Nickel Industries Limited

Hello and welcome to the Nickel Industries Limited 2026 Half Year Results Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star 1 on your telephone keypad. If you would like to withdraw your question, just simply press star 1 again. We'll now turn the conference over to Justin Werner, Managing Director. Please go ahead.

Thank you, everyone, and welcome to the half-year results presentation. I forgot to just ask the moderator to move to the next slide, please. Start with safety and ESG. Zero 12-month LTIFR, 0.45 12-month TRIFR, so these are world-class safety figures. 18 million safe man-hours worked over the past 12 months. In terms of ESG, Once again, we were awarded the Green Popper rating from the Indonesian Ministry of Environment and Forestry, one of only three nickel mining companies to achieve that rating. We entered into an agreement to look at feasibility of natural hydrogen in and around the Hangia mining lease, which could opt for potentially low-cost clean energy source in the future. We inaugurated a 197 hectare biodiversity conservation area a short distance from the Hengjia mine and again one of very few mines who have successfully been able to inaugurate a biodiversity area. The scholarship program continues to progress very well. We now have 30 students actively enrolled in a number of disciplines. And then finally on the CSR side we received TSR awards for excellence in community development and we also won awards for some of our RKEF operations at the HR Asia Awards. If we could just move to the next slide, half year summary, very solid results from the existing business prior to any contribution from commissioning of the E&C project. If we could just move to the next slide please. Group operations and corporate highlights, US$247.6 million of adjusted EBITDA, up 46% from the same time last year. We also announced the $1.3 billion San Paolo valuation in return for a share swap. Sorry, if you could go back. In return for a share swap in the C&E HPAL, which I'll talk about a little bit later on. We also announced the... billion wet metric tonne resource at our Sandpiler project. So that is a world-class resource. And our mine operations, adjusted EBITDA view of 73.4, up 4% on the same period last year. Although, and I'll talk about this a little bit later on, expect to see a significantly increased EBITDA from the mine off the back of a change in HPM pricing. 5.9 metric tonnes of all sales, so it's on track, same as last year, but we are ramping up towards the back end of this year with ENC commissioning, and I'll talk about that a little bit later. Ebitda per tonne margins from the mine were $12.40, and that was also up 5%. Where we see the majority of the improvement in this half was really from our NPI business. adjusted at $146.7 million, up 87%. In terms of nickel sales, they were down slightly. That was in relation to sub-plant maintenance that was undertaken at ANI and ONI, which are really our two major MPI producers. And these results were really driven by strengthening the MPI price, which is $13,784 per tonne for the half, which is up 21% on the same time last year. And then finally, HKL performed very well the first half of this year. Adjusted EBITDA from our 10% interest in HNC was US$35.2 million, up 31% from the same time the previous year. And we were pleased to announce our maiden dividend distribution of US$3.5 million. And then moving to EMC, Tremendous milestone of first NHP production in July, followed not too shortly afterwards by first cohort in August. And we can just move to the next slide, looking at the P&L and adjusted EBITDA. The real drivers of that significant improvement, 46% improvement here but there, was the nickel pig iron price mentioned up 21% to $13,784 and as of today it continues to strengthen past $14,000 a tonne. The LME price has also risen significantly up 15% and averaged $17,700 for the first half of this year. We've been able to, we were able and we were one of a very small number of companies that was able to increase our RKAB quota from 9 million last year to 14.3 million this year. And that will drive some continued improved EBITDA. And then we've seen at the mine more recently, changes in the oil price which are flowing through to very strong margins at the HCM mine and resilient NPI production. So despite the maintenance that I mentioned, we were fairly much similar to the last year. If we could just go to the next slide, please. I'll hand over to Chris just to talk through the balance sheet and the next protocols.

