Nickel Industries Limited (NIC) Earnings Call Transcript & Summary

Thank you for standing by, and welcome to the Nickel Industries Limited 2024 FY Results call. [Operator Instructions] I would now like to hand the conference over to Mr. Justin Werner, Managing Director. Please go ahead.

Thank you, and thank you, everyone, for your attendance at the Nickel Industries Full Year 2024 Results Call. Could I please ask the slide moderator to move the slide deck to Slide 3, please? Despite what has been a very challenging 12-month period with multi-year lows across global nickel markets, we still managed to deliver USD 296.8 million EBITDA adjusted for HNI and RNI impairment and FX losses of USD 17 million and a USD 186.7 million gross profit. Unfortunately, accounting standards led to the USD 205 million impairment of our oldest RKEF assets, HNI and RNI. These assets do not benefit from integrated power, and they are older assets. However, both of those RKEFs, HNI and RNI, did generate positive EBITDA for 2024 and were mainly impacted in the second half of 2024 by abnormally high ore costs, where all shortages drove premiums of up to USD 22 a wet metric tonne, above the nickel ore market price. These premiums are now subsiding, and both HNI and RNI delivered a positive EBITDA for January. These factors contributed to the reported net loss after tax of USD 189.8 million. A final dividend of AUD 0.015 per share has been declared, bringing the full 2024 dividend to AUD 0.04 per share, which we believe to be a good result against the backdrop of many major global nickel producers either shutting operations or being loss making over the course of 2024. This is a greater than 5% dividend yield, and is reflective of our strong underlying cash generation and robust margins across the different elements of our business. A decision was also made by the Board to offer shareholders the opportunity to participate in a dividend reinvestment plan in lieu of cash, should they so choose. This will allow shareholders the opportunity to elect to take shares at a time when the company is on the cusp of delivering a number of significant value of creating milestones across 2025 including first nickel from the company's ENC HPAL project, an intended increase in all sales from our Hengjaya Mine from 9 million wet metric tonnes per annum to 19 million wet metric tonnes per annum, and first ore from our recently acquired world class Sampala Nickel Project. The fact that 3 of our largest shareholders and the full Executive Board, which comprises more than 50% of the nickel industry's share register, have indicated their intention to participate in the DRP, demonstrates, I think, the significant share price upside that we feel exists. It allows the company to retain up to USD 22 million in cash, to retain a conservative balance sheet, and ensures that we balance shareholder returns, which remain a focus and priority of the Board within our current capital investment cycle, which is nearing maturity, with only 2 further payments for ENC remaining across the course of this year. Net debt is USD 827.5 million, with the company remaining well inside its debt serving covenants. Moving to the processing NPI and MHP, USD 212.6 million adjusted EBITDA for our processing operations. A record 135,602 tonnes of nickel was produced for 2024 and ENC construction progressing extremely well ahead of schedule, which I'll touch on later in the presentation. In terms of corporate updates, we increased our ownership across the course of the year in ENC to 44% and over the course of this year, we will be increasing that to the final 55%. We announced a maiden JORC Resource at our Siduarsi project of over 500,000 tonnes of contained nickel metal, and we moved to a 51% ownership in that project. We also signed definitive agreements to acquire 60% of the world-class Sampala project. And then finally, establishment and syndication of $250 million of bank funding lines. Again, very well supported by Asian and global banks, and this marks the second loan that we've done with this bank. And so I think it's reflective of the strong belief in the company's -- where it's headed and also its balance sheet. Finally, for nickel ore, over USD 100 million EBITDA from Hengjaya mine, 9 million tonnes of nickel ore was sold, and I've touched on the acquisition of the world-class Sampala project, which we are very excited about. If I could ask the -- to move to the next slide, Slide 4, please. Some of our safety and ESG achievements over the course of 2024. An independent third-party released the carbon intensity of HNC, which came in at 6.9 tonnes of carbon per ton of nickel, significantly below the Australian peer average of around 11 tonnes. In fact, there was only one Australian nickel producer that was below us. And so, this is reflective of ENC, which will operate at a similar carbon intensity with a goal to drive that even lower. We established during the course of 2024 our Nickel Industries Foundation and the first program as a part of that was funding of university scholarship program for local underprivileged students and our first batch of 12 students is currently performing very well across a number of different chosen degrees. We established and were awarded a conservation biodiversity area to protect local fauna and flora in close proximity to our Hengjaya mining operation. There's a number of awards that you can see there across the course of the year, Best Climate Reporting and Transparency and recognized by a number of different groups. And our MSCI rating, we achieved the top rating for an Indonesian metals and mining company and our S&P score. Again, these are all independent third-party scores. We achieved 37 in 2024. That was up from 7 in 2021. And the global metals and mining average is actually 29. So we're performing well in excess of that S&P global average. Once again, we've been shortlisted for the Green PROPER rating for the third consecutive year. Finally, to safety. Our LTIFR of 0.11, well below the world's steel average of 0.76 and our TRIFR was 1.43, again, well below the world steel average of 4.73. We worked 17.4 million man hours in 2024, which is up from 16.7 million in 2023. And the Hengjaya mine has recorded over 18 million work hours since its last reported LTI, which was way back in November of 2021. If we could just move to Slide 5, please, and I'll hand over to Chris to talk through the P&L and balance sheet.

