Annual General Meeting April 28, 2017 Eva Carissimi – President & CEO Mike Boone - CFO 2 0 1 7 A N N U A L G E N E R A L M E E T I N G 1
Forward-Looking Statements This presentation contains forward-looking statements and forward-looking information within the meaning of applicable securities laws. Forward- looking statements can generally be identified by the use of words such as “anticipates”, “believes”, “plans”, “intends”, “estimates”, “are expected”, “is forecast”, “approximately” or variations of such words and phrases, or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will” be taken, occur or be achieved, or words and ex pressions of similar nature. Amongst others, the Fund has made forward- looking statements for the Fund and the Operating Trust’s future business plans and operation of the Processing Facility, Net Revenues under market terms, the sensitivity of Net Revenues under market terms, the sale of zinc metal inventory, future liabilities and obligations of the Fund (including capital expenditures), the ability of the Fund to operate profitably after the expiry of the initial term of the Supply and Processing Agreement in May 2017, the dependence upon the continuing supply of zinc concentrates and competition relating thereto, the ability of the Processing Facility to treat a more varied feed quality stream, anticipated trends in zinc concentrate supply and demand, zinc concentrate treatment charges, the anticipated financial and operating results of the Fund and distributions to Unitholders. The Fund provides this information because they are the key drivers of the business. Readers are cautioned that this information may not be appropriate for other reasons. These statements and information are based, among others, on the Fund’s current assumptions, expectations, estimates, objectives, plans and intentions regarding projected revenues and expenses, the economic and industry environments in which the Fund operates or which could affect the Fund’s activities, the Fund’s ability to attract and retain clients and consumers as well as the Fund’s operating costs, raw materials and energy supplies, all of which are subject to a number of risks and uncertain ties. Forward-looking information involves known and unknown risks, uncertainties and other factors, which may cause the actual events, results or performance to be materially different from any future events, results or performance expressed or implied by the forward-looking statements and information. As a result, the Fund cannot guarantee that any forward-looking statements will materialize. Assumptions, expectations and estimates made in the preparation of forward-looking statements and risks that could cause the Fund’s actual events, results or performance to differ materially from the Fund’s current expectations are discusse d throughout this document and in our other continuous disclosure materials available on SEDAR at www.sedar.com. Examples of such risks, uncertainties and other factors include, but are not limited to: (1) the Fund’s ability to operate at normal prod uction levels and to generate sufficient income, including because of the ongoing strike of the employees at the Processing Facility, and to make distributions; (2) the demand and price for zinc concentrate, zinc metal, sulphuric acid and copper in cake; (3) dependence upon the continuing supply of zinc concentrates and the terms of that supply; (4) the ability to manage sulphuric acid inventories; (5) changes in future zinc concentrate, zinc grade and impurity levels and their potential impact on capital expenditure and working capital requirements, operating costs, production and recoveries; 2 2 0 1 7 A N N U A L G E N E R A L M E E T I N G
Forward-Looking Statements (6) changes to the supply and demand for specific zinc metal products and the impact on the Fund’s realized premiums; (7) reliance on Glencore Canada and certain of its affiliates for sales agency services and the management, operation and maintenance of the Processing Facility, the Fund, the Operating Trust (including credit support in connection with the ABL Facility) and the Partnership, and reliance on the performance and operations of the Processing Facilities as the Fund’s sole operating asset; (8) the ability of the Fund to continue to service customers in the same geographic region and the Fund’s dependence o n key customers; (9) general business and economic conditions and the condition of financial and credit markets; (10) legislation and regulations