Nickel Industries Limited · ASX:NIC
Nickel Industries — Nickel Mines — Investor Presentation (December 2020)
53 slides from Nickel Industries's investor presentation, Dec 2, 2020
Slide 1: Equity Raising Presentation
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES December 2020 Equity Raising Presentation A NEW FORCE IN GLOBAL NICKEL 0
Slide 2: Important Notices and Disclaimer
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Important Notices and Disclaimer This presentation is dated 2 December 2020 and has been prepared by, and is the sole responsibility of, Nickel Mines Limited ACN 127 510 589 ("Nickel Mines" or “Company”). This presentation has
Slide 3: Important Notices and Disclaimer (cont'd)
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Important Notices and Disclaimer (cont’d) 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, includi
Slide 4: Important Notices and Disclaimer (cont'd)
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Important Notices and Disclaimer (cont’d) Future performance This presentation contains certain forward looking statements and comments about future events, including statements about Nickel Mines’ expectations about the financ
Slide 5: Important Notices and Disclaimer (cont'd)
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Important Notices and Disclaimer (cont’d) Listing Rule 5.23 Disclosure The information in this presentation that relates to Mineral Resources is based on data compiled by Daniel Madre of PT Danmar Explorindo. Information relati
Slide 6: Whilst we own a world class nickel laterite mine… this is not a mining story
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES WHILST WE OWN A WORLD CLASS NICKEL LATERITE MINE… IT’S A STORY ABOUT THE PRODUCTION OF THE LOWEST CAPITAL INTENSIVE AND SOME OF THE MOST PROFITABLE NICKEL UNITS THIS IS NOT A IN THE GLOBAL MARKET IN PARTNERSHIP WITH THE WORLD’S
Slide 7: Transaction Overview
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES TRANSACTION OVERVIEW 6
Slide 8: Transaction overview
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Transaction overview Nickel Mines has executed a binding definitive agreement (“Agreement”) with Shanghai Decent to acquire a 70% interest in the Angel Nickel Project (“ANI”) (the “Transaction”). Nickel Mines will acquire i
Slide 9: Transaction transforms Nickel Mines, expected to double nameplate production
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Transaction transforms Nickel Mines, expected to double nameplate production Nickel Mines’ attributable nickel production profile is ATTRIBUTABLE NAMEPLATE NICKEL PRODUCTION PROFILE TO APPROXIMATELY DOUBLE(1) estimated to app
Slide 10: Sources and uses
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Sources and uses The majority of the proceeds of the Entitlement Offer will be put towards funding the First Acquisition payment. Sources of Funds A$m US$m – First Acquisition payment of US$210m is due by end of Q1 2021 to se
Slide 11: Pro-forma capitalisation
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Pro-forma capitalisation Strong balance sheet position maintained. Entitlement Use of Pro-forma Pro-forma capitalisation (1) Units Current (2) Offer Proceeds First Acquisition Pro-forma for the First Acquisition and the Ent
Slide 12: ANI Acquisition – Investment Proposition
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES ANI ACQUISITION – INVESTMENT PROPOSITION TRANSFORMING THE NICKEL MINES 11
Slide 13: Globally significant nickel producer
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Globally significant nickel producer Since it’s IPO in 2018, Nickel Mines has transitioned from a small-scale supplier of nickel laterite to a globally significant nickel producer with attributable nickel production of >30 kt
Slide 14: The Nickel Mines Story – Who are we?
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES The Nickel Mines Story – Who are we? IMIP IMIP MOROWALI IWIP NIC HNI RNI HM ANI ASX 80% 80% 80% 70% Nickel Mines Limited Hengjaya Nickel Project Ranger Nickel Project Hengjaya Mine. Definitive Agreement to (NIC) is an Aus
Slide 15: The Nickel Mines Story – Why Invest?
