Lynas Rare Earths Limited

Thank you for standing by. Welcome to Linus 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'll then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the call over to Linus. Please go ahead.

Good morning and welcome to the Linus Reras Investor Briefing for the March 2025 quarter. Today's briefing will be presented by Amanda Lacaze, CEO and Managing Director, and joining Amanda are Gauden Sturzenegger, Chief Financial Officer, Paul Leroux, Chief Operating Officer, Sarah Leonard, General Counsel and Company Secretary, and Daniel Havas, VP Strategy and Investor Relations. I'll now hand over to Amanda to begin the briefing. Please go ahead, Amanda.

Good morning everybody. As always thank you for joining us and thank you for being interested in our business which we wake up and think about from the moment we wake up every day but I'm sure is something which is not necessarily you know on your agendas on a daily basis. I guess today everyone will want to talk about the actions of various governments globally and their impact on the market dynamics for the rare earth market rather than some of the more specific actions and developments at Linus. So with that in mind I would just say that most of you who have spoken with me or been at these calls previously would know that as I have said many times before, the most important feature of any business's success is the development of sustainable competitive advantage. Developing sustainable competitive advantage allows the business to survive, indeed even to flourish, even with difficult market dynamics. Even the most casual observer would know that the rare earths market can be difficult. Marked as it is by low cost competition, concentrated supply chains, fairly change resistant customers, some of whom seem to think that if they cross their fingers and wish hard enough that everything will be okay. and of course the geopolitical posturing and actions of various governments. But the rarest market is also, like most others, market leaders are the most efficient producers, lead industry technically, and offer differentiated products and services. So at Linus, We continue to focus on building our competitive advantage while everything around us gets thrown up in the air like a pack of cards. And I am really pleased to be able to announce today that we have our first product, a small quantity of holmium concentrate, which has been produced from our new heavy rare earth separation circuits. with the all-important dysprosium oxide and terbium oxide to be produced this quarter. In the context of the current restrictions on heavy rare earth exports from China, this is an incredibly important step forward. Our sales team has been engaging with customers for months to develop a sales plan that delivers best returns for Linus. Now, often when people are talking about rare earths and heavies in particular, the focus is on magnets. But it's important to note that dysprosium and terbium are also used in other applications, including, for example, the microcapacitor market, which is considerably less price sensitive than the magnet market. It is the job of our sales team to finalise a best sales portfolio optimised to provide best return to the company. Suffice to say, demand for these materials significantly outstrips our current capacity and we are already assessing options to further increase output alongside continued development of our US project. So Linus's performance during the quarter was very much in line with market conditions and we continue to manage our production ramp up carefully in a market where the US and Chinese government actions are both presenting challenges to our business. However, having said that, the current market dynamics offer the best chance for a sustainable reset of the market as customers are forced to deal with the realized supply risk of magnets from China. As noted in the report, magnets containing heavy rare earths are not being exported from China at present. and the two-way flow of materials including feedstock from the US into China has ceased. In terms of our own progress towards the Linus 2025 run rate, our approach remains to work to prove capacity but not to continue production at rates ahead of demand. As noted in our report, Mount Weld Operations and the Mount Weld Expansion Project are both in excellent shape, performing at or ahead of expectations. Our Kalgoorlie facility is continuing to improve and you will note that we transitioned the cost from the capital account to the operating account from February this year. And our performance at the Linus Malaysia facility in Kuantan continues to improve and really, in a very satisfying way, with several very complex new circuits coming online, including the front-end receiving and processing of mixture areas of carbonate, The new flow sheet for separation of NDPR, which has given us sort of the uplifting capacity. And of course, importantly, as noted earlier, the new heavy rare earth separation circuit. As we note in the report, the US project is awaiting finalization of a further cost review. This is driven by a combination of new design to accommodate some of the wastewater permitting challenges that we're facing at the selected site, but also importantly by the effect of the tariffs which have been applied particularly in US and Chinese jurisdictions. I think as all of our shareholders know, we are risk averse on this project and are not inclined to take cost inflation risk. Of course, if we see real progress on downstream development in the US and or Europe, that may change. But for now and the immediate future, the nucleus of the rare earth market remains in East and Southeast Asia. And we at Linus are strong because we operate in this geography and we operate with now a strong and supportive relationship with the Malaysian government. We will continue to build our competitive advantage. We operate at the bottom of the cost curve. We are bringing new products and applications online. We have strong customer relationships which are built on our proven, not planned, track record as a reliable supplier of quality product. And we have a skilled, capable and committed team of people who are dedicated to ensuring the success of the Linus business. So with those as opening comments, I will leave as much time as possible to take questions because I am sure there are many.