29 August 2024
ASX Limited 20 Bridge Street
Sydney NSW 2000 (41 pages)
HALF YEAR FINANCIAL REPORT
Highlights: 6 Months to 6 Months to 30 June 2024 30 June 2023Nickel Industries Group Results:
Sales revenue: US$843.3M US$932.3M
Gross profit: US$96.3M US$126.4M
Operating profit: US$87.8M US$117.3M
Profit after tax: US$14.0M US$49.1M
EBITDA: US$131.7M US$141.8M
RKEF EBITDA: US$90.9M US$147.2M
Hengjaya Mine EBITDA: US$39.1M US$26.1M
30 June 2024 31 December 2023
Nickel Industries Group Balance Sheet:
Total assets: US$3,898.6M US$4,071.3M
Net assets: US$2,829.4M US$2,906.6M
63,814 tonnes of nickel metal produced in RKEF operations
4,117 tonnes (attributable, 10%) of nickel metal produced in HPAL operations
6.1 million tonnes of saprolite and limonite ore mined at the Hengjaya Mine
Subsequent to the end of the period, increased to a 44% interest in ENC HPAL project
Interim dividend declared of A$0.025 (funded from 100% conduit foreign income)
Yours sincerely
Richard Edwards Company Secretary
pjn12289
NICKEL INDUSTRIES LIMITED
ABN 44 127 510 589
Level 2, 66 Hunter Street Sydney NSW 2000 Australia
T +61 2 9300 3311
F +61 9221 6333
E info@nickelindustries.com
W https://www.nickelindustries.com
Appendix 4D Half Year Report
Name of entity
NICKEL INDUSTRIES LIMITED
ABN or equivalent company reference
Financial half year ended ('current period')
44 127 510 589
30 JUNE 2024
Results for announcement to the market
Revenues from ordinary activities down 9.5% to US$843.3M Profit from ordinary activities after tax attributable to down 81.1% to US$5.1M members Net profit for the period attributable to members down 81.1% to US$5.1M | ||
Dividends (distributions) | Amount per security | Franked amount per security |
Final dividend Interim dividend | N/A A$0.025 | N/A Nil¢ |
Previous corresponding period Final dividend Interim dividend | N/A A$0.02 | N/A Nil¢ |
Record date for determining entitlements to the 4 September 2024 dividend. Brief explanation of any of the figures reported above and short details of any bonus or cash issue or other item(s) of importance not previously released to the market: Refer attached reports. | ||
NTA backing | Current period | Previous corresponding period |
Net tangible asset backing per ordinary security | US$0.642 | US$0.674 |
Additional information supporting the Appendix 4D disclosure requirements can be found in the Directors' Report and the consolidated financial statements for the half-year ended 30 June 2024.
This report is based on the consolidated financial statements for the half-year ended 30 June 2024 which have been reviewed by KPMG.
NICKEL INDUSTRIES LIMITEDand its controlled entities
A.B.N. 44 127 510 589
INTERIM FINANCIAL REPORT FOR THE HALF YEAR ENDED 30 JUNE 2024Table of Contents
Directors' Report 3
Lead Auditor's Independence Declaration 15
Condensed Consolidated Statement of Profit or Loss and Other Comprehensive Income 16
Condensed Consolidated Statement of Financial Position 17
Condensed Consolidated Statement of Changes in Equity 18
Condensed Consolidated Statement of Cash Flows 19
Notes to the Consolidated Financial Statements 20
Directors' Declaration 36
Independent Auditor's Review Report 37
Corporate Directory 39
The Directors of Nickel Industries Limited (Nickel Industries or the Company) and its subsidiaries (the Group) submit their financial report for the half year ended 30 June 2024 and the Auditor's Review Report thereon.
All amounts are reported in US$ unless otherwise stated. DIRECTORS
The names of the Directors of the Company in office during the half year period and until the date of this report were:
Norman Seckold - Chairman and Executive Director since 12 September 2007 Justin Werner - Managing Director since 23 August 2012
Christopher Shepherd - Executive Director since 23 December 2022 James Crombie - Non-Executive Director since 23 May 2008 Emma Hall - Non-Executive Director since 11 June 2024
Dasa Sutantio - Non-Executive Director since 29 May 2020 Haijun Wang - Non-Executive Director since 1 November 2023 Muliady Sutio - Non-Executive Director since 21 September 2023 Xu Yuanyuan - Non-Executive Director since 26 April 2018 Xiang Binghe - Non-Executive Director since 9 May 2023
RESULTS
The profit of the Group for the half year after providing for income tax amounted to $14,047,242 (2023 - $49,052,812).
REVIEW OF OPERATIONS
During and following the half year ended 30 June 2024, significant milestones were achieved as follows:
Highlights:
The Company's Hengjaya Nickel, Ranger Nickel, Angel Nickel and Oracle Nickel rotary kiln electric furnace (RKEF) projects produced a combined 63,814 tonnes of nickel metal equivalent. 62,071 of this was nickel in nickel pig iron (NPI) and 1,743 was nickel in nickel matte. A total of 65,032 tonnes of nickel metal equivalent were sold during the half year and EBITDA(1)from the RKEF projects for the six months to 30 June 2024 was $90.9M.
6,084,127 wet metric tonnes (wmt) of nickel ore were mined at the Hengjaya Mine, 1,906,190 wmt of saprolite ore and 4,177,937 wmt of limonite ore. On a stand-alone basis, EBITDA from the Hengjaya Mine for the six months to 30 June 2024 was $39.1M(2).
In January 2024, the Company declared a final dividend of A$0.025 per share, representing a distribution of A$107.1M ($69.9M).
In April 2024, the Company completed the acquisition of a further 13.75% equity interest in the Excelsior Nickel Cobalt HPAL Project (ENC) by cash payment of US$316.3M. Subsequent to the end of the period the Company acquired an additional 16.5% interest through the cash payment of US$379.5M, increasing its interest in ENC to 44%.
(1)EBITDA is defined by the Company as profit/(loss) for the period, plus depreciation and amortisation costs, plus interest income/(expenses), plus withholding tax expense. This non-IFRS financial measure, which is referred to throughout the directors' report, is used internally by management to assess the performance of the Group's business and make decisions on allocation of resources. This non-IFRS measure has not been subject to audit or review.
(2)During the half year, the Hengjaya Mine sold saprolite ore to Hengjaya Nickel, Oracle Nickel and Ranger Nickel. Hengjaya Mine profit of $0.5M relating to nickel ore inventory held by Hengjaya Nickel, Oracle Nickel, Ranger Nickel at 30 June 2024 was realised on consolidation in the period.
RKEF OPERATIONS
During the half year, the Company held an 80% interest in Hengjaya Nickel (HNI), Ranger Nickel (RNI), Angel Nickel (ANI) and Oracle Nickel (ONI), projects.
