LYNAS CORPORATION LIMITED 2002-05-02 ASX-SIGNAL-G
HOMEX - Perth
+++++++++++++++++++++++++
* China's largest producer of tantalum and niobium metal joint
ventures into tantalum and niobium sublease sector of overall Lynas
deposit
*Chinese partner locks into 100 per cent of tantalum and niobium
off-take
*Shared costs provide further infrastructure cost reduction
Lynas Corporation today announced a joint venture (JV) with China's
largest producer of tantalum and niobium powder and wire, OTIC
(Ningxia Orient Tantalum Industry Co Ltd) which generates $8.5 mln in
cash for Lynas. The deal follows the completion this week of the
Lynas transaction with Anaconda Nickel Ltd which gives Lynas 100 per
cent of all non-phosphate minerals in the Mt Weld project area.
The JV with OTIC is for a specific sublease sector of the Mt Weld
deposit and for the tantalum and niobium minerals in it. It is quite
distinct from the main Rare Earths deposits at Mt Weld which remain
Lynas' overall key project focus. In the JV between Lynas and OTIC,
Lynas has sold, subject to relevant Chinese Government and Australian
FIRB approvals, a 51 per cent interest in the Crown tantalum/niobium
deposit at Mt Weld for $6.5 mln to OTIC.
OTIC has also agreed to a $2 mln equity investment in Lynas. Lynas
President and CEO, Mr Nicholas Curtis said that the $2 mln placement
by OTIC in Lynas is at 28.5 cents.
Lynas estimates its contribution to complete a bankable feasibility
study on the JV tantalum and niobium property is approximately $1
mln. This will leave over $7 mln available to Lynas towards the
fast-track development of its Rare Earths project. The JV will
complete the feasibility study for mining the niobium/tantalum
resource with a view to mine construction starting in late 2003. The
project will produce a tantalum niobium concentrate. The study will
focus on international and Chinese technology for the concentration
process, in line with the work being done by Lynas on the Rare Earths
deposit at Mt Weld.
OTIC is a Chinese Government controlled company listed on the
Shenzhen Stock Exchange. It is the largest tantalum producer in
China, with annual production of 200 tonnes of tantalum powder (18%
of the world output), behind H.C. Stark of Germany and Cabot of
America and 100 tonnes tantalum wire (40% of the world market and the
largest producer in the world). Current customers include Kemet and
Vishay, NEC and Hitachi - major producers of capacitors.
Lynas President and CEO Nicholas Curtis today said that under the
terms of the sale and creation of the JV, OTIC will be obliged to
take 100 per cent of the niobium/tantalum off-take. Lynas will have
the right to 100% of the Rare Earths by-product at its option.
"This approach eliminates all the risk associated with
tantalum/niobium sales and will give us a guaranteed cash flow from
that sublease section alone," Mr Curtis said. "The deal gives us
several major benefits for the overall Rare Earths project
development:
it frees up $7 mln for the main Rare Earths project development it
reduces further the main project infrastructure costs it accelerates
further the project fast-tracking "The sublease JV agreement provides
for the JV partners to provide 50 per cent of the total Mt Weld site
infrastructure costs. There will be one centralised location for the
plants and associated infrastructure for all activity on site. This
means that the actual infrastructure costs of the Lynas stand-alone
Rare Earths activity will be reduced by 26 per cent.
"In addition, OTIC will be providing, through their interest in the
JV, $1.9125 mln of our contingent liability to Ashton (being 26 per
cent of the $7.5 mln contingent payment due to Ashton).
"The whole thrust of the transaction from Lynas' point of view is
that it retains our key focus on the Rare Earths project, while
providing us with a diversification into the valuable tantalum and
niobium market as a primary supplier to China's largest producer.
"Lynas will manage the tantalum and niobium JV project. "The benefit
to OTIC is having access to the world's richest tantalum and niobium
deposits which are at Mt Weld.
"Initial processed output is anticipated to be around 2,500tpa of
niobium. The JV will be looking to expand these production figures."
Niobium is used primarily in the production of high strength low
alloy structural steels and in natural gas pipelines. Niobium also
has potential for major applications in the electronics industry,
alongside tantalum.
For further information:
Nick Curtis Doug Macdonald
PRESIDENT and CEO CAPITAL FINANCIAL COMMUNICATIONS
Lynas Corporation 0408 143 404
02 8259 7100
BACKGROUND INFORMATION FOLLOWS:
OTIC BACKGROUND
Ningxia Orient Tantalum Industry Co Ltd (OTIC) is the largest
tantalum and niobium producer in China, with annual production of 200
tonnes of tantalum powder being 18% of the world output, behind HC
Stark of Germany and Cabot of America and 100 tonnes tantalum wire
being 40% of the world market and the largest producer in the world.
More than 80% of the products are for export to 29 countries,
especially USA, Europe and Japan. Current customers include Kemet and
Vishay, NEC and Hitachi - major producers of capacitors.
According to OTIC's 2001 Annual Report, the financial status as of 31
December 2001 (exchange rate USD/RMB () =8.28 and AUD/USD=0.538):
Sales revenue 1,225,383,888 A$275,367,165
EBITA 294,576,871 A$66,197,049
Net Profit 178,397,581 A$40,089,344
Cash in banks 419,996,471 A$94,381,229
OTIC was listed on the Shenzhen Stock Exchange on 20 January 2000,
with 58.18% share owned by the Chinese Government. On 30 April 2002,
OTIC's market value is:
No. of shareholders 39,397
Total shares issued 356,400,000
Share price 14.79 A$3.32
Market value 5,271,156,000 A$1,184,529,438
Besides further development of its tantalum technology and capacity,
OTIC has recently announced the successful development of new niobium
powder with up to 100,000 f.v/g electronic capacity. The large
international capacitor producers view this material as a high
quality material for possible use in next generation of capacitors.
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