Lynas Rare Earths : Annual Report FY2024

About this update from Lynas Rare Earths Limited

2024 Annual Report Contents FY24 Key Figures and Highlights 1 Chair's Letter 2 CEO Review 4 Our Operations 7 Living our Values 7 Board of Directors 8 Senior Management Team 8 Directors' Report 9 Environmental, Social and Governance Statement 35 Remuneration Report - Audited 35 Directors' Declaration 55 Auditor's Independence Declaration 56 Independent Auditor's Report 57 Financial Statements 63 Consolidated Statement of Profit or Loss and Comprehensive Income 64 Consolidated Statement of Financial Position 65 Consolidated Statement of Changes in Equity 66 Consolidated Statement of Cash Flows 67 Notes to the Financial Statements 68 Mineral Resources and Ore Reserves 108 Additional Information 111 Corporate Directory Back Cover Lynas Rare Earths acknowledges the Traditional Owners of the lands on which we live and work, across Australia. We acknowledge and value Lynas' Aboriginal and Torres Strait Islander employees, partners and communities and pay respect to their Elders past and present. FY24 Key Figures and Highlights $463.3m $523.8 Cash and Short Term Sales Revenue Deposits $84.5m $579.3m Net Profit after Tax Property, Plant & Equipment Capital Spend 1117 10,908 tonnes Employees Total REO production 24% 5,655 tonnes Women Total NdPr production Employees External accreditations maintained Lynas Rare Earths Limited | 2024 Annual Report 1 Chair's Letter "Lynas is proud of our position as an ethical and responsible producer of rare earth materials..." Dear Shareholder, I'm pleased to present the Lynas Rare Earths Annual Report for the 2024 financial year. The Company delivered a positive financial performance despite challenging external market conditions. Significant progress was made on key growth initiatives which position the Company to benefit from future market improvements and deliver long term shareholder value. Key FY24 financial outcomes reflected the challenging conditions and included revenue of $463.3m and a Net Profit After Tax (NPAT) of $84.5m. While NdPr production decreased by 8% year on year, due in large part to a 6-week works program at Lynas Malaysia, total costs reduced by 17% year on year. This cost performance demonstrates the Company's strong financial discipline and steadfast focus on delivering process efficiencies and improved recoveries across all operations. During the year, the average China domestic price of NdPr (VAT excluded) decreased from US$60.4/kg in June 2023 to US$44.0/kg in June 2024. There has been some positive movements in the NdPr market price since May 2024, however, prices are likely to remain volatile until the Chinese economy improves. Significantly for Lynas, the variation of the Malaysian operating licence announced in October 2023 has enabled the continuation of cracking and leaching in Malaysia and provided confidence for further investment in our Malaysian operations. This includes the major works program completed at Lynas Malaysia in the December 2023 quarter and the reconfiguration of a circuit to deliver first production of two Heavy Rare Earth products (Dysprosium and Terbium) in Malaysia in CY2025. In Western Australia, the new Kalgoorlie Rare Earths Processing Facility delivered first production of Mixed Rare Earth Carbonate (MREC) in the June 2024 quarter and the first shipment of MREC was dispatched to Lynas Malaysia for processing. This milestone was the result of excellent collaboration between our Australian and Malaysian teams, including the contribution of a number of our Malaysian team who are working on site in Kalgoorlie. I'm pleased to report that the first MREC from Kalgoorlie has been successfully processed at our Malaysian facility. At Mt Weld, key achievements including the successful completion of the exploration drilling program, the commencement of a new mining program and the completion of construction for Stage 1 (Concentrate Dewatering) of the Mt Weld Expansion project. 2 www.LynasRareEarths.com On 5 August 2024, Lynas released the 2024 Mt Weld Mineral Resource and Ore Reserve Update which included a 92% increase in Mineral Resources 1 and a 63% increase in Mt Weld Ore Reserves, 2 a 93% increase in contained Dy and a significant increase in contained Heavy Rare Earth mineralisation. We are committed to a program to reduce Greenhouse Gas (GHG) emissions and on 22 July 2024, Lynas signed contracts with Zenith Energy for the supply of power from a gas-firmed hybrid renewable power station at Mt Weld. Early works for the new power station commenced in FY24 and, once fully operational, the 75MW hybrid power station is forecast to reduce GHG emissions by approximately 60,000t CO 2 -equivalent per year when compared to a diesel-only power station of equivalent size. In August 2024, Lynas signed an approx. US$258m follow on contract with the United States (U.S.) Department of Defense (DoD) for the construction of a U.S. Heavy Rare Earths processing facility. Detailed engineering, procurement and approvals activities continued for the planned U.S. facility during the year. Progress on key growth initiatives in FY24 demonstrates the Company's ongoing commitment to diversifying its industrial footprint, increasing production capacity, and investing in the world class Mt Weld resource. Lynas