Lynas Rare Earths Limited

Thank you for standing by and welcome to the Linus Rare Earths quarterly investor briefing. All participants are in a listen only mode. There'll be a presentation followed by a question and answer session. If you wish to ask a question, you will need to press the star key followed by the number one on your telephone keypad. I'd now like to hand the conference over to Linus Rare Earths. Please go ahead.

Good morning and welcome to the Linus Reras Quarterly Results Briefing for the December quarter of 2020. Presenting the briefing today is Amanda Lacaze, CEO and Managing Director, and Amanda is joined by Gaden Sturzenegger, CFO, Andrew Arnold, General Counsel and Company Secretary, Daniel Havis, Vice President of Strategy and Investor Relations, and Cam Leong, VP of Upstream. Please go ahead, Amanda.

Thanks, Jan. Well, good morning, everybody. And as always, thank you for your continued interest in the company. I was a bit concerned at a minute to 11. I'm in Queensland, so 10. We only had two people online, and I thought, is everybody thinking, oh, it's all so good that we don't have to ask any questions, and that's okay as well. But no, we now have... a much more substantive audience. So I guess for me, this is maybe one of the easiest quarterly readouts that I've done. I mean, really, wow, what a quarter. It was a very busy quarter. It was a very busy quarter and a very productive quarter. So it was productive in terms of our normal operations within the business, It was also a very productive quarter in terms of our progress on the significant growth projects that we have within our company. And it was a very busy quarter as we sought to continue to effectively manage some of the challenges that continue to be presented to our business by the COVID-19 pandemic. So it's with a great deal of pleasure that I highlight the fact that it was the highest revenue recorded in this quarter that we have ever recorded in the history of the company. Of course, benchmark pricing was fairly kind to us, but I think that more importantly, it reflects the strength of the key energy segments into which we sell, particularly new automotive. And by that, we're talking about hybrids, plug hybrids and electric vehicles. And I know that many investors are looking at Linus as an excellent way to gain exposure to this electric vehicle and new energy thematic. Of course, continued growth in renewables, particularly in wind power and electronics. Last quarter, a number of analysts said, oh, gee, you've done well to keep the costs where they are. Do you think you can manage to sustain that? And you will recall that I said that when we targeted to be operating at 75% of Linus Next capacity... we said we would expect to be able to capture cost efficiencies at that level. And we're pleased to be able to report this quarter that with a continuing strong focus on our costs that we have indeed been able to sustain the cost-efficient production. Of course, we'll note that we have also kept our production running at 75% of Linus Next rates, as we previously indicated. And I know that some of you want to know, well, why don't we do more? And to that, I would say exactly the same as we did last quarter, that there are still a great deal of uncertainties in the market today. We learn new and different things about the effects of the pandemic each day. And the challenges are much more than just health, but health matters. And our large processing facility is in Malaysia, which is grappling with a third wave of COVID infections at present. there is a rigorous movement control order in place. And as always, we ensure that we comply at a minimum with that regulation, but always, as with everything in the business, we adopt the highest standards. And so where quarantine rules may be more stringent in Australia, say, compared to some other jurisdictions, we will always adopt the more stringent requirements. So in Malaysia, part of the movement control order is a request for all businesses to control and minimize the number of staff on site. We've gone back to many of our administrative staff working from home, but at the 75% rate, we certainly are able to very effectively manage the requirements to safeguard the health of our employees and to meet the government requirements. And the other thing I think that is particularly relevant in the quarter just passed is the progress that we have made on our growth project. I said at the AGM that We are ambitious for our company and we are operating in growth segments and we are ambitious that our company will continue to grow as the market grows, that we will retain our share in the high value segments and indeed grow, that we will meet and exceed the expectations of our key strategic customers. Meeting the growth means that we need to be increasing capacity at each production stage within our operations. Part of that is the Kalgoorlie facility where progress is very satisfactory. One analyst that I read today wondered why we hadn't actually spent more money yet on Kalgoorlie. Of course, as always, we are carefully managing our procurement processes and profile to ensure best value. But we are moving forward with a number of the packages associated with construction that have now either been selected suppliers or we are well advanced in the tender process. And I think that some of you would have seen some of the pictures that we've got in the report of the kiln fabrication, which is continuing notwithstanding some of the COVID-19 challenges. Of course, the other news, which has been really significant in the last week, was the grant from the US government, the further grant of funding for the development of a commercial light rare earths facility in the US. This is very exciting. If we move to the next stage for the heavy development, we will end up with a facility in the US with light heavies and specialties. And this is very much in line with our overarching strategy to ensure that our upstream processing is close to our resource in Western Australia and our downstream processing close to our customers. And of course the upstream processing means that we need to continue to explore and understand our war body and once again we released during the quarter information related to that. So we will be releasing our half yearly results next month and one of the limitations always of the quarterly report is that it provides a view of cash as opposed to a P&L view of profitability. Once we've released that, you'll be able to see how these two things interplay. But we've got a history of really excellent cash conversion within the quarter, generally in excess of 80%, sometimes in excess of 90%. Simply the profile of sailings during this quarter meant that we had a lot of our deliveries late in the quarter and I would reassure everyone who is listening in that those sales which were invoiced late in the quarter have now been collected, the cash has been collected in the early part of January. So really very pleased with the quarter and in fact very pleased with the first two quarters of this financial year. So with those as introductory comments, I am as always happy to take any questions.