Thanks, Justin. As Justin mentioned, relatively strong financial results in terms of EBITDA and gross profit in quite a challenging operating environment. Both the LME and NPI prices were down significantly through 2024. And we also had pretty significant RKAB, the associated issues affecting both the mining and the processing operations throughout the year. Pleasingly, however, ONI and HNC delivered significant production improvements throughout the year. And we also saw the benefit at HM of the haul road upgrade, which the management team at HM have been working on for a number of years. Finally, the dividend. As Justin mentioned, we've declared a $0.015 per share final dividend. We've overlaid that with the DRP and which, as Justin said, is supported by all of our major shareholders and exec directors. The balance -- we're really casting a balance here of shareholder returns versus maintaining a robust balance sheet for our investments and debt servicing. Can I turn to Page 6, please? We've continued to maintain a strong balance sheet despite the margin compression throughout the year. Our cash has reduced as we paid almost $700 million for ENC payments, including an early payment this year to look to fast track the nickel sulphate and nickel cathode plants at ENC. Total assets were down due to the impairment, which we've touched upon at HNI and RNI. And obviously, our debt and liabilities went up through the year, additional $250 million debt raised from a syndicate of global banks earlier in the year, and we drew down the remainder of the first bank loan, the $400 million bank loan. Can I turn to Page 7, please? Here, we just set out a couple of reconciliations for everyone. Really just the first one is the EBITDA. The adjusted EBITDA to get to a total number of $306.5 million, less the overheads at the Head Office level to give us an adjusted EBITDA of $296.8 million for the year. That's comprised primarily from the RKEF business of $187 million, an additional $19 million at -- for the HPAL business and [ $100 billion ] for the mining business. We've also included a profit to EBITDA bridge, the -- and that's starting at the net profit after tax line of negative $189.8 million. Adding back the usual items in EBITDA of our depreciation and amortization, our taxes, adding back the impairment, the interest and then obviously, the FX, and that gets us to that same $296.8 million of adjusted EBITDA. Let me turn to Slide 8, and I'll hand back to Justin.

