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You can still listen to the meeting while you read. I will now hand over to Lynas.
Good morning and welcome to the Lynas Rare Earths investor briefing for the quarter ending June 2026. Today's briefing will be presented by Pol Le Roux, Interim CEO, and joining Pol on the briefing are Gaudenz Sturzenegger, CFO, Chris Jenney, VP Sales and Market Development, Daniel Havas, VP Strategy and Investor Relations, and Sarah Leonard, General Counsel and Company Secretary. I'll now hand over to Pol Le Roux. Please go ahead, Pol.
Thank you, Jen. Good morning, everyone. My name is Pol Le Roux, and as you probably know, I replaced Amanda Lacaze as Interim CEO following her retirement June 30th. I'm pleased to share with you my analysis of our performance in this June quarter 2026. Of course, I will then try my best to answer your questions, if any. During this quarter, the market continued to be strong, and all the customers I reconnected with since I took this new position indicated a higher than expected growth of magnet demand, raising their concerns for security of supply and supporting, of course, quite healthy price level. That's a great situation to be in, and this market situation benefited Lynas, and we achieved a record 98% of a kilogram average selling price through the quarter.
This performance is the result of a favorable market environment, of course, but also improved offer from Lynas, in particular with the sales of dysprosium and terbium, and price premium obtained by the team in recognition for reliability. This favorable situation will continue as we finalize the qualification of our newly launched samarium and move from qualification into commercial contracts. I am actually in Korea, following this call, I will head to the signing ceremony celebrating the new partnership between JS Link and Lynas. This agreement includes a AUD 50 million contribution by Lynas in the 3,000-ton magnet factory that JS Link will build in Malaysia, as well, of course, as a 10-years resource supply contract.
Some of you know my attachment to Korea, where I enjoyed seven wonderful years. I look forward to further development in this dynamic country, surprisingly called "moderate-income country," which is not very obvious when you work here. Anyway, this is an important move by Lynas, one more step in the development of our Lynas 2030 strategy, supporting downstream industry development outside China. On the operations side, I would like to first start with safety because we are very pleased to continue operating safely on our three sites, as demonstrated by the decrease in our lost time injury frequency rate, which went from two to a 0.9 end of the year. That's a very good achievement. We are looking forward for further improvement of the situation, but it is already a very good performance level safety-wise.
On production, I have to say that our production performance was clearly not as good as expected, was impacted by the quality variation of our concentrate as we were mining into transition zone. These variations were impacting the productivity of cracking and leaching in both Kalgoorlie and Kuantan, therefore reducing the feedstock, the feed flow to the solvent extraction, therefore the total production. That experience, while it has been very frustrating, it has mobilized all the teams together from the three sites and the R&D and led to a step change in our expertise, including solutions to vary our process parameters and sequence upstream and downstream to adjust to ore quality variations. Again, we are disappointed, but we get out of this much stronger individually and collectively, as everyone has now a deep understanding of the process from mine to big bag and how each process step influence the others.
On the positive note, the production of Dy and terbium was higher than expected. This includes part of the WIP. You remember last quarter, we explained that we had a lower production because we had some WIP, but in fact, beyond catching under the WIP, our recovery has improved, and that's a very good sign and should continue as we start the IsaMill during this July quarter. Last but not least, to me it is quite important, reflective of the improvement of the team in Kalgoorlie. Kalgoorlie has started a new process, a continuous precipitation process, and they did that faster than it takes to write a report. That's to me a very important change reflecting the improvement of the Kalgoorlie team, the process Kalgoorlie team in their expertise, and that is something that makes me quite confident for future.
Project-wise, we just focus on the heavy rare separations since expansion in Mount Weld is almost finished. We just need to finish the tailing pond number four. On the HRE project during the quarter, we have reviewed the project so as to allow us to go for stage product-by-product execution of the project. You remember, we produced dysprosium in May 2025, terbium in June 2025, samarium in March 2026, now we changed the schedule so that we could produce gadolinium early fiscal year 2028. Let's say, well, for the Northern Hemisphere, the summer 2027. Yttrium, early calendar year 2028, lutetium, the last one will be probably around April 2028. That is very important, because we continue seeing very strong demand for every single element that this project will deliver.
