Lynas Rare Earths Limited

Thank you for standing by. Welcome to Linus Red Earth Quarterly Resorts Briefing. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you need to press star 11 on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Linus. Thank you. Please go ahead.

Good morning and welcome to the Linus Veras Investor Briefing for the September quarter of FY23. Today's briefing will be presented by Amanda LaCaze, CEO and Managing Director, and joining Amanda on the call are Gauden Sturzenegger, CFO, Paul LaRue, Chief Operating Officer, Sarah Leonard, General Counsel and Company Secretary, and Daniel Haver, VP Strategy and Investor Relations. I'll now hand over to Amanda. Please go ahead, Amanda. Thanks, Jan. Good morning, everybody.

Actually, we're attending in force today in terms of the Linus team, and it's an interesting reflection of life in 2022 that we are literally scattered all over the world. So we're calling in from a variety of different destinations. But we are all very focused on ensuring that we find a better second quarter performance than the first quarter. It was a difficult quarter. I think that everyone on the call is well across the fact that we had the serious issues with water. I think I've said to many of you, it's a matter of ongoing frustration to me that we operate on the wettest continent on earth and on the driest continent on earth, and water is a challenge in each location. During this quarter, I remember and previous quarters we've often had ongoing challenges with our continuity of water supply in Malaysia but generally we've been able to implement initiatives which have mitigated the effects of reduced supply. During this quarter we weren't able to do that when a major pipe burst and we had zero water delivered to the plant. for nearly over two weeks. So I think that the important thing here is that it's a sign of strength, it's really a sign of how strong the market is that we still booked 164 million in revenue and we ended the quarter with over a billion dollars in the bank which is particularly pleasing given that We've got a very heavy call on capital at this time as we're really accelerating our activities in Kalgoorlie in particular and as we start to invest more in our Mount Weld capability. So notwithstanding some of the challenges of the quarter itself, as we've indicated in the report and as I've said on other occasions, we are really focused on growth. And just to pick out the highlights on that, we had two big pieces of news associated with Mount Weld through the quarter. The first is that we've commenced the two-year exploration program into the carbonitite. This is into the primary mineralisation below the enriched weathered zone, which we have been mining to date. We're delighted that via JARE, JOGNEG, Japan Oil Gas Metals Exploration Corporation, is providing us with additional technical support on that program. This is really exciting stuff geologically. Our GEOs are very excited to find out what lies beneath, as indeed are our colleagues at ZOGNEG. In addition to that, JARE provided additional financial support for the exploration program in the form of a US $9 million equity placement to fund those program activities. And of course the other really big news at Mount World is the expansion which we announced in early August. I sometimes sort of say a little wryly that it appears that most things come in $500 million chunks and rare earths. Indeed, this is another $500 million program at Mount World. It's very exciting. It will take us... a first step to 12,000 tonnes a year of NDPR. We have two further enhancements that the team is working on which we will announce in due course which will see us be able to increase that output by a further 2,500 tonnes each. It is really important to just take a moment to reflect on this. It can sometimes be easy in a market where there's a lot of focus on some of the processing activities that we remember that feedstock is essential. Any downstream investments are only going to deliver a return if they have feedstock. And the quality of the Mountveld ore body continues to be the thing that underpins value and value creation. within Linus. Of course, I know everybody always waits breathlessly to see what's going on at Kalgoorlie and it is so exciting. A couple of weeks ago, I was out there on the Monday with the board and then on the Wednesday with the US ambassador, which is pretty cool. And even within those two days, I could see changes on the site. The team is very excited every day to see this plant really coming together and you can see it in some of the photos that we've included in the report. We have provided a little bit of a further update on this as well. Those of you who listen to these calls often would know that we received a grant from the Australian government under the Modern Manufacturing Initiative for a new industry-first carbonation circuit. I was hopeful that we would be able to accommodate that within our original budget, but with some of the various pressures, particularly around construction costs and logistics, that's not been possible. As well as that, we made a decision to put in some circuits which will allow us to further upgrade capacity at Kalgoorlie over time. And then, as I said, there's been a few of the you know, sort of increases in construction contracts and logistics. And so today we're just announcing that we expect that we'll come in about 15% over our initial budget, but that, as I said, includes both the scope increases and any cost increases. In the quarter I've spent quite a bit of time on aeroplanes. delighted to be back in a single location now hopefully for a few days. Being to the US a terrific opportunity to view the site and the proposed site for the plant there. We will update the market on that once we've completed our negotiations, but I think that it will be an excellent location for our facility. Also had extensive engagement with US government with respect to that contract. and things are progressing well there with the delivery of our phase two deliverables as part of that program. And then last week, you know, I was in the US again, met with many investors and that was terrific, you know, this great interest in the rare earths industry. But as well as that, there was, you know, sort of probably the premier rare earth conference of the year. And so I had a great opportunity to really engage with other players in the market as we all seek to, ensure that we are actually stepping up to deliver the sort of supply requirements for this market as it continues to grow through to 2030. But notwithstanding all of that, it still remains that while there's a lot of action in the market, Lyman is the only producer at scale of separated rare earths outside of China. And we see that that will probably be the case for some time yet. And so ensuring that we maintain a focus on getting back online, having a much stronger second quarter in terms of production is really sort of the focus of everybody on the team at present. So a bit of a mixed quarter notwithstanding some of the challenges we still delivered sort of a nice uplift in cash whilst funding the growth programs and hopefully we're looking into a better second quarter as we head through to the end of this calendar year. So with those opening comments I'm very happy to take any questions or if you want to specifically direct your questions to any of the others on the team, please let me know.