Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — Lynas — Investor Presentation (February 2007)
30 slides from Lynas Rare Earths's investor presentation, Feb 15, 2007
Slide 1: Investor Presentation February 2007
Investor Presentation February 2007 5 CORPORATION LTD
Slide 2: Disclaimer
Disclaimer pe The information contained in this presentation has been prepared using the information available to Lynas Corporation Limited (Lynas) at the time of preparation of the presentation. » For further information about Lynas, you can obtain a copy of all recent ASX announcements made by Lyn
Slide 3: Lynas has a clear vision and strong values
Lynas has a clear vision and strong values Values Strive for excellence in safety, health and the environment Value our differences and be open to change Operate in an honest, candid and transparent manner Deliver quality products, processes and services Always respect and contribute to the communit
Slide 4: Lynas is an Australian listed company
Lynas is an Australian listed company » Australian » Mount Weld Rare Earths resource in Western Australia » Mount Weld Polymetailic resource including Nb, Ta, Ti, Zr, & Rare Earths » Listed on the Australian Stock Exchange (LYC) « Shares on issue 397,290,506 * Options outstanding 44.7M with strike p
Slide 5: Rare Earths are vital for three important developments in our society
Rare Earths are vital for three important developments in our society Greenhouse Gas Digital Technology Energy Conservation Reduction in car exhaust | Enabling miniaturisation | Energy efficient products * Catalytic converter * Rare Earth magnets * Compact fluorescent lights ¢ Hybrid vehicles + Flat
Slide 6: Rare Earths have many applications in the automotive industry
Rare Earths have many applications in the automotive industry . UV cut glass Glass and Mirrors « Cerium polishing powder e Cerium Diesel Fuel Additive « Cerium HYBRID electric motor + Lanthanum and generator e Neodymium e Praseodymiurn e Dysprosium e Terbium HYBRID NIMH battery e Lanthanum 25+ Elect
Slide 7: Electronics is also a key industry for Rare Earths
... Electronics is also a key industry for Rare Earths Screen * Eu, To phosphors Hard Disk Drive/CD/DVD ~ CRT & PDP e Nd magnet in spindle ~ Backlight for LCD e Ce glass polish e« Nd magnet in voice coll motor Optical Lenses e La glass additive « Ce glass polish Speakers a « Nd magnets in headphones
Slide 8: The global chemical companies who purchase Rare Earths include
The global chemical companies who purchase Rare Earths include: Panasonic § hee for Hihe SHOWA DENKG osram @ ShicZt in=tsu PHILIPS _ HOYA ° TOSHIBA AGE AI MICHEA ENGELHARD MESS] Lynas Jolson Matthey ENVIRONMENTAL CATALYSTS AND TECHNOLOGIES A
Slide 9: Supply - demand imbalance suggest the price increases will continue
Supply - demand imbalance suggest the price increases will continue over the next few years Rare Earths market history and independent forecast 2 (US$/kg) (REO Metric Tonnes) g US$8.95/kg g 10.00 7 ~ [2-Feb-07 r 175000 £ 900> * Tech Crash / - 450000 Oo g00-+ + Substantial inventories 2) 9 Oo 700+ |
Slide 10: Demand is growing over 10% p.a. from both existing and new applications
Demand is growing over 10% p.a. from both existing and new applications Demand » Existing applications are driving sustained growth of the 95,000t Rare Earths global market « Neo magnets 13% p.a. to 2010 « NiMH batteries 30% p.a. to 2010 « Catalysts (automotive and FCC) 4% p.a. to 2010 » Phosphors 1
Slide 11: Where do Rare Earths come from?
Where do Rare Earths come from? » Whilst Rare Earths are relatively abundant in the earth’s crust, they are rarely present in economic concentrations » They are never found as free metals but as a ‘cocktail’ of the Rare Earths elements, which need separating for commercial use » China currently supp
Slide 12: Supply is undergoing a structural change due to environmental and regulatory issues
Supply is undergoing a structural change due to environmental and regulatory issues Supply » China continues to dominate the world’s supply of Rare Earths (~95%) » Chinese Government announced a mining production quota of 76,000 tpa » Chinese Government enforcing their environmental regulations caus
Slide 13: Supply - demand imbalance for elements used in magnets shows potential for price increases
Supply - demand imbalance for elements used in magnets shows potential for price increases Neodymium and Praseodymium Oxide price movement (US$/kg) 255 20 - 2 164 = 104 Rare Earths Price FOB China basis Lynas —e— Neodymium ~~@~— Praseodymium —o— Mt Weld Pr & Nd Value A 13.
