© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Thank you for standing by, and welcome to Nickel Industries Limited December Quarter Results Webcast. [Operator Instructions]
I would now like to hand the conference over to Mr. Justin Werner, Managing Director. Please go ahead.
Thank you for joining the December quarter results presentation. Slide person, could you move to Slide #2, please? I'm very pleased again to report another record quarter in excess of 23,000 tonnes of nickel metal produced -- apologies, Slide #2. So the next slide, please, which is up considerably on the 20,000 tonnes that was produced in the September quarter. And that's really -- we're seeing that from the contribution from ANI.
Pleasingly, we also saw very good production in our nickel matte and very strong margins from our nickel matte. As a result, RKEF EBITDA of USD 90 million. As I mentioned, the margins on our nickel matte, almost $6,000 a tonne and over $4,000 a tonne for Angel Nickel. So you can clearly see the results of having the integrated power plant that we have at Angel Nickel. And now with Oracle coming online, expect that 23,000 tonnes to continue to grow significantly.
At the Mine, also another record 2.7 million tonnes of ore was mined. And the Mine delivered an EBITDA of USD 16.1 million, which is up over 58% on the last quarter. So underlying cash generation from operations of close to USD 100 million for the quarter. And as I said, the transition to nickel matte has proven very successful, and we are currently enjoying very strong margins there.
Finally, as I mentioned, Oracle, 2 lines are commissioning. Another 2 over the coming weeks will commission, and we will start to see the result and the impact of additional profitable nickel units coming through with the Oracle commissioning.
If we could move to the next slide, please. The table here just summarizes those numbers that I've been through. As I said, 23,000 tonnes in excess, a record. The RKEF sales, RKEF EBITDA and Hengjaya production, all records as well.
If we could just move to Slide 4, please. You can see here quite clearly the impact of Angel Nickel and what that's had on our nickel units, you can see it's continued to grow from quarter-to-quarter. And we expect to see a similar profile for Oracle Nickel. So that 23,000 tonnes for the quarter will probably likely grow by another sort of 10,000 to 12,000 tonnes per quarter.
If we could just go to the next slide, please. Slide 5. You can see here the margins. And pleasingly, we've seen a double in EBIT -- doubling in EBITDA from the September quarter and also almost a doubling of our EBITDA per tonne. Margins, back to sort of the more historical levels that we've enjoyed.
If we could just go to the next slide, please, #6 number mentioned record quarter for the Hengjaya mine, 2.7 million tonnes. You could see both the Saprolite business and the Limonite business currently making very strong margins at almost $20 a tonne on our Saprolite and more than $10 a tonne on our Limonite. Pleasingly, the haul road, which will link up our Hengjaya mine to IMIP is progressing very well, and we hope to be able to commission and start using that haul road by the end of the second quarter.
And then just finally, the Hengjaya mine was awarded a Green PROPER rating from the Indonesian Environmental Authority, 1 of only 2 mines to receive that award. And so we're very proud of that. The other mine is VALE Inco. And it's in recognition of not just meeting but exceeding environmental and ESG standards. So as I said, it's a tremendous achievement given that we are 1 of only 2 mines in Indonesia to have been awarded that rating.
If we could just move to the next slide, please. Just to refresh, we did update the JORC resource in the September quarter.
And again, on this slide here, if you could just go to Slide 7, please. You can see 3.7 million tonnes of contained nickel metal. We still have probably another 500 hectares that is prospective. So that number potentially could continue to grow. And you can see there that puts us amongst the top 10 global known nickel resources. And we mentioned in the recent raising that new mine acquisitions, and we are working on those, and we will look to grow from that 3.7 million tonnes of contained nickel metal. Ideally, we would like to sort of situate ourselves right at the very top of that curve in terms of known nickel resources that NIC would have control of.
If we could just move to Slide 8, please. Post the quarter, in fact, only sort of 1 to 2 weeks ago, we finalized the Electric Vehicle Battery Supply Chain Strategic Framework Agreement with our largest shareholder, Shanghai Decent. There's a number of elements to it, but it really is a transformational transaction for the company and that will diversify us into the Class 1 nickel space and could eventually see sort of 2/3 of NIC's production being Class 1 EV suitable nickel and cobalt battery metals.
The elements to the agreement, there is a 10% acquisition of the Huayue Nickel Cobalt HPAL, which was -- is USD 270 million. And they've elected to take that in NIC shares, obviously, subject to the shareholder for approval. The HNC HPAL project is the world's lowest capital intensity, fastest build, fastest ramp-up and has very low carbon intensity, less than 10 tonnes of carbon per tonne of nickel. In fact, it sits at around 7. How they achieved that is it has the world's largest sulfuric acid plant, which generates a lot of heat, which is obviously then turned into power.
