Sherritt Reports Q2 Results and Strong Liquidity from Cobalt Swap

NOT FOR DISTRIBUTION TO U.S. NEWSWIRE SERVICES OR FOR DISSEMINATION IN THE U.S.

Sherritt International Corporation ("Sherritt", the "Corporation") (TSX: S), a world leader in using hydrometallurgical processes to mine and refine nickel and cobalt metals deemed critical for the energy transition, today reported its financial results for the three and six months ended June 30, 2023. All amounts are in Canadian currency unless otherwise noted.

"We are pleased with the success of the Cobalt Swap agreement and the liquidity it provides Sherritt. While we had some production challenges this quarter, our Moa Joint Venture's strong cash position and expected cash flow generation will continue to support our expansion program," said Leon Binedell, President and CEO of Sherritt International. "Our current liquidity profile and expected future Cobalt Swap distributions creates significant strategic optionality for Sherritt."

Mr. Binedell continued, "We paid cash interest on our PIK notes in July 2023 and following a second PIK note cash interest payment in January 2024 we will have the opportunity to provide returns to our shareholders. At the end of the quarter, our capacity to make restricted payments under the Second Lien Note Indenture was approximately $114 million allowing significant flexibility to pursue investments and future shareholder returns."

SELECTED Q2 2023 DEVELOPMENTS

• Available liquidity in Canada of $125 million largely driven by the successful completion of the first year of the Cobalt Swap.
  • Final 802 tonnes of cobalt dividend required to fulfill the 2,082 tonne annual maximum volume received;
  • Cash dividend of US$48.5 million ($64 million) received as a top-up payment as the total in-kind value of cobalt received did not meet the annual dollar minimum of US$114 million (US$57 million per partner);
  • General Nickel Company's (GNC) 50% share of the cobalt and cash dividends, collectively US$57 million ($76 million) was redirected to Sherritt as payment towards the GNC receivable; and
  • Sherritt sold 1,064 tonnes, $38.4 million, of cobalt (1,760 tonnes, $68.2 million for the year to date) and has received $35.1 million in cash from sales ($53.9 million for the year to date).
• Sherritt's share of finished nickel and cobalt production at the Moa JV was 3,268 tonnes and 331 tonnes, 12% and 16% lower, respectively, than the prior year quarter.
• Net direct cash cost (NDCC) ⁽¹⁾ was US$7.22/lb in Q2 2023 compared to US$2.19/lb in Q2 2022 primarily due to 63% lower cobalt and 35% lower fertilizer realized prices. Sherritt revised its 2023 NDCC guidance range from US$5.00 – US$5.50 to US$6.75 – US$7.25 per pound of nickel sold.
• Power production increased by 29% compared to Q2 2022 primarily from the receipt of gas from two new wells and improved equipment availability. Sherritt updated its 2023 annual production guidance range from 575 – 625 GWh to 650 – 700 GWh and reduced its unit operating cost guidance range from $28.50 – $30.00/MWh to $27.25 – $28.75/MWh.
• Net earnings from continuing operations was $0.3 million, or $nil per share in Q2 2023, compared $81.5 million, or $0.21 per share, in Q2 2022.
• Adjusted EBITDA ⁽¹⁾ in the quarter was $15.7 million compared to $102.0 million in Q2 2022 primarily as a result of lower nickel, cobalt and fertilizer average-realized prices ⁽¹⁾ .
• Sherritt released its 2022 Sustainability Reports which continued to show progress on its ESG goals and achieved another successful independent audit on Sherritt's conformance with the LME's responsible sourcing requirements.
• Sadly, Sherritt reported two fatalities at the Moa JV mine site. Working with our Cuban partners, a rigorous root cause analysis and review of the site's fatality prevention measures was completed, and improvements are being implemented to enhance and maintain a safe work environment.

DEVELOPMENTS SUBSEQUENT TO QUARTER END

• In accordance with the Cobalt Swap, subsequent to quarter-end:
  • Sherritt sold 114 tonnes, $4.3 million, of cobalt and received $13.3 million in cash from prior cobalt sales. The remaining 208 tonnes of cobalt are expected to be sold and all cash is expected to be received by the end of Q3 2023.
• Sherritt paid $3.4 million cash interest in July on its 10.75% unsecured PIK option notes due 2029 (PIK Notes). Under the terms of the PIK Notes Indenture, payment of cash interest during the preceding consecutive 12-month period permits the Corporation to provide returns to shareholders, including share repurchases and dividends.
• Sherritt received confirmation from the London Metals Exchange (LME) that Sherritt is in conformance with LME's Track B Responsible Sourcing Requirements.

