PERTH (miningweekly.com) – Rare earths developer Lynas has confirmed a delay and A$40-million cost blow-out at its Lynas Advanced Materials Plant (Lamp), in Malaysia.

The miner has now secured some $225-million in financing to cover these costs, as well as working capital costs until cash flow was obtained from the Lamp.

Lynas told shareholders that additional engineering completion requirements and the consequential delays in procurement, as well as the recent monsoon season, were the primary reasons for the Lamp being delayed.

The first feed to kiln was now expected to take place in the second quarter of 2012, subject to regulatory compliance and the issuance of the preoperating licence for the project.

Meanwhile, Lynas reported that it raised some $225-million through a convertible bonds issue. US-based investment firm Mount Kellet Capital Management has subscribed for $50-million of the convertible bonds, with the balance of the bonds being subscribed upon the satisfaction of specific conditions precedent, including the completion of a technical due diligence.

Following the issue of the convertible bonds, Lynas would have sufficient funds to complete the construction and commissioning of Phase 1 of the Lamp, and to provide for working capital needs through to cash flow from sales, in light of the project delay.

“Because of its longer term and cheaper costs, the convertible bonds provide more attractive financing for Lynas than the unutilised working capital facility,” said executive chairperson Nicholas Curtis.

“Moreover, it represents a further strong vote of confidence in our project,” he added.
 

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