Itafos Inc · TSXV:IFOS
Itafos — Investor Presentation (July 2019)
49 slides from Itafos's investor presentation, July 2019
Slide 1: Corporate Presentation: Pure-Play Phosphate Fertilizer Company
Corporate Presentation “Pure-Play” Phosphate Fertilizer Company July 2019
Slide 2: Cautionary statements and forward-looking information
Cautionary statements and forward-looking information FORWARD-LOOKING INFORMATION This presentation contains forward-looking information (“FLI”) within the meaning of applicable Canadian securities legislation regarding future events or the future performance of the company (“Itafos”). Except for st
Slide 3: Table of contents
Table of contents 1 Company overview 2 Annex I: Portfolio highlights 3 Annex II: Financial highlights 4 Annex III: Definitions 3
Slide 4: Company overview
Company overview ITAF@S
Slide 5: Itafos is an integrated pure-play phosphate fertilizer platform company
Itafos is an integrated pure-play phosphate fertilizer platform company Value proposition Solid phosphate market fundamentals with expected 1 improvements in pricing Strategically positioned assets with significant market 2 share in target markets Industry leading board of directors and experienced
Slide 6: Phosphate fertilizer demand is expected to experience steady growth
Phosphate fertilizer demand is expected to experience steady growth… Global phosphate fertilizer demand growth Global phosphate fertilizer supply capacity1 +1.2% CAGR2 +1.1% CAGR2 60,000 60,000 50,000 50,000 Africa 40,000 Others 40,000 CIS 000’s P2O5 000’s P2O5 30,000 30,000 North America North Amer
Slide 7: Prices expected to improve with rising utilization rates
…and prices are expected to improve with rising utilization rates, consistent with historical trends Phosphate price vs. capacity utilization rate evolution H1 2008 95% High operating rate leading to 800 price fly-up in 2008 as stocks were drawn down High utilization rate due to stranded Chinese 700
Slide 8: Owner and operator of strategically positioned assets
Owner and operator of strategically positioned assets ✓ Itafos Conda: located in US west with competitive access to world’s 3rd largest fertilizer market (competitors clustered in east) Itafos Farim ✓ Itafos Arraias: located in the heart of Cerrado1 with competitive ▪ Products: Phosphate access to w
Slide 9: Industry leading board of directors and experienced management team
Led by an industry leading board of directors and experienced management team... Board of directors Management team Brent de Jong (Chairman) ✓ Partner at Castlelake Dr. Mhamed Ibnabdeljalil ✓ Former CEO of Zaff Capital LP Director, Interim CEO Dr. Mhamed Ibnabdeljalil (Interim CEO) Former CCO and EV
Slide 10: Demonstrated track record of executing to plan
…with a demonstrated track record of executing to plan Platform Created 2016 2017 2018 … and Beyond Restructuring Option Value Transforming Strategic Transactions Transactions Transactions Plan ✓ Acquired Itafos ✓ Acquired Itafos ✓ Acquired Itafos ✓ Optimize and Arraias (MBAC Paris Hills Conda exten
Slide 11: Itafos Conda represents 7% of US phosphate market
Itafos Conda represents 7% of US phosphate market with 550kt p.a. capacity Plant Mine life1 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 Mining Mine Permits/Exploration & Development Exploration & Development Key highlights ▪ 30 year operating track-record ▪ Produces and sells a range of premiu
Slide 12: Conda positioned in consolidated North American fertilizer market
Itafos Conda is strategically positioned in attractive, consolidated North American fertilizer market Nutrien Redwater <500kt (CLOSED) 500-1,000kt Itafos Conda Simplot Simplot Pocatello 1,000-1,500kt Mosaic Nutrien Itafos Simplot Conda Rock Specialty agriculture (fruits, Springs >1,500kt vegetables,
