Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — Lynas — J.P. Morgan Australia Corporate Access Days, New York 2010
46 slides from Lynas Rare Earths's conference presentation, Sep 27, 2010
Slide 1: Rare Earths – We touch them everyday
Rare Earths For personal use only WE TOUCH THEM EVERYDAY J.P. J P Morgan Australia Corporate Access Days New York 27-28 September 2010
Slide 2: Disclaimer
Disclaimer For personal use only • The release, publication or distribution of this presentation in certain jurisdictions may be restricted by law and therefore persons in such jurisdictions into which this presentation is released, published or distributed should inform themselves about and observe
Slide 3: Today's Agenda
Rare Earths,, we touch them everyday y y For personal use only TODAY’S AGENDA 1. Rare Earths, we touch them everyday 2. Rare Earths in short supply – the demand and supply equation 3. Rare Earths price escalation 4. The Lynas Story – online in 2011, expansion and beyond 3
Slide 4: Rare Earths cannot be substituted in many applications
Rare Earths cannot be substituted in many applications For personal use only RARE EARTHS EARTHS: LANTHINIDES PLUS YITTRIUM – UNIQUE PROPERTIES • Chemical Unique electron configuration • Catalytic Oxygen storage and release • Magnetic g High magnetic anisotropy and large magnetic moment • Optic
Slide 5: Rare Earths underpin new materials technology
Rare Earths underpin new materials technology required to sustain the needs of today’s society For personal use only Energy efficiency through Environmental protection Smaller yet more powerful lower consumption through lower emissions digital technology • Compact Fluorescent Lights • Wind turbine •
Slide 6: Demand for Rare Earths is driven by the underlying applications
Demand for Rare Earths is driven by the underlying d l i applications li ti For personal use only 2010 DEMAND FORECAST BY APPLICATION Application Demand (%) Demand (t) Others 5% Others, • Magnets 26% 35,000 Phosphors, 10% • Battery Alloy 14% 18,600 Glass • Metallurgy ex batt 9% 11,700 Additive, 4% M
Slide 7: Magnets and battery alloy are forecast growth drivers to 2014
Magnets and battery alloy are forecast to be the growth drivers for Rare Earths demand to 2014 For personal use only GROWTH FORECAST BY APPLICATION 2014 DEMAND FORECAST BY APPLICATION Application Growth rate p.a. (%) Demand (t) Other 5% Other, Phosphors, • Magnets 12% 55,100 10% • Battery Alloy 15%
Slide 8: Looming crisis - Rare Earths supply will be outstripped by demand
Looming crisis - Rare Earths supply will be outstripped i dbby d demand;d 115kt 11 k REO ini 2010 For personal use only CHINESE SUPPLY SOURCES NON CHINESE SUPPLY SOURCES (2010 CAPACITY, REO) (2010 CAPACITY, REO) Baotou 55,000t India 3,000t By product of iron ore mine Subsidiary y of Indian AEA
Slide 9: Our assumptions show global supply at 170kt by 2014 vs demand of 190kt
Our assumptions show global supply at 170kt by 2014 compared 2014, d tto d demand d off 190kt For personal use only 2014 FORECAST SUPPLY ASSUMPTIONS SUPPLY SOURCES KEY UNDERLYING ASSUMPTIONS • B t Baotou 60 000t 60,000t • Sichuan 20,000t • Baotou – 10% production increase 2010 / 2014 • Ionic Clay Re
Slide 10: Supply, demand and pricing, historic and forecast
As supply tightened in 2008 prices increased, in 2009 demand dipped, prices are now soaring For personal use only HISTORIC AND FORECAST SUPPLY, SUPPLY DEMAND AND PRICING 10
