Sherritt’s Updated Reserve Estimate and Life of Mine Plan at the Moa JV More than Doubles Reserves and Extends Life of Mine to 26 years
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OR FOR DISSEMINATION IN THE UNITED STATES
Sherritt’s Updated Reserve Estimate and Life of Mine Plan at the Moa JV
More than Doubles Reserves and Extends Life of Mine to 26 years
TORONTO, March 31, 2023 – Sherritt International Corporation (“Sherritt” , the “Corporation”) (TSX:S), a
world leader in the mining and refining of nickel and cobalt – metals essential for the growing adoption of
electric vehicles, announced today that it is filing an updated National Instrument 43-101 Technical Report
(NI 43-101 or 2023 Moa JV Technical Report) for the Moa Joint Venture (the Moa JV) indicating that current
reserves are expected to support a 26 year life of mine.
Highlights
• Proven and Probable Reserves (i) increased to 1,182 kt of nickel and 144 kt of cobalt, an increase
of 110% and 129%(ii), respectively;
• The life of mine (LOM) extends to 204 8, an increase of 14 years, with total estimated metal
recovered of 724 kt of nickel and 85 kt of cobalt;
• Over the next 10 years, a verage annual finished metal production of 30 kt of nickel and 3.3 kt of
cobalt from Moa is expected, excluding the impact of the Moa JV expansion program and refining
of third-party feeds;
• Favourable economics in the base case scenario supports an after-tax NPV (8%) of US$812 million
(100% basis) using conservative prices of US$7.12/lb nickel and US$21.32/lb cobalt;
• Significant upside in an alternative case increases the after-tax NPV (8%) to US$1.5 billion (100%
basis) using recent analyst commodity price forecasts of US$9.00/lb nickel, US$23.50/lb cobalt and
higher input commodity prices;
• The 2023 Moa JV Technical Report excludes the upside NPV impact from the Moa JV expansion.
Once completed by the end of 2024, the full expansion is expected to result in a higher NPV but
shorten the LOM by 3-5 years.
“The updated reserves and associated life of mine at the Moa JV underpins and validates our long -term
strategy for producing low cost, high purity nickel and cobalt,” said Leon Binedell , President and CEO of
Sherritt International. “ With an estimated 26-year mine life and a strong market o utlook for our product s,
the revised economics supports both our near-term strategy of expanding production capacity and our long-
term growth ambitions to meet the demand from evolving markets increasingly driven by the ener gy
transition and, in particular, electric vehicle battery supply chains.”
Mineral Reserve Estimates
The 2023 Moa JV Technical Report, which incorporates a newly developed strategic LOM plan based on
the economic cut-off grade (ECOG) methodology, estimates that as of August 31, 2022 the Moa JV had
117.2 millions of tonnes (Mt) of proven and probable r eserves at an averag e nickel grade of 1.01% and
cobalt grade of 0.12%, providing total reserves of 1,182 kt of contained nickel and 144 kt of contained
cobalt. The updated contained nickel and cobalt reserves are 110% and 129% higher, respectively,
compared to the amounts previously reported and as disclosed in the 2021 Annual Information Form (2021
AIF).
The following table provides a summary of the proven and probable reserves for the Moa JV (100% basis):
Reserve classification ((1)(2)
Contained metal
Tonnage
(Mt)
Ni
(%)
Co
(%)
Ni
(kt)
Co
(kt)
Proven 83.5 1.02 0.13 851.8 104.9
Probable 33.7 0.98 0.12 330.6 39.1
Total Proven and Probable Reserves 117.2 1.01 0.12 1,182.4 144.0
1. Cut-off grades vary. All assumptions, parameters, and methods used to estimate the mineral resources and reserves are disclosed in
the 2023 Moa JV Technical Report to be filed March 31, 2023. An excerpt from the report of the full reserves table is provided in
Appendix 2 of this press release.