It appeared for us very important to be able to produce, to execute and start supplying the market step by step and not wait until the full project is finished. In parallel with that, we've had a lot of detailed technical discussion with specific customers, that discussions led to some change in equipments in order for us to match with specific targets, specifically very low level of non-risk impurities, even in some cases, managing the physical characteristic of the product, such as very narrow particle size distribution. This modification, combined with now identified source of all equipments outside China, you know that we can't buy anymore anything, it took a while for us to really identify contractors who could actually deliver all the equipment needed.
Now it's done, this all modification together led to an increase of our CapEx to AUD 294 million, a Class 3 CapEx, it's a well-controlled and precisely defined CapEx. Again, what is very important is first, we are in control, second, we manage to anticipate and start to deliver on specific product all through the project rather than waiting to the end. All in all, this quarter had its shares of challenges and successes, all together, this has led Lynas improving our cash position by AUD 138 million to AUD 1.209 billion which is a great feeling and a good place to be at a moment of market opportunities. That would be my summary of this quarter. We don't make forward statements, we feel pretty confident for the quarter we are entering, I will take questions now, if any. Thank you.
Thanks, Pol. If you have not yet joined the live audio queue, please do so now. To hear from as many people as possible, we request that you ask one question at a time. If you have more questions, please rejoin the queue. I will introduce each caller by name and ask you to go ahead. You will then hear a beep indicating your microphone is live. Our first question today comes from Austin Yun from Macquarie. Please go ahead.
Morning, Pol and team. Thank you for the update. Good to see that you made some progress on the Kalgoorlie front despite the ore quality challenges at Mount Weld. I am just keen to understand, looking forward, given the improved understanding of the ore body and also improvement at the flotation facility, how should we think about the production run rate at Kalgoorlie for the next 12 months? Thank you.
Well, I cannot project exact numbers. What I can tell you is that Kalgoorlie is in a much better shape today than it was at least three months ago, and it is a bit unfair for them that these quality variations that we missed at the start, to be honest, impacting the productivity, otherwise, it would have delivered a very good quarter. Moving forward for Kalgoorlie, I think we can be pretty confident. What is really very important, I tried to explain that, all the variation comes from ore and transition zones. It was frustrating, but we have developed very complex new process parameters, including cracking, leaching, and in flotation to address these variations. That makes me quite comfortable for the future because everything depends on the people's expertise, and I see that growing very fast.
Thank you.
Thank you. The next question comes from Chen Jiang from Bank of America. Please go ahead.
Good morning, Pol. Thank you for taking my question. Just a follow-up on your production and operational performance. NdPr production for this quarter looks like the second weakest quarter of the last five quarters. Understand the quarter-over-quarter variations, your ore variations. Just want to confirm, has currently achieved 12,000 tonnes per annum of NdPr capacity after Mount Weld expansion. Also there are multiple issues what kind of issues actually impacted your production the most?
Look, listen, I'm not sure I heard everything. You cut off quite a number of times. Maybe you asked a question about Mount Weld capacity. Mount Weld capacity, basically this quarter was impacted because we had some problems on the water recycling unit. This has been fixed. Unfortunately, I would say because of the problem downstream Mount Weld supply was big enough for the downstream. Now I think Mount Weld is really set up for the original design capacity. The only step that is remaining for us is to start the IsaMill. You know, grinding very fine, liberating more rare earths, improving the recovery rates. We had a few tests done, very short, but normally we should establish that permanently from this quarter, and that will be it for Mount Weld. Not too much concern on my side on the Mount Weld.
I just want to emphasize a little bit, because it's a good example. The expansion came with a lot of automation, including, now you have a fixed crusher. That makes life of everyone way easier. We realized that in the past they had a mobile crusher, so the people in charge were really discriminating ore and blending them nicely to have a constant feed on the flotation system. Of course, once it's all automized, you realize that people discriminate a lot less the ore. That's something that we missed, to be honest, in the design, so we addressed that as well. Mount Weld is really in very good shape, except for the TSF that we'll finish this quarter or no, next quarter. Everything is done and working pretty well.
