Nyrstar Investor Presentation
August 2018
Important notice
. This presentation has been prepared by the management of Nyrstar NV (the "Company"). It does not constitute or form part of, and should not be construed as, an offer, solicitation or invitation to subscribe for, underwrite or otherwise acquire, any securities of the Company or any member of its group nor should it or any part of it form the basis of, or be relied on in connection with, any contract to purchase or subscribe for any securities of the Company or any member of its group, nor shall it or any part of it form the basis of or be relied on in connection with any contract or commitment whatsoever
. The information included in this presentation has been provided to you solely for your information and background and is subject to updating, completion, revision and amendment and such information may change materially. Unless required by applicable law or regulation, no person is under any obligation to update or keep current the information contained in this presentation and any opinions expressed in relation thereto are subject to change without notice. No representation or warranty, express or implied, is made as to the fairness, accuracy, reasonableness or completeness of the information contained herein. Neither the Company nor any other person accepts any liability for any loss howsoever arising, directly or indirectly, from this presentation or its contents . This presentation includes forward-looking statements that reflect the Company's intentions, beliefs or current expectations concerning, among other things, the Company’s results of operations, financial condition, liquidity, performance, prospects, growth, strategies and the industry in which the Company operates. These forward-looking statements are subject to risks, uncertainties and assumptions and other factors that could cause the Company's actual results of operations, financial condition, liquidity, performance, prospects, growth or opportunities, as well as those of the markets it serves or intends to serve, to differ materially from those expressed in, or suggested by, these forward-looking statements. The Company cautions you that forward-looking statements are not guarantees of future performance and that its actual results of operations, financial condition and liquidity and the development of the industry in which the Company operates may differ materially from those made in or suggested by the forward-looking statements contained in this presentation. In addition, even if the Company's results of operations, financial condition, liquidity and growth and the development of the industry in which the Company operates are consistent with the forward-looking statements contained in this presentation, those results or developments may not be indicative of results or developments in future periods. The Company and each of its directors, officers and employees expressly disclaim any obligation or undertaking to review, update or release any update of or revisions to any forward-looking statements in this presentation or any change in the Company's expectations or any change in events, conditions or circumstances on which these forward-looking statements are based, except as required by applicable law or regulation
. This document and any materials distributed in connection with this document are not directed to, or intended for distribution to or use by, any person or entity that is a citizen or resident or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require any registration or licensing within such jurisdiction
. The distribution of this document in certain jurisdictions may be restricted by law and persons into whose possession this document comes should inform themselves about, and observe any such restrictions. The Company’s shares have not been and will not be registered under the US Securities Act of 1933 (the “Securities Act”) and may not be offered or sold in the United States absent registration under the Securities Act or exemption from the registration requirement thereof 2 Table of Contents
I. Introduction
II. Key investment highlights
III. Financial and operating results
IV. Delivering a strong future for Nyrstar
V. Appendix
3 Nyrstar today Global multi-metals business, with a market leading position in zinc and lead, and growing positions in other base and precious metals
Geographically diverse smelters operating in OECD countries1
LTM3 Revenue EUR 3.7bn
LTM3 Underlying EBITDA EUR 214m
c. 4,100 employees
LTM3 production 1,028kt zinc metal 139kt zinc in conc.