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES The Nickel Mines Story – Why Invest? Strategic Partnership Established Tenant RKEF Processing Consistent Production with Tsingshan within the IMIP Technology Outperformance Partnership in multiple (HNI and RNI) Indonesia/IM
Slide 16: Building a Nickel Empire
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Building a Nickel Empire Nickel Mines will have operating footprints in what are predicted to be the world’s two largest nickel production centres. HALMAHERA IWIP PT ANI IMIP MOROWALI HM MINE 15
Slide 17: Introducing the Indonesia Weda Bay Industrial Park
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Introducing the Indonesia Weda Bay Industrial Park The IWIP is a new RKEF nickel production frontier. IWIP is located on Halmahera Island in Indonesia’s North Maluku province. Construction commencement in August 2018. The
Slide 18: Comparing IMIP and IWIP
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Comparing IMIP and IWIP IMIP and IWIP are estimated to become the world’s two largest nickel production centres… IMIP IWIP Steel production capacity 3Mt Stainless Steel per annum 8 operating RKEF lines RKEF lines Further RKEF l
Slide 19: ANI overview
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES ANI overview CAPITAL COST GUARANTEE - Not to exceed US$700M(4) - No cost overrun risk 380MW POWER PLANT FIRST PRODUCTION 4 NEXT GENERATION ANI DEVELOPMENT COST - “CAPTIVE” POWER RKEF LINES(1) CAPPED AT US$700M - ~20% SAVINGS ON
Slide 20: Proposed ANI ownership structure
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Proposed ANI ownership structure ANI structure will replicate the structures used for Hengjaya Nickel and Ranger Nickel investments. Indicative corporate structure(1) – Nickel Mines will acquire its interest in ANI through FI
Slide 21: ANI – Compelling Capital Intensity
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES ANI – Compelling Capital Intensity ANI capital intensity in line with previous acquisitions with the additional benefit of captive 380MW power plant. Comparison to HNI and RNI by the numbers… Implied Implied Implied HNI RNI ANI
Slide 22: Continuation of transformational growth in attributable nickel production
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Continuation of transformational growth in attributable nickel production A successful commissioning of ANI is expected to more than double NIC’s nameplate production capacity and position it as the largest pure-play listed nic
Slide 23: ESG considerations
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES ESG considerations Community Environment > 1,500 locals employed across the HNI/RNI RKEF operations. Hengjaya Mine – open cut, at surface truck and shovel operation with no tailings. ~2,000 personnel expected to be employ
Slide 24: Operations Update
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES OPERATIONS UPDATE 23
Slide 25: September Quarter Highlights
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES September Quarter Highlights GROSS PRODUCTION 10,699.9 (tonnes of nickel metal (100% basis) +5.9% from 10,103.9 tonnes in June Qtr NIC ATTRIBUTABLE PRODUCTION(1) 8,559.9 tonnes of nickel metal +41.2% from 6,062.3 tonnes in June
Slide 26: Continued operational outperformance at HNI and RNI
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Continued operational outperformance at HNI and RNI ~40% 2,500 Nameplate Production Actual Production 7,900 ~15,000 tonnes(1) ~20,800 tonnes(1) 2,000 1,916 7,700 1,895 1,870 1,817 1,819 1,824 1,697 1,661 1,648 Ni Eq Tonnes 1,62
Slide 27: RKEF Operations – An Outstanding September Quarter
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES RKEF Operations – An Outstanding September Quarter HENGJAYA NICKEL July August September Quarter Total June Quarter NPI Production tonnes 9,428.7 11,300.0 12,652.3 33,381.0 34,078.3 NPI Grade % 15.4 16.1 14.8 15.4 14.6 Nickel M
Slide 28: Benefiting from superior NPI payabilities
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Benefiting from superior NPI payabilities How does NIC get paid? Nickel Mines enters into NPI sales contracts with various Tsingshan group companies. An NPI sales price is quoted based on publicly available third-party refe
Slide 29: Bottom quartile operating costs
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Bottom quartile operating costs Cost Advantages for the IMIP The IMIP’s fully integrated production chain delivers significant cost and logistics savings: – Kiln heat recycled to assist ore drying. – Hot charging of NPI direc
Slide 30: Taxation concessions
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Taxation concessions By official decree of the Minister of Finance of the Republic of Indonesia. Material tax concessions have been granted to both HNI and RNI. It is the intention for ANI to apply for these tax concessions in
Slide 31: Hengjaya Mine – The Foundation Asset
Hengjaya Mine – The Foundation Asset Location Licence Resource Mining Morowali Regency, Central IUP licence covering 6,249 Updated Resource released Geology de-risked by mining Sulawesi, Indonesia. hectares. in August 2020(1). activity to date. A large tonnage, high grade, 20 year mining
Slide 32: Hengjaya Mine – September Quarter Performance
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Hengjaya Mine – September Quarter Performance Production summary July 2020 August 2020 September 2020 Quarter Total June 2020 Quarter Tonnes mined Wmt 9,540 45,900 102,618 158,058 62,610 Overburden mined BCM 24,257 87,214 88,96
Slide 33: Equity Raising Details
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES EQUITY RAISING DETAILS 32
Slide 34: Entitlement Offer overview
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Entitlement Offer overview 2 for 11 fully underwritten pro-rata accelerated non-renounceable Entitlement Offer (“Offer” or “Entitlement Offer”) at A$0.94 per New Share to Offer size and raise approximately ~A$364m / US$268m.