Slide 11: Applications use different Rare Earths; supply does not match demand
Applications use different Rare Earths, the supply distribution does not match demand distribution For personal use only RARE EARTHS USAGE BY APPLICATION Application La Ce Pr Nd Sm Eu Gd Tb Dy Y Other • Magnets 23.4% 69.4% 2% 0.2% 5% • Battery Alloy 50% 33.4% 3.3% 10% 3.3% • Metallurgy ex batt 26% 5
Slide 12: Elemental Pinch Points for 2010
Elemental Pinch Points based on Lynas estimated Demand and Supply for 2010 For personal use only SUPPLY VS DEMAND SUPPLY/DEMAND IMBALANCE (REO, SEPARATED PRODUCTS) (REO, SEPARATED PRODUCTS) Demand vs Supply • Lanthanum 42,800t 28,200t • Lanthanum -14,600t -34% • Cerium 43,500t 38,200t • Cerium -5,30
Slide 13: 2014 Elemental Pinch Points – shortages remain
2014 Elemental Pinch Points, maximum China supply plus two new resources– shortages remain For personal use only SUPPLY VS DEMAND SUPPLY/DEMAND ESTIMATED IMBALANCE (REO, SEPARATED PRODUCTS) (REO, SEPARATED PRODUCTS) Demand e a d vs s Supp Supply y • Lanthanum 57,100t 43,400t • Lanthanum - 13,700t -2
Slide 14: Global supply at 170kt by 2014 compared to demand of 190kt
Our assumptions show global supply at 170kt by 2014 compared 2014, d tto d demand d off 190kt For personal use only GROWTH FORECAST BY APPLICATION 2014 FORECAST SUPPLY ASSUMPTIONS APPLICATION GROWTH RATE P.A. DEMAND SUPPLY SOURCES SUPPLY Magnets g 12% % 55,100t , • Baotou 60 000t 60,000t Battery All
Slide 15: Environmental impact not sustainable, illegal smuggling not sustainable
Environmental impact not sustainable, ill illegal l smuggling li nott sustainable t i bl For personal use only Southern Clay 15
Slide 16: China aims to improve return on resources and environmental performance
China aims to improve “return on resources” as wellll as ttackle kl environmental i t l performance f For personal use only COMPETITION – CHINA POLICY Production Quota (Tonnes REO contained within concentrate) 100000 80000 Ionic Clays • No prospecting or mining licences 60000 for Rare Earths until J
Slide 17: Lynas is the leader in defined Rare Earths resources outside China
Lynas is the leader in defined Rare Earths resources in i d development l t outside t id Chi China For personal use only COMPARING SIZE AND PROGRESS OF GLOBAL RARE EARTHS PROJECTS Source: the data for non non-Mount Mount Weld deposits is based on public statements by the relevant resource holders ex
Slide 18: Lynas will offer the first new source of supply outside China
Lynas will offer the first new source of supply of R Rare E Earths th outside t id off Chi China - Q3 2011 For personal use only LYNAS VITALS AT A GLANCE VISION: To be a g global leader in Rare Earths for a sustainable future EXCHANGE: ASX Top 200 Company; code LYC Mount Weld SHARES: 1,657m on issue
Slide 19: Lynas is on track for production in Q3 2011
Lynas is on track for production in Q3 2011 For personal use only KEY MILESTONES TO ENSURE A RELIABLE SOURCE OF RARE EARTHS • Lynas raised A$450 million in the equity markets to fund the completion of its project • All approvals in Australia and Malaysia in place to complete construction of processi
Slide 20: Products set for Phase 1; flexibility in Phase 2
The products are set for Phase 1; Lynas has product flexibility in phase 2 For personal use only PHASE 1 11,000t REO PRODUCTS VOLUMES (tpa) Ce carbonate 2,600 La carbonate 1 350 1,350 Ce / La carbonate 4,000 Nd / Pr oxide 2,700 SEG + Heavy Rare Earths 480 PHASE 2 ADDITIONAL 11,000t REO PRODUCTS Ce c
