Sherritt International Corporation · TSX:S
Sherritt International — Q4 2015 Earnings Presentation
21 slides from Sherritt International's earnings presentation, Feb 11, 2016
Slide 1: Fourth Quarter and 2015 Results
Fourth Quarter and 2015 Results l February 11, 2016 SHERRITT INTERNATIONAL CORPORATION 1
Slide 2: Cautionary Statement on Forward-Looking Information
Cautionary Statement on Forward-Looking Information This document 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”,
Slide 3: David Pathe, President & CEO
David Pathe, President & CEO SHERRITT INTERNATIONAL CORPORATION 3
Slide 4: 2015 Highlights: Nickel
(1) 2015 Highlights: Nickel Moa Production (50% basis) Moa: NDCC 16,853 $4.44 Avg. Reference Price 16,455 Nickel (USD) $2.90 $7.17 FY 2014 FY 2015 Q4 2014 Q4 2015 $4.27 Ambatovy Production (40% basis) Ambatovy: NDCC 18,908 $6.98 14,821 $4.07 Q4 2014 Q4 2015 FY 2014 FY 2015 Q4 2014 Q4 2015 (1) All do
Slide 5: 2015 Highlights: Oil & Gas and Power
(1) 2015 Highlights: Oil & Gas and Power Avg. Reference Price Oil: Net Working Interest Fuel Oil No. 6 (USD) $61.98 11,158 10,960 Ending Cash (2) $29.86 $477.2 $435.4 $374.8 FY 2014 FY 2015 Q4 2014 Q4 2015 Power (33 1/3% basis) GWh Power: Free Cash Flow 902 $57 847 $45.4 FY 2014 Q3 2015 Q4 2015 FY 2
Slide 6: NDCC Improvements Outpaced the Cost Curve with Moa's Fertilizer Sales Credit
NDCC Improvements Outpaced the Cost Curve with Moa’s Fertilizer Sales Credit Helping Out in Q4 $8.00 $6.98 $7.00 $6.00 $5.74 $5.60 $5.48 $5.06 U.S.$/lb Ni $5.51 $5.00 $5.23 $4.96 $4.24 $4.00 $4.44 $4.36 $4.07 $4.12 $4.07 $3.00 $2.90 $2.00 $1.00 Q4 2014 Q1 2015 Q2 2015 Q3 2015 Q4 2015 Moa JV & Fort S
Slide 7: A Closer Look at the Cash Cost Curve
(1) A Closer Look at the Cash Cost Curve 2015 Nickel Industry, Normal, C1 Cash Cost Grouped by Operation and Ranked by Cash Cost (C1) Existing Operations and Base Case 50th percentile = US$4.96 25th percentile = US$3.04 Ambatovy = US$4.07 Moa = US$2.90 (Q4 2015) (Q4 2015) Source: Wood Mackenzie Ltd.
Slide 8: Ambatovy Distributable Cash Flow
Ambatovy Distributable Cash Flow Revenue Generated by Ambatovy (100%) subtract Payment of Operating Expenses (100%) subtract 1. Interest @ LIBOR + 255 bps (post financial Payment of Debt Service (2 parts) (100%) completion) 2. Principal repayments made semi-annually subtract (June, Dec) Funding of M
Slide 9: Nickel Market 2005 – 2035 Projected
Nickel Market 2005 – 2035 Projected • Refined nickel imports into China through November 2015 are up 108%, with ferronickel imports up 146% in the same period (RBC, INSG, Wood Mackenzie) • Supply gap continues to develop with few new firm nickel projects announced Nickel Supply Demand 2005 to 2035 w
Slide 10: Operations Update
OPERATIONS UPDATE Steve Wood, Executive Vice President and COO SHERRITT INTERNATIONAL CORPORATION 10 10
Slide 11: Moa JV Highlights
Moa JV Highlights • Finished nickel production of 33,706 t (100% basis) • Cash costs declined for the fourth consecutive quarter to US$2.90/lb (~$0.69/lb credit mainly from fertilizer sales) • Nickel recovery 89% for 2015 • Free cash flow ($9) million 2015 2015 Moa JV Nickel Production by Quarter (1
Slide 12: Ambatovy JV Highlights
Ambatovy JV Highlights • 47,271 tonnes (100% basis) finished nickel, up 28% YoY • 2015 Adjusted EBITDA of ($9.4) million • Q4 Net direct cash costs down to US$4.07/lb, US$4.83 for full year • Sherritt provided US$105.6 million in funding in 2015, including US$90 million for principal and interest pa
Slide 13: Oil and Gas Highlights
Oil and Gas Highlights • 18,257 bopd GWI-Cuba; 11,158 bopd NWI – all ops • 2015 Adjusted EBITDA of $81.9 million • 2015 Free cash flow generation of $21.4 million • Unit operating costs in Q4 impacted by standby charges, F/X and lower production Cuba Production – Gross Working-Interest 19,719 18,607
Slide 14: Power Highlights
Power Highlights • Electricity generation up 6% YoY on higher gas availability • 2015 Adjusted EBITDA of $30 million • 2015 free cash flow $57 million (Cash received in the form of CSA repayments of principal and interest ~$71.6 million) Electricity Generation (GWh) (100% basis) 726 672 678 630 2016
Slide 15: Finance Update
FINANCE UPDATE Dean Chambers, Executive Vice President and CFO SHERRITT INTERNATIONAL CORPORATION 15
Slide 16: Impairment Accounting and Presentation
Impairment Accounting and Presentation Balance as of Debt: Equity Impairment, Share of loss FX and Other Balance as of September Conversion net of tax excluding Interest December 30, 2015 Impairment 31, 2015 Investment in 1,568.1 840.0 (1,619.6) (83.5) 63.6 (11.3) 757.3 associate Ambatovy 1,917.0 (8
Slide 17: Combined Adjusted Operating Cash Flow
Combined Adjusted Operating Cash Flow Reconciliation from Q3 2015 to Q4 2015 40 20 $10.7 . 0 (millions of dollars) ($21.4) $8 -20 $0.8 ($11.9) ($4.5) -40 ($11.2) ($29.5) -60 -80 -100 Combined adjusted Lower Ambatovy Lower Oil & Gas Lower Power Higher Moa JV and Higher interest paid Other Combined ad
Slide 18: Balance Sheet Cash from Q3 to Q4 2015
Balance Sheet Cash from Q3 to Q4 2015 800 700 600 (millions of dollars) 500 $65 $1.30 $435.4 $7.6 $6 $15.4 $10.6 400 $374.8 ($12.3) ($20.4) ($11.2) 300 200 100 0 September 30, Adjusted cash Adjusted cash Working capital Interest paid on Interest + Capital Draw down of Cash paid on Other December 31,
Slide 19: Financial Covenant Summary
Financial Covenant Summary Debentures Revolver + Line of Credit Maintenance covenants (restricted Consolidated coverage ratio (EBITDA/ payments) interest expense) Total leverage ratio (Indebtedness/EBITDA) Covenant ratio: net financial debt: EBITDA Yes – 3.75 to1 - compliant Covenant ratio: financia
Slide 20: Sensitivity Analysis: Foreign Exchange and Metals Price Sensitivity
Sensitivity Analysis: Foreign Exchange and Metals Price Sensitivity 2014 2015 2014 2015 Approximate Approximate Approximate Approximate change in annual net change in annual net change in annual change in annual earnings ($/millions) earnings ($/millions) basic EPS basic EPS Factor Increase increase
Slide 21: Sherritt International Corporation
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: www.sherritt.com SHERRITT INTERNATIONAL CORPORATION 21
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