Thanks, Chris. You can see a record production in 2024 of 135,602 tonnes, up 4,500 tonnes from the 131,000 tonnes produced in 2023. Whilst the LME nickel price was down significantly 26% and NPI price was down 17%, we also were able to bring our costs down 11% from $11,138 in 2023 to $11,957. This was also achieved in an environment of record nickel ore prices. And so that did result in a decline in overall RKEF margins from 2023 to 2024. So our average margins in '23 were $2,676. That was down to $1,458 in 2024. However, the margins still remain at our main producing assets, which is ANI and ONI. The margins still remain very strong. So we delivered margins of $1,900 per tonne from ANI and ONI, which produced over 70% of our RKEF nickel tonnes. And the margins at HNI and RNI were about $334 a tonne. If we could just move to the next slide, please. One of the most pleasing aspects of 2024 has been the performance of HNC, which delivered over 83,000 tonnes of nickel and 8,000 tonnes of cobalt. This is 38% above its nameplate capacity of 60,000 tonnes. A newer HPAL plant in IWIP called Huafei, which is built under a similar sort of design to ENC. It has larger autoclaves and a number of improvements. It is also currently performing at 38% above nameplate capacity. So I think this bodes very well for ENC. Costs over the course of 2024 remained stable in the first quartile with an average of about $7,115 a tonne with margins ranging across the course of the year from $5,000 to $7,000 a tonne and an average margin of $5,746. So this is an excellent barometer of what we can expect from ENC, which we will be commissioning in the second half of this year. HNC delivered an adjusted EBITDA on a 100% basis of USD 466.3 million in 2024. And we have uploaded a link to an ENC video on our website, which I would encourage people to go and view. If we could turn to the next slide, please. ENC construction is progressing very well. All 3 autoclaves are now installed and the autoclaves are the heart of the HPAL system. You can see there from some of the aerial photos, the top one is the HPAL. The bottom photo is the sulphate and cathode plants. You can see they're very advanced. And so we expect first nickel from those in Q3 of this year. And then ENC first MHP commissioning in Q4, which is around the October time line. And again, as I said, there is a video on the website, which I would encourage you to visit. If we could move to the next slide, please. Another record year of production at our Hengjaya mine and sales. If you look at the chart in the left there, we've experienced a 3.5-fold increase in EBITDA from 2021, where we recorded USD 22 million up to USD 101 million for 2024. We are in the process of, hopefully, again, increasing our sales quota to 19 million tonnes. And our Hengjaya mine currently supplied about 60% of the ore requirements for HNI, RNI and ONI. If we could move to the next slide, please. During 2024, we announced the acquisition of the world-class Sampala project. It already has initial JORC compliant resource of containing 2.3 million tonnes of contained nickel metal. This is an area of just 900 hectares. There's a total area of 4,700 hectares, which is highly prospective. So really, that only covers 20% of the prospective area. With an additional exploration target on top of the current resource of 187 million of dry metric and an upper range target of additional USD 600 million to USD 700 million, this easily takes the deposit to over 1 billion wet metric tonnes. With current blended margins at Hengjaya of USD 11 a wet metric tonne, that obviously underscores the significant value of the Sampala project given that, as I said, there's potential there for over 1 billion wet metric tonnes. We undertook a very aggressive drilling program across the course of 2024, and we've drilled almost 50,000 meters with some spectacular results of up to 7.41% nickel and 1.37% cobalt. Mine development and haul road construction has commenced. What's attractive about these laterite mining operations is the very low development CapEx, and we're expecting a number of around USD 50 million, but very strong margins as demonstrated by our Hengjaya mine performance. We are targeting first production at the end of 2025 or in early 2026. And Sampala will deliver full self-sufficiency across all of our RKEF operations and HPAL operations within the IMIP. If we could just move to the next slide, please. This slide shows where we currently sit. If you look at the far right there, the blue bubble, which is our Hengjaya mine, our Sampala and our Siduarsi resources. With an additional 600 million to 700 million dry metric tonnes, that takes us over to the far right-hand side there of around 1.2 billion dry metric tonnes. And so our strategy is to become one of the largest holders of nickel resources globally. And we're certainly on track to achieve that, given the results that we are seeing coming back from the Sampala project. If we could just move to the next slide, please. Just to reiterate some of the corporate highlights of 2024, the acquisition to acquire 60% of the Sampala project, which I've just spoken about. Successful syndication of 2 loans, the $400 million and $250 million bank loan, as I said, again, with the same bank. A move to 51% of the Siduarsi project and a maiden JORC Resource of over 0.5 million tonnes of contained nickel metal and increasing ownership in the ENC HPAL to 44%. In terms of our targets for 2025, commissioning of the ENC cathode and sulphate plants ahead of schedule in Q3 with MHP on target to come on in October or Q4 of 2025. Increasing the Hengjaya mine, RKAB sales quota from its current 9 million tonnes per annum to 19 million wet metric tonnes per annum. First ore sales from our Sampala project either the end of 2025 or early 2026. And we continue to assess and potentially look to acquire value-accretive nickel resource projects given the significant value that's currently being realized across our mining operation. So to summarize 2024, despite a challenging environment, still robust margins. What's to look forward to in 2025. At the end of 2024, we actually saw NPI volumes down by about 10,000 tonnes for the month in Indonesia. And if that trend continues, we hope to see a potential strengthening in NPI pricing. Approval of the HM RKAB, what that would mean is a potential doubling of our EBITDA, so taking it from USD 100 million for 2024 to around USD 200 million. With the Sampala project, we're targeting a similar production profile. And with HNC margins of close to $6,000 a tonne, EBITDA of close to $0.5 billion on a 100% basis. Assuming ENC operates at the same nameplate and margins, that delivers us an additional USD 400 million to USD 500 million. So when you add all of these numbers together, an additional $100 million at HM with a ramp-up in the RKAB, a similar profile at Sampala of about $200 million and the $400 million to $500 million of EBITDA from ENC, that takes you to around USD 700 million to USD 800 million EBITDA annually. Combined with this year's EBITDA of in excess of $300 million, that gets us on our way to our target of USD 1 billion in EBITDA over the next 2 to 3 years, assuming that margins stay where they are. With that, I'll hand over to questions.

