fees and other retention terms of special counsel or other experts or consultants. If such fees and expenses exceed, or are expected to exceed $150,000, the Reserves Committee must obtain the approval of the full Board.

The Reserves Committee has a written mandate that establishes its purpose, responsibilities and membership. A copy of the mandate is located on the Corporation’s website at www.sherritt.com.

HUMAN RESOURCES COMMITTEE

Members: Dee Marcoux (Chair), Peter Gillin, Adrian Loader

The Human Resources Committee’s primary role is to assist the Board in fulfilling its oversight responsibilities in respect of all matters relating to director compensation and executive officer performance, evaluation, succession and compensation, including retirement plans.

The Human Resources Committee is responsible for making recommendations to the Board on the following:

· the Corporation’s executive compensation structure, including the relative balance of fixed and variable elements of compensation for executive officers and other terms and conditions of employment;

· senior executive officer performance evaluation;

· executive officer succession planning;

· design of and awards under incentive and share-based plans, including the selection of participants and the allocation of Shares or units under the plans;

· the awards made to any senior executive officer under a performance-based plan, including any adjustment for actual performance;

· directors’ compensation, including the adequacy, level and composition of compensation so that the directors’ compensation appropriately reflects the responsibilities and risks of being a director and member of a committee; and

· the activities of the Corporation’s Management Retirement Committee to ensure the responsibilities of the Board pursuant to its mandate in respect of retirement plans are fulfilled.

The Human Resources Committee has a written mandate that establishes its purpose, responsibilities and membership. A copy of the mandate is located on the Corporation’s website at www.sherritt.com.

In addition to its mandate, the Human Resources Committee establishes an annual work plan. Details of the 2016 annual work plan are provided in the table below.

Meeting		Details
All Meetings		· Management Retirement Committee Report
		· Share-Based Compensation Report
		· Human Resources Strategic Initiatives Report
		· Review year-to-date organizational performance
		· In camera sessions without management
January		· Preliminary review of 2015 organizational performance and the individual performance of each of the senior executive officers, including the Named Executive Officers
February		· Recommend to the Board approval of prior year short-term incentive awards for senior officers, including the Named Executive Officers
		· Recommend to the Board approval of current year: (i) performance goals; (ii) base salaries, short-term incentive targets and share-based compensation awards for senior executive officers; and (iii) total inventory for share-based compensation awards available for eligible executives and employees below the level of senior executive officer
		· Review the compensation comparator group
June		· Annual review of the Committee’s mandate
		· Review analysis of one and three year corporate performance relative to comparator group
		· Review report on governance trends, with particular emphasis on comparator group practices
September		· Report on 2015 say-on-pay voting results
		· Review the directors’ compensation in comparison to the results of the market compensation study, which includes an analysis of the amount, mix and relative market position by function and scope of role
November		· Advise the Board of Management’s succession, training and development plans following an in-depth review
		· Review compensation programs and processes and deliver compensation-related risk report to the Board
		· Review competitive total compensation analysis for senior executive officers and advise the Board
		· Recommend to the Board approval of amendments to the mandate of the Management Retirement Committee and a new Funding Policy

As a former senior executive and director of various public companies, the Chair of the Human Resources Committee has extensive experience recommending executive compensation structures and individual pay decisions. The other members of the Human Resources Committee similarly bring a wide range of skills and experience that helps them make decisions on the Corporation’s compensation policies and practices and assess performance on both an individual and an organization level. These skills and experiences include, but are not limited to:

· industry knowledge;

· operational experience;

· human resources management and compensation design experience;

· financial knowledge; and

· international business experience.

The Human Resources Committee has access to the resources and the authority necessary to discharge its duties and responsibilities, including the authority to select, retain, terminate and approve the fees and other retention terms of special counsel or other experts or consultants. If such fees and expenses exceed or are expected to exceed $150,000, the Human Resources Committee must obtain the approval of the full Board.

Management is invited to attend and present recommendations and updates at every Human Resources Committee meeting. The Human Resources Committee’s independent advisor (as described below under “Compensation Discussion & Analysis — Compensation Governance — Independent Advisor”) attends all regular meetings in person or by phone to provide advice and consultation. The Human Resources Committee meets in-camera at each regularly scheduled meeting.

April 6, 2016

Letter from the Chair of the Human Resources Committee

Dear fellow shareholder,

2015 was a challenging year for all commodity companies, including Sherritt. The organization faced significant financial pressures due to the continuing commodity market downturn and the need to preserve liquidity. The Corporation responded by focusing on key elements of the business to permanently change the cost structure, to increase production and productivity, and to improve reliability, all of which are largely within management’s control. As a result, several significant goals were achieved, including:

· Financial Completion at Ambatovy, including the significant production milestone of “90 for 90” demonstrating the capability for Ambatovy to produce at 90% of nameplate capacity for 90 days (out of a 100 day period), which means that the construction project financing is now non-recourse

· Significant reduction in costs, both in operations and in the corporate office, including structural changes to delivery of internal services

· Significantly increased production at Ambatovy and best year in the last five for Moa

All of these accomplishments were aligned with the strategy of being a low cost nickel producer that creates sustainable prosperity for investors, employees, and communities. Achieving them demonstrated the expertise and talent of the leadership team and the employees across the organization.

Compensation Philosophy

The Committee is engaged in setting performance expectations and reviewing performance against those expectations. We have a compensation philosophy designed to align the interests of senior management with Shareholders, encourage senior management to focus on the mid- to long-term success of the Corporation and attract and retain a skilled and cohesive senior executive team. We balance risk and reward and align compensation with the nature and time horizon of the risks associated with the business. We provide conservative salaries and ensure that a significant portion of each executive’s pay is variable and provided in mid to long-term equity.

We follow good executive compensation governance practices. We have a recoupment or claw back policy, we prohibit our executives from hedging their shares and share-based compensation and we have competitive executive share ownership requirements. We have an appropriate comparator group for benchmarking director and executive compensation and generally benchmark to the median of this peer group for target performance taking into account the scope of each executive’s role and their experience in the role.

Assessing Performance

We assess performance using a detailed scorecard that covers the key elements of corporate performance:

· Financial performance — earnings, operating cash flow per share, relative total shareholder return, total available liquidity and production costs

· Production — tonnes of nickel, cobalt, and mixed sulphides produced, barrels of oil per day and GWh of electricity

· Sustainability — workplace safety, environmental protection and employee engagement

2015

In 2015 the Committee reviewed Sherritt’s performance scorecard at each regular Committee meeting. This scorecard sets quantitative targets for each key metric and the Committee assesses performance against these targets. The committee then applies its judgment taking into account the quality of the results and the performance of the Corporation viewed as a whole to determine the appropriate payout level.

The Committee reviews the performance of the CEO and the CEO’s assessment of his direct reports.

Based on the performance scorecard and the accomplishments this year, all of the named executive officers, including the CEO, received a short-term incentive payment at 50% of target. The quantitative results clearly demonstrated that 2015 was a year where extraordinary progress was achieved on elements that were within the senior executive team’s control, specifically production and cost. However, the short-term incentive payment was moderated to recognize that the financial performance of the organization continued to be impacted by significantly declining commodity prices, and while many aspects of safety remained at or better than industry standards, the four fatalities at Ambatovy also reduced the awards to the entire senior executive team.

The decision to award all senior executives the same percentage of the target award was unanimously supported by the Board to acknowledge that the collective achievements were the result of the alignment and commitment of the leadership team with the goals of permanently reducing costs, increasing cross-functional efficiencies and increasing production. It is the expectation that this foundation of operational excellence, laid in 2015, will significantly contribute to improved results.

As part of the compensation plan for 2016, in order to specifically align the executive team with the cost reduction strategy and to retain our senior executives during this challenging transformation period, the Board of Directors approved a one-time additional mid-term incentive of 100% performance contingent share awards for the senior executive officers.

This award is in addition to the regular annual grant of mid-term incentives, and is contingent on a performance target to achieve Net Direct Cash Cost at or below the 12 lowest cost nickel operations (excluding those with negative cash costs) for two consecutive quarters during the three-year performance period ending December 31, 2018. Fifty percent of the award will be paid at vesting if the performance target is achieved one time and 100% if the performance target is achieved two times. There is no additional payout if the performance target is achieved more than two times, and not more than 100% of the award can be paid at vesting. This is a stretch target and if accomplished will be a result of the senior executive team’s commitment to driving change and achieving and sustaining the operational excellence efforts required to be a low cost nickel company. The award vests at the end of the performance period and if achieved, will not be paid out until 2019.

The grant value of this one-time award is two times base salary for the CEO and one and a half times base salary for the other senior executive officers, resulting in 2,426,475 share units being granted to the CEO and an aggregate of 6,022,080 share units being granted to the other senior executives in respect of this award, all of which are subject to the performance vesting condition. As this pertains to 2016 compensation, this one-time award is not referenced in the following Compensation Discussion & Analysis and will be included in next year’s report.

The combination of: (i) the Net Direct Cash Cost targets in this one time award, (ii) the relative total shareholder return targets in the annual, mid-term incentive restricted share units, and (iii) the share price improvement focus of the annual, long-term incentive stock options, provides a balance of awards contingent on achievement of both absolute and relative performance metrics and key strategic objectives, and is strongly aligned with shareholders’ interests.

We will continue to regularly review our executive compensation structure to ensure the design, the mix, and the amount remain aligned with market practice and that compensation is fair, performance based and clearly connects compensation to the long-term strategy and goals of the Corporation.

Dee Marcoux

Human Resources Committee Chair

COMPENSATION DISCUSSION & ANALYSIS

EXECUTIVE SUMMARY

Sherritt’s compensation philosophy is to pay for performance, where performance is measured against strategic and annual goals that are aligned to our Purpose. Our Purpose is to be a low cost nickel producer that creates prosperity for our stakeholders: our investors, our employees and our communities. Performance is measured in the following three categories: (i) Financial, (ii) Operational and (iii) Sustainability and Rewarding Workplace.

In 2015, the Corporation faced significant financial pressures due to the continuing prolonged commodity market downturn and the need to preserve liquidity. The Corporation responded by proactively managing capital spending budgets to defer spending and preserve liquidity, significantly reduce operating and administrative costs in sustainable ways, including reductions in headcount, increasing production, and continuing to pursue a culture of accountability, pay for performance and being focused on elements within the control of the Corporation.

The table below lists the Corporation’s 2015 strategic priorities (communicated at the March 2015 Investor Day) and highlights the Corporation’s performance against those priorities in 2015:

	2015 Strategic Priorities
MOA	Sustaining production and lowering costs at Moa	Achieved: ü Production at Moa/Fort Site up 2% over prior year ü Record cobalt production in Q4 ü Net Direct Cash Costs (“NDCC”) of US$2.90 per pound in Q4
	Successful progression of acid plant at Moa	Achieved: ü Project on track for completion, as expected in 2016
AMBATOVY Continuing to Ramp Up at Ambatovy	Targeting a production rate of 90% of nameplate capacity for 90 days (within 100 day period) (90 for 90) in the first half of 2015	Achieved: ü 90 for 90 achieved in Q1 ü Financial completion achieved in Q3 ü NDCC lower in each successive quarter throughout 2015, from US$6.98 per pound in Q4 2014 to US$4.07 per pound in Q4 2015
OIL and GAS
Extending the Life of the Cuban Energy Business	Securing two additional exploration production sharing contracts (“PSC”) and continue drilling on extended Puerto Escondido / Yumuri PSC	Achieved: ü Drilling locations identified and permitted on new Block 10 in preparation for 2016 drilling ü Drilling commitments were fulfilled on the extended Puerto Escondido / Yumuri PSC ü Investigated alternative fuel sources for power generation, discussions with the Cuban Government are ongoing ü New PSC discussions are progressing with the Cuban Government; though priority is on Block 10 at prevailing market oil prices

	2015 Strategic Priorities
Maintaining Strong Balance Sheet and Liquidity	Optimizing operating and administrative costs	Achieved: ü Finished year with $435.4 million in cash and cash equivalents ü Reduced administrative costs by $19.9M (21%) from prior year ü Strategically deferred capital spending
Rewarding Workplace and Sustainability within our operations and communities	Sustainability	Received the following awards in recognition of our focus on Sustainability: ü Syncrude Award for Excellence in Sustainable Development for Sherritt’s world-class sustainability program at Ambatovy, awarded by the Canadian Institute of Mining ü Green Star Award for environmental emergency prevention and preparedness at Ambatovy, awarded by the United Nations and the Green Cross
	Environment	üNo high severity environmental incidents in each of Moa / Fort Site; Oil & Gas; and Power ü Achieved the rigorous Environmental certificate required for financial completion at Ambatovy One high severity environmental incident at Ambatovy: an SO2 leak that was detected in the community directly adjacent to the plant site
	Health and Safety	ü No lost time incidents in each of Oil & Gas and Power and Corporate Office ü Improvement in lost time incidents in Moa / Fort Site over prior year Marred by four fatalities at Ambatovy. A Corporation-wide safety audit was undertaken by an independent third party; the results and recommendations will be the focus of an improved safety culture and results.

Compensation Developments in 2015

Annually, the Human Resources Committee assesses executive compensation and performance against comparators to ensure compensation decisions are internally equitable and externally competitive. As a result of this assessment, there were no changes made to executive compensation levels or programs in 2015, other than the adjustments for Mr. Pathe and Mr. Sellers on page 53 and page 61, respectively.

Named Executive Officers

The Named Executive Officers (“NEOs”) for 2015 are:

· David Pathe, President and Chief Executive Officer (“President & CEO”)

· Dean Chambers, Executive Vice President and Chief Financial Officer (“EVP & CFO”)

· Tim Dobson, Senior Vice President, Ambatovy (“SVP, Ambatovy”)

· Elvin Saruk, Senior Vice President, Oil & Gas and Power (“SVP, Oil & Gas and Power”)

· Ward Sellers, Senior Vice President, General Counsel and Corporate Secretary (“SVP, General Counsel & Corporate Secretary”)

· In addition, Mr. Plamondon served as a Senior Vice President, Ambatovy until March 2015 and Senior Vice President, Technical Services until July 13, 2015, when he left the Corporation. The total amount of his compensation in 2015 met the definition of a NEO.

Details relating to NEO compensation are provided starting on page 42, below, and the Summary Compensation Table for NEOs can be found on page 65 below.

COMPENSATION GOVERNANCE

The Human Resources Committee is responsible for assisting the Board in fulfilling its governance responsibilities in respect of all matters relating to director and executive compensation.

To assist with its duties, the Human Resources Committee retains Meridian Compensation Partners, as its independent advisor. Meridian Compensation Partners (“Meridian”) has been the Human Resources Committee’s external compensation consultant since October 2011, and has not provided any services to management. Meridian’s mandate is to provide independent advice to the Committee on executive and director compensation. Meridian attends all regularly scheduled Human Resources Committee meetings and provides advice to the Human Resources Committee in respect of the compensation comparator group, benchmarking of executive and director compensation, review of short term and long term incentive plan design vehicles and metrics, assessment of compensation risk and compensation governance.

The fees paid to Meridian Compensation Partners in each of the financial years ended 2013, 2014 and 2015 are provided in the table below.

	2013		2014		2015
Independent Advisor Fees	$	99,843	$	130,230	$	50,861
All Other Fees	Nil		Nil		Nil
Total Fees Paid	$	99,843	$	130,230	$	50,861

MANAGING COMPENSATION RISK

The Human Resources Committee is responsible for evaluating compensation-related risk and annually reviews the relationship between risk management policies, corporate strategy and executive compensation. This is achieved by aligning executive compensation programs with the risk assessment approved by the Board as outlined in the mandate of the Board, attached as Schedule “A”.

Based on its review of enterprise risks, incentive plans, total reward programs and supported by its independent advisor, the Human Resources Committee has concluded that the Corporation’s compensation programs and policies are not reasonably likely to have a material adverse effect on the Corporation by incenting inappropriate risks. Factors considered in arriving at this conclusion include, among other things, the following:

· A strong governance culture which ensures effective oversight;

· Use of balanced measures, including qualitative and quantitative measures and assessment to determine short-term incentives;

· Incorporates time and performance vesting as part of share-based compensation programs;

· Share ownership requirements for directors and executives;

· Board review and approval of executive compensation recommendations;

· Share-based compensation plans prohibit directors, officers and other employees from purchasing financial instruments that are designed to hedge or offset a decrease in the market value of Shares; and

· Policy that permits recoupment of incentive compensation if there is a material financial restatement as a result of intentional misconduct.

COMPARATOR GROUP

In February 2015, the Human Resources Committee and the Board, with the advice of its independent advisor, reviewed the comparator group and determined to make no changes, other than removing Talisman Energy Inc. due to its acquisition by Repsol, S.A. The comparator group is used to benchmark director and executive pay practices and compensation. Sherritt targets pay within a competitive range of the median of the comparator group. The comparator group comprises mining and energy companies ranging from 1/3 to 3 times the Corporation’s size in terms of assets, with Sherritt positioned above the median in terms of assets and below the median in terms of revenue. For purposes of determining the comparator group, Sherritt’s assets and revenue include Sherritt’s proportionate interest in the Ambatovy and Moa joint ventures. Sherritt’s revenue is similarly adjusted.

The 2015 comparator group consists of the following 19 organizations:

AGNICO EAGLE MINES LTD		HUDBAY MINERALS INC
ARC RESOURCES LTD		IAMGOLD CORP
ATCO LTD		KATANGA MINING LTD
CAMECO CORP		KINROSS GOLD CORP
CAPSTONE MINING CORP		LUNDIN MINING CORP
CRESCENT POINT ENERGY CORP		NEVSUN RESOURCES LTD
ELDORADO GOLD CORP		PENN WEST PETROLEUM LTD
ENERPLUS CORP		THOMPSON CREEK METALS CO INC
FIRST QUANTUM MINERALS LTD		YAMANA GOLD INC
FORTIS INC

DIRECTOR COMPENSATION

Individual directors add value by bringing skills, knowledge and experience that complement those of their colleagues on the Board. This provides diversity and balance in views and perspectives and ensures a well-informed and thoughtful exchange with management. Directors are expected to attend Board and Committee meetings unless there are exceptional circumstances that preclude attendance.

Director compensation is regularly reviewed to ensure the ability to attract and retain qualified directors to the Board. In making its compensation recommendations to the Board, the Human Resources Committee considers:

· The level of compensation required to fairly reflect the responsibilities of serving as a director; and

· The alignment of the interests of directors and Shareholders by:

· having director share ownership requirements; and

· having 50% of the annual retainer delivered as Director Deferred Share Units (“DDSU”) which are held until after a director retires or otherwise ceases to serve on the Board, and are valued at the prevailing market price when redeemed. See — Director Share-Based Awards — on page 40 for additional information concerning DDSUs.

Director Benchmarking

Director compensation is benchmarked relative to the same comparator group that is used to benchmark executive compensation.

Director Fees

Director fees are intended to compensate directors for their oversight, responsibility, skills, time, effort, and governance accountabilities. No changes were made to director fees in 2015. Directors who also serve as executive officers are not entitled to director fees. The 2015 director fees are outlined in the table below.

	Cash		DDSUs
Chairman of the Board Annual Retainer	$	180,000	$	180,000
Director Annual Retainer	$	90,000	$	90,000
Audit Committee Chair Annual Retainer	$	15,000
Human Resource Committee Chair Annual Retainer	$	15,000
Other Committee Chair Annual Retainer	$	5,000

The cash and DDSU components of each director’s annual retainer are paid and granted, respectively, in equal quarterly installments, in arrears. A predetermined schedule of grant dates has been set in advance so that DDSUs can be awarded quarterly, in arrears, outside all regularly scheduled trading blackout periods.

Director Share Ownership Requirements

Director share ownership requirements (“Director SOR”) were established in 2005 to ensure that directors have significant financial alignment with Shareholders. The Board regularly reviews the requirements and makes changes from time to time to ensure the continued alignment of directors’ interests with those of Shareholders. Effective September 19, 2014, the securities ownership requirement for directors increased from three times to five times the cash component of each director’s annual retainer, excluding Committee Chair retainers. The Director SOR must be met by the later of: (i) five years after the Board approved the most recent Director SOR; or (ii) the Director’s fifth anniversary of election or appointment, to the Board.

The greater of the acquisition/grant date value and the closing price on the Toronto Stock Exchange on December 31, 2015 ($0.73) is used to determine the aggregate value of the securities for purposes of the Director SOR in 2015. Shares personally held or controlled by a director and DDSUs granted to a director count towards the Director SOR.

The table below provides the Director SOR for each director as of December 31, 2015, and includes DDSUs for services performed in 2015 but not granted until January 2016.

	Guideline		Securities Ownership			Ownership Multiple of Retainer
Name(1)	Multiple of Cash Retainer	Total ($)	Common Shares ($)	DDSUs ($)	Total Ownership ($)	Based on Common Shares	Based on Total Ownership	Minimum Ownership Met(2)
Timothy Baker	5	450,000	48,844	154,687	203,531	0.5	2.3	In progress
Peter Gillin	5	450,000	142,897	440,780	583,676	1.6	6.5	Yes
Sir Richard Lapthorne	5	450,000	230,463	332,164	562,627	2.6	6.3	Yes
Adrian Loader	5	450,000	76,580	222,996	299,576	0.9	3.3	In progress
Dee Marcoux	5	450,000	439,753	543,439	983,192	4.9	10.9	Yes
Lisa Pankratz	5	450,000	76,944	200,435	277,379	0.9	3.1	In progress
Hap Stephen	5	900,000	385,202	517,423	902,625	2.1	5.0	Yes

Notes:

(1) Mr. Pathe does not appear in this table as he is subject to executive share ownership requirements in his capacity as President & Chief Executive Officer. See page 73 for details relating to his share ownership requirements.

(2) Messrs. Baker, Loader and Stephen and Ms. Pankratz have until September 19, 2019 to satisfy their share ownership requirements (being the fifth anniversary of the adoption of the most recent director share ownership requirements in September 2014).

Director Compensation Table

The total compensation, including the value of DDSUs, awarded to the directors during the fiscal year ended December 31, 2015 was $1.9 million. The following table provides the details for compensation received by each of the directors for serving on the Board in 2015.

Name(1)	Fees Earned ($)	DDSU Awards(2) ($)	Option-Based Awards ($)	Non-Equity Incentive Compensation ($)	All Other Compensation(3) ($)	Total Compensation ($)
Timothy Baker	93,125	90,017	Nil	Nil	Nil	183,142
Peter Gillin	105,000	90,017	Nil	Nil	Nil	195,017
Sir Richard Lapthorne	95,000	90,017	Nil	Nil	Nil	185,017
Adrian Loader	93,125	90,017	Nil	Nil	Nil	183,142
Dee Marcoux	106,875	90,017	Nil	Nil	150,000	346,892
Bernard Michel(4)	35,625	33,760	Nil	Nil	93,750	163,135
Lisa Pankratz	90,000	90,017	Nil	Nil	Nil	180,017
Hap Stephen	180,000	180,010	Nil	Nil	150,000	510,010

Notes:

(1) Mr. Pathe does not appear in this table as he is an executive director and a NEO. Mr. Pathe does not receive any compensation for serving as a director. Information relating to Mr. Pathe’s compensation is provided on page 53 of this circular.

(2) The number of DDSUs granted to each director was calculated by dividing the compensation value of the award by the market price in respect of the specific grant date. The number of units granted is rounded up to the nearest 5 units. There were four grant dates in respect of 2015 DDSUs: April 15, 2015, July 15, 2015, October 15, 2015 and January 15, 2016. The Market Prices were $2.16, $1.86, $1.04, and $0.62, respectively.

(3) Certain directors have been listed under Title IV of the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 of the United States (the “Helms Burton Act”) and have been advised by the United States Department of State that they, their spouse and minor children are inadmissible for entry into the United States. In recognition of the hardship, loss of opportunity and emotional distress suffered by such directors and their respective families, they receive a “Helms-Burton Allowance”. Although these allowances are not considered compensation they have been included as “All Other Compensation” in the table above in the interest of providing full disclosure. Such allowances are not grossed-up for tax purposes.

The policy with respect to the Helms-Burton Allowance was amended in 2014 so that it applies only to those directors who are named on the Helms-Burton list. Ms. Marcoux and Mr. Stephen are currently on the Helms-Burton list.

(4) Mr. Michel did not stand for re-election at the annual general meeting held on May 12, 2015, and was on the Helms-Burton list until August 2015.

Director Share-Based Awards

The following table provides the details of the DDSU Plan. No amendments were made to the DDSU Plan in 2015.

Feature		Description
Securities		Phantom share units that track the value of Shares.
Eligibility		Non-Executive Directors.
Calculation of Award		The compensation value is divided by the volume-weighted average trading price of a Share on the TSX for the five trading days immediately preceding the applicable date (the “Market Price”). The number of units granted is rounded up to the nearest 5 units.
Dividends		The value of dividends paid on Shares, if any, is converted into additional DDSUs.
Vesting		DDSUs vest on the grant date.
Redemptions		DDSUs are redeemable after the DDSU participant ceases to be a director and no later than December 31st of the calendar year following cessation from service. DDSUs are valued at Market Price as at the redemption date.
Amendments and Variation		The Board may at any time amend the DDSU Plan provided that no amendment materially affects any rights acquired by a participant under the plan. The Board may also, with the consent of the participant, approve any variation in terms of DDSUs that have been granted to the participant.

Outstanding DDSU Awards

The following table provides information concerning all unexercised DDSU awards held by directors as of December 31, 2015. No other share-based awards or Stock Options are granted to directors. DDSU awards are fully vested on the date of grant.

Name		Market or Payout Value of Vested DDSU Awards Not Paid Out or Distributed(1) ($)
Timothy Baker		47,554
Peter Gillin		82,683
Sir Richard Lapthorne		71,770
Adrian Loader		60,032
Dee Marcoux		93,617
Bernard Michel(2)		0
Lisa Pankratz		55,559
Hap Stephen		128,035

Notes:

(1) The “Market or Payout Value of Vested Share-based Awards not Paid Out or Distributed” is calculated by multiplying the number of DDSUs by the closing price of Shares on the TSX on December 31, 2015, which was $0.73.

(2) Mr. Michel did not to stand for re-election at the annual general meeting in 2015. He subsequently redeemed his DDSUs prior to December 31, 2015 in accordance with the terms of the DDSU Plan.

Value Vested or Earned During the Year

The following table provides information concerning the aggregate dollar value that would have been realized by the directors had their DDSU awards that vested during 2015 been paid out on the vesting date.

Name		DDSU Awards(1) ($)
Timothy Baker		90,017
Peter Gillin		90,017
Sir Richard Lapthorne		90,017
Adrian Loader		90,017
Dee Marcoux		90,017
Bernard Michel		56,263
Lisa Pankratz		90,017
Hap Stephen		180,013

Note:

(1) The value vested during the year is calculated by multiplying (i) the number of DDSUs that vested during the year by (ii) the grant date Market Price which is the volume-weighted average trading price of a Share on the TSX for the five trading days immediately preceding each grant date. There were four grant dates in respect of 2015 DDSUs: January 15, 2015, April 15, 2015, July 15, 2015 and October 15, 2015. The Market Prices were $2.37, $2.16, $1.86, $1.04, respectively.

EXECUTIVE COMPENSATION

Total Rewards describes all elements of compensation that an executive receives in exchange for his or her time, efforts, and business results and includes:

· total direct compensation (base salary, short-, mid- and long-term incentives);

· benefits, retirement savings and perquisites;

· expatriate allowances/premiums.

Each year, the Human Resources Committee, in consultation with its independent advisor, reviews and makes recommendations to the Board on the total direct compensation elements for senior executive officers, including the NEOs identified in this Circular.

The following sections provide an overview of the Total Rewards program, including the Human Resources Committee’s consideration in determining the 2015 compensation awards for the NEOs.

Executive Compensation Approach

Our approach to executive compensation encompasses the following:

· Pay for capabilities. Base salary is a fixed element of compensation and is linked to the size and scope of each executive’s job and the individual executive’s competencies, skills and experience. Executive base salaries are aligned to the value of those skills, both internally and externally.

· Reward for achieving performance goals. Short-term incentives are a variable element of compensation and are performance-based. They are a reward for achieving or exceeding annual goals that are linked to overall corporate strategy and for progress towards strategic multi-year goals.

· Include compensation that is share-based. Share-based compensation is variable and aligns the interests of executives and Shareholders as payment values depend on a combination of Share price and/or relative performance against a comparator group.

· Provide an appropriate mix of fixed and variable compensation. The proportion of fixed and variable compensation elements is aligned to the complexity and time horizon of the executive’s key responsibilities thereby aligning their focus on mid- to long-term success.

All aspects of total rewards are regularly reviewed to ensure executives remain focused on the success of the Corporation. This is achieved by establishing a link between performance and pay while building equity ownership.

Pay is aligned with strategy and performance by ensuring that:

· The majority of executive compensation is variable and linked to performance;

· Performance is measured and is tied to the business strategy;

· Payment values of mid-term incentives are linked to Share value and performance relative to comparators;

· Compensation design takes into account the time horizons of the operations; and

· Compensation attracts and retains talent as needed.

For more information about how performance is measured, please see — Determining Short-Term Incentive Awards — at page 48.

Executive Benchmarking

For purposes of benchmarking executive compensation, two main sources are considered: (i) proxy data from the comparator group noted on page 38 of this Circular; and (ii) Hay Mining Compensation Review, Global Executive Report. Salaries and total direct compensation are targeted at median values.

Elements of Total Rewards

The following table provides an overview of the elements of total rewards.

Element	Purpose	Form of Award	Performance Period	Payment
Base Salary	Compensates executives for capabilities, skills and accountability required to successfully perform in their roles.	Cash	One Year	Fixed.

Short-Term Incentive	Rewards executives for meeting or exceeding annual goals and progress towards strategic initiatives.	Cash	One Year	Variable — Award based on corporate and individual performance. Actual award value could range from 0% — 200% of target.

Mid-term Incentive	Rewards executives for creating mid-term Shareholder value.	Restricted share units	Three years	Variable — Payment value of the award depends on share price and the relative total shareholder return (“RTSR”) performance. Twenty percent of the mid-term incentive award is subject to RTSR performance. For each 2% of Sherritt’s RTSR, 1% of the award is impacted, within established threshold and maximum range as discussed below. Sherritt’s RTSR is measured against a combined weighted index consisting of · S&P/TSX Metals and Mining Industry Index (Bloomberg: STMETL): with a 67% weighting and · S&P/TSX Oil & Gas, Exploration & Production Industry Index (Bloomberg: STOILP): with a 33% weighting. Threshold: If Sherritt underperforms the combined weighted index by 40% or more, the performance factor is 0% therefore none of the 20% vests (20% × 0% = 0); resulting in 80% of the mid-term incentive vesting and paying out. Maximum: If Sherritt outperforms the combined weighted index by 40% or more, the Performance factor is 200% therefore 200% of the 20% vests (20% × 200% = 40); resulting in 120% of the mid-term incentive vesting and paying out. Settled in cash.

Element	Purpose	Form of Award	Performance Period	Payment
Long-term incentive	Rewards executives for creating long-term Shareholder value.	Stock options	Ten years (1/3 vests each year over three years)	Variable — Value depends on the appreciation of the share price relative to the exercise price. Actual value is determined based on the variance between the exercise price, share value at the time of grant, and share price at the time of exercise. Stock options can expire with no value. Settled in treasury shares.

Group Benefits, Retirement Savings and Perquisite Allowance	Invests in executive health and well-being and provides an important source of retirement savings. Executives are offered an annual Executive Medical which is treated as a taxable benefit and such amounts are not grossed-up for tax purposes.	—	—	—

Expatriate Premiums and Allowances	Recognizes the personal adjustment required for the executive and his or her family inherent with an international assignment.	Cash	Duration of assignment	Fixed — Value determined by assignment location.

Base Salary

Base salaries are reviewed annually and adjusted, if necessary, to reflect the increase of experience and expertise in the role. Any increases to senior executive officer’s base salaries are recommended by the President & CEO to the Human Resources Committee for approval. Increases to the President & CEO’s base salary are recommended to the Board by the Human Resources Committee for approval.

Short-Term Incentive

Short-term incentives (“STI”) reward employees for their contribution towards achieving corporate goals. STI target awards are a percentage of base salary and are based on the scope of the role. Award value can range from 0% to 200% of target.

The value of STI awards is determined based on the following:

· An overall company performance factor which is based on the achievement of annual corporate and strategic goals measured against target performance levels;

· An overall divisional performance factor which is based on the achievement of divisional goals, for those senior executives who have accountability for an operating division; and

· Individual performance measured against goals established at the beginning of the year.

STI awards are determined annually at the February Human Resources Committee and Board meetings following the close of the fiscal year. The Board has the discretion to adjust awards up or down based on situational factors that are not captured in the formal measures. For example, the 2015 STI awards reflected, among other things, the strategic deployment of capital and improvement to the liquidity position of the Corporation.

Mid- and Long-Term Incentive

Mid- and long-term incentives align the interests of employees with Shareholders. Awards are based on the scope and time horizon of the role. Mid- and long-term incentives are variable as the payment value of the award is based on Share price and/or performance factors.

Awards granted under the mid- and long-term incentive programs are aligned with the following compensation principles:

· Align with shareholder interests through share and option based awards;

· Reward for contributions by recognizing the achievement of mid- and long-term corporate and strategic goals; and

· Support retention through deferred vesting.

Mid- and long-term incentives are forward looking and are determined annually at the February Human Resources Committee and Board meetings.

Benefits

The benefits program is 100% employer-paid and includes medical, dental, short- and long-term disability, and life insurance coverage.

In addition, all employees have the opportunity to purchase Shares through the Employee Share Ownership Plan (“ESOP”). ESOP was introduced in 2014 and replaces The Employee Share Purchase Plan (“SPP”) which closed July 2015. The following table provides details relating to each plan.

	ESOP	SPP
Description	Employees, including executives, who voluntarily choose to participate, direct up to 10% of their base salary for the purchase of Shares. The Corporation matches 50% of the employee contribution, up to a maximum of $2,500 per calendar year.	Employees, including executives, who voluntarily choose to participate, direct up to 5% of their prior year earnings to an interest bearing account. Such funds accumulate over a pre-set time period which typically runs from July 1st to June 30th, two years later. At the end of the 24-month period, the accumulated funds are used to purchase Shares.

Securities	Shares are purchased at the time the contribution is made. The timing of the contributions is linked to the participant’s pay date. Shares are bought on the open market.	Shares are purchased at the end of the 24-month savings period. Shares are issued from treasury. Once purchased, the Share is no longer available for issuance.

Purchase Price	The purchase price is the price of Shares at the time of purchase on the open market.	The purchase price is equal to the lower of the volume-weighted average trading price of a Share on the TSX for the five trading days immediately preceding the first day or the last day of the 24-month savings period. The offer price is typically fixed on May 31st (“Offer Price”) immediately preceding the beginning of the 24-month savings program, and the closing price on June 30th (“Closing Price”) of the second year of the program. The Purchase Price is the lower of: (i) the Offer Price; and (ii) the Closing Price.

Restrictions/Limitations	Participants cannot sell or transfer Shares purchased with employer contributions until they have participated in the ESOP for 24 consecutive months.	The total number of Shares (a) issued to insiders, within a one year period; and (b) issuable to insiders, at any time under the SPP, together with all other security based compensation arrangements, shall not exceed 10% of our issued and outstanding Shares.

	Enrollment and changes to the employee’s participation are subject to the Corporation’s Insider Trading Policy.	Enrollment in SPP is subject to the Corporation’s Insider Trading Policy.

Cancellations	Employees can cancel their participation at any time, subject to restrictions/limitations noted above. If an employee cancels participation in the plan prior to making 24 consecutive months of contributions, Shares purchased with employer contributions will be forfeited.	Employees can cancel their participation at any time and their accumulated balances are returned to them.

Amendments and Variations	The Board may amend ESOP at any time.	The Board may amend the SPP subject to required regulatory or Shareholder approvals; provided a participant’s current enrolment cannot be negatively affected without the participant’s consent.

Notes:

(1) The Human Resources Committee may make certain types of amendments to the SPP without seeking Shareholder approval, including amongst other things: (i) amendments of an administrative nature; and (ii) termination, modification or suspension of all or any part of the SPP.

(2) Shareholder approval is required for the following types of amendments to the SPP, including amongst other things; (i) amendments to the number of Shares issuable under the SPP; (ii) amendments reducing the purchase price of a Share; (iii) the addition of any other provision which results in participants receiving Shares while no cash consideration is received by the Corporation; and (iv) amendments required to be approved by Shareholders under applicable law.

Retirement Savings

The retirement program is an employer-paid savings program. Contributions are a fixed percentage of base salary and are determined based on market practice.

	Group Retirement Savings Plan (“Group RSP”)	Executive Supplementary Pension Plan (“ESPP”)
Eligibility	All Employees.	Senior executives who are subject to Canadian tax rules and whose Group RSP contributions exceed the annual limits prescribed by the Income Tax Act (Canada).

Description	Contributions are made on behalf of the employee to the employee’s individual account under a group RSP.	Notional credits are made to the executive’s ESPP account on a pre-tax basis.

Contributions	A percentage of base salary directed into investments, as directed by the employee, which they select from an approved list established by the Management Retirement Committee.	Executive directs the investment of notional credits to the same investment choices as the Group RRSP.

Withdrawal	Funds can be withdrawn at any time.	Funds can be withdrawn only upon cessation of employment.

Perquisite Allowance

Executives are eligible to receive a perquisite allowance which is fully taxable and is intended for a variety of expenses, including wellness and transportation related expenses. It offers flexibility by allowing the individual executives to select perquisites that best suit their requirements. The allowance is determined by executive level and market practice and ranges from $28,000 to $32,000 per year.

Expatriate Premiums and Allowances

Various expatriate premiums and allowances are provided to employees on international assignments to recognize the personal adjustment required for the employee and the employee’s family inherent with a foreign assignment. These premiums and allowances are designed to recognize the mobility, security, challenging working conditions and remoteness experienced by the employee as well as accommodating the opportunity for rest and recuperation from such conditions. Expatriate premiums and allowances range from 25% to 65% of base salary, depending on the foreign assignment location.

Compensation Mix

The Human Resources Committee considers the mix of compensation including fixed and variable and short- and long-term compensation and determines compensation mix based on:

· Nature and time horizon of the executive’s key responsibilities; and

· Market practice.

As senior executive officers have greater influence on organizational performance over the long-term, their compensation mix is more heavily weighted towards variable compensation and mid- and long-term elements of compensation. The following chart outlines the expected mix of base salary, short-, mid- and long-term incentives at target performance for the President & CEO and the average of the other NEOs.

President and CEO: Pay Mix	Other NEO: Pay Mix

DETERMINING SHORT-TERM INCENTIVE AWARDS

Organizational Performance

A performance scorecard was developed to measure and monitor organizational performance, and includes: financial, production and sustainability metrics with a view to ensuring that financial and production goals are achieved safely, reliably and sustainably. The measures are both quantitative and qualitative and are assessed at a company-wide and/or divisional level, as appropriate for the specific measure. A disciplined assessment of organizational and individual performance results provides the context for ensuring the appropriate correlation between performance and pay. Organizational performance is reviewed quarterly by the Human Resources Committee which provides the opportunity for feedback and to make course corrections, as required, to ensure that performance expectations remain aligned with organizational goals.

The Human Resources Committee assessed the organizational performance against the targets in the performance scorecard and applied its judgment to determine that the overall Corporation’s performance and the collective contributions of the individual senior executive officers justified a short-term incentive award for each of the NEOs at 50% of their respective short-term incentive target. The measures, rationale and results that were used to assess organizational performance are described in the table below.

Category	Measure	Rationale	Results
Financial

	Adjusted EBITDA	Represents a proxy for cash generated by the Corporation’s operating activities (on an accrual basis), a standard industry metric. For more details reference “Non-GAAP Measures” section” in the 2015 MD&A.	Adjusted EBITDA was less than 50% of the prior year Adjusted EBITDA and 22% of 2015 budget. Adjusted EBITDA was negatively impacted by low prices for nickel and oil, and the impact of the weak Canadian dollar. Accordingly, the score for this measure was determined to be 0%.

	Combined Free Cash Flow	Combined free cash flow represents operating cash flow generated by each of the Corporation’s business units less cash capital spending.	Combined free cash flow was significantly impacted by low commodity prices and foreign exchange impact and was below budget and prior year actuals. Accordingly, the score for this measure was determined to be 0%.

	Capital Spend	Represents how the Corporation allocates capital to ensure sustainability of existing facilities and expansion of new facilities.	Capital spending was proactively managed and deferred where appropriate in order to conserve cash, with some strategic spend where appropriate. This disciplined approach enabled continued investment where a significant future impact could be achieved, e.g., construction of an acid plant at Moa will reduce the need to purchase acid. Accordingly, the score for this measure was determined to be 30%.

Individual Performance

A comprehensive review of each executive’s performance is completed by the Human Resources Committee based on goals that were established at the beginning of the year:

· President & CEO. Includes input from every director as well as a self-assessment from the President & CEO. The Human Resources Committee uses this information in developing recommendations for establishing base salary and mid- and long-term incentives. The STI payment value is based on overall corporate performance and the Board’s assessment of the CEO’s performance against individual objectives. These recommendations are presented to the Board for approval during the February Committee and Board meetings.

· Other Senior Executive Officers, including the NEOs. The President & CEO develops recommendations for base salary, STI, mid- and long-term incentive awards for senior executive officers taking into consideration changes in individual capabilities, corporate and individual performance. He makes his recommendations to the Human Resources Committee for approval during the February Committee and Board meetings.

President & CEO

Mr. Pathe’s individual performance is assessed against predetermined organizational goals which were agreed to by Mr. Pathe and the Board at the beginning of the year. Based on this annual assessment and in consultation with the Human Resources Committee’s independent advisor, the Human Resources Committee recommends to the Board the President & CEO’s base salary, and short-term, mid-term and long-term incentives.

2015 Key results

· Production up and costs down in both nickel operations

· Successful hiring of new Chief Operating Officer to drive new focus on operational excellence

· Strong liquidity position maintained and reduced balance sheet risk with achievement of financial completion

· Continued to set leadership tone and drive change initiatives throughout the organization that supported the ongoing effort of becoming a performance based culture

· Continued to build leadership capability by overseeing company-wide commitment to performance feedback

David Pathe
President & CEO

Mr. Pathe is accountable for developing and implementing high-level strategy, making major corporate decisions and managing the growth, operations and overall performance of the Corporation.

The Human Resources Committee reviewed Mr. Pathe’s 2015 compensation and the Board approved the Committee’s recommendations. Mr. Pathe’s base salary increased to $825,000 per annum, effective April 1, 2015. The CEO’s 2015 STI target remains at 100% of his base salary and his share-based compensation increased to $1,750,000 allocated 50% to each of mid-term and long-term awards. These adjustments to Mr. Pathe’s compensation bring him closer to the median of the comparator group with approximately 72% of Mr. Pathe’s 2015 compensation being performance-based.

Mr. Pathe’s 2015 STI award is based on overall organizational results.

· The STI award for 2015 performance was based on Mr. Pathe’s target of 100% of his annualized base salary as at December 31, 2015. His award of $412,500 represents 50% of his target award of $825,000, reflecting the overall performance of the Corporation.

Compensation	2012		2013			2014			2015
Fixed
Base Salary (Annualized as at December 31)	$	700,000	$	750,000		$	750,000		$	825,000
Variable
Short-term incentive	$	650,000	$	0		$	562,500		$	412,500
*Share-based compensation (Grant Date Value)*
Mid-term Incentive (RSUs)	590,000		$	600,018		$	800,010		$	875,006
Long-term Incentive (Stock Options)	509,903		$	599,975		$	800,007		$	875,000
Total direct compensation	$	2,449,903	$	1,949,993		$	2,912,517		$	2,987,506
Change from prior year			-20		%	49		%	3		%

Mr. Pathe was appointed President & CEO on January 1, 2012. The year-over-year increase in his total direct compensation in 2015 reflects an increase to base salary and share-based compensation awards to move him closer to (but still below) the median of the comparator group and a decrease in his 2015 STI award at 50% of target for 2015.

2015 Pay Mix

President & CEO

Current Value of Total Direct Compensation Awards

The table below illustrates the impact of the Corporation’s declining share price on the President & CEO’s Total Direct Compensation over his tenure.

President & CEO Total Direct Compensation

Notional Value, Impact of Share Price and Total Cash

Notes:

(1) Total Direct Compensation includes: base salary, and short-term, medium-term and long-term incentive awards valued at the grant date as set out in the — Summary Compensation Table described on page 65.

(2) Notional Total Direct Compensation includes: base salary, and short-term, medium-term and long-term incentive awards with option-based and share-based compensation valued as at December 31, 2015, consistent with the — Notional Value of Total Compensation — methodology described on page 63.

Other NEOs

Performance for the other NEOs is assessed by the President & CEO against predetermined goals. Based on his performance assessment of each of the other NEOs, Mr. Pathe recommends to the Human Resources Committee and the Board for their approval the base salary, and short-term, mid-term and long- term incentives for each of Messrs. Chambers, Dobson, Saruk, and Sellers.

2015 Key results

· Significant progress reducing administrative costs

· Proactive management of capital budgets in a difficult and rapidly changing commodity price environment

· Finished year with strong cash liquidity position

· Improved business planning and reporting processes

· Instrumental in process with lenders for financial completion at Ambatovy

Dean Chambers
EVP & CFO

Mr. Chambers is accountable for the strategic coordination of all financial issues and current and long-term effectiveness of all financial functions including financial strategy and structure, accounting standards / compliance, financial risk management and treasury. He is also accountable for the Corporate Development and Investor Relations functions. Mr. Chambers contributes to the overall success of the Corporation through active participation in strategic planning and other key corporate processes.

There were no changes made to Mr. Chambers’ target compensation in 2015.

Mr. Chambers’ 2015 STI award is based on a combination of corporate and individual performance.

· The STI award for 2015 performance was based on Mr. Chamber’s target of 70% of base salary. His award of $157,500 represents 50% of his target award of $315,000.

Compensation	2013		2014			2015
Fixed
Base Salary (Annualized as at December 31)	$	450,000	$	450,000		$	450,000
Variable
Short-term incentive	$	189,000	$	245,700		$	157,500
*Share-based compensation (Grant Date Value)*
Mid-term Incentive (RSUs)	$	340,011	$	340,005		$	340,005
Long-term Incentive (Stock Options)	$	260,033	$	259,952		$	260,000
Total direct compensation	$	1,239,044	$	1,295,657		$	1,207,505
Change from prior year			5		%	-7		%

2015 Pay Mix

EVP & CFO

Current Value of Past Total Direct Compensation Awards

The table below illustrates the impact of the Corporation’s declining share price on the EVP & CFO’s Total Direct Compensation for the past 3 years.

EVP & CFO Total Direct Compensation

Notional Value, Impact of Share Price and Total Cash

Notes:

2015 Key results

· Production targets met

· Exceeded expectations for reductions in net direct cash costs

· 90 for 90 operational test achieved ahead of schedule and financial completion at Ambatovy achieved on time

· Negatively impacted by 4 workplace fatalities

Tim Dobson
SVP, Ambatovy

Mr. Dobson is responsible for the leadership and management of the Corporation’s Ambatovy division by meeting operational and financial objectives as set out by the Chief Operating Officer. He contributes to the overall success of the Corporation through active participation in strategic planning and other key corporate processes. He was appointed to the position of SVP Ambatovy, effective March 1, 2015. Prior to his appointment to SVP Ambatovy Mr. Dobson was in the role of Vice President, Operations Ambatovy from his July 2014 hire date.

Mr. Dobson’s STI award is based on a combination of corporate, divisional and individual performance.

· The STI award for 2015 performance was based on Mr. Dobson’s target of 65% of his annualized December 31, 2015 base salary. His award of $130,000 represents 50% of his target award of $260,000.

Compensation	2014		2015
Fixed
Base Salary (Annualized as at December 31)	$	196,000	$	400,000
Variable
Short-term incentive	$	110,810	$	130,000
*Share-based compensation (Grant Date Value)*
Mid-term Incentive (RSUs)	N/A		$	485,005
Long-term Incentive (Stock Options)	N/A		N/A
Total direct compensation	$	306,810	$	1,015,005
Change from prior year	—		—

Notes:

(1) Mr. Dobson was appointed to the position of SVP, Ambatovy effective March 1, 2015. Prior to this appointment Mr. Dobson served as Vice President, Operations at Ambatovy from his July 2014 hire date. As his 2013 total direct compensation reflects a partial year, a “Change from prior year” percentage has not been included for 2014. Mr. Dobson’s 2014 Base Salary has been calculated on a pro rata basis from his date of hire.

2015 Pay Mix

SVP, Ambatovy

Current Value of Past Total Direct Compensation Awards

The table below illustrates the impact of the Corporation’s declining share price on the SVP, Ambatovy’s Total Direct Compensation in respect of 2015, his first full year of employment with the Corporation.

SVP, Ambatovy Total Direct Compensation

Notional Value, Impact of Share Price and Total Cash

Notes:

2015 Key results

· Drilling program on extension lands executed and amended to respond to drilling results

· Power production and cash flow exceeded expectations

· Work to reprocess seismic and identify drilling locations on Block 10 completed

· Well permitting advanced in Cuba to enable drilling in 2016

· Completed the sale of an oil and gas lease in the North Sea asset

Elvin Saruk
SVP, Oil & Gas and Power

Mr. Saruk is responsible for the leadership and management of the Corporation’s Oil & Gas and Power divisions by meeting operational and financial objectives as set out by the Chief Operating Officer. He contributes to the overall success of the Corporation through active participation in strategic planning and other key corporate processes.

There were no changes made to Mr. Saruk’s target compensation in 2015.

Mr. Saruk’s 2015 STI award is based on a combination of corporate, divisional and individual performance.

· The STI award for 2015 performance was based on Mr. Saruk’s target of 60% of base salary. His award of $114,000 represents 50% of his target award of $228,000.

Compensation	2013		2014			2015
Fixed
Base Salary (Annualized as at December 31)	$	380,000	$	380,000		$	380,000
Variable
Short-term incentive	$	159,600	$	193,800		$	114,000
*Share-based compensation (Grant Date Value)*
Mid-term Incentive (RSUs)	$	350,008	$	350,010		$	350,007
Long-term Incentive (Stock Options)	$	134,999	$	135,014		$	135,000
Total direct compensation	$	1,024,607	$	1,058,824		$	979,007
Change from prior year			3		%	-8		%

2015 Pay Mix

SVP, Oil & Gas and Power

Current Value of Past Total Direct Compensation Awards

The table below illustrates the impact of the Corporation’s declining share price on the SVP, Oil & Gas and Power’s Total Direct Compensation for the past 3 years.

SVP, Oil & Gas and Power

Notional Value, Impact of Share Price and Total Cash

Notes:

2015 Key results

· Facilitated activities that supported financial completion at Ambatovy

· Effectively reduced costs within the legal function

· Effectively supported CEO on corporate strategy

· Completed roll-out and training on revised Anti-Bribery and Corruption policy

· Successfully led process to promote Board effectiveness, including through more effective board reporting and communications

Ward Sellers

SVP, General Counsel & Corporate Secretary

Mr. Sellers is responsible for the leadership and management of the overall legal affairs of the Corporation. He is also responsible for the corporate secretarial function. In addition, Mr. Sellers oversees the Corporation’s internal audit and anti-bribery and corruption programs. He contributes to the overall success of the Corporation through active participation in strategic planning and other key corporate processes. Mr. Sellers joined the Corporation in October 2013.

The Human Resources Committee reviewed Mr. Pathe’s recommendations for Mr. Sellers’ 2015 compensation and the Board approved the recommendations. Mr. Sellers base salary increased to $375,000 per annum, effective April 1, 2015. His STI target remains at 50% of his base salary and his share-based compensation increased by $40,000 with approximately 62% and 38% of the increase being allocated to mid-term and long-term awards, respectively. These adjustments to Mr. Sellers’s compensation bring him to the median of the market.

Mr. Sellers’ 2015 STI award is based on a combination of corporate and individual performance.

· The STI award for 2015 performance was based on Mr. Sellers’s target of 50% of his annualized base salary as at December 31. His award of $93,750 represents 50% of his target award of $187,500.

Compensation	2013		2014		2015
Fixed
Base Salary (Annualized as at December 31)	$	79,647	$	350,000	$	375,000
Variable
Short-term incentive	$	43,750	$	157,500	$	93,800
*Share-based compensation (Grant Date Value)*
Mid-term Incentive (RSUs)	$	82,825	$	325,005	$	350,007
Long-term Incentive (Stock Options)	$	33,712	$	135,014	$	150,000
Total direct compensation	$	239,934	$	967,519	$	968,807
Change from prior year	—		—		<1		%

Notes:

(1) Mr. Sellers was appointed Senior Vice President, General Counsel and Corporate Secretary on October 9, 2013. As his 2013 total direct compensation reflects a partial year, a “Change from prior year” percentage has not been included for 2014. Mr. Sellers’ 2013 Base Salary has been calculated on a pro rata basis from his date of hire.

2015 Pay Mix

SVP, General Counsel & Corporate Secretary

Current Value of Past Total Direct Compensation Awards

The table below illustrates the impact of the Corporation’s declining share price on the SVP, General Counsel and Corporate Secretary’s Total Direct Compensation for the full years of 2014 and 2015, with 2013 being a partial year from October 9, 2013.

SVP, General Counsel and Corporate Secretary’s Total Direct Compensation

Notional Value, Impact of Share Price and Total Cash

Notes:

NOTIONAL VALUE OF TOTAL COMPENSATION

The following table provides the notional value of total compensation in the specified year with the option-based and share-based awards valued as at December 31, 2015 compared to the total compensation values provided in the Summary Compensation Table that follows this section. This Notional Compensation Table has been included to illustrate how change in Share price impacts the value of NEO total compensation, aligning compensation directly with Share value. The Total Compensation as per the Notional Value as noted in the table below includes the following:

· Total compensation less the compensation value for share-based and option-based awards, as provided in the Summary Compensation Table which follows;

· The value of unvested RSUs granted in a specified year, calculated by (i) multiplying the number of RSUs outstanding as at December 31, 2015 (equal to the number of units granted plus dividend equivalents reinvested) by the closing share price on the TSX on December 31, 2015, which was $0.73; and (ii) a performance factor of 100%;

· The value of unvested and vested, but unexercised, Stock Options granted in a specified year, calculated by multiplying (i) the difference between the Option exercise price and the closing price of Shares on the TSX on December 31, 2015, which was $0.73, by (ii) the number of outstanding Stock Options (both vested and unvested). Where the difference is negative, the Stock Options are not in the money and no value is reported; and

· To the extent any Stock Options granted in a specified year have vested and are subsequently exercised, any gains on such exercise are calculated by multiplying (i) the difference between the Stock Options’ exercise price and the volume-weighted average trading price of a Share on the TSX for the five (5) trading days preceding the exercise date, by (ii) the number of outstanding Stock Options exercised. The NEOs have not exercised any vested Stock Options that were granted in 2013, 2014 and 2015.

		Summary Compensation Table		Notional Value of
Name	Year	Total Compensation		Total Compensation		Variance
David Pathe	2015	$	3,260,155	$	1,815,859	$	(1,444,296	)
President & CEO	2014	$	3,162,989	$	1,761,784	$	(1,401,205	)
	2013	$	2,231,875	$	1,122,764	$	(1,109,111	)
Dean Chambers	2015	$	1,395,569	$	914,355	$	(481,214	)
EVP & CFO	2014	$	1,484,524	$	969,062	$	(515,462	)
	2013	$	1,440,706	$	892,162	$	(548,544	)
Tim Dobson	2015	$	1,374,023	$	1,058,469	$	(315,544	)
SVP, Ambatovy
Elvin Saruk	2015	$	1,147,633	$	784,912	$	(362,722	)
SVP, Oil & Gas and Power	2014	$	1,227,290	$	829,248	$	(398,042	)
	2013	$	1,219,516	$	787,523	$	(431,993	)
Ward Sellers	2015	$	1,050,519	$	672,798	$	(377,722	)
SVP, General Counsel & Corporate Secretary	2014	$	1,117,937	$	738,685	$	(379,252	)
	2013	$	260,480	$	160,632	$	(99,848	)

PERFORMANCE GRAPH (Total Shareholder Return)

The following graph illustrates the cumulative total shareholder return of $100 invested on December 31, 2010 in shares of the Corporation. compared with the return on the S&P/TSX Composite Total Return Index. It also includes the total return on the S&P/TSX Metals & Mining Index (Bloomberg: STMETL), which currently consists of the 32 companies in the metals and mining industry that are included in the S&P/TSX Composite Index, and is reflective of the Corporation’s principal business.

During the 2010 — 2015 time period metal prices declined and that is reflected in the STMETL index declining over the same period. Nickel prices declined more significantly (by 65%) than other metals such as copper, which declined by 51% and gold which declined by 25%.

As illustrated in the table below, the change in total NEO compensation tracks directionally with the performance of the Share price and overall total shareholder return, with the exception of 2012 where year-over-year NEO compensation decreased and total shareholder returns increased.

Year	Year-over-Year Percent Change: Aggregate NEO Compensation (%)	Year-over-Year Percent Change: Total Shareholder Return for Sherritt Common Shares (%)	Year-over-Year Percent Change: Total Shareholder Return for S&P/TSX Composite (%)
2015(1)	-5.4	-75.4	-8.3
2014	16.8	-18.0	10.6
2013(2)	-15.4	-32.9	13.0
2012(3)	-1.1	8.5	7.1
2011(4)	-4.8	-33.8	-8.7

Notes:

(1) Total NEO compensation has been adjusted for the reporting of six NEOs in 2015. Mr. Plamondon served as SVP Technical Services until July 13, 2015. As a result, his 2015 total compensation has been excluded from this analysis.

(2) Total NEO compensation has been adjusted for the reporting of six NEOs in 2013. Mr. Tiessen served as EVP Operations until October 10, 2013. As a result, his 2013 total compensation has been excluded from this analysis.

(3) Total NEO compensation has been adjusted for the reporting of two Chief Financial Officers in 2012. Mr. Robins served as Chief Financial Officer until December 10, 2012. Mr. Chambers was appointed EVP & CFO at that time. As a result, Mr. Robins’ total compensation has been excluded from this analysis.

(4) Excludes Mr. Delaney’s retirement and Chairman allowances, which were entitlements earned by him prior to serving as Chief Executive Officer in 2010 and 2011.

SUMMARY COMPENSATION TABLE

The following table sets forth for the period indicated, the compensation of the President & CEO, the EVP and Chief Financial Officer and the other three most highly compensated officers. Additionally, Mr. Plamondon served as an officer of the Corporation for part of 2015 and is included below.

The compensation value of share-based awards and option-based awards in the table below are reported using the grant date fair market value, whereas the notional compensation discussed in the section above, utilizes the share price as at December 31, 2015, assisting in the interpretation of pay and performance alignment.

To better understand the impact of a declining share price on the value of share-based compensation received by the NEOs, refer to the Notional Compensation Table, above, on page 63.

				Share-Based		Option-Based		Annual		Pension		All Other		Total
Name	Year	Salary		Awards(1)		Awards(2)(3)		Incentive		Value(4)		Compensation(5)		Compensation
(a)	(b)	(c)		(d)		(e)		(f)		(g)		(h)		(i)
David Pathe	2015	$	806,250	$	875,006	$	875,000	$	412,500	$	74,320	$	217,079	$	3,260,155
President & CEO	2014	$	750,000	$	800,010	$	800,007	$	562,500	$	65,730	$	184,742	$	3,162,989
	2013	$	737,500	$	600,018	$	599,975	$	0	$	64,680	$	229,701	$	2,231,875
Dean Chambers	2015	$	450,000	$	340,005	$	260,000	$	157,500	$	31,570	$	156,494	$	1,395,569
EVP & CFO	2014	$	450,000	$	340,005	$	259,952	$	245,700	$	29,730	$	159,137	$	1,484,524
	2013	$	443,750	$	340,011	$	260,033	$	189,000	$	43,880	$	164,032	$	1,440,706
Mark Plamondon	2015	$	205,833	$	350,007	$	135,000	N/A		$	0	$	1,793,567	$	2,484,408
SVP, Technical Services	2014	$	380,000	$	350,010	$	135,014	$	171,000	$	21,330	$	648,283	$	1,705,637
	2013	$	375,000	$	350,008	$	134,999	$	159,600	$	33,420	$	623,890	$	1,676,917
Tim Dobson(6)	2015	$	393,333	$	485,005	N/A		$	130,000	N/A		$	365,685	$	1,374,023
SVP, Ambatovy	2014	$	196,000	N/A		N/A		$	110,810	N/A		$	135,034	$	441,844
Elvin Saruk	2015	$	380,000	$	350,007	$	135,000	$	114,000	$	20,670	$	147,956	$	1,147,633
SVP, Oil & Gas and Power	2014	$	380,000	$	350,010	$	135,014	$	193,800	$	21,330	$	147,137	$	1,227,291
	2013	$	375,000	$	350,008	$	134,999	$	159,600	$	33,420	$	166,489	$	1,219,516
Ward Sellers(7)	2015	$	368,750	$	350,007	$	150,000	$	93,800	$	19,320	$	68,642	$	1,050,519
SVP, GC and Corporate Secretary	2014	$	350,000	$	325,005	$	135,014	$	157,500	$	17,730	$	132,688	$	1,117,937
	2013	$	79,647	$	82,825	$	33,712	$	43,750	$	0	$	20,546	$	260,480

Notes:

(1) The number of RSUs awarded to each NEO in 2015 was calculated by dividing the compensation value (grant date fair value) of the award by the Market Price on the date of grant, which was $2.11.

(2) The number of Stock Options awarded to each NEO in 2015 was calculated by dividing the compensation value of the award by the product of the market price on the date of grant, which was $2.11, and the Black-Scholes value, which was $1.00. For the purpose of calculating the Black-Scholes compensation value, the Corporation uses the discrete method for determining the dividend value as grants are awarded at a point in time. As a result, the Black-Scholes value for the March 13, 2015 grant was calculated using the following assumptions: (a) interest rate of 1.49%; (b) Share price volatility of 51.47%; (c) a dividend yield of $0.37; and (d) an option term of 10 years.

In 2015, the compensation value was the same as the accounting fair value for the Stock Options awarded.

The Black-Scholes value used for calculating the accounting fair value uses a continuous method for determining the dividend value. As a result, the Black-Scholes value used for calculating the accounting fair value was $1.00 and was calculated using the following assumptions: (a) interest rate of 1.47%; (b) Share price volatility of 51.65%; (c) a dividend yield of 1.89%; and (d) an option term of 10 years.

(3) Mr. Dobson receives 100% of his equity-based compensation in the form of restricted share units. Issuing Mr. Dobson’s share-based compensation in the form of RSUs aligns with the global competitive practices for Australian international executives.

(4) The Pension Value represents the notional amount of contributions allocated by the Corporation on behalf of each NEO to the ESPP. Additional information on the ESPP can be found under “Retirement Savings” on page 47 and “Pension Benefits” on page 75.

(5) The following table provides details for the 2015 All Other Compensation amounts reported above.

	David Pathe		Dean Chambers		Mark Plamondon		Tim Dobson		Elvin Saruk		Ward Sellers
Life Insurance	$	2,375	$	2,140	$	840	$	4,778	$	1,678	$	1,788
Group RRSP	$	22,430	$	22,430	$	23,980	$	47,200	$	24,930	$	24,930
Health, Dental & LTD	$	6,524	$	6,524	$	3,272	$	7,397	$	6,041	$	6,524
Helms-Burton Allowance(i)	$	150,000	$	90,000	$	57,000	—		$	76,000	—
International Allowances(ii)	—		—		$	295,766	$	279,643	—		—
Provincial Health Premium	$	900	$	900	—		—		—		$	900
Parking	—		—		—		—		$	7,308	—
Perquisite Allowances	$	32,000	$	32,000	$	32,000	$	26,667	$	32,000
ESOP	$	2,500	$	2,500	$	1,029	—		—		$	2,500
Taxable Benefits(iii)	$	350	—		$	1,639	—		—		—
Termination Benefits(iv)	—		—		$	1,378,040	—		—		—
Total	$	217,079	$	156,494	$	1,793,567	$	365,685	$	147,956	$	68,642

Notes:

(i) Certain NEOs have been listed under Title IV of the Cuban Liberty and Democratic Solidarity (Libertad) Act of 1996 of the United States (the “Helms Burton Act”) and have been advised by the United States Department of State that they, their spouse and minor children are inadmissible for entry into the United States. In recognition of the hardship, loss of opportunity and emotional distress suffered by such Named Executive Officers and their respective families, they receive a “Helms-Burton Allowance”. Although these allowances are not considered compensation they have been included in the table in the interest of providing full disclosure. Such allowances are not grossed-up for tax purposes.

(ii) Mr. Plamondon was SVP Ambatovy until February 28, 2015 and during such time was eligible for certain international allowances. Mr. Dobson was appointed SVP Ambatovy March 1, 2015 and as such is eligible for certain international allowances.

(iii) Represents the value of the taxable benefit for an executive medical for Mr. Pathe and a long-service award for Mr. Plamondon.

(iv) Mr. Plamondon was SVP Technical Services until he left the Corporation in July 2015. The value of his severance benefits represents the full value of the accounting accrual, the maximum payable; such amount is subject to mitigation.

(6) Mr. Dobson was appointed SVP, Ambatovy, effective March 1, 2015. Prior to this appointment Mr. Dobson served as Vice President, Operations at Ambatovy from his July 2014 hire date.

(7) Mr. Sellers was appointed to Senior Vice President, General Counsel and Corporate Secretary on October 9, 2013.

INCENTIVE PLAN AWARDS

The compensation value of mid- and long-term incentive awards for the executives are determined annually during the February Committee and Board meetings. Recommendation and approvals of awards are as follows:

· President & CEO. The Human Resources Committee, with advice from its independent advisor, recommends to the Board for approval, the compensation value for the President & CEO.

· Other Senior Executive Officers, including the NEOs. The President & CEO recommends to the Human Resources Committee, for approval, the compensation value for his direct reports.

Executive Share Unit Plan

The following table provides the details of the Executive Share Unit Plan, which authorizes the granting of Restricted Share Units (“RSUs”) and Deferred Share Units (“DSUs”). DSUs have not been granted since 2004 and in 2014 they were removed from the plan document. In 2015, no changes were made to the Executive Share Unit Plan. A housekeeping amendment was made in early 2016 to clarify the double trigger required for vesting in the event of a change of control. This amendment did not require shareholder approval.

Feature		Description
Securities		Phantom share units that track the value of Shares.
Eligibility		Select employees, including executives, are eligible to receive an award.
Awards		The number of units to be granted is calculated by dividing the compensation value by the volume-weighted average trading price of a Share on the TSX for the five trading days immediately preceding the grant date. The calculated number of units is rounded up to the nearest five units.
Term		RSUs are granted with a three-year term.
Dividends		The value of dividends paid on Shares is reinvested as additional share units.
Vesting		Awards have a three-year time vesting period and are subject to performance vesting conditions, if applicable.
Redemption		RSUs are redeemed by the Corporation at their vesting date for a cash payment.
Redemption Price		Equal to the volume-weighted average price of Shares on the TSX for the five trading days immediately preceding the redemption date.
Performance Factors		RSUs granted in 2013, 2014 and 2015 include a Relative Total Shareholder Return performance condition. The final number of RSUs that vest will range between 80% and 120% of the outstanding number of units on the vesting date. The percentage of the award that vests and pays out is subject to Sherritt’s relative TSR performance measured against the TSR of a combined index consisting of: · S&P/TSX Metals and Mining Industry Index (Bloomberg: STMETL), with a 67% weighting; and · S&P/TSX Oil & Gas, Exploration & Production Industry Index (Bloomberg: STOILP), with a 33% weighting. For each 2% of Sherritt’s relative performance, 1% of units are impacted, positively or negatively resulting in a range 80% – 120% of the award vesting.
Cessation of Employment		Death or Disability. Vest immediately with a performance factor, if any, of 100%. Retirement or Termination without Cause. Vest per normal vesting schedule. Resignation or Termination with Cause. Awards are forfeited.
Change of Control		In the case of a change of control event where a survivor (which includes the Corporation), successor or acquiring entity (a “Successor”) exists, such Successor shall retain or assume the outstanding RSUs or substitute similar awards. If, within 24 months following the termination of the change of control event, a participant’s employment is terminated for a reason other than for just cause or resignation (other than resignation which constitutes constructive dismissal), all of the outstanding RSUs held by the participant will vest immediately upon the termination.
		If the Successor does not retain, assume or substitute all of the outstanding RSUs, all of the outstanding RSUs of each affected participant will be deemed to vest immediately prior to the change of control event. In the case where only part of the Corporation is subject to the change of control event, the Change of Control provisions of the Executive Share Unit Plan will only apply to the participants employed in the affected part of the business.
Recoupment		RSUs granted since 2014 can be recouped if there is a restatement of financials which resulted from executive misconduct which led to an overpayment of incentive compensation.
Assignability		Not permitted.
Amendments		The Board may amend the Executive Share Unit Plan subject to any required regulatory or Shareholder approvals; provided a participant’s previously granted RSUs cannot be negatively affected without the participant’s consent.

Restricted Stock Plan

The following table provides the details of the Restricted Stock Plan. Restricted Stock awards have not been granted since 2012. No amendments were made to the Restricted Stock Plan in 2015.

Feature		Description
Securities		Restricted Stock is beneficially owned by the participant, including the right to vote. Restricted Stock is held in trust for the participant during the restricted period.
Eligibility		Employees designated from time to time by the Human Resources Committee. Currently employees at the Senior Vice President level and above are eligible to participate.
Calculation of Award		Awards are converted into Shares by (a) deducting a consistent notional tax amount from the intended compensation value, (b) dividing the after-tax value by the market price, and (c) rounding the calculated number of Shares to the nearest 100.
Dividends		Dividends are paid in cash to participants.
Restrictions and Performance Conditions		At the time of grant, the Human Resources Committee sets restrictions, including performance conditions, if any.
Vesting		Restricted Stock vests when any restrictions and performance conditions have been satisfied, which typically occurs three years from the date of grant.
Cessation of Employment		Death: Vest as of date of death. Retirement, Disability and Termination without Cause: Continue to vest per vesting schedule. Resignation and Termination with Cause: Forfeited.
Amendments and Variations		The Board has the authority to amend the Restricted Stock Plan, subject to any required regulatory or Shareholder approvals; provided a participant previously granted Restricted Stock cannot be negatively affected without the participant’s consent.

Stock Option Plan

The following table provides the details of the Stock Option Plan, which authorizes the granting of Stock Options with or without Tandem Stock Appreciation Rights (“TSARs”). TSARs have not been issued since March 2010. In 2015, no changes were made to the Stock Option Plan. A housekeeping amendment was made in early 2016 to clarify the double trigger required for vesting in the event of a change of control. This amendment did not require shareholder approval pursuant to the amendment provisions of the Stock Option Plan.

	Stock Options	Stock Option with TSARs
Securities	A stock option (an “Option”) entitles a holder to purchase, in the future, a Share at a price (the “exercise price”) set at the time of grant.	An Option granted with a TSAR entitles the holder to a cash payment equal to the difference between the exercise price and the purchase price.
Eligibility	Senior Vice President level and above are eligible to participate.
Awards	The number of Options granted to participants is calculated by dividing the compensation value of the award by the product of the market price on the date of grant and the Black Scholes value. The calculated number of Options and TSARs is rounded to the nearest 100.
Term	Options are typically granted with a ten-year term. The maximum term is ten years (except where the Option with or without TSAR expires during a restricted trading period, in which case, the expiry date is extended to ten days following the end of the restricted trading period).
Vesting	One-third vest and become exercisable on each of the first three anniversaries of the grant date.
Exercise	The exercise price is determined using the volume-weighted average trading price of a Share on the TSX for the five trading days immediately preceding the grant date. Upon exercise, a Share is issued from treasury.	The value of the TSAR is the difference between the exercise price and the volume-weighted average trading price of a Share on the TSX for the five trading days immediately preceding the exercise date. Upon exercise, the related Option is cancelled and the Share underlying the cancelled Option is no longer available for issuance.
Cessation of Employment	Death or Disability. Options vest as at the date of death or disability and may be exercised within the earlier of 180 days of such date and the original expiry date.

	Resignation and Termination without Cause. Vested Options and those that vest within 90 days of the termination date may be exercised. Unvested Options and vested Options that have not been exercised are cancelled 90 days from the date of termination.

	Retirement. Options continue to vest as of the date of retirement and may be exercised within the earlier of 5 years from the date of retirement and the original expiry date.

	Termination with Cause. Vested and unvested Options are cancelled on the date of termination.

	Stock Options	Stock Option with TSARs
Change of Control	In the case of a change of control event where a survivor (which includes the Corporation), successor or acquiring entity (a “Successor”) exists, such Successor shall retain or assume the outstanding options or substitute similar awards. If, within 24 months following the termination of the change of control event, an optionee’s employment is terminated for a reason other than for just cause or resignation (other than resignation which constitutes constructive dismissal), all options held by the optionee will vest immediately upon the termination. If the Successor does not retain, assume or substitute all of the outstanding options, such options will be deemed to vest immediately prior to the change of control event. In the case where only part of the Corporation is subject to the change of control event, the Change of Control provisions of the Stock Option Plan will only apply to optionees employed in the affected part of the business.
Recoupment	Options granted since in 2014 can be recouped if there is a restatement of financials which resulted from executive misconduct which resulted in an over payment of incentive compensation.
Assignability	Options are not assignable.
Limitations	The Stock Option Plan places certain limitations on grants and terms of Options with or without TSARs These include:
	· The exercise price must not be lower than the market price of the Shares at the date of grant;
	· The total number of Shares issued or issuable to any one person under the Stock Option Plan, together with all other security based compensation arrangements of the Corporation, shall not exceed 5% of the Corporation’s issued and outstanding securities;
	· The total number of Shares (a) issued to insiders of the Corporation within a one year period; and (b) issuable to insiders of the Corporation at any time under the Stock Option Plan, together with all other security based compensation arrangements of the Corporation, shall not exceed 10% of the Corporation’s issued and outstanding securities;
	· The exercise of Options with or without TSARs is subject to the Corporation’s Insider Trading Policy.
Amendments and Variations	The Board or the Human Resources Committee may amend the terms of an Option in compliance with the Stock Option Plan.
	The Board may amend the Stock Option Plan subject to required regulatory or Shareholder approvals; provided a participant’s previously granted options cannot be negatively affected without the participant’s consent.(1)(2)

Notes:

(1) The Human Resources Committee may make certain types of amendments to the Stock Option Plan without seeking Shareholder approval, including amongst other things; (i) amendments of an administrative nature; (ii) amendments to the vesting provisions of the Stock Option Plan or any Option; (iii) amendments to the Stock Option Plan to comply with tax laws; (iv) amendments to termination provisions not providing an extension beyond the original expiry date, or a date beyond a permitted automatic extension in the case of an Option expiring during a blackout period; and (v) amendments providing for or modifying or deleting a cashless exercise feature, payable in cash or Shares and providing for a full deduction of underlying Shares from the Stock Option reserve.

(2) Shareholder approval is required for the following types of amendments to the Stock Option Plan, including amongst other things: (i) amendments to the number of Shares issuable under the Stock Option Plan; (ii) amendments reducing the exercise price or purchase price of an Option; (iii) amendments to termination provisions providing an extension beyond the original expiry date, or a date beyond a permitted automatic extension in the case of an Option expiring during a blackout period; (iv) amendments to the eligibility requirements which could increase insider participation; and (v) amendments to permit options to be transferable or assignable other than for normal estate settlement purposes.

Outstanding Option-Based and Share-Based Awards

The following table provides information concerning all unexercised Option-based awards and non-vested Share-based awards outstanding as of December 31, 2015 that were granted to the NEOs on or before December 31, 2015.

	Option-Based Awards				Share-Based Awards
Name	# of Shares Underlying Unexercised Options (#)	Option Exercise Price ($)	Option Expiry Date	Value of Unexercised In-The-Money Options(1) ($)	# of Share-Based Awards that Have Not Vested (#)		Market or Payout Value of Share-Based Awards that Have Not Vested(2) ($)
David Pathe	15,000	14.91	4 Jul 17	Nil
	25,000	15.02	17 Jun 18	Nil
	25,000	3.69	12 Nov 18	Nil
	155,000	5.16	16 Jun 19	Nil
	103,463	8.33	22 Mar 20	Nil
	70,300	9.10	4 Mar 21	Nil
	199,200	6.04	2 Mar 22	Nil
	319,100	5.14	11 Mar 23	Nil
	516,129	3.00	3 Mar 24	Nil
	875,000	2.11	13 Mar 25	Nil
					27,000		19,710
					124,497	(3)	90,883
					272,345	(3)	198,812
					418,781	(3)	305,710
	2,303,163			Nil	842,623		615,115
Dean Chambers	40,000	14.91	4 Jul 17	Nil
	50,000	15.02	17 Jun 18	Nil
	155,000	5.16	16 Jun 19	Nil
	103,463	8.33	22 Mar 20	Nil
	70,300	9.10	4 Mar 21	Nil
	87,900	6.04	2 Mar 22	Nil
	138,300	5.14	11 Mar 23	Nil
	167,700	3.00	3 Mar 24	Nil
	260,000	2.11	13 Mar 25	Nil
					70,548	(3)	51,500
					115,747	(3)	84,495
					162,727	(3)	118,791
	1,072,663			Nil	349,022		254,786
Mark Plamondon(4)					72,622	(3)	53,014
					119,153	(3)	86,982
					167,514	(3)	122,285
	Nil			Nil	359,289		262,281
Tim Dobson					232,124	(3)	169,451
	N/A			N/A	232,124		169,451

	Option-Based Awards				Share-Based Awards
Name	# of Shares Underlying Unexercised Options (#)	Option Exercise Price ($)	Option Expiry Date	Value of Unexercised In-The-Money Options(1) ($)	# of Share-Based Awards that Have Not Vested (#)		Market or Payout Value of Share-Based Awards that Have Not Vested(2) ($)
Elvin Saruk	40,000	10.34	2 Mar 16	Nil
	50,000	14.91	4 Jul 17	Nil
	50,000	15.02	17 Jun 18	Nil
	155,000	5.16	16 Jun 19	Nil
	103,463	8.33	22 Mar 20	Nil
	70,300	9.10	4 Mar 21	Nil
	52,700	6.04	2 Mar 22	Nil
	71,800	5.14	11 Mar 23	Nil
	87,100	3.00	3 Mar 24	Nil
	135,000	2.11	13 Mar 25	Nil
					72,622	(3)	53,014
					119,153	(3)	86,982
					167,514	(3)	122,285
	815,363			Nil	359,289		262,281
Ward Sellers	30,100	3.70	6 Jan 24	Nil
	87,100	3.00	3 Mar 24	Nil
	150,000	2.11	13 Mar 25	Nil
					22,861	(3)
					110,640	(3)
					167,514	(3)
	267,200			Nil	301,015		219,741

Notes:

(1) The “Value of Unexercised In-The-Money Options” is calculated by multiplying the difference between the Option exercise price and the closing price of Shares on the TSX on December 31, 2015, which was $0.73, by the number of outstanding Stock Options (both vested and unvested). Where the difference was negative, the Stock Options are not in-the-money and no value is reported. Any actual payments resulting from the exercise of Stock Options under the Stock Option Plan are calculated by multiplying the difference between the Stock Option exercise price and the volume-weighted average trading price of a Share on the TSX for the five (5) trading days preceding the exercise date, by the number of outstanding Options.

(2) The market value of the share-based awards is calculated by multiplying the number of unvested share-based awards by the closing price of Shares on the TSX on December 31, 2015, which was $0.73.