A summary of production from HNI, RNI, ANI and ONI for the six months to 30 June 2024 is as follows:
PRODUCTION | HNI | RNI | ANI | ONI | Total | |
NPI production | tonnes | 57,688 | 73,301 | 167,607 | 206,120 | 504,716 |
NPI grade | % | 12.3 | 12.2 | 13.4 | 11.5 | 12.3 |
Nickel in NPI | tonnes | 7,117 | 8,910 | 22,389 | 23,655 | 62,071 |
Matte production | tonnes | 13,483 | - | - | - | 13,483 |
Matte grade | % | 12.9 | - | - | - | 12.9 |
Nickel in matte | tonnes | 1,743 | - | - | - | 1,743 |
Total nickel production | tonnes | 8,860 | 8,910 | 22,389 | 23,655 | 63,814 |
SALES AND CONTRACTS | HNI | RNI | ANI | ONI | Total | |
Weighted avg contract price | $ | 11,545 | 11,267 | 11,126 | 11,353 | 11,290 |
Tonnes sold | tonnes | 9,610 | 8,910 | 22,857 | 23,655 | 65,032 |
Sales revenue1 | $M | 110.92 | 100.3 | 252.1 | 268.6 | 731.9 |
COSTS | HNI | RNI | ANI | ONI | Total | |
Cash costs/tonne produced3 | $/t | 10,723 | 10,814 | 8,933 | 9,667 | 9,716 |
EBITDA | $/M | 2.4 | 0.9 | 48.6 | 39.0 | 90.9 |
SUMMARY RKEF METRICS | 6 months to 30 June 2023 | 6 months to 30 June 2024 | % movement | |
Nickel production | tonnes | 59,957 | 63,814 | 6.4 |
Nickel tonnes sold | tonnes | 59,637 | 65,032 | 9.0 |
Nickel metal production attributable to Nickel Industries | tonnes | 45,843 | 51,052 | 11.4 |
Sales revenue2 | $M | 922.9 | 731.9 | (20.7) |
RKEF EBITDA | $M | 147.2 | 90.9 | (38.2) |
1 Revenue also includes other operations sales.
2 Excludes the $42.5M of sales by Hengjaya Nickel to Glencore AG of nickel matte not produced by Hengjaya Nickel.
3 Cash costs refers to the cash costs of production, a non-IFRS performance measure, in order to provide investors with information about the measure used by management to monitor performance. Cash costs/tonne produced are equal to cash costs divided by nickel tonnes produced.
Safety
Hengjaya Mine
At the Hengjaya Mine over 13.4 million work hours have been registered since the last reported lost time injury (LTI) in November 2021. This gives the Hengjaya Mine a LTI frequency rate (LTIFR) of 0.07 and a total recordable incident frequency rate (TRIFR) of
0.74 for each million work hours. During the half year 3.25 million work hours recorded with no LTIs.
Safety and career development training continued, including supervisory and ISO 45001-2018 standards and reporting components which are currently focusing on Health and Safety certification. With the new haul road to Indonesia Morowali Industrial Park (IMIP) now in operation, there has been an increased focus on contractor management, the use of mobile equipment and the introduction of new safe work procedures for long distance road-haulage, traffic management and additional mining operations.
RKEF Operations
For the 6 months to 30 June 2024, 4.93 million cumulative work hours with one LTI at the ONI operation reported. Nickel Industries' RKEF operations LTIFR stand at 0.316 for the half year.
Group Safety
Total hours worked for the group half year was 8.18 million hours with 1 LTI representing a LTIFR of 0.182 per million work hours. The Company will continue to strengthen its 'best practice' mining and processing standards. In addition to the Hengjaya Mine, all of our operations continue to focus on our safety training, risk assessments and change management. The Company remains committed to continuous improvement in all areas of operations and will continue to work collaboratively with stakeholders to drive positive environmental, safety, social, and governance outcomes.
Weekly safety talk at the Hengjaya Mine Emergency response training
Commentary on RKEF operations
RKEF operations during the half year period 2024 were negatively impacted by a series of licencing, weather and maintenance issues.
During the March quarter, there were industry-wide delays in relation to the renewal of the Rencana Kerja dan Anggaran Biaya Indonesian mining licenses (RKAB License). The RKAB License was an annual license approving nickel ore sales volumes but has now been granted for a three-year period. The delay was caused in part by enhanced regulatory approvals and scrutiny in the lead up to the Indonesian presidential elections which were held on 14 February 2024.
The delayed reissuance of RKAB Licenses across Indonesia were particularly impactful to the Company's RKEF operations in January and February. Whilst material stockpiles of ore are consistently maintained within the IMIP and IWIP, lower levels of incoming ore necessitated draw down and usage of lower grade higher cost ore throughout the quarter. As a result of lower grade ore feed, nickel production volumes from the Company's four RKEF lines were below historical levels which also translated into higher cash costs.
During the June quarter, above average rainfall further impacted the delivery of normal nickel ore volumes into the IMIP necessitating the continued requirement to draw down lower grade ore stockpiles which again negatively impacted production volumes and unit cash costs.
With production volumes down due to the abovementioned licencing and weather events proactive and rotational maintenance was carried out across the IMIP's power stations, with the Company's ONI power plant offline for several weeks during the half year period, contributing to lower than usual production volumes and higher cash costs at ONI.
Hengjaya Nickel (80% interest held by Nickel Industries)
During the six months to 30 June 2024, HNI produced 7,117 tonnes of nickel metal in NPI and 1,743 tonnes of nickel metal in matte, with a weighted average cash cost of $10,723 per tonne of nickel metal.
HNI (100%) | March 2024 Quarter | June 2024 Quarter | Total | |
NPI production | tonnes | 20,972 | 36,716 | 57,688 |
NPI grade | % | 12.8 | 12.1 | 12.3 |
Matte production | tonnes | 13,483 | - | 13,483 |
Matte grade | % | 12.9 | - | 12.9 |
Nickel metal production in NPI and Matte | tonnes | 4,416 | 4,444 | 8,860 |
Cash costs | $/t Ni | 10,320 | 11,131 | 10,723 |
Nickel metal sold | tonnes | 5,046 | 4,564 | 9,610 |
For the six months to 30 June 2024, HNI recorded sales of $110.9M from 9,610 tonnes of nickel metal sold. EBITDA for the six months was $2.4M.
In December 2023 the Company had entered into a sales contract with Glencore AG (Glencore) for nickel matte. With HNI ceasing the production of nickel matte in February 2024 it was not able to complete the contact. Subsequently the contract was fulfilled by Golden Harbour International Pte. Ltd, an associate of Shanghai Decent. As a result of this contract Hengjaya Nickel recorded an additional $42.5M in sales revenue, separate from the $112.6M of revenue from sales of its own production, as well as a corresponding
$42.5M in operating costs.
Ranger Nickel (80% interest held by Nickel Industries)
During the six months to 30 June 2024, RNI produced 8,910 tonnes of nickel metal, with a weighted average cash cost of $10,814 per tonne of nickel metal.
