Lynas Rare Earths Limited

Good day and thank you for standing by. Welcome to Liner's quarterly results 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. You will then hear an automatic message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to turn the call over to Liner's Readers.

Good morning and welcome to the Linus Reres quarterly investor briefing for the September 2024 quarter. Today's briefing will be presented by Amanda Lacaze, CEO and Managing Director. And joining Amanda today are Gauden Sturzenegger, CFO, Daniel Havas, VP Strategy and Investor Relations, Sarah Leonard, General Counsel and Company Secretary. I'll now hand over to Amanda. Please go ahead, Amanda.

Well, good morning, everybody. Actually, for those in Sydney and Melbourne, now it's good afternoon, isn't it, with those trend of daylight savings? I'm told that everyone was prompt to joining the call today, so I'm not quite sure whether that means that we're in between you and your lunchtime or whether not much else is going on today. Certainly, I think that what we have today in terms of our report is a report on a fairly uneventful quarter in very many ways. As I look around at some of the other financial news hot topics at present, I think I'm quite happy to be in a relatively uneventful space. Across the quarter we saw a slow improvement in NDPR pricing which seems to reflect that it reached a level that was uncomfortable for many producers. I'm reminded of what I think one of the analysts actually told me about the price goes up in steps but it comes down in an elevator and certainly as we've looked across the last month or so We're seeing small steps. I got a bit excited today. I think it was over a dollar that the price went up, but generally somewhere in the range of 30 to 50 cents a day with the occasional backward step. But generally, the trend is good even if the trajectory is modest. And that's good for our business. So within that market environment, we continued to demonstrate our ability to be successful even at low prices. I was just recently at the big annual rare earth conference in Washington with many other rare earth existing participants in the rare earth markets and aspiring participants. And I have to say, I came away with that remaining very pleased that I'm the CEO of Linus and not one of those other companies. During the quarter, production at approximately 1700 tonnes reflects our previous advice that we would align production to demand. It is our assessment and remains our assessment that now is not the time to create supply side pressure in the market or to incur costs ahead of revenue by producing to inventory. During this time of managed production, we are focusing on ensuring that all our assets are in excellent shape for what we see as inevitable future improvements in the market. Mount Weld continues to perform strongly. The release of the dewatering bottleneck with the commissioning of stage one of the expansion is an important milestone and gave us the opportunity to actually just deliver a record monthly production from Mount Weld. And that's producing to two different specifications. and two different packaging formats for LAMP and also for Kalgoorlie. So in a retainer to Kalgoorlie, we're in bulk bags for the LAMP. The photo on page six, which I'm sure to many untrained eyes would just look like sort of two piles of dirt, is quite exciting for all of us and I am sure to those on the call with a more discerning eye who can see the value of the concentrate which has come out of that dewatering circuit. With the commissioning and use of the dewatering circuit, the bottleneck has now moved to the mill. On page seven, we have included two photos at Mount Weld, which I find, once again, very exciting as we look at really Where is all the money going? I mean, we have a big CapEx spend and have had over the past couple of years. But as you look at this photo, you can really see the significant investment that we're placing in our asset at Mountwell with great confidence that this will deliver excellent returns for the company. So the pole neck has now moved to the milk. which will be resolved with the completion of stage two. You can see the photo of the feed conveyor, the mills in place, very excitingly the fine grinding circuit which will allow us, we believe, to recover much of the rare earths which has reported tailings over the past decade. Of course, during the quarter, we also released our resource and reserve statement. I've spoken about this extensively at Diggers and Dealers and then subsequently with our annual results. But I refer to it again now because it should never be taken for granted as it is the foundation for our