Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — Lynas — Investor Presentation (April 2009)
44 slides from Lynas Rare Earths's investor presentation, April 2009
Slide 1: Investor Presentation April 2009
Investor Presentation April 2009
Slide 2: Disclaimer
Disclaimer ► 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 such restrictions. ►
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 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, candid and transparen
Slide 4: Lynas Corporation is an ASX company with strong institutional support
Lynas Corporation is an ASX 200 company with strong institutional support Listed on the Australian Stock Exchange (LYC) 648 million shares on issue 21 million unlisted options with strike prices between A$0.17 to A$1.27 Major institutional support Goldman Sachs The Capital Group JP Morgan
Slide 5: Rare Earths are a unique group of elements
Rare Earths are a unique group of elements 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 (Tb) Dysprosium (Dy) -
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 Improve Energy Efficiency Environmental Protection Enable Digital Technology through lower consumption through emission control smaller & more powerful Compact fluorescent lights Auto catalytic convert
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 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 wipers and washer jets
Slide 8: Hybrid technology is totally dependent upon Rare Earths
Hybrid technology is totally dependent upon Rare Earths 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 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 Improved performance
Slide 10: Rare Earths are vital for further important energy efficiency applications
Rare Earths are vital for further important energy efficiency applications 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 oil production -10-
Slide 11: The consumer electronics industry use Rare Earths in many applications
The consumer electronics industry use Rare Earths in many applications 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 POLISHING POWDERS GLASS ADDI
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 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% • Catalysts 7% 32,000 Catalysts
Slide 13: A Rare Earths supply structural deficit looms
A Rare Earths supply structural deficit looms ► China supplies 95% of world market Operates at its capacity limit ► No material non-Chinese supply sources available Small and limited production in Russia (3-4,000tpa) Beach sand processed by Indian Rare Earths, subsidiary of Atomic Energy Agenc
Slide 14: The sustainability of Rare Earths supply is becoming more fragile
The sustainability of Rare Earths supply is becoming more fragile 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-product of iron mining
Slide 15: Rare Earths are classified as critical minerals by the US Academy of Science
Rare Earths are classified as critical minerals by the US Academy of Science Critical Metals US Academy of Science conducted a 4 (high) comprehensive study regarding key metals Rhodium to the US Economy: a shortage risk affects the US Society. Impact of Supply Platinum As particular critical followi
Slide 16: The resultant structural deficit will be filled in part by Lynas
The resultant structural deficit will be filled in part by Lynas 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$10.07/kg Supply Rare Earths Price Chart 13.00 Feb 09 15
Slide 17: Lynas Mt Weld will be the 1st non-Chinese fully integrated source of supply
Lynas Mt Weld will be the 1st non-Chinese fully integrated source of supply 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 Containers used to ship concentrate
Slide 18: The Mount Weld Rare Earths Project is on hold due to disruption in planned funding structure
The Mount Weld Rare Earths Project is on hold due to disruption in planned funding structure 1. Project funding plan assumed both equity and debt. The debt was: a. US$105 million senior bank facility with HVB b. US$95 million convertible bond with bond holders, including hedge funds. 2. Certain cond
Slide 19: The current mining operation is within the Central Zone Pit which has 648,000t REO
The current mining operation is within the Central Zone Pit which has 648,000t REO Mt Weld Tenements The Total CLD Sector Mineral Resource (2.5% REO cut-off) Updated in March 2008 Category Tonnes Grade Tonnes (Mt) (%REO) (kt) REO Measured 2.21 14.7 324 Indicated 3.84 11.5 441 Inferred 6.19 6.8 418 T
Slide 20: Mt Weld's Central Zone Pit has a natural advantage in grade and composition
Mt Weld’s Central Zone Pit has a natural advantage in grade and composition Mt Weld US$/kg Baotou Composition Rare Earth Elements Composition 23 Feb 2009 By Weight By Weight Lanthanum Oxide 25.60% 7.50 25.70% Cerium Oxide 45.74% 4.60 51.30% Praseodymium Oxide 5.42% 14.50 5.40% Neodymium Oxide 18.62%
