S.TO · 2024-07-29 12:00:00

Sherritt Reports Second Quarter 2024 Results; Metals and Power Deliver

Financials

Sherritt International Corporation 1

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE

SERVICES OR FOR DISSEMINATION IN THE UNITED STATES

Strong Performance; Net Direct Cash Cost Significantly Improved

TORONTO – July 29, 2024 – Sherritt International Corporation (“Sherritt”, the “Corporation”) (TSX: S), a world leader in using

hydrometallurgical processes to mine and refine nickel and cobalt – metals deemed critical for the energy transition – today

reported its financial results for the three and six months ended June 30, 2024. All amounts are in Canadian dollars unless

otherwise noted.

Leon Binedell, President and CEO of Sherritt commented, “We are encouraged by the strong operational turnaround and

improved performance delivered by both our Metals and Power businesses in line with our plans developed last year in response

to the market decline and operational challenges experienced. At Metals, nickel, cobalt and fertilizer production benefitted from

improved operating reliability and increased mixed sulphides availability as we begin to see the positive impacts of the slurry

preparation plant commissioned earlier this year. Notably, our net direct cash cost of US$5.75 per pound was a significant

improvement and with our continued focus on operating stability, margin improvement and cash generation, we see the potential

to realize further cost improvements ahead. At Power, we continue to achieve increased production and improved utilization.

We are pleased to announce an additional well is scheduled to be drilled this year which will increase our output further. The

additional supply of gas in Power has resulted in a materially higher dividend of $5.1 million received in Canada this quarter and

we expect to continue receiving higher dividends going forward.”

Mr. Binedell continued, “With nickel and cobalt both facing headwinds and prices considered at or near the bottom, our lower

operating costs and the advancements in operational improvements we have made, place us in a strong position to weather

these near-term market uncertainties unlike many non-Chinese linked suppliers which have already announced their exit from

the market. Once these near-term market uncertainties abate, we will ultimately capitalize on the future growth opportunities

ahead with strong demand expected over the medium-term for the responsibly sourced critical minerals we produce.”

SECOND QUARTER 2024 SELECTED DEVELOPMENTS

 Sherritt’s share (1) of finished nickel and cobalt production at the Moa Joint Venture (“Moa JV”) was 3,383 tonnes and

342 tonnes, respectively.

 Sherritt’s share of finished nickel and cobalt sales was 3,791 tonnes and 390 tonnes, respectively. Nickel sales volumes

exceeded production volumes on continued strong spot sales which are expected to continue in the second half of the

year, driving progress on reducing nickel inventory.

 Net direct cash cost (“NDCC”) (2) was US$5.75/lb benefitting from lower mining, processing and refining costs per pound

of nickel sold (“MPR/lb”), the largest component of NDCC(2), which improved 15% compared to Q2 2023. Compared to

Q1 2024, NDCC(2) continued to improve as expected decreasing by 21%.

 Received $5.1 million of dividends in Canada from Energas during the quarter. Based on current 2024 guidance

estimates for production volumes, unit operating costs (2) and spending on capital(2) disclosed in the Outlook section of

the MD&A, Sherritt expects total dividends in Canada from Energas to exceed $10.0 million in 2024 (3).

 Electricity production was 205 GWh benefitting from increased gas supply from the two wells that went into production

at the end of Q2 2023.

 Electricity unit operating cost (2) was $42.74/MWh reflecting timing of higher scheduled maintenance, partly offset by

higher sales volume.

 2024 guidance for production volumes, unit operating costs/NDCC (1) and spending on capital(1) remain unchanged.

 Net loss from continuing operations was $11.5 million, or $(0.03) per share primarily due to lower average-realized

prices(2) for nickel, cobalt and fertilizers, partly offset by higher nickel sales volumes.

 Adjusted net loss from continuing operations (2) was $10.0 million or $(0.03) per share, which primarily excludes a non-

cash $5.3 million revaluation loss on the net receivable pursuant to the Cobalt Swap (4) on updates to valuation

assumptions and a $3.4 million unrealized gain on nickel put options.

 Adjusted EBITDA (2) was $13.0 million.

