Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — Sydney Mining Club (July 2009)
30 slides from Lynas Rare Earths's conference presentation, Jul 30, 2009
Slide 1: LYC, CNMC and the GFC
For personal use only LYC, CNMC and the GFC Sydney Mining Club 30 July 2009
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: Who is LYC
Who is LYC For personal use only Lynas Corporation Mount Weld Rare Earths Project An ASX 200 listed company MT WELD MT WELD PROJECT With a vision: “Be a global PROJECT leader in Rare Earths for a sustainable future” People in Sydney, Perth, Mount Weld and Malaysia Mine and concentration plant at Mou
Slide 4: 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 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 Environmental Protection Smaller yet more powerful through lower consumption through lower emissions digital technology Compact fluorescent lights Hybrid vehicle
Slide 6: Demand for Rare Earths is growing strongly and evenly spread by application
Demand for Rare Earths is growing strongly and evenly spread by application For personal use only 2006 Demand by Application Growth Forecast by Application Application Growth rate 2013 demand % p.a. tonnes Other, 7% Glass Additive, Ceramics, 5% 12% • Glass Additives 1% 14,000 Phosphors, 8% • Catalys
Slide 7: China supplies 95% of global demand, and the sustainability of this supply is becoming fragile
China supplies 95% of global demand, and the sustainability of this supply is becoming fragile For personal use only Chinese Government Policy Chinese Production Limits Strategic value of REO well understood Largest REO mine Baotou (50% of world supply) operating at capacity Mining quota of 77,500t
Slide 8: The current mining operation is within the Central Zone Pit
The current mining operation is within the Central Zone Pit For personal use only Mt Weld Tenements The Total CLD Sector Mineral Resource (2.5% REO cut-off) 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 Total 12.24 9
Slide 9: The project finance structure was typical for a junior mining company
The project finance structure was typical for a junior mining company For personal use only Senior Debt Convertible Note Equity US$105M US$95M A$170M Announced July 2007 Announced November 2007 April 2008 Fully subscribed Feb 2008 A$95M HVB At $1.26 per share Amount: USD 95 million Term: 5 years
Slide 10: The GFC arrived in January 2009, with a bondholder dispute
The GFC arrived in January 2009, with a bondholder dispute For personal use only Senior Debt Convertible Note Equity US$105M US$95M A$170M Announced July 2007 Claimed non compliance to April 2008 conditions. Motivated to A$95M HVB prevent US$95M from At $1.26 per share leaving escrow account Ter
Slide 11: With the collapse of the convertible note facility the Senior Debt facility could not be drawn
With the collapse of the convertible note facility the Senior Debt facility could not be drawn 8 8 For personal use only Senior Debt Convertible Note Equity US$105M US$95M A$170M Announced July 2007 Motivation to prevent April 2008 US$95M from leaving A$95M HVB escrow account At $1.26 per share
Slide 12: In February 2009 the construction of the Mount Weld Rare Earths project was suspended
In February 2009 the construction of the Mount Weld Rare Earths project was suspended 8 8 For personal use only Senior Debt Convertible Note Equity US$105M US$95M A$170M Announced July 2007 Motivation to prevent April 2008 US$95M from leaving A$95M HVB escrow account At $1.26 per share Term: 5 y
Slide 13: Established relationships in China enabled a fast track to refinancing
Established relationships in China enabled a fast track to refinancing For personal use only New paradigm was required to refinance the project Islamic financing- Malaysian Sukuk market Discussion with industrial partners -13-
Slide 14: Introduction of China Nonferrous Metal Mining (Group) Co., Ltd (CNMC)
Introduction of China Nonferrous Metal Mining (Group) Co., Ltd (CNMC). For personal use only Who are CNMC? An international mining company focused on nonferrous metals with both domestic China and overseas resource projects. CNMC activities in resource projects include exploration, design, const
Slide 15: CNMC equity and debt package gives Lynas access to US$366 million
CNMC equity and debt package gives Lynas access to US$366 million (over A$470 million) For personal use only Equity issue to CNMC 700 million shares at A$0.36 to give A$252 million 52.5% above the 30 trading day VWAP CNMC will be the majority shareholder with 51.6% of the shares on issue Debt
Slide 16: CNMC support the current business model and management team
CNMC support the current business model and management team For personal use only Lynas vision: Be a global leader in Rare Earths for a sustainable future Production system Concentration Plant in Western Australia at Mount Weld Advanced Materials Plant on the East Coast of Malaysia near Kuantan
Slide 17: This provides full project funding for the phase expansion to 21,000t REO production
This provides full project funding for the phase 2 expansion to 21,000t REO production For personal use only Australian Dollar costs CCY Total Costs Spent post suspension Spend for completion Mt Weld Mining Campaign A$ 20 20 - Mt Weld Concentration Plant A$ 72 24 48 Australian Start Up Costs A$ 28 3
Slide 18: Heads of Agreement is binding, but subject to approvals
Heads of Agreement is binding, but subject to approvals For personal use only ► Chinese government regulatory approvals: State-owned Assets Supervision & Administration Commission (SASAC) The National Development & Reform Commission (NDRC) The Ministry of Commerce (MOFCOM) The State Administ
Slide 19: First mining campaign at Mt Weld and surface ore stockpiles are completed
First mining campaign at Mt Weld and surface ore stockpiles are completed – on budget & time For personal use only -19-
Slide 20: Concentration Plant Status at Mt Weld
Concentration Plant Status at Mt Weld For personal use only ► Engineering Design completed ► Contract Status on-site Bulk earth works Downer EDI Completed ► All Approvals in place Construction contract Abesque Engineering On hold Steam generation RCR Energy Systems On hold ► All major equipmen
Slide 21: Mount Weld Concentration Plant site – Flotation Building foundations
Mount Weld Concentration Plant site – Flotation Building foundations For personal use only -21-
Slide 22: Lynas has secured land for the processing plant in the State of 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: Malaysia site: Advanced Material Plant Status
Malaysia site Malaysian construction: Advanced MaterialPiling Plantfor post Status treatment workshop ► Engineering Design to be completed ► Most major equipment to be held For personal use only at current production point and ► All Approvals in place stored with manufacturer ► Contract Status on-si
Slide 24: Malaysia site construction: Piling for post treatment workshop
Malaysia site construction: Piling for post treatment workshop For personal use only -24-
Slide 25: Building construction has commenced
For personal use only Building construction has commenced Lynas-constructed stormwater detention pond -25-
Slide 26: Six supply agreements have been signed
Six supply agreements have been signed For personal use only 1st Customer Agreement - 6th Customer Agreement – Supply Contract Supply Contract • US$90M • Long term multiple year contract • Long term 5 year contract • Product from Phase I & Phase II • Cerium, Europium, of final separation and product
Slide 27: Rare Earths Market Outlook
Rare Earths Market Outlook For personal use only ► Customers reported that few significant purchases of Rare Earths have been made since November 2008 due to inventory destocking ► The Q2 2009 the average quarterly price had dropped to US$9.70/kg. ► The rationale for this price move is that at curre
Slide 28: Lynas – building a stable supply chain for vital raw materials to a sustainable world
Lynas – building a stable supply chain for vital raw materials to a sustainable world For personal use only Applications Raw Material Supply Lynas The growth drivers are : China dominates the Foundation on the 1. More efficient use of market with 95% supply richest Rare Earths ore energy body in the
Slide 29: Thank you
For personal use only Thank you Terima Kasih Xie Xie -29-
Slide 30: NOTE
NOTE For personal use only The information in this report that relates to Exploration 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 Corporatio