Sherritt International Corporation · TSX:S
Sherritt International — Q4 2022 Earnings Presentation
33 slides from Sherritt International's earnings presentation, Feb 9, 2023
Slide 1: Q4 Earnings Call: Review of Financial and Operational Results
Q4 Earnings Call Review of Financial and Operational Results February 9, 2022 New slurry preparation plant Moa Cuba
Slide 2: Presenters
Presenters Leon Binedell President & CEO Yasmin Gabriel CFO
Slide 3: Forward-Looking Statements
Forward-Looking Statements This presentation contains certain forward-looking statements. Forward-looking The Corporation cautions readers of this presentation not to place undue reliance on any successfully attracting required financing; successfully developing and proving statements can generally
Slide 4: Delivered on 2022 Strategic Priorities
Delivered on 2022 Strategic Priorities Leading Green Metals Achieve Balance Sheet Leverage Technologies Producer for Growth Continued Strength Advanced US$77M expansion program Repurchased ~$150M notes to advance innovative technologies at a discount NDCC st in 1 cost quartile Finalized $3
Slide 5: Review of operations
Review of operations Energas power generation facility Boca de Jaruco, Cuba 55
Slide 6: Moa JV highlights – Q4
Moa JV highlights – Q4 Finished Nickel(1) Finished Cobalt(1) NDCC(2) (US$/lb of nickel sold) -4% -11% 4,266 4,112 476 423 Q4 2021 Q4 2022 Q4 2021 Q4 2022 • Moa JV maintains focus on operational efficiencies to mitigate external impacts 1. Tonnes, Sherritt’s share - 50% basis 2. Net direct cash cost.
Slide 7: Moa JV highlights – 2022
Moa JV highlights – 2022 Finished Nickel(1) Finished Cobalt(1) NDCC(2) (US$/lb of nickel sold) +3% -4% 15,592 16,134 1,763 1,684 2021 2022 2021 2022 • Production in line with 2022 guidance 1. Tonnes, Sherritt’s share - 50% basis 2. Net direct cash cost. A non-GAAP financial measure. For additional i
Slide 8: Moa JV expansion and LOM program
Moa JV expansion and LOM program Expansion: • Low capital intensity investment to increase production by 6,500 tonnes of contained metals annually at only US$13,200 per annual tonne of nickel • Focus on improving Moa MSP(1) production to fully utilize existing refinery capacity • Any excess MSP is e
Slide 9: Power highlights – Q4 and 2022
Power highlights – Q4 and 2022 Electricity production (33⅓% GWh(1)) Unit operating costs(2)($/MWh(3)) +22% +26% 568 $22.72 450 $21.41 $23.06 $19.39 159 130 Q4 2021 Q4 2022 2021 2022 Q4 2021 Q4 2022 2021 2022 Extended economically beneficial joint venture contract to March 2043 1. GWh = Gigawatt hour
Slide 10: 2022 Sustainability highlights
2022 Sustainability highlights • Further improved peer-leading safety performance 2021/2022 Safety performance • Experienced no security incidents involving allegations TRIFR(1) LTIFR(2) of human rights abuses at any of Sherritt’s operations • Experienced zero work-related fatalities at our 0.34 ope
Slide 11: Financial Highlights
Financial Highlights Cobalt production Fort Saskatchewan, Canada 11
Slide 12: Net earnings from continuing operations/Adjusted EBITDA
Net earnings from continuing operations/Adjusted EBITDA ($ millions) Net earnings (loss) from Adjusted net earnings (loss)(1) Adjusted EBITDA(1) continuing operations from continuing operations $217.6 $112.2 $88.4 $63.7 $(13.4) $(13.9) 2021 2022 2021 2022 2021 2022 Strong earnings driven by high nic
Slide 13: Repurchase of notes
Repurchase of notes • ~$150 million principal repurchased during the year at a 16% discount • Q2 repurchased ~$60 million $433M Junior notes C$ millions Due 2029 $83M • Q4 repurchased ~$90 million $292M Junior notes Due 2029 • Repurchased 35% of our opening principal $71M(1) Second lien secured note
Slide 14: Settlement of Cuban receivables – Cobalt Swap
Settlement of Cuban receivables – Cobalt Swap $736M • Expected annual cash flow of US$114 million through the sale of cobalt and cash distributions (half to settle Sherritt Share receivables) $368M • Majority of payments expected to be received prior to C$ millions maturity of the second lien notes
Slide 15: Liquidity in perspective
Liquidity in perspective $228 • Strong Moa JV distributions of ~$100 million: Available Credit $178 • Q4 – $57.2 million $82M Available Credit • Purchased ~$150 million of second lien secured Other 3M $55M and junior notes for $125 million cash Other $7M Energas • Revolving credit facility of $37 mi
Slide 16: Outlook
Outlook Moa, Cuba 16
Slide 17: 2023 Guidance updates
2023 Guidance updates Moa JV and Fort Site Production (100% basis) & Unit Costs Finished nickel 30,000 – 32,000 tonnes • 2023 will be a transition year for the Moa JV Finished cobalt 3,100 – 3,400 tonnes • This transition phase of mine expansion will Net direct cash cost(1) US$5.00 - $5.50/lb includ
Slide 18: 2023 Strategic Priorities
2023 Strategic Priorities Leading Green Metals Achieve Balance Sheet Leverage Technologies Producer Strength for Growth • Execute on expansion • Leverage collections on • Continue to advance program Cobalt Swap commercialization of innovative technologies • Rank in 1st cost quartile for • Maximize l
Slide 19: Q4 Takeaways
Q4 Takeaways • Delivered on our 2022 strategic priorities • Finalized Cobalt Swap agreement to recover $368 million of total Cuban receivables • Repurchased cumulative total ~$150M of outstanding notes • Extended Moa Swap agreement (US$50M annually) • Extended economically beneficial Energas Joint V
Slide 20: Q&A Discussion
Q&A Discussion sherritt
Slide 21: Sherritt International Corporation contact details
Sherritt International Corporation 22 Adelaide West, 42nd Floor Toronto, Ontario, Canada M5H 4E3 Lucy Chitilian, Director, Investor Relations Telephone: (416) 935 -2457 I Toll -Free: 1 (800) 704 -6698 Email: Lucy.Chitilian@sherritt.com I Website: www.sherritt.com
Slide 22: Appendix
Appendix 22
Slide 23: Adjusted EBITDA
Adjusted EBITDA The Corporation defines Adjusted EBITDA as earnings (loss) from operations and joint venture, which excludes net finance expense and loss from discontinued operations, net of tax, as reported in the financial statements for the period, adjusted for: depletion, depreciation and amorti
Slide 24: Adjusted EBITDA, cont.
