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REC Silicon Investor Presentation 2015

Feb 13, 2015

3726_rns_2015-02-13_d44196c8-a36e-4415-868a-428368a7219a.pdf

Investor Presentation

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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 Fourth quarter 2014 results presentation on February 13, 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.

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REC Silicon ASA Fourth Quarter Highlights

Revenues: \$126.2 M

EBITDA: \$38.0 M

Record Polysilicon Production

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Strong Silicon Gas Sales

  • 848 MT Sales
  • Silicon gas prices remained stable

Q4 PV Market Weaker than Anticipated

  • 2014 polysilicon demand approx. 270,000 MT
  • REC solar grade prices impacted by trade dispute

Expansion Initiatives On-track

  • Yulin JV \$75 M equity contribution paid
  • Rx 25/26 Expansion underway

REC Silicon ASA Q4 2014 Key Metrics

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* Guidance presented November 4, 2014

5 © REC Silicon ASA. All rights reserved. Confidential February 13, 2015

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Record High Polysilicon Production in Q4 2014

Polysilicon Production

FBR Cost

Q4 2014 FBR ASPs Down Compared to Spot Indices

  • › Average total polysilicon price dropped 12% in Q4 compared to Q3
  • › Trade dispute negatively impacted FBR Prime ASPs
  • › FBR Prime ASPs discounted to secure volume

Q4 2014 Shipments and Productive Capacity Expectation

Tier 1 Shipment Estimates Total Available Capacity

Tier 1: Daqo, GCL, Hemlock, Mitsubishi, OCI, Osaka Titanium, REC, SunEdison, Tokuyama, Wacker

Productive Capacity figures include non Tier-1 additional capacity of 47kMT in 2014 and 63kMT in 2015-2016

Source: Financial reports, press releases, construction/production calculations

Q4 2014 Silicon Gas Sales Remained Strong

  • › Strong Sales Volumes
  • 48MT Over Guidance
  • › Silicon gas prices remained stable from Q3
  • ›Display and PV demand up
  • › Competitive capacity restart ramping and qualifying material in Q1'15

Silicon Gases (MT)

US/China Trade Dispute Timeline (Impacts only Solar grade FBR)

SolarWorld 1 Case

  • › AD/CVD applies to Chinese cells, prompting Taiwanese cell loophole
  • › Dec 31, 2014 announcement: AD/CVD reduced to approx. 17% in Preliminary Determination of 1st Annual Review
  • › Final Determination of 1st Annual Review expected mid-year 2015

SolarWorld 2 Case

  • › Applies to Taiwanese cells and Chinese panels containing foreign made cells, closing the SolarWorld 1 loophole
  • ›Dec 17, 2014 Final Determination 77-90%

Industry analyst view:

"This is a big loss for SolarWorld, and a big win for the Chinese manufacturers"

"The likelihood is that cash deposits…are going to go down from ~31% to 15% for most Chinese manufacturers beginning in either May or June of this year…."

  • GTM ResearchJanuary 22, 2015

Potential MOFCOM Tariff Review

  • › FBR costs have decreased since original investigation period
  • › Current 57% tariff based on investigation period Jul 2011 – Jun 2012
  • › New period of review Jan 2014 – Jan 2015
  • › MOFCOM discretion whether to undertake the review
  • Request to be made by Feb 19, 2015
  • Potential revision not likely until Q1 2016

Polysilicon & Silicon Gases Market Outlook

Market Highlights

PV Polysilicon

2014 supply and demand relatively balanced until late Q3/Q4, when China enddemand weakened, which may lead to excess channel inventory in early 2015.

