Due Diligence and Valuation Report

Arrowhead Code: 41-01-07 Company: 5N Plus Incorporation

Coverage initiated: 28 03 2017
Ticker: TSX: VNP
This document: 04 10 2018
Headquarters: Quebec, Canada
Fair share value bracket: CAD4.55 to CAD5.00i
Share price on date: CAD3.31ii Chairman: Luc Bertrand

Analyst Team Website: http://www.5nplus.com/

Natasha Agarwal Sumit Wadhwa
[email protected] [email protected]

from the various metals is not directly related to

Market Data
the metal market price level.
52-Week Range: CAD 2.22 – CAD 3.73iii
The Electronic Materials segment operates in
Average Daily Volume: 88,975iv
North America, Europe and Asia. This segment
Market Cap. on date: CAD 279.1MMv
manufactures and sells refined metals,
Fiscal Year (FY) 1st January – 31st compounds and alloys, primarily used in a
December number of electronic applications. Typical end-
markets include photovoltaics (terrestrial and
Summary spatial solar energy), light emitting diodes
5N Plus is the leading producer of specialty (LED), displays, high-frequency electronics,
metal and chemical products. Fully integrated medical imaging and thermoelectrics. Main
with closed-loop recycling facilities. They are products are related to the following metals:
headquartered in Montreal, Quebec, Canada and cadmium, gallium, germanium, indium and
operate in manufacturing facilities and sales tellurium. These are sold either in elemental or
offices in several locations in Europe, North as alloyed form as well as in the form of chemicals,
well as South America and Asia. 5N Plus installs compounds and wafers.
a range of proprietary and proven technologies
This segment is tagged as Eco-Friendly Materials
to produce products which are put into use in a
segment because of its association with
number of advanced pharmaceuticals, electronic
bismuth, one of the very few heavy metals
and re applications. Their product palette
which have no detrimental effect on either
includes purified metals such as bismuth,
human health or in the environment. This has
gallium, germanium, indium, selenium and
resulted into increased usage of Bismuth in a
tellurium, inorganic chemicals based on such
number of applications as a replacement for
metals and compound semiconductor wafers.
more harmful metals and chemicals. The Eco-
Many of these are critical precursors and key
Friendly Materials segment operates in North
enablers in various high profile markets.
America, Europe and Asia. It manufactures and
The company has two reportable segments, sells refined bismuth and bismuth chemicals,
namely Electronic Materials and Eco-Friendly low melting point alloys as well as refined
Materials. Important to mention, the revenue selenium and selenium chemicals. The finished
line for both segments includes an important products are used in the pharmaceutical and
metal price component, which is a flow through animal-feed industry as well as in a number of
for the company, sourcing its commercial grade industrial applications including coatings,
metals externally and via its recycling facilities. pigments, metallurgical alloys and electronics.
For this reason, the revenue line varies to a very
During Q2FY18, 5N Plus continued to focus on
large extent with the metal market prices while
its growth initiatives while improving its core
the premiums charged on the products made
activities. The company reported an EPS of

5N Plus Inc. – Arrowhead BID 1 TSX: VNP

Due Diligence and Valuation Report See important disclosures on page 32 of this report
$0.04 per share. Revenues in Q2FY18 increased opportunities based on existing and non-organic
by 3.8% YoY to USD 58.4MM, supported by a competencies compatible with the corporate
favorable sales mix and strong product demand. DNA. 5N21 focuses on three major pillars:
This was especially notable for the Extractive
• Optimizing balance of contribution from
and Catalytic Materials, which is on track to
upstream and downstream activities;
reach higher levels since its inception a few
• Extracting more value from core
years ago and the company’s ultra-high purity
businesses and global asset; and
materials, which is currently running at full
• Delivering quality growth from both
capacity. However, an increase in cost of sales
existing and future M&A opportunities.
by 6.8% YoY led to a dip in the gross margins to
26.5% in Q2FY18 compared to 28.5% in 5N21 is built on the company’s strengths and
Q2FY17. The consolidated adjusted EBITDA also aims to grow earnings while reducing risk and
decreased by 2.9% YoY from USD 9.2MM in volatility associated with its business.
Q2FY17 to USD 8.9MM in Q2FY18. In H1FY18,
Along this path, the business is viewed in two
the revenue growth was almost flat, but
distinct parts; Upstream and Downstream
adjusted EBITDA increased by 6.1% YoY to
activities. The Upstream part starts with
$16.9MM, from $15.9MM in H1FY17, supported
procurement of feeds, by-products,
by a favorable sales mix, strong product
concentrates, wastes which contain metals
demand and overall performance of operating
essential to the product business (Downstream
activities. Annualized Return on Capital
business). The company extracts these metals
Employed (ROCE) rose to 16.8% in H1FY18
using metallurgical technologies. The Upstream
compared to 15.6% at FY17.
part does not include mining - they are not
The company also announced the doubling of engaged in mining. Going forward they expect
the capacity of its ultra-high purity their investments in this area will enable them
semiconductor plant located on its Montreal to valorize more metals from secondary streams
campus to serve the growing demand for the which should grow their bottom line
company’s specialty semiconductor materials, performance. In the Downstream portion of
which are becoming the materials of choice for their business, they utilize upstream valorized
advanced sensing and imaging technologies metal as a consumable to produce various
utilized in a new generation of medical devices, material for a whole host of industries. Their
and in security and defense applications. aim is to grow their value-added activities and
move further Downstream. They embrace
The company has been consistently
technologically complex sectors which enable
transforming its production by moving towards
pricing power – they believe complexity can
engineered products and high purity metals,
serve as an entry barrier. In this bimodal
thus, moving towards value addition and
approach, upstream business benefits from
therefore, margin expansions. Such
higher metal prices and downstream business
developments highlight the company’s progress
benefits from lower metal prices; together they
toward the objectives related to the second and
will enable to grow earnings while reducing
third pillar of 5N21, which are to increase
earnings volatility. With this model the company
contribution from upstream activities and to
should be able to generate market competitive
deliver quality growth from new initiatives.
returns independent of metal prices.
The company divulged its Strategic Plan 5N21
5N Plus continued to make progress towards its
(“5N21”) designed to amplify profitability while
strategic initiatives to position its business
lowering earnings volatility on 12 September
segments with emphasis on higher value-added
2016. The principal thrust of 5N21 is to
downstream markets and further expansion into
selectively extract value along the current
upstream activities.
value-chain while also addressing emerging

5N Plus Inc. – Arrowhead BID 2 TSX: VNP

Due Diligence and Valuation Report See important disclosures on page 32 of this report
5N Plus exercised its right to partially redeem its and managing working capital, while also
5.75% convertible unsecured subordinated selectively growing its existing portfolio of core
debentures maturing on June 30, 2019, for an businesses.
aggregate principal amount of CAD 40MM.
Following such partial repayment, the aggregate
Valuation
principal amount of debentures outstanding is
5N Plus operates in a high-potential market and
CAD 26MM, thus, reducing future cost of the
manufactures a diversified range of products.
company’s gross debt. 5N Plus also announced
The company is an industrial leader in specialty
the closing of a USD 79MM Senior Secured
metals and chemical products.
Multi-Currency Revolving Syndicated Credit
Facility, with a USD 30MM accordion feature Arrowhead believe that the increased focus on
which would increase the total size of the facility higher-margin products along with additional
to USD 109MM, replacing its existing USD 50MM investments to increase the plant capacity will
credit facility. Further, the company made a lead to margin expansion.
drawdown of USD 30MM to partially redeem its
Given due diligence and valuation estimations
debentures.
based on discounted cash flow (DCF), we
5N Plus will continue to focus on improving believe that the fair share value of 5N Plus lies
capacity utilization, increasing production yields, between CAD 4.55 and CAD 5.00.

Table of Contents

Company Presentation ................................................................................................................................................................ 4

5N21 Strategic Plan: .................................................................................................................................................................... 8
News .......................................................................................................................................................................................... 13
Listing Information ..................................................................................................................................................................... 17
Major Shareholders ................................................................................................................................................................... 17
Management and Governance .................................................................................................................................................. 18
Assets and Projects .................................................................................................................................................................... 19
Technologies and Market .......................................................................................................................................................... 24
Value .......................................................................................................................................................................................... 29
Valuation .................................................................................................................................................................................... 31
Analyst Certifications ................................................................................................................................................................. 32
Notes and References ................................................................................................................................................................ 33

5N Plus Inc. – Arrowhead BID 3 TSX: VNP

Due Diligence and Valuation Report See important disclosures on page 32 of this report
Company Presentation
Listed on the Canadian Stock Exchange (TSE: VNP), the specialty metals and chemicals 5N Plus supplies
are key components in countless consumer and industrial products. They go into making the digital
devices we carry in our pockets, and into satellites circling the earth. Customers use its products to
make thin-film solar panels, pharmaceuticals, LEDs (light emitting diodes) and a multitude of other
items that are essential to our way of life.

Headquartered in Montreal, Canada, and with strategically located facilities around the world, 5N Plus is
among the leading suppliers of specialty metals, alloys and related chemicals. Beyond being a trusted
supplier, they strive to be a business partner. This means:

• Deploying proprietary and proven technologies to meet the specifications customers demand

• Securing long-term sourcing contracts with primary producers so that customers can depend on
them

• And offering value-added services such as cradle-to-cradle recycling and R&D partnerships

With multiple facilities on three continents, 5N Plus is strategically situated close to resources, suppliers
and customers. Their growing Asian presence includes minor metal recovery facilities in Laos and
Malaysia, a bismuth chemical manufacturing facility and an ultra-high purity gallium processing facility in
China, and a partnership in South Korea for gallium chemicals production.

5N Plus has undertaken some strategic initiatives to overcome and offset the impact from global
volatility and commodity price fluctuations. On 12 September 2016, the company released its Strategic
Plan 5N21 with the aim to improve profitability and reduce volatility in its earnings. The footprint
optimization initiatives announced in Sep-2016, was completed in Nov-2017. All the key product lines
which were formerly produced at its Wellingborough, UK are now produced at the other plants within the
group, explicitly plants in Canada, Germany and China. The company expects to realize the benefits
from the above initiatives by FY18.

