Nickel Mines Ltd. Earnings Call Highlights: Strong Operations Amid Challenges

Nickel Mines Ltd. ((AU:NIC)) has held its Q4 earnings call. Read on for the main highlights of the call.

The recent earnings call for Nickel Mines Ltd. showcased a blend of strong operational achievements and certain financial challenges. The sentiment was generally positive, highlighting impressive safety and sustainability milestones, alongside record production figures. However, the company faced hurdles such as lower reported EBITDA due to foreign exchange losses, quota limitations impacting sales, and the influence of soft nickel prices. Despite these setbacks, the outlook for 2025 remains optimistic with key projects progressing as planned and fully funded.

Safety and Sustainability Achievements

Nickel Mines Ltd. has made significant strides in safety and sustainability, recording 17.4 million man hours with only two Lost Time Injuries (LTIs) in 2024. The company’s Lost Time Injury Frequency Rate (LTIFR) and Total Recordable Injury Frequency Rate (TRIFR) were notably below the world steel average. Furthermore, the company was shortlisted for a Green PROPER rating for the third consecutive year and is targeting a Gold rating. It also achieved the highest MSCI rating among Indonesian metals and mining companies, with a notable increase in its S&P rating from seven in 2021 to 37 in 2024.

Record Production and Operational Performance

The company reported US$72.4 million in operational revenue for the December quarter, marking a period of record production. Over 7 million tonnes were mined, with November alone seeing 1.3 million tonnes sold. The ONI RKEF operations achieved a record production of 12,362 tonnes of nickel in MPI, contributing to a total quarterly production of 32,784 tonnes, representing a 7% increase from the previous quarter.

Strong Performance from Hengjaya Mine and Exploration Success

The Hengjaya Mine delivered robust EBITDA figures, generating US$35.6 million in the December quarter. Additionally, the Sampala Project showed promising exploration results with significant nickel and cobalt grades, indicating a potential for over 1 billion wet metric tonnes of ore.

Lower Reported EBITDA

Despite operational successes, the reported EBITDA from RKEF operations was significantly lower at US$22.1 million, compared to US$60 million in the September quarter. This decline was primarily due to a US$20 million foreign exchange loss in the December quarter.

Challenges with RKAB Quota and Delayed Ore Sales

The company reached its RKAB quota of 9 million tonnes early in December, which limited ore sales and resulted in an US$8.5 million loss for the month. However, there is an expectation of a quota increase to 19 million tonnes in the second half of 2025.

Soft Nickel Price Impact

Throughout 2024, Nickel Mines Ltd. operated in an environment of continued soft nickel prices, which affected overall revenue and profitability.

Positive Outlook for 2025

Looking forward, the company is optimistic about 2025, with several key projects and initiatives on the horizon. The ENC HPAL commissioning is expected in the second half of the year, alongside a potential increase in the Hengjaya Mine RKAB from 9 million to 19 million tonnes. The development of the Sampala Project, which is fully funded, is also anticipated to contribute significantly to future growth.

In conclusion, Nickel Mines Ltd.’s earnings call highlighted a company that is navigating challenges while achieving significant operational milestones. The sentiment was largely positive, with a focus on safety, sustainability, and production records. Despite financial setbacks, the outlook for 2025 remains promising, with strategic projects set to drive future growth.