2024 Second Quarter Report

Press Release

2 Sherritt International Corporation

 Available liquidity in Canada as at June 30, 2024 was $55.9 million supported by $27.0 million received from the Moa

JV as full repayment of short-term working capital advances primarily offset by $7.8 million used for operating activities

at Power to support scheduled maintenance activities, a $9.4 million interest payment on Second Lien Notes and a

$10.8 million payment on rehabilitation and closure costs related to legacy Oil and Gas assets in Spain.

 Sherritt’s syndicated revolving-term credit facility was amended to extend its maturity by one year from April 30, 2025

to April 30, 2026 and change the EBITDA-to-Interest Expense covenant as defined in the agreement. There were no

other significant changes to the terms, financial covenants or restrictions.

 Purchased put options on 3,876 tonnes of nickel, or 646 tonnes per month, at an exercise price of US$8.16/lb at a cost

of $2.2 million for a six-month period starting from June 1, 2024. Any settlements will be paid in cash monthly based

on the average monthly nickel price on the London Metal Exchange (“LME”). The economic hedging strategy provides

Sherritt with full exposure to upward changes in nickel prices, while protecting against downward changes in nickel

prices by providing a minimum price of US$8.16/lb on approximately 25% of expected nickel production from the Moa

JV during the six-month period. In July, Sherritt received $0.4 million upon settlement of the June 2024 in-the-money

put option.

 Opportunistically repurchased $1.5 million of 10.75% unsecured PIK option notes (“PIK Notes”) at a 50% discount.

 Released the Corporation’s 2023 Sustainability Report marking the 16th year of sustainability reporting and outlining

significant progress made during the year toward its ESG goals and highlighting achievements made during the year

including maintaining conformity with the LME’s Track B Responsible Sourcing Requirements.

 Completed a 10% workforce reduction at its Corporate office in Q2 2024 in addition to the Canada-wide restructuring

completed in Q1 2024. Annual cost savings from these cumulative employee and other cost reductions are expected

to be $15.0 million per year.

 Phase two of the Moa JV expansion continues with commissioning and ramp up expected in the first half of 2025.

 Advanced the mixed hydroxide precipitate processing project (“MHP Project”) with the commencement of an

engineering study and continued batch test work and process flowsheet development, which yielded very positive results

for metal recoveries and impurity removals.

(1) References to “Sherritt’s share” is consistent with the Corporation’s definition of reportable segments for financial statement purposes. Sherritt’s share of “Metals”

includes the Corporation’s 50% interest in the Moa JV, its 100% interest in the utility and fertilizer operations in Fort Saskatchewan (“Fort Site”) and its 100% interests

in subsidiaries established to buy, market and sell certain of the Moa JV’s nickel and cobalt production and the Corporation’s cobalt inventory received under the

Cobalt Swap agreement (“Metals Marketing”). Sherritt’s share of Power includes the Corporation’s 33⅓% interest in Energas S.A. (“Energas”). References to Corporate

and Other and Oil and Gas includes the Corporation’s 100% interest in these businesses. Corporate and Other refers to the Corporate office and Technologies.

References to Fort Site directly is to the Corporation’s interest in its 100% interest in the utility and fertilizer operations.

(2) Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release.

(3) Refer to the risks related to Sherritt’s corporate structure in the Corporation’s 2023 Annual Information Form for further information on risks related to dividends in

Canada from Energas.

(4) For additional information on the Cobalt Swap, see Note 12 – Advances, loans receivable and other financial assets of the consolidated financial statements for the

year ended December 31, 2023.

DEVELOPMENTS SUBSEQUENT TO THE QUARTER

Subsequent to the quarter end:

 The Moa JV received approval for US$12 million of foreign currency financing from a Cuban bank to support

international payments related to construction of the Sixth Leach Train, the primary component of phase two of the

expansion project.

 Elected not to pay cash interest due July 2024 of $3.5 million and added the payment-in-kind interest to the principal

amount owed to noteholders on its 10.75% unsecured PIK notes.

