Sherritt Reports Higher Production at Moa JV and Stronger Balance Sheet for Q3 2018

NOT FOR DISTRIBUTION TO UNITED STATES NEWSWIRE SERVICES OR FOR
DISSEMINATION IN THE UNITED STATES

TORONTO–(BUSINESS WIRE)–
Sherritt International Corporation (“Sherritt” or the “Corporation”)
(TSX: S), a world leader in the mining and hydrometallurgical refining
of nickel and cobalt from lateritic ores, today reported its financial
results for the three- and nine-month periods ended September 30, 2018.
All amounts are in Canadian currency unless noted.

CEO COMMENTARY

“Our performance in the third quarter was marked by clear signs of
progress,” said David Pathe, President and CEO of Sherritt
International. “We ended Q3 with a stronger balance sheet, our first
dividend distribution from the Moa JV in more than three years, and
higher nickel production at Moa.

“While the momentum that nickel and cobalt prices established at the
start of the year has recently been dampened by concerns over
international trade disputes and the impacts of tariffs, underlying
fundamentals for physical metal remain strong and the outlook is
encouraging. Since the start of 2018, we have witnessed a decline in
global Class 1 nickel inventory stocks by almost 40%. With no new nickel
production coming online in the near term and demand expected to
continue to grow, especially as the electric vehicle battery market
expands, we anticipate favorable market fundamentals to continue.”

Q3 2018 HIGHLIGHTS

Adjusted EBITDA was $40.6 million, up 20% from $33.8 million in Q3
2017. The increase was largely due to higher realized nickel and
cobalt prices, more than offsetting the impact of lower oil production
due to the expiration of a production sharing contract at Varadero
West as well as the impact of higher mining and input costs, including
increased sulphur and energy expenses. Year-to-date adjusted EBITDA
for 2018 has improved by 26% to $126.5 million.
Sherritt’s share of finished nickel production at the Moa Joint
Venture (“Moa JV”) was 4,457 tonnes, up 10% from last year, while
finished cobalt was 465 tonnes, flat from Q3 2017. Nickel production
in Q3 2018 improved largely due to the arrival of new mining equipment
that enabled Moa to surpass its target mixed sulphide production for
the quarter.
Net direct cash cost (NDCC)⁽¹⁾ at the Moa JV was US$2.16
per pound of finished nickel sold, representing the sixth consecutive
quarter that the Moa JV is in the lowest cost quartile relative to
other nickel producers based on annualized information tracked by Wood
Mackenzie. NDCC in Q3 2018 was impacted, however, by higher sulphur
and energy prices relative to Q3 2017 when the NDCC at the Moa JV was
US$1.94 per pound of finished nickel sold.
The average-reference price for nickel improved 26% from last year to
US$6.01/lb while the average-reference price for cobalt increased 22%
to US$35.21/lb.
Received $5.2 million in dividend distributions from the Moa Joint
Venture. The dividend marks the first that Sherritt has received since
Q1 2015, and reflects generally improved nickel market conditions.
Sherritt ended the quarter with $207.1 million in cash, cash
equivalents and short-term investments, up from $197.2 million at June
30, 2018.
Net loss was $13.3 million or $0.03 on a per share basis. In Q3 2017,
Sherritt incurred a net loss of $69.5 million or $0.24 per share.
As previously reported, Sherritt resumed drilling on Block 10 in early
July. Drilling continues today. During the quarter, the expandable
casing technology imported to address the loss circulation zones in
the upper reservoir was successfully deployed. Drilling continued to a
total depth of approximately 5,000 meters of the planned 5,960 meters.
Recently, wellbore instability has been encountered between the upper
and lower reservoirs. To manage the wellbore instability, a portion of
the wellbore below the upper reservoir is currently being re-drilled
and results are anticipated within 90 days. Total capital spending for
the oil division, including added costs for drilling on Block 10, are
now estimated at approximately US$29 million for 2018.
Submitted an application to the Alberta Partial Upgrading Program for
a grant to advance development of Sherritt’s proprietary process to
upgrade bitumen at a lower cost. Sherritt’s process is based on 60
years of experience with hydrometallurgical processes and the use of
autoclaves.
Relocated to a new corporate office in Toronto, a move that is
expected to result in cost savings of approximately $1 million per
year.

DEVELOPMENTS SUBSEQUENT TO QUARTER END

In early October 2018, delivery of hydrogen sulphide, a key reagent
used at the Moa JV refinery in Fort Saskatchewan, Alberta, was
interrupted due to the supplier’s non-compliance with provincial
regulations, resulting in a temporary suspension of hydrogen sulphide
delivery to the refinery and a reduction in production of finished
nickel and cobalt. Hydrogen sulphide supply has now resumed, and the
refinery is once again operating at full capacity. As a result of the
impact of the supplier’s delivery interruption, Sherritt has lowered
the range of its expected production guidance at the Moa JV for
finished nickel to 30,500 to 31,000 tonnes (100% basis) and lowered
the range of finished cobalt production to 3,250 to 3,400 tonnes (100%
basis). Expected NDCC guidance at the Moa JV for 2018 has been updated
to be in the range of US$1.90 to US$2.40 per pound of nickel sold,
reflecting the impact of the hydrogen sulphide development on
production as well as the recent increase in input costs and decline
in cobalt prices.
Sherritt’s escrow account to cover funding requirements of the
Ambatovy Joint Venture was depleted following a cash call in October
2018. The escrow account was established as a requirement of the
Ambatovy restructuring completed in December 2017 when Sherritt’s
ownership interest was reduced to 12% in exchange for the elimination
of $1.4 billion of debt. Any future cash funding requirements will be
dependent on Ambatovy’s production as well as prevailing commodity
prices among other items. If additional cash funding is required,
Sherritt does not anticipate providing any such funding based on
Ambatovy’s current debt structure.

