Sherritt International Corporation · TSX:S
Sherritt International — Q3 2017 Earnings Presentation
23 slides from Sherritt International's earnings presentation, Oct 25, 2017
Slide 1: Q3 Investor Call
Q3 Investor Call October 25, 2017 SHERRITT INTERNATIONAL CORPORATION 1
Slide 2: Forward-looking statements
Forward-looking statements This press release 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”, “sh
Slide 3: Participants
Participants David Pathe President & CEO Steve Wood Executive Vice President & COO Andrew Snowden Senior Vice President & CFO SHERRITT INTERNATIONAL CORPORATION 3
Slide 4: Q3 2017 highlights
Q3 2017 highlights 1 Increased cash position to $291M 2 Reduced NDCC at Moa to $1.94/lb – lowest since Q4 2004 3 Improving commodity prices and outlook Safety & shutdown procedures limited Hurricane Irma’s 4 impact Sherritt is well positioned for improving market fundamentals SHERRITT INTERNATIONAL
Slide 5: Market Environment
MARKET ENVIRONMENT SHERRITT INTERNATIONAL CORPORATION 5
Slide 6: Nickel and cobalt price trends from 2015 to date
Nickel and cobalt price trends from 2015 to date Nickel vs. 90-Day Moving Average (DMA) Cobalt vs. 90-Day Moving Average (DMA) +15% in +80% in (42%) in 2015 +18% in 2016 (24%) in 2015 +37% in 2016 $8.00 2017 $30 2017 $7.50 $7.00 $25 $6.50 $6.00 $20 $5.50 $5.00 $15 $4.50 $4.00 Avg. reference price $1
Slide 7: Nickel supply deficit is looming
Nickel supply deficit is looming Global nickel supply/demand market balance (kt) 200 600 Nickel inventories 150 450 Inventories (kt) Nickel supply (kt) 100 300 50 150 0 0 (50) (150) (100) (300) 2014 2015 2016 2017 2018 2019 2020 2021 Nickel supply/demand balance • Demand is tied to EV battery requir
Slide 8: Sherritt is a low cost nickel producer
Sherritt is a low cost nickel producer 2017 Nickel industry NDCC (YTD) 10 25th percentile 50th percentile US$2.53 US$3.77 C1 Cash Costs (US$/lb) YTD avg. reference 5 price US$4.55/lb Moa = US$2.53 Ambatovy = US$3.96 (YTD 2017) (YTD 2017) 0 (5) 0 1,000 2,000 3,000 4,000 Mlbs Moa ranked in lowest cost
Slide 9: Third Quarter Operating Results
THIRD QUARTER OPERATING RESULTS SHERRITT INTERNATIONAL CORPORATION 9
Slide 10: Metals highlights - Moa JV
Metals highlights - Moa JV Production(1) (tonnes) NDCC (US$/lb) Nickel Cobalt 8,590 $3.55 8,098 978 928 $1.94 Q3 2016 Q3 2017 Q3 2016 Q3 2017 Q3 2016 Q3 2017 • Declines due to mixed sulphides shipment • Lowest NDCC since Q4 2004 delays caused by Hurricane Irma • Driven by high cobalt credit and US$0
Slide 11: Metals highlights - Ambatovy JV
Metals highlights - Ambatovy JV Production(1) (tonnes) NDCC (US$/lb) Nickel Cobalt 9,173 838 $4.67 8,118 $4.27 675 Q3 2016 Q3 2017 Q3 2016 Q3 2017 Q3 2016 Q3 2017 • Lower production due to asset reliability and planned asset plant shutdown in September • High cobalt credits contributed to improved N
Slide 12: Oil and Gas highlights
Oil and Gas highlights Oil Production (total NWI, boepd) Unit operating costs (Cuba GWI, $/bbl) $9.31 8,719 $8.98 7,658 Q3 2016 Q3 2017 Q3 2016 Q3 2017 • Decrease due to natural reservoir decline • Improved due to lower Opex and the and the impact of Hurricane Irma strengthening of the Canadian doll
