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 everyone for your attendance today and welcome to the Nickel Industries June Quarter results presentation. If I could ask the moderator just to turn to the next slide. Please start with safety and sustainability. LTIFR end of June was 0.05 with no lost time injuries recorded during the quarter against 4.6 million work hours registered. For the 12 months to 30 June, 18.6 million work hours have been registered with only a single LTI occurring. The company-wide 12 month rolling TRIFR at the end of June was 1.29. I was pleased during the quarter to release our 2024 Sustainability Report as we move towards alignment with IFRS Sustainability Disclosure Standards and the Australian Accounting Standards Board guidance.
Some of the highlights from the Sustainability Report were the formal establishment of the Nickel Industries Foundation, which is a big milestone for the company that will allow us to further embed some of the programs that we have now engaged in in terms of education, health, environmental conservation in and around the communities in which we operate, and also the establishment of a biodiversity area. We are one of a very small number of mines that have successfully been able to establish a biodiversity area in close proximity to our mining area. If we could just go to the next slide please. June Quarter, another solid quarter, $86 million of adjusted EBITDA from operations. That brings our first half unaudited adjusted EBITDA to $183.6 million and that's a material outperformance versus the first half of 2024.
RKAB nickel metal production was 30,463 tonnes, slightly lower than the March quarter and EBITDA was also lower than the March quarter and that was impacted by the realignment of some kilns and power station maintenance which I'll touch on later in the presentation. HPAL production from HNC was 2,075 tonnes of nickel, so it continues to operate well above nameplate capacity. It was 38% for the June quarter. EBITDA was down, was $10.8 million, so it was materially lower than the March quarter. There are a number of reasons for that which we will explain further on in the presentation. The actual HNC EBITDA, outside of Sin Creation, the trading company, was actually up 11% and that was due to higher MHP prices. Payabilities for MHP are close to 90% at the moment and that offset higher operating costs due to higher input costs from sulphur.
Sin Creation, which is the trading division, which I mentioned. That was really where the impact on the EBITDA came from. That was due to a delay in sales because of the intended commissioning of the E and C integrated nickel refinery cathode plant, which we made the decision not to continue with, and also just some delays in final contract settlements. We expect that to catch up over the next few months. Pleasingly, margins remain very strong, over $6,000 a tonnes. Pleased to report record ore sales from the Hengjaya Mine of over 3 million wet metric tonnes and EBITDA of $41.4 million. That was a material increase on the March quarter, 33% higher and much stronger EBITDA per tonne margins. They've risen 25% and they're now currently sitting at US $13.7 a wet metric tonnes. We could just go to the next slide, please.
RKAB production, as I mentioned, decreased 4%. Predominantly, that was the realignment of 2 kilns at Oracle Nickel and that work was completed sequentially across April and May, and then maintenance at the ANI and ONI power plants. ONI has been completed and the ANI maintenance is expected to be completed at the end of July. The lower production and the increased power costs as the power stations were down for maintenance led to an increase in costs. NPI pricing remained stable, $11,449, slightly higher than the previous quarter, whilst EBITDA is down $10.6 million, so $44.3 million in the first quarter to $33.7 million. We actually picked that up at the Hengjaya Mine, so Hengjaya Mine EBITDA was up $10.4 million. This really goes to highlighting the benefit of having an integrated operation and the movement of margins across the value chain.
We could just go to the next slide, please. HNC , over 20,000 tonnes of nickel was produced and at 1,877 tonnes of cobalt. As I mentioned, continues to outperform versus nameplate. Operating costs did increase due to higher sulphur costs, but I mentioned payabilities for mixed hydroxide precipitate also increased in terms of the EBITDA margin. That remains strong at $6,219 and at the operating entity of HNC , EBITDA per tonne margins actually increased across the quarter. They went from $4,297 a tonne to $4,819. How we arrive at the $6,219 a tonne, that includes the trading division margin, which is sin creation and that's typically averaged around sort of $1,400 a tonne. If we could just go to the next slide, please. E and C.
We were very pleased to announce post quarter end that the E and C integrated nickel refinery for cathode has reached a point where we could commence commissioning. The decision was taken to defer that commissioning and that was to better align working capital requirements, but also given that the commercial sales license, which is the IUI, is not anticipated to be issued until January of next year. The practice of coming into production before we have the IUI issued is what we've done previously at both ONI and AN l. Given the large draw that that would take across a number of months, the decision was made to not commission at this point and to really focus on completion of the remainder of the E and C project, which, as you can see from the photos on the right there, is progressing extremely well.
