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Nickel Mines Limited (NIC.ASX) reported a robust financial performance in its Q2 2025 earnings call, highlighting a significant increase in adjusted EBITDA and a dividend declaration. The company, with a market capitalization of $1.75 billion, showcased resilience despite market headwinds. Stock prices reflected a positive investor response, rising by 3.85% to $0.52. According to InvestingPro analysis, the company appears undervalued based on its Fair Value calculations, with analysts maintaining a moderate buy consensus. Key operational advancements and strategic projects were also detailed, setting a promising outlook for the coming quarters. InvestingPro data reveals strong fundamentals with a "GREAT" overall financial health score of 3.27, suggesting solid operational execution. InvestingPro subscribers have access to 6 additional key insights about Nickel Mines’ financial health and growth prospects.
Key Takeaways
- Adjusted EBITDA reached $97.3 million for the quarter.
- The company declared a final dividend of $0.15 per share.
- Nickel Mines’ stock price increased by 3.85% post-announcement.
- Significant progress in the E&C project, with key milestones approaching.
- The company received substantial VAT refunds, boosting cash flow.
Company Performance
Nickel Mines demonstrated solid performance in Q2 2025, driven by an increase in adjusted EBITDA to $97.3 million. This marks an improvement over the previous quarter, with the RKF segment contributing $44.3 million, a 5% increase from the December quarter. The company’s ability to maintain EBITDA per tonne growth, despite some operational challenges, underscores its operational efficiency and strategic focus.
Financial Highlights
- Adjusted EBITDA: $97.3 million
- RKF EBITDA: $44.3 million, up 5% from last quarter
- Dividend: $0.15 per share declared
- VAT refunds received: $36.4 million
Outlook & Guidance
Nickel Mines has set ambitious targets for the upcoming quarters, including the commissioning of the nickel cathode plant in July and the NHP and nickel sulfate commissioning in October. The company is also planning to expand its mine permits and increase production capacity at the Hengai mine from 9 to 19 million tonnes. These initiatives are expected to bolster future revenue streams and enhance market competitiveness.
Executive Commentary
Justin Werner, Managing Director, emphasized the company’s progress towards commissioning the nickel cathode plant, stating, "We are rapidly approaching commissioning of the nickel cathode plant." This sentiment was echoed by the CFO, Chris, who highlighted ongoing assessments of debt capital markets for potential refinancing opportunities, reflecting a proactive approach to financial management.
Risks and Challenges
- Market conditions remain soft, with reduced nickel ore premium prices.
- Localized flooding impacted RKF production, highlighting operational vulnerabilities.
- The broader weakening sentiment in equity and debt markets could affect future financing options.
- Fluctuations in NPI contract prices may impact revenue stability.
- Macroeconomic pressures and geopolitical factors could pose additional risks.
Nickel Mines continues to navigate a challenging market environment with strategic initiatives and operational improvements. The company’s strong financial performance and forward-looking projects position it well for future growth, although it remains vigilant of potential risks and market dynamics.
Full transcript - Nickel Mines Ltd (NIC) Q1 2025:
Conference Moderator: Thank you for standing by, and welcome to the Nickel Industries Limited March Quarter Activity Webcast. All participants are in a listen only mode. There will be a presentation followed by a question and answer session. I would now like to hand the conference over to Mr. Justin Werner, Managing Director.
Please go ahead.
Justin Werner, Managing Director, Nickel Industries Limited: Thank you, and thank you, everyone, for attending the Eiffel Industries March quarter twenty twenty five quarterly activities update. If I could just ask the moderator to move to the next slide, please. Pick up with Safety and Sustainability. Twelve months LTIFR remains very low at 0.05. No lost time injuries were recorded against 4,800,000 work hours for the quarter.
The TRIFR also remains very low at the March. That was 1.48. We continue to be recognized as an ESG leader. We were awarded our third consecutive Green Proper Rating, and we are striving to be the first company to achieve gold in Indonesia. And we also were pleased to receive an award for outstanding corporate social responsibility in Asia.
