Nickel Asia Corporation

Transcription

1 Nickel Asia Corporation Click Presentation to edit Master on subtitle NACstyle 3 rd International Nickel Presentation April 29, 2015, London

2 Nickel Asia Corporation DISCLAIMER: Any and all information given by the speaker during his speech is based on his own studies and analyses. The same are published in good faith and for general information purposes only. The speaker nor the company he works for does not make any warranties about the completeness, reliability and accuracy of the information. Any action you take upon the information gathered from the speaker is strictly at your own risk. The speaker or the company he works for is not liable for any losses and damages in connection with the use of any information gathered from the speaker.

3 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 operating nickel mines, 4 nickel exploration properties, and 4 exploration properties for gold and copper One of the largest supplier of lateritic nickel ore globally Successful downstream processing with a 10% interest in the Coral Bay HPAL facility and 22.5% interest in the new Taganito HPAL facility, commissioned in Strategic relationships with two key shareholders, Sumitomo Metal Mining (Sumitomo) and Pacific Metals (PAMCO) 1 Consolidated 2 Consolidated, including AFS financial assets 3

4 Overview of our Mines Rio Tuba Mine Ownership NAC (60%) PAMCO (36%) Sojitz Corp (4%) Operations Commenced 1975 Remaining mine life 1 MPSA Renewal Year 2023 Approx. 11 years 2013 Volume/Revenue 5.8 mwmt / 3.0 bphp Cagdianao Mine Ownership NAC (100%) Operations Commenced 1999 Remaining mine life 1 Approx. 27 years MPSA Renewal Year Volume/Revenue 0.9 mwmt / 0.7 bphp 2014 Volume/Revenue 1.4 mwmt / 3.6 bphp 2014 Volume/Revenue 6.0 mwmt / 6.6 bphp Taganito Mine Ownership NAC (65%) PAMCO (33.5%) Sojitz Corp (1.5%) Taganaan Mine Ownership NAC (100%) Operations Commenced 1980 Operations Commenced 1987 Remaining mine life 1 Approx. 6 years Remaining mine life 1 Approx. 25 years MPSA Renewal Year Volume/Revenue 3.9 mwmt / 3.1 bphp MPSA Renewal Year Volume/Revenue 3.4 mwmt / 3.4 bphp 2014 Volume/Revenue 3.5 mwmt / 5.0 bphp 2014 Volume/Revenue 7.1 mwmt / 8.5 bphp Note: 1 Remaining mine lives from January 1, 2015, calculated based on December 31, 2013 ore reserves and estimated annual nickel ore shipments and deliveries for each mine We have a proven track record in successfully operating mines in the Philippines. Most of our mines have significant exploration potentials. 4

5 Our Investment in Downstream Processing Plants: Coral Bay Coral Bay Nickel Corporation (CBNC) Facility Location High Pressure Acid Leach (HPAL) processing plant In a Special Economic Zone adjacent to the Rio Tuba mine Ownership NAC (10%) Sumitomo (54%) Mitsui (18%) Sojitz (18%) Ore Supply Low grade limonite ore from Rio Tuba mine; approx. 3.3M WMT per year Operations Line 1 (10,000tNi) commissioned 2005 at cost of $200M Line 2 (10,000tNi) commissioned 2009 at cost of $308M Technology Product HPAL process licensed from Sumitomo Nickel cobalt sulfide sold exclusively to Sumitomo 5

6 Our Investment in Downstream Processing Plants: Taganito HPAL Facility Location HPAL processing plant In a Special Economic Zone adjacent to the Taganito mine Technology HPAL process licensed from Sumitomo Ownership Ore supply Operations NAC (22.5%) Sumitomo (62.5%) Mitsui (15.0%) Low grade limonite ore from our Taganito mine; approx. 5.0M WMT per year Nameplate capacity: 30,000 tni 20% capacity increase to 36kT from 2016 First shipment commenced Oct 2013 Investment cost Financing Product Capital cost of US$1,590 million, funded by JBIC loan (US$750m), equity (US$455m) and shareholders' loans. SMM funding NAC portion of shareholders' loans in return for 1% fee. JBIC Loan contract was signed on July 5. Initial drawdown was made on August 4, Nickel cobalt sulfide sold exclusively to Sumitomo Taganito HPAL Nickel Corp. (THPAL) 6

7 NAC sales tonnages 20,000 17,873 From 1977 to 2004, annual sales volume averaged 880 thousand WMT (Thousand WMT) 15,000 10,000 65% 6,541 7,268 6,459 32% 10,388 8,339 6,951 11,730 7,494 13,998 10,404 12,133 In 2005, CBNC commenced commercial operations From 2005 to 2007, sales volume grew at an effective annual rate of 65% 5, '77 '04 Ave. 2,685 3,774 5,553 3,448 5,122 4,562 2,027 1,400 4,236 3,494 3,217 3,436 3,594 1, ,421 1, Saprolite Limonite 5,741 In 2008, following the global financial crisis, volume down by 53% From 2008 to 2014, sales volume grew at an effective annual rate of 32% 7

