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Click to edit Master subtitle style Nickel Asia Corporation Presentation on NAC PSE: NIKL RIC: NIKL.PS BBG: NIKL.PM.

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Presentation on theme: "Click to edit Master subtitle style Nickel Asia Corporation Presentation on NAC PSE: NIKL RIC: NIKL.PS BBG: NIKL.PM."— Presentation transcript:

1 Click to edit Master subtitle style Nickel Asia Corporation Presentation on NAC PSE: NIKL RIC: NIKL.PS BBG: NIKL.PM

2 2 NAC at a glance ►Listed in the PSE on November 22, 2010 ►Largest nickel mining company in the Philippines and long operating history of mining nickel laterite since 1977 ►4 operating nickel mines, 5 nickel exploration properties, and 4 recently acquired exploration properties for gold and copper ►One of the largest supplier of lateritic nickel ore globally ►Substantial proved and probable ore reserves and long average mine lives ►Successful downstream processing with a 10%* interest in the world class Coral Bay HPAL facility ►Replicate successful technology with a 22.5% interest in the new Taganito HPAL facility to underpin earnings growth ►Strategic relationships with two key shareholders, Sumitomo Metal Mining (Sumitomo) and Pacific Metals (PAMCO) *subject to final SEC approval of property dividend from 60%-owned subsidiary, Rio Tuba Nickel Mining Corp, in the form of Coral Bay shares

3 3 Leading laterite ore producer with a strong reserve base 2012 Global Top 5 Laterite Ore Producers We are one of the largest lateritic ore producers in the world. We have substantial reserves to support our dominant position and supply feedstock to our downstream processing facilities Source: NAC Study Total Mineral Resources and Ore Reserves 1,2,3 Source: NAC, as of 31 December 2013 Notes: 1 Mineral resources and ore reserves for four operating mines (Rio Tuba, Taganito, Cagdianao, Taganaan) 2Includes subsidiaries that are not wholly-owned by the Company 3Report prepared under the Philippine Mineral Reporting Code Ore Type December 31, 2013December 31, 2012 %Inc kWMT%Ni%FekWMT%Ni%Fe Mineral Resources (Measured and Indicated) Saprolite 126,459 1.60 11.06 126,212 1.61 11.170% Limonite 258,630 1.10 43.28 264,912 1.10 43.18-2% Ore Reserves (Proved and Probable) Saprolite 119,594 1.50 11.22 119,058 1.50 11.690% Limonite 249,714 1.09 43.23 248,969 1.11 42.510%

4 4 Rio Tuba Mine Ownership NAC (60%) PAMCO (36%) Sojitz Corp (4%) OperationsCommenced 1975 Remaining mine life 1 Approx. 13 years MPSA Renewal Year2023 2012 Volume/Revenue5.6 mWMT / 4.0 bPHP 2013 Volume/Revenue5.8 mWMT / 3.0 bPHP Ownership NAC (65%) PAMCO (33.5%) Sojitz Corp (1.5%) OperationsCommenced 1987 Remaining mine life 1 Approx. 30 years MPSA Renewal Year2034 2012 Volume/Revenue2.4 mWMT / 3.1 bPHP 2013 Volume/Revenue3.9 mWMT / 3.1 bPHP Taganito Mine Note: 1Remaining mine lives from January 1, 2014, calculated based on December 31, 2013 ore reserves and estimated annual nickel ore shipments (and/or deliveries) for each mine OwnershipNAC (100%) OperationsCommenced 1999 Remaining mine life 1 Approx. 77 years MPSA Renewal Year2022 2012 Volume/Revenue1.1 mWMT / 1.1 bPHP 2013 Volume/Revenue0.9 mWMT / 0.7 bPHP Cagdianao Mine OwnershipNAC (100%) OperationsCommenced 1980 Remaining mine life 1 Approx. 8 years MPSA Renewal Year2032 2012 Volume/Revenue2.6 mWMT / 2.9 bPHP 2013 Volume/Revenue3.4 mWMT / 3.4 bPHP Taganaan Mine Overview of our Mines We have a proven track record in successfully operating mines in the Philippines. Most of our mines have significant exploration potentials.

5 Manicani Mine 5 ► MPSA granted on August 13, 1992. ► MPSA suspended by DENR on November 18, 2002 due to social issues. Operations put on care and maintenance status since then. ► On July 1, 2014, DENR authorized the disposal of nickel ore from the stockpile, which was the result of operations in the late 1990’s. ► Based on Company records, which are still subject to further drilling and testing for validation, available resources from the stockpile are: ► Actual shipments could commence in 1 to 2 months. Ore TypeGradeVolume Saprolite~1.75% Ni90 kWMT Limonite≥45% Fe≥1 million WMT

