Earnings call transcript: Lynas Rare Earths Q1 2025 highlights production expansion

Lynas Rare Earths Ltd (LYC) has reported its Q1 2025 earnings, focusing on expanding its heavy rare earth production capabilities. While the company did not provide precise financial guidance, it reported last twelve months revenue of $300.35 million amid challenging market conditions. The stock price saw a modest increase, reflecting investor interest in its strategic initiatives and market opportunities amid geopolitical disruptions. According to InvestingPro data, the stock is trading near its 52-week high of $5.73, showing strong momentum with a 34% return over the past year.

Key Takeaways

• Lynas is expanding heavy rare earth production in Malaysia.
• The company is navigating geopolitical disruptions in the rare earths market.
• Lynas remains the only non-Chinese producer of heavy rare earth oxides.

Company Performance

Lynas Rare Earths continues to focus on expanding its production capabilities, particularly in Malaysia, where it is developing new processes to enhance product quality. The company maintains a strong financial position with a healthy current ratio of 3.6 and operates with moderate debt levels, as revealed by InvestingPro analysis. The company is leveraging its position as the sole non-Chinese producer of heavy rare earth oxides to capitalize on market opportunities created by geopolitical tensions, particularly China’s export restrictions.

Financial Highlights

• Capital Expenditure: Expected to be $50-60 million carried over from the current financial year.
• Sustaining business-as-usual CapEx is expected to be in a similar range.

Outlook & Guidance

Lynas is carefully managing its production ramp-up to align with market demand and is exploring the expansion of its heavy rare earth production. Based on InvestingPro’s Fair Value analysis, the stock appears slightly overvalued at current levels, though analysts maintain positive forecasts with revenue growth expected at 34% for FY2025. The company is also in discussions with the US government regarding the potential establishment of a facility in the US. Additionally, Lynas is seeking partnerships for downstream value chain participation.

Executive Commentary

Amanda Lacaz, CEO of Lynas, emphasized the company’s focus on developing a sustainable competitive advantage to thrive amid challenging market dynamics. She highlighted the value seen in both magnet and other sectors, and the potential for a price reset in the rare earth market to achieve sustainable pricing levels.

Risks and Challenges

• Geopolitical tensions affecting supply chains and market dynamics.
• Dependence on market demand for rare earth products.
• Potential regulatory hurdles in expanding production facilities.
• Pricing volatility in the rare earth market.
• Competition from Chinese producers.

Lynas Rare Earths is positioning itself strategically amid global market shifts, focusing on expanding production and strengthening its competitive position outside of China. The ongoing geopolitical disruptions present both challenges and opportunities, which the company aims to navigate through careful management and strategic partnerships.

Full transcript - Lynas Rare Earths Ltd (LYC) Q3 2025:

Conference Operator: Please be advised that today’s conference is being recorded. I would now like to hand the call over to Please go ahead.

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Good morning, and welcome to the Linus Rare Earth’s investor briefing for the March. Today’s briefing will be presented by Amanda Lacaz, CEO and Managing Director. And joining Amanda are Gardin Sturtzenegger, Chief Financial Officer Paul Larew, Chief Operating Officer Sarah Leonard, General Counsel and Company Secretary and Daniel Havas, VP Strategy and Investor Relations. I’ll now hand over to Amanda to begin the briefing. Please go ahead, Amanda.

Good morning, everybody. As always, thank you for joining us and thank you for being interested in our business, which we wake up and think about from the moment we wake up every day, but I’m sure it’s something which is not necessarily on your agendas on a daily basis. I guess today everyone will want to talk about actions of various governments globally, and their impact on the market dynamics, for the rare earth market rather than some of the more specific actions and developments at Linus. So with that in mind, I would just say that most of you who have spoken with me or been at these, calls previously would know that as I have said many times before, the most important feature of any business’s success is the development of sustainable competitive advantage. Developing sustainable competitive advantage allows the business to survive, indeed even to flourish even with difficult market dynamics.

And even the most casual observer would know that the rare earths market can be difficult, marked as it is by low cost competition, concentrated supply chains, fairly change resistant customers, some of whom seem to think that if they cross their fingers and wish hard enough that, you know, everything will be okay, and of course the geopolitical posturing and actions of various governments. But the rarest market is also like most others. Market leaders are the most efficient producers, lead industry technically, and offer differentiated products and services. So at Linus, we continue to focus on building our competitive advantage while everything around us gets thrown up in the air like a pack of cards. And I am really pleased to be able to announce today that we have our first product, a small quantity of holmium concentrate, which has been produced from our new heavy rare earth separation circuit with the all important dysprosium oxide and terbium oxide to be produced this quarter.

