Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — Lynas — Investor Day (May 2019)
70 slides from Lynas Rare Earths's investor day presentation, May 21, 2019
Slide 1: Lynas 2025: Growing with the Market
LYNAS 2025: GROWING WITH THE MARKET Investor Day Presentation 21 May, 2019 1
Slide 2: Disclaimer
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
Slide 3: Agenda
Agenda Time Description Presenter 8:15am Introducing Lynas 2025 Amanda Lacaze 8:30am An exciting company in an exciting Pol Le Roux market 9:15am Tier 1 resource & unique IP Kam Leung 9:45am Panel: Growth opportunities in Mt Weld & Kam Leung Malaysia Grant McAuliffe Alex Logan 10:30am Break 11:00am
Slide 4: Introducing Lynas 2025
INTRODUCING LYNAS 2025 Amanda Lacaze, CEO and Managing Director 4
Slide 5: Lynas 2025
Lynas 2025 A larger business to meet • Efficient capacity expansion leveraging Lynas’ unique assets forecast demand growth • 10,500 tpa NdPr products Diversified Industrial footprint • Upstream processing close to the resource with processing facilities in • Downstream processing close to our custom
Slide 6: Our track record underpins our confidence in the future: Western Australia
Our track record underpins our confidence in the future Western Australia An expanded WA operation; Mining, Concentrator, Cracking & Leaching. 6
Slide 7: Our track record underpins our confidence in the future: Malaysia
Our track record underpins our confidence in the future Malaysia A dynamic operation in Gebeng with increased investment in downstream processing; SX, Product Finishing, value added processing and recycling. Supporting Malaysia’s Industry 4.0 vision and economic development. 7
Slide 8: Our track record underpins our confidence in the future: United States
Our track record underpins our confidence in the future United States Exciting market opportunity with a skilled US based partner. Filling a market gap with new separation and Product Finishing capability. 8
Slide 9: Our track record underpins our confidence in the future
Our track record underpins our confidence in the future Malaysia A dynamic operation in Gebeng with increased investment in downstream processing; SX, Product Finishing, value added processing and recycling. Supporting Malaysia’s Industry 4.0 vision and economic development. United States Western Au
Slide 10: Developing our sources of unique competitive advantage
Developing our sources of unique competitive advantage Mt Weld Market position Inhouse Proven Operations Will to win • A true Tier 1 • World’s second Intellectual • Established • Corporate culture Resource largest Rare Earths Property operating assets founded on our • Continuing producer • Technical
Slide 11: Our track record underpins our confidence in the future
Our track record underpins our confidence in the future 12,000 Production Volume REOt 220 Sales Revenue (A$'m) 10,000 170 8,000 6,000 120 4,000 70 2,000 0 20 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 NdPr (RTS) Others (RTS) Cash Flow
Slide 12: Our presenters
. GM - Lynas Advanced VP Sales & Marketing VP Production Materials Plant Metallurgy Manager Pol Le Roux Kam Leung Grant McAuliffe Alex Logan | $ Gj < } A» VP Malaysia VP People & Culture Chief Financial Officer Chairman Dato’ Mashal Ahmad Mimi Afzan Afza Gaudenz Sturzenegger Mike Harding Lynas JJ
Slide 13: An Exciting Company in an Exciting Market
AN EXCITING COMPANY IN AN EXCITING MARKET Pol Le Roux, VP Sales & Marketing 13
Slide 14: Wayne | 2006 Rafali | 2017 Zaini | 2008
Zaini | 2008 Wayne | 2006 Richard | 2004 Rafali | 2017 Kaneko | 2011 Pol | 2002 Vincent | 2018 Dai | 2001 Jaiouen | 1993 Zihan | 2008 14 14 Anne-Marie | 2018
Slide 15: Why did they join Lynas to form the dream team?
