Sherritt International Corporation · TSX:S
Sherritt International — Q4 2023 Earnings Presentation
37 slides from Sherritt International's earnings presentation, Feb 8, 2024
Slide 1: Q4 2023 Conference Call
Sherritt International Corporation Q4 2023 Conference Call Review of Financial and Operational Results February 8, 2024 SHERRITT.COM • TSX: S
Slide 2: Presenters
Presenters Leon Binedell President & CEO Yasmin Gabriel CFO 2
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain forward-looking statements. Forward-looking statements. These risks, uncertainties and other factors include, but are not limited to, technological challenges; successful environmental assessment and stakeholder statements can generally b
Slide 4: Full year 2023 Highlights
Full year 2023 Highlights Completed the first year of the Cobalt Swap agreement 31% year over year increase in electricity production exceeding increased guidance Delivered updated mine plan for the Moa JV, doubling mineral reserves and extending the mine life to 2048 Cobalt Briquettes Completed pha
Slide 5: Market Summary: 2023 Rapid Decrease in Nickel Price
Market Summary: 2023 Rapid Decrease in Nickel Price Timely Measures Taken to Improve Margins and Liquidity US$15/lb 1 2 3 4 5 6 7 1 January 2023 Consensus 2023 nickel price US$9.70/lb 2 June 2023 Consensus 2023 nickel price US$10.40/lb Sherritt Q3 2023 results • Lowered 2023 guidance for spending on
Slide 6: Market Outlook
Market Outlook Near Term Volatility but Longer-term Outlook Remains Positive Sherritt’s refinery is a strategic asset → Nickel and cobalt markets continue to be over supplied in the near term → Developments in 2023 could lead to stronger regionalization of markets → Indonesian nickel supply to remai
Slide 7: Outlook 2024 Guidance
Outlook 2024 Guidance 2023 Actual 2024 Guidance Production Volumes Metals: Moa Joint Venture (100% basis) 2024 Guidance Finished Nickel (t) 28,672 30,000 – 32,000 Finished Cobalt (t) 2,876 3,100 – 3,400 → NDCC(1) average for the year Electricity (GWh, 33 ⅓% basis) 745 775 – 825 Unit Operating Costs(
Slide 8: Review of Operations
Review of Operations New Slurry Preparation Plant, Moa Cuba 8
Slide 9: Metals Fourth Quarter Production
Metals Fourth Quarter Production Production Results Q4 2023 Q4 2022 2023 2022 Mixed sulphides (tonnes) (1) → Heavy rainfall required processing lower grade and Mixed Sulphides 3,514 4,000 15,084 16,248 quality stockpiled materials Finished Nickel 3,744 4,112 14,336 16,134 Finished nickel and cobalt
Slide 10: Metals Fourth Quarter Net Direct Cash Costs (NDCC)
Metals Fourth Quarter Net Direct Cash Costs (NDCC) (1) Fourth Quarter 2023 Results Year Over Year Change 2024 Guidance NDCC(1) (US$/lb of nickel sold) Q4 2022 to Q4 2023 NDCC(1) (US$/lb of nickel sold) 2022 - 2024 2024 Guidance Midpoint Implies 20% NDCC Decrease $7.22 $6.00 - $5.14 $5.50 2022 2023 2
Slide 11: Moa JV Expansion Update
Moa JV Expansion Update Slurry Preparation Plant (SPP) → Completed construction under budget → Commissioning and capacity testing is ongoing. Began processing ore at design capacity in January 2024 Processing Plant → Sixth Leach Train: Long-lead items arriving in Q1 2024 with construction commencing
Slide 12: Power Fourth Quarter Results
Power Fourth Quarter Results Electricity production → Higher production in Q4 and full year Operating Results(1) Q4 2023 Q4 2022 2023 2022 → Began receiving gas from two new wells in Q2 Electricity Production → Improved equipment availability 255 159 745 568 (GWh(2)) Unit operating cost(3) Unit Oper
Slide 13: ESG 2023 Highlights
ESG 2023 Highlights → Implemented Safety Strategy sessions with each operation to improve safety protocols → Completed GHG Emissions Baseline Assessment at Energas and initiated assessments at the Moa mine site and Fort Site → Commenced a TFCD-aligned Risk and Opportunity Assessment for Energas, wit