Right. Thank you. Thanks, Pol. I might queue back. Thank you.
Thank you. The next question comes from Paul Young from Goldman Sachs. Please go ahead.
Yeah, morning, Pol, Gaudenz and team. Paul, can I just dig into Mount Weld a little bit more, just the challenges in the quarter. I visited the site in March and the commissioning was going extremely well, and there's clear upside on the, it might be on the base case, 1.3 million tons throughput. Just to step through the mass balance, clearly can produce over 200,000 tons of concentrate and you haven't had to run Kalgoorlie cracking and leaching really at all because the cracking and leaching facility in Malaysia can do 100,000 tons of imports. The mass balance stacks up that Kalgoorlie hasn't really needed to run until this point, probably more a statement really. The commissioning seems like it's mostly completed on all the key processing units at Kalgoorlie, so that's good news.
Just to talk through Mount Weld, I understand, looking at the circuit, you had a mineral sizer there. You've now put in a more fixed crusher. You've had clearly some challenges with the particle size distribution being fed into the SAG milling circuit. When I was there, the SAG mill was running really with low steel charge and more in autogenous mode. You've obviously had some variability on feed size distribution and different ore types coming through. It sounds like this is all pretty simple. Just to confirm again, just to provide more color, that it's really was around size distribution to the float circuit, challenges with the gang and silicates that are floating with the monazite and then basically impacting concentrate grade and also particle size distribution in the concentrate.
I know that's a long-winded sort of technical statement or question, it sounds as though these are all minor, just commissioning issues. Can I just confirm that?
Yeah. Anyway, I like techniques. At the end of the day, techniques matters. Thank you very much, Paul. No, the variation of quality, we are beyond some difficulty. It was not a big challenge on the new mill, which were related to particle size, et cetera. Here it's more a variation on composition. You have variation of MgO, calcium, carbonate, phosphate. It's the combination of these impurities combined. It's not one versus the other. That's why it was a bit complex. It's an equation with four different variables, which are sulfate, magnesium, calcium, and carbonate. Depending on the respective level of one versus the other, then you have different performance in both the flotation, but most important in cracking. This impacts the dynamic of the reaction.
When you mix with sulfuric acid, your reaction goes too fast, and so the viscosity becomes terrible, so your product doesn't flow fast enough, and so that impacts your productivity in cracking. It's more the composition, and that is a result of transition zone. When you have dolomite, apatite, monazite, all coming together, you need to control that, and be able to react both on modifying your cracking process or sequence and modifying the flotation process so as to secure a dynamic of the reaction in the cracking that is under control and not leading to viscous slurries. I don't know if I answered your question, Paul.
No, no, it has. Sorry, I thought you were more pressing limonite on a saprolite consistently rather than the apatite. I think, yeah, it just shows you that obviously the ore body's transitioning. Thanks, Pol.
Yep.
Thank you. The next question comes from Rahul Anand from Morgan Stanley. Please go ahead.
Oh, hi, Pol. Thank you for the call. I just had one on the CapEx increase that you had. Obviously, the plant was greenlit, I think, on the 29th of October. That was already after the restrictions came in from a China perspective. I'm aware, given past understanding, that there were contingency plans also in place, to source from alternate suppliers. I guess my question is, it's taken us a fair bit of time to get to this updated CapEx estimate. Is it purely just a sourcing issue here in terms of contingency? Has the scope changed? I know you've talked a bit about purity of product, but if you can provide perhaps a bit more detail as to what exactly has changed in terms of the flow sheet, so to speak, that has led to the increase.
Yeah.
The size that it is.
You understand that I will not go into too much detail because I don't want to help the work of our competitors. There are two elements. One, you're right. The Chinese restrictions, especially for Lynas, were clear from quite a while. To review where you can buy outside China every single equipment that goes in a factory, it's complex, and sometimes you simply don't have manufacturers existing outside China, and so it takes time for developing these kind of contractors that can build, for instance, a good furnace, specific reactors, mixer settlers. It was a bit of a challenge for us to really develop to the level of performance we want. Yeah, it took a while, and then additional cost to make sure that we would have a secure non-China supply chain for the equipments. That's one part.