If you could just go to the next slide, please. A strong quarter despite, again, continuing soft market conditions. US97.3 million dollars adjusted EBITDA from operations. RKF production was slightly lower, and that was just due to a small halt in operations for a couple of days at O and I just
Conference Moderator: Pardon me. It appears we’ve lost connection with our speaker. Please hold while we reconnect. Ladies and gentlemen, we’ve reconnected with our speakers. Justin, you may begin.
Justin Werner, Managing Director, Nickel Industries Limited: Apologies, everyone. The time line dropped out there. So I’ll start again. 97,300,000.0 adjusted EBITDA from operations from the quarter. RKF production, slightly lower, as I mentioned, due to some localized flooding from heavy rainfall.
RKF EBITDA of USD 44,300,000.0, 5 percent higher than the December quarter. And EBITDA per tonne, we show an increase from $13.00 $9 a tonne to $13.76 dollars Very good performance from our interest in the HNC H valve. Again, continues to consistently perform strongly in terms of nickel tonnes produced over 2,000 tonnes for the quarter, again, 40% above nameplate capacity. And the highest amount of EBITDA delivered yet from HNC of 22,000,000. And this obviously bodes well for the commissioning of E and C in the second half of this year.
We reached agreement with Shanghai Decent to defer our two remaining E and C acquisition payments of hundred and $26,500,000 on January and one October of this year. They have been deferred by six months. I’ll talk about that a little bit later on. But that is reflective of very strong relationship that we have with Shanghai Decent, in no way is a reflection of our confidence in the project or the market. It really is just preserving the balance sheet, particularly given the current environment in terms of global tariffs.
And we have just recently seen, obviously, a weakening sentiment in both equity and debt markets. Mine operations production was slightly lower, and that was due to the changing of some pits. But ore sales were slightly increased. EBITDA was lower, and that was driven predominantly by a significant reduction in the premium price that’s being paid for all over and above the standard HPM price. If we could just go to the next slide, please.
RKF operations, as I mentioned, production slightly lower by about 4%. Cash cost pleasingly were was 6.4 lower. So reduction from February 10/1976 to to 09/1996. And so that was predominantly driven by lower nickel ore costs, and that did result in improved performance versus the December. We did see a reduction in the NPI contract price, averaged to $11,884 in the fourth quarter of twenty twenty four.
That reduced to $11,317 for the March. But I would note that we did see a strong improvement in NPI pricing across the quarter. So that rose from $11,055 a tonne in January to $11,220 in February and then finally, 11,981 a tonne in March, which is actually above the Q4 average of $11,884 So we did see a strengthening of NPI pricing across the quarter, which is encouraging. And as I mentioned, pleasingly, we saw a 6% reduction in our costs. We just go to the next slide, please.
HNC, as I said, consistently producing above nameplate capacity. Costs again were decreased similar to our RKF operations driven predominantly by lower nickel ore costs across the quarter. A new quarterly attributable EBITDA record of US22 million dollars And as I said, it bodes well for E and C. If we could just move to the next slide, please. EMC is progressing extremely well.
The top photo that you can see there is the HPOW plant, thickeners, countercurrent decantation, storage tanks and reactors are all nearing completion. Two of the three autoclaves are now connected, and they’re in their pre and and post treatment stages. And then the bottom photo there, that is the cathode and nickel sulfide plant. And you can see there, that’s very well advanced, and and we’re still targeting commissioning of the cathode plant in July, which is well ahead of the October schedule. And we’re still on track to deliver NHP and or commission NHP and nickel sulfate in October.
If you just move to the next slide, please. Mine operations, there was a decrease in ore mined driven by a number of factors. There was high rainfall across the quarter and referred to some flooding earlier. There was also a pit or a movement from a lower grade pit to a higher grade pit, which decreased some of that mining and also saw a decrease in grade from 1.56 to 1.45. That is now being resolved.