[Operator Instructions] Your first question comes from Mitch Ryan with Jeffries.

First question, just hoping for an update on the RKAB quota increase. Obviously, has there been anything material since you last spoke to sort of quarterly? And can you just remind us the time line on that?

Yes. So there's basically sort of 3 steps to increasing that RKAB. The first is submission and approval of a feasibility study. That has been submitted and we've been working through with the evaluators through -- there's basically 13 key chapters to it. We are now at the point where all of those 13 chapters have basically been signed off. And so we're optimistic of receiving final sign-off and approval of that feasibility study in the coming weeks. Once that's approved, we have already prepared what's called an AMDAL which is an Environmental Impact Statement that would be the equivalent in Australia. That is prepared. We're ready to lodge that submission. Once that's submitted, we'll submit that for approval. We expect that to take sort of 3 to 4 months for approval. Once that's approved, there undoubtedly will be some small amendments to the feasibility study, which we will go back and make. Once those are completed, it's then approved for an RKAB increase. So we're targeting to have that RKAB increase completed before October of this year, which is in line with commissioning of the ENC HPAL MHP plant and would allow us to start delivering those increased volumes.

My second question just relates to the impact of the Indonesia's mandate for natural resource companies to retain 100% of FX revenues in Indonesia for 12 months. Can you just talk about what impact this would have -- what revenue streams this would capture for Nickel Industries? And then potentially what impact it would have on working capital for the company?

Chris, do you want to take that one?

Yes, sure. Thanks for the question, Mitch. We are still analyzing specifically what is covered by the export revenue. It is a little bit opaque on which exports are covered. But if we assume it does cover all of our exports, we would be looking at our NPI exports from Angel should we not work with Tsingshan to actually redivert those to the stainless steel plants in -- from the IWIP into the IMIP. We would also be looking at exports from HNC and in the future, ENC. That will obviously have a working capital effect should that happen and should we not -- sorry, simply by a buildup of cash. However, there is also talk about -- and Justin's had discussions in Jakarta on this point regarding -- the revenues are actually split converted from U.S. dollar into IDR, which I guess is part of the whole point of what the government is trying to do, that there will not be such restrictions. Justin, do you want to touch on that conversion?