RNI (100%) | March 2024 Quarter | June 2024 Quarter | Total | |
NPI production | tonnes | 37,459 | 35,842 | 73,301 |
NPI grade | % | 12.2 | 12.2 | 12.2 |
Nickel metal production | tonnes | 4,554 | 4,356 | 8,910 |
Cash costs | $/t Ni | 10,342 | 11,309 | 10,814 |
Nickel metal sold | tonnes | 4,554 | 4,356 | 8,910 |
For the six months to 30 June 2024, RNI recorded sales of $100.3M from 8,910 tonnes of nickel metal sold. EBITDA for the six months was $0.9M.
Angel Nickel (80% interest held by Nickel Industries)
During the six months to 30 June 2024, ANI produced 22,389 tonnes of nickel metal, with a weighted average cash cost of $8,933 per tonne of nickel metal.
ANI (100%) | March 2024 Quarter | June 2024 Quarter | Total | |
NPI production | tonnes | 82,795 | 84,811 | 167,606 |
NPI grade | % | 13.6 | 13.1 | 13.4 |
Nickel metal production | tonnes | 11,271 | 11,118 | 22,389 |
Cash costs | $/t Ni | 8,797 | 9,071 | 8,933 |
Nickel metal sold | tonnes | 11,561 | 11,296 | 22,857 |
For the six months to 30 June 2024, ANI recorded (on a 100% basis) sales of $252.1M from 22,857 tonnes of nickel metal sold. EBITDA for the six months was $48.6M.
Oracle Nickel (80% interest held by Nickel Industries)
During the six months to 30 June 2024, Oracle Nickel produced 23,655 tonnes of nickel metal, with a weighted average cash cost of
$9,667 per tonne of nickel metal.
ONI (100%) | March 2024 Quarter | June 2024 Quarter | Total | |
NPI production | tonnes | 104,953 | 101,167 | 206,120 |
NPI grade | % | 11.1 | 11.9 | 11.5 |
Nickel metal production | tonnes | 11,599 | 12,057 | 23,656 |
Cash costs | $/t Ni | 9,411 | 9,914 | 9,667 |
Nickel metal sold | tonnes | 11,599 | 12,057 | 23,655 |
For the six months to 30 June 2024, ONI recorded sales of $268.6M from 23,655 tonnes of nickel metal sold. EBITDA for the six months was $39.0M.
HPAL OPERATIONS
Huayue Nickel Cobalt Project (10% indirect interest held by Nickel Industries)
During the half year, the Huayue Nickel Cobalt (HNC) Project produced 41,172 tonnes of nickel and 3,669 tonnes of cobalt in mixed hydroxide precipitate (MHP). Nickel Industries' attributable share of HNC production was 4,117 tonnes of nickel and 367 tonnes of cobalt.
Whilst HNC undertakes its own sales of MHP, offtake is also distributed to Tsing Creation for sale. Nickel Industries holds a 10% interest in HNC and 10% of the EBITDA of HNC for the six month period was $18.1M4. The EBITDA for Tsing Creation (with Nickel Industries holding a 100% interest) was $4.5M4, giving a combined EBITDA of $22.6M4. The Company's 10% profit from equity accounted investment in HNC was $6.6M for the period.
HPAL CONSTRUCTION
Excelsior Nickel Cobalt Project (44% indirect interest held by Nickel Industries)
During the period, continued strong progress was made at the Company's ENC HPAL project. Office and staff facilities have been completed and all earthworks and footings are now largely complete with concrete pouring to commence shortly, whilst long lead items and critical process equipment continue to be sourced and fabricated in China ahead of delivery to the IMIP.
In April 2024, the Company acquired a further 13.75% equity interest in ENC following a cash payment of US$316.3M (refer ASX release 2 April 2024). As noted in the Company's recent operating update (refer ASX release 4 July 2024), subsequent to period end the Company completed an early acquisition of an additional 16.5% interest in ENC, increasing its equity interest to 44%, via a cash payment of US$379.5M fast tracked to assist in the acceleration of the construction and commissioning of the Project's nickel cathode and sulphate plants.
ENC Project under construction
4The Company is equity accounting its 10% interest in HNC and therefore reports in its financials its 10% share of the net profit of HNC, including any amortisation on the fair value of the acquisition. In determining the EBITDA of HNC for the six month period, EBITDA is defined as profit/(loss) for the period, plus depreciation and amortisation costs, plus interest income/(expenses), plus withholding tax expense, as calculated in accordance with HNC's financial reports. Further, Tsing Creation is a Hong Kong entity through which the Company holds its 10% interest in HNC.
HENGJAYA MINE (80% interest held by Nickel Industries)
The Company holds an 80% interest in PT Hengjaya Mineralindo, the owner of 100% of the Hengjaya Mine, with the remaining 20% interest owned by the Company's Indonesian partner.
The mine is located approximately 12 kilometres from the IMIP in the Morowali Regency, Central Sulawesi, Indonesia. The Hengjaya Mine tenement covers 5,983 hectares and holds a 20-year mining operation/production licence (issued in June 2011) with two further 10-year extension periods.
Operations
For the half year, production of saprolite ore totalled 1,906,190 wmt and production of limonite ore totalled 4,177,937 wmt.
March 2024 Quarter | June 2024 Quarter | Total | ||
Saprolite mined | wmt | 1,026,910 | 879,280 | 1,906,190 |
Limonite mined | wmt | 2,087,865 | 2,090,072 | 4,177,937 |
Nickel ore mined | wmt | 3,114,775 | 2,969,352 | 6,084,127 |
Overburden mined | BCM5 | 385,378 | 370,204 | 755,582 |
Strip ratio | BCM/wmt | 0.12 | 0.12 | 0.12 |
During the half year, operations at the Hengjaya Mine were negatively impacted by the delay by Indonesian authorities in the issuance of a Rencana Kerja dan Anggaaran Biaya (RKAB) (an application which is made based on the previous year's operating and environmental performance) and above average rainfall during the period. The Company's new RKAB has been granted for a three year period. The Hengjaya Mine was one of the first mines in Indonesia from over 700 mines to have the RKAB licence approved, highlighting our credentials as one of the leading mining operations in Indonesia.
Despite these challenges, the 6,084,127 wmt mined was a 16.8% increase on the 5,207,201 wmt mined in the six months to 30 June 2023.
Additional haul trucks continue to be commissioned to provide the Hengjaya Mine with a full contingent of 175 x 50t payload haul trucks now operating at the mine site, and the Company has commenced additional road improvements and surfacing to allow haulage hours to improve during the future wet periods. The benefits of these improvement works are already being seen in July haulage numbers, and despite the higher-than-average rainfall in the June quarter, the Hengjaya Mine remains on track to produce 12 million wmt for 2024.
5 BCM represents 'bank cubic metres'.
SAFETY, ENVIRONMENT, COMMUNITY AND SOCIAL GOVERNANCE
HNC CO2 intensity
The Huayue Nickel Cobalt HPAL Project (HNC), in which the Company holds a 10% interest has recently released its carbon intensity for 2023. HNC's carbon intensity as determined by Skarn Associates Limited came in at 6.91 tonnes of CO2 per tonne of nickel produced (Scope 1 & 2), positioning it as one of the lowest carbon emitting nickel processors globally and second when compared to Australian peers. The ENC Project will replicate the HNC project, with the exception of the added flexibility of being able to also produce nickel sulfate and nickel cathode, as well as mixed hydroxide precipitate. With the assistance of the SESNA solar project (Indonesia's largest solar project) (see ASX announcement dated 9 October 2023), our target is for ENC to significantly improve on this CO2, intensity as part of our efforts to achieve the Company's stated emission targets.
