Sherritt International Corporation · TSX:S
Sherritt International — Investor Presentation (May 2003)
26 slides from Sherritt International's investor presentation, May 2003
Slide 1: Investor Presentation
Investor Presentation May, 2003
Slide 2: Safe Harbor / Forward-Looking Statements
Safe Harbor / Forward-Looking Statements This This presentation presentation contains contains forward-looking forward-looking statements. statements. These These forward- forward- looking looking statements statements are are not not based based on on historical historical facts, facts, but but
Slide 3: Sherritt Business Segments
Sherritt Business Segments Sherritt Sherritt operates operates through through 55 primary primary business business segments segments Canada’s largest, and one of North America’s largest thermal coal producers Over 40 million tonnes of annual production through 10 mines COAL Principal coal
Slide 4: Capital Asset Segmentation
Capital Asset Segmentation Sherritt Sherritt has has significantly significantly increased increased its its Canadian Canadian asset asset base: base: CAPITAL ASSETS & GOODWILL CAPITAL ASSETS & GOODWILL 1997 2002(1) Europe Europe & Asia & Asia Canada 1% 12% Canada 24% 60% Cuba Cuba 64% 39% $372
Slide 5: Revenue by Business Segment
Revenue by Business Segment Sherritt Sherritt is is an an increasingly increasingly diversified diversified company company with with clearly clearly defined defined sources sources of of growing growing revenue revenue REVENUE BY SEGMENT REVENUE BY SEGMENT 1997 2002(1) Other Oil & 6% Metals Coa
Slide 6: Strong Cash Flow Growth
Strong Cash Flow Growth Strong Strong cash cash flow flow growth growth through through diversified diversified revenue revenue streams streams z z Cash Cash flow flow and and earnings earnings consistency consistency enhanced enhanced through through the the recent recent Luscar, Luscar, Fordin
Slide 7: Pro Forma EBITDA
Pro Forma EBITDA ACTUAL 2002 EBITDA(1) PRO FORMA 2002 EBITDA (1), (2) ($ millions) ($ millions) Coal Metals Coal Metals 22% 19% 23% 17% Power Power & Other & Other 3% 8% Oil & Oil & Gas Gas 56% 52% $308 million $333 million (1) Before allocation of Corporate costs. (2) 6 Pro forma including Fording
Slide 8: Coal – Financial Performance
Coal – Financial Performance Enhanced Enhanced revenue revenue and and cash cash flow flow stability stability going going forward: forward: z z Long-term, Long-term, escalating escalating contracts contracts with with investment investment grade grade Canadian Canadian utilities utilities z z R
Slide 9: Metals – Financial Performance
Metals – Financial Performance Stable Stable profitability profitability through through nickel nickel cycle cycle Strong Strong operating operating performance performance in in 2002 2002 driven driven by by increased increased sales sales volumes volumes and and higher higher realized real
Slide 10: Oil & Gas – Financial Performance
Oil & Gas – Financial Performance Revenue Revenue andand EBITDA EBITDA have have grown grown at at aa CAGR CAGR of of 36% 36% and and 48% 48% respectively respectively over over the the last last 55 years years Full Full exploration, exploration, development development and and production pr
Slide 11: Oil and Gas – Operations
Oil and Gas – Operations Sherritt Sherritt is is Cuba's Cuba's largest largest producer producer of of oil oil and and gas gas z 92 z 92 wells wells generated generated gross gross operating operating production production of of 55,000 55,000 bpd bpd Benchmarked Benchmarked to z z to world world
Slide 12: Metals – Operations
Metals – Operations Sherritt’s Sherritt’s metals metals operation operation is is the the world’s world’s most most commercially commercially successful successful hydrometallurgical hydrometallurgical producer producer ofof nickel nickel from from lateritic lateritic ore: ore: z z Fully Fully i
Slide 13: Value Enhancement
Value Enhancement
Slide 14: Sherritt Overview