Second largest zinc metal producer globally… …with consistent long term production
2017 zinc smelter production2 (kt Zn) Metal (kt) 1'192 1'019 1'011 195 158 179 178 185 1,050-1,100 187 171 801
583 457 1'125 1'084 1'088 1'097 1'115 1'015 1'019
Korea Zinc Nyrstar Glencore Hindustan Nexa Boliden 2011 2012 2013 2014 2015 2016 2017 2018 Zinc Zinc Resources Guidance Lead Zinc Market 9.1% 7.5% 7.4% 4.5% 4.5% 3.4% Share2 1 Excludes corporate offices and mining assets where sale has been agreed or completed 2 Wood Mackenzie Q2-18 Global zinc long-term outlook figures other than Nyrstar 3 LTM – last 12 months from July 2017 to June 2018 4 Source: Wood Mackenzie; Nyrstar company information Table of Contents
I. Introduction
II. Key investment highlights
III. Financial and operating results
IV. Delivering a strong future for Nyrstar
V. Appendix
5 Key investment highlights Key investment highlights
#1 Strong progress on key strategic initiatives
#2 Excellence in smelting and mining
#3 Robust industry backdrop
#4 Significantly enhanced liquidity, capital structure and maturity profile
#5 Expert management and Board
#6 Strategic relationship with supportive cornerstone shareholder
6 Key investment highlights #1 Strong progress on key strategic initiatives Proactive operational and financial initiatives to transform Nyrstar into the leading global multi-metals business
• Project optimised in 2017 to accelerate and de-risk ramp-up • First feed to TSL furnace achieved end October 2017. All major systems including slag Port Pirie caster and acid plant are in operation Redevelopment • Proportion of residue in feed for the new TSL furnace, at 57% during the month of July 2018, ahead of the fully ramped-up target of 40% • Underlying EBITDA uplift of ~ €130m per annum from 20201
• North American mines retained as a core component of the Nyrstar business Extract • Middle Tennessee successfully restarted and ramped-up maximum value from mining • Restart of Myra Falls in progress with first production in Q3 2018 • Full Potential optimisation review completed - targeting ~200kt of Zinc production by 2019
Optimise • Full potential assessments completed across all five zinc smelters by end Q3 2017 zinc smelting • Low-capex initiatives set to deliver substantial improvements in production and operating costs identified for delivery in 2018 and subsequent years
Supported by Strengthened Strong macro balance sheet fundamentals
7 1 Uplift vs 2016 Underlying EBITDA applying 2016 macros Key investment highlights #2 Excellence in smelting and mining Clearly defined business model in metals processing generates significant gross profit from diverse sources
Diverse sources of smelting gross profit
• Paid to the smelters by miners in the form of concessions Treatment – Consistent source of gross profit driven by the annual charges benchmark TC LTM Metals Processing sources of gross profit1 (“TC”) – Small proportion (5-10%) of purchases are at spot treatment charge terms By-product Zinc and Sales Lead TCs 36% • Metal produced over and above the content the smelter has 14% paid for in concentrates purchased – Nyrstar’s operational excellence helps extract maximum free Free metal metal to supplement earnings from the TC Zinc and lead – Free metal set to increase once Port Pirie is fully operational Premium as higher value feedstock is processed 16%
• Sales of refined metal made above the LME zinc and lead Metal reference price premiums – Significant portion of zinc / lead production above commodity grade due to strong R&D and technical know-how Zinc and lead free Metal 34% • Extraction of additional metals and by-products from the concentrates Total2: By- – High quality assets extract significant amounts of high value products by-products from the feedstock EUR 1,120m – Exposure set to increase once Port Pirie is fully ramped-up
1 LTM – last 12 months from July 2017 to June 2018; Note that the percentages in the chart refer to the gross profit contributed by each source as a percentage of Gross Profit excluding Other Gross Profit (total of EUR 990m) 2 Includes Other Gross Profit of EUR (98)m 8 Key investment highlights #2 Excellence in smelting and mining Project and earnings uplift overview
