Sherritt International Corporation · TSX:S

Sherritt International — Investor Presentation (March 2017)

32 slides from Sherritt International's investor presentation, March 2017

  1. Slide 1: Investor Presentation March 2017

    Investor Presentation March 2017 SHERRITT INTERNATIONAL CORPORATION 1

  2. 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

  3. Slide 3: A low cost cobalt and nickel producer, with a 20 year energy business in Cuba

    Sherritt - A low cost cobalt and nickel producer, with a 20 year energy business in Cuba 1 Low cost producer of LME grade cobalt and nickel 2 A 90 year track record Cuba’s largest independent oil producer and most efficient 3 power producer Successfully carried out balance sheet initiatives to exten

  4. Slide 4: Nickel and Cobalt: ~83,500 t Ni + ~7,600 t Co

    NICKEL AND COBALT: ~83,500 t Ni + ~7,600 t Co(1) (1) Estimated production at 100% basis, using mid point of SHERRITT INTERNATIONAL CORPORATION 4 2017 guidance range

  5. Slide 5: Nickel structural supply deficits are forecast for the coming years

    Nickel structural supply deficits are forecast for the coming years 3,000 300 2,500 250 Days of consumption 2,000 200 Kt 1,500 150 1,000 100 500 50 0 0 2005 2010 2015 2020 2025 2030 2035 Existing supply Probable projects Consumption Global stocks (in days of consumption) • A shortage of over 200kt o

  6. Slide 6: Battery demand expected to account for most of the growth in nickel longer term

    Battery demand expected to account for most of the growth in nickel longer term… 1,400 2015-2035 CAGR: 2016 Nickel demand 1,200 +10% 31% 1,000 800 Kt +2% 600 69% +3% 400 Nickel demand in non-stainless +2% Nickel demand in stainless 200 +2% 0 2015 2020 2025 2030 2035 Batteries Non-ferrous alloys Allo

  7. Slide 7: Demand mostly met by Class I nickel but new supply is FeNi and NPI

    …this demand is mostly met by Class I nickel but new nickel supply is expected to be FeNi and NPI New nickel production consists mostly of FeNi and NPI • Today stocks of Class I nickel remain high 3,000 because of the increased availability of NPI, FeNi and other Class II products 2,500 • But the st

  8. Slide 8: Cobalt supply

    Cobalt supply Cobalt sources Mine production by country (2016) 2% Canada: 3% Russia: 5% 37% 61% Cuba: 5% Philippines: DRC: 61% 3% Copper mines by-product Nickel mines by-product Australia: 5% Madagascar: 3% Primary cobalt mines Most cobalt production is mined as a by-product and 61% of the total sup

  9. Slide 9: Electric Vehicles will also drive the increase in cobalt demand

    Electric Vehicles (EVs) will also drive the increase in cobalt demand Annual EV production and cobalt demand for EVs 8 35 7 30 Co demand for EVs (Kt) 6 Millions of vehicles 25 5 20 4 15 3 10 2 1 5 0 0 2015 2016 2017 2018 2019 2020 2025 EVs PHEVs HEVs Co demand • 30kt of cobalt will be consumed by el

  10. Slide 10: 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 $25 (24%) in 2015 +37% in 2016 (42%) in 2015 +18% in 2016 $7.75 $23 $7.25 $21 $6.75 $19 $6.25 $5.75 $17 $5.25 $15 $4.75 $13 $4.25 Avg. reference price Avg. reference price $11 2015: US$12.99 $3.75 20

  11. Slide 11: Our Operations

    OUR OPERATIONS SHERRITT INTERNATIONAL CORPORATION 11

  12. Slide 12: Power and Oil have supported adj. EBITDA in 2016

    Power and Oil have supported adj. EBITDA in 2016 Metals Oil & Gas Power • 9,483 boepd (NWI) / 15,452 bopd • 33,306 t of finished nickel (GWI - Cuba) produced on average • 894 GWh generated in 2016 (Sherritt’s share) produced in 2016 in 2016 Revenue and Adj. EBITDA 2016 as of December 31, 2016(1)(2)

