Itafos Inc · TSXV:IFOS
Itafos — Investor Presentation (May 2021)
55 slides from Itafos's investor presentation, May 2021
Slide 1: Corporate Presentation
Corporate Presentation May 2021
Slide 2: Disclaimer
Disclaimer FORWARD-LOOKING INFORMATION (“FLI”) This presentation contains FLI within the meaning of applicable Canadian securities legislation regarding future events or the future performance of Itafos (the “Company”). Except for statements of historical fact relating to the Company, information co
Slide 3: Table of contents
Table of contents I Company overview II Industry overview III Key investment highlights IV Operational overview V Financial overview VI Annex I: Supporting detail VI Annex II: Non-IFRS measure reconciliations 3
Slide 4: Company overview
1) Company overview ITAF@S
Slide 5: Itafos is a vertically integrated phosphate fertilizer company
Itafos is a vertically integrated phosphate fertilizer company Business overview Operational and financial highlights ▪ Owner of Conda, a vertically integrated phosphate Q1 2021 LTM 3/31/21 LQA 3/31/21 fertilizer business in Idaho Sales – Products include monoammomium phosphate 151kst 565kst 606kst
Slide 6: Conda represents 7% of US phosphate market with 606kst per year capacity
Conda represents 7% of US phosphate market with 606kst per year production and sales capacity Business overview Conda site Vertically integrated phosphate mine and Overview fertilizer business Location Idaho, US Ownership 100% Status Operating for 30+ years Through mid-2026 (existing mines) with Min
Slide 7: Operational flexibility offers multiple options to deliver P2O5 value to market
Operational flexibility offers multiple options to deliver P2O5 value to market Key highlights Sales by customer size ($mm)(2) ▪ Conda’s products are sold into the North American 6.3% fertilizer markets 15.0% ▪ Conda partners with leading crop services companies that have the trust of the grower mar
Slide 8: Industry overview
i } Industry overview ITAF@S
Slide 9: Long-term fertilizer demand growth is driven by the global food story
Long-term fertilizer demand growth is driven by the global food story Global World Deliveries Population of Leading and Cereals Phosphate Production Products Key Highlights (DAP / MAP / NP / NPS/ TSP) ▪ As the world population grows to 8.5bn and more people Product P2O5 (Millions Short Tons) (Mil Sh
Slide 10: World grain and oilseeds stock-to-use percentage is projected to drop
World grain and oilseeds stock-to-use percentage is projected to drop to the lowest level since 2003/04 World Less China Grain and Oilseed Stocks Indexes of Leading Crop Prices (Short Tons in thousands) Monthly Average of Daily Close of Front Month Futures Contract (2000=100) 525 21% 400 500 375 20%
Slide 11: Steady traditional demand drivers coupled with a large structural corn deficit in China
Steady traditional demand drivers coupled with the development of a large structural corn deficit in China ✓ Demand for grain and oilseed has advanced at a moderate and Global Grain and Oilseed Production and Use steady CAGR of 2.2% since beginning of the century driven (Billions Short Tons) largely
Slide 12: New crop prices take another step up
New crop prices take another step up in response to lower-than- expected US acreage and weather concerns New Crop Corn Prices New Crop Soybean Prices New Crop HRW Wheat Prices Daily close of the December contract Daily close of the November contract Daily close of the July contract June 1 of prior y
Slide 13: Key investment highlights
III Key investment highlights 13
Slide 14: Key investment highlights
Key investment highlights 1 North American phosphate producer strategically positioned in premium agricultural market Strong end market tailwinds support meaningful growth trajectory in short and 2 mid-term 3 Phosphate is an attractive market, with high barriers to entry Fully contracted MAP product
Slide 15: Conda is strategically positioned in premium agricultural region
1 Conda is strategically positioned in premium agricultural region, one of two key producers west of the Mississippi River Highly technical farming Specialty Ag (canola, wheat) (fruits & veg, (REPURPOSED) perennials) 16% Pocatello Western Cornbelt very intense farming Itafos Rock (corn, soybeans) Sp
Slide 16: Demand growth is outpacing new capacity, driving phosphate prices higher
