Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — Lynas — Shareholder Meeting (November 2005)
34 slides from Lynas Rare Earths's shareholder meeting presentation, Nov 30, 2005
Slide 1: Annual General Meeting
Annual General Meeting 30 November 2005 Presented by Nicholas Curtis Executive Chairman
Slide 2: Disclaimer
Disclaimer ► The information contained in this presentation has been prepared using the information available to Lynas Corporation Limited (Lynas) at the time of preparation of the presentation. ► For further information about Lynas, you can obtain a copy of all recent ASX announcements made by Lyna
Slide 3: Contents
Contents ► Achievements over the past year ► Rare Earths Project Market changes Current status of Rare Earths project Value of Rare Earths project Realising this value and development schedule ► Rare Metals Project -3-
Slide 4: Achievements over the past year: Rare Earths Project
Achievements over the past year Rare Earths Project ► Successfully completed Definitive Feasibility Study for Rare Earths Upstream Project, including the integration of the concentrator to the site in China ► Signed Land Purchase Agreement for the Chinese integrated processing plant site in December
Slide 5: Achievements over the past year: Rare Metals and Corporate
Achievements over the past year Rare Metals Project ► Announced globally significant niobium-rich Rare Metals resource September 2004 ► Reviewed process flow sheet, marketable products and metal prices as of November 2005, which has increased potential revenues and margins Corporate ► Relocated Chin
Slide 6: Tracker
Tracker ► Achievements over the past year ► Rare Earths Project Rare Earths market Current status of Rare Earths project Value of Rare Earths project Realising this value and development schedule ► Rare Metals Project -6-
Slide 7: Rare Earths enrich our lives in many ways
Rare Earths enrich our lives in many ways… Glass Colour & Light Miniaturisation Powerful Polishing magnets Powders - Neodymium - Cerium Phosphor for - Praseodymium CRT & PDP screens - Terbium - Europium / Yttrium Ceramic capacitors - Terbium / Yttrium - Neodymium - Lanthanum Glass Screens
Slide 8: Rare Earths have many applications in the automotive industry
Rare Earths have many applications in the automotive industry Toyota Prius Hybrid Vehicle UV cut Glass and Mirrors Car body primers glass polishing powder and anti-corrosive • Cerium • Cerium coatings • Yttrium Diesel Fuel Engine Additive Sensors • Cerium • YSZ • Lanthanum Catalytic Converter • Ce/Z
Slide 9: Electronics is also a key industry for Rare Earths
… Electronics is also a key industry for Rare Earths Integrated Circuit • Ultra high purity Ce polishes silicon Speakers wafer • Nd magnet in PC and NEC Notebook powered by Notebook speakers integrated Fuel Cell • Nd magnets in headphones of Ipod Screen and MP3 Players • Eu, Tb phosphors – CRT & PDP
Slide 10: Rare Earths market developments
Rare Earths market developments Demand ► Rare Earths demand enters a period of sustained growth, 8% p.a. (~ 8,000 tpa), driven by growth in existing and new applications (e.g. hybrid vehicle) Supply ► China continues to dominate the world’s supply of Rare Earths (~95%) ► Chinese government enforced
Slide 11: Supply-demand imbalance suggest price increases over the next few years
Supply - demand imbalance suggest price increases will occur over the next few years Rare Earths market history and independent forecast (REO Metric (US$/kg) Based on Mt Weld Composition, FOB China basis Tonnes) 7.00 125000 6.00 100000 RE Supply & Demand Rare Earths Price 5.00 75000 4.00 3.00 50000
Slide 12: Tracker
Tracker ► Achievements over the past year ► Rare Earths Project Rare Earths market Current status of Rare Earths project Value of Rare Earths project Realising this value and development schedule ► Rare Metals Project -12-
Slide 13: Strategy: transparent, environmentally sound, integrated supply chain
The strategy is to develop a transparent, environmentally sound, integrated supply chain The Upstream Project Downstream LOCATION Australia China China Plant in China METHOD Open Cut Mining Flotation Acid Cracking+ initial Solvent Extraction separation SEG* 97.5% OUTPUT & REO Ore Concentrate 40% & R
Slide 14: Rare Earths JORC resource with heritage and Native Title clearances received
Rare Earths JORC resource with Aboriginal Heritage and Native Title clearances received The Central Lanthanide Deposit (4% REO cut-off) Grade Category Tonnes (Mt) (%REO) Tonnes REO Measured 1.2 15.7 186,000 Indicated 5.0 11.8 583,000 Inferred 1.5 9.9 148,000 Total 7.7 12.0 917,000 JORC standard reso
Slide 15: Environmental approval granted and mining contractor proposals received
Environmental approval granted and mining contractor proposals have been received Central Lanthanide Deposit -15-
Slide 16: Transport group proposals received for bulk transport through Esperance
Transport group proposals received for bulk transport and export of ore through Esperance -16-
Slide 17: Processing site secured, approvals and business licence granted
Processing site secured, environmental and project approvals and business licence granted LYNAS PLANT Import to China -17-
Slide 18: Tracker
Tracker ► Achievements over the past year ► Rare Earths Project Rare Earths market Current status of Rare Earths project Value of Rare Earths project Realising this value and development schedule ► Rare Metals Project -18-
Slide 19: Mt Weld is the richest Rare Earths resource in the world
Mt Weld is the richest Rare Earths resource in the world INSITU RECOVERABLE GRADE RESOURCE RESOURCE DEPOSIT (REO) (t REO) (t REO) NOTE Baiyun Obo, Baotou PRC 5% 17,000,000 1,700,000 Govt pressure to reduce mine rate Mt Weld Rare Earths Project 12% 917,000 431,500* 4% cut-off Mt Pass, Molycorp USA 8.
