Good day, and thank you for standing by. Welcome to Lynas' quarterly results briefing conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there'll be a question-and-answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference will be recorded. I would now like to hand the conference over to Lynas. Please go ahead.
Good morning, and welcome to the Lynas Rare Earths investor briefing for the quarter ending 31 December 2023. Today's briefing will be presented by Amanda Lacaze, CEO and Managing Director, and joining Amanda are Gaudenz Sturzenegger, CFO, Pol Le Roux, COO, Daniel Havas, VP, Strategy and Investor Relations, and Sarah Leonard, General Counsel and Company Secretary. I'll now hand over to Amanda. Please go ahead, Amanda.
Thanks, Jen. Good morning, everybody. For those of you who are on the East Coast of Australia or indeed even the West Coast, within the top half, I hope that you're staying healthy during this incredible heatwave that we've got just at present. For those of you who are in cooler climates, I trust you're enjoying it. The quarter, which is just past, has been a very productive one for our business.
About midway through the quarter, we received the very welcome news that our Malaysian license had been varied, so that the conditions which were quite difficult for us with respect to management of our facility in Malaysia have now been removed, and we are able to continue to operate all areas of our Malaysian facility through the duration of the current license, which takes us through to the second of March 2026. As part of this license variation, there's only been one further variation from us, which is to dedicate 1% of our gross sales revenue to research aimed at developing a residue which is less than one becquerel per gram of radioactivity.
That process, that research process, which is being conducted under the supervision of the Malaysian AELB, but in partnership with a number of different tertiary institutions, both in Malaysia and also using some of our relationships in Australia, is already scoped and in progress. Of course, by getting this variation in the license conditions, it gave us confidence to make some of the investments that we had been planning to make in our Malaysian facility, including those which see us reconfigure our flow sheet in solvent extraction and make further investments in product finishing, which will allow us to increase our downstream capacity in Malaysia to approximately 10,500 tonnes per annum of NdPr.
In addition, during the quarter, during the period that we were shut down to complete those works, we also undertook significant works in our crushing and leaching and ore areas, both on ongoing maintenance, but also some enhancements in operations, given that we now have extended operation of those facilities. This was indeed, as you would have seen in the report, the largest work, you know, most significant works that we've undertaken on our Malaysian processing facility since the construction of the plant. We had 600 subcontractors mobilized on-site, and we're very pleased to say that all planned modifications were complete without any injuries. So at the same time, during the quarter, we were delighted that we were able to announce feed on in Kalgoorlie in early December.
That certainly takes the pressure off some of the issues with respect to the change in the license takes some of the pressure off in terms of the speed of the ramp-up in Kalgoorlie, and also has given us the opportunity to demobilize some of the subcontractors on-site, you know, which has a beneficial cost impact. And then at Mount Weld, we were delighted because we received the ministerial statement, which reflects basically support of the Mount Weld expansion project by the Western Australian EPA and made some great progress with our early works. And separately from the...
Quarterly report, we've also announced some of the results that we've had from the carbonatite exploration program, which we've been conducting over the past 18 months or thereabout, and these are highly prospective for the future resource development at Mount Weld. So really, the quarter has been very focused on ensuring that we are setting up our operations, progressing our various projects, to ensure that we are both able to support capacity growth as the market grows, but also that we are undertaking efficiency initiatives to ensure that we can preserve, and indeed, in some instances, improve our cost position. Because in a market, which I'll talk about shortly, which is, you know, cyclical in nature in terms of pricing, it is important that we retain a low cost and competitive cost position in the market.
So let me turn a little then to sales and also the market. I would point out that despite our being shut down for 50% of the quarter, you know, six weeks out of the 12, we had some very good production rates. Production during that quarter was absolutely in line with our target, 7,000 tons per annum. Our sales, notwithstanding the very low pricing environment, were also at a respectable level, which reflects the fact that we were able to sell down some of the safety stock that we had been holding, just in case. I guess that's what safety stock means, isn't it? Just in case we had not achieved the outcome on the Malaysian license that we did.
