Thank you for standing by, and welcome to the Nickel Industries Limited June Quarter Activities Webcast. 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, thank you everyone for your attendance this evening. If I could just ask the slide turner to turn to page two of the presentation, please. Nickel Industries again, pleased to report another record quarter, with 32,558 tons of nickel metal produced. That was an 18.6% increase on the March quarter. We look forward to a further production increase coming in over the September quarter through our ONI operations, and I'll talk about that a little bit later on. In terms of NIC attributable production, that's 5,000 of that 32,500 tons.
That puts us on a annualized rate at in excess of 100,000 tons of nickel metal production on an annualized basis and firmly places us in amongst the top 10 nickel producer. As I've said, we expect further production growth over the September quarter. We've just recently announced at the end of June that the power plant had been successfully commissioned, and I'll go into that in a little bit more detail later on in the presentation in terms of what that means for the Oracle Nickel production profile, as well as our EBITDA profile. RKEF revenue for the quarter was $434 million. That was slightly lower than the March quarter, about 11% lower, mostly driven by a softening in NPI and LME prices.
We, we believe we've seen the bottom, and I think pleasingly, margins for the majority of our business were, were very robust. We look forward to a stronger September quarter, and I'll, I'll go into the reasons for, for why we're expecting that a little bit, little bit later. RKEF EBITDA for the quarter was $43.9 million. Whilst we had a decrease in realized pricing, we also saw a corresponding decrease in OpEx between sort of 8% to 15%, depending on which RKEF operation it was. Driven primarily by declining nickel ore and power prices. We expect to see those prices continue to decrease across the September quarter.
That is why we're, we're optimistic of seeing a stronger, stronger September quarter. The production-weighted EBITDA was about $1,533. That was down from the March quarter, which was a record quarter. I would just make a comment there that ANI or Angel Nickel, which is 38% of our production, had a very robust margin of $2,754 per ton of nickel. Oracle Nickel, which is a replica of the ANI plant and only benefited from the commissioning of the power plant, which came on at the end of June, it had an EBITDA per ton margin of $744 per ton for the June quarter.
We expect to start to see Oracle Nickel capture that additional sort of $2,000 a ton differential across the September quarter, as well as an increase in the tons. That's as, as I've said earlier, that's why we remain optimistic about a strong September quarter. It was also a record quarter at the Hengjaya Mine. We produced 2.7 million wet metric tons of ore. That was about 10% higher than the 2.5 million that we produced in the March quarter. We're also looking to ramp that up over the September quarter, and I'll, I'll go into that a little bit later on.
The mine EBITDA was about $12 million, slightly down on the $13 million that we recognized in the March quarter, predominantly driven by lower ore prices. That, as I said, that will flow through to our RKEF cost base, so we expect to, whilst we will see lower realized ore prices, for our ore, for our Hengjaya Mine, we will get the benefit of lower OpEx in our RKEF operations, 'cause ore is the largest cost item, in terms of the cost breakdown for the RKEF operations. Underlying cash generation from operations totaled $48.6 million. Pleased to also announce the interim dividend of AUD 0.02 per share.
That's in line with our previous dividend announcements. I think it reflects the robust nature of the operations in terms of. We've had a challenging quarter in terms of pricing, but, you know, we've still been able to deliver a strong quarter. If you look at March, March was a record in a sense. I think it does point to the robustness of the operations and the fact that we are very well positioned, that in a stronger pricing environment, given the size of our operations and the cost base, we're well positioned to capitalize in terms of capturing significant additional revenue and EBITDA....
On the ESG front, very pleased to report, 5.5 million man-hours without an LTI at our RKEF operations since the beginning of the reporting year, January of this year. More than 7.3 million man-hours since the last recorded LTI at the Hengjaya Mine, which was in November 2021. Also, very pleased to report during the quarter, the Hengjaya Mine received 2 gold trophies at the Nusantara CSR Awards, and also, Most Promising Transition Award at the ESG World Summit in Bangkok this year.