2 Demand growth is outpacing the start up of new capacity driving phosphate prices to the highest levels since 2012 Phosphate Prices ✓ Phosphate prices to their highest levels in nine years, driven by the following: DAP NOLA ($ Short Ton) ▪ Depletion of channel inventories worldwide 600 550 ▪ Thin p
Slide 17: Phosphate is an attractive market given demand growth and higher barrier to entry
3 Phosphate is an attractive market given its exposure to fertilizers demand growth and its higher barrier to entry Main phosphates applications Key highlights Feed & ✓ The main application of phosphate is fertilizers (87%), with also applications for animal Industrials nutrition and a range of indu
Slide 18: Fully contracted MAP production with investment grade off-taker
4 Fully contracted MAP production with investment grade off-taker along with contracted ammonia and sulfuric acid supply MAP offtake agreement ▪ 100% of Conda’s MAP is sold through a long-term offtake agreement with Nutrien - Current term through 12/31/23; renewable by mutual agreement one year prio
Slide 19: Disciplined financial policies and shift towards a capital-lite strategy
5 Disciplined financial policies, prioritization of liquidity and shift towards a capital-lite strategy focused on cash flow generation ▪ Improved fertilizer market pricing and strong operational track record supporting strong Conda cash flow generation Cash flow ▪ Mitigated downside exposure with i
Slide 20: Proven management team with strong bench of operators
6 Proven management team with strong bench of operators David Delaney Director, Chief Executive Officer ▪ 30+ years of experience in leadership roles within the fertilizer and agricultural sectors ▪ Previously served as CCO at Farmer’s Business Network Inc., Strategic Advisor for Paine & Partners, L
Slide 21: Operational overview
@ operational overview ITAF@S 21
Slide 22: ESG initiatives
ESG initiatives Itafos believes in delivering sustainable results through its core values of zero-harm, social responsibility, integrity, ownership and collaboration Environmental Social Governance Commitment to understanding, Commitment to develop respectful Embed strong corporate governance managi
Slide 23: Conda process flow
Conda process flow M B Phosphate Micronutrients Rock Grade: Ore Rock Ammonia 29.5% Volume: 1,402kst G C ▪ Mined Volume: ▪ Volume: 57kst MAP / MAP+ ▪ Volume: 391kst 2,301kst 3.76 t/t ▪ Sourced from Nutrien Volume: 391kst ▪ MAP sell to Nutrien ▪ P2O5 Grade: 25% ▪ MAP+ sell to farmers 0.533 / 1.00 t/t
Slide 24: Conda Mineral Reserves and Mineral Resources overview
Conda Mineral Reserves and Mineral Resources overview Rasmussen Valley/Lanes Creek Item Tons (Mst) Grade (%) P2O5 (Mst) Mineral Reserves 14.4 26.6% 3.8 Measured and Indicated Mineral Resources (including Mineral Reserves)(1) 17.9 26.6% 4.8 Inferred Mineral Resources 0.2 25.7% 0.1 H1/NDR Item Tons (M
Slide 25: Conda mine life
Conda mine life Mine(1) Phase 1H21 2H21 1H22 2H22 2023 2024 2025 2026 Rasmussen Valley Mining Permitting Drilling and Mineral Reserve definition H1/NDR Development Mining Mine location Key highlights ▪ Completed NI 43-101 technical report in 2019 Existing mines - Concluded mine life through mid-2026
Slide 26: Conda EBITDA optimization initiatives
Conda EBITDA optimization initiatives MAP+ HFSA MgO Reduction ▪ Production and sales of MAP ▪ Production and sales of 25kst ▪ Reduction of magnesium enhanced with per year of hydrofluorosilicic oxide (“MgO”) in phosphate micronutrients acid (“HFSA”), a by-product rock while optimizing ▪ New product
Slide 27: Strategic alternatives for non-North American assets
Strategic alternatives for non-North American assets ▪ The non-North American assets were acquired by the Company in prior years with intention to create a global pure-play phosphate business ▪ Non-North American assets include(1): - Arraias, a vertically integrated phosphate fertilizer business in
Slide 28: Financial overview
tv } Financial overview ITAF@S
Slide 29: Annual consolidated historical financial performance
Annual consolidated historical financial performance Revenues Adjusted EBITDA(1) ($ in millions) ($ in millions) $361 DAP NOLA $395 $307 $312 $368 $498 $339 ($/st) (2) $302 $41 $83 $26 $260 $275 $5 $361 $31 $36 $277 $299 $275 $256 $15 ($3) FY2018A FY2019A FY2020A LTM 3/31/21 LQA Q1 2021 FY2018A FY20
Slide 30: Annual consolidated historical financial performance (cont'd)
