Lynas Rare Earths Limited

Ladies and gentlemen, thank you for standing by and welcome to the Linus quarterly results briefing conference call. At this time, all participants are in listen early mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one on your telephone. Please be advised that today's conference is being recorded and I'd like to hand the call over to Linus. Thank you. Please go ahead.

Good morning and welcome to the Linus Corporation briefing for the quarter ending 30 June 2020. Amanda LaCaze, CEO and Managing Director of Linus, will be presenting the update today. And she is joined by Gabrielle Sturzenegger, CFO, Andrew Arnold, General Counsel and Company Secretary, and Paul Leroux, Vice President of Sales and Marketing. I'll now hand over to Amanda LaCaze. Please go ahead, Amanda.

Good morning, everybody. Welcome from the heavy industrial zone at Rose Bay in Sydney. Up until about five minutes ago, next door they were jackhammering tiles, but lovely, lovely cooperative workers who said they'd taken early lunch so that I could do this call without having the background noise. As always, I will assume that you have read the report and I will make a few opening comments and then open up for questions. So like just about every other business in the world, the June quarter was a challenging quarter for Linus. For us, it marked the first time that we had negative operating cash flows since the end of 2014. And that's quite heartbreaking for many of us who have been involved in the Linus journey over those years. But as always, the health and safety of our people and communities is our number one priority. We are very fortunate that we are operating in two jurisdictions where the performance with respect to the pandemic on a global scale has been really excellent. Both Australia and Malaysia have recorded very low fatalities from the COVID-19 pandemic and the responses have generally been very positive. In Malaysia, we are particularly alert to compliance with government regulations which certainly have assisted in keeping our people and our communities safe. So, yes, it was sad to see that we had a negative cash outcome. But on the positive side for the quarter, the first thing, clearly, we implemented the COVID-19 protocols early and with good effect. and that is at both sites. We've included previously some of the pictures of the way that we're managing this. Certainly we're managing with lower loads. We only operate our charters out to site here in Australia at 50%. We've reduced to 50% our buses out to site as well. Our people in the camp have been absolutely compliant with all regulations. We've stayed clear of the Indigenous community whose health is absolutely a priority for us, including the way that we have managed those on our workforce who are Indigenous when they return to community. In Malaysia, similarly, we have temperature checking on site. We have physical distancing at all times. We've taken a lot of our meetings outside rather than inside to facilitate improved outcomes. Also on the positive side, I'm confident that we have managed the extended shutdown well. And as we've identified in the report, the shutdown completely, the temporary shutdown for COVID, numbered 44 days. Of course, once we restarted operations, it can take, well, for some elements, it takes almost three weeks to get from the front end to the back end of the plant, but certainly it takes a few days before we had material flowing through the system through to finished product. But during that time, we were able to avoid many costs within the business, including our most significant inputs. And of course, as we look at this quarter's results where we're reporting cash outcome today, We do have cash costs which are related to March production numbers where we've paid those invoices during April or May. During the time, we determined very early on that we would use this time wisely. We've diverted people to productive activities. We've completed projects that we would have otherwise had to contract out and we've been able to use our own people to complete those improvements and development projects and we've used the time to properly revisit all of our operating and cost parameters and within the context of expecting that we will be running at lower than Linus' next rates for an extended time. we really have looked at all of those operating and cost parameters to ensure that we are capturing all opportunities. We started up in good order and we are running about 75% of our plants, so just over two kilns out of four, three SX5 trains, and depending upon product mix, 67 of our tunnel furnaces. and we are producing consistently within the 70% to 75% production range. During the quarter, also on a very positive note, the Linus 2025 project teams continue to make very solid progress, including, as we announced last week, we've placed our first order for our longest lead time item related to the Linus Kalgoorlie project. So just a few words in terms of outlook, as we've indicated. The outlook in terms of both demand and price is of course uncertain because we live in uncertain times, but feedback from our customers indicates that they expect some improvement in the second half. And I think as most of you know, we are primarily exposed to the automotive industry and whilst the automotive industry in total is significantly down on what it was pre-COVID, electric and hybrid vehicles are holding very well and of course they are primary engines, no pun intended, for our growth. We can operate efficiently at 75%, we can capture most volume cost efficiencies at 75% and we are operating at that 70 to 75% level. And of course, everybody is always very interested and the continued governmental focus is helpful for our business. However, we would make the point, as we have made with many governments, but ultimately it does need to be matched by customer behaviour. And our view would be that the COVID-19 pandemic has been a stark reminder to many that outsourcing all of the manufacturing to other jurisdictions may not always be a good idea. We remain very excited about our progress with Linus 2025. The teams there are actually having a pretty good time. So with those comments, I'm happy to open up for questions.

