REC Silicon

Investor Presentation • Jul 25, 2019

PRESENTATION

Disclaimer 2019

This presentation includes and is based, inter alia, on forward-looking information and statements that are subject to risks and uncertainties that could cause actual results to differ. These statements and this presentation are based on current expectations, estimates and projections about global economic conditions, the economic conditions of the regions and industries that are major markets for REC Silicon ASA's (including subsidiaries and affiliates) lines of business. These expectations, estimates and projections are generally identifiable by statements containing words such as "expects", "believes", "estimates" or similar expressions. Important factors that could cause actual results to differ materially from those expectations include, among others, economic and market conditions in the geographic areas and industries that are or will be major markets for REC Silicon ASA's businesses, energy prices, market acceptance of new products and services, changes in governmental regulations, interest rates, fluctuations in currency exchange rates and such other factors as may be discussed from time to time in the presentation. Although REC Silicon ASA believes that its expectations and the presentation are based upon reasonable assumptions, it can give no assurance that those expectations will be achieved or that the actual results will be as set out in the presentation. REC Silicon ASA makes no representations or warranties, expressed or implied, as to the accuracy, reliability or completeness of the presentation, and neither REC Silicon ASA nor any of its directors, officers or employees will have any liability to you or any other persons resulting from your use.

This presentation was prepared for the second quarter 2019 results on July 25, 2019. Information contained herein will not be updated. The following slides should be read and considered in connection with the information given orally during the presentation.

REC Silicon ASA shares have not been registered under the U.S. Securities Act of 1933, as amended (the "Act"), and may not be offered or sold in the United States absent registration or an applicable exemption from the registration requirements of the Act.

SECOND QUARTER

Q2 Financial Results

Financial Review

Market Outlook

Silicon Gas & EG Polysilicon

China Tariff Update

Moses Lake's Future

Yulin JV

Short-Term Business Plan

Q&A

Highlights 2019

Revenues:	\$47.0M
EBITDA:	\$ 0.5M

June 30, 2019 cash balance of \$38.4M

• Cash increase of \$13.0M
• Net proceeds from private placement of equity \$19.1M
• Cash outflows from operations (\$4.0M)
  • Working capital decrease of \$3.2M

Silicon Gas sales

• Sales volume of 834MT
• 3.0% Silane Gas price increase vs. Q1'19

Successful completion of private placement of equity

• Settled on May 14, 2019
• NOK 170 million in gross proceeds (254,381,870 shares at NOK 0.67)

Shutdown of Moses Lake FBR facility

• \$20M additional impairment of assets
• Curtailment of FBR production on May 15, 2019
• Workforce reduction announced on July 15, 2019
• Long-term shutdown until access to China polysilicon market is restored or other significant positive developments in solar grade polysilicon markets occur

Polysilicon Sales Volume **
Total	2,090MT
Inventory Decrease	1,110MT

FBR Production
Actual	679MT
Guidance*	620MT
Deviation	9.5%

Total Polysilicon Production
Actual	980MT
Guidance*	980MT
Deviation	-0.2%

Semiconductor Production
Actual	216MT
Guidance*	220MT
Deviation	-1.9%

Silicon Gases Sales Vol.
Actual	834MT
Guidance*	960MT
Deviation	-13.2%

** Guidance Presented May 9, 2019

** Excludes Fines and Powders

5 © REC Silicon ASA. All rights reserved. Confidential July 25, 2019

Financial Review

(USD million)	Q2 2019		Q1 2019		2018
	Revenues	EBITDA	Revenues	EBITDA	Revenues	EBITDA
Solar Materials	12.2	(9.4)	12.9	(7.4)	69.2	(26.6)
Semiconductor Materials	34.8	15.2	32.2	9.2	152.9	52.2
Other	0.0	(5.3)	-	(6.5)	-	(30.0)
Eliminations	-	-	0.0	0.0	(0.9)	(0.5)
REC Silicon Group	47.0	0.5	45.0	(4.7)	221.2	(4.9)

› Implementation of IFRS 16 – Leases

• Effective date January 1, 2019
• Increased EBITDA equal to lease payments classified as finance leases
• Recognition of interest expense (imputed)
• Right of use assets depreciated over lease term

(USD million)	EBITDA Impact
	(IFRS 16 Leases)
	Q2 2019	2019
Solar Materials	1.8	7.2
Semiconductor Materials	1.4	5.5
Other	0.0	0.0
Eliminations	-	-
Total Impact of IFRS 16	3.2	12.7

