Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — Investor Presentation (May 2008)
35 slides from Lynas Rare Earths's investor presentation, May 2008
Slide 1: Investor Presentation
Investor Presentation Nicholas Curtis May 2008
Slide 2: Disclaimer
Disclaimer Not for distribution in the US ► 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 an
Slide 3: Lynas has a clear vision to become a global company in the Rare Earths industry
Lynas has a clear vision to become a global company in the Rare Earths industry Vision We will lead the growth of the global Rare Earths industry by creating a reliable, fully-integrated source of supply from mine through to a diverse set of customers Values Strive for excellence in safety, health
Slide 4: Lynas Corporation is an ASX 200 company with strong institutional support
Lynas Corporation is an ASX 200 company with strong institutional support Listed on the Australian Stock Exchange (LYC) 647 million shares on issue 24 million unlisted options with strike prices between A$0.17 to A$1.27 US$95.3 million unlisted convertible bonds due Jan 2013 Major institutiona
Slide 5: Rare Earths are a unique group of elements
Rare Earths are a unique group of elements A group of metallic elements With unique properties Lanthanum (La) Chemical Cerium (Ce) Catalytic Praseodymium (Pr) Electrical Neodymium (Nd) Magnetic Samarium (Sm) Metallurgic Europium (Eu) Optical Terbium (Tb) Dysprosium (Dy) -
Slide 6: Rare Earths underpin new materials technology required to sustain the needs of today's society
Rare Earths underpin new materials technology required to sustain the needs of today’s society Improve Energy Efficiency Environmental Protection Enable Digital Technology through lower consumption through emission control smaller & more powerful Compact fluorescent lights Auto catalytic convert
Slide 7: Rare Earths improve fuel consumption and emission control in the automotive industry
Rare Earths improve fuel consumption and emission control in the automotive industry Weight reduction through new magnets Electric motor with Neo magnets is half the weight of traditional ferrite motor Electric seats, windows and mirrors Sunroof and tail gate Windscreen wipers and washer jets
Slide 8: Hybrid technology is totally dependent upon Rare Earths
Hybrid technology is totally dependent upon Rare Earths HYBRID electric motor and generator HYBRID NiMH battery Neodymium Lanthanum Praseodymium Neodymium Dysprosium Cerium Terbium Enabling better emission standards and lower energy consumption -8-
Slide 9: Rare Earths play a pivotal role in automotive catalytic converters and clean diesel
Rare Earths play a pivotal role in automotive catalytic converters and clean diesel AUTOCATS IN EVERY CAR CLEAN DIESEL TECHNOLOGY Autocats convert harmful gases to inert Rare Earths compound added to diesel gases fuel in the car Rare Earths enable Diesel soot trapped in filter Improved performance
Slide 10: Rare Earths are vital for further important energy efficiency applications
Rare Earths are vital for further important energy efficiency applications Energy efficient light bulb – Lanthanum is used to increase oil legislation driving demand refinery yields by 7% (FCC) Europium, Terbium and Yttrium 7% is equivalent to the demand predicted to double US oil production -10-
Slide 11: The consumer electronics industry use Rare Earths in many applications
The consumer electronics industry use Rare Earths in many applications HIGH POWER NEO MAGNETS PHOSPHORS Disk drives RED GREEN BLUE Computers Data storage TV and computer screens Ipods CRT Video recorders Plasma Gaming consoles LCD Video cameras Speakers POLISHING POWDERS GLASS ADDI
Slide 12: Roskill forecast strong growth for Rare Earths across most applications
Roskill forecast strong growth for Rare Earths across most applications Application Element Consumption tpa REO Growth Rate 2006 2012 % pa Battery Alloy La, Ce, Pr, Nd 17,000 43,000 17% Magnets Nd, Pr, Dy, Tb, Sm 20,500 42,000 13% Catalysts Ce, La, Nd 21,500 32,000 7% Polishing Powder Ce, La, Pr 14,
Slide 13: Detailed analysis of this forecast suggests an imbalance for certain Rare Earths elements
