Thank you for standing by, and welcome to the Nickel Industries Limited December Activities Results Call. All participants are in a listen-only mode. There will be a presentation followed by a question-and-answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I would now like to hand the conference over to Mr. Justin Werner, Managing Director. Please go ahead.
Thank you very much, and before I welcome everyone, could I please ask the slide operator to move to page 2 of the presentation? Welcome, everyone, to the Nickel Industries December quarter results. We're very pleased once again to report record group EBITDA from operations of $135.4 million, which underpins an announced increased full-year dividend and share buyback. Despite the backdrop of very weak nickel prices, particularly over the second half of 2023, our unaudited second half EBITDA is $256 million versus our first half, which was $169 million.
And so I think we're just really showing with the ramp-up of our operations, maintaining our position at the bottom end of the cost curve, and a ramp-up in the Hengjaya Mine. We're really starting to see the results of those coming through. For 2023, over 16.7 million LTI-free man hours across all of NIC's operations. That's a tremendous result, and I'll talk about that a little bit later on. Again, record RKEF nickel metal production of 34,450 tons, which is well in excess of or close to 140,000 tons on an annualized basis.
Nickel attributable for the quarter was 27,560 tons of nickel pig iron and matte, plus an additional 1,823 tons of nickel from our 10% interest in HNC. Pleasingly, the HNC production of 1,823 was 29% above the 1,410 tons received in September produced, sorry. And I think that's indicative of the sort of performance or outperformance that we can expect from ENC, which I'll touch on a little bit later on.
Those two numbers give us 29,383 as NIC attributable nickel metal for the quarter, and full year 2023 nickel metal production as 128,327 tons on a 100% basis. Remembering that we haven't been fully ramped up for the entire year. So again, we're looking forward to a strong 2024. RKEF EBITDA $85.1 million, down slightly on the September quarter, mostly due to lower realized contract pricing. We did pleasingly though see modest cost reductions across most of our operations, and that was driven by lower ore, coal and electricity prices.
Pleasingly, record Hengjaya Mine EBITDA of $42 million, 82% increase on the September quarter, which was $23.1 million. And that we expect to see continued strong EBITDA from the Hengjaya Mine. Off the back of these very strong results for the second half of 2023, we're pleased to announce a full-year dividend of 2.5 cents per share, which is a 25% increase on the prior FY 2022 dividend. And the announcement of a new capital management framework, where we've enunciated a dividend policy of 30%-60% of free cash flow. And also announced a on-market share buyback of up to $100 million over the next 12 months.
Here we're obviously looking to target higher shareholder returns, and the increase in the dividend reflects the very robust EBITDA that we've been able to deliver in a very challenging environment, and the fact that our ENC project is also fully funded. If we could just go to the next slide, please. Environment and safety, and NIC is really taking a leadership role here in Indonesia, as far as the environment and safety. I touched on earlier, over 16.7 million LTI-free man hours were worked or LTI-free man hours for 2023. As an LTIFR, that's about 0.1 and a TRIFR of 0.98. The industry benchmark, I believe, in Australia for 2021-2022 for LTIFR was about 8.4.
So, a significant amount of man hours worked, as I said again, without a LTI injury. Environmental, we were once again awarded a Green PROPER Rating by the Ministry of Environment and Forestry for the second consecutive year. One of only two nickel mines in all of Indonesia to again receive a Green PROPER Rating. We are striving to do the first to achieve gold over the coming years. And just to put that into some perspective, only 196 companies of the 3,694 audited achieved a Green PROPER Rating. So again, a tremendous achievement at placing us as an industry leader.
Towards the back end of last year, we had a visit from a North American EV maker, very impressed with what they saw. We were audited by a European EV maker. Again, that audit went very well, over 90% plus compliance with all of their requirements. On the renewable energy front, and as part of our decarbonization, we executed an operational lease agreement for Indonesia's largest solar project, which is 200 MW peak plus 20 MWh battery storage. And it's anticipated that that power will supply the IMIP power, and we're targeting for that IMIP power to have the lowest carbon footprint globally. We were invited to present at the COP28 Climate Summit in Dubai, one of only two Indonesian mining companies that was asked to present.