Ladies and gentlemen, we'll now begin the question and answer session. If you wish to ask a question, please press star 1 on your telephone and wait for your name to be announced. If you wish to cancel your request, please press the pound and ask key. Once again, it is star 1 to ask a question. Thank you. Our next telephone question is from Dylan Kelly from OID Minute. Dylan, please ask your question.

Yes, good morning, Amanda. A few questions for me. Just firstly on production and the limitations here in Malaysia about increasing them beyond, say, that 70%, 75% level. Could you just walk us through what are the constraints? Is it, you know, your concentrate import limit for this calendar year, is that going to come into effect? Is it demand-driven or is this purely an operational constraint in terms of the amount of people you can have in the control room and operating the various pieces of kit that you've got?

Thanks, Dylan. This is a demand-driven decision.

So you put that statistic in the release saying, what, 1,000 kilos, was it? Import restraint from a slight decrease in automotive demand?

So I think the more... For us, we have the ability to be able to flex our production up and down. And so at present, as we're coming out of all the various shutdowns, at the rate that we're at at present, we can meet customer demand and refill only slightly depleted supply chains. As the market comes back, we have the ability to bring back production and even this year, this calendar year, we wouldn't see that compromising our concentrate import license within Malaysia.

Fair enough. Just a second question regarding geopolitical events. So what is it? Last week we had the Chinese government saying we're going to restrict supply of rare earths to the likes of Lockheed Martin. Just want to get your sense of understanding about what that means in terms of end-use demand. what that means for your business, and in particular, does this accelerate the US political shenanigans from sort of slowing things down?

So I think, Dylan, it's a really very interesting turn of events. Not to use the word that is de rigueur these days, not unprecedented. We have seen... In the past couple of months, the Chinese government prepared to take action in the unrelated areas to deliver diplomatic messages. And here in Australia, that's been particularly relevant with the Bali tariff decision and also with the restricting imports of meat from particular abattoirs. And so the ability to leverage their strong industrial position to deliver political messages has certainly been something which has been evident. This is maybe the first time that I've seen that they've singled out a specific company. And I would expect that this would be something to which all Western users of rare earths are highly alert. So the actual consumption by Lockheed Martin of rare earth materials is a relatively small part of their bill of materials, but that's the same for most uses of rare earths. It forms a relatively small part of their bill of materials. a material element because without it there are many things which will not be able to be produced. We have previously had discussions with various players in this sector and we are aware that some of them have already switched parts of their supply chain to source out of Japan, for example, rather than China. And in terms of its effect on our demand directly, it is probably relatively small. However, in terms of, once again, reminding the market of the risk of a concentrated supply chain, no matter where that concentration is, you know, I don't really want to get into the politics totally, no matter where the concentration is, it carries risks.

Okay, that's clear, Amanda. Just in terms of what this means for your acceleration of the Pentagon discussions, sorry, the DID, it appears that there's an article out a few hours ago from Reuters saying that the DID's resumed funding for the projects. Would that be perhaps an indication of a change in sentiment towards the supply chain risk in the U.S.? ?

We don't comment on speculation by media or third parties and we certainly will, as always, keep the market informed. We continue to work with all stakeholders in the process, but I would say, as I think I've said several times before, governments move at the rate that governments move at. Understood.

So I suppose it's more of a yes or no. Have you received notification yet from the DOD that work will resume?

So we continue to be engaged with the relevant stakeholders in the process and we certainly have a very strong ethos within our company and it is the thing which has led to our success. that we will be successful independently of external influences where we can harness them for the benefit of our company, then we will do so. But we are able, we are progressing with all of the work which is required to be able to stand up a heavy rare earth separation facility and that remains a key part of our strategic plan going forward.

Okay, perfect. I won't labor the point then. I'll pass it along.

Thanks, Amanda. Thank you.

Our next telephone question is from Daniel Morgan from UBS. Please ask your question, Daniel.

Hi, Amanda and team. Just wondering, given all the strategic interest in the rare earth sector, et cetera, just wondering if you are hearing of any movement on magnet-making facilities outside of China and Japan. Is there anyone who's bankrolling, downstream facilities that might enable you to have more customers. Thank you.

Thanks, Daniel. I might let Paul contribute to this as well. At this stage, we're aware of consideration but we're not aware of any firm investment. Paul, did you want to add to that?