(3) Represents 100% of outstanding RSUs. The final number of RSUs that vest will vary from 80% to 120% of the number of RSUs originally awarded plus dividend equivalents reinvested, if applicable. See — Executive Share Unit Plan — above for details of the performance conditions that will be applied at vesting.

(4) Mr. Plamondon’s stock options expired on October 11, 2015 in accordance with the terms and conditions of the awards.

Value Vested or Earned During the Year

The following table provides information concerning: (i) the aggregate dollar value that would have been realized by the NEOs if their option-based awards that vested during 2015 had been exercised on the vesting date; (ii) the aggregate dollar value that would have been realized by the NEOs if the their share-based awards that vested during 2015 had been paid out on the vesting date; and (iii) the aggregate dollar value of all non-equity incentive plan compensation earned by the NEO during 2015.

Name	Option-Based Awards Value Vested During the Year(1) ($)	Share-Based Awards Value Vested During the Year(2) ($)	Non-Equity Incentive Plan Compensation Value Earned During the Year ($)
David Pathe	Nil	76,104	412,500
Dean Chambers	Nil	74,844	157,500
Mark Plamondon	Nil	72,576	Nil
Tim Dobson	N/A	Nil	130,000
Elvin Saruk	Nil	72,576	114,000
Ward Sellers	Nil	Nil	93,800

Notes:

(1) Messrs. Pathe, Chambers, Plamondon, Saruk and Sellers had Stock Options that vested during 2015. The value of these securities is calculated by multiplying (a) the number of Stock Options that vested during the year by (b) the difference between the exercise price of each such Option and the closing price of the Shares on the TSX on the vesting date for such Option. If the vesting date was not a trading day, the closing price on the first trading day immediately following the vesting date was used. Where the difference was negative, the Stock Options are not in-the-money and no value is reported.

(2) Messrs. Pathe, Chambers, Plamondon, and Saruk had Restricted Stock awards that vested on March 2, 2015. The value of these awards were calculated by multiplying (a) the number of Restricted Stock that vested during the year by (b) the closing price of Shares on the TSX on the vesting date for the award which was $2.52.

Executive Share Ownership Requirements

In 2009, the Corporation established share ownership requirements for the senior executive officers of the Corporation (“Executive SOR”) which are designed to align the interests of executives with the interests of Shareholders. The Executive SOR can be satisfied with Shares, Restricted Stock and RSUs held by executives (the “Executive SOR Holdings”). The Executive SOR is a multiple of each executive’s base salary, with the President & CEO required to maintain 3 times his base salary and each of the Executive Vice Presidents and Senior Vice Presidents required to maintain 1 times his or her base salary. Executives have five years from the later of (i) the date the policy was introduced; or (ii) the date they were appointed to a position with a new Executive SOR level to meet their Executive SOR requirement.

The table below provides the Executive SOR Holdings for each NEO as of December 31, 2015.

	Executive SOR		Executive SOR Holdings(1)
Name	Multiple of Base Salary	Total ($)	Common Shares ($)	Restricted Share Units ($)	Restricted Stock ($)	Total Ownership ($)	Total Ownership Multiple	Minimum Ownership Met
David Pathe	3	2,475,000	821,733	1,861,757	133,920	2,817,410	3.4	Yes
Dean Chambers	1	450,000	946,618	835,458	0	1,657,191	3.7	Yes
Tim Dobson(2)	1	400,000	0	391,688	0	391,688	0.98	In process
Elvin Saruk	1	380,000	655,230	860,042	0	1,515,272	4.0	Yes
Ward Sellers	1	375,000	35,775	615,245	0	651,120	1.7	Yes

Notes:

(1) Executive SOR Holdings were calculated using the number of Shares, Restricted Stock and RSUs held as at December 31, 2015 multiplied by the greater of (a) the grant or purchase price and (b) the closing price on the TSX on December 31, 2015 ($0.73). Assumes 80% of the RSUs granted to NEOs will vest. The final number of RSUs that vest will vary from 80% to 120% depending on the Corporation’s relative total shareholder return performance over the vesting period. See — Executive Share Unit Plan — for details on page 67. The total number of Shares includes Shares subject to vesting under the terms of the ESOP.

(2) Mr. Dobson has until May 2020 to satisfy this requirement.

Securities Authorized for Issuance Under Equity Compensation Plans

The following table sets out information with respect to the stock compensation plans of the Corporation under which equity securities of the Corporation are authorized for issuance to employees or former employees, in exchange for consideration in the form of goods or services. Information in the table below is given as at December 31, 2015.

Plan Category	Securities to be Issued Upon Exercise of Outstanding Stock Options	% of Shares Outstanding		Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights		Securities Remaining Available for Future Issuance Under Equity Compensation Plans(2)	% Shares Outstanding		Total Securities Outstanding & Available for Future Issuance	% of Shares Outstanding
Stock Option Plan approved by securityholders(1)	6,149,349	2.09	%	$	5.80	5,135,655	1.75	%	11,285,004	3.84	%
Share Purchase Plan approved by securityholders(3)	N/A	N/A		N/A		598,520	0.20	%	598,520	0.20	%
Equity compensation plans not approved by securityholders	N/A	N/A		N/A		N/A	N/A		N/A	N/A
Total	6,149,349	2.09	%	$	5.80	5,734,175	1.95	%	11,8883,524	4.04	%

Notes:

(1) Represents Shares issuable under the Corporation’s Stock Option Plan. The Stock Option Plan was established in 1995 following the creation of the Corporation and before the Shares were distributed to the public. The Stock Option Plan was amended in 2005, 2007, 2010 and 2014.

(2) The Corporation is authorized to issue up to 17,500,000 Shares under the terms of the Stock Option Plan. The number of Shares available for future issuance under the Plan includes Shares that have not previously been reserved for a Stock Option grant and Shares underlying unexercised Stock Options that have expired or were terminated.

(3) The Corporation is authorized to issue up to 3,300,000 Shares under the Share Purchase Plan. As of December 31, 2015, 2,701,480 Shares had been issued under the Plan.

Stock Option Plan Overhang, Dilution and Burn-Rate

The following table sets out information with respect to the overhang, dilution and burn-rate calculations for the Stock Option Plan as at December 31, 2015.

	Description	Percentage
Overhang	The total number of Shares reserved for issuance under the Stock Option Plan plus the number of Stock Options and TSARs outstanding, divided by the number of total Shares outstanding.	3.8	%
Dilution	The number of Stock Options and TSARs outstanding, divided by the number of total Shares outstanding.	2.1	%
Burn-rate	The total number of Stock Options issued in 2015 divided by the number of total Shares outstanding.	0.7	%

PENSION BENEFITS

No changes were made to the retirement savings program in 2015. Retirement savings contributions made on behalf of the executive is outlined in the table below.

Executive Level	Contribution (% of Base Salary)
CEO	12	%
EVP	12	%
SVP	12	%

Contributions made on behalf of the executive are directed to a group retirement savings plan and such amounts are reported as an element of All Other Compensation in the Summary Compensation Table on page 65. For Canadian residents such contributions continue until the annual maximum RRSP contribution limit is reached. The remaining contributions are notionally directed to the executive’s ESPP account. Non-Canadian residents have the full value of their retirement savings contributions directed to an international retirement savings plan.

The following table sets forth details of the ESPP accounts for each of the NEOs, the proceeds of which are payable to NEOs upon cessation of their employment.

	Accumulated Value at Start of the Year ($)	Compensatory(1) ($)	Non- Compensatory(2) ($)	Accumulated Value at Year End ($)
David Pathe	333,850	74,320	3,697	411,867
Dean Chambers	381,883	31,570	23,259	436,711
Mark Plamondon(3)	247,456	0	13,248	0
Elvin Saruk	407,474	20,670	5,605	433,749
Ward Sellers	18,033	19,320	1,250	38,603

Notes:

(1) Compensatory changes represent the notional amount contributed in 2015 to each NEO’s ESPP account.

(2) Non-compensatory changes represent the notional investment earnings or losses accrued on each NEO’s ESPP account.

(3) Mr. Plamondon’s balance of $260,703.90 was paid to him at termination, none of which was compensatory in 2015.

(4) Mr. Dobson does not participate in the ESPP, as a non-Canadian resident he is not eligible to do so. 100% of his retirement savings are directed to an international retirement savings plan.

TERMINATION AND CHANGE OF CONTROL BENEFITS

Employment Agreements and Termination Arrangements

Employment agreements are in place with Mr. Pathe and Mr. Sellers. For Messrs. Chambers, Dobson and Saruk, any severance entitlements are in accordance with statutory requirements and common law.

The following table summarizes the details of termination arrangements outlined in Mr. Pathe’s and Mr. Sellers’ employment agreements.

	Mr. Pathe	Mr. Sellers
Base Salary	24 months	18 months
STI	2x the average of the prior two years’ payment value; plus a pro-rata annual incentive for the year of termination.	1.5x the greater of (a) 75% of target for current year and (b) actual award for prior year (not to exceed 100% of target).
Mid- and long-term incentives	Pursuant to the terms of the applicable plan for awards previously received.	Pursuant to the terms of the applicable plan for awards previously received
Benefits and perquisites	24 months	18 months

Change of Control

Upon appointment to the SVP level or above, change of control agreements have been entered into with each executive. Accordingly, change of control agreements exist for each of Messrs. Pathe, Chambers, Plamondon, Dobson, Saruk and Sellers. Under the terms of these agreements, if the executive’s employment is terminated without cause or if they resign for good reason (as defined in the change of control agreement) within 24 months of a change of control or prior to a change of control at the request of an acquirer, the executive is entitled to certain benefits.

For purposes of these agreements, change of control is defined as:

(1) the acquisition (directly or indirectly) by any person or a combination of persons acting jointly or in concert (other than an entity or entities that were, immediately prior to such acquisition, affiliates of the Corporation) of more than 50% of the voting securities of the Corporation;

(2) fifty percent or more of the issued and outstanding voting securities of the Corporation become subject to a voting trust other than a voting trust controlled by any entity or entities that were, immediately prior to such disposition, affiliates of the Corporation;

(3) a majority of the directors of the Corporation are removed from office or fail to be re-elected at any annual or special meeting of Shareholders, or a majority of the directors resign from office over a period of 60 days or less, and the vacancies created thereby are not filled by appointments made by the remaining members of the Board;

(4) the disposition of all or substantially all of the assets of the Corporation other than to an entity or entities that were, immediately prior to such disposition, affiliates of the Corporation;

(5) where applicable, the disposition of all or substantially all of the assets of a division of the Corporation in which the Executive is employed other than to an entity or entities that were, immediately prior to such disposition, affiliates of the Corporation;

(6) any resolution is passed or any action or proceeding is taken with respect to the liquidation, dissolution or winding-up of the Corporation;

(7) the Corporation amalgamates with one or more entities other than any entity or entities that were, immediately prior to such amalgamation, affiliates of the Corporation, if the result of such amalgamation is that persons who were formerly Shareholders of the Corporation immediately prior to such amalgamation hold less than a majority of the voting securities of the amalgamated entity;

(8) the Corporation enters into any transaction or arrangement which would have the same or similar effect as any of the transactions referred to in the foregoing paragraphs; or

(9) any person (other than the executive or any of his associates) makes a bona fide take-over bid for the Shares of the Corporation that, if successful, would result in a change of control of the Corporation as defined in paragraph 1 above.

The treatment of Share-based compensation awards upon a change of control is governed by:

· the terms of our various compensation plans and is described below for a change of control without a termination;

· the terms of the change of control agreement for change of control with a termination.

The following table summarizes the compensation that would be paid to the NEO in a change of control with and without termination.

	Change of Control without Termination	Double Trigger Change of Control with Termination
Severance	None	Lump sum payment equal to the sum of:
		· two times base salary at date of termination;
		· two times annual incentive at target performance;
		· 24 months of retirement savings contributions;
		· 24 months of perquisite allowance; and
		· 24 months of benefit premiums.

Options with or without TSARs	Options granted after 2014: Continue to vest and become exercisable per normal schedule. Options granted 2014 and earlier: Immediately vest.	Immediately vest and become exercisable for a period of 12 months from the termination date.

RSUs	Continue to vest per normal vesting schedule.	Vest and become payable upon termination. Performance conditions, if any, will be deemed to have been met at target performance (100%).

Restricted Stock	The Board has the discretion to provide that some or all of the Restricted Stock held by the participant vests on or within a specified period prior to or following the change of control.	Vest and unrestricted ownership is transferred to participant.

Helms-Burton Allowance	Not impacted.	Continues until the NEO is removed from the Title IV list.

Notes:

(1) The change of control agreements do not include any non-compete or non-solicitation provisions.

(2) The NEO is expected to take necessary action to be removed from the Title IV list, and provided with reasonable assistance as may be necessary.

Calculation of Incremental Amounts

The incremental amounts payable to each of the NEOs under various termination scenarios are set out in the table below. The estimated incremental amounts include the amounts described in the Termination and Change of Control tables set out above, as well as other amounts payable in accordance with the Corporation’s incentive plans. The actual amount that an NEO will receive under each termination of employment scenario depends on actual circumstances at time of termination. As there are many factors that would affect the nature of the amount of any benefit provided to the NEO as a result of a termination of employment, actual amounts may be higher or lower than what is described below. The following assumptions have been made for purposes of calculating the incremental benefit for each NEO:

· Termination date of December 31, 2015;

· Closing Share price as at December 31, 2015, which was $0.73;

· As all the unvested Stock Options which would vest are not-in-the money at December 31, 2015, there is no incremental benefit;

· For retirement, termination without cause and change of control with termination, three months of Helms-Burton Allowance; and

· The incremental amount for termination without cause does not include amounts that may be payable under common law to Messrs. Chambers, Dobson and Saruk. The incremental amounts for each of Messrs. Pathe and Sellers for a termination without cause are determined in accordance with their respective employment agreements.

	David Pathe		Dean Chambers		Tim Dobson		Elvin Saruk		Ward Sellers
Resignation	Nil		Nil		Nil		Nil		Nil
Retirement	$	722,609	$	277,286	$	169,451	$	281,281	$	219,741
Termination with Cause	Nil		Nil		Nil		Nil		Nil
Termination without Cause	$	3,654,206	$	277,286	$	169,451	$	281,281	$	1,080,309
Change of Control without Termination	Nil		Nil		Nil		Nil		Nil
Change of Control with Termination without Cause	$	4,304,206	$	1,998,415	$	1,673,801	$	1,667,918	$	1,517,165

INDEBTEDNESS OF DIRECTORS AND EXECUTIVE OFFICERS

Other than routine indebtedness as defined under Canadian securities laws, none of the executive offices, directors, employees and former executive officers, directors and employees of the Corporation or any of its subsidiaries have been indebted to the Corporation at any time since the beginning of the last completed financial year of the Corporation.

INTEREST OF CERTAIN PERSONS OR COMPANIES IN MATTERS TO BE ACTED ON

To the knowledge of the Corporation, no person who has been a director or executive officer of the Corporation at any time since the beginning of its last completed financial year, no proposed nominee for director of the Corporation nor any associate or affiliate of the foregoing, has any material interest, direct or indirect, by way of beneficial ownership of securities of otherwise, in any matter to be acted upon at the Meeting.

INTEREST OF INFORMED PERSONS IN MATERIAL TRANSACTIONS

To the knowledge of the Corporation, no informed person of the Corporation, proposed director, or any associate or affiliate of any informed person or proposed director has a material interest, direct or indirect, in any transaction since the commencement of the Corporation’s most recently completed financial year or in any proposed transaction which has materially affected or would materially affect the Corporation or its subsidiaries.

DIRECTORS’ AND OFFICERS’ INSURANCE

Directors’ and officers’ liability insurance with an annual aggregate policy limit of $75,000,000, subject to a $500,000 deductible per wrongful act, has been purchased at the Corporation’s expense for the protection of the Corporation and all directors and officers of the Corporation and its present subsidiaries and joint venture companies. The annual premium paid by the Corporation for such insurance is currently $472,422. In addition, directors of the Corporation have supplementary directors’ and officers’ liability coverage with an annual aggregate policy limit of $20,000,000, which has been purchased at the Corporation’s expense. The annual premium paid by the Corporation for such insurance is currently $60,000. All policies contain standard industry exclusions.

ADDITIONAL INFORMATION

Financial information for the financial year ended December 31, 2015 is provided in the Corporation’s audited consolidated financial statements and management’s discussion and analysis of the audited consolidated financial statements for the year ended December 31, 2015 (the “MD&A”). Shareholders who wish to be added to the mailing list for the annual and interim financial statements and MD&A should contact the Corporation at 181 Bay St., 26th Floor, Toronto, Ontario M5J 2T3; Attention: Corporate Secretary.

Copies of the Corporation’s 2015 AIF, together with one copy of any document, or the pertinent pages of any document, incorporated by reference in the 2015 AIF, the Corporation’s most recently filed comparative annual financial statements, together with the accompanying report of the auditor, and any interim financial statements of the Corporation that have been filed for any period after the end of the Corporation’s most recently completed financial year, and this Circular are available, upon request, from the Corporate Secretary of the Corporation, without charge, to Shareholders.

The 2015 financial statements and MD&A, the 2015 AIF and other information relating to the Corporation are also available on SEDAR at www.sedar.com.

DIRECTORS’ APPROVAL

The contents of this Circular and its sending to Shareholders have been approved by the directors of the Corporation.

	By Order of the Board of Directors


	“David Pathe”


	David Pathe
	President and Chief Executive Officer

Toronto, Ontario
April 6, 2016

SCHEDULE “A”

SHERRITT INTERNATIONAL CORPORATION

MANDATE OF THE BOARD OF DIRECTORS

1. GENERAL

The Board of Directors (the “Board”) is responsible for overseeing the management of the business and affairs of Sherritt International Corporation (the “Corporation”) according to lawful and ethical standards and in accordance with the Corporation’s viability as a going concern.

The Board has the power to delegate its authority and duties to committees of the Board as it determines appropriate, as permitted by applicable law. Board committees are accountable to the Board, which at all times retains its oversight function and ultimate responsibility for all delegated responsibilities.

2. BOARD DUTIES AND RESPONSIBILITIES

Directors and Senior Management

· Appoint the Chairman, the President and CEO and other senior officers and, as permitted by applicable law, delegate to senior management responsibility for the Corporation’s day-to-day operations.

· With the assistance of the Nominating and Corporate Governance Committee, evaluate the performance of the Chairman against the position description developed by the Board.

· With the assistance of the Human Resources Committee, evaluate the performance of the President and CEO against the position description developed by the Board.

· With the assistance of the Nominating and Corporate Governance Committee, ensure that management maintains a process that adequately provides for succession planning of senior management.

Ethical Leadership

· Foster an ethical corporate environment and ensure that the President and CEO and other senior officers manage the business and affairs of the Corporation in an ethical and legal manner and exhibit ethical leadership throughout the Corporation.

Strategic Direction and Risk Assessment

· With the assistance of the applicable Board committee, assess and approve management’s strategic plan and review and approve annual business plans developed and proposed by management. The Board will:

· provide advice and input regarding strategic opportunities, issues and circumstances which could threaten the Corporation’s viability as a going concern;

· approve business and operational policies within which management will operate in relation to capital expenditures, acquisitions and dispositions, disclosure and communications, finance and investment, risk management and human resources;

· set annual corporate and management performance targets consistent with the Corporation’s strategic plan;

· review and discuss with management the process used by management to assess and manage risk, including the identification by management of the principal risks of the Corporation’s business and the implementation by management of appropriate systems to deal with such risks; and

· confirm that processes are in place to address and comply with applicable legal, regulatory, corporate, securities and other compliance matters.

Financial Reporting and Management

· The Board will approve annual operating and capital budgets.

· With the assistance of the Audit Committee, the Board will:

· review and oversee the integrity of the Corporation with respect to its compliance with applicable audit, accounting and financial reporting requirements;

A-1

· oversee the integrity of the Corporation’s disclosure controls and procedures and internal controls over financial reporting, and management information systems;

· review operating and financial performance results relative to established strategies, plans, budgets and objectives; and

· approve the Corporation’s annual financial statements and related management’s discussion and analysis and earnings press releases.

Disclosure, Communications and Insider Trading

· With the assistance of the Nominating and Corporate Governance Committee, satisfy itself that appropriate policies and procedures are in place regarding public disclosure, communications and restricted trading by insiders.

Corporate Governance

· With the assistance of the Nominating and Corporate Governance Committee, the Board will:

· ensure that there exists an appropriate system of corporate governance, including practices to facilitate the Board’s independence;

· ensure that the necessary Board committees are in place and approve: (i) any changes to their respective mandates; (ii) the mandate of any new committee; and (iii) the authority delegated to each committee;

· ensure that there exists appropriate processes for the annual evaluation of Board and committee effectiveness and the contributions of individual directors; and

· approve the nomination of directors.

Compensation of Senior Officers and Directors

· With the assistance of the Human Resources Committee, the Board will:

· approve the compensation of the President and CEO and senior management reporting directly to the President and CEO, as well as compensation policies for the President and CEO and other senior officers;

· approve the compensation of directors, including the Chairman; and

· approve any equity-based compensation plans for eligible directors, officers and other employees of the Corporation.

Environment, Health, Safety and Sustainability

· With the assistance of the Environment, Health, Safety and Sustainability Committee, the Board will:

· monitor the scope of environment, health and safety, security and sustainability risks to the Corporation’s operations and future growth and ensure the adequacy and effectiveness of the Corporation’s management systems and controls to mitigate these risks and attendant liabilities;

· ensure compliance with legal and regulatory requirements and any voluntary commitments the Corporation has made related to environment, health and safety, security and sustainability with a focus on continuous improvement and ensuring consistent practice across the Corporation and its divisions;

3. DIRECTOR DUTIES AND RESPONSIBILITIES

· Each director must act honestly and in good faith with a view to the best interests of the Corporation and its shareholders by exercising the degree of care, diligence and skill that a reasonably prudent person would exercise in comparable circumstances. In order to fulfill this responsibility, each director is expected to:

· participate with management in assessing strategic and business plans;

· develop and maintain a thorough understanding of the Corporation’s operational and financial objectives, financial position and performance and the performance of the Corporation relative to its principal competitors;

· participate in each meeting, including seeking clarification from management and outside advisors where necessary to fully understand the issues under consideration;

A-2

· disclose any personal interests that conflict with, or may appear to conflict with, the interests of the Corporation; and

· engage in continuing education programs for directors, as appropriate.

4. BOARD COMPOSITION

· With the assistance of the Nominating and Corporate Governance Committee, determine the size and composition of the Board, Board member qualifications and Board member independence to ensure that a majority of directors qualify as independent directors as determined under applicable Canadian securities laws.

5. CHAIRMAN OF THE BOARD

The Chairman is responsible for ensuring that the Board operates independently of management and that directors have an independent leadership contact.

Specific Roles and Responsibilities

· The Chairman will:

· chair meetings of the directors and assume such other responsibilities which the directors as a whole may designate from time to time;

· ensure that directors have adequate opportunities to meet without management present;

· communicate to senior management as appropriate the results of private discussions among directors;

· monitor compliance with the Corporation’s governance policies; and

· meet annually with each director to obtain insight as to areas where the Board and its committees could be operating more effectively.

Please refer to the Corporation’s document entitled “Chairman’s Terms of Reference”, attached as Appendix “A” for additional responsibilities of the Chairman.

6. BOARD MEETINGS

· Board meetings are scheduled in advance and are held not less than quarterly.

· In addition to regularly scheduled Board meetings, additional Board meetings may be called upon proper notice at any time to address specific needs of the Corporation.

· An in-camera session will be held at each regularly scheduled Board meeting.

· The Board may also take action from time to time by unanimous written consent.

· A Board meeting may be called by the Chairman or any director.

(Revised February 2016)

A-3

APPENDIX “A”

CHAIRMAN’S TERMS OF REFERENCE

The principal role of the Chairman of the Board of Directors (“Board”) of Sherritt International Corporation (the “Corporation”) is to provide leadership to the Board. The Chairman is responsible for effectively managing the affairs of the Board and ensuring that the Board is properly organized and that it functions efficiently and independent of management. The Chairman also advises the President and Chief Executive Officer in all matters concerning the interests of the Corporation, the Board and the relationships between management and the Board.

More specifically, the Chairman shall:

A. Strategy

1. Provide leadership to enable the Board to act effectively in carrying out its duties and responsibilities as described in the Mandate of the Board and as otherwise may be appropriate.

2. Work with the Board, the President and Chief Executive Officer and other management to monitor progress on the Corporation’s business plans, annual budgets, policy implementation and succession planning.

3. Assist the President and Chief Executive Officer in presenting the corporate vision and strategies to the Board, large shareholders, partners and the outside world.

B. Advisor to President and Chief Executive Officer

4. Provide advice, counsel and mentorship to the incumbent President and Chief Executive Officer.

5. In consultation with the President and Chief Executive Officer, ensure that there is an effective relationship between management personnel and the members of the Board.

C. Board Structure and Management

6. Preside over Board meetings and annual and special meetings of shareholders.

7. Provide advice, counsel and mentorship to fellow members of the Board.

8. Execute the responsibilities of a company director according to the lawful and ethical standards and in accordance with the Corporation’s policies.

9. Take a leading role in determining the composition of the Board and its committees to achieve maximum effectiveness.

10. In consultation with the President and Chief Executive Officer, the Corporate Secretary and the chairs of the Board committees, as appropriate, determine the frequency, dates and locations of meetings of the Board, of Board committees and of the shareholders.

11. In consultation with the President and Chief Executive Officer and the Corporate Secretary, review the annual work plan and the meeting agendas to ensure all required business is brought before the Board to enable it to efficiently carry out its duties and responsibilities.

12. Ensure the proper flow of information to the Board and review, with the President and Chief Executive Officer and Corporate Secretary, the adequacy and timing of materials in support of management personnel’s proposals.

D. Compensation Matters and Succession Planning

In conjunction with the Human Resources Committee:

13. Recommend compensation awards for President and Chief Executive Officer and be available to advise the Board on general compensation matters.

14. Advise the Board on performance of the President and Chief Executive Officer and succession planning of the President and Chief Executive Officer.

15. In conjunction with the President and Chief Executive Officer, develop executive succession planning options to support the Corporation’s strategies and to capitalize on opportunities for growth and/or acquisition.

A-4

SCHEDULE “B”

CONTINUANCE RESOLUTION

RESOLVED AS A SPECIAL RESOLUTION THAT:

1. The Corporation make application to the Director (the “CBCA Director”) appointed under the Canada Business Corporations Act (the “CBCA”) for a certificate of continuance continuing the Corporation as a corporation to which the CBCA applies and in connection therewith make application to the Director (the “OBCA Director”) appointed under the Ontario Business Corporations Act (the “OBCA”) for authorization to apply for a certificate of continuance under the CBCA and for a certificate of discontinuance under the OBCA.

2. The articles of continuance of the Corporation shall be in the form attached as Schedule “C” to the Management Information Circular of the Corporation dated April 6, 2016 (the “Circular”), with such technical amendments, deletions or alterations as may be considered necessary or advisable by any officer of the Corporation in order to ensure compliance with the provisions of CBCA, as the same may be amended, and the requirements of the CBCA Director thereunder.

3. Subject to the issuance of such certificate of continuance by the CBCA Director and the OBCA Director providing a certificate of discontinuance, and without affecting the validity of the incorporation or existence of the corporation by and under its articles or of any act done thereunder, the Corporation is authorized to approve and adopt, in substitution for the existing articles of the Corporation, the articles of continuance attached as Schedule “C” to the Circular, with any amendments, deletions or alterations made pursuant to paragraph 2.

4. The Board of Directors of the Corporation is authorized, in its sole discretion, to abandon the application for a certificate of continuance continuing the Corporation as a corporation to which the CBCA applies, or determine not to proceed with the continuance, without further approval of the shareholders of the Corporation any time prior to the endorsement by the CBCA Director of a certificate of continuance.

5. Any officer or director of the Corporation is authorized, for and on behalf of the Corporation, to execute and deliver such documents and instruments and to take such other actions as such officer or director may determine to be necessary or advisable to implement this resolution and the matters authorized hereby including, without limitation, the execution and filing of articles of continuance and any forms prescribed or contemplated by the CBCA with the CBCA Director and the filing with the OBCA Director of an application to continue in another jurisdiction and evidence of the continuation under CBCA and delivery of such documents or instruments and the taking of any such actions necessary for the OBCA Director to issue a certificate of discontinuance under the OBCA.

B-1

SCHEDULE “C”

Canada Business Corporations Act (CBCA)

FORM 11

ARTICLES OF CONTINUANCE (Section 187)

1 - Corporate name

Sherritt International Corporation

2 - The province or territory in Canada where the registered office is situated (do not indicate the full address)

Ontario

3 - The classes and any maximum number of shares that the corporation is authorized to issue

The Corporation is authorized to issue an unlimited number of common shares.

4 - Restrictions, if any, on share transfers

None

5 - Minimum and maximum number of directors (for a fixed number of directors, please indicate the same number in both boxes)

Minimum number 3

Maximum number 15

6 - Restrictions, if any, on the business the corporation may carry on

None

7 - (1) If change of name effected, previous name

(2) Details of incorporation

Amalgamated under the Business Corporation Act (Ontario) on December 1, 2010.

8 - Other provisions, if any

The directors may appoint one or more additional directors, who shall hold office for a term expiring not later than the close of the next annual meeting of the shareholders, but the total number of directors so appointed may not exceed one third of the number of directors elected at the previous annual meeting of shareholders.

9 - Declaration

I hereby certify that I am a director or an authorized officer of the corporation continuing into the CBCA.

Print name	Signature
David Pathe

Note: Misrepresentation constitutes an offence and, on summary conviction, a person is liable to a fine not exceeding $5,000 or to imprisonment for a term not exceeding six months or to both (subsection 250(1) of the CBCA).

IC 3247E (2013/07)

C-1

SCHEDULE “D”

Excerpt of Section 185 of the OBCA

Rights of dissenting shareholders

185. (1) Subject to subsection (3) and to sections 186 and 248, if a corporation resolves to,

(a) amend its articles under section 168 to add, remove or change restrictions on the issue, transfer or ownership of shares of a class or series of the shares of the corporation;

(b) amend its articles under section 168 to add, remove or change any restriction upon the business or businesses that the corporation may carry on or upon the powers that the corporation may exercise;

(d) be continued under the laws of another jurisdiction under section 181; or

(e) sell, lease or exchange all or substantially all its property under subsection 184 (3),

a holder of shares of any class or series entitled to vote on the resolution may dissent. R.S.O. 1990, c. B.16, s. 185 (1).

Idem

(2) If a corporation resolves to amend its articles in a manner referred to in subsection 170 (1), a holder of shares of any class or series entitled to vote on the amendment under section 168 or 170 may dissent, except in respect of an amendment referred to in,

(a) clause 170 (1) (a), (b) or (e) where the articles provide that the holders of shares of such class or series are not entitled to dissent; or

(b) subsection 170 (5) or (6). R.S.O. 1990, c. B.16, s. 185 (2).

One class of shares

(2.1) The right to dissent described in subsection (2) applies even if there is only one class of shares. 2006, c. 34, Sched. B, s. 35.

Exception

(3) A shareholder of a corporation incorporated before the 29th day of July, 1983 is not entitled to dissent under this section in respect of an amendment of the articles of the corporation to the extent that the amendment,

(a) amends the express terms of any provision of the articles of the corporation to conform to the terms of the provision as deemed to be amended by section 277; or

(b) deletes from the articles of the corporation all of the objects of the corporation set out in its articles, provided that the deletion is made by the 29th day of July, 1986. R.S.O. 1990, c. B.16, s. 185 (3).

Shareholder’s right to be paid fair value

(4) In addition to any other right the shareholder may have, but subject to subsection (30), a shareholder who complies with this section is entitled, when the action approved by the resolution from which the shareholder dissents becomes effective, to be paid by the corporation the fair value of the shares held by the shareholder in respect of which the shareholder dissents, determined as of the close of business on the day before the resolution was adopted. R.S.O. 1990, c. B.16, s. 185 (4).

No partial dissent

(5) A dissenting shareholder may only claim under this section with respect to all the shares of a class held by the dissenting shareholder on behalf of any one beneficial owner and registered in the name of the dissenting shareholder. R.S.O. 1990, c. B.16, s. 185 (5).

D-1

Objection

(6) A dissenting shareholder shall send to the corporation, at or before any meeting of shareholders at which a resolution referred to in subsection (1) or (2) is to be voted on, a written objection to the resolution, unless the corporation did not give notice to the shareholder of the purpose of the meeting or of the shareholder’s right to dissent. R.S.O. 1990, c. B.16, s. 185 (6).

Idem

(7) The execution or exercise of a proxy does not constitute a written objection for purposes of subsection (6). R.S.O. 1990, c. B.16, s. 185 (7).

Notice of adoption of resolution

(8) The corporation shall, within ten days after the shareholders adopt the resolution, send to each shareholder who has filed the objection referred to in subsection (6) notice that the resolution has been adopted, but such notice is not required to be sent to any shareholder who voted for the resolution or who has withdrawn the objection. R.S.O. 1990, c. B.16, s. 185 (8).

Idem

(9) A notice sent under subsection (8) shall set out the rights of the dissenting shareholder and the procedures to be followed to exercise those rights. R.S.O. 1990, c. B.16, s. 185 (9).

Demand for payment of fair value

(10) A dissenting shareholder entitled to receive notice under subsection (8) shall, within twenty days after receiving such notice, or, if the shareholder does not receive such notice, within twenty days after learning that the resolution has been adopted, send to the corporation a written notice containing,

(a) the shareholder’s name and address;

(b) the number and class of shares in respect of which the shareholder dissents; and

Certificates to be sent in

(11) Not later than the thirtieth day after the sending of a notice under subsection (10), a dissenting shareholder shall send the certificates, if any, representing the shares in respect of which the shareholder dissents to the corporation or its transfer agent. R.S.O. 1990, c. B.16, s. 185 (11); 2011, c. 1, Sched. 2, s. 1 (9).

Idem

(12) A dissenting shareholder who fails to comply with subsections (6), (10) and (11) has no right to make a claim under this section. R.S.O. 1990, c. B.16, s. 185 (12).

Endorsement on certificate

(13) A corporation or its transfer agent shall endorse on any share certificate received under subsection (11) a notice that the holder is a dissenting shareholder under this section and shall return forthwith the share certificates to the dissenting shareholder. R.S.O. 1990, c. B.16, s. 185 (13).

Rights of dissenting shareholder

(14) On sending a notice under subsection (10), a dissenting shareholder ceases to have any rights as a shareholder other than the right to be paid the fair value of the shares as determined under this section except where,

(a) the dissenting shareholder withdraws notice before the corporation makes an offer under subsection (15);

(b) the corporation fails to make an offer in accordance with subsection (15) and the dissenting shareholder withdraws notice; or

D-2

(c) the directors revoke a resolution to amend the articles under subsection 168 (3), terminate an amalgamation agreement under subsection 176 (5) or an application for continuance under subsection 181 (5), or abandon a sale, lease or exchange under subsection 184 (8),

in which case the dissenting shareholder’s rights are reinstated as of the date the dissenting shareholder sent the notice referred to in subsection (10). R.S.O. 1990, c. B.16, s. 185 (14); 2011, c. 1, Sched. 2, s. 1 (10).

Same

(14.1) A dissenting shareholder whose rights are reinstated under subsection (14) is entitled, upon presentation and surrender to the corporation or its transfer agent of any share certificate that has been endorsed in accordance with subsection (13),

(a) to be issued, without payment of any fee, a new certificate representing the same number, class and series of shares as the certificate so surrendered; or

(b) if a resolution is passed by the directors under subsection 54 (2) with respect to that class and series of shares,

(i) to be issued the same number, class and series of uncertificated shares as represented by the certificate so surrendered, and

(ii) to be sent the notice referred to in subsection 54 (3). 2011, c. 1, Sched. 2, s. 1 (11).

Same

(14.2) A dissenting shareholder whose rights are reinstated under subsection (14) and who held uncertificated shares at the time of sending a notice to the corporation under subsection (10) is entitled,

(a) to be issued the same number, class and series of uncertificated shares as those held by the dissenting shareholder at the time of sending the notice under subsection (10); and

(b) to be sent the notice referred to in subsection 54 (3). 2011, c. 1, Sched. 2, s. 1 (11).

Offer to pay

(15) A corporation shall, not later than seven days after the later of the day on which the action approved by the resolution is effective or the day the corporation received the notice referred to in subsection (10), send to each dissenting shareholder who has sent such notice,

(a) a written offer to pay for the dissenting shareholder’s shares in an amount considered by the directors of the corporation to be the fair value thereof, accompanied by a statement showing how the fair value was determined; or

(b) if subsection (30) applies, a notification that it is unable lawfully to pay dissenting shareholders for their shares. R.S.O. 1990, c. B.16, s. 185 (15).

Idem

(16) Every offer made under subsection (15) for shares of the same class or series shall be on the same terms. R.S.O. 1990, c. B.16, s. 185 (16).

Idem

(17) Subject to subsection (30), a corporation shall pay for the shares of a dissenting shareholder within ten days after an offer made under subsection (15) has been accepted, but any such offer lapses if the corporation does not receive an acceptance thereof within thirty days after the offer has been made. R.S.O. 1990, c. B.16, s. 185 (17).

Application to court to fix fair value

(18) Where a corporation fails to make an offer under subsection (15) or if a dissenting shareholder fails to accept an offer, the corporation may, within fifty days after the action approved by the resolution is effective or within such further period as the court may allow, apply to the court to fix a fair value for the shares of any dissenting shareholder. R.S.O. 1990, c. B.16, s. 185 (18).

D-3

Idem

(19) If a corporation fails to apply to the court under subsection (18), a dissenting shareholder may apply to the court for the same purpose within a further period of twenty days or within such further period as the court may allow. R.S.O. 1990, c. B.16, s. 185 (19).

Idem

(20) A dissenting shareholder is not required to give security for costs in an application made under subsection (18) or (19). R.S.O. 1990, c. B.16, s. 185 (20).

Costs

(21) If a corporation fails to comply with subsection (15), then the costs of a shareholder application under subsection (19) are to be borne by the corporation unless the court otherwise orders. R.S.O. 1990, c. B.16, s. 185 (21).

Notice to shareholders

(22) Before making application to the court under subsection (18) or not later than seven days after receiving notice of an application to the court under subsection (19), as the case may be, a corporation shall give notice to each dissenting shareholder who, at the date upon which the notice is given,

(a) has sent to the corporation the notice referred to in subsection (10); and

(b) has not accepted an offer made by the corporation under subsection (15), if such an offer was made,

of the date, place and consequences of the application and of the dissenting shareholder’s right to appear and be heard in person or by counsel, and a similar notice shall be given to each dissenting shareholder who, after the date of such first mentioned notice and before termination of the proceedings commenced by the application, satisfies the conditions set out in clauses (a) and (b) within three days after the dissenting shareholder satisfies such conditions. R.S.O. 1990, c. B.16, s. 185 (22).

Parties joined

(23) All dissenting shareholders who satisfy the conditions set out in clauses (22) (a) and (b) shall be deemed to be joined as parties to an application under subsection (18) or (19) on the later of the date upon which the application is brought and the date upon which they satisfy the conditions, and shall be bound by the decision rendered by the court in the proceedings commenced by the application. R.S.O. 1990, c. B.16, s. 185 (23).

Idem

(24) Upon an application to the court under subsection (18) or (19), the court may determine whether any other person is a dissenting shareholder who should be joined as a party, and the court shall fix a fair value for the shares of all dissenting shareholders. R.S.O. 1990, c. B.16, s. 185 (24).

Appraisers

(25) The court may in its discretion appoint one or more appraisers to assist the court to fix a fair value for the shares of the dissenting shareholders. R.S.O. 1990, c. B.16, s. 185 (25).

Final order

(26) The final order of the court in the proceedings commenced by an application under subsection (18) or (19) shall be rendered against the corporation and in favour of each dissenting shareholder who, whether before or after the date of the order, complies with the conditions set out in clauses (22) (a) and (b). R.S.O. 1990, c. B.16, s. 185 (26).

Interest

(27) The court may in its discretion allow a reasonable rate of interest on the amount payable to each dissenting shareholder from the date the action approved by the resolution is effective until the date of payment. R.S.O. 1990, c. B.16, s. 185 (27).

D-4

Where corporation unable to pay

(28) Where subsection (30) applies, the corporation shall, within ten days after the pronouncement of an order under subsection (26), notify each dissenting shareholder that it is unable lawfully to pay dissenting shareholders for their shares. R.S.O. 1990, c. B.16, s. 185 (28).

Idem

(29) Where subsection (30) applies, a dissenting shareholder, by written notice sent to the corporation within thirty days after receiving a notice under subsection (28), may,

(a) withdraw a notice of dissent, in which case the corporation is deemed to consent to the withdrawal and the shareholder’s full rights are reinstated; or

(b) retain a status as a claimant against the corporation, to be paid as soon as the corporation is lawfully able to do so or, in a liquidation, to be ranked subordinate to the rights of creditors of the corporation but in priority to its shareholders. R.S.O. 1990, c. B.16, s. 185 (29).

Idem

(30) A corporation shall not make a payment to a dissenting shareholder under this section if there are reasonable grounds for believing that,

(a) the corporation is or, after the payment, would be unable to pay its liabilities as they become due; or

(b) the realizable value of the corporation’s assets would thereby be less than the aggregate of its liabilities. R.S.O. 1990, c. B.16, s. 185 (30).

Court order

(31) Upon application by a corporation that proposes to take any of the actions referred to in subsection (1) or (2), the court may, if satisfied that the proposed action is not in all the circumstances one that should give rise to the rights arising under subsection (4), by order declare that those rights will not arise upon the taking of the proposed action, and the order may be subject to compliance upon such terms and conditions as the court thinks fit and, if the corporation is an offering corporation, notice of any such application and a copy of any order made by the court upon such application shall be served upon the Commission. 1994, c. 27, s. 71 (24).

Commission may appear

(32) The Commission may appoint counsel to assist the court upon the hearing of an application under subsection (31), if the corporation is an offering corporation. 1994, c. 27, s. 71 (24).

D-5

SCHEDULE “E”

CONFIRMATION OF BY-LAW NO. 1

RESOLVED THAT:

1. Effective upon the issuance of a certificate of continuance to the Corporation by the Director under the Canada Business Corporations Act, a new By-law No. 1, being a by-law relating generally to the transaction of the business and affairs of the Corporation, in the form attached as Schedule “F” to the Management Information Circular dated April 6, 2016, and providing for the repeal of the existing By-law No. 1 and By-law No. 2 of the Corporation is confirmed as a by-law of the Corporation.

2. Any director or officer of the Corporation is authorized to do all such things and execute all instruments and documents on behalf of the Corporation as such director or officer, in such director’s or officer’s sole discretion, considers necessary or desirable to carry out this resolution.

E-1

SCHEDULE “F”

BY-LAW NO. 1

SHERRITT INTERNATIONAL CORPORATION

(the “Corporation”)

1. REGISTERED OFFICE

(a) The registered office of the Corporation shall be in the place within Ontario specified in the articles of the Corporation and at such location therein as the directors may from time to time determine.

2. CORPORATE SEAL

(a) The Corporation may, but need not, have a corporate seal. The corporate seal of the Corporation shall be such as the directors may by resolution from time to time adopt. An instrument or agreement executed on behalf of the Corporation by a director, an officer or an agent of the Corporation is not invalid merely because the corporate seal, if any, is not affixed thereto.

3. DIRECTORS

(a) NOMINATION OF DIRECTORS

(i) Only persons who are nominated in accordance with the procedures set out in this By-Law No. 1 shall be eligible for election as directors to the board of directors (the “Board”) of the Corporation. Nominations of persons for election to the Board may only be made at an annual meeting of shareholders, or at a special meeting of shareholders called for any purpose which includes the election of directors to the Board, as follows:

(A) by or at the direction of the Board or an authorized officer of the Corporation, including pursuant to a notice of meeting;

(B) by or at the direction or request of one or more shareholders pursuant to a proposal made in accordance with the provisions of the Canada Business Corporations Act (the “Act”) or a requisition of shareholders made in accordance with the provisions of the Act; or

(C) by any person entitled to vote at such meeting (a “Nominating Shareholder”), who: (A) is, at the close of business on the date of giving notice provided for in Section 3(a)(iii) below and on the record date for notice of such meeting, either entered in the securities register of the Corporation as a holder of one or more shares carrying the right to vote at such meeting or who beneficially owns shares that are entitled to be voted at such meeting; and (B) has given timely notice in proper written form as set forth in this By-Law No. 1.

(ii) For the avoidance of doubt, the foregoing Section 3(a)(i) shall be the exclusive means for any person to bring nominations for election to the Board before any annual or special meeting of shareholders of the Corporation.

(iii) For a nomination made by a Nominating Shareholder to be a timely notice (a “Timely Notice”), the Nominating Shareholder’s notice must be received by the Chief Executive Officer of the Corporation at the principal executive offices of the Corporation:

(A) in the case of an annual meeting of shareholders, not later than the close of business on the 30th day before the date of the meeting; provided, however, if the first public announcement made by the Corporation of the date of the annual meeting is less than 50 days prior to the meeting date, not later than the close of business on the 10th day following the day on which the first public announcement of the date of such annual meeting is made by the Corporation;

(B) in the case of a special meeting (which is not also an annual meeting) of shareholders called for any purpose which includes the election of directors to the Board, not later than the close of business on the 15th day following the day on which the first public announcement of the date of the special meeting is made by the Corporation.

F-1

(iv) To be in proper written form, a Nominating Shareholder’s notice to the Chief Executive Officer of the Corporation must comply with all the provisions of this Section 3(a)(v) and:

(A) disclose or include, as applicable, as to each person whom the Nominating Shareholder proposes to nominate for election as a director (a “Proposed Nominee”):

(I) their name, age, business and residential address, principal occupation or employment for the past five years, status as a “resident Canadian” (as such term is defined in the Act);

(II) their direct or indirect beneficial ownership in, or control or direction over, any class or series of securities of the Corporation, including the number or principal amount and the date(s) on which such securities were acquired;

(III) any relationships, agreements or arrangements, including financial, compensation and indemnity related relationships, agreements or arrangements, between the Proposed Nominee or any affiliates or associates of, or any person or entity acting jointly or in concert with, the Proposed Nominee and the Nominating Shareholder;

(IV) any other information that would be required to be disclosed in a dissident proxy circular or other filings required to be made in connection with the solicitation of proxies for election of directors pursuant to the Act or applicable securities law; and

(V) a duly completed personal information form in respect of the Proposed Nominee in the form prescribed by the principal stock exchange on which the securities of the Corporation are then listed for trading;

(B) disclose or include, as applicable, as to each Nominating Shareholder giving the notice and each beneficial owner, if any, on whose behalf the nomination is made:

(I) their name, business and residential address, direct or indirect beneficial ownership in, or control or direction over, any class or series of securities of the Corporation, including the number or principal amount and the date(s) on which such securities were acquired;

(II) their interests in, or rights or obligations associated with, an agreement, arrangement or understanding, the purpose or effect of which is to alter, directly or indirectly, the person’s economic interest in a security of the Corporation or the person’s economic exposure to the Corporation, including any derivative or hedging arrangements;

(III) any proxy, contract, arrangement, agreement or understanding pursuant to which such person, or any of its affiliates or associates, or any person acting jointly or in concert with such person, has any interests, rights or obligations relating to the voting of any securities of the Corporation or the nomination of directors to the Board;

(IV) a representation that the Nominating Shareholder is a holder of record of securities of the Corporation, or a beneficial owner, entitled to vote at such meeting, and intends to appear in person or by proxy at the meeting to propose such nomination; and

(V) any other information relating to such person that would be required to be included in a dissident proxy circular or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to the Act or as required by applicable securities laws;

(C) Such notice shall include a written consent duly signed by each Proposed Nominee to being named as a nominee and to serve as a director of the Corporation, if elected.

(v) All information to be provided in a Timely Notice shall be provided as of the date of such notice. The Nominating Shareholder shall update such information forthwith so that it is true and correct in all material respects as of the date that is ten (10) business days prior to the date of the meeting, or any adjournment or postponement thereof.

(vi) Any notice, or other document or information required to be given to the Corporation pursuant to this By-Law No. 1 may only be given by personal delivery, facsimile transmission or by email (at such email address as may be stipulated from time to time by the Corporation for purposes of this notice), and shall be deemed to have been given and made only at the time it is served by personal delivery to the Chief Executive Officer at the address of the principal executive offices of the Corporation, email (at the address as aforesaid) or sent by facsimile transmission (provided that receipt of confirmation of such transmission has been received); provided that if such delivery or electronic communication is made on a day which is a not a business day or later than 5:00 p.m. (Toronto time) on a day which is a business day, then such delivery or electronic communication shall be deemed to have been made on the next following day that is a business day.

F-2

(vii) Additional Matters

(A) The chair of any meeting of shareholders of the Corporation shall have the power to determine whether any proposed nomination is made in accordance with the provisions of this By-Law No. 1, and if any proposed nomination is not in compliance with such provisions, must declare that such defective nomination shall not be considered at any meeting of shareholders.

(B) Despite any other provision of this By-Law No. 1, if the Nominating Shareholder (or a qualified representative of the Nominating Shareholder) does not appear at the meeting of shareholders of the Corporation to present the nomination, such nomination shall be disregarded, notwithstanding that proxies in respect of such nomination may have been received by the Corporation.

(C) Nothing in this By-Law No. 1 shall obligate the Corporation or the Board to include in any proxy statement or other shareholder communication distributed by or on behalf of the Corporation or Board any information with respect to any proposed nomination or any Nominating Shareholder or Proposed Nominee.

(D) The Board may, in its sole discretion, waive any requirement of this By-Law No. 1.

(E) For the purposes of this By-Law No. 1, “public announcement” means disclosure in a press release disseminated by the Corporation through a national news service in Canada, or in a document filed by the Corporation for public access under its profile on the System of Electronic Document Analysis and Retrieval at www.sedar.com.

(F) This By-Law No. 1 is subject to, and should be read in conjunction with, the Act and the articles of continuance of the Corporation (the “Articles”). If there is any conflict or inconsistency between any provision of the Act or the Articles and any provision of this By-Law No. 1, the provision of the Act or the Articles will govern.

(b) Number and Quorum. The number of directors shall be not fewer than the minimum and not more than the maximum provided in the articles, at least one-third of whom shall not be officers or employees of the Corporation or of any of its affiliates. The number of directors shall be determined by the directors when they are empowered by special resolution to make such determination and otherwise the number of directors shall be determined by special resolution. A simple majority of the number of directors so determined or such greater number as may be fixed by the directors or shareholders shall constitute a quorum for the transaction of business at any meeting of directors.

(c) Qualification. No person shall be qualified to be a director if he is less than eighteen years of age; if he is of unsound mind and has been so found by a court in Canada or elsewhere; or if he has the status of a bankrupt. At least 25 per cent of the directors shall be resident Canadians.

(d) Election and Term of Office. The directors shall be elected at each annual meeting of shareholders of the Corporation and each director shall hold office until the close of the first annual meeting following his election provided that if an election of directors is not held at an annual meeting of shareholders, the directors then in office shall continue in office until their successors are elected. Retiring directors are eligible for re-election.

(e) Vacation of Office. A director ceases to hold office if he dies, is removed from office by the shareholders, ceases to be qualified for election as a director or, subject to the Act, resigns by a written resignation received by the Corporation. A written resignation of a director becomes effective at the time it is received by the Corporation, or at the time specified in the resignation, whichever is later.

(f) Removal of Directors. The shareholders may by ordinary resolution at an annual or special meeting of shareholders remove any director or directors from office provided that where the holders of any class or series of shares have an exclusive right to elect one or more directors, a director so elected may only be removed by an ordinary resolution of the shareholders of that class or series. A vacancy created by the removal of a director may be filled at the meeting of the shareholders at which the director is removed.

(g) Vacancies. Subject to the Act, a quorum of directors may fill a vacancy among the directors. A director appointed or elected to fill a vacancy holds office for the unexpired term of his predecessor.

(h) Action by Directors. The directors shall manage or supervise the management of the business and affairs of the Corporation. The powers of the directors may be exercised at a meeting (subject to section (i)) at which a quorum is present or by resolution in writing signed by all the directors entitled to vote on that resolution at a meeting of the directors. Where there is a vacancy in the board of directors, the remaining directors, may exercise all the powers of the board so long as a quorum remains in office.

(i) Meeting by Telephone. If all the directors of the Corporation present at or participating in the meeting consent, a meeting of directors or of a committee of directors may be held by means of such telephone, electronic or other

F-3

communication facilities as permit all persons participating in the meeting to communicate with each other simultaneously and instantaneously, and a director participating in such a meeting by such means is deemed to be present at that meeting.

(j) Place of Meetings. Meetings of directors may be held at any place within or outside of Ontario. A majority of the meetings of directors need not be held within Canada in any financial year of the Corporation.

(k) Calling of Meetings. Meetings of the directors shall be held at such time and place as the Chairman of the Board, the President or any two directors may determine.

(l) Notice of Meeting. Notice of the time and place of each meeting of directors shall be given to each director by telephone or by written notice not less than 48 hours before the time of the meeting and need not specify the purpose of or the business to be transacted at the meeting. Meetings of the directors may be held at any time without notice if all the directors have waived or are deemed to have waived notice.

(m) First Meeting of New Board. No notice shall be necessary for the first meeting of newly-elected directors held immediately following their election at a meeting of shareholders.

(n) Adjourned Meeting. Notice of an adjourned meeting of directors is not required if the time and place of the adjourned meeting is announced at the original meeting.

(o) Regular Meetings. The directors may appoint a day or days in any month or months for regular meetings and shall designate the place and time at which such meetings are to be held. A copy of any resolution of directors fixing the place and time of regular meetings of the board shall be sent to each director forthwith after being passed, and no other notice shall be required for any such regular meeting.

(p) Chairman. The Chairman of the Board, or in his absence the President if a director, or in his absence a director chosen by the directors at the meeting shall be the chairman of any meeting of directors.

(q) Voting at Meetings. Questions arising at any meeting of directors shall be decided by a majority of votes. In the case of an equality of votes, the chairman of the meeting, in addition to his original vote, shall not have a second or casting vote.

(r) Conflict of Interest. A director or officer who is a party to, or who is a director or officer of or has a material interest in, any person who is a party to a material contract or transaction or proposed material contract or transaction with the Corporation shall disclose the nature and extent of his interest at the time and in the manner provided by the Act.

(s) Remuneration and Expenses. The directors shall be paid such remuneration as the directors may from time to time by resolution determine. The directors shall also be entitled to be paid their travelling and other expenses properly incurred by them in going to, attending and returning from meetings of directors or committees of directors. If any director or officer of the Corporation shall be employed by or shall perform services for the Corporation otherwise than as a director or officer or shall be a member of a firm or a shareholder, director or officer of a body corporate which is employed by or performs services for the Corporation, the fact of his being a director or officer of the Corporation shall not disentitle such director or officer or such firm or body corporate, as the case may be, from receiving proper remuneration for such services.

4. COMMITTEES

(a) Committees of Directors. The directors may appoint from among their number one or more committees of directors and delegate to them any of the powers of the directors except those which under the Act a committee of directors has no authority to exercise.

(b) Audit Committee. The directors shall appoint from among their number an audit committee composed of not fewer than three directors, all of whom are not officers or employees of the Corporation or any affiliate of the Corporation. The audit committee shall review the financial statements of the Corporation and shall report thereon to the directors of the Corporation before such financial statements are approved by the directors. The auditor of the Corporation is entitled to receive notice of every meeting of the audit committee and, at the expense of the Corporation, to attend and be heard thereat; and, if so requested by a member of the audit committee, shall attend every meeting of the committee held during the term of office of the auditor. The auditor of the Corporation or any member of the audit committee may call a meeting of the committee.

(c) Transaction of Business. Subject to section 3(i), the powers of a committee appointed by the directors may be exercised at a meeting at which a quorum is present or by resolution in writing signed by all members of the

F-4

committee entitled to vote on that resolution at a meeting of the committee. Meetings of a committee may be held at any place in or outside Canada.

(d) Procedure. Unless otherwise determined by the directors each committee shall have power to fix its quorum and to regulate its procedure.

5. OFFICERS

(a) General. The directors may from time to time appoint a Chairman of the Board, a President, one or more Vice-Presidents, a Secretary, a Treasurer and such other officers as the directors may determine, including one or more assistants to any of the officers so appointed. The officers so appointed may but need not be members of the board of directors except as provided in sections 5(c) and 5(d).

(b) Term of Office. Any officer may be removed by the directors at any time but such removal shall not affect the rights of such officer under any contract of employment with the Corporation. Otherwise, each officer shall hold office until his successor is appointed.

(c) The Chairman of the Board. The Chairman of the Board, if any, shall be appointed from among the directors and shall, when present, be chairman of meetings of shareholders and directors and shall have such other powers and duties as the directors may determine.

(d) The President. Unless the directors otherwise determine, the President shall be the chief executive officer of the Corporation and shall have general supervision of its business and affairs and in the absence of the Chairman of the Board shall be chairman at meetings of shareholders and directors when present.

(e) Vice-President. A Vice-President shall have such powers and duties as the directors or the President may determine.

(f) Secretary. The Secretary shall give, or cause to be given, all notices required to be given to shareholders, directors, auditors and members of committees; shall attend and be secretary of all meetings of shareholders, directors and committees appointed by the directors and shall enter or cause to be entered on books kept for that purpose minutes of all proceedings at such meetings; shall be the custodian of the corporate seal of the Corporation and of all records, books, documents and other instruments belonging to the Corporation; and shall have such other powers and duties as the directors or the President may determine.

(g) Treasurer. The Treasurer shall keep proper books of account and accounting records with respect to all financial and other transactions of the Corporation; shall be responsible for the deposit of money, the safe-keeping of securities and the disbursement of the funds of the Corporation; shall render to the directors when required an account of all his transactions as Treasurer and of the financial position of the Corporation; and he shall have such other powers and duties as the directors or the President may determine.

(h) Other Officers. The powers and duties of all other officers shall be such as the directors or the President may determine. Any of the powers and duties of an officer to whom an assistant has been appointed may be exercised and performed by such assistant, unless the directors or the President otherwise direct.

(i) Variation of Duties. The directors may, from time to time, vary, add to or limit the powers and duties of any officer.

(j) Conflict of Interest. An officer shall disclose his interest in any material contract or proposed material contract in accordance with section 3(r).

(k) Agents and Attorneys. The directors shall have power from time to time to appoint agents or attorneys for the Corporation in or out of Canada with such powers (including the power to sub-delegate) of management, administration or otherwise as the directors may specify.

6. PROTECTION OF DIRECTORS, OFFICERS AND OTHERS

(a) Indemnification of Directors and Officers. The Corporation shall indemnify a director or officer, a former director or officer or a person who acts or acted at the Corporation’s request as a director or officer, or an individual acting in a similar capacity, of another entity, and the heirs and legal representatives of such a person to the fullest extent permitted by the Act.

(b) Insurance. The Corporation may purchase and maintain insurance for the benefit of any person referred to in section 6(a) to the extent permitted by the Act.

F-5

7. MEETINGS OF SHAREHOLDERS

(a) Annual Meetings. The annual meeting of the shareholders shall be held at the registered office of the Corporation or at such other place, in or outside Ontario but within Canada, at such time in each year as the directors may determine, for the purpose of receiving the reports and statements required to be placed before the shareholders at an annual meeting, electing directors, appointing an auditor or auditors, and for the transaction of such other business as may properly be brought before the meeting.

(b) Other Meetings. The directors shall have power at any time to call a special meeting of shareholders to be held at such time and at such place, in or outside Ontario, as may be determined by the board of directors.

(c) Electronic Meetings. A meeting of shareholders may be held by telephonic or electronic means and a shareholder who, through those means, votes at a meeting or establishes a communications link to a meeting shall be deemed to be present at that meeting.

(d) Notice of Meetings. Notice of the time and place of a meeting of shareholders shall be given not less than twenty-one days nor more than sixty days before the meeting to each holder of shares carrying voting rights at the close of business on the record date for notice, to each director and to the auditor of the Corporation. Notice of a meeting of shareholders at which special business is to be transacted shall state or be accompanied by a statement of the nature of that business in sufficient detail to permit the shareholder to form a reasoned judgment thereon and shall include the text of any special resolution or by-law to be submitted to the meeting. All business transacted at a special meeting of shareholders and all business transacted at an annual meeting of shareholders, except consideration of the minutes of an earlier meeting, the financial statements and auditor’s report, election of directors and reappointment of the incumbent auditor, shall be deemed to be special business.

(e) Record Date for Notice. For the purpose of determining shareholders entitled to receive notice of a meeting of shareholders, the directors may fix in advance a date as the record date for such determination of shareholders, but the record date shall not precede by more than sixty days or by less than thirty days the date on which the meeting is to be held. Where no record date is fixed, the record date for the determination of shareholders entitled to receive notice of a meeting of shareholders shall be at the close of business on the day immediately preceding the day on which the notice is given, or, if no notice is given, shall be the day on which the meeting is held. If a record date is fixed, unless notice of the record date is waived in writing by every holder of a share of the class or series affected whose name is set out in the securities register at the close of business on the day the directors fix the record date, notice thereof shall be given, not less than seven days before the date so fixed, by advertisement in a newspaper published or distributed in the place where the Corporation has its registered office and in each place in Canada where it has a transfer agent or where a transfer of its shares may be recorded and by written notice to each stock exchange in Canada on which the shares of the Corporation are listed for trading.

(f) Persons Entitled to be Present. The only persons entitled to be present at a meeting of shareholders shall be those entitled to vote thereat, the directors, the auditor and other persons who are entitled or required under any provision of the Act or the articles or by-laws of the Corporation to attend a meeting of shareholders of the Corporation. Any other person may be admitted only on the invitation of the chairman of the meeting or with the consent of the meeting.

(g) Chairman. The Chairman of the Board, or in his absence the President, or in his absence a person chosen by a vote at the meeting shall be chairman of meetings of shareholders.

(h) Scrutineers. At each meeting of shareholders one or more scrutineers, who need not be shareholders, may be appointed by a resolution or by the chairman with the consent of the meeting.

(i) Quorum. Two persons present in person and each being entitled to vote thereat, representing in person or by proxy at least 25% of the total number of shares entitled to vote at a meeting, shall constitute a quorum for the transaction of business at any meeting of shareholders.

(j) Right to Vote. The Corporation shall prepare a list of shareholders entitled to receive notice of a meeting, arranged in alphabetical order and showing the number of shares held by each shareholder, which list shall be prepared,

(i) if a record date is fixed as hereinbefore provided, not later than ten days after that date;

(ii) if no record date is fixed, at the close of business on the day immediately preceding the day on which the notice is given, or where no notice is given, on the day on which the meeting is held.

A person named in the said list is entitled to vote the shares shown opposite his name at the meeting to which the list relates.

F-6

(k) Joint Shareholders. Where two or more persons hold shares jointly, one of those holders present at a meeting of shareholders may in the absence of the others vote the shares, but if two or more of those persons are present, in person or by proxy, they shall vote as one on the shares jointly held by them.

(l) Representatives. Where a body corporate or association is a shareholder of the Corporation, the Corporation shall recognize any individual authorized by a resolution of the directors or governing body of the body corporate or association to represent it at meetings of shareholders of the Corporation. An individual so authorized may exercise on behalf of the body corporate or association he represents all the powers it could exercise if it were an individual shareholder.

(m) Executors and Others. An executor, administrator, committee of a mentally incompetent person, guardian or trustee and, where a corporation is such executor, administrator, committee, guardian or trustee of a testator, intestate, mentally incompetent person, ward or cestui que trust, any duly appointed representative of such corporation, upon filing with the secretary of the meeting sufficient proof of his appointment, shall represent the shares in his or its hands at all meetings of shareholders of the Corporation and may vote accordingly as a shareholder in the same manner and to the same extent as the shareholder of record. If there be more than one executor, administrator, committee, guardian or trustee, the provisions of this by-law respecting joint shareholders shall apply.

(n) Proxyholders. Every shareholder entitled to vote at a meeting of shareholders may by means of a proxy appoint a proxyholder or one or more alternate proxyholders, who need not be shareholders, as his nominee to attend and act at the meeting in the manner, to the extent and with the authority conferred by the proxy. A proxyholder or an alternate proxyholder has the same rights as the shareholder who appointed him to speak at a meeting of shareholders in respect of any matter, to vote by way of ballot at the meeting and, except where a proxyholder or an alternate proxyholder has conflicting instructions from more than one shareholder, to vote at such meeting in respect of any matter by way of any show of hands. A proxy shall be executed by the shareholder or his attorney authorized in writing or, if the shareholder is a body corporate, by an officer or attorney thereof duly authorized and ceases to be valid one year from its date. A proxy shall be in such form as may be prescribed from time to time by the directors or in such other form as the chairman of the meeting may accept and as complies with all applicable laws and regulations.

(o) Time for Deposit of Proxies. The directors may by resolution fix a time not exceeding forty-eight hours, excluding Saturdays and holidays, preceding any meeting or adjourned meeting of shareholders before which time proxies to be used at that meeting must be deposited with the Corporation or an agent thereof, and any period of time so fixed shall be specified in the notice calling the meeting.

(p) Votes to Govern. Subject to the Act and the articles of the Corporation, at all meetings of shareholders every question shall be decided, either on a show of hands or by ballot, by a majority of the votes cast on the question. In case of an equality of votes, the chairman of the meeting shall not have a second or casting vote.

(q) Show of Hands. Voting at a meeting of shareholders shall be by show of hands except where a ballot is demanded by a shareholder or proxyholder entitled to vote at the meeting or where required by the chairman. A ballot may be demanded either before or after any vote by show of hands. Upon a show of hands every person who is present and entitled to vote shall have one vote. Whenever a vote by show of hands shall have been taken upon a question, unless a ballot thereon be required or demanded, an entry in the minutes of a meeting of shareholders to the effect that the chairman declared a motion to be carried is admissible in evidence as prima facie proof of the fact without proof of the number or proportion of the votes recorded in favour of or against the motion. A demand for a ballot may be withdrawn at any time prior to taking of a poll on the ballot.

(r) Ballots. If a ballot is demanded or required, the vote upon the question shall be taken in such manner as the chairman of the meeting shall direct and each person present and entitled to vote at the meeting shall, unless the articles of the Corporation otherwise provide, be entitled to one vote for each share in respect of which he is entitled to vote at the meeting.

(s) Adjournment. The chairman of any meeting of shareholders may, with the consent of the meeting and subject to such conditions as the meeting may decide, adjourn the same from time to time and from place to place. If a meeting of shareholders is adjourned for less than thirty days it is not necessary to give notice of the adjourned meeting other than by announcement at the earliest meeting that is adjourned. If a meeting of shareholders is adjourned by one or more adjournments for an aggregate of thirty days or more, notice of the adjourned meeting shall be given as for an original meeting. Any business may be brought before or dealt with at any adjourned meeting which might have been brought before or dealt with at the original meeting in accordance with the notice calling such original meeting.

F-7

(t) Resolution in Lieu of Meeting. A resolution in writing signed by all the shareholders entitled to vote on that resolution at a meeting of shareholders is as valid as if it had been passed at a meeting of shareholders except where a written statement in respect thereof has been submitted by a director or where representations in writing are submitted by the auditor of the Corporation, in either case, in accordance with the Act.

8. SHARES

(a) Issue. Subject to the Act and the articles of the Corporation, shares of the Corporation may be issued at such times and to such persons and for such consideration as the directors may determine, provided that no shares may be issued until it is fully paid as provided in the Act.

(b) Commissions. The directors may authorize the Corporation to pay a reasonable commission to any person in consideration of his purchasing or agreeing to purchase shares of the Corporation from the Corporation or from any other person, or procuring or agreeing to procure purchasers for any such shares.

(c) Share Certificate. Every shareholder is entitled at his option to a share certificate in respect of the shares held by him that complies with the Act or to a non-transferable written acknowledgement (“written acknowledgement”) of his right to obtain a share certificate from the Corporation in respect of the shares of the Corporation held by him, but the Corporation is not bound to issue more than one share certificate or written acknowledgement in respect of a share or shares held jointly by several persons and delivery of a share certificate or written acknowledgement to one of several joint holders is sufficient delivery to all. Written acknowledgements shall be in such form or forms as the directors shall from time to time by resolution determine. The Corporation may charge a fee in accordance with the Act for a share certificate issued in respect of a transfer. Subject to the provisions of the Act and to the requirements of any stock exchange on which shares of the Corporation may be listed, share certificates shall be in such form or forms as the directors shall from time to time approve. Unless otherwise determined by the directors, share certificates shall be signed by the Chairman of the Board, the President, or a Vice-President or a director and by the Secretary or an Assistant Secretary and need not be under the corporate seal and certificates for shares in respect of which a transfer agent and/or registrar has been appointed shall not be valid unless countersigned on behalf of such transfer agent and/or registrar. Share certificates shall be signed manually by at least one director or officer of the Corporation or by or on behalf of a registrar, transfer agent, branch transfer agent or issuing or other authenticating agent of the Corporation and any additional signatures required on share certificates may be printed or otherwise mechanically reproduced thereon. A manual signature is not required on a share certificate representing a fractional share. If a share certificate contains a printed or mechanically reproduced signature of a person, the Corporation may issue the share certificate, notwithstanding that the person has ceased to be a director or an officer of the Corporation, and the share certificate is as valid as if he were a director or an officer at the date of its issue.

(d) Transfer Agents and Registrars. For each class of shares issued by it, the Corporation may appoint one or more agents to keep the securities register and the register of transfers and one or more branch registers. Such an agent may be designated as a transfer agent or registrar according to functions and one agent may be designated both transfer agent and registrar. The securities register and the register of transfers shall be kept at the registered office of the Corporation or at such other places in Ontario as are designated by the directors, and the branch register or registers of transfers may be kept at such offices of the Corporation or other places, either within or outside Ontario, as are designated by the directors.

(e) Transfer of Shares. Subject to the Act, no transfer of a share shall be registered except upon presentation of the certificate representing such share with an endorsement which complies with the Act, together with such reasonable assurance that the endorsement is genuine and effective as the directors may prescribe, upon payment of all applicable taxes and fees and upon compliance with the articles of the Corporation.

(f) Non-Recognition of Trust. Subject to the Act, the Corporation may treat the registered holder of any share as the person exclusively entitled to vote, to receive notices, to receive any dividend or other payment in respect of the share, and to exercise all the rights and powers of an owner of the share.

(g) Replacement of Share Certificates. Where the owner of a share certificate claims that the share certificate has been lost, apparently destroyed or wrongfully taken, the Corporation shall issue or cause to be issued a new certificate in place of the original certificate if the owner (i) so requests before the Corporation has notice that the share certificate has been acquired by a bona fide purchaser; (ii) files with the Corporation an indemnity bond sufficient in the Corporation’s opinion to protect the Corporation and any transfer agent, registrar or other agent of the Corporation from any loss that it or any of them may suffer by complying with the request to issue a new share certificate; and (iii) satisfies any other reasonable requirements imposed from time to time by the Corporation.

F-8

9. DIVIDENDS AND RIGHTS

(a) Declaration of Dividends. Subject to the Act, the directors may from time to time declare dividends payable to the shareholders according to their respective rights and interests in the Corporation.

(b) Cheques. A dividend payable in money shall be paid by cheque to the order of each registered holder of shares of the class or series in respect of which it has been declared and mailed by prepaid ordinary mail to such registered holder at the address of such holder in the Corporation’s securities register, unless such holder otherwise directs. In the case of joint holders the cheque shall, unless such joint holders otherwise direct, be made payable to the order of all such joint holders and mailed to them at their address in the Corporation’s securities register. The mailing of such cheque as aforesaid, unless the same is not paid on due presentation, shall satisfy and discharge the liability for the dividend to the extent of the sum represented thereby plus the amount of any tax which the Corporation is required to and does withhold.

(c) Non-Receipt of Cheques. In the event of non-receipt of any dividend cheque by the person to whom it is sent as aforesaid, the Corporation shall issue to such person a replacement cheque for a like amount on such terms as to indemnity, reimbursement of expenses and evidence of non-receipt and of title as the directors may from time to time prescribe, whether generally or in any particular case.

(d) Record Date for Dividends and Rights. The directors may fix in advance a date, preceding by not more than fifty days the date for payment of any dividend or the date for the issue of any warrant or other evidence of the right to subscribe for securities of the Corporation, as a record date for the determination of the persons entitled to receive payment of such dividend or to exercise the rights to subscribe for such securities, and notice of any such record date shall be given not less than seven days before such record date in the manner provided by the Act. If no record date is so fixed, the record date for the determination of the persons entitled to receive payment of any dividend or to exercise the right to subscribe for securities of the Corporation shall be at the close of business on the day on which the resolution relating to such dividend or right to subscribe is passed by the directors.

(e) Unclaimed Dividends. Any dividend unclaimed after a period of six years from the date on which the same has been declared to be payable shall be forfeited and shall revert to the Corporation.

10. NOTICES

(a) General. A notice or document required by the Act, the regulations thereunder, the articles or the by-laws of the Corporation to be sent to a shareholder or director of the Corporation may be sent by prepaid mail addressed to, or may be delivered personally to, the shareholder at his latest address as shown in the records of the Corporation or to the director at his latest address as shown in the records of the Corporation or in the most recent notice filed under the Act, whichever is the more current. A notice or document if mailed to a shareholder or director of the Corporation shall be deemed to have been received on the fifth day after mailing. If the Corporation sends a notice or document to a shareholder in accordance with this section and the notice or document is returned on three consecutive occasions because the shareholder cannot be found, the Corporation is not required to send any further notices or documents to the shareholder until he informs the Corporation in writing of his new address.

(b) Computation of Time. In computing the time when a notice or document must be given or sent under any provision requiring a specified number of days’ notice of any meeting or other event, a “day” shall mean a clear day and the period of days shall be deemed to commence the day following the event that began the period and shall be deemed to terminate at midnight of the last day of the period except that if the last day of the period falls on a Sunday or holiday the period shall terminate at midnight of the day next following that is not a Sunday or holiday.

(c) Omission and Errors. The accidental omission to give any notice or send any document to any shareholder, director or other person or the non-receipt of any notice or document by any shareholder, director or other person or any error in any notice or document not affecting the substance thereof shall not invalidate any action taken at any meeting held pursuant to such notice or otherwise founded on such notice or document.

(d) Notice to Joint Shareholders. All notices or documents with respect to any shares registered in more than one name may, if more than one address appears on the securities register of the Corporation in respect of such joint holding, be given to such joint shareholders at the first address so appearing, and all notices so given or documents so sent shall be sufficient notice to all the holders of such shares.

(e) Proof of Service. A certificate of the Secretary or other duly authorized officer of the Corporation, or of any agent of the Corporation, as to facts in relation to the mailing or delivery or sending of any notice or document to any shareholder or director of the Corporation or to any other person or publication of any such notice or document, shall be conclusive evidence thereof and shall be binding on every shareholder or director or other person as the case may be.

F-9

(f) Signature on Notice. The signature on any notice or document given by the Corporation may be printed or otherwise mechanically reproduced thereon or partly printed or otherwise mechanically reproduced thereon.

(g) Waiver of Notice. Notice may be waived or the time for the sending of a notice or document may be waived or abridged at any time with the consent in writing of the person entitled thereto. Attendance of any director at a meeting of the directors or of any shareholder at a meeting of shareholders is a waiver of notice of such meeting, except where he attends for the express purpose of objecting to the transaction of any business on the grounds that the meeting is not lawfully called.

11. BUSINESS OF THE CORPORATION

(a) Voting Shares and Securities in Other Corporations. All of the shares or other securities carrying voting rights of any other body corporate or bodies corporate held from time to time by the Corporation may be voted at any and all meetings of holders of such securities of such other body corporate or bodies corporate in such manner and by such person or persons as the directors of the Corporation shall from to time determine or failing such determination the proper signing officers of the Corporation may also from time to time execute and deliver for and on behalf of the Corporation instruments of proxy and arrange for the issue of voting certificates and other evidence of the right to vote in such names as they may determine.

(b) Bank Accounts, Cheques, Drafts and Notes. The Corporation’s bank accounts shall be kept in such chartered bank or banks, trust company or trust companies or other firm or corporation carrying on a banking business as the directors may by resolution from time to time determine. Cheques on bank accounts, drafts drawn or accepted by the Corporation, promissory notes given by it, acceptances, bills of exchange, orders for the payment of money and other instruments of a like nature may be made, signed, drawn, accepted or endorsed, as the case may be, by such officer or officers, person or persons as the directors may by resolution from time to time name for that purpose. Cheques, promissory notes, bills of exchange, orders for the payment of money and other negotiable paper may be endorsed for deposit to the credit of any one of the Corporation’s bank accounts by such officer or officers, person or persons, as the directors may by resolution from time to time name for that purpose, or they may be endorsed for such deposit by means of a stamp bearing the Corporation’s name.

(c) Execution of Instruments. Any one director or officer shall have authority to sign in the name and on behalf of the Corporation all instruments in writing and any instruments in writing so signed shall be binding upon the Corporation without any further authorization or formality. The board of directors shall have power from time to time by resolution to appoint any officer or officers or any person or persons on behalf of the Corporation either to sign instruments in writing generally or to sign specific instruments in writing. Any signing officer may affix the corporate seal to any instrument requiring the same. The term “instruments in writing” as used herein shall, without limiting the generality thereof, include contracts, documents, powers of attorney, deeds, mortgages, hypothecs, charges, conveyances, transfers and assignments of property (real or personal, immovable or movable), agreements, tenders, releases, receipts and discharges for the payment of money or other obligations, conveyances, transfers and assignments of shares, stocks, bonds, debentures or other securities, instruments of proxy and all paper writing.

(d) Fiscal Year. Until changed by resolution of the directors the fiscal year of the Corporation shall terminate on the 31st day of December in each year.

12. INTERPRETATION

(a) In this by-law, wherever the context requires or permits, the singular shall include the plural and the plural the singular; the word “person” shall include firms and corporations, and masculine gender shall include the feminine and neuter genders. Wherever reference is made to any determination or other action by the directors such shall mean determination or other action by or pursuant to a resolution passed at a meeting of the directors, or by or pursuant to a resolution consented to by all the directors as evidenced by their signatures thereto. Wherever reference is made to the “Act”, it shall mean the Canada Business Corporations Act, and every other act or statute incorporated therewith or amending the same, or any act or statute substituted therefor. Unless the context otherwise requires, all words used in this by-law shall have the meanings given to such words in the Act.

13. REPEAL

(a) All prior by-laws of the Corporation be and they are hereby repealed without prejudice to any action or actions taken thereunder.

F-10

QUESTIONS AND FURTHER ASSISTANCE

If you have any questions about the information contained in this document or require assistance in completing your proxy form, please contact the proxy solicitation agent, at:

The Exchange Tower

130 King Street West, Suite 2950, P.O. Box 361

Toronto, Ontario

M5X 1E2

www.kingsdaleshareholder.com

North American Toll Free Phone:

1-800-749-9197

Email: contactus@kingsdaleshareholder.com

Facsimile: 416-867-2271

Toll Free Facsimile: 1-866-545-5580

Outside North America, Banks and Brokers

Call Collect: 416-867-2272

If you have any questions or need assistance completing your proxy or

voting instruction form, please call Kingsdale Shareholder Services,

toll free at 1-800-749-9197 or email contactus@kingsdaleshareholder.com.