Premiums

Leading supplier of metals having multiple applications: 5N Plus is a leading manufacturer and supplier
of metals like bismuth, tellurium, gallium, indium among others. Bismuth, having multiple uses in the
pharmaceutical and electronic industry, is being widely substituted for lead, and germanium and
tellurium are highly demanded in the satellite and solar power generation. 5N Plus has acquired
certifications to supply bismuth products to FDA and GMP standards. It also has a significant position in
the supply of germanium, tellurium, gallium and indium.

Specialized in manufacture of high quality micro powders: The company has made significant
investments in developing high performance atomizing technology over the past years. This has helped
the company to efficiently manufacture fine metallic powders, known as micro powders. The demand for
these powders has grown significantly in the electronics industry where its main application is in the
production of solder pastes and conductive adhesives in mobile device and automotive applications. The
micro powders technology of 5N Plus has distinct properties for preparing powders with consistent
shape, uniform size distribution and controlled purity, ideally suited to meet the challenges of these
demanding markets.

International market leader in the production of LMPA: Low melting point Alloys (LMPA) are fusible alloys
which are made with bismuth, lead, tin, cadmium and indium. LMPA-type alloys have a melting point
below 450F (233C). Major applications of these alloys are seen in optics, radiation screening, fusible
core technologies, and in architecture and construction. 5N Plus has expertise in the production of such
alloys. The company also sells customized LMPA’s which meet customer specifications and needs.

5N Plus Inc. – Arrowhead BID 4 TSX: VNP

Due Diligence and Valuation Report See important disclosures on page 32 of this report
Diversification in terms of product mix and geography: The Electronic Materials and Eco-Friendly
Materials segments operate in the United States, China, Japan, Germany, France, United Kingdom, and
others, with none of the countries contributing more than 20% to the total revenues. 5N Plus also
manufactures a wide variety of products for the solar, pigment, medical sectors and some others that
find usage in chemical applications such as coatings, pigments, alloys, and electronics.

Revenue segment by geography, Q2FY18

2% 3% 2%
19%
21%

2%

14%

23%
4%
10%

China Japan Rest of Asia United States

Rest of Americas France Germany United Kingdom
Rest of Europe Others

Source: Company Fillings

Promoting sustainable development through recycling initiatives: 5N Plus has formulated sustainable
development policies to reduce the adverse impact on the environment. One of the initiatives to reduce
environmental impact is the adoption of recycling its by-products. 5N Plus’ extensive know-how of the
industry processes has enabled it to help smelting operations across the world, to utilize the full
potential of their mining sites and its by-products. 5N Plus has developed unique technologies which
recover and treat the by-products and scrap generated in the metallurgical process. The company
promotes recycling of industrial waste generated by its manufacturing process and has set targets that
will ensure minimal environmental impact. The company has set up recycling plants in three continents
namely, Eisenhüttenstadt (Germany), Kulim (Malaysia), Montreal (Canada), and Vientiane (Laos).

Experienced management team: The company’s management personnel have relevant experience and a
wealth of knowledge and expertise, which helps them achieve strategic objectives such as improving
bottom-line performance and extracting appropriate value from existing assets. On an average, each
senior management member has an industry experience of about 20 years.

Risks associated

5N Plus is subject to a number of risk factors which may limit the company’s ability to execute its
strategy and achieve its long-term growth objectives. The management analyses these risks and
implements strategies in order to minimize their impact on the company's performance.
Risks associated with growth strategy: 5N Plus’ strategic plan is designed to enhance profitability while
reducing earnings volatility and is found on three pillars of growth: first, optimizing balance of
contribution from upstream and downstream activities; second, extracting more value from core
businesses and global asset; and third, delivering quality growth from both existing and future M&A
opportunities. There is a risk that some of the expected benefits will fail to materialize or may not occur

5N Plus Inc. – Arrowhead BID 5 TSX: VNP

Due Diligence and Valuation Report See important disclosures on page 32 of this report
within the time periods anticipated by management. The realization of such benefits may be affected by
a number of factors, many of which are beyond our control.

International operations: Commodity prices may fluctuate owing to various reasons that are beyond the
control of the company, including economic conditions, currency exchange rates, global demand for
metal products, trade sanctions, tariffs, labor costs, competition, overcapacity of producers and price
surcharges, in turn affecting the results of its operations and cash flows. Although the company operates
primarily in countries with relatively stable economic and political climates, there can be no assurance
that its business will not be adversely affected by the risks inherent in international operations.

International trade regulations: The company does business in a number of countries from various
locations due to which it faces risks associated with changes to International trade regulations and
policies. Some of these risks include barriers to or restrictions on free trade, changes in taxes, tariffs
and other regulatory costs. Although the company operates primarily in countries, with proximity to its
clients and suppliers, and with relatively stable economic and political climates, it is not sure that its
business will not be adversely affected by the risks inherent to the changing international political
landscape and its impact on global trade.

Environmental regulations: The operations of the company involve use, handling, generation,
processing, storage, transportation, recycling and disposal of hazardous materials due to which it is
subjected to extensive environmental laws and regulations at the national, provincial, local and
international level. These environmental laws and regulations relate the discharge of pollutants into the
air and water, the use, management and disposal of hazardous materials and wastes, the clean‐up of
contaminated sites and occupational health and safety. The company has incurred and will continue to
incur capital expenditures in order to comply with these laws and regulations. Additionally, violations of,
or liabilities under, environmental laws or permits may result in imposition of restrictions on the
company’s operating activities or may subject the company to substantial fines, penalties, criminal
proceedings, third party property damage or personal injury claims, clean‐up costs or other costs.
Though the company believes that currently it complies with applicable environmental requirements,
future developments like more aggressive enforcement policies, the implementation of new, more
stringent laws and regulations, or the discovery of currently unknown environmental conditions may
require additional expenditures having materially adverse effect on its business, results of operations
and financial condition.

Competition risk: 5N Plus is a leading producer of specialty metal and chemical products and has a
limited number of competitors. Few of its competitors are as fully integrated as the company is and offer
similar range of products. As a result, they have limitation to provide differentiated products. However,
it cannot be assumed that this situation will continue in the future and competition could arise from new
low‐cost metal refiners or from certain customers who could decide to backward integrate. Greater
competition could have an adverse effect on the revenues and operating margins if the competitors gain
market share and the company is unable to compensate for the volume lost to its competition.

Commodity price risk: The purchase price and availability of various inputs fluctuates due to numerous
factors beyond the control of the company, including economic conditions, currency exchange rates,
global demand for metal products, trade sanctions, tariffs, labor costs, competition, over capacity of
producers and price surcharges. Fluctuations in availability and cost of inputs may materially affect the
business, financial condition, results of operations and cash flows of the company. The company’s
inability to pass on any increases, its business, financial condition, results of operations and cash flows
may be materially adversely affected.

Sources of supply: The company is unsure whether it will be able to secure the critical raw material
feedstock on which it depends for its operations. Currently, the company procures its raw materials from
a number of suppliers with whom it has had long‐term commercial relationships. The loss of any one of
these suppliers or a reduction in the level of deliveries to the company may reduce the production

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Due Diligence and Valuation Report See important disclosures on page 32 of this report
capacity and impact deliveries to its customers. As a result, the sales and net margins will be negatively
impacted resulting in additional liabilities with respect to some of the supply contracts.

Protection of intellectual property: Protection of the proprietary processes, methods and other
technologies is important to the business of the company. To safeguard its intellectual property, the
company relies almost exclusively on a combination of trade secrets and employee confidentiality
agreements. The company has deliberately chosen to limit its patent position to avoid disclosing
valuable information. If the company fails to protect and monitor the use of its existing intellectual
property rights it might lose out on its valuable technologies and processes.

Inventory price risk: The company monitors the risks associated with the value of its inventories in
relation to the market price of such inventories. The highly illiquid nature of many of its inventories
forces the company to rely on a combination of standard risk measurement techniques, such as value at
risk as well as a more empirical assessment of the market conditions. Decisions on appropriate physical
stock levels depend on both the value at risk calculations and the market conditions.

Business interruptions: Business interruptions might result in losses for the company. In many
instances, especially those related to long‐term contracts, the company has contractual obligations to
deliver product in a timely manner. Any disruption in activities leading to a business interruption could
harm the customers’ confidence level and lead to the cancellation of contracts and legal recourse against
the company. Although the company believes that it has taken the necessary precautions to avoid
business interruptions and carry business interruption insurance, there is still probability of experiencing
interruptions which would adversely impact its financial results.

Dependence on key personnel: The smooth functioning of company’s operations are dependent on the
expertise and know‐how of its personnel. The loss of any member of the senior management team could
have a material adverse effect on the company. The future success also depends on the company’s
ability to retain and attract key employees, train, retain and successfully integrate new talent into the
management and technical teams. Recruiting and retaining talented personnel, particularly those with
expertise in the specialty metals industry and refining technology is crucial for the success of the
company and may prove difficult. The company cannot provide assurance that it will be able to attract
and retain qualified personnel when needed.

Collective agreements: A portion of 5N Plus’ workforce is unionized and the company is party to
collective agreements that are due to expire at various times in the future. The inability of the company
to renew these collective agreements on similar terms as they become subject to renegotiation from
time to time, could result in work stoppages or other labor disturbances, such as strikes, walkouts or
lock‐outs, potentially affecting the performance of the company.

Risks associated with public issuer status: The shares of 5N Plus are publicly traded and, as such, the
company is subject to all of the obligations imposed on "reporting issuers" under applicable securities
laws in Canada and all of the obligations applicable to a listed company under stock exchange rules.
Compared to privately owned competitors, the company faces the risk associated with a public issuer
status regarding disclosure of key company information.

