On behalf of the Board of Directors it is with great pleasure that I invite you to participate in the Initial Public Offering (IPO) of Nickel Mines Limited
(Nickel Mines or the Company).
The Company is seeking to raise a minimum subscription of $200.0 million (before costs) through the issue of approximately 571.4 million new
Shares. The funds will primarily be used by the Company to move to a controlling 60% interest in the 2-line Rotary Kiln Electric Furnace (RKEF)
plant which is being built in collaboration with our partner, Shanghai Decent Investment (Group) Co., Ltd (Shanghai Decent), a Tsingshan group
(Tsingshan) company responsible for the development of the Indonesia Morowali Industrial Park (IMIP).
As the world’s largest stainless steel producer Tsingshan’s commitment to China’s ‘One Belt, One Road’ strategy has been captured in its
commitment to the rapid development of the industry recognised IMIP on the island of Sulawesi, Indonesia, which is located only 12 kilometres from
the northern most boundary of Nickel Mines’ Hengjaya nickel mine. As a consequence of the introduction of a ban on the direct shipping of certain
unprocessed minerals, including nickel, by the Indonesian Government in January 2014, a relationship between Nickel Mines and Tsingshan was
developed – Tsingshan needed nickel for their stainless steel operations at the IMIP and the Hengjaya Mine had a large high grade JORC compliant
nickel ore resource.
While our working relationship with Tsingshan began by supplying nickel ore to Tsingshan’s IMIP operations, our mutual understanding and
appreciation of each other’s growth ambitions led us to broaden our relationship, culminating in the signing of a collaboration and subscription
agreement (CSA) in September 2017 with Shanghai Decent. The CSA sets out the terms and conditions by which Nickel Mines and Shanghai
Decent will work together to construct two new RKEF lines within the IMIP. Our collaboration will not only serve to contribute to Tsingshan expanding
its stainless steel production at the IMIP to a targeted 3 million tonnes per annum but will also provide Nickel Mines with a platform to reap the
significant economic benefits of becoming a downstream nickel producer.
In April this year, completion of the CSA was achieved, paving the way for Shanghai Decent and another cornerstone investor, Shanghai Wanlu
Investment Co. Ltd (Wanlu) to complete their respective US$26 million and US$24 million subscriptions for Nickel Mines Shares. These funds
have been used by Nickel Mines to acquire an initial 25% interest in the two new RKEF lines which are already under construction and which,
when completed, on a steady state basis are expected to produce ~16,500 tonnes of nickel metal per annum in the form of nickel pig iron.
In addition to increasing our ownership interest of these two new RKEF lines to 60%, which is the principal use of funds from the IPO, Nickel
Mines has the right to increase our ownership to 100% for an additional US$120 million. Beyond that, Nickel Mines and Shanghai Decent have
also executed a non-binding Memorandum of Understanding whereby Nickel Mines may acquire a further two new RKEF lines to be built in the
IMIP by Shanghai Decent.
Your Board of Directors believes Nickel Mines represents a truly unique investment opportunity that will in time see Nickel Mines establish itself as a
globally significant nickel producer and a tier-1 investment exposure among listed nickel companies.
Finally I would like to pay tribute to my predecessor and now Executive Deputy Chairman Norm Seckold. Norm is a founding Director of the Company
and had been the Company’s Chairman since its inception in 2007. On behalf of all existing and incoming Shareholders I thank him for his leadership
and perseverance in guiding the Company through some difficult times to now be in a position to capitalise on the tremendous opportunity before us.
I encourage you to read the Prospectus carefully and in its entirety before making your investment decision and where necessary consult your
professional adviser. In particular, you should consider the investment risks outlined in Section 6 (Risks) before deciding whether or not to
participate in the Offer.
We look forward to a continuing prosperous relationship with Tsingshan and to you joining us in support of our IPO.
Chairman, Nickel Mines Limited