Nickel Industries Limited · ASX:NIC
Nickel Industries — Nickel Mines — Investor Presentation (May 2020)
41 slides from Nickel Industries's investor presentation, May 19, 2020
Slide 1: A New Force in Global Nickel
Not for release to US wire services or distribution in the United States A NEW FORCE IN GLOBAL NICKEL Intention to Exercise RKEF Ownership Options & Equity Raising Presentation May 2020
Slide 2: Important Notices and Disclaimer
Important Notices and Disclaimer 2 This presentation is dated 19 May 2020 and has been prepared by, and is the sole responsibility of, Nickel Mines Limited ACN 127 510 589 612 ("Nickel Mines" or “Company”). This presentation has been prepared in relation to the accelerated non-renounceable pro rata
Slide 3: Important Notices and Disclaimer (cont'd)
Important Notices and Disclaimer (cont’d) 3 Investment risk An investment in shares in Nickel Mines (“Shares”) is subject to known and unknown risks, some of which are beyond the control of Nickel Mines and its directors, including possible loss of income and principal invested. Nickel Mines does no
Slide 4: Important Notices and Disclaimer (cont'd)
Important Notices and Disclaimer (cont’d) 4 Future performance This presentation contains certain forward looking statements and comments about future events, including statements about Nickel Mines’ expectations about the financial and operating performance of its business, the potential impact and
Slide 5: Important Notices and Disclaimer (cont'd)
Important Notices and Disclaimer (cont’d) 5 Listing Rule 5.23 Disclosure Information in this presentation that relates to Mineral Resources were published in a Technical Assessment Report and a Resource Estimate Report prepared by PT GMT Indonesia dated April 2018 (as included in the Company’s prosp
Slide 6: This Is Not a Mining Story
6 Whilst we own a world class nickel laterite mine Not for distribution or release in the United States 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
Slide 7: Contents
Table of Contents 7 Contents Page Not for distribution or release in the United States 1. Transaction overview 8 2. Nickel Mines update and investment proposition 13 3. Equity raising details 25 MOROWALI REGENCY IMIP HENGJAYA MINE Appendices A. Risk factors 29 B. International offer restrictions 37
Slide 8: Transaction Overview
Not for distribution or release in the United States TRANSACTION OVERVIEW 8
Slide 9: Transaction overview
Transaction overview 9 Nickel Mines to increase its ownership interests in both the Hengjaya Nickel Project (“HNI”) and Ranger Nickel Project (“RNI”) to 80% (the “Transactions”): Under the terms of the Collaboration Agreements with Shanghai Decent Investment (Group) Co. Ltd and its associates (“
Slide 10: Transactions grow exposure to highly attractive, core assets
Transactions grow exposure 10 to highly attractive, core assets GROWING SHARE OF PRODUCTION AND EBITDA The Transactions increase Nickel Mines’ 40,000 economic interests in its core assets to 80%. 34,560 Not for distribution or release in the United States HNI and RNI are industry leading assets:
Slide 11: Sources and Uses
Sources and Uses 11 Proceeds of the equity raising will be put towards funding cash consideration Sources of Funds A$m US$m payable to Shanghai Decent in relation to the Transactions: Entitlement Offer proceeds $231m $150m Not for distribution or release in the United States o US$120m exercise pri
Slide 12: Pro-forma capitalisation
Pro-forma 12 capitalisation Entitlement Exercise of Pro-forma capitalisation (1) Units Current (2) Pro-forma Strong balance sheet Offer options position maintained. Basic Shares Outstanding M 1,665(3) 463 2,128 Pro-forma for the Not for distribution or release in the United States Transactions a
Slide 13: Nickel Mines Update and Investment Proposition
Not for distribution or release in the United States INVESTMENT PROPOSITION NICKEL MINES UPDATE AND 13
Slide 14: The Nickel Mines Story – Who Are We?
The Nickel Mines Story – Who Are We? 14 NIC HNI RNI HM NIC ASX 60% 60% 80% Growth Not for distribution or release in the United States • Nickel Mines Limited (NIC) • Hengjaya Nickel Project • Ranger Nickel Project (RNI). • Hengjaya Mine. • NIC has established itself as is an Australian company (HNI)
Slide 15: The Nickel Mines Story – Why Invest?
