The quarterly report of Lynas Corporation Limited (ASX: LYC) is published now which states that the company has achieved a record operational performance in Q1 of FY19. The company reports the cash flow of A$32.8 million from the operating activities which is 58% higher than the June quarter. The sales revenue generated was A$105.6 million which increased by 15.2% higher than the June quarter. The REO production increase by 8.7% which is equivalent to 5,220 tonnes. The NdPr production also increased by 9.1% as compared to the June quarter which is equivalent to the production of 1,579 tonnes. The Next target of Lynas is to production of NdPr above 600 tonnes. There is a strong demand of Lynas Rare Earths especially from its Japanese customers, which has led Lynas to achieve a record sale of A$105.6 million in the quarter. The price of the NdPr remain constant throughout the quarter. The next step for Lynas is to make significant improvement in the recoveries and the reliabilities in order to achieve record production results. December quarter is lined up with the commissioning of a new circuit that is used to separate Nd and Pr.
The production results of Q1 FY19 has made the CEO confident about Lynas capability to deliver at an increased production rate. During August, there was still a water supply issue at Lynas’ plant in Gebeng, Malaysia. In order to prevent the hampering of the production due to the water supply problem, the company accessed water from the 2 additional sources. They commissioned the construction of a third water storage pond which is expected to finish by the end of 2018. They also took initiatives to reduce water consumption. This initiative led them to reduce water consumption by 20% at the Lynas Malaysia plant. Apart from this Lynas and other users in the Gebeng estate contributed an amount of MYR 500k each in order to fund structural work on the embankment near the local pump house. It is expected that this work will complete by next quarter. In spite of these disruptions Lynas was able to produce at a higher Lynas NEXT production rates in the month of August 2018. Due to decrease in the demand of magnet in China and continued illegal processing of NdPr led the prices to flattened to an average of US$40.5/kg NdPr during the quarter. However, there was not much impact of this on market and Lynas was able to maintain a strong position as the only miner and producer of rare earth materials outside China. Lynas has kept itself on track in regard to the improvement taking budget into consideration. As of now, the major works are completed at both Mt Weld and Lynas Malaysia. and the Company’s ability to deliver world-class material to customers around the world from our plant in Malaysia, as the second largest producer of NdPr in the world. The Malaysian Government has made announcement in regard to the establishment of a committee so that they can review the operations at Lynas Malaysia. Lynas is expected to cooperate with full confidence about their performance and will continue to follow best practice internationally to confirm that the operations are safe not only to the employees of Lynas but also the local communities as well as the environment.
The current market price of the share is A$1.7 with market capitalization of A$1.05 billion and PE ratio of 17.93x.
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