Sherritt International Corporation · TSX:S
Sherritt International — Q3 2023 Earnings Presentation
31 slides from Sherritt International's earnings presentation, Nov 2, 2023
Slide 1: Q3 2023 Conference Call
Sherritt International Corporation Q3 2023 Conference Call Review of Financial and Operational Results November 2, 2023 SHERRITT.COM • TSX: S
Slide 2: Presenters
Presenters Leon Binedell President & CEO Yasmin Gabriel CFO 2
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain forward-looking statements. Forward-looking access to capital; access to financing; the risk to Sherritt’s entitlements to future technological challenges; successful environmental assessment and stakeholder statements can generally be id
Slide 4: Third Quarter 2023 Highlights
Third Quarter 2023 Highlights Sold 97% of the total cobalt received under the Cobalt Swap agreement and expect remaining sales in Q4(1) Ended Q3 with $104 million of liquidity in Canada 37% year over year increase in electricity production Cobalt Briquettes Moa Joint Venture expansion program remain
Slide 5: Review of Operations
Review of Operations New Slurry Preparation Plant, Moa Cuba 5
Slide 6: Metals Third Quarter Production
Metals Third Quarter Production Mixed sulphides Production Results Q3 2023 Q3 2022 (tonnes) (1) → Lower production due to maintenance, lower ore grades, logistical delays Mixed Sulphides 4,037 4,216 Finished Nickel 3,841 4,443 Finished nickel and cobalt → Lower production due to lower mixed sulphide
Slide 7: Metals Third Quarter Net Direct Cash Costs (NDCC)
Metals Third Quarter Net Direct Cash Costs (NDCC)(1) Mining, processing and refining (MPR)(2) NDCC(US$/lb of nickel sold) → Higher costs due to impact of lower nickel production and delayed sales and higher maintenance costs, partly offset by lower input commodity prices Cobalt by-product credit(2)
Slide 8: Moa JV Expansion Update
Moa JV Expansion Update Slurry Preparation Plant (SPP) → Installation of electrical cable tray, electrical cables and instrumentation nearing completion → Piping, slurry and water return pipelines complete → Pre-commissioning plan started on completed systems Processing Plant → Sixth Leach Train: 95
Slide 9: Power Third Quarter Results
Power Third Quarter Results Electricity production Operating Results(1) Q3 2023 Q3 2022 → 37% year-over-year increase → Began receiving gas from two new wells in Q2 Electricity Production 190 139 (GWh(2)) → Improved equipment availability Unit Operating Costs(3) Unit operating cost 27.06 20.04 ($/MW
Slide 10: Financial Highlights
Financial Highlights Nickel briquette, Fort Saskatchewan, Alberta 10
Slide 11: Financial Performance Third Quarter Results
Financial Performance Third Quarter Results Financial performance notable drivers Financial Results Q3 2023 Q3 2022 ($ millions) → Delayed nickel and lower fertilizer sales volumes → Lower average-realized prices(1) Revenue(1) 36.4 30.2 → Nickel 3% → Cobalt 37% Combined revenue(2) 132.4 190.1 → Fert
Slide 12: Available Liquidity in Canada Third Quarter Update
Available Liquidity in Canada Third Quarter Update Q3 changes include → Receipts on Cobalt Swap $23.7M $22.7 M → Repayment of revolving credit facility ($40.0M) and short-term advance to the Moa JV ($15.0M) $104.2M → Fort Site cash used by operating activities ($12.2M) → Property, plant and equipmen
Slide 13: Outlook
Outlook Steam Boilers at Boca de Jaruco, Cuba 13
Slide 14: Outlook 2023 Guidance
Outlook 2023 Guidance Production Volumes Previous Updated Moa Joint Venture (100% basis) Finished Nickel (t) 30,000 – 32,000 29,000 – 30,000 Finished Cobalt (t) 3,100 – 3,400 2,900 – 3,100 Electricity (GWh, 33 ⅓% basis) 650 – 700 (unchanged) Unit Operating Costs Moa Joint Venture – NDCC(1) (US$/lb)
Slide 15: Third Quarter 2023 Summary
Third Quarter 2023 Summary → Liquidity continues to be strong and is expected to further strengthen with Cobalt Swap in the years ahead → New gas wells continue to deliver stronger production from Power → Expecting higher metals production and sales to drive stronger financial performance → Moa JV e
Slide 16: Q&A Discussion
Q&A Discussion Streambank restoration, Fort Saskatchewan, Alberta 16
Slide 17: Sherritt International Corporation
SHERRITT INTERNATIONAL CORPORATION 22 Adelaide West, Suite 4220 Toronto, Ontario, Canada M5H 4E3 Tom Halton, Director, Investor Relations and Corporate Affairs Telephone: S E P T E M B E416.935.2451 R 2023 | Toll -Free: 1.800.704.6698 Email: investor@sherritt.com SHERRITT.COM • TSX: S
Slide 18: Appendix: Non-GAAP and other financial measures