Of course, everybody who is even a casual observer of the rare earth market, and in fact, generally, you know, the critical minerals market, you know, a number of the other non-iron ore minerals in the market, would know that the market is not helping us at present. Yes, I'm sure you've heard that from many other producers as they've been releasing their quarterly results. It really is all about the subdued environment in China. Generally speaking, across our various markets, we continue to see, you know, automotive is pretty strong.
Our Japanese customer demand remains resilient, but really inside China, particularly when it comes to those areas which are associated with the real estate market, we are seeing very soft demand, which is translating to conservatism in terms of in inventory holdings and sales in the rare earth market. And so the price is back at, you know, sort of pre-COVID levels. We see this as being, you know, part of, you know, normal sort of cyclical events within the market. And as I said, our objective is to ensure that we have our operations operating safely and in a cost-effective way to ensure that we are able to continue to compete and be well-placed for the market upturn when it happens.
And I'm sure many of you who've been investors in Lynas for many years would know that this was exactly what we were saying in about 2020. And so we saw the benefits of being in that strong position when the market really picked up in 2021, 2022. So generally speaking, I think we're all fairly pleased with the progress that we have made during the quarter. And pleased also with the way that we have been able to manage the business through this time and through, you know, sort of having an extended shutdown. And we look forward to this calendar year continuing to be an exciting one as we continue to develop each of those projects further.
With those as sort of opening remarks, I am, as always, happy to take questions.
Thank you. We will now conduct the question and answer session. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by as we compile the Q&A roster. Our first question comes from Chen Jiang , from Bank of America. Please.
...Good morning. Good morning, Amanda. Can you hear me?
Yes, thanks. Chen.
Hey, hey, hey, Amanda, thank you for taking my question. A couple from me, please. So congratulations on the NdPr production despite the shutdown. Sorry, the temporary maintenance work. I'm just wondering, NdPr capacity, you know, mentioned in the quarterly 10.5 by the end of December 2024, so that's end of first half of 2025. Could you please remind us the plan after the 10.5 to achieve 12? Previously, you mentioned it's called Lynas growth plan 2025. So, would you please remind us if the Lynas 2025 growth plan is still intact and then the plan after that? Thank you.
Sure. Well, actually, you would recall the original Lynas 2025 growth plan was to get to 10,500 tons per annum. In addition to that, we have plans to construct a separation facility in the U.S., which is about, you know, 1,300 tons per annum. So that really takes us up to, you know, sort of that 12,000. We've got the opportunities to do some further optimization work in Malaysia as well. But essentially it will be a combination of the Malaysian facility with the U.S. facility is going to get us to the 12,000, which is the capacity that we're installing at Mount Weld.
Now with the two cracking and leaching facilities in Kalgoorlie and in Malaysia, clearly we have sufficient cracking and leaching capacity to be able to feed that downstream activity.
Great. Thanks. Thanks for that, Amanda. That's very clear. Maybe a question on Kalgoorlie, please. So, Kalgoorlie will start to feed the mixed rare earth carbonate to your Malaysia plant from the March quarter. If you could give us any color on the cost as an average for Lynas growth. I know it's very hard for us to, well, your cash cost will increase, including Kalgoorlie, but if you can give us any, you know, how should we think of your cash cost, including Kalgoorlie in the next three years? Thank you.
So certainly in this financial year, we have always been very clear that it is, you know, sort of an adjustment year. We've got, you know, we've had this effect of the sort of long shutdown. There's a number of initiatives that we've had to take, that we've chosen to take in Kalgoorlie to facilitate, you know, sort of the start up there, including using trapped gas rather than piped gas because of various issues around the gas pipeline. We also, you know, will wear some cost penalties in the early stages as we're adjusting and, you know, particularly operations there, reagents. We've got more people on site to ensure that we're getting the commissioning and ramp-up process right.
