Nickel Asia Corporation (NIKL) Earnings Call Transcript & Summary

Good afternoon, everyone, and welcome to Nickel Asia Corporation's briefing for our financial and operational results for 2025. My name is [indiscernible 00:00:12], Nickel Asia Corporation's Senior Manager for Investor Relations. Joining me today are our Group President and CEO, Mr. Dennis Zamora; our Chief Commercial Officer for Nickel Asia's Mining Business, Mr. Koichi Ishihara; our VP of Finance and our CFO, Mr. Andre Lu Dy; Director of our Geothermal business, [ Mr. Joseph Novos ]; and President of Cordillera Exploration Company, Dr. G. Yumul [Operator Instructions] This video will be recorded and the presentation materials. [Operator Instructions]

So let's begin with our financial highlight. The last most set of bar charts here indicates our top line performance for the period and historically over the last 3 years. For 2025, our revenues, which are comprised of the sale of ore and other services increased by 33% year-on-year to PHP 29.6 billion from PHP 22.3 billion in 2024. Last year saw a marked increase in nickel ore prices for saprolite ore exports. The second bar chart in the center showcases our consolidated EBITDA for the period, which totaled PHP 13.7 billion, 56% growth from the PHP 8.8 billion reported in 2024. The right most set of bar chart shows our attributable net income for 2025 and this surged to PHP 6.3 billion, or a 91% increase from the 2024 net income figure here of PHP 3.3 billion. It should be noted, however, that the PHP 3.3 billion here is representative of core net income and attributable net income. Improvement in our bottom line performance was primarily included 2 things. The first is the higher direct shipping ore prices, which were up by 32%. And the second is the onetime income of PHP 800 million generated from the sale of our stake in Coral Bay earlier this year. If you refer to the table below the right most column indicates additional metrics on our performance for the year. The first row summarizes our gross profit margins, which stood at 63% for 2025. EBITDA margins also improved 46%. Despite operating expenses increasing by about 24%, operating income grew by about 69% year-on-year. We'll provide more details on the revenue and cost and expense variances in the subsequent slide. Next slide. So moving on to the mining highlights for this period. The first set of bar charts that we have on the left shows us nickel ore sales volume for the period in millions of wet metric tons. The green portion represent saprolite ore exports, while the orange part represents limonite exports. So in 2025, our mining sales volumes increased by 9%, totaling 18.56 million wet metric tons. Ore exports, which comprised nearly 60% of total mining sales volumes amounted to 10.93 wet metric tons, up 13% from 2024. H1 deliveries on the other hand, totaled 7.64 million wet metric tons or an increase of 4% from 2021. In the middle set of bar charts, we see the movement in average ore prices for the period in U.S. dollars per wet metric ton. For ore exports, which is seen in green, the average prices registered a higher value of $36.14 per wet metric ton or a 32% increase from last year's average price of $27.34 per wet metric ton. For limonite HPAL prices, there was a marginal increase of 2% to $10.66 per wet metric ton from 2024 $10.50 per wet metric ton. So due to these more favorable saprolite export prices, we can see in the right bar chart that combined ore revenue rose by 39% to PHP 27.5 billion from PHP 19.6 billion. If you place your attention to the table below, this will give us additional context on nickel prices. The first column indicates average nickel LME price per pound in U.S. dollars. So for 2025, this amounted to $6.86 per wet metric ton lower compared to $7.66 per wet metric ton in 2024. The chart also gives us a summary of the nickel pay factor of our ore exports in HPAL deliveries. So nickel payability for ore exports was notably higher in 2025 at 26.93% from last year's 18.03%. So despite the weaker nickel LME price, the payability for raw nickel ore exports was quite high. So the reasons for this are the tightness in nickel supply from Indonesia due to mining both the permit issues, while the demand for ore for processing still continues to be strong from Indonesia and China. Nickel factor for HPAL deliveries, however, increased from 9.87% from 9.24% last year. The reason for this is for the renegotiated prices that we have with Sumitomo Metal Mining. Next slide, please. This slide shows the revenue variance analysis. Total revenues for 2024, this is also inclusive of our renewable energy performance amounted to approximately PHP 29.6 billion, which represents a 33% increase from 2024. So as you can see here, the primary driver of top line growth was the increase in realized nickel prices. Higher saprolite ore export prices gave us about PHP 5.6 billion in revenues versus 2024. So apart from this, there was an improved nickel payability for our Rio Tuba