Lynas Rare Earths Limited · ASX:LYC
Lynas Rare Earths — Lynas — Investor Presentation (January 2008)
31 slides from Lynas Rare Earths's investor presentation, January 2008
Slide 1: Nicholas Curtis, Executive Chairman, January 2008
Nicholas Curtis Executive Chairman January 2008
Slide 2: Disclaimer
Disclaimer ► 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 recent ASX announcements made by Lynas at
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 We will lead the growth of the global Rare Earths industry by creating a reliable, fully-integrated source of supply from mine through to a diverse set of customers Values Strive for excellence in safety, health
Slide 4: Lynas Corporation is an ASX 200 company with strong institutional support
Lynas Corporation is a ASX 200 company with strong institutional support Listed on the Australian Stock Exchange (LYC) Shares on issue Shares on issue 570,580,403 Options outstanding 24.0M with strike prices between A$0.17 to A$1.27 Major institutional support Goldman Sachs The Capital Group
Slide 5: What are Rare Earths?
What are Rare Earths? A group of metallic elements With unique properties • Lanthanum (La) • Cerium (Ce) • Chemical • Praseodymium (Pr) • Catalytic • Neodymium (Nd) • Electrical • Samarium (Sm) • Magnetic • Europium (Eu) • Metallurgic • Terbium (Tb) • Optical • Dysprosium (Dy) -5-
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 Enable Digital Technology Improve Energy Efficiency Environmental Protection • Flat panel displays • Compact fluorescent lights • Auto catalytic converter • Disk Drives • Automotive vehicles • Diesel addit
Slide 7: The consumer electronics industry use lanthanides in many applications
The consumer electronics industry use lanthanides in many applications HIGH POWER NEO MAGNETS PHOSPHORS, RED GREEN • Disk drives BLUE ¾ Computers • TV and computer screens ¾ Data storage ¾ CRT ¾ Ipods ¾ Plasma ¾ Video recorders ¾ LCD ¾ Gaming consoles ¾ Video cameras • Energy efficient compact effic
Slide 8: Turning to the automotive industry, hybrid technology can only work with Rare Earths
Turning to the automotive industry, hybrid technology can only work with Rare Earths HYBRID electric motor HYBRID NiMH battery and generator • Lanthanum • Neodymium • Cerium • Dysprosium • Terbium -8-
Slide 9: Neo magnets play multiple roles in the automotive industry
Neo magnets play multiple roles in the automotive industry to reduce weight and increase fuel efficiency NEO MAGNETS IN CARS • Electric motor with Neo magnets is half the weight of traditional ferrite motor ¾ Electric seats, windows and mirrors ¾ Sunroof and tail gate ¾ Windscreen wipers and washer
Slide 10: 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 • Rare Earths compound added to to inert gases diesel fuel in the car • Rare Earths enable • Diesel soot trapped in filter ¾ Improved per
Slide 11: Rare Earths are used to increase oil refinery yields
Rare Earths are used to increase oil refinery yields by making a better Fluid Cracking Catalyst (FCC) World Oil Production per Day 100 90 80 7% 70 million barrels 60 50 40 86 80 30 20 10 0 Current Refining Production Losses without LnO 7% reduction in yield equates to no oil from: • Iraq ~ 2 mbbl/d
Slide 12: Demand for Rare Earths is evenly spread by application and most are growing strongly
Demand for Rare Earths is evenly spread by application and most are growing strongly 2006 Demand by Application Growth Forecast by Application Application Growth rate 2012 demand % p.a. tonnes Other, 7% Glass Additive, Ceram ics, 5% 12% • Battery Alloy 17% 43,000 Phosphors, 8% • Magnets 13% 42,000 C
Slide 13: Supply – China dominates the market with over 95% of global supply
Supply – China dominates the market with over 95% of global supply “There is oil in Middle East... there is Rare Earths in China” Deng Xiaoping (1992) Chinese production cannot satisfy growing demand • Current largest mine Baotou is operating at its capacity limit already • Qualities of REO vary qui
Slide 14: Supply-demand imbalance suggests 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 (US$/kg) (REO Metric Tonnes) Based on Mt Weld Composition, FOB China basis US$12.91/kg 15.00 190000 14.00 29 Jan 08 13.00 165000 12.00 RE Supply & Demand 11
Slide 15: REO demand in 2006 and 2012 forecast – Roskill, with Lynas analysis of shortfalls
REO demand in 2006 and 2012 forecast – Roskill, with Lynas analysis of shortfalls 2006 2012 Application Total Total Under/over supply based on natural REO distribution Metal Alloys 17,000 43,000 2012 Magnets 20,500 42,000 Catalysts 21,5000 32,000 Under Supply – Nd - 31% Pr - 29% Polishing 14,000 21,
Slide 16: Key supply contracts have been signed
Key supply contracts have been signed 1st Supply Contract US$90M Long term 5 year contract Cerium, Europium, Terbium & Lanthanum 2nd Supply Contract US$200M Long term 5 year contract Neodymium & Praseodymium 3rd Supply Contract US$20M Long term multiple year contract Product from P
