Nickel Industries Limited · ASX:NIC
Nickel Industries — Nickel Mines — Investor Presentation (October 2019)
32 slides from Nickel Industries's investor presentation, Oct 3, 2019
Slide 1: Presentation to Investors
ABN 44 127 510 589 Level 2, 66 Hunter Street Sydney NSW 2000 Australia T: +61 2 9300 3311 F: +61 2 9221 6333 E: info@nickelmines.com.au 3 October 2019 The Manager Companies ASX Limited 20 Bridge Street Sydney NSW 2000 (32 pages by email) PRESENTATION TO INVESTORS Nickel Mines Limited (‘the Company’)
Slide 2: A New Force in Global Nickel
A NEW FORCE IN GLOBAL NICKEL North America – October 2019
Slide 3: Disclaimer
Disclaimer 2 This presentation has been prepared by Nickel Mines Limited (ABN 44 127 510 589) (‘NIC’). The information contained in this presentation is for information purposes only and has been prepared for use in conjunction with a verbal presentation and should be read in that context. The infor
Slide 4: This Is Not a Mining Story
3 Whilst we own a world class nickel laterite mine THIS IS NOT A MINING STORY It’s a story about the production of the lowest capital intensive and most profitable nickel units in the global market in partnership with the world’s largest stainless steel producer.
Slide 5: Executive Summary
Executive Summary 4 NIC HNI RNI HM IMIP ASX 60% 60% 80% Potential • Nickel Mines Limited • Hengjaya Nickel Project • Ranger Nickel Project • Hengjaya Mine • NIC has established itself (NIC) is an Australian (HNI) (RNI) (HM) as an important strategic company publicly listed partner to Tsingshan and o
Slide 6: Corporate Snapshot
Corporate Snapshot 5 Directors and Management TRADING INFORMATION 27 SEPTEMBER 2019 11.4% ASX Code NIC Shanghai Decent Shares on Issue 1,665.4B Blackrock 39.3% 18.1% Share Price A$0.70 Shanghai Wanlu Range A$0.22 –A$0.75 Regal 9.6% Market Capitalisation A$1,165.8B UBS Group AG & related entities 5.5
Slide 7: Hengjaya Mine
Hengjaya Mine 6 THE FOUNDATION ASSET Location Resource Mining • Morowali Regency, Central • JORC compliant resource: • Geology de-risked by Sulawesi, Indonesia. mining activity to date. • 37.5M dmt at 1.81% nickel • A large tonnage, high (1.5% COG) for ~680k • Excellent mining grade, open-cut mine i
Slide 8: Introduction to Tsingshan, Shanghai Decent & the IMIP
Introduction to Tsingshan, Shanghai Decent & the IMIP 7 • Currently the world’s largest stainless steel • Shanghai Decent (SDI) is a Tsingshan group • Committed to ahead of the Indonesian producer with output of 9.29 Mt in 2018. company. Government’s 2014 DSO export ban. Targeting ~12Mt in 2019. • M
Slide 9: Indonesia Morowali Industrial Park (IMIP)
“The PT SMI facility is world-class and arguably the lowest cost FeNi operation in the world.” - Glencore Nickel Market Developments (September 2016) 8 Indonesia Morowali Industrial Park (IMIP)
Slide 10: Fully Integrated NPI & Stainless Steel Plant
Fully Integrated NPI & 9 Stainless Steel Plant Rotary Kiln RKEF Control Room Electric Furnace Molten NPI NPI Ingot Casting Stainless Steel Mix Stainless Steel Slab Hot Rolled Coil (HRC)
Slide 11: Supported by World Class Facilities & Infrastructure
Supported by World Class 10 Facilities & Infrastructure Surrounded by Ni Laterite Deposits 2GW Coal Fired Power Station Stockpile Areas Significant Port Facilities Executive Quarters and Helipad 5-Star Hotel
Slide 12: A Collaboration Philosophy
A Collaboration Philosophy 11 Tsingshan have a track record of successfully collaborating with numerous partners within the IMIP TECHNICAL/ SUPPORT SERVICES SDI + SDI + SDI + NIC 60% NIC 60% others others others SDI 40% SDI 40% PT SMI PT GCNS PT ITSS HNI RNI 4 RKEF Lines 8 RKEF Lines 8 RKEF Lines 1M
Slide 13: Hengjaya Mine Location is Everything
Hengjaya Mine 12 Location is Everything
Slide 14: What Benefits Does Nickel Mines Get From Partnering With Tsingshan?
