Sherritt International Corporation

Headnote

Mutual Reliance Review System for Exemptive Relief Applications - In connection witha series of proposed Dutch auction issuer bids, offeror exempt from requirement to takeup and pay for securities deposited proportionately according to the number ofsecurities deposited to the bids and the associated disclosure requirement - Offerorexempt from formal valuation requirement on the basis that there is a liquid market forthe securities subject to each issuer bid - Decision terminates in 24 months.

Applicable Ontario Statute

Securities Act, R.S.O. 1990 c. S.5, as am., ss. 95(7) and 104(2)(c).

Applicable Ontario Regulation

Regulation made under the Securities Act, R.R.O. 1990, Reg. 1015, as am., s. 189 andItem 9 of Form 33.

WHEREAS the Canadian securities regulatory authority or regulator (the "DecisionMaker") in each of British Columbia, Alberta, Saskatchewan, Manitoba, Ontario, Quebec,Nova Scotia, and Newfoundland (collectively, the "Jurisdictions") has received anapplication (the "Application") from Sherritt International Corporation ("Sherritt") for adecision pursuant to the securities legislation of the Jurisdictions (the "Legislation") that,in connection with the proposed purchases from time to time by Sherritt of portions of itsoutstanding 6% Convertible Unsecured Subordinated Debentures due December 15, 2006(the "Debentures") pursuant to issuer bids (the "Offers"), Sherritt be exempt from:

(i) the requirements in the Legislation (other than that of Quebec) to take up and payfor securities proportionately according to the number of securities deposited byeach securityholder (the "Proportionate Take-up and Payment Requirement");

(ii) the requirements in the Legislation (other than that of Quebec) to provide disclosurein the issuer bid circulars (the "Circulars") of such proportionate take-up andpayment (the "Associated Disclosure Requirement"); and

(iii) the requirements in the Legislation to obtain valuations of the Debentures andprovide disclosure in the Circulars of such valuations, or summaries thereof, andof prior valuations (the "Valuation Requirement").

AND WHEREAS pursuant to the Mutual Reliance Review System for ExemptiveRelief Applications (the "System"), the Ontario Securities Commission is the principalregulator for the Application;

AND WHEREAS Sherritt has represented to the Decision Makers as follows:

1. Sherritt is a reporting issuer or the equivalent in each of the Jurisdictions and is notin default of any requirement of the Legislation. The head office of Sherritt islocated in Toronto, Ontario.

2. Sherritt's authorized capital consists of 100 Multiple Voting Shares and an unlimitednumber of Restricted Voting Shares. 100 Multiple Voting Shares and 72,269,069Restricted Voting Shares were outstanding as at December 31, 1999. Debenturesin the aggregate principal amount of $675,000,000 were outstanding as at February23, 2000.

3. The Debentures and the Restricted Voting Shares are listed and posted for tradingon The Toronto Stock Exchange (the "TSE").

4. To the knowledge of Sherritt, no person or company holds more than 10% of theaggregate principal amount of outstanding Debentures.

5. The Debentures are convertible at the option of the holder into Restricted VotingShares at a conversion price of $8.775 per Restricted Voting Share. TheDebentures are redeemable on or after December 16, 1999, provided that thetrading price of the Restricted Voting Shares reaches certain levels between $9.50and $11.88.

6. On February 23, 2000, the last full trading day prior to the day on which Sherrittannounced its intention to make the initial Offer, the closing price of the RestrictedVoting Shares on the TSE was $3.92 and the closing price of the Debentures on theTSE was $69.50 per $100 principal amount of Debentures.

7. Over the next two years, Sherritt proposes to purchase Debentures from time totime through Offers by way of Circulars. A new Offer will likely be made each fiscalquarter, provided business conditions warrant. Sherritt intends to acquire theaggregate principal amount of $25,000,000 of Debentures, representingapproximately 3.7% of the outstanding Debentures, pursuant to the initial Offer.Sherritt anticipates using cash on hand to make the Debenture acquisitions.

