Lynas Corporation (LYSCF.PK)
Quarterly Investor Relations Conference Call
July 31, 2012 2:00 AM ET
Nicholas Curtis – Chairman
Luisa Catanzaro – CFO
Eric Noyrez – President and COO
Ben Wilson – UBS
Chris Terry – Deutsche Bank
Phil Owen – MMO Associates
Craig Sainsbury – Citigroup
Mike Harrowell – BBY
Andrew Harrington – Patersons
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Welcome to the Lynas Corporation Quarter Investor Relations Conference Call. There will be an opportunity to ask questions at the end of today’s presentation. (Operator Instructions). At this time for opening remarks I would like to turn the conference over to your host today, Executive Chairman of Lynas Corporation, Mr. Nicholas Curtis. Please go ahead, sir.
Thank you and thank you for joining us on this quarterly call for Lynas. Let me start with the issue that is undoubtedly the source of the major conversation around Lynas at the moment and that is to try and give as much as I can possibly give on the status of the license. I start with the clear statement, the Lynas Phase I plant is complete and ready for operation. We cannot bring concentrate into Malaysia until the temporary operating license is given to us.
That license has been approved but not yet issued as shareholders know, the project has been the subject of significant scrutiny around the parliamentary steering committee and other reviews and some appeals and so on.
All of those are now behind us, we are in active conversation with the Malaysian government about any issues that they may perceive need to be addressed prior to the filed issuance of the TOL. We do not see any outstanding issues there at the moment but I cannot give a time table on the issuance of the TOL because it is now well and truly in the hands of the government to decide the date on which they wish to issue that TOL. So, we as a shareholders are and management is keenly looking forward to that day, we are ready to ship materially and ready to feed it through to the kiln.
Our operating assumption remains first feed the kiln in the next quarter obviously and in fact we had in the month of August. So that’s probably the best clarity that I can give at this point in time, obviously speculations on when although it's quite understandable that people speculate pretty heavily on this, speculation of precise dates is impossible because the matter is outside of their direct control at this point in time.
So that’s an update on the TOL, let’s move now more into the rest of the presentation. I will go through where we are at in terms of safety and sustainability and give you an update on WA operations, construction operation, update on the (inaudible) in Malaysia and a bit of update on Phase II and the Duncan Deposit. So a little bit about our finances and broadly about the rare earth pockets.
I am very pleased that having completed Phase I, we have completed it LTI free at more than 8.7 million hours of labor LTI free, that’s an outstanding outcome in Malaysia or Australia or anywhere in the world for project construction and has been done with proper discipline of safety prioritization in the operation from our contract and for the rest of contractors.
The company’s overall LTI frequency rate north 0.6 for the full financial year and that includes obviously contracts across Australia and Malaysia and Malawi and we continue strive for zero harm.
It is important, we believe safety is not just an optional extra the safety is the indication of an efficient company and we drive the company towards those safety and sustainability goals. Now Weld has been an operating plot now for significant amount of time and in fact we would say that we have de-risked the front end of that process mining and concentration, we now have switched off piles of concentrate ahead of the straight up of the lap for some time to come, we have more than 13,000 tons of dry bagged concentrate ready for export.
The plant has exceeded our expectations design expectations in terms of grade and recovery, we are now at around about 70% recovery which is a substantially above (inaudible) design capacity and cash costs are coming down substantially with that plant. Now they are not down to where we believe they will be long term because the plant has not operated at the continuous rates with the going forward in production and in fact we are currently going through a temporary shutdown of the plant as it has helped to reduce the working capital requirements which allows us maintenance and integration of Phase II construction during such shutdown base.
If we don’t exactly know when we will restart the Mt Weld plant, because that is a function of making sure that we can export the concentration as we know further decide to build up concentrate in Australia but that will be fully synchronized with the requirements of the startup plant in Malaysia.
In Malaysia, the plant itself as I say is now effectively complete, we are not focused on the pre-commissioning and commissioning of the plant and we can take that only so far with that live material to feed into the plant. As of the end of June, 77 out of 85 pre-commissioning test packs were handed over through a managing contract for final commissioning and at the end of the quarter actual commissioning of the plant was 64% complete that’s because we can go downstream, we can do certain parts of the plant and activate those parts of the plant for commissioning ahead of live feed then into the plant. So, 64% commissioned, we have what we call our ready for startup operational preparedness program which is that we are now at 100% employment for the plant utilization in Malaysia, anticipating a very short term utilization and each of those employees needs to have the work programs well defined and our operation preparedness has to complete.