Awarded highest sustainability score in the Indonesian nickel mining sector
During the period, the Company was recognised by the Indonesian Ministry of Environment and Forestry (KLHK) for achieving the highest sustainability score of any mine in the Indonesian nickel mining sector and fourth highest score for all mining companies, as published in the Government agency's PROPER Book of 2023.
This sustainability score builds upon numerous other accolades and awards for the Hengjaya Mine from various certified third parties such as S&P, MSCI, ENSIA and TrenAsia and being one of only two Indonesian mining companies recently invited to present at the prestigious COP28 climate summit in Dubai.
Having now established itself as the world's largest listed pure-play nickel producer, the Company is continuing to play a leadership role in promoting responsible and sustainable mining practices in Indonesia underscored by its recent commitment to net zero emissions by 2050 and a 50% reduction in carbon intensity across its operations by 2035.
Sustainability Report
In June 2024, the Company released its 2023 Sustainability Report, the third sustainability report published by the Company and a continuation of the previous year's report published in March 2023. The Sustainability Report showcases the Company's commitment to exhibiting a leadership role in promoting responsible and sustainable mining in Indonesia by implementing industry best practices across our mining and downstream processing operations, with the steadfast support from the local communities in which the Company operates.
The report was developed in accordance with key reporting principles, including stakeholder inclusiveness, materiality, completeness, accuracy, balance, clarity, comparability, reliability, and timeliness. The Company has reported the information cited in the Global Reporting Initiative (GRI) content index for 2023 in accordance with the GRI Standards, along with the Metals and Mining (MM) Supplement Sector; Sustainability Accounting Standards Board (SASB) for Metals and Mining Standard; and the early adoption of the International Financial Reporting Standards (IFRS) Sustainability Disclosure Standards.
University Scholarship Program
The Company, in partnership with Hasanuddin University, established a university scholarship program as part of our broader ongoing social initiatives within the local communities in which it operates. The scholarship program will provide full financial support to 10 local indigenous students per year from the Central Sulawesi, North Maluku and West Papua Provinces to pursue 4-year undergraduate degrees across the fields of metallurgical engineering, environmental engineering and mining engineering. It is envisaged this program will help foster the next generation of leaders in the local mining industry.
University scholarship selection test on June 26 in Morowali Selected students first day of University
CSR and Social Responsibility Awards
During the period, the Company's Hengjaya Mine received the Top CSR (Community Social Responsibility) Award and the Indonesia Social Responsibility Award for the SMART HM (Semangat Meraih Cita-cita Bersama HM), with a focus on educating vocational school students to be more prepared to enter the industry.
Top CSR Awards 2024 and Indonesia Social Responsibility Award ceremony
CORPORATE
Increase to a 44% equity interest in ENC HPAL Project
In April 2024 completed the acquisition of an additional 13.75% interest in the ENC Project, increasing its equity interest in ENC to 27.5%. Subsequent to the end of the half year period the Company completed the acquisition of a further 16.5% equity interest, increasing its interest in ENC to 44.0%. The payment of U$$379.5M was made ahead of the scheduled 1 October 2024 payment date to assist in the acceleration of the construction and commissioning of the nickel cathode and sulphate plants.
The acquisition payment schedule for ENC is set out below.
Date | US$M | Equity acquired | Cumulative equity |
Invested to date | 1,012.0 | 44.00% | 44.00% |
By 1 July 2025 | 126.5 | 5.50% | 49.50% |
By 1 October 20256 | 126.5 | 5.50% | 55.00% |
Total | 1,265.0 | 55.00% | |
Trial sales of nickel cathode |
During the period, the Company commenced delivery of a contract to deliver 200 metric tonnes (MT) of nickel cathode to a leading Western space and aeronautical company under a trial sales contract, a necessary step ahead of any longer term, larger volume supply contract. The nickel cathode was produced by a nickel cathode plant operating at the IMIP (which is 49% owned by a Shanghai Decent-related entity) whose product specifications ENC's nickel cathode is anticipated to replicate. While the Company has numerous samples of MHP under qualification testing with various counterparties, this contract represents the first trial of nickel cathode and is a strong endorsement of ENC's multi-product offering - the first HPAL plant of its kind that will be capable of producing three class-1 nickel products being MHP, nickel sulphate and nickel cathode.
Successful syndication of US$400m BNI loan facilities
During the period, the Company announced the successful syndication of its US$400M of bank loan facilities provided by PT Bank Negara Indonesia (Persero) Tbk (BNI). The loan facilities, established with BNI in October 2023 to support the Company's ENC funding obligations, were successfully syndicated across an additional eight banks comprising a mix of Asian, European and global banking institutions. This broad-based support is indicative of the Company's growing regional reputation and an industry leader in responsible and sustainable mining in Indonesia.
In March 2024 the Company drew down $160.2M of the facility, ahead of making a US$316.3M payment for an additional 13.75% interest in the ENC project. Subsequent to the end of the period, the Company drew down the final US$50M under the facility ahead of making the US$379.5M payment for an additional 16.50% interest in the ENC project.
6 Following commissioning of line 1 of the ENC Project.
US$250m term loan facility executed
During the period, the Company executed a US$250M, 5-year term loan facility, jointly provided by tier-1 banks BNI and DBS Bank Ltd (DBS).
Following the repayment of the US$245M balance of the Company's April 2024 notes, the facility was established to support the remaining funding requirements for Nickel Industries' acquisition of a 55% equity interest in the ENC project (ENC), which is currently under construction within the IMIP.
Subsequent to the end of the period, the Company drew down the facility in full ahead of making the US$379.5M payment for an additional 16.50% interest in the ENC project.
SUBSEQUENT EVENTS
In July 2024, the Company paid US$379.5M for an additional 16.5% interest in the ENC project, taking the Company's interest in the project to 44.0%.
In July 2024, the Company drew down the remaining US$50M under the US$400M BNI loan facility and the US$250M BNI and DBS facility, ahead of the ENC acquisition payment.
In August 2024, the Company announced the acquisition of the Sampala Project, three contiguous nickel IUPs (mining licences) covering 6,654 hectares. Subsequent to the end of the period the Company has made US$5M of acquisition payments for the Sampala project.
Other than the matters detailed above, there has not arisen in the interval between the end of the half year and the date of this report any other item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the Group, the results of those operations, or the state of affairs of the Group, in future financial years.
LEAD AUDITOR'S INDEPENDENCE DECLARATION
A copy of the Lead Auditor's Independence Declaration on page 15 as required under Section 307C of the Corporations Act 2001 is attached to and forms part of the Directors' Report for the half-year ended 30 June 2024.
Signed in accordance with a resolution of the Directors.
