Highlights
- Lynas experienced a significant decline in REO production to 1,911 tonnes.
- Cash reserves halved to A$268.9 million.
- Despite operational challenges, the company is advancing its heavy rare earth separation capabilities.
- First Dysprosium commercial separation is expected in May.
- The company remains strategically positioned in the Western rare earth supply chain.
- Lynas faces a critical need to stabilize output and financial strength.
Lynas Rare Earths Ltd (opens in a new tab) (ASX: LYC), the world’s leading ex-China producer of separated rare earths, reported Q3 FY25 results (opens in a new tab) that signal a mix of strategic breakthroughs and operational turbulence. Sales revenue declined to A$123.0 million from A$141.2 million in the prior quarter, even as average selling prices rose to A$50.5/kg, driven by high-value contracts and favorable FX. However, total REO production dropped sharply for the second straight quarter to just 1,911 tonnes, down 46% from Q3 FY24. NdPr output slightly recovered to 1,509 tonnes, reflecting a refocus on high-demand segments. Still, broader production weakness raises questions about operational efficiency during the Kalgoorlie ramp-up and Malaysian kiln maintenance.
Most critically, Lynas’s cash reserves fell to A$268.9 million, halving from A$616.7 million just six months ago. While CAPEX investment has slowed from a peak of A$140.9 million in Q2 to A$71.3 million this quarter, the cumulative spend for FY25 has reached A$337 million.
Lynas attributes part of this to its U.S. facility in Seadrift, where revised wastewater plans require fresh government engagement and additional capital. In parallel, construction at Mt Weld remains on schedule, with solar and hybrid power integration progressing. But with ongoing trade dislocations—China suspending HRE magnet exports and the U.S.-China rare earth trade collapsing—Lynas’s elevated costs and thin production buffer may undermine its first-mover advantage unless market prices recover meaningfully.
CEO Amanda Lacaze’s on-market share sale (opens in a new tab) of 462,979 shares—amid a broader issuance of 728,687 new shares via the employee performance rights scheme—adds a layer of investor sensitivity. While framed as tax-related, the optics of significant director-level divestment during an operational downswing may concern institutional holders.
That said, the commissioning of the company’s new heavy rare earth separation circuit is a rare bright spot: first commercial separation of Dysprosium is expected in May, with Terbium in June, positioning Lynas as the only non-Chinese HRE separator, a notable movement.
Suppose supply chains realign in Lynas’s favor. In that case, the company may yet emerge as the defining strategic asset in the West’s rare earth defense buildout—but it must urgently stabilize output and balance sheet strength to secure that role.
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