LYC 0.11% $9.38 lynas rare earths limited

Massive Upside !!!!!

  1. 3,255 Posts.

    HOMEX - Perth

    * China's largest producer of tantalum and niobium metal joint
    ventures into tantalum and niobium sublease sector of overall Lynas

    *Chinese partner locks into 100 per cent of tantalum and niobium

    *Shared costs provide further infrastructure cost reduction

    Lynas Corporation today announced a joint venture (JV) with China's
    largest producer of tantalum and niobium powder and wire, OTIC
    (Ningxia Orient Tantalum Industry Co Ltd) which generates $8.5 mln in
    cash for Lynas. The deal follows the completion this week of the
    Lynas transaction with Anaconda Nickel Ltd which gives Lynas 100 per
    cent of all non-phosphate minerals in the Mt Weld project area.

    The JV with OTIC is for a specific sublease sector of the Mt Weld
    deposit and for the tantalum and niobium minerals in it. It is quite
    distinct from the main Rare Earths deposits at Mt Weld which remain
    Lynas' overall key project focus. In the JV between Lynas and OTIC,
    Lynas has sold, subject to relevant Chinese Government and Australian
    FIRB approvals, a 51 per cent interest in the Crown tantalum/niobium
    deposit at Mt Weld for $6.5 mln to OTIC.

    OTIC has also agreed to a $2 mln equity investment in Lynas. Lynas
    President and CEO, Mr Nicholas Curtis said that the $2 mln placement
    by OTIC in Lynas is at 28.5 cents.

    Lynas estimates its contribution to complete a bankable feasibility
    study on the JV tantalum and niobium property is approximately $1
    mln. This will leave over $7 mln available to Lynas towards the
    fast-track development of its Rare Earths project. The JV will
    complete the feasibility study for mining the niobium/tantalum
    resource with a view to mine construction starting in late 2003. The
    project will produce a tantalum niobium concentrate. The study will
    focus on international and Chinese technology for the concentration
    process, in line with the work being done by Lynas on the Rare Earths
    deposit at Mt Weld.

    OTIC is a Chinese Government controlled company listed on the
    Shenzhen Stock Exchange. It is the largest tantalum producer in
    China, with annual production of 200 tonnes of tantalum powder (18%
    of the world output), behind H.C. Stark of Germany and Cabot of
    America and 100 tonnes tantalum wire (40% of the world market and the
    largest producer in the world). Current customers include Kemet and
    Vishay, NEC and Hitachi - major producers of capacitors.

    Lynas President and CEO Nicholas Curtis today said that under the
    terms of the sale and creation of the JV, OTIC will be obliged to
    take 100 per cent of the niobium/tantalum off-take. Lynas will have
    the right to 100% of the Rare Earths by-product at its option.

    "This approach eliminates all the risk associated with
    tantalum/niobium sales and will give us a guaranteed cash flow from
    that sublease section alone," Mr Curtis said. "The deal gives us
    several major benefits for the overall Rare Earths project

    it frees up $7 mln for the main Rare Earths project development it
    reduces further the main project infrastructure costs it accelerates
    further the project fast-tracking "The sublease JV agreement provides
    for the JV partners to provide 50 per cent of the total Mt Weld site
    infrastructure costs. There will be one centralised location for the
    plants and associated infrastructure for all activity on site. This
    means that the actual infrastructure costs of the Lynas stand-alone
    Rare Earths activity will be reduced by 26 per cent.

    "In addition, OTIC will be providing, through their interest in the
    JV, $1.9125 mln of our contingent liability to Ashton (being 26 per
    cent of the $7.5 mln contingent payment due to Ashton).

    "The whole thrust of the transaction from Lynas' point of view is
    that it retains our key focus on the Rare Earths project, while
    providing us with a diversification into the valuable tantalum and
    niobium market as a primary supplier to China's largest producer.

    "Lynas will manage the tantalum and niobium JV project. "The benefit
    to OTIC is having access to the world's richest tantalum and niobium
    deposits which are at Mt Weld.
    "Initial processed output is anticipated to be around 2,500tpa of
    niobium. The JV will be looking to expand these production figures."
    Niobium is used primarily in the production of high strength low
    alloy structural steels and in natural gas pipelines. Niobium also
    has potential for major applications in the electronics industry,
    alongside tantalum.

    For further information:

    Nick Curtis Doug Macdonald
    Lynas Corporation 0408 143 404
    02 8259 7100



    Ningxia Orient Tantalum Industry Co Ltd (OTIC) is the largest
    tantalum and niobium producer in China, with annual production of 200
    tonnes of tantalum powder being 18% of the world output, behind HC
    Stark of Germany and Cabot of America and 100 tonnes tantalum wire
    being 40% of the world market and the largest producer in the world.
    More than 80% of the products are for export to 29 countries,
    especially USA, Europe and Japan. Current customers include Kemet and
    Vishay, NEC and Hitachi - major producers of capacitors.

    According to OTIC's 2001 Annual Report, the financial status as of 31
    December 2001 (exchange rate USD/RMB () =8.28 and AUD/USD=0.538):

    Sales revenue 1,225,383,888 A$275,367,165
    EBITA 294,576,871 A$66,197,049
    Net Profit 178,397,581 A$40,089,344
    Cash in banks 419,996,471 A$94,381,229

    OTIC was listed on the Shenzhen Stock Exchange on 20 January 2000,
    with 58.18% share owned by the Chinese Government. On 30 April 2002,
    OTIC's market value is:

    No. of shareholders 39,397
    Total shares issued 356,400,000
    Share price 14.79 A$3.32
    Market value 5,271,156,000 A$1,184,529,438

    Besides further development of its tantalum technology and capacity,
    OTIC has recently announced the successful development of new niobium
    powder with up to 100,000 f.v/g electronic capacity. The large
    international capacitor producers view this material as a high
    quality material for possible use in next generation of capacitors.
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