Nickel Industries Limited ($NIC)

Welcome to this Annual General Meeting of Nickel Industries. My name is Norman Seckold, and I will be chairing today's meeting. It's 11 a.m., a quorum is present, and I declare the meeting open. Today's meeting is being convened in accordance with the Corporations Act. The notice of this meeting has been sent to shareholders and is taken as read. All resolutions today will be decided by way of a poll, including valid proxies submitted before the meeting. Computershare has been appointed as scrutineers for each poll. The blue voting cards will be collected and the poll will be conducted after all the business of the meeting has been completed. The formal results of the poll will be notified to the ASX after the meeting and will be posted on the company's website. As Chairman of the meeting and having been appointed as proxy for shareholders entitled to vote. As stated in the notice of meeting, I will vote all directed proxies in accordance with the directions provided by shareholders, and where authorized, I will vote all undirected proxies in favor of each resolution before the meeting today. I'd like to introduce you to our Board of Directors with us at meeting today. Joining us here in person are my fellow directors, Chris Shepherd, CFO; non-Executive Director at Emma Hall; Company Sectary, Richard Edwards is with us, as is the company's auditor from KPMG, Adam Twemlow. With this on Zoom, Managing Director, Justin Werner, who is currently in London on the Road Show; non-Executive Directors, James Crombie; Muliady Sutio, Haijun Wang; and Yuanyuan Xu; as well as our Chief Development Officer, Rachel Zhao; and Investor Relations Manager, Andrew Coleman. William Shangjaya is unable to join us and sends his apologies. When you registered for your attendance this morning you were issued with an attendance card. People with a blue card are shareholders entitled to speak and vote at the meeting. Your blue card will serve the voting form and will be collected at the end of the meeting. People with a yellow card are shareholders entitled to speak but not vote at the meeting. people with a work card of visitors. I now propose to deal with the formal business of the meeting and following that, Justin, when it will give a short presentation. There'll be a pause for members to ask questions about the business of the meeting and later about the company's activities. If we can now move to the slide summarizing the proxies received. The annual report. The first item of business is set out on the notice of meeting is to receive and consider the annual report and statutory financial statements for the year ended 31 December 2025. Are there any questions in relation to the financial statements or the report? If there's no discussion, we can record the Annual Report and statutory accounts have been received and adopted. Resolution 1 is the remuneration report. Resolution 1 as set out in the Notice of Meeting is to consider a nonbinding ordinary resolution. The adoption of the remuneration report is set out in the company's annual report. Are there questions in relation to this resolution? The proxy votes received on this resolution are currently displayed on the screen, and I declare the poll open for Resolution 1. Please be good enough to record your vote by placing a mark in the for, against, or abstain for Resolution 1 on the blue card provided. Resolution 2 is set out in the notice of meeting is an ordinate resolution to consider and if thought fit to reelect Chris Shepherd as a director. Chris is acquired by the corporation's law and the company's constitution to retire and offer himself for reelection. Are there any questions or comments in relation to this resolution? The proxy votes received on this resolution are currently displayed on the screen. There we are. I'm back. Please record your vote by placing a mark in the for, against or abstain box for Resolution 2 on the blue voting card. Resolution 3 as set out in the Notice of Meeting, is an ordinary resolution to consider and if thought fit to reelect Muliady Sutio as a Director. Muliady is required by the corporation's law and the company's constitution to retire and offer himself for reelection. Are there any questions or comments in relation to this resolution. The proxy votes received on this resolution are currently displayed on the screen, and I declare the poll open for Resolution 3. Please record your vote by placing a mark in the for, against or abstain boxes for Resolution 3 on the blue card provided. Resolution 4 is being withdrawn for the simple reason. It was an administrative error and so it has been withdrawn. As Resolution 5 concerns the issue of performance rights to myself, I'll hand the chair to you, Emma.

Resolution 5 as set out in the Notice of Meeting, is an ordinary resolution to approve for all purposes, including ASX Listing Rule 10.14 to grant performance rights to Norman Seckold under the company's performance rights plan on the terms and conditions set out in the explanatory memorandum. Are there any questions or comments in relation to the resolution? The proxy votes received on this resolution are currently displayed on the screen, and I declare the poll open for resolution 5. Please record your vote by placing a mark in the for, against or abstain box for Resolution 5 on the blue card provided. I'll hand the chair back to Norm.

