27% 5,920 5,840 5,506 5,176 15 000 Zinc 15,000 4,787 higher - PowerPoint PPT Presentation

» Interim report Q3 2018 Joni Lukkaroinen CEO 25 October 2018

» Key events in July – September  By the end of period, the cumulative net sales exceeded the sales of full year 2017.  EBITDA EUR 12.9 million and operating profit EUR 4.7 million.  Positive free cash flow from operations.  The third hydrogen sulphide production line taken into use.  Quarterly records reached in nickel and zinc production.  The major technology agreements of battery chemicals plant were made with key equipment suppliers.  Environmental safety at good level.  Production mainly in closed loop.  Emissions into waterways clearly under the environmental permit.

» Prices affected by » Metallien hinnat » Otsikko kehittyivät developments in Päivitä kuva myönteisesti global market päivitettävä päivitettävä » Nikkelin ja sinkin » Metallien hinnat hinnat kehittyivät myönteisesti

» Nickel price at higher level than the previous year Nickel price development 1 Jan 2016 – 30 Sep 2018 18,000  In Q3, average price 13,266 USD/t 18 000 which was 8.4% lower than in Q2. 16,000 16 000  Compared with 2017 Q3, average 14,000 14 000 price was 26.0% higher.  The combined stock levels of LME 12,000 12 000 and SHFE decreased by appr. 50,000t 10,000 10 000 in Q3 and were below 250,000t at the 8,000 8 000 end of September.  Price development was affected by 6,000 6 000 1.1.16 31.3.16 29.6.16 27.9.16 26.12.16 26.3.17 24.6.17 22.9.17 21.12.17 21.3.18 19.6.18 17.9.18 the unclarities related to trade between the United States and China. Day price for nickel on the London Metal Exchange (USD/t) Day price for nickel on the London Metal Exchange (USD/t), 90 day average Data source: Metal Bulletin LME = London Metal Exchange, SHFE = Shanghai Futures Exchange

» Zinc price showed a decrease Zinc price development 1 Jan 2016 – 30 Sep 2018 4,000 4 000  In Q3, average price 2,537 USD/t which was 18.5% lower than in Q2. 3 500 3,500  Compared with 2017 Q3, average price 3,000 3 000 was 14.4% lower. 2,500 2 500  The combined stock levels of LME and SHFE decreased by appr. 100,000t 2,000 2 000 in Q3 and were appr. 230,000t at the 1,500 1 500 end of September.  The price development was driven by 1 000 1,000 1.1.16 31.3.16 29.6.16 27.9.16 26.12.16 26.3.17 24.6.17 22.9.17 21.12.17 21.3.18 19.6.18 17.9.18 the effects of the United States import duties as well as the weakening demand in the Chinese market. Day price for zinc on the London Metal Exchange (USD/t) Day price for zinc on the London Metal Exchange (USD/t), 90 day average Data source: Metal Bulletin LME = London Metal Exchange, SHFE = Shanghai Futures Exchange

» Production records in main products

» Ore stacking to bioleaching continued as planned Nickel and zinc to primary bioleaching (t) 40 000 40,000 13,192 11,791 12,234 10,630 11,038 11,900 30 000 30,000 10,070 20 000 20,000 25,697 24,803 24,269 23,594 23,149 22,742 20,239 10 000 10,000 0 Q3 2018 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Nickel Zinc Q1 – Q3 2018: 34,655t Q1 – Q3 2018: 72,693t Full year 2017: 46,200t Full year 2017: 91,827t

» Quarterly records at the metals production plant Nickel and zinc production (t) Nickel 25 000 25,000 Q1 – Q3 2018 7,326 20 000 20,000 6,421 27% 5,920 5,840 5,506 5,176 15 000 Zinc 15,000 4,787 higher compared to Q1 – Q3 2018 Q1 – Q3 2017. 16,530 10 000 10,000 15,008 14,096 37% 13,772 12,242 11,204 9,791 5 000 5,000 higher compared to 0 Q1 – Q3 2017. Q3 2018 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Nickel Zinc Q1 – Q3 2018: 19,667t Q1 – Q3 2018: 45,634t Full year 2017: 20,864t Full year 2017: 47,205t

» Liikevaihto kaksinkertaistui » Liikevaihto kehittyi xxx » Liikevaihto » Liikevaihto kehittyi edellisvuoteen verrattuna VAIHDA laivakuva » Turvallisuus on kehittyi hyvin erittäin hyvin Päivitä kuva ja otsikko avainasioitamme päivitettävä Kuva vaihdettava » Työturvallisuus » Occupational safety suurennuslasin alla in focus 9 29.10.201 Dokumentin nimi 8

» Lost-time injury frequency for rolling 12 months 7.3 Lost-time injury frequency Terrafame employees 25 23.3 20 15 665 Target 2018 10 below 2.5 8.4 7.3 5 Terrafame 3.5 employees 0 2015 2016 2017 liukuva Rolling 12 months Lost-time injury frequency = number of injuries per one million person-hours worked.

