Navigating the future and on track to deliver Roland Junck CEO Euronext Financial Cocktail Brussels, 20 October 2009
Who we are Largest Producer of Refined Zinc Top 0.0% 10 Zinc Smelting Companies 5.0% (2008) 10.0% Global Presence Nyrstar Korea Zinc Xstrata Hindustan Zinc New Boliden Glencore Votorantim Huludao Zinc Teck Noranda Inc Fund 2.3% 3.9% 3.5% 3.5% 3.5% 3.5% 6.0% 4.6% 8.9% 8.1% 0 400 800 1200 Top 10 = 48% of ~11.5 million tonnes market (China = 4m) Operations on four continents - Europe, US, Australia and Asia - Workforce of 3200 skilled employees 2
Who we are Nyrstar is a leading global multi-metals business, producing significant quantities of zinc and lead as well as other products (including silver, gold and copper) Largest smelter of zinc - 1.1 million tonnes of zinc (2008) Major smelter of lead - 240,000 tonnes of lead (2008) Listed on NYSE Euronext Brussels in October 2007 3
On track to deliver Transforming today for a sustainable future Nyrstar is transforming itself in the face of challenging years for commodities Our perspective of a changing world The future outlook for the metal industry is strong Building for the future Our new strategy is clear and on the way to get executed 4
Transforming today for a sustainable future
Global financial crisis: a challenging year for commodities Index: 02.01.2008 = 100 160 140 120 100 80 Inde xe d zinc price Inde xe d le a d price Inde xe d coppe r price Inde xe d a lum inium price Commodity prices fell dramatically over 2008 as the result of exceptionally challenging financial conditions 60 40 20 jan-08 mrt-08 mei-08 jul-08 sep-08 nov-08 jan-09 mrt-09 mei-09 jul-09 sep-09 Source: www.metalprices.com 6
Challenging market conditions Zinc price, US$/tonne Nyrstar shares, 3,000 2,500 2,000 1,500 1,000 18 16 14 12 10 8 6 500 LHS: Zinc price RHS: Nyrstar share price 4 2 0 Jan-08 Apr-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 0 Source: LME, factiva 7
Fast action: smelting industry leadership by cutting production and addressing supply/demand % Global Consumption (except Nyrstar 2009) 10 4 5 2.5 1.3 1.4 0 (5) -6.5 (10) -7.4 (15) (20) -20.4 (25) 1991 2001 2009 Mines Smelters Nyrstar s production Nyrstar took bold and unprecedented action to address the supply/demand imbalance facing the smelting industry. Budel: off peak production Clarksville: off peak production Balen: care & maintenance More than 300,000 tonnes In total approx 750,000 tonnes of refined zinc cut by smelters Similarly approx 670,000 tonnes of zinc cut by mines Strong contrast compared with previous downturns Source: Brook Hunt, Nyrstar market intelligence and company announcements. 8
Results apparent: zinc prices stabilise Zinc s tocks (tonnes ) 600 000 500 000 400 000 300 000 200 000 Zinc Price (RH scale) Zinc Stocks (LH scale) 3 000 2 500 2 000 1 500 1 000 Zinc pric e (US$/tonne ) The decisive actions stabilised zinc prices: Production cuts helped to address supply/demand imbalance Growth in stocks arrested Sowed the seeds for price recovery 100 000 500 0 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 0 Source: Stocks include both LME & Shanghai Metals Exchange 9
Solid financial performance Despite challenging market conditions, strong cost management resulted in a positive EBITDA of 30 million millions* H2 2008 H1 2009 % Var Revenue 1,002 712-29% Gross Profit 420 283-33% Operating Costs 376 254-32% EBITDA 47 30-36% * Gross Profit, Operating Costs and EBITDA are on an underlying basis 10
Our strategic framework: for a sustainable future New vision: The partner of choice in essential resources for the development of a changing world Target: Financial return and scale Strategic focus Portfolio management Business improvement Growth 11
Transformational changes Significant progress in pursuing transformational changes to create a lean, efficient, dynamic and flexible business focused on creating value On track to deliver cost savings On track to deliver sustainable annual cost savings of 75 million by end 2010 Aggressively increased from 50 million Comprising 30 million employee costs, 45 million other costs On track to reduce head count On track to reduce headcount by 500 (15%) by end 2010 300 in H1 2009 Timing All initiatives to be completed by end 2010 Once-off restructuring expenses completed, with 24 million in 2008 and 16 million in H1 2009 12
Our perspective of a changing world
