ANC20-Proceedings-Presentations-Full

6 October 2020
Pan Pacific Hotel, Perth
Conference Proceedings







➔ Jim Lennon ➔ First Quantum Minerals


➔ Western Areas ➔ Poseidon Nickel

➔ IGO Ltd ➔ Centaurus Metals


➔ Mincor Resources ➔ Auroch Minerals

➔ Legend Mining ➔ Ardea Resources


➔ Blackstone Minerals ➔ St George Mining

➔ Chalice Gold Mines ➔ Panoramic Resources

➔ Azure Minerals ➔ Roskill


➔ Impact Minerals ➔ Neometals

➔ Clontarf Foundation

Nickel Market Outlook


Short-term pain but long-term gain








Jim Lennon

[email protected]

Macquarie Commodities Strategy
Macquarie Capital (Europe) Ltd
28 Ropemaker Street
London EC2Y 9HD, UK




October 2020






This publication has been prepared by Sales and Trading personnel at Macquarie and is not a product of the Macquarie Research
Department. Sales and Trading personnel at Macquarie are not independent and, therefore, the information herein may be subject to certain
conflicts of interest, and may have been shared with other parties prior to publication. Note: To the extent Macquarie Research is referenced,
it is identified as such and the associated disclaimers are included in the published research report.
Please refer to important disclosures at www.macquarie.com/salesandtradingdisclaimer.

Overview of presentation




➔Covid-19 has (obviously) had a negative impact on the supply/demand fundamentals for

nickel, with market shifting from deficit to surplus – these could last a few years…


➔Nickel prices have held up well in the circumstances due to a strong Chinese stainless
steel recovery, aided by weaker US dollar and speculative buying


➔Strong rise in Indonesian nickel production weighs heavily over nickel market in near

term – nickel is in the middle of the biggest surge in supply growth ever seen


➔Growth in nickel use in batteries is the big opportunity with the only significant
investments in new capacity so far being made by Chinese investors in Indonesia


➔Industry needs to invest now to meet potential explosive demand post-2025. Electric
vehicle makers have options to use more or less nickel, depending on nickel availability












PAGE 2

Nickel prices: were in retreat after Indonesian ore ban announced


but now recovering


➔Prices surged in Jul-Sep 2019 on Daily LME cash prices ($/tonne)

speculation that Indonesian govt. would
bring forward nickel ore ban – prices fell Ore ban announced

after they announced the ban! 19,000 Indo ore ban
announced

➔Prices retreated on weaker physical nickel 18,000 Speculation on ore ban
market with big and growing discounts for 17,000 Speculation Covid-19 in

non-LME deliverable nickel units (75% of 16,000 on Indo ore China
supply) – surplus has emerged $/tonne 15,000 ban begins


➔Coronavirus created major short term 14,000

demand downside and contributed to the 13,000
Q1 2020 sell-off. 12,000


➔Prices, however, have recovered 11,000

strongly since May on a “V-shaped” 10,000
Chinese recovery, large investor buying Jan 19 Feb 19 Mar 19 Apr 19 May 19 Jun 19 Jul 19 Aug 19 Sep 19 Oct 19 Nov 19 Dec 19 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20

and a weaker $US


Source: LME, Macquarie Commodities Strategy, October 2020
PAGE 3

Stainless steel still dominates nickel usage – batteries is still


small in terms of absolute usage


➔Stainless steel industry consumed

Global nickel consumption by first use, 2019 1.7mt of primary nickel last year (and

Batteries Other
7% 1% another 965kt of nickel in scrap)
Castings
2%
➔Batteries consumed around 170,000t

Plating
6% of nickel used in batteries


Non-ferrous ➔Stainless is 10x bigger than batteries
10%


Alloy steel ➔As a result of Covid-19 and
4% Stainless
steel collapsing oil price, demand in non-
70%
ferrous, alloy steel and plating is

being hit hard in 2020 (down 20%+?)









Source: INSG, ISSF, Macquarie Commodities Strategy, October 2020
PAGE 4

Recovery in Chinese stainless steel prices and large


speculative buying on SHFE drive nickel price recovery







Chinese SHFE prices for nickel and stainless steel SHFE nickel
R-squared = 88% Daily traded volume
18500 2050
2000000
17500
1950 1800000
16500 1600000
SHFE Ni: $/tonne 15500 1850 SHFE stainless: $/tonne 1400000


1200000
1750
14500
13500 Lots (1t) 1000000
1650
800000
12500
600000
1550
11500
400000
10500 1450 200000
Oct 19 Nov 19 Dec 19 Jan 20 Feb 20 Mar 20 Apr 20 May 20 Jun 20 Jul 20 Aug 20 Sep 20 0


Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20
Nickel (front month) Stainless (front month)



