LYNAS: GROWING WITH THE MARKET Diggers & Dealers Mining Forum 7 August 2019 Amanda Lacaze, CEO & Managing Director 1
Disclaimer This Presentation has been prepared by Lynas Corporation Limited (ABN 27 009 066 648) (Lynas or financial position and performance are also forward-looking statements. Forward-looking statements, the Company) This Presentation contains summary information about Lynas and its subsidiaries opinions and estimates provided in this Presentation are based on assumptions and contingencies (Lynas Group) and their activities current as at the date of this Presentation. The information in this which are subject to change without notice, as are statements about market and industry trends, Presentation is of general background and does not purport to be complete or to comprise all the which are based on interpretations of current market conditions. Such forward-looking statements information that a shareholder or potential investor in Lynas may require in order to determine including projections, guidance on future earnings and estimates are provided as a general guide whether to deal in Lynas shares. It should be read in conjunction with Lynas Group’s other periodic only and should not be relied upon as an indication or guarantee of future performance. There can and continuous disclosure announcements lodged with the Australian Securities Exchange (ASX), be no assurance that actual outcomes will not differ materially from these forward-looking which are available at www.asx.com.au. This document is not a prospectus or a product disclosure statements. statement under the Corporations Act (Cth) 2001 (Corporations Act) and has not been lodged with Investment Risk and other risks ASIC. An investment in Lynas shares is subject to investment and other known and unknown risks, some of Not investment or financial product advice which are beyond the control of Lynas Group, including risk factors associated with the industry in This Presentation is for information purposes only and is not financial product or investment advice which Lynas Group operates, such as: nature of mineral exploration and production; mineral and ore or a recommendation to acquire Lynas shares and has been prepared without taking into account reserves; operations risks; project development risks; market price and demand risk; credit and the objectives, financial situation or needs of individuals. Before making an investment decision, market risks; regulatory, political and environmental risks; tax and other risks generally relating to prospective investors should consider the appropriateness of the information having regard to their equity investment. own objectives, financial situation and needs and seek financial, legal and taxation advice Not an offer appropriate to their jurisdiction. Lynas is not licensed to provide financial product advice in respect of Lynas shares. Cooling off rights do not apply to the acquisition of Lynas shares. This Presentation does not constitute an offer to sell, or the solicitation of an offer to buy, any securities in the United States. Any securities described in this Presentation have not been, and will Financial data not be, registered under the U.S. Securities Act of 1933 (the “Securities Act”). All dollar values are in Australian dollars (A$) unless stated otherwise and financial data is presented Disclaimer within the financial year end of 30 June 2018 unless stated otherwise. Any pro forma historical financial information included in this Presentation does not purport to be in compliance with Article 11 Lynas and its affiliates, officers, employees, agents and advisers have not authorised, permitted or of Regulation S-X of the rules and regulations of the US Securities and Exchange Commission. caused the issue, dispatch or provision of this Presentation to any third party. Lynas, its related bodies corporate and their respective affiliates, officers, employees, agents and advisers to the Future performance maximum extent permitted by law, expressly disclaim all liabilities in respect of any expenses, Past performance information given in this Presentation is given for illustrative purposes only and losses, damages or costs incurred by you as a result of the information in this Presentation being should not be relied upon as (and is not) an indication of future performance. This Presentation inaccurate or due to information being omitted from this Presentation, whether by way of negligence contains certain “forward-looking statements”. The words “expect”, “should”, “could”, “may”, “will, or otherwise, and make no representation or warranty, express or implied, as to the fairness, “predict”, “plan”, “scenario”, “forecasts”, “anticipates” “estimates” and other similar expressions are currency, accuracy, reliability or completeness of information. The information in this Presentation intended to identify forward-looking statements. Indications of, and guidance on, future earnings and remains subject to change without notice. 2
