PERTH (miningweekly.com) – Rare earths miner Lynas faced a tough quarter in the three months to September, with production and revenue falling compared with the June quarter.

Total rare earth oxide production for the quarter reached 3 500 t, down from the 3 650 t produced in the previous quarter, while neodymium-praseodymium (NdPr) production was down from 1 579 t to 1 045 t.

“We continued to face significant operational challenges including a complete outage of water supply in Malaysia. A catastrophic equipment failure experienced by the local water supplier to our Malaysian facility resulted in approximately 16 days of lost production during the quarter,” said CEO Amanda Lacaze.

“Mitigating strategies included sourcing water from alternative local sources and trucked water. As a result, quarterly production of 1 045 t ready for sale production volume of NdPr and sales revenue of A$163.8-million was achieved.”

Sales revenue for the quarter was down from the A$294.5-million achieved in the June quarter.

“Our Malaysian team continues to work on additional strategies to reduce our reliance on freshwater supply, including options to increase water recycle,” said Lacaze on Thursday.

“Notwithstanding these short-term issues, market demand continues to grow strongly and we have defined a comprehensive growth programme including several major projects.”

Lynas in August announced a A$500-million capacity expansion at its Mt Weld operation, in Western Australia, and Lacaze noted that early progress included recruitment of the project teams and early procurement activities.

“During the quarter our long-term partner and senior lender, Japan Australia Rare Earths (JARE), provided support to the exploration program at Mt Weld via a contribution of $9-million through a subscription for ordinary shares in Lynas. JARE will also provide technical support to the exploration program through the involvement of world-leading geologists and other technical professionals from Japan Oil, Gas and Metals National Corporation.

“Further, JARE has agreed to remove capital management restrictions in the loan facility. Lynas will no longer be subject to capital restrictions in respect of issuing dividends, share buy-backs, capital expenditure or incurring financial liabilities. The removal of the capital management restrictions in the loan facility is an important step in the maturing relationship between Lynas and JARE and will ensure all options can be considered as part of our capital management strategy,” Lacaze said.

The initial A$500-million expansion of Mt Weld would increase production at Mt Weld from its current 7 000 t/y NdPr to 12 000 t/y by increasing the throughput capacity from 300 000 t/y to 1.3-million tonnes a year by 2024, with further uplift plans also in development.

Meanwhile, construction of the new Kalgoorlie rare earths processing facility continues to accelerate, and all equipment procurement has now been completed and major construction packages have been awarded.

Equipment costs had remained in line with budget, however logistics and construction costs had increased since the project commenced, Lacaze said.

“The Kalgoorlie project now includes the additional scope of works to implement the industry-first rare earth carbonate refining process which received co-funding through the Australian Federal government’s Modern Manufacturing Initiative and upgrades to certain equipment and infrastructure to allow for future capacity expansion at Kalgoorlie.

“With these changes, we now forecast a project cost increase of approximately 15% over the initial A$500-million project budget estimate,” she added.

Project costs are now estimated at A$575-million.

Meanwhile, ore mining started at Mt Weld during the quarter as part of Mining Campaign 4-1 and blended ores from this campaign were introduced into the process plant. Mt Weld and Kalgoorlie integration activities also commenced in the quarter and Lynas continued to use a combination of both commercial and charter shipping to transport concentrate product to Malaysia.