REC Silicon

Investor Presentation • Oct 30, 2019

THIRD QUARTER 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 third quarter 2019 results on October 30, 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.

THIRD QUARTER

Q3 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

Revenues: \$36.4M EBITDA Loss: (\$ 5.6M)

September 30, 2019 cash balance of \$46.2M

• Cash increase of \$7.8M
• Cash inflows from operations \$9.0M
• Working capital decrease of \$17.4M

Silicon gas sales

• Sales volume of 860MT (vs. guidance of 900MT)
• (0.5%) Silane gas price decrease vs. Q2'19

Semiconductor segment polysilicon sales

• Sales volume of 194MT (decrease of 44.8% vs. Q2'19)
• 10.7% Semiconductor grade polysilicon price decrease vs. Q2'19

Shutdown of Moses Lake FBR facility

• Curtailment of FBR production on May 15, 2019
• Workforce reduction announced on July 15, 2019
• \$2.2M reorganization costs
• Long-term shutdown until significant positive developments in solar grade polysilicon markets occur

Plan initiated to investigate the sale of the Butte, Montana plant

• Will be sold only if an acceptable bid is received
• Proceeds will be used to retire debt, provide a buffer for contingent liabilities, and prepare to restart FBR

PV Market Outlook

THIRD QUARTER

2019

• › 2019 global demand forecasted approximately 118GW
• China forecast 2019 ~30GW
• US forecast 2019 ~15GW
• EU forecast 2019 ~23GW
• ROW forecast 2019 ~50GW
• › 2020 global demand expected to be approximately 131GW

2018 - 2025 Global Module

Source: PV Infolink - Database October 2019

Quarterly Installation Estimates: 2019 – 2020 2019

• › Total forecast in 2019 Q4 is approximately 30GW
• China forecast 2019Q4 ~11GW
• US forecast 2019Q4 ~4GW
• EU forecast 2019Q4 ~5GW
• ROW forecast 2019Q4 ~10GW

Source: PV Infolink - Database October 2019

FINANCIAL REVIEW

(USD million)	Q3 2019		2019 YTD		2018
	Revenues	EBITDA	Revenues	EBITDA	Revenues	EBITDA
Semiconductor Materials	29.7	8.2	96.7	32.5	152.9	52.2
Solar Materials	6.6	(6.1)	31.7	(22.8)	69.2	(26.6)
Other	0.0	(7.7)	0.0	(19.6)	-	(30.0)
Eliminations	-	-	0.0	0.0	(0.9)	(0.5)
REC Silicon Group	36.4	(5.6)	128.4	(9.9)	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)
	Q3 2019	2019
Semiconductor Materials	1.2	4.2
Solar Materials	1.8	5.5
Other	0.0	0.0
Eliminations	-	-
Total Impact of IFRS 16	3.1	9.7

Key Financial Results – Semiconductor Materials 2019

Key Financial Results – Solar Materials and Other 2019

Solar Materials

Revenues: \$6.6M (45.8% decrease vs. Q2'19) EBITDA Contribution: (\$6.1M) Loss

• › Polysilicon sales volumes 961MT (44.7% decrease vs. Q2'19)
• (8.7%) Average price decrease vs. Q2'19 (Low Mix of Prime)
• (3.2%) Prime grade solar price decrease vs. Q2'19
• › Net expense while FBR is not in operation
• Expect approximately \$5M per quarter net cost

Other and Eliminations

• › Net cost: (\$7.7M) (compared to \$5.3M in Q2'19)
• Includes \$2.2M Reorganization Costs

THIRD QUARTER

Cash Flows 2019

Cash inflows from operating activities \$9.0M

• › EBITDA loss of (\$5.6M)
• › Working capital decrease \$17.4M
• Decrease in inventories \$7.4M
• Increase in receivables \$8.0M
• Decrease in payables \$2.0M
• › Interest paid (\$1.5M)
• › Currency loss of (\$1.1M) (stronger USD vs. NOK)
• › Other (\$0.2M)

Cash inflows from investing activities \$0.4M

• › Capex (\$0.1M)
• › Decrease in restricted cash \$0.5M

Cash outflows from financing activities (\$1.6M)