6 Our Investment in Downstream Processing Plants: Coral Bay FacilityHigh Pressure Acid Leach (HPAL) processing plant LocationIn a Special Economic Zone adjacent to the Rio Tuba mine OwnershipNAC (10%*) Sumitomo (54%) Mitsui (18%) Sojitz (18%) Ore SupplyLow-grade limonite ore from Rio Tuba mine; approx. 3.3M WMT per year OperationsLine 1 (10,000tNi) commissioned 2005 at cost of $200M Line 2 (10,000tNi) commissioned 2009 at cost of $308M TechnologyHPAL process licensed from Sumitomo ProductNickel-cobalt sulfide sold exclusively to Sumitomo Coral Bay Nickel Corporation (CBNC) US$ MM2013201220112010200920082007 Sales volume (contained-Ni tons)23,56923,92322,66818,78316,89810,50610,355 US$ MM Revenue274.2324.5382.1 352.7 234.4 153.5 291.1 Cost of goods sold260.6270.6255.0 203.8 166.0 142.7 115.6 Operating expenses8.78.47.4 6.3 5.8 4.7 5.0 Income from operations4.945.5119.7 142.6 62.7 6.1 170.5 Net income3.646.6117.4 139.8 59.1 1.9 166.0 Net income margin1.3%14.4%30.7%39.6%25.2%1.2%57.0% Average realized LME price6.477.9510.51 10.15 7.68 7.78 16.19 * subject to final SEC approval of property dividend from 60%-owned subsidiary, Rio Tuba Nickel Mining Corp, in the form of Coral Bay shares 6 ► Pilot plants to test for the commercial recovery of Scandium and Chromite to be commissioned later this year

7 7 Our Investment in Downstream Processing Plants: Taganito HPAL FacilityHPAL processing plant Location In a Special Economic Zone adjacent to the Taganito mine Ownership  NAC (22.5%)  Sumitomo (62.5%)  Mitsui (15.0%) Ore supply Low-grade limonite ore from our Taganito mine; approx. 4.5M WMT per year Operations  Nameplate capacity: 30,000 tNi  20% capacity increase to 36kT from 2016  First shipment commenced Oct 2013 TechnologyHPAL process licensed from Sumitomo Investment cost Capital cost of US$1,300m revised to US$1,590 million due to forex loss and effects of insurgency attack in Oct 2011, funded by JBIC loan (US$750m), equity (US$455m) and shareholders' loans. SMM funding NAC portion of shareholders' loans in return for 1% fee. Financing  JBIC Loan contract was signed on July 5.  Initial drawdown was made on August 4, 2011. ProductNickel-cobalt sulfide sold exclusively to Sumitomo Taganito HPAL Nickel Corp. ► Civil works have started for the construction of a pilot plant to test for the recovery of Hematite

8 8 Our Investment in Downstream Processing Plants: Taganito HPAL ► Sumitomo is one of the few companies with the technological know-how and proven execution capability to successfully develop HPAL facilities Present October 2010April 2013January 2012 We will derive from the THPAL facility:  Additional limonite ore sales (+4.5m WMT)  Direct P&L recognition of investment income from 22.5% interest

9 99 Product portfolio breakdown

10 NAC sales tonnages 10 6,459 3,448 ► From 1977 to 2004, annual sales volume averaged 880 thousand WMT ► In 2005, CBNC commenced commercial operations ► From 2005 to 2007, sales volume grew at an effective annual rate of 65% ► In 2008, following the global financial crisis, volume down by 53% ► From 2008 to 2013, sales volume grew at an effective annual rate of 32%

11 11 Low cost nickel producer ► Favorable geologic conditions at all of our four mines, with near-surface open-pit deposits ► Mining does not require explosives, chemicals or complex waste handling ► Ability to sell limonite ore and lower grades of saprolite ore to the China NPI market and Coral Bay HPAL enables lower unit cost per WMT of nickel ore sold ► All four operating mines are located within 3 to 7 km from the tidewater loading area ► Rehabilitation of our mining areas is a simple and straightforward process

12 12 Financial highlights Revenue (Php MM)Net Income 2 (Php MM)EBITDA 1 (Php MM) Notes: 1.EBITDA is calculated as total revenue less costs and expenses (before depreciation and amortization of RTN LT stockpile) plus other income from RTN’s ancillary services 2.Represents net income attributable to equity holders adjusted for derivative transactions gains/losses. Derivative transaction gain was Php519 MM in 2007, while derivative transaction losses were Php1,417 MM, Php79 MM, and Php47 MM in 2008, 2009, and 2010, respectively. 104% 242% 2007200820092010201120122013 EBITDA margin64%39%35%49%54%44% Net income margin 2 29%27%6%19%28%19%18% Ave. Ni price per pound (US$)16.879.546.679.8910.357.956.80 Source: Company data We are one of the most profitable nickel miners in the world. 65% -6% -16% -24%

13 13 YearType Payment / Issue Date Dividend rate %of PY Earnings 2011 RegularCashMay 9, 2011₱ 0.19/sh.*30.3% SpecialCashDecember 8, 2011₱ 0.08/sh.*13.0% 2012 RegularCashMay 11, 2012₱ 0.43/sh.*30.5% StockSeptember 24, 201250%N/A 2013 RegularCashMay 14, 2013₱ 0.28/sh.**31.7% StockJuly 12, 201325%N/A 2014RegularCashMay 8, 2014₱ 0.30/sh.36.9% ►Our dividend policy entitles holders of Shares to receive annual cash dividends of up to 30% of the prior year’s recurring attributable net income based on the recommendation of our Board of Directors. Historical Dividend Payout and Payable (since 2010 IPO) * Adjusted for the effects of the 50% and 25% stock dividends issued on September 2012 and July 2013, respectively. ** Adjusted for the effect of the 25% stock dividend issued on July 2013.