We're targeting completion of the next stage of the refinery process, which is the sulphate circuit in Q4 of 2025, and then finally the HPAL smelter itself to be complete at the end of this year with commissioning and then issuance of an IUI license early in the first quarter of 2026. If we could just go to the next slide, please. Hengjaya Mine operations, as mentioned, record sales over 3 million tonnes. Pleasingly, the EBITDA per tonne margin rose from $10.90- $13.70. At the end of July, sorry, 28th of July, pleased to report that current mine sales for the month of July sit at 1,226,540. We're setting ourselves up and targeting another record quarter. In the September quarter of this year, there was a slight increase in operating costs and that was just related to an increase in royalties from 10%- 14%.
We are also opening up a new pit which is targeted to deliver us higher saprolite grades. We hope that will flow into increased EBITDA per tonne margins in the September quarter. Also pleased to announce during the quarter approval of the feasibility study to increase the Hengjaya Mine RKAB from the current 9 million tonnes to 19 million tonnes. That's the key first step in achieving that revision. Over the course of the next week, we will be lodging our final AMDAL, which is our environmental impact study, for approval and we remain optimistic of receiving approval of that AMDAL in August. We're targeting the issuance of a revised RKAB to be completed sometime this quarter. Given the very strong margins that we're experiencing from the Hengjaya Mine, we're looking forward to delivering a very strong second half, particularly from our Hengjaya Mine operations.
Finally, if we could just move to the next slide and an update on our Sampala project that's also progressing extremely well. We've lodged a feasibility study for an initial operation of 6 million wet metric tonnes per annum and we remain confident of receiving that approval. In this September quarter, we have started construction of eight kilometers of haul road and you can see in that map there, it's the turquoise section that is predominantly within the three IUPs. The green section in the middle there is a section that will then link us into an existing haul road that will take us all the way into the IMIP . Eight kilometers of that required 22 km is already well advanced and we're looking forward to completing that, if not at the end of, early in the fourth quarter.
We continue to expand the resource at Sampala through a very aggressive drilling campaign. We currently have 16 drill rigs on site and we completed over 1,000 holes for the quarter. We remain very optimistic of Sampala achieving an exploration target of in excess of a billion wet metric tonnes of ore. With current margins of $13.7, you can see the significant value that the Sampala project will bring to Nickel Industries . The development continues to go extremely well as we look forward to targeting first ore. In summary, another strong quarter despite some downtime for the kiln alignment and ONI power stations, which did contribute to slightly reduced EBITDA. As I mentioned, the unaudited adjusted EBITDA of $183.6 million for the first half of this year is a material improvement on the first half of last year.
We have some exciting catalysts coming up for the second half of this year. We continue to push the RKAB approval and as I mentioned, we remain very optimistic of some positive news over the coming weeks and months in terms of achieving that approval. Sampala, which we've just touched on, continues to grow the resource. Mine development is continuing very well and then the continued delivery of the E and C project, which is tracking extremely well, and EBITDA margins remain strong at over $6,000 per tonne margin. With that, I'll hand over to Q and 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 Richard Knights from Berenberg. Please go ahead.
Hey, Justin, thanks for the call. Just a quick one on cash flow. I mean, obviously a good quarter from an EBITDA perspective, but your cash flow from operations was broadly neutral. Can you just maybe, and it might be one for Chris, just help us out with a sort of bridge as to how we get from that EBITDA number to the neutral cash flow number.
Chris, do you want to take that?
Yeah, I'll take that. Look, the main thing with that really is, Richard, is the working capital build. We had quite a large working capital build in the operations, particularly in the RKAB operations. Tsingshan and I saw the opportunity to really build the nickel ore inventory and coal inventories. The effect there in building that is you obviously got an issue with your cash flow. It reduces your cash flow through the period.
Okay, thanks. You'd expect that's kind of a one off for this quarter and we'll over the second half of the year.
We'd expect that to unwind. Absolutely.
Yeah. Yeah.
Okay, fine.
Thanks. Just another one on MHP realizations. It seems like it's a pretty big move, up to 90% realizations from where we were not too long ago. I think probably closer to 70%. Just wondering if you can give us any sort of flavor about what you're seeing in the market and what's really driving that uptick in realizations.
Yeah, I think there is some market tightness which is being reflected in improved payabilities. It's also sort of offsetting a reduction in the, you know, a decrease in the LME price. Whilst we had a, you know, looking back at last year, we had a higher LME price but a lower, lower payability. It's sort of almost kept in lockstep as the LME price has come down. We have continued to see increased MHP payabilities, which has meant that, you know, we've seen margins remain pretty stable.
Yep. Okay, brilliant. Thanks, guys. I'll hand it on.
