During several recent discussions Ausheads has told me how clueless I was , how I had no understanding of Lynas process. Why My figuring out that feed to lamps was over nameplate while he said it was well below was ridiculous. I derived two different ways that current feed was about 22K ton. ridiculous according to him.
I asked where the extra Nd Pr came from if they were feeding well below name plate and never had a response. I am sure many have followed this.
Now thanks to goofy who in another post said I was presenting bad info I had to go back and find in the Q2 Activities Report for proof I was just saying what company had said. While in that report on page 5 I notice this item which I had forgotten
“During the December quarter, Cracking and Leaching (C&L) at the LAMP treated over 2,000t REO in concentrate per month for a total of 6,700t REO. The C&L kilns continue to operate at above design rates.
So during December they fed 2KT REO, not ore. That would be a run rate of 24KT Reo a year. . Now they did process this much to a finished state. But if NdPr is only 24% which the company still says it is, March 23 Then (3913 / 24% )*34% = 4.3KT Reo should have been finished. Only 3913 was so about 500T was not finished. My guess is it was Ce La blend, price is very low and has not changed at all since September. See charts one up from bottom.
http://www.metal-pages.com/metals/cerium/metal-prices-news-information/ for change history.
I want to be clear I have no problem believing that leaching and cracking could handle 50 KT Reo a year maybe more. The fact they are only running two Kilns with one warm standby proves this.
There are many other potential bottle necks. Biggest is SX2 which all product has to go through. All NdPr has to go through Sx7. Until recently I agreed with Ausheads that SX 5 was Key to NdPr production Chart in March 23 presentation show clearly it is SX7. Yes I am still learning including who to believe without checking.
He says it will be easy to increase NdPr by over 30 %. My only argument to this is AL
“
· RECORD PRODUCTION: NdPr production, at 1,331 tonnes for the quarter, reached design rates”
“In the December quarter, Lynas achieved NdPr production at design rates, ahead of the previous guidance which indicated production would be at 90% of design. We produced 1,331 tonnes of NdPr up from 1,176 tonnes in the September quarter. Total REO production at 3,913 tonnes was up from 3,665 tonnes in the prior quarter. These production increases highlight a continuation of solid production and operational performance. We expect these improvements in production to be sustainable.”
Now for this quote there is a question for me on what “Sustainable” refers to. Is it the increase in Production rate or the current production rate? As a conservative investor I will use the second. If first Q3 & Q4 should show how wrong I am. Form your own opinion.
Aushead maintained strongly that feed was well below name plate and that was key to his argument for increases in NdPr production. Now I find this company info saying December had yearly run rate 24KT REO. 10 % over name plate. I would have a very hard time investing in Lynas. Based on his conclusion that NdPr is going up in volume without some concrete proof. I cannot say he is wrong, I will say there is little supporting evidence. Time will tell.
Conclusions. Forward looking statement are always subject to error and change but I do my best to be logical with data. Some will disagree! To determine who to believe evaluate their arguments of why I am wrong. Evaluate data they present.
NdPr volume is unlikely to increase much. Possible but not something to go to bank on
NdPr Sales where 100 tons more than production. A nice boost to revenue and ASP. In previous Qs we were not given any info into this. I doubt there is much NdPr in inventory to continue this. We will see.
For Nd Pr which is a very high percentage of revenue (75%?) most revenue growth will come from price increases for NdPr
La Ce and LaCe blend.
La Ce blend is 36% of Lynas output. I have also shown that there has been no price activity for this product. That on page 7 and 9 of March 23 presentation they show uses for different products. No use is shown for CeLa Blend My Guess is that only market is for those that fully separate it and that market is small. The only potential for revenue growth I see is if they can separate more of it. Reducing the 36%. . They are working on Improvements in this area so there is potential.
Pure La 12% of output Pure Ce 23% of output. March 23
rd page 9. They are making improvements to these products and that should help. La has a price of about $5.00 if price doubles between market price and improvements that only adds $5.00 * 0.12 =$0.60 to ASP Both the doubling and $5.00 are high. I will be generous and say CE has a market price of $4.00 If it price doubles than $4.00 times .23 = $1.00 It helps but this is not what will get Lynas to making 1 cent / yr on P&L
All real revenue gains have to be primarily based on Ndpr.
We will see what happens to production cost and ASP in Q3. Knowing that and using H1 report we should have a better idea of what it will take to break even on P&L for FY ’17 And what it might take for a 0.50 cent / SH profit in H1 ’18. 1 cent / yr
(20min delay)