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Good day, and welcome to the Nickel Industries Limited March Quarter Results Webcast. 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. [Operator Instructions] And finally, I would like to advise all participants this call is being recorded.
Thank you. I’d now like to welcome Mr. Justin Werner, Managing Director to begin the conference. Justin, over to you.
Thank you, and thank you, everyone, for your attendance this morning at the Nickel Industries March quarter results call for 2023.
If I could please ask the slide presenter to move to page 2 of the quarterly results presentation. We are, again, very pleased to announce another record quarter for both production and EBITDA. This is against the backdrop of many companies, which are across the resources and battery minerals sector, which are reporting soft results and numerous production misses.
Pleasingly, we achieved over US$100 million in EBITDA from our RKEF operations for the first time. We had record nickel metal production of 26,665 tonnes, which was 15.6% higher than the December quarter. Oracle Nickel ramp-up is progressing very well, and I'll touch on that a little bit later on, but we expect Oracle Nickel to continue to drive record production and more importantly, significant increases into our…
[Technical Difficulty]
Apologies for the interruption. We seem to have some technical difficulties. Please standby while we get the presenters back
Apologies, everyone, the line dropped out there monetarily. So just to rehash, another record quarterly production and EBITDA against the backdrop of many companies in the resources and battery minerals space that have reported soft results and production. This is, as I said, pleasingly, EBITDA from RKEF operations has exceeded for the first time US$100 million, and we reported record nickel metal production of 26,665 tonnes for the quarter, which was a 15.6% increase on our December quarter. Oracle Nickel ramp-up is progressing very well, and we expect that to add not just significant additional production tonnes, but more importantly, significant EBITDA to our bottom line.
Production of nickel matte continues with continued margins being delivered of $4,947 per tonne. We've achieved record RKEF revenue of US$487.9 million and also very strong average received prices for our nickel matte of $21,858 per tonne.
I mentioned the record RKEF EBITDA of US$100.2 million. Pleasingly, our NPI margins from Angel Nickel, which were $4,894 per tonne were consistent with the margins from our nickel matte production at HNI of $4,947 a tonne. The record EBITDA was mostly made up of the EBITDA contribution from our four Angel nickel RKEF loans, which delivered US$61.1 million. And that is a clear endorsement of our strategy to not only move forward from our original four RKEF lines into newer, more integrated lines, and we are seeing a significant margin improvement from those from those newer lines.
Hengjaya Mine ore production of 2.8 million wet metric tonnes. That was slightly lower. There were some seasonal rains and there was some delays in the delivery of ore over the quarter. But we look forward to making that up and a strong upcoming second quarter. Hengjaya mine EBITDA was US$13 million, and underlying cash generation from operations was US$108 million.
If we can move to Slide 3, please. This table summarizes the results. As I said, production, 26,665, up 15.6%. Record RKEF sales and record EBITDA at US$100.2 million, up 11.3% from the December quarter. Cash balance US$275.1 million. So the company maintains a very strong balance sheet.
If we could move to Slide 4, please. The slide here demonstrates on a quarterly basis, the production from our various RKEF operations. Pleasingly, if you look at March of 2022, so a year ago, our production was 11,166 tonnes of nickel. In a period of a year, we have more than doubled that, in fact, increased that by 139% to 26,665 tonnes in March. And there is still additional growth on top of that.
You can see the blue line for Angel Nickel, and you can see that ramp-up profile. And you can see the other light blue line, which is Oracle Nickel, we expect that ramp-up profile to reflect the ramp-up profile of Angel Nickel. So as I said, still significant additional tonnes to come online.
I mentioned Angel Nickel EBITDA of US$61.1 million. We only recognized US$1.7 million of EBITDA from Oracle Nickel. So we expect to see a significant increase in EBITDA moving forward. As ONI continues to ramp up and to achieve and deliver the same sort of results that that we are seeing from our Angel Nickel operations. Pleasingly, we're already starting to see that. We saw a 25% decrease in costs from our ONI operations this quarter when compared to the previous quarter. If we could just move to Slide 5, please.
Despite record high input prices for coal and ore at the back end of 2022 and softer NPI prices. So if I could ask you to move to Slide 5, yes, one slide behind it. Despite record high input prices for coal and oil at the back end of 2022 and softer NPI prices at the start of 2023, you can see here on Slide 5 that margins have remained very strong and continue to grow.