8 Nickel Asia Corporation Nickel Ore Supply from the Philippines to China

9 Ni Ore Flow for China NPI 2014 Ni Ore Flow Beginning Import* Used End M wmt K Ni ton M wmt K Ni ton M wmt K Ni ton M wmt K Ni ton HG (1.8%Ni) MG (1.45%Ni) LG (0.9%Ni) Total *6M wmt of 0.6% Ni is not included in the import volume due to carbon steel use 2015 Ni Ore Flow Beginning Import Used End M wmt K Ni ton M wmt K Ni ton M wmt K Ni ton M wmt K Ni ton HG (1.8%Ni) MG (1.45%Ni) LG (0.9%Ni) Total IDN 10 PHL 8 Due to the increase in MG/HG nickel ore shipments from the Philippines and 10M wmt of HG nickel ore shipments from Indonesia in 2014, tightness of nickel ore supply will be delayed to 2H MG nickel ore from the Philippines increases to 21M wmt in 2015 regardless of actual consumption in anticipation of the Philippines wet season. 9

10 Chinese NPI production for % of Designed Capacity (KVA) Current Operation level (KVA) Current Operation rate Ni ore requirement (WMT/Year) Estimated NPI Production (Ni t / Year) EF plants 689, ,400 72% 6,806,240 65,113 RKEF Integrated 638, ,000 69% 5,993,432 57,337 RKEF Stand alone 2,450,500 1,257,000 51% 17,200, ,550 EF/RKEF Total 3,777,900 2,192,400 58% 30,000, ,000 NPI Production Capacity (Ni t / Month) Current NPI Production (Ni t / Month) For economic reasons, China NPI production capacity is down to 70%. Environmental concerns drove it further down to 58% and 71% for EF/RKEF and BF plants, respectively. We believe that the following factors limit NPI production to 350 k nickel ton in Continued economic/environmental concerns Current Operation Rate Limited MG/HG nickel ore supply from the Philippines Ni ore requirement (WMT/Year) Estimated NPI Production (Ni t / Year) BF plants 9,000 6,400 71% 13,000,000 63,000 EF/RKEF/BF Total 43,000, ,000 Necessity of stockpile M of M/G nickel ore (wet season in Surigao area from Nov.-Apr.) 10

11 Middle/High grade ore shipment from the Philippines to China K WMT 30,000 25,000 20,000 15,000 10,000 5,000 0 Historical MG/HG nickel ore export to China from the whole Philippines Tawi Tawi area is a sole contributor for the increase of H/G nickel ore from the Philippines. Two mines are currently operational in the area. Tumbagaan nickel site, which is located at a small island (800 Hectares), is a major H/G nickel supplier and we expect their resources to deplete in the near future. 1.5%Ni 1.8%Ni MG/HG nickel ore volume from the Philippines to China dramatically increased to 24.3M wmt in 2014 compared to 8.8M wmt in 2013, up by 176%. Middle grade Ni ore is the main driver for the increase of export volume from the Philippines and we estimate further growth in K WMT 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 Tawi Tawi Historical MG/HG nickel ore export volume %Ni 1.8%Ni 11

12 Middle/High grade ore shipment from the Philippines to China K WMT 3,500 Historical H/G nickel export volume to China K WMT 25,000 Historical M/G nickel export volume to China 3,000 2,500 2,000 NAC Others Dinagat 20,000 15,000 NAC Others Dinagat 1,500 1, Surigao Palawan Zambalez 10,000 5,000 Surigao Palawan Zambalez H/G nickel ore shipment volume is at a down-trend. We expect the down-trend to continue in the future, except in the Tawi-Tawi area. Surigao area is the main source of M/G nickel ore export, approximately 8 M wmt in 2014/15. We believe that production from the Surigao area is at almost maximum capacity, and if it continues at this level, depletion of M/G nickel ore will come in the middle term. 12

13 Low Ni high Fe grade ore shipment from the Philippines to China K WMT 35,000 30,000 25,000 20,000 15,000 10,000 NAC Others Dinagat Surigao Palawan Zambalez 5, Low nickel high iron (LG) material was the major product from the Philippines as a substitute material for iron ore. Due to the collapse of iron ore price starting from May, 2014, current demand is only for the Chinese BF plants that produce low grade NPI. Due to the Law of supply and demand, the current FOB price of this material is approaching break even costs of the mines. 13

14 Conclusion MG/HG nickel ore supply from the Philippines can not cover the full demand of EF/RKEF plants, that produce H/G NPI. We believe H/G NPI production volume might further go down from 2016 onwards. Export volume from the Philippines to China could reach up to 43M wmt this year under the current market conditions since MG/HG nickel ore deposit is already exposed in the Surigao area due to previous Limonite (low nickel/high iron material) shipments. However, export volume of M/G nickel ore might significantlly go down if the FOB price drops below 20US$/WMT. Mining ratio of MG/HG grade nickel ore vs Limonite is estimated at 1:3 in the Surigao area. If current low FOB price continues, most Surigao mines may be forced to shut down due to high mining cost. NAC can be more cost effective because Limonite is directly sold to our HPAL plants located within our mines. Potential supply from thetawi Tawi area still remains uncertain. Nevertheless, H/G nickel ore supply might significantlly decrease in

15 Nickel Asia Corporation DISCLAIMER: Any and all information given by the speaker during his speech is based on his own studies and analyses. The same are published in good faith and for general information purposes only. The speaker nor the company he works for does not make any warranties about the completeness, reliability and accuracy of the information. Any action you take upon the information gathered from the speaker is strictly at your own risk. The speaker or the company he works for is not liable for any losses and damages in connection with the use of any information gathered from the speaker.

16 Nickel Asia Corporation END