So the first element of that agreement is the acquisition of 10% in that HNC project. Importantly, it gives us access to 10% of the MHP that's produced. So we will have marketable MHP of about 6,000 tonnes per annum. And so it allows investors to get a see-through into what a successful HPAL plant looks like and how it operates. It sits at the very bottom end of the cost curve and has enjoyed margins up to in excess of USD 10,000 a tonne. So it is a very profitable business.
We're also acquiring another 10% in Oracle nickel for USD 75 million. That is the same price that we paid almost 14 months ago, and it's certainly cheaper than some of the more recent transactions that have been done in the market.
The other elements of the framework agreement are 2 options. The first one is $25 million for the construction of the HPAL plant, where NIC would have the opportunity to take a majority. And that plant will actually go further than just producing MHP if we'll go right down to nickel sulfate or nickel cathode to allow more of the margin capture.
And then the second option, USD 15 million, to construct a low-grade to high-grade nickel matte converter for Oracle Nickel. And you've seen this quarter the very strong margins is $5,950 a tonne from the nickel matte business.
The transaction was funded by a recent capital raise, which was fully underwritten and very heavily oversubscribed. We had very good support from existing and new shareholders, and we have now just launched a share purchase plan for retail shareholders to also participate in what we see as a very exciting transaction for the company. And as I said earlier in the call, something that will set us up to be a significant producer of Class I nickel, but also make us the only diversified nickel producer. So a number of nickel products, NPI, nickel matte, MHP and potentially in the future nickel sulfate or nickel cathode.
I'll end the presentation there and happy to turn over to any questions anyone has.
[Operator Instructions] Your first question comes from David Coates from Bell Potter Securities.
Justin, thanks for the presentation, and congratulations on a really strong December quarter results. We're starting to show the benefits of some of your strategic decisions. So just -- and on that, the benefit of going down the nickel matte path has been shown. What kind of -- we said diversified production that you just sort of pointed out. You guys have been the only sort of producer with that different product exposure. How do you see the margins -- the outlook for the margins in those different markets over the next sort of 6 to 12 months? How much visibility on the -- obviously, good margin in nickel matte at the moment, but you just sort of see improved margins in the NPI market. How do you -- what's your outlook for those different markets in the next 6 to 12 months, do you think?
Yes. Look, thanks, Dave. We've certainly seen an improvement in NPI pricing. And look, that's probably predominantly driven by China opening up, which was always going to happen. So look, I think we're expecting stable NPI pricing moving forward. And obviously, the decision to, as I said, integrate and have that power, you can see the difference, RNI margins at sort of $2,000 a tonne. Angel Nickel margins are over $4,000 a tonne. So there's a clear advantage in having that integrated power.
But coming back to question, NPI, we see, is stable. Nickel matte is obviously very strong. And the margins that are based on the analysis that we've done, that we're seeing in MHP also look very strong, whilst MHP sort of payabilities have perhaps been coming down. I think it's just probably important to remember that the price -- the net price received is sort of still around $20,000 a tonne. So if your OpEx is 10,000 and less, that's where those strong margins come from. So look, we -- the next 6 to 12 months, we're looking forward to sort of stable pricing across NPI and even LME and SHFE.
Excellent. And just another question on the diversified -- with those diversified products. Are you guys looking to diversify your customer base as well and sort of sell direct to other customers yourselves? Or will you largely sort of continue to sell through sort of [ SPI ]/Tsingshan existing customer base and through them?
Yes. Look, we have the opportunity at the end of March to seek other buyers for our nickel matte. As -- and so we're sort of in the process of doing that. And then for our MHP and the acquisition of 10% of HNC, we also have the freedom there to market that to whoever we choose. So look, there a number of discussions and dialogue is already commenced with potential offtakers. So you're right. It will diversify our customer base. Look, we don't Tsingshan as a risk, but our -- the ratings agencies, people like that, see single customer exposure as a risk. So it certainly will give us diversification.
Thank you. There are no further questions at this time. I will now hand back to Mr. Werner for some closing remarks.
Okay. Look, just to close, again, very pleasingly another record quarter. I can't talk enough about achieving the Green PROPER rating. It's a tremendous achievement, and I think reflective of the fact that our Hengjaya mine has now become a showpiece for sustainable and responsible mining.
It is very important, particularly as we now make this transition into the Class 1 and EV battery space, all investors are taking a very keen interest upstream and what is happening, where the ore is sourced from and how it's mined. And so as I said, we see that as a tremendous achievement. And we're also very excited by the most recent transaction, which, as I said, has been well received by the market. And we'll see NIC further diversify and also look to reduce our carbon footprint, given the very low carbon intensity of an HPAL.
And again, with the HPAL deal, as with all of our deals with Tsingshan, it comes with a CapEx guarantee. And I can't overstate how important that is as well, particularly if you look around the market recently. The number of CapEx blowouts that have been announced by several major companies in the battery material space have been significant. Some of them that have been in the order of 100% or doubling of the original forecast CapEx. So to have that guarantee, we also see it as extremely valuable one, and so we look forward to another strong quarter for the March quarter. And thank you all again for your time.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.