Why did they join Lynas to form THE DREAM TEAM? They are passionate about Rare Earths - and so is Lynas The Rare Earths market is exciting and is a great opportunity to participate in the green revolution A focus on Sustainability is essential to achieve growth in green industries • Lynas leads the
Slide 16: Demand for NdPr is forecast to accelerate from 2021
Demand for NdPr is forecast to accelerate from 2021 Global demand for fresh NdPr Oxide 70.0 • Energy International Agency: 125-220m electric cars on the road in 2030 60.0 Equivalent to 88-155ktns additional REO kt of NdPr Oxide 50.0 supply of NdPr over next 10 years 40.0 • Most new models will be
Slide 17: The automotive industry is embracing Rare Earth Electric Vehicle Drives
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 tha
Slide 18: Lynas is the partner of choice for a sustainable magnet supply chain
Lynas is the partner of choice for securing a sustainable magnet supply chain • Lynas offers: - Unique market expertise inside and outside China - Independence from China - Transparent downstream supply chain - Can provide metal, alloy and recycling services through trusted partners in addition to R
Slide 19: Our sales and marketing road map to 2025
Our sales and marketing road map to 2025 Develop additional value for other products Maintain 20-25% Extract Dy and Tb - La all pre-sold via Prepare for NdPr market share from our Heavy long term contracts through timely outside China Rare Earths and magnet recycling capacity increases - New opportu
Slide 20: Generating more value from Ce-La is in our hands
Generating more value from Ce-La is in our hands Ce-La Products Margin Increasing EBITDA for Cerium- Cat Lean Lanthanum Polishing powder 300% High purity Cerium 250% Cat Lean Polishing powder Polishing powder precursor 200% High purity Cerium Low Cl Cerium 150% Polishing powder precursor Low Cl Ceri
Slide 21: Lynas has a key role to play in Heavy Rare Earths
Lynas has a key role to • Currently all Heavy Rare Earths (HRE) play in Heavy Rare Earths separation is in China Xinfeng ore value • Dy and Tb are essential to high power electrical 250 60% motors 200 50% % paid by Lighting 150 40% • HRE in China is extracted from ionic clay, a USD/kg 30% 100 20% ve
Slide 22: Lynas-Japan alliance plays an essential role in RE market growth
Lynas-Japan alliance plays an essential role in RE market growth Mining Separation Metal Alloy Magnet Component OEM • Security of supply from Lynas has contributed to growth in Japanese industry • Lynas provides outside China automotive manufacturers with confidence in Rare Earths technology 22
Slide 23: Lynas – Blue Line partnership announced
Lynas – Blue Line partnership announced • MOU between Lynas and Blue Line Corporation for the joint development of Rare Earths separation in USA • Binding, conditional on funding approvals by both parties • Exclusive for 12 months • Primarily focusing on HRE separation but could include LRE separati
Slide 24: Demand is forecast to outstrip new supply
Demand is forecast to outstrip new supply Lynas has a demonstrated ability to support market growth • Tier 1 resource • Efficient operating plant • Cost base delivers good returns even when market pricing is low • Lynas 2025 will support Lynas to maintain its market share in a larger market Interest
Slide 25: Highly visible
Highly visible Demonstrated capability to grow =. cil Japan: +50% since 2013 Bringing Rare Earths supply to the United States Fully transparent Silver medallist - EU chemical companies Life Cycle Assessment UN Global Compact signatory sD: Dy, Tb separation High value added Ce based products End of l
Slide 26: Tier 1 Resource & Unique IP
TIER 1 RESOURCE & UNIQUE IP Kam Leung VP Production 26
Slide 27: Lynas 2025: Growing with the Market
LYNAS 2025: GROWING WITH THE MARKET • Production ramp up to meet demand growth: 10.5kt NdPr p.a. • Reliable long term supplier: maintain 25+ year Ore Reserve • Judicious use of capital: $500m capital envelope • Continue strong cost culture driving down unit costs • Expand revenue through new product
Slide 28: Lynas 2025: Growing with the Market
Lynas 2025: Growing with the Market 2019 2020 2021 2022 2023 2024 2025 Start Duncan Processing Mt Weld Concentrator Upgrade WA C&L SX/PF Upgrade Heavy Rare Earth Separation Indicative, subject to change New configuration of operations including relocation of C&L to WA and flow sheet enhancements hel
Slide 29: How will we grow to meet market demand from 2022? Upstream
How will we grow to meet market demand from 2022? Upstream processing expansion in WA • Preliminary studies conducted on 5 sites • 2 preferred sites (no fatal flaws) • Ability to supply multiple downstream processing sites Mt Weld Kalgoorlie Community Support Close to source / Efficient Transport Re
Slide 30: How will we grow to meet market demand from 2022? Downstream
