Nickel Industries LimitedASX: NIC

Half Year Financial Report

Aug 28, 2024 at 11:42 PM UTC · Issued by Nickel Industries Limited

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29	August 2024
ASX Limited
20	Bridge Street	(41 pages)
Sydney NSW 2000
	HALF YEAR FINANCIAL REPORT
Highlights:
	6 Months to	6 Months to
	30 June 2024	30 June 2023

Nickel Industries Group Results:

o	Sales revenue:	US$843.3M	US$932.3M
o	Gross profit:	US$96.3M	US$126.4M
o	Operating profit:	US$87.8M	US$117.3M
o	Profit after tax:	US$14.0M	US$49.1M
o	EBITDA:	US$131.7M	US$141.8M
o	RKEF EBITDA:	US$90.9M	US$147.2M
o	Hengjaya Mine EBITDA:	US$39.1M	US$26.1M
		30 June 2024	31 December 2023

Nickel Industries Group Balance Sheet:

o	Total assets:	US$3,898.6M	US$4,071.3M
o	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 UNLIMITED	Level 2, 66 Hunter Street	T +61	2 9300 3311	E info@nickelindustries.com
ABN 44 127 510 589	Sydney NSW 2000 Australia	F +61	9221 6333	W www.nickelindustries.com

	Appendix 4D
	Half Year Report
Name of entity
	NICKEL INDUSTRIES LIMITED

ABN or equivalent company	Financial half year ended ('current period')
reference

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	N/A			N/A
A$0.025			Nil¢
Interim dividend


Previous corresponding period	N/A			N/A
Final dividend
A$0.02			Nil¢
Interim dividend

Record date for determining entitlements to the dividend.

4 September 2024

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 LIMITED

and its controlled entities

A.B.N. 44 127 510 589

INTERIM FINANCIAL REPORT

FOR THE HALF YEAR ENDED

30 JUNE 2024

Table 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

NICKEL INDUSTRIES LIMITED

and its controlled entities

DIRECTORS' REPORT

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%.
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.
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.

NICKEL INDUSTRIES LIMITED

and its controlled entities

DIRECTORS' REPORT

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

															6 months			6 months					%
	SUMMARY RKEF METRICS									to 30 June			to 30 June
												movement
															2023						2024

	Nickel production										tonnes			59,957					63,814						6.4
	Nickel tonnes sold										tonnes		59,637					65,032				9.0

	Nickel metal production attributable to					tonnes			45,843					51,052						11.4
	Nickel Industries

	Sales revenue2										$M		922.9					731.9						(20.7)

	RKEF EBITDA										$M			147.2					90.9						(38.2)

Revenue also includes other operations sales.
Excludes the $42.5M of sales by Hengjaya Nickel to Glencore AG of nickel matte not produced by Hengjaya Nickel.
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.

NICKEL INDUSTRIES LIMITED

and its controlled entities

DIRECTORS' REPORT

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

NICKEL INDUSTRIES LIMITED

and its controlled entities

DIRECTORS' REPORT

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.

NICKEL INDUSTRIES LIMITED

and its controlled entities

DIRECTORS' REPORT

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			June 2024	Total
				Quarter			Quarter

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		tonnes			4,416			4,444	8,860
and Matte

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		June 2024	Total

			Quarter		Quarter

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.

NICKEL INDUSTRIES LIMITED

and its controlled entities

DIRECTORS' REPORT

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			June 2024	Total
		Quarter			Quarter

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		June 2024	Total

			Quarter		Quarter

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.