Sherritt International Corporation · TSX:S
Sherritt International — Investor Presentation (March 2022)
32 slides from Sherritt International's investor presentation, March 2022
Slide 1: Metals for an Electric Future
Metals for an Electric Future Sherritt Investor Presentation March 2022
Slide 2: 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 3: Sherritt's transformation
Sherritt’s transformation 1. Completed balance sheet restructuring in Q3 2020 2. New CEO joined in June 2021 and launched expansion strategy in Q4 3. Strong 2021 financial and operational results despite COVID 4. Technologies give transformational growth opportunities 5. Capitalizing on improving ma
Slide 4: Market outlook
Market outlook 4
Slide 5: Changing market dynamics present new opportunities
Changing market dynamics present new opportunities* EV SALES COBALT DEMAND 63.3 317 289 Millions of vehicles Thousands of tonnes 259 40.2 224 14.6% 175 197 12.7% 22.5 CAGR CAGR 8.5 10.0 4.7 6.0 7.2 2021 2022 2023 2024 2025 2030 2035 2040 2021 2022 2023 2024 2025 2026 NICKEL DEMAND IN BATTERIES 1,001
Slide 6: EV battery chemistries dominated by nickel and cobalt
EV battery chemistries dominated by nickel and cobalt Nickel • Nickel provides energy density 19.8% 36.2% Cobalt 48.2% 48.8% • Cobalt provides stability 19.9% • LFP batteries have limited range 12.1% Manganese 18.5% 6.0% 11.3% 9.2% 5.6% Lithium 7.8% 7.8% 7.3% 5.6% 7.4% NMC-111 NMC-622 NMC-811 NCA LF
Slide 7: EV supply chain starts with nickel
EV supply chain starts with nickel Ore Finished Battery Cathodes & Battery packs Electric processing nickel precursor cells vehicles HPAL process Intermediate product High purity finished Nickel sulphate is a Batteries are End use determined by produces a undergoes refining nickel is used to key com
Slide 8: Global nickel reserves are concentrated within lateritic deposits
Global nickel reserves are concentrated within lateritic deposits Canada Russia Philippines 3% 8% 95M Tonnes of global nickel reserves* 5% Cuba • Bulk is contained in low-grade Indonesia lateritic deposits 6% • Typically rich in iron • Not easily amenable for EV 24% battery production Brazil • Produ
Slide 9: Cuba is an important source of cobalt reserves
Cuba is an important source of cobalt reserves Canada Russia Philippines 3% 4% 7.6M Tonnes of global cobalt reserves* 4% Cuba • Bulk is contained in the Democratic Republic of Congo 7% • Produced as a by-product to copper and nickel • Industry challenged by artisanal DRC mining and child labour • Ch
Slide 10: Operations
Operations 10
Slide 11: Sherritt – Metals for an electric future
Sherritt – Metals for an electric future • One of the world’s largest producers of Class 1 nickel from lateritic sources Alberta, •Canada Global marketing network • Leader in the development and application of pressure hydrometallurgy worldwide Our Production Process 1. Mixed sulphides with high cob
Slide 12: Sherritt is a dependable nickel and cobalt producer
Sherritt is a dependable nickel and cobalt producer 40 • Only refinery in Western Canada 35 producing finished nickel and cobalt Thousand tonnes (100% basis) 30 • 60+ year history of responsible, sustainable production 25 • Produced 3B pounds of nickel 20 • No labour disruptions over 60 years 15 • P
Slide 13: Financial Highlights
Financial Highlights sherritt
Slide 14: Recent financial results
Recent financial results (1) (1) Combined Revenue Adjusted EBITDA Net loss from continuing operations $ 612.8 $ 497.0 $112.2 $38.9 2020 2021 $(13.4) 2020 2021 $(85.7) 2020 2021 Improvements driven by higher realized prices and efforts to reduce costs 1. Non-GAAP financial measures – These measures a
Slide 15: 2021 Moa JV cost highlights
2021 Moa JV cost highlights Net Direct Cash Cost(1) (US$/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 highe