So as we move through over the next two to three years, our target, right, and I understand that this is a challenging target, is to keep our cost of production, you know, within the same sort of range as we have it now. Now, will we be able to do that? It means that we're going to have to look at efficiencies, because by definition, yes, you're right, adding a third site is going to add further costs. So we need to look for further efficiencies in both our Mount Weld and our Malaysian operations, so that when we look at the cash cost on a combined basis, we will not be significantly increasing that cost.
Now, I can't give you really what the exact profile of that is going to be, but, that's certainly our objective, because as I said, preserving a low-cost position is crucial to our ongoing success.
Understood, Amanda. Thanks for the color. Last question from me, please, on Kalgoorlie. I'm just wondering, well, Kalgoorlie has started processing the concentrate from Mount Weld at the end of last year. Any challenges have, you know, since it started?
Oh, yes.
Are you expecting any technical challenges from, you know, for processing the carbonate for the rest of the year? Will you send the Kalgoorlie carbonate to Malaysia? Thank you.
Okay. So yes, there are challenges. Stop press. We've got a big complicated new plant, and there's some challenges. And we certainly have been, you know, as we introduced feed, I mean, of course, areas, you know, there was, all of our team had a, you know, sort of hypothesis on where we might face those challenges. Well, you don't know until, you know, that's all theory until you actually introduce the material. So, there are some areas where, you know, improving, and like with any startup, you start it up, you shut it down, you start it up. Yeah, you start it up, you shut it down, and do some further works and all those sorts of things.
I'm not sure that it really, the reporting made it to the East Coast, but there's been a very, very significant issue with power in Kalgoorlie over the last week. It was taken out completely by lightning strikes and absolutely amazing, these huge towers which were taken down. For us, fortunately, we actually were not operating the plant at the time as we were doing some of the enhancements, because I think that, you know, the sudden disturbance to power could have been quite problematic for us.
As it was, you know, having no power was definitely an issue, but by no means as great for us running an industrial facility as for some of the other residents of Kalgoorlie, and we did our best to contribute and help within the community. So I think that our latest forecast is that we should have power back onto the plant by the end of this week. In the meantime, we have gen sets which are providing power, which allows us to be able to continue with certain of our, you know, sort of final construction activities. But, you know, as we've said, with the heat wave, we're really sort of focusing on things which are undercover.
So we have plenty of challenges, but we also have plenty of skills and capabilities to meet those challenges, and I think we're all feeling that we can continue with the ramp up in good order. With respect to processing the MREC in Malaysia, you know, fortunately, we're not in a situation where we're trying to do something with no experience and no skills. In fact, you know, we've got a decade of it now. But as well as that, we have the ability to actually produce a rare earth carbonate in our plant, which we have then been able to test through the circuits. This gives us, you know, sort of, a great deal of confidence that the circuits, as they've been designed, will work.
And so we think that that's a lower risk change from others that we may, you know, sort of, put in place at various times.
Great. Thanks. Thank you so much, Amanda, for your-
Please.
For your color and insights. Much appreciated. I'll pass it on. Thank you.
Thanks, Chen.
Thank you. Our next question comes from Daniel Morgan, from Barrenjoey. Please go ahead.
Hi, Amanda and team. My question just relates to demand. I mean, obviously, it's disappointing the commodity price has been tracking how it is. I just wanted to hear, you know, what thoughts you can give us, on your customers. Like, obviously, you've called out air conditioning as being weak and other property-related sectors. But, is there any shift in demand from wind customers? I understand that's been pretty weak over the last 12, 18 months as well. And I guess broadly, the point, is there any reasons to be optimistic on a turnaround in demand, any concern?
Well, maybe I might let Paul take that question. Suffice to say that certainly, you know, we have seen some wind projects deferred. But look, I'll just hand over to Pol. He's actually been in each of the major markets relatively recently, meeting with customers, and will be able to give you a bit more color than I can.
