Annual Report FY2024

• Lynas Rare Earths Limited's FY24 annual report shows a net profit after tax (NPAT) of $84.5 million, down from $310.7 million in FY23.
• Sales revenue decreased by 37.3% year-on-year to $463.3 million.
• NdPr production decreased by 8% to 5,655 tonnes due to a six-week works program at Lynas Malaysia.
• Total costs reduced by 17% year-on-year, demonstrating strong financial discipline.
• The average China domestic price of NdPr decreased from US$60.4/kg in June 2023 to US$44.0/kg in June 2024.
• The Kalgoorlie Rare Earths Processing Facility achieved first production and shipment of MREC in June 2024.
• Mt Weld saw key achievements including exploration drilling, a new mining program, and completion of Stage 1 of the Mt Weld Expansion project.
• Mineral Resources increased by 92%, and Ore Reserves increased by 63% at Mt Weld.
• A US$258 million contract was signed with the U.S. Department of Defense for a U.S. Heavy Rare Earths processing facility.
• Capital expenditure is expected to be approximately $400-$500 million in FY25.
• The company ended FY24 with a cash balance of $523.8 million and long-dated debt reduced to US$130 million.

Score: 5

Explanation: The report presents a mixed sentiment. While the company highlights positive developments like cost reductions and new contracts, the overall financial performance is significantly worse than the previous year due to market challenges.

• Strong financial discipline leading to a 17% year-on-year reduction in total costs.
• Successful completion of major works program at Lynas Malaysia.
• First production and shipment of MREC from the Kalgoorlie facility.
• Significant increase in Mt Weld Mineral Resources (92%) and Ore Reserves (63%).
• Securing a US$258 million contract with the U.S. Department of Defense.
• Robust cash balance of $523.8 million at the end of FY24.
• Reduction in long-dated debt to US$130 million.

• Lower than expected financial outcomes compared to the prior year due to challenging market conditions.
• 8% decrease in NdPr production.
• 37.3% decrease in sales revenue year-on-year.
• Significant decrease in cash and short-term deposits from $1,011.2 million to $523.8 million.

• Volatility in rare earth prices due to supply-side factors (Chinese production quotas), demand-side factors (global economic trends), and geopolitical factors.
• Increased competition in the global rare earths market.
• Fluctuations in exchange rates (USD/AUD, MYR/AUD, and Chinese Renminbi).
• Operational and development risks, including unforeseen events and third-party commitments.
• Hazards associated with mining operations (geological formations, rock falls, flooding).
• Uncertainty in mineral and ore reserve estimates.
• Risks associated with rare earth processing operations.
• Availability of key inputs (water, electricity, gas).
• Supply chain and counterparty risks.
• Attraction and retention of skilled personnel.
• Loss of key customers.
• Changes in technology and industry trends.
• Project development risks (delays, cost overruns, contractor insolvency).
• Regulatory, legal, and environmental risks.
• Political risks and government actions.
• Malaysian regulatory matters.
• Environmental risks (pollution, waste disposal).
• Climate change risks (transition risks, physical impacts).
• Community acceptance and reputation.
• Legal action.
• Health and safety risks.
• Tax risks.
• Debt facilities and covenants.
• Funding risks.
• General economic conditions.
• Accounting standards changes.
• Force majeure events.
• Cybersecurity risks.

Capital expenditure is expected to be approximately $400-$500 million in FY25, including sustaining capital, mining activities, and major growth projects. The company remains focused on fulfilling key customer needs, maximizing internal efficiencies, ensuring future fitness, and delivering excellent value for shareholders.