Redevelopment allows Nyrstar to leverage the zinc smelter network Monthly volume of feed treated in TSL furnace
• Major milestones reached on Port Pirie Redevelopment project with all % Residue in feed Quarterly TSL feed rate (kt) major systems now commissioned and ramp up on track - Volume of material treated continues to ramp-up ahead of schedule - Proportion of residue in feed for the new TSL furnace, at 54% 57% 57% during the month of July 2018, ahead of the fully ramped-up target of 40% 37% - Blast furnace optimisation during Q2’18 planned 78 maintenance shut removed bottlenecks - Sufficient internally generated residues (c. 400kt) stockpiled 48 on-site to feed the TSL furnace for the coming several years • Two year ramp up significantly de-risked 21 0.5 - Continuous operating time increasing every month since commencement of ramp-up in December 2017; Q4’17 Q1’18 Q2’18 Q3’18 proforma on ‒ Sinter plant / old acid plant operation extended to allow parallel July actual operation with TSL furnace and new acid plant in 2018
Projected increase in throughput - greater ability to use residues Revised Underlying EBITDA uplift profile1 Optimisation expected to 620kt drive run-rate earnings uplift in the region of EUR 130m p.a. compared to 2016 Internal 260 ~ EUR130m Full 360kt ~ EUR 100m ramp-up Primary Pb 60
360 ~ EUR 40m 300 ~ EUR 0m 2017 2018 2019 2020+ 2016 2020+ 1 Against 2016 Underlying EBITDA using 2016 macroeconomic assumptions Source: Company information 9 Key investment highlights #2 Excellence in smelting and mining Latin American assets divested , North American mines core to business • Latin American Mining assets sold (5 mines), with additional upside through price participation at El Toqui, earn-out at Coricancha and royalty at Campo Morado • Divestment process concluded in Q3 2017 with the North American mines to be held as a core component of the Nyrstar business • Myra Falls mine restart commenced in August 2017 and proceeding as planned with production in Q3’18 and first shipments in Q4’18 − Total restart capex of EUR c.70m; copper prepay of USD 30m partially funding the restart capex • North American mining operations continue to increase their quarterly run rate of EBITDA generation and are expected to generate robust free cash flow in 2018 • All Mining free zinc for 2019 (166kt) hedged during Q2 2018 at c. USD 3,000/t
Full indicative potential - North American mines Zinc in concentrate production (kt)
Myra Falls to commence zinc Production C1 cash cost in conc. production in Q3’18 (kt) (USD/t) 160 - 180 220 2,500
200
+28% 180
123 160 2,000 140 27 96 120
100
80 Middle 1,500 Restart Tennessee 60 of ramped-up MTN production 40 20
0 1,000 2016 Restarts and 2017 Restart and 2018 Guidance 2016A 2017A 2018F 2019F 2020F operational operational improvements improvements C1 cash cost (USD/t) Zinc contained production (kt) 10 Key investment highlights #2 Excellence in smelting and mining Full potential review of zinc smelting network completed in Q3 2017 • Zero to low-capex operational excellence initiatives identified for implementation over the coming years, focusing on: − Zinc smelter asset integrity; − Asset management; − Metallurgical excellence; − Productivity improvements • Low capex debottlenecking initiatives to drive output to 1.2m tonnes per annum by 2020 on a consistent basis • Operating cost reductions to be achieved by: − Production volume increases over a reduced fixed cost base; and − External spend optimisation
Zinc metal production (kt) Full indicative potential – Zinc smelters
Zn market metal DOC (kt) (EUR/t) 1’015 1’019 -29 39 1,300 600 -47 1,200 550 1,100
1,000 500 Unplanned outages: Hobart 900 (13kt), Budel (30kt) and 450 Clarksville (5kt) 800 700 400 600 500 350 Planned outages at 400 Balen (11kt), Budel 300 (9kt), Clarksville (3kt) 300 and Hobart (6kt) 200 250 100 0 200 2016 Planned Unplanned Operational 2017 Operational 2018 2016A 2017A 2018F 2019F 2020F maintenance outages Improvements improvements Guidance Zinc market metal production (kt) outages in 2018 11 Wood Mackenzie industry cost curve data used for global comparison zinc smelters Key investment highlights