Key Financial Results 2019

Solar Materials

Other and Eliminations

EBITDA of \$0.5M

Cash Flows 2019

SECOND QUARTER

\$38

Debt

USD Million

Nominal debt - \$184.9M

• › Increase of \$23.8M in Q2'19
  • \$23.6M Increase in Lease Liabilities (IFRS 16)
  • \$0.2M Due to weaker USD relative to NOK

Nominal net debt - \$146.6M

• › Increase of \$10.9M in Q2'19
  • Increase in cash of \$13.0M
  • Increase in nominal debt of \$23.8M

Contingent Liabilities

• › Reassessment of tax \$30.0M
• › Indemnity loan \$23.5M
• › 2012 Property tax appeal \$7.7M

11 © REC Silicon ASA. All rights reserved. Confidential July 25, 2019

Market Outlook

SECOND QUARTER

2019

Global PV Module Demand Forecast: 2018 - 2025 2019

• › 2019 Global demand forecasted to be ~120 GW which is a ~20% increase from 2018
• › Europe, USA and ROW is the main driver for growth in 2019
• › A continuous growth in PV installations is expected for the next 5 years

Source: PV Infolink - Database July 2019

• › Forecasting strong 2H/2019 after China policy clarity
• › China 2H/2019 installation is forecast estimated to be 25-30GW
• › Europe 2H/2019 ~10GW
• › U.S. 2H/2019 ~8GW

PV Infolinks Global Module Demand by Quarter

China USA Europe India Japan ROW

Source: PV Infolink - Database July 16, 2019

SILICON GAS & EG POLYSILICON

Silicon Gas Sales Forecasted to Increase in H2/2019

• › Silicon gas sales
  • Sales volume of 834MT versus 829MT in Q1'19
• › Silicon gas sales lower than guidance
  • Inventory control due to demand uncertainty
  • Reduced demand of PV requires less volume of Silane
  • "Buy China" sentiment due to China tariffs
  • 3.0% Silane Gas price increase vs. Q1'19 due segment product mix
• › Forecast of 900MT in Q3'19
  • Inventory replenishment
  • Increased activity in the PV sector

REC Shipments - Silicon Gases

SECOND QUARTER

2019

Semiconductor Grade Polysilicon (Market Uncertainty Persists)

› Semiconductor polysilicon sales

• Total polysilicon sales from Butte was 352MT (34.2% increase vs. Q1'19)
• (18.3%) Average price decrease vs. Q1'19
• 4.3%)Semiconductor grade price increase vs.Q1'19

› Uncertainty in semiconductor market

• Demand is normally correlated very closely with global GDP
• China weakness
• Delay of incremental capacity additions and associated qualifications in order to balance inventories with demand
• › Focus on high end semiconductor polysilicon
  • Only 2 companies able to make Float Zone
  • Production of Float Zone will reduce volume but contributes higher margins
  • Production will be managed based on customer orders

CHINA TARIFF UPDATE

Polysilicon is a U.S. Government Priority 2019

SECOND QUARTER

• › US/China trade negotiations have resumed following G-20 in Osaka
  • In-person meetings scheduled in Beijing on July 30, 2019
• › Uncertainty around timeline for a resolution
• › US government committed to prioritize the U.S. polysilicon industry in trade negotiations

Senator Daines, Montana: "U.S. polysilicon industry has been targeted by China and retaliatory tariffs are threatening manufacturing jobs at REC Silicon…. Is removing these tariffs on U.S. polysilicon a priority / will you work to address them as negotiations with China continue?"

The Honorable Robert Lighthizer: "Yes, it's something we've raised on numerous occasions and will continue to raise. You know the background. What we think of as an unfair retaliatory AD case brought against those products by the Chinese. Something we've raised and will continue to raise. If we find ourselves with an agreement, we expect this to be

U.S. Senate Finance Committee June 18, 2019

Polysilicon is Foundational to Growth Industries 2019

SECOND QUARTER

• › REC is actively exploring options in coordination with the USG to re-open markets for U.S.-made Polysilicon
• › Polysilicon is important for future economic growth, it is foundational to Semiconductor, Solar & in future Li ion Battery's/Electric Vehicles
• › REC Silicon is the only U.S. producer of Silane Gas which will be a critical material for Li ion Battery
• › "Made in China 2025" and the reliance on China is a growing concern globally

Source: Marco Rubio US Senator for Florida Web Site, Press Releases

The future of the Moses Lake FBR Facility

The PV Manufacturing Value Chain-

China has almost a Monopoly except within Polysilicon and Solar Module capacity

QUARTER 2019

SECOND

• "Others" consists of mainly South Korea, Taiwan, India, Vietnam, Malaysia

Sources:

Polysilicon: PV Infolink - Database dated April 23, 2019 Ingot, Wafer, Cell, and Module: BNEF, REC Silicon Data Base, Bloomberg