Yeah, thank you, Justin. Morning, everybody. On the balance sheet, the key balance sheet movements between December and June, so 31 December and 30 June, $240 million US was related to the Sphere transaction, so we had a a $239 million receivable as of 31 December and a 240 mil payable to Decent. That's in relation to the 10% interest in BNC that Sphere invested. Those receivables and payables have obviously been received during the period, so that is the main reason for the movement in current liabilities and assets. net debt of $980 million or $982 million at 30 June. Importantly for our covenants, that sits us at about a 2.3 times leverage ratio, which is within our 3.5 times max covenant post our recent refinancing of our bank loans. If the leverage stays at that level at 2.3 times our our margin over SOFA will fall from 3.5% to 2.5% by the end of this year, which effectively reduces our cost of debt from the current 7.1% under the bank loans to 6.1%. Can we move to the next slide, please? We've got our profit and... We'll just set out the profit and adjusted EBITDA reconciliations here on the chart on the left-hand side. You can see the contribution from the three core businesses, the RKF business of 147 mil, the HFL business of 35 mil, and so that's H&C and Syncreation, our trading entity, and 73 mil from Henjaya Mine. 73 mil from Henjaya Mine. The total being there of 255 mil from operations. There's 7.6 mil of NIC overheads. to get us to our final 247 mil of adjusted EBITDA for the first half of 2026. On the right-hand side, we then provide the bridge from adjusted EBITDA to profit, and we can see the key items being obviously the 80 mil DNA, 29 mil in taxes, our net finance costs are just under 50 mil, and then some FX-related... related charges of just under 16 mil to give us our impact for the first half of 2026 of 74 mil. Can we move to the next slide, please? On the cash flow waterfall, the three key items, we've got 65 mil of cash flow. You can see that on the right-hand chart, the first two columns, the 77.5 operating cash flow, less the capex at 12 mil. That's what we say, our cash flow prior to any growth and debt. Our higher earnings were partly, as we've mentioned, so they're partly absorbed by an increase in nickel ore stockpiles of approximately $30 million. That primarily relates to lemon ice as we are preparing for the ongoing commissioning of E&C. Taxes and royalties paid and then a decrease in trade payables of approximately $40 million across the half year. We've had growth spend of $137 million throughout the first half of the year, $46 million of that was for our final E&C payment, for our final 2%, to take us from 44% to 46% equity interest in E&C. Our Sampala development capex of approximately $26 million across the half year, and then an acquisition payment of $28.5 million for Sampala. That was the advance payment that we announced in May of this year. Our net borrowings following the successful syndicated loan in April of refinancing the outstanding $400 million bank loans to $450 million of the syndicated loans in April. They're the key items there. It shows the movement of cash from $323 million at the start of the year to $260 million. So a strong cash balance of $260 million as we head into the second half of 2026. Justin, back to you and PJ.