Overall supply for 2015 should be sufficient for potential demand scenarios

Long-term contracts will continue to expire through 2015 driving more spot transactions and greater equilibrium between spot and contract price

Silicon Gases

Market growth in all segments for second consecutive year in 2014

Continued market growth is predicted for Integrated Circuit, Flat Panel and PV segments

Advanced silicon gases have higher growth potential associated with new technology adoption

Potential for further production retirement this year due to re-started capacity and limited market share opportunity

GW

  • › 2014 estimates 44 – 47 GW
  • However actual polysilicon shipments indicate inventory build and lower demand
  • ›2015 estimates 53 – 57 GW
  • ›2016 estimates 58 – 64 GW

2015 Solar Grade Polysilicon Capacity vs. Cash Cost

Note: Excludes Semiconductor grade and excessive polysilicon inventory in value chain Source: REC internal database

16 © REC Silicon ASA. All rights reserved. Confidential February 13, 2015

REC Product Mix Response to AD/CVD

57% Tariff does not apply to: Siemens EG, PV Tolling, PV China Free Trade Zone (FTZ), PV China Process in Trade (PIT), ROW PV, Silicon Gases

China Market Price

› Internal China market price sets benchmark

Process in Trade Price

› Lower than China Market Price due to Process In Trade customers extracting some value for bonded book access scarcity and other applicable importrelated taxes/costs

Outside China Price

› Lower than China Market and Process in Trade Prices because customers outside China extract value for access to nontariffed markets and increased choice

China Non Process in Trade Price

› Lowest price due to discount for 57% tariff

AD / CVD Impact on Market ASPs

Continued Market Leadership in Silicon Gases

  • › Largest Silicon gas consumers
  • Flat Panel Displays
  • Semiconductor
  • PV
  • › Mobile devices and IC miniaturization driving demand of additional high growth advanced silicon gases
  • › Significant volume under secure contractual obligations
  • › REC Silicon #1 or #2 in market share for each gas

Silicon Gases Demand Outlook

Note: REC internal model built with industry demand side information from: I.H.S. DisplaySearch, SEMI, IC Insights, LINX Consulting, Sage Concepts, BNEF, Greentech Media, Energytrend

Financial Overview

Financial Results – Total and Continuing Operations

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›REC Silicon & Other

  • Continuing operations
  • REC Silicon Includes Special Items of USD 101 million for Transfer of Technology to the Yulin JV (*)

›EBITDA of \$38.0 M

  • REC Silicon Segment EBITDA of \$38.2 M
  • Parent Company Expenditures of \$0.2 M

Q4 2014 Key Financial Results

Revenues - \$126.2 M

  • Unchanged from Q3 2014
  • › Increased Polysilicon Revenues
  • ~18% Sales volume increase from Q3 2014
  • ~12% Average price decrease from Q3 2014
  • › Continued Strong Silicon Gas Sales
  • Sales prices remained stable
  • Higher spot market sales as competitive capacity is restarted
  • Sales volume of 848 MT (11% decrease from Q3 2014)

EBITDA - \$38.0 M

~15% Decrease from Q3 2014

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

Operations - \$30.5 M

› Working capital increase due to Increased Inventories and Accounts Receivable

Yulin JV Equity Contribution \$75 M paid in October, 2014

Nominal Net Debt - \$112 M

  • ›Increased by \$48 M from Q3 '14
  • ›Reduced by \$265 M in 2014

Nominal Debt - \$208 M

  • › Reduced by \$16 M in Q4'14 due to changes in currency exchange rates
  • ›Reduced by \$169 M in 2014

Expansion Initiatives

Yulin JV – On Track

›Q4 Activities

  • Detailed engineering with Fluor in Shanghai well underway
  • REC made \$75 M capital contribution in October
  • Purchase orders for long-lead items issued

›Q1 Activities

  • Recruitment of technical personnel and preparation for operational training in U.S.
  • Detailed engineering with Fluor continues

YULIN JOINT VENTURE:

  • • 18,000 MT granular polysilicon, 1,000 MT Siemens polysilicon, 500 MT Silane gas
  • •Next generation Fluid Bed Reactors (FBR-B)
  • • Technology transfer limited to China and Taiwan

Moses Lake and Butte – On Track

  • ›Building permits obtained
  • ›Construction activity commenced
  • › Start-up
  • Silane I: Q3 2016
  • Rx 25 & 26: Q3 2016

MOSES LAKE AND BUTTE EXPANSION:

  • •Adding 3,000 MT granular polysilicon
  • •Next Generation Fluid Bed Reactors (FBR-B )
  • •Restart Silane I - 3,000 MT
  • •Silane loading Butte - additional 1,200 MT
  • •Estimated cost USD 115 million

2014 Review

Q1 and 2015 Guidance

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Q1 2015 Reporting May 6, 2015

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