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Sherritt Files Proxy Circular and Issues Letter to Shareholders

March 31, 2014

TORONTO, ONTARIO--(Marketwired - March 31, 2014) -


Sherritt International Corporation ("Sherritt") (TSX:S) announced today that it has filed a letter to shareholders and its proxy circular. Both can be downloaded from or

"Sherritt is gaining momentum with a disciplined strategy to pay down debt, cut costs and focus on our core areas of expertise," said Harold (Hap) Stephen, Chairman, Sherritt. "Now, a dissident shareholder with no experience in Sherritt's lines of business, a poor track record on corporate governance, no credible ideas for creating value beyond what management is already doing and a demand for a veto over potential growth plans, threatens to throw a wrench into the company's progress."

Sherritt has tried for many months to avoid a costly and disruptive proxy fight by reaching a constructive outcome that would maintain the quality of Sherritt's Board. Those efforts were spurned by the dissident, Mr. George Armoyan, Chief Executive Officer of Clarke Inc.

In addition to important information regarding the dissident nominees, the proxy circular also contains details on Sherritt's continuing Board renewal efforts, including information about new director nominee, Timothy Baker, former Chief Operating Officer of Kinross Gold Corporation and former senior executive of Placer Dome. The circular also contains details about corporate governance enhancements, refinements to Sherritt's director compensation plan and the implementation of "Say on Pay" advisory resolutions.

Mr. Stephen concluded: "Between now and the proxy voting deadline, shareholders will likely be subjected to hollow rhetoric from the dissident. I respectfully urge shareholders to cut through this noise, consider the qualifications of each group of director nominees and determine which directors will act in the best interests of Sherritt and all of its shareholders. The Board recommends shareholders protect the value of their investment in Sherritt by voting only the BLUE proxy FOR Sherritt's director nominees."

The letter to shareholders is below:

Dear Fellow Shareholders,

2013 was a challenging year for Sherritt as the prices for two of our main commodities, nickel and thermal coal, reached new lows. Together with significant ramp-up costs to develop the Ambatovy nickel project in Madagascar, this contributed to weak share price performance, and put a strain on Sherritt's financial position.

It was also a year of progress, as Sherritt delivered on a number of important initiatives in 2013 and in the first quarter of 2014 that have positioned it to benefit from improving market conditions and create shareholder value in 2014 and beyond. Specifically, we:

  • produced our highest ever volume of finished nickel and cobalt in 2013, reflecting increased production by 47% and 26%, respectively, over 2012;

  • announced the sale of our coal business for total consideration of $946 million, which was greater than the consensus analyst estimate value for this business;

  • achieved commercial production at Ambatovy - the largest finished nickel and finished cobalt operation from lateritic ore in the world, with an annual design capacity of 60,000 tonnes of nickel and 5,600 tonnes of cobalt, and an estimated mine life of 29 years;

  • commenced a project to reduce net direct cash costs at Moa nickel operations by up to 20% and expanded Sherritt's power generation business in Cuba;

  • increased our financial flexibility by reducing the Corporation's dividend to a more sustainable level in the face of persistently low commodity prices; and

  • continued to actively reduce our cost structure by eliminating $43 million of costs in 2013, deferring an additional $40 million of capital spending, and targeting a further $33 million in cost reductions for 2014.

Sherritt also continued to demonstrate a commitment to maintaining the highest standards of corporate governance. This includes our active and ongoing program of Board renewal that continues to bring fresh perspectives and independent voices to the Board as well as the implementation of refinements to Sherritt's director compensation plan, and the adoption of this year's annual and special shareholders meeting of "say-on-pay" advisory resolutions for executive compensation and director compensation.