Slide 35: Timetable
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Timetable Event Date Trading halt and announcement of Entitlement Offer Wednesday, 2 December 2020 Institutional Entitlement Offer opens Wednesday, 2 December 2020 Institutional Entitlement Offer closes Thursday, 3 December 202
Slide 36: Appendix
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES APPENDIX 35
Slide 37: Risk Factors
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Risk Factors 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
Slide 38: Risk Factors (cont'd)
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Risk Factors (cont’d) Risk Description The continued operations of HNI and RNI and future operations and development of ANI are heavily reliant on the relationship between the Company and Tsingshan. Sales All sales of NPI from
Slide 39: Risk Factors (cont'd)
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Risk Factors (cont’d) Risk Description CAs The CAs are material contracts which set out the terms of the Company’s key partnership with Shanghai Decent and its associates in respect of the RKEF lines of HNI and RNI and future R
Slide 40: Risk Factors (cont'd)
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Risk Factors (cont’d) Risk Description Exploration, development and production at the Hengjaya Mine, the RKEF and power plant operations at HNI and RNI and future RKEF operations at ANI require various licences and permits from
Slide 41: Risk Factors (cont'd)
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Risk Factors (cont’d) Risk Description There can be no assurance that the Company, the HNI Entities, the RNI Entities and the ANI Entities will achieve their respective production and cost estimates. The failure to achieve thes
Slide 42: Risk Factors (cont'd)
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Risk Factors (cont’d) 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 managem
Slide 43: Risk Factors (cont'd)
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Risk Factors (cont’d) Risk Description The Company insures its operations in accordance with industry practice. However, in certain circumstances, the Company’s insurance and the insurance held by the HNI Entities, the RNI Enti
Slide 44: Risk Factors (cont'd)
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Risk Factors (cont’d) Risk Description The Transactions As noted on slide 7 of this presentation, the Transactions are subject to the shareholder approval. The Company intends to hold an extraordinary general meeting in January
Slide 45: Risk Factors (cont'd)
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Risk Factors (cont’d) Risk Description • any event specified in the Timetable is delayed by Nickel Mines for more than 1 business day without the prior consent of the Underwriters; • the Company withdraws the Entitlement Offer;
Slide 46: Risk Factors (cont'd)
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Risk Factors (cont’d) Risk Description • trading of all securities quoted on ASX, LSE, HKEX, NASDAQ or NYSE is suspended for at least 1 trading day (or a substantial part of 1 trading day) on which that exchange is open for tra
Slide 47: Risk Factors (cont'd)
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Risk Factors (cont’d) Key risks – General risks: Risk Description The Company and the enterprises in which it invests are subject to litigation risks. All industries, including the minerals extraction and processing industry, a
Slide 48: International Offer Restrictions
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES International Offer Restrictions This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distrib
Slide 49: International Offer Restrictions
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES International Offer Restrictions Cayman Islands This document may not be distributed from within the Cayman Islands and does not constitute an offer of New Shares to the public in the Cayman Islands. The New Shares may not be o
Slide 50: International Offer Restrictions
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES International Offer Restrictions 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
Slide 51: International Offer Restrictions
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES International Offer Restrictions Switzerland The New Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange or on any other stock exchange or regulated trading facility in Switzerland
Slide 52: Corporate snapshot
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES Corporate snapshot TRADING INFORMATION 1 DECEMBER 2020 10.3% ASX Code NIC Directors and Management 18.6% Shares on Issue 2,128.1B Shanghai Decent 42.5% PT Karunia Bara Perkasa Share Price A$1.045 Blackrock Market Capitalisation
Slide 53: www.nickelmines.com.au
NOT FOR RELEASE TO US WIRE SERVICES OR DISTRIBUTION IN THE UNITED STATES www.nickelmines.com.au Robert Neale Peter Nightingale Chairman Director and Chief Financial Officer rneale@nickelmines.com.au pnightingale@nickelmines.com.au Norman Seckold Richard Edwards Deputy Chairman Company Secretary nsec