Nickel Industries Limited · ASX:NIC
Nickel Industries — Nickel Mines — Ord Minnett East Coast Mining Conference 2022
35 slides from Nickel Industries's conference presentation, Mar 30, 2022
Slide 1: Building a Nickel Empire
BUILDING A NICKEL EMPIRE Ord Minnett East Coast Mining Conference 30 March 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: 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 2
Slide 4: IWIP and IMIP nickel production centres
IMIP IWIP RKEF lines 44 operating RKEF lines 31 operating RKEF lines (8 under construction) RKEF lines (17 under construction) Steel production capacity 3Mt stainless-steel per annum Steel production capacity Currently no stainless-steel capacity Employees ~45,000 total (40,000 locals) Employees ~35
Slide 5: 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 6: Illustrative business model
Illustrative business model Mining business Hengjaya Mine ~80 other nickel ore suppliers from across Indonesia FY 2021 ~3MT pa US$22M EBITDA Morowali and Weda Bay Industrial Parks Centralised nickel ore stockpile RKEF operations Industrial business In addition to NIC’s RKEF lines, Tsingshan FY 2023
Slide 7: Nickel Mines – a world-class industrial processing business
Nickel Mines – a world-class industrial processing business Producing some of the most profitable nickel units in the global market in partnership with Tsingshan – the world’s largest, lowest cost stainless steel producer RKEFs Versus Typical mining operations ✓ Consistent, long-life RKEF production
Slide 8: Current operations
NICKEL MINES LIMITED Current operations
Slide 9: Operating consistency – a hallmark of our business
Operating consistency – a hallmark of our business Consistent, industrial style production and cost base with production profile set to triple over the next 12 months RKEF production March Qtr June Qtr September Qtr December Qtr FY 2021 NPI production tonnes 71,939 74,487 73,154 78,772 298,353 NPI g
Slide 10: Bottom quartile, industrial style cost base
Bottom quartile, industrial style cost base Wood Mackenzie NPI/FeNi cost curve (2020) NIC is a low cost, bottom quartile producer of NPI 30,000 1st Quartile 2nd Quartile 3rd Quartile 4th Quartile C1 cash cost (US$/t Ni)(1) 25,000 Whilst the overall cost curve has increased ▪ Underpinning NIC’s posit
Slide 11: Strong, consistent EBITDA per tonne of Ni sold
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 7,527 8,683 9,107 1
Slide 12: Material tax concessions
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 10 years reduction (from the year of commercial production) (4 years remaining) (4 years remaining) (10 years remain
Slide 13: 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 14: The next wave of growth
NICKEL MINES LIMITED The next wave of growth ay. ' razah | a apc _-
Slide 15: ANI capacity coming online
ANI capacity New overview coming online within 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$560m January 2022(2)
Slide 16: Establishing Nickel Mines as a top 10 global nickel producer
ANI overview Establishing Nickel Mines as a top 10 global nickel producer ONI acquisition to add significant scale, while diversifying Nickel Mines’ production footprint 2021 Processed Nickel Production (kt) 596 269 193 190 168 148 138 103 86 70 68 65 64 46 44 38 32 31 29 26 24 20 18 Shandong Nickel
Slide 17: ANI and ONI expected to be transformative
ANI and ONI expected to be transformative to NIC’s production and financial profile Consolidated production (100% basis) Existing operations demonstrate consistent 140,000 12 RKEF lines performance of 30%+ above nameplate Ni Eq production (tpa)(3) capacity 120,000 ? 100,000 8 RKEF lines ANI and ONI
Slide 18: EBITDA profile set to triple
EBITDA profile set to triple over the next 12 months Assumed margin per tonne (US$/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)(1) (tonnes) Current profile Nameplate 30,0
Slide 19: A sustainable future
NICKEL MINES LIMITED A sustainable future
Slide 20: Sustainability – Community
Sustainability – investing in our social licence to operate Community ~3,500 local employees(1) at current operations with additional workers expected to be employed at ANI and ONI, benefiting local communities Deeply involved in numerous community projects focused on educational, health and agricul
Slide 21: 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 22: 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 23: 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 24: A compelling valuation
A compelling valuation Growth-EV/EBITDA Correlation Chart(1) Source: Capital IQ as of 18 Feb 2022. Notes: 21E-23E EBITDA CAGR considered in case 22E-24E NA (1) Removed Ivanhoe, PT Merdeka and Buenaventura as outlier, trading above >15.0x EV/23E EBITDA 23
Slide 25: A compelling valuation (cont'd)
A compelling valuation (cont’d) Growth-P/NAV Correlation Chart(1) Source: Capital IQ as of 18 Feb 2022. Notes: 21E-23E EBITDA CAGR considered in case 22E-24E NA (1) Removed KGHM Polska as outlier, trading above >4.0x P/NAV 24
Slide 26: Why invest now?
Why invest now? Production and EBITDA profile to grow >3x over the next 12 months as 2 new projects come online A compelling growth profile An attractive valuation entry point Growth that does not rely on Unrivalled growth delivered through increasing production and strong, stable ‘industrial’ style
Slide 27: Thank you
THANK YOU For further inquiries please contact Justin Werner Chris Shepherd Cameron Peacock Managing Director Chief Financial Officer Investor Relations & Business Development jwerner@nickelmines.com.au cshepherd@nickelmines.com.au cpeacock@nickelmines.com.au 26
Slide 28: Further information
NICKEL MINES LIMITED Further information
Slide 29: Corporate snapshot
Corporate snapshot $1.80 $1.60 Trading information 29 March 2022 $1.40 ASX code NIC $1.20 Shares on issue 2.623 billion $1.00 Share price A$1.295 $0.80 Market capitalisation A$3.4 billion (US$2.5 billion) $0.60 Indexes ASX All Ords / ASX 200 / MSCI $0.40 Cash(1) US$218 million $0.20 US$325 million (
Slide 30: 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 31: Nickel Mines has evolved into a globally relevant nickel producer
Nickel Mines has evolved into a globally relevant nickel producer … Nickel Mines has evolved from its mining origins to become a leading producer of NPI to the stainless steel market as a response to Indonesia’s ore shipping ban September 2007 October 2013 September 2017 NIC was incorporated with th
Slide 32: With a proven track record of strategic growth
With a proven track record of strategic growth Nickel Mines listed on the ASX in 2018 and since grown to ~US$3.0bn market capitalisation (1) August 2018 March 2019 June 2020 January 2021 September 2021 January 2022 NIC listed on ASX. At time of HNI’s second kiln HNI and RNI ownership Acquisition of
Slide 33: Financial snapshot – an excellent full year result
Financial snapshot – an excellent full year result across all operations ▪ Record FY2021 financial performance underpinned by: All figures in US$M FY 2021 FY 2020 – strong and consistent RKEF production (>10kt per quarter) – higher realised NPI prices RKEF sales revenue $645 $524 23% – higher EBITDA
Slide 34: Robust balance sheet
Robust balance sheet – conservative, with significant flexibility for the future ▪ Strong operating performance has underpinned the maintenance of a robust balance sheet All figures in US$M 31 December 2021 31 December 2020 ▪ In April the Company successfully completed a maiden US$ bond issuance: Cu
Slide 35: 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%) –
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