Lynas Rare Earths Limited

Good day and thank you for standing by. Welcome to Linus Rare Earth's half-year 2025 results briefing. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will 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.

Good morning and welcome to the Linus Ririth's investor briefing for the half year ending 31 December 2024. Today's briefing will be presented by Amanda LaCaze, CEO and Managing Director, Chris Teresi, Executive General Manager of Resource Development and Operations, and Alex Logan, GM of the Mount World Expansion. Joining them will be Garden Sturtzenegger, CFO, Paul LaRue, COO, and Daniel Havis, VP, Strategy and Investor Relations. I will now hand over to Amanda. Please go ahead, Amanda.

I'll just go off mute. Good morning, everybody. Thank you for joining us again today. In addition to my two colleagues, Chris Teresi and Alex Logan, we do have our senior leaders within the organisation on the call, Paul LaRue, our Chief Operating Officer, and Gaden Sturzenegger, our Chief Financial Officer. on who I will shamelessly rely for some of the more complex financial questions related to accounting. But in particular, I thought that it was a good idea to ask Chris and Alex to join us today. As the Executive General Manager for Resource Development and respectively the General Manager for Mountwell Expansion, these two colleagues accountable for delivering really significant changes at Mount World. And many of those have been delivered in the half year results that we're reflecting. These provide the foundation for our success today and well into the future. And I know that it is some time since many of you have had the chance to visit Mount World. It is a hive of activity, I can tell you that. And so I thought this was an excellent opportunity to provide some more detail on those initiatives by the individuals who've actually done the work. So as we move through the presentation today, and as always, we will acknowledge the traditional owners of the lands on which we live, work and meet across Australia and particularly acknowledge and value the our Aboriginal and Torres Strait Islander employees and to pay respect to their elders past and present. So looking first at the half year snapshot, our Linus 2025 plan has always been about adding capacity, improving the efficiency of our operations, sustaining our position, Yes, they're sustaining our position as a low-cost producer and enhancing sustainability initiatives within the organisation. And we have started to see some of those strategies deliver in the first half of 2025. In the first six months, we grew production, we grew our sales volume and we grew our sales revenue. versus the prior corresponding period. In the first six months of this financial year, we variously commissioned, operated, and ramped up new capacity at each of our sites. And as always, significantly invested in safety as we extended our operations. And We have managed to record an improvement in our lost time injury-free rate and our total recordable injury-free rate. But we are particularly proud of the million hours LTI-free on the Mount Weld Expansion Project. And for those of you who have looked at the presentation, you will see the amount of work that has been done there is really significant. And the 1.2 million hours LTI-free in Linus Malaysia. I know all of you watch the rare earths market closely, and so therefore you know that prices have remained stubbornly lower over the past six months. As I think a few of the early analysts have identified, the result has largely been pre-reported at production, sales, and cash levels. And so really the only significant element as we look at the financials, and we can move on to the next slide, Lauren, is really the bridge to the accounting results. And that is affected by the allocation of additional cost of goods sold to the increased sales, and that included the sale of some inventory at the end of the half Some small increase in cost of goods sales related to variable costs at Kalgoorlie, a write down of some of our lanthanum and cerium inventory, and particularly foreign exchange effects with a significant weakening of the Australian dollar to both the US dollar and the Malaysian ringgit over the reporting period. It It is certainly understanding the bridge. I mean, I, like most people, run my personal P&L and balance sheet on a cash basis. Understanding all of the bridge from the cash basis to the accounting basis can take a little bit of time, but GADENS is on the call to assist to answer questions on the call or separately if that is helpful. Okay. During the period, we did also build some work in progress inventory, both at Mount Weld and with our mixed rare earth carbonate. And that's all part of ensuring that we are well positioned to be able to demonstrate the Linus 2025 rates in the final quarter of this year. That will progressively work its way through the system. So NDPR production at 2,969 tonnes was up. versus the prior corresponding period, including as a result of improved processing of lanthanide concentrate in Malaysia, improvements in recovery rates, but also as a result of processing mixed rare earth carbonate from the Kalgoorlie facility. NDPR sales volume was up at 3,178 tonnes, and that is a combination of reflecting increased production and also increased inventory. The results show progressive production improvements across all sites, including enhanced operations in our Linus Malaysia facility. As we head towards the end of the Linus 2025 capital program, We had a capital expenditure of $267 million in the six months and finished with $308 million in cash and short-term deposits. Kalgoorlie is operating, and we are now shifting into a continuous improvement mode, focused on both continuing to enhance our flow sheet and reduce our costs. Stage one of Mount World... has been tied into operations and is already delivering benefits. LAMP, mixture of carbonate processing, is operational. New solvent extraction capacity is already being operated, and we have new PF capacity and DYTV separation expected to come into operation before the end of the financial year. So if we move on and just have a few comments on the market, I mean, everyone knows the last two years have been very challenging. Demand has continued to grow, but at lower rates than was forecast maybe in, you know, I think particularly in FY22. And there has been significant reductions in market prices. As people can see, you know, the prices, was $7 less in December 24 versus December 23. We are seeing the first green shoots of an improved market. And people may ask why. And of course, there are complex influences in the rare earths market. As I said, the market demand growth has been sustained. Some sectors are growing slightly slower than we had previously thought they would. However, I think most seasoned observers on this call would understand that the market is very heavily influenced by supply side factors and particularly inside China. So China regulation really makes a difference to not just actual performance in the market, but also perceptions. And there can be a lot of activity in this market based upon people's perceptions and expectations, which is not always reflecting the real time world. China has released in February 2025, just about a week or so ago, some new draft regulations for comment, which show a further centralisation of control and further consolidation of the industry in China. And that is the rare earths processing industry. And it will ultimately, if the regulations pass into law after the period of comment, will centralise control to the two big firms, Northern Rare Earths and China Rare Earths. And we would expect that smaller independent players will be absorbed in time into these two organisations. It does allow greater control in China on production volumes, And it does for the first time also take into scope via the mechanisms which are used any feedstock which is imported into China, which previously was not accommodated within the previous quota arrangements. So we do await the quotas, which we sort of expect within the next few weeks to see what the ultimate effect of the new regulation may be. However, I think everyone would have seen that the price has already improved by about $5 a kilo for NDPR since the release of the draft regulations. And you don't need to be a mathematical genius to calculate what effect that would have had on our results for the six months to December 2024. The greater control of feedstock, you know, generally we would believe Fabus Linus says we are a proven separator. with proven resources, and we remain the only non-Chinese producer who can bank the full value of any improvements in the oxide prices. One of the other things that I've just referenced here is that we are seeing continued consolidation in the magnet manufacturing area with those magnet makers who are operating at the top end of the market with sort of the highest tech materials growing share. We think that that will drive growth over time. And then, of course, like many, we watch with interest the various global geopolitical moves. Once again, our point would be that Linus is best placed to benefit from any of these because it is absolutely easier to get guaranteed supply from Linus than developing whole new industries or mining sectors elsewhere. in new countries. And that is really the real value of Linus. We have the proven resource and we have the proven capability. And our program with Linus 2025, which has been focused on increasing our capacity to meet growing demand, improving our efficiency to ensure continued profitability and meeting, um, community, government, and indeed our own benchmarks on sustainability will see us in an excellent position as we see the market recover. So I now want to take about 10 minutes to give first Chris and then Alex the opportunity to take you through some of the initiatives that we've executed at Mount Weld and then be very happy to take, and then a little bit about Malaysia and Kalgoorlie, but then very happy to take questions from those who are on the call. So over to you, Chris.