Q2 2023 FINANCIAL HIGHLIGHTS

Cash and cash equivalents as at June 30, 2023 were $176.0 million, up from $138.3 million at March 31, 2023. During Q2 2023, Sherritt received $64.0 million as a top-up dividend on the Cobalt Swap and $35.1 million in cash from the sale of cobalt to third-parties and used $17.6 million for operating activities at Fort Site primarily due to timing of payments relative to strong pre-sales received in Q1, $9.4 million for interest payment on Second Lien Notes, $5.0 million to pay down its revolving credit facility and $5.3 million for the repurchase of $7.4 million of PIK Notes. In addition, Energas paid $8.8 million (33⅓% basis) to GNC in the quarter ($14.8 million for year to date), in Cuban pesos, in accordance with the Cobalt Swap.

Sherritt did not make any mandatory redemptions on the Second Lien Notes during the quarter as the minimum liquidity condition pursuant to the provisions of the indenture agreement was not met.

For the two-quarter period ended June 30, 2023, Excess Cash Flow, as defined and calculated pursuant to the Second Lien Notes Indenture, was $57.1 million. Subject to the minimum liquidity threshold of $75.0 million pursuant to the Second Lien Notes Indenture, at the interest payment date in October 2023, the Corporation will be required to redeem, at par, total Second Lien Notes equal to 50% of Excess Cash Flow, or $28.6 million. In determining the minimum liquidity amounts in October 2023, the $7.8 million of cash used to repurchase the 10.75% unsecured PIK option notes due 2029 during the six months ended June 30, 2023 and any amounts drawn on the Credit Facility will be added back in the calculation of minimum liquidity before and after any such redemption.

REVIEW OF OPERATIONS

Metals

Revenue for the three months ended June 30, 2023 was 11% lower compared to the same period in the prior year. Lower nickel revenue was a result of 20% lower average-realized prices ⁽¹⁾ on unchanged sales volume in Q2 2023. Higher cobalt revenue for Q2 2023 was primarily attributable to a 329% increase in sales volume, which included the additional 50% of sale volume of re-directed finished cobalt received and sold by Sherritt under the Cobalt Swap. This increase more than offset the impact of a 63% decline in realized prices. On a comparative basis, based on Sherritt's 50% share only, cobalt sales volume was 532 tonnes in Q2 2023 compared to 248 tonnes in Q2 2022.

Fertilizer revenue was lower for Q2 2023 primarily as a result of the 35% lower average-realized price compared to the prior year period. The impact of lower average-realized price was partly offset by a 27% increase in sales volume in the current year period.

Mixed sulphides production at the Moa JV for the three months ended June 30, 2023 was 3,783 tonnes, down 3% from the same period in the prior year. While ore blending challenges from Q1 2023 were resolved, the lower production in Q2 was primarily due to unplanned maintenance in the hydrogen plant which was resolved in the quarter.

Sherritt's share of finished nickel production for Q2 2023 totaled 3,268 tonnes and was 12% lower than the same period in the prior year primarily as a result of lower mixed sulphide feed availability at the refinery. Finished cobalt production for Q2 2023 of 331 tonnes was 16% lower consistent with lower nickel production. The annual refinery shutdown occurred in Q2 similar to last year and production has since resumed to normal.

Maintenance challenges at the Moa mine in the first half of the year, coupled with the ore blending challenges in Q1 have impacted feed availability at the refinery. As a result, full year production is expected to be at the lower end of the guidance range for the year; however, additional third-party feed has been secured to utilize existing refinery capacity and offset shortfalls in Moa mine production from the first half of the year.

Fertilizer production for the three months ended June 30, 2023 was 16% lower compared to the same periods in the prior year primarily as a result of lower metals production and unplanned ammonia plant maintenance during the period.

