Sherritt International Corporation · TSX:S
Sherritt International — Q4 2021 Earnings Presentation
32 slides from Sherritt International's earnings presentation, Feb 10, 2021
Slide 1: Q4 Earnings Call
Q4 Earnings Call Review of Financial and Operational Results February 10, 2022
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 to the U.S. government policy toward Cuba, including the U.S. embargo on Cuba and the Helms- business and financial condition; the ability of the Corporation to implement and succ
Slide 4: Q4 Highlights
Q4 Highlights 1. Strong nickel and cobalt production 2. Lowest NDCC* in three years 3. Highest Adjusted EBITDA* in four years 4. Met 2021 guidance for production and unit costs 5. Progress on expansion strategy 6. Made key appointments to Board and senior leadership team Sherritt ended 2021 pivoting
Slide 5: Review of operating results
Review of operating results 5
Slide 6: Moa JV highlights – Production
Moa JV highlights – Production (1) (1) Q4 Production (tonnes) Full Year Production (tonnes) Finished Nickel Finished Cobalt Finished Nickel Finished Cobalt 15,753 15,592 1,763 4,266 1,685 4,020 476 451 Q4 2020 Q4 2021 Q4 2020 Q4 2021 FY2020 FY2021 FY2020 FY2021 • Strong production in Q4 2021 reflect
Slide 7: Moa JV highlights – Costs
Moa JV highlights – Costs Net Direct Cash Cost(1) (US$/lb) $4.47 $4.20 $4.11 $3.60 Q4 2020 Q4 2021 FY2020 FY2021 • Lowest NDCC since Q4 2018 • Beat NDCC guidance for FY2021 • NDCC benefitted from rise in cobalt prices • Benefitted from higher by-product credits and efforts • NDCC impacted by higher
Slide 8: Power highlights
Power highlights (1) Electricity production (33⅓% GWh ) Unit operating costs(2)($/MWh(3)) $26.73 602 144 $22.72 $23.06 130 450 $17.38 Q4 2020 Q4 2021 FY2020 FY2021 Q4 2020 Q4 2021 FY2020 FY2021 • Met production guidance for 2021 • Q4 2021 costs declined due lower maintenance • Production impacted by
Slide 9: Commitment to ESG
Commitment to ESG Heath and Safety Climate and Diversity and Responsible Environment Inclusion Sourcing • Achieve level A in • Achieve net zero GHG • Increase women in • Be fully compliant with TSM Safety & Health emissions by 2050 the workforce to 36% all material responsible Protocol in all • Obta
Slide 10: Financial Highlights
Financial Highlights sherritt
Slide 11: Improved Adjusted EBITDA and net earnings
Improved Adjusted EBITDA and net earnings Q4 ($ millions) Full Year ($ millions) Adjusted EBITDA(1)(2) Net earnings (loss) from Adjusted EBITDA(1) Net loss from continuing operations continuing operations 2020 2021 2020 2021 2020 2021 2020 2021 $112.2 $46.4 $38.9 $10.7 $14.4 $(13.4) $(85.7) $(49.3)
Slide 12: Liquidity in perspective
Liquidity in perspective $228M $218M Increase driven by: Available Available • $30M increase in credit facility Credit $54M Credit $82M • $7.7M of Cuban energy payments Other $5M • $12.1M of fertilizer prepayments Other $3M Energas $77M Energas Offset by: $79M • $8.1M of Moa JV distributions deferre
Slide 13: Near term outlook for Moa JV distributions is favourable
Near term outlook for Moa JV distributions is favourable $12 $40 $35 $10 $30 $8 Cobalt Price (US$/lb) Nickel price (US$/lb) $25 Nickel $6 $20 $15 $4 $20M Cobalt $14M $10 $2 $5 $20M $11M $14M $10M $9M $10M $10M $6.5M $0 $2.5M $5M $0 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Jan-22 2019 2019 2019 2019 2020
Slide 14: 5-year runway before 2L notes are due
5-year runway before 2L notes are due Cash in Canada and overdue receivables Second Lien Notes • Opportunities to address debt obligations: $262M • Strong Moa JV distributions due to favorable nickel and cobalt price outlook • Incremental cash flow from Moa JV expansion C $Millions $351M $198M • Col
Slide 15: Outlook
Outlook 15
Slide 16: Nickel and cobalt prices since start of Q4
Nickel and cobalt prices since start of Q4 40% US$34.60 35% Cobalt +34% 30% Nickel +29% 25% 20% US$10.67 15% 10% US$25.88 5% 0% (5%) US$8.25 (10%) 3-Feb 7-Oct 6-Jan 4-Nov 2-Dec 9-Dec 30-Sep 13-Jan 20-Jan 27-Jan 14-Oct 21-Oct 28-Oct 11-Nov 18-Nov 25-Nov 16-Dec 23-Dec 30-Dec Strong prices anticipated