Yes, good morning. Actually, there is no plan that is confirmed or moving forward. Just as a reminder, before the crisis, the total consumption of NDPR outside China was around 65% of Linus production capacity. So the challenge was already to develop further capacity downstream of magnet making, motor making. And with the current economic situation, I think there is even more uncertainty in this. So I don't think there is a lot of push for plans for downstream investments outside China at the moment.

So does that mean that the ex-China magnet making capacity I mean, it's going to center in Japan. Is that right?

I don't think that that's necessarily the outcome. As I said, and to Paul's point, nothing which is confirmed at this stage, but given all of the various considerations, there are many who are... Thinking about it, there are a few who may be studying it, but we would not see this as being something which is going to take root in the short term. But I think that as we continue to have the focus on development of non-Chinese supply chains, that the chances that something might come to fruition will continue to improve.

Sure. And you're obviously operating at less than full capacity at the moment, and it sounds like that's discretionarily at the moment due to demand. I'm just wondering how you're going to think about that through the rest of the year. I mean, in the past couple of years, you would have liked to have produced more, but you had a licensing constraint in Malaysia, and you're trying to get that obviously changed. But towards the end of this year, would you look to produce up to your constraints in order to have inventory? I mean, obviously that'll cause you to fund that inventory, but would you look to produce in line with demand? Just wondering how you're thinking about that.

At this stage, we are planning to be prudent in our approach, which means, yes, in line with demand primarily. We are in uncertain times, as everybody knows, and I think that making sure that we take actions which ensure that we continue to preserve balance sheet strength is really important. We will update it as things develop. The good thing for our business is that we do have the ability to flex that production. But at present, we are not considering producing to inventory.

Sure. And my last question just relates to how do I think about the financial implications of that regarding costs? So most businesses have fixed cost leverage, so the costs that we've seen you demonstrate over the past few years when you've been operating at fuller capacity. Just wondering if you could give some guidance on your fixed cost versus variable cost leverage. If you're running at 75%, for example, will that mean you're at 80% or 85% of normal costs? Thank you.

Okay, so at 75%, 75% is actually very close to original nameplate capacity for the Kwantung plant. So we had uplifted that with the Linus Next program, but it is at about the original nameplate. So therefore, as I said, we can capture most of the cost efficiencies, and one of the things that the team did a lot of work on was ensuring that as we restarted, we made sure that all of our reagent use, et cetera, was at a minimum at design rates, if not better. Our expectation is that we will, if you look at our history, you will see that we have consistently improved our cost position, but there have been times where we would say that we were happier with stability, reliability and therefore cost in the plant. And we are very pleased with that at present on a unit cost basis. And we would see that we can optimise most of our costs at that 75% rate. At 50%, it would be very hard. It would be very, very difficult. But at the 75%, we're feeling pretty good because we're only running three quarters of the plant.

OK, thank you very much.

Sorry, so maybe just to give you a bit more context on that, Daniel, just a little more. When you have a look at even our results in the last quarter, you will be able to see that we've been able to avoid most of the big costs in the business. So when we talk about our fixed costs, say, for example, labour, we're not faced with the same sort of overhead in terms of labour that, for example, you know, other businesses are. So, you know, they are, yes, they're variable costs, which was not your question, but, you know, the big contributors to our cost are reagents, energy, other utilities, and we are able to avoid those on a volume basis.

Awesome. Thank you very much for the call.

Thank you.

Our next telephone question is from Reg Spencer from Crown Accord. Please ask your question, Reg.

Thanks. Good morning, Amanda and team. I was just wondering if you could provide any comments on where your unsold inventory might sit and how that might relate to any plans to ramp up production throughout the back half of the year. Do you need to run at 75% of capacity? Is there any inventory that you can work down? And I guess as part of that question, how that might sit in the context of your comments around improving demand in the second half?

We never carry much inventory reach on NDPR and today we are still not carrying much inventory on NDPR. And really the only inventory, and when you have a look at our sales, of course, in the quarter, They were low. There's a number of things. Of course, low production, but the fact that it was back-ended in the quarter. And of course, there are fewer sailings of boats within the COVID-19 environment, which just means that where we previously would always be able to optimise shipments to the end of the quarter, that right now we've got to be a little bit more choosy about when we book the ships. But we have very limited NDPR inventory, and when I say that I'm talking about less than a couple of hundred tonnes. For our other materials, we also have limited inventory for SEG, but we have implemented strategy on SEG now for I think about four years where we only sell it if it reaches you know sort of selling price that we've determined internally in the first instance and then of course we have lanthanum and cerium stocks on site Probably the biggest challenge for us will be cerium as we move forward. It's used primarily in the largest volume consumption is in catalysts for ICE vehicles, which of course have got some pretty serious demand issues. But our production rates will be primarily driven by NDPR demand and the work that particularly Paul and his technical team are doing on improving our range of lanthanum and cerium materials to include much more specialised products will also improve and that's really about making sure that we are a strong and profitable

