REC Silicon

Investor Presentation • Nov 4, 2015

November 4, 2015

Disclaimer

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 (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 third quarter 2015 results presentation on November 4, 2015. 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.

REC Silicon Q3 Financial Results	T. Torvund, CEO
U.S. / China Trade	F. Sullivan, CLO
Market Outlook	T. Torvund
Financial Overview	J. May, CFO
Yulin JV Update	T. Torvund
Near-term Strategy	T. Torvund
Guidance	T. Torvund
Q & A

REC Silicon ASA Third Quarter 2015 Highlights

Revenues: \$87.5 M

EBITDA: (\$14.1 M) Loss

Polysilicon Production

• Total polysilicon production 3,580 MT
• FBR cash cost \$13.8/kg

Polysilicon Sales Volume 4,512 MT

• 1,026 MT inventory reduction
• 13% Solar Grade price decline

Silicon Gas Sales

• 642 MT Silicon gas sales
• 17% Silicon gas price increase

Optimism for Trade War Resolution

• Negotiations are ongoing
• Uncertainty remains

Full Capacity Available when Trade and Market Conditions Permit

• Anticipate restart of Silane III and full capacity utilization in Moses Lake from January 2016
• Leverage low cost advantage to penetrate solar markets

REC Silicon ASA Q3 2015 Key Metrics

	Financials
	Revenue		\$87.5 M
		EBITDA (Loss)	\$14.1 M
		EBITDA Margin	(16%)
FBR Production			FBR	Cash Cost
Actual	2,863 MT		Actual		\$13.8/kg
Guidance*	2,920 MT			Guidance*	\$15.2/kg
Deviation	- 0.2%		Deviation		- 9%

Total Polysilicon Production
Actual	3,580 MT
Guidance*	3,600 MT
Deviation	- 0.5%

Semiconductor Production
Actual	282 MT
Guidance*	330 MT
Deviation	- 14.6%

Silicon Gases Sales Vol.
Actual	642 MT
Guidance*	720 MT
Deviation	-10.9%

* Guidance presented July 16, 2015

5 © REC Silicon ASA. All rights reserved. Confidential November 4, 2015

Q3 Production and FBR Cost Impacted by Silane III Shutdown

Polysilicon Production

FBR Cost

Q3 2015 Polysilicon ASPs Continued Downward Trend

FBR Prime vs. Spot Indices

› REC Silicon average Solar Grade sales price decreased 13% from Q2 '15 › Discount to spot reflects customer leverage › Trade war › Surplus supply-chain inventory › Anticipate increased Q4 '15 end-use demand to push spot pricing slightly higher JAN FEB MAR APR MAY JUN JUL AUG SEP OCT NOV DEC JAN FEB MAR APR MAY JUN JUL AUG SEP 2014 2015 Index I Index II Index III FBR PRIME

• › Silicon Gas Sales Volumes 642 MT
• 35% volume decrease vs. Q2 '15
• 17% avg. price increase vs. Q2 '15
• › Overall Silicon gas demand on track
• Slow Q3 '15 a result of forward sales in Q2 '15
• Forward sales likely to impact Q4 '15 and Q1 '16 sales

U.S. China Trade War

U.S. / China Trade War: Resolution is in Motion

• › SolarWorld & Chinese Panel makers a confidential "commercial deal" to settle Solar Panel dispute in August, 2015
• › U.S. Government consent & involvement required to make withdrawal of U.S. Duties on Chinese solar panels and this deal a reality in the U.S.
• › U.S. Government Concrete Condition: China market access is required for all U.S. Polysilicon makers for this to happen

Big win for China with a Package Solar Resolution Deal

What the resolution package means:

• › Improved access to valuable U.S. panel market
• › Current U.S. Duties significant cost to Chinese panel makers
• › Eliminate risk of retrospective U.S. Duty hikes
• › Without a deal the U.S. Duties will continue to handicap Chinese panels in future
• › Polysilicon shortage looming in China with poly prices \$2-5 higher than the ROW
• › Needed growth in wafer capacity expected outside of China without trade war resolution

Timing?

›

› Consensus building in China and internal processes underway

Market Outlook

Demand Estimates Up from Original 2015 estimates

58 GW Installation Forecast

• › 45% increase from 2014 actuals
• › ~41 GW installed through Q3
• › ~17 GW in Q4

Q4 Drivers

• › China: Q4 expected to be strong - 6 GW
• › U.S.: possible ITC expiration accelerating timing of utility scale development - 4 GW
• › Japan: restart of nuclear capacity and FiT reductions drive near term demand - 3 GW
• › India: national tender process in place, increased demand expected into 2016 - 1.7 GW

2015 PV Installation Forecast

13 © REC Silicon ASA. All rights reserved. Confidential November 4, 2015

› Cost-competitiveness

› Falling solar costs compared to other resources

› High electricity prices

› Retail and wholesale rates in key markets are high enough to support PV globally

› Structural factors

• › High growth in high isolation areas
• › Large gross demand needs globally

› Cost of capital

› Increasing access to cheaper finance, capital markets and the use of portfoliobased funds