APPENDIX Non-GAAP and other financial measures 18
Slide 19: Combined revenue
Combined revenue The Corporation uses combined revenue as a measure to help management assess the Corporation’s financial performance across its operations. Combined revenue includes the Corporation’s consolidated revenue and revenue of the Moa JV within the Metals reportable segment on a 50% basis,
Slide 20: Adjusted EBITDA
Adjusted EBITDA The Corporation defines Adjusted EBITDA as earnings (loss) from operations and joint venture, which excludes net finance expense and loss from discontinued operations, net of tax, as reported in the financial statements for the period, adjusted for: depletion, depreciation and amorti
Slide 21: Adjusted EBITDA (continued)
Adjusted EBITDA (continued) $ millions, for the three months ended September 30 2022 Adjustment for Moa Techno- Oil and Joint Metals(1) Power logies Gas Corporate Venture Total Earnings (loss) from operations and joint venture per financial statements $ 22.5 $ 1.4 $ (3.5) $ 1.5 $ (1.1) $ 0.5 $ 21.3
Slide 22: Adjusted EBITDA (continued)
Adjusted EBITDA (continued) $ millions, for the nine months ended September 30 2022 Adjustment for Moa Techno- Oil and Joint (2) Metals(1) Power logies Gas Corporate Venture Total Earnings (loss) from operations and joint venture per financial statements $ 167.4 $ 4.2 $ (10.4) $ 0.8 $ (15.8) $ (27.4
Slide 23: Average-realized price
Average-realized price Average-realized price is generally calculated by dividing revenue by sales volume for the given product in a given division. The average-realized price for power excludes by-product revenue, as this revenue is not earned directly for power generation. Transactions by a Moa Jo
Slide 24: Average-realized price (continued)
Average-realized price (continued) $ millions, except average-realized price and sales volume, for the three months ended September 30 2022 Metals Adjustment for Moa Joint Nickel Cobalt Fertilizer Power Other(1) Venture Total Revenue per financial statements $ 128.0 $ 21.5 $ 15.0 $ 9.0 $ 16.6 $ (159
Slide 25: Average-realized price (continued)
Average-realized price (continued) $ millions, except average-realized price and sales volume, for the nine months ended September 30 2022 Metals Adjustment for Moa Joint Nickel Cobalt Fertilizer Power Other(1) Venture Total Revenue per financial statements $ 369.0 $ 82.2 $ 84.2 $ 26.6 $ 51.8 $ (483
Slide 26: Unit operating cost / Net direct cash cost
Unit operating cost / Net direct cash cost With the exception of the Moa Joint Venture, which uses NDCC, unit operating cost is generally calculated by dividing cost of sales as reported in the financial statements, less depreciation, depletion and amortization in cost of sales, the impact of impair
Slide 27: Unit operating cost / Net direct cash cost (continued)
Unit operating cost / Net direct cash cost (continued) $ millions, except unit cost and sales volume, for the three months ended September 30 2022 Adjustment for Moa Metals Power Other(1) Joint Venture Total Cost of sales per financial statements $ 151.0 $ 6.8 $ 6.4 $ (137.2) $ 27.0 Less: Depletion,
Slide 28: Unit operating cost / Net direct cash cost (continued)
Unit operating cost / Net direct cash cost (continued) $ millions, except unit cost and sales volume, for the nine months ended September 30 2022 Adjustment for Moa Metals Power Other(1) Joint Venture Total Cost of sales per financial statements $ 398.3 $ 19.3 $ 23.3 $ (334.9) $ 106.0 Less: Depletio
Slide 29: Spending on capital
Spending on capital The Corporation defines spending on capital for each segment as property, plant and equipment and intangible asset expenditures on a cash basis adjusted to the accrual basis in order to account for assets that are available for use by the Corporation and the Moa Joint Venture pri
Slide 30: Spending on capital (continued)
Spending on capital (continued) $ millions, for the three months ended September 30 2022 Total Adjustment derived from Combined for Moa financial Metals Power Other(1) total Joint Venture statements Property, plant and equipment expenditures (2) $ 17.4 $ 3.0 $ 0.1 $ 20.5 $ (10.1) $ 10.4 Intangible a
Slide 31: Spending on capital (continued)
Spending on capital (continued) $ millions, for the nine months ended September 30 2022 Total Adjustment derived from Combined for Moa financial Metals Power Other(1) total Joint Venture statements Property, plant and equipment expenditures (2) $ 40.3 $ 3.5 $ 0.1 $ 43.9 $ (25.9) $ 18.0 Intangible as
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