Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — Lynas — Investor Presentation (November 2017)
41 slides from Lynas Rare Earths's investor presentation, Nov 2, 2017
Slide 1: Investor Presentation 2017
For personal use only LYNAS CORPORATION Investor Presentation 2017 1
Slide 2: Disclaimer
Disclaimer For personal use only 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
Slide 3: Company Performance
For personal use only 3 Company Performance
Slide 4: Introduction to Lynas
Introduction to Lynas For personal use only § Lynas Corporation Ltd (ASX: LYC) is an integrated miner and AXS Code LYC producer of rare earths, operating a high grade mine in Mt Weld, Share Price (31 Oct 2017) 0.180 Western Australia and a reliable, sustainable chemical processing operation in Kuant
Slide 5: Continuous improvement in NdPr and total production throughput
Continuous improvement in NdPr and total production throughput For personal use only Production Volume 4,665 5,000 Sales Volume (tonnes) 4,503 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 3,000 3,000 REOt REOt 2,043 2,000 2,000
Slide 6: Stable operating costs and higher production rates
Stable operating costs and higher production rates For personal use only Total Operating Costs vs Production (excl. restructuring costs, STI & employee share based payment) Sales Revenue (A$’m) 8000 80 120 6000 60 100 Quarter Quarter 80 4000 40 60 2000 20 40 0 0 20 Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18 Nd
Slide 7: Significantly improved cash flow
Significantly improved cash flow For personal use only Cash Flow (excl. AELB payment) Cash Flow (excl. AELB payment) 40 30 30 25 20 20 10 15 0 10 FY15 FY16 FY17 -10 5 Quarter Annual -20 0 Q1 FY15 Q1 FY16 Q1 FY17 Q1 FY18 -30 -5 -40 -10 -50 -15 Net Investing CF Net Operating CF Operating & Investing C
Slide 8: The Balance Sheet is being progressively de-leveraged
The Balance Sheet is being progressively de-leveraged For personal use only Debt Reduced Outstanding 31/12/16 Outstanding 19/10/17 during 2017 JARE Facility (1) US$ 200,000,000 US$ 170,000,000 US$ 30m Convertible Bonds (2) US$ 225,000,000 US$ 106,500,000 US$ 118.5m Cash received by Lynas Outstanding
Slide 9: Sustainability and safety
Sustainability and safety For personal use only Life Cycle assessment The Rare Earth industry has, Tools like LCA assist to Responsible care is When making technology provides end users with a at times, suffered differentiate between becoming a standard in the decisions – which engage for tool to ev
Slide 10: Rare Earths Applications
For personal use only Rare Earths Applications 10
Slide 11: Improved environmental outcomes
Improved environmental outcomes For personal use only Where RE Property RE Allows Final Key Impact Products Wind Permanent magnet Nd Pr, Dy No gear box (Cost) Energy turbines generators Better yield in light produced at winds lower cost Cars Permanent Nd Pr, Dy Electricity savings magnets motors Wei
Slide 12: Rare Earth market growth is accelerating driven by magnets (NdPr)
Rare Earth market growth is accelerating driven by magnets (NdPr) For personal use only § Key uses for magnetic materials: The market needs § Cleaner energy production: Electric and hybrid vehicles, Wind turbines sustainable supply. § Electronics § Automation/robotic applications LYNAS can and will
Slide 13: Rare earth material supply chain
Rare earth material supply chain For personal use only Metal making – China, Vietnam & Thailand Magnet makers – China, Japan Alloy – China, Japan, Vietnam & Germany Mixed oxide making – NiMH batteries – China & Japan France, Japan & China PRODUCTION: CRACKING & MINE SEPARATION FURTHER RE PROCESSING
Slide 14: Magnet material supply chain
Magnet material supply chain For personal use only Engine cooling Car makers Wipers Appliances Sunroof drives Robots Heating/ventilation/air MRI conditioning Wind turbines Cooling pumps Electronics MAGNET COMPONENT SYSTEM END USER Window lifts Seat drives Power steering power trains Motors ABS/EPS G
Slide 15: Lynas Operations
For personal use only 15 Lynas Operations
Slide 16: Mt Weld: resource quality
Mt Weld: resource quality For personal use only § Central lanthanide deposit, the highest grade operating rare earths mine in the world with an operating LOM JORC reserve assessed in 2015 to be 25+ years § Duncan Deposit, the largest high grade dysprosium resource globally § Crown and Coors Deposits
Slide 17: Mt Weld Ore Reserves and Mineral Resources
Mt. Weld Ore Reserves (4% REO cut off ) For personal use only Mt Weld contains one of the world’s largest and highest grade Rare Earth deposits § The Ore Reserves were assessed in 2015 as sufficient to sustain economic total production of 22k tpa REO for over 25 years § The tenements include undevel
Slide 18: Mt Weld Concentrator
Mt Weld Concentrator For personal use only 18
Slide 19: Concentrate is shipped from Fremantle WA to Kuantan, Malaysia
Concentrate is shipped from Fremantle WA to Kuantan, Malaysia For personal use only 19
Slide 20: LAMP processing facilities
LAMP processing facilities For personal use only 928 metres of kilns and tunnel furnaces 4 rotary kilns (60m long) 8 tunnel furnaces (88m long) 46 Plate & Frame Pressure 44 High Speed Centrifuges Filters Quality specs as low as <50ppm for some impurities 1,000 Solvent Extraction Stages 20
Slide 21: Global operations & customer relationships
Global operations & customer relationships For personal use only Europe & USA China & Japan Important strategic end Core client base for rare use markets earth metals Malaysia LAMP, Kuantan and Corporate office § Mt Weld – located 35km south of Laverton in Western Australia § Lynas Advanced Material
