The concentration plant aspect is significantly derisked.
Staffing levels are at income earning levels and cash burn at similar levels as they will be when earning income
LAMP - Focus is now completion of wiring etc - progress pre-commissioning tests - engineering requirements - piping etc - First product out the door 2nd qtr 2012 - Construction staff increased.
Temporary Licence - Issue pending no comments however LYC respect Govts processes no shortcuts. - Everything is good to go once Temporary license issued
Focus on Phase 2 - Going very well - Contracts awarded - Malaysian contracts issued - Early 2013 construction completion - Expansion phase 2 on time on budget money ready (Sojitz) - Online earl;y 2013
Resource increase
Duncan lower grade than Mt Weld, Mt Weld richest grade in world.
Duncan - is different, important due to mineral distribution, higher level dysprosium. Allows provide full suite of RE to customers- UNIQUE!
- Test work on Duncan is encouraging and LYC believe that Duncan will be a real expansion project for LYC - Early 2nd qtr anticipate a decision to proceed. - LYC customers want LYC to advance Duncan asap
$225m
- Pleased MK are investing in LYC as anchor investor. $50m received and the remaining $175m once due diligence complete. - The 2.75% is effective long term low cost funding.
NOTE: POL not a condition of this money
RE Market
- Volatile - Predicts that structural readjustment into high demand period will ensure long term basket prices - Prices will reflect structural deficit of supply - China price and International price need to be closer together for non china market competitiveness. - Chinese quotas issued are environmental based and will cause stress on market and LYC are benefiting - Clean supply chain to supply RE for environmentally safe products IE magnets etc - Chinese Govt are serious about rectifying production
NC Stressed obtaining Temporary licensing (New term for the POL) and production are key
Questions
Introduce RE into LAMP prior to concentrate (pre-seeding) is a 44 day cycle (allow 60) to test prior to concentrate being fed, REO packaging onto actual sales etc
Recoveries or ORE from Mt Weld are 10% above stated target in DFS. Is it sustainable? NC Yes! however NC did note that this additional resource wouldnt equalt additional profits (additional ore provides longer mine life) as LYC can only produce REO as fast as the LAMP rate can take input. Cost profit ratio per tonnes is greater but not more production
Chinese quotas are very serious and they will not back down on ratios in China!
RE prices - Chinese internal profitability level = Environmental cost now being included so 25-27 per kilo is now break even for internal Chinese producers (was $15) Water treatment etc will increase more costs per kilo to producers in china. Estimate of internal re costs
Duncan grade improvement of Dysprosium = 10 x greater grade than Mt Wled and Mt Weld has no yttrium and there is 5% in Duncan!
Costs
Ops costs $14.4m includes Mt Weld in full and labour at Lamp and all shipping for stage 1. Stage 2 fixed costs do not increase substantially.
Phase 2 56m spent = 38% project completion
up from $16m to $28m burn in qtr (Staff & full production) $28m per qtr will be close to ongoing when in income producing mode
WTO - did not include RE in decision. global structural deficit of RE not just china so unlikely to.
Engineering requirements- Additional engineering works and costs were due to pipe flanges etc (due to lengthened piping etc). No changes to leeching tanks welding etc
Political -Respect local processes, more required to win local favour.
Long term storage - Suggestions such as LYC Island/aus/on site? NC - No comment on ill informed speculation. LYC have met and will continue to meet all standards. regulatory authorities are the only ones that matter
Malaysian press report - Peoples Alliance (PAS) are saying they will terminate the LAMP if they win office- NC it is not PAS saying this. Fuziah is a minority (a single member of a party) and no position within the greater PAS. She is only person saying revoke POL not PAS. PAS have stated they are happy with LYC and have not said they would close LYC.
Completion - 85% in Sept, now 91% what delays? Delays and swings are caused by delays in work completion and also by LYC not accepting work offered as completion and have asked for some works to be rectified and or re done.
Gypsum from waste research - Advanced well. Technically it works. Commercial situation will not emerge until product is created (LYC are in discussions with customers) for road based and pure Gypsum (no iron) suitable for construction industry
Contingency if no POL granted - NC we are confident with our current business plan.
Northern Minerals Dysprosium - Would LYC buy ores from other RE players? LYC are a shareholder and comfortable at the moment
Sounds good to me folks.
LYC Price at posting:
$1.33 Sentiment: Hold Disclosure: Held
(20min delay)