Nickel Industries Limited

Thank you and thank you everyone for your attendance at the Nickel Industries full year 2024 results call. Could I please ask the slide moderator to move the slide deck to slide three please? Despite what has been a very challenging 12-month period with multi-year lows across global nickel markets, we still managed to deliver US$296.8 million EBITDA adjusted for H&I and R&I impairment and FX losses of US$17 million and a US$186.7 million gross profit. Unfortunately, accounting standards led to the US$205 million impairment of our oldest RKEF assets, H&I and R&I. These assets do not benefit from integrated power and they are older assets. However, both of those RKEFs HNI and RNI did generate positive EBITDA for 2024 and were mainly impacted in the second half of 2024 by abnormally high ore costs, where ore shortages drove premiums of up to US$22 a wet metric tonne above the nickel ore market price. These premiums are now subsiding and both HNI and RNI delivered positive EBITDA for January. These factors contributed to the reported net loss after tax of US$189.8 million. A final dividend of 1.5 cents per share of Australian has been declared bringing the full 2024 dividend to 4 cents per share. It's we believe to be a good result against the backdrop of many major global nickel producers either shutting operations or being loss making over the course of 2024. This is a greater than 5% dividend yield and is reflective of our strong underlying cash generation and robust margins across the different elements of our business. A decision was also made by the board to offer shareholders the opportunity to participate in a dividend reinvestment plan in lieu of cash, should they so choose. This will allow shareholders the opportunity to elect to take shares at a time when the company is on the cusp of delivering a number of significant value accreted milestones across 2025, including first nickel from the company's ENC HPAL project, an intended increase in all sales from our Hangia mine from 9 million wet metric tonnes per annum to 19 million wet metric tonnes per annum, and first ore from our recently acquired world-class Sampala nickel project. The fact that three of our largest shareholders and the full executive board which comprises more than 50% of the nickel industry share register, have indicated their intention to participate in the DRP. It demonstrates, I think, the significant share price upside that we feel exists. It allows the company to retain up to US$22 million in cash to retain a conservative balance sheet and ensures that we balance shareholder returns, which remain a focus and priority of the board, within our current capital investment cycle, which is nearing maturity, with only two further payments for E&C remaining across the course of this year. Net debt is US$827.5 million, with the company remaining well inside its debt-serving covenants. Moving to the processing NPI and MHPs. US $212.6 million adjusted EBITDA for our processing operations. A record 135,602 tonnes of nickel was produced for 2024. And ENC construction progressing extremely well ahead of schedule, which I'll touch on later in the presentation. In terms of corporate updates, We increased our ownership across the course of the year in ENC to 44%, and over the course of this year, we will be increasing that to the final 55%. We announced a maiden jork resource at our Asiduasi project of over 500,000 tonnes of contained nickel metal, and we moved to a 51% ownership in that project. We also signed definitive agreements to acquire 60% of the world-class Sampala project, And then finally, establishment and syndication of $250 million of bank funding lines. Again, very well supported by Asian and global banks. And this marks the second loan that we've done with this bank. And so I think it's reflective of the strong belief in the companies where it's headed and also its balance sheet. For nickel ore, over US$100 million EBITDA from Hangia Mine, 9 million tonnes of nickel ore was sold and I've touched on the acquisition of the world-class Sampala project which we are very excited about. If I could ask to move to the next slide, slide four please. Some of our safety and ESG achievements over the course of 2024. An independent third party released the carbon intensity of HNC, which came in at 6.9 tonnes of carbon per tonne of nickel, significantly below the Australian peer average of around 11 tonnes. In fact, there was only one Australian nickel producer that was below us. And so this is reflective of ENC, which will operate at a similar carbon intensity with a goal to drive that even lower. We established during the course of 2024 our Nickel Industries Foundation and the first program as a part of that was funding of university scholarship program for local underprivileged students and our first batch of 12 students is currently performing very well across a number of different chosen degrees. We established and were awarded a conservation biodiversity area to protect local fauna and flora in close proximity to our Hang Jaya mining operation. There's a number of awards that you can see there across the course of the year, best climate reporting and transparency and recognised by a number of different groups. And our MSCI rating, we achieved the top rating for an Indonesian metals and mining company and our S&P score Again, these are all independent third-party scores. We achieved 37 in 2024. That was up from seven in 2021. And the global metals and mining average is actually 29. So we're performing well in excess of that S&P global average. Once again, we've been shortlisted for the green proper rating for the third consecutive year. Finally, to safety, our LTIFR 0.11, well below the world steel average of 0.76 and our TRIFR was 1.43, again, well below the world steel average of 4.73. We worked 17.4 million man hours in 2024, which is up from 16.7 million in 2023. And the Hengzai mine has recorded over 18 million work hours since its last reported LTI, which was way back in November of 2021. If we could just move to slide five, please, and I'll hand over to Chris to talk through the P&L and balance sheet.