Slide 17: Nickel inventories continue to decline
Nickel inventories continue to decline 250 Thousands of tonnes 200 150 100 50 60% Decline in inventory over 12 months 0 Aug-21 Sep-21 Dec-20 Feb-21 Jul-21 Nov-21 Dec-21 May-21 Apr-21 Oct-21 Jan-21 Mar-21 Jun-21 LME SHFE Growing nickel demand and consumer stockpiling are driving lower inventories Sou
Slide 18: Advancing with an accelerated expansion strategy
Advancing with an accelerated expansion strategy Moa - Slurry Prep Plant Moa – Processing and Reserves Fort Site Refinery • Complete new SPP • Extend mine life beyond 2040 • Debottlenecking at Fort Site • Grow mixed sulphides production • Complete prior suspended • Upgrade or expand equipment • Redu
Slide 19: Progress on expansion strategy in Q4
Progress on expansion strategy in Q4 • SPP budget and timelines approved by Moa JV Board • US$27M cost estimate • Completion expected early 2024 • Benefits starting in mid-2024: • 1,700 tones of increased mixed sulphides production • Reduced haulage costs • Reduced carbon intensity • Total budget ex
Slide 20: 2022 Guidance
2022 Guidance Moa JV Power Finished nickel 32,000 – 34,000 tonnes Electricity production 450 – 500 GWh Finished cobalt 3,400 – 3,700 tonnes Net direct cash cost: US$4.00 - $4.50/lb(1)(2) Unit operating costs: $26.50 - $28.00 /MWh(1) Spending on capital: C$75M(1)(3) Spending on capital: C$5M(1) • Pro
Slide 21: Summary
Summary • Ended FY2021 with strong production • Progress on growth strategy underway • Outlook for nickel and cobalt is favourable • Strong Moa JV distributions expected in FY2022 • On track to extend Power agreement beyond Q1 2023 • Guidance for 2022 builds on recent momentum Sherritt is well posit
Slide 22: Q&A Discussion
Q&A Discussion sherritt
Slide 23: Sherritt International Corporation contact details
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
Slide 24: Non-GAAP and other financial measures
Appendix Non-GAAP and other financial measures 24
Slide 25: Highest Adjusted EBITDA since Q4 2017
Highest Adjusted EBITDA(1) since Q4 2017 Improved performance driven by higher sales volumes and realized prices 1. A non-GAAP financial measure. For additional information see the Non-GAAP and other financial measures section in the Appendix to this presentation 25
Slide 26: Adjusted EBITDA
Adjusted EBITDA The Corporation defines Adjusted EBITDA as earnings (loss) from operations and joint venture, which excludes net finance expense and earnings (loss) from discontinued operations, net of tax, as reported in the financial statements for the period, adjusted for: depletion, depreciation
Slide 27: Adjusted EBITDA, cont.
Adjusted EBITDA, cont. $ millions, for the three months ended December 31 2020 Adjustment for Moa Moa JV and Metals Oil and Techno- Joint Fort Site(1) Other Gas Power logies Corporate Venture Total Earnings (loss) from operations and joint venture per financial statements $ 4.4 $ (0.5) $ (5.9) $ (10
Slide 28: Adjusted EBITDA, cont.
Adjusted EBITDA, cont. $ millions, for the year ended December 31 2020 Adjustment for Moa Moa JV and Metals Oil and Techno- Joint Fort Site(2) Other Gas Power logies Corporate Venture Total Earnings (loss) from operations and joint venture per financial statements $ 3.9 $ (2.0) $ (136.4) $ (5.6) $ (
Slide 29: Unit operating costs/Net direct cash cost
Unit operating costs/Net direct cash cost With the exception of the Moa Joint Venture, 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 impairm
Slide 30: Unit operating costs/Net direct cash cost, cont.
Unit operating costs/Net direct cash cost, cont. 30
Slide 31: Unit operating costs/Net direct cash cost, cont.
Unit operating costs/Net direct cash cost, cont. (1) Other is composed of the cost of sales of the Metals Other, Oil and Gas, Technologies and Corporate reportable segments. (2) Other is primarily comprised of royalties, other contributions and sales discounts. (3) Unit operating cost/NDCC may not c
Slide 32: 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
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