Securities Law & Instruments


Mutual Reliance Review System for ExemptiveRelief Applications -- issuer bids -- convertible debentures-- debentures convertible into common shares at a conversionprice far in excess of current value of common shares -- conversionfeature of no material value -- debentures trade like non-convertible,unsecured debt -- convertible debentures are out-of-the-money-- circular to include summary of opinion letter on convertibilityfeature -- applicant exempt from valuation requirement.

Applicable Rule

61-501 -- Insider Bids, Issuer Bids, Going PrivateTransactions and Related Party Transactions, ss. 3.3, 3.4, and9.1.















WHEREAS the local securities regulatoryauthority or regulator (the "Decision Maker") in eachof British Columbia, Alberta, Saskatchewan, Manitoba, Ontario,Quebec, Nova Scotia and Newfoundland and Labrador (the "Jurisdictions")has received an application (the "Application") fromSherritt International Corporation ("Sherritt") fora decision under the securities legislation of the Jurisdictions(the "Legislation") that the requirement containedin the Legislation to obtain a formal valuation (the "ValuationRequirement") shall not apply to the proposed exchangeby Sherritt of a portion of its outstanding 6.00% ConvertibleUnsecured Subordinated Debentures due December 15, 2006 (the"6% Debentures") pursuant to a formal issuer bid (the"Proposed Offer");

AND WHEREAS pursuant to the Mutual RelianceReview System for Exemptive Relief Applications (the "System"),the Ontario Securities Commission is the principal regulatorfor the Application;

AND WHEREAS, unless otherwise defined,the terms herein have the meaning set out in National Instrument14-101 Definitions or in Quebec Commission Notice 14-101;

AND WHEREAS Sherritt has representedto the Decision Makers that:

1. Sherritt was incorporated under the BusinessCorporations Act (New Brunswick) on October 4, 1995. Itsprincipal and head office is located in Toronto, Ontario.

2. Sherritt is a reporting issuer or the equivalentin each of the Jurisdictions and is not in default of anyrequirements of the Legislation.

3. Sherritt is authorized to issue 100 multiplevoting shares and an unlimited number of restricted votingshares (the "Restricted Voting Shares"). As of October7, 2003, Sherritt had outstanding 100 multiple voting sharesand 131,174,679 Restricted Voting Shares.

4. As of October 7, 2003, Sherritt had outstanding6% Debentures in the aggregate principal amount of $600,000,000.

5. To the knowledge of management of Sherritt,no person or company holds more than 10% of the aggregateprincipal amount of the 6% Debentures.

6. The 6% Debentures were issued pursuantto an indenture dated as of November 28, 1996 (the "Indenture")between Sherritt and The R-M Trust Company (now CIBC MellonTrust Company), as trustee, and distributed pursuant to ashort form prospectus dated November 21, 1996 by way of instalmentreceipts.

7. Since December 16, 1999, Sherritt has beenentitled to redeem the 6% Debentures in whole or, from timeto time, in part, at any time at par plus accrued and unpaidinterest, but only if the weighted average trading price ofthe Restricted Voting Shares on the Toronto Stock Exchange(the "TSX") during the 20 consecutive trading daysending five trading days preceding the date on which the noticeof redemption is given exceeds specified prices in respectof each year, which prices decrease over time.

8. Sherritt may, at its option and subjectto all regulatory approvals, elect to redeem the 6% Debenturesby payment of that number of freely tradeable Restricted VotingShares (the "Share Redemption Option") obtainedby dividing the principal amount of the outstanding 6% Debenturesby 95% of the weighted average trading price of the RestrictedVoting Shares on the TSX for the 20 consecutive trading daysending five trading days preceding the date on which the noticeof Sherritt's intention to pay in Restricted Voting Shareson the redemption date is first given.

9. At no time since 1999 have the RestrictedVoting Shares traded at a price which would permit redemptionof the 6% Debentures. However, even if Sherritt is able toredeem the 6% Debentures, it has no intention of triggeringthe Share Redemption Option prior to, or during the courseof, the Proposed Offer.

