Nickel Asia Corporation
Presentation
NACstyle
Click
to edit Masteron
subtitle
PSE: NIKL
RIC: NIKL.PS
BBG: NIKL.PM
Analysts Presentation
April 2015
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, 4 nickel
exploration properties, and 4 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
► 2014 Revenues of Php 24.7 B1 (+123%);
Attributable Income of Php 8.6 B (+316%).
Cash balance of Php 16.4 B2.
► 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 2013.
► Strategic relationships with two key
shareholders, Sumitomo Metal Mining
(Sumitomo) and Pacific Metals (PAMCO)
1 Consolidated
2 Consolidated,
including AFS financial assets
2
Leading laterite ore producer with a strong reserve base
Saprolite
Limonite
Total Mineral Resources and Ore Reserves 1,2,3
December 31, 2013
December 31, 2012
Ore Type kWMT %Ni %Fe
kWMT %Ni %Fe %Inc
Mineral Resources (Measured and Indicated)
Saprolite 126,459 1.60 11.06 126,212 1.61 11.17 0%
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
Limonite 249,714 1.09 43.23 248,969
1.50
1.11
11.69
42.51
0%
0%
Source: NAC, as of 31 December 2013
Notes:
1
Mineral resources and ore reserves for four operating mines
(Rio Tuba, Taganito, Cagdianao, Taganaan)
2 Includes subsidiaries that are not wholly-owned by the Company
3 Report prepared under the Philippine Mineral Reporting Code
Rio Tuba Mine Pit
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
3
Overview of our Mines
Rio Tuba Mine
Cagdianao Mine
Ownership
NAC (100%)
Ownership
NAC (60%)
PAMCO (36%)
Sojitz Corp (4%)
Operations
Commenced 1999
Operations
Commenced 1975
Remaining mine life1
Approx. 27 years
Remaining mine life1
Approx. 11 years
MPSA Renewal Year
2022
MPSA Renewal Year
2023
2013 Volume/Revenue
0.9 mWMT / 0.7 bPHP
2013 Volume/Revenue
5.8 mWMT / 3.0 bPHP
2014 Volume/Revenue
1.4 mWMT / 3.6 bPHP
2014 Volume/Revenue
6.0 mWMT / 6.6 bPHP
Taganito Mine
Taganaan Mine
NAC (65%)
PAMCO (33.5%)
Sojitz Corp (1.5%)
Ownership
NAC (100%)
Operations
Commenced 1980
Operations
Commenced 1987
Remaining mine life1
Approx. 6 years
Remaining mine life1
Approx. 25 years
MPSA Renewal Year
2032
MPSA Renewal Year
2034
2013 Volume/Revenue
3.4 mWMT / 3.4 bPHP
2013 Volume/Revenue
3.9 mWMT / 3.1 bPHP
2014 Volume/Revenue
3.5 mWMT / 5.0 bPHP
2014 Volume/Revenue
7.1 mWMT / 8.5 bPHP
Ownership
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
Overview of our Exploration Projects
Our exploration programs are geared towards strategically expanding resources and confirming
significant potential reserves to support growth in the long run
Nickel exploration
1
4
Eastern Samar
Surigao del Norte
Surigao del Norte
RTN
HMC
TMC
CMC
3,605
1,165
6,981
226
Measured
5.4 (1.97% Ni)
-
-
-
Indicated
2.0 (1.92% Ni)
-
-
-
Inferred
8.3 (1.80% Ni)
2.6 (1.85% Ni)
2.5 (1.61% Ni)
Area (ha)
Palawan
3
Boa
Ownership
Manicani
2
Kepha
Location
Bulanjao
Resources (m WMT)
Saprolite
Notes:
Limonite
Measured
7.6 (1.31% Ni)
Indicated
Inferred
MPSA/Operating
Agreement
-
-
11.6 (1.06% Ni)
-
3.8 (1.00% Ni)
5.4 (1.17% Ni)
35.6 (1.19% Ni)
7.2 (0.97% Ni)
Mining lease
contract, for
conversion to MPSA
MPSA expiring in
2017
1
1.76 (1.70% Ni)
*other a rea s ha ve
di fferent pros pective
ore
2
0.6 (0.8% Ni)
Operating agreement Operating agreement
expiring in 2032
expiring in 2017
Bes i de the RTN mi ne. Envi ronmental
cl ea ra nce now obtai ned from the
Pa l a wa n Conci l for Sus tai na bl e
Devel opment. Other requi red s tudi es
under wa y.