Hengjaya Mine and our operations have received numerous accolades, certifications, awards, I think it's a strong validation of the serious commitment that we've placed in terms of ESG, as we sort of look to work towards being the most sustainable and responsible, integrated and diversified nickel operations in Indonesia. If we could just move to page four, please, of the presentation. Just to rehash the quarterly results, I mentioned record 32,558 tons of nickel produced, almost a 20% increase on the March quarter. Apologies, if we could just move to the next slide, please. Page four.
I mentioned that NIC's attributable production of this is 25,000, so that on an annualized basis for the first time, we've now cracked the 100,000 ton per annum nickel metal production, which is a tremendous milestone, and as I said, places us well amongst the top 10 nickel producers. RKEF sales, as I mentioned, slightly down, driven by lower prices. The Hengjaya Mine, record production, and we expect to see that continue. If we could just go to page five of the presentation, please. What you can see here clearly is that since June 2022 of last year, we've experienced a 110% increase in production.
15,556 tons in June of 2022 and 32,558 tons in June in 2023. It's been a very, very rapid ramp-up. When you look at the breakdown of what comprises that increase in tons, ANI for the June quarter produced 12,422 tons, so that was 38% of the June quarter production. ONI produced 10,141 tons, 31% of that production. Together, those two operations accounted for 69% of total production. It's important to note that I spoke about the commissioning of the ONI power plant earlier in the presentation.
That will have a significant impact on not just the tons that were produced, that will be produced by ONI over the September quarter, but also the EBITDA and EBIT EBITDA ton margins that we can expect across the September quarter. I mentioned ANI, EBITDA per ton margin of $2,754. That was 75% of the total June EBITDA. ANI delivered $33.2 million of EBITDA. ONI delivered $7.5 million.
Once that power plant is ramped up and it, as I said, it, it came online at the end of June, we expect to see similar production numbers, so probably a 20% production upside from 10,000 to 12,000, but also a margin upside from $744 to around $2,700, assuming everything stays the same. You know, we look forward to the September quarter in terms of the additional EBITDA upside from the ONI operation.
Pleasingly, we have seen a reduction across the quarter in our OpEx costs, and whilst we've experienced softening in prices, and that led to about a 17% decrease in realized pricing, we did also see across the quarter a mix between 8% to 14% reduction across our RKEF operations. We expect to see those OpEx costs continuing to decline across the September quarter. We believe that the nickel pricing for both NPI and Class 1 nickel, we think we've seen the cyclical lows. They've bounced back from sort of the record lows and now seem to be trading in a fairly stable band. So, you know, the.
I think the key takeaway from this slide is we're, we're yet to see the key production increases and EBITDA increases from our Oracle Nickel operations. Together, Oracle and ANI, as I said, comprise more, greater than 90% of our EBITDA base. If we could just move to page six, please. The Hengjaya Mine against, again, once again, happy to report record EBITDA of 2.7 million tons of ore produced. That's a significant increase on the 2.5 million tons produced in March. Very robust margins. Again, if you come down and look at limonite, we actually experienced an increase from the $18.29 that we were receiving in March to $20.01 in June.
Actually saw a decrease in the cost of production from $3.67 to $3.11. If we could just move to the next page, page seven, please. The Hengjaya Mine to IMIP haul road. The opening of that haul road is imminent. That's a tremendous milestone for the Hengjaya Mine. Once that is open, the ramp up from 3.5 million tons, which is what we did last year, to around 10 million tons, which will be comprised of 6.5 million tons of limonite and 3.5 million tons of saprolite. That ramp up will begin with the opening of this haul road.
Not only that, the opening of the haul road will mean that the HM Mine is already one of the largest suppliers to the industrial park or to IMIP. We expect that supply to continue to grow, and to a point where the HM Mine will be the largest, second, third largest supplier. I think it just underscores the strategic value of the HM Mine, which also contains 3.7 million tons of contained nickel metal. That makes it-- that places us amongst the top 10 global nickel resources. If we could just move to page eight, please. Also a very busy quarter on the corporate front. We announced a conditional share placement and collaboration agreement with United Tractors, which is a subsidiary company of Jardine Matheson.