And that was really on the work that we've done around our ESG work in Indonesia. And at that conference, we announced our future emission targets, so a 50% reduction in carbon intensity by 2035, and net zero by 2050. Again, fitting in with our reduction in carbon intensity, we also successfully trialed the first electric vehicle trucks in Indonesia, and we're now working towards increasing that EV truck fleet over the coming months. If we could just move to the next slide, please.
This slide clearly demonstrates, you can see in the bar chart there, December 2022 last year, where we sat in terms of production, 23,433 tons, and then what we've just reported now for December 2023, 34,450 tons. So a significant increase and that ramp up has gone very, very well. But I think if you look at the bubbles above that, in the green, you can see EBITDA from operations, and in the white, you can see the average LME nickel price. If we look at December 2022, EBITDA from operations, $106.1 million. If you come over to December 2023, $135.4 million EBITDA from operations, so a 28% increase.
Looking at the LME nickel price below that, it was $25,460 in December 2022, and $17,298 in December 2023, so a 32% reduction in the LME nickel price. So again, tremendous result, I think, as again, showing the ramp up of our operations and again, the fact that we sit at the very lowest end of the cost curve. So 28% increase in EBITDA from operations against the backdrop of a significant decline in LME nickel pricing. If we could just go to the next slide, please. The Hengjaya Mine, as I said, tremendous result, $42 million in EBITDA versus $23.1 million for the September quarter, up 81.1%, and record quarterly production of 4.5 million tons.
If we could just go to the next slide, please. On the corporate front, pleased to announce final investment decision for NIC's 55% in the ENC HPAL project. That's expected to produce 72,000 tons per annum. And it will produce, and it will be the first HPAL globally, that will have the ability to produce three of the key Class 1 nickel products, those being Mixed Hydroxide Precipitate, nickel sulfate, and nickel cathode. That is progressing very well. We have made acquisition payments totaling $316.3 million for our 13.75% equity interest. There is, and contained in the quarterly report, the full acquisition schedule, but again, that payment for the 55% is over the next two years.
We look forward to providing further updates on the ENC progress over the course of this year. We established or executed a financing facility with PT Bank Negara Indonesia, or BNI, a leading Indonesian bank. This is the first time an Indonesian bank has actually financed a HPAL project in Indonesia, and again, that's reflective of our ESG credentials and our strong operating performance and our corporate governance. It's a $350 million, 5-year senior term loan at a very attractive rate, if compared to our bonds, with a further $50 million revolving in our credit facility. That loan has been syndicated out, and it was a very successful syndication.
There is a large number of banks, not just Asian banks, but Western banks that have come into that syndication, and again, very reflective of NIC's operations. We announced during the quarter, our first nickel matte sales contract with Glencore. I'm sure they need no introduction. Everyone knows who they are. This represents our first direct sale to Western companies, and this is underpinning our diversification into the Class 1 nickel space, which we see stronger margins, lower carbon intensity, and a diversified customer base. We are currently working on sales of MHP from our 10% interest in HNC, and we have that product currently being tested by a number of potential buyers, Asian, and European.
And as well, the strategic partnering process for ENC and potential off-takers that will be kicking off over the coming weeks. Finally, some board changes at the end of the year. Retirement of our non-executive directors, Mr. Huang Weifeng. He's been instrumental in the relationship between NIC and Tsingshan. He's been replaced by Haijun Wang, who we also have a very close working relationship with, and we welcome him onto the board and looking forward to continuing that very close, and as I said, strong relationship. And also the retirement of Mark Lochtenberg , who's been a long time NIC shareholder, in fact, from its foundations.
