EDITOR: | June 7th, 2017 | 7 Comments

Lynas Targets Multiple Rare Earth Supply Chains

| June 07, 2017 | 7 Comments

Amanda Lacaze, Managing Director of Lynas Corporation Ltd. (ASX: LYC | OTC: LYSDY) in an interview with InvestorIntel Editor Peter Clausi discuss the Australian’s rare earth plays. Being the largest rare earths producer outside China, Amanda tells us of their primary product, neodymium and praseodymium (NdPr): “it is not a commodity, it is actually a specified functional material; so it can’t be sold into a pool and then sold out, and that’s a very good thing for our business.” Lynas also targets the mixed oxide supply chain with lanthanum and cerium, and they reported record-breaking positive cash flow last quarter of AUS$11.6 million.

Peter Clausi: Lynas has had a great year so far.

Amanda Lacaze: We’ve been quite pleased with this year. There’s been a lot of heavy lifting in Lynas and I know that you have tracked Lynas’ performance over time. We’re pretty happy. We’re in a good spot now. We’ve now got 100% of our assets commissioned. We’ve got one separation train yet that we’re going to look at how we actually bring that into play, but we’re operating at slightly above design rates for Nd Pr which is the most valuable of the materials we produce.

Peter Clausi: A year ago you came to the conference saying you had erased debt, you put the assets— getting them ready for production and you had said it was going to be a big, big year. Now a recent press release shows that you have positive cash flow.

Amanda Lacaze: Actually I’m not sure that I said we had erased it. We’ve taken it away as a continuing issue. In fact, in the year just passed we did do a further rescheduling of the debt. I think we may have some of the cheapest money in the world seeing we’re secured at 2.5%. Our bond is now at 1.25% coupon. Both of those debts have been pushed out, so we have plenty of runway.

Peter Clausi: Is that with a bank or a private lender?

Amanda Lacaze: The senior secured is with a company called JARE, which is a special purpose vehicle combined from JOGMEC, which is a Japanese government instrumentality, and Sojitz. Our subsidiary convertible bond is actually with a group of hedge funds basically. Both of our lenders have been very supportive during the period of time that the business has been both ramping up and also dealing with the most unfavorable market conditions that most people can remember. We are very aligned. We’re very aligned on making a strong and successful business that sees good returns to all stakeholders…to access the full interview, click here

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  • JJ Beswick

    Seems it’s Lynas then daylight in the RE space.
    They’ve survived -by the narrowest of margins- to become a viable business with positive cash flow, stable production & a customer base.
    They’re the second biggest NdPr producer in the world and the only one of any significance ex China.
    It won’t be any easier for those seeking to follow.

    June 10, 2017 - 6:58 AM

  • asrms

    Totally agree. It is going to be 3 to 5 years before we see any (if any) of these now highlighted companies actually producing after having been able to find actual financing for their projects, matching product to real needs (as Lynas does), and dealing with all the regulation requirements and facility problems that new coming on line processors/manufacturers experience. Lynas despite all the problems/detractors they have faced are setting themselves up into a moat position outside of China.

    June 12, 2017 - 8:26 AM

  • Tim Ainsworth

    New paradigm emerging, investment mkts lagging:

    “Praseodymium neodymium oxide market currently on the market price of 32.5-330,000 yuan/ton, the separation plant stock not much Futures should at least be the one month later, some stock brokers currently there are no shipments, strong stock to be up emotions.
    Neodymium-praseodymium metal market price of 32.5-335,000 yuan/ton, due to oxide procurement difficulties, part of the metal factory has temporarily stopped quotes, not many recent shipments, also has metal factory said metal stocks now are not many, only a small number of shipments, only supply to existing customers.
    This year rare-earth crackdown is going with, intensified combat against broader, effect more visible action, illegal supply of the market has been curbed, reducing supply, provided strong support for prices, environmental verification will continue to help in the rare-earth market also rose.
    Expected black and the State reserve will be billed based on market rising market tightening, praseodymium and neodymium prices will continue to rise in the short term.”


    June 30 comment Baotou Exchange, read Beijing.

    July 1, 2017 - 9:01 AM

  • Robert Richardson

    To suggest that the current market cap of Lynas is surprisingly low seems an understatement to me….

    July 1, 2017 - 9:21 AM

  • JJBeswick

    Agree Tim.
    Finally, China is gaining control of RE production.
    Low cost low quality illegal production is in noone’s interests.
    We know Lynas is a low cost producer compared to its Chinese peers. (Baotou’s about equal in overall costs.)
    Any price upside will be amply leveraged given the operation currently has a small margin.

    July 1, 2017 - 12:46 PM

  • Tim Ainsworth

    Lynas carries no legacy costs, far from optimised, particularly given scale, let alone potential scale, and mkt shifting rapidly to captive. Interest should be more than interesting, early fruit picked/plucked.

    July 2, 2017 - 9:03 AM

  • InvestorIntel Rare Earths Monthly – June 2017

    […] Lynas targets multiple Rare Earth supply chains […]

    July 7, 2017 - 5:53 AM

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