Lynas Rare Earths Limited

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

Good morning and welcome to the Linus Reris Investor Briefing for the September quarter of FY 2022. Today's briefing will be presented by CEO and Managing Director Amanda LaCasse. And joining Amanda today are Garden Sturzenegger, CFO, Daniel Havis, VP of Strategy and Investor Relations, and Sarah Leonard, General Counsel and Company Secretary. I'll now hand over to Amanda. Please go ahead, Amanda.

Thanks Jan. Good morning everybody and a special hello to anyone who's joining from Melbourne and maybe you aren't joining today because you're too keen to be out and about and making the most of the end of your terribly prolonged lockdown. Anyway, thanks for joining today. Pleased to be able to present the quarterly results. We've delivered our second highest revenue quarter on record and that's reflecting very strong demand and high prices. And I guess one of the things that's really got us pretty enthusiastic is that our customers are very optimistic about future continuing demand growth we continue to see a lot of strength in the price. As we think about, however, some of the challenges that we dealt with through the quarter, it was definitely the most difficult of the pandemic. In Malaysia, the third wave of the pandemic was almost completely contained within the quarter. You know, we started at about 5,000 cases a day. in Malaysia, we peaked with an extended period around about 20 up to 22,000 cases a day. And then by the end of the quarter, we dropped back down to about 5,000 cases a day. And of course, that reflected significantly increasing vaccination rates in Malaysia, including, of course, within our own workforce. But During the period of time, and it was several weeks where we were looking at these sort of 20,000 plus or minus cases every day, it created really an everyday pressure for our people. And it did mean that there was a lot of infection in the communities. Some of our staff were exposed to it. We run our own very careful track and trace program. And so in some instances, we had staff having to isolate because they had close contacts, either with their colleagues or family. I'm really pleased to say that all of our staff who did suffer from COVID have recovered. But as we've noted in the reports, Where we did have staff isolating, it tended to be to take our whole crews, you know, who had been in contact with each other. And so whilst we redeployed staff across the site wherever possible, there is a limit to the number that you can redeploy. Say, for example, it's hard to take a technician and put them into our lab doing some of the highly skilled work required there. Of course, there's a lot written about some of the effects of the pandemic, particularly on shipping, exacerbated in Australia by some of the continuing issues on the waterfront with industrial unrest. But for us, the biggest issue relates to the ability to get containers and by extension ships as well. We were pretty excited at one stage, we got up to about 35 days concentrate cover on site and we thought this was all over Red Rover, but now we're sort of seeing further tightening in shipping, which is presenting a few challenges for our logistics manager. Notwithstanding all of the above, as the pandemic effects receded in September, we're very pleased with our production outcomes in Malaysia and are seeing that continue into October. In Australia, we will absolutely do our part in complying with the Western Australian government's vaccination mandate. As most people would be aware, the Western Australian government has now issued orders for mandatory vaccination for all fly-in, fly-out workers. We support this certainly philosophically in terms of managing a safe workplace for our people and the fact that we are operating in a remote location and certainly would not want to in any way introduce any illness into the local population. So we're very happy to comply with the Western Australian mandate and hopefully that will mean that travel in and out of Western Australia will start to happen again early in the new year. Provided a couple of other updates in the report on Kalgoorlie. It's very exciting that we've now had the EPA recommend the project for approval. Of course, there are still some final steps around this, including receiving the ministerial statement. But as I said, it's great to pass through that gate. We've shared some photos in the report The aerial photo is sort of showing the work which has already started on site in compliance with the minor and preliminary works approval. You can see our giant kiln. It's well and truly on its way to Australia on a specially charted ship and we believe that we will be in good shape to receive that when it lands. I can't wait to see it in person. I'm at present sitting out a couple of weeks in Adelaide ahead of being able to get into WA shortly for an extended stay. Quite interestingly, many of you... Previously, many of the analysts have asked why we're not spending more at Kalgoorlie and, you know, we're very... confident with the rate at which we have let our tenders. We have placed all of our orders for long lead time items. So some of the concerns about, you know, sort of cost overruns in that area, you know, we've got a great deal of confidence because those orders have been placed on agreed contracts and pricing. And we've got over 70% of our total equipment requirements have been tendered and contracted. So for those of you who were a bit worried about not spending more, you will see that we do actually have a higher capex spend this quarter than we've had previously. And we expect that to continue to accelerate as we continue to accelerate works on site. We've also made good progress on approvals for the now preferred site in the Giving Industrial Estate in Malaysia for the PDS. So the EIA there has been lodged and is out for public comment at present. All in all, a lot of progress in a time when I think all of us are just wishing that we no longer ever had to say the word COVID and certainly not with respect to business performance. But we're seeing our way through this. The vaccinations of our workforce give us a lot of comfort and confidence in our first objective, which is to ensure that their safety and health, but as well as that to ensure the continuation and indeed acceleration of the business as we meet the market. We at Linus did our heavy lifting over the past few years in terms of standing up our facilities, sort of optimising operation of those facilities, really becoming expert in processing our materials. At the time, we aimed to ensure that we were ready to bank the benefits of market growth as we moved into what we have always known would be a rapid growth phase in the market. We are now seeing that inflection in growth in the market. We think that it's going to be particularly exciting over the next three to four years. And we're ready to take advantage of that growth. And with that, I'd be happy to take any questions that people might have.