A NEW FORCE IN GLOBAL NICKEL North America – October 2019
Disclaimer 2 This presentation has been prepared by Nickel Mines Limited (ABN 44 127 510 589) (‘NIC’). The information contained in this presentation is for information purposes only and has been prepared for use in conjunction with a verbal presentation and should be read in that context. The information contained in this presentation is not investment or financial product advice and is not intended to be used as the basis for making an investment decision. Please note that, in providing this presentation, NIC has not considered the objectives, financial position or needs of any particular recipient. NIC strongly suggests that investors consult a financial advisor prior to making an investment decision. This presentation is strictly confidential and is intended for the exclusive use of the institution to which it is presented. It may not be reproduced, disseminated, quoted or referred to, in whole or in part, without the express consent of NIC. No representation or warranty, express or implied, is made as to the fairness, accuracy, completeness or correctness of the information, opinions and conclusions contained in this presentation. To the maximum extent permitted by law, none of NIC, their respective related bodies corporates, shareholders, directors, officers, employees, agents or advisors, nor any other person accepts any liability, including, without limitation, any liability for any loss arising from the use of information contained in this presentation. This presentation may include “forward looking statements”. Such forward looking statements are not guarantees of future perf ormance and involve known and unknown risks, uncertainties and other factors, many of which are beyond the control of NIC and their respective officers, employees, agents or associates that may cause actual results to differ materially from those expressed or implied in such statement. Actual results, performance or achievements may vary materially from any projections and forward looking statements and the assumptions on which those statements are based. NIC assumes no obligation to update such information. This presentation is not, and does not constitute, an offer to sell or the solicitation, invitation or recommendation to purchase any securities and neither this presentation nor anything contained in it forms the basis of any contract or commitment.
3 Whilst we own a world class nickel laterite mine THIS IS NOT A MINING STORY It’s a story about the production of the lowest capital intensive and most profitable nickel units in the global market in partnership with the world’s largest stainless steel producer.
Executive Summary 4 HNI RNI NIC HM HM IMIP MIP 60% 60% 60% 60% ASX 80% 80% Potenti ential • Nickel Mines Limited • NIC has established itself • Ranger Nickel Project • Hengjaya Nickel Project • Hengjaya Mine (NIC) is an Australian as an important strategic (RNI) (HNI) (HM) company publicly listed partner to Tsingshan and • 2 Line RKEF Plant • 2 Line RKEF Plant • NIC holds an 80% 80% on the ASX. the IMIP. producing nickel pig iron producing nickel pig iron interest in PT Hengjaya • A$200M IPO completed • Numerous potential (NPI) yielding ~16.5kt pa (NPI) yielding ~16.5kt pa Mineralindo (PTHM) which on 20 August 2018. options exist to expand of nickel metal. of nickel metal. holds 100% of the the current relationship Hengjaya Nickel Mine IUP • 60% interest acquired for • 60% interest acquired for including: licence covering 6,249 US$171.4M. US$12 120M. hectares. Participation in o • Option to increase interest • Option to increase interest additional RKEF lines. • HM is located in Morowali to 80% for US$60M to 80% for US$60M Regency, Central extending until Participation in other extending until o Sulawesi, Indonesia, 30 November 2020. IMIP assets. 30 November 2020. adjacent to Tsingshan Holding Group’s • Commissioning underway. Additional ore supply • Commissioning complete. o (Tsingshan) Indonesia agreements – NIC has • Current monthly • Current monthly Morowali Industrial Park an existing MOU to production rate of production rate of (IMIP). supply limonite ore to ~1,700t Ni metal. ~1,800t Ni metal. IMIP’s new HPAL plant.
Corporate Snapshot 5 Directors and Management 11.4% TRADING INFORMAT ATION 27 SEPTEMBER 2019 Shanghai Decent ASX Code NIC Blackrock 39.3% Shares on Issue 1,665.4B 18.1% Share Price A$0.70 Shanghai Wanlu A$0.22 – A$0.75 Range Regal 9.6% Market Capitalisation A$1,165.8B UBS Group AG & related 5.5% entities 9.0% 7.1% Share Price Performance $0.80 Substantial Shareholders Analyst Coverage $0.70 Shanghai Decent (SDI) 18.1% Bell Potter Buy Target Price $1.24 Blackrock 9.6% Patersons Buy Target Price $0.92 $0.60 Shanghai Wanlu 9.0% Canaccord Buy Target Price $1.25 $0.50 Norm Seckold 7.4% Petra Capital Buy Target Price $1.58 Regal FM 7.1% $0.40 BMO Mkt Target Price $1.20 5.5% UBS Group AG & related entities $0.30 Free Float Indexes $0.20 ~1.385B shares or ~83.2% of issued capital ASX All Ords / ASX 300 20-Aug-18 20-Nov-18 20-Feb-19 20-May-19 20-Aug-19
Hengjaya Mine 6 THE FOUNDATION ASSET Location Resource Mining • Morowali Regency, Central • JORC compliant resource: • Geology de-risked by Sulawesi, Indonesia. mining activity to date. • 37.5M dmt at 1.81% nickel • A large tonnage, high (1.5% COG) for ~680k • Excellent mining grade, open-cut mine in tonnes contained nickel. 1 reconciliations to date with close proximity to IMIP. higher than predicted • 180M dmt at 1.30% nickel nickel grade and tonnes (1.0% COG) for ~2.3M and lower than expected tonnes contained nickel. 2 Fe/Si/Mg. MOROWALI REGENCY • 1,402 holes over 30,296 • Currently supplying ~50K metres. wmt per month to the IMIP. Licence IMIP • Resource not fully defined HM MINE • Plans underway to – approximately half of the increase mining capacity • IUP licence covering 6,249 mapped ultramafic nickel to ~1.5M wmt pa. hectares. bearing area has been resource drilled. • 20 year mining operation/ production licence with a • 30+ year resource life further 2 x 10 year based on a 1.5M wmt pa extensions (issued May mining operation. 2012). 1,2 – Refer slide 31
Introduction to Tsingshan, Shanghai Decent & the IMIP 7 • Currently the world’s largest stainless steel • Shanghai Decent (SDI) is a Tsingshan group • Committed to ahead of the Indonesian producer with output of 9.29 Mt in 2018. company. Government’s 2014 DSO export ban. Targeting ~12Mt in 2019. • Manager of IMIP. • Fully permitted industrial zone jointly sanctioned • Established a clear early mover advantage in by the Indonesian and Chinese Governments. • Key architect in establishing Tsingshan’s building in-country processing capacity within integrated stainless steel industry supply chain • Over US$7.7B invested to date. Indonesia. from mining, to NPI smelting to stainless steel • Currently ~30,000 employees. • A recognised global leader in RKEF processing output in the form of slab, hot rolled coil (HRC) • 3.0 Mt pa stainless steel capacity. technology to produce NPI. and cold rolled coil (CRC). • 24 operating RKEF lines. • Pioneers of ‘hot - charging’ molten forms of NPI • Responsible for Tsingshan’s international directly into stainless steel operations. project management, including project o 1.8Mt nameplate NPI capacity pa construction, equipment design and • Vertical integration and logistics management o 180kt nameplate Ni capacity pa procurement, logistics and raw material underpin the Group’s ‘Lowest Cost Producer’ importation/supply. • 0.5 Mt pa carbon steel capacity philosophy. • A counterparty to the Collaboration and • 0.6 Mt pa high carbon ferrochrome capacity. Subscription Agreement (CSA) for HNI and the • 2GW coal-fired power plant Collaboration Agreement (CA) for RNI. (expanding to 2.9GW) • Currently hold 40% equity interests in HNI and • Lime plant, coke plant, acid plant. RNI. • Significant port facilities. • Executive guest quarters and 5-star hotel.
“ The PT SMI facility is world-class and arguably the lowest cost FeNi operation in the world.” - Glencore Nickel Market Developments (September 2016) 8 Indonesia Morowali Industrial Park (IMIP)
Fully Integrated NPI & 9 Stainless Steel Plant RKEF Control Room Electric Furnace Molten NPI Rotary Kiln NPI Ingot Casting Stainless Steel Mix Stainless Steel Slab Hot Rolled Coil (HRC)
Supported by World Class 10 Facilities & Infrastructure Surrounded by Ni Laterite Deposits 2GW Coal Fired Power Station Stockpile Areas Significant Port Facilities Executive Quarters and Helipad 5-Star Hotel
A Collaboration Philosophy 11 Tsingshan have a track record of successfully collaborating with numerous partners within the IMIP TECHNICAL/ SUPPORT SERVICES SDI + SDI + SDI + NIC 60% NIC 60% others others others SDI 40% SDI 40% PT SMI PT GCNS PT ITSS HNI RNI 4 RKEF Lines 8 RKEF Lines 8 RKEF Lines 1Mt Stainless 1Mt Stainless 1Mt Stainless 2 RKEF Lines 2 RKEF Lines Power Power Power Indicative only and not representative of all the operating entities within the IMIP. For further details of the shareholding structure of the various operating entities within the IMIP refer 2017 IMIP Annual Report on NIC’s website ( www.nickelmines.com.au).
Hengjaya Mine 12 Location is Everything
13 WHAT BENEFITS DOES NICKEL MINES GET FROM PARTNERING WITH TSINGSHAN?
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