Slide 14: Financial Highlights
Financial Highlights Nickel briquette, Fort Saskatchewan, Alberta 14
Slide 15: Financial Performance Fourth Quarter Results
Financial Performance Fourth Quarter Results Financial performance notable drivers Financial Results Q4 2023 Q4 2022 2023 2022 ($ millions) → Lower average-realized prices(2) for nickel, cobalt Revenue(1) 34.8 48.6 223.3 178.8 and fertilizers → Higher maintenance costs Combined revenue(2)(3) 140.5 2
Slide 16: Available Liquidity in Canada Fourth Quarter Update
Available Liquidity in Canada Fourth Quarter Update $21.5 M Fourth Quarter changes include → Short-term advance to the Moa JV $(15.0M) $63.0M → Payment of interest on Second Lien Notes $(9.4M) Available Liquidity in → Property, plant and equipment spending $(5.5M) Canada → Rehabilitation and closure
Slide 17: Summary
Summary Steam Boilers at Boca de Jaruco, Cuba 17
Slide 18: Fourth Quarter 2023 Summary
Fourth Quarter 2023 Summary → Effectively managing lower price environment → Cost mitigation and cash conservation program commenced in Q3 and ongoing → 10% Canadian workforce reductions announced in January → Optimized operating plan supported by our partner → Streamlined Metals to deliver operatio
Slide 19: Q&A Discussion
Q&A Discussion Streambank restoration, Fort Saskatchewan, Alberta 19
Slide 20: Sherritt International Corporation
SHERRITT INTERNATIONAL CORPORATION 22 Adelaide West, Suite 4220 Toronto, Ontario, Canada M5H 4E3 Tom Halton, Director, Investor Relations and Corporate Affairs Telephone: S E P T E M B E416.935.2451 R 2023 | Toll -Free: 1.800.704.6698 Email: investor@sherritt.com SHERRITT.COM • TSX: S
Slide 21: Appendix: Non-GAAP and other financial measures
APPENDIX Non-GAAP and other financial measures 21
Slide 22: Combined revenue
Combined revenue The Corporation uses combined revenue as a measure to help management assess the Corporation’s financial performance across its core operations. Combined revenue includes the Corporation’s consolidated revenue, less Oil and Gas revenue, and includes the revenue of the Moa JV within
Slide 23: Adjusted EBITDA
Adjusted EBITDA The Corporation defines Adjusted EBITDA as (loss) earnings from operations and joint venture, which excludes net finance expense, income tax expense and loss from discontinued operations, net of tax, as reported in the financial statements for the period, adjusted for: depletion, dep
Slide 24: Adjusted EBITDA (continued)
Adjusted EBITDA (continued) $ millions, for the three months ended December 31 2022 Adjustment for Moa Techno- Oil and Joint Metals(1) Power logies Gas Corporate Venture Total Earnings (loss) from operations and joint venture per financial statements $ 30.5 $ 4.5 $ (4.4) $ (17.1) $ (11.6) $ (2.0) $
Slide 25: Adjusted EBITDA (continued)
Adjusted EBITDA (continued) $ millions, for the year ended December 31 2022 Adjustment for Moa Techno- Oil and Joint Metals(2) Power logies Gas Corporate Venture Total Earnings (loss) from operations and joint venture per financial statements $ 197.9 $ 8.7 $ (14.8) $ (16.3) $ (27.4) $ (29.4) $ 118.7
Slide 26: Average-realized price
Average-realized price Average-realized price is generally calculated by dividing revenue by sales volume for the given product in a given segment. The average-realized price for power excludes by-product revenue, as this revenue is not earned directly for power generation. Transactions by a Moa JV
Slide 27: Average-realized price (continued)
Average-realized price (continued) $ millions, except average-realized price and sales volume, for the three months ended December 31 2022 Metals Adjustment for Moa Joint Nickel Cobalt Fertilizer Power Other(1) Venture Total Revenue per financial statements $ 153.8 $ 22.0 $ 40.4 $ 10.5 $ 7.9 $ (188.