14 Nickel Asia Corporation EO 79 ON MINING POLICIES

15 Impact of Presidential Executive Order No. 79 on Mining Policies 15 ► Moratorium on new mining permits until higher taxes are legislated  No impact on existing operations.  No impact on exploration permits/activities.  Will delay conversion of exploration permits to mining permits.  Moving forward, amendments to tax structure are expected to be implemented in 2014- 15. ► Impact on higher taxes  Three of four NAC mines operating within Mineral Reservations will most likely not be significantly affected by higher taxes.  Currently our four mines are paying the following tax rates based on gross revenue: Taxes and FeesRTNTMCCMCHMC Excise tax2% Royalty to the Government *-5% Royalty for Indigenous People1% -- Local Business Tax0.5%1% Total3.5%9%8% * under the Surigao Mineral Reservation Act

16 Nickel Asia Corporation INDONESIAN ORE BAN

17 17 Nickel Ore Flow – 2013 Stainless Steel Production (million MT) Ni % Ni Tonne (kilo MT) 200-series7.51%75 300-series11.28%896 400-series3.80%0 Total22.5971 Ore TypeIndonesiaPhilippinesTotal mWMTNi-kMTmWMTNi-kMTmWMTNi-kMT High Grade 1.8% 52.0517.14.645.756.6562.9 Med Grade 1.6% 5.346.93.530.98.877.8 Low Grade 1.0% 2.111.610.055.312.166.9 Subtotal for NPI 59.4575.618.1131.977.5707.5 For Carbon Steel -25.0 Total59.443.1102.5 China’s Importation of Nickel Ore 72% to NPI production 28% to stockpile StockpilemWMT Ni- kMT Beginning548.3 2013 imports21198.1 Total26246.4 China’s Stainless Steel Production 510 MT

18 Nickel Ore Flow Outlook – 2014 18 China’s Importation of Nickel OreChina’s Stainless Steel Production 200920102011201220132014 Ni Consumption (MT)1.28M1.37M1.59M1.66M1.82M1.916M 1 Ni Supply (MT)1.32M1.43M1.60M1.72M1.96M1.920M 2 World Market Balance (MT)+40K-60K+10K+60K+140K+4K Ave. LME Ni Price ($/lb.)6.659.8910.367.956.83??? World Nickel Consumption and Supply 1 Computed from 2013 consumption + 96 kMT growth in China’s stainless steel production. 2 Computed from 2013 supply + 50 kMT from new projects – 90 kMT reduction in NPI production. Stainless Steel Prod (mMT ) Ni % Ni Tonn e (kMT) 200- series 8.31%83 300- series 12.38%984 400- series 4.20%0 Total24.81,067 Ore TypeIndonesiaPhilippinesStockpileTotal mWMTNi-kMTmWMTNi-kMTmWMTNi-kMTmWMTNi-kMT High Grade 1.8% 283. 4 Med Grade 1.6% -- Low Grade 1.0% -- Subtotal for NPI 1.09.922.5162.426.0246.449.5 418. 8 For Carbon Steel -25.0- Total1.047.526.074.5 39% (419kMT) from NPI

19 19 Price Increase Post Indonesian Ni Ore Ban Q1 2014 Ave. Prices Apr-May 2014 Ave. Prices Highest Contracted Prices YTD Last Contracted Prices LME ($/lb.)6.648.35 Saprolite ≥1.80% ($/WMT)28.3387.11135.00113.00 Saprolite ~1.50% ($/WMT)17.8235.2792.0070.00 Saprolite ~1.40% ($/WMT)N/A50.0082.0040.00 Limonite ~1.20% Fe ~40% ($/WMT) N/A39.0040.0036.00 Limonite HiFe ($/WMT)21.7123.5142.0035.00  Ore prices to Japan are now benchmarked to China prices  Shipment volume to hit 17 million WMT in 2014 due to demand for 1.4% and 1.2% ore grades  Hi Fe ore is also used for NPI production

20 Shipment seasonality by quarter 20 % Volume 10% 30% 41%19%

21 Nickel Asia Corporation END

22 Nickel Asia Corporation APPENDIX

23 NAC Shipments Profile (Nickel Ore in kWMT) 23 Source: Company data

24 NAC Shipments Profile (Nickel Ore Revenue in Php Million) 24 Source: Company data

25 25 Nickel Forecasts Source: Energy & Metals Consensus Forecasts by Consensus Economics Inc. 2012 (June 2013)

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