Sherritt International Corporation · TSX:S
Sherritt International — Q1 2017 Earnings Presentation
21 slides from Sherritt International's earnings presentation, Apr 27, 2017
Slide 1: First Quarter Results
First Quarter Results April 27, 2017 SHERRITT INTERNATIONAL CORPORATION 1
Slide 2: Forward-looking statements
Forward-looking statements This presentation 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”, “sho
Slide 3: Q1 2017 highlights
Q1 2017 highlights Liquidity • Ending cash, cash equivalents and short-term investments of $300.7M after repayment of $20.5M on revolving term credit facility • Combined free cash flow of $10.0M for the quarter vs. ($31.4)M in Q1 2016 • Higher collection of Cuban energy payments (US$37.6M vs. US$18.
Slide 4: Market Environment
MARKET ENVIRONMENT SHERRITT INTERNATIONAL CORPORATION 4
Slide 5: The nickel and cobalt price trends from 2015 to date
The nickel and cobalt price trends from 2015 to date Nickel vs. 200-DMA's Cobalt vs. 200-DMA's $8.25 (6%) in $27 +68% in (42%) in 2015 +18% in 2016 (24%) in 2015 +37% in 2016 2017 2017 $7.75 $25 $7.25 $23 $6.75 $21 $6.25 $19 $5.75 $17 $5.25 $15 $4.75 $13 $4.25 Avg. reference price Avg. reference pri
Slide 6: Sherritt is one of the leading cobalt producers
Sherritt is one of the leading cobalt producers Cobalt sources Mine production by country (2016) 2% Canada: 3% Russia: 5% 37% Cuba: 5% 61% (3% Sherritt) Philippines: DRC: 61% 3% Copper mines by-product Nickel mines by-product Australia: 5% Madagascar: 3% Primary cobalt mines • Battery customers star
Slide 7: Cobalt contribution to Sherritt
Cobalt contribution to Sherritt Contribution to Metals Q1 2017 revenue LTM Adj. EBITDA sensitivity to cobalt prices(1) Moa 80 3% $69 14% 70 Nickel $59 Cobalt 60 Adj. EBITDA (C$ M) Fertilizers 50 25% 58% Other 40 $37 $33 30 Ambatovy 20 $10 3% 10 $4 28% Nickel 0 Cobalt LTM avg realized price Analysts
Slide 8: Nickel cash cost curve and our positioning
Nickel cash cost curve and our positioning 2017 Nickel industry, normal C1 cash cost grouped by operation and ranked by cash cost (C1) existing operations and base case 10 25th percentile 50th percentile = US$2.88 = US$3.78 C1 Cash Costs (US$/lb) Ambatovy = US$3.93 5 Moa = US$3.25 (Q1 2017) (Q1 2017
Slide 9: Update on Block 10
UPDATE ON BLOCK 10 SHERRITT INTERNATIONAL CORPORATION 9
Slide 10: Overview of Block 10
Overview of Block 10 Varadero West Block Varadero oil field Hicacos Peninsula Cardenas Bay Block 10 264km² Mean Sea Level -0 CUPEY-1X - 400 - 800 Vertical Depth (metres) - 1,200 - 1,400 - 2,000 - 2,400 - 2,800 - 3,200 - 3,600 - 4,000 0 2 4 6 8 10 12 14 16 18 20 22 24 26 Horizontal Distance (kilometr
Slide 11: Block 10 - Second well trajectory
Block 10 - Second well trajectory • Second well to be drilled later this year at a lower cost than the first well ($10.6M vs. $24.1M) as it will use part of the cased section of the first well SHERRITT INTERNATIONAL CORPORATION 11
Slide 12: First Quarter Operating Results
FIRST QUARTER OPERATING RESULTS SHERRITT INTERNATIONAL CORPORATION 12
Slide 13: Metals highlights
Metals highlights Nickel production (tonnes) Moa: NDCC Avg. reference price: nickel (US$) 5,111 $3.80 4,242 4,442 $3.34 $3.25 3,840 3,817 $4.90 $4.66 3,782 $3.86 Q1 2016 Q4 2016 Q1 2017 Moa (50%) Ambatovy (40%) Q1 2016 Q4 2016 Q1 2017 Q1 2016 Q4 2016 Q1 2017 Cobalt production (tonnes) Ambatovy: NDCC
Slide 14: Oil & Gas and Power highlights
Oil & Gas and Power highlights Oil: Cuba GWI and NWI Oil: Cuba GWI unit operating costs Avg. reference price $10.95 Fuel Oil No. 6 (US$) 16,449 $9.53 14,470 15,213 $8.66 9,890 8,163 $45.63 7,452 $41.12 Q1 2016 Q4 2016 Q1 2017 GWI Production Cuba NWI Production Cuba Q1 2016 Q4 2016 Q1 2017 $21.13 Pow
Slide 15: Financial Highlights
FINANCIAL HIGHLIGHTS SHERRITT INTERNATIONAL CORPORATION 15
Slide 16: Cash cost (NDCC) drivers for Moa and Ambatovy
Cash cost (NDCC) drivers for Moa and Ambatovy Moa Ambatovy NDCC NDCC Q4 2016: US$3.80/lb Q4 2016: US$3.10/lb Q1 2017: US$3.25/lb Q1 2017: US$3.93/lb Mining, processing and refining costs Mining, processing and refining costs Diesel 5% 5% Diesel 2% 3% 18% 9% 10% 20% Coal / fuel oil / electricity 6% C
Slide 17: Balance sheet cash from Dec. 31, 2016 to March 31, 2017
Balance sheet cash from Dec. 31, 2016 to March 31, 2017 In million of dollars $10.4 $16.1 $309.6 ($9.9) $300.7 ($20.5) ($4.9) ($0.1) Dec. 31, 2016 - Adjusted operating Working capital Interest paid on Repayment of Capital expenditure Other March 31, 2017 - Cash, cash cash flow (excl. change debentur
Slide 18: Appendices
APPENDICES SHERRITT INTERNATIONAL CORPORATION 18
Slide 19: 2017 strategic priorities
2017 strategic priorities 2017 strategic priorities Q1 2017 status update • First quarter NDCC of US$3.25/lb at the Moa JV represents cash costs at the 30th percentile, while Ambatovy NDCC of US$3.93/lb fell short of its target, due to lower production Uphold global operational leadership • Producti
Slide 20: Key takeaways
Key takeaways • $301 million in cash and short-term investments, and no long term debt maturity before Q4 2021 • Improved cobalt prices should drive cash flow generation through the year • A long operating track record through all phases of the cycle • The largest and best established foreign mining
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:INTERNATIONAL SHERRITT www.sherritt.comCORPORATION 21
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