In the context of the current restrictions on heavy rare earth exports from China, this is an incredibly important step forward. Our sales team has been engaging with customers for months to develop a sales plan that delivers best returns for Linus. Now often when people are talking about rare earths and heavies in particular, the focus is on magnets. But it’s important to note that dysprosium and terbium are also used in other applications, including, for example, the microcapacitor market, which is considerably less price sensitive than the magnet market. It is the job of our sales team to finalise our best sales portfolio, optimised to provide best return to the company.

Suffice to say, demand for these materials significantly outstrips our current capacity, and we are already assessing options to further increase output alongside continued development of our US project. So Linus’ performance during the quarter was very much in line with market conditions, and we continue to manage our production ramp up carefully in a market where The U. S. And Chinese government actions are both presenting challenges to our business. However, having said that, the current market dynamics offer the best chance for a sustainable reset of the market as customers are forced to deal with the realized supply risk of magnets from China.

As noted in the report, magnets containing heavy rare earths are not being exported from China at present, and the two way flow of materials including, feedstock from The US into China has ceased. In terms of our own progress towards the Linus 2025 run rate, our approach remains to work to prove capacity, but not to continue production at rates ahead of demand. As noted in our report, Mount Weld operations and the Mount Weld expansion project are both in excellent shape performing at or ahead of, expectations. Our Kalgoorlie facility is continuing to improve, and you will note that we transitioned the cost from the capital account to the operating account from February. And our performance at the Linus Malaysia facility in Kuantan continues to improve and really in a very satisfying way with several very complex new circuits coming online, including the, front end receiving and processing of mixed rare earth carbonate, the new flow sheet for separation of NDPR, which has given us sort of the uplifting capacity, and of course, importantly, as noted earlier, the new heavy rare earth separation circuit.

As we note in the report, The US project is awaiting finalization of a further cost review. This is driven by a combination of new design to accommodate some of the wastewater permitting challenges that we’re facing, at the selected site, but also importantly by the effect of the tariffs which have been applied, in particularly in US and Chinese jurisdictions. I think as all of our shareholders know, we are risk averse on this project and are not inclined to take cost inflation risk. Of course, if we see real progress on downstream development in The US and or Europe, that may change. But for now and the immediate future, the nucleus of the rare earth market remains in East And Southeast Asia.

And we at Linus are strong because we operate in this geography, and we operate with a strong with now a strong and supportive relationship with the Malaysian government. We will continue to build our competitive advantage. We operate at the bottom of the cost curve. We are bringing new products and applications online. We have strong customer relationships, which are built on our proven, not planned, track record as a reliable supplier of quality product, and we have a skilled, capable and committed, team of people who are dedicated to ensuring the success of the line of business.

So with those as, opening comments, I will leave as much time as possible to take questions because I am sure there are many.

: Thank you.

Conference Operator: First question comes from Chen Jiang from Bank of America. Please go ahead.

Chen Jiang, Analyst, Bank of America: Good morning, Amanda. Congratulations on the commencement of heavy rarest oxide separation. I think it’s the perfect time after China put the exposed restrictions earlier April this month. Just two questions from me on the heavy rare earth oxide. So firstly, on pricing, you mentioned a couple of times strong demand ex China.

But just wondering if you can share any insights, how would the pricing work for DUI and TB? Does your customer use China’s DY TB as a reference and then pay your premium on top of China’s index or China index doesn’t matter for heavy, and your customer will pay whatever price you ask? Any color on the pricing you can share? That would be much appreciated. Thank you.

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Thanks, Cheng. So there are various different models as we’ve discussed many times, and depending upon the sector into which we’re selling, different, customers will seek a different pricing, methodology. Now it has been absolutely normal to have a reference to the inside China price. At present, where there is no material being exported from China because of the ban on exports of heavy rare earth materials, that price is no longer a relevant price. So our discussions with customers are on a more sort of traditional industrial input spaces, which is really identifying and understanding your sort of value drivers for both customers and suppliers and ensuring that we agree a price which is beneficial to both.

I’m not gonna give you anything further on specific segments or specific customers, except to say that we recognize that the material we’re producing is scarce outside China, I e, we’re the only ones producing it, and we think that there is significant value attached to that.