The other one is that was very good that the sales marketing team went way ahead with end customers. Because the specs of I used to work in this field 15 years ago in a different company, but the specs have changed over time, and there are more constraints, so that at the end of the day, we made decision, for instance, to add the purification stage for our chemical products and to also have water purification, so demineralized water systems, so as to make sure that we will maintain the level and achieve the low level of impurities, of non-risk impurities in the finished product that is required by those specific customers. There are two elements. One is really to go through all the non-Chinese equipments, including sometimes, in a few cases, developing the technology for some contractors.
The other was really going far into securing the purity and the particle size of our finished products up to the targeted specifications of our key customers for these new products. That are the two elements that led to an increase of our CapEx. I have to say, now this CapEx is fully reviewed. This is what I said is a Class 3, so it means that we have gone through all the AACE, et cetera. The next step is construction, and we are in construction actually.
Got it. Thank you. I'll queue back in.
Thank you. The next question comes from Jonathan Sharp from JPMorgan. Please go ahead.
Yeah. Hi, Pol and team. Just a question on China controls. They suspended their October 2025 export controls, and they potentially come back in on the 10th of November this year. Just with those controls potentially returning, can you just tell me what are the potential consequences for the industry? How are customers preparing? Just interested in your thoughts on those potential controls.
Well, we'll see what is announced November this year. Definitely, well, what I can see from our side and what I can see when meeting customers, the level of concern about accessing specific rare earths from China is very high. I know that in China, some rare earths producers are trying to lobby, say, "Well, we need more business," I think it's a very important geopolitical game being played. I foresee this restriction to be further strengthened. Therefore, our job is to grow as fast as possible additional capability, additional products, additional heavy rare earths in particular. All of this, for Lynas, whether it's official or not, anyway, Lynas cannot source any single material expertise, whatever, from China, and we don't. That's a challenge ahead of us.
I think we are in a market environment where you need to go very fast because China is still in control of the majority of the rare earth supply, and that's a major challenge for the rest of the world.
Okay. Thank you.
The next question comes from Daniel Morgan from Barrenjoey. Please go ahead.
Excuse me. Hi, Pol. Just back on Mount Weld. When do you expect Mount Weld to be back up to full operational run rates? Do you still have a lot of transition ore in the feed in the months ahead, or have changes been made to the operation such that it's delivering the feed the downstream needs currently? Thank you.
We are fully done now on what we know. This frustrating experience is in the past. I will go in Mount Weld next month, well, we are always careful to not underestimate the issues, to me, Mount Weld is well on track now. It's done with.
Just a quick follow-up if I may. I have observed in the Kalgoorlie region there's been several grid instability issues. Other mining firms have referenced it during the quarter. This was not referenced in your release today. Obviously, if Mount Weld upstream is not operating at full tilt, it's not giving feed to the downstream at full tilt. If Mount Weld were delivering, would the bottleneck move to Kalgoorlie and power? If that's right, what's being done about power supply for Kalgoorlie?
Very good question. It's true that the power supply is not up to where we want it to be. This being said, we had a very difficult situation back in October to 25 until January or February this year. Since then, the situation has improved. There were some modifications made on the Western Power side. Okay, it's not as good as we wish. Let's say we are staying within one power failure per month, which is not what we wish to have. That's what we have. It's, I would say, manageable given the excess of capacity we have between Kuantan and Kalgoorlie. We're still weighing whether we should go for off-grid solution or not. At the moment, it's not the real emergency, I think. Power has improved. Not to where you could dream of, but enough.
Okay. Thank you, Pol, for your perspectives.
I hope I won't be made wrong in a few hours or next week. Keep just one power failure per month. That would be nice.
Thank you. The next question comes from Mitch Ryan from Jefferies. Please go ahead.
Morning, Pol. Thank you for your time. My question relates to Mount Weld. Obviously, you're blending ore for mineralogy for now, that seems to be under control. Are there any physical modifications that the Mount Weld circuit will require in the mid to long term as you progress through the ore body, to account for that ore mineralogy? To meet the required concentrate grade and quality?