Exhibit 2.3

CONSOLIDATED FINANCIAL STATEMENTS

As at and for the years ended December 31, 2015 and 2014

CONSOLIDATED FINANCIAL STATEMENTS
Management’s report	2
Independent auditor’s report	3
Consolidated statements of comprehensive income (loss)	4
Consolidated statements of financial position	5
Consolidated statements of cash flow	6
Consolidated statements of changes in shareholders’ equity	7

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Nature of operations and corporate information	8
Note 2 — Basis of presentation	8
Note 3 — Critical accounting estimates and judgments	20
Note 4 — Accounting pronouncements	23
Note 5 — Segmented information	25
Note 6 — Expenses	27
Note 7 — Investment in an associate	29
Note 8 — Joint arrangements	32
Note 9 — Gain on arbitration settlement	35
Note 10 — Restructuring expense	35
Note 11 — Net finance expense	35
Note 12 — Income taxes	35
Note 13 — Discontinued operations	38
Note 14 — Assets held for sale	40
Note 15 — Loss per share	41
Note 16 — Financial instruments	41
Note 17 — Advances, loans receivable and other financial assets	44
Note 18 — Inventories	45
Note 19 — Property, plant and equipment	45
Note 20 — Intangible assets	47
Note 21 — Loans and borrowings	48
Note 22 — Provisions, contingencies and guarantees	50
Note 23 — Shareholders’ equity	52
Note 24 — Stock-based compensation plans	54
Note 25 — Cash flows	57
Note 26 — Financial risk and capital risk management	58
Note 27 — Related party transactions	61
Note 28 — Operating lease arrangements	62
Note 29 — Commitments for expenditures	62

Sherritt International Corporation

Consolidated financial statements

Management’s report

The accompanying consolidated financial statements are the responsibility of Sherritt International Corporation’s (“Sherritt”) management. They have been prepared in accordance with International Financial Reporting Standards as issued by the International Accounting Standards Board and include amounts based on estimates and judgments. Management has determined such amounts on a reasonable basis in order to ensure that the consolidated financial statements are presented fairly, in all material respects.

Management has developed and maintains a system of internal control to provide reasonable assurance that the Company’s assets are safeguarded, transactions are authorized and the consolidated financial statements are complete and accurate.

The consolidated financial statements are approved by the Board of Directors on the recommendation of the audit committee. The audit committee of the Board of Directors is composed entirely of independent directors. Sherritt’s consolidated financial statements are reviewed by the audit committee with management before the consolidated financial statements are approved by the Board of Directors. In addition, the audit committee has the duty to review the accounting principles and practices applied and followed by the Corporation during the fiscal year, including critical accounting policies and significant estimates and judgments underlying the consolidated financial statements as presented by management. Deloitte LLP (“Deloitte”) performs an audit of the consolidated financial statements, the results of which are reflected in their report for 2015 included on the next page. Deloitte has full and independent access to the audit committee to discuss their audit and related matters. In addition, Sherritt has an internal audit function that evaluates and formally reports to management and the audit committee on the adequacy and effectiveness of internal controls specified in the approved annual internal audit plan.

/s/ David V. Pathe		/s/ Dean Chambers
David V. Pathe		Dean Chambers
President and Chief Executive Officer		Executive Vice President and
		Chief Financial Officer

February 10, 2016

	Deloitte LLP
	Bay Adelaide East
	22 Adelaide Street West
	Suite 200
	Toronto ON M5H 0A9
	Canada

	Tel: 416-601-6150
	Fax: 416-601-6610
	www.deloitte.ca

Independent Auditor’s Report

To the Shareholders of Sherritt International Corporation

We have audited the accompanying consolidated financial statements of Sherritt International Corporation, which comprise the consolidated statements of financial position as at December 31, 2015 and December 31, 2014, and the consolidated statements of comprehensive income (loss), consolidated statements of changes in shareholders’ equity and consolidated statements of cash flow for the years then ended, and a summary of significant accounting policies and other explanatory information.

Management’s Responsibility for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with International Financial Reporting Standards, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditor’s Responsibility

Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with Canadian generally accepted auditing standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained in our audits is sufficient and appropriate to provide a basis for our audit opinion.

Opinion

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of Sherritt International Corporation as at December 31, 2015 and December 31, 2014, and its financial performance and its cash flows for the years then ended in accordance with International Financial Reporting Standards.

/s/ Deloitte LLP

Chartered Professional Accountants
Licensed Public Accountants

February 10, 2016

Consolidated financial statements

Consolidated statements of comprehensive income (loss)

Canadian $ millions, except per share amounts, for the years ended December 31	Note	2015			2014

Revenue		$	335.9		$	455.6
Cost of sales	6	(318.1		)	(318.0		)
Administrative expenses	6	(46.4		)	(63.4		)
Impairment of Oil assets	19	(80.6		)	—
Gain on sale of Corporate assets	14	19.1			3.3
Gain on arbitration settlement	9	—			14.1
Restructuring expense	10	—			(7.5		)
Share of loss of an associate, net of tax, including impairment	7	(1,876.7		)	(205.4		)
Share of (loss) earnings of a joint venture, net of tax	8	(11.8		)	9.4
Loss from operations, associate and joint venture		(1,978.6		)	(111.9		)
Financing income	11	75.5			67.7
Financing expense	11	(204.5		)	(228.9		)
Net finance expense		(129.0		)	(161.2		)
Loss before tax		(2,107.6		)	(273.1		)
Income tax recovery (expense)	12	35.9			(45.4		)
Net loss from continuing operations		(2,071.7		)	(318.5		)
(Loss) earnings from discontinued operations, net of tax	13	(5.0		)	28.5
Net loss for the year		$	(2,076.7	)	$	(290.0	)

Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Foreign currency translation differences on foreign operations	23	579.2			260.8
Items that will not be subsequently reclassified to profit or loss:
Actuarial (losses) gains on pension plans, net of tax
Continuing operations	23	(0.2		)	(1.1		)
Discontinued operations	23	—			0.6
Other comprehensive income		579.0			260.3
Total comprehensive loss		$	(1,497.7	)	$	(29.7	)


Net loss from continuing operations per common share, basic and diluted	15	$	(7.05	)	$	(1.07	)

Net loss per common share, basic and diluted	15	$	(7.07	)	$	(0.97	)

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated statements of financial position

		2015			2014
Canadian $ millions, as at	Note	December 31			December 31

ASSETS
Current assets
Cash and cash equivalents	16	$	230.6		$	161.6
Short-term investments	16	204.8			315.6
Advances, loans receivable and other financial assets	17	82.7			75.6
Trade accounts receivable, net	16	258.3			264.9
Inventories	18	38.0			30.6
Prepaid expenses		6.0			6.8
		820.4			855.1

Non-current assets
Advances, loans receivable and other financial assets	17	1,600.5			1,922.4
Other non-financial assets		0.8			1.2
Property, plant and equipment	19	351.1			422.1
Investment in an associate	7	757.3			1,548.5
Investment in a joint venture	8	404.2			380.1
Intangible assets	20	154.8			149.4
Deferred income taxes	12	—			2.3
		3,268.7			4,426.0
Assets held for sale	14	0.9			2.1
Total assets		$	4,090.0		$	5,283.2

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Loans and borrowings	21	$	91.2		$	1.6
Trade accounts payable and accrued liabilities		73.6			131.6
Income taxes payable		2.4			22.0
Other financial liabilities		1.5			3.2
Deferred revenue		24.6			17.2
Provisions	22	18.8			18.0
		212.1			193.6

Non-current liabilities
Loans and borrowings	21	2,171.9			1,858.3
Other financial liabilities		1.9			4.2
Deferred revenue		3.8			4.0
Provisions	22	107.8			108.8
Deferred income taxes	12	35.4			55.6
		2,320.8			2,030.9
Total liabilities		2,532.9			2,224.5

Shareholders’ equity
Capital stock	23	2,775.3			2,772.9
Deficit		(2,342.6		)	(259.9		)
Reserves	23	224.9			225.2
Accumulated other comprehensive income	23	899.5			320.5
		1,557.1			3,058.7
Total liabilities and shareholders’ equity		$	4,090.0		$	5,283.2

The accompanying notes are an integral part of these consolidated financial statements.

Approved by the Board,

/s/ Harold (Hap) Stephen		/s/ David V. Pathe
Harold (Hap) Stephen		David V. Pathe
Director		Director

Consolidated financial statements

Consolidated statements of cash flow

Canadian $ millions, for the years ended December 31		2015			2014

Operating activities
Net loss from continuing operations		$	(2,071.7	)	$	(318.5	)
Add (deduct):
Depletion, depreciation and amortization	6	119.2			101.4
Share of loss of an associate, net of tax, including impairment	7	1,876.7			205.4
Share of loss (earnings) of a joint venture, net of tax	8	11.8			(9.4		)
Loss on impairment of assets	6, 19	80.6			14.8
Finance costs (less accretion expense)	11	127.9			159.8
Income tax (recovery) expense	12	(35.9		)	45.4
Service concession arrangements		—			(2.1		)
Gain on sale of Corporate assets	14	(19.1		)	(3.3		)
Net change in non-cash working capital	25	(21.1		)	34.2
Interest received		49.8			46.0
Interest paid		(58.9		)	(93.2		)
Premium paid on redemption of debentures		—			(33.6		)
Income tax paid		(10.6		)	(41.8		)
Dividends received from joint venture	8	12.5			—
Other operating items	25	3.3			4.5
Cash provided by continuing operations		64.5			109.6
Cash (used) provided by discontinued operations	13	(16.0		)	18.6
Cash provided by operating activities		48.5			128.2

Investing activities
Property, plant and equipment expenditures	5	(79.0		)	(80.8		)
Intangible asset expenditures	5	(1.4		)	(1.5		)
Increase in advances, loans receivable and other financial assets		(17.1		)	(1.1		)
Receipts of advances, loans receivable and other financial assets		38.5			10.7
Proceeds from investments		—			6.2
Loans to an associate	17	(135.7		)	(191.2		)
Net proceeds from sale of Corporate assets	14	21.2			2.1
Net proceeds from sale of property, plant and equipment		0.1			0.4
Net proceeds from sale of Coal operations, net of cash disposed	13	—			804.3
Proceeds from short-term investments		110.8			12.0
Cash (used) provided by continuing operations		(62.6		)	561.1
Cash used by discontinued operations	13	—			(13.5		)
Cash (used) provided by investing activities		(62.6		)	547.6

Financing activities
Repayment of loans and borrowings and other financial liabilities		(1.6		)	(365.3		)
Increase in loans and borrowings and other financial liabilities		90.0			—
Repayment of senior unsecured debentures		—			(675.0		)
Issuance of senior unsecured debentures, net of financing costs		—			239.0
Issuance of common shares		0.7			1.0
Share repurchase		—			(10.0		)
Dividends paid on common shares	23	(9.0		)	(21.9		)
Cash provided (used) by continuing operations		80.1			(832.2		)
Cash used by discontinued operations	13	—			(9.5		)
Cash provided (used) by financing activities		80.1			(841.7		)
Effect of exchange rate changes on cash and cash equivalents		3.0			2.3
Increase (decrease) in cash and cash equivalents		69.0			(163.6		)
Cash and cash equivalents at beginning of the year		161.6			325.2
Cash and cash equivalents at end of the year	16	$	230.6		$	161.6

The accompanying notes are an integral part of these consolidated financial statements.

Consolidated statements of changes in shareholders’ equity

											Accumulated
					Retained						other
		Capital			earnings						comprehensive
Canadian $ millions	Note	stock			(deficit)			Reserves			income (loss)			Total

Balance as at December 31, 2013		$	2,808.5		$	40.2		$	196.5		$	62.0		$	3,107.2

Total comprehensive income (loss):
Net loss for the year		—			(290.0		)	—			—			(290.0		)
Foreign currency translation differences on foreign operations	23	—			—			—			260.8			260.8
Actuarial loss on defined benefit obligations, net of tax	23	—			—			—			(0.5		)	(0.5		)
		—			(290.0		)	—			260.3			(29.7		)

Shares issued for:
Restricted stock plan (vested)	23	0.7			—			(0.7		)	—			—
Employee share purchase plan (vested)	23	1.2			—			(0.2		)	—			1.0
Share repurchase	23	(37.5		)	—			27.5			—			(10.0		)

Restricted stock plan expense	23	—			—			0.7			—			0.7
Employee share purchase plan expense	23	—			—			0.1			—			0.1
Stock option plan expense	23	—			—			1.3			—			1.3

Reclassification on settlement of pension obligation	23	—			1.8			—			(1.8		)	—
Dividends declared to common shareholders		—			(11.9		)	—			—			(11.9		)
Balance as at December 31, 2014		2,772.9			(259.9		)	225.2			320.5			3,058.7

Total comprehensive income (loss):
Net loss for the year		—			(2,076.7		)	—			—			(2,076.7		)
Foreign currency translation differences on foreign operations	23	—			—			—			579.2			579.2
Actuarial loss on defined benefit obligations, net of tax	23	—			—			—			(0.2		)	(0.2		)
		—			(2,076.7		)	—			579.0			(1,497.7		)

Shares issued for:
Restricted stock plan (vested)	23	1.6			—			(1.6		)	—			—
Employee share purchase plan (vested)	23	0.8			—			(0.1		)	—			0.7

Restricted stock plan expense	23	—			—			0.1			—			0.1
Stock option plan expense	23	—			—			1.3			—			1.3

Dividends declared to common shareholders		—			(6.0		)	—			—			(6.0		)
Balance as at December 31, 2015		$	2,775.3		$	(2,342.6	)	$	224.9		$	899.5		$	1,557.1

The accompanying notes are an integral part of these consolidated financial statements.

Notes to the consolidated financial statements

Notes to the consolidated financial statements

(All dollar amounts presented in tables are expressed in millions of Canadian dollars except share and per share amounts)

1. NATURE OF OPERATIONS AND CORPORATE INFORMATION

Sherritt International Corporation (“Sherritt” or the “Corporation”) is a world leader in the mining and refining of nickel from lateritic ores with projects and operations in Canada, Cuba, and Madagascar. The Corporation is the largest independent energy producer in Cuba, with extensive oil and power operations across the island. Sherritt licenses its proprietary technologies and provides metallurgical services to mining and refining operations worldwide.

The Corporation is domiciled in Ontario, Canada and its registered office is 181 Bay Street, Toronto, Ontario, M5J 2T3. These consolidated financial statements were approved and authorized for issuance by the Board of Directors of Sherritt on February 10, 2016. The Corporation is listed on the Toronto Stock Exchange (TSX).

2. BASIS OF PRESENTATION

2.1 Basis of presentation

The consolidated financial statements of the Corporation are prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the International Accounting Standards Board (IASB).

The consolidated financial statements are prepared on a going concern basis, under the historical cost convention except for certain financial assets and liabilities which are measured at fair value. All financial information is presented in Canadian dollars rounded to the nearest hundred thousand, except as otherwise noted.

The significant accounting policies described below are consistently applied to all the periods presented.

The preparation of financial statements requires the use of certain critical accounting estimates. It also requires management to exercise judgment in applying the Corporation’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in note 3.

2.2 Principles of consolidation

These consolidated financial statements include the financial position, results of operations and cash flows of the Corporation, its subsidiaries, its interest in an associate, its interest in a joint venture, and its share of assets, liabilities, revenues and expenses related to its interests in joint operations. Intercompany balances, transactions, income and expenses, profits and losses, including gains and losses relating to subsidiaries and joint operations have been eliminated on consolidation.

The Corporation’s significant subsidiaries, joint arrangements and interest in an associate are as follows:

		Geographic	Economic	Basis of
	Relationship	location	interest	accounting

Metals

Moa Joint Venture	Joint venture		50%	Equity method

Composed of the following operating companies:
International Cobalt Company Inc.		Bahamas	50%
Moa Nickel S.A.		Cuba	50%
The Cobalt Refinery Company Inc.		Canada	50%

Ambatovy Joint Venture	Associate		40%	Equity method

Composed of the following operating companies:
Ambatovy Minerals S.A.		Madagascar	40%
Dynatec Madagascar S.A.		Madagascar	40%

Oil and Gas

Sherritt International (Cuba) Oil and Gas Ltd.	Subsidiary	Cuba	100%	Full consolidation
Sherritt International Oil and Gas Ltd.	Subsidiary	Canada	100%	Full consolidation

Power
				Economic interest
Energas S.A. (Energas)	Joint operation	Cuba	331/3%	recognized

Subsidiaries

Subsidiaries are entities over which the Corporation has control. Control is defined as when the Corporation is exposed or has rights to the variable returns from the subsidiary and has the ability to affect those returns through its power over the subsidiary. Power is defined as existing rights that give the Corporation the ability to direct the relevant activities of the subsidiary. Subsidiaries are fully consolidated from the date control is transferred to the Corporation and are de-consolidated from the date control ceases.

Joint arrangements

A joint arrangement is an arrangement whereby two or more parties are subject to joint control. Joint control is considered to be when all parties to the joint arrangement are required to reach unanimous consent over decisions about relevant business activities pertaining to the contractual arrangement. The Corporation has two types of joint arrangements:

(i) Joint ventures

A joint venture is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control and whereby each party has rights to the net assets of the arrangement. Interests in joint ventures are recognized as an investment and accounted for using the equity method of accounting.

· The Corporation recognizes its share of earnings (loss), net of tax in the consolidated statements of comprehensive income (loss), which is adjusted against the carrying amount of its interest in a joint venture;

· The Corporation recognizes its share of other comprehensive income in the consolidated statements of changes in shareholders’ equity, which is adjusted against the carrying amount of its interest in a joint venture;

· If the Corporation’s share of losses equals or exceeds the carrying value of its investment in joint venture in the future, the Corporation does not recognize further losses, unless it has incurred obligations or made payments on behalf of the entity;

· Gains and losses on transactions between the Corporation and its joint venture are eliminated to the extent of the Corporation’s interest in this entity. Losses are eliminated only to the extent that there is no evidence of impairment; and

· Interest revenue on a loan receivable from a joint venture is recognized to the extent of Sherritt’s economic interest.

Notes to the consolidated financial statements

(ii) Joint operations

A joint operation is a contractual arrangement whereby two or more parties undertake an economic activity that is subject to joint control and whereby each party has rights to the assets and obligations for liabilities relating to the arrangement. Interests in joint operations are accounted for by recognizing the Corporation’s share of assets, liabilities, revenues, and expenses.

Associate

An associate is an entity over which the Corporation has significant influence. The Corporation is presumed to have significant influence over an entity if it holds, directly or indirectly, 20 percent or more of the voting power of the entity.

· If the Corporation’s share of losses equals or exceeds the carrying value of its investment in an associate in the future, the Corporation does not recognize further losses, unless it has incurred obligations or made payments on behalf of the entity;

· Gains and losses on transactions between the Corporation and its associate are eliminated to the extent of the Corporation’s interest in this entity. Losses are eliminated only to the extent that there is no evidence of impairment; and

· Prior to Commercial Production, interest revenue on a loan receivable from an associate is fully eliminated. Subsequent to commercial production, interest revenue on a loan receivable from an associate is recognized to the extent of Sherritt’s economic interest.

2.3 Held for sale and discontinued operations

Individual non-current assets or disposal groups (i.e. groups of assets and liabilities to be disposed of, by sale or otherwise) are classified as held for sale, if the following criteria are met:

· The assets (or disposal groups) must be available for immediate sale, in their present condition, subject to terms that are usual and customary of such assets (or disposal groups); and

· The sale is highly probable.

Individual non-current assets or disposal groups are classified, and presented, as discontinued operations if the assets or disposal groups are disposed of or classified as held for sale and if the first and second or third of the following criteria are met:

· The assets or disposal groups represent a separate major line of business or geographical area of operations;

· The assets or disposal groups are part of a single coordinated plan to dispose of a separate major line of business or geographical area of operations; or

· The assets or disposal groups are a subsidiary acquired solely for the purpose of resale.

Assets or disposal groups that meet these criteria are measured at the lower of carrying amount and fair value less costs to sell. The assets and liabilities of the disposal group are presented separately on the face of the consolidated statements of financial position as a single asset and a single liability, respectively. The comparative period consolidated statements of financial position are not restated.

When the fair value less costs to sell of a disposal group is lower than the carrying amount at the time of classification as held for sale, the resulting impairment is recognized in the consolidated statements of comprehensive income (loss) in that period. A gain for any subsequent increase in fair value less costs to sell of a disposal group is recognized, but not in excess of the cumulative impairment loss.

Non-current assets held for sale are not depreciated or amortized. Interest and other expenses attributable to the liabilities of a disposal group are recognized.

The results of discontinued operations are shown separately in the consolidated statements of comprehensive income (loss) and cash flow, and comparative figures are restated. When the sale is expected to occur beyond one year, the costs to sell are measured at their present value. Any increase in the present value of the costs to sell arising from the passage of time is presented as a financing expense.

2.4 Statements of cash flow

The Corporation presents interest paid and received as an operating activity in the consolidated statements of cash flow. Dividends paid are presented as a financing activity and dividends received are presented as an operating activity in the consolidated statements of cash flow. The Corporation presents the consolidated statements of cash flow using the indirect method.

2.5 Basis of segmented disclosure

When determining its reportable segments, the Corporation considers qualitative factors, such as operations that offer distinct products and services and are considered to be significant by the Chief Operating Decision Maker, identified as the senior executive team. The Corporation also considers quantitative thresholds when determining reportable segments, such as if revenue, earnings (loss) or assets are greater than 10% of the total consolidated revenue, net earnings (loss), or assets of all the reportable segments, respectively. Operating segments that share similar economic characteristics are aggregated to form a single reportable segment. The reportable segments’ financial results are reviewed by the senior executive team.

· The Moa JV and Fort Site segment is comprised of mining, processing and refining activities of nickel and cobalt at the Moa Joint Venture in Cuba and Canada and includes the production and sale of agricultural fertilizers at its operations in Fort Saskatchewan.

· The Ambatovy JV segment represents the Ambatovy Joint Venture’s integrated nickel and cobalt facility in Madagascar.

· The Metals Other segment is comprised of businesses established to buy, market and sell certain of Ambatovy Joint Venture’s and Moa Joint Venture’s nickel production.

· The Oil and Gas segment includes the oil and gas operations in Cuba as well as the exploration and development of oil and gas in Cuba, Spain and Pakistan.

· The Power segment includes the operations in Cuba, which construct and operate electricity generating plants that provide electricity in Cuba, and includes an electricity generating plant in Madagascar.

· The Corporate and Other segment is comprised of the metallurgical technology business, management of cash and short-term investments, general corporate activities and wholly-owned subsidiaries of the Corporation established to finance the Ambatovy Joint Venture.

2.6 Revenue recognition

Revenue from the sale of goods is recognized when the Corporation has transferred to the buyer the significant risks and rewards of ownership of the goods, the Corporation retains neither continuing managerial involvement nor effective control over the goods sold, the amount of revenue can be measured reliably, it is probable that the economic benefits associated with the transaction will flow to the Corporation, and the costs incurred or to be incurred in respect of the transaction can be measured reliably. Revenue from a contract to provide services is recognized by reference to the stage of completion of the contract.

Metals

In Metals, these criteria are generally met when the transfer of ownership, as specified in the sales contract, is fulfilled, which is upon shipment or delivery to destination.

Certain Metals product sales are provisionally priced, with the selling price subject to final adjustment at the end of a quotation period, in accordance with the terms of the sale. The quotation period is normally within 90 days after shipment to the customer, and final pricing is based on a reference price established at the end of the quotation period.

Revenue from provisionally priced sales is initially recorded at the estimated fair value of the consideration that is expected to be ultimately received based on forecast reference prices. At each reporting date, all outstanding receivables originating from provisionally priced sales are marked-to-market based on a forecast of reference prices at that time. The adjustment to accounts receivable is recorded as an adjustment to sales revenue. Provisional pricing is only used in the pricing of nickel and cobalt sales for which reference prices are established in a freely traded and active market.

Oil and Gas

In Oil and Gas, these criteria are met at the time of production based on the Corporation’s working interest. In Cuba, all oil production is sold to the Cuban government and, accordingly, delivery coincides with production. The Corporation is allocated a share of Cuban oil production pursuant to its production-sharing contracts.

Notes to the consolidated financial statements

Revenue from cost recovery oil, up to the total recoverable costs incurred in connection with oil activities, is recognized when entitlement to the cost recovery oil component of production is established. The production-sharing contracts limit cost recovery oil to a maximum percentage of total production in a calendar quarter, ranging generally between 50% and 60% of total production. Revenue from profit oil represents the Corporation’s share of oil production after cost recovery oil production is deducted. Recoverable costs that do not provide cost recovery oil entitlements in the current period are included in the determination of cost recovery oil entitlements, and thus revenue, in future periods.

Power

Substantially all of Power’s revenue is from agencies of the Government of Cuba, with the revenue recognition criteria met at the time electricity is delivered or services are performed.

The facilities located in Boca de Jaruco and Puerto Escondido, Cuba operate under a service concession arrangement. In accordance with the accounting guidance for service concession arrangements, Power revenue on operational facilities is recognized at the time electricity is delivered or services are performed, and construction revenue is recorded during periods of new construction, enhancement or upgrade activities. The construction revenue relates to the exchange transaction whereby the Corporation provides design, construction and operating services at Boca de Jaruco or Puerto Escondido in return for the right to charge the Government of Cuba for the future supply of electricity.

The facilities located in Varadero, Cuba and in Madagascar operate under lease arrangements, whereby the Corporation is the lessor. All operating lease revenue related to the Varadero facility is contingent on the amount of electricity produced or services rendered and is recognized when lease payments become due.

2.7 Foreign currency translation

The consolidated financial statements are presented in Canadian dollars, the Corporation’s functional and presentation currency.

Translation of foreign entities

The functional currency for each of the Corporation’s subsidiaries, joint arrangements and associate is the currency of the primary economic environment in which it operates. Operations with foreign functional currencies are translated into the Corporation’s presentation currency in the following manner:

· Monetary and non-monetary assets and liabilities are translated at the spot exchange rate in effect at the reporting date;

· Revenue and expense items (including depletion, depreciation and amortization) are translated at average rates of exchange prevailing during the period, which approximate the exchange rates on the transaction dates;

· Impairment of assets are translated at the prevailing rate of exchange on the date of the impairment recognition, and;

· Exchange gains and losses that result from translation are recognized as a foreign currency translation adjustment in accumulated foreign currency translation reserve.

Translation of transactions and balances

Operations with transactions in currencies other than the entity’s functional currency are recognized at the rates of exchange prevailing at the date of the transaction as follows:

· Monetary assets and liabilities are translated at current rates of exchange with the resulting gains or losses recognized within financing expense in the consolidated statements of comprehensive income (loss);

· Non-monetary items are translated at historical exchange rates; and

· Revenue and expense items are translated at the average rates of exchange, except depletion, depreciation and amortization, which are translated at the rates of exchange applicable to the related assets, with any gains or losses recognized within financing expense in the consolidated statements of comprehensive income (loss).

2.8 Property, plant and equipment

Property, plant and equipment include acquisition costs, capitalized development costs and pre-production expenditures that are recorded at cost less accumulated depreciation and accumulated impairment losses. Costs of property, plant and equipment are incurred while construction is in progress and before the commencement of commercial production. Once the construction of an asset is substantially complete, and the asset is ready for its intended use, these costs are depreciated.

Plant and equipment

Plant and equipment include assets under construction, equipment and processing, refining, power generation and other manufacturing facilities.

The Corporation recognizes major long-term spare parts and standby equipment as plant and equipment when the parts and equipment are significant and are expected to be used over a period greater than a year. Major inspections and overhauls required at regular intervals over the useful life of an item of plant and equipment are recognized in the carrying amount of the related item if the inspection or overhaul provides benefit exceeding one year.

Plant and equipment are depreciated using the straight-line method based on estimated useful lives, once the assets are available for use. Plant and equipment may have components with different useful lives. Depreciation is calculated based on each individual component’s useful life. New components are capitalized to the extent that they meet the recognition criteria of an asset. The carrying amount of the replaced component is derecognized, and any gain/loss is included in net earnings (loss). If the carrying amount of the replaced component is not known, it is estimated based on the cost of the new component less estimated depreciation. The useful lives of the Corporation’s plant and equipment are as follows:

Buildings and refineries	5 to 40 years
Machinery and equipment	3 to 50 years
Office equipment	3 to 35 years
Fixtures and fittings	3 to 35 years
Assets under construction	not depreciated during development period

Oil and Gas properties

Oil and Gas properties include acquisition costs and development costs related to properties in production, under development and held for future development. Ongoing pre-development costs relating to properties held for future development are capitalized as incurred. Development costs incurred to access reserves at producing properties and properties under development are capitalized and are depreciated on a unit-of-production basis over the life of such reserves. Reserves are measured based on proven and probable reserves.

Capitalization of borrowing costs

Borrowing costs on funds directly attributable to finance the acquisition, construction or production of a qualifying asset are capitalized until such time as substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are complete. A qualifying asset is one that takes a substantial period of time to prepare the asset for its intended use. Where money borrowed specifically to finance a project is invested to earn interest income, the income generated is also capitalized to reduce the total capitalized borrowing costs.

Where the funds used to finance a project form part of general borrowings, interest is capitalized based on the weighted-average interest rate applicable to the general borrowings outstanding during the period of construction.

Derecognition

An item of property, plant and equipment is derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the item) is included in net earnings (loss) in the period the item is derecognized.

2.9 Leases

Leases of property, plant and equipment are classified as finance leases when the lessee retains substantially all the risks and rewards of ownership. Leases in which a significant portion of the risks and rewards of ownership are retained by the lessor are classified as operating leases.

Corporation as a lessee

Finance leases are recognized at the lower of the fair value of the leased property and the present value of the minimum lease payments. The corresponding lease obligations, net of finance charges, are recorded as interest-bearing liabilities. Each lease payment is allocated between the liability and finance cost when paid.

Operating lease payments (net of any amortization of incentives) are expensed as incurred. Incentives received from the lessor to enter into an operating lease are capitalized and depreciated over the life of the lease.

Notes to the consolidated financial statements

Corporation as a lessor

Rental Income from operating leases is recognized on a straight-line basis over the term of the relevant lease. Contingent rental income is recognised as revenue in the period in which it is earned. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised over the lease term on the same basis as rental income.

Determining whether an arrangement contains a lease

The Corporation determines whether a lease exists at the inception of an arrangement. A lease exists when one party is effectively granted control of a specific asset over the term of the arrangement.

At inception or upon reassessment of arrangements containing leases, the Corporation separates payments and other consideration required related to lease payments from those related to other goods or services using relative fair value or other estimation techniques.

2.10 Overburden removal costs

The costs of removing overburden to access mineral reserves at producing mines, referred to as stripping costs, are accounted for as variable production costs to be included in the cost of inventory, unless overburden removal creates economic benefit beyond providing access to the underlying reserve, in which case these costs are capitalized and depreciated using the units-of-production basis to cost of sales over the life of the related mineral reserves.

2.11 Intangible assets

Intangible assets are developed internally or acquired as part of a business combination. Internally generated assets are recognized at cost and primarily arise as a result of exploration and evaluation activity and service concession arrangements. Intangible assets acquired as part of a business combination are recognized separately from goodwill, if the asset is separable or arises from contractual or legal rights, and are initially recorded at their acquisition date fair value.

The useful lives of intangible assets are assessed as either finite or indefinite.

Intangible assets with a finite life are amortized over their useful economic lives on a straight-line or units-of-production basis, as appropriate. The amortization expense is included in cost of sales unless otherwise noted. Intangible assets that are not yet ready for use are not amortized until put into use.

Intangible assets with indefinite useful lives are not amortized, but are tested for impairment annually, either individually or at the cash-generating unit level. The Corporation has no identifiable intangible assets for which the expected useful life is indefinite.

Exploration and evaluation

Exploration and evaluation (E&E) expenditures are measured using the cost model and generally include the costs of licenses, technical services and studies, seismic studies, exploration drilling and testing, and directly attributable overhead and administration expenses including remuneration of operating personnel and supervisory management. These costs do not include general prospecting or evaluation costs incurred prior to having obtained the rights to explore an area, which are expensed as they are incurred.

E&E expenditures related to Oil and Gas properties are capitalized and carried forward until technical feasibility and commercial viability of extracting the resource is established. The technical feasibility and commercial viability is established when economic quantities of proven and/or probable reserves are determined to exist, at which point the E&E assets attributable to those reserves are reviewed for impairment before being transferred to property, plant and equipment.

Service concession arrangements

Service concession arrangements are contracts between private sector and government entities and can involve the construction, operation or upgrading of public infrastructure. Service concession arrangements can be classified as financial assets (where the operator has an unconditional right to receive a specified amount of cash or other financial asset over the life of the arrangement) or intangible assets (where the operator’s future cash flows are not specified).

Through its interest in Energas, the Corporation has been contracted to design, construct and operate electrical generating facilities at Boca de Jaruco and Puerto Escondido, Cuba, on behalf of the Cuban government. The sale price of electricity is contractually fixed, but decreases after loans provided by the Corporation to fund the construction are fully repaid. Ownership of these facilities will be transferred to the Cuban government for nil consideration at the end of the contract term which ends in 2023. Energas bears the demand risk on revenues related to assets covered under service concession arrangements as receipts are based on usage rather than an unconditional right to receive cash. As a result, the Boca de Jaruco and Puerto Escondido assets have been classified as intangible assets and represent the Corporation’s right to charge the Government of Cuba for future electricity and by-products delivered.

During periods of new construction, enhancement or upgrade activities, the Corporation records a new intangible asset and a corresponding construction revenue amount to reflect the right to charge the Cuban government for an incremental future supply of electricity. The construction expenses relating to the new construction activity are expensed as incurred. The net result of the construction activity is a nil impact to net earnings. Once operational, the carrying amount of the new service concession intangible asset, including capitalized interest, is amortized on a straight-line basis over the remaining contract term.

Repair, maintenance and replacement costs incurred in relation to service concession intangible assets are expensed as incurred.

Amortization

The following intangible assets are amortized on a straight-line basis over the following estimated useful lives:

Service concession arrangements	12 years
Exploration and evaluation	not amortized during development period

2.12 Impairment of non-financial assets

The Corporation assesses the carrying amount of non-financial assets including property, plant and equipment and intangible assets at each reporting date to determine whether there is any indication of impairment. Internal factors, such as budgets and forecasts, as well as external factors, such as expected future prices, costs and other market factors are also monitored to determine if indications of impairment exist.

An impairment loss is the amount equal to the excess of the carrying amount over the recoverable amount. The recoverable amount takes into account a market participant’s ability to generate economic benefits by using the asset in its highest and best use. To achieve this, the recoverable amount is the higher of value in use (being the net present value of expected pre-tax future cash flows of the relevant asset) and fair value less costs to sell the asset(s).

Impairment is assessed at the cash-generating unit (CGU) level. A CGU is the smallest identifiable group of assets that generates cash inflows largely independent of the cash inflows from other assets or group of assets. The assets of the corporate head office are allocated on a reasonable and consistent basis to CGUs or groups of CGUs.

If, after the Corporation has previously recognized an impairment loss, circumstances indicate that the recoverable amount of the impaired assets is greater than the carrying amount, the Corporation reverses the impairment loss by the amount the revised recoverable amount exceeds its carrying amount, to a maximum of the previous impairment loss. In no case shall the revised carrying amount exceed the original carrying amount, after depreciation or amortization, that would have been determined if no impairment loss had been recognized. An impairment loss or a reversal of an impairment loss is recognized in the consolidated statements of comprehensive income (loss), depending on the nature of the asset.

Exploration and evaluation expenditures at Oil and Gas

Upon determination of proven and probable reserves, the related E&E assets attributable to those reserves are tested for impairment prior to being transferred to property, plant and equipment. Capitalized E&E costs are reviewed and evaluated for impairment at each reporting date for events or changes in circumstances that indicate the carrying amount may not be recoverable from future cash flows of the property.

2.13 Impairment of the investment in an associate and investment in a joint venture

At each reporting date, the Corporation assesses whether there is any indication that the carrying amount of the Corporation’s investment in an associate and investment in a joint venture, including related mineral rights, may be impaired. Significant changes in commodity price forecasts, reserve estimates and production forecasts are examples of factors that could indicate impairment.

Notes to the consolidated financial statements

Impairment is determined as the excess of the carrying amount of the investment in an associate and investment in a joint venture over the recoverable amount (higher of value in use and fair value less costs to sell). The recoverable amount is based on estimated future recoverable production, expected commodity or contracted prices (considering current and historical prices, price trends and related factors), foreign exchange rates, production levels, cash costs of production and environmental rehabilitation costs over the life of mine. Cash flow projections are based on detailed mine plans and independent estimates of critical commodity prices.

2.14 Provisions

Provisions are recognized when the Corporation has a present obligation (legal or constructive) as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation. Where appropriate, the future cash flow estimates are adjusted to reflect risks specific to the obligation. Where the Corporation expects some or all of a provision to be reimbursed, for example, under an insurance contract, the reimbursement is recognized as a separate asset, but only when the reimbursement is virtually certain. The expense relating to any provision is presented in cost of sales or administrative expenses, depending on the nature of the provision. If the effect of the time value of money is material, provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects current market assessments of the time value of money. Where discounting is used, the increase in the provision due to the passage of time is recognized as financing expense. A contingent liability is disclosed where the existence of an obligation will only be confirmed by future events or where the amount of the obligation cannot be measured with reasonable reliability. Contingent assets are not recognized, but are disclosed where an inflow of economic benefits is probable.

Environmental rehabilitation

Provisions for environmental rehabilitation include decommissioning and restoration costs when the Corporation has an obligation to dismantle and remove infrastructure and residual materials as well as to restore the disturbed area. Estimated decommissioning and restoration costs are provided for in the accounting period when the obligation arising from the disturbance occurs, whether this occurs during mine development or during the production phase, based on the net present value of estimated future costs. The provision for environmental rehabilitation is reviewed and adjusted each period to reflect developments which could include changes in closure dates, legislation, discount rate or estimated future costs.

The amount recognized as a liability for environmental rehabilitation is calculated as the present value of the estimated future costs determined in accordance with local conditions and requirements. An amount corresponding to the provision is capitalized as part of property, plant and equipment and is depreciated over the life of the corresponding asset. The impact of amortization or unwinding of the discount rate applied in establishing the net present value of the provision is recognized in financing expense. The applicable discount rate is a pre-tax rate that reflects the current market assessment of the time value of money which is determined based on government bond interest rates and inflation rates.

Changes to estimated future costs are recognized in the consolidated statements of financial position by either increasing or decreasing the rehabilitation liability and rehabilitation asset if the initial estimate was originally recognized as part of an asset measured in accordance with IAS 16, “Property, Plant and Equipment”. Any reduction in the rehabilitation liability and therefore any deduction from the rehabilitation asset may not exceed the carrying amount of that asset. If it does, any excess over the carrying amount is taken immediately to cost of sales.

If the change in estimate results in an increase in the rehabilitation provision and therefore an addition to the carrying amount of the asset, the entity is required to consider whether the new carrying amount is recoverable, and whether this is an indication of impairment of the asset as a whole. If indication of impairment of the asset as a whole exists, the Corporation tests for impairment in accordance with IAS 36, “Impairment of Assets”. If the carrying amount of the revised mine assets, net of rehabilitation provisions, exceeds the recoverable value, that portion of the increase is charged directly to cost of sales. For closed sites, changes to estimated costs are recognized immediately in cost of sales. Also, rehabilitation obligations that arise as a result of the production phase of a mine are expensed as incurred.

Where rehabilitation is conducted systematically over the life of the operation, rather than at the time of closure, provision is made for the estimated cost of outstanding rehabilitation work at each statement of financial position date and any increase in overall cost is expensed.

2.15 Income taxes

The income tax expense or benefit for the reporting period consists of two components: current and deferred taxes.

The current income tax payable or recoverable is calculated using the tax rates and legislation that have been enacted or substantively enacted at each reporting date in each of the jurisdictions and includes any adjustments for taxes payable or recoverable in respect of prior periods.

Current tax assets and liabilities are offset when they relate to the same jurisdiction, the entity has a legally enforceable right to offset and intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.

Deferred tax assets and liabilities are determined using the statement of financial position liability method based on temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their tax bases. In calculating the deferred tax assets and liabilities, the tax rates used are those that have been enacted or substantively enacted by each reporting date in each of the jurisdictions and that are expected to apply when the assets are recovered or the liabilities are settled. Deferred income tax assets and liabilities are presented as non-current.

Deferred tax liabilities are recognized on all taxable temporary differences, and deferred tax assets are recognized on all deductible temporary differences, carryforward of unused tax losses and carryforward of unused tax credits, with the exception of the following items:

· Temporary differences associated with investments in subsidiaries, associates and interests in joint ventures where the Corporation is able to control the timing of the reversal of temporary differences and such reversals are not probable in the foreseeable future;

· Temporary differences that arise on the initial recognition of assets and liabilities in a transaction that is not a business combination and has no impact on either accounting profit or taxable profit; and

· Deferred tax assets are only recognized to the extent that it is probable that sufficient taxable profits exist in future periods against which the deductible temporary differences can be utilized.

The probability that sufficient taxable profits exist in future periods against which the deferred tax assets can be utilized is reassessed at each reporting date. The amount of deferred tax assets recognized is adjusted accordingly.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets against current tax liabilities where they relate to income taxes levied by the same taxation authority on the same taxable entity and where the Corporation has the legal right to offset them.

Current and deferred taxes that relate to items recognized directly in equity are also recognized in equity. All other taxes are recognized in income tax expense in the consolidated statements of comprehensive income (loss).

2.16 Stock-based compensation

The Corporation operates a number of equity-settled and cash-settled share-based compensation plans under which it issues equity instruments of the Corporation or makes cash payments based on the value of the underlying equity instrument of the Corporation to directors, officers and employees in exchange for services.

The Corporation’s equity-settled compensation plans include the stock options plan and the Restricted Stock Plan (“RSP”). RSP obligations are settled by the purchase of shares on the open market. Equity-settled stock options obligations are settled by the issuance of shares from treasury. The fair value of the RSP obligation is measured as the value at which the shares are purchased on the market. The fair value of grants issued under the stock options plan are determined at the date of grant using the Black-Scholes option valuation model. They are only re-measured if there is a modification to the terms of the option, such as a change in exercise price or legal life. The fair value of the equity-settled compensation plans is recognized as an expense over the expected vesting period with a corresponding entry to shareholders’ equity.

The Corporation’s cash-settled share plans, including stock options with tandem stock appreciation rights (“Options with Tandem SARs”), Restricted Share Units (“RSUs”) and Deferred Share Units (“DSUs”) are recognized as liabilities at the date of grant.

The fair value of the liability of the Options with Tandem SARs is determined based on the application of the Black-Scholes option valuation model at the date granted and expensed over the vesting period of the awards based on management’s estimate of the number of shares expected to vest. Projections are reviewed at each reporting date up to the vesting date to reflect management’s best estimates and adjusted as required. Movements in the liability between reporting dates are recognized as an adjustment to the liability and an offsetting expense or recovery. At each reporting date until settlement, the fair value of the awards is re-measured based on revised pricing parameters of the model based on market conditions at the reporting date and estimates of forfeiture rates. Options with Tandem SARs permit awards to be settled in shares. If this occurs, the liability is transferred directly to equity as part of the consideration for the equity instruments issued.

Notes to the consolidated financial statements

The fair value of the RSU liability at the date of grant and at each subsequent reporting date until settlement is based on the market value of the Corporation’s shares. If the Corporation’s share price changes between reporting dates then the fair value of the RSU liability is adjusted and an offsetting expense or recovery is recognized in the statement of comprehensive income (loss). The adjusted fair value of the RSU liability is then amortized over the remaining vesting period. For RSUs issued with performance requirements, the fair value at the date of grant and at each subsequent reporting date until settlement is based on performance metrics which are defined at the time of issuance and on the market value of the Corporation’s shares with the liability expensed over the vesting period. Adjustments recorded are amortized over the remaining vesting period.

The fair value of DSUs at the date of grant and at each subsequent reporting date until settlement is based on the market value of the shares with the liability expensed over the vesting period. Movements in the liability between reporting dates are recognized as an adjustment to the liability and an offsetting expense or recovery. The adjustment amount is amortized over the remaining vesting period.

2.17 Financial Instruments

Management determines the classification of financial assets and financial liabilities at initial recognition and, except in very limited circumstances, the classification is not changed subsequent to initial recognition. The classification depends on the purpose for which the financial instruments were acquired, their characteristics and/or management’s intent. Transaction costs with respect to instruments not classified as fair value through profit or loss are recognized as an adjustment to the cost of the underlying instruments and amortized using the effective interest method.

The Corporation’s financial instruments were classified in the following categories:

Financial assets

Financial assets, measured at fair value through profit or loss:

· Restricted cash; cash equivalents; short-term investments; provisionally priced sales.

Loans and receivables, measured at amortized cost:

· Cash on hand and balances at bank; advances and loans receivable; other financial assets; trade accounts receivable.

Financial liabilities

Other financial liabilities, measured at amortized cost:

· Trade accounts payable and accrued liabilities; loans and borrowings; other financial liabilities.

Financial assets, measured at fair value through profit or loss

An instrument is classified as fair value through profit or loss if it is held for trading or is designated as such upon initial recognition. A financial asset is classified as fair value through profit or loss if acquired principally for the purpose of selling in the short term or if so designated by management. Financial instruments included in this category are initially recognized at fair value and transaction costs are taken directly to earnings along with gains and losses arising from changes in fair value.

Derivative instruments, including embedded derivatives, are recorded at fair value unless exempted from derivative treatment as normal purchase and sale. All changes in their fair value are recorded in net earnings.

Financial assets and liabilities, measured at amortized cost

Trade accounts receivable are initially recognized at fair value including direct and incremental transaction costs and are subsequently measured at amortized cost reduced for any impairment losses. An allowance for impairment of trade accounts receivable is established when there is objective evidence that an amount will not be collectible or, in the case of long-term receivables, if there is evidence that the amount will not be collectible in accordance with payment terms.

Advances and loans receivable are initially recognized at fair value including direct and incremental transaction costs and are subsequently measured at amortized cost. Interest revenue on advances and loans receivable are recognized using the effective interest method.

Trade accounts payable and accrued liabilities are initially recognized at fair value including direct and incremental transaction costs and are subsequently measured at amortized cost using the effective interest method.

Loans and borrowings include short-term loans and long-term loans. These liabilities are initially recognized at fair value net of transaction costs and are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption amount is recorded in financing expense or financing income in the consolidated statements of comprehensive income (loss) over the period of the borrowings using the effective interest method.

Loans and borrowings are classified as a current liability unless the Corporation has an unconditional right to defer settlement for at least 12 months after the consolidated statements of financial position date.

Other financial assets primarily include other loans and receivables. Other financial liabilities primarily include other loans and payables. Other financial assets are initially recognized at fair value net of transaction costs and are subsequently measured at amortized cost. Other financial liabilities are initially recognized at fair value net of transaction costs and are subsequently measured at amortized cost using the effective interest method.

Derecognition of financial assets and liabilities

A financial asset is derecognized when its contractual rights to the cash flows that compose the financial asset expire or substantially all the risks and rewards of the asset are transferred. A financial liability is derecognized when the obligation under the liability is discharged, cancelled or expired. Gains and losses on derecognition are recognized within financing income and financing expense respectively.

Impairment of financial assets, carried at amortized costs

At each reporting date, the Corporation assesses whether there is any objective evidence that a financial asset or a group of financial assets is impaired. A financial asset or a group of financial assets is impaired if there is objective evidence that the estimated future cash flows of the financial asset or the group of financial assets have been negatively impacted. Evidence of impairment may include indications that debtors are experiencing financial difficulty, default or delinquency in interest or principal payments, or other observable data which indicates that there is a measurable decrease in the estimated future cash flows.

If an impairment loss has occurred, the loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows (excluding future expected credit losses that have not yet been incurred). The present value of the estimated future cash flows is discounted at the financial asset’s original effective interest rate. If a financial asset has a variable interest rate, the discount rate for measuring any impairment loss is the current effective interest rate.

The carrying amount of the asset is reduced through the use of an allowance account, and the loss is recognized in financing expense. Interest income continues to be accrued on the reduced carrying amount using the rate of interest used to discount the future cash flows for the purpose of measuring the impairment loss. The interest income is recorded as part of financing income. Loans together with the associated allowance are written off when there is no realistic prospect of future recovery and all collateral has been realized or has been transferred to the Corporation.

If, in a subsequent year, the amount of the estimated impairment loss increases or decreases because of an event occurring after the impairment was recognized, the previously recognized impairment loss is increased or reduced by adjusting the allowance account. If an impairment is later recovered, the recovery is credited to financing income.

Financial instrument measurement hierarchy

All financial instruments are required to be measured at fair value on initial recognition. For those financial assets or liabilities measured at fair value at each reporting date, financial instruments and liquidity risk disclosures require a three-level hierarchy that reflects the significance of the inputs used in making the fair value measurements. These levels are defined below:

Level 1: determined by reference to unadjusted quoted prices in active markets for identical assets and liabilities that the entity can access at the measurement date;

Level 2: valuations using inputs other than the quoted prices for which all significant inputs are based on observable market data, either directly or indirectly; and

Level 3: valuations using inputs that are not based on observable market data.

The Corporation’s financial instruments subject to the measurement hierarchy are provided in note 16.

Notes to the consolidated financial statements

2.18 Inventories

Raw materials, materials in process and finished products are valued at the lower of average production cost and net realizable value, with cost determined on a moving weighted-average basis. Spare parts and operating materials within inventory are valued at the lower of average cost and net realizable value, and recognized as cost of sales when used.

The cost of inventory includes all costs related to bringing the inventory to its current condition, including mining and processing costs, labour costs, supplies, direct and allocated indirect operating overhead and depreciation expense, where applicable, including allocation of fixed and variable costs.

Write-downs to net realizable value may be reversed, up to the amount previously written down when circumstances support an increased inventory value.

2.19 Government grants

Government grants are not recognized until there is reasonable assurance that the Corporation has complied with the conditions required to receive the grant.

Government grants that are contingent on the Corporation purchasing, constructing or otherwise acquiring non-current assets are recognized as a reduction in the carrying amount of the assets and recognized as a reduction of depreciation within cost of sales or administrative expenses, depending on the nature of the asset, in the consolidated statements of comprehensive income (loss) on a rational basis over the useful lives of the related assets.

Other government grants are recognized as a reduction in the related expense over the periods necessary to match them with the costs for which they are intended to compensate, on a systematic basis. Government grants that are receivable as compensation for expenses or losses already incurred, or for the purpose of giving immediate financial support to the Corporation with no future related costs, are recognized in the consolidated statements of comprehensive income (loss) in the period in which they become receivable.

3. CRITICAL ACCOUNTING ESTIMATES AND JUDGMENTS

The preparation of financial statements requires the Corporation’s management to make estimates and assumptions that affect the reported amounts of the assets, liabilities, revenue and expenses reported each period. Each of these estimates varies with respect to the level of judgment involved and the potential impact on the Corporation’s reported financial results. Estimates are deemed critical when the Corporation’s financial condition, change in financial condition or results of operations would be materially impacted by a different estimate or a change in estimate from period to period.

By their nature, these estimates are subject to measurement uncertainty, and changes in these estimates may affect the consolidated financial statements of future periods.

3.1 Critical accounting estimates

Environmental rehabilitation provisions

The Corporation’s operations are subject to environmental regulations in Canada, Cuba, Madagascar and other countries in which the Corporation operates. Many factors such as future changes to environmental laws and regulations, life of mine estimates, the cost and time it will take to rehabilitate the property and discount rates, all affect the carrying amount of environmental rehabilitation provisions. As a result, the actual cost of environmental rehabilitation could be higher than the amounts the Corporation has estimated. For certain operations, actual costs will ultimately be determined after site closure in agreement with predecessor companies.

The environmental rehabilitation provision is assessed quarterly and measured by discounting the expected cash flows. The applicable discount rate is a pre-tax rate that reflects the current market assessment of the time value of money which is determined based on government bond interest rates and inflation rates. The actual rate depends on a number of factors, including the timing of rehabilitation activities that can extend decades into the future and the location of the property.

Reserves for Oil and Gas properties

Reserves are estimates of the amount of product that can be economically and legally extracted from the Corporation’s oil and gas properties. Reserve estimates are an integral component in the determination of the commercial viability of a site, depletion amounts charged to the cost of sales and any impairment analysis.

In calculating reserves, estimates and assumptions are required about a range of geological, technical and economic factors, including quantities, production techniques, production decline rates, production costs, commodity prices and exchange rates. In addition, future changes in regulatory environments, including government levies or changes in the Corporation’s rights to exploit the resource imposed over the producing life of the reserves may also significantly impact estimates.

All of the oil and gas reserves have been evaluated in accordance with National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities.

Property, plant and equipment

Property, plant and equipment is the largest component of the Corporation’s assets and, as such, the capitalization of costs, the determination of estimated recoverable amounts and the depletion and depreciation of these assets have a significant impact on the Corporation’s financial results.

Certain assets are depreciated using a units-of-production basis, which involves the estimation of recoverable reserves in determining the depletion and/or depreciation rates of the specific assets. Each item’s life, which is assessed annually, is assessed for both its physical life limitations and the economic recoverable reserves of the property at which the asset is located.

For those assets depreciated on a straight-line basis, management estimates the useful life of the assets and their components, which in certain cases may be based on an estimate of the producing life of the property. These assessments require the use of estimates and assumptions including market conditions at the end of the asset’s useful life, costs of decommissioning the asset and the amount of recoverable reserves.

Asset useful lives and residual values are re-evaluated at each reporting date.

Income taxes

The Corporation operates in a number of industries in several tax jurisdictions and, consequently, its income is subject to various rates and rules of taxation. As a result, the Corporation’s effective tax rate may vary significantly from the Canadian statutory tax rate depending upon the profitability of operations in the different jurisdictions.

The Corporation calculates deferred income taxes based upon temporary differences between the assets and liabilities that are reported in its consolidated financial statements and their tax bases as determined under applicable tax legislation. The Corporation records deferred income tax assets when it determines that it is probable that such assets will be realized.

The future realization of deferred tax assets can be affected by many factors, including current and future economic conditions, net realizable sale prices, production rates and production costs, and can either be increased or decreased where, in the view of management, such change is warranted.

3.2 Critical accounting judgments

Interests in other entities

As part of its process in determining the classification of its interests in other entities, the Corporation applies judgment in interpreting these interests such as: (i) the determination of the level of control or significant influence held by the Corporation; (ii) the legal structure and contractual terms of the arrangement; (iii) concluding whether the Corporation has rights to assets and liabilities or to net assets of the arrangement; and (iv) when relevant, other facts and circumstances. The Corporation has determined that Energas S.A. and its Oil and Gas production-sharing contracts represent joint operations while the Moa Joint Venture represents a joint venture as described in IFRS 11, “Joint Arrangements”. The Corporation has concluded that the Ambatovy Joint Venture represents an investment in associate as described in IAS 28, “Investments in Associates and Joint Ventures”. All other interests in other entities have been determined to be subsidiaries as described in IFRS 10, “Consolidated Financial Statements”.

Notes to the consolidated financial statements

Aggregation of segments

The Corporation applies judgment in aggregating operating segments into a reportable segment. Aggregation occurs when the operating segments have similar economic characteristics, and have similar (a) products and services; (b) production processes; (c) type or class of customer for their products and services; (d) methods used to distribute their products or provide their services; and (e) nature of the regulatory environment, if applicable. In the fourth quarter of 2015, the Corporation changed its approach of aggregating the Ambatovy Joint Venture operating segment, including a wholly-owned subsidiary (“Metals Other”) established to buy, market and sell certain Ambatovy nickel production, and the Moa Joint Venture operating segment, including operations in Fort Saskatchewan. The Corporation now discloses the Ambatovy Joint Venture, the Moa Joint Venture and Fort Saskatchewan, and the Metals Other operating segments as three separate reportable segments. This new segment disclosure is aligned with current information reviewed by the Chief Operating Decision Maker. The Corporation has revised the December 31, 2014 comparative information in note 5 to be consistent with this new segment presentation. This change does not impact the aggregated total within note 5 for the year ended December 31, 2014.

Property, plant and equipment

Management uses the best available information to determine when a development project reaches commercial viability which is generally based on management’s assessment of when economic quantities of proven and/or probable reserves are determined to exist and the point at which future costs incurred to develop a mine on the property are capitalized. Management also uses the best available information to determine when a project achieves commercial production, the stage at which pre-production costs cease to be capitalized. Commercial production at the Ambatovy Joint Venture was defined as 70% of ore throughput of nameplate capacity in the Pressure Acid Leach (PAL) circuit on average over a thirty-day period. The Corporation declared commercial production at the Ambatovy Joint Venture in January 2014 and began recognizing its share of earnings (losses) from Ambatovy beginning February 1, 2014.

For assets under construction, management assesses the stage of each construction project to determine when a project is commercially viable. The criteria used to assess commercial viability are dependent upon the nature of each construction project and include factors such as the asset purpose, complexity of a project and its location, the level of capital expenditure compared to the construction cost estimates, completion of a reasonable period of testing of the mine plant and equipment, ability to produce the commodity in saleable form (within specifications), and ability to sustain ongoing production of the commodity.

Asset impairment

The Corporation assesses the carrying amount of non-financial assets including investment in a joint venture, property, plant and equipment and intangible assets subject to depreciation and amortization at each reporting date to determine whether there are any indicators that the carrying amount of the assets may be impaired or require a reversal of impairment. Impairment is assessed at the CGU level and the determination of CGUs is an area of judgment.

For purposes of determining fair value, management assesses the recoverable amount of the asset using the net present value of expected future cash flows. Projections of future cash flows are based on factors relevant to the asset and could include estimated recoverable production, commodity or contracted prices, foreign exchange rates, production levels, cash costs of production, capital and reclamation costs. Projections inherently require assumptions and judgments to be made about each of the factors affecting future cash flows. Changes in any of these assumptions or judgments could result in a significant difference between the carrying amount and fair value of these assets. Where necessary, management engages qualified third-party professionals to assist in the determination of fair values.

Measuring the recoverable amount of the Corporation’s interest in the Ambatovy Joint Venture

The Corporation accounts for its interest in the Ambatovy Joint Venture using the equity method. The Corporation assesses the carrying amount of its investment at each reporting date to determine whether there are any indicators that the carrying amount of the investment may be impaired.

For purposes of determining the recoverable amount of its interest in the Ambatovy Joint Venture, management calculates the net present value of expected future cash flows. Projections of future cash flows are based on factors relevant to Ambatovy’s operations and could include estimated recoverable production, commodity or contracted prices, foreign exchange rates, production levels, cash costs of production, capital and reclamation costs. Projections inherently require assumptions and judgments to be made about each of the factors affecting future cash flows. The determination of the recoverable amount involves a detailed review of Ambatovy’s life of mine model and the determination of a weighted average cost of capital among other critical factors.

Changes in any of these assumptions or judgments could result in a significant difference between the carrying amount and the recoverable amount of this asset. Where necessary, management engages qualified third-party professionals to assist in the determination of recoverable amounts.

Overburden removal costs

Overburden removal costs are capitalized and depreciated over the useful lives when the overburden removal activity can be shown to create value beyond providing access to the underlying reserve. In many cases, this determination is a matter of judgment.

Exploration and evaluation

Management must make estimates and assumptions when determining when to transfer E&E expenditures from intangible asset to property, plant and equipment, which is normally at the time when commercial viability is achieved. Assessing commercial viability requires management to make certain estimates and assumptions as to future events and circumstances, in particular whether an economically viable operation can be established. Any such estimates and assumptions may change as new information becomes available. If after having capitalized the expenditure, a decision is made that recovery of the expenditure is unlikely, the amount capitalized is recognized in cost of sales in the consolidated statements of comprehensive income (loss).

Income taxes

In determining whether it is probable that a deferred tax asset will be realized, management reviews the timing of expected reversals of taxable temporary differences, the estimates of future taxable income and prudent and feasible tax planning that could be implemented. Significant judgment may be involved in determining the timing of expected reversals of temporary differences.

Arrangements containing a lease

The Corporation determined that the Power facilities in Varadero, Cuba and Madagascar are subject to operating lease arrangements. The Corporation applies judgment in interpreting these arrangements such as determining which assets are specified in an arrangement, determining whether a right to use a specified asset has been conveyed and if relative fair value or another estimation technique to separate lease payments from payments for other goods or services should be used. The Corporation also uses judgment in applying accounting guidance to determine whether these leases are operating or finance leases.

Service concession arrangements

The Corporation determined that the contract terms regarding the Boca de Jaruco and Puerto Escondido, Cuba, facilities operated by Energas represent service concession arrangements as described in IFRIC 12, “Service concession arrangements” (IFRIC 12). The Corporation uses judgment to determine whether the grantor sets elements of the services provided by the operator, whether the grantor retains any significant ownership interest in the infrastructure at the end of the agreement, and to determine the classification of the service concession asset as either a financial asset or intangible asset.

4. ACCOUNTING PRONOUNCEMENTS

4.1 Adoption of new and amended accounting pronouncements

In fiscal 2015, there have been no new or amended accounting pronouncements that have had a material impact on the Corporation’s consolidated financial statements.

4.2 Accounting pronouncements issued but not yet effective

IFRS 9 — Financial instruments

IFRS 9, “Financial instruments” (IFRS 9) was issued by the IASB on July 24, 2014 and will replace IAS 39, “Financial instruments: recognition and measurement” (IAS 39). IFRS 9 utilizes a single approach to determine whether a financial asset is measured at amortized cost or fair value and a new mixed measurement model for debt instruments having only two categories: amortized cost and fair value. The approach in IFRS 9 is based on how an entity manages its financial instruments in the context of its business model and the contractual cash flow characteristics of the financial assets. Final amendments released on July 24, 2014 also introduce a new expected loss impairment model and limited changes to the classification and measurement requirements for financial assets. IFRS 9 is effective for annual periods beginning on or after January 1, 2018. The Corporation is currently evaluating the impact of this standard and amendments on its consolidated financial statements.

Notes to the consolidated financial statements

IFRS 11 — Joint Arrangements

IFRS 11, “Joint Arrangements” (IFRS 11) was amended by the IASB on May 6, 2014. The amendments add new guidance on how to account for the acquisition of an interest in a joint operation that constitutes a business. The amendments are effective for annual periods beginning on or after January 1, 2016. The adoption of these amendments is not expected to have a material impact on the Corporation’s consolidated financial statements.

IFRS 15 - Revenue from Contracts with Customers

IFRS 15, “Revenue from Contracts and Customers” (IFRS 15) was issued by the IASB on May 28, 2014, and will replace IAS 18, “Revenue”, IAS 11, “Construction Contracts”, and related interpretations on revenue. IFRS 15 sets out the requirements for recognizing revenue that apply to all contracts with customers, except for contracts that are within the scope of the standards on leases, insurance contracts and financial instruments. IFRS 15 uses a control based approach to recognize revenue which is a change from the risk and reward approach under the current standard. Companies can elect to use either a full or modified retrospective approach when adopting this standard and it is effective for annual periods beginning on or after January 1, 2018. The Corporation is currently evaluating the impact of IFRS 15 on its consolidated financial statements.

IFRS 16 — Leases

IFRS 16, “Leases” (IFRS 16) was issued by the IASB on January 13, 2016, and will replace IAS 17, “Leases”. IFRS 16 will bring most leases on-balance sheet for lessees under a single model, eliminating the distinction between operating and financing leases. Lessor accounting however remains largely unchanged and the distinction between operating and finance leases is retained. The new standard is effective for annual periods beginning on or after January 1, 2019 with early adoption permitted if IFRS 15 has also been applied. The Corporation is currently evaluating the impact of IFRS 16 on its consolidated financial statements.

IAS 1 — Presentation of Financial Statements

IAS 1, “Presentation of Financial Statements” (IAS 1) was amended by the IASB on December 18, 2014. The amendments to IAS 1 give guidance on how to apply the concept of materiality in practice. The amendments are effective for annual periods beginning on or after January 1, 2016. The adoption of these amendments is not expected to have a material impact on the Corporation’s consolidated financial statements.

IAS 16 — Property, Plant and Equipment

IAS 16, “Property, Plant, and Equipment” (IAS 16) was amended by the IASB on May 12, 2014. The amendments to IAS 16 clarify that the use of revenue-based methods to determine the depreciation of an asset is not appropriate. However, the amendments provide limited circumstances when a revenue-based method can be an appropriate basis for amortization. The amendments are effective for annual periods beginning on or after January 1, 2016. The adoption of these amendments is not expected to have an impact on the Corporation’s consolidated financial statements.

IAS 38 — Intangible Assets

IAS 38, “Intangible Assets” (IAS 38) was amended by the IASB on May 12, 2014. The amendments to IAS 38 clarify that an amortization method based on revenue is generally presumed to be an inappropriate basis for measuring the consumption of the economic benefits embodied in an intangible asset. However, the amendments provide limited circumstances when a revenue-based method can be an appropriate basis for amortization. The amendments are effective for annual periods beginning on or after January 1, 2016. The adoption of these amendments is not expected to have an impact on the Corporation’s consolidated financial statements.

5. SEGMENTED INFORMATION

Business segments

Canadian $ millions, for the year ended December 31

2015

Metals

Adjustments for

Moa JV and

Ambatovy

Oil and

Corporate

Joint Venture

Fort Site(1)

JV(2)

Other(3)

Gas

Power

and Other(4)

and Associate(5)

Total

Revenue

412.6

332.0

60.5

162.6

52.7

2.3

(686.8

)

335.9

Cost of sales

(410.9

)

(558.4

)

(58.8

)

(146.9

)

(52.6

)

(5.2

)

914.7

(318.1

)

Administrative expenses

(6.1

)

(24.6

)

(1.2

)

(6.7

)

(3.8

)

(32.1

)

28.1

(46.4

)

Impairment of Ambatovy JV assets(7)

—

(1,683.1

)

—

1,683.1

—

Impairment of Oil assets

—

(80.6

)

—

(80.6

)

Gain on sale of Corporate assets

—

19.1

—

19.1

Share of loss of an associate, net of tax

—

(1,876.7

)

(1,876.7

)

Share of loss of a joint venture, net of tax

—

(11.8

)

(11.8

)

(Loss) earnings from operations, associate and joint venture

(4.4

)

(1,934.1

)

0.5

(71.6

)

(3.7

)

(15.9

)

50.6

(1,978.6

)

Financing income

75.5

Financing expense

(204.5

)

Net finance expense

(129.0

)

Loss before tax

(2,107.6

)

Income tax recovery

35.9

Net loss from continuing operations

(2,071.7

)

Loss from discontinued operations, net of tax (note 13)

(5.0

)

Net loss for the year

(2,076.7

)

Supplementary information

Depletion, depreciation and amortization

45.2

202.2

—

72.9

33.7

2.9

(237.7

)

119.2

Property, plant and equipment expenditures

62.4

36.1

—

57.9

4.4

3.3

(85.1

)

79.0

Intangible asset expenditures

—

1.4

—

1.4

Canadian $ millions, as at December 31

2015

Non-current assets(6)

772.0

2,815.9

—

147.6

199.6

11.0

(3,440.2

)

505.9

Total assets

1,039.8

3,044.1

12.2

1,219.5

548.6

913.8

(2,688.0

)

4,090.0

Notes to the consolidated financial statements

Canadian $ millions, for the year ended December 31																						2014
	Metals																		Adjustments for
	Moa JV and			Ambatovy						Oil and						Corporate			Joint Venture
	Fort Site(1)			JV(2)			Other(3)			Gas			Power			and Other(4)			and Associate(5)			Total

Revenue	$	457.4		$	291.8		$	64.6		$	269.3		$	49.0		$	4.2		$	(680.7	)	$	455.6
Cost of sales	(407.4		)	(424.3		)	(62.8		)	(150.0		)	(37.1		)	(9.5		)	773.1			(318.0		)
Administrative expenses	(9.3		)	(25.9		)	(0.5		)	(7.8		)	(7.3		)	(43.6		)	31.0			(63.4		)
Gain on sale of Corporate assets	—			—			—			—			—			3.3			—			3.3
Gain on arbitration settlement	—			—			—			—			—			14.1			—			14.1
Restructuring expense	(1.7		)	—			—			(0.8		)	(0.3		)	(5.7		)	1.0			(7.5		)
Share of loss of an associate, net of tax	—			—			—			—			—			—			(205.4		)	(205.4		)
Share of earnings of a joint venture, net of tax	—			—			—			—			—			—			9.4			9.4
Earnings (loss) from operations, associate and joint venture	39.0			(158.4		)	1.3			110.7			4.3			(37.2		)	(71.6		)	(111.9		)
Financing income																						67.7
Financing expense																						(228.9		)
Net finance expense																						(161.2		)
Loss before tax																						(273.1		)
Income tax expense																						(45.4		)
Net loss from continuing operations																						(318.5		)
Earnings from discontinued operations, net of tax (note 13)																						28.5
Net loss for the year																						(290.0		)

Supplementary information
Depletion, depreciation and amortization	$	39.1	$	152.9	$	(0.6	)	$	66.6	$	20.5	$	3.9	$	(181.0	)	$	101.4
Property, plant and equipment expenditures	41.4		50.3		—			62.0		3.7		0.6		(77.2		)	80.8
Intangible asset expenditures	—		—		—			0.8		0.7		—		—			1.5

Canadian $ millions, as at December 31																2014
Non-current assets(6)	$	675.2	$	3,927.6	$	—	$	210.6	$	199.2	$	11.1	$	(4,452.2	)	$	571.5
Total assets	965.4		4,184.1		17.3		1,264.9		484.5		1,330.4		(2,963.4		)	5,283.2

(1) Included in the Moa JV and Fort Site segment are the operations of the Corporation’s 50% interest in the Moa Joint Venture and its 100% interest in the utility and fertilizer operations in Fort Saskatchewan.

(2) Included in the Ambatovy JV segment are the operations of the Corporation’s 40% interest in the Ambatovy Joint Venture.

(3) Included in the Metals Other segment are the operations of two wholly-owned subsidiaries of the corporation established to buy, market and sell certain Ambatovy and Moa Joint Venture nickel production.

(4) Revenues from Corporate and Other primarily relate to sales from the Corporation’s metallurgical technologies business. Also included in the Corporate and Other segment are the operations of wholly-owned subsidiaries of the Corporation established to finance the Ambatovy Joint Venture.

(5) The adjustments for Joint Venture and Associate reflect the adjustments for equity-accounted investments in the Moa and Ambatovy Joint Ventures.

(6) Non-current assets are composed of property, plant and equipment and intangible assets.

(7) The impairment of Ambatovy JV assets includes the impairment of property, plant and equipment of $1.2 billion and impairment of mineral rights, before deferred tax adjustments, of $0.5 billion (note 7).

Geographic segments

	2015				2014
Canadian $ millions, as at	December 31				December 31
	Non-current		Total		Non-current		Total
	assets(1)		assets(2)		assets(1)		assets(2)

North America	$	165.0	$	1,070.8	$	169.8	$	1,114.2
Cuba	324.4		1,002.0		382.3		1,019.4
Madagascar	1.3		1,975.4		1.7		3,044.3
Europe	14.2		20.4		16.8		36.3
Asia	1.0		2.6		0.9		2.3
Other	—		18.8		—		66.7
	$	505.9	$	4,090.0	$	571.5	$	5,283.2

(1) Non-current assets are composed of property, plant and equipment and intangible assets.

(2) For its geographic segments, the Corporation has allocated assets based on their physical location.

	2015		2014
	Total		Total
Canadian $ millions, for the years ended December 31	revenue(1)		revenue(1)

North America	$	115.9	$	132.1
Cuba	203.3		305.7
Madagascar	1.7		1.3
Europe	11.3		11.5
Asia	2.3		2.2
Other	1.4		2.8
	$	335.9	$	455.6

(1) For its geographic segments, the Corporation has allocated revenue based on the location of the customer.

Revenue components

Revenue includes the following significant categories:

Canadian $ millions, for the years ended December 31	2015		2014

Commodity and electricity	$	325.4	$	438.1
Other	10.5		17.5
	$	335.9	$	455.6

Significant customers

Oil and Gas derived $150.6 million of its revenue for the year ended December 31, 2015 ($256.9 million for the year ended December 31, 2014) directly and indirectly from agencies of the Government of Cuba.

Power derived $48.7 million of its revenue for the year ended December 31, 2015 ($41.8 million for the year ended December 31, 2014) directly and indirectly from agencies of the Government of Cuba.

Metals Other derived $54.1 million of its revenue for the year ended December 31, 2015 ($59.7 million for the year ended December 31, 2014) from a customer who markets and sells nickel production.

No other single customer contributed 10% or more to the Corporation’s revenue for both 2015 and 2014.

6. EXPENSES

Cost of sales includes the following:

Canadian $ millions, for the years ended December 31	2015		2014

Employee costs	$	59.1	$	62.8
Depletion, depreciation and amortization of property, plant and equipment and intangible assets	116.5		98.4
Raw materials and consumables	48.4		60.6
Repairs and maintenance	56.6		41.0
Exploration and evaluation expenses(1)	—		3.3
Impairment losses and inventory obsolescence (2)(3)	2.1		14.8
Freight and shipping costs	17.8		14.9
Other	17.6		22.2
	$	318.1	$	318.0

(1) In 2014, the exploration and evaluation expenses incurred by the Corporation related to the Sulawesi Project in Indonesia. As the Corporation terminated its earn-in and shareholders’ agreement for the Sulawesi project, effective February 1, 2014, there were no further funding requirements after this date.

(2) In the third quarter of 2015, the Corporation recognized an impairment loss of $80.6 million (note 19) representing the write-down of certain Oil assets in the Oil and Gas segment to their recoverable amount. Due to the significance of this impairment loss, the amount has been presented separately from cost of sales as impairment of Oil assets in the consolidated statement of comprehensive income (loss).

(3) In 2014, impairment losses were primarily comprised of an impairment of Oil and Gas exploration and evaluation licenses of $12.3 million (note 20) and an impairment of Oil and Gas property, plant and equipment assets of $2.1 million (note 19).

Notes to the consolidated financial statements

Administrative expenses include the following:

Canadian $ millions, for the years ended December 31	2015			2014

Employee costs	$	32.9		$	41.1
Severance(1)	2.2			—
Depreciation	2.7			3.0
Stock-based compensation (recovery) expense	(1.0		)	4.0
Annual general meetings costs and other Shareholder related costs	0.2			4.4
Consulting services and audit fees	5.2			7.4
Other	4.2			3.5
	$	46.4		$	63.4

(1) In the fourth quarter of 2014, the Corporation recognized a restructuring charge of $7.5 million (Note 10) related to severance and other termination benefits for employees whose positions were terminated. Due to the significance of this restructuring charge, the 2014 amount had been presented separately from administrative expenses as restructuring expense in the consolidated statements of comprehensive income (loss).

7. INVESTMENT IN AN ASSOCIATE

The Corporation indirectly holds a 40% interest in Ambatovy Minerals S.A. and Dynatec Madagascar S.A. (collectively the Ambatovy Joint Venture). Sherritt is the operator of the Ambatovy Joint Venture and has as its partners, Sumitomo Corporation (Sumitomo) and Korea Resources Corporation (Kores). The Ambatovy Joint Venture has two nickel deposits located near Moramanga, Madagascar. The ore from these deposits is delivered via pipeline to a processing plant and refinery located near the Port of Toamasina.

Financial completion

In September 2015, the Ambatovy Joint Venture filed the final two remaining certificates and made a deposit of US$115 million (100% basis) in the Senior Debt Reserve Account to achieve financial completion under the Ambatovy Joint Venture financing. Upon achieving financial completion, the US$1.6 billion (100% basis, balance as at December 31, 2015) Ambatovy Joint Venture financing became non-recourse to the Ambatovy partners and the interest rate increased from approximately LIBOR plus 1.4% to LIBOR plus 2.5%.

Arbitration

In September and October of 2015, the Ambatovy Joint Venture received notice of final awards in three commercial arbitrations. Two of these decisions, related to the construction of a power plant and the refinery, resulted in rulings against the Ambatovy Joint Venture and resulted in a cash outflow of US$65 million (100% basis). The third, which related to the construction of a pipeline, resulted in a ruling in favour of the Ambatovy Joint Venture and will have a positive cash flow impact if and when collected. Arbitration and interest costs have been expensed and resulted in a net impact of US$11.2 million (100% basis) in the share of loss of an associate, net of tax, within the consolidated statements of comprehensive income (loss). The remainder of the costs awarded relate to construction costs and resulted in US$44.5 million (100% basis) being capitalized to investment in an associate within the consolidated statements of financial position, of which US$35 million (100% basis) had been previously accrued.

Impairment

In the fourth quarter of 2015, an impairment indicator was identified at the Ambatovy Joint Venture reflecting the expectation of a sustained reduction in long-term nickel prices. The recoverable amount was based on value in use and was determined to be $7.1 billion (100% basis) as at December 31, 2015. In determining value in use for the Ambatovy Joint Venture, a long-term nickel price of US$8.50/lb and a discount rate of 9.0% were used in the discounted cash flow calculation. The Corporation has identified the Ambatovy Joint Venture operation as one cash-generating unit (“CGU”), which constitutes the Ambatovy Joint Venture reportable segment.

The Corporation recognized a total impairment of $1.6 billion (40% basis), after tax, within the Corporation’s share of loss of an associate, net of tax, in the consolidated statement of comprehensive income (loss). The total impairment consists of the Corporation’s 40% share of the Ambatovy Joint Venture impairment, a deferred tax asset write-down, an inventory write-down and an incremental impairment of the Corporation’s mineral rights, net of deferred tax adjustments, as discussed further below.

Impairment of Ambatovy Joint Venture

The loss on impairment of Ambatovy Joint Venture of $3.0 billion (100% basis) represents the write-down of Ambatovy Joint Venture property, plant and equipment to its recoverable amount. The impairment resulted in an expense of $1.2 billion (40% basis) recognized within the Corporation’s share of loss of an associate, net of tax, in the consolidated statement of comprehensive income (loss).

Deferred tax asset write-down

The Ambatovy Joint Venture concluded that its deferred tax asset was not recoverable due to the expectation of a sustained reduction in long-term nickel prices, which resulted in a deferred tax asset write-down of $120.6 million (100% basis). This write-down resulted in an expense of $48.2 million (40% basis) recognized within the Corporation’s share of loss of an associate, net of tax, in the consolidated statement of comprehensive income (loss).

Inventory write-down

The Ambatovy Joint Venture wrote down its spare parts and operating materials to its net realizable value, which resulted in an inventory write-down of $98.4 million (100% basis). This write-down resulted in an expense of $39.4 million (40% basis) recognized within the Corporation’s share of loss of an associate, net of tax, in the consolidated statement of comprehensive income (loss).

Notes to the consolidated financial statements

Loss on impairment of mineral rights and deferred tax liability

An additional impairment of $0.3 billion (40% basis), net of deferred tax of $0.2 billion, was recognized representing the incremental carrying value of Sherritt’s investment in an associate, primarily related to mineral rights acquired from Dynatec in 2007. This impairment was recognized within the Corporation’s share of loss of an associate, net of tax, in the consolidated statement of comprehensive income (loss).

Ambatovy funding

Pursuant to cash calls due in January 2016, an additional US$30 million was provided to the Ambatovy Joint Venture by Sumitomo and Kores. Total cash calls of US$50 million were made, with Sherritt not funding its 40% pro-rata share (US$20 million). By agreement amongst the Ambatovy Joint Venture partners, Sherritt’s unfunded amounts accrue interest at LIBOR plus 3.0%. These amounts will be subtracted from future Ambatovy Joint Venture distributions, or may be set off by the Ambatovy Joint Venture against other amounts owed to Sherritt. Sherritt also has the option to pay the amounts at any time, at Sherritt’s election. Until the funding deficit is cured, and subject to continued discussions with the Ambatovy Joint Venture partners, Sherritt will not be exercising its Ambatovy Joint Venture voting rights.