› Payment of lease liabilities (\$1.5M)

Nominal debt - \$182.3M › Decrease of \$2.7M in Q3'19 - \$1.2M Increase in Lease Liabilities (IFRS 16) - \$1.5M Due to stronger USD relative to NOK Nominal net debt - \$136.1M › Decrease of \$10.5M in Q3'19 - Increase in cash of \$7.8M - Decrease in nominal debt of \$2.7M Contingent Liabilities › Reassessment of tax - \$28.2M › Indemnity loan - \$22.0M › 2012 Property tax appeal - \$7.7M Sept 2019 \$46M \$46M \$22M Available To Be

USD Million

SILICON GAS & EG POLYSILICON

Macro Drivers for Semiconductor Industry …aligned with the future trends

THIRD QUARTER 2019

› Internet of Things (IOT)

› 5G

• › Display/Flex Display
• › PV/Renewable Energy
• › Auto
• › Increasing content
• › EV/Autonomous

THIRD QUARTER

Value Creation at REC Silicon 2019

Siemens reactor - based polycrystalline silicon deposition process

Silicon Gases

Silicon Gases in REC Silicon's Portfolio 2019

• › Silane (SiH⁴ ) Applications
• Thin Film Transistor (TFT)
• Semiconductor Devices
• Photovoltaic (PV)
• › Dichlorosilane (DCS) (SiCl2H² ) Applications
• Semiconductor Devices
• Ceramics
• Advanced Material/Gas Precursor
• › Monochlorosilane (MCS) (SiH3Cl) Applications
• Semiconductor Devices
• Advanced Material/Gas Precursor
• › DiSilane (Si2H⁶ ) Applications

• Semiconductor Devices

• Global Silane Supply Stack › Largest producer and distributor of Silane Gas

• Unmatched experience and safety record
• Recognized product quality and reliability
• ~70% Semiconductor market share
• › Infrastructure to protect market share
  • Large module fleet
  • Secure distribution channels
• › Available capacity to support market growth

20 © REC Silicon ASA. All rights reserved. Confidential October 30, 2019

• MCS, DCS, DiSilane

• Used with advanced technology

• China = 12%

Silicon Gases

forecasted

capacity

• Inventory control

• Short term demand uncertainty

› Strong future demand growth

• Autonomous and EV

• Driven by mega trends - 5G - IoT

Silicon Gas Sales Follow Trends in End Markets 2019

QUARTER

THIRD

Silicon Anode Increases Li Battery Capacity ~30% 2019

• › Study and application focused on increasing Si content
• Increase energy density
• Increase charging speed
• › Significant optimism around Silane as silicon source
• › Small but growing volumes of Silane being supplied now
• Start Ups/Pilots
• R&D
• › Available Silane capacity an advantage
• Allows for compression of adoption timeline and ramp up

Semiconductor Polysilicon

THIRD QUARTER

2019

Overview of Polysilicon Quality 2019

• › Float Zone (FZ)
• Power IC/Discrete application
• Most stringent quality requirements
  • Highest resistivity available
  • Lowest intrinsic impurities
  • Tight tolerance physical properties
• › Electronic Grade (EG)
• Semiconductor application
• Highest CZ quality
  • < 5 ppba
  • Low bulk and surface impurities
• › Photovoltaic Grade (Mono)
• Mono PV application
• Standard grade CZ
  • <10ppba metallic
  • Low bulk impurities
• › Photovoltaic Grade (Multi)
• Multi PV application
• Lower grade CZ
  • <50ppba metallic
  • Higher impurity level

Float Zone Polysilicon Most advanced and pure polysilicon manufactured

• › Primary and preferential product produced in Butte
• REC is one of two FZ producers
• › Applications
• High voltage grid
• Renewable energy
• High speed trains
• Electric vehicles

› Market attributes

• Contracts
• Ownership relationships
• Long term supply relationships

Electronic Grade Polysilicon 2019

• › Top 5 Wafer Companies are 90% of production
• China is <5% of demand
• › Semiconductor market
• Demand weakness for semi wafers
• Demand recovery forecasted H2/2020
• › Focus on high end Float Zone polysilicon
• 2 Producers globally of Float Zone
• Product Mix is optimized for highest value creation including volume trade offs

