I was going to do a good/bad assessment of the FY23 report, but one point got so elaborate so I'll post it alone:
First off, I like numbers, and I like when things fit, like in a jigsaw-puzzle. So I was initially very perplexed with the 'capacity increase' to 9,000 tpa (NdPr equivalent) at Kal. After all, we have been promised both 10,500 and 12,000 tpa before and it's been the motivation for spending north of a billion dollars capex. It sounded like others were confused about this on the call too. To get this clear, I put details it in a timeline:
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August 2017Unveiling plans to expand nameplate (~5,400 tpa) production rate to 'NEXT' rate: 7,200 tpa NdPr. This included upgrades to both Mt Weld and LAMP. Capex ~$35m. A VERY important point here is that this was, in hindsight, a fool's errand.. LYC was counting on an uplift in our processing limit, which has yet today not changed. In other words, we have had the capacityfor 7,200 tpa, but the processing limits imposed by the government prevented us going at this rate continuously.
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May 2019We were presented with a $500m capex expansion plan, and construction of our Kal facility. This was to expand our NdPr capacity to 10,500 tpa and to in part de-risk regulatory issues. However, this was an expansion rather than replacement of LAMP. In other words, LYC (perhaps naively) calculated LAMP + Kal to be 10,500 tpa. So, assuming nameplate at LAMP, Kal was originally meant to bring an additional capacity of ~5,000 tpa.
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August 2019
YBY has a hissy fit and forces us to relocate C&L. I'm guessing sometime around this point priority one became to at least replace LAMP c&l capacity (7,200 tpa) at Kal.
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August 2022
Mt Weld expansion plans. For $500m capex plans to increase feedstock capacity at Mt Weld to 12,000 NdPr equivalent per annum (up from ~7,000 tpa).
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August 2023
Kal nameplate capacity increase from 7,000 tpa to 9,000 tpa.
To summarise (reading between the lines and making some assumptions, because these pieces don't fit all that well together):
-Mt Weld capacity is today ~7,000 tpa (NdPr equivalent), and plans are to increase this to ~12,000 tpa.
-Kal was originally planned to add ~5,000 tpa capacity (to bring us to ~10,500 tpa when including LAMP c&l). After licensing restrictions were imposed, I'm guessing the plan was to at least 'replace' LAMP NEXT capacity (~7,200 tpa). Now we have increased this to 9,000 tpa.
There is still a gap between Kal capacity and Mt Weld. USA will have capacity of ~1,500 tpa NdPr, but there is still a gap.. How are they planning to fill this? In the original plans there were mention of two other avenues each with capacity of ~2,400 tpa NdPr - what exactly are these avenues? Still on the table? Why have there been these gaps in capacity at all? Mt Weld/LAMP/Kal should be planned as an ecosystem, not like individual entities.
I don't know if LYC reads this, but if you do: as bullish as I am on LYC long term and as much as I'm a fan of AL, I have to say this has been communicated extremely poorly. Lots of numbers thrown around, used for capex justification, yet an assumption of these numbers have been continuing operations in Malaysia. This has been extremely native.
Am I missing something? I'd love for people to chime in and have a discussion about this (minus resident down rampers).
ps Don't worry, I have a positive post re the report soon..
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