rare earths company not just an ndpr company fabulous thanks amanda just on on further on your comments about strengthening demand in the second half and look i know that you guys don't like to publicly comment about what others are doing but how do those does that view on on near-term improvements in demand sit relative to recent news that the chinese may look to or have uh lifted production quotas uh for the second half And how that might impact pricing, do you think?

Sure. So it is, I think as we've always said, it's a relatively small market and it is possible for it to be distorted by supply side decisions. However, our business is still primarily driven by demand side matters. And so we remained very focused on particularly the non-Chinese market and facilitating increased demand in those areas. With respect to what happens with the prices of NDPR, of course that is a key determinant of our success. On the other hand, we understand that at present we are not the price leader in terms of setting the price in the market, so therefore we need to build our own muscle, which is really around cost. And as we've demonstrated, we can continue to run our business even when prices are sitting at very low levels, and even when they're at levels where many in the Chinese industry are not able to be profitable. So we think that we've developed sort of strengths in terms of our cost base, but I've told you guys I think before, Paul and Wayne in particular, but sometimes I participate also at the beginning of every quarter we have a bet on what's going to happen with the NDPR price and I don't think any of us have ever got it right. That's one of the reasons why I'm not going to speculate on it.

Understood. Just lastly, if we go back a couple of years ago, there was some interest due on the JARE facility that was deferred. Can you remind me when you might expect to pay that deferred interest? Or if that gets restructured as part of the wider restructuring of that facility?

under the current facility that is due. Gaudens, remind me, I think it's October this year.

Yes, that's correct. October this year. That's the 2019 related interest, yes.

And does that due date hold? Well, I'm not going to speculate on that. right now, Reg.

Understood. That's great. Thanks very much, guys. I'll pass it on.

Our next telephone question is from Jack Gabb from Bank of America. Please ask your question, Jack.

Thank you and good morning all. Just two quick ones. Firstly, just following your last comment, Amanda, when you said that many in the Chinese industry are not profitable, are you able to put a sort of a percentage on that or the amount of sort of NDPR production that you think isn't profitable? And then secondly, are you still expecting to give us an update on your funding gap or a broader financing update in August?

Thanks. Okay. So to your first question. Northern rare earths is the largest rare earths producer in the world. It's in Inner Mongolia and it has, we believe, by far the best cost position. Linus is the second largest rare earths producer in the world and we believe, based upon the evidence that we have, that we have the second best cost position. and that is partly to do with the jurisdictions in which we operate. For example, Malaysia is an excellent low-cost environment and partly to do with the quality of our resource. As everybody on this call knows, the less material you have to process, the fewer costs you have, and so the high-grade nature of our Mountwell deposit serves us very well. So I wouldn't want to speculate in any more detail on others. And of course, everyone can be profitable if the price is sitting at, let's say, 300 to 350 renminbi a kilo, which would be what we would think would be an excellent place for it to go because it's still sitting in the 200s at present. With respect to funding of the Linus 2025 initiatives, Yeah, Jack, clearly as we look at this, in May last year we identified that we were very confident of our ability to self-fund, particularly given the changes to the JARE facility, the shutdowns, Combined with the fact that we expect that demand will remain subdued for some time and the fact that we can't just push the project out means that we are reviewing that position and, yes, we will provide further information on that. Probably we would expect sometime around about the time of our annual results.

Perfect. That's all for me.

Thanks very much. Thanks, Jack.

Our next telephone question is from Andrew White from Curran & Co. Please ask your question, Andrew.

Hi there, Amanda and team. Just a question. I noticed in the quarterly about Mount Weld and halting the production there, and it seemed it was in line with halting the production at the LAMP. I just wanted to get an understanding on, are there any limitations on how much concentrate you can stockpile there? Or what's the basis of halting the production there?