Slide 20: The Rare Earths project grows as the plant ramps up volume
The Rare Earths project grows as the plant ramps up volume to 15,000t REO in year 5 REVENUE EBITDA NPAT (In Million A$) 37 35 22 21 98 90 30 17 25 26 77 15 68 13 51 1E 2E 3E 4E 5E 1E 2E 3E 4E 5E 1E 2E 3E 4E 5E YY1E YY3E YY5E YY1E YY3E YY4E YY5E YY2E YY4E YY2E YY1E YY3E YY5E YY2E YY4E -20-
Slide 21: Key Rare Earths BFS financials
Key Rare Earths BFS financials Upstream Project capital expenditure A$ 65.5M Mt Weld pre-strip & 1st campaign A$ 15.9M Shandong integrated plant A$ 36.8M Contingency A$ 4.5M Ashton debt A$ 8.3M Less current funds in Lynas A$ -7.5M Funding requirement A$ 58.0M Ungeared Project IRR 30% -21-
Slide 22: Cash flows of the Rare Earths project including JORC resource
Cash flows of the Rare Earths project including JORC resource Total Revenue Total EBITDA ► Reserves only A$1,500 M A$ 500 M (Ramp-up to 15,000t in year five and hold) ► JORC Resource * A$3,000 M A$ 860 M (Potential to continue ramp-up beyond 15,000t) * : Assumed 80% conversion of resource to reserve
Slide 23: Tracker
Tracker ► Achievements over the past year ► Rare Earths Project Rare Earths market Current status of Rare Earths project Value of Rare Earths project Realising this value and development schedule ► Rare Metals Project -23-
Slide 24: Realising value in the Rare Earths project
Realising value in the Rare Earths project Customer contracts ► Lynas is in advanced commercial discussions with potential customers regarding long term supply contracts ► Following a detailed technical review Lynas anticipates signing a Heads of Agreement in the near future with a major customer Pr
Slide 25: Rare Earths project expected development schedule
Rare Earths project expected development schedule 05 2006 2007 STAGE OF DEVELOPMENT D e c J a n F e b M a r A pr M a y J un J ul A ug S e p O c t N o v D e c J a n F e b M a r Key customer supply contracts Financing completed Australian contractor proposals Detailed design Civil works Equipment inst
Slide 26: Tracker
Tracker ► Achievements over the past year ► Rare Earths Project Rare Earths market Current status of Rare Earths project Value of Rare Earths project Realising this value and development schedule ► Rare Metals Project -26-
Slide 27: Identified the Rare Metals resource, separate to the Rare Earths resource
Identified the Rare Metals resource, which is totally separate to the Rare Earths resource Crown & Coors Rare Metal Deposit -27-
Slide 28: Scoping study completed and Rare Metals JORC resource defined
A scoping study has been completed and a Rare Metals JORC resource defined ► The Indicated and Inferred resource was defined as 37.7m tonnes in October 2004, recent price increases in the contained metal is likely to increase this resource ► The resource estimate for the scoping study only used the
Slide 29: Mt Weld Rare Metals resource is a globally significant niobium oxide resource
The Mt Weld Rare Metals resource is a globally significant niobium oxide resource GRADE insitu DEPOSIT (Nb2O5) RESOURCE NOTE CBMM Araxa, Brazil 2.5% 11,500,000 t Price maker Mt Weld Rare Metals Project 1.07% 400,000 t World’s 2nd largest Mineracao Catalao de Goias Ltd 1.34% 240,000 t Anglo-American
Slide 30: Status of Rare Metals Project
Status of Rare Metals Project Revised Engineering Scoping Study Complete ► Lynas conducted a scoping study which assessed opex and capex in conjunction with a highly respected Chinese non-ferrous metals research institute ► The majority of the ore lies between 30m and 60m in depth, suitable for open
Slide 31: Rare Metals insitu and recoverable values based on JORC resource
Mt Weld Rare Metals insitu and recoverable values based on JORC resource PROJECT GRADE INSITU INSITU PROPOSED RESOURCE A$B * PRODUCT Tantalum oxide 0.24% 20M lbs 1.6 Ta metal Niobium oxide 1.07% 400,000 t 8.0 Nb oxide Rare Earths oxide 1.25% 470,000 t 2.3 Mixed RE Cl Zirconium oxide 0.3% 110,000 t 0
Slide 32: Scoping study financial model outcomes
Scoping study financial model outcomes ► Mining Mt Weld – 1M tpa (over 35 year mine life) ► Resource 38M t (Crown – Coors sectors only) ► Process concept by Lynas and a Chinese research institute ► Processing in People’s Republic of China ► CAPEX USD 434M Directors advise that the scoping ► OPEX USD
Slide 33: Next steps for Rare Metals project
Next steps for Rare Metals project ► A feasibility study should be completed on the Rare Metals project given the size of resource and technical and economic strength of the scoping study ► The key aspect of the initial feasibility work involves conducting metallurgical test work to verify process f
Slide 34: In summary
In summary ► Rare Earths feasibility study complete, now ready for detailed engineering ► Lynas is working on obtaining funding for Rare Earths project; Phase 1 - Off take contracts…due by 1st quarter 2006 Phase 2 - Project financing…due by end 1st quarter 2006 ► Aiming for positive cash flow mi