We also saw retirement of our chairman, Rob Neale, and delighted to say that Norman Seckold has stepped back into the executive chairman role, and as the founder of the company with a long history, we warmly welcome him back into that chairman's role. So in summary, another record quarter, which again is just demonstrated our ability to generate very strong margin, in a weak nickel price environment because of that OpEx, and where we sit at the very bottom end of the cost curve. On the safety front, as I said, tremendous achievement, 16.7 million LTI-free hours . When you think about how many hours that actually is, it's a tremendous result and the continued leadership in ESG.
Just final comment on the market generally. We are obviously seeing a supply response globally to the current nickel price environment that we're faced with, with mine closures, with a reduction in Chinese NPI production, and even in Indonesia, we're seeing numerous HPAL projects either being deferred or completely canceled. We think that we are extremely well positioned for the rebound in nickel prices when it comes, given our current strong operating footprint, but also our fully funded move into ENC and a more diversified Class 1 product mix. With that, I'll hand over to questions.
Thank you. If you wish to ask a question, please press star then one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star then two. If you are on a speakerphone, please pick up the handset to ask your question. Our first question will come from Alex Papaioannou of Citi. Please go ahead.
Hi, Justin. Are you seeing any supply response in Indonesian RKEF, given where margin's sitting? And is nickel ore shortages still a thing?
Thanks, Alex. We have seen some supply response. There has been a curtailment of other higher cost NPI producers and also stainless steel production out of Indonesia. There has also, and the government has strongly enunciated that there will be no further nickel pig iron capacity approved. And so we have seen a curtailment with no further NPI to be built. In terms of ore supply, we haven't seen any shortages. And look, as our Hengjaya Mine continues to ramp up, and we are looking at. We've now achieved the 10 million tons per annum mark. We are looking to further increase that over the course of this year.
We expect to be in the sort of coming years, at a point where our mine supply will probably meet our whole RKEF and HPAL requirements.
Okay, great. And in terms of the attributable EBITDA from HNC, you noted that it won't go into your financials. So how are you planning to account for that share in the P&L and the cash flow?
... Yeah, sorry, I'll take that. Alex, I know this is a big thing for everyone. We're and we are finalizing our treatment with the auditors over the course of this month. Obviously, as a 10% investment, we won't be equity accounting it, but we will be carrying that at fair value. So it won't give you a direct read-through quarter by quarter basis on the actual operating performance of HNC. Which I know will be disappointing to the entire broker and investor community, but that is the approach that we're most likely to take.
Right. Okay. Just one more, if I can. So when do you think you'll start the buyback, and do you-- have you taken the view now that your share price is depressed at its current point?
Yeah, look, Justin, are you happy, happy for me to take that?
Yeah. Yeah, go ahead.
Look, obviously, with you know, with our new capital management program or framework that we've announced, we are focused on increased shareholder returns. We've heard the market loud and clear on that. We are starting off with the buyback. We are including the share buyback of up to AUD 100 million over the 12 months. Clearly, with any share buyback, we are firmly of the view that, where we're sitting, around the AUD 0.60 level, as of this morning, we are severely undervalued, and we continue to hold that view. Remember, it's not long ago that we bought in a strategic investor at AUD 1.10.
So, we believe that we're strongly undervalued. The main point around the timing, Alex, is around FIRB approval for United Tractors or DTN. They're sitting just under 20%. So with them going through 20%, if and when Nickel Industries buys back shares, they will need FIRB approval. As one of our largest shareholders, obviously a long-term strategic shareholder, the board has taken the decision that it's in everyone's best interest for them to get FIRB approval. And then as soon as that happens, we currently intend to commence that buyback.
Great, and the timeline on that sort of approval process?
Yeah, look, unfortunately, as you've seen in our past transactions with Shanghai Decent, FIRB is its own or the FIRB process can vary widely. We've experienced that ourselves from several months. So I think in HNC last year was six months. However, this is a very different situation to what we've experienced in the past. I think both sets of lawyers, both ours and United Tractors' lawyers are confident in the FIRB approval not taking a significant amount of time. The rationale for that is obviously, it's clearly not a situation where you've got a single major shareholder participating in or selling an asset to a company and having a large increase in their ownership.