Yes. In the long term, we know that we'll have variations of ore, but that's not imminent. We're working on this. Well, we have plenty of options process-wise, so we are addressing that now. We have time to prepare. Not for transition, but for really addressing mining some specific ore. This is under progress at the moment, and we work on it and get ready for it, probably later in this, not even this fiscal year, but the year after. Yeah.
Okay. Sorry, is that when you will encounter the problems, or is that when you will communicate the solution to the market?
Yeah. We will, of course.
Sorry, you didn't answer my question. Is that when the problem comes to occur?
No, we will not wait for the problem to happen. This happened this last quarter. It was a problem with the transition zone. When it comes to different kinds of ore to be mined and processed, we have time to really address that. We have different options that we are studying, and once we are done with it, we will communicate on that. That will be anticipated, not in a reactive mode like this quarter.
Okay. Thank you.
The next question comes from Matthew Hope from Ord Minnett. Please go ahead.
Yeah. Thanks. I just wanted to know if there was any change in the plans for the heavy rare earths separation plan, because you spoke about when you would add gadolinium and yttrium and lutetium, when they would be coming out, but my understanding was the heavy rare earths refinery was also supposed to replace the current facilities for dysprosium, terbium, and samarium. You have given no timelines for those. Are the old facilities going to be replaced with the new? If so, what is the timeline on the new enlarged production for those elements?
The dysprosium terbium, I understand the information didn't pass very well, but I don't know why. We today are established, and we could produce 240 tons of dysprosium if we had it in the feedstock. Dysprosium terbium production is established, and will not be modified from then on. It's just a matter of us changing the feed with a higher content of dysprosium terbium in the feed, for which we have different options, and we are working on them. For samarium, we have a temporary situation where we produce 400 tons a year of samarium. That's a temporary situation that we started in March this year. For the full production of samarium, which will go to 1,100 tons or more, that will be an asset that is under construction, and that will come beginning of calendar year 2028.
In between, you will have gadolinium in beginning of fiscal year 2028, sometime between August, September 2027. As I said, yttrium later, and finally, the samarium and the lutetium. Sorry, I did not include that in my presentation. The samarium increased to over 1,100 tons from the current 400 tons.
All right. Thank you.
Thank you. The next question is from Neal Dingmann from William Blair. Please go ahead.
Thanks for your time, Pol. Can you hear me?
Yep.
My question is around the JS contract. Could you talk about, again, will that be a continued strategy of, will that be one of several joint ventures that you would connect more on the downstream side? What is the strategy going forward, beyond just the JS contract that was announced?
Well, we are not a magnet maker. We are a miner and a chemical processing player. We will not manage magnet making at Lynas. This being said, we support magnet makers because we need more new magnet makers coming up. This partnership with JS Link was a very good opportunity for us. We are. Well, AUD 50 million is not peanuts, but it is not the majority of the capital they need to build this factory, and they will manage this factory by themselves and the business. We are supporting them in our position, which is basically supply of rare earths and most likely, very soon, the recycling of their swarf. That's how we position ourselves, and we will continue doing that. Supporting downstream industry, including metal making and magnet making, but not necessarily managing those assets.
Especially magnet, to me, is a step where the expertise required are very different from what we have. That's definitely not the step. I'm not a supporter of the famous mine-to-magnet theory. We have enough work in our positioning.
Understood. With most of those, would you continue to make investments in the equity, or how do you see structures going forward? Thank you.
It's just when needed. If it's needed, we can look at it. I think there are many projects where the key point is security of supply, and we do discuss that. JS Link was a particular case where some capital injection was needed to help them take it off. That's what we did.
Thank you.
The next question is from Chen Jiang from Bank of America. Please go ahead.
Hello. I do not hear Chen Jiang's second question, by the way.
It appears Chen is having some technical issues, so we will move to the next question, which is from Rahul Anand at Morgan Stanley.
