Ambatovy Site Tour

5/25/2018 Ambatovy Site Tour

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AMBATOVY SITE TOUR

March 28 and 29, 2014


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FORWARD LOOKING STATEMENTS

This presentation contains certain forward-looking statements. F

be identified by the use of statements that include such words as believe , e

intend , plan , forecast , likely , may , will , could , should

continue or other similar words or phrases. Forward-looking sta

are not limited to, statements regarding operations (including certa

transportation), mine life, mining rate and mining capacity, safety tar

sales, local laws, impact on operating results and financial reportin

based on historic facts, but rather on current expectations, assumptioevents. They are based on information available to management and/or

believes are reasonable. Many factors could cause results to differ mater

the forward-looking statements. Although the forward-looking state

management believes to be reasonable assumptions, Sherritt cannot as

will be consistent with such forward-looking statements and such for

be unduly relied upon. All forward-looking statements in this presenta

Except as required by applicable securities laws, Sherritt does not intend an

obligations to update or revise the forward-looking statements. The Co

discussed in disclosure documents filed by Sherritt with Canadian securi

be made to the management discussion and analysis in Sherritt s annual

and its annual information form for the year ended December 31, 2013 and

which are available on SEDAR at www.sedar.com.


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CONTENTS

Page Topic

3 Maps

7 Ambatovy Operational Highlights

8 General Process Overview

9 Mine Operations

16 Pipeline

17 Plant Site

25 Logistics and Marketing

30 Sustainability

36 Reporting


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MAP

Overview of the Joint Venture


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4

MAP

Toamasina Area Sites


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5

MAP

Plant Site


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6

MAP

Mine Operations


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7

AMBATOVY OPERATIONAL HIGHLIGHTS

Area Highlight

Mine Commenced operations in July 2010. Mining certificate co(1)

OPP Full capacity achieved in Q1 2013.

Pipeline Slurry was first sent down pipeline to the plant site in Q2 20

within design parameters the same quarter. Pipeline certifi

2013.(1)

PAL Commercial Production (above 70% of PAL nameplate capacit

achieved on January 22, 2014.

Refinery Highest level of nickel briquetted in one day 175 tonnes, a

tonnes.

Refinery2013 nickel extraction rate exceeded the process design crit

Marketing Quality Management System ISO 9001 registration expected in Q

Port Port operation has met design rates and the capacity certifi(1)was achieved in Q2

2013.

(1)For Project Financing completion tests.


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8

GENERAL PROCESS OVERVIEW

H

PA

L

R

E

FIN

E

RY

The Ambatovy flowsheet emphasizes

conservative design and redundancy. All

processes are proven on a commercial scale

and critical circuits have several parallel trains

for operation.

Pressure leaching is carried out by titanium

lined autoclaves. At Ambatovy, there are five

parallel process trains.

Solid-liquid separation is carried out by

Counter-Current Decantation (CCD).

Sulphide precipitation occurs in two parallel

process trains, and results in the production

of mixed sulphides.

Purifying the nickel containing-solution and

separating nickel and cobalt is carried out by

solvent extraction (SX).

Separate reduction circuits for nickel and

cobalt precipitate metal powders in

autoclaves (7 autoclaves for nickel, 3 for

cobalt).

Metal powder is washed, dried and

briquetted.


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10

MINE OPERATIONS

Moramanga, Madagascar


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10

MINE

Reserves and Resources

Reserves(1), (2)

December 31, 2013

Tonnage

(million tonnes)

Ni

(%)

Co

(%)

Proven 74.9 1.03 0.085

Probable 90.5 0.87 0.080

Proven + probable 165.4 0.94 0.082

Resources(1)

December 31, 2013

Tonnage

(million tonnes)

Ni

(%)

Co

(%)

Measured 6.1 0.88 0.070

Indicated 13.1 0.84 0.081

Measured + indicated 19.2 0.85 0.078

Inferred 41.8 1.01 0.059

1. Based on a cut-off grade of 0.6%.

2. Includes materials that have been mined and stockpiled at the mine site.

1. Based on a cut-off grade of 0.6%.


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11

MINE

Reserves and Resources

Ambatovy s reserves and resources comprise two

ore bodies (Ambatovy and Analamay) that are

about three kilometers apart.

The deposit was identified in 1960, and has been

the subject of several studies and drilling

campaigns over the years. It covers an area of

about 1,300 hectares, with a thickness from 20 to100 meters - average thickness is approximately

40 meters.

More than ninety percent of the deposit is

classified as ferralite, some of which is underlain

by saprolite.