This is a decision made for the... by the board for all of the shareholders as a whole, and I think we'd expect the government, or the treasury to look at it in a similar manner.
Great, thanks. I'll pass it on.
Thanks, Alex.
The next question comes from Adam Baker of Macquarie. Please go ahead.
Morning, Justin, Chris, and team, well done on the strong result in the weak nickel price environment. Just maybe one following up on that, dividends. Just wondering, you know, if you had any thoughts around executing the buyback, you know, is there a ceiling to the share price that you're going to execute the buyback? Do you have any kind of ceiling in mind? And then one on the dividends, nice to see the rise in dividends there. You know, historically, I guess you've paid AUD 0.02 on a half-yearly basis. Can we expect to see that moving forward, having a kind of base rate dividend and then anything further upside from there is what you would see moving forward?
Or are we just looking at 30%-60% free cash flow policy moving forward? Thanks.
Yeah, I'll take the dividends, then Justin, you can talk about the buyback. I think it's the latter, Adam. It's 30%-60% of free cash flow. We've tried to be very clear with revising this policy, as you'd remember in the past, that it was the same level as you've seen in the past, or in the prior period, unless told otherwise. Obviously, we are very confident in our business. We wouldn't be announcing a share buyback and committing capital to that, if we did believe that dividends were not going to be strong in the future. But yeah, I don't think we can say anything other than 30%-60% of free cash flow at this stage.
Yeah, look, thanks, Adam. In terms of the share buyback, there is no ceiling. Obviously, as a management team, we will make calls as to the volume and price of shares that we acquire.
Yeah, no, and maybe just a couple of operational questions. ONI had pretty strong performance, 108,800 tons NPI. Just wondering if that's the kind of rate that we're expecting moving forward, and is there any further upside to that number?
... Look, I think we're seeing that the production is pretty consistent now. The biggest and you would have noticed that there is a fair difference in NPI grade between ANI and ONI. And that'll be something that we are looking at closer this quarter, particularly, you know, NPI grade driving nickel tonnes. But no, look, I think that that performance from ONI is what we could continue to expect moving forward.
Sure. Thanks. And maybe one on Angel. I think there was a previous plan of setting up nickel matte production. Just wondering if that's still on the cards, given the reductions in margins for the matte at the moment?
Yes, we are still working on the nickel matte converter option. And so we're in the process of hopefully finalizing that. And once that is finalized, then we'll be able to make further announcements about an acquisition or interest in a nickel matte converter and then conversion of additional RKEF lines to the production of nickel matte.
Okay, thanks. I'll hand it on. Thanks.
Thanks, Adam.
There are no further questions at this time. I'll now hand back to Justin Werner for any closing remarks.
Look, thank you again, everyone, for your attendance. Look, again, just to reiterate, I think this quarterly result has demonstrated the robustness of the Nickel Industries' business. But I think also what it does show, and we've seen it over the period of time, is given the diversification of nickel products that we have, combined with the integration, you know, we've seen, if you look back sort of 12-18 months ago, we were experiencing very strong NPI margins. At the beginning of 2023, those margins then sort of transformed into nickel matte. We're now starting to see stronger margins in nickel ore. And, you know, we also have a small amount of MHP being Class 1, but we're obviously going to grow that significantly through ENC.
So I think that diversification, and that integration, we're really starting to see the results of that. And, you know, obviously, that will translate into, you know, dividends for the shareholders moving forward as our production base is now stabilized, with the next leg up being ENC, which is fully funded. So, you know, we're comfortable that we sit in a very, very strong position. As always, any questions, please don't hesitate to contact any of us. And again, thank you, everyone, for your time this morning.
That does conclude our conference for today. Thank you for participating, and you may now disconnect.