Nickel Asia Corporation

Good afternoon everyone and welcome to Nickel Asia Corporation's briefing for our financial and operational results for the first half of 2021. My name is Miriam Gueto, Nickel Asia Senior Manager for Investor Relations. Joining me today are our Group President and CEO, Mr. Dennis Zamora, who's joining us online. Our Chief Commercial Officer for Nickel Asia's mining business, Mr. Koichi Ishihara. our VP for Finance and WP TFO, Mr. Andre Dy, and President and CEO of our youth thermal business, Mr. Joseph Lopez. I'd like to remind everyone to keep your microphones off during the duration of the presentation. This session will be recorded and the presentation materials will be available on our website after the briefing. There will be a Q&A portion after the formal presentation. and we will first address questions submitted via the registration form. For any additional questions, feel free to send them via the chat box or raise your hand so we can update you. Now for our financial highlights. This slide presents our consolidated financial highlights for the first half of 2026. compared to the corresponding periods over the last four years. As you will see, this has been a standout performance period for Nickel Asia across our revenues, EBITDA, and attributable net income. Our first half results for this year were the strongest in the last five years, reflecting the company's continued operational and financial momentum. The last full set of bar charts indicates our top-line performance for the period Revenues, which are comprised of the sale of ore, power, and other services, amounted to $17.0 billion in the first half of this year, representing a 44% increase from the $11.78 billion in the first half of 2025. The set of bar charts in the center showcases our consolidated EBITDA for the period, which totals $8.68 billion, up 67%, from 5.20 billion in the first half of last year. Please note that the eight of the figures that are shown here have been adjusted from previous presentations, so include non-operating income and expenses as well as the equity loss in the system. For the right-hand set of bar charts, it shows are reasonable that in non-excluding minority and the rest, For the first half of 2026, attributable net income amounted to $4.06 billion, an increase of 93% from the $2.10 billion reported in the first half of 2025. The rise in earnings was driven by the increase in average or sales prices, sales volumes from operating lines, and the depreciation of the Philippine PESA against the U.S. dollar, which favorably affected PESA-denominated revenue. Turning to our margins, in the table below, gross profit margin for the first half stood at 65%, up from 53% from the first half of 2025. Revenue growth significantly outpaced the increase in cost to sales. So while our top line grew 44%, our cost to sales only increased by 6%, resulting in the improved margin. Income margin improved as well, by 70 percentage points for 51%. The net income margin held up despite softer contributions from other income and financial income, which declined by 68% and 23%. To summarize, this is a strong first half across the board, showcasing higher revenues, wider margins, and significantly higher earnings versus the same period last year. Now for our nickel mining growth formats. This slide details our mining volumes, prices, and revenues for this first six months of the year, starting with sales volumes on the left. Represented in millions of wet metric funds, the green portion represents sapper life or exports, while the orange portion represents limonite age policies. Total mining sales volume increased by 10% year-on-year to 8.64 million wet metric funds from 7.85 million wet metric funds. Our exports were up 21% year-on-year to 4.76 million WM funds from 3.93 million. Lemonite H-PAL delivery space class was a 1% decrease year-on-year to 3.88 million WM funds from 3.93 million in the first half of last year. Moving on to the movement and average ore varieties seen in the middle chart here, for our exports, The average prices registered is $42.86 for WMF and an increase of 12%. For limonite H5 prices, there was a notable increase of 33% to $12.57 for WMF as compared to last year's amount of $9.43 for WMF. Weight and average core prices grew by 23% year-on-year. The table below gives us additional context on the nickel crisis. The average nickel enemy price per pound for the first half of this year was $8.18, recovering from $6.96 in the first half of last year, and an increase of about 18%. The effective nickel pay factor for ore exports stood at 26.88% for the first six months of the year, slightly below last year's figure of 27.36%. Each thousand degrees, on the other hand, had an average nickel payability of 9.78% versus 9.18% in the first half of last year. For mining revenues, Total, our revenues came in at 15.40 billion pesos, which was off 45% from last year. Our export revenues grew 47% year-on-year to 12.45 billion. And the monite H4 revenues grew 40% year-on-year to 2.95 billion pesos. So to summarize, higher volumes and stronger realized prices. across both ore exports and HVAL deliveries drove a broad-based improvement in our mining revenues. Moving on to our revenue variance analysis, this slide will