Statement of financial position

The following provides additional information relating to the Corporation’s investment in the Ambatovy Joint Venture:

	2015		2014
Canadian $ millions, 100% basis, as at	December 31		December 31

Assets
Cash and cash equivalents(1)	$	39.6	$	47.7
Other current assets	12.9		23.1
Trade accounts receivable, net	89.6		67.9
Inventories(6)	426.2		456.3
Deferred income taxes(2)	—		46.4
Other non-current assets	5.8		4.7
Property, plant and equipment	7,036.5		10,575.8
Total assets	7,610.6		11,221.9

Liabilities
Trade accounts payable and accrued liabilities	317.5		332.2
Other current financial liabilities	15.8		12.0
Current portion of loans and borrowings:
Ambatovy Joint Venture financing(3)	260.7		218.5
Ambatovy revolving credit facility(4)	60.6		44.7
Non-current portion of loans and borrowings:
Ambatovy Joint Venture financing(3)	1,927.9		1,829.0
Ambatovy Subordinated loan payable(5)	3,009.1		3,724.8
Environmental rehabilitation provision	117.6		100.7
Other non-current liabilities	8.2		0.7
Deferred income taxes	—		327.4
Total liabilities	5,717.4		6,590.0
Net assets	$	1,893.2	$	4,631.9

(1) In accordance with La loi établissant un régime special pour les grands investissements dans le secteur minier malagasy (LGIM), Madagascar’s large scale mining investment act, the Ambatovy Joint Venture is required to (a) maintain foreign currency in local bank accounts sufficient to pay 90 days of local expenses, or (b) repatriate all revenue from export sales of mining products, less authorized debt service costs, to local bank accounts within 90 days of receipt. The Ambatovy Joint Venture is currently electing to repatriate revenue from export sales, less authorized debt service costs, in compliance with the requirements of the LGIM.

(2) As at December 31, 2015, the Ambatovy Joint Venture has fully written-off its deferred tax asset. As at December 31, 2015, the Ambatovy Joint Venture has earned investment tax credits which management has estimated to be $713.7 million (December 31, 2014 - $595.0 million), operating losses of $652.1 million (December 31, 2014 - $272.2 million) and $4,117.8 million of deductible temporary differences for which a deferred tax asset has not been recognized since the realization of any related tax benefit through future taxable profits is not probable. The investment tax credits have an indefinite carry forward period and may be used to partially offset Malagasy income tax otherwise payable by the Ambatovy Joint Venture in subsequent years. The operating losses have a 5-year expiry period.

(3) The Ambatovy Joint Venture financing of $2,188.6 million, net of financing costs, is project financing with a group of international lenders that matures on June 15, 2024. For the year ended December 31, 2015, total principal repayments were US$188.4 million. The project financing became non-recourse to the partners in September 2015 when the project filed the remaining completion certificates and is now solely secured by the project assets. Interest is payable based on LIBOR rates plus 2.5%. As at December 31, 2015, the Ambatovy Joint Venture had borrowed US$1,601.1 million (December 31, 2014 - US$1,789.5 million) under the project financing.

(4) The Ambatovy revolving credit facility is comprised of a Malagasy Ariary (MGA) 140 billion ($60.6 million) revolving and MGA 20 billion ($8.7 million) overdraft credit facility agreement with local financial institutions and bear interest rates between 9.00% and 11.85%. The revolving credit facility matures on February 29, 2016 and the overdraft credit facility matured on January 20, 2016. The facilities are subordinated to the Ambatovy Joint Venture financing. As at December 31, 2015, MGA 140 billion ($60.6 million) and nil were drawn on the revolving and overdraft credit facilities, respectively (December 31, 2014 - MGA 100 billion ($44.7 million) and MGA nil, respectively).

(5) The subordinated loan payable is comprised of pro-rata contributions provided by the Ambatovy Joint Venture partners. The debt bears interest at LIBOR plus 6%. Repayments of principal or interest will not be made prior to certain conditions of the finance agreements being satisfied. Unpaid interest is accrued monthly and capitalized to the principal balance semi-annually. In December 2015, US$1.5 billion of the Ambatovy Joint Venture Subordinated loan payable was converted to equity which, at the Corporation’s 40% share, resulted in a US$618.0 million ($840.0 million) decrease in the Corporation’s subordinated loans receivable. The Corporation has recorded its share of the related subordinated loan receivable within advances, loans receivable and other financial assets (note 17). There was no change to the Corporation’s ownership interest as a result of the conversion.

(6) The Ambatovy Joint Venture wrote its major spare parts and operating material down to its net realizable value as at December 31, 2015. This resulted in the recognition of an inventory write-down of $98.4 million in the fourth quarter of 2015.

Notes to the consolidated financial statements

Reconciliation of Ambatovy Joint Venture’s net assets to the carrying value of investment in an associate recognized in the consolidated statements of financial position:

	2015			2014
Canadian $ millions, as at	December 31			December 31

Net assets of Ambatovy Joint Venture	$	1,893.2		$	4,631.9
Proportion of Sherritt’s ownership interest	40		%	40		%
Total	757.3			1,852.8
Intercompany capitalized interest elimination(1)	—			(304.3		)
Carrying value of investment in an associate	$	757.3		$	1,548.5

(1) In December 2015, the Ambatovy Joint Venture wrote the carrying amount of its property, plant and equipment down to its recoverable amount. Included within the carrying amount of property, plant and equipment is capitalized intercompany interest, which the Corporation eliminates to reconcile the Ambatovy Joint Venture net assets to its investment in an associate. This elimination is no longer required as at December 31, 2015 as a result of the impairment.

Results of operations

Canadian $ millions, 100% basis, for the years ended December 31	2015			2014

Revenue(1)	$	830.0		$	729.5
Cost of sales(2)	(1,395.9		)	(1,060.6		)
Administrative expenses	(61.4		)	(64.8		)
Loss on impairment of property, plant and equipment	(3,044.1		)	—
Loss from operations	(3,671.4		)	(395.9		)
Financing income	0.2			0.1
Financing expense	(295.3		)	(246.5		)
Net financing expense	(295.1		)	(246.4		)
Loss before tax	(3,966.5		)	(642.3		)
Income tax (expense) recovery(3)	(48.3		)	54.1
Net loss and comprehensive loss for the year	$	(4,014.8	)	$	(588.2	)

(1) Commercial production, the point at which Ambatovy began to recognize operating revenues and costs for accounting purposes, commenced on February 1, 2014. The Ambatovy Joint Venture generated pre-commercial production revenue of $42.5 million ($17.0 million — 40% basis) for the month ended January 31, 2014.

(2) Included in cost of sales for the year ended December 31, 2015 is depreciation and amortization of $504.2 million ($381.5 for the year ended December 31, 2014). A $101.3 million inventory write-down has also been included in cost of sales for the year ended December 31, 2015, which includes the inventory write-down of $98.4 million recognized in the fourth quarter as part of the impairment.

(3) Included in income tax expense for the year ended December 31, 2015 is the $120.6 million write-down of the Ambatovy Joint Venture deferred tax asset.

Reconciliation of Ambatovy Joint Venture’s net loss and comprehensive loss to the share of loss of an associate recognized in the consolidated statements of comprehensive income (loss):

Canadian $ millions, for the years ended December 31	2015			2014

Net loss and comprehensive loss for the year of Ambatovy Joint Venture	$	(4,014.8	)	$	(588.2	)
Proportion of Sherritt’s ownership interest	40		%	40		%
Total	(1,605.9		)	(235.3		)
Intercompany interest expense elimination	43.7			29.9
Impairment of mineral rights, net of deferred tax	(314.5		)	—
Share of loss of an associate, net of tax, including impairment	$	(1,876.7	)	$	(205.4	)

8. JOINT ARRANGEMENTS

Investment in a joint venture

The Corporation indirectly holds a 50% interest in the Moa Joint Venture. The operations of the Moa Joint Venture are currently conducted among three companies. Moa Nickel S.A. owns and operates the mining and processing facilities located in Moa, Cuba; The Cobalt Refinery Company Inc. owns and operates the metals refinery located at Fort Saskatchewan; and International Cobalt Company Inc. acquires mixed-sulphides from Moa Nickel S.A. and third parties, contracts the refining of such purchased materials and then markets finished nickel and cobalt.

The following provides additional information relating to the Corporation’s investment in the Moa Joint Venture:

Statement of financial position

	2015		2014
Canadian $ millions, 100% basis, as at	December 31		December 31

Assets
Cash and cash equivalents	$	43.7	$	48.3
Income taxes receivable	—		3.7
Other current assets	11.8		2.8
Trade accounts receivable, net	72.2		107.7
Inventories	208.4		197.4
Other non-current assets	13.9		4.4
Property, plant and equipment	1,349.5		1,135.1
Deferred income taxes(1)	12.1		1.3
Total assets	1,711.6		1,500.7

Liabilities
Trade accounts payable and accrued liabilities	68.3		81.9
Other current financial liabilities	59.0		73.1
Other current liabilities	2.9		—
Loans and borrowings	43.9		13.7
Environmental rehabilitation provision	80.6		65.9
Other long-term financial liabilities	519.9		396.7
Deferred income taxes	27.6		23.4
Total liabilities	802.2		654.7
Net assets	$	909.4	$	846.0

(1) As at December 31, 2015, the Moa Joint Venture had taxable losses of $53.8 million (December 31, 2014 - nil) which may be carried forward and used to reduce future taxable income for the five years following the year in which the loss was incurred. The Moa Joint Venture has recognized a deferred income tax asset of $12.1 million on the full amount of the losses, since the realization of a tax benefit through future taxable profits is probable based on the Moa Joint Venture’s forecasted future earnings. The taxable losses are located in Cuba.

Reconciliation of Moa Joint Venture’s net assets to the carrying value of investment in a joint venture recognized in the consolidated statements of financial position:

	2015			2014
Canadian $ millions, as at	December 31			December 31

Net assets of Moa Joint Venture	$	909.4		$	846.0
Proportion of Sherritt’s ownership interest	50		%	50		%
Total	454.7			423.0
Intercompany capitalized interest elimination	(50.5		)	(42.9		)
Carrying value of investment in a joint venture	$	404.2		$	380.1

Results of operations

Canadian $ millions, 100% basis, for the years ended December 31	2015			2014

Revenue	$	709.5		$	777.9
Cost of sales(1)	(712.8		)	(698.8		)
Administrative expenses	(7.0		)	(12.2		)
(Loss) profit from operations	(10.3		)	66.9
Financing income	0.5			0.6
Financing expense	(41.4		)	(39.8		)
Net finance expense	(40.9		)	(39.2		)
(Loss) earnings before tax	(51.2		)	27.7
Income tax recovery (expense)(2)	8.7			(25.1		)
Net (loss) earnings and comprehensive (loss) income for the year	$	(42.5	)	$	2.6

(1) Included in cost of sales for the year ended December 31, 2015 is depreciation and amortization of $71.1 million (for the year ended December 31, 2014 - $57.4 million).

(2) Due to a new foreign investment law, statutory tax rates for Cuba have been reduced, resulting in tax rate reductions at the Moa Joint Venture (note 12).

Notes to the consolidated financial statements

Reconciliation of Moa Joint Venture’s net (loss) earnings and comprehensive (loss) income to the share of (loss) earnings of a joint venture recognized in the consolidated statements of comprehensive income (loss):

Canadian $ millions, for the years ended December 31	2015			2014

Net (loss) earnings and comprehensive (loss) income for the year of Moa Joint Venture	$	(42.5	)	$	2.6
Proportion of Sherritt’s ownership interest	50		%	50		%
Total	(21.3		)	1.3
Intercompany interest expense elimination	9.5			8.1
Share of (loss) earnings of a joint venture, net of tax	$	(11.8	)	$	9.4

For the year ended December 31, 2015, the Moa Joint Venture (50% basis) paid $12.5 million of dividends (nil for the year ended December 31, 2014).

Joint operations

The following is a summary of the Corporation’s economic interests in joint operations, all of which have a December 31 reporting date:

		2015		2014
As at		December 31		December 31
Entity	Principal activities	Economic Interest

Energas	Power generation	331/3	%	331/3	%

The Corporation recognizes all applicable assets, liabilities, revenues and expenses relating to its interest in the above noted joint operations in accordance with IFRS.

The following tables present a summary of the Corporation’s interests in its joint operations:

	2015			2014
Canadian $ millions, as at December 31	Energas			Energas
	331/3		%	331/3		%

Current assets	$	25.6		$	27.7
Non-current assets	176.2			167.1
Current liabilities	21.4			14.1
Non-current liabilities	79.8			112.7
Net assets	$	100.6		$	68.0

	2015			2014
Canadian $ millions, for the years ended December 31	Energas			Energas
	331/3		%	331/3		%

Revenue	$	52.2		$	48.7
Expense	(28.8		)	(35.0		)
Net earnings	$	23.4		$	13.7

Government grants

For the year ended December 31, 2015, the Corporation recognized government grants relating to Energas re-investment credits of $0.2 million ($1.4 million for the year ended December 31, 2014). Re-investment credits are earned as a result of providing financing for construction projects approved by the Cuban government. Receipt of these credits is contingent on Energas generating taxable income, and therefore re-investment credits are included in income only as Energas accrues income tax.

9. GAIN ON ARBITRATION SETTLEMENT

On August 1, 2014, the Corporation received a favourable arbitration settlement ruling related to a contract dispute with a port operator that arose during the time the Corporation operated Coal Valley Resources Inc. As a result of the decision, the Corporation recognized a gain on settlement of $14.1 million for the year ended December 31, 2014.

10. RESTRUCTURING EXPENSE

On October 28, 2014, the Corporation initiated a restructuring plan that resulted in a company-wide headcount reduction, excluding Ambatovy. In the fourth quarter of 2014, the Corporation recognized a restructuring charge of $7.5 million related to severance and other termination benefits for employees whose positions were terminated.

In 2015, the Corporation recognized $2.2 million in restructuring charges which have been presented in administrative expenses in the consolidated statements of comprehensive income (loss).

11. NET FINANCE EXPENSE

Canadian $ millions, for the years ended December 31	Note	2015			2014

Revaluation on financial instruments(1)	16	$	(17.7	)	$	(8.5	)
Interest income on cash, cash equivalents and short-term investments		2.7			6.3
Interest income on investments		—			1.4
Interest income on advances and loans receivable		90.5			68.5
Total financing income		75.5			67.7

Interest expense and accretion on loans and borrowings		149.9			166.2
Unrealized foreign exchange loss		44.4			15.0
Realized foreign exchange (gain) loss		(1.5		)	0.2
Premium on debenture redemption	21	—			33.6
Other finance charges		10.6			12.5
Accretion expense on environmental rehabilitation provisions	22,25	1.1			1.4
Total financing expense		204.5			228.9
Net finance expense		$	129.0		$	161.2

(1) Included in revaluation on financial instruments for the year ended December 31, 2015 is the Corporation’s realized loss on the extinguishment of the Ambatovy call option of $13.7 million which expired on September 30, 2015.

Included in interest income on advances and loans receivable in the consolidated statements of comprehensive income (loss) is interest on the Energas conditional sales agreement of $16.1 million for the year ended December 31, 2015 ($15.5 million for the year ended December 31, 2014). Additionally, included in interest received in the consolidated statements of cash flow is interest of $37.9 million for the year ended December 31, 2015 ($26.4 million for the year ended December 31, 2014). In the prior periods, these amounts were netted against interest expense and accretion on loans and borrowings and interest paid, respectively. For consistency of presentation with the current periods presented, the comparative amounts have been reclassified to interest income and interest received, respectively.

12. INCOME TAXES

Canadian $ millions, for the years ended December 31	2015			2014

Current income tax (recovery) expense
Current period	$	16.2		$	47.2
Tax rate changes	(27.2		)	—
	(11.0		)	47.2

Deferred income tax (recovery) expense
Origination and reversal of temporary differences	(55.9		)	(53.7		)
Reduction in tax rate	(13.5		)	(0.1		)
Non-recognition of tax assets	44.5			52.0
	(24.9		)	(1.8		)
Income tax (recovery) expense	$	(35.9	)	$	45.4

Notes to the consolidated financial statements

Tax rate changes

Cuba

In 2015, clarification was received from the Cuban government regarding the application of tax rate reductions in Cuba due to a new foreign investment law. As a result, the tax expense for the year ended December 31, 2015 includes a tax recovery of $40.7 million in Oil and Gas. In addition, for the year ended December 31, 2015 a tax recovery of $2.6 million (50% basis) was recognized at the Moa Joint Venture, the impact of which is included in the Corporation’s share of (loss) earnings of a joint venture. The new foreign investment law in Cuba resulted in the following rate changes:

	Prior		Revised
	Statutory		Statutory
Operation	Tax Rate		Tax Rate

Oil and Gas	30.0	%	22.5	%
Power	30.0	%	15.0	%
Metals - Moa Joint Venture	45.0	%	22.5	%

Alberta

In 2015, a 2% increase in Alberta’s corporate income tax rate was enacted. As a result, the tax expense at the Moa Joint Venture includes a non-cash adjustment of $1.0 million (50% basis) for the year ended December 31, 2015, reflecting a re-measurement of deferred tax liabilities. The impact of this adjustment is included in the Corporation’s share of (loss) earnings of a joint venture (note 8).

The following table reconciles income taxes calculated at a combined Canadian federal/provincial income tax rate with the income tax expense in the consolidated statements of comprehensive income (loss) for the years ended December 31:

Canadian $ millions, for the years ended December 31	2015			2014

Loss before tax from continuing operations	$	(2,107.6	)	$	(273.1	)
Add share of loss of equity accounted investments	1,888.5			196.0
Parent companies and subsidiaries loss before tax	(219.1		)	(77.1		)

Income tax recovery at the combined basic rate of 26.06% (2014 - 25.20%)	(57.1		)	(19.4		)
Increase (decrease) in taxes resulting from:
Difference between Canadian and foreign tax rates	(16.5		)	(13.6		)
Reduction in income tax rates	(40.7		)	(0.1		)
Non-deductible losses and write-downs	36.4			25.9
Non-recognition of tax assets	44.5			52.0
Other items	(2.5		)	0.6
	$	(35.9	)	$	45.4

Deferred tax assets (liabilities) relate to the following temporary differences and loss carry forwards:

Recognized

in other

Recognized

comp-

Opening

in net

rehensive

Closing

Canadian $ millions, for the year ended December 31, 2015

Balance

loss

income (loss)

Balance

Deferred tax assets

Environmental rehabilitation obligations

0.3

(0.3

)

—

Property, plant and equipment

16.4

(14.9

)

2.2

3.7

16.7

(15.2

)

2.2

3.7

Set off of deferred tax liabilities

(14.4

)

—

(3.7

)

Deferred tax assets

2.3

(15.2

)

2.2

—

Deferred tax liabilities

Property, plant and equipment

(44.3

)

33.1

(5.7

)

(16.9

)

Cuban tax contingency reserve

(22.0

)

4.8

(3.0

)

(20.2

)

Pension and other benefit plans and reserves

(3.7

)

2.2

(0.5

)

(2.0

)

(70.0

)

40.1

(9.2

)

(39.1

)

Set off of deferred tax assets

14.4

—

3.7

Deferred tax liabilities

(55.6

)

40.1

(9.2

)

(35.4

)

Net deferred tax (liabilities) assets

(53.3

)

24.9

(7.0

)

(35.4

)

Recovery recognized in continuing operations

24.9

							Recognized
							in other
				Recognized			comp-
	Opening			in net			rehensive			Closing
Canadian $ millions, for the year ended December 31, 2014	Balance			loss			income (loss)			Balance

Deferred tax assets
Environmental rehabilitation obligations	$	0.8		$	(0.5	)	$	—		$	0.3
Property, plant and equipment	12.0			3.5			0.9			16.4
	12.8			3.0			0.9			16.7
Set off of deferred tax liabilities	(9.1		)	—			—			(14.4		)
Deferred tax assets	$	3.7		$	3.0		$	0.9		$	2.3

Deferred tax liabilities
Property, plant and equipment	$	(35.9	)	$	(4.9	)	$	(3.5	)	$	(44.3	)
Cuban tax contingency reserve	(19.8		)	(0.5		)	(1.7		)	(22.0		)
Pension and other benefit plans and reserves	(5.1		)	1.8			(0.4		)	(3.7		)
	(60.8		)	(3.6		)	(5.6		)	(70.0		)
Set off of deferred tax assets	9.1			—			—			14.4
Deferred tax liabilities	(51.7		)	(3.6		)	(5.6		)	(55.6		)
Net deferred tax liabilities	$	(48.0	)	$	(0.6	)	$	(4.7	)	$	(53.3	)
Recovery recognized in discontinued operations				2.4
Recovery recognized in continuing operations				1.8

As at December 31, 2015, the Corporation had temporary differences of $838.2 million (December 31, 2014 - $878.3 million) associated with investments in subsidiaries, associated entities and interests in joint ventures for which no deferred tax liabilities have been recognized, as the Corporation is able to control the timing of the reversal of these temporary differences and it is not probable that these temporary differences will reverse in the foreseeable future.

Notes to the consolidated financial statements

As at December 31, 2015, the Corporation had non-capital losses of $439.2 million (December 31, 2014 - $350.0 million) and capital losses of $1,054.0 million (December 31, 2014 - $994.1 million) which may be used to reduce future taxable income. The Corporation has not recognized a deferred income tax asset on $439.2 million of non-capital losses, $1,054.0 million of capital losses and $165.3 million of other deductible temporary differences since the realization of any related tax benefit through future taxable profits is not probable. The capital losses have no expiry dates and the other deductible temporary differences do not expire under current tax legislation. The non-capital losses are located in Canada and expire as follows:

	Unrecognized
Canadian $ millions, for the year ended December 31, 2015	losses

Expiration Date
2026	$	0.1
2027	1.8
2028	2.2
2029	1.0
2030	4.1
2031	43.3
2032	67.5
2033	90.8
2034	112.0
2035	116.4
Total	$	439.2

13. DISCONTINUED OPERATIONS

On April 28, 2014, the Corporation completed the sale of its Coal operations, receiving $793.0 million in cash proceeds. In addition, a net post-closing adjustment of $21.4 million was received in June 2014.

For the years ended December 31, 2015 and 2014, (loss) earnings from Coal are reported in (loss) earnings from discontinued operations and cash used by Coal is reported in cash (used) provided by discontinued operations. For the year ended December 31, 2015, loss from discontinued operations relates to an increase in the obligations retained by the Corporation post-disposition (note 22).

The net (loss) earnings from Coal for the years ended December 31, 2015 and 2014 are as follows:

Canadian $ millions, for the years ended December 31	2015			2014

Revenue	$	—		$	242.8
Cost of sales	(5.0		)	(211.2		)
Administrative expenses	—			(7.2		)
(Loss) earnings from operations	(5.0		)	24.4
Financing income	—			4.8
Financing expense	—			(9.6		)
Net finance expense	—			(4.8		)
(Loss) earnings before tax	(5.0		)	19.6
Income tax expense	—			(4.1		)
Net (loss) earnings for the year	$	(5.0	)	$	15.5
Gain on disposal of Coal operations	—			13.0
(Loss) earnings from discontinued operations	$	(5.0	)	$	28.5

Gain on disposal of Coal operations

The gain on disposal of the Coal operations is calculated as:

	2014
Canadian $ millions, as at	December 31
Consideration received in cash	$	793.0
Post-closing adjustments	21.4
Total consideration received	$	814.4
Net assets disposed of	801.4
Gain on disposal	$	13.0

The major classes of assets and liabilities of the Coal segment are as follows:

	2015		2014
Canadian $ millions, as at	December 31		April 28
ASSETS
Current assets
Cash and cash equivalents	$	—	$	10.1
Advances, loans receivable and other financial assets	—		3.9
Finance lease receivable	—		15.6
Trade accounts receivable, net	—		58.2
Income taxes receivable	—		1.6
Inventories	—		148.3
Prepaid expenses	—		1.7
	—		239.4
Non-current assets
Advances, loans receivable and other financial assets	—		24.4
Other non-financial assets	—		2.0
Finance lease receivable	—		154.6
Property, plant and equipment	—		473.8
Intangible assets	—		417.2
	—		1,072.0
Assets of discontinued operations	$	—	$	1,311.4

LIABILITIES
Current liabilities
Trade accounts payable and accrued liabilities	$	—	$	79.4
Other financial liabilities	—		40.0
Other non-financial liabilities	—		0.1
Environmental rehabilitation provisions	—		19.4
	—		138.9
Non-current liabilities
Other financial liabilities	—		95.2
Other non-financial liabilities	—		0.6
Environmental rehabilitation provisions	—		152.9
Deferred income taxes	—		122.4
	—		371.1
Liabilities of discontinued operations	$	—	$	510.0
Net assets of discontinued operations	$	—	$	801.4

Notes to the consolidated financial statements

The following table provides details of the operating, investing and financing activities of the Coal operations for the years ended December 31, 2015 and 2014:

Canadian $ millions, for the years ended December 31	2015			2014

Operating activities
Net (loss) earnings from discontinued operations	$	(5.0	)	$	15.5
Add (deduct):
Finance costs (less accretion expense)	—			3.8
Income tax expense	—			4.1
Loss on settlement of environmental rehabilitation provisions	—			1.2
Change in provision	(6.3		)	(16.2		)
Net change in non-cash working capital	(4.7		)	3.2
Interest received	—			3.8
Interest paid	—			(6.3		)
Liabilities settled for environmental rehabilitation provisions	—			(4.2		)
Other operating items	—			13.7
Cash (used) provided by operating activities	(16.0		)	18.6

Investing activities
Property, plant and equipment expenditures	—			(14.2		)
Increase in advances, loans receivable and other financial assets	—			(0.6		)
Repayment of advances, loans receivable and other	—			1.2
financial assets
Net proceeds from sale of property, plant and equipment	—			0.1
Cash used by investing activities	—			(13.5		)

Financing activities
Repayment of other financial liabilities	—			(14.2		)
Increase in finance lease receivables	—			(1.0		)
Repayment of finance lease receivables	—			5.7
Cash used by financing activities	—			(9.5		)
Decrease in cash and cash equivalents	$	(16.0	)	$	(4.4	)

14. ASSETS HELD FOR SALE

Gain on sale of Corporate assets

On December 31, 2014, the Corporation completed the sale of certain corporate assets for $3.3 million. As those assets were fully amortized at the time of sale, the entire amount was recognized as a gain.

On May 29, 2015, the Corporation completed the sale of its corporate office in Toronto for $21.5 million. On the sale of the property, the Corporation recognized a gain of $19.1 million, which represents the difference between the proceeds, net of transaction costs of $0.3 million, and the net book value of $2.1 million.

Assets held for sale

During the second quarter of 2015, the Corporation approved the sale of the Technologies property located in Fort Saskatchewan. In classifying the land and building as held for sale, the Corporation is required to measure the assets at the lower of carrying amount and fair value less cost to sell. The expected purchase consideration was used as the basis for determining the fair value. In performing this assessment, the Corporation concluded that the fair value less cost to sell of the assets exceeded the carrying amount. As a result, no adjustment was required. The transaction is expected to be completed in 2016.

15. LOSS PER SHARE

The following table presents the calculation of basic and diluted (loss) earnings per common share:

Canadian $ millions, except share amounts in millions and per share amounts in dollars, for the years ended December 31	2015			2014

Net loss from continuing operations	$	(2,071.7	)	$	(318.5	)
(Loss) earnings from discontinued operations, net of tax	(5.0		)	28.5
Net loss - basic and diluted	$	(2,076.7	)	$	(290.0	)

Weighted-average number of common shares - basic and diluted(1)	293.7			297.0

Net loss from continuing operations per common share, basic and diluted	$	(7.05	)	$	(1.07	)

(Loss) earnings from discontinued operations per common share, basic and diluted	$	(0.02	)	$	0.10

Net loss per common share, basic and diluted	$	(7.07	)	$	(0.97	)

(1) The determination of the weighted-average number of common shares - diluted excludes 6.2 million shares related to stock options that were anti-dilutive for the year ended December 31, 2015 (5.5 million for the year ended December 31, 2014). There were nil shares related to the employee share purchase plan that were anti-dilutive for the year ended December 31, 2015 (0.3 million shares for the year ended December 31, 2014). There were nil shares related to the restricted stock plan that were anti-dilutive for the year ended December 31, 2015 (0.3 million shares for the year ended December 31, 2014).

16. FINANCIAL INSTRUMENTS

Cash, cash equivalents and short-term investments

Cash and cash equivalents consist of:

	2015		2014
Canadian $ millions, as at	December 31		December 31

Cash equivalents	$	118.9	$	112.8
Cash on hand and balances with banks	110.7		47.8
Restricted cash	1.0		1.0
	$	230.6	$	161.6

The Corporation’s cash balances are deposited with major financial institutions rated A- or higher by Standard and Poor’s except for institutions located in Madagascar (BB or higher) and with banks in Cuba that are not rated. The total cash held in Cuban bank deposit accounts was $3.8 million at December 31, 2015 (December 31, 2014 — $11.7 million).

As at December 31, 2015, $0.8 million of cash on the Corporation’s consolidated statements of financial position was held by Energas (December 31, 2014 — $7.5 million). These funds are for the use of the joint operation.

The Corporation’s cash equivalents consist of Government of Canada treasury bills and term deposits with a major financial institution with maturities of 90 days or less. As at December 31, 2015, the Corporation had $118.9 million in Government of Canada treasury bills and term deposits (December 31, 2014 - $112.8 million) included in cash and cash equivalents and $204.8 million in short-term investments (December 31, 2014 - $315.6 million).

Notes to the consolidated financial statements

Financial instrument hierarchy

		Hierarchy	2015		2014
Canadian $ millions, as at	Note	level	December 31		December 31

Recurring financial assets, measured at fair value through profit or loss:
Cash equivalents		1	$	118.9	$	112.8
Short-term investments		1	204.8		315.6
Restricted cash		1	1.0		1.0
Provisionally priced sales(1)		2	5.2		—
Ambatovy call option	17	3	—		15.5

(1) Revenue from provisionally priced sales is initially recorded at the estimated fair value of the consideration that is ultimately expected to be received based on forecast reference prices. At each reporting date all outstanding receivables originating from provisionally priced sales are marked to market based on a forecast of reference prices at that time. The adjustment to accounts receivable is recorded as an adjustment to sales revenue. Provisional pricing is only used in the pricing of nickel and cobalt sales for which reference prices are established in a freely traded and active market.

The following is a reconciliation of the beginning to ending balance for the Ambatovy call option included in Level 3:

		For the			For the
		year ended			year ended
		December 31			December 31
Canadian $ millions	Note	2015			2014

Balance, beginning of the year		$	15.5		$	22.1
Revaluation on financial instruments in net finance expense	11	(17.7		)	(8.5		)
Effect of movements in exchange rates		2.2			1.9
Balance, end of the year		$	—		$	15.5

Upon achieving financial completion on September 21, 2015, the Corporation’s Ambatovy call option became exercisable for a two-year period or until SNC-Lavalin exercised its put option. The Ambatovy call option relates to the right of the Corporation and Sumitomo Corporation to acquire SNC-Lavalin’s 5% equity interest in the Ambatovy Joint Venture. SNC-Lavalin’s put option relates to the right to divest of its 5% equity interest to the Corporation and Sumitomo Corporation. The Corporation had the right to decline such an offer. On September 30, 2015, SNC-Lavalin exercised its put option. The Corporation declined its option to acquire its share of SNC-Lavalin’s interest. As a result, the Ambatovy call option expired and the Corporation realized a loss of $13.7 million on the extinguishment of this financial instrument through net finance expense (note 11).

Fair values

Financial instruments with carrying amounts different from their fair values include the following(1):

			2015				2014
			December 31				December 31
		Hierarchy	Carrying		Fair		Carrying		Fair
Canadian $ millions, as at	Note	value	value		value		value		Value

Liabilities:
8.00% senior unsecured debentures due 2018	21	1	$	247.3	$	140.0	$	246.5	$	247.5
7.50% senior unsecured debentures due 2020	21	1	246.5		135.0		246.0		237.5
7.875% senior unsecured debentures due 2022	21	1	240.3		130.0		239.2		235.0
Ambatovy Joint Venture Additional Partner loans(2)	21	2	1,303.2		106.4		1,014.3		970.9
Ambatovy Joint Venture Partner loans(2)	21	2	134.6		20.1		111.0		93.5
Assets:
Ambatovy subordinated loans receivable(3)	17	2	1,187.2		1,308.7		1,489.9		1,294.2
Energas conditional sales agreement(3)	17	2	157.5		167.7		221.8		188.3
Moa Joint Venture loans receivable(3)	17	2	255.9		225.7		193.9		209.5

(1) The carrying values are net of financing costs. Fair values exclude financing costs and are based on market closing prices.

(2) The fair value for the Ambatovy Partner loans and Ambatovy Additional Partner loans is calculated by discounting future cash flows using rates that are based on market rates adjusted for the Corporation’s credit quality for instruments with similar maturity horizons.

(3) The fair value for the Ambatovy subordinated loans receivable, Energas conditional sales agreement and Moa Joint Venture loans receivable is calculated by discounting future cash flows using rates that are based on market rates adjusted for the Corporation’s credit quality.

As at December 31, 2015, the carrying amounts of cash and cash equivalents, short-term investments, trade accounts receivable, current portion of advances and loans receivable, current portion of other financial assets, current portion of loans and borrowings, current portion of other financial liabilities, trade accounts payable and accrued liabilities are at fair value or approximate fair value due to their immediate or short terms to maturity.

The fair values of non-current loans and borrowings and other financial liabilities approximate their carrying amount except as indicated in the above table. Due to the use of judgment and uncertainties in the determination of the estimated fair values, these values should not be interpreted as being realizable in the immediate term.

The Corporation’s 2022 notes include an option for the Corporation to redeem all or part of the notes outstanding prior to the expiration date at a determinable price. The fair value of the embedded derivative was insignificant at December 31, 2015.

As at December 31, 2015, the carrying amount of the lenders’ conversion option under the Ambatovy Joint Venture additional partner loan agreements is approximately equal to its fair value.

Trade accounts receivable, net

The Corporation’s trade accounts receivable are composed of the following:

		2015			2014
Canadian $ millions, as at	Note	December 31			December 31

Trade accounts receivable		$	186.6		$	196.4
Allowance for doubtful accounts		(11.8		)	(12.2		)
Accounts receivable from joint operations	27	0.7			0.1
Accounts receivable from joint venture	27	20.2			20.6
Accounts receivable from associate	27	33.8			37.5
Other		28.8			22.5
		$	258.3		$	264.9

Aging of receivables not impaired:

	2015		2014
Canadian $ millions, as at	December 31		December 31

Not past due	$	170.6	$	250.8
Past due no more than 30 days	26.9		5.1
Past due for more than 30 days but no more than 60 days	11.8		0.8
Past due for more than 60 days	49.0		8.2
	$	258.3	$	264.9

Payment terms for oil sales to an agency of the Cuban government are based on Gulf Coast No. 6 Fuel Oil (FO#6) reference prices. If the FO#6 price is greater than US$29.50, payment terms are 180 days from the date of invoice. If FO#6 price is between US$24.76 and US$29.50, payment terms are 150 days from the date of invoice. If FO#6 price is between US$20.01 and US$24.75, payment terms are 120 days from the date of invoice. If FO#6 price is less than US$20.00, payment terms are 90 days from the date of invoice.

Payment terms for electricity and by-product sales to Cuban state enterprises are 60 days from the date of invoice.

Notes to the consolidated financial statements

17. ADVANCES, LOANS RECEIVABLE AND OTHER FINANCIAL ASSETS

Advances, loans receivable and other financial assets

		2015			2014
Canadian $ millions, as at	Note	December 31			December 31

Advances and loans receivable
Ambatovy subordinated loans receivable(1)	27	$	1,187.2		$	1,489.9
Energas conditional sales agreement(1)	27	182.0			239.3
Moa Joint Venture loans receivable(1)	27	312.8			250.3
Other		1.2			3.0

Other financial assets
Ambatovy call option	16	—			15.5
		1,683.2			1,998.0
Current portion of advances, loans receivable and other financial assets		(82.7		)	(75.6		)
		$	1,600.5		$	1,922.4

(1) As at December 31, 2015, the non-current portions of the Ambatovy subordinated loans receivable, Energas conditional sales agreement and the Moa Joint Venture loans receivable are $1,187.2 million, $157.5 million and $255.9 million, respectively (December 31, 2014 — $1489.9 million, $221.8 million and $193.9 million, respectively).

Ambatovy subordinated loans receivable

A funding agreement was entered into by the Corporation with the Ambatovy Joint Venture to finance the development of the Ambatovy Project. The facility bears interest at six-month LIBOR plus 6%. Repayments of principal or interest will not be made prior to certain conditions of the Ambatovy Joint Venture senior debt finance agreements being satisfied. Unpaid interest is accrued monthly and capitalized to the principal balance semi-annually. For the year ended December 31, 2015, $135.7 million of loans were provided to the Ambatovy Joint Venture. In December 2015, US$1.5 billion of Ambatovy subordinated loans were converted to equity which, at the Corporation’s 40% share, resulted in a US$618.0 million ($840.0 million) decrease in Ambatovy subordinated loans receivable.

Energas conditional sales agreement

A conditional sales agreement was entered into by the Corporation with Energas to finance construction activity on specific power generating assets in Cuba. The agreement directs the Corporation to arrange for the performance of certain construction activity on behalf of Energas, and contains design specifications for each new construction phase. The Corporation retains title to the constructed assets until the loan is fully repaid. The facility bears interest at 8%. Income generated by the constructed assets will be used to repay the facilities. Until the loan is fully repaid, all of the income generated by these assets is paid to the Corporation. The amount of advances and loans receivable from Energas are presented net of the elimination of the 331/3% proportionately consolidated intercompany balances.

Moa Joint Venture loans receivable

The Moa Joint Venture loans receivable consists of two funding arrangements with certain Moa Joint Venture entities. The first is a funding agreement entered into by the Corporation in prior years to finance expansion. This loan receivable has a fixed interest rate of 6.5% and a balance outstanding as at December 31, 2015 of $255.9 million (December 31, 2014 - $207.4 million). In June 2015, the maturity date of this agreement was extended to December 31, 2026. Repayments are being made from available distributable cash flows from the Moa Joint Venture.

The second loan receivable is a working capital facility totaling $56.9 million as at December 31, 2015 (December 31, 2014 - $42.9 million). In September 2015, the terms of this facility were amended to extend the maturity date to November 2016 and increase the maximum credit available from $65.0 million to $90.0 million. The facility bears interest at prime plus 2.25% per annum or bankers’ acceptances plus 3.25%.

18. INVENTORIES

	2015		2014
Canadian $ millions, as at	December 31		December 31

Materials in process	$	—	$	0.1
Finished products	7.7		4.9
	7.7		5.0
Spare parts and operating materials	30.3		25.6
	$	38.0	$	30.6

For the year ended December 31, 2015, the cost of inventories included in cost of sales was $65.1 million ($67.2 million for the year ended December 31, 2014).

19. PROPERTY, PLANT AND EQUIPMENT

Canadian $ millions, for the year ended December 31

2015

Plant,

Oil and Gas

equipment

Note

properties

and land

Total

Cost

Balance, beginning of the year

1,303.6

649.9

1,953.5

Additions

32.1

42.1

74.2

Additions and changes in estimates to environmental rehabilitation provisions

6.7

(5.8

)

0.9

Disposals and derecognition

(1.3

)

(27.4

)

(28.7

)

Effect of movements in exchange rates and other

222.9

62.1

285.0

Reclassified to assets held for sale

—

(4.0

)

(4.0

)

Balance, end of the year

1,564.0

716.9

2,280.9

Depletion, depreciation and impairment losses

Balance, beginning of the year

1,227.5

303.9

1,531.4

Depletion and depreciation

59.8

38.5

98.3

Impairments

78.5

2.1

80.6

Disposals and derecognition

(1.3

)

(26.0

)

(27.3

)

Effect of movements in exchange rates and other

143.3

106.6

249.9

Reclassified to assets held for sale

—

(3.1

)

(3.1

)

Balance, end of the year

1,507.8

422.0

1,929.8

Net book value

56.2

294.9

351.1

Notes to the consolidated financial statements

Canadian $ millions, for the year ended December 31							2014
				Plant,
		Oil and Gas		equipment
	Note	properties		and land			Total

Cost
Balance, beginning of the year		$	1,176.0	$	581.9		$	1,757.9
Additions		42.2		41.1			83.3
Additions and changes in estimates to environmental rehabilitation provisions		6.3		12.4			18.7
Disposals and derecognition		—		(2.0		)	(2.0		)
Effect of movements in exchange rates and other		79.1		25.8			104.9
Reclassified to assets held for sale	14	—		(9.3		)	(9.3		)
Balance, end of the year		$	1,303.6	$	649.9		$	1,953.5

Depletion, depreciation and impairment losses
Balance, beginning of the year		$	1,091.6	$	273.5		$	1,365.1
Depletion and depreciation		59.8		23.6			83.4
Impairments		—		2.1			2.1
Disposals and derecognition		—		(1.2		)	(1.2		)
Effect of movements in exchange rates and other		76.1		13.1			89.2
Reclassified to assets held for sale	14	—		(7.2		)	(7.2		)
Balance, end of the year		$	1,227.5	$	303.9		$	1,531.4
Net book value		$	76.1	$	346.0		$	422.1

		Plant,
		equipment
Canadian $ millions		and land

Assets under construction, included in above

As at December 31, 2015		18.3
As at December 31, 2014		17.5

Impairment of Oil assets

In the third quarter of 2015, the Corporation recognized an impairment loss of $80.6 million representing the write-down of certain Oil assets in the Oil and Gas segment to their recoverable amount as a result of lower oil price forecasts and drilling results from development wells at the Puerto Escondido/Yumuri extension that were below expectations. This impairment was recognized in the consolidated statements of comprehensive income (loss) as Impairment of Oil assets. The Corporation has four cash-generating units (“CGUs”) within its Oil and Gas segment. These CGUs are determined by geographical area or production-sharing contract (“PSC”). The impaired CGUs consisted of Puerto Escondido/Yumuri, Puerto Escondido/Yumuri extension and Spain. The recoverable amounts of the impaired CGUs were based on value in use and were $54.4 million as at September 30, 2015. In determining value in use for the CGU, the cash flows were discounted at a rate of 10%. The drilling results used in the value in use were derived from internal estimates.

In the fourth quarter of 2015, an independent qualified reserve analysis was received. Based on the Corporation’s review of this report, no additional impairment was recognized.

20. INTANGIBLE ASSETS

Canadian $ millions, for the year ended December 31

2015

Service

Contractual

Exploration

concession

arrange-

and

arrange-

ments

Evaluation

ments

Other

Total

Cost

Balance, beginning of the year

27.0

12.3

198.5

9.1

246.9

Additions through internal development

—

1.4

—

1.4

Disposals

—

Effects of movements in exchange rates

—

0.1

37.0

—

37.1

Balance, end of the year

27.0

13.8

235.5

9.1

285.4

Amortization and impairment losses

Balance, beginning of the year

21.2

12.3

57.1

6.9

97.5

Amortization

1.8

—

18.7

0.2

20.7

Disposals

—

Impairments

—

Effect of movements in exchange rates

—

12.4

—

12.4

Balance, end of the year

23.0

12.3

88.2

7.1

130.6

Net book value

4.0

1.5

147.3

2.0

154.8

Canadian $ millions, for the year ended December 31											2014
							Service
		Contractual		Exploration			concession
		arrange-		and			arrange-
	Note	ments		Evaluation			ments		Other		Total

Cost
Balance, beginning of the year		$	27.0	$	11.9		$	179.5	$	9.1	$	227.5
Additions through internal development		—		0.5			2.8		—		3.3
Disposals		—		—			—		—		—
Effect of movements in exchange rates		—		(0.1		)	16.2		—		16.1
Balance, end of the year		$	27.0	$	12.3		$	198.5	$	9.1	$	246.9

Amortization and impairment losses
Balance, beginning of the year		$	19.4	$	—		$	38.4	$	6.0	$	63.8
Amortization		1.8		—			14.8		0.9		17.5
Disposals		—		—			—		—		—
Impairments	6	—		12.3			—		—		12.3
Effect of movements in exchange rates		—		—			3.9		—		3.9
Balance, end of the year		$	21.2	$	12.3		$	57.1	$	6.9	$	97.5
Net book value		$	5.8	$	—		$	141.4	$	2.2	$	149.4

Notes to the consolidated financial statements

Contractual arrangements

In 2003, in connection with the acquisition of outside interests in Sherritt Power Corporation, the Corporation acquired significant long-term contractual arrangements.

Exploration and evaluation

For the year ended December 31, 2014, the Corporation recognized an impairment of $12.3 million related to Oil and Gas exploration assets in the North Sea and Alboran Sea.

Service concession arrangements

Construction at the Energas Boca de Jaruco facility was completed in February 2014. Construction revenues and expenses relating to the construction activity for the year ended December 31, 2015 is nil (December 31, 2014 - $2.1 million). Expenses incurred in relation to the construction activity are included in cost of sales on the consolidated statements of comprehensive income (loss). The amount of interest expense capitalized was nil as at December 31, 2015 (December 31, 2014 — $0.7 million at a weighted-average capitalization rate of 8.0%).

Other

In 2007, the Corporation acquired scientific and technical knowledge related primarily to hydrometallurgical technologies for the treatment and recovery of non-ferrous metals.

21. LOANS AND BORROWINGS

Loans and borrowings

		2015			2014
Canadian $ millions, as at	Note	December 31			December 31

Long-term loans
8.00% senior unsecured debentures due 2018	16	$	247.3		$	246.5
7.50% senior unsecured debentures due 2020	16	246.5			246.0
7.875% senior unsecured debentures due 2022	16	240.3			239.2
Ambatovy Joint Venture Additional Partner loans	16	1,303.2			1,014.3
Ambatovy Joint Venture Partner loans	16	134.6			111.0
Syndicated revolving-term credit facility		55.0			—
Line of credit		35.0			—
Vendor financing		1.2			2.9
		2,263.1			1,859.9
Current portion of loans and borrowings		(91.2		)	(1.6		)
		$	2,171.9		$	1,858.3

Senior unsecured debentures

On October 10, 2014 the Corporation completed the purchase of $150.0 million of 8.00% Senior Unsecured Debentures due November 15, 2018 (2018 Debentures) and $250.0 million of 7.50% Senior Unsecured Debentures due September 24, 2020 (2020 Debentures) related to the previously announced offers of solicitation. Net of deferred financing costs, the Corporation’s outstanding 2018 Debentures decreased by $147.8 million and the outstanding 2020 Debentures decreased by $245.8 million. The tender of the 2018 Debentures and 2020 Debentures and the receipt of consents required the Corporation to pay tender, consent and dealer fees of $19.0 million plus accrued interest to the date of repurchase of $5.6 million in October 2014.

Additionally, on October 10, 2014, the Corporation completed an issuance of $250.0 million of 7.875% Senior Unsecured Notes due in 2022. The net proceeds of approximately $239.0 million (after the deduction of expenses and discounts) were used with cash on hand to fund the repurchase and redemption of the Corporation’s outstanding 7.75% Senior Unsecured Debentures due October 15, 2015 (2015 Debentures). In connection with the repurchase and redemption of the 2015 Debentures, the Corporation was required to pay an early redemption premium on the principal amount of $14.6 million plus accrued interest of $1.5 million.

During the third quarter of 2014, the Corporation received consent to amend the Corporation’s indentures. Under the new indenture agreement the Corporation is subject to certain covenants, including financial covenants which, if exceeded, limit or prohibit the incurrence of indebtedness and the ability to make certain distributions. The financial covenants are as follows; earnings before interest, taxes, depreciation and amortization (EBITDA)-to-interest expense ratio of no less than 2:1 and total indebtedness-to-EBITDA ratio not to exceed 3:1. The amendments were adopted for all outstanding debentures of the Corporation on October 10, 2014.

The 8.00% senior unsecured debentures, due 2018, are net of financing costs of $2.7 million at December 31, 2015 (December 31, 2014 - $3.5 million).

The 7.50% senior unsecured debentures, due 2020, are net of financing costs of $3.5 million at December 31, 2015 (December 31, 2014 - $4.0 million).

The 7.875% senior unsecured debentures, due 2022, are net of financing costs of $9.7 million at December 31, 2015 (December 31, 2014 - $10.8 million).

Ambatovy Joint Venture additional partner loans

Sherritt has arrangements with its Ambatovy Joint Venture partners, Sumitomo and Kores, for a mechanism through which the joint venture partners would finance the Corporation’s pro-rata share of shareholder funding requirements for the Ambatovy Joint Venture up to US$600.9 million plus accrued interest.

These loans, which are fully drawn, are non-recourse to the Corporation except in circumstances where there is a direct breach by the Corporation of restrictions in the loan documents, which limit the activities of certain subsidiaries and the use of proceeds from the loans to the development of the Ambatovy mine.

Interest and principal on these loans will be repaid solely through the Corporation’s share of the distributions from the Ambatovy Joint Venture. However, the Corporation has the right to prepay some or all of the loans at its option. Until the Ambatovy Joint Venture additional partner loans and the Ambatovy Joint Venture partner loans, as described below, are fully repaid, 45% of the Corporation’s share of distributions will be applied to repay the Ambatovy Joint Venture additional partner loans, 25% will be applied to repay the Ambatovy Joint Venture partner loans and the remaining 30% will be payable to the Corporation. When one loan has been repaid in full, 70% of such distributions will be applied to repay the loan that remains outstanding and the Corporation will receive the balance of the distributions until such time as both loans have been repaid in full and the Corporation will be entitled to receive all of its distributions.

Each lender individually has the right to exchange some or all of its Ambatovy Joint Venture additional partner loan for up to a maximum 15% equity interest, in aggregate, at any time. Exercise of these rights in full would reduce Sherritt’s interest in the Ambatovy Joint Venture to 25%. This right is subject to senior project lender consent and Sherritt’s right to repay such loans and avoid the reduction in its equity interest.

The lenders’ conversion option incorporated in these loan agreements is an embedded derivative. The lenders’ conversion option has been bifurcated from the loan and ascribed a nominal value. These loans carry interest at a rate of six-month LIBOR plus 7.0% per annum.

The principal amount outstanding under this facility at December 31, 2015 was $1,303.2 million, including accrued interest (December 31, 2014 - $1,014.3 million). This amount is net of financing costs of $2.2 million at December 31, 2015 (December 31, 2014 - $2.5 million).

Ambatovy Joint Venture partner loans

In 2008, the Ambatovy Joint Venture partners finalized agreements to provide Sherritt with loans of up to US$236.0 million to be used to fund Sherritt’s contributions for the project. The loans are provided at an interest rate based on a six-month LIBOR plus 1.125% with a 15-year term. Should Ambatovy distributions be insufficient to repay the loans in full, the Corporation will have the option to repay any outstanding balance in either cash or its common shares.

As a condition for providing funding under the Ambatovy Joint Venture additional partner loan agreements (described above), the Corporation was required to repay from the proceeds of these loans US$50.0 million of the existing Ambatovy Joint Venture partner loans such that the principal amount of the original loans is US$85.4 million. The principal amount outstanding under this facility at December 31, 2015 was $134.6 million, including accrued interest (December 31, 2014 - $111.0 million). This amount is net of financing costs of $0.5 million at December 31, 2015 (December 31, 2014 - $0.6 million). The advances continue to bear interest at a rate of LIBOR plus 1.125%. The Corporation’s ability to draw additional amounts on the facility expired on August 22, 2014.

Notes to the consolidated financial statements

Syndicated revolving-term credit facility

In September 2015, the Corporation amended the terms of the syndicated revolving-term credit facility to extend the maturity date to November 30, 2016 and increase the maximum credit available from $90.0 to $115.0 million. The total available draw is based on eligible receivables and inventory. The interest rate on the facility remains unchanged at prime plus 2.25% per annum or bankers’ acceptances plus 3.25%. The facility is subject to the following financial covenants: net financial debt-to-EBITDA covenant of 3.75:1, financial debt-to-equity covenant of 0.55:1 and EBITDA-to-interest expense covenant of not less than 3:1. As at December 31, 2015, the Corporation had $47.5 million of letters of credit outstanding on this facility (December 31, 2014 - $56.6 million). As at December 31, 2015, $55.0 million has been drawn on this facility (December 31, 2014 - nil).

Line of credit

In September 2015, the Corporation amended the terms of the line of credit to extend the maturity date to November 30, 2016 and increase the maximum credit available from $20.0 to $35.0 million. The interest rate on the facility increased from prime plus 2.25% or bankers’ acceptance plus 3.25% per annum to prime plus 2.75% or bankers’ acceptances plus 3.75% per annum. This facility is subject to the same financial covenants as the syndicated revolving-term credit facility. As at December 31, 2015, $35.0 million was drawn on this line of credit (December 31, 2014 - nil).

Interest and accretion

Interest and accretion expense on loans and borrowings was $149.9 million for the year ended December 31, 2015 ($150.7 million for the year ended December 31, 2014).

Interest has been capitalized at the rate of interest applicable to the specific borrowings financing the assets under construction, exploration and evaluation efforts and the service concession agreement. Where these assets have been financed through general borrowings, interest has been capitalized at a rate representing the average interest rate on such borrowings. The amount of interest expense capitalized was nil for the year ended December 31, 2015 (December 31, 2014 — $0.7 million at a weighted-average capitalization rate of 8.0%).

Covenants

As at December 31, 2015, the Corporation exceeded the financial debt to equity covenant of the Syndicated revolving-term credit facility and line of credit as a result of impairment charges recognized on the assets of the Ambatovy Joint Venture. Exceeding this covenant gives the lender the option to accelerate the repayment terms of this facility. Subsequent to year end, the Corporation received a waiver for this covenant on the Syndicated revolving-term credit facility as at December 31, 2015. In addition, a waiver was also received for this covenant on the line of credit. This waiver is temporary while discussions are ongoing with the line of credit lender.

22. PROVISIONS, CONTINGENCIES AND GUARANTEES

	2015			2014
Canadian $ millions, as at	December 31			December 31

Environmental rehabilitation provisions	$	107.8		$	101.7
Other provisions	18.8			25.1
	126.6			126.8
Current portion of provisions	(18.8		)	(18.0		)
	$	107.8		$	108.8

Environmental rehabilitation provisions

Provisions for environmental rehabilitation obligations are recognized in respect of Oil and Gas, Power and mining operations and include associated infrastructure and buildings, such as oil and gas production facilities, refinery, fertilizer and utilities facilities. The obligations normally take place at the end of the asset’s useful life.

The following is a reconciliation of the environmental rehabilitation provisions:

Canadian $ millions, for the years ended December 31	Note	2015			2014

Balance, beginning of the year		$	101.7		$	83.6
Additions		0.2			0.3
Change in estimates		0.7			18.3
Utilized during the year		(0.1		)	—
Accretion	11	1.1			1.4
Effect of movement in exchange rates		4.2			(1.9		)
Balance, end of the year		$	107.8		$	101.7

The 2015 change in estimates is primarily the result of discount rates increasing by approximately 0.3% during the year due to higher government bond yields and updates on remediation estimates.

The Corporation has estimated that it will require approximately $141.9 million in undiscounted cash flows to settle these obligations. The payments are expected to be funded by cash generated from operations. Discount rates from 1.78% to 10.12% were applied to expected future cash flows to determine the carrying value of the environmental rehabilitation provision.

Other provisions

The following is a reconciliation of other provisions:

Canadian $ millions, for the years ended December 31	2015			2014

Balance, beginning of the year	$	25.1		$	41.3
Additions	5.0			—
Change in estimates	—			9.7
Utilized during the year	(11.3		)	(25.9		)
Balance, end of the year	$	18.8		$	25.1

On October 31, 2013 a breach of an onsite water containment pond occurred at the Coal operations’ Obed Mountain mine near Hinton, Alberta. The release consisted of 670,000 cubic metres of process water, containing water mixed with clay, mud, slate and coal particles. The Corporation continues to be subject to financial obligations relating to the Obed breach subsequent to the sale of the Coal operations (note 13). Other provisions includes additions of $5.0 million during the year ended December 31, 2015 for financial obligations relating to the Obed breach reflecting management’s best estimate of penalties arising from regulatory charges, including the provincial charges laid in October 2015 by the Alberta Crown Prosecutor.

As the Obed breach occurred within the Coal operations, the $5.0 million change in estimate recognized in the current year has been included within discontinued operations (note 13).

Contingencies

A number of the Corporation’s subsidiaries and affiliates have operations located in Cuba. The Corporation will continue to be affected by the difficult political relationship between the United States and Cuba. The Corporation has received letters from U.S. citizens claiming ownership of certain Cuban properties or rights in which the Corporation has an indirect interest, and explicitly or implicitly threatening litigation. Having regard to legal and other developments in the United States, and remedies available in Canada and in Europe, the Corporation believes that the impact of any claims against it will not be material.

In addition to the above matter, the Corporation and its subsidiaries are also subject to routine legal proceedings and tax audits. The Corporation does not believe that the outcome of any of these matters, individually or in aggregate, would have a material adverse effect on its consolidated net earnings, cash flow or financial position.

Notes to the consolidated financial statements

23. SHAREHOLDERS’ EQUITY

Normal Course Issuer Bid

On October 29, 2014, the Corporation received approval from the TSX to commence a normal course issuer bid (NCIB) to purchase for cancellation up to 14,875,944 common shares, representing approximately 5% of its issued and outstanding common shares until November 2, 2015. Based on the average daily trading volumes, daily purchases were limited to 300,404 common shares, other than block purchase exceptions.

For the year ended December 31, 2014, the Corporation purchased and cancelled 3,960,300 under the NCIB at an average cost of $2.52 per share, for an aggregate cost of $10.0 million. For the year ended December 31, 2015, the Corporation did not purchase or cancel any common shares under the NCIB. The Corporation’s NCIB expired on November 2, 2015 and was not renewed.

Capital Stock

The Corporation’s common shares have no par value and the authorized share capital is composed of an unlimited number of common shares. The changes in the Corporation’s outstanding common shares were as follows:

Canadian $ millions, except share amounts, for the years ended December 31		2015			2014
	Note	Number	Capital stock		Number		Capital stock

Balance, beginning of the year		293,271,191	$	2,772.9	296,939,426		$	2,808.5
Restricted stock plan (vested)	24	260,400	1.6		73,500		0.7
Employee share purchase plan (vested)	24	321,410	0.8		218,565		1.2
Share repurchase		—	—		(3,960,300	)	(37.5		)
Balance, end of the year		293,853,001	$	2,775.3	293,271,191		$	2,772.9

The following dividends were paid or were declared but unpaid:

For the

year ended

December 31

Canadian $ millions, except per share amounts

2015

2014

Per share

Total

Per share

Total

Dividends paid during the year

0.030

9.0

0.074

21.9

Dividends declared but unpaid

—

0.010

3.0

On September 17, 2015, the Corporation’s Board of Directors suspended its quarterly dividend of $0.01 per common share.

Reserves

Canadian $ millions, for the years ended December 31	Note	2015			2014
Stated capital reserve
Balance, beginning of the year		$	217.8		$	190.3
Share repurchase		—			27.5
Balance, end of the year		217.8			217.8

Stock-based compensation reserve(1)

Balance, beginning of the year		$	7.4		$	6.2
Restricted stock plan (vested)	24	(1.6		)	(0.7		)
Restricted stock plan expense	24	0.1			0.7
Employee share purchase plan (vested)	24	(0.1		)	(0.2		)
Employee share purchase plan expense	24	—			0.1
Stock option plan expense	24	1.3			1.3
Balance, end of the year		7.1			7.4
Total reserves, end of the year		$	224.9		$	225.2

(1) Stock-based compensation reserve relates to equity-settled compensation plans issued by the Corporation to its directors, officers and employees.

Accumulated other comprehensive income

Canadian $ millions, for the years ended December 31	Note	2015			2014
Foreign currency translation reserve
Balance, beginning of the year		$	323.8		$	63.0
Foreign currency translation differences on foreign operations		579.2			260.8
Balance, end of the year		903.0			323.8

Actuarial (losses) gains on defined benefit obligation
Balance, beginning of the year		$	(3.3	)	$	(1.0	)
Actuarial (losses) gains on defined benefit obligation, net of tax
Continuing operations		(0.2		)	(1.1		)
Discontinued operations		—			0.6
Reclassification due to settlement of pension obligation	13	—			(1.8		)
Balance, end of the year		$	(3.5	)	$	(3.3	)
Total accumulated other comprehensive income		$	899.5		$	320.5

Accumulated foreign currency translation reserve

Accumulated other comprehensive income includes a reserve pertaining to the accumulated foreign currency translation adjustment which relates to deferred exchange gains and losses arising from the translation of the financial statements of the Corporation’s foreign operations which have a foreign dollar functional currency.

Accumulated actuarial gains and losses on defined benefit obligations reserve

Accumulated other comprehensive income also includes a reserve relating to changes in defined benefit obligations and plan assets.

In 2014, the Corporation elected to reclassify actuarial losses, included in accumulated other comprehensive income (loss), to retained earnings upon settlement of a pension obligation triggered by the sale of its coal business.

Notes to the consolidated financial statements

24. STOCK-BASED COMPENSATION PLANS

Stock options and options with tandem stock appreciation rights

The Corporation maintains a stock option plan, pursuant to which securities of the Corporation may be issued as compensation. Eligible participants are those persons designated from time to time by the Human Resources Committee of the Board of Directors (the Committee) from among the executive officers and certain senior employees of the Corporation or its subsidiaries who occupy responsible managerial or professional positions and who have the capacity to contribute to the success of the Corporation.

Under the Corporation’s stock option plan, the Committee has the discretion to attach Tandem SARs to options, which entitles the holder to a cash payment of the difference between the option’s exercise price and the volume-weighted average trading price of a share on the Toronto Stock Exchange for the five trading days preceding the exercise date. Options with Tandem SARs have not been issued since March 2010.

The maximum number of stock options issuable is 17,500,000. The remaining number of options which may be issued under the stock option plan is 4,617,958 at December 31, 2015. Under the stock option plan, the exercise price of each option equals the volume-weighted average trading price over the five days prior to the date the option is granted. An option’s maximum term is 10 years. Options vest on such terms as the Committee determines, generally in three equal instalments on the annual anniversary date of the grant of the options. When options with or without Tandem SARs are exercised, the related options are cancelled and the shares underlying such options are cancelled and are no longer available for issuance under the stock option plan.

The following is a summary of stock option activity:

Canadian $, except number of options, for the years ended December 31	2015				2014
			Weighted-				Weighted-
			average				average
	Number of		exercise		Number of		exercise
	options		price		options		price

Outstanding, beginning of the year	5,518,752		$	7.52	4,868,249		$	8.70
Granted	2,075,600		2.07		1,233,200		3.02
Forfeited	(1,090,003	)	5.40		(582,697	)	7.85
Expired	(355,000	)	11.97		—		—
Outstanding, end of the year	6,149,349		$	5.80	5,518,752		$	7.52
Options exercisable, end of the year	3,497,447		$	8.22	3,604,288		$	9.46

The following table summarizes information on stock options outstanding and exercisable:

As at December 31

2015

Weighted-

Exercisable

average

Weighted-

weighted-

remaining

average

Number

contractual

exercise

Number

exercise

Range of exercise prices

outstanding

life (years)

price

exercisable

price

$2.11 - $5.05

2,836,800

8.8

2.49

379,032

3.09

$5.06 - $9.77

2,344,216

5.0

6.55

2,150,082

6.68

$9.78 - $11.64

283,333

0.2

10.46

283,333

10.46

$11.65 - $15.23

685,000

1.9

14.98

685,000

14.98

Total

6,149,349

6.2

5.80

3,497,447

8.22

As at December 31, 2015, 2,023,549 options with tandem SARs (December 31, 2014 — 2,575,552) and 4,125,800 options without tandem SARs (December 31, 2014 — 2,943,200) remained outstanding for which the Corporation has recognized a compensation expense of $0.8 million for the year ended December 31, 2015 (compensation expense of $0.5 million for the year ended December 31, 2014 of which a compensation recovery of $0.1 million is included in earnings from discontinued operations). The carrying amount of liabilities associated with cash-settled stock option compensation arrangements is nil as at December 31, 2015 (December 31, 2014 — $0.5 million).

Inputs for measurement of grant date fair values

The fair value at the grant date of the stock options was measured using Black-Scholes. The following summarizes the weighted average fair value measurement factors for options granted during the year:

Canadian $, except as noted, for the years ended December 31	2015			2014

Share price at grant date	$	2.07		$	3.04
Exercise price	$	2.07		$	3.02
Risk-free interest rates (based on 10-year Government of Canada bonds)	1.50		%	2.39		%
Expected volatility	51.78		%	49.10		%
Expected dividend yield	1.74		%	1.41		%
Expected life of options	10 years			10 years
Weighted-average fair value of options granted during the year	$	1.00		$	1.55

Expected volatility is estimated based on the average historical share price volatility for a period equal to the expected life of the option. The expected life of the option is estimated to equal its legal life at the time of grant. The expected dividend yield is determined by comparing the most recent dividend payment to the share price at grant date.

Other stock-based compensation

Restricted Share Units (RSUs)

Under the terms of the Executive Share Unit Plan, the RSUs are available to be granted to executives and employees. The RSUs represent a right to receive a cash amount payable by the Corporation to a participant at the end of the vesting period for RSUs determined by reference to the market price of the common shares multiplied by the number of RSUs held by the participant as adjusted for dividend equivalents credited. RSUs are issued subject to vesting conditions, including performance criteria, if any, which are set by the Committee. The RSUs vest at the sole discretion of the Committee. RSUs vest not later than the earlier of (a) the earlier of: (i) December 31 of the third calendar year following the calendar year in respect of which the RSUs were granted or (ii) the date set out in the RSU grant agreement; and (b) the date of death of a participant. The vesting date set out in the grant agreement is typically the third anniversary of the grant date. The Corporation shall redeem all of a participant’s vested RSUs on the vesting date and may, at the discretion of the Committee, redeem all or any part of a participant’s unvested RSUs prior to the vesting date.

Beginning in 2013, the Corporation began issuing performance based RSUs to certain employees, which vest at the end of three years. Under the plan, each unit awarded is equivalent to a common share. A liability is accrued related to the units awarded and a compensation expense is recognized in the consolidated statement of comprehensive income (loss) over the service period required for employees to become fully entitled to the award. At the maturity date, the participant receives cash representing the value of the units. The final number of units that vest will vary from 80% to 120% of the number of outstanding units on the vesting date (initial number awarded plus additional units for dividend equivalents) based on the Corporation’s total shareholder return relative to a benchmark index comprised of mining and oil and gas companies.

Deferred Share Units (DSUs)

Under the terms of the Non-executive Directors’ Deferred Share Unit Plan, the DSUs are available to be granted to non-executive directors. The DSUs represent a right to receive a cash amount payable by the Corporation to a participant following departure from the Board of Directors. The value payable is determined by reference to the market price of the common shares multiplied by the number of DSUs held by the participant as adjusted for dividend equivalents credited. DSUs vest on the later of (a) the grant date or (b) the date that any terms of vesting conditions attached to the DSUs are satisfied. DSUs generally vest on the grant date. DSUs are redeemed by the Corporation at the election of the participant by filing a notice of redemption not earlier than the participant’s termination date and not later than December 1st of the calendar year following the termination date.

Restricted Stock Plan (RSP)

The Corporation has a Restricted Stock Plan intended for senior executives, under which the Committee may grant restricted shares to employees of the Corporation. Under the terms of the plan, shares that are issued are subject to vesting conditions, which are set by the Committee for each grant of restricted stock. The shares granted under this plan are purchased on the open market by a trustee and held in each participant’s custodial account until the vesting conditions have been met, or the shares are forfeited. The participant owns the restricted shares but cannot dispose or otherwise transfer ownership of them until the restrictions and performance conditions, if any, specified by the Committee at the time of grant have been satisfied.

Notes to the consolidated financial statements

For accounting purposes, these shares are excluded from the number of outstanding common shares of the Corporation and reduce the capital stock of the Corporation. As the shares vest, the shares are included in the number of outstanding common shares of the Corporation and the capital stock of the Corporation is increased accordingly. The Corporation purchased nil common shares during the year ended December 31, 2015 (for the year ended December 31, 2014 the Corporation purchased nil common shares). These shares are excluded from the calculation of the weighted-average number of common shares used for the purposes of calculating basic earnings per share.

Employee Share Purchase Plan

The Employee Share Purchase Plan (Share Purchase Plan) was intended to allow eligible employees of the Corporation to purchase shares of the Corporation by means of automatic payroll deductions. Employees of the Corporation were typically eligible to participate in the Share Purchase Plan after one year of continuous service. Under the terms of the Share Purchase Plan, participating employees were able to purchase shares by electing to have an amount (up to 5% of their previous year’s earnings) withheld by payroll deduction over a two-year period (Purchase Period). The purchase price of the shares was the lower of the share price at the beginning of the two-year Purchase Period and the share price at the end of the Purchase Period. On June 30, 2015, this two-year Purchase Period ended and the Share Purchase Plan was closed.

The Corporation was authorized to issue up to 3,300,000 shares under the Share Purchase Plan. The Corporation issued 326,875 common shares to employees during the year ended December 31, 2015 (December 31, 2014 — 218,565) under the Share Purchase Plan for total consideration of $0.7 million (December 31, 2014 - $1.0 million) and has, since its inception in 1996, issued an aggregate of 2,701,480 common shares to employees.

A summary of the Share Purchase Plan units, RSUs, DSUs and RSP units outstanding as at December 31, 2015 and 2014 and changes during the year ended is as follows:

For the year ended December 31	2015
	Share
	Purchase Plan		RSU		DSU		RSP

Outstanding, beginning of the year	293,280		4,696,518		375,314		287,400
Issued	—		3,568,505		455,155		—
Dividends credited	—		87,802		6,267		—
Exercised	(326,875	)	—		—		—
Forfeited	(133,940	)	(445,577	)	—		—
Adjusted on settlement	167,535		—		—		—
Vested	—		(698,311	)	(98,037	)	(260,400	)
Outstanding, end of the year	—		7,208,937		738,699		27,000
Units exercisable, end of the year	n/a		n/a		738,699		n/a

For the year ended December 31	2014
	Share
	Purchase Plan		RSU		DSU		RSP

Outstanding, beginning of the year	774,560		2,838,197		422,961		360,900
Issued	58,595		2,534,277		189,040		—
Dividends credited	—		73,886		9,235		—
Exercised	(218,565	)	—		—		—
Forfeited	(355,590	)	(43,612	)	—		—
Adjusted on settlement	34,280		—		—		—
Vested	—		(706,230	)	(245,922	)	(73,500	)
Outstanding, end of the year	293,280		4,696,518		375,314		287,400
Units exercisable, end of the year	n/a		n/a		375,314		n/a

For other stock-based compensation plans the Corporation recorded a compensation recovery of $1.8 million for the year ended December 31, 2015 (compensation expense of $4.0 million for the year ended December 31, 2014 of which $0.6 million is included in loss from discontinued operations). The carrying amount of liabilities associated with cash-settled compensation arrangements is $3.1 million as at December 31, 2015 (December 31, 2014 - $6.3 million).

Measurement of fair values at grant date

The fair value of the RSUs, DSUs and RSPs are determined by reference to the market value and performance conditions, as applicable, of the shares at the time of grant.

The number of units subject to the RSU performance conditions outstanding at December 31, 2015 was 7,132,981 (December 31, 2014 — 3,924,456).

The following summarizes the grant date fair values for the Share Purchase Plan, RSU and DSU units granted:

Canadian $, for the years ended December 31	2015		2014

Share Purchase Plan	$	—	$	3.31
RSU	2.05		3.04
DSU	1.70		3.70

The intrinsic value of cash-settled stock-based compensation awards vested and outstanding as at December 31, 2015 was $3.1 million (December 31, 2014 - $7.0 million).

Employee share ownership plan

The Corporation offers an employee share ownership plan (ESOP) for eligible employees. Under the ESOP, contributions by the Corporation and eligible employees will be used by the plan administrator to make purchases of common shares of the Corporation on the open market. Each eligible employee may contribute up to 10% of the employee’s salary to the ESOP. The Corporation will match 50% of employee contributions to the plan, up to a maximum annual contribution. Employer contributions will be used by the plan administrator to purchase additional common shares in the Corporation. These additional shares cannot be sold or withdrawn until the employee has participated in the plan for a continuous 24 month period. Shareholder approval is not required for this plan or any amendments to this plan.

The Corporation accounts for its contributions as compensation and benefits expense when the amounts are contributed to the plan. Compensation and benefits expense related to this plan was $0.6 million for the year ended December 31, 2015 ($0.2 million for the year ended December 31, 2014).

25. CASH FLOWS

Other operating items

Canadian $ millions, for the years ended December 31	Note	2015			2014

Add (deduct) non-cash items:
Accretion expense on environmental rehabilitation provisions	11, 22	$	1.1		$	1.4
Stock-based compensation (recovery) expense, net	24	(1.0		)	4.0
Other items		12.3			11.8
Cash flow arising from changes in:
Other finance charges	11	(10.6		)	(12.5		)
Realized foreign exchange gain (loss)	11	1.5			(0.2		)
		$	3.3		$	4.5

Net change in non-cash working capital

Canadian $ millions, for the years ended December 31	2015			2014

Trade accounts receivable	$	38.1		$	7.8
Inventories	(3.6		)	6.0
Prepaid expenses	(7.5		)	(7.4		)
Trade accounts payable and accrued liabilities	(55.3		)	38.5
Deferred revenue	7.2			(10.7		)
	$	(21.1	)	$	34.2

Notes to the consolidated financial statements

26. FINANCIAL RISK AND CAPITAL RISK MANAGEMENT

Risk management policies and hedging activities

The Corporation is sensitive to changes in commodity prices, foreign exchange and interest rates. The Corporation’s Board of Directors has overall responsibility for the establishment and oversight of the Corporation’s risk management framework. Although the Corporation has the ability to address its price-related exposures through the use of options, futures and forward contracts, it does not generally enter into such arrangements. The Corporation reduces the business-cycle risks inherent in its commodity operations through industry diversification.

Credit risk

Cuba

The Corporation has credit risk exposure related to its share of cash, accounts receivable, advances and loans receivable and certificates of deposit associated with its businesses located in Cuba or businesses which have Cuban joint venture partners as follows:

	2015		2014
Canadian $ millions, as at	December 31		December 31

Cash	$	9.8	$	19.0
Trade accounts receivable, net	155.8		140.7
Advances and loans receivable	585.7		609.3
Total	$	751.3	$	769.0

The table above reflects the Corporation’s maximum credit exposure to Cuban counterparties which may differ from balances in the consolidated results due to eliminations in accordance with accounting principles for subsidiaries and joint ventures.

Madagascar

The Corporation has credit risk exposure in Madagascar related to its share (40% basis) of net accounts receivable of $35.8 million associated with the Ambatovy Joint Venture including value added tax (VAT) receivables of $6.2 million from the government of Madagascar. The VAT receivable is net of a provision of $100.5 million (40% basis) reflecting the diminished likelihood of receipt of these amounts. As at December 31, 2015, total overdue VAT receivable (net of provision) for the Ambatovy Joint Venture amount to $5.5 million (40% basis).

Liquidity risk

Liquidity risk is the risk that the Corporation will not be able to meet its obligations associated with financial liabilities. Liquidity risk arises from the Corporation’s financial obligations and in the management of its assets, liabilities and capital structure. The Corporation manages this risk by regularly evaluating its liquid financial resources to fund current and long-term obligations and to meet its capital commitments in a cost-effective manner.

The main factors that affect liquidity include realized sales prices, production levels, cash production costs, working capital requirements, capital-expenditure requirements, scheduled repayments of long-term loans and borrowing obligations, credit capacity and debt and equity capital market conditions.

The Corporation’s liquidity requirements are met through a variety of sources, including cash and cash equivalents, cash generated from operations, existing credit facilities, leases, and debt and equity capital markets.

At December 31, 2015, considering the Corporation’s financial position, the Corporation currently does not expect to access public debt and equity capital markets for financing over the next 12 months. However, the Corporation may access these markets.

Based on management’s assessment of its financial position and liquidity profile at December 31, 2015, the Corporation will be able to satisfy its current and long-term obligations as they come due.

The agreements establishing certain jointly controlled entities require the unanimous consent of shareholders to pay dividends. It is not expected that this restriction will have a material impact on the ability of the Corporation to meet its obligations.

Financial obligation maturity analysis

The Corporation’s significant contractual commitments, obligations, and interest and principal repayments in respect of its financial liabilities are presented in the following table:

Falling

due

due in

due within

between

more than

Canadian $ millions, as at December 31, 2015

Total

1 year

1-2 years

2-3 years

3-4 years

4-5 years

5 years

Trade accounts payable and accrued liabilities

73.6

—

Income taxes payable

2.4

—

Senior unsecured debentures

1,041.4

58.4

308.4

38.4

288.4

289.4

Ambatovy Joint Venture Additional Partner Loans (non-recourse)(1)

4,985.2

—

4,985.2

Ambatovy Joint Venture Partner Loans(1)

168.1

—

168.1

Other loans and borrowings

95.2

—

Provisions

160.7

19.1

4.2

4.4

—

0.4

132.6

Operating leases

20.0

2.9

3.0

5.2

Total

6,546.6

251.6

65.5

315.8

41.4

291.8

5,580.5

(1) Ambatovy Joint Venture Additional Partner loans and Partner loans are loans provided by the Ambatovy Joint Venture partners to finance Sherritt’s portion of the funding requirements of the Joint Venture, bearing interest of LIBOR plus a margin of 7.0% and 1.125%, respectively. These partner loans are to be repaid from the Corporation’s share of cash distributions from the Ambatovy Joint Venture (note 21). The amounts above are based on management’s best estimate of future cash flows including estimating assumptions such as commodity prices, production levels, cash costs of production, capital and reclamation costs. The Ambatovy Joint Venture Additional Partner loans are non-recourse to Sherritt unless there is a direct breach of certain restrictions stipulated in the loan documents. The maturity analysis table includes an estimate of interest repayments.

As a result of the Corporation’s 40% interest in the Ambatovy Joint Venture, its proportionate share of significant undiscounted commitments of the joint venture include accounts payable of $127.0 million, income taxable payable of $6.4 million, environmental rehabilitation commitments of $227.5 million, other contractual commitments of $29.5 million and senior debt financing of $1,066.8 million.

As a result of the Corporation’s 50% interest in the Moa Joint Venture, its proportionate share of significant undiscounted commitments of the joint venture include accounts payable of $34.2 million, income taxes payable of $1.5 million, advances and loans payable of $218.2 million, environmental rehabilitation commitments of $87.6 million and other commitments of $0.9 million.

Market risk

Market risk is the potential for financial loss from adverse changes in underlying market factors, including foreign exchange rates, commodity prices, interest rates and stock-based compensation costs.

Foreign exchange risk

Many of Sherritt’s businesses transact in currencies other than the Canadian dollar. The Corporation is sensitive to foreign exchange exposure when commitments are made to deliver products quoted in foreign currencies or when the contract currency is different from the product price currency. Derivative financial instruments are not used to reduce exposure to fluctuations in foreign exchange rates. The Corporation is also sensitive to foreign exchange risk arising from the translation of the financial statements of subsidiaries with a functional currency other than the Canadian dollar impacting other comprehensive income (loss).

Based on financial instrument balances as at December 31, 2015, a strengthening or weakening of $0.05 of the Canadian dollar to the U.S. dollar with all other variables held constant could have an unfavourable or favourable impact of approximately $43.1 million, respectively, on net loss.

Notes to the consolidated financial statements

Based on financial instrument balances as at December 31, 2015, a strengthening or weakening of $0.05 of the Canadian dollar to the U.S. dollar with all other variables held constant could have a favourable or unfavourable impact of approximately $41.9 million, respectively, on other comprehensive income.