Slide 13: Conda levers to achieve up to US$225mm EBITDA
Itafos Conda has potentially actionable levers to achieve up to US$225mm EBITDA Itafos Conda EBITDA Potential additional EBITDA: +US$165mm 37 26 11 Note: US$11mm of total US$37mm additional EBITDA represents risk mitigation associated with expiration of third party sulfuric acid supply contract Upsi
Slide 14: Itafos Arraias represents 7% of Brazil phosphate market
Itafos Arraias represents 7% of Brazil phosphate market with 500kt p.a. capacity Acidulation and granulation plants Sulfuric acid plant Key highlights ▪ Designed as vertically integrated phosphate mine and fertilizer business1 ▪ Currently repurposing plant to focus on high grade SSP, SSP+ and premiu
Slide 15: Arraias positioned in one of the world's fastest growing fertilizer markets
Itafos Arraias is strategically positioned in one of the world’s fastest growing fertilizer markets Key highlights ▪ Brazil is world’s 4th largest fertilizer market and is set to grow faster than global average through 2022 ▪ Cerrado is Brazil’s most promising MA PI agricultural region, expected to
Slide 16: Arraias levers to achieve up to US$50mm EBITDA
Itafos Arraias has potentially actionable levers to to achieve up to US$50mm EBITDA Itafos Arraias EBITDA Potential additional EBITDA: +US$20mm Upside Capex 1 1 1 3 12 18 (US$mm) Short-term Mid-term Pro Forma EBITDA Potential Cost Optimization Potential Revenue Optimization Upside EBITDA Note: Refer
Slide 17: Farim expected to represent 4% of global traded phosphate rock
Itafos Farim is expected to represent 4% of global traded phosphate rock with 1.3Mt p.a. capacity High quality phosphate rock Mine Item Unit Value Mine area (year 1 through 7) P2O5 % 34% Mine area Cadmium ppm 6.4-6.9 (year 8 onwards) CaO/P2O5 x <1.5x Shipping product bin ✓ 34% P2O5 content compared
Slide 18: Farim being de-risked on path to commercial production
Itafos Farim being de-risked and project is on path to commercial production Milestones Status Key highlights Feasibility study ▪ Reviewed by independent technical consultants Environmental/social ▪ Based on IFC guidelines and Equator principles and reviewed impact assessment by independent technica
Slide 19: Farim within 1st quartile of global cash cost curve
Itafos Farim is within 1st quartile of global cash cost curve with clear steps to further reduce costs Phosphate rock projects expected cash costs1 160 1st quartile of global cash cost curve 140 Itafos Farim 1.3Mt 120 (Self Mining)2 Itafos Farim 2.0Mt Itafos Farim 1.3Mt Cash Costs, US$/t 100 (Self M
Slide 20: Farim levers to achieve up to US$127mm EBITDA
Itafos Farim has potentially actionable levers to achieve up to US$127mm EBITDA Itafos Farim EBITDA Potential additional EBITDA: +US$62mm Upside Capex 60 43 103 (US$mm) Short-term Mid-term Pro Forma EBITDA Potential Cost Optimization Potential Revenue Optimization Upside EBITDA Note: Refer to cautio
Slide 21: Compelling economic profile
Compelling economic profile… Metric 2019 2020 2021 2022 2023 Notes (US$ mm) ▪ Considers current pricing environment for phosphate rock, fertilizer and key inputs ▪ Considers Itafos Arraias repurpose plan Adjusted $20-30 $45-65 $95-125 $105-145 $130-180 ▪ Considers Itafos Farim commercial EBITDA oper
Slide 22: With significant upside potential
…with significant upside potential Itafos pro forma EBITDA, upside EBITDA and upside capex 600 +170% potential 485 500 growth +270% 392 400 potential 364 growth US$mm 300 +95% 225 potential +60% 200 growth potential 145 127 growth 103 100 60 65 50 30 18 0 Itafos Conda Itafos Arraias Itafos Farim Tot
Slide 23: Annex I: Portfolio highlights
2 Annex I: Portfolio highlights
Slide 24: Portfolio highlights