How will we grow to meet market demand from 2022? Downstream processing expansion in Malaysia & United States • Invest in increased processing capacity in Gebeng - Optimisation and development of more efficient SX and PF • Develop a second processing site close to the US market for Heavy Rare Earth
Slide 31: Our unique Tier 1 Rare Earth deposit
Our unique Tier 1 Rare Earth deposit 31
Slide 32: Mt Weld is favoured by grade, NdPr content, total REO and life of mine
Mt Weld is favoured by grade, NdPr content, total REO and life of mine 32 32
Slide 33: 2018 Mt Weld Mineral Resource underpins our growth
2018 Mt Weld Mineral Resource underpins our growth Fresh carbonatite below existing ore is open at Depth Situation • Mining and Processing higher grade CZ and Li ore since start up • 2018 Mineral Resource – 3,000 kt contained TREO • 2018 Ore Reserve – 1,690 kt contained TREO Opportunities • Mining a
Slide 34: Sustaining a 25+ Year Reserve in 2025
Sustaining a 25+ Year Reserve in 2025 Coarse grain primary RE mineralisation will be much simpler to process • Step change improvement in grade and recovery performance for current and future ores • Proven improved flowsheet Parisite +2mm for new ores • Exploration and new flowsheet for Primary Carb
Slide 35: Unlocking potential at Mt Weld for 2025 throughput
Unlocking potential at Mt Weld for 2025 throughput Comments Grinding • One additional grinding mill • Bypass crushing & screening Flotation Capacity • Stack Cell – low cost capacity, froth washing, improved upgrading • R&D on increase recovery Boiler • Turned off with current reagent trials Tailings
Slide 36: Unlocking potential in Malaysia for 2025 output
Unlocking potential in Malaysia for 2025 output Comments Cracking & Leaching • New capacity in WA using improved design Solvent Extraction • Increased capacity • New more efficient flowsheets Product Finishing • Increase capacity using improved design • Tunnel Furnaces (optimisation, extension) New
Slide 37: Our competitiveness continues to improve
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 150% NdPr and a wider
Slide 38: Growth Opportunities in Mt Weld and Malaysia
GROWTH OPPORTUNITIES IN MT WELD AND MALAYSIA • Kam Leung, VP Production • Grant McAuliffe, General Manager, Lynas Advanced Materials Plant • Alex Logan, Metallurgy Manager 38
Slide 39: Mt Weld Tailings
Mt Weld Tailings ▪ A potential significant source of Rare Earths ▪ Direct ore treatment or blended feed for concentrator 39 39
Slide 40: Lynas Malaysia Gebeng site
Lynas Malaysia Gebeng site 40 40
Slide 41: Lynas NEXT - New products
Lynas NEXT - New products = oi aes B77
Slide 42: Lynas NEXT - Cracking and Leaching
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 42
Slide 43: Improving Capital Efficiency
Improving Capital Efficiency ▪ Phase 1: 29 Flotation Cells ▪ Phase 2: 9 Flotation Cells ▪ Lynas NEXT: 1 Flotation Cell ▪ Lynas 2025: 3-5 Flotation Cells 43 43
Slide 44: Mt Weld Resource to underpin growth
Mt Weld Resource to underpin growth Coarse grained rare earth minerals discovered and open at depth Dolomite Ca,Mg(CO3)2 • Primary source of Mt Weld Parisite +1mm rare earths discovered Ca,RE (CO3)3F2 • ~3%REO open at depth Parisite +2mm • Parisite identified as primary rare earth mineral • Coarse g
Slide 45: Plant upgrade for 10.5kt NdPr & lower grades
Plant upgrade for 10.5kt NdPr & lower grades Dryer Cracking & Leaching ? Thickener /Filter New Power Station Elsewhere (Hybrid) Flotation 45 45 Mill
Slide 46: 928 metres of kilns and tunnel furnaces
928 metres of kilns and tunnel furnaces 4 rotary kilns (60m long) 8 tunnel furnaces (NEXT – one extended) 47 High Speed Centrifuges 46 Plate & Frame Pressure Filters (NEXT +3) 900 Solvent Extraction Stages (NEXT -60). Quality specs as low as <50ppm for some impurities 46
Slide 47: Session Break
Session Break 47
Slide 48: Malaysia in Focus
MALAYSIA IN FOCUS Dato’ Mashal Ahmad, Managing Director 48
Slide 49: Malaysian political environment
Malaysian political environment 49
Slide 50: PH Government key reformation plan
PH Government key reformation plan Objectives • To reduce corruption in government and Public sectors via: • Greater empowerment of MACC • Taking high profile corruption cases to court • Review and re-negotiate contracts awarded by previous government and implement open tenders • Improve country’s e
Slide 51: Our journey since GE14
Our journey since GE14 • Media reports say a Lynas Review would be led by anti-Lynas MPs Oct • Lynas publicly calls for any review to be fair, transparent & scientific 2018 • Independent Review Committee of academics and scientists subsequently appointed • Independent Review Committee appointed; fin
Slide 52: Malaysia regulatory update
Malaysia regulatory update Operating License renewal • Full Operating Stage License (FOSL) due for • The Malaysian PM Tun Dr Mahathir renewal on 2 September 2019 has stated that Lynas will continue to • License renewal application progressing to a operate in Malaysia with some new “normal” timetable
