Slide 1: Capital Raising and Business Update
Lynas Corporation Rare Earths – we touch them everyday Capital Raising and Business Update 5 May 2014 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 2: Disclaimer
Disclaimer 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. The information in
Slide 3: Agenda
Agenda Transaction Overview Company Overview Financial and Operational Update Rare Earths Market Outlook Key Investment Highlights Appendix 3 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 4: Equity Raising Summary
Equity Raising Summary Equity raising A Share Purchase Plan fully underwritten by Patersons Securities Limited in the amount of $30 million. A “top-up” equity placement with the capacity to raise up to $10 million. Issue price The issue price for both the SPP and the Placement will be a 17.5%
Slide 5: SPP details and Equity Raising Timetable
SPP details and Equity Raising Timetable SPP details Eligible shareholders Open to eligible shareholders with registered addresses in Australia and New Zealand No brokerage or other transaction costs will be incurred Application amount Opportunity to apply for up to A$15,000 worth of Lynas’ or
Slide 6: Proposed Nomura transaction
Proposed Nomura transaction Key points Existing Sojitz / JOGMEC senior facility repayments Following receipt of expressions of interest from various financial industry 250 participants, Lynas selected Nomura Australia Limited to arrange the 200 purchase and amendment of the Sojitz / JOGMEC senior
Slide 7: Agenda
Agenda Transaction Overview Company Overview Financial and Operational Update Rare Earths Market Outlook Key Investment Highlights Appendix 7 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 8: Company overview
Company overview The only new integrated source of Rare Earths from mine to customers Primarily involved in the exploration, development, mining and processing of Rare Earth minerals ASX-listed, market capitalisation of A$324m as of 1 May 2014 Owns and operates: Mt. Weld – the highest grade
Slide 9: Lynas' Sustainable Business Model
Lynas’ Sustainable Business Model Independent Rare Earth supply Proven ability to offer end users long term supply contracts securing quantities and prices Proven ability to partner with downstream processors to secure supply chains to end users Significant reserves of 1.1Mt REO versus today’s annua
Slide 10: Lynas confident of achieving the 11,000tpa production rate during June 2014 quarter
Lynas confident of achieving the 11,000tpa production rate during June 2014 quarter Secured funding for Mt. Weld resource Completion of Entered into Phase 1 increases to 23.9Mt @ Commences construction and customer construction 7.9% REO Production construction of first feed at Mt. agreements in On t
Slide 11: Safe for People, Safe for Environment
Safe for People, Safe for Environment Employee Safety Lynas’ goal is Zero Harm The 12-month rolling LTI Frequency Rate for Lynas global operations as at the end of March was 1.1 (per millions hours worked) Western Australian operations achieved one year “Harm Free” during the March 2014 quarter.
Slide 12: Safe for People, Safe for Environment
Safe for People, Safe for Environment Triple Certification ISO Certification Western Australian and Malaysian operations maintained certification to: OHSAS 18001 (Occupational Health and Safety) ISO 14001 (Environmental Management Systems) ISO 9001 (Quality Management Systems) Solid Residues
Slide 13: Agenda
Agenda Transaction Overview Company Overview Financial and Operational Update Rare Earths Market Outlook Key Investment Highlights Appendix 13 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 14: Financial overview
Financial overview March 2014 quarter CASH FLOW A$M OPENING CASH BALANCE 1 JANUARY 2014 74.7 Average selling price increased to US$22.63/kg REO (revenue basis), from US$21.48/kg REO (revenue INFLOWS basis) in the prior quarter, supported by a favourable Cash Receipts from the sale of goods 21.9 sa
Slide 15: LAMP operational update
LAMP operational update REO production and average selling price March 2014 quarter 1200 25 Production: 1,089 tonnes REO equivalent products Average selling price US$/kg revenue basis 1000 Shipments: 751 tonnes REO equivalent products 20 March 800 Record production in the month of March of 575
Slide 16: Sales and marketing – customer agreements