Portfolio highlights Item Itafos Conda Itafos Arraias Itafos Paris Hills Itafos Farim Itafos Santana Itafos Mantaro Itafos Araxá Itafos ▪ 100% ▪ 97.0%1 ▪ 100% ▪ 100% ▪ 99.4%1 ▪ 100% ▪ 100% Ownership ▪ Tocantins, ▪ Farim, Guinea ▪ Minas Gerais, Location ▪ Idaho, US ▪ Idaho, US ▪ Pará, Brazil ▪ Junin,
Slide 25: Conda overview
Itafos Conda overview Operating business Key highlights Location highlights ▪ 100% owned by Itafos ▪ Vertically integrated phosphate fertilizer business with production and sales capacity of approx. 550kt per year Conda, ID ▪ Produces SPA, MAP, MGA and APP to be sold to wholesale and retail customer
Slide 26: Conda expected process overview
Itafos Conda expected process overview Operating business M B Phosphate Rock Grade: Ore Rock Ammonia 29.5% Volume: 1,300kt G C ▪ Mined Volume: ▪ Volume: 47kt MAP ▪ Volume: 335kt 2,000kt 3.75 t/t ▪ Sourced from Nutrien Volume: 335kt ▪ Sell to Nutrien ▪ Purchased Volume: 1.00 t/t 0.533 200-300kt P P t
Slide 27: Conda photos
Itafos Conda photos Operating business Mine Plant Sulfuric acid plant Community involvement 27
Slide 28: Arraias overview
Itafos Arraias overview Operating business Key highlights Location highlights ▪ Owned 97.0% by Itafos ▪ Designed as vertically integrated phosphate fertilizer business with production and sales capacity of approx. 500kt per year and sulfuric acid production PA MA capacity of approx. 210kt per year T
Slide 29: Arraias process overview
Itafos Arraias1 Key highlights SSP domestic capacity is in coastal /southern F Milling and Phosphate Rock filtration Ammonia Volume: TBD ▪ Volume: TBD ▪ Volume: TBD ▪ Sourced from Yara ▪ Sourced from third 0.67 t/t parties A 0.96 t/t G G C ▪ Volume: TBD Acidulation Granulation PK compounds ▪ Sell di
Slide 30: Arraias photos
Itafos Arraias photos Operating business Mine1 Reclaimer Beneficiation plant Community involvement (1) Existing permitted mines have been idled in connection with advancing the repurpose plan; however, all licenses and permits will be maintained in good standing and comply with existing regulations
Slide 31: Paris Hills overview
Itafos Paris Hills overview Near-term project Key highlights Location highlights ▪ Owned 100% by Itafos ▪ Phosphate rock mine development project ▪ Expected to produce phosphate rock to be integrated Conda with Itafos Conda ▪ Located in Idaho, US on a property consisting of approx. 1,010 ha of land
Slide 32: Paris Hills expected process overview
Itafos Paris Hills expected process overview Near-term project M C Phosphate Rock Grade: Ore Rock 29.5% Volume: 0.95kt ▪ Mined Volume: 0.95kt ▪ Volume: 0.95kt P2O5 Grade: 29.5% T C ▪ Transport the Strip Ratio: TBD Trucking Phosphate Rock phosphate rock to Volume: .95kt Volume: .95kt Itafos Conda (ap
Slide 33: Farim overview
Itafos Farim overview Near-term project Key highlights Location highlights ▪ Owned 100% by Itafos ▪ Phosphate rock mine development project ▪ Expected to produce phosphate rock to be sold to producers of phosphate based fertilizers ▪ Located in Farim, Guinea Bissau on a property consisting of approx
Slide 34: Farim expected process overview
Itafos Farim expected process overview Near-term project M B Phosphate Rock Grade: Ore Rock 34% Volume: 1.3Mt ▪ Mined Volume: 1.8Mkt ▪ Volume: 1.3Mt ▪ Sell to international P2O5 Grade: 30% T C producers and Strip Ratio: 9.6x Trucking Phosphate Rock distributors of Volume: 1.3Mt Volume: 1.3Mt phospha
Slide 35: Farim photos
Itafos Farim photos Near-term project Mine Port Construction camp Community involvement 35
Slide 36: Santana overview
Itafos Santana overview Mid-term project Key highlights Location highlights ▪ Owned 99.4% by Itafos ▪ Integrated phosphate mine and fertilizer plant development project with expected SSP production of approx. 500kt per year and sulfuric acid production of MA approx. 230kt per year PA PI ▪ Expected t