Commodity price risk

The Corporation is exposed to fluctuations in certain commodity prices. Realized prices for finished products and for input commodities are the most significant factors affecting the Corporation’s revenue and earnings. Revenue, earnings and cash flows from the sale of nickel, cobalt and oil are sensitive to changes in market prices over which the Corporation has little or no control.

The Corporation has the ability to address its price-related exposures through the limited use of options and future and forward contracts, but generally does not enter into such arrangements. Sherritt reduces the business-cycle risks inherent in its commodity operations through industry diversification.

The Corporation has certain provisional pricing agreements in Metals. These provisionally priced transactions are periodically adjusted to actual as prices are confirmed as the settlement occurs within a short period of time. In periods of volatile price movements, adjustments may be material.

Interest rate risk

The Corporation is exposed to interest rate risk based on its outstanding loans and borrowings, and short-term and other investments. A change in interest rates could affect future cash flows or the fair value of financial instruments.

Based on the balance of short-term and long-term loans and borrowings, cash equivalents, short-term and long-term investments, and advances and loans receivable at December 31, 2015, excluding interest capitalized to project costs, a 1.0% decrease or increase in the market interest rate could decrease or increase the Corporation’s net earnings by approximately $3.5 million, respectively. The Corporation does not engage in hedging activities to mitigate its interest rate risk.

Stock-based compensation risk

The Corporation is exposed to a financial risk related to stock-based compensation costs.

Potential fluctuations in the price of Sherritt’s common shares would have an impact on the stock-based compensation expense. Based on balances at December 31, 2015, a strengthening or weakening of $0.50 in the price of the Corporation’s common shares would have had an unfavourable or favourable impact of approximately $2.1 million on annual net earnings, respectively.

Capital risk management

In the definition of capital, the Corporation includes, as disclosed in its consolidated financial statements and notes: capital stock, deficit and available credit facilities.

	2015			2014
Canadian $ millions, as at	December 31			December 31

Capital stock	$	2,775.3		$	2,772.9
Deficit	(2,342.6		)	(259.9		)
Available credit facilities	2.6			53.4

The Corporation’s objectives, when managing capital, are to maintain financial liquidity and flexibility in order to preserve its ability to meet financial obligations throughout the various resource cycles with sufficient capital and capacity to manage unforeseen operational and industry developments and to ensure the Corporation has the capital and capacity to allow for business growth opportunities and/or to support the growth of its existing businesses.

In order to maintain or adjust its capital structure, the Corporation may purchase shares for cancellation pursuant to normal course issuer bids, issue new shares, repay outstanding debt, issue new debt (secured, unsecured, convertible and/or other types of available debt instruments), refinance existing debt with different characteristics, acquire or dispose of assets or adjust the amount of cash and short-term investment balances.

Certain of the Corporation’s credit facilities, loans and debentures have financial tests and other covenants with which the Corporation and its affiliates must comply. Non-compliance with such covenants could result in accelerated repayment of the related debt or credit facilities and reclassification of the amounts to current liabilities. The Corporation monitors its covenants on an ongoing basis and reports on its compliance with the covenants to its lenders on a quarterly basis.

Refer to note 21 for the Corporation’s compliance with financial covenants as at December 31, 2015.

27. RELATED PARTY TRANSACTIONS

The Corporation and subsidiaries provide goods, labour, advisory and other administrative services to jointly controlled entities and an associate at fair value. The Corporation and its subsidiaries also market, pursuant to sales agreements, a portion of the nickel, cobalt and certain by-products produced by certain jointly controlled entities and an associate in the Metals business.

Balances and transactions between the Corporation and its subsidiaries, which are related parties of the Corporation, have been eliminated and are not disclosed in this note. A listing of the Corporation’s subsidiaries is included in note 2.2.

A description of the Corporation’s interests in an associate and its interest in jointly controlled entities are included in notes 7 and 8, respectively.

Canadian $ millions, for the years ended December 31	2015		2014

Total value of goods and services:
Provided to joint operations	$	33.2	$	20.2
Provided to joint venture	169.4		165.1
Provided to associate	2.9		2.2
Purchased from joint operations	—		1.0
Purchased from joint venture	141.0		192.0
Purchased from associate	53.8		58.5
Net financing income from joint operations	16.1		15.5
Net financing income from associate	65.6		45.5
Net financing income from joint venture	8.6		7.4

		2015		2014
Canadian $ millions, as at	Note	December 31		December 31

Accounts receivable from joint operations	16	$	0.7	$	0.1
Accounts receivable from joint venture	16	20.2		20.6
Accounts receivable from associate	16	33.8		37.5
Accounts payable to joint operations		0.2		0.1
Accounts payable to joint venture		5.2		34.2
Accounts payable to associate		0.5		2.5
Advances and loans receivable from associate	17	1,187.2		1,489.9
Advances and loans receivable from joint operations	17	182.0		239.3
Advances and loans receivable from joint venture	17	312.8		250.3

Transactions between related parties are generally based on standard commercial terms. All amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received on the outstanding amounts. No expense has been recognized in the current or prior periods for bad debts in respect of amounts owed by related parties.

Key management personnel

Key management personnel are composed of the Board of Directors, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Senior Vice Presidents of the Corporation. The following is a summary of key management personnel compensation:

Notes to the consolidated financial statements

Canadian $ millions, for the years ended December 31	2015		2014

Short-term benefits	$	7.5	$	7.8
Post-employment benefits(1)	1.8		1.4
Share-based payments	6.3		5.7
	$	15.6	$	14.9

(1) Post-employment benefits include a non-registered defined contribution executive supplemental pension plan. The total cash pension contribution for key management personnel was $0.4 million for the year ended December 31, 2015 ($0.8 million for the year ended December 31, 2014). The total pension expense that is attributable to key management personnel was $0.2 million for the year ended December 31, 2015 ($0.2 million for the year ended December 31, 2014).

28. OPERATING LEASE ARRANGEMENTS

Corporation acts as a lessor

The Corporation acts as a lessor in operating leases related to the Power facilities in Madagascar and in Varadero, Cuba. During 2013, the Corporation recorded an impairment related to its electricity generating facility located in Madagascar. Accordingly, the future minimum lease payments have been determined to be nil as at December 31, 2015 and as at December 31, 2014.

All operating lease payments related to the Varadero facility are contingent on power generation. The terms of the leases are for 20 years, ending in February 2017 and March 2018. For the year ended December 31, 2015, contingent revenue was $14.1 million ($13.1 million for the year ended December 31, 2014).

Corporation acts as a lessee

Operating lease payments recognized as an expense in the consolidated statement of comprehensive income (loss) for the year ended December 31, 2015 were $2.6 million ($2.0 million for the year ended December 31, 2014).

29. COMMITMENTS FOR EXPENDITURES

Canadian $ millions, as at December 31	2015

Property, plant and equipment commitments	$	11.5
Joint venture:
Property, plant and equipment commitments	9.8
Other commitments	0.3

Exhibit 2.4

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the year ended December 31, 2015

This Management’s Discussion and Analysis (MD&A) is intended to help the reader understand Sherritt International Corporation’s operations, financial performance and the present and future business environment. This MD&A, which has been prepared as of February 10, 2016, should be read in conjunction with Sherritt’s audited consolidated financial statements for the year ended December 31, 2015. Additional information related to the Corporation, including the Corporation’s Annual Information Form, is available on SEDAR at www.sedar.com or on the Corporation’s website at www.sherritt.com.

References to “Sherritt” or the “Corporation” refer to Sherritt International Corporation and its share of consolidated subsidiaries and joint ventures, unless the context indicates otherwise. All amounts are in Canadian dollars, unless otherwise indicated. References to “US$” are to United States dollars.

Securities regulators encourage companies to disclose forward-looking information to help investors understand a company’s future prospects. This discussion contains statements about Sherritt’s future financial condition, results of operations and business. See the end of this report for more information on forward-looking statements.

Overview of the business	2
Strategic Priorities	5
Highlights	7
Financial results	9
Consolidated financial position	14
Outlook	15
Significant factors influencing operations	17
Review of operations	19
Metals	19
Oil and Gas	25
Power	28
Liquidity and capital resources	30
Risk Factors	35
Critical accounting estimates and Judgments	51
Accounting pronouncements	55
Three-year trend analysis	57
Summary of quarterly results	58
Off-balance sheet arrangements	59
Transactions with related parties	59
Controls and procedures	60
Supplementary information	61
Sensitivity analysis	61
Oil and Gas production and sales volume	62
Non-GAAP measures	62
Forward-looking statements	71

Sherritt International Corporation

Overview of the business

Sherritt is a leader in the mining and refining of nickel and cobalt from lateritic ores with projects and operations in Canada, Cuba and Madagascar. The Corporation is also the largest independent energy producer in Cuba, with extensive oil and power operations on the island. Sherritt licenses its proprietary technologies and provides metallurgical services to mining and refining operations worldwide. The common shares of the Corporation are listed on the Toronto Stock Exchange, trading under the symbol “S”.

METALS

Sherritt is an industry leader in mining, processing and refining nickel and cobalt from lateritic ore bodies. Sherritt has a 50/50 partnership with General Nickel Company S.A. (GNC) of Cuba (the Moa Joint Venture) and a 40% interest in the Ambatovy Joint Venture that owns a significant nickel operation in Madagascar. In addition, Sherritt has wholly-owned fertilizer, sulphuric acid, utilities and storage facilities in Fort Saskatchewan, Alberta, Canada (Fort Site) that provide additional sources of income.

The Moa Joint Venture mines, processes and refines nickel and cobalt for sale worldwide (except in the United States). The Moa Joint Venture has mining operations and associated processing facilities in Moa, Cuba; and refining facilities in Fort Saskatchewan, Alberta. Continuous optimization of production facilities, combined with the implementation of innovative technologies at the Moa Joint Venture assists Metals in continuing to be one of the world’s lower-cost producers of nickel and cobalt from lateritic ore. Moa Joint Venture’s experienced and knowledgeable workforce and management team, combined with consistently high on-stream time and equipment reliability, have been the key to the safe and responsible utilization of production assets.

Ambatovy is one of the world’s largest nickel mining, processing and refining operations utilizing lateritic ore. Sherritt is the operator of the mine and refining facilities, and has as its partners Sumitomo Corporation and Korea Resources Corporation (collectively referred to as the Ambatovy Partners). Ambatovy has two nickel deposits located near Moramanga (eastern central Madagascar) which are planned to be mined over a 19-year period. Additionally, reclamation of low-grade ore stockpiles is expected to extend project life by nine years. The ore from these deposits is initially processed at the mine site and then delivered as slurry to the processing plant and refinery located near the Port of Toamasina. Ambatovy has an annual nameplate capacity of 60,000 tonnes (100% basis) of nickel and 5,600 tonnes (100% basis) of cobalt.

OIL AND GAS

Sherritt explores for and produces oil and gas, primarily from fields situated in Cuba. All of Sherritt’s oil sales in Cuba in 2015 were to an agency of the Government of Cuba. Under the terms of its production-sharing contracts, Sherritt’s net production is made up of an allocation from gross working-interest production (cost recovery oil) to allow recovery of all approved costs in addition to a negotiated percentage of the remaining production (profit oil). The pricing for oil produced by Sherritt in Cuba is based on a discount to Gulf Coast Fuel Oil Number 6 reference prices.

Sherritt has developed expertise in the exploration and development of fold-and-thrust geological plays along the north coast of Cuba. Reservoirs are located offshore, but in close proximity to the coastline. As a result, specialized long reach directional drilling methods have been developed to economically exploit the reserves from land-based drilling locations.

POWER

Sherritt’s primary power generating assets are located in Cuba at Varadero, Boca de Jaruco and Puerto Escondido. These assets are held by Sherritt through its one-third interest in Energas S.A. (Energas), which is a Cuban joint arrangement established to process raw natural gas and generate electricity for sale to the Cuban national electrical grid. Cuban government agencies Union Electrica (UNE) and Unión Cuba Petróleo (CUPET) hold the remaining two-thirds interest in Energas.

Raw natural gas that would otherwise be flared is supplied to Energas by CUPET free of charge. The processing of raw natural gas produces clean natural gas, used to generate electricity, as well as by-products such as condensate and liquefied petroleum gas. All of Energas’ electrical generation is purchased by UNE under long-term fixed-price contracts while the by-products are purchased by CUPET at market based prices. Sherritt provided the financing for the construction of the Energas facilities and is repaid from the cash flows generated by the facilities.

The Energas facilities comprising the two combined cycle plants at Varadero and Boca de Jaruco, produce electricity using steam generated from the waste heat captured from the gas turbines. The Boca de Jaruco Combined Cycle Project was fully operational in early February 2014, increasing Energas’ electrical generating capacity by 150 MW to 506 MW.

CORPORATE AND OTHER

Technologies

Sherritt Technologies provides technical support to Sherritt’s operating divisions and identifies opportunities for the Corporation as a result of the division’s international and R&D activities. Technologies specializes in evaluating, developing and commercializing process technologies for natural resource based industries, in particular for the hydrometallurgical recovery of non-ferrous metals. Technologies’ process development is conducted in laboratory and pilot plant facilities where new technologies are developed, tested and demonstrated.

The business we manage

Sherritt manages its nickel, oil, gas and power operations through different legal structures including 100% owned subsidiaries, joint venture arrangements and production sharing contracts. With the exception of the Moa Joint Venture, which Sherritt operates jointly with its partner, Sherritt is the operator of these assets. The relationship Sherritt has with these operations and the economic interest recognized in the Corporation’s financial statements are as follows:

	Relationship for	Economic		Basis of
	accounting purposes	interest		accounting

Metals
Moa Joint Venture	Joint venture	50	%	Equity method

Ambatovy Joint Venture	Associate	40	%	Equity method

Oil and Gas	Subsidiary	100	%	Full consolidation

Power	Joint operation	331/3	%	Economic interest recognized

The Financial results and review of operations sections in this MD&A present amounts by reporting segment, based on the Corporation’s economic interest. For financial statement purposes, the Moa Joint Venture and Ambatovy Joint Venture are accounted for using the equity method of accounting which recognizes the Corporation’s share of earnings (loss) from joint venture and associate, respectively. Metal’s operating results include the Corporation’s 50% interest in the Moa Joint Venture, 100% interest in the utility and fertilizer operations in Fort Saskatchewan (Fort Site), 40% interest in the Ambatovy Joint Venture, and 100% interest in a wholly-owned subsidiary established to buy, market and sell certain Ambatovy nickel production. The financial statements and review of operations in this MD&A include the Corporation’s 100% interest in its Oil and Gas business and 331/3% interest in its Power businesses.

Amounts presented in this MD&A can be reconciled to note 5 of the audited consolidated financial statements for the year ended December 31, 2015.

Strategic Priorities

The table below lists Sherritt’s Strategic Priorities in 2015, and how the Corporation performed in 2015 against those priorities.

Strategic Priorities	2015 Targets	Status

FOCUSING ON OUR CORE NICKEL BUSINESS 1	Sustaining production and lowering costs at Moa Advancing the acid plant project at Moa	Moa nickel production was steady, and NDCC costs declined in each successive quarter of 2015 Acid plant construction continues on track for second half of 2016

CONTINUING TO RAMP UP AMBATOVY 2	Targeting a production rate of 90% of nameplate capacity over a 90-day period within the first half of 2015 Targeting financial completion by September 30, 2015	Achieved 90 for 90 in Q1 2015, and again in Q3 2015 Financial completion announced September 21, 2015

EXTENDING THE LIFE OF OUR CUBAN ENERGY BUSINESS 3	Securing two additional exploration PSCs Commencing drilling on extended Puerto Escondido/Yumuri PSC	Eight wells drilled in the Puerto Escondido/ Yumuri extension area PSCs. Block 8A and Block 10 PSCs signed in late 2014. In Block 10, seismic was reprocessed, drilling locations identified and permitting process commenced in 2015

BUILDING BALANCE SHEET STRENGTH 4	Maintaining a strong balance sheet and liquidity	Cash, cash equivalents and short term investments of $435.4 million at December 31, 2015, after full drawdown of existing credit facilities. Credit facilities were upsized by $40 million in Q3

REDUCING COSTS 5	Optimizing operating and administrative costs	Net Direct Cash Costs at Moa and Ambatovy have declined every quarter this year, averaging US$$3.88/lb (Moa) and US$4.83/lb (Ambatovy) Combined administrative expense for the full year were down 21% year over year

The table below lists Sherritt’s strategic priorities for 2016. The 2016 Strategic Priorities reflect the continuing depressed commodity outlook and the Corporation’s responsibility to preserve liquidity, continue to drive down costs, and execute rational capital allocation plans. Sherritt’s purpose, originally communicated in 2014, continues to be a low-cost nickel producer that creates sustainable prosperity for our employees, investors and communities.

Strategic Priorities		2016 Targets

UPHOLD GLOBAL OPERATIONAL LEADERSHIP IN FINISHED NICKEL LATERITE PRODUCTION 1		Complete and commission the acid plant at Moa in the second half of 2016 Further reduce NDCC costs at Moa and Ambatovy towards the goal of being in the lowest quartile Increase Ambatovy production over 2015, despite the major maintenance work scheduled for Q3 Maintain peer leading performance in environmental, health, safety and sustainability

EXTEND THE LIFE OF OUR CUBAN ENERGY BUSINESS 2		Allocate capital to new drilling on Block 10, with future drilling to be contingent on results from 2016 activity

PRESERVE LIQUIDITY AND BUILD BALANCE SHEET STRENGTH 3		Protect Sherritt’s balance sheet and preserve cash Establish clarity on long-term funding of Ambatovy Run business units to be free cash flow neutral, and continue to optimize administrative costs

Highlights

OPERATIONS UPDATE

Metals achieved record production of 35,761 tonnes of finished nickel (Sherritt’s share) for the year ended December 31, 2015, representing a 14% increase from the prior year. The increase is due to the ramp-up of production at Ambatovy and stable refinery operations and mixed sulphide availability at the Moa Joint Venture. This increased production combined with lower input costs and an organization wide focus on cost management resulted in achieving a Metals net direct cash cost (NDCC) of nickel of US$4.38 per pound for 2015, a 26% reduction from the prior year.

On September 29, 2015, Sherritt received notice that Ambatovy’s finished nickel briquettes met the standards to qualify for delivery to London Metal Exchange (LME) warehouses. With Ambatovy’s LME acceptance, nickel briquettes from all of Sherritt’s nickel operations are LME deliverable, allowing Sherritt or its customers the flexibility and commercial advantage of delivering nickel product to LME warehouses where logistics benefits exist or to mitigate short term variance in customer demand.

AMBATOVY FUNDING

In 2015, Sherritt provided funding to Ambatovy of US$105.6 million. Funding requirements were significantly impacted in the year by principal and interest payments on the Ambatovy Joint Venture Financing. As no funding was provided in the fourth quarter, this amount is unchanged from the funding that Sherritt reported in the third quarter of 2015. As a result of achieving financial completion, the US$ 1.6 billion Ambatovy Joint Venture Financing (balance as at December 31, 2015, 100% basis) became non-recourse to the partners.

Pursuant to cash calls due in January, 2016, an additional US$30.0 million was provided to Ambatovy by Sumitomo Corp. and Korea Resources Corp. (KORES). Total cash calls of US$50.0 million were made, with Sherritt not funding its 40% pro-rata share (US$20.0 million). By agreement amongst the partners Sherritt’s unfunded amounts remain payable to Ambatovy, with accrued interest at LIBOR +3%. These amounts will be subtracted from future Ambatovy Joint Venture distributions, or may be set off by the Ambatovy Joint Venture against certain other amounts owed to Sherritt. Sherritt also has the option to pay the amounts in cash at any time, at Sherritt’s election. Until the funding deficit is cured, and subject to continued discussions with the Ambatovy partners, Sherritt will not be exercising its Ambatovy voting rights. The outcome of these discussions is not certain — for additional information see the Risk Factors section.

Sherritt determined not to fund further cash calls at this time to preserve liquidity and due to the current structure of the Ambatovy partner loans, which, at current nickel prices, effectively reduce Sherritt’s 40% interest in Ambatovy to a 12% economic interest (1). At this time, Sherritt continues to serve as operator, and constructive discussions are ongoing between partners and senior lenders regarding future funding of Ambatovy and modifications to the existing senior principal amortization.

IMPAIRMENTS

In the fourth quarter of 2015, the Ambatovy Joint Venture recorded an impairment of US$2.4 billion (100% basis) due to lower forecast nickel prices. The impairment recorded at the Sherritt level is $1.6 billion after tax, consisting of $1.3 billion representing Sherritt’s 40% share of Ambatovy’s impairment and $0.3 billion from the incremental carrying value of Sherritt’s Ambatovy assets, primarily related to mineral rights acquired from Dynatec in 2007.

In the third quarter of 2015, the Corporation recorded an impairment expense of $80.6 million on its oil assets in Cuba and Spain. This impairment is the result of lower oil price forecasts and drilling results from development wells at Puerto Escondido/Yumuri extension that were below expectation.

TAX RATE REDUCTIONS IN CUBA

During the first quarter of 2015, clarification was received from the Cuban government regarding the application of tax rate reductions in Cuba due to a new foreign investment law.

	Prior Statutory		Revised Statutory
Operation	Tax Rate		Tax Rate
Oil and Gas	30	%	22.5	%
Power	30	%	15	%
Metals - Moa	45	%	22.5	%

As a result of these changes, for the twelve months ended December 31, 2015 the Corporation recognized a tax recovery of $40.7 million in Oil and Gas and $2.6 million in the Moa Joint Venture.

(1) 70% of Sherritt’s distributable cash flow from Ambatovy (after opex, capex and project debt service) goes to Partner Loan repayment, leaving Sherritt with 30%; 30% of Sherritt’s 40% ownership = 12%.

Financial results

	For the three months ended								For the years ended
	2015			2014					2015			2014
$ millions, except as otherwise noted	December 31			December 31			Change		December 31			December 31			Change

FINANCIAL HIGHLIGHTS
Revenue	$	76.5		$	101.6		(25	)%	$	335.9		$	455.6		(26	)%
Combined revenue(1)	229.5			278.3			(18	)%	1,022.7			1,136.3			(10	)%
Adjusted EBITDA(1)	6.1			31.4			(81	)%	113.1			253.2			(55	)%
Loss from operations, associate and joint venture	(1,721.9		)	(74.9		)	(2,199	)%	(1,978.6		)	(111.9		)	(1,668	)%
Loss from continuing operations	(1,757.3		)	(147.7		)	(1,090	)%	(2,071.7		)	(318.5		)	(550	)%
(Loss) earnings from discontinued operations, net of tax	—			(12.7		)	100	%	(5.0		)	28.5			(118	)%
Net loss for the period	(1,757.3		)	(160.4		)	(996	)%	(2,076.7		)	(290.0		)	(616	)%
Adjusted loss from continuing operations(1)	(113.8		)	(80.0		)	(42	)%	(351.3		)	(246.5		)	(43	)%

Loss per share (basic and diluted)($ per share)
Net loss from continuing operations	(5.99		)	(0.50		)	(1,098	)%	(7.05		)	(1.07		)	(559	)%
Net loss for the period	(5.99		)	(0.54		)	(1,009	)%	(7.07		)	(0.97		)	(629	)%

CASH FLOW
Cash provided (used) by continuing operating activities	$	10.8		$	39.4		(73	)%	$	64.5		$	109.6		(41	)%
Combined free cash flow(1)	(24.8		)	(14.8		)	(68	)%	(98.8		)	(81.7		)	(21	)%
Combined adjusted operating cash flow(1)	(29.5		)	(41.3		)	29	%	63.1			95.1			(34	)%
Combined adjusted operating cash flow per share ($ per share)(1)	(0.09		)	(0.14		)	36	%	0.21			0.32			(34	)%

OPERATIONAL DATA

SPENDING ON CAPITAL AND INTANGIBLE ASSETS(2)	$	26.9		$	56.1		(52	)%	$	150.1		$	150.5		—

PRODUCTION VOLUMES
Finished nickel (tonnes)
Moa Joint Venture (50% basis)	4,098			4,332			(5	)%	16,853			16,455			2	%
Ambatovy Joint Venture (40% basis)	4,885			3,964			23	%	18,908			14,821			28	%
Finished cobalt (tonnes)
Moa Joint Venture (50% basis)	521			436			19	%	1,867			1,605			16	%
Ambatovy Joint Venture (40% basis)	386			277			39	%	1,386			1,166			19	%
Oil (boepd, NWI production)(3)	10,727			10,369			3	%	11,158			10,960			2	%
Electricity (gigawatt hours) (331/3% basis)	226			214			6	%	902			847			6	%

AVERAGE-REALIZED PRICES(1)
Nickel ($ per pound)	$	5.54		$	7.89		(30	)%	$	6.68		$	8.29		(19	)%
Cobalt ($ per pound)	12.91			15.34			(16	)%	15.20			15.10			1	%
Oil ($ per boe, NWI)(3)	29.53			49.58			(40	)%	38.73			65.69			(41	)%
Electricity ($ per megawatt hour)	56.53			48.38			17	%	54.26			46.81			16	%

UNIT OPERATING COSTS(1)
Nickel (US$ per pound)
Moa Joint Venture	$	2.90		$	4.44		(35	)%	$	3.88		$	4.99		(22	)%
Ambatovy Joint Venture	4.07			6.98			(42	)%	4.83			7.04			(31	)%
Oil ($ per boe, GWI)(3)	11.64			12.25			(5	)%	10.69			9.45			13	%
Electricity ($ per megawatt hour)	33.88			22.82			48	%	21.00			17.25			22	%

(1) For additional information see the Non-GAAP measures section.

(2) Spending on capital and intangible assets includes accruals and does not include spending on service concession arrangements.

(3) Net working-interest (NWI); gross working-interest (GWI); barrels of oil equivalent per day (boepd); barrels of oil equivalent (boe).

REVENUE

	For the three months ended								For the years ended
	2015			2014					2015			2014
$ millions	December 31			December 31			Change		December 31			December 31			Change

Revenue by segment
Metals	$	183.8		$	216.5		(15	)%	$	805.1		$	813.8		(1	)%
Oil and Gas	30.5			49.6			(39	)%	162.6			269.3			(40	)%
Power	13.7			11.7			17	%	52.7			49.0			8	%
Corporate and Other	1.5			0.5			200	%	2.3			4.2			(45	)%
Combined revenue(1)	229.5			278.3			(18	)%	1,022.7			1,136.3			(10	)%
Adjust joint venture and associate	(153.0		)	(176.7		)			(686.8		)	(680.7		)
Financial statement revenue	76.5			101.6			(25	)%	335.9			455.6			(26	)%

(1) For additional information see the Non-GAAP measures section.

Combined revenue for the three and twelve months ended December 31, 2015 were lower compared to the same periods in the prior year primarily due to lower nickel and oil prices partly offset by a weaker Canadian dollar relative to the U.S. dollar.

For the twelve months ended December 31, 2015 sales volumes of nickel and cobalt were higher at both Moa Joint Venture and Ambatovy as a result of continued operational stability at the Moa Joint Venture and continued ramp-up of operations at Ambatovy. In addition, for the twelve months ended December 31, 2015 Ambatovy revenues were higher compared to the prior-year period which only included revenue for the eleven months following the declaration of commercial production effective February 1, 2014.

COST OF SALES

	For the three months ended								For the years ended
	2015			2014					2015			2014
$ millions	December 31			December 31			Change		December 31			December 31			Change

Cost of sales by segment
Metals	$	284.9		$	244.7		16	%	$	1,028.1		$	894.5		15	%
Oil and Gas	30.2			52.9			(43	)%	146.9			150.0			(2	)%
Power	16.7			10.3			62	%	52.6			37.1			42	%
Corporate and other	1.2			1.5			(20	)%	5.2			9.5			(45	)%
Combined cost of sales(1)	333.0			309.4			8	%	1,232.8			1,091.1			13	%
Adjust joint venture and associate	(257.9		)	(209.3		)			(914.7		)	(773.1		)
Financial statement cost of sales	75.1			100.1			(25	)%	318.1			318.0			—

(1) For additional information see the Non-GAAP measures section.

Combined cost of sales for the three and twelve months ended December 31, 2015 were higher compared to the same periods in the prior year primarily due to inventory impairment adjustments at Ambatovy, costs associated with increased production ramp-up at Ambatovy and the weaker Canadian dollar relative to the U.S. dollar, partly offset by lower input commodity prices. The prior year includes an impairment of the North Sea and Alboran Sea oil and gas licenses. For the three and twelve months ended December 31, 2015, depletion, depreciation and amortization expense was higher at Power’s Varadero facility due to the impact of a change in the residual value estimate.

Costs of sales at Ambatovy were higher compared to the prior-year period which only included costs for the eleven months following the declaration of commercial production.

ADMINISTRATIVE EXPENSES

	For the three months ended								For the years ended
	2015			2014					2015			2014
$ millions	December 31			December 31			Change		December 31			December 31			Change

Administrative expenses by segment
Metals	$	8.7		$	11.3		(23	)%	$	31.9		$	35.7		(11	)%
Oil and Gas	1.5			0.8			88	%	6.7			7.8			(14	)%
Power	0.3			1.2			(75	)%	3.8			7.3			(48	)%
Corporate and other	8.2			9.7			(15	)%	32.1			43.6			(26	)%
Combined administrative expenses(1)	18.7			23.0			(19	)%	74.5			94.4			(21	)%
Adjust joint venture and associate	(7.7		)	(10.0		)			(28.1		)	(31.0		)
Financial statement administrative expenses	11.0			13.0			(15	)%	46.4			63.4			(27	)%

(1) For additional information see the Non-GAAP measures section.

Combined administrative expenses for the three and twelve months ended December 31, 2015 were lower compared to the same periods in the prior year primarily due to lower employee costs following the restructuring plan initiated by the Corporation in the fourth quarter of 2014, higher legal fees in 2014 attributable to the Coal transaction and implementation of cost reduction initiatives undertaken in the current year.

ADJUSTED EBITDA

	For the three months ended						For the years ended
	2015		2014				2015		2014
$ millions	December 31		December 31		Change		December 31		December 31		Change

Adjusted EBITDA(1) by segment
Metals	(1.9	)	13.6		(114	)%	33.3		73.3		(55	)%
Oil and Gas	9.7		26.3		(63	)%	81.9		191.7		(57	)%
Power	5.5		5.4		2	%	30.0		24.8		21	%
Corporate and Other	(7.2	)	(13.9	)	48	%	(32.1	)	(36.6	)	12	%
Adjusted EBITDA	6.1		31.4		(81	)%	113.1		253.2		(55	)%

(1) For additional information see the Non-GAAP measures section.

NET FINANCE EXPENSE

	For the three months ended				For the years ended
	2015	2014			2015	2014
$ millions	December 31	December 31	Change		December 31	December 31	Change

Financial statement net finance expense	35.4	71.9	(51	)%	129.0	161.2	(20	)%
Moa Joint Venture net finance expense(1)	1.6	3.4	(53	)%	11.2	12.0	(7	)%
Ambatovy Joint Venture net finance expense(1)	28.2	19.8	42	%	74.3	68.7	8	%
Combined net finance expense(2)	65.2	95.1	(31	)%	214.5	241.9	(11	)%

(1) For additional information see the Non-GAAP measures section.

(2) Net of intercompany interest.

Combined net finance expense for the three and twelve months ended December 31, 2015 were lower than the prior periods due to lower interest expense as a result of lower outstanding loan balances in 2014 including fees related to the repurchase and redemption of the Corporation’s debentures in the fourth quarter of 2014, partly offset by a higher unrealized foreign exchange loss recognized due to a weakening of the Canadian dollar relative to the U.S dollar, higher interest income on the Ambatovy subordinated loan receivable and the expiry of the Ambatovy call option in the third quarter of 2015.

Net finance expense increased at Ambatovy for the three and twelve months ended December 31, 2015 primarily due to higher interest expense on higher outstanding loan balances. Net finance expense for the three months ended December 31, 2015 was also impacted by increased interest rates on Ambatovy’s senior financing as a result of achieving financial completion in the third quarter of 2015.

INCOME TAXES

	For the three months ended								For the years ended
	2015			2014					2015			2014
$ millions	December 31			December 31			Change		December 31			December 31			Change

Income taxes by segment
Metals	$	(113.2	)	$	(6.3	)	(1,697	)%	$	(136.1	)	$	(9.1	)	(1,396	)%
Oil and Gas	0.3			2.1			(86	)%	(35.0		)	44.1			(179	)%
Power	(0.3		)	(1.1		)	73	%	(0.9		)	(0.5		)	(80	)%
Corporate and other	—			(0.1		)	100	%	—			1.8			(100	)%
Combined income taxes(1)	(113.2		)	(5.4		)	(1,996	)%	(172.0		)	36.3			(574	)%
Adjust joint venture and associate	113.2			6.3					136.1			9.1
Financial statement income taxes	—			0.9			(100	)%	(35.9		)	45.4			(179	)%

(1) For additional information see the Non-GAAP measures section.

Combined income taxes for the three and twelve months ended December 31, 2015 were lower than the prior periods primarily due to a deferred income tax recovery recognized at Ambatovy as a result of the impairment as well as lower earnings from Moa Joint Venture, Ambatovy and Oil and Gas.

In addition, in the twelve month period there was a tax recovery related to the reduction in tax rates in Cuba. In 2015, clarification was received from the Cuban government regarding the application of tax rate reductions in Cuba due to a new foreign investment law. As a result in the twelve months ended December 31, 2015, the tax recovery includes a recovery of $40.7 million in Oil and Gas and $2.6 million for Moa Joint Venture. The total tax recovery includes a non-cash adjustment of $13.0 million to reflect re-measurement of deferred tax liabilities and a current tax recovery of $30.3 million.

IMPAIRMENTS

Ambatovy Impairment

The Corporation recognized a total impairment of $1.6 billion (40% basis), after tax, within the Corporation’s share of loss of an associate, net of tax, in the consolidated statement of comprehensive income (loss). The impairment reflects the expectation of a sustained reduction in long-term nickel prices. The total impairment consists of the Corporation’s 40% share of the Ambatovy Joint Venture impairment, including a deferred tax asset write-down and inventory write-down, and, an incremental impairment of the Corporation’s mineral rights, net of deferred tax adjustments. The recoverable amount was based on value in use and was determined to be $7.1 billion (100% basis) as at December 31, 2015. In determining value in use for the Ambatovy Joint Venture, a long-term nickel price of US$8.50/lb and a discount rate of 9.0% were used in the discounted cash flow calculation. The Corporation has identified the Ambatovy Joint Venture operation as one cash-generating unit (CGU), which constitutes the Ambatovy Joint Venture reportable segment.

Oil and Gas Impairment

In the third quarter of 2015, the Corporation recognized an impairment loss of $80.6 million representing the write-down of certain Oil assets in the Oil and Gas segment to their recoverable amount as a result of lower oil price forecasts and drilling results from development wells at the Puerto Escondido/Yumuri extension that were below expectation. This impairment was recognized in the consolidated statements of comprehensive income (loss) as Impairment of Oil assets. The Corporation has four CGUs within its Oil and Gas segment. These CGUs are determined by geographical area or production-sharing contract (PSC). The impaired CGUs consisted of Puerto Escondido/Yumuri, Puerto Escondido/Yumuri extension and Spain. The recoverable amounts of the impaired CGUs were based on value in use and were $54.4 million as at September 30, 2015. In determining value in use for the CGU, the cash flows were discounted at a rate of 10%. The drilling results used in the value in use were derived from internal estimates.

In the fourth quarter of 2015, an independent qualified reserve analysis was received. Based on the Corporation’s review of this report no additional impairment was recognized.

CHANGE IN NET LOSS

For the three months ended December 31, 2015, net loss from continuing operations was $1,757.3 million, or $5.99 per share, compared to a loss of $147.7 million, or $0.50 per share in the same period in the prior year.

For the year ended December 31, 2015, net loss from continuing operations was $2,071.7 million, or $7.05 per share, compared to a loss of $318.5 million, or $1.07 per share in the same period in the prior year.

The change in net loss from continuing operations between 2015 and 2014 is detailed below:

	For the three			For the year
	months ended			ended
	2015			2015
$ millions	December 31			December 31

Lower U.S. dollar denominated nickel and cobalt prices	$	(58.0	)	$	(150.2	)
Lower oil and gas prices	(12.3		)	(93.8		)
Higher fertilizer prices	2.8			10.8
Higher total metals and fertilizer sales volumes	23.5			86.0
Lower Cuba oil and gas gross working-interest volumes	(3.4		)	(11.8		)
Higher Spain oil and gas volumes	—			6.7
Higher electricity volumes	0.7			3.1
Lower mining, processing and refining, third-party feed and fertilizer unit costs	12.4			32.3
Lower Oil and Gas cost recovery revenue	(4.2		)	(14.6		)
Lower (Higher) Oil and Gas cost of sales	3.7			(1.5		)
Lower (Higher) depletion, depreciation and amortization	1.7			(32.4		)
Lower administrative expenses	4.3			19.9
Ambatovy impairment of assets	(1,722.5		)	(1,722.5		)
Tax impact on Ambatovy impairment	102.9			102.9
Impairment of Oil assets	—			(80.6		)
Lower exploration and evaluation impairment losses	13.5			14.7
Gain on sale of corporate assets	(3.3		)	15.8
Arbitration settlement	(1.3		)	(14.1		)
January 2014 earnings at Ambatovy capitalized prior to commercial production	—			(10.2		)
Foreign exchange impact on operations	(15.7		)	(44.4		)
Lower combined net finance expense, before Ambatovy call option revaluation	29.8			41.1
Ambatovy call option revaluation	—			(13.7		)
Cuban tax recovery	—			43.3
Other tax recoveries	4.9			62.1
Other	10.9			(2.1		)
Change in net loss from continuing operations, compared to 2014	$	(1,609.6	)	$	(1,753.2	)

CONSOLIDATED FINANCIAL POSITION

The following table summarizes the significant items as derived from the audited consolidated statements of financial position:

$ millions, except as otherwise noted, as at December 31	2015			2014			Change

Current assets	$	820.4		$	855.1		(4	)%
Current liabilities	212.1			193.6			10	%
Working capital	608.3			661.5			(8	)%
Current ratio	3.87:1			4.42:1			136	%
Cash, cash equivalents and short-term investments	$	435.4		$	477.2		(9	)%
Non-current advances, loans receivable and other financial assets	1,600.5			1,922.4			(17	)%
Investment in an associate	757.3			1,548.5			(51	)%
Investment in a joint venture	404.2			380.1			6	%
Property, plant and equipment	351.1			422.1			(17	)%
Total assets	4,090.0			5,283.2			(23	)%
Total loans and borrowings	2,263.1			1,859.9			22	%
Total provisions	126.6			126.8			—
Total liabilities	2,532.9			2,224.5			14	%
Retained (deficit) earnings	(2,342.6		)	(259.9		)	(801	)%
Shareholders’ equity	1,557.1			3,058.7			(49	)%

As at December 31, 2015, cash, cash equivalents and short-term investments decreased by $41.8 compared to the prior year end. For additional information see the Liquidity and capital resources - sources and uses of cash section.

The significant changes in assets, liabilities and shareholders’ equity from 2014 to 2015 are discussed below:

· Investment in an associate decreased by $791.2 million primarily as a result of the $1.6 billion impairment of Ambatovy’s assets, partly offset by a $840.0 million decrease in Ambatovy’s subordinated loan payable, due to a conversion from loan payable to equity and foreign exchange adjustments;

· Non-current advances, loans receivable and other financial assets decreased by $321.9 million primarily due to a $840.0 million decrease in the Ambatovy subordinated loan receivable, due to a conversion from loan receivable to equity and repayments on the Energas conditional sales agreement, partly offset by $135.7 million of loans provided to the Ambatovy Joint Venture to meet the Corporation’s funding obligations, foreign exchange adjustments and accrued interest receivable related to the Ambatovy subordinated loan;

· Property, plant and equipment decreased by $71.0 million primarily as a result of the impairment of $80.6 million recognized on the Corporation’s oil assets and depletion, depreciation and amortization, offset by normal course capital spending. A discussion of spending on capital is included in the Review of operations sections for each segment;

· Total loans and borrowings increased by $ 403.2 million primarily due to foreign exchange adjustments on the Ambatovy Joint Venture loans due to a weakening of the Canadian dollar relative to the U.S dollar as well as the drawdown of the revolving term credit facility and line of credit; and

· Retained earnings decreased by $2.1 billion reflecting the impact of losses recognized in the year. In addition, the Corporation paid dividends of $9.0 million during the year prior to the suspension of dividends announced in October 2015.

Outlook

2016 PRODUCTION AND CAPITAL SPENDING GUIDANCE

In 2016, Sherritt has made certain modifications to how guidance is presented. For example, nickel and cobalt production expectations will continue to be published and reconciled to production guidance, but mixed sulphide production will not be part of the production guidance. This change was implemented recognizing that external stakeholders are focused on finished metal production with mixed sulphide production guidance having less utility.

Secondly, capital spending estimates are being presented in U.S. dollars, with the Canadian dollar estimate being presented for ease of comparison. The Canadian dollar estimate has been converted using the 2016 forecast conversion rate of $1.36. This change in presentation is intended to align with Sherritt’s capital budgeting practices, and to mitigate the change to capital that arises from translation to the Canadian dollar reporting currency. In 2015, capital spending revisions were generally explained in terms of their U.S. dollar movement, as the fall in the Canadian dollar offset larger downward revisions to capital spending as the year progressed. This year, the presentation in U.S. dollars and reporting against spending projections in U.S. dollars is intended to mitigate the impacts of currency exchange volatility. Capital projects in the Metals business are generally U.S. dollar expenditures, while in Oil & Gas, the expenditures are roughly 50% Canadian dollar denominated and 50% U.S. dollar denominated.

		Actual
	2015	2015	2016
Production volumes and spending on capital	guidance	December 31	guidance

Production volumes
Mixed sulphides (tonnes, Ni+Co contained, 100% basis)
Moa Joint Venture	36,500-38,000	37,020
Ambatovy Joint Venture	50,500-56,000	48,995
Total	87,000-94,000	86,015
Nickel, finished (tonnes, 100% basis)
Moa Joint Venture	33,000-34,000	33,706	33,500 - 34,500
Ambatovy Joint Venture	45,000-48,000	47,271	48,000 - 50,000
Total	78,000-82,000	80,977	81,500 - 84,500
Cobalt, finished (tonnes, 100% basis)
Moa Joint Venture	3,500-4,000	3,734	3,300 - 3,800
Ambatovy Joint Venture	3,500-4,000	3,464	3,300 - 3,800
Total	7,000-8,000	7,198	6,600 - 7,600
Oil — Cuba (gross working-interest, bopd)	18,500	18,257	14,500
Oil and Gas — All operations (net working-interest, boepd)	11,300	11,158	8,900
Electricity (GWh, 331/3% basis)	850	902	860

Spending on capital ($ millions)
Metals — Moa Joint Venture (50% basis), Fort Site (100% basis) (1)	75	64	US$38 (52)
Metals — Ambatovy Joint Venture (40% basis)	35	24	US$25 (34)
Oil and Gas	71	55	US$43 (59)
Power (331/3% basis)	4	4	US$1 (1)
Power (331/3% basis) Pipeline Construction on Service Concession Arrangements			US$4 (5)
Spending on capital (excluding Corporate)	185	147	US$111 (151)

(1) Spending is 50% of US$ expenditures for Moa JV and 100% expenditures for Fort Site fertilizer and utilities.

PRODUCTION VOLUMES

Sherritt expects 2016 production to increase at Ambatovy, despite the planned once in three year maintenance shutdown of operations scheduled for Q3 2016. Production at Moa and in the power operations is expected to remain steady, with a decline in Oil & Gas, reflecting natural reservoir declines and no further drilling activity on existing PSC’s. The original PSC wells are scheduled to revert to Cuban ownership in 2017 and 2018. Longer term, new production in Oil & Gas is expected to come from the drilling of Block 10, where the drill program will progress at a pace driven by prudent capital spending, and the objective of running the business units to be cash flow neutral.

CAPITAL SPENDING

Capital spending (excluding Corporate) in 2015 was approximately $147 million, up 39% from 2014 capex of approximately $106 million, but down 21% from guidance provided at the end of Q3 2015. Approximately US$12 million ($16.3 million) has been carried over to 2016 estimated capital spending of US$107 million.

In the Moa JV, 2016 estimated capital spending is consistent with 2015 levels adjusting for carry-forwards. The acid plant construction at the Moa JV is nearing 75% completion at January 31, 2016, and is on track to be operating in the second half of 2016. Counting US$40.4 million spent (100% basis) from the construction re-start in 2013 to the end of 2015 and an additional estimated US$24.6 million (included in the 2016 capital spending estimate), the construction completion cost (since resuming construction in 2013) is forecast at approximately US$65 million which is in line with the 2013 approved budget and is being 100% financed by a Cuban leading institution.

Ambatovy capital spending is similar to what was originally estimated for 2015.

Oil and gas estimated capital spending is focused on the preparation and drilling of Block 10. Block 10 is covered by one of the two new PSC’s which Sherritt signed in 2014 with the Cuban agency, encompassing 261 square kilometres in the Bay of Cardenas for a 25-year term. Sherritt originally held Block 10 and completed a drill hole on the block in June 1994. Sherritt drilled one well, using an offshore drilling rig, which produced a discovery which tested at 3,750 barrels of oil per day. Since then, significant advances in horizontal drilling technology have made new drilling from onshore a viable prospect.

Power capital spending is forecast to be US$1 million (Sherritt’s 33 1/3% share) in 2016. In addition, the cost to construct a new pipeline to increase gas availability is estimated at US$4 million (Sherritt’s share) with construction starting and finishing in 2016.

Significant factors influencing operations

As a commodity-based, geographically diverse company, Sherritt’s operating results are influenced by many factors, the most significant of which are: commodity prices and foreign exchange rates.

COMMODITY PRICES

Operating results for the year ended December 31, 2015 were significantly impacted by market-driven commodity prices for nickel, cobalt, oil and gas. A significant portion of electricity prices are established at the beginning of a negotiated supply contract period and are, therefore, less susceptible to commodity price fluctuations during the term of the agreement.

Nickel spot prices hit a multi-year low of US$3.70 per pound in the fourth quarter of 2015, and have since traded lower in February. These are price levels not seen since 2003. More significant supply disruptions have started to appear in January, with announced cuts from Votorantim and Mirabela in Brazil, and Panoramic and Mincor in Australia. Coupled with Chinese supply cuts announced in 2015, these cuts could impact 200,000 tonnes of nickel supply in 2016. So far, the LME nickel price has not shown any positive response to the supply cut news, as nickel was one of the worst performers in 2015 and published inventories remain at high levels buffering the impact of any supply disruptions. On the demand side, global stainless demand is estimated to have decreased marginally (by approximately 1.2%) in 2015; however, despite this slowdown, world nickel demand is projected to increase marginally in 2016. High levels of nickel stocks and the strengthening U.S. dollar are factors that may cap price rallies in 2016. Sherritt’s Moa Joint Venture and Ambatovy Joint Venture operations experienced steady demand for their nickel briquettes throughout 2015, despite the negative market sentiment and price decline. Higher nickel grades of stainless steel remain more profitable for steel mills, which is positive for both the Moa and Ambatovy Joint Ventures.

Crude oil prices also hit multi-year lows, with WTI prices ending the year at US$36.60 per barrel, and Gulf Coast Fuel Oil 6 ending the year at US$21.80 per barrel.

A sensitivity analysis of 2015 earnings to changes in significant commodity prices is provided in the Supplementary information — Sensitivity analysis section.

FOREIGN EXCHANGE RATE

As Sherritt reports its results in Canadian dollars, the fluctuation in foreign exchange rates has the potential to cause significant volatility in those results. Most commodity prices are quoted in U.S. dollars, and a significant portion of operating expenses are U.S. dollar denominated. Therefore operating earnings are generally positively impacted by a weaker Canadian dollar as the uplift on revenue exceeds the negative impact on operating expenses. However, in a period of operating losses, where U.S. denominated expenses exceeds U.S. denominated revenue, the foreign exchange impact is negative. This was the case in 2015 where the negative impact of foreign exchange on operating earnings was approximately $90 million.

In addition many of Sherritt’s trade accounts receivable, accounts payable, loans receivable and loans payable are denominated in U.S. dollars. In 2015, the U.S. based financial liabilities exceeded the U.S. based financial assets which resulted in a negative translation loss of approximately $45 million for the year.

During 2015, the Canadian dollar weakened relative to the U.S. dollar such that the average annual Canadian dollar cost to purchase one U.S. dollar increased on average to $1.28, compared to an average of $1.10 in 2014 and had an approximate negative impact on earnings of $135 million as described above.

Review of operations

METALS

Financial Review

$ millions, for the three months ended December 31										2015												2014
	Moa JV and			Ambatovy									Moa JV and			Ambatovy
	Fort Site			JV			Other			Total			Fort Site			JV			Other			Total			Change

FINANCIAL HIGHLIGHTS
Revenue	$	101.1		$	69.9		$	12.8		$	183.8		$	127.3		$	73.4		$	15.8		$	216.5		(15	)%
Earnings (loss) from operations	(6.8		)	(1,785.5		)	(0.6		)	(1,792.9		)	9.9			(51.6		)	0.5			(41.2		)	(4,252	)%
Adjusted EBITDA(1)	7.6			(9.5		)	—			(1.9		)	21.2			(7.5		)	(0.1		)	13.6			(114	)%
Cash provided (used) by operations	21.1			(22.3		)	1.4			0.2			30.0			(16.8		)	2.4			15.6			(99	)%
Free cash flow(1)	1.3			(26.6		)	1.4			(23.9		)	9.0			(29.1		)	2.4			(17.7		)	(35	)%

PRODUCTION VOLUMES (tonnes)
Mixed Sulphides	4,336			5,042			—			9,378			4,589			4,312			—			8,901			5	%
Finished Nickel	4,098			4,885			—			8,983			4,332			3,964			—			8,296			8	%
Finished Cobalt	521			386			—			907			436			277			—			713			27	%
Fertilizer	69,741			15,169			—			84,910			69,996			10,942			—			80,938			5	%

NICKEL RECOVERY (%)	89		%	86		%							84		%	87		%

SALES VOLUMES (tonnes)
Finished Nickel	4,237			4,665			—			8,902			4,401			3,658			—			8,059			10	%
Finished Cobalt	559			411			—			970			435			257			—			692			40	%
Fertilizer	60,461			14,814			—			75,275			78,134			9,080			—			87,214			(14	)%

AVERAGE REFERENCE PRICES (US$ per pound)
Nickel										$	4.27											$	7.17		(40	)%
Cobalt(2)										11.34												14.07			(19	)%

AVERAGE-REALIZED PRICES(1)
Nickel ($ per pound)	$	5.57		$	5.52		—			$	5.54		$	7.94		$	7.84		—			$	7.89		(30	)%
Cobalt ($ per pound)	14.08			11.31			—			12.91			15.49			14.84			—			15.34			(16	)%
Fertilizer ($ per tonne)	413			197			—			371			391			187			—			370			—

UNIT OPERATING COSTS(1) (US$ per pound)
Nickel - net direct cash cost	$	2.90		$	4.07		—			3.51			$	4.44		$	6.98		—			5.59			(37	)%

SPENDING ON CAPITAL
Sustaining	$	13.8		$	4.9		$	—		$	18.7		$	18.6		$	12.4		$	—		$	31.0		(40	)%
Expansion	6.7			—			—			6.7			2.8			—			—			2.8			139	%
	$	20.5		$	4.9		$	—		$	25.4		$	21.4		$	12.4		$	—		$	33.8		(25	)%

(1) For additional information see the Non-GAAP measures section.

(2) Average low-grade cobalt published price per Metals Bulletin.

$ millions, for the years ended December 31									2015											2014
	Moa JV and			Ambatovy								Moa JV and			Ambatovy
	Fort Site			JV			Other		Total			Fort Site			JV(1)			Other		Total			Change

FINANCIAL HIGHLIGHTS
Revenue	$	412.6		$	332.0		$	60.5	$	805.1		$	457.4		$	291.8		$	64.6	$	813.8		(1	)%
Earnings (loss) from operations	(4.4		)	(1,934.1		)	0.5		(1,938.0		)	39.0			(158.4		)	1.3		(118.1		)	(1,541	)%
Adjusted EBITDA(2)	42.2			(9.4		)	0.5		33.3			78.1			(5.5		)	0.7		73.3			(55	)%
Cash provided (used) by operations	53.4			(24.3		)	4.1		33.2			34.5			(52.6		)	0.9		(17.2		)	293	%
Free cash flow(2)	(9.0		)	(60.4		)	4.1		(65.3		)	(6.9		)	(102.9		)	0.9		(108.9		)	40	%

PRODUCTION VOLUMES (tonnes)
Mixed Sulphides	18,510			19,598			—		38,108			18,205			16,107			—		34,312			11	%
Finished Nickel	16,853			18,908			—		35,761			16,455			14,821			—		31,276			14	%
Finished Cobalt	1,867			1,386			—		3,253			1,605			1,166			—		2,771			17	%
Fertilizer	255,991			54,930			—		310,921			263,423			39,112			—		302,535			3	%

NICKEL RECOVERY (%)	89		%	86		%						87		%	86		%

SALES VOLUMES (tonnes)
Finished Nickel	16,980			18,857			—		35,837			16,604			13,559			—		30,163			19	%
Finished Cobalt	1,885			1,362			—		3,247			1,623			1,071			—		2,694			21	%
Fertilizer	182,065			56,033			—		238,098			214,271			36,841			—		251,112			(5	)%

AVERAGE REFERENCE PRICES (US$ per pound)
Nickel									$	5.37										$	7.65		(30	)%
Cobalt(3)									12.99											14.16			(8	)%

AVERAGE-REALIZED PRICES(2)
Nickel ($ per pound)	$	6.72		$	6.64		—		$	6.68		$	8.23		$	8.37		—		$	8.29		(19	)%
Cobalt ($ per pound)	15.69			14.50			—		15.20			15.20			14.93			—		15.10			1	%
Fertilizer ($ per tonne)	425			196			—		371			392			168			—		359			3	%

UNIT OPERATING COSTS(2) (US$ per pound)
Nickel - net direct cash cost	$	3.88		$	4.83		—		4.38			$	4.99		$	7.04		—		5.91			(26	)%

SPENDING ON CAPITAL(4)
Sustaining	$	47.4		$	23.8		$	—	$	71.2		$	36.6		$	37.5		$	—	$	74.1		(4	)%
Expansion	16.7			—			—		16.7			6.0			—			—		6.0			178	%
	$	64.1		$	23.8		$	—	$	87.9		$	42.6		$	37.5		$	—	$	80.1		10	%

(1) Represents the post-commercial production period except for production volumes and nickel recovery.

(2) For additional information see the Non-GAAP measures section.

(3) Average low-grade cobalt published price per Metals Bulletin.

(4) For Ambatovy JV, excludes payments made on arbitration settlements disclosed in note 7 of the audited consolidated financial statements for the year ended December 31, 2015.

Moa Joint Venture and Fort Site

Revenue is composed of the following:

	For the three months ended						For the years ended
	2015		2014				2015		2014
$ millions	December 31		December 31		Change		December 31		December 31		Change

Nickel	$	54.8	$	77.0	(29	)%	$	254.5	$	301.4	(16	)%
Cobalt	17.4		14.9		17	%	65.2		54.4		20	%
Fertilizers	25.0		30.5		(18	)%	77.4		83.9		(8	)%
Other(1)	3.9		4.9		(20	)%	15.5		17.7		(12	)%
	$	101.1	$	127.3	(21	)%	$	412.6	$	457.4	(10	)%

(1) Beginning in the second quarter of 2015 sulphuric acid revenue was reclassified from fertilizers to other; all current and prior periods have been adjusted to reflect this change. The amount of sulphuric acid revenue included in other was $2.7 million and $10.6 million for the three and twelve months ended December 31, 2015, respectively, and $3.0 million and $11.7 million for the three and twelve months ended December 31, 2014, respectively.

The change in earnings from operations between 2015 and 2014 is detailed below:

	For the three			For the year
	months ended			ended
	2015			2015
$ millions	December 31			December 31

Lower U.S. dollar denominated realized nickel prices	$	(27.5	)	$	(85.7	)
Lower U.S. dollar denominated realized cobalt prices	(3.6		)	(6.0		)
Higher fertilizer prices	1.9			7.8
Higher metals sales volumes	1.7			4.8
Lower fertilizer sales volumes	(2.0		)	(4.1		)
Lower mining, processing and refining, third-party feed and fertilizer unit costs	12.4			32.3
Weaker Canadian dollar relative to the U.S. dollar	1.2			9.7
Other	(0.8		)	(2.2		)
Change in earnings from operations, compared to 2014	$	(16.7	)	$	(43.4	)

The average-realized prices of nickel and cobalt for the three and twelve months ended December 31, 2015 were lower than the same periods in the prior year due to lower reference prices. The impact of lower reference prices was partly offset by the impact of a weaker Canadian dollar relative to the U.S. dollar.

Production of contained mixed sulphides for the three months ended December 31, 2015 was lower compared to the same period in the prior year primarily as a result of unplanned maintenance in HPAL operations resulting in lower process plant availability in the quarter. The unplanned maintenance and lower availability was partially attributed to power failures stemming from a newly commissioned national power plant in Moa which also contributed to premature component failures in the HPAL. Production was higher for the twelve months ended December 31, 2015 reflecting strong production in the first half of 2015.

Production of finished nickel for the three months ended December 31, 2015 was lower compared to the same period in the prior year due to lower Moa feed availability; however it was higher for the twelve month period. Continued stable refinery operations and mixed sulphide availability over the course of the year, resulted in finished nickel volume above levels of the prior year despite a longer planned annual refinery shutdown in the second quarter of 2015. Finished cobalt production for the three and twelve months ended December 31, 2015 was also higher than in the same periods in the prior year reflecting similar trends and a higher utilization of cobalt rich feeds.

Fertilizer’s contributions to operating earnings for the three and twelve months ended December 31, 2015 were lower compared to the same periods in the prior year due to lower production and sales volumes, partly offset by higher realized prices. For the twelve months ended December 31, 2015, lower opening inventories after a strong fourth quarter in 2014 and the longer planned maintenance shutdown in the second quarter of 2015, impacted production and sales volumes.

Cost of sales(1) is composed of the following:

	For the three months ended						For the years ended
	2015		2014				2015		2014
$ millions	December 31		December 31		Change		December 31		December 31		Change

Mining, processing and refining	$	61.3	$	67.5	(9	)%	$	254.1	$	256.2	(1	)%
Third-party feed costs	4.7		3.4		38	%	13.9		14.6		(5	)%
Fertilizers	16.4		22.5		(27	)%	57.6		62.0		(7	)%
Selling costs	4.7		4.4		7	%	16.6		16.9		(2	)%
Other(2)	6.2		4.1		51	%	23.6		19.3		22	%
	$	93.3	$	101.9	(8	)%	$	365.8	$	369.0	(1	)%

(1) Excludes depletion, depreciation and amortization

(2) Beginning in the second quarter of 2015 sulphuric acid cost of sales was reclassified from fertilizers to other; all current and prior periods have been adjusted to reflect this change. The amount of sulphuric acid cost of sales included in other was $1.5 million and $11.4 million for the three and twelve months ended December 31, 2015, respectively, and $1.5 million and $6.5 million for the three and twelve months ended December 31, 2014, respectively. Sulphuric acid costs increased in the twelve months ended December 31, 2015 primarily due to the bi-annual maintenance shutdown of the Sulphuric Acid Plant which took place in 2015.

Net direct cash cost(1) is composed of the following:

	For the three months ended								For the years ended
	2015			2014					2015			2014
	December 31			December 31			Change		December 31			December 31			Change

Mining, processing and refining costs	$	4.60		$	6.00		(23	)%	$	5.15		$	6.24		(17	)%
Third-party feed costs	0.38			0.31			23	%	0.29			0.36			(19	)%
Cobalt by-product credits	(1.39		)	(1.35		)	(3	)%	(1.36		)	(1.34		)	(1	)%
Other(2)	(0.69		)	(0.52		)	(33	)%	(0.20		)	(0.27		)	26	%
Net direct cash cost (US$ per pound of nickel)	$	2.90		$	4.44		(35	)%	$	3.88		$	4.99		(22	)%

(1) For additional information see the Non-GAAP measures section.

(2) Includes the Moa Joint Venture and Fort Site refinery fertilizer by-product profit or loss and marketing costs, discounts, and other by-product credits.

Net direct cash cost of nickel in the three and twelve months ended December 31, 2015 were lower compared to the same periods in the prior year due largely to lower mining, processing and refining costs primarily reflecting lower fuel oil prices.

Sustaining capital spending for the Moa Joint Venture was lower in the three months ended December 31, 2015 and higher in the twelve months ended December 31, 2015 compared to the same periods in the prior year. The decrease in the fourth quarter was due to planned deferral of spending into 2016 in response to the weak commodity price environment. The increase in the year to date period is a result of higher planned spending undertaken during the extended refinery and utilities shutdowns completed in the second quarter of 2015 and a weaker Canadian dollar relative to the U.S. dollar. Expansion capital spending relates to the construction of the 2,000 tonnes per day acid plant at Moa which is on track for operation in the second half of 2016.

Ambatovy

Revenue is composed of the following:

	For the three months ended						For the years ended
	2015		2014				2015		2014
$ millions	December 31		December 31		Change		December 31		December 31(1)		Change

Nickel	$	56.8	$	63.2	(10	)%	$	276.3	$	249.9	11	%
Cobalt	10.2		8.4		21	%	43.6		35.2		24	%
Fertilizers	2.9		1.7		71	%	11.0		6.2		77	%
Other	—		0.1		(100	)%	1.1		0.5		120	%
	$	69.9	$	73.4	(5	)%	$	332.0	$	291.8	14	%

(1) Excludes revenue for January 2014 of approximately $17 million, which was capitalized for accounting purposes.

The change in earnings from operations between 2015 and 2014 is detailed below:

	For the three			For the year
	months ended			ended
	2015			2015
$ millions	December 31			December 31

Lower US dollar denominated realized nickel prices	$	(21.6	)	$	(47.9	)
Lower US dollar denominated realized cobalt prices	(5.1		)	(10.6		)
Higher metals sales volumes	23.8			85.3
Higher fertilizer sales volumes	0.9			3.0
Lower administrative expense	2.8			4.7
Higher depreciation expense	(3.6		)	(23.2		)
Weaker Canadian dollar relative to the U.S. dollar	(16.6		)	(55.7		)
January 2014 losses capitalized prior to commercial production	—			(10.2		)
Impairment of assets (excluding related $102.9M tax recovery)	(1,722.5		)	(1,722.5		)
Other	8.0			1.4
Change in earnings from operations, compared to 2014	$	(1,733.9	)	$	(1,775.7	)

In the fourth quarter of 2015, the Ambatovy Joint Venture recorded an impairment of US$2.4 billion (100% basis) due to lower forecast nickel prices. The impairment recorded at the Sherritt level is $1.6 billion after tax, consisting of $1.3 billion representing Sherritt’s 40% share of Ambatovy’s impairment and $0.3 billion from the incremental carrying value of Sherritt’s Ambatovy assets, primarily related to mineral rights acquired from Dynatec in 2007.

The average-realized prices of nickel and cobalt for the three and twelve months ended December 31, 2015 decreased compared to the same periods in the prior year due to lower reference prices. The impact of a lower reference price was partly offset by a weaker Canadian dollar relative to the U.S. dollar.

Production and sales volumes of nickel and cobalt were higher for the three and twelve months ended December 31, 2015 compared to the same periods in the prior year due to process control enhancements and improved operational stability, which have facilitated the ramp-up of production capacity. Finished nickel production for three and twelve months ended December 31, 2015 represents 81% and 79% of design capacity, respectively. For the twelve months ended December 31, 2015 production was affected by a plant strike in April, unexpected plant outages and maintenance and repairs to the ore thickeners. All autoclave train turnarounds scheduled for the second half of 2015 were successfully completed and significant progress was made in reducing maintenance time required to perform an autoclave turnaround from approximately 42 days to 21 days going forward. In the third quarter of 2016, a two week total plant shutdown is scheduled to complete inspections of pressure vessels in accordance with statutory engineering codes and to carry out major opportune maintenance in various areas of the plant.

Sales volumes of nickel and cobalt for the twelve months ended December 31, 2015 were also higher compared to the prior-year period which only included sales for the eleven months following the declaration of commercial production.

Depletion, depreciation, and amortization expense for the three and twelve months ended December 31, 2015 were higher compared to the same periods in the prior year due to the impact of a weaker Canadian dollar relative to the U.S. dollar. For the twelve months ended December 31, 2015 the increase is also due to the prior-year period recognizing depreciation for the post commercial production period only. Going forward, depreciation charges are expected to decline by approximately US$55.0 million (40% basis) per year as a result of the lower carrying value due to the impairment recognized in the fourth quarter of 2015.

Cost of sales(1) is composed of the following:

	For the three months ended						For the years ended
	2015		2014				2015		2014
$ millions	December 31		December 31		Change		December 31		December 31(2)		Change

Mining, processing and refining	$	68.4	$	70.1	(2	)%	$	296.1	$	257.4	15	%
Selling costs	3.5		2.6		35	%	14.5		10.6		37	%
Impairment of inventory	36.4		—		—		36.4		—		—
Other	3.9		—		—		9.7		3.8		155	%
	$	112.2	$	72.7	5	%	$	356.7	$	271.8	31	%

(1) Excludes depletion, depreciation and amortization.

(2) Excludes cost of sales for January 2014 of approximately $27 million, which were capitalized for accounting purposes.

Net direct cash cost(1) is composed of the following:

	For the three months ended								For the years ended
	2015			2014					2015			2014
	December 31			December 31			Change		December 31			December 31(2)			Change

Mining, processing and refining costs	$	4.78		$	7.52		(36	)%	$	5.49		$	7.82		(30	)%
Cobalt by-product credits	(0.90		)	(0.97		)	(7	)%	(0.87		)	(1.09		)	(20	)%
Other(3)	0.19			0.43			(56	)%	0.21			0.31			(32	)%
Net direct cash cost (US$ per pound of nickel)	4.07			6.98			(42	)%	4.83			7.04			(31	)%

(1) For additional information see the Non-GAAP measures section.

(2) Represents the post-commercial production period.

(3) Includes selling costs, discounts, and other by-product credits.

Net direct cash cost of nickel for the three and twelve months ended December 31, 2015 decreased compared to the same periods in the prior year primarily due to increased production efficiencies resulting from the continued ramp up; lower maintenance costs and headcount and lower overall input commodity prices. The fourth quarter of 2015 represented a record NDCC quarter for Ambatovy and demonstrates the potential for Ambatovy NDCC to trend toward the lowest quartile NDCC production with mining, processing and refining costs similar to those of the Moa Joint Venture.

Capital spending for Ambatovy is focused on sustaining capital for mining and production equipment and the tailings facility.

In the third quarter of 2015, SNC-Lavalin exercised their put option to divest their 5% interest in Ambatovy, selling their stake to existing partner Sumitomo Corporation for $600.0 million. Sumitomo now owns 32.5%, with Sherritt at 40% and Korea Resources at 27.5%. As a result of SNC-Lavalin exercising their put option, Sherritt’s Ambatovy call option expired and the Corporation recognized a loss on financial instruments of $13.7 million within net finance expense.

In 2015, Sherritt provided funding to Ambatovy of US$105.6 million ($135.7 million). Funding requirements were significantly impacted in the year by principal and interest payments on the Ambatovy Joint Venture Financing. As no funding was provided in the fourth quarter, this amount is unchanged from the funding that Sherritt reported in the third quarter of 2015. As a result of achieving financial completion, the US$ 1.6 billion Ambatovy Joint Venture Financing (balance as at December 31, 2015, 100% basis) became non-recourse to the partners.

Sherritt determined not to fund further cash calls at this time to preserve liquidity and due to the current structure of the Ambatovy partner loans, which, at current nickel prices, effectively reduce Sherritt’s 40% interest in Ambatovy to a 12% economic interest(1). At this time, Sherritt continues to serve as operator, and constructive discussions are ongoing between partners and senior lenders regarding future funding of Ambatovy and modifications to the existing senior principal amortization.

OIL AND GAS

Financial review

	For the three months ended								For the years ended
	2015			2014					2015			2014
$ millions, except as otherwise noted	December 31			December 31			Change		December 31			December 31		Change

FINANCIAL HIGHLIGHTS
Revenue	$	30.5		$	49.6		(39	)%	$	162.6		$	269.3	(40	)%
(Loss) earnings from operations	(1.2		)	(4.9		)	76	%	(71.6		)	110.7		(165	)%
Adjusted EBITDA(1)	9.7			26.3			(63	)%	81.9			191.7		(57	)%
Cash provided (used) by operations	30.2			58.3			(48	)%	80.7			193.8		(58	)%
Free cash flow(1)	23.3			41.6			(44	)%	21.4			131.0		(84	)%

PRODUCTION AND SALES(2)
Gross working-interest (GWI) - Cuba	17,045			18,701			(9	)%	18,257			19,456		(6	)%
Total net working-interest (NWI)	10,727			10,369			3	%	11,158			10,960		2	%

AVERAGE REFERENCE PRICES (US$ per barrel)
Gulf Coast Fuel Oil No. 6	$	29.86		$	61.98		(52	)%	$	40.68		$	82.55	(51	)%
Brent	43.45			76.80			(43	)%	52.08			99.35		(48	)%

AVERAGE-REALIZED PRICES(1) (NWI)
Cuba ($ per barrel)	$	29.38		$	49.93		(41	)%	$	38.35		$	66.21	(42	)%
Spain ($ per barrel)	53.39			84.61			(37	)%	67.37			109.08		(38	)%
Pakistan ($ per boe)(2)	11.00			9.38			17	%	10.63			9.05		17	%
Weighted-average ($ per boe)	29.53			49.58			(40	)%	38.73			65.69		(41	)%

UNIT OPERATING COSTS(1)(2)(3) (GWI)
Cuba	$	10.82		$	9.94		9	%	$	9.53		$	8.56	11	%
Spain	60.40			185.59			(67	)%	61.12			72.80		(16	)%
Pakistan	9.87			6.36			55	%	8.56			6.45		33	%
Weighted-average ($ per boepd)	11.64			12.25			(5	)%	10.69			9.45		13	%

SPENDING ON CAPITAL
Development, facilities and other	$	(1.2	)	$	20.2		(106	)%	$	53.1		$	64.8	(18	)%
Exploration	0.5			—			—		1.4			0.6		133	%
	$	(0.7	)	$	20.2		(103	)%	$	54.5		$	65.4	(17	)%

(1) For additional information see the Non-GAAP measures section.

(2) Oil production is stated in barrels of oil per day (bopd). Natural gas production is stated in barrels of oil equivalent per day (boepd), which is converted at 6,000 cubic feet per barrel. Collectively, oil and natural gas production are stated in barrels of oil equivalent per day (boepd).

(3) Excludes the impact of impairment of property, plant and equipment.

Oil and Gas revenue is composed of the following:

	For the three months ended						For the years ended
	2015		2014				2015		2014
$ millions	December 31		December 31		Change		December 31		December 31		Change

Cuba	$	27.4	$	45.0	(39	)%	$	146.1	$	250.6	(42	)%
Spain	1.5		2.0		(25	)%	10.5		11.2		(6	)%
Pakistan	0.2		0.2		—		1.1		1.0		10	%
Processing	1.4		2.4		(42	)%	4.9		6.5		(25	)%
	$	30.5	$	49.6	(39	)%	$	162.6	$	269.3	(40	)%

The change in earnings from operations between 2015 and 2014 is detailed below:

	For the three			For the year
	months ended			ended
	2015			2015
$ millions	December 31			December 31

Lower realized oil and gas prices, denominated in U.S. dollars	$	(12.3	)	$	(93.8	)
Lower Cuba gross working-interest volumes	(3.4		)	(11.8		)
Higher Spain volumes	—			6.7
Lower cost recovery revenue	(4.2		)	(14.6		)
Lower administrative costs	(0.7		)	1.1
Lower depletion, depreciation and amortization	8.6			4.0
Weaker Canadian dollar relative to the U.S. dollar	(2.3		)	(5.7		)
Impairment of Oil assets	—			(80.6		)
Lower exploration and evaluation impairment losses	13.5			14.7
Lower (higher) operating costs	3.7			(1.5		)
Other	0.8			(0.8		)
Change in earnings from operations, compared to 2014	$	3.7		$	(182.3	)

Reference and realized prices continued to decline in the fourth quarter of 2015. Prices were significantly lower in the three and twelve months ended December 31, 2015 compared to the same periods in the prior year. The decrease in average-realized price in the current-year periods benefited from the impact of a weaker Canadian dollar relative to the U.S. dollar.

In Spain, revenue decreased in the three and twelve months ended December 31, 2015 compared to the same periods in the prior year primarily due to lower realized prices, partly offset by higher production resulting from a successful workover in the Rodaballo field, which came back onto production in the first quarter of 2015.

Production and sales volumes were as follows:

	For the three months ended				For the years ended
	2015	2014			2015	2014
Daily production volumes(1)	December 31	December 31	Change		December 31	December 31	Change

Gross working-interest oil production in Cuba	17,045	18,701	(9	)%	18,257	19,456	(6	)%
Net working-interest oil production
Cuba (heavy oil)
Cost recovery	4,580	4,311	6	%	4,059	3,395	20	%
Profit oil	5,565	5,493	1	%	6,378	6,975	(9	)%
Total	10,145	9,804	3	%	10,437	10,370	1	%
Spain (light oil)	292	257	14	%	426	280	52	%
Pakistan (natural gas)	290	308	(6	)%	295	310	(5	)%
	10,727	10,369	3	%	11,158	10,960	2	%

(1) Refer to Oil and Gas production and sales volume on page 62 for further detail.

Gross working-interest oil production in Cuba decreased for the three and twelve months ended December 31, 2015 compared to the same periods in the prior year primarily due to lower oil production from development wells drilled under the Puerto Escondido/Yumuri Production Sharing Contract (PSC) extension which were not able to offset the natural reservoir declines.

Cost-recovery oil production in Cuba for the three and twelve months ended December 31, 2015 increased compared to the same periods in the prior year as a result of lower oil prices. The allocation of cost recovery barrels in any particular period is limited to a fixed percentage of GWI volumes within each cost pool. Expenditures that exceed this limit are carried forward and are eligible for a future allocation of cost recovery barrels.

Profit oil production, which represents Sherritt’s share of production after cost recovery volumes are deducted from GWI volumes, were lower in the twelve months ended December 31, 2015 as a result of higher cost recovery oil volumes during the current-year periods and a reduction in GWI volumes.

In Spain, oil production was higher in the three and twelve months ended December 31, 2015 compared to the same periods in the prior year as a result of increased production from the Rodaballo field.

Unit operating cost in Cuba increased in the three and twelve months ended December 31, 2015 compared to the same periods in the prior year primarily due to a weaker Canadian dollar relative to the U.S. dollar and lower production, partly offset by lower workover costs in 2015.

Unit operating cost in Spain decreased in the three and twelve months ended December 31, 2015 compared to the same periods in the prior year primarily as a result of lower workover costs in 2015 as well as higher production in the Rodaballo field.

Spending on capital was lower in the three and twelve months ended December 31, 2015 compared to the same periods in the prior year due to a decrease in development drilling activities and lower spending on facilities. In the twelve months ended December 31, 2015, a total of six development wells were drilled with two currently producing oil, one abandoned, one suspended and two shut-in.

During the year, Oil and Gas fulfilled its commitment to drill seven wells under the Puerto Escondido/Yumuri Production Sharing Contract extension agreement.

POWER

Financial review

	For the three months ended								For the years ended
	2015			2014					2015			2014
$ millions (331/3% basis), except as otherwise noted	December 31			December 31			Change		December 31			December 31		Change

FINANCIAL HIGHLIGHTS
Revenue	$	13.7		$	11.7		17	%	$	52.7		$	49.0	8	%
(Loss) earnings from operations	(3.3		)	(0.1		)	(3,200	)%	(3.7		)	4.3		(186	)%
Adjusted EBITDA(1)	5.5			5.4			2	%	30.0			24.8		21	%
Cash provided by operations	6.5			18.5			(65	)%	61.4			49.8		23	%
Free cash flow(1)	4.4			16.3			(73	)%	57.0			45.4		26	%

PRODUCTION AND SALES
Electricity (GWh(2))	226			214			6	%	902			847		6	%

AVERAGE-REALIZED PRICES(1)
Electricity (per MWh(2))	$	56.53		$	48.38		17	%	$	54.26		$	46.81	16	%

UNIT OPERATING COSTS(1)(per MWh)
Base	$	23.77		$	19.21		24	%	$	17.57		$	15.18	16	%
Non-base(3)	10.11			3.61			180	%	3.43			2.07		66	%
	33.88			22.82			48	%	21.00			17.25		22	%

SPENDING ON CAPITAL AND SERVICE CONCESSION ARRANGEMENTS
Sustaining	$	2.2		2.3			(4	)%	$	4.4		$	3.7	19	%
Growth	—			—			—		—			0.7		(100	)%
Capital	$	2.2		2.3			(4	)%	$	4.4		$	4.4	—

Service concession arrangements	(0.2		)	—			—		(0.3		)	2.1		(114	)%
	$	2.0		2.3			(13	)%	$	4.1		$	6.5	(37	)%

(1) For additional information see the Non-GAAP measures section.

(2) Gigawatt hours (GWh), Megawatt hours (MWh).

(3) Costs incurred at the Boca de Jaruco and Puerto Escondido facilities that otherwise would have been capitalized if these facilities were not accounted for as service concession arrangements.

Power revenue is composed of the following:

	For the three months ended							For the years ended
	2015			2014				2015			2014
$ millions (331/3% basis)	December 31			December 31		Change		December 31			December 31		Change

Electricity sales	$	12.9		$	10.3	25	%	$	49.0		$	39.6	24	%
By-products and other	1.0			1.4		(29	)%	4.0			7.3		(45	)%
Construction activity(1)	(0.2		)	—		—		(0.3		)	2.1		(114	)%
	$	13.7		$	11.7	17	%	$	52.7		$	49.0	8	%

(1) Value of construction, enhancement or upgrading activity of the Boca de Jaruco and Puerto Escondido facilities. The contractual arrangements related to the activities of these facilities are treated as service concession arrangements for accounting purposes. Construction activity revenue is offset equally by construction activity expenses recorded in cost of goods sold.

The change in earnings from operations between 2015 and 2014 is detailed below:

	For the three			For the year
	months ended			ended
	2015			2015
$ millions (331/3% basis)	December 31			December 31

Higher electricity volumes	$	0.7		$	3.1
Lower realized by-product prices	(0.5		)	(2.9		)
Lower realized by-product volume	(0.1		)	(0.8		)
Lower administrative expenses	0.9			3.5
Higher depletion, depreciation and amortization	(3.3		)	(13.2		)
Weaker Canadian dollar relative to the U.S. dollar	2.0			7.3
Other	(2.9		)	(5.0		)
Change in earnings from operations, compared to 2014	$	(3.2	)	$	(8.0	)

Electricity revenue was higher in the three and twelve months ended December 31, 2015, due to higher realized prices and production volumes. Production was higher in the current periods as a result of higher gas availability and for the year to date period, production from the 150MW Boca de Jaruco Combined Cycle Project which was operational for the entire period, compared to eleven months in the prior-year period as a result of being brought online effective February 2, 2014.

The average-realized price of electricity was higher for the three and twelve months ended December 31, 2015 compared to the same periods in the prior year primarily due to a weakening of the Canadian dollar relative to the U.S. dollar.