• The Company delivered a positive financial performance despite challenging external market conditions.
• Significant progress was made on key growth initiatives which position the Company to benefit from future market improvements and deliver long term shareholder value.
• This cost performance demonstrates the Companys strong financial discipline and steadfast focus on delivering process efficiencies and improved recoveries across all operations.
• The variation of the Malaysian operating licence...provided confidence for further investment in our Malaysian operations.
• Progress on key growth initiatives in FY24 demonstrates the Companys ongoing commitment to diversifying its industrial footprint, increasing production capacity, and investing in the world class Mt Weld resource.
• The 2024 financial year was both an exciting and challenging year for Lynas Rare Earths.
• In FY24, Lynas delivered positive financial performance and maintained a strong balance sheet.
• Whilst the 2024 financial outcomes were lower than the prior year when prices were much more favourable, they reflect our continuing focus on capturing cost efficiencies across the business.
• Lynas has over a decade of experience as a supplier of separated rare earths and this means we are well prepared to weather price volatility.
• The foundation of Lynas ongoing success and financial sustainability is the high grade, long life Mt Weld ore body and progress at Mt Weld this year has been exciting.
• The exploration drilling program informed the 2024 Mt Weld Mineral Resource and Ore Reserve Update which was released on 5 August 2024 and included a 92% increase in Mineral Resources and a 63% increase in Mt Weld Ore Reserves.
• In Malaysia, the variation to the operating licence has provided a platform for sustainable operations and we are progressing our investment program accordingly.
• I am pleased to report revenue of $463.3m and a Net Profit After Tax (NPAT) of $84.5m for the 2024 financial year.
• Whilst NdPr production decreased by 8%, in a year when we undertook a major works program at Lynas Malaysia, total costs reduced by 17% compared to FY23.
• Lynas is the only scale producer of separated rare earths outside China, a unique position from which to grow.
• The 2024 financial year demonstrated Lynas ability to operate a profitable business through the price cycle.

Lynas's performance reflects the broader challenges in the rare earths market, characterized by price volatility and subdued demand. Their success in reducing costs and securing government contracts highlights their competitive advantage as a low-cost producer outside of China, a position increasingly important given geopolitical concerns about supply chain diversification.

• Completion of commissioning of Stage 1 (Concentrate Dewatering) of the Mt Weld Expansion project by end of September 2024.
• Completion of construction of Stage 2 (Balance of Plant) of the Mt Weld Expansion project by the end of FY25.
• First production of Dysprosium and Terbium in Malaysia in CY2025.
• Continued ramp-up of the Kalgoorlie facility.
• Continued detailed engineering, procurement, and approvals activities for the planned U.S. facility.

• 23/5/1983: Lynas Rare Earths Limited date of incorporation
• 3/3/2003: Lynas Services Pty Ltd date of incorporation
• 15/5/1996: Mt Weld Holdings Pty Ltd date of incorporation
• 29/7/1991: Mt Weld Mining Pty Ltd and Lynas Kalgoorlie Pty Ltd date of incorporation
• 6/11/2006: Lynas Malaysia Sdn Bhd date of incorporation
• 13/1/2011: Lynas Africa Holdings Pty Ltd date of incorporation
• 12/7/2007: Lynas Africa Limited date of incorporation
• 24/6/2019: Lynas USA LLC date of incorporation
• 14 March 2024: Lynas awarded Carey Group a 5-year mining services contract at Mt Weld.
• 22 January 2024: Lynas announced completion of the Mt Weld exploration program.
• 5 August 2024: Lynas released the 2024 Mt Weld Mineral Resource and Ore Reserve Update.
• 22 July 2024: Lynas signed contracts with Zenith Energy for power supply at Mt Weld.
• 24 October 2023: Variation to the Malaysian operating licence was issued.
• 27 June 2024: Lynas announced the reconfiguration of a circuit to produce Dysprosium and Terbium in Malaysia.
• 12 July 2024: Lynas provided an update on acid supply arrangements for Kalgoorlie.
• 11 July 2024: BHP announced temporary suspension of Western Australia Nickel operations.
• 1 August 2023: Lynas signed a follow-on contract with the U.S. Department of Defense.
• 29 November 2023: Kathleen Conlon resigned as Non-Executive Chair, John Humphrey appointed.
• 1 May 2023: John Beevers joined the Company as a Non-Executive Director.
• 28 August 2024: Directors Report and Financial Statements signed.