Yeah, thanks, Chris. If we could move to the next slide, please. I'll start with the mining operations, 5.9 million wet metric tonnes for the first half of this year, basically on track as the same as the first half of last year. We do have an RKOB for 14.3 million for the remainder of the year and we saw a very strong July where we delivered 1.4 million tonnes and we're on track to potentially exceed that number in August, so expect to see a stronger ramp-up in tonnes in the second half of this year. The average realised sale went 28% to US$31.30. That again has increased significantly in the June quarter and so we expect to see the flow on of that adoption of the HPM price into the third and fourth quarters. of this year. Operating costs were up slightly, at 18.7. Well, they're up significantly versus the first half of last year, and that was really driven by higher royalties. Adjusted EBITDA was 73.4 million. That was up 4%. I think what you'll see is in June we delivered a 45.7 million EBITDA just for the month of June and so we only really adopted the new HPM pricing in May and we did have in the June quarter 14 days of loss production. So the third quarter of this year will be the first full quarter at that new HPM price And if you look at the adjusted EBITDA for wet metric tonne, it was $12.40 for the first half of 2026. It was $15.90 in the June quarter. And we would expect that EBITDA per tonne margin to continue to rise across the third and fourth quarters of this year. So looking forward to a very strong second half to the year for the angio mines through increased volumes versus the first half of this year. and increased EBITDA per tonne margins due to the new ore pricing regime. If we could just go to the next slide, please. We were very pleased to announce the Sandpala draw resource upgrade. Over a billion wet metric tonnes with margins currently at around $15.90. You can see that the value of that ore body. It contains 8 million tonnes of nickel, so it makes it one of the largest ore resources globally. We were able to leverage the value of that ore body into a share swap for 18% of Sandpala's ANN and ETL RUPs. There's actually three RUPs, so it's only two of the three RUPs. or a 36% interest in the C&E HL project, which has about 28,000 tonnes of nickel capacity for zero cash. That share swap implies a St Favre valuation of above US$1.3 billion, so about a 5.4 times value uplift on the consideration that we paid for, that we'll pay for the project. In terms of project development, good progress continues to be made. Both the ETL and IUP's feasibility studies are being progressed and we're hopeful of approval of those in the coming weeks. In terms of the construction of the 24 kilometres of haul road, the first 8 kilometres has been completed. The remaining 16km, we're just waiting on the relevant permits to be issued to be able to continue that 16km section. At the Sudawasi project, feasibility study is also under review and that's initially looking at a 2 million tonne per annum ore operation. we're looking at about $19 to $20 million, so a similar size to what it is or the intention of the Hang Jaya mine. And I should add that we have made an application to increase from the $14.3 million at Hang Jaya, and we are hopeful of hearing the results of that very shortly as well. If we could just move to the next slide, please. RKF Operations. Nickel production down slightly due to some scheduled maintenance at our plants and RKEF lines at ANI and ONI which produce the bulk of our MPI. We did also start a kiln and furnace rebuild on one of the HNI kilns at the end of June. Cash costs were up 13% to $11,480 by the Indonesian government raising the benchmark sapolite oil pricing. Sale price up $13,700 to $13,784 a tonne, up 21%, and pleasingly EBITDA up 86% to the US $146.7 million. So I think that clearly demonstrates the leverage that we have to an improvement in both the NPI and the LME price. So we've got a 21% increase in the MPI price and 87% increase in adjusted EBITDA. And if you look at the EBITDA per tonne margin, that's gone from $1,250 to $2,500. That's a 100% increase in the EBITDA per tonne. And if you look at MPI demand looking forward, One of the analysts, Gru, they're talking about an additional 697,000 tonnes of nickel required to meet stainless growth, which is about 62% of incremental nickel demand. And currently there's a moratorium on any new NPI growth in Indonesia. So there's no demand for NPI through growth in stainless. but a cap on supply so we think that looking forward the NPI business looks to be very strong and that's supported by the first half results. If we could just move to the next slide please. At our HVAL operations, commissioning of EMC is progressing well. We began commissioning in May. now announced subsequent to that first CAFO and first MHP production. We currently have two kilns that are in the process of commissioning. They're at about 50% capacity and we should have an update shortly as to when we will be able to start the commissioning of the third kiln. One of the challenges we are coming up against is it's extremely dry wet season. and so we're just looking at ensuring that we can secure enough water for the whole operation. But other than that, the commissioning is progressing well. At HNC, $35.3 million in adjusted EBITDA up 31%. Nickel sales were down by about 10%. EBITDA per ton margin up 52%, so very strong margins from for the first half of this year of $9,113 a tonne. There is obviously some pressures coming through in regards to the cost of sulphur and the situation in the Middle East. I think, pleasingly, the June quarter margins were still at $8,090 a tonne at our HNC. And we announced the first maiden distribution from HNC of US$3.5 million. If we could just go to the next slide, please. The HPAL is really where we'll see the next leg of growth. And I think if you look at the mine and NPI numbers, they're very strong. If we didn't have any contribution from E&C this year, I think it was really on track to be somewhere around US half a billion in EBITDA just from the mine and NPI business alone. But if you look at what is coming on over the course of sort of the next 12 to 18 months, we have ENC obviously committing. NIC's attributable interest in that is 33,000 tonnes. Just to remind everyone, it has a 15-year tax holiday within an additional two years at 11%. And it's the first HPAL globally that will produce MHP, nickel and cobalt sulphate and nickel cathode. And before the end of last year, we announced the transaction with Sphere, who's one of only five accredited suppliers to SpaceX and the only one with a long-term 10-year contract. So nickel cathode will be going into SpaceX rockets. The quality of the cathode that's been produced thus far is very good, and so we're confident that that will allow us to achieve LME registration. That will take some time, but with LME registration, we should be able to command a premium The recently announced April transactions, I'll start with TMI. That's $169 million required to be paid in November. That will give NIC 7,000 tonnes of a tubular nickel metal. It's in a very strong consortium of Korean and Japanese partners, LS M&M, who are a significant global copper refiner, as well as other base metals and cathode producer. Anwar, a Japanese trading company with long, deep roots into Indonesia, and another unnamed strategic investor who's a global player in the EV chain. As with all of our previous projects, that comes with a capex guarantee. And Sanpala has signed the exclusive supplier of ore, to this project, and we feel the integration should bode favourably when it comes time for a HNAB application at Sampala. And then secondly, CME, which I touched on in Sampala, effectively swapping an 18% interest in the Sampala project, the ANN and ETL IUPs, for new cash consideration for a 36% interest in CME. That will give Nick about 10,000 tons of attributable nickel metal. So effectively, if you look at the two transactions, we're acquiring 17,000 tonnes of additional incremental high margin MHP for a cash consideration of US$169 million. So that's a capital intensity of around US$10,000 a tonne, which is significantly lower than any of our peers are paying or have paid in the market to access high margin MHP units. If we could just move to the final slide please. I think this first half has really demonstrated our leverage for nickel prices given our strong production base and that was demonstrated through 21% increase in NPI price translating into a 97% increase in EBITDA at our RKEF operations. and we're yet to see any contribution from EMC and then looking forward from CNE and CMI. We're positioned at the very bottom end of the cost curve throughout scale and integration and I think if you look at particularly the first half of last year where it was We were at cyclical lows and a number of our peers were loss making. Even during that difficult time, we were able to make a robust margin. Now that we're coming into a period of significantly improved pricing and a much better market outlook, you can see what that has done to our bottom line. Again a reminder of the material tax concessions that we have and the benefit that brings up to 15 years for our EMC project. We are one of the largest owners of nickel resources globally and we're seeing strengthening mine margins so expect for the second half of this year we're looking forward to increased volumes and significantly stronger margins and also a very strong focus on bringing on Sanpala next year into production. And we have a clear pathway that's funded to this growth. And this growth, when you combine the incremental HL product margins that will come on over the course of the next 12 to 18 months, along with margins from Sanpala, at a 19 to 20 million tonne run rate. That sets us up well to targeting EBITDA of US $1 billion in the next sort of two to three years. If you look at the market itself, again, coming back to crew, they believe there's probably about an additional 1.1 million tonnes of nickel demand up until the end of 2030. So Takega are about 5.6%. 700,000 of that to come from stainless and so that obviously goes very well for the NP hot business given the lack of new supply coming on. About 250,000 of that from battery. and then another $150,000 from other, and that's products such as Super Alloys, which obviously is the market that ANC will be selling into through the transaction with Sphere and the supply to SpaceX. With that, I'll hand over to Yvonne.

