Sherritt International Corporation · TSX:S
Sherritt International — Q1 2023 Earnings Presentation
30 slides from Sherritt International's earnings presentation, May 11, 2023
Slide 1: Q1 Earnings Call
Q1 Earnings Call Review of Financial and Operational Results May 11, 2023 New slurry preparation plant Moa Cuba
Slide 2: Presenters
Presenters Leon Binedell President & CEO Yasmin Gabriel CFO
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain forward-looking statements. Forward-looking volatility; level of liquidity and the related ability of the Moa Joint Venture to pay completing test work and engineering studies, prefeasibility and feasibility studies, statements can genera
Slide 4: Q1 Highlights
Q1 Highlights Positive earnings from operations and Adjusted EBITDA(1) despite lower cobalt prices Filed NI 43-101 Technical Report supporting an estimated 26-year mine life Successfully implemented Cobalt Swap Drilled new gas well for power generation Maintained positive momentum and delivered on s
Slide 5: 2023 Strategic Priorities
2023 Strategic Priorities Leading Green Metals Achieve Balance Sheet Leverage Technologies Producer Strength for Growth • Execute on Moa JV • Effectively leverage collections ✓ ✓• Support Moa JV expansion, expansion on Cobalt Swap operational improvements and Life of Mine extension • Rank in lowest
Slide 6: Review of operations
Review of operations Nickel briquettes Fort Saskatchewan, Canada 66
Slide 7: Moa JV highlights – Q1 Production
Moa JV highlights – Q1 Production Finished Nickel(1) Finished Cobalt(1) -10% -18% • Lower mixed sulphide (MSP) feed availability at refinery due to lower ore grade and unplanned 3,875 3,483 maintenance due to feed characteristics at Moa 446 367 Q1 2022 Q1 2023 Q1 2022 Q1 2023 • New ore body access a
Slide 8: Moa JV highlights – Q1 NDCC
Moa JV highlights – Q1 NDCC(1) NDCC (US$/lb of nickel sold) • Cobalt price 54% lower • Higher MPR costs due to higher opening inventory costs, lower production volumes and higher diesel costs • No significant impact from the Cobalt Swap • Input commodity prices improved in Q1 compared to Q4 2022 1.
Slide 9: Moa JV NI 43-101 filed in Q1
Moa JV NI 43-101 filed in Q1 26 Year mine life • Proven and Probable Reserves increased >100% • Favourable economics NPV (8%) of US$1.5 billion (100% basis)(1) • Completion of expansion program will increase economics Nickel briquettes Underpins our strategy for establishing Sherritt as a leading gr
Slide 10: Moa JV Expansion update
Moa JV Expansion update Low capital intensity of US$13k per additional tonne of contained nickel • 80% of structural steel erected on SPP(1) • Feasibility study for MPP(1) approved by Cuban authorities • All significant long-term contracts have or are being awarded for Sixth Leach Train and are on b
Slide 11: Power highlights – Q1
Power highlights – Q1 Electricity production Unit operating costs(2) (33⅓% GWh(1)) ($/MWh(1)) +15% • Higher production due to greater equipment/gas availability 158 137 $19.37 • Unit cost increase due to timing of maintenance $15.70 activities • Moa Swap has been successful in providing liquidity re
Slide 12: Technologies
Technologies • Supported Moa JV expansion, operational improvements, ECOG(1) implementation and life of mine extension • Received NRCan funding commitment to evaluate using MHP(1) as an additional refinery feed • Signed agreement with Aurora Hydrogen to support development of hydrogen production tec
Slide 13: Financial Highlights
Financial Highlights sherritt
Slide 14: Key Financial Metrics
Key Financial Metrics Net earnings from Adjusted EBITDA(1) ($M) continuing operations ($M) • Higher nickel average-realized price(1) offset by lower production $58.5 • Cobalt average-realized price 54% lower $39.9 • Higher MPR costs on higher opening inventory costs, lower volumes and higher diesel
Slide 15: Cobalt Swap Update
Cobalt Swap Update Cobalt (tonnes (t)) Cash ($M)(1) To May 9, 2023 (100% basis) 2,082 2,082 155 • Received – 1,520t of cobalt – $67M 562 • Reduced GNC(2) receivable – $34M 1,234 • Sold – 848t of cobalt – $37M 123 • Cash received on sales – $32M 1,520 Balance of year 848 32 • Cobalt distributions and
Slide 16: Available liquidity in Canada
Available liquidity in Canada(1) $82M Net increase includes: $75M • Receipts on sale of cobalt Available • Strong Fort Site fertilizer pre-buys Credit $37M • Payment of share-based compensation obligation C$ millions Available Credit $55M Subsequent to the quarter-end: Canada $45M • Received $13M on
Slide 17: Outlook
Outlook Moa, Cuba 17
Slide 18: 2023 Guidance
2023 Guidance Moa JV and Fort Site Production (100% basis) & Unit Costs Finished nickel 30,000 – 32,000 tonnes Finished cobalt 3,100 – 3,400 tonnes 2023 Guidance amount unchanged Net direct cash cost(1) US$5.00 - $5.50/lb Spending on capital (Sherritt’s share)(1)(2) • Monitoring volatile cobalt pric
Slide 19: Q1 Take aways
Q1 Take aways • Earnings from operations and Adjusted EBITDA(1) strong despite lower cobalt prices • Accessing new mining areas in 2023 will reduce Q1 operating challenges at the Moa mine • NI 43-101 Technical Report supports an estimated 26-year mine life • Moa JV expansion program remains on time
Slide 20: Q&A Discussion
Q&A Discussion sherritt
Slide 21: Sherritt International Corporation contact details
Sherritt International Corporation 22 Adelaide West, 42nd Floor Toronto, Ontario, Canada M5H 4E3 Lucy Chitilian, Director, Investor Relations Telephone: (416) 935 -2457 I Toll -Free: 1 (800) 704 -6698 Email: Lucy.Chitilian@sherritt.com I Website: www.sherritt.com
Slide 22: Appendix
Appendix 22
Slide 23: 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 24: Adjusted EBITDA, cont.
Adjusted EBITDA, cont. $ millions, for the three months ended March 31 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 $ 67.1 $ 0.5 $ (4.0) $ 1.6 $ (23.6) $ (18.1) $ 23.5 Add (
Slide 25: 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 26: Average-realized price, cont.
Average-realized price, cont. $ millions, except average-realized price and sales volume, for the three months ended March 31 2022 Metals Adjustment for Moa Joint Nickel Cobalt Fertilizer Power Other(1) Venture Total Revenue per financial statements $ 123.0 $ 36.6 $ 20.6 $ 9.0 $ 13.0 $ (168.1) $ 34.
Slide 27: 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 28: 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 2022 Adjustment for Moa Metals Power Other(1) Joint Venture Total Cost of sales per financial statements $ 118.6 $ 6.0 $ 6.6 $ (100.8) $ 30.4 Less: Depletion, depreciat
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, cont.
Spending on capital, cont. $ millions, for the three months ended March 31 2022 Total Adjustment derived from Combined for Moa financial Metals Power Other(1) total Joint Venture statements Property, plant and equipment expenditures (2) $ 10.7 $ 0.5 $ -$ 11.2 $ (7.1) $ 4.1 Intangible asset expenditu
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