Gra nted permi s s i on to s hi p ore from the
s tockpi l es . Dri l l i ng of l i moni te s tockpi l es
under wa y.
3
Currently bei ng dri l l ed.
4
Awa i ting renewa l of Expl ora tion Permi t.
5
Our Investment in Downstream Processing Plants: Coral Bay
Coral Bay Nickel Corporation
(CBNC)
Facility
High Pressure Acid Leach (HPAL) processing plant
Location
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 $308M
Technology
HPAL process licensed from Sumitomo
Product
Nickel-cobalt sulfide sold exclusively to Sumitomo
US$ MM
2014
2013
2012
2011
2010
2009
2008
2007
Sales volume (contained-Ni tons) 24,066 23,569 23,923 22,668 18,783 16,898 10,506 10,355
US$ MM
Revenue
Cost of goods sold
Operating expenses
Income from operations
Net income
Net income margin
Average realized Ni LME price
331.1
254.9
7.9
68.3
59.4
17.9%
7.65
274.2
260.6
8.7
4.9
3.6
1.3%
6.47
324.5
270.6
8.4
45.5
46.6
14.4%
7.95
382.1
255.0
7.4
119.7
117.4
30.7%
10.51
352.7 234.4 153.5
203.8 166.0 142.7
6.3
5.8
4.7
142.6
62.7
6.1
139.8
59.1
1.9
39.6% 25.2%
1.2%
10.15
7.68
7.78
291.1
115.6
5.0
170.5
166.0
57.0%
16.19
► Pilot plants to test for
commercial recovery
of Chromium and
Scandium are
operating.
► Direct P&L recognition
of income from 10%
interest (2014 equity
income: P198 million)
6
Our Investment in Downstream Processing Plants: Taganito HPAL
Facility
HPAL 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. 5.0M WMT per year
Operations
 Nameplate capacity: 30,000 tNi
 20% capacity increase to 36kT from 2016
 First shipment commenced Oct 2013
Technology
HPAL process licensed from Sumitomo
Investment
cost
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.
Financing
 JBIC Loan contract was signed on July 5.
 Initial drawdown was made on August 4, 2011.
Product
Nickel-cobalt sulfide sold exclusively to Sumitomo
Taganito HPAL Nickel Corp.
(THPAL)
7
Our Investment in Downstream Processing Plants: Taganito HPAL
We derive from the THPAL facility:
 Additional limonite ore sales of +5.0m WMT/year (2014 sales: 4.0m WMT)
 Direct P&L recognition of income from 22.5% interest (2014 equity income: Php324m)
October 2010
January 2012
April 2013
Present
► Sumitomo is one of the few companies with the technological know-how and proven execution capability to
8
successfully develop HPAL facilities
Our Entry Into Power Generation
 $10.2 M mezzanine loan to Emerging Power Inc. (EPI) to
partially fund initial two ‘slim holes’ in the 40 MW, $185M
Montelago geothermal project, convertible to equity1.
 Drilling completed. Target depth and temperature attained.
Flow rate tests on-going.
 The conversion plus additional $10.6 M equity will result in
66% ownership of EPI. Expected IRR: 17 to 19%.