continued success. And we really are most pleased to be able to look at being a decade on in the operation of this mine and still be able to increase both our mineral resource and our mineral reserve by the amounts that we've done and most importantly the 92% increase in contained DY and TB is very important as we look forward in our business. We've also got the photo of the finished site at Kalgoorlie, another one that gets me a bit excited as I look at it. It really is a beautiful site. It is wonderful looking at new chemical factories when they're still sparkling. Kalgoorlie is generally performing in line with our expectations. In particular, we are seeing excellent recoveries through the cracking and leaching process. And POL is not backward in offering that as a particular challenge to our team in Malaysia and offering them the opportunity to even further improve their own recovery performance. Many of you would know that the closure of the smelter in Kalgoorlie by BHP, the nickel smelter, has offered us some challenges with respect to ongoing supply of sulfuric acid and we are working closely with BHP at present on identifying a new solution. I guess the other thing that I would say as we look at this facility which is still in the early stages of operation where we do have some experienced staff on the team from our Malaysian team but we also have quite a lot of staff who are new to the company that I'm pleased to say that as they are gaining more experience in operating this asset that they are becoming more confident. And then, of course, in Malaysia, I would say that our facility there is operating very well. The new solvent extraction flow sheet, which I've briefed previously, gives us the 50% uplift in production, is now operating in control, and we are particularly pleased with the thought and innovative thinking that went into developing that flow sheet, which has given us such a significant increase in capacity for really very limited expense. The new equipment that we're placing in our product finishing area is continuing according to plan. And importantly, the DYTB investment, which I briefed a couple of quarters ago, is proceeding as planned and we do expect to have this material out in the first half of next calendar year. We are continuing to invest in repairs and maintenance on our cracking and leaching plant in Malaysia, I think, Those who followed us for some time would know that we put a minimum amount of, certainly to ensure that things were operating safely and efficiently during the period of time that we faced potential closure of those assets. But we are now making further enhancements in that area to ensure that we continue to operate that asset efficiently and at best possible rates. Of course, the market is still not really our friend, even though there's been slight improvements in pricing, but we remain confident of the medium and long-term growth. And I would remind everybody as they think about their investment portfolios that the rarest exposure is across a number of market segments. We are not reliant on any one particular segment. For example, battery electric vehicles are growing because in automotive we are in ICE vehicles, we are in hybrids, we're in plug hybrids, and we're in battery electric vehicles. But we're also in wind turbines, we're also in electronics, we're also in automation products, and we're also in many of those items which are used in particularly building and construction like energy efficient air conditioners and elevator systems. We remain confident that the profile of consumption across the various segments still remains very firmly in growth mode and we expect across a number of those segments as the global economy continues to improve that growth will continue to improve as well but notwithstanding that the price is still in you know so the low to mid 50s per kilo of ndpr and so therefore we must remain tough and hard and focused on efficiency and cost management in our business and we are and as you look at the various analyst reports you will see that we continue to improve our cost per kilo of NDPR. So we are continuing to meet the market with a focus on maximising margin We don't believe that this time comes from maximizing volume. We think that we need a slightly more delicate touch than just shove as much product into the market as possible. I think that you're seeing the benefits of that in the results that we're able to deliver at a time when many others are struggling. So with that, I'm happy to take some questions. But bearing in mind that it's getting close to lunchtime for our Sydney and Melbourne colleagues, I'm happy if you want to move through them fairly quickly.