Higher depletion, depreciation and amortization expense for the three and twelve months ended December 31, 2015 compared to the same periods in the prior year is due to the impact of a change in residual value estimate of the Varadero facility in the first quarter of 2015 as well as the impact of a weaker Canadian dollar relative to the U.S. dollar. In addition, depletion, depreciation and amortization is higher for the twelve months ended December 31, 2015 due to depreciation at the Boca de Jaruco Combined Cycle Project being recognized for the full period, compared to eleven months in the prior period.

Unit operating cost increased for the three and twelve months ended December 31, 2015 compared to the same periods in the prior year due to a weaker Canadian dollar relative to the U.S. dollar and higher routine maintenance costs, partly offset by higher production.

Sustaining capital expenditures were primarily related to routine maintenance and the purchases of equipment.

Liquidity and capital resources

Total available liquidity at December 31, 2015 was $438.0 million which includes cash, cash equivalents and short term investments of $435.4 million and available credit facilities of $2.6 million.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The following table provides a summary of consolidated significant liquidity and capital commitments based on existing commitments and debt obligations (including accrued interest):

					Falling		Falling		Falling		Falling		Falling
			Falling		due		due		due		due		due in
			due within		between		between		between		between		more than
Canadian $ millions, as at December 31, 2015	Total		1 year		1-2 years		2-3 years		3-4 years		4-5 years		5 years

Trade accounts payable and accrued liabilities	$	73.6	$	73.6	$	—	$	—	$	—	$	—	$	—
Income taxes payable	2.4		2.4		—		—		—		—		—
Senior unsecured debentures	1,041.4		58.4		58.4		308.4		38.4		288.4		289.4
Ambatovy Joint Venture Additional Partner loans (non-recourse)	4,985.2		—		—		—		—		—		4,985.2
Ambatovy Joint Venture Partner loans	168.1		—		—		—		—		—		168.1
Other loans and borrowings	95.2		95.2		—		—		—		—		—
Provisions	160.7		19.1		4.2		4.4		—		0.4		132.6
Operating leases(2)	20.0		2.9		2.9		3.0		3.0		3.0		5.2
Capital commitments	11.5		11.5		—		—		—		—		—
Total	$	6,558.1	$	263.1	$	65.5	$	315.8	$	41.4	$	291.8	$	5,580.5

(1) The interest and principal on the loans from the Ambatovy Joint Venture partners will be repaid from the Corporation’s share of distributions from the Ambatovy Joint Venture. Amounts are based on management’s best estimate of future cash flows including estimating assumptions such as commodity prices, production levels, cash costs of production, capital and reclamation costs. The Ambatovy Joint Venture additional partner loans are non-recourse to Sherritt unless there is a direct breach of certain restrictions stipulated in the loan documents. The maturity analysis table includes an estimate of interest repayments.

OTHER COMMITMENTS

The following commitments are not reflected in the table above:

Moa Joint Venture

As a result of the Corporation’s 50% interest in the Moa Joint Venture, its proportionate share of significant commitments of the joint venture includes the following:

· Environmental rehabilitation commitments of $87.6 million, with no significant payments due in the next four years;

· Advances and loans payable of $218.2 million; and

· Other commitments of $0.9 million.

Ambatovy Joint Venture

As a result of the Corporation’s 40% interest in the Ambatovy Joint Venture, its proportionate share of significant commitments of the Joint Venture includes the following:

· Environmental rehabilitation commitments of $227.5 million, with no significant payments due in the next four years;

· Other contractual commitments of $29.5 million; and

· Ambatovy Joint Venture senior debt financing of US$640.4 million ($886.4 million). On an undiscounted basis, principal and interest repayments are $1.1 billion.

In September 2015, the Ambatovy Joint Venture achieved financial completion under the Ambatovy Joint Venture financing, during the fourth quarter 2015 the challenge period for financial completion expired. Upon achieving financial completion, the US$1.6 billion (100% basis, balance as at December 31, 2015) Ambatovy senior financing became non-recourse to the Joint Venture partners and the interest rate increased from LIBOR plus 1.4% to LIBOR plus 2.5%.

INVESTMENT LIQUIDITY

At December 31, 2015, cash and cash equivalents and investments were located in the following countries:

			Cash equivalents
			and
			short-term
$ millions, as at December 31, 2015	Cash		investments		Total

Canada	$	100.2	$	323.7	$	423.9
Cuba	3.9		—		3.9
Other	7.7		—		7.7
	$	111.8	$	323.7	$	435.5

Cash and short-term investments

The Corporation’s cash balances are deposited with major financial institutions rated A- or higher by Standard & Poor’s, except for institutions located in Madagascar (BB or higher) and with banks in Cuba that are not rated.

At December 31, 2015 cash equivalents includes $ 118.9 million in Government of Canada treasury bills and term deposits with major financial institutions both having original maturity dates of less than three months and short-term investments includes $204.8 million in Government of Canada treasury bills having original maturity dates of greater than three months and less than one year.

The table above does not include cash and cash equivalents of $43.7 million (100% basis) held by the Moa Joint Venture, or $39.6 million (100% basis) held by the Ambatovy Joint Venture. The Corporation’s share is included as part of the investment in a joint venture and associate balances in the consolidated statement of financial position.

Loans and Borrowings

Loans and borrowings are composed primarily of:

· $750.0 million in unsecured debentures and notes having interest rates between 7.50% and 8.00% and maturities in 2018, 2020 and 2022;

· $1.4 billion in two loans provided by the Ambatovy Joint Venture partners to finance Sherritt’s portion of funding requirements of the Joint Venture bearing interest of six-month LIBOR plus a margin of 7.0% and 1.125%, respectively;

· $55.0 million in the syndicated revolving-term credit facility bearing interest at prime plus 2.25% per annum or bankers’ acceptances plus 3.25%; and

· $35.0 million in a line of credit bearing interest at prime plus 2.75% or bankers’ acceptances plus 3.75% per annum.

The following is a summary of significant changes in the Corporation’s credit facilities during 2015.

Syndicated revolving-term credit facility

Line of credit

CAPITAL STRUCTURE

	2015			2014
$ millions, except as otherwise noted	December 31			December 31			Change

Current portion of loans and borrowings	$	91.2		$	1.6		5600	%
Non-current loans and borrowings	2,171.9			1,858.3			17	%
Other financial liabilities	3.4			7.4			(54	)%
Total debt	$	2,266.5		$	1,867.3		21	%
Shareholders’ equity	1,557.1			3,058.7			(49	)%
Total debt-to-capital (1)	59		%	38		%	56	%

Common shares outstanding	293,853,001			293,271,191			—
Stock options outstanding	6,149,349			5,518,752			11	%

(1) Calculated as total debt divided by the sum of total debt and shareholders’ equity.

AVAILABLE CREDIT FACILITIES

The following table outlines the maximum amounts undrawn and available to the Corporation for credit facilities that had amounts undrawn at December 31, 2015 and December 31, 2014. In September 2015, the Corporation amended the terms of the syndicated revolving-term credit facility as well as the line of credit and increased the maximum credit available on these facilities. A detailed description of these facilities is provided in the Loans, borrowings and other liabilities note in the Corporation’s audited consolidated statements for the years ended December 31, 2015 and December 31, 2014.

					2015						2014
$ millions, as at					December 31						December 31
	Maximum		Undrawn		Available(1)		Maximum		Undrawn		Available(1)

Short-term
Syndicated revolving-term credit facility(2)	$	115.0	$	12.6	$	2.6	$	90.0	$	33.0	$	33.0
Line of credit	35.0		—		—		20.0		20.0		20.0
Total	$	150.0	$	12.6	$	2.6	$	110.0	$	53.0	$	53.0

(1) The Corporation’s credit facilities are available to the extent amounts are undrawn and financial covenants or restrictions have not been exceeded.

(2) Established for general corporate purposes. Total available draw is based on eligible receivables and inventory. At December 31, 2015, the Corporation had $47.4 million of letters of credit outstanding and drew down $55.0 million on this facility. Letters of credit at December 31, 2015 are primarily in place to support Oil and Gas reclamation obligations in Spain and exploration activities in Cuba.

Covenants

Certain of the Corporation’s credit facilities, loans and debentures have financial tests and other covenants with which the Corporation and its affiliates must comply. Non-compliance with such covenants could result in accelerated repayment of the related debt or credit facilities and classification of the amounts to current. The Corporation monitors its covenants on an ongoing basis and reports on its compliance with the covenants to its lenders on a quarterly basis.

SOURCES AND USES OF CASH

The Corporation’s cash flows from operating, investing and financing activities are summarized in the following table as derived from Sherritt’s consolidated statements of cash flow(1).

	For the three months ended								For the years ended
	2015			2014					2015			2014
$ millions	December 31			December 31			Change		December 31			December 31			Change

Cash provided (used) by operating activities
Oil and Gas operating cash flow	$	30.2		$	58.3		(48	)%	$	80.7		$	193.8		(58	)%
Power operating cash flow (excluding interest received on Energas CSA loan)	3.7			7.1			(48	)%	23.5			23.4			—
Fort Site operating cash flow	1.2			15.1			(92	)%	14.3			13.6			5	%
Dividends received from Moa Joint Venture	—			—			—		12.5			—			—
Interest received on Moa Joint Venture loans	0.6			2.0			(70	)%	9.1			13.7			(34	)%
Interest received on Energas CSA loan	2.8			11.4			(75	)%	37.9			26.4			44	%
Interest paid on debentures	(20.4		)	(27.9		)	27	%	(58.9		)	(93.2		)	37	%
Premium paid on redemption of debentures	—			(33.6		)	100	%	—			(33.6		)	100	%
Corporate and other operating cash flow	(7.3		)	7.0			(204	)%	(54.6		)	(34.5		)	(58	)%
Cash provided by continuing operations	10.8			39.4			(73	)%	64.5			109.6			(41	)%
Cash (used) provided by discontinued operations	(12.3		)	(0.1		)	(12200	)%	(16.0		)	18.6			(186	)%
	$	(1.5	)	$	39.3		(104	)%	$	48.5		$	128.2		(62	)%

Cash (used) provided by investing and financing activities
Property, plant, equipment and intangible expenditures	$	(11.2	)	$	(25.4	)	56	%	$	(80.4	)	$	(82.3	)	2	%
Receipts of advances, loans receivable and other financial assets	8.3			0.4			1975	%	38.5			10.7			260	%
Increase in advances, loans receivable and other financial assets	—			1.1			(100	)%	(17.1		)	(1.1		)	(1455	)%
Increase of loans, borrowings and other financial liabilities	65.0			—			—		90.0			—			—
Repayment of loans, borrowings and other financial liabilities	(0.4		)	(0.4		)	—		(1.6		)	(365.3		)	100	%
Repayment of senior unsecured debentures	—			(675.0		)	100	%	—			(675.0		)	100	%
Issuance of senior unsecured debentures, net of financing costs	—			239.0			(100	)%	—			239.0			(100	)%
Loans to Ambatovy Joint Venture	—			(73.2		)	100	%	(135.7		)	(191.2		)	29	%
Receipt from investments	—			—			—		—			6.2			(100	)%
Net proceeds from sale of Corporate assets	—			2.1			(100	)%	21.2			2.1			910	%
Dividends paid on common shares	—			(3.0		)	100	%	(9.0		)	(21.9		)	59	%
Issuance of common shares	—			—			—		0.7			1.0			(30	)%
Share repurchase	—			(10.0		)	100	%	—			(10.0		)	100	%
Cash used by discontinued operations	—			—			—		—			(23.0		)	100	%
Net proceeds from sale of Coal (net of cash disposed)	—			—			—		—			804.3			(100	)%
Other	0.4			1.0			(60	)%	3.1			2.7			15	%
	$	62.1		$	(543.4	)	111	%	$	(90.3	)	$	(303.8	)	70	%
	60.6			(504.1		)	112	%	(41.8		)	(175.6		)	76	%
Cash, cash equivalents and short-term investments:
Beginning of the period	374.8			981.3			(62	)%	477.2			652.8			(27	)%
End of the period	$	435.4		$	477.2		(9	)%	$	435.4		$	477.2		(9	)%

(1) As a result of disposing the Coal operations on April 28, 2014, cash (used) provided by Coal prior to disposal and any subsequent uses related to Coal are reported in cash provided (used) by discontinued operations for the current and prior-year periods.

The following significant items affected the sources and uses of cash:

Cash from continuing operations were lower during the three and twelve months ended December 31, 2015 compared to prior periods:

· cash from continuing operating activities at Oil and Gas was lower for the three and twelve months ended December 31, 2015 compared to the same periods in the prior year, respectively as a result of lower earnings and timing related to the settlement of receivables;

· movements in cash flow from operations at Fort Site relates primarily to timing of collection of fertilizer sales; and

· interest payments on debentures were lower as a result of the reduction of outstanding debt in the fourth quarter of 2014.

Included in investing and financing activities:

· funding of $135.7 million (US$105.6 million) to the Ambatovy Joint Venture in the twelve months ended December 31, 2015 relates primarily to fund the Senior Debt Reserve Account upon financial completion and to settle arbitration payments;

· receipts of advances and loans receivable of $8.3 million and $38.5 million for the three and twelve months ended December 31, 2015, respectively, relates primarily to principal repayments from Energas;

· increase in advances and loans receivable in the twelve months end December 31, 2015 of $17.1 million relates to advances made to the Moa Joint Venture; and

· increase in loans and borrowings of $65.0 and $90.0 million for the three and twelve months ended December 31, 2015 relates to the drawdown of the revolving term credit facility and line of credit.

Combined adjusted operating and free cash flow

The Corporation’s combined adjusted operating cash flow(1) and free cash flow(1) are summarized in the following table as derived from Sherritt’s consolidated statements of cash flow.

	For the three months ended								For the years ended
	2015			2014					2015			2014
$ millions	December 31			December 31			Change		December 31			December 31			Change

Combined adjusted operating cash flow	$	(29.5	)	$	(41.3	)	29	%	$	63.1		$	95.1		(34	)%
Combined free cash flow	(24.8		)	(14.8		)	(68	)%	(98.8		)	(81.7		)	(21	)%

(1) For additional information see the Non-GAAP measures section.

During the three months December 31, 2015, combined adjusting operating cash flow, which excludes changes in working capital is higher than the same period in the prior year due to higher interest paid and fees related to the repurchase and redemption of the Corporation’s debentures in the fourth quarter of 2014 partly offset by lower earnings.

During the three months ended December 31, 2015, combined free cash flow is lower than the same period in the prior year due to higher capital spending.

During the twelve months ended December 31, 2015, combined adjusted operating cash flow and combined free cash flow were lower compared to the same period in the prior year primarily as a result of lower earnings and marginally higher property, plant and equipment expenditures due to higher expenditures at the Moa Joint Venture completed in the second quarter of 2015 partly offset by higher interest paid and fees in the fourth quarter of 2014.

COMMON SHARES

As at February 10, 2016, the Corporation had 293,880,001 common shares outstanding. An additional 6,149,349 common shares are issuable upon exercise of outstanding stock options granted to employees and directors pursuant to the Corporation’s stock option plan.

As part of a comprehensive initiative to manage liquidity, the Board has suspended the $0.01 per share quarterly dividend, effective September 2015.

Normal Course Issuer Bid

For the year ended December 31, 2014, the Corporation purchased and cancelled a total of 3,960,300 shares under the NCIB at an average cost of $2.52 per share, for an aggregate cost of $10.0 million. For the year ended December 31, 2015, the Corporation did not purchase or cancel any common shares under the NCIB. The Corporation’s NCIB expired on November 2, 2015 and was not renewed.

Risk Factors

An investment in securities of the Corporation is subject to certain risks. Before making any investment decision, a potential investor should carefully consider the risks described below, as well as the other information contained in and incorporated by reference in this MD&A. These risks may not be the only risks faced by the Corporation. Additional risks and uncertainties not presently known by the Corporation or which are presently considered immaterial may also adversely impact the Corporation’s business, results of operations, and financial performance.

MARKET CONDITIONS

Generally

In recent years, there has been global economic uncertainty, including reduced economic growth, reduced confidence in financial markets, bank failures and credit availability concerns.

Should these conditions continue or intensify, they could have a material adverse effect on the Corporation’s business, results of operations and financial performance.

Commodity Risk

Sherritt’s principal businesses include the sale of several commodities. Revenues, earnings and cash flows from the sale of nickel, cobalt, oil and gas are sensitive to changes in market prices, over which the Corporation has no control. The Corporation’s earnings and financial condition depend largely upon the market prices for nickel, cobalt, oil, gas and other commodities, which can be volatile in nature. The prices for these commodities can be affected by numerous factors beyond the Corporation’s control, including expectations for inflation, speculative activities, relative exchange rates to the U.S. dollar, production activities of mining and oil and gas companies, global and regional supply and demand, supply and market prices for substitute commodities, political and economic conditions and production costs in major producing regions. The prices for these commodities have fluctuated widely in recent years. Significant further reductions in commodity prices or sustained low commodity prices could have a material adverse effect on the Corporation’s business, results of operations and financial performance.

Sherritt’s current businesses are dependent upon commodity inputs such as natural gas, sulphur, sulphuric acid, coal, electricity, fuel oil, diesel and related products, and materials costs that are subject to prevailing commodity prices. Costs and earnings from the use of these products are sensitive to changes in market prices over which Sherritt has no control.

Market Fluctuations and Share Price Volatility

In recent years, the securities markets in Canada and the rest of the developed world have experienced price and volume volatility, which have affected the market price of Sherritt’s securities. The market prices of Sherritt’s securities have been and, may continue to be, affected by these fluctuations, as well as varying in response to a number of other events and factors. These factors may include, but are not limited to: the price of commodities, Sherritt’s operating performance; the public’s reaction to the Corporation’s press releases, other public announcements and the Corporation’s filings with the various securities regulatory authorities; changes in earnings estimates or recommendations by research analysts who trade the Corporation’s common shares or the shares of other companies in the resource sector. In the past year, the market price and trading volume of Sherritt’s securities has decreased significantly, resulting in the Corporation’s common shares being removed from the composite index of the Toronto Stock Exchange. The lower trading price of Sherritt’s common shares has also led to an increase in price volatility, as small increase or decrease in trading price result in a larger proportional percentage change than would have occurred at higher values.

In addition to the factors listed above, securities markets have recently experienced a large degree of price and volume volatility and the market price of many companies have experience wide fluctuations which have not necessarily been related to the operating performance, underlying asset values or prospects of such companies. As such, there can be no assurance that price and volume fluctuations in the market price of Sherritt’s securities will not continue to occur.

Liquidity and Access to Capital

Sherritt’s ability to fund its capital and operating expenses and to meet its financial obligations depend on its ability to generate sufficient cash flow from its operations and its ability obtain additional financing and/or refinance its existing credit facilities and loans on terms that are acceptable to the Corporation. As noted in the risk factor entitled “Commodity Risk” above, Sherritt’s earnings and financial condition are highly dependent upon the market prices for nickel, cobalt, oil, gas and other commodities, which are highly volatile in nature. Should the current negative trend in commodity prices continue, Sherritt may find itself unable to access sufficient capital to fund its operations in the manner required for the long-term viability of the business and/or remain in compliance with its debt covenants. Failure to adequately fund its operations or meet its financial obligations could have a material adverse effect on Sherritt’s business, results of operations and financial performance.

Sherritt’s current financing includes, among other things, a $115 million syndicated revolving-term credit facility, a $35 million unsecured line of credit and $750 million in unsecured debentures. The total available draw under the Corporation’s syndicated revolving-term credit facility is based on eligible receivables and inventory, and the facility is currently fully drawn. If commodity prices remain at similar levels or continue to decline this could result in materially less funds being available to Sherritt under the syndicated revolving-term credit facility and the line of credit. Certain debt covenants under the syndicated revolving-term credit facility and the line of credit are based on ratios involving the Corporation’s EBITDA and/or equity, which would also be negatively affected by decreased commodity prices. As at December 31, 2015 the Corporation exceeded the financial debt to equity covenant of the Syndicated revolving-term credit facility and line of credit as a result of impairment charges recognized on the assets of the Ambatovy Joint Venture. Subsequent to year end, the Corporation received a waiver for this covenant on the Syndicated revolving-term credit facility as at December 31, 2015. In addition, a waiver was also received for this covenant on the line of credit. This waiver is temporary while discussions are ongoing with the line of credit lender. There can be no assurance that these waivers will be extended in the future. Unless the lenders otherwise agree, a breach of such covenants could result in a default and could lead to an acceleration of repayment and early termination of the credit facility and line of credit, which could have a material adverse impact on the Corporation’s liquidity, and its business, results of operations and financial performance.

Please see the risk factor entitled “Ambatovy Liquidity and Funding Risks” for information regarding the financing risks associated with the Ambatovy Joint Venture.

There is no guarantee that the Corporation will be able to refinance its unsecured debentures, as they come due, on terms and conditions that would be acceptable to the Corporation. Similarly, there is a risk that Sherritt will not be able to raise funds in the equity capital markets on terms that are acceptable to the Corporation.

Please see the risk factor entitled “Restrictions in Debt Instruments, Debt Covenants and Mandatory Repayments” for more information on Sherritt’s loans and borrowings and on the effect of non-compliance with certain debt covenants.

AMBATOVY LIQUIDITY AND FUNDING RISKS

The Ambatovy Joint Venture borrowed US$2.1 billion (US$1.6 billion as at December 31, 2015) under the Ambatovy financing agreements and all of the Ambatovy Joint Venture’s assets and the interests of its shareholders in the Ambatovy Joint Venture have been pledged as security for the financing. If the Ambatovy Joint Venture is unable to make semi-annual interest and principal repayments, the Ambatovy senior lenders could realize upon their security and seize all of the Ambatovy Joint Venture’s assets and all of Sherritt’s interest therein. This would have a material adverse effect on Sherritt’s investment in the Ambatovy Joint Venture, and on the Corporation’s business, results of operations and financial performance. Please see “Liquidity and Access to Capital”, above, and “Restrictions in Debt Instruments, Debt Covenants and Mandatory Repayments” and “Reliance on Partners”, below, for additional information.

Cash calls of US$50 million were due to the Ambatovy Joint Venture in January 2016 and Sherritt did not fund its 40% pro-rata share (US$20 million). By agreement amongst the partners, Sherritt is not considered to be a defaulting shareholder under the Shareholders Agreement as a consequence of such non-funding and Sherritt’s unfunded amounts accrue interest at LIBOR +3%. These amounts (including accrued interest) will be subtracted from future Ambatovy Joint Venture distributions, or may be set off by the Ambatovy Joint Venture against certain other amounts owed to Sherritt. Sherritt also has the option to pay such amounts in cash at any time at Sherritt’s election. Until the funding deficit is cured, and subject to continued discussions with the Ambatovy partners, Sherritt will not receive any Ambatovy Joint Venture distributions and will not exercise its voting rights at the Ambatovy Joint Venture’s Executive Committee, its corporate Boards of Directors and its Shareholder Meetings. Sherritt, its partners, and the Ambatovy senior lenders continue to seek a solution on future Ambatovy Joint Venture funding and debt service. In the event that a solution satisfactory to Sherritt is not achieved, there can be no assurance that Sherritt will resume its funding, nor that the existing arrangements between the partners will be extended to funding any future cash calls.

Unless otherwise agreed with its partners, Sherritt would be in breach of the Ambatovy Joint Venture Shareholders Agreement if it fails to resume funding approved cash calls. As a consequence of such breach, Sherritt would become a defaulting shareholder and until its funding deficit was cured: (a) any unfunded amounts would continue to accrue interest at LIBOR +3%; (b) Sherritt would not receive any Ambatovy Joint Venture distributions; (c) Sherritt would lose its voting rights at the Ambatovy Joint Venture’s Executive Committee, its corporate Boards of Directors and its Shareholder Meetings; (d) Sherritt would lose its right to attend and be represented at meetings of the Ambatovy Joint Venture’s Executive Committee and its corporate Boards of Directors; (e) it will be required to offer its 40% shareholder interest and subordinated loans pro rata to the other Ambatovy partners who have the right to purchase them at the lower of fair market value and book value; (f) the other Ambatovy partners can elect to cure Sherritt’s funding deficit by funding on Sherritt’s behalf, in which case such funding is deemed to be a loan to Sherritt, payable on demand, which accrues interest at LIBOR +3% and is limited recourse to Sherritt’s interest in the Ambatovy Joint Venture and repayable from future distributions; and (g) the other Ambatovy Joint Venture partners can elect to dilute Sherritt’s interest by converting such deemed loans or by funding on Sherritt’s behalf and electing dilution of Sherritt’s interest, without any deemed loan. In the event that any of the Ambatovy Joint Venture partners elect to purchase the Corporation’s interest pursuant to paragraph (e), there can be no assurance that the Corporation will receive any proceeds once such purchase price is offset against amounts outstanding under the Partner Loans.

Due to the Ambatovy Joint Venture’s current and projected funding requirements and the distribution sharing arrangements under the partner loans and additional partner loans, in a persistently low nickel price environment there can be no certainty that Sherritt will receive any distributions from the Ambatovy Joint Venture. Accordingly, Sherritt’s continued funding and ongoing involvement in the Ambatovy Joint Venture may not be commercially or economically justified. Sherritt’s future involvement as operator and equity partner in the Ambatovy Joint Venture will be significantly impacted by the outcome of the ongoing discussions between and amongst Sherritt, its partners, and the Ambatovy senior lenders regarding future funding of Ambatovy Joint Venture and modifications to the terms of the Ambatovy Joint Venture Financing. There can be no assurance that these discussions will result in concessions or favourable terms for Sherritt. Whether as a result of Sherritt not funding cash calls or otherwise (and unless the partners otherwise agree), Sherritt’s equity interest in the Ambatovy Joint Venture and entitlements to future distributions could be at risk and there is no assurance that it will be able to retain all or any portion of its equity interest or entitlement to future distributions, which could have a materially adverse effect on the Corporation’s business, results of operations, and financial performance.

Please see “Restrictions in Debt Instruments, Debt Covenants and Mandatory Repayments”, below, for additional information.

RESTRICTIONS IN DEBT INSTRUMENTS, DEBT COVENANTS AND MANDATORY REPAYMENTS

Sherritt is a party to certain agreements in connection with its syndicated revolving-term credit facility and line of credit, as well as the trust indenture governing its 7.875% Notes, its 7.50% Notes and its 8.00% Notes. Sherritt is also a party to various agreements with the Ambatovy senior lenders relating to the US$2.1 billion (US$1.6 billion as at December 31, 2015) Ambatovy Joint Venture Financing. In addition, Sherritt has two tranches of loans - the partner loans and the additional partner loans - with the Ambatovy partners (and certain other parties) that were used to fund Sherritt’s contributions to the Ambatovy Joint Venture. These agreements and loans contain covenants which could have the effect of restricting Sherritt’s ability to react to changes in Sherritt’s business or to local and global economic conditions. In addition, Sherritt’s ability to comply with these covenants and other terms of its indebtedness may be affected by changes in the Corporation’s business, local or global economic conditions or other events beyond the Corporation’s control. Failure by Sherritt to comply with the covenants contained in the indenture, the syndicated revolving -term credit facility, the line of credit, the Ambatovy Joint Venture Financing, the partner loans or any future debt instruments or credit agreements, could materially adversely affect the Corporation’s business, results of operations, and financial performance.

The Corporation provided certain completion guarantees to the Ambatovy senior lenders under the Ambatovy Financing Agreements. These guarantees became non-recourse to the Corporation once the Ambatovy Joint Venture achieved financial completion in September 2015. As a result, the Ambatovy senior lenders’ recourse under the Ambatovy Joint Venture Financing, including for repayment of semi-annual of principal and interest, is limited to the Ambatovy Joint Venture and Sherritt’s and the other Ambatovy Partners’ interests therein.

The partner loans ($134.6 million as at December 31, 2015) are generally repayable by Sherritt or a wholly-owned subsidiary of Sherritt solely from the proceeds of distributions from the Ambatovy Joint Venture. Recourse under these loans is generally limited to Sherritt’s interest in the Ambatovy Joint Venture and is subordinate to the security interests therein held by the Ambatovy senior lenders. If Sherritt becomes a defaulting shareholder under the terms of the Ambatovy Joint Venture Shareholders Agreement, for example, by failing to fund a cash call, a cross-default to the partner loans would be triggered and the lenders could elect to accelerate repayment. However, due to the limited recourse nature of the loans, such acceleration will not require Sherritt to repay the loans until after August 2023 and the lenders’ recourse is effectively limited to their subordinated security interest over Sherritt’s interest in and future distributions from the Ambatovy Joint Venture. While recourse is generally limited, Sherritt can be obligated to repay any outstanding amount of the partner loans if they have not been repaid in full by August 2023 or if the Ambatovy senior lenders exercise remedies as a result of a default by the Ambatovy Joint Venture under the Ambatovy Joint Venture Financing. In either case, Sherritt has the option to repay in cash or, provided its common shares are trading on the Toronto Stock Exchange at the time of payment, in common shares. Unless the lenders otherwise agree, the partner loans also require repayment in cash within five business days in the event of the sale of all or substantially all of the assets of Sherritt, the acquisition of more than 50% of the Shares of Sherritt or a corporate restructuring of Sherritt. Repayment of the partner loans in cash could have significant consequences for Sherritt’s liquidity and could materially adversely affect the Corporation’s business, results of operations and financial performance. In those cases where it has the option, if Sherritt elects to repay all or any portion of the partner loans in common shares this could result in significant dilution to existing shareholders depending on the prevailing common share price at the time of payment.

The additional partner loans ($1,303.2 million as at December 31, 2015) are repayable by a wholly-owned subsidiary of Sherritt solely from the proceeds of distributions from the Ambatovy Joint Venture. Recourse for a default under these loans is generally limited to Sherritt’s interest in and future distributions from the Ambatovy Joint Venture, and is also subordinate to the security interests therein held by the Ambatovy senior lenders. These loans are recourse to Sherritt in circumstances where there is a breach of specific restrictions in the loan documents by Sherritt or its wholly-owned subsidiaries that hold Sherritt’s interest in the Ambatovy Joint Venture. These restrictions are generally aimed at preserving the lenders’ security interests by restricting the activities of such subsidiaries, for example, by prohibiting the pledging of Sherritt’s interest in the Ambatovy Joint Venture or a corporate reorganization of a subsidiary that holds such interest.

If Sherritt becomes a defaulting shareholder under the terms of the Ambatovy Joint Venture Shareholders Agreement, a cross-default to the partner loans would be triggered, which in turn could trigger a cross-default under the syndicated revolving-term credit facility and the line of credit. However, the lenders under the syndicated revolving-term credit facility have waived any default attributable to Sherritt becoming a defaulting shareholder under the Ambatovy Joint Venture Shareholders Agreements due to non-funding and any cross-default under the partner loans that would be triggered as a result of thereof. Certain breaches of the Ambatovy Joint Venture Shareholders Agreement could also trigger a default under the additional partner loans. However, this would not trigger a cross-default under the syndicated revolving-term credit facility and the line of credit.

If a cross-default to the partner loans is triggered, and the lenders under those loans were to accelerate repayment, although generally such acceleration would not require repayment by Sherritt until after August 2023 it could in turn trigger a cross-default under the indenture. Such a cross-default under the indenture could result in acceleration of the debentures unless the default is cured by repaying the partner loan or waived in accordance with the Indenture. . Sherritt likely would not have sufficient cash and short term investments to repay all or any portion of the amounts outstanding under any or all series of outstanding debentures (in the aggregate, $750 million principal amount as at December 31, 2015) and there can be no assurance that Sherritt could refinance such amounts. Acceleration of the partner loans and/or the debentures would, in turn, trigger an event of default under the syndicated revolving term credit facility and the line of credit. Accordingly, acceleration of any one or more series of debentures could materially adversely affect the Corporation’s business, results of operations, and financial performance.

RELIANCE ON PARTNERS

In addition, the Corporation is currently in discussions with its Ambatovy partners regarding modifications to the Ambatovy Joint Venture financing structure. Failure to achieve modifications that are satisfactory to the Corporation could lead Sherritt to be in breach of its obligations under the Ambatovy Joint Venture funding arrangements. For information regarding the possible consequences of a failure to comply with such arrangements please see “Ambatovy Liquidity and Funding Risks” for additional information.

OPERATING RISKS

Please see the Risk Factors entitled “Risks Related to Sherritt’s Operations in Madagascar” and “Risks Related to Sherritt’s Operations in Cuba” for additional information.

COMPLETION OF THE MOA JOINT VENTURE ACID PLANT

The Corporation and GNC have agreed on the terms to complete the 2,000 tonne per day acid plant at Moa. Agreement was reached with a Cuban financial institution to fund the full amount of the estimated US$67.2 million required to complete this project and funding has occurred since 2013. The issues which have caused previous delays in the construction of the acid plant have largely been resolved and construction is progressing well. However, there can be no assurance that the completion of the acid plant may not be further delayed either by delays in construction or for other reasons, some of which are outside of the Corporation’s control. Any delay would postpone the Moa Joint Venture’s ability to realize the cost savings anticipated from the completion of the acid plant. Further, should additional delays occur or if the cost of completion exceeds $67.2 million further funding may not be available.

TRANSPORTATION

In particular, the Corporation’s metals process plants rely on access to rail, port and marine shipping for certain raw material inputs and for the export of refined metals and fertilizers.

UNCERTAINTY OF GAS SUPPLY TO ENERGAS

DEPLETION OF RESERVES

RELIANCE ON KEY PERSONNEL AND SKILLED WORKERS

EQUIPMENT FAILURE AND OTHER UNEXPECTED FAILURES

MINING, PROCESSING AND REFINING RISKS

UNCERTAINTY OF RESOURCES AND RESERVE ESTIMATES

· mineralization or formations could be different from those predicted by drilling, sampling and similar examinations;

· declines in the market price of nickel, cobalt, oil and gas or increases in operating costs and processing costs may render the production of some or all of Sherritt’s reserves uneconomic;

· the grade or quality of reserves may vary significantly from time to time and there is no assurance that any particular level of nickel, cobalt, oil or gas may be recovered from the reserves; and

· legislative changes and other political changes in jurisdictions in which Sherritt operates may result in changes to Sherritt’s ability to exploit reserves.

ENVIRONMENTAL REHABILITATION PROVISIONS

RISKS RELATED TO SHERRITT’S CORPORATE STRUCTURE

The Corporation holds its interest in certain operating companies, joint ventures or partnerships in Canada, Cuba, Spain, and Madagascar through one or more wholly-owned intermediary holding companies located in jurisdictions outside Canada, including the Bahamas, British Virgin Islands, Barbados, Cuba,, Spain and the Netherlands. Certain payments, including payment of dividends or other distributions by these subsidiaries to the Corporation is subject to statutory regimes applicable to those entities. There can be no assurance that the applicable Canadian government, or some or all of the holding company jurisdictions will not adopt law and/or regulations more restrictive than those currently in effect which could have a material adverse effect on the Corporation’s financial performance. While these jurisdictions have experienced political stability for some time, we continue to regularly monitor changes to applicable laws and regulations.

POLITICAL, ECONOMIC AND OTHER RISKS OF FOREIGN OPERATIONS

RISKS RELATED TO SHERRITT’S OPERATIONS IN MADAGASCAR

In 2002, the government of Madagascar passed the La loi établissant un régime special pour les grands investissements dans le secteur minier Malagasy (LGIM), which is legislation to manage large-scale mining projects. The Ambatovy Joint Venture is the first and currently the only project to be developed under the LGIM’s terms and provisions, which have been largely untested. Although the Ambatovy Joint Venture has received its eligibility certification under the LGIM, it is possible that the LGIM could be interpreted or amended in a manner that has a material adverse effect on the Ambatovy Joint Venture.

Madagascar has a history of political instability and there is no assurance that continuing political stability will be achieved.

In 2009, Madagascar experienced an unexpected change of government and the Transitional Government of Madagascar took control of the country. At several points during the ensuing five year political crisis, the Transitional Government indicated that the Ambatovy Joint Venture’s status under the LGIM could be subject to review. However, the Ambatovy Joint Venture’s eligible status under the LGIM has since been confirmed by the Commission des Grands Investissements Minier, the government body responsibility for overseeing the LGIM, on July 7, 2014. The Malagasy government is currently in the process of revising country’s mining code (the Code Minier de Madagascar) . While the amendments included in the current draft legislation do not affect the Ambatovy Joint Venture’s rights under the LGIM, there is no guarantee that such amendments could not be made in the future.

The political crisis came to an end with the holding of internationally recognized presidential elections in December 2013, whereby Mr. Hery Rajaonarimampianina was elected as the President of the Republic of Madagascar. While Mr. Rajaonarimampianina remains in power, the resignation the Prime Minister, Mr. Roger Kolo on January 12, 2015 and subsequent appointment of Mr. Jean Ravelonarivo has triggered the appointment of a new government. The government may continue to have direct or indirect impact on the Ambatovy Joint Venture, and may adversely affect the Corporation’s business. Any changes in regulations or shifts in political attitudes are beyond the control of Sherritt and may adversely affect its business. Operations may be affected in varying degrees by the Government of Madagascar regulations with respect to production, price controls, export controls (including the recent requirement for the registration of imports and exports), income taxes or investment tax credits, tax reimbursements, royalties and fees, expropriation of property, environmental legislation, land use, water use and mine and plant safety or changes to the LGIM.

RISKS RELATED TO SHERRITT’S OPERATIONS IN CUBA

The Corporation directly or indirectly holds very significant interests in mining, metals processing, exploration for and production of crude oil and the generation of electricity in Cuba. The operations of the Cuban businesses may be affected by economic pressures on Cuba. Risks include, but are not limited to, fluctuations in official or convertible currency exchange rates and high rates of inflation. Any changes in regulations or shifts in political attitudes are beyond the control of Sherritt and may adversely affect its business. Operations may be affected in varying degrees by such factors as Cuban government regulations with respect to currency conversion, production, project approval and execution, price controls, import and export controls, income taxes or reinvestment credits, expropriation of property, environmental legislation, land use, water use and mine and plant safety.

RISKS RELATED TO U.S. GOVERNMENT POLICY TOWARDS CUBA

The United States has maintained a general embargo against Cuba since the early 1960s, and the enactment in 1996 of the Cuban Liberty and Democratic Solidarity (Libertad) Act (commonly known as the “Helms-Burton Act”) extended the reach of the U.S. embargo. In December 2014, President Obama announced his intention to normalize diplomatic relation between the United States and Cuba and to reduce certain restrictions on travel, commercial and personal transactions between Americans and Cubans. Bilateral discussions between the U.S. and Cuba have been advancing to some extent since that time.

The U.S. Embargo

In its current form, apart from the Helms-Burton Act, the embargo applies to most transactions involving Cuba or Cuban enterprises, and it bars all “U.S. Persons” from participating in such transactions unless such persons have general or specific licenses from the U.S. Department of the Treasury (Treasury) authorizing their participation in the transactions. U.S. Persons include U.S. citizens, U.S. residents, individuals or enterprises located in the United States, enterprises organized under U.S. laws and enterprises owned or controlled by any of the foregoing. Subsidiaries of U.S. enterprises are subject to the embargo’s prohibitions. The embargo also extends to entities deemed to be owned or controlled by Cuba (specially designated nationals or SDNs). The three entities constituting the Moa Joint Venture in which Sherritt holds an indirect 50% interest have been deemed SDNs by Treasury. Sherritt is not an SDN. The U.S. embargo generally prohibits U.S. Persons from engaging in transactions involving the Cuban-related businesses of the Corporation. Furthermore, despite the relaxation of certain restrictions over the past year, generally U.S.-originated technology, U.S.-originated goods, and many goods produced from U.S.- originated components or with U.S.-originated technology cannot under U.S. law be transferred to Cuba or used in the Corporation’s operations in Cuba. In 1992, Canada issued an order pursuant to the Foreign Extraterritorial Measures Act (Canada) to block the application of the U.S. embargo under Canadian law to Canadian subsidiaries of U.S. enterprises. In addition, Sherritt conducts its Cuba-related operations so as not to require U.S. Persons to violate the U.S. embargo. The general embargo limits Sherritt’s access to U.S. capital, financing sources, customers, and suppliers.

The Helms-Burton Act

The Foreign Extraterritorial Measures Act (Canada) was amended as of January 1, 1997 to provide that any judgment given under the Helms-Burton Act will not be recognized or enforceable in any manner in Canada. The amendments permit the Attorney General of Canada to declare, by order, that a Canadian corporation may sue for and recover in Canada any loss or damage it may have suffered by reason of the enforcement of a Helms-Burton Act judgment abroad. In such a proceeding, the Canadian court could order the seizure and sale of any property in which the defendant has a direct or indirect beneficial interest, or the property of any person who controls or is a member of a group of persons that controls, in law or in fact, the defendant. The property seized and sold could include shares of any corporation incorporated under the laws of Canada or a province.

PROJECT DEVELOPMENT

Generally

These risks and uncertainties could have a material adverse effect on the Corporation’s business, results of operations and financial performance.

Capital and Operating Cost Estimates

SIGNIFICANT CUSTOMERS

The Ambatovy Joint Venture has entered into long-term nickel offtake agreements with two companies (the Ambatovy Offtakers). The Ambatovy Offtakers have each agreed to purchase 50% of nickel production up to the stated refined nickel capacity (60,000 tonnes per year) on open account terms net 30 days after shipment, for re-sale in global markets. The Moa Joint Venture derives a material amount of revenue from certain customers in Europe and Asia. Payment is made by way of an irrevocable letter of credit in a form acceptable to the lenders of the senior credit facility or through open account terms that are secured by accounts receivable insurance or by payment upon presentation of documents at the time of shipment. Any cancellation of shipments would result in nickel being placed with other customers through the spot markets; however, prices realized could vary from those negotiated with the customer. The Moa Joint Venture’s finished nickel product is qualified for delivery to the London Metals Exchange (LME) which provides a terminal market in the event that significant customers are unable to meet their contractual obligations.

FOREIGN EXCHANGE AND PRICING RISKS

ENVIRONMENT, HEALTH AND SAFETY

The potential impact of evolving regulations, including on product demand and methods of production and distribution, is not possible to predict. However, the Corporation closely monitors developments and evaluates the impact such changes may have on the Corporation’s financial condition, product demand and methods of production and distribution. Independently and through involvement in various associations, the Corporation responds to potential changes to EH&S laws by participating, as appropriate, in the public review process, thus ensuring the Corporation’s position is understood and considered in the decision-making process. The Corporation seeks to anticipate and prepare for public and regulatory concerns well in advance of such projects. Communication with regulators and the public is considered a key tool in gaining acceptance and approval for new projects.

CLIMATE CHANGE/GREENHOUSE GAS EMISSIONS

In addition, various Canadian provincial governments and other regional initiatives are moving ahead with GHG reduction and other initiatives designed to address climate change. Given the present uncertainty around the practical application of specific provisions in the Regulations and the impact of other provincial or regional initiatives, it is not yet possible to estimate with specificity the impact to the Corporation’s operations. However, the Corporation’s Canadian operations are large facilities, so the establishment of emissions regulations (whether in the manner described above or otherwise) may well affect them and may have a material adverse effect on the Corporation’s business, results of operations and financial performance. In addition, the Corporation’s operations require large quantities of power and future taxes on or regulation of power producers or the production of oil and gas or other products may also add to the Corporation’s operating costs.

COMMUNITY RELATIONS AND SOCIAL LICENSE TO GROW AND OPERATE

CREDIT RISK

Sherritt’s sales of nickel, cobalt, oil, gas, electricity and coal expose the Corporation to the risk of non-payment by customers. Sherritt manages this risk by monitoring the creditworthiness of its customers, covering some exposure through receivables insurance, documentary credit and seeking prepayment or other forms of payment security from customers with an unacceptable level of credit risk. There are also certain credit risks that arise due to the fact that all sales of oil and electricity in Cuba are made to agencies of the Cuban government (see “Risks Related to Sherritt’s Operations in Cuba”). Additionally, there are credit risks that arise due to the fact that there are currently value-added tax receivables and receivables related to the Corporation’s Power business that are outstanding from the Malagasy government (see “Risks Related to Sherritt’s Operations in Madagascar”). Although Sherritt seeks to manage its credit risk exposure, there can be no assurance that the Corporation will be successful in eliminating the potential material adverse impacts of such risks.

SHORTAGE OF EQUIPMENT AND SUPPLIES

COMPETITION IN PRODUCT MARKETS

FUTURE MARKET ACCESS

INTEREST RATE CHANGES

INSURABLE RISK

LABOUR RELATIONS

LEGAL RIGHTS

In the event of a dispute arising in respect of Sherritt’s foreign operations, Sherritt may be subject to the exclusive jurisdiction of foreign courts or may not be successful in subjecting foreign persons to the jurisdiction of courts in Canada or international arbitration. If Sherritt is unsuccessful in enforcing its rights under the agreements to which it is a party, it could have a material adverse effect on Sherritt’s business, results of operations and financial performance.

LEGAL CONTINGENCIES

ACCOUNTING POLICIES

RISKS ASSOCIATED WITH FUTURE ACQUISITIONS

GOVERNMENT PERMITS

GOVERNMENT REGULATION

The Corporation’s activities are subject to various laws governing exploration, development, production, environment, taxes, labour standards and occupational health, mine safety, toxic substances and other matters. Mining, drilling and exploration activities are also subject to various laws and regulations relating to the protection of the environment. Although the Corporation believes that its activities are currently carried out in all material respects in accordance with applicable rules and regulations, no assurance can be given that new rules and regulations will not be enacted or that existing rules and regulations will not be applied in a manner that could limit or curtail production or development of the Corporation’s properties or otherwise have a material adverse effect on the Corporation’s business, results of operations and financial performance.

ANTI-CORRUPTION AND BRIBERY

Sherritt is subject to Canada’s Corruption of Foreign Public Officials Act (CFPOA), as well as various local anti-corruption laws. The CFPOA prohibits Canadian (and Canadian-controlled) corporations and their intermediaries from making or offering to make an improper payment of any kind to any kind of foreign public official, or any other person for the benefit of foreign public official, where the ultimate purpose is to obtain or retain a business advantage.

MANAGEMENT OF GROWTH

Critical accounting estimates and judgments

By their nature, these estimates are subject to measurement uncertainty, and changes in these estimates may affect the consolidated financial statements of future periods.

CRITICAL ACCOUNTING ESTIMATES

Environmental rehabilitation provisions

Reserves for Oil and Gas properties

All of the oil and gas reserves have been evaluated in accordance with National Instrument 51-101, Standards of Disclosure for Oil and Gas Activities.

Property, plant and equipment

Asset useful lives and residual values are re-evaluated at each reporting date.

Income taxes

CRITICAL ACCOUNTING JUDGMENTS

Interests in other entities

Aggregation of segments

Property, plant and equipment

Asset impairment

Measuring the recoverable amount of the Corporation’s interest in the Ambatovy Joint Venture

Overburden removal costs

Exploration and evaluation

Income taxes

Arrangements containing a lease

Service concession arrangements

Accounting Pronouncements

ADOPTION OF NEW AND AMENDED ACCOUNTING PRONOUNCEMENTS

In fiscal 2015, there have been no new or amended accounting pronouncements that have had a material impact on the Corporation’s consolidated financial statements.

ACCOUNTING PRONOUNCEMENTS ISSUED BUT NOT YET EFFECTIVE

IFRS 9 — Financial instruments

IFRS 11 — Joint Arrangements

IFRS 15 - Revenue from Contracts with Customers

IFRS 16 — Leases

IAS 1 — Presentation of Financial Statements

IAS 16 — Property, Plant and Equipment

IAS 38 — Intangible Assets

Three-year trend analysis

The following table presents select financial and operational results for the last three years:

$ millions, except per share amounts for the years ended December 31	2015			2014			2013

Revenue	$	335.9		$	455.6		$	448.5
Adjusted EBITDA(1)	113.1			253.2			216.7
(Loss) earnings from operations, associate and joint venture	(1,978.6		)	(111.9		)	34.5
Loss from continuing operations	(2,071.7		)	(318.5		)	(158.5		)
(Loss) earnings from discontinued operations, net of tax	(5.0		)	28.5			(501.8		)
Net loss for the period	(2,076.7		)	(290.0		)	(660.3		)

Loss per common share (basic and diluted)($ per share):
Net loss from continuing operations	(7.05		)	(1.07		)	(0.53		)
Net loss for the period	(7.07		)	(0.97		)	(2.23		)
Dividend rate per share	0.02			0.04			0.172

PRODUCTION VOLUMES
Finished nickel (tonnes)
Moa Joint Venture (50% basis)	16,853			16,455			16,771
Ambatovy Joint Venture (40% basis)	18,908			14,821			10,059
Finished cobalt (tonnes)
Moa Joint Venture (50% basis)	1,867			1,605			1,660
Ambatovy Joint Venture (40% basis)	1,386			1,166			833
Oil (boepd, net working-interest production)(2)	11,158			10,960			11,331
Electricity (gigawatt hours) (331/3% basis)	902			847			589

(1) For additional information see the Non-GAAP measures section.

(2) Barrels of oil equivalent per day (boepd).

In 2015, loss from continuing operations was negatively impacted by a $1.6 billion after tax impairment of the Ambatovy Joint Venture assets and $80.6 million impairment on Oil assets. In 2014, loss from continuing operations was negatively impacted by $205.4 million in losses related to the Corporation’s share of loss of an associate, $14.4 million of impairments at Oil and Gas primarily related to its exploration and evaluation licenses in the United Kingdom’s North Sea and in Spain’s Alboran Sea, and $7.5 million of restructuring costs. In 2013, loss from continuing operations was negatively impacted by $36.7 million of impairments in Metals as a result of a change in expansion strategy and in Power as a result of a $22.1 million impairment at the Boca de Jaruco and Puerto Escondido facilities in Cuba, a $7.3 million impairment at an electricity generation facility in Madagascar and a $9.9 million provision on receivables related to this facility. In 2013, net loss for the period also includes losses related to the classification of Coal as a discontinued operation.

Summary of quarterly results

The following table presents a summary of the segment revenue and consolidated operating results for each of the eight quarters ended March 31, 2014 to December 31, 2015(1).

$ millions, except per share amounts,	2015			2015			2015			2015			2014			2014			2014			2014
for the three months ended	Dec 31			Sept 30			June 30			Mar 31			Dec 31			Sept 30			June 30			Mar 31

Revenue
Metals	$	183.8		$	193.4		$	204.2		$	223.7		$	216.5		$	221.2		$	216.0		$	160.1
Oil and Gas	30.5			38.5			51.3			42.3			49.6			68.1			74.7			76.9
Power	13.7			14.5			12.7			11.8			11.7			12.7			12.7			11.9
Corporate and Other	1.5			0.1			0.2			0.5			0.5			0.7			1.2			1.8
Combined Revenue(2)	$	229.5		$	246.5		$	268.4		$	278.3		$	278.3		$	302.7		$	304.6		$	250.7
Adjust joint venture and associate revenue	(153.0		)	(169.6		)	(168.8		)	(195.4		)	(176.7		)	(199.8		)	(174.4		)	(129.8		)
Financial statement revenue	$	76.5		$	76.9		$	99.6		$	82.9		$	101.6		$	102.9		$	130.2		$	120.9

Share of loss of an associate, net of tax	(1,703.2		)	(68.6		)	(62.6		)	(42.3		)	(65.0		)	(49.4		)	(50.9		)	(40.1		)
Share of (loss) earnings of a joint venture, net of tax	(9.1		)	(6.4		)	(0.3		)	4.0			4.5			10.8			1.0			(6.9		)

Net loss from continuing operations	(1,757.3		)	(210.0		)	(47.6		)	(56.8		)	(147.7		)	(51.3		)	(49.0		)	(70.5		)
(Loss) earnings from discontinued operations, net of tax	—			—			(5.0		)	—			(12.7		)	—			18.9			22.3
Net loss for the period	$	(1,757.3	)	$	(210.0	)	$	(52.6	)	$	(56.8	)	$	(160.4	)	$	(51.3	)	$	(30.1	)	$	(48.2	)

Net loss per share, basic and diluted ($ per share)
Net loss from continuing operations	$	(5.99	)	$	(0.72	)	$	(0.16	)	$	(0.19	)	$	(0.50	)	$	(0.17	)	$	(0.16	)	$	(0.24	)
Net loss for the period	(5.99		)	(0.72		)	(0.18		)	(0.19		)	(0.54		)	(0.17		)	(0.10		)	(0.16		)

(1) On April 28, 2014, the Corporation completed the sale of its Coal operations. Results for Coal prior to the date of sale and any subsequent expenses relating to Coal have been reported in (loss) earnings from discontinued operations.

(2) For additional information see the Non-GAAP measures section.

In general, net (loss) earnings for the Corporation are primarily affected by commodity prices, sales volumes and exchange rates that impact revenue and costs. The average Canadian dollar cost to purchase one U.S. dollar for the above quarters has ranged from $1.09 to $1.34. In addition to the impact of commodity prices, sales volumes and exchange rates, net (loss) earnings were impacted by the following significant items (pre-tax):

· the fourth quarter of 2015 includes an impairment of $1.6 billion recognized on Ambatovy Joint Venture assets.

· the third quarter of 2015 includes an impairment of $80.6 million recognized on oil assets. Net finance expense includes a loss on financial instruments of $13.7 million related to the expiry of the Ambatovy call option;

· the second quarter of 2015 includes a gain on sale of the Corporation’s head office building of $19.1 million and an additional tax recovery of $13.2 million related to tax rate reductions in Cuba;

· the first quarter of 2015 includes a tax recovery of $30.1 million related to tax rate reductions in Cuba;

· the fourth quarter of 2014 includes $33.8 million of fees related to the repurchase and redemption of debentures, $7.5 million related to restructuring costs and unrealized foreign exchange losses partly offset by a $3.3 million gain on sale of the Corporate assets and a $1.3 million gain on arbitration settlement;

· the third quarter of 2014 includes a $12.8 million gain on arbitration settlement;

· the second quarter of 2014 includes a $13.0 million gain recognized on the sale of the Coal operations;

· the first quarter of 2014 includes a reduction in depletion, depreciation, and amortization as a result of classifying Coal as a discontinued operation.

Off-balance sheet arrangements

The Corporation has no foreign exchange or commodity options, futures or forward contracts.

Transactions with related parties

	2015		2014
Canadian $ millions, as at	December 31		December 31

Accounts receivable from joint operations	$	0.7	$	0.1
Accounts receivable from joint venture	20.2		20.6
Accounts receivable from associate	33.8		37.5
Accounts payable to joint operations	0.2		0.1
Accounts payable to joint venture	5.2		34.2
Accounts payable to associate	0.5		2.5
Advances and loans receivable from associate	1,187.2		1,489.9
Advances and loans receivable from joint operations	182.0		239.3
Advances and loans receivable from joint venture	312.8		250.3

	For the three months ended					For the years ended
	2015		2014			2015		2014
Canadian $ millions	December 31		December 31			December 31		December 31

Total value of goods and services:
Provided to joint operations	$	12.8	$	7.6		$	33.2	$	20.2
Provided to joint venture	36.2		38.4			169.4		165.1
Provided to associate	0.7		(0.3		)	2.9		2.2
Purchased from joint operations	—		—			—		1.0
Purchased from joint venture	39.5		61.6			141.0		192.0
Purchased from associate	11.2		14.1			53.8		58.5
Net financing income from joint operations	3.7		1.5			16.1		15.5
Net financing income from associate	16.9		13.5			65.6		45.5
Net financing income from joint venture	2.3		2.0			8.6		7.4

Advances and loans receivable from associate, joint operation and joint venture relate to the Corporation’s interest in the Ambatovy subordinated loans receivable, Energas conditional sales agreement, and Moa Joint Venture loans receivable, respectively. For further detail, refer to note 17 of the Corporation’s December 31, 2015 audited consolidated financial statements.

Goods and services provided to joint venture primarily relates to services provided by Fort Site to Moa Joint Venture. Goods and services purchased from associate relate to nickel purchased from the Ambatovy Joint Venture purchased under long term nickel off take agreements by a subsidiary of the Corporation established to buy, market and sell certain Ambatovy nickel production. Net financing income from associate relates to interest income recognized by the Corporation on the Ambatovy subordinated loans receivable.

Key management personnel

Key management personnel is composed of the Board of Directors, Chief Executive Officer, Chief Operating Officer, Chief Financial Officer and Senior Vice Presidents of the Corporation. The following is a summary of key management personnel compensation:

	2015		2014
Canadian $ millions, as at	December 31		December 31

Short-term benefits	$	7.5	$	7.8
Post-employment benefits(1)	1.8		1.4
Share-based payments	6.3		5.7
	$	15.6	$	14.9

Controls and procedures

DISCLOSURE CONTROLS AND PROCEDURES

Management is responsible for establishing and maintaining adequate internal control over disclosure controls and procedures, as defined in National Instrument 52-109 of the Canadian Securities Commission (NI 52-109). Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to management, including the CEO and CFO, on a timely basis so that appropriate decisions can be made regarding public disclosure. Management, with the participation of the certifying officers, has evaluated the effectiveness of the design and operation, as of December 31, 2015, of the Corporation’s disclosure controls and procedures. Based on that evaluation, the certifying officers have concluded that such disclosure controls and procedures are effective and designed to ensure that material information known by others relating to the Corporation and its subsidiaries is provided to them.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

Management is responsible for establishing and maintaining adequate internal control over financial reporting, as defined in NI 52-109. Internal control over financial reporting means a process designed by or under the supervision of the CEO and CFO, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

The internal controls are not expected to prevent and detect all misstatements due to error or fraud. Management advises that there have been no changes in the Corporation’s internal controls over financial reporting during 2015 that have materially affected or are reasonably likely to materially affect the Corporation’s internal control over financial reporting.

Management, with the participation of the certifying officers, conducted an evaluation of the effectiveness of the Corporation’s internal controls over financial reporting, as of December 31, 2015, using the Internal Control-Integrated Framework published in 2013 by the Committee of Sponsoring Organizations of the Treadway Commission (COSO 2013 Framework). Based on this evaluation, the CEO and CFO have concluded that the internal controls over financial reporting were effective as of December 31, 2015.

Supplementary information

SENSITIVITY ANALYSIS

The following table shows the approximate impact on the Corporation’s net earnings and earnings per share from continuing operations for the twelve months ended December 31, 2015 from a change in selected key variables. The impact is measured changing one variable at a time and may not necessarily be indicative of sensitivities on future results.

			Approximate
			change in annual			Approximate
			net earnings			change in annual
			($ millions)			basic EPS
Factor	Increase		Increase/(decrease)			Increase/(decrease)

Prices
Nickel - LME price per pound(1)	US$	0.50	$	45		$	0.15
Cobalt - Metal Bulletin price per pound(1)	US$	0.50	4			0.02
Oil -U.S. Gulf Coast Fuel Oil No. 6 price per barrel	US$	5.00	15			0.05

Exchange rate
Weakening of the Canadian dollar relative to the U.S. dollar	$	0.05	(38		)	(0.13		)

Operating costs(1)
Natural gas - per gigajoule (Moa Joint Venture)	$	1.00	(4		)	(0.02		)
Sulphur - per tonne (Moa Joint Venture and Ambatovy)	US$	25.00	(7		)	(0.04		)
Sulphuric acid — per tonne (Moa Joint Venture)	US$	25.00	(4		)	(0.02		)
Coal - per tonne (Ambatovy)	US$	20.00	(4		)	(0.02		)
Limestone - per tonne (Ambatovy)	US$	5.00	(3		)	(0.01		)

(1) Variable changes are applied at the operating level with the approximate change in net earnings and basic EPS representing the Corporation’s 50% interest in the Moa Joint Venture and 40% interest in the Ambatovy Joint Venture.

OIL AND GAS PRODUCTION AND SALES VOLUME

The following table provides further detail about the Corporation’s oil and gas production and determination of sales volumes.

	For the three months ended				For the years ended
	2015	2014			2015	2014
Daily production volumes(1)	December 31	December 31	Change		December 31	December 31	Change

Gross working-interest oil production in Cuba(2)(3)	17,045	18,701	(9	)%	18,257	19,456	(6	)%
Net working-interest oil production(4)
Cuba (heavy oil)
Cost recovery	4,580	4,311	6	%	4,059	3,395	20	%
Profit oil	5,565	5,493	1	%	6,378	6,975	(9	)%
Total	10,145	9,804	3	%	10,437	10,370	1	%
Spain (light oil)(4)	292	257	14	%	426	280	52	%
Pakistan (natural gas)(4)	290	308	(6	)%	295	310	(5	)%
	10,727	10,369	3	%	11,158	10,960	2	%

(1) Oil production is stated in barrels of oil per day (bopd). Natural gas production is stated in barrels of oil equivalent per day (boepd), which is converted at 6,000 cubic feet per barrel. Collectively, oil and natural gas production are referred to as boepd.

(2) In Cuba, Oil and Gas delivered all of its gross working-interest oil production to CUPET at the time of production.

(3) Gross working-interest oil production is allocated between Oil and Gas and CUPET in accordance with production-sharing contracts. The Corporation’s share, referred to as net working-interest production, includes (i) cost recovery oil (based upon the recoverable capital and operating costs incurred by Oil and Gas under each production-sharing contract) and (ii) a percentage of profit oil (gross working-interest production remaining after cost recovery oil is allocated to Oil and Gas). Cost recovery pools for each production-sharing contract include cumulative recoverable costs, subject to certification by CUPET, less cumulative proceeds from cost recovery oil allocated to Oil and Gas. Cost recovery revenue equals capital and operating costs eligible for recovery under the production-sharing contracts.

(4) Net working-interest production (equivalent to net sales volume) represents the Corporation’s share of gross working-interest production.

NON-GAAP MEASURES

Management uses combined results, Adjusted EBITDA, average-realized price, unit operating cost, adjusted earnings, adjusted operating cash flow per share and free cash flow 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 evaluate the results of its underlying business. These measures 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 Ambatovy Joint Venture achieved commercial production on January 22, 2014 and commenced recognizing revenues and costs within the statement of comprehensive income (loss) effective February 1, 2014. The non-GAAP measures reflect Ambatovy operating results for the post-commercial production period.

Combined results

The Corporation presents combined revenue, combined cost of sales, combined administrative expenses, combined net finance expense, and combined income taxes (together, combined results) as measures which help management assess the Corporation’s financial performance across its business units. The combined results include the Corporation’s consolidated financial results, and the results of its 50% share of the Moa Joint Venture and its 40% share of the Ambatovy Joint Venture, both of which are accounted for using the equity method for accounting purposes. Management uses these measures to reflect the Corporation’s economic interest in its business units prior to the application of equity accounting. Refer to pages 10 to 12 for the reconciliations of the combined results.

Adjusted EBITDA

The Corporation defines Adjusted EBITDA as earnings (loss) from operations, associate and joint venture as reported in the financial statements for the period adjusted for depletion, depreciation and amortization; impairment charges for long lived assets, intangible assets, goodwill and investments; and gain or loss on disposal of property, plant and equipment of the Corporation, associate and joint venture. The exclusion of impairment charges eliminates the non-cash impact.

The tables below reconcile Adjusted EBITDA to net earnings (loss) from operations, associate and joint venture:

$ millions, for the three months ended December 31

2015

Adjustment

Metals

for Joint

Moa JV and

Ambatovy

Oil and

Corporate

Venture and

Fort Site

Other

Total

Gas

Power

and Other

Associate

Total

Earnings (loss) from operations, associate and joint venture per financial statements

(6.8

)

(1,785.5

)

(0.6

)

(1,792.9

)

(1.2

)

(3.3

)

(7.9

)

83.4

(1,721.9

)

Add (deduct):

Depletion, depreciation and amortization

2.7

—

0.1

2.8

10.9

8.8

0.7

—

23.2

Impairment of assets

1.4

1,722.5

—

1,723.9

—

1,723.9

Adjustments for share of associate and joint venture:

Depletion, depreciation and amortization

10.3

53.5

0.5

64.3

—

64.3

Net finance expense

—

29.8

Income tax recovery

—

(113.2

)

(113.2

)

Adjusted EBITDA

7.6

(9.5

)

—

(1.9

)

9.7

5.5

(7.2

)

—

6.1

$ millions, for the three months ended December 31

2014

																					Adjustment
	Metals																				for Joint
	Moa JV and		Ambatovy									Oil and						Corporate			Venture and
	Fort Site		JV			Other			Total			Gas			Power			and Other			Associate			Total

Earnings (loss) from operations, associate and joint venture per financial statements	$	9.9	$	(51.6	)	$	0.5		$	(41.2	)	$	(4.9	)	$	(0.1	)	$	(11.8	)	$	(16.9	)	$	(74.9	)
Add (deduct):
Depletion, depreciation and amortization	3.1		—			(0.1		)	3.0			17.6			5.5			1.2			—			27.3
Impairment of property, plant and equipment and intangibles	—		—			—			—			13.6			—			—			—			13.6
Gain on property, plant and equipment and intangibles	—		—			—			—			—			—			(3.3		)	—			(3.3		)
Adjustments for share of associate and joint venture:
Depletion, depreciation and amortization	8.2		44.1			(0.5		)	51.8			—			—			—			—			51.8
Net finance expense	—		—			—			—			—			—			—			23.2			23.2
Income tax recovery	—		—			—			—			—			—			—			(6.3		)	(6.3		)
Adjusted EBITDA	$	21.2	$	(7.5	)	$	(0.1	)	$	13.6		$	26.3		$	5.4		$	(13.9	)	$	—		$	31.4

$ millions, for the year ended December 31

2015

Adjustment

Metals

for Joint

Moa JV and

Ambatovy

Oil and

Corporate

Venture and

Fort Site

Other

Total

Gas

Power

and Other

Associate

Total

(Loss) earnings from operations, associate and joint venture per financial statements

(4.4

)

(1,934.1

)

0.5

(1,938.0

)

(71.6

)

(3.7

)

(15.9

)

50.6

(1,978.6

)

Add (deduct):

Depletion, depreciation and amortization

9.7

—

9.7

72.9

33.7

2.9

—

119.2

Impairment of assets

1.4

1,722.5

—

1,723.9

80.6

—

1,804.5

Gain on property, plant and equipment and intangibles

—

(19.1

)

—

(19.1

)

Adjustments for share of associate and joint venture:

Depletion, depreciation and amortization

35.5

202.2

—

237.7

—

237.7

Net finance expense

—

85.5

Income tax recovery

—

(136.1

)

(136.1

)

Adjusted EBITDA

42.2

(9.4

)

0.5

33.3

81.9

30.0

(32.1

)

—

113.1

$ millions, for the year ended December 31

2014

																			Adjustment
	Metals																		for Joint
	Moa JV and		Ambatovy									Oil and				Corporate			Venture and
	Fort Site		JV			Other			Total			Gas		Power		and Other			Associate			Total

Earnings (loss) from operations, associate and joint venture per financial statements	$	39.0	$	(158.4	)	$	1.3		$	(118.1	)	$	110.7	$	4.3	$	(37.2	)	$	(71.6	)	$	(111.9	)
Add (deduct):
Depletion, depreciation and amortization	10.4		—			(0.1		)	10.3			66.6		20.5		3.9			—			101.3
Impairment of property, plant and equipment and intangibles	—		—			—			—			14.4		—		—			—			14.4
Gain on property, plant and equipment and intangibles	—		—			—			—			—		—		(3.3		)	—			(3.3		)
Adjustments for share of associate and joint venture:
Depletion, depreciation and amortization	28.7		152.9			(0.5		)	181.1			—		—		—			—			181.1
Net finance expense	—		—			—			—			—		—		—			80.7			80.7
Income tax recovery	—		—			—			—			—		—		—			(9.1		)	(9.1		)
Adjusted EBITDA	$	78.1	$	(5.5	)	$	0.7		$	73.3		$	191.7	$	24.8	$	(36.6	)	$	—		$	253.2

Average-realized price

Average-realized price is generally calculated by dividing revenue by sales volume for the given product in a given division. The average-realized price for nickel, cobalt, and fertilizer excludes the impact of by-product revenue and the metals marketing company. The average-realized price for oil and gas is based on net working-interest oil plus natural gas production stated in barrels of oil equivalent.

The tables below reconcile average-realized price to revenue as per the financial statements:

$ millions, except average-realized price and sales volume, for the three months ended December 31

2015

Metals

Other

Nickel

Cobalt

Fertilizer

revenue

Total

Oil and Gas

Power

Revenue per financial statements

111.6

27.6

27.9

16.7

183.8

30.5

13.7

Adjustments to revenue:

By-product revenue

—

(1.0

)

Processing revenue

—

(1.4

)

—

Service concession arrangement revenue

—

0.2

Revenue for purposes of average-realized price calculation

111.6

27.6

27.9

29.1

12.9

Sales volume for the period

19.6

2.1

75.3

1.0

226

Volume units

Millions of
pounds

Thousands
of tonnes

Millions of
barrels(1)

Gigawatts

Average-realized price(2)(3)

5.54

12.91

371

29.53

56.53

$ millions, except average-realized price and sales volume, for the three months ended December 31									2014
	Metals
							Other
	Nickel		Cobalt		Fertilizer		revenue		Total		Oil and Gas			Power

Revenue per financial statements	$	140.2	$	23.3	$	32.2	$	20.8	$	216.5	$	49.6		$	11.7
Adjustments to revenue:
By-product revenue	—		—		—						—			(1.4		)
Processing revenue	—		—		—						(2.4		)	—
Revenue for purposes of average-realized price calculation	140.2		23.3		32.2						47.2			10.3

Sales volume for the period	17.8		1.6		87.2						1.0			214

Volume units	Millions of pounds		Millions of pounds		Thousands of tonnes						Millions of barrels(1)			Gigawatts
Average-realized price(2)(3)	$	7.89	$	15.34	$	370					$	49.58		$	48.38

$ millions, except average-realized price and sales volume, for the year ended December 31

2015

Metals

Other

Nickel

Cobalt

Fertilizer

revenue

Total

Oil and Gas

Power

Revenue per financial statements

530.8

108.8

88.4

77.1

805.1

162.6

52.7

Adjustments to revenue:

By-product revenue

—

(4.0

)

Processing revenue

—

(4.9

)

—

Service concession arrangement revenue

—

0.3

Other

—

Revenue for purposes of average-realized price calculation

530.8

108.8

88.4

157.7

49.0

Sales volume for the period

79.0

7.2

238.1

4.1

902

Volume units

Millions of
pounds

Thousands of
tonnes

Millions of
barrels(1)

Gigawatts

Average-realized price(2)(3)

6.68

15.20

371

38.73

54.26

$ millions, except average-realized price and sales volume, for the year ended December 31														2014
	Metals
							Other
	Nickel		Cobalt		Fertilizer		revenue		Total		Oil and Gas			Power

Revenue per financial statements	$	551.3	$	89.6	$	90.1	$	82.8	$	813.8	$	269.3		$	49.0
Adjustments to revenue:
By-product revenue	—		—		—						—			(7.3		)
Processing revenue	—		—		—						(6.5		)	—
Service concession arrangement revenue	—		—		—						—			(2.1		)
Revenue for purposes of average-realized price calculation	551.3		89.6		90.1						262.8			39.6

Sales volume for the period	66.5		6.0		251.1						4.0			847

Volume units	Millions of pounds		Millions of pounds		Thousands of tonnes						Millions of barrels(1)			Gigawatts
Average-realized price(2)(3)	$	8.29	$	15.10	$	359					$	65.69		$	46.81

For purposes of average-realized price tables, above:

(1) Net working-interest oil production. For additional discussion see Oil and Gas Production and Sales Volume section.

(2) Average-realized price may not calculate based on amounts presented due to foreign exchange and rounding.

(3) Power, average-realized price per MWh.

Unit operating cost

With the exception of Metals, which uses net direct cash cost, unit operating cost is generally calculated by dividing cost of sales as reported in the financial statements, less depreciation, depletion and amortization in cost of sales, the impact of impairment, gains and losses on property, plant, and equipment and exploration and evaluation assets and certain other non-production related costs by the number of units sold.

The Moa Joint Venture’s and Ambatovy Joint Venture’s net direct cash cost is calculated by dividing cost of sales, as reported in the financial statements, adjusted for the following: depreciation, depletion and amortization in cost of sales; cobalt by-product, fertilizer and other revenue; and other costs primarily related to the impact of opening and closing inventory values, by the number of finished nickel pounds sold in the period, and expressed in U.S. dollars.

Average unit operating costs for oil and gas is based on gross working-interest oil plus natural gas production stated in barrels of oil equivalent.

The tables below reconcile unit operating cost to cost of sales per the financial statements:

$ millions, except unit cost and sales volume, for the three months ended December 31																2015
	Metals
	Moa JV and			Ambatovy									Oil and
	Fort Site			JV			Other			Total			Gas			Power

Cost of sales per financial statements	$	106.3		$	165.6		$	13.0		$	284.9		$	30.2		$	16.7
Less:
Depletion, depreciation and amortization in cost of sales	(13.0		)	(53.4		)	(0.6		)	(67.0		)	(10.9		)	(8.7		)
	93.3			112.2			12.4			217.9			19.3			8.0

Adjustments to cost of sales:
Cobalt by-product, fertilizer and other revenue	(46.3		)	(15.2		)							—			—
Impact of opening/closing inventory and other	(10.6		)	(0.7		)							—			—
Service concession arrangements — Cost of construction	—			—									—			0.2
Impairments	—			(39.4		)							—			—
Cost of sales for purposes of unit cost calculation	36.4			57.0									19.3			8.2

Sales volume for the period	9.3			10.3									1.6			226

Volume units	Millions of pounds			Millions of pounds									Millions of barrels(1)			Gigawatts
Unit operating cost(2)(3)	$	3.90		5.54									$	11.64		$	33.88
Unit operating cost (U.S. dollars)	$	2.90		4.07

$ millions, except unit cost and sales volume, for the three months ended December 31															2014
	Metals
	Moa JV and			Ambatovy								Oil and
	Fort Site			JV			Other		Total			Gas			Power

Cost of sales per financial statements	$	113.2		$	116.4		$	15.1	$	244.7		$	52.9		$	10.3
Less:
Depletion, depreciation and amortization in cost of sales	(11.3		)	(43.7		)	0.5		(54.5		)	(17.5		)	(5.5		)
	101.9			72.7			15.6		190.2			35.4			4.8

Adjustments to cost of sales:
Cobalt by-product, fertilizer and other revenue	(50.3		)	(9.6		)						—			—
Impact of opening/closing inventory and other	(2.7		)	1.1								—			—
Service concession arrangements — Cost of construction	—			—								—			—
Impairments	—			—								(13.6		)	—
Cost of sales for purposes of unit cost calculation	48.9			64.2								21.8			4.8

Sales volume for the period	9.7			8.1								1.8			214

Volume units	Millions of pounds			Millions of pounds								Millions of barrels(1)			Gigawatts
Unit operating cost(2)(3)	$	5.04		7.96								$	12.25		$	22.82
Unit operating cost (U.S. dollars)	$	4.44		6.98

$ millions, except unit cost and sales volume, for the year ended December 31															2015
	Metals
	Moa JV and			Ambatovy								Oil and
	Fort Site			JV			Other		Total			Gas			Power

Cost of sales per financial statements	$	410.9		$	558.4		$	58.8	$	1,028.1		$	146.9		$	52.6
Less:
Depletion, depreciation and amortization in cost of sales	(45.1		)	(201.7		)	—		(246.8		)	(72.7		)	(33.6		)
	365.8			356.7			58.8		781.3			74.2			19.0

Adjustments to cost of sales:
Cobalt by-product, fertilizer and other revenue	(158.1		)	(58.3		)						—			—
Impact of opening/closing inventory and other	(22.0		)	0.1								—			—
Service concession arrangements — Cost of construction	—			—								—			0.3
Impairments	—			(39.4		)						—			—
Cost of sales for purposes of unit cost calculation	185.7			259.1								74.2			19.3

Sales volume for the period	37.4			41.6								6.9			902

Volume units	Millions of pounds			Millions of pounds								Millions of barrels(1)			Gigawatts
Unit operating cost(2)(3)	$	4.96		6.23								$	10.69		$	21.00
Unit operating cost (U.S. dollars)	$	3.88		4.83

$ millions, except unit cost and sales volume, for the year ended December 31															2014
	Metals
	Moa JV and			Ambatovy								Oil and
	Fort Site			JV			Other		Total			Gas			Power

Cost of sales per financial statements	$	408.0		$	424.3		$	62.2	$	894.5		$	150.0		$	37.1
Less:
Depletion, depreciation and amortization in cost of sales	(39.0		)	(152.5		)	0.5		(191.0		)	(66.3		)	(20.4		)
	369.0			271.8			62.7		703.5			83.7			16.7

Adjustments to cost of sales:
Cobalt by-product, fertilizer and other revenue	(156.0		)	(41.5		)						—			—
Impact of opening/closing inventory and other	(12.2		)	3.3								—			—
Service concession arrangements — Cost of construction	—			—								—			(2.1		)
Impairments	—			—								(14.4		)	—
Cost of sales for purposes of unit cost calculation	200.8			233.6								69.3			14.6

Sales volume for the period	36.6			29.9								7.3			847

Volume units	Millions of pounds			Millions of pounds								Millions of barrels(1)			Gigawatts
Unit operating cost(2)(3)	$	5.49		7.81								$	9.45		$	17.25
Unit operating cost (U.S. dollars)	$	4.99		7.04

For purposes of unit operating cost tables, above:

(1) Gross working-interest oil production. For additional discussion, see Oil and Gas Production and Sales Volume section.

(2) Unit operating costs may not calculate based on amounts presented due to rounding.

(3) Power, unit operating cost per MWh.

Adjusted earnings from continuing operations

The Corporation defines adjusted earnings from continuing operations as earnings from continuing operations less items not reflective of operational performance. These adjusting items include, but are not limited to, the Ambatovy call option fair value adjustment, impairment of assets, gains and losses on the acquisition or disposition of assets, gains and losses on unrealized foreign exchange, and other one-time adjustments. While some adjustments are recurring (such as the Ambatovy call option fair value adjustment), management believes that they do not reflect the Corporation’s operational performance or future operational performance. Management believes that these measures, which are used internally to monitor operational performance, provide investors the ability to better assess the Corporation’s operations.

The table below reconciles adjusted earnings net earnings (loss) per the financial statements:

	For the three months ended						For the years ended
	2015			2014			2015			2014
$ millions	December 31			December 31			December 31			December 31

Net (loss) earnings from continuing operations	$	(1,757.3	)	$	(147.7	)	$	(2,071.7	)	$	(318.5	)

Adjusting items:
Sherritt - Unrealized foreign exchange (gain) loss - Continuing	18.3			5.7			44.3			15.0
Corporate - Call option fair value adjustment	—			4.6			17.7			8.5
Corporate - Restructuring and other Severance	—			8.5			2.2			8.5
Corporate - Sale of Corporate Assets and Arbitration Settlement	—			(4.6		)	(19.1		)	(17.4		)
Corporate - Refinancing of Debentures	—			33.6			—			33.6
Ambatovy - Impairment of assets (net of tax)	1,619.6			—			1,619.6			—
Ambatovy - VAT discounting adjustment	—			—			(4.5		)	—
Ambatovy - Arbitration Awards	—			—			4.5			—
Oil and Gas - Impairment on oil assets and exploration license impairment	—			12.3			80.6			12.3
Oil and Gas - Obsolete inventory and asset impairment	1.7			3.6			1.7			4.3
Oil and Gas - Revenue adjustment	—			4.5			—			4.5
Power - Interest adjustment	—			3.0			—			3.0
Moa JV - Obsolete inventory and equipment impairment	2.9			—			2.9			—
Other	—			—			7.4			—
Total adjustments, before tax	$	1,642.5		$	71.2		$	1,757.3		$	72.3
Tax adjustments(1)	1.0			(3.5		)	(36.9		)	(0.3		)
Adjusted net (loss) earnings from continuing operations	$	(113.8	)	$	(80.0	)	$	(351.3	)	$	(246.5	)

(1) Year to date period includes tax recoveries of $43.3 million related to changes in tax rates in Cuba. See Income taxes on page 12 for further details.

