another write up

LYC’s main shareholders are: the CEO Nick Curtis (4.6%), JP Morgan
(5.25%), Goldman Sachs (7.0%), Merrill Lynch (5.7%), Tell Capital (6.1%)
and The Capital Group Companies (5.6%). ARU doesn’t have such “prominent”
list of main shareholders.

Finally, LYC already seems to have some customer contracts in place.
According to …[a] report more than 50% of their product is already scheduled to go to Japan, which nicely fits the Toyota/Honda picture. In this report they also say that commercial production is scheduled to commence between July and September, 2009.

The above information comes from the following report at www.steelguru.com:

Lynas to supply over 50% of rare earth products for Japan
JMB reported that Australian rare metal producer, Lynas Corporation supplies rare earth products to Japanese market with 3 to 5 years contract by developing Mt Weld mine in Western Australia.
The firm already started construction of concentration plant in Australia and plant in Malaysia to process and refine concentrate from Australia.
Mr Nicholas Curtis executive chairman of Luncas Corporation said the firm starts the commercial production in July to September 2009 and the sales to Japanese customers would represent more than half of the total sales.

P.W. reports that Lynas C.E.O. Nick Curtis has an impressive track record of success in the mining world. He was originally a banker, then spent most of the 90’s in China with the Chinese National Non-Ferrous Corp. (CNCC) working on acquisitions and then working in their gold division to crate Sino Gold (ASX:SGX), which delivered a gain of more than 500% to its early shareholders. In 2005 he bought into Lynas perhaps anticipating the unfolding REE story (Lynas had an option from Rio Tinto on the Mount Weld project).

A consultant’s feasibility report for Lynas’ Rare Earth project can be reviewed here. The company’s web site contains what seem to me to be impressive progress reports including the latest quarterly report that indicates financing, mining approvals, plant construction, and sales discussions that resulted in Letters of Intent all having been achieved.

Here is a section of the web site that summarizes Lynas’ corporate strategy:

Lynas has a strategy of creating a reliable, fully integrated source of supply from mine through to customers, and to become the benchmark for security of supply and environmental standards in the global Rare Earths industry.

Lynas owns the richest deposit of Rare Earths in the world at Mt Weld, 35km south of Laverton in Western Australia. A feasibility study has been completed on the Rare Earths deposit and all Australian approvals required for project development have been received.

Over the last year Lynas has observed a trend in Chinese Government policy decisions which is leading to an increase in Government control of the Rare Earths industry in China and the tightening of supply due to the imposition of mining production quotas, and the reduction and restrictions on trading of the existing export quota. These policy decisions have followed the removal of VAT rebates for exports of Rare Earths oxides and an increased enforcement of China’s stringent environmental standards which resulted in the closure of non-compliant Rare Earths plants.

Shortly after the introduction of production quotas in China the company determined it was prudent to investigate potential sites other than China that would be suitable for the company’s proposed processing plant for Mt Weld ore. The drivers for this decision were the:

Increasing Government control of the Rare Earths industry in China, thereby increasing the project risk for our plant
Escalating operating costs in China due to the Government policies noted above, and also inflation affecting cost of reagents, utilities and labour
Favourable tax environments available in alternative countries
Opportunity to reduce cost base denominated in Renminbi, and thereby benefit from a strengthening Chinese currency
The first stage was to relocate the concentration plant from China back to Mount Weld, and the next phase was to develop an Advanced Materials Plant to process the concentrate through to the final product.
Following a detailed evaluation of several possible sites, Kuantan, in the state of Pahang, Malaysia, was chosen for its favourable investment climate, the high quality workforce, the excellent infrastructure servicing the proposed site and the readily available reagents used by the Plant.

Lynas has been granted the “strategic pioneer status” by the Malaysian Industrial Development Association (MIDA), which has a number of associated benefits including a 12 year tax free period.
Kuantan offers a highly skilled and educated labour force with experience in the chemical industry and a key benefit is also their English proficiency.

The state has a robust and first-class transport network, comprehensive communications networks and reliable supply of natural gas, electricity and water at competitive prices. Kuantan has excellent port facilities for handling bulk liquid chemicals and containers to accommodate the transport of. Mount Weld concentrates to Gebeng in sealed containers.

Of significant advantage for the Gebeng Industrial Estate site is the fact that manufacturers of key reagents required for the process (lime, sulfuric acid, and hydrochloric acid) are already established in close proximity to the proposed plant site.

Lynas has received the environmental and municipal approvals from the Malaysian authorities and has commenced construction of the Advanced Materials Plant in the Gebeng Industrial Area in Kuantan