Dynatec currently is 45% owner and operator at Ambatovy. Sumitomo Corp. and Korea Resources Corp. each own 27.5%. Korea Resources is leading a South Korean consortium that includes Daewoo International, Keangnam Enterprises and STX Corp. SNC-Lavalin has agreed to acquire a 5% interest from Dynatec coincident with the closing of project debt financing, which is targeted for around the end of the second quarter of 2007. Closure of the SNCLavalin transaction will reduce Dynatec’s interest in the project to 40%.

The Ambatovy mine site is located 80 km east of Antananarivo, Madagascar. The project includes an open-pit mine and orepreparation plant at the mine site, a 220- km slurry pipeline, and a process plant and refinery a few kilometers from the Port of Toamasina to receive and process the slurried ore. The project is designed to produce 60,000 mt/y of nickel, 5,600 mt/y of cobalt, and 190,000 mt/y of ammonium sulphate. Reserve life is estimated at 27 years. Capital cost to develop the project is estimated at $2.5 billion. Initial production is scheduled for 2010.

Sherritt produces nickel, cobalt, thermal coal, oil, and electricity. Its metals division currently focuses on production of nickel and cobalt from laterite ores at Moa, Cuba, where it is 50% owner and operator. The division also has nickel and cobalt refining facilities at Fort Saskatchewan, Alberta. A phased expansion currently in progress will increase Moa production from 33,000 mt/y to 49,000 mt/y of nickel.

Assuming successful acquisition of Dynatec and successful development of the Ambatovy project, Sherritt is looking forward to increasing metal production at mines it operates to 109,000 mt/y of nickel and 10,600 mt/y of cobalt by 2010, with Sherritt’s equity interest in the production being approximately 49,000 mt/y of nickel and 4,740 mt/y of cobalt.

In addition to its Ambatovy interest, Dynatec owns 24.5% of FNX Mining, which has underground nickel mines and exploration and development projects in the Sudbury district of Ontario. Assuming closure of Sherritt’s acquisition of Dynatec, Sherritt plans to divest this FNX interest through the issuance of FNX shares to former Dynatec shareholders. Sherritt also has entered into an agreement with FNX, whereby FNX has the right, subject to closing of the transaction, to purchase Dynatec’s Mining Services Division from Sherritt for cash at a price based on independent assessments of value. FNX said it intends to exercise this right.