Sherritt Overview Sherritt Sherritt has has undergone undergone aa significant significant transformation: transformation: z z Canada’s Canada’s largest largest coal coal producer producer and and one one of of the the largest largest in in North North America, America, focused focused onon ther
Slide 15: Sherritt Overview
Sherritt Overview Sherritt Sherritt is is focused focused on on maximizing maximizing value value in in its its core core businesses businesses by by increasing increasing production production and and achieving achieving efficiencies efficiencies Sherritt’s Sherritt’s management management
Slide 16: Coal – Value Enhancement Opportunities
Coal Value Enhancement Opportunities Thermal Thermal coal coal will will be be of of increasingly increasingly strategic strategic importance importance in in the the future: future: z z Long Long life, life, low low cost cost energy energy resource resource relative relative to to natural natur
Slide 17: Metals – Value Enhancement Opportunities
Metals Value Enhancement Opportunities Nickel Nickel has has the the best best growth growth potential potential of of any any base base metal metal Sherritt’s Sherritt’s leverage leverage to to nickel nickel is is slightly slightly less less than than Inco Inco and and greater greater than
Slide 18: Oil & Gas – Value Enhancement Opportunities
Oil & Gas Value Enhancement Opportunities Initially Initially redeveloped redeveloped existing existing wells, wells, now now focused focused on on new new development development prospects prospects Sherritt Sherritt continues continues toto explore explore growth growth opportunities oppor
Slide 19: Power – Value Enhancement Opportunities
Power Value Enhancement Opportunities Sherritt Sherritt has has developed developed considerable considerable expertise expertise in in building building and and operating operating gas gas powered powered generating generating facilities facilities Capital Capital expenditures expenditures
Slide 20: Commodity Price Sensitivity
Commodity Price Sensitivity SENSITIVITY OF EARNINGS TO CHANGES IN COMMODITY PRICES(1) APPROX. APPROX. ANNUAL CHANGE FACTOR CHANGE CHANGE IN IN NET EARNINGS BASIC EPS (MILLIONS) Prices Nickel - LME price per pound U.S. $0.10 $2.8 $0.03 Cobalt - Metal Bulletin price per pound U.S. $1.00 $2.7 $0.03 Oil
Slide 21: Pro Forma Capitalization
Pro Forma Capitalization (millions) (millions) As of December 31 Long-term debt $347.0 Minority interest in subsidiary companies $5.1 Convertible debentures $587.3 Shareholders equity(1) $801.6 Total capitalization $1,810.2 20 (1) Prior to giving effect to the proposed offering.
Slide 22: Summary of Offering
Summary of Offering
Slide 23: Summary of Offering
Summary of Offering Issuer: Issuer: Sherritt Sherritt International International Corporation Corporation Offering: Offering: Treasury Treasury offering offering of of [z]MM [z]MM Restricted Restricted Voting Voting Shares Shares Offering Offering Price: Price: To To be be priced priced
Slide 24: NAV Valuation
Summary of Offering NAV Valuation SHERRITT INTERNATIONAL (Net Asset Value C$) PER SHARE PER SHARE OPERATIONS C$ MILLIONS PRE POST CONVERSION CONVERSION(3) Metals Metals Enterprises Enterprises (50%) (50%) $400.0 $400.0 $3.86 $3.86 $2.32 $2.32 Oil Oil and and Gas Gas $380.0 $380.0 $3.67 $3.67 $2.21 $
Slide 25: Comparable Company Valuation
Summary of Offering Comparable Company Valuation Sherritt Sherritt trades trades at at aa significant significant discount discount to to its its peers peers across across aa spectrum spectrum of of valuation valuation metrics metrics ENTERPRISE VALUE / PRICE/ PRICE / 30- 30-APR- APR-03 FD MARKE
Slide 26: Investment Highlights
Summary of Offering Investment Highlights Broadly diversified asset base Strong and stable growth from operations Significant opportunities for strategic growth Management team focused on value creation Attractive valuation 25
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