The new pit has been opened up. We are looking to increase the grades. Sales were higher in this quarter, and, there was a slight increase in the Limonite contract price. And so our adjusted EBITDA was 31,000,000, lower than the GBP 36,500,000.0 in the December. As I predominantly driven by the decrease in the premium pricing that we saw was being paid across the majority of 2024, which now appears to have subsided quite a lot.
And that will simply mean that we will just see margin flowing back into our RKF operations and our HPL operations, which we have seen this quarter. If we could just go to the next slide, please. Corporate highlights, declaration of $0.15 per share final dividend a dividend reinvestment plan that took the full year 2024 dividend to $04 Angel Nickel received USD 36,400,000.0 of VAT refunds from 2022. And there is a remaining balance of USD 110,000,000 that is expected to be received over the next twelve months. I’ve touched again on the green proper award and again, one of only two mining companies to receive that.
So it is a tremendous achievement. And then finally, subsequent to the end of the quarter, we reached agreement with Shanghai Basin to defer the remaining E and C payments by six months. As you said, that removes any possible stress on the balance sheet and is, again, really a reflection of the strong relationship that we have with Shanghai decent and the alignment of interests that we had given their significant holding in nickel industries. That wraps up the March for 2025. With that, hand over to questions.
Conference Moderator: We will now begin question and answer session. If you If you wish to cancel your request, please press 2. If you are on a speakerphone, please pick up the handset to ask your question. The first question today comes from Richard Knight with Baron Joey.
Please go ahead.
Richard Knight, Analyst, Baron Joey: Justin. Hi, Justin. Thanks for
Analyst: the call. Just a quick one on Hengjai volumes. Obviously, you’ve got the closure expansion to 19,000,000 tonnes coming at the back end of the year. Have you have you stockpiled enough limonite to be able to fulfill that quota by the end of the year? That’s the first question.
And second question, just on VAT rebates. If there’s any update on the sort of timing of payments of those. I suppose I’m just thinking about, you know, in the current environment, you know, you were still pretty much cash flow breakeven. And just thinking about what sort of delta in the current price environment could sort of lift your cash balance ahead of having to make those payments for E and C in in six months’ time or nine months’ Yes.
Justin Werner, Managing Director, Nickel Industries Limited: We’ve got yeah. Thanks, Richard. I’m happy to take the first question. I’ll hand over to Chris for the the VAT. At the moment, we we have over 20,000,000 tonnes of of limonite currently stockpiled.
So that there is more than enough limonite stockpiled to make that ramp up from 9,000,000 to nine, ten million. So the h power will consume around 11 to 12,000,000 tons of of all year. So effectively, we have sort of two years of of limonite stockpile there. So we’re very comfortable with that with limonite stockpile levels. I’ll let Chris talk to, the the VAT question.
Chris, CFO/Finance Executive, Nickel Industries Limited: Thanks, Justin. Thanks for the question, Richard. We we we all we have said now is the remaining 10 that we are expect expecting it within the next twelve months. I believe that’s conservative. But given the delays we’ve had to date, I I want to be conservative, like like and say that.
Do I expect it to happen coming 2025? I’m hopeful, but, I I can’t guarantee that, Richard.
Analyst: Yep. Okay. No worries. Thanks, guys.
Justin Werner, Managing Director, Nickel Industries Limited: K. Thank you. Thanks, Richard.
Conference Moderator: The next question comes from Tim Hoff with Canaccord. Please go ahead.
Justin Werner, Managing Director, Nickel Industries Limited: Hi, Tim. Thanks for the question. I just was hoping you could unpick, the EBITDA that’s being generated by, TC, that 13,000,000, in within the HPL unit.
Chris, CFO/Finance Executive, Nickel Industries Limited: What what sorry. So, Justin,
Analyst: I can take that.
Chris, CFO/Finance Executive, Nickel Industries Limited: What when you say unpicked in, like, what what do you mean?