#3 Strong macro Robust industry backdrop fundamentals Continued robust demand
Key Sources of Demand(1) Global Slab Zinc Consumption(2)
Zinc (kt) • The construction industry is the largest end consumer and 20'000 accounts for c. 50% of overall demand • Zinc is used for its corrosion resistance in galvanised 16'000 steel, which accounts for c. 60% of zinc first use • China is the biggest consumer of zinc accounting for c. 48% 12'000 of global demand • Urbanisation and industrialisation in China has 8'000 resulted in a sharp increase in per capita zinc consumption (from 4.8kg per head in 2015 to an 4'000 estimated 6.0kg per head by 2031)
0 2000 2005 2010 2015 2020 2025 2030 2035 China Asia (ex. China) Russia and Caspian Europe North America Other
• Continued positive global industrial production growth
Demand • World consumption growth is forecast to average 1.9% p.a. from 2018 to 2023 with consumption expected to grow from 14.4Mt in 2017 to 16.2Mt in 2023 outlook (3) • Ongoing urbanisation and industrialisation of the developing world will be a key driver
• Growing demand requires the construction of new smelter capacity around the end of the decade
(1) AME (3) WoodMckenzie LTO Q2 2018 12 (2) Wood Mackenzie Key investment highlights
#3 Strong macro Robust industry backdrop fundamentals Additional concentrate production will return the market to balance
LME zinc price
LME Zinc price (USD/t) SHFE zinc stocks (kt) (USD/t) 800 LME Zinc stocks 3'500
700 3'000 600
500 2'500
400
2'000 300
200 1'500 100
0 1'000 Jul- Jan- Jul- Jan- Jul- Jan- Jul- 2015 2016 2016 2017 2017 2018 2018
• The average annual requirement for new mine production is 500kt/a from 2017 to 2024
• Global mine production is forecast to increase by 10% in 2018 with 1,255kt of new production and Supply expected to stabilise over the medium to long term. Major capacity additions in 2017 include: outlook • Antamina 165kt, Rampura Agucha 150kt, Sindesar Khurd 50kt, Bisha 50kt and Penasquito 35kt (1) • Although still tight this additional capacity will move the concentrates market to balance in 2018, with a small surplus expected in 2019. Tightness is forecast to continue through to 2020
(1) Source: Wood Mackenzie long term outlook Q2 2018 13
Key investment highlights #3 Robust industry backdrop
Zinc Market and Treatment Charges Treatment charges and metal price relationship • Mines and Smelters operate in a symbiotic relationship of dependence at the top end of the zinc market: • Concentrate surplus • Surplus metal and concentrates • Power shifts to (1) smelters • They share zinc price exposure through free metal and • LME price falls (2) • TCs increase escalators on treatment charges , negotiating these TC • Mines cut production • Smelters increase terms between each other production
• Over the medium term zinc smelters receive a relatively • Concentrates draw • Metals draw down constant share of the total value, with the zinc price having down • LME price increases been positively correlated with TCs in the past • Power shifts to • Miners increase miners production • TCs fall • Over the short term however, market dynamics influence the We are here balance between metal prices and the treatment charges Treatment Charge and LME zinc price negotiated between smelters and mines
Share % • The 2018 benchmark zinc TC, settled at the end of April 100 2018, of USD 147/dmt represents an historical low as 90 percentage of the payable zinc price 80 70 • As the bottleneck moves from concentrates to refining 60 50 capacity pricing power shifts to smelters, possibly leading to 40 a period of sustained high prices and rising TCs 30 20 10 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
Smelter Share, % Mine Share, %