Resolution 6 is set out in the notice of meeting. There's an ordinary resolution to approve all purposes, including ASX Listing Rule 10.14 to grant performance rights to Justin Werner under the company's performance rights plan on the terms and conditions set out in the explanatory memorandum. Are there any questions or comments in relation to this resolution. The proxy votes received on this resolution are currently displayed on the screen, and I declare the poll open for Resolution 6. Please record your vote by placing a mark in the for, against or abstain box for Resolution 6 on the blue card provided. Resolution 7 is set out in the Notice of Meeting, is an ordinary resolution to approve for all purposes, including ASX Listing Rule 10.14 in to grant performance rights to Chris Shepherd under the company's performance rights plan on the terms and conditions set out in the explanatory memorandum. Are there any questions or comments in relation to this resolution? The proxy votes received on this resolution are currently displayed on the screen, and I declare the poll open for Resolution 7. Please record your vote by placing a mark in the for, against or abstain box for Resolution 7 on the blue card provided. Resolution 8 is set out in the Notice of Meeting, is an ordinary resolution to consider and if thought fit to reelect William Shangjaya as a director. William is required by the corporation's law and the company's constitution to retire and offer himself for reelection. Are there any questions or comments in relation to this resolution? The votes received on this resolution are currently displayed on the screen, and I declare the poll open for Resolution 8. Please record your vote by placing a mark in the for, against or abstain box for Resolution 8 on the blue card provided. In a couple of minutes, I'll close the polls. Please ensure that you've cast your vote on all resolutions and that you hand your blue voting card to the registry personnel now coming around to collect them. [Voting]

Ladies and gentlemen, voting is now closed. The results will be made available to the ASX later today. And I now declare the formal business of the meeting closed. As I said at the start of the meeting, we will now give a short report on the company's operations, and I hand you over to Justin Werner for that presentation. Your questions are welcome, of course.