Sherritt International Corporation 3

Q2 2024 FINANCIAL HIGHLIGHTS

For the three months ended For the six months ended

2024 2023 2024 2023

$ millions, except per share amount June 30 June 30 Change June 30 June 30 Change

Revenue $ 51.4 $ 93.5 (45%) $ 80.2 $ 152.1 (47%)

Combined revenue(1) 163.2 197.0 (17%) 290.9 384.4 (24%)

(Loss) earnings from operations and joint venture (1.9) 2.2 (186%) (24.3) 23.8 (202%)

Net (loss) earnings from continuing operations (11.5) 0.3 nm(2) (52.4) 13.9 (477%)

Net (loss) earnings for the period (11.5) 0.3 nm (52.0) 13.6 (482%)

Adjusted EBITDA(1) 13.0 14.2 (8%) 6.5 55.4 (88%)

Adjusted net (loss) earnings from continuing operations(1) (10.0) (2.5) (300%) (34.6) 11.3 (406%)

Net (loss) earnings from continuing operations ($ per share) (0.03) 0.00 nm (0.13) 0.03 (533%)

Adjusted net (loss) earnings from continuing operations

($ per share)(1) (0.03) (0.01) (200%) (0.08) 0.02 (500%)

Cash (used) provided by continuing operations for operating

activities (37.8) 32.0 (218%) (24.8) 41.9 (159%)

Combined free cash flow(1) (27.0) 5.6 (582%) (11.2) 34.9 (132%)

Average exchange rate (CAD/US$) 1.368 1.343 2% 1.359 1.348 1%

(1) Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release.

(2) Not meaningful (“nm”).

2024 2023

$ millions, as at June 30 December 31 Change

Cash and cash equivalents

Canada $ 25.5 $ 21.5 19%

Cuba(1) 105.4 96.3 9%

Other 1.4 1.3 8%

132.3 119.1 11%

Loans and borrowings 369.9 355.6 4%

The Corporation's share of cash and cash equivalents in the Moa Joint Venture,

not included in the above balances: $ 8.5 $ 5.9 44%

(1) As at June 30, 2024, $104.2 million of the Corporation’s cash and cash equivalents was held by Energas (December 31, 2023 - $93.9 million).

Cash and cash equivalents as at June 30, 2024 were $132.3 million, decreasing from $144.4 million as at March 31, 2024.

As at June 30, 2024, total available liquidity in Canada, which is composed of cash and cash equivalents in Canada of

$25.5 million and available credit facilities of $30.4 million was $55.9 million decreasing from $67.9 million as at March 31, 2024

as expected. Available liquidity in Canada during the quarter was supported by $27.0 million received from the Moa JV as full

repayment of short-term working capital advances, and $5.1 million of dividends from Energas received in Canada. These

receipts were primarily offset by $7.8 million used for operating activities at Power primarily to support scheduled maintenance

activities, a $9.4 million interest payment on Second Lien Notes and a $10.8 million payment on rehabilitation and closure costs

related to legacy Oil and Gas assets in Spain. The receipt of the Moa JV advance repayment is reflected in cash provided by

investing activities.

Moa JV’s cash and cobalt distributions to the Corporation are determined based on available cash in excess of liquidity

requirements. Determinants of liquidity include anticipated nickel and cobalt prices, planned spending on capital at the Moa JV

including growth capital, working capital needs, expected financing and other expected liquidity requirements. Available cash is

also impacted by changes in working capital primarily related to changes in inventory, and timing of receipts and payments,

including receipts on nickel and cobalt sales subsequent to shipment. Based on the midpoint of the Moa JV’s 2024 guidance

ranges for production volumes, unit operating costs (1) and spending on capital(1) disclosed in the Outlook section of the MD&A,

and the first half 2024 nickel and cobalt average reference prices of US$8.00/lb and US$13.50/lb, respectively, Sherritt expects

to receive approximately $50.0 million in Cobalt Swap distributions (including both Sherritt’s share and GNC’s redirected share).

As defined by the agreement, any short fall in the annual minimum payment amount will be added to the following year. With

the full repayment of the short-term working capital advances to the Moa JV received in the second quarter of 2024, Sherritt

expects the joint venture will commence dividends pursuant to the Cobalt Swap during the fourth quarter of 2024. Refer to the

risks related to Sherritt’s corporate structure in the Corporation’s 2023 Annual Information Form for further information on risks

related to distributions from the Moa JV.