SECOND QUARTER

U.S. has Several Tariffs Layered on Imported PV Cells and Modules 2019

et k e ar ar M h S. S U.	6%	11%	0%	1%	3%	13%
01 2	0%	0%	0%	2.5GW without Tariff then 25%	25% Tariff
01 3				25%	25%
D V C D/ A	~140%		Total 166 GW/year	~30%	~30%

• › Section 201: All non-U.S. manufactured cells and modules (certain cell technologies exempt from tariff)
• › Section 301: China manufactured cells and modules
• › AD/CVD: China manufactured MGS, cells and modules

Sources: REC Silicon Data Base, Bloomberg

The U.S. is Globally the 2nd Largest Market for PV

U.S. Polysilicon Unable to Access the Solar Market Due to Unfair Chinese Trade Practices

• › The U.S. PV market is estimated ~15GW in 2019
  • Requires ~60,000MT of Polysilicon
  • The US Polysilicon capacity ~ 80,000MT
• › The U.S. Polysilicon industry is competitive
• › U.S Polysilicon is blocked from its domestic market as a result of China's domination of ingot and wafer manufacturing due to unfair policies
• › U.S. Polysilicon makers should be able to access the U.S. market when Solar continues to grow in the U.S. and receive policy support

Source: PV Infolink - Database July 2019

Silicon in Anodes Increases Capacity and Reduce Cost 2019

Why Put Silicon Into Li ion Batteries?

• › Improves energy density thereby reducing the weight of the Battery pack as well as the cost of the Battery
• › Dramatically increases the power acceptance of the Battery which allows much faster charging of Battery packs.
• › A Li ion Battery with an Anode comprised of 15% Si and 85% Graphite improves energy density by one third (from 220 Wh/KG to over 300 Wh/KG)
• › However the average price for the same Li ion Battery would drop from \$140 per kWh to ~\$98/kWh

Source: Cairn ERA

Silane Gas- The Preferred Source of Silicon in Anodes 2019

• › Silicon (1-3%) already in use in the anodes for batteries in the electronic industry
  • Target 30% within 5 years.
• › Electric vehicles will be the main driver
• › The global anode market could be \$10B in 2025
• › Silane Gas considered to be the best source of silicon
• › REC Silicon working closely with the most advanced R&D anode companies

Yulin JV Update

Yulin, China – REC Silicon Presence in Primary Market

• › Construction completed in 2018
• › Large scale silicon manufacturing facility with
  • 19,000 MT FBR-B granular Polysilicon
  • 300MT Siemens semiconductor grade Polysilicon
  • 500MT Silane Gas loading

• › Unplanned outage in Silane unit reduced production in H1/2019 – 2,400 metric ton produced
• › Production is expected to increase throughout H2 2019
• › The Silane units and the FBR reactors have demonstrated design capacities

Plant characteristics Positioned to capitalize on growing PV industry

• › Located in principal market China
• › FBR-B is semiconductor grade capable which is optimal for monocrystalline PV applications
• › Current REC ownership of 15%, option to increase exposure to 49% from January 2021

Short-Term Business Plan

Short Term Business Plan for REC Silicon 2019

• › Moses Lake FBR production curtailed on May 15, 2019
  • Organizational adjustment in Moses Lake July 15th, 2019
  • Preserve option value at minimal cost
• › Continue to operate stable and profitable Butte facility
  • Annual EBITDA contribution of USD ~50M
  • Minimal capex requirements to maintain facility – consistent cash flow contribution
• › Long term neutral cash flow in current market conditions

REC Silicon's Long Term Strategy for Moses Lake 2019

• › Re-opening of China markets
  • 100% FBR Utilization
  • Cash cost of ~\$8/kg
  • Higher polysilicon prices
• › Establish a Solar value chain which is independent of China
  • Re-open markets & establish new markets for U.S. produced Polysilicon
  • New Solar markets are rapidly developing and an alterative supplier to the China monopoly is required
  • › The Battery market
    • Substantial increase in demand for Silane expected

FBR Production **		FBR Cash Cost **
Q3	0MT	Q3	N/A
Q4	0MT	Q4	N/A
2019	1,770MT	2019	\$21.3/kg

Total Polysilicon Production
Q3	340MT
Q4	310MT
2019	3,138MT

Semiconductor Production
Q3	220MT
Q4	200MT
2019	920MT

Silicon Gas Sales
Q3	900MT
Q4	900MT
2019	3,463MT

2019 CapEx *
Maintenance	\$3M

** Additions to Property Plant and Equipment

** Reflects shutdown of FBR on May 15, 2019

Q3 2019 Reporting October 30, 2019

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