(1) Zinc smelters only pay for 85% of the metal contained in concentrates, but are able to recover approximately 96%. The difference is free metal (2) Escalators and de-escalators were set at 0% for the 2017 and 2018 benchmark terms 14 Key investment highlights #3 Robust industry backdrop Proactive approach to risk management During the implementation of the transformation and turnaround strategy, the company has taken prudent measures to mitigate downside risk on Zinc price and currency 4,000 H2’18: $3,842 Call Upside from $3,117 Zinc Price 3,500 Upside from $2,800 H1’18: $3,094 Call . Zinc hedge collars were effected to 3,000 $2,437 Call protect 50% of free metal in H2 2018 Q2-Q4’17: $2,543 Call 2,500 $2,496 Call on the recent market move higher H2’18: $2,600 Put . 2,000 Q2-Q4’17: $2,172 Put H1’18: $2,300 Put 100% of Zinc Mining free zinc for 2019 $2,100 Put $2,127 Put (166kt) hedged during Q2 2018 at c. ZINC PRICE 1,500 USD 3,000/t Jan.16 Jul.16 Jan.17 Jul.17 Jan.18 Jul.18 Jan.19 . Nyrstar will continue to implement zinc price and FX hedges on a rolling 6-9 month basis to protect downside risk
1.30 1.15 Call 1.14 Call 1.18 FX 1.20 1.10 Call . EUR-USD hedges have been entered 1.10 into for H2 2018 and H1 2019 at 1.18 1.08 Put covering 100% of total transactional 1.05 Put 1.00 expenses 1.00 Put
EUR - USD FX RATE 0.90 . Jan.16 Jul.16 Jan.17 Jul.17 Jan.18 Jul.18 Jan.19 AUD-USD hedges cover 100% of total transactional expenses for H2 2018 and H1 20191
0.85 H2’16: 0.83 Call 2017: 0.81 Call 2018: 0.80 Call 0.80 . CAD-USD hedges cover 100% for H2 2018 and FY 20192 0.75 2018: 0.69 Put 0.70 H2’16: 0.68 Put H1’17: 0.68 Put Other - USD D FX RATE 0.65 H1’17: 0.62 Put . All FX and commodity exposure for
AUD 0.60 Myra Falls hedged until end 2019 Jan.16 Jul.16 Jan.17 Jul.17 Jan.18 Jul.18 Jan.19
1 100% of H2 2018 AUD-USD exposure buying 0.70 puts and selling 0.80 calls; 100% of H1 2019 AUD-USD exposure is hedged with a fixed forward at 0.76 2 100% of H2 2018 CAD-USD exposure buying 1.32 puts and selling 1.36 calls; 100% of 2019 CAD-USD exposure is hedged with a fixed forward at 1.32
Key investment highlights #4 Significantly enhanced liquidity, capital structure and maturity profile Further funding activities planned to extend maturities and maintain strong liquidity position
Outstanding balances at 30 June 2018 (€m) Continued proactive approach to balance sheet management
Drawing Capacity Maturity €m €m • Continue to monitor the market for additional opportunistic Structural Debt financings to further strengthen the balance sheet, extend the 2018 Convertible Bond 29 29 Sept 2018 existing maturity profile and maintain strong liquidity 2019 High Yield Bond 350 350 Sept 2019 • Rollover prepays to offset amortisation profile 2022 Convertible Bond 115 115 July 2022 2024 High Yield Bond 500 500 Mar 2024 • Issuance of new HY bond to address 2019 maturity Structural Debt 994 994
Outstanding maturity / anticipated amortisation profile Working Capital Facilities KBC SCTF 300 600 Dec 2021 Loan from Related Party (Trafigura) 0 215 Dec 2019 €50m Trafigura facility KBC 0 50 July 2019 All Prepays Working capital facilities 300 865 €31m SCTF €215m HY Bonds Prepays in Other Financial Liabilities / Convertible bonds Deferred Income Zinc Prepay (May-2018) – 12 month grace 107 May 2021 €124m Silver Prepay PPR 34 Aug 2019 Silver Prepay (Apr-18) – 6 month grace 43 Apr 2019 Silver Prepay (Jun-17) – 10 month grace 26 Sep 2018 €600m Silver Prepay (Dec-17) – 10 month grace 52 July 2019 €500m Silver Prepay (Dec-17) – 12 month grace 9 Dec 2018 €350m Copper Prepay (Dec-17) – 12 month grace 26 Dec 2021 €78m Prepays 296 €115m €62m Perpetual Securities1 €29m Perpetual Securities 185 2018 2019 2020 2021 2022 2023 2024 16 1 In May 2018, Nyrstar elected to defer repayments of the Perpetual Securities and remains in full compliance with its contractual obligations relating to the financing arrangements Key investment highlights #5 Expert management and Board
Nyrstar Management Committee
Hilmar Rode Roman Matej Frank Rittner Cristiano Melcher Willie Smit Chief Executive Officer Interim Chief Financial Officer Chief Technical Officer Chief Commercial Officer Chief HR Officer
Superior operational expertise
