Ann: Partial Conversion of Convertible Bonds, page-37

Hey DD -

The clauses regarding the rising of interest rates (Annex. A, Amendments to Debt Facilities, LYC Announcement 10/2016), seems to suggest there are 3 conditions that need to be met before interest rates can rise:
(1) for 6 consecutive & preceding test dates, the weighted average sale price of NdPr is >= $38 USD/kg
(2) only considers the WASP of the NdPr sold by LYC
(3) test date only considers the WASP at the last day of each calendar month

LYC's Q4 update indicated that NdPr price just touched $38USD/kg in June (but can't tell whether it is average, or if it was the test date), so my guess is that the interest rate rise is still 3-6 months away

Regarding the VWAP 160% and the concerns over MtK pushing harder to convert, it also does not seem to be a material concern.

The Amendments to Debt Facilities issued in 10/2016 did not appear to have amendments over the definition of LYC's Redemption Period. Thus, IMO we can assume the original definition of Redemption Period still stands since the issue of the Convertible Bond Deed Poll, page 9, in 2012:

" Redemption Period means the period commencing on the date occurring 42 months after the Tranche 1 Subscription Date and ending on the date occurring 54 months after the Tranche 1 Subscription Date"


Assuming both Tranches 1 & 2 were completed in 28/02/2012 (see announcements), then LYC has already passed the Redemption Period and, therefore, MtK probably don't have any urgent motivation to convert all the remaining bonds.

Disclaimer - I'm not a lawyer - just drawing some observation and interpretation to publicly available information. Please kindly offer your correction if any mistakes are apparent and/or misleading.

Many thanks.