All of the growth that we've touched on the previous slide is paid for -- and we expect looking forward to see a strengthening in the NPI price and in NPI margins and that will continue to grow to support significant EBITDA growth.
Just looking back at the margins, if you were to take this time last year in March of 2022, where we were making averaging $7,000 a tonne margins. If you were to apply that to this quarter's production of 26,665 tonnes, that would be EBITDA in excess of US$180 million and this doesn't include a fully ramped up ONI.
You can see we are very well placed to take advantage of any upside in NPI and Class 1 nickel pricing moving forward. And I think what we've demonstrated is throughout the cycle in a high-cost environment in a softer NPI environment that our margins remain very robust and are very strong. And that, again, is because we sit right at the very quite amended the cost curve.
If you could just move to Slide 6, please. Pleasingly, if you look at whilst the numbers were down for the Hengjaya mine, pleasingly, if you look at our saprolite and limonite coal delivered, saprolite grade reduced by 0.1% from 1.67 to 1.57%, but we were able to still increase margins from $14.01 in the December quarter to $15.81 in the March quarter. The same results for limonite. We were able to reduce that grade by 0.02% and increased margins from $14.8 in December 2022 to $14.62 in March. This reduction in grade is significant because it does increase the mineable resources and obviously, the mine life.
If we could just move on to Page 7, please. The Haul Road is progressing well. It's about 60% complete. You can see some photos there from different sections of the Haul Road. The bridge construction is progressing well. You can see the photo there on the -- on the bottom left, that's about a 70-meter stand bridge. Whilst we were targeting end of Q2, we believe that it will probably come online early in Q3. Really, the only reason for that is we have had heavy rainfalls most recently. And also, there has been significant limestone outcrops that have required us to mobilize additional operating equipment.
Moving on to Slide 8, please. We were pleased yesterday to provide an update on our Siduarsi project. The Phase 1 drill program is now complete. We've completed over 167,000 kilometers of ground penetrating radar and 31,000 meters of drilling, which covers a prospective area of 1,400 hectares. 23,000 samples have been received, and we still have another 7,400 samples awaiting assay in another 2,800 building in transit to the laboratory.
Pleasingly, the results to date have been better than expected. We've certainly discovered that there is higher-grade pods at saprolites, which we weren't expecting. We were expecting it to be purely a limonite deposit and we've returned peak assay results, very high results, 3.68% nickel and 0.82% Cobalt, along with that, very high premium oxide, 21.72% that is recoverable through the HPAL process. And interestingly, quite high scandium numbers, 191 ppm peak with overall scandium grade of 48 ppm and that is something that we will explore further.
Now that, that Phase 1 work has been completed, we are now -- once we have received all of the assay results, we will be releasing the initial JORC resource estimate for the Siduarsi project, and then using that to form the basis of a feasibility and environmental study which will look at a direct shipping operation initially supplying or most likely to weather bat.
The completion of that JORC resource, we look forward to that building on the nickel inventory that we already have, which is significant. We currently have 3.7 million tonnes of contained nickel metal at our Hengjaya mine. We expect Siduarsi to make a significant increase on that. And this builds into our strategy to hold the world's largest known nickel resources. We do have other potential acquisitions that are progressing well, and we look forward to providing further news as those projects continue to develop.
If we could just move to Slide 9, please. During the quarter, very pleased to execute the electric vehicle battery supply chain strategic framework agreement. A number of elements to that key being, firstly, acquisition of a 10% interest in the PT Huayue Nickel Cobalt, HNC HPAL plant from Tsingshan, the consideration to be paid in NIC shares. HNC has the record for the fastest build, fastest ramp up, lowest OpEx, less than $10,000 a tonne lowest carbon intensity of 7 tonnes of carbon per tonne of nickel with a road map to net-zero by 2030. Obviously, that compares very favorably to NPI, which is around 60 tonnes of carbon per tonne of nickel.
What the acquisition of this interest does is it gives investors to see through into the world's best operating HPAL. It also gives us some marketable parcel of our 10% share of MHP to start to build relationships with Tier 1 global EV and battery customers.