  13. Slide 13: Adj. EBITDA shows the sensitivity to nickel and oil prices

    Adj. EBITDA shows the sensitivity to nickel and oil prices LME - Spot Nickel Price (US$/lb) Metals - Adjusted EBITDA ($ M) Gulf Coast Fuel Oil No. 6 (US$/bbl) Oil & Gas - Adjusted EBITDA ($ M) $10 $150 $9 233 229 $8 $120 Gulf Coast Fuel Oil No. 6 (US$/bbl) 192 $7 Nickel Price (US$/lb) $6 $90 $5 133

  14. Slide 14: Nickel and cobalt - A long-life asset base

    Nickel and cobalt - A long-life asset base Moa JV (50%) and Fort Site (100%) Unit operating costs (US$/lb)(1) • The oldest and lowest cost HPAL asset globally $4.83 • >15 more years of proven reserve life $3.88 $4.27 $3.42 $3.45 $3.40 • Cash flow positive on an annual basis at most points in the nic

  15. Slide 15: Nickel and cobalt production

    Nickel and cobalt production (tonnes, Sherritt’s share) Moa Ambatovy Nickel Nickel 16,853 16,464 16,750 20,000 18,908 16,842 2015 2016 2017e 2015 2016 2017e Cobalt Cobalt 1,867 1,847 1,825 1,580 1,386 1,309 2015 2016 2017e 2015 2016 2017e Note: Mid point of 2017 guidance range SHERRITT INTERNATIONAL

  16. Slide 16: Nickel cash cost curve and our positioning

    Nickel cash cost curve and our positioning 2016 Nickel industry, normal C1 cash cost grouped by operation and ranked by cash cost (C1) existing operations and base case 15 25th percentile 50th percentile = US$3.00 = US$3.69 C1 Cash Costs (US$/lb) 10 Ambatovy: US$3.10 Moa: US$3.80 (Q4 2016) (Q4 2016)

  17. Slide 17: Cash cost (NDCC) drivers for Moa and Ambatovy

    Cash cost (NDCC) drivers for Moa and Ambatovy Moa Ambatovy 2016 mining, processing and refining costs 2016 mining, processing and refining costs 14% 3% 16% Diesel 8% 4% 7% Diesel 7% Coal / fuel oil / electricity Coal / fuel oil / electricity 18% Sulphur / acid 12% Sulphur / acid Other variable costs

  18. Slide 18: Oil & Gas - A profitable and predictable history, with future production dependent on Block 10

    Oil & Gas - A profitable and predictable history, with future production dependent on Block 10 Largest independent oil producer in Cuba Total production (NWI, boepd)(1) • 20+ year history in the country • 209 wells drilled since 1992, 86% found oil 11,158 9,483 6,700 • Approximately 676,000 m drille

  19. Slide 19: Power

    Power Largest independent power producer in Cuba Power generation (331/3% basis, GWh)(1) • Sherritt Power operates in Cuba through its 331/3% interest in Energas S.A. 902 894 • Aggregate net power capacity of 506MW with 3 facilities: 875 Varadero West, Puerto Escondido and Boca de Jaruco 2015 2016 2

  20. Slide 20: Financial Highlights

    FINANCIAL HIGHLIGHTS SHERRITT INTERNATIONAL CORPORATION 20

  21. Slide 21: Balance sheet cash from Dec. 31, 2015 to Dec. 31, 2016

    Balance sheet cash from Dec. 31, 2015 to Dec. 31, 2016 In million of dollars $72.1 $435.4 $14.1 ($84.6) ($40.2) $309.6 ($65.7) ($14.8) ($6.7) Dec. 31, 2015 - Adjusted Corporate Working capital Capital Debt Repayment Fees paid on Other Dec. 31, 2016 - Cash, cash operating cash change expenditure debe