show the key drivers of our top-line performance for the first half versus the first half of last year. The total gross revenues grew from 11.78 billion to 17.02 billion The primary contributors were, firstly, more shipments from our operating mines, which represented a year-on-year increase of $1.78 billion in revenue. Next, there were improved LME and nickel ore export prices, or, in general, higher nickel realites prices, which contributed about $1.91 billion more from the first half of last year. Third, there was also favorable movement in the foreign exchange rates, averaging 60.85 pesos to one US dollar this year versus 56.47 pesos to one dollar last year. This roughly added 1.107 billion to our revenues. Another contributor to improved top line was higher solar power generation, revenue of approximately 447 million. These positives were partially offset by a $20 million investor reduction from hedging impacts and a $4 million investor reduction related to loan returns from deliveries for the period. This next slide summarizes our cost and expense variant analysis for the first half. During your total costs and expenses increased from 8.349 billion to 9.805 billion. So the reasons for these key movements were firstly an increase of 145 million in depreciation due to the replacement of capital expenditures. Next, there was also an increase of 685 billion year-on-year in mining costs. Reflecting higher mining production volumes and higher fuel costs. So for further context, average fuel prices for the first half of 2026 were at 86.43 pesos per liter. So this is up 73% year-on-year from 49.93 pesos per liter. Other loadable movements. in our expenses were from an increase of 519 million in excise tax and royalties on higher revenues and the recognition of royalties under the new fiscal regime. Three of our mines were affected by the new fiscal regime which requires payments for royalties outside mineral reservations. These mines in particular are Rio Tuba or RTN, Sinapige or GMCC and Armani Calimay. So after that step, the royalty impact from the new municipal regime was approximately 63 million pesos for the first half of the year. Apart from this, an increase of 230 million pesos versus last year came from costs from our renewable energy business due to additional capacity from the energization of P1 of our San Ysidro solar project. And lastly, there was a decrease of 66 million pesos in non-mining costs due to lower material handling for our Tagaynilo HVAC. Overall, the increase in costs were consistent with our higher production and shipment volumes, as well as the ramp-up of our renewable energy capacity and was more than offset by the growth in our industry. Let me walk you now through the key movements in our balance sheet as of June 3, 2026 compared to the year end, 2025. For assets, total assets, there is 74.1 billion as of end June, up 6% from 17.2 billion at the year end. Cash and cash equivalents declined 14% to 15.1 billion pesos. Trade and other receivables increased 72% to 4.1 billion pesos. The increase in current assets were primarily due to higher trade receivables arising from increased sales, higher inventories resulting from ongoing mining activities, and increases in principal withholding taxes, advances, deposits, and other prepayments. CPE grew 7% to 35.5 billion pesos and other assets increased 40% to 19.5 billion pesos. Other movements in the asset section of the balance sheet were mainly due to two things. The first is the continuing capital expenditures for our R&D projects, particularly Phase 1 and 2 of San Ysidro. and Phase 1 of the Kawa Solar Project. Second, Mikael Ishihara advanced an amount of US$10 million, which was equivalent to about P613.5 million, in connection with his acquisition of a 20% membership interest in the East Copper Production. Noya East Copper is a Pakistan-based entity that owns 100% of GRK MLB, which holds a subsoilage rights for the Karchika Copper Mine that we are closing soon after. So on liabilities, total liabilities increased 7% to $22.3 million from $22.3 million at year-end 2025. Shorts and debts declined significantly by 58%. to 2.1 billion. The short-term debt decreased because of the full and partial repayment of loans of our renewable energy business, which rolled out above 2.9 billion pesos. Closed-end debts were essentially stable, down 2% to 9.2 billion pesos, while other liabilities increased 61% to 12.7 billion. Other significant movements in the liability spectrum were due Higher excise taxes and royalties, higher contract liabilities or advance collections from customers as a result of higher revenues from ourselves, as well as higher income tax payable. On equity, total equity grew 5% to P50.1 billion. Equity attributable to the current company increased 6% to P41.9 billion, while non-controlling interest did an 8.2 billion, which is up 1%. Paying for key financial ratios, axles due with 30, all of that ratios, so it unchanged at 0.38 times. Debt equity was registered at 0.48 times compared to almost similar from the year end at 0.47. Debt equity increased marginally to 0.1 times from 0.05 times, which was driven by the decline in cash balances as we funded other capital expenditures. But overall, the Ban on the Sheets remains healthy with a modest