Nickel Empire, page-2

Why haven’t any other ASX listed nickel companies tried to replicate your success in Indonesia?

“[In country] experience and knowledge. I have been here almost 25 years,” Werner says.

“We also have a very good relationship with our local partners, with our strategic partner Tsingshan – all of those relationships take time to foster and develop.”

How important has Tsingshan been to NIC’s rapid growth?

“The deals we have done with Tsingshan have been very value accretive. The acquisition multiple is a little over three times EBITDA,” Werner says.

“The [deals] come with a capex guarantee and a nameplate guarantee — and they consistently perform 35% above nameplate.

“There’s also a time frame guarantee which is two years, and they have consistently brought them on within 12-18 months; well ahead of schedule.

“You just can’t find those deals anywhere in the market.”

Where’s the next growth opportunity coming from once you hit 130,000tpa?

“I think the focus for us will be more on nickel for the battery market,” Werner says.

“We have converted two of our lines that can produce nickel matte.

“And we have signed an MOU with Tsingshan to look at High Pressure Acid Leach (HPAL) opportunities given the significant amount of limonite resources that exist in Indonesia.

[HPAL is a process used to extract battery quality nickel and cobalt from laterite ore bodies.]

“I like to think we will be a company that continues to have a strong growth profile.

“The benefit of the relationship with Tsingshan is that they build these plants with a capex guarantee, and nameplate guarantee and a timeframe guarantee. It’s about as risk-free as you can get.”

How big could nickel matte production be for you guys?

“It just provides flexibility in our business,” Werner says.

“We will be a swing producer. HPAL is always going to be the lowest cost producer; if you look at the Ramu HPAL plant for example, they report costs of about $US2/lb.

“Nickel matte production via electric furnace is never going to get anywhere near that, but where there are shortages of class 1 nickel we can certainly come in and fill that supply gap, where the economics are favourable.

“At this point in time there is a noticeable margin to be captured in the production of nickel matte.”

When do you plan to turn that production on?

“We haven’t set a firm date yet, but given fundamentals are very strong and that there appears to be a margin advantage it could be possibly very near,” Werner says.

“We would do it on a campaign basis, producing matte for 6-9 months a year.”