2024 Second Quarter Report

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4 Sherritt International Corporation

In Power, based on 2024 guidance estimates for production volumes, unit operating costs(1) and spending on capital(1) disclosed

in the Outlook section of the MD&A, Sherritt expects total dividends in Canada from Energas to exceed $10.0 million in 2024.

Refer to the risks related to Sherritt’s corporate structure in the Corporation’s 2023 Annual Information Form for further

information on risks related to dividends in Canada from Energas.

During the quarter, Sherritt purchased put options on 3,876 tonnes of nickel, or 646 tonnes per month, at an exercise price of

US$8.16/lb at a cost of $2.2 million for a six-month period starting from June 1, 2024. Any settlements will be paid in cash

monthly based on the average monthly nickel price on the LME. The economic hedging strategy provides Sherritt with full

exposure to upward changes in nickel prices, while protecting against downward changes in nickel prices by providing a

minimum price of US$8.16/lb on approximately 25% of expected nickel production from the Moa JV during the six-month period.

In July, Sherritt received $0.4 million upon settlement of the June 2024 in-the-money put option.

Sherritt’s syndicated revolving-term credit facility was amended to extend its maturity by one year from April 30, 2025 to

April 30, 2026 and change the EBITDA-to-Interest Expense covenant as defined in the agreement. The amendment included

terms to transition the interest rate of bankers’ acceptance plus 4.00% to CORRA plus 4.00%. There were no other significant

changes to the terms, financial covenants or restrictions.

At the Second Lien Note interest payment date in April 2024, the Corporation was not required to make a mandatory redemption

of Second Lien Notes as it did not have Excess Cash Flow as defined in the Second Lien Notes indenture agreement for the

two-quarter period ended December 31, 2023. Additionally, for the two-quarter period ended June 30, 2024, the Corporation did

not have Excess Cash Flow as defined in the Second Lien Notes indenture agreement and, therefore, will not be required to

make a mandatory redemption with its October 2024 interest payment.

As at June 30, 2024, the Corporation was in compliance with all its debt covenants.

Subsequent to the quarter end:

 The Moa JV received approval for US$12 million of foreign currency financing from a Cuban bank to support

international payments related to construction of the Sixth Leach Train, the primary component of phase two of the

expansion project.

 Elected not to pay cash interest due July 2024 of $3.5 million and added the payment-in-kind interest to the principal

amount owed to noteholders on its PIK notes.

(1) Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release.

Sherritt International Corporation 5

REVIEW OF OPERATIONS

Metals

For the three months ended For the six months ended

2024 2023 2024 2023

$ millions (Sherritt's share), except as otherwise noted June 30 June 30 Change June 30 June 30 Change

FINANCIAL HIGHLIGHTS(1)

Revenue $ 150.6 $ 185.6 (19%) $ 265.7 $ 362.1 (27%)

Cost of sales 144.5 182.2 (21%) 275.6 326.7 (16%)

(Loss) earnings from operations 2.7 3.8 (29%) (18.3) 34.8 (153%)

Adjusted EBITDA(2) 18.0 18.6 (3%) 10.5 63.1 (83%)

CASH FLOW(1)

Cash provided by continuing operations for operating

activities(2) $ 21.2 $ 38.8 (45%) $ 52.4 $ 101.8 (49%)

Free cash flow(2) 13.5 22.7 (41%) 35.2 76.1 (54%)

PRODUCTION VOLUMES (tonnes)

Mixed Sulphides 4,095 3,783 8% 8,147 7,533 8%

Finished Nickel 3,383 3,268 4% 6,980 6,751 3%

Finished Cobalt 342 331 3% 684 698 (2%)

Fertilizer 60,355 52,224 16% 117,419 110,215 7%

NICKEL RECOVERY(3) (%) 88% 85% 4% 87% 85% 2%

SALES VOLUMES (tonnes)

Finished Nickel 3,791 3,188 19% 7,814 6,532 20%

Finished Cobalt 390 1,064 (63%) 752 1,795 (58%)

Fertilizer 60,682 63,384 (4%) 84,591 93,263 (9%)

AVERAGE-REFERENCE PRICE(4) (US$ per pound)

Nickel $ 8.35 $ 10.12 (17%) $ 7.94 $ 10.94 (27%)

Cobalt 13.34 15.27 (13%) 13.59 16.46 (17%)