8. The Offers will be made pursuant to a Dutch auction procedure as follows:

(a) the maximum aggregate principal amount of Debentures (the "SpecifiedAmount") that Sherritt intends to purchase under an Offer will be specifiedin the Circular;

(b) the range of prices (the "Range") within which Sherritt is prepared topurchase Debentures under an Offer also will be specified in the Circular;

(c) holders of Debentures (the "Debentureholders") wishing to tender to an Offerwill be able to specify the lowest price within the Range at which they arewilling to sell their Debentures (an "Auction Tender");

(d) Debentureholders wishing to tender to an Offer but who do not wish to makean Auction Tender may elect to be deemed to have tendered at the ClearingPrice determined in accordance with paragraph (e) below (a "Purchase PriceTender");

(e) the purchase price (the "Clearing Price") of the Debentures tendered to anOffer will be the lowest price that will enable Sherritt to purchase theSpecified Amount of Debentures and will be determined based upon theaggregate principal amount of Debentures tendered pursuant to an AuctionTender at each price within the Range and tendered pursuant to a PurchasePrice Tender, with each Purchase Price Tender being considered a tenderat the lowest price in the Range for the purpose of calculating the ClearingPrice;

(f) the aggregate amount that Sherritt will expend pursuant to an Offer will notbe ascertained until the Clearing Price is determined;

(g) all Debentures tendered at or below the Clearing Price pursuant to anAuction Tender and all Debentures tendered pursuant to a Purchase PriceTender will be taken up and paid for at the Clearing Price, plus accrued andunpaid interest, subject to proration (calculated to the nearest whole $1,000principal amount of Debentures, so as to avoid the creation of fractionalDebentures) if the aggregate principal amount of Debentures tendered at orbelow the Clearing Price pursuant to Auction Tenders and the aggregateprincipal amount of Debentures tendered pursuant to Purchase PriceTenders exceeds the Specified Amount;

(h) all Debentures tendered at prices above the Clearing Price will be returnedto the appropriate Debentureholders;

(i) all Debentures tendered by Debentureholders who specify a tender price forsuch tendered Debentures that falls outside the Range will be considered tohave been improperly tendered, will be excluded from the determination ofthe Clearing Price, will not be purchased by Sherritt and will be returned tothe tendering Debentureholders; and

(j) all Debentures tendered by Debentureholders who fail to specify any tenderprice for such tendered Debentures and fail to indicate that they havetendered their Debentures pursuant to a Purchase Price Tender will beconsidered to have been tendered pursuant to a Purchase Price Tender andwill be dealt with as described in paragraph (g) above.

9. Prior to the expiry of an Offer, all information regarding the aggregate principalamount of Debentures tendered and the prices at which such Debentures aretendered will be kept confidential, and the depositories will be directed by Sherrittto maintain such confidentiality until the Clearing Price is determined.

10. Since the Offers will be for less than all the Debentures, if the aggregate principalamount of Debentures tendered to an Offer within the Range exceeds the SpecifiedAmount, the Legislation would require Sherritt to take up and pay for depositedDebentures proportionately (including those with a specified price higher than theClearing Price), according to the principal amount of Debentures deposited by eachDebentureholder. In addition, the Legislation would require disclosure in theCirculars that Sherritt would, if Debentures tendered to the Offers exceeded theSpecified Amount, take up such Debentures proportionately according to theaggregate principal amount of Debentures tendered by each Debentureholder.

11. The Circulars will:

(a) disclose the mechanics for the take-up of and payment for, or the return of,Debentures as described in paragraph 8 above; and

(b) explain that, by tendering Debentures at the lowest price in the Range, aDebentureholder can reasonably expect that the Debentures so tendered willbe purchased at the Clearing Price, subject to proration as described inparagraph 8 above.

AND WHEREAS pursuant to the System this MRRS Decision Document evidencesthe decision of each of the Decision Makers (collectively, the "Decision");

AND WHEREAS each of the Decision Makers is satisfied that the test contained inthe Legislation that provides the Decision Maker with the jurisdiction to make the Decisionhas been met;

THE DECISION of the Decision Makers in the Jurisdictions pursuant to theLegislation is that, in connection with the Offers, Sherritt is exempt from the ProportionateTake-up and Payment Requirement, the Associated Disclosure Requirement and theValuation Requirement, provided that

(i) the Offers are otherwise carried out in accordance with the requirements ofthe Legislation applicable to issuer bids;

(ii) Debentures tendered to the Offers are taken up and paid for, or returned tothe Debentureholders, in the manner and circumstances described inparagraph 8 above;

(iii) Sherritt receives an opinion (the "Liquidity Opinion") from an independentregistered dealer, in respect of each Offer, that there is a liquid market in theDebentures before the making of a particular Offer and, following theparticular Offer, the remaining Debentureholders who decline the particularOffer will have available a market that is not materially less liquid than themarket that existed prior to the making of the particular Offer, and the TSE,which is the principal Canadian stock exchange on which the Debenturesare listed and traded, states that it concurs with the Liquidity Opinion; and

(iv) this Decision will terminate twenty-four months from the date of the Decision.

March 27^th, 2000.

"J. A. Geller"     "Robert W. Davis"