Slide 14: The speciality Rare Earths are lagging Nickel and Zinc price movements
The speciality Rare Earths are lagging Nickel and Zinc price movements Comparison of Ni, Zn and Nd/Pr Oxide price movements (US$/tonne) (US$/tonne) 35,000 5,000 30,000 pop 4500 / + 4,000 25,000 a + 3,500 20,000 at 3,000 yy fo + 2,500 15,000 P "” + 2,000 10,000 + 1,500 + 1,000 5,000 +++ + o_o" 500 By
Slide 15: Recoverable value of Mt Weld Rare Earths is A$5.4B
Recoverable value of Mt Weld Rare Earths is A$5.4B * * : Rare Earths Oxide price: US$8,090/t, AUD/USD = 0.75
Slide 16: Mt Weld is geologically unique
Mt Weld is geologically unique COORS: SECTOR CLORARE | mt - EARTHS DEPOSIT _ ee . : _ oe . : : : : 2 ss ter binpreneival ANCHOR SECTOR MT WELO Grade Comrours ‘iteraane 8 ein 28 10-20% pd 20-30% 30-40% Qp+40%
Slide 17: Mt Weld's grade and composition are a natural advantage
Mt Weld’s grade and composition are a natural advantage Mt Weld Composition vs Baotou Composition By Weight By Weight Lanthanum oxide 25504 2o10n Cerium oxide 46.74% 51,30% Paseodymium oxide 5.32% 6.40% Neodymium oxide 12.50% 15.10% Samarium oxide 22h 102 Dysprosium oxide 0.12% 006% Europium oxide 0
Slide 18: Mt Weld mining contract to be let by April with ground breaking in May
Mt Weld mining contract to be let by April with ground breaking in May 2B SECTOR Samet ‘ war ; \ OE Ci wen : : ‘moon 4 ] CLD RARE : i : y WLCOMERNG "| PROJECT EARTHS DEPOSIT
Slide 19: Our strategy is to develop a transparent, environmentally sound, integrated supply chain
Our strategy is to develop a transparent, environmentally sound, integrated supply chain Australia Malaysia Final Separation Ch Stage 2 ry o 121,000 tpa of ore, 14.8% REO Integrated processing Solvent extraction Open Cut Mining plant to float, crack separation plants and separate REO Batch mining Pr
Slide 20: The Malaysian plant will also separate 5,000 tpa REO to individual oxides initially
The Malaysian plant will also separate 5,000 tp REO to individual oxides initially » Lynas will separate approximately 5,000 tpa REO in Malaysia, and is likely to expand this separation capacity shortly after commencement of production » The engineering for the separation capacity is being fast trac
Slide 21: Simplified flowsheet of Lynas' proposed processing plant
Simplified flowsheet of Lynas’ proposed processing plant RARE EARTHS ORE ‘1OM’ IRON OXIDE Raw Water MATERIAL RARE EARTHS CONCENTRATE 4 CRACKING ieey Neutralised Gas to Atmosphere : 0 Leach-Purification Solids 2) Waste Water 7) Spent Water sally Waste Solids Rare Earths finished products
Slide 22: Malaysian environmental and project approvals are underway
Malaysian environmental and project approvals are underway a ee y oe a ae Lo es a ee. : i in NO : ee / Te LC ee Tes i eae: ss ail Lynas ‘ist
Slide 23: Why Malaysia is an ideal location for the processing plant
Why Malaysia is an ideal location for the processing plant Lynas Granting of “strategic pioneer status” in Malaysia, with a related 10 year tax free period Excellent infrastructure at Teluk Kalong Industrial Estate « Flat industrial land available at reasonable rates # Close to deep water all weathe
Slide 24: Commissioning of the plant in Malaysia is planned for H2
Commissioning of the plant in Malaysia is planned for H2 2008 > MIDA approval expected this quarter « Strategic Pioneer Status with associated 10 year tax break Ranhill WorleyParsons appointed EPCM contractor # Offices in Sydney, Beijing, Kuala Lurnpur and Kerteh Engineering design underway » Review
Slide 25: Lynas has signed a Heads of Agreement with Rhodia
Lynas has signed a Heads of Agreement with Rhodia The Rhodia Heads of Agreement goes beyond a standard supply agreement » Rhodia are a major French chemical company with annual sales in excess of US$6.7 billion. The Electronics and Catalysis subsidiary produce high technology patented Rare Earths pr
Slide 26: Estimated Rare Earths project schedule for Malaysian site
Estimated Rare Earths project schedule for Malaysian site, currently being finalised STAGE OF DEVELOPMENT Engineering design Civil works Equipment installation Cammissioning Grade control drilling Mining campaign initial production ~ . ops ° » Ramp-up to 10,500t REO, including wet commissioning, is
Slide 27: Key Rare Earths project capital costs
Key Rare Earths project capital costs >» China based project capital expenditure A$ 65.0M =» Mt Weld mine development capital cost A$ 16.2M =» Processing plant capital cost AS 40.4M = Contingency (15%) A$ 8.4M b 30% - 40% Estimated Malaysian site increase A$ 20 — 26M « Capital Cost review available
Slide 28: Rare Earths summary
Rare Earths summary e A perfect storm has hit the Rare Earths market, with demand growing strongly and supply restrictions in place » Lynas has the only commercially viable deposit outside China, and will be one of the lowest cost producers in the world » The plant in Malaysia brings significant tax
Slide 29: Crown Polymetallic resource
Crown Polymetallic resource _ Indicated Inferred nasarose | ‘patie --- 15 36.2 Crown & 0.037% 0.024% Rare M 14% 1.06% Depo : 1.65% 1.14% 0.32% 0.3% 46.5% 426% 8o% 106% 01% 0.09% 9.94% 113% 58% 3.04% Lepsius > SCOPING STUDY COMPLETED - POSITIVE PROJECT VALUE » FURTHER WORK TO COMMENCE LATER THIS YEAR
Slide 30: Summary
Summary In achieving our Vision we will: » Create a globally unique strategic supplier of advanced materials — underpinned by the cashfiow from our Rare Earths asset » Create sustainable long term earnings with exposure to growth through technology advancement » Create long term shareholder value in