AVERAGE-REALIZED PRICE(2) (CAD)

Nickel ($ per pound) $ 11.25 $ 13.58 (17%) $ 10.55 $ 15.06 (30%)

Cobalt ($ per pound) 14.32 16.36 (12%) 14.41 17.48 (18%)

Fertilizer ($ per tonne) 574.70 709.67 (19%) 528.73 663.94 (20%)

UNIT OPERATING COST(2) (US$)

Nickel - net direct cash cost (US$ per pound) $ 5.75 $ 7.22 (20%) $ 6.50 $ 6.88 (6%)

SPENDING ON CAPITAL(2)(CAD)

Sustaining $ 7.4 $ 13.6 (46%) $ 14.8 $ 19.5 (24%)

Growth 0.4 2.5 (84%) 2.4 6.2 (61%)

$ 7.8 $ 16.1 (52%) $ 17.2 $ 25.7 (33%)

(1) The Financial Highlights, and cash flow amounts for Metals combine the operations of the Moa JV, Fort Site and Metals Marketing. Breakdowns of revenue, Adjusted

EBITDA, and the components of free cash flow (cash provided (used) by continuing operations for operating activities and Property, plant and equipment expenditures)

for each of these operations are included in the Combined Revenue, Adjusted EBITDA and Free cash flow reconciliations, respectively, in the Non-GAAP and other

financial measures section of this press release.

(2) Non-GAAP financial measures. For additional information see the Non-GAAP and other financial measures section of this press release.

(3) The nickel recovery rate measures the amount of finished nickel that is produced compared to the original nickel content of the ore that was mined.

(4) Reference sources: Nickel – LME. Cobalt - Average standard-grade cobalt price published per Argus.

2024 Second Quarter Report

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6 Sherritt International Corporation

Revenue

Metals revenue in Q2 2024 was $150.6 million compared to $185.6 million in Q2 2023. Revenue in the current year period was

lower primarily due to lower average-realized prices(1) for nickel, cobalt and fertilizer and the timing of receipts and sales of cobalt

by Sherritt under the Cobalt Swap agreement, partly offset by higher nickel sales volumes. In Q2 2024 the average-realized

prices(1) for nickel, cobalt and fertilizers were $11.25/lb, $14.32/lb and $574.70/tonne, 17%, 12% and 19% lower, respectively,

compared to the same period in the prior year.

Nickel revenue in Q2 2024 was $94.0 million compared to $95.5 million in Q2 2023. Finished nickel sales volumes in Q2 2024

were 19% higher than Q2 2023 and exceeded production volumes as Metals continued reducing its inventory with strong spot

sales which are expected to continue in the second half of the year, driving progress on reducing nickel inventory.

Cobalt revenue in Q2 2024 was $12.3 million compared to $38.4 million in Q2 2023. Lower revenue was primarily due to the

timing of receipts and sales of cobalt under the Cobalt Swap and lower average-realized prices(1). For more information regarding

the timing of Cobalt Swap distributions in 2024, refer to the Cobalt Swap sales section below.

Fertilizer revenue in Q2 2024 was $34.8 million compared to $45.0 million in Q2 2023. In addition to lower average-realized

prices(1), sales volumes for Q2 2024 were 4% lower compared to Q2 2023.

Cobalt Swap sales

For 2024, Cobalt Swap distributions are anticipated to start in the fourth quarter of the year whereas in 2023, Sherritt had

received 100% of the annual maximum amount of cobalt (2,082 tonnes) and had sold approximately 85% of that cobalt by the

end the first half of the year.

While the timing of receipts and sales of cobalt under the Cobalt Swap results in variances in cobalt sales volumes, revenue and

cost of sales for Sherritt, they do not have a material impact on earnings from operations, average-realized prices (1), cobalt by-

product credits, or NDCC(1) as the variance in revenue and costs of Sherritt’s share of cobalt under the Cobalt Swap is offset by

Sherritt’s share of revenue and costs of the Moa JV and the cost of cobalt sold on volumes of cobalt redirected from GNC (2) is

determined based on the in-kind value of cobalt calculated as the cobalt reference price from the month preceding distribution

less a mutually agreed selling cost adjustment.