^{(1) For additional information see the Non-GAAP measures section of

this press release.}

Q3 2018 FINANCIAL HIGHLIGHTS

	For the three months ended						For the nine months ended
		2018		2017			2018		2017
$ millions, except per share amount	September 30		September 30		Change	September 30		September 30		Change

Revenue		29.9		63.3	(53%)	$	115.8	$	212.5	(46%)
Combined Revenue(1)		187.8		234.7	(20%)		535.8		693.7	(23%)
Net Loss for the period		(13.3)		(69.5)	81%		(11.1)		(244.0)	95%
Adjusted EBITDA(1)		40.6		33.8	20%		126.5		100.2	26%
Cash used (provided) by continuing operations		14.1		28.7	(51%)		(5.2)		24.3	(121%)
Combined free cash flow (1)		(3.5)		7.3	(148%)		(13.9)		(20.9)	33%
Net Loss from continuing operations per share		(0.03)		(0.24)	88%		(0.03)		(0.83)	96%

^{(1) For additional information see the Non-GAAP measures section.}

^{(2) The amounts for the periods ended September 30, 2018 have been

prepared in accordance with IFRS 9 and IFRS 15; prior year periods

amounts have not been restated. Refer to note 4 in the condensed

consolidated financial statements for the three months ended March 31,

2018 for further information.}

	2018		2017
$ millions, except as otherwise noted, as at	September 30		December 31		Change

Cash, cash equivalents and short term investments	$	207.1	$	203.0	2%
Loans and borrowings		696.0		824.1	(16%)

In Q3 2018, Sherritt generated $14.1 million in cash flow from
operations largely as a result of higher realized prices for nickel and
cobalt and a $5.2 million dividend distribution received from the Moa
JV. In addition, the Moa JV’s stronger financial position allowed it to
fully repay Sherritt $10.8 million of advances previously provided for
working capital purposes. Receipt of this repayment is reported within
financing activities and, therefore, not included within Sherritt’s
operating and free cash flow results.

The dividend distribution, the first in more than three years, was
possible following the final repayment on a $45 million Moa JV working
credit facility and the $10.8 million advance. Future dividend
distributions from the Moa JV will vary in amount based on available
free cash generated largely as a result of production totals and
prevailing nickel and cobalt prices.

Combined operating cash flow in Q3 2018 included contributions totaling
$12.3 million from the Moa JV and Fort Site, $0.8 million from the Oil
and Gas division and $10.0 million from the Power division.

As a result of a combination of exploration costs for Block 10 drilling
and other capital expenditures totaling $21 million, Sherritt generated
negative free cash flow of $3.5 million on a combined basis in Q3 2018.
This total was also impacted by reduced Cuban energy payments in the
period. Cuban overdue scheduled receivables at September 30, 2018
totaled US$147.8 million, up from US$136.9 million at June 30, 2018. In
Q3 2018, Sherritt received US$14.0 million of Cuban energy payments.
Sherritt has experienced variability in its Cuban receivables over the
years but has not incurred any losses related to any scheduled Cuban
receivables.

Cash, cash equivalents and short-term investments at September 30, 2018
were $207.1 million, up from $197.2 million at June 30, 2018. The
increase was due to a number of items, including the $5.2 million
dividend distribution from the Moa JV, $7.1 million in fertilizer
prepayments and the receipt of a $10.8 million advance previously
provided to the Moa JV for working capital purposes.

Adjusted earnings (loss) from continuing operations
⁽¹⁾

		2018				2017
For the three months ended September 30	$ millions		$/share		$ millions		$/share

Net loss from continuing operations		(13.3)		(0.03)		(69.5)		(0.24)

Adjusting items, net of tax:
Unrealized foreign exchange (gain) loss		6.1		0.01		(13.5)		(0.05)
Other		(3.0)		(0.01)		(1.4)		–
Adjusted net loss from continuing operations		(10.2)		(0.03)		(84.4)		(0.29)

		2018				2017
For the nine months ended September 30	$ millions		$/share		$ millions		$/share

Net loss from continuing operations		(11.1)		(0.03)		(244.0)		(0.83)

Adjusting items, net of tax:
Unrealized foreign exchange (gain) loss		(12.6)		(0.03)		(16.4)		(0.06)
Other		(10.0)		(0.03)		(6.5)		(0.02)
Adjusted net loss from continuing operations		(33.7)		(0.09)		(266.9)		(0.91)

^{(1) For additional information see the Non-GAAP measures section.}

Sherritt incurred a net loss from continuing operations of $13.3
million, or $0.03 per share outstanding, in Q3 2018. These compare to a
net loss from operations of $69.5 million, or $0.24 per share, in Q3
2017.

On an adjusted basis, Sherritt incurred a net loss from operations of
$10.2 million, or $0.03 per share outstanding, in Q3 2018 before the
effect of an unrealized foreign exchange loss of $6.1 million. These
compare to an adjusted net loss of $84.4 million, or $0.29 per share,
for the same period of 2017 when Sherritt recorded an unrealized foreign
exchange gain of $13.5 million.