Thank you. If you have a question, please press Start 1 on your telephone keypad to raise your hand and join the queue. If you wish to remove yourself from the queue, simply press star one again. One moment, please, for your first question. Your first question comes from the line of Lyndon Fagan of JPMorgan. Your line is open.

Good morning, guys. Thanks for the call. Look, the first one, just a bit of accounting treatment. So with mining, at what point are we going to see all of the revenue going into segment, i.e. I guess the HPAL division consuming whatever's left there? I guess you have to give some colour on when that'll be zero revenue, i.e. it's going to feed everything internally?

Chris, do you want to take this one?

Chris's line has dropped. Okay.

I think we've lost Chris's line there.

That's okay.

I can take it online.

Yeah.

Yeah. Yeah.

Okay. The other one was just to pick up on your billion dollar EBITDA comments. Are we able to break that down by division? I guess I'm... bit under that. So just trying to kind of figure out what I might be missing there.

Sorry. Sorry, Lydon. I've just been cut off. I heard you say first one's for an accounting treatment tidy up and then I've been cut off the line. I've just dialed back in. I haven't heard anything since that.

No, that's all right. I guess what I'm trying to determine is just when all of the mining revenue will be into segment, and so I guess that relies on the HPAL division consuming, I guess, the remaining portion of revenue there that's going externally. When should we expect that to be showing zero revenue in the segment reporting? Zero revenue...

For the limonite and the saprolyte or just the limonite?

Yeah, so I guess at this stage it's already zeroed the limonite and we're seeing the saprolyte. When are we going to see?