Slide 21: Rare Earths Mineral Resources at Mount Weld
Rare Earths Mineral Resources at Mount Weld; N New T Total t lR Resource off 1 1.416 416 million illi ttonnes REO For personal use only CENTRAL ‘000 TONNES REO %* TLnO (%)** Y203(ppm) LANTHANIDE DEPOSIT CATEGORY Measured 3,550 14.4 14.3 820 Indicated 1,440 8.2 8.1 960 Inferred 4,884 8.6 8.5 1,120 To
Slide 22: Mount Weld initial mining campaign complete
Mount Weld Rare Earths initial mining campaign complete, l t lloss-time-injury-free, ti i j f on budget b d t For personal use only MOUNT WELD STOCKPILES WITH RARE EARTH OXIDE PERCENTAGES DUNCAN DEPOSIT (DD) Offices 773,000t on stockpiles 8% 13% DD CLD 17% DEPOSIT 26% 15% 13% 21% 20% Conc. Conc DD P
Slide 23: Concentration Plant process schematic
Schematic - Concentration Plant process at Mount W ld which Weld, hi h hhas b been ffully ll pilot il t plant l t ttested t d For personal use only 23
Slide 24: Concentration Plant construction on schedule
Concentration Plant construction is on schedule t be to b completed l t d iin D December b 2010 For personal use only FEATURES OF CONSTRUCTION AT THE CONCENTRATION PLANT Flotation Building under construction 24
Slide 25: Concentration Plant construction on schedule
Concentration Plant construction is on schedule t be to b completed l t d iin D December b 2010 For personal use only FEATURES OF CONSTRUCTION AT THE CONCENTRATION PLANT Conditional Filter Press Con Thickner and Concentration Dewatering Area 25
Slide 26: Concentrate trucked to Fremantle for shipping to Malaysia
Containers of Rare Earths concentrate will be t k d tto Fremantle trucked F tl for f shipping hi i tto Malaysia M l i For personal use only • Mount Weld to Fremantle = 1000km • Transportation approx. 9% of total costs 26
Slide 27: Expanding the Malaysian processing hub
Lynas will expand the Malaysian processing hub, with ith th the ability bilit tto ttake k multiple lti l sources off material t i l For personal use only PROCESSING HUB WITH EXCEPTIONAL INFRASTRUCTURE Gebeng Industrial Estate, INDUSTRIAL INFRASTRUCTURE East Coast Malaysia KNOWLEDGE INFRASTRUCTURE GO
Slide 28: Lynas Advanced Materials Plant core process
Schematic - Lynas Advanced Materials Plant core process, which hi h uses mature t iindustry d t ttechnology h l For personal use only 28
Slide 29: Lynas Advanced Materials Plant Malaysia site
Lynas Advanced Materials Plant Malaysia site Phase 1 : 11,000t , construction: Piling for post REO t t treatment t workshop k h For personal use only Phase 2 : 22,000t REO -29-
Slide 30: Industrialising operations to meet customer expectations
We are industrialising our operations to meet our customers’ t ’ expectations t ti For personal use only FOUR PILLARS UNDERPINNING LYNAS’ OPERATIONS Marketing and Sales • Serving long-term long term customer requirements and commitments commitments, and thus providing input for plant extensions and
Slide 31: Expansion driven by customer requirements and commitments
Expansion beyond first production will be driven b customer by t requirements i t and d commitments it t For personal use only HOW LYNAS WILL COST-EFFECTIVELY COST EFFECTIVELY EXPAND • Lynas y plans to at least double production. • Product range within the Lynas product suite will also be expanded.
