Sherritt International Corporation · TSX:S

Sherritt International — Investor Presentation (December 2016)

30 slides from Sherritt International's investor presentation, December 2016

  1. Slide 1: Investor Presentation December 2016

    Investor Presentation December 2016 SHERRITT INTERNATIONAL CORPORATION 1

  2. 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

  3. Slide 3: Sherritt: Low Cost HPAL Producer; YTD Metals Price Evolution

    Sherritt YTD metals price evolution 140 +37% A Low Cost HPAL Producer of LME 130 +29% Nickel 120 Rebased on 100 110 Cuba’s Largest Independent Oil Producer and Most Efficient Power 100 Producer 90 Balance Sheet Initiatives Set the Ground 80 to Capture the Turn in Commodity 70 Prices Cobalt Nickel SH

  4. Slide 4: Nickel Market

    NICKEL MARKET SHERRITT INTERNATIONAL CORPORATION 4

  5. Slide 5: A Small Market Where Price Swings can be Significant

    A Small Market Where Price Swings can be Significant Base Metals Market Supply (2015) 10 Year Nickel Performance (US$/lb) 70,000 $26 60,000 $22 50,000 $18 000’s tonnes 40,000 $14 30,000 $10 20,000 10,000 $6 0 $2 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Aluminum Copper Lead Nickel Tin Z

  6. Slide 6: Nickel Cash Cost Curve

    Nickel Cash Cost Curve 2016 Nickel Industry, Normal C1 Cash Cost Grouped by Operation and Ranked by Cash Cost (C1) Existing Operations and Base Case 15 50th percentile 10 = US$4.43 C1 Cash Costs (US$/lb) 25th percentile = US$2.86 Ambatovy = US$4.79 Moa = US$3.30 (9m 2016) 5 (9m 2016) 14% of operatio

  7. Slide 7: Nickel +37% so far this year

    Nickel +37% so far this year Nickel vs. 60-, 100- and 200-DMA's $5.75 Main trends on the market - Mine closures in the Philippines following the environmental audit $5.25 - China's stainless steel demand growth higher than expected $4.75 $4.25 $3.75 $3.25 Nickel 60-DMA 100-DMA 200-DMA SHERRITT INTER

  8. Slide 8: Cobalt +29% so far this year

    Cobalt +29% so far this year Cobalt vs. 60-, 100- and 200-DMA's $15.0 $14.0 $13.0 $12.0 $11.0 $10.0 $9.0 Cobalt 60-DMA 100-DMA 200-DMA SHERRITT INTERNATIONAL CORPORATION 8

  9. Slide 9: Our Operations

    OUR OPERATIONS SHERRITT INTERNATIONAL CORPORATION 9

  10. Slide 10: Power and Oil have Supported Adj. EBITDA as of Sept 30, 2016

    Power and Oil have Supported Adj. EBITDA as of Sept 30, 2016 Metals Oil & Gas Power • 24,413 t of finished nickel • 9,925 bopd (NWI) / 15,782 (GWI - • 670 GWh generated in 2016 so far (Sherritt’s share) produced so far in Cuba) produced on average in the this year 2016 first 9 months of 2016 Revenue

  11. Slide 11: Adj. EBITDA Shows the Sensitivity to Nickel and Oil Prices

    Adj. EBITDA Shows the Sensitivity to Nickel and Oil Prices LME - Spot Nickel Price (US$/lb) Metals - Adjusted EBITDA ($ M) Gulf Coast Fuel Oil No. 6 (US$/boe) Oil & Gas - Adjusted EBITDA ($ M) $10 $150 $9 $8 $120 Gulf Coast Fuel Oil No. 6 (US$/boe) 233 229 $7 192 Nickel Price (US$/lb) $6 $90 $5 133

