Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — Lynas — Investor Presentation (September 2017)
20 slides from Lynas Rare Earths's investor presentation, Sep 19, 2017
Slide 1: Lynas Corporation Investor Presentation September 2017
Lynas Corporation For personal use only Investor Presentation September 2017
Slide 2: Disclaimer
Disclaimer For personal use only This Presentation has been prepared by Lynas Corporation Limited (ABN 27 009 066 648) (Lynas or the Company) This Presentation contains summary information about Lynas and its subsidiaries (Lynas Group) and their activities current as at the date of this Presentation
Slide 3: Introduction to Lynas
Introduction to Lynas For personal use only • Lynas mines and processes Rare Earth elements – Lynas mines Rare Earths and completes first stage processing at Mt Weld Western Australia – Concentrate is shipped to Malaysia where it is refined by separating the various RE elements – Sales are primarily
Slide 4: FY17 Highlights
FY17 Highlights For personal use only o Safe, stable, record production rates at the LAMP o Safe and efficient operations at Mt Weld; 2nd mining campaign complete o Record total sales revenue of $264 million o Positive adjusted EBITDA of $31.9 million o Positive cash flows of $34.0 million from FY17
Slide 5: Continuous improvement in NdPr and total production throughput
Continuous improvement in NdPr and total production throughput leading to higher sales volume and lower unit costs For personal use only Production Volume Sales Volume (tonnes) 14,616 18,000 Others (RTS) 16,003 16,000 Others Sales 16,000 14,000 12,513 NdPr (RTS) 12,631 NdPr Sales 14,000 12,000 Total
Slide 6: Stable operating costs, higher production rates, positive cashflow
Stable operating costs, higher production rates, delivering positive operating and investing cashflow For personal use only Total Operating Costs vs Production Sales Revenue (A$'m) (excl. restructuring costs, STI & employee share based 320 20,000 215 250 264 payment) 199 270 16,000 185 200 220 196 1
Slide 7: The Balance Sheet is being progressively de-leveraged
The Balance Sheet is being progressively de-leveraged For personal use only Outstanding 31/12/16 Outstanding 18/9/17 Cash received by Lynas during 2017 Warrants at $0.038 (1) 174,365,466 0 A$ 6.6m Warrants at $0.05 (2) 348,843,836 273,648,609 A$ 3.8m Outstanding 31/12/16 Outstanding 18/9/17 Debt Red
Slide 8: NdPr price increased throughout 2H FY17
NdPr price increased throughout 2H FY17 The trend has continued in mid September For personal use only USD/kg NdPr Oxide Price RMB/kg • China central government actions have contributed to improved market 100 550 conditions 90 500 • Mining and Production quotas 80 450 inspected and enforced • Enviro
Slide 9: Rare Earth market growth is accelerating driven by magnets (NdPr)
Rare Earth market growth is accelerating driven by magnets (NdPr) For personal use only • Key uses for magnetic materials: - Cleaner energy production: Electric and hybrid vehicles, Wind turbines - Electronics - Automation/robotic applications • The benefits of NdFeB magnets are well recognized and
Slide 10: Focus on electrification of vehicles
Focus on electrification of vehicles For personal use only Hybrid, Plug Hybrid, Electrical Cars global production 20 18 16 6.9 14 Hybrid PHEV million units 12 10 2.2 BEV 8 7.1 3.9 6 4 0.3 5.2 2 0.1 0.4 4.5 0.1 1.8 1.9 0 2012 2015 2020 2025 Global 89m 98m 106m Market Requires a new LYNAS every 4 year
Slide 11: Small permanent magnets are used in various motors in cars
Small permanent magnets are used in various motors in cars For personal use only Traditional vehicles typically use 0.25kg magnets Sunroof drive Growing NdPr requirement Front wiper Rear wiper 12 Engine cooling 10 10 8 8 kt 6 HVAC (Heating, 4 Ventilation, Air Seat drive 2 Condition) Coola 0 nt Engin
Slide 12: High power permanent magnet motors in e-cars will drive further growth
High power permanent magnet motors in e- cars will drive further growth For personal use only Typical usage: 2kg magnet Power Growing NdPr requirement Steering System 15 12 10 7 kt 5 2 Power train: Chassis Components 0 Hybrid and Electric Passive and Active 2016 2020 2024 safety ABS, ESP, ibooser, N
Slide 13: Wind turbine growth
Wind turbine growth For personal use only Windfarms installed capacity Direct Drive continues to grow s installed capacity to double 600kg magnet/MW within 5 years Windfarms Source: GWEC insta Source: GWEC 800 700 600 Gear Box Reliability 100kg magnet/MW 500 10GW = 2,000tnes NdPr oxide GWATTS 400 30
Slide 14: Magnet material supply chain
Magnet material supply chain For personal use only Engine cooling Wipers Sunroof drives Heating/ventilation/air conditioning Car makers Cooling pumps Appliances Window lifts Robots Magnet Component System End user Motors Seat drives MRI Generators Power steering Wind turbines Actuators power trains
Slide 15: Rare earth material supply chain
Rare earth material supply chain For personal use only Metal making – China, Magnet makers – China, Vietnam & Thailand Japan & Germany China: SOEs and independents Alloy – China, Japan, NiMH batteries – China & Lynas Vietnam Japan Production: Further RE Functional Mine Cracking & processing elements
Slide 16: End users are sensitive to RE sustainability
End users are sensitive to RE sustainability For personal use only • Life Cycle Assessment (LCA) is becoming an industry standard: o A growing number of end users are evaluating the environmental impact of the products they manufacture. This impact is evaluated including the environmental effects of
Slide 17: Lynas leads the market in sustainability
Lynas leads the market in sustainability For personal use only Optimise your resource: Lynas has, and continues to, optimise flotation techniques to continuously improve ore utilisation Preserve the environment: Lynas prioritises the safety of people, the community and the environment and has implem
Slide 18: Opportunities to generate further growth in shareholder value
There are many opportunities to generate further growth in shareholder value For personal use only • Greater financial yield from materials • Improved recoveries and product quality • Improved throughput and production volume • Demonstrated capability • Rare earths pricing • Sustainable demand dynam
Slide 19: Competent Person's Statement
Competent Person’s Statement For personal use only COMPETENT PERSON’S STATEMENTS– MINERAL RESOURCES The Mineral Resources and Ore Reserves Statement in this Presentation is based on, and fairly represents, information compiled by Mr. Brendan Shand who is a consultant geologist to Lynas Corporation.
Slide 20: Rare Earths Market Data: Disclaimer
Rare Earths Market Data: Disclaimer For personal use only The slides in this presentation containing Rare Earths market data have been sourced from independent analysis of end application demand, along with Lynas estimates of quantities of Rare Earths end use in various key applications. Although Ly