Adjusted EBITDA, cont. $ millions, for the three months ended December 31 2021 Adjustment for Moa Moa JV and Metals Oil and Techno- Joint Fort Site(1) Other Gas Power logies Corporate Venture Total Earnings (loss) from operations and joint venture per financial statements $ 36.2 $ (0.4) $ (0.7) $ 0.
Slide 25: Adjusted EBITDA, cont.
Adjusted EBITDA, cont. $ millions, for the year ended December 31 2021 Adjustment for Moa Moa JV and Metals Oil and Techno- Joint Fort Site(2) Other Gas Power logies Corporate Venture Total Earnings (loss) from operations and joint venture per financial statements $ 98.3 $ (2.0) $ (11.6) $ (0.6) $ (
Slide 26: Unit operating costs/Net direct cash cost
Unit operating costs/Net direct cash cost With the exception of the Moa Joint Venture, which uses NDCC, unit operating cost is generally calculated by dividing cost of sales as reported in the financial statements, less depreciation, depletion and amortization in cost of sales, the impact of impairm
Slide 27: Unit operating costs/Net direct cash cost, cont.
Unit operating costs/Net direct cash cost, cont. $ millions, except unit cost and sales volume, for the three months ended December 31 2021 Adjustment Moa JV and for Moa Fort Site Power Other(1) Joint Venture Total Cost of sales per financial statements $ 142.7 $ 7.0 $ 11.2 $ (118.3) $ 42.6 Less: De
Slide 28: Unit operating costs/Net direct cash cost, cont.
Unit operating costs/Net direct cash cost, cont. $ millions, except unit cost and sales volume, for the year ended December 31 2021 Adjustment Moa JV and for Moa Fort Site Power Other(1) Joint Venture Total Cost of sales per financial statements $ 451.4 $ 26.1 $ 45.5 $ (382.0) $ 141.0 Less: Depletio
Slide 29: Adjusted net earnings/loss from continuing operations
Adjusted net earnings/loss from continuing operations and adjusted net earnings/loss from continuing operations per share The Corporation defines adjusted net earnings/loss from continuing operations as net earnings/loss from continuing operations less items not reflective of operational performance
Slide 30: Adjusted net earnings/loss from continuing operations, cont.
Adjusted net earnings/loss from continuing operations and adjusted net earnings/loss from continuing operations per share, cont. 2022 2021 For the year ended December 31 $ millions $/share $ millions $/share Net earnings (loss) from continuing operations $ 63.7 $ 0.16 $ (13.4) $ (0.03) Adjusting ite
Slide 31: Spending on capital
Spending on capital The Corporation defines spending on capital for each segment as property, plant and equipment and intangible asset expenditures on a cash basis adjusted to the accrual basis in order to account for assets that are available for use by the Corporation and the Moa Joint Venture pri
Slide 32: Spending on capital, cont.
Spending on capital, cont. $ millions, for the three months ended December 31 2021 Total Adjustment derived from Moa JV and Combined for Moa financial Fort Site Power Other(1) total Joint Venture statements Property, plant and equipment expenditures (2) $ 8.3 $ 0.1 $ 0.5 $ 8.9 $ (6.2) $ 2.7 Intangib
Slide 33: Spending on capital, cont.
Spending on capital, cont. $ millions, for the year ended December 31 2021 Total Adjustment derived from Moa JV and Combined for Moa financial Fort Site Power Other(1) total Joint Venture statements Property, plant and equipment expenditures (2) $ 34.0 $ 0.1 $ 0.9 $ 35.0 $ (25.1) $ 9.9 Intangible as
Sherritt International — Q4 2022 Earnings Presentation on 6ix