Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — Investor Presentation (September 2009)
39 slides from Lynas Rare Earths's investor presentation, Sep 9, 2009
Slide 1: Investor Presentation September 2009
For personal use only Investor Presentation September 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: 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 Be a global leader in Rare Earths for a sustainable future Values Excellence in safety, health and the environment Learn from our differences and be open to change Operate in an honest,
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) 648 million shares on issue 42 million unlisted options with strike prices between A$0.30 to A$1.28 New proposed shareholding LYC Share Price over the las
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 required to sustain the needs of today's society
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 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: 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 2012 demand % p.a. tonnes Other, 7% Glass Additive, Ceramics, 5% 12% • Glass Additives 1% 14,000 Phosphors, 8% • Catalys
Slide 13: 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 significant non-Chinese supply sources available today Small and limited production in Russia (3-4,000tpa) Beach sand processed by Indian Rare Earths, su
Slide 14: The sustainability of Rare Earths supply is becoming more fragile
The sustainability of Rare Earths supply is becoming more 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 (2% vs 2006) REO is a by-pr
Slide 15: The resultant structural deficit will be filled in part by Lynas
The resultant structural deficit will be filled in part by Lynas For personal use only Price Development Supply – Demand Imbalance (US$/kg) (REO Metric Tonnes) 2006 2012 Based on Mt Weld Composition, FOB China basis Total Demand 108,000 188,000 15.00 175000 14.00 US$9.52/kg Supply Rare Earths Price
Slide 16: Lynas Mt Weld will be the 1st fully integrated new source of supply outside of China
Lynas Mt Weld will be the 1st fully integrated new source of supply outside of China For personal use only Mining - Australia Open pit mining at Mt Weld Contractor mining on a campaign basis Rare Earths Concentration - Australia Concentrator using flotation to be constructed at Mt Weld Conta
Slide 17: The current mining operation is within the Central Zone Pit
The current mining operation is within the Central Zone Pit For personal use only Mt Weld Tenements The Total CLD Sector Mineral Resource (2.5% REO cut-off) March 2008 Category Tonnes Grade Tonnes (Mt) (%REO) (kt) REO Measured 2.21 14.7 324 Indicated 3.84 11.5 441 Inferred 6.19 6.8 418 Total 12.24 9
Slide 18: Mt Weld's Central Zone Pit has a natural advantage in grade and composition
Mt Weld’s Central Zone Pit has a natural advantage in grade and composition For personal use only Mt Weld US$/kg Baotou Composition Rare Earth Elements Composition 24 Aug 2009 By Weight By Weight Lanthanum Oxide 25.50% 5.90 25.70% Cerium Oxide 46.74% 3.80 51.30% Praseodymium Oxide 5.32% 14.50 5.40%
Slide 19: Classification of Mineral Resources for the Southern Zone within the CLD Sector
Classification of Mineral Resources for the Southern Zone within the CLD Sector For personal use only Average REO Distribution of Mineral The Southern Zone Mineral Resource Resources (%) (2.5% REO cut-off) Category Tonnes Grade Tonnes Central Southern Rare Earth Oxide (Mt) (%REO) (kt) REO Zone Zone
Slide 20: 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 -20-
Slide 21: 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 22: Mount Weld Concentration Plant site – Flotation Building foundations
Mount Weld Concentration Plant site – Flotation Building foundations For personal use only -22-
Slide 23: Containers of concentrate shall be trucked to port for shipment to Malaysia
Containers of concentrate shall be trucked to port for shipment to Malaysia For personal use only ► Transportation of containers to Malaysia via Fremantle -23-
Slide 24: 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 25: 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 26: Malaysia site construction: Piling for post treatment workshop
LYNAS ADVANCED Malaysia site construction: Piling for post MATERIALS treatmentPLANT workshop For personal use only -26-
Slide 27: Building construction has commenced
For personal use only Building construction has commenced Lynas-constructed stormwater detention pond -27-
Slide 28: 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 29: 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$9.70/kg. ► The rationale for this price move is that at curre
Slide 30: Operational expenses are dominated by reagent and energy costs
Operational expenses are dominated by reagent and energy costs For personal use only Cash Cost per tonne of finished REO by expense type and region 70% 66% 60% Current Budget assumes cash 20% costs of USD 5.65 per kilo ± 10% 50% 2/3 of the costs are generated in 40% Malaysia 30% Reagents accou
Slide 31: Capital costs for the project, including phase expansion to 21,000t REO production
Capital costs for the project, including phase 2 expansion to 21,000t REO production For personal use only Australian Dollar costs CCY Total Costs Spent post suspension Spend for completion Mt Weld Mining Campaign A$ 20 20 - Mt Weld Concentration Plant A$ 72 24 48 Australian Start Up Costs A$ 28 3 2
Slide 32: 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 33: 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 34: 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 35: 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 36: Lynas – building a stable supply chain for vital raw materials
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 37: The Crown Polymetallic resource at Mt Weld
The Crown Polymetallic resource at Mt Weld 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% 7.96% 7.99% Y2O3 0.1% 0.09% 0.
Slide 38: Lynas signs agreement to acquire CSBP rights within Mt Weld tenements
Lynas signs agreement to acquire CSBP rights within Mt Weld tenements For personal use only Swan Phosphate Deposit at Mt Weld Lynas to acquire apatite rights at Mt Weld previously owned by CSBP Limited (a subsidiary of Wesfarmers Ltd) Lynas already owns other mineral rights within the Mt Weld te
Slide 39: 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
Lynas Rare Earths — Investor Presentation (September 2009) on 6ix