Ladies and gentlemen, thank you for standing by and welcome to the Lynas full year results briefing. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one on your telephone. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Lynas. Thank you. Please go ahead.
Good morning, and welcome to the Lynas FY20 results investor briefing. Today's call will be presented by CEO, Amanda Lacaze, and Amanda is joined by CFO, Gaudenz Sturzenegger, General Counsel and Company Secretary, Andrew Arnold, and VP Downstream, Pol Le Roux. Due to legal restrictions, we're unable to discuss the process or details around the equity raising announcement, other than the terms referred to in the announcement. Please refrain from asking questions about the specific details of the equity raising, as we're legally restricted from answering those questions on this call. I'll now hand over to Amanda. Please go ahead, Amanda.
Good morning, everybody. It is a pleasure to join you from a very delightful, sunny day in Sydney. And thank you. Busy day for us today. But today's meeting, this call is all about looking at our results in the year just passed. And it's a chance to reflect on that year, and I don't know. I think I've turned a new... I've coined a new phrase. Instead of dog years, we've got COVID years, because some of last year seems a very long time ago. But it was a very busy and a very productive year, and much of our work was about ensuring that we had foundations in place for future growth. It was a year of four quarters, two of them very strong, two not so strong.
And despite the low prices, our performance in quarter one and quarter three shows the underlying business strength, even as markets were somewhat difficult. So just looking at those, if we particularly look at quarter three, even with 10 days lost production due to the Movement Control Order, causing us to shut down the plant in Malaysia, and 14 days of a slow ramp-up from the December temporary production halt, we still recorded the highest ever NdPr production in quarter three. And this really is a reflection of improved capability as a result of our Lynas Next capacity building initiative.
Certainly, while the 44 days lost production affected the latter part of quarter three and quarter four, I would balance that against the fact that Malaysia's response to the COVID-19 pandemic has been really excellent in its effect. And that, as always, the competence of managing that process has meant that business has been able to come back to pretty close to normal operation, with, of course, the additional health and hygiene protocols in place, but very much business as usual. We are fortunate as a business that during the shutdown period, we were able to avoid the big costs associated with our business, and this is particularly things like reagents in the business and of course, other utilities.
We were pleased to be able to continue to pay our people during this period of time, and while we only had a skeleton staff for safety and maintenance purposes in Kuantan, we were able to continue operations at Mount Weld, where mining was designated as an essential industry. Once again, with relevant health and hygiene protocols in place. We used, and I mentioned this on the quarterly call a few weeks ago. During that time, we used our time wisely. Certainly, the economic effects of COVID has caused us to revisit our planned production profile. And as I indicated then, we restarted at about 70%. We're now running at 75% of Lynas Next rates.
I would just remind everybody who's been with us on this journey, that that is actually equivalent to the original nameplate for our facilities, yet we are running it with only 75% of our assets in use. So that means that, you know, we really have captured some of the reliability benefits that we were aiming for as part of the Lynas Next program. It also means that we are able to substantially capture the cost efficiencies which are associated with volume. It also gave our teams the opportunity to do some really excellent work, revisiting all of our cost lines, all of our operating parameters, and ensure that as we started up, we started up with, you know, sort of best possible performance.
At the 75%, as we've noted, in the results presentation, we are, you know, pretty close to market demand at this stage. And it ensures that we're not bringing any supply side pressure into the market of being able to operate very cost effectively and profitably for our own business. As I said earlier, much of the work in 2020 was about making sure we had strong foundations in place for future growth. We maintained a very strong focus on safety. We were pleased to record a further reduction in the 12-month rolling Lost Time Injury Frequency Rate. And, of course, we were very pleased in August to have recorded 461 days Lost Time Injury Free in our Malaysian facility.
We were, as many minerals and industrial companies have been able to do, we have strong safety systems, so we were able to drop in the additional health and hygiene protocols required to manage within the pandemic environment in a way which is safe for our people. Even with the COVID pandemic, we retained our commitment to our communities. We have distributed PPE and other care packs into our communities, including food stuffs in Malaysia. We have ensured that we've put in very strong protocols in Laverton to ensure careful separation of our people from the community, which of course is a high representation of Indigenous people. We have a strong foundation for the future with improved productivity from our existing assets.
Some of the other achievements, which as said in COVID, seems quite a long time ago. In terms of regulatory outcomes in Lynas, Malaysia, the operating license was renewed for three years from the third of March. The conditions associated with that are very clear, and we're confident of our ability to satisfy those conditions. And most recently, we have announced the approval of the site for the Permanent Disposal Facility, subject to finalization of various studies and final regulatory approvals. We have made really significant progress on the projects which are part of our Lynas 2025 growth vision.
We have our Kalgoorlie project team has been in place now for nearly a year, and has made really substantial progress, and really not skipped a beat during the pandemic. Once again, Western Australia has designated mining industry as an essential industry, and so we can our team continues apace. We've selected Kalgoorlie. The project's been awarded Major Project Status from the Australian G
overnment and Lead Agency Status from the Western Australian G overnment. And of course, we were selected by the U.S. Department of Defense for phase one of the U.S. heavy rare earth separation facility that we've previously indicated. We were going to respond to that tender and with our partner, Blue Line in Texas, you know, propose the establishment of that plant.