2. Total tonnage amounts may not sum exactly due to each component number being rounded to its nearest decimal.
Mineral Resource Estimates
The 2023 Moa JV Technical Report estimates that as of August 31, 2022 the Moa JV had 156.5 Mt of
Measured and Indicated Resources (1) at an average nickel grade of 1.07% and cobalt grade of 0.12%,
providing total measured and indicated resources of 1,677 kt of contained nickel and 192 kt of contained
cobalt. The updated contained nickel and cobalt resources are 12% and 2% higher, respectively, compared
to the amounts previously reported and as disclosed in the 2021 AIF.
The following table provides a summary of the Mineral Resources that are inclusive of Minera l Reserves
for the Moa JV (100% basis):
Moa JV Mineral Resources inclusive of Mineral Reserves
Resources classification (1)(2)
Tonnage
(Mt)
Ni
(%)
Co
(%)
Ni
(kt)
Co
(kt)
Measured 98.1 1.07 0.13 1,053.7 129.2
Indicated 58.4 1.07 0.11 623.6 62.9
Total Measured and Indicated Resources 156.5 1.07 0.12 1,677.2 192.1
Inferred 42.2 1.00 0.1 419.3 49.2
1. All assumptions, parameters, and methods used to estimate the mineral resources and reserves are disclosed in the 2023 Moa JV
Technical Report to be filed March 31, 2023. An excerpt from the report of the full resources table is provided in Appendix 3 of this
press release.
2. Totals may not sum exactly due to each component number being rounded to its nearest decimal.
Updated Life of Mine Plan
With the increase in Proven and Probable Reserve estimates, Moa’s mine life is expected to extend by
approximately 14 years to 204 8 based on the utilization rates at the effective date of the 2023 Moa JV
Technical Report. Over the next 10 years, average annual finished nickel and cobalt production, exclusive
of the impact of the current expansion program and third-party feed, is estimated at 30 kt of finished nickel
and 3.3 kt of finished cobalt. Total recovered metals over the extended life of mine are estimated to be 724
kt of nickel and 85 kt of cobalt.
The current LOM strategy used to support the 2023 Moa JV Technical Report uses a n “economic cut-off
grade” (ECOG) methodology versus a “fixed cut -off grade” (FCOG) used in the previous NI 43 -101
Technical Report filed June 26, 2019 for the Moa JV in determining the amounts of Proven and Probable
reserves. The primary difference between the ECOG and FCOG is that the ECOG better reflects the
potential economic benefit of extracting the selected material. The ECOG definition incorporates the nickel
and cobalt commodity prices, the metallurgical recovery of these metals, and the costs involved in the
mining, refining and marketing of these metals.
Economic Analysis
The base case extended LOM has a favourable after tax NPV of US$812 million (100% basis) at an 8%
discount rate using conservative prices of US$7.12/lb nickel and US$21.32/lb cobalt . This is based on the
LOM in the 2023 Moa JV Technical Report.
Additionally, the 2023 Moa JV Technical Report includes an alternative scenario which results in an after
tax NPV of US$1.5 billion (100% basis) at an 8% discount rate, based on recent analyst commodity price
forecasts for nickel, cobalt and key input commodity prices.
The following table provides a summary of some of the key assumptions related to the net economic
evaluation contained in the 2023 Moa JV Technical Report for the Moa JV (100% basis) (1)(2):
Units Base Case
Value
Alternative
Scenario(3)
Proven and Probable Reserve kt 117,180 same
% Ni 1.01 same
% Co 0.12 same
LOM period years 26 same
Refined nickel production t 723,552 same
Refined cobalt production t 84,679 same
Nickel Reference Price US$/lb 7.12 9.00
Cobalt Reference Price US$/lb 21.32 23.50
Net Operating Margin (EBITDA) US$M 3,738 5,429
LOM capital expenditures (excl. Working Cap.) US$M 1,457 same
LOM undiscounted cash flow before tax US$M 2,368 4,078
LOM undiscounted cash flow after tax US$M 1,887 3,399
NPV after tax at 8% discount US$M 812 1,517
1. All assumptions, parameters, and methods used in preparing the economic analysis are included in Section 22.0 ECONOMIC
ANALYSIS of the 2023 Moa JV Technical Report to be filed March 31, 2023. A copy of the economic analysis summary is included in
Appendix 4 of this press release.
