Sherritt International Corporation · TSX:S
Sherritt International — Shareholder Meeting (June 2017)
24 slides from Sherritt International's shareholder meeting presentation, Jun 13, 2017
Slide 1: 2017 Annual General Meeting
2017 Annual General Meeting June 13, 2017 SHERRITT INTERNATIONAL CORPORATION 1
Slide 2: Forward-looking statements
Forward-looking statements This presentation 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”, “sho
Slide 3: A low cost nickel and cobalt producer, with a 20 year energy business in Cuba
A low cost nickel and cobalt producer, with a 20 year energy business in Cuba Strengthening the balance sheet: extended maturity dates and reduced debt • Cash position of $301M as at March 31, 2017 1 • $86M expended to repay $99M of loans and borrowings since January 2016 • First public debt maturit
Slide 4: Key trends in the nickel and cobalt markets
Key trends in the nickel and cobalt markets SHERRITT INTERNATIONAL CORPORATION 4
Slide 5: The nickel price has suffered more, and recovered less than copper or gold
The nickel price has suffered more, and recovered less than copper or gold Average reference prices 9.09.0 1,400 1,400 US$1,265/oz US$1,250/oz US$1,237/oz 8.08.0 (8%) +8% US$1,160/oz (1%) 1,200 1,200 US$7.65/lb 7.07.0 (30%) 1,000 1,000 6.06.0 US$/oz US$5.37/lb US$/oz US$/lb US$/lb (20%) +3% 800 5.05
Slide 6: Nickel cash cost curve and our positioning
Nickel cash cost curve and our positioning 40% of the industry is underwater at current price level 2017 Nickel industry, normal C1 cash cost grouped by operation and ranked by cash cost (C1) existing operations and base case 10 25th percentile 50th percentile = US$2.88 = US$3.78 C1 Cash Costs (US$/
Slide 7: A continuing focus on liquidity
A continuing focus on liquidity SHERRITT INTERNATIONAL CORPORATION 7
Slide 8: No maturity until Q4 2021 and $1.4bn in debt to be eliminated from Sherritt balance sheet
No maturity until Q4 2021 and $1.4bn in debt to be eliminated from Sherritt balance sheet Liquidity • 3-year bond extension completed in July - no maturity until Nov 2021 • Ambatovy JV project debt principal payment deferrals totaling US$565 million over 3 years • $86M expended to repay $99M of loan
Slide 9: Our operations
Our operations SHERRITT INTERNATIONAL CORPORATION 9
Slide 10: Nickel and Cobalt Production
Nickel and Cobalt Production Steady production at Moa and ramp-up challenges at Ambatovy Moa (50%) (tonnes) 17,132 16,771 16,455 16,853 16,464 16,750 1,896 1,660 1,605 1,867 1,847 1,825 2012 2013 2014 2015 2016 2017e Ambatovy (12%) (tonnes) 6,000 5,672 5,053 4,446 3,018 683 416 393 474 59 250 350 20
Slide 11: A steady downward trend in NDCC despite quarterly fluctuations
A steady downward trend in NDCC despite quarterly fluctuations $8.00 $7.04 $7.00 U.S.$/lb Ni $6.00 $4.83 $5.00 $4.94 $4.99 $4.27 $4.86 $3.93 $4.00 $3.88 $3.00 $3.42 $3.25 $2.00 $1.00 2012 2013 2014 2015 2016 Q1 2017 Moa JV & Fort Site Ambatovy JV • Moa JV third acid plant now in operation, with ~US$
Slide 12: Cuban oil production has generated over $1 billion in free cash flow since inception
Cuban oil production has generated over $1 billion in free cash flow since inception 45,000 $1,250 $250 40,000 35,000 $1,000 $200 Cumulative Free Cash Flow $CAD M 30,000 Free Cash Flow $CAD MM $750 $150 25,000 GWI BOPD 20,000 $500 $100 15,000 10,000 $250 $50 5,000 0 $0 $0 (5,000) (10,000) ($250) ($5
Slide 13: Cuban power generation: steady production and strong EBITDA generation
Cuban power generation: steady production and strong EBITDA generation Power generation (331/3% basis, GWh) 902 894 847 217 2014 2015 2016 Q1 2017 EBITDA ($M) 30.0 29.5 24.8 9.2 2014 2015 2016 Q1 2017 • Extension of the Varadero power facilities until 2023 • Cash also due to Sherritt from CSA paymen