Slide 32: First feed to kiln at LAMP scheduled for Q3 2011
First feed to kiln at the Lynas Advanced Materials Pl t iis scheduled Plant h d l d ffor Q3 2011 For personal use only FEATURES OF CONSTRUCTION AT THE LAMP Concrete pour of the Gas Treatment Plant Blinding slab being prepared for concrete 32
Slide 33: First feed to kiln at LAMP scheduled for Q3 2011
First feed to kiln at the Lynas Advanced Materials Pl t iis scheduled Plant h d l d ffor Q3 2011 For personal use only FEATURES OF CONSTRUCTION AT THE LAMP Lynas-constructed stormwater detention pond Concrete Batch Plants 33
Slide 34: Six customer agreements have been signed
Six customer agreements have been signed For personal use only Rhodia Customer Agreement - Supply Contract 6th Customer Agreement – Supply Contract • >US$200M¹ • Long term multiple year contract • Long term 10 year contract • Product from Phase I & Phase II of final • Cerium, Europium, Terbium & Lan
Slide 35: Operational expenses dominated by reagent and energy costs
Operational expenses are dominated by reagent and d energy costs t For personal use only CASH COST PER TONNE OF FINISHED REO BY EXPENSE TYPE AND REGION 66% • Current Budget assumes cash costs of USD 7.00 per kilo ± 10% • 2/3 of the costs are generated in Malaysia 21% • Reagents account for nearly 50
Slide 36: Lynas' finances are in good shape
Lynas’ finances are in good shape as at the end of August 2010 For personal use only CONSTRUCTION AND OTHER TOTAL TO DATE FUTURE SPEND CAPITAL COSTS AUD $M AUD $M AUD $M Concentration Plant 61.39 24.77 36.62 Lynas Advanced Materials Plant (LAMP) 232.40 52.06 180.34 Engineering and Project Management
Slide 37: Lynas – online in 2011, delivering Rare Earths globally
Lynas – online in 2011, delivering R Rare E Earths th globally l b ll For personal use only Our vision is to be a global leader in Rare Earths for a sustainable future. We are close to realising this vision. Lynas will be online in 2011, delivering Rare Earths globally. This is the first new product
Slide 38: Note – Competent Person statement
NOTE For personal use only The information in this report p that relates to Exploration p Results,, Mineral Resources or Ore Reserves is based on information compiled by Brendan Shand, who is a member of The Australasian Institute of Mining and Metallurgy. Brendan Shand is an employee of Lynas Corpo
Slide 39: Rare Earths – We touch them everyday – Appendix
RARE EARTHS For personal use only WE TOUCH THEM EVERYDAY – APPENDIX
Slide 40: Wind turbines using permanent magnet generators
New generation, >3MW, wind turbines are using permanent magnet turbines bi For personal use only WIND TURBINES ARE A GROWTH DRIVER FOR MAGNETS • 120GW global wind generation in 2008 • 18% annual growth forecast to 2020 to 700GW • Turbines scaling to 3MW plus, key differentiator • Generator technolog
Slide 41: Forecast growth of hybrids is a competing application for magnets
The forecast growth of hybrids is a competing application li ti ffor supply l off magnetst For personal use only BROKER FORECASTS FOR HYBRIDS WITH LYNAS REO REQUIREMENTS 23,400t 5,850t JP Morgan research 41
Slide 42: Lighting is the largest of the phosphor markets
Lighting is the largest of the phosphor markets, b t allll are fforecastt tto grow strongly but t l For personal use only PHOSPHORS 2008 CONSUMPTION BY APPLICATION AND TECHNOLOGY THREATS PHOSPHORS: Lighting : 4981t LCD : 729t Plasma : 227t Red Green Blue Red Green Blue Red Green Blue 3850t 1115t 16t
Slide 43: It is not about size of resource, it is about getting into production
It is not about size of resource, it is about getting i t production. into d ti For personal use only THE DRIVERS OF THE POTENTIAL SHORTAGE • Shortage occurs when supply as a function of time can no longer keep up with demand as a function of time. • The ultimate recoverable resource in the g ground
Slide 44: Current mining operation at Mount Weld is within the Central Zone Pit
The current mining operation at Mount Weld i within is ithi th the C Central t lZ Zone Pit For personal use only RARE EARTHS MINERAL RESOURCES AT MOUNT WELD • Two defined deposits: Central Lanthanide Deposit and the Duncan Deposit 44
Slide 45: Mount Weld current pit floor and mine plan pit floor
Mount Weld current pit floor is 51m below surface, th mine the i plan l pitit flfloor iis another th 3636m d down For personal use only Red layer – alluvial overburden Yellowish layer – Rare Earths ore Pit extensions to North and West in addition to depth 45
Slide 46: Note – Competent Person statement
NOTE For personal use only The information in this report p that relates to Exploration p Results,, Mineral Resources or Ore Reserves is based on information compiled by Brendan Shand, who is a member of The Australasian Institute of Mining and Metallurgy. Brendan Shand is an employee of Lynas Corpo
Lynas — J.P. Morgan Australia Corporate Access Days, New York 2010 on 6ix