• Strengthening of Board and management since November 2015 • Management team are fully committed to Nyrstar’s stated strategy • Focus on operational excellence with knowledge of bringing complex metals projects into production • Hilmar Rode appointed as CEO to draw on his significant metals processing experience to bring operational and technical best practices to Nyrstar: – Over 20 years of industry experience – Recently led the successful transformation at Minera Escondida – Led the restructuring and business optimisation of Kazzinc • Michel Abaza, previously Corporate Treasurer at Safran Group joined Nyrstar as CFO in July 2018 17 Key investment highlights #6 Strategic relationship with supportive cornerstone shareholder Trafigura support demonstrated through a variety of commercial and financial agreements
• This has effect for as long as Trafigura holds at least 20% but less than 50% of the shares in Nyrstar Relationship • Ensures all business dealings to continue on arm’s length basis and on normal commercial terms Agreement • Trafigura has two dependent directors on Nyrstar’s six person board
• Long term purchase agreements for approximately one third of Nyrstar’s zinc concentrate requirements (600Kdmt per annum) and zinc metal off-take sales agreements for approximately one fifth of Nyrstar’s Commercial zinc metal production (200Kt per annum) with a prepayment mechanism Agreements • Based on market prices with annually agreed premiums and TCs • Provides Nyrstar with additional certainty of supply and leverages Trafigura’s strong marketing presence
• Trafigura WC Facility upsized to US$250m on a committed basis and extended on similar terms to end 2019 Capital • Nyrstar’s May 2018 US$125m zinc prepayment facility (ultimately upsized to US$150m in July 2018) Commitment • Supported Nyrstar’s February 2016 €274m rights offering by underwriting up to €125m and participated in the November 2017 €100m placement to maintain equity holding at c. 24.6% • Leverage Trafigura’s financial relationships to achieve more beneficial terms for Nyrstar
18 Table of Contents
I. Introduction
II. Key investment highlights
III. Financial and operating results
IV. Delivering a strong future for Nyrstar
V. Appendix
19 Financial and operating results
Financial summary up to H1’18 Underlying EBITDA (€’m)
120 110 94 €m H1-17 H1-18 ∆ ∆%
Revenue 1,806 1,930 124 7% 118 MP U. EBITDA 117 118 1 1% Metals Processing 117 88 Mining U. EBITDA 15 28 13 87% 1 Mining 32 Other U. EBITDA (22) (26) (5) 18% 15 28 Group Underlying EBITDA 111 120 9 8% Other (26) (26) (22) DD&A (77) (75) 2 (3%) H1-174 H2-174 H1-18 Underlying Adjustments 2 (16) (18) - Result from discontinued 35 (4) (39) (111%) Capex (€’m) operations
Net financial expense (65) (71) (6) 9% 201 (35) (5) (86%) FX gain/(loss) 31 161 40 Income tax (expense)/ benefit 9 1 (8) (89%) 134 Port Pirie Redevelopment 64 2 Loss for the period (21) (49) (29) 133% 124 68
Capex Metals Processing 78 MP Sustaining 59 55 (5) (7%) Mining1 63 19 37 Port Pirie Redevelopment 64 2 (61) (97%) H1-17 H2-17 H1-18 MP Growth 17 13 (4) (24%) Mining 19 63 44 232% FFO and FCF (€’m) Group Capex 161 134 (27) (17%) 18
Funds From Operations (FFO) (111) 18 129 (116%) -76 -111 Free Cash Flow (FCF) (159) (58) 101 (64%) -193 -58 (FCF) -47 Net Debt4 986 1,198 212 22% -158 (FCF) FFO Interest & Finance Costs Net Debt, inclusive of Zinc 1,243 1,487 245 20% Prepay and perpetual securities -73
-266 (FCF) 1 Net Debt is short term and long term liabilities, exclusive of Zinc Prepay and perpetual securities, minus cash 20 H1 2017 H2 2017 H1 2018 Financial and operating results
H1 2018 - Consistent safety and operating performance
Lagging Safety Indicators3 Safety, Health & Environment • Significant milestones for safety were achieved in 13.6 H1 2018 at the Auby and Balen smelters reaching 2 RIR DART million and 1 million work hours DART free, 9.8 7.2 7.1 respectively 6.4 6.5 6.8
