News Release2021-01-25 07:10 ET - News Release Mr. Joe Racanelli reports SHERRITT ANNOUNCES 2020 PRODUCTION RESULTS AND GUIDANCE FOR 2021 Sherritt International Corp. has released production results for the fourth quarter and full year ended Dec. 31, 2020, and provided guidance for expected production, unit costs and capital spending in 2021. Highlights Finished nickel production at the Moa Joint Venture ("Moa JV") in 2020 on a 100% basis was 31,506 tonnes, largely in line with guidance of 32,000 to 33,000 tonnes for the year. Production was negatively impacted by railway service disruptions in Q1, an extended plant shutdown in Q3 due to additional found work scope and reduced contractor availability due to COVID-19, and by unplanned repairs to autoclaves in Q4. Finished cobalt production was 3,370 tonnes on a 100% basis, consistent with guidance for the year. Power production in 2020 was 602 gigawatts (GWh) of electricity, exceeding guidance for the year. Finished nickel production in 2021 is expected to be 32,000 {ߕ –} 34,000 tonnes on a 100% basis. Finished cobalt production in 2021 is expected to be 3,300 {ࡊ –} 3,600 tonnes on a 100% basis. Net direct cash costs at the Moa JV are forecasted to be in the range of US$4.25 and US$4.75 per pound of finished nickel sold in 2021. Sherritt's share of capital spending in 2021 is forecasted at US$45 million. The total will be primarily earmarked to replace existing equipment and infrastructure at Moa operations as well as at the refinery in Fort Saskatchewan, Alberta. Summary of 2020 Production Results Production volumes1 Q4 2020FY2020Guidance for 2020 Moa Joint Venture (tonnes, 100% basis) Nickel 8,040 31,506 32,000-33,000 Cobalt 902 3,370 3,300-3,400 Oil - Cuba (gross working-interest, bopd) 2,599 2,947 3,000-3,300 Oil and Gas - All operations (net working-interest) boepd) 1,518 1,687 1,800-2000 Power (GWh, 331/3% basis) 144 602 500-550 Finished nickel production at the Moa JV in 2020 was 31,506 tonnes on a 100% basis, largely in line with guidance of 32,000 {භ –} 33,000 tonnes for the year. Finished cobalt production at the Moa JV in 2020 was 3,370 tonnes on a 100% basis, consistent with guidance for the year. Finished nickel and cobalt production in 2020 were negatively impacted by railway service disruptions in Q1, an extended plant shutdown in Q3 due to additional found work scope and reduced contractor availability due to COVID-19, and by unplanned repairs to autoclaves in Q4. Production totals achieved at the Moa JV in 2020 benefitted from additional health and safety measures implemented in Q1 to prevent the spread of COVID-19. Production for the Oil and Gas business in Cuba on a gross working interest was 2,947 barrels of oil per day, largely in line guidance for the year. Oil production in Cuba in 2020 was impacted by natural reservoir declines at Puerto Escondido/Yumuri. Power production in 2020 was 602 gigawatt hours of electricity, exceeding guidance for the year. Higher production for 2020 was largely due to the decision to defer maintenance activities initially planned for the year as a result of reduced liquidity. Sherritt expects to report its full operational and financial results for the three- and 12-month periods ended December 31, 2020 on February 10, 2021 after market close. 2021 Guidance Guidance for 2021 is based on a number of assumptions and estimates as of January 22, 2021 including, among other items, assumptions about commodity prices, anticipated costs and expenditures. Sherritt's guidance for 2021 also includes estimates based on a number of risks and uncertainties, which may cause actual results to differ materially. Summary of 2021 Production Forecasts Production volumes2 Guidance for 2021 Moa Joint Venture (tonnes, 100% basis) Nickel 32,000 {ᖢ –} 34,000 Cobalt 3,300 {ᗢ –} 3,600 Power (GWh, 331/3% basis) 450 - 500 In 2021, nickel and cobalt production at the Moa JV are forecasted at between 32,000 and 34,000 tonnes and 3,300 and 3,600 tonnes, respectively. Anticipated production for 2021 is consistent with initial guidance for 2020 and recent performance at the Moa JV, and reflective of the ongoing commitment to operational excellence and employee health and safety. The Power business is forecasted to produce between 450 and 500 gigawatt hours of electricity in 2021. The forecast for 2021 is lower than guidance for 2020 due to planned maintenance activities previously deferred in 2020. Production in 2021 may be also impacted by the availability of natural gas provided to Sherritt for power production activities and operational spending in relation to the receipt of funds under Sherritt's energy agreements with its Cuban partners. Summary of 2021 Unit Cost Forecasts Unit Operating Costs Guidance for 2021 Moa Joint Venture Net Direct Cash Costs (US$ per lb.)US$4.25 - $4.75 Power (unit operating costs, C$ per MWh) C$30.50 - $32.00 Net direct cash costs (NDCC) at the Moa JV are forecasted at between US$4.25 and US$4.75 per pound of finished nickel sold, marginally above 2020 guidance due to higher forecasted input commodity prices. Net direct cash costs include by-product credits and input commodities that are subject to considerable change given the volatility of cobalt, fertilizers, crude oil, natural gas and sulphur prices. Forecasted NDCC for 2021 is also subject to the seasonality of fertilizer sales, which are typically higher in the second and fourth quarters. NDCC guidance for 2021 is based on a forecast cobalt reference price of US$15.58 per pound and a forecast average sulphur price of US$145 per tonne including freight and handling. Operating costs for the Power business in 2021 are forecasted to be between C$30.50 and C32.50. The increase in forecasted unit costs for 2021 relative to 2020 guidance is due to the anticipated reduction in production due to planned maintenance activities that were deferred in 2020. Operating costs for 2021 may vary if maintenance activities are impacted by the delays in the collection of receivables. Summary of 2021 Spending Cost Forecasts Spending on capital3 (US$ millions/ C$millions) 2021 Guidance Moa Joint Venture (50% basis) and Fort Site (100% basis)US$44 (C$57) Power (331/3% basis). US$1.0 (C$1.3) Sherritt's share of capital spending at the Moa JV and at the Fort Site is forecasted at US$44 million in 2021. Capital spending in 2021 is planned for the continued replacement of mine and plant equipment. Capital spend at the Power business is forecasted at US$1 million, consistent with 2020 guidance.