Thank you, and thank you everyone for your attendance today at short notice. Apologies that we don't have an online version. We'll ask you to refer to the presentation that was in the announcement. The deal did come together quite quickly, there wasn't enough time to line everything up. We're very excited to announce a strategic partnership with United Tractors. There's two elements to the transaction. The first is a conditional placement for AUD 943 million, at a placement price of AUD 1.10, which represents a 27.2% premium to our last traded price as of April 2.
This would take UT's holding, and it's through its subsidiary, PT Danusa Tambang Nusantara, or DTN. This should take them to 19.99% shareholding within Nickel Industries. If you look at the chart there on the right, you can see the pro forma ownership structure. This does include the issue of shares to Jinxin for the HNC acquisition. You can see there, Shanghai Decent, Jinxin would hold 22.5%, United Tractors, 19.99%, and remaining shareholders, 57.5%. The second element to this announcement is a collaboration agreement for the ENC HPAL project. DTN intends to participate in the acquisition of a 20% equity interest in stage one of the ENC project.
I should note that their participation in Stage 1 will be at a valuation of U.S. $2.5 billion. You would recall recently that the value was negotiated down to U.S. $2.3 billion. The difference in that valuation amount, NIC will retain that difference, that will be cash to NIC. As part of this announcement, we are also pleased to announce a further increase from 67,000 tons of capacity to 72,000 tons of capacity, with no increase to the CapEx, which further reduces the capital intensity and enhances the project economics. This is very reflective of the strong relationship that we have with our largest shareholder and partner, Shanghai Decent.
When the deal was originally announced, it was $2.5 billion of CapEx for 60,000 tons of capacity. That CapEx amount was then reduced to $2.3 billion, with the capacity increasing to 67,000 tons. As I said, very pleased to announce a further increase to 72,000 tons. This represents a 20% total increase in output since we first made the announcement, but very pleasingly, a 9.8% reduction in CapEx from when we first made the announcement. This certainly bucks the trend that you will see across the battery metals complex, where there seems to be a consistent raft of announcements on regarding CapEx blowouts.
We also do believe that a further CapEx reduction may be possible should we elect to go ahead with ENC phase 2. The partnership with United Tractors will allow us potentially to unlock stage two, which would be a doubling of the capacity that is envisaged in stage one. If you look at the right there, you can see what the ownership in the ENC project would potentially look like. Nickel Industries will hold 55%, Shanghai Decent, 25%, and United Tractors, 20%. This is a reduction from our originally stated 60%-80% ownership.
We always did intend that we would make room for a strategic partner, we're very comfortable with that number, at around 55%, given that if we do move into even stage 2, ENC, that ultimately it actually reduces our funding burden required for the ENC stage 1. Moving to slide five, a bit of a summary on who United Tractors is. UT is the major shareholder in Astra International, Astra hold 59.5% of the shares in UT. Astra International's ultimate parent is Jardine Matheson. They're a diversified Fortune Global 500 company. They have a diversified long-term portfolio with a very strong focus on Southeast Asia and China. They have a footprint in Indonesia, Singapore, Hong Kong, Vietnam, and China.
This diversified portfolio includes automotive, engineering, and heavy equipment, mining, construction, energy, financial services, hotels, and property. By the numbers, their FY 2022 revenue was $37.7 billion. They have assets of $89.1 billion, and across this diversified portfolio, they employ some 425,000 employees. UT is Indonesia's largest industrial conglomerate. Astra, who is their largest shareholder, is the 6th largest listed company in Indonesia. UT has a very diversified portfolio, which spans mining, contracting, construction, and energy. By the numbers for UT, FY 2022 revenue of $8.3 billion, $1.4 billion of net profit. They currently sit on $2.3 billion in cash, and they employ over 32,000 employees.
If I could ask you to move to slide six, just to give a bit of an overview and summary on Astra International. I mentioned earlier that the ultimate parent is Jardine Matheson, who hold a 38.2% shareholding in Astra. They are the largest listed conglomerate in Indonesia. Their diversified portfolio includes heavy equipment, mining, construction, energy, and automotive. On the heavy equipment mining side, they're the partner of choice for Komatsu, Sumitomo, and Canbei. On the automotive side, they have very strong partnerships with Toyota, BMW, Daihatsu, and Honda. They're very dialed in to the automotive space, particularly in Indonesia.