Thank you. As a reminder, to ask questions, please press star 11 and wait for our name to be announced. The first question comes from Paul Young of Goldman Sachs. Please go ahead.

Hi Amanda and Gaudenz, I hope you're well. Yeah, Amanda, pretty steady quarterly and pretty much in line with, I think, where the market was expecting, which is great. And thanks for all those photos. I think Mount World's progressing really well, and I think good to see that filtered concentrate. And also interesting to see you've got an isomill in the regrowing circuit at Mount World. Anyway, just a comment around actually Cal and the progress there. Is there any data you can share with us with respect to equipment performance? How many days have you been able to run at full capacity? Are you campaign processing the concentrate? Anything you can share with us to help us understand just how cow cracking and leaching is actually performing so far?

Probably not any of those. Hello, Paul. Not those specific measures. I would say that as we look at it, we see that it's doing much of what you would expect for a very large and complex plant like this. The flow sheet works without question. So it works as designed and there are, as I said, there are some points which have been particularly positive for us, including recoveries. We're learning some new things. So we look at this and we have one very large kiln compared to in Malaysia for sort of equivalent or slightly less volumes we have, or less capacity, we have four kilns. And so learning to operate that kiln, ensuring that we're sort of optimising the inputs including things like acid has been sort of one of the learnings that we've had to develop as we're going through this. I would say that we're not running yet on what we would regard as truly continuous operation because like in the stages of any new plant, you sort of run it, you identify a few issues, you shut down and you deal with those. That's one part of it, but we certainly are continuing to have to deal with some challenges around some of the utilities. For example, I think everybody understands the issues that there have been with power in Kalgoorlie and so managing within that environment has been a small challenge as well. At this stage, we are... about where we planned to be in terms of the amount of contained NDPR that we're sending, that we're producing month on month. And we are about to take the next step to push production up from sort of the first stable level we've been looking at. We also are working pretty hard right now on identifying best ways to remove impurities. I recall doing this in LAMP as well a decade ago. I think that the original design there saw us removing a lot of the impurities by the time it got to product finishing. We set up some flow sheets that saw us be able to remove a lot of those impurities. I'm talking about things like aluminium and zinc and iron, moving them out earlier on. Where we're at today with respect to Kalgoorlie and the lamp is just we're doing some testing on where's the best place to remove those impurities. Is it Kal or is it the lamp? But having said all of that and trying to give you some context and some colour, We don't provide, and I think it's not particularly helpful over time, we don't provide specific measurements at each stage of our production cycle and one of the reasons why we don't do that is exactly for that reason I'm talking about with the impurities where we make decisions and trade-offs across each stage because what we care about is the efficiency from mine too big bag, not necessarily at each single stage of the process. So the short answer is no, I can't give you any more metrics, but the long answer is we're pretty happy with where things are at.

Okay, thanks Amanda. At least the team can commission slowly until the time the Met World starts ramping up, so that's a good thing as well. Maybe just turning to the heavier earths, I'm interested in your comments about some substitution from Magna producers and also high imagery levels. I think substitution has sort of been happening for a little while anyway with TBDY, but actually I'm curious to know what your marketing strategy actually, specifically what your marketing strategy will be when you actually start producing heavier earth products. Who are you going to sell to? What sort of contracts are you going to sign for that product?

Well, the short answer to that is that we believe that it is a significant differentiating feature that we will have and so therefore we will take every opportunity to maximise your return from that. As we look at magnets specifically, are not yet going to be able to produce in what we would see as a magnet ratio. But we know many of our magnet-making customers would be very happy if we could supply to them in a magnet-making ratio. And I'm sure that we will be able to offer them appropriately bundled products, including NDPR and DYTV accordingly. And it will be priced in a way that reflects the scarcity of the non-Chinese GYTV. There are other markets that it opens up for us though as well, including areas like microcapacitors, et cetera, where there are longer product qualification periods, but pricing is very positive for us. And so we are engaged with, you know, working with a number of those customers at this stage to work through that. So we see this as a real opportunity as, you know, really these products are a really important addition to our portfolio and we will be using them judiciously.

Okay. Thanks, Amanda. That's great. I appreciate the time.

Thanks, Bob. Thank you for the questions. One moment for the next questions. Next question comes from Jonathan Sharp from CLSA. Please go ahead.

Yeah. Hi, Amanda and team. Just the first question on the US project, just regarding the permitting issue. What specifically are the wastewater management concerns and possibly a timeline for resolution and is there any impact on the long-term project?

I don't propose to go into detail on the specifics around the wastewater plantings. It is associated just with some local area issues associated with wastewater management. I think, as I mentioned at the last call, we got our NEPA approvals very promptly, but there is some local consideration of these, which is ongoing at present. I can't tell you when it will be involved any more than I can ever tell you when regulators and politicians will make decisions. The facts just say that we are very actively engaged both locally and at a federal level on this matter.

And just sticking with the US, just with the US election approaching, how do you view potential policy shifts Could a change in administration change anything for you positively or negatively?