Thanks, Justin. As Justin mentioned, relatively strong financial results in terms of EBITDA and gross profit in quite a challenging operating environment. Both the LME and NPI prices were down significantly through 2024, and we also had... pretty significant RKAB-associated issues affecting both the mining and the processing operations throughout the year. Pleasingly, however, O&I and H&C delivered significant production improvements throughout the year, and we also saw the benefit at HM of the haul road upgrade, which the management team at HM had been working on for a number of years. Finally, the dividend, as Justin mentioned, we've declared a 1.5 cents per share final dividend. We've overlaid that with the DRP, which, as Justin said, is supported by all of our major shareholders and exec directors. The balance, we're really casting a balance here of shareholder returns versus maintaining a robust balance sheet for our investments and debt servicing. Can I turn to page six, please? We've continued to maintain a strong balance sheet despite the margin compression throughout the year. Our cash has reduced as we paid almost $700 million for E&C payments, including an early payment this year to look to fast track the nickel sulfate and nickel cathode plants at E&C. Total assets were down due to the impairment, which we've touched upon at H&I and R&I. And obviously our debt and liabilities went up through the year, additional 250 mil debt raised from a syndicate of global banks earlier in the year. And we drew down the remainder of the first bank loan, the 400 mil bank loan. Can I turn to page seven, please? He would just set out a couple of reconciliations for everyone. Really just the first one is the EBITDA, the adjusted EBITDA to get to a total number of 306.5, less the overheads at the head office level to give us an adjusted EBITDA of $296.8 million for the year. That's comprised primarily from the RKF business of $187 million an additional $19 million for the HPAL business and $100 billion for the mining business. We've also included a profit to EBITDA bridge, and that's starting at the net profit after tax line of negative $189.8 million, adding back the usual items in EBITDA of our depreciation and amortization, our taxes, adding back the impairment, the interest, and then obviously the FX and that gets us to that same $296.8 million of adjusted EBITDA. We turn to slide 8 and I'll hand back to Justin.

Thanks Chris. You can see record production in 2024 of 135,602 tonnes up 4,500 tonnes from the 131,000 tonnes produced in 2023. Whilst the LME nickel price was down significantly 26% and NPI price was down 17%, we also were able to bring our costs down 11% from $11,138 in 2023 to $11,957. This was also achieved in an environment of record nickel ore prices and so that did result in a decline in overall RKEF margins. from 2023 to 2024. So our average margins in 23 were $2,676, that was down to $1,458 in 2024. However, the margins still remain at our main producing assets which is ANI and ONI, the margins still remain very strong so we We delivered margins of $1,900 per tonne from ANI and ONI which produced over 70% of our RKEF nickel tonnes and the margins of HNI and RNI was about $334 a tonne. If we could just move to the next slide please. One of the most pleasing aspects of 2024 has been the performance of HNC which delivered over 83,000 tonnes of nickel and 8,000 tonnes of cobalt. This is 38% above its nameplate capacity of 60,000 tonnes. A newer HPAL plant in IWIP called Huafei which is Built under similar sort of design to ENC, it has larger autoclaves and a number of improvements. It is also currently performing at 38% above nameplate capacity, so I think this bodes very well for ENC. Costs over the course of 2024 remain stable in the first quartile at an average of about $7,115 a tonne. with margins ranging across the course of the year from $5,000 to $7,000 a tonne and an average margin of $5,746. So this is an excellent barometer of what we can expect from ENC, which we'll be commissioning in the second half of this year. HNC delivered an adjusted EBITDA on a 100% basis of US$466.3 million in 2024. and we have uploaded a link to an ENC video on our website which I would encourage people to go and view. If we could turn to the next slide please. ENC construction is progressing very well. All three autoclubs are now installed and the autoclubs are the heart of the HPAL system. You can see there from some of the aerial photos, the top one is the HPAL. The bottom photo is the sulfate and cathode plants. You can see they're very advanced and so we expect first nickel from those in Q3 of this year and then ENC first MHP. commissioning in Q4 which is around the October timeline and again as I said there is a video on the website which I would encourage you to