debt profile showing a strong equity base to support our ongoing growth initiatives. So moving on now to our renewable energy updates and financial highlights for EVIT. EVIT began this session with an important update. Our renewable energy platform, formerly known as Emerging Power Inc. or EVIT, have been rebranded to NAC Energy. This evolution from developers' established power platforms marks a key milestone in NAC's 2030 strategic roadmap to build a diversified natural resources powerhouse. Moving forward, NAC Energy's operations intends to go beyond solar to ensure that the company can deliver both clean generation and flexible and silent baseload or midnight capacity. needed to stabilize local grid infrastructure. NAP Energy's core mission remains absolute, to provide stable, resilient, and cheaper power to all Filipino countries. So allow me to continue to update you all with our flagship operational asset and to the daily port zone. So this has the capacity of 172 megawatt-eak. After the end of June, 117 MW of GSI's capacity was contracted under powers by agreement. Our PSE to WSM sales mix for the second quarter stood at 96%, 64%. And the direction for this asset continues to be fully contracted, insulating our revenues from WSM's price policies. So, moving on now to the sanity-related project that is being developed under Green Light Renewable Walls funding, or joint venture with Shell. The project is divided into two phases, each with 120 megawatt peak of capacity. Both phases are already 100% contracted. Phase 1 was energized in the fourth quarter of last year, with the COG targeted for the third of this year. Phase 2 is targeted for energization in the third quarter of 2012, with CO2 in the second quarter of 2020. Here are the consolidated financial highlights for NAP Energy for the first half of 2016. Generation grew 68% year-on-year to 216,106 MWh. from 127,013 nanowatts driven by the energization of silica reflux. Our sales mix shifted further toward contracted volumes, with PSE now accounting for 98% of sales versus 2% on WSM, compared to 88% and 12% in the same period last year. It followed an additional 55% Megawatt peak of P&P contracted in January this year. EBITDA grew 83% during the year to $628 million from $343 million, reflecting both higher revenues and higher costs. EBITDA margin expanded 4 percentage points to 65% from 61%. The weighted utilized tariffs improved 3% year-on-year to 4.56 pesos per kilowatt-hour, from 4.44 pesos per kilowatt-hour driven by the higher tariff rate from the new contracted community, to 4.50 in 2026, compared to what's an exposure of 2.77 pesos per kilowatt-hour in the comparable period last. Overall, NAP Energy is gaining meaningful scale and we expect this trajectory to continue as more of our pipeline projects come. So let's now move on to updates in our development pipeline. Our next project under Greenlight Renewables is San Juan Guatalan in the balance consisting of two phases. Phase one, at 45 megawatt-feet is fully contracted and targeted for energization in the fourth quarter of this year, with commercial operations in the second quarter of next year. Phase 2 at 14 megawatt-feet is targeted to be 100% contracted as well. Last July, we began energization of the first 40 megawatts of this 120 megawatt project. Under our wholly owned renewable energy subsidiary, the Subicow project located in Zambales remains a key development asset. It's divided into two phases. Phase 1 of 17901C is currently 64% contracted with active ongoing negotiations for the remaining 36%. Energy generation is targeted for the second quarter of 2027. The COD is the third quarter of 2027. Phase 2 of Subicawag at 75 MW each is targeted to be 100% contracted, and the duration is expected in the fourth quarter of next year when COE will be in the first quarter, 2020. Our final development project is another rental facility in Bataan, a 50 MW each plant. This project is currently in the pre-development stage with off-day contracts still ongoing. A visualization is targeted for the third quarter of 2028 with COG in the fourth quarter. This slide summarizes the expected progression of NAP Energy's installed generation capacity over the next years. Those capacities are expected to reach 428 megawatts by the end of this year and 617 megawatts by the end of 2027, incorporating JSI, SISP, and our other five-time projects as they progress through construction. As we have communicated before, our primary focus going forward is on maximizing the value of each megawatt that we bring online, prioritizing fully contracted assets, integrating battery energy storage systems across the portfolio, and exploring hybrid solutions for island grid operations to capture midnight supply opportunities. So that concludes our formal presentation for this earnings briefing. We will now open the floor for questions. Feel free to use the chat box or raise your hand, but we will first go through the questions submitted to us via the registration form. So we've listed these questions here. Most of the questions sent in have to do with Indonesia's nickel ore quotas or mining qualities. I think we will address those questions first as a whole, and then move on to the follow-up questions sent in individually by our analysts.

