Shuffling the decks at Sherritt, Dynatec and FNX

Sherritt International is to acquire all of the issued and outstanding common shares of Dynatec for a total value of C$1.6 billion. Under the proposed transaction, Dynatec shareholders will receive 0.190 of a Sherritt common share and approximately 0.0635 of an FNX Mining common share, which are currently owned by Dynatec, for each Dynatec common share held. Jowdat Waheed, President and CEO of Sherritt, said, “This is an important step in the growth strategy of our Metals division, enabling us to become a premier, globally diversified lateritic nickel producer based in Canada. The Ambatovy nickel project enhances our already strong Metals operating platform, from which we will be able tomeet demand in a growing market.”

Bruce V. Walter, President and CEO of Dynatec, added, “This transaction provides an immediate and attractive premium to Dynatec’s shareholders. It also affords them an opportunity to participate in an exciting, diversified growth company through their investment in Sherritt, and to have greater exposure to the strong nickel price environment. In addition, the combination of our companies’ strengths will benefit the Ambatovy project as it moves forward with development. Our shareholders will also continue to participate in the significant value potential of the Sudbury Basin through a direct interest in FNX.”

Successful completion of the transaction will strengthen Sherritt Metals’ position in the global nickel market. Sherritt Metals’ operating experience at its existing lateritic nickel mine and processing facility, and its ongoing Metals expansion project, will result in significant capital build-out, operating and knowledge-transfer synergies. Ambatovy’s estimated reserve life of 27 years combined with Sherritt’s existing Metals operations, with reserves of approximately 25 years, positions Sherritt with leading longlife nickel assets. Long-term gross annual production from the combined company’soperating mines is expected to be 109,000 t of nickel and 10,600 t of cobalt (net interest to Sherritt of approximately 49,000 and 4,740 t of nickel and cobalt, respectively).

Concurrent with this transaction, Dynatec and Sherritt have entered into an agreement with FNX, whereby FNX has been granted the right, subject to the closing of the transaction, to purchase Dynatec’s Mining Services Division for cash at a price to be determined based upon independent valuations. FNX intends to exercise this right immediately upon closing of the transaction, which is expected to occur by the middle of June, subject to regulatory, shareholder and court approvals.

Terry MacGibbon, President and CEO of FNX noted: “We are very pleased to have the opportunity to acquire Dynatec’s Mining Services Division and plan to not only maintain the division as one of North America’s premier mining contractors but also pursue new contracting opportunities and to aggressively grow the division. This acquisition will provide FNX with a large pool of highly skilled and experienced managerial, professional, supervisory, technical, and mining employees to not only support FNX’s ambitious growth plans at its Sudbury, Ontario operations, but to enable it to become a significant joint venture partner and mine/exploration operator in worthwhile mining projects in a manner similar to which Dynatec became FNX’s partner in the Sudbury Joint Venture. This unique opportunity provides FNX with the talent and expertise necessary to support our ambitious growth plans in Sudbury, while simultaneously increasing the company’s share liquidity and broadening our shareholder base.”

Tony Makuch, FNX’s Senior Vice President and Chief Operating Officer and the former Dynatec Vice President Operations for the Mining Services Division, added, “the Mining Services Division has mining and development contracts in Canada and the USA and it is our intention to continue to provide high level service and support to Dynatec’s existing clients and to aggressively expand the mine services business with the support and participation of the current Mining Services Division employees. We believe that there are outstanding opportunities to grow and expand the Mining Services Division during this period of unprecedented worldwide mining activity.”