Lynas releases positive results and confirms operating license
September was a month of positive news-flow from Lynas Corporation Ltd. (ASX: LYC | OTC: LYSDY). First at the beginning of the month, Lynas revealed that it had finally received renewal of its full operating license for its Malaysian based operation, the Lynas Advanced Materials Plant, “LAMP.” Following this announcement of the operating license, Lynas released its 2016 results for the year ended 30 June 2016.
The operating license has been a contentious issue over the last few years when the Stop Lynas, Save Malaysia Campaign, which began in 2011, successfully delayed the granting of this license thereby delaying the production commencement date. This delay took the company to the brink of bankruptcy.
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Since this time, under the guidance of its CEO, Amanda Lacaze, who took the helm in 2014, Lynas has been making huge strides and achieving its project goals.
Now following a rigorous review undertaken by the Atomic Energy License Board (AELB) as well as other independent regulatory bodies in Malaysia, it was concluded that the LAMP project is in full compliance with all applicable regulations. Furthermore as Lynas has now been in operation for four years and data shows that there has been no increase in background radiation levels, the license has been granted until September 2019.
Regarding the Company’s financial results, the company made good progress and reported positive production growth, despite the poor pricing environment. The NdPr production facility is now running at full capacity and the business has been breakeven for several quarters.
The increase in production was reflected in higher revenue, which rose to A$196.1m compared to A$148.6m in 2014. Production volumes rose significantly for both NdPr and total rare earth oxides (TREO) to 3,897 tonnes (2015: 2,258 tonnes) and 12,630 tonnes (2015: 8,799 tonnes) respectively.
In addition costs continued to be well managed throughout the year and the operating capacity at LAMP was improved due to the commissioning of the fourth NdPr separation train in SX5.
A consideration of the Lynas share price reveals that despite the positive reports, the share price remained relatively constant. The price during September ranged from $0.055-$0.063. The highest price was achieved on the 16th of September, the day the report regarding the operating licence was published. Since this time, prices have fallen back to around $0.055/share.
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