mine for each past sales due to renegotiated prices. So nickel sales volumes grew by approximately PHP 2.2 billion in 2025. This was largely due to an increase in off-season shipments that we had from our mine in Rio Tuba and Palawan, increased exports from our Cagdianao mine and added shipments from our U.S. mines in Manicani in Eastern Samar. So these additional shipments offset the operational impacts of certain weather disruptions we had at the beginning of last year. The foreign exchange rates also had a modest impact on our revenues. The average exchange rate in 2025 declined to PHP 57.22 per U.S. dollar from PHP 57.36 in the previous year, resulting in a revenue reduction of approximately PHP 62 million. Apart from this, lower WESM spot prices also had a marginal effect on our top line figures, which resulted in a decrease of about PHP 51 million in 2024. Next slide. So this slide summarizes our cost and operating expenses in 2025 versus 2024. Cost and expenses increased by approximately 17% to PHP 18.1 billion from PHP 15.5 billion in 2024. The increase was primarily driven by mining costs, which grew by PHP 1.5 billion in 2025. Specifically mining costs in this case pertains to spending related to higher volume of nickel ore, second would be the preparation of new mining areas like in our Manicani mine. And the third was due to longer hauling distances and increased road maintenance activities due to certain weather conditions in seasonal parts of last year. The next major contributor to the year-on-year increase in costs was excise tax and royalties, reflecting the impact of higher realized ore prices. So this is higher by PHP 666 million versus 2024. Additional costs also stemmed from the ramp-up of operations at our new Manicani mine, which completed 11 shipments at the end of 2025 versus only 4 shipments in 2024. So finally, another contributor to the higher expenses was depreciation primarily due to newly acquired equipment following any capital expenditure increases. So this slide essentially show updates on HPAL. So in February of last year, we completed the sale of our 15% stake in Coral Bay to Sumitomo Mining, with the goal to strengthen our financial position and focus on resources for core projects. Year-on-year results indicate that the strategic decision to divest has reduced the drag significantly. And as shown in this slide, total losses from our equity investments have decreased by 72% year-on-year and it's now down to PHP 249 million. Next slide. So let me walk you through our balance sheet highlights for 2025. As of December 31, 2025, total assets reached PHP 70.2 billion up from PHP 61.7 billion in December 31, 2024 or up 14% increase. So the increase was driven by higher and improved collections from operations and the general increase in noncurrent assets was driven by our renewable energy projects, particularly in San Isidro, Leyte and Subic-Cawag. With respect to our liabilities, total liabilities increased by 30% to PHP 22.3 billion from PHP 17.2 billion in 2024. Short-term debt declined by 20% to PHP 5 billion in 2025 from PHP 6.9 billion in 2024. Current liabilities in general decreased primarily due to payments on short-term loans after accounting for any loan developments drawdowns during the year. Long-term debt as seen here, however, rose notably up 285% from PHP 2.43 billion to PHP 9.36 billion. So the rise is largely due to project financing of EPI, our renewable energy arm, particularly also for the construction of the solar projects in Subic-Cawag and San Isidro, Leyte. So regarding the updates to our renewable energy business and future rollout plans, we will provide a more detailed discussion of this later in the presentation. Equity at the end of 2025 remains solid, increasing 8% year-on-year. Equity net of noncontrolling interest grew to PHP 39.7 billion or an 8% increase from PHP 36.6 billion influenced by our earnings, dividend payments and reduction in cumulative transection adjustment. So as to the end of 2025, our balance sheet remains healthy and relative conservatively managed. Our debt ratio increased modestly to 0.32x from 0.28x in 2024, reflecting -- leverage to support ongoing operational and growth initiatives. So despite this, our debt-equity ratio remains comfortable at 0.47x, up from 0.89x in the prior year, indicating that we continue to operate with a strong equity base relative to our borrowings. Net debt to equity ratio in here improved to 0.05x compare to 0.07x in 2024. Next slide please. With a strong balance sheet and healthy liquidity position, we're able to train value to our shareholders this slide indicates our most recent cash dividend declaration. Yesterday, our Board of Directors approved the declaration of a cash dividend of PHP 0.14 per share of common stock. The dividend is payable on March 25, 2026 to shareholders of record as of March 12, 2026. Next slide. So for the renewable energy update and outlook, our Director for Geothermal business, Mr. Joseph, will take you through it.