• No environmental events with material business 9.7 6.8 consequences occurred in H1’18 5.2 3.9 3.8 4.3 4.1 Production 2014 2015 2016 2017 12mma H1 2017 H1 2018 • Zinc metal production of 528kt, up 2% over H1’17 and in-line with FY’18 guidance of 1.05 to 1.1 million tonnes • Lead production at Port Pirie of 69kt, down 18% vs. Zinc metal production Lead metal production at Zinc in concentrate
H1’17 due to the major planned blast furnace per site (kt) Port Pirie (kt) per site (kt) maintenance shut in Q2’18 which impacted +30% production by 21kt +2% -18% • Zinc in concentrate production of 69kt, up 30% on 518 528 84 69 78 H1’17, primarily due to restart of MTN and Auby 82 69 11 Langlois 53 optimisation of ETN 137 Middle Balen 117 22 16 Tennessee
Budel 140 133 5
East Clarksville 59 52 36 32 Tennessee Hobart 121 129
H1-17 H1-18 H1-17 H1-18 H1-17 H1-18
21 Financial and operating results
Group underlying EBITDA – H1 2018 on H1 2017 (€m) Macro MP Mining -€24m +€44m -€11m
51 9 Other 1 (34) Group 42 Zinc Group (11) €120m €111m (7) (42) 44
118 MP MP 117
Mining Mining 15 28 Other (22) (26) Other
H1’17 Metal Strategic FX TC rate/ Metals Mining Other & H1’18 EBITDA prices hedges Other Processing Eliminations EBITDA macro5 H1’17 H1’18 ∆ Zinc price (USD/t) 2,690 3,257 21% B/M Zn TC (USD/dmt) 172 147 (15%) FX (EUR/USD) 1.08 1.21 12% FX (EUR/AUD) 1.44 1.57 9% Zinc metal (kt) 518 528 2% Zinc in concentrate (kt) 53 69 30%
22 Financial and operating results
Net Debt evolution over Q2 2018 €m (1,592) Zn Prepay & Perp Notes Net Debt (1,487) (1,439) (241) (49) 0 (28) 66 (82) (241) (290) 233 20 (57)
(1'351)(1351) (1,198)1198 (1,198)
Net Debt Group Capex Interest & Working Change Other Net Debt Change in Change in Net Debt Mar’18 EBITDA Tax Capital in Ag/Zn exclusive Zn Zn prepay Perp Notes inclusive Zn Prepays Prepay and Prepay and Perp Notes Perp Notes Jun’18 Jun’18
• Working capital inflow of EUR 240m in Q2’18 more than Working Capital movement (€’m)
offsetting the EUR 155m outflow experienced in Q1’18 33 Inflow
52 Outflow • Interest and capex in-line with expectations (13) • Amortisation of silver prepays was more than offset by the 233 issuance of new prepays in Q2’18 174 • Cash balance at the end of H1 2018 of EUR 78m with (26) 13 immediately available liquidity of EUR 643m FX Price Inventory Receivables Payables Customer Working Volume Prepays Capital Inflow
23 Table of Contents
I. Introduction
II. Key investment highlights
III. Financial and operating results
IV. Delivering a strong future for Nyrstar
V. Appendix
24 Delivering a strong future for Nyrstar
Delivering a strong future for Nyrstar Set to deliver Positive Free Cash Flow for 2018
• Nyrstar is set to become a cash flow positive business from 2018 on the basis of three key pillars:
– Locking in an earnings uplift of ~ EUR 130m1 per annum from the fully ramped-up Port Pirie Redevelopment with all major systems including slag caster and acid plant now in operation
– Delivering a step change in operational performance to unlock the full potential of the existing zinc smelter asset base
– Extracting maximum value from Mining by optimising the North American mines, including the ramp-up of the restarted Middle Tennessee Mines and restart of Myra Falls, to operate for strong free cash flow
• Balance sheet has been substantially strengthened utilising a diverse range of funding opportunities with liquidity of EUR 643m at the end of June 2018
• Zinc industry macros are supportive and fundamentals look strong
– Expecting a period of sustained demand growth
– Supply response likely to be muted
– Metal stocks are low and declining
1 EUR 130m uplift against 2016 Underlying EBITDA using 2016 macroeconomic assumptions 25
Table of Contents
I. Introduction
II. Key investment highlights
III. Financial and operating results
IV. Delivering a strong future for Nyrstar
V. Appendix
26 Appendix H1 2018 underlying EBITDA sensitivity - annualised
FY 2018 Change Estimated annual 2018 underlying EBITDA impact (€’m) Parameter average +/-10% price/rate Metals Processing Mining Group
EUR:USD* 1.21 -/+ 10% +99 (81) +12 (10) +112 (91)
Zinc price $3,257/t -/+ 10% (37) +37 (32) +32 (69) +69
EUR:AUD* 1.57 -/+ 10% (33) +27 - - (33) +27
Zinc B/M TC $147/dmt -/+ 10% (21) +21 +3 (3) (18) +18
