REC Silicon

Investor Presentation • May 9, 2019

1 © REC Silicon ASA. All rights reserved. Confidential

Annual General Meeting 2019

Annual General Meeting

2019

PRESENTATION

FINANCIAL REVIEW

CFO James A. May II

(USD million)	2018			2017
	Revenues	EBITDA	EBIT	Revenues	EBITDA	EBIT
Solar Materials	69.2	(26.6)	(466.7)	127.8	(1.7)	(131.1)
Semiconductor Materials	152.9	52.2	86.6	147.5	55.3	39.5
Other	-	(30.0)	(26.4)	-	(32.7)	(34.7)
Eliminations	(0.9)	(0.5)	(0.5)	(2.9)	(1.2)	(1.2)
Total	221.2	(4.9)	(407.1)	272.4	19.8	(127.5)

Key Financial Results - 2018

2019

Solar Materials

Revenues: \$69.2M (45.9% Decrease vs. 2017) EBITDA Contribution: (\$26.6M) Loss

› Polysilicon sales volumes 6,232MT (45.6% Decrease vs. 2017) - 19.0% Average price increase vs. 2017

Semiconductor Materials

Revenues: \$152.9M (3.7% Increase vs. 2017) EBITDA Contribution: \$52.2M

• › Polysilicon sales volumes 1,552MT (26.1% decrease vs. 2017)
  • 18.0% Average price Increase vs. 2017
  • 1,076MT Semiconductor Polysilicon Sales Volumes
    • 24% Semiconductor Grade Price Decrease
• › Silicon gas sales volumes 3,600MT (2.8% increase vs. 2017)
  • (2.0%) Silane price decrease vs. 2017

Other and Eliminations

Net cost: (\$30.5M) (9.9% Decrease vs. 2017)

EBITDA Loss of (\$4.9M)

Compared to 2017 EBITDA of \$19.8M

• › Lower Solar Grade Volumes and Prices
• › Lower Production Volumes / Higher Unit Costs

Revenues EBITDA

Cash Flows 2019

Cash Flows From Operating Activities (\$10.1M)

• › (\$ 4.9M) EBITDA
• › (\$11.0M( Working Capital Decrease
  • (\$11.6M( Decrease in Accounts Receivable
  • (\$ 3.8M( Decrease in Inventories
  • (\$ 4.3M) Increase in Accounts Payable
• › (\$14.4M) Interest payments
• › (\$ 2.7M) JV Equity Settlement
• › (\$ 1.7M( Fx
• › (\$ 0.9M) Other

Cash Outflows From Investing Activities (\$1.2M)

• › (\$ 1.7M) CapEx
• › (\$ 0.5M) Sale of Fixed Assets

Cash Outflows From Investing Activities (\$61.4M)

• › (\$ 56.6M) Repurchase and Maturity of REC03
• › (\$112.8M) Repurchase and Maturity of USD Convertible
• › (\$110.0M( Issue of Senior Secured USD Bond
• › (\$ 2.0M) Transaction Fees

USD million

Debt at December 31, 2018

Nominal Debt - \$133.0M

• › Decrease of (\$56.9M) in 2018
  • (\$ 55.5M) Retirement of REC 03
  • (\$110.0M) Retirement of USD Convertible
  • (\$ 1.4M) Fx due to a Weaker USD (Indemnity)
  • (\$110.0M( Issuance of USD Senior Secured

Nominal Net Debt - \$101.2M

• › Increase of \$15.8M in 2018
  • (\$72.7M) Decrease in Cash
  • (\$56.9M) Decrease in Nominal Debt

Contingent Liabilities

• › Reassessment of tax \$29M
• › 2012 Property tax appeal \$7.5M

Short Term Business Plan 2019

• › Curtail Moses Lake FBR production on May 15, 2019
  • Move to full capacity utilization if access to China market restored
  • Long-term shutdown by June 30, 2019 if access to China market not restored
  • 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 flows in current market conditions