Source: SHFE, Macquarie Commodities Strategy, October 2020
PAGE 5

Key reasons why stainless is all that matters for now and


why it is all about China/Indonesia








Monthly stainless steel melt production Share of China and Indonesia in world Stainless dominates nickel use and Indonesia
3.5 stainless steel production and China dominate nickel in stainless
low scrap use
stainless 75% 82% 81%
3.0 80%
70% 2019 2020F
78%
million tonnes 65% 76% 74% 73%
2.5
74%
2.0
60%
72%
70%
70%
55%
1.5 68%
high scrap use
stainless
66%
50%
1.0 64%
Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 45% Stainless share in total nickel China/Nickel share in primary
use
nickel used to make stainless
steel
Indonesia+China World ex-Indonesia+China


Source: CRU, INSG, ISSF, Industry statistics, Macquarie Commodities Strategy, October 2020
PAGE 6

Global supply/demand balance: surplus emerges after


sustained period of inventory reductions






Monthly nickel supply/demand 2020 2019 Y-o-Y
Jan 2016-July 2020
Use by area Jan-Jul Jan-Jul % Change
210 50
Western Europe 142.9 175.0 -18.3%
Usage and production: 3MMA '000t ni 190 30 Balance: '000t Ni Former Soviet Union 736.5 750.0 -10.8%
40
5.8
Eastern Europe
-17.4%
7.1
200
11.6
12.3
-5.7%
China
-1.8%
20
-4.5%
94.0
98.5
Japan
180
210.7
Other Asia
236.4
10
63.2
77.8
170
-28.8%
32.0
Rest of world
22.8
Total world use
-7.3%
160 0 USA 1287.5 1388.9 -18.8%
-10
Total world production 1378.7 1353.5 1.9%
150 -20 Implied balance 91.2 -35.4
2016 2017 2018 2019 2020
Balance Production Consumption (use)
Source: INSG, Macquarie Commodities Strategy, October 2020
PAGE 7

Chinese production rising and estimated real consumption


recovering in “V” shape





Chinese estimated monthly real consumption
Chinese+Indonesia monthly SS 300 series production
of stainless steel
1.8
30%

1.6
20%

1.4
10%
million tonnes 1.2 % change YoY 0%





1.0
-10%

0.8
-20%


0.6 -30%
Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 Jan-18 Feb-18 Mar-18 Apr-18 May-18 Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Aug-20 Sep-20 F



Real Apparent

Source: ZLJ Steel, Wind, Chinese trade statistics, Macquarie Commodities Strategy, October 2020
PAGE 8

Stainless production forecasts – a big hit to production in


2020


Year Year Year
'000t 2019 2020F 2021F
USA 2600 2127 2318 ➔We expect a strong recovery in
Japan 2964 2462 2696
Europe 6784 5889 6282 stainless steel demand in 2021,
Korea 2349 2074 2300
Taiwan 997 843 725 assuming no further Covid setbacks
India 3723 2627 3284
China 30611 31328 32581 ➔Unlike 2020, however, Chinese
Indonesia 2265 2588 3000
Total (inc others) 53288 50788 54026 recovery may be muted compared to
Total Ex-China/Indonesia 20412 16872 18445
rest of he world since it happened
% change yoy
USA -7.4% -18.2% 9.0% earlier and govt likely to cool the
Japan -9.7% -16.9% 9.5%
Europe -8.1% -13.2% 6.7% economy after stronger than
Korea -2.5% -11.7% 10.9%
Taiwan -14.9% -15.5% -14.0% anticipated 2020 recovery
India -7.4% -29.4% 25.0%
China 10.0% 2.3% 4.0% ➔Non-Chinese recovery could be even
Indonesia 3.8% 14.3% 15.9%
Total World 2.0% -4.7% 6.4% stronger than we project
Total Ex-China/Indonesia -8.1% -17.3% 9.3%



Source: CRU, ISSF, Macquarie Commodities Strategy, October 2020
PAGE 9

EVs: Growth amid the pandemic (thanks to Europe), but



after a horrid period for China




China PV EV sales, monthly, 000 vehicles US PV EV sales, monthly, 000 vehicles
160 40
Chinese nickel sulphate production - down 22%
140 35
YTD: -28% YoY in H1 2020 but now recovering strongly
120 30
16000
100 25
80 20
60 15 YTD: -11% 14000
40 10
20 5
12000
-
- Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
'000t Ni 10000
2019 2020 2019 2020
Europe PV EV sales, monthly, 000 vehicles Global EV sales, 000 units
120 300
YTD: +7% 8000
100 250
YTD: +123% 200
80 6000
60 150
40 100 4000
20 50 Jan-17 Mar-17 May-17 Jul-17 Sep-17 Nov-17 Jan-18 Mar-18 May-18 Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19 Jan-20 Mar-20 May-20 Jul-20 Sep-20 Nov-20
0
-
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2019 2020
2020 2019
Source: Rho Motion, SMM, Macquarie Commodities Strategy, October 2020
PAGE 10