By the numbers, $20.3 billion of revenue for FY22, $1.9 billion of net profit, $26.5 billion of total assets, and in excess of 200,000 employees. Moving on to page seven, now that I've given an overview of the transaction and the background to the shareholders. As I said earlier, we see this as a transformative strategic partnership with a highly credible and significant regional investor. They have a deep knowledge and history in Indonesia, particularly in the Indonesian mining, construction, and automotive landscape. The injection of capital allows us to effectively fund the ENC project for Stage 1, and we envisage that no further equity issuances would be expected by Nickel Industries to fund the ENC project.
There may have been some overhang on the stock as to, you know, how this ENC project was going to be funded. We believe this investment answers that and should allow us to move forward, subject to a positive FID, rapidly to commence the ENC project. This investment also brings us the potential to look at and explore an expanded ENC project. Rather than just the phase 1 of sort of 70,000 tons, that potentially could be doubled. UT has indicated their very strong desire to also participate in that second stage. That forms part of the collaboration agreement that we have with them.
What the diversification into the ENC HPAL means, and if we did it initially with an acquisition of the 10% of the HPAL, is it gives us a fully diversified nickel product offering across NPI, nickel matte, MHP, nickel sulphate, and nickel cathode. It changes our product mix from Class 2 to Class 1, where potentially, if we did both stages of ENC, we would be looking at our product mix of Class 1 nickel being very close to 90%. That Class 1 does have higher margins and a lower carbon intensity. It also allows us to diversify our customer base and continue to work to attract a strategic player from the EV or battery space.
On slide eight, you can see here the transaction details. For the conditional placement, I mentioned at the beginning of the call, 857 million NIC shares to be issued to UT's subsidiary, DTN, for AUD 943 million, which represents 19.99% of the pro forma ordinary shares outstanding upon completion. The placement price of AUD 1.10, which represents a 27.2% premium to the last traded share price. UT will have the right to appoint a director to the Nickel Industries board. The key documentation behind that is just a conditional share subscription agreement.
The timetable for the execution of the issue of shares is shareholder approval will be shortly expected in early in Q3 of 2023, as is completion. There are some key conditions precedent to the completion of this placement, and that is the positive approval for the placement to Shanghai Decent for the acquisition of the % equity interest in the HNC HPAL project, and that will require Nickel Industries shareholder approval for the conditional placement. That needs to be achieved before the 29th of September, 2023. The second element of the collaboration agreement, which I mentioned, UT intends to participate across ENC, phase 1 and 2, at a 20% level. We've executed the collaboration agreement.
If we make a FID investment, we will nominate DTN to acquire a 20% interest from NIC in the ENC project. If we do not make a positive FID decision by 29th of September, that collaboration agreement will terminate. Just in regards to moving towards that FID. We are about to appoint in the coming days, a global tier one engineering and process firm with deep HPAL experience, as well as very strong Indonesian experience in HPAL. They will provide us with a third-party audit and full review of the ENC feasibility study, and that will assist the NIC board in ranking or not ranking a FID. Again, that FID intention is to make that before 29th of September, 2023.
There are also conditions precedent to this transaction: completion of the HNC placement, completion of the placement to UT. Obviously a positive FID to invest in the ENC project, and completion of the feasibility study and additional due diligence, along with shareholder approval from Nickel Industries, NIC's shareholders. In terms of moving to slide nine, the transaction timeline. The shareholder meeting to approve the HNC placement is set for Wednesday, the 5th of July. As I've mentioned earlier, we will be looking to seek shareholder approval for the conditional placement early in Q3, along with obviously, allotment of those shares assuming that we receive shareholder approval. To again summarize the transaction.
United Tractors, as I mentioned, a subsidiary of Astra, whose ultimate parent is Jardine Matheson, a Fortune Global 500 global enterprise. Astra is the largest listed conglomerate in Indonesia. They're a partner of choice for many large international operators, and I went through those names earlier, Komatsu, BMW, Toyota, et cetera. United Tractors is one of the largest heavy equipment distributors in Indonesia, and Danusa Tambang Nusantara has expertise in the Indonesian mineral mining sector, particularly in the energy and also the gold mining space. Jardine, through its investment, has a very long-term approach to capital allocation. They've been a major shareholder in UT and Astra for in excess of 20 years.
We see that same relationship and long-term approach as a very good fit with NIC and our philosophy, and also that of our largest shareholder, Shanghai Decent. Being obviously the largest listed conglomerate and sixth-largest listed company in Indonesia, with in excess of 200,000 employees, they have a very deep local knowledge, very strong network throughout Indonesia, and very strong operational expertise, particularly in mining services. One of their subsidiaries, PAMA, is one of the largest local mining contractors in Indonesia. They have significant financial strength. As I mentioned, UT has $2.3 billion of cash sitting on its balance sheet, and the Jardine Matheson assets, as I mentioned, $89.1 billion.