A material type termed low magnesium saprolite

(LMS) lies below the ferralite and between the

ferralite and saprolite, where the latter is present.

Only the ferralite and LMS have been considered

in the mine plan.


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12

MINE OPERATIONS

Q3 2006 Mining permit granted valid for 40 years.

Q3 2010 Mining commences at the site in the

Ambatovy West deposit.

In 2013, over 4.0 million tonnes of ore were

mined.

To date, over 8.0 million tonnes of ore have been

mined.

Mine life is estimated to be 20 years, plus

9 years of rehandling of low grade ore, giving a

total production plan of 29 years.

Mine Site, Moramanga


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13

MINE OPERATIONS

Due to the soft nature of lateritic ore, it

is necessary to sheet the travel sections

of the benches with suitable material.

Pit slopes have been designed at a

conservative 27 degrees.

The mine plan is based on the use of

hydraulic excavators and both 40-ton

and 100-ton haulage trucks.

Truck requirements will be twenty-seven

100-ton trucks and eight 40-ton trucks

when at full production capacity.



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14

MINE OPERATIONS

Ambatovy West is expected to be mined for 18

years, proceeding to Ambatovy Southeast (in2015), followed by the Analamay deposit (in

2017).

At capacity, approximately 6.225 million

tonnes of ore are scheduled for delivery to the

ore preparation plant (OPP) annually. On

average this amounts to 17,500 t/d of ore.

The total mine capacity starts at about 20,000

t/d, which allows for a 0.2: 1 strip ratio.

The mining rate increases over time, and by

year six, the mining rate is about 50,000 t/d, orabout a 1.3:1 strip ratio.

The average strip ratio over the mine life is

about 0.73: 1.



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15

MINE OPP

Q2 2010 Construction completed.

Q3 2010 Commissioning completed.

Q2 2011 Slurry sent down pipeline to the

plant site.

Pipeline operates within design

parameters.

Q1 2013 Full capacity achieved at OPP.

Q1 2013 Mining certificate completed.(1)

Q1 2013 Pipeline certificate completed.(1)




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16

PIPELINE

2013

20[09]

Transports ~7.2 million tonnes per year of slurry

from the Ambatovy mine site to terminal facilities

at Tamatave, a 30-hour journey.

The pipeline system includes:

a 220 km, 24-inch outside diameter buried

pipeline;

one pump station located at the OPP;

three pressure monitoring stations along thepipeline route;

one main valve and choke station along the

pipeline route; and

pipeline terminal facilities and choke station.

For nearly all of its length, the pipeline was buried

using standard cut and cover construction to an

average depth of 1.5 m. In certain areas, Ambatovy

drilled horizontally beneath the surface, leaving

stretches of forest untouched, and allowing the

Pipeline to pass safely below Madagascar s scenic

rivers.

Extensive rehabilitation over the cours

Pipeline is already returning the landsca

its natural state.


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SAFETY

Targets

Ambatovy set a Lost Time Injury (LTI) index targetof zero and a Total Recordable Injury (TRI) index

target of less than 0.50 for 2013. The TRI index

target will be further lowered to 0.45 in 2014.

Performance

At Ambatovy, the 2013 process safety incident (PSI)frequency rate was at the industry minimum level,

as per the Centre for Chemical Process Safety s

benchmark PSI.

The TRI and LTI rolling indices for employees and

contractors were 0.22 and 0.03 respectively.

Ambatovy is working toward OHSAS (Occupational

Health and Safety Assessment Series) 18001

certification for its safety management system, the

highest international standard for occupational

health and safety.

0.00

0.25

0.50

Q1 13 Q2 13 Q3 13 Q4 13

Ambatovy TRI INDEX

0.00

0.05

0.10

0.15

Q1 13 Q2 13 Q3 13 Q4 13

Ambatovy LTI INDEX

2013 Target

Target


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19

STATUS OF THE RAMP-UP


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20

UTILITIES SYSTEMS

Key System Design Capacity

Met or Exceeded

Raw water supply

Process water

Cooling water

Compressed air

Demineralized water plant

Power plant (3 units)

Hydrogen plant

Hydrogen sulphide plant

Air separation plant

Sulphuric acid plant

Lime & limestone plant

Coal for Power Plant


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21

PAL SYSTEMS STATUS

System Design Capacity

Met or Exceeded

Slurry Thickener

PAL Leach Autoclaves (1 5)

Neutralization CCD

Raw Liquor Neutralization

Sulphide precipitation

Mixed sulphides wash

All systems in the PAL circuit met or e

their design capacity by January 201

Facilities running above namepl

indicative of future opportunity

Autoclave


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22

REFINERY SYSTEMS STATUS

Key System Design Capacity

Met or Exceeded

Mixed sulphide leach

Iron and copper impurity

removal

Zinc solvent extraction

Cobalt solvent extraction

Nickel reduction

Cobalt purification

Cobalt reduction

Sulphide stripping

Ammonium sulphate

Nickel Briquettes


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23

FINISHED METAL PRODUCTION

0%

10%

20%

30%

40%

50%

60%

Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13

%

design

cap

acity

Saleable Nickel and Cobalt Productio

(% of capacity)

Refinery is continuing to ramp-

up.