Period of sustained growth came to an end in Q4 2019,


before the virus




➔All growth in nickel use in 2019 was
Changes in quarterly global nickel usage
from China, which grew by 8.7%
2017: +10.2%
20%
2018: +6.8%
17% while rest of world fell by 4.7%
15%
13% 12%
12% ➔In 2020, China to grow by 4.4%,
2019: +2.3%
10% 9%
while rest of world falls by 18%!
5%
5% 4% 3%
2%
1% ➔We assume recovery in H2 will be
0%
0%
0% significant but annual growth will be
-2%
-5.6% this year
-5% -4%

-10% -9% -8%
➔We are projecting 8% YoY growth in
2020: -5.6%
-15% 2021 as impact of virus wanes
economic growth recovers strongly



Source: INSG, Macquarie Commodities Strategy, October 2020
PAGE 11

Nickel supply growth all about nickel pig iron – rest of world


production static to falling







World primary nickel production by quarter, kt Ni
NPI share in total world nickel production
450
50%
400
45%
350 40%

300 35%

250 30%

200 25%

150 20%

100 15%
10%
50
5%
0
2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F
0%
Ex-NPI NPI 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 20192020F
% of total

Source: INSG, Antaike, Company data, Macquarie Commodities Strategy, October 2020
PAGE 12

Virtually all growth in supply from nickel pig iron in China and Indonesia and from

nickel ore from Indonesia (domestic plus exports)





'000t Ni World primary nickel production growth ➔The role of NPI has been dominant
300 in recent years

250 21

4 ➔NPI fell in 2014/15 after previous
200
Indonesian nickel ore ban; this time,
150 109 51
2 76
232
100 28 67 208 61 growth in Indonesian NPI offsets
0
50 62 95 100 126 85 114 Chinese fall in 2020 and 2021
62 76 80
25
0 -10
-20 -35 -25
-55 -50 ➔For 2020 onwards, we have included
-50 -80 -54 -92
-132 our disruption allowance in Ex-NPI
-100
-76
-150 ➔Significant cuts in non-NPI
-200 production in 2020, partly due to
2015 2016 2017 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F
Covid and partly due to market

Indonesian NPI Chinese NPI Non-NPI world

Source: Company data, INSG, Macquarie Commodities Strategy, October 2020

PAGE 13

Indonesia is where the supply growth is…






Estimated and projected Indonesian nickel production Annual changes in Indonesian nickel supply
1600 50%

1400 126 45% 275 225 219 260
225
110 40% 166
1200 55 85 35% 175 138 120 118 145
'000t finished nickel equivalent 800 313 20 1006 1091 1205 30% Indonesian share of world supply % '000t Ni -25
125
1000
75
25%
25
20%
600
-75
400 672 191 568 800 926 15% -125 -97
385 451 47 360 10%
200 92 105 169 181 261 5% -175
17 28 33 30 37 42 49 100 1 2 44 3 28 0 90 -225
0 0%
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F -275
-325
PT Vale Aneka Tambang 2017 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F
All HPAL
Ore exports Share of world primary supply Matte FeNi NPI HPAL Ore Total

Source: Industry statistics, SMM, Antaike, , Macquarie Commodities Strategy, October 2020
PAGE 14

The rise and rise of NPI – reassessed after ore ban – massive

number of new Indo projects since mid-2019 – the net differences


emerge post 2021





Nickel pig iron production (kt Ni) How our total NPI forecasts have changed - China + Indonesia
1,600
1,500
1,400 1,331 1,366
1,300 1,300
1,251
1,210
1,200 1,160 1,135
1,100
1,060 1,079
1,009
1,000
900
1,006 1,091 1,205
360 568 800 926 800
700 '000t Ni
261
600
500 185
28 90
400
300 584
475 492
400 381 408 360 325 325
100 275 250 200

2015 2016 2017 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F 0
-100
2020F 2021F 2022F 2023F 2024F
China Indonesia July-19 Oct-20


Note: 2020 onwards is before any disruption allowance.
Source: Company data, SMM, Antaike, Macquarie Commodities Strategy, October 2020
PAGE 15