10. The Indenture provides that Sherritt maypurchase for cancellation any or all of the 6% Debenturesin the open market by tender or by private contract, subjectto any regulatory approval required by law, provided thatSherritt is not in default under the Indenture and that theprice at which such 6% Debenture is purchased does not exceedits principal amount, together with accrued and unpaid interestand costs of purchase. Sherritt is not in default under theIndenture. There are no other restrictions upon Sherritt'sability to purchase the 6% Debentures.

11. The 6% Debentures are unsecured and subordinatedand are convertible at the 6% Debenture holder's option intoRestricted Voting Shares at any time prior to the earlierof December 15, 2006 and the last business day immediatelypreceding the date specified for redemption by Sherritt. Theconversion price is $8.775 per Restricted Voting Share, beinga rate of approximately 113.96 Restricted Voting Shares per$1,000 principal amount of 6% Debentures.

12. The Restricted Voting Shares and the 6%Debentures are listed on the TSX.

13. Over the twelve month period prior toOctober 8, 2003, the 6% Debentures traded at a price rangeof $795 to $960 per $1,000 of principal amount of 6% Debentureswith an average daily volume of $642,498 on the days traded.

14. Over the twelve month period prior toOctober 8, 2003, the Restricted Voting Shares have tradedon the TSX in a range between $5.10 and $3.99 with an averagedaily volume of 261,649 shares.

15. The closing price of the Restricted VotingShares on the TSX on October 7, 2003 was $5.06 per share.The closing price of the 6% Debentures on the TSX on October7, 2003 was $960 per $1,000 principal amount of 6% Debentures.

16. Under the Proposed Offer, Sherritt intendsto offer to exchange up to an aggregate principal amount of$300,000,000 of 6% Debentures, representing approximately50% of the outstanding 6% Debentures, for an equal amountof new convertible unsecured subordinated debentures (the"New Debentures").

17. Sherritt anticipates that the terms ofthe New Debentures will be substantially the same as the 6%Debentures except with respect to an enhanced interest rate,extended maturity, reduced conversion price, and certain conversionand redemption conditions, all of which will be determinedin accordance with market terms at the time the Proposed Offeris made. Sherritt intends to apply to have the New Debentureslisted and posted for trading on the TSX.

18. National Bank Financial Inc., in its letterdated October 7, 2003 (the "Opinion Letter"), opinesthat:

(i) the convertibility feature of the 6%Debentures is of no material value, and

(ii) the 6% Debentures trade on the TSXlike non-convertible, subordinated, unsecured debt basedon the underlying creditworthiness of Sherritt.

19. The Proposed Offer will proceed by wayof an issuer bid circular which will include prospectus leveldisclosure on Sherritt and the New Debentures and a summaryand a copy of the Opinion Letter.

20. The Proposed Offer will be made in compliancewith the requirements in the Legislation applicable to formalbids made by issuers, except to the extent exemptive reliefis granted by the Decision Makers.

21. The Proposed Offer will be an "issuerbid" within the meaning of the Legislation in the Jurisdictionsbecause the 6% Debentures are convertible debt securities.

AND WHEREAS pursuant to the System, thisMRRS Decision Document evidences the Decision of each of theDecision Makers (collectively, the "Decision");

AND WHEREAS each of the Decision Makersis satisfied that the test contained in the Legislation thatprovides the Decision Maker with the jurisdiction to make theDecision has been met;

THE DECISION of the Decision Makers underthe Legislation is that, in connection with the Proposed Offer,the Valuation Requirement contained in the Legislation shallnot apply to Sherritt, provided that:

(iii) prior to, or during the course of, theProposed Offer, Sherritt shall not have indicated any intentionof triggering the Share Redemption Option;

(iv) at the date the Proposed Offer is made,National Bank Financial Inc. shall have confirmed in writingto Sherritt that the conclusions stated in the Opinion Letterremain valid as of the day before the date the Proposed Offeris made; and

(v) Sherritt complies with the other requirementsin the Legislation applicable to formal bids made by issuers.

October 28, 2003.

"Ralph Shay"