Slide 37: Santana expected process overview
Itafos Santana expected process overview Mid-term project M B Phosphate ▪ Volume: 6kt Rock Grade: Ore Rock Ammonia 34% Volume: 300kt ▪ Mined Volume: 1,500kt 1.7 t/t P2O5 Grade: 12.0% A 1.00 t/t G G C Strip Ratio: 2.8x Acidulation Granulation SSP1 ▪ Volume: 500kt Volume: 500kt Volume: 500kt Volume: 5
Slide 38: Mantaro overview
Itafos Mantaro overview Mid-term project Key highlights Location highlights ▪ Owned 100% by Itafos ▪ Phosphate rock mine development project ▪ Expected to produce phosphate rock to be sold to producers of phosphate based fertilizers ▪ Located in Junin, Peru on a property consisting of approx. 12,800
Slide 39: Mantaro expected process overview
Itafos Mantaro expected process overview Mid-term project M B Phosphate Rock Grade: Ore Rock 28.8-32.5% Volume: TBD ▪ Mined Volume: TBD P2O5 Grade: 10.0% T T C Strip Ratio: TBD Trucking Phosphate Rock ▪ Volume: TBD Volume: TBD Volume: TBD ▪ Sell to national and international producers and distributo
Slide 40: Araxá overview
Itafos Araxá overview Mid-term project Key highlights Location highlights ▪ Owned 100% by Itafos ▪ Vertically integrated rare earth elements and niobium mine and extraction plant development project ▪ Expected to produce rare earth oxides and niobium PA MA oxide to serve international markets PI ▪ L
Slide 41: Araxá expected process overview
Itafos Araxá expected process overview Mid-term project M Ore ▪ Mined Volume: 1,500kt P2O5 Grade: 12.5% O N C Strip Ratio: 2.8x Niobium Plant ▪ Volume: 0.7kt Volume: 0.7kt ▪ International markets 0.92 t/t Sulfuric Acid ROM ▪ Volume: TBD 0.22 t/t R C REE Solvent NaOH (25%) ROM Ore Cracking Plant ▪ Vo
Slide 42: Annex II: Financial highlights
3 Annex II: Financial highlights
Slide 43: Capital markets overview
Capital markets overview1 Capitalization1 Shareholders4 Exchange ▪ TSX-V Ticker ▪ IFOS 26.5% Shares outstanding ▪ 140,298,801 Share price (/share) ▪ C$1.38 60.3% Average daily volume (TTM) ▪ 44,764 4.5% Market capitalization (000s) ▪ C$193,612 8.7% Cash2 (000s) ▪ US$10,550 Castlelake Pala de Jong Ca
Slide 44: Income statement
Income statement Income statement 1Q19 1Q18 ∆ US$ ∆% Income statement (US$ 000s) Revenues, net 73,178 58,116 15,062 26% Cost of goods sold (73,340) (47,252) (26,088) 55% Impairments - - - - (162) 10,864 (11,026) (101%) Expenses Selling, general and administrative expenses (5,848) (8,223) 2,375 (29%)
Slide 45: Balance sheet
Balance sheet Balance sheet 1Q19 4Q18 ∆ US$ ∆% Assets (US$ 000s) Cash and cash equivalents 10,550 9,919 631 6% Accounts receivable 24,325 35,907 (11,582) (32%) Short-term investments - 2,106 (2,106) (100%) Inventories, net 138,595 133,840 4,755 4% Other current assets 8,618 12,704 (4,086) (32%) Tota
Slide 46: Cash flow statement
Cash flow statement Cash flow statement 1Q19 1Q18 ∆ US$ ∆% Operating activities (US$ 000s) Net income (loss) (13,331) 51,324 (64,655) (126%) Depreciation and depletion 8,772 3,085 5,687 184% Cash settlement of share-based payments (9) - (9) NA Share-based payment (recovery) expense (142) 616 (758) (
Slide 47: Annex III: Definitions
FB Annex Ill: Definitions ITAF@S
Slide 48: Non-IFRS financial measures
Non-IFRS financial measures The Company considers both IFRS and certain non-IFRS measures to assess performance. Non-IFRS measures are a numerical measure of a company’s performance, that either include or exclude amounts that are not normally included or excluded from the most directly comparable I
Slide 49: Glossary of product acronyms
Glossary of product acronyms Acronym Definition Asset MAP Monoammonium phosphate Itafos Conda SPA Superphosphoric acid Itafos Conda MGA Merchant grade phosphoric acid Itafos Conda APP Ammonium polyphosphate Itafos Conda SSP Single superphosphate Itafos Arraias SSP+ SSP with micronutrients Itafos Arr