Summary of outlook – from deficit to surplus





`000t Ni 2019 2020f 2021f 2022f 2023f 2024f 2025f
Total SS production 53288 50788 54026 56269 58635 60956 63307 ➔Deficit this year of 138kt and 70kt in
% Change 2.0% -4.7% 6.4% 4.2% 4.2% 4.0% 3.9%
Primary nickel consumption 2439 2303 2492 2588 2724 2890 3063 2021, despite strong demand
% Change 2.3% -5.6% 8.2% 3.8% 5.2% 6.1% 6.0%
recovery
Nickel Supply 2401 2441 2562 2655 2796 2906 3046
% Change 9.7% 1.7% 4.9% 3.6% 5.3% 4.0% 4.8%
(of which NPI) (945) (1,060) (1,160) (1,251) (1,331) (1,366) (1,455) ➔Revisions upwards in Indonesian
supply are pushing the market in to
World Market Balance -38 138 70 67 72 16 -17
continuous surplus out to 2024
Estimated total stocks 506 644 714 781 853 869 852
Weeks' world demand 10.8 14.5 14.9 15.7 16.3 15.6 14.5
LME Cash Price ($/t) 13908 13263 13750 14000 15000 15500 16000 ➔Included in the numbers is 140ktpa
of Indonesian HPAL production by
Projected global balance now and late-2019
2025, which will feed into NiSO4
150 138
output in Indonesia and China
100
70 67 72
50 ➔We could see significant closures of
'ooot Ni 16
0 ferronickel capacity as NPI floods
-17 the market
-24
-50 -41 -39
-60 -60
-80
-100
2020F 2021F 2022F 2023F 2024F 2025F
Previous (Dec-19) Latest (July-20)
Source: INSG, Company reports, Macquarie Commodities Strategy, October 2020
PAGE 16

Principle issues in the medium-term outlook




Demand


➔What is the growth rate in stainless use and also in stainless steel scrap availability from
China?


➔How fast can nickel in batteries grow? – massive forecast uncertainty especially over the

use of NCM 811 (high Ni content) batteries


Supply

➔What is the next source of nickel supply for the battery industry?


➔Over 200ktpa of HPAL projects in Indonesia but doubts about the timing, environmental issues
and capital costs


➔How much class1 can be displaced from the stainless industry by NPI and stainless steel scrap?


➔Will NPI be converted into nickel sulphate?










PAGE 17

We are in the early stages of market development – this is


before Tesla announced 3,000GWh investment by 2030!












































Source: Benchmark Minerals, Macquarie Commodities Strategy, October 2020
PAGE 18

Mega-factory battery capacity: Nickel-based chemistries to


dominate












































Source: Benchmark Minerals, Macquarie Commodities Strategy, October 2020
PAGE 19

Key trends in battery technology



➔Higher nickel and lower cobalt (to increase energy density, partly at expense of stability)


➔Bigger batteries to increase range (from 30-45 kWh battery packs per vehicle (in NMC111)
to 50-60kWh (NMC 622/NMC 532) and then to 75-80kWh+ (NMC 811)


➔NCM 523/611 now dominating in Europe but shift to NCM 811 is under way – no signs of
this slowing


➔Tesla is going to use no-Ni/no-CO lithium iron phosphate (LFP) batteries in Chinese model 3

and signalled at its Battery Day that it will roll out a mass-market $25,000 car to the world,

presumably using LFP rather than nickel-based chemistries



Nickel content kg/kWh Cobalt content Lithium content Mn content kg/kWh
kg/kWh kg/kWh
0.8 0.40
0.40 0.14
0.6 0.30
0.30
0.4 0.09 0.20
0.20
0.2 0.10 0.04 0.10

0.0 0.00 -0.01 0.00
NMC NMC NMC NMC NMC NMC NMC NMC NMC NMC NMC NMC NMC NMC NMC NMC
111 532 622 811 111 532 622 811 111 532 622 811 111 532 622 811

Source: Industry data, Macquarie Commodities Strategy, October 2020 PAGE 20

Sales of EVs to continue growing strongly after 2019/2020


slowdown
➔Growth continues at reduced rate in


World EV sales growth to continue 2019/20 but should recover strongly
in 2021 (up over 40%)
12 60%

➔Many countries have introduced new
10 50%
incentives in recent months and “go

8 40% green” strategies could be
million units 6 30% accelerated.





4 20% ➔Our assumption of 30% a year to
2025 from next year bring global total

2 10%
to just over under 12m vehicles by
2025 with 80:20 Pure EV: PHEV split
0 0%
2016 2017 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F
BEV PHEV Growth rate YoY %




Source: Rho Motion, Macquarie Commodities Strategy, October 2020
PAGE 21

Use of nickel in batteries to grow strongly beyond 2020




➔ Nickel to benefit from strong electric vehicle
growth and increased nickel use per battery. Use of nickel in batteries set to grow strongly


➔ Amount of nickel per car could on average 1,200
grow from 20kg up to 40–50kg by 2025-30, 1,000
but that depends on uptake of NCM