Slide 28: Average-realized price (continued)
Average-realized price (continued) $ millions, except average-realized price and sales volume, for the year ended December 31 2022 Metals Adjustment for Moa Joint Nickel Cobalt Fertilizer Power Other(1) Venture Total Revenue per financial statements $ 522.8 $ 104.2 $ 129.5 $ 37.1 $ 41.1 $ (672.1) $
Slide 29: Unit operating cost/Net direct cash cost (NDCC)
Unit operating cost/Net direct cash cost (NDCC) With the exception of Metals, which uses NDCC, unit operating cost is generally calculated by dividing cost of sales as reported in the financial statements, less depreciation, depletion and amortization in cost of sales, the impact of impairment losse
Slide 30: Unit operating cost/Net direct cash cost (continued)
Unit operating cost/Net direct cash cost (continued) $ millions, except unit cost and sales volume, for the three months ended December 31 2022 Adjustment for Moa Metals Power Other(1) Joint Venture Total Cost of sales per financial statements $ 189.5 $ 4.9 $ 22.0 $ (159.7) $ 56.7 Less: Depletion, d
Slide 31: Unit operating cost/Net direct cash cost (continued)
Unit operating cost/Net direct cash cost (continued) $ millions, except unit cost and sales volume, for the year ended December 31 2022 Adjustment for Moa Metals Power Other(1) Joint Venture Total Cost of sales per financial statements $ 587.8 $ 24.2 $ 45.3 $ (494.6) $ 162.7 Less: Depletion, depreci
Slide 32: Adjusted net earnings/loss from continuing operations
Adjusted net earnings/loss from continuing operations and adjusted net earnings/loss from continuing operations per share The Corporation defines adjusted net earnings/loss from continuing operations as net earnings/loss from continuing operations less items not reflective of the Corporation’s curre
Slide 33: Adjusted net earnings/loss from continuing operations (continued)
Adjusted net earnings/loss from continuing operations and adjusted net earnings/loss from continuing operations per share (continued) 2023 2022 For the three months ended December 31 $ millions $/share $ millions $/share Net loss from continuing operations $ (53.4) $ (0.13) $ (7.3) $ (0.02) Adjustin
Slide 34: Adjusted net earnings/loss from continuing operations (continued)
Adjusted net earnings/loss from continuing operations and adjusted net earnings/loss from continuing operations per share (continued) 2023 2022 For the year ended December 31 $ millions $/share $ millions $/share Net (loss) earnings from continuing operations $ (64.3) $ (0.16) $ 63.7 $ 0.16 Adjustin
Slide 35: Spending on capital
Spending on capital The Corporation defines spending on capital for each segment as property, plant and equipment and intangible asset expenditures on a cash basis adjusted to the accrual basis in order to account for assets that are available for use by the Corporation and the Moa Joint Venture pri
Slide 36: Spending on capital (continued)
Spending on capital (continued) $ millions, for the three months ended December 31 2022 Total Adjustment derived from Combined for Moa financial Metals Power Other(1) total Joint Venture statements Property, plant and equipment expenditures (2) $ 24.0 $ 2.1 $ 0.1 $ 26.2 $ (15.9) $ 10.3 Intangible as
Slide 37: Spending on capital (continued)
Spending on capital (continued) $ millions, for the year ended December 31 2022 Total Adjustment derived from Combined for Moa financial Metals Power Other(1) total Joint Venture statements Property, plant and equipment expenditures (2) $ 64.2 $ 5.1 $ 0.2 $ 69.5 $ (41.8) $ 27.7 Intangible asset expe
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