  22. Slide 22: Sensitivity to nickel prices (Ambatovy at 40%)

    Sensitivity to nickel prices (2016 FY basis / Moa at 50% + Ambatovy at 40%) 80 Moa $71 70 $66 Ambatovy 60 Metals $48 Adj. EBITDA (C$ M) 50 $46 40 30 $22 $20 $20 20 $13 10 0 (10) ($7) (20) 2016 avg realized Spot price Analysts consensus price (US$4.3/lb) (US$5.0/lb) for 2017 (US$4.9/lb) Nickel price

  23. Slide 23: Sensitivity to nickel prices (Ambatovy at 12%)

    Sensitivity to nickel prices (2016 FY basis / Moa at 50% + Ambatovy at 12%) 60 $55 Moa $52 50 $48 Ambatovy $46 Metals 40 Adj. EBITDA (C$ M) 30 $20 $20 $18 20 $13 10 $7 $6 0 ($2) (10) ($7) (20) 2016 avg realized price 2016 avg realized price Spot price Analysts consensus for (US$4.3/lb, 40% stake) (U

  24. Slide 24: Sensitivity to oil prices (Cuba only)

    Sensitivity to oil prices (2016 FY basis / Cuba only) 70 O&G Adj. EBITDA $61 60 Sherritt Adj. EBITDA $58 $56 $53 50 Adj. EBITDA (C$ M) $40 40 $36 30 20 10 0 2016 WTI avg ref. WTI spot price WTI analysts price (US$53.1) consensus for 2017 (US$43.4) (US$54.8) Reference oil price (US$/bbl) Assumptions:

  25. Slide 25: Key takeaways

    Key takeaways • $310 million in cash and short-term investments, and no long term debt maturity before Q4 2021 • A long operating track record through all phases of the cycle • The largest and best established foreign mining and energy business in Cuba Nearing the end stages of Ambatovy negotiations

  26. Slide 26: Appendices

    APPENDICES SHERRITT INTERNATIONAL CORPORATION 26

  27. Slide 27: 2017 strategic priorities

    2017 strategic priorities 2017 strategic priorities Targets • Further reduce NDCC at Moa and Ambatovy towards the goal of achieving or remaining in the lowest quartile of Uphold global operational leadership global nickel cash costs in finished nickel production from • Increase Ambatovy production a

  28. Slide 28: Metals highlights

    Metals highlights Nickel production (k tonnes) Moa: NDCC Avg. reference price: nickel (US$) 18.9 20.0 (19%) 16.9 16.5 16.8 16.8 $3.88 $3.42 $3.45 $5.37 $4.36 2015 2016 2017e Moa (50%) Ambatovy (40%) 2015 2016 2017e 2015 2016 Cobalt production (k tonnes) Ambatovy: NDCC Avg. reference price: cobalt (U

  29. Slide 29: Oil & Gas and Power highlights

    Oil & Gas and Power highlights Oil: Cuba GWI and total NWI Oil: Cuba unit operating costs Avg. reference price 18,257 Fuel Oil No. 6 (US$) 15,452 $11.50 12,000 $9.53 $9.75 11,158 (21%) 9,483 6,700 $40.68 $32.13 2015 2016 2017e GWI Production Cuba NWI Production All 2015 2016 2017e Power (331/3% basi

  30. Slide 30: 2017 production, NDCC and unit operating cost guidance

    2017 production, NDCC and unit operating cost guidance 2016 guidance 2016 actual 2017 guidance (1) Production volumes Nickel, finished (tonnes, 100% basis) Moa Joint Venture 32,500-33,000 32,928 33,000-34,000 Ambatovy Joint Venture 40,000-42,000 42,105 48,000-52,000 Total 72,500-75,000 75,033 81,000

  31. Slide 31: 2017 capital expenditure guidance

    2017 capital expenditure guidance - higher spending on capital due to the Oil & Gas growth plan US$ millions / ($ millions) 2016 guidance 2016 actual 2017 guidance Metals – Moa JV (50% basis), Fort Site (100% basis) US$38 US$25 (33) US$28 (38) Metals – Ambatovy JV (40% basis) US$25 US$25 (33) US$45

  32. Slide 32: 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 32

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