Unlikely. We commenced engagement with the US government in 2018 under a Trump administration. They were very enthusiastic about reshoring manufacturing and particularly reshoring parts of the rare earth supply chain. That's been carried on under the Biden administration, and I would expect post the 5th of November, it will be by whether it is the Harris or the Trump administration.

Okay, no worries. Thanks, Amanda. I'll pass it on.

Thanks, Jonathan.

Thank you for the questions. Our next question comes from David Decker-Womb from TD Colon. Please go ahead.

Thanks, Amanda and team. I appreciate the time today. Amanda, I was curious just to follow up on some of the other questions. As we think about the current pricing environment, should we think about the volumes coming out of Kalgoorlie as being relatively, I guess, capped at this point, just given the prevailing price of where NDPR is right now?

Where we are right now is that we are not pushing any of our assets as hard as we possibly could. We see that the very low pricing that's been evident in the market over the past three to six months has reflected a variety of different factors, but one of them certainly has been supply side pressure. You've seen that in China, particularly with some of the imported feedstocks from Myanmar, Laos, and even the US, and the imported feedstocks haven't previously been caught by the Chinese quotas. And so you have seen a lot of supply side pressure, and that's particularly been in the south of China. We see the slight strengthening of price over the last couple of months has certainly been a consequence of some of that imported feedstock. The volumes of that have been reduced. We've seen that there's been a reduction in inventory in China. As that reduction of inventory has started to bring buyers back into the market, we've seen the firming of the price. We think that it is very definitely a sensible path to not be increasing supply side pressure. Therefore, we are matching our production. pretty closely to demand from our strategic customers. As the price continues to improve, that's my hope, then we will revisit that strategy. But for us, being able to bank an extra $10 in margin is more beneficial than several hundred tonnes actually in volume. So we really are focusing on a margin over volume situation at present, and we think that our actions are the most prudent in the market with the market in the condition that it's in at present.

I appreciate that. And maybe just continuing on that thought, just as we think about some of these longer-term projects that are focused around expansion, Should we also then, I guess, preclude that if prevailing market conditions continue, that the volume output would kind of be delayed a bit in terms of a ramp? Or is there an increase in orders from strategic customers that would have you otherwise increasing volume even if, you know, we're still looking at $50 a ton NDPR pricing?

As for both, David, our direct strategic customers continue to grow. Yes, we continue to produce. Our direct magnet making customers five years ago were consuming probably 50, 60% of what they consume today, and so we would expect that that will continue. So yes, we do see that, but we also see that whilst it may not be immediately logical, pricing is cyclical. I don't really get it because people buy cars every year. But anyway, rarer's pricing does tend to be cyclical and relatively volatile, what we must be in a position to take full advantage of the price when it does go up. It is too late when the price starts to move to then say, oops, gosh, we'd better put some investment on the ground because rare earth plants take a while to build and they take a while to get right. And so that's why we're proceeding with our various plans. And, you know, six years ago we told the market with our Linus 2025 strategy that we would have capacity to produce 10,500 tonnes of NDPR annually this financial year, and that remains our goal.

Thank you very much. Good luck out there.

Thanks, David. Thank you for the questions. Our next question comes from Daniel Morgan from Barenjoy. Please go ahead.

Hi, Amanda, and Tim, first question, just can you give us a sense of how much costs were capitalised specific to the Kalgoorlie plant in your CapEx numbers there?

Yeah, we are continuing to capitalise most of the operating costs associated with Kalgoorlie. Dan Enns and the accountants are considering at what stage we pass all of the various tests and we think it's pretty imminent.

Thank you. So if I look at costs, I mean, doing back of the envelope is 53 Aussie a kilo of NDPR in the quarter. Given you've got some capitalized costs at Kalgoorlie, which will come in when it ramps up, but then you'll also have greater scale. Can you give us any sense of where that might sit in the medium to longer term?

