Lynas Corporation Limited Released Investor Day Presentation

On 21 May 2019, Lynas Corporation Limited (ASX: LYC) released an investor presentation where the company highlighted the current status of its plan for:

  • A larger business to meet forecast demand growth
  • A diversified Industrial footprint with processing facilities in optimal locations
  • Continuing to be the supplier of choice to non-Chinese customers with a fit for market product portfolio
  • Enhanced earnings
  • A $500m Capital plan

The company provided an update on its Malaysian, US and Western Australian Projects. In Malaysia, there was a dynamic operation in Gebeng with increased investment in downstream processing. In the US, the company envisages an exciting market opportunity with a skilled US-based partner. The company expanded its Western Australian operation.

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The company focuses on developing its sources of unique competitive advantage.

Mt Weld: Mt Weld is a true Tier 1 Resource of the company and is one of the world’s highest-grade rare-earth deposits.

 Market Position: The company ranks second in the world amongst the largest Rare Earths producer. It is the only Rare Earth miner and processor outside China and has established long term, trusted relationships built with its key customers.

 In-house Intellectual Property: The Technical, Engineering and Processing IP, has positioned the company as the Rare Earths Centre of Excellence outside China.

Proven Operations: The operating assets of the company are well established and has strong capital and operating cost culture.

Will to win: The Lynas team focuses on building long term shareholder value. The company has employed 738 skilled people, 651 at Lynas Malaysia and 87 at Mt Weld and are committed to achieving the goals of the company.

The company is confident going into the future based on its past track record. It has witnessed a sustained REOt production volume increase for the past few years, coupled with up trending sales revenue. The company is also turning the corner with regards to operational profitability in the past couple of quarters, and at the same time improving its operating cash flows.

Pol Le Roux, the VP Sales & Marketing of LYC highlighted that the demand for NdPr would accelerate from 2021 with the increase in electric cars in the range of 125 million -220 million on the road in 2030. He also updated the investors that most of the new models will be launched in 2021.

Now, most of the car makers are welcoming Rare Earth technology. In the present scenario, electric vehicles are expensive, and its battery represents 50% of the cost. A Rare Earth Electric Vehicle is more efficient as the target range is achieved with a smaller, lighter and cheaper battery. The Rare Earth Electric Vehicle Drive is the solution which consists of 2kg of REE magnets at the cost of US$100 per vehicle. The REE motor is 2-5% more efficient than alternatives.

LYC offers unique market expertise inside and outside China. It has a transparent downstream supply chain. It can also provide metal, alloy and recycling services through trusted partners in addition to Rare Earth supply. It keeps full transparency of transactions. Thus, Lynas is the partner of choice for securing a sustainable magnet supply chain.

Lynas plays a crucial role in Heavy Rare Earths. The alliance of Lynas and Japan plays an essential role in the market growth of Rare earth.

The MoU between Lynas and Blue Line Corporation was also highlighted in the presentation for the development of Rare Earths separation in the USA.

The company will engage itself in upstream processing expansion in WA, downstream processing expansion in Malaysia & United States to meet the market demand from 2022.

Dato’ Mashal Ahmad, the MD of Lynas highlighted on Malaysian political environment along with PH Government key reformation plan. The objectives of the key reformation plan include the reduction of corruption in government as well as Public sectors, improve the economy of the country by being investor friendly and welcome the hi-tech industries.

The company reported a strong balance sheet with a debt of US$162mn, of which US$15mn is convertible bonds. The net cash balance at the end of 31 March 2019 was A$67.1 million.

Around AEST 3:15 PM Yesterday, the company requested a trading halt pending the response from the company for the clarification of the information presented on slide 33 of the Investor Day presentation. Today the company has released its clarification, the 2018 Mineral Resource table and its figures were extracted from a previous ASX announcement. Further, the company withdrew forecast tailings quantities figures, and Sc2O3 in concentrate figures quoted on slide 33, as those figures are not material.

The shares of LYC are trading up by 7.965% at $2.440 (As at AEST: 12: 37 PM, 22 May 2019).


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