Yeah, good morning. Not much to add to that, but, the... I think mainly the interest rate increase has postponed or some wind turbine projects, especially in Europe, but that's not really major. Electric car growth is there and is overall doing pretty well. The key factor is definitely the economy in China. So, I think you are more expert than me to forecast how fast the economy will recover in China. I'm just a little risk guy, you are finance expert for that, but that, that's the key point, when will China recover?
Yeah. Thank you. Maybe how do you think, Amanda and team, about bringing on your own supply in the next 12-18 months? I mean, you've got the potential to add a lot of supply to the market versus what you have. You know, how do you anticipate sequencing that, given the demand for the product has been a bit weak recently?
So demand for our product remains resilient. I mean, we continue to have everything that we produce finding a home under contract. I mean, we have a very clear look through in terms of ongoing demand, and our major customers continue to forecast increases in demand. Having said that, with any business where, you know, any business is dependent upon, you know, sort of the general economic environment or in our case, some specific sort of sectors. And so building optionality into our business, ways that we can, you know, sort of make best choices for cost, be able to make choices to dial up or dial down at particular times, is something that we've actually worked on pretty hard for probably the last six years, to be able to give us a bit more flexibility in the business.
You know, compared to the days when we just, you know, had to turn out as much as we could, as fast as we could, and sell at any price. So, our customers have still got, you know, clear growth trajectories in their forecast consumption, and that's the reason why we continue to invest with confidence in increasing our capacity.
Thank you very much for your perspectives, Amanda and team.
Thanks, Daniel. I do the same to everybody, and Happy New Year! Anyway.
Thank you. Our next question comes from Austin Yun, from Macquarie. Please go ahead.
Thank you. Morning, Amanda and the team. During the December quarter, we can see the product mix has shifted. So how should I think about the product mix for, you know, for both production and the sales for the next two quarters, please? And just quickly, also to confirm that the 1,500 ton of production for the March quarter is for NdPr only. Thank you.
Yeah, thanks, Austin. Yep, the 1,500 tons is the NdPr production that we're expecting. I think this is one of the things that we spent a fair bit of time thinking through, particularly through the shutdown and as we've done some of the testing of the circuits. As you would recall, last quarter, we talked to having a very soft first quarter this year, and then you know, sort of having to ramp up to the new capacity occurring in the June quarter. We've chosen a smoother ramp-up profile, which will actually see us produce a bit more over the six months, which we think is generally a good thing. The...
In terms of the mix, I think as we move back into full production, we will see the mix actually settle back to normal profile.
Okay, got it. Just one quick follow-up. Given the revised ramp-up profile, would there be additional working capital expected, or how should I think about any potential cash flow impact, if anything, that we need to be mindful of? Thank you.
Well, I think that it will resemble much more of a normalized quarter, with the exception that this quarter, you know, we get the benefit because, you know, most things are paid on a 30-day term. We get the benefit of some of the reductions in costs that came, production costs that came during our, during our shutdown in the December quarter. But no, no, nothing significant.
Great. Thank you. Pass down.
Thank you. Our next question comes from Al Harvey, from JP Morgan.
Yeah, morning, Amanda and team. I'll just follow up on the supply and demand outlook. So I guess, maybe a couple here, just thinking through what your views are on the additional production quotas announced by China late last year, what the motivations there might be, just given prices have already been soft. And then perhaps on the demand side, just wondering if Lynas has any exposure to the growing AI and robotics industry, and whether you've done any research on the potential total addressable market there in terms of the rare earth side of things?
Sure. Thanks, Al. Once again, I think I might pass that across to Paul. But start by saying, yes, we see automation and factory automation as being one of the key growth drivers and, you know, as we go forward. But Paul can speak particularly to production quotas, he was in China towards the end of last year and can give a bit more color on that. Across to you, Paul.
Yeah. Yeah, so there was this surprising announcement at the very end of the calendar year for additional quotas.