Our objective, Daniel, is that ultimately we want to be able to improve efficiency sufficiently in Kalgoorlie that we're able to be competitive with the material that comes out of there, with the material that is produced in Malaysia. via the Kalgoorlie flow sheet versus via the Malaysian flow sheet. Now, certain of those costs are going to be the same in each case. At present, we are not competitive via the Kalgoorlie flow sheet with the Malaysian flow sheet, but I'm guessing that's not going to surprise anybody because we're very early in the process. We're not running the plant at maximum capacity. And our focus has been to get the plant constructed and operational. And now we have a specific team whose task it is to work particularly on the inputs to that process to ensure that we are capturing cost efficiencies. And so there are some things which are intrinsically more cost efficient because we, for example, deliver our concentrate in retainers rather than bagging and unbagging and then moving them around. So in a retainer that goes directly into the hopper. On the other hand, there are other areas which at present remain uncompetitive, you know, landslide logistics and WA for some of our inputs, you know, I think everybody knows that they can be very expensive. And so working with others in the Kalgoorlie, you know, sort of jurisdiction to look at are there alternatives, are there intermodal solutions, those sorts of things are really important for us. So in this financial year, the percentage of material which is fed into Essex in the form of MREC versus the percentage which comes from the Malaysian cracking and leaching facility will not be sufficient to change the variable cost significantly but of course we do have to bear the fixed costs of operating a plant the size of Kalgoorlie so we will see it will make it harder for us to continue to bank a downward trend on those costs but it will not be I think we would say it will not be significant in this financial year and hopefully by the end of this financial year we will have found and banked a number of the efficiencies that we're working on at present.

Okay, I appreciate the extra color. Just on licensing, I know that you've resolved a lot of issues in licensing in Malaysia over time and that situation has calmed a lot. Just wondering if there's any opportunity to increase the duration of the license in Malaysia.

Thank you. Thank you, Daniel. Certainly, we have had fairly open discussions about the fact that a three-year period is difficult for some of the larger and longer-term investments that we might seek to make, and particularly some of the work that we're doing at present, some of the R&D work which we're doing at present, which is around thorium removal from the WLP will necessarily bring with it some capital investments. The work we're doing at present seems to suggest it will also bring with it some operating benefits, operating cost benefits, but it will be difficult to make a decision on capital whilst we still sit within sort of a three-year period for the licensing. We've had that discussion with government. At present, our licensing is an artifact of the Act of Parliament, not about Linus, but about the Atomic Energy Licensing Act in Malaysia. It would take a change to that, to change the conditions under which our license operates and we continue to watch that with interest. Balancing that out, there is nowhere in the world where you get a license in perpetuity. You have an expectation that if you meet the conditions of your license, it will be relatively automatically renewed. We have always met the conditions of our license in Malaysia. Audits have always been rated as very satisfactory, which is the highest rating available. I think that today with the difference in government policy that we have a greater level of confidence that this will be normalised in the same way it is in other jurisdictions where so long as we continue to meet our licence conditions we can have a reasonable expectation that the licence will be renewed. But yeah, we certainly have discussed actively with government the importance of a longer license period, and we watch with interest to see whether the government acts on that.

Okay, thank you very much, Amanda.

Thanks, Daniel.

Thank you for the questions. Our next question comes from Al Harvey from JP Morgan. Please go ahead.

Good morning, Amanda. I just wanted to pick up on the comment in the release just around optimising costs and improving recoveries from mine-to-finish products being a focus. I guess you've noted in your opening comments that recovery downstream is going quite well. So I just wanted to get a sense, are the recovery issues you're flagging more at the Mount Weld? Is this on the dewatering circuit upgrade? Is that behind us now? Are you seeing some challenges on the horizon around maybe appetite or process or something else?

