LYNAS CORPORATION 2017 Annual General Meeting 1
Chairman’s address 2
Stable operating costs and higher production rates Total Operating Costs vs Production Sales Revenue (A$’m) (excl. restructuring costs, STI & employee share based payment) 120 7000 70 (A$’m) 6000 60 100 Quarter 5000 50 Quarter 80 4000 40 3000 30 60 2000 20 40 1000 10 0 0 20 Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18 0 NdPr Production (RTS) Others (RTS) Costs (A$'mill) Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18 Sales Revenue (A$’m) Total Operating Costs vs Production (excl. restructuring costs, STI & employee share based payment) 300 25000 220 250 20000 210 Annual Annual 200 15000 200 150 10000 190 100 5000 180 50 0 170 0 FY15 FY16 FY17 FY15 FY16 FY17 NdPr Production (RTS) Others (RTS) Costs (A$'mill) 3
Continuous improvement in NdPr and total production throughput Production Volume Sales Volume (tonnes) 4,665 4,503 5,000 5,000 Others (RTS) Others Sales 3,665 NdPr Sales 4,000 NdPr (RTS) 4,000 3,171 3,080 Total Sales Volume 2,691 Quarter REOt 3,000 REOt 3,000 2,043 1,546 2,000 2,000 1,000 1,000 1,442 1,428 1,176 1,060 968 984 445 468 0 0 Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18 Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18 Production Volume Sales Volume (tonnes) [VALUE] 16,000 [VALUE] 18,000 Others (RTS) Others Sales [VALUE] 14,000 16,000 NdPr Sales NdPr (RTS) [VALUE] 12,000 14,000 Total Sales Volume Total RTS Volume Annual 12,000 10,000 [VALUE] [VALUE] REOt REOt 10,000 8,000 8,000 6,000 6,000 4,000 4,000 [VALUE] 2,000 [VALUE] [VALUE] 2,000 [VALUE] [VALUE] [VALUE] 0 0 FY15 FY16 FY17 FY15 FY16 FY17 4
Significantly improved cash flow Cash Flow (excl. AELB payment) Cash Flow (excl. AELB payment) 40 30 30 25 20 20 10 15 0 10 FY15 FY16 FY17 5 -10 Quarter Annual 0 -20 Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18 -5 -30 -10 -40 -15 -50 Net Investing CF Net Operating CF Operating & Investing CF Net Investing CF Net Operating CF Operating & Investing CF Q1 Q1 Q1 Q1 FY15 FY16 FY17 FY18 FY15 FY16 FY17 Net Investing CF -0.8 -3.2 -0.4 -1.7 Net Investing CF -9.6 -10.3 -2.2 Net Operating CF -31.9 4.6 35.1 Net Operating CF -10.8 4.5 1.7 26.7 Operating & Investing CF -41.6 -5.7 32.8 Operating & Investing CF -11.6 1.3 1.3 25.0 5
The Balance Sheet is being progressively de-leveraged Debt Reduced Outstanding 31/12/16 Outstanding 24/11/17 during 2017 JARE Facility (1) US$ 200,000,000 US$ 170,000,000 US$ 30m Convertible Bonds (2) US$ 225,000,000 US$ 96,500,000 US$ 128.5m Cash received by Lynas Outstanding 31/12/16 Outstanding 24/11/17 during 2017 Warrants at $0.038 (3) 174,365,466 0 A$ 6.6m Warrants at $0.05 (4) 348,843,836 271,322,983 A$ 3.9m 1) In Aug 2017 restricted cash accounts were closed. JARE waived interest totalling US$15m and this amount was applied as a US$15m principal repayment under the JARE facility On 13 th October 2017, Lynas made an early prepayment of US$15m to JARE 2) 1.875% Convertible Bonds each with a face value of US$1.00, due 30 September 2020 convertible at A$ 0.10 per share with FX of 0.75. Since July 2017, US$128.5m of the Convertible Bond debt has been converted into equity 3) Warrants exercisable at $0.038 on or before 30 September 2018 4) Warrants exercisable at $0.05 on or before 30 September 2020 6
Changes to the Lynas Board in 2017 Jake Klein resigned in May 2017 after 12 years as a Non-Executive Director John Humphrey was appointed as a Non- Executive Director in May 2017 Grant Murdoch was appointed as a Non- Executive Director in September 2017 Liam Forde will resign on 28 November 2017 after 10 years as a Non-Executive Director 7
Lynas is the world #1 supplier of NdPr to the free market Europe & USA China & Japan Important strategic end Core client base for rare use markets earth metals Malaysia LAMP, Kuantan and Corporate office Australia Mount Weld rare earths deposit and processing plant. Perth office 8
Introducing Lynas NEXT Optimise value from existing assets and 425mRL capability 405mRL 407.5mRL 400mRL 402.5mRL - 500 tonnes/month NdPr from April 2018 600 tonnes/month NdPr from January 2019 - Temporary ramp blasted to 405mRL ready to dig 07.5mRL - Higher value product mix Improved plant reliability and recoveries - Strengthen and Derisk the Business - Contribute to total market growth - Engage directly with target OEM users - Reduce revenue volatility with long term contracts - Increased sales of differentiated products 9