 Project Pipeline (for evaluation):
Resource
Location
MW
Cost ($M)
IRR
Biliran
200
900
17%
Wind
CamSur
70
186
18%
Hydro
Cordillera
60
268
17%
Solar-Bunker Hybrid
Palawan
25
88
18%
Solar
CamSur
10
22
13%
Biogas
Quezon
8.6
23
12%
Geothermal
1
Subject to satisfactory “P90” Volumetric Resource Assessment by ISOR
9
Product portfolio breakdown
Saprolite
Limonite
Type of Ore:
Hi Grade
≥1.8% Ni
Mid Grade
≥1.4% Ni
Mid Grade
≥1.2% Ni
High Fe
0.6-0.9% Ni; 48-50% Fe
Low Grade
1.0-1.2% Ni
Supplied By:
Rio Tuba
Taganito
Cagdianao
Hinatuan
Rio Tuba
Taganito
Cagdianao
Hinatuan
Cagdianao
Rio Tuba
Taganito
Hinatuan
Rio Tuba
Taganito
Japan FeNi
Smelter
Japan FeNi
Smelter / China NPI
Smelter (EF & RKEF)
China NPI
Smelter (Blast
Furnace)
China NPI Smelter
(Blast Furnace) /
China Pig Iron Smelter
(Blast Furnace)
Sold To:
Philippines
CBNC
THPAL
Ferronickel
Ferronickel /
Hi-Grade NPI:
10-12% Ni
Medium Grade
NPI: 6-8% Ni
Low Grade NPI (1-3%
Ni) / Pig Iron
Ni-Co Sulfide
55% Ni
300 Series
Stainless Steel
300 Series Stainless
Steel
300 Series
Stainless Steel
200 Series Stainless
Steel / Carbon Steel
Ni Smelter
LME Ni Price
Negotiated
US$/WMT
Negotiated
US$/WMT
Negotiated
1,065
4,676
461
4,266
7,406
2014 % Volume
6%
26%
3%
24%
41%
2014 % of Revenue
18%
45%
3%
22%
12%
Final Products:
For Use In:
Pricing Method:
2014 Volume (kWMT)
x Payable Ni
1
1
Benchmarked against China prices (US$/WMT) effective Q2 2014
2
Pricing was correlated with the iron ore price until Q2 2014 when pricing started to be linked to nickel
US$/WMT
2
LME Ni Price
x Payable Ni
10
Shipment seasonality by quarter
Millions WMT
Average Shipment Volume (exclusive of HPAL) for the Last 4 Years
4.0
3.8
3.0
2.7
2.0
1.0
1.6
0.8
-
% Volume
1Q
2Q
3Q
4Q
10%
30%
42%
18%
11
NAC sales tonnages
20,000
► From 1977 to 2004,
17,873
annual sales volume
averaged 880 thousand
WMT
15,000
13,998
► In 2005, CBNC
(Thousand WMT)
32%
commenced commercial
11,730
12,133
operations
10,388
► From 2005 to 2007, sales
10,000
8,339
65%
880
-
6,459
4,562
global financial crisis,
5,741
2,027
1,400
3,494
108
772
1,285
988
'77-'04
Ave.
2005
2006
65%
► In 2008, following the
3,448
5,553
6,951
5,122
3,774
2,685
effective annual rate of
7,494
6,541
5,000
volume grew at an
10,404
7,268
1,421
1,897
2008
2009
3,217
3,436
2010
2011
4,236
volume down by 53%
3,594
► From 2008 to 2014, sales
volume grew at an
2007
Saprolite
Limonite
2012
2013
2014
effective annual rate of
32%
12
Low cost nickel producer
► Favorable geologic conditions at all of our four mines, with near-surface open-pit deposits
► Mining does not require explosives or complex waste handling
► Ability to sell limonite ore and lower grades of saprolite ore to the China NPI market and to
Taganito and Coral Bay HPAL facilities 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
Cash Costs (US$/WMT sold)
Production
Shipping & Loading
Excise Tax & Royalties
General & Admin
Total Cash Costs / WMT
2012
7.71
2.79
1.43
0.72
12.65
Pct.
60.9%
22.1%
11.3%
5.7%
100.0%
2013
5.86
2.25
1.09
1.25
10.44
Pct.
56.1%
21.5%
10.4%
12.0%
100.0%
2014
6.04
2.18
2.23
1.32
11.77
Revenue (US$/WMT)
22.43
17.25
30.17
Operating Margin (US$/WMT)
9.78
6.81
18.40
Average Nickel LME Price (US$/lb.)
7.95
6.80
7.65
Pct.
51.3%
18.5%
19.0%
11.2%
100.0%
13
Financial highlights
We are one of the most profitable nickel miners in the world.
