Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — Lynas — Investor Presentation (March 2011)
31 slides from Lynas Rare Earths's investor presentation, Mar 30, 2011
Slide 1: Rare Earths: We Touch Them Everyday
Rare Earths WE TOUCH THEM EVERYDAY For personal use only Execution of agreements with Sojitz, Institutional Placement, Share Purchase Plan and Business Update 30 March 2010 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
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 Presentatio
Slide 3: Summary
Summary For personal use only • Lynas and Sojitz have executed a financing agreement, a distribution & agency agreement, and an availability agreement The financing agreement forms the basis of a financing package to raise a total of US$325 million (A$325 million), of which US$250 million is to be
Slide 4: Sojitz financing, distribution & agency and availability agreements overview
Lynas and Sojitz have executed a financing agreement, a distribution & agency agreement, and an availability agreement For personal use only Overview • Financing agreement Forms the basis of a financing package to raise a total of US$325 million (A$325 million) comprised of: US$225 million (A$225
Slide 5: Distribution & agency and availability agreements
Distribution & agency and availability agreements For personal use only Key terms • Lynas to make available a minimum of 8,500t (+/- 500t) per annum of Rare Earths products for distribution in Japan • Sojitz will be appointed the sole distributor and sole agent of Lynas in Japan, subject to completi
Slide 6: Financing agreements with Sojitz
Financing agreements with Sojitz For personal use only Key terms US$225 million (A$225 million) Loan Facility secured over the assets of the Lynas group • Conditional upon signing an underwriting agreement for an Institutional Placement and SPP to raise total gross proceeds of approximately A$75 mil
Slide 7: Conditions precedent
Conditions precedent For personal use only US$225 million (A$225 million) secured Loan Facility supplied by the SPC Condition1 Status Documents: Sojitz/JOGMEC have received all of the documents or information listed as conditions precedent in Expected to be the facility documents in form and substan
Slide 8: Conditions precedent (cont'd)
Conditions precedent (cont’d) For personal use only US$25 million (A$25 million) subscription by the SPC Condition1 Status Event of default: No event of default or potential event of default is subsisting or will result from the drawdown of Expected to be the facility satisfied Representations and w
Slide 9: Institutional Placement
Institutional Placement For personal use only • Fully underwritten Institutional Placement to raise approximately A$55 million at an issue price of A$2.07 per share • The issue price represents a discount of 5.0% to the last closing price on 29 March 2011 and a discount of 2.2% to the 5-day VWAP • A
Slide 10: Share Purchase Plan
Share Purchase Plan For personal use only • Underwritten SPP to raise approximately A$20 million • Total funds to be raised under the SPP will be limited to a maximum of A$20 million and if applications are received in excess of this amount, they will be scaled back pro-rata • Eligible shareholders
Slide 11: Use of proceeds from the Institutional Placement and Share Purchase Plan
Use of proceeds from the Institutional Placement and Share Purchase Plan For personal use only Use of proceeds • Funds raised will be made available for additional expenditures that may arise, including, but not limited to: Preliminary work on the Kangankunde Deposit in Malawi, including prelimina
Slide 12: Proceeds from the financing package will primarily fund Phase 2
Proceeds from the financing package will be primarily used to fund Phase 2 of the project1 For personal use only Sources (A$mm) Existing cash balances (as at 31 January 2011, excludes proposed Forge transaction proceeds) $264.42 Proceeds from Loan Facility $225.03 Proceeds from SPC share subscriptio
Slide 13: Pro forma December 2010 balance sheet
Pro forma 31 December 2010 balance sheet For personal use only Assets 31 December 2010 Pro forma 31 December 2010 Pro forma 31 December 2010 (A$mm) after Institutional Placement after Institutional Placement, and Share Purchase Plan Share Purchase Plan and (A$mm) Sojitz Funding (A$mm) Cash and cash
Slide 14: Business update – Phase 1
Business update – Phase 1 For personal use only Lynas is on track for production by the end of 3Q 2011 • Budgeted Phase 1 construction costs are fully funded • The Mount Weld Concentration Plant is completed and is ready for the first feed of ore. Lynas is working on satisfying the final requirement