13 WHAT BENEFITS DOES NICKEL MINES GET FROM PARTNERING WITH TSINGSHAN?
Slide 15: Global Industry Lows in Capital Intensity
Global Industry Lows in Capital Intensity 14 Tsingshan have established a new paradigm for delivering nickel units to market Not all nickel units are created equal New benchmarks for project development have now been established Ni CAPITAL CAPEX/t CAPACITY COST NiEq PROJECT YEAR PLANT (Kt pa) (US$M)
Slide 16: Bottom Quartile Operating Costs
Bottom Quartile 15 Operating costs Cost Advantages for the IMIP ▪ The IMIP’s fully integrated production chain delivers significant cost and logistics savings. o Kiln heat recycled to assist ore drying. C1 costs currently < US$8,000/t o Hot charging of NPI directly into stainless operations yields e
Slide 17: Superior NPI Payabilities
Superior NPI Payabilities 16 Superior Payabilities Underpin a Compelling Economic Advantage for NPI Producers 110% 100% NPI payabilities typically range from ~90% to a small premium to LME nickel 90% 80% 70% Concentrate payabilities typically range from 65%to 75% of LME nickel 60% 50% NPI Payables C
Slide 18: Taxation Concessions
Taxation Concessions 17 By official decree of the Minister of Finance of the Republic of Indonesia Material tax concessions have been granted to both HNI and RNI 100% TAX EXEMPTION +2 Years WHT Free • 100% Corporate Income • Plus an additional 2 Years • Exemption from withholding Tax Reduction for 7
Slide 19: Current State of Play
NICKEL MINES LIMITED CURRENT STATE OF PLAY
Slide 20: RKEF Production Ramp-up
RKEF Production Ramp-up 19 HNI RNI HNI Cash Costs RNI Cash Costs 2,000 7,900 7,771 7,782 1,858.9 1,800 1,765.2 7,648 1,647.5 7,694 7,700 7,601 1,578.8 1,600 1,518.2 7,580 7,517 7,500 NICKEL EQUIVALENT TONNES 1,400 CASH COSTS (USD/T) 1,375 (16.5kt pa) 1,289.4 7,456 1,250 (15kt pa design capacity) 1,1
Slide 21: Hengjaya Nickel: An Outstanding First Months of Production
Hengjaya Nickel 20 An Outstanding First 6 Months of Production HENGJAYA NICKEL January February March Qtr Total NPI Production tonnes 67.5 1,802.6 6,502.2 8,372.3 NPI Grade % 11.6 12.7 13.1 13.0 Nickel Metal Production tonnes 7.9 229.9 852.4 1,090.2 IMIP NPI Pricing1 USD/t LME Ni 12,800 12,800 12,80
Slide 22: June 2019 Full Year Results
30 June 2019 Full Year Results 21 FY 2019 US$M FY 2019 US$M Reported Gross Profit 21.59 Cash 49.0 Equity Accounted Profit - HNI 2.62 Trade and receivables 43.7 Underlying Gross Profit 24.21 Total current assets 108.2 Directors Fees/Consultant Expenses (2.64) Total Non-current assets 423.7 Other Expe
Slide 23: Why Invest?
NICKEL MINES LIMITED
Slide 24: Unique Growth Optionality
Unique Growth 23 Optionality A CLEAR LINE OF SIGHT ON ADDITIONAL NICKEL UNITS ▪ NIC distinguishes itself from its peer group with its unique growth optionality. 30,000 o No mine life limitations. o No project development risks. HNI RNI 25,000 ▪ NIC possesses contractual options to increase its owner
Slide 25: Unique Growth Optionality: Value of the Options
Unique Growth The value of the HNI and RNI options? At current spot prices NIC would be buying additional 24 Optionality nickel units on an EBITDA multiple of ~2.3x NIC’s strong financial profile is underpinned by: A CLEAR LINE OF SIGHT ON STRONG EBITDA AND FCF GROWTH ▪ Industry low levels of capita
Slide 26: A Year of Achievement Now Delivering Value
25 A Year of Achievement Now Delivering Value $0.80 1 YEAR ON FROM NIC’S IPO: $0.70 • 60% interest in HNI and RNI. $0.60 • Both projects in production within 12 months of breaking ground. $0.50 • HNI and RNI production run rate well in excess of nameplate capacity. $0.40 • Material income tax conces
Slide 27: Investment Highlights
Investment Highlights 26 Why You Need to Own Nickel Mines Strategic Partnership Established tenant RKEF Processing Strengthening Nickel with Tsingshan within the IMIP Technology Market Fundamentals • Multi-faceted Collaboration • Indonesia/IMIP are the epicentre of • Tsingshan have pioneered RKEF •
Slide 28: www.nickelmines.com.au
27 www.nickelmines.com.au Robert Neale Chairman rneale@nickelmines.com.au Norman Seckold Deputy Chairman nseckold@nickelmines.com.au Justin Werner Managing Director jwerner@nickelmines.com.au Peter Nightingale Director and Chief Financial Officer pnightingale@nickelmines.com.au Richard Edwards Compa
Slide 29: The Shifting Nickel Landscape
The Shifting Nickel Landscape 28 EXPORT BAN Why does the ore ban feel different Who benefits from the ban? Export Ban 2020 this time around? • Indonesian NPI producers grade and cost • Full re-implementation of the export ban to take • LME Ni stockpiles are significantly lower than advantage over Ch
Slide 30: Indonesia's Export Ban is Achieving its Objective
Indonesia’s Export Ban 29 is Achieving its Objective The value of Indonesian exports has grown significantly since the introduction of the export ban despite a lower average Ni price than in 2013. Indonesian nickel exports (Volume) Indonesian nickel exports (Value) Source: Badan Pusat Statistik, Mac
Slide 31: ESG Considerations
ESG Considerations 30 Community Environment ▪ > 30,000 locals employed at the IMIP, > 350 locals employed at ▪ Hengjaya Mine - open cut, at surface truck and shovel HM Mine. operation - no tailings. ▪ NIC deeply involved in numerous community projects focused on ▪ HM recently voted Best Mine Site Re
Slide 32: Statement of Compliance
Statement of Compliance 31 The information in this report that relates to Exploration Results and Mineral Resources is based on information compiled by the staff and contractors of Nickel Mines Limited and its subsidiaries and approved by Mr Brett Gunter, a Member of the Australasian Institute of Mi