2. The economic analysis including the NPV calculation is for the Moa JV and production from the Moa mine only and does not consider
the impact of operating results of Sherritt’s 100% owned fertilizer business, potential third-party feed opportunities, and the impact of
the current Moa JV expansion on timing of production and capital cost estimates.
3. In addition to the nickel and cobalt prices in the table, key input commodity prices for the base case and alternative scenario include:
sulphur – US$161/t and US$230/t, diesel – US$0.64/l and US$1.00/l, and fuel oil – US$320/t and US$500/t, respectively.
Impact of Current Moa JV Expansion Program on the LOM
In 2021, the Moa JV embarked on a low capital intensity expansion program to capitalize on the growing
demand for high purity nickel and cobalt being driven by the accelerated adoption of electric vehicles (EV).
The scope of the expansion program was narrowed during 2022 to better reflect the evolving intermediate
market for nickel and cobalt and to focus on the most critical components of growth in light of supply chain
challenges and inflationary price pressures on capital. The current program is aimed at increasing annual
mixed sulphide precipitate (MSP) production by 20% or 6,500 t of contained nickel and cobalt (100% basis).
The expansion program consists of two phases with phase one focused on the construction of a new slurry
preparation plant (NSPP) at Moa, and phase two is focused on the expansion of the Moa processing plant,
including the Leach Plant Sixth Train and Fifth Sulphide Precipitation Train as well as construction of
additional acid storage capacity at Moa. The total capital cost is expected to be US$77 million (100% basis)
or approximately US$13,200 per additional annual tonne of contained nickel for the full expansion. Growth
spending on capital for the expansion program is expected to be self-funded by the Moa JV primarily using
operating cash flows.
The economic analysis in the 2023 Moa JV Technical Report includes the remaining capital for the
construction of the NSPP and the related ore haulage distance and mining fleet benefits; however, it does
not include any of the incremental MSP production associated with that phase. Therefore, Sherritt estimates
only US$50 million of additional capital would be required to complete the expansion program and realize
the increased annual production of MSP by 6,500t of nickel and cobalt and associated economic benefits.
Assuming an accelerated mining sequence in order to meet the expect ed increased production related to
the Moa JV expansion, the LOM would likely be reduced by 3 to 5 years, resulting in a LOM of approximately
21 to 23 years. This increased production would be expected to increase cashflows and the NPV of the
Moa JV.
Qualified Persons
The technical information contained in this press release has been reviewed and approved by Bryce Reid,
P.Eng, Senior Chemical Engineer, who is a Qualified Person with respect to the Moa JV as defined under
NI 43-101. Information related to the 2023 Moa JV Technical Report contained in this news release has
been reviewed and approved by the report co -authors, Béatrice Foret, M.Sc., AUSIMM(CP) , Associate
Mineral Resource Geologist ; Michiel Frederik Breed, M.Eng., Pr.Eng., SAIMM(CP) , Associ ate Senior
Mining Engineer; and Christopher Jacobs, CEng., MBA, MIMMM, Mining Economist and President of Micon
International Limited.
The qualified persons have verified the information disclosed herein, including the sampling, preparation,
security and analytical procedures underlying such information, and are not aware of any significant risks
and uncertainties that could be expected t o affect the reliability or confidence in the information discussed
herein. Each of Béatrice Foret, Michiel Frederik Breed, and Christopher Jacobs is an "Independent Qualified
Person", vis-à-vis Sherritt, as such term is defined in National Instrument 43-101 – Standards for Disclosure
for Mineral Projects.