Thank you, [indiscernible]. Good afternoon, everyone. Moving on to our renewable energy business. This first slide is a visual of our fully operational solar power plant in Mount Santa Rita situated within Subic Bay Freeport Zone in Zambales. This is run by our main operating asset, JSI. Santa Rita has an installed capacity -- an operational capacity of 172 megawatts, making it one of the largest in the country coming from a single solar power generation plant. The table indicates the current offtake profile of Santa Rita. As of the end of 2025, 86% of the energy sales mix was from power supply agreements or PSAs with the remaining 14% from exposure to the WESM. Moving forward, the direction is to fully contract energy via PSA. Next slide, please. Here are the comparative financial highlights from JSI for 2025 as against 2024. Generation for 2025 was relatively flat, only increasing 1% versus the previous year at 226,897 megawatt hours. EBITDA for 2025 was down 16% to PHP 788 million due to lower effective tariff rates. However, because JSI sales are predominantly secured through PSAs, the decline in WESM prices during the period was mitigated by these contracts. Next slide, please. Moving on to our renewable energy pipeline. Let us go through the projects we have. First, under Green Light Renewable Holdings, Inc., our joint venture with Shell Overseas Investments BV. Next slide, please. Santa Rita project is our first project under GRHI, which is divided into 2 phases. Each phase will contribute an additional 120 megawatts peak or attributable 72 megawatts San Isidro Leyte to EPI portfolio. This project is already fully contracted. Phase 1 of San Isidro Leyte solar project achieved energization in October 2024, adding 120 megawatts peak or an attributable 72 megawatt peak to EPI's installed capacity. Commercial operations are targeted for the second quarter of 2026. For fourth quarter 2025, Phase 1 of the Leyte project already generated 15,172 megawatt hours, which translated to $66.9 million in revenues for the quarter. We anticipate that this will contribute more revenues for the renewable energy business moving forward. For Leyte Phase 2, construction of 120 megawatt peak is ongoing with testing and commissioning targeted for the second quarter of 2026. Next slide, please. San Juan Botolan is another project which we have under joint venture with Shell with a total adding capacity of 59 megawatts peak or an attributable capacity of 35.4 megawatts peak for Phase 1 and 2. As seen in the photo, the Botolan project is in its early stages. Predevelopment activities have already been completed and rights have been secured. Last October, the notice to proceed was issued, and we are targeting energization for both phases to be by the fourth quarter of 2026 and the notice to proceed for Phase 2 to be issued by the second half of this year. Okay. Moving on to projects under OCI, our wholly-owned subsidiaries. So here's a visual of our solar project in Subic, Cawag. Here, we are developing 145-megawatt peak facility divided into 2 phases. Phase 1, 70 megawatts peak. Construction is currently underway. The testing and commissioning time line for Phase 1 Subic, Cawag has moved to the first half of 2027. Phase 2 of this project is scheduled to begin construction in the first quarter of 2026. Next slide. Finally, we have our project located in Nazareno, Bataan. This is a 50-megawatt project that is currently under predevelopment activities with land based resources already secured and the EPC bidding completed. Construction is targeted to commence by the third quarter of this year. In the next slide, we will see a summary of the previous updates and outlines the expected progression of our renewable energy projects over the next few years. In the past, we have disclosed that we have -- that we wanted to reach a gross installed capacity of 1 gigawatt by 2027. If you can compare this updated bar chart from our last briefing, there is a notable decrease in the targeted gross installed capacity for 2027 and 2028, which stood at 1,109 megawatts peak and 1,289 megawatts peak, respectively. Our primary message regarding the future of our renewable energy business is that we are transitioning from volume-driven to value-focused expansion. This is in response to the changing market dynamics and to optimize its pipeline of solar power. Our plan is to integrate battery energy storage systems or BES, across our portfolio, particularly for the JSI facility, Cawag Phase 2 and Najran projects to enhance operational efficiency. Our renewable energy business is broadening its development strategy to include run-of-river hydropower projects, hybrid diesel, solar and battery systems tailored for island grid operations. These efforts are focused on flexible generation solutions capable of delivering bar supply to meet the market demand.