METAL MARKETS

Nickel

Nickel prices softened in Q3 2018 due largely to concerns of the
potential negative impacts that escalating international trade disputes
and the imposition of new tariffs will have on future demand. These
concerns, which became heightened in September, slowed the momentum that
nickel prices developed starting in the second half of 2017. The average
reference price in Q3 2018 was US$6.01/lb, up 26% from US$4.78/lb in the
third quarter of 2017.

Combined nickel inventories on the London Metals Exchange and the
Shanghai Futures Exchange at the end of Q3 2018 totaled 240,066 tonnes,
down 20% from 298,803 tonnes at the end of Q2 2018. Total Class 1 nickel
inventories since the start of the year have declined by almost 40%. As
demand continues to exceed available supply, the nickel market is
anticipated to be in a structural deficit in the coming years.

Demand for nickel will continue to be driven by the stainless steel
sector. According to market research by CRU, stainless steel demand is
expected to grow at an average annual rate of 4% through 2022 with
production emanating largely from China and Indonesia. Demand for nickel
– particularly Class 1 nickel – from non-stainless steel sectors is also
expected to accelerate given the growth of the electric vehicle battery
market. Class I nickel, along with cobalt, are key metals needed to
manufacture electric vehicle batteries.

Beyond 2018, a shortage of Class 1 nickel is anticipated over the coming
years since current market prices are below incentive levels needed to
develop new nickel projects. As a result, no new Class 1 nickel supply
is expected to come on stream in the near term.

Cobalt

Cobalt prices experienced continued softness in Q3 2018 over the prior
quarter. The price decline was driven by a number of developments,
including increased supply of physical metal from the Democratic
Republic of Congo as well as tightening liquidity conditions for traders
and buyers based in China that reduced demand. The average-reference
price for Q3 2018 was US$35.21/lb, up 22% from US$28.84/lb for Q3 2017.

Low physical demand and current cobalt oversupply is likely to keep
market conditions subdued through the end of 2018.The recent softening
of prices is expected to be temporary due to the growing demand from the
electric vehicle battery market and persistent supply risk concerns
linked to the Democratic Republic of Congo, which is currently the
world’s largest source of cobalt supply. Cobalt prices since the start
of Q4 2018 have experienced some recovery and have stabilized in the
US$33-$34/lb range.

High cobalt prices are not expected to cause supply-chain disruptions or
delay the growth of the electric vehicle market given that cobalt prices
represent a relatively small percentage of the overall battery pack
costs. As a result, the potential for removing cobalt from electric
vehicle battery production in the near term is relatively low especially
since cobalt’s unique properties give batteries energy stability. While
battery manufacturers continue to explore alternatives to existing
electric vehicle battery chemistry, particularly to increase the
battery’s energy density, the likely beneficiary of any changes is
expected to be Class I nickel.

REVIEW OF OPERATIONS

Moa Joint Venture (50% interest) and Fort Site (100%)

	For the three months ended					For the nine months ended
		2018		2017			2018		2017
$ millions, except as otherwise noted	September 30		September 30		Change	September 30		September 30		Change

FINANCIAL HIGHLIGHTS
Revenue	$	136.3	$	100.7	35%	$	378.1	$	294.1	29%
Earnings from operations		25.1		12.8	96%		73.5		11.4	545%
Adjusted EBITDA⁽¹⁾		39.5		23.9	65%		111.0		48.4	129%

CASH FLOW
Cash provided by operations	$	12.3	$	17.6	(30%)	$	40.5	$	25.8	57%
Adjusted operating cash flow⁽¹⁾		29.2		21.5	36%		92.9		40.5	129%
Free cash flow⁽¹⁾		3.8		14.5	(74%)		18.5		12.5	48%

PRODUCTION VOLUMES (tonnes)
Mixed Sulphides		4,861		4,555	7%		12,969		13,207	(2%)
Finished Nickel		4,457		4,049	10%		11,060		11,628	(5%)
Finished Cobalt		465		464	–		1,189		1,336	(11%)
Fertilizer		57,235		60,033	(5%)		162,416		181,759	(11%)

NICKEL RECOVERY (%)		89%		87%	2%		83%		87%	(5%)

SALES VOLUMES (tonnes)
Finished Nickel		4,404		4,018	10%		10,982		11,550	(5%)
Finished Cobalt		467		447	4%		1,180		1,303	(9%)
Fertilizer		27,567		32,080	(14%)		116,774		127,350	(8%)

AVERAGE-REFERENCE PRICES (US$ per pound)
Nickel	$	6.01	$	4.78	26%	$	6.20	$	4.55	36%
Cobalt⁽²⁾		35.21		28.84	22%		39.05		24.84	57%

AVERAGE REALIZED PRICE
Nickel ($ per pound)	$	7.96	$	6.02	32%	$	8.10	$	5.94	36%
Cobalt ($ per pound)		44.75		34.89	28%		48.82		30.85	58%
Fertilizer ($ per tonne)		333		309	8%		390		367	6%

UNIT OPERATING COSTS ⁽¹⁾(US$ per pound)
Nickel – net direct cash cost	$	2.16	$	1.94	11%	$	1.96	$	2.53	(23%)

SPENDING ON CAPITAL
Sustaining	$	8.9	$	3.0	197%	$	26.5	$	13.2	101%
	$	8.9	$	3.0	197%	$	26.5	$	13.2	101%

^{(1) For additional information see the Non-GAAP measures section.}

^{(2) Average low-grade cobalt published price per Fastmarkets MB

(formerly Metals Bulletin).}

The Moa JV produced 4,457 tonnes of finished nickel in Q3 2018, up 10%
from 4,049 tonnes produced in Q3 2017. Growth was largely driven by the
deployment of new mining equipment that provided access to higher grade
ore for processing. The new equipment also contributed to significantly
improved equipment availability when compared to the same period of 2017.