Annual consolidated historical financial performance (cont’d) ($ in millio ns unless o therwise indicated) 2018A 2019A 2020A Q1 2021 Production volumes (st) Conda 597,093 634,874 569,322 160,046 Arraias 100,061 217,300 5,503 – Production volumes (st) 697,154 852,174 574,824 160,046 Production volume
Slide 31: Annual consolidated historical financial performance (cont'd)
Annual consolidated historical financial performance (cont’d) Consolidated historical financial performance ($ in millio ns unless o therwise indicated) 2018A 2019A 2020A Q1 2021 Maintenance Capex Conda $39 $26 $8 $2 Arraias – $4 – – Corporate – – $0 – Development & Exploration(1) $0 $0 – – Maintena
Slide 32: Quarterly consolidated historical financial performance
Quarterly consolidated historical financial performance Revenues Adjusted EBITDA(1) ($ in millions) ($ in millions) $90 DAP NOLA ($/st) (2) $273 $271 $334 $369 $498 – $75 $75 4 0 $62 0 $48 0 90 $21 71 75 62 $11 48 ($1) ($0) $5 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q
Slide 33: Annual Conda historical financial performance
Annual Conda historical financial performance Revenues Adjusted EBITDA(1) ($ in millions) ($ in millions) DAP NOLA $361 ($/st) (2) $395 $307 $312 $368 $498 $299 6 $277 $275 18 $256 11 17 170 17 121 130 115 121 1 42 $97 – 11 20 $64 148 $50 144 112 116 142 $35 $34 FY2018A FY2019A FY2020A LTM 3/31/21 L
Slide 34: Annual Conda historical operating performance
Annual Conda historical operating performance Conda historical operating performance For the years ended December 31 ($ in millio ns unless o therwise indicated) 2018 2019 2020 Q1 2021 Production volumes (st) MAP 396,836 420,329 356,082 82,616 MAP+ – 9,952 21,863 30,936 SPA 163,401 160,770 151,699 4
Slide 35: Environmental and asset retirement obligations
Environmental and asset retirement obligations Item Highlights ▪ Itafos recognizes the present value of its environmental and asset retirement obligations as a liability (provision) on its balance sheet ‒ The estimated cash costs of these obligations are based upon environmental and regulatory requi
Slide 36: Current capitalization
Current capitalization Current capitalization As of ($ in millions) 3/31/21 Maturity Interest rate Cash and cash equivalents $18 Credit facility 196 June 2022 12% (9% cash, 3% PIK) (1) Conda ABL ($20mm of capacity) 10 August 2023 LIBOR + 2.00 - 2.50% (cash) on draw n amounts Total secured debt $206
Slide 37: Annex I: Supporting detail
VI Annex I: Supporting detail 37
Slide 38: Current simplified corporate organization chart
Current simplified corporate organization chart Simplified corporate organization chart Credit facility: $196mm Itafos Promissory notes: $37mm (Cayman Islands) Debentures: $1mm Itafos Services Holdco Holdco Holdco Holdco (US) (Cayman Islands) (Cayman Islands) (Cayman Islands) (Cayman Islands) Holdco
Slide 39: Arraias (Brazil) overview
Arraias (Brazil) overview Business overview Business location Vertically integrated phosphate mine and Overview fertilizer business Location Tocantins, Brazil PA Ownership 98.3% MA PI TO Status Idled MT BA Mine life Under review GO Products SSP, SSP+ and excess sulfuric acid MG 2 Annual production 5
Slide 40: Farim (Guinea-Bissau) overview
Farim (Guinea-Bissau) overview Project overview Project location Overview Phosphate mine project Location Farim, Guinea-Bissau Ownership 100% Status Construction ready Mine life 25 years Product Phosphate rock Annual production 1.4Mst capacity Resource overview(1) Project design ▪ = Mine area Tons G
Slide 41: Santana and Araxá (Brazil) overview
Santana and Araxá (Brazil) overview Santana project overview Araxá project overview Overview Phosphate mine project Vertically integrated rare earth elements and Overview niobium project Location Pará, Brazil Location Minas Gerais, Brazil Ownership 99.4% Ownership 100% Status Maintaining option Stat
Slide 42: Paris Hills (US) and Mantaro (Peru) overview
Paris Hills (US) and Mantaro (Peru) overview Paris Hills project overview Mantaro project overview Overview Phosphate mine project Overview Phosphate mine project Location Idaho, US Location Junin, Peru Ownership 100% Ownership 100% Wind down in process (H1/NDR defined as Wind down in process (cost
Slide 43: Annex II: Non-IFRS measure reconciliations
VII Annex II: Non-IFRS measure reconciliations 43
Slide 44: Non-IFRS financial measure definitions