The saprolyte is all internal, so we eliminate that out already. So the intercompany revenues you're seeing there in the nickel ore mining, that's saprolyte revenue. currently... Sorry, I got that wrong. Yeah. Whereas the liminal sales are currently to... have been to third parties. We have been selling to third parties, so they have not been getting... They have not been getting eliminated. We will have a very... It won't be the same for... It'll be a little bit different when we bring on ENC and we have the revenues there. because we're not going to be consolidating P&C. It's going to be equity account of treatment. So you'll see in our next set of accounts, in the December accounts, there'll be slightly expanded disclosure. What you're seeing there in the HPL projects, the revenue of EAA, which is backed out, that's the revenue, the sales from H&C to SYN Creation. So that's very different. So H&C, where we've got our 10% interest, sells to our trading entity, so we're backing that up.

Yeah, so I've got the trading bit sorted. It's really just to try and figure out at what point is the mining division just feeding everything internally to ARCF and HPAL? Are we going to get to that point in the next year?

The intention will currently separate, yes, and... We intend to prioritise all of our limonite into E&C and if there is any external left-over, then we will sell it externally. But the hope and the plan is that all sales will be internal to the group.

Yeah, so once E&C is ramped up, we basically won't be seeing any revenue in the mining segment. Is that fair?

No, no, no. You'll see the nickel ore mining will be... Sorry, yes, you're right. There'll be an intersegment elimination for all of it, yeah.

And when's ANC expected to be fully ramped up to sort of figure that?

Justin, do you want to talk about the ramp-up timing?

Yeah, so we're at 50% of the first two auto-classed. We're just waiting on the decision and the timing for the commissioning of the third and final auto class and then we'll be able to give a more definitive answer, but the target is still very much before the end of this year.

Great. And then, Justin, just to pick up on the billion dollar EBITDA target, how should we split that up across the various segments?

Yeah, using today's margins, if you achieve about 125,000 tonnes of nickel in MPI at a $2,500 a tonne, gives you about $300 million US in EBITDA. If you take the Heng Jia mine at $14.3 million and you use current margins of sort of $15.90 or $16, that's about $225 million. So that's the as-is operations at the moment. So as I said, it's about half a billion. And that's supported with the US $247 million of EBITDA for the first half of this year. Then looking forward, if you look at HPAL, we've got 60,000 tonnes of attributable nickel units coming through from EMC, CNE and TMI. If you use the jude water margins, which were sort of around $8,000 a tonne, you've got another $480 million. And then you've got sandpiler at sort of 20 million tonnes. Again, at that $15.90 margin, you've got about another $300 million. So those three poor numbers, now that takes you to sort of in excess of that US a billion in EBITDA.

Okay, thanks for that. I'll pass it on. Thanks, Ian.

Your next question, Justin, mine of Richard Knight of Bering Julie. Your line is open.

Hi. Pardon me. Hi, Justin and Chris. Thanks for the call. Just wanted to push you a little bit on the water issue at EMC. What exactly are you looking for there in terms of permitting and, you know, as we're thinking about the rampart, main plate by sort of the end of the year or how should we think about the risks to that?

Yeah, so we have had an above average dry season. In fact, it's been a very dry season given obviously the growth in the park and the size of the park. we are looking at what water is available. We do draw water from one of the major rivers, and that's sort of at a very low level at this point in time. Look, we think the confidence of when the wet season comes on, which is in the next two to three months, it'll return back to normal. So it's something that we're just looking at at the moment and that'll really determine when we're ready to start commissioning of the third autoclave. So at the moment we've got two commissioning and the commissioning there is going very well. Availability of water will determine when we start the commissioning of the third autoclave. we still remain confident, given that we should be coming out of the dry season fairly soon, that we'll be able to achieve that nameplate by the end of the year.

Yeah, yeah, okay. And the two autoclaves that are operating, they're running, you said about 50% June? They're already at 50% of their nameplate. Yeah, okay. And so we should expect those two to be running at that sort of nameplate by the end of the year with a degree of confidence.

Yeah, look, I would think within the next sort of two months.