The key global trends affecting Nyrstar in the long-term is the scarcity of resources Global mega-trends Limited resources, unlimited demands resource demand rapidly outpaces supply (oil, gas, coal, water, biomass, most relevant metals) New consumers over 1 billion new consumers, predominately in China and India; ageing population Shifting centres of economic activity dramatic realignment of GDP, oil windfall in the Gulf, urbanization Climate change carbon productivity or adaptation becoming the dominant factor in all business decisions The overburdened public sector productivity gains in the public sector needed to avoid massive tax increases The social cost of the free market companies increasingly have to answer not just to shareholders but also to stakeholders Social life in a technological world connectivity transforms the way we live and interact Turbulent tides of talent supply and demand for global talent is shifting to Asia for low cost and highly skilled talent New global industry structures barbell-like industry structures, increasing global capital flows The new economies of knowledge ubiquitous access to information, science of management Source: McKinsey Global Institute 14
Economic growth drives demand Normalised real and wealth adjusted GDP/capita* US$/capita Real copper price US$/t Europe post-war Japan s reconstruction industrialisation 11 years 12 years China s urbanisation 25 years? China is continuing to develop and this process will lead to greater demand for resources Real zinc price US$/t 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020 * World average GDP/cap used to deflate GDP/cap for individual countries to 1940 levels. This normalises GDP level to a single time point. GDP measured in 1990 International Geary-Khamis dollars. Inflation and PPP adjusted wealth levels Source: Angus Maddison; Tex Report; USGS; Global Insight 15
Tumbling investment in resources supply Spending in recent years was in part catching up for low investment in the 1990s Capital expenditure estimates for global mining, US$bn 43 59 +22% 72 92 108 116 136 135 52 62 How quickly will capex be restored? 2003 2004 2005 2006 2007 2008 2009E 2010E 2011 2012 2013 2014 2015 150 120 Supply response will lag resumed demand Capex budgets will lag behind resumed demand Additional delay on projects as feasibility studies need to be redone For zinc: end of life of mine for several mines Pre-crisis Post crisis Source: McKinsey Basic Materials Institute 16
Our perspective of a changing world Cyclical short-term outlook World economy and metals markets have reached a turning point. Markets are likely to remain volatile in the short term. Structural outlook Medium to longer term expectations for strong metals consumption increase based on BRIC industrialisation and urbanisation remain intact Fall-out from recession and credit crunch will reduce the capacity of metals supply to respond to rising demand Market outlook We believe the resources outlook is positive and provides opportunities 17
Building for the future
Opportunity through upstream integration Zinc smelter value share 100% 3500 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 3000 2500 2000 1500 1000 500 0 Zinc price US$tonne Upstream integration provides a greater exposure to metal prices throughout the cycle Smelters'share of zinc value Miners'share of value Zinc price Note: Zinc prices are annual average cash settlement in nominal terms Source: CRU, LME, McKinsey analysis 19
Mining valuations appear conservative Global Mining EBITDA 2008-2009, USD Billions Volume Cost 15 15 Price Volume Cost 20 35 Price 115 The opportunity exists for Nyrstar to selectively grow into mining now March 2009 valuations assume EBITDA of $150 to $170 bn 2008 EBITDA Optimistic case 2009 EBITDA High Case Pessimistic case 2009 2009 EBITDA EBITDA Low from Case valuations Source: McKinsey Mining model; Mar 2009 EBITDA Multiples 2008 2.45, 2009 high case 3.2, 2009 low case 4.3 20
Future Strategy We will: Continue to improve and expand our existing business Selectively pursue opportunities in mining, favouring: mines that support our existing business markets where Nyrstar has existing expertise (Zinc, Lead, Silver, Gold, Copper) and proven capability Our aim is that smelting and mining will both provide valuable contributions to our earnings An integrated Nyrstar could facilitate broader industry consolidation 21
Resources for a changing world East Tennessee Zinc Tennessee Mines, US Acquired Gordonsville zinc mine complex in May 2009 Agreed to acquire East-Tennessee Zinc mine complex in Sep 2009 Combined annual production capacity: 210,000 dry metric tonnes zinc concentrate (130,000 tonnes zinc in concentrate) Record of one-for-one reserve replacement Gordonsville 22
Resources for a changing world Citronen zinc deposit, Greenland Citronen Zinc Deposit, Greenland Agreed to acquire 19.9% of Ironbark in September 2009 (owner of world class Citronen deposit) Resource (indicated and inferred) of 56 million tonnes at 5.4% zinc and 0.6% lead Coricancha Mine, Peru Agreed to acquire 85% interest in Coricancha poly-metallic mine in Peru in October 2009 Annual production capacity (post expansion): 45,000 oz gold, 2.4 million oz silver 20,000 dry metric tonnes zinc concentrate 15,000 dry metric tonnes lead concentrate Coricancha, Peru 23
Questions & Answers 24