... I understand that this was specifically required by one, Chinese major rare earth player, who had, consumed his, full year, quotas. That led—I mean, obviously, it led to a bit of a oversupply, given that the, at least the mood and the demand was not very strong, and that explains the, the situation we are in at the moment. The, the key element is always to understand, I mean, China remains the biggest by far, rare earth supplier on the planet. How much they increase their production quotas reflects, their overall strategy. Two points on this one.
I had to do recently an exercise for long-term demand of NdPr, and actually, if you forget the quota, but project yourself 10 years ahead, there is so much need for it that actually this game on production quotas might not be the main driver overall. The second is, I remain of a same position that actually China has developed downstream a clear leadership. They leveraged their rare earth production position to do that. Today, they have the downstream leadership established. They should not, you know, understand them paying so much attention about where the supply comes from, because downstream, they are really having the lead. This being said, we'll see what will be the quotas after the Lunar New Year. February 9th, I think, is the Lunar New Year.
I expect something to be announced in the second half of February.
Thanks, Pol. And just when you, you know, you just mentioned that you've, you did a bit of work on it. Are you willing to share kind of where you see the Chinese production quotas or their production capacity capping out in your assumption there?
I don't think I can do that. Sorry.
Fair enough.
You can as well ask me what the price will be tomorrow, and I can't do that. Surprise, surprise.
All right.
No, I not he won't, but, you know, it would be foolish of us to speculate on China government policy. And, you know, it's not something over which we have control. We come back to, as I was saying, you know, what we do control is the ability to operate our our facilities cost effectively and to develop strong, robust relationships with, you know, our strategic customers who are going to be, you know, sort of driving demand over the next three to five years.
And that includes now that we have a very clear pathway to increase production, the ability to engage with some of the customers who have been seeking, you know, sort of additional product from us, on long-term contracts for some time now, but for whom we've not been in a position to be able to make that commitment until we have, you know, sort of real confidence in the capacity uplift.
Just adding up to that, sharing with you a little bit of my trip to China. I hadn't been to China for four years, so for December 2019, before COVID. It was interesting in different aspects. First is that you really feel the economic difficulties. You can see that in the street. But the second is that our suppliers, competitors, are saying that Lynas is now the most competitive rare earth producer, which means two things. One is the idea of killing Lynas is off the table, and second, second, it's, as you know, we always say that in Lynas, our costs are our muscles, and so it's important that the efforts have been delivered and recognized. So that was really the very interesting takeaways from our trip to China.
Sure. Thanks for that, and, yeah, I do appreciate it. It is hard to know what's going on with China. I just thought, given you'd done a little calc yourself, that maybe you'd be willing to share, but, so we'll move on. Just wanted to get a sense of how you're thinking about longer term messaging around the total capacity, system capacity for Lynas. You know, given you've got, call it 15,000-16,000 tons of cracking and leaching capacity, and, you know, notwithstanding the weaker market conditions, what kind of works have you done on looking at a rate beyond 12,000 tons? And perhaps maybe can guide us on when you might go about stepping out those kind of plans.
I just love you guys. I mean, you know, here we are, still in the process of finalizing this significant next step, and now you want to know what are, what more? But actually, what more is one of the reasons why we have continued the significant drilling campaign, at Mount Weld, you know, so we are undertaking real exploration, and infill drilling that allows us to better understand the ore body as, as, as it is. And so we have not converted the, carbonatite drilling program to a mineral resource at this stage, but expect to be able to do that over the next several months.
So, you know, as always, you know, the value starts with what's under the ground, and really understanding that we have sufficient material to be able to feed a larger production capability is critically important. The results are really very positive for two things. One is, you know, sort of additional NdPr. And as we've looked at it, while we-
Sorry, can you guys still hear me? It just dropped out a bit there.
Hi. Please stay on the line as we're just waiting for technical difficulties. Thank you. Please remain on the line. Your conference will resume shortly.
Hello, I'm back. Hi.
You're back. I can hear you again, Amanda.
Oh, my God! I'm not sure where I stopped. I was in full flight.