Combined adjusted operating cash flow per share

The Corporation defines combined adjusted operating cash flow per share as cash provided (used) by continuing operations adjusted for dividends received from joint venture and associate and before net changes in non-cash working capital divided by the weighted average number of outstanding shares during the period.

The tables below reconcile combined adjusted operating cash flow per share to the consolidated statement of cash flow:

$ millions, except per share amounts, for the three months ended December 31

2015

Adjustment

Total

Metals

for Joint

derived from

Moa JV and

Ambatovy

Oil and

Corporate

Combined

Venture and

financial

Fort Site

Other

Total

Gas

Power

and Other

total

Associate

statements

Cash provided (used) by continuing operations

21.1

(22.3

)

1.4

0.2

30.2

6.5

(28.5

)

8.4

2.4

10.8

Adjust: net change in non-cash working capital

(12.4

)

(4.9

)

(1.5

)

(18.9

)

(22.6

)

2.3

1.3

(37.9

)

22.4

(15.4

)

Adjusted continuing operating cash flow

8.7

(27.2

)

(0.1

)

(18.7

)

7.6

8.8

(27.2

)

(29.5

)

24.8

(4.6

)

Combined adjusted operating cash flow per share(1)

0.03

(0.09

)

—

(0.06

)

0.03

(0.09

)

(0.09

)

0.08

(0.01

)

(1) The weighted average number of common shares for the quarter was 293.9 million shares.

$ millions, except per share amounts, for the three months ended December 31																											2014
																									Adjustment		Total
	Metals																								for Joint		derived from
	Moa JV and			Ambatovy									Oil and						Corporate			Combined			Venture and		financial
	Fort Site			JV			Other			Total			Gas			Power			and Other			total			Associate		statements

Cash provided (used) by continuing operations	$	30.0		$	(16.8	)	$	2.4		$	15.6		$	58.3		$	18.5		$	(55.0	)	$	37.4		$	2.0	$	39.4
Adjust: net change in non-cash working capital	(16.0		)	(9.6		)	(2.4		)	(28.0		)	(31.3		)	(1.4		)	(18.0		)	(78.7		)	15.9		(62.8		)
Adjusted continuing operating cash flow	14.0			(26.4		)	—			(12.4		)	27.0			17.1			(73.0		)	(41.3		)	17.9		(23.4		)
Combined adjusted operating cash flow per share(1)	$	0.05		$	(0.09	)	$	—		$	(0.04	)	$	0.09		$	0.06		$	(0.25	)	$	(0.14	)	$	0.06	$	(0.08	)

(1) The weighted average number of common shares for the quarter was 297.2 million shares.

$ millions, except per share amounts, for the year ended December 31

2015

Adjustment

Total

Metals

for Joint

derived from

Moa JV and

Ambatovy

Oil and

Corporate

Combined

Venture and

financial

Fort Site

Other

Total

Gas

Power

and Other

total

Associate

statements

Cash provided (used) by continuing operations

53.4

(24.3

)

4.1

33.2

80.7

61.4

(108.6

)

66.7

(2.2

)

64.5

Adjust: net change in non-cash working capital

(22.9

)

(5.1

)

(3.7

)

(31.7

)

(6.8

)

6.7

28.2

(3.6

)

24.7

21.1

Adjusted continuing operating cash flow

30.5

(29.4

)

0.4

1.5

73.9

68.1

(80.4

)

63.1

22.5

85.6

Combined adjusted operating cash flow per share(1)

0.10

(0.10

)

—

0.25

0.23

(0.27

)

0.21

0.08

0.29

(1) The weighted average number of common shares for the year was 293.7 million shares.

$ millions, except per share amounts, for the year ended December 31																										2014
																							Adjustment			Total
	Metals																						for Joint			derived from
	Moa JV and		Ambatovy									Oil and						Corporate			Combined		Venture and			financial
	Fort Site		JV			Other			Total			Gas			Power			and Other			total		Associate			statements

Cash provided (used) by continuing operations	$	34.5	$	(52.6	)	$	0.9		$	(17.2	)	$	193.8		$	49.8		$	(148.6	)	$	77.8	$	31.8		$	109.6
Adjust: net change in non-cash working capital	23.7		30.9			(0.2		)	54.4			(42.4		)	(1.9		)	7.2			17.3		(51.6		)	(34.3		)
Adjusted continuing operating cash flow	58.2		(21.7		)	0.7			37.2			151.4			47.9			(141.4		)	95.1		(19.8		)	75.3
Combined adjusted operating cash flow per share(1)	$	0.20	$	(0.07	)	$	—		$	0.13		$	0.51		$	0.16		$	(0.48	)	$	0.32	$	(0.07	)	$	0.25

(1) The weighted average number of common shares for the year was 297.0 million shares.

Combined free cash flow

The Corporation defines combined free cash flow as cash flow provided (used) by continuing operations adjusted for dividends received from joint venture and associate less cash spending on property plant and equipment, exploration and evaluation, and intangible expenditures.

The tables below reconciled free cash flow to the consolidated statement of cash flow.

$ millions, for the three months ended December 31

2015

Adjustment

Total

Metals

for Joint

derived from

Moa JV and

Ambatovy

Oil and

Corporate

Combined

Venture and

financial

Fort Site

Other

Total

Gas

Power

and Other

total

Associate

statements

Cash provided (used) by continuing operations

21.1

(22.3

)

1.4

0.2

30.2

6.5

(28.5

)

8.4

2.4

10.8

Less:

Property, plant and equipment expenditures

(19.8

)

(4.3

)

—

(24.1

)

(6.4

)

(2.1

)

(0.1

)

(32.7

)

22.0

(10.7

)

Intangible Expenditures

—

(0.5

)

—

(0.5

)

—

(0.5

)

Free Cash Flow

1.3

(26.6

)

1.4

(23.9

)

23.3

4.4

(28.6

)

(24.8

)

24.4

(0.4

)

$ millions, for the three months ended December 31																										2014
																								Adjustment		Total
	Metals																							for Joint		derived from
	Moa JV and			Ambatovy								Oil and						Corporate			Combined			Venture and		financial
	Fort Site			JV			Other		Total			Gas			Power			and Other			total			Associate		statements

Cash provided (used) by continuing operations	$	30.0		$	(16.8	)	$	2.4	$	15.6		$	58.3		$	18.5		$	(55.0	)	$	37.4		$	2.0	$	39.4
Less:
Property, plant and equipment expenditures	(21.0		)	(12.3		)	—		(33.3		)	(16.6		)	(2.2		)	0.1			(52.0		)	26.8		(25.2		)
Intangible expenditures	—			—			—		—			(0.1		)	—			(0.1		)	(0.2		)	—		(0.2		)
Free Cash Flow	$	9.0		$	(29.1	)	$	2.4	$	(17.7	)	$	41.6		$	16.3		$	(55.0	)	(14.8		)	$	28.8	$	14.0

$ millions, for the year ended December 31

2015

Adjustment

Total

Metals

for Joint

derived from

Moa JV and

Ambatovy

Oil and

Corporate

Combined

Venture and

financial

Fort Site

Other

Total

Gas

Power

and Other

total

Associate

statements

Cash provided (used) by continuing operations

53.4

(24.3

)

4.1

33.2

80.7

61.4

(108.6

)

66.7

(2.2

)

64.5

Less:

Property, plant and equipment expenditures

(62.4

)

(36.1

)

—

(98.5

)

(57.9

)

(4.4

)

(3.3

)

(164.1

)

85.1

(79.0

)

Intangible Expenditures

—

(1.4

)

—

(1.4

)

—

(1.4

)

Free Cash Flow

(9.0

)

(60.4

)

4.1

(65.3

)

21.4

57.0

(111.9

)

(98.8

)

82.9

(15.9

)

$ millions, for the year ended December 31																										2014
																								Adjustment		Total
	Metals																							for Joint		derived from
	Moa JV and			Ambatovy								Oil and						Corporate			Combined			Venture and		financial
	Fort Site			JV			Other		Total			Gas			Power			and Other			total			Associate		statements

Cash provided (used) by continuing operations	$	34.5		$	(52.6	)	$	0.9	$	(17.2	)	$	193.8		$	49.8		$	(148.6	)	$	77.8		$	31.8	$	109.6
Less:
Property, plant and equipment expenditures	(41.4		)	(50.3		)	—		(91.7		)	(62.0		)	(3.7		)	(0.6		)	(158.0		)	77.2		(80.8		)
Intangible expenditures	—			—			—		—			(0.8		)	(0.7		)	—			(1.5		)	—		(1.5		)
Free Cash Flow	$	(6.9	)	$	(102.9	)	$	0.9	$	(108.9	)	$	131.0		$	45.4		$	(149.2	)	(81.7		)	$	109.0	$	27.3

FORWARD-LOOKING STATEMENTS

This MD&A 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”, “projected”, “continue” or other similar words or phrases. Specifically, forward-looking statements in this document include, but are not limited to, statements set out in the “Outlook” sections of this MD&A and certain expectations about capital costs and expenditures; capital project completion dates; future price of key commodities; sales volumes; revenue, costs, and earnings; sufficiency of working capital and capital project funding; completion of development and exploration wells; and amounts of certain joint venture commitments.

Forward-looking statements are not based on historic facts, but rather on current expectations, assumptions and projections about future events. 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 those 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 MD&A 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. This risks, uncertainties and other factors include, but are not limited to changes in the global price for nickel, cobalt, oil and gas or certain other commodities (ammonium sulphate), share-price volatility, level of liquidity and access to capital resources, access to financing, compliance with financial covenants, risks associated with the Corporation’s joint venture partners; discrepancies between actual and estimated production; variability in production at Sherritt’s operations in Madagascar and Cuba; risks associated with the completion of Moa Joint Venture Acid Plant; potential interruptions in transportation; uncertainty of gas supply for electrical generation; uncertainty of exploration results and Sherritt’s ability to replace depleted mineral and oil and gas reserves; the Corporation’s reliance on key personnel and skilled workers; the possibility of equipment and other failures; the potential for shortages of equipment and supplies; risks associated with mining, processing and refining activities; uncertainty of resources and reserve estimates; uncertainties in environmental rehabilitation provisions estimates; risks related to the Corporation’s corporate structure; political, economic and other risks of foreign operations; risks related to Sherritt’s operations in Madagascar and Cuba; risks related to the U.S. government policy toward Cuba, including the U.S. embargo on Cuba and the Helms-Burton legislation; risks related to the accuracy of capital and operating cost estimates; reliance on significant customers; foreign exchange and pricing risks; compliance with applicable environment, health and safety legislation and other associated matters; risks associated with governmental regulations regarding greenhouse gas emissions; maintaining the Corporation’s social license to grow and operate; risks relating to community relations; credit risks; shortage of equipment and supplies; competition in product markets; future market access; interest rate changes; risks in obtaining insurance; uncertainties in labour relations; uncertainty in the ability of the Corporation to enforce legal rights in foreign jurisdictions; uncertainty regarding the interpretation and/or application of the applicable laws in foreign jurisdictions; legal contingencies; risks related to the Corporation’s accounting policies; risks associated with future acquisitions; uncertainty in the ability of the Corporation to obtain government permits; failure to comply with, or changes to, applicable government regulations; bribery and corruption risks, including failure to comply with the Corruption of Foreign Public Officials Act or applicable local anti-corruption law; uncertainties in growth management; and certain corporate objectives, goals and plans for 2016; and the Corporation’s ability to meet other factors listed from time to time in the Corporation’s continuous disclosure documents. Readers are cautioned that the foregoing list of factors is not exhaustive and should be considered in conjunction with the risk factors described in this MD&A and in the Corporation’s other documents filed with the Canadian securities authorities.

The Corporation may, from time to time, make oral forward-looking statements. The Corporation advises that the above paragraph and the risk factors described in this MD&A and in the Corporation’s other documents filed with the Canadian securities authorities should be read for a description of certain factors that could cause the actual results of the Corporation to differ materially from those in the oral forward-looking statements. The forward-looking information and statements contained in this MD&A are made as of the date hereof and the Corporation undertakes no obligation to update publicly or revise any oral or written forward-looking information or statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. The forward-looking information and statements contained herein are expressly qualified in their entirety by this cautionary statement.

Exhibit 2.5

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

As at and for the three months ended March 31, 2016 and 2015

INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Condensed consolidated statements of comprehensive income (loss)	2
Condensed consolidated statements of financial position	3
Condensed consolidated statements of cash flow	4
Condensed consolidated statements of changes in shareholders’ equity	5
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 — Nature of operations and corporate information	6
Note 2 — Basis of presentation	6
Note 3 — Summary of significant accounting policies, judgments and estimates	6
Note 4 — Segmented information	7
Note 5 — Expenses	9
Note 6 — Investment in an associate	10
Note 7 — Joint arrangements	12
Note 8 — Net finance (income) expense	15
Note 9 — Income taxes	15
Note 10 — Discontinued operations	16
Note 11 — Assets held for sale	16
Note 12 — Loss per share	16
Note 13 — Financial instruments	17
Note 14 — Advances, loans receivable and other financial assets	19
Note 15 — Inventories	19
Note 16 — Property, plant and equipment	20
Note 17 — Loans, borrowings and other liabilities	21
Note 18 — Provisions, contingencies and guarantees	22
Note 19 — Shareholders’ equity	23
Note 20 — Stock-based compensation plans	25
Note 21 — Cash flows	27
Note 22 — Financial risk and capital risk management	27
Note 23 — Related party transactions	30
Note 24 — Operating lease arrangements	30
Note 25 — Commitments for expenditures	31

Sherritt International Corporation

Interim condensed consolidated financial statements (unaudited)

Condensed consolidated statements of comprehensive income (loss)

Unaudited, Canadian $ millions, except per share amounts, for the three months ended March 31	Note	2016			2015

Revenue		$	58.4		$	82.9
Cost of sales	5	(64.6		)	(82.7		)
Administrative expenses	5	(12.7		)	(12.0		)
Share of loss of an associate, net of tax	6	(65.9		)	(42.3		)
Share of (loss) earnings of a joint venture, net of tax	7	(12.9		)	4.0
Loss from operations, associate and joint venture		(97.7		)	(50.1		)
Financing income	8	17.3			20.0
Financing expense	8	33.3			(56.1		)
Net finance income (expense)		50.6			(36.1		)
Loss before tax		(47.1		)	(86.2		)
Income tax (expense) recovery	9	(0.7		)	29.4
Net loss from continuing operations		(47.8		)	(56.8		)
Earnings from discontinued operations, net of tax	10	—			—
Net loss for the period		$	(47.8	)	$	(56.8	)

Other comprehensive income
Items that may be subsequently reclassified to profit or loss:
Foreign currency translation differences on foreign operations	19	(169.3		)	281.6
Items that will not be subsequently reclassified to profit or loss:
Actuarial (losses) gains on pension plans, net of tax
Continuing operations	19	(0.2		)	0.7
Other comprehensive (loss) income		(169.5		)	282.3
Total comprehensive (loss) income		$	(217.3	)	$	225.5

Net loss from continuing operations per common share, basic and diluted	12	$	(0.16	)	$	(0.19	)
Net loss per common share, basic and diluted	12	$	(0.16	)	$	(0.19	)

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

Condensed consolidated statements of financial position

		2016			2015
Unaudited, Canadian $ millions, as at	Note	March 31			December 31

ASSETS
Current assets
Cash and cash equivalents	13	$	276.8		$	230.6
Short-term investments	13	93.1			204.8
Advances, loans receivable and other financial assets	14	80.7			82.7
Trade accounts receivable, net	13	257.7			258.3
Inventories	15	40.4			38.0
Prepaid expenses		3.5			6.0
		752.2			820.4

Non-current assets
Advances, loans receivable and other financial assets	14	1,348.3			1,600.5
Other non-financial assets		0.6			0.8
Property, plant and equipment	16	332.4			351.1
Investment in an associate	6	864.3			757.3
Investment in a joint venture	7	369.0			404.2
Intangible assets		142.9			154.8
		3,057.5			3,268.7
Assets held for sale	11	0.9			0.9
Total assets		$	3,810.6		$	4,090.0

LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities
Loans and borrowings	17	$	45.9		$	91.2
Trade accounts payable and accrued liabilities		98.8			73.6
Income taxes payable		1.4			2.4
Other financial liabilities	17	2.2			1.5
Deferred revenue		31.1			24.6
Provisions	18	15.9			18.8
		195.3			212.1

Non-current liabilities
Loans and borrowings	17	2,082.2			2,171.9
Other financial liabilities	17	45.6			1.9
Deferred revenue		3.7			3.8
Provisions	18	110.9			107.8
Deferred income taxes		32.6			35.4
		2,275.0			2,320.8
Total liabilities		2,470.3			2,532.9

Shareholders’ equity
Capital stock	19	2,775.3			2,775.3
Deficit		(2,390.4		)	(2,342.6		)
Reserves	19	225.4			224.9
Accumulated other comprehensive income	19	730.0			899.5
		1,340.3			1,557.1
Total liabilities and shareholders’ equity		$	3,810.6		$	4,090.0

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

Interim condensed consolidated financial statements (unaudited)

Condensed consolidated statements of cash flow

Unaudited, Canadian $ millions, for the three months ended March 31	Note	2016			2015

Operating activities
Net loss from continuing operations		$	(47.8	)	$	(56.8	)
Add (deduct):
Depletion, depreciation and amortization		24.4			33.8
Share of loss of an associate, net of tax	6	65.9			42.3
Share of loss (earnings) of a joint venture, net of tax	7	12.9			(4.0		)
Net finance (income) expense (less accretion expense)	8	(50.8		)	35.9
Income tax expense (recovery)	9	0.7			(29.4		)
Service concession arrangement		(2.0		)	—
Net change in non-cash working capital	21	(4.2		)	(26.3		)
Interest received		1.2			27.0
Interest paid		(10.3		)	(9.4		)
Income tax paid		(2.3		)	(0.1		)
Dividends received from joint venture	7	—			12.5
Other operating items	21	2.6			0.8
Cash (used) provided by continuing operations		(9.7		)	26.3
Cash used by discontinued operations	10	(2.9		)	(3.5		)
Cash (used) provided by operating activities		(12.6		)	22.8

Investing activities
Property, plant and equipment expenditures	4	(5.8		)	(23.8		)
Intangible asset expenditures	4	(0.6		)	—
Receipts of advances, loans receivable and other financial assets		0.4			3.5
Net proceeds from sale of property, plant and equipment		—			0.1
Proceeds from short-term investments		111.7			132.6
Cash provided by continuing operations		105.7			112.4
Cash used by discontinued operations	10	—			—
Cash provided by investing activities		105.7			112.4

Financing activities
Repayment of loans and borrowings and other financial liabilities		(45.4		)	(0.4		)
Dividends paid on common shares	19	—			(3.0		)
Cash used by continuing operations		(45.4		)	(3.4		)
Cash used by discontinued operations	10	—			—
Cash used by financing activities		(45.4		)	(3.4		)
Effect of exchange rate changes on cash and cash equivalents		(1.5		)	2.3
Increase in cash and cash equivalents		46.2			134.1
Cash and cash equivalents at beginning of the period		230.6			161.6
Cash and cash equivalents at end of the period	13	$	276.8		$	295.7

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

Condensed consolidated statements of changes in shareholders’ equity

										Accumulated
				Retained						other
		Capital		earnings						comprehensive
Unaudited, Canadian $ millions	Note	stock		(deficit)			Reserves			income (loss)			Total

Balance as at December 31, 2014		$	2,772.9	$	(259.9	)	$	225.2		$	320.5		$	3,058.7

Total comprehensive income (loss):
Net loss for the period		—		(56.8		)	—			—			(56.8		)
Foreign currency translation differences on foreign operations	19	—		—			—			281.6			281.6
Actuarial gains on defined benefit obligations, net of tax	19	—		—			—			0.7			0.7
		—		(56.8		)	—			282.3			225.5
Shares issued for:
Restricted stock plan (vested)	19	1.6		—			(1.6		)	—			—

Restricted stock plan expense	20	—		—			0.1			—			0.1
Stock option plan expense	20	—		—			0.2			—			0.2

Dividend declared to common shareholders		—		(3.0		)	—			—			(3.0		)
Balance as at March 31, 2015		$	2,774.5	$	(319.7	)	$	223.9		$	602.8		$	3,281.5

Total comprehensive income (loss):
Net loss for the period		—		(2,019.9		)	—			—			(2,019.9		)
Foreign currency translation differences on foreign operations	19	—		—			—			297.6			297.6
Actuarial loss on defined benefit obligations, net of tax	19	—		—			—			(0.9		)	(0.9		)
		—		(2,019.9		)	—			296.7			(1,723.2		)
Shares issued for:
Employee share purchase plan (vested)	19	0.8		—			(0.1		)	—			0.7
										—
Stock option plan expense	20	—		—			1.1			—			1.1

Dividend declared to common shareholders		—		(3.0		)	—			—			(3.0		)
Balance as at December 31, 2015		$	2,775.3	$	(2,342.6	)	$	224.9		$	899.5		$	1,557.1

Total comprehensive income (loss):
Net loss for the period		—		(47.8		)	—			—			(47.8		)
Foreign currency translation differences on foreign operations	19	—		—			—			(169.3		)	(169.3		)
Actuarial loss on defined benefit obligations, net of tax	19	—		—			—			(0.2		)	(0.2		)
		—		(47.8		)	—			(169.5		)	(217.3		)

Stock option plan expense	20	—		—			0.5			—			0.5
Balance as at March 31, 2016		$	2,775.3	$	(2,390.4	)	$	225.4		$	730.0		$	1,340.3

The accompanying notes are an integral part of these interim condensed consolidated financial statements.

2016 First Quarter Report

Notes to the interim condensed consolidated financial statements

Notes to the consolidated financial statements

(All dollar amounts presented in tables are expressed in millions of Canadian dollars except share and per share amounts)

1. NATURE OF OPERATIONS AND CORPORATE INFORMATION

The Corporation is domiciled in Ontario, Canada and its registered office is 181 Bay Street, Toronto, Ontario, M5J 2T3. These consolidated financial statements were approved and authorized for issuance by the Audit Committee on behalf of the Board of Directors of Sherritt on April 25, 2016. The Corporation is listed on the Toronto Stock Exchange.

2. BASIS OF PRESENTATION

The interim condensed consolidated financial statements of the Corporation are prepared in accordance with IAS 34, “Interim Financial Reporting” (IAS 34), as issued by the International Accounting Standards Board (IASB). Accordingly, certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with International Financial Reporting Standards (IFRS), as issued by the IASB, have been omitted or condensed. These interim condensed consolidated financial statements include the financial results of the Corporation’s interest in its subsidiaries, joint arrangements and an associate.

The interim condensed consolidated financial statements are prepared on a going concern basis, under the historical cost convention, except for certain financial assets and liabilities which are presented at fair value. All financial information is presented in Canadian dollars, the Corporation’s reporting currency, except as otherwise noted.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, JUDGMENTS AND ESTIMATES

These interim condensed consolidated financial statements have been prepared using the same accounting policies and methods of computation as the annual consolidated financial statements of the Corporation as at and for the year ended December 31, 2015, with the exception of the impact of certain amendments to accounting standards or new interpretations issued by the IASB, which were applicable from January 1, 2016 and disclosed in the annual consolidated financial statements of the Corporation as at and for the year ended December 31, 2015. The adoption of these amendments and interpretations did not have a material impact on the accounting policies, methods of computation or presentation applied by the Corporation. The Corporation has not early adopted any standard, interpretation or amendment that has been issued but is not yet effective.

Accordingly, the interim condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements for the year ended December 31, 2015.

4. SEGMENTED INFORMATION

Business segments

Canadian $ millions, for the three months ended March 31

2016

Metals

Adjustments for

Moa JV and

Ambatovy

Oil and

Corporate

Joint Venture

Fort Site(1)

JV(2)

Other(3)

Gas

Power

and Other(4)

and Associate(5)

Total

Revenue

76.7

65.1

11.2

22.4

15.6

0.3

(132.9

)

58.4

Cost of sales

(85.6

)

(110.3

)

(10.7

)

(28.7

)

(14.6

)

(2.4

)

187.7

(64.6

)

Administrative expenses

(2.4

)

(4.7

)

(0.2

)

(2.4

)

(1.2

)

(7.7

)

5.9

(12.7

)

Share of loss of an associate, net of tax

—

(65.9

)

(65.9

)

Share of loss of a joint venture, net of tax

—

(12.9

)

(12.9

)

(Loss) earnings from operations, associate and joint venture

(11.3

)

(49.9

)

0.3

(8.7

)

(0.2

)

(9.8

)

(18.1

)

(97.7

)

Financing income

17.3

Financing expense

33.3

Net finance income

50.6

Loss before tax

(47.1

)

Income tax expense

(0.7

)

Net loss from continuing operations

(47.8

)

Earnings from discontinued operations, net of tax (note 10)

—

Net loss for the period

(47.8

)

Supplementary information

Depletion, depreciation and amortization

11.1

37.1

—

12.7

8.9

0.7

(46.1

)

24.4

Property, plant and equipment expenditures

7.6

—

4.4

0.1

(6.4

)

5.8

Intangible asset expenditures

—

0.6

—

0.6

Canadian $ millions, as at March 31

2016

Non-current assets(6)

741.4

2,604.0

—

133.9

182.0

10.3

(3,196.3

)

475.3

Total assets

1,008.6

2,828.9

12.8

1,189.6

531.3

595.7

(2,356.3

)

3,810.6

2016 First Quarter Report

Notes to the interim condensed consolidated financial statements

Canadian $ millions, for the three months ended March 31																						2015
	Metals																		Adjustments for
	Moa JV and			Ambatovy						Oil and						Corporate			Joint Venture
	Fort Site(1)			JV(2)			Other(3)			Gas			Power			and Other(4)			and Associate(5)			Total

Revenue	$	104.5		$	100.7		$	18.5		$	42.3		$	11.8		$	0.5		$	(195.4	)	$	82.9
Cost of sales	(96.1		)	(139.5		)	(17.8		)	(41.3		)	(11.4		)	(1.1		)	224.5			(82.7		)
Administrative expenses	(1.4		)	(5.0		)	(0.4		)	(1.9		)	(1.4		)	(7.6		)	5.7			(12.0		)
Share of loss of an associate, net of tax	—			—			—			—			—			—			(42.3		)	(42.3		)
Share of earnings of a joint venture, net of tax	—			—			—			—			—			—			4.0			4.0
Earnings (loss) from operations, associate and joint venture	7.0			(43.8		)	0.3			(0.9		)	(1.0		)	(8.2		)	(3.5		)	(50.1		)
Financing income																						20.0
Financing expense																						(56.1		)
Net finance expense																						(36.1		)
Loss before tax																						(86.2		)
Income tax recovery																						29.4
Net loss from continuing operations																						(56.8		)
Earnings from discontinued operations, net of tax (note 10)																						—
Net loss for the period																						(56.8		)

Supplementary information
Depletion, depreciation and amortization	$	11.3		$	48.1		$	(0.2	)	$	22.4		$	8.3		$	0.9		$	(57.0	)	$	33.8
Property, plant and equipment expenditures	7.8			6.4			—			20.6			0.4			0.4			(11.8		)	23.8
Intangible asset expenditures	—			—			—			—			—			—			—			—

Canadian $ millions, as at December 31																2015
Non-current assets(6)	$	772.0	$	2,815.9	$	—	$	147.6	$	199.6	$	11.0	$	(3,440.2	)	$	505.9
Total assets	1,039.8		3,044.1		12.2		1,219.5		548.6		913.8		(2,688.0		)	4,090.0

(2) Included in the Ambatovy JV segment are the operations of the Corporation’s 40% interest in the Ambatovy Joint Venture.

(3) Included in the Metals Other segment are the operations of two wholly-owned subsidiaries of the Corporation established to buy, market and sell certain Ambatovy Joint Venture and Moa Joint Venture nickel production.

(5) The Adjustments for Joint Venture and Associate reflect the adjustments for equity-accounted investments in the Ambatovy Joint Venture and Moa Joint Venture.

(6) Non-current assets are composed of property, plant and equipment and intangible assets.

Geographic information

			2016				2015
			March 31				December 31
	Non-current		Total		Non-current		Total
Canadian $ millions, as at	assets(1)		assets(2)		assets(1)		assets(2)

North America	$	165.0	$	987.7	$	165.0	$	1,070.8
Cuba	294.2		945.1		324.4		1,002.0
Madagascar	1.3		1,844.8		1.3		1,975.4
Europe	13.9		19.1		14.2		20.4
Asia	0.9		2.5		1.0		2.6
Other	—		11.4		—		18.8
	$	475.3	$	3,810.6	$	505.9	$	4,090.0

(1) Non-current assets are composed of property, plant and equipment and intangible assets and exclude the non-current assets of equity accounted investments.

(2) For its geographic information, the Corporation has allocated assets based on their physical location.

	2016		2015
	Total		Total
Canadian $ millions, for the three months ended March 31	revenue(1)		revenue(1)

North America	$	17.2	$	28.1
Cuba	36.2		50.5
Madagascar	0.4		0.5
Europe	4.0		3.1
Asia	0.3		0.3
Other	0.3		0.4
	$	58.4	$	82.9

(1) For its geographic information, the Corporation has allocated revenue based on the location of the customer. Revenue excludes the revenue of equity accounted investments.

Revenue components

Revenue includes the following significant categories:

Canadian $ millions, for the three months ended March 31	2016		2015

Commodity and electricity	$	54.3	$	80.3
Other	4.1		2.6
	$	58.4	$	82.9

5. EXPENSES

Cost of sales includes the following:

Canadian $ millions, for the three months ended March 31	2016		2015

Employee costs	$	17.5	$	15.6
Depletion, depreciation and amortization	23.7		33.1
Raw materials and consumables	9.3		12.7
Repairs and maintenance	7.0		11.8
Freight and shipping costs	4.2		4.4
Other	2.9		5.1
	$	64.6	$	82.7

Administrative expenses include the following:

Canadian $ millions, for the three months ended March 31	2016		2015

Employee costs	$	7.1	$	9.5
Severance	0.7		—
Depreciation	0.7		0.7
Stock-based compensation expense (recovery)	1.8		(0.4		)
Annual general meetings costs and other shareholder related costs	0.1		—
Consulting services and audit fees	1.0		1.0
Other	1.3		1.2
	$	12.7	$	12.0

2016 First Quarter Report

Notes to the interim condensed consolidated financial statements

6. INVESTMENT IN AN ASSOCIATE

Ambatovy funding

Ambatovy cash calls due in January 2016 amounted to US$50.0 million, with funding of US$30.0 million provided by Ambatovy Joint Venture partners Sumitomo and Kores. Total cash funding provided by Sumitomo and Kores has increased to US$51.0 million, pursuant to additional cash calls of US$35.0 million. By agreement amongst the Ambatovy Joint Venture partners, Sherritt’s unfunded amounts remain payable with accrued interest at LIBOR plus 3.0%. These amounts will be subtracted from future Ambatovy Joint Venture distributions, or may be set off against other amounts owed to Sherritt. Sherritt also has the option to pay the amounts in cash at any time, at Sherritt’s election. Until the funding deficit is addressed, and subject to continued discussions with the Ambatovy Joint Venture partners, Sherritt will not exercise its Ambatovy voting rights. The Corporation has the ability to cure the underfunding and regain these voting rights at any time. Therefore, it is the Corporation’s judgment that it continues to have significant influence over the Ambatovy Joint Venture.

Statement of financial position

The following provides additional information relating to the Corporation’s investment in the Ambatovy Joint Venture:

	2016		2015
Canadian $ millions, 100% basis, as at	March 31		December 31

Assets
Cash and cash equivalents(1)	$	51.3	$	39.6
Other current assets	4.2		12.9
Trade accounts receivable, net	78.9		89.6
Inventories	381.3		426.2
Other non-current assets(2)	49.6		5.8
Property, plant and equipment	6,507.1		7,036.5
Total assets	7,072.4		7,610.6

Liabilities
Trade accounts payable and accrued liabilities	305.0		317.5
Other current financial liabilities	16.8		15.8
Current portion of loans and borrowings:
Ambatovy Joint Venture financing(3)	244.3		260.7
Ambatovy revolving credit facility(4)	51.4		60.6
Non-current portion of loans and borrowings:
Ambatovy Joint Venture financing(3)	1,808.2		1,927.9
Ambatovy Subordinated loan payable(5)	2,311.2		3,009.1
Environmental rehabilitation provision	125.2		117.6
Other non-current liabilities(2)	49.5		8.2
Total liabilities	4,911.6		5,717.4
Net assets	$	2,160.8	$	1,893.2

(2) As at March 31, 2016, the Ambatovy Joint Venture has recognized a financial asset relating to its right to receive outstanding shareholder funding from the Corporation (note 17). The Ambatovy Joint Venture has also recognized a financial liability relating to future distributions payable to the Corporation if and when the funding deficit is cured (note 14). This financial liability has not been included within the Ambatovy subordinated loan payable as the funding has not yet been provided by the Corporation.

(3) The Ambatovy Joint Venture financing of $2,052.5 million, net of financing costs, is project financing with a group of international lenders that matures on June 15, 2024. For the three months ended March 31, 2016, total principal repayments were nil. The project financing became non-recourse to the partners in September 2015 when the project filed the remaining completion certificates and is now solely secured by the project assets. Interest is payable based on LIBOR rates plus 2.5%. As at March 31, 2016, the Ambatovy Joint Venture had borrowed US$1,601.1 million (December 31, 2015 - US$1,601.1 million) under the project financing.

(4) The Ambatovy revolving credit facility is a Malagasy Ariary (MGA) 126.0 billion ($51.4 million) revolving credit facility agreement with local financial institutions (December 31, 2015 — MGA 140 billion ($60.6 million)) which matures on April 29, 2016. The Corporation is in current discussions to extend the maturity date of this revolving credit facility agreement. The facility bears interest rates between 9.00% and 11.85% and is subordinated to the Ambatovy Joint Venture financing. As at March 31, 2016, MGA 126.0 billion ($51.4 million) was drawn on the revolving credit facility (December 31, 2015 - MGA 140 billion ($60.6 million)). As at December 31, 2015, the Ambatovy revolving credit facility was also comprised of a MGA 20 billion ($8.7 million) overdraft facility which matured on February 29, 2016.

(5) The subordinated loan payable is comprised of pro-rata contributions provided by the Ambatovy Joint Venture partners. The debt bears interest at LIBOR plus 6%. Repayments of principal or interest will not be made prior to certain conditions of the finance agreements being satisfied. Unpaid interest is accrued monthly and capitalized to the principal balance semi-annually. In January 2016, US$430.0 million of the Ambatovy Joint Venture Subordinated loan payable was converted to equity which, at the Corporation’s 40% share, resulted in a US$172.0 million ($242.2 million) decrease in the Corporation’s subordinated loans receivable. The Corporation has recorded its share of the related subordinated loan receivable within advances, loans receivable and other financial assets (note 14). There was no change to the Corporation’s ownership interest as a result of the conversion.

2016 First Quarter Report

Notes to the interim condensed consolidated financial statements

Reconciliation of Ambatovy Joint Venture’s net assets to the carrying value of investment in an associate recognized in the interim condensed consolidated statements of financial position:

	2016			2015
Canadian $ millions, as at	March 31			December 31

Net assets of Ambatovy Joint Venture	$	2,160.8		$	1,893.2
Proportion of Sherritt’s ownership interest	40		%	40		%
Carrying value of investment in an associate	$	864.3		$	757.3

Results of operations

Canadian $ millions, 100% basis, for the three months ended March 31	2016			2015

Revenue	$	162.7		$	251.7
Cost of sales(1)	(275.8		)	(348.7		)
Administrative expenses	(11.7		)	(12.4		)
Loss from operations	(124.8		)	(109.4		)
Financing income	1.2			—
Financing expense	(58.5		)	(38.2		)
Net financing expense	(57.3		)	(38.2		)
Loss before tax	(182.1		)	(147.6		)
Income tax recovery	—			16.7
Net loss and comprehensive loss for the period	$	(182.1	)	$	(130.9	)

(1) Included in cost of sales for the three months ended March 31, 2016 is depreciation and amortization of $92.5 million ($120.0 for the three months ended March 31, 2015).

Reconciliation of Ambatovy Joint Venture’s net loss and comprehensive loss to the share of loss of an associate recognized in the interim condensed consolidated statements of comprehensive income (loss):

Canadian $ millions, for the three months ended March 31	2016			2015

Net loss and comprehensive loss for the period of Ambatovy Joint Venture	$	(182.1	)	$	(130.9	)
Proportion of Sherritt’s ownership interest	40		%	40		%
Total	(72.8		)	(52.4		)
Intercompany interest expense elimination	6.9			10.1
Share of loss of an associate, net of tax	$	(65.9	)	$	(42.3	)

7. JOINT ARRANGEMENTS

Investment in a joint venture

The following provides additional information relating to the Corporation’s investment in the Moa Joint Venture:

Statement of financial position

	2016		2015
Canadian $ millions, 100% basis, as at	March 31		December 31

Assets
Cash and cash equivalents	$	27.2	$	43.7
Other current assets	15.7		11.8
Trade accounts receivable, net	74.0		72.2
Inventories	191.4		208.4
Other non-current assets	13.1		13.9
Property, plant and equipment	1,278.7		1,349.5
Deferred income taxes	15.3		12.1
Total assets	1,615.4		1,711.6

Liabilities
Trade accounts payable and accrued liabilities	69.8		68.3
Other current financial liabilities	58.3		59.0
Other current liabilities	3.8		2.9
Loans and borrowings	46.1		43.9
Environmental rehabilitation provision	83.3		80.6
Other non-current financial liabilities	494.9		519.9
Deferred income taxes	27.1		27.6
Total liabilities	783.3		802.2
Net assets	$	832.1	$	909.4

Reconciliation of Moa Joint Venture’s net assets to the carrying value of Investment in a Joint Venture recognized in the interim condensed consolidated statements of financial position:

	2016			2015
Canadian $ millions, as at	March 31			December 31

Net assets of Moa Joint Venture	$	832.1		$	909.4
Proportion of Sherritt’s ownership interest	50		%	50		%
Total	416.1			454.7
Intercompany capitalized interest elimination	(47.1		)	(50.5		)
Carrying value of investment in a joint venture	$	369.0		$	404.2

Results of operations

Canadian $ millions, 100% basis, for the three months ended March 31	2016			2015

Revenue	$	135.6		$	189.6
Cost of sales(1)	(154.8		)	(170.4		)
Administrative expenses	(2.4		)	(1.5		)
Operating (loss) profit	(21.6		)	17.7
Financing income	0.1			0.2
Financing expense	(11.4		)	(15.3		)
Net finance expense	(11.3		)	(15.1		)
(Loss) earnings before tax	(32.9		)	2.6
Income tax recovery	2.0			1.0
Net (loss) earnings and comprehensive (loss) income for the period	$	(30.9	)	$	3.6

(1) Included in cost of sales for the three months ended March 31, 2016 is depreciation and amortization of $18.0 million (for the three months ended March 31, 2015 - $18.1 million).

2016 First Quarter Report

Notes to the interim condensed consolidated financial statements

Reconciliation of Moa Joint Venture’s net (loss) earnings and comprehensive (loss) income to the share of (loss) earnings of a joint venture recognized in the interim condensed consolidated statements of comprehensive income (loss):

Canadian $ millions, for the three months ended March 31	2016			2015

Net (loss) earnings and comprehensive (loss) income for the period of Moa Joint Venture	$	(30.9	)	$	3.6
Proportion of Sherritt’s ownership interest	50		%	50		%
Total	(15.5		)	1.8
Intercompany interest expense elimination	2.6			2.2
Share of (loss) earnings of a joint venture, net of tax	$	(12.9	)	$	4.0

For the three months ended March 31, 2016, the Moa Joint Venture (50% basis) paid nil dividends ($12.5 for the three months ended March 31, 2015).

Joint operations

	2016			2015
	March 31			December 31
Canadian $ millions, as at	Energas			Energas
	331/3		%	331/3		%

Current assets	$	29.2		$	25.6
Non-current assets	160.9			176.2
Current liabilities	18.5			21.4
Non-current liabilities	82.3			79.8
Net assets	$	89.3		$	100.6

	2016			2015
Canadian $ millions, for the three months ended March 31	Energas			Energas
	331/3		%	331/3		%

Revenue	$	15.6		$	11.3
(Expense) recovery	(20.2		)	3.9
Net (loss) earnings	$	(4.6	)	$	15.2

8. NET FINANCE (INCOME) EXPENSE

Canadian $ millions, for the three months ended March 31	Note	2016			2015

Revaluation on financial instruments		$	—		$	(2.8	)
Interest income on cash, cash equivalents and short-term investments		0.7			1.0
Interest income on investments		0.1			0.2
Interest income on advances and loans receivable		16.5			21.6
Total financing income		17.3			20.0

Interest expense and accretion on loans and borrowings		42.4			35.5
Unrealized foreign exchange (gain) loss		(76.0		)	17.6
Realized foreign exchange gain		(0.3		)	(0.6		)
Other finance charges		0.4			3.4
Accretion expense on environmental rehabilitation provisions	18,21	0.2			0.2
Total financing expense		(33.3		)	56.1
Net finance (income) expense		$	(50.6	)	$	36.1

Included in interest income on advances and loans receivable in the interim condensed consolidated statements of comprehensive income (loss) is interest on the Energas conditional sales agreement of $3.6 million for the three months ended March 31, 2016 ($4.3 million for the three months ended March 31, 2015). Additionally, included in interest received in the interim condensed consolidated statements of cash flow is interest of nil for the three months ended March 31, 2016 ($23.0 million for the three months ended March 31, 2015). In the prior period, these amounts were netted against interest expense and accretion on loans and borrowings and interest paid, respectively. For consistency of presentation with the current periods presented, the comparative amounts have been reclassified to interest income and interest received, respectively.

9. INCOME TAXES

Canadian $ millions, for the three months ended March 31	2016			2015

Current income tax expense (recovery)
Current period	$	1.6		$	6.2
Effect of tax rate change in Cuba	—			(14.0		)
	1.6			(7.8		)

Deferred income tax (recovery) expense
Origination and reversal of temporary differences	(6.0		)	(12.3		)
Non-recognition of tax assets	5.1			4.2
Effect of tax rate change in Cuba	—			(13.5		)
	(0.9		)	(21.6		)
Income tax expense (recovery)	$	0.7		$	(29.4	)

Tax rate changes

Cuba

In 2015, clarification was received from the Cuban government regarding the application of tax rate reductions in Cuba due to a new foreign investment law. As a result, the tax expense for the three months ended March 31, 2015 included a tax recovery of $27.5 million in Oil and Gas. In addition, for the three months ended March 31, 2015 a tax recovery of $2.9 million (50% basis) was recognized at the Moa Joint Venture, the impact of which was included in the Corporation’s share of (loss) earnings of a joint venture. In 2015, the new foreign investment law in Cuba resulted in the following rate changes:

	Prior		Revised
	Statutory		Statutory
Operation	Tax Rate		Tax Rate

Oil and Gas	30.0	%	22.5	%
Power	30.0	%	15.0	%
Metals - Moa Joint Venture	45.0	%	22.5	%

2016 First Quarter Report

Notes to the interim condensed consolidated financial statements

10. DISCONTINUED OPERATIONS

For the three months ended March 31, 2016, the Corporation has recognized $2.9 million in cash used by discontinued operations in the interim condensed consolidated statements of cash flow ($3.5 million for the three months ended March 31, 2015). Cash used by discontinued operations relate to changes in the estimated Obed provision retained by the Corporation following the sale of the Coal operations in 2014, as well as cash paid to settle this provision (note 18). For the three months ended March 31, 2016, the Corporation has recognized nil change in the estimated provision and made $2.9 million in payments to settle this provision (nil and $3.5 million, respectively, for the three months ended March 31, 2015).

11. ASSETS HELD FOR SALE

12. LOSS PER SHARE

The following table presents the calculation of basic and diluted loss per common share:

Canadian $ millions, except share amounts in millions and per share amounts in dollars, for the three months ended March 31	2016			2015

Net loss from continuing operations	$	(47.8	)	$	(56.8	)
(Loss) earnings from discontinued operations, net of tax	—			—
Net loss - basic and diluted	$	(47.8	)	$	(56.8	)

Weighted-average number of common shares - basic and diluted(1)	293.9			293.4

Net loss from continuing operations per common share, basic and diluted	$	(0.16	)	$	(0.19	)

(Loss) earnings from discontinued operations per common share, basic and diluted	$	—		$	—

Net loss per common share, basic and diluted	$	(0.16	)	$	(0.19	)

(1) The determination of the weighted-average number of common shares - diluted excludes 9.7 million shares related to stock options that were anti-dilutive for the three months ended March 31, 2016 (7.1 million for the three months ended March 31, 2015). There were nil shares related to the restricted stock plan that were anti-dilutive for the three months ended March 31, 2016 (nil shares for the three months ended March 31, 2015). On June 30, 2015, the Corporation closed its employee share purchase plan. There were 0.3 million shares related to the employee share purchase plan that were anti-dilutive for the three months ended March 31, 2015.

13. FINANCIAL INSTRUMENTS

Cash, cash equivalents and short-term investments

Cash and cash equivalents consist of:

	2016		2015
Canadian $ millions, as at	March 31		December 31

Cash equivalents	$	190.8	$	118.9
Cash on hand and balances with banks	85.0		110.7
Restricted cash	1.0		1.0
	$	276.8	$	230.6

The Corporation’s cash balances are deposited with major financial institutions rated A- or higher by Standard and Poor’s except for institutions located in Madagascar and Cuba that are not rated. The total cash held in Cuban bank deposit accounts was $9.0 million at March 31, 2016 (December 31, 2015 — $3.8 million).

As at March 31, 2016, $4.7 million of cash on the Corporation’s interim condensed consolidated statements of financial position was held by Energas (December 31, 2015 — $0.8 million). These funds are for the use of the joint operation.

The Corporation’s cash equivalents consist of Government of Canada treasury bills and term deposits with a major financial institution with maturities of 90 days or less. As at March 31, 2016, the Corporation had $190.8 million in Government of Canada treasury bills and term deposits (December 31, 2015 - $118.9 million) included in cash and cash equivalents and $93.1 million in short-term investments (December 31, 2015 - $204.8 million).

Financial instrument hierarchy

	Hierarchy	2016		2015
Canadian $ millions, as at	level	March 31		December 31

Recurring financial assets, measured at fair value through profit or loss:
Cash equivalents	1	$	190.8	$	118.9
Short-term investments	1	93.1		204.8
Restricted cash	1	1.0		1.0
Provisionally priced sales(1)	2	8.6		5.2

Fair values

Financial instruments with carrying amounts different from their fair values include the following(1):

			2016				2015
			March 31				December 31
		Hierarchy	Carrying		Fair		Carrying		Fair
Canadian $ millions, as at	Note	value	value		value		value		Value

Liabilities:
8.00% senior unsecured debentures due 2018	17	1	$	247.5	$	120.0	$	247.3	$	140.0
7.50% senior unsecured debentures due 2020	17	1	246.7		115.0		246.5		135.0
7.875% senior unsecured debentures due 2022	17	1	240.5		110.0		240.3		130.0
Ambatovy Joint Venture Additional Partner loans(2)	17	2	1,221.3		39.7		1,303.2		106.4
Ambatovy Joint Venture Partner loans(2)	17	2	126.2		11.9		134.6		20.1
Assets:
Ambatovy subordinated loans receivable(3)	14	2	897.9		925.0		1,187.2		1,308.7
Energas conditional sales agreement(3)	14	2	162.5		153.9		157.5		167.7
Moa Joint Venture loans receivable(3)	14	2	243.7		217.0		255.9		225.7

(1) The carrying values are net of financing costs. Fair values exclude financing costs and are based on market closing prices.

2016 First Quarter Report

Notes to the interim condensed consolidated financial statements

As at March 31, 2016, the carrying amounts of cash and cash equivalents, short-term investments, trade accounts receivable, current portion of advances, loans receivable and other financial assets, current portion of loans and borrowings, current portion of other financial liabilities, trade accounts payable and accrued liabilities and income taxes payable are at fair value or approximate fair value due to their immediate or short terms to maturity.

The fair values of non-current loans and borrowings and other non-current financial assets and liabilities approximate their carrying amount except as indicated in the above table. Due to the use of judgment and uncertainties in the determination of the estimated fair values, these values should not be interpreted as being realizable in the immediate term.

As at March 31, 2016, the carrying amount of the lenders’ conversion option under the Ambatovy Joint Venture additional partner loan agreements is approximately equal to its fair value.

Trade accounts receivable, net

The Corporation’s trade accounts receivable are composed of the following:

		2016			2015
Canadian $ millions, as at	Note	March 31			December 31

Trade accounts receivable		$	181.6		$	186.6
Allowance for doubtful accounts		(11.2		)	(11.8		)
Accounts receivable from joint operations	23	0.7			0.7
Accounts receivable from joint venture	23	22.0			20.2
Accounts receivable from associate	23	41.6			33.8
Other		23.0			28.8
		$	257.7		$	258.3

Aging of receivables not impaired:

	2016		2015
Canadian $ millions, as at	March 31		December 31

Not past due	$	161.6	$	170.6
Past due no more than 30 days	20.2		26.9
Past due for more than 30 days but no more than 60 days	7.5		11.8
Past due for more than 60 days	68.4		49.0
	$	257.7	$	258.3

Payment terms for oil sales to an agency of the Cuban government are based on Gulf Coast No. 6 Fuel Oil (FO#6) reference prices. If the FO#6 price is greater than US$29.50, payment terms are 180 days from the date of invoice. If FO#6 price is between US$24.76 and US$29.50, payment terms are 150 days from the date of invoice. If FO#6 price is between US$20.01 and US$24.75, payment terms are 120 days from the date of invoice. If FO#6 price is equal to or less than US$20.00, payment terms are 90 days from the date of invoice.

Payment terms for electricity and by-product sales to Cuban state enterprises are 60 days from the date of invoice.

14. ADVANCES, LOANS RECEIVABLE AND OTHER FINANCIAL ASSETS

		2016			2015
Canadian $ millions, as at	Note	March 31			December 31

Advances and loans receivable
Ambatovy subordinated loans receivable(1)(2)	23	$	897.9		$	1,187.2
Energas conditional sales agreement(1)	23	185.5			182.0
Moa Joint Venture loans receivable(1)(3)	23	300.6			312.8
Other		0.9			1.2

Other financial assets(4)		44.1			—
		1,429.0			1,683.2
Current portion of advances, loans receivable and other financial assets		(80.7		)	(82.7		)
		$	1,348.3		$	1,600.5

(1) As at March 31, 2016, the non-current portions of the Ambatovy subordinated loans receivable, Energas conditional sales agreement and the Moa Joint Venture loans receivable are $897.9 million, $162.5 million and $243.7 million, respectively (December 31, 2015 — $1,187.2 million, $157.5 million and $255.9 million, respectively).

(2) In January 2016, the Ambatovy Joint Venture converted US$430.0 million of its subordinated loans payable to equity (note 6) which, at the Corporation’s 40% share, resulted in a US$172.0 million ($242.2 million) decrease in the Corporation’s subordinated loans receivable. There was no change to the Corporation’s ownership interest as a result of the conversion.

(3) The Moa Joint Venture loans receivable consists of two funding arrangements. The first is a funding agreement for expansion financing and the second is a working capital facility with maximum credit available of $90.0 million. During the three months ended March 31, 2016, the terms of the working capital facility were amended to increase the interest rates from prime plus 2.25% or bankers’ acceptance plus 3.25% to prime plus 2.50% or bankers’ acceptance plus 3.50%.

(4) As at March 31, 2016, other financial assets relate to the Corporation’s right to receive future distributions from the Ambatovy Joint Venture (note 17). This non-current financial asset has not been included within Ambatovy subordinated loans receivable as the funding has not yet been provided by the Corporation (note 6).

15. INVENTORIES

	2016		2015
Canadian $ millions, as at	March 31		December 31

Materials in process	$	0.3	$	—
Finished products	9.5		7.7
	9.8		7.7
Spare parts and operating materials	30.6		30.3
	$	40.4	$	38.0

For the three months ended March 31, 2016, the cost of inventories included in cost of sales was $9.3 million ($15.1 million for the three months ended March 31, 2015).

2016 First Quarter Report

Notes to the interim condensed consolidated financial statements

16. PROPERTY, PLANT AND EQUIPMENT

Canadian $ millions, for the three months ended March 31							2016
				Plant,
	Oil and Gas			equipment
	properties			and land			Total

Cost
Balance, beginning of the period	$	1,564.0		$	716.9		$	2,280.9
Additions	1.6			3.8			5.4
Additions and changes in estimates to environmental rehabilitation provisions	1.6			2.6			4.2
Disposals and derecognition	—			(0.9		)	(0.9		)
Effect of movements in exchange rates	(85.7		)	(28.5		)	(114.2		)
Balance, end of the period	$	1,481.5		$	693.9		$	2,175.4

Depletion, depreciation and impairment losses
Balance, beginning of the period	$	1,507.8		$	422.0		$	1,929.8
Depletion and depreciation	9.2			10.0			19.2
Disposals and derecognition	—			(0.9		)	(0.9		)
Effect of movements in exchange rates	(84.1		)	(21.0		)	(105.1		)
Balance, end of the period	1,432.9			410.1			1,843.0
Net book value	$	48.6		$	283.8		$	332.4

Canadian $ millions, for the year ended December 31								2015
					Plant,
		Oil and Gas			equipment
	Note	properties			and land			Total

Cost
Balance, beginning of the year		$	1,303.6		$	649.9		$	1,953.5
Additions		32.1			42.1			74.2
Additions and changes to estimates to environmental rehabilitation provisions		6.7			(5.8		)	0.9
Disposals and derecognition		(1.3		)	(27.4		)	(28.7		)
Effect of movements in exchange rates and other		222.9			62.1			285.0
Reclassified to assets held for sale	11	—			(4.0		)	(4.0		)
Balance, end of the year		$	1,564.0		$	716.9		$	2,280.9

Depletion, depreciation and impairment losses
Balance, beginning of the year		$	1,227.5		$	303.9		$	1,531.4
Depletion and depreciation		59.8			38.5			98.3
Impairments		78.5			2.1			80.6
Disposals and derecognition		(1.3		)	(26.0		)	(27.3		)
Effect of movements in exchange rates and other		143.3			106.6			249.9
Reclassified to assets held for sale	11	—			(3.1		)	(3.1		)
Balance, end of the year		1,507.8			422.0			1,929.8
Net book value		$	56.2		$	294.9		$	351.1

	Plant,
	equipment
Canadian $ millions	and land

Assets under construction, included in above

As at March 31, 2016		16.8
As at December 31, 2015	18.3

Impairment of Oil assets

In 2015, the Corporation recognized an impairment loss of $80.6 million representing the write-down of certain Oil assets in the Oil and Gas segment to their recoverable amount as a result of lower oil price forecasts and drilling results from development wells at the Puerto Escondido/Yumuri extension that were below expectations. This impairment was recognized in the consolidated statements of comprehensive income (loss) as Impairment of Oil assets. The Corporation has four cash-generating units (“CGUs”) within its Oil and Gas segment. These CGUs were determined by geographical area or production-sharing contract (“PSC”). The impaired CGUs consisted of Puerto Escondido/Yumuri, Puerto Escondido/Yumuri extension and Spain. The recoverable amounts of the impaired CGUs were based on value in use and were $54.4 million as at September 30, 2015. In determining value in use for the CGU, the cash flows were discounted at a rate of 10%. The drilling results used in the value in use were derived from internal estimates.

17. LOANS, BORROWINGS AND OTHER LIABILITIES

Loans and borrowings

		2016			2015
Canadian $ millions, as at	Note	March 31			December 31

Long-term loans
8.00% senior unsecured debentures due 2018	13	$	247.5		$	247.3
7.50% senior unsecured debentures due 2020	13	246.7			246.5
7.875% senior unsecured debentures due 2022	13	240.5			240.3
Ambatovy Joint Venture Additional Partner loans	13	1,221.3			1,303.2
Ambatovy Joint Venture Partner loans	13	126.2			134.6
Syndicated revolving-term credit facility		45.0			55.0
Line of credit		—			35.0
Vendor financing		0.9			1.2
		2,128.1			2,263.1
Current portion of loans and borrowings		(45.9		)	(91.2		)
		$	2,082.2		$	2,171.9

Syndicated revolving-term credit facility

During the three months ended March 31, 2016, the terms of the syndicated revolving-term credit facility were amended to update the financial covenants. The amendments, effective March 31, 2016, were executed subsequent to period end. The maximum credit available remains at $115.0 million with the total available draw based on eligible receivables and inventory. The interest rates increased from prime plus 2.25% or bankers’ acceptance plus 3.25% to prime plus 2.50% or bankers’ acceptance plus 3.50%. The facility is subject to the following financial covenants as at March 31, 2016: net financial debt-to-EBITDA covenant of 3.75:1, net financial debt-to-equity covenant of 0.55:1 and EBITDA-to-interest expense covenant of not less than 1.75:1. The net financial debt-to-EBITDA covenant increases to 4:1 as at June 30, 2016 and increases to 4.25:1 as at September 30, 2016. If, after March 31, 2016, net financial debt-to-EBITDA is greater than 3.75:1, unrestricted cash must be greater than 50% of the lower of the borrowing base amount and facility amount. As a result of these amendments, the Corporation was in compliance with these amended financial covenants at March 31, 2016. As at March 31, 2016, the Corporation has $46.2 million of letters of credit outstanding on this facility (December 31, 2015 - $47.5 million).

Line of credit

On February 23, 2016, the Corporation repaid the outstanding balance of $35.0 million and terminated its line of credit.

2016 First Quarter Report

Notes to the interim condensed consolidated financial statements

Covenants

At March 31, 2016, there are no events of default on the Corporation’s borrowings or debentures.

Other financial liabilities

		2016			2015
Canadian $ millions, as at	Note	March 31			December 31

Other long-term financial liabilities(1)		$	44.4		$	0.3
Stock compensation liability	20	3.4			3.1
		47.8			3.4
Current portion of other financial liabilities		(2.2		)	(1.5		)
		$	45.6		$	1.9

(1) As at March 31, 2016, the Corporation has an obligation for outstanding shareholder funding to the Ambatovy Joint Venture. This obligation represents cash calls that were not funded in January and March 2016 (note 6). The Corporation has also recognized a financial asset relating to its right to future distributions from the Ambatovy Joint Venture if and when this financial obligation is cured (note 14).

18. PROVISIONS, CONTINGENCIES AND GUARANTEES

	2016			2015
Canadian $ millions, as at	March 31			December 31

Environmental rehabilitation provisions	$	110.9		$	107.8
Other provisions	15.9			18.8
	126.8			126.6
Current portion of provisions	(15.9		)	(18.8		)
	$	110.9		$	107.8

Environmental rehabilitation provisions

The following is a reconciliation of the environmental rehabilitation provisions:

		For the three			For the
		months ended			year ended
		March 31			December 31
Canadian $ millions	Note	2016			2015

Balance, beginning of the period		$	107.8		$	101.7
Additions		—			0.2
Change in estimates		4.2			0.7
Utilized during the period		—			(0.1		)
Accretion	8	0.2			1.1
Effect of movement in exchange rates		(1.3		)	4.2
Balance, end of the period		$	110.9		$	107.8

Other provisions

The following is a reconciliation of other provisions:

	For the three			For the
	months ended			year ended
	March 31			December 31
Canadian $ millions	2016			2015

Balance, beginning of the period	$	18.8		$	25.1
Additions	—			5.0
Utilized during the period	(2.9		)	(11.3		)
Balance, end of the period	$	15.9		$	18.8

19. SHAREHOLDERS’ EQUITY

Capital Stock

			For the three			For the
			months ended			year ended
			March 31			December 31
			2016			2015
Canadian $ millions, except share amounts	Note	Number	Capital stock		Number	Capital stock

Balance, beginning of the period		293,853,001	$	2,775.3	293,271,191	$	2,772.9
Restricted stock plan (vested)	20	—	—		260,400	1.6
Employee share purchase plan (vested)		—	—		321,410	0.8
Balance, end of the period		293,853,001	$	2,775.3	293,853,001	$	2,775.3

The following dividends were paid or were declared but unpaid:

For the three

For the

months ended

year ended

March 31

December 31

2016

2015

Canadian $ millions, except per share amounts

Per share

Total

Per share

Total

Dividends paid during the period

—

0.030

9.0

On September 17, 2015, the Corporation’s Board of Directors suspended its quarterly dividend of $0.01 per common share.

2016 First Quarter Report

Notes to the interim condensed consolidated financial statements

Reserves

		For the three		For the
		months ended		year ended
		March 31		December 31
Canadian $ millions	Note	2016		2015
Stated capital reserve
Balance, beginning and end of the period		$	217.8	$	217.8
Stock-based compensation reserve(1)
Balance, beginning of the period		$	7.1	$	7.4
Restricted stock plan (vested)		—		(1.6		)
Restricted stock plan expense		—		0.1
Employee share purchase plan (vested)		—		(0.1		)
Stock option plan expense	20	0.5		1.3
Balance, end of the period		7.6		7.1
Total reserves, end of the period		$	225.4	$	224.9

(1) Stock-based compensation reserve relates to equity-settled compensation plans issued by the Corporation to its directors, officers and employees.

Accumulated other comprehensive income

	For the three			For the
	months ended			year ended
	March 31			December 31
Canadian $ millions	2016			2015
Foreign currency translation reserve
Balance, beginning of the period	$	903.0		$	323.8
Foreign currency translation differences on foreign operations	(169.3		)	579.2
Balance, end of the period	733.7			903.0

Actuarial losses on defined benefit obligation
Balance, beginning of the period	$	(3.5	)	$	(3.3	)
Actuarial losses on defined benefit obligation, net of tax Continuing operations	(0.2		)	(0.2		)
Balance, end of the period	$	(3.7	)	$	(3.5	)
Total accumulated other comprehensive income	$	730.0		$	899.5

20. STOCK-BASED COMPENSATION PLANS

Stock options and options with tandem stock appreciation rights

The following is a summary of stock option activity:

Canadian $, except number of options, for the three months ended March 31	2016				2015
			Weighted-				Weighted-
			average				average
	Number of		exercise		Number of		exercise
	options		price		options		price

Outstanding, beginning of the period	6,149,349		$	5.80	5,518,752		$	7.52
Granted	3,802,400		0.68		1,805,000		2.11
Forfeited	—		—		(198,200	)	6.19
Expired	(273,333	)	10.59		—		—
Outstanding, end of the period	9,678,416		$	3.65	7,125,552		$	6.19
Options exercisable, end of the period	4,313,944		$	6.73	4,305,615		$	8.52

The following table summarizes information on stock options outstanding and exercisable:

As at March 31

2016

Weighted-

Exercisable

average

Weighted-

weighted-

remaining

average

Number

contractual

exercise

Number

exercise

Range of exercise prices

outstanding

life (years)

price

exercisable

price

$ 0.68 - $2.10

3,802,400

9.9

0.68

—

$ 2.11 - $5.05

2,836,800

8.5

2.49

1,274,728

2.64

$ 5.06 - $9.77

2,344,216

4.7

6.55

2,344,216

6.55

$ 9.78 - $15.23

695,000

1.6

14.86

695,000

14.86

Total

9,678,416

7.6

3.65

4,313,944

6.73

As at March 31, 2016, 1,750,216 options with tandem SARs (March 31, 2015 — 2,545,552) and 7,928,200 options without tandem SARs (March 31, 2015 — 4,580,000) remained outstanding for which the Corporation has recognized a compensation expense of $0.5 million for the three months ended March 31, 2016 (compensation recovery of $0.1 million for the three months ended March 31, 2015). The carrying amount of liabilities associated with stock options with tandem SARs is nil as at March 31, 2016 (December 31, 2015 — nil).

Inputs for measurement of grant date fair values

Canadian $, except as noted, for the three months ended March 31	2016			2015

Share price at grant date	$	0.68		$	2.11
Exercise price	$	0.68		$	2.11
Risk-free interest rates (based on 10-year Government of Canada bonds)	1.14		%	1.47		%
Expected volatility	55.12		%	51.65		%
Expected dividend yield	0.00		%	1.89		%
Expected life of options	10 years			10 years
Weighted-average fair value of options granted during the period	$	0.43		$	1.01

2016 First Quarter Report

Notes to the interim condensed consolidated financial statements

Other stock-based compensation

A summary of the Share Purchase Plan units, RSUs, DSUs and RSP units outstanding as at March 31, 2016 and 2015 and changes during the three months ended is as follows:

For the three months ended March 31				2016
	RSU		DSU	RSP

Outstanding, beginning of the period	7,208,937		738,699	27,000
Issued	18,944,740		290,355	—
Exercised	(1,126,196	)	—	—
Forfeited	(281,505	)	—	—
Outstanding, end of the period	24,745,976		1,029,054	27,000
Units exercisable, end of the period	n/a		1,029,054	n/a

For the three months ended March 31						2015
	Share
	Purchase Plan		RSU		DSU	RSP

Outstanding, beginning of the period	293,280		4,696,518		375,314	287,400
Issued	—		3,229,795		85,455	—
Dividends credited	—		15,641		1,239	—
Forfeited	(17,890	)	(1,505	)	—	—
Vested	—		(628,404	)	—	(260,400	)
Outstanding, end of the period	275,390		7,312,045		462,008	27,000
Units exercisable, end of the period	n/a		n/a		462,008	n/a

For other stock-based compensation plans the Corporation recorded a compensation expense of $1.3 million for the three months ended March 31, 2016 (compensation recovery of $0.3 million for the three months ended March 31, 2015). The carrying amount of liabilities associated with cash-settled compensation arrangements is $3.4 million as at March 31, 2016 (December 31, 2015 - $3.1 million).

Measurement of fair values at grant date

The fair value of the RSUs, DSUs and RSPs are determined by reference to the market value and performance conditions, as applicable, of the shares at the time of grant.

The number of RSUs subject to a performance condition based on the Corporation’s relative total shareholder return outstanding at March 31, 2016 was 17,695,097 (March 31, 2015 — 7,236,801).

In the first quarter of 2016, the Corporation’s Board of Directors approved an additional one-time grant of performance based RSUs to certain employees which vest at December 31, 2018. Under the plan, each unit awarded is equivalent to a common share. A liability is accrued related to the units awarded and a compensation expense is recognized in the interim condensed consolidated statement of comprehensive income (loss) over the service period required for employees to become fully entitled to the award. At the maturity date, the participant receives cash representing the value of the units. The final number of units that vest will be either 0%, 50% or 100% of the initial number awarded, plus dividend equivalents (if any), depending on the Corporation’s ability to achieve certain net direct cash cost (NDCC) milestones in the Corporation’s Metals operation. The number of units subject to this RSU performance condition outstanding at March 31, 2016 was 8,448,555 (March 31, 2015 — nil).

The following summarizes the grant date fair values for the RSU and DSU units granted during the period:

Canadian $, for the three months ended March 31	2016	2015

RSU	0.68	2.11
DSU	0.62	2.37

The intrinsic value of cash-settled stock-based compensation awards vested and outstanding as at March 31, 2016 was $3.4 million (December 31, 2015 - $3.1 million).

Employee share ownership plan

The Corporation accounts for its contributions to the employee share ownership plan (ESOP) as compensation and benefits expense when the amounts are contributed to the plan. Compensation and benefits expense related to this plan was $0.2 million for the three months ended March 31, 2016 ($0.2 million for the three months ended March 31, 2015).

21. CASH FLOWS

Other operating items

Canadian $ millions, for the three months ended March 31	Note	2016			2015

Add (deduct) non-cash items:
Accretion expense on environmental rehabilitation provisions	8, 18	$	0.2		$	0.2
Stock-based compensation expense (recovery), net	20	1.8			(0.4		)
Other items		0.7			3.8
Cash flow arising from changes in:
Other finance charges	8	(0.4		)	(3.4		)
Realized foreign exchange gain	8	0.3			0.6
		$	2.6		$	0.8

Net change in non-cash working capital

Canadian $ millions, for the three months ended March 31	2016			2015

Trade accounts receivable	$	(4.4	)	$	11.7
Inventories	(3.8		)	(4.9		)
Prepaid expenses	2.4			(6.7		)
Trade accounts payable and accrued liabilities	(4.8		)	(45.3		)
Deferred revenue	6.4			18.9
	$	(4.2	)	$	(26.3	)

22. FINANCIAL RISK AND CAPITAL RISK MANAGEMENT

Credit risk

Cuba

The Corporation has credit risk exposure related to its share of cash, accounts receivable and advances and loans receivable associated with its businesses located in Cuba or businesses which have Cuban joint venture partners as follows:

	2016		2015
Canadian $ millions, as at	March 31		December 31

Cash	$	13.0	$	9.8
Trade accounts receivable, net	145.0		155.8
Advances and loans receivable	578.8		585.7
Total	$	736.8	$	751.3

2016 First Quarter Report

Notes to the interim condensed consolidated financial statements

Madagascar

The Corporation has credit risk exposure in Madagascar related to its share (40% basis) of net accounts receivable of $31.6 million (December 31, 2015 - $35.8 million) associated with the Ambatovy Joint Venture including value added tax (VAT) receivables of $6.7 million (December 31, 2015 - $6.2 million) from the government of Madagascar. The VAT receivable is net of a provision of $89.6 million (40% basis) (December 31, 2015 - $100.5 million) reflecting an assessment on the likelihood of receipt of these amounts. During the quarter, this provision was reduced by $10.9 million (40% basis). As at March 31, 2016, total overdue VAT receivable (net of provision) for the Ambatovy Joint Venture amount to $2.7 million (40% basis) (December 31, 2015 - $5.5 million).

Liquidity risk

Financial obligation maturity analysis

The Corporation’s significant contractual commitments, obligations, and interest and principal repayments in respect of its financial liabilities are presented in the following table:

Falling

due

due in

due within

between

more than

Canadian $ millions, as at March 31, 2016

Total

1 year

1-2 years

2-3 years

3-4 years

4-5 years

5 years

Trade accounts payable and accrued liabilities

98.8

—

Income taxes payable

1.4

—

Senior unsecured debentures

1,032.1

58.4

308.4

38.4

279.1

289.4

Ambatovy Joint Venture Additional Partner Loans (non-recourse)(1)

4,629.0

—

4,629.0

Ambatovy Joint Venture Partner Loans(1)

157.7

—

157.7

Other loans and borrowings

47.3

—

Provisions

161.9

16.2

0.5

11.8

—

133.4

Operating leases

19.2

1.0

2.9

3.0

6.4

Total

6,147.4

223.1

61.8

323.1

41.4

282.1

5,215.9

(1) Ambatovy Joint Venture Additional Partner loans and Partner loans are loans provided by the Ambatovy Joint Venture partners to finance Sherritt’s portion of the funding requirements of the Joint Venture, bearing interest of LIBOR plus a margin of 7% and 1.125%, respectively. These partner loans are to be repaid from the Corporation’s share of cash distributions from the Ambatovy Joint Venture (note 17). The amounts above are based on management’s best estimate of future cash flows including estimating assumptions such as commodity prices, production levels, cash costs of production, capital and reclamation costs. The Ambatovy Joint Venture Additional Partner loans are non-recourse to Sherritt unless there is a direct breach of certain restrictions stipulated in the loan documents. The maturity analysis table includes an estimate of interest repayments.

As a result of the Corporation’s 40% interest in the Ambatovy Joint Venture, its proportionate share of significant undiscounted commitments of the joint venture include accounts payable of $122.0 million, income taxable payable of $6.7 million, environmental rehabilitation commitments of $213.0 million, other contractual commitments of $27.6 million and senior debt financing and working capital facility of $999.3 million.

As a result of the Corporation’s 50% interest in the Moa Joint Venture, its proportionate share of significant undiscounted commitments of the joint venture include accounts payable of $34.9 million, income taxes payable of $1.9 million, advances and loans payable of $227.0 million, environmental rehabilitation commitments of $81.6 million and other commitments of $0.9 million.

Market risk

Foreign exchange risk

Based on financial instrument balances as at March 31, 2016, a strengthening or weakening of $0.05 of the Canadian dollar to the U.S. dollar with all other variables held constant could have a favourable or unfavourable impact of approximately $52.4 million, respectively, on net loss.

Based on financial instrument balances as at March 31, 2016, a strengthening or weakening of $0.05 of the Canadian dollar to the U.S. dollar with all other variables held constant could have an unfavourable or favourable impact of approximately $43.3 million, respectively, on other comprehensive income.

Commodity price risk

Interest rate risk

Based on the balance of short-term and long-term loans and borrowings, cash equivalents, short-term and long-term investments, and advances and loans receivable at March 31, 2016, excluding interest capitalized to project costs, a 1.0% decrease or increase in the market interest rate could decrease or increase the Corporation’s net earnings by approximately $5.0 million, respectively. The Corporation does not engage in hedging activities to mitigate its interest rate risk.

Capital risk management

In the definition of capital, the Corporation includes, as disclosed in its interim condensed consolidated financial statements and notes: capital stock, deficit and available credit facilities.

	2016			2015
Canadian $ millions, as at	March 31			December 31

Capital stock	$	2,775.3		$	2,775.3
Deficit	(2,390.4		)	(2,342.6		)
Available credit facilities	3.8			2.6

2016 First Quarter Report

Notes to the interim condensed consolidated financial statements

23. RELATED PARTY TRANSACTIONS

A description of the Corporation’s interest in an associate and its interest in jointly controlled entities are included in notes 6 and 7, respectively.

Canadian $ millions, for the three months ended March 31	2016		2015

Total value of goods and services:
Provided to joint operations	$	8.8	$	5.5
Provided to joint venture	34.5		35.2
Provided to associate	0.7		0.6
Purchased from joint venture	35.5		28.6
Purchased from associate	9.6		17.0
Net financing income from joint operations	3.6		4.3
Net financing income from associate	10.6		15.3
Net financing income from joint venture	2.4		2.1

		2016		2015
Canadian $ millions, as at	Note	March 31		December 31

Accounts receivable from joint operations	13	$	0.7	$	0.7
Accounts receivable from joint venture	13	22.0		20.2
Accounts receivable from associate	13	41.6		33.8
Accounts payable to joint operations		0.1		0.2
Accounts payable to joint venture		17.5		5.2
Accounts payable to associate		1.4		0.5
Advances and loans receivable from associate	14	897.9		1,187.2
Advances and loans receivable from joint operations	14	185.5		182.0
Advances and loans receivable from joint venture	14	300.6		312.8

24. OPERATING LEASE ARRANGEMENTS

Corporation acts as a lessor

All operating lease payments related to the Varadero facility are contingent on power generation. The terms of the leases are for 20 years, ending in February 2017 and March 2018. For the three months ended March 31, 2016, contingent revenue was $3.9 million ($3.1 million for the three months ended March 31, 2015).

Corporation acts as a lessee

Operating lease payments recognized as an expense in the consolidated statement of comprehensive income (loss) for the three months ended March 31, 2016 were $0.8 million ($0.5 million for the three months ended March 31, 2015).

25. COMMITMENTS FOR EXPENDITURES

Canadian $ millions, as at March 31	2016

Property, plant and equipment commitments	$	15.3
Joint venture:
Property, plant and equipment commitments	9.4
Joint operations:
Constructions commitments relating to service concession arrangements	3.4

Exhibit 2.6

MANAGEMENT’S DISCUSSION AND ANALYSIS

For the three months ended March 31, 2016

This Management’s Discussion and Analysis (MD&A) is intended to help the reader understand Sherritt International Corporation’s operations, financial performance and the present and future business environment. This MD&A, which has been prepared as of April 26, 2016, should be read in conjunction with Sherritt’s interim condensed consolidated financial statements for the three months ended March 31, 2016 and the MD&A for the year ended December 31, 2015. Additional information related to the Corporation, including the Corporation’s Annual Information Form, is available on SEDAR at www.sedar.com or on the Corporation’s website at www.sherritt.com.

References to “Sherritt” or the “Corporation” refer to Sherritt International Corporation and its share of consolidated subsidiaries, joint ventures and associate, unless the context indicates otherwise. All amounts are in Canadian dollars, unless otherwise indicated. References to “US$” are to United States (U.S.) dollars.

The business we manage	2
Update on 2016 strategic priorities	3
Highlights	4
Financial results	5
Outlook	10
Significant factors influencing operations	11
Review of operations	13
Metals	13
Oil and Gas	19
Power	22
Liquidity and capital resources	24
Managing risk	28
Accounting pronouncements	28
Summary of quarterly results	29
Off-balance sheet arrangements	30
Transactions with related parties	30
Controls and procedures	31
Supplementary information	32
Sensitivity analysis	32
Oil and Gas production and sales volume	33
Non-GAAP measures	33
Forward-looking statements	39

Sherritt International Corporation

2016 First Quarter Report

Management’s discussion and analysis

The business we manage

	Relationship for	Economic		Basis of
	accounting purposes	interest		accounting

Metals
Moa Joint Venture	Joint venture	50	%	Equity method

Ambatovy Joint Venture	Associate	40	%	Equity method

Oil and Gas	Subsidiary	100	%	Full consolidation

Power	Joint operation	331/3	%	Economic interest recognized

Amounts presented in this MD&A can be reconciled to note 4 of the interim consolidated financial statements for the three months ended March 31, 2016.

Strategic Priorities

Strategic Priorities	2016 Targets	Status

UPHOLD GLOBAL OPERATIONAL LEADERSHIP IN FINISHED NICKEL LATERITE PRODUCTION 1	Complete and commission the acid plant at Moa in the second half of 2016	Acid plant on track to complete in Q2 with full operation in Q3 this year

	Further reduce NDCC costs at Moa and Ambatovy towards the goal of being in the lowest quartile	Q1 NDCC of US$3.90/lb (avg between both operations) was down 24% over Q1 2015

	Increase Ambatovy production over 2015, despite the major maintenance work scheduled for Q3	Ambatovy production was lower in the first quarter, but expected to recover in the second quarter with no change to guidance

	Maintain peer leading performance in environmental, health, safety and sustainability	Performance on track

EXTEND THE LIFE OF OUR CUBAN ENERGY BUSINESS 2	Allocate capital to new drilling on Block 10, with future drilling to be contingent on results from 2016 activity	Capital allocation has been reduced in Q1, as drilling is expected to take place in the second half. Results from the first well will dictate next steps

PRESERVE LIQUIDITY AND BUILD BALANCE SHEET STRENGTH 3	Protect Sherritt’s balance sheet and preserve cash	Cash position declined by approximately $66 million since year end, with $45 million being repayment of credit facilities

	Establish clarity on long-term funding of Ambatovy	Ceased funding Ambatovy cash calls due to the “40 for 12” issue

	Run business units to be free cash flow neutral, and continue to optimize administrative costs

Highlights

OPERATIONS UPDATE

The Metals operations produced 8,684 tonnes of finished nickel (Sherritt’s share) in the first quarter of 2016, representing a 4% decrease from the prior year period and a 3% decrease from the fourth quarter of 2015. This decrease is primarily due to unplanned downtime for repairs and equipment replacement in the process plant at Ambatovy.

Despite lower production, Sherritt’s Metals operations achieved a net direct cash cost (NDCC) of US $3.90 in the first quarter of 2016, a 24% reduction on the prior year period. This decrease is due to lower input commodity costs and continued cost discipline. The 11% increase in Metals NDCC compared to the fourth quarter of 2015 is attributable to lower production and normal fertilizer sales seasonality.