Silver price $16.65/oz -/+ 10% (5) +5 (0) +0 (6) +6
Copper price $6,917/t -/+ 10% (2) +2 (1) +1 (2) +2
Gold price $1,318/oz -/+ 10% (1) +1 - - (1) +1
Lead price $2,456/t -/+ 10% (1) +1 - - (1) +1
Lead B/M TC $99/dmt -/+ 10% (2) +2 - - (2) +2
EUR:CHF 1.17 -/+ 10% - - - - (5) +4
The sensitivities give the estimated effect on underlying EBITDA assuming that each individual price or exchange rate moved in isolation. The relationship between currencies and commodity prices is a complex one and movements in exchange rates can affect movements in commodity prices and vice versa. The exchange rate sensitivities include the effect on operating costs but exclude the effect on the revaluation of foreign 27 currency working capital. They should therefore be used with care. Appendix Transformation EBITDA uplift driven by substantially increased throughput and margin on internal zinc smelter residues
Indicative Port Pirie Port Pirie throughput feed content1 Indicative margin per metal2 k dmt Int. Int. 2016 2020 2016-20 Internal Residues Res. Res. Lead Pb Concentrates 620 3 30 Lead ~99% (kt) Silver 0.4 3.8 Silver 75-85% (Moz) Gold Blended 5 25 Gold 80-90% 2016-20 260 (koz) Margin Copper 1 3 Copper 90-95% (kt) Lead 12-21% Zinc 360 10 25 Zinc ~15% (kt) Silver 8-17% 60 Pb Pb 2016 2020 2016 Gold 15-16% Conc.’s Conc.’s Lead 90-95% 180 220 Lead ~10% Copper (kt) 360 Silver 3 0.5-1.0% 15.0 20.0 Silver 5-7% Zinc Uplift 300 (Moz) Gold 40 160 Gold 6-9% (koz) Copper 5 6 Copper 90-95% (kt) Zinc 15 18 Zinc ~90% 2016 2020 (kt)
1 Content values presented on rounded basis 2 Indicative margin represents approx. net value capture i.e. (Payable out – Payable in / Recoveries) 3 Blended Zinc margin uplift represents increase in average zinc free metal capture at segment level attributable to Port Pire Transformation 28 Appendix Increased throughput and increased margins provide a substantial segment earnings uplift once ramped-up
1 Indicative production and consumption 2 Indicative margin %1 3 Prices2
2016 Average Production 2016 2018 2019 2020 Margin 2016 2018 2019 2020 Prices Lead (kt) 182 185 230 250 Lead 12% 19% 20% 21% Lead USD 1,872/t Silver (Moz) 15 16 21 23 Silver 8% 12% 17% 17% Silver USD 17/oz Gold (koz) 46 125 165 180 Gold 16% 16% 16% 16% Gold USD 1,250/oz Copper (kt) 5 6 7 8 X Copper 95% 90% 90% 90% X Copper USD 4,863/t = Zinc (kt, segment) 1016 1060 1060 1060 Zinc 0.50% 1.0% 1.0% 1.0% Zinc USD 2,095/t Acid (kt) 1357 1600 1725 1725 Acid n/a n/a n/a n/a Acid USD 40/t
2016 Avg Realised Consumption 2016 2018 2019 2020 Pb TC Pb conc. (k dmt) 300 280 340 360 USD 190/dmt Int Res (k dmt) 60 150 210 260 n/a
4 Indicative Gross Profit uplift less DOC = EBITDA uplift (mEUR) Indicative U.EBITDA Uplift 2018 2019 2020
Uplift in Gross Profit 66 138 164 Change in Port Pirie DOC3 (24) (34) (34) Uplift in EBITDA 42 104 130
1 Margin represents increase in net value capture i.e. (Payable out – Payable in / Recoveries) 2 Uplift based on applying 2016 annual average metal prices, FX rates and 2016 commercial terms 3 Increase in Port Pirie DOC converted to EURm applying 2016 annual average EUR:AUD FX rate 29
Appendix
2018 guidance
Production Capex
2017 2018 2017 2018
€’m Actual Guidance Actual Guidance
Metals Processing Zinc (kt) 1,019 1,050 – 1,100 Metals Processing 303 130 - 150
Mining - metal in concentrate Mining 56 70 - 90 Zinc (kt) 123 160 – 180 Group capex 362 200 - 240
• Estimated impact of maintenance shuts on 2018 Planned maintenance shuts production have been taken into account when Smelter & production step Timing and duration Estimated determining zinc metal guidance for 2018 impacted impact Auby – roaster Q2: 2 weeks Nil
Balen – roaster #5 Q2: 1 week Nil Balen – roaster #4 Q4: 4 weeks Nil
Budel – roaster #1 Q4: 2 weeks Nil
Clarksville – roaster Q3: 4 weeks 8,000 tonnes Hobart – roaster #5 Q2: 3 weeks Nil
Port Pirie – blast furnace & slag Q2: 6 weeks 21,000 tonnes fumer
Port Pirie – TSL furnace Q4: 1 week Nil
30
For further information:
Anthony Simms Head of Investor Relations & Insured Risk D: +41 (0)44 745 8157 M: +41 (0)79 722 2152 E: [email protected] www.nyrstar.com
31