811…and LFP. 800

➔ Our base case: 2025: 510kt Ni; 2030: 1mt Ni '000t Ni 600


➔ 2020 demand recovering in 2H and could now
400
be flat YoY: we have raised our demand
profile out to 2025 as a result of new EV 200
policies

0
➔ There is a role for all battery technologies,
particularly LFP and Hydrogen fuel cell – Base High Low

their growth in not necessarily bad for
nickel Massive forecast uncertainty



Source: CRU, Macquarie Commodities Strategy, October 2020

PAGE 22

Nickel use forecasts on our base case nickel in battery


forecasts



Nickel growth by application

1,600
1,467 ➔Batteries will be the

1,400 largest growth driver
1,307
over the decade in
1,200
volume terms
1,030
1,000
'000t Ni 800 822 ➔Total needed growth


620 1.5mt from 2019-30F,
an 11-year period,
600
compared with 1.3mt
400
from 2000-19, a 19-
200 138 139
year period.
24
0
Stainless Batteries Other Total
2000-19 2019-30F


Source: CRU, INSG, Macquarie Commodities Strategy, October 2020 PAGE 23

Where will the nickel come for EV revolution?





“Class 1” nickel and sulphides are not the

only feedstocks Estimated and projected sourcing of nickel uints to make nickel sulphate
Note: includes nickel sulphate for non-battery applications
➔ Crude nickel sulphate (from Cu/PGM refining) 550


➔ Recycled scrap and revert/end of life battery scrap 450

➔ Mixed nickel-cobalt hydroxides and sulphides
(MHP/NHC and MSP) – intermediates from HPAL. 350

➔ Mixed nickel-cobalt sulphides from the bioleaching of '000t Ni 250
sulphide ores(Terrafame)

➔ Integrated from mining nickel ore to refining of nickel 150
sulphate – from laterite/sulphide ores.
50
➔ Class 1 nickel metal and powders (both sulphide and
laterite ores) – mainly coarse nickel powders and -50 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020F 2021F 2022F 2023F 2024F 2025F

briquettes. Other nickel shapes (cathodes) mostly too
expensive to process. Intergrated MHP/NiS intermediates Class 1 metal/powders and oxides Crude nickel sulphate/secondary

➔ Nickel oxides (small volumes from Japan and
previously from New Caledonia). Source: Industry estimates, Macquarie Commodities Strategy, October 2020


PAGE 24

Projects for the battery market – mostly Indonesian/all


laterite; some of post-2025 projects could come earlier


➔Large numbers of
Base case to 2025 '000t metal
Country Company Plant Ni Co Timing Product Process proposed HPAL projects
Australia First Quantum Ravensthorpe 30 0.7 Q2 2020 MHP HPAL
N.Caledonia Vale VNC (Goro) 30 2.0 Q2 2020 NHC (MHP) HPAL and two NPI to
Indonesia PT Halmahera Persada Lygend 1 Obi Island 37 4.4 2021 MHP/NiSO4 HPAL matte/precursor projects
Indonesia PT Halmahera Persada Lygend 2 Obi Island 18 2.2 2022/3 MHP/NiSO4 HPAL
Indonesia PT QMB New Energy Morowali 50 4.0 2022 MHP HPAL
Indonesia Morowali Huayue Nickel & Cobalt 1 Morowali 30 3.0 2022 MHP HPAL ➔First Indonesian HPAL
Indonesia Morowali Huayue Nickel & Cobalt 2 Morowali 30 3.0 2023 MHP HPAL
Indonesia Youshan Nickel (Huayou/Shentung) Weda Bay 35 0.4 2021 Matte Smelting projects already 1-2
Indonesia Huayou Cobalt Weda Bay 45 0.5 2023 Matte/precursors Smelting
Sub-total 305 20.0 years “late”

Other potential projects - assumed post 2025 (could be earlier)
Indonesia Vale/SMM Pomalaa 40 4.0 2024+ MSP HPAL ➔At least half of the
Indonesia Huayou/Tsingshan Weda Bay 50 5.0 2025+ MHP HPAL known post-2025
PNG MCC Ramu 32 3.1 2025+ MHP HPAL
Australia Sunrise (Clean Teq) Sunrise 20 4.6 2025+ MHP HPAL projects may never get
Australia Australian Mines Sconi 16 2.2 2025+ MHP HPAL
China Jinchuan Fangchengang 30 3.0 2025+ MHP HPAL built but many other
Sub-total 188 21.9
Indonesian projects are

possible if first ones are

successful
Source: Company reports, Macquarie Commodities Strategy, October 2020
PAGE 25

Class 1 primary nickel to shift from stainless to battery


market out to 2025?




