Nickel Industries Limited · ASX:NIC
Nickel Industries — Nickel Mines — BMO Conference 2022
33 slides from Nickel Industries's conference presentation, February 2022
Slide 1: Building a Nickel Empire
BUILDING A NICKEL EMPIRE BMO Conference 2022 A clearly defined growth path to becoming a top-10 global nickel producer 0
Slide 2: Disclaimer
Disclaimer 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 informa
Slide 3: A world class industrial processing business
PRODUCING THE LOWEST CAPITAL INTENSIVE AND SOME OF THE A WORLD CLASS INDUSTRIAL MOST PROFITABLE NICKEL UNITS IN THE GLOBAL MARKET IN PARTNERSHIP WITH TSINGSHAN - THE WORLD’S LARGEST, PROCESSING BUSINESS LOWEST COST STAINLESS STEEL PRODUCER. 2
Slide 4: Nickel Mines core investment thesis
Industry Nickel Leading Mines Capital – core Intensity investment thesis Defined growth path to becoming an established top 10 1 Proven commissioning and production expansion track record global nickel producer 2 Established, mutually beneficial partnership with Tsingshan Tsingshan is the undisputed
Slide 5: Nickel Mines – a world-class industrial processing business
Nickel Mines – a world-class industrial processing business Producing some of the most profitable nickel units in the global market in partnership with Tsingshan – the world’s largest, lowest cost stainless steel producer RKEFs Versus Typical mining operations ✓ Consistent, long-life RKEF production
Slide 6: Corporate snapshot
Corporate snapshot $1.80 $1.60 Trading information 24 February 2022 $1.40 ASX code NIC $1.20 Shares on issue 2.623 billion $1.00 Share price A$1.45 $0.80 Market capitalisation A$3.8 billion (US$2.7 billion) $0.60 Indexes ASX All Ords / ASX 200/ MSCI $0.40 Cash(1) US$218 million $0.20 US$325 million
Slide 7: The RKEF business
The RKEF business IMIP IMIP IWIP IMIP HNI RNI ANI ONI 80% 80% 80% 70% OPERATING OPERATING COMMISSIONING UNDER CONSTRUCTION Hengjaya Nickel Project (HNI) Ranger Nickel Project (RNI) Angel Nickel Project (ANI) Oracle Nickel Project (ONI) 2 RKEF lines 2 RKEF lines 4 RKEF lines 4 RKEF lines - nameplate
Slide 8: Indonesia – the undisputed epicentre of global nickel supply
Indonesia – the undisputed epicentre of global nickel supply HALMAHERA IWIP ANI Nickel Mines has established IMIP operating footprints in what are HNI, RNI, ONI now two of the world’s largest MOROWALI HM MINE nickel production centres 7
Slide 9: Two world class nickel production centres
IMIP IWIP Steel production capacity 3Mt stainless-steel per annum Steel production capacity No stainless-steel capacity RKEF lines 44 operating RKEF lines RKEF lines 31 operating RKEF lines (8 under construction) (17 under construction) Power capacity ~3GW power for IMIP Power capacity Currently 500
Slide 10: Current Operations
NICKEL MINES LIMITED Current Operations
Slide 11: Operating consistency – a hallmark of our business
Operating consistency – a hallmark of our business Consistent, industrial style production and cost base with production profile set to triple over the next 12 months RKEF production March Qtr June Qtr September Qtr December Qtr FY 2021 NPI production tonnes 71,939 74,487 73,154 78,772 298,353 NPI g
Slide 12: Strong, consistent EBITDA per tonne of Ni sold despite cost increases
Strong, consistent EBITDA per tonne of Ni sold despite cost increases Nickel Mines has maintained strong margins in all operating cost environments. Consistent production and stable margins highlight the “industrial nature” of the Company’s RKEF operations RKEF EBITDA performance 100.0 8,000 40% 43%
Slide 13: Strong operating performance at Hengjaya Mine
Strong operating performance at Hengjaya Mine Production summary March Qtr June Qtr September Qtr December Qtr Total 2021 Saprolite mined wmt 456,487 574,791 579,156 847,260 2,457,694 Overburden mined BCM 262,270 549,213 793,045 1,183,367 2,787,895 Limonite mined BCM 402,557 349,373 257,448 152,222
Slide 14: The Next Wave of Growth
NICKEL MINES LIMITED The Next Wave of Growth
Slide 15: ANI and ONI capacity overview
ANI capacity New overview coming online over the next 12 months Capital cost guarantee ▪ Not to exceed US$700m (1) Angel ▪ No cost overrun risk Nickel First production (“ANI”) 4 next generation RKEF lines 80% interest for ▪ Commissioning commenced in and a 380MW power plant US$560m January 2022 (2)
Slide 16: ANI overview – transaction to establish top 10 global nickel producer
ANI overview Transaction to establish Nickel Mines as a top 10 global nickel producer Source: Broker Research, Company data. Note: Production data reflects 2021 figures unless stated otherwise. (1) NIC numbers represent actual attributable production in 2021, plus the attributable expected productio
Slide 17: Bottom quartile, industrial style cost base
Bottom quartile, industrial style cost base Wood Mackenzie NPI/FeNi cost curve (2020) NIC is a low cost, bottom quartile producer of NPI 30,000 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile C1 cash cost (US$/t Ni)(1) 25,000 Whilst the overall cost curve has increased ▪ Underpinning NIC’s posit