On the strength of these accomplishments and with the additional benefit of improving nickel prices, we are entering a period of opportunity. The Board and management are executing on a clear business strategy aimed at improving shareholder value. Our immediate priority is to close the coal transaction and to use a significant portion of the proceeds of the coal transaction to reduce the Corporation's debt and improve our financial flexibility. In addition, we are working to reduce Sherritt's cost structure, enhance its shareholder outreach efforts, and capitalize on opportunities in areas where the Corporation has differentiating skills and experience, particularly our metals business and our Cuba platform. As we have said before, our interest in pursuing any acquisitions as part of our strategy will depend on the price of nickel and our overall liquidity position and our Board having a high degree of confidence that an acquisition would be accretive to cash flow and provide better returns than paying down additional debt.

To preserve and sustain Sherritt's positive momentum, it is essential that the Board continue to be comprised of directors with the relevant experience, industry knowledge and external credibility required to properly govern Sherritt and oversee our complex international businesses. While we cannot control commodity prices, we can and must ensure that we keep a Board in place that will provide strong oversight and act in the best interests of Sherritt and all of its shareholders.

For these and the other reasons, it is very important that you vote only the BLUE proxy to elect the qualified and independent directors recommended by Sherritt.

A dissident shareholder threatens to weaken Sherritt's governance and disrupt its positive momentum

What makes this year's vote so important is that a dissident shareholder with no experience in mining, metals or international business, a poor track record of corporate governance and no credible ideas for Sherritt beyond the Board's current strategy, is seeking to gain significant and disproportionate control of your Board.

Through a variety of public and private companies he controls, including Clarke Inc., as well as through personal holdings and positions held by members of his family, dissident shareholder George Armoyan recently secured voting control of about 5% of Sherritt's common shares. Despite only recently assembling his stake in Sherritt and the willingness of the Board and management to engage constructively with him, Mr. Armoyan initially requested three Board seats and that he be made Chairman of the Board of Sherritt. Shortly thereafter he requisitioned a shareholders meeting, via Clarke Inc., to reduce the size of the Board from nine directors to seven directors, to elect himself and two of his employees as directors of Sherritt in place of four of Sherritt's current independent directors, and to have shareholders vote on a number of other proposals. Despite having only a 5% voting position, Mr. Armoyan is seeking control of over 40% of your Board.

The Board has tried on several occasions to engage Mr. Armoyan in constructive discussion towards a mutually acceptable outcome. The Board told Mr. Armoyan it was willing to consider him as a potential nominee as part of its normal course director nominating process, if he would agree to refrain from launching a costly and distracting proxy contest. Like most companies, Sherritt's director nominating process includes customary background checks, interviews and other basic due diligence procedures. Mr. Armoyan refused to participate in this process. We can only assume Mr. Armoyan knew that the process would reveal what Sherritt now knows: that Mr. Armoyan is not a suitable director nominee. For more information on the Corporation's findings, see "Reasons to Reject Armoyan's Dissident Board Election Proposals" in the accompanying management information circular (the "Circular").

In addition, Mr. Armoyan identified individuals who he thought would be good additions to Sherritt's Board. Sherritt considered the qualifications of these individuals and offered to recommend one of them as a nominee at the upcoming annual and special shareholders meeting. Mr. Armoyan rejected this proposal, too, and insisted that a Clarke Inc. representative be included as a candidate.

On March 20, 2014, Mr. Armoyan submitted a number of additional shareholder proposals some of which are part of our own meeting agenda but also included a proposal that unanimous Board approval be required for material acquisitions. The notion that Mr. Armoyan or any single director could hold veto power over the judgment of every other director as to the best interests of the Corporation is inconsistent with basic principles of good corporate governance, and is of questionable validity under applicable corporate law. In our view, this proposal from Mr. Armoyan is further evidence of his lack of suitability as a director.

We urge shareholders to consider the following:

  • Sherritt has a track record of adding strong and independent directors with the necessary experience and qualifications to oversee a corporation of Sherritt's size and complexity.

  • Each of the directors targeted by Mr. Armoyan has joined Sherritt's Board since 2010 - with two joining within the past 12 months - as part of the Board's ongoing process of renewal.

