Sherritt International Corporation · TSX:S
Sherritt International — Q3 2021 Earnings Presentation
25 slides from Sherritt International's earnings presentation, Nov 4, 2021
Slide 1: Q3 Earnings Call: Review of Financial and Operational Results
Q3 Earnings Call Review of Financial and Operational Results November 4, 2021
Slide 2: Participants
Participants Leon Binedell President & CEO Steve Wood Executive Vice President & COO Yasmin Gabriel CFO
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain forward-looking statements. Forward-looking statements can failures; risks associated with mining, processing and refining activities; uncertainty of resources and Corporation’s other documents filed with the Canadian securities authoriti
Slide 4: Q3 Highlights
Q3 Highlights 1. Production impacted by spread of Delta variant and unplanned maintenance 2. NDCC affected by rising input costs 3. Favourable market dynamics for nickel and cobalt 4. Received US$10M in distributions 5. Sustainability Report with upgraded ESG targets released 6. Made progress on exp
Slide 5: Review of operating results
Review of operating results 5
Slide 6: Commitment to ESG
Commitment to ESG Heath and Safety Climate and Diversity and Responsible Environment Inclusion Sourcing • Achieve level A in • Achieve net zero GHG • Increase women in • Be fully compliant with TSM Safety & Health emissions by 2050 the workforce to 36% all material responsible Protocol in all • Obta
Slide 7: Greening of light vehicles at Moa and Fort Site
Greening of light vehicles at Moa and Fort Site • Initiative launched in 2020 to increase use of renewable energy at Moa and Fort sites • Initiative includes electrification of light vehicles • 8 electric vans delivered to date at Moa • First EV delivered at Fort Site in Q3 • Opportunities to replac
Slide 8: Moa JV highlights – Q3 Production
Moa JV highlights – Q3 Production Finished Nickel(1) (tonnes) Finished Cobalt(1) (tonnes) 3,750 409 2,908 334 Q3 2020 Q3 2021 Q3 2020 Q3 2021 • Decrease driven by spread of Delta variant, deferral and • Cobalt production decline due to comparable factors extension of facility shutdown, and unplanned
Slide 9: Moa JV highlights – Costs
Moa JV highlights – Costs (1) Mining, Processing and Refining Costs (US$/lb) Net Direct Cash Cost(1) (US$/lb) MPR per pound of nickel sold $7.00 $6.43 $6.00 0.89 Other fixed costs $4.53 $4.90 0.58 Labour $5.00 $4.04 US$/lb of nickel 0.70 Maintenance 1.25 $4.00 0.77 Other variable 0.74 costs $3.00 Su
Slide 10: Power highlights
Power highlights Electricity production (33⅓% GWh(1)) Unit operating costs(2)($/MWh(3)) $23.14 152 110 $14.63 Q3 2020 Q3 2021 Q3 2020 Q3 2021 • Decline due to deferral of maintenance activities • Higher unit costs driven by maintenance activities, • Discussions underway to extend existing agreement
Slide 11: 2021 Guidance Update
2021 Guidance Update Moa JV – Initial Guidance Moa JV – Update Guidance Finish nickel 32,000 – 34,000 tonnes Finish nickel 31,000 – 32,000 tonnes Finished cobalt 3,300 – 3,600 tonnes Finished cobalt No change Net direct cash cost: US$4.25 - $4.75/lb* Net direct cash cost: No change Capital Spending:
Slide 12: Financial Highlights
Financial Highlights sherritt
Slide 13: Adjusted EBITDA - Q3 2020 to Q3 2021
Adjusted EBITDA(1) - Q3 2020 to Q3 2021 Extended full-facility shutdown resulted in lower sales volume and higher MPR costs 1. Non-GAAP measure – see Non-GAAP and other financial measures in the most recent MD&A for details 13
Slide 14: Context for administrative expenses
Context for administrative expenses* • Q3 2021 includes $3.4M in severance and other contractual benefits ($0.1M in Q3 2020) $6.4M $6.7M • Corporate office reductions and executive departures will lead to $1.3M in annual savings • Q3 2020 includes $2.7M adjustment related to balance sheet initiative
Slide 15: Sensitivity analysis – Moa JV
Sensitivity analysis* – Moa JV At midpoint of production guidance Approximate change in annual net earnings (CAD$ millions) Factor Increase Increase/(decrease) Prices Nickel - LME price per pound US$ 1.00 $ 35 Cobalt - Fastmarkets MB price per pound US$ 5.00 20 Exchange rate Strengthening of the Can
Slide 16: Strengthened liquidity
Strengthened liquidity $248M Liquidity at end of Q3 increased due to: $218M $215M Available • Moa JV dividends of $12.7M Credit Available Avaiable Credit $84M • Fertilizer pre-buys of $13.9M Credit $54M $62M Other $5M Other $5M Other $4M Energas Energas Credit facility amended subsequent to Q3: Ener
Slide 17: Outlook
Outlook 17
Slide 18: Backdrop to expansion strategy
Backdrop to expansion strategy 1 Strong demand forecasts for nickel and cobalt 2 Significant nickel supply deficit anticipated beginning 2025 3 Nickel prices are below incentive prices for new mine development 4 First in-person meetings with new CEO and Cuban partners held in Oct. 5 Cuban partners a
Slide 19: Nickel and cobalt prices since start of Q3
Nickel and cobalt prices since start of Q3 25% US$28.20 Cobalt +23% 20% 15% 10% US$22.90 Nickel +8% 5% US$8.99 0% US$8.37 (5%) (10%) 7-Jul 6-Oct 30-Jun 14-Jul 21-Jul 28-Jul 11-Aug 18-Aug 25-Aug 15-Sep 22-Sep 29-Sep 4-Aug 1-Sep 8-Sep 13-Oct 20-Oct 27-Oct Strong prices anticipated through end of year
Slide 20: Nickel inventories continue to decline
Nickel inventories continue to decline 250 Thousands of tonnes 44% 200 150 Decline in inventory over 12 months 100 Aug-21 Sep-21 Nov-20 Dec-20 Feb-21 Jul-21 May-21 Oct-20 Apr-21 Oct-21 Jan-21 Mar-21 Jun-21 LME SHFE Growing nickel demand and consumer stockpiling are driving lower inventories Source:
Slide 21: Significant nickel supply deficit expected in near term
Significant nickel supply deficit expected in near term Forecast Nickel Consumption vs Supply 5000 4500 4000 3500 Thousand of tonnes 3000 2500 2000 1500 1000 500 0 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2
Slide 22: Advancing with an accelerated expansion strategy
Advancing with an accelerated expansion strategy • Multi-phased approach • Increase finished production to 15 to 20% from 2020 totals • Complete slurry prep plant • Complete expansion circuits • Install and upgrade equipment • Extend life of mine at Moa beyond 2040 • Convert resources to reserves •
Slide 23: Summary
Summary • Worst of COVID-19 is behind us • Updates to guidance driven by COVID-19 and unplanned maintenance • Nickel market outlook is favourable • Relations with Cuban partners are strong • Expansion strategy delivers potential for high ROI with low capital intensity • Expansion strategy details to
Slide 24: Q&A Discussion
Q&A Discussion sherritt
Slide 25: Sherritt International Corporation investor relations contact
Sherritt International Corporation 22 Adelaide West, 42nd Floor Toronto, Ontario, Canada M5H 4E3 Joe Racanelli, Director, Investor Relations Telephone: (416) 935 -2457 I Toll -Free: 1 (800) 704 -6698 Email: joe.racanelli@sherritt.com I Website: www.sherritt.com
Sherritt International — Q3 2021 Earnings Presentation on 6ix