Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — Lynas — Investor Presentation (February 2008)
30 slides from Lynas Rare Earths's investor presentation, Feb 28, 2008
Slide 1: Nicholas Curtis, Executive Chairman, February 2008
For personal use only Nicholas Curtis Executive Chairman February 2008
Slide 2: Disclaimer
Disclaimer For personal use only 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 info
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 For personal use only 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 excell
Slide 4: Lynas Corporation is an ASX company with strong institutional support
Lynas Corporation is an ASX 200 company with strong institutional support For personal use only Listed on the Australian Stock Exchange (LYC) Shares on issue 570 million Options outstanding 24.0M with strike prices between A$0.17 to A$1.27 Major institutional support Goldman Sachs The Capita
Slide 5: Rare Earths are a unique group of elements
Rare Earths are a unique group of elements For personal use only 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 (T
Slide 6: 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 Improve Energy Efficiency Environmental Protection Enable Digital Technology through lower consumption through emission control smaller & more powerful Compact fluorescent lights
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 For personal use only 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 w
Slide 8: Hybrid technology is totally dependent upon Rare Earths
Hybrid technology is totally dependent upon Rare Earths For personal use only 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 For personal use only 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
Slide 10: Rare Earths are vital for further important energy efficiency applications
Rare Earths are vital for further important energy efficiency applications For personal use only 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
Slide 11: The consumer electronics industry use Rare Earths in many applications
The consumer electronics industry use Rare Earths in many applications For personal use only 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 POLISH
Slide 12: Roskill forecast strong growth for Rare Earths across most applications
Roskill forecast strong growth for Rare Earths across most applications For personal use only 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
Slide 13: Detailed analysis suggests an imbalance for certain Rare Earths elements
Detailed analysis of this forecast suggests an imbalance for certain Rare Earths elements For personal use only 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 ov
Slide 14: A Rare Earths supply structural deficit looms
A Rare Earths supply structural deficit looms For personal use only ► 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
Slide 15: Chinese supply restrictions relate to capacity as well as Government strategy
Chinese supply restrictions relate to capacity as well as Government strategy For personal use only Chinese Production Limits Chinese Government Policy Largest REO mine Baotou (50% of world Strategic value of REO well regarded, resulting supply) operating at capacity in introduction of: REO is a b
Slide 16: Other potential Rare Earths projects have a high level of uncertainty
Other potential Rare Earths projects have a high level of uncertainty For personal use only 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 explora
Slide 17: Imbalance of Supply and Demand suggests further price increases
Imbalance of Supply and Demand suggests further price increases For personal use only Price Development Supply – Demand Imbalance (US$/kg) (REO Metric Tonnes) 2006 2012 15.00 190000 Based on Mt Weld Composition, FOB China basis Total Demand 108,000 188,000 14.00 US$13.52/kg 13.00 22 Feb 08 165000 Su
Slide 18: Lynas Mt Weld will be the 1st non-Chinese fully integrated source of supply
Lynas Mt Weld will be the 1st non-Chinese fully integrated source of supply For personal use only Mining - Australia Open pit mining at Mt Weld Contractor mining on a campaign basis Rare Earths Concentration - Australia Concentrator using flotation to be constructed at Mt Weld Containers use
Slide 19: Mt Weld, located in Western Australia, is geologically unique
Mt Weld, located in Western Australia, is geologically unique For personal use only The CLD Sector Resource Mt Weld Tenements (4% REO cut-off) Category Tonnes Grade Tonnes (Mt) (%REO) (kt) REO Measured 1.2 15.7 186 Indicated 5.0 11.8 583 Inferred 1.5 9.9 148 Total 7.7 12.0 917 ► High grade, mine pla
Slide 20: Mt Weld's central zone has a natural advantage in grade and composition
Mt Weld’s central zone, within CLD sector, has a natural advantage in grade and composition For personal use only Mt Weld Baotou Composition Rare Earth Elements Composition US$/kg By Weight By Weight Lanthanum Oxide 25.50% 6.10 25.70% Cerium Oxide 46.74% 4.00 51.30% Praseodymium Oxide 5.32% 29.50 5.
Slide 21: Mt Weld mining is well underway
Mt Weld mining is well underway For personal use only A milestone was achieved when Downer EDI Mining mobilised to site at Mt Weld Mining fleet has cleared the area Mining commenced in early July Commenced Rare Earths ore stockpiles -21-
Slide 22: Lynas has secured land for the processing plant in Pahang
Lynas has secured land for the processing plant in the State of Pahang on the east coast For personal use only 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 Are
Slide 23: Engineering design for the plant is well underway with Ranhill WorleyParsons
Engineering design for the plant is well underway with Ranhill WorleyParsons For personal use only ► EPCM contract agreed with Ranhill WorleyParsons Offices in Sydney, Beijing, Kuala Lumpur and East Coast Malaysia ► Engineering well advanced Completed Basic Engineering Design Detailed Design w
Slide 24: Rare Earths project schedule – 1st Phase 10,500tpa
Rare Earths project schedule – 1st Phase 10,500tpa For personal use only 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 - Concentr
Slide 25: Key supply contracts have been signed
Key supply contracts have been signed For personal use only 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 con
Slide 26: Key financial aspects of the Rare Earths project
Key financial aspects of the Rare Earths project For personal use only 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 Senior Loan (USD 105m) 119.6 Mining 30.0 16.3 Con Note (USD 95
Slide 27: Operational expenses are dominated by reagent and energy costs
Operational expenses are dominated by reagent and energy costs For personal use only 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
Slide 28: Rare Earths summary – A vital raw material to a greener world
Rare Earths summary – A vital raw material to a “greener” world For personal use only 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 efficien
Slide 29: 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 For personal use only 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 parti
Slide 30: Other mineralisation at Mt Weld exists – The Crown Polymetallic resource
Other mineralisation at Mt Weld exists – The Crown Polymetallic resource For personal use only 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%