  12. Slide 12: Sensitivity to Nickel Prices (Moa + Ambatovy @40%)

    Sensitivity to Nickel Prices (9 month basis as of Sept 30, 2016 / Moa + Ambatovy @40%) 80 Moa $63 Ambatovy 60 $54 Metals $43 $41 Adj. EBITDA (C$ M) 40 20 $14 $7 0 ($3) (20) ($17) (40) ($31) YTD average realized Spot price Analysts consensus price (US$5.3) for 2017 (US$5.0) Average realized nickel pr

  13. Slide 13: Sensitivity to Nickel Prices (Moa + Ambatovy @12%)

    Sensitivity to Nickel Prices (9 month basis as of Sept 30, 2016 / Moa + Ambatovy @12%) 70 Moa $57 60 $54 Ambatovy 50 Metals $43 $43 40 Adj. EBITDA (C$ M) 30 20 $14 $14 10 $5 $2 0 ($1) (10) ($9) (20) ($17) (30) ($31) (40) YTD average realized YTD average realized Spot price Analysts consensus for pri

  14. Slide 14: Sensitivity to Oil Prices (Cuba only)

    Sensitivity to Oil Prices (9 month basis as of Sept 30, 2016 / Cuba only) 45 $41 O&G Adj. EBITDA $39 40 Sherritt Adj. EBITDA 35 Adj. EBITDA (C$ M) 30 25 $24 $19 20 $18 15 10 5 $3 0 YTD WTI average ref. WTI spot price WTI analysts price (US$52.0) consensus for 2017 (US$53.0) Average reference oil pri

  15. Slide 15: Metals

    Metals Moa JV (50% WI) and Fort Site (100%) Nickel Production (tonnes) • The oldest and lowest cost HPAL asset globally 14,821 18,908 16,400 • Over 20 years of profitable operations, Phase I expansion 16,455 16,853 17,000 completed in 2008 and >15 more years of proven reserve life 2014 2015 2016e •

  16. Slide 16: NDCC for Both Operations Since Q1 2015

    NDCC for Both Operations Since Q1 2015 $8 Ambatovy unit cost temporarily $7 impacted by pipe blockage and shutdown $6 $5.74 $5.48 U.S.$/lb Ni $5.12 $5.51 $5.06 $4.96 $5 $5.23 $4.48 $4.67 $4.24 $4.07 $4 $4.41 $4.38 $4.43 $4.36 $4.12 $4.07 $3.55 $3 $3.34 $2.90 $2.94 $2 $1 Q1 2015 Q2 2015 Q3 2015 Q4 20

  17. Slide 17: Oil & Gas - A Profitable and Predictable History

    Oil & Gas - A Profitable and Predictable History, with Future Production Dependent on Block 10 Largest Independent Oil Producer in Cuba Total Production (NWI, bopd) • 20+ year history in the country 10,960 11,158 • 209 wells drilled since 1992, 86% found oil 9,200 • Approximately 676,000 m drilled s

  18. Slide 18: Power

    Power Largest Independent Power Producer in Cuba Power Generation (331/3% basis, GWh) • Sherritt Power operates in Cuba through its 331/3% interest 902 in Energas S.A. 860 847 • Aggregate net power capacity of 506MW with 3 facilities: Varadero West, Puerto Escondido and Boca de Jaruco 2014 2015 2016

  19. Slide 19: Financial Highlights

    FINANCIAL HIGHLIGHTS SHERRITT INTERNATIONAL CORPORATION 19

  20. Slide 20: Q3 2016 Nickel Highlights

    Q3 2016 Nickel Highlights Moa Production (50% basis) Moa: NDCC Avg. Reference Price Nickel (US$) 4,521 $4.07 $3.55 4,295 $2.94 $4.78 4,145 $4.66 Q3 2015 Q2 2016 Q3 2016 Q3 2015 Q2 2016 Q3 2016 Ambatovy Production (40% basis) Ambatovy: NDCC $4.00 5,209 $5.12 $4.67 $4.24 3,620 3,669 Q3 2015 Q2 2016 Q3