All right. That's all right. You were on a bit of a roll about the Mount Weld exploration results, so I might just finish with one more on that, if I can. I guess I just wanna kind of clarify the wording in the release around the grade. So it does say that total rare earth oxide grade in the fresh carbonatite is averaging up to 3.3%. So I guess I'm just trying to understand if that's the peak or it is the average, and, like, just how you kind of think about that with respect to the reserves that are currently, you know, approximately 8%.
And then, yeah, just wanna get a sense of what kind of gives the team out there a view that it could be, you know, the fresh carbonatite could be a simpler and lower-cost process versus the higher grade saprolite material at surface.
Okay. I did actually cover some of that when I was speaking into the abyss. But certainly, the work which has been done at present on possible ways to process this material. I think as you know, that, you know, the saprolite zone has its own set of challenges with respect to the float circuit, the very fine particles, and, you know, the ability to use a simpler separate process for the coarser-grained material we see as being prospective. Bearing in mind that this is an early report. We have not converted this material to a mineral resource.
In that way, if that is the case, I mean, it does make this the ability to be able to cost-effectively process, even though it's, you know, sort of, on average, a lower grade, I think is very positive for our business going forward. So, I think that the other thing, which I was once again saying when I dropped out, is some of the additional information that we have been able to get as we've conducted the drilling campaign, particularly on the distribution and availability of heavies, is really important because as you know, high performance magnets need a combination of both NdPr and also heavies. And I think the prospect of being able to mine for element, not just mine for grade, is also very positive for our business.
Yeah, sorry, just really quickly on that. It does look, though, like the dysprosium grades are, you know, 3-4 times lower in the fresh rock zone versus the saprolite zone that you're already mining. So just how do we reconcile that?
Sorry. The dysprosium results that we have seen are actually related to areas which don't sit within our current life of mine, even in the saprolite zone. So that's what we're actually doing more work on, is to understand in those areas which sit outside, given that our current life of mine plan is primarily focused on grade and by default, therefore, NdPr, is actually looking at the areas outside of there where we can see further enrichment of the heavies. So there is-
I really appreciate all this, Amanda.
Yeah. But, you know, I think that we're at a stage, at this stage, where we've got some good prospective results, and it's important for us to share those with the market. We need to do some more work, and we'll, in due course, convert this into a proper mineral resource and subsequent mineral reserve for Mount Weld.
Thanks, Amanda.
Thank you. Our next question comes from David Deckelbaum from TD Cowen. Please go ahead.
Morning, Amanda and team. Thanks for squeezing me in here.
A pleasure. Hope it's not too late for you.
No, no, no. You guys came in early this time around. But, the... You know, I wanted to maybe ask a high-level question. You know, is, obviously, this quarter there, there's a bit of a transition. You all are endeavoring in multiple growth initiatives. I don't necessarily need to know what's next, but I am curious, in the context of the cash burn that's probably foreseeable for the next several quarters, how do you kind of square your capital initiatives right now with the uncertainty of the market, which, as you pointed out earlier, is highly contingent on the broader Chinese economy recovery, which no one seems to have the answer to right now?
So how do you think about sort of that risk management right now, and how far away are we from any modification to timing of capital outlays, or are we sort of, you know, kind of too pregnant with some of the projects that are ongoing now, so it's more of a, "Let's finish those up commission and then wait and see?
It's an excellent question, David, and, I, I think you would not be surprised to know that we have done a fair bit of work on this. I mean, you know, you cannot just keep spending money blithely or, you know, bankers would say, "Well, why don't you take on some debt?" It's like, well, the market's down. The dumbest thing we could ever do is actually spend borrowed money. So therefore, what are the profiles that allow us to be able to preserve cash if we need to? At this stage, we don't see this, in the short term because we have been able to, develop such a strong balance sheet. And really, the key project in terms of, capital consumption over the next 12 months is going to be the Mount Weld expansion.
We see that as being both able to be accommodated within our current balance sheet and highly desirable to complete within that period. But we have a watching brief on it, and we have identified what we can do. We just don't need to do it at this stage.
