• Sherritt remains very focused on the Dodds-Roundhill project.

• Sherritt is currently evaluating our project design and schedule with respect to emerging coal gasification market opportunities.

• Sherritt will be furthering our engineering studies to select the end products that the gasification facility will produce, which may include ultra-clean diesel, synthetic natural gas, methanol to gasoline, and hydrogen.

General Information

Sherritt, through its Carbon Development Partnership with the Ontario Teachers' Pension Plan, has proposed to develop Canada's first commercial coal gasification facility, the Dodds-Roundhill Coal Gasification Project.

Coal gasification is a clean alternative for converting coal into energy products. It involves the following:

• The gasification process breaks down coal to produce three main chemical components: Hydrogen, carbon monoxide and carbon dioxide, collectively known as synthesis gas (syngas).

• Syngas can be used for fuel, as a petrochemical feedstock, or can be further processed into hydrogen for use by bitumen upgraders and crude oil refineries in Alberta. Other potential products include methanol to gasoline, synthetic natural gas or clean diesel.

• The primary byproduct of gasification is high-purity carbon dioxide, which can be easily captured.

• Carbon dioxide can be stored underground (sequestered) or used in enhanced oil recovery rather than emitted directly into the atmosphere, which has obvious environmental benefits.

The proposed Project will include a surface coal mine and a coal gasification facility located approximately 80 km southeast of Edmonton, Alberta - refer to map on sidebar.

Alberta is the ideal place in Canada to introduce this technology, as the province has over 70% of the country's coal resources as well as an internal industrial demand.

Project Details

• Major components:
    o Surface coal mine
    o Coal gasification complex
• Proposed mine permit area: ~300 km2 with sufficient coal to feed complex for ~40 years
• Mining foot print per year: ~1.5 to 2.5 square kilometers
• Total reserve energy value: ~9 trillion cubic feet of natural gas equivalent or 1 billion barrels of oil equivalent
• Employment: 1,000+ workers on average in first phase of construction and could create up to 4,000 jobs (direct, indirect and induced) at peak times. Permanent workforce expected to be between 300 and 400
• Reclamation activities: Systemic, ongoing and well defined in mine plan and operating license

Environment

Sherritt has a long history of meeting environmental standards at its mining operations in Alberta and has won awards for its reclamation efforts. In 2007, Sherritt's coal operations levelled 1,064 hectares of land and completed 654 hectares of top soiling in western Canada. Sherritt's application for development of the Dodds-Roundhill Coal Gasification Plant will be subject to a detailed technical review by local, provincial and federal authorities.

Mining Process

Surface mining, which is the most efficient, safe, environmentally friendly and economical approach to recovering Dodds-Roundhill coal will produce coal feedstock for the proposed project.

Prior to mining, all topsoil will be removed and retained in stockpiles for future use or hauled to areas already undergoing reclamation.

Suitable subsoil material will be recovered and hauled to already mined-out areas undergoing reclamation.

The dragline will remove the overburden (clays and tills) to expose the coal seam(s).The overburden is placed in close proximity to the area being mined.

Loaders or backhoes will be used in the pit to load coal directly into trucks.

Bulldozers will re-contour the replaced overburden, leveling and packing the material as well as recreating contours (e.g. hills, valleys) as desired.

Suitable subsoil material will be replaced after the leveled overburden settles.

Topsoil salvaged prior to mining will be replaced on the leveled subsoil.

The land will then be re-vegetated and returned to agricultural production or other acceptable land use as defined in the mine's operating licenses.

Coal Transportation

Once mined, the coal will be transported by truck over private haul roads from the mine to a storage area at the plant site. The raw coal will then be processed before it is fed into the  gasification facility in order to ensure a consistent quality feedstock for the gasifier.

Processing the raw coal may involve the following steps:

• Crushing, to reduce the size of the coal;

• Washing, to reduce the ash content; and

• The processed coal will then be stored in a silo or hopper until it is fed into the plant.

Coal Gasification Process

Coal is fed to a gasifier unit, where it is exposed to steam and oxygen under high temperatures and pressures. The coal, oxygen and steam will react to form three main chemical elements - hydrogen, carbon monoxide and carbon dioxide. This mixture is commonly referred to as synthesis gas (syngas)

The syngas is then cooled with water (quenched) and scrubbed in order to remove residual particulates (ash) and trace gaseous by-products such as ammonia. The separated residual particulates leave the gasifier as inert glass-like solids. This material will be used as backfill in the mined out area or it may have potential use as a fill material for road construction.

After the syngas is partially cleaned, it is then mixed with additional steam and fed to the shift reactors where the carbon monoxide content is converted to hydrogen and carbon dioxide.

Carbon dioxide is then separated from the hydrogen into a highly concentrated form. It can then be transported by pipeline for third-party use in enhanced oil recovery or sequestered which prevents it from escaping to the atmosphere.

In the final processing step, the hydrogen is purified and then shipped to markets via a pipeline.

Reclamation

Reclamation begins with the organized storage of topsoil removed during the first stage of mining and is complete when the land is returned to a state of acceptable land use. Land typically would be reclaimed within six years.