This investment obviously significantly strengthens our balance sheet and allows us to pursue our desire or aspiration to diversify further into the Class 1 nickel space. Finally, on slide 11. You can see in the chart on the right, where NIC sits today at 83,000, two jump ups to the left there. If we go ahead with ENC Stage 1, and if we were to execute on ENC Stage 2, where that would place us amongst the global nickel producers. You can see there, Stage 1 and 2, 196,000 tons of nickel per annum, makes us clearly the fifth-largest diversified nickel producer in the world.
We are already today a top 10 global nickel producer. We've been able to achieve this, and we could potentially achieve the 196,000 in under 10 years from IPO. That's really due to the strong relationships that we have with Tsingshan and the CapEx guarantees that we benefit. We are the first HPAL or ENC is the first HPAL to be announced in Indonesia with not just a CapEx guarantee, but a nameplate guarantee, a timeframe guarantee, and also a diversified product mix of not just MHP, but also nickel cathode and nickel sulfate. This allows us to unlock our aspirations to really transform the business into that Class 1 nickel space.
We've got a very strong presence in the Class 2 NPI space. We have the largest holding outside of Tsingshan, of NPI in Indonesia. We will look to replicate that growth in the Class 1 nickel space. As we were in NPI, we look to be an early mover, and we believe that teaming up with UT Astra will enable us to achieve this goal. With that, thank you, everyone, and I'll now hand over to questions.
Thank you. If you'd like to ask a question, please press star one on your telephone and wait for your name to be announced. If you'd like to cancel your request, please press star two. If you are on a speakerphone, please pick up the handset to ask your question. Today's first question comes from Cameron Taylor from Bank of America. Please go ahead.
Good morning, Justin, and thanks for the opportunity. My first question, why are you issuing equity at $1.10 per share? Is this what you value the company at? Given the recent Independent Expert Report findings, how do you view their controlling interest value for Nickel Industries at $1.54? I've got a couple more. Thanks.
Yeah. Chris, do you want to speak to that one?
Yeah, sure. No problem. I think, Cameron, looking at solely controlling interest, these guys do not have control. They're a 19.99% shareholder. We still have a larger shareholder than them as well, so I don't think it is fair to say that they should be looking at a controlling perspective. On top of that, as part of our shareholder vote for the 5th of July, the independent expert, whilst they don't need to opine on this transaction, they will be providing an update on what this transaction means for shareholders in the context of the existing AGM.
On top of that, they will probably, I expect, would outline, just like they did in the HNC transaction, Independent Expert Report. I expect that they will outline all of the other strategic benefits that are contained in that Justin's just run through. They will probably allude to those as well. I don't think it's a straight like-for-like comparison. Is it what we value the company, the share price? No. We think when you look at the growth profile that this transaction is unlocking, and specifically the opportunity to move from just stage one ENC to stage two as well, we think there's a lot of benefits and a lot of value for the company in that.
Thank you. Also, are you concerned about, you know, the reduction in free float at all, given that, you know, Shanghai Decent and UT will be large shareholders, following the approval of the conditional replacements?
I'm not concerned at all by that. We're not acquiring other people's shares. There's still the same, the existing number of shares that are available for trading today will be available, should this transaction close.
Okay. Just on the stage two CapEx and timing, are you assuming similar CapEx to stage one? Would you assume to get the similar sort of CapEx guarantees? Are there any other integration synergies that can reduce that CapEx for stage two compared to stage one? Thank you.
Justin, do you want to run through that?
Yes. Look, we are confident that there will be synergies, as you've outlined. We are very optimistic that stage two, we would be able to negotiate a full reduction in the CapEx should we go ahead with stage two.
Okay, thanks. I'll just ask one more, if I can. Last one. You mentioned in the release that you're pursuing growth opportunities. You will be pursuing growth opportunities in the Indonesian nickel space. Have you got any specific examples of what these projects are, given that United Tractors, you know, will be in partnership with them?
The growth opportunities, the immediate growth opportunities outside of ENC, are really resources. We remain committed and focused on increasing our resource base. That UT does bring a very good mine in Stargate Mine. You know, for NIC, our focus is to continue to grow that resource base as resources continue to increase in value, given the significant amount of processing capacity that's now mining in the measure.
Okay. Thanks, team.
Yep. Thanks, man.
Thank you. Once again, if you'd like to ask a question, please press star one on your telephone and wait for your name to be announced. Your next question comes from Tim Zhao from Lazard Asset Management. Please go ahead.
