Lynas Q4 results: Production improves, rare earth prices “started to increase again”

The December quarter has proven to be quite the turnaround for Lynas (ASX: LYC) thanks to a rebound in rare earth prices and the easing of water supply disruptions at its downstream plant in Malaysia. The company’s shares are up 1.9% in early trade. 

“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 said in a statement.

Rare earth production improved to 4,457 tonnes for the quarter, up from 3,500 in the previous quarter but still below the record 4,945 tonnes produced in the March quarter 2022.

Financials at a glance

Notable earnings for the December quarter vs. previous quarter include:

• Sales revenue of $232.7m vs. $163.8m

• Sales receipts of $168.4m vs. $234.4m

• Cash and short-term deposits of $934.2m vs. $1,026.6m

Lynas explained that the decline in sales receipts were a reflection of “timing of deliveries which occurred later in the quarter.”

It's worth noting that the company has a market cap of around $8.2bn – so the cash position reflects around 11% of its market cap. 

Rare earth prices rebound, demand remains strong

Lynas’ average rare earths selling price improved to $62.5/kg, up 26.8% compared to the previous quarter but down -21.1% from the record $79.2/kg achieved in the fourth quarter of FY22.

“Demand from customers for Lynas’ NdPr product family remains strong … 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.

Kalgoorlie update

Lynas said its Mt Weld Expansion Project is “progressing as planned with significant process on Detailed Engineering Design, procurement of long lead time items and award of packages.”

Last August, the company announced a $500m project to expand capacity at the Mt Weld mine to 10,500 tonnes of NdPr per annum by 2025. 

Broker notes

Macquarie is the only broker that has provided coverage of the stock in 2023.

The investment bank was Neutral rated with a $9.20 target price.