Thank you, Joseph. Moving on to updates regarding our gold and copper exploration projects. I give the floor to Dr. Yumul, President of Cordillera Exploration Company.

Cordillera Exploration Co. Inc, or CExCI, our joint venture with Sumitomo Mining continues to receive significant copper gold mineralization results in its drilling program at the Cordon project in Isabela. This slide is a summary of the work undertaken in 2025 as well as forward-looking plans regarding our gold and copper exploration effort.

That's the drilling campaign that which consisted of 21 drill holes last year. So the results essentially delineated the mineralized zone. And for our 2026 plans, essentially, the goal is to build upon this. So in the first part of the year from Jan to April to complete 4,000 meters of drilling and from May to December to have an additional 6,000 meters to upgrade on this. To the next slide please. So with respect to our CapEx updates from performance and project details, we're giving you now a high-level view of last year's capital expenditures and initial guidance that we have for 2026. The figures are categorized into 3 key areas of our business, namely mining operations, renewable energy projects and exploration activities under Cordillera Exploration Company. So for CapEx mining, particularly, we spent approximately PHP 1.5 billion in 2025. Last year's mining CapEx was primarily focused on 3 main things, which are, firstly, the re-fleeting or replacing and upgrading of equipment in our Rio Tuba mine. Second is the build-out and expansion of our new mine in Manicani. And third is the construction of a new causeway in our Dinapigue Mining in Isabela, which supported better logistics and operational efficiency. Looking ahead to the rest of the year with respect to CapEx expenditure, we anticipate spending less than last year, approximately PHP 300 million less or PHP 1.2 billion with the bulk of this again being earmarked for replacement CapEx and additional fleet for Manicani. With respect to CapEx for renewable energy, CapEx last year was approximately PHP 7.7 billion. The bulk of renewable energy CapEx last year was from Subic, Cawag and San Isidro, Leyte. So to break this down for Subic, Cawag about PHP 4 billion out of the PHP 7.7 billion includes milestone payments for Cawag Phase 1, offshore and onshore contracts and milestone payments for Cawag Phase 2. For San Isidro, Leyte approximately about PHP 2.8 billion out of the PHP 7.7 billion was for milestone payments of Leyte Phase 1 and other development costs such as right acquisitions, project permits, et cetera. For renewable energy CapEx guidance in 2026, expected spend is about PHP 10.3 billion. So this is mostly spread throughout the San Isidro, Subic, Cawag, as well as Nazareno, Bataan projects. So I'll give you an initial breakdown of what the PHP 10.3 billion is going to be. So about PHP 3.8 billion for the expense for this year for our -- for the San Isidro, Leyte project. So this is largely coming from milestone payments for Phase 2 and any retention fees we have for Phase 1 of Leyte. About PHP 2.5 billion out of the PHP 10.3 billion will be for the Subic, Cawag project, mostly for construction payments. And any other unpaid costs we have for Phase 1 and any other development and construction overhead might need. Additionally to this, about PHP 3 billion out of the PHP 10.3 billion will be allocated for Nazareno in Bataan. So bulk of the payments will come in this year for those projects while for Nazareno, plan to issue an NPP by more or less midyear 2026. With respect to CapEx for Cordillera Exploration, last year we had mining exploration cost CapEx at about PHP 159 million. So for this year, we've allocated about PHP 221 million for gold and copper. Nex slide. So this concludes our formal presentation for today.

[Operator Instructions] We'll now open the floor for questions. But before we entertain questions from the audience, we like to go through the questions sent in by our registration form. [Operator Instructions] The first question that we have is from Klein of Regis. Her question is, how are sales volumes and ASPs trending so far in 2026?