Thank you. Once again, if you wish to ask a question, please press star one on your telephone. The next question comes from Chunwei Mui from Akan Capital. Please go ahead.
Hi there, can you hear me, actually?
We can.
Okay, a couple of questions for me. Number one is, I guess, the delaying in the commissioning of E and C integrated nickel refinery. How much does that save in terms of working capital or defer?
We haven't released obviously full numbers on that, Chunwei, so that's not public, but it was significant enough for us to take that decision to not build up that working capital for 2, 3, 4 months ahead of the sales license.
Okay, but I guess you know. Yeah, yeah, but it relates to the last question that was asked, I guess, by the previous inquirer. For example, in Q2, the working capital bill was, a lot of that was for E and C.
Yeah, a lot more of that was working capital build at the mine for limonite inventory build. We continue to build our limonite stockpiles, obviously for the commissioning of E and C. What I was referring to now with Richard's question was more around the RKAB operations and the inventory there, the nickel Ore inventory.
The coal inventory for the RKF operations, the working capital build that we're saving, what we're talking about for saving in delaying the commissioning of E and C and particularly the cathode circuit that we're intending for July ahead of the sales license, that's the usual process to take MHP or to take the limonite or convert it to MHP and then convert it to cold cathode and sulphate. That's several months of inventory buildup that we did not want to incur. Now in Q2, Q3 ahead of getting our sales license, which Justin has referenced in January next year.
Okay, I guess second question is in the second half of this year, how much debt service is required in terms of interest, amortization for the bond, and is there any bank debt amortization repayment requirement?
We have amortized. Interest amortization payments were made in July of $33 million and that's all on the banks across the bond and the bank loans. There's another $100 million due in the remainder of the year across, and that's combined banks and bond interest and amortization that's in Q4. The numbers are obviously quite large. It's quite clear that cash flow is obviously tight and we're actively managing, and clearly that's one of the reasons why we're actively managing our working capital. We also remain in active discussions on various other sources of financing, if that's required, obviously depending on margins, what's required, and when I say other sources of financing, I'm talking debt financing. We have very good relationships, I think, with our banks and we have very good support from the debt capital markets. We do know that the debt capital markets are extremely strong right now. We're absolutely managing all of that and in active discussions on all fronts, obviously excluding equity raises.
Okay, sorry. That's $100 million, that includes interest, right you said?
Yes.
That's after the $33 million paid in July.
Yes.
Okay, got it. Thank you.
Thanks Chunwei.
Thank you. Once again, if you wish to ask a question, please press Star one. Your next question comes from David Coates from Bell Potter Securities. Please go ahead.
Thanks guys. A couple of my questions have already been answered, just touching on Sampala perhaps. First, the RKAB mining permit. Do you think that should be arriving in August and you'll be able to fully ramp up production from the Hengjaya Mine over the balance of the calendar year? Is that how we should be reading that?
Yeah, we remain optimistic of getting that approval and increase in third quarter. We targeting obviously we did $3 million for the quarter, we're at $1.2 million already for July. The low target would be 12 million tonnes for the year. We are targeting significantly above that given that there's still another six months remaining in the year.
Excellent, thank you. Just on Sampala, you know you've got a big drill program underway there. You're also constructing that haul road, that haul road looks like a sort of final road, I guess access to the IMIP. How far are you going to advance development of Sampala? I guess hand in hand with the resource drill out that's going on. And. What sort of timing, I suppose, are we looking at for commencement of production from Sampala with those development activities underway?
Yes. We're targeting completion of the first 8 km early in the fourth quarter of this year. The remaining 14 km, we're well advanced in getting a forestry permit. As soon as we receive that forestry permit, we'll be in a position to complete the remaining 14 km. Once that is complete, we're then ready to pre-stripping and to start mining. Given one of the advantages of the Sampala project is we're able to leverage the existing 33 km of haul road that already exists into the IMIP . We are looking sort of early in the second half of next year for first ore delivery. Obviously, that's subject to permitting and receipt of approvals to be able to allow us to complete construction of the haul road and also to start mining.
Cool. What does the CapEx profile look like for that over the next nine months or 12 months?
Rather a route looking at about sort of $30 million remaining or less U.S. to commencement of production.
Excellent. Thanks, Justin.
Thanks, Dave.
Thank you. There are no further phone questions at this time. I'll now hand back to Mr. Werner for closing remarks.
Thank you everyone again. Just to reiterate, some very big catalysts upcoming in the second half of this year. We look forward to updating the market as those come to hand. Thank you everyone for your attendance.
Thank you. That does conclude our conference for today. Thank you for participating. You may now disconnect.