5N Plus Inc. – Arrowhead BID 7 TSX: VNP

Due Diligence and Valuation Report See important disclosures on page 32 of this report
5N21 Strategic Plan:
On 12 September 2016, management unveiled its strategic plan aimed at improving profitability,
addressing earnings volatility and delivering quality growth. Since then, the management has steadily
progressed on its strategic plans. 5N21 utilizes three main pillars to achieve this goal:

Process of Upstream and Downstream Activities

Source: Company filings

1st Pillar: Extracting more value from core businesses and global assets
Higher contribution from core business: Over the past years, 5N Plus has been successful in increasing
its penetration across a number of downstream related products, platforms and market sectors through
both M&A and organic investments. With the current portfolio, it is time to consider all activities through
a view of selectivity in order to optimize value across their various platforms. To do this, the company
has divided the businesses in three distinct pillars.
• Those which create appropriate value and remain critical for the company’s future growth,
• Those which are no longer seen as viable and must address, and
• Those which need to be moved either to the former or accept the consequences of the latter.

Optimize the assets and operations: On November 6, 2017, 5N Plus announced the completion of its
footprint optimization initiatives – to consolidate the operations at Wellingborough, UK. All the key
products lines are now relocated to other sites in the group, mainly Canada, Germany and China. Over
the next quarters the company will continue to focus on improving capacity utilization, increasing
production yields, managing working capital while selectively growing the existing portfolio of core
businesses.

2nd Pillar: Optimizing balance of contribution from upstream & downstream activities

5N Plus Inc. – Arrowhead BID 8 TSX: VNP

Due Diligence and Valuation Report See important disclosures on page 32 of this report
The upstream activities of the company are referred to as the acquisition of specialty metals used in
their products & services. However, this can be the purchase of required metals from the market; or the
acquisition of complex feeds, by-products, industrial waste, etc. Once these streams are procured, the
next step is to process technology along with recycling & refining assets which are used to extract
necessary metals utilized in the downstream businesses. The Company does not have any plans to
migrate to mining related activities and it will continue to work closely with current and future suppliers
to develop their upstream goals.
On the other hand, the downstream activities include product businesses where specialty chemicals,
compounds, engineered materials, substrates and alike are sold to a diverse set of industries and
customers, based on metals which have largely been procured from the upstream activities.

Against this backdrop, 5N21 aims at the utilization of process technologies to enable higher
effectiveness in procurement of various metals from complex residues at reasonable terms. In the long
term, the company expects to record higher contribution from its Recycling and Refinery assets. The
company has made a number of investments at its Laos facility with the aim of improving capability and
capacity. Going forward, the company expects this site to play a vital role in efficient valorization of key
metals for the Group. Additionally, 5N21 calls for further migration downstream and use product
technology as an enabler and a differentiator to take care of more value-added market requirements
which usually promise better margins. Over time, 5N Plus expects metal to account for a smaller
percentage of the COGS.
As per the trend, the climate of high metal prices benefits upstream activities while low metal prices
benefit downstream activities. One inherent benefit of this integrated model is a quasi-hedge in the
group’s P&L when the right balance between the two streams have been struck.

Downstream Opportunities

Market growth Current Capital

5N's Position
Prospect Requirements
Pharma, Health & Nutrition High High Market Leader
Electronics & Electro-Optics Average Low Top 3
Industrial Chemicals Average Low Top 3
Coating & Pigments Average Low Top 3
Alternative Energy High Low Market Leader
Aerospace, Security & Defence High Low Top 3
Source: Company filings

5N Plus Inc. – Arrowhead BID 9 TSX: VNP

Due Diligence and Valuation Report See important disclosures on page 32 of this report
 Downstream Revenue Development

Source: Company filings

3rd Pillar: Delivering quality growth from both existing and future M&A opportunities
Monetizing existing growth initiatives: There are a number of organic growth opportunities which the
Group is considering amongst which the two cases are Semiconductors and Micro-Powders. The first
activity will focus around specialty semiconductor material and engineered substrates utilized in a whole
number of industries. Regarding Micro-Powders, recalibrated, the company is making progress to a point
where they have proven the viability of the technology, on the basis of feedbacks attained from a
number of potential customers, declaring it to be unique and of interest. The next milestone will be
industrialization of the technology where the company will consider different options to propagate.

M&A Opportunities: The company sees M&A activities as an important part of 5N21 and believes that
proper discipline and due diligence is essential, to focus on quality targets with obvious synergies and
growth potential.

As a general rule of thumb, 5N21 estimates a minimum of 12% Return on Capital Employed and this is
expected to increase to 17% by the end of the plan. The adjusted EBITDA is also expected to grow by
15% YoY, backed by a reduction in earnings volatility by more than 50% by 2019.

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 Financial Interpretation of the 3 Pillars…

Source: Company filings

Key Milestones:
As per 5N21 Strategic plan, following are the key Milestones of the company:

5N21 Milestones

Source: Company filings

The company has steadily progressed towards its aforementioned plans and this is visible in its reported
numbers which shows an increase in the gross margin, reaching 25.1% in Q12018 compared to 23.1%
in Q12017, reflecting an improved product mix. The consolidated adjusted EBITDA also increased
considerably by 18.6% YoY from USD 6.6MM in Q1FY17 to USD 7.9MM in Q1FY18, supported by a
favorable sales mix, strong product demand and overall performance of operating activities. As a result,

5N Plus Inc. – Arrowhead BID 11 TSX: VNP

Due Diligence and Valuation Report See important disclosures on page 32 of this report
the consolidated adjusted EBITDA margin improved significantly to 13.5% in Q1FY18 from 10.9% in
Q1FY17.

Progress Report as of February 2018…

Source: Company filings

…In Line With The Management Guidance

Source: Company filings

5N Plus Inc. – Arrowhead BID 12 TSX: VNP

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News

– 5N Plus announced Q2FY18 results: On August 7, 2018, the company announced its second
quarter results for 2018. In Q2FY18, the company reported an EPS of $0.04 per share, same as
$0.04 per share in Q2FY17. Revenues in Q2FY18 increased by 3.8% YoY to USD 58.4MM, supported
by a favorable sales mix and strong product demand. However, an increase in cost of sales by 6.8%
YoY led to a small decrease in the gross margins ending at 26.5% in Q2FY18 compared to 28.5% in
Q2FY17. The consolidated adjusted EBITDA also decreased by 2.9% YoY from USD 9.2MM in Q2FY17
to USD 8.9MM in Q2FY18. In H1FY18, Adjusted EBITDA increased by 6.1% YoY to $16.9MM, from
$15.9MM in H1FY17, supported by a favorable sales mix, strong product demand and overall
performance of operating activities.
– 5N Plus doubles production capacity in semiconductor engineered materials to address
growing market demand: On July 3, 2018, announced that it is doubling the capacity of its ultra-
high purity semiconductor plant located on its Montreal campus to enable its electronic materials
division to satisfy the growing demand for the company’s specialty semiconductor materials, which
are becoming the materials of choice for advanced sensing and imaging technologies utilized in a
new generation of medical devices, and in security and defense applications.
– 5N Plus completes partial redemption of 5.75% convertible unsecured subordinated
debentures: On July 3, 2018, the company announced that it has completed the previously
announced partial redemption of its 5.75% convertible unsecured subordinated debentures maturing
on June 30, 2019.
– 5N Plus announces partial redemption of 5.75% convertible unsecured subordinated
debentures: On May 29, 2018, a leading producer of engineered materials, announced that it has
exercised its right to partially redeem its 5.75% convertible unsecured subordinated debentures
maturing on June 30, 2019. 5N Plus will redeem Debentures in an aggregate principal amount of
CAD 40MM. On redemption, 5N Plus will pay to the holders of redeemed debentures a redemption
price equal to the principal amount of the debentures, plus accrued and unpaid interest up to but
excluding the redemption date, for a total of CAD 1,000.32 per CAD 1,000 principal amount of
debentures. Following such partial repayment, the aggregate principal amount of debentures
outstanding shall be CAD 26MM. The company intends to use available funds to pay the redemption
price of the redeemed debentures.
– 5N Plus holds its annual meeting of shareholders and appoints a new board member: On
May 2, 2018, the company’s board of directors fixed seven directors of the company to be elected at
the meeting. Each of the seven nominees listed in the Management Information Circular was elected
as a director of 5N Plus. All of the nominee directors were already members of the board of directors
with the exception of Mr. Donald F. Osborne who was a new nominee. Subsequent to the meeting,
the directors re-appointed Mr. Luc Bertrand as Chairman of the board of directors of the company.
– 5N Plus announced Q1FY18 results: On May 1, 2018, the company announced its first quarter
results for 2018. In Q1FY18, the company reported an EPS of $0.04 per share compared to $0.05
per share in Q1FY17. Revenues in Q1FY18 declined by 4% YoY to USD 58.5MM primarily due to
lower sales of pass‐through metal component, consistent with the company’s plan to reduce its
earnings volatility. However, the company continued to improve its gross margin reaching 25.1% in
Q1FY18 compared to 23.1% in Q1FY17. The consolidated adjusted EBITDA also increased
considerably by 18.6% YoY from USD 6.6MM in Q1FY17 to USD 7.9MM in Q1FY18, supported by a
favorable sales mix, strong product demand and overall performance of operating activities. As a
result, the consolidated adjusted EBITDA margin improved significantly to 13.5% in Q1FY18 from
10.9% in Q1FY17.
– 5N Plus secures multi-year supply contracts and services within the renewable energy
sector: On April 24, 2018, the company announced that it has secured a series of multi-year
contracts for the supply of semiconductor materials and ancillary services associated with the

