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FINANCIAL RESULTS Sherritt International Corporation Sherritt’S Strongest Balance Sheet in More Than a Decade

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FINANCIAL RESULTS Sherritt International Corporation Sherritt’S Strongest Balance Sheet in More Than a Decade 2020 FINANCIAL RESULTS Sherritt International Corporation Sherritt’s strongest balance sheet in more than a decade 2020 was a difficult year for the mining industry, with volatile commodity prices, the global pandemic and, for Sherritt, a tumultuous Cuba-U.S. relationship. Through it all, Sherritt remained steadfastly focused on protecting employees, suppliers and other stakeholders from COVID-19, maintaining collections on Cuban energy overdue receivables, and preserving liquidity. 2020 was a transformative year for Sherritt, foremost, it completed its balance sheet initiative which reduced its outstanding debt by approximately $301 million, extended the maturities of its note obligations to 2026 and 2029, reduced annual interest payments by more than $15 million, and terminated its debt obligations relating to the Ambatovy Joint Venture and its cross-default risk of the Ambatovy shareholder agreement, all without any dilution of its common shares. Pre-transaction1 Post-transaction $145M $358M $221M $170M $198M $75M 0 0 2020 Nov. 2021 2022 Aug. 2023 2024 Nov. 2025 Nov. 2026 2029 Existing unsecured debentures Ambatovy Partner loans New second lien notes Junior Note (1) Face value of public debentures and principal amount and accrued interest of Ambatovy partner loans ($ millions) / Excluding the credit facility 2020 Operational Highlights Sherritt’s focus is nickel and cobalt, but we also have a long history of oil and power production in Cuba. Our continued focus on operational excellence and employee safety meant that COVID-19 had a limited impact on our production activities at each of our operations primarily as a result of a quick and sustained focus on additional health and safety measures implemented starting in March 2020 as the virus was spreading around the world. This resulted in production results largely in line with our guidance for the year. Nickel and Cobalt(1) Oil Power(3) (tonnes) (GWI, Cuba bopd(2)) (Gigawatt hours) Finished Nickel Finished Cobalt 16,554 15,753 736 1,688 1,685 4,175 602 2,947 FY2019 FY2020 FY2019 FY2020 FY2019 FY2020 FY2019 FY2020 (1) Sherritt’s 50% share. (2) NWI = Gross working-interest, bopd = barrels of oil per day, (3) Sherritt’s 33⅓% share Message from Sherritt’s Chair I am pleased to enclose our Financial Statements and Management’s Discussion and Analysis as at and for the year ended December 31, 2020. For all of us, 2020 was a year like no other, but it was also an eventful year for Sherritt. I am particularly proud of how our company responded to the COVID-19 pandemic. Despite the disruption caused the pandemic, rail disruptions in Canada, and the impact of harsh U.S. sanctions against our Cuban partners, we largely met our production and unit cost targets for 2020 across all of our businesses. The limited impact COVID-19 had on our operations is due in large part to the additional health and safety measures that we implemented starting in early March, and which since then have been applied with great diligence by our entire workforce. In August, we completed a plan of arrangement under the Canada Business Corporations Act. That arrangement enabled us to: • reduce our outstanding debt by approximately $300 million; • eliminate debt maturities in 2021, 2023, and 2025 and replace them with maturities in 2026 and 2029; • reduce our annual interest payments by more than $15 million; and • exit the Ambatovy project and thereby terminate our debt obligations to our Ambatovy partners and eliminate the risk of cross-defaults to our debt as a result of not funding Ambatovy. This arrangement was all completed without any dilution to our common shares. If we had not achieved this, Sherritt would not exist in its current form today. This restructuring marks the culmination of nearly seven years of efforts to strengthen our balance sheet from the threat posed by Ambatovy. Since 2014, Sherritt has eliminated some $2.4 billion in debt and an additional $1.1 billion in debt guarantees from its balance sheet. 2020 was not without setback for Sherritt. Most notably, after overcoming a number of geotechnical challenges and restricted access to technology as a result of increasing U.S. sanctions against Cuba to reach our target depth, we were disappointed by test results at Block 10 that confirmed water had penetrated the well above the target reservoir, rendering the well uneconomic. Sherritt’s outlook has improved tremendously over the past several months with the completion of the balance sheet initiative. Most notably, global and macro-economic developments provide near-term and longer-term opportunities for us to build on recent financial results, strengthen our balance sheet and collect on overdue amounts owed to us by our Cuban partners. Central to our encouraging outlook are the fundamental changes to the nickel market being driven by rapid