Sherritt International Corporation · TSX:S
Sherritt International — Q1 2022 Earnings Presentation
30 slides from Sherritt International's earnings presentation, May 12, 2022
Slide 1: Q1 Earnings Call
Q1 Earnings Call Review of Financial and Operational Results May 12, 2022
Slide 2: Participants
Participants Leon Binedell President & CEO Yasmin Gabriel CFO
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain forward-looking statements. Forward-looking statements can growth opportunities risk of future non-compliance with debt restrictions and covenants; that any opportunity will be successful, commercially viable, completed on time or on budg
Slide 4: Q1 Highlights
Q1 Highlights 1. Unprecedented market and geopolitical disruptions 2. Progress on expansion strategy 3. Strong Adjusted EBITDA* 4. NDCC* in lowest cost quartile 5. Recovery of Power business High nickel and cobalt prices drove Sherritt’s strong Q1 results * Non-GAAP financial measures. For additiona
Slide 5: Impact of Q1 market and geopolitical disruptions on Sherritt
Impact of Q1 market and geopolitical disruptions on Sherritt Suspensions of LME Trading • Limited impact on nickel sales volumes • Some product diverted to spot market • No impact to realized prices Sanctions against Russia • Alternative sources of sulphur supply secured • Risk exposure assessment c
Slide 6: Review of operating results
Review of operating results 6
Slide 7: Moa JV highlights – Q1 Production
Moa JV highlights – Q1 Production(1) Mixed Sulphides Finished Nickel Finished Cobalt 4,126 4,188 477 3,931 3,875 446 Tonnes Tonnes Tonnes Q1 2022 Q1 2021 Q1 2022 Q1 2021 Q1 2022 Q1 2021 • Q1 2022 reflects improved mining • Q1 2022 impacted by delays in mixed sulphides deliveries to conditions at Moa
Slide 8: Q1 2022 NDCC highlights
Q1 2022 NDCC(1) highlights Q1 2022 NDCC – US$3.42/lb • Benefitted from high by-product credits • Cobalt realized price +90% US$/lb of nickel sold • Fertilizer realized price +110% • Fertilizer sales volume +16% • Partly offset by high input costs • Sulphur costs +181% • Natural gas +47% • Fuel oil +
Slide 9: Power highlights
Power highlights (1) Electricity production (33⅓% GWh ) Unit operating costs(2)($/MWh(3)) 137 $25.89 95 $15.70 Q1 2022 Q1 2021 Q1 2022 Q1 2021 • Q1 2021 impacted by maintenance activities • Unit costs improved due to increased production since completed • Discussions with Cuban partners to increase
Slide 10: Financial Highlights
Financial Highlights sherritt
Slide 11: Improved Adjusted EBITDA and net earnings
Improved Adjusted EBITDA and net earnings Adjusted EBITDA(1) ($ millions) Net earnings from continuing operations ($ millions) $58.5 $30.2 $16.4 $(1.9) Q1 2022 Q1 2021 Q1 2022 Q1 2021 • Improvement driven primarily by higher nickel prices and by-product credits Q1 2022 Adjusted EBITDA nearly doubled
Slide 12: Outlook for Moa JV distributions is strong
Outlook for Moa JV distributions is strong $20M $14M $12.5M $20M $14M $10M $9M $11M $10M $10M $6.5M(1) $5M $2.5M Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 2019 2019 2019 2019 2020 2020 2020 2020 2021 2021 2021 2021 2022 Distributions (US$, Sherritt share - 50% basis) Redirection from GNC (US$)(2) • Qua
Slide 13: Liquidity in perspective
Liquidity in perspective $237M $228M Available Available Credit Credit $82M $92M Other $3M Other $14M Energas $79M Energas $81M Canada Canada $64M $50M 12/31/2021 3/31/2022 Current liquidity position and expected cash flow provides opportunity to reduce debt to achieve balance sheet strength 13
Slide 14: Modified Dutch Auction and Fixed Price Tender Offer
Modified Dutch Auction and Fixed Price Tender Offer Announced the commencement of a global liquidity event Key transaction dates to repurchase notes outstanding, for aggregate cash May 12, 2022 at 9:00 a.m. – Offers open for tender consideration of up to $50 million June 1, 2022 at 5:00 p.m. – Initi
Slide 15: Expansion projects
Expansion projects .._,
Slide 16: Pillars of expansion projects
Pillars of expansion projects Moa - Slurry Prep Plant Moa – Processing and Reserves Fort Site Refinery • Complete new SPP • Extend mine life beyond 2040 • Debottleneck Fort Site • Increases mixed sulphides feed • Complete prior suspended • Upgrade or expand equipment for refinery expansion, install
Slide 17: Progress in Q1
Progress in Q1 Moa - Slurry Prep Plant Moa – Processing and Reserves Fort Site Refinery ) Leach plant 6th train ) • Construction in progress • Near completion of a feasibility study • Start of basic engineering on for leach plant 6th train several debottlenecking projects • Cost assessment completed
Slide 18: Upcoming milestones
Upcoming milestones In H2 2022 we expect to: • Complete basic engineering, acid plant capacity testing • Obtain full project approval • Complete new life of mine plan • Update NI 43-101 The SPP project is expected to be completed early 2024 and all projects by the end of 2024 Expansion strategy prov
Slide 19: Outlook and summary
Outlook and summary sherritt
Slide 20: 2022 Moa JV guidance
2022 Moa JV guidance Production & Unit Costs • Production and NDCC guidance unchanged Finished nickel 32,000 – 34,000 tonnes • Sustaining capital is earmarked for equipment Finished cobalt 3,400 – 3,700 tonnes replacement, fertilizer handling, tailings Net direct cash cost(1): US$4.00 - $4.50/lb(2)
Slide 21: Q1 Summary
Q1 Summary • Sherritt demonstrated agility in response to market and geopolitical developments • Strong Q1 results driven by higher nickel, cobalt and fertilizer prices • Outlook for nickel and cobalt is favourable • Progress on growth strategy underway • Initiated offer to repurchase up to $50 mill
Slide 22: Q&A Discussion
Q&A Discussion sherritt
Slide 23: Sherritt International Corporation contact details
Sherritt International Corporation 22 Adelaide West, 42nd Floor Toronto, Ontario, Canada M5H 4E3 Mark Preston, Investor Relations Telephone: (416) 935 -2406 I Toll -Free: 1 (800) 704 -6698 Email: mark.preston@sherritt.com I Website: www.sherritt.com
Slide 24: Appendix
Appendix 24
Slide 25: Non-GAAP and other financial measures
Non-GAAP and other financial measures 25
Slide 26: 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 27: Adjusted EBITDA, cont.
Adjusted EBITDA, cont. $ millions, for the three months ended March 31 2021 Adjustment for Moa Moa JV and Metals Oil and Techno- Joint Fort Site(1) Other Gas Power logies Corporate Venture Total Earnings (loss) from operations and joint venture per financial statements $ 27.8 $ (0.6) $ (3.9) $ (1.1)
Slide 28: Unit operating costs/Net direct cash cost
Unit operating costs/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 impairm
Slide 29: Unit operating costs/Net direct cash cost, cont.
Unit operating costs/Net direct cash cost, cont. $ millions, except unit cost and sales volume, for the three months ended March 31 2021 Adjustment Moa JV and for Moa Fort Site Power Other(1) Joint Venture Total Cost of sales per financial statements $ 96.4 $ 6.4 $ 14.8 $ (87.2) $ 30.4 Less: Depleti
Slide 30: 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
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