Yes. So I believe at this point in time, it's only for companies that are holding USD. Companies that convert USD into IDR, there is no requirement to hold that capital for up to 12 months.

THE next question comes from Adam Baker with Macquarie.

I just had a couple on the dividend, if that's okay. Just wondering if you could provide some color on your reasoning to pay the dividend for the second half of CY '24? And just putting this in context of your dividend policy of 30% to 60% free cash flow?

Yes, I'll take that, Jus. Thanks for the question, Adam. Look, I think we obviously have in, on the 30th of January last year put out a new dividend policy. And you're right, it is we have guided by 30% to 60% of free cash flow. Ordinarily, we would not -- obviously, we are paying above that minimum 30% level. However, we have been guided by the policy, and we do recognize the extraordinary events in 2024 on the free cash flow. And when I talk about that, I'm talking about the events we've spoken about in terms of the RKAB sales, license effects across the industry, not just on Nickel Industries and the effects that's having particularly on our processing business and also the -- on the heavy rainfall throughout the course of the year, which that affected both the mining and processing operations. What we're seeking to do, Adam, is balance reliable shareholder returns while still maintaining that balance sheet strength for our ongoing obligations and investment opportunities. So this decision was not taken lightly. We have -- We had a lot of discussion, a lot of modeling, internally a lot of discussion at the Board level, the shareholder level with the shareholder representatives on the Board as well. And the decision was taken to reduce the dividend. We are still confident -- we're obviously confident in our upcoming obligations over the next 12 to 18 months, so we wouldn't be letting that cash go out the door, but also balancing it by showing the strength of the conviction that the major shareholders and directors have by overlaying a DRP.

Okay. And maybe just was there any consideration to implement a share buyback in lieu of the dividend? This is just noting where you're currently trading given that you're near your 12-month share price lows?

Not at this stage, Adam. I think a share buyback is really right now, there's 2 arguments that it's supporting the exiting shareholders. However, we just are continuing to focus first on dividends over share buybacks. I know we announced one at the start of last year as well, a share buyback. However, obviously, the market environment was not conducive for us to executing on that share buyback. But the decision was taken at this stage to implement the dividend but overlay it with the DRP and that those shareholders who have the conviction in the share price, which we do, as well can take the shares and still benefit on that uplift in the future.

Your next question comes from David Coates with Bell Potter.

Just a couple from me. Can you just -- first of all, just on the impairment charge, just maybe a couple more details on just, I guess, the exact kind of triggers for that and just confirming it's all noncash and no impact on -- or no effective impact on the business?

Yes. I think as Justin mentioned at the start in the intro, it is really an accounting adjustment. Every period, every period, the Board -- myself and the Board go through a process of checking our assets for impairment. And -- so this is nothing new. However, I think it's fair to say that our older RKEF operations, whilst they're still being profitable, have not been making the profits we're seeing in prior years as compared with our much larger ANI and ONI operations, which have the integrated power. So we've worked through effectively doing a DCF on these operations. You have to do that under the accounting standards. The -- All the assumptions that we've put in there are in the note on -- in the back of the annual report. Where we -- unfortunately, what happens in this sort of low price environment is we have to take -- we have to obviously include cash flow projections based on market analyst forecast nickel prices. And I'm sure as you're aware, the global investment banks whose research we rely on for the forecast nickel prices, when they're set, they often tend to follow wherever the current commodity price is. I'm not going to say they're price hugging. But when the market is low that you generally find for the next few years they are low before any look for recovery. So we have to use those prices. We have used those prices. We've set out all the assumptions there. And the other important fact with these DCFs is the useful lives of them. Coates. So [ their ] -- [indiscernible] [ their ] remaining useful life in our notes of Hengjaya Ranger of 15 years. Now we know they're going to go for much longer than that. However, given they started off -- the first feasibility started with 20 years, and that's what it went into our accounts at, we are unable to change that from an impairment perspective. So you're right, it is cash -- it has no cash effect. It is just in our accounts on our balance sheet.

