Transcription of The Stock Network Interview with Nickel Industries (ASX:NIC), Managing Director Justin Werner
Lel Smits: Nickel Industries has just announced two significant transactions, both strengthening its position in Indonesia’s nickel industry and increasing its exposure to the EV battery supply chain. Nickel Industries has acquired stakes in the CNE and TMI HPAL projects, securing additional Class 1 nickel production while maintaining a disciplined approach to growth. Importantly, the Sampala project remains central to the strategy, with the resource identified as the exclusive ore supplier to both CNE and TMI.
As Nickel Industries positions to become an even larger player in the battery materials market, I’m joined by Managing Director Justin Werner to discuss the rationale behind the transactions and also key catalysts to watch next. Justin, welcome back to the Stock Network.
Justin Werner: Thanks, Lel, and great to be here again.
Lel Smits: Great to have you on. And you have just announced investments in two HPAL projects while retaining a significant stake in Sampala. Now, for investors, what’s the simple takeaway from these transactions? And also, how do they strengthen Nickel Industries’ position in the EV battery supply chain?
Justin Werner: Yeah, so what we’ve been able to structure is effectively an additional 17,000 tonnes of nickel in mixed hydroxide precipitate, which margins for MHP in the first quarter of this year were close to US$10,000 a tonne.
We’ve been able to structure it where it’s a cash consideration of US$169 million, so a capital intensity of a little over US$10,000 a tonne, which is very attractive compared to our peers that are paying sort of US$20,000 to US$30,000 a tonne capital intensity. And we’ve also, it’s allowed us to monetise our Sampala resource, and we effectively acquired that for US$248 million on a 100% basis. And we’re swapping shares in one of the HPALs at a US$1.3 billion valuation, so it’s a 5.4 times uplift.
And I think it speaks to the quality and the value of the Sampala resource. We will retain a 42% interest in the Sampala project, so remain the largest shareholder. And as I mentioned, we will have 17,000 tonnes of new attributable nickel production, and that will come via a 17.5% interest in one HPAL and a 38% interest in the other one.
Lel Smits: So Justin, as you’ve outlined, the CNE and TMI transactions do have positive ramifications for your Sampala project, which also recently announced an upgraded mineral resource estimate. But in terms of the broader quality and strategic value of the project, what does this say about that project, and why should investors be paying attention?
Justin Werner: And look, Sampala is a world-class ore body. We announced a resource upgrade recently, taking the resource to in excess of 1Bn wet metric tonnes at 1.2%. Current margins on those sort of grades are $10 a tonne, so you can see the resource value in situ in that particular project.
And at a rate of 20Mt a year, there’s 50 years of mine life sitting there in very close proximity to our HPAL operations, and that’s really the key. We’ll be able to leverage Surrey Pipeline, which we’re doing for another HPAL E&C, and so that’ll give us a number of cost benefits. And also the integration with the HPAL projects, we think will stand Sampala in very good, in a favourable light when it comes time to apply for our ore quotas.
And so we think that should give us a boost there as well.
Lel Smits: And Justin, with these investments strengthening Nickel Industries’ position in the EV battery supply chain, what are the most important operational development, also commercial milestones that investors should now be watching for?
Justin Werner: Yeah, we have a number of milestones that are upcoming. The first one will be first mixed hydroxide precipitate from our E&C HPAL project in July, which is an exciting milestone.
And we’re aiming to have that ramped up to nameplate capacity by sort of October, September, October of this year. So that will be another milestone, will be achievement of the nameplate capacity. We’re targeting first ore from Sampala towards the end of the first half of next year.
And then our two new HPAL investments, we’re targeting to be at nameplate capacity by sort of September, October of next year. So there’s a number of milestones upcoming over the course of the next year that will be very, very EVADARA creative. And so we look forward to announcing them as we reach them.
Lel Smits: Justin, appreciate the update from Nickel Industries today.
Justin Werner: Thanks, Lel. Appreciate it.
Ends