➔NPI production growth much faster
Nickel use in stainless steel production Total Ni in SS
Growth rate
2019-25F
3.8% a year total than total stainless production growth
3500
-8% a year
3250
218 ➔Potentially frees circa 150ktpa of
3000 232
192
2750 198
230 3% a year class 1 nickel from stainless use to
2500 356 224 1143
534 1099
2250 1055
1010 other uses (including batteries) from
963
2000 932
'000t Ni 1750 975 960 443 2019-2025
1500 416 422 433 1.4% a year
415
1250 392
407
1000 ➔LME stocks of 200kt+ of nickel
416
750 1455
1251 1331 1366 briquettes another supply source
1160
500 945 1060
736 7.5% a year
250
0
2018 2019 2020f 2021f 2022f 2023f 2024f 2025f
NPI Ferronickel Ni in scrap Other primary (class 1 and oxide)



Source: Company reports, Macquarie Commodities Strategy, October 2020
PAGE 26

Challenges for Indonesian HPAL projects


➔ Indonesian projects similar to Chinese-built Ramu
project in PNG, the lowest cost HPAL (reported) Reported/Calculated HPAL C1 cash costs
$/tonne Ni
➔ Indonesian HPAL capital costs – lower than previous 30000

projects: $25,000-35,000/tonne of capacity,
compared with $50-60,000/tonne best recent projects
25000
➔ Operating costs highly dependent on cobalt

➔ Environmental challenges: Ramu uses deep-sea 20000
tailing placement (DSTP). Indonesian projects want
to use DSTP in first 3 projects – some automakers $/tonne Ni after Co credit 15000
will not accept this product in their batteries. We
think dry stack tailings (DST) will ultimately be used. 10000


➔ Previous projects took longer to build, had major
capital cost over-runs. Already significant delays 5000

➔ Incentive price for NPI projects in the $10-11,000/t
range while HPAL incentive prices anywhere from 0
$15-20,000/t, depending on assumptions made. Q118 Q218 Q318 Q418 Q119 Q219 Q319 Q419 Q120 Q220
Ramu to MHP VNC Moa
➔ Fall-back option could be to convert NPI to nickel
Ambatovy Murrin Ramu to finished
sulphate but only makes sense if NPI trades at big
discount to NiS04
Source: Company reports (for Murrin Murrin, calculated from Glencore financial data), Macquarie Commodities Strategy, October 2020
PAGE 27

In summary



➔Major growth in NPI in 2019-20, combined with demand collapse has pushed global market

into surplus; surplus likely out to 2024 as Indonesian supply surge continues


➔Nickel use in batteries will be the major growth area for nickel out to 2030 – huge uncertainty
over actual growth rates but risks remains on upside


➔Supply response to meet in incremental demand growth has to come from Indonesia,

currently from NPI, but in future from high-pressure acid leach projects

➔Track record on HPAL creates uncertainty. The Indonesian projects have to work from an

environmental as well as volume and cost perspective.


➔NPI/FeNi conversion to matte/refining could be a source of nickel for batteries, if HPAL
projects are delayed


➔There will always be a place for nickel concentrate projects but that is not the solution to

large scale growth needed









PAGE 28

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PAGE 29

AUSTRALIAN NICKEL


CONFERENCE







Building the future; 2030 here we come!



D A N L O U G H E R | 6 October 2020

AGENDA














CORPORATE NICKEL MARKET GROWTH OPERATIONS




































2

Disclaimer and forward looking statements






This presentation is being furnished to you solely for your information and for your use and may not be copied, reproduced or redistributed to any other person in any manner. You agree to keep
the contents of this presentation and these materials confidential. The information contained in this presentation does not constitute or form any part of any offer or invitation to purchase any
securities and neither the issue of the information nor anything contained herein shall form the basis of, or be relied upon in connection with, any contract or commitment on the part of any person
to proceed with any transaction.
The distribution of this presentation in jurisdictions outside Australia may be restricted by law, and persons into whose possession this presentation comes should inform themselves about, and
observe, any such restrictions. This is not for distribution or dissemination in the U.S.

The information contained in this presentation has been prepared by Western Areas Ltd. No representation or warranty, express or implied, is or will be made in or in relation to, and no
responsibility or liability is or will be accepted by Western Areas Ltd, employees or representatives as to the accuracy or completeness of this information or any other written or oral information
made available to any interested party or its advisers and any liability therefore is hereby expressly disclaimed. No party has any obligation to notify opinion changes or if it becomes aware of any
inaccuracy in or omission from this presentation. All opinions and projections expressed in this presentation are given as of this date and are subject to change without notice.

