Lynas Rare Earths Limited

Good day and thank you for standing by. Welcome to Liner's quarterly results briefing conference call. At this time, all participants are in the listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Linus Rare Earth. Please go ahead.

Good morning and welcome to the Linus Rare Earth investor briefing for the quarter ending 30 June 2024. Today's briefing will be presented by Amanda Lacaze, CEO and Managing Director of And joining Amanda today are Gardin Sturzenegger, CFO, Daniel Havis, VP Strategy and Investor Relations, and Sarah Leonard, General Counsel and Company Secretary. I'll now hand over to Amanda. Please go ahead, Amanda.

Good morning, everybody. I see we have plenty of people on the call, which is always a delight. During the quarter, the first shipment of mixed rare earth carbonate left Kalgoorlie. After the incredible challenge of constructing that plant on the previously very constrained timelines, this was certainly a milestone to be celebrated. But frankly, we were all just a bit too busy to spend much time celebrating. I think that the quarter could best be described one where our internal focus remained firmly on improving efficiencies reducing costs and continually challenging ourselves to find new ways to improve and flourish in a tough market and of course to continue to deliver on our growth projects which will deliver extra capacity and but will also, importantly, deliver greater efficiencies, improve safety via new automation processes, and new revenue and margin via initiatives like our new DYTB separation circuit in Malaysia. I think everyone on the call knows the price of NDPR is stubbornly sticking at five-year lows. We all knew it would come off its very highest highs, but these lows really reflect continued slow conditions in the Chinese economy, and we watch with interest as we see the various economic initiatives being taken there. Despite those low prices, we're pleased to continue to report positive operating cash flow. That reflects our ongoing commitment to continuously improving our cost competitiveness and we are confident that alongside Northern Rare Earths, we're the only two firms that can be profitable at these price levels. Free cash flow, as pointed out by some keen observers, I was reading one of your reports is negative, but that's not surprising given the large capital projects that we are still completing. And that is our choice as we continue to prepare for future market growth. However, as also identified by certain keen observers, we are not accelerating the Calvioli ramp-up as we may have done under different market conditions. During the quarter production volumes were down but actually well aligned to the market and we continued to meet all customer needs from that production and a slight reduction in the inventory that we held at the end of the previous quarter. The bearing failure in Malaysia was not forecast but really on reflection was not completely unexpected. As one of our people noted, he had been working for over 10 years, God rest his soul. With the extra capacity coming online at Kalgoorlie, we now have the opportunity to plan some additional work at Malaysia, which is consistent with the age of the plant. And we will provide some further updates on that when we deliver the annual results at the end of August. And some other exciting news, which is canvassed in the report, we now have Carey Mining on site. Carey Mining is the first Aboriginal owned business in Australia. Daniel originally set this up about 30 years ago. It's very exciting to have them involved. Daniel grew up in the Laverton area and has a strong connection to country. They bring with them new kit which is really quite exciting to see on site. And the deployment of people and equipment to site has gone very smoothly, and we look forward to a long and productive relationship with Keri. During the quarter, we also announced the very efficient implementation of a new circuit in Malaysia to separate our dysprosium and terbium. These are materials which are required in high performance magnets and we have the great benefit of course now in Malaysia of being able to continuously improve and enhance the operations at that plant now that we have confidence about our ongoing presence. And then, of course, we had and we've included at least one picture, I think, the energisation of stage one of the Mount Weld expansion and great progress on phase two. For any of you who have visited Mount Weld coming to visit now, you will see that the site really looks very different from what it's looked like over the past decade. as we complete this really significant expansion. Work on that project is proceeding very well and we're really pleased with the fact that stage one will be fully commissioned and tied in with current operations over the next few months. which will allow us to progressively increase mount weld output as we de-bottleneck the de-watering stage. And then, of course, Kalgoorlie, and I'm sure some of you will be at Diggers and Dealers in a couple of weeks, and I know that you will be very impressed by this facility. I was there a couple of weeks ago, and it really – It is a thing of beauty to see a brand new sparkling plant. It's even better to know that it is operating as designed. And we've got a number of initiatives there which really go to this point about efficiency and automation. We mentioned one of them in here which is the use of what we call rotainers, which are basically bulk in containers, which we fill at Mount Weld, so we don't need to have the manual labour to fill the bags, which then are fully automated, operated by someone with what really looks a bit like a Nintendo game console, to lift that container and tip it into the hopper and then bring it back down. So all really very exciting. We are approaching the end of our very heavy capital investment phase with Mount World expected to complete this year. The land industrial plan, the continued enhancement of our facilities in Malaysia on track and the Kalgoorlie ramp up proceeding. We will continue to focus on pushing operating costs down Key areas of focus in that include, clearly, everybody here who even knows a little bit about mining will know that recoveries equal margin. We have significantly lifted recoveries at each of Mount Weld and Minus Malaysia. And as we bring on our new, particularly at Mount Weld, our new facilities, we will be able to improve that further as we bring in our fine grinding circuit. Last night, you would have seen that we released an announcement with respect to signing contracts with Zenith as a builder and operator of a gas-firmed hybrid renewable power station at Mount Weld. And that has always been part of that program is to identify ways that we can, as we increase our energy consumption, do it in a way that is consistent with our ESG objectives. So all in all, a fairly, in some ways, uneventful quarter, very much focused on ensuring that we continue to improve our business So that we, you know, remembering that our business is not about what we produce, but it's about how much money we make. And so really we are managing all of our activities at present to ensure that we maximize margins and profitability and what continues to be a very challenging market. And with that, I am happy to take questions.