Hi. Thanks for the opportunity again. Pol, my questions were answered, but I would love to perhaps test the Mount Weld thesis a bit more. I know you have talked about transitionals being the key driver for the variability in production that you have had, and obviously you have to marry up three different plants or three different sites to produce what you produce, so it is complex. How do we think about the plan from here? I know you are not here to provide guidance, but in terms of the mine plan and when you think all these three can be humming along again, and how do you think about the medium-term planning? What type of actions do you need to do now? Do you need to drill more, define the ore body better, or do you have the right definition but not the right planning in place?
I just want to get a bit more sense on the mining side. Thanks.
All of this, except that we already did. We launch additional mining drilling to better characterize the ore that is mined. That's already launched from end of May. To have a better accuracy on what we mine. Second most important is to. We are a lot more segregative in ore sorting ores, blending and controlling back again the blend of ore that is feeding to the flotation. The most important to me are the improvements that have been made in variations in the flotation circuit and the cracking and leaching sequence that allow us to adjust and to maintain productivity despite these variations. That's the reason why. Well, I don't want to project, but we feel much more comfortable and secured now than we were.
Sure. Thank you.
The next question is from Paul Young at Goldman Sachs. Please go ahead.
Hi again, Pol. Pol, a few further questions on the JS Link agreement, please. Can you share any details around the additional CapEx requirements from your side? I understand the AUD 50 million is going into the equity part for JS Link. It will go into funding part of their share of the facility. Can you share any sort of total capital numbers for the project and potentially when it could start production? Further to that, is the supply contract at NdPr going to be at the AUD 110 a kilo? Is that the base case?
We will do something that I will enjoy. I will ask Chris Jenney to answer that question, because he negotiated all the contract with JS Link.
Thanks, Pol. And hi, Paul. Obviously, the commercial arrangements with JS Link are confidential. The AUD 50 million obviously is not the full CapEx required for the site. Again, JS Link is probably better positioned to answer the total cost. In terms of the pricing and the offtake, as you know, 12-year offtake agreement, again, that's commercially sensitive, so we really can't go into those details. The great thing is that JS Link has commenced acquiring the site, which is very close to the Kuantan facility, and are busy ordering equipment and progressing that project.
Okay. Thanks. Maybe just a quick follow up Chris. I know that JS Link are planning on building a facility in the U.S. and they have an agreement with POSCO, and they have a site and agreement that's already sort of locked away in the U.S. Is that a facility you might get involved with and supply in the future? Is that part of the bigger plan here?
Potentially, Paul. Yeah. Obviously that's subject to ongoing discussions with JS Link. Watch this space.
I can add.
Okay. Thank you.
Probably there will be a press release from JS Link today or tomorrow. We should let them disclose what they wish to disclose, in terms of CapEx and planning for execution. Be aware that the Koreans go very fast. The most common word in Korean is "ppalli-ppalli" which means quick. As aggressive as their schedule may look like, they may be even better than this.
Okay. Pol, can I have one more follow-up, please? Just on magnets, that is around the Japanese magnet producers. Is there anything you can share with us around what the four magnet producers in Japan and their strategies are, considering a few of them actually have facilities in China? We've got the November deadline coming on the China export controls, which are more somewhat set in stone. Are you seeing any signs of the four Japanese magnet producers looking to actually get on with it and actually expand their facilities in Japan?
Well, I haven't gone to Japan for a while, but I follow from a distance. Again, Chris was in Japan last week, so he can add to my point. What I know is, especially some magnet makers are really concerned in Japan about their challenge of sourcing heavy rare earths from China. That is the reason why we, Lynas, need to accelerate as fast as possible in increasing our production of the Dy, terbium for them. Chris, there was any element you wanted to share from your meetings last week?
No. Yeah, great discussions in Japan. I think that the key is that the JARE offtake and availability agreement that we've agreed with Japan is critical to supporting those Japanese magnet makers with committed volume of light and heavy rare earths. That really, obviously then supports Japanese industry with the volumes they need. Yeah, as Pol said, massive focus on ramping our heavy rare earth capacity to meet those demands. There is some protection for Japan through that JARE offtake.
All right. Thank you. Appreciate it.
Thank you. We will try going back to Chen Jiang from Bank of America. Please go ahead. Hi, Chen, please go ahead if you can hear us.
Hey, can you hear me?