  • Each of Sherritt's director nominees has superior qualifications to Mr. Armoyan and his employees (as discussed in detail in the Circular in the section entitled "Reasons to Vote for Sherritt's Nominees").

  • As part of its Board renewal process, the Corporation is proposing to add further depth to its Board by nominating Timothy Baker, former Executive Vice President and Chief Operating Officer of Kinross Gold Corporation, a former senior operating executive with Placer Dome and an experienced director, to stand for election at the upcoming shareholders meeting.

For more information about Sherritt's prospects and the many concerns your Board has with Mr. Armoyan's campaign, please see the Circular and in particular, the section of the Circular entitled "Reasons to Vote for Sherritt's Nominees" and "Reasons to Reject Armoyan's Dissident Board Election Proposals".

It's Up to You to Protect the Value of Your Investment in Sherritt.

Your Board unanimously recommends that you vote only the BLUE proxy as follows:

  • FOR the reappointment of auditors named in the Circular and the authorization of the directors to fix remuneration of the auditors;
  • FOR the confirmation of the Amended By-Law No. 1 Resolution;
  • FOR the confirmation of the Advance Notice By-Law Resolution;
  • FOR the advisory vote on the non-binding Say on Executive Pay Resolution;
  • FOR the advisory vote on the non-binding Say on Director Pay Resolution;
  • FOR the Sherritt Nominees for election to the Board;
  • WITHHOLD from voting for the dissident director nominees for election to the Board;
  • AGAINST the Dissident Reduced Board Size Resolution;
  • AGAINST the Dissident Helms-Burton Resolution; and
  • AGAINST each of the shareholder proposals set out in Schedule "C" to the Circular.

It is up to you to prevent Mr. Armoyan from weakening Sherritt's corporate governance and disrupting the Corporation's increasingly positive momentum. We thank you for your continued support.



Harold (Hap) Stephen


Sherritt International Corporation

Proxy Voting Instructions

Regardless of how many Sherritt shares you own, it is important you vote your BLUE proxy today.

We encourage shareholders to vote the 12-digit control number found on your BLUE proxy FOR Sherritt's nominees, no later than 5:00 p.m. (Toronto time) on Friday, May 2, 2014.

For more information or assistance in voting your BLUE proxy, please contact Kingsdale Shareholder Services at 1-800-749-9197 (toll-free), 416-867-2272 (outside North America), or by email at or go to

About Sherritt

Sherritt is a world leader in the mining and refining of nickel from lateritic ores with 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", "projected", "continue" or other similar words or phrases. Forward-looking statements in this document include, but are not limited to, statements regarding the closing of the coal transaction, our operations, priorities and plans, anticipated financial performance, business prospects, and certain corporate objectives, goals and plans for 2014. Forward-looking statements are not based on historic facts, but rather on current expectations, assumptions and projections about future events. They are based on information available to management and/or assumptions management believes are reasonable. Many factors could cause results to differ materially from the results discussed in the forward-looking statements. Although the forward-looking statements are based on what management believes to be reasonable assumptions, Sherritt cannot assure investors that actual results will be consistent with such forward-looking statements and such forward-looking statements should not be unduly relied upon. All forward-looking statements in this press release are made as of the date of this press release. Except as required by applicable securities laws, Sherritt does not intend and does not assume any obligations to update or revise the forward-looking statements. The Corporation's risk factors are discussed in disclosure documents filed by Sherritt with Canadian securities regulators. Reference should be made to the management discussion and analysis in Sherritt's annual and interim financial statements and its annual information form for the year ended December 31, 2013 and dated March 26, 2014, all of which are available on SEDAR at

Investor inquiries:
Kingsdale Shareholder Services

Sherritt International Corporation
416-935-2451 or Toll-free:1-800-704-6698

Media inquiries:
Longview Communications
Joel Shaffer

Longview Communications
Alan Bayless

Sherritt International Corporation
416-935-2421 or Toll-free: 1-888-625-3448