Justin Werner, Managing Director, Nickel Industries Limited: So so how how’s that the the the the extra $13,000,000 that’s being attributed to TC or Sync Creation. How’s that being generated?
Chris, CFO/Finance Executive, Nickel Industries Limited: So Sync Creation is our entity. Sync Creation owns we own a % of Sync Creation, and we have Sync Creation owns 10% of HNC. We have sales. H HNC makes sales to Sync Creation. And so we have any any profit that we have there sitting in Sync Creation from on selling the product is a % EBITDA because we we can include that.
It’s we consolidate that. However, our share of the h and c sales or the h and c profit, we obviously cannot consolidate. And so we we gross that up, take our share of it, and call that our attributable EBITDA, and we add that to the the EBITDA from Syncreation to give you the attributable EBITDA number of $22.22 mil. However, from an because we we cannot actually attribute we cannot actually consolidate the agency earnings, we have to equity account that. We back out the items below the EBITDA line to show an equity accounted profit, and that’s the number that you’d see in our in our accounts, in in the actual half yearly and year end accounts.
Justin Werner, Managing Director, Nickel Industries Limited: Alright. So in the NPAT line, we’re gonna see that if it accounted profits come through.
Chris, CFO/Finance Executive, Nickel Industries Limited: Yeah. And and we look. We we we deliberately show it like that. So we we we gross up HNC because we don’t want people to be looking and thinking that the that the margins coming out of HNC are a lot lower than what we believe the EBITDA margins is when they actually apply that. When you when you guys apply that to your ENC model forecast, we we we obviously don’t want you understating the the margins there for that business.
Justin Werner, Managing Director, Nickel Industries Limited: Excellent. Thanks. And just remind us on the okay. No. I think we’ve got that.
Excellent. Thank you very much. Thanks, team.
Conference Moderator: The next question comes from David Kotis with Bell Potter Securities. Please go ahead. David, your line is unmuted. You may now ask your question.
Chris, CFO/Finance Executive, Nickel Industries Limited: Sorry, operator. Have is David still on the line?
Conference Moderator: David is connected currently. Perhaps you’re muted, David.
Chris, CFO/Finance Executive, Nickel Industries Limited: Perhaps we go we go to the next question, and we can come back to David.
Conference Moderator: The next question comes from Dim Ariasang with UBS. Please go ahead.
Tim, Analyst, UBS: Good morning, guys. For the call. Maybe if you could just walk us through again, please, what what is required to get that, sorry, mining permit expanded? Are there any goalposts that we can look to? Yeah.
What is what is that glide path look like potentially? Yep.
Justin Werner, Managing Director, Nickel Industries Limited: Yeah. Thanks, Tim. Look. Effectively, there’s three key steps. The first step is is development submission and approval of of a feasibility study, which which pleasingly, we had approved during the quarter.
So that that’s a a major milestone. The second step is then the, what’s called an AMDAL or an environmental impact statement, which is, supports the feasibility study and outlines the environmental management and and rehabilitation plan. That has been submitted and is currently in progress. There’s a number of workshops, meetings, revisions, which we’re working through at the moment. And and that is also once that environmental study is approved, the effect basically, it’s then all consolidated into a single document submitted for approval of the increase in the RKOP, and that’s the final step.
So we remain very confident of receiving that approval before October when we expect to start delivery of of limonide ore to to ENC.
Tim, Analyst, UBS: Yep. Cool. Thanks. And and maybe just on e n c, I guess, it’s great and prudent that you you were given an extension with the on on these payments. Is there any capacity?
And I guess it’s not something you’d wanna do, but is there any capacity to change things further, like, maybe take on less ownership? Or yeah. I guess yeah. We you know, it may be prudent maybe to revisit the economics of this just given the broader broader challenges in the commodity at the moment. But are those conversations yeah.
Are you able to have those conversations at all, or is this just a strict deferral?