Forecasted PV Installations and Share by Region

Source: GTM Research, October 2015

Limited Additional Polysilicon Capacity Expected in Coming Years

Source: Financial reporting, industry analysts, REC Internal database

Polysilicon Supply

Semi Semi Semi Semi ROW ROW ROW ROW China Top 3 China Top 3 China Top 3 China Other China Top 3 Other China Other China Other China 58GW 67GW 78GW 95GW 0 100 200 300 400 500 2015 2016 2017 2018 Polysilicon (kMT) Total Poly Demand

Polysilicon near-term Supply Demand

• › GTM Research Installed PV demand estimates › growth 15% – 23% annually
• › Balanced supply and demand by year-end 2016

Source: PV Demand GTM Research October 2015 and Internal REC database. Note: PV poly demand based on 5 g/w through 2017 4.9g/W in 2018

Financial Review

Revenues - \$87.5 M

• › Increased Polysilicon Sales Volumes
• 18% Sales Volume Increase from Q2'15
• 13% Solar Grade Price Decrease from Q2'15 (Excluding Fines & Powders)
• › Silicon Gas Sales Volumes 642 MT
• 35% Sales Volume Decrease from Q2'15
• 17% Price Increase Compared to Q2'15

EBITDA – Loss of (\$14.1 M)

• Higher Polysilicon Volumes
• Lower Polysilicon Prices
• Higher Unit Costs due to Silane III Shutdown

* Excludes Special Items of USD 101 million Gain on Sale of Technology to the Yulin JV

Q3 2015 Cash Flows

Cash Flows From Operating Activities \$8 M

• › EBITDA Loss of (\$14.1 M)
• › Working Capital Decrease \$23.9 M
• Decreased Inventories \$14.7 M
• Decreased Accounts Receivable \$8.1 M
• Increased Accounts Payable \$1.1 M
• › Interest payments (\$2.1 M)

Cash Flows From Financing Activities \$53 M

• › Debt \$10 M
• Sale of NOK 155 M REC03
• Redemption of NOK 55 M REC02
• Transaction Costs of NOK 1.3 M
• › Equity \$43 M
• Issuance of 230 Million Shares at NOK 1.55 per Share
• Gross Proceeds of NOK 356.5 M
• Transaction Costs of NOK 7.8 M

Nominal Net Debt - \$114 M

• › Decreased by \$40.8 M from Q2'15
• › Increase in Cash of \$45.5 M
• › Increase in Nominal Debt of \$4.7

Nominal Debt - \$208 M

• › Increased by \$4.7 M from Q2'15
• › Increased by \$10.4 M due to:
  • › Repurchase of NOK 55 M REC02
  • › Sale of NOK 155 M REC03
• › Decreased by \$5.7 M due to Stronger US Dollar

USD million

• Indemnification Loan (NOK)
• 2016 NOK Bond (May 2016)
• 2018 NOK Bond (May 2018)
• 2018 USD Convertible Bond (Aug 2018)

Yulin JV – On Track

• › Equipment tendering in progress, >50% issued or awarded
• › Bids awarded for major items and fabrication has begun
• › Major site piling completed in November
• › Critical excavation and foundation work started
• › Mechanical construction to start after 2016 Chinese New Year holiday
• › Negotiations on-going to defer equity contribution

Yulin JV Administrative buildings October, 2015

Near-term Strategy

REC Remains Low Cost Polysilicon Producer

› Low spot prices due to excess inventory but expected to increase with drawdown › Cash cost for non U.S. producers has dropped due to currency changes

Source: REC internal database; spot price is average of industry indices

Approximately 20% of Silicon Wafers Produced Outside China

• › 2015 Wafer capacity estimated at 70 GW
• › China accounts for 78% of wafer production
• › Wafer capacity outside China ~ 75k MT polysilicon

Source: GTM Research.

Continuing to Reduce Reliance on China

Increased Sales to Rest of World

• › Polysilicon prices discounted to gain Rest of World Share
• › Discounted pricing expected to diminish as polysilicon demand increases

Decreased Inventory Levels in 2nd Half of 2015

• Inventory Increases through 1st Half Due to:
• › Trade War (limited access to China)
• › Excess polysilicon supply
• 2nd Half Inventory Reduction Due to:
• › Lower production (Silane III shutdown)
• › Increased sales (18% Q3 increase)
• › 1,026 MT decrease in Q3 2015
• › 1,700 MT decrease expected Q4

Target Inventory Levels: › ~60 Days supply (3,000 MT)

Sufficient Liquidity Expected Without Trade War Resolution

› Cost and Efficiency Improvements

• Headcount Reduction
• Defer Planned Maintenance Outages
• Limit Capital Expenditures
• Delay Expenditures Where Possible
• › Gradual Solar Grade price increases
• Supply/Demand balance tightening
• › Full FBR capacity from January 2016
• Restart dependent on:
  • Trade War status
  • Market Conditions

	FBR Production		FBR Cash Cost		Silicon Gas Sales
Q4	2,220 MT		Q4	\$17.1/kg	Q4	700 MT
2015	14,000 MT		2015	\$12.4/kg	2015	3,060 MT

Semiconductor Production			Total Polysilicon Production	CapEx
Q4	300 MT	Q4	2,980 MT		Maintenance	\$14 M
2015	1,210 MT	2015	16,840 MT		Expansion	\$41 M

2015 Total \$55 M

Q4 2015 Reporting February 12, 2016