Sherritt International Corporation · TSX:S
Sherritt International — Shareholder Meeting (June 2018)
23 slides from Sherritt International's shareholder meeting presentation, Jun 12, 2018
Slide 1: Sherritt 2018 Annual Meeting
SHERRITT 2018 ANNUAL MEETING June 12, 2018 1
Slide 2: David Pathe, President and CEO
SHERRITT 2018 ANNUAL MEETING David Pathe President and CEO June 12, 2018 2
Slide 3: Forward-looking statements
Forward-looking statements The material and presentations comprising the Sherritt International Corporation (“Sherritt” or the “Corporation”) Annual General Meeting on June 12, 2018 contain certain forward-looking statements. Forward-looking statements can generally be identified by the use of state
Slide 4: Supplying a sustainable future
Supplying a sustainable future Launch of 2017 sustainability report 4
Slide 5: Starts with a sustainable Sherritt
Starts with a sustainable Sherritt 2014 2016 2017 2018 - Sold non-core coal assets - Extended debenture - Restructured Ambatovy JV - Repurchased $120M of for $946M and repaid maturities by 3 years & eliminated $1.4B of debt debentures for $110M $425M in debentures - Repurchased $30M of - Additional
Slide 6: Impact of balance sheet initiatives
Impact of balance sheet initiatives $1,938M $653M 74% Decrease in net debt since 2016(1) $507M 12/31/2016 12/31/2017 3/31/2018 Reducing debt remains a priority (1) Non-GAAP measure. Net debt is defined as debt due within one year plus the face value of long-term debt, less cash, cash equivalents and
Slide 7: 3+ year runway before major liabilities are due
3+ year runway before major liabilities are due(1) $134M $206M $223M $170M 2018 2019 2020 2021 2022 2023 2024 2025 Public debentures Ambatovy partner loan No debt maturities until Q4 2021 (1) Includes debentures and outstanding partner loan 7
Slide 8: Reducing operating and head-office costs
Reducing operating and head-office costs Operations Moa MPR (1) costs (US$/lb, excl. by-product credits) • Focus on reduction of controllable costs 7.5 − 3rd acid plant reduced operating costs 7.0 6.5 • Lower NDCC aided by rising cobalt prices 6.0 Corporate 5.5 • Administrative expenses reduced by 3
Slide 9: Focus on safety makes us stronger
Focus on safety makes us stronger Moa JV - Work-related incidents Q1 2018 results • Zero lost time incidents 1.00 Frequency (per 200,000 hours worked) • 7 million hours without a lost time incident 0.90 0.80 • Safest record since Q3 2005 0.70 0.60 0.50 0.40 Global commitment 0.30 • Implementing Towa
Slide 10: A sustainable future starts with nickel and cobalt
A sustainable future starts with nickel and cobalt 10
Slide 11: Electric vehicles -- No longer just a China phenomenon
Electric vehicles -- No longer just a China phenomenon 11
Slide 12: Trend is a global phenomenon
Trend is a global phenomenon Initiative Year China targets 5M EVs on the road by 2020 and production of 7M EVs by 2025. EVs with China 2020, 2025 range > 400km see increase in subsidies Norway Change to taxes and incentives to achieve zero or low emission vehicle sales 2025 Holland Ban all fossil fu
Slide 13: Auto industry is undergoing dramatic changes
Auto industry is undergoing dramatic changes 2019 2020 2022 2025 - China begins EV production - 100% of Jaguar Land - Ford will launch an all- - 30% of Audi vehicle sales quotas at 10% of all vehicles Rover’s fleet will be electric electric SUV + 24 hybrid and will be electric 16 full EVs as a resul
Slide 14: Electric vehicles will consume 40% of the world's cobalt supply by 2025
Near-term outlook for cobalt is strong Cobalt demand coming from the battery sector 70% 60% 50% 40% 30% 20% 10% 0% 2017 2018 2019 2020 2021 2022 2023 2024 2025 Batteries EV batteries Electric vehicles will consume 40% of the world’s cobalt supply by 2025 Source: CRU 14
Slide 15: Nickel supply deficit is accelerating
Nickel supply deficit is accelerating Global nickel supply/demand market balance (kt) 250 300 200 225 Nickel inventories (days) • Supply deficit expected to Market balance (kt) 150 150 100 75 grow through 2025 50 0 • Demand is tied to EV battery 0 (75) requirements (50) (150) (100) (225) • Current L
Slide 16: Sensitivity to nickel and cobalt prices
Sensitivity to nickel and cobalt prices Nickel Price (US$/lb) $10 $45 Cobalt price (US$/lb) $9 Moa JV - Adjusted EBITDA ($M) $40 $8 $35 $7 Cobalt price (US$/lb) Nickel price (US$/lb) $30 $133M $6 $25 $5 $20 $4 $78M $81M $15 $3 $51M $42M $10 $2 $27M $20M $1 $5 $0 $0 2012 2013 2014 2015 2016 2017 Q1 2
Slide 17: Sustaining our momentum
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Slide 18: Sherritt's priorities have not changed
2018 priorities 1 Preserve liquidity and enhance balance sheet strength Uphold global leadership in finished nickel laterite production 2 3 Optimize opportunities in Cuban energy business Sherritt’s priorities have not changed 18
Slide 19: 2018 progress
2018 progress Strategic Priority 2018 Results YTD Strengthen balance sheet & • Cash position increased to $237.3M – Q1 preserve liquidity • $121.2M debenture purchased for $110.3M – Q1 • $10 million debenture purchase – Q2 Uphold leadership position in nickel production • Operations at Moa JV and Am
Slide 20: Block 10 development potential
Block 10 development potential • Finalized evaluation of available technology to complete drilling • Drilling expected to commence soon • US$13 million in spend budgeted for drilling • Potential production: − 25,000 bopd GWI • Preliminary results expected in Q3 • Results will determine development b
Slide 21: Sherritt bitumen upgrade process addresses industry need
Sherritt bitumen upgrade process addresses industry need Bitumen Sherritt Process • Eliminates need for diluent addition • Leverages 60+ years of hydrometallurgical processes and use of autoclaves • Pilot-scale demonstration successfully completed • Opportunity to commercialize technology • Highly v
Slide 22: Summary
Summary 1 Balance sheet initiatives have transformed Sherritt 2 Outlook and prospects have never been stronger Sherritt has strong upside leverage to rising nickel and cobalt prices 3 22
Slide 23: Questions?
Questions? David Pathe President and CEO 23
Sherritt International — Shareholder Meeting (June 2018) on 6ix