is proud of our position as an ethical and responsible producer of rare earth materials and we are committed to reporting transparently on the material issues for our business. Our annual update on environmental, social and governance (ESG) initiatives and performance is available in the 2024 ESG Report on our website at LynasRareEarths.com. On behalf of the Board, I would like to thank Amanda Lacaze and the executive team for their leadership this year and extend that thanks to the entire Lynas team for their contributions to Lynas' success in 2024. The Board would also like to thank you, our shareholders, for your continued support. We look forward to updating you on our progress in the year ahead. John Humphrey Chair Mineral Resource cut-off grade of 2.5% TREO applied Reserves cutoff of 2.8% TREO compared to 4.0% TREO used for 2018 Reserves Lynas Rare Earths Limited | 2024 Annual Report 3 CEO Review "These works have also enabled the reconfiguration of an existing Solvent Extraction (SX) circuit to produce two Heavy Rare Earth products (Dysprosium and Terbium) in Malaysia for the first time." The 2024 financial year was both an exciting and challenging year for Lynas Rare Earths. In FY24, Lynas delivered positive financial performance and maintained a strong balance sheet. During the year, we also met a number of major milestones associated with our growth plan. Achievements in the financial year included the variation to the Malaysian operating licence to enable the continuation of cracking and leaching in Malaysia and first production from our new Kalgoorlie Rare Earths Processing Facility. The construction and commissioning of such a large facility in just over two years from receipt of full construction approvals is a credit to the skills and perseverance of our Kalgoorlie team and the support received from our Malaysian experts. Whilst the 2024 financial outcomes were lower than the prior year when prices were much more favourable, they reflect our continuing focus on capturing cost efficiencies across the business. Lynas has over a decade of experience as a supplier of separated rare earths and this means we are well prepared to weather price volatility. Investing for the future Lynas is an integrated rare earths producer and in FY24, $579.3m was invested in capital and mine development projects, primarily related to the new Kalgoorlie Rare Earths Processing Facility, the Mt Weld Expansion project, and capacity and efficiency projects at Lynas Malaysia. The foundation of Lynas' ongoing success and financial sustainability is the high grade, long life Mt Weld ore body and progress at Mt Weld this year has been exciting. This has included the completion of the exploration drilling program, the completion of Stage 1 construction of the Mt Weld Expansion project, and the signing of a new 5-year mining contract with Carey Group. The exploration drilling program informed the 2024 Mt Weld Mineral Resource and Ore Reserve Update 1 which was released on 5 August 2024 and included a 92% increase in Mineral Resources 2 and a 63% increase in Mt Weld Ore Reserves, 3 a 93% increase in contained Dy and a significant increase in contained Heavy Rare Earth mineralisation. The Mt Weld capacity expansion project progressed well during the year. Stage 1 (Concentrate Dewatering) construction was completed and commissioning commenced in the June 2024 quarter, while construction of Stage 2 (balance of plant) continues. Refer to Appendix A Mineral Resource cut-off grade of 2.5% TREO applied Reserves cutoff of 2.8% TREO compared to 4.0% TREO used for 2018 Reserves 4 www.LynasRareEarths.com In Malaysia, the variation to the operating licence has provided a platform for sustainable operations and we are progressing our investment program accordingly. During the year, our largest program of works in over a decade was successfully and safely completed in December 2023. The works enable a progressive uplift to separation capacity of approximately 10,500 tonnes p.a. for the NdPr family (NdPr, Nd, Pr), in line with our previously announced Lynas 2025 goals. These works have also enabled the reconfiguration of an existing Solvent Extraction (SX) circuit to produce two Heavy Rare Earth products (Dysprosium and Terbium) in Malaysia for the first time. First production is expected in CY2025. In Kalgoorlie, following final commissioning activities, production of Mixed Rare Earth Carbonate (MREC) commenced in the June 2024 quarter and the first shipment of MREC was dispatched to Lynas Malaysia. The ramp up of the Kalgoorlie Facility continues as planned, and is being managed to align with increased production capacity at Mt Weld and Lynas Malaysia and with market demand. In the U.S., Lynas signed a follow on contract with the United States (U.S.) Department of Defense (DoD) for the construction of the Heavy Rare Earths component of the Lynas U.S. Rare Earths Processing Facility. Detailed engineering, procurement and approvals activities continued for the planned U.S. Facility in FY24. During the year, $579.3m was invested in capital and mine development projects. Notwithstanding this heavy capital investment program in FY24, we ended the period with a robust cash balance of $523.8m. Long dated debt reduced to US$130m, preserving a strong Balance Sheet despite the low market prices