In terms of sustainability, of course, all of our customers care about sustainability practices, ensuring that we have, we've completed some excellent work around life cycle analysis and external affirmation of the sustainability principles on which we run our business, including a gold medal award from EcoVadis. So as I said, we're really looking at continuing to improve the productivity from our existing assets. This includes upgrades to our circuits, both in Mount Weld and also in Kuantan, including improving pretreatment processes, the inclusion of Duncan ore into our processing stream. In Kuantan, we've done upgrades, which have improved product processing and quality. And over time, we certainly want to be playing more and more in the specialty rare earth sector.
And I also indicated both sites have taken advantage of the pause to revisit our costs and ensure that we are in best possible shape, particularly as we're dealing with, you know, sort of an uncertain global economy. During the year, you know, a huge amount of time and effort has been spent with governments and regulators. The outcomes of that have included the granting of the Malaysian license to operate, the progress that we've made on the PDF in Malaysia. But it's also included engagement with other governments, chief amongst those, the Australian, Japanese, U.S., European governments, on future rare earth supply chain strategy. And I've already referenced the U.S., the phase one contract in the U.S.
So despite, you know, the disappointment of the hit that we took in the fourth quarter of the year, which, you know, means that our performance has not been as good as it was looking, say, on about the fifteenth of March. If you'd looked at our forecast through to year end, they were looking a little rosier than the actual outcome. We are very confident that we have taken the actions in 2020, that ensure we enter this decade in good shape, and that we are match fit for the future opportunities that we see for our business. So with that, I'm happy to take questions, as people have them.
Thank you. Ladies and gentlemen, if you do wish to ask a question today, please press star followed by one on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press the pound or hash key. Once again, it is star one if you wish to ask a question today. Your first question comes to the line of Daniel Morgan from UBS. Please ask your question.
Hi, Amanda and team. So just wondering about the restructure and the CapEx envelope. In the past, you've talked about that being about AUD 500 million to achieve it. Just wondering if you could talk to that number again, and is there any itemization you might consider regarding the full capital number? Thank you.
So the AUD 500 million, yes, we can affirm that. We've done a huge amount of work. The project team has done a lot of work now on that over the past 12 months. So where we started with that, and it was, you know, sort of, oh, probably well and truly in the plus or minus, it could have been 30% or 40%. We now have locked that down with sort of line by line, not only estimates, but we've tested the market on sort of key line items to ensure that our assumptions are, you know, correct. We're very pleased with the first tender, which is the kiln. It actually came in slightly lower than what we had budgeted for, which gives us a good idea for the future.
The AUD 500 million will cover the project in Kalgoorlie and the associated upgrades in Kuantan, because there's going to be slight changes in the flow sheet. And also, a healthy contingency associated with it. You know, it's a big project, and so therefore, you need to make sure that you have, you know, that sort of contingency buffer. But we're very confident that we have the right people on the project. These are people who know the asset, understand, you know, where the design was not right in 2012, 2013. Where we have got it right, as we've revisited that design, and therefore, how to take the best of that and make it even better for the facility in Kalgoorlie.
Thank you. Amanda, can you remind us, or update us on what we are getting for the AUD500 million? What is the scope of the project in terms of your end capacity and different products you're gonna have for that?
Yeah. So, it's really a step along the way. A year ago, we presented to the market our Lynas 2025 vision. Today's facilities, at Lynas Next rate, can produce about 7,000 tons a year of NdPr, and our target is to produce 10,500 tons by 2025. The cracking and leaching facility in Kalgoorlie is a step along the way to that, and by establishing that facility, it opens up the pathway for us to actually achieve the Lynas 2025 goals. And it gives us, you know, the way that we will be engineering the facility, gives us the ability to, yeah, optimize throughput.
The actual throughput will, as for any of these types of facilities, be determined by the grade of the concentrate that we feed. It will produce a mixed rare earth carbonate, and therefore, Kuantan will now be configured in a way that can receive mixed rare earth carbonate, and process it.
Okay, thank you. And, just on the markets, the NdPr price has been rallying, recently, despite what appears to be, you know, end markets. I mean, I mean, you've talked about you're running your plant at 75% or reduced capacity due to, lower demand. I'm just wondering what color you can give us about what's happening in the market of, you know, why are the prices rallying from your perspective?
Yeah. So, Paul's on the call as well, but, you know, I'll take the question in the first instance. You know, essentially, the prices stayed very low for most of last year. And, you know, as with many markets, you know, there's a stage where the price cannot stay low forever. But as we talk about, you know, sort of demand today, certainly, you know, there were various shutdowns as a result of COVID. So, there's not a lot of inventory sitting in the system. So that means demand is pretty steady. Whilst the automotive market, and I think there's, you know, many, much has been written about the decline in demand for automotive. That's been most felt within the ICE vehicle segment.