Non-IFRS financial measure definitions Non-IFRS measure Definition Most directly comparable IFRS measure Earnings before interest, taxes, depreciation, EBITDA Net income (loss) and operating income (loss) depletion and amortization EBITDA adjusted for non-cash, extraordinary, non- Adjusted EBITDA re
Slide 45: Annual consolidated EBITDA and adjusted EBITDA reconciliation
Annual consolidated EBITDA and adjusted EBITDA reconciliation Consolidated EBITDA and adjusted EBITDA For the years ended December 31 LTM ($ in millio ns unless o therwise indicated) 2018 2019 2020 3/31/2021 Net income ($113) ($144) ($62) ($42) (+) D&A 27 50 39 34 (+) Interest expense, net 16 29 28
Slide 46: Quarterly consolidated EBITDA and adjusted EBITDA reconciliation
Quarterly consolidated EBITDA and adjusted EBITDA reconciliation Consolidated EBITDA and adjusted EBITDA ($ in millio ns unless o therwise indicated) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 LQA 2021 Net income ($18) ($21) ($14) ($9) $2 $8 (+) D&A 11 13 7 9 6 25 (+) Interest expense, net 6 7 7 8 8 34
Slide 47: Annual Conda EBITDA and adjusted EBITDA reconciliation
Annual Conda EBITDA and adjusted EBITDA reconciliation Conda EBITDA and adjusted EBITDA For the years ended December 31 LTM ($ in millio ns unless o therwise indicated) 2018 2019 2020 3/31/2021 Net income $84 $2 $3 $17 (+) D&A 18 41 35 31 (+) Interest expense, net 1 0 (0) 1 (+) Income taxes 7 (6) (5
Slide 48: Quarterly Conda EBITDA and adjusted EBITDA reconciliation
Quarterly Conda EBITDA and adjusted EBITDA reconciliation Conda EBITDA and adjusted EBITDA ($ in millio ns unless o therwise indicated) Q1 2020 Q2 2020 Q3 2020 Q4 2020 Q1 2021 LQA 2021 Net income $1 $3 ($2) $0 $15 $59 (+) D&A 10 10 6 8 6 24 (+) Interest expense, net 0 (0) (0) (0) 1 3 (+) Income taxe
Slide 49: Annual Arraias EBITDA and adjusted EBITDA reconciliation
Annual Arraias EBITDA and adjusted EBITDA reconciliation Arraias EBITDA and adjusted EBITDA For the years ended December 31 LTM ($ in millio ns unless o therwise indicated) 2018 2019 2020 3/31/2021 Net income ($162) ($82) ($22) ($14) (+) D&A 9 9 4 3 (+) Interest expense, net 1 0 0 0 EBITDA ($152) ($
Slide 50: Annual development & exploration EBITDA and adjusted EBITDA reconciliation
Annual development & exploration EBITDA and adjusted EBITDA reconciliation Development & Exploration EBITDA and adjusted EBITDA For the years ended December 31 LTM ($ in millio ns unless o therwise indicated) 2018 2019 2020 3/31/2021 Net income ($10) ($22) ($10) ($10) (+) D&A 0 0 0 0 (+) Interest ex
Slide 51: Annual corporate EBITDA and adjusted EBITDA reconciliation
Annual corporate EBITDA and adjusted EBITDA reconciliation Corporate EBITDA and adjusted EBITDA For the years ended December 31 LTM ($ in millio ns unless o therwise indicated) 2018 2019 2020 3/31/2021 Net income ($26) ($41) ($33) ($35) (+) D&A 0 0 0 0 (+) Interest expense, net 14 28 28 30 (+) Incom
Slide 52: Annual and quarterly consolidated free cash flow reconciliation
Annual and quarterly consolidated free cash flow reconciliation Consolidated Free cash flow For the years ended December 31 LTM LQA ($ in millio ns unless o therwise indicated) 2018 2019 2020 3/31/2021 Q1 2021 Adjusted cash flows from operating activities N/A $35 ($3) $16 $64 (+) Cash flows from inv
Slide 53: Annual and quarterly consolidated free cash flow reconciliation (cont'd)
Annual and quarterly consolidated free cash flow reconciliation (cont’d) Adjusted cash flow from operating activities Adjusted cash flow from operating activities For the years ended December 31 LTM LQA 2018 2019 2020 3/31/2021 Q1 2021 Cash flows from operating activities N/A $35 ($3) $19 $64 (+) Te
Slide 54: Annual and quarterly consolidated total capex reconciliation
Annual and quarterly consolidated total capex reconciliation Annual consolidated total capex For the years ended December 31 LTM LQA ($ in millio ns unless o therwise indicated) 2018 2019 2020 3/31/2021 Q1 2021 Additions to property, plant and equipment $71 $44 $21 $19 $9 Additions to mineral proper
Slide 55: Annual and quarterly Conda total capex reconciliation
Annual and quarterly Conda total capex reconciliation Annual Conda total capex For the years ended December 31 LTM LQA ($ in millio ns unless o therwise indicated) 2018 2019 2020 3/31/2021 Q1 2021 Additions to property, plant and equipment $43 $31 $20 $18 $10 Additions to mineral properties 27 18 31