Norman Seckold Justin Werner
Chairman Managing Director
Sydney, 29 August 2024
Lead Auditor's Independence Declaration under Section 307C of the Corporations Act 2001
To the Directors of Nickel Industries Limited
I declare that, to the best of my knowledge and belief, in relation to the review of Nickel Industries Limited for the half-year ended 30 June 2024 there have been:
no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the review; and
no contraventions of any applicable code of professional conduct in relation to the review.
M_I I
KPMG Adam Twemlow
Partner
Brisbane
29 August 2024
15
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AND OTHER COMPREHENSIVE INCOME FOR THE HALF YEAR ENDED 30 JUNE 2024Notes | 6 months to 30 June 2024 | 6 months to 30 June 2023 | |
US$ | $ | $ | |
Sales revenue | 843,280,448 | 932,265,569 | |
Cost of sales | (683,173,149) | (755,292,467) | |
Depreciation and amortisation expense | (63,852,613) | (50,606,945) | |
Gross profit | 96,254,686 | 126,366,157 | |
Directors' fees and consultants' expenses | (7,162,369) | (4,999,055) | |
Exploration and evaluation expenditure | (568,237) | - | |
Share of profit of equity accounted investee | 12 | 6,594,510 | - |
Other expenses7 | 4 | (7,279,132) | (4,082,088) |
Results from operating activities | 87,839,458 | 117,285,014 | |
Financial income | 5 | 9,349,201 | 2,682,818 |
Financial expense7 | 5 | (60,932,912) | (53,860,732) |
Net financial expense | (51,583,711) | (51,177,914) | |
Profit before income tax | 36,255,747 | 66,107,100 | |
Income tax expense7 | (22,208,505) | (17,054,288) | |
Profit for the period | 14,047,242 | 49,052,812 | |
Other comprehensive income | - | - | |
Total comprehensive income for the period | 14,047,242 | 49,052,812 | |
Profit attributable to: Owners of the Company | 5,136,972 | 27,128,306 | |
Non-controlling interest | 8,910,270 | 21,924,506 | |
Profit for the period | 14,047,242 | 49,052,812 | |
Total comprehensive income attributable to: Owners of the Company | 5,136,972 | 27,128,306 | |
Non-controlling interest | 8,910,270 | 21,924,506 | |
Total comprehensive income for the period | 14,047,242 | 49,052,812 | |
Earnings per share Basic and diluted profit per share (cents) | 7 | 0.12 | 0.91 |
The above consolidated statement of profit or loss and other comprehensive income should be read in conjunction with the accompanying notes.
7 Refer to Note 2 for reclassification of prior period expenses.
AS AT 30 JUNE 2024US$ | Notes | 30 June 2024 $ | 31 December 2023 $ |
Current assets | |||
Cash and cash equivalents | 351,518,021 | 284,053,495 | |
Term deposits and cash reserve | 6,564,876 | 494,753,107 | |
Trade and other receivables | 6 | 341,083,191 | 328,505,849 |
Inventory | 8 | 138,911,055 | 199,448,465 |
Other current assets | 55,182,991 | 37,911,368 | |
Total current assets | 893,260,134 | 1,344,672,284 | |
Non-current assets | |||
Other non-current asset | 40,593,977 | 41,242,609 | |
Trade and other receivables | 6 | 62,690,634 | 101,374,795 |
Inventory | 8 | 29,392,692 | 12,667,046 |
Property, plant and equipment | 9 | 1,809,066,006 | 1,836,771,098 |
Exploration and evaluation assets | 33,320,960 | 24,884,921 | |
Investment in equity accounted investees | 12 | 850,133,920 | 527,239,410 |
Intangible assets | 77,405,502 | 79,745,215 | |
Goodwill | 10 | 102,748,404 | 102,748,404 |
Total non-current assets | 3,005,352,095 | 2,726,673,498 | |
Total assets | 3,898,612,229 | 4,071,345,782 | |
Current liabilities | |||
Trade and other payables | 11 | 193,851,003 | 192,758,925 |
Current tax payable | 20,907,354 | 26,092,246 | |
Provision - employees' benefit obligation | 1,744,004 | 1,761,767 | |
Borrowings | 13 | 32,337,102 | 257,269,448 |
Total current liabilities | 248,839,463 | 477,882,386 | |
Non-current liabilities | |||
Provision - rehabilitation | 1,801,723 | 1,845,273 | |
Deferred income tax liability | 96,099,817 | 96,099,816 | |
Other non-current liability | 951,779 | 1,122,739 | |
Borrowings | 13 | 721,496,210 | 587,753,980 |
Total non-current liabilities | 820,349,529 | 686,821,808 | |
Total liabilities | 1,069,188,992 | 1,164,704,194 | |
Net assets | 2,829,423,237 | 2,906,641,588 | |
Equity | |||
Share capital | 14 | 2,032,927,026 | 2,032,927,026 |
Reserves | 19,065,940 | 19,065,940 | |
Retained profits | 308,292,285 | 373,060,100 | |
Total equity attributable to equity holders of the Company | 2,360,285,251 | 2,425,053,066 | |
Non-controlling interest | 469,137,986 | 481,588,522 | |
Total equity | 2,829,423,237 | 2,906,641,588 |
The above consolidated statement of financial position should be read in conjunction with accompanying notes.
NICKEL INDUSTRIES LIMITEDand its controlled entities
CONDENSED CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE HALF YEAR ENDED 30 JUNE 2024Non- | |||||
controlling | |||||
Notes Share capital | Retained profits | Reserves | Total | interest | Total equity |
$ | $ | $ | $ | $ | $ |
US$
Balance at 1 January 2023 Total comprehensive income for the period Profit for the period | 942,442,827 - | 337,031,589 27,128,306 | 19,144,965 - | 1,298,619,381 27,128,306 | 515,925,058 21,924,506 | 1,814,544,439 49,052,812 | ||
Total comprehensive income for the period | - | 27,128,306 | - | 27,128,306 | 21,924,506 | 49,052,812 | ||
Transactions with owners, recorded directly in equity Dividends | - | (40,706,503) | - | (40,706,503) | - | (40,706,503) | ||
Issue of shares | 209,130,208 | - | - | 209,130,208 | - | 209,130,208 | ||
Costs of issue | (4,944,222) | - | - | (4,944,222) | - | (4,944,222) | ||
Transaction with non-controlling interest without a change of control | - | - | - | - | 26,400,000 | 26,400,000 | ||
Distributions to non-controlling interest | - | - | - | - | (16,436,842) | (16,436,842) | ||
Balance at 30 June 2023 | 1,146,628,813 | 323,453,392 | 19,144,965 | 1,489,227,170 | 547,812,722 | 2,037,039,892 | ||
Balance at 1 January 2024 | 2,032,927,026 | 373,060,100 | 19,065,940 | 2,425,053,066 | 481,588,522 | 2,906,641,588 | ||
Total comprehensive income for the period | ||||||||
Profit for the period | - | 5,136,972 | - | 5,136,972 | 8,910,270 | 14,047,242 | ||
Total comprehensive income for the period | - | 5,136,972 | - | 5,136,972 | 8,910,270 | 14,047,242 | ||
Transactions with owners, recorded directly in equity | ||||||||
Dividends | 14 | - | (69,904,787) | - | (69,904,787) | - | (69,904,787) | |
Distributions to non-controlling interest | - | - | - | - | (21,360,806) | (21,360,806) | ||
Balance at 30 June 2024 | 2,032,927,026 | 308,292,285 | 19,065,940 | 2,360,285,251 | 469,137,986 | 2,829,423,237 |
The above consolidated statement of changes in equity is to be read in conjunction with the accompanying notes.