Mining, processing and refining (MPR) costs per pound of nickel sold for the three months ended June 30, 2023 was up 16% compared to the same period in the prior year. Higher MPR costs reflects lower production volumes and the cost associated with the significantly higher cobalt sales volume in the current year period. The higher MPR costs were partly offset by lower input commodity prices in Q2, including a 49% decrease in global sulphur prices, a 50% decrease in natural gas prices, and a 24% decrease in fuel oil prices.

NDCC ⁽¹⁾ per pound of nickel sold increased to US$7.22/lb in Q2 2023 from US$2.19/lb in Q2 2022. The higher NDCC was primarily due to significantly lower fertilizer and cobalt by-product credits ⁽²⁾ as lower average-realized prices more than offset higher sales volumes, and higher MPR costs in the current year period as discussed above. Q2 2022 saw a spike in cobalt and fertilizer reference prices following the Russian invasion of Ukraine.

Based on the NDCC for the six month ended June 30, 2023 of US$6.88/lb, expected production and materially lower realized prices for cobalt for the balance of the year, Sherritt revised its 2023 NDCC guidance range from US$5.00 – US$5.50 to US$6.75 – US$7.25 per pound of nickel sold. Revised NDCC guidance reflects a full year average cobalt reference price of US$16.80/lb compared to US$23.50/lb in Sherritt's original estimates and incremental costs from third-party feed purchases in the second half of the year as noted above. Continuing maintenance challenges in the fertilizer business are expected to impact fertilizer production volumes reducing fertilizer by-product credits for the remainder of the year.

Sustaining spending on capital ⁽¹⁾ in Q2 2023 was $13.6 million, up 9% from $12.5 million in Q2 2022. The year-over-year increase was due primarily to timing of planned spending at both the Moa JV and Fort Site. Growth spending on capital was $2.5 million, most of which was related to spending on the slurry preparation plant as part of the Moa JV expansion program.

Based on spending to date and expected timing of spending for the balance of the year, 2023 guidance for sustaining and growth spending on capital are unchanged for the year.

Moa JV expansion program update

Progress for the expansion program in Q2 2023 included:

Slurry Preparation Plant (SPP):

The SPP construction continues to progress and remains on budget and on time for expected completion in early-2024:

• structural steel and field assembly of major equipment completed;
• installation of piping, electrical cable tray and electrical cables and instrumentation progressing on schedule;
• slurry and water return pipelines are 72% complete and are expected to be finished in early Q4 2023; and
• the commissioning plan and schedule is being developed and is expected to be completed in August, 2023

Processing Plant:

The processing plant expansion is progressing on schedule for an expected end of year 2024 completion:

• 53% of procurement packages for the Sixth Leach Train have been awarded within budget, including all long lead items;
• an effort-hour loaded schedule has been developed for the Sixth Leach Train and is currently under review and is expected to be finalized in Q3 2023;
• engineering for the Fifth Sulphide Precipitation Train is in progress and is expected to be completed in Q3 2023; and
• vendor selected to supply the materials and erect the acid tanks to whom the contract is expected to be awarded when the construction permit is granted by the Cuban authorities, expected in the second half of 2023.

Power

Revenue for the three months ended June 30, 2023 was $10.9 million, up 27% compared to the same period in the prior year primarily due to higher production.

Electricity production for the three months ended June 30, 2023 was 172 GWh compared to 133 GWh in the prior year period. The increase in electricity production is a result of increased equipment availability as one turbine was brought back online following completion of maintenance work and successful efforts to increase availability of gas.

During the quarter, Energas began receiving additional gas from two gas wells drilled by Union Cubapetroleo. The gas is provided to Energas free of charge for the use in power generation. Opportunities to further increase gas supply for additional power production continue to be investigated.

Unit operating costs ⁽¹⁾ for the three months ended June 30, 2023 was $34.13/MWh up 70% from the same period in 2022 primarily driven by higher maintenance costs due to timing of maintenance, partly offset by higher sales volumes.

As a result of successful efforts to increase available gas from two new wells, Sherritt updated its 2023 annual production guidance range from 575 – 625 GWh to 650 – 700 GWh and reduced its unit operating cost guidance range from $28.50 – $30.00/MWh to $27.25 – $28.75/MWh.