Finished nickel and cobalt

production exceeded 70% of

nameplate over a 30-day

period in March 2014.

Cobalt quality exceeds the

LME specification.

Nickel quality meets LME

specification for all elements

with the exception of silicon.


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24

$0

$2

$4

$6

$8

$10

$12

50% 70% 90% 100%

Average

N

DCC

(US$

/lb)

$4 - $6

$6 - $8

$9 - $11

$ 3 - $5

% of nameplate capacity (finished produc

Range of Estimated NDCC at Various Capaci(holding current commodity prices consta

REFINERY PRODUCTION

The net direct cash cost

(NDCC) of nickel for theoperation is within the range

anticipated for the percentage

of capacity achieved.

The greatest benefits to the

unit cost structure occur when

the facilities are operating atover 85% of their design

capacity.

Key sensitivities to the costs at

Ambatovy remain:

Volume (throughput)

Sulphur pricing/use

Diesel pricing/use

Reporting of Ambatovy unit

cost data will begin in Q1

2014.


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26

LOGISTICS & MARKETING

Toamasina, Madagascar


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26

PORT & RAIL

The port of Toamasina handles 90 percent of

Madagascar s container traffic and more than80 percent of all trade traffic.

Limestone, coal and sulphur are unloaded

using ship s gear, directly for transfer by rail to

the process plant.

The products from the process plant (nickel,

cobalt, and ammonium sulphate) are trucked

to the port for export.

A rail spur, approximately two kilometers long,

was built to connect an existing rail line, which

was double tracked, to the plant site.

All rail construction was completed in Q2

2010.


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27

COMMODITY UNLOADING

Commodity Unloading 2013

(tonnes)

Start to March 15, 2014

(tonnes)

Limestone 997,188 1,856,513

Coal 416,768 1,054,822

Sulphur 281,327 616,227

Ammonia 20,400 51,060

Total 1,715,683 3,578,622

Port operation has met design rates and the capacity certificate(1)was achieved in Q2 2013.

Imported commodities required for production will total appro

nearly 13 times greater than the amount of finished goods to be ex

Ambatovy s port investments included a substantial extensionMole B, in French) an

state-of-the-art equipment for handling the import of bulk raw m

coal, sulphur, and ammonia.



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28

MARKETING

Finished Nickel

Ambatovy sells all of its nickelproduction to KORES, Sumitomo and

Sherritt at market prices under nickel

offtake agreements covering full

nickel capacity for 15 years.

The Partners, in a coordinated

manner, market directly to end users.

Realized prices improving as

production volumes increase and

quality stabilizes.

Sherritt s nickel marketing is

recorded in both the revenue and

cost of the Metals Division, but its

net impact on EBITDA and earnings is

immaterial.

LME DiscountFOB Madagascar Percentage of LME

Achieved

94.8

95.0

95.2

95.4

95.6

95.8

96.0

96.2

96.4

96.6

96.8

400

450

500

550

600

650

700

750

Q1 Q2 Q3 Q4

PercentofLM

E

Achiev

ed

Netback

asDiscounttoLM

E

(U

S$

/M

T)

Realized Ni Price

(percentage of LME Ni Price)


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29

MARKETING

Africa

17%

East Asia

15%

Europe

42%

North

America

26%

Cobalt Sales by Region

Customer sales of both finished nickel

and finished cobalt are geographically

diverse with good penetration into key

markets.

Finished Cobalt

Ambatovy markets all of its cobalt and

utilizes established distribution channel

relationships in Europe, India and North

America.

Ammonium Sulphate

Ammonium sulphate is sold principally in

Southeast Asia and East Africa.

