HORSEHEAD HOLDING CORP. Analysts Day May 7, 2013 Mooresboro, NC Cellhouse D of Asturiana de Zinc (same design as Mooresboro)
Legal Disclaimers Informational Purposes Only This investor presentation is being furnished for informational purposes only, and does not and shall not constitute an offer to sell or a solicitation to buy any securities of the Company. Third Party Information This presentation has been prepared by the Company based on information we have or have obtained from sources we believe to be reliable. Summaries of the terms of certain documents may be contained in this presentation and may not be complete, and we refer you to such documents for a more complete understanding of what we discuss in this presentation. The information in this presentation is current only as of the date on the cover, and our business or financial condition and other information in this presentation may change after that date. Forward Looking Statements This presentation contains statements, estimates and projections with respect to the anticipated future performance of the Company that may be deemed to be forward looking statements. You should not place undue reliance upon these statements. These statements relate to analyses and other information, which are based on forecasts of future results and estimates of amounts not yet determinable. These statements also relate to our future prospects, liquidity, possible or future results of operations, developments and business strategies. Although we believe that our plans, intentions and expectations reflected in or suggested by such forward looking statements are reasonable, we cannot assure you that we will achieve those plans, intentions or expectations. Non-GAAP Financial Measures We have included certain financial measures in this presentation, including EBITDA and Adjusted EBITDA, which are non-gaap financial measures as defined under the rules of the Securities and Exchange Commission. This presentation includes reconciliations of the non-gaap financial measures found in this presentation to the most directly comparable financial measures calculated and presented in accordance with generally accepted accounting principles in the United States. 2
Purpose of Meeting Provide an overview of the technology being deployed at the new plant Provide an update on status of construction, expected startup schedule and expected benefits Take a tour of the facility to observe the status first hand Provide an update on the transition plan for the Monaca plant and the zinc oxide plant at Zochem 3
New Zinc Plant Overview
New Zinc Plant Green Technology at a Substantially Lower Cost Current 80 year old zinc smelter utilizes a high-cost electrothermic process which produces a limited product range and faces increasing environmental pressures New plant will utilize a state-of-the-art, green technology based on solvent extraction and electro-winning technology Benefits: Lower energy usage, higher labor productivity and reduced maintenance costs Produces Special High Grade ( SHG ) and Continuous Galvanizing Grade ( CGG ) in addition to the Prime Western Grade produced by current smelter thus serving a much larger market with higher premiums Recovery of value from silver and lead in electric arc furnace ( EAF ) dust and higher premiums on SHG and CGG Positions the Company among the global low cost producers when combined with our EAF-based feed New facility is currently expected to expand EBITDA by approximately $90 to $110 million by 2014 Reduced conversion costs due to change in technology Reduced feed cost as some processes are eliminated in recycling operations and higher recovery rates Expect to capture co-product value Higher purity zinc metal sells for higher premium 7%-10% volume expansion when fully ramped up, plant being designed for future growth 5
Comparison of major items Monaca vs. Mooresboro Monaca Mooresboro Conversion Cost High Low Labor 500 250 Energy High Low Maintenance Cost High Low GHG Generation High Low Environmental Compliance with Upcoming Regulations Capital Required Compliant 6 6
New Zinc Plant Overview New plant will replace existing high temperature smelting process located in Monaca, PA with state-of-the-art, green, solvent extraction ( SX ) and electro-winning ( EW ) technology SX is the only proven technology which selectively extracts zinc from a leachate containing multiple contaminants typical of the Waelz Oxide produced from EAF dust EW is the most commonly used technology in the world for producing high purity zinc Nominal operating level of 155,000 tpy will replace existing 140,000 tpy smelter in Monaca New plant will produce SHG, CGG and PW metal Current smelter produces 140,000 tpy of zinc contained in PW metal, SSHG metal and zinc oxide Zinc Oxide business will be supplied by purchased SHG after the new zinc plant comes on-line Entered into engineering and technology licensing agreements with Tecnicas Reunidas ( TRSA ) for SX and Asturiana de Zinc ( AdZ ), a subsidiary of Xstrata, for EW in early 2011 Project capital cost of approximately $450 million is for site preparation, equipment and installation Design upgrades and scope changes evaluated, and added to the project to reduce variation in recovery process for co-metals and to reduce longer term maintenance requirements. Engineering and installation costs are coming in higher than previously estimated. August 2012 April 2013 7
New Zinc Plant Advantages New customers and markets opened through this technology Products SHG zinc metal with higher purity and premium Markets CGG market is 10x current market Allows for participation in the much larger steel continuous galvanizer segment including several of our EAFD recycling customers Expand access in the hot dip galvanizing segment to include all galvanizer needs, doubling our opportunities Exposure to the zinc die cast alloy producers. Currently, the Company has supplied some SSHG to them and purchased the residues they generate from their process SHG grade opens access to LME warehouses MARKET SEGMENTS ZINC METAL TYPE Other 134,444 11% Alloy 170,810 14% 2011 US Consumption of Zinc (1,260,688 Tons) PW 150,965 12% Brass and Bronze 182,932 14% Sheet and Strip Galvanizing 607,406 48% After Fab Galvanizing 163,096 13% SHG/CGG 1,109,723 88% Source: Management estimates. 8