The Power business unit had $0.6 million spending on capital ⁽¹⁾ in Q2 2023 primarily driven by maintenance activities. Spending on capital is in line with guidance for the year.

Technologies

During the three months ended June 30, 2023, Technologies:

• continued to provide technical support, process optimization and technology development services to the Moa JV and the Fort Site and continued to support the Moa JV's expansion program;
• commenced its mixed hydroxide precipitate (MHP) test program supported by a funding commitment from Natural Resources Canada (NRCan);
• advanced its flowsheet enhancements on its next-generation laterite (NGL) processing technology and commenced new batch testing on specific laterite opportunities to test NGL's applicability; and
• continued to progress on commercialization activities around proprietary technologies and innovative industry solutions.

OUTLOOK

2023 production volumes, unit operating costs and spending on capital guidance

Moa Joint Venture

Maintenance challenges at the Moa mine in the first half of the year, coupled with the ore blending challenges in Q1 have impacted feed availability at the refinery. As a result, full year production is expected to be at the lower end of the guidance range for the year, however, additional third-party feed has been secured to utilize existing refinery capacity and offset shortfalls in Moa mine production from the first half of the year.

Based on the NDCC for the six months ended June 30, 2023 of US$6.88, expected production and materially lower realized prices for cobalt for the balance of the year, Sherritt revised its 2023 NDCC guidance range from US$5.00 – US$5.50 to US$6.75 – US$7.25 per pound of nickel sold. Revised NDCC guidance reflects a full year average cobalt reference price of US$16.80/lb compared to US$23.50/lb in Sherritt's original estimates and incremental costs from third-party feed purchases in the second half of the year as noted above. Continuing maintenance challenges in the fertilizer business are expected to impact fertilizer production volumes reducing fertilizer by-product credits for the remainder of the year.

Power

As a result of successful efforts to increase available gas from two new wells, Sherritt updated its 2023 annual production guidance range from 575 – 625 GWh to 650 – 700 GWh and reduced its unit operating cost guidance range from $28.50 – $30.00/MWh to $27.25 – $28.75/MWh.

CONFERENCE CALL AND WEBCAST

Sherritt will hold its conference call and webcast July 27, 2023 at 10:00 a.m. Eastern Time to review its Q2 2023 results. Dial-in and webcast details are as follows:

Please dial in 15 minutes before the start of the call to secure a line. Alternatively, listeners can access the conference call and presentation via the webcast available on Sherritt's website.

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

FINANCIAL STATEMENTS AND MANAGEMENT'S DISCUSSION AND ANALYSIS

Sherritt's condensed consolidated financial statements and MD&A for the three and six months ended June 30, 2023 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 on SEDAR at www.sedar.com .

NON-GAAP AND OTHER FINANCIAL MEASURES

Management uses the following non-GAAP and other financial measures in this press release and other documents: combined revenue, adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), average-realized price, unit operating cost/net direct cash cost (NDCC), adjusted net earnings/loss from continuing operations, adjusted earnings/loss from continuing operations per share, spending on capital and combined free cash flow.

Management uses these measures to monitor the financial performance of the Corporation and its operating divisions and 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 are intended to provide additional information, not to replace International Financial Reporting Standards (IFRS) measures, and 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.

The non-GAAP and other financial measures are reconciled to their most directly comparable IFRS measures in the Appendix below. This press release should be read in conjunction with Sherritt's consolidated financial statements for the three and six months ended June 30, 2023.