Filing of the 2023 Moa JV Technical Report
The 2023 Moa JV Technical Report , which is to be filed on March 31, 2023 , has been prepared in
compliance with National Instrument 43-101 – Standards for Disclosure for Mineral Projects, for Sherritt by
Micon International Limited with an effective date of August 31, 2022. The 2023 Moa JV Technical Report
will be available on Sherritt’s profile on SEDAR at www.sedar.com and on Sherritt’s website at
www.sherritt.com.
Readers are encouraged to read the 2023 Moa JV Technical Report in its entirety, including all
qualifications, assumptions and exclusions that relate to the details summarized in this news release. The
report is intended to be read as a whole, and sections should not be read or relied upon out of context.
About the Moa Joint Venture
The Moa Joint Venture is a 50/50 joint venture between Sherritt and General Nickel Company S.A. of Cuba.
The Moa JV explores, develops, mines and processes nickel laterite deposits in Cuba for refining into
finished nickel and cobalt from its refinery in Fort Saskatchewan, Alberta or for potential sale as intermediary
products and markets its products to customers internationally, except the United States.
About Sherritt
Sherritt is a world leader in using hydrometallurgical processes to mine and refine nickel and cobalt – metals
essential for an electric future. Its Technologies Group creates innovative, proprietary solutions for natural
resource-based industries around the world to improve environmental performance and increase economic
value. Sherritt has embarked on an expansion program focused on increasing annual mixed sulphide
precipitate production by 20% or 6,500 tonnes of contained nickel and cobalt (100% basis). The Corporation
is also the largest independent energy producer in Cuba. Sherritt’s common shares are listed on the Toronto
Stock Exchange under the symbol “S”.
For more information, please contact:
Lucy Chitilian, Director of Investor Relations
Telephone: 416-935-2457
Email: [email protected]
www.sherritt.com
End notes:
i. The terms Proven and Probable Reserves and Measured and Indicated Resources are industry defined terms and are
summarized in Appendix 1 to this press release. These terms are fully defined and discussed in the 2023 Moa JV Technical
Report.
ii. Compared to the amounts reported in the Corporation’s Annual Information Form for the year-ended December 31, 2021
(the 2021 AIF), which incorporates estimates based on the NI 43-101 Technical Report filed by the Moa JV on June 26,
2019 with an effective date of December 31, 2018, net of depletions to December 31, 2021.
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”, “wi ll”, “could”, “should”, “suspect”, “outlook”, “potential”, “projected”,
“continue” or other similar words or phrases.
Specifically, forward -looking statements in this document include, but are not limited to, statements
regarding resource and reserve estimates, including potential resources and reserves expansion, assumed
commodity prices and exchange rates, life of mine and life of mine production plan, production, net present
value, operating and capital cost estimates. Forward-looking statements are not based on historical 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; production
results; realized prices for production; earnings and revenues; global demand for electric vehicles and the
anticipated corresponding demand for cobalt and nickel; the commercialization of certain proprietary
technologies and services; advan cements in environmental and greenhouse gas (GHG) reduction
technology; GHG emissions reduction goals and the anticipated timing of achieving such goals, if at all;
statistics and metrics relating to Environmental, Social and Governance (ESG) matters which are based on
assumptions or developing standards; environmental rehabilitation provisions; environmental risks and
liabilities; compliance with applicable environmental laws and regulations; risks related to the U.S.
government policy toward Cuba; and cer tain corporate objectives, goals and plans for 2023 , together with
projected mine and process recovery rates, mining dilution, projected closing costs and requirements and
assumptions as to environmental, permitting and social considerations and risks . 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 the 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 stateme nt 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.