US$ Cash flows from operating activities | Notes | 30 June 2024 $ | 30 June 2023 $ |
Cash receipts from customers | 860,352,068 | 864,586,294 | |
Cash payments in the course of operations | (674,659,554) | (789,638,334) | |
Interest received | 9,635,064 | 2,385,973 | |
Taxes and fees paid | (11,829,291) | (25,793,310) | |
Payments for exploration and evaluation | (1,463,231) | - | |
Net cash from operating activities | 182,035,056 | 51,540,623 | |
Cash flows from investing activities | |||
Receipts from term deposits | 490,913,669 | - | |
Payments for exploration and evaluation assets | (8,436,038) | (8,938,865) | |
Payments for property, plant and equipment | (4,260,864) | (12,555,005) | |
Payments for construction in progress | (48,166,497) | (121,216,656) | |
Payments for investments | 12 | (316,300,000) | - |
Advancement of loan monies | - | (2,000,000) | |
Net cash from/(used in) investing activities | 113,750,270 | (144,710,526) | |
Cash flows from financing activities | |||
Proceeds from issue of shares | 14 | - | 209,130,208 |
Costs of issue | 14 | - | (4,944,222) |
Dividend distributions | 14 | (69,904,787) | (40,706,503) |
Proceeds from borrowings, net of transaction costs | 13 | 159,553,029 | 397,636,233 |
Prepayment for borrowings cost | (3,770,000) | - | |
Payments for cash reserve amount | (2,725,438) | - | |
Repayment of borrowings | 13 | (249,418,000) | (315,482,000) |
Payment of interest charges | 13 | (39,319,222) | (20,911,920) |
Payment of financing expenses | 13 | - | (18,476,640) |
Distributions to non-controlling interest | (21,360,807) | (16,436,843) | |
Contributions by non-controlling interest | - | 122,400,000 | |
Net cash (used in)/from financing activities | (226,945,225) | 312,208,313 | |
Net increase in cash and cash equivalents | 68,840,101 | 219,038,411 | |
Effect of exchange rate adjustments on cash held | (1,375,575) | 703,588 | |
Cash and cash equivalents at the beginning of the period | 284,053,495 | 144,242,357 | |
Cash and cash equivalents at the end of the period | 351,518,021 | 363,984,356 | |
The above consolidated statement of cash flows should be read in conjunction with the | accompanying notes. |
NOTE 1 - REPORTING ENTITY
Nickel Industries Limited (the 'Company') is a company domiciled in Australia. The condensed consolidated interim financial report for the half year ended 30 June 2024 comprises the Company and its subsidiaries (together referred to as the 'Group'). The Group is a for-profit entity and is involved in nickel mining and production operations.
The consolidated annual financial report of the Group as at and for the period ended 31 December 2023 is available upon request from the Company's registered office at Level 2, 66 Hunter Street, Sydney, NSW, 2000 or at https://www.nickelindustries.com.
NOTE 2 - BASIS OF PREPARATION
Statement of compliance
The condensed consolidated interim financial statements are general purpose financial statements prepared in accordance with the requirements of the Corporations Act 2001 and Australian Accounting Standard AASB 134 'Interim Financial Reporting'.
The condensed consolidated interim financial statements do not include full disclosures of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the financial report for the year ended 31 December 2023 and any public announcements made by the Company during the interim reporting period in accordance with the continuous disclosure requirements of the Corporations Act 2001 and the ASX Listing Rules.
The financial report was authorised for issue by the Directors on 29 August 2024.
Basis of measurement
The financial statements have been prepared on the historical cost basis except for certain financial instruments which are measured at fair value.
Functional and presentation currency
These financial statements are presented in United States dollars, which is the Company's functional currency.
Use of estimates and judgements
The preparation of financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised and in any future periods affected. The significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those described in the last annual financial statements.
In forming views on these significant areas of estimation uncertainty, management have also had regard to the broader macroeconomic environment. In particular, the current year saw nickel prices fall considerably as the supply of nickel from Indonesia continued to increase and the market forecast further increasing supply, as well as a slower than expected growth in the EV sales. Management have had regard to these factors when assessing the short-term to medium-term outlook for nickel pricing, and the impacts this may have on financial performance of the Group as a result.
Reclassification of prior period expenses
Certain types of expenses have been reclassified within the Condensed Consolidated Interim Statement of Profit or Loss and Other Comprehensive Income to more appropriately reflect the underlying nature of the expenses. The impact of this change on the previously reported comparative period includes withholding taxes on dividend distributions of $8,073,250 being reclassified from other expenses to income tax expense, and foreign exchange gain of $1,481,391 being reclassified from other expenses to financial expense.
NOTE 3 - MATERIAL ACCOUNTING POLICIES
The accounting policies applied by the Group in these condensed consolidated interim financial statements are materially the same as those applied by the Group in its consolidated financial statements as at and for the period ended 31 December 2023. The policy for recognising and measuring income taxes in the interim period is consistent with that applied in the comparative interim period, except for the changes outlined below:
The OECD released Global Anti-Base Erosion Model Rules for a global minimum tax that is expected to be used by individual jurisdictions which seeks to apply a 15% global minimum tax effective for income years commencing on or after 1 January 2024. Legislation to effect these changes is not substantively enacted in Australia, Singapore and Indonesia where the Group primarily operates.
The Group has adopted AASB 2023-2 Amendments to Australian Accounting Standards - International Tax Reform - Pillar Two Model Rules which provides a temporary mandatory exception from deferred tax accounting effective immediately.
If implemented the Company may be within scope of the proposed rules, given its operations and arrangements in Singapore and Indonesia. It is noted that the Company's subsidiaries have been granted material tax concessions in Indonesia.
The Company continues to evaluate the potential implications of the Pillar Two global minimum tax rules under IAS12. Recognition of any impact will only occur once legislation has been substantively enacted.
6 months to | 6 months to | |
30 June | 30 June | |
2024 $ | 2023 $ | |
NOTE 4 - OTHER EXPENSES | ||
Audit fees - KPMG audit and review of financial reports | 465,970 | 250,866 |
Travel | 265,355 | 343,258 |
Legal fees | 828,040 | 607,694 |
Withholding tax expenses* | 4,028,303 | 1,768,173 |
Other | 1,691,464 | 1,112,097 |
7,279,132 | 4,082,088 | |
* Refer to Note 2 for reclassification of prior period expenses. |
6 months to 30 June 2024 | 6 months to 30 June 2023 | |
NOTE 5 - FINANCIAL INCOME AND FINANCE EXPENSE | ||
Interest income | 9,349,201 | 2,682,818 |
Interest expense* | (40,590,765) | (36,865,483) |
Foreign exchange gain/(loss) # | (20,342,147) | 1,481,391 |
Financing expenses | - | (18,476,640)^ |
(51,583,711) | (51,177,914) |
* Includes amortisation of bond issue costs and bank loan facility costs of $3,685,885 which are being expensed under the effective interest rate method. Refer to Note 13 for further details.
