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Nickel Asia Corporation
Presentation on NACPSE: NIKLRIC: NIKL.PSBBG: NIKL.PM
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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
Antam NAC PT Inco Eramet Cerro Matoso
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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)2 Includes subsidiaries that are not wholly-owned by the Company3 Report prepared under the Philippine Mineral Reporting Code
Ore TypeDecember 31, 2013 December 31, 2012
%InckWMT %Ni %Fe kWMT %Ni %FeMineral 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 1.50 11.69 0%Limonite 249,714 1.09 43.23 248,969 1.11 42.51 0%
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Rio Tuba MineOwnership
NAC (60%)PAMCO (36%)Sojitz Corp (4%)
Operations Commenced 1975
Remaining mine life1 Approx. 13 years
MPSA Renewal Year 2023
2012 Volume/Revenue 5.6 mWMT / 4.0 bPHP
2013 Volume/Revenue 5.8 mWMT / 3.0 bPHP
OwnershipNAC (65%)PAMCO (33.5%)Sojitz Corp (1.5%)
Operations Commenced 1987
Remaining mine life1 Approx. 30 years
MPSA Renewal Year 2034
2012 Volume/Revenue 2.4 mWMT / 3.1 bPHP
2013 Volume/Revenue 3.9 mWMT / 3.1 bPHP
Taganito Mine
Note: 1 Remaining 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
Ownership NAC (100%)
Operations Commenced 1999
Remaining mine life1 Approx. 77 years
MPSA Renewal Year 2022
2012 Volume/Revenue 1.1 mWMT / 1.1 bPHP
2013 Volume/Revenue 0.9 mWMT / 0.7 bPHP
Cagdianao Mine
Ownership NAC (100%)
Operations Commenced 1980
Remaining mine life1 Approx. 8 years
MPSA Renewal Year 2032
2012 Volume/Revenue 2.6 mWMT / 2.9 bPHP
2013 Volume/Revenue 3.4 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.
Manicani Mine
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► 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 Type Grade Volume
Saprolite ~1.75% Ni 90 kWMT
Limonite ≥45% Fe ≥1 million WMT
Our Investment in Downstream Processing Plants: Coral Bay
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 $200MLine 2 (10,000tNi) commissioned 2009 at cost of $308M
Technology HPAL process licensed from Sumitomo
Product Nickel-cobalt sulfide sold exclusively to Sumitomo
Coral Bay Nickel Corporation (CBNC)
US$ MM 2013 2012 2011 2010 2009 2008 2007Sales volume (contained-Ni tons) 23,569 23,923 22,668 18,783 16,898 10,506 10,355
US$ MMRevenue 274.2 324.5 382.1 352.7 234.4 153.5 291.1 Cost of goods sold 260.6 270.6 255.0 203.8 166.0 142.7 115.6 Operating expenses 8.7 8.4 7.4 6.3 5.8 4.7 5.0 Income from operations 4.9 45.5 119.7 142.6 62.7 6.1 170.5 Net income 3.6 46.6 117.4 139.8 59.1 1.9 166.0 Net income margin 1.3% 14.4% 30.7% 39.6% 25.2% 1.2% 57.0%Average realized LME price 6.47 7.95 10.51 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
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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. 4.5M 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$1,300m 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$455m) and shareholders' loans. SMM funding NAC portion of shareholders' loans in return for 1% fee.
Financing JBIC Loan contract was signed on July 5. Initial drawdown was made on August 4, 2011.
Product Nickel-cobalt sulfide sold exclusively to Sumitomo
Taganito HPAL Nickel Corp.