Yeah, so with regards to the situation in Indonesia, the protests have remained in majority tight for the year, but recently there has been some selected Relaxation of quotas for some particularly large mines that were affected by tight quota. But still, these quotas remain limited. So our view is the policy in Indonesia with the Arka Ape will continue to be implemented in that manner, which is tighter and more relaxed. because this is still the strategy of the Indonesian government to regulate the supply of property given the global oversupply in nickel and the effect of which we could show in the appendix MIREN. So the effect of this policy that they've set is seen in the global nickel balance So in the first half, as per CRU, we could see that the production and the consumption, there's a slight oversupply. So what Indonesia have done as a policy is already impacting the oversupply in the market. Also the phenomenon on high sulfuric acid prices. As you know, sulfuric acid prices have already quadrupled from where they were. Now it's close to a thousand. So because of this, processing nickel, metal, processing nickel has been constrained.

And this is also aiding in the relief of oversupply.

So our view is the oversupply is going to narrow. and there will be a support for nickel ore prices.

So to the follow-up questions here, so from Christine of PPI Security, she also asks if there is any latest guidance for dividends?

Well, we've always said that 30% payout would be the regular And then, if you look at the strong years that we've had, we have a good history of paying special dividends. We do not guide on special dividends, but if history were to be the teacher, then it would point to likelihood of special dividends. But I think the change in NEC's strategy is we made an announcement that We're going offshore. So what's changed from five years ago is we're making offshore investments. We're evaluating offshore opportunities in copper and nickel. So that will also be in consideration when allocating our capital. Of course, we reward the shareholders. Then we will also invest in our growth and also in our power subsidiaries. So these things in consideration, especially with the good results here, the likelihood of the special dividends is still there. So yeah, we're looking forward to later this year as we continue, as third quarter will even be better because that's where typically most of the volumes come in. So thankfully with the high payability of people who work, We will be able to, we're forecasting to have a good year and we'll be able to fulfill these three things. Reward shareholders and then fund our offshore growth and also fund our power subsidiary plans.

So Eric Chan from Buena Vista Fund Management also has a question. Given the changing attitudes of the Indonesian government in restricting and relaxing the production quota, how is that impacting nickel exports in Indonesia?

Thank you, Eric. For NAC, I think what sets us apart from the other Philippine miners is the quality of our nickel ore and our brand name. So in a time where nickel ore is relaxed and in theory there would be more supply, I think the prioritization of selection of nickel ore for the buyers in Indonesia, they will prioritize nickel Asia's ore over the others. So I think that's what we have. So it did not affect us. We do not see any impact to our sales. During times of relaxation and more so when the policy is tight. So I think Nickel Asia enjoys the brand. The brand enjoys prioritization in terms of the quality, the nickel rate that they can expect from us. So I think there's no problem here, Eric.

I think we've answered George's question and the client's first question. The client's follow-up is, have nickel ore prices held at these levels so far in 3Q? And are you making any changes to your $29,000 on the auction highbacks?

Client, for the second quarter, we saw a peak. There was a time that nickel ore prices peaked really high. It has come off now in the third quarter. We would like to describe it as it has normalized. So although it has come off, I think it has come off to levels where it is still quite on the high side of last year. So I would put it as some normalization, but we think that it will continue to hold. Given the situation on the ground, it appears like it will stay at these levels for now. And then in terms of our guidance for 20 million tons, so right now we have done 10% more than previous year. I think the 20 million is still achievable. We're not seeing any difficulty so much in the weather. So as long as the weather permits, then I think the 20 million is definitely achievable.

I think the answer is the first question, but I can take question number two, which was, what was the net peso impact of higher diesel prices in QQ? The net impact on our end was about 634 million pesos so and then your next question is what was the percentage of ore sold to China versus Indonesia and what factors currently affect pricing to both countries so it's about 60 40 60 percent in China and 40 percent in Indonesia With respect to the factors affecting pricing, it's essentially more or less similar for both of those regions. I think we've answered as well the questions of Miguel and Philip. So for the next page, please. So can you talk about your capital planning? Given the windfall from high default prices, and secondly, can you discuss how the new mining royalties' windfall taxes will work? Are these already reflected in the current financials? Do you want to talk about the first question?

Yeah, so I think I mentioned this a while ago. On capital planning, of course we have a policy on dividends, but more than that, We are investing also more than our power base has. We're also looking to ramp up also on our M&A investments. So we're about to close our transaction on offshore copper. As you know, copper is a very strong metal right now. It's at all-time highs, especially with the recent stockpiling. So we're very excited with this venture. We continue to assess projects offshore that are into gold or into nickel as well. So hopefully we'll be able to ramp up on that. Now, how does that tie in with capital allocation? Yes, it will take some capital in order to be invested in these businesses. But we think that our nickel business, which is very cash generative, will be able to not only supply Our means to invest offshore, but we still remain able, very well able to reward shareholders through our dividend policy. And then our renewable energy, our EPI has finally ramped up, so it has reached a certain scale, sorry, not energy, has reached a certain scale where it's already profitable also at the core level. So in terms of capital allocation, there is less reliance. from NAC to do so. So I think from a capital allocation standpoint, we were able to do everything now.