^ During the prior period the Company completed a $400M issuance of senior unsecured notes, and at the same time purchased and cancelled the Company's $225M senior secured notes and completed a tender offer for $80.082M of the $325M senior unsecured notes maturing in April 2024, with the costs associated with the repurchasing shown above.
# Refer to Note 2 for reclassification of prior period expenses.
30 June | 31 December | |
2024 | 2023 | |
NOTE 6 - TRADE AND OTHER RECEIVABLES | $ | $ |
Current | ||
Sales taxes receivable* | 70,824,875 | 41,175,913 |
Trade receivables^ | 270,258,316 | 287,329,936 |
341,083,191 | 328,505,849 | |
Non-current | ||
Sales taxes receivable* | 62,690,634 | 101,374,795 |
62,690,634 | 101,374,795 |
* The four RKEF entities have the following sales tax receivable (VAT) amounts outstanding at 30 June 2024: PT Hengjaya Nickel Industry $6.7M, PT Ranger Nickel Industry $2.6M, PT Angel Nickel Industry $61.4M and PT Oracle Nickel Industry $62.7M. PT Hengjaya Nickel Industry, PT Ranger Nickel Industry and now PT Angel Nickel Industry are receiving VAT refunds regularly in the normal course of operations. The VAT claims for PT Angel Nickel Industry for the years 2021 ($12.1M) and 2022 ($39.3M) had been submitted to the Indonesian taxation authorities on an annual basis. During the period the PT Angel Nickel Industry received the VAT claim for the 2021 year, as well as regular returns for 2023 but not for 2022 as yet. PT Oracle Nickel Industry has not yet commenced receiving VAT refunds.
^ Trade receivables are in the ordinary course of business and at 30 June 2024 are comprised as follows: PT Hengjaya Mineralindo
$10.2M (excludes saprolite ore receivables which are eliminated on consolidation), PT Hengjaya Nickel Industry $60.5M, PT Ranger Nickel Industry $32.8M, PT Angel Nickel Industry $75.4M and PT Oracle Nickel Industry $91.3M.
6 months to | 6 months to | |
30 June | 30 June | |
2024 | 2023 | |
$ | $ | |
NOTE 7 - PROFIT PER SHARE | ||
Basic and diluted profit per share have been calculated using: | ||
Net profit for the period attributable to equity holders of the Company | 5,136,972 | 27,128,306 |
Nº of Shares | Nº of shares | |
Weighted average number of ordinary shares (basic and diluted) | ||
Issued ordinary shares at the beginning of the period | 4,285,809,880 | 2,731,273,497 |
Effect of shares issued on 24 January 2023 | - | 226,178,869 |
Effect of shares issued on 3 March 2023 | - | 22,461,968 |
Weighted average number of shares at the end of the period 4,285,809,880 2,979,914,334
30 June 2024 | 31 December 2023 | |
NOTE 8 - INVENTORY | $ | $ |
Current | ||
Inventory - Hengjaya Mine nickel ore stockpiles | 29,351,236 | 23,589,678 |
Inventory - nickel pig iron production raw materials | 103,049,429 | 119,985,773 |
Inventory - nickel matte production raw materials | - | 27,420,805 |
Inventory - nickel pig iron | 6,510,390 | 20,461,078 |
Inventory - nickel matte | - | 7,991,131 |
138,911,055 | 199,448,465 | |
Non-current | ||
Inventory - Hengjaya Mine nickel ore stockpiles* | 29,392,692 | 12,667,046 |
29,392,692 | 12,667,046 |
* The carrying value of limonite ore not forecast to be delivered in the next 12 months has been classified as non-current.
During the six-month period ended 30 June 2024, the Company's 80% subsidiary PT Hengjaya Mineralindo supplied saprolite nickel ore to the Company's 80% owned subsidiaries PT Hengjaya Nickel Industry, PT Oracle Nickel Industry and PT Ranger Nickel Industry under a series of offtake agreements to supply a between 80,000 to 100,000 wmt of saprolite per month to each entity for the period January to June 2024. During the period the PT Hengjaya Mineralindo continued to supply limonite ore to two HPAL projects operating within the IMIP, the Huayue Nickel Cobalt project and the QMB HPAL Nickel project.
Nickel pig iron production raw materials includes nickel ore acquired by PT Hengjaya Nickel Industry, PT Oracle Nickel Industry and PT Ranger Nickel Industry from PT Hengjaya Mineralindo, operator of the Hengjaya Mine. This continues to be valued at the PT Hengjaya Mineralindo cost of production.
Inventories are carried at the lower of cost and net realisable value.
NOTE 9 - PROPERTY, PLANT AND EQUIPMENT 30 June 2024
31 December
2023
Furniture and fittings | 123,611 | 176,793 |
Mine infrastructure assets | 30,239,521 | 31,160,514 |
Buildings | 326,327,489 | 327,088,090 |
Mining properties | 24,520,174 | 25,092,774 |
Office equipment | 765,819 | 866,302 |
Plant and machinery | 1,425,550,045 | 1,451,756,907 |
Motor vehicles | 364,396 | 411,959 |
Construction in progress* | 1,174,951 | 217,759 |
1,809,066,006 | 1,836,771,098 |
Reconciliations of the carrying amounts for each class of property, plant and equipment are set out below.
Furniture and fittings | ||
Carrying amount at beginning of year | 176,793 | 276,422 |
Additions | 2,496 | 28,877 |
Depreciation | (55,678) | (128,506) |
Net book value | 123,611 | 176,793 |
Mine infrastructure assets | ||
Carrying amount at beginning of year | 31,160,514 | 5,654,422 |
Additions | - | 26,371,362 |
Depreciation | (920,993) | (865,270) |
Net book value | 30,239,521 | 31,160,514 |
Buildings and land Carrying amount at beginning of year | 327,088,090 | 192,910,955 |
Additions | 8,366,739 | 150,385,160 |
Depreciation | (9,127,340) | (16,208,025) |
Net book value | 326,327,489 | 327,088,090 |
Mining properties Carrying amount at beginning of year | 25,092,774 | 24,236,775 |
Additions | 29,053 | 2,463,154 |
Amortisation | (601,653) | (1,607,155) |
Net book value | 24,520,174 | 25,092,774 |
NOTE 9 - PROPERTY, PLANT AND EQUIPMENT (Cont.) | 30 June | 31 December |
2024 | 2023 | |
Office equipment Carrying amount at beginning of year | 866,302 | 790,648 |
Additions | 90,235 | 455,314 |
Depreciation | (190,718) | (379,660) |
Net book value | 765,819 | 866,302 |
Plant and machinery Carrying amount at beginning of year | 1,451,756,907 | 985,090,214 |
Additions | 27,634,922 | 557,183,813 |
Disposal | (3,318,812) | - |
Depreciation | (50,522,972) | (90,517,120) |
Net book value | 1,425,550,045 | 1,451,756,907 |
Motor vehicles Carrying amount at beginning of year | 411,959 | 393,003 |
Additions | 45,983 | 214,818 |
Depreciation | (93,546) | (195,862) |
Net book value | 364,396 | 411,959 |
Construction in progress Carrying amount at beginning of year | 217,759 | 712,756,965 |
Additions | 1,191,937 | 39,882,355 |
Transfers* | (234,745) | (752,421,561) |
Net book value | 1,174,951 | 217,759 |
Total property, plant and equipment | 1,809,066,006 | 1,836,771,098 |
* Balances in construction in progress are transferred into other categories, as additions, on commissioning of projects, or when available for use in a manner that Management intended.