Hybrids and electrification, which are the areas that are driving demand for magnetic materials, which of course is NdPr, remains steady. And indeed, some other segments, which use the material, like for example, big block magnets, which are used in wind turbines, are really fairly buoyant. So, we would see this as a, you know, sort of a fairly natural progression and not inconsistent with what we've seen historically in terms of, you know, price. Pricing always tends to be stronger in the back half of the year than in the front half of the year. Paul, I don't know if you wanted to add anything more to that, but, yeah, that's really where we see the pricing at present.
I think added to that, Daniel, there's not a lot of supply side pressure actually coming through into the market at present.
Thank you very much.
Okay, thanks.
Your next question today comes on the line of Andrew White from Curran & Co. Andrew, please go ahead. Hello, Andrew, your line is now open. Please go ahead.
Hi there. Sorry about that. Thanks very much, Amanda. Just a couple of questions. Stepping back to what it's gonna look like, as you head towards 2025 on, Mount Weld and the mining rate there. Obviously, you're doing mining on a campaign basis there. Have you given much thought as to what it looks like, as you head towards 2025 on changes to rates of production there?
No, actually, Andrew, I thought we would just, you know, see how we go. Of course, we've given lots of thought to that.
Excellent. Can you give us a bit of color on what that looks like?
Yeah. Yeah. So, look, I think the first thing I would say is that, you know, when we did our last resource and reserve upgrade, we talked to the fact that we'd done some additional drilling, which allowed us to significantly upgrade the reserve, and the resource. But there was some of the indications from that drilling that gave us sort of a highly positive prospective view of the ore body and future development. And that is that, you know, it's open at depth, and it's open laterally. So one of the key things that we will be doing is to doing some additional drilling to reconfirm our life of mine plan. You know, we've always talked to, you know, sort of really wanting to maintain the life.
As we look at it, you know, we're a 25-year plus mine life at present, and we want to continue exploration in a way that that enables us to extend that. And so that will certainly factor into, you know, the additional drilling, will factor into more thoughts around how we you know the life of mine planning. In addition to that, yes, we're highly alert to, you know, sort of grade variations as we move through the ore body and how we balance those out. And the team at Mount Weld is very focused on metallurgical you know sort of review to understand how we can best optimize our processing.
You know, as we move into different parts of the ore body, it may mean that, you know, sort of the flotation process in its current form may change incrementally, or as we move into maybe, for example, even the primary mineralization, we may use a different processing method. All of, all of the investment and upgrade, which is required as we move through the ore body. And remember, when we talk about moving into lower grades, they are still grades which are significantly higher than most other resources in the world. As we move into those, you know, we will require upgrades, and we have included that in, you know, our planning for the business between now and 2025.
Okay, excellent. And what does it look like in terms of the proportion of Duncan ore that you'll be mining over the next couple of years? Do you see that, you know, as a proportion of to the other types of materials? Does the proportion of Duncan material increase over the next couple of years with the way dysprosium and terbium is looking?
I can't off the top of my head give you any specific numbers on that. I mean, we certainly, we actually right now, as part of previous mining campaigns, have mined areas within the ore body which were classified as sort of the Duncan zone. I mean, it was originally sort of classified as a separate ore body, but now we just see it as a part of a, you know, as a different zone. And we are blending that in with our, with our current production, and that is so that we can have an enriched stream of dysprosium and terbium.
Sure.
We expect to be able to continue that.
Okay. Okay. Just on returning back to what it's gonna look like over the next 12 months for the development of the cracking and leaching facility in Kalgoorlie. Can you just give us a high-level overview on sort of the major tasks over the next 12 months? What are the key milestones you'll be aiming for?
So completing all of the engineering and design work, and we've included in the presentation a 3-D graphic actually showing what the plant's gonna look like. It's all pretty exciting, actually. And we are substantively complete on that. So sort of moving into... We've already, as said, you know, let the first long lead time item, which is the kiln, and we're moving to tender on some of the other longer lead time items as well. Of course, our approval path is a crucial part of this. And you know, that's our studies are very well progressed, or in some instances, complete. Our submissions in a number of areas, it's already been made.
Of course, the value of the Lead Agency Status from the Western Australian Government and Major Project Status from the federal government is very helpful in that area as we have project management partners within the government to help us to navigate our way through those processes. So, you know, we have two core streams in engineering and approvals. And then the third one, which we would expect to commence within this financial year, will be site early works ahead of sort of major construction, you know, sort of towards the middle of next year.
Okay, excellent. Thanks very much for that.
Thanks.
Once again, ladies and gentlemen, if you do wish to ask a question today, it's star one on your telephone. Hi, it says we have no further questions on the line today. And so I would now like to hand the conference back to you, Amanda, for closing remarks.
Terrific. Thank you very much. You know, I will just close by stating that we do anticipate making further announcements with respect to the equity raising in accordance with our ASX continuous reporting obligations in due course. We will communicate directly with security holders with respect to their eligibility to participate in the equity raise. Other than that, I would simply like to thank everyone for their continued interest in our business and look forward to continuing that through the new financial year and, as I said, a new decade. Thanks, all, very much.