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 manufacturing of thin film photovoltaic (PV) modules by First Solar, Inc. The terms of these
contracts will be in effect until early 2021 and will rely on the global asset-base and capabilities of
5N Plus across Asia, Europe and North America.
– 5N Plus announced new USD 79MM syndicated credit facility: On April 24, 2018, the company
announced the closing of a USD 79MM senior secured multi‐currency revolving syndicated credit
facility to replace its existing USD 50MM revolving facility. The new credit facility has a four‐year
term, bearing interest and a margin based on 5N Plus’ senior consolidated debt to EBITDA ratio.
Subject to lenders’ approval, 5N Plus can exercise its option to request an expansion of the credit
facility through a USD 30MM accordion feature which would increase the total size of the facility to
USD 109MM. The syndicate is comprised of six banks and financial institutions with HSBC Bank
assuming the role of lead arranger and book runner.
– 5N Plus expands capacity and capability for its upstream activities across sites in Asia and
Europe: On April 11, 2018, the company announced expansion of capacity and capability in its
upstream activities. The expansion will increase the company’s capacity for production of specialty
metals by more than 2000 metric tons per year. The construction and commissioning phase of the
investment is expected to take a year to complete.
– 5N Plus announced FY17 results: The company witnessed a fall in the topline by 5% in FY17 to
$219.9MM from $231.5MM in FY16, primarily due to lower sales of pass‐through metal component,
consistent with the Company’s plan to reduce its earnings volatility. In FY17, Adjusted EBITDA and
EBITDA reached $25.1MM and $26.9MM, compared to $20.1MM and $15.1MM in FY16. The Adjusted
EBITDA demonstrates improved profitability which was largely supported by growth in value‐added
activities and services within an environment of stable commodity prices and sustainable demand.
The net profit in FY17 reached $12MM compared to $5.9MM loss in FY16.
– 5N Plus Inc. announced entry into specialized materials for Feed Additives Industry: The
company entered into the animal feed minerals market, 5N Plus will manufacture a range of
products to address the specific needs associated with this sector, focusing initially on the production
and development of animal feed containing trace elements essential for good health and nutrition of
animals, a sub‐segment of the feed minerals market worth in excess of $100MM annually.
– 5N Plus Inc. announced Q317 results: Revenue for Q317 decreased by 9.4% to $50.3MM from
$55.5MM; however, the gross margin slightly improved in Q317 to 26.5% compared to 26.2% in
Q316. This reflects a change in the quality of revenue with the value‐added component of revenue
growing and the pass‐through component declining. The company’s net earnings for Q317 was
$2.2MM compared to a net loss of $4.2MM for Q316.
– 5N Plus Inc. Announces Completion of Footprint Optimization Initiatives: On November 6,
2017, 5N Plus announced successful completion of the footprint optimization initiatives which was
introduced on September 2016, along with its Strategic Plan 5N21. The company has strategically
relocated all the key product lines which were earlier produced at its Wellingborough, UK plant to
other plants within the group, mainly to plants in Canada, Germany and China.
– 5N Plus awarded Multi-Year, US Government Contract: On October 11, 2017, the company
announced that it entered into a multi-year agreement with the US government, wherein the
company will supply engineered semiconductor materials essential for space and aeronautical
missions. The contract was awarded after a broad process with the competitors and was decided on
the total value creation based on products and services offered. This contract demonstrates the
company’s focus towards achieving its 5N21 strategic plan to deliver quality growth driven by
technology enhancement. The company anticipates commencing the services from the second half of
2018.
– Amendment of the Normal Course Issuer Bid: On February 21, 2017, 5N Plus announced that
the approval given by the Toronto Stock Exchange (“TSX”) to amend its normal course issuer bid
(“NCIB”) implemented on October 11, 2016. Under the NCIB, 5N Plus now has the right to purchase
for cancellation, from October 11, 2016 to October 10, 2017, a maximum of 2,100,000 (previously

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 600,000) common shares, representing 4.73% of the 44,416,731 shares forming 5N Plus’ public
float as at October 3, 2016. As of October 3, 2016, 5N Plus had 83,979,657 common shares issued
and outstanding. During the NCIB period, subject to TSX and other regulatory authorities’ approval,
the company may consider purchasing for cancellation more than 2,100,000 common shares up to a
maximum of 4,441,673 common shares, representing 10% of the company’s public float.
– Appointment of Executive Vice President, Eco‐Friendly Materials: On February 20, 2017, 5N
Plus Inc. announced that Mr. Paul Tancell has been appointed Executive Vice President, Eco‐Friendly
Materials, and effective February 20, 2017. Mr. Tancell has over 20 years of experience across
several international regions and industries, including automotive, chemical, and minor and precious
metals. He previously held senior commercial and business development roles within the Umicore
Automotive Catalysts Division, responsible for markets in Asia Pacific while living in China. Mr.
Tancell holds a BSc in Environmental Chemistry and a PhD in Chemistry from the University of
Plymouth, United Kingdom.
– Approval of normal course Issuer bid: On 5 October 2016, 5N Plus announced that the Toronto
Stock Exchange (TSX) has approved its normal course issuer bid (NCIB), under which the company
has the right to purchase for cancellation, from 11 October 2016 to 10 October 2017, a maximum of
600,000 common shares, representing 1.35% of the 44,416,731 shares forming 5N Plus’ public float
as at October 3, 2016. As of October 3, 2016, 5N Plus had 83,979,657 common shares issued and
outstanding. Any shares purchased by 5N Plus under the NCIB will be affected through the facilities
of TSX as well as on alternative Canadian trading platforms at prevailing market rates and any
common shares purchased by the company will be cancelled. During the NCIB period, subject to TSX
and other regulatory authorities’ approval, the corporation may consider purchasing for cancellation
more than 600,000 common shares up to a maximum of 4,441,673 common shares, representing
10% of the corporation’s public float.
– 5N Plus Inc. announces footprint optimization initiatives: On 29 September 2016, 5N Plus
announced the consolidation of its Wellingborough operations with those of other sites within the
group. During the first half of 2017, the operations of DeForest‐Wisconsin, U.S.A. and Fairfield‐
Connecticut, U.S.A. will be consolidated into a newly updated and scaled facility located in the state
of Connecticut. Over the next few quarters, the corporation will transfer a number of product lines
from Wellingborough to other manufacturing facilities within the Group. During this time, the
corporation expects a seamless transition while serving its client base. The primary drivers to
determine the future locations of the affected product lines will be operational synergy, cost
competitiveness and client proximity. The expected restructuring cost associated with these
initiatives will be around $3.5 million with an expected payback of less than two years. The positive
impact from these initiatives will be progressive reaching full potential starting in 2018.
– Release of 5-Year Strategic Plan: On September 12, 2016, 5N Plus released the highlights of a
five-year strategic plan (5N21 Plan) which aims at improving the corporation’s profitability along
with reducing the volatility exposure. The 5N21 Plan is based on three main pillars, namely: a)
Optimizing balance of contribution between upstream and downstream activities b) Extracting more
value from core businesses, existing assets and capabilities c) Delivering quality growth from
existing growth initiatives including future M&A activities.
– Appointment of Chairman of the Board: On January 11, 2016, 5N Plus announced the
appointment of Mr. Luc Bertrand as the company’s new Chairman of the Board effective
immediately. He succeeded Mr. Jean-Marie Bourassa, who continues to serve on the board and as
Chair of the Audit & Risk Management Committee, a position he already held. Since February 2011,
Mr. Bertrand is Vice-Chairman of National Bank of Canada, responsible for developing and
maintaining relations with corporate, institutional and government clients in Canada. During his
illustrious career, Mr. Bertrand has held various management positions in the financial services
industry. Aside from his professional duties, Mr. Bertrand is an active member of boards of directors

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 and industry committees. He currently serves on the Board of the International Finance Centre of
Montréal, is also Chairman of the Board of the Montreal Canadiens/CH Group Inc.
– Appointment of new president and chief executive officer: On 10 December 2015, the
company announced the appointment of Mr. Arjang J. (AJ) Roshan as its new President and Chief
Executive Officer (CEO) effective 15 February 2016. The position was previously held by Mr. Jacques
L’Ecuyer who decided to step aside from 03 November 2015. Mr. Roshan has 25 years of
international and executive experience, closely related to 5N Plus’ line of businesses. He has worked
for Umicore, a global materials technology and recycling group for 18 years, holding a number of
senior executive positions, including leading the Automotive Catalysts business in Asia Pacific as
Senior Vice President for the division and later, as Senior Vice President of Umicore’s Electro‐Optic
Materials Business Unit, widely recognized as the global leader in development, production, recycling
and refining of semiconductor and electro-optic materials along with high purity chemicals and
metals.
– Fifth consecutive win at the 2014 Deloitte Technology Fast 50 awards: On 13 November
2014, 5N Plus announced that it has been ranked in the Deloitte Technology Fast 50 and Technology
Fast 500 for the fifth year in a row. The company ranked 179 on Deloitte’s Technology Fast 500, a
listing of the 500 fastest growing technology, media, telecommunications, life sciences, and clean
technology companies in North America based on percentage growth over a five-year period.
– Closing of new USD 125MM syndicated credit facility: On 07 August 2014, 5N Plus secured a
USD 125MM senior secured multi-currency revolving syndicated credit facility, replacing the existing
USD 100MM facility. This facility is expected to be used for refinancing existing debt liabilities, capital
expenditures, and funding other growth opportunities. The new credit facility is on a revolving basis,
has a four-year term and carries interest at either prime rate, U.S. base rate, HK base rate or Libor
plus a margin based on 5N Plus’ senior consolidated debt to EBITDA ratio.
– Closure of allotment of convertible unsecured subordinated debentures: On 26 June 2014,
5N Plus announced the closure of its offering of USD 60MM convertible unsecured subordinated
debentures, with an additional purchase of USD 6MM aggregate principal number of debentures at a
price of $1,000 per debenture, by the underwriters.

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Listing Information
5N Plus is listed on the Toronto Stock Exchange (TSX) in Canada and started trading on 20 December
2007.