Appreciate that, and thanks for the response. You know, maybe a little bit more in the weeds, but just when I look at this past quarter's results, you know, it appears, unless I'm incorrect, that your absolute total costs are increasing right now. And I'm curious if any element of that is a function of commissioning or downtime at facilities that you would deem to be more one-time in nature, as opposed to, obviously, just total operating costs increasing on a unit basis as you bring on Kalgoorlie.
Oh, that's all a bit complicated, but I guess one of the important things here to recognize is that, as you said, in terms of what we report here as a cash flow, not a, not a, not as we will report with our half year, where we actually get an accounting cost associated with production. And the cash cost, of course, is slightly lags production. So during the quarter, we effectively had, you know, close to a quarter's worth of cash costs associated with production, but, you know, 50% of a quarter of production. We will see some of that benefit come in during this quarter.
But as you've identified, and as I mentioned earlier, it is an adjustment year, and we will see some increases during this year associated with operation of the Kalgoorlie facility, which, you know, once we've got it up and running stably, we will then look to optimize.
Thanks for the answers, Amanda. Best of luck out there.
Thanks, David.
Thank you. Next, we have Dim Ariyasinghe from UBS. Please go ahead.
... Thanks, Amanda and team. Just on the ramp up, can you maybe let us know in terms of optimization or give us a little bit more color on how you could potentially manage a ramp up of Kalgoorlie with regards to lower prices? Like, is there any elasticity in how much production you can have? How agile is the facility versus lower prices?
Yeah, probably not a huge amount of elasticity in the ramp-up phase, to the extent that, as we start the facility, you know, we need to be testing and pressing its capability. So, you know, I mean, it is an expensive, you know, it's a costly period as we produce during that phase. Once we have a sort of a view of operating capability and we're operating stably there, and at the same time, we're operating with stability in Malaysia, then certainly we have an opportunity to look at how do we best optimize that. And we may do things differently according to market conditions. But during the ramp-up phase, probably not a lot of wiggle room.
Yeah. Yeah. No, thanks. And, yeah, thanks for answering these questions. Maybe one a little more blue sky. Can you just remind us on your heavy rare earth strategy? Maybe that's something a little bit more exciting, versus your $50 NdPr price.
We think every day is exciting, and even a $50 NdPr price gives us plenty of exciting things to deal with.
Yeah.
But heavies, look, I think that, you know, the original exploration, as I've, as I've talked about, about Mount Weld is really, you know, very much about lights. Heavies were a happy coincidence that we brought along, along with it. The processing, you know, sort of our end-to-end processing, was absolutely designed to optimize, say, recoveries for lights and, you know, didn't necessarily optimize recoveries of heavies. And we see that we have opportunities to improve that. As I said, we've got the opportunity to, to mine in areas that weren't within our current life of mine plan, which would see us produce more heavies as well. These are all important. In terms of then looking at alternate sources for heavies, I think every one of you has written about, you know, sort of ionic clay deposits and prospectivity from those.
You know, certainly for us, very close to home are the Malaysian Ionic clay deposits, which are being progressively developed. The Malaysian government has nominated, you know, sort of development of rare earth industries, upstream and downstream, as one of their important economic focus areas. And so, working with potential supply sources in Malaysia to complement the material that we have available out of the Mount Weld ore body is clearly a priority. And then looking further afield at other heavies sources, of course, is, of course, you know, sort of on the agenda. But I would say that those are, you know, sort of developing Mount Weld, looking to partner and develop Malaysia are the two things that I think are the most prospective at this stage.
Yeah. Understood. Okay, cool. Thank you. Thanks a lot.
Thank you.
Thank you. Next, we have Al Harvey from JP Morgan. Please go ahead.
Sorry, just, wanted to follow up, Amanda. When should we expect the resource update?
Oh, probably, mid-year, mid-year-ish.
Okay.
We generally provide an update around about, you know, around about the time that we produce our annual results, and we would think that we will aim to do it no later than that. Of course, if the team can do it earlier, we'll brief the market accordingly.