This document contains forward-looking statements including nickel production targets and cost estimates. These statements are based on assumptions and contingencies that are subject to
change without notice, and certain risks and uncertainties that could cause the performance or achievements of Western Areas Ltd to differ materially from the information set forth herein. Often,
but not always, forward looking statements can generally be identified by the use of forward looking words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “continue”, and
“guidance”, or other similar words and may include, without limitation, statements regarding plans, strategies and objectives of management, anticipated production and expected costs. Western
Areas Ltd undertakes no obligation to revise these forward-looking statements to reflect subsequent events or circumstances. Individuals should not place undue reliance on forward-looking
statements and are advised to make their own independent analysis and determination with respect to the forecasted periods, which reflect Western Areas Ltd’s view only as of the date hereof.
The information within this PowerPoint presentation was compiled by Western Areas management, but the information as it relates to exploration results, mineral resources or ore reserves was
prepared by Mr Graeme Gribbin, Mr Andre Wulfse or Mr Marco Orunesu-Preiata respectively. Mr Gribbin, Mr Wulfse and Mr Orunesu-Preiata are full time employees of Western Areas Ltd. Mr
Gribbin is a member of Australian Institute of Geoscientists (AIG). Mr Wulfse is a Fellow of Australian Institute of Mining and Metallurgy (AusIMM) and Mr Orunesu-Preiata is a member of
Australian Institute of Mining and Metallurgy (AusIMM) and have sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity
which they are undertaking to qualify as Competent Persons as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
Reserves’(2012 JORC Code). Mr Gribbin, Mr Wulfse and Mr Orunesu-Preiata consent to the inclusion in this presentation of the matters based on the information in the form and context in which
it appears.

This announcement is authorised for market release by Western Areas Limited Managing Director and CEO, Daniel Lougher.
Western Areas Registered Office: L2, 2 Kings Park Road, West Perth, 6005, Australia




3

CORPORATE

Western Areas are safe areas






























Days LTI free 12 month LTIFR moving average
7.5
Cosmic Boy 7.0
Concentrator 723 Sep-18 6.5
6.0 LTIFR
5.5
Exploration 710 Sep-18 5.0
4.5
4.0
Flying Fox 527 Mar-19 3.5
3.0
2.5
Spotted Quoll 158 Mar-20 2.0
1.5
1.0
Cosmos 60 Jul-20 0.5
0.0






5

Success timeline






June 2004 October 2018
First offtake with LionOre Feb 2017 Odysseus DFS approved September 2020
Oct 2009 Tsingshan and BHP Offtakes
Spotted Quoll 1 production and decision to mine AM6 Reserve
st
June 2020
April 2017
July 2000 WSA 19.9% stake in
$5m ASX IPO @ 20c Oct 2006 MREP project approved Panoramic Resources
Flying Fox production July 2015
Western Areas debt-free for first
time
















Dec 1999 Oct 2015
Company incorporated Oct 2007 Purchase Cosmos April 2018
Spotted Quoll discovery July 2020
from Glencore Odysseus early works
Sept 2003 approved
Discovery of Dec 2009
Flying Fox T1 BHP Offtake March 2017
Dec 2004 Jinchuan Offtake Odysseus PFS January 2019
Mine development at BioHeap purchase Odysseus decline
Flying Fox rehabilitation commences




6

The past and present!




























































7

Corporate overview





The Company aims to be a sustainable and profitable, nickel focused, base metal miner
building value and scale while maintaining financial strength



ASX code WSA
Share price 2.11

Low Cash Cost Shares outstanding (m) 274.7
High High Grade
Quality Market Cap (A$m) 1 579.6
Nickel Sulphide
Cash (A$m) 2 144.8


$144.8M at COSMOS
bank 2 No Debt
Odysseus
164kt Ni Ore Reserves
265kt Ni Mineral Resource
First Production CY2022
Odysseus Mine
Strong AM6
Growth Diggers South 47kt Ni Ore Reserves
New Morning
67kt Ni Mineral Resource
FORRESTANIA
Panoramic Nickel Spotted Quoll
Resources Leverage 49.6kt Ni Ore Reserves
(WSA 19.9%) 65.2kt Ni Mineral Resource

Flying Fox
12.0kt Ni Ore Reserves
45.3kt Ni Mineral Resource





1. Based on share price on 5 October 2020 2. As at 30 June 2020 8

NICKEL MARKET






















































9

Offtake contracts best in class








New contracts executed with strategic partners following successful
completion of a highly competitive tender process



Seamless transition into new contracts. Full benefit of improved
commercial terms (compared to previous agreements) commenced JINCHUAN BHPB
Jinchuan
February 2020 ~13ktpa ~10ktpa BHP
~10ktpa
Jan 2017 Jan 2017 ~10ktpa
Premium blending concentrate - superior commercial terms 2 years + 3 years
1 year ending

Our Partners: option Jan 2023
▪ BHP: 50%

✓ Australia’s largest nickel producer
✓ Building a nickel sulphate plant in Kwinana Western Australia
▪ Jinchuan: 50%

✓ China’s largest nickel cathode producer
✓ Direct feeder of the Chinese nickel sulphate market


Discussion ongoing with offtake parties that are linked to the Electric Vehicle battery pre-cursor sector for future
MREP production of high grade premium nickel sulphide and potential for Odysseus concentrate to feed this market.