Conference Operator: Thank you for the questions. One moment for the next question. Our next question comes from David Deckelbaum from TD Cowen. Please go ahead.

David Deckelbaum, Analyst, TD Cowen: Thanks, Amanda and team for fitting me on and congrats again on the commissioning of the heavy rare separation. Amanda, I am curious maybe if you could just remind the market and walk us through the anticipated ramp and volumes to come out of the separation circuit here. And then as a follow-up to that, this was I believe a relatively low capitally intensive project in Malaysia to take this seg mix that you typically produce and separate it down to the oxides. Could there be expansion CapEx in Malaysia or would expansion beyond this have to exist in other jurisdictions?

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Thanks, David. Nice to hear from you. So let me take that second part of your question. It really sort of probably deals with some of the first as well. But certainly, the there is nowhere where we can add separation capacity as efficiently or as painlessly as we can do in Malaysia.

And, you know, it is also close to the primary markets for the materials that we produce, whether it goes into magnets or whether it goes in to, other industries. And so, yes, in Malaysia, we have been able to, very low cost, add this additional circuit. It’s the tonnages which it will produce, are less than market demand outside of China, and so we are assessing what additional capital would be required, to further, increase production. We’re also assessing, additional I mean, I think as everybody knows, as part of our exploration program at Mount Weld, we specifically explored for heavies and we understand where within our Mount Weld, ore body we can get an increased proportion of heavies. But we are also exploring other opportunities for feedstock, including, I think very valuably and very prospectively, the potential for development of upstream feedstock development in Malaysia.

Malaysia has in some areas the same sort of ionic clay geology that you see throughout Southeast Asia, and there is an appetite, from the Malaysian government to support the development of that upstream asset as well. So that would give us additional feedstock and certainly make a lot of sense for us in terms of increasing processing capacity in Malaysia. With respect to The US facility, it is much more expensive because it is a greenfields, facility. You know, we talked about varying capacities there, and we continue to have a conversation with the US government about really what is essential for The US market and particularly for defense applications and ways that we can do that within, you know, sort of the regulatory environment in The US. So, you know, we’re continuing those discussions with the US government at present, and and in due course, we will, provide a further update.

Conference Operator: Thank you for the questions. Our next question comes from Jonathan Sharp from CLSA. Please go ahead.

Jonathan Sharp, Analyst, CLSA: Yes. Hi, Mandarin and team. Thanks for taking my question. Just a question on the CapEx profile for next year. So we know that the expansion is being completed.

Can you just give us some detail on how you see CapEx next year? I know consensus is around $180,000,000 We know it is going to come off quite a bit from this year, but can you just elaborate on that and give us some details, please?

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Sure. Well, as you know, we don’t give sort of precise guidance on these matters, and some of it will be based upon how much carryover, whilst we expect to complete the Mount Weld project in this financial year. Of course, not everything will be bought and paid for by the June 30. So there will be some carryover of capital costs associated with that. We think maybe somewhere in the range of sort of 50,000,000 to $60,000,000 will carry over.

And the remainder of the capital at present will be sort of our sustaining business as usual CapEx, which we would expect to be somewhere in the same of vicinity. We will assess any other projects, including things like expanding capacity of heavy rare earths or any other sort of projects will be assessed on an independent basis, we will inform the market as we do that.

Conference Operator: Thank you for the questions. Our next question comes from Paul Young of Goldman Sachs. Please go ahead.

Paul Young, Analyst, Goldman Sachs: Good morning, Amanda and team. Amanda, I hope you’re well. Really unprecedented events in the RERET market at the moment, as you know. And so a couple of questions on that. And firstly, I know you’ve spoken a lot about the heavy RERET pricing and offtake, but I’m actually curious about what happens in the NDPR market.

And a couple of things. Firstly, mean, not all your product goes directly to Japanese offtake or should I say facilities in Japan. So are you still able to actually sell all your NDPR oxide into those Japanese magnet producers at our facilities in China? And then I guess second part to that is around your comments around that at the moment, there’s an opportunity for sustained market restructure. I gather that probably also means NEPR.

And there’s about six MAGNA facilities being built outside of Japan and China. So we are seeing quite a rapid development rollout of Magna facilities across, in particularly Europe and The U. S. So I’m just curious about your any sort of initial I don’t know if you’ve spoken to us a long time over the last for a lot, I should say, the last five years, but any comments around potential for you to actually sign NDPR with ex Japanese, magnet facilities?