I'll talk about both of those companies in a moment. The placement was for AUD 943 million at an issue price of AUD 1.10 per share, which represented a 27.2% premium to the last traded price on the day prior to the announcement, which was AUD 0.87. That premium has actually since increased, if you compare it to today's close. UT is Indonesia's largest listed conglomerate. Their financial year 2022 revenue was $8.3 billion. They have around 33,000 employees and very strong balance sheet, $2.3 billion in cash. Their ultimate beneficial owner is Jardine Matheson, a global diversified Fortune 500 company.
Very, very strong and long presence in Asia, across a raft of diversified industries, automotive, mining, mine services, property, retail, financing, over 425,000 employees, and financial year 2022 revenue of $87.7 billion. We're delighted with this potential collaboration and investment. We view UT and their ultimate beneficial owner of Jardine Matheson as one of the best blue chip investors and partners that we could possibly attract within Indonesia. There is a conditional collaboration agreement for UT to acquire a 20% equity interest in the ENC HPAL project for $500 million. That is actually...
We have since negotiated the full price on a 100% basis, down from $2.5 billion to $2.3 billion, with an increase in the expected capacity, and I'll talk about that a little bit later on. That investment is still conditional upon a final investment decision being taken by the NIC board. I will talk about that in a moment as well. The next point there, we received further approval for the placement to Shanghai Decent, which was at $2. That will allow us to acquire a 10% interest in the HNC HPAL. That is an operating HPAL, has the world record for the fastest build and ramp up, which was achieved during COVID.
It's one of the lowest global OpEx and carbon-intensive HPAL operations. What this will do is, whilst it's a minority interest, it's 10%, it will give us access to an immediate marketable parcel of about 6,000 tons of mixed hydroxide precipitate, which NIC can start to market. It further diversifies us into the Class 1 EV and battery market space. If I could just ask you to move to page nine, please. Just coming back to the conditional collaboration agreement and the ENC HPAL project. The NIC board is working its way through the feasibility study, and we expect to make a FID during the September quarter.
As I said, pleasingly, production has increased from the initially announced volume of 60,000 tons of nickel to 72,000 tons per annum. That's a 20% increase. In fact, with that increase, the CapEx has actually reduced from $2.5 billion to $2.3 billion. It again comes with a CapEx guarantee. I think, again, it's a very, very important note. We see tremendous value in that. We've seen recently, ASX-listed company has had to write down the value of an investment in a Western Australian nickel sulfide project to the tune of almost AUD 1 billion. Again, that's probably been predominantly driven by a CapEx blowout. We don't have that.
We also have a timeframe guarantee, so within 24 months. Assuming a positive FID is taken in the September quarter, we expect to see construction start in Q4 of this year. What the placement to UT does, is means that NIC is fully funded for that for that investment into ENC. The shareholding will be 55% NIC, 20% United Tractors, and 25% Tsingshan.
We obviously will go to shareholders for approval, you know, given the premium, given the significant amount of cash it delivers, which we can invest into taking the ENC project forward, and the fact that the ENC project will be the first HPAL in Indonesia to produce more than just MHP, it will go further to produce nickel cathode and nickel sulfate, which will basically give it access to the three major class products. We again, see that as extremely valuable, and I think just sort of underscores the competitive advantage and first-mover advantage that NIC has been able to capitalize on as we've undergone this very rapid growth. If we could just move to page 10, please.
With the conditional collaboration agreement with UT, that potentially gives us access to what we call stage two of ENC, which would be a ramp up to 144,000 tons of nickel. Doubling, but again, subject to a positive FID. Stage one is really what we're focused on at the moment. Then stage two, assuming that we have the funding and economically it makes sense, is something that we will consider in the future, but it importantly does open up that potential opportunity.