Slide 14: A changing demand source for nickel and cobalt
A changing demand source for nickel and cobalt SHERRITT INTERNATIONAL CORPORATION 14
Slide 15: After years of surplus production, the nickel market is expected to experience multiple years of deficit
After 5 years of surplus production, the nickel market is expected to experience multiple years of deficit Global nickel supply/demand market balance (kt) 250 1,600 200 1,400 150 1,200 Total stocks (kt) 100 1,000 kt 50 800 0 600 (50) 400 (100) 200 (150) 0 2011 2012 2013 2014 2015 2016 2017 2018 2019
Slide 16: Even under conservative assumptions the EV market is expected to grow to >10 million car sales per year by 2025
Even under conservative assumptions the EV market is expected to grow to >10 million car sales per year by 2025 Increasing EV market penetration (annual vehicle sales) 90 80 Millions of vehicles 70 60 50 40 30 20 10 0 2015 2025 2025 Conservative view Optimistic view Electric and hybrid vehicles Trad
Slide 17: Today the nickel market is driven by stainless steel
Today the nickel market is driven by stainless steel Nickel supply Nickel demand 31% 48% 52% 69% NPI and ferronickel High quality nickel Non-stainless Stainless • Class I has to compete against NPI and Ferronickel as demand for Class I products is still catching up to supply • Thus, Class I nickel d
Slide 18: But low grade nickel for stainless has no ability to supply the growing battery market
But low grade nickel for stainless has no ability to supply the growing battery market • Today stocks of Class I nickel remain high (~380,000 tonnes) • Strong forecast demand from batteries for Class I units could lead to a shortage of high purity products • Nickel content is one of the key enablers
Slide 19: The cobalt price response is already well underway
The cobalt price response is already well underway Cobalt price performance (US$/lb) $27 $25 $23 $21 $19 $17 $15 $13 $11 $9 1/2/2015 1/2/2016 1/2/2017 Cobalt • A limited supply cobalt market (~125,000 tonnes per annum) with no price elasticity has caused a doubling of prices with no sign of slowdown
Slide 20: EVs will also increase the demand for cobalt but the cobalt supply dynamic has its own challenges
EVs will also increase the demand for cobalt but the cobalt supply dynamic has its own challenges Cobalt sources Mine production by country (2016) 2% Canada: 3% Russia: 5% 37% 61% Cuba: 5% Philippines: DRC: 61% 3% Copper mines by-product Nickel mines by-product Australia: 5% Madagascar: 3% Primary c
Slide 21: Sustainability & Strategic Priorities
Sustainability & Strategic Priorities SHERRITT INTERNATIONAL CORPORATION 21
Slide 22: Demonstrating sustainability leadership
Demonstrating sustainability leadership 2016 KPIs • Beat all injury frequency • 4% decreased in GHGs targets • 45% drop in community Named to Corporate Knights’ 2017 • Zero high-severity grievances Future 40 Corporate Leaders in environmental incidents Canada • $750 million to host • 4 worker fatali
Slide 23: Our 2017 strategic priorities
Our 2017 strategic priorities 2017 strategic priorities Q1 2017 status update • Cuban energy payments received were US$37.6 million in the first quarter of 2017, an improvement over Q4 2016 Preserve liquidity and build balance payments received of US$18.3 million sheet strength • Free cash flow gene
Slide 24: Sherritt International Corporation
Sherritt International Corporation 181 Bay Street, 26th Floor, Brookfield Place Toronto, Ontario, Canada M4T 2Y7 Investor Relations Flora Wood Telephone: 416.935.2457 Toll-Free: 1.800.704.6698 Email: investor@sherritt.com Website:INTERNATIONAL SHERRITT www.sherritt.comCORPORATION 24
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