Yes. Thanks for the question, Klein. To answer that, the market prices on a dollar per metric ton have remained elevated. I would say it's still on an uptrend given the tightness in ore that's in Indonesia. The approved quotas have still been limited. So that's still driving a lot of concern on the supply end. And then the Philippines as a country is now still closed in terms of mining. There are only a few mines. So supply is quite tight from the Philippines and with limited quotas, we expect the ore prices to remain elevated. So ASPs so far are still trending upward. Now, for volumes, we cannot comment on that yet because, as I mentioned, most of the Philippine mines will open by April. So we'll have a better feel of where volumes are once second quarter is in. But 1Q is too early to tell in terms of the volume trends.

The next question is [ Philip ]. He asks, can you discuss the progress of renewable energy projects in terms of how it is connected to the grid and what project needs to be with this?

Thanks for the question, Philip. So we have 2 projects that are under right now. So starting with Cawag Phase 1 work on the substation and interconnection facilities have commenced. And so this is now going to be connected to the grid for its testing and commissioning later this year. For the San Isidro projects, we are also connected. In fact, we've conducted our preliminary testing and commissioning for this project. And we hope to be able to finalize connection arrangement with NGCP as soon as we reach our maximum. We're just waiting for better weather to achieve that. Now to your question on which project needs to be with BES. But generally, most solar power projects now would really have to start seriously considering the integration of energy storage for them to be more marketable. So for the EPI projects, we are considering the integration of BES in our projects in Cawag Phase 2 as well as JSI and Cawag Phase 1. The projects in Leyte for specifically San Isidro, they are currently fully contracted as pure solar and will remain as such until the expiration of the contracts.

So our next question is from Carl from S&P Global. He asks, how will Nickel Asia respond to the expected surge in demand from Indonesia following the nation's nickel ore production cuts?

Yes. Carl, thank you for the question. Given that Indonesia is cutting nickel ore production for 2026, smelters are really relying on external suppliers coming from the Philippines to be able to fill the gap. Of course, New Caledonia would also play a role, but production from New Caledonia is quite limited also, but being able to ramp up and supply to China will provide some relief. But overall, even the Philippines and New Caledonia trying to fill the gap, the production cuts that were introduced in Indonesia are quite daunting. But it's -- but Philippine miners and Nickel Asia will be ready to try to take advantage of that opportunity. So we continue to focus on how we will be able to increase the tonnage that we've guided by ramping up our Manicani and Dinapigue mines and again, try to just do it at a more efficient manner. So we will be ready to be able to take advantage of this opportunity.

Next question is from Franco Fernandez of Evercore ISI Securities. Given Indonesia's production cuts and the recent recovery in nickel prices, how should we think about the growth and sustainability of dividends over the next year?

Yes. Thank you for that question, Franco. If you've seen our recent declaration at the minimum, our policy is 30% of previous year's earnings. And the earnings is largely driven by the average selling price of the ore and the volumes that we generate. That being said that prices are on the uptrend, I would expect that we will be able to continue to fulfill shareholders' return by rewarding them with that 30% payout. But it's also common for us to declare special dividends -- and if you've seen in the previous years, we've been able to declare special dividends also more often than not. So I would think given the situation of ASPs and our ramp-up of the new mines, one would expect that we will continue to be in a position to reward shareholders both for the regular and special dividends in the upcoming quarters.

The next question is from Geraldine. Geraldine, he asks, can you share the company's income and production outlook -- and perhaps the company can disclose new investments in mining or renewable energy, if any.

Geraldine for Nickel Asia, we do not give guidance for our earnings. But what we do is we give an indication of our target tonnage. And for this full year, we're targeting 20 million metric tons. We don't have any specific investments to report as of now with respect to the mining business.

Thank you for the question, Geraldine. For the renewable energy business, we are in the process of shifting our focus from pure solar to a more diversified and well-managed generation mix that would be targeting mid-barage supply as well as baseload supply. So frankly, the focus of the company is to undertake all the preliminary development activities with a view of rolling out these projects progressively later this year and next year within our 5-year development time frame.