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Yeah. Good questions, Paul, as I would expect from a Wombat boy. Anyway, can we sell everything we produce? Yes, we can. There are no constraints on us selling into China in addition to selling to Japan.

We have a number of contracts which are direct contracts with magnet buyers as well as our contracts with magnet makers. Having said that, the market is difficult at present because, you know, we we do have, you know, this situation where there are no magnets coming out of China. Yet industry is yet to feel the real pain for that because, yeah, there is a fair bit of everyone, you know, sort of following the last rare earth shot carries, you know, sort of a reasonable level of inventory. Having said that, we are very actively engaged with a number of prospective magnet makers. We would not think that all five or six of the projects that you referenced will actually end up coming to market.

But we do think that there are a number that will come to market, and we are actively engaged with each of those magnifiers. We’re also actively engaged with the Japanese magnet I’m sorry, magnet makers, with Japanese magnet makers as they seek to, you know, engage with magnet buyers, having now sort of really the, as I say, the black swan event has materialized. And so some of the magnet buyers who seem to have thought that if they kept their fingers crossed, everything would be alright, are now seeing that, yeah, they definitely do need to take a risk based approach to their procurement of rare earth materials. Won’t happen overnight. It is something which we are and and it’s not a new engagement.

As I said, we’ve always had some, you know, sort of contracts with magnet buyers, which operate independently of the magnet maker that they may choose. So we would think that, there is the opportunity for a sustained price reset. We think it is very difficult just now when you have the magnet industry in China basically looking at a situation where they can’t export their materials, so reliant on domestic consumption. But we do see this as the best opportunity we’ve had for some time with really resetting rare earth pricing at a level which properly reflects the importance of the material in finished goods.

Conference Operator: Thank you for the questions. One moment for the next question. Next question comes from Austin Yun of Macquarie. Please go ahead.

: Good morning, Amanda and the team. Just one question from me. As you mentioned at the call, you will continue to pursue the market condition and meet the demand from the customers. Given what has happened and unfolding in the last couple of months, do you see higher demand from your customer base already? Any changes in the inventory management or purchasing behaviors?

Any color you can share? On that will be much appreciated. Thank you.

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: So I think that we hello, Austen. Yes. We have seen we have seen an an increase in inbound inquiry that would not surprise anybody, as various customers, and depending upon which segment they operate in, customers are seeking to secure demand. And so we are engaging with each of those customers on an individual basis, and reaching out to others that, we think would benefit, as I said, from taking a more risk based approach to, their procurement strategy. Which means paying a risk premium for, secure supply.

Conference Operator: Thank you for the questions. Next question comes from Daniel Morgan of Baron Joey. Please go ahead.

Daniel Morgan, Analyst, Baron Joey: Hi, Amanda and team. It seems a very obviously, it’s a very strategic and odd time in the market. And I just wonder how it’s best for you to be running your business to capitalize on this, you know, never waste a crisis sort of So how do you plan to be running your throughput in the months ahead? I mean, your China customers would presumably the magnet makers, they would presumably not have as much demand as they would normally have. And so is it in your interest to not ramp up very quickly in the next few months?

Thank you.

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: It is in our interest to carefully manage. And thanks for the question, Daniel. You you are absolutely on the money. There is no point in us, you know, sort of ramping up to 10 and a half thousand tonnes without, you know, sort of a a clear pathway to get best return on that production. And right now, that means that we need to take the time to agree the new commercial arrangements with various different prospective customers because as I think everyone who tracks the Asian metal prices, NDPR would know the the reduction in in demand for Chinese material because it’s not leaving the Chinese ports, is seeing a softening of prices for NDPR.

We expect that will be that will start to recover, but, you know, our view on this is that the last thing that we need to do is to, you know, sort of produce huge quantities of material, which either finds a home in our warehouse or finds a home at a lower price elsewhere. And so taking our time to get full advantage out of this crisis is absolutely our number one priority.

Conference Operator: Thank you for the questions. Our next question comes from the line of Reg Spencer from Canaccord. Please go ahead.

Reg Spencer, Analyst, Canaccord: Good morning, Amanda and team. Just a question on your reference in your quarterly about more conversations with potential customers for direct contracting. I was just wondering if you are able to comment about probably well, most definitely in general terms about how these customers might be thinking about changes to supply chains and sourcing given that today there is still relatively limited manufacturing capacity ex China. So do these customers, are they start will they look at direct purchasing of volumes, tolling arrangements? Because for example, I look at GM purportedly buying magnets from MP.

