Sherritt International Corporation · TSX:S

Sherritt International — Q2 2017 Earnings Presentation

19 slides from Sherritt International's earnings presentation, Jul 27, 2017

  1. Slide 1: Second Quarter Results

    Second Quarter Results July 27, 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: Q2 2017 highlights

    Q2 2017 highlights Liquidity • Ending cash, cash equivalents and short-term investments of $274M, after further revolver repayment of $6.5M • Oil capex guidance reduced by US$20M to reflect reduced drilling costs and deferral of seismic on Block 8A Operations • Moa’s NDCC lowest since Q2 2008, when

  4. Slide 4: Ambatovy agreement in principle on 40 for 12 restructuring

    Ambatovy agreement in principle on 40 for 12 restructuring Balance sheet • $1.4 billion in debt to be eliminated from Sherritt’s balance sheet • Sherritt to retain 12% of total project equity and subordinated loans advanced to Ambatovy Estimated costs • At closing, Sherritt will pay approximately US

  5. Slide 5: Market Environment

    MARKET ENVIRONMENT SHERRITT INTERNATIONAL CORPORATION 5

  6. Slide 6: 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 (10%) +80% in (42%) in 2015 +18% in 2016 (24%) in 2015 +37% in 2016 $8.25 in 2017 $29 2017 $7.75 $27 Avg. reference price 2015: US$12.99 $7.25 $25 2016: US$11.77 Q2 2017: US$25.87 $6.75 $23 $6.25 $21 $5.75

  7. Slide 7: Meaningful decline in exchange-traded inventories, below 500kt global for first time in 24 months

    Meaningful decline in exchange-traded inventories, below 500kt global for first time in 24 months Global nickel exchange-traded inventories 700,000 600,000 500,000 400,000 Kt 300,000 200,000 100,000 0 LME Inventories Bonded Warehouse SHFE Source: Bloomberg, Scotiabank SHERRITT INTERNATIONAL CORPORAT

  8. Slide 8: Hard to avoid reading about cobalt these days…

    Hard to avoid reading about cobalt these days… SHERRITT INTERNATIONAL CORPORATION 8

  9. Slide 9: Cobalt contribution to Sherritt

    Cobalt contribution to Sherritt Contribution to Metals Q2 2017 revenue LTM Adj. EBITDA sensitivity to cobalt prices(1) Moa 80 2% $71 70 23% Nickel $59 Cobalt 60 44% Adj. EBITDA (C$ M) Fertilizers 50 $46 Other 40 $38 31% 30 Ambatovy 20 $12 3% $8 10 Nickel 32% 0 Cobalt LTM avg realized price Analysts

  10. Slide 10: Nickel cash cost curve and our positioning

    Nickel cash cost curve and our positioning 2017 Nickel industry, normal C1 cash cost grouped by operation and ranked by cash cost (C1) existing operations and base case 10 25th percentile 50th percentile US$2.86 US$3.79 C1 Cash Costs (US$/lb) YTD avg. reference 5 price US$4.43/lb Ambatovy = US$3.79

  11. Slide 11: Second Quarter Operating Results

    SECOND QUARTER OPERATING RESULTS SHERRITT INTERNATIONAL CORPORATION 11

  12. Slide 12: Metals highlights

    Metals highlights Nickel production (tonnes) Moa: NDCC Avg. reference price: nickel (US$) 4,145 $3.25 $4.66 3,620 3,840 3,817 3,739 3,443 $2.94 $4.00 $4.18 $2.55 Q2 2016 Q1 2017 Q2 2017 Moa (50%) Ambatovy (40%) Q2 2016 Q1 2017 Q2 2017 Q2 2016 Q1 2017 Q2 2017 Cobalt production (tonnes) Ambatovy: NDCC

  13. Slide 13: Oil & Gas and Power highlights

    Oil & Gas and Power highlights Oil: Cuba GWI and NWI Oil: Cuba GWI unit operating costs Avg. reference price 16,200 $9.95 Fuel Oil No. 6 (US$) 15,213 14,545 $9.30 $8.66 9,933 8,163 8,010 $45.63 $43.26 Q2 2016 Q1 2017 Q2 2017 $31.02 GWI Production Cuba NWI Production Cuba Q2 2016 Q1 2017 Q2 2017 Powe

  14. Slide 14: Revised guidance

    Revised guidance Revised 2017 2017 YTD guidance Production volumes Nickel, finished (tonnes, 100% basis) Moa Joint Venture 15,158 31,500-32,500 Ambatovy Joint Venture 18,150 40,000-43,000 Total 33,308 71,500-75,500 Cobalt, finished (tonnes, 100% basis) Moa Joint Venture 1,744 3,500-3,800 Ambatovy Jo

  15. Slide 15: Financial Highlights

    FINANCIAL HIGHLIGHTS SHERRITT INTERNATIONAL CORPORATION 15

  16. Slide 16: Cash cost (NDCC) drivers for Moa and Ambatovy

    Cash cost (NDCC) drivers for Moa and Ambatovy Moa Ambatovy NDCC NDCC Q1 2017: US$3.25/lb Q1 2017: US$3.93/lb Q2 2017: US$2.55/lb Q2 2017: US$3.66/lb 2017e: US$2.80-3.30/lb 2017e: US$3.10-3.40/lb Mining, processing and refining costs Mining, processing and refining costs Diesel 5% 5% Diesel 3% 4% 10%

  17. Slide 17: Balance sheet cash from Dec. 31, 2016 to June 30, 2017

    Balance sheet cash from Dec. 31, 2016 to June 30, 2017 In million of dollars 31.8 309.6 (6.2) 8.6 (30.0) 274.2 (27.0) (11.0) (1.6) Dec. 31, 2016 - Adjusted Working capital Interest paid on Receipt of Repayment of Capital Other June 30, 2017 - Cash, cash operating cash change debentures advances borr

  18. Slide 18: Key takeaways

    Key takeaways • $274 million in cash and short-term investments, and no long term debt maturity before Q4 2021 • Improved cobalt prices should drive cash flow generation through the year • A long operating track record through all phases of the cycle • Ambatovy transaction expected to close in Q3 or

  19. Slide 19: 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 19

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