Slide 13: Power highlights
Power highlights Electricity production (331/3%, GWh) Unit operating costs ($/MWh) 226 210 $25.55 $16.59 Q3 2016 Q3 2017 Q3 2016 Q3 2017 • Decline due to reduced gas availability and • Decrease to due lower non-capitalized the impact of Hurricane Irma maintenance costs at Boca and Escondido SHERRITT
Slide 14: Financial Highlights
FINANCIAL HIGHLIGHTS SHERRITT INTERNATIONAL CORPORATION 14
Slide 15: Consolidated cash from June 30, 2017 to Sept. 30, 2017
Consolidated cash from June 30, 2017 to Sept. 30, 2017 In million of dollars 18.4 3.2 7.9 14.7 (2.7) 291.3 274.2 (9.6) (5.6) (9.2) June 30, 2017 Fort Site OCF O&G OCF Power OCF Other OCF Interest paid on Receipt of Capital Other Sept. 30, 2017 (excl. debenture debentures advances from expenditures i
Slide 16: Cash cost drivers for Moa and Ambatovy
Cash cost (NDCC) drivers for Moa and Ambatovy Moa Ambatovy Mining, processing and refining costs Mining, processing and refining costs 6% 4% Diesel 3% 4% Diesel 8% 6% 6% 4% Coal / fuel oil / electricity 19% 20% Coal / fuel oil / electricity 9% 7% 14% Other fixed costs Other fixed costs 19% 32% 20% L
Slide 17: Status of overdue receivables
Status of overdue receivables Q3 Progress US$ Millions Q2 Overdue Expected/Due Received Q3 Overdue Oil & Gas $22.7 $21.4 ($15.6) $28.5 receivables Power receivables $67.5 $21.5 ($17.0) $72.0 Total Cuban energy $90.2 $42.9 ($32.6) $100.5 Receivables • Overdue receivables have always fluctuated over t
Slide 18: Impact of Forex on results
Impact of Forex on results Balance as at Q3 2017 Gain/ (loss) Month-end exchange Financial assets and liabilities in $M in $M rates CAD USD CAD USD: Q3 gain/ Date CAD (loss) Ambatovy JV partner and $1,450.1 $1,161.9 $58.4 additional partner loans Q3 2017 0.8013 Ambatovy JV subordinated loans $800.7
Slide 19: Outlook & Near-Term Catalysts
OUTLOOK & NEAR-TERM CATALYSTS SHERRITT INTERNATIONAL CORPORATION 19
Slide 20: Updated 2017 targets
Updated 2017 targets Guidance at June 30 Updated at Sept. 30 Nickel production at Ambatovy - tonnes 40,000 – 43,000 36,000 – 39,000 Cobalt production at Ambatovy - tonnes 3,600 – 3,900 3,300 – 3,600 Oil – Cuba (BOPD – GWI) 11,500 – 12,500 13,000 – 14,000 Oil – (BOEPD – NWI) 6,400 – 7,000 7,500 – 8,0
Slide 21: Near-term catalysts
Near-term catalysts 1 Ambatovy JV restructuring expected in Q4 2 Block 10 drill results expected by year end Sherritt is well positioned for improving market fundamentals SHERRITT INTERNATIONAL CORPORATION 21
Slide 22: Q&A
Q&A SHERRITT INTERNATIONAL CORPORATION 22
Slide 23: Sherritt International Corporation
Sherritt International Corporation 181 Bay Street, 26th Floor, Brookfield Place Toronto, Ontario, Canada M4T 2Y7 Investor Relations Joe Racanelli Telephone: 416.935.2457 Toll-Free: 1.800.704.6698 Email: jracanelli@sherritt.com Website: www.sherritt.com SHERRITT INTERNATIONAL CORPORATION 23
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