Moses Lake Options

Different Paths to Create Business Opportunities for Moses Lake 2019

› Reopening of the China market for US polysilicon

• › The establishment of a PV value chain outside of China with considerably lower CO² footprint
• › Pursue and optimize opportunities for REC's silane for the silicon anode market for LI Batteries

Source: Cairn ERA

China Tariff Update

• › "Phase One Trade Agreement" to be signed at APEC November 16- 17, 2019 in Santiago
• China purchase of US products a major part
• Potential opportunity for US polysilicon
• › Start of normalization of China trade relations creates path forward to end longstanding Chinese trade embargo on US polysilicon

A Non-Chinese PV Value Chain

The PV Manufacturing Value Chain

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

THIRD QUARTER 2019

Sources:

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

REC Silicon has lowest Carbon Footprint

› China's PV Value Chain is based on Coal Fired Power – generating the highest CO² in the industry

THIRD QUARTER

2019

› REC Silicon has the lowest CO² footprint due to FBR technology

THIRD QUARTER

2019

footprint

US Tariffs on Imported PV Cells/Modules has tripled US Module capacity in 2 years

THIRD QUARTER 2019

et k e ar ar M h S. S U.		~15 GW	No Capacity	1.0 GW	From 2GW to 6GW since tariff was implemented	14-16 GW
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

Silicon Anode Battery Opportunities

THIRD QUARTER

2019

Silicon Battery Anodes Increase Performance by ~30% 2019

• › Tesla Competitive Advantages
• More range per battery kwh
• More power per batter kwh
• › Tesla is the only company known to use the SiO² mixed with graphite in the Battery Anode

Elon Musk: "Our cells should be called nickel-graphite, because primarily the cathode is nickel and the anode side is graphite with silicon oxide…the main determinants on the cost of the cell are the price of the nickel and the cost of the synthetic graphite with silicon oxide coating"

Extensive R&D to increase the content of Silicon in the Battery Anode

Yulin JV Update

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

Near Term Outlook

• › Q3 Production of 1,350MT
• › High purity FBR production underway
• › Siemens FZ and CZ qualifications underway
• › ~12MT Silane Loaded for PV qualification

Business Plan

Why Divest Butte? 2019

• › REC Silicon will divest Butte if an acceptable offer is received
• › Leading arguments for a possible divestment:
• Semiconductor is not the core business for REC's investors
• Butte's silane gas and semiconductor grade polysilicon businesses operate in mature and niche markets
• Interesting growth opportunities both in silicon gas and polysilicon

• Divestment of Butte will strengthen REC's balance sheet

• › Semiconductor market is mature, translating into steady financial results that can be shown historically

• › REC's good reputation in the marketplace is a positive selling point
• › Semiconductor market is worldwide

• Demand for silicon gases outside of China is expected to remain steady, even if trade issues continue

• › Strengthen Balance Sheet

• REC will be a debt-free company
• › Facilitate REC's active participation in establishment of PV value chain outside of China
• › Capacity to support commercialization of Silicon Li battery anode
• › Increase ownership in the Yulin JV
• › Finalize the investment in RX 25/26 to produce EG FBR quality

Short Term Business Plan for REC Silicon 2019

• › Prepare divestment of the Butte facility if an acceptable offer is received
• ROTH Capital Partners has been engaged as advisors
• › Continue to operate stable and profitable Butte facility
• Annual EBITDA contribution of USD ~40-50M
• Minimal capex requirements to maintain facility
• › Moses Lake FBR production curtailed on May 15, 2019
• Preserve option value at minimal cost

The future for REC Silicon

Silane-based Polysilicon Company serving the fast-growing PV sector Globally

• › REC is the leading company using highly efficient FBR technology
• › REC is the leading company which produces silane as feed stock for the polysilicon process
• › REC's Silane is experiencing growing interest from the fast-emerging Silicon Anode industry
• Moses Lake Silane capacity is 25,000 MT/year
• › REC has production capacity in the two biggest PV markets, China and the US

Q4 2019 Reporting February 14, 2020

recsilicon.com