Justin Werner, Managing Director, Nickel Industries Limited: We we look. We are able to have those conversations with with with Jing Shen. But at this point in time, really, the discussion has just been around a a deferment for for a period of six months.
Tim, Analyst, UBS: Yep. Cool. Thank you. Thanks thanks very much, guys. Cheers.
Justin Werner, Managing Director, Nickel Industries Limited: Thanks, Ed.
Conference Moderator: The next question comes from Adam Baker with Macquarie. Please go ahead.
Richard Knight, Analyst, Baron Joey: Good morning, Justin and team. Yeah. Good to to those payments for ANC. Just wondering, secondly, on the the debt repayments that you’ve got due in the second half of this year. I think you’re starting to pay off the senior unsecured notes.
Can you just walk us through that, please?
Chris, CFO/Finance Executive, Nickel Industries Limited: Yes. I’ll take that, Adam. Thanks for the question. Yeah. We we do have the senior unsecured notes.
They will start amortizing in October this year. And we also have amortization. We’ve already made some amortization payments on some of our bank loans, and they are continuing through this year. And and look, that that that’s a key factor around why we’ve pushed. We we went to Shanghai decent and discussed this and pushed back those a and c deferrals.
We want to as I said, I I think on the last last call we had at the it was either last quarterly or year end. We are continuing to assess the capital markets, the the debt capital markets. I must be clear on that. We’re continuing to assess the debt capital markets for refinancing of that debt. We don’t think now is the right time, mainly for for various reasons, but operational reasons.
We have some very large catalysts coming up. We believe in the second half of this year being the e and c commissioning being, the expected increase of the Hengai mine, Arkab, and also, the expect expected Samparla coming into production early next year. Obviously, with those three things and the effect that they will have on our EBITDA, I would much prefer to be looking to refinance that debt stack once those catalysts have happened or are much closer to happening so we can actually get credit for those. So with that, the amortization will be getting paid on the on the on the debt, reducing our debt balance. And to do that, given the current market environment and margins we’ve experienced, we went to our partner and requested a a delay in those payments.
Richard Knight, Analyst, Baron Joey: And the amortization coming up in October, the the quantum for that is around 40 to 50,000,000 from memory?
Chris, CFO/Finance Executive, Nickel Industries Limited: No. No. No. The the let me just bring it up for you. Sorry.
The amortization of senior unsecured is 44, 44 mil, and that’s in October 25. But there’s also, amortization and various on quarterly amortizations on the bank loans as well. So and they they’re every quarter. I I’m happy to, I think we’ve already published those. So I I’m happy to send those back through to you rather than reading out, month by month amortization, Adam.
Richard Knight, Analyst, Baron Joey: Yeah. Got it. I’ll touch base up on. Thanks, guys.
Chris, CFO/Finance Executive, Nickel Industries Limited: Okay. Thanks, Adam.
Justin Werner, Managing Director, Nickel Industries Limited: Thanks, Adam.
Conference Moderator: The next question comes from David Cook with Bell Potter. Please go ahead.
David Cook, Analyst, Bell Potter Securities: Hi, Tim. Can you hear me this time? We can.
Justin Werner, Managing Director, Nickel Industries Limited: Excellent. Yeah.
David Cook, Analyst, Bell Potter Securities: Look. Apologies if I missed any of this while I was dialing back in, but just one of the do you have any do you have any color on the, you know, potential block of shares that might be coming out? We saw, you know, that that block trade during the month, which was interestingly handled. That’s now out of resto, I I believe. Can you give us any update on that?
Justin Werner, Managing Director, Nickel Industries Limited: Yeah. Thanks, Adam. No. I’d be glad to point out it is it is out of resto. I’ve I had I had lunch with the with the principal about two weeks ago.
And think important to note that that that block of shares was actually held across two entities. One was the publicly listed entity, which is Harwell Managing. They are a coal producer listed on the IDX, but they are transitioning into nickel. And they they have a mine at Kalmahera and a HPO that is under construction. They needed to sell their balance of their shares for liquidity management and for some of the funding of some of their nickel operations.