Finished cobalt production in Q3 2018 was 465 tonnes, flat from 464
tonnes produced in Q3 2017. Finished cobalt production in Q3 2018 was
impacted by a higher nickel to cobalt ratio in supplemental third-party
feeds supplied to the Fort Saskatchewan refinery when compared to Q3
2017. The nickel to cobalt ratio in Moa’s mixed sulphide in Q3 2018 was
within range of historic norm.

Q3 2018 revenue for the Moa JV and the Fort Site totaled $136.3 million,
up 35% from $100.7 million for the comparable period of 2017. The
increase was driven by higher realized prices in 2018 for nickel (+32%),
cobalt (+28%) and fertilizer (+8%) and a weaker Canadian dollar relative
to the U.S. dollar.

Nickel sales represented 57% of the Moa JV’s total Q3 2018 revenue while
cobalt sales represented 34%. Fertilizer sales in Q3 2018 were down 7%
from last year, reflecting weaker demand leading up to the fall
fertilizer application season. The impact of weaker sales was partially
offset, however, by higher realized prices of 8%.

Mining, processing and refining (MPR) costs for Q3 2018 were US$5.25/lb,
up 15% from US$4.57/lb for Q3 2017. The increase was primarily due to
higher input costs, largely from increased sulphur and energy prices as
well as the impact of planned maintenance activities at an acid plant at
Moa that contributed to higher maintenance and purchased sulphuric acid
costs relative to the comparable period of 2017.

After taking into account a cobalt credit of US$3.63/lb, NDCC at Moa in
Q3 2018 was US$2.16/lb, up 11% from US$1.94/lb for the same period last
year. NDCC in Q3 2018 was, nevertheless, ranked in the lowest cost
quartile relative to other nickel producers based on annualized
information tracked by Wood Mackenzie. NDCC at the Moa JV has now ranked
in the lowest cost quartile for six consecutive quarters.

The Moa JV generated adjusted operating cash flow of $29.2 million in Q3
2018, up 36% from $21.5 million in the same period of 2017. The increase
was largely due to the year-over-year improvement in realized prices for
nickel and cobalt.

The Moa JV’s sustaining capital spending in Q3 2018 was $8.9 million, up
from $3.0 million in Q3 2017. The increase was due to higher planned
spending, including the construction of the new slurry preparation plant
dump pocket at Moa, which is expected to be commissioned in Q4 2018.
Following an internal equipment inspection, a significant capital
project at the Fort Site has been reassessed and is able to be reduced
and deferred until future years. As a result, when combined with certain
other opportunities to defer some maintenance projects to 2019,
sustaining capital spending for 2018 at the Moa JV has been lowered to
$40 million (US$31 million). The Moa JV is expected to continue to
operate and fund capital expenditures without shareholder funding.

Subsequent to quarter end, delivery of hydrogen sulphide, a key reagent
used at the Moa JV refinery in Fort Saskatchewan, Alberta, was
interrupted due to the supplier’s non-compliance with provincial
regulations, resulting in a temporary suspension of hydrogen sulphide
delivery to the refinery and a reduction in production of finished
nickel and cobalt. Hydrogen sulphide supply has now resumed, and the
refinery is once again operating at full capacity. As a result of the
impact of the supplier’s delivery interruption, Sherritt has lowered the
range of its expected production guidance at the Moa JV for finished
nickel to 30,500 to 31,000 tonnes (100% basis) and lowered the range of
finished cobalt production to 3,250 to 3,400 tonnes (100% basis).
Expected NDCC guidance at the Moa JV for 2018 has been updated to be in
the range of US$1.90 to US$2.40 per pound of nickel sold, reflecting the
impact of the hydrogen sulphide development on production as well as the
recent increase in input costs and decline in cobalt prices.

Investment in Ambatovy Joint Venture (12% interest effective December
11, 2017)
⁽¹⁾

	For the three months ended					For the nine months ended
		2018		2017			2018		2017
$ millions, except as otherwise noted	September 30		September 30		Change	September 30		September 30		Change

FINANCIAL HIGHLIGHTS
Revenue	$	28.6	$	78.0	(63%)	$	77.7	$	221.1	(65%)
Loss from operations		(7.7)		(34.2)	77%		(18.2)		(101.8)	82%
Adjusted EBITDA⁽²⁾		2.9		1.3	123%		12.7		7.9	61%

CASH FLOW
Cash provided (used) by operations	$	2.6	$	(8.9)	129%	$	1.0	$	(23.3)	104%
Adjusted operating cash flow⁽²⁾		2.8		0.9	211%		5.7		(10.6)	154%
Free cash flow⁽²⁾		(1.0)		(13.8)	93%		(8.1)		(34.9)	77%

PRODUCTION VOLUMES (tonnes)⁽³⁾
Mixed Sulphides		1,070		1,022	5%		3,015		3,452	(13%)
Finished Nickel		914		974	(6%)		2,729		3,152	(13%)
Finished Cobalt		88		100	(12%)		236		278	(15%)
Fertilizer		2,383		3,122	(24%)		8,134		9,932	(18%)

