A Look At Lynas Corporation’s Quarterly Report For March 2019 Quarter

A look At Lynas Corporation’s Quarterly Report For March 2019 Quarter

Lynas Corporation Limited (ASX: LYC), based in Kuantan, Malaysia, is engaged in the exploration and development of rare earths deposits and other mineral resources in Australia and Asia. The company is currently focussed on the Mt Weld Rare Earth project located south of Laverton in Western Australia.

On April 16th, 2019, the company released its Quarterly Report for the period ending March 31st, 2019. Lynas Corporation achieved record production and strong financial results during the period reflecting the improvements delivered by the success of Lynas NEXT. This in turn supported the operations amidst ongoing market softness and uncertainty in China causing weakness in the market prices. Meanwhile, the demand in the Japanese market remained strong and Lynas continued to strengthen its position there.

The invoiced sales revenue was recorded at AUD 101.3 million, up 26.8% on the prior quarter. Besides, the loan repayment of USD 3.1 million in early January reduced JARE loan to USD 146.9 million. Lynas closed the quarter with a cash balance of AUD 67.1 million.

With the restart of production in January 2019, after the shutdown in December 2018 when the company reached its annual approved processing limit for lanthanide concentrate, new record production was recorded with 1,591 tonnes NdPr including over 600 tonnes NdPr in March 2019. Although, the production was slow to stabilise through January and February due to shorter months, the Lynas NEXT initiatives enabled the company to produce heavily in March alone. Besides, the total REO production stood at 5,444 tonnes, which was up 23.1% on the 4,422 tonnes produced in the prior quarter. Also, the first separated Pr was produced and sold during the quarter.

Recently, Lynas informed that it was trying to gain clarity on the recent remarks by the Prime Minister and engage in discussions with the government to resolve the remaining issues related to WLP. During the quarter, the company formulated a new pathway after extensive discussion with the Malaysian government and regulators for the management of NUF residue. It has apparently developed an action plan that includes commercialisation options and a long-term disposal solution.

Also, on March 27th, 2019, Lynas announced that the Board had evaluated the highly conditional proposal from Wesfarmers Limited (ASX: WES) for full acquisition of Lynas at AUD 2.25 cash per share. Accordingly, it has decided to not engage with Wesfarmers on the terms outlined and provided detailed information for shareholders to understand the Board’s response in a letter released on April 10th, 2019.

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On the safety and environment front, Lynas is compliant with the national and international safety and sustainability practice standards. Accordingly, its operations are safe for employees, the environment as well as for its customers. As per the report, the company-wide 12-month rolling Lost Time Injury Frequency Rate was 0.6 per million hours worked (with no lost time injuries) at the end of the March quarter.

Moreover, the ongoing improvement of kiln waste gas treatment plants continued during the period whereby an in-house designed demister (which removes entrained water) was installed on one of the four kiln lines. The new design with self-cleaning sprays is effectively performing so far and is currently under evaluation.

The LYC stock is trending at AUD 2.030, edging up 1.5% by AUD 0.030 with ~ 1.57 million shares traded on Tuesday, April 16th, 2019, at 03:35 PM AEST.


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