Thanks for the question, Al. Isn't it interesting? I didn't think that the language was negative, but your interpretation is that if we're focusing on recoveries, we must have a problem. I actually would say to you that our recoveries are the best they have ever been. In a decade of production, they are the best they have ever been and they are managed very carefully from mine to finished product. I was simply indicating that we are continuing to look for ways to improve those. For example, the lab today operates recoveries several percent higher than original design, even than revised design when we put Linus Next in place in 2018. We are actually, the team is delivering at a much higher rate than was expected. But as I said, that's where Paul's very happy to tickle up the Malaysian workforce to say, well, look what we're able to achieve in Kalgoorlie. This is about just continuously improving when we talk about it because recovery, as I think everyone knows, are golden because it falls directly to the bottom line. It just reflects an increasing understanding. Ten years ago, we couldn't have spoken about the importance of certain additives at Mount Weld and the way that that would affect our cracking and leaching performance in Malaysia. But today we do know that and it gives us an opportunity to improve. So it really is just a reflection of the fact that we are looking to continuously improve the recoveries, not that we see ourselves with any specific problems at present.

Understood. Thanks, Amanda. And maybe just on your comments around, you know, not at this point in time, not producing oxide at ratios that do fully cater for a, you know, high temperature magnet. I just kind of wanted to get a sense, is that a longer term target for Linus to be able to provide at those levels? I suppose in the context of your comments around negotiations on longer operating license timelines with Malaysia, historically you have said, you wouldn't mind getting into the clay, ionic clays over there. Is that part of the discussion that could see that kind of overall investment get you to a point where maybe the Malaysian government does come on board for a longer operating license period?

I'm not sure that I would conflate the two things, but in answer to the first question, Al, absolutely. I think that if we, you know, and I have a fundamental belief that in business you should always be focused on your customer and when you're not focused on your customer you should refocus on your customer and so our customers you know if we can serve a hundred percent of our customers needs then to use another mainly not so pc analogy we remain the wife not the mistress And so if we can make sure that we are the primary relationship for our customers, the rarest relationship for our customers, then we believe that's the best thing for our business. And so therefore, yes, we would like to be able to offer DYTB in magnet ratios to our customers. And so does that mean that we're looking for another DYTB source? Well, part of the reason why we did the exploration program in the way that we did at Mount Weld was to really understand what we had available to us within our own ore body. We continue to assess various different alternate sources for actually all rare earths and certainly we would be happy to see further development of both upstream and downstream assets in Malaysia and are working pretty actively with government and industry in Malaysia to facilitate that.

Paul, great. Thanks for that, Amanda. Maybe just one quick follow-up then. I suppose, given the exploration work you have done at Mount World and the solid upgrades to resources, is there any potential that you think in time that could produce at magnet ratios, or it really is more a matter of needing to bring something else in?

Well, I think we're still working on that and we're still working on recoveries. I mean, up until now, we haven't specifically... So we're back to that first question again. We haven't specifically focused on DYTB recoveries. We've been very focused on NDPR recoveries, of course, and rare earths. So we do have opportunities to improve the amount of DYTB we recover through the process. And we are looking at our mine plan to understand how we will integrate those DYTB-enriched zones as we continue the mine plan. But I go back again, yes, we are actively looking, in fact, Danielle, keeps a spreadsheet with every sort of junior project, whether it's still just a thought bubble in someone's head through to being somewhere close to maybe being able to get the project across the line. And so we have a very good assessment of all of those projects and we'll make decisions on whether to invest or not in various different projects simply based upon all the things that anyone ever makes decisions in minerals on. It'll be on grade, it'll be on ability to upgrade the material, it'll be on logistics and location and all of those sorts of things. So we're actively looking at them, but I have nothing to announce, otherwise I would have announced it.

Understood. Thanks very much, Amanda.

Thanks, Al.

Thank you for the questions. Our next question comes from Regan Borrow from Bell Potter. Please go ahead.

Hi, Amitra and team. Congratulations on the quarterly. First question just on Kaggle, and I guess following on from Paul's earlier comments. Obviously, batch processing at the moment is working well with, I guess, the market where it is and the closure of BHP, Nickel West. Is there a deadline that you sort of have to have a solution in place for alternate sources of sulfuric acids in order to sort of run Calgouli at the current rates or, I guess, ramp it up further?