Slide 22: Global customer base
Global customer base For personal use only § Balanced customer portfolio – Lynas supplies market leaders in all key end use target segments § Close partnerships with direct customers and end users, in Japan, China and Europe § Reputation as a reliable supplier of quality, traceable, environmentally
Slide 23: The Rare Earths Market
For personal use only The Rare Earths Market 23
Slide 24: Rare Earths market dynamics are changing
Rare Earths market dynamics are changing NdPr Oxide price Rare earth For personal use only dynamics are changing 70 570 65 520 § Market demand is strong 60 470 RMB/kg USD/kg 55 420 § Rare earths are essential for many future 50 370 45 facing technologies: to reduce car 40 320 270 emissions, electric
Slide 25: Small permanent magnets are used in various motors in cars
Small permanent magnets are used in various motors in cars For personal use only Traditional vehicles typically use 0.25kg magnets Growing NdPr requirement Sunroof drive Front wiper Rear wiper 12 Engine cooling 10 10 8 8 kt 6 HVAC (Heating, 4 Ventilation, Air Seat drive 2 Condition) Coola 0 nt Engin
Slide 26: High power permanent magnet motors in e-cars will drive further growth
High power permanent magnet motors in e-cars will drive further growth For personal use only Typical usage: 2kg magnet Power Steering Growing NdPr requirement System 14 12 12 10 8 7 kt 6 4 2 2 Power train: Hybrid Chassis Components 0 and Electric Passive and Active safety 2016 2020 2024 ABS, ESP, ib
Slide 27: Wind turbine growth
Wind turbine growth For personal use only Windfarms installed capacity continues to grow Windfarms installed capacity Direct Drive to double within 5 years Windfarms Source: GWEC installed capacity to double within Source: GWEC Source: GWEC 800 600kg magnet/MW 800 700 700 600 600 Gear Box Reliabilit
Slide 28: Sustainability
For personal use only 28 Sustainability
Slide 29: Lynas leads the market in sustainability
Lynas leads the market in sustainability For personal use only Resource Optimisation Best Practice Delivering to customer Lynas has, and continues to, Environmental needs optimise flotation techniques strategies Lynas is supporting to continuously improve ore Lynas prioritises the safety technology
Slide 30: Lynas continues to engage and participate along side the local community
Lynas continues to engage and participate along side the local community For personal use only § Lynas runs long and short term engagements to contribute to the local communities in Malaysia and in Mt Weld: § Upgrading of local facilities eg Balok Library, Laverton sports club § Exhibition booth at
Slide 31: Strategic Priorities
For personal use only Strategic Priorities 31
Slide 32: Lynas can deliver profitable growth
Lynas can deliver profitable growth For personal use only Grow production in line with Deliver better returns on total Rare Capture high value share of market increased market demand Earths processed - Reduce risk by entering into long - Sustainable production of 500 - Optimise product portfolio ter
Slide 33: Questions
For personal use only 33 Questions
Slide 34: Appendix
For personal use only 34 Appendix
Slide 35: Executive Management
Executive Management For personal use only Amanda Lacaze Andrew Arnold Gaudenz Sturzenegger Dato' Mashal Ahmad Managing Director General Counsel & Chief Financial Officer VP, Malaysia Company Secretary Mimi Afzan Afza Kam Leung Pol Le Roux VP, People & Culture VP, Production VP, Sales & Marketing 35
Slide 36: Step 1: Cracking & Leaching
Step 1: Cracking & Leaching For personal use only RE Fe Phosphate + High temperature RE Sulfate H2SO4 solution 4 rotary kilns where the reaction occurs 2 state of the art waste gas treatment units 36
Slide 37: Step 2: Solvent Extraction (SX)
Step 2: Solvent Extraction (SX) Separate RE Sulphate into individual elements For personal use only Leaching Solvent pipe Adjustable pipe RE Sulphate Heavy RE Chloride Agitator SX 1 Sightglass 241 – MgO Neutralization Internal recycling SX 3 De-Fe RE Chloride SX 2 Organic phase outlet Organic & aque
Slide 38: Step 3: Product Finishing
Step 3: Product Finishing Convert RE Chloride into carbonate/oxide Pack and Ship For personal use only LP Steam Na2CO3 Solution Hot water Hot water RE Cl3 Pre-treatment Filtration Precipitation Centrifuges RE Carb. Filtrate Reagents Cake Waste Water (HDS) Calcination RE Oxide 38
Slide 39: Capital Structure
Capital Structure For personal use only § Extension to debt maturity dates § JARE (now US$170 million) 30-6-2020 § Convertible Bond (now US$106.5 million) 30-9-2020 § The JARE interest rate is now 3.75% per annum. The convertible bond interest rate is now 1.875% per annum. § No fixed principal repay
Slide 40: Competent Person's Statement
Competent Person’s Statement For personal use only COMPETENT PERSON’S STATEMENTS– MINERAL RESOURCES The Mineral Resources and Ore Reserves Statement in this Presentation is based on, and fairly represents, information compiled by Mr. Brendan Shand who is a consultant geologist to Lynas Corporation.
Slide 41: Rare Earths Market Data: Disclaimer
Rare Earths Market Data: Disclaimer For personal use only The slides in this presentation containing Rare Earths market data have been sourced from independent analysis of end application demand, along with Lynas estimates of quantities of Rare Earths end use in various key applications. Although Ly