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Solid result sends Lynas to 6-month high

Shares in rare earths group Lynas (ASX:LYC) made a strong start to the week on Monday, jumping to their highest level in more than 6 months after the company revealed a solid performance for the December quarter and half year.

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The shares closed at $9.71, up 6.9% and the highest they have been since last August. The $9.71 close was the high for the day.

That was after Lynas told the ASX in its December quarter report that sales revenue reached $232.7 million – up 42% quarter on quarter and 15% on the final quarter of 2021.

Sales receipts came to $168.4 million – down 28% quarter on quarter but up 11% on the on the year ago quarter.

That was after it produced 4,457 tonnes of rare earth oxide – up 27% quarter on quarter and 6% on 2021.

Of that production of oxides, Lynas said Neodymium and praseodymium (NdPr) production totalled 1,508 tonnes – up 44% quarter on quarter and 11% on the pcp.

As a result, Lynas said it ended the quarter (and 2022) with $934.2 million of cash and short-term deposits. That was down from the previous quarter’s $1.026 billion.

The December quarter saw a rebound in rare earth prices and the easing of water supply disruptions at its downstream processing plant in Malaysia.

Sales receipts, at $168.4 million, were a reflection of timing of deliveries which occurred later in the quarter. “A higher sales price was achieved for SEG and new La-Ce speciality products which improved our average selling price despite flat market pricing with an average China Domestic Price for NdPr of US$83 per kilo during the quarter,” CEO Amanda Lacaze said in Monday’s statement.

“Market prices started to increase again from December in anticipation of the late January Lunar New Year holidays and an expected rebound of the consumption in China,” Lynas.

“Future pricing trends will depend on China’s economic recovery,” she added.

“Lynas continues to focus on increasing production as our customers forecast very strong demand in calendar year 2023. Lynas continues to receive enquiries from potential new customers for future cooperation, mainly from automotive OEMs and new magnet manufacturing projects outside of China.”

The company said it is still working on developments at its Mt Weld, Kalgoorlie, and Malaysian operations. It’s also developing a rare earths separation plant in the US which is being part financed by that country’s government.

“Progress on major construction activities accelerated at the Kalgoorlie Rare Earths Processing Facility during the quarter including significant progress on production assets such as, earthworks for the construction of the evaporation ponds and embankments, progress on lining the 110-metre kiln with bricks, and installation of the kiln generator and facilities including completing the workshop warehouse, control room and maintenance offices.

“The Mt Weld Expansion Project is progressing as planned with significant progress on Detailed Engineering Design, procurement of long lead time items and award of packages. The bulk earthworks contractor mobilised in January and has commenced site works.

Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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