visit. If we could move to the next slide please. Another record year of production at our Hingjia mine and sales. If you look at the chart in the left there we've experienced a three and a half fold increase in EBITDA from 2021 where we recorded 22 million US up to 101 million US for 2024. We are in the process of hopefully again increasing our sales quota to 19 million tonnes and Our Hengjia mine currently supplied about 60% of the ore requirements for HNI, RNI and ONI. If we could move to the next slide please. During 2024 we announced the acquisition of the world-class Sanpala project. It already has initial JAWC compliant resource of containing 2.3 million tonnes of contained nickel metal. This is an area of just 900 hectares. There's a total area of 4,700 hectares which is highly prospective. So really that only covers 20% of the prospective area. With an additional exploration target on top of the current resource of $187 million of dry metric and an upper range target of additional $600 to $700 million, this easily takes the deposit to over 1 billion wet metric tonnes. With current blended margins at Hengjia of US$11 a wet metric tonne that obviously underscores the significant value of the Sao Paulo project given that as I said there's potential there for over a billion wet metric tonnes. We undertook a very aggressive drilling program across the course of 2024 and we drilled almost 50,000 metres with some spectacular results of up to 7.41% nickel and 1.37% cobalt. Mine development and haul road construction has commenced. What's attractive about these laterite mining operations is the very low development capex and we're expecting a number of around 50 million US but very strong margins as demonstrated by our Henge Iron Mine performance. We are targeting first production at the end of 2025 or in early 2026 and Sampala will deliver full self-sufficiency across all of our RKEF operations and HBAL operations within the IMIP. If we could just move to the next slide please. This slide shows where we currently sit. If you look at the far right there, the blue bubble, which is our Hangzhou mine, our Sampala and our Sidoasi resources. With an additional 600 to 700 million dry metric tonnes, that takes us over to the far right-hand side there of around 1.2 billion dry metric tonnes. Our strategy is to become one of the largest holders of nickel resources globally and we're certainly on track to achieve that given the results that we're seeing coming back from the Sandpiler project. If we could just move to the next slide please. Just to reiterate some of the corporate highlights of 2024, the acquisition to acquire 60% of the Sampala project, which I've just spoken about, successful syndication of two loans, the $400 million and $250 million bank loan, as I said, again, with the same bank, a move to 51% of the Siddawasi project and a maiden resource of over half a million tonnes of contained nickel metal. and increasing ownership in the ENC HPAL to 44%. In terms of our targets for 2025, commissioning of the ENC cathode and sulphate plants ahead of schedule in Q3 with MHP on target to come on in October or Q4 of 2025. Increasing the Hang Jaya mine RKAB sales quota from its current 9 million tonnes per annum to 19 million wet metric tonnes per annum. First all sales from our sand pilot project either the end of 2025 or early 2026 and we continue to assess and potentially look to acquire value accretive nickel resource projects given the significant value that's currently being realized across our mining operation. So to summarize 2024, despite a challenging environment, still robust margins. What's to look forward to in 2025? At the end of 2024, we actually saw NPI volumes down by about 10,000 tonnes for the month in Indonesia. And if that trend continues, we hope to see a potential strengthening in NPI pricing. Approval of the HMRKAB, what that would mean is a potential doubling of our EBITDA, so taking it from US$100 million for 2024 to around US$200 million. With the Sao Paulo project, we're targeting a similar production profile. And with HNC margins of close to $6,000 a tonne, EBITDA of close to half a billion dollars on a 100% basis, assuming E&C operates at the same nameplate and margins, that delivers us an additional 400 to 500 million US. So when you add all of these numbers together, an additional $100 million at HM with a ramp up in the RKAV, a similar profile at Sampala of about $200 million and the $400 million to $500 million of EBITDA from ENC, that takes you to around $700 million to $800 million US EBITDA annually. Combined with this year's EBITDA of in excess of $300 million, that gets us on our way to our target of US $1 billion. in EBITDA over the next two to three years, assuming that margins stay where they are. With that, I'll hand over to questions.