Another element of the battery supply chain strategic framework agreement is the option to build what we've coin the Excelsior Nickel Cobalt Project, basically a replica of HNC. We were pleased to announce during the quarter that we were able to negotiate a CapEx reduction down from the initial $2.5 billion to $2.3 billion, as well as an increase in the guaranteed nameplate capacity from 50,000 tonnes of nickel metal to 67,000 tonnes of nickel metal, and also a further diversification of the product that will be produced.
So rather than just purely mixed hydroxide product, or MHP it will go further downstream to produce nickel sulfate and also nickel cathode, which nickel cathode attracts 100% of the LME price, and nickel sulfate does at times trade at a premium to the LME price.
Of the recently announced Indonesian edge power projects, we are the only one that has made an announcement with a CapEx guarantee, a timeframe guarantee and the name-frame guarantee, which we see as significantly valuable given if you look at the CapEx blowouts across the battery metals complex that have been announced recently by a number of listed companies. And it's been those CapEx guarantees that have allowed us to significantly drive our growth over the last two to three years and been a key part of our success to date. We expect the first draft of the feasibility report this quarter for the E&C as we look towards a potential final investment decision sometime towards the end of this year.
As part of the electric vehicle battery supply chain agreement, we completed a successful equity raise. We raised US$185 million and its a fully underwritten institutional placement, which was very well-supported. Additional to that was for the further US$270 million placement to Shanghai Decent, a US$15 million placement to Shanghai Wanlu, and AUD2 million or US$1.4 million to Non-Executive Director, Mark Lochtenberg. This is conditional placement. It still will require approval by shareholders and an AGM, which will be held. And in the case of the placement of shares to Shanghai Decent, we're just awaiting approval by the Australian Foreign Investment Review Board offer. Also as part of the equity raise was a share purchase plan that was completed in March, again, well-supported, and that raised a total of AUD34.5 million.
If we could move to slide 10, please. We also declared during the quarter a final dividend of AUD0.02 per share, taking our total dividend for 2022 to AUD0.04 per share. We were pleased to bring forward the release of our 2022 sustainability report to the end of March. That was to enable it to be included in numerous third-party reviews, such as the Australian Council for Super Emulation Investors.
This is a sign of our commitment to transparency and being measured by recognized independent third parties. Highlights from that sustainability report, we were a recipient of seven trophies of the Environmental and Social Innovation Awards. We received a silver award at the Asia Sustainability Reporting Rating. Probably the one we're most proud of is we were awarded a Green Proper Rating for our mine by the Indonesia Ministry of Environment and Forestry. One of only two nickel operations in the whole of Indonesia to have received that recognition of Green Proper. And so our Hengjaya Mine really has become a showpiece for responsible and sustainable mining.
We were nominated as a finalist for three categories at the Asia Sustainability Reporting Awards. We're in the top-half of ESG performers in the global Mining and Metals Industry according to S&P Global. And we were the highest achiever in S&P Global ESG scores for Indonesian nickel operations.
Finally, also pleased to announce a US$400 million senior unsecured note issuance and a concurrent refinancing tender offer of existing bonds, that was a refinancing of the company's US$225 million senior secured notes. And as I mentioned, the concurrent tender offer for the existed US$325 million notes maturing in April 2024.
What this has done is simplified our capital structure and all secured debt has now been removed. The outstanding bonds, which is US$400 million of new notes that don't mature until 21st of October 2028. That obviously gives us a long runway, but we do have a non-pool period of only two years, which is unique in this type of bond. As I said, this improves our debt profile, and more importantly, removes the security that we previously had, allowing us to better leverage our balance sheet moving forward.
So look, in summary, once again, we've delivered record production and EBITDA growth, as I mentioned, despite the backdrop of soft NPI prices, which have ticked up. And as I said, we remain optimistic that we've seen improvement in that pricing.
We're very much looking forward to further significant EBITDA growth as ONI continues to ramp up and the power commissions sometime this quarter. As I mentioned, ANI delivered US$61.1 million, ONI in US$1.7 million. We expect ONI once that power is commissioned this term to have a similar EBITDA and margin profile. So you can see the significant EBITDA growth that still remains to be captured moving forward.
On the mining side, as the haul road comes online, we look forward to tripling the production from where we sit today and assuming margins stay the same, again, a significant increase in EBITDA from the Hengjaya Mine. We have the Siduarsi initial JORC resource to look forward to, which will contribute to growing our significant nickel resource base.