EBITDA1 (Php MM)
Revenue (Php MM)
Net Income2 (Php MM)
24,746
Sale of ore
Services and others
8,552
15,842
123%
16,572
10,529
224%
-6%
65%
316%
4,800
12,695
11,607 11,110
6,862
-16%
3,538
104%
8,336
5,080
4,110
5,827
4,687
4,883
242%
1,596
2,252
-24%
2,207
2,054
2012
2013
1,547
1,650
303
2007
2008
2009
2010
2011
2012
2013
2014
2007
2008
2009
2010
2011
2012
2013
2014
2007
2008
2009
2010
2011
2014
2007
2008
2009
2010
2011
2012
2013
2014
EBITDA margin
64%
39%
35%
49%
54%
44%
44%
64%
Net income margin2
29%
27%
6%
19%
28%
19%
18%
35%
Ave. Ni price per pound (US$)
16.87
9.54
6.67
9.89
10.35
7.95
6.80
7.65
Source: Company data
Notes:
1. EBITDA is calculated as total revenue less costs and expenses (before depreciation and amortization of RTN LT stockpile) plus other income from RTN’s ancillary services
2. Represents net income attributable to equity holders adjusted for derivative transactions gains/losses. Derivative transaction gain was Php519 MM in 2007, while derivative
transaction losses were Php1,417 MM, Php79 MM, and Php47 MM in 2008, 2009, and 2010, respectively.
14
Historical Dividend Payout and Payable (since 2010 IPO)
Year
2011
2012
2013
2014
Payment /
Issue Date
Type
Cash
May 9, 2011
₱ 0.12/sh.
30.3%
Special
Cash
December 8, 2011
₱ 0.05/sh.
13.0%
Regular
Cash
May 11, 2012
₱ 0.28/sh.
30.5%
Stock
Regular
September 24, 2012
Cash
Stock
50%
May 14, 2013
₱ 0.19/sh.
July 12, 2013
25%
N/A
31.7%
N/A
Regular
Cash
May 8, 2014
₱ 0.20/sh.
36.9%
Special
Cash
December 10, 2014
₱ 0.33/sh.
61.6%
January 28, 2015
50%
N/A
Regular
Cash
April 27, 2015
₱ 0.70/sh.
31.1%
Special
Cash
April 27, 2015
₱ 0.30/sh.
13.3%
Stock
1
%of PY Earnings
Regular
Stock
2015
Dividend
Rate 1
TBA
100%
N/A
Cash dividend rates are adjusted for the effects of the 50%, 25%, and 50% stock dividends issued on September 2012, July 2013, and January 2015, respectively.
► Our dividend policy entitles holders of Shares to receive annual cash dividends of up to 30% of the
prior year’s recurring attributable net income based on the recommendation of our Board of
Directors.
15
Nickel Asia Corporation
INDONESIAN ORE BAN
Ni LME and Ni Ore Prices
 Nickel prices spiked in the first half of
2014 only to fall back in the 2nd half,
failing to meet analysts expectations
 The large overhang of primary nickel
coupled with stocks of high-grade
Indonesian ore in Chinese ports and
the unexpected rise in ore exports
from the Philippines delayed any
physical market tightness
Source: LME, Macquarie Research, January 2015
Ore Price
US$/WMT
150
LME Ni
US$/Lb
11.00
125
10.00
100
9.00
75
8.00
1.8%Ni
50
7.00
LME Ni
25
6.00
0
5.00
JAN
2014
MAR
MAY
JUL
SEP
NOV
JAN
2015
1.5%Ni
 Ni ore price declined along with LME
Ni price. Nevertheless, prices of midgrade and high-grade ore are still
about double compared to pre-export
ban.
 Nickel ore imports into China reached
53.5M wmt in 2014, down 24M wmt yo-y. The Philippines accounted for
44M wmt.