Slide 21: A comparison of Lynas vs. Baotou sales and costs shows Lynas shall be competitive
A comparison of Lynas vs. Baotou sales and costs shows Lynas shall be competitive in the market USD/kg USD/kg 14.00 14.00 FOB Sales The higher value of Mt Weld Rare Earths prices have price Q1 09 ore together with no regulatory fallen to cost of production 12.00 export costs enable Lynas to be 12.00
Slide 22: Classification of Mineral Resources for the Southern Zone within the CLD Sector
Classification of Mineral Resources for the Southern Zone within the CLD Sector 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 Measured 0.13 3.8 5 La
Slide 23: Mt Weld's Central Zone Pit is a relatively small open cast pit, mined on a campaign basis
Mt Weld’s Central Zone Pit is a relatively small open cast pit, mined on a campaign basis 10 – 20% 20 – 30% 30 – 40% + 40% -23-
Slide 24: First Mt Weld Rare Earths mining campaign completed
First Mt Weld Rare Earths mining campaign completed Loss time injury free Ahead of schedule On budget -24-
Slide 25: Future mining campaigns and final pit design of current mine pit
Future mining campaigns and final pit design of current mine pit 4 2 4 1 3 -25-
Slide 26: 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 -26-
Slide 27: 773,000 tonnes of ore stockpiled on site
773,000 tonnes of ore stockpiled on site -27-
Slide 28: Concentration Plant Status at Mt Weld
Concentration Plant Status at Mt Weld ► Engineering Design completed ► All Approvals in place ► Contract Status on-site Bulk earth works Downer EDI Completed Construction contract Abesque Engineering On hold Steam generation RCR Energy Systems On hold Power station Kalgoorlie Power Systems O
Slide 29: Mount Weld Concentration Plant site – Ball Mill foundations
Mount Weld Concentration Plant site – Ball Mill foundations -29-
Slide 30: Mount Weld Concentration Plant site – Flotation Building foundations
Mount Weld Concentration Plant site – Flotation Building foundations -30-
Slide 31: Water Treatment Pond complete
Water Treatment Pond complete -31-
Slide 32: Containers of concentrate shall be trucked to port for shipment to Malaysia
Containers of concentrate shall be trucked to port for shipment to Malaysia ► Transportation of containers to Malaysia via Fremantle -32-
Slide 33: Lynas has secured land for the processing plant in the State of Pahang on the east coast
Lynas has secured land for the processing plant in the State of Pahang on the east coast 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 Area ► Excellent infrastr
Slide 34: Lynas is establishing a sustainable platform for long term operations
Lynas is establishing a sustainable platform for long term operations ► Comprehensive Safety, Health, Environment and Community policies and processes in place ► Multi-million dollar investment, approximately US$35m, in waste gas, waste water and waste solid treatment plant and equipment ► Developin
Slide 35: Malaysian Advanced Material Plant Status
Malaysian Advanced Material Plant Status ► Engineering Design to be completed ► All Approvals in place ► Contract Status on-site Bulk earth works Substantially completed Piling Completed Concreting works On hold Other construction contracts Yet to be let, on hold ► Most major equipment to be
Slide 36: Malaysia site construction: Piling for post treatment workshop
Malaysia site construction: Piling for post treatment workshop -36-
Slide 37: Malaysia site construction: Piling for post treatment workshop
Malaysia site construction: Piling for post treatment workshop -37-
Slide 38: Malaysia site construction: Piling for post treatment workshop
Malaysia site construction: Piling for post treatment workshop -38-
Slide 39: Lynas-constructed stormwater detention pond
Lynas-constructed stormwater detention pond -39-
Slide 40: Building construction has commenced
Building construction has commenced -40-
Slide 41: Six supply agreements have been signed
Six supply agreements have been signed 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 Terbium & Lanthanum f
Slide 42: Operational expenses are dominated by reagent and energy costs
Operational expenses are dominated by reagent and energy costs Cash Cost per tonne of finished REO by expense type and region 70% 66% 60% Current Budget assumes cash 20% costs of USD 5.75 per kilo 50% 2/3 of the costs are generated in 40% Malaysia 30% Reagents account for nearly 50% 21% 42% 20
Slide 43: 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 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 world 2. Reduction of
Slide 44: The Crown Polymetallic resource at Mt Weld is a world scale niobium resource
The Crown Polymetallic resource at Mt Weld is a world scale niobium resource 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