Contacts
Head office 4385 Garand Street, Montreal, Quebec, H4R 2B4, Canada

Telephone +1 514-856-0644
Facsimile +1 514-856-9611
E-mail (General inquiries) [email protected]
E-mail (Investors) [email protected]

Major Shareholders
Equity Holder No. of ordinary shares held (MM) Percentage shareholding

Caisse De Depot Et Placement 15.87 18.82%

Letko Brosseau & Associates 15.52 18.41%
FMR LLC 5.05 5.99%
IG Investment Management LTD 2.37 2.81%
The Bank of Nova Scotia 1.46 1.73%
Source: Bloomberg

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Management and Governance
Personnel Designation Current and Total Experience

Luc Bertrand Chairman Mr. Luc Bertrand has been the Vice-Chairman of National Bank of Canada
since February 2011 and is responsible for developing and maintaining
relations with corporate, institutional, and government clients in Canada.
He serves on the Board of the International Finance Centre of Montréal, is
also Chairman of the Board of the Montreal Canadiens/CH Group Inc. He
also serves on the Board of TMX Group.
Arjang President and Chief Mr. Roshan has nearly 25 years of business experience in various
Roshan Executive Officer industries including Automotive, Chemical, Electro-Optics, and Metals &
Material Technology. Previously, he was Senior Vice President of Electro-
Optic Materials at Umicore (2012-15). Mr. Roshan has also worked with
Ford Motor Company and Robert Bosch Corporation. He holds a degree in
Electrical Engineering from Michigan Technological University, an
Executive Management Degree from the University of Michigan Ross
School of Business, and an Executive MBA from Michigan State University
Broad School of Business.
Richard Chief Financial Mr. Richard Perron is a Certified Public Accountant (CPA) having 20 years
Perron Officer of international experience in the manufacturing and technology sectors.
He has served as the Chief Financial Officer and Strategy Manager of Long
Carbon Americas, at ArcelorMittal, and also as the Director of Finance and
Control and Chief Information Officer at Danfoss Turbocor Compressors of
Danfoss Group. Mr. Perron holds a B. Com degree (Accounting), a M.Sc. in
Administration, Management and Accounting, and a M.B.A. from the
University of Sherbrooke.
Nicholas Executive Vice Mr. Nicholas Audet has served various positions in 5N Plus including those
Audet President, of Chief Commercial Officer, Director of Research & Development, and
Electronic Materials Manager, Research & Development. Formerly, Mr. Audet acted as a lead
engineer for EMS Technologies Inc. Mr. Audet is a certified mechanical
engineer and graduated from the Université Laval in Québec City. He also
holds a Master’s degree in Engineering from the University of Victoria,
British Columbia.
Paul Tancell Executive Vice Mr. Paul Tancell has over 20 years of experience across several
President, Eco‐ international regions and industries, including automotive, chemical, and
Friendly Materials minor and precious metals. He has held senior roles in companies such as
Umicore, Ford Motor Company, and Johnson Matthey. He has an excellent
track record of developing high-performing organizations and delivering
competitive results across industries, environments, and geographies. Mr.
Tancell holds a BSc in Environmental Chemistry and a PhD in Chemistry
from the University of Plymouth, United Kingdom.

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Assets and Projects
5N Plus is a leader in the production of specialty metal and chemical products which are used in a
number of advanced chemical, pharmaceutical, industrial, electronic and electro-optics applications. 5N
Plus has put into use a range of proprietary and proven technologies to manufacture its products. Their
main products include purified metals such as bismuth, gallium, germanium, indium, selenium and
tellurium, inorganic chemicals based on such metals and compound semiconductor wafers. The company
is headquartered in Montreal, Quebec, Canada and has manufacturing facilities and sales offices in
several locations in Europe, the Americas, and Asia. Its products are niche and many of these are critical
precursors and key enablers in markets such as solar, light-emitting diodes and eco-friendly materials.
An integrated supplier having both primary and secondary refining capabilities. Their forte in primary
refining allows them to treat very low-grade metal concentrates, and extract and refine the required
metals so as to be fed to their secondary refining operations, to attain the highest level of purity. Once
purified, metals can be sold to customers in the form of pure metals, alloys or chemicals. As the
company excels in extensive refining functions, leading them to go from one end of the purity spectrum
to the other, and manufacture chemicals and alloys, and this drives them to consider themselves a
supplier with integrated refining capabilities. Furthermore, their primary refining proficiencies enable
them to treat complex feeds and very low-grade concentrates containing minor amounts of the metals of
interest, playing a vital role in the recycling of the specialty metals that they produce.
Purification and manufacturing activities are carried out using a variety of metallurgical and chemical
processes. Their raw materials or “feedstock” are generally in the form of concentrates or recyclable
materials containing the metals of interest. Given the nature of their activities and the metals that we
purify, they operate under, and comply with, stringent environmental, health and safety conditions.
Several of our operations are either certified (ISO 9001, ISO 14001, ISO 50001 and OHSAS 18001) or
have approval from the United States Food and Drug Administration (“FDA”) or have Good
Manufacturing Practices (GMP) requirements, reinforcing our commitment to best practices in terms of
operations, quality and health and safety.
Business Model: Upstream activities utilizes technology to extract critical metals from complex streams
at attractive terms. At the same time, downstream deals with manufacturing and sale of industrial
product and material technology with high degree of value-added activity and transformation. For
upstream activities, high metal prices reap maximum benefit, whereas in case of downstream activities,
maximum value addition results from low metal prices.

5N21 Business Model

Source: Company filings

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 Financial Summary:
Electronic Materials Q2FY18 vs. Q2FY17 Performance: In
Summary: The Electronic Materials segment Q2FY18, revenues of the Electronic Materials
manufactures and sells refined metals, segment increased significantly by 15.4% YoY to
compounds, and alloys. The segment operates USD 21.4MM. The company recorded an
in North America, Europe, and Asia. The adjusted EBITDA of USD 6.6MM in Q2FY18
products are sold to top firms for their electronic compared to USD 6.7MM in Q2FY17. This
applications. Depending on the requirements, reflects a reduction in EBITDA margin expressed
these products are manufactured in elemental, as a % to 30.6% in Q2FY18 from 35.9% in
alloyed, chemical, or compound forms. Q2FY17.

End Markets: Photovoltaic (terrestrial and in USD ‘000 Q2FY18 Q2FY17 ∆

spatial solar energy), LED, displays, high‐ Sales 21,418 18,566 +15.4%
frequency electronics, medical imaging, and
Adjusted EBITDA 6,533 6,668 -1.7%
thermo-electrics.
Adjusted EBITDA
30.6% 35.9% NA
Target Commodities: Cadmium, Gallium, Margin (%)
Germanium, Indium, and Tellurium.
H1FY18 vs. H1FY17 Performance: In
The list of products manufactured under the H1FY18, revenues of the Electronic Materials
Electronic Materials segment is given below. segment increased significantly by 10.9% YoY to
USD 42.0MM. However, the company witnessed
Gallium &
Indium &
Indium
Tellurium a small decrease in adjusted EBITDA ending at
Cadmi Germani &
um
Gallium
um
Chemical
Tellurium USD 13.4MM in H1FY18 compared to USD
Chemicals and
alloys
Chemicals 13.6MM in H1FY17. Expressed as a %, the
LED Lights
Flat panel EBITDA margin ended at 31.9% in H1FY18 from
Flat-panel
Battery displays
displays (ITO)
Solders
36.0% in H1FY17.
Industry Integrated CdTe solar cells
Infrared Thin-film
CdTe Circuits Medical
solar Optoelectroni
optics coating
Imaging in USD ‘000 H1FY18 H1FY17 ∆
Optical CIGS solar
cells c devices Thermoelectric
Applications fibers cells
Alloys Specialty
Catalysts Battery
devices Sales 42,041 37,905 +10.9%
and alloys Infrared
Solar cell manufacturin
Metallur
gical
Energy
storage
substrates g
detectors
Optical storage
Adjusted EBITDA 13,407 13,628 -1.6%
Catalysts
additives Biomedical
Ceramics Adjusted EBITDA
CIGS solar 31.9% 36.0% NA
cells
Fuel cells Margin (%)
Annual
>20,000
Worldwide 300 MT 120 MT 800 MT 550-600 MT
MT
Production* Recent Developments
* Based on management estimates and units in metric tons (MT)
Within Electronic Materials, the company is
Supply of Raw Materials working towards doubling its capacity by
Specialty metal concentrates - Procured from a Q1FY19 to support demand for imaging and
number of non‐ferrous metal suppliers. 5N Plus medical devices. In the Specialty Semiconductor
has long‐term commercial relationships with sector, the company has been experiencing a
suppliers. higher than usual demand.
Cadmium and Indium - These products are
generally the by‐products of zinc refining. The
company purchases these from zinc producers in
various forms.
Gallium - Purchased in various forms from other
sources of operations.
Tellurium - By‐product of copper, zinc, or gold
refining. It is procured from several sources
worldwide.

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 Key Customers of Electronic Materials dealings with most producers of primary
Segment bismuth worldwide.