adoption of electric vehicles. This trend, which is being fueled by the introduction of new government policies and by advances within the automotive industry, is expected to drive significant demand for high purity or Class 1 nickel – the type that Sherritt produces. Looking at the nickel market over the longer term, demand forecasts are particularly bullish. Total demand is slated to grow by more than 80% over the next 20 years, largely on the back of electric vehicle adoption. As we look to the future and the nickel market develops, we will look to the unique capabilities of our Technologies Group to ensure we are at the forefront of the battery revolution. We will also bring more focus to commercializing the innovations carried out by the Technologies Group in making the next generation of nickel mining and processing less capital intensive and more environmentally friendly. These R&D efforts take advantage of the unparalleled expertise we have developed in hydrometallurgy and lateritic ore processing. Our ability to identify market opportunities and commercialize our research projects is driven by our experience and work with more than 40 operations around the world which already use our technology and processes. This experience and expertise includes more than 14 PhDs on staff, more than 1,000 cumulative years of process development experience and the more than 1,700 patents we have registered since 1954. In 2021 and beyond, we also plan to build on our Environmental, Social and Governance (ESG) targets, including efforts to reduce greenhouse emissions, maintain peer-leading safety metrics, and our commitments to doubling the number of female employees by 2030. In 2020, we improved our safety performance despite the disruption caused they the pandemic, and signed the BlackNorth Initiative Pledge aimed at ending anti-Black systemic racism and creating opportunities for Black, Indigenous, and People of Colour communities. I would like to thank all of our employees for their tremendous efforts in difficult circumstances in 2020, and all of our shareholders for your patience and support over recent years. I look forward to sharing highlights of our progress again with you soon. Sir Richard Lapthorne Chair of Sherritt’s Board of Directors CEO COMMENTARY “With a significantly strengthened balance sheet, a considerably improved outlook for nickel and cobalt, and encouraging signs for improved Cuban-U.S. relations, Sherritt ended 2020 in its strongest position in more than a decade,” said David Pathe, President and CEO of Sherritt International. “Keys to our progress were completion of a debt restructuring initiative that resolved our Ambatovy investment legacy while extending our debt maturities to the fourth quarter of 2026, ongoing commitments to operational excellence and employee health and safety that contributed to production results largely in line with our guidance for the year, and measures we took to preserve liquidity against a backdrop of a global pandemic and volatile commodity prices.” Mr. Pathe added, “We plan to sustain our momentum into 2021 – even as we manage against the continuing global pandemic – by capitalizing on the growing demand for high purity nickel as the market adoption of electric vehicles and requirement for low-carbon emissions accelerate, and on the current nickel price nearly US$2 per pound higher than the average for 2020. We will also be focused on our ESG commitments in 2021 and beyond. Over the longer term, we expect to fuel our growth through an increased focus on commercializing the innovation and process development capabilities of our Technologies Group.” SELECTED Q4 2020 HIGHLIGHTS Sherritt’s share of finished nickel and cobalt production at the Moa Joint Venture (Moa JV) were 4,020 tonnes and 451 tonnes, respectively. Despite being impacted by unplanned autoclave repairs at the refinery in Fort Saskatchewan, Alberta, Q4’s production totals helped to offset the negative effects of railway service disruptions in Q1 and an extended plant shutdown in Q3 due to additional found work scope, and reduced contractor availability due to COVID-19, enabling Sherritt to largely meet its production guidance at the Moa JV for the year. Sherritt received US$20 million in distributions from the Moa JV, representing its 50% share of total dividends declared. Sherritt also received an additional US$20 million, representing the 50% share of distributions of its Moa JV partner, General Nickel Company (“GNC”), pursuant to an overdue receivables agreement negotiated by Sherritt in 2019. Distributions received in Q4 were indicative of improving nickel and cobalt prices and strong operational performance. Sherritt received US$30.1 million in Cuban energy payments as part of the overdue receivables agreement with its Cuban partners. Included in this amount was the aforementioned US$20 million re-directed to Sherritt by GNC to be applied against amounts owed by Energas. Total payments consisted of US$27.7 million received in Canada and US$2.4 million accepted in Cuba to support local costs for Sherritt’s Oil and Gas operations.
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