So the next question is from [ Jed ]. Can net share its projected total megawatt capacity of its power generation by the end of 2026? And if you can share updates on ongoing energy project development? I seen in renewable energy gross capacity summary side that we had earlier that projected operational capacity for the end of 2026 is 450 megawatts. I'm not sure if Joseph had more of this. You want to share.

I can. As I mentioned earlier, the focus of the company is to diversify its power generation portfolio. And so much of the work that we will be doing this year is to continue with the execution and construction of our existing solar projects with a view of integrating solar battery energy storage systems, the solar projects as appropriate and also to develop other sources of energy such as hydro and looking at also scale energy projects to complement our energy mix with clean nonrenewable energy sources. So much of the work that we will be doing this year, Jed, is to develop these projects with the view of completing most of them within the next 3 to 5 years.

So the last 4 questions that were sent in from [ Rachin ]from Union Bank from First Metro and Alexis from AJCG Securities. All have to do with the nickel price outlook as well as any catalyst sustain the momentum. So we'll try and answer that all at once.

Yes. So for these questions on nickel price outlook, I think it's more impacted now because on the supply side. So because of the Indonesia policy, and the tighter nickel ore supply, we're seeing these ASPs coming up. It started early this year. And we also saw nickel LME up as a result of this. Now on the demand side, the demand for stainless steel continues to be steady. So last year, it grew 2% as an industry. The growth continues to be dependent on, of course, China economy and the global economy, which we all know are also facing challenges. So we expect stainless steel to grow modestly around the low single-digit range. And then for the battery market, for battery materials, we expect this to grow modestly. And there will be some stabilization and normalization in battery materials growth. So putting these together, we do expect nickel to prices to remain elevated and to be on an uptrend, more impacted because of the supply side.

One question we have here is, are we expecting a continuation of the previous year's bad weather patterns for Q1, which typically results in operational slowdown?

Yes. That's difficult to tell. But despite the bad weather, I can tell you, Jed, that we managed to still deliver our tonnage. So that shouldn't be a thing to worry about. If you look at last year, despite the difficult weather, we were able to deliver much more exports, close to 11 million wet metric tons. So even with the same -- face with the same challenges, we'd be able to -- I have no doubt that the target of 20 million tons is possible for us to do. It's nothing to worry about really. So from Raymond, 3 questions. Excluding the one-offs, what were the income figures for 2025? Okay. The one-offs for 2025 are really from the Coral base sale. So that amounts to around PHP 800 million onetime gain. So if you deduct that, we'll have a net of around PHP 5.4 billion, PHP 5.5 billion in core. So if you look at it core-to-core, it's PHP 5.5 billion against 2024's PHP 3.3 billion if you add back that geothermal write-off. So from a core-to-core basis, it's still a big gain. And then your number 2 is on ore volumes in Q4 were quite high. Yes. Actually, what happened was there's a spillover of Q3 shipments that we delivered in Q4. So we were shipping out. We were very busy in October, November. Yes, you're right. Seasonally, we kind of slowed down by October, November, but we really had targets to reach. And like I said, the challenging weather patterns, our company has always an opportunity to adjust. And we saw weather improved in October, November, and we took advantage. So we were able to continue our shipments all the way up to November. So you would notice that 4Q had also contributed to that. And lastly, what was the split in ore sales to China and Indonesia last year? In 2025, I don't have the exact figure, but Indonesia shipments have grown. So the demand from Indonesia has been growing. And it represents about 1/3 to 1/4 of deposit 20%. It represents about 30% of our total exports. So since exports have grown totally 9% year-on-year, even the share of Indonesia for 30% of that has grown on an absolute amount. Where do we see it in 2025? Well, if Indonesia is cutting permits, they really need to buy the Philippine nickel ore. So that share might possibly go up. And then another question from RJ. Do we have plans to build our own metal manufacturing facility? I guess for the processing plants, there's always the ambition for a miner to add value and become integrated. But at the moment, we are focused on our upstream investments where we are good at and we specialize at. For downstream opportunities, I will leave it to our last disclosure on studying with DMCI mining. So that remains a project that is being studied. And we have no new updates on that. A question from [ Othel ]. Can you share your insights and feedback on the recently signed critical minerals partnership with the U.S.? And how will this benefit the Philippines? And what can we expect from the U.S. and Japan as partners?