NICKEL RECOVERY (%)		86%		77%	12%		87%		82%	6%

SALES VOLUMES (tonnes)⁽³⁾
Finished Nickel		1,069		1,145	(7%)		2,918		3,328	(12%)
Finished Cobalt		103		103	–		251		298	(16%)
Fertilizer		3,274		3,336	(2%)		7,411		10,171	(27%)

AVERAGE-REFERENCE PRICES (US$ per pound)
Nickel	$	6.01	$	4.78	26%	$	6.20	$	4.55	36%
Cobalt⁽⁴⁾		35.21		28.84	22%		39.05		24.84	57%

AVERAGE-REALIZED PRICE
Nickel ($ per pound)	$	8.03	$	5.77	39%	$	7.96	$	5.92	34%
Cobalt ($ per pound)		41.36		36.16	14%		47.42		31.89	49%
Fertilizer ($ per tonne)		195.00		160	22%		193.92		166	17%

UNIT OPERATING COSTS ⁽²⁾(US$ per pound)
Nickel – net direct cash cost	$	3.91	$	4.27	(8%)	$	4.07	$	3.96	3%

SPENDING ON CAPITAL
Sustaining	$	4.6	$	13.0	(65%)	$	10.2	$	34.2	(70%)
	$	4.6	$	13.0	(65%)	$	10.2	$	34.2	(70%)

^{(1) Sherritt’s share for Ambatovy Joint Venture reflects its

interest at 40% through December 10, 2017 and 12% thereafter.}

^{(2) For additional information, see the Non-GAAP measures section

of this release.}

^{(3) To allow for easier comparison, Ambatovy production volume

information for the periods ended September 30, 2017 are presented on a

12% basis.}

^{(4) Average low-grade cobalt published price per Fastmarkets MB

(formerly Metals Bulletin).}

Sherritt’s financial results at Ambatovy are presented on a 12% basis
for Q3 2018 and on a 40% basis for Q3 2017. Production totals are
presented on a 12% for both periods for better comparison purposes.
Along with its partners, Sherritt completed the restructuring of the
Ambatovy Joint Venture on December 11, 2017. The restructuring led to
Sherritt’s ownership interest being reduced to 12% in exchange for the
elimination of $1.4 billion of debt. Sherritt will continue to serve as
operator of Ambatovy at least through 2024, however, as a result of the
reduction in its ownership interest, Sherritt’s ability to direct local
decision-making at Ambatovy has diminished.

Finished nickel production at Ambatovy in Q3 2018 was 914 tonnes, down
6% from 974 tonnes produced in Q3 2017. Finished cobalt production in Q3
2018 was 88 tonnes, down 12% from 100 tonnes for Q3 2017. Production in
Q3 2018 was impacted by a number of developments, including bottlenecks
in the pressure acid leach (PAL) circuit caused by ore that was highly
oxidizing and constrained throughput. The bottleneck issues experienced
in Q3 2018 have since been resolved. Production in Q3 2018 was also
impacted by a longer than expected planned shutdown that lasted 10 days
and included the replacement of an economizer as well as related
maintenance and inspection activities.

Throughout 2018, the Ambatovy JV has been implementing a number of
initiatives aimed at improving production and increasing the reliability
of acid production and PAL circuits. These initiatives have included the
replacement of two acid plant economizers, replacement of equipment
damaged by Cyclone Ava, and efforts to improve autoclave reliability.

Based on the progress of the initiatives to strengthen asset
reliability, Sherritt continues to expect that its nickel and cobalt
production at Ambatovy in the second half of 2018 will be greater than
production through the first six months of the year, and also expects to
reach the lower range of its production guidance for the year.

MPR costs for Q3 2018 were US$7.28/lb, up 11% from US$6.58/lb in Q3
2017. The year-over-year increase was largely due to the impact of
higher input costs, including sulphur and energy expenses.

NDCC for finished nickel at Ambatovy in Q3 2018 was US$3.91/lb, down 8%
from US$4.27/lb for Q3 2017. The decrease was due to a higher cobalt
by-product credit, partially offset by higher energy and sulphur input
costs. As a result of the recent decline in cobalt prices and increase
in sulphur and energy costs, Sherritt expects that NDCC at the Ambatovy
JV will be in the range of US$3.75 to US$4.25 per pound of nickel sold
for 2018.

Spending on sustaining capital at Ambatovy on a 100% basis was
relatively unchanged in Q3 2018 from the same period last year. Capital
spend in Q3 2018 was approximately $33 million (100% basis) and was
largely allocated towards the replacement of the economizer at Acid
Plant 2, restoring the conditions of the acid plants, repairing corroded
equipment and improving plant reliability.

OIL AND GAS

	For the three months ended					For the nine months ended
		2018		2017			2018		2017
$ millions, except as otherwise noted	September 30		September 30		Change	September 30		September 30		Change

FINANCIAL HIGHLIGHTS
Revenue	$	8.7	$	29.9	(71%)	$	36.4	$	99.3	(63%)
(Loss) earnings from operations		(5.2)		5.8	(190%)		(6.6)		25.7	(126%)
Adjusted EBITDA⁽¹⁾		(2.7)		14.0	(119%)		1.3		51.4	(97%)

CASH FLOW
Cash provided by operations		0.8		7.9	(90%)		18.6		33.1	(44%)
Adjusted operating cash flow⁽¹⁾		(3.5)		10.4	(134%)		(14.5)		39.7	(137%)
Free cash flow⁽¹⁾		(7.3)		0.7	(1143%)		0.6		18.8	(97%)