Justin, maybe one for you. Just on the ore premiums, which have been elevated this year and really helped Hengjaya along to bring good results. You said they're sort of starting to come off. So [indiscernible] -- we see that in the Hengjaya mine through the near term. But is that also offset by better margins in the RKEF and HPAL businesses?

Yes, exactly. And the premium only applies to ore over 1.5%. So there hasn't been any premiums applied to any of the limonite ore for HPAL. But yes, we have already seen a significant reduction in that premium. And given the 80% ownership across both the mine and the RKEF, we're just seeing simply a transfer of margin from the mine back into the RKEF entities. And I think we can probably expect to see that in -- across the -- this quarter, assuming premiums continue to come down.

[Operator Instructions] Your next question comes from Richard Knights with Barrenjoey.

Just on ENC, wondering if you can give us a flavor of how you're seeing the product mix shaping up over, I suppose, the first 12 months of operation between sulphate, MHP and cathode? And also if you've had any progress with offtake agreements for MHP in particular?

Thanks, Richard. Both the sulphate and the cathode plant will have a capacity -- maximum capacity of about 40,000 tonnes each of nickel in nickel cathode and nickel and nickel sulphate. So we do expect to fully utilize that available capacity across both of those plants. MHP production from ENC, we think will be around 80,000, which will then match [ fairly ] to the cathode and sulphate plant. So predominantly looking at cathode and sulphate. That said, we -- and this is where ENC is unique, we do have product flexibility. So we can choose to sell MHP and not put it through our cathode and sulphate plant and simply acquire MHP from other HPAL producers in Indonesia, or we may choose to put 100% through. So we haven't reached a decision yet as to how we operate that, but it certainly will be our intention that all 3 of the plants will operate at 100% of their capacity. We continue to advance discussions with a number of potential off-takers. And so we hope to be able to announce something sort of prior to commissioning.

Okay. That's great. I mean I suppose, does that mean -- I mean you've obviously got a cost advantage from producing MHP and I guess that would be the preference if that market was available to you. Is it fair to say that the market conditions for MHP have been pretty soft over the last 6 months or so?

Yes. Look, I think what we think is attractive about ENC is, starting with nickel cathode, that will attract the spot LME price, and that is a market that we can sell into at any point in time at the spot price. So there's no requirement for any negotiation. It doesn't have the fluctuation in payabilities that you see across MHP and nickel sulphate. Nickel sulphate is interesting because it has traded between premium to the LME price and also a discount. So there may be margin opportunities in the future in nickel sulphate over and above the LME price and what we get for our cathode. And then MHP also -- the payability, we've seen it from low 70s up to high 80s. And so I think we have flexibility in that product mix. And I think similar to what we were able to do with nickel matte in the early days where we were getting margins of $5,000 to $7,000 a tonne, we'll be able to play segments of the nickel market where we think there's pricing opportunities.

That's helpful. Just maybe perhaps one more just on the final 2 ENC payments. Obviously, the dividend is a pretty strong signal about your view on the strength of the balance sheet at the moment. I mean, is there any sort of likelihood of those payments being moved around at all? Or do you think you'll be in a good position to make those payments at the time they fall due currently?

I think -- it's Chris here, Richard. I think we'll be in a good position to make the payments when they're due. And if there was any deterioration in our cash situation, we would look for alternatives, potentially looking to push those back, but we're not seeing that now. Obviously, otherwise, we wouldn't be paying the dividend.

Your next question comes from Dim Ariyasinghe with UBS.

Maybe just a couple of quick ones from me. Just on HNC, can you just walk through what is driving that outperformance that you saw in 2024 and how to think about that in the context of ENC going forward, please?