Yeah, yeah, okay. And then maybe just pushing a little bit on... sold for prices and the impact there. I mean, does that come into your thinking at all in terms of the ramp up at EMC? And then I suppose the counter to that is what are nickel and MHP prices doing? How are those realisations looking? Have you even sold any material from EMC yet?

Yeah, so we are still awaiting for the RUI or the sales licence to be able to sell some MHP from ANC, and we're confident of getting that in the near term. So that'll allow us to make the first sales of MHP, and we also have some cathode, which is being produced. MHP pay abilities are holding up quite strongly. Sulphur obviously continues to be... to be a challenge looking forward, although, you know, we are sitting at around still about 44,000 tonnes of sulphur in stockpiles. So we do still have a good buffer there until we have to sort of go out into the market and buy some meaningful volumes.

Yep, yep. Okay, thanks. And then maybe just a question on regional closures. You know, we haven't seen anything firm yet, but there's been rumours that we obey the sort of 20 million tonne shortfall that Sing Shan has there now been granted. You know, I suppose, what are you seeing in terms of additional closures being granted halfway through the year, and how do you expect that to inform your application at Hangire?

Yeah, look, there was some unfounded news that went out that whether they had received a 20 million tonne increase, but that hasn't been verified. And in fact, before the RKOV quotas are released, they're just waiting for confirmation from the government as to whether they will be making any increases in the RKOV. I believe based on, I mean we've been through iterations of evaluation. I think now that we should be in the next two to three weeks, potentially even earlier than that, we should know the outcome of the applications that have been made by all participants and who may or may not receive a an increase, but at this point in time, we're not aware of anyone that's initiated an increase, and there certainly hasn't been anything formal from the government to indicate that there's going to be a new RKOV quote or episode, and I think that's really what everyone's waiting for, for that confirmation of what the number is, whether they're going to stick with it or whether they're going to make an adjustment.

Yep. Yep. Okay, that's interesting. And then just one last one from me, just on the balance sheet. Can you just remind us of the timing of the payments for Sampala and for TMI, CNE?

Yeah, TMI, there's 169 mil due in November. CNE, you just said payments for TMI and CNE, there's actually no payment for CNE, that's for the share swap. and then the remaining payment for Sampala is in April $144,000 for our equity interest in the project. That's in April 27.

Yep.

Okay. The follow-up which other people may have and I'm expecting to get it is we announced when we did the transaction for TMI, the $169,000 payment, that should we require it, it's inched on would be available to fund if required. Subsequent to year-end, we've now actually entered into a facility agreement with a partner of Seachunt for that purpose. So obviously we haven't drawn down any of it. I'm not expecting to draw down on it, but for completeness, that facility is there. It's been executed. So if we did require it, we can draw down on that.

Yeah, okay. And that's a $144 million facility, is it?

No, sorry. The facility is $169 million to match the TNI payment, which is due in November.

Yep.

Yep.

Perfect. Okay. Great. Thanks, guys.

Thanks, Richard.

Thanks, Chris.

Your next question comes from the line of David Coates of Bell Potter Securities. Your line is open.

Good day, Justin. Good day, Krista. Thanks for the call this morning. Congratulations on a good result. Just a couple of quick ones from me, hopefully. Just on the mining, the mining ramp-up, you know, you're waiting on the RCAV license. What's your mining strategy in the meantime? You're sort of running flat-shat and then, you know, banking on the sort of permit coming through, or are you adjusting your mining volumes in July. That's the first one.

Thanks Dave.

For the mining strategy, we've sort of kept it at about $6 million for the first half of this year in anticipation of saving volumes for the EMC commissioning and ramp-up. We did 1.4 million tonnes in July. probably untracked through about 1.5 in August. And we're just sort of matching the demands of E&C along with the making sure that we sort of get close to our, or we meet our RKAB target. What we do have, which is great, is we have the flexibility of third-party limonite sales to other HPL producers. So we're balancing that against the RKAB quota and then against the commissioning and anticipated limonite requirements coming from E&C. And as I said, hopefully we'll know the outcomes of our RKAB application in the coming weeks. and then depending on what that is, we do have a strategy in place to, you know, if required, if we do need to ramp up, how we can look to achieve that ramp up for the larger volumes if we're successful in our application to increase.

Cool. And then just a quick reminder, that's 19 point something million tonnes that application made, is that correct?