PRODUCTION AND SALES (bopd)
Gross working-interest (GWI) – Cuba		4,668		13,831	(66%)		4,973		14,524	(66%)
Total net working-interest (NWI)		1,536		7,658	(80%)		2,414		8,446	(71%)

AVERAGE EXCHANGE RATE (CAD/USD)		1.307		1.253	4%		1.288		1.307	(2%)

AVERAGE REFERENCE PRICE (US$ per barrel)
West Texas Intermediate (WTI)	$	69.56	$	48.21	44%	$	66.90	$	49.29	36%
U.S. Gulf Coast High Sulpher Fuel Oil (USGC HSFO)⁽²⁾		65.72		46.39	42%		61.16		45.03	36%
Brent		74.95		52.51	43%		72.18		51.66	40%

AVERAGE-REALIZED PRICE ⁽¹⁾(NWI)
Cuba ($ per barrel)	$	63.55	$	42.10	51%	$	55.25	$	42.63	30%

UNIT OPERATING COSTS ⁽¹⁾(GWI)
Cuba ($ per barrel)	$	18.84	$	8.98	110%	$	18.72	$	9.19	104%

SPENDING ON CAPITAL
Development, facilities and other	$	1.4	$	0.9	56%	$	1.4	$	(0.3)	567%
Exploration		7.1		6.6	8%		16.6		12.5	33%
	$	8.5	$	7.5	13%	$	18.0	$	12.2	48%

^{(1) For additional information see the Non-GAAP measures section.}

^{(2) Starting in 2018, the Oil and Gas division uses U.S. Gulf Coast

High Sulphur Fuel Oil for pricing purposes, replacing U.S. Gulf Coast

Fuel Oil #6 used previously. The comparative period has been adjusted

accordingly.}

Gross working-interest oil production in Q3 2018 in Cuba was 4,668
barrels of oil per day (“bopd”), down 66% from 13,831 bopd for the
comparable period of 2017. The decrease was primarily due to the
expiration of the Varadero West Production Sharing Contract (PSC) in
November 2017, natural reservoir declines and the absence of new
development drilling.

Revenue in Q3 2018 was $8.7 million, down 71% from $29.9 million for
last year. The decline was attributable to lower production due to the
expiration of the Varadero West PSC and the reduction of Sherritt’s
profit oil percentage to 6% from 45% with the renewal of the Puerto
Escondido/Yumuri PSC. The revenue decline was partially offset by higher
realized oil prices of 51% to $63.55 per barrel in Cuba and by the
impact of a weaker Canadian dollar relative to the U.S. currency.

Total net working-interest production for Q3 2018 was 1,536 barrels of
oil equivalent per day (“boepd”), down from 7,658 boepd in the same
period of 2017. The decline was due to the impact of the expiration of
the Varadero West PSC and decrease in profit oil percentage with the
renewal of the Puerto Escondido/Yumuri PSC already noted.

Unit operating costs in Q3 2018 in Cuba were $18.84 per barrel, up 110%
from $8.98 in Q3 2017, driven largely by reduced production. Costs were
negatively impacted by the weakening of the Canadian dollar relative to
the U.S. dollar in Q3 2018 as expenses in Cuba are denominated in U.S.
currency.

Capital spending in Q3 2018 was $8.5 million, up from $7.5 million for
the comparable period of last year, largely due to Block 10 drilling
activities.

Sherritt resumed drilling on Block 10 in early July 2018. Drilling
continues today. During Q3, the expandable casing technology imported to
address the loss circulation zones in the upper reservoir was
successfully deployed. Drilling continued to a total depth of
approximately 5,000 meters of the planned 5,960 meters. Recently,
wellbore instability has been encountered between the upper and lower
reservoirs. To manage the wellbore instability, a portion of the
wellbore below the upper reservoir is currently being re-drilled and
results are anticipated within 90 days. Total capital spending for the
oil division, including added costs for drilling on Block 10, are now
estimated at approximately US$29 million for 2018.

POWER

	For the three months ended					For the nine months ended
		2018		2017			2018		2017
$ millions (33 ⅓% basis), except as otherwise noted	September 30		September 30		Change	September 30		September 30		Change

FINANCIAL HIGHLIGHTS
Revenue	$	11.7	$	12.2	(4%)	$	36.0	$	39.2	(8%)
Earnings (loss) from operations		(0.2)		1.5	(113%)		3.1		5.8	(47%)
Adjusted EBITDA⁽¹⁾		6.1		7.5	(19%)		21.5		24.6	(13%)

CASH FLOW
Cash provided by operations		10.0		18.4	(46%)		29.3		39.1	(25%)
Adjusted operating cash flow⁽¹⁾		5.7		7.9	(28%)		20.5		24.5	(16%)
Free cash flow⁽¹⁾		9.8		18.2	(46%)		28.8		37.7	(24%)

PRODUCTION AND SALES
Electricity (GWh)		191		210	(9%)		597		647	(8%)

AVERAGE-REALIZED PRICE ⁽¹⁾
Electricity ($/MWh)	$	54.57	$	53.10	3%	$	53.99	$	55.50	(3%)

UNIT OPERATING COSTS ⁽¹⁾($/MWh)
Base		17.38		14.19	22%		15.79		15.18	4%
Non-base⁽²⁾		7.22		2.40	201%		4.25		2.82	51%
		24.60		16.59	48%		20.04		18.00	11%

NET CAPACITY FACTOR (%)		60		65	(8%)		62		67	(7%)

SPENDING ON CAPITAL
Sustaining	$	0.2	$	0.2	–	$	0.5	$	1.4	(64%)
	$	0.2	$	0.2	–	$	0.5	$	1.4	(64%)

^{(1) For additional information see the Non-GAAP measures section.}

^{(2) Costs incurred at the Boca de Jaruco and Puerto Escondido

facilities that otherwise would have been capitalized if these

facilities were not accounted or as service concession arrangements.}

Power production in Q3 2018 was 191 gigawatt hours (“GWh”) of
electricity, down 9% from 210 GWh for the comparable period of 2017. The
decline was largely due to reduced gas supply used for power generation
activities and the timing of maintenance activities.