Slide 17: Mt Weld, located in Western Australia, is geologically unique
Mt Weld, located in Western Australia, is geologically unique Plan View of Lynas Mt Weld Tenements ► High grade, mine plan at 15% REO ► Low Thorium, 44ppm ThO2 / 1% REO Cross Section Rare Earths Deposit 10 – 20% 20 – 30% 30 – 40% + 40% -17-
Slide 18: The Mt Weld resource has the highest grade of Rare Earths of any known deposit
The Mt Weld resource has the highest grade of Rare Earths of any known deposit The Central Lanthanide Deposit (4% REO cut-off) Grade Category Tonnes (Mt) (%REO) Tonnes REO Measured 1.2 15.7 186,000 Indicated 5.0 11.8 583,000 Inferred 1.5 9.9 148,000 Total 7.7 12.0 917,000 JORC standard resource esti
Slide 19: Processing steps for Mt Weld Rare Earths
Processing steps for Mt Weld Rare Earths Mining • Open pit mining at Mt Weld • Contractor mining on a campaign basis Rare Earths Concentration • Concentrator using flotation to be constructed at Mt Weld • Containers used to ship concentrate to Malaysia Rare Earths Cracking and Initial Separation Pur
Slide 20: Mt Weld Mine Development
Mt Weld Mine Development A historic milestone was achieved when Downer EDI Mining mobilised to site at Mt Weld Mining fleet has cleared the area Mining commenced in early July Commenced Rare Earths ore stockpiles -20-
Slide 21: Concentrate shall be trucked and railed in containers for shipment to Malaysia
Concentrate shall be trucked and railed in containers for shipment to Malaysia -21-
Slide 22: 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 Satellite Photo of Gebeng Industrial Area Gebeng Industrial Area Kuantan Port -22-
Slide 23: The east coast of Malaysia is an ideal location for the processing plant
The east coast of Malaysia is an ideal location for the processing plant ► Strong Federal, State, and Local Government support. Lynas granted “strategic pioneer status” with 12 year tax free period, 3 year training grant and no stamp duty on land purchase ► Excellent infrastructure in Gebeng Industr
Slide 24: Engineering design for the plant is well underway with Ranhill WorleyParsons
Engineering design for the plant is well underway with Ranhill WorleyParsons ► EPCM contract agreed with Ranhill WorleyParsons Offices in Sydney, Beijing, Kuala Lumpur and East Coast Malaysia ► Engineering well advanced Completed Basic Engineering Design Detailed Design well underway ► Long le
Slide 25: The processing plant scope includes rapid brown-field expansion to 21,000t REO p.a.
The processing plant scope includes rapid brown-field expansion to 21,000t REO p.a. Initial 10,500t REO Sales Lynas will separate approximately Predominantly Sold 10,000 tpa REO in Malaysia, The remaining 500 tpa REO of Partially Sold heavy mixed Rare Earths will be either sold or separated at strat
Slide 26: Key financial aspects of the Rare Earths project
Key financial aspects of the Rare Earths project Cash Outflow before Positive Cash Flow Total Budget Capex and AUDm Costs Jul 07 – Sep 09 Jan O8 to Sep 1st HY FY 08 09 Malaysian Processing Plant 215.0 8.5 206.5 Western Australia Concentrator 40.0 1.2 38.8 Western Australia Mining 30.0 13.7 16.3 Cont
Slide 27: Rare Earths project schedule
Rare Earths project schedule 2007 2008 2009 STAGE OF DEVELOPMENT Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Grade control drilling Mining campaign Engineering design Purchase Order and Equipment Delivery Civil works Equipment Installation Commissioning - Concentrator Commissioning - Malaysia Initial produc
Slide 28: Lynas has acquired additional Rare Earths resources in Malawi, Africa
Lynas has acquired additional Rare Earths resources in Malawi, Africa Key points for Kangankunde (KGK) Fully permitted for operations Inferred Resource of 107,000 tonnes REO at an average grade of 4.24% REO Deposit remains open at depth Extremely low thorium levels for a Rare Earths deposit, 11ppm T
Slide 29: Lynas will commence development of the KGK resource at the start of 2008
Lynas will commence development of the KGK resource at the start of 2008 The Kangankunde Carbonatite Next steps for the Kangankunde RE deposit Establish an environmental management plan Undertake drilling program to provide drill core and test resource extension Validate the concentrate production f
Slide 30: The Crown Polymetallic resource is the next project for Lynas to undertake
The Crown Polymetallic resource is the next project for Lynas to undertake 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
Slide 31: Rare Earths summary
Rare Earths summary ► A perfect storm has hit the Rare Earths market, with demand growing strongly and supply restrictions in place ► Lynas is the alternative global supplier of Rare Earths to China, from a unique resource base and will be one of the lowest cost producers in the world ► The plant in