Risks, uncertainties and other factors regarding resources and reserves include, but are not limited to: the
ability to obtain required Cuban approvals for the Economic Cut -Off Grade methodology and new cut -off
grade, the degree of confidence that can be attained in relation to the resource models for certain areas,
the frequency of waste dump and stockpile surveying and lower resource categorization with respect to
saprolites. In addition, those associated with reserves include but are not limited to: the ability to assure
sufficient and continuou s tailings capacity , the ability to successfully implement the revised mine plan
associated with the increased reserves on site Risks to forward looking statements also include changes
to costs of production from what is assumed, unrecognized environmental risks, unanticipated reclamation
expenses, unexpected variations in the quantity of mineralized material, grade or recovery rates,
geotechnical or hydrological considerations differing from what is assumed, failure of mining methods to
operate as anticipa ted, changes to assumptions as to the availability and cost of electrical power and
process reagents, the ability to maintain the social license to operate, accidents, labour disputes and other
risks of the mining industry, changes to interest rates and c hanges to tax rates, and availability of
allowances for depreciation and amortization.
Additional risks, uncertainties and other factors include, but are not limited to, security market fluctuations
and price volatility; level of liquidity and the related ability of the Moa Joint Venture to pay dividends; access
to capital; access to financing; the risk to Sherritt’s entitlements to future distributions (including pursuant
to the Cobalt Swap) from the Moa Joint Venture, the impact of infectious diseases ( including the COVID-
19 pandemic), the impact of global conflicts; changes in the global price for nickel, cobalt, oil, gas, fertilizers
or certain other commodities; risks related to Sherritt’s operations in Cuba; risks related to the U.S.
government policy toward Cuba, including the U.S. embargo on Cuba and the Helms -Burton legislation;
political, economic and other risks of foreign operations; 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; compliance with applicable environment, health and safety
legislation and other associated matters; risks associated with governmental regulations regarding climate
change and greenhouse gas emissions; risks relating to community relations; maintaining social license to
grow and operate; risks related to environmental liabilities including liability for reclamation costs, tailings
facility failures and toxic gas releases; uncertainty about the pace of technological advancements required
in relation to achieving ESG targets; risks to information technologies systems and cybersecurity;
identification and management of growth opportunities; the ability to replace depleted mineral reserves; risk
of future noncompliance with debt restrictions and covenants; risks associated with the Corporation’s joint
venture partners; variability in production at Sherritt’s operations in Cuba; risks associated with mining,
processing and refining activities; potential interruptions in transportation; uncertainty of gas supply for
electrical generation; reliance on key personnel and skilled workers; growth opportunity risks; the possibility
of equipment and other failures; uncertainty of resources and reserve estimates; the potential for shortages
of equipment and supplies, including diesel; supplies quality issues; risks related to the Corporation’s
corporate structure; risks associated with the operation of large projects generally; risks related to the
accuracy of capital and operating cost estimates; foreign exchange and pricing risks; 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; legal contingencies; risks related to the
Corporation’s accounting policies; uncertainty in the ability of the Corporation to obtain government permits;
failure to comply with, or changes to, applicable government regul ations; bribery and corruption risks,
including failure to comply with the Corruption of Foreign Public Officials Act or applicable local anti -
corruption law; the ability to accomplish corporate objectives, goals and plans for 2023; and the ability to
meet other factors listed from time to time in the Corporation’s continuous disclosure documents.
The Corporation, together with its Moa Joint Venture is pursuing a range of growth and expansion
opportunities, including without limitation, process technology solutions, development projects, commercial
implementation opportunities, life of mine extension opportunities and the conversion of mineral resources
to reserves. In addition to the risks noted above, factors that could, alone or in combination, prevent the
Corporation from successfully achieving these opportunities may include, without limitation: identifying
suitable commercialization and other partners; successfully advancing discussions and successfully
concluding applicable agreements with external parties and/or partners; successfully attracting required
financing; successfully developing and proving technology required for the potential opportunity;
successfully overcoming technical and technological challenges; successful environmental assessment
and stakeholder engagement; successfully obtaining intellectual property protection; successfully
completing test work and engineering studies, prefeasibility and feasibility studies, piloting, scaling from
small scale to large scale production, , procurement, construction, commissioning, ramp -up to commercial
scale production and completion; and secu ring regulatory and government approvals. There can be no
assurance that any opportunity will be successful, commercially viable, completed on time or on budget, or
will generate any meaningful revenues, savings or earnings, as the case may be, for the Cor poration. In
addition, the Corporation will incur costs in pursuing any particular opportunity, which may be significant.