Yep.
Okay. Thank you. Sorry about the tech issue. I apologize. Thank you for taking up my follow-up question. Just on the heavy rare earth expansion project, thanks for providing the commencement, I mean, the timing for yttrium, for gadolinium. How about dysprosium and terbium? Like, last year, in your release, you have 250 Dy and 50 metric tons per annum of Tb. When are we going to see that, the expansion? I'm not talking about the current heavy rare earths. It's referring to your expansion Dy and Tb. If you can provide timing and color on that. Thank you.
Thanks. As I said, if we had 250 tons of dysprosium in our feedstock, we would produce 250 tons of pure dysprosium. What was probably misunderstood is that, initially we thought of going step by step and supply a small portion of the Dy, terbium. Actually, we modified and the efficiency of the effects is such that we realized that we could produce tomorrow 250 tons of Dy and 50 tons of terbium if only we had this in the feedstock. Processing-wise, everything is ready. The key question is how and when we will increase the Dy, terbium content in our feedstock. For that, we are evaluating different options, and it's a bit too early for me to disclose our plan, but that's the emergency for us is our The solution is only feedstock, no more processing for Dy, terbium .
Right. That's very helpful. The constraint is of producing the heavy rare earths expansion, the capacity is coming from upstream, which is the feedstock, not your downstream.
Yeah.
Is kind of already completed.
For dysprosium terbium.
Yes. Okay. Thank you.
For dysprosium terbium. Yes.
The next question comes from Jonathan Sharp from JPMorgan. Please go ahead.
Yeah. Thanks for follow-up question. My questions have been answered, but I'll just ask one on
You're now producing Dy, Tb, you're going to be producing samarium and the other three rare earth products shortly soon. I'm just interested in your thoughts, Pol, on where the value creation is with these. Do you see there's direct product revenue, margins? I get the feeling that there's quite a bit of value there with strategic customer relationships. Can you just talk to that for us and where you see the value?
Well, you can see in the numbers, there is quite some value in supplying separated heavies rather than doing what we were doing in the past, which was selling unseparated heavy compounds to separation companies in China. That is where the margin lies for us, and I think for as long as, and I expect this to last for quite a while, as long as those elements are in shortage outside China, you will have lots of value in supplying separated rares. Dysprosium, terbium, even gado, yttrium, they are essential element because currently they are supplied only by China. That's where the value lies.
Okay, just to follow up, is there extra NdPr that can be sold with those contracts?
Well, we bind the dysprosium, terbium with NdPr, generally speaking. Okay. If you look at the reason why you don't see more magnet capacity popping up outside China, I've been frustrating with that for the last 16 years. Until recently, one of the key question was people were not certain of the demand growth and not certain that OEM would be serious about securing at least part of the sourcing outside China. Now this point is gone. It's a matter of getting the expertise, because it is complex, Chinese are really the best in that. You need to match the best competition technology from China. The second is accessing NdPr, Dy, terbium. Currently the most critical is to secure Dy, terbium because we have NdPr. We continue growing our production of NdPr.
I explained, I share with you that I was a little bit frustrated for this quarter, we know where to go and how to get there. We need to get more Dy, terbium, the market needs us to produce more Dy, terbium. That's essential.
Okay. Thank you.
The next question is from Mitch Ryan at Jefferies. Please go ahead.
Hello. Thanks for the follow-up. I'm interested in the increased CapEx of the heavy rare earth project, which is obviously to allow increased purity and physical characteristics for your customers. Does this mean you'll be producing individual SKUs of each heavy for each customer? How should we think about that with regards to operating costs?
That's a good question. It varies. I would say, take an example, Dy, terbium for magnet, that's a standard spec. Everyone buys the same. Dysprosium can also serve MLCC, which is a micro capacitors, which is a very important segment that not many people talk about. Here, definitely you need to control your particle size, particle shape of your dysprosium. You have a different grade, because you have a different grade, it comes with different price as well. Same applies for yttrium, gadol where you have a very standard 3N spec, especially gadol when it comes as a contributor to magnet making, this is quite standard. If you go into a specific alloys, for instance, and coating, then you really need to address purity and the shape of it.
