lynas conference call summary

My summary notes below. Total confidence displayed by all concerned including callers with questions imo. Nothing to worry about if i am any judge of people.

Australia
Safety: greater than 8 million Hours of safety.
Safety = efficient and safe operation. Ahead of expectations.

Recoveries well ahead – 36% Concentrated grade – Concentration plant is significantly de-risked.
Malaysia delay means larger stockpile than normal.

Duncan
Deposit is alongside major pit design. Separate deposit to Mt Weld. Different mineral structure. Excited as it is high grade relative to other RE deposits (4% head grade) significant heavy re. This is strategically significant as a supplier of HRee. One stop shop for full suite of products to magnet clients. Extensive discussions with clients, well advanced on test and scoping. Announce near future regarding scoping results.

General
Finance (Mt Kellett) fully subscribed. 211.2 m to fund costs thru to first cash sale. 303.5 m.
Rare Earth price easing. NC Japan trip – significant inventory build up by japan. Demand has as a consequence fallen away. LYC believe demand is rebounding significantly, magnet demand big increase. China increase today for first time in a while. Price stabilization happening and align china and non-china pricing.
RE Price Levels are where they need to be maintained by China.

Malaysia
Safe! The LAMP is ready for handover is ready for commissioning. System pre-commissioning (test packs) ready to go is greater 90% complete. Near to full completion. Perm staff is now 251 (90% total workforce).

Issue overhanging – ambiguity of License issuance state. Approval is received (1st feb). They have a temporary license due to natural occurring radioactivity otherwise they would have a permanent license. In the normal course of business they would have been immediately granted a 2 year TOL to demonstrate that they are inline. The TOL/ POL is not a environmental approval milestone, however the politicalizing has led to an abnormally higher level of scrutiny than normal. Approval is very important step.

The license delay caused by 2 x legal challenges / appeal. The appeal decision is not overly long away.
A parliamentary steering committee was established due to anxiety to ensure Malaysian people concerns are addressed (PSC) and there are 2 meetings scheduled in May. Process separate to judicial and appeal process.

Outcome of the appeal is unclear rigorous investigation is healthy and fine.

Legal
Groups crossed line between facts and defamation. (Free Malaysia Today media portal and SMSL). Lynas have been tolerant however defamation is not acceptable. Targeted and defamatory statements and should be shut down.
Legal position taken to protect reputation and avoid false and misleading statements to ensure objectivity and fact not emotion and defame.

LAMP
Phase 2 happening And contracts awarded. >50% construct complete.

Questions from callers

•BBY – Clarify will there be a further high court challenge? NC, Can’t predict what will happen however do not expect any as all processes were followed re AELB act. Therefore they have stepped back from involvement. BBY - When minister decides, no further reviews are possible? (NC wait and see).

•BBY – LAMP construction is 98% complete, yet another $75mill required, why? Basically because contractors have payment terms etc. such as pay 90 days from invoice and project acceptance.

•AH Patersons – Uptick in RE price in china – 40-50% differential from domestic and fob price in china. NC Believes a structural deficit in market due to inventory, just about out of system now. Good for industry. Industry users better off with some stability in pricing. Price levels are close to ideal currently.

•AH Patersons – Is RE price a reaction to LYC coming on stream. NC; no, LREE pricing is china induced, HRee strong price growth means higher demand

•Ah Patersons – Court appeal re AELB complete, 3rd legislative process what is the aim – NC Aim is not to judge the license, but to ensure Malaysian people are heard and concerns dealt with by Malaysian Govt. Politicians and academics involved in the appeals which are not judging the TYOL decision, they are meeting and discussing people concerns. NC is confident that IAE and AELB are ok with the decision. NC and AH of Patersons are both confident that everything is in place for a TOL.

•ME CLSA – Clarify Appeal heard and announcement soon. Will license be issued if appeal ok or does steering committee have an announcement due. NC, PSC is not about license! AELB are it! MOSTI outcome is what we need (after appeal process is completed). Expect that law will stand if we get all licenses issued that are approved. LYC can then import concentrate.

•Ip GS – If all licenses approved could they feed now? NC 2 weeks as kiln is ready but they have a bit of pre commissioning work to do. When they have license how long for material to go in and when will it produce and 1st cash flow? NC transportation to LAMP 4-5 weeks, Feed Kiln immediately, 44 days from feed to produce (allowed 60 for first feed) sales period requires acceptance from customers and payment term = lag of 1 month to bag, deliver then test accept and get payment. So 18-19 weeks for first run and payment then approx. 16 weeks thereafter.

•LF AFR – Timing when expect license? NC Govt hands. No direct communication re timing. Process is being worked through. Report by June. MOSTI will have no delays on process once the appeals process has been completed.
Caller # Asked what was actually stated as the reason for LYC defamatory action? NC Clarity required that plant must be based on fact and real issues not personalized attacks on company or people based on false and misleading information. Does NC want a retraction? NC remedies sought prior to filing case but not forthcoming so went to court?

•LC Private Investor – No new contracts signed. Is that due to Malaysia delay and when LAMP running cash flow when? NC Time table provided. Satisfied with customers and discussions. Substantial contracts to come just waiting for final TOL approval. Confident it will come.

•PK Fairfax – Defamation, clarify timeline of action? April 10? NC Not a highlight, don’t want to discuss as were forced to take action. No value in escalating and before courts. Not taking lightly. Leave it there

•LM Private Investor – Hypothetical, Will they fly some product through rather than ship concentrate? NC Start up timetable after they know about license issuance. Understands urgency required but not doing anything until TOL issued.

•MH BBY – $75.8 mill left to spend, is it separate from $31m operational cost? NC yes.MH, Is $31 million indicative of quarterly burn rate? NC Almost at full employment so yes, fixed cost per qtr around $31m

•RG Private Sh – Talk a year ago on waste road base, what stage is that at? NC, research complete. Residual product stored is safe. PDF is something that was best practice recommendation by AELB. Road base research is highly encouraging and will be there best means for dealing with most, if not all solid waste. Gypsum is produced by Lynas waste and is required by customers in Malaysia and externally. Commercial discussions happening however no outcome as yet. Difficult to get a contract on material as yet not produced. Once happening confident to monetize waste product.

•PC RBS – Page 15 of report cost for phase 2 is that an accurate figure? – NC total budget is $250 m Current $130 spent so $120 left to spend on completing phase 2.