Slide 53: Lynas is committed to Malaysia
Lynas is committed to Malaysia 53
Slide 54: Lynas makes a meaningful economic contribution to Malaysia
Lynas makes a meaningful economic contribution to Malaysia 98% 1000+ 4000+ 80% of employees Direct jobs Local jobs established of inputs are Malaysian created because of Lynas sources locally RM 2.6B RM 969M RM 2.0M+ In Foreign Direct Investment GDP impact in 2018 Invested in research with since 200
Slide 55: Will to Win
WILL TO WIN Mimi Afzan Afza, VP People & Culture 55
Slide 56: Our people are committed to our purpose
Our people are committed to our purpose We employ 738 skilled people • 651 at Lynas Malaysia • 87 at Mt Weld Our people enjoy working at Lynas "We are strong. We are • Retention is high fighters. We want to be treated fairly.“ • Average turnover is approx. 1% per month Khairul Suhaimi, Plant Manager
Slide 57: We invest in skill development for our highly skilled workforce
We invest in skill development for our highly skilled workforce • We invest in training for all our people 5 PhDs • Safety training is always our priority • 77% of our people hold a certificate or higher qualification, 8 including 5 PhDs and 8 Masters Degree Masters Degrees • We have welcomed >100 g
Slide 58: We contribute to our communities
We contribute to our communities • The safety of our people, our communities and the environment is our first priority • We aim to make a positive contribution to local employment, skills, education, and health • We provide meaningful opportunities for Lynas staff to directly contribute to their com
Slide 59: Our community engagement in Malaysia
Our community STEM-focused strategic alliance with engagement in Malaysia the Pahang State Education Department, International Islamic University and Pahang Skills Development Centre Youth programmes in partnership with the Pahang Youth and Sports Department Social welfare events in partnership with
Slide 60: Our community engagement in Mt Weld
Our community Ongoing donations to Laverton Crisis engagement in Mt Weld Intervention Service for women and children Contributing to Shire of Laverton community initiatives Supporting Laverton Swim Stars learn to swim program Participating in MEEDAC Employer Expo in Laverton Committee members of not
Slide 61: Growing Value
GROWING VALUE Gaudenz Sturzenegger, CFO 61
Slide 62: Lynas 2025: Growing with the Market
Lynas 2025: Growing with the Market 2019 2020 2021 2022 2023 2024 2025 Start Duncan Processing Mt Weld Concentrator Upgrade WA C&L SX/PF Upgrade Heavy Rare Earth Separation Indicative, subject to change New configuration of operations including relocation of C&L to WA and flow sheet enhancements hel
Slide 63: Increased throughput to meet forecast market growth
Increased throughput to meet forecast market growth NdPr production (tonnes per month) Forecast Revenue and Margin 1,000 growth 900 +46% 800 +33% • Significant volume increase to 10.5 700 ktpa NdPr products 600 • 100% sales to outside China 500 875 customers 400 300 600 • New Heavy Rare Earth separa
Slide 64: Sustain competitive advantage with continued cost efficiencies
Sustain competitive advantage with continued cost efficiencies Further optimise flowsheet • Incorporate process learnings in the design of new facilities • Eliminate unnecessary logistics costs • Integrate residue management close to the resource Realise product recovery opportunities • Develop opti
Slide 65: Lynas 2025 growth capital: A$500m
Lynas 2025 growth capital: A$500m • Deliver 10.5 ktpa of NdPr Products • Establish new industrial footprint providing expanded geographical coverage - Upstream processing including C&L in WA - Downstream processing in Malaysia and the US • Invest in downstream expansion including: - Heavy Rare Earth
Slide 66: Balance sheet fit for growth
Balance sheet fit for growth • Strong Balance Sheet - Debt of US$162m of which US$15m is convertible bonds - Cash Balance at 31st March 2019: A$67.1m - Strong operating cash flow of A$185.7m over the last seven quarters or A$26.5m on average per quarter • JARE has extended its support to Lynas - Lyn
Slide 67: Growth initiatives have driven shareholder value
Growth initiatives have driven shareholder value Production Volume REOt vs Market Cap Shareholder Value (Market Cap) 12,000 $1,400 $1,329.4 $1,228.8 1,400 $1,228.8 9,642 10,000 $1,200 1,200 8,839 $1,055.1 $1,055.1 7,577 $1,000 1,000 8,000 6,337 $800 800 6,000 4,221 $600 600 4,000 $345.4 $345.4 400 $
Slide 68: Closing Remarks
CLOSING REMARKS Mike Harding, Chairman 68
Slide 69: Q&A
Q&A 69
Slide 70: Competent Person's Statement
Competent Person’s Statement COMPETENT PERSON’S STATEMENTS– MINERAL RESOURCES The information in this report that relates to the 2018 Mineral Resources is based on information compiled by Mr Alex Whishaw under the guidance of Dr Andrew Scogings. Mr Wishaw and Dr Scogings are full-time employees of C