Again, coming back to what I said earlier, we, in, in a little over sort of almost five years, have been able to rapidly grow the company to in excess in terms of NIC's attributable nickel metal production, in excess of 100,000 tons of nickel production in a, in a very short, time space. The other, key highlights there, I mentioned the Oracle Nickel power plant, commenced, commissioning at the end of June. What that gives us is a further 20% upside on the Oracle Nickel production, so expecting that to go from 10,000 this quarter to in excess of 12,000, for the September quarter. I think more importantly, there's a significant upside potential in terms of the EBITDA per ton margin.
I mentioned $744 was the EBITDA per ton margin for Oracle in June. Angel, exact replica, was $2,744. Potentially an additional $2,000 per ton of margin capture that we can hope to capture in the September quarter. We're also looking to capture additional ramp-up of the Hengjaya Mine, and we look forward to updating the market in terms of the opening of that haul road, but that is imminent. We look forward to another busy, productive September quarter.
I've mentioned the ramp-up of ONI, probably more importantly, the increase in or the EBITDA per ton margin upside that will come with trucking of first ore down the haul road also a ramp-up in the mining tons. Acquisition of the 10% in HNC, which we'll be looking to conclude this quarter. An FID decision on ENC, then on the periphery, you know, our Siduarsi project, we look forward to announcing a maiden JORC resource for that project. As we look to build our resource or nickel ton inventory.
We're already in amongst the top 10 nickel resources, but we will look to continue to build that to a point where it's our ultimate aim that NIC will sit on, you know, the largest known global resources for, of nickel terms. With that, that ends the presentation, and happy to hand over to Q&A.
Thank you. If you wish to ask a question, please press star one on your telephone and wait for your name to be announced. If you wish to cancel your request, please press star two. If you're on a speakerphone, please pick up the handset to ask your question. Your first question comes from Isabelle Pan from Aris. Please go ahead.
Hi, Justin. Just a couple of questions from me. I think the first one is, we just wanted to understand a little better the movement in the weighted average contract price. I think it has gone from around $16,000 per nickel ton in the last quarter to now $13,000 nickel per nickel ton for NPI. Could you just help us understand a little bit more around kind of the drivers for this decrease, which is around 20%?
Yeah.
The second one is, I guess, the same, same thing for HNI, where I think the production is met instead of NPI. The reason for a decrease from 20,000 tons to 15,000.
Yeah. Across both of those products, we've seen a softening in, in both the NPI and the LME nickel price. That reduction in the first instance of NPI is just purely, purely market driven. That said, we, we, we've bounced off the lows that we, that we saw recently. As I said, we're sort of optimistic that moving forward, we should be able to realize a higher price. I think more importantly, we are still seeing a, a decrease in our OpEx costs. We expect to continue to see decreased oil prices into July, and power prices into, into August.
Sort of, but, but back to your question, both of those, both of those prices have just been driven by, by, by softness in the market. In terms of nickel matte, it's a subtle difference. You may have seen, we're now selling or reporting realized pricing for low-grade nickel matte. What that doesn't include is our high-grade nickel matte price also includes a factor for the conversion price, which is the conversion from low-grade to high-grade nickel matte. Given that there were some increases in that conversion price, we elected this quarter to rather than paying a tolling fee to upgrade it and sell it as high-grade nickel matte, we elected to sell it as, as low-grade nickel matte, basically to the converter gate.
That, that, that is why there's a big difference in the matte price. Although what we have done is we have gone back and modified our March results to be reflective of if we were selling a low-grade matte product, just so that some comparison can be undertaken.
This is... Just on the OpEx side, so I understand that once the power plant rents out for ONI, I guess the margin should track more similarly for ONI with ENI. Can I ask you for RNI, will that get the benefit of the power plant from ONI as well?
No, no. We, we expect ANI to decrease from about $0.08 this quarter to around $0.052, which is what ANI reported for this quarter. That's where we see that significant margin upside for RNI is in the decrease of the power. Not only that, we, we do expect to continue, continue to see a decrease in all costs. Both HNI and RNI, given their much older RKEF lines, more the capacity, but also they don't benefit from the integrated power. Unfortunately, they're not a beneficiary of those of those superior power costs.
Okay, understood. Thank you.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone. Your next question comes from Niel Botha from Ninety One. Please go ahead.
