Nickel Mines Ltd. ((AU:NIC)) has held its Q2 earnings call. Read on for the main highlights of the call.
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The recent earnings call for Nickel Mines Ltd. presented a mixed sentiment, highlighting both significant achievements and notable challenges. The company celebrated record ore sales and strong production figures from its HNC operations, yet faced production decreases and cash flow issues. While future projects like Sampala show promise, immediate concerns such as the ENC commissioning delay and cash flow management require attention.
Strong Safety and Sustainability Performance
Nickel Mines Ltd. reported impressive safety and sustainability metrics, achieving a Lost Time Injury Frequency Rate (LTIFR) of 0.05 with no lost time injuries over 4.6 million work hours for the quarter. The company also released its 2024 sustainability report, established the Nickel Industries Foundation, and created a biodiversity area, underscoring its commitment to sustainable practices.
Record Ore Sales from Hengjaya Mine
The Hengjaya Mine achieved record ore sales, surpassing 3 million wet metric tonnes, which contributed to a 33% increase in EBITDA to USD 41.4 million. The EBITDA per tonne margin also rose by 25%, reflecting the mine’s operational efficiency and profitability.
HNC Production Exceeds Expectations
HNC operations produced 2,075 tonnes of nickel from HPAL operations, operating 38% above nameplate capacity. This resulted in a strong EBITDA margin of over USD 6,000 per tonne, showcasing the facility’s exceptional performance.
Positive Outlook for Sampala Project
The Sampala project is progressing well, with 16 drill rigs on site and over 1,000 holes completed in the quarter. The project is targeting an exploration resource of over 1 billion wet metric tonnes of ore, indicating a promising future for Nickel Mines Ltd.
Decrease in RKEF Nickel Production
RKEF nickel metal production saw a 4% decrease due to kiln realignment and power station maintenance, resulting in lower EBITDA compared to the previous quarter. This highlights the operational challenges faced by the company.
Delays in ENC Cathode Plant Commissioning
The commissioning of the ENC cathode plant has been deferred to better align with working capital requirements and sales license issuance. This delay impacts short-term production plans and reflects the company’s need to manage its resources effectively.
Cash Flow Challenges
Despite a strong EBITDA quarter, cash flow from operations was broadly neutral due to a significant working capital build for inventory. This presents a challenge for the company in managing its financial resources efficiently.
Forward-Looking Guidance
Looking ahead, Nickel Mines Ltd. aims to continue its strong performance with key metrics and achievements highlighted by Managing Director Justin Werner. The company reported an adjusted EBITDA of USD 86 million for the quarter, contributing to a first-half total of USD 183.6 million. The Sampala project is set to deliver its first ore in the second half of 2026, with promising margins. Despite increased sulfur costs, EBITDA margins remain robust, and the company is poised for continued growth.
In summary, the earnings call for Nickel Mines Ltd. reflected a balanced view of achievements and challenges. While the company celebrates record sales and robust production figures, it must address immediate concerns such as production decreases and cash flow management. Looking forward, the Sampala project and other strategic initiatives offer a positive outlook for the company’s future.