Would auto OEMs, for example, go direct to a rare earth producer such as yourself to secure volumes?

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Yeah. And we’ve done some of that. I guess in priority order, we certainly have many discussions with various defense contractors, particularly in The US, and having material available as they completely reconfigure their supply chains to be non Chinese ahead of the DFARS regulation. So this is something which has been on track for some time, but now has some added urgency. We have, over time, had direct contracts with both OEMs and with tier one suppliers to OEMs, including, in particular, high performance motor manufacturers.

We expect to do more of that. We also, as I said, are engaged very actively with magnet makers as they sort of approach the market. Think that with non Chinese magnet makers, we think that working in partnership with them to make a compelling offer to customers is probably the most prospective approach, in a lot of ways. So we’re doing this via a number of different mechanisms. Some are direct and some are in partnership with magnet makers.

But I come back to, you know, it’s got to be getting that whole supply chain working together, which matters. Of course, in due course, we would expect that the Chinese will, new licensing regime will settle down, and it may be that our contract with, say, a European OEM may see our product being delivered into China again sometime in the future to a Chinese magnet maker. But right now, that that that’s, you know, not not a pathway which is available.

Conference Operator: Thank you for the questions. Our next question comes from the line of Shannon Sinha from Morgan Stanley. Please go ahead.

Shannon Sinha, Analyst, Morgan Stanley: Hi, Amanda and team. Just a question about how you could increase your heavy rare earth output. So I was wondering if there’s any way you can switch production from NDPR towards heavies given that heavies demand perhaps is a bit greater ex China and you can get a better price perhaps for heavies than you can for NDPR. So if that’s a possibility at Malaysia or is that limited by the amount of heavies that you can produce from Mt. Weld at the moment?

Thanks.

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Thanks, Shannon. Yeah. Mother nature determines the proportion in which we, can produce NDPR and DY present. No, we can’t just switch an NDPR circuit into a DY TB circuit. But we can and we do have opportunities to consider increasing our heavies output in Malaysia, but it will require some further investment.

And as I said, we continue to work with alternate suppliers potentially of heavy rare earths feedstock, And we expect that we will, with time, be able to produce more heavies from our Malaysian facility.

Conference Operator: Thank you for the questions. One moment for the next question. Next up, we have the questions from the line of Al Harvey from JPMorgan. Please go ahead.

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths0: Good morning, Amanda. Just following up on your early comments, just wanted to see if you could speak to what you’re hearing from customers around magnet and heavy rare earth inventories. And I suppose if you’re fuelling concerns around how the market can function without access to tiny heavies in the medium term, given you’re really the only ex kind of producer.

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Yeah, well we can satisfy despite what some people seem to think. You know, the West is not short resource. Linus, you know, can satisfy Western demand for NDPR, and we stand poised to be able to do that. With respect to inventories, I can tell you that, inventories range on different products from maybe as low as three months forward cover to two years on some of the lower volume materials. So we have the time to get this right and to make sure that, you know, are appropriately valuing the benefit of having a diverse supply chain.

Conference Operator: Thank you for the questions. Our next question comes from the line of Regan Burrows from Bell Potter. Please go ahead.

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths1: Hi, Amanda and team. Thanks for taking my question. Just on the DYTB. I mean, historically, you said that going down this path wasn’t necessarily about expanding margin, it’s more so about providing a broader product offering suite to your customers. Has that thinking sort of changed?

And I guess sort of looking forward over the as you start producing those volumes, what’s the qualification pathway or process in order to turn those material into sales and revenue?

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: So I I I probably never intended to be quite that definitive. I mean, we we are happy to take, a dollar in margin on any product that we produce. So certainly there is value to be had from being able to sell in sort of magnet proportions. However, as I said, these materials are used in other sectors as well, certainly, are less price sensitive than the magnet sector. Look.

We see we see that there is value, in in both. With respect to, qualification, material qualification process for materials that go into magnets is relatively short. You know, with this quarter’s production, we will have, sort of production samples for various customers to be able to test, for things like, as I mentioned, the micro capacitor market qualification, will take a little longer, but we’re pretty we’re we’re we’re very confident about the quality of the material that we’re producing, and we will elect how much we allocate to each of these segments on on a margin basis, basically.