Yes. Look, Dim, Tsingshan has a track record of outperformance, not just in HPALs, but in RKEFs as well. And it is also driven by, similar to RKEFs, the grade of ore that's fed through. And so, in the -- in its -- early in its operating life, we expect the HPAL to be consuming sort of 1.3% limonite ore, and that will come down over the course of its life to sort of somewhere average around 1.1%. So partly driven by higher grades going through in the initial life, and that makes sense as you're looking to try and return the investment and deliver the best margin possible. But it's also -- look, again, Tsingshan has a track record of this. They like to be conservative on their nameplate capacity and generally try to operate at a sort of -- at a beat to the nameplate.

So under promise, over deliver. Yes. Okay, cool. And then maybe just a second one. I guess just with regards to the 2025 targets that line on continuing to acquire value-accretive nickel resources. Maybe if you could just help me with this? So with Sampala coming on, I presume -- I think you are then fully self-sufficient on your inputs. How do you think about future investments versus capital returns versus continued risks around RKAB? Like I understand that it's a place you want to be in. But yes, just -- if you could just talk through that a little bit more, the longer-term strategy, I guess?

Look, yes, every potential resource acquisition is analyzed on a case-by-case basis. We see Sampala as being extremely value accretive given that the acquisition price is only $2.50 for every dry metric tonne above 1.7%. So effectively, we're getting anything under 1.7% nickel grade for 0. Our RKEFs currently using a grade of 1.5% to 1.6% and our HPALs will need a grade of 1.1% to 1.3%. So effectively, we're not paying anything for the ore that we need other than we are paying for ore that is high grade and we'll get a premium price. With the potential to host 1 billion wet metric tonnes at an $11 margin, which is the margin that we're experiencing at HM at the moment, you can see the significant value of the Sampala acquisition. And assuming we get to where we want to get HM, which is 19 million wet metric tonnes a year with possibly 1 billion in the ground, that's a 50, 60-year plus asset mine life. So those sort of opportunities, given the very low capital development costs, USD 50 million and very, very fast payback, those sort of opportunities, I think we'd look to capitalize on every day of the week, but it's on a case-by-case basis. And in the case of Sampala, we have also deferred payment. There's a 3-month due diligence period and then a further 18-month period before we're required to make the payment. So we pushed the payments right down the back end. And in fact, that will allow us to hopefully have the project up in production before we're required to make a significant acquisition payment.

Your next question comes from Kate McCutcheon with Citi.

Just on the fiscal side, there's been a lot of news flow recently. Mitch mentioned the export proceeds regulation, but there was also the 15% global minimum tax last month. Is your understanding that your existing tax holidays will be grandfathered per se? Or are there any impacts you're expecting from this or no changes?

We have some things, Kate -- I'll take that, obviously, Jus. We've done a lot of work with tax advisers on this over the last probably 12 months, Kate, and including in these annual reports. We're currently paying over the minimum amount and through our various operations. And it's not just a straight 15% across the business. You've got jurisdiction by jurisdiction, you've got concessions in each jurisdiction. It's quite detailed, but where we are now, we're comfortable. Obviously, as ENC comes online, and there's a much larger contribution from operations, which have the tax holiday, if that pushes us down below the 15%, there may be consequences there in the future. How that plays out with companies which have been provided tax holidays and the government is obviously an unknown at this stage, but you can imagine that anyone who has had tax holidays will be having discussions with the government going forward.

Makes sense. And then the reline that's due of HNI, I think it was this net usage, how long should we expect that to be down for and how much should we expect that to cost? And would it be fair to assume that RNI also slots in this year?

Sorry, you cut out there at the start. Was it the reline, Kate, at HNI and RNI?

Yes, correct.

Justin, do you want to take those?