Africa

2%

Europe

33%

East Asia

55%

North

America

9%

Nickel Sales by Region


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SUSTAINABILIT

Mantella aurantiaca


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MADAGASCAR

Mining Environment

Madagascar has developed the legal and regulatory framework to su

in the country. Madagascar s Large Investments in Mining Act (

Investissements Mini res) is a main component of that framew

The LGIM features include:

Tax and legal stability guaranteed for 25 years;

International dispute arbitration and waiver of sovereiof arbitrated awards;

Ability to maintain and operate offshore bank accounts;

Reduced corporate income tax;

Reduced royalty payments (1% on value-added mineral products

Up to 75% debt financing and repayment of loan principal an

withholding tax;

10% withholding tax on dividends to foreign shareholders

elimination of value added tax (VAT) for operations and su


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SUSTAINABILITY

US$25 MILLION

COMMITTED TO SUPPORT

SOCIAL DEVELOPMENT PROJECTS

Including in 2013:

Infrastructure for Community of Ampitambe

Two classrooms for the Public Primary School

(EPP), construction of a Primary Health Care

Center (CSB), a football field with bleachers, hand

pumps for eight wells, and a gendarmerie

outpost.

Harenasoa Poultry Project

Construction of approximately 50 b

Creating over 100 jobs and product f

communities.

Eco-friendly School Poultry Farm Under Co


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SUSTAINABILITY

PROTECTION OF OVER

25,000 HECTARES

OF FOREST AND WETLANDS

(15 times the size of the mine footprint)

Ankerana Biodiversity Offset

Ankerana (6,800 ha) was chosen as an offset

because of similarities to the mine azonal forests.

Studies indicate that Ambatovy protection efforts

have successfully reduced forest loss at Ankerana.

Ambatovy Lemur Conservation Progra

With 90% of Madagascar s lemur species

considered by IUCN at risk of extincti

and the biodiversity offsets will ens

and preferably a net gain, in the popul

endangered lemurs.


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SUSTAINABILITY

85%

OF AMBATOVY EMPLOYEES ARE

MALAGASY PERSONNEL

(Employ an additional 6,500 Malagasy Contractors)

Both classroom and on-the-job training is

provided.

Programs include PEXT, Mentorship Program and

Advanced Leadership Development.

Training is coordinated with vario

optimize resources and methods.

Utilization of SkillMine software s

training tracking and progress mon

employees, and Supervisor verificati


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SUSTAINABILITY

Pipeline

650 hectares of rice fields were affected by theconstruction phase of the pipeline.

556 hectares have been fully rehabilitated, the

remaining 94 hectares will be completed in

2014.

Resettlement

Families in the mine lease area receivland in the neighouring Amboloma

In addition to the land transfer, te

training was provided aimed at impro

productivity.

MITIGATION PROGRAM

Avoid and Minimize Impact Then Repair and Restore

Pipeline Construction Ambolomaro Resettlement


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37REPORTING


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REPORTING IN 2014

Impact on Operating Results

Beginning February 1, 2014, Sherritt began

recognizing its share of Ambatovy operating

results.

This will be represented in a single line item,

Earnings (loss) from an associate .

For 2014, an estimated loss from Ambatovy will be

derived as follows (estimates in $ millions,

Sherritt s 40% interest):

EBITDA $ x

DD&A (170)

Net interest expense (110)

Income tax recovery 35

Estimated loss from an associate $ x 245

Worker at OPP


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REPORTING IN 2014

Balance Sheet Advances, Loans Receivable

The Ambatovy subordinated loans receivablerepresent a funding mechanism. The balance at

December 31, 2013 was $1.106 billion.

Prior to Commercial Production, interest income on

this receivable was fully eliminated. After

Commercial Production, only 40% of the interest

income will be eliminated. As a result, Sherritt will

recognize interest income from these loans in 2014.

Balance Sheet Investment in Associate

The net Investment in an associate is forecast to

decrease in 2014 (losses to exceed funding).

2014 Losses

from Ambatovy

February 1 December 31

(Sherritt s 40% share)

($X 245 million)

Funding for Ambatovy

Sherritt s 40% Share

(~$200 million)

Air Separation Plant


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REPORTING IN 2014

Net Direct Cash Cost (NDCC)

Beginning in Q1 2014, the Moa

JV NDCC will include a by-

product credit from the Fort

Site operations (utilities and

fertilizers).

Reporting of NDCC for

Ambatovy will begin in Q1

2014.

It will be presented in a

comparable manner to the Moa

Joint Venture.

Nickel

Ambatovy Nickel


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Sherritt International Corporation

1133 Yonge Street, Toronto, Ontario, Canada M4T 2Y7

Telephone: 416-935-2451

Toll-Free: 1-800-704-6698

Email: [email protected]

Website: www.sherritt.com

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Ambatovy Site Tour