Again, it's different grades for several of these heavies, more than in the lights, and they go together with different prices.
Okay. Yeah, I missed that. You'll potentially be able to attract a bigger premium by providing these more bespoke.
Exactly.
Products to your clients. Is that the correct way to think about it?
Yeah, absolutely.
Okay.
That's the reason why we decided to move ahead and improve the setup and install some equipments so that we can do that.
Okay. Thank you very much.
The next question comes from Matthew Hope from Ord Minnett. Please go ahead.
I just had another question on JS Link. Just wondering, with their Korea plant, when do you expect to begin supplying that? The other question around JS Link is, They will presumably need some dysprosium terbium for their magnets. Do you have any capability to supply that over to Korea or is it all taken due to the JARE contract, is all taken by Japan?
No. We have agreement with Japan and we have agreements with JS Link. Their factory in Malaysia, basically, let's say will start, it's a challenge to start a new magnet factory, in 2028, I guess, calendar year. We'll start supplying them with the necessary NdPr and dysprosium terbium as they move up. As I said, as they grow, we will also finalize and execute options for us to produce higher Dy, terbium ore. You may remember, and this is one among other options, but we have areas in Mount Weld with pretty high level of dysprosium. That's one option.
Sorry, I think you dropped out.
Hi there, Pol, you seem to have dropped your audio.
Hello. You can't hear me?
It is quite faint. If you could just try moving closer.
Can you hear me better now?
That's much better. Thank you.
Sorry, I don't know what you heard from my end.
It started to drop out when I think you were saying there were high areas of Dy and Tb in Mount Weld.
Yes.
Sort of lost it after that.
That's it. That's one of the options.
I mean, definitely, as I mentioned, we need to increase our Dy, terbium content in the feedstock. One option is to accelerate the mining activity in Mount Weld, there are other options as well. Same.
Okay. I guess what I was a bit interested in was Oh, you're dropping out again. I was just interested in the contract with JS Link. I understood that you also had a contract to supply their Korean plant, which is currently ramping up, as I understand it. I was wondering when that feedstock was due to start, and whether you actually had any dysprosium, terbium to supply then given that the JS Link contract has first dibs on all your dysprosium and terbium, if I understood that agreement correctly.
Their Korean line is a small line, we're not talking about big numbers for supplying their Korean line. I think over time the mining capacity will be in Malaysia definitely, and in the U.S.
Korea will probably turn into a pilot plant more than a commercial plant. That's my.
Okay. Thank you
Feeling. Their decision, too, it's my understanding.
Thank you. The next question comes from Daniel Morgan from Barrenjoey. Please go ahead.
Hi, Pol. Just a question on CapEx for the heavies plant. You've said that the budget has increased to AUD 294 million. I imagine that there was some that was spent in FY 2026. How much is left to go from this point in time or in FY 2027 and beyond of that AUD 294 million? Thank you.
Oops. I think cash-wise, I'm not 100% sure. I may ask Gaudenz for help. To my view, we have committed at the moment around 25% of it. The forward will be in FY 2027. Cash-wise, probably a lot will be spent in the beginning of 2028. Gaudenz might have more precise numbers in front of him.
Yeah, I think they will put obviously something in the annual report. Cash-wise, pretty little has been spent so far. Probably on the commitment side, we are probably 20% in. That will grow pretty quickly over the next month. At the moment it's really, really active on the procurement side. There will not be a lot of cash flow in the past financial year. It's really heavily in 2027 and then 2028.
Okay. Just to clarify, this is the major capital spending commitment that the company is making right now in terms of projects. There's nothing material.
Correct.
Outside of sustaining. Is that correct?
Correct.
Correct.
Okay.
Yeah.
Thank you so much, Pol and Gaudenz.
Thank you. That is the end of the Q&A. I'll now hand back to Pol for closing remarks.
Okay. Thank you very much, everyone. That was my first presentation of the quarterly results. I hope you got answers to your questions. We'll have a more complete review together for the yearly results announcement, which are being audited at the moment. It will be next month. I look forward for a continuous discussion with all of you sometime soon. Thank you.
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