During the period, the Group acquired $37,361,365 of property, plant and equipment and recognised depreciation and amortisation totalling $61,512,900.
NOTE 10 - GOODWILL 30 June
2024
31 December
2023
Carrying amount at beginning of year | 102,748,404 | 102,748,404 |
102,748,404 | 102,748,404 |
The goodwill balance amounting to $102,748,404 pertains to the Hengjaya Nickel, Ranger Nickel, Angel Nickel and Oracle Nickel RKEF Projects, which are considered to be individual cash generating units (CGUs). The Directors consider there to be no impairment on the basis that the recoverable value, determined based on value-in-use, is higher than the carrying value of the respective CGUs.
Updated models were prepared as at 30 June 2024, given the impairment indicators identified during the period. The key assumptions used in the underlying cash flows of each CGU (RKEF plant) are set out below. Nickel price and cash cost estimates used in the cash flows are based on a 'steady state' of operations:
Carrying amount of CGU | Carrying amount of goodwill | Nickel production (tpa) | 5-yr average NPI price (p/t)* | 5-yr average cash costs ($/t)* | Discount rate - real post tax (%) | Remaining useful life (years) |
$288,949,575 | $29,219,349 | 20,451 | $12,515 | $10,499 | 10 | 15 |
$290,079,132 | $26,185,545 | 19,990 | $12,515 | $10,499 | 10 | 15 |
$729,354,695 | $22,577,269 | 48,600 | $12,515 | $8,978 | 10 | 18 |
$814,835,279 | $24,766,240 | 48,600 | $12,515 | $8,978 | 10 | 19 |
CGU (RKEF
Project)
Hengjaya Nickel Ranger Nickel Angel Nickel Oracle Nickel
* The cash flow projections include specific estimates for the first five years and a constant margin thereafter for the remaining useful life of the RKEF project. NPI prices have been forecast based on an average of external market analyst forecast NPI prices. The forecast cash costs incorporate expected savings generated from reduced electricity and coal costs over the next five years. Forecast prices and costs are in real terms.
Hengjaya Nickel and Ranger Nickel CGUs
The estimated recoverable amount of the Hengjaya Nickel and Ranger Nickel CGUs were approximately equal to their carrying value. Therefore, a material adverse change in certain key assumptions would lead to impairment.
Angel Nickel and Oracle Nickel CGUs
The Angel Nickel and Oracle Nickel CGUs benefit from lower operating costs as a result of their owned power plants. These CGUs have demonstrated comparatively higher margins than Ranger Nickel and Hengjaya Nickel during their operations to date, which has been factored into the forecast for these CGUs.
30 June | 31 December | |
2024 | 2023 | |
$ | $ | |
NOTE 11 - TRADE AND OTHER PAYABLES | ||
Current Creditors | 181,897,424 | 175,627,034 |
Accruals | 8,422,889 | 12,257,929 |
Other | 3,530,690 | 4,873,962 |
193,851,003 | 192,758,925 | |
NOTE 12 - EQUITY-ACCOUNTED INVESTEES AND ASSOCIATED INTANGIBLE ASSETS
Investment in Equity Accounted Investee HNC - 10% interest | ||
Opening balance | 185,939,410 | - |
Acquisition of a 10% interest in PT HNC | - | 188,500,000 |
Share of profit/(loss) of associate | 6,472,516 | (2,560,590) |
Carrying value of investment in HNC | 192,411,926 | 185,939,410 |
Excelsior Nickel - 27.5% interest | ||
Opening balance | 341,300,000 | - |
Acquired Option to develop Excelsior Nickel | - | 25,000,000 |
Acquisition of a 5.5% interest in Excelsior Nickel | - | 126,500,000 |
Acquisition of an additional 8.25% interest in Excelsior Nickel | - | 189,800,000 |
Acquisition of an additional 13.75% interest in Excelsior Nickel | 316,300,000 | - |
Share of profit of associate | 121,994 | - |
Carrying value of investment in Excelsior Nickel | 657,721,994 | 341,300,000 |
850,133,920 | 527,239,410 | |
Intangible Asset HNC Opening balance | 79,745,215 | - |
Acquisition of right to offtake from PT HNC | - | 81,500,000 |
Amortisation | (2,339,713) | (1,754,785) |
77,405,502 | 79,745,215 | |
30 June 2024 | 31 December 2023 | |
NOTE 13 - BORROWINGS | $ | $ |
Current | ||
Senior Unsecured Notes April 2024 | - | 244,345,619 |
Interest on Senior Unsecured Notes - April 2024 | - | 3,979,918 |
Interest on Senior Unsecured Notes - October 2028 | 8,750,000 | 8,750,000 |
Bank Facility - October 2028 | 22,050,000 | - |
Bank facility interest | 1,537,102 | 193,911 |
32,337,102 | 257,269,448 | |
Non-current | ||
Working Capital Loan - September 2025 | 3,300,000 | 7,800,000 |
Interest on Working Capital Loan - September 2025 | 312,164 | 203,320 |
Senior Unsecured Notes - October 2028 | 394,089,820 | 393,406,866 |
Bank Facility - October 2028 | 323,794,226 | 186,343,794 |
721,496,210 | 587,753,980 |
Senior Unsecured Notes October 2028
In April 2023, the Company issued $400,000,000 of senior unsecured notes (Senior Unsecured Notes October 2028). At the same time the Company made a tender offer (Concurrent Tender Offer) for its existing Senior Unsecured Notes (maturing April 2024) and purchased the outstanding $225,000,000 of Senior Secured Notes. Key terms of the Senior Unsecured Notes October 2028 are as follows:
Issue size of $400,000,000.
Coupon interest rate of 11.25% per annum.
Interest is payable on a semi-annual basis in arrears.
11% amortisation in April and October each year commencing on 21 October 2025.
Final Maturity Date of 21 October 2028.
Senior Unsecured Notes April 2024
In April 2024 the Company repaid the principal balance of $244,918,000 of the Senior Unsecured Notes April 2024, as well as associated interest of $8,003,920.