Yes, application for 19.

And then secondly, the registration of nickel cathode with the LME. You mentioned my facts, I'm fine. And I don't particularly want to hold you to a schedule that's probably a bit out of control. what kind of timeline are you looking at and what kind of marketing plans do you, you know, will that kind of enable that you're interested in pursuing as soon as it comes through?

Yeah, look, our head of battery materials, Simon Miller, he's really driving that L&A registration process. My understanding is that it'll probably be about an 18-month time frame. But... That's sort of the target that we're working towards for the registration. I think what's interesting for Capode is obviously we already had a large volume that's accounted for outside of the LME for SPHERE. and I think their volumes and requirements will continue to grow with the growth of SpaceX and all the forecast growth of SpaceX and their super alloy requirements.

Cool, I can't believe you've also leveraged that LME premium pricing into that sphere offtake or...?

Yes, yeah, absolutely, yep.

Excellent. Thanks very much, George. Cheers. Thanks, Ed.

Your next question comes from one of Donovan Tan of BlackRock. Your line is open.

Hi, Nathan. Thank you for the presentation. I think I have a couple of clarification questions about these. I didn't hear it too clearly. But can you sort of check that Clumb Keto has already been produced, one, and two, when you were speaking about the kind of EBITDA water for It's going to be $300 from RKEF, half a billion from the HPAL, and about $300 from the mines. Is that correct?

Yes. Thanks, Donovan. That's correct. First Cathode has been produced, and the quality that we're producing subsequent to that is very good, so we're very happy with that. Just in terms of the EBITDA, we're looking at about $300 million from the MPI business. about $200 million from Hangia Mine, about $300 million from Sampala, and then from the HPAL, we've got 60,000 tonnes of attributable at nameplate, and really it depends what margin you use there. We've used the June quarter margin of $8,000, so that's another sort of $480 million of EBITDA there.

Okay, got it. Thank you. So I have two questions. So the first one is just like asking about the scale side of things from EMT. I understand the products will be kind of pro-rata. Is there any expectations of selling your own share of the EMT products over the scale, so like incremental demand from them?

Yeah, so they obviously have the right to opt out. They're pro-rata 10%. we have entered into an agreement to provide over and above that 10% due to their demand and I think that demand will continue to grow and obviously subject to the pricing being competitive then we'd look to entertain further capo sales to Sphere.

Okay, got it. And I think that's one final question for myself. I think this is regarding a headline back in July where Tsing Shan suspended some exports of metal products. So I understand that you guys sell it to Tsing Shan, which is not exactly an export, but have they communicated anything about this to you guys?

Yeah, they did pay back some of the production at their IWIP. HVAL operations. I should note that those operations aren't integrated with all supply and so as a result they are paying a much higher price for all than E&C and so I think they took the decision just to pay back the production. Again, we think it just demonstrates the the benefit of being integrated and sitting at the bottom end of the cost curve.

Okay, I hear you. All right, thank you. That's all from me. I'll go back to the queue.

Thanks, Oliver.

Your next question comes from the line of William Jing of ION Analytics. Your line is open.

Hi, thanks for taking my question. So I have just one follow-up question about the mining strategy. So basically, we've seen very strong production at the Hangia Mine, and at the same time, our production at the ENC quarter is still ramping up. So therefore, there should be kind of like a mismatch between the strong production at Hangia Mine, which produce limonite used in ENC production. So I just wonder, like, in case... that the limonite production is very strong that outpaced the needs for limonite at ENC so are we going to sell all those excess limonite production to third party or we're going to stockpile it until like ENC reaches its main production and consume all the limonite yeah because I guess we are going to exhaust all the RPAB quota this year so that we can keep the same quota or lift our quota next year So therefore, I think probably you guys want to produce like up to the RKAB quota. Yep.

Yeah, thanks William. That's absolutely right. Our target is to produce right up to the RKAB quota. And so at the moment, our strongest margins come from the saprolite, given the very, very good pricing that we're seeing there. and we have 30 million tonnes stockpiled so there's no risk of us running out of limonite for ENC but we're just balancing and we'll continue to balance ENC's demands along with ensuring that we hit our RKOV target and I think what's positive there is we have the flexibility of third-party limonite sales and at this point in time that they want to take everything that we produce. So that's how we're sort of managing the RKAV and Lemonite sales.