through FY24. Capital expenditure is expected to be approximately $400-$500 million in FY25 including sustaining capital, mining activities and major growth projects. Lynas Rare Earths Limited | 2024 Annual Report 5 Demonstrating resilience through market cycles I am pleased to report revenue of $463.3m and a Net Profit After Tax (NPAT) of $84.5m for the 2024 financial year. Whilst NdPr production decreased by 8%, in a year when we undertook a major works program at Lynas Malaysia, total costs reduced by 17% compared to FY23. Initiatives to improve the flow sheet at each stage and deliver better recoveries were at the heart of the cost improvements achieved in FY24, together with a continued focus on optimising procurement and operational efficiency. During the year production decisions reflected the muted market environment. In FY24, NdPr production was 5,655 tonnes (down from 6,142 tonnes in FY23) and total REO production was 10,908 tonnes. This included the six week temporary shutdown of Lynas Malaysia in the December 2023 quarter whilst major works to support the capacity expansion were completed. The average China domestic price of NdPr (VAT excluded) decreased from US$60.4/kg in June 2023 to US$44.0/kg in June 2024. FY24 was the most challenging pricing environment for Rare Earths for several years. Pleasingly, there have been positive movements in the NdPr market price since May 2024, and we continue to focus on fulfilling contracted customer requirements and maintaining our strategy of not selling into the spot market. Despite the short term effects of low market prices, we continue to see investment and government policy initiatives which will support the development of the Rare Earths market. Responsible production of essential rare earth materials At Lynas, we are committed to reducing Greenhouse Gas (GHG) emissions from operations. During the year we commenced early works for a new hybrid power station at Mt Weld and on 22 July 2024 contracts were signed with Zenith Energy for the supply of power from an approximately 65MW gas-firmed hybrid renewable power station to Lynas' Mt Weld mine and concentration plant. The thermal power station is expected to be completed in the first half of CY2025 and renewables (solar, wind and battery storage) will be installed progressively, with full operation expected in CY2026. The hybrid power station has been designed to deliver up to approximately 70% average annual renewable energy as well as reliable baseload thermal capability. Early works progress in FY24 included construction of the thermal (gas) power station with orders placed for long lead items including wind turbines. In Malaysia, works to install a 0.75MW rooftop solar array also commenced in FY24. Our focus in FY25 Lynas is the only scale producer of separated rare earths outside China, a unique position from which to grow. The 2024 financial year demonstrated Lynas' ability to operate a profitable business through the price cycle. This is the result of strong financial discipline, an unrelenting focus on identifying and capturing cost efficiencies, and a clear focus on key customer requirements. In FY25, the team remains focused on fulfilling key customer needs, maximising internal efficiencies, ensuring we are future fit and delivering excellent value for our shareholders. Our people across Australia and Malaysia achieved many successes and milestones this year and I would like to thank all members of our team for their hard work and contribution to the 2024 financial year. We appreciate the excellent support of our shareholders and are focused on continuing to build value in your Company over the year ahead. Amanda Lacaze Managing Director and Chief Executive Officer 6 Our Operations MALAYSIA AUSTRALIA Lynas Malaysia: Mt Weld, WA: Integrated Rare Tier 1 Rare Earths refinery in Earths deposit, Gebeng, Malaysia. Concentration Plant, Capacity expansion Project Kalgoorlie, WA: New Rare Earths Processing Facility Living our Values UNITED STATES Planned U.S. Rare Earths Processing Facility Care Achievement Expertise Diversity Sustainability We care for and respect We are resilient and We are driven to be the We are a multicultural We are passionate about each other, our committed. We world's best in Rare company. We value and contributing to a communities and the overcome challenges to Earths and to earn the embrace diversity. sustainable future and environment. We make achieve our goals. respect of our green technologies. sure we all go home safe customers. and well. Lynas Rare Earths Limited | 2024 Annual Report 7 BOARD OF DIRECTORS John Humphrey Amanda Lacaze John Beevers Chair Managing Director & CEO Non-Executive Director Philippe Etienne Dr Vanessa Guthrie AO Grant Murdoch Non-Executive Director Non-Executive Director Non-Executive Director SENIOR MANAGEMENT TEAM Amanda Lacaze Mimi Afzan Afza Dato Sri Mashal Daniel Havas Chris Jenney Managing Director Vice President Ahmad Vice President VP Major Projects & CEO People & Culture Vice President Strategy & Investor Malaysia Relations Sarah Leonard Pol Le Roux Jennifer Parker Gaudenz General Counsel & Chief Operating Vice President Sturzenegger Company Secretary Officer Corporate Affairs Chief Financial Officer 8 www.LynasRareEarths.com

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