Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — Lynas — Sydney Resources Round-up 2006
24 slides from Lynas Rare Earths's conference presentation, May 16, 2006
Slide 1: Sydney Resources Round-up
Sydney Resources Round-up 16 May 2006 Presented by Nicholas Curtis Executive Chairman c ORPORATION LTD
Slide 2: p> The information contained in this presentation has been prepared
p> 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 Lynas at www.
Slide 3: Lynas is an Australian listed company
Lynas is an Australian listed company » Australian « Head Office in Sydney « Mount Weld Rare Earths resource in Western Australia « Mount Weld Polymetallic resource including Nb, Ta, Ti, Zr, & Rare Earths > Listed on the Australian Stock Exchange (LYC) « Current shares on issue 245,558,258 « Options
Slide 4: Lynas has a clear vision and strong values
Lynas has a clear vision and strong values je through to customer. 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 resp
Slide 5: Rare Earths are vital for three important developments in our society
Rare Earths are vital for three important developments in our society.... Green House Gas Reduction Digital Technology Energy Conservation ung Reduction in car exhaust || Enabling miniaturisation | Energy efficient products ¢ Catalytic converter * Rare Earth magnets ¢ Compact fluorescent lights ¢ Hy
Slide 6: Rare Earths have many applications in the automotive industry
Rare Earths have many applications in the automotive industry Toyota Prius Hybrid Vehicte poraaad roe eve . UV cut ee Glass and Mirrors glass Car body primers po ish ing powder * Cerium and anti-corrosive » Cerium “ coatings e Yttrium Diesel Fuel Engine Additive Sensors « Cerium ° YSZ ¢ Lanthanum Ca
Slide 7: Electronics is also a key industry for Rare Earths
... Electronics is also a key industry for Rare Earths In iz ireuit « Ultra high purity Ce polishes silicon Speakers wafer » Nd magnet in PC and Notebook speakers NEC Notebook powered by integrated Fuet Cell « Nd magnets in headphones of Ipod SCEBGD and MP3 Players *« Eu, Th phosphors ~ CRT & PDP .
Slide 8: A 'perfect storm' is brewing in the Rare Earths market
A ‘perfect storm’ is brewing in the Rare Earths market Demand a Existing applications are driving sustained growth in Rare Earths demand of 5% - 10% p.a. of 95,000t global market » New applications such as the hybrid vehicle could increase this dramatically; a conservative forecast for hybrid sales
Slide 9: A 'perfect storm' is brewing in the Rare Earths market: Prices
A ‘perfect storm’ is brewing in the Rare Earths market Prices pm Rare Earths prices have begun to increase over the last twelve months » The Mt Weid basket of Rare Earths increased from US$4.11/kg in May 2005 to US$5.32/kg in May 2006 » Potential upside is high as demand for Rare Earths tends to be
Slide 10: Supply - demand imbalance suggest price increases over the next few years
Supply - demand imbalance suggest price increases will occur over the next few years Rare Earths market history and independent forecast {REO Metric (USS/kg) Tonnes) @ 10.00 7 - 175000 et es 9.004 & : + 450000 GS B00+ « Tech Crash ; x ® 8 zoo L « Substantial inventories | 425000 op = 5 600} S a 2 *
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 concentration » They are never found as free metals but as a ‘cocktail’ of Rare Earths elements that need separating for commercial use » China currently supplies ap
Slide 12: Rare Earths deposits: grade and resource comparison
INSITU RECOVERABLE GRADE RESOURCE RESOURCE DEPOSIT (Gite), (tREQ) (t REO) NOTE Baiyun Obo, Baotou PRC 5% 17,000,000 1,700,000 Govt pressure to reduce mine rate Mt Weld Rare Earths Project 12% 917,000 431,500* 4% cutoff Mt Pass, Molycorp USA 89% 1,070,000 Mineclosed _ Distribution Is low value, 5% cu
Slide 13: Processing site secured, environmental and project approvals and business licence granted
Processing site secured, environmental and project approvals and business licence granted a import to Qingdao " iavereron 00 arta MF VEEL acon sone] PROJECT. ae epee, to Git:
Slide 14: Why China?
Why China? » Low capital and operating costs » High skills within the Rare Earths Industry » Existing separation capacity » China consumes 50% of global demand Lynas “44.
Slide 15: Lynas has signed a Heads of Agreement with Rhodia
Lynas has signed a Heads of Agreement with Rhodia, a significant consumer of Rare Earths » Rhodia are a major French chemical company with annual sales in excess of US$6.7 billion. » Lynas secures Rhodia as an anchor customer, supplying a significant portion of Rhodia’s Rare Earths requirement > Rho
Slide 16: Our strategy is to develop a transparent, environmentally sound, integrated supply chain
Our strategy is to develop a transparent, environmentally sound, integrated supply chain The Upstream Project Downstream Market o Diverse customer base for 10,500 tpa REO Qhodia Integrated processing Solvent extraction Lanthanum Open Cut Mining plant to float, crack separation plant “="=="» Praseody
Slide 17: Project funding and detailed design are the next steps to proceed to construction
Project funding and detailed design are the next steps to proceed to construction Rare Earths Project Next Steps » Obtain project finance « Behre Dolbear completed a favourable preliminary independent review « Introduction of RAB Capital, a London based institution, to the register # AIM listing sch
Slide 18: Rare Earths project expected development schedule
Rare Earths project expected development schedule Engineering design Civil works Equipment installation Commissioning Grade control drilling Mining campaign Initial production » Ramp-up to 10,500t REO, including wet commissioning, is expected to take 12 months Lynas as 18.
Slide 19: Key Rare Earths BFS financials
Key Rare Earths BFS financials > p > > > Upstream Project capital expenditure Mt Weld mine development capital cost Processing plant capital cost Contingency (15%) Corporate refinancing costs Ashton outstanding contingent debt Provision for repayment of convertible note AS AS AS AS AS Finance and co
Slide 20: Profit drivers
Profit drivers Operating Costs Revenue 10,500 US$3.50/kg REO Current US$5.32/kg REO 15,000 US$3.30/kg REO Q1 2006 US$5.07/kg REO The abovementioned prices are for ‘standard’ 99% purity of individual elements and for the generic composite of Rare Earths equivaient to the Rare Earths distribution at M
Slide 21: Crown Polymetallic resource
Crown Polymetallic resource | waease Is. Indicated inferred 16 36.2 0.037 0.024 4 14 1.06 1.65 4A be By | My onl BART IO sp Sons | es sector - —_ Ge ao eee SECTOR 0.32 0.3 465 426 89 796 0.1 0.09 7 9.94 418 : 5.8 3.04 r-""Proposed Rare Earths Mia ie acebovinin Rare metal mineral resources for ore bl
Slide 22: Status of Polymetallic Project
Status of Polymetallic Project Revised Engineering Scoping Study Complete » Lynas conducted a scoping study which assessed opex and capex in conjunction with a highly respected Chinese non-ferrous metals research institute » The majority of the ore lies between 30m and 60m in depth, suitable for ope
Slide 23: Scoping study financial model outcomes
Scoping study financial model outcomes » Mining Mt Weld — 1M tpa (over 35 year mine life) » Resource 38M t (Crown — Coors sectors only) » Process concept by Lynas and a Chinese research institute » Processing in People’s Republic of China » CAPEX USD 434M Directors advise that the scoping » OPEX USD
Slide 24: In summary
In summary » Lynas is well positioned to benefit from the perfect storm brewing in the Rare Earths industry » The Rare Earths market is global and growing rapidly » The environmental and capital constraints are starting to restrict the supply situation in China » Lynas has the only commercially viab