Average-realized prices in Q3 2018 declined to $54.57 per megawatt hour
(“MWh”) of electricity from $53.10 per MWh in Q3 2017. The decline was
due to the appreciation of the Canadian dollar relative to the U.S.
currency.

Revenue in Q3 2018 totaled $11.7 million, down 4% from $12.2 million for
Q3 2017. The decrease is attributable to lower production and lower
realized prices.

Free cash flow in Q3 2018 decreased by 46% to $9.8 million due to the
higher operating costs, which were negatively impacted by a weakening
Canadian dollar relative to the U.S. currency.

Unit operating cost in Q3 2018 was $24.60 per MWh of electricity, up 48%
from $16.59 per MWh for Q3 2017. The increase was mainly due to the
timing of maintenance activities as a major inspection on one of the gas
turbines in Boca was completed in Q3 2018.

Total capital spending in Q3 2018 was negligible and relatively
unchanged from last year.

2018 REVIEW OF STRATEGIC PRIORITIES

The table below lists Sherritt’s Strategic Priorities for 2018, and
summarizes how the Corporation has performed against those priorities on
a year to date basis.

Strategic Priorities	2018 Actions	Status
PRESERVE LIQUIDITY AND BUILD BALANCE SHEET STRENGTH	Continue to emphasize de-leveraging of the balance sheet	Eliminated $131.9 million of long-term debt through September 30, 2018 as a result of efforts to purchase outstanding debentures using the proceeds of a $132 million equity raise completed in January, 2018. The debt reduction also allows Sherritt to generate annual savings of approximately $11 million in interest expense.
	Optimize working capital and receivables collection	Management continues to take action to expedite Cuban energy receipts and received US$14.0 million in payments in Q3 2018. Overdue scheduled receivables at quarter end were US$147.8 million.
	Operate the Metals businesses to maintain a leadership position as a low-cost producer of finished nickel and cobalt while maximizing Free Cash Flow	The Moa JV and Fort Site has generated $92.9 million of adjusted operating cash flow through September 30, 2018, up 129% from the same period in 2017.
UPHOLD GLOBAL OPERATIONAL LEADERSHIP IN FINISHED NICKEL LATERITE PRODUCTION	Further reduce NDCC towards the goal of being consistently in the lowest cost quartile.	NDCC at the Moa JV through September 30, 2018 was US$1.96/lb, down 23% from last year. Moa’s NDCC has been consistently ranked within the lowest cost quartile relative to other nickel producers since Q1 2017. Ambatovy’s NDCC of US$3.91/lb in Q3 2018 improved by 8% from last year, due, in part, to efforts to increase production stability and acid plant reliability.
	Maximize production of finished nickel and cobalt and improve predictability over 2017 results	Combined nickel production at the Moa JV and the Ambatovy JV improved in Q3 2018 by 2% to 16,531 tonnes (100% basis) from 16,215 tonnes (100% basis) in Q3 2017. The improvement was due to efforts aimed at increasing production stability and equipment reliability, particularly at the Ambatovy JV. Through September 30, 2018, the Moa JV deployed new mining equipment, and made progress on the buildout of a new slurry preparation plant dump pocket. Combined, these initiatives are expected to contribute to higher production at the Moa JV and Ambatovy in the second half of 2018 when compared to the first six months of the current year.
	Achieve peer leading performance in environmental, health, safety and sustainability	Through September 30^th, Sherritt’s operations at Moa, Ambatovy, Oil & Gas and Power had zero work-related fatalities and one lost time incident. Sherritt’s Recordable injury frequency rate in Q3 was 0.17 and the lost time injury frequency rate was 0.05, both are in the lowest quartile of benchmark peer set data.
OPTIMIZE OPPORTUNITIES IN CUBAN ENERGY BUSINESS	Successfully execute Block 10 drilling program	Drilling on Block 10 resumed in July 2018. Drilling, which is currently ongoing, has made effective use of expandable casing technology for dealing with lost circulation zones. Recently, wellbore instability has been encountered between the upper and lower reservoirs. To manage the wellbore instability, a portion of the wellbore below the upper reservoir is currently being re-drilled and results are anticipated in Q4 2018. Total capital spending for the oil division, including added costs for drilling on Block 10, are now estimated at approximately US$29 million for 2018.
	Review opportunities to leverage Oil and Gas experience and relationships	The Production Sharing Contract at Puerto Escondido/ Yumuri was extended for three years to 2021.