Yeah, there is. So I think that all of you would know that the nickel smelter went into care and maintenance at the end of September. Our relationship with BHP is a good and productive one and they... At that time, the acid tank was full. There is also imported acid which comes into WA. There are a few logistics challenges around switching from an essentially local supplier from the smelter to the Kalgoorlie facility to an imported solution. And the way that we manage that transition is really important and includes a number of different stakeholders in the process. But we're working on it. We believe that we have a physical solution and so therefore it should be, you know, it You should be no more worried about the sourcing as this is a raw material than you are about it. No one ever asked me how you're going to get sulfuric acid at the lab. But I also recognize that there are a few specifics around this. That's the reason why I referred to it. But yeah, we're pretty confident that we certainly know all of the things around timelines, deadlines, et cetera, and we're working to make sure we solve for those.

Great. So it doesn't seem like it's sort of a bottleneck to ramping up Kalgoorlie more so than market and, I guess, the concentrate coming through.

It should not be a bottleneck, no. But, you know, until you've done what you say you're going to do, you know, you still... you still want to make sure everybody's focus is on getting it right.

Great, thanks for that. And just a second question. Obviously, in the last couple of years, the trend in, I guess, production of other rare earths has come down, I guess, in comparison to NDPR, which has been great for the basket price. Just sort of curious, is this driven by, I guess, changes in the enrichment of the concentrate, or is this a selective process that you've gone through at Malaysia to target more NDPR to support the basket price? And then, I guess, is this sort of a normalised level for other areas going forward?

It's a selective process. I think that when I first joined about 10 years ago, Lanthanum was still selling for somewhere between $5 and $10 a kilo. Because I do remember us thinking, oh, it should really be about $15 a kilo. For the last five years, I think Lantanum's been selling, maybe sometimes we got a bit excited when it hit $1.50 a kilo, but generally around about a dollar and relatively unspecified cerium, undifferentiated cerium sells for around about a dollar a kilo. that is more than the subsequent costs of processing those materials through public extraction and product finishing. So it is a deliberate decision that we have where we allow them to report to tailings at this stage and we are allocating more of our product finishing assets to NDPR. But we can change that decision if or when the market price improves. But probably the more important issue is the fact that we are dedicating a lot of our research and development to the development of particular catalysts which are used in some new energy fuels and otherwise. So a high purity cerium might sell for 25 times what a two nines purity cerium might sell for. So really focusing on areas where we can improve the quality of the product, things like the morphology of the product. These are opportunities for us. They tend to be used in lower volumes but once again you know sort of the margin over volume argument is not a difficult one you know selling a 250 tons of the high purity cerium is it will be uh very valuable for our business so that's really where our focus is there but we can make a decision almost literally on a daily basis to dial up or dial down our la and cerium production and it is purely economic

Great. So I guess assume sort of normalised levels until we see sort of a pricing recovery in those serum and lanthanum.

Yes, yes. And we will tell you when we have some of the... I mean, we have some products already, some differentiated products, which we continue to produce. But as we really get into some of these more exciting new markets, we will certainly let you know about those as well. We've got, I think, about eight... eight patents, which we've already either applied for or been granted in these areas. And it really is just a case now of going through the process of having those properly qualified with customers and watching the growth in those markets alongside the growth in the magnet market.

Great. I appreciate your time. Thank you very much.

Thanks, Reagan.

Thank you for the questions. Our next question comes from Chen Jiang from Bank of America. Please go ahead.

Good afternoon, Amanda. Good to hear your plans are running well as Linus planned. I'll be quick so we all can go to our lunch. Two questions from me, please. So first question is where is production and capacity related? So for your total rare earth oxide production for the quarter, I'm wondering if you can provide any color on this quarter's capacity utilization. Is 70% or 80% the norm? Or if there's a strong demand for your product, same question for NDPR for the quarter. I mean, when I annualized this quarter NDPR, the run rate is 6.7 thousand tons. I'm wondering what's your utilisation rate and your current NDPR capacity? Thank you very much.