Management Team
Leadership Team General Manager - Anthony Staley, Ph.D. Over 20 years experience in Metals Extraction and Processing Manager of Hydrometallurgical Operations and Technology for Freeport McMoRan s Morenci Operations, the largest installed capacity Copper SX/EW facility in the world Played a significant technical role in the startup of the Tenke-Fungarume facility in the Democratic Republic of Congo. Education Bachelors degree in Chemical and Petroleum-Refining Engineering Masters of Business and Economics Doctorate of Philosophy-Metallurgy and Materials Engineering. Multiple peer reviewed publications ranging from Gold Sampling Protocol, Copper Electrowinning and Aluminum Processing. Operations Manager Scott Hoenecke Maintenance & Engineering Manager Michael Zell Chief Process Engineer Kendall Oliphant Safety Manager Randy Cooper Environmental Manager James Harris Accounting Manager Timothy Hammett Human Resources Manager Paul Landers 10
SX-EW Process Overview
Simplified Block Diagram of Zinc SX/EW Plant Area 600 Lead Conc Waelz Oxide Wash/Leach / Skimmings Neutralization Leach Residue PLINT Process PLINT Residue Area 100 Metallic Cement SX Extraction SX Washing SX Stripping Gypsum Gypsum Precipitation Cementation SX Depletion Bleed Treatment Area 200 Manganese Dioxide Electrowinning Area 400 Effluent Final Treatment Area 300 Final Residue = Indicates Decoupled Unit Operation with significant buffer capacity SHG Zinc CGGZinc PW Zinc Area 500 Melting Casting 12
Byproducts: Lead Concentrate Gypsum Metal cement Raffinate Barren Organic Stripped Electrolyte Waelz Oxide Leaching Extraction Stage Strip Stage Electrowinning / Casting 99.99% Pure Zinc Loaded Electrolyte Pregnant Leach Solution Loaded Organic Recycles: Leach residue Effluent Final residue 13
Loaded Organic Raffinate PLS Barren Organic 14
Project Update
Project Update Project is on schedule Start-up of the SX-EW facility remains on schedule for first zinc in second half of 2013. Target start production by beginning of Q4 13. All equipment delivery is tacked and crosschecked to the schedule Lead/silver recovery circuit (PLINT) is expected to produce first lead concentrate before the end of 2013. Projected capital requirements increased since March Increase from $415M to $450M, primarily driven by completion of detailed design. Majority of increase is due to: o Electrical Packages: Under-defined Initial Scope o Engineering Services: Scope changes and Estimation Error 95% of total construction cost has either already been paid for or estimated based on firm bids from completed designs. 16
Recruiting Plan Hiring schedule: May 13, 2013 - Production Supervisors, Maintenance Supervisors, and hourly maintenance employees. July 11, 2013 Skilled operators: Control Room, Sr. Leach & SX, and Sr. Wastewater August 8, 2013 Semi-skilled: WOX unloading, Leach, SX, EW, Casting, etc. August 22, 2013 Entry & Semi-skilled: EW, Casting, PLINT, etc. September 5, 2013 Remainder: Warehouse, Janitorial, Security, etc. 17
Start-Up Estimates Our Expectations (Sept 2013 Start) 120% Max Theoretical Capacity (170 ktpa) 100% Name Plate (155 ktpa) 80% Annual Production Rate 60% 40% ZINCEX PLINT ZINCEX RampUp Expectations = 6 months to Full Production PLINT RampUp Expectations = 18 months to Full Production 20% 0% 1 Year 2 Years 3 Years 18 18
Construction Progress
Aerial June 2012 20
Aerial August 2012 21
Aerial October 2012 22
Aerial December 2012 23
Aerial February 2013 24
Aerial April 2013 25
Aerial - April WOX Unloading 26
Aerial - April Leaching 27
Aerial - April Solvent Extraction 28
Aerial - April Future - PLINT 29
Aerial - April Bleed Treatment 30
Aerial - April Electrowinning 31
Aerial - April Melting & Casting 32
Cost and volume profile Annual output (tons) Recovery 156,000 96.7% Feed required - ZnE 161,324 Horsehead EAFD-based Purchased 140,724 20,600 161,324 87% 13% Zinc co-products total 0.048 0.011 0.070 0.081 0.023 0.233 0.003 0.001 0.017 0.001 0.010 0.032 0.051 0.012 0.087 0.082 0.033 0.265 Conversion Cost Profile - $/ZnE-lb Labor Maintenance Reagents & supplies Energy Overhead Total Shipments SHG zinc metal Concentrate Pb contained Concentrate Ag contained 156,000 tons 6,259 tons 413,050 troy ounces 33
Mitigation of Risks
Primary Risks and Related Mitigation Construction Cost Overruns Over 95% of the project construction cost has been either been paid for or a fixed bid has been received. Extended Startup Significant de-coupling of process in place Experienced operators on staff, commissioning resources under contract Other solvent extraction installations reviewed/visited Lack of Liquidity Hedging program continues to provide downside protection Credit facilities in place to meet working capital needs Additional financing continues to be pursued 35
Monaca and Zochem Transition
Monaca Transition Waelz Oxide will be diverted to new zinc plant once ramp up of solvent extraction process is well underway Monaca smelting operation will consume remaining feedstock and coke, shutting down in a 4 to 6 week timeframe after zinc production has stabilized in Mooresboro. Zinc oxide and SSHG metal production will cease shortly thereafter Our plan is to build inventory of metal and oxide over the next two quarters and continue to ship out of Monaca for 2 to 3 months after idling of smelter and refinery Skeleton crew will remain Purchase Option by Shell Chemical was extended to June 30, 2013 and continues to be a preferred alternative for the site o Shell continues an active presence on the site. 37
Zinc Oxide Transition Production capacity at Monaca will be idled when the smelter idles Expansion of capacity currently underway at Zochem o Expected to be in place as capacity idles at Monaca o Will reduce our run-rate to approximately 70,000 tons p.a. o Margins expected to improve with lower cost technology, increased volume at the Zochem facility and lower, more selective volume overall. 38
Q&A