  21. Slide 21: Q3 2016 Oil & Gas and Power Highlights

    Q3 2016 Oil & Gas and Power Highlights Oil: Cuba GWI and NWI Oil: Cuba Unit Operating Costs Avg. Reference Price Fuel Oil No. 6 (US$) 17,693 16,200 $9.30 $9.31 14,709 10,354 9,933 8,045 $38.11 $9.04 $34.88 $31.02 Q3 2015 Q2 2016 Q3 2016 GWI Production Cuba NWI Production Cuba Q3 2015 Q2 2016 Q3 2016

  22. Slide 22: Total Debt vs. Recourse Debt - Most of the Total Debt is Non-recourse

    Total Debt vs. Recourse Debt - Most of the Total Debt is Non-recourse As at September 30, 2016 ($ millions) Total Recourse Senior unsecured notes (2021, 2023, 2025)(1) 720 720 Ambatovy partner loans 129 129 Ambatovy additional partner loans 1,284 - Other 45 45 Total debt 2,178 894 Cash and short ter

  23. Slide 23: Maintaining Strong Balance Sheet: No Maturity Until Q4 2021

    Maintaining Strong Balance Sheet and Reducing Costs: No Maturity Until Q4 2021 Debenture/Notes Maturity Schedule ($ M) 250 250 220 Bond Extension Completed in July 3-year extension of the maturity dates 129 No maturity until Nov 2021 2017 2018 2019 2020 2021 2022 2023 2024 2025 Senior unsecured note

  24. Slide 24: Balance Sheet Cash from Dec. 31, 2015 to Sept. 30, 2016

    Balance Sheet Cash from Dec. 31, 2015 to Sept. 30, 2016 500 $21.2 $10.1 $20.1 $31.7 450 $435.4 ($59.4) ($29.4) 400 (millions of dollars) $345.2 350 ($62.4) ($14.6) ($7.5) 300 250 200 150 100 Dec. 31, Adjusted Adjusted Adjusted Corporate Working Capital Debt Fees paid Obed/Other Sept. 30, 2015 - oper

  25. Slide 25: Key Takeaways

    Key Takeaways • > $345 million in cash and short-term investments, and no debt maturity before Q4 2021 • A long operating track record through all phases of the cycle • The largest and best established foreign mining and energy business in Cuba Well positioned to capture the turn in commodity prices

  26. Slide 26: Appendices

    APPENDICES SHERRITT INTERNATIONAL CORPORATION 26

  27. Slide 27: Reporting on our 2016 Strategic Priorities

    Reporting on our 2016 Strategic Priorities 2016 Strategic Priorities Delivery so far this year • Year-to-date NDCC of US$3.30/lb at Moa, and US$4.79/lb at Ambatovy is a reduction at both divisions • Moa acid plant in operation, NDCC benefit expected Q4 and Focusing on Core Nickel Business 2017 onwar

  28. Slide 28: Ambatovy Distributable Cash Flow

    Ambatovy Distributable Cash Flow Revenue Generated by Ambatovy (100%) - Payment of Operating Expenses (100%) - 1. Interest @ LIBOR + 255 bps (post financial completion) Project Finance Debt Service (100%) 2. US$188M of principal - repayment in 2015 and US$56M interest p.a. Funding of Maintenance Cap

  29. Slide 29: Discovered Pools in Cuba - Sherritt Has Played a Major Role in Most Discoveries

    Discovered Pools in Cuba - Sherritt Has Played a Major Role in Most Discoveries 1- Boca de Jaruco 2 - Santa Cruz 7 - Varadero West • Since 1998 • Enhanced recovery • 2005 (ended 2009) • Sherritt PSC expiry project ended in 2007 November 2017 1 2 3 4 5 6 7 3 - Canasí 4 - Puerto Escondido 5 - Yumurí 6

  30. Slide 30: Sherritt International Corporation Contact

    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 30

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