Yes. So we are looking to do a reline of one full line at HNI and a reline of one full line at RNI over the course of this year. That will mean that we take down one line at HNI probably starting around May of this year for a period of about 3 to 4 months. And then once that's complete, we'll then move to RNI to do the -- to take a line down at RNI as well. That cost is mostly captured in our OpEx and we will be -- given the performance of HNI and RNI, we will be doing a bit more than just a kiln and furnace reline. We're actually looking at sort of a full furnace rebuild, which will give us hopefully significant operational improvements in terms of the efficiency. And then we are looking at some other work such as improvements to our desulfurization plant and other improvements that can be made in the plant, all with the aim of bringing down that OpEx cost and bringing down the -- and increasing the efficiency. So to answer your question, yes, we will be doing a reline of the kiln and furnace, along with other work at HNI and RNI over the course of this year. And that will be one line at HNI and then one line at RNI. And that will obviously have a limited impact on our production in terms of only doing one line from each plant in series.

The next question comes from Stephen Mayne with Mayne Report.

Just a couple of questions. I'd normally be asking this at the AGM, but I'm in Melbourne, and it's a physical meeting that you're running in Sydney. So I was hoping you would be able to introduce the hybrid model for the AGMs for your 15,000 retail shareholders? Just a couple of questions on the financials. Is there any tax or is there any cash flow impact from lower tax payments down the road from the write-down? Because it is a bit curious that your market cap $3.23 billion and you've still taken write-downs to $2.54 billion. So you had sort of $0.5 billion of headroom in terms of market value versus book value, but you've still taken the fairly hefty write-down. Is there any upside financially from tax deductibility with that down the track? And just one other small governance thing. Would you be able to publish a copy of your constitution on your website that's normal for ASX 200 companies, and I'm not sure why you don't do that.

Yes, sure. Thanks, Stephen. I'll look into the constitution absolutely with the Company Secretary after this. There's no specific reason. In terms of the write-down, it's not -- you can't look at these the write-downs on the basis of the total assets. In terms of the accounting standards, you have to look at each separate CGU on its own stand-alone basis. And that means for the RKEF business, we're looking at HNI, RNI, ONI and ANI totally separately. So looking at it as a combined effect versus our total assets, it doesn't matter what our total assets are. We have to look at each one on its own. You will note in the accounts as a result of the impairments to the PP&E, we have had a deferred tax liability included in that as well, which was revalued and that result -- that gave us an income tax benefit of over the life of $31.9 million. But in the context of our operations, that 31.9% over the length is irrelevant. [indiscernible] It's a benefit that's immaterial.

Right. Okay. Also, thanks for getting the annual report out today, gives the proxy advisers more time to look at the REM report and things like that. Last year, you did it on the same day as the notice of meeting at the end of April. And just on the last year's AGM, you had 2 material protest votes against the non-independent shareholders of 23% and a 13%. So obviously, your independent shareholders and the proxy advisers are a bit concerned about the lack of independence on the Board. Is it worth moving to an independent Chair model? Because I note that Norm Seckold is the Executive Chair, but he's like -- he's not on the call today. So he's not being an executive in that sense. So why -- given we have had unrest from shareholders on the independent director question, why wouldn't we move to an independent Chair model and find someone apart from Norm?

Yes. Steve, I'll take that one. We have improved our independence with the appointment of Emma Hall, and we are looking -- actively looking at appointing another independent Board member to the Board. And we believe that, that will provide us enough independence. And so, for now, I think the actual percentage vote against the independence was very small. So we don't see any issues at this point. And certainly, it's not the feedback that we're getting from anyone in the market.

There are no further questions at this time. I'll now hand back to Mr. Werner for closing remarks.

Well, thank you, everyone, for your attendance today. As I said, I think 2025 is a watershed year for us. A number of significant value-accretive catalysts that we'll be looking to hit this year. First production from ENC, an increase in our HM mine sales and first ore sales from our Sampala project. This growth is mostly all locked in and fully funded. And so, I think that's representative of our confidence in still retaining a dividend against the market backdrop where we've seen many of our peers, not just in nickel, but across the commodity complex, [ got ] significant impairments. And 0 dividend or extremely reduced dividend. So thank you again for your time, and we look forward to providing further updates in the future. And as always, Chris and myself are always available for any further follow-up questions. Thank you.

That does conclude our conference for today. Thank you for participating. You may now disconnect.