► Civil works have started for the construction of a pilot plant to test for the recovery of Hematite
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Our Investment in Downstream Processing Plants: Taganito HPAL
► Sumitomo is one of the few companies with the technological know-how and proven execution capability to successfully develop HPAL facilities
Present
October 2010 April 2013January 2012
We will derive from the THPAL facility: Additional limonite ore sales (+4.5m WMT) Direct P&L recognition of investment income from 22.5% interest
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Product portfolio breakdown
Hi Grade Low Grade Hi Grade High Fe Low Grade≥1.8% Ni ≥1.5% Ni ≥1.5% Ni 0.6-0.9% Ni; 48-50% Fe 1.0-1.3% Ni
2013 Volume (kWMT) 1,147 2,447 539 5,586 4,280
2013 % Volume 8% 17% 4% 40% 31%
2013 % of Revenue 16% 16% 2% 52% 14%1 Pricing method correlated with the iron ore price
Pricing Method: LME Ni Pricex Payable Ni
Negotiated US$/WMT
Negotiated US$/WMT
Negotiated
US$/WMT 1LME Ni Pricex Payable Ni
For Use In: 300 Series Stainless Steel
300 Series Stainless Steel
300 Series Stainless Steel
200 Series Stainless Steel / Carbon Steel
Ni Smelter
Ni-Co Sulfide55% Ni
Sold To:Japan FeNi Smelter
Japan FeNiSmelter / China NPI Smelter (EF & RKEF)
China NPI Smelter (Blast
Furnace)
China NPI Smelter (Blast Furnace) /
China Pig Iron Smelter (Blast Furnace)
PhilippinesCBNC
Taganito HPAL
Final Products: FerronickelFerronickel / Hi-Grade NPI: 10-12% Ni
Medium GradeNPI: 6-8% Ni
Low Grade NPI (1-3% Ni) / Pig Iron
Type of Ore:
Saprolite Limonite
Supplied By:
Rio TubaTaganitoCagdianaoHinatuan
Rio TubaTaganitoCagdianaoHinatuan
CagdianaoRio TubaTaganitoHinatuan
Rio TubaTaganito
NAC sales tonnages
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'77-'04 Ave.
2005 2006 2007 2008 2009 2010 2011 2012 2013 -
2,000
4,000
6,000
8,000
10,000
12,000
14,000
772 1,285 988
3,494
1,421 1,897
3,217 3,436 4,236
3,594
108
1,400
5,553
3,774
2,027
4,562
5,122
6,951
7,494
10,404
Saprolite Limonite
(Tho
usan
d W
MT)
880
2,685
6,5417,26865%
32% 10,387
8,339
11,730
13,998
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%
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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
2011 Pct. 2012 Pct. 2013 Pct.Production 7.01 56.9% 7.71 60.9% 5.86 56.1%Shipping & Loading 2.87 23.3% 2.79 22.1% 2.25 21.5%Excise Tax & Royalties 1.64 13.3% 1.43 11.3% 1.09 10.4%General & Admin 0.80 6.5% 0.72 5.7% 1.25 12.0%Total Cash Costs / WMT 12.32 100.0% 12.65 100.0% 10.44 100.0%
Revenue (US$/WMT) 27.06 22.43 17.25
Operating Margin (US$/WMT) 14.74 9.78 6.81
Average Nickel LME Price (US$/lb.) 10.35 7.95 6.80
Cash Costs (US$/WMT sold)
2007 2008 2009 2010 2011 2012 2013
4,800
1,596
303
1,547
3,538
2,207 2,054
2007 2008 2009 2010 2011 2012 2013
10,529
2,252 1,650
4,110
6,862
5,080 4,883
2007 2008 2009 2010 2011 2012 2013
16,572
5,827 4,687
8,336
12,695 11,607 11,110
Sale of oreServices and others
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Financial highlights
Revenue (Php MM) Net Income2 (Php MM)EBITDA1 (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 services2. 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%
2007 2008 2009 2010 2011 2012 2013
EBITDA margin 64% 39% 35% 49% 54% 44% 44%
Net income margin2 29% 27% 6% 19% 28% 19% 18%
Ave. Ni price per pound (US$) 16.87 9.54 6.67 9.89 10.35 7.95 6.80
Source: Company data
We are one of the most profitable nickel miners in the world.
65%-6%
-16%-24%
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Year Type Payment / Issue Date