The Nickel Mines Story – Why Invest? 15 Strategic Partnership Established Tenant RKEF Processing Strengthening NPI Market with Tsingshan within the IMIP Technology Fundamentals Not for distribution or release in the United States • Multi-faceted Collaboration • Indonesia/IMIP are the epicentre of •
Slide 16: COVID-19 Response
COVID-19 Response 16 RKEF Operations Update Mine Operations Update “While the onset of Coronavirus is currently having significant ramifications around the world and the way • To date, there have been no confirmed cases • To date, there have been no confirmed cases people lead their daily lives, Nic
Slide 17: Tsingshan, Shanghai Decent & the IMIP – A Strategic Partnership
Tsingshan, Shanghai Decent & the IMIP – A Strategic Partnership 17 Currently the world’s largest stainless steel producer Shanghai Decent is a Tsingshan group company. Committed to ahead of the Indonesian Government’s with output of ~10.65Mt in 2019. 2014 DSO export ban. Manager of IMIP. Ove
Slide 18: Continued operational outperformance at HNI and RNI
Continued operational outperformance at HNI and RNI 18 March quarter annualised run-rate of ~22.5kt per annum at each of HNI and RNI (100% basis) 2,250 8,500 2,000 1,943 1,913 1,925 1,934 1,907 8,300 1,904 8,256 1,879 1,854 Not for distribution or release in the United States 1,820 1,825 1,780 8,100
Slide 19: Bottom Quartile Operating costs
Bottom Quartile 19 Operating costs Cost Advantages for the IMIP The IMIP’s fully integrated production chain delivers significant cost and logistics savings: Not for distribution or release in the United States o Kiln heat recycled to assist ore drying. C1 costs currently < US$8,000/t o Hot chargi
Slide 20: Benefitting from Superior NPI Payabilities
Benefitting from Superior NPI Payabilities 20 Superior Payabilities Underpin a Compelling Economic Advantage for NPI Producers including HNI and RNI Not for distribution or release in the United States 110% 100% NPI payabilities typically range from ~90% to a small premium to LME nickel 90% 80% 70%
Slide 21: Hengjaya Mine Operations – March Quarter Performance
Hengjaya Mine Operations – March Quarter Performance 21 Production summary January 2020 February 2020 March 2020 Quarter Total Dec 2019 Quarter Tonnes mined Wmt 50,649 49,666 49,643 149,958 194,159 Overburden mined BCM 119,040 144,435 27,480 290,955 428,041 Not for distribution or release in the Uni
Slide 22: Hengjaya Mine Expansion Initiatives
22 Hengjaya Mine Expansion Initiatives Numerous expansion initiatives are underway aimed at unlocking the full strategic value of Hengjaya Mine Not for distribution or release in the United States Objectives of Hengjaya Mine expansion(1): o Materially increase production of saprolite from current
Slide 23: Taxation Concessions
Taxation Concessions 23 By official decree of the Minister of Finance of the Republic of Indonesia Material tax concessions have been granted to both HNI and RNI Not for distribution or release in the United States 100% TAX EXEMPTION +2 Years WHT Free • 100% Corporate Income • Plus an additional 2 Y
Slide 24: ESG Considerations
ESG Considerations 24 Not for distribution or release in the United States Community Environment > 1,500 locals employed across the HNI/RNI RKEF operations Hengjaya Mine – open cut, at surface truck and shovel > 350 locals employed at Hengjaya Mine. operation with no tailings. NIC deeply invol
Slide 25: Equity Raising Details
Not for distribution or release in the United States EQUITY RAISING DETAILS 25
Slide 26: Entitlement Offer Overview
Entitlement Offer Overview 26 1 for 3.6 fully underwritten pro-rata accelerated non-renounceable Entitlement Offer (“Offer” or “Entitlement Offer”) at A$0.50 per New Share to raise approximately A$231m. Offer size and structure Approximately 463m New Shares to be issued (equivalent to approximat
Slide 27: Timetable
Timetable 27 Event Date Trading halt and announcement of Entitlement Offer Tuesday, 19 May 2020 Institutional Entitlement Offer opens Tuesday, 19 May 2020 Not for distribution or release in the United States Institutional Entitlement Offer closes Wednesday, 20 May 2020 Trading halt lifted and Shares
Slide 28: Appendix
Not for distribution or release in the United States APPENDIX 28