Slide 18: ANI and ONI will be transformative to production and financial profile
ANI and ONI will be transformative to NIC’s production and financial profile Consolidated production (100% basis) ? 140,000 ANI and ONI ... Ni Eq production (tpa)(3) 120,000 Consistent performance of ? ▪ expand the Company’s RKEF operations from 100,000 30%+ above nameplate ? 4 lines to 12 lines cap
Slide 19: EBITDA profile set to triple over the next months
EBITDA profile set to triple over the next 12 months Margin per tonne (US$/t) 5,000 5,500 6,000 ▪ FY 2021 RKEF EBITDA of US$225M, delivered at a margin of US$5,607/t of Ni sold. Production – 2H2021 margin was US$6,109/t of Ni sold RKEF EBITDA (US$m)* (tonnes) Current profile Nameplate 30,000 150 165
Slide 20: Material tax concessions – by Decree of the Indonesian Government
ANI overview Material tax concessions – by Decree of the Indonesian Government Existing production Future production HNI RNI ANI ONI 100% corporate income tax 7 years 7 years 10 years reduction (from the year of (4 years remaining) (4 years remaining) (10 years remaining) Potential to commercial pro
Slide 21: High cash conversion supporting sustainable, robust profitability
High cash conversion supporting sustainable, robust profitability Underpinned by cost profile, material tax concessions and minimal levels of sustaining capex High cash flow conversion throughout 2021 US$m (100% basis) 99% 99% 80.0 95% 97% 100% 68.4 67.6 68.8 67.8 90% 70.0 80% 60.0 57.9 55.2 56.0 52
Slide 22: Market Update
NICKEL MINES LIMITED Market Update
Slide 23: Stainless steel continues to dominate nickel demand
Stainless steel continues to dominate nickel demand Nickel Demand Composition Key thematics ▪ Stainless steel remains the primary driver of first use nickel demand with Indonesia emerging as the world’s second largest producer after China. ▪ Growth in Indonesian NPI has reduced dependence on Class 1
Slide 24: A Sustainable Future
NICKEL MINES LIMITED A Sustainable Future
Slide 25: Sustainability – Community
Sustainability – investing in our social licence to operate Community >1,850 local employees(1) at current operations with an additional ~2,000 expected to be employed at ANI and ONI, benefiting local communities Deeply involved in numerous community projects focused on educational, health and agric
Slide 26: Sustainability – Environment
Sustainability – investing in our social licence to operate Environment Maiden Sustainability Report expected 2Q’22 to serve as baseline future reporting and decarbonisation projects Significant progress on improving energy and emissions reporting, including the calculating of carbon footprint Rehab
Slide 27: Solar Power – our first Future Energy collaboration
Solar Power – our first “Future Energy” collaboration Commitment to a more sustainable future for Indonesia’s nickel industry ▪ MoU signed in January 2022 with PT Sumber Energi Surya Nusantara (“SESNA”) to implement the first solar power generation facility in IMIP (200MWp capacity) ▪ SESNA has comm
Slide 28: Battery grade nickel – nickel matte and HPAL potential
Battery grade nickel – nickel matte and HPAL potential Potential to become a producer of battery grade nickel for sale into the electric vehicle (‘EV’) market. Battery grade nickel will be critical input into technologies for electrification as part of a global transition to a greener economy Produc
Slide 29: Why invest now?
Why invest now? Growth-EV/EBITDA Correlation Chart(1) ▪ A compelling growth profile – production and EBITDA profile to grow >3x over the next 12 months as 2 new projects come online ▪ Growth that does not rely on inflated commodity prices – growth delivered through increasing production and strong,
Slide 30: Thank you
THANK YOU For further inquiries please contact Justin Werner Cameron Peacock Managing Director Investor Relations & Business Development jwerner@nickelmines.com.au cpeacock@nickelmines.com.au 29
Slide 31: Financial snapshot – an excellent full year result across all operations
Financial snapshot – an excellent full year result across all operations ▪ Record FY2021 financial performance underpinned by: All figures in US$M FY 2021 FY 2020 – strong and consistent RKEF production (>10kt per quarter) – higher realised NPI prices RKEF sales revenue $645 $524 23% – higher EBITDA
Slide 32: Robust balance sheet – conservative, with significant flexibility
Robust balance sheet – conservative, with significant flexibility for the future ▪ Strong operating performance has underpinned the maintenance of a robust balance sheet All figures in US$M 31 December 2021 31 December 2020 ▪ In April the Company successfully completed a maiden US$ bond issuance: Cu
Slide 33: RKEF production – industrial style consistency
RKEF production – industrial style consistency EBITDA figures in US$M ▪ Consistent production from both Hengjaya Nickel and Ranger FY 2021 FY 2020 Nickel of >20,000 tonnes EBITDA margins in US$/t – Hengjaya: 33.5% above nameplate (15kt pa) Hengjaya Nickel production (Ni tonnes) 20,020 21,514 (7%) –