Conference Operator: Thank you for the questions. Next question is from Mitch Ryan from Jefferies. Please go ahead.

Daniel Morgan, Analyst, Baron Joey: Good morning, Amanda and team. Yeah. Clearly, geopolitical is a key focus, but wanted to move to operations. Just if you could give some more color around Kalgoorlie, during the quarter, how was the MREC quality? How’s that been how’s the facility been performing?

Then and then how’s the product quality?

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Yeah. So as with all facilities, it’s presented us with some expected challenges and also with some unexpected challenges. Having said that, I think we measure about, sorry about that. I I think that we measure Paul, you’ll be able to tell me about it. I think about eight different measures on quality, with, the most important ones being things like the particle size or what clearly the amount of NDPR and moisture and then impurities in the material and particle size.

Those are the sort of categories that we’re talking about. We are improving on all of those. We have one which is the sulfate, where we are implementing a new which is an impurity where we are implementing a new process to reduce that significantly from where it has been previously, which will absolutely improve its processability in Malaysia. So guess I would say that we are, pleased that it’s an understatement, we’re certainly pleased that we have excess capacity in the cracking and leaching stage of our process, because we are able to operate our Malaysian facility alongside Kalgoorlie. And that has given us the opportunity to approach the ramp up at Kalgoorlie in a very controlled fashion.

But we are pleased with the improvements being delivered, but we have a couple more which we think will be sort of step changes in performance, and we’ll be very pleased when we bank those.

Conference Operator: Thank you for the questions. Now our next question comes from Dim Ariasinha from UBS. Please go ahead.

Jonathan Sharp, Analyst, CLSA: Good day, Amanda And yes, congrats on the rare separation progress. Just one for me on the Section two thirty two investigation. Just wondering if you have any views yourself on what could come out of these investigations, just given existing relationship with the US government. You’ve got a pretty unique or advantaged viewpoint.

If you could maybe talk to that, please.

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Daniel, are you up to talking about that? Daniel’s not feeling a % at present, but if he is, I I might, get him to to address that.

Daniel Morgan, Analyst, Baron Joey: Sure. No problems at all.

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths2: There was a Section two thirty two done about three years ago in a similar form, and we provided a submission towards that, as you would expect, and we are looking to provide another submission for this one. However, in real terms, the conversation has not changed significantly from when we submitted the last submission back to the US government under the previous administration. So there’s still some ambiguity, I guess, as to what they’re trying to achieve with it, but we are talking to the U. S. Government about what we need to put into that submission to make sure we get the best outcomes from it.

Conference Operator: Thank you for the questions. I’ll now have we have the follow-up questions from Jonathan Sharp from CLSA. Please go ahead.

Jonathan Sharp, Analyst, CLSA: Yes. Thanks for letting me take another question. Just a quick one on the proportion of NDPR that increased quite a bit this period. Do you expect this proportion to be sustained, or do you think it will return to roughly sort of fifty fifty product split there?

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Once again, that just really reflects the market. It reflects the market for lanthanum and cerium as opposed to reflecting the market for NDPR. So the price for much of the lanthanum and cerium, sort of on a I sort of hesitate to put in, but standard lanthanum and cerium is below the cost to process it. So we focus on only producing the lanthanum and cerium for which we’re able to achieve premium based upon your sort of improved specification. And we have seen some slight improvement in lanthanum and cerium pricing over the past sort of month or so, but we will return to producing more of that material, but not necessarily in the proportion that mother nature offers it to us.

But it’s it’s it it will simply be, on on the basis, Jonathan, or would just be on the basis of of market demand and market price.

Conference Operator: Thank you for the questions. Next question is from Paul Young of Goldman Sachs.

Paul Young, Analyst, Goldman Sachs: Hi, again, Amanda. Madam, another follow-up question on NDPR pricing and relates to ex China pricing. Firstly, demand for magnets is growing really strongly, and my understanding is double digit at the moment globally, and prices for NDPR have bottomed. So just curious around the potential to place your ex Japanese, I guess, offtake with other producers and actually how we think about could think about the price of NDPR ex the Asia Metals Index. And I think that probably the question is the fact that the cost of production outside of China for magnets is probably 20%, thirty forty % higher than what the Chinese can produce at.

So if an OEM wants to contract with you directly, how would that potentially the pricing work? Would they have to, you know, maybe underpin a margin for that magnet producer to stay in business?