Readers are cautioned that the foregoing list of factors is not exhaustive and should be considered in
conjunction with the risk fac tors described in the Corporation’s other documents filed with the Canadian
securities authorities, including without limitation the “Managing Risk” section of the Management’s
Discussion and Analysis for the year ended December 31, 2022 and the Annual Inf ormation Form of the
Corporation dated March 24, 2022 for the year ending December 31, 2021, which is available on SEDAR
at www.sedar.com.
The Corporation may, from time to time, make o ral 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 o f 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 a nd 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.
APPENDIX 1 – RESOURCE AND RESERVE DEFINITIONS
Mineral resource and mineral reserve definitions, according to the “CIM Standards on Mineral Resources
and Reserves – Definitions and Guidelines”, are as follows.
MINERAL RESOURCE
A ‘Mineral Resource’ is a concentration or occurrence of solid material of economic interest in or on the
Earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual
economic extraction. The location, quantity, grade or quality, continuity and other geological characteristics
of a Mineral Resource are known, estimated or interpreted from spe cific geological evidence and
knowledge, including sampling.
An ‘Inferred Mineral Resource’ is that part of a Mineral Resource for which quantity and grade or quality
are estimated on the basis of limited geological evidence and sampling. Geological eviden ce is sufficient
to imply but not verify geological and grade or quality continuity.
An Inferred Mineral Resource has a lower level of confidence than that applying to an Indicated Mineral
Resource and must not be converted to a Mineral Reserve. It is reas onably expected that the majority of
Inferred Mineral Resources could be upgraded to Indicated Mineral Resources with continued exploration.
An ‘Indicated Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality,
densities, shape and physical characteristics are estimated with sufficient confidence to allow the
application of Modifying Factors in sufficient detail to support mine planning and evaluation of the economic
viability of the deposit.
Geological evidence is derived from adequately detailed and reliable exploration, sampling and testing and
is sufficient to assume geological and grade or quality continuity between points of observation.
An Indicated Mineral Resource has a lower level of confidence than that applying to a Measured Mineral
Resource and may only be converted to a Probable Mineral Reserve.
A ‘Measured Mineral Resource’ is that part of a Mineral Resource for which quantity, grade or quality,
densities, shape, and physical characteristics are estimated with confidence sufficient to allow the
application of Modifying Factors to support detailed mine planning and final evaluation of the economic
viability of the deposit.
Geological evidence is derived from detailed and reliable exploration, sampling and testing and is sufficient
to confirm geological and grade or quality continuity between points of observation.
A Measured Mineral Resource has a higher level of confidence than that applying to either and Indicated
Mineral Resource or an Inferred Mineral Resource. It may be converted to a Proven Mineral Reserve or to
a Probable Mineral Reserve.
Modifying Factors are considerations used to convert Mineral Resources to Mineral Reserves. These
include, but are not restricted to, mining, processing, metallurgical, in frastructure, economic, marketing,
legal, environmental, social and governmental factors.
MINERAL RESERVE
A ‘Mineral Reserve’ is the economically mineable part of a Measured and/or Indicated Mineral Resource. It
includes diluting materials and allowances for losses, which may occur when the material is mined or
extracted and is defined by studies at Pre -Feasibility or Feasibility level as appropriate that include
application of Modifying Factors. Such studies demonstrate that, at the time of reporting, ext raction could
reasonably be justified.
The reference point at which Mineral Reserves are defined, usually the point where the ore is delivered to
the processing plant, must be stated. It is important that, in all situations where the reference point is
different, such as for a saleable product, a clarifying statement is included to ensure that the reader is fully
informed as to what is being reported.