So 6.7, as you said, is pretty close. I mean, we've just made this clear previously that, you know, sort of our current capacity is around about 7,000 tonnes per annum of finished product. The changes that we have made to the Essex flow sheet, we have... Just to remind everyone, we have four trains that separate NDPR and LACE. We've converted one of those to the new flow sheet, which takes us up to close to 9,000 tonnes, and then we will do a further train which will take us to the 10,500 tonnes that we've targeted for Linus 2025. We will have the option at some time in the future to also implement some changes on the other two trains, which will allow us to further increase capacity again, but that's not part of the current plan as we look into the market as it stands at present. The other constraint in terms of finished product is is product finishing capacity, where at present we have, I think, six out of about eight tunnel furnaces that are devoted to NDPR production, which feeds back to the previous question about LA and CE. But we have new equipment, new rotary kilns coming into product finishing. We've already implemented continuous precipitation, and so that means that by the end of this financial year, we will have the ability to produce 10,500 tons finished NDPR. So where we are today, until we've got all of those downstream activities, I mean upstream with the combination of cow burley and cracking in Malaysia, we have sort of capacity headroom, but downstream we're focused on the 10,500. probably a bit north of the seven because we've already put in the new flow sheet on one of our Essex trains. But we are targeting to get to 10.5 by the end of this financial year.

Sure. Thanks for the call. So Amanda, just to confirm, at the moment you are running around 7,000 tons of NDPR and still on track to achieve 10.5 by the end of this financial year. That's it.

In a nutshell, if I had to use all those other words, I could have just said that.

Yeah, sure, sure, I understand. And then just to follow up on your comment, so how do you balance the increasing capacity versus the production, which you mentioned earlier, aligning with the market demand in the next few quarters?

Oh, it's quite tricky. Okay. I say that, but then it's also a case of arithmetic. So as we think about the increase in capacity, there are certainly benefits to be had from capturing certain economies of scale in any chemical process. So we do actually have to understand those and capture those where possible. And then after that it becomes a more discretionary task and understanding really what are the opportunities for the sale of material over and above that which is in what we would classify as our strategic customers. There are still many more customers who would like to buy what we produce. than we serve today, but not all of them are prepared to pay the price that we would see it being beneficial for us to take advantage of that market. But that's the job of the sales team, is to work on that and to add customers and add growth, which is price at a level which is attractive to the business. It's simple as in you can build the spreadsheet and work out what price you have to be able to sell at to make the production worthwhile and apply some other sort of qualitative factors around how much you think that might influence market confidence, market pricing. On the other hand, it's complex because we do have to make decisions at each asset on are we capturing cost efficiencies, are we putting enough material through that asset to make it work. So there's no simple answer to the question, Jen, other than to say that we focus on it all the time. It is our business to focus on that and that's how we make the decision on how much we produce and how much we sell.

Sure, sure. I understand. I appreciate the comment, Amanda. Maybe last question. Linus comments made in the release this morning on page three that Linus says economic challenges faced by many producers at low price levels. I'm wondering if you can elaborate that comment like from producers or cost perspective. I mean, whereas it's more like other commodities, you can easily have a have a global cost curve, et cetera. So any comments appreciated on the economics and the producers that are struggling at the low price levels? Thank you. Sure, sure, sure.

So we've got, once again, yeah, we love spreadsheets and liners. We've got a spreadsheet that shows all the significant players in the rare earth market. We judge ourselves to be... equal or was cost producer and that's pretty simple. The Chinese firms along with the very limited number of non-Chinese firms actually published their results and over the last six month period Linus and Northern Rare Earths have been the only ones that have made profit. So it's not terribly complex.

All right, I appreciate the call, Amanda. I'll pass it on. Thank you very much.

Thank you for the questions. With that, I'd like to hand the call back to Amanda for closing remarks.

Okay, well, once again, thank you, everybody. We still managed to fill in the hour, even though I thought it was a relatively anodyne quarter. Much appreciate your questions and look forward to seeing you all in person at one or other of various functions over the next few months. Thank you. Bye.

That does conclude today's conference call. Thank you for your participation. You may now disconnect your lines.