And that was driven by unfortunately for them, coal margins had significantly decreased sort of gone from tens of dollars down to sort of $4 to $5 a tonne. The remaining stake actually sits with the, with with the family or family office, and they they have no intention of of selling. In in fact, the comment was made to to me was that, yeah, they understand the the catalyst that are upcoming and the growth that is effectively locked in. And the comment was that, he wouldn’t be considering selling anything under $1 So, we don’t expect, to see those shares being offered anytime soon.
David Cook, Analyst, Bell Potter Securities: Excellent. Thanks, Justin. And if we just one more on a couple of inbounds that I’ve had in relation to potential royalty changes, sort of, you know, versus royalties on oil production versus oil potential royalties on MPI production. Can you give us an update on that?
Justin Werner, Managing Director, Nickel Industries Limited: Yeah. Chris, do you wanna take that one or no, please?
Chris, CFO/Finance Executive, Nickel Industries Limited: Yeah. Sure. Sure. The the I’ll go to the second bit you said on the NPI production. I I I wanna be very clear.
We don’t pay royalties on NPI production. That royalty is only for integrated operations which have in in the same company. There there’s there’s an there’s a couple of them, but in the same company, they have an an ore, a mine, and an RKF operation. So there’s no actual external sales of the ore, so the government doesn’t capture any royalty on that. So instead, for those entities, they capture a royalty on the end product, being the NPI or whatever other product they produce.
So NPI royalties are not relevant to Nickel Industries. On the ore, we’ve gone through and whilst we’re still finalizing, we we’ve seen that they’ve been enacted. They’ve become legislation. There is some ambiguity, but we are taking the position that we will be paying a 14% royalty on the saprolite and limonite. It may be less, which is what the discussions we’re having, but I think at this stage, it’s best to assume the 14% royalty on the on on on our oil sales for the 2024 on our sales.
If that if this new legislation had have been in place for the whole of 2024, we estimate, and that’s on the 9,000,000 tons. We estimate in addition, we would have paid an additional $8,000,000 royalty. For our estimate on 2025, we’re assuming we get the expanded, ARCab license, so the increased sales license, we expect that that increase in royalty will increase our royalties, by $12,000,000. So not huge numbers in the context of our of our operations and our cash flows, but we we’ve just I’m giving you those numbers just so that you can you can see based on our 2024 sales, it would have only been 8,000,000, and our estimate for this year is an additional $12,000,000 as a result of this legislation change.
David Cook, Analyst, Bell Potter Securities: Excellent, Chris. Thanks for clearing that up. That’s helpful. Cheers.
Chris, CFO/Finance Executive, Nickel Industries Limited: Thanks, David.
Justin Werner, Managing Director, Nickel Industries Limited: Thanks, Ed.
Conference Moderator: There are no further phone questions at this time. I’ll now hand the call back to Mr. Warner for closing remarks.
Justin Werner, Managing Director, Nickel Industries Limited: Thank you, everyone, again for the questions. Again, look, we’re really rapidly approaching now. In fact, we’re sort of three months away from commissioning of the of the nickel cathode plant and then not far away from that in October, the NHP and nickel sulfide. So, you know, that’s one of the the big milestones this year along with, obviously, the Hangzhou mine ramp up from nine to 19,000,000 tonnes, and and we hope to be able to provide update on that environmental study in the coming weeks. And then finally, I haven’t touched on it, but our, Sampala project, good progress continues to be made there.
We continue to aggressively drill that project out. And it’s looking like it will host a significant ore body in close proximity to IMIP. And obviously, given the low CapEx and good margins from mining operations, we look forward to providing further updates on the Sampala project as well. So thank you, everyone, again for your time.
Conference Moderator: That does conclude our conference for today. Thank you for participating. You may now disconnect.
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