governing the operation of the Fund including, without limitation, air emissions, discharges into water, waste including residue ponds, hazardous materials, workers’ health and safety, and many other aspects of the Fund’s operations, as well as the impact of current and future legislation and regulations on expenses, capital expenditures, taxation and restrictions on the operation of the Processing Facility; (11) loan default and refinancing risk associated with the ABL Facility; (12) the impact of costs and liabilities related to the closure, decommissioning, reclamation and rehabilitation of the Processing Facility and surrounding lands, including employee severance, pensions, and environmental and reclamation and rehabilitation liabilities if an acceptable replacement arrangement is not put in place after the expiration of the Supply and Processing Agreement; (13) the sensitivity of the Fund’s Net Revenues to reductions in realized zinc metal prices including premiums, copper prices, sulphur ic acid prices; and the strengthening of the Canadian dollar vis-à- vis the US dollar; (14) the sensitivity of the Fund’s production costs to increases in electricity rates, other energy costs, labour costs and operating supplies used in its operations, and the sensitivity of the Fund’s interest expense to increases in interest rates; (15) potential negative financial impact from a labour disrupt ion, regulatory investigations, claims, lawsuits and other proceedings; and (16) increasing transportation, labour and distribution costs; (17) changes in recoveries, reserves and capital expenditure requirements and risks of closure and decommissioning and related liabilities in respect of the Processing Facility; (18) changes in income tax laws and other risks associated with the Fund continuing as a taxable income trust; (19) transportation disruptions; and (20) the other general risks and uncertainties set out in the Fund’s continuous disclosure documents on file with the Canadian Securities Regulatory Authorities. Forward- looking information contained in this presentation is based on management’s current estimates, expectations and assumptions, which management believes are reasonable as of the current date. You should not place undue importance on forward-looking information and should not rely upon this information as of any other date. Except as required by law, the Fund does not undertake to update these forward-looking statements, whether written or oral, that may be made from time to time by the Fund or on the Fund’s behalf. All dollar amounts are in Canadian, except otherwise noted . 3 2 0 1 7 A N N U A L G E N E R A L M E E T I N G
Agenda • 2016 in Review • Recent Developments & Results • Transition to Market Terms • Q & A 4 2 0 1 7 A N N U A L G E N E R A L M E E T I N G
Eva Carissimi President and Chief Executive Officer 2 0 1 7 A N N U A L G E N E R A L M E E T I N G 5
2016 in Review • Exceeded production targets Tight concentrate market conditions 2% • Sales in line with targets • Strengthened balance sheet • Supply and Processing Agreement Reduction in per unit production renewed costs • 6 2 0 1 7 A N N U A L G E N E R A L M E E T I N G
Strengthened Balance Sheet As at Dec 31, 2015 As at Dec 31, 2016 Outstanding $92.8 million $64.0 million Debt Cash $1.9 million $2.6 million • $22.5M of senior notes paid in 2016 • ABL facility extended to November 15, 2017 providing access to $175.0M • Excess availability on ABL facility at December 31, 2016 was $93.4M 7 2 0 1 7 A N N U A L G E N E R A L M E E T I N G
Michael Boone Vice President and Chief Financial Officer 2 0 1 7 A N N U A L G E N E R A L M E E T I N G 8
Operational Highlights Zinc Metal Sales Zinc Metal Production Tonnes Tonnes 72,639 67,627 50,048 49,516 Q1 2016 Q1 2017 Q1 2016 Q1 2017 • • Metal production impacted by unionized Metal sales decline consistent with lower workers’ strike metal production • Plant operating at 50% - 60% of normal production levels 9 2 0 1 7 A N N U A L G E N E R A L M E E T I N G
Q1 Key Performance Metrics Q1 2016 Q1 2017 Zinc concentrate processed 135,727 tonnes 117,892 tonnes Secondary feed processed 1,237 tonnes 4,165 tonnes Zinc recovery 97.5% 96.9% Average realized zinc price U$0.83/lb U$1.33/lb Average LME Zinc price U$0.76/lb U$1.26/lb Average US/CDN exhange rate 1.37 1.32 Facility operating at 50% - 60% of normal production levels since start of unionized workers’ strike 10 2 0 1 7 A N N U A L G E N E R A L M E E T I N G
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