Sherritt International Corporation · TSX:S
Sherritt International — Q1 2021 Earnings Presentation
24 slides from Sherritt International's earnings presentation, Apr 29, 2021
Slide 1: Q1 Earnings Call
Q1 Earnings Call Review of Financial and Operational Results April 29, 2021
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain forward-looking statements. Forward-looking statements transportation; uncertainty of gas supply for electrical generation; the Corporation’s reliance The Corporation may, from time to time, make oral forward-looking statements. The can g
Slide 3: Q1 Highlights
Q1 Highlights 1. $30.2M in Adjusted EBITDA(1) was highest total in almost 3 years 2. Moa JV had strong finished nickel and cobalt production results 3. US$5M of distributions from Moa JV indicative of improving metals prices 4. Eliminated $5M of 2L notes and reduced administrative costs by $1.5M 5.
Slide 4: Review of operating results
Review of operating results 4
Slide 5: Greening the light vehicle fleet at Moa
Greening the light vehicle fleet at Moa • Initiative launched in 2020 to increase use of renewable energy at Moa • Initiative includes electrification of light vehicles • 2 electric vans delivered to date • 2 more electric vans expected in 2021 • Opportunities to replace diesel-powered land cruisers
Slide 6: Moa JV highlights – Q1 Production
Moa JV highlights – Q1 Production Finished Nickel(1) (tonnes) Finished Cobalt(1) (tonnes) 4,188 3,836 477 400 Q1 2020 Q1 2021 Q1 2020 Q1 2021 • Q1 2021 growth driven by increased mixed sulphides • Increased availability of mixed sulphides, availability and improved refinery reliability improved refi
Slide 7: Moa JV highlights – Costs
Moa JV highlights – Costs (1) Mining, Processing and Refining Costs (US$/lb) Net Direct Cash Cost(1) (US$/lb) $5.34 $5.09 $4.33 $3.83 Q1 2020 Q1 2021 Q1 2020 Q1 2021 • 5% decline in Q1 2021 driven by lower labour costs • NDCC improvement driven by higher cobalt by- • Decline offset by 24% increase i
Slide 8: Oil and Gas highlights
Oil and Gas highlights Oil Production (Cuba GWI, bopd)(1) Unit operating costs (Cuba GWI, $/bbl(2)) 3,277 $27.28 $20.64 2,202 Q1 2020 Q1 2021 Q1 2020 Q1 2021 • Q1 2021 production impacted by natural reservoir • Q1 2021 costs declined due to expiration of PSC declines and expiration of PSC on March 1
Slide 9: Power highlights
Power highlights Electricity production (33⅓% GWh(1)) Unit operating costs ($/MWh(2)) $25.89 153 95 $14.57 Q1 2020 Q1 2021 Q1 2020 Q1 2021 • Q1 2021 production impacted by scheduling of • Q1 2021 unit costs impacted by timing of maintenance activities at Boca maintenance activities and lower product
Slide 10: Recent progress of Technologies Group
Recent progress of Technologies Group Bitumen Upgrading • Full upgrading process developed • Eliminates need for diluent and costs • Makes bitumen more profitable to transport • Delivers environmental benefits • Next step is to identify partner for pilot testing Improved Metals Extraction • Processi
Slide 11: Financial Highlights
Financial Highlights sherritt
Slide 12: Liquidity at March 31
Liquidity at March 31 Energas Energas 75.0 74.4 Cash position impacted by bond repurchase and seasonality of fertilizer business 1. Excludes receipts of distributions from Moa JV and interest received on Energas CSA, identified separately 12
Slide 13: Continued focus on administrative expense reductions
Continued focused on administrative expense reductions $8.7M $7.2M $1.5M C$ Millions Savings in administrative expenses* Q1 2020 Q1 2021 Balance sheet strength and liquidity preservation are strategic priorities * Excludes non-cash depreciation and share-based compensation expenses 13
Slide 14: Status of Cuban energy receivables
Status of Cuban energy receivables Received on Q4 2020 Expected/ receivables Q1 2021 US$M overdue due Received agreement overdue Oil & Gas - Trade receivables $ 25.1 $ 3.0 $ (0.6) $ – $ 27.5 Power Trade receivables/other $ 2.6 $ 2.9 $ (2.8) $ – $ 2.7 Energas CSA $118.2 $ 8.1 $ – $ (2.3) $124.0 Total
Slide 15: Unification of Cuban currencies
Unification of Cuban currencies Key highlights Impacts to Sherritt 1. Cuba’s dual currency system ended Dec. 31 1. All payments denominated in $US 2. Convertible currency (CUC) unified with domestic 2. Cash held at Energas unaffected currency (CUP) on Jan. 1 3. CSA loan and amounts owed unaffected 3
Slide 16: Distributions from the Moa Joint Venture
Distributions from the Moa Joint Venture 45.0 40.0 35.0 Distributions (US$ Millions) 30.0 25.0 20.0 20.0 US$135M* Distributed since Q1 2019 15.0 10.0 20.0 Quarterly distributions based on 5.0 10.0 11.0 10.0 available cash, prevailing metals prices, 9.0 2.5 5.0 and planned capital spend 0.0 Q1 Q2 Q3
Slide 17: Outlook
Outlook 17
Slide 18: Nickel and cobalt prices since beginning of 2021
Nickel and cobalt prices since beginning of 2021 80% 70% 60% 50% US$21.25 40% Cobalt +36% 30% 20% US$15.60 10% US$7.81 Nickel +4% 0% US$7.50 (10%) 31-Dec 7-Jan 14-Jan 21-Jan 28-Jan 4-Feb 11-Feb 18-Feb 25-Feb 4-Mar 11-Mar 18-Mar 25-Mar 1-Apr 8-Apr 15-Apr 22-Apr Nickel prices impacted in Q1 by Tsingsh
Slide 19: Putting the Tsingshan announcement in perspective
Putting the Tsingshan announcement in perspective 1 Conversion of nickel pig iron into a matte product is not novel 2 Product made by a process that greatly increases carbon emissions 3 Production process reduces recovery of cobalt and other metals 4 Additional refining costs and capital spend requi
Slide 20: Outlook for nickel and cobalt prices
Outlook for nickel and cobalt prices • Recent price momentum driven by economic recovery and renewed interest in electric vehicles • New government policies and automotive industry investments paving the way • Nickel remains the metal of choice for battery chemistries • Cobalt prices slated to climb
Slide 21: Summary
Summary • Q1 results indicative of improved nickel and cobalt prices • Progress made across multiple metrics • Variability of overdue payments expected • Q2 production to be impacted by planned shutdowns at Moa and the refinery • No changes to 2021 guidance • Balance sheet strength remains priority
Slide 22: Q&A Discussion
Q&A Discussion sherritt
Slide 23: Sherritt AGM
Sherritt AGM Date: May 20 Time: 10:00 am ET Details at www.sherritt.com 23
Slide 24: Sherritt International Corporation contact details
Sherritt International Corporation 22 Adelaide West, 42nd Floor Toronto, Ontario, Canada M5H 4E3 Joe Racanelli, Director, Investor Relations Telephone: (416) 935 -2457 I Toll -Free: 1 (800) 704 -6698 Email: joe.racanelli@sherritt.com I Website: www.sherritt.com
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