ABOUT SHERRITT INTERNATIONAL CORPORATION

Sherritt is a world leader in using hydrometallurgical processes to mine and refine nickel and cobalt – metals deemed critical for the energy transition. Sherritt's Moa Joint Venture has a current estimated mine life of 26 years and 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's Power division, through its ownership in Energas S.A., is the largest independent energy producer in Cuba with installed electrical generating capacity of 506 MW, representing approximately 10% of the national electrical generating capacity in Cuba. The Energas facilities are comprised of two combined cycle plants that produce low-cost electricity from one of the lowest carbon emitting sources of power in Cuba. Additionally, its Technologies Group creates innovative, proprietary solutions for natural resource-based industries around the world to improve environmental performance and increase economic value. Sherritt'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 regarding strategies, plans and estimated production amounts resulting from expansion of mining operations at the Moa Joint Venture; growing and increasing nickel and cobalt production; expansion program update as it relates to the Slurry Preparation Plant and the Moa Processing Plant; commercializing Technologies projects and growing shareholder value; statements set out in the "Outlook" section of this press release and certain expectations regarding production volumes and increases, inventory levels, operating costs and capital spending and intensity; sales volumes; revenue, costs and earnings; the availability of additional gas supplies to be used for power generation; the effect of maintenance challenges at the Moa mine;, the anticipated repayment of all outstanding receivables through dividends, including in the form of finished cobalt or cash, the timing and amount of cobalt dividend distributions; sales of finished cobalt and associated receipts; distributions from the Corporation's Moa Joint Venture in general; the opportunity to pursue options for providing returns to shareholders as a result of the payment of cash interest on the PIK Notes; the impact of the U.S. sanctions on Cuba; anticipated economic conditions in Cuba; sufficiency of working capital management and capital project funding; strengthening the Corporation's capital structure 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; global demand for electric vehicles and the anticipated corresponding demand for cobalt and nickel; the commercialization of certain proprietary technologies and services; advancements 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 certain corporate objectives, goals and plans for 2023. 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 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, 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 non-compliance 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 regulations; 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 securing 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 Corporation. 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 factors 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 three and six months ended June 30, 2023 and the Annual Information Form of the Corporation dated March 31, 2023 for the period ending December 31, 2022, 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.

APPENDIX – NON-GAAP AND OTHER FINANCIAL MEASURES

Management uses the measures below to monitor the financial performance of the Corporation and its operating divisions and 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 are intended to provide additional information, not to replace IFRS measures, and 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.

The non-GAAP and other financial measures are reconciled to the most directly comparable IFRS measure as presented in the condensed consolidated financial statements for the three and six months ended June 30, 2023.

Combined revenue

The Corporation uses combined revenue as a measure to help management assess the Corporation's financial performance across its operations. Combined revenue includes the Corporation's consolidated revenue and revenue of the Moa JV on a 50% basis, which is accounted for using the equity method for accounting purposes.

Management uses this measure to reflect the Corporation's economic interest in its operations prior to the application of equity accounting to help allocate financial resources and provide investors with information that it believes is useful in understanding the scope of Sherritt's business, based on its economic interest, irrespective of the accounting treatment.

The table below reconciles combined revenue to revenue per the financial statements:

Adjusted EBITDA

The Corporation defines Adjusted EBITDA as earnings (loss) from operations and joint venture, which excludes net finance expense and loss from discontinued operations, net of tax, as reported in the financial statements for the period, adjusted for: depletion, depreciation and amortization; impairment losses on non-current non-financial assets and investments; and gains or losses on disposal of property, plant and equipment of the Corporation and the Moa JV. The exclusion of impairment losses eliminates the non-cash impact of the losses.

Management uses Adjusted EBITDA internally to evaluate the cash generation potential of Sherritt's operating divisions on a combined and segment basis as an indicator of ability to fund working capital needs, meet covenant obligations, service debt and fund capital expenditures, as well as provide a level of comparability to similar entities. Management believes that Adjusted EBITDA provides useful information to investors in evaluating the Corporation's operating results in the same manner as management and the Board of Directors.

The tables below reconcile earnings from operations and joint venture per the financial statements to Adjusted EBITDA:

Average-realized price

Average-realized price is generally calculated by dividing revenue by sales volume for the given product in a given division. The average-realized price for power excludes by-product revenue, as this revenue is not earned directly for power generation. Transactions by a Moa JV marketing company, included in other revenue, are excluded.

Management uses this measure, and believes investors use this measure, to compare the relationship between the revenue per unit and direct costs on a per unit basis in each reporting period for nickel, cobalt, fertilizer and power and provide comparability with other similar external operations.

Average-realized price for fertilizer is the weighted-average realized price of ammonia and various ammonium sulphate products.

Average-realized price for nickel and cobalt are expressed in Canadian dollars per pound sold, while fertilizer is expressed in Canadian dollars per tonne sold and electricity is expressed in Canadian dollars per megawatt hour sold.

The tables below reconcile revenue per the financial statements to average-realized price: