Sherritt International Corporation · TSX:S
Sherritt International — Q2 2024 Earnings Presentation
34 slides from Sherritt International's earnings presentation, Jul 30, 2024
Slide 1: Q2 2024 Conference Call
Sherritt International Corporation Q2 2024 Conference Call Review of Financial and Operational Results July 30, 2024 SHERRITT.COM • TSX: S
Slide 2: Presenters
Presenters Leon Binedell President & CEO Yasmin Gabriel CFO Elvin Saruk COO 2
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain forward-looking statements. Forward-looking statements the U.S. government policy toward Cuba, including the U.S. embargo on Cuba and the case may be, for the Corporation. In addition, the Corporation will incur costs in pursuing any can
Slide 4: Nickel Market Overview
Nickel Market Overview 2024 Nickel Price Volatility US$10/lb US$9/lb Second Quarter 2024 Key Market Developments → Continuing supply cut announcements US$8/lb → London Metal Exchange restrictions on Russian origin metals → Political protests in New Caledonia US$7/lb → Announcements of tariffs being
Slide 5: Second Quarter 2024 Highlights
Second Quarter 2024 Highlights → Strong production of mixed sulphides and finished nickel → Nickel sales continues to exceed production reducing inventory → NDCC(1) decreased to US$5.75/lb driven by 15% lower MPR/lb(2) year-over-year and strong fertilizer sales → Strong electricity sales volume 19%
Slide 6: Review of Operations
Review of Operations 6 Transformer, Boca de Jaruco, Cuba
Slide 7: Metals Second Quarter Highlights
Metals Second Quarter Highlights Production volumes Mixed sulphides (tonnes)(1) Q2 2024 Q2 2023 → Strong mixed sulphides production benefitting from the Mixed Sulphides 4,095 3,783 new Slurry Preparation Plant and lower maintenance Finished Nickel 3,383 3,268 Finished nickel and cobalt Finished Coba
Slide 8: Metals Second Quarter Net Direct Cash Costs (NDCC)
Metals Second Quarter Net Direct Cash Costs (NDCC) (1) Second Quarter 2024 Results Year Over Year Change NDCC(1) (US$/lb of nickel sold) Mining, processing and refining(2) 20% Decrease YoY → 15% lower MPR/lb costs due to: → Operating efficiencies on better ore feed $0.15 → Lower input commodity pric
Slide 9: Moa JV Expansion Update
Moa JV Expansion Update Slurry Preparation Plant → Completed construction in Q4 2023, under budget → Processing ore at design capacity – improving mixed sulphides feed to refinery Processing Plant → Civil construction and structural erection completed → Piping installation commenced → Moa JV receive
Slide 10: Power Second Quarter Results
Power Second Quarter Results Electricity production → 19% year-over-year increase on improved gas availability (since the end of Q2 2023) Operating Results Q2 2024 Q2 2023 Unit operating cost(1) Electricity Production(2) → Higher unit cost driven by timing of scheduled maintenance (GWh(3)) 205 172 a
Slide 11: Financial Highlights
Financial Highlights Fort Saskatchewan, Alberta 11
Slide 12: Financial Performance Second Quarter Results
Financial Performance Second Quarter Results Financial performance notable drivers: Financial Results Q2 2024 Q2 2023 ($ millions) → Lower average-realized prices(1) → Nickel 17% Revenue(2) 51.4 93.5 → Cobalt 12% Combined revenue(1)(3) 163.2 197.0 → Fertilizers 19% → Improved nickel sales volumes
Slide 13: Available Liquidity in Canada Second Quarter Update
Available Liquidity in Canada Second Quarter Update $30.4M $25.5M Second Quarter changes include → Moa JV short-term advance fully repaid $27.0M $55.9M → Dividend distribution from Energas $5.1M Available → Interest paid on Second Lien Notes $(9.4)M Liquidity in Canada → Power operating cash usage o
Slide 14: Financial Highlights Additional Second Quarter Updates
Financial Highlights Additional Second Quarter Updates → Purchased put options on approximately 25% of Moa JV nickel production for six months starting June 1, 2024 Nickel Price Hedging → Exercise price of US$8.16/lb → Provides downward protection while maintaining full exposure to upward changes in
Slide 15: Summary
Summary Fort Saskatchewan, Alberta 15
Slide 16: Second Quarter 2024 Summary
Second Quarter 2024 Summary → Strong operational performance at both Metals and Power → Higher production expected at Metals in H2 2024 → Operating efficiencies and higher sales volumes expected to drive unit operating costs(1) and NDCC(1) to guidance ranges → Growth and strategic development progra
Slide 17: Q&A Discussion
Q&A Discussion sherritt
Slide 18: 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 416.935.2451 ER 2024 | Toll -Free: 1.800.704.6698 Email: investor@sherritt.com SHERRITT.COM • TSX: S
Slide 19: Estimates and Non-GAAP and other financial measures
APPENDIX Estimates and Non-GAAP and other financial measures 19
Slide 20: Forward-Looking Estimates
Forward-Looking Estimates 2024 Cobalt Swap distributions Moa JV’s cash and cobalt distributions to the Corporation are determined based on available cash in excess of liquidity requirements. Determinants of liquidity include anticipated nickel and cobalt prices, planned spending on capital at the Mo
Slide 21: Non-GAAP and other financial measures
APPENDIX Non-GAAP and other financial measures 21
Slide 22: Combined revenue
Combined revenue The Corporation uses combined revenue as a measure to help management assess the Corporation’s financial performance across its core operations. Combined revenue includes the Corporation’s consolidated revenue, less Oil and Gas revenue, and includes the revenue of the Moa JV within
Slide 23: Adjusted EBITDA
Adjusted EBITDA The Corporation defines Adjusted EBITDA as (loss) earnings from operations and joint venture, which excludes net finance expense, income tax expense and loss from discontinued operations, net of tax, as reported in the financial statements for the period, adjusted for: depletion, dep
Slide 24: Adjusted EBITDA (continued)
Adjusted EBITDA (continued) 2023 $ millions, for the three months ended June 30 (Restated) Adjustment Corporate for Moa Oil and and Joint Metals(1) Power Gas Other Venture Total Earnings (loss) from operations and joint venture per financial statements $ 3.8 $ 3.3 $ 1.5 $ (8.6) $ 2.2 $ 2.2 Add (dedu
Slide 25: Adjusted EBITDA (continued)
Adjusted EBITDA (continued) 2023 $ millions, for the six months ended June 30 (Restated) Adjustment Corporate for Moa Oil and and Joint Metals(1) Power Gas Other Venture Total Earnings (loss) from operations and joint venture per financial statements $ 34.8 $ 9.2 $ 0.1 $ (18.6) $ (1.7) $ 23.8 Add (d
Slide 26: 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 segment. The average-realized price for power excludes by-product and other revenue, as this revenue is not earned directly for power generation. Transactions by
Slide 27: Average-realized price (continued)
Average-realized price (continued) $ millions, except average-realized price and sales volume, for the three months ended June 30 2023 Metals Adjustment for Moa Joint Nickel Cobalt Fertilizer Power Other(1) Venture Total Revenue per financial statements $ 95.5 $ 38.4 $ 45.0 $ 10.9 $ 11.3 $ (107.6) $
Slide 28: Average-realized price (continued)
Average-realized price (continued) $ millions, except average-realized price and sales volume, for the six months ended June 30 2023 Metals Adjustment for Moa Joint Nickel Cobalt Fertilizer Power Other(1) Venture Total Revenue per financial statements $ 216.9 $ 69.2 $ 61.9 $ 21.2 $ 21.4 $ (238.5) $
Slide 29: Unit operating cost/Net direct cash cost (NDCC)
Unit operating cost/Net direct cash cost (NDCC) With the exception of Metals, 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 impairment losse
Slide 30: 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 June 30 2023 Adjustment for Moa Metals Power Other(1) Joint Venture Total Cost of sales per financial statements $ 182.2 $ 6.5 $ 6.4 $ (99.0) $ 96.1 Less: Depletion, depreci
Slide 31: 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 six months ended June 30 2023 Adjustment for Moa Metals Power Other(1) Joint Venture Total Cost of sales per financial statements $ 326.7 $ 9.9 $ 14.1 $ (195.3) $ 155.4 Less: Depletion, deprec
Slide 32: Adjusted net earnings/loss from continuing operations
Adjusted net earnings/loss from continuing operations and adjusted net earnings/loss from continuing operations per share The Corporation defines adjusted net earnings/loss from continuing operations as net earnings/loss from continuing operations less items not reflective of the Corporation’s curre
Slide 33: Adjusted net earnings/loss from continuing operations (continued)
Adjusted net earnings/loss from continuing operations and adjusted net earnings/loss from continuing operations per share (continued) 2024 2023 For the three months ended June 30 $ millions $/share $ millions $/share Net (loss) earnings from continuing operations $ (11.5) $ (0.03) $ 0.3 $ - Adjustin
Slide 34: Adjusted net earnings/loss from continuing operations (continued)
Adjusted net earnings/loss from continuing operations and adjusted net earnings/loss from continuing operations per share (continued) 2024 2023 For the six months ended June 30 $ millions $/share $ millions $/share Net (loss) earnings from continuing operations $ (52.4) $ (0.13) $ 13.9 $ 0.03 Adjust
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