Slide 29: Risk Factors
Risk Factors 29 This section discusses some of the risks associated with an investment in Nickel Mines. Nickel Mines’ business is subject to a number of risk factors both specific to its business and of a general nature which may impact on its future performance and forecasts. Before subscribing for
Slide 30: Risk Factors (cont'd)
Risk Factors (cont’d) 30 Risk Description CAs The CAs are material contracts which set out the terms of the Company’s key partnership with Shanghai Decent in respect of the RKEF lines of HNI and RNI, and are governed under the laws of Singapore. If Shanghai Decent breaches its obligations under a CA
Slide 31: Risk Factors (cont'd)
Risk Factors (cont’d) 31 Risk Description Exploration, development and production at the Hengjaya Mine and the RKEF operations at HNI and RNI require various licences and permits from the government (whether at the central government or regional government level) and other government agencies to con
Slide 32: Risk Factors (cont'd)
Risk Factors (cont’d) 32 Risk Description Risk that the Company’s The Company’s business and future success heavily depends upon the continued services of management and other key personnel. If one or more of the Company’s management or key personnel were unable management and key or unwilling to co
Slide 33: Risk Factors (cont'd)
Risk Factors (cont’d) 33 Risk Description The operations of the Company may be affected by various factors including failures in internal controls and financial fraud. To the extent that such matters may be in the control of the Company, the Company will mitigate these risks through management and s
Slide 34: Risk Factors (cont'd)
Risk Factors (cont’d) 34 Risk Description • any certificate which is required to be furnished by the Company under the Underwriting Agreement is not furnished when required; • there is an event, occurrence or non-occurrence after the execution of the Underwriting Agreement which makes it illegal for
Slide 35: Risk Factors (cont'd)
Risk Factors (cont’d) 35 Risk Description • hostilities not presently existing commence (whether war has been declared or not) or a major escalation in existing hostilities occurs (whether war has been declared or not) involving any one or more of Australia, the United States of America, Indonesia,
Slide 36: Risk Factors (cont'd)
Risk Factors (cont’d) 36 Key risks – General risks: Risk Description The Company is subject to litigation risks. All industries, including the minerals extraction and processing industry, are subject to legal claims, with and without merit. Defence and settlement costs of legal Not for distribution
Slide 37: International Offer Restrictions
International Offer Restrictions 37 This document does not constitute an offer of New Shares of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold in the institutional entitle
Slide 38: International Offer Restrictions (cont'd)
International Offer Restrictions (cont’d) 38 Section 138 of the Securities Act (Ontario) provides that no action shall be commenced to enforce these rights more than (a) in the case of any action for resc ission, 180 days after the date of the transaction that gave rise to the cause of action or (b)
Slide 39: International Offer Restrictions (cont'd)
International Offer Restrictions (cont’d) 39 Indonesia A registration statement with respect to the New Shares has not been, and will not be, filed with Otoritas Jasa Keuangan in the Republic of Indonesia. Therefore, the New Shares may not be offered or sold to the public in Indonesia. Neither this
Slide 40: International Offer Restrictions (cont'd)
International Offer Restrictions (cont’d) 40 United Kingdom Neither this document nor any other document relating to the offer has been delivered for approval to the Financial Conduct A uthority in the United Kingdom and no prospectus (within the meaning of section 85 of the Financial Services and M
Slide 41: www.nickelmines.com.au
41 www.nickelmines.com.au Robert Neale Chairman rneale@nickelmines.com.au Not for distribution or release in the United States Norman Seckold Deputy Chairman nseckold@nickelmines.com.au Justin Werner Managing Director jwerner@nickelmines.com.au Peter Nightingale Director and Chief Financial Officer