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Lynas sets A$425m raising target as profits fall

17th August 2020

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

     

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PERTH (miningweekly.com) – Rare earths miner Lynas on Monday announced a A$425-million equity raise to fund its Lynas 2025 foundation projects, while also reporting a loss in earnings and revenue for the full year ended June.

Lynas has announced that revenue for the full year decreased from the A$363.5-million reported in 2019 to A$305.1-million, reflecting the six-week temporary halt in production as well as weak commodity conditions during the year.

Earnings before interest, taxes, depreciation and amortisation declined from A$100.7-million to A$59.8-million, as total sales volume for the full year declined from 19 154 t rare earth oxide to 14 172 t.

Neodymium-praseodymium (NdPr) production for the full year reached 4 656 t, with 14 562 t of heavy rare earth oxide produced.

“Our company entered the Covid-19 pandemic in robust financial share, as a result of a number of years of prudent capital management. However, our 2020 financial performance has been affected by the Covid-19-related shutdown as well as lower market prices and the temporary production halt in December after we reached the annual concentrate processing limit for calendar year 2019,” said MD and CEO Amanda Lacaze.

“While this was disappointing, we have built a resilient business, and despite the lower market pricing, our performance in quarters not affected by the production halt remained strong. This resilience was also shown in the way our people quickly adapted to new ways of working and new Covid-19 protocols to the health and wellbeing of all staff.”

Lacaze said that the highlight of the 2020 financial year was the renewal of the operating licence in Malaysia for a period for three years, to March 2023, with acceptable conditions.

“The licence renewal provides the foundation for the continued operation of Lynas Malaysia as well as a resolution on the management of our two residue streams. In a further step towards satisfying the Malaysian licence conditions, on August 5 we announced that the Atomic Energy Licensing Board had approved the proposed site for the permanent deposit facility for our residue streams, subject to relevant studies and final approvals.”

Lacaze noted that the company also made substantial progress on key Lynas 2025 projects during the year, including the planned Kalgoorlie rare earth processing facility and plans for a heavy rare earth separation facility.

The Kalgoorlie project, along with the associated upgrades at Lynas Malaysia, would represent A$500-million in capital investments, and could create up to 500 jobs during construction and 100 new ongoing jobs once operational.

“We also progressed our plans to meet our customer’s needs for separated heavy rare earths and announced in April that Lynas has been selected for Phase 1 of the US Department of Defence tender for a heavy rare earth separation plant in the US,” Lacaze said.

Lynas on Monday announced plans for a A$425-million capital raise to fund the Lynas 2025 projects, consisting of a fully underwritten 1-for-7.7 pro-rata accelerated non-renounceable entitlement offer and an institutional placement.

The new shares will be issued at a price of A$2.30 each, with the issue price representing an 11.9% discount to the company’s last closing price.

The institutional placement will consist of 92-million shares, to raise an initial A$211.6-million, while a further 92.9-million new shares will be on offer under the entitlement offer.

“The Lynas 2025 growth vision is an exciting opportunity to transform our business and grow with our key markets. Advanced manufacturing supply chains need rare earths and Covid-19 has brought into sharp focus the need for resilient and diversified supply chains,” Lacaze said.

“Lynas is ideally placed to meet this need as we are a proven and profitable operation and the only significant producer of separated rare earths outside of China.

“By strengthening our balance sheet, we can mitigate global economic uncertainties and continue to progress our foundation project which is the Kalgoorlie rare earth processing facility. This facility provides the opportunity to develop a critical minerals processing hub in the Goldfields. The project has received strong support from the Kalgoorlie-Boulder city council, Western Australian and Australian governments.”

Edited by Creamer Media Reporter

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