Sherritt International Corporation · TSX:S
Sherritt International — Bernstein Strategic Decisions Conference 2018
20 slides from Sherritt International's conference presentation, September 2018
Slide 1: Bernstein Strategic Decisions Conference Presentation
SHERRITT THE NAME IN NICKEL Bernstein Strategic Decisions Conference Presentation David Pathe Chief Executive Officer September 2018 1
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”, “shou
Slide 3: 90 years of nickel and cobalt production
90 years of nickel and cobalt production 3
Slide 4: Sherritt is completing a transformation
Sherritt is completing a transformation Recent progress & momentum: • Eliminated $2B of debt since 2014 • Restructured Ambatovy JV ownership • Produced ~67,000 tonnes of nickel and ~6,600 tonnes of cobalt in FY2017* • Q2 production costs at Moa JV in the Metals lowest quartile for 5th consecutive Oi
Slide 5: Electric vehicles start with nickel and cobalt
Electric vehicles start with nickel and cobalt 5
Slide 6: Electric vehicles trend is a global phenomenon
Electric vehicles trend is a global phenomenon Initiative Year China targets 5M EVs on the road by 2020 and production of 7M EVs by 2025. EVs with China 2020, 2025 range > 400km see increase in subsidies Norway Change to taxes and incentives to achieve zero or low emission vehicle sales 2025 Holland
Slide 7: Automotive industry is undergoing a dramatic transformation
Automotive industry is undergoing a dramatic transformation 2019 2020 2022 2025 - China begins EV - 100% of Jaguar Land - Ford will launch an all- - 30% of Audi vehicle sales production quotas at Rover’s fleet will be electric SUV + 24 hybrid and will be electric 10% of all vehicles electric 16 full
Slide 8: EV sales are meeting forecasts
EV sales are meeting forecasts Global EV sales actuals EV production forecasts ’000s 0 20 40 60 80 100 120 140 16 14 China +130% Million vehicles produced/Yr 12 Europe 10 +39% 8 US +31% 6 +29% 4 Japan 2 ROW +17% 0 China Europe USA RoW Q1 2018 Q1 2017 2016 2020 2025 2030 5 years to reach first millio
Slide 9: Nickel and cobalt supply are integral to EV adoption
Nickel and cobalt supply are integral to EV adoption Nickel and cobalt demand from electric vehicles 16 CAGR: 800 +65% 14 700 million vehicles per year 12 600 10 500 kt p.a. 8 400 6 300 4 200 2 CAGR: 100 +17% 0 0 2017 2018 2019 2020 2021 2022 2023 2024 2025 EV sales Nickel demand (kt p.a.) Cobalt de
Slide 10: Cobalt supply marked by jurisdictional risk
Cobalt supply marked by jurisdictional risk Cobalt sources Mine production by country (2017): total = 113 kt 2% Canada: 3% Russia: 5% 37% Cuba: 4% 61% (3% Sherritt) Philippines: (1) DRC: 62% 4% Australia: 5% Copper mines by-product Madagascar: 3% (1) Nickel mines by-product Primary cobalt mines Othe
Slide 11: Supply risks are driving changes to battery chemistry
Supply risks are driving changes to battery chemistry Metal content by battery Other Changes catalysts driven for change: by: Nickel 19.8% 36.2% - Cobalt - Cobalt supply supply constraints constraints 48.2% - Commodity pricing environment 48.8% Cobalt 19.9% - Commodity pricing - Surging end-product
Slide 12: Not all nickel is the same
Not all nickel is the same Differences in nickel supply and uses 3.5 >70% 3.0 2.5 Stainless steel Low purity Class II – 2.0 Nickel Pig Iron & Mt Ferro-nickel 1.5 Stainless steel with high Of all nickel supply is purity nickel unsuitable for EV battery High purity 1.0 Class I – High Non-stainless exc
Slide 13: Class 1 nickel supply deficit is accelerating
Class 1 nickel supply deficit is accelerating 600,000 500,000 400,000 300,000 200,000 35% inventory decline YTD 100,000 0 LME Inventories SHFE No new nickel mines currently in development Source: LME, SHFE 13
Slide 14: Where future Class 1 nickel supply will come from
Where future Class 1 nickel supply will come from Recent tropical- subtropical climate belt Global resources of nickel Sulphides Laterites > 10 Mt 1 - 10 Mt < 1 Mt Sherritt is the world leader in processing and refining from lateritic ores 14
Slide 15: Sherritt has two long-life assets
Sherritt has two long-life assets Moa Ambatovy Reserve classification Tonnage Ni Co Ni Co Reserve classification Tonnage Ni Co Ni Co (Mt) (%) (%) (000 t) (000 t) (Mt) (%) (%) (000 t) (000 t) Proven Central Moa 43.59 1.14 0.12 497.2 51.3 Proven 72.8 0.84 0.07 608.4 54.4 Eastern Satellites 11.03 1.18
Slide 16: Moa has a long track record of stable production
Moa has a long track record of stable production Nickel and cobalt production (tonnes, 100% basis) 33,599 33,972 34,572 34,263 33,705 33,542 32,909 32,927 31,524 ~ 31,500 • Average yearly nickel production: ~33,400T • Average yearly cobalt production:~3,600 • High cobalt-to-nickel 3,721 3,706 3,853
Slide 17: Sherritt is well positioned for strong battery metals outlook
Sherritt is well positioned for - Low-cost producer of Class 1 nickel strong battery metals outlook and cobalt - High cobalt to nickel production ratio - Produce nickel and cobalt in briquette and powder forms - Experts in processing nickel from lateritic ores - Strong relationships with battery man
Slide 18: Sensitivity to nickel and cobalt prices
Sensitivity to nickel and cobalt prices $10 $45 $9 $40 $8 $35 $7 Cobalt (US$/lb) Nickel (US$/lb) $30 133 $6 $25 $5 $20 $4 78 81 72 $15 $3 51 42 $10 $2 20 $5 $1 $0 $0 2012 2013 2014 2015 2016 2017 H1 2018 Sherritt is benefitting from nickel and cobalt price recoveries (1) For additional information,
Slide 19: Near-term outlook and catalysts
Near-term outlook and catalysts 1 Higher nickel and cobalt production at Moa JV in H2 over H1 2 Upside leverage to improving nickel and cobalt prices 3 Preliminary Block 10 drill results expected by Nov. 1 4 Continued focus on debt reduction 5 Strengthened balance sheet 19
Slide 20: Questions?
Questions? David Pathe Chief Executive Officer September 2018 20
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