I think this is a good project for the Philippines. But I think we need to see the details of what will come out of this. So for example, if the U.S. will favor Philippine supply of materials such as battery materials, which could mean that they will pay a higher price. Then possibly it could encourage development of downstream nickel in the Philippines. But fortunately, I think this is just a framework that was signed. And I think we need to wait for the details before we can comment on whether or not it would be good for the Philippines.

Are there any other questions? Would anyone like to ask a question? [Operator Instructions] Let's unmute Amos.

Congrats on the earnings. I just have 3 questions. My first one is if you could give a production target for Manicani this year? And do we expect to see, given the high grades of Manicani versus your other mines, any significant impact to the ore export prices?

Okay. Two questions, Amos, now?

Yes.

Okay. For Manicani mine, our permit, our ECC is up to 3 million tons. So we're doing our best to reach that this year to wrap it up. So we will try to get close to 3 million tons. Now just to give your assumptions more color, half of that shipments will be saprolite ore and half of that shipments will be limonite ore, right? So the ASPs would differ, if you assume that. The limonite ore that we will be able to produce from Manicani will be the ones in high iron. So there is a separate pricing for that, and that goes to the China market. And then while the saprolite ore can go both to Indonesia and Chinese customers. And then the grades, the grades of the saprolite ore in Manicani would range between 1.3% to as high as 1.5% nickel ore, generally higher than the other mine sites that we have today.

Sorry, I still have 2 more questions. My second one is on the HPAL equity earnings. From my understanding, it seems like the losses narrowed for full year versus 9 months. So that would imply a positive or HPAL equity income for 4Q. So should we expect equity income or earnings moving forward, especially in 2026?

Yes. I think with the recent improvement in nickel LME prices, our HPAL losses -- our HPAL performance should continue to improve, plus the higher cobalt prices have been able to offset some of our costs better. So there are some drivers to -- there are some opportunities for the HPAL equity earnings for this year to improve. But again, it will really depend on the market will continue, whether cobalt prices can stay where they are and whether nickel LME will stay where it is. But our belief is that nickel LME is still on an uptrend. Even if it has risen to these levels, we think that there is still room for it to rerate given the situation of the supply/demand in the market, yes.

And then one last question for me. So in the press release, it seems like there's some initial grades on the Cordon project. I think there were some initial grades on the drill holes like 0.71% copper, 0.34 grams per ton for Baltic. Would you say this would be like the general grades of the resources for this tenement area? Or like how should we interpret these initial results?

Yes. Normally, in the Philippines, the average grade copper grade will be around 0.35, 0.4. So for Cordon, I think we're doing good. If you're going to compare general Philippine copper grade.

Got it. And then sorry, just a follow-up on that. When do we expect for you to release the reserves and resources for the Cordon...

We're still in the step-out drilling. So when we start doing the drilling, that's the time that we elevate our inferred to indicated. So 2, 3, 4 years...

[Operator Instructions]

We have a question from Christy, inquiring about margin trajectory given strong shipment and selling price. That is on an upward trend. So I think our margins, we can keep doing better year-on-year, especially where ASPs are today and where they look to be headed. And then in terms of volumes, like I said, our ECC for Manicani is up to 3 million. We'll do our very best to get you -- to get ourselves that figure. So margins could be in for a better year. Secondly, what has been the net effect of your effective tax rate on the new tax regime? Well, we're still waiting for the implementing rules and regulations for the IRR. So once we get that, we'll be able to file accordingly for 2027. So you're talking about full year 2026 effect. So at least for 2025, the new fiscal regime taxes or these windfall profit taxes won't be applied yet. So that may come into effect next year. And then any update on exploration, proven reserves? I think it is what Dr. Yumul had told you. We're very positive about the drilling results we've had. The common copper mines would give you 0.35. But if you look at our results, it's much better than that. So give us another few more years, and we'll be able to translate these inferred resources into to standard, which will be better valued by the market. So that's for Christy's questions. And then from Francis, are export prices have decoupled from LME prices? Right now, because of the uptick in LME prices, there is some correlation, but the reasons are separate Francis. The reasons are separate for them moving up. But I believe if you look at the raw ore prices on -- by itself, really on the ground is -- there's really no supply to work with for the smelters. So that's causing a very tight prices. Now for the nickel LME, there is still a global oversupply in nickel, but the market is forward-looking and the market prices everything ahead. And the expectation is with the tight nickel ore supply, the global oversupply will soon vanish. So it is really a forward-looking mechanism. And at this point in time, there is some correlation in both rebound in nickel LME price. From Christy, inquiring about evolving mix of overall limonite, saprolite-based production. Okay. So last year, we did 18.5 million tons. We were able to ship out close to 11 million. And then the remainder, which is 7.6 million was limonite. So that would be around a 60% to 40% split between limonite. And that should continue, Christy.