Selenium – A by‐product of copper refining. 5N

Plus purchases suitable feedstock from several
copper suppliers.
Financial Summary:
Q2FY18 vs. Q2FY17 Performance: In
Q2FY18, revenues of the Eco-Friendly Materials
segment decreased by 1.9% YoY to USD
36.9MM. The company recorded an adjusted
EBITDA of USD 5.4MM in Q2FY18 compared to
USD 5.6MM in Q2FY17. This reflects an EBITDA
margin of 14.6% in Q2FY18 from 14.8% in
Source: Company filings Q2FY17.

in USD ‘000 Q2FY18 Q2FY17 ∆

Eco-Friendly Materials Sales 36,941 37,663 -1.9%
Adjusted EBITDA 5,404 5,591 -3.3%
Asset Summary: This segment manufactures
Adjusted EBITDA
and sells bismuth and bismuth chemicals, LMPA, Margin (%)
14.6% 14.8% NA
refined selenium, and selenium chemicals. Note: Also includes revenues from recycling services provided to
Bismuth has no adverse effect on either human clients of the Electronic Materials segment
health or the environment and hence is
replacing other harmful metals and chemicals in H1FY18 vs. H1FY17 Performance: In
a number of applications. The segment operates H1FY18, revenues of the Eco-Friendly Materials
in North America, Europe, and Asia. segment decreased by 5.5% YoY to USD
74.9MM. However, the company witnessed
End Markets: Pharmaceutical and animal‐feed significant improvement of YoY adjusted EBITDA
industries, other industrial applications including of USD 13.4MM in H1FY18 compared to USD
coatings, pigments, metallurgical alloys, and 9.2MM in H1FY17. This led to a higher EBITDA
electronics. margin of 12.3% in H1FY18 from 10.1% in
H1FY17.
Target Commodities: Bismuth and Selenium.
in USD ‘000 H1FY18 H1FY17 ∆
The table below lists the products manufactured
under the Eco‐Friendly Materials segment. Sales 74,865 79,194 -5.5%
Bismuth & Bismuth Selenium & Adjusted EBITDA 9,188 8,003 +14.8%
chemicals and alloys Selenium chemicals
Adjusted EBITDA
Pharmaceutical Industry 12.3% 10.1% NA
Electronics Glass Industry Animal Margin (%)
Cosmetics feeds Additive for Note: Also includes revenues from recycling services provided to
Magnets production of
clients of the Electronic Materials segment
Non-toxic substitute for electrolytic
lead manganese
Applications
Alloys for soldering Metallurgic additive Recent Developments
Lubricating greases CIGS solar cells
Pigments Infrared optics
Alloys and metallurgical Thermoelectric Within Eco-Friendly materials, Industrial
additives devices
Materials division saw a decline in the revenues,
Annual Worldwide but the margins saw an improvement on a YoY
12,000 MT 4,000 MT
Production* basis. The Healthcare/Pharma revenues
* Based on management estimates and units in metric tons (MT) increased YoY on the back of strong demand.
Extractive/Catalytic also increased on a YoY
Supply of Raw Materials basis, and the order book being completely sold
Bismuth – Recovered as a byproduct of lead, out till Q1FY19, on the back of strong demand
tin, and tungsten refining. 5N Plus has been from mining and O&G clients, who seek

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environmentally friendly solutions. The products to FDA and GMP standards, 5N Plus
management guided a possibility of either a sells bismuth in various forms, including
capital investment or a margin expansion from chemicals and pure metals.
this segment, both of which aligns with the
long-term strategy of the company. Gallium: Gallium is extensively used in
electronic applications with an extensive use in
the LED industry value chain. Gallium arsenide
Key Customers of Eco-Friendly Materials (GaAs), for example, is the semiconductor of
Segment
choice for wireless devices and high-frequency
electronics, whereas gallium nitride (GaN) is
preferred for light-emitting diodes (LED) and
display applications.

5N Plus generally sell gallium as a high purity

metal or as a gallium chemical.
Germanium: Germanium has unique properties
for infrared optical applications and is also being
used as a substrate for solar cells. Other
applications for germanium in the form of oxide
or chloride include catalysts and optical fibers.
5N Plus is a reliable supplier of high quality
germanium wafers for the production of ultra-
Source: Company filings
high efficiency solar cells which serve as key
components of solar power generation and
concentrated photovoltaic systems. Along with
Specialty Chemicals & Metals this, the company is also engaged in growing
Bismuth: Various commercial applications using germanium crystals for satellite power
Bismuth are in cosmetics, pigments, and generation.
medicines. Combination of Bismuth with other Indium: Due to its low melting and boiling point
metals is used to make LMPA for safety devices characteristics, Indium is used to make LMPA
in fire extinguishers and detection systems. Bi and bearing alloys. An important part of touch
also acts as a replacement for lead in shots and screen, flat screen TV, and solar panel
bullets as well. The U.S. Naval Surface Weapons production uses Indium tin oxide (ITO), which is
Center uses Bismanol, a permanent magnet of made using Indium. The Indium metal can be
high coercive force. After the European Union’s evaporated to glass to form mirrors which are
Restriction of Hazardous Substances Directive more corrosion resistant when compared to
for reduction of lead in electronics, as well as for those made with silver. The main end-use
food processing equipment and copper water markets include Electronics, Energy, Optics, and
pipes, the use of Bismuth has significantly Petrochemicals.
grown.
5N Plus generally sell indium in the form of pure
Bismuth is also used in the pharmaceutical metal or as a chemical. Also, the company sell
industry and is the active ingredient in a number engineered substrates and semiconductor
of drugs for treating stomach ulcers and other material containing Indium as a critical
discomforts associated with the gastrointestinal component of high-end sensing and imaging
tract. Bismuth Oxide is also used in the applications.
manufacture of mobile phone and digital camera
lenses having high refractive index. Having Selenium: The most extensive use of selenium
acquired certifications to supply bismuth is as an additive to glass. It is used to make
pigments for ceramics, paint, and plastics and

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as an additive to make stainless steel. It further used of solid state cooling and heating. Typical
finds use in photocells, solar cells, and applications include power generation, waste
photocopiers. It is used extensively in heat recovery, and climate-controlled car seats.
electronics applications, such as in photocells, Some of its other uses are to color glass and
light meters, and solar cells. ceramics, and as an alloying agent. Small
amounts of tellurium are added to copper and
5N Plus sell selenium in various forms, including
stainless steel to make them easier to machine
powder, high-purity metal and chemicals. The
and mill.
company mainly supplies selenium to Zinc
Selenide manufacturers wherein it is used to 5N Plus is active in all market segments selling
make lenses for CO lasers CdTe to solar cell manufacturers, engineered
material for imaging and sensing applications,
Tellurium: Tellurium is used in the solar
metals to bismuth telluride producers and
industry, electronics, imaging and metallurgical
tellurium alloys for metallurgical applications.
applications. Tellurium also finds application as
a key ingredient in thermoelectric components

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Technologies and Market
during the forecast period (2016–2024). Asia
Bismuthvi Pacific is anticipated to be the largest market for
Chemistry and Properties: Bismuth (Bi) is bismuth, with a share of 46% in overall sales by
considered to be the most diamagnetic of all the end of 2024.
metals. It has thermal conductivity lower than Market Trends - Commodity Prices: In 2008–
any metal except mercury. 09, the worldwide financial crisis and recession
Sources: Native Bi is rare and is available in had a marked effect on global Bi consumption
mineral form with other elements such as and prices. But in the due course, Bismuth
bismithunite and bismite. These and other gained momentum and reached peaks by 2011.
bismuth minerals also occur within ores of other Though prices again dropped and displayed a
metals, such as gold, silver, lead, zinc, and flattish trend for two years. The price movement
tungsten, but in minute quantities. Most showed some improvement and reached the
bismuth is produced from mines in China, same 2011 levels by mid of 2014, but to the
Mexico, Peru, and Bolivia. dismay drastically fell below 5 US$/lb.

Supply and Production: As per the US Bismuth price trend

Geological Survey (USGS), the world reserves of
bismuth containing ore stands at 320,000 tons
and the reserve base is estimated to be 680,000
tons, with the majority located in China, Bolivia
and Mexico.

World Bismuth Reserves(USGS)

(Data in metric tons of bismuth content
unless otherwise noted)
Country Reserves
United States 5,000
Bolivia 10,000 Source: Assetmacro
Canada 5,000
China 240,000
Mexico 10,000 Galliumvii
Other countries 50,000
Chemistry and Properties: Gallium (Ga) is
World total 320,000
silvery white and soft enough to be cut with a
China has a reserve base of around 470,000
knife. Because of superficial oxidation, it takes
tons, taking a 69% worldwide share. The total
on a bluish tinge. Known for its unusually low
worldwide bismuth mining production was 7,600
melting point (about 30°C [86°F]), gallium also
tons in 2013. China was the biggest bismuth
expands upon solidification and supercools
producer, with a total production of 6,500 tons.
readily.
Mexico produced 940 tons of bismuth in the
same year. Sources: Gallium is more abundant than lead
but much less accessible because it has not
Demand: Inclusion of stringent environmental
been selectively concentrated into minerals and
regulations regarding lead usage would push the
tends to be widely dispersed. Several ores, such
market of bismuth and bismuth derived
as the aluminum ore bauxite, contain a small
compounds. Major paints & coatings
amount of gallium, and Coal may also have a
manufacturers such as BASF SE and PPG Inc.
relatively high gallium content.
are actively offering bismuth-based products.
The global bismuth market is expected to reach Supply and Production: As per USGS
US$ 400.0 Million expanding at a CAGR of 6.7% estimates, the worldwide low-grade primary

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gallium production was 435 metric tons in 2015. global market. The United States ranks third
China, Germany, Japan, and Ukraine were the with a consumption of 37.8 t (13.5%), similar to
leading producers; countries with lesser output the European market which is estimated to
were Hungary, the Republic of Korea, and consume 30–40 t.
Russia. China, Japan, the United Kingdom, the
Around 90% of the worldwide gallium demand is
United States, and possibly Slovakia were the
utilized in semi-conducting or semi-insulating
principal producers of high-purity refined
(SC/SI) substrates and epitaxial layers. Of this
gallium. Gallium was recycled from new scrap in
figure, integrated circuits and discrete field
Canada, Germany, Japan, the United Kingdom,
effect transistors (FETs) accounted for 50% and
and the United States.
LEDs (for general lighting and backlighting
Gallium Production Concentration, 2012 applications) 38%.

2% 2% World Gallium Consumption by Application,

2% China
4% 2014
Germany
4%
Kazakhstan Other
Magnets
6% 3%
South Korea 3%

10% Ukraine Photovoltaics

4%
Japan Russia
70% Russia Other SC/SI
2%
Hungary

IC, FETS
Source: Roskill Information Services for 2013 CRM
50%
study

Demand: Global gallium consumption is Source: Roskill, 2014

estimated at 285 t in 2014 (RLJ 2014), which
means a rise of merely 1% compared to 2013,
5N Plus generally sell gallium as a high purity
but an increase of more than 70% compared to
metal or as a gallium chemical.
2009.