Sales and marketing – customer agreements Lynas has agreements to supply Rare Earths products to credit-worthy counterparties globally Based on current customer agreements and negotiations, Lynas currently expects to sell its annual Phase 1 production Market growth is expected to be secured thro
Slide 17: Global chemical and technology companies who purchase Rare Earths
The global chemical and technology companies who purchase Rare Earths include: 17 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 18: Agenda
Agenda Transaction Overview Company Overview Financial and Operational Update Rare Earths Market Outlook Key Investment Highlights Appendix 18 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 19: Rare Earths prices
Rare Earths prices Mt Weld basket price history 2008-2014 Mt Weld basket price history last 12 months 250 35 30 200 25 150 USD/REO kg USD/REO kg 20 15 100 10 50 5 0 0 Jan-08 Jan-09 Jan-10 Jan-11 Jan-12 Jan-13 Jan-14 Apr-13 Jun-13 Aug-13 Oct-13 Dec-13 Feb-14 China domestic China FOB China domestic Ch
Slide 20: Rare Earths pricing dynamics
Rare Earths pricing dynamics 250 Fears of a RE supply 1 shortage leads to market panic and over- purchasing of REs (above 200 actual consumption) Unsustainable RE price 1 2 Results in a build of increases for consumers excess RE inventories impacts RE demand and 2010: along the supply chain prices (
Slide 21: What are the demand drivers of Rare Earths?
What are the demand drivers of Rare Earths? REO demand growth outlook 2015E Expected Global Rare Earths demand by application CAGR Sector 2012-2018 Rare Earths used Other 5% Optical Glass 3% NiMH Batteries 11% NiMH Batteries 10.1% La, Nd UV Cut 2% Magnets 9.7% NdPr, Dy Polishing 11% Autocatalysts 5.
Slide 22: RE market outlook – key demand side trends
RE market outlook – key demand side trends A number of key trends will drive the future growth of the global RE market 1 Energy efficient and green applications continue to accelerate strong NdPr Estimated REO demand in magnet industry demand growth 50 Wind energy, HEV/EVs, general auto, energy ef
Slide 23: RE market outlook – key demand side trends
RE market outlook – key demand side trends A number of key trends will drive the future growth of the global RE market 3 NiMH battery technology is continued Chinese exports of lanthanum products (REO equivalent) to be used in HEVs, potentially securing La demand in the future 18000 Chinese export
Slide 24: Rare Earths market balance outlook
Rare Earths market balance outlook The NdFeB magnet market is forecast to be the highest growth end market for REs with a CAGR of over 10% from 2012-2020F End Market Historic vs. Forecast RE Demand Growth(1)(2)(3) NiMH Batteries Magnets Autocatalysts FCCs Metallurgy & FerroSilicon Phosphors Polishin
Slide 25: Rare Earths market balance outlook
Rare Earths market balance outlook Elemental market balances and demand growth rates RE Element Forecast Demand Growth vs. Forecast Supply Balance(1)(2)(3)(4) La Ce NdPr Sm Eu Gd Tb Dy Y 12% La 2012-2020F REO Demand Growth (CAGR) 10% 43.1ktpa Gd Ce 1.2ktpa 8% Sm 35.7ktpa 0.6ktpa 6% 4% NdPr 56.1ktpa
Slide 26: China RE market moving towards sustainability
China RE market moving towards sustainability China consumes 50-60% of global Moving towards supply discipline inside RE production already and this China – aiming at sustainable production will continue to grow, due to fast growing Chinese domestic demand At this pace China will become a The Chin
Slide 27: Agenda
Agenda Transaction Overview Company Overview Financial and Operational Update Rare Earths Market Outlook Key Investment Highlights Appendix 27 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 28: Key investment highlights
Key investment highlights Company overview World’s largest Rare Earths separation plant at the LAMP 1 • located within one of the most cost competitive industrial and petrochemical estates High quality, long life assets 2 • more than 25 years of proven reserves in Australia and significant additiona
Slide 29: Agenda
Agenda Transaction Overview Company Overview Financial and Operational Update Rare Earths Market Outlook Key Investment Highlights Appendix 29 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 30: Production process overview
Production process overview 30 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 31: Lynas RE distribution: 45% Cerium, 25% Lanthanum, 25% NdPr, 5% Heavies