Slide 16: 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 Other $3M Offset by: Energas $77M Energas • $8.1M of Moa JV distributions deferred to Jan. 2022 $79M • $14.8M cash intere
Slide 17: Outlook for Moa JV distributions is strong
Outlook for Moa JV distributions is strong $20M US$196M* Distributions (US$) $14M Distributed since Q1 2019 Quarterly distributions based on $20M available cash, prevailing metals prices, $14M $10M $9M $11M $10M $10M and planned capital spend $5M $6.5M $2.5M Q1 Q2 Q3 Q4 Q1 Q4 Q1 Q2 Q3 Jan. 2019 2019
Slide 18: 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 $198M • Col
Slide 19: Collecting on overdue receivables
Collecting on overdue receivables Cash swap agreement - Exchange of cash between Sherritt’s Cuban partners US$ - Allows cash held at Energas to be used to fund local purchases by Moa JV in local Cuban currency (CUP) - Allows US$ otherwise used for local purchases by Havana Moa JV to be re-directed t
Slide 20: Mandatory redemptions of 2L notes at par
Mandatory redemptions of 2L notes at par • Mandatory redemptions of 2L notes are a Excess cash flow requirement of indenture agreement Determined by: - Cash from operating activities (excl. Power) • Conditions required to trigger repurchases: - Less sustaining capital spending (excl. Power) - Plus C
Slide 21: Sherritt's Outlook
Sherritt’s Outlook 21
Slide 22: 2022 strategic priorities
2022 strategic priorities Establish Sherritt as Achieve balance sheet Maximize value a leading green strength from Cuban energy metals producer businesses Leverage Be recognized as a Technologies for sustainable transformational organization growth Sherritt’s near-term focus builds on recent momentu
Slide 23: 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 24: Impact of rising nickel prices
Impact of rising nickel prices* Sherritt’s share of Moa JV’s Adjusted EBITDA(1) for 2022 Sensitivity assumptions: $424M - Determined as Sherritt’s 50% share of Moa JV $302M - Based on mid-point of CDN$ (millions) $221M guidance for 2022 or 33,000 tonnes of nickel $152M - Based on mid-point of NDCC G
Slide 25: 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 • Increased mixed sulphides feed for refinery • Complete prior suspended • Upgrade or expand equi
Slide 26: Recent progress on expansion strategy
Recent progress on expansion strategy • SPP budget and timelines approved by Moa JV Board • US$27M cost estimate • Completion expected early 2024 • Benefits starting in mid-2024: • 1,700 tonnes of increased mixed sulphides production • Reduced haulage costs • Reduced carbon intensity • Total budget
Slide 27: Technologies as an incubator and provider of solutions
Technologies as an incubator and provider of solutions Commercialize research projects Create incremental value Next Gen lateritic ore Sherritt Treatment process. of copper Licensing/sales of Moa JV/ Sherritt con- solutions Delivery of services Corefco centrates Technologies Bitumen/ EPCM heavy oil
Slide 28: 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 29: Sherritt investment summary
Sherritt investment summary 1. Favourable nickel and cobalt market outlook due to growing EV demand 2. Sherritt is well positioned as a low- cost nickel and cobalt producer 3. Growth strategy delivers high ROI at low capital intensity 4. Opportunity to extend mine life and grow nickel and cobalt res
Slide 30: Q&A Discussion
Q&A Discussion sherritt
Slide 31: Sherritt International Corporation
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 32: Appendix – Non GAAP and other financial measures
Appendix – Non GAAP and other financial measures This presentation includes the following non-GAAP or other financial measures: combined revenue, unit operating cost/NDCC, adjusted EBITDA and spending on capital. These measures are incorporated by reference to Sherritt’s Management Discussion and An
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