Lynas Corporation has moved to address a looming shortfall in funding for the development of its Malaysian rare earths refinery.
Sydney-based Lynas called a trading halt on Monday, citing the pending announcement of a “funding transaction”.
Analysts speculated the company would need to raise money to see it through to the completion of the refinery.
As at the end of September, Lynas had $122 million in cash yet the remaining budget on the project was $144 million.
The company has a $125 million working capital facility in place with JPMorgan Chase and Sumitomo Mitsui Banking Corp.
However, pre-operating approval for the refinery is understood to be a condition of drawing down on this debt.
The Malaysian Atomic Energy Licensing Board is due to meet next week to decide whether to grant a temporary licence to Lynas.
The board’s decision will then be debated by the full cabinet of the Malaysian Parliament.
Investec analyst Geoff Meurs said last week that Lynas had several options for securing additional funding, including offtake pre-payments and selling rare earth concentrates direct to China.
Japanese companies Sojitz and Japan Oil, Gas and Metals National Corp, which has provided Lynas with $US250 million in debt to accelerate the expansion of the refinery, could make some of that funding available ahead of time or extend more
AFR.com
LYC Price at posting:
$1.28 Sentiment: None Disclosure: Not Held
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