We have delivered on our promises LYNAS ENTERPRISE VALUE 4000 3500 Sales Revenue (A$'m) 3000 AUD millions Production Volume REOt 220 2500 12,000 2000 10,000 170 Debt 1500 8,000 A$'m 1000 REOt 120 6,000 500 4,000 0 70 2,000 2010 FY 2012 FY 2014 FY 2016 FY 2018 FY 0 20 H115 H215 H116 H216 H117 H217 H118 H218 H119 H219 H115 H215H116H216 H117H217H118 H218H119H219 NdPr (RTS) Cash Flow (A$'m) 80 EBITDA (A$m) (excl. AELB, Interest) 100 60 NPAT (A$m) Net operating CF 80 60 40 60 40 Net investing CF 40 20 20 0 20 -20 0 0 -40 -20 -60 -40 -20 -80 -60 -100 -40 -120 -80 H115H215H116H216H117H217H118H218H119H219 H1 15 H2 15 H1 16 H2 16 H1 17 H2 17 H1 18 H2 18 H1 19 H1 15 H2 15 H1 16 H2 16 H1 17 H2 17 H1 18 H2 18 H1 19 3
Our product offering today Product Capacity REO Market tonnes/annum NdPr+Nd+Pr Oxide & Metal 7,200 NdPr 5,400 Magnets Nd 1,500 Magnets, Catalysts Pr 300 Catalysts, Pigments, Magnets SEG Oxide 1200 HRE Separation Ce-La Carbonate, Oxide, Metal, Compounds 16,000 Ce Carbonate, Oxide Catalysis, Glass La Oxide FCC, Ferrite, NiMH LaCe Carbonate, Oxide, Metal Polishing, NiMH, Alloy RE compounds Customized applications 4
Increased product range through Lynas NEXT Pr oxide - targeting 300 tonnes/annum Nd oxide - targeting 1500t per annum for magnets & catalysts for catalysts, pigments & magnets 5
Mt Weld is favoured by grade, NdPr content, total REO and life of mine 6 6
The world’s largest, most modern RE plant designed on best practice sustainability principles 7 7
Our competitiveness continues to improve • From 2014 to 2016, Lynas operations stabilised Lynas NdPr Production cost Index: 100=Average 2016 • Mid-2016, both plants were running 250% at design capacity • Through Lynas NEXT, production 200% capacity has increased to 7.2 ktpa of NdPr and a wider product range 150% 100% • Processing costs are continuously improving 50% • Continued focus on cost efficiencies in daily operations as well as 0% Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 breakthrough innovation programs 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 8 8
Improving Capital Efficiency Phase 1: 29 Flotation Cells Phase 2: 9 Flotation Cells Lynas NEXT: 1 Flotation Cell Lynas 2025: 3-5 Flotation Cells Scoping hybrid power station with potential to 40,000L per month reduction in supply up to diesel consumption through the 50% of site installation of heat exchangers to power recover waste heat from tailings 9 9
Lynas NEXT - Cracking and Leaching MgO Circuit Split, new heat exchangers added, new pumping designs, new hopper designs, changed filter configurations Redesigned WGT ducting Emissions improvements 10
Demand for NdPr is forecast to accelerate from 2021 Global demand for fresh NdPr Oxide • Energy International Agency: 125-220m 70.0 electric cars on the road in 2030 60.0 Equivalent to 88-155ktns additional supply of NdPr over next 10 years REO kt of NdPr Oxide 50.0 • Most new models will be launched in 40.0 2021 when growth of NdPr demand will accelerate 30.0 • From late 2020s, end of life recycling will 20.0 affect demand for fresh oxide 10.0 0.0 2010 2015 2020 2025 2030 Wind Turbines Automotive Electrified Vehicles Electronic & Medical Automation & Appliances Others 11
The automotive industry is embracing Rare Earth Electric Vehicle Drives • Today, electric vehicles are expensive and the battery represents 50% of the cost • A Rare Earth Electric Vehicle Drive is the solution - 2kg of REE magnets at a cost of US$100/vehicle - REE motor efficiency is 2-5% higher than alternatives, saving energy over its lifetime • Being more efficient, the target range is achieved with a smaller, lighter and cheaper battery • Being smaller and lighter, vehicle packaging is more efficient, saving on vehicle weight (virtuous cycle) • Except for a few luxury car brands, all car makers are embracing Rare Earth technology Est. US$ 200/kWh, 22kWk/100km, 100kWh battery size, US 35 cents/kWh, 5% efficiency saving, 425Wh/L, 162.5 Wh/Kg, 300 Euro kWh, 12 litre, 31kg for a 100 kWh battery 12
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