Oh no, there's no limitation to how much we can have on site at Mount Weld. But this comes down to, particularly as we run into this process, we didn't know how long any sort of lockdown would be or otherwise there's no point in building concentrate inventory at some stage we need to be consuming it so you know we built to a particular level and then we said well actually rather than continuing to consume costs and producing more inventory at Mountwell it would be better to to direct our resources there to doing projects that would otherwise cost us money because we would have to outsource them. Mount World has really managed through this process excellently. I'm really proud of everybody in the company actually. But there's a number of development initiatives that would have cost us, you know, probably hundreds of thousands of dollars to outsource. which we have actually been able to complete with our own staff.

Excellent. Okay. So just on the back of that, is there any change in the frequency of concentrate shipments over this quarter? Has that reduced because of a reduction in production?

Sure. Concentrate shipments are in line with the amount of material that we need to consume. of course we built quite a lot of concentrated inventory in Kuantan because we had to shut down so suddenly and we had material on the water already and on the wharf and we were fortunate to be able to manage all of that very well with the Malaysian government approval for those movements even during the most strict of the movement control order period. That meant we were able to avoid detention charges and those sorts of things. But we have consumed that material and we are back in the business of fresh shipments now and those shipments are timed and in quantities which are consistent with our production in Quentin.

Excellent. Just on another issue, there was mention of supply out of China before. I was just wondering... Sorry? Can you hear me okay?

Yeah, can you just ask again? I just missed it.

Yeah, I was just... There was talk before on this call about production and supply out of China with the new quotas. I just wanted to get some perspective from you as well about potential supply that's coming online outside of China as well. Can you give us a bit of colour on potential producers that are coming online or things that companies you think will make an impact?

Actually no, not really. I think I would make a few sort of general comments. I think most of you know I'm originally a marketer by trade and when I went to university I learnt that the more competitive markets are the more they grow and the more they are to be innovative and so it also gives those who are incumbent in those markets the opportunity to prove how well they are how good they are and so for us I actually have a full time job being the CEO of Linus trust me it takes up most of my waking moments each day to thinking about it and I don't have time to spend you know, sort of understanding other people's business as well as running our own. So no, I don't really have any comment to make on other people's businesses.

No problem. That's all for me. Thanks very much.

Thanks, Andrew.

Our next telephone question is from Matthew Chen from Foster Stockbroking. Please ask your question, Matthew.

Morning, Amanda. Just wanted to clarify a couple of points please. So I read that Mountwell production being typically shut down during the period as you'd made a call on global concentrate inventory levels and having reached maximum target levels. Are you able to unpack that, expand a little bit more on that please?

I'm just realising from your question that you're probably reading the word global differently from the way that we intended it.

Yeah, that's right. Okay, so I've misread that, haven't I?

No, no, no, no. We probably should have used a better word. Internally, we refer to our global inventory levels, which means our inventory levels within line, not inventory levels within inventory.

Yeah, okay. I just wanted to clarify if that was a comment on No. Inventory that wasn't controlled by you.

No, no.

Yeah, no, that's fine.

We have a line item that we manage in our business called Global Inventory for Concentrate.

Yeah, I've never come across this in one of your releases, yeah. Yeah. Okay. No, that's fine. Okay, so it was an internal management decision based on your con levels. Okay, that's fine. Yeah. I did notice that a couple of questions back you mentioned building the cost muscle and I wanted to reconcile that with comments that you've made in the past about pricing strategies. I mean we can take it as read that NDPR pricing is subdued at the moment. I just wanted to clarify like I think in the part you've talked about some being removed from the yoke of essentially commodity pricing and I just wanted to get an update on that strategy essentially around that pricing but also in specifics I think there was, you might need to refresh me, there was a pricing mechanism for floor ceilings and not across the whole volume book but across a lot of different products and for batches of quantities is that right?