Worldwide Gallium Consumption Market Trends - Commodity Prices: Prices

are negotiated bilaterally usually on a long-term
basis among suppliers and customers. Between
1960 and 2013, prices for 6N gallium in the US
metal market declined at a CAGR of 3.1%.

Germaniumviii
Chemistry and Properties: Germanium (Ge) is
a shiny and silvery, yet very brittle metalloid. It
has a diamond-like crystalline structure and has
similarities with Silicon in terms of chemical and
Source: Information Center of Ministry of Land and
Resources & Federal Institute for Geosciences and physical properties. Germanium is stable in air
Natural Resources Report and water, and is unaffected by alkalis and
acids, except nitric acid.
The largest market for gallium is still in Japan,
which consumed 97 t in 2013. However, the Sources: Germanium like gallium, is rarely
country’s share of the global market has fallen found in minerals except in trace amounts.
from about 80% in the mid-2000s to about 35% Further, similar to gallium, germanium is
in 2013, while China’s demand increased rapidly obtained as a byproduct of mining and
to 67.5 t in 2013, or a share of 24% of the processing zinc and copper.

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Production: The available resources of level. China was the leading producer, followed
germanium are associated with certain zinc and by the Republic of Korea, Japan, and Canada.
lead-zinc-copper sulfide ores. Most of the US Primary indium was recovered from residues
reserves of recoverable germanium are generated during the smelting of zinc
contained in zinc deposits in Alaska and concentrates. According to market reports,
Tennessee. After analysis of zinc concentrates, indium production in China declined by 15-30%
the US reserves of zinc should contain as much in the first half of 2015 compared with the year-
as 2,500 tons of germanium. ago period.
Supply: The global ITO market was valued at
Supply and Demand: In 2015, China remained
USD 2.59 billion in 2015 and is expected to
the leading global producer of germanium and
reach USD 3.46 billion by 2020, growing at a
consumed about 26 tons. The use of Ge in fiber
CAGR of almost 6%. Several indium-containing
optics increased substantially in China from
exploration or development projects are
2012 to 2015, making the country the leading
advancing in Canada and South America. It is
germanium consuming area. Earlier, China’s
however uncertain as to when or whether these
Ministry of Commerce issued a preliminary
projects will come on stream.
antidumping ruling against imports of fiber-optic
preforms from Japan and the United States. In
early-2015, scientists from the United States Seleniumx
developed a multi-junction solar cell that used Chemistry and Properties: Selenium (Se) is a
germanium quantum dots on a standard silicon non-metallic chemical element which can exist
wafer. This might increase the demand of in two forms, as a silvery metal and as a red
germanium in the long run. powder. Being a metalloid, it has some
characteristics of metals and some of non-
Market Trends - Commodity Prices:
metals. Selenium burns in air and is unaffected
Germanium dioxide prices were relatively stable
by water, but dissolves in concentrated nitric
during the first half of 2015, remaining close to
acid and alkalis.
the 2014 levels, and nearly double as compared
to 2010. However, prices began to drop in the Sources: Selenium is a very rare element with
second half of the year and reached $1,170 per no ore from which it can be profitably mined. It
kilogram in October 2015. is obtained as a byproduct of mining other
metals. It is produced primarily from copper,
Indiumix iron, and lead ores. The major producers of
selenium in the world are Japan, Canada,
Chemistry and Properties: Indium (In) is a
Belgium, the United States, and Germany.
soft, silvery-white metal with very low melting
and boiling points, which makes it ideal for Demand: Approximately 40% of the Selenium
soldering activity. It is stable in air and water demand is from the glass manufacturing and
but dissolves in acids. paint industries. Other areas of demand are
metallurgy (approximately 30%), where it is
Sources: Indium has a rare existence on earth,
used as an additive in manganese production;
and as such is prevalently found in zinc, copper
agriculture, where it is used as a supplement for
and iron ores. The world’s top producers of In
animal feedstock; and electronics photovoltaic
are Canada, China, and Russia. Indium
technology (10%), with pigments further
Corporation, headquartered in New York, US, is
accounting for a similar 10% share.
one of the largest producers of Indium metal.
Production and Supply: The average world
Production: According to the USGS 2014
production of selenium is estimated at 3,000-
Minerals Yearbook, the world’s total production
3,500 tonnes per year. In 2011, the production
of primary indium was estimated to be 881
of selenium metal in respect of 11 countries for
tonnes in 2014, or 8% more than the 2013
which data is available was estimated at 1,911

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Due Diligence and Valuation Report See important disclosures on page 32 of this report
tonnes. The chief producers were Japan,
Germany, Belgium, Russia, Kazakhstan,
Sweden, Poland, and Finland. Natural Graphite Statistics

Market Trends - Commodity Prices: Country Reserves*

According to USGS, the Selenium price was World: Total (rounded) 24,000
$37.83 per lb in 2010. Canada 800
Peru 3,600
USA 3,500
Telluriumxi
Other Countries 26,000
Chemistry and Properties: Tellurium (Te) is a *Estimates include tellurium contained in copper resources
only
silvery-white metalloid. Its pure version has a
Source: Mineral Commodities Summaries, 2013
metallic luster. Crystalline tellurium is easily
pulverized.
Source: Currently, most tellurium is obtained Cadmiumxii
as a byproduct of mining and refining copper. Chemistry and Properties: Cadmium (Cd) is a
The metalloid is found commercially in the lustrous, silvery white, ductile, and highly
electrolytic refining of blister copper from anode malleable metal having a bluish tinge. It is
muds. soluble in acids but not in alkalis.
Demand: World consumption of tellurium was Supply and Production: The main mining
estimated to have decreased in 2014 owing to a areas for cadmium are those associated with
continued decreasing demand for thermo- zinc. The world production of Cd is around
electrics in China. The usage of Tellurium in 14.000 tons per year. Canada is the main
solar cells was estimated to have decreased producing country, with the United States,
because of the falling cost of conventional Australia, Mexico, Japan, and Peru also being
silicon-based cells. major suppliers.

Global Tellurium Production, 2012 Cadmium World Production

Source: USGS Source: Wikipedia

Supply: The supply of tellurium is directly Applications: Cadmium is primarily used in

linked to the production of copper. With rechargeable batteries and in low melting-point
decreasing metal prices throughout 2014, alloys. It is also extensively used in association
production rates from copper refineries are with tellurium and sold by us in the form of
expected to fall. The recovery of tellurium from CdTe for solar module, infrared imaging and
copper drums continues to fall, owing to medical imaging applications.
reduced supplies.
Around three-fourths of cadmium is used in Ni-
Cd batteries, while most of the remaining one-

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fourth is used mainly in pigments, coatings and solder. It is also used to form many useful alloys
plating, and as stabilizers for plastics. such as bronze and Pewter.

Tinxiii Zincxiv
Chemistry and Properties: Tin (Sn) is a soft, Chemistry and Properties: Zinc (Zn) is a
pliable, and a silvery-white metal. lustrous bluish-white metal. It combines with
oxygen and other non-metals and is fairly
Production: The graph below shows the
reactive.
leading tin producing companies worldwide in
2014, based on production output (in 1,000
Production: China remains the world’s largest
metric tons). As per the graph, Yunnan Tin in
zinc producer in terms of mine production. It is
China is the leading producer with 75.92 metric
also the world’s largest consumer and the
tons.
largest refiner of Zinc. The other main zinc
Global Tin Resources, 2015 mining areas are in Canada, Russia, Australia,
the United States, and Peru.
Other

Kazakhstan
24% China Zinc World Production
35%
4%

Germany
4%
Brazil
6%
Russia
Indonesia 12%
7% Australia
8%

Source: ITRI, 2016 Report on Global Tin Resources

and Reserves

Applications: Tin is widely used for plating Source: Etf.com

steel cans used as cooking vessels, food
containers, metals used for bearings, and in

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Value
The Fair Market Value for 5N Plus Inc. shares stands between CAD 384.8MM and CAD 422.9MM.
The Fair Market Value for one of 5N Plus Inc. publicly traded shares stands between CAD 4.55 and CAD
5.00.

DCF Valuation
5N Plus Inc. Balance Sheet Forecast
all figures in '000
Low bracket estimates
CONSOLIDATED BALANCE SHEET USD, unless
stated differently

December Ending 2018E 2019E 2020E 2021E 2022E 2023E

Total Current Assets 153,539 150,944 168,788 203,428 221,379 249,369

Total Non-Current Assets 79,382 79,037 79,042 70,008 70,296 70,772

TOTAL ASSETS 232,921 229,981 247,831 273,436 291,675 320,141

Total Current Liabilities 58,794 59,052 57,617 56,198 54,211 52,676

Total Non-Current Liabilities 51,486 43,986 36,486 28,986 21,486 21,486

TOTAL LIABILITIES 110,280 103,038 94,103 85,184 75,697 74,162

Total Shareholders’ Equity 122,641 126,943 153,728 188,252 215,977 245,978

TOTAL LIABILITIES and EQUITY 232,921 229,981 247,831 273,436 291,675 320,141

all figures in '000

High bracket estimates
CONSOLIDATED BALANCE SHEET USD, unless
stated differently

December Ending 2018E 2019E 2020E 2021E 2022E 2023E

Total Current Assets 155,788 155,440 175,913 211,141 231,801 263,067

Total Non-Current Assets 79,382 79,037 79,042 70,008 70,296 70,772

TOTAL ASSETS 235,170 234,478 254,956 281,149 302,097 333,839

Total Current Liabilities 58,984 59,610 58,500 57,379 55,624 54,306

Total Non-Current Liabilities 51,486 43,986 36,486 28,986 21,486 21,486

TOTAL LIABILITIES 110,470 103,596 94,986 86,365 77,110 75,792

Total Shareholders’ Equity 124,700 130,881 159,969 194,784 224,986 258,048

TOTAL LIABILITIES and EQUITY 235,170 234,478 254,956 281,149 302,097 333,839

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Important Information on Arrowhead Methodology
The principles of the valuation methodology employed by Arrowhead BID are variable to a certain
extent, depending on the sub-sectors in which the research is conducted. But all Arrowhead valuation
researches possess an underlying set of common principles and a generally common quantitative
process.
With Arrowhead commercial and technical due diligence, the company researches the fundamentals,
assets and liabilities of a company, and builds estimates for revenue and expenditure over a coherently
determined forecast period.
Elements of past performance such as price/earnings ratios, indicated as applicable, are mainly for
reference. Still, elements of real-world past performance enter the valuation through their impact on the
commercial and technical due diligence.