AMBATOVY FUNDING

As reported in the Corporation’s Management’s Discussion and Analysis for the year ended December 31, 2015, Ambatovy cash calls due in January 2016 amounted to US$50.0 million, with funding of US$30.0 million provided by partners Sumitomo Corp. and Korea Resources Corp. (KORES). Total cash funding provided by Sumitomo and KORES has increased to US$51.0 million, pursuant to additional cash calls of US$35.0 million. By agreement amongst the partners, Sherritt’s unfunded amounts remain payable with accrued interest at LIBOR +3%. These amounts will be subtracted from future Ambatovy Joint Venture distributions, or may be set off against other amounts owed to Sherritt. Sherritt also has the option to pay the amounts in cash at any time, at Sherritt’s election. Until the funding deficit is addressed, and subject to continued discussions with the Ambatovy partners, Sherritt will not exercise its Ambatovy voting rights.

Sherritt continues not to fund further cash calls at this time due to the structure of the Ambatovy partner loans, which, at current nickel prices, effectively reduce Sherritt’s 40% interest in Ambatovy to a 12% economic interest. Sherritt continues to serve as operator, as constructive discussions are ongoing between partners and senior lenders regarding future funding of Ambatovy and modifications to the principal amortization on the existing senior loan. The outcome of these discussions is not certain — for additional information see the Risk Factors section in the Annual Information Form.

Financial results

$ millions, except as otherwise noted, for the three months ended March 31	2016			2015			Change

FINANCIAL HIGHLIGHTS
Revenue	$	58.4		$	82.9		(30	)%
Combined revenue(1)	191.3			278.3			(31	)%
Adjusted EBITDA(1)	(9.1		)	44.2			(121	)%
Loss from operations, associate and joint venture	(97.7		)	(50.1		)	(95	)%
Loss from continuing operations	(47.8		)	(56.8		)	16	%
Net loss for the period	(47.8		)	(56.8		)	16	%
Adjusted earnings from continuing operations	(126.9		)	(71.0		)	(79	)%

Loss per common share (basic and diluted) ($ per share):
Net loss from continuing operations	$	(0.16	)	$	(0.19	)	16	%
Net loss for the period	(0.16		)	(0.19		)	16	%

CASH FLOW
Cash provided (used) by continuing operations	$	(9.7	)	$	26.3		(137	)%
Combined free cash flow(1)	(31.4		)	11.2			(380	)%
Combined adjusted operating cash flow(1)	(22.2		)	56.1			(140	)%
Combined adjusted operating cash flow per share ($ per share)(1)	(0.08		)	0.19			(142	)%

OPERATIONAL DATA

SPENDING ON CAPITAL AND INTANGIBLE ASSETS(2)	$	14.4		$	42.3		(66	)%

PRODUCTION VOLUMES
Finished nickel (tonnes)
Moa Joint Venture (50% basis)	4,242			4,357			(3	)%
Ambatovy Joint Venture (40% basis)	4,442			4,656			(5	)%
Finished cobalt (tonnes)
Moa Joint Venture (50% basis)	499			426			17	%
Ambatovy Joint Venture (40% basis)	365			344			6	%
Oil (boepd, net working-interest production)(3)	10,504			10,938			(4	)%
Electricity (gigawatt hours) (331/3% basis)	217			210			3	%

AVERAGE-REALIZED PRICES(1)
Nickel ($ per pound)	$	5.16		$	7.93		(35	)%
Cobalt ($ per pound)	14.52			15.41			(6	)%
Oil ($ per net boe)(3)	22.27			41.79			(47	)%
Electricity ($ per megawatt hour)	58.27			52.63			11	%

UNIT OPERATING COSTS(1)
Nickel (US$ per pound)
Moa Joint Venture	$	3.34		$	4.36		(23	)%
Ambatovy Joint Venture	4.41			5.74			(23	)%
Oil ($ per gross boe)(3)	10.35			10.16			2	%
Electricity ($ per megawatt hour)	16.86			15.64			8	%

(1) For additional information see the Non-GAAP measures section.

(2) Spending on capital and intangible assets includes accruals and does not include spending on service concession arrangements.

(3) Net working-interest (NWI); gross working-interest (GWI); barrels of oil equivalent per day (boepd); barrels of oil equivalent (boe).

ADJUSTED EBITDA

REVENUE

$ millions, for the three months ended March 31	2016			2015			Change

Revenue by operations
Metals	$	153.0		$	223.7		(32	)%
Oil and Gas	22.4			42.3			(47	)%
Power	15.6			11.8			32	%
Corporate and Other	0.3			0.5			(40	)%
Combined revenue(1)	$	191.3		$	278.3		(31	)%
Adjust joint venture and associate	(132.9		)	(195.4		)
Financial statement revenue	$	58.4		$	82.9		(30	)%

(1) For additional information see the Non-GAAP measures section.

Combined revenue for the three months ended March 31, 2016 was lower compared to the same period in the prior year primarily due to lower nickel and oil prices partly offset by a weaker Canadian dollar relative to the U.S. dollar.

Revenue at Metals was also affected by unplanned downtime for repairs and equipment replacement at Ambatovy. Revenue at Oil and Gas was also impacted by lower gross working-interest oil production in Cuba due to natural reservoir declines and the absence of new drilling in the first quarter of 2016.

Increased revenue at Power relates primarily to revenue for the construction of the Puerto Escondido/Yumuri pipeline which is accounted for as a service concession arrangement. Construction activity revenue is offset equally by construction activity expenses recorded in cost of goods sold.

COST OF SALES

$ millions, for the three months ended March 31	2016			2015			Change

Cost of sales by operations
Metals	$	206.6		$	253.4		(18	)%
Oil and Gas	28.7			41.3			(31	)%
Power	14.6			11.4			28	%
Corporate and other	2.4			1.1			118	%
Combined cost of sales(1)	$	252.3		$	307.2		(18	)%
Adjust joint venture and associate	(187.7		)	(224.5		)
Financial statement cost of sales	$	64.6		$	82.7		(22	)%

(1) For additional information see the Non-GAAP measures section.

Combined cost of sales for the three months ended March 31, 2016 was lower compared to the same period in the prior year primarily due to decreased production at Ambatovy, Moa Joint Venture and Oil and Gas, continued cost discipline, lower input commodity prices partly offset by a weaker Canadian dollar relative to the U.S. dollar.

In addition, depletion, depreciation and amortization expense was lower at Ambatovy and Oil and Gas as a result of lower carrying values due to the impairments recognized in 2015. Increased cost of sales at Power primarily relate to construction activity expenses related to the construction of the Puerto Escondido/Yumuri pipeline equally offset by construction revenue.

ADMINISTRATIVE EXPENSES

$ millions, for the three months ended March 31	2016			2015			Change

Administrative expenses by operations
Metals	$	7.3		$	6.8		7	%
Oil and Gas	2.4			1.9			26	%
Power	1.2			1.4			(14	)%
Corporate and other	7.7			7.6			1	%
Combined administrative expenses(1)	$	18.6		$	17.7		5	%
Adjust joint venture and associate	(5.9		)	(5.7		)
Financial statement administrative expenses	$	12.7		$	12.0		6	%

(1) For additional information see the Non-GAAP measures section.

Combined administrative expenses for the three months ended March 31, 2016 was higher compared to the same period in the prior year primarily due to higher stock based compensation expense and severance costs incurred in the quarter.

NET FINANCE (INCOME) EXPENSE

$ millions, for the three months ended March 31	2016			2015		Change

Financial statement net finance (income) expense	$	(50.6	)	$	36.1	(240	)%
Moa Joint Venture net finance expense(1)	3.3			5.5		(40	)%
Ambatovy Joint Venture net finance expense(1)	15.8			5.2		204	%
Combined net finance (income) expense(2)	$	(31.5	)	$	46.8	(167	)%

(1) For additional information see the Non-GAAP measures section.

(2) Net of intercompany interest.

For the three months ended March 31, 2016 combined net finance income was primarily due to the strengthening of the Canadian dollar relative to the U.S. dollar since December 31, 2015.

INCOME TAXES

$ millions, for the three months ended March 31	2016			2015			Change

Income tax (recovery) expense by segment
Metals	$	(1.0	)	$	(7.2	)	86	%
Oil and Gas	0.9			(29.1		)	103	%
Power	(0.2		)	(0.3		)	33	%
Corporate and other	—			—			—
Combined income taxes(1)	$	(0.3	)	$	(36.6	)	99	%
Adjust joint venture and associate	1.0			7.2
Financial statement income taxes	$	0.7		$	(29.4	)	102	%

(1) For additional information see the Non-GAAP measures section.

Combined income taxes for the three months ended March 31, 2016 was higher than the prior year period primarily due to an income tax recovery recognized in the prior year period related to the reduction in tax rates in Cuba which impacted Oil and Gas and Moa Joint Venture.

CHANGE IN NET LOSS

For the three months ended March 31, 2016, net loss from continuing operations was $47.8 million, or $0.16 per share, compared to a loss of $56.8 million, or $0.19 per share in the same period in the prior year.

The change in net loss from continuing operations between 2016 and 2015 is detailed below:

$ millions, for the three months ended March 31	2016

Lower U.S. dollar denominated nickel and cobalt prices	$	(69.6	)
Lower oil and gas prices	(15.0		)
Higher fertilizer prices	0.5
Change in total metals and fertilizer sales volumes	2.9
Lower Cuba oil and gas gross working-interest volumes	(5.2		)
Lower Spain oil and gas volumes	(1.2		)
Higher electricity volumes	0.4
Lower mining, processing and refining, third-party feed and fertilizer unit costs	30.0
Lower Oil and Gas cost of sales	4.1
Lower depletion, depreciation and amortization	25.4
Higher administrative expenses	(0.9		)
Foreign exchange impact on operations	(5.7		)
Lower combined net finance expense	78.3
Higher combined tax	(36.3		)
Other	1.3
Change in net loss, compared to 2015	$	9.0

COMBINED ADJUSTED OPERATING AND FREE CASH FLOW

The Corporation’s combined adjusted operating cash flow(1) and free cash flow(1) are summarized in the following table as derived from Sherritt’s consolidated statements of cash flow.

$ millions, for the three months ended March 31	2016			2015		Change

Combined adjusted operating cash flow	$	(22.2	)	$	56.1	(140	)%
Combined free cash flow	(31.4		)	11.2		(380	)%

(1) For additional information see the Non-GAAP measures section.

During the three months ended March 31, 2016, combined adjusted operating cash flow, which excludes change in working capital, and combined free cash flow were lower compared to the same period in the prior year primarily as a result of lower earnings and an absence of interest and dividends received from Energas and Moa Joint Venture, respectively, offset by lower combined property, plant and equipment expenditures.

CONSOLIDATED FINANCIAL POSITION

The following table summarizes the significant items as derived from the audited consolidated statements of financial position:

	2016		2015
$ millions, except as noted, as at	March 31		December 31		Change

Financial Condition
Cash, cash equivalents and short-term investments	$	369.9	$	435.4	(15	)%
Net working capital balance	556.9		608.3		(8	)%
Current ratio	3.85:1		3.87:1		—
Total assets	3,810.6		4,090.0		(7	)%
Total loans and borrowings	2,128.1		2,263.1		(6	)%
Shareholders’ equity	1,340.3		1,557.1		(14	)%

At March 31, 2016, total available liquidity was $373.7 million, including undrawn credit facilities. Total debt at March 31, 2016, was $2.1 billion, including $1.3 billion related to non-recourse Ambatovy Partner Loans.

Outlook

2016 PRODUCTION AND CAPITAL SPENDING GUIDANCE

In 2016, Sherritt has made certain modifications to how guidance is presented. For example, capital spending estimates are presented in US dollars. In the quarterly reporting, actual capital spending is presented in Canadian dollars consistent with Sherritt’s reporting currency, but estimates and forward looking information continue to be provided in U.S. dollars. This change in presentation is intended to align with Sherritt’s capital budgeting practices, and to mitigate the change to capital spending that arises from translation to the Canadian dollar reporting currency. In Sherritt’s full year and Q4 2015 reporting, when guidance was first presented, the forecast exchange rate was Cdn$1.36 per U.S. dollar. Capital projects in the Metals business are generally U.S. dollar expenditures, while in Oil & Gas, the expenditures are roughly 50% Canadian dollar denominated and 50% U.S. dollar denominated.

	Guidance at	Actual
	2015	2016	Revised Projected
Production volumes and spending on capital	December 31	March 31	2016

Production volumes
Nickel, finished (tonnes, 100% basis)
Moa Joint Venture	33,500-34,500	8,484	No change
Ambatovy Joint Venture	48,000-50,000	11,105	No change
Total	81,500-84,500	19,589	No change
Cobalt, finished (tonnes, 100% basis)
Moa Joint Venture	3,300-3,800	998	No change
Ambatovy Joint Venture	3,300-3,800	913	No change
Total	6,600-7,600	1,911	No change
Oil — Cuba (gross working-interest, bopd)	14,500	16,449	No change
Oil and Gas — All operations (net working-interest, boepd)	8,900	10,504	No change
Electricity (GWh, 100% basis)	860	217	No change

Spending on capital (US$ millions)
Metals — Moa Joint Venture (50% basis), Fort Site (100% basis)	US$38	US$6	No change
Metals — Ambatovy Joint Venture (40% basis)	US$25	US$1	No change
Oil and Gas	US$43	US$3	US$34
Power (331/3% basis) Pipeline Construction on Service Concession Agreements	US$4	US$2	No change
Power (331/3% basis)	US$1	—	No change
Spending on capital (excluding Corporate)	US$111	US$12	US$102

Significant factors influencing operations

As a commodity-based, geographically diverse company, Sherritt’s operating results are influenced by many factors, the most significant of which are: commodity prices and foreign exchange rates.

COMMODITY PRICES

Operating results for the three months ended March 31, 2016, were significantly impacted by market-driven commodity prices for nickel, cobalt and oil and gas. A significant portion of electricity prices are established at the beginning of a negotiated supply contract period and are, therefore, less susceptible to commodity price fluctuations during the term of the agreement.

Although nickel prices continued their decline to lows not experienced in the past decade, Sherritt customer demand has been firm with demand from China climbing. Nickel sales into China increased over the prior year period at both the Moa JV and the Ambatovy JV, which is consistent with an overall increase reported in Chinese nickel imports. Importantly, the largest increase has been in non-LME deliverable metal, which indicates demand from end users rather than metal traders who tend to prefer LME-deliverable material. The increase experienced by Sherritt in Chinese demand is linked to declining availability of NPI and stainless steel scrap. Recent Chinese NPI production estimates for 2016 have pointed to approximately 300,000 tonnes compared to levels of approximately 350,000 — 375,000 tonnes in 2015.

Cobalt demand and pricing have been rising slowly, as cobalt supply suffers when nickel and copper production are cut back, and we are beginning to see evidence of supply cuts in these commodities. Cobalt is a smaller market, with most production occurring as by-products of copper or nickel production. Demand growth has come from battery manufacturers shifting from small consumer batteries (laptops, cell phones, etc.) to larger storage applications such as automotive, power tools and industrial/household storage. Sherritt’s high grade cobalt remains well positioned to meet the demand for these applications as it is approved by the majority of major rechargeable battery manufacturers and recognized for its high purity.

FOREIGN EXCHANGE RATE

As Sherritt reports its results in Canadian dollars, the fluctuation in foreign exchange rates has the potential to cause significant volatility in those results. Most commodity prices are quoted in U.S. dollars, and a significant portion of operating expenses are U.S. dollar denominated. Therefore operating earnings are generally positively impacted by a weaker Canadian dollar as the uplift on revenue exceeds the negative impact on operating expenses. However, in a period of operating losses, where U.S. denominated expenses exceeds U.S. denominated revenue, the foreign exchange impact is negative. The Canadian dollar was weaker relative to the U.S dollar for the three months ended March 31, 2016 compared to the same period in the prior year.

In addition many of Sherritt’s trade accounts receivable, accounts payable, loans receivable and loans payable are denominated in U.S. dollars. In the first quarter of 2016, the Canadian dollar strengthened relative to the U.S. dollar since December 31, 2015. In 2016, the U.S. based financial liabilities exceeded the U.S. based financial assets which resulted in a positive translation gain of approximately $76 million for the three months ended March 31, 2016.

Review of operations

METALS

Financial Review

$ millions, except as otherwise noted, for the three months ended March 31									2016									2015
	Moa JV and			Ambatovy								Moa JV and			Ambatovy
	Fort Site			JV			Other		Total			Fort Site			JV			Other			Total			Change

FINANCIAL HIGHLIGHTS
Revenue	$	76.7		$	65.1		$	11.2	$	153.0		$	104.5		$	100.7		$	18.5		$	223.7		(32	)%
(Loss) earnings from operations	(11.3		)	(49.9		)	0.3		(60.9		)	7.0			(43.8		)	0.3			(36.5		)	(67	)%
Adjusted EBITDA(1)	(0.2		)	(12.8		)	0.3		(12.7		)	18.3			4.3			0.1			22.7			(156	)%
Cash provided (used) by operations	(3.0		)	(5.5		)	4.2		(4.3		)	30.2			12.6			(0.5		)	42.3			(110	)%
Free cash flow(1)	(10.6		)	(5.5		)	4.2		(11.9		)	22.4			9.9			(0.5		)	31.8			(137	)%

PRODUCTION VOLUMES (tonnes)
Mixed Sulphides	4,321			4,571			—		8,892			4,876			5,522			—			10,398			(14	)%
Finished Nickel	4,242			4,442			—		8,684			4,357			4,656			—			9,013			(4	)%
Finished Cobalt	499			365			—		864			426			344			—			770			12	%
Fertilizer	70,907			14,355			—		85,262			60,529			11,662			—			72,191			18	%

NICKEL RECOVERY (%)	88		%	87		%						88		%	85		%

SALES VOLUMES (tonnes)
Finished Nickel	4,141			4,491			—		8,632			4,275			4,944			—			9,219			(6	)%
Finished Cobalt	468			332			—		800			409			342			—			751			7	%
Fertilizer	31,713			14,107			—		45,820			30,842			13,127			—			43,969			4	%

AVERAGE REFERENCE PRICES (US$ per pound)
Nickel									$	3.86											$	6.50		(41	)%
Cobalt(2)									10.70												13.73			(22	)%

AVERAGE-REALIZED PRICES(1)
Nickel ($ per pound)	$	5.17		$	5.15		—		$	5.16		$	7.91		$	7.95		—			$	7.93		(35	)%
Cobalt ($ per pound)	13.84			15.39			—		14.52			16.23			14.42			—			15.41			(6	)%
Fertilizer ($ per tonne)	391			186			—		327			375			190			—			318			3	%

UNIT OPERATING COSTS(1) (US$ per pound)
Nickel - net direct cash cost	$	3.34		$	4.41		—		3.90			$	4.36		$	5.74		—			5.10			(24	)%

SPENDING ON CAPITAL
Sustaining	$	3.8		$	1.7		$	—	$	5.5		$	5.7		$	6.4		$	—		$	12.1		(55	)%
Expansion	4.0			—			—		4.0			2.4			—			—			2.4			67	%
	$	7.8		$	1.7		$	—	$	9.5		$	8.1		$	6.4		$	—		$	14.5		(34	)%

(1) For additional information see the Non-GAAP measures section.

(2) Average low-grade cobalt published price per Metals Bulletin.

Moa Joint Venture and Fort Site

Revenue is composed of the following:

$ millions, for the three months ended March 31	2016		2015		Change

Nickel	$	47.2	$	74.5	(37	)%
Cobalt	14.3		14.6		(2	)%
Fertilizers	12.4		11.5		8	%
Other(1)	2.8		3.9		(28	)%
	$	76.7	$	104.5	(27	)%

(1) Beginning in the second quarter of 2015 sulphuric acid revenue was reclassified from fertilizers to other; the prior year period has been adjusted to reflect this change. The amount of sulphuric acid revenue included in other was $2.1 million for the three months ended March 31, 2016 and $2.6 million for the three months ended March 31, 2015.

The change in earnings from operations between 2016 and 2015 is detailed below:

$ millions, for the three months ended March 31	2016

Lower U.S. dollar denominated realized nickel prices	$	(30.3	)
Lower U.S. dollar denominated realized cobalt prices	(3.2		)
Higher fertilizer prices	0.5
Higher cobalt net of lower nickel sales volumes	1.1
Higher fertilizer sales volumes	0.2
Lower mining, processing and refining, third-party feed and fertilizer unit costs	11.8
Weaker Canadian dollar relative to the U.S. dollar	0.1
Other	1.5
Change in earnings from operations, compared to 2015	$	(18.3	)

The average-realized prices of nickel and cobalt for the three months ended March 31, 2016 were lower than the same period in the prior year due to lower reference prices. The impact of lower reference prices was partly offset by the impact of a weaker Canadian dollar relative to the U.S. dollar.

Production of contained mixed sulphides for three months ended March 31, 2016 was lower compared to the same period in the prior year primarily as a result of lower quality ore available for processing at Moa Nickel. Ore grade was impacted in the quarter as access to planned mining faces was limited by above average rainfall. Finished nickel and cobalt production in the quarter was lower than the same period in the prior year but above planned levels as the impact of lower mixed sulphides production was partly offset by third party feed usage and a higher drawdown of mixed sulphides inventory.

Fertilizer’s contributions to operating earnings for the three months ended March 31, 2016 were higher compared to the same period in the prior year due to higher sales volumes as temperatures in Western Canada allowed early application of ground nutrients coupled with higher realized prices.

Cost of sales(1) is composed of the following:

$ millions, for the three months ended March 31	2016		2015		Change

Mining, processing and refining	$	56.5	$	63.4	(11	)%
Third-party feed costs	2.9		3.7		(22	)%
Fertilizers	7.8		8.0		(3	)%
Selling costs	3.6		3.6		—
Other(2)	3.7		6.1		(39	)%
	$	74.5	$	84.8	(12	)%

(1) Excludes depletion, depreciation and amortization

(2) Beginning in the second quarter of 2015 sulphuric acid cost of sales was reclassified from fertilizers to other; the prior year period has been adjusted to reflect this change. The amount of sulphuric acid cost of sales included in other was $1.4 million for the three months ended March 31, 2016 and $3.2 million for the three months ended March 31, 2015.

Net direct cash cost(1) is composed of the following:

	2016			2015			Change

Mining, processing and refining costs	$	4.45		$	5.28		(16	)%
Third-party feed costs	0.23			0.32			(28	)%
Cobalt by-product credits	(1.15		)	(1.25		)	8	%
Other(2)	(0.19		)	0.01			(2,000	)%
Net direct cash cost (US$ per pound of nickel)	$	3.34		$	4.36		(23	)%

(1) For additional information see the Non-GAAP measures section.

(2) Includes the Moa Joint Venture and Fort Site refinery fertilizer by-product profit or loss and marketing costs, discounts, and other by-product credits.

Net direct cash cost of nickel in the three months ended March 31, 2016 was lower compared to the same period in the prior year due largely to lower input commodity prices for fuel oil, sulphuric acid and sulphur, higher net fertilizer by-product credits and a weaker Canadian dollar relative to the U.S. dollar.

Sustaining capital spending was lower in the three months ended March 31, 2016 compared to the same period in the prior year reflecting lower planned spending. Expansion capital spending relates to the construction of the 2,000 tonnes per day acid plant at Moa. Construction of the third acid plant was greater than 95% complete as of March 31, 2016 and some commissioning activities have commenced. Project construction is on schedule to be completed by the end of the second quarter of 2016 with full operation expected in Q3 2016.

Ambatovy

Revenue is composed of the following:

$ millions, for the three months ended March 31	2016		2015		Change

Nickel	$	51.1	$	86.7	(41	)%
Cobalt	11.3		10.9		4	%
Fertilizers	2.6		2.5		4	%
Other	0.1		0.6		(83	)%
	$	65.1	$	100.7	(35	)%

The change in earnings from operations between 2016 and 2015 is detailed below:

$ millions, for the three months ended March 31	2016

Lower US dollar denominated realized nickel prices	$	(35.7	)
Lower US dollar denominated realized cobalt prices	(0.4		)
Lower metals sales volumes	1.4
Higher fertilizer sales volumes	0.2
Lower mining, processing and refining, selling and fertilizer unit costs	18.2
Lower depreciation expense	17.1
Weaker Canadian dollar relative to the U.S. dollar	(7.3		)
Other	0.4
Change in earnings from operations, compared to 2015	$	(6.1	)

The average-realized price of nickel for the three months ended March 31, 2016 decreased compared to the same period in the prior year due to lower reference prices. The impact of a lower reference price was partly offset by a weaker Canadian dollar relative to the U.S. dollar.

The average-realized price of cobalt for the three months ended March 31, 2016 increased compared to the same period in the prior year despite a decline in the cobalt reference price. This increase was due to a weaker Canadian dollar relative to the U.S. dollar and the timing of mark to market adjustments on provisionally priced sales.

Production and sales volumes of nickel and cobalt were lower for the three months ended March 31, 2016 compared to the same periods in the prior year as a result of a number of reliability issues on equipment in the HPAL plant. These issues are well understood, and the Corporation is addressing the challenge through both progressive replacement of problematic equipment and the implementation of a comprehensive asset management program. Port operations at Ambatovy were interrupted for 21 days during the quarter while Sherritt confirmed Ambatovy’s status regarding the Government of Madagascar’s imposition of a new security-related protocol, the Advance Cargo Declaration, on all port users. This matter was resolved with no material financial impact and no impact to production. Finished nickel production for three months ended March 31, 2016 represents 74% of design capacity.

Depletion, depreciation, and amortization expense for the three months ended March 31, 2016 was lower compared to the same period in the prior year primarily as a result of the lower carrying value due to the impairment recognized in the fourth quarter of 2015 partly offset by the impact of a weaker Canadian dollar relative to the U.S. dollar.

In the third quarter of 2016, a two week total plant shutdown is scheduled to complete inspections of pressure vessels in accordance with statutory engineering codes and to carry out major opportune maintenance in various areas of the plant.

Cost of sales(1) is composed of the following:

$ millions, for the three months ended March 31	2016		2015		Change

Mining, processing and refining	$	68.3	$	86.1	(21	)%
Selling costs	3.8		4.0		(5	)%
Other	1.2		1.4		(14	)%
	$	73.3	$	91.5	(20	)%

(1) Excludes depletion, depreciation and amortization.

Net direct cash cost(1) is composed of the following:

	2016			2015			Change

Mining, processing and refining costs	$	4.91		$	6.38		(23	)%
Cobalt by-product credits	(0.67		)	(0.90		)	(26	)%
Other(2)	0.17			0.26			(35	)%
Net direct cash cost (US$ per pound of nickel)	4.41			$	5.74		(23	)%

(1) For additional information see the Non-GAAP measures section.

(2) Includes selling costs, discounts, and other by-product credits.

Net direct cash cost of nickel for the three months ended March 31, 2016 decreased compared to the same period in the prior year primarily due to efficiencies resulting from the continued ramp up, lower maintenance costs and lower overall input commodity prices partly offset by lower cobalt by-product credits in U.S. dollars. Other costs are lower in the current year period primarily due to higher discounts in the comparative quarter as Ambatovy’s production was not then certified for delivery to the London Metal Exchange (LME).

Capital spending for Ambatovy is focused on sustaining capital for mining and production equipment and the tailings facility.

Sherritt continues not to fund further cash calls at this time due to the structure of the Ambatovy partner loans, which, at current nickel prices, effectively reduce Sherritt’s 40% interest in Ambatovy to a 12% economic interest as set-out in the following chart(1). Sherritt continues to serve as operator, as constructive discussions are ongoing between partners and senior lenders regarding future funding of Ambatovy and modifications to the principal amortization on the existing senior loan. The outcome of these discussions is not certain — for additional information see the Risk Factors titled — “Ambatovy Liquidity and Funding Risks” and “Restrictions in Debt Instruments, Debt Covenants and Mandatory Repayments” in the Annual Information Form.

OIL AND GAS

Financial review

$ millions, except as otherwise noted, for the three months ended March 31	2016			2015			Change

FINANCIAL HIGHLIGHTS
Revenue	$	22.4		$	42.3		(47	)%
Loss from operations	(8.7		)	(0.9		)	(867	)%
Adjusted EBITDA(1)	4.0			21.5			(81	)%
Cash provided by operations	2.6			6.6			(61	)%
Free cash flow(1)	(2.4		)	(14.0		)	83	%

PRODUCTION AND SALES(2)
Gross working-interest (GWI) - Cuba	16,449			19,719			(17	)%
Total net working-interest (NWI)	10,504			10,938			(4	)%

AVERAGE REFERENCE PRICES (US$ per barrel)
Gulf Coast Fuel Oil No. 6	$	21.13		$	44.32		(52	)%
Brent	33.64			53.88			(38	)%

AVERAGE-REALIZED PRICES(1) (per NWI)
Cuba ($ per barrel)	$	21.80		$	41.44		(47	)%
Spain ($ per barrel)	45.84			65.33			(30	)%
Pakistan ($ per boe)(2)	10.77			10.59			2	%
Weighted-average	22.27			41.79			(47	)%

UNIT OPERATING COSTS(1)(2) (per GWI)
Cuba	$	9.53		$	8.26		15	%
Spain	50.30			79.52			(37	)%
Pakistan	9.33			8.17			14	%
Weighted-average ($ per boepd)	10.35			10.16			2	%

SPENDING ON CAPITAL
Development, facilities and other	$	4.1		$	27.0		(85	)%
Exploration	0.6			—			—
	$	4.7		$	27.0		(83	)%

(1) For additional information see the Non-GAAP measures section.

Oil and Gas revenue is composed of the following:

$ millions, for the three months ended March 31	2016		2015		Change

Cuba	$	19.6	$	37.6	(48	)%
Spain	1.4		3.2		(56	)%
Pakistan	0.3		0.3		—
Processing	1.1		1.2		(8	)%
	$	22.4	$	42.3	(47	)%

The change in earnings from operations between 2016 and 2015 is detailed below:

$ millions, for the three months ended March 31	2016

Lower realized oil and gas prices, denominated in U.S. dollars	$	(15.0	)
Lower Cuba gross working-interest volumes	(5.2		)
Lower Spain volumes	(1.2		)
Lower depletion, depreciation and amortization	8.8
Weaker Canadian dollar relative to the U.S. dollar	1.1
Lower operating costs	4.1
Other	(0.4		)
Change in earnings from operations, compared to 2015	$	(7.8	)

Reference and realized prices continued to decline in the first quarter of 2016 and were significantly lower in the three months ended March 31, 2016 compared to the same period in the prior year. The decrease in average-realized price in the current year benefited from the impact of a weaker Canadian dollar relative to the U.S. dollar.

Production and sales volumes were as follows:

Daily production volumes, for the three months ended March 31(1)	2016	2015	Change

Gross working-interest oil production in Cuba	16,449	19,719	(17	)%
Net working-interest oil production
Cuba (heavy oil)
Cost recovery	4,443	2,229	99	%
Profit oil	5,447	7,872	(31	)%
Total	9,890	10,101	(2	)%
Spain (light oil)	334	542	(38	)%
Pakistan (natural gas)	280	295	(5	)%
	10,504	10,938	(4	)%

(1) Refer to Oil and Gas production and sales volume on page 33 for further detail.

Gross working-interest oil production in Cuba decreased for the three months ended March 31, 2016 compared to the same period in the prior year primarily due to natural reservoir declines and the absence of new drilling in the first quarter of 2016.

Cost-recovery oil production in Cuba for the three months ended March 31, 2016 increased compared to the same period in the prior year as a result of lower oil prices. The allocation of cost recovery barrels in any particular period is limited to a fixed percentage of GWI volumes within each cost pool. Expenditures that exceed this limit are carried forward and are eligible for a future allocation of cost recovery barrels.

Profit oil production, which represents Sherritt’s share of production after cost recovery volumes are deducted from GWI volumes, were lower in the three months ended March 31, 2016 as a result of higher cost recovery oil volumes during the current-year period and a reduction in GWI volumes.

In Spain, oil production was lower in the three months ended March 31, 2016 compared to the same period in the prior year as a result of production stabilizing in the Rodaballo field since the major workover was completed in this field in the first quarter of 2015.

Unit operating cost in Cuba increased in the three months ended March 31, 2016 compared to the same period in the prior year primarily due to lower production and a weaker Canadian dollar relative to the U.S. dollar.

Unit operating cost in Spain decreased in the three months ended March 31, 2016 compared to the same period in the prior year primarily due to lower production and as a result of limited workover costs in the first quarter of 2016 compared to $2.8 million in major workover costs incurred in the comparative period, which accounted for an increase in workover costs of $56.43 per barrel in the first quarter of 2015.

Spending on capital was significantly lower in the three months ended March 31, 2016 compared to the same period in the prior year due to the absence of any development drilling activities. Drilling activity in 2016 will be focused on the preparation and drilling of Block 10, as previously disclosed. The Corporation is expected to commence drilling in the second half of the year, and with this timing, only one well will be drilled in 2016, compared to the two originally planned.

POWER

Financial review

$ millions (331/3% basis), except as otherwise noted, for the three months ended March 31	2016			2015			Change

FINANCIAL HIGHLIGHTS
Revenue	$	15.6		$	11.8		32	%
Loss from operations	(0.2		)	(1.0		)	80	%
Adjusted EBITDA(1)	8.7			7.3			19	%
Cash provided by operations	0.9			24.1			(96	)%
Free cash flow(1)	0.8			23.7			(97	)%

PRODUCTION AND SALES
Electricity (GWh(2))	217			210			3	%

AVERAGE-REALIZED PRICES(1)
Electricity (per MWh(2))	$	58.27		$	52.63		11	%

UNIT OPERATING COSTS(1) (per MWh)
Base	$	14.86		$	15.55		(4	)%
Non-base(3)	2.00			0.09			2,122	%
	16.86			15.64			8	%

SPENDING ON CAPITAL AND SERVICE CONCESSION ARRANGEMENTS
Sustaining	$	0.1		$	0.4		(75	)%
Spending on Capital	$	0.1		$	0.4		(75	)%

Service concession arrangements	1.9			—			—
	$	2.0		$	0.4		400	%

(1) For additional information see the Non-GAAP measures section.

(2) Gigawatt hours (GWh), Megawatt hours (MWh).

(3) Costs incurred at the Boca de Jaruco and Puerto Escondido facilities that otherwise would have been capitalized if these facilities were not accounted for as service concession arrangements.

Power revenue is composed of the following:

$ millions (331/3% basis), for the three months ended March 31	2016		2015		Change

Electricity sales	$	12.7	$	11.1	14	%
By-products and other	1.0		0.7		43	%
Construction activity(1)	1.9		—		—
	$	15.6	$	11.8	32	%

The change in earnings from operations between 2016 and 2015 is detailed below:

$ millions (331/3% basis), for the three months ended March 31	2016

Higher electricity volumes	$	0.4
Lower realized by-product prices	(0.2		)
Higher realized by-product volume	0.1
Higher depletion, depreciation and amortization	(0.5		)
Weaker Canadian dollar relative to the U.S. dollar	0.4
Other	0.6
Change in earnings from operations, compared to 2015	$	0.8

Production and electricity sales were relatively unchanged for the three months ended March 31, 2016 compared to the same period in the prior year. Construction revenue relates to the construction of the Puerto Escondido/Yumuri pipeline which is accounted for as a service concession arrangement.

The average-realized price of electricity was higher for the three months ended March 31, 2016 compared to the same period in the prior year primarily due to a weaker Canadian dollar relative to the U.S. dollar.

Unit operating cost increased for the three months ended March 31, 2016 compared to the same period in the prior year primarily due to timing of planned maintenance activities at Boca and Puerto Escondido.

The Puerto Escondido/Yumuri pipeline is expected to be operational in the fourth quarter of 2016.

Liquidity and capital resources

Total available liquidity at March 31, 2016 was $373.7 million which includes cash, cash equivalents and short term investments of $369.9 million and available credit facilities of $3.8 million.

CONTRACTUAL OBLIGATIONS AND COMMITMENTS

The following table provides a summary of consolidated significant liquidity and capital commitments based on existing commitments and debt obligations (including accrued interest):

					Falling		Falling		Falling		Falling		Falling
			Falling		due		due		due		due		due in
			due within		between		between		between		between		more than
Canadian $ millions, as at March 31, 2016	Total		1 year		1-2 years		2-3 years		3-4 years		4-5 years		5 years

Trade accounts payable and accrued liabilities	$	98.8	$	98.8	$	—	$	—	$	—	$	—	$	—
Income taxes payable	1.4		1.4		—		—		—		—		—
Senior unsecured debentures	1,032.1		58.4		58.4		308.4		38.4		279.1		289.4
Ambatovy Joint Venture Additional Partner loans (non-recourse)(1)	4,629.0		—		—		—		—		—		4,629.0
Ambatovy Joint Venture Partner loans(1)	157.7		—		—		—		—		—		157.7
Other loans and borrowings	47.3		47.3		—		—		—		—		—
Provisions	161.9		16.2		0.5		11.8		—		—		133.4
Operating leases	19.2		1.0		2.9		2.9		3.0		3.0		6.4
Capital commitments	15.3		7.8		7.5		—		—		—		—
Total	$	6,162.7	$	230.9	$	69.3	$	323.1	$	41.4	$	282.1	$	5,215.9

OTHER COMMITMENTS

The following commitments are not reflected in the table above:

Moa Joint Venture

As a result of the Corporation’s 50% interest in the Moa Joint Venture, its proportionate share of significant commitments of the joint venture includes the following:

· Environmental rehabilitation commitments of $81.6 million, with no significant payments due in the next four years;

· Advances and loans payable of $227.0 million; and

· Other commitments of $0.9 million.

Ambatovy Joint Venture

As a result of the Corporation’s 40% interest in the Ambatovy Joint Venture, its proportionate share of significant commitments of the Joint Venture includes the following:

· Environmental rehabilitation commitments of $213.0 million, with no significant payments due in the next four years;

· Other contractual commitments of $27.6 million; and

· Ambatovy revolving credit facility of $20.6 million. The facility bears interest rates between 9.00% and 11.85% and matures on April 29, 2016.

· Ambatovy Joint Venture senior debt financing of US$640.4 million ($831.7 million) which is non-recourse to the Joint Venture partners as a result of achieving financial completion in September 2015. Interest is payable based on LIBOR plus 2.5%. On an undiscounted basis, principal and interest repayments are $1.0 billion.

INVESTMENT LIQUIDITY

At March 31, 2016, cash and cash equivalents and investments were located in the following countries:

			Cash equivalents
			and
			short-term
$ millions, as at March 31, 2016	Cash		investments		Total

Canada	$	69.6	$	284.0	$	353.6
Cuba	9.0		—		9.0
Other	7.3		—		7.3
	$	85.9	$	284.0	$	369.9

Cash and short-term investments

The Corporation’s cash balances are deposited with major financial institutions rated A- or higher by Standard & Poor’s, except for institutions located in Madagascar and Cuba that are not rated.

At March 31, 2016 cash equivalents includes $190.8 million in Government of Canada treasury bills and term deposits with major financial institutions, both having original maturity dates of less than three months and short-term investments includes $93.1 million in Government of Canada treasury bills having original maturity dates of greater than three months and less than one year.

The table above does not include cash and cash equivalents of $27.2 million (100% basis) held by the Moa Joint Venture, or $51.3 million (100% basis) held by the Ambatovy Joint Venture. The Corporation’s share is included as part of the investment in a joint venture and associate balances in the consolidated statement of financial position.

Loans and Borrowings

Loans and borrowings are composed primarily of:

· $750.0 million in unsecured debentures and notes having interest rates between 7.50% and 8.00% and maturities in 2018, 2020 and 2022;

· $1.3 billion in two loans provided by the Ambatovy Joint Venture partners to finance Sherritt’s portion of funding requirements of the Joint Venture bearing interest of six-month LIBOR plus a margin of 7.0% and 1.125%, respectively;

· $45.0 million in the syndicated revolving-term credit facility bearing interest at prime plus 2.50% per annum or bankers’ acceptances plus 3.50%; and

The following is a summary of significant changes in the Corporation’s credit facilities during 2016.

Syndicated revolving-term credit facility

As a result of these amendments, the Corporation was in compliance with these amended financial covenants at March 31, 2016.

Line of credit

On February 23, 2016, the Corporation terminated and repaid the $35.0 million outstanding balance.

AVAILABLE CREDIT FACILITIES

The following table outlines the maximum amounts undrawn and available to the Corporation for credit facilities that had amounts undrawn at March 31, 2016 and December 31, 2015. A detailed description of these facilities is provided in the Loans, borrowings and other liabilities note in the Corporation’s audited consolidated statements for the year ended December 31, 2015.

	2016						2015
$ millions, as at	March 31						December 31
	Maximum		Undrawn		Available(1)		Maximum		Undrawn		Available(1)

Short-term
Syndicated revolving-term credit facility(2)	$	115.0	$	23.8	$	3.8	$	115.0	$	12.6	$	2.6
Line of credit(3)	—		—		—		35.0		—		—
Total	$	115.0	$	23.8	$	3.8	$	150.0	$	12.6	$	2.6

(1) The Corporation’s credit facilities are available to the extent amounts are undrawn and financial covenants or restrictions have not been exceeded.

(2) Established for general corporate purposes. Total available draw is based on eligible receivables and inventory. At March 31, 2016, the Corporation had $46.2 million of letters of credit outstanding and drew down $45.0 million on this facility. Letters of credit at March 31, 2016 are primarily in place to support Oil and Gas reclamation obligations in Spain and exploration activities in Cuba.

(3) On February 23, 2016, the Corporation terminated and repaid the $35.0 million outstanding balance on its line of credit.

Covenants

There are no events of default on the Corporation’s borrowings or debentures.

SOURCES AND USES OF CASH

The Corporation’s cash flows from operating, investing and financing activities are summarized in the following table as derived from Sherritt’s consolidated statements of cash flow(1).

$ millions, for the three months ended March 31	2016			2015			Change

Cash provided (used) by operating activities
Oil and Gas operating cash flow	$	2.6		$	6.6		(61	)%
Power operating cash flow (excluding interest received on Energas CSA loan)	0.9			1.1			(18	)%
Fort Site operating cash flow	0.3			13.5			(98	)%
Dividends received from Moa Joint Venture	—			12.5			(100	)%
Interest received on Moa Joint Venture loans	0.7			2.9			(76	)%
Interest received on Energas CSA loan	—			23.0			(100	)%
Interest paid on debentures	(10.3		)	(9.4		)	(10	)%
Corporate and other operating cash flow	(3.9		)	(23.9		)	84	%
Cash provided by continuing operations	(9.7		)	26.3			(137	)%
Cash used by discontinued operations	(2.9		)	(3.5		)	17	%
	$	(12.6	)	$	22.8		(155	)%

Cash (used) provided by investing and financing activities
Property, plant, equipment and intangible expenditures	$	(6.4	)	$	(23.8	)	73	%
Receipts of advances, loans receivable and other financial assets	0.4			3.5			(89	)%
Repayment of loans, borrowings and other financial liabilities	(45.4		)	(0.4		)	(11250	)%
Dividends paid on common shares	—			(3.0		)	100	%
Other	(1.5		)	2.4			(163	)%
	$	(52.9	)	$	(21.3	)	(148	)%
	(65.5		)	1.5			(4467	)%
Cash, cash equivalents and short-term investments:
Beginning of the period	435.4			477.2			(9	)%
End of the period	$	369.9		$	478.7		(23	)%

(1) Cash (used) provided by discontinued operations relate to changes in the estimated Obed provision retained by the Corporation following the sale of the Coal operations in 2014, as well as cash paid to settle this provision.

The following significant items affected the sources and uses of cash:

Cash from continuing operations was lower during the three months ended March 31, 2016 compared to prior year period:

· Interest received on the Energas CSA loan was nil for the three months ended March 31, 2016 compared to $23.0 million in the prior year period. This reduction in interest was due to higher capital spending in 2015 and the comparative period included interest received relating to 2014. Under the current repayment schedule the Corporation expects interest received under the CSA to be $34.0 million in 2016;

· movements in cash flow from operations at Fort Site related primarily to timing of collection of fertilizer sales;

· cash from continuing operating activities at Oil and Gas was lower for the three months ended March 31, 2016 as a result of lower earnings and the timing of settlement of receivables and payment of taxes ; and

· cash from continuing operating activities at Corporate was higher for the three months ended March 31, 2016 due to timing of working capital payments.

Included in investing and financing activities:

· repayment in loans and borrowings of $45.0 million in the three months ended March 31, 2016 relates to the repayment and termination of the $35.0 million line of credit and a $10.0 million repayment on the revolving - term credit facility.

COMMON SHARES

As at April 26, 2016, the Corporation had 293,880,001 common shares outstanding. An additional 9,678,416 common shares are issuable upon exercise of outstanding stock options granted to employees and directors pursuant to the Corporation’s stock option plan.

As part of a comprehensive initiative to manage liquidity, the Board suspended the $0.01 per share quarterly dividend, effective September 2015.

Managing risk

Sherritt manages a number of risks in each of its businesses in order to achieve an acceptable level of risk without appreciably hindering its ability to maximize returns. Management has procedures to identify and manage significant operational and financial risks. A comprehensive list of the Corporation’s significant business risks and strategies designed to manage these risks can be found in the Corporation’s Annual Information Form.

Accounting Pronouncements

There have been no new accounting pronouncements issued in the first quarter of 2016 that are expected to impact the Corporation. For a summary of accounting pronouncements, see the accounting pronouncements note in the Corporation’s audited consolidated financial statements for the year ended December 31, 2015.

Summary of quarterly results

The following table presents a summary of the segment revenue and consolidated operating results for each of the eight quarters ended June 30, 2014 to March 31, 2016(1).

$ millions, except per share amounts,	2016			2015			2015			2015			2015			2014			2014			2014
for the three months ended	Mar 31			Dec 31			Sept 30			June 30			Mar 31			Dec 31			Sept 30			June 30

Revenue
Metals	$	153.0		$	183.8		$	193.4		$	204.2		$	223.7		$	216.5		$	221.2		$	216.0
Oil and Gas	22.4			30.5			38.5			51.3			42.3			49.6			68.1			74.7
Power	15.6			13.7			14.5			12.7			11.8			11.7			12.7			12.7
Corporate and Other	0.3			1.5			0.1			0.2			0.5			0.5			0.7			1.2
Combined Revenue(2)	$	191.3		$	229.5		$	246.5		$	268.4		$	278.3		$	278.3		$	302.7		$	304.6
Adjust joint venture and associate revenue	(132.9		)	(153.0		)	(169.6		)	(168.8		)	(195.4		)	(176.7		)	(199.8		)	(174.4		)
Financial statement revenue	$	58.4		$	76.5		$	76.9		$	99.6		$	82.9		$	101.6		$	102.9		$	130.2

Share of loss of an associate, net of tax	(65.9		)	(1,703.2		)	(68.6		)	(62.6		)	(42.3		)	(65.0		)	(49.4		)	(50.9		)
Share of (loss) earnings of a joint venture, net of tax	(12.9		)	(9.1		)	(6.4		)	(0.3		)	4.0			4.5			10.8			1.0

Net loss from continuing operations	(47.8		)	(1,757.3		)	(210.0		)	(47.6		)	(56.8		)	(147.7		)	(51.3		)	(49.0		)
(Loss) earnings from discontinued operations, net of tax	—			—			—			(5.0		)	—			(12.7		)	—			18.9
Net loss for the period	$	(47.8	)	$	(1,757.3	)	$	(210.0	)	$	(52.6	)	$	(56.8	)	$	(160.4	)	$	(51.3	)	$	(30.1	)

Net loss per share, basic and diluted ($ per share)
Net loss from continuing operations	$	(0.16	)	$	(5.99	)	$	(0.72	)	$	(0.16	)	$	(0.19	)	$	(0.50	)	$	(0.17	)	$	(0.16	)
Net loss for the period	(0.16		)	(5.99		)	(0.72		)	(0.18		)	(0.19		)	(0.54		)	(0.17		)	(0.10		)

(2) For additional information see the Non-GAAP measures section.

In general, net (loss) earnings for the Corporation are primarily affected by commodity prices, sales volumes and exchange rates. The average Canadian dollar cost to purchase one U.S. dollar for the above quarters has ranged from $1.09 to $1.37. In addition to the impact of commodity prices, sales volumes and exchange rates, net (loss) earnings were impacted by the following significant items (pre-tax):

· the first quarter of 2016 includes unrealized foreign exchange gains of $76.0 million due to the strengthening of the Canadian dollar relative to the U.S dollar since December 31, 2015;

· the fourth quarter of 2015 includes an impairment of $1.6 billion recognized on Ambatovy Joint Venture assets;

· the first quarter of 2015 includes a tax recovery of $30.1 million related to tax rate reductions in Cuba;

· the third quarter of 2014 includes a $12.8 million gain on arbitration settlement; and

· the second quarter of 2014 includes a $13.0 million gain recognized on the sale of the Coal operations.

Off-balance sheet arrangements

The Corporation has no foreign exchange or commodity options, futures or forward contracts.

Transactions with related parties

	2016		2015
Canadian $ millions, as at	March 31		December 31

Accounts receivable from joint operations	$	0.7	$	0.7
Accounts receivable from joint venture	22.0		20.2
Accounts receivable from associate	41.6		33.8
Accounts payable to joint operations	0.1		0.2
Accounts payable to joint venture	17.5		5.2
Accounts payable to associate	1.4		0.5
Advances and loans receivable from associate	897.9		1,187.2
Advances and loans receivable from joint operations	185.5		182.0
Advances and loans receivable from joint venture	300.6		312.8

	For the three months ended
	2016		2015
Canadian $ millions	March 31		March 31

Total value of goods and services:
Provided to joint operations	$	8.8	$	5.5
Provided to joint venture	34.5		35.2
Provided to associate	0.7		0.6
Purchased from joint venture	35.5		28.6
Purchased from associate	9.6		17.0
Net financing income from joint operations	3.6		4.3
Net financing income from associate	10.6		15.3
Net financing income from joint venture	2.4		2.1

Advances and loans receivable from associate, joint operation and joint venture relate to the Corporation’s interest in the Ambatovy subordinated loans receivable, Energas conditional sales agreement, and Moa Joint Venture loans receivable, respectively. For further detail, refer to note 14 of the Corporation’s December 31, 2015 audited consolidated financial statements.

Controls and procedures

DISCLOSURE CONTROLS AND PROCEDURES

Disclosure controls and procedures are designed to provide reasonable assurance that all relevant information is gathered and reported to management, including the CEO and CFO, on a timely basis so that appropriate decisions can be made regarding public disclosure.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

Internal control over financial reporting means a process designed by or under the supervision of the CEO and CFO, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

The internal controls are not expected to prevent and detect all misstatements due to error or fraud.

As at March 31, 2016, the Corporation’s CEO and CFO have certified that the disclosure controls and procedures are effective and that during the quarter ended March 31, 2016, the Corporation did not make any material changes in the internal controls over financial reporting that materially affected or are reasonably likely to materially affect the Corporation’s internal control over financial reporting.

Supplementary information

SENSITIVITY ANALYSIS

The following table shows the approximate impact on the Corporation’s net earnings and earnings per share from continuing operations for the three months ended March 31, 2016 from a change in selected key variables. The impact is measured changing one variable at a time and may not necessarily be indicative of sensitivities on future results.

				Approximate
				change in quarterly			Approximate
				net earnings			change in quarterly
				($ millions)			basic EPS
Factor	Increase			Increase/(decrease)			Increase/(decrease)

Prices
Nickel - LME price per pound(1)	US$		0.50	$	12		$	0.04
Cobalt - Metal Bulletin price per pound(1)	US$		0.50	1			—
Oil -U.S. Gulf Coast Fuel Oil No. 6 price per barrel	US$		5.00	4			0.02

Exchange rate
Strengthening of the Canadian dollar relative to the U.S. dollar	$	0.05		51			0.18

Operating costs(1)
Natural gas - per gigajoule (Moa Joint Venture)	$	1.00		(1		)	—
Sulphur - per tonne (Moa Joint Venture and Ambatovy)	US$		25.00	(2		)	(0.01		)
Sulphuric acid - per tonne (Moa Joint Venture)	US$		25.00	(2		)	(0.01		)
Coal - per tonne (Ambatovy)	US$		20.00	(1		)	—
Limestone - per tonne (Ambatovy)	US$		5.00	(1		)	—

OIL AND GAS PRODUCTION AND SALES VOLUME

The following table provides further detail about the Corporation’s oil and gas production and determination of sales volumes.

	For the three months ended
	2016	2015
Daily production volumes(1)	March 31	March 31	Change

Gross working-interest oil production in Cuba(2)(3)	16,449	19,719	(17	)%
Net working-interest oil production(4)
Cuba (heavy oil)
Cost recovery	4,443	2,229	99	%
Profit oil	5,447	7,872	(31	)%
Total	9,890	10,101	(2	)%
Spain (light oil)(4)	334	542	(38	)%
Pakistan (natural gas)(4)	280	295	(5	)%
	10,504	10,938	(4	)%

(2) In Cuba, Oil and Gas delivered all of its gross working-interest oil production to CUPET at the time of production.

(4) Net working-interest production (equivalent to net sales volume) represents the Corporation’s share of gross working-interest production.

NON-GAAP MEASURES

Combined results

The Corporation presents combined revenue, combined cost of sales, combined administrative expenses, combined net finance expense, and combined income taxes (together, combined results) as measures which help management assess the Corporation’s financial performance across its business units. The combined results include the Corporation’s consolidated financial results, and the results of its 50% share of the Moa Joint Venture and its 40% share of the Ambatovy Joint Venture, both of which are accounted for using the equity method for accounting purposes. Management uses these measures to reflect the Corporation’s economic interest in its business units prior to the application of equity accounting. Refer to pages 6 to 7 for the reconciliations of the combined results.

Adjusted EBITDA

The tables below reconcile Adjusted EBITDA to net earnings (loss) from operations, associate and joint venture:

$ millions, for the three ended March 31

2016

Adjustment

Metals

for Joint

Moa JV and

Ambatovy

Oil and

Corporate

Venture and

Fort Site

Other

Total

Gas

Power

and Other

Associate

Total

(Loss) earnings from operations, associate and joint venture per financial statements

(11.3

)

(49.9

)

0.3

(60.9

)

(8.7

)

(0.2

)

(9.8

)

(18.1

)

(97.7

)

Add (deduct):

Depletion, depreciation and amortization

2.1

—

2.1

12.7

8.9

0.7

—

24.4

Adjustments for share of associate and joint venture:

Depletion, depreciation and amortization

9.0

37.1

—

46.1

—

46.1

Net finance expense

—

19.1

Income tax recovery

—

(1.0

)

(1.0

)

Adjusted EBITDA

(0.2

)

(12.8

)

0.3

(12.7

)

4.0

8.7

(9.1

)

—

(9.1

)

$ millions, for the three ended March 31																								2015
																					Adjustment
	Metals																				for Joint
	Moa JV and		Ambatovy									Oil and						Corporate			Venture and
	Fort Site		JV			Other			Total			Gas			Power			and Other			Associate			Total

Earnings (loss) from operations, associate and joint venture per financial statements	$	7.0	$	(43.8	)	$	0.3		$	(36.5	)	$	(0.9	)	$	(1.0	)	$	(8.2	)	$	(3.5	)	$	(50.1	)
Add (deduct):
Depletion, depreciation and amortization	2.3		—			(0.1		)	2.2			22.4			8.3			0.9			—			33.8
Adjustments for share of associate and joint venture:
Depletion, depreciation and amortization	9.0		48.1			(0.1		)	57.0			—			—			—			—			57.0
Net finance expense	—		—			—			—			—			—			—			10.7			10.7
Income tax recovery	—		—			—			—			—			—			—			(7.2		)	(7.2		)
Adjusted EBITDA	$	18.3	$	4.3		$	0.1		$	22.7		$	21.5		$	7.3		$	(7.3	)	$	—		$	44.2

Average-realized price

The tables below reconcile average-realized price to revenue as per the financial statements:

$ millions, except average-realized price and sales volume, for the three ended March 31

2016

Metals

Other

Nickel

Cobalt

Fertilizer

revenue

Total

Oil and Gas

Power

Revenue per financial statements

98.3

25.6

15.0

14.1

153.0

22.4

15.6

Adjustments to revenue:

By-product revenue

—

(1.0

)

Processing revenue

—

(1.1

)

—

Service concession arrangement revenue

—

(1.9

)

Other

—

Revenue for purposes of average-realized price calculation

98.3

25.6

15.0

21.3

12.7

Sales volume for the period

19.0

1.8

45.8

1.0

217

Millions of

Thousands

Millions of

Volume units

pounds

of tonnes

barrels(1)

Gigawatts

Average-realized price(2)(3)

5.16

14.52

327

22.27

58.27

$ millions, except average-realized price and sales volume, for the three months ended March 31														2015
	Metals
							Other
	Nickel		Cobalt		Fertilizer		revenue		Total		Oil and Gas			Power

Revenue per financial statements	$	161.2	$	25.5	$	14.0	$	23.0	$	223.7	$	42.3		$	11.8
Adjustments to revenue:
By-product revenue	—		—		—						—			(0.7		)
Processing revenue	—		—		—						(1.2		)	—
Revenue for purposes of average-realized price calculation	161.2		25.5		14.0						41.1			11.1

Sales volume for the period	20.3		1.7		44.0						1.0			210

	Millions of		Millions of		Thousands		Millions of
Volume units	pounds		pounds		of tonnes		barrels(1)		Gigawatts
Average-realized price(2)(3)	$	7.93	$	15.41	$	318	$	41.79	$	52.63

For purposes of average-realized price tables, above:

(1) Net working-interest oil production. For additional discussion see Oil and Gas Production and Sales Volume section.

(2) Average-realized price may not calculate based on amounts presented due to foreign exchange and rounding.

(3) Power, average-realized price per MWh.

Unit operating cost

Average unit operating costs for oil and gas is based on gross working-interest oil plus natural gas production stated in barrels of oil equivalent.

The tables below reconcile unit operating cost to cost of sales per the financial statements:

$ millions, except unit cost and sales volume, for the three months ended March 31

2016

Metals

Moa JV and

Ambatovy

Oil and

Fort Site

Other

Total

Gas

Power

Cost of sales per financial statements

85.6

110.3

10.7

206.6

28.7

14.6

Less:

Depletion, depreciation and amortization in cost of sales

(11.1

)

(37.0

)

—

(48.1

)

(12.7

)

(8.9

)

74.5

73.3

10.7

158.5

16.0

5.7

Adjustments to cost of sales:

Cobalt by-product, fertilizer and other revenue

(29.5

)

(11.8

)

—

Impact of opening/closing inventory and other

(3.1

)

(0.6

)

—

Service concession arrangements - Cost of construction

—

(1.9

)

Cost of sales for purposes of unit cost calculation

41.9

60.9

16.0

3.8

Sales volume for the period

9.1

9.9

1.6

217

Volume units

Millions of
pounds

Millions of
barrels(1)

Gigawatts

Unit operating cost(2)(3)

4.59

6.15

10.35

16.86

Unit operating cost (U.S. dollars)

3.34

4.41

$ millions, except unit cost and sales volume, for the three months ended March 31															2015
	Metals
	Moa JV and			Ambatovy								Oil and
	Fort Site			JV			Other		Total			Gas			Power

Cost of sales per financial statements	$	96.1		$	139.5		$	17.8	$	253.4		$	41.3		$	11.4
Less:
Depletion, depreciation and amortization in cost of sales	(11.3		)	(48.0		)	0.2		(59.1		)	(22.3		)	(8.3		)
	84.8			91.5			18.0		194.3			19.0			3.1

Adjustments to cost of sales:
Cobalt by-product, fertilizer and other revenue	(30.0		)	(15.3		)						—			—
Impact of opening/closing inventory and other	(3.7		)	1.0								—			—
Cost of sales for purposes of unit cost calculation	51.1			77.2								19.0			3.1

Sales volume for the period	9.4			10.9								1.9			210

Volume units	Millions of pounds		Millions of pounds	Millions of barrels(1)		Gigawatts
Unit operating cost(2)(3)	$	5.42	7.08	$	10.16	$	15.64
Unit operating cost (U.S. dollars)	$	4.36	5.74

For purposes of unit operating cost tables, above:

(1) Gross working-interest oil production. For additional discussion, see Oil and Gas Production and Sales Volume section.

(2) Unit operating costs may not calculate based on amounts presented due to rounding.

(3) Power, unit operating cost per MWh.

Adjusted earnings from continuing operations

The table below reconciles adjusted earnings net earnings (loss) per the financial statements:

$ millions, for the three months ended March 31	2016			2015

Net (loss) earnings from continuing operations	$	(47.8	)	$	(56.8	)

Adjusting items:
Sherritt - Unrealized foreign exchange (gain) loss - Continuing	(76.0		)	17.6
Corporate - Call option fair value adjustment	—			2.8
Ambatovy - VAT adjustment	(3.8		)	(4.5		)
Severance	0.7			—
Total adjustments, before tax	$	(79.1	)	$	15.9
Tax adjustments(1)	—			(30.1		)
Adjusted net (loss) earnings from continuing operations	$	(126.9	)	$	(71.0	)

(1) Prior year to date period includes tax recoveries of $30.1 million related to changes in tax rates in Cuba. See Income taxes on page 7 for further details.

Combined adjusted operating cash flow per share

The tables below reconcile combined adjusted operating cash flow per share to the consolidated statement of cash flow:

$ millions, except per share amounts, for the three months ended March 31

2016

Adjustment

Total

Metals

for Joint

derived from

Moa JV and

Ambatovy

Oil and

Corporate

Combined

Venture and

financial

Fort Site

Other

Total

Gas

Power

and Other

total

Associate

statements

Cash provided (used) by continuing operations

(3.0

)

(5.5

)

4.2

(4.3

)

2.6

0.9

(17.8

)

(18.6

)

8.9

(9.7

)

Adjust: net change in non-cash working capital

1.2

(7.5

)

(3.9

)

(10.2

)

(0.1

)

5.6

1.1

(3.6

)

7.8

4.2

Adjusted continuing operating cash flow

(1.8

)

(13.0

)

0.3

(14.5

)

2.5

6.5

(16.7

)

(22.2

)

16.7

(5.5

)

Combined adjusted operating cash flow per share(1)

(0.01

)

(0.04

)

—

(0.05

)

0.01

0.02

(0.06

)

(0.08

)

0.06

(0.02

)

(1) The weighted average number of common shares for the year was 293.9 million shares.

$ millions, except per share amounts, for the three months ended March 31																									2015
																						Adjustment			Total
	Metals																					for Joint			derived from
	Moa JV and			Ambatovy									Oil and				Corporate			Combined		Venture and			financial
	Fort Site			JV			Other			Total			Gas		Power		and Other			total		Associate			statements

Cash provided (used) by continuing operations	$	30.2		$	12.6		$	(0.5	)	$	42.3		$	6.6	$	24.1	$	(29.9	)	$	43.1	$	(16.8	)	$	26.3
Adjust: net change in non-cash working capital	(18.3		)	(8.0		)	0.7			(25.6		)	15.3		6.3		17.0			13.0		13.3			26.3
Adjusted continuing operating cash flow	11.9			4.6			0.2			16.7			21.9		30.4		(12.9		)	56.1		(3.5		)	52.6
Combined adjusted operating cash flow per share(1)	$	0.04		$	0.02		$	—		$	0.06		$	0.07	$	0.10	$	(0.04	)	$	0.19	$	(0.01	)	$	0.18

(1) The weighted average number of common shares for the year was 293.4 million shares.

Combined free cash flow

The tables below reconciled free cash flow to the consolidated statement of cash flow.

$ millions, for the three months ended March 31

2016

Adjustment

Total

Metals

for Joint

derived from

Moa JV and

Ambatovy

Oil and

Corporate

Combined

Venture and

financial

Fort Site

Other

Total

Gas

Power

and Other

total

Associate

statements

Cash provided (used) by continuing operations

(3.0

)

(5.5

)

4.2

(4.3

)

2.6

0.9

(17.8

)

(18.6

)

8.9

(9.7

)

Less:

Property, plant and equipment expenditures

(7.6

)

—

(7.6

)

(4.4

)

(0.1

)

(0.1

)

(12.2

)

6.4

(5.8

)

Intangible Expenditures

—

(0.6

)

—

(0.6

)

—

(0.6

)

Free Cash Flow

(10.6

)

(5.5

)

4.2

(11.9

)

(2.4

)

0.8

(17.9

)

(31.4

)

15.3

(16.1

)

$ millions, for the three months ended March 31																												2015
																									Adjustment			Total
	Metals																								for Joint			derived from
	Moa JV and			Ambatovy									Oil and						Corporate			Combined			Venture and			financial
	Fort Site			JV			Other			Total			Gas			Power			and Other			total			Associate			statements

Cash provided (used) by continuing operations	$	30.2		$	12.6		$	(0.5	)	$	42.3		$	6.6		$	24.1		$	(29.9	)	$	43.1		$	(16.8	)	$	26.3
Less:
Property, plant and equipment expenditures	(7.8		)	(2.7		)	—			(10.5		)	(20.6		)	(0.4		)	(0.4		)	(31.9		)	8.1			(23.8		)
Free Cash Flow	$	22.4		$	9.9		$	(0.5	)	$	31.8		$	(14.0	)	$	23.7		$	(30.3	)	11.2			$	(8.7	)	$	2.5

FORWARD-LOOKING STATEMENTS

This MD&A 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”, “projected”, “continue” or other similar words or phrases. Specifically, forward-looking statements in this document include, but are not limited to, statements set out in the “Outlook” sections of this MD&A and certain expectations about capital costs and expenditures; production volumes; capital project completion dates; future price of key commodities; sales volumes; revenue, costs, and earnings; sufficiency of working capital and capital project funding; completion of development and exploration wells; and amounts of certain joint venture commitments.

The Corporation cautions readers of this MD&A 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 changes in the global price for nickel, cobalt, oil and gas or certain other commodities, share-price volatility, level of liquidity and access to capital resources, access to financing, risk of future non-compliance with debt restrictions and covenants; risks associated with the Corporation’s joint venture partners; discrepancies between actual and estimated production; variability in production at Sherritt’s operations in Madagascar and Cuba; risks associated with the completion of Moa Joint Venture Acid Plant; potential interruptions in transportation; uncertainty of gas supply for electrical generation; uncertainty of exploration results and Sherritt’s ability to replace depleted mineral and oil and gas reserves; the Corporation’s reliance on key personnel and skilled workers; the possibility of equipment and other failures; the potential for shortages of equipment and supplies; risks associated with mining, processing and refining activities; uncertainty of resources and reserve estimates; uncertainties in environmental rehabilitation provisions estimates; risks related to the Corporation’s corporate structure; political, economic and other risks of foreign operations; risks related to Sherritt’s operations in Madagascar and Cuba; risks related to the U.S. government policy toward Cuba, including the U.S. embargo on Cuba and the Helms-Burton legislation; risks related to the accuracy of capital and operating cost estimates; reliance on significant customers; foreign exchange and pricing risks; compliance with applicable environment, health and safety legislation and other associated matters; risks associated with governmental regulations regarding greenhouse gas emissions; maintaining the Corporation’s social license to grow and operate; risks relating to community relations; credit risks; shortage of equipment and supplies; competition in product markets; future market access; interest rate changes; risks in obtaining insurance; uncertainties in labour relations; uncertainty in the ability of the Corporation to enforce legal rights in foreign jurisdictions; uncertainty regarding the interpretation and/or application of the applicable laws in foreign jurisdictions; legal contingencies; risks related to the Corporation’s accounting policies; risks associated with future acquisitions; uncertainty in the ability of the Corporation to obtain government permits; failure to comply with, or changes to, applicable government regulations; bribery and corruption risks, including failure to comply with the Corruption of Foreign Public Officials Act or applicable local anti-corruption law; uncertainties in growth management; and certain corporate objectives, goals and plans for 2016; and the Corporation’s ability to meet other factors listed from time to time in the Corporation’s continuous disclosure documents. Readers are cautioned that the foregoing list of factors is not exhaustive and should be considered in conjunction with the risk factors described in this MD&A and in the Corporation’s other documents filed with the Canadian securities authorities.

Exhibit 2.7

FORM 51-102F3

MATERIAL CHANGE REPORT

1. Name and Address of Reporting Issuer

Sherritt International Corporation (the “Company”)

181 Bay Street

26th Floor, Brookfield Place

Toronto, ON M5J 2T3

2. Date of Material Change

May 30, 2016

3. News Release

A news release was issued and disseminated by the Company on May 31, 2016 through Marketwired and has been filed on SEDAR. A copy of the news release is attached hereto as Schedule A.

4. Summary of Material Change

On May 31, 2016, the Company announced that it had entered into consent and support agreements (the “Support Agreements”) with institutional holders of approximately 44% of the Company’s $720 million of outstanding senior unsecured debentures (the “Notes”). The Support Agreements contemplate a proposed extension of the maturity dates under each of the Company’s three series of Notes by three years to 2021 (in respect of the Company’s $220 million 8.00% Notes due 2018), 2023 (in respect of the Company’s $250 million 7.50% Notes due 2020), and 2025 (in respect of the Company’s $250 million 7.85% Notes due 2022) (collectively, the “Extension”).

5. Full Description of Material Change

On May 31, 2016, the Company announced that it had entered into Support Agreements in respect of the Extension with institutional holders of approximately 44% of the Company’s $720 million of outstanding Notes.

The Company intends to commence proceedings under the Canada Business Corporations Act (“CBCA”) to implement the Extension by way of a corporate plan of arrangement, which remains subject to, among other things, Noteholder approval at a meeting of Noteholders to be scheduled, such other approvals as may be required by the Ontario Superior Court of Justice (the “Court”) or the Toronto Stock Exchange, the approval of the plan of arrangement by the Court and the receipt of all necessary regulatory approvals.

The Extension will include the following key elements:

· an amendment and restatement of the Company’s note indenture to extend the maturity dates as contemplated above;

· the applicable interest rates and existing covenants for the Notes under the governing note indenture will remain unchanged; and

· each Noteholder that votes in favour of the Extension on or prior to a deadline to be established by the Company will be entitled to receive on the closing of the Extension, at the option of the applicable holder, either cash consent consideration equal to 2% of the principal amount of Notes held by such holder, or 73.25 warrants (the “Warrants”) for each $1,000 of principal amount of Notes held by such holder.

The Warrants will have a term of 5 years, are not expected to be listed on any exchange and shall have an exercise price of $0.74 per share (being the five day volume weighted average trading price for the period ended May 30, 2016). o

The form of Support Agreement has been filed on SEDAR. Additional information and key dates in connection with the implementation of the Extension, including matters relating to the CBCA proceedings and plan of arrangement, will be made publicly available by the Company.

Additional information on the proposed Extension can be found in the news release attached hereto as Schedule A.

6. Reliance on subsection 7.1(2) of National Instrument 51-102

Not applicable.

7. Omitted Information

None.

8. Executive Officer

The following executive officer of the Company is knowledgeable about the material change and this report:

Ward Sellers, Senior Vice President, General Counsel and Corporate Secretary

Tel.: (416) 935-4551

9. Date of Material Change Report

June 8, 2016

SCHEDULE A

(See attached)

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES

OR FOR DISSEMINATION IN THE UNITED STATES

Sherritt Announces Execution of Support Agreements

to Extend Maturities on all Outstanding Notes

Toronto, Ontario, May 31, 2016 — Sherritt International Corporation (“Sherritt” or the “Corporation”) (TSX: S) announced today that it has entered into consent and support agreements (the “Support Agreements”) with institutional holders of approximately 44% of Sherritt’s $720 million of outstanding senior unsecured debentures (the “Notes”). The Support Agreements contemplate a proposed extension of the maturity dates under each of Sherritt’s three series of Notes by three years as follows (the “Extension”):

· the maturity date under Sherritt’s $220 million 8.00% Notes due 2018 (the “2018 Notes”) to be extended to 2021;

· the maturity date under Sherritt’s $250 million 7.50% Notes due 2020 (the “2020 Notes”) to be extended to 2023; and

· the maturity date under Sherritt’s $250 million 7.875% Notes due 2022 (the “2022 Notes”) to be extended to 2025.

The applicable interest rates and existing covenants for the Notes under the governing note indenture would remain unchanged.

“Extending the maturities of the Notes for three years treats all noteholders equally and fairly, and upon completion of the Extension, there will be no maturities until November 2021, which will bring greater stability to our capital structure and better enable us to weather this ongoing period of weak commodity prices,” said David Pathe, Sherritt President and CEO.

Sherritt explored a number of potential alternatives to improve its capital structure. After an extensive review, Sherritt concluded that the Extension transaction represents the best available alternative to maximize and preserve value for Sherritt and its stakeholders under the present circumstances. Sherritt entered into confidentiality agreements with certain institutional holders of the Notes (the “Noteholders”) and holders of approximately 90% of the Notes held by the Noteholders consulted by Sherritt have entered into Support Agreements with Sherritt. Such institutional holders hold approximately 44% of Sherritt’s Notes. The Extension transaction adheres to Sherritt’s values of exploring all alternatives, enhancing liquidity and treating all stakeholders in a fair and reasonable manner.

Sherritt’s Board of Directors has determined that the Extension transaction offers substantial benefits to Sherritt and is in the best interests of the Corporation and its stakeholders. The Extension will maintain stability for Sherritt and mitigate the risk associated with an upcoming maturity while giving nickel and oil prices more time to recover. Sherritt’s Board of Directors unanimously recommends that all Noteholders support the Extension.

The Extension has the following key elements:

· An amendment and restatement of Sherritt’s note indenture to extend the maturity dates under each of Sherritt’s three series of Notes by three years to 2021, 2023 and 2025 respectively.

· Each Noteholder that votes in favour of the Extension (each a “Consent Date Noteholder”) on or prior to a deadline to be established by the Corporation (expected to be in early July 2016) (the

“Consent Date”) will be entitled to receive on closing of the Extension, at the option of the applicable Consent Date Noteholder, either:

· cash consent consideration equal to 2% of the principal amount of Notes held by such Consent Date Noteholder as at the Consent Date (the “Early Consent Cash Consideration”); or

· 73.25 warrants for each $1,000 of principal amount of Notes held by such Consent Date Noteholder as at the Consent Date (“Early Consent Warrants”).

· The Early Consent Warrants will have a term of 5 years, are not expected to be listed on any exchange and shall have an exercise price of $0.74 per share (being the five day volume weighted average trading price for the period ended May 30, 2016).

· Institutional Noteholders owning or controlling approximately 44% of the outstanding aggregate principal amount of the Notes have signed Support Agreements and committed to vote their Notes in favour of the Extension. Sherritt expects to receive the support of other Noteholders for the Extension.

Sherritt intends to commence proceedings under the Canada Business Corporations Act (the “CBCA”) to implement the Extension by way of a corporate plan of arrangement (a “Plan of Arrangement”). Sherritt will continue to operate and satisfy its obligations to trade creditors, customers and employees in the ordinary course of business. The outside date under the Support Agreements for completing the Extension is September 15, 2016.

Implementation of the Extension by way of a Plan of Arrangement remains subject to, among other things, Noteholder approval at a meeting of Noteholders to be scheduled at a later date to consider the Plan of Arrangement, such other approvals as may be required by the Ontario Superior Court of Justice (the “Court”) or the Toronto Stock Exchange, approval of the Plan of Arrangement by the Court and the receipt of all necessary regulatory approvals. If all requisite approvals are obtained, the Plan of Arrangement will bind all Noteholders. Sherritt can give no assurances at this time that the Extension will be completed.

The form of Support Agreement will be filed by the Corporation on SEDAR. Further information about the Extension will be made available on SEDAR (www.sedar.com) and Sherritt’s web page (http://www.sherritt.com). Additional information and key dates in connection with the implementation of the Extension, including matters relating to the CBCA proceedings and the Plan of Arrangement, will also be made publicly available by Sherritt.

Separately, as permitted pursuant to the terms of the indenture governing the Notes, Sherritt has repurchased $30 million aggregate principal amount of its 2018 Notes at a discount to the outstanding principal amount, thereby reducing the aggregate outstanding principal amount of the 2018 Notes to $220 million.

Sherritt’s legal advisor for the Extension is Goodmans LLP and its financial advisor for the Extension is National Bank Financial Inc. The Proxy Solicitor and Information Agent for the Extension is Kingsdale Shareholder Services.

About Sherritt

Sherritt is the world leader in the mining and refining of nickel from lateritic ores with operations in Canada, Cuba and Madagascar. The Corporation is the largest independent energy producer in Cuba, with extensive oil and power operations across the island. Sherritt licenses its proprietary technologies and provides metallurgical services to mining and refining operations worldwide. The Corporation’s common shares are listed on the Toronto Stock Exchange under the symbol “S”

-30-

Source: Sherritt Investor Relations

For further information, please contact:

Sherritt International Corporation

Investor Relations

Flora Wood

Director Investor Relations

Telephone: 416-935-2451

Toll-Free: 1-800-704-6698

Email: investor@sherritt.com

www.sherritt.com

Kingsdale Shareholder Services

Telephone: 416-867-2272

Toll-Free: 1-800-749-9197

Email: contactus@kingsdaleshareholder.com

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”, “projected”, “continue” or other similar words or phrases. Specifically, forward-looking statements in this document include, but are not limited to, statements set out in this press release relating to the Extension.

Forward-looking statements are not based on historic facts, but rather on current expectations, assumptions and projections about future events, including matters relating to the proposed Extension; availability of governmental, court, regulatory and third party approvals; and certain corporate objectives, goals and plans for 2016. 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 those 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 the risks and uncertainties set out in the Management’s Discussion & Analysis of the Corporation for the period ending March 31, 2016 and the Corporation’s Annual Information Form dated March 21, 2016, each of which are available on SEDAR at www.sedar.com. Readers are cautioned that the foregoing list of factors is not exhaustive and should be considered in conjunction with the risk factors described in this press release and in the Corporation’s other documents filed with the Canadian securities authorities.

The Corporation may, from time to time, make oral forward-looking statements. The Corporation advises that the above paragraph and the risk factors described in this press release and in the Corporation’s other documents filed with the Canadian securities authorities should be read for a description of certain factors that could cause the actual results of the Corporation to differ materially from those in the oral forward-looking statements. The forward-looking information and statements contained in this press release are made as of the date hereof and the Corporation undertakes no obligation to update publicly or revise any oral or written forward-looking information or statements, whether as a result of new information, future events or otherwise, except as required by applicable securities laws. The forward-looking information and statements contained herein are expressly qualified in their entirety by this cautionary statement.

Category

Measure

Rationale

Results

Production and Productivity

Unit Production Cost

Represents the Corporation’s performance in managing operating costs relative to production levels.

Moa / Fort Site: Net direct cash cost (“NDCC”) of nickel at the Moa Joint Venture decreased each successive quarter throughout the year with the full year unit cost at US$3.88/lb. which was lower than budget by 26% and the prior year by 22%. Throughout 2015, quarterly NDCC was below the median of Wood Mackenzie’s quarterly reported C1 cash cost. In Q4, US$2.90 NDCC was achieved, the lowest cost since 2009. Accordingly, the score for this measure was determined to be 90%.

Ambatovy: NDCC of nickel at the Ambatovy Joint Venture was lower in each successive quarter throughout 2015, from US$6.98 per pound in Q4 2014 to US$4.07 per pound in Q4 2015 and below budget for each month of the second half of 2015. For the full year NDCC was higher than budget by 3% however, throughout Q3 and Q4, NDCC was below the median of Wood Mackenzie’s C1 quarterly reported cash cost. Accordingly, the score for this measure was determined to be 80%.

Oil & Gas: Unit operating costs for 2015 were $10.69 per barrel, 10% higher than budget and 13% higher than the prior year, which was impacted by lower production volume and the weak Canadian dollar relative to the US dollar. Accordingly, the score for this measure was determined to be 50%.

Power: Unit operating costs at Power were positively impacted by cost savings initiatives. Those savings were negated by the weak Canadian dollar, finishing the year with unit costs higher than budget by approximately 7% and 21% over the prior year. Accordingly, the final score for this measure was determined to be 50%.