Thank you. Thank you, Norm, and apologies to everyone that I cannot be there with you today. Just confirming that everyone can see the presentation. Okay. So the Nickel industries is now Australia's largest foreign investor into Indonesia. It's the world's largest listed pure nickel producer, operates a suite of integrated low-cost assets from mining through the processing facilities. We sit at the very bottom end of the quartile. We produce a diverse set of nickel products. We have over 4,700 employees, and we had the sustainability and ESG leader in Indonesia. On the right there, you can see a summary of our business, starting with the mining business. We mine low-grade limonite ore that goes through to a hydrometallurgical process, which is high-pressure acid leach use sulfuric acid to leach nickel and cobalt met their elements into solution and then recover it. That process produces an intermediary product, which is a mixed hydroxide precipitate or MHP, that can then be further refined to nickel and cobalt sulfate and to nickel cathode. These nickel products are destined for the EV battery, aerospace, aeronautical and super alloy industries. Saprolite ore is a higher grade ore, sits below the Lebanon ore. It goes through a parametallurgical process, which is a rotary kiln electric furnace that produces nickel pig iron or NPI, and the end use for that is stainless steel. We have an irrevocable undertaking with our largest shareholder, Tsingshan to purchase all of the NPI that we produce to our RKEF operations at the market price. In terms of full year 2025 results, group financials, USD 1.65 billion in revenue, USD 283 million in adjusted EBITDA, and we sit with USD 866 million of net debt. In terms of our processing facilities, we produced 133,000 tonnes of nickel and that adjusted EBITDA of USD 207.7 million. On the mining side, we mined a record 9.9 million wet metric tonnes for adjusted EBITDA of USD 91.6 million. And we pretty pleased to announce that we've actually received an increase quota for 2026 of $14.3 million. That's against the backdrop of many of our peers receiving significant cuts to the quota. It was very busy on the corporate front over the course of the year. We had a very successful bond issuance to USD 800 million 5-year senior notes at a replacing the previous notes, which were at 11.25%. We signed a $14 million tonne MOU for our Sampala project, and we're very pleased -- we were very pleased just recently to announce the resource upgrade there, which delivered over 1 billion wet metric tonnes, making it a truly world-class project. And we're also pleased to announce an investment at the asset level by per Korean listed super alloy manufacturer who is a supplier to SpaceX. So it means that nickel from our ENC operations, we'll be going into SpaceX rockets. In terms of safety and ESG, LTIFR of 0. TRIFR of 0.68. We've worked 17.7 million man hours for 2025. So a tremendous achievement. We've been able to work 26.6 million work hours since our last reported LTI in 2021 at our Hengjaya mine. We're very proud of our university scholarship program. We currently have 20 students at university doing ranging degrees, and we're expanding that to 30 by year-end. And I think a lot of the initiatives that we've undertaken have been reflected in our improved S&P ESG score, which was 33, and that's above the metals and mining severage of 27. And then on the other side there in the right-hand side, you can see some of the awards that we received during the course of 2025, as well as our 262-megawatt solar project and 80-megawatt battery energy storage system, which is Indonesia's largest and we will be an offtaker of that project. The green chart here is the LME nickel price over the last couple of years. You can see in December '22, it was sitting at around USD 30,000 over the course of most of '24 and '25, we sat at cyclical lows of $14,000 to $15,000 a ton. Despite that and in a period where we had more than 500,000 tonnes come out of the market and either go out of business or go on care and maintenance. We were still able to maintain a very robust EBITDA profile. If you look across the top there, you can see in 2022, it was USD 339 million. In '23, it was USD 403 million. In '24, USD 326 million. '25 million, $283 million. And first quarter of this year was very strong with USD 135.5 million just for the first quarter alone. How we've been able to maintain this very robust EBITDA profile has really been volume growth. If you look at our attributable process, nickel, in '22, it was 56,000 tonnes. That's growing to 156,000 tonnes for 2026. And then our mine ore sales at 3.5 million, that's increased significantly as well to 14.3 million tonnes. We've also, as you can see in the chart there, we've had a strong uptick in the nickel price. So that's added some very strong margins across the business for the start of 2026. During those last few years, you can see we've been a material dividend payer, except for last year. In terms of the corporate highlights, with the acquisition by a Sphere of 10% of ENCNC for USD 240 million. We were very pleased to announce that at the end of last year. Our ENC HPAL is now commissioning and we're looking to ramp up and hit nameplate of 72,000 by October '26. And with HPAL margins on MHP currently sitting at close to $10,000 a tonne, we're ramping up into a very strong nickel price environment. I mentioned we were very pleased to announce the increased Sampala JORC resource upgrade, and the mine development there is also progressing very well. We've done a lot of work on optimizing our debt stack and debt refinancing, which I'll talk about a little bit later on. And we have funded volume growth, which will deliver significant cash flow and we're looking at in excess of USD 1 billion EBITDA on a consolidated basis, and we should be at that run rate by the end of this year. The 10% acquisition by Sphere, as I mentioned, Korean-listed super alloy producer, 1 of only 3 accredited vendors to SpaceX and the only one with a long term tenured contract. We think this is a strong validation of the business, particularly given the slightest impurities in supper alloys, in nickel in particular, in rocket ships can lead to catastrophic failure and be very expensive. So we think it's a very strong endorsement and it certainly opens up other supply chain opportunities in the North American aerospace and aeronautical markets. We have a number of very strong strategic partnerships. Tsingshan, our largest shareholder, 23%. How we've been able to grow the company so quickly into the point where it is today since our IPO in 2018 is through a unique set of guarantees that we realized through our relationship with Tsingshan, which is a CapEx guarantee, a nameplate guarantee with the make hole if nameplate isn't hit, and a time frame guarantee of no more than 2 years for every project that we've done. And so that what has allowed us to grow very quickly because investors know that we're not going to come back in 18 months' time with cost and time frame blowouts. We were pleased to welcome United Tractors into the register sitting at 20%. They're a blue chip Indonesian mining company and their ultimate beneficial owner is Jardine Matheson, which is a Fortune Global 500 firm, with a very strong track record in and across Southeast Asia. And then the Sphere-SpaceX deal that we mentioned earlier. When ENC ramps up to nameplate at the end of this year. You can see where that will position us amongst global nickel juices I mentioned at the beginning, we are the world's largest listed pure nickel producer. If you look to the left of that chart, you can see Shandong is Chinese; Nornickel is Russian and diversified; Jinchuan, Chinese and Tsingshan, Chinese. And looking to the right-hand side, Huayou, Harita, Lygend, for example. Really, we're the only Western-listed pure nickel company of any scale and we're very highly leveraged to the nickel price given our significant volume. And that was very well demonstrated in the December and March quarters. in the December quarter of last year, our RKEF business delivered USD 35 million in EBITDA. In the March quarter of this year, that had grown by 145% to USD 85 million, and that was off just a 19% increase in the NPI price. So very highly leveraged to an improving nickel price. We've recently transitioned the business into hyper-acid leach. The reason for that is the superior margins. We're currently seeing at HNC which was our first investment where we took a 10% interest. March quarter EBITDA of USD 9,992 a tonne. And that project has been operating very well at over 40% above nameplate capacity now for a long period of time. And the HNC project is the beneficiary of a 15-year tax holiday. So we play no tax for 15 years, plus an additional 2 years at 11%. ENC, which is in the commissioning stages, that's the first HPAL globally to produce mixed oxide precipitate, nickel and cobalt sulfate and cathodes. So it gives us product diversity. I mentioned targeting -- hitting nameplate by end of October this year and the nameplate's 72,000. We currently have a 46% interest and ENCNC project is also the beneficiary of a 15-year tax holiday, plus another 2 years at 11%. Assuming EBITDA margins stay where they are at around $10,000 a tonne, you could see that by the end of the year, ENC, on a consolidated basis, should be delivering a $720 million of additional EBITDA. Our processing operations are underpinned by world-class mine operations and resources. Our Hengjaya mine that has 3.3 million tonnes of contained nickel metal, first quarter EBITDA of US $30 million. And I mentioned we're the only company that I'm aware of that was actually able to increase its ore quota from $9 million last year to $14.3 million this year. And Hengjaya mine will be supplying 100% of the limonite requirements by a dedicated slurry pipeline to the ENC HPAL project. HM is also located only 16 kilometers from our processing operations. Our new project, Sampala, covers 6,654 hectares. We just announced a revised resource of 648 million dry metric tonnes or over 1 billion wet metric tonnes, with current margins of in excess of $10 a tonne, you can see the value of that project. To bring it into production, we need to complete construction of the 24 kilometers of haul road. We've built the first 8 kilometers and we're just waiting for some forestry permits to be able to complete the remaining 16 kilometers. Permit dependent, we are targeting to full first production towards the end of first half of next year. And I mentioned earlier that we've signed a $14 million on a year offtake for limonite for an expansion to the ENC project, which Tsingshan is currently undertaking. And then we have a third project in West Papua, the Siduarsi project. Current resource of 52 million tonnes and we're advancing a feasibility study there for approval for a 2 million tonne per annum on our mining operation. Where does that position us globally? You can see there basically the second largest owner of nickel resources globally. Our intention is to continue to move right over to the right-hand side of that curve and so to be the owner of the largest known nickel resources globally, which will underpin our assets for a considerable -- processing assets for a considerable period of time. Debt refinancing over the course of last year has strengthened the capital structure. We've been able to improve the coupon. I mentioned the bond coming down from 11.25% to 9%. We've been able to remove or push out some of the amortizing loans. And we've had very strong support from a syndicate of banks. And we have pricing there of SOFR plus range anywhere from 2.25% to 4.5%. The 3 catalysts that are really going to transform the company and drive us towards that USD 1 billion in EBITDA is the Hengjaya mine increase from 9 million to 14.3 million tonnes. The ENC commissioning and ramp-up, which I mentioned at a $10,000 a tonne margin at 72,000 tonnes is at USD 720 million. Given the outperformance of HNC at 40%, I don't think it's unreasonable to expect that we would also most likely see outperformance of the ENC HPAL. And then development of our Sampala mine, very low CapEx remaining about USD 30 million. We're looking to get that through about 15 million to 20 million tonnes a year. And at the current $10 a tonne margin, that's another USD 150 million to USD 200 million in EBITDA. So looking forward to this year through the course of this year, a number of catalysts, which are going to drive very strong cash earnings for the business. That's the end of the presentation. Happy to take any questions. If there's no questions, then I'll hand back to Norm.