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Oh, yeah. It it it will vary. I I think that the first thing is that, you know, whilst we all seek to have a price which operates independently of the largest rare earths price in the world with market in the world, which is China, the simple fact is, you know, producers of the finished goods, whether they’re a vehicle or a phone or a wind turbine, are still operating in a competitive market. And so, know, are not gleefully saying, well, let’s pay more for our inputs. And as you said, that difference can be significant.

On the other hand, our our view is that, singular supply chains are never, you know, healthy, and we certainly seek to make sure that for all of our major inputs, have more than one supplier even if the second supplier is at a higher price than the primary supplier. So our view would be that for a lot of the non Chinese customers, the sensible thing would be for them to contract a portion of their requirements. And if that comes at a price premium, well, so be it. That’s they’re basically paying a risk premium for making sure that their production lines don’t stop. So for us, to your point, you know, magnet makers are more expensive not because of the raw material.

They’re more expensive for a whole variety of other reasons, but it’s another reason why, as I said, we work in partnership with magnet makers to approach the market and make sure that magnet buyers understand the benefit. Over time, the most desirable outcome will be is the Chinese price list, then it will become sort of sustainable pricing at a higher level, because we’ll all be on a level playing field. And that’s not beyond sort of potential pathway for this market going forward, because certainly the consolidated rare earths players in in China, whilst their state owned, do seek to deliver profitable performance as well.

Conference Operator: Thank you. We have a follow-up question from Austin Yun of Macquarie. Please go ahead.

: Thank you, Amanda. Just you talked about the feedstock expansion looking at Malaysia. Have you thought about moving along the value chain to the downstream? Do you see any opportunities to unlock value there and even potentially give you more pricing power on your product?

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Yeah. Also, we’ve we’ve we’ve thought about it a lot. I think that it’s important to note that it’s easy to write in a PowerPoint presentation. It’s, sort of harder to execute. I think Paul, who’s been in the rare earth market longer than any of the rest of us in Linus, would say, I think he said the first time he saw a PowerPoint presentation talking about this was in about 1999, and no one has executed successfully on it in that time.

Why? Because the skills required for minerals processing, for running a big chemical plant of the sort that we run for our processing are quite different from the materials science which is attached to, a magnet. So we think that the best way for us to participate will be via partnerships. Now at some stage or other, they may be equity partnerships, or they may simply be strategic alliances. But, partnering with skilled and capable, metal and magnet makers, we think, is a better pathway than, you know, striking off on our own.

Conference Operator: Thank you for the questions. Next, we also have a follow-up question from Daniel Morgan of Barron Joey. Please go ahead.

Daniel Morgan, Analyst, Baron Joey: Hi, Amanda. Just maybe talking about your U. S. Plans. There’s obviously a lot to talk about with your U.

S. Partners, operating costs, CapEx, permitting. Could you expand on when you would hope or expect to see FID on The U. S. Project, if at all?

And I would imagine or expect there’d be some urgency for US government action here or perhaps not. Can you let let us know?

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: So just in terms of urgency, we have we are very actively involved with defense industry to ensure that The US defense industry is not exposed at this time, you know, with or without a a facility in The US. And I think that that makes us an important and valuable player as far as the US government is concerned, even absent all the other things that we’ve talked about. The finalization of the plant had reached a stage where we had a final design. We had bought the land, we had the final design, we were ready to go. These issues around water permitting have become just an additional challenge.

We have a new process which we propose to implement, which will see us deal with those. But it does come at a greater cost. And, you know, the US government at present has quite a lot of issues on their plate, and not all decision making positions have been filled, because as you would understand, there’s, you know, sort of Senate confirmation processes and otherwise. So we are working actively. We have actually a weekly call.

We’re working very actively on resolving this, but as with most things, I hesitate to predict what decisions any government might make and when.

Conference Operator: Thank you. Our next follow-up question is from Chen Jiang of Bank of America. Please go ahead. Hi, Chen. Ben, your line is open.

You may unmute locally.

Chen Jiang, Analyst, Bank of America: Can you hear me? Yes,

Conference Operator: please go ahead.

Chen Jiang, Analyst, Bank of America: All right. Okay. Yes. Thanks, Amanda, for taking my follow-up question. Just on the follow-up on The U.

S. Plant, in the report flagged additional CapEx, I guess, given the whole heavy rare earth project is fully funded by the US Department of Defense, is that fair to say whatever additional CapEx required, the US Department of Defense will cover them? Or they will reimburse you because, like, they can’t get heavy rare earth for military use from China going forward. Is that a fair assumption? Thank you.