Arrowhead BID Fair Market Value Bracket

The Arrowhead Fair Market Value is given as a bracket. This is based on quantitative key variable
analyses such as key price analysis for revenue and cost drivers or analysis and discounts on revenue
estimates for projects, especially relevant to projects estimated to provide revenue near the end of the
chosen forecast period. Low and high estimates for key variables are produced as a valuation tool.
In principle, an investor comfortable with the high brackets of our key variable analysis will align with
the high bracket in the Arrowhead Fair Value Bracket, and, likewise, in terms of low estimates. The
investor will also note the company’s intangibles to analyze the strengths and weaknesses, and other
essential company information. These intangibles serve as supplementary decision factors for adding or
subtracting a premium in the investor’s own analysis.

The bracket should be taken as a tool by Arrowhead BID for the reader of this report and the reader
should not solely rely on this information to make his decision on any particular security. The reader
must also further understand that while on the one hand global capital markets contain inefficiencies,
especially in terms of information, on the other, corporations and their commercial and technical
positions evolve rapidly. This present edition of the Arrowhead valuation is for a short to medium-term
alignment analysis (one to twelve months). The reader should also refer to important disclosures on
page 27 of this report.

Information on the 5N Plus Inc. Valuation

5N Plus Inc. Valuation Methodology: The Arrowhead fair valuation for 5N Plus is based on the
discounted cash flow (DCF) method. We have calculated the NPV of the project based on estimated cash
flows, which we have subsequently discounted by a discount rate. We have also accounted for the
operational risk through an implied P/NPV multiple, which is applied to the NPV of the project to arrive at
an implied equity value.

Time Horizon: The Arrowhead fair valuation for 5N Plus Inc. is based on a DCF method. We have
assumed a longer time horizon. The later years are heavily discounted and have a marginal effect on
valuation, which are included primarily to present a full project cycle situation.

Underlying Business Plan: 5N Plus engages in the manufacturing and sales of specialty metals and
chemicals. The company produces a range of products used as an input in industries such as solar
photovoltaics, LEDs, and ecofriendly materials.

Terminal Value: Terminal value is estimated to depend on a terminal growth rate of 0.5%,
representing the maturity, technology change, and prospective competitiveness in the business.

Prudential Nature of Valuation: This Arrowhead Fair Value Bracket estimate is a relatively prudential
estimate as it is based upon the company’s business model.

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Valuation
WACC
Risk-free rate 2.2% xv

Beta 1.01 xvi

Risk premium 7.8% xvii

Additional risk premium 0.0% xviii

Cost of equity 9.45%

Cost of debt (after tax) 4.2%

Terminal Growth Rate 0.5%

FCFF (Low) Time Period

--> (USD ‘000)

2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

EBIT 22,418 24,890 27,347 34,834 37,928 41,040 43,031 45,222

Capital Expenditure (12,282) (10,885) (10,985) (10,078) (10,144) (10,231) (10,342) (10,271)

Free Cash Flow 11,211 31,272 32,563 37,500 31,007 32,285 35,037 35,308

Present Value of FCF 10,967 27,936 26,560 27,929 21,086 20,047 19,865 18,279

FCFF (High) Time Period

--> (USD ‘000)
2018E 2019E 2020E 2021E 2022E 2023E 2024E 2025E

EBIT 24,477 26,769 29,650 37,528 41,317 45,228 48,437 52,762

Capital Expenditure (12,282) (10,885) (10,985) (10,078) (10,144) (10,231) (10,342) (10,271)

12,652 32,202 34,016 36,921 32,707 34,570 38,390 40,220

Free Cash Flow
12,378 28,766 27,746 27,498 22,243 21,466 21,767 20,822
Present Value of FCF

In the model, the valuation is continued to the year 2029, from which point the terminal value is established.

Arrowhead Fair Value Bracket Low High

Terminal Value (TV) (CAD ‘000) 216,190 252,155

Present Value of TV (CAD ‘000) 77,802 90,744

Present Value of FCF (CAD ‘000) 307,020 332,138

Present Value of TV+FCF (CAD ‘000) 384,822 422,883

Shares O/s (000’s) (As on June 30, 2018) 84,495 84,495

Fair Share Value Bracket (CAD) 4.55 5.00

Current Market Price (CAD) 3.31 3.31

Upside/(Downside) 38% 51%

Current Market Cap. (CAD ’000) 279,677 279,677

Target Market Cap. Bracket (CAD ’000) 384,822 422,883

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Analyst Certifications
Investors are advised to gather and consult
I, Natasha Agarwal, certify that all of the views multiple information sources before making
expressed in this research report accurately investment decisions. Recipients of this report
reflect my personal views about the subject are strongly advised to read the information on
security and the subject company. Arrowhead Methodology section of this report to
understand if and how the Arrowhead Due
I, Sumit Wadhwa, certify that all of the views Diligence and Arrowhead Fair Value Bracket
expressed in this research report accurately integrate alongside the rest of their stream of
reflect my personal views about the subject information and within their decision taking
security and the subject company. process.

Important disclosures Past performance of securities described directly

Arrowhead Business and Investment Decisions, or indirectly in this report should not be taken as
LLC received fees in 2017 and will receive fees an indication or guarantee of future results. The
in 2017 and 2018 from 5N Plus Inc. for price, value of, and income from any of the
researching and drafting this report and for a financial securities described in this report may
series of other services to 5N Plus Inc., including rise as well as fall, and may be affected by
distribution of this report, investor relations and simple and complex changes in economic,
networking services. financial and political factors.

Aside from certain reports published on a Should a security described in this report be
periodic basis, the large majority of reports are denominated in a currency other than the
published by Arrowhead BID at irregular investor’s home currency, a change in exchange
intervals as appropriate in the analyst’s rates may adversely affect the price of, value of,
judgment. or income derived from the security.
Any opinions expressed in this report are
statements of our judgment to this date and are This report is published solely for information
subject to change without notice. purposes, and is not to be considered as an offer
to buy any security, in any state.
This report was prepared for general circulation
and does not provide investment Other than disclosures relating to Arrowhead
recommendations specific to individual Business and Investment Decisions, LLC, the
investors. As such, any of the financial or other information herein is based on sources we
money-management instruments linked to the believe to be reliable but is not guaranteed by
company and company valuation described in us and does not purport to be a complete
this report, hereafter referred to as “the statement or summary of the available data.
securities”, may not be suitable for all investors.
Arrowhead Business and Investment Decisions,
Investors must make their own investment LLC is not responsible for any loss, financial or
decisions based upon their specific investment other, directly or indirectly linked to any price
objectives and financial situation utilizing their movement or absence of price movement of the
own financial advisors as they deem necessary. securities described in this report.

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Notes and References

i Arrowhead Business and Investment Decisions (ABID) Fair Value Bracket. See information on valuation on pages 29-31 of this
report and important disclosures on page 32 of this report
ii Bloomberg as on 04-October-2018
iii Bloomberg as on 04-October-2018
iv 3-month average volume from Bloomberg as on 04-October-2018
v Bloomberg as on 04-October-2018
vi http://www.lenntech.com/periodic/elements/bi.htm#ixzz4XLRwe7dJ
http://scienceviews.com/geology/bismuth.html
http://www.persistencemarketresearch.com/mediarelease/bismuth-market.asp
vii http://www.lenntech.com/periodic/elements/ga.htm
https://minerals.usgs.gov/minerals/pubs/commodity/gallium/mcs-2016-galli.pdf
http://www.bgr.bund.de/EN/Themen/Min_rohstoffe/Downloads/studie_Li_Ga_en.pdf?__blob=publicationFile&v=4
viii http://www.livescience.com/29520-germanium.html
https://minerals.usgs.gov/minerals/pubs/commodity/germanium/mcs-2016-germa.pdf
ix https://minerals.usgs.gov/minerals/pubs/commodity/indium/myb1-2014-indiu.pdf
http://www.businesswire.com/news/home/20160826005015/en/Top-5-Vendors-Indium-Tin-Oxide-Market
x
https://minerals.usgs.gov/minerals/pubs/commodity/selenium/myb1-2014-selen.pdf
http://ibm.gov.in/writereaddata/files/07092014130755IMYB-2012-Selenium%20and%20Tellurium.pdf
xi http://www.rsc.org/periodic-table/element/52/tellurium
http://ibm.gov.in/writereaddata/files/07092014130755IMYB-2012-Selenium%20and%20Tellurium.pdf
xii http://www.lenntech.com/periodic/elements/cd.htm
https://en.wikipedia.org/wiki/Cadmium
xiii https://minerals.usgs.gov/minerals/pubs/commodity/tin/mis-201601-tin.pdf
https://www.itri.co.uk/index.php?option=com_mtree&task=att_download&link_id=55516&cf_id=24
xiv http://www.lenntech.com/periodic/elements/zn.htm
http://www.chemistryexplained.com/elements/T-Z/Zinc.html
xv Bloomberg as on 04-October-2018
xvi Bloomberg as on 04-October-2018
xvii Bloomberg as on 04-October-2018
xviii Arrowhead estimates

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