OUTLOOK

2018 PRODUCTION, UNIT OPERATING COST AND CAPITAL SPENDING GUIDANCE

		Year-to-date	Updated
	2018	actual at	Guidance at
Production volumes, unit operating costs and spending on capital	Guidance	September 30, 2018	September 30, 2018

Production volumes
Moa Joint Venture (tonnes, 100% basis)
Nickel, finished	31,500 – 32,500	22,120	30,500 – 31,000
Cobalt, finished	3,500 – 3,800	2,378	3,250 – 3,400
Ambatovy Joint Venture (tonnes, 100% basis)
Nickel, finished	35,000 – 38,000⁽¹⁾	22,742	Unchanged
Cobalt, finished	3,100 – 3,400⁽¹⁾	1,967	Unchanged
Oil – Cuba (gross working-interest, bopd)	4,300 – 4,800	4,973	Unchanged
Oil and Gas – All operations (net working-interest, boepd)	2,300-2,600⁽²⁾	2,414	Unchanged
Electricity (GWh, 33⅓% basis)	750 – 800	597	Unchanged

Unit operating costs
NDCC (US$ per pound)
Moa Joint Venture	$1.75 – $2.25⁽²⁾	$1.96	$1.90 – $2.40
Ambatovy Joint Venture	$3.00 – $3.50⁽¹⁾	$4.07	$3.75 – $4.25
Oil and Gas – Cuba (unit operating costs, $ per barrel)	$22.00 – $23.50	$18.72	Unchanged
Electricity (unit operating cost, $ per MWh)	$20.75 – $21.50	$20.04	Unchanged

Spending on capital (US$ millions)
Moa Joint Venture (50% basis), Fort Site (100% basis)⁽³⁾	US$41 (CDN$52)	US$21 (CDN$27)	US$31 (CDN$40)
Ambatovy Joint Venture (12% basis)⁽⁴⁾	US$13 (CDN$17)	US$8 (CDN$10)	Unchanged
Oil and Gas	US$25 (CDN$32)⁽¹⁾	US$14 (CDN$18)	US$29 (CDN$37)
Power (33⅓% basis)	US$1 (CDN$1)	US$1 (CDN$1)	Unchanged
Spending on capital (excluding Corporate)	US$80 (CDN$102)	US$44 (CDN$56)	US$74 (CDN$95)

^{(1) Guidance updated June 30, 2018.}

^{(2) Guidance updated March 31, 2018.}

^{(3) Spending is 50% of US$ expenditures for Moa JV and 100%

expenditures for Fort Site fertilizer and utilities.}

^{(4) Sherritt’s ownership interest at the Ambatovy Joint Venture was

reduced to 12% following a restructuring completed on December 10, 2017.}

NON-GAAP MEASURES

The Corporation uses combined results, Adjusted EBITDA, average-realized
price, unit operating cost, adjusted operating cash flow and free cash
flow to monitor the performance of the Corporation and its operating
divisions. Management believes these measures enable investors and
analysts to compare the Corporation’s financial performance with its
competitors and/or 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. See Sherritt’s Management’s
Discussion and Analysis for the period ended September 30, 2018 for
further information and reconciliation of non-GAAP measures to the most
directly comparable IFRS measure.

CONFERENCE CALL AND WEBCAST

Sherritt will hold its conference call and webcast November 1^st
at 9:00 a.m. Eastern Time to review its Q3 and 2018 results.

Conference Call and Webcast:		November 1, 2018, 9:00 a.m. ET
North American callers, please dial:		1-866-521-4909
International callers, please dial:		647-427-2311
Live webcast:		www.sherritt.com

An archive of the webcast and replay of the conference call will also be
available on the website.

COMPLETE FINANCIAL STATEMENTS AND MANAGEMENT’S DISCUSSION AND ANALYSIS

Sherritt’s complete condensed consolidated financial statements and MD&A
for the three and nine months ended September 30, 2018 are available at www.sherritt.com
and should be read in conjunction with this news release. Financial and
operating data can also viewed in the investor relations section of
Sherritt’s website.

ABOUT SHERRITT

Sherritt is a world 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 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”.

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”, “potential”, “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 press release and certain expectations
regarding production volumes, operating costs and capital spending;
supply, demand and pricing outlook in the nickel and cobalt markets;
anticipated payments of outstanding receivables; future distributions
from the Moa Joint Venture, funding of future Ambatovy cash calls, drill
plans and results on exploration wells and amounts of certain other
commitments.

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;
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. 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, changes
in the global price for nickel, cobalt, oil and gas or certain other
commodities; share price volatility; level of liquidity; access to
capital; access to financing; risks related to the liquidity and funding
of the Ambatovy Joint Venture; the risk to Sherritt’s entitlements to
future distributions from the Moa and Ambatovy joint ventures; 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; 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;
environmental risks and risks related to 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 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 Sherritt’s operations in
Madagascar; risks associated with Sherritt’s development, construction
and operation of large projects generally; risks related to the accuracy
of capital and operating cost estimates; 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; risks
relating to community relations and maintaining the Corporation’s social
license to grow and operate; 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; risks to information technologies systems and cybersecurity;
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. 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, including without limitation the
Annual Information Form of the Corporation dated March 20, 2018 for the
period ending December 31, 2017, which is available on SEDAR at www.sedar.com.

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.

View source version on businesswire.com:

https://www.businesswire.com/news/home/20181031005873/en/

Sherritt International Corporation

Joe Racanelli, Director
of Investor Relations
Telephone: 416.935.2457
Toll-free:
1.800.704.6698
investor@sherritt.com
www.sherritt.com

Source: Sherritt International Corporation

Sherritt Reports Higher Production at Moa JV and Stronger Balance Sheet for Q3 2018

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