Lynas RE distribution: 45% Cerium, 25% Lanthanum, 25% NdPr, 5% Heavies ANTICIPATED VOLUMES LAMP PHASE 1 + 2 ─ 22,000t REO CAPACITY Major Applications (tpa) Automotive Catalysis, NiMH Batteries, Ce carbonate, oxide 5,200 Oil Refining Catalysis, UV-cut glass La carbonate, oxide 2,700 Oil Refineries, N
Slide 32: Western Australia operations
Western Australia operations Overview of Australian assets Mt Weld Mine Location of the Mt Weld Mine & Concentration Plant The richest known deposit of Rare Earths in the world Consists of the Central Lanthanide Deposit (“CLD”) and Duncan Deposit Located 35km south of Laverton in W.A. Simple
Slide 33: Resources and Reserves
Resources and Reserves Mt Weld contains one of the world’s largest and highest grade Rare Earth resources Ore reserves sufficient to sustain total production of 22,000tpa REO for over 25 years Greater proportion of the higher value heavy Rare Earths located at the Duncan deposit Mt Weld teneme
Slide 34: Malaysia operations
Malaysia operations The LAMP facility is strategically located in Malaysia and uses proven, mature industry technology PERLIS Kangar THAILAND Stable operating environment and a sovereign credit Kota Baharu Alor Setar rating of A- LANGKAWI KEDAH Gebeng is a hub into Asia with exceptional MALAYSIA
Slide 35: Synthetic minerals products program
Synthetic minerals products program Lynas is committed to the development and commercialisation of LAMP co-products Product Source Target applications Development status Evaluation of product Desulfurisation of flue • Plasterboard Synthetic gypsum formulations and engagement gases (FGD) • Gypsum fib
Slide 36: Key risk factors
Key risk factors 1) Introduction A number of risks and uncertainties, which are both specific to Lynas and of a more general nature, may affect the future operating and financial performance of Lynas and the value of Lynas shares. You should carefully consider the following risk factors, as well as
Slide 37: Key risk factors (cont'd)
Key risk factors (cont’d) 3) Rare Earths market demand and price risks Lynas’ business relies primarily on the production and sale of Rare Earths products to a variety of buyers. Fluctuations in the global Rare Earths market may materially affect Lynas’ financial performance. Demand for, and pricing
Slide 38: Key risk factors (cont'd)
Key risk factors (cont’d) b) Environmental risks Lynas’ activities are subject to extensive laws and regulations controlling not only the mining of, exploration for and processing of mineral properties, but also the possible effects of such activities upon the environment and interests of local comm
Slide 39: Key risk factors (cont'd)
Key risk factors (cont’d) 6) Tax risks Lynas is subject to taxation and other imposts in Australia and Malaysia. Future changes in taxation laws in those countries, including changes in interpretation or application of existing laws by the courts or taxation authorities in those jurisdictions, may a
Slide 40: Foreign selling restrictions
Foreign selling restrictions International Offer Restrictions This document does not constitute an offer of securities in any jurisdiction in which it would be unlawful. New Shares may not be offered or sold in any country outside Australia except to the extent permitted below. European Economic Are
Slide 41: Foreign selling restrictions
Foreign selling restrictions New Zealand This document has not been registered, filed with or approved by any New Zealand regulatory authority under or in accordance with the Securities Act 1978 (New Zealand). The New Shares are not being offered or sold in New Zealand, or allotted with a view to be
Slide 42: Foreign selling restrictions
Foreign selling restrictions Switzerland The New Shares may not be publicly offered in Switzerland and will not be listed on the SIX Swiss Exchange ("SIX") or on any other stock exchange or regulated trading facility in Switzerland. This document has been prepared without regard to the disclosure st
Slide 43: Competent person's statement
Competent person’s statement The information in this presentation 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 an
Slide 44: Rare Earths market data - Disclaimer
Rare Earths market data - Disclaimer 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 Lynas believes that