Dividendrate
%of PY Earnings
2011Regular Cash May 9, 2011 ₱ 0.19/sh.* 30.3%
Special Cash December 8, 2011 ₱ 0.08/sh.* 13.0%
2012Regular Cash May 11, 2012 ₱ 0.43/sh.* 30.5%
Stock September 24, 2012 50% N/A
2013Regular Cash May 14, 2013 ₱ 0.28/sh.** 31.7%
Stock July 12, 2013 25% N/A
2014 Regular Cash May 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.
Nickel Asia Corporation
EO 79 ON MINING POLICIES
Impact of Presidential Executive Order No. 79 on Mining Policies
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► 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 Fees RTN TMC CMC HMC
Excise tax 2% 2% 2% 2%
Royalty to the Government * - 5% 5% 5%
Royalty for Indigenous People 1% 1% - -
Local Business Tax 0.5% 1% 1% 1%
Total 3.5% 9% 8% 8%
* under the Surigao Mineral Reservation Act
Nickel Asia Corporation
INDONESIAN ORE BAN
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Nickel Ore Flow – 2013
Stainless Steel Production(million MT) Ni % Ni Tonne
(kilo MT)
200-series 7.5 1% 75
300-series 11.2 8% 896
400-series 3.8 0% 0
Total 22.5 971
Ore Type Indonesia Philippines Total
mWMT Ni-kMT mWMT Ni-kMT mWMT Ni-kMT
High Grade 1.8% 52.0 517.1 4.6 45.7 56.6 562.9
Med Grade 1.6% 5.3 46.9 3.5 30.9 8.8 77.8
Low Grade 1.0% 2.1 11.6 10.0 55.3 12.1 66.9
Subtotal for NPI 59.4 575.6 18.1 131.9 77.5 707.5
For Carbon Steel - 25.0 25.0
Total 59.4 43.1 102.5
China’s Importation of Nickel Ore
72% to NPI production
28% to stockpile
Stockpile mWMT Ni-kMT
Beginning 5 48.3
2013 imports 21 198.1
Total 26 246.4
China’s Stainless Steel Production
NPI53%Primary Ni
32%
SS Scrap15%
Source of Ni in China SS Produc-tion
510 MT
Nickel Ore Flow Outlook – 2014
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China’s Importation of Nickel Ore China’s Stainless Steel Production
2009 2010 2011 2012 2013 2014
Ni Consumption (MT) 1.28M 1.37M 1.59M 1.66M 1.82M 1.916M1
Ni Supply (MT) 1.32M 1.43M 1.60M 1.72M 1.96M 1.920M2
World Market Balance (MT) +40K -60K +10K +60K +140K +4K
Ave. LME Ni Price ($/lb.) 6.65 9.89 10.36 7.95 6.83 ???
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 Tonne(kMT)
200-series 8.3 1% 83
300-series 12.3 8% 984
400-series 4.2 0% 0
Total 24.8 1,067
Ore Type Indonesia Philippines Stockpile Total
mWMT Ni-kMT mWMT Ni-kMT mWMT Ni-kMT mWMT Ni-kMT
High Grade 1.8% 1.0 9.9 5.5 54.7 22.0 218.8 28.5 283.4
Med Grade 1.6% - - 5.0 41.4 2.0 16.6 7.0 58.0
Low Grade 1.0% - - 12.0 66.3 2.0 11.1 14.0 77.4
Subtotal for NPI 1.0 9.9 22.5 162.4 26.0 246.4 49.5 418.8
For Carbon Steel - 25.0 - 25.0
Total 1.0 47.5 26.0 74.5 39% (419kMT) from NPI
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Price Increase Post Indonesian Ni Ore Ban
Q1 2014 Ave. Prices
Apr-May 2014 Ave.
Prices
Highest Contracted Prices YTD
Last Contracted
PricesLME ($/lb.) 6.64 8.35Saprolite ≥1.80% ($/WMT) 28.33 87.11 135.00 113.00Saprolite ~1.50% ($/WMT) 17.82 35.27 92.00 70.00Saprolite ~1.40% ($/WMT) N/A 50.00 82.00 40.00Limonite ~1.20% Fe ~40% ($/WMT) N/A 39.00 40.00 36.00Limonite HiFe ($/WMT) 21.71 23.51 42.00 35.00
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
Shipment seasonality by quarter
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1Q 2Q 3Q 4Q -
1,000,000.0
2,000,000.0
3,000,000.0
4,000,000.0
838,797.3
2,548,880.2
3,479,209.2
1,635,594.9
Average Shipment Volume (without HPAL) for the Last 3 Years
% Volume 10% 30% 41% 19%
Nickel Asia Corporation
END
Nickel Asia Corporation
APPENDIX
NAC Shipments Profile (Nickel Ore in kWMT)
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14%
54%
32%
2010 Japan1,146
China4,504
HPAL2,689 8%
63%
29%
2011 Japan843
China6,567
HPAL2,977
11%
60%
29%
2012 Japan1,313
China7,065
HPAL3,352 8%
62%
31%
2013 Japan1,051
China8,668
HPAL4,280
Source: Company data
NAC Shipments Profile (Nickel Ore Revenue in Php Million)
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34%
46%
20%
2010Japan2,679
China3,657
HPAL1,632
20%
64%
16%
2011
Japan2,416
China7,805
HPAL1,909
22%
66%
12%
2012 Japan2,447
China7,368
HPAL1,339
14%
71%
14%
2013 Japan1,464
China7,377
HPAL1,482
Source: Company data
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Nickel Forecasts
Source: Energy & Metals Consensus Forecasts by Consensus Economics Inc. 2012 (June 2013)