Klien had a question.

Can you hear me?

Yes.

So my first question is -- so I just want to make sure that I know the entire business and your assets. Do you have other mining assets apart from the ones that you're mining now as well as the ones that you're exploring CExCI, you have other mining assets that you could potentially explore and develop in the future?

Klien, in our portfolio, for the nickel assets, that's it, once we've disclosed with Manicani and Dinapigue. And then for our gold copper assets, it's all under CExCI. The Cordon project is the one that we're focusing on. There are predevelopment activities for a couple of projects under CExCI.

Can I add a bit? In gold and copper, we have several projects under exploration. But most -- in this industry, it's very hard to find a very good site. So normally, we don't disclose anything. And that's the reason why we started making disclosures on this Cordon project because it's something worth disclosing. So I guess that's the answer to your -- we're working on several, a handful. But we cannot say that there's a likelihood that any of them will reach the stage of development of production.

Understood. I heard that the DENR or the government plans to privatize some idle mining assets. Have you heard the same? Or is there any movement that you're seeing on the government side regarding, I guess, the privatization?

I think it's always in the interest of government to maximize their assets, and they would like to give it to operators that could do it time and not wait for decades. So we've always received inquiry or feedback on whether there are assets that Nickel Asia would like to participate in. We're very much open to that. And we cannot confirm whether we've talked to the government about this. But yes, definitely, there's interest between government and private miners to be able to develop projects together to increase government and private enterprises revenues.

Okay. And also last -- well, sorry, I have another question before this. So -- after this. So just sticking to the same topic, I'm wondering if you've seen any, I guess, changes in the behavior of local government, local government, I guess, participation in mining or whatever after the passage of the fiscal regime law basically because they're supposed to get their royalties immediately already. Do you think that they're now more incentivized to issue more permits to miners and all that?

I think it's a bit too early. So I personally can't say that I've witnessed any change. But your logic is correct that moving forward, it should align their interests more with the company. But I think most of the permits we need are not from the local governments. They're from the DENR, the MGB and the national government. But similarly, since the taxes will go up, they would be presumably more incentivized to support us.

And my last question is on your dividend outlook. So you declared dividend -- regular dividends today, which -- but you didn't declare special dividends. So I'm wondering if there's still a chance that you could pay a special dividend later on this year?

Klien, we don't guarantee the special, the regular review. But if you look at the previous dividend declarations, we can very much do so over the course of the year. So for as long as the business is doing well and the CapEx requirements are not that substantial, then we rationalize and we also do recognize the merits of declaring dividends to give back to the shareholders. [ Technical Difficulty ] highest risk would be policy regulation in Indonesia. So while Indonesia has maintained a tight policy stance, of course, they could be flexible if the market needs some adjustments in the quota. So you need to be -- we need to watch out for that. Right now, the declaration is 250 million to 260 million tons, while the demand is 300 million to 310 million. So any change in policy to meet that 300 million will definitely shift ASP prices. So that's something to look out to. Other than that, for us, I don't think weather is a big disruptor because with the challenging weather, we were able to overcome last year. So it's really the things that are beyond our control, which is Indonesia policy on nickel.

Thank you very much for joining us this afternoon. Feel free to send additional questions you might have when the final results of the year out. We also appreciate the IR team, would appreciate if you answered the survey, so we know best how to get the information. So there, thank you very much. Have a good rest of the day.