Thank you for the benefit of time. Can we go to the slide that shows the new mining discouraging? Okay. So just as a summary, to discuss how the royalties and windfall taxes work. The only thing that is new from Middle Asia's end are the royalties for outside mineral reservations and the windfall public tax. So, with respect to royalties outside mineral reservations, three of our mines are currently affected by that, which is Rio Tuba, Dinapigay, and Manitan. So, After that, the impact of the new fiscal regime was about 63 million pesos on our end. With respect to windfall profits, these will be reflected in our fiscal year 2026 financial results. So, from now on the end, it will still be just the royalties outside the direct circulation. The margins that you see here in the middle part of the table are referred to operating income margins for mining subsidiaries. So, that should give you an idea of what the rates are. So, yeah. So, basically, you can call a company tax to not be seen until the end of the year. And royalties outside mineral reservations are only for three apartments. And the last question is from Raz. So his question has to do with, well his follow-up questions were, how are you managing the changes in oil prices in Dubai? That's his first question. And what would be the impact of the mining fiscal regime on our P&L?

For oil prices, we do not hedge that commodity. But even with the increase in diesel prices, the increase in nickel prices have more than offset The impact now that we can see is about a 2% impact.

On the bottom line, for mining operations, we'll likely get more clarity on it by Q3, but for now, we'll say 2% impact on bottom line, but just for mining ops.

Okay.

So we have a question here from Sheila or Shaila Singh. So the first is, When is the NICL Asia and East Hopper deal at Texas closed?

We are looking at end of third quarter to close this, if not early fourth quarter. So maybe a timeline of September to finish, latest October. So again, we're very excited about this offshore copper venture.

And then the next question is the Zambales concession under Salmanico.

Yeah, we are still in the studying phase, exploration phase. So this is still in early stages. We will be able to share more information by next year after the study, but no figures at the moment. In terms of the remaining exploration and development timelines, Before it reaches production, this is still, we're still unable to answer. We have to get to the resource and the service definition first. So up until then, we will give you more updates. And then third, I believe, is for Jose, right? Yeah.

Okay, so once the KawaBest will be operational, because we're designing it to be able to store around four hours of energy. We expect that it will improve the capacity factor of the power station, the combined solar and battery capacity factor by around 25 to 30 percent. But this is, of course, subject to many different factors, among which is the available irradiance at that time, but 25 to 30 percent would be a good estimate. The next question is also related to power. So the question is, is Nickel Asia part of the Aqua Power solar best project in New Clark City? As you probably know, we signed a joint development agreement with Aqua last June, and part of this agreement was for us to jointly develop projects. So Aqua's power solar battery project is among those that will be brought to the to the joint development partnership for consideration. So, subject to the viability of the project, we will strongly consider participating in that project.

This question is, what led to each file narrowing and equity losses for the first half of 2016?

What led to smaller losses for teenage families? So I think, aside from the high sulfuric acid input cost, nickel LME was also at better levels. And then even cobalt. So the cobalt was also higher. So I think the combination with the high sulfur prices still resulted in some losses, but smaller than the last year.

Great.

So, Amos, the sourcing of this input material, sulfuric acid, they can also source it cheaper in Japan. We get it from Sumitomo, so that also explains why. Or from Russ. Yeah, go ahead, Mira.

We have another question from Raph. Interview. I don't know what this is. I don't know what this is. Nothing there. Anyway, in GCBSD, Raph's question was, Just wondering if the question on the development today on a cobalt-concentrated export ban in Congo, do you see this providing an opportunity for windfall in your HVAC equity earnings?

Well, there's no guarantee what effect it will have. A ban, an export ban in Congo, in theory, will lead to an impact also to cobalt prices. But we cannot say right now what the exact impact of earnings might be. But directionally, it should provide some sort of relief in our costs with better global prices.

Anyone who would like to ask a question live? We don't have any more questions in the chat box, but if there are any, you can just raise your hand if you want. Thank you very much for your participation. The presentation will be available on our website by the end of the day. If you have any additional questions, feel free to reach us at the general IR email or you know how to reach me and Angie. Thank you so much everyone.