Q & A Highlights

Q: Can you break down the $1 billion EBITDA target by division? A: Justin Werner (Managing Director) outlined the breakdown using current margins: approximately $300 million from the NPI business (based on 125,000 tonnes at a $2,500/tonne margin), about $225 million from the Hengjaya Mine (at a $14.3 million RKAB and current margins of ~$15.90/tonne), roughly $480 million from the HPAL business (60,000 tonnes of attributable nickel units from E&C, C&E, and TMI at June quarter margins of ~$8,000/tonne), and about $300 million from Sampala (at a 20 million tonne run rate and $15/tonne margin). These combined figures exceed the $1 billion EBITDA target.

Q: What is the status of the E&C commissioning, and what are the risks to reaching nameplate capacity by year-end? A: Justin Werner (Managing Director) stated that the first two autoclaves are currently commissioning at about 50% of nameplate capacity, with first MHP and first cathode production achieved. The key challenge is an extremely dry season affecting water availability, which will determine the timing for commissioning the third autoclave. The company remains confident of achieving nameplate capacity by the end of the year, as the wet season is expected to return within the next 2-3 months.

Q: What is the timeline for LME registration of the nickel cathode, and how will that impact pricing? A: Justin Werner (Managing Director) indicated the LME registration process is being driven by the Head of Battery Materials and is expected to take approximately 18 months. The quality of cathode produced so far is very good, and achieving LME registration should allow the company to command a premium. Additionally, a large volume of cathode is already accounted for through the Sphere offtake agreement, with demand expected to grow alongside SpaceX's expansion.

Q: How is the company managing its mining strategy given the ramp-up of E&C and the RKAB quota? A: Justin Werner (Managing Director) explained that the company is balancing production to meet both E&C's limonite demand and its RKAB target. The company produced 1.4 million tonnes in July and is on track for ~1.5 million in August. They have the flexibility to sell excess limonite to third-party HPAL producers, and there is currently strong demand for all production. The company has applied to increase its RKAB from $14.3 million to approximately $19-20 million and expects to hear the outcome within the next 2-3 weeks.

Q: What is the impact of Tsingshan's decision to pare back production at its WIP HPAL operations? A: Justin Werner (Managing Director) noted that Tsingshan did pare back production at two of its HPAL operations at WIP, as those operations are not fully integrated and are paying much higher prices for ore. This has no direct impact on Nickel Industries and is actually a positive, as it removes higher-cost MHP capacity from the market, allowing the company to replace it with lower-cost MHP as E&C ramps up.

Q: What is the timing of the payments for the TMI and Sampala transactions? A: Christopher Shepherd (CFO) confirmed that the TMI payment of $169 million is due in November, while the C&E transaction involves no cash payment as it is a share swap. The remaining payment for Sampala of $144 million is due in April 2027. Additionally, the company has executed a $169 million facility agreement with a partner of Sian to fund the TMI payment if required, though no drawdown is currently expected.

Q: When will all mining revenue be internalized, with no external sales in the segment reporting? A: Christopher Shepherd (CFO) explained that saprolite sales are already eliminated as internal transactions. Limonite sales are currently made to third parties, but the intention is to prioritize all limonite for E&C once it is fully ramped up. Once E&C reaches full capacity, all limonite will be consumed internally, and the mining segment will show no external revenue. Justin Werner added that the target for full E&C ramp-up remains before the end of this year.

Q: How is the company managing the working capital build in the first half, and can you provide a quarterly breakdown? A: Christopher Shepherd (CFO) noted that there was a significant working capital build in Q1, largely unwound in Q2, particularly related to trade receivables from Tsingshan for NPI sales. The company managed to tighten days outstanding significantly. While exact quarterly numbers weren't provided on the call, the CFO offered to follow up with specific figures. The working capital usage was primarily driven by increased nickel ore stockpiles (~$30 million) for E&C commissioning and a decrease in trade payables (~$40 million).

Q: What is the company's view on RKAB quota increases across the industry, and what is the status of its own application? A: Justin Werner (Managing Director) stated that there have been unfounded rumors about other companies receiving quota increases, but nothing has been verified. The government has not formally indicated whether there will be any adjustments to the current RKAB quotas. The company expects to know the outcome of all applications within the next 2-3 weeks. Nickel Industries has applied to increase its quota from $14.3 million to approximately $19-20 million and has a strategy in place to ramp up volumes if the application is successful.

Q: How are sulfur prices impacting the HPAL operations, and what is the company's inventory buffer? A: Justin Werner (Managing Director) acknowledged that sulfur costs continue to be a challenge, exacerbated by the situation in the Middle East. However, the company maintains a good buffer with approximately 44,000 tonnes of sulfur in stockpiles. Despite these pressures, June quarter margins at HMC remained strong at around $8,000 per tonne. MHP payabilities are holding up strongly, and the company is awaiting its sales license to begin selling from E&C, which is expected in the near term.

For the complete transcript of the earnings call, please refer to the full earnings call transcript .