Yep. Just finally, a bit more of a follow-up. Just thinking about, you know, that potential again, beyond 12,000 tons. How do you think, you know, and in the context of Paul's analysis, you know, how are you thinking about whether or not the market could take it? I suppose you did mention that thinks that there is a requirement for more material, but, how do you think about, yeah, feeding in more material longer term?
Well, I think once again, it's one of the reasons why we've been dedicating, you know, sort of time and effort to better understand the Mount Weld ore body. We continue to, you know, sort of engage with various different prospective third-party suppliers, none of them have actually come to market yet, but that doesn't mean that we won't, over time, be able to take, you know, be able to work with others who may be able to develop a resource to be able to process that resource. And as I said, you know, with a particular focus on some of the upstream resources, which we do expect to come available, particularly in Malaysia.
This is a, you know, sort of, it's close to home, and, it's a jurisdiction in, you know, where we already know what we're doing and understand, you know, sort of the potential sources of additional material. In terms of our processing capacity, as said, cracking and leaching, we've now got plenty of capacity. And so downstream, you know, we've got a very low cost uplift from the 7,000 tons to the 10,500 tons capacity in Malaysia. One of the great benefits of, you know, a brownfields expansion, and I think we're relatively, confident that we would be able to take a further step there, but it will be, you know, sort of, done and, you know, sort of phased appropriately with what we do with capacity in the other stages.
Thanks, Amanda.
Thank you.
Thank you. Our next question comes from Paul Young of Goldman Sachs. Please go ahead.
Hi, Amanda. I know it's been a long call, so thanks for taking the question. I just want to dial, dial in on a few specifics. And, the first one's around the slight upgrade in production for NdPr for the June half. Just want to clarify, you've done the expansion works or debottlenecking on the cracking and leaching in front end. Have you actually completed the expansion of the solvent extraction, the two solvent extraction trains, or is that still ongoing?
No, it's done. What we need to do now is to stabilize those, and increase the feed rate through to those as we bring MREC from Malaysia as well. Bear in mind that we've got to have, we've got to have both the feedstock from Malaysia, sorry, and the MREC from Kalgoorlie to be able to feed the increased production. The upgrade went really well, and we are very confident about those circuits, which is the reason why, instead of sort of, you know, we've been conservative in what we'd said previously, which was to hold that production lower while those circuits stabilized. Things are working very well for us right now.
Yeah, great. That's, that's amazing. Well done to the team. It's probably the fastest expansion I've seen of a, a back-end refinery, in the industry, so well done to the team. Second question, Amanda, just on the, on Mount Weld. I noticed it was running at 80% nameplate in the quarter. Why wouldn't you be running it as hard as you can? I know it was running at basically nameplate a couple of quarters ago. Is that just ore type changes, or something else?
No, just because we were shut down for six weeks because we've been able to build the inventory and because we are always mindful of costs.
Right. So it's more working capital management-
Yep.
-that Mt Weld is running at 80% throughput-
Yeah.
in the quarter.
Yeah. And it's now back to 100.
Great. Okay, fantastic. That's-
Thank you.
The two for me. Appreciate it.
Thank you.
Thank you. I would now like to hand the conference back to Amanda for closing remarks.
Thank you. And look, thank you, everybody, for joining. I think that it is always, you know, when the market is feeling soft, it's easy for us to feel like having a little bit of a wait. But generally, we see this market continuing to be highly prospective. It's growing, it's important, and, you know, we're about making sure that we are in the best possible shape to win in all circumstances, whether the market conditions are really, really positive or whether, as they are today, maybe not so positive. But, you know, we need to be focused on making sure we can be successful across all stages of the cycle. So thank you very much, and we look forward to a very exciting, you know, 2024 calendar year.
I'm sure I'll talk to you all again soonish as we announce our half-year results.
Thank you. This concludes today's conference call. Thank you all for participating. You may now disconnect.