Guys, can you hear me?
yes.
Hello?
Yes.
Perfect. Hi, guys. Thank you very much for the call. I just have a couple of questions from my side. One question is sort of basically almost been answered. It was about the, the, the sort of call to go from high-grade to low-grade matte. It's sort of been answered. I just wanted to, to sort of get a bit more color on why that conversion price increased, and sort of the intent for this quarter and the next quarter to also stay sort of where you are or maybe go back to, to doing the sort of higher grade. Then maybe just a second question on RNI. Just maybe a reminder for me where that sits on the cost curve, because, I mean, I think the last two quarters, margins have sort of decreased quite a bit.
I assume that that asset is not performing as well. I've seen some other companies are definitely not making profit at these levels. Just a reminder on where that asset sits in the cost curve.
Yeah. Yeah. No, look, thanks, Neil. It's good to hear from you. In terms of, we have seen an increase in the conversion cost from low grade to high grade matte. Look, that, that, that's something that, that is out of our control. That is why one of the things that we announced was the opportunity for us to acquire our own nickel matte converters. The CapEx, very modest, $110 million for converter plant with capacity of 50,000 tons of nickel on an annualized basis. You know, that if you look at again, the, the margin differential only last quarter was a couple thousand tons between matte and NPI. That, that obviously, you know, pays itself off very quickly.
Not only that, as I said, the, the, the conversion cost has increased significantly to about $2,000 a ton. The converter opportunity is something that, that we announced. We're still very much looking into that and, and looking to pursue that opportunity. You know, we think it makes a lot of sense.
In terms of your question around RNI, I think what that highlights is that, you know, one of the things that, that we have consistently done is, is look to not just grow our nickel production, but also continue to integrate our operations and invest in the next generation of nickel processing lines, which deliver lower OpEx, you know, that integrated nature, which provides more flexibility, particularly in the case of nickel matte. RNI is an older plant. Potentially, you know, look, it, it will just stay on NPI. One of the things that we benefit from is we have that product flexibility.
I think if you look back at the point from where we converted HNI to the production of nickel matte, and then the associated margins from RNI from the same point, you know, our ability and the decision to move to the production of nickel matte has delivered far superior EBITDA. It's something that just gives us flexibility moving forward. Whilst nickel matte margins were soft this quarter, I think, you know, just looking at the March quarter, things can turn around very quickly, and I think that's probably something. The key message from this quarter is, you know, we've weathered, you know, the lowest NPI and LME pricing we've seen probably the last year.
Just prior to that, only a couple of quarters ago, you know, we came through record high input costs in terms of coal and fuel oil prices. I think, you know, we've been right through the cycle on both ends, proved the robustness of the business. That is why we sort of have made the announcement and looked at the opportunity to be able to diversify between NPI and nickel matte from our RKEF operations. That's what's driven the transition into Class 1 nickel, which is the 10% acquisition of the HNC HPAL, and then the potential construction of the ENC HPAL, which will not only produce MHP, but nickel cathode and nickel sulfate, which will provide significant product diversity.
You know, as we've been able to successfully do with, with HNI when compared to RNI, is convert some of our capacity to producing a higher value product in the market.
Yeah. Perfect. Thanks a lot. On that nickel matte converter you mentioned, if you sort of execute that, what's the sort of timeline, timeline on that being implemented?
Yeah. We, we, we announced that, probably close to six months ago. We, we are still working through that acquisition. Not finalized as yet, but it is something that we've flagged and still something that we, we, we do intend to execute on. We, we, we're, we're working on. I can't give away specifics, but look, it, it's something that we've flagged, said we wanna do, and we're certainly working on, on, on following that through.
Perfect. Thanks a lot. That's all from me.
Thank you.
Thank you. There are no further questions at this time. I'll now head back to Mr. Werner for closing remarks.
Oh, thanks, everyone. Appreciate your attendance on the call. As always, myself, Chris, Cam, always available for any questions. Please don't hesitate to reach out. Thank you again for your attendance, well, evening our time and, and, and morning your time. Thank you.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.