Yeah sure so if we think about this across the product suite NDPR used for metal making and magnets the ability to to generate real either chemical or physical differentiation on that material is relatively limited and so therefore the sort of premium that we're able to capture on that is going to be one which is either related to our non-Chinese status, reliability of supply or preparedness to hold the price for an extended period of time. And so the concepts which go into that are specific to those items. So floor ceiling is about giving price certainty. Things like fixed price contracts for guaranteed volumes is really about supply reliability. But over time, even in the very best of worlds, we would expect that we will still generally see that whilst we should achieve a price which is higher than the inside China price, and we always do as an average... And that's still the case, isn't it? Yes. That it will typically follow the shape of the inside China pricing. So then we look at, therefore, how do we improve our margin as a business? Well, we improve our margin as a business by increasing margin on some of our other products. So heavy rare earths, we're in the business of wanting to separate our own heavy rare earths, not to satisfy government intention. We're in the business of wanting to separate our own heavy rare earths because there is a margin to be had over and above selling our unseparated ECG compound. So that's one opportunity that we've got and we've significantly progressed on. The other is we sell about 17,000 tons of lanthanum and cerium every year. And if we are able to improve the prices of those, so five years ago, a lot of the lanthanum and cerium that we produced was really not up to spec. We were very focused at that time on getting our plant right for producing NDPR. And so we used to sell quite a lot of that product at, say, a dollar a kilo. Today, we produce it and we're able to sell it on spec at a minimum with market price. But over time, Lanthanum and Cerium both give us real opportunity for both chemical and physical product differentiation. Our technical team has done a lot of work on this and we know how to do it now. Our next step is actually to put in place production capability to do that. As you would know when we're talking about a big site like Malaysia, where we must be volume driven and we must chug out those NDPR tons. It can sometimes be more difficult to get sort of focus on sort of product differentiation. So we're considering how to execute on this, but technically we know what we need to do. Right. And if you think about 17,000 tonnes, it doesn't take much of a premium, an average premium across that, to leverage a significantly improved outcome.

Absolutely. Yeah, that's right. And I think that's something that, particularly on the Syrian side, that's something that Poles have been looking for for a while now, hasn't it?

Oh, this is Poles' great passion. Oh, have I done your passion sufficient justice?

No, but excellent. I see that you joined the club of passionate people. That's good.

That's great. Thanks, Amanda.

Thanks, Matt. Hope you're well down in that, you know, south of the border.

Once again, ladies and gentlemen, it is Star 1. Our next telephone question is from Trent Allen from CLSA. Please ask your question, Trent.

Good morning, guys. Just a quick one from me. I think one of your next milestones over the next 12 months is starting the PDF in Malaysia. Can you give us any update on how that might be progressing in terms of the site and remind us what the sort of permitting steps you might need to go through to hit that March deadline? Thanks.

Sure. Thanks, Trent. You would have noted that in our March quarterly we had made some relatively substantive payments as a result of concluding a turnkey contract solution with a local contractor in Malaysia. and those payments were triggered by meeting certain of the regulatory requirements and provide the basis for the initial development of certain elements relating to the site. So we have an identified site. It has been confirmed by the state government, and now what we are engaged in doing is the various studies that need to be done on that site, whether they are geotechnical, hydrological, et cetera, and of course radiological. engaged in doing those. Now for us the great benefit is that we've been operating the storage facilities for our iron phosphate as known as WLP material now in Malaysia for seven years so we have excellent stats available and we expect to be able to progress through this stage in good order and we are confident that we will meet the licence conditions as they were specified at the end of February.

Okay, great. Thank you.

And our next question is from Reg Spencer from Canaccord. Please ask your question Reg.

Thanks. Sorry guys, just a very, very quick follow-up question. Amanda, could you tell us when we might expect some guidance as to when you'll be able to provide some more details around the structure of the Blue Line JV, expected scale of that project and so on and so forth, given that media speculation about a resumption of the DoD funding process?

I'll read your short answers now. As you said, governments move at the speed that governments move at and completion of the JV or the commercial arrangement with Blue Line will be a factor of where we finish with sort of the various discussions with government. I can only tell you that we will tell you when we know.

That's OK. So just so I understand that process, the structure of the JV is subject to whether or not there is some contribution from the government and then the finalisation of that JV would be subject to whether or not you're successful in your discussions with government.

Yeah, that is right. That sounds a bit more negative than it really is. And then we see that... Having, as we identified with the Linus 2025 plan originally, footprint in the US will be a productive thing for our business, in particular for some of the specialty materials that we produce. But also, we see that there is a ready market for heavies and we can probably sell the production from that facility a couple of times over. But making the decision on exactly what the plant footprint looks like is going to be something that we are waiting on really soon. seeing where governments end up with their decisions and that of course will then shape commercially how we approach it.

So it sounds like that irrespective of what role the government plays in terms of funding or part of the JV structure itself it is certainly a project you're going to continue to progress with like I said regardless of any government involvement

We will be in the business of heavy rare earth separation. Timing of it may depend upon where the funding comes from and location of it may depend on where the funding comes from.

Fabulous. Thanks again, guys. Appreciate it.

Thanks.

There are no more further questions at this time. I'd like to hand the call back to Linus for closing remarks. Please go ahead.

Terrific. Thank you all. Lots of questions today. Very exciting. And look forward to talking to you again soon.

Ladies and gentlemen, that does conclude the call for today. Thank you for all participating. You may all disconnect. Goodbye.