MAR
17
Ni Ore Flow for China NPI
Source of Ni in China SS Production
2014 Ni Ore Flow
Beginning
SS Scrap
14%
Refined
Ni / FeNi
34%
NPI
52%
485kT
2014 Ni Use in China SS Prod. ~935 Ni-kT
1.8%Ni
1.45%Ni
0.8%Ni
Total
Import*
Used
End
M
wmt
K Ni
ton
M
wmt
K Ni
ton
M
wmt
K Ni
ton
M
wmt
K Ni
ton
21.5
1.0
2.0
24.5
221
9
8
238
18.0
17.0
20.0
55.0
185
141
83
410
29.0
13.5
18.0
60.5
299
112
75
485
10.5
4.5
4.0
19.0
108
38
17
162
IDN 10
PHL 8
*6M wmt of 0.6% Ni is not included in the import volume due to carbon steel use
SS
Scrap
13%
Refined
Ni /
FeNi
49%
2015 Ni Ore Flow
Beginning
NPI
38%
361kT
2015 Ni Use in China SS Prod. ~963 Ni-kT
1.8%Ni above
1.45%Ni
0.8%Ni
Total
Import
Used
End
M
wmt
K Ni
ton
M
wmt
K Ni
ton
M
wmt
K Ni
ton
M
wmt
K Ni
ton
10.5
4.5
4.0
19.0
108
38
17
162
6.0
22.0
15.0
43.0
62
182
62
307
16.5
17.0
12.0
45.5
170
141
50
361
0.0
9.5
7.0
16.5
0
79
29
108

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 2015.

Philippine ore exports to China will decline compared to last year. In particular, the decline will be in the high Fe type as
prices are approaching break-even level due to over-supply mainly brought about by the effects of the Shandong
closures. This will result in lower NPI production this year.

Lower dependence on NPI would translate to Chinese STS mills consuming more refined nickel, which will result in a
decline in LME warehouse inventory and a recovery in Ni LME price.
18
Indonesian Ore Ban
Chinese Nickel Ore Port Stocks
Source: Macquarie Research, February 2015
 China port stocks of high-grade
Indonesian ore is expected to be
depleted by 2H and could trigger a
rally in ore prices.
Chinese NPI Projects in Indonesia
 The building of
refined nickel
capacity in
Indonesia is much
slower than
anticipated.
19
Nickel Supply-Demand Forecast
Macquarie Forecast
Source: Macquarie Commodities Research, February 2015
Spot vs. Forecast Nickel Prices
22,000
20,971
20,360
19,842
19,842
18,000
Sources:
Spot –LME
14,000
Analyst Consensus –Bloomberg, Equity Research
Spot
Analyst Consensus
10,000
Dec-11
Jun-12
Dec-12
Jun-13
Dec-13
Jun-14
Dec-14
Jun-15
Dec-15
Jun-16
Dec-16
Jun-17
Dec-17
Jun-18
Dec-18
20
Nickel Asia Corporation
EO 79 ON MINING POLICIES
Impact of Presidential Executive Order No. 79 on Mining Policies
► 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.
► 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 Fees
Excise tax
RTN
TMC
CMC
HMC
2%
2%
2%
2%
-
5%
5%
5%
1%
1%
-
-
Local Business Tax
0.5%
1%
1%
1%
Total
3.5%
9%
8%
8%
Royalty to the Government *
Royalty for Indigenous People
* under the Surigao Mineral Reservation Act
22
Nickel Asia Corporation
END
Nickel Asia Corporation
APPENDIX
Stainless Steel Production
25
NAC Shipments Profile (Nickel Ore in kWMT)
2011
HPAL
2,977
29%
HPAL
3,352
8%
63%
2013
HPAL
4,280
2012
Japan
843
11%
29%
60%
China
6,567
2014
Japan
1,051
7%
China
7,065
Japan
1,822
10%
HPAL
7,406
31%
Japan
1,313
42%
62%
48%
China
8,668
China
8,644
Source: Company data
26
NAC Shipments Profile (Nickel Ore Revenue in Php Million)
2011
HPAL
1,909
16%
20%
2012
Japan
2,416
HPAL
1,339
12%
Japan
2,447
22%
66%
64%
China
7,368
China
7,805
HPAL
1,482
2013
14%
HPAL
2,973
Japan
1,464
14%
2014
Japan
5,008
13%
21%
China
15,760
72%
China
7,377
66%
Source: Company data
27