Slide 15: Budgeted Phase 1 construction costs are fully funded
Budgeted Phase 1 construction costs are fully funded For personal use only TOTAL TO 31/1/11 FUTURE SPEND CONSTRUCTION AND OTHER CAPITAL COSTS A$mm A$mm A$mm Mount Weld Concentration Plant 70.86 56.36 14.50 Lynas Advanced Materials Plant, Malaysia 237.32 91.39 145.93 Engineering and Project Managemen
Slide 16: Six supply contracts and two letters of intent signed
Lynas has signed six supply contracts and two letters of intent in relation to future production For personal use only Rhodia Customer Agreement – 8th Customer Agreement – Supply Contract Supply Contract • Long term contract • >US$200M¹ • Product from Phase I & II • Long term 10 year contract, 7th C
Slide 17: Products set for Phase 1; flexibility in Phase 2
The products are set for Phase 1; Lynas has product flexibility in Phase 2 For personal use only ANTICIPATED PHASE 1 ─ 11,000t REO PRODUCTS VOLUMES (tpa) Ce carbonate 2,600 La carbonate 1,350 Ce / La carbonate 4,000 Nd / Pr oxide 2,700 SEG + Heavy Rare Earths 480 PHASE 2 ─ ADDITIONAL 11,000t REO PRO
Slide 18: Estimated capital and operating costs to fund Phase 2
Summary of estimated capital and operating costs to fund Phase 2 of the project For personal use only Construction & other capital costs Total (A$mm) Capex spent to Future capex date (A$mm) (A$mm) Phase 2 plant & equipment for the Concentration Plant $28.0 - $28.0 Phase 2 plant & equipment for the L
Slide 19: Rare Earths: We Touch Them Everyday – Appendix
RARE EARTHS WE TOUCH THEM EVERYDAY – For personal use only APPENDIX NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 20: Appendix A: Key risk factors
Appendix A For personal use only Key risk factors 20 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 21: Key risk factors
Key risk factors For personal use only 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 ris
Slide 22: Key risk factors (cont'd)
Key risk factors (cont’d) For personal use only 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. D
Slide 23: Key risk factors (cont'd)
Key risk factors (cont’d) For personal use only b) Environmental risks Lynas’ activities are subject to extensive laws and regulations controlling not only the mining of and exploration for mineral properties, but also the possible effects of such activities upon the environment and interests of loc
Slide 24: Key risk factors (cont'd)
Key risk factors (cont’d) For personal use only 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 thos
Slide 25: Appendix B: Foreign selling restrictions
Appendix B For personal use only Foreign selling restrictions 25 NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES
Slide 26: Foreign selling restrictions
Foreign selling restrictions For personal use only 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.
Slide 27: Foreign selling restrictions
Foreign selling restrictions For personal use only (c) in no case shall the amount recoverable exceed the price at which the New Shares were offered. Section 138 of the Securities Act (Ontario) provides that no action shall be commenced to enforce these rights more than (a) in the case of any action
Slide 28: Foreign selling restrictions (cont'd)
Foreign selling restrictions (cont’d) For personal use only restricted number of non-qualified investors (cercle restreint d’investisseurs) acting for their own account, as defined in and in accordance with Articles L.411-2-II-2° and D.411-4, D.734-1, D.744-1, D.754-1 and D.764-1 of the French Monet
Slide 29: Foreign selling restrictions (cont'd)
Foreign selling restrictions (cont’d) For personal use only (b) any natural person who is registered as a professional investor with the Oslo Stock Exchange (No. Oslo Børs) and who fulfils two or more of the following: (i) any natural person with an average execution of at least ten transactions in
Slide 30: Foreign selling restrictions (cont'd)
Foreign selling restrictions (cont’d) For personal use only United Kingdom Neither the information in this document nor any other document relating to the offer has been delivered for approval to the Financial Services Authority in the United Kingdom and no prospectus (within the meaning of section
Slide 31: Appendix C: Note on resources and reserves
Appendix C For personal use only Note on resources and reserves 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 Sha