And also, rather than talking about the FID for the project, I will be able to expedite the construction for the project given the urgency. Thank you, Amanda.

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Yeah. So in response to the second question, I mean, given you know, sort of this extra time, our team has had time to really review and and fine tune and continues to do so, know, sort of how we will, execute the project. And so, you know, you don’t waste the extra time that you’ve got available, and our team certainly has not wasted the extra time that they have available for thinking about this and and and how do we execute, in a timely fashion. With respect to the, whether the US government picks up the tab, I mean, that’s that’s the conversation we’re having with the US government about, you know, what’s the size of that additional requirement. As I have always said, you know, it’s not a project on which we will risk our balance sheet.

There is a certain amount of face that there will be development of downstream industry. But, you know, for us, a dollar spent in Malaysia today can give us a bigger return. So it’s the conversation we’re having with the US government. It doesn’t affect our ability, certainly, in the short term to be able to meet the market in a way that is beneficial for, our customers.

Conference Operator: Thank you for the questions. Our next follow-up question comes from Al Harvey from JPMorgan. Please go ahead.

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths0: Yes. Hi, Amanda. Just a follow-up on my earlier question and sorry to labour the point. So I appreciate that we’re not short on NDPR for ex Guyanese, but I suppose given they are responsible for nearly all the heavies production, I suppose the question I’m really trying to answer and hope you have a view on is whether the West can satisfy the ex China heavy demand. I suppose within that context of the upper limit timeframe you mentioned on inventories that the West might hold of around two years.

Within that timeframe can the West satisfy heavies demand?

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Sure. I think we can. I think that what we need to do is there are two or three potential feedstocks that we need to look at ensuring that they come online appropriately. But, in terms of the ability to process those materials you know, with confidence, you know, we can certainly, you know, sort of do that. So, yeah, I I don’t think that this is beyond the wit of the the West to be able to solve for it.

It’s just a case of, you know, we’re the only ones who know how to do it outside of China. And for various reasons, it hadn’t made it to the top of capital list until recently. But now that it’s there and now that there are prospective additional feedstocks available to us, yes, certainly I think that we can in in due course, ramp up, our production.

Conference Operator: Thank you. Our last question comes from Regan Burrows from Bell Potter. Please go ahead.

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths1: Hi, Amanda. Thanks for taking my follow-up. Just on Kalgoorlie, obviously, you guys stopped capitalizing the cost there in February. Just confirming, was that February or February? And I guess with your guidance of saying you’re going to ramp up sort of in line, that Kalgoorlie’s sort of seen as a higher cost plant, does that mean you’re putting more material through Malaysia?

And how should we think about that ramp up process for Kalgoorlie?

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Yeah. So Gadens, correct me if I’m not wrong, but I think it was at the February. And bear in mind, it’s fixed it’s only the fixed costs. The variable costs have been running through the the the p and l because we have been producing material. The the balance between, Kalgoorlie and and Malaysia, on a cost basis, we It’s tilted clearly towards Malaysia.

On the other hand, you know, we need to run at a certain rate. Any plan of this sort needs to run at a certain rate to ensure that we capture efficiencies. The team is looking at the best operating rhythm to have in Calgurly, whether it is 20 fourseven operation or whether there is some sort of different operating rhythm that might work better in terms of our ability to capture efficiencies but not overproduce. So we’re working on that at present. I mean, as we’ve said, our first task was to get the plant working as designed and then to optimise, and that optimisation comes partially from what’s our operating format and also from really addressing some of the costs which are associated with Kalgoorlie, which I am confident we will be able to bring down over time.

Conference Operator: Thank you for the question. That’s the end of the question and answer session. I would like to hand the call back to management for closing.

Amanda Lacaz, CEO and Managing Director, Linus Rare Earths: Thank you. Thank you all for your questions. Jen always prepares me very well for Q and A. She comes up with all of these questions that she thinks that you might ask. You probably asked about 40% of the questions that Jen came up with, so she’s a much better interrogator, I think I’ve decided.

But, thank you all. No doubt you will be in touch with, Danielle, if you’ve got any further follow-up questions, and, we look forward to an excellent fourth quarter.

Conference Operator: Thank you. This concludes today’s conference call. Thank you for your participation. You may now disconnect.

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