Oh, okay. Okay, sure. Got it. Just one more follow-up question on the HPM, sorry, the royalty on the Lemonite based on the HPM price, sorry. So basically, I think a few quarters ago, you guys mentioned that although the HPM for Lemonite is higher than the market price, but then actually the transactions for Lemonite are actually happening on a level which is lower than HPM, which basically means that we need to pay more royalties based on higher than market level HPM price. So just wondering if that changed or like whether like the buyers for the Lemonite is accepting a higher price, basically means that we are not undertaking like all paying more royalties than the market price or than the HPM or it's like we're still like paying royalties more higher HPM price but then selling the limited size market price so maybe I'm not being clear enough

I think I understand what you're saying. You're right. We are paying more royalties on limo and we haven't seen any change in the market price and that market price has been pretty consistent for sort of the last three years, sort of sitting around that sort of $20, $22 a tonne sale price. So I don't think there'll be any changes in that in the foreseeable future. But on the saprolite side, we've seen very strong growth in margins there and that's really because of the increase in the HPM price there. So I mean, if you look... If you look quarter on quarter, our first quarter average saprolite sale price was around $30, and then the June quarter, that had risen to sort of $51.60. So, you know, we're making up margin in the saprolite.

Okay. Yeah, that's awesome. Thank you.

Your next question comes from one of Love... Pardon? Your next question comes along of Love Sharma of 0.72. Your line is open.

Yeah. Hi, good morning. So two questions from me. First one, if you can just highlight the working capital usage for the first half and if you can break it down between first quarter and the second quarter. It seems to be quite decent given the gap between your EBITDA and the operating cash flow. And second one, I think... about the question about St. John's ability to export and some disruption there. Did you mention that they have been paying you or paying back the production? I didn't catch that part, so if you could clarify some bit of that, thanks.

Chris, do you want to take the first part of that question?

Yeah, I can. I don't have the exact numbers, but it was split between the quarters at hand. We did have quite a large working capital build in Q1, and a lot of that unwound in Q2, however. And that was working the same time, particularly around our trades receivable.

We managed to really tighten up a lot of the days there.

And then I think it's a testament... I'm talking about the NPI sales. I think it's a testament to our relationship there with them. I'm happy to follow up with you with the specific numbers. I don't want to give that up. Yeah, sure.

That would be very useful. Yeah. But broadly speaking, first quarter was negative in terms of the working capital usage, and second quarter you had positive. It would improve it, yes. That's correct. Okay. I understand. Okay. We'll be good to get some numbers later. Thanks. And then the other question about sanction, and, you know, if you could clarify, what was it about? Did they pay attack production, or I thought you said... Yeah, yeah.

Yeah, Qingshan did announce that they were scaling back production out of two of their XPALs at IWIP.

Right, okay. And how does it impact you as of now? Or is there any change in terms of your own production?

No, look, no impact for us and probably a positive in terms of, you know, that's... MHP, higher cost MHP capacity that's not in the market. So we can look to replace it with lower cost MHP as E&C ramps up.

Thank you. That's all the time we have for today's Q&A. I would now like to pass the call back off to Justin Werner for some closing remarks.

Thanks again everyone. Really just to sort of hit on the fundamentals of the business and we've built the business historically on nickel pig iron and mining and both of those segments look very good moving forward and then we're now moving into the commissioning of the higher margin HPAL business, along with the commissioning of all first production from Sanpala, which is also an exciting milestone for the company. And then coming back to the numbers that I mentioned at the end of the presentation, with an additional 1.1 million tons of nickel required by 2030, according to crew, and a cap on NPI, and as well as a cap on MHP and HPAL out of Indonesia. We think that looking forward, the integrated low-cost producers such as ourselves that have a diversified product across different segments of the nickel market, we're positioned very well. And again, I think our leverage to the nickel price really demonstrated in the first half, you know, 21% increase in MPI, 87% increase in EBITDA. Well, thank you, everyone, and if you have any further questions, please don't hesitate to reach out to Chris and myself.

Thank you. This concludes today's conference call. You may now disconnect.