Rare Earth market growth is accelerating driven by magnets (NdPr) 45 NdFeB magnet growth by application Demand forecast to 40 accelerate from 2020, 35 000 tons of NdPr Oxide used in Magnets driven by Electrified 30 Others 25 Vehicles and Automation- Automation & Appliances Electronic & Medical Electrified Vehicles 20 Appliances ICE Vehicles Wind Turbines 15 10 Additional 5000 tonnes of 5 NdPr needed every 5 years 0 2010 2015 2020 2025 2030 The market needs sustainable supply With Lynas NEXT, Lynas grows with the market and plays a major role in supporting development and adoption of new technologies 10
Lynas Next Significant Drill Intersections at Mt Weld Currently treating Li/CZ (gold) ore from CLD deposit AP (red) ore will be treated later Depth of AP ore zone limited by “AC” (air core) drill penetration Part 1 (“AP Depth Extension”) of a six part exploration program is underway using “RC” (reverse circulation) drill rig Preliminary results show depth extension of AP mineralisation New base of AP mineralisation is deeper than before New mineral resource and ore reserve due in 2018 after completion of drilling and analysis Transition and Fresh Rare Earth mineralization has been intersected under AP zone X-Section 6807240mN AP Depth Extension Drill Program 11
Lynas NEXT Increase Throughput • 600 tonnes/month NdPr from January 2019 • Improved operational reliability - Cracking and Leaching operations - Waste water and residue management - Tunnel Furnaces • Improved operational Recoveries - Mt Weld ball mill - Mt Weld flotation circuit - MgO neutralization 12
Lynas NEXT Enhance Product Mix • Higher value product mix - Up to 150 tonnes/month of separated Nd and Pr - Up to 200 tonnes/month of additional separated Ce and La - Higher quality and more grades of La and Ce to meet customer needs 13
Lynas NEXT Excellent Return on Capital Incremental CAPEX: $22.5m Total CAPEX: $35m Capex per Total Capex NdPr per NdPr per tonne per Invested annum month year A$M REOt REOt A$/kg Establishment costs + 749 1,956 163 382.9 Production Lines Additional 259 3,282 274 78.9 Production Lines 1,008 5,238 437 Project NEXT Optimisation of 35 1,962 163 17.8 existing production lines 1,043 7,200 600 14
45 million EV global sales are estimated by 2030 Key Motor Technology Choices 1 highest – 4 lowest PMa-SynRM with PMM IM EESM NdFeB magnet with NdFeB magnets Induction Externally Excited Most energy efficient Cheaper motor Robust Cheaper battery = Cheaper car Wider control Good torque Most compact, Lightest Least energy efficient Bigger, Heavier Bigger & heavier Vibrations and noise. Decreased efficiency at high RPM Heat management Heat at high speed Under development Magnet resistance to high Wearing parts maintenance Requires bigger batteries temperature. 15
Lynas NEXT Drive total Market Growth Residual “Fake News” provides Lynas with the opportunity to establish its positive credentials Fake News Lynas Truth PMMs have a higher acquisition cost but years of lower • PMM electrical motors are expensive because of consumption , due to motor efficiency and lower vehicle weight Rare Earth Lynas is #2 producer with 20% share of global NdPr market and #1 supplier of NdPr to the free market. • China dominates with 95% of supply and reserves Lynas offers long-term pricing to support entire vehicle programs • It is risky to choose RE solutions due to volatile Lynas has significant Rare Earths reserves and can efficiently pricing and uncertain supply increase capacity to satisfy demand Lynas undertakes life cycle assessment on all inputs to • Rare Earths production creates environmental continuously reduce environmental impacts. damage Lynas has a strong track record with 5 years of safe operation • Lynas works with the most important metal and magnet makers Rare Earth supply chain is opaque Lynas is a dependable partner on REE supply chain decisions 16
Lynas NEXT Drive Total Market Growth Assure supply reliability Engage directly with Automotive Industry on Lynas is no longer a Rare Earth technologies challenger we are a market leader Invest in Application R&D Promote sustainable business practices 17
Recommend
More recommend
