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Shareholders have reacted well to the latest piece of Lynas news. The Aussie rare earths miner increased its gross sales revenue by 74 percent quarter-on-quarter to hit AU$51.9 million, a record high.
Australian rare earths miner Lynas (ASX:LYC) released its quarterly activities report at the end of last week, and shareholders have reacted well to the latest piece of Lynas news.
For the quarter, the company increased its gross sales revenue by 74 percent, to AU$51.9 million, a record high for the miner. Furthermore, Lynas reported AU$6.4 million in positive free cash flow, up from AU$191,000 in the previous quarter.
More importantly, Lynas more than doubled its annual revenue, reporting AU$148.6 million in gross sales revenue for the financial year ended June 30. It earned just AU$66.2 million in 2014.
Part of that was driven by higher production volumes — Lynas produced roughly 8,799 tonnes of rare earth oxides for the year, more than doubling its output from 2014 (3,965 tonnes).
Lynas’ share price was on the rise for most of last week ahead of Friday’s news, but it jumped to AU$0.047 Friday morning before settling at AU$0.038. A total of 98 million shares traded hands that day, just under 10 times the daily average for Lynas. Overall the company has gained 15 percent in the past week.
Latest Lynas news pointing to a brighter future?
Market watchers have been speculating over whether the tide could be turning for Lynas for some time now. In April, it reported reaching its first quarter of positive free cash flow. The miner cut costs significantly for the March quarter, reporting AU$35 million in annualized savings.
Furthermore, CEO Amanda Lacaze has a positive take on how changes to China’s rare earths policies will affect the company. She suggested in April that announcements from China on rare earths taxes and quotas have brought more clarity to the market. She said she sees potential for more demand to come back as end users could begin to place orders again.
That might sound like good news, but Lynas doesn’t appear to be counting on rare earths prices rising just yet. “The market pricing for Rare Earths products is at a cyclical low,” the company said in its activities report. “Success in this environment will require Lynas to continue to apply the same focus and discipline to delivering further improvements in the business.”
As part of that strategy, Lynas will begin construction on an upgraded tailings facility at its Mount Weld operations in Q1 of the Australian financial year. It expects the facility to be complete and operational by Q4.
Amended take-or-pay agreement
In other Lynas news, the company signed an amended agreement regarding take-or-pay contracts with one of its chemical suppliers for its Lynas Advanced Materials Plant in Malaysia. To date, Lynas has used lower volumes of chemical reagents from the supplier than originally expected, and has paid AU$25.1 million in take-or-pay penalties as a result.
However, the new agreement has reduced contracted volumes to match current and expected levels, which is expected to help the company save big on future take-or-pay related costs.
Certainly, Lynas still has a long way to go. The company’s share price is still quite a ways off from where it was when rare earths prices skyrocketed in 2011, and despite all of the improvements announced, Lynas’ share price has fallen 73 percent over the past year. And, as mentioned above, the company still has a tough market to contend with.
That said, there have certainly been some positive announcements from the company as of late. Rare earths investors will continue to keep an eye out for more Lynas news.
Securities Disclosure: I, Teresa Matich, hold no direct investment interest in any company mentioned in this article.
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Is the Tide Turning for Lynas?