10

What we are seeing








▪ Tesla announce that they will manufacture own
battery cathode to ensure ongoing supply, due to

potential shortage of pre-cursor materials such as
nickel


▪ Growing EV demand in first half 2020, especially in
Europe


▪ Major car OEM’s taking position in Chinese
market


▪ Technology change to NCM 811 which requires
higher quantity of nickel, gaining market momentum


▪ Jinchuan (largest nickel cathode producer in China)
increasing nickel sulphate volumes


▪ Other stockpiles shrinking on the back Indonesian
ban and stainless demand

▪ Indonesia ore export ban still in place, but NPI
volume increasing in-country to supply SS demand








11

The future – EV demand for nickel





▪ Tesla announce; "Musk said Tesla's new, larger 4680 cell design used cobalt-free cathodes with a high nickel content as it embraced
a mine-to-battery approach to drive battery costs lower, increase manufacturing efficiencies and accelerate the world's transition to
sustainable energy.“

▪ Potentially very significant incremental demand versus a current nickel market size of c.2,2mt

▪ Research indicates NMC 811 will be the fastest growing battery combination by 2025!

▪ VW announced its Zwickau Plant — currently the world’s largest automotive plant — produced its last car with a combustion engine
▪ BMW iX3 SUV recently launched with an 811 NCM battery








Odysseus Production FY23
























Source: Trafigura Research, SMM, CIAP – March 2020 Source: Trafigura Research, SMM, CIAP – March 2020


12

GROWTH AND EXPLORATION






















































13

Nickel growth pipeline





Nickel

Resources/Reserves


















































14

Cosmos nickel operation – Odysseus mine





WESTERN AREAS’ SECOND OPERATIONAL HUB:


▪ Outstanding nickel address

▪ Total Ore Reserves of 211k tonnes of nickel

▪ Strategically located between Nickel West Leinster and
Mt Keith mines

▪ Established infrastructure






































15

Odysseus




























































16

Odysseus mine – a long life, low cost, project 10yrs + +





▪ Odysseus - Long life, low cost project:

✓Ore Reserve 8.1mt @ 2.0% for 164kt nickel


✓Mine life > 10 years


✓AISC A$3.50/lb

✓Average nickel in concentrate production

14.5ktpa from FY24


▪ AM6 now a value add:

✓Ore Reserve 2.1mt @ 2.2% for 47kt nickel


✓Increasing mine life and capital efficiency


▪ Significant upside:

✓Record 22% Ni massive sulphide intersections

in lenses below Odysseus














17

Odysseus mine – underground infrastructure







▪ Pre-production Activities:


✓ Main pump stations and water infrastructure Production Shaft

complete


✓ Full face development commenced in the

Odysseus decline and RAW Main Pump Station
10,000mRL

✓ Mine development expenditure profile:
FY21 – A$90m FY22 – A$120m

FY23 – A$42m



✓ Pilot hole commenced for hoisting shaft

✓ 900ktpa concentrator – optimisation studies

ongoing


✓ WSA is well funded with cash and has no
debt
Ramp Decline from AM5/6
18






18

Odysseus production ~900k tpa ore










▪ Minimum 10 year mine life on reserves
(OD only)



▪ Annual ore production of 900kt. First ore

scheduled for late CY 21


▪ First Ni concentrate late CY 2022



▪ Consistent annual nickel production



▪ Significant upside now a reality with
inclusion of 47kt Ni Reserve for AM6



▪ Optimisation studies commenced to

integrate AM6 Reserves






19






19

Why a hoisting shaft?







▪ Shaft infrastructure dismantling and refurbishment
completed. Now being delivered to South Africa port,

prior to shipping to Perth

▪ Significant economical and environmental benefits
versus trucking

▪ Combined with renewable power = energy efficient

site, 85% reduction in CO 2

▪ Low, consistent opex and proven technology

▪ Cycle time: ~3 mins

▪ Save 1.5 ML diesel burnt pa (DPM)

▪ Remove 5 MW of heat generated from diesel engines

3
▪ Remove minimum 200m /s of additional ventilation Key Metrics:
requirement ▪ 5.7m diam. raise bore

▪ 4 guide ropes per conveyance
▪ 1.27Mtpa (ore and waste)

▪ 12 t skips
▪ 1 truck required to feed shaft

▪ 4.5 MW peak power




20