Detailed analysis of this forecast suggests an imbalance for certain Rare Earths elements Strongest growth expected for the magnet and battery alloy market Boosting Nd, Pr, La demand However natural distribution of Rare Earths Elements does not match demand This leads to over and undersupply of
Slide 14: A Rare Earths supply structural deficit looms
A Rare Earths supply structural deficit looms ► China supplies 95% of world market Operates at its capacity limit ► No material non-Chinese supply sources available Small and limited production in Russia (3-4,000tpa) Beach sand processed by Indian Rare Earths, subsidiary of Atomic Energy Agenc
Slide 15: Chinese supply restrictions relate to capacity as well as Government strategy
Chinese supply restrictions relate to capacity as well as Government strategy Chinese Production Limits Chinese Government Policy Largest REO mine Baotou (50% of world Strategic value of REO well regarded, supply) operating at capacity resulting in introduction of: REO is a by-product of iron mini
Slide 16: Other potential Rare Earths projects have a high level of uncertainty
Other potential Rare Earths projects have a high level of uncertainty Mountain Nolans Hoidas Lake Thor Lake Pass Australia Canada Canada USA Separation plant Pre-feasibility study Advanced Advanced Status restarted in 07 for stock complete. Pilot plant exploration. Some exploration. Some piled volum
Slide 17: Imbalance of Supply and Demand suggests further price increases
Imbalance of Supply and Demand suggests further price increases Price Development Supply – Demand Imbalance (US$/kg) (REO Metric Tonnes) 2006 2012 US$14.94/kg Based on Mt Weld Composition, FOB China basis 15.00 190000 14.00 12 May 08 Total Demand 108,000 188,000 13.00 165000 RE Supply & Demand 12.00
Slide 18: Rare Earths are classified as critical minerals by the US Academy of Science
Rare Earths are classified as critical minerals by the US Academy of Science Critical Metals US Academy of Science conducted a 4 (high) comprehensive study regarding key metals Rhodium to the US Economy: a shortage risk affects the US Society. Impact of Supply Platinum As particular critical followi
Slide 19: Lynas Mt Weld will be the 1st non-Chinese fully integrated source of supply
Lynas Mt Weld will be the 1st non-Chinese fully integrated source of supply Mining - Australia Open pit mining at Mt Weld Contractor mining on a campaign basis Rare Earths Concentration - Australia Concentrator using flotation to be constructed at Mt Weld Containers used to ship concentrate
Slide 20: The current mining operation is within the Central Zone Pit which has 648,000t REO
The current mining operation is within the Central Zone Pit which has 648,000t REO Mt Weld Tenements The Total CLD Sector Mineral Resource (2.5% REO cut-off) Updated in March 2008 Category Tonnes Grade Tonnes (Mt) (%REO) (kt) REO Measured 2.21 14.7 324 Indicated 3.84 11.5 441 Inferred 6.19 6.8 418 T
Slide 21: Mt Weld's Central Zone Pit has a natural advantage in grade and composition
Mt Weld’s Central Zone Pit has a natural advantage in grade and composition Mt Weld Baotou Composition Rare Earth Elements Composition US$/kg By Weight By Weight Lanthanum Oxide 25.60% 8.20 25.70% Cerium Oxide 45.74% 4.15 51.30% Praseodymium Oxide 5.42% 33.00 5.40% Neodymium Oxide 18.62% 32.30 15.70
Slide 22: Classification of Mineral Resources for the Southern Zone within the CLD Sector
Classification of Mineral Resources for the Southern Zone within the CLD Sector Average REO Distribution of Mineral The Southern Zone Mineral Resource Resources (%) (2.5% REO cut-off) Central Southern Category Tonnes Grade Tonnes Rare Earth Oxide (Mt) (%REO) (kt) REO Zone Zone Measured 0.13 3.8 5 La
Slide 23: Mt Weld's Central Zone Pit is a relatively small open cast pit, mined on a campaign basis
Mt Weld’s Central Zone Pit is a relatively small open cast pit, mined on a campaign basis 10 – 20% 20 – 30% 30 – 40% + 40% -23-
Slide 24: First mining campaign at Mt Weld and surface ore stockpiles will be complete by May
