Reporting Season

Buoyant rare earth price sees Lynas post two fold jump in profits

Fri 26 Aug 22, 10:34am (AEST)
Open cut mine
Source: iStock

Key Points

  • Lynas profits jump 244% in FY22 to $540.8m from $157.1m a year ago
  • The average rare earth oxide selling price was $60.3/kg from $29.8 a year ago
  • Lynas said it continues to receive many approaches from end users seeking to secure their material sourcing

Lynas (ASX: LYC) is sitting on a cash position of almost $1bn thanks to a triple digit percentage jump in net profits and elevated rare earth prices. The company's stock is up 5.7% in early trade.

"Closing cash at $965.6m allows us to confidently progress our various growth initiatives," commented CEO Amanda Lacaze, including the company's most recent $500m investment into its Mt Weld mine in Western Australia.

Results at a glance:

Full year

2022

2021

% change

Revenue ($m)

920

489

88.1

EBITDA ($m)

601.2

235.3

155.5

EBITDA margin (%)

65.3

48.1

35.8

Net profit ($m)

540.8

157.1

244

Cash ($m)

965.6

680.8

41.8

Source: Lynas | Table: Market Index

Rare earth markets review

Lynas achieved an average rare earth oxide selling price of $60.3 a kilo in FY22, up from $29.8 in FY21 and $21.5 in FY20.

"The rare earth markets remained strong throughout most of FY22. There was a slight weakening in demand for rare earths for NdFeB magnets inside China during the June quarter as a result of COVID-19 related lockdowns in several industrial regions in China," Lynas said in a statement.

Still, market prices were viewed as 'resilient', especially the NdPr price which remained 70-80% higher than a year ago. The average China domestic price of NdPr increased from US$64.7 a kilo in June 2021 to US$124.0 in June 2022. Lynas notes that future market price trends "continue to depend on end product demand", especially from the automotive industry.

"The company continues to receive many approaches from end users seeking to secure their raw material sourcing over the longer term and is engaged in productive discussions with a number of end users," said Lynas.

Expansion initiatives

Lynas is progressing several growth initiatives to leverage its unique position as the world's largest rare earths producer outside China. Updates from today include:

  • Kalgoorlie Rare Earths Processing Facility: All necessary approvals received, 100% of equipment ordered and construction works at the end of FY22 were 40% complete

  • Mt Weld expansion: Approximately $500m project to expand Mt Weld mine and concentration plant from 10,500 tonnes per annum of NdPr to 12,000 tonnes announced on 3 August

  • US Department of Defense Heavy Rare Earths separation facility: Lynas awarded US$120m on 14 June 2022. Detailed planning underway, targeting operational status by FY25

Lynas expects capital expenditure to be approximately $600m in FY23 and $600m in FY24 for sustaining capital and major growth projects.

Lynas share price chart
Lynas share price chart (Source: TradingView)

 

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Written By

Kerry Sun

Content Strategist

Kerry holds a Bachelor of Commerce from Monash University. He is an avid swing trader, focused on technical set ups and breakouts. Outside of writing and trading, Kerry is a big UFC fan, loves poker and training Muay Thai. Connect via LinkedIn or email.

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