That concludes the meeting. But if there are any last minute questions, I'm more than happy to address them.

[indiscernible]

It's certainly part of our policy to pay dividends. We've gone through a significant expansion phase, which is just allocation of capital, keeping the balance sheet in good order. But certainly, it's high on the agenda and hopefully be reinstated relatively soon. I can assure you it was a reasonably large shareholder, I'd welcome a dividend as well.

Are new guys getting performance rights?

It's a pretty small part of my...

Is it really? Okay.

Yes, yes. Yes. Even -- I mean, I'm happy to be quite open on that. Even after I divide by 2 in recent years on the domestic scenario, I've still got in excess of 60 million shares. So performance rights are great, but it's a small part of it.

Just a little side note, can you tell me about the road show that's going on at the moment?

Yes, I can take that one. It's just part of -- can you hear me online? Yes. Okay. Okay. We've been attending in the last 2 weeks, several conferences in the U.S. I was over there with Justin as well. As part of that, he's continued on to London with our investor -- Head of Investor Relations, Andrew Coleman, totally non-deal roadshow. There's nothing on the horizon. It's just when you're over in North America, it's best to get over to the European investors at the same time.

Okay. And what do the -- what actually takes place on these roadshows? Who are they targeting?

Targeting equity and credit investors.

Okay. Yes. All right. Thank you.

Thanks.

Any other questions? Well, being none, I'd like to thank you all very much for coming out today in this measurable weather, and look forward to seeing you all next year. Thank you.