First mining campaign at Mt Weld and surface ore stockpiles will be complete by May Mining operation continues to run to plan and budget 2,021,000m3 of overburden have been removed 326,000m3 of ore are on stockpiles of different grades and mineralogy -24-
Slide 25: Concentrator Plant to be built at Mt Weld
Concentrator Plant to be built at Mt Weld ► Engineering Design and Procurement contract with Ranhill WorleyParsons ► Mintrex appointed at Superintendent to manage contractors on-site ► Bulk earth works contract out to tender ► Australian principle construction contract out to tender ► Works Approval
Slide 26: Containers of concentrate shall be trucked then railed to port for shipment to Malaysia
Containers of concentrate shall be trucked then railed to port for shipment to Malaysia ► Transportation of containers to Malaysia via Esperance or Perth -26-
Slide 27: Malaysia is an ideal location for the "Advanced Materials Plant"
Malaysia is an ideal location for the “Advanced Materials Plant” ► Granting of “strategic pioneer status” in Malaysia, with a related 12 year tax free period ► Excellent infrastructure at Gebeng Industrial Area Prepared industrial land available Close to container and liquid chemical port Esta
Slide 28: Lynas has secured land for the processing plant in the State of Pahang on the east coast
Lynas has secured land for the processing plant in the State of Pahang on the east coast Satellite Photo of Gebeng Industrial Area ► Strong Federal, State, and Local Government support Lynas granted “strategic pioneer status” with 12 year tax free period Gebeng Industrial Area ► Excellent infrastr
Slide 29: EPCM contract signed and bulk earth works and piling are underway at our site in Malaysia
EPCM contract signed and bulk earth works and piling are underway at our site in Malaysia EPCM contract signed with Ranhill WorleyParsons All approvals received to commence construction Bulk earth works commenced on site 49/153 equipment supply packages have been issued for tender 7 equipm
Slide 30: Rare Earths project schedule – 1st Phase 10,500tpa
Rare Earths project schedule – 1st Phase 10,500tpa 2007 2008 2009 STAGE OF DEVELOPMENT Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Grade control drilling Mining campaign Engineering design Purchase Order and Equipment Delivery Civil works Equipment Installation Commissioning - Concentrator Commissioning - M
Slide 31: Key supply contracts have been signed
Key supply contracts have been signed 1st Supply Contract US$90M Long term 5 year contract Cerium, Europium, Terbium & Lanthanum 2nd Supply Contract US$200M Long term 5 year contract Neodymium & Praseodymium 3rd Supply Contract US$20M Long term multiple year contract Product from P
Slide 32: Key financial aspects of the Rare Earths project
Key financial aspects of the Rare Earths project Project Capex & Costs Budget Budget Funding AUDm Jul07 – Sep09 Jan08 – Sep09 Processing Plant 215.0 206.5 Cash at bank (1st Jan 08) 89.9 Concentration Plant 40.0 38.8 Completed Equity Issue 95.0 Mining 30.0 16.3 Senior Loan (USD 105m) 119.6 Land 30.0
Slide 33: Operational expenses are dominated by reagent and energy costs
Operational expenses are dominated by reagent and energy costs Cash Cost per tonne of finished REO by expense type and region 70% 66% 60% Current Budget assumes cash 20% costs of USD 5.50 per kilo 50% 2/3 of the costs are generated in 40% Malaysia 30% Reagents account for nearly 50% 21% 42% 20
Slide 34: Rare Earths summary – A vital raw material to a "greener" world
Rare Earths summary – A vital raw material to a “greener” world Demand Supply Lynas Continuous growth +10% China dominates the Will be the first and CAGR is forecast market with 95% supply dominant non-Chinese supplier The growth drivers are : China cannot meet 1. More efficient use of growing world
Slide 35: Other mineralisation at Mt Weld exists – The Crown Polymetallic resource
Other mineralisation at Mt Weld exists – The Crown Polymetallic resource Category Indicated Inferred Total Mt 1.5 36.2 37.7 Crown Ta2O5 0.037% 0.024% 0.024% Polymetallic Nb2O5 1.4% 1.06% 1.07% Resource TLnO 1.65% 1.14% 1.16% ZrO 0.32% 0.3% 0.3% FeO3 46.5% 42.6% 42.8% P2O5 8.9% 7.96% 7.99% Y2O3 0.1%