Hi, Justin. Hi, team. Just a quick question, a couple of questions for me. Can you just confirm, post this deal for ENC stage one, I calculate the remaining CapEx for you guys is about $440 million. Is that correct?
I'll take that, Justin. Yeah, no. Look, the simple way that everyone should look at this is the stage one, it's $2.3 billion for 100%. If this transaction goes through, we'll be taking 55% of that, so that's $1.265 billion.
Yep.
The number slightly reduces because as Justin's alluded to, if it goes through, UT is coming in at a higher valuation than we, than we negotiated for ourselves with our partners. They're coming in at $2.5 billion. That additional $200 million, and 20% of $200 million is obviously $40 million. That additional $40 million accrues directly to Nickel Industries, so it reduces the amount that we have to pay.
Right.
$1.2 billion. Then look, as I've said before, we will be looking to fund this with a mixture of debt and equity. That has not changed. This transaction doesn't change that. We have a total funding requirement of $1.2 billion over the course of the next, say, two to three years of the construction build. We've got our existing operating cash flows, and we've now got another. We will have another AUD 900 million.
Right. I guess I'm calculating 1.2 minus the $628 million that you're getting from UT, right?
You can look at it that way. We've obviously got, as I said, we're looking at, and I've said this to all investors and the community, the investor community, we are in discussions with debt financiers at the project level as well. That remaining amount, it may not be that the entire amount of equity just goes straight in like that.
Right. Also on stage two, I think Justin mentioned about, you know, there's no equity issues, further equity issues in stage one and two. Because this transaction, does that mean, assume $2.3 billion for stage two, or probably slightly lower, and a 55% interest, so there's another $1 billion funding requirement that will come in from the debt holders?
Yeah.
I should think about it.
No, what we absolutely do not foresee another equity issuance at this stage. As I've been very clear with all our debt and equity investors, the funding for these HPALs, you don't put all of the money in on day one. It's required over the timing of the construction. We have a lot of time to continue to build up cash flows through our existing operations and through our modeling. We do not expect to have to do another equity raise it.
Last one, I think, if I may. Does this transaction prevent you guys to deal with third party for the next three months on the same term or better terms?
What.
Does this transaction prevent you guys to deal with another party for the next three or four months?
Absolutely not. One thing that Justin's mentioned is that we do retain the right to the percentages that we've outlined there, the 55%, 25% and 20%, we do have the ability to introduce other strategics in terms of targeting the likes of a global battery maker or a global EV maker to supplement what UT brings to the table as well.
Okay, cool. Thanks.
Thank you.
Thank you. Your next question comes from Kate McCutcheon, from Citi. Please go ahead.
Hi, good morning, Justin and Chris. Congrats on getting it this way at a premium, well, likely to. Just some comments on the decision to not give your other insto and retail shareholders an opportunity.
Justin, do you want that, or do you want me to take that?
If you want to take it, please, sure.
Kate, I think it's. I think when you look at the, when you look at the size of the premium, 27%. That's obviously to the last close, it's not as if the, that it's we've issued at a dip either. When you compare it to the 30-day VWAP, 60-day VWAP, it's very similar type premiums. If our institutional and retail shareholders want to buy at a 27% premium, I would imagine that they would have been in the market doing so already.
Okay, makes sense. Are there any escrow clauses on the share issuance or any links to the equity with the ENC stake that we should be aware of?
Sorry, can you just repeat that question?
The 20% stake that United Tractors will take, are there any kind of escrow periods on those shares, or is there anything that ties the shares to the 20% stake in ENC per se?
No, no. We will be for the downstream, for the downstream investment, as we've said, in or as Justin said, we're still moving to definitive documentation on that. It may be contained in the definitive documentation, but at this stage we have not got those sort of clauses in there.
Okay. Lastly, I think you did kind of touch on this with Tim's question. The CapEx for stage one of ENC, how do you see that profile flowing? Will it be pretty evenly staggered over the two-year construction timeframe? You mentioned you won't opt for the 55% on day one.
Yeah, that's right. The money's not gonna be on day one. I think as you've seen, as you've seen with our previous investment, and the Oracle is a good one, a good example. As the project gets constructed, funding will be required along that same period. Will it be exactly matched? No. Will it be faster in some points and slower in some points? Yes. That, that is all still to be determined. Should we actually, one, get a positive shareholder vote on the fifth of July to actually progress through to having the ability to do, an HPAL project with Tsingshan.
Two, still subject to the finalization, as Justin said, of the feasibility study, and a potential final investment decision on the back of that, by the board of NIC.