2019

Private Placement of Equity – April 9, 2019

Liquidity development through December 2020 (USDM)

• › If market access to China is postponed, REC Silicon will retain sufficient liquidity
• › Moses Lake solar polysilicon inventory depleted in Q3 2019
• › Stable Butte business will carry cash flow requirements for the group
• › A non-recurring restructuring charge of USD 3.7M to be incurred in Q2 2019
• › Remaining JV equity settlement payments of USD 3.1M in Q2 2019 and 5.2M in Q1 2020

Note: EBITDA reflects operating results prior to the adoption of IFRS 16 leases in order to maintain comparability

CEO Tore Torvund

Massive long term growth for solar PV 2019

• › PV has become the fastest growing source of new power generation globally
• › Robust global PV demand growth in 2018 despite reduction of solar incentives in China
• › Rapid growth expected to continue as solar has become the cheapest source of power in solar rich regions
  • Growth consistently outpaces analyst expectations
• › Long term demand growth supports option value of Moses Lake FBR facility

Source: IHS Markit Installations Tracker March 15, 2019 Source: BNEF

Quarterly Installations in 2019 by Region 2019

• › China driving 2H demand - China 35-45GW in 2019
• › USA installations remain steady
• › Europe strong growth in 2019
• › India declining through the year
  • Fiscal year ends March 31

Source: PV Infolink - Database April 23, 2019; Bloomberg PV Market Outlook, Q1 February 21, 2019, IHS Markit PV Installations Tracker March 15, 2019

Continued Pricing Pressure on Polysilicon 2019

• › Oversupply in China driving prices lower
  • Several China polysilicon undergoing maintenance shutdowns
• › China FIT policy clarification to improve demand in 2H 2019
  • Second half demand expected to reduce inventory

"Almost all Polysilicon Enterprises are Facing Losses"

2019

Source: China Silicon Industry Association

Source: BNEF Source: China Silicon Industry Association

Polysilicon Weekly Review - Touching historical lows again (April 17, 2019) Domestic polysilicon market prices have bottomed out this week after experiencing a two-month downturn

Three Reasons:

• › First- long-term low-cost transactions, polysilicon enterprises internal silicon stocks have been exhausted no supply pressure
• › Second- polysilicon prices fell to historical lows compared with 58.9% at the beginning of 2018 domestic Almost all polysilicon enterprises are facing losses. Some trade companies and downstream enterprises with high acumen have already seen the opportunity to make bottom-selling. The demand for single polycrystalline is now picking up.
• › Third- some polysilicon enterprises started maintenance this week and overhaul in May. The plan has increased the atmosphere of market stabilization and recovery.

Polysilicon remains a drag on group EBITDA and FCF Sales in Polysilicon were down 4% YOY as strong volume growth (xxxxxxxxxxxxxxxxxxxxxxxxxxx) could not offset lower ASPs. EBITDA was even weaker than expected xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx due to low prices as well as writedowns of inventory and higher energy cost. XXXXXX noted that it currently does not see prices improving and we also expect the division to remain a drag on group earnings and FCF going forward as prices are likely to remain below cash cost. Positive news flow out of China (solar targets) could provide temporary relief, however. Source: Kepler Cheuvreux

2019

• › Still seeing production curtailments inside and outside China
• › Continued capacity increases will put further pressure on non cost competitive companies

		Source: PV Infolink -	Database April 23, 2019

Annual General Meeting FBR is a More Advanced Technology than Siemens in Making Polysilicon for the PV Industry

2019

REC Silicon is the Cost Leader at Design Capacity 2019

Polysilicon industry unit cash costs¹

• › REC Silicon highly competitive cost position if able to operate at full rates
• › Current record low prices will not sustain the polysilicon industry
• › Re-opening of polysilicon market in China will force

Source: REC Silicon internal research

US/China Trade Negotiations On-Going & Optimistic 2019

Addressed to:

State Representative Gianforte

• › Ongoing high level meetings between China and the US
• › Substantial optimism in the markets that parties will conclude a deal
• › No announcement of a signing meeting between President Xi and President Trump continued speculation this will occur in late May or latest at G20 meeting in Osaka in June
• › Withdrawal of China's tariffs on US polysilicon has been widely reported to be a key priority of the US
• › The US Trade Representative (USTR) has repeatedly publicly committed to work towards a re-opening of the China market for US polysilicon as part of a trade deal
• › USG continues to negotiate from a position of strength
  • Economic indicators strong in US economy
  • Bipartisan support
  • International support

Source: CNBC April 26, 2019

Source: New York Times April 26, 2019

Polysilicon Foundational to Growth Industries 2019

• › Polysilicon foundational to semiconductor solar & in future LIBs/electric vehicles
• › REC Silicon is the only US producer of Silane Gas which is becoming a critical material for LIBs
• › Focus on countering China's industrial policies
  • Solar
  • Semi-conductor
  • Planned dominance in batteries
• › Reducing reliance on China
• › Made in China 2025 a growing concern globally Members of the U.S. trade delegation Robert Lighthizer and Steven Mnuchin

arrive at a Hotel in Beijing, China March 28,2019. REUTERS/Jason Lee Source: Business News April 23,2019

2019 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

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
• › Fits with China long-term technology goals

Near Term Outlook

• › Unplanned outage in Silane unit reduced production in Q1/2019 - production resumed
• › Production is expected to increase throughout H2 2019
• › The Silane units and the FBR reactors have demonstrated design capacities

Growth for Semiconductor Polysilicon 2019

• › Semiconductor polysilicon used in a wide range of microelectronic devices
• › REC outpacing market growth in the short term due to market re-entry

REC Shipments - Semiconductor

20 © REC Silicon ASA. All rights reserved. Confidential May 9, 2019

Source: The McClean report 2019 - by IC Insights, Inc.

Growth for High Margin Silicon Gases 2019

• › Silicon gases used in flat panel display (FPD), semiconductor, and PV applications
• › Dominant position in consistent high growth/margin semiconductor and FPD applications

Flat panel display capacity 2008-

Source: IHS Markit AMOLED and LCD Supply Demand & Equipment Tracker – Q4 2018

REC Shipments - Silicon Gases

Annual General Meeting 2019 Use of Silicon in Anodes Could Increase the Overall Capacity of Lithium Batteries by 30-40%

• › Silicon anode can theoretically hold 10x electrons compared to graphite
• › Silicon 300x expansion is the main problem
  • Several companies working on solutions
• › The global anode market could be \$10B in 2025
• › REC Silicon is in discussions with the main companies

Silicon-based anodes offer more energy density than graphite and more stability than lithium

ANODE SPECIFIC MATERIAL CAPACITY, (mA h)/g :		VOLUME CHANGE, %	BENEFITS	CHALLENGES
Lithium	3.862	None	light	Highest energy density: Unstable: slow charge rate
Silicon	3.600	320%	High energy density	Capacity fade due to damage from expansion and contraction
Aluminum	2.235	604	Better energy density than graphite	: Worse energy density and more expansion than silicon
Tin	990	252	Stabler than silicon	Worse energy density than Silicon
Graphite	372 10		Stable; widely used	Poor energy density

Source: Prog. Mater. Sci. 2014, DOI: 10.1016/j.pmatsci.2014.02.001; C&EB research. Note: (mA h)/g is a measure of the amount of charge (electrons) per gram of material

Potential Upside for REC Silicon 2019

• › Re-opening of China markets
  • 100% FBR Utilization
  • Cash cost of ~\$8/kg
  • Higher FBR ASP
• › Increased ownership in Yulin JV
  • Attractive option to increase from 15% to 49% in January 2021
• › The battery market
  • Substantial increase in demand for silane