» Sulphate load at a very low level Sulphate load of discharged water (t) 4 000 4,000  Sulphate management system works 3,672 efficiently. 3,000 3 000  The discharge pipe was not used during 9 August – 5 September. 2,617  No discharge to southern waterways. 2,000 2 000  2018 rolling sulphate load 16% of 1,582 annual permit quota. 1,000 1 000 475 598 0 Q3 2018 Q1 2018 Q2 2018 Q3 2018 Quarterly average 2016 Quarterly average 2017 Q1 – Q3 2018: 2,655t Full year 2017: 10,468t

» Bioleaching-based production process has 25 – 40% lower carbon footprint Mine Mine Mine Concentrator HPAL Bioleaching TERRAFAME’S PRODUCTION PROCESS Smelter Metals extraction Metals extraction Hydr. Nickel Refinery Nickel sulphide nickel sulphide Briquettes Cathodes Refinery Refinery Refinery Nickel sulphate Nickel sulphate Nickel sulphate

Kuva: Juhani Viitanen » Ylösajo ja toiminnan » Tuotannon ylösajo jatkui » Net sales exceeded » Osavuosikatsaus » Osavuosikatsaus vakiinnuttaminen jatkuivat net sales of full year 2017 Q2 2018 Q3 2018 Kuva vaihtoon Joni Lukkaroinen Joni Lukkaroinen toimitusjohtaja Kuva vaihdettava toimitusjohtaja 27.7.2018 25.10.2018 Kuva ja otsikko vaihdettava

» Q3 net sales EUR 86.0 million Net sales (EUR million) EBITDA (EUR million) 100 50 47.6 90 40 80 85.7 86.0 30 12.9 11.1 76.7 70 20 9.8 67.6 -18.4 -32.9 60 63.9 17.3 10 50 0 47.2 40 41.3 -10 30 -20 20 -30 10 0 -40 Q3 2018 Q3 2018 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q1 – Q3 2018: EUR 248.4 million Q1 – Q3 2018: EUR 33.8 million Full year 2017: EUR 220.0 million Full year 2017: EUR 13.6 million

» In January-September, close to EUR 35 million allocated to improving productivity and capacity Capital expenditure (EUR million) 100 Key capital expenditures in Q3:  Detail engineering of the battery chemicals 80 plant and related earthwork construction Q1 – Q3: Q1 –  Construction of the foundations for 60 53.0 Q3: block 2 in waste rock area 69.7  Finishing the construction of production 40 Sustaining capex block 4 in the secondary bioleaching area (EUR 18.2 million) 20  Alteration work of the hydrogen Improving productivity and sulphide plant 2 capacity (EUR 34.8 million) 0 2017 2018 2018 Q3 2018: EUR 16.4 million Full year 2017: EUR 92.1 million

» Terrafame has a good solidity 100 200 300 400 500 600 700 Equity and liabilities (EUR million) 0 242 550 31.3.2017 205 511 30.6.2017 246 557 30.9.2017 619 296 31.12.2017 613 301 31.3.2018 305 617 30.6.2018 310 616 30.9.2018 30.9.2018 Liabilities Equity 100 200 300 400 500 600 700 Value of work in progress (EUR million) 0 65.0 31.3.2017 56.3 30.6.2017 111.9 30.9.2017 138.0 31.12.2017 146.2 31.3.2018 154.0 30.6.2018 163.2 30.9.2018

» Free cash flow positive in July – September Free cash flow after sustaining capex (EUR million) 20 10 12.7 0 -12.2 -14.3 -17.4 -5.5 -10 -9.3 -20 -30 -45.7 -40 Q1 – Q3 2018: EUR -2.1 million -50 Full year 2017: EUR -89.6 million Q1 2017 Q2 2017 Q3 2017 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q3 2018 Free cash flow after sustaining capex = EBITDA - change in working capital - sustaining capex

» Board of Directors of Terrafame has made a positive investment decision

» EVs are becoming more common in traffic Outlook for deep electrification, 2017 – 2040 PHEV, FCEV, LSEV and BEV sales as % of total Source: Roskill, 2018 PHEV = Plug-in hybrid electric vehicle, FCEV = Fuel cell electric vehicle LSEV = Low Speed Electric Vehicle, BEV = Battery electric vehicle

» Battery chemicals plant project is proceeding to detail engineering  Technological alternatives for the main processes explored, detail engineering continued and earthwork construction started.  The major technology agreements were made with key equipment suppliers.  The regional economic impact of the construction and operations were published as part of the EIA reporting in October:  Export will grow appr. EUR 200 million annually.  Employment in will improve by 407 – 711 person-years.  Tax revenue will increase by EUR 88 – 90 million annually.

» Nickel is one of the main materials in lithium ion battery Plastic cover Positive terminal Ni Co Al Li Safety valve Cathode Housing, negative Separator terminal Anode Nickel Lithium Cobalt Aluminium sulphate sulphate carbonate sulphate Lithium cathode material Sources: Roskill 2017, BMO 2018