And then finally, we will continue to work on the strategic battery agreement as we look to diversify and move into higher margin, lower carbon-intensive Class 1 nickel and to give you some idea margins that are being achieved by the HNC HPAL sitting somewhere in the order of close to US$10,000 a tonne, and we will look to as I said, diversify our production base into that higher margin, lower carbon-intensive Class 1 nickel, as we continue to grow into -- already, we are a top 10 global nickel producer, but we will look to move closer to that number one position. With that, I'll hand over to questions.
[Operator Instructions] And your first question comes from the line of Mitch Ryan of Jefferies. Your line is open.
Hi. Good morning, Justin and team. Thanks for taking my question and congratulations on a good EBITDA and cash flow during the quarter. My first question just relates to the market dynamics. I've read reports that there were some matte lines converted back to NPI during the quarter within Indonesia. Did you see evidence of that in the facilities that you operate in? And do you understand what was driving that?
Yes. If you look at the supply/demand, Tsingshan has been and is very good at managing the supply demand across a number of different products that it produces. If you look at the margins from our Angel Nickel NPI, which were 4,894 versus our margins from nickel matte, which were 4,947, you can see actually very little difference between the margins from the newer NPI lines and the converted nickel matte lines. So look, really a supply-demand balancing that Tsingshan undertakes. But I think it also points to Tsingshan’s confidence that we have I think, seen the bottom of the NPI pricing. And moving forward, they are expecting better conditions for NPI in the stainless market
And in similar vein, I had read an article stating that Indonesian NPI, some of the lines partially cut production in March. Did you see evidence of that? And within sort of your facilities, given Tsingshan manage that supply demand, who makes that decision about which lines are cutting production?
Yes. There's been no production in NPI from any of the lines within IMIP or IWIP. There has been production cuts from other NPI producers in Indonesia, such as Virtue Dragon. And that is because they have smaller older RKEF lines and without integrated power and their margins are significantly lower than what Tsingshan is able to achieve. So we're talking margins from those producers of $1,000, less than $1,000 a ton. Whereas as you just pointed out, ANI and Tsingshan's newer NPI lines are achieving margins up around $5,000 a tonne. So again, I think it just highlights that if there is any production cuts in NPI, there will be many other producers that will be making those cuts well before Tsingshan is even forced to contemplate doing that.
Yes, definitely, great margins. That's it for my questions. Thank you.
Yes, thanks, Mitch.
Your next question comes from the line of David Coates of Bell Potter Securities. Your line is open.
Thanks very much. Thanks, Justin, and thanks for the presentation this morning. Just following on a little bit from Mitch's questions there and extending that kind of supply management dynamic into the Chinese NPI production where as I understand, it sort of the high-end of the cost curve is. Do you expect short of manage the play out of there as well to the extent that we're able?
Yes. Tsingshan is by no means close to self-sufficiency in NPI. They're probably at about 60% of their NPI needs are met from IMIP, IWIP and existing NPI operations within China. So there is still a heavy reliance on that third-party NPI producers, particularly third-party Chinese NPI producers. And so I mean -- and we think that will continue moving forward, given that most of the NPI capacity in Indonesia is now built out. There's no real plans for any significant further NPI capacity expansion.
What that does do is it gives us the benefit of NPI pricing is set off the cost of a marginal Chinese NPI producer. And so whilst they may only enjoy slim margins, as evidenced by even producers in Indonesia that don't have the same sizes or scale or execution capability it will allow us to always enjoy a healthy margin given that pricing dynamic.
Okay. So I still expect those supply from those marginal producers to be required to sort of see the overall stainless steel demand and I guess, kind of keep the high-end of that cost curve in business.
Correct.
Excellent. Thanks so much. That's all for me. Thanks, Justin.
Thanks, guys.
[Operator Instructions] And there are no further questions at this time. So I'd like to hand back to Justin.
Thank you, everyone. Again, we look forward to reporting another strong quarter for the June quarter. And look, if you have any other additional questions, please don't hesitate to contact myself, Cano or Chris, and we look forward to providing further updates throughout the course of this quarter on many of the other projects and opportunities that we continue to work on. Thank you, everyone.
That does conclude our conference for today. Thank you for participating. You may now all disconnect.