Joni Lukkaroinen CEO21 Feb 2020

»Business reviewJanuary–December 2019

»January–December 2019 in brief Net sales for the financial year EUR 310.4 (325.8) million. EBITDA EUR 32.0 (32.8) million. Operating result EUR -5.6 (3.0) million. Metal prices fluctuated strongly during the year.

Nickel production increased to 27,468 (27,377) tonnes. Zinc production 55,222 (61,608) tonnes. The construction of the new battery chemicals plant progressed as planned and process

equipment installations and the establishment of the production organisation were launched.

Occupational safety matters have been systematically emphasised at the site. The discharge pipe of Lake Nuasjärvi was in operation from April to mid-July, and the

release of water was restarted in late August. The substance concentrations of purified water released from the site remained below permit levels.

Unless otherwise stated, the figures in parentheses refer to the corresponding period of the previous year.

»Safety is one of our cornerstones

»Last year was challenging with occupational safety especiallyat the battery chemicals plant construction site

LTIFR on 31 Dec 2019.

9.6

17.914.2

0,0

5,0

10,0

15,0

20,0

25,0

30,0

2015 2016 2017 2018 2019

Terrafame Partner companies Total

Rolling 12 mont lost-time injury frequency (LTIFR)

Partnercompanies appr.

735employees

Terrafame

754employees

»Battery chemicals plant’s commercial production will start in 2021

»In Europe, electric vehicle sales increased 35% compared to full year 2018

China

US & Canada

EU & EFTA

JapanAsia Pacific Other

Rest of the World

0

100

200

300

400

500

600

700

Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 Q3 2019 Q4 2019

Source: Rho Motion

Regional monthly EV sales (‘000 units)

0 %

20 %

40 %

60 %

80 %

100 %

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

NCM811

NCM622

NCM523

NCM111

NCA

LTO

LMO

LFP

»Both battery size of electric vehicles and the amount of nickel in the battery have increased

Average battery size (kWh)EV battery chemistry

0

10

20

30

40

50

60

Q12018

Q22018

Q32018

Q42018

Q12019

Q22019

Q32019

Q42019

Lähde: Rho MotionNCMXXX = N nickel, C cobalt, M manganese and their mutual relations

»Terrafame is moving forward in the value chain

RAW MATERIALS CHEMICALS/SALTS PROCESSED MATERIALS CELL & PACK DOWNSTREAM

APPLICATIONS

Nickel ore

Cobalt ore

Manganese ore

Nickel sulphate

Cobalt sulphate

Manganese sulphate

Anode materials Battery management system

Electrolyte materials

Separator materials

PRE-CURSORMATERIALS

CATHODE ACTIVE

MATERIALSCELL PACK

Electric vehicles

Plug-in hybrids

Cathode materials Battery cell

Source: Internal, 2019

Lithium ore Lithium hydroxide

»Key figures January ̶December 2019

The uncertainty of the global economy and markets’ speculation on Indonesia’s nickel ore ban affected the price development during the year.

In 2019, the average price of nickel was13,926 USD/t, which was 6% higher thanin 2018.

In Q4 2019 the average price was 15,450 USD/t which was 34.0% higher than the price in Q4 2018, but very close to the price in Q3 2019.

At the end of the year, combined LME and SHFE nickel stocks corresponded to appr. 4 (5) weeks’ demand.

Data source: Metal BulletinLME = London Metal Exchange, SHFE = Shanghai Futures Exchange

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

»Strong nickel price fluctuations continued in 2019

5 000

10 000

15 000

20 000

1.1.

16

1.4.

16

1.7.

16

1.10

.16

1.1.

17

1.4.

17

1.7.

17

1.10

.17

1.1.

18

1.4.

18

1.7.

18

1.10

.18

1.1.

19

1.4.

19

1.7.

19

1.10

.19

31.1

2.19

Nickel price development (USD/t) 1 Jan 2016–31 Dec 2019

»The price of zinc kept declining in 2019

The zinc prices have been declining, although reported stocks levels were on low levels. During the end of the year, the uncertainty of the global economy affected also to the price.

In 2019, the average price was 2,547 USD/t, which was appr. 12.8% lowerthan in 2018.

In Q4 2019, the average price was2,388 USD/t, which was 9.2% lower thanin Q4 2018 and 1.6% lower than in Q3 2019.

At the end of the year, combined LME and SHFE nickel stocks corresponded to under one week’s demand.

Data source: Metal BulletinLME = London Metal Exchange, SHFE = Shanghai Futures Exchange

1 000

2 000

3 000

4 000

1.1.

16

1.4.

16

1.7.

16

1.10

.16

1.1.

17

1.4.

17

1.7.

17

1.10

.17

1.1.

18

1.4.

18

1.7.

18

1.10

.18

1.1.

19

1.4.

19

1.7.

19

1.10

.19

31.1

2.19

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

Zinc price development (USD/t) 1 Jan 2016–31 Dec 2019

,0

5,000

10,000

15,000

20,000

25,000

30,000

35,000

Q4

2019

Q3

2019

Q2

2019

Q1

2019

Q4

2018

Q3

2018

Q2

2018

Q1

2018

,0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

Q4

2019

Q3

2019

Q2

2019

Q1

2019

Q4

2018

Q3

2018

Q2

2018

Q1

2018

»Metals production was affected by repair measures in the bioleaching as well as the metals production plant’s scheduled maintenance stoppage and power failure with its multiplier impacts in Q4

Rolling 12 month nickel production (t) Rolling 12 month zinc production (t)

»Net sales EUR 310.4 million ̶ EBITDA was at the 2018 level

Net sales (EUR million)

310.4325.8

0

50

100

150

200

250

300

350

FY 2019FY 2018

32.032.8

0

10

20

30

40

FY 2019FY 2018

EBITDA (EUR million)

-5.6

3.0

-10

-5

0

5

FY 2019FY 2018

Operating result(EUR million)

»EUR 88.5 million were used to improve productivity and increase capacity

53,188,5

28,4

42,1

0

20

40

60

80

100

120

140

2018 2019

Capital expenditure (EUR million)

Sustaining capex

Improving productivityand increasingcapacity (mainlythe batterychemicalsplant)

81,5

130,6

350322

349

345

366

0

100

200

300

400

500

600

700

800

31.1

2.20

19

30.9

.201

9

30.6

.201

9

31.3

.201

9

31.1

2.20

18

Equity and liabilities (EUR million)

764

685

682 75

0

Equity

Liabilities

685

Environmentalprovision

»Significant events after the end of the financial period

The Finnish Government decided on 6 February 2020, to grant a uranium recovery permit to Terrafame.

The end of 2019 was extremely rainy. As a result, a neutralization process was put into operation in December in order to purify and reduce the process solution. This is estimated to increase the sulphate load of water released from the area during 2020.

A new record for monthly nickel production, 2,887 tonnes, was achieved in January 2020.

»Near-term outlook

Since the end of the review period, the price of nickel in the London Metal Exchange (LME) has remained at the USD 13,000 per tonne level. Nonetheless, the fluctuation of prices has continued to be strong.

The process equipment installation work at the battery chemicals plat is progressing and the commercial production of battery chemicals will commence in early 2021.

Terrafame will continue to take measures to improve its safety culture, production and cost efficiency.

21.2.2020Dokumentin nimi

www.terrafame.com