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Lynas reveals 40% decline in rare earths production

Lynas (ASX:LYC), a rare earths group, saw its shares under pressure on Monday after revealing a 40% year-on-year decline in rare earths production in the December quarter.

The miner reported a production of 901 tonnes of neodymium and praseodymium (NdPr), down from 1,508 tonnes in Q2 FY 2023. Total rare earth oxide (REO) production during the quarter fell to 1,566 tonnes from 4,457 tonnes.

Quarterly sales revenue halved to $113 million from $233 million year on year, and Lynas reported sales receipts of $107 million, down from $168 million in the December 2023 quarter.

Shares were down 1.5% in early afternoon trading as most investors accepted that the fall wasn’t new news and that Lynas had previously warned of the slowdown due to a temporary shutdown for upgrade works at its Malaysia processing facility.

Lynas stated in a press release that it now expects output to recover over the rest of 2024.

“During the shutdown, the works to modify and increase separation capacity and improve the reliability of cracking and leaching at Lynas Malaysia were successfully and safely completed,” the miner explained.

Lynas now expects NdPr production in the March quarter to be around 1,500 tonnes, with output in the six months to June 2024 increasing slightly from its previous guidance to be in the range of 3,200 to 3,400 tonnes.

NdPr production capacity is expected to increase to approximately 10,500 tonnes a year by the end of this year.

In the December 2023 quarter, Lynas received a variation for its Lynas Malaysia’s operating license from the Malaysian government, news which boosted the Lynas share price at the time.

This now allows Lynas to keep importing and processing Lanthanide Concentrate from its Mt Weld mine in Western Australia. The amended operating license is valid until March 2, 2026.

Lynas said the construction of the Kalgoorlie rare earths processing facility was largely completed during the quarter, alongside full plant commissioning.

Following the completion of the kiln heating and other commissioning activities, the first feed of material from Mount Weld was introduced into the Kalgoorlie facility in December 2023.

“Mixed rare earth carbonate (MREC) from the Kalgoorlie facility is expected to be progressively introduced to the Lynas Malaysia plant commencing late in the March 2024 quarter,” the company said on Monday.

At the same time, the Mount Weld expansion project remains on track with early works progressing as planned.

“These include Stage 1 structural, mechanical and piping (SMP) works in the thickener and filter circuit, and the commencement of